[8.] Charles Ganilh [Mercantilist Conception of Exchange and Exchange-Value. Inclusion of All Paid Labour in the Concept of Productive Labour]

***

||IX-400| Monsieur Germain Garnier had published in Paris in 1796 Abrégé élémmentaire des principes de l’économie politique. Along with the Physiocratic view that agriculture alone is productive another is to be found (which to a great extent explains his polemic against Adam Smith), namely, that consumption (strongly represented by the “unproductive labourers”) is the source of production, and that the volume of the latter is to be measured by the volume of the former. The unproductive labourers satisfy artificial needs and consume material products, and are thus in every way useful, He also polemises, therefore, against economy (thrift). On p. xiii of his preface we find:

“The fortune of an individual is enlarged by saving; the public fortune, on the contrary, derives its increase from the increase of consumption.”

And on p. 240, in the chapter on public debts:

“The improvement and extension of agriculture and consequently the progress of industry and commerce have no other cause than the extension of artificial needs.”

From this he concludes that public debts are a good thing, in that they increase these needs. |IX-400||

***

||XI-421| Schmalz. In his criticism of Smith’s distinction between productive labour and unproductive labour this German afterbirth of the Physiocrats says (German edition [it was published in] 1818):

“I observe only … that Smith’s distinction between productive and unproductive labour should not be considered as essential or very precise, if one has regard to the fact that in general the labour of others never produces anything for us but a saving of time, and that this saving of time is all that forms its value and its price.”*

“The joiner for example who makes a table for me, and the servant who takes my letters to the post, who cleans my clothes or gets for mc the things I need, both perform a service of absolutely like nature, Both the one and the other save mc the time which I myself would have to use up in doing these things, as also the time I would have to devote to acquire the skill and facility needed for them” (Schmalz, Économie politique, traduit par Henri Jouffroy, etc., t. I, 1826, p. 304).

The following remark of this same scribbler Schmalz**** is also important for the link with Garnier, for instance his consumption system (and the economic utility of vast expenditure) with the Physiocratic system:

“This system” (Quesnay’s) “regards the consumption of artisans, and even of those who merely consume, as meritorious, because this consumption, even though in an indirect and mediated way, contributes to the growth of the nation’s revenue; since but for this consumption the consumed products would not have been produced from the land and could not have been added to the revenue of the landowner” (p. 321). |IX-421||

||VIII-358| A very inferior and superficial compilation is Charles Ganilh’s Des systémes d’économie politique, First edition Paris 1809, second 1821. (Quotations from the latter.) His twaddle is directly linked with Garnier, against whom he polemises.

<Canard in Principes d’économie politique defines “wealth” [as] “an accumulation of supeflruous labour”. Had he said that it is the labour which is superfluous for keeping the labourer alive as a labourer, the definition would be correct.>

Monsieur Ganilh’s starting-point is the elementary fact that the commodity is the element of bourgeois wealth, and therefore labour, in order to produce wealth, must produce commodities, must sell itself or its product.

“In the present state of civilisation, labour is only known to us through exchange” (l.c., t. I, p. 79). “Labour without exchange can produce no wealth” (l.c., p. 81).

From this Ganilh jumps straight into the Mercantile system.

Because labour without exchange creates no bourgeois wealth. “wealth comes exclusively from trade” (l.c., p. 84). Or, as he says later: “Exchange or trade alone gives value to things” (l.c., p. 98). On this “principle of the identity of values and wealth … rests the doctrine of the fruitfulness of general labour” (l.c., p. 93).

Ganilh himself declares ||359| that the “commercial system” which he calls a mere “modification” of the monetary system

“derives private and public wealth from the exchangeable values of labour, whether these values are or are not fixed in material, durable, and permanent objects” (l.c., p. 95).

He thus falls into the Mercantile system, as Garnier fell into the Physiocratic. His trash, if good for nothing else, is consequently not had as a characterisation of this system and of its views on “surplus-value”, especially as he puts forward these views in opposition to Smith, Ricardo, etc.

Wealth is exchangeable value; all labour which produces an exchangeable value or itself has an exchangeable value consequently produces wealth. The only word in which Ganilh shows himself a more profound Mercantilist, is the word general labour. The labour of individuals, or rather its product, must take the form of general labour. Only so is it exchange-value, money. In fact, Ganilh comes back to the view that wealth is equivalent to money; though no longer only gold and silver, but the commodity itself, in so far as it is money. He says: “Commercial system, or the exchange of values of general labour” (l.c., p. 98). This is nonsense. The product is value as the form of existence, as the incarnation of general labour, but not as “the value of general labour”, which would be equivalent to the value of value. But let us assume that the commodity is constituted as value, and has even taken on the form of money, is metamorphosed. It is now exchangeable value. But how great is its value? All commodities are exchangeable value. They are not different from each other in this. But what makes the exchangeable value of a definite commodity? Here Ganilh does not get beyond the crudest superficiality. A is of greater exchange-value when it exchanges for more B, C, D, etc.

Ganilh is quite right when he says of Ricardo and most economists that they consider labour without exchange, although their system, like the whole bourgeois system, rests on exchange-value. This however is only due to the fact that to them the form of product as commodity seems self-evident, and consequently they examine only the magnitude of value. In exchange the products of individuals only manifest themselves as products of general labour by taking the form of money. This relativity, however, originates from the fact that they must present themselves as the form of existence of general labour, and can be reduced to it only as relative, merely quantitatively different expressions of social labour. But the exchange itself does not give them their magnitude of value. In exchange they appear as general social labour; and the extent to which they can appear as general social labour depends on the extent to which they can present themselves as social labour, that is, on the extent of the commodities for which they can be exchanged, and therefore on the expansion of the market, of trade; on the range of commodities in which they can be expressed as exchange-value. For example, were there only four different branches of production in existence, each of the four producers would produce a great part of his product for himself. If there are thousands, then he can produce his total product as commodities. It can enter entirely into exchange. But Ganilh imagines, with the Mercantilists, that the magnitude of value is itself the product of exchange, whereas in fact it is only the form of value or the form of commodity which the product receives through exchange.

“Exchange gives things a value which they would not have had without it” (p. 102).

If this means that things, use-values, only become value, receive this form as relative expressions of social labour, it is a tautology. But if it is intended to mean that through exchange they get a greater value than they would have had without it, it is clearly nonsense, for exchange can only increase A’s magnitude of value by reducing that of B. So far as it gives A a greater value than it has before the exchange, it gives B a smaller value. A+B, therefore, has the same value after the exchange as it had before it.

“The most useful products may have no value if exchange does not give any to them” (p. 104).

(First, if these things are “products”, they are from the start products of labour, not general elemental things provided by nature like air, etc.; if they are “the most useful”, they are use-values in the highest sense, use-values that everyone needs; if exchange gives them no value, this is only possible if everyone produces them for himself; this however contradicts ||360| the assumption that they are produced for exchange; therefore the whole proposition is nonsense.)

“And the most useless products may have very great value, if exchange is favourable for them” (p. 104).

For Monsieur Ganilh, “exchange” is a mystical being. If the “most useless” products are no use for anything, have no use-value, who will buy them? They must therefore have at least an imaginary “utility” for the buyer. And if he is not a fool, why should he pay more for them? Their dearness must therefore originate in some circumstance which in any case does not arise from their “uselessness”. Their “scarcity”, rarity? But Ganilh calls them “the most useless products”. As therefore they are products, why are they not produced in greater quantities, in spite of their great “exchange-value”? If before it was the buyer who was a fool, giving a lot of money for something that had neither a real nor an imaginary use-value for him, now it is the seller, who does not produce these trifles of great exchange-value instead of utilities of small value. That their exchange-value is great in spite of their small use-value (use-value determined by the natural needs of man), must therefore be due to some circumstance that originates not from Lord Exchange, but from the product itself. Its high exchange-value is therefore not the product of exchange, but only appears in exchange.

“The exchanged value of things and not their exchangeable value establishes the real value, the value which is identical with wealth” (l.c., p. 104).

But exchangeable value is a relation of the thing to other things with which it can be exchanged. <The correct point underlying this statement is: what compels the transformation of the commodity into money is that it has to enter into exchange as an exchangeable value, but only becomes that as the result of exchange.> On the other hand, the exchanged value of A is a definite quantity of products B, C, D, etc. Therefore (according to Monsieur Ganilh) it is no longer a value, but a thing, without exchange. B, C, D, etc., were not “values”. A has become a value through these non-values stepping into its place (as exchanged value). By the mere change of place—after they have come out of exchange and find themselves in the same position as before—these things have become values.

“It is therefore neither the real utility of things, nor their intrinsic value, which makes them wealth; it is exchange which fixes and determines their value, and it is this value which identifies them with wealth” (l.c., p. 105).

Lord Exchange fixes and determines something which was there or was not there. If only exchange creates the value of things, then this value, this product of exchange, ceases to exist as soon as exchange itself ceases. Thus what it makes, it equally unmakes. I exchange A for B+C+D, In the act of this exchange A gets value. As soon as the act is past, B+C+D stands on the side where A was, and A on the side where B+C+D was. And in fact each stands on its own, outside Lord Exchange, who only consisted of this change of place. B+C+D is now things, not values. So is A. Or exchange “fixes and determines” in the literal meaning of the word. A dynamometer determines and fixes the degree of strength of my muscles, but it does not make it. In this case value is not produced by exchange.

“There is in truth no wealth for individuals and for peoples, except when each labours for all” (that is to say, when his labour takes the form of general social labour, for in any other meaning this would be nonsense; since, except in the form of general social labour, an iron manufacturer does not work for all, but only for consumers of iron); “and all for each” (which again is nonsense, if we are dealing with use-value, for the products of all are without exception special products, and each person needs only special products; what this means is therefore only that each special product takes on a form in which it exists for everyone; and it only exists in this form, not because as a special product it is distinct from the product of each other person, but because it is identical with it; that is, once more the form of social labour as it exists on the basis of commodity production) (l.c., p. 408).

||361| From this definition—exchange-value is the expression of the labour of the isolated individual as general social labour—Ganilh falls once more into the crudest conception: that exchange-value is the proportion in which commodity A exchanges against commodity B, C, D, etc. A has great exchange-value if much B, C, D is given for it; but then little A is given for B, C, D. Wealth consists of exchange-value. Exchange-value consists of the relative proportion in which products exchange for each other. The total quantity of products has therefore no exchange-value, since it is not exchanged for anything. Hence, society, whose wealth consists of exchange-values, has no wealth. Consequently it follows not only, as Ganilh himself concludes, that the “national wealth, which is composed of the exchange-values of labour” (p.108), can never rise and can never fall in exchange-value ( therefore there is no surplus-value), but that it has no exchange-value whatever, and so is not wealth, since wealth consists only of exchangeable values.

“If the abundance of wheat makes its value fall, the farmers will he less rich, because they have less exchange-values to obtain for themselves things that are necessary, useful or pleasant for life; but the consumers of wheat will profit from all that the farmers have lost: the loss of some will be compensated by the gain of others, and the general wealth will undergo no change” (pp. 108-09).

Excuse me. The consumers of wheat eat the wheat and not the exchangeable value of the wheat. They are richer in means of subsistence, but not in exchangeable value. They have exchanged a small amount of their products—which have a high exchange-value because of their relative paucity as compared with the quantity of wheat for which they are exchanged—for the wheat. The farmers have now received the high exchange-value and the consumers a good deal of wheat of small exchange-value, so that now the latter are the poor ones and the farmers the rich.

Moreover, the total (the social total of exchange-values) loses its nature of being exchange-value in the same degree as it becomes the total of exchange-values. A, B, C, D, E, F have exchange-value in so far as they are exchanged for each other. When they have been exchanged, they are then all products for their consumers, their purchasers. By exchanging hands they have ceased to be exchange-value. And thereby the wealth of society, which is composed of exchangeable values, has disappeared. The value of A is relative; it is its exchange relation to B, C, etc. A+B has less exchange-value, because its exchange-value now exists only in relation to C, D, E, F. But the total of A, B, C, D, E, F has no exchange-value at all, because it expresses no relation. The total of commodities is not exchanged for other commodities. Therefore the wealth of society, which consists of exchange-values, has no exchange-value and is consequently not wealth.

“Hence it is that it is difficult, and perhaps impossible, for a country to enrich itself by internal commerce. It is not at all the same for peoples who engage in foreign trade” (l.c., p. 109).

This is the old Mercantile system. Value consists in my getting not an equivalent, but more than the equivalent. At the same time, however, for Ganilh there is no equivalent, for this would imply that the value of A and the value of B are determined not by the proportion of A in B or of B in A, but by a third thing in which A and B are identical. But if there is no equivalent, there can also be no excess over the equivalent. I get less gold for iron than iron for gold. Now I have more iron, for which I get less gold. If therefore I gain on the original transaction because less gold is equal to more iron, I now lose just as much because more iron is equal to less gold.

“All labour, whatever be its nature, is productive of wealth provided that it has an exchange-value” (l.c., p. 119). “Exchange pays no regard either to the quantity or to the material nature or to the durability of the products” (l.c., p. 121). “All” (kinds of labour) “are equally productive of the sum for which they have been exchanged” (pp. 121-22).

First they are equally productive of the sum, that is, the price, which they have been paid (the value of their wages). But Ganilh at once goes another step further. Immaterial labour, he says, produces the material product for which it is exchanged, so that it seems that material labour produces the product of immaterial labour.

||362| “There is no difference between the labour of the workman who makes a chest of drawers for which he gets two bushels of wheat in exchange and the labour of a village fiddler for which he gets two bushels of wheat. In both cases two bushels of wheat are produced: two bushels to pay for the chest of drawers, and two bushels to pay for the pleasure given by the village fiddler. It is true that after the joiner has consumed the two bushels of wheat, a chest of drawers remains, and after the fiddler has consumed the two bushels of wheat, nothing remains; bet how many labours reputed productive are in the same case!… it is net by what remains after consumption that one can judge whether a labour is productive or sterile, it is by the exchange or by the production to which it has given rise. But since the joiner’s labour, as well as the fiddler’s labour, is the cause of the production of two bushels of wheat, both are equally productive of two bushels of wheat, although the one, after it is finished, does not fix and realise itself in any durable object, and the other fixes and realises itself in a durable object” (l.c., pp. 122-23).

“Adam Smith would like to reduce the number of labourers who are not usefully occupied, in order to multiply that of the labourers who are usefully occupied; but no consideration has been given to the fact that if this desire could be realised all wealth would be impossible, because consumers would be lacking for the producers, and the excess that was not consumed would not be reproduced. The productive classes do not give the products of their labours gratuitously to the classes whose labours do not yield any material products” (here he nevertheless himself distinguishes between labours which yield material products and labours which do not); “they give them to them in exchange for the convenience, the pleasures and the enjoyments that they receive from them, and, in order to give them to them, they are obliged to produce them. If the material products of labour were not employed to pay for the labours which do not yield material products, they would not have consumers and their reproduction would cease, The labours productive of enjoyment thus contribute to production as efficaciously as the labour which is considered to be the most productive” (l.c., pp. 123-24).

“Almost always the convenience, the pleasures or the enjoyments which they” (the peoples) “seek follow and do not precede the products which are to pay for them” (l.c., p. 125). (They seem therefore to be much more effect than cause of the products which are to pay for them). “The position is different when the pro ours devoted to pleasure, luxury and ostentation are not wanted by the productive classes, “ (thus he himself makes the distinction here) “and they are nevertheless forced to pay for them and to cut down their own requirements by this amount. Then it may come about that this forced payment does not bring about an increase in production” (l.c., p. 125). “Apart from this case all labour is necessarily productive, and contributes more or less efficaciously to the formation and growth of the public wealth, because it necessarily calls forth the products which pay for it” (l.c. p. 126).

<If, according to Adam Smith, that labour is productive which is directly exchanged for capital, then we have to consider, apart from the form, also the material components of the capital which is exchanged for labour. It resolves itself into the necessary means of subsistence; that is for the most part into commodities, material things. What the labourer has to pay from these wages to State and Church is a deduction for services which are forced upon him; what he pays out for education is devilishly little, but when he does, his payments are productive, for education produces labour-power; what he pays out for the services of physicians, lawyers, priests, is his misfortune; there are very few unproductive labours or services left on which the labourer’s wages are spent, especially as he himself provides his costs of consumption (cooking, keeping his house clean, generally even repairs).>

The following statement of Ganilh’s is extremely characteristic:

“If exchange gives to the servant’s labour a value of 1,000 francs, while it gives to that of the husbandman or factory worker only a value of 500 francs, one must conclude from this that the servant’s labour contributes to the production of wealth twice as much as that of the husbandman and the factory worker; and it cannot be otherwise, as long as the labour of servants receives in payment twice as much in material products as the labour of husbandmen and factory workers. How can it be imagined that wealth results from labour which has less exchange-value and which is consequently paid less!” (l.c., pp. 293-94).

||363| If the wages of the factory or agricultural labourer are 500 francs, and the surplus-value (profit and rent) created by him is equal to 40 per cent, his net product would be 200 francs, and five such labourers would be required to produce the wages of 1,000 francs for the servant. If instead of the servant Lord Exchange cared to buy a mistress for 10,000 francs annually, the net product of 50 such productive labourers would be required. And because her unproductive labour brings in for the mistress twenty times as much exchange-value, wages, as the wages of the productive labourer, this person adds twenty times as much to “the production of wealth”, and a country produces the more wealth the higher it pays its servants and mistresses. Monsieur Ganilh forgets that only the productivity of manufacturing and agricultural labour, only the surplus created by the productive workers but not paid to them, provides any fund at all for which the unproductive labourers are paid. But he reckons like this: 1,000 francs wage, and the labour of servant or mistress as equivalent for the wage, make together 2,000 francs. The value of servants and mistresses, that is, their production costs, depend entirely on the net product of the productive labourers. Indeed, their existence as a special breed of people depends on it. Their price and their value have little in common with each other.

But even assuming that the value (the costs of production) of a servant is twice as great as that of a productive labourer, it must be observed that the productivity of a labourer (like that of a machine) and his value are entirely different things, which are even in inverse proportion to each other. The value that a machine costs is always a minus in relation to its productivity.

“In vain is the objection raised that if the labour of servants is as productive as that of husbandmen and factory workers, there is no reason why the public economy of a country should not be used to maintain them, not only without being squandered but with a constant increase of value. This objection is only specious because it assumes that the fruitfulness of each labour results from its co-operation in the production of material objects, that material production is constitutive of wealth and that production and wealth are completely identical. It is forgotten that all production only becomes wealth concurrently with its consumption,* and that exchange determines up to what point it contributes to the formation of wealth. If it is remembered that all labours contribute directly or indirectly to the total production of each country, that exchange, in fixing the value of each labour, determines the part that it has had in this production, that consumption of the production realises the value that exchange has given it, and that the surplus or deficit of production over consumption determines the state of wealth or poverty of peoples, it will be realised how inconsistent it is to isolate each labour, to fix its fertility and its fruitfulness by its contribution to material production and without any regard to its ||364| consumption, which alone gives it a value, a value without which wealth cannot exist” (l.c., pp. 294-95).

On the one hand the fellow makes wealth depend on the excess of production over consumption, on the other hand he says that only consumption gives value. And a servant who consumes 1,000 francs consequently contributes twice as much to the giving of value as a peasant who consumes 500 francs.

In the first place he admits that these unproductive labours do not ‘directly participate in the formation of material wealth. Smith does not claim more than this. On the other hand he tries to prove that on the contrary they create material wealth in the same measure as, according to his own admission, they do not.

All those who polemise against Adam Smith on the one hand assume a superior attitude to material production, and on the other hand they attempt to justify immaterial production—or even no production, like that of lackeys—as material production. It makes absolutely no difference whether the owner of the net revenue consumes this revenue in lackeys, mistresses or pasties. But it is ludicrous to imagine that the surplus must be consumed by servants and cannot be consumed by productive labourers themselves without the value of the product going to the devil. With Malthus too we find the same view of the necessity of unproductive consumers—which necessity in fact exists when the surplus comes into the hands of idlers. |364||

[9. Ganilh and Ricardo on Net Revenue. Ganilh as Advocate of a Diminution of the Productive Population; Ricardo as Advocate of the Accumulation of Capital and the Growth of Productive Forces]

||364| Ganilh claims to have put forward a theory in his Théorie de l’économie politique (a book I don’t know) which Ricardo later copied from him. This theory is that wealth depends on net product and not on gross product, and thus on the level of profit and rent. (This is certainly not a discovery of Ganilh’s, who distinguishes himself, however, by the way he puts it.)

Surplus-value presents itself (has its real existence) in a surplus-produce in excess of the quantity of products which only replace its original elements, that is, which enter into its production costs and—taking constant and variable capital together—are equal to the total capital advanced to production. The aim of capitalist production is the surplus, not the product. The labourer’s necessary labour-time, and therefore also its equivalent in the product with which it is paid for, is only necessary as long as it produces surplus-labour. Otherwise it is unproductive for the capitalist.

The surplus-value is equal to the rate of surplus-value s/v multiplied by the number of simultaneous days’ labour or the number of employed labourers, that is, by n. So S= s/v × n. This surplus-value can therefore be increased or reduced in two ways. For example, (s/v)/2×n is equal to 2s/v × n=2S. Here S ||365| has doubled, because the rate has doubled, since (s/v)/2 is 2s/v, that is, is twice as much as s/v. On the other hand, however s/v × 2n would also be equal to 2sn/v, that is, also equal to 2S. V, the variable capital, is equal to the p rice of the single day’s labour multiplied by the number of labourers employed. If 800 labourers are employed, each costing £1, then V=£800, that is, £1 × 800, where n=800. Then if the surplus-value is 160, its rate would be ¹⁶⁰/_(£1×800) = ¹⁶⁰/₈₀₀ = ¹⁶/₈₀ = ¹/₅ = 20 per cent. But the surplus-value itself is ¹⁶⁰/_(£1×800) × 800, that is, ^£S/_£1×n× n.

With a given length of labour-time, this surplus-value can only be increased by an increase of productivity, or at a given level of productivity, by a lengthening of the labour-time.

But what concerns us here is: 2S=[(s/v)/2] × n; and 2S=s/v × 2n.

The surplus-value (gross amount of surplus-value) remains the same, if the number of labourers is reduced by half—is only n instead of 2n, but the surplus-labour performed by them each day is twice as much as it was before. On this assumption, therefore, two things would remain the same: first, the total quantity of products produced; secondly, the total quantity of surplus-produce or net product. But the following would have changed: first, the variable capital, or the part of the circulating capital expended in wages, would have fallen by half. The part of the constant capital which consists of raw materials would also remain unchanged, as the same quantity of raw material as before would be worked up, although this would be done by half the labourers employed before. As against this, the part which consists of fixed capital has increased.

If the capital expended in wages was £300 (£1 per labourer), it would now be £150. If that expended in raw materials was £310, it would now be £310. If the value of the machinery was four times as much as the rest of the capital, it would now be £1,600. Therefore if the machinery is worn out in ten years, the machinery entering annually into the product would be £160. We will assume that the capital previously expended annually on instruments was £40, thus only ¹/₄, Then the account would stand:

	Machinery	Raw Material	Wages	Total	Surplus-value	Rate of Profit	Total Product
Old capital	40	310	300	650	150 or 50%	23 ¹/₁₃%	800
New Capital	160	310	150	620	150 or 100%	24⁶/₃₁%	770

In this case the rate of profit has risen, because the total capital has decreased—the capital expended in wages has fallen by £150, the total value of the fixed capital has only risen by £120, and so in all £30 less than before is expended.

But if the £30 left over is again employed in the same way, ³¹/₆₂ (or ¹/₂) in raw material, ¹⁶/₆₂ in machinery and ¹⁵/₆₂ in wages, the result would be:

Machinery	Raw material	Wages	Surplus-value
£7.14.6	£15	£7.5.6	£7.5.6

And taking both together:

	Machinery	Raw material	Wages	Surplus-value	Rate of profit
New capital	£167.14.6	£325	£157.5.6	£157.5.6	24 ⁶/₃₁%

Total amount of capital expended: £650 as before. Total product £807.5.6.

The total value of the product has risen; the total value of the capital expended has remained the same; and not only the value, but the amount of the total product has risen, since an additional £15 in raw materials has been transformed into the product.

||366| [We find in Ganilh:]

“When a country is deprived of the aid of machines, and its labour is carried out by hand, the labouring classes consume almost the whole of their production. To the degree that industry makes progress, is improved by the division of labour, the skill of the workmen, and the invention of machines, the costs of production diminish, or in other words, a smaller number of labourers is required to obtain a greater production” (l.c., t. 1, pp. 211-12).

That is to say, therefore, in the same degree as industry becomes more productive, the production costs of wages are reduced. Fewer labourers are employed in relation to the product, and these therefore also consume a smaller part of the product.

If a labourer without machinery needs 10 hours to produce his own means of subsistence, and if with machinery he only needs 6, then (with 12 hours’ labour) in the first case he works 10 for himself and 2 for the capitalist, and the capitalist gets one-sixth of the total product of the 12 hours. In the first case 10 labourers will produce a product for 10 labourers (equal to 100 hours) and 20 [hours] for the capitalist. Of the value of 120, the capitalist gets one-sixth, or 20. In the second case, 5 labourers will produce a product for 5 Labourers (equal to 30 hours), and for the capitalist 30 hours. Of the 60 hours the capitalist now gets 30, that is, one half—3 times as much as before, The total surplus-value too would have risen, namely from 20 to 30, by ¹/₃. When I appropriate one-half of 60 days, this is one-third more than when I appropriate one-sixth of 120 days.

Moreover, the one-half of the total product that the capitalist gets is also greater in quantity than before. For 6 hours now produce as much product as 10 did before; 1 [hour] as much as ten-sixths of an hour [before], or 1 as much as 1 ⁴/₆=1 ²/₃, So the 30 surplus hours contain as much product as did previously 30 (1+²/₃) = 30 + ⁶⁰/₃ = 50. 6 hours produce as much product as 10 did previously, that is, 30—or 5×6—produce as much as 5×10 did before.

The capitalist’s surplus-value would therefore have risen and also his surplus-product (if he consumes it himself, or as much of it as he consumes in kind). The surplus-value can even rise without the quantity of the total product being increased. For the increase of surplus-value means that the labourer is able to produce his means of subsistence in less time than before, that therefore the value of the commodities he consumes falls, represents less labour-time, and that therefore a certain value, equal to 6 hours for example, represents a greater quantity of the use-values than before. The labourer receives the same quantity of product as before, but this quantity forms a smaller part of the total product, as its value expresses a smaller part of the fruits of the day’s labour. Although an increase in productive power in the branches of industry whose product neither directly nor indirectly enters into the formation of the labourer’s means of consumption could not have this result—since increased or reduced productivity in these branches does not affect the relation between the necessary and the surplus-labour—the result for these industries would nevertheless be the same, although it did not originate from a change in their own productivity. The relative value of their products would rise in exactly the same proportion as that of the other commodities had fallen (if their own productivity had remained the same); consequently, a proportionately smaller aliquot part of these products, or a smaller part of the labour-time of the labourer which is materialised in them, would procure for him the same quantity of means of subsistence as before. The surplus-value would therefore rise in these branches of labour just as in the others.

But what will then become of the five displaced labourers?

It will be said that capital has also been released, namely, that which paid the five dismissed workers, who each received 10 hours (f or which they worked 12), that is, 50 hours in all, which could previously have paid the wages of five labourers and which [now] that wages have fallen to 6 hours can pay for ⁵⁰/₆ = 8 ¹/₂ days’ labour. Therefore now the capital of 50 [hours’] labour that has been released can employ more labourers than have been dismissed.

But a capital equivalent to the whole 50 hours’ labour has not been released. For even assuming that the raw material has become cheaper in the same proportion as the increase in the quantity of it that is worked up in the same labour-time—that is, assuming that the same increase of productivity has taken place in that branch of production —the outlay for the new machinery nevertheless remains. Assuming that this costs exactly 50 hours’ labour, it has certainly in no case employed as many labourers as were put off. For this 50 hours’ labour was laid out entirely in wages, for 5 labourers. But in the value of the machine, equivalent to 50 hours’ labour, both profit and wages are contained, both paid and unpaid labour-time. In addition, constant capital enters into the value of the machine. The number of machine-building labourers [who built the machine is] smaller than the number of labourers discharged; nor are they the same individuals ||367| as those discharged. The greater demand for labourers in machine building can at most affect the future distribution of the number of labourers, so that a larger part of the generation entering the labour-market—a larger part than before—turns to that branch of industry. It does not affect those who have been discharged. Moreover the increase in the annual demand for these is not equal to the new capital expended on machinery. The machine lasts for example for ten years. The constant demand which it creates is therefore equal annually to ¹/₁₀ of the wages contained in it. To this ¹/₁₀ must be added labour for repairs during the 10 years, and the daily consumption of coal, oil and other auxiliary materials; which in all amounts perhaps to another ²/₁₀.

<Assume that the productivity of industry is so advanced that whereas earlier two-thirds of the population were directly engaged in material production, now it is only one-third. Previously ²/₃ produced means of subsistence for ³/₃; now ¹/₃ produce for ³/₃. Previously ¹/₃ was net revenue (as distinct from the revenue of the labourers), now ²/₃. Leaving [class] contradictions out of account, the nation would now use ¹/₃ of its time for direct production, where previously it needed ²/₃. Equally distributed, all [that is, the whole population] would have ²/₃ more time for unproductive labour and leisure. But in capitalist production everything seems and in fact is contradictory. The assumption does not imply that the population is stagnant. For if the ³/₃ grow, so also do the ¹/₃; thus, measured in quantity, a larger number of people could he employed in productive labour. But relatively, in proportion to the total population, it would always be 50 per cent less than before. Those two-thirds of the population consist partly of the owners of profit and rent, partly of unproductive labourers (who also, owing to competition, are badly paid). The latter help the former to consume the revenue and give them in return an equivalent in services—or impose their services on them, like the political unproductive labourers. It can be supposed that—with the exception of the horde of flunkeys, the soldiers, sailors, police, lower officials and so on, mistresses, grooms, clowns and jugglers—these unproductive labourers will on the whole have a higher level of culture than the unproductive workers had previously, and in particular that ill-paid artists, musicians, lawyers, physicians, scholars, schoolmasters, inventors, etc., will also have increased in number.

Within the productive class itself commercial middlemen will have multiplied, but in particular those engaged in machine construction, railway construction, mining and excavation; moreover, in agriculture labourers engaged in stock-raising will have increased in number, and also those employed in producing chemical and mineral materials for fertilisers, etc. Further, the farmers who grow raw materials for industry will have risen in number, in proportion to those producing means of subsistence; and those who provide fodder for cattle, in proportion to those who produce means of subsistence for people. As the constant capital grows, so also does the proportionate quantity of the total labour which is engaged in its reproduction. Nevertheless, the part [of the population] directly producing means of subsistence, although its number declines, ||368| produces more products than before. Its labour is more productive. While for the individual capital the fall in the variable part of the capital as compared with the constant part takes the direct form of a reduction in the part of the capital expended in wages, for the total capital—in its reproduction—this necessarily takes the form that a relatively greater part of the total labour employed is engaged in the reproduction of means of production than is engaged in the production of products themselves—that is, in the reproduction of machinery (including means of communication and transport and buildings), of auxiliary materials (coal, gas, oil, tallow, leather belting, etc.) and of plants which form the raw material for industrial products. Relatively to the manufacturing labourers, agricultural labourers will decline in number. Finally the luxury, labourers will increase in number, since the higher revenue will consume more luxury products.>

***

Ganilh continues:

“So long as the division of labour is not established in all branches, so long as all classes of the labouring and industrious population have not attained their full development, the invention of machines, and their employment in certain industries, only cause the capitals and labourers displaced by the machines to flow into other employments which can usefully employ them. But it is evident that when all branches of employment have the capital and the labourers they require, every further improvement and every new machine that cuts down labour, necessarily reduces the labouring population: and as this reduction does not diminish production, the part which it leaves available accrues either to the profit of capitals or to the rent of land; and in consequence the natural and necessary effect of machines is to diminish the population of the wage-earning classes who live on the gross product, and to increase the population of the classes which live on the net product” (l.c., p. 212).

||369| “The displacement of the population of a country, a necessary consequence of the progress of industry, is the true cause of the prosperity, the power and the civilisation of modern peoples. The more the lower classes of society decrease in number, the less need it be troubled by the dangers to which the distress, the ignorance, the credulity and the superstition of these unfortunate classes ceaselessly expose it; the more the upper classes multiply, the more subjects the State has at its disposal, the stronger and more powerful it is, the more knowledge, intelligence and civilisation there is in the whole population” (l.c., p. 213).

<Say makes the total value of the product resolvable into revenue in the following way: in the Constancio translation of Ricardo’s [book Principles], Chapter 26, he says in a note:

“The net revenue of an individual consists of the value of the product to which he has contributed … less his disbursements; but as the disbursements that he has made are portions of revenue which he has paid to others, the totality of the value of the product has served to pay revenues. The total revenue of a nation is composed of its gross product, that is to say, of the gross value of all its products which are distributed among the producers.”

The last sentence would be correct if expressed in this way:

The total revenue of a nation is composed of that part of its gross product, that is to say, of the gross value of all the products which are distributed as revenues among the producers, that is to say, less that portion of all the products which in each branch of industry had replaced the means of production. But so expressed, the sentence would negate itself.

Say continues:

“This value, after many exchanges, would he entirely consumed in the year which saw its birth, but it would nonetheless he still the revenue of the nation; just as an individual who has 20,000 francs annual revenue has nonetheless 20,000 francs annual revenue, although he consumes it entirely each year. His revenue does not consist only of his savings.”

His revenue never consists of his savings, although his savings always consist of his revenues. To prove that a nation can annually consume both its capital and its revenue, Say compares it to an individual who leaves his capital intact and only consumes his revenue each year. If this individual consumed in a single year both his capital of 200,000 francs and the revenue of 20,000, he would have nothing to eat the year after. If the entire capital of a nation, and consequently the entire gross value of its products, consisted of revenues, Say would be right. The individual consumes his 20,000 francs revenue. His 200,000 francs capital, which he does not consume, would be composed of the revenues of other individuals, each of whom consumes his share, and thus, at the end of the year, the whole capital would be consumed. But perhaps it would be reproduced while it is consumed, and thus replaced? But the individual in question reproduces annually his revenue of 20,000 francs, because he has not consumed his capital of 200,000 francs. The others have consumed this capital. Then they have no capital with which to reproduce revenue.>

“Only the net product,” says Ganilh, “and those who consume it form its” (the State’s) “wealth and its power, and contribute to its prosperity, its glory and its grandeur” (l.c., p. 218).

Ganilh further cites Say’s notes to Constancio’s translation of Ricardo [Principles,] Chapter XXVI, where Ricardo says that if a country has 12 million [inhabitants], it would be more advantageous for it if 5 million productive labourers labour for the 12 million, than if 7 million productive labourers labour for the 12 million. In the first case the net product consists of the surplus-produce on which the 7 million who are not productive live; in the other, of a surplus-produce for 5 million. Say remarks on this:

“This is quite like the doctrine of the Economists of the eighteenth century, who maintained that manufactures in no way helped towards the wealth of the State, because the wage-earning class, consuming a value equal to ||370| that which they produce, contribute nothing to their famous net product.” “

On this, Ganilh observes (pp. 219-20):

“It is not easy to see any connection between the Economists’ assertion that the industrial class consumes a value equal to that which it produces and the doctrine of Mr. Ricardo, that the wages of labourers cannot be counted in the revenue of a State.”

Here too Ganilh misses the point. The Economists go wrong in regarding the manufacturers as only wage-earning classes. This distinguishes them from Ricardo. They are further wrong in thinking that the wage-earners produce what they consume. The correct view, as Ricardo in contrast to them knew very well, is that it is they who produce the net product, but produce it precisely because their consumption, that is to say their wage, is equal not to the time they labour, but to the labour-time that they have put in to produce this wage; that is, that they receive a share of the product only equal to their necessary consumption, or that they receive only as much of their own product as is equivalent to their own necessary consumption. The Economists assumed that the whole industrial class (masters and workmen) was in this position. They considered that only rent bore the character of an excess of production over wages, and consequently that it was the only wealth. But when Ricardo says that profits and rents form this surplus and are consequently the only wealth, in spite of his difference from the Physiocrats, he agrees with them in thinking that only the net product, the product in which the surplus-value exists, forms the national wealth; although he has a better understanding of the nature of this surplus. For him, too, it is only the part of the revenue which is in excess of wages. What distinguishes him from the Economists is not his explanation of the net product, but his explanation of wages, under which category the Economists wrongly also include profits.

Say also remarks in opposition to Ricardo:

“From seven million fully employed labourers there would be more savings than from five million.”

Ganilh rightly observes, refuting this:

“That is to suppose that economies from wages are preferable to the economy which results from the reduction of wages… It would be too absurd to pay four hundred millions in wages to labourers who give no net product, in order to provide them with the opportunity and the means for making economies on their wages” (l.c., p. 221).

“With every step made by civilisation, labour becomes less burdensome and more productive; the classes condemned to produce and to consume diminish; and the classes which direct labour, which relieve (!), console (!) and enlighten the whole population, multiply, become more numerous and appropriate to themselves all the benefits which result from the diminution of the costs of labour, from the abundance of products and the cheapness of consumer goods. In this way, the human race lifts itself up… Because of this progressive tendency to the diminution of the lower classes of society and the increase of the upper classes … civil society becomes more prosperous, more powerful,” etc, (l.c., p. 224). “If … the number of labourers employed is seven millions, the wages will be fourteen hundred millions; but if the fourteen hundred millions do not yield a larger net product than the thousand millions paid to the five million labourers, the real economy would be in abolishing the four hundred millions in wages paid to two million labourers who yield no net product, and not in the savings that these two million labourers could make from the four hundred millions of wages” (l.c., p. 221).

In Chapter XXVI [of his Principles] Ricardo observes:

“Adam Smith constantly magnifies the advantages which a country derives from a large gross, rather than a large net income… What would be the advantage resulting to a country from the employment of 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? “ Whether a nation employs five or seven million productive labourers to produce the net revenue ||371| on which five million others live, “the food and clothing of five millions would be still the net revenue. The employing of 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., p. 215).

This reminds us of the ancient Germans, of whom one part in turn took the field and the other cultivated the field. The smaller the number that was indispensable for cultivating the field, the greater the number who were able to war. It would not have helped them if the number of people had increased by one-third, so that instead of 1,000 they had 1,500, if 1,000 were then required to cultivate the field while previously it was 500. Their disposable forces would have consisted of only 500 men both before and after. If on the other hand the productivity of their labour had increased, so that 250 sufficed to cultivate the field, 750 of the 1,000 could have taken the field, whereas in the opposite case, if the productivity of their labour had fallen, it would be only 500 out of the 1,500.

First it should be noted here that Ricardo means by net revenue or net product not the excess of the total product over the part of it that must be returned to production as means of production, raw materials or instruments. On the contrary, he shares the false view that the gross product consists of gross revenue. By net product or net revenue he means the surplus-value, the excess of the total revenue over the part of it that consists of wages, of the revenue of the labourers. This revenue of the labourer, however, is equal to the variable capital, the part of the circulating capital which he is constantly consuming and constantly reproducing as the part of his production which he himself consumes.

If Ricardo treats the capitalists as not entirely useless, that is to say, as themselves agents of production, and therefore resolves a part of their profit into wages, he has to deduct a part of their revenue from the net revenue and to declare that all these persons only contribute to wealth in so far as their wages form the smallest possible part of their profit. However that may be, at least a part of their time as agents of production belongs, like a fixture, to production itself. And to this extent they cannot be used for other purposes of society or of the State. The more free time their duties as managers of production leave them, the more is their profit independent of their wage. In contrast to these, the capitalists who live only on their interest, and also the landlords who live on rent, are in person entirely at the disposal [of society and the State], and no part of their income enters into the costs of production—except for that part which is used for the reproduction of their own worthy person. Ricardo should therefore have also desired, in the interests of the State, a growth of rent (the pure net revenue) at the cost of profits; but this is not at all his viewpoint. And why not? Because it hinders the accumulation of capitals [or]—what is in part the same thing—because it increases the number of unproductive labourers at the cost of the productive.

Ricardo fully shares Adam Smith’s view of the distinction between productive and unproductive labour, that the former exchanges its labour directly for capital, [the latter I directly for revenue. But he no longer shares Smith’s tenderness for and illusion about the productive labourer. It is a misfortune to be a productive labourer. A productive labourer is a labourer who produces wealth for another. His existence only has meaning as such an instrument of production for the wealth of others. If therefore the same quantity of wealth for others can be created with a smaller number of productive labourers, then the suppression of these productive labourers is in order. Vos, non vobis.* Ricardo, incidentally, does not think of this suppression as Ganilh does—that through mere suppression the revenue increases and that what was formerly consumed as variable capital (that is, in the form of wages) would then be consumed as revenue. With the diminution in the number of productive workers also disappears the amount of product which those who have been discharged themselves consumed and themselves produced—their equivalent. Ricardo does not assume, as Ganilh does, that the same quantity of products as before is produced; but the same quantity of net product. If the labourers consumed 200 and their surplus was 100, the total product was 300, and the surplus was one third=100. If the labourers consume 100 and their surplus is 100 as before, the total product is 200 and the surplus is one half=100. The total product would have fallen by one-third— by the quantity of products consumed by the 100 dismissed workers, and the net product ||372| [would have] remained the same, because ²⁰⁰/₂ = ³⁰⁰/₃. For Ricardo, therefore, the amount of the gross product does not matter, provided that that portion of the gross product which constitutes the net product remains the same or grows, but in any case does not diminish.

So he says:

“To an individual with a capital of 20,000 l., whose profits were 2,000 1. 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 l., or for 20,000 l., provided, in all cases, his profits were not diminished below 2,000 l. Is not the real interest of the nation similar? |VIII-372||

***

||IX - 377 | The passage in Ricardo (Chapter XXVI) runs:

“Adam Smith constantly magnifies the advantages which a country derives from a large gross, rather than a large net income” (because, says Adam, “the greater will he the quantity of productive labour which it puts into motion”) “What would be the advantage resulting to a country from the employment of 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.“

“To an individual with a capital of 20,000 l., whose profits were 2,000 l. 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 l or for 20,000 l. provided, in all cases, his profits were not diminished below 2,000 1.”

“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 sup-porting fleets and armies, and all species of unproductive labour” (this passage shows among other things that Ricardo shared Adam Smith’s view of productive and unproductive labour, although he did no longer share Smith’s tenderness, based on illusions, for the productive labourer) “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 clothing 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” (Ricardo, On the Principles of Political Economy and Taxation, 3rd edition, London, 1821, pp. 415-17).

A country is the richer the smaller its productive population is relatively to the total product; just as for the individual capitalist: the fewer labourers he needs to produce the same surplus, so much the better for him. The country is the richer the smaller the productive population in relation to the unproductive, the quantity of products remaining the same. For the relative smallness of the productive population would be only another way of expressing the relative degree of the productivity of labour.

On the one hand it is the tendency of capital to reduce to a dwindling minimum the labour-time necessary for the production of commodities, and therefore also the number of the productive population in relation to the amount of the product. On the other hand, however, it* has the opposite tendency to accumulate, to transform profit into capital, to appropriate the greatest possible quantity of the labour of others. It* strives to reduce the norm of necessary labour, but to employ the greatest possible quantity of productive labour at the given norm. The proportion of the products to the population makes no difference in this. Corn and cotton can be changed into wine, diamonds, etc., ||378| or labourers can be employed in productive labour which does not directly add anything to the (consumable) products (such as railway construction, etc.).

If as the result of an invention a capitalist can now only use in his business £10,000 instead of the £20,000 he used previously, because £10,000 is sufficient, and if this sum yields 20 per cent for him instead of 10, that is, as much as the £20,000 brought in before, this would be no reason for him to spend £10,000 as revenue instead of as capital as before. (Actually it is only in the case of State loans that we can speak of a direct transformation of capital into revenue.) He would place it elsewhere—and in addition would capitalise a part of his profit.

Among the economists (including Ricardo in part) we find the same antimony as there is in reality. Machinery displaces labour and increases the net revenue (particularly always what Ricardo here calls net revenue—the quantity of products in which revenue is consumed); it reduces the number of labourers and increases the products (which then are partly consumed by unproductive labourers, partly exchanged abroad, etc.). So this would be desirable. But no. In that case it must be shown that machinery does not deprive the labourers of bread. And how is this to be shown? By the fact that after a shock (to which perhaps the section of the population which is directly affected cannot offer any resistance) machinery once again employs more people than were employed before it was introduced—and therefore once again increases the number of “productive labourers” and restores the former disproportion.

That is in fact what happens. And so in spite of the growing productivity of labour the labouring population could constantly grow not in proportion to the product, which grows with it and faster than it, but proportionately [to the total population], if, for example, capital simultaneously becomes concentrated, and therefore former component parts of the productive classes fall into the ranks of the proletariat. A small part of the latter rises into the middle class. The unproductive classes, however, see to it that there is not too much food available. The constant retransformation of profit into capital always restores the same cycle on a wider basis.

And Ricardo’s care for accumulation is even greater than his care for net profit, which he regards with fervent admiration as a means to accumulation. Hence too his contradictory admonitions and consoling remarks to the labourers. They are the people most interested in the accumulation of capital, because it is on this that the demand for them depends. If this demand rises, then the price of labour rises. They must therefore themselves desire the lowering of wages, so that the surplus taken from them, once more filtered through capital, is returned to them for new labour and their wages rise. This rise in wages however is bad, because it restricts accumulation. On the one hand they must not produce children. This brings a fall in the supply of labour, and so its price rises. But this rise diminishes the rate of accumulation, and so diminishes the demand for them and brings down the price of labour. Even quicker than the supply of them falls, capital falls along with it. If they produce children, then they increase their own supply and reduce the price of labour; thus the rate of profit rises, and with it the accumulation of capital. But the labouring population must rise in the same degree as the accumulation of capital; that is to say, the labouring population must be there exactly in the numbers that the capitalist needs—which it does anyway.

Monsieur Ganilh is not altogether consistent in his admiration for the net product. He quotes from Say:

“I do not doubt at all (…) that in slave labour the excess of the products over consumption is larger than in the labour of a free man… The worker of the slave has no limit hut his capacity. … The slave” (and the free work too) “labours for an unlimited need: his master’s cupidity” (Say, 1re éd., pp. 215, 216).

||379 | On this Ganilh observes:

“The free labourer cannot consume more and produce less than the slave… All consumption presumes an equivalent produced to pay for it. If the free labourer consumes more than the slave, the products of his labour must he more considerable than those of the slave’s labour” (Ganilh, t. I, p. 234).

As if the size of the wage depended only on the productivity of the labourer, and not, with a given productivity, on the division of the product between labourer and master.

“I know,” he continues, “that it can be said with some reason that the economies made by the master at the expense of the slave” (according to this there are after all economies made on the wages of the slave) “serve to augment his personal expenses,” etc. “But it is more advantageous to the general wealth that there should be well-being in all classes of society rather than no excessive opulence among a small number of individuals” (pp. 234-35).

How does that tally with the net product? And for that matter Monsieur Ganilh at once retracts his liberal tirades (l.c., pp. 236-37). He wants Nigger-slavery for the colonies, He is only liberal in so far as he does not want to reintroduce it into Europe, having grasped that the free labourers here are slaves, that they only exist to produce net product for capitalists, landlords and their retainers.

“He” (Quesnay) “definitely denies that economies made by the wage-earning classes have the faculty to increase capital; and the reason he gives for this is that these classes should not have any means on which to make economics, and that if they had a surplus, an excess, this could only be due to an error or to some disorder in the society’s economy” (l.c., p. 274).

Ganilh cites in evidence the following passage from Quesnay:

“If the sterile class saves in order to augment its cash … its labours and its gains will diminish in the same proportion, and it will fall into decay”(Physiocratie, p. 321).

The ass! He does not understand Quesnay.

Monsieur Ganilh puts on the keystone in the following paragraph:

“The larger they” (wages) “are, the less is the revenue of the society” (society stands on them, but they do not stand in society), “and all the skill of governments should be applied to reducing the amount [of the wages]… A task …worthy of the enlightened century in which we live” (t. II, p. 24).

Then there are still Lauderdale (Brougham’s insipit jests are not worth examining after him), (Ferrier?), Tocqueville, Storch, Senior, and Rossi to be considered briefly on productive and unproductive labour.

[10.] Exchange of Revenue and Capital [Replacement of the Total Amount of the Annual Product: (a) Exchange of Revenue for Revenue; (b) Exchange of Revenue for Capital; (c) Exchange of Capital for Capital]

{To be distinguished: 1. The part of the revenue which is trans-formed into new capital; that is, the part of the profit which is itself again capitalised. Here we leave this entirely out of account—it belongs to the section on accumulation. 2. The revenue which is exchanged with capital consumed in production, so that by means of this exchange not new capital is formed, but old capital replaced—in a word, the old capital is conserved. In this inquiry, therefore, we can put the part of the revenue which is transformed into new capital as equal to nil, and treat the subject as if all revenue covers either revenue or capital consumed.

The whole amount of the annual product is therefore divided into two parts: one part is consumed as revenue, the other part replaces in kind the constant capital consumed.

Revenue is exchanged for revenue, when for example the producers of linen exchange a portion of that part of their product—the linen—which represents their profits and wages, their revenue, for corn that represents a portion of the profits and ||380| wages of farmers. Here therefore there is the exchange of linen for corn, those two commodities which both enter into individual consumption—exchange of revenue in the form of linen for revenue in the form of corn. There is absolutely no difficulty in this. If consumable products are produced in proportions corresponding to needs, which means also that the proportionate amounts of social labour required for their production are proportionately distributed <which of course is never exactly the case, there being constant deviations, disproportions, which as such are adjusted; but in such a way that the continuous movement towards adjustment itself presupposes continuous disproportion>, then revenue, for example in the form of linen, exists in the exact quantity in which it is required as an article of consumption, therefore in which it is replaced by the articles of consumption of other producers. What the producer of linen consumes in corn, etc., the farmers and others consume in linen. The part of his product which represents revenue, which he exchanges for other commodities (articles of consumption), is thus taken in exchange as an article of consumption by the producers of these other commodities. What he consumes in the product of others, these others consume in his product.

It may be noted in passing: that no more necessary labour-time is employed on a product than is required by society—that is to say, no more time than on the average is required for the production of this commodity—is the result of capitalist production, which even continuously reduces the minimum of necessary labour-time. But in order to do so, it must constantly produce on a rising scale.

If 1 yard of linen costs only 1 hour and this is the necessary labour-time that society has to use to satisfy its need for 1 yard of linen, it by no means follows from this that if 12 million yards are produced—that is, 12 million hours’ labour, or what is the same thing, 1 million days’ labour—1 million labourers being employed as linen weavers, society [needs] to employ such a part of its labour-time “necessarily” on the weaving of linen. If the necessary labour-time is given, and therefore also that a certain quantity of linen can be produced in one day, the question arises how many such days are to be used in the production of linen? The labour-time used on the total of particular products, in a year for example, is equal to a definite quantity of this use-value—for example, 1 yard of linen (say equivalent to 1 day’s labour)—multiplied by the number of days’ labour used in all. The total quantity of labour-time used in a particular branch of production may be under or over the correct proportion to the total available social labour, although each aliquot part of the product contains only the labour-time necessary for its production, or although each aliquot part of the labour-time used was necessary to make the corresponding aliquot part of the total product.

From this standpoint, the necessary labour-time acquires another meaning. The question is, in what quantities the necessary labour-time itself is distributed among the various spheres of production. Competition constantly regulates this distribution, just as it equally constantly disorganises it. If too large a quantity of social labour-time is used in one branch, the equivalent can be paid only, as if the correct quantity had been used. The total product—that is to say, the value of the total product—is in this case therefore not equal to the labour-time contained in it, but is equal to the proportionate labour-time which would have been used had the total product been in proportion to production in the other spheres. But in as much as the price of the total product falls below its value, the price of each aliquot part of it falls. If 6,000 yards of linen instead of 4,000 are produced, and if the value of the 6,000 yards is 12,000 shillings, they are sold for 8,000. The price of each yard is 1 ¹/₃ shillings instead of 2—one-third below its value. It therefore amounts to the same thing as if ¹/₃ too much labour-time had been used to produce one yard. Assuming that the commodity has use-value, the fall of its price below its value therefore shows that, although each part of the product has cost only the socially necessary labour-time <here it is assumed that the conditions of production remain unchanged>, a superfluous—more than necessary —total quantity of social labour has been employed in this one branch.

The sinking of the relative value of the commodity as a result of altered conditions of production is something entirely different; ||381| this piece of linen on the market has cost 2s., equal for example to 1 day’s labour. But it can be reproduced every day for 1s. Since the value is determined by the socially necessary labour-time, not by the labour-time used by the individual producer, the day that the producer has used for the production of the one yard is now only equal to half the socially determined day. The fall of the price of his yard from 2s. to 1s.—that is, of its price below the value it has cost him—shows merely a change in the conditions of production, that is, a change in the necessary labour-time itself. On the other hand, if the production costs of the linen remain the same while those of all other articles rise—with the exception of gold, the material of money; or even [if the rise applies to] certain articles such as wheat, copper, etc., in a word, to articles which do not enter into the component parts of the linen—then one yard of linen would be equal to 2s. as before. Its price would not fall, but its relative value expressed in wheat, copper, etc., would have fallen.

----------------

Of the part of the revenue in one branch of production (which produces consumable commodities) which is consumed in the revenue of another branch of production, it can be said that the demand is equal to its own supply (in so far as production is kept in the right proportion). It is the same as if each branch itself consumed that part of its revenue. Here there is only a formal metamorphosis of the commodity: C—M—C’. Linen— money—wheat.

Both commodities which are exchanged here represent only a part of the new labour added in the year. But in the first place it is clear that this exchange—in which two producers mutually consume a part of their product which represents revenue in each other’s commodities—only takes place in those branches of production which produce consumable articles, articles which enter directly into individual consumption, in which consequently revenue can be spent as revenue. Secondly, it is just as clear: that only regarding this part of the exchange of products it is true that the producer’s supply is equal to the demand for other products which he wishes to consume. Here in fact it is only a question of a simple exchange of commodities. Instead of producing his means of subsistence himself, he produces the means of subsistence for another, who produces his. No relation between revenue and capital enters into this. Revenue in one form of consumable articles is exchanged against revenue in another form of consumable articles, and so in fact consumable articles are exchanged for consumable articles. What determines their process of exchange is not that both are revenue, but that both are consumable articles. Their definite form as revenue does not enter into it at all. It shows itself however in the use-value of the interchangeable commodities, in that both enter into individual consumption; which in turn however means no more than that one part of consumable products is exchanged for another part of consumable products.

The form of revenue can only intervene or make itself manifest where the form of capital confronts it. But even in this case what Say and other vulgar economists assert is not true— that if A cannot sell his linen or can only sell it under its price—that is, the part of his linen which he wishes to consume himself as revenue—then this happens because B, C, etc., have produced too little wheat, meat, etc. It may be because they have not produced enough of these. But it may also be because A has produced too much linen. For assuming that B, C, etc., have enough wheat, etc., to buy all A’s linen, they nevertheless do not buy it, because only a definite quantity of linen is consumed by them, Or it may also be because A has produced more linen than the part of their revenue which can be spent on clothing materials altogether—that is, absolutely, because each person can expend as revenue only a definite quantity of his own product, and A’s production of linen presupposes a greater amount of revenue than in total there is. It is ridiculous, however, when it is only a matter of the exchange of revenue against revenue, to suppose that what is wanted is not the use-value of the product but the quantity of this use-value, thus once again forgetting that this exchange concerns only the satisfaction of needs, not, as in exchange-value, the quantity.

But everyone will prefer to have a large rather than a small quantity of an article. If this is supposed to solve the difficulty, then ||382| it is absolutely impossible to understand why the producer of linen, instead of exchanging his linen for other articles of consumption and piling these up en masse, does not carry out the simpler process of enjoying a part of his revenue in his superfluous linen. Why does he at all transform his revenue from the form of linen into other forms? Because he has to satisfy other needs than the need for linen. Why does he himself consume only a certain part of the linen? Because only a quantitatively determined part of the linen has use-value for him. The same thing, however, holds for B, C, etc. If B sells wine and C books and D mirrors, each may prefer to consume the surplus of his revenue in his own product—wine, books, mirrors—rather than in linen. Thus it cannot be said that, necessarily, too little wine, books and mirrors have been produced because A cannot transform his revenue in the form of linen (or cannot transform it at its value) into wine, books and mirrors. It is still more ridiculous, however, when this exchange of revenue against revenue—this one section of the exchange of commodities—is passed off as the whole of commodity exchange.

We have thus disposed of one part of the product. A part of the consumable products changes hands between the producers of these consumable products themselves. Each consumes a part of his revenue (profit and wages) in the other’s consumable product instead of in his own consumable product, and in fact he can only do this in so far as there is the reciprocal consumption by the other of someone else’s consumable product instead of his own. It is the same as if each had consumed that part of his consumable product which represents his own revenue.

For all the rest of the products, however, complicated relations intervene, and it is only here that the commodities exchanged confront each other as revenue and capital, and not only as revenue.

First a distinction has to be made. In all branches of production a part of the total product represents revenue, labour added (during the year), profit and wages. <Rent, interest, etc., are parts of profit; the income of the State good-for-nothings is part of profit and wages; the income of other unproductive labourers is the part of profit and wages which they buy with their unproductive labours—it therefore does not increase the product existing as profit and wages, but only determines how much of it they consume, and how much is consumed by the labourers and capitalists themselves.> But only in one section of the spheres of production can the part of the product representing revenue enter directly in kind into the revenue, or in its use-value be consumed as revenue. All products which are only means of production cannot be consumed in kind, in their immediate form, as revenue, but only their value. This however must be consumed in the branches of production which produce directly consumable articles. A part of the means of production may be immediate articles of consumption—it may be one or the other according to the use made of it, as for example a horse, a cart, etc. A part of the immediate articles of consumption may be means of production, like corn for spirits, wheat for seed, and so on. Almost all articles of consumption can re-enter the production process as excrements of consumption, as for example worn-out and half-rotten rags of linen in the manufacture of paper. But no one produces linen in order that it should become, as rags, the raw material for paper. It only gets this form after the linen weaver’s product as such has entered consumption. Only as excrement of this consumption, as residuum and product of the consumption process, can it then go into a new production sphere as means of production. This case, therefore, is not relevant here.

The products therefore—of which the aliquot part that represents revenue can be consumed by their own producers as value, but not as use-value (so that they must sell the part for example of their machines which represents wages and profit in order to consume it, [as they] cannot directly satisfy any individual need with it as a machine)— [these products] can just as little be consumed by the producers of other products; they cannot enter into their individual consumption, and hence cannot form part of the products on which they spend their revenue, since this would be in contradiction to the use-value of these commodities: their use-value by the nature of the case excludes individual consumption. The producers of these unconsumable products, therefore, can only consume their exchange-value; that is to say, they must first transform them into money in order to retransform this money into consumable commodities. But to whom are they to sell ||383| them? To producers of other individually unconsumable products? Then they would merely have one unconsumable product in the place of the other. It is however presupposed that this part of the product forms their revenue; that they sell these commodities in order to consume their value in consumable products. For that reason they can only sell them to the producers of products that can be consumed individually.

This part of the exchange of commodities represents exchange of one man’s capital for another man’s revenue, and of one man’s revenue for another man’s capital. Only one part of the total product of the producer of consumable products represents revenue; the other part represents constant capital. He can neither himself consume the latter, nor can he exchange it for the consumable products made by others. He can neither consume in kind the use-value of this part of the product, nor can he consume its value by exchanging it for other consumable products. He must on the contrary transform it again into the natural elements of his constant capital. He must consume industrially this part of his product, that is, use it as means of production.

But in its use-value his product is only capable of entering individual consumption; he cannot therefore transform it again in kind into his own elements of production. Its use-value excludes industrial consumption. So he can only industrially consume its value, [by selling it] to the producers of those elements of production needed for his product. He can neither consume in kind this part of his product, nor can he consume its value by selling it for other products that can be consumed individually. Just as little as this part of his product can enter into his own revenue, can it be replaced out of the revenue of producers of other individually consumable products; since this would only be possible if he exchanged his product for their product and so consumed the value of his product, which cannot happen. But since this part of his product, as well as the other part which he can consume as revenue, by its use-value can only be consumed as revenue, must enter into individual consumption and cannot replace constant capital, it must enter into the revenue of the producers of unconsumable products —it must be exchanged against that part of their products whose value they can consume, or in other words which represents their revenue.

If we look at this exchange from the standpoint of each of the people exchanging, for A, the producer of the consumable product, it represents a transformation of capital into capital. He transforms the part of his total product which is equal to the value of the constant capital it contains back again into the natural form in which it can function as constant capital. Both before and after the exchange it represents, in its value, only constant capital. For B, the producer of the product that cannot be consumed, it is the reverse: the exchange represents merely the transformation of revenue from one form into another. He transforms the part of his total product which forms his revenue—equal to the part of the total product which represents labour newly added, his own labour (capital and labourer)—into the natural form in which only he can consume it as revenue. Both before and after the exchange it represents, in its value, only his revenue.

If we look at the relation from both sides there, A exchanges his constant capital for B’s revenue, and B exchanges his revenue for A’s constant capital. B’s revenue replaces A’s constant capital, and A’s constant capital replaces B’s revenue.

In the exchange itself <irrespective of the purposes of those carrying it out> only commodities confront each other—and a simple exchange of commodities takes place—the relation between which is merely that of commodities, the designations of revenue and capital having no significance here. Only the different use-value of these commodities shows that one lot can only serve for industrial consumption, and the other only for individual consumption, can only enter into this consumption. The various practical uses of the various use-values of various commodities, however, concern their consumption and do not affect the process of their exchange as commodities. It is quite a different thing when the capitalist’s capital is transformed into wages, and labour is transformed into capital. Here the commodities do not confront each other as simple commodities, but capital as capital. In the exchange we have just been considering sellers and buyers face each other only as sellers and buyers, only as simple commodity owners.

It is further clear that the whole of the product destined for individual consumption or the whole product entering into individual consumption, in so far as it enters into it, can only be exchanged for revenue. The fact that it cannot be industrially consumed means precisely that it can only be consumed as revenue, i.e., only individually. <As noted above, we here abstract from the transformation of profit into capital.>

If A is a producer of a product that can only be individually consumed, let his revenue be equal to one-third of his total product, his constant capital to two-thirds. The assumption implies that he himself consumes the first one-third, whether he ||384| consumes it all himself in kind or only partly or not at all, or whether he consumes its value in other articles of consumption; the sellers of these articles of consumption then consume their own revenue in A’s product. So the part of the consumable product which represents the revenue of the producers of consumable products is consumed by them either directly, or indirectly, through exchanging among themselves the products to be consumed by them; in regard to this part, therefore, where revenue is exchanged for revenue—here it is the same as if A represented the producers of all consumable products. He himself consumes one-third of this aggregate amount, the aliquot part which represents his revenue. This part, however, represents exactly the quantity of labour which during the year category A has added to its constant capital, and this quantity is equal to the total sum of wages and profits produced by category A during the year.

The other two-thirds of category A’s total product are equal value of the constant capital, and must therefore be replaced by the product of the annual labour of category B, which produces products that cannot be [individually] consumed and only enter into industrial consumption as means of production in the production process. But as this two-thirds of A’s total product, just the same as the first one-third, must enter into individual consumption, it is taken by the producers of category B, in exchange for the part of their product which represents their revenue. Category A has therefore exchanged the constant part of its total product for constant capital in its original natural form, retransforming it into the newly-produced products of category B; but category B has only paid for it with that part of its product which represents its revenue but which it can only consume in the products of A. It has thus in fact paid with its newly-added labour, which is completely represented by the part of B’s product that is exchanged for the last two-thirds of A’s product. Thus A’s total product is exchanged for revenue, or passes entirely into individual consumption. On the other hand (on the assumption that the transformation of revenue into capital is here left out of account, being taken as equal to nil) the total revenue of society is expended on product A; for the producers of A consume their revenue in A, and so do the producers of category B. And there is no other category besides these two.

The total product A is consumed, although it contains two-thirds constant capital, which cannot be consumed by the producers of A but must be retransformed into the natural form of their elements of production. The total product A is equal to the total revenue of society. The total revenue of society, however, represents the total labour-time which it has added during the year to the existing constant capital. Now although the total product A consists of newly-added labour only as to one-third, and as to two-thirds of past labour that has to be replaced, it can be bought in its entirety by newly-added labour, because two-thirds of this total annual labour must be consumed not in their own products but in the products of A. A is replaced by two-thirds more newly-added labour than it itself contains, because these two-thirds are labour newly added in B, and B can only consume it individually in A, just as A can only consume the two-thirds industrially in B. Thus the total product of A can in the first place be entirely consumed as revenue, and at the same time its constant capital can be replaced. Or rather it can only be entirely consumed as revenue because two-thirds of it are replaced by the producers of constant capital, who cannot consume in kind the part of their product representing revenue, but are obliged to consume it in A, that is, through exchanging it for two-thirds of A.

We have thus disposed of the final two-thirds of A.

It is clear that it makes no difference if a third category C exists, whose products are consumable both industrially and individually; for example, corn, by men or by cattle or as seed or as bread; vehicles, horses, cattle, etc. In so far as these products enter into individual consumption they must be consumed as revenue, direct or indirect, by their own producers, or by the producers (direct or indirect) of the part of the constant capital contained in them. They therefore come under A. In so far as they do not enter into individual consumption, they come under B.

The process of this second kind of exchange, where it is not revenue that is exchanged against revenue but capital against revenue —in which the whole constant capital must in the end be resolved into revenue, that is, into newly-added labour —can be thought of in two ways. Let A’s product be for example linen. The two-thirds of the linen which are equal to the constant capital of A (or its value) pay for yarn, machinery and auxiliary materials. But the yarn manufacturer and the manufacturer of machinery ||385| can only consume as much of this product as represents their own revenue. The linen manufacturer pays the whole price of the yarn and machinery with these two-thirds of his product. By so doing he has thus replaced for the spinner and the machinery manufacturer their total product which entered into the linen as constant capital. But this total product is itself equal to the constant capital and revenue—one part being equal to the labour added by the spinner and machinery manufacturer, and another part representing the value of their own means of production, that is, for the spinner flax, oil, machinery, coal, etc., and for the machinery manufacturer coal, iron, machinery, etc. A’s constant capital, equal to two-thirds, has thus replaced the total product of the spinner and machinery manufacturer, their constant capital plus the labour newly added by them—their capital plus their revenue. But they can only consume their revenue in A. After deducting the part of the two-thirds of A which is equal to their revenue, with the rest they pay for their raw materials and machinery. According to our assumption, however, the latter need not replace any constant capital. Only so much of their product can enter into product A—and therefore also into the products which are means of production for A—as A can pay for. But A can only pay with his two-thirds for as much as B can buy with his revenue, that is to say, as much as the product exchanged by B contains revenue, newly-added labour. If the producers of the final elements of production of A had to sell to the spinner a quantity of their product which represented a part of their own constant capital— that is, which represented more than the labour they had added to their constant capital—then they could not accept payment in A, because they cannot consume one part of this product. Consequently what takes place is the opposite.

Let us trace the stages in reverse. Let us assume that the total linen is equal to 12 days. The product of the flax-grower, of the iron manufacturer, etc., is equal to 4 days; this product is sold to the spinner and the machinery manufacturer, who in turn add 4 days to it; these sell it to the weaver, who again adds 4 days. The linen weaver can thus himself consume one-third of his product; 3 days replace his constant capital for him and pay for the product of the spinner and machinery manufacturer; these can consume 4 of the 8 days, and with the other 4 they pay the flax-grower, etc., and thus replace their constant capital; the last-named have only their labour to replace with the last 4 days in linen.

The revenue, although it is assumed to be of the same size— equal to 4 days—in all three cases, is of different proportions in the products of the three classes of producers who participate in producing product A. For the linen weaver, it is one-third of his product, equal to one-third of 12; for the spinner and for the machinery manufacturer it is equal to one-half of his product, equal to one-half of 8; for the flax-grower it is equal to his product, 4. In relation to the total product it is however exactly the same, equal to one-third of 12, that is, 4. But for the weaver, the labour newly added by spinner, machinery manufacturer and flax-grower takes the form of constant capital. For the spinner and machinery manufacturer, the total product represents the labour newly added by themselves and by the flax-grower, the labour-time of the flax-grower appearing as constant capital. For the flax-grower, this phenomenon of constant capital has ceased to exist. Because of this, the spinner for example can use machinery, or constant capital in general, in the same proportions as the weaver. For example, ¹/₃ : ²/₃. But in the first place the amount (the total amount) of the capital employed in spinning must be smaller than that used in weaving, since its total product enters as constant capital into weaving. Secondly, if the spinner also has the proportion of ¹/₃ : ²/₃, his constant capital would be equal to ¹⁶/₃ his labour added to ⁸/₃; the former equal to 5 ¹/₃ days’ labour, the latter to 2 ²/₃. In this case there would be proportionately more days’ labour contained in the branch which supplies him with flax, etc. He would then have to pay 5 ¹/₃ for newly-added labour, instead of 4 days.

It is self-evident that only that part of category A’s constant capital has to be replaced by new labour which enters into the process of giving value to A, that is, is consumed by A during the labour-process. The whole of the raw material and the auxiliary materials enter into it, and the wear and tear of the fixed capital. The other part of the fixed capital does not enter into it, and therefore has not got to be replaced.

A large part of the existing constant capital—large as regards the relation of the fixed capital to the total capital—does not therefore require to be replaced annually by new labour. For that reason the (absolute) amount [of the capital to be annually replaced] may be considerable, but nevertheless it is not large in relation to the total (annual) product. This entire part of the constant capital, in A and B, which enters into the determination of the rate of profit (with a given surplus-value), does not enter as a determining element into the current reproduction of the fixed capital. The larger this part in relation to the total capital—the greater the scale on which present, already existing, fixed capital is employed in production—the greater the current volume of reproduction will be that is used for the replacement of the worn-out fixed capital, but the smaller relatively will be the proportional amount, in relation to the total capital,

Let the reproduction period (the average) for all kinds of fixed capital be ten years. ||386| Let us assume that the different kinds of fixed capital have a turnover of 20, 17, 15, 12, 11, 10, 8, 6, 4, 3, 2, 1, ⁴/₆ and ²/₆ years (14 kinds), so that the fixed capital has an average turnover of 10 years.

On the average, therefore, the capital would have to be replaced in 10 years. If the total fixed capital amounted to ¹/₁₀ of the total capital, then ¹/₁₀ of this would mean that only ¹/₁₀₀ of the total capital would have to be replaced annually.

If it amounted to ¹/₃, then ¹/₃₀ of the total capital would have to be replaced annually.

But let us now compare fixed capitals with different reproduction periods—the capital with a 20-year period, for example, in contrast to the capital with a period of ¹/₃ of a year.

Only ¹/₂₀ of the fixed capital which is reproduced in 20 years has to be replaced annually. So that if it amounts to ¹/₂ of the total capital, only ¹/₄₀ of the total capital has to be replaced annually, and if it amounts even to ⁴/₅ of the total capital, only ⁴/₁₀₀=¹/₂₅ of the total capital has to be replaced annually. On the other hand, if the capital which has a reproduction period of ²/₆ of a year—that is, turns over three times a year—amounts to only ¹/₁₀ of the capital, then the fixed capital has to be replaced three times a year, so that ³/₁₀ of the capital has to be replaced annually, nearly one-third of the total capital. On the average, the larger the fixed capital in proportion to the total capital, the longer is its relative (not absolute) period of reproduction; and the smaller it is, the shorter its relative period of reproduction. Implements form a much smaller part of handicraft capital than machinery does of machine-production capital. But handicraft implements wear out much more quickly than machinery.

Although the absolute magnitude of its reproduction—or its wear and tear—grows with the absolute size of the fixed capital, as a rule its proportional magnitude falls, in so far as its period of turnover, its duration, as a rule increases in proportion to its size. This proves among other things that the quantity of labour reproducing machinery or fixed capital is not at all proportional to the labour which originally produced these machines (conditions of production remaining the same), since only the annual wear and tear has to be replaced. If the productivity of labour rises—as it constantly does in this branch of production—the quantity of labour required for the reproduction of this part of the constant capital diminishes still more. However, account has to be taken of the means of consumption daily used by the machine (which however have nothing directly to do with the labour employed in the machine-building industry itself). But machinery, which needs merely coal and a little oil or tallow, lives on an infinitely stricter diet than the labourer—not only the labourer whom it replaces, but the labourer who built the machine itself.

----------------

We have now disposed of the product of the entire category A and of a part of category B’s product. A is completely consumed: one-third by its own producers, two-thirds by the producers of B, who cannot consume their own revenue in their own product. The two-thirds of A, in which they consume the part of the value of their product which represents revenue, at the same time replace their constant capital in kind for the producers of A, that is, provide them with the commodities which they consume industrially. But with the consumption of A’s entire product, and with two-thirds of it replaced by B in the form of constant capital, we have also disposed of the entire part of the product which represents the labour newly added annually. This labour cannot therefore buy any other part of the total product. In fact, the whole of the labour added annually (leaving out of account the capitalisation of profit) is equal to the labour contained in A. For one-third of A which is consumed by its own producers represents the labour newly added by them during the year to the two-thirds of A which represent A’s constant capital. They have performed no labour apart from this, which they consume in their own product. And the other two-thirds of A, which are replaced by B’s product and consumed by the producers of B, represent all the labour-time which the producers of B have added to their own constant capital. They have added no more in labour, and there is nothing more for them to ||387| consume.

In its use-value, product A represents the whole part of the annual total product which enters annually into individual consumption. In its exchange-value, it represents the total quantity of labour newly added by the producers during the year.

Thus, however, we have as residuum a third part of the total product whose constituent parts, when exchanged, can represent neither the exchange of revenue against revenue nor of capital against revenue and vice versa. This is the part of product B which represents B’s constant capital. This part is not included in B’s revenue and therefore cannot be replaced by or exchanged against product A, and therefore also cannot enter as a constituent part into A’s constant capital. This part is likewise consumed, industrially consumed, to the extent that it enters not only into B’s labour-process but also into the formation of value in B. This part, therefore, like all other parts of the total product, must be replaced in the proportion in which it forms a component part of the total product, and indeed it must be replaced in kind by new products of the same sort. On the other hand, it is not replaced by any new labour. For the total quantity of newly-added labour is equal to the labour-time contained in A, which is completely replaced only by B consuming his revenue in two-thirds of A and supplying to A in exchange all the means of production which are consumed in A and must be replaced. For the first one-third of A, which is consumed by its own producers, consists only—as exchange-value—of the labour newly added by themselves, and it contains no constant capital.

Let us now examine this residuum.

It consists of the constant capital which enters into raw materials, and secondly of the constant capital which enters into the formation of the capital, and thirdly of the constant capital which enters into auxiliary materials.

First, the raw materials. Their constant capital consists in the first place of fixed capital, machinery, instruments of labour and buildings, and perhaps auxiliary materials, which are means of consumption for the machinery employed. In regard to the directly consumable part of the raw materials —such as cattle, corn, grapes, and such like—this difficulty does not arise. In this aspect they belong to class A. This part of the constant capital contained in them enters into the two-thirds of the constant part of A, which is exchanged as capital against the unconsumable products of B or in which B consumes his revenue. This holds good too in general for such raw materials that cannot be immediately consumed as far as they enter in kind into the consumable product itself, however many intermediate stages they may pass through in the processes of production. The part of flax that is transformed into yarn and later into linen enters in its entirety into the consumable product.

But a part of these vegetative raw materials, such as timber, flax, hemp, leather and so on, partly enters directly into the components of the fixed capital itself, and partly into the auxiliary materials for the fixed capital. For example, in the form of oil, tallow, etc.

Secondly, however, seed [belongs to the constant capital expended for the production of raw materials]. Vegetative materials and animals reproduce themselves. Vegetation and generation. By seed we mean actual seed, and in addition fodder which reverts to the land as dung, pedigree cattle, etc. This large part of the annual product—or of the constant part of the annual product—itself serves directly as material for regeneration, it reproduces itself.

Non-vegetative raw materials. Metals, stones, etc. Their value consists of only two parts, since here there is no seed—which represents the raw materials of agriculture. Their value consists only of added labour and machinery consumed (including the means of consumption for the machinery). In addition therefore to the part of the product which represents newly-added labour and is hence included in the exchange of B for the two-thirds of A, there is nothing to be replaced but the wear and tear of the fixed capital and its means of consumption (such as coal, oil, etc.). But these raw materials form the principal component part of the constant capital, of the fixed capital (machinery and instruments of labour, buildings, etc.). They therefore replace their constant capital in kind by the exchange [of capital against capital].

||388| Secondly, the fixed capital (machinery, buildings, instruments of labour, containers of all kinds).

Their constant capital consists of: (1) their raw materials, metals, stones, vegetative raw materials such as timber, leather belting, rope, etc. But though these raw materials form the raw material for them, they themselves enter as instruments of labour into the production of these raw materials. Hence they replace themselves in kind. The iron producer has to replace machinery, the machine builder iron. In quarrying there is wear and tear of machinery, but in factory buildings there is wear and tear of building stone, etc. (2) The wear and tear of machine—building machinery, which within a certain period has to be replaced by a new product of the same kind. But the product of the same kind can, of course, replace itself. (3) The means of consumption for the machine (auxiliary materials). Machinery consumes coal, but coal consumes machinery, and so on. In the form of containers, tubes, pipes, etc., machinery of all kinds enters into the production of the means of consumption for machinery, as in the case of tallow, soap, gas (for lighting). Therefore also in these cases the products of these spheres enter reciprocally into each other’s constant capital, and consequently replace each other in kind.

If beasts of burden are included among machines, what has to be replaced in their case is fodder and in certain conditions stabling (buildings). But if fodder enters into the production of cattle, so do cattle into the production of fodder.

In the third place, auxiliary materials. Some of these require raw materials, like oil, soap, tallow, gas, etc. On the other hand, in the form of fertilisers, etc., they in turn enter in part into the production of these raw materials. Coal is required for making gas, but gas lighting is used in producing coal, etc. Other auxiliary materials consist only of labour added and fixed capital (machinery, containers, etc.). Coal must replace the wear and tear of the steam-engine used to produce it. But the steam-engine consumes coal. Coal itself enters into the means of production of coal. Thus it replaces itself in kind. Transport by rail enters into the production costs of coal, but coal in turn enters into the production costs of the locomotive.

Later on, there is something special to be added about chemical factories, all of which in greater or smaller degree produce auxiliary materials, such as the raw material of containers (for example, glass, porcelain), as well as articles which enter directly into consumption.

All colouring materials are auxiliary materials. But they enter into the product not only as to their value, as for example coal consumed enters into cotton; but they reproduce themselves in the form of the product (its colours).

Auxiliary materials are either means of consumption for machinery —in this case either fuel for the prime mover, or means of reducing the friction of the operating machinery, such as tallow, soap, oil, etc.—or they are auxiliary materials for buildings, like cement, etc. Or they are auxiliary materials for carrying on the production process in general, such as lighting, heating, etc. (in this case they are auxiliary materials required by the labourers themselves to enable them to work).

Or they are auxiliary materials which enter into the formation of the raw materials as do all types of fertilisers and all chemical products consumed by the raw materials.

Or they are auxiliary materials which enter into the finished product—colouring matter, polishing materials, and so on.

----------------

The result is therefore:

A replaces his own constant capital, [equal to] two-thirds [of the product], by exchange with that part of B’s unconsumable product which represents B ‘s revenue—that is, the labour added in category B during the year. But A does not replace B’s constant capital. B for his part must replace this constant capital in kind by new products of the same sort. But B has no labour-time over to replace them with. For all the new labour-time added by him forms his revenue, and is therefore represented by the part of B’s product which enters as constant capital into A. How then is B’s constant capital replaced?

Partly by his own reproduction (vegetative or animal), as in all agriculture and stock-raising; partly by exchange in kind of parts of one constant capital for parts of another constant capital, because the product of one sphere enters as raw material or means of production into the other sphere, and vice versa; that is, because the products of the various spheres of production, the ||389| various sorts of constant capital, enter reciprocally in kind into each other’s sphere as conditions of production.

The producers of unconsumable products are the producers of constant capital for the producers of consumable products. But at the same time their products serve them reciprocally as elements or factors of their own constant capital. That is to say, they consume each other’s products industrially.

The whole product A is consumed. Therefore also the whole of the constant capital it contains. The producers of A consume one-third of A, the producers of the unconsumable products B consume two-thirds of A. A’s constant capital is replaced by the products of B which form B’s revenue. This is in fact the only part of the constant capital that is replaced by newly-added labour; and it is replaced by it because the quantity of products B that is the newly-added labour in B, is not consumed by B, but on the contrary is industrially consumed by A, while B consumes individually the two-thirds of A.

Let A be equal to 3 days’ labour; his constant capital, on our assumption, is equal to 2 days’ labour. B replaces the product of two-thirds of A, and so supplies unconsumable products equal to 2 days’ labour. Now 3 days’ labour have been consumed, and 2 are left. In other words, the 2 days of past labour in A are replaced by 2 days of newly-added labour in B, but only because the 2 days of newly-added labour in B consume their value in A and not in product B itself.

B’s constant capital, in so far as it has entered into the total product B, must likewise be replaced in kind by new products of the same sort—that is, by products which are required for industrial consumption by B. But it is not replaced by new labour-time, although it is replaced by the products of the labour-time newly applied during the year.

Let the whole constant capital in B’s total product be two-thirds. Then if the newly-added labour (equal to the total wages and profit) is 1, the past labour which served it as material and means of labour is equal to 2. How then are these 2 replaced? The proportion of constant and variable capital may vary considerably within the various spheres of production of B. But on our assumption the average is as ¹/₃ : ²/₃, or 1 : 2. Each of the producers of B is now Laced by two-thirds of his product, such as coal, iron, flax, machinery, cattle, wheat (i.e., the part of his cattle and wheat that does not enter into consumption), etc.; whose elements of production must be replaced, or which must be reconverted into the natural form of their elements of production. But all these products themselves re-enter industrial consumption. The wheat (as seed) is in turn also its own raw material, and a part of the cattle produced replaces what has been consumed, that is, itself. In these spheres of production of B (agriculture and stock-raising) this part of their product therefore replaces their own constant capital in its natural form. A part of this product, therefore, does not go into circulation (at least need not go into circulation, and can only do so in a formal sense). Others of these products, such as flax, hemp, etc., coal, iron, timber, machinery, in part enter into their own production as means of production, in the same way as seed in agriculture: for example, coal in the production of coal, and machinery in the production of machinery. A part of the product consisting of machinery and coal, and in fact a part of that part of this product which represents its constant capital, thus replaces itself and merely changes its place in the process of production. It changes from a product into its own means of production.

Another part of these and of other products reciprocally enter into each other as elements of production—machinery into iron and timber, timber and iron into machinery, oil into machinery and machinery into oil, coal into iron, iron (tram-rails, etc.) into coal, and so on. In so far as the two-thirds of these products of B are not self-replacing in this way—that is, do not come back in their natural form into their own productions so that a part of B is directly consumed industrially by its own producers, just as a part of A is directly consumed individually by its own producers—the products of the producers of B replace each other reciprocally as means of production. The product of a goes into b’s industrial consumption and the product of b into a’s industrial consumption; or in a roundabout way, a’s product into b’s industrial consumption, b’s product into that of c, and that of c into that of a. What therefore is consumed as constant capital in one of B’s spheres of production is newly produced in another; but what is consumed in the latter is produced in the former. What in one sphere passes from the form of machinery and coal into the form of iron, passes in the other from the form of iron and coal into machinery, and so on.

||390| What has to be done is to replace B’s constant capital in its natural form. If we consider B’s total product, it represents the entire constant capital in all its natural forms. And where the product of one particular sphere of B cannot replace its own constant capital in kind, purchase and sale, a change of hands, puts everything here in its proper place again.

Here, therefore, there is replacement of constant capital by constant capital; in so far as this does not occur directly and without exchange, here therefore there is exchange of capital for capital, that is, of products for products on the basis of their use-value; the products enter reciprocally into their respective production processes, so that each of them is industrially consumed by the producers of the other.

This part of the capital consists neither of profit nor of wages. It contains no newly-added labour. It is not exchanged against revenue. It is neither directly nor indirectly paid for by consumers. It makes no difference whether this reciprocal replacement of capitals is carried through with the aid of merchants (that is, by merchant’s capitals) or not.

But since these products are new (machinery, iron, coal, timber, etc., which reciprocally replace each other), since they are the products of the last year’s labour—thus the wheat which serves as seed is just as much a product of new labour as the wheat which passes into consumption, etc.—how can it be said that no newly-added labour is contained in these products? And moreover isn’t their form striking evidence to the contrary? Even if not in the case of wheat or cattle, surely in the case of a machine its form bears witness to the labour which has transformed it from iron, etc., into a machine, and so forth.

This problem has been solved earlier, It is not necessary to go into it here again.

<Adam Smith’s statement that the trade between dealers and dealers must be equal to the trade between dealers and consumers (by which he means direct, not industrial, consumers, since he himself includes industrial consumers among dealers) is therefore wrong. It is based on his false assertion that the whole product consists of revenue, and in fact only means that the part of the exchange of commodities which is equal to the exchange between capital and revenue is equal to the total exchange of commodities. As the assertion is wrong, the practical applications Tooke made of it for the circulation of money are also wrong (especially the relation between the quantity of money circulating between dealers and the quantity of money circulating between dealers and consumers).

Let us take as the final dealer confronting the consumer the merchant who buys the product of A; this product is bought from him by the revenue of A, equal to one-third of A, and by the revenue of B, equal to two-thirds of A. These replace his merchant’s capital for him. The total of their revenues must cover his capital. (The profit which the rascal makes must be accounted for by his retaining a part of A for himself, and selling a smaller part of A for the value of A. Whether the rascal is thought of as a necessary agent of production or as a sybaritic intermediary does not in any way alter the case.) This exchange between dealer in A and consumer of A covers in value the exchange between the dealer in A and all the producers of A, and consequently all dealings between these producers among themselves.

The merchant buys the linen. This is the last dealing between dealer and dealers. The linen weaver buys yarn, machinery, coal, etc. This is the last but one dealing between dealer and dealers. The spinner buys flax, machinery, coal, etc. This is the last dealing but two between dealer and dealers. The flax-grower and machine builder buy iron, machines, etc., and so on. But the dealings between the producers of flax, machinery, iron, coal, [which are carried out] to replace their constant capital, and the value of these dealings, do not enter into the dealings which A’s product passes through, whether as the exchange of revenue for revenue, or as the exchange of revenue for constant capital. These dealings—not those between the producers of B and the producers of A, but those between the producers of B— have not to be replaced by the buyer of A to the seller of A, any more than the value of this part of B enters into the value of A. These dealings too require money, and are carried out through merchants. But the part of the circulation of money which exclusively belongs to this sphere is completely separate from that between dealers and consumers.>

||391| Two questions are still to be solved:

1. In our investigation up to now wages have been treated as revenue, without being distinguished from profit. How far in this connection have we to take account of the fact that wages are at the same time part of the circulating capital of the capitalist?

2. Up to now it has been assumed that the total revenue is spent as revenue. The alteration that comes in when a part of the revenue, of the profit, is capitalised, has therefore to be considered. This in fact comes up in the examination of the process of accumulation—but not in its formal aspect. That a part of the product which represents surplus-value is reconverted, partly into wages and partly into constant capital, presents no difficulty. Here we have to examine how this affects the exchange of commodities under the headings previously considered—under which it can be examined in relation for its holders, that is to say, as exchange of revenue for revenue, exchange of revenue for capital, or finally, exchange of capital for capital.}

[11.] Ferrier [Protectionist Character of Ferrier’s Polemics against Smith’s Theory of Productive Labour and the Accumulation of Capital, Smith’s Confusion on the Question of Accumulation, The Vulgar Element in Smith’s View of “Productive Labourers”]

Ferrier (François-Louis-Auguste) (Sub-inspector of Customs): Du Gouvernement considéré dans ses rapports avec le commerce, Paris, 1805. (This was the main source for Friedrich List.) This fellow eulogises the Bonapartist system of prohibitions, etc. In fact the Government (therefore also State officials —those unproductive labourers) is in his view important, as a manager directly intervening in production. This customs officer is consequently extremely angry with Adam Smith for calling State officials unproductive.

“The principles which Smith has laid down in regard to the economy of nations have as their basis a distinction in labour, which he calls productive or unproductive …”

“This distinction is in essence false. There is no unproductive labour” (p. 141). “There is therefore economy and prodigality on the part of nations; but a nation is only prodigal or economic in its relations with other peoples, and it is from this standpoint that the question should be considered” (l.c., p. 143).

In a moment we shall quote for comparison the context of the passage from Adam Smith which Ferrier regards with such abomination.

“There is an economy on the part of nations, hut it is very different from what Smith recommends…, It consists in not buying foreign products except in so far as a nation can pay for them with its own, It consists sometimes in doing without them altogether” (l.c., pp. 174-75).

<Book I, Chapter VI, (t. I, éd. Garnier, pp. 108-09) Adam Smith says at the end of this chapter which deals with the component parts of the price of commodities:

“As in a civilised country there are but few commodities of which the exchangeable value arises from labour only, rent and profit contributing largely to that of the far greater part of them, so the annual produce of its labour will always be sufficient to purchase or command a much greater quantity of labour than what was employed in raising, preparing, and bringing that pro duce to market. 1f the society were annually to employ all the labour which it can annually purchase, as the quantity of labour would increase greatly every year, so the produce of every succeeding year would be of vastly greater value than that of the foregoing. But there is no country in which the whole annual produce is employed in maintaining the industrious. The idle everywhere consume a great part of it; and, according to the different proportions in which it is annually divided between those two different orders of people, its ordinary or average value must either annually increase or diminish, or continue the same from one year to another” [Smith, Wealth of Nations, O.U.P. edition, Vol. 1, pp. 59-60].

There is confusion of all kinds in this passage, in which Smith is in fact trying to solve the problem of accumulation.

First, once again there is the wrong assumption that the “exchangeable value” of the annual product of labour, and so also “the annual produce of labour”, resolves itself into wages and profits (including rents). We will not deal again with this nonsense. We only observe: the amount of the annual product—or of the funds, the stocks of commodities which are the annual product of labour—consists for the most part ||392| of commodities in kind which can only enter as elements into constant capital <raw materials, seed, machinery, etc.>, which can only be consumed industrially. The very use-value of these commodities (and they form the larger part of the commodities entering into constant capital) shows that they are not suitable for individual consumption; that therefore revenue cannot be expended on them, whether it is wages, profit or rent. A part of the raw materials (in so far as it is not required for the reproduction of raw materials themselves, or in so far as it does not enter into the fixed capital as auxiliary material or directly as a component part) will, it is true, later on be given a consumable form, but only through the labour of the current year. As a product of the previous year’s labour these raw materials themselves form no part of revenue. It is only the consumable part of the product that can be consumed, can enter into individual consumption and thus form revenue. But even a part of the consumable product cannot be consumed without making reproduction impossible. One part even of the consumable part of commodities therefore must be deducted which must be consumed industrially, that is, it must serve as material of labour, as seed, etc., not as means of subsistence, whether for labourers or for capitalists. This part of the product therefore has first to be deducted from Adam Smith’s calculation—or rather has to be added to it. If the productivity of labour remains the same, then this part of the product which does not consist of revenue remains the same from year to year; provided that, with the productivity of labour remaining the same, the same quantity of labour-time as before is employed.

On the assumption therefore that a greater quantity of labour than before is used each year, we have to see what happens to the constant capital. In short: in order to employ a greater quantity of labour, it is not enough either that a greater quantity of labour should be available, or that a greater quantity should be paid for, that is, more should be spent in wages; but the means of labour—raw material and fixed capital—must also be there in order to absorb a greater quantity of labour. Hence this point is still to be discussed after the points raised by Adam Smith have been cleared up.

So then, once more [we take] his first sentence:

“As in a civilised country there are but few commodities of which the exchangeable value arises from labour only, rent and profit contributing largely to that of the far greater part of them, so the annual produce of its labour will always he sufficient to purchase or command a much greater quantity of labour than what was employed in raising, preparing, and bringing that produce to market” (in other words, to produce it).

Here different things are obviously mixed up. Not only living labour, living labour employed during the current year, enters into the exchangeable value of the total annual product, but also past labour, product of the labour of past years. Not only labour in living form, but labour in materialised form. The exchangeable value of the product is equal to the total labour-time which it contains, a part of which consisted of living labour and a part of materialised labour.

Let the proportion of the former to the latter be as ¹/₃ : ²/₃ or 1 : 2. Then the value of the total product is equal to 3, of which 2 are materialised labour-time and 1 living labour-time. The value of the total product can therefore buy more living labour than is contained in it, on the assumption that materialised labour and living labour exchanged for each other as equivalents, that a definite quantity of materialised labour commanded only a quantity of living labour equal to itself. For the product is equal to 3 days’ labour; but the living labour-time contained in it is only equal to 1 day’s labour. 1 day’s living labour sufficed to produce the product (in fact, only to give the final form to its elements). But 3 days’ labour is contained in it. Therefore if it was exchanged entirely against living labour-time, if it was employed only “to purchase or command” quantities of living labour, it would be able to command, to purchase, 3 days’ labour.

This however is evidently not what Adam Smith has in mind, and would be a quite useless premise for him. What he means is that a large part of the exchangeable value of the product does not resolve itself (or as he wrongly expresses it, because of a confusion of ideas noted earlier) into wages but into profits and rents, or, as we will say to simplify things, into profits. In other words, the part of the value of the product which is equal to the quantity of labour added during the last year—thus in fact the part of the product which in the proper meaning of the word is the product of last year’s labour—pays first the labourers and secondly enters into the capitalist’s revenue, his fund for consumption. This whole part of the total product arises from labour, and indeed exclusively from labour; but it consists of paid and unpaid labour. The wages are equal to the total of the paid labour, the profits ||393| to the total of the unpaid labour. If therefore this total product was expended in wages, it could naturally set in motion a greater quantity of labour than that of which it was the product; and in fact the proportion in which the product can set in motion more labour-time than it itself contains depends exactly on the proportion in which the working-day is divided into paid and unpaid labour-time.

Let us assume that the proportion is such that the labourer produces or reproduces his wages in 6 hours, that is, in half a day. Then the other 6 hours or the other half day forms the surplus. Thus for example of a product which contained 100 days’ labour [newly-added labour], equal to £50 (when the day’s labour is equal to 10s., making 100 days’ labour equal to 1,000s., or £50), there would be £25 for wages and £25 for profit (rent). With the £25—equal to 50 days’ labour—l00 labourers would have been paid, who would have worked precisely half their labour-time for nothing or for their masters. If therefore the whole product (of the 100 days’ labour) were to be expended in wages, then 200 labourers could be set in motion with the £50, each of whom would receive as wages 5s. or half the product of his labour as before. The product of this labour would be equal to £100 (that is, 200 days’ labour, equal to 2,000s., or £100), with which 400 labourers (5s. the labourer, making 2,000s.) could be set in motion, whose product would be equal to £200, and so on.

And this is what Adam Smith means by saying that “the annual produce of labour” will always be sufficient “to purchase or command a much greater quantity of labour” than what was employed to produce the product. (If the labourer were paid the whole product of his labour, that is, £50 for 100 days’ labour, then the £50 too could only set in motion 100 days’ labour.) And so Smith goes on to say:

“if the society were annually to employ all the labour which it can annually purchase, as the quantity of labour would increase greatly every year, so the produce of every succeeding year would be of vastly greater value than that of the foregoing.”

A part of this product however is consumed by the owners of profit and rent; a part by their parasites. The part of the product that can be expended again in (productive) labour is consequently determined by the part of the product which the capitalists, landlords and their parasites (that is the unproductive labourers) do not themselves consume.

But nevertheless there is always a new fund (a new fund of wages) to set in motion, with the previous year’s product, a greater quantity of labourers in the current year. And as the value of the annual product is determined by the quantity of labour-time employed, the value of the annual product will grow each year.

Of course it would be of no use to have the fund “to purchase or command” a “much greater quantity of labour” than in the previous year unless a greater quantity of labour was on the market. It is of no use to me to have more money to buy a commodity, unless more of this commodity is on the market. Let us assume that the £50 set in motion, instead of the 100 as before (who received £25), not 200 but only 150 labourers, while the capitalists themselves consumed £12.l0s. instead of £25. The 150 labourers ([receiving] £37.l0s.) would perform 150 days’ labour, equal to 1,500s. or £75. But if the quantity of labourers available were, as before, only 100, instead of £25 as before, they would receive £37.l0s, as wages, though their product [would amount to I only £50 as before. Thus the revenue of the capitalist would have fallen from £25 to £l2.l0s., because wages had risen by 50 per cent. Adam Smith knows, however, that an increasing quantity of labour will be available. Partly [due to] the annual increase of the population (though this is supposed to be provided for in the old wages), partly unemployed paupers, or half-employed labourers, etc. Then the large numbers of unproductive labourers, part of whom can be transformed into productive labourers by a different way of using the surplus-produce. Finally the same number of labourers can perform a greater quantity of labour. And whether I pay 125 labourers instead of 100, or whether the 100 work 15 hours a day instead of 12, would be quite the same thing.

It is incidentally an error of Adam Smith’s—directly connected with his analysis of the total product into revenue—to say that with the increase of the productive capital—or with the growth of the part of the annual product which is destined for reproduction—the labour employed (the living labour, the part of capital expended in wages) must increase in the same proportion.

||394| Thus first Adam Smith has a fund of consumable means of subsistence, which can “purchase or command” a greater quantity of labour this year than the foregoing year; he has more labour; and at the same time more means of subsistence for this labour. Now we must see how this additional quantity of labour is to be realised.>

Had Adam Smith adhered with full consciousness to the analysis of surplus-value which in substance is to be found in his work—which is created only in the exchange of capital against wage-labour—it would have followed that productive labour is only that which is exchanged against capital: never labour which is exchanged with revenue as such. In order for revenue to be exchanged against productive labour, it must first be transformed into capital.

But taking as his starting-point one aspect of the traditional view—that productive labour is labour which directly produces material wealth of any kind—and at the same time combining with this his distinction in so far as it is based on the exchange of either capital for labour or of revenue for labour, with Smith the following became possible: The kind of labour for which capital is exchanged is always productive (it always creates material wealth, etc.). The kind of labour which is exchanged for revenue may be productive or it may not; but the spender of revenue as a rule prefers to set in motion directly unproductive labour rather than productive. One can see how Adam Smith, by this compound of his two distinctions, very much weakens and blunts the principal distinction.

The following quotation shows that Adam Smith does not take the fixation of labour in a purely external sense; among the various component parts of the fixed capital is enumerated:

“Fourthly, of the acquired and useful abilities of all the inhabitants and members of the society. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realised, as it were, in his person. Those talents, as they make a part of his fortune, so do they likewise that of the society to which he be Longs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit” ([Wealth of Nations, O.U.P, edition, Vol. I, p. 308], [Garnier], l.c., t. II, ch, I, pp. 204-05).

The strange origin of accumulation and its necessity:

“In that rude state of society, in which there is no division of labour, in which exchanges are seldom made, and in which every man provides every thing for himself, it is not necessary that any stock should be accumulated, or stored up beforehand, in order to carry on the business of the society” (that is, after assuming that there is no society). “Every man endeavours to supply, by his own industry, his own occasional wants, as they occur. When he is hungry, he goes to the forest to hunt”—and so on ([ibid., p.301], [Garnier], l.c., t, II, pp. 191-92) (l. II, Introduction). “But when the division of labour has once been thoroughly introduced, the produce of a man’s own labour can supply but a vary small part of his occasional wants. The far greater part of them are supplied by the produce of other men’s labour, [which he purchases with the produce ], or, what is the same thing, the price of the produce of his own, But this purchase cannot be made till such time as the produce of his own labour has not only been completed, but sold.”

(Even in the first case he could not eat the hare before he had killed it, and he could not kill it before he had produced for himself the classical “bow” or something similar. The only thing that seems to be added in case II is therefore not the necessity of a stock of any sort, but the “time… to sell the produce of his labour”.)

“A stock of goods of different kinds, therefore, must be stored up somewhere, sufficient to maintain him, and to supply him with the materials and tools of his work, till such time at least as both these events can be brought about. A weaver cannot apply himself entirely to his peculiar business, unless there is beforehand stored up somewhere, either in his own possession, or in that of some other persons, a stock sufficient to maintain him, and to supply him with the materials and tools of his work, till he has not only completed, but sold his web. This accumulation must evidently be previous to his applying his industry for so long a time to such a peculiar business, … The accumulation of s t o c k must, in the nature of things, be previous to the division of labour…” ([ibid., pp. 301-02], [Garnier], l.c., pp. 192-93).

(On the other hand, according to what he has stated at the beginning, it appears that no accumulation of capital takes place before the division of labour, just as there is no division of labour before the accumulation of capital.)

He continues:

“… Labour can be more and more subdivided in proportion only as stock is previously more and more accumulated. The quantity of materials which the same number of people can work up, increases in a great proportion as labour comes to be more and more subdivided; and as the operations of each workman are gradually reduced to a greater degree of simplicity, a variety of new machines come to be invented for facilitating and ||395| abridging those operations. As the division of labour advances, therefore, in order to give constant employment to an equal number of workmen, an equal stock of provisions, and a greater stock of materials and tools than what would have been necessary in a ruder state of things, must be accumulated be forehand”, ([ibid., p. 302], [Garnier], l.c., pp. 193-94). “As the accumulation of stock is previously necessary for carrying on this great improvement in the productive powers of labour, so that accumulation naturally leads to this improvement. The person who employs his stock in maintaining labour, necessarily wishes to employ it in such a manner as to produce as great a quantity of work as possible. He endeavours, therefore, both to make among his workmen the most proper distribution of employment, and to furnish them with the best machines which he can either invent or afford to purchase. His abilities, in both these respects, are generally in proportion to the extent of his stock, or to the number of people whom it can employ. The quantity of industry, therefore, not only increases in every country with the increase of the stock which employs it, but, in consequence of that increase, the same quantity of industry produces a much greater quantity of work” ( [ibid., pp. 302-03], [Garnier], l.c., pp. 194-95).

Adam Smith treats the objects which are already in the fund for consumption in exactly the same way as productive and unproductive labour. For instance:

“A dwelling-house, as such, contributes nothing to the revenue of its inhabitant; and though it is, no doubt, extremely useful to him, it is as his clothes and household furniture are useful to him, which, however, make a part of his expense, and not of his revenue” ( [ibid., pp. 306-07 ], [Garnier], l.c., t. 11, pp. 201-02). On the other hand, fixed capital includes “all those profitable buildings which are the means of procuring a revenue, not only to their proprietor who lets them for a rent, but to the person who possesses them, and pays that rent for them; such as shops, warehouses, workhouses, farm-houses, with all their necessary buildings, stables, granaries, etc, These are very different from mere dwelling-houses. They are a sort of instruments of trade… “ ( [ibid., p. 308 ], [Garnier], l.c., t. II, pp. 203-04).

“… All such improvements in mechanics, as enable the same number of workmen to perform an equal quantity of work with cheaper and simpler machinery than had been usual before, are always regarded as advantageous to every society. A certain quantity of materials, and the labour of a certain number of workmen, which had before been employed in supporting a more complex and expensive machinery, can afterwards be applied to augment the quantity of work which that or any other machinery is useful only for performing” ( [ibid., p. 315 ], [Garnier], l.c., t, II, pp. 216-17).

“… The whole expense of maintaining the fixed capital is … necessarily excluded from the neat revenue of the society” ( [ibid., p. 316 ], [Garnier], l.c., t, II, p. 218). “Every saving, therefore, in the expense of maintaining the fixed capital, which does not diminish the productive powers of labour, must increase the fund which puts industry into motion, and consequently the annual produce of land and labour, the real revenue of every society” ( [ibid., p. 321 ], [Garnier ], l.c., t. II, pp. 226-27).

Gold and silver money forced to go abroad by bank-notes and by paper money in general—if spent “in purchasing foreign goods for home consumption”—buys either luxury products such as foreign wines, foreign silks, etc., in a word, “goods … likely to be consumed by idle people, who produce nothing… or .., they may purchase on additional stock of materials, toots, and provisions, in order to maintain and employ an additional number of industrious people, who reproduce, with a profit, the value of their annual consumption” ([ibid., p. 324], [Garnier], l.c., t. II, pp. 231-32).

The first manner of employment, says Smith, promotes prodigality, “increases expense and consumption, without increasing production, or establishing any permanent fund for supporting that expense, and is in every respect hurtful to the society” ([ibid., p. 324], [Garnier], l.c., t. II, p. 232). On the other hand “employed in the second way, it promotes industry; and though it increases the consumption of the society, it provides a permanent fund for supporting that consumption; the people who consume reproducing, with a profit, the whole value of their annual consumption” ( [ibid., p. 324], [Garnier], l.c., t, II, p. 232).

“The quantity of industry which any capital can employ, must evidently be equal to the number of workmen whom it can supply with materials, tools, and a maintenance suitable to the nature of the work” ( [ibid., p.326], [Garnier], l.c., t, II, p. 235).

||396| In Chapter III of Book II (l.c., t. II, p. 314 sqq.) [we find]:

“Both productive and unproductive labourers, and those who do not labour at all, are all equally maintained by the annual produce of the land and labour of the country. This produce … must have certain limits. According, therefore, as a smaller or greater proportion of it is in any one year employed in maintaining unproductive hands, the more in the one case, and the less in the other, will remain for the productive, and the next year’s produce will be greater or smaller accordingly…

“Though the whole annual produce of the land and labour of every country is … ultimately destined for supplying the consumption of its inhabitants, and for procuring a revenue to them; yet when it first comes either from the ground, or from the hands of the productive labourers, it naturally divides itself into two parts. One of them, and frequently the largest, is, in the first place, destined for replacing a capital, or for renewing the p r o v i s i o n s, materials, and finished work, which had been withdrawn from a capital; the other for constituting a revenue either to the owner of this capital, as the profit of his stock, or to some other person, as the rent of his land…

“That part of the annual produce of the land and labour of any country which replaces a capital, never is immediately employed to maintain any but productive hands. It pays the wages of productive labour only. That which is immediately destined for constituting a revenue… may maintain indifferently either productive or unproductive hands. …

“Unproductive labourers, and those who do not labour at all, are all maintained by revenue; either, first, by that part of the annual produce which is originally destined for constituting a revenue to some particular persons, either as the rent of land, or as the profits of stock; or, secondly, by the part which, though originally destined for replacing a capital, and for maintaining productive labourers only, yet when it comes into their hands, whatever part of it is over and above their necessary subsistence, may be employed in maintaining indifferently either productive or unproductive hands. Thus … even the common workman, if his wages are considerable, may maintain a menial servant; or he may sometimes go to a play or a puppet-show, and so contribute his share towards maintaining one set of unproductive labourers; or he may pay some taxes, and thus help to maintain another set … equally unproductive, No part of the annual produce, however, which had been originally destined to replace a capital, is ever directed towards maintaining unproductive hands, till after it has put into motion its full complement of productive labour, … The workman must have earned his wages by work done, before he can employ any part of them in this manner,.,, The rent of land and the profits of stock are everywhere… the principal sources from which unproductive hands derive their subsistence, “ These two sorts of revenue “might both maintain indifferently, either productive or unproductive hands. They seem, however, to have some predilection for the latter….

“The proportion, therefore, between the productive and unproductive hands, depends very much in every country upon the proportion between that part of the annual produce, which, as soon as it comes either from the ground, or from the hands of the productive labourers is destined for replacing a capital, and that which is destined for constituting a revenue, either as rent or as profit. This proportion is very different in rich from what it is in poor countries” [Wealth of Nations, O.U.P. edition, Vol. I, pp. 370-73].

[Adam Smith] then contrasts the “very large, frequently the largest, portion of the produce of the land” which “in the opulent countries of Europe […] is destined for replacing the capital of the rich and independent farmer”with “the prevalency of the feudal government”, when “a very small portion of the produce was sufficient to replace the capital employed in cultivation”.

It is the same with commerce and manufactures. Large capitals are now employed in them, formerly very small capitals, but they

“yielded very large profits. The rate of interest was nowhere less than ten per cent, and their profits must have been sufficient to afford this great interest. At present, the rate of interest, in the improved parts of Europe, is nowhere higher than six per cent; and in some of the most improved, it is so low as four, three, and two per cent. Though that part of the revenue of the inhabitants which is derived from the profits of stock, is always much greater in rich than in poor countries, it is because the stock is much greater; in proportion to the stock, the profits are generally much less.

“That part of the annual produce, therefore, which, as soon as it comes either from the ground, or from the hands of the productive labourers, is destined for replacing a capital, ||397| is not only much greater in rich than in poor countries, but bears a much greater proportion to that which is immediately destined for constituting a revenue either as rent or as profit. The funds destined for the maintenance of productive labour are not only much greater in the former than in the latter, but bear a much greater proportion to those which, though they may be employed to maintain either productive or unproductive hands, have generally a predilection for the latter,”

(Smith falls into the error of identifying the size of the productive capital with the size of that part of it which is destined to provide subsistence for productive labour. But in fact large-scale industry, as he knew it, was as yet only in its beginnings.)

“The proportion between those different funds necessarily determines in every country the general character of the inhabitants as to industry or idleness.” Thus he says for example: in English and Dutch manufacturing towns “where the inferior ranks of people are chiefly maintained by the employment of capital, they are in general industrious, sober and thriving”. On the other hand, in “towns which are principally supported by the [constant or occasional] residence of a court, and in which the inferior ranks of people are chiefly maintained by the spending of revenue, they are in general idle, dissolute, and poor; as at Rome, Versailles”,* etc. [ibid., pp. 372-75].

“The proportion between capital and revenue, therefore, seems everywhere to regulate the proportion between industry and idleness. Wherever capital predominates, industry prevails: wherever revenue, idleness. Every increase or diminution of capital, therefore, naturally tends to increase or diminish the real quantity of industry, the number of productive hands, and consequently the exchangeable value of the anneal produce of the land and labour of the country, the real wealth and revenue of all its inhabitants. …

“What is annually saved, is as regularly consumed as what is annually spent, and nearly in the same time, too: but it is consumed by a different set of people.” The first portion “by idle guests and menial servants, who leave nothing behind them in return for their consumption”. The second [portion] “by labourers […] who, reproduce, with a profit, the value of their annual consumption… The consumption is the same, but the consumers are different” [ibid., pp. 377-78].

Hence Smith’s homilies (further on [Garnier], 1, c., t. II, l. II, ch. III, pp. 328-29 sqq.) on the frugal man, who by his annual savings provides something like a public workhouse for an additional number of productive hands, and thus

“establishes, as it were, a perpetual fund for the maintenance of an equal number in all times to come”, while the prodigal diminishes “the funds destined for the employment of productive labour… If the quantity of food and clothing, which were thus” (as a result of the prodigal’s prodigality) “consumed by unproductive, had been distributed among productive hands, they would have reproduced, together with a profit, the full value of their consumption” [ibid., pp. 378-79].

The conclusion of this moral tale is that these (frugality and prodigality) average out among private individuals, that in fact “wisdom” prevails.

“Great nations are never impoverished by private, though they sometimes are by public prodigality and misconduct. The whole, or almost the whole public revenue is, in most countries, employed in maintaining unproductive hands.” [These include] the people of the court, the church, fleets and armies, “who in time of peace produce nothing, and in time of war acquire nothing which can compensate the expense of maintaining them, even while the war lasts. Such people, as they themselves produce nothing, are all maintained by the produce of other men’s labour. When multiplied, therefore, to an unnecessary number, they may in a particular year consume so great a share of this produce, ns not to leave a sufficiency for maintaining the productive labourers, who should reproduce it next year” [ibid., pp. 382-83].

[In] Chapter IV of Book II [Smith writes]:

“The demand for productive labour, by the increase of the funds which are destined for maintaining it, grows every day greater and greater. Labourers easily find ||398| employment; but the owners of capitals find it difficult. To get labourers to employ. Their competition raises the wages of labour, and sinks the profits of stock” ([ibid., p. 395], [Garnier], l.c., t. II, p. 359).

In Chapter V of Book II (p. 369 sqq., t. II) of the “Different Employments of Capitals”, Smith classifies them according as they employ more or less productive labour, and, consequently, raise “the exchange-value” of the annual product. First agriculture. Then manufacture. Then commerce, and finally retail trade. This is the order of precedence in which they set in motion quantities of productive labour. Here too we get a completely new definition of productive labourers:

“The persons whose capitals are employed in any of those four ways, are themselves productive labourers. Their labour, when properly directed, fixes and realises itself in the subject or vendible commodity upon which it is bestowed, and generally adds to its price the value at least of their own maintenance and consumption” ([ibid., p. 404], [Garnier], l.c., p. 374).

(On the whole he sees their productivity in the fact that they put into motion productive labour.)

He says of the farmer:

“No equal capital puts into motion a greater quantity of productive labour than that of the farmer, Not only his labouring servants, but his labouring cattle are productive labourers” [ibid., p. 405.].

So in the end the ox too is a productive labourer.

[12.] Earl of Lauderdale [Apologetic Conception of the Ruling Classes as Representatives of the Most Important Kinds of Productive Labour]

Lauderdale (Earl of): An Inquiry into the Nature and Origin of Public Wealth, etc., [Edinburgh and] London, 1804. (The French translation: Recherches sur la nature et l’origine de la richesse publique etc. par Lagentie de Lavaïsse, Paris, 1808.)

Lauderdale’s apologetic justification of profit will be examined only later on, in Section III. It regards profit as arising from capitals themselves, because they “supplant” labour. They are paid for doing what otherwise, without them, the hand of man would have to do, or could not do at all.

“Now it is apprehended, that in every instance where capital is so employed as to produce a profit, it uniformly arises, either—from its supplanting a portion of labour which would otherwise be performed by the hand of man; or—from its performing a portion of labour, which is beyond the personal exertion of man to accomplish” (French translation, p. 119)* [p. 161].

The “Earl” is a great enemy of Smith’s doctrine of accumulation and saving, Also of his distinction between productive and unproductive labourers; but according to him what Smith calls “productive powers of labour” are only the “productive power of capital”. He flatly denies the derivation of surplus-value put forward by Smith, on the following grounds:

“If this, however, was a just and accurate idea of the profit of capital, it would follow that the profit of stock must be derivative, and not an original source of revenue: and capital could not therefore be considered as a source of wealth, its profit being only a transfer from the pocket of the labourer into that of the proprietor of stock” (l.c., pp. 116-17) [p. 157 ].

It is clear that on these premises he picks on the most superficial points in his polemic against Smith. Thus he says:

“Thus the same labour may appear either productive or unproductive, according to the use subsequently made of the commodity on which it was bestowed. If my cook, for example, makes a tart which I immediately consume, he is considered as an unproductive labourer; and the net of making the tart is unproductive labour: because that service has perished at the moment of its performance: but if the same labour is performed in a pastry cook’s shop, it becomes productive labour” (l.c., p. 110) [pp. 149-50].

(Garnier has the copyright in this argument, as his edition and notes on Smith appeared in 1802, two years before Lauderdale.)

“This extraordinary distinction, founded on the mere durability of the services performed, classes as unproductive labourers some of those who are occupied in rendering the most important services to society. Thus the sovereign, and all who are employed in the maintenance of religion, the justice, or the defence of the State, as well as those whose skill and care are occupied in superintending the health and education of the society, are alike deemed unproductive Labourers” (l.c., pp. 110-11) [p. 151 ], (Or, as Adam Smith [Garnier trans.] l. II, ch. III, p. 313) presents the elegant sequence: “churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, etc.” [Wealth of Nations, O.U.P, edition, Vol. I, p. 370 ].)

“If exchangeable value is to be considered as the basis of wealth,—it is needless to use much argument to explain the errors of this doctrine. ||399| The practice of mankind, in estimating these services, if we can judge by what is paid for them, bears sufficient testimony of its inaccuracy” ( [Lauderdale ], l.c., p. 111) [pp. 151-52].

Further: “The labour of the manufacturer fixes and realises itself in some vendible commodity… Neither the labour performed by the menial servant, nor that of which the necessity is supplanted by circulating capital,” < by this he means money> “do naturally stock, or store themselves up in such a manner as to be transferred from one to another for a defined value. The profit of the one and the other alike arises from saving the labour of the owner or master. The similarity is indeed such that it is natural to suppose the same circumstances which led the one to be deemed unproductive, would naturally create the same impression with relation to the other.” > And thereupon he quotes Smith, Book II, Chapter II, > (Lauderdale, l.c., pp. 144-45) [pp. 195-97].

***

Thus we would have the succession: Ferrier, Garnier, Lauderdale, Ganilh. The latter phrase about the “saving of labour” is particularly hard ridden by Tocqueville.

[13. Say’s Conception of “Immaterial Products”. Vindication of an Unrestrained Growth of Unproductive Labour]

Notes

Show the following:

Adjust appearance:

***

***