Grundrisse: Notebook IV – The Chapter on Capital

Transition from the process of the production of capital into the process of circulation. – Devaluation of capital itself owing to increase of productive forces. (Competition.) (Capital as unity and contradiction of production process and realization process.) Capital as barrier to production. – Overproduction. (Demand by the workers themselves.) – Barriers to capitalist production

We have now seen how, in the realization process, capital has (1) maintained its value by means of exchange itself (exchange that is, with living labour); (2) increased, created a surplus value. There now appears, as the result of this unity of the process of production and the process of realization, the product of the process, i.e. capital itself, emerging as product from the process whose presupposition it was – as a product which is a value, or, value itself appears as the product of the process, and specifically a higher value, because it contains more objectified labour than the value which formed the point of departure. This value as such is money. However, this is the case only in itself; it is not posited as such; that which is posited at the outset, which is on hand, is a commodity with a certain (ideal) price, i.e. which exists only ideally [ideell] as a certain sum of money, and which first has to realize itself [sich realisieren] as such in the exchange process, hence has to re-enter the process of simple circulation in order to be posited as money. We now come therefore to the third side of the process in which capital is posited as such.

(3) Looked at precisely, that is, the realization process of capital – and money becomes capital only through the realization process – appears at the same time as its devaluation process [Entwertungsprozess], its demonetization. And this in two respects. First, to the extent that capital does not increase absolute labour time but rather decreases the relative, necessary labour time, by increasing the force of production, to that extent does it reduce the costs of its own production – in so far as it was presupposed as a certain sum of commodities, reduces its exchange value: one part of the capital on hand is constantly devalued owing to a decrease in the costs of production at which it can be reproduced; not because of a decrease in the amount of labour objectified in it, but because of a decrease in the amount of living labour which it is henceforth necessary to objectify in this specific product. This constant devaluation of the existing capital does not belong here, since it already presupposes capital as completed. It is merely to be noted here in order to indicate how later developments are already contained in the general concept of capital. Belongs in the doctrine of the concentration and competition of capitals. – The devaluation being dealt with here is this, that capital has made the transition from the form of money into the form of a commodity, of a product, which has a certain price, which is to be realized. In its money form it existed as value. It now exists as product, and only ideally as price; but not as value as such. In order to realize itself, i.e. to maintain and to multiply itself as value, it would first have to make the transition from the form of money into that of use values (raw material – instrument – wages); but it would thereby lose the form of value; and it now has to enter anew into circulation in order to posit this form of general wealth anew. The capitalist now enters the process of circulation not simply as one engaged in exchange, but as producer, and the others engaged in exchange are, relative to him, consumers. They must exchange money in order to obtain his commodity for their consumption, while he exchanges his product to obtain their money. Suppose that this process breaks down – and the separation by itself implies the possibility of such a miscarriage in the individual case – then the capitalist’s money has been transformed into a worthless product, and has not only not gained a new value, but also lost its original value. But whether this is so or not, in any case devaluation forms one moment of the realization process; which is already simply implied in the fact that the product of the process in its immediate form is not value, but first has to enter anew into circulation in order to be realized as such. Therefore, while capital is reproduced as value and new value in the production process, it is at the same time posited as not-value, as something which first has to be realized as value by means of exchange. The three processes of which capital forms the unity are external; they are separate in time and space. As such, the transition from one into the other, i.e. their unity as regards the individual capitalists, is accidental. Despite their inner unity, they exist independently alongside one another, each as the presupposition of the other. Regarded broadly and as a whole, this inner unity must necessarily maintain itself to the extent that the whole of production rests on capital, and it must therefore realize all the necessary moments of its self-formation, and must contain the determinants necessary to make these moments real. But at the point we have reached so far, capital still does not appear as the determinant of circulation (exchange) itself but merely as one moment of the latter, and it appears to stop being capital just at the point where it enters into circulation. As a commodity, capital now shares the fate of commodities in general; it is a matter of accident whether or not it is exchanged for money, whether its price is realized or not.

In the production process itself – where capital continued to be presupposed as value – its realization appeared totally dependent solely on the relation of itself as objectified labour to living labour; i.e. on the relation of capital to wage labour. But now, as a product, as a commodity, it appears dependent on circulation, which lies outside this process. (In fact, as we have seen, it returns into it as its ground, but also and equally emerges from it again.) [19] As a commodity, it must be (1) a use value and, as such, an object of need, object of consumption; (2) it must be exchanged for its equivalent – in money. The new value can be realized only through a sale.

If it contained objectified labour at a price of 100 thalers before, and now at a price of 110 (the price here merely an expression, in money, of the amount of objectified labour), then this has to be demonstrated through the exchange of the labour objectified in the newly produced commodity for 110 thalers. The product is devalued [entwertet] initially in so far as it must be exchanged for money at all, in order to obtain its form as value again. Inside the production process, realization appeared totally identical with the production of surplus labour (the objectification of surplus time), and hence appeared to have no bounds other than those partly presupposed and partly posited within this process itself, but which are always posited within it as barriers to be forcibly overcome. There now appear barriers to it which lie outside it. To begin with, even on an entirely superficial inspection, the commodity is an exchange value only in so far as it is at the same time a use value, i.e. an object of consumption (still entirely irrelevant here, what kind of consumption); it ceases to be an exchange value when it ceases to be a use value (since it does not yet exist as money again, but rather still in a specific mode of existence coinciding with its natural quality). Its first barrier, then, is consumption itself – the need for it. (Given the present presuppositions, there is no basis whatever for speaking of ineffective, non-paying needs; i.e. a need which does not itself possess a commodity or money to give in exchange.) Then, secondly, there has to be an equivalent for it, and, since circulation was presupposed at the outset as a constant magnitude – as having a given volume – but since, on the other hand, capital has created a new value in the production process, it seems indeed as if no equivalent were available for it. Thus, by emerging from the production process and re-entering circulation, capital (a) as production, appears to encounter a barrier in the available magnitude of consumption – of consumption capacity. As a specific use value, its quantity is irrelevant up to a certain point; then, however, at a certain level – since it satisfies only a specific need – it ceases to be required for consumption. As a specific, one-sided, qualitative use value, e.g. grain, its quantity itself is irrelevant only up to a certain level; it is required only in a specific quantity; i.e. in a certain measure. This measure, however, is given partly in its quality as use value – its specific usefulness, applicability – partly in the number of individuals engaged in exchange who have a need for this specific consumption. The number of consumers multiplied by the magnitude of their need for this specific product. Use value in itself does not have the boundlessness of value as such. Given objects can be consumed as objects of needs only up to a certain level. For example: No more than a certain amount of grain is consumed etc. Hence, as use value, the product contains a barrier – precisely the barrier consisting of the need for it – which, however, is measured not by the need of the producers but by the total need of all those engaged in exchange. Where the need for a certain use value ceases, it ceases to be a use value. It is measured as a use value by the need for it. But as soon is it ceases to be a use value, it ceases to be an object of circulation (in so far as it is not money). (b) As new value and as value as such, however, it seems to encounter a barrier in the magnitude of available equivalents, primarily money, not as medium of circulation but as money. The surplus value (distinct, obviously, from the original value) requires a surplus equivalent. This now appears as a second barrier.

(c) Money – i.e. wealth as such, i.e. wealth existing in and because of the exchange for alien objectified labour – originally appeared to collapse into itself [in sich zusammenzufallen] to the extent that it did not proceed to the exchange for alien living labour, i.e. to the production process. Circulation was incapable of renewing itself from within itself. At the same time, the production process now appears to be in a fix, in as much as it is not able to make the transition into the process of circulation. Capital, as production resting on wage labour, presupposes circulation as the necessary condition and moment of the entire motion. This specific form of production presupposes this specific form of exchange which finds its expression in the circulation of money. In order to renew itself, the entire product has to be transformed into money; not as in earlier stages of production, where exchange is by no means concerned with production in its totality, but only with superfluous production and superfluous products.

These are, then, the contradictions which present themselves of their own accord to a simple, objective, non-partisan view. How they are constantly suspended in the system of production resting on capital, but also constantly created again – and are suspended only by force (although this suspension appears up to a certain point merely as a quiet equilibration) – this is another question. The important thing at present is to take note of the existence of these contradictions. All the contradictions of circulation come to life again in a new form. The product as use value is in contradiction with itself as value; i.e. in as much as it exists in a specific quality, as a specific thing, as a product of specific natural properties, as a substance of need in contradiction with its substance as value, which it possesses exclusively on account of its being objectified labour. But this time, this contradiction is posited not merely as it was in circulation, as a merely formal difference; rather the quality of being measured by use value is here firmly determined as the quality of being measured by the total requirement for this product by all those engaged in exchange – i.e. by the amount of total consumption. The latter here appears as measure for it as use value and hence also as exchange value. In simple circulation it had simply to be transposed from the form of a particular use value into the form of exchange value. Its barrier then appeared only in the fact that, [coming] from circulation, it existed in a particular form owing to its natural composition, rather than in the value form in which it could be exchanged for all other commodities directly. What is posited now is that the measure of its availability is given in its natural composition itself. In order to be transposed into the general form, the use value has to be present in a limited and specific quantity; a quantity whose measure does not lie in the amount of labour objectified in it, but arises from its nature as use value, in particular, use value for others. At the same time, the previous contradiction, that money for-itself [das für sich seiende Geld] had to proceed to exchange itself for living labour, now appears even greater, in as much as the surplus money, in order to exist as such, or the surplus value, has to exchange itself for surplus value. Hence, as value, it encounters its barrier in alien production, just as, as use value, its barrier is alien consumption; in the latter, its measure is the amount of need for the specific product, in the former, the amount of objectified labour existing in circulation. The indifference of value as such towards use value is thereby brought into just as false a position [Position] as are, on the other side, the substance of value and its measure as objectified labour in general. *

* The transition to the relation of supply, demand, prices cannot be made yet, as their development proper presupposes capital. Should not demand and, supply, in so far as they are abstract categories and do not yet express any particular economic relations, perhaps be examined already together with simple circulation or production?

The main point here – where we are concerned with the general concept of capital – is that it is this unity of production and realization, not immediately but only as a process, which is linked to certain conditions, and, as it appeared, external conditions. *

* We saw earlier that the capital realization process presupposes the prior development of the simple production process. [20] This will be the case with demand and supply as well, to the extent that simple exchange presupposes a need for the product. The (direct) producer’s own need as the need for others’ demand. In the course of this development itself it will be seen what has to be presupposed to it, and all this is then to be thrown into the first chapters.

The creation by capital of absolute surplus value – more objectified labour – is conditional upon an expansion, specifically a constant expansion, of the sphere of circulation. The surplus value created at one point requires the creation of surplus value at another point, for which it may be exchanged; if only, initially, the production of more gold and silver, more money, so that, if surplus value cannot directly become capital again, it may exist in the form of money as the possibility of new capital. A precondition of production based on capital is therefore the production of a constantly widening sphere of circulation, whether the sphere itself is directly expanded or whether more points within it are created as points of production. While circulation appeared at first as a constant magnitude, it here appears as a moving magnitude, being expanded by production itself. Accordingly, it already appears as a moment of production itself. Hence, just as capital has the tendency on one side to create ever more surplus labour, so it has the complementary tendency to create more points of exchange; i.e., here, seen from the standpoint of absolute surplus value or surplus labour, to summon up more surplus labour as complement to itself; i.e. at bottom, to propagate production based on capital, or the mode of production corresponding to it. The tendency to create the world market is directly given in the concept of capital itself. Every limit appears as a barrier to be overcome. Initially, to subjugate every moment of production itself to exchange and to suspend the production of direct use values not entering into exchange, i.e. precisely to posit production based on capital in place of earlier modes of production, which appear primitive [naturwüchsig] from its standpoint. Commerce no longer appears here as a function taking place between independent productions for the exchange of their excess, but rather as an essentially all-embracing presupposition and moment of production itself. *

* Of course, all production aimed at direct use value decreases the number of those engaged in exchange, as well as the sum of exchange values thrown into circulation, and above all the production of surplus values. Hence the tendency of capital (1) continually to enlarge the periphery of circulation; (2) to transform it at all points into production spurred on by capital. [21]

On the other side, the production of relative surplus value, i.e. production of surplus value based on the increase and development of the productive forces, requires the production of new consumption; requires that the consuming circle within circulation expands as did the productive circle previously. Firstly quantitative expansion of existing consumption; secondly: creation of new needs by propagating existing ones in a wide circle; thirdly: production of new needs and discovery and creation of new use values. In other words, so that the surplus labour gained does not remain a merely quantitative surplus, but rather constantly increases the circle of qualitative differences within labour (hence of surplus labour), makes it more diverse, more internally differentiated. For example, if, through a doubling of productive force, a capital of 50 can now do what a capital of 100 did before, so that a capital of 50 and the necessary labour corresponding to it become free, then, for the capital and labour which have been set free, a new, qualitatively different branch of production must be created, which satisfies and brings forth a new need. The value of the old industry is preserved by the creation of the fund for a new one in which the relation of capital and labour posits itself in a new form. Hence exploration of all of nature in order to discover new, useful qualities in things; universal exchange of the products of all alien climates and lands; new (artificial) preparation of natural objects, by which they are given new use values. * The exploration of the earth in all directions, to discover new things of use as well as new useful qualities of the old; such as new qualities of them as raw materials etc.; the development, hence, of the natural sciences to their highest point; likewise the discovery, creation and satisfaction of new needs arising from society itself; the cultivation of all the qualities of the social human being, production of the same in a form as rich as possible in needs, because rich in qualities and relations – production of this being as the most total and universal possible social product, for, in order to take gratification in a many-sided way, he must be capable of many pleasures [genussfähig], hence cultured to a high degree – is likewise a condition of production founded on capital. This creation of new branches of production, i.e. of qualitatively new surplus time, is not merely the division of labour, but is rather the creation, separate from a given production, of labour with a new use value; the development of a constantly expanding and more comprehensive system of different kinds of labour, different kinds of production, to which a constantly expanding and constantly enriched system of needs corresponds.

* The role played by luxury in antiquity in contrast to its role among the moderns, to be alluded to later.

Thus, just as production founded on capital creates universal industriousness on one side – i.e. surplus labour, value-creating labour – so does it create on the other side a system of general exploitation of the natural and human qualities, a system of general utility, utilizing science itself just as much as all the physical and mental qualities, while there appears nothing higher in itself, nothing legitimate for itself, outside this circle of social production and exchange. Thus capital creates the bourgeois society, and the universal appropriation of nature as well as of the social bond itself by the members of society. Hence the great civilizing influence of capital; its production of a stage of society in comparison to which all earlier ones appear as mere local developments of humanity and as nature-idolatry. For the first time, nature becomes purely an object for humankind, purely a matter of utility; ceases to be recognized as a power for itself; and the theoretical discovery of its autonomous laws appears merely as a ruse so as to subjugate it under human needs, whether as an object of consumption or as a means of production. In accord with this tendency, capital drives beyond national barriers and prejudices as much as beyond nature worship, as well as all traditional, confined, complacent, encrusted satisfactions of present needs, and reproductions of old ways of life. It is destructive towards all of this, and constantly revolutionizes it, tearing down all the barriers which hem in the development of the forces of production, the expansion of needs, the all-sided development of production, and the exploitation and exchange of natural and mental forces.

But from the fact that capital posits every such limit as a barrier and hence gets ideally beyond it, it does not by any means follow that it has really overcome it, and, since every such barrier contradicts its character, its production moves in contradictions which are constantly overcome but just as constantly posited. Furthermore. The universality towards which it irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognized as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension.

Those economists who, like Ricardo, conceived production as directly identical with the self-realization of capital – and hence were heedless of the barriers to consumption or of the existing barriers of circulation itself, to the extent that it must represent counter-values at all points, having in view only the development of the forces of production and the growth of the industrial population – supply without regard to demand – have therefore grasped the positive essence of capital more correctly and deeply than those who, like Sismondi, emphasized the barriers of consumption and of the available circle of counter-values, although the latter has better grasped the limited nature of production based on capital, its negative one-sidedness. The former more its universal tendency, the latter its particular restrictedness. The whole dispute as to whether overproduction is possible and necessary in capitalist production revolves around the point whether the process of the realization of capital within production directly posits its realization in circulation; whether its realization posited in the production process is its real realization. Ricardo himself, of course, has a suspicion that the exchange value of a commodity is not a value apart from exchange, and that it proves itself as a value only in exchange; but he regards the barriers which production thereby encounters as accidental, as barriers which are overcome. He therefore conceives the overcoming of such barriers as being in the essence of capital, although he often becomes absurd in the exposition of that view; while Sismondi, by contrast, emphasizes not only the encounter with the barriers, but their creation by capital itself, and has a vague intuition that they must lead to its breakdown. He therefore wants to put up barriers to production, from the outside, through custom, law etc., which of course, as merely external and artificial barriers, would necessarily be demolished by capital. On the other side, Ricardo and his entire school never understood the really modern crises, in which this contradiction of capital discharges itself in great thunderstorms which increasingly threaten it as the foundation of society and of production itself.

The attempts made from the orthodox economic standpoint to deny that there is general overproduction at any given moment are indeed childish. Either, in order to rescue production based on capital (see e.g. MacCulloch), [22] all its specific qualities are ignored and their specific character as forms omitted, and capital is conceived as its inverse, as simple production for immediate use value. Totally abstracts away the essential relations. In fact, in order to cleanse it of contradictions, it is virtually dropped and negated. [23] – Or, like e.g. Mill, more perceptively (copied from the dull Say): supply and demand are allegedly identical, and should therefore necessarily correspond. [24] Supply, namely, is allegedly a demand measured by its own amount. Here a great confusion: (1) This identity of supply, so that it is a demand measured by its own amount, is true only to the extent that it is exchange value = to a certain amount of objectified labour. To that extent it is the measure of its own demand – as far as value is concerned. But, as such a value, it first has to be realized through the exchange for money, and as object of exchange for money it depends (2) on its use value, but as use value it depends on the mass of needs present for it, the demand for it. But as use value it is absolutely not measured by the labour time objectified in it, but rather a measuring rod is applied to it which lies outside its nature as exchange value. Or, it is further said: Supply itself is demand for a certain product of a certain value (which expresses itself in the demanded amount of the product). Then, if the supplied product is unsaleable, it proves that too much has been produced of the supplied commodity and too little of what the supplier demands. Thus allegedly there is no general overproduction, but merely overproduction of one or a few articles, as against underproduction of others. This again forgets that what the producing capital demands is not a specific use value, but value for itself, i.e. money – money not in the role of medium of circulation, but as a general form of wealth, or a form of the realization of capital in one regard, a return to its original dormant state in the other. But the assertion that too little money is produced means indeed nothing else than what is being asserted, that production is not identical with realization, i.e. that it is overproduction, or, what is the same, that it is production which cannot be transformed into money, into value; production which does not pass the test of circulation. Hence the illusion of the money-artists (including Proudhon etc.), that it is a case of lack of means of circulation – on account of the high cost of money – and that more money has to be created artificially. [25] (See also the Birminghamites, e.g. the Gemini.) [26] Or it is said that production and consumption are the same from the social standpoint, that hence an excess or disproportion between the two can never take place. Social standpoint here means the abstraction which ignores precisely the specific social structure and relations and hence also the contradictions which emerge from it. Storch, for example, remarked quite correctly against Say that a great part of consumption is not consumption for immediate use, but consumption in the production process, e.g. consumption of machines, coal, oil, required buildings etc. [27] This consumption is in no way identical with that at issue here. Malthus and Sismondi have likewise correctly remarked that e.g. the workers’ consumption is in no way in itself a sufficient consumption for the capitalist. [28] The moment of realization is here simply thrown out entirely, and production and consumption are simply equated, i.e. not production based on capital but production based directly on use value is presupposed. Or, expressed socialistically: [29] labour and the exchange of labour, i.e. production and its exchange (circulation), are allegedly the entire process; how then could a disproportion arise except by oversight, miscalculation? Labour is here regarded not as wage labour, nor capital as capital. On one side, the consequences of production based on capital are accepted, on the other side the presuppositions and conditions of these consequences are denied – necessary labour as posited by and for surplus labour. Or – e.g. Ricardo – since production is itself regulated by the costs of production, it allegedly regulates itself, and if one branch of production does not realize itself then capital withdraws from it to a certain degree and throws itself on another point where it is needed. [30] But apart from the fact that this necessity of evening-up already presupposes the unevenness, the disharmony and hence the contradiction – in a general crisis of overproduction the contradiction is not between the different kinds of productive capital, but between industrial and loanable capital – between capital as directly involved in the production process and capital as money existing (relatively) outside of it. Finally: proportionate production (this is already in Ricardo also, etc.) only when it is capital’s tendency to distribute itself in correct proportions, but equally its necessary tendency – since it strives limitlessly for surplus labour, surplus productivity, surplus consumption etc. – to drive beyond the proportion. (In competition this inner tendency of capital appears as a compulsion exercised over it by alien capital, which drives it forward beyond the correct proportion with a constant march, march! Free competition, as Mr Wakefield correctly sniffs out in his commentary on Smith, has never yet been developed by the economists, no matter how much they prattle about it, and [no matter] how much it is the basis of the entirety of bourgeois production, production resting on capital. [31] It has been understood only negatively: i.e. as negation of monopolies, the guild system, legal regulations etc. As negation of feudal production. But it also has to be something for itself, after all, since a mere 0 is an empty negation, abstraction, from a barrier which immediately arises again e.g. in the form of monopoly, natural monopolies etc. Conceptually, competition is nothing other than the inner nature of capital, its essential character, appearing in and realized as the reciprocal interaction of many capitals with one another, the inner tendency as external necessity.) (Capital exists and can only exist as many capitals, and its self-determination therefore appears as their reciprocal interaction with one another.) Capital is just as much the constant positing as the suspension of proportionate production. The existing proportion always has to be suspended by the creation of surplus values and the increase of productive forces. But this demand, that production should be expanded simultaneously and at once in the same proportion, makes external demands upon capital which in no way arise out of it itself; at the same time, the departure from the given proportion in one branch of production drives all of them out of it, and in unequal proportions. So far (for we have not yet reached the aspect of capital in which it is circulating capital, and still have circulation on one side and capital on the other, or production as its presupposition, or ground from which it arises), even from the standpoint of production alone, circulation contains the relation to consumption and production – in other words, surplus labour as counter value [Gegenwert], and differentiation of labour in an ever richer form.

The simple concept of capital has to contain its civilizing tendencies etc. in themselves; they must not, as in the economics books until now, appear merely as external consequences. Likewise the contradictions which are later released, demonstrated as already latent within it.

So far in the realization process, we have only the indifference of the individual moments towards one another; that they determine each other internally and search for each other externally; but that they may or may not find each other, balance each other, correspond to each other. The inner necessity of moments which belong together, and their indifferent, independent existence towards one another, are already a foundation of contradictions.

Still, we are by no means finished. The contradiction between production and realization – of which capital, by its concept, is the unity – has to be grasped more intrinsically than merely as the indifferent, seemingly reciprocally independent appearance of the individual moments of the process, or rather of the totality of processes.

To approach the matter more closely: First of all, there is a limit, not inherent to production generally, but to production founded on capital. This limit is double, or rather the same regarded from two directions. It is enough here to demonstrate that capital contains a particular restriction of production – which contradicts its general tendency to drive beyond every barrier to production – in order to have uncovered the foundation of overproduction, the fundamental contradiction of developed capital; in order to have uncovered, more generally, the fact that capital is not, as the economists believe, the absolute form for the development of the forces of production – not the absolute form for that, nor the form of wealth which absolutely coincides with the development of the forces of production. The stages of production which precede capital appear, regarded from its standpoint, as so many fetters upon the productive forces. It itself, however, correctly understood, appears as the condition of the development of the forces of production as long as they require an external spur, which appears at the same time as their bridle. It is a discipline over them, which becomes superfluous and burdensome at a certain level of their development, just like the guilds etc. These inherent limits have to coincide with the nature of capital, with the essential character of its very concept. These necessary limits are:

(1) Necessary labour as limit on the exchange value of living labour capacity or of the woes of the industrial population;

(2) Surplus value as limit on surplus labour time; and, in regard to relative surplus labour time, as barrier to the development of the forces of production;

(3) What is the same, the transformation into money, exchange value as such, as limit of production; or exchange founded on value, or value founded on exchange, as limit of production. This is:

(4) again the same as restriction of the production of use values by exchange value; or that real wealth has to take on a specific form distinct from itself, a form not absolutely identical with it, in order to become an object of production at all.

However, these limits come up against the general tendency of capital (which showed itself in simple circulation, where money as medium of circulation appeared as merely vanishing, without independent necessity, and hence not as limit and barrier) to forget and abstract from:

(1) necessary labour as limit of the exchange value of living labour capacity; (2) surplus value as the limit of surplus labour and development of the forces of production; (3) money as the limit of production; (4) the restriction of the production of use values by exchange value.

Hence overproduction: i.e. the sudden recall of all these necessary moments of production founded on capital; hence general devaluation in consequence of forgetting them. Capital, at the same time, [is] thereby faced with the task of launching its attempt anew from a higher level of the development of productive forces, with each time greater collapse as capital. Clear, therefore, that the higher the development of capital, the more it appears as barrier to production – hence also to consumption – besides the other contradictions which make it appear as burdensome barrier to production and intercourse.

<The entire credit system, and the over-trading, over-speculation etc. connected with it, rests on the necessity of expanding and leaping over the barrier to circulation and the sphere of exchange. This appears more colossally, classically, in the relations between peoples than in the relations between individuals. Thus e.g. the English forced to lend to foreign nations, in order to have them as customers. At bottom, the English capitalist exchanges doubly with productive English capital, (1) as himself, (2) as Yankee etc. or in whatever other form he has placed his money.>

<Capital as barrier to production is pointed out: e.g. Hodgskin: [32] ‘In the present state, every accumulation of capital adds to the amount of profit demanded from the labourer, and extinguishes all that labour which would only procure the labourer his comfortable existence … Profit the limitation of production.’ (H[odgskin, Notebook,] p. 46.) [33] Through foreign trade, the barrier of the sphere of exchange [is] expanded, and [it is] made possible for the capitalist to consume more surplus labour: ‘In a series of years the world can take no more from us than we can take from the world. Even the profits made by our merchants in their foreign trade are paid by the consumer of the return goods here. Foreign trade mere barter, and as such exchange for the convenience and enjoyment of the capitalist. But he can consume commodities to a certain degree only. He exchanges cottons etc. for the wines and silks of foreign countries. But these represent only the surplus labour of our own population as much as the clothes and cottons, and in this way the destructive power of the capitalist is increased beyond all bounds. Thus nature is outwitted.’ (Source and Remedy etc., pp. 27, 28.) [34] How the glut is connected with the barrier of necessary labour: ‘The very meaning of an increased demand by the labourers is, a disposition to take less themselves, and leave a larger share for their employers; and if it be said that this, by diminishing consumption, increases glut, I can only say that glut then is synonymous with high profits.’ (Enquiry, London, 1821, p. 12.) [35] Herein the one side of the contradiction completely expressed. ‘The practice of stopping labour at that point where it can produce, in addition to the subsistence of the labourer, a profit for the capitalist, opposed to the natural law which regulates production.’ (H[odgskin, Notebook,] 41, IX.) [36] ‘The more the capital accumulates, the more the whole amount of profit demanded does so; so there arises an artificial check to production and population.’ (H[odgskin, Notebook,] 46.) [37] The contradictions between capital as instrument of production in general and as instrument of production of value, developed as follows by Malthus (X, 40 seq.): ‘Profits are invariably measured by value and never by quantity … The wealth of a country depends partly upon the quantity of produce obtained by its labour, and partly upon such an adaptation of this quantity to the wants and powers of the existing population as is calculated to give it value. Nothing can be more certain than that it is not determined by either of them alone. But where wealth and value are perhaps the most nearly connected, is in the necessity of the latter to the production of the former. The value set upon commodities, that is the sacrifice of labour which people are willing to make in order to sustain them, in the actual state of things may be said to be almost the sole cause of the existence of wealth … The consumptive demand occasioned only by the workmen employed in productive labour can never alone furnish a motive to the accumulation and employment of capital … the powers of production alone do not secure the creation of a proportionate degree of wealth, as little as the increase of population. What it requires in addition is such a distribution of produce, and such an adaptation of this produce to the wants of those who are to consume it, as constantly to increase the exchangeable value of the whole mass, i.e. the powers of production are only called fully into motion by the unchecked demand for all that is produced … [38] This is however brought about on the one hand by constantly new branches of industry (and reciprocal expansion of the old), by means of which the old obtain new markets etc. Production indeed itself creates demand, in that it employs more workers in the same branch of business, and creates new branches of business, where new capitalists again employ new workers and at the same time alternately become market for the old; but the demand created by the productive labourer himself can never be an adequate demand, because it does not go to the full extent of what he produces. If it did, there would be no profit, consequently no motive to employ him. The very existence of a profit upon any commodity presupposes a demand exterior to that of the labourer who has produced it.’ ‘Both labourers and capital may be redundant compared with the means of employing them profitably.’> [39]

<To be noted for (3), to which we shall soon proceed, that the provisional accumulation, as which capital appears vis-à-vis labour, and by means of which it is the command over labour, is at first nothing else but surplus labour itself in the form of surplus produce, at the same time claim on alien co-existing labour.>

The point here, of course, is not yet to develop overproduction specifically, but only the predisposition to it, such as it is posited in primitive form in the capital relation itself. We must also, therefore, omit here any regard for the other possessing and consuming etc. classes, which do not produce but live from their revenue, hence exchange with capital; form centres of exchange for it. We can consider them only partly (but better, along with accumulation), in so far as they are most important for the historic formation of capital.

In production based on slavery, as well as in patriarchal agricultural-industrial production, where the greatest part of the population directly satisfies the greatest part of its needs directly by its labour, the sphere of circulation and exchange is still very narrow; and more particularly in the former, the slave does not come into consideration as engaged in exchange at all. But in production based on capital, consumption is mediated at all points by exchange, and labour never has a direct use value for those who are working. Its entire basis is labour as exchange value and as the creation of exchange value.

Well. First of all

the wage worker as distinct from the slave is himself an independent centre of circulation, someone who exchanges, posits exchange value, and maintains exchange value through exchange. Firstly: in the exchange between that part of capital which is specified as wages, and living labour capacity, the exchange value of this part of capital is posited immediately, before capital again emerges from the production process to enter into circulation, or this can be conceived as itself still an act of circulation. Secondly: To each capitalist, the total mass of all workers, with the exception of his own workers, appear not as workers, but as consumers, possessors of exchange values (wages), money, which they exchange for his commodity. They are so many centres of circulation with whom the act of exchange begins and by whom the exchange value of capital is maintained. They form a proportionally very great part – although not quite so great as is generally imagined, if one focuses on the industrial worker proper – of all consumers. The greater their number – the number of the industrial population – and the mass of money at their disposal, the greater the sphere of exchange for capital. We have seen that it is the tendency of capital to increase the industrial population as much as possible.

Actually, the relation of one capitalist to the workers of another capitalist is none of our concern here. It only shows every capitalist’s illusion, but alters nothing in the relation of capital in general to labour. Every capitalist knows this about his worker, that he does not relate to him as producer to consumer, and [he therefore] wishes to restrict his consumption, i.e. his ability to exchange, his wage, as much as possible. Of course he would like the workers of other capitalists to be the greatest consumers possible of his own commodity. But the relation of every capitalist to his own workers is the relation as such of capital and labour, the essential relation. But this is just how the illusion arises – true for the individual capitalist as distinct from all the others – that apart from his workers the whole remaining working class confronts him as consumer and participant in exchange, as money-spender, and not as worker. It is forgotten that, as Malthus says, ‘the very existence of a profit upon any commodity pre-supposes a demand exterior to that of the labourer who has produced it’, [40] and hence the demand of the labourer himself can never be an adequate demand. Since one production sets the other into motion and hence creates consumers for itself in the alien capital’s workers, it seems to each individual capital that the demand of the working class posited by production itself is an ‘adequate demand’. On one side, this demand which production itself posits drives it forward, and must drive it forward beyond the proportion in which it would have to produce with regard to the workers; on the other side, if the demand exterior to the demand of the labourer himself disappears or shrinks up, then the collapse occurs. Capital itself then regards demand by the worker – i.e. the payment of the wages on which this demand rests – not as a gain but as a loss. I.e. the immanent relation between capital and labour asserts itself. Here again it is the competition among capitals, their indifference to and independence of one another, which brings it about that the individual capital relates to the workers of the entire remaining capital not as to workers: hence is driven beyond the right proportion. What precisely distinguishes capital from the master-servant relation is that the worker confronts him as consumer and possessor of exchange values, and that in the form of the possessor of money, in the form of money he becomes a simple centre of circulation – one of its infinitely many centres, in which his specificity as worker is extinguished. *

* It is quite the same with the demand created by production itself for raw material, semi-finished goods, machinery, means of communication, and for the auxiliary materials consumed in production, such as dyes, coal, grease, soap, etc. This effective, exchange-value-positing demand is adequate and sufficient as long as the producers exchange among themselves. Its inadequacy shows itself as soon as the final product encounters its limit in direct and final consumption. This semblance, too, which drives beyond the correct proportion, is founded in the essence of capital, which, as will be developed more closely in connection with competition, is something which repels itself, is many capitals mutually quite indifferent to one another. In so far as one capitalist buys from others, buys commodities, or sells, they are within the simple exchange relation; and do not relate to one another as capital. The correct (imaginary) proportion in which they must exchange with one another in order to realize themselves at the end as capital lies outside their relation to one another.

To begin with: capital forces the workers beyond necessary labour to surplus labour. Only in this way does it realize itself, and create surplus value. But on the other hand, it posits necessary labour only to the extent and in so far as it is surplus labour and the latter is realizable as surplus value. It posits surplus labour, then, as the condition of the necessary, and surplus value as the limit of objectified labour, of value as such. As soon as it cannot posit value, it does not posit necessary labour; and, given its foundation, it cannot be otherwise. It therefore restricts labour and the creation of value – by an artificial check, as the English express it – and it does so on the same grounds as and to the same extent that it posits surplus labour and surplus value. By its nature, therefore, it posits a barrier to labour and value-creation, in contradiction to its tendency to expand them boundlessly. And in as much as it both posits a barrier specific to itself, and on the other side equally drives over and beyond every barrier, it is the living contradiction. *

* Since value forms the foundation of capital, and since it therefore necessarily exists only through exchange for counter-value, it thus necessarily repels itself from itself. A universal capital, one without alien capitals confronting it, with which it exchanges – and from the present standpoint, nothing confronts it but wage labourers or itself – is therefore a non-thing. The reciprocal repulsion between capitals is already contained in capital as realized exchange value.

While capital thus, on one side, makes surplus labour and its exchange for surplus labour into the precondition of necessary labour and hence of the positing of labour capacity [Arbeitsvermögen] as a centre of exchange – hence already narrows and attaches conditions to the sphere of exchange from this side – it is just as essential to it, on the other side, to restrict the worker’s consumption to the amount necessary to reproduce his labour capacity – to make the value which expresses necessary labour the barrier to the realization of labour capacity and hence of the worker’s exchange capacity, and to strive to reduce the relation of this necessary labour to surplus labour to the minimum. [Thus we have] a new barrier to the sphere of exchange, which is, however, at the same time identical, as is the first, with the tendency of capital to relate to every limit on its self-realization as to a barrier. The boundless enlargement of its value – boundless creation of value – therefore absolutely identical here with the positing of barriers to the sphere of exchange, i.e. the possibility of realization – the realization of the value posited in the production process.

The same with the productive force. On the one hand, the necessary tendency of capital to raise it to the utmost, in order to increase relative surplus time. On the other hand, thereby decreases necessary labour time, hence the worker’s exchange capacity. Further, as we have seen, relative surplus value rises much more slowly than the force of production, and moreover this proportion grows ever smaller as the magnitude reached by the productive forces is greater. But the mass of products grows in a similar proportion – if not, then new capital would be set free – as well as labour – which did not enter into circulation. But to the same degree as the mass of products grows, so grows the difficulty of realizing the labour time contained in them – because the demands made on consumption rise. (We are still concerned here only with the way in which the capital realization process is its devaluation process. Out of place here would be the question how, while it has the tendency to heighten the productive forces boundlessly, it also and equally makes one-sided, limits etc. the main force of production, the human being himself, and has the tendency in general to restrict the forces of production.)

Capital, then, posits necessary labour time as the barrier to the exchange value of living labour capacity; surplus labour time as the barrier to necessary labour time; and surplus value as the barrier to surplus labour time; while at the same time it drives over and beyond all these barriers, to the extent that it posits labour capacity opposite itself as something simply engaged in exchange, as money, and surplus labour time as the only barrier, because creatrix of surplus value. (Or, from the first aspect, it posits the exchange of surplus values as the barrier to the exchange of the necessary values.)

In one and the same moment, it posits the values on hand in circulation – or, what is the same, the proportion of values posited by it to the values contained in it and presupposed in circulation – as the barrier, the necessary barrier to its value-creation; on the other hand, its productivity as the only barrier and creatrix of values. It therefore drives constantly on one side towards its own devaluation, on the other side towards the obstruction of the productive forces, and of labour which objectifies itself in values.

Overproduction. – Proudhon (How is it possible that in the price of the commodity which the worker buys, he pays the profit etc. and still obtains his necessary wages). – Price of the commodity and labour time. Surplus etc. (Price and value etc.) – Capitalist does not sell too dear; but still above what the thing costs him. – Price (fractional). Bastiat. Decline of the fractional price. – Price can fall below value without damage to capital. Number and unit (measure) important in the multiplication of prices

<This nonsense about the impossibility of overproduction (in other words, the assertion of the immediate identity of capital’s process of production and its process of realization) has been expressed in a manner which is at least sophistical, i.e. ingenious, as mentioned above, [41] by James Mill, in the formula that supply = its own demand, that supply and demand therefore balance, which means in other words the same thing as that value is determined by labour time, and hence that exchange adds nothing to it, and which forgets only that exchange does have to take place and that this depends (in the final instance) on the use value. Mill says, then, that if demand and supply do not balance, this comes about because too much has been produced of one specific product (the supplied product) and too little of the other (the one in demand). This too much and too little concerns not the exchange value, but the use value. More of the supplied product exists than is ‘needed’; this is what it boils down to. Hence that overproduction comes from use value and therefore from exchange itself. This in stultified form in Say – products are exchanged only for products; [42] therefore, at most, too much has been produced of one and too little of another. Forgetting: (1) that values are exchanged for values, and a product exchanges for another only to the extent that it is value; i.e. that it is or becomes money; (2) it exchanges for labour. The good gentleman adopts the standpoint of simple exchange, in which indeed no overproduction is possible, for it is indeed concerned not with exchange value but with use value. Overproduction takes place in connection with realization, not otherwise. [43]>

Proudhon, who certainly hears the bells ringing but never knows where, therefore sees the origin of overproduction in the fact ‘that the worker cannot buy back his product’. [44] By this he understands that interest and profit are added on to it; or that the price of the product is an overcharge on top of its real value. This demonstrates first of all that he understands nothing about the determination of value, which, generally speaking, can include no overcharge. In practical commerce, capitalist A can screw capitalist B. The one pockets what the other loses. If we add them both together, then the sum of their exchange = the sum of the labour time objectified in it, of which capitalist A has merely pocketed more than his share in relation to B. From all the profits made by capital, i.e. the total mass of capitalists, there is deducted (1) the constant part of capital; (2) the wage, or, the amount of objectified labour time necessary in order to reproduce living labour capacity. They can therefore divide nothing among themselves other than the surplus value. The proportion – just or unjust – in which they distribute this surplus value among themselves alters absolutely nothing about exchange or about the exchange relation between capital and labour.

It might be said that necessary labour time (i.e. the wage), which therefore excludes profit, and is rather to be deducted from it, is itself again determined by the prices of products which already include profit. Where else could the profit come from which the capitalist who does not directly employ this worker makes in the exchange with him? For example, the spinner’s worker exchanges his wages for so many bushels of grain. But in the price of each bushel, the profit of the farmer, i.e. of capital, is already included. So that the price of the consumption goods which are bought by necessary labour itself already includes surplus labour time. It is clear, first of all, that the wage paid by the spinner to his workmen must be high enough to buy the necessary bushel of wheat, regardless of what profit for the farmer may be included in the price of the bushel of wheat; but that, likewise, on the other side, the wage which the farmer pays his workers must be high enough to procure for them the necessary quantity of clothing, regardless of what profit for the weaver and the spinner may be included in the price of these articles of clothing.

The puzzle arises simply because (1) price and value are being mixed up; (2) relations are brought in which are irrelevant to the determination of value of such. Suppose initially – and this is the conceptual relation – that capitalist A himself produces all the consumption goods which the worker needs, or which represent the sum of use values in which his necessary labour objectifies itself. Then, with the money which he obtains from the capitalist – money appears in this transaction only as medium of circulation – the worker would have to buy back from the capitalist, with that money, a fractional part – the part representing his necessary labour – of his product. The price of a fractional part of capitalist A’s product is of course the same for the worker as for everyone else engaged in exchange. From the moment he buys from the capitalist, his specific quality as worker is extinguished; the money contains no trace of the relation in which, or of the operation by which, it was obtained; in circulation he confronts the capitalist simply as M, and the capitalist confronts him as C; as realizer of the price of C, which is hence presupposed for him just as for every other representative of M, i.e. buyer. Good. But in the price of the fractional part of the commodity which he buys, the profit is included in which the surplus value going to the capitalist appears. If his necessary labour time, therefore, represents 20 thalers = a certain fractional part of the product, it follows that, if the profit is 10%, the capitalist sells him the commodity for 22 thalers.

That is what Proudhon thinks, and concludes from it that the worker cannot buy back his product, i.e. the fractional part of the total product which objectifies his necessary labour. (We will come back directly to his other conclusion, that therefore capital cannot adequately exchange, hence overproduction.) To make the matter tangible, say that the worker’s 20 thalers = 4 bushels of grain. Consequently – if 20 thalers is the value of the 4 bushels expressed in money – if the capitalist sells them for 22, then the worker could not buy back the 4 bushels, or rather he could buy only 3 7/11 bushels. In other words, he imagines that the monetary transaction distorts the relation. 20 thalers is the price of necessary labour = 4 bushels; and the capitalist pays this to the worker; but as soon as the latter presents his 20 thalers and asks for the 4 bushels, he gets only 3 7/11. Since he would thereby receive less than the necessary wage, he could not live at all, and thus Mr Proudhon proves more than he intends. *

* It is beside the point here that capital, in practice as well as in general tendency, directly employs price, as e.g. in the truck system, to defraud necessary labour, and to reduce it below the standard given by nature as well as by a specific state of society. We must always presuppose here that the wage paid is economically just, i.e. that it is determined by the general laws of economics. The contradictions have to follow here from the general relations themselves, and not from fraud by individual capitalists. The further forms which this assumes in reality belong in the doctrine of wages.

But the presupposition, if you please, is wrong. If 5 thalers expresses the value of a bushel, i.e. the labour time objectified in it, and if 4 bushels express the necessary wages of labour, then capitalist A sells these 4 bushels not, as Proudhon thinks, for 22 but for 20 thalers. But the thing is this: let the total product (including necessary and surplus labour time) equal 110 thalers = 22 bushels; let 16 of these bushels = 80 thalers, represent the capital invested in seed, machinery etc.; 4 bushels = 20 thalers for necessary labour time; 2 bushels = 10 thalers, surplus labour time. The capitalist sells each bushel at 5 thalers, the necessary value of the bushel, and nevertheless he makes a gain of 10% on each bushel, or 5/10 of a thaler, 1/2 a thaler = 15 silver groschen. How? Because he sells 22 × 5 instead of 20 × 5. We can here equate to 0 the additional capital he would have to lay out in order to produce 2 additional bushels, since these can dissolve in pure surplus labour, more thorough ploughing, elimination of weeds, procurement of mineral fertilizer which, say, costs him nothing, etc. The value contained in the 2 surplus bushels has cost him nothing, hence makes up a surplus above his expenditures. If he sells 20 of the 22 bushels for what they cost him, for 100 thalers, plus 2, which cost him nothing – but whose value = the labour contained in them – for 10 thalers, then it is the same for him as if he sold all of them, each bushel for 15 silver groschen more than it cost him. (For 1/2 a thaler or 10% of 5 thalers = 5/10.) Therefore, although he makes 2 thalers on the 4 bushels he sells to the worker, the worker obtains each bushel at its necessary value. The capitalist makes 2 thalers on them only because, beside these 4 bushels, he sells 18 additional ones at the identical price. If he sold only 16, he would make nothing; for then he would sell a total of: 5 × 20 =100, his invested capital.

Indeed, in manufacturing, too, it is possible that the capital’s outlays do not increase, while a surplus value is sold nevertheless; i.e. it is not necessary that the outlay in raw material and machinery should grow. Assume that the same product obtains a higher finish through labour by hand – the mass of required raw material and instrument held constant – and hence its use value, therefore the use value of the product, increases, not in quantity, but in quality, owing to the increased hand labour employed on it. Its exchange value – the labour objectified in it – simply grows in relation to this labour. If the capitalist then sells for 10% more, then the worker gets paid the fractional part of the product, expressed in money, which represents necessary labour; and if the product could be divided, then the worker could buy this fractional part. The capitalist’s profit would come not from overcharging the worker for this fractional part, but from the fact that in the whole of the product he sells a fractional part which he has not paid for, and which represents, precisely, surplus labour time. The product is always divisible as value; in its natural form, it need not be so. Profit here always comes from the fact that the whole value contains a fractional part which is not paid, and hence a fractional part of surplus labour is paid in each fractional part of the whole. So in the above example. When the capitalist sells 22 bushels, i.e. 2 which represent surplus labour, it is the same as if he sold an extra 1/10 of a bushel per bushel, i.e. 1/10 surplus value. If e.g. only one clock has been produced, where the relation of labour, capital and surplus value is the same, then the quality of the clock has been raised 1/10 in value by 1/10 labour time which costs the capitalist nothing.

Third case, that the capitalist, as is usual in manufacturing (but not in extractive industry), needs more raw material (let the instrument remain constant; however, nothing is changed if it, too, is variable) in which the surplus labour time objectifies itself. (Actually this does not belong here yet, for capital here can or must just as well be assumed as having also produced the raw material, e.g. the cotton, and surplus production at any point has to reduce itself to mere surplus labour, or, what is rather the reality, presupposes simultaneous surplus labour at all points of circulation.) Assume that he spins up 25 lb. of cotton, which cost him 50 thalers, and for which he requires machinery (which we will assume to be entirely consumed in the production process) at 30 thalers, and wages 20 thalers, for 25 lb. of twist, which he sells at 110. He sells each pound of twist, then, for 4 2/5 thalers, or 4 thalers 12 silver groschen. The worker thus obtains 4 6/11 lb. of twist, if he wants to buy it again. If the worker were working for himself, he would likewise sell the pound for 4 thalers 12 silver groschen and make no profit – presupposing that he performs only the necessary labour; but he would spin up less cotton.

As we know, the value of a pound of twist consists exclusively of the amount of labour time objectified in it. Now suppose that the value of the pound of twist = 5 thalers. Given that 4/5, i.e. 4 thalers, represent cotton, instrument etc.; then 1 thaler represents the labour realized in the cotton by means of the instrument. If the worker, in order to live from spinning, needs say 20 thalers per month, then – since he earns 1 thaler for spinning 1 lb. of twist, but needs 20 – he would have to spin 20 lb. of twist. If he himself owned the cotton, material etc., and were working for himself, hence were his own master, then he would have to sell 20 lb. of twist; since he would earn only 1/5 on each, one thaler, and 1 × 20 = 20. If he works for the capitalist, then the labour which spins up 20 lb. of cotton only represents the necessary labour; for, by presupposition, of the 20 lb. of twist or 20 × 5 = 100 thalers, 80 thalers only represent the already purchased cotton and instrument, and the newly reproduced value represents nothing but necessary labour. Of the 20 lb. of twist, 4 lb. = 20 thalers would represent necessary labour, and 16 nothing more than the constant part of capital. 16 × 5 = 80 thalers. Each additional pound which the capitalist orders to be produced over and above the 20 contains 1/5 surplus labour, surplus value for him. (Objectified labour which he has sold without having paid for it.) If he orders 1 more pound spun, he gains 1 thaler; 10 lb, more, 10 thalers. Out of 10 lb. or 50 thalers, the capitalist would have 40 thalers to replace his investment and 10 thalers of surplus labour; or 8 lb. of twist with which to buy the material for 10 (machinery and cotton), and 2 lb. of twist, or their value, which have cost him nothing. If we now summarize the capitalist’s accounts, we find that he has invested, in thalers

Altogether he has produced 30 lb. of twist (30 × 5 = 150); the pound at 5 thalers, the exact value of the pound, i.e. purely determined by the labour objectified in it, and deriving value only from the latter. Of this 30 lb., 24 represent constant capital, 4 lb. go for wages, and 2 form the surplus value. Calculating it on the basis of his total investment, 140 thalers or 28 lb., as the capitalist himself does, this surplus value forms 1/14 = 7 1/7% (although, in the example given, the surplus value amounts to 50% on labour).

Now assume that the productivity of labour grows to the extent that he is capable of spinning 40 lb. with the same wage cost. According to our assumption he would sell these 40 lb. at their real value, i.e. the pound at 5 thalers, of which 4 thalers is labour objectified in cotton etc., 1 thaler is newly added labour. He would then sell:

40 lb. - the lb. @ 5 thalers = 40 × 5 = 200; from these 40 lb., deduct

On an investment of 200 thalers the capitalist would have earned 20, or 10%. 10% on total investment; but in fact 20 on the second hundred thalers or second 20 lb., in which he did not pay the objectified labour. Now assume that he is capable of making double that, say

In fact in the above example the capitalist’s investment is only 180; on this he makes 20, or 11 1/9%.

The smaller the part of the outlay becomes which represents necessary labour, the greater the gain, although it stands in no obvious relation to the real surplus value, i.e. surplus labour. For example. In order for the capitalist to gain 10%, he has to spin 40 lb. of twist; the worker needs to spin only 20 = necessary labour. Surplus labour = necessary labour, 100% surplus value. This is our old law. But this is not the matter at issue here.

In the above example with the 40 lb., the real value of the pound is 5 thalers, and, like the capitalist, the worker himself, if he conducted his own business as a worker (and could advance himself enough funds to be able to realize the raw material etc. to the extent necessary to allow him to live as a worker), would sell the pound at 5 thalers. He would, however, produce only 20 lb., and from its sale he would use 4/5 to obtain new raw material, and 1/5 to live. The only thing he would make out of the 100 thalers would be his wages. The capitalist’s gain comes not from selling the pound too dear – he sells it at its exact value – but from selling it above the costs of production, his costs (not the costs, for the 1/5 costs the worker surplus labour). If he sold at less than 5 thalers, he would be selling below the value, and the buyer would have the 1/5 of labour contained in every pound of twist above the investment etc., for nothing. But the capitalist calculates in this manner:

What he calculates is not that he gains 20 thalers out of the second 100 thalers, but that he gains 20 on his entire investment of … 180 thalers. This gives him a profit of 11 1/9%, instead of 20. He calculates further that, in order to make this profit, he has to sell 40 lb. 40 lb. at 5 thalers gives him not 1/5, or 20%, but 20 thalers distributed over 40 lb., or 1/2 a thaler per pound. At the price for which he sells the pound, he makes 1/2 a thaler out of 5 thalers; or 1 out of 10 thalers; 10% of the selling price. The price is determined by the price of the fractional unit (1 pound) multiplied by the number to be sold; here 1 pound at 5 thalers × 40. While this determination of price is correct for the capitalist’s pocket, it is equally liable to lead one astray theoretically, in as much as it now seems as if an overcharge above the real value took place in each individual pound, and the origin of the surplus value in each individual pound has become invisible. This determination of price by the multiplication of the value of the unit (measure) of the use value (pound, yard, ton etc.) with the number of these units produced is important later in the theory of prices. There follows from it among other things that a decline in the price of the unit and an increase in the number of units – brought about by growth of the productive forces – shows that profit increases in relation with labour, or that the proportion [Verhältnis] of necessary labour declines in relation [im Verhältnis] to surplus labour – and not the opposite, as is the opinion of Mr Bastiat etc. [45] E.g. if labour grew, owing to productivity, to the point where the worker was producing twice as many pounds in the same time as before – presupposing that 1 lb. of twist renders him entirely the same service, regardless of its cost, and that twist, clothing, is all he needs to live – then the value added by labour to 20 lb. of twist would no longer amount to 1/5 but now only to 1/10, because he would be transforming the 20 lb. cotton into twist in 1/2 the time. To the 80 thalers which the raw material cost, there would then be added not 20 thalers but only 10. The 20 lb. would cost 90 thalers and each pound 90/20 or 4 10/20 thalers. But if the total labour time remained the same, then labour would now transform 80 lb. of cotton into twist, instead of 40. 80 lb. twist, the pound at 4 9/20 thalers, = 356 thalers. [46] The capitalist’s account would be –

The capitalist’s gain from the value of the measure (unit) of use value – pound, yard, quarter etc. – decreases in proportion as the relation of living labour to raw material etc. – of newly added labour – decreases; i.e. the less labour time is necessary to give the raw material the form which the unit expresses. Yard of cloth etc. But on the other side, – since this identical with the increased productivity of labour, or the growth of surplus labour time – the number of these units grows, units in which surplus labour time is contained, i.e. labour time not paid for.

It further follows from the above that the price can fall below the value, and capital can still make a gain; he must sell, however, a number multiplied by the unit large enough to form a surplus over the number multiplied by the unit which forms the necessary price of labour. If the relation of labour to raw material etc. is 1/5, then he can sell at e.g. only 1/10 above the constant value, since the surplus labour costs him nothing. He then makes a present of 1/10 of the surplus labour to the consumer and realizes only 1/10 for himself. This very important in competition; overlooked in particular by Ricardo. The determination of prices is founded on the determination of values, but new elements enter in. The price, which originally appeared only as the value expressed in money, becomes further determined as itself a specific magnitude. If 5 thalers is the value of a pound of twist, i.e. the same labour time as is contained in 5 thalers is contained in 1 pound of twist, then this remains its value regardless of whether 4 or 4 million lb. of twist are being appraised. The moment of the NUMBER OF POUNDS, because it expresses the relation of surplus labour to necessary labour in another form, becomes decisively important in the determination of price. This matter brought to popular awareness in the question of the ten hours’ bill etc.

Specific accumulation of capital (transformation of surplus labour (revenue) into capital). – Proudhon. Value- and price- determination. In antiquity (slaves) not overproduction but over-consumption

It follows further from the above:

If the worker were to restrict himself to necessary labour, he would spin no more than 20 lb. of twist, and realize no more raw material, machinery etc. than would have a value of 80 thalers monthly. Apart from the raw material, machinery etc. which are required for the workers reproduction, self-maintenance, the capitalist must necessarily lay out capital in raw material (and machinery, even if not in the same proportion) for the objectification of surplus labour. (In agriculture, fishery, in short, the extractive industries, this is not absolutely necessary; it becomes so, however, when they are conducted on a large scale, i.e. industrially; it appears then as surplus outlay not in raw material itself, but in the instruments to take it out with.) These surplus outlays – i.e. the tendering of the material for surplus labour – of the objective elements of its realization [Verwirklichung] are actually what forms the specific so-called provisional accumulation of capital: the accumulation of the stock (let us say for the time being) specifically of capital. For it is stupid, as we shall see more closely, to regard it as a quality specific to capital – that the objective conditions of living labour must be present, as such – whether they are furnished by nature or produced in history. These specific advances which capital makes signify nothing more than that it realizes objectified surplus labour – surplus product – in new living surplus labour, instead of investing (spending) it, like, say, Egyptian kings or Etruscan priest-nobles for pyramids etc.

Into the determination of prices (as we shall also see with profit) there also enters – fraud, reciprocal chicanery. One party can win in exchange what the other loses; all they can distribute among themselves is the surplus value – capital as a class. But these proportions open a field for individual deception etc. (apart from supply and demand) which has nothing to do with the determination of value as such.

Thus, out the window goes Mr Proudhon’s discovery that the worker cannot buy back his product. The basis on which this rests is that he (Proudhon) understands nothing, either about value-determination or about price-determination. But, furthermore and regardless of that, his conclusion that this is why there is over production is false in this abstraction. In the slave relation, the masters are not troubled by the fact that the workers do not compete with them as consumers. (Nevertheless, production for luxury as it presents itself in antiquity is a necessary result of the slave relation. Not overproduction, but over-consumption and insane consumption, signifying, by its turn towards the monstrous and the bizarre, the downfall of the old system of states.)

After capital steps out of the production process as product, it must be transformed into money again. The money which previously appeared merely as realized commodity etc., now appears as realized capital, or, realized capital as money. This an aspect of money (as of capital). The mass of money as medium of circulation has nothing to do with the difficulty of making capital into a reality [realisieren], i.e. of realizing it [verwerten]. This can already be seen from the above development.

The general rate of profit. – If the capitalist merely sells at his own cost of production, then it is a transfer to another capitalist. Worker gains almost nothing thereby

In the above example, where the capitalist, if he sells the pound of twist at 5 thalers – i.e. 40 lb. at 5 thalers each – hence sells the pound of twist at its real value and thereby gains 1/2 a thaler out of 5 (the selling price), 10% on the selling price, or 1/2 on 4 1/2, i.e. 11 1/9% of his outlay, if he sells at only 10% – assume now a profit of merely 9/20 of a thaler on 4 1/2 thalers (this is a 1/20 difference from 1/2 on 4 1/2 thalers; a difference of just 1 1/9%). He then sells the pound at 4 1/2 thalers + 9/20 of a thaler; i.e. at 4 19/20 thalers or the 40 lb. at 198 thalers. Now various cases are possible. The capitalist with whom he exchanges – to whom he sells his 40 lb. – assume him to be the owner of a silver mine, i.e. silver producer – pays him only 198 thalers – hence gives him 2 thalers too little objectified labour in silver for the labour objectified in 40 lb. of cotton. Posit that with this capitalist B, the proportions of the outlay are exactly the same, etc. If capitalist B also takes only 10 instead of 11 1/9, then for 200 thalers he could not demand 40 lb. twist, but only 39 3/5. It is therefore impossible that both capitalists at the same time sell at 1 1/9% too little, or that the one offered 40 lb. for 198 thalers and the other offered 200 thalers for 39 3/5 lb., a case that cannot occur. In the previously assumed case, capitalist B would have paid 1 1/9% too little in his purchase of 40 lb. twist, i.e. apart from the profit which he does not obtain from exchange, but which exchange merely confirms, i.e. a profit of 11 1/9, he would also have gained the 1 1/9% lost by the other capitalist, for a total of 12 2/9%. From his own workers – the labour set into motion by his own capital – he would have gained 11 1/9%; the additional 1 1/9% are surplus labour by the workers of capitalist A, which he appropriates for himself. The general rate of profit can therefore fall in one or another branch of business if competition etc. forces the capitalist to sell below the value, i.e. to realize a part of the surplus labour not for himself, but for those who buy from him. But the general rate cannot fall in this way; it can fall only if the proportion of surplus labour to necessary labour falls relatively, and this, as we saw earlier, takes place if the proportion is already very large, or, expressed differently, if the proportion of living labour set into motion by capital is very small – if the part of capital which exchanges for living labour is very small compared to that which exchanges for machinery and raw material. The general rate of profit can fall in that case, even though absolute surplus labour rises.

With that, we come to another point. A general rate of profit as such is possible only if the rate of profit in one branch of business is too high and in another too low; i.e. that a part of the surplus value – which corresponds to surplus labour – is transferred from one capitalist to the other. If in 5 branches of business, for example, the respective rate of profit is

then the average rate is 10%; but, in order for this to exist in reality, capitalist A and B have to give up 7% to D and E – more particularly, 2 to D and 5 to E – while C remains as it was. It is impossible for rates of profit on the same capital of 100 to be equal, since the relations of surplus labour are altogether different, depending on the productivity of labour and on the relation between raw material, machinery and wages, and on the overall volume in which production takes place. But suppose that a given branch of business, E, is necessary, say, the bakery trade, then the average 10% has to be paid to it. But this can happen only if A and B credit E with a part of their surplus labour. The capitalist class thus to a certain extent distributes the total surplus value so that, to a certain degree, it [shares in it] evenly in accordance with the size of its capital, instead of in accordance with the surplus values actually created by the capitals in the various branches of business. The larger profit – arising from the real surplus labour within a branch of production, the really created surplus value – is pushed down to the average level by competition, and the deficit of surplus value in the other branch of business raised up to the average level by withdrawal of capitals from it, i.e. a favourable relation of demand and supply. Competition cannot lower this level itself, but merely has the tendency to create such a level. Further developments belong in the section on competition. This is realized [realisiert] by means of the relation of prices in the different branches of business, which fall below the value in some, rise above it in others. This makes it seem as if an equal sum of capital in unequal branches of business created equal surplus labour or surplus value.

Now in the above example, where capitalist A is forced, say by competition, to sell at a profit of 10% instead of 11 1/9%, and hence sells the pound of twist at 1/20 of a thaler too cheaply, the worker would continue to obtain 20 thalers as before, in money, his necessary wages; but in twist, he would obtain 4 4/90 lb. instead of 4 lb. If his wages were in twist, he would have obtained 4/20 of a thaler = 1/5 of a thaler or 6 silver groschen, i.e. 1% more than his necessary wages. If the worker works in a branch of business whose product lies entirely outside the sphere of his consumption, then he gains not a farthing in this operation; rather, for him it is a matter of performing a part of his surplus labour indirectly for capitalist B, instead of directly for capitalist A; i.e. through the mediation of capitalist A. He can gain from the fact that capitalist A lets go of a part of the labour objectified in his product for nothing, only if he is himself a consumer of this product, and only to the extent that he is such a consumer. Thus, if his consumption of twist makes up 1/10 of his expenditure, then he gains exactly 1/50 of a thaler from the operation (2/100 of a thaler out of 2 thalers, 1/100 of 1, exactly 1% of the 2 thalers), i.e. 1/10% of his total wages of 20 thalers, or, 7 1/5 pfennigs. This would be the proportion – 7 1/5 pfennigs – in which he would participate in his own surplus labour of 20 thalers. Such are the proportions of the surplus wages which the worker makes at best, when the price in the branch of business where he is occupied falls below the necessary value. In the best case – and this is impossible – the limit (in the instance given) is 6 silver groschen or 1%, i.e. if he could live exclusively on twist; i.e. in the best case his surplus wages are determined by the relation of necessary labour time to surplus labour time. In the luxury-goods industries proper, from whose consumption he is himself excluded, it is always = 0.

Now let us assume that capitalists A, B, C exchange among one another; the total product of each = 200 thalers. Let A produce twist, B grain and C silver; let the relations of surplus and necessary labour, and of outlays and profit be just the same. A sells 40 lb. twist at 198, instead of at 200 thalers, and loses 1 1/9% of his gains; ditto B his, say 40 bushels wheat, at 198 instead of 200; but C exchanges the labour objectified in his 200 thalers in full. Between A and B the relation is such that neither of them loses in the exchange with the other. A would obtain 40 bushels wheat, B 40 lb. twist; but each of them a value of only 198. C obtains 40 lb. twist or 40 bushels wheat for 198 thalers and in both cases pays 2 thalers too little, or obtains 2/3 lb. twist or 2/5 bushel wheat too much. But now assume that the relation takes the form that A sells his 40 lb. to the silver man, C, for 200 thalers, but C has to pay 202 to the grain man, B, or 2 thalers above its value. Between twist A and silver C everything is all right; both exchange at value with each other; but because B’s price has risen above its value, the 40 lb. twist and the 200 thalers silver, when expressed in grain, have fallen by 1 1/9%, or, neither of them could in fact any longer buy 40 bushels grain for 200 thalers, but only 39 2/5. 39 2/5 bushels wheat would cost 200 thalers, or the single bushel wheat, [47] instead of 5 thalers, 5 1/20 thalers; 5 thalers 1 1/4 silver groschen. Now, in this last relation, assume that the worker’s consumption consists 1/2 of wheat; his twist consumption was 1/10 of his income; his wheat consumption 5/10. On the 1/10 he had gained 1/10% on his total wages; on the wheat, he loses 5/10; thus on the whole he loses 4/10% instead of gaining. Although the capitalist would have paid him his necessary labour, his wages would fall beneath the necessary pay as a consequence of grain man B’s overcharging. If this continued on, then his necessary wages would have to rise. Thus if the sale of twist by capitalist A is due to a rise above value in the price of grain or of other use values which form the most essential part of the worker’s consumption – then capitalist A’s worker would lose in the same relation as his consumption of the now more expensive product is greater than the cheaper product he himself produces. But if A had sold twist at 1 1/9% above its value, and B sold grain at 1 1/9% below, then, in the best case, if the worker consumed nothing but grain, he could gain at most 6 silver groschen, or, since we presupposed half in grain, only 3 silver groschen, or 3% on his wages of 20 thalers. Thus the worker may experience all three cases: his gain or loss from the operation = 0; it may depreciate his necessary wages, so that they no longer suffice, hence make him fall below the necessary minimum; it can thirdly bring him a surplus wage, which is resolved into a very small share of his own surplus labour.

We saw above that if the relation of necessary labour to the other conditions of production = 2/5 (20 out of 100 total outlay) or = 40% of the total value (in 20 lb. twist = 4 lb. twist) (or of 100 thalers, 80 raw material and instrument, 20 labour) and the relation of surplus labour to necessary labour is 100% (i.e. the same quantity), then the capitalist makes 11 1/9% on his outlay.

If he took only 10% and made a gift of the 1 1/9 or 2 thalers (transferred surplus value), then the worker, in so far as he is a consumer, would likewise gain, and in the best (impossible) case, if he lived only from the products of his master, it would [be], as we saw:

If on the other hand the capitalist had raised wages by 10% from 20 to 22 thalers, because, say, the demand for labour in his branch of business had risen above the supply – while he continued to sell the pound of twist at its value, i.e. at 5 thalers as before, then his profit would have fallen by only 2 thalers, from 200 to 198, i.e. by 1 1/9%, and would still have been 10%.

It follows from this that if the capitalist, say, out of consideration for Mr Proudhon, sold his commodities at the production costs they cost him, and if his total profit = 0, this would be merely a transfer of the surplus value or surplus labour time from capitalist A to B, C, D etc., and as regards his worker, his gain at best – i.e. his share of his own surplus labour – would be limited to that part of the wage which he consumed in the depreciated commodity; and if he spent his entire wages on it, the gain could not be greater than the proportion of necessary labour to the total product (in the above example 20: 200 = 1/10, 1/10 of 20 = 2 thalers). As regards the other workers, the case is entirely the same; they gain from the depreciated commodity only in relation (1) as they consume it; (2) relative to the size of their wage, which is determined by necessary labour. If the depreciated commodity were, e.g. grain – one of the staffs of life – then first its producer, the farmer, and following him all other capitalists, would make the discovery that the worker’s necessary wage is no longer the necessary wage; but stands above its level; hence it is brought down; hence ultimately only the surplus value of capitals A, B, C etc. is increased, and the surplus labour of those occupied in them.

Posit 5 capitalists, A, B, C, D and E. Let E produce a commodity which is consumed only by workers. E would then realize his profit purely in the exchange of his commodity with wages; but, as always, his profit would originate not in the exchange of his commodity for the workers’ money, but in the exchange of his capital with living labour. Posit that necessary labour relates in all 5 branches of business at 1/5; let 1/5 be surplus labour in all of them; let constant capital be = 3/5 in all. Capitalist E exchanges his product for 1/5 of capital A, 1/5 of capital B, 1/5 of capital C, 1/5 of capital D, and 1/5 constitutes his wages. He would make no profit on this last 1/5, as we have seen; or rather his profit would not arise from the fact that he gives the workers 1/5 of his capital in money, and that they buy back the same 1/5 from him as money – would not originate from the exchange with them as consumers, as centres of circulation. His whole transaction with them as consumers rests on the basis that he gives them his product in the form of money, and they give him back the same money for exactly the same fractional part of the product. With the workers of A, B, C, D, his relation is not that of capitalist to worker, but of C[ommodity] to M[oney], of vendor to buyer. We have presupposed that the workers of A, B, C, D consume no part of their own products; D does, however, exchange for 1/5 of the product of A, B, C and E, i.e. 4/5 of their product; but this exchange is only a detour to get to the wages which A, B, C and D pay their own workers. They each give the workers money to the value of 1/5 of their product, or 1/5 of their product as payment for necessary labour, and with this, with 4/5 of the value of their product or capital, they then buy E’s commodity. But this exchange with E is then only an indirect form of advancing the part of capital which represents necessary labour – i.e. deduction from their capital. They cannot therefore gain thereby. The gain comes from the realization of the remaining 4/5 of capital A, B, C, D, and this realization consists of each of them, through the exchange, getting back the labour objectified in his product, in another form. For each of them, since there is a division of labour, 3/5 replaces his constant capital, raw material and material of labour. Their gain – the realization of surplus labour time, its positing as surplus value – consists in the reciprocal realization of the last 1/5. It is not necessary that capitals A, B, C, D exchange the entire 4/5 with one another. Since they are, as capitalists, at the same time large consumers, and can in no way live on air, but since, as capitalists, they do not live from their labour either, they have nothing to exchange or to consume apart from other peoples’ products. That is, for their own consumption they exchange just that 1/5 which represents surplus labour time, the labour created by means of capital. Posit that each consumes 1/5 of this 1/5, i.e. 1/25, in the form of his own product. There remain 4/25 to be either realized or to be transformed into use values for their own consumption through exchange. Let A exchange 2/25 with B, 1/25 with C, 1/25 with E, and likewise on the part of B, C, E.

The case we have posited, where capital E realizes the whole of its profit in exchange with wages, is the most favourable – or expresses, rather, the only correct relation in which it is possible for capital to realize the surplus value created in production through exchange with the workers’ consumption. But capitals A, B, C, D can realize their value in this case only through exchange among one another, i.e. through the exchange of capitalists among themselves. Capitalist E consumes nothing of his own commodity, since he has paid 1/5 of it to his own workers, exchanged 1/5 for 1/5 of capital A, 1/5 for 1/5 of capital B, 1/5 for 1/5 of capital C, 1/5 for 1/5 of capital D. A, B, C, D make no profit on this exchange, since it is the respective 1/5 which they have paid to their own workers.

Given the relation we have assumed, of 2/5 raw material, 1/5 machinery, 1/5 workers’ necessaries, and 1/5 surplus product, from which Messrs the capitalists at the same time live and realize their surplus value, then we need, if the total product of each of A, B, C, D, E = 100, a producer E for workers’ necessaries, 2 capitalists A and B, who produce raw materials for all the others, 1, C, who produces the machinery, and 1, D, who makes the surplus produce, The accounts would be these (the machinery-maker etc. has to produce every part of his commodity for himself):

E therefore exchanges his entire product of 100 for 20 in his own workers’ wages, 20 in wages for workers of raw material A, 20 for the workers of raw material B, 20 for the workers of machinery maker C, 20 for the workers of surplus producer D; of this he exchanges 40 for raw material, 20 for machinery, 20 he obtains back for workers’ necessaries, and 20 remain for him to buy surplus produce, from which he himself lives. Likewise the others in the relation. What constitutes their surplus value is the 1/5 or 20, which all of them can exchange for surplus product. If they consumed the entire surplus, then they would have come no further at the end than they were at the beginning, and the surplus value of their capital would not grow. Posit that they eat up only 10; or 1/10, half of the surplus value; then surplus producer D himself would eat up 10 less; and each of the others 10 less; all in all, then, he would sell only half of his commodity, = 50, and could not begin his business anew. Posit therefore that he consumes only 50 in consumables. Likewise, 50 in money, then each of the capitalists A, B, C, D, E, would accumulate 10 thalers in money. These would represent the surplus value not consumed. These 10 thalers, or together 50, could be realized, however, only by being laid out for new labour. In order to produce more raw material, A and B need 4 thalers more of living labour, and, since they have no additional machinery for it, more labour by hand to the amount of 6 thalers. Thus, out of the 400 thalers which exist in raw materials, machines and workers’ necessaries, only 50 are there for capitalists’ consumables. But each of the capitalists now owns a surplus of 10, out of which 4 are in raw material, 2 in machines, 2 in workers’ necessaries, on which he must make a gain of 2 (like 100 from 80, as before); D has gained 10 on his 40 and can therefore increase his production in the same proportion, i.e. by 5. The next year he produces 7 1/2% more = 57 1/2.

This example may or may not be continued later. Does not actually belong here. This much is clear, that realization here takes place in the exchange among the capitalists, for although E produces only for workers’ consumption, he exchanges with the others through the form of wages, 1/5 of A, 1/5 of B, 1/5 of C, 1/5 of D etc. A, B, C, D likewise exchange with E: not directly, but indirectly, in that each of them requires 1/5 from him as necessaries for his workers. The realization consists of each of them exchanging his own product for fractional parts of the products of the other four, and this in such a way that a part of the surplus product goes for the capitalist’s own consumption, and a part is transformed into surplus capital with which to set new labour into motion. The realization consists of the real possibility of increased realization – production of new and larger values. It is clear here that D and E, where E represents all commodities consumed by the workers and D all those consumed by the capitalists, would have produced too much – that is, too much relative to the proportion of the part of capital going to the worker, or too much relative to the part of capital consumable by the capitalists (too much relative to the proportion by which they must increase their capital; and this proportion later obtains a minimum limit in the form of interest) – that general overproduction would take place, not because relatively too little [sic] had been produced of the commodities consumed by the workers or too little [sic] of those consumed by the capitalists, but because too much of both had been produced – not too much for consumption, but too much to retain the correct relation between consumption and realization; too much for realization.

Barrier of capitalist production. – Relation of surplus labour to necessary labour. Proportion of the surplus consumed by capital to that transformed into capital. – Devaluation during crises

In other words: At a given point in the development of the productive forces – for this will determine the relation of necessary labour to surplus labour – a fixed relation becomes established, in which the product is divided into one part – corresponding to raw material, machinery, necessary labour, surplus labour – and finally surplus labour divides into one part which goes to consumption and another which becomes capital again. This inner division, inherent in the concept of capital, appears in exchange in such a way that the exchange of the capitals among one another takes place in specific and restricted proportions – even if these are constantly changing, in the course of production. If the relations are e.g. those of 2/5 raw material, 1/5 machinery, 1/5 wages, 1/5 surplus product, of which 1/10 for consumption, 1/10 for new production – this is the division within capital – this will appear in the exchange process as distribution among, say, 5 capitals. This gives, in any case, both the sum total of the exchange which can take place, and the proportions in which each of these capitals must both exchange and produce. If the relation of necessary labour to the constant part of capital is, as e.g. in the above example, = 1/5:3/5, then we have seen that the capital which works for the consumption of capitalists and workers combined may not be greater than 1/5 + 1/10 of the 5 capitals, each of which represents 1, = 1 1/2 capitals. Given likewise is the relation in which each capital must exchange with each other one, which represents a specific one of its own moments. Finally, in which each of them must exchange at all. If, for example, the relation of raw material = 2/5, then the capitals which produce raw material can at any final point exchange no more than 3/5, while 2/5 must be regarded as fixed. (E.g. as seed etc. in agriculture.) Exchange in and for itself gives these conceptually opposite moments an indifferent being; they exist independently of one another; their inner necessity becomes manifest in the crisis, which puts a forcible end to their seeming indifference towards each other.

A revolution in the forces of production further alters these relations, changes these relations themselves, whose foundations – from the standpoint of capital and hence also of that of realization through exchange – always remains the relation of necessary to surplus labour, or, if you like, of the different moments of objectified to living labour. It is possible, as we have already indicated earlier, that the capital as well as the living labour capacity set free owing to the increase in productive forces must both lie dormant, because they are not present in the proportions in which production must take place on the basis of the newly developed productive forces. If it proceeds regardless of that, then ultimately a minus, a negative magnitude, will come out of the exchange on one side or the other.

The barrier always remains, that exchange – hence production as well – takes place in such a way that the relation of surplus labour to necessary labour remains the same – for this is = to the constancy [Gleichbleiben] of the realization of capital. The second relation – the proportion between the part of the surplus product consumed by capital and that part transformed anew into capital – is determined by the first relation. Firstly, the magnitude of the sum to be divided into these two parts depends on this original relation; secondly, just as the creation of surplus value by capital depends on the creation of surplus labour, so does the increase of capital as capital (accumulation, and, without accumulation, capital cannot form the foundation of production, since it would remain stagnant, and would not be an element of progress, required already by the mere increase of population etc.) depend on the transformation of a part of this surplus product into new capital. If the surplus value were simply consumed, then capital would not have realized itself as capital, and not produced itself as capital, i.e. as value which produces value.

We have seen that if 40 lb. of twist of a value of 200 thalers – because they contain labour time objectified in 200 thalers – are exchanged for 198 thalers, then not only does the manufacturer of twist lose 1 1/9% gain; but also his product is devalued, has been sold below its real value, although it is sold at a price which still leaves him a profit of 10%. On the other hand, the producer of silver gains 2 thalers. Keeps 2 thalers as liberated capital. Nevertheless, a devaluation has taken place as regards the total sum. For the sum is 398 thalers instead of 400. For, in the hand of the producer of silver, the 200 thalers of twist are also worth only 198; it is the same for him as if the productive force of his labour had increased to the point where the same objectified labour were contained in 200 thalers as before, but that 2 of these thalers had left the column of necessary outlays in his books and gone over into the column of surplus value, so that he would have paid 2 thalers less for necessary labour. The opposite could be the case only if the silver producer were able to re-sell for 200 thalers the 40 lb. of twist he bought at 198 thalers. Then he would have 202 thalers, and say he sold them to a manufacturer of silk who gave him silk to the value of 200 thalers in exchange for the 40 lb. of twist. The 40 lb. twist would then have been sold at their true value, although not first-hand by their producer, but rather second-hand, by their buyer, and the total accounts would look as follows: Exchanged, 3 products each containing objectified labour of a value of 200 thalers; hence sum of the values of the capitals: 600. The manufacturer of twist, A, the manufacturer of silver, B, the manufacturer of silk, C: A 198, B 202 (i.e. 2 extra from the first exchange and 200 in silk), C 200. Total 600. In this case the combined value of the capitals remained the same, and all that took place was a displacement, in that B pocketed as an extra the value-fraction which A lost.

If A, the twist maker, could sell only 180 (the cost of the thing for him), and absolutely could not find a buyer for 20 twist, then objectified labour in the amount of 20 thalers would have become valueless. The same would be the case if he gave a value of 200 for 180 thalers; for B, the manufacturer of silver – to the extent that this necessity had arisen for A owing to overproduction of twist, so that B, too, could not get rid of the value contained in the 40 lb. twist for more than 180 – 20 thalers of his capital would have been set free. He would have in hand a relative surplus value of 20 thalers, but in absolute values – objectified labour time to the extent that it is exchangeable – he would have only 200 as before – that is, 40 lb. twist at 180 and 20 thalers liberated capital. It would be the same for him as if the production costs of twist had decreased, i.e. as if, owing to increased labour productivity, 40 lb. twist contained 20 thalers less labour time, or as if, with a working day = 4 thalers, 5 working days less were necessary in order to transform x lb. of cotton into 40 lb. twist; so that, then, he would have to exchange less labour time objectified in silver for the labour time objectified in twist. But the combined sum of the values on hand would be 380 instead of 400. Thus a general depreciation of 20 thalers would have taken place, or a destruction of capital to the amount of 20 thalers. A general devaluation thus takes place despite the fact that the depreciation of the twist manufacturer’s 40 lb. twist from 200 to 180 necessarily appears as an appreciation on the part of silver, a depreciation of twist relative to silver; and a general depreciation of prices as such always includes an appreciation of money, i.e. of the commodity in which all the others are appraised. Thus, in a crisis – a general depreciation of prices – there occurs up to a certain moment a general devaluation or destruction of capital. The devaluation, like the depreciation, can be absolute and not merely relative, because value expresses not merely a relation between one commodity and another, as does price, but rather the relation between the price of the commodity and the labour objectified in it, or between one amount of objectified labour of the same quality and another. If these amounts are not equal, then devaluation takes place, which is not outweighed by appreciation on the other side, for the other side expresses a fixed amount of objectified labour which remains unchanged by exchange. In general crises, this devaluation extends even to living labour capacity itself. In consequence of what has been indicated above, the destruction of value and capital which takes place in a crisis coincides with – or means the same thing as – a general growth of the productive forces, which, however, takes place not by means of a real increase of the productive force of labour (the extent to which this happens in consequence of crises is beside the point here), but by means of a decrease of the existing value of raw materials, machines, labour capacity. For example. The cotton manufacturer loses capital on his products (e.g. twist), but he buys the same value of cotton, labour etc. at a lower price. It is the same for him as if the real value of labour, of cotton etc., had decreased, i.e. as if they had been produced more cheaply owing to an increase in the productive force of labour. In the same way, on the other hand, a sudden general increase in the forces of production would relatively devalue all the present values which labour objectifies at the lower stage of the productive forces, and hence would destroy present capital as well as present labouring capacity. The other side of the crisis resolves itself into a real decrease in production, in living labour – in order to restore the correct relation between necessary and surplus labour, on which, in the last analysis, everything rests. (Thus it is by no means true, as Lord Overstone thinks – as a true usurer – that crises simply resolve themselves in enormous profits for the one, and tremendous losses for the other.) [48]

Capital coming out of the production process becomes money again

Exchange does not change the inner characteristics of realization; but it projects them to the outside; gives them a reciprocally independent form, and thereby lets their unity exist merely as an inner necessity, which must therefore come forcibly to the surface in crises. Both are therefore posited in the essence of capital: the devaluation [Entwertung] of capital in the production process, as well as the suspension of devaluation and the creation of the conditions for the realization [Verwertung] of capital. The process by which this takes place in reality can be examined only as soon as real capital, i.e. competition etc. – the actual real conditions – have been examined. Does not belong here yet. On the other hand, without exchange the production of capital as such would not exist, since realization as such cannot exist without exchange. Without exchange, the only question of concern would be the measurement etc. of the use value produced, only use value as such.

After capital, in the production process, (1) has realized itself, i.e. created a new value; (2) become devalued, i.e. made the transition from money to the form of a particular commodity, it (3) realizes itself together with its new value, in that the product is thrown into circulation again, and, as C, is exchanged for M. At the point where we stand now, where capital is being examined only in general, the real difficulties of this third process are present only as possibilities, and are therefore suspended, again as possibilities. Therefore, the product now posited as having been transformed back into money.

Capital is thus now posited as money again, and money therefore posited in the new aspect of realized capital, not merely as realized price of the commodity. Or, the commodity realized in the price is now realized capital. We will examine this new aspect of money, or rather of capital as money, later. In accord with the initial nature of money, the only apparent feature by which capital – when transformed into money – may be measured is the new value which it has created; i.e. the first aspect of money as the general measure of commodities repeats itself; now as the measure of surplus value – of the realization of capital. In the form of money, this realization appears as measured by itself; as being its own measure. The capital was originally 100 thalers; because it is now 110, the measure of its realization is posited in its own form – as a proportion of the capital returned (returned to its money form) from the production process and from exchange, relative to the original capital; no longer as a relation between two unequal qualities – objectified and living labour – or necessary labour and surplus labour. When capital is posited as money, it is therefore posited in the first aspect of money, as measure of value. Here, however, this value is its own value, or the measure of its self, negation. [49] We will return to this (under profit).

The second form of money was that of the medium of circulation, and in this regard the money form of capital appeared as a mere vanishing moment for the purpose of exchanging it again, but not, as in the case of money as a medium of circulation in general, an exchange in return for commodities – use values – for final consumption, but rather an exchange in return for those particular use values in which it is able to begin its course as capital anew – raw material and instrument on the one hand, living labour capacity on the other. In this role it is circulating capital, about which later. However, the end-product of money in its role as medium of circulation is the beginning of the act of production with posited capital as the point of departure, and this is the point which we will here examine before we go further. (In the first aspect, measure, the new value did appear as measured; but the difference merely formal; instead of surplus labour, money – surplus labour objectified in a specific commodity. But the qualitative nature of this new value also undergoes a change – i.e. the magnitude of the measure itself, to be examined only later. Secondly, as medium of circulation the disappearance of the money form is also merely formal. It only becomes essential after not only the first but also the second circular path has been completed. Thus initially it results only in our standing again at the beginning of the realization process. We therefore begin to take up the continuation at this point.)

The third form of money, as independent value in a negative relation vis-à-vis circulation, is capital which does not step out of the production process into exchange again to become money. Rather, it is capital which becomes a commodity and enters into circulation in the form of self-sufficient value [sich auf sich selbst beziehenden Werts]. This third form presupposes capital in the earlier forms and at the same time forms the transition from capital to the particular capitals, the real capitals; since now, in this last form, capital already in its very concept divides into two capitals with an independent existence. Along with the duality, plurality in general is then given. Such is the march of this development. [50]

<Before we go any further, just one remark. Capital in general, as distinct from the particular capitals, does indeed appear (1) only as an abstraction; not an arbitrary abstraction, but an abstraction which grasps the specific characteristics which distinguish capital from all other forms of wealth – or modes in which (social) production develops. These are the aspects common to every capital as such, or which make every specific sum of values into capital. And the distinctions within this abstraction are likewise abstract particularities which characterize every kind of capital, in that it is their position [Position] or negation [Negation] (e.g. fixed capital or circulating capital); (2) however, capital in general, as distinct from the particular real capitals, is itself a real existence. This is recognized by ordinary economics, even if it is not understood, and forms a very important moment of its doctrine of equilibrations etc. For example, capital in this general form, although belonging to individual capitalists, in its elemental form as capital, forms the capital which accumulates in the banks or is distributed through them, and, as Ricardo says, so admirably distributes itself in accordance with the needs of production. [51] Likewise, through loans etc., it forms a level between the different countries. If it is therefore e.g. a law of capital in general that, in order to realize itself, it must posit itself doubly, and must realize itself in this double form, then e.g. the capital of a particular nation which represents capital par excellence in antithesis to another will have to lend itself out to a third nation in order to be able to realize itself. This double positing, this relating to self as to an alien, becomes damn real in this case. While the general is therefore on the one hand only a mental [gedachte] mark of distinction [differentia specifica], it is at the same time a particular real form alongside the form of the particular and individual. [52] (We will return later to this point, which, while having more of a logical than an economic character, will nevertheless have a great importance in the course of our inquiry. The same also in algebra. For example, a, b, c are numbers as such; in general; but then again they are whole numbers as opposed to a/b, b/c, c/b, c/a, b/a etc., which latter, however, presuppose the former as their general elements.>

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