1. ‘The worker has a capital value which is found by considering the monetary value of his annual service as a payment of interest… If the average daily wage is capitalized at a rate of 4 per cent, we make the average value for an agricultural worker of the male sex to be 1,500 thalers in German Austria, 1,500 thalers in Prussia, 3,750 thalers in England, 2,000 thalers in France, and 750 thalers in Russia proper’ (Von Reden, Vergleichende Kulturstatistik [Comparative Cultivation Statistics], Berlin, 1848, p. 434).
2. Directly after the February revolution [of 1848], when commodities and securities in Paris were extremely devalued and totally unsaleable, a Swiss merchant in Liverpool, Mr E. Zwilchenbart (who related this to my father), sold whatever he could for cash, travelled to Paris, and went to Rothschild with the proposal to do a joint deal. Rothschild stared at him fixedly and then rushed up to him and said, grasping him by both shoulders: ‘Avez-vous de rargent sur vous?’ – ‘Oui, M. le baron.’ – ‘Alors vous êtes mon homme I’ [Do you have money in your pocket?’ – ‘Yes, Baron’. – ‘Then you’re the man for me!’ – And they both made a handsome profit. – F. E.
3. This duplication and triplication of capital has been taken very much further in recent years, e.g. through the financial trusts, which already require a column of their own in the London stock-market reports. A company is formed for the purpose of purchasing a certain class of interest-bearing paper, for instance securities issued by foreign governments, English municipal loans, American public bonds, railway stocks, etc. The capital involved, say £2 million, is obtained by a share issue; the directors of the company buy up the values in question, or speculate in them more or less actively, and they distribute the annual interest received among the shareholders as dividends, after deducting expenses. In certain joint-stock companies, moreover, the custom has developed of dividing ordinary shares into two classes, ‘preferred’ and ‘deferred’. Preferred shares receive a fixed interest payment, say 5 per cent, on condition that the overall profit permits this; if something remains over, this goes to the holders of the deferred shares. In this way, the more ‘solid’ capital investment in preferred shares is more or less separated from actual speculation, in deferred. Since certain large undertakings do not want to avail themselves of this new method, companies have come to be formed which invest a million pounds, say, or even a few million, in the shares of these firms, subsequently issuing new shares for the nominal value of the shares bought, but with one half preferred and the other deferred. In these cases the original shares are duplicated, by serving as the basis for a new share issue. – F.E.
4. The extent to which this tendency has grown since Marx wrote is shown by the following official tabulation of the reserves of the fifteen largest London banks for November 1892, taken from the Daily News of 15 December:
Name of bank |
Liabilities |
Cash reserves |
Percentages |
City |
£9,317,629 |
£746,551 |
8.01 |
Capital and Counties |
11,392,744 |
1,307,483 |
11.47 |
Imperial |
3,987,400 |
447,157 |
11.22 |
Lloyds |
23,800,937 |
2,966,806 |
12.46 |
Londong and Westminster |
24,671,599 |
3,818,885 |
15.50 |
London and S.Western |
5,570,268 |
812,353 |
14.58 |
London Joint Stock |
12,127,993 |
1,288,977 |
10.62 |
Londong and Midland |
8,814,499 |
1,127,280 |
12.79 |
London and County |
37,111,035 |
3,600,374 |
9.70 |
National |
11,163,829 |
1,426,225 |
12.77 |
National Provincial |
41,907,384 |
4,614,780 |
11.01 |
Parrs and the Alliance |
12,794,489 |
1,532,707 |
11.98 |
Prescott and Co. |
4,041,058 |
538,517 |
13.07 |
Union of London |
15,502,618 |
2,300,084 |
14.84 |
Williams, Deacon and Manchester and Co. |
10,452,381 |
1,317,628 |
12.60 |
Total |
£232,655,823 |
£27,845,807 |
11.97 |
Of these reserves of almost £28 million, £25 million at the very least is deposited with the Bank of England, leaving at most £3 million in the safes of the fifteen banks themselves. But the bullion reserve of the Bank of England’s Banking Department, in the same month of November 1892, was never as much as £16 million! – F. E.
5. The suspension of the 1844 Bank Act enables the Bank to issue an unlimited sum of banknotes, irrespective of the extent to which these are covered by its gold reserve; i.e. to create an unlimited amount of fictitious, paper money capital and use this to make advances to the banks and billbrokers, and through them to the world of commerce. – F.E.
6. ‘Government bonds axe no more than imaginary capital, representing the portion of annual revenue destined for the payment of debts. A capital of equal size has been frittered away; this gives the loan its denomination, but it is not what the government bond represents, for the capital no longer exists in any form. In the meantime, new wealth must arise from the labour of industry; an annual part of this wealth is assigned in advance to those who lent the wealth that was squandered. This part is taken in taxes from those who produce wealth, and given to the state’s creditors, while the customary ratio in the country between capital and interest forms the basis for assuming an imaginary capital, of sufficient size to yield the annual interest that the creditors have to receive’ (Sismondi, Nouveaux Principes, II, pp. 229,230).*
7. One part of the accumulated money capital for loan is in actual fact simply the expression of industrial capital. If England invested, say, £80 million in American railways and other undertakings in 1857, this investment was effected almost entirely through the supply of English goods for which the Americans did not have to make any return payment. The English exporter drew bills on America against the goods, and these bills were purchased by English subscribers who sent them to America in payment for their shares.
8. As I have already noted elsewhere,* the last great general crisis represented a turning-point. The acute form of the periodic process with its former ten-year cycle seems to have given way to a more chronic and drawn-out alternation, affecting the various industrial countries at different times, between a relatively short and weak improvement in trade and a relatively long and indecisive depression. Perhaps what is involved is simply an extension of the cycle’s duration. When world trade was in its infancy, 1815–47, cycles of approximately five years could be discerned; between 1847 and 1867 the cycle was definitely a ten-year one; might we now be in the preparatory phase of a new world crash of unheard-of severity? Many things seem to point this way. Since the last general crisis of 1867, great changes have occurred. The colossal expansion of means of communication – ocean-going steamships, railways, electric telegraphs, the Suez canal – has genuinely established the world market for the first time. Alongside England, which formerly had a monopoly of industry, we have a whole series of competing industrial countries; the investment of surplus European capital in all parts of the globe is infinitely greater and more widespread, so that this is far more broadly distributed and local over-speculation is more easily overcome. All these things mean that most of the former breeding-grounds of crises and occasions for crisis formation have been abolished or severely weakened. Competition in the home market is also retreating in the face of the cartels and trusts, while on the foreign market it is restricted by the customs tariffs with which all major industrial countries except England surround themselves. But these tariffs themselves are nothing less than the weapons for the final general industrial campaign to decide supremacy on the world market. And so each of the elements that counteracts a repetition of the old crises, conceals within it the nucleus of a far more violent future crisis. – F. E.
9. B. A. 1857, evidence of Twells, banker: ‘4516. As a banker, do you deal in capital or in money? – We deal in money.’ – ‘4517. How are the deposits paid into your bank? – In money.’ – ‘4518. How are they paid out? – In money.’ – ‘4519. Then can they be called anything else but money? – No.’
Overstone shows persistent confusion between ‘capital’ and ‘money’ (see Chapter 26). ‘Value of money’, for him, also means interest, in so far as this is determined by the quantity of money; but interest is supposed to be the ‘value of capital’, in so far as it is determined by the demand for productive capital and by the profit that this yields. He says (4140): ‘The use of the word “capital” is very dangerous.’ – (4148) ‘The export of bullion from this country is a diminution of the quantity of money in this country, and a diminution of the quantity of money in this country must of course create a pressure upon the money-market generally’ (but not in the capital market, according to him). – (4112) ‘As the money goes out of the country, the quantity in the country is diminished. That diminution of the quantity remaining in the country produces an increased value of that money.’ (What this originally means in his theory is a rise in the value of money as money in comparison to commodity values, brought about by a contraction in circulation; i.e. where this rise in the value of money = a fall in the value of commodities. But since in the meantime it has been incontrovertibly demonstrated even for him that the quantity of money in circulation does not determine prices, it is now the reduction in money as means of circulation that is supposed to raise its value as interest-bearing capital, and hence the rate of interest.) ‘And that increased value of what remains stops the exit of money, and is kept up until it has brought back that quantity of money which is necessary to restore the equilibrium.’ We shall continue with Overstone’s contradictions later on.
10. This is the point where there enters the confused notion that both things are ‘money’, the deposit as a claim to payment from the banker, and the deposited money in the banker’s possession. Banker Twells, before the Bank Acts Committee of 1857, takes the following example: ‘If I begin business with £10,000,1 buy with £5,000 commodities and put them into warehouse. I deposit the other £5,000 with a banker, to draw upon it and use it as I require. I consider it still £10,000 capital to me, though £5,000 is in the shape of deposits or money’ (4528). – The following peculiar debate then unfolds. – (4531) ‘You have parted with your £5,000 of notes to somebody else? – Yes.’(4532) ‘Then he has £5,000 of deposits? – Yes.’ – (4533) ‘And you have £5,000 of deposits left? – Exactly.’ – (4534) ‘He has £5,000 in money, and you have £5,000 in money? – Yes.’ – (4535) ‘But it is nothing but money at last? -No.’ The confusion arises in part from this: A, who has deposited the £5,000, can draw on it, and disposes of it just as well as if he still had it. To this extent, it functions for him as potential money. But whenever he draws on it, he destroys his depositara tanto. If he withdraws actual money and his money has already been lent again, he is paid not with his own money, but rather with the money someone else has deposited. If he pays a debt to B with a cheque on his banker, B deposits this cheque with his banker, and if A’s banker has likewise a cheque on B’s banker, so that the two bankers simply exchange cheques, the money that A deposited has performed money functions twice: firstly, in the hands of the person who received the money that A had deposited; secondly, in the hands of A himself. In the second function, there is an adjustment of claims (the claim of A on his banker and the claim of the latter on B’s banker) without the intervention of money. Here the deposit has a double effect as money, i.e. first as actual money and subsequently as a claim to money. Mere claims to money can only take the place of money in the balancing of claims.
12. At the general stockholders’ meeting of the Union Bank of London, on 17 January 1894, the chairman, Mr Ritchie, recalled how the Bank of England had put up its discount rate from 2 1/2 per cent (July) to 3 per cent and 4 per cent in August, and since despite this fully £4 1/2 million in gold had been lost, to 5 per cent, on which gold flowed back and the Bank rate was reduced to 4 per cent in September and 3 per cent in October. This Bank rate, however, was not recognized in the market. ‘When the bank-rate was 5 per cent, the discount rate was 3 1/2 per cent, and the rate for money 2 1/2 per cent; when the bank-rate fell to 4 per cent, the discount rate was 2⅜ per cent and the money rate 1 3/4 per cent; when the bank-rate was 3 per cent, the discount rate fell to 1 1/2 per cent and the money rate to something below that’ (Daily News, 18 January 1894). – F. E.
13. See A Contribution to the Critique of Political Economy, pp. 169 ff.
14. How this affected the money market is shown by the following testimony of W. Newmarch [B. A. 1857]. ‘1509. At the close of 1853, there was a considerable apprehension in the public mind, and in September of that year the Bank of England raised its discount on three occasions… In the early part of October there was a considerable degree of apprehension and alarm in the public mind. That apprehension and alarm was relieved to a very great extent before the end of November, and was almost wholly removed, in consequence of the arrival of nearly £5,000,000 of treasure from Australia… The same thing happened in the autumn of 1854, by the arrival in the months of October and November of nearly £6,000,000 of treasure. The same thing happened again in the autumn of 1855, which we know was a period of excitement and alarm, by the arrivals, in the three months of September, October and November, of nearly £8,000,000 of treasure, and then at the close of last year, 1856, we find exactly the same occurrence. In truth, I might appeal to the observation almost of any member of the Committee, whether the natural and complete solvent to which we have got into the habit of looking for any financial pressure, is not the arrival of a gold ship.’
15 According to Newmarch, a drain of gold abroad can arise for one of three reasons, in particular: (1) for a purely commercial reason, i.e. if imports have become greater than exports, as was the case between 1836 and 1844, and again in 1847, with particularly steep imports of corn; (2) to procure the means for investing English capital abroad, as for railways in India in 1857; and (3) for final expenditure abroad, as for war purposes in the East in 1853 and 1854.
16 (1918) Newmarch: ‘When you combine India and China, when you bring into account the transactions between India and Australia, and the still more important transactions between China and the United States, the trade being a triangular one, and the adjustment taking place through us… then it is true that the balance of trade was not merely against this country, but against France, and against the United States’ (B. A. 1857).
17 See for example Weguelin’s ridiculous response when he says that an outflow of £5 million in money is that much capital less, and seeks to use this to explain phenomena that do not occur even with infinitely greater rises in price, or with devaluations, expansions and contractions of the actual industrial capital. On the other hand, no less ridiculous is the attempt to explain these phenomena as direct symptoms of an expansion or contraction in the mass of real capital (looked at from the point of view of its material elements).
18 Newmarch (B. A.1857): ‘1364. The reserve of bullion in the Bank of England is, in truth, the central reserve or hoard of treasure upon which the whole trade of the country is made to turn; all the other banks in the country look to, the Bank of England as the central hoard or reservoir from which they are to draw their reserve of coin; and it is upon that hoard or reservoir that the action of the foreign exchanges always falls.’
19 ‘Practically, then, both Mr Tooke and Mr Loyd would meet an additional demand for gold… by an early… contraction of credit by raising the rate of interest, and restricting advances of capital… But the principles of Mr Loyd lead to certain’ (legal) ‘restrictions and regulations which… produce the most serious inconvenience’ {The Economist, 1847, p. 1418).
20 ‘You quite agree that there is no mode by which you can modify the demand for bullion except by raising the rate of interest?’ – Chapman (associate member of the great billbroking firm of Overend, Gurney’ Co.): ‘I should say so… When our bullion falls to a certain point, we had better sound the tocsin at once and say we are drooping, and every man sending money abroad must do it at his own peril’ (B. A. 1857, Evidence, no. 5057).
21 ‘It is by frequent fluctuations within the month, and by pawning one article to relieve another, where a small sum is obtained, that the premium for money becomes so excessive. There are about 240 licensed pawnbrokers in the metropolis, and nearly 1,450 in the country. The capital employed is supposed somewhat to exceed a million pounds sterling; and this capital is turned round thrice in the course of a year, and yields each time about 33 1/2 per cent on an average; according to which calculation, the inferior orders of society in England pay about one million a year for the use of a temporary loan, exclusive of what they lose by goods being forfeited’ (J. D. Tuckett, A History of the Past and Present State of the Labouring Population, London, 1846,1, p. 114).
22. Even in the very titles of their works, they gave as their main purpose ‘the general good of the landed men, the great increase of the value of land’, the exemption of ‘the nobility, gentry, etc., from taxes, enlarging their yearly estates, etc.’. Only the usurers would lose from this, these worst enemies of the nation, who had caused the nobility and the yeomanry more damage than an invading army from France could have done.
23. The rich goldsmiths, for example (the bankers’ forerunners), made Charles II pay interest rates of 20 or 30 per cent on loans. ‘This profitable business induced the goldsmiths to become increasingly lenders to the King, to anticipate all the revenue, to take every grant of Parliament into pawn as soon as it was given; also to outvie each other in buying and taking to pawn bills, orders, and tallies, so that, in effect, all the revenue passed through their hands’ (John Francis, History of the Bank of England, London, 1848,I, p. 31). “The erection of a bank had been suggested several times before that. It was at last a necessity’ (ibid., p. 38). ‘The bank was a necessity for the government itself, sucked dry by usurers, in order to obtain money at a reasonable rate, on the security of parliamentary grants’ (ibid., pp. 59–60).
24 In working over the manuscript again, Marx would undoubtedly have modified this passage substantially. It was inspired by the role of the former Saint-Simonians under the Second Empire in France, where, by historical irony, the world-shattering credit fantasies of this school were precisely realized, as Marx writes, in a swindle of previously unheard-of dimensions. Marx subsequently spoke only with admiration of the genius and encyclopedic mind of Saint-Simon. If in his earlier writings Saint-Simon ignored the opposition between the bourgeoisie and the proletariat, which in France was only just arising, and if he included the section of the bourgeoisie active in production in the travailleurs, this was Fourier’s conception also, Fourier who sought to reconcile capital and labour, and it is explained by the economic and political conditions of France at that time. If Owen saw further ahead here, this was because he lived in a different environment, in the midst of the industrial revolution and the class antagonism that was already acutely coming to a head. – F. E.
25 Karl Marx, The Poverty of Philosophy; and A Contribution to the Critique of Political Economy[op. cit., p. 86]. [See also above, pp. 446–8.]
26. Nothing could be more curious than Hegel’s development of private property in land. Man as a person must give his will actuality as the soul of external nature, and hence take possession of this nature as his private property. If this is the distinguishing mark of ‘the person’, of man as person, it would follow that a man must be a landowner if he is to realize himself as a person. Free private property in land – a very recent product – is for Hegel not a particular social relationship, but rather a relationship of man as a person to ‘nature ’,‘the absolute right of appropriation which man has over all “ things ”’ (Hege’s Philosophy of Right, trs. Knox, Oxford, 1967, p. 41; para. 44). The first thing that is clear is that the individual person cannot maintain himself as a proprietor by his ‘will’ alone, vis-à-vis the will of someone else who similarly wants to give himself corporeal actuality in the same fragment of the globe. Quite other things than a good will are needed for this. Moreover, there is absolutely no way of seeing where ‘the person’ sets a limit to the realization of his will, whether the existence of his will is realized in an entire country or whether it needs a whole pile of countries in order ‘to manifest the preeminence of my will over the thing by appropriating it’ [p. 236; para. 44, Addition]. Here Hegel comes completely unstuck. ‘Taking possession is always piece-meal in type; I take into possession no more than what I touch with my body. But here comes the second point: external objects extend further than I can grasp. Therefore, whatever I have in my grasp is linked with something else. It is with my hand that I manage to take possession of a thing, but its reach can be extended’ [p. 238; para. 55, Addition]. But this something else is connected in turn with something else again, so that the limit as to how far my will has to pour out into the soil as soul completely vanishes. ‘If I am in possession of something, the intellect immediately draws the inference that it is not only the immediate object in my grasp which is mine but also what is connected with it. At this point positive law must enact its statutes since nothing further on this topic can be deduced from the concept’ [p. 238; para. 55, Addition]. This is an extraordinarily naive confession for ‘the concept’ to make, and proves that the concept, which makes the great blunder right from the start of taking a quite particular legal notion of landed property which belongs to bourgeois society as absolute, understands ‘nothing’ of the actual configuration of this landed property. At the same time this involves the admission by Hegel that with the changing needs of social, i.e. economic development, ‘positive law’ can and must change its provisions.
27. Quite conservative agricultural chemists, such as Johnston, for example, admit that private property places insuperable barriers on all sides to a genuinely rational agriculture. So too do writers who are professed defenders of the monopoly of private property in the earth, such as M. Charles Comte,* for instance, in a two-volume work which has the defence of private ownership as its special purpose. ‘A people,’ he says, ‘cannot attain the degree of well-being and power that their nature grants them unless each part of the land that sustains them receives the destiny that stands most in harmony with the general interest. In order to give their riches a substantial development, a single will, and above all an enlightened one, if possible, must take in hand the disposal of each individual piece of their territory, and make each portion contribute towards the prosperity of all others. But the existence of such a will… would be incompatible with the division of the land into private holdings… and with guaranteeing the ability of each proprietor to dispose of his wealth in an almost absolute manner’ [Traité de la propriété, Vol. I, Paris, 1834, p. 228]. Johnston, Comte, etc., in considering the contradiction between property and a rational agronomy, are simply thinking of the cultivation of the land of a single country as a whole. But the way that the cultivation of particular crops depends on fluctuations in market prices and the constant changes in cultivation with these price fluctuations – the.entire spirit of capitalist production, which is oriented towards the most immediate monetary profit – stands in contradiction to agriculture, which has to concern itself with the whole gamut of permanent conditions of life required by the chain of human generations. A striking example of this is provided by forests, which are managed in the common interest – and even then only to a limited extent – solely in those rare cases when they are not private property but are subject to state administration.
28. The Poverty of Philosophy, London, 1966, p. 143. There I make the distinction between terre-matière and terre-capital. ‘The very fact of applying further outlays of capital to land already transformed into means of production increases land as capital without adding anything to land as matter, that is, to the extent of the land… Land as capital is no more eternal than any other capital… Land as capital is fixed capital; but fixed capital gets used up just as much as circulating capital.’
29. I say ‘may form’, because in certain circumstances this interest is governed by the law of ground-rent and may therefore disappear, for instance where there is competition from new lands of great natural fertility.
30. See James Anderson and Carey.*
31 See the Anti-Corn-Law prize essays.* Mean while the Corn Laws still held prices up to an artificially high level. This favoured the better-off farmers. They profited from the stationary condition in which the protective tariff kept the great mass of farmers, who, with or without good reason, placed their faith in the exceptional average price.
32. John C. Morton, The Forces Used in Agriculture, a lecture to the London Society of Arts in 1859, based on authentic documents collected from some hundred farmers in twelve Scottish and thirty-five English counties.
33. On the surplus profit, see the Inquiry* (against Malthus).
33 [a]. It is precisely the recent sudden increase of cultivation of these prairie or steppe regions that has proved so ridiculous the renowned Malthusian thesis that ‘population presses on the means of subsistence’, producing in contrast to this the agrarian complaint according to which German agriculture and with it everything else in Germany will collapse unless the means of subsistence which are pressing on the population are not forcibly kept away from them. The cultivation of these steppes, prairies, pampas, llanos, etc. is however only in its very beginnings; its revolutionary effect on European agriculture will make itself felt far more strongly in the future than it has done so far. – F. E.
34. An error in calculation running through the above tables IVa to IVd made it necessary to rework them. This in no way affected the theoretical perspectives developed from the tables, but it did lead in places to quite monstrous numerical ratios for production per acre. Even these are not objectionable in principle. It is quite usual in relief and topographical maps to take a considerably larger scale for the vertical dimension than for the horizontal. Anyone who still feels that his agrarian feelings have been injured is free to multiply the number of acres by any figure he chooses. In Table I, moreover, instead of 1, 2, 3, 4 qrs per acre, we could put 10, 12, 14, 16 bushels (8 bushels = 1 qr), which would keep the figures derived from these in the other tables within the bounds of the possible; the result, the relationship between rise in rent and rise in capital, still comes out just the same. This has been done in the tables added by the editor in the following chapter. – F. E.
35. Wakefield, England and America, London, 1833. See also Capital Volume 1, Chapter 33.
36. See Dombasle and R. Jones.*
37. Ricardo gives an extraordinarily superficial account of this point. See the passage against Adam Smith over rent of forests in Norway, Principles, Chapter II, right at the beginning.
38. Laing, [F. W.] Newman.
39. Crowlington Strike. Engels, Condition of the Working Classes in England, Collected Works, Vol. 4, London, 1975, pp. 543–4.
40. ‘The paving of the streets of London has enabled the owners of some barren rocks on the coast of Scotland to draw a rent from what never afforded any before’ (Adam Smith [The Wealth of Nations], Book I, Chapter XI, II [Pelican edn, p. 268]).
41. It is a service of Rodbertus, whose important text on rent we shall return to in Volume 4,* to have developed this point. The first error he commits, however, in connection with capital, is to see the growth in profit as always expressing a growth in capital, so that the ratio remains the same as the mass of profit rises. But this is wrong, since, even if the exploitation of labour remains the same, the profit rate may still rise as the composition of capital changes, through a fall in the proportionate value of the constant part of capital as compared with the variable. Secondly, he makes the error of treating the proportion of money rent on a piece of land of a definite size, 1 acre for example, as if this had been the general premise of classical economics in its analyses of the rise and fall of rent. This again is incorrect. Classical economics always treated the rate of rent, in as much as it considered rent in its natural form, in relation to the product, and in as much as it considered rent as money rent it treated it in relation to the capital advanced, since these are in fact the rational expressions.
42. For an actual case of a fall in land prices combined with a rise in rent, see Passy.
42a. Adam Smith emphasizes how in his time (and this is still true for our own, as far as the plantation economy in tropical and sub-tropical countries is concerned) rent and profit are still not always separate, since the landowner is also the capitalist, as Cato for instance was on his estates.* This separation, however, is precisely the precondition for the capitalist mode of production, the basis of slavery similarly standing in invariable contradiction with the concept of this mode.
43. In his Römische Geschichte Mommsen uses the word ‘capitalist’ in no way in the sense of modern economics and modern society, but rather in the manner of a popular idea persisting on the Continent – though not in England or America – as an outdated tradition from past conditions.
44. When a country was conquered, the first thing for the conqueror was always to take possession of the people. Cf. Linguet. See also Möser.*
44a. Cf. Buret, Tocqueville, Sismondi.*
45. See the King of France’s speech from the throne, in Tooke.*
46. See Mounier and Rubichon.†
47. Dr H. Maron (Extensiv oder Intensiv? [Oppeln, 1859]) bases himself on the false assumption of his opponents. He assumes that the capital invested inthe purchase of land is ‘investment capital’ and simply challenges the respective definitions of the concepts investment capital and operating capital, i.e. fixed capital and circulating capital. His completely jejune ideas about capital in general, even if they are somewhat excusable for a non-economist, given the general condition of German ‘national economies’, conceal from him that this capital is neither investment capital nor operating capital. In the sameway, the capital that someone invests on the stock exchange in the purchase of shares or government paper is by no means actually ‘invested’ in any branch of production, even if it appears as a capital investment for the investor himself.
48. The following three fragments were found at various points in the manuscript of Part Six. – F. E.
49 This is where Chapter 48 begins in the manuscript. – F. E.
50. ‘Wages, profit and rent are the three original sources of all revenue, as well as of all exchangeable value’ (Adam Smith).* ‘Thus the causes of material production are at the same time the sources of the original revenues that it yields’ (Storch, I, p. 259).
51. Ricardo makes the following very pertinent observation about the thoughtless Say: ‘Of net produce and gross produce, M. Say speaks as follows: “The whole value produced is the gross produce; this value, after deducting from it the cost of production, is the net produce” (Vol. II, p. 491). There can, then, be no net produce, because the cost of production, according to M. Say, consists of rent, wages and profits. In page 508 he says: “The value of a product, the value of a productive service, the value of the cost of production, are all then similar values, whenever things are left to their natural course.” Take a whole from a whole, and nothing remains’ (Ricardo, Principles, Chapter XXXII [pp. 409–10], note). As we shall see later on, however, Ricardo never rejected Smith’s erroneous analysis of commodity price, his resolution of this into the value sum of the revenues. He did not bother with it, and assumes its correctness in his analyses by ‘abstracting’ from the constant portion of commodity value. He thus falls occasionally into the same way of looking at things.
52. ‘In every society the price of every commodity finally resolves itself into some one or other, or all of those three parts’ (viz. wages, profits, rent)… ‘A fourth part, it may perhaps be thought, is necessary for replacing the stock of the farmer, or for compensating the wear and tear of his labouring cattle, and other instruments of husbandry. But it must be considered that the price of any instrument of husbandry, such as a labouring horse, is itself made up of the same three parts; the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer who advances both the rent of this land, and the wages of this labour. Though the price of the corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself either immediately or ultimately into the same three parts of rent, labour’ (meaning wages) ‘and profit.’ (Adam Smith [Book One, Chapter VI, p. 153]).
We shall show later on how Adam Smith himself feels the contradiction in this evasion and its unsatisfactory character, for it is nothing more than an evasion for him to send us from pillar to post, even though he never indicates the actual capital investment in which the price of the product is ‘ultimately’ resolved simply into these three parts without further analysis.
53. Proudhon declares his inability to understand this in the narrow-minded formula: l’ouvrier ne peut pas racheter son propre produit [the worker cannot buy back his own product], since the interest contained in it is added on to the prix-de-revient, the cost price to himself.* But does M. Eugène Forcade teach him any better? ‘If Proudhon’s charge were true, it would not affect simply the profits of capital, but would destroy the possible existence of industry altogether. If the worker is forced to pay 100 for what he only receives 80 for, if wages can only buy back the value in a product that he has added to it, this means that the worker can buy nothing back, that wages can buy nothing. For the cost price always contains something more than the wages of the worker, and the sale price always something more than the profit of the entrepreneur, e.g. the price of the raw material, which is often paid abroad… Proudhon has forgotten the perpetual growth in the national capital, he has forgotten that this growth involves all working people, the entrepreneur as well as the worker’ (Revue des Deux Mondes, vol. 24, 1848, pp. 998–9). Here we have the optimism of bourgeois thoughtlessness in the most appropriate form of its wisdom. First M. Forcade believes that the worker could not survive if he did not receive a higher value than that which he produces, while conversely the capitalist mode of production would be impossible if he really did receive the value he produces. Secondly, he correctly generalizes the problem that Proudhon expressed only from a restricted point of view. The price of a commodity contains an excess not only on top of wages but also on top of profit, i.e. the constant portion. So the capitalist, too, in Proudhon’s argument, could not buy the commodity back with his profit. But how does Forcade solve the riddle? By a meaningless phrase – the growth of capital. Thus the steady growth of capital is to mean among other things that while the political economist finds it impossible to analyse commodity price for a capital of 100, it is superfluous to analyse cost price for a capital of 10,000. What would be said of a chemist who, when asked how it is that the soil’s product contains more carbon than the soil itself, gave the answer that this came from the steady growth in agricultural production? In vulgar economics, the well-meaning good intention of finding the bourgeois world to be the best of all possible worlds makes any desire for truth and any impulse towards scientific investigation unnecessary.
54. ‘The invested circulating capital in materials, raw materials and finished products is itself composed of commodities, whose necessary price is formed from the same elements, in such a way that it would be an unnecessary repetition to count this part of the circulating capital as one of the elements of the necessary price’ (Storch, Cours d’ économie politique, II, p. 140). Among these elements of circulating capital, Storch includes the constant portion. (The fixed is simply circulating in a different form.) ‘It is true that the worker’s wages as well as the portion of the entrepreneur’s profit that consists of wages if one considers these as a portion of means of subsistence – is similarly composed of commodities sold at their market price, which themselves include wages, capital-rents, ground-rents and profits of enterprise… establishment of this fact serves only to prove that it is impossible to resolve the necessary price into its simplest elements’ (ibid., note). In a polemic against Say in his Considérations sur la nature du revenu national (Paris, 1824), Storch admittedly understands the absurdity of the conclusion which follows from the false analysis of commodity value that resolves it just into revenue, and correctly points out the ridiculous character of this result – from the standpoint of a nation rather than that of the individual capitalist. But he does not himself take a single step further in his analysis of the prix nécessaire which, as he explained in his Cours, it is impossible to resolve into its actual elements instead of a false infinite regress. ‘It is apparent that the value of the annual product can be divided on the one hand into capital, on the other into profit, and that each of these portions of value of the annual product will regularly buy the products that the nation needs, both to maintain its capital and to replace its consumption stock’ (pp. 134–5)… ‘Can they’ (the peasant family working for themselves) ‘live in their barns or stables, eat up their seed-corn and animal fodder, slaughter their draught cattle for clothes, and satisfy their needs with their agricultural implements? According to M. Say’s doctrine, all these questions have to be answered in the affirmative’ (pp. 135–6). ‘Once it is conceded that the revenue of a nation is equal to its gross product, i.e. that no capital has to be deducted, then it must also be conceded that the nation can consume the entire value of its annual product unproductively, without making the slightest inroad into its future revenue’ (p. 147). ‘The products that make up a nation’s capital are not consumable’ (p. 150).
55. In connection with the division into wages, profit and ground-rent of the value added to the constant capital component, it is self-evident that these are components of value. They can of course be imagined as existing in the immediate product in which this value is expressed, i.e. in the product that the workers and capitalists in a particular sphere of production, e.g. cotton-spinning, have directly produced, say in yarn. In fact, however, they are no more and no less expressed in this product than in any other kind of commodity, any other component of material wealth of the same value. In practice we find that wages are paid in money, i.e. the pure expression of value, and similarly interest and rent. For the capitalist, in fact, the transformation of his product into the pure value expression is very important; this is already assumed in connection with distribution. Whether these values are transformed back into the same product, the same commodity, from whose production they derived, whether the worker buys back a part of the product he directly produced or buys the product of other labour and other types of labour, has nothing to do with the essence of the matter. Rodbertus gets quite needlessly worked up over this subject.
56. ‘It will be sufficient to remark, that the same general rule which regulates the value of raw produce and manufactured commodities, is applicable also to the metals; their value depending not on the rate of profits, nor on the rate of wages, nor on the rent paid for mines, but on the total quantity of labour necessary to obtain the metal, and to bring it to market’ (Ricardo, Principles, Chapter III [pp. 108–9]).
56a. John Stuart Mill, Some Unsettled Questions of Political Economy, London, 1844.
57. See the essay on competition and cooperation (1832?).*
58. F. List observes correctly: ‘The predominance of owner-management on large estates simply indicates inadequate civilization, means of communication, local industry and wealthy cities. This is why we find it all over Russia, Poland, Hungary and Mecklenburg. It was formerly predominant in England too, but with the arrival of trade and industry these estates were broken up into middle-sized farms and leased out’ (Die Ackerverfassung, die Zwergwirths-chaft und die Auswanderung, 1842, p. 10).*