For the analysis now following we can ignore the distinction between value and price of production, since this disappears whenever we are concerned with the value of labour’s total annual product, i.e. the value of the product of the total social capital.
Profit (profit of enterprise plus interest) and rent are nothing more than characteristic forms assumed by particular portions of the surplus-value in commodities. The size of the surplus-value sets a quantitative limit for the parts it can be broken down into. Average profit plus rent is therefore equal to surplus-value. It is possible for a part of the surplus labour and hence surplus-value contained in commodities not to go directly into the equalization that gives the average profit, so that a’ part of the value of the commodities is not expressed at all in their price. But firstly, this is compensated for by a rise in the profit rate, if the commodity sold below its value forms an element of constant capital, or else by the expression of profit and rent in a greater product, if this commodity goes into the part of value consumed as revenue, as an article of individual consumption. Secondly, it is cancelled out in the average movement. In any case, even if a portion of surplus-value not expressed in the price of the commodity is omitted from the price formation process, the sum of average profit plus rent can in its normal form never be greater than the total surplus-value, though it can be less. This normal form assumes a wage corresponding to the value of labour-power. Thus even monopoly rent, in so far as it is not a deduction from wages and does not form a special category, must always indirectly form part of surplus-value. Even if it is not a part of the excess price over and above the production costs of the actual commodity of which it itself forms a component, as in the case of differential rent, or an excess part of the surplus-value in the commodity of which it forms a component over and above its own portion of surplus-value as measured by the average profit (as in the case of absolute rent), it is still a part of the surplus-value of other commodities, i.e. those which are exchanged against this commodity with a monopoly price.
The sum of average profit plus ground-rent can never be greater than the quantity of which these are parts, and this is already given before the division. Whether the entire surplus-value of the commodities, i.e. all the surplus labour they contain, is realized in their price or not is therefore immaterial as far as we are concerned here. In actual fact the surplus-value is not completely realized, for since the amounts of socially necessary labour required for the production of a given commodity are constantly changing owing to the constant changes in productivity of labour, one section of commodities are always produced under abnormal conditions and must therefore be sold below their individual value. At all events profit plus rent equals the entire realized surplus-value (surplus labour), and for our present purpose the realized surplus-value can be equated with the total surplus-value; for profit and rent are realized surplus-value, i.e. the total surplus-value that goes into the prices of commodities, and thus for practical purposes all the surplus-value that forms a component of this price.
Wages, on the other hand, which form the third characteristic form of revenue, are always equal to the variable component of capital, i.e. the component that is laid out not on means of labour but on the purchase of living labour-power, on the payment of workers. (The labour paid in the expenditure of revenue is itself paid for from wages, profit or rent, and thus does not form any portion of the value of those commodities with which it is paid. So it does not come into consideration for the analysis of commodity value and the components into which this breaks down.) It is the objectification of that portion of the workers’ total working day in which the value of variable capital and hence the price of labour is reproduced; the portion of commodity value in which the worker reproduces the value of his own labour-power or the price of his labour. The worker’s total working day is divisible into two parts. One part is that in which he performs the quantum of labour needed to reproduce the value of his own means of subsistence: the paid part of his total labour, which is the part necessary for his own maintenance and reproduction. The entire remaining part of the working day, the entire excess quantum of labour he performs beyond the labour realized in the value of his wages, is surplus labour, unpaid labour, which is represented in the surplus-value of his total commodity production (and thus in an excess quantity of commodities), surplus-value which is divisible in turn into differently named portions, profit (profit of enterprise plus interest) and rent.
The total portion of commodity value, therefore, in which the total labour that the worker adds during a day or a year is realized, the total value of the annual product that this labour creates, breaks down into the value of wages, profit and rent. For this total labour breaks down into necessary labour, by which the worker creates the portion of the product’s value with which he is paid himself, i.e. wages, and unpaid surplus labour, by which he creates the portion of the product’s value that represents surplus-value and that subsequently divides into profit and rent. Besides this labour, the worker performs no other, and besides the total value of the product, which assumes the forms of wages, profit and rent, he creates no other value. The value of the annual product in which the labour he has newly added during the year is represented is equal to wages or the value of the variable capital, plus surplus-value, which breaks down again into the forms of profit and rent.
Thus the total portion of the annual product’s value which the worker creates in the course of the year is expressed in the annual sum of value of the three revenues, the value of wages, profit and rent. It is evident, therefore, that the value of the constant portion of capital is not reproduced in the annually created product-value, for wages are equal simply to the variable portion of capital advanced in production, while rent and profit are equal to the surplus-value, the excess value produced over and above the total value of the capital advanced, i.e. the value of the constant capital plus the value of the variable capital.
It is completely immaterial for the problem to be solved here that one part of the surplus-value which has been transformed into the form of profit and rent is not consumed as revenue but serves for accumulation. The part of this that is saved as an accumulation fund serves towards forming new, additional capital, but not towards replacing the old capital, whether the component of the old capital laid out on labour-power or that laid out on means of labour. For simplicity’s sake, therefore, it can be assumed that the revenues go completely into individual consumption. A double problem arises here. On the one hand, the value of the annual product in which these revenues – wages, profit, rent – are consumed contains in it a portion of value equal to the value of the constant portion of capital that has gone into it. It contains this portion of value on top of the portion of value reducible to wages and the portion reducible to profit and rent. Its value therefore = wages + profit + rent + C, with C standing for the constant portion of its value. How then is the value annually produced, which is simply wages + profit + rent, to buy a product whose value is (wages + profit + rent) + C? How can the value annually produced buy a product that has a higher value than it has itself?
If on the other hand we ignore the portion of constant capital which has not gone into the product and so continues to exist after the annual commodity production, though with a reduced value; if we thus abstract for the time being from the fixed capital that is applied but not consumed, then the constant capital advanced in the form of raw and ancillary materials has gone completely into the new product, while one part of the means of labour has been completely used up, and another partly used up, only part of its value having been consumed in production. The part of the constant capital that has been completely used up in production must be replaced in kind. Taking all other factors as unchanged, and particularly the productivity of labour, the same amount of labour is required to replace it as before, i.e. it must be replaced by an equivalent value. But who is to perform this labour, and who does perform it?
As far as the first problem is concerned – who is to pay for the constant portion of value contained in the product, and with what? – it is assumed that the value of the constant capital that has gone into production reappears as a component of the product’s value. This does not contradict the premises of the second problem. For we have already shown in Volume 1, Chapter 7 (‘The Labour Process-and the Valorization Process’) how when new labour is added, even though it does not reproduce the old value but simply makes an addition to it, only creating additional value, the old value is still preserved in the product; and that this happens not by virtue of the value-creating characteristic of labour, i.e. not because it is labour in general, but rather in its function as a specific kind of productive labour. No additional labour was needed, therefore, to perpetuate the value of the constant component in the product on which the revenue, i.e. the total value created during the year, is spent. But additional labour is needed to replace the constant capital consumed during the previous year, in value and in use-value, since without this replacement no reproduction is possible at all.
All newly added labour is expressed in the value newly created in the course of the year, which in turn goes entirely into the three revenues: wages, profit and rent. On the one hand, therefore, there is no excess social labour left over for the replacement of the capital consumed, which has to be reproduced partly both in kind and in value, and partly simply in value (for the mere wear and tear of the fixed capital). On the other hand, the value annually created by labour, which breaks down into the three forms of wages, profit and rent, and is spent in these forms, seems insufficient to pay for or to buy the constant component of capital, which the annual product must contain on top of the value of the revenues.
We can see that the problem posed here was already solved when we dealt with the reproduction of the total social capital, in Volume 2, Part Three. We come back to it here firstly because there surplus-value was not yet developed in its forms of revenue – profit (profit of enterprise plus interest) and rent – and hence could not yet be dealt with in these forms; and secondly because it is precisely in connection with the form of wages, profit and rent that an incredible blunder has run through the analysis of all political economy since Adam Smith.
In Volume 2 we divided all capital into two great classes: department I, which produces means of production, and department II, which produces means of individual consumption. The fact that certain products may serve both for personal satisfaction and as means of production (a horse, corn, etc.) in no way abolishes the absolute validity of this division. It is in no sense a hypothesis, but simply the expression of a fact. Let us take a country’s annual product. One part of this product goes into individual consumption, whatever may be its ability to serve as means of production. It is the product on which wages, profit and rent are spent. This is the product of a specific department of the social capital. It is possible that this same capital also produces products belonging to department I. In as much as it does this, it is not the portion of this capital consumed in the products of department II, in products that really do fall to individual consumption, which provides the productively consumed products falling to department I. This entire product II that goes into individual consumption, and on which revenue is spent, is the existence of the capital consumed in it plus the excess produced. It is thus the product of a capital invested simply in the production of means of consumption. In the same way, department I of the annual product, which serves as means of reproduction, raw material and instruments of labour, whatever capacity this product might otherwise have, by its particular nature, to serve as means of consumption, is the product of a capital invested simply in the production of means of production. By far the greater part of the products that form constant capital exist in a material form in which they cannot go into individual consumption. In as much as they might do so, as a peasant for instance could eat his seed-corn or slaughter his draught ox, the economic barrier facing him makes it exactly the same as if this part did exist in a non-consumable form.
As already said, we abstract in both cases from the fixed part of the constant capital which continues to exist both in kind and in value, independently of the annual product of the two departments.
In department II, on whose products wages, profit and rent are spent, i.e. revenues consumed, the product itself, from the point of view of its value, consists of three components. One component is equal in value to the portion of constant capital consumed in production; a second component is equal in value to the variable portion of capital advanced, that spent on wages; finally, a third component is equal to the surplus-value produced, i.e. profit + rent. The first component of department II’s product, the value of the constant capital, can be consumed neither by the capitalists or workers in department II, nor by the landowners. It forms no part of their revenues but must be replaced in kind, and for this to be done it must be sold. The two other components of this product, on the other hand, are equal to the value of the revenues produced in this department, wages + profit + rent.
In department I, the product formally consists of the same components. But here the part that forms revenue, wages + profit + rent, in other words the variable capital + the surplus-value, is consumed not in the natural form of the products of this department I but rather in the products of department II. The value of the revenues in department I must therefore be consumed in the part of the product of department II that forms the constant capital of II that is to be replaced. The part of department II’s product that has to replace its constant capital is consumed in its natural form by the workers, capitalists and landowners in department I. These spend their revenues on this product II. The product of department I, on the other hand, in so far as it represents the revenue of department II, is productively consumed in its natural form by department II, whose constant capital it replaces in kind. The used-up portion of constant capital in department II, finally, is replaced out of the products of this department itself, which consist precisely of means of labour, raw and ancillary materials, etc., partly by exchange of the capitalists in department I among themselves, and partly by the ability of one section of these capitalists directly to use its own products again as means of production.
Let us take the schema used earlier (Volume 2, Chapter 20, 2) for simple reproduction:
I. 4,000c + 1,000ν + 1,000s = 9,000.
II. 2,000c + 500ν + 500s
In this case, 500c + 500s = 1,000 is consumed in revenue in department II by the producers and landowners there; 2,000c,. remains to be replaced. This is consumed by the workers, capitalists and recipients of rent in department I, their income being 1,000ν + 1,000s = 2,000. The consumed product of department II is consumed as revenue by department I, and the portion of revenue in department I that is represented in an unconsumed product is consumed as constant capital in department II. Account has still to be given of the 4,000c in department I. This is replaced from department I’s own product of 6,000, or rather 6,000—2,000, for 2,000 has already been converted into constant capital for department II. It should be noted that the figures here are completely arbitrary, so that the correspondence between the value of department I’s revenue and department II’s constant capital also seems arbitrary. It is important, however, that in so far as the reproduction process proceeds normally and with other factors remaining the same, i.e. abstracting from accumulation, the sum of wages, profit and rent in department I must be equal in value to the constant portion of capital in department II. Otherwise department II cannot replace its constant capital, nor department I convert its revenue from non-consumable into consumable form.
The value of the annual commodity product, therefore, just like the value of the commodity product of a particular capital investment or the value of any individual commodity, can be broken down into two components: component A, which replaces the value of the constant capital advanced, and component B, expressed in the form of revenue as wages, profit and rent. Component B contrasts with component A in so far as, other factors being equal, this (1) never assumes the form of revenue, (2) always returns in the form of capital, and constant capital at that. The other component B, however, has its internal distinctions as well. What profit and rent have in common with wages is that all three are forms of revenue. Yet they are basically distinguished by the fact that profit and rent represent surplus-value, i.e. unpaid labour, and wages represent paid labour. The portion of the product’s value that represents wages paid, i.e. replaces wages – and so under our assumptions, in which reproduction proceeds on the same scale and under the same conditions, is transformed back into wages – returns first of all as variable capital, as a component of the capital that has to be advanced once more for reproduction. This component has a double function. It exists firstly in the form of capital, being exchanged as such against labour-power. In the hands of the worker it is transformed into the revenue that the worker draws from the sale of his labour-power; then, as revenue, it is converted into means of subsistence and consumed. This double process is demonstrated by the way it is transacted through monetary circulation. Variable capital is advanced in money, paid out in wages. This is its first function as capital. It is replaced by labour-power and transformed into the externalization of this labour-power, into labour. This is the process as far as the capitalist is concerned. Secondly, however, the workers use this money to buy a portion of their commodity product, which is measured by this money and is consumed by them as revenue. If we imagine the money circulation to be removed, one part of the worker’s product is already in the hands of the capitalist in the form of capital. He advances this part as capital, giving it to the worker in exchange for new labour-power, while the worker consumes it as revenue, either directly or by exchanging it for other commodities. Thus the portion of the product’s value destined to be transformed in the course of reproduction into wages, into revenue for the worker, returns first of all to the capitalist in the form of capital, variable capital to be precise. It is an essential condition for the repeated reproduction of labour as wage-labour, the means of production as capital, and the production process itself as a capitalist one, that it should return in this form.
So as not to get entangled in useless difficulties, we must distinguish gross output and net output from gross income and net income.
The gross output or the gross product is the entire product reproduced. With the exception of the portion of fixed capital which is applied but not consumed, the value of the gross output or gross product is equal to the value of the capital advanced and consumed in production, constant capital and variable, plus the surplus-value, which breaks down into profit and rent. Or, if we consider not the product of the individual capital but rather the total social capital, the gross output is equal to the material elements forming the constant and variable capital, plus the material elements of the surplus product, in which profit and rent are represented.
The gross income is the portion of value, and the part of the gross product measured by this, which remains over after deducting the portion of value, and the part of the total production measured by it, which the capital advanced and consumed in production replaces. Gross income, therefore, is equal to wages (or the part of the product destined to become the workers’ income again) + profit + rent. Net income, on the other hand, is the surplus-value and hence surplus product that remains after wages are deducted, and so it expresses in fact the surplus-value that capital realizes and has to share with the landowners, and the surplus product measured by this.
We have now seen how the value of each individual commodity, and the value of the total commodity product of each individual capital, breaks down into two parts: one which simply replaces constant capital, and another which, although a fraction of it returns as variable capital, i.e. returns in the form of capital, is destined nevertheless to be completely transformed into gross income and to assume the form of wages, profit and rent, the sum of these three being what constitutes gross income. We have also seen that the same thing happens with respect to the value of the total annual product of a society. Thus the only distinction between the product of the individual capitalist and that of society is that from the standpoint of the individual capitalist net income is different from gross income, since the latter includes wages while the former excludes them. Considering the income of the society as a whole, national income consists of wages plus profit plus rent, i.e. the gross income. But this too is an abstraction, since the whole society, on the basis of capitalist production, is considered from the capitalist standpoint and hence views as net income only those incomes reducible to profit and rent.
Such fantasies as those of Monsieur Say, on the other hand, to the effect that the entire output, the total gross product of a nation, is reducible to net output, or is not distinct from this, i.e. that this distinction ceases to obtain from the standpoint of the nation as a whole, are simply the necessary final expression of the absurd dogma that has pervaded all political economy since Adam Smith, to the effect that the value of commodities can be ultimately broken down into wages, profit and rent.51
It is extremely easy, of course, in the case of the individual capitalist, to see that one part of his product must be transformed back into capital (even ignoring the expansion of reproduction, or accumulation), and moreover not into variable capital but into constant capital, which can never be transformed into income. The simplest perception of the production process makes this obvious. The difficulty begins only when the production process is considered as a whole, on a large scale. On the one hand we have an undeniable practical fact. The value of the entire part of the product that is consumed as revenue, in the form of wages, profit and rent (and it is quite immaterial here whether it is consumed individually or productively), actually disappears completely, on analysis, into the sum of value formed from wages plus profit plus rent, i.e. into the total value of the three revenues, even though the value of this part of the product, just like that which does not go into revenue, contains a portion of value = C, equal to the value of the constant capital contained in it, so that it can in no way be limited, prima facie, to the value of the revenue. On the other hand, we have an equally undeniable theoretical contradiction – and the easiest though fraudulent solution to this problem is to claim that it is only from the standpoint of the individual capitalist that commodity value appears to contain a further portion of value distinct from that existing in the form of revenue. All further consideration is rendered unnecessary by the maxim that what appears as revenue for one person forms capital for another. How, if the value of the entire product can be consumed in the form of revenues, the old capital can be replaced, and how the value of the product of each individual capital can be equal to the value sum of the three revenues plus C, the constant capital, while the combined value sum of the products of all capitals together equals the value sum of the three revenues plus 0, all this can only appear as an insoluble riddle, and must be explained by alleging that analysis is quite incapable of catching hold of the simple elements of price and must instead satisfy itself with a vicious circle and an infinite regress. So that what appears as constant capital is reducible to wages, profit and rent, but the commodity values in which wages, profit and rent are expressed are determined in turn by wages, profit and rent, and so ad infinitum.52
The fundamentally false dogma that the value of commodities can be ultimately reduced to wages + profit + rent is thus expressed in the contention that the consumer has ultimately to pay the total value of the total product; or that the monetary circulation between producers and consumers must ultimately be equal to the monetary circulation between the producers themselves (Tooke);† contentions that are all as false as the fundamental principle on which they are based.
The problems that lead to this false and prima facie absurd analysis can be summarized as follows:
(1) The basic relationship of constant and variable capital is not understood, and so neither is the nature of surplus-value and with it the entire basis of the capitalist mode of production. The value of each partial product of capital, each individual commodity, includes a portion of value = constant capital, a portion of value = variable capital (which is transformed into wages for the worker) and a portion of value = surplus-value (later separated into profit and rent). How then is it possible for the worker with his wages, the capitalist with his profit, and the landowner with his rent, to buy commodities that contain not only one of these components but all three, and how is it possible for the value sum of wages, profit and rent, i.e. the three sources of income taken together, which are to buy the commodities which are to enter into the total consumption of the recipients of these incomes, to contain a further additional value component on top of these three, i.e. constant capital? How can a value of four be bought with a value of three?53
We have given an analysis of this in Volume 2, Part Three.
(2) It is not understood how and in what way labour, while it adds new value, also preserves old value in a new form, without producing this value afresh.
(3) The interconnection of the reproduction process is not understood, i.e. as this presents itself not from the standpoint of the individual capital, but rather from that of the total capital; the problem of how the product in which wages and surplus-value are realized, i.e. all value newly added in the course of the year, can replace its constant value portion and still be reducible to a value defined simply by revenues; how, moreover, the constant capital consumed in production can be replaced materially and in value by a new capital, even though the total sum of newly added labour is realized only in wages and surplus-value, and is exhaustively expressed in the sum of these two. It is precisely here that the principal difficulty lies, in the analysis of reproduction and the relationship of its various components, both in their material character and in their value.
(4) But there is still a further problem, which becomes yet more difficult once the different components of surplus-value appear in the form of mutually independent revenues. This is that the firm determinations of revenue and capital change places and shift, so that they seem to be only relative determinations pertaining to the standpoint of the individual capitalist, and seem to vanish altogether when the total production process is in view. For instance, the revenue of the workers and capitalists in department I, which produces constant capital, replaces the constant capital in department II, which produces means of consumption, both in value and materially. The problem can thus be brushed aside with the notion that what is revenue for one is capital for another, so that these definitions have nothing to do with the actual distinctions in the components of commodity value. Further, commodities that are ultimately destined to form the material elements of revenue expenditure, i.e. means of consumption, pass through various stages in the course of the year, e.g. woollen yarn, cloth. At one stage, they form part of constant capital, at another they are consumed individually and go entirely into revenue. It is possible to imagine, therefore, as Adam Smith did, that constant capital is merely an apparent element of commodity value, which disappears in the overall context. There is also an exchange of variable capital for revenue. With his wage, the worker buys the portion of commodities that forms his revenue. He thereby returns to the capitalist the money form of the variable capital. Some of the products forming constant capital, finally, are replaced in kind or by exchange between the producers of the constant capital itself, a process that seems to have nothing to do with the consumers. When this is overlooked, the illusion arises that the consumers’ revenue replaces the entire product, including the constant portion of value.
(5) Apart from the confusion produced by the transformation of values into prices of production, a further confusion derives from the transformation of surplus-value into various separate, mutually independent forms related to the various elements of production, into profit and rent. It is forgotten that the values of commodities are the basis and that the breakdown of this commodity value into particular components, and the further development of these value components into forms of revenue, their transformation into relations that the various owners of the different agents of production have to these particular value components, their distribution among these owners according to particular categories and titles, in no way alter the value determination and its law. Just as little is the law of value affected by the fact that the equalization of profit, i.e. the distribution of the total surplus-value among the various capitals and the obstacles that landed property partly places in the way of this (in absolute rent), gives rise to governing average prices for commodities that diverge from their individual values. This again affects only the addition of surplus-value to the various commodity prices; it does not abolish surplus-value itself, nor the total value of commodities as the source of these various price components.
This is the quid pro quo which we shall discuss in the following chapter, and it is necessarily connected with the illusion that value arises from its own components. Firstly, in other words, the various value components of commodities receive independent forms in the revenues and are related to the particular material elements of production as their sources, instead of to the value of the commodities as their single source. They are indeed related to the elements of production, but not as components of value, rather as revenues, as value components accruing to these particular categories of agents of production, the worker, the capitalist and the landowner. It is possible then to imagine that these components of value, instead of arising from the decomposition of commodity value, actually give rise to it by coming together. This then leads to the neat vicious circle in which the value of commodities arises from the value sum of wages, profit and rent, while the value of wages, profit and rent is determined in turn by the value of commodities, etc.54
If we consider the normal state of reproduction, then only a part of the freshly added labour is applied to the production and hence replacement of constant capital; i.e. precisely that part which replaces the constant capital used up in the production of means of consumption, of the material elements of revenue. This is balanced by the fact that the constant portion of department II costs no additional labour. But the constant capital that is not the product of freshly added labour (taking the reproduction process as a whole, thus including the equalization of departments I and II), even though this product could not be produced without it, is exposed during the reproduction process, in its material aspect, to accidents and dangers that may decimate it. (It may also depreciate in value as the result of a change in the productivity of labour.) One part of the profit accordingly serves as an insurance fund, and thus also a part of the surplus-value and surplus product in which the freshly added labour is expressed. And it in no way affects the nature of the problem whether or not this insurance fund is managed by insurance companies as a separate business. This is the only part of the revenue that is neither consumed as such nor serves necessarily as an accumulation fund. Whether it actually does serve as such a fund, or simply offsets the shortfall in reproduction, is a matter of chance. This is also the only part of surplus-value and the surplus product, and thus of surplus labour, leaving aside the part serving for accumulation, i.e. for expansion of the reproduction process, that would have to continue in existence after the abolition of the capitalist mode of production. In this situation, of course, the part regularly consumed by the direct producers would not remain confined to its present minimum level. Apart from surplus labour for those who cannot yet participate in production on grounds of age, or can no longer do so, there would be no other labour for the maintenance of non-workers. If we consider instead the beginnings of society, then no produced means of production are yet in existence, i.e. no constant capital whose value goes into the product and has to be replaced in kind from the product on the same scale, in the course of reproduction, to an extent determined by its value. But in this case nature directly provides means of subsistence that do not first need to be produced. Thus it also gives the savage, who has only few needs to satisfy, the time, if not to use the means of production not yet in existence for new production, then – besides the labour that it takes to appropriate the means of subsistence given by nature – to transform other natural products into means of production, a bow, a stone knife, a boat, etc. This process in the case of the savage completely corresponds, taking simply the material aspect, to the transformation of surplus labour back into new capital. In the process of accumulation, we still have the continued transformation of such a product of excess labour into capital; and the fact that all new capital arises from profit, rent or other forms of revenue, i.e. from surplus labour, gives rise to the false idea that all commodity value arises from a revenue. This transformation of profit into capital rather shows the opposite on closer analysis, i.e. it shows that the additional labour – which always takes the form of revenue – serves not to maintain or reproduce the old capital value but rather to create new and additional capital, in so far as it is not consumed as revenue.
The entire problem arises from the way that all freshly added labour, in so far as the value it creates is not reducible to wages, appears as profit – conceived here as the general form of surplus-value, i.e. a value that costs the capitalist nothing, so that it also certainly does not have to replace anything advanced, any capital. This value exists therefore in the form of additional available wealth, i.e. from the standpoint of the individual capitalist in the form of his revenue. But this newly created value can be consumed productively as well as individually, as capital as well as revenue. Its natural form already dictates that it must in part be consumed productively. It is evident, therefore, that the labour added each year creates both capital and revenue; as is then shown also in the process of accumulation. But the portion of labour-power used for the creation of new capital (i.e. in our analogy the part of the working day that the savage spends not appropriating food but rather preparing the tool with which to appropriate it) then becomes invisible, because the entire product of the surplus labour presents itself first of all in the form of profit, a characteristic which in fact has nothing to do with this surplus product itself, but simply bears on the private relationship between the capitalist and the surplus-value he pockets. In actual fact, the surplus-value that the worker creates breaks down into revenue and capital; i.e. into means of consumption and additional means of production. But the old constant capital handed down from the previous year (apart from the part that is damaged, i.e. proportionately destroyed, i.e. as far as it does not have to be reproduced, and such disturbances of the reproduction process fall under the heading of insurance) is not reproduced in value by the freshly added labour.
We see, moreover, that one part of the freshly added labour is always absorbed in the reproduction and replacement of the constant capital consumed, even if this freshly added labour can be completely resolved into revenues – wages, profit and rent. It is overlooked in this connection, however, (1) that the value component of the product of this labour is not the product of the freshly added labour but constant capital that was already in existence and has been used up; hence that the part of the product in which this value component is expressed is not transformed into revenue but replaces the means of production of this constant capital in kind; (2) that the value component in which this freshly added labour is actually expressed is not consumed in kind as revenue but rather replaces the constant capital in another sphere, where it is converted into a natural form in which it can be consumed as revenue, even if this is not exclusively the product of freshly added labour.
As long as reproduction proceeds on the same scale, each element of constant capital used up must be replaced – at least in efficacy if not in quantity and form – by a new item of the appropriate kind. If the productivity of labour remains the same, this replacement in kind involves the replacement of the same value that the constant capital had in its old form. But if the productivity of labour rises, so that the same material elements can be reproduced with less labour, a smaller value component of the product can replace the constant part fully in kind. The surplus can then go towards forming new additional capital, or the surplus labour can be reduced. If the productivity of labour declines, on the other hand, a greater part of the product must go into replacing the old capital; the surplus product declines.
If we abstract from the specific historical form and consider it simply as the formation of new means of production, the transformation of profit or any kind of surplus-value back into capital shows that there is always a situation in which the worker spends additional labour on producing means of production, on top of that spent in obtaining his immediate means of subsistence. The transformation of profit into capital is nothing more than the use of a part of the additional labour in forming new and additional means of production. If this happens in the form of the transformation of profit into capital, it simply means that it is not the worker but the capitalist who has the surplus labour at his disposal. If this surplus labour must first go through a stage in which it appears as revenue (whereas in the case of the savage, for example, it appears as labour immediately directed to the production of means of production), it simply means that this labour, or its product, is appropriated by the non-worker. What is actually transformed into capital is not profit as such. The transformation of surplus-value into capital simply means that the surplus-value and surplus product are not individually consumed by the capitalist as revenue. What really is transformed in this way is value, objectified labour, or the product in which this value is directly expressed, or against which it is exchanged, after prior conversion into money. Even if profit is transformed back into capital, it is not this specific form of surplus-value, profit, that forms the source of the new capital. Surplus-value, in this connection, is simply transformed from one form into the other. But it is not this formal transformation that makes it into capital. It is the commodity and its value that now function as capital. But it is completely immaterial for the objectification of this labour, for value itself, that the value of the commodity is not paid – and it is only in this way that it becomes surplus-value.
The misunderstanding is expressed in various forms. In the form, for instance, that the commodities which constant capital consists of themselves contain elements of wages, profit and rent. Or that what is revenue for one person is capital for another, and that these are therefore simply subjective relationships. Thus the spinner’s yarn contains a value component that represents profit for him. If the weaver buys the yarn, he realizes the spinner’s profit, but as far as he is concerned this yarn is simply part of his constant capital.
On top of what we said previously about the relationship of revenue and capital, we should note here that what goes into the weaver’s capital with the yarn, as a constituent element considered in value terms, is the yarn’s value. How the components of this value might be reducible for the spinner into capital and revenue, in other words into paid and unpaid labour, is a matter of complete indifference for determining the value of the commodity itself (apart from the modifications owing to average profit). Always lurking in the background is the idea that profit, and surplus-value in general, is an excess over and above the value of the commodity, which is made only by a surcharge, by mutual cheating, by profit on alienation. But since the production price of the commodity is paid, or even its value, so too are those value components of the commodity that appear to their seller in the form of revenue. Monopoly prices, of course, are not at issue here.
Secondly, it is quite correct that the commodity components which constant capital consists of are reducible like all other commodity value to value components that could be resolved for their producers and the owners of the means of production into wages, profit and rent. This is simply the capitalist way of expressing the fact that commodity value is always just the measure of the socially necessary labour contained in a commodity. But as we have already shown in Volume 1, this in no way prevents the commodity product of a capital from breaking down into separate components, of which one exclusively represents the constant capital component, another the variable capital component and a third simply the surplus-value.
Storch puts forward what is also the opinion of many other people when he says:
‘The saleable products that make up the national revenue must be considered by political economy in two different ways: as values, in relation to individuals; and as goods, in relation to the nation; for the revenue of a nation is not assessed like that of an individual, according to its value, but rather according to its utility, or according to the needs which it can satisfy’ (Considérations sur la nature du revenu national, p. 19).
Firstly, it is a false abstraction to treat a nation whose mode of production is based on value, and organized capitalistically into the bargain, as a unified body simply working for the national needs.
Secondly, even after the capitalist mode of production is abolished, though social production remains, the determination of value still prevails in the sense that the regulation of labour-time and the distribution of social labour among various production groups becomes more essential than ever, as well as the keeping of accounts on this.