The Elements of Marxist Economics was originally composed in Ponza in 1929. It was in these years, despite our defeat at Lyon and shortly afterwards at the VI Enlarged Executive of the Communist International in 1926, that our current, in emigration or confinement, in prison or in solitude, nevertheless supported the last and vehement battle in defense of the Marxist doctrine and program against all mystification. Since then is it our characteristic, repeated a thousand times in this text, that Marxism is a unique and invariant block which cannot be reduced to a simple “method” of interpreting facts as they happen. Rather, it offers a global vision of the course of human history and the very becoming of nature; it is not a mosaic of which one can change the tesserae at will, leaving the overall picture unchanged, but a scientific and global conception of the world in which everything is linked, and no one can willingly accept or reject any seperate part at will without disfiguring it and thus destroying its revolutionary power.

The text, in its original form, was intended “in a certain way to sort out and align the economic part” of Capital but from all its pages, as from those of Marx’s cyclopean work, both the battle cry of the working class fighting for the overthrow of the bourgeois mode of production, whose infamies hidden behind a democratic screen and its State superstructure are denounced, is the anticipated vision of society in which mankind will finally emerge from its prehistory and, ideally rejoining the beginnings of an associated community life, will base all relations of production and human coexistence on criteria that are not mercantile, not individualistic, not vulgarly contingent, but finally human and rational.

So it’s all economics, “philosophy”, politics: in short, class warfare.

The work we take to publish is an exposition, in a somewhat different form from the original, of the First Book of Capital. It is not a summary and much less a vulgarisation. The study of Marx’s fundamental work requires a historical and philosophical economic preparation whose results must be applied in parallel. Here, the economic part of the text is in a certain way thinned out and aligned.

A similar work for the historical and philosophical part can give sufficient basis to the work for a correct approach and knowledge of the integral doctrine of communism, in its classic original enunciation.

The first part of this study corresponds to the First Section of the First Book entitled by the author Commodities and Money.

For the Practical purpose of establishing a new numbering, we will consider the study divided into the seven following points:

1. Definition of the commodity and its two properties: value in use and exchange value.

2. Exchange value. The quantitative concept and difficulty in finding the measure.

3. The simple form of value. Whenever we talk about value, we will henceforth refer to exchange value. The simple form is the statement of equivalence, for the purpose of exchange, between two goods which are both susceptible to use (consumption), so that a given quantity of commodity A corresponds to a given quantity of commodity B.

4. General form of value and equivalent form. It occurs when we consider a given number of different goods and we know all the equivalences between pairs of them. With two goods we have two equivalence, the simple form. With three goods we have six equivalences, with four twelve. With ten goods we would have ninety equivalences, a system too complicated for practical and mnemonic purposes. To remember the ninety relationships it is enough to know those of nine goods with only one and therefore only nine relationships from which the others easily derive. One commodity has been chosen as the equivalent of all. We are at the general form of value.

5. Historical-social character of the whole question. We have briefly summarized a chapter, the one on “The fetishism of commodities and the secret thereof” that summarizes all the elements of the Marxist doctrine in a masterful foreshortening, on the economic, historical and philosophical side together. We have reported just enough to clarify that Marxist economics does not go into the subtleties in the analysis of commodities to find immanent and immutable laws of the economic process (the claimed natural laws of economics) but – in order to expose with rigorous development the scientific investigation on the becoming of human society in all its complexity and in the historical succession of its events – referred to different eras from a different mechanics of the economic world. It therefore investigates not the relationship between the piece of cloth and the iron pound, but the relationship between real men in production and consumption to data carried out in history.

6. Circulation. Value and price. At this point the market as a whole is studied, when a commodity chosen as a general equivalent, such as salt, is finally replaced by currency, first metallic and then also paper and conventional. In this development is put in front of the hypothesis that in order to have a measure of the value we can adopt the one of the average human working time that every goods requires in general to be produced. The progressive application of this hypothesis (which, as is known, is not found for the first time in Marx but is due to the economists of the first capitalist era and in particular to David Ricardo (1772‑1823) who published his fundamental work, Principles of Political Economics, in London in 1821) to the whole economic world present in the development of research will decide on the validity of the hypothesis itself.

7. Path of the money. The Second Section, where Capital finally comes onto the scene, deals precisely with the transformation of money into capital – investigated by studying the dynamics no longer of those who enter the market to bring goods or withdraw them for their own use, but of those who descend as bearers of money. As a premise Marx recalls how much it is necessary to establish regarding the essential monetary mechanism in the bourgeois economy, before continuing with the exposition of all “the process of capitalist production”, the theme of the First Book of the work.

* * *

Having said this as a prologue to the First Section of the First Book, it will be good to give some indication of the partition of the whole work, which in Marx’s plan was to include four Books or Volumes. Of them only the First is known in full in Italian, while the Fourth could not have be written by Marx.

The Second Book deals with the process of the circulation of Capital, the third of the aspects that cover the overall economic process; the Fourth was to expose the history of theory, of which, however, there are copious materials in the first Books and their annotations.

Among the many Prometeo tasks may be that of an exposition of the two subsequent Books of Capital, much less known than the First.

It is good, however, to remove a current convention and much used for revisionist purposes,that is, that the two subsequent Books examine a part of the real economic process that was omitted in the First, and that this analysis was carried out by the author to the point of leading him to important corrections if not to renunciations of the main doctrines of the First Book such as those of surplus-value, the accumulation of capital, the growing misery, etc. This opinion, contradicted by the context of even the most recent works that appeared until Marx’s death (1883) and afterwards, as by the posthumous reworking and exegesis by Engels, corresponds to an erroneous evaluation of the constructive framework of the work. The First Book covers the complete field of Marx’s doctrine on capitalism and is certainly not an abstract treatment of relations that are established in the sphere of production and that prescind from the relations of the circulation of goods and currency. To believe this would be to consider the substantial content of Marx’s method destroyed.

What defines the relationship between the First Book of Capital and the rest of the Work is an entirely different criterion. As rich as it is in historical, critical, bibliographic and polemical material, the First Book carries out the economic study of the whole process, from the first exchange to barter on through the birth and accumulation of capital to the conclusion that capitalism will be succeeded by a social economy and not a mercantile one, traced out lapidarily in the penultimate chapter, as we shall see at the appropriate time. The data, the study and the laws of circulation are already fully understood in this development. But all the material is taken up and re‑examined in the following books – and, explaining the concept better, we can well say in all the later and also future work of Marxists – by way of study of the particular phenomena of capitalist development, from which, given the character of the method, the verification and control of the general theory and the proof of its efficiency must incessantly be drawn.

The First Book therefore gives us the essential development of the capitalist process and its real social characteristics in the relationship between capitalist and wage‑earners, which is impractical and unimaginable without taking into account the phenomena of circulation and consumption, and finds the laws of this process, although not crystallizing them in the statics of an abstract world but verifying them in all situations: of nascent capitalism and put in relation with different economic types, and then in the course of its development and its conquest of the world. Therefore, it always takes into account the real historical environment, since it can never be said to be in the presence of a “model” of capitalist economy in the “pure” state.

And, in fact, the famous First Section of the First Book, on circulation, is the cornerstone on which the whole study of production rests, and because of the well‑known warnings of Marx himself and of the best commentators it is the most difficult, especially for readers who are not well prepared, even though its comprehension is completely indispensable to the whole.

But it has also been said many times that a work like Marx’s, from which every apriorism and every metaphysics of principles have been expelled, must be acquired in all its parts, and reading the first chapters presupposes a certain assimilation of the theses of the following parts. Marx himself suggested to some readers to start halfway through the book from the descriptive and historical chapters and then to the decisive ones of scientific analysis.

The First Book therefore stands for everything else as the fundamental trace, the guideline of the whole system, which has its own completeness and complete cycle, and was written by the author on the basis of all the materials that economic history up to its time offered him, and of which he reserved detailed exposure to the following volumes.

It holds the place that in modern physics and astronomy hold the Philosophiae Naturalis Principia Mathematica by Isaac Newton (1687). Of a single jet, from the truth due to Galileo that the force acting on a material body in motion is the cause not of its speed but of its acceleration (i.e. it increases or decreases the speed itself), the mathematical procedure, with the methods of calculation of the very small quantities found by Newton, leads directly to establish the laws of motion of a planet around the sun and finds deductively the laws that Kepler had inferred from Tycho Brahe’s observations on planetary revolutions. The theoretical principle thus receives dazzling confirmation. It is worth noting that even the first part of Newton’s work, which establishes in geometric form the first propositions of infinitesimal calculus, found at the same time by Leibniz in another more expressive form, is hard to study and boring, while the deduction of the following chapters in which the famous law of universal gravitation is great and brilliant even in form.

The three or four very simple statements by Galileo, Newton, Kepler give full reason for all the motions of the bodies of the solar system, planets and satellites, and have definitive value in the history of science. This does not detract from the fact that they derive from a pure and abstract case, that of central motion, which considers only two celestial bodies, while in the system there are a great number of them. The real effect is therefore very complicated. Already the problem of the three bodies appears, analytically, much more difficult. Yet admitted the Newton’s famous action at a distance, each body attracts each other and deforms its trajectory more or less. Something similar to the passage from Marx’s simple M → M’ barter to the general picture of today’s economic movement. To the following volumes of Capital we will therefore compare the gigantic later work performed by astronomers in deducing the particular motions of the various bodies, and especially the fundamental and classical Mécanique Céleste by Laplace, the famous applications such as the discovery of Neptune made by Le Verrier by calculating the perturbations of Saturn’s orbit, identifying its precise position in the sky, then verified by observation through the telescope.

The same theory therefore regulates the study of many effective deviations of detail from the standard law and the pure Keplerian ellipses, but Newton’s law remains solidly established and reconfirmed. The standard process is absolutely valid and yet it never happens. Not only are the heavens no longer immutable and incorruptible as they were for Aristotle and Thomas, and they are rectified by the same valid mechanics for the motion of the grave earths studied by Galileo, but Kepler’s geometrically exquisite orbits are not immutable traces to the motion of the planets. Each of them never traces them twice, the real phenomenon is always different from the theoretical one, but this only confirms the validity and effectiveness of the scientific law.

Introduced further considerations on thermal processes it becomes possible to attempt a history of the solar system and Laplace puts forward his hypothesis on the origin of the planets from the sun and their future fallout into it. This, of course, does not take away the validity of the scientific conquest contained in the first classical construction of the general law of motion.

To avoid confusion, not always innocent, we mention one last point. The methodological issues mentioned here are not affected, in the development of the comparison with the cosmogonic problem, by recent acquisitions and scientific doctrines that introduce in the balance in addition to the thermal considerations those of atomic energy, nor by broader constructions such as those of relativistic theory that have not denied (in the sense that interests us here) the classical law of gravitation, but have framed it in a broader conception as a “limit case”. All this, like the question of determinism in the science of nature and in the science of man, must be reserved for further studies such as those on Marxism and theory of knowledge.

* * *

The notes we are publishing serve as an introduction to the reading of Capital, and even better to the political work with the handling of that fundamental and revolutionary instrument. A book is for us like a machine; more, like a weapon.

It would be useful, since any work of investigation is nowadays for us socialists collective and not personal, for the illumination of the text by already prepared militants.

For example, the fourth paragraph of the first chapter on the fetish character of the commodity contains very topical propaganda material on points that the opportunists of the moment put under their feet at least three times a day, while they claim to be students of Marx

In a few pages it provides a historical glimpse of the various economies whose use of the dialectical method we will discuss in our course extensively, it is shown that not all past economies were mercantile, and that the socialist economy is defined, as a first condition, by being non‑commercial and non‑monetary. The thesis is contained that any apologetics of capitalism in economics and of equality and freedom in politics, tending to contrast the perfection and dignity of bourgeois institutions with the “artificiality” of feudal ones, is scientifically worth as little as the position of all theologians, according to whom the religions of others are artificial, theirs alone is natural. Any religion that is not theirs is an invention of men, theirs is the revelation of God. Marx quotes himself here in his answer to Proudhon on the Misery of Philosophy. For us Marxists all religions are “inventions” of men.

Today, under the incredible label of Marxism, from Attlee to Stalin, from Saragat to Togliatti, of all the nuances that fit in, under the incredible label of Marxism, no one is beating mercantilism or deism. They all feel they are going in an anti‑capitalistic sense without bothering the commodity fetish, the “beast” (it is Marx who quotes the Apocalypse of John) currency, nor the god of the altars.

None of them remember reading:

     «The religious world is but a reflection of the real world. A society in which the product of labour generally takes the form of a commodity; where consequently the most common relationship between producers consists in buying the values of their products and, in this simple form, in comparing their private work with each other as equal human labour (these characteristics remain intact in the statizations of both Labour and Russian totalitarianism); such a society finds in Christianity with its cult of abstract man, and especially in its bourgeois development, Protestantism, deism, etc., the most appropriate form of religion.
     «In general, the religious reflection of the real world can only disappear because the conditions of work and practical life will present man with clear and reasonable relations with his fellow human beings and with nature.
     «Social life, of which material production and the relationships it implies form the basis, will not tear the mystical veil of fog that hides its appearance except on the day when the work of men freely associated, consciously acting according to a determined plan and masters of their own social movement, will manifest itself. But this requires a material basis of society or a set of conditions of material existence, which in turn are but the product of a long and painful historical development».

But now, in order not to frighten the allies of the fideist movements, the “Marxists” no longer speak of these problems. Their followers are made to believe that silence is only a temporary skillful maneuver.

At most they say that Lenin quotes from Marx that religion is the opium of the people: a phrase of passage in which the terms are not in the light of theoretical rigor. Do we need a passage from Lenin, to avoid they say that we are the ones who invent a Marx and a Lenin in our own way? Here it is:

«We materialists, after Engles, term the Kantians and Humeans agnostics, because they deny the objective reality of the source of our sensations. The agnostics says: I do not know if there is an objective reality, reflected, represented by our sensations; I declare it impossible to know. Hence the denial of objective truth the agnostic and a tolerance −a bourgeois, philistine, cowardly tolerance− of the dogmas of house goblins and wood demons, Catholic saints and the like»
(Materialism and Empirio criticsm, Chap II, par. 4).

The allusion to werewolves and spirits comes from a polemic with the self‑styled Russian Marxist Bagdanov who, embracing the philosophy fashionable in 1910 of Mach & Avenarius, however, claimed the anti‑fideist position. Lenin contests this and among other things says «If truth (including scientific truth) is but an organizing form of human experience, then the fundamental postulate of clericalism is admitted, the door remains open to it, and room is made for the “organizing forms” of religious experience».

Where we see that for the Marxist the terms fideism, clericalism, religion Christianity and deism, are equal expressions of an enemy thesis, and that the same heterodox as Bogdanov were until yesterday ashamed to have a tolerance for them.

But today, a duly purged edition of Marx and Lenin is expected. While you’re at it, couldn’t you include the formation of the commission in the Lateran Pacts?

A commodity is an object which possesses two properties: a) being useful, that is able to satisfy human needs; b) and susceptible to exchange with other commodities.

We use the term use‑value to describe this property a). Does it correspond to a measurable quantity? No, because use‑value of even the same commodity varies according to the circumstances of time, place and person. Use‑value is therefore a qualitative property that cannot be treated as a quantitative magnitude ⁽¹⁾.

Exchange-value: We thus designate the second property of the commodity, that is, its exchangability.

Is exchange value quantitatively measurable? And if so, to what known quantities must it be attributed to? We answer the first question in the affirmative because, although at first sight a given commodity allows for many isolated exchanges for various quantities of other commodities, in all these relations there must be something in common.

As for the second question, we cannot ascribe a measure of exchange value to the specific properties that define use‑value, such as color, flavor, shape, chemical composition, etc., because the commodity can be exchanged for other commodities of any use‑value without changing its exchange value. The common character of various commodities that can be exchanged indiscriminately can only be reduced to the fact that they are all products of human labor.

2. Exchange value

We then propose to measure exchange value by referring to labor, a common measurable quantity. Human labor is only measurable as labor time.

It must be immediately understood that it is not a matter of the time of work occasionally required to produce a given commodity, which can vary under a thousand circumstances, but of the average time of work required to reproduce it systematically, i.e. socially necessary labor time

Exchange value is the ability of a commodity to be exchanged with others in a given relationship, and is a measurable quantity.

The number which will measure exchange value with respect to an agreed unit of measurement is always proportional to the social-average labor time required to produce a given commodity, i.e. the number itself is given by this time divided by the labor time required to produce the agreed unit of the exchange value.

The productive power of average labor varies if the processes of technology vary. When this happens, the exchange value of goods of that type varies. Of course, it also varies for the goods still existing, produced with the unimproved system and with a longer working time.

Hence it can be seen that the formula that value is crystallized labor is also erroneous and it is necessary to formulate the law in the precise terms stated above.

Labor is represented in a dual form within the commodity: use value is in relation to the particular quality of the labor required; the exchange value is in relation to the quantity of average human labor time is required to reproduce it.

When we speak of time and labor power, we are referring to simple labor, from which complex or qualified labor must be distinguished. Throughout this discussion, complex labor is always reduced to simple labor, as we will see later.

3. The simple form of value

A commodity has two forms: its natural form, most often physical and material, and its value form.

And in which form does value appear to us? In practice, as experimental data, value appears to us in the form of money, which is basically the price. It is a matter of arriving at this practical data, familiar to all, by a deductive analysis that starts from the simple property of exchange that all goods possess, since we have established that they have a value (of exchange) insofar as they can be exchanged.

Let’s start from the simplest fact of the exchange between two lots of commodities:

The form of value appears here at first in a way we can describe as simple or particular. We then have an equality, with two members. Although we can, as in any quantitative equality, change their places, nevertheless the expressions x Commodity A and y Commodity B have a different character. They express the same quantities of value; but y Commodity B is used to define how much Commodity A is worth. So we will call the first member the relative form, and the second the equivalent form.

If we wanted to express the absolute magnitude of the value V by a number, that is to say, to express it according to a general unit of measurement, applicable to all goods A, B, C, D, etc. we could not do so starting from the data of the simple formula. We can in fact deduce from this relation:

Value of x commodity A

=

Value of y commodity B

=

Value V

But this does not allow us to say what is the magnitude of a unit (Kg, etc.) of A, because it depends on the value of B. Moreover the value of A, as well as that of B, can change as a result of variations in the time of the work necessary for A or B; in this case the ratio will change, and we will thus have various expressions of the value sought, i.e. we will not have yet arrived at an absolute measure.

4. Total or expanded value form

With the simple form, the commodity of interest to us finds only one equivalent, and we do not arrive at a general measure of value. Taking a step further, suppose we know all the equivalents of commodity A expressed by the other commodities on the market.

To have an idea of the whole market (we think of the time of barter) we must know how to write for each commodity the developed form indicated above. If there are n goods, this one consists of n‑1 equalities, and in all there are n(n‑1) equalities. For example, for 10 goods we must know 90 relations.

The n(n‑1) or 90 relations are not all independent, however, and are all contained in the n‑1 or 9 of the developed form. We then only have to reverse the latter and to refer the value of all the other n‑1 goods to that of the commodity A, which has become the unique equivalent or general equivalent. We will have:

y commodity B = z commodity C = m commodity D etc. = x commodity A

In practice this means that, as bartering has become widespread, in order not to have to remember 90 relationships, one commodity has been elevated to the rank of common equivalent of all others.

We do not yet have an absolute expression of the measure or quantity of value, but we do have a measure of it, as it were, expressed by the quantity of the equivalent commodity which corresponds to each special commodity. Thus the savages, for example, trade in cattle by expressing their value in pounds of salt.

With the development of trade the equivalent commodity fulfills not only a mnemonic function, but is in fact exchanged for all other commodities, the direct contact between the individual exchangers having disappeared. The simple form (for example: 1 cow = 3 goats) is no longer realized, but we have the exchange between a cow and 30 pounds of salt, then between 10 pounds of salt and a goat. Or the trader interposes himself between the one who sells the cow and the one who sells the goat, because they can both be materially distant; the trader carries the merchandise or the salt equivalent to bring everyone together. The salt no longer circulates only to be consumed, but much more frequently to facilitate the circulation of other goods.

It is necessary, however, that the equivalent commodity be easy to transport, not very bulky, absolutely unalterable. These qualities are combined in gold, which has become the general equivalent: and so we pass to the form of value.

5. Historical and social character of the question

Having reached this stage of the analysis of value, Marx inserts a chapter on “the fetish character of the commodity and its secret”. This chapter has a historical and polemical character and it presupposes an enunciation of the doctrine of economic determinism that does not enter into the object of Capital, but is inseparable from the Marxist doctrine on the character of the Marxist economics.

This chapter is not a digression, and it is not the intention here to give a summary of it, whereas it should rather be given the widest development.

In analyzing the forms of value, we applied the positive scientific method to the question. But the object of our research was not facts of absolute and immanent character, as for example the nature of chemical elements – discovered in 1800, but valid also for discussing the conditions of the original nebula as well as those of the distant future of the universe. We had to go into the historical field to explain the stages of our research, linking the simple form of value to the time of barter in kind, the general form and to that of trade, etc... Thus the results to which we tend do not have an immanent character, but are relative to the various times and degrees of development of the society.

Recognizing labor time as the measure of quantities of value is not enough without an analysis that applies this key to various economies.

What is acquired for the first time by Marxist research is that exchange value is not an absolute property of things, but the reflection of the relations of social organization. Objects are commodities because there is a certain system of relations between the people who produce and consume them. Moreover, it is natural that the economists who preceded us should see in the commodity a primary datum, because they take for definitive and natural relations those which correspond to the society in which they live and to the interests of the classes they represent. Marx develops here our doctrine, which makes opinions depend on the stage of development of the social economy and on the class struggle.

Above all, the polemic against the traditional economists does not take place on ground that is common to any of them, and they play the role of passive objects of research, rather than collaborators – or even adversaries. We are not concerned with what they may allege later, even for a very long time to come: in the same way the founders of modern mechanics and astronomy do not consider biblical and peripatetic developments as working material. If one does not understand this, it is useless to hope to understand how the analysis, starting from the minimal fact of the permutation of two objects, arrives at the doctrine of surplus-value which must provide the key to the positive and historical interpretation of the contemporary productive mechanism.

We therefore strip the commodity of its fetish character by discovering the laws that assign it a value and provide us with the means to measure it in the relations between men and groups of men for whom commodities and values are involved.

(Chapter II, “the process of exchange”, is implicitly summarized in the historical considerations indicated in parallel to the passage from the simple form to the money form).

6. Circulation - Value and price

We have tried to consider value as a measurable quantity, in order to treat it by the scientific method and to discover the laws relative to it. We have assumed that the quantitative value is proportional to the average social work time. By analyzing the experimental facts, we applied and verified the hypothesis. We have reached the general equivalent commodity and a new step forward has brought us to money.

We leave aside the observations on mono or bi‑metallism.

Gold by its quantity and weight, expressed in the monetary terminology, indicates therefore with a certain unit to measure the value of goods.

In conclusion we have reduced the measure we are looking for to the value of gold, that is, according to our hypothesis, to the time of work necessary to produce the gold. So the term of comparison is variable, and therefore general oscillations can occur, which are easy to interpret.

The price expresses the ratio between the value of the commodity considered and the value of the gold unit (for example, according to the original ratio: one pound = sterling). Or, which is the same thing, the price, according to us, expresses the ratio between the labor time needed for the commodity and the labor time needed for the pound of gold.

When we talk about the necessary working time, we want to distinguish it from the working time that was actually required in a specific case; this time can be higher or lower as a result of mistakes or, on the contrary, of the producer’s manufacturing secrets. In addition, due to other considerations, the price can express more or less than the abstract value of the merchandise, because of exceptional circumstances of the alienation.

If, for example, while using the necessary average time, all the producers provide a given market with a quantity of the commodity X exceeding the consumption, let’s say of 20%, as a result of an error in the social division of labor, this 20% will be lost. And this can also manifest itself in the form of a temporary fall in price below value, with each producer discounting 20% of his working time, as in the case where, as a result of clumsiness, he has used 6 hours instead of 5. The opposite case can also occur, that is, a rise in price above value.

This case should not be confused with that of a fall in price as a consequence of new technical inventions which reduce the necessary working time; for in this case it is the value itself which has fallen and which will not rise again. In the previous cases, known phenomena, provoking the opening of new enterprises or the closing of old ones, tend to level the prices.

(The winning horse of the Derby has a very high price because among 20 competing horses, which have absorbed equal care (working time), only one can win this price. The profit of one breeder compensates for the losses of the other 19, but this does not prevent the relationship between the value of a horse and the amount of work absorbed by its breeding. It is only a question of a production that, for technical reasons, does not give a series of equal objects, but products that are very different due to unforeseeable circumstances at the beginning of the enterprise).

We can therefore speak of a quantity of value which does not necessarily coincide with the price form, but which is its basis, since the price can oscillate above and below the value. An opportune research will succeed in determining it.

In the same way, in the physical sciences, it is difficult to establish at first sight the mass of a given body, of a wooden ball for example. We feel that it tends to fall, and we measure its weight: but it varies according to whether we are at the pole or at the equator, at sea level or in the mountains, and finally it even becomes negative if we immerse the ball in water. This does not prevent the constant quantity of mass from being measurable, and from being used to formulate the laws that will elucidate all these variations of weight, which previously appeared as an arena of contradictory data. A later refinement of the scientific results, which establishes that the mass of a body in motion varies at the same time as its speed, does not prevent that it is rightly introduced and treated this quantity in the field of the phenomena considered in the research.

The science of mechanics was born when mass was measured, a datum which, in a certain sense, is neither concrete nor sensible; the science of economics was born with the measurement of the quantity value, whereas it is not a scientific work if one claims to have to limit oneself to knowing and recording contingent prices, under the pretext that it is only these that are measured and expressed in figures.

Let us now continue the analysis of the market by examining the path followed by the commodity. The possessor brings it to the market, sells it for a certain amount of money, which is not for his own use, but only to buy another commodity. The cycle is:

The second part of this cycle (M → G) is, for the owner of the other commodity, the first part (G → M) of another cycle and so on, indefinitely. The set of all these cycles, each of which has a common half with another, represents the circulation, according to the diagram:

G₁ → M → G₂ → M → G₃ → M → G₄ → etc.

7. The circulation of money

In the movement of the circulation of goods, money passes in its turn from hand to hand; but while each commodity arrives on the market from the outside to leave it immediately, money on the contrary remains constantly there.

It is obviously not necessary for the money in circulation to be equal to the sum of the prices of all the individual “buy‑sells”; on the contrary, since each gold fragment circulates several times, a smaller sum is sufficient. The quotient of the sum of all prices (business figures) in a given time by the mass of money available is called the speed of circulation in that time.

It is worth noting, with regard to money, the transition from the form in which pure gold is used to the form of gold money – the weight of which may be less than the theoretical value – then to coins of silver and non‑noble metals with a partly conventional value, and finally to paper money, the value of which is purely figurative: all forms which, under normal conditions, do not alter in any way the circulation relations between money and goods.

Money can, moreover, assume other functions, besides those of measuring the value of goods or serving as a vehicle for their exchange. These forms are: hoarding or accumulation; deposit to meet payments in advance or delayed in relation to the moment when the merchandise changes owner (the game of debit and credit); universal currency or element of compensation in exchanges between nations, for which gold transfers compensate for the imbalances in trade balances, gold being, in this sense, the only currency that is effectively valid throughout the world. Today, something that did not exist in Marx’s time, it is not only gold that is capable of assuming a worldwide validity, but also a paper currency: the dollar, which circulates without being exchanged against other national currencies.

The detailed study of these economic phenomena is not necessary before proceeding to the study of the transformation of money into capital, which is the starting point of the laws of circulation that bring into play the commodity and money.

8. From the circulation of money to the appearance of surplus-value

The formula for the circulation of money and commodities is thus G → M → G. If we consider the person who brings commodities to exchange them for others of different use values while having the same quantity of (exchange) value, except for secondary circumstances. For this person, money is only an indication of value and a vehicle of exchange. But in the whole mercantile system, currency immediately introduces new relations and new actors, whose intervention makes the exchange of use values possible for others. They use money and with it they buy goods which they resell for more money. Circulation, from this second point of view, is represented by the formula M → G → M. The intervention of this second group of actors cannot be explained without a motive.

This is not a quest for use values, since their money eventually returns to money, without qualitative change. Therefore there can be no purpose and motive except in a quantitative change. While in the case of G → M → G, the movement of a constant value is explained. This is no longer the case for M → G → M, if the amount of money remained the same after purchase and sale. Philanthropy or other ideal forces cannot be the incentive for the bearers of money, this is determined by the fact that in general the amount of money the second time is greater than the first time. The formula therefore becomes M → G → M’, where M’ = M + ΔM. The original amount of money, M, is increased by an increment ΔM (Delta M). This increase is called surplus-value.

For the money bearer the movement of money in exchange serves as production of surplus-value, which is immediately added to the per‑existing value and returns to the cycle to increase yet again.

It is in this way that money, from simple representation of value and vehicle of exchange, neccesarialy becomes capital.

Capital is value whose peculiarity is to increase continuously.

A mercantile system, once past the stage of bartering in kind, must blossom into capitalism.

In this definition, summarized in the formula M → G → M’, only commercial capital would seem to be considered. That is, all the goods which stay in possession of the professional money bearers of the market, who offer goods purchased from producers.

But even for industrial capital there is money which is transformed into commodities only to return to money with the sale of the latter, this will be the subject of further discussion.

Marx at the beginning of this Section establishes – in a fundamental historical reference that accompany the illustrative exposition of the capitalist process – that «capital appears only where production and the circulation of goods, or trade, have reached a certain development. The modern history of capital dates from the creation of trade and the world market in the sixteenth century».

The pure form M → M’ then represents usury, in which there is no passage through a commodity. Usury is meant in the sense of any arrangement of money for interest.

In M → M it is possible to reduce the formula to hording, which removes money from circulation. In doing so this takes away money’s possibility to generate surplus-value, and thus is not yet in the form of capital.

9. Seeking the origin of surplus‑value

Surplus-value, the increase (ΔM) in the amount M underwent to become M’, can not and will never be explained in the field of circulation alone.

All attempts made in this sense fail before the elementary fact that circulation consists of a series of exchanges between equivalents.

One can point to many exceptions to this law, but they are not worth expounding on, when the increase from M to M’ occurs with confirmable regularity.

If one ascribes to buying the virtue of bringing about an imbalance in favor of the money‑bearer, or such virtue is ascribed to selling, since both in the simple circuit M → G → M, and in the whole of circulation each interested party appears as many times a seller and buyer, the supposed differences offset each other in a general equality. The same is true if all prices went up or down together.

The explanation that the one who buys in order to consume pays more than the one who sells having made a product does not hold up either. As the consumer draws his money from the fact of having been in turn a producer. Therefore we should suppose consumers who draw value from something other than productive work, i.e. not through exchange. Such a class will therefore receive money, not through circulation, but by extorting, in the material sense of the term, the merchandise or money belonging to others. This explanation is inadequate for the mercantile age.

It is not even worth mentioning exceptionally disproportionate or even fraudulent buying and selling, because this explains the transfer of special values from one hand to another, rather than the formation of the smallest part of surplus-value.

We insert a parenthesis to show that not even the syndicate or even monopoly regime of producers can explain the normal genesis of surplus-value in the circulation sphere. If in the ordinary mercantile regime of free competition the producer of commodity A was free to raise their price, they would have realized a surplus-value. But this can never happen, because it is obvious that buyers would abandon them and turn to other sellers of the same commodity, so that this mechanism, except for secondary phenomena, maintains all prices at a minimum level corresponding to exchange value. Now, we could suppose that all or some of the producers of commodity A agree to raise its price arbitrarily; the game of competition would be eliminated and a surplus-value resulting purely and simply from circulation would be realized.

To such an objection one may reply that if, in the analysis, we wanted to substitute for the general and typical system of free competition, a stable system of monopolies – and not an intermediate system which will always remain to be examined, but which serves for the application and not for the research of general laws – we would then be led to consider that all the groups of producers have constituted themselves into monopolies, and sell each other commodities at overvalued prices but which find a new equilibrium by compensation. We would thus find ourselves back at the same point. The monopolization agreements will have achieved, in an intermediate stage, an appropriation of value on the backs of the lagging monopolists, but they will not have been able to produce surplus-value.

In conclusion, the problem reduces down to these seemingly contradictory terms: In circulation, exchanges take place only between equivalents; money circulating as capital leaves circulation having undergone an increase.

In pursuit of the solution, do not lose sight of the fact that for a capitalist economic society in a stable and normal set‑up both statements have systematic value, that is, they are realized in the vast majority of cases, so that citing particular cases and moments of instability cannot serve to evade the need to give an equally general solution to the “system of equations” that we can write:

     Value of M = value of G
     Value of G = value of M’
     Value of M’ is larger than the value of M .

We shall see why the equations are not incompatible, as would be found if we gave them a purely arithmetical sense – or, in other words, why this patently contradiction to the formal rules of logical syllogism (a contradiction which, as Marx recalls, Aristotle discerned but could not explain, nor could he with the data of his time explain) is implemented in the reality of economic life, since in this, Capital is generated.

10. The commodity “labor power”

At what stage of the process can the increase in value have originated? It cannot come from money from itself since a quantity of money remains materially unchanged. Therefore, the increase arises from the exchange of money for commodity. It cannot arise from the second act G → M’ just as it cannot arise from the first M → G, if these are exchanges between equivalents.

Marx’s fundamental discovery is this: the increase in value cannot arise from the two exchanges; it arises, rather, from the use of the commodity, since there exists in the market a commodity whose use coincides with a systematic increase in its exchange value.

If the use of a commodity produces value, and if value corresponds to the availability of labor time, the mysterious commodity in question must be such as to make human labor available: that commodity is precisely labor, or, more accurately, labor power.

Under certain historical conditions, while those who buy any commodity generally resell it for the same amount of money (value), those who buy labor power pay for it at a certain amount while systematically reselling it for a higher amount. What the buyer of labor power resells are actually material goods to which has undergone transformations by applying purchased labor power to them. This is the case when the worker, or owner of labor power, because of legal and social conditions cannot make contact with the commodity to be transformed (raw material). Either because he does not possess money, and therefore cannot anticipate the value of the raw material itself; or the transformation of labor requires technical means (tools of labor, concentration of large numbers of workers) which are the monopoly of others (of the owners of money or capital).

There is another condition: namely, that the worker is free, for he must remain in possession of his own labor power in order to sell it in portions (periods of time). Should he be able or required to sell or surrender it all at once he himself would become a commodity (slavery).

Hence, in certain historical conditions, which they cannot claim to have always existed, just as they cannot claim to always exist in the future, conditions which we call peculiar to the capitalist epoch, we have the production of surplus-value, and the accumulation of it into capital. This is realized through the buying and selling of labor power, that is, through the organization of the wage earner by those who possess the money and the technical tools of labor.

Surplus-value and capital as economic phenomena appear later than exchange and exchange value, and also later than money.

11. Purchase of “labor power”

How then is payment determined for the commodity labor power (wage labor)? As with any other commodity, those who seek it pay the minimum possible i.e. they run elsewhere if they are offered better terms; so that the price tends to reach a minimum, given by the labor time required to produce that commodity.

Labor power is also a commodity in this sense, since in order to produce it the worker must provide for the expenditure of his own body, that is, he must procure:
     1. personal means of subsistence, such as food and a minimum of satisfaction of other needs;
     2. the means of subsistence for his family (without which the working class would become extinct);
     3. vocational education, which also involves time and expense.

This minimum is reducible to a sum of commodities which, demanded from producers, and in any case from possessors, must be paid at a price determined by the labor time required to produce them (just by our fundamental assumption). This price will be demanded by the worker to alienate his labor power (under average conditions, that is, disregarding interference from exceptional phenomena).

Having thus occurred the buying and selling of labor power, the capitalist, becoming its master, employs it. (We neglect here the other benefit of employing labor before actually paying for it, thanks to the custom of paying wages at deferred periods.)

The use of labor power, purchased at the right price, is done by applying it to raw materials equally purchased at the right price.

In order to understand how the right selling price of the finite commodities left at the capitalist’s disposal exceeds the sum of the fair prices paid (the birth of surplus-value), it is necessary to move from the field of circulation, where everything proceeds in the name of pure equivalence and full freedom, to the study of that of production, where instead the basis of in‑equivalence or surplus-value and class division are discovered.

Every working process, independently of the type of social organization, consists of three elements: man’s personal activity, or labor power; object of labor, or raw material (found in nature but always with the addition of previous labor); means of labor, or instruments of production.

As long as we are in the presence of self‑employed workers (artisans) they own their own labor power, raw material, work tools. Consequently, the result of the working process, or product, belongs to them.

In the capitalist system the worker owns only his labor power; but he sells it so that the capitalist becomes the owner. To him belong also the raw materials and the instruments of work: by right the products belong to him.

The transformation of money into capital, the formation of surplus-value appear together with the separation of the worker from the instrument of labor and the product of his labor.

13. The birth of surplus-value

Let’s consider the productive process from the capitalist’s point of view. He goes to the market and comes back having bought – at their right price and value – as much the raw material as the work tools as the labor power.

He applies the labor power of his laborers, by means of his tools, to the raw material, and receives from them a certain volume of products. He returns to the market and sells them.

Let us consider the quantitative examination of such a value movement of value.

Let’s denote by V the value of the labor power (wages paid), by A the value of that part of the productive tools worn out in the group of operations we consider, by B the value of the raw materials employed; finally by F the value of the products obtained.

It is clear that F contains in full the values of A and B, i.e., production tools and raw material bought at the market. According to our basic hypothesis these values depend on the labor time required to produce these tools and materials.

As for the value of labor power V it is, as we have seen, related to the labor time required for the workers’ means of subsistence.

Every commodity, like materials and instruments, possesses an exchange value insofar as it possesses in its turn a use value, but in such a way that the two values are not comparable, nor communicable with each other (e.g.: I can reduce the value of a kilo of sugar to three hours of work, but I cannot refer its use value as food to a working time, but only to chemical, organoleptic qualities, etc. of the sugar). On the contrary, for the special commodity of labor power, if the exchange value, or market price, derives, as always, from labor time (necessary to produce the means of subsistence, as has just been said), the use value also lends itself to be measured precisely in labor time, because the use of this commodity is precisely labor: use by the purchasing capitalist of the labor of the selling wage‑earner.

Since the value of F (product) must then consist of the work time necessary to completely put together the products considered, it is clear that we will have:

Labor time for F = Labor time for B + Labor time for A + Actual labor time supplied by wage earners.

An equality between working times translates into an equality between the respective exchange values.

For the commodity labor power we must consider no longer its exchange value (wages), but its use value, reducing this to the time of work.

If, to fix the ideas, each hour of labor corresponds to the value of £3, the working time of the raw materials, since they are worth B pounds, will be B:3; of the instruments of production A:3; of the product F:3. If the worker has worked 10 hours, the equality between the working times before written becomes:

F  £3

=

B  £3

+

A  £3

+

10 (expressed in hours)

Back to values:

This is what the capitalist gets from the sale of the product. The figure B and the figure A he has spent in full because they signify exchange value, i.e. market prices.

But the figure 10·£3 does not represent the exchange value but the use value of labor power (10 hours of work actually done, for £3, the general ratio for measuring values in labor time).

What do those 10 hours of labor power cost the capitalist? We have indicated their cost with V, which is their exchange value, their price (wage). Now, since this value depends on the means of subsistence and on the time absorbed by them, it is independent of the 10 hours inferred from consumption, and not from the production, of labor power. If another team of workers were employed to provide food, clothes, etc. for the capitalist’s workers who work 10 hours, it’s clear that for each of them and for each day less labor time would be sufficient: let’s say 6 hours. Apart from the new surplus-value which would accrue to the aforesaid workers if they were in their turn wage‑earners, or supposing these to be self‑employed, the price V will be determined by those 6 hours multiplied by £3.

That the time of 6 hours turned out to be less than the time of 10 hours is not an assumption on our part, but a fact which can be deduced not only from special calculations, however laborious they may be, but from the very fact of the existence of capitalism and its profits, which we are only endeavoring to discover, starting from our hypothesis about labor.

If the expenditure V per labor is 6·£3, the total expenditure results:

B + A + 6·£3

The proceeds from the sale of the product were:

F = B+A+10·£3 = (B+A+6·£3) + (4·£3)

We have for the capitalist a profit of 4·£3 = £12 which represents the surplus-value in the productive operation under consideration.

14. Summary of the demonstration

The question we have been asking from the beginning is to represent the phenomena of the present economy with quantitative laws.

Experience gives us facts:
   a) we have a mercantile economy, that is, the products of labor become commodities susceptible to exchange, and the exchange is made by means of the general equivalent called money;
   b) whoever owns money can use it to buy the instruments of production and obtain a benefit, a surplus-value from production by means of wage earners (we also have a capitalist economy).

Accepting the fact that the measure of exchange value is expressed by the quantity of money given for a commodity, that is, by its price on the market, when we place ourselves in average, normal and general conditions, we have stated the hypothesis that this value is proportional to the working time necessary to reproduce that commodity, always in average, normal and general conditions.

Having analytically examined the phenomena of exchange, from barter to the introduction of the general equivalent commodity, to the function of money – having eliminated all objections relating to special exchanges and to exceptional circumstances and all those deviations from the average which may occur to a greater or lesser extent – we have shown that in the circulatory field nothing but exchanges between equivalents take place.

However, in order to explain the fact that the owner of money becomes the owner of capital and realizes a profit which has as its starting and ending points exchanges in the market, we have discovered and stated that this is due to the acquisition of a special commodity, labor power, which, while requiring a given labor time for its production, makes available a greater labor time in its consumption.

This commodity is paid in fact, and in accordance with our hypothesis, at a price (wage) proportional to its production (subsistence) labor time. But it transmits to the product a greater working time, and therefore a greater exchange value, whence the surplus-value.

The meaning of all this in the social field is the following: as long as the worker (artisan) is able not to separate himself from the instrument of work and the product of work, and sells this for his total benefit, he recovers in the exchange value of this his entire working time.

But when capitalism appears – because of the accumulation of money on the one hand (the origins of which we will not now discuss: slavery, land feudalism, etc.) and on the other hand because of the discovery of technical means, which diminish the working time necessary to a given product through the use of machines, and because of the concentration of many workers – the price of the artisan’s product falls: in fact its exchange value is adjusted to the minimum working time technically necessary. It matters little on the market that the craftsman with outdated processes has taken longer.

Let us suppose that prices fall so low as not to compensate for the artisan’s slightest need, e.g., the artisan having to yield at the price of 3 hours’ labor the product of 12 hours’ work, while his means of subsistence are worth 6 hours. The artisan will have only to sell his labor power, for its exchange value of 6 hours, working 12 hours for the capitalist who, quadrupling the output of his work, is able to pay 6 hours for the labor power which on the market could only be exchanged into the value of 3 hours.

We have thus satisfactorily explained the fundamental phenomenon of capitalist economy (fundamental also in relation to those which preceded it) by formulating an important consequence of the theory of value (first enunciated by Ricardo): the doctrine of surplus-value (Marx’s central discovery) is already contained in the following theses: on the market, only equivalents are exchanged; all the profit of capital arises from the purchase and employment of labor power.

The quantitative laws of this doctrine remain to be formulated ⁽³⁾.



[Prometeo, no. 7, May–June 1947]

15. Constant capital and variable capital

As we have seen, the money anticipated by the capitalist to acquire the means of production and raw materials appears entirely in the price of the product. This is why we call this fraction of capital, constant capital.

Raw materials and instruments are of two kinds: some reappear in the product, others disappear as they are used, such as fuels and are called auxiliary; instruments of labor, such as machines, installations, buildings, are taken into consideration only for the fraction of their value actually spent during the productive operation considered.

The money advanced instead for the wages of the workers, that is for the purchase of labor power, reappears in the sale of the products increased by a surplus-value, and we shall call this variable capital.

We had summarized the balance of the capitalist operation in the two formulas:
 – expenses:
   B + A + V (raw materials + tool wear + wages)
 – revenue:
   B + A + V + S = F (raw materials + tool wear + wages + surplus-value = value of the product)

We then have: B + A = constant capital, which we denote by C, and V = variable capital.

Calling K the total capital advanced, S the surplus-value, and K′ the capital gained at the end we have:

K = C + V

K′ = C + V + S = K + S

16. Rate of surplus-value

Rather than knowing case by case the absolute quantity of surplus-value realized by the capitalist, it is more interesting to know the relation in which surplus-value stands to the capital which produced it.

It is very important to point out that the capital which is actually susceptible to produce surplus-value is that advanced for the purchase of labor power, that is, variable capital V. As for constant capital C, it reappears integrally in the product and in itself does not give rise to any increase.

It is for this reason that, wishing to define a quantity whose measure gives us the idea of the intensity of production of surplus-value, Marx assumes as the rate of surplus-value not the ratio of this to the whole of capital, but the ratio to variable capital alone.

So, denoted by s the rate of surplus-value:

s

=

S   V

In the quantitative example we have given V was 6h⋅£3 = £18. The surplus-value was 10h⋅£3 - 6h⋅£3 = 4·£.3 = £12. The rate of surplus-value is s = £12 / £18 = 66.66%.

Passing now to examine working time, and referring for the purpose of fixing the ideas to a single day of a single workman and to the number of hours of which it is composed, which we shall call t (in the example 10 hours), a new quantity is defined: the work required and the relative time required. By such we mean the time or number of hours that the worker would have to work in order to transmit to the product a value exactly equal to that which he was paid for his labor power. In our case the workman was paid at the rate of £18, i.e. 6 hours’ labor. If he worked 6 hours he would reproduce exactly the value paid to him as wages, that is the value equivalent to his subsistence: in this case surplus-value would disappear, and with it the reason for the existence of the capitalist enterprise.

However, the worker works 10 hours instead of 6, and we distinguish the 10 hours into 6 hours of necessary work and 4 which we will call surplus-labor, calling this time surplus-labor time.

Let us repeat: necessary labor‑time is that which would suffice to reproduce the value of wages; surplus‑time or surplus-labor that the worker works in further, and which produces the difference in value, or surplus-value, for the benefit of the capitalist.

As the values are proportional to the working times in which they are produced we have:

Surplus-labor time		Surplus-value
	=
Necessary labor time		Variable capital (wage)

These two ratios reduce to the one we have already indicated as the rate of surplus-value; hence the theorem: the surplus-labor divided by the necessary labor gives the rate of surplus-value.

In our example the written proportion would be:

17. General law of surplus-value

It is also possible to show this by other means.

Let us summarize the notations; remembering that we refer to a single worker and a single day’s work:

V = Variable capital or daily wage S = Surplus-value s = Rate of surplus-value, i.e. S/V t = Hours of work n = Hours of necessary work e = Hours of surplus-labor z = Production of value per hour.

The worker transmits to the product the value (abstraction of constant capital) V + S, working t hours. So in one hour the worker produce the value:

z

=

V + S  t

Now we want to calculate the necessary work time n in which the worker produces the value V. By definition in n hours the worker produces the value

So, knowing the hourly value production, one division is enough:

n

=

t

V  V + S

We have thus found n.

Very simple is the calculation of e (surplus-labor):
 

e

=

t - n

=

t -

t·V V+S

=

t·V + t·S - t·V V + S

=

t

S V + S

The problem was to find the ration of e (surplus-labor) to n (necessary labor); dividing one by the other in the respective formulae, we have:

e / n

=

t·S V + S

/

t·V V + S

=

S / V

=

s

Thus the fundamental proportion remains proved, which we repeat here for the sake of clarity: surplus-labor stands to necessary labor as surplus-value stands to wage capital; this common relation is the rate of surplus-value.

18. Demonstration of the fundamental law

To show that ascribing surplus-value only to wages and not to all capital is not an arbitrary assumption, let us take the example of a firm in which there is only variation in the proportionality of constant capital to variable capital; the exchange value or price of products, the price of raw materials and work tools remains the same, independently, so too does the wages and the work day.

If the price of finished labor is to remain the same, representing it as labor time, we are not obligated to imagine a change in the technical processes of production: we can choose an example (convincing for that matter even to those who do not start from our theory of value) in which the firm also comes to incorporate an earlier stage of processing, producing directly what it previously purchased in the market.

Suppose that a steel mill which previously purchased pig iron to convert into steel would take iron ore, from which pig iron is made, to be processed directly (see in symbols in §20).

It is evident that the capitalist will spend less on raw materials, the cost of ore is far less than pig iron, and although there is a relative increase in the tools of labor, the share of constant capital will decrease in total.

Even vulgarly it is recognized that the capitalist will make a greater profit because he will accumulate the profit of two per‑existing firms. But he will also realize a greater profit for the same total capital up front since, albeit for each kilo of steel he will also have the burden of the new plant producing pig iron, such a burden he also paid before in the market price of pig iron, rather increased by the profit from producing pig iron.

In other words, the capital advanced for a labor operation is always included in the selling price of the relevant stock of product, so with the same financial potential the capitalist will be able to produce the same kilograms of steel if not more.

But on that figure his profit has increased; and this is because the capital invested in obtaining the kilogram of steel now contains less expenditure on raw materials and more expenditure on the purchase of labor power. So it is the amount of wage capital that, with equal treatment of workers, with equal market conditions, varies in proportion to the capitalist’s gain. Thus one must refer surplus-value to the mass of wage capital alone and not to the mass of all capital.

And this is also valid socially speaking, since in the various portions of constant capital other portions of surplus-value from previous workings are included, assuming they were carried out by the capitalist mechanism. The pig‑iron capital was, with the portion not represented by iron ore and wear of plants, already affected by surplus-value, collected by the pig‑iron seller; the iron ore capital for the mine capitalist was affected by surplus-value drawn from the miners’ surplus-labor; and analogously can be said of the mechanical steel plants, of the pig‑iron industry, in the mine, finally succeeding satisfactorily – outside of pleasantries about pearl fishers and the like – our explanation which, both qualitatively and quantitatively, discovers in every exchange value a labor time, and in every profit a surplus-labor.

Marx warns against falling into the gross mistake of confusing the rate of surplus-value with the rate of profit. Vulgar economics understands the rate of profit to be the ratio of the capitalist’s net earnings (the difference between income and expenses over a certain period, e.g., one year, provided that the “asset” value of all facilities remains unchanged and any liabilities offset) and the total value of the capital invested in the facilities increased by the amount of money required to meet purchases of raw materials, payment of wages, etc.

Vulgar economics also distinguishes within profit an interest to be paid for invested capital, and the remaining difference, or actual profit of the entrepreneur.

It is not now the case to push further the comparison between that computation and the calculations we followed. Suffice it to consider that the counting of time includes our having kept in mind an entire work cycle, e.g.: that by which the kilo of steel is arrived at. The more the extent of time increases of that productive act increases, the more the profit of the entrepreneur increases and in general the rate of profit as well.

On the other hand, the rate of surplus-value depends on the degree of exploitation of labor power and is always much higher; Marx’s easy examples show that profit rates, e.g., of 10‑15%, can correspond to a surplus-value rate of even 100%.

However, as an exercise in applying the above, one could institute the calculation on profit in a company that would be transformed in the manner indicated in the example of the steel mill, assuming concrete figures for prices and quantities of ore, pig iron, steel, for wages, hours of work, annual days of work, etc.

19. Breakdown of the value of the product into proportional parts of the quantities of the product of the working day

We gave at the beginning the example of the product of the value F, which consisted of the value of the raw materials and the wear of the instruments (B+A = C, constant capital) and the value generated in a 10‑hour workday. We used to equate the exchange value of £3 with one hour’s work.

Now let us suppose that the value C is £60. We will then have:

Of the £30 of value added by the worker, 18 = 6·£3 represented the wage or variable capital V; 12 = 4·£3 representing the surplus-value.

Let us suppose now that the product, worth £90, weighs 1,800 kg.

As we have £90 = £60+£18+£12, we can put 1,800 kg = 1,200+360+240 kg. We then have represented in proportional parts of the product the elements that constitute its value. 1,200 kg = £60 represent the constant capital; 360 kg = £18 represent the variable capital; 240 kg = £12 represent the surplus-value. Adding these last two parts, we obtain 600 Kg = £30 = 10 hours of work, which represent the total value produced by labor (both the necessary labor and the surplus-labor). That is, they would represent the value added for 10 hours of work to the value of raw materials and worn‑out tools.

This subdivision is legitimate but completely conventional; it cannot provide an interpretation of the productive process, because, if it is true that the £60 exist prior to the application of work as raw materials and machines, as parts of the product, but neither a pound, nor a gram can be obtained without work. We have here a purely conventional notation. It is necessary to convince ourselves that our conclusion on the distribution of the £30 of value of labor in wages and surplus-value is quite different; this distribution is provided to us by a law which adapts exactly to the technical, economic, historical and social characters of the studied phenomenon.

In a similar exercise we will divide no longer the 1,800 kilograms, but the 10 hours taken to produce them, into parts proportional to the elements of value. For just as there subsists, other things being equal, proportionality between quantities of products and their values, there also subsists proportionality between product value (and quantity) and processing time. In one hour 180 kilograms of weight and £9 of value would come out of the worker’s hands, that is, one‑tenth of 1,800 kilograms and £90.

So to the following subdivision:

This representation can be interpreted in a misleading way (see Marx’s “Senior’s last hour”, Capital, Vol. I) by saying that out of the 10 hours, the worker works for the capitalist for only 1h20min. With such an argument it was intended to show that the 8‑hour day would have ruined the capitalist. Such an argument for us could only be in favor of the 8‑hour day! But experience shows sufficiently that the 8‑hour day is perfectly compatible with the production of surplus-value.

In fact, such an argument is equivalent to assuming that the worker also produces the raw materials and instruments, whose value represents, on the contrary, pre‑existing labor time.

The exact distribution according to our theory is as follows:
   £90 = £60 + £18 + £12 = value of the product.
   30h = 20h + 6h + 4h = value expressed in labor time.
   20 hours represent the labor contained, as value, in the constant capital purchased by the capitalist.
   6 hours the necessary (paid) labor.
   4 hours the surplus-labor (unpaid).

Reducing the workday to 8 hours would remove only 2 of the 4 hours of surplus-labor, assuming that associated phenomena (increase in labor productivity) do not at the same time reduce the work time absorbed by the means of subsistence, i.e. the necessary work.

20. Appendix: Calculation for the company referred to in chapter 18.

General treatment of the case of firm 2 that utilizes the products previously processed by firm 1, demonstrating the legitimacy of attributing surplus-value to wage capital alone.

Firm 2 incorporates firm 1 for previous processing of its raw materials. This firm 1 produces in one year exactly the quantity B₂ needed by firm 2: B₂ = F₁.

For constant capital, we distinguish:

C1 = A1 + H1 + B1 C2 = A2 + H2 + B2 Ctot = A1 + H1 + B1 + A2 + H2 = C1 + C2 ‑ B2

Thus it has been demonstrated that, in the transition from two separate firms to a single unified firm:
  - Variable capital V₁+V₂ remains the same
  - Profit S₁+S₂ remains the same
  - Rate of surplus-value thus remained the same
  - Constant and total capital decrease by B₂
  - Rate of profit has thus increased
  - Sales decreases by F₁

The same profit, or surplus-value, S₁ + S₂, cannot therefore be the result of constant capital, which has decreased. So we rightly take as the rate of surplus-value its ratio to variable capital, which alone brought it about. If we were to put it in relation to constant capital or total capital, we would face the absurdity of finding a different proportion between the two terms of the ratio solely by virtue of the change in management of the two firms ⁽⁴⁾.



[Prometeo, no. 8, November 1947]

21. Length of the working day

The length of the working day is variable. It has a minimum which, under the capitalist regime, will never reach the necessary working time, and it has a maximum which depends on the physical limits of the worker’s endurance. By placing fully on the terrain of capitalist economy, by considering labor power as a commodity and the wage as its fair price, the worker, like every other seller, has the right to be protected by law in determining the quantity of the commodity he sells, that is, the time he undertakes to work in the day.

If this were not the case, not only would the canon of juridical equality among those who enter the marketplace be violated, but if the worker’s body were to be weakened, the number of years for which he would have the strength to work would be diminished, thus depriving him of a large part of his only private property: his labor power. By physically crippling the working class this would, moreover, prove to be in the long run to the detriment of the capitalists themselves, although any given entrepreneur pays attention to nothing but the pursuit of the maximum of working time.

Hence a struggle for the legal limitation of the working day, amply described by Marx in chapters that need to be not so much summarized as updated for the present day.

Rather, it is interesting to see what theoretical conclusions such an exposition leads to. Far from concluding with the apologia of social law, Marx ironically reduces the pompous catalog of human rights to its measly result, for the worker, of knowing how long he has “freely” sold himself, and how much remaining time belongs to him.

But this result, if it prevents the physical annihilation of the working class, does not detract from the fact that, as we know, a large part (surplus-labor) of even legally sold time consists of unpaid time.

What the workers need (Ch. X Sec. 7) is not to affirm a limit to the working day, but «to put their heads together and, as a class, compel the passing of a law, an all‑powerful social barrier by which they can be prevented from selling themselves and their families into slavery and death by voluntary contract with capital». These words are not to be interpreted in the banal sense of the introduction of the normal working day or collective bargaining and even of the wage fixed by law, but in the sense of the historical abolition of the principle which makes labor a commodity, and of the possibility of freely selling even a single hour of work, that is to say: of the abolition of capitalism.

22. Surplus-labor and capitalism

We have said that the production of surplus-value appears under the capitalist regime in the precise sense in which surplus-value is the difference in a commodity value which appears after a series of exchanges on the market.

But even before labor power was treated as a commodity on the (free) market, the worker was forced in different ways to give away large parts of his time for free (surplus-labor). That was the case for the slave economy, agrarian economy, etc., etc. But Marx observes that when the form of a society is not mercantile, or is scarcely so, that is to say, when commodities are more interesting for their use value than for their exchange value, the social order does not give rise to an excessive hunger for surplus-labor. The owner of slaves has no interest in making them work beyond a certain limit, because he generally consumes rather than sells the slave’s products, and he would have to pay for a new slave if the first one died or became unable to work. The feudal landlord makes the peasant work for free on his land on corvée days; although this system seems inhuman, it produces a lower rate of surplus-labor than modern capitalism (Chap. VIII, 2).

23. Capital and surplus-value

Up to this point the analysis has proceeded by imagining that the capitalist always pays the same price for labor power (constant wages), and that this price exactly expresses its value.

Under these conditions, that is to say, while holding the necessary labor‑time constant, capital, in order to satisfy its need of obtaining the maximum surplus-value, since this is given by V·s, can only follow one of these paths:
    1. increase the rate of surplus-value, or surplus-labor, that is, the working day – but we have already seen that historically, it tends to decrease;
    2. increase variable capital, and this can be done by increasing the number of workers. In this sense, capital is always taking new steps forward by transforming artisans, smallholders, etc. into workers, taking advantage of population growth, urbanism, colonization. However, despite this tendency to increase the mass of variable capital, which is the only means of increasing the mass of surplus-value, we can see that capital is increasingly forced to largely take the form of constant capital in modern production.

However, further analysis will show that the contradiction with the law of dependence between variable capital and surplus-value is only apparent ⁽⁵⁾

On the understanding that the formation of surplus-value is the characteristic of capitalism, another observation needs to be made about the initial conditions for the capitalistic phenomenon to emerge.

The new master must have sufficient financial means to employ a minimum number of workers, such as is necessary to guarantee him enough surplus-value to not only improve his personal standard of living, but also to set aside a margin of money to be further transformed into capital. These lower bounds are very variable according to social conditions; we have here an example of a purely quantitative distinction that gives rise to a qualitative difference (between the artisan or master craftsman and the capitalist).

However, the technological transformation of production processes is not an indispensable condition for the establishment of relations of the capitalist type. Capitalism came into being using traditional technology at first. The revolutions in the field of technology, machinery, and the use of mechanical forces followed later on. For us, these innovations are, on the one hand, brought about at an ever‑accelerating pace by the needs of capitalism, and on the other, they represent the conditions that make it technologically and economically possible to abolish it.

24. Relative surplus‑value

In every science, for the purpose of analysing a phenomenon, since it generally presents several variable magnitudes, the various aspects are first simplified by changing only some of them, and considering the others constant. Thus, for example, the law of gravity assumes a simpler form when the acceleration of gravity, or the intensity of the earth’s attraction, is assumed constant. But taking a step further, which would be indispensable for accuracy if the object, instead of falling from a small height, were to start from, say, the lunar orbit, it must be observed that, as the distance between the object and the centre of the Earth decreases during the fall, the gravitational force and the acceleration increase. Since we know this law, the inverse of the square of distance, we can study the fall at variable acceleration similarly to constant acceleration, only the results will be more complicated.

In a perfectly analogous way, whereas we have hitherto studied the production of surplus-value under the simplifying hypothesis of the constancy of all values, i.e. of commodities, gold, and labour-power (which means that we imagined the average quantum of labour required to reproduce the individual commodities, gold, and the means of subsistence remain unchanged), we will now go further and suppose that the exchange-value of the means of subsistence needed by the worker, i.e. the value of labour-power and wages, can vary.

In the previous analysis, the quantity of capital, the number of workers, the length of the working day and the time of surplus-labour varied, while the necessary labour remained invariable. We saw that the rate of surplus-value could only rise by increasing the working day, and its mass either by increasing the surplus-value rate itself or the mass of wage capital, which was only possible by increasing the number of workers. The surplus-value produced under such assumptions was called absolute surplus-value by Marx.

We shall now assume that wages can vary, with the exchange value of the means of subsistence being varied, so is the necessary labour time. We shall call relative surplus-value that which originates no longer from the simple prolongation of the working day, but from the diminution of the wage and of the necessary working time.

The hypothesis of a forced reduction in wages is not yet made here, the value of labour-power remaining. This fact is not uncommon but is nevertheless an exception to the generality of our investigation. We speak of a decrease in wages the worker’s consumption being equal, due to the decreased cost (value) of what he consumes. This can only happen if labour productivity increases for those firms producing the means of subsistence. For relative surplus-value to arise, it is therefore necessary that the labour productivity not just in the production of any commodity, but of the commodities that enter into the means of subsistence be increased.

Although the value of the commodity produced in the capitalist enterprise, in order to be sold, is still treated by us as a constant, let us pose the objection: how can it be explained that the capitalist, who introduces an innovation increasing the productivity of labour, while keeping wages and all working time unchanged, makes a higher profit?

In that case, for a time the capitalist will be able to sell at the old, higher price (or at a little less because, being able to produce more and having to capture a larger market, he will have to eliminate other producers with a relative decrease in price). But this benefit will be transitory because very soon the competition will force his rivals to introduce the new production method and force him to adopt the lowered price.

In order for the socially necessary labour time to be shortened, the increase in productivity will have to invest those commodities that form part of the worker’s means of subsistence, there will then be a definitive increase in surplus-value. This is unless the working class manages to raise its standard of living, i.e. the mass of its consumption, another fluctuation of variables still extraneous to our examination.

In any case, our example of the capitalist who has transformed his technique, even in the transitional period, has only raised the use-value of his workers’ labour-power relative to the social average: they give him not simple but complex labour, hence greater value for each hour of work. This is how, without changing wages, the necessary working time decreases, which is that in which the worker would reproduce his wages if he could sell the products himself, and receive the benefit of the realised innovation (after deducting the constant capital). Therefore, even in that transitional period, the greater surplus-value derives from greater surplus-labour.

The stages through which capitalism realises more and more relative surplus-value, increasing labour productivity beyond the limit that the independent artisan worker could reach, can be reduced to the following: collaboration between workers, manufacturing, machinery.

Taking the trades as they are under artisan production, with the same distribution and the same working skills and instrumentation and tools of the worker in each trade, an increase in productivity can nevertheless be realised by having a large number of workers working side by side during working time. This not only compensates for the individual deviations be they greater than or less than the average work potential, but actually allows the same operations to be performed in a smaller sum of time.

Thus we have simple collaboration, which accepts without yet modifying it the same technical division of labour achieved in the artisan regime. However, the fact of collaboration raises the average output of human labour. This is a social benefit, the first for which historical credit must be given to capitalism. However, it does not realise collaboration under this social impulse, but only for the purpose of intensifying the production of surplus-value.

On the other hand, one should not believe that the capitalist order is indispensable to society wishing to enjoy the benefits of collaboration. Examples of collaboration on a large scale include ancient regimes in which dynastic military leaders, dynastic or sacerdotes could dispose of large masses of labour forces (Assyrians, Egyptians, etc.). Similarly, it must be assumed that, if surplus-value cannot be produced without collaboration, the social achievement of collaboration can be preserved even beyond the stage of surplus-value production.

When we turn to manufacturing we see a radical change: the production technique of craftsmen has not fundamentally changed, but the old division of labour is revolutionised in a greater productivity.

Manufacturing achieves this in two ways. 1) To produce objects on which workers of different trades have to work (example of the carriage that needs the blacksmith, the carpenter, the tailor, the painter, etc.) these workers are all brought together in the same workshop, where they will always exercise not all of their trade but only that particular activity that is needed for the object in question. In this first case, the workshop brings together several separate trades, while greatly restricting the scope of each one. Each workman thus acquires greater skill and productivity in the special function on which he concentrates. 2) In order to produce an object that previously required the work of only one trade, (e.g. the production of pins), the workshop breaks up the successive individual operations of that trade by entrusting them to workers who specialise in that one. Thus one trade is broken up into many others.

In either case, in parallel with the specialisation of the worker, the tool is specialised, which, having to serve a single operation, assumes the form that allows it to be carried out more quickly.

These two forms are called the heterogeneous form and the organic form of manufacturing.

Manufacturing decreases the labour time required not only for the aforementioned reasons, but because it creates a distinction, which the medieval artisan regime attempted to reject: that between specialised workers and labourers, who always mechanically perform the same gestures. For this second category, by eliminating or decreasing the expenses for the apprenticeship period, there is a decrease in the value of labour power and an increase in surplus-value.

Manufacturing represents a step forward in the division of labour. But this is a process that began long before manufacturing and which can be examined with regard to society as a whole.

The fundamental basis of a social division of labour, necessarily accompanied by the exchange of commodities, is the basic fact of the separation of town and country. This fact is already advanced in the feudal economy: while the peasants remain scattered in the territory, in which the feudal lord is arbiter, the artisans concentrate in the cities with a very different system of material, intellectual and political life.

While the division of labour of the craftsmen supposes a great dissemination of the means of production among many independent producer-merchants, the division of labour of the manufacturing type requires the concentration of many means of production in the hands of individual capitalists.

Would it be possible to reconcile the great advantage of the social division of labour with a general social organisation without capitalism? Not only is this possible as a programme for the future, but there are examples in the past of communities living on the basis of an organised division of labour between trades and the common ownership of land (ancient India, etc.). Hence Marx says that, while the social division of labour is found in the most diverse forms of society, manufacturing is a creation of capitalism, but its real benefits will outlive capitalism itself.

Ancient writers on economics extolled the social division of labour because it increased the output of human activity: they had quality and use-value in mind more than quantity and exchange-value.

With the manufacturing era, political economy appears as a special science. Its writers see matters from the capitalist angle, that is, they see the division of labour as a means to produce more, increase surplus-value and capital accumulation, what they call the elevation of national wealth.

The manufacturing industry, built on the narrow basis of the old trades, soon became insufficient and the transition to the stage of machinery took place, which began with the establishment of mechanical factories where the first more complex tools and devices already adopted in individual factories.

The introduction of the machine – while in turn (like the other two first stages: collaboration and manufacturing) representing a decisive step forward for the performance of human, social labour – is determined by the capitalist tendency to lower the price of commodities and produce more relative surplus-value.

Machine in the economic sense does not mean what machine is in mechanics and physics, i.e. any device that changes the intensity, direction or point of application of the force acting upon it. The wedge, lever, etc. are physically machines but economically mere tools. Nor can a machine be defined as an apparatus moved not by man but by other agents: animal, water, steam, etc. Speaking of machines, we will distinguish between machine tools and driving machines. These transform, by means of mechanical agents, heat, chemical, electrical energy, etc. into a given movement which, when appropriately transmitted, causes the machine tool or operating machine to perform acts and movements previously entrusted to the hand of man, equipped with a relatively simple tool.

But even machine tools that have human power as their motive force economically deserve the name of machines because man performs a simple and continuous movement. Here, human intervention becomes purely accidental as it can be replaced by a mechanical motor, just as an electric motor can be applied to a sewing machine.

It is well understood that, depending on the case, the worker always intervenes, either to guide and rectify the motion of the machine tool or to start the motor, such as guiding the sewing fabric under the machine needle or operating the motor switch.

In the first machines the worker had to provide the physical energy to move them. They began to replace man with beast, and followed the ancient practice of drawing energy from watercourses and wind. But the real mechanical revolution came with the invention of the steam engine, capable of driving large numbers of machine tools simultaneously. This was followed by the industrial application of electricity, allowing water energy to be used remotely.

The question arises as to whether our theory of value, springing from labour, and of surplus-value, springing from surplus-labour, translates well the economic fact of the use of machines and whether it explains how it is a source of relative surplus-value.

The machine takes its place among the elements of constant capital. That is, it transmits to the product a part of its own value. This value is smaller the greater the durability and resistance to wear and tear of the machine; it is the greater the more it consumes fuel, lubricant, etc. (We shall compute the value of fuel and lubricants among those of the indirect raw materials, which as well as constant capital, end up incorporated in the product). So the machine would seem to add something to the value and price of the product.

The value of the machine depends for us on the average social labour involved in its production. The less expensive the machine, the less energy it consumes, the more productive it is, in the sense that it adds less of its share to the value of the product.

There is no doubt that the machine contains more labour and is much more expensive than the simple tools of the craftsman or even of manufacturing. Thus, in machinery, the means of labour would appear to contribute more value to the formation of the value of the product. On the other hand, however, it occurs that the machine replaces – for the same product – a large number of workers, thus decreasing the wage bill, so that overall there can be a decrease in the value produced. Thus, although, in relation to the same value of products, the production facilities of machinery import a greater expenditure than those of manufacturing, the performance of the machinery is such that the value of the products (sum of labour required) is diminished.

The question is whether the machine saves labour costs more than it increases the expense of maintaining it. This benefit can be had even if, as is always the case, the machine costs much more than the tool.

Picking up on familiar symbols, we recall the company’s profit:

i.e,

Recall also that the rate of surplus-value is

In this company, a machine is introduced with the annual depreciation rate A’. This machine consumes auxiliary materials of value H’. It eliminates w’ workers. The capitalist spends more A’ + H’. He spends less, however, w’gv.

He will find it convenient to apply the machine as soon as

Even when there is an equilibrium between the two lots, and the capitalist is not yet driven to introduce the machine, there would be social benefit in using it. For, while the lot w’gv represents paid wages, i.e. the value of labour power, the lot A’ + H’ represents price paid, i.e. the value corresponding to all added labour (necessary labour, paid to workers, surplus-labour, enjoyed by capitalists producing machines, and inside auxiliary materials). Socially, substitution would be beneficial because far fewer labour days were invested in the machines and auxiliary materials than the w’g saved, for the same product.

Let us now see what happens to surplus-value. Assuming also that the capitalist introduces the machine in pure balance of expenditure, variable capital will have fallen from wgv to (w-w’)gv.

Even assuming that surplus-value remains constant, the rate of surplus-value will have risen

For example: if the workers have gone from 100 to 50, the rate of surplus-value will have doubled. Thus we have relative surplus-value, i.e. surplus-value increased (so far only in his rate) without extending the working day.

It may appear that this is of no interest to the capitalist, once he has only shifted part of his investment from variable capital to constant capital without (for now) increasing profit. But this is only appearance. We will try further to reduce to a few formulas the complete comparison between Marxist analysis and the capitalist accounting system, reserved by Marx for the Third Book. The sum of constant capital A’ + H’ which our capitalist – the mass of surplus-value S having remained unchanged – has substituted for an equal wage expenditure, is itself the product of labour, which was not performed before (i.e. before machines and coal were needed). On this sum of product another capital (other as owner, but in reality the same as previously invested in the wages of w’ workers) has realised another surplus-value, thus the total surplus-value has increased.

Let us now consider that there is a large benefit in substituting a part of the expenditure on wages in the expenditure on the machine, as corresponds in reality to the spread of machinery. The profit S, if the price of the products sold remained the same, would rise greatly, and the rate of surplus-value (profit divided by wage expenditure) would increase for two reasons, because of the increase in the dividend and the decrease in the divisor.

In reality, the effect of machinery, when it is sufficiently generalised, is to make goods produced at lower cost, i.e. with less labour. And in fact – having reached equilibrium and returned to the general conditions of our hypothesis of investigation, that on the market everything is paid for at the right value generated by labour time – the products of the firm under consideration will fall in price in proportion to the lesser total labour they contain. They will have to come down, not because that was the capitalist’s aim, but because competition will force him to do so.

He will not, however, regret the innovation, and here is why. The product used to include labour, which has now decreased by w’g working days. It’s true that the labour-days contained in A’ + H’ appear in it, but these are much less, a) because of the surplus-labour that appears in A’ + H’; b) because we have assumed A’ + H’ to be less than w’g.

Therefore the product will be paid for at a lower price. The lower production costs will lower the unit cost of production in the ratio

It would thus seem that profit also in the second case falls back to the S-value.

But if we make the hypothesis of a general equilibrium succeeded by the diffusion of machinery, we have as a consequence that the same phenomena considered for the branch of business we are concerned with have taken place in all the others, with a consequent reduction also in the price not only of the new products A’ (machine) H’ (coal) but also of the old purchases for A and H, and also in the means of subsistence and therefore in wages v. As a result of this general equilibrium the fall in prices will take place without diminishing profit nor reversing the increase to it brought about by the introduction of the machines. The mass of surplus-value will therefore have increased despite the fall in the price of products, the rate of surplus-value will also have increased, and the production of relative surplus-value will have reached its peak.

All this without yet considering the historical social effects of machinery, in the general increase in the mass of consumption and in that of the number of workers absorbed by industry.

Secondary effects of the machine, all of which compete to increase surplus-value, are: a) the possibility of utilising the labour of women and children; b) the possibility of prolonging the working day by requiring less effort and less attention; c) the intensification of work, i.e. the increased yield of work with the same amount of effort on the part of the worker, which can also compensate for the forced reduction in the number of hours worked per day.

One of the consequences of the introduction of the machines was the immediate dismissal of large numbers of workers, which caused real uprisings followed by the destruction of the machines to the fury of the people. A classic example is the Luddite movement at the beginning of the 19th century in England, which was suppressed by the government with extraordinary violence.

The appearance of capitalist manufacturing had not produced similar conflicts, because, if opposition came to the new workshops of the craft guilds, there was no conflict between wage earners and capitalists.

Quite different were the consequences of the introduction of machines, which gave rise to real tragedies of misery. The workers could not understand that these inconveniences did not stem from the technology of the machine, but from its social use.

Many bourgeois economists at the time of the introduction of the machine were concerned to justify and defend the mechanical system, in spite of all its drawbacks, but of course they attempted to do so without admitting that these drawbacks stemmed from the capitalist management of machinery. Among other things, they enunciated the so-called compensation theory according to which the reduction in labour costs (wages) achieved through the machine is a release of capital that can be used elsewhere by ‘giving work’ to other workers. This reasoning is reminiscent of the vulgar one according to which capitalists, by consuming a large part of the collective product of human labour, give workers more opportunities to work and thus earn a living. Almost as if they were proposing not to consume that extra product equally in a fairer distribution system, but to give up producing it.

Returning to the theory of compensation, it suffices to note that, as we have seen, even if the diminished wage bill is greater than the value of the machine purchased, the former represents a much greater number of working days, while in the value of the machine, and in that of the difference saved or in any case invested by the capitalist, only a fraction of the wage bill appears, the remainder being covered by investment in other constant capital and surplus-value.

But the economists in question place themselves, on the ground of the repercussions on the labour and subsistence market, from the point of view of their law of supply and demand. On this ground too, however, one could criticise them. By decreasing the wage bill and the purchase of subsistence by unemployed workers, there will be a surplus in the supply of subsistence and it will fall in price. But there will also be a surplus in the labour supply and wages will fall. And in the companies producing subsistences the lower demand will produce more redundancies.

The conundrum of the contradictions of machinery can only be solved by condemning its capitalist social application. Society should save a great deal of labour with the machines, the mass of food remaining the same, at worst. But more likely growing as well. The average result would be less effort and more food. But machinery, by generating relative surplus-value, separates the worker from his food and takes a larger share of it away for the benefit of non-workers.

In reality, even in the capitalist regime, the introduction of the machinery, and its abrupt repercussions, have been followed by phenomena that have allowed – subject always to the intensified levy of surplus-value – the demand for workers to be extended, however, with the rise of new industries previously unknown and correlated to the production of machinery or to other needs of the mechanical system (railways, motor navigation, motoring, gas and electric lighting and heating, photography and cinematography, telegraphy and radio telegraphy and telephony, air navigation, etc. etc.).

There is no need here to pursue an analysis of the revolution brought about by machinery in production. The relations between the various markets are disrupted, the countries where industry first developed can flood foreign markets with their cheap products, and the other countries must reduce themselves to producing raw materials and subsistence for the industrialised ones. The labour made available by machines gives great impetus to emigration and colonisation. At the time of Marx’s writing, the United States was in such a relationship with England, i.e. it absorbed population and the products of industry, returning agricultural products and raw materials. This relationship has completely changed today, and, if not quite reversed, it does, however, create in American industry a competitor capable of overwhelming European industry.

Nor is it the case here to deal with the theory of overproduction crises, and the closely related phenomena of industrial and colonial-military imperialism.

Big industry, in a word, from the moment of its appearance upsets the social division of labour from top to bottom.

Equally, we neglect to summarise here the well-known problems raised by the factory regime and which are the subject of the claims of professional organisations and so-called social legislation (discipline, hygienic treatment, protection against casualties, disability, unemployment, night work, women’s and children’s work, etc.).

Finally, in Marx’s text there is a mention of the effects of big industry on agriculture, a subject he has dealt with elsewhere. Marx emphasises that the damage that the new methods do to the producer due to the capitalist application of the new technical resources is accentuated; but he adds the thesis that intensive exploitation also depletes the accumulated fertility in the earth. This process is avoided by the later discovery of chemical fertilisation, which allows soil losses to be artificially replenished, however Marx’s social argument retains its value in that it means that the application of machinery to the land is unlikely to be feasible by capitalism, if even it has been able to overcome the contradictions of its application to industry relatively. It is necessary for the realisation of the agrarian technical revolution that the application of machinery be done on a social basis and with central rather than private directives. This view is confirmed by the contrast between the forward march of industry and the still backward state of much of the world’s agriculture, and with it also agrees the programmatic orientation of the socialisation of industrial capital as a clearly anticipated stage in the industrialisation of agriculture.

Summarising the path we have taken, we have analysed the exchange of commodities, recognising in the commodity a product of human labour which, instead of being consumed by the one who has produced it, is offered by him in exchange for another product that he needs; whatever the mechanism or the intermediary, the rule of this exchange is that it takes place between objects that cost on average the same amount of labour time.

The complex of those who work and exchange presents more and more intricate relations and, at a certain moment, after the exchange has become generalised, the division of labour extended, the currency introduced, we seem to witness the failure of our rule as the exchange differences in value, i.e. surplus-value, emerge. There are some (among the holders of money) who come to the market and leave having ‘gained’, i.e. with a greater sum of goods than they had brought in.

Even before the mercantile epoch and even on other grounds than the market, there were (and are) those who realised such a benefit in products that were not theirs; but in that case they were directly delivered to them without material exchange and by virtue of social relations that clearly revealed the character of relations of force; whether they were marauding tribes, hieratic or feudal military chiefs, slave masters and the like.

But since surplus-value appears on the mercantile terrain and seems to be realised through peaceful and legitimate relations, we recognise the appearance of capitalism. Such surplus-value would not appear to be an appropriation of other people’s products, and thus of other people’s labour.

In every epoch, surplus-value has enabled certain individuals and even communities to prevent everything produced from being consumed, allowing the accumulation of material things necessary for the life of ever more advanced societies, which is commonly referred to as wealth.

In the ages of antiquity it was evident to the first attempts to theorise economic facts that all surplus-value arose from appropriated labour without expenditure (we say from surplus-labour) and the origin of wealth was recognised in labour.

Of course there are riches not produced by man but offered by nature. But only for populations that are still sparsely populated and have primitive needs can they be enjoyed without labour. When, however, the economy was based not on the labour of slaves or the defeated in war but on that of peasants, who, for the Christian feudal lord, were morally men like himself, the production of wealth as a gift from nature was theorised, wanting to disguise the power relationship whereby the landowner obliged the peasant, in addition to working for his own consumption, to provide surplus-labour and surplus-produce for the feudal lord.

This conception that it is only agrarian production that provides surplus-value survives in the school of physiocrats.

When, after the great geographical discoveries, the land economy is overlaid by the worldwide spread of trade, the mercantilist school arises to uphold the absurdity that neither nature nor labour, but simple exchange produces wealth; surplus-value arises in every exchange; the fundamental law is the negation of our: every exchange takes place between non-equivalents.

But capitalism appears and with it new economic doctrines and new explanations of surplus-value and the origin of wealth. The great activity of manufacturing and industrial factories leads to the truth that all wealth comes from labour. Ricardo makes this theory triumph and his school proclaims that surplus-value emerges from the productive force of labour (Classical Political Economy).

At this point, capitalist class theorists are no longer those of a revolutionary class but those of a conservative class. They cannot proceed any further in the scientific investigation of the truth. If the new mercantile and industrial society has definitively broken all feudal and theocratic brakes on the modern development of the sciences of nature, it is far from being appropriate for it to remove the brakes on the development of the sciences of society.

Ricardo and his ilk know that value comes from labour, but they dare not conclude that surplus-value comes from surplus-labour, because then capitalist profit would have its cause not in an immediate ownership of modern organised labour, but only in the superimposition upon it of a compulsion.

Hence, while the official economists contemporary with Marx will argue with all sorts of reasoning that surplus-value is a ‘natural’ and ‘necessary’ fact, inherent in productive labour, and therefore society will unfold without ever abolishing it, the many subsequent schools will, under the pretext of objectivity and true positive scientific sense, collect a mass of material, but refuse to draw simplifying syntheses from it. Profit will become a statement of cash, an arithmetical difference between the two lots, but its causes will be wisely found everywhere, in the exploitation of natural resources, in labour, in the vicissitudes of exchange, and so on. It will be argued that the economy is not susceptible to the enunciation of scientific laws, or even of causal hypotheses, with the famous argument that the imponderable fact of human action plays a role, and it will be reduced to a simple statistic. Similarly, the constructions of mechanics and chemistry can be challenged because, despite innumerable observations and experiments, no one has ever seen the pure realisation of the law of inertia (which would be in the practical absurdity of perpetual motion), or a piece of real matter whose component ratios mathematically translate without error those given by molecular theory.

The Marxist solution, on the other hand, is crystal-clear: value and wealth originate from labour; exchanges only take place between equivalents; surplus-value does not necessarily occur where there is productive labour and exchanges of products, and it is not a necessary character of a high social division of labour: it represents surplus-labour, i.e. unpaid labour, and for it to be produced the necessary condition is a social relation of force that separates the worker from the instrument of production and the product, and that forces him to alienate his labour-power as the only means of procuring subsistence.

The cause and measure of capitalist profit lies in the appropriation of surplus-labour. The thesis that there can be no productive labour except where surplus-value is produced is false.

Marx proceeds with a method that vulgar critics describe as a cold analysis of capitalism, alien to approval or condemnation, which concludes in predicting the further gradual evolution of capitalism itself. The very fact that Capital is not a programmatic manifesto or a memoir of claims leads them to believe that therein lies the toleration of long further vicissitudes of the capitalist regime and therein appear as satisfactory and desirable claims on the part of the working class the legislative measures of England and elsewhere. These are set out in chronicling the stages of bourgeois development and analysed with the aim of demonstrating that economic theory, the enunciation and demonstration of which forms the author’s object, is well applied. The gross or deliberate misunderstanding is based on the fact that the book proceeds by scientific method, and the scientific method – applied to it, and by the school to which it gave rise, to economics, sociology and history – consists in discarding all ideological preconceptions of a moral nature as worthless. It is a matter, in the work of investigation, of ascertaining the facts as they are, extracting laws from them and, on the basis of these, following and predicting their course.

There is no need to say now how and why this task does not in the least contradict the integrative task of active intervention, not of ideal forces and inspired and creative individualities, but of collectivities operating in a broad or restricted field according to the succession of situations ⁽⁷⁾.

We say this because we have in Chapter 16 of Part V an example of how Marx’s work should be understood and read.

The fact of surplus-value is first investigated according to the methods of experimental science, on the basis of a hypothesis that explains and measures well the established facts. Then the thesis now recalled, which claims surplus-value to be inseparable from productive labour, is examined. We first compare it with past data. It is not true that once productive labour appeared, surplus-value appeared with it. As long as the producer remains in possession of his instrument of labour, is able to procure the raw materials, and remains the arbitrator of whether or not to alienate his products, or in any case alienate them for his exclusive benefit, he works as much as is sufficient to procure the things he needs, i.e. for only as long as he needs to work. In the beginnings of society, if the labour forces acquired are minimal, the needs are also minimal, and, especially where climate and soil fertility are favourable, the necessary labour time is low. Forceful intervention is needed to subject members of society to each other, to force some to work extra time for the benefit of others. While it is therefore true that a certain degree of labour productivity is needed for the fact of surplus-value to appear, it is not true that this has its immediate cause in labour, because historically we find examples of labour without surplus-value.

Having thus made the comparison with the data of history, which suffice to refute the pretended and metaphysical necessity of surplus-value and profit, the third point of the deduction is an obvious corollary: it will be possible for surplus-value to disappear and with it capitalism, preserving the productivity of labour with the formidable increases received through the various phases analysed.

It is therefore not a question of proposing mitigations or preconceiving minor changes in the economic order, but of the most radical position one can think of, that is, the suppression of capitalism itself, getting rid of the pretended demonstrations of the necessity and social immanence of the hinges on which it rests. Elsewhere the next point is dealt with, namely that such a transition is not only possible but necessary, and elsewhere still, when dealing with problems no longer of science alone but of action, it will be shown how and with what forces positive action will be exercised in this sense, the necessity of which in no way contradicts the established historical determination.

32. Distribution of the value produced by labour between the capitalist and the wage earner

Now that we have briefly followed the historical variation of the length of the working day, and of the technical productivity of labour, let us consider quantitatively the laws of these variations. In all that follows, let us consider constant the value of money, which is taken as the measure of value of every other commodity: that is, let us assume that the procurement of a kilo of gold always costs the same average labour time, and that the kilo of gold always represents the same number of monetary units. Resuming the previous example, the equivalence of one hour’s work with £3 thus remains fixed.

To the quantities previously considered let us add a new one, the productivity of labour, i.e. its capacity to produce in the unit of time more or less products. Let us call this quantity m, intending to refer with it to the average social productivity of labour. On the other hand, we call the intensity of labour its productivity in an individual firm, insofar as it can be higher or lower than the average general productivity. Thus, while the average productivity of an hour’s work may be equivalent to x grams of iron, y grams of cotton, 2 grams of gold, 3 pounds, if, on the other hand, a worker in a given firm is able, by his skill or superior means of production, to produce 2x grams of iron, 2y grams of cotton, etc., i.e. 2 hours of average work, we shall say that the intensity is double that average.

Setting aside completely the constant capital whose value passes unaltered in the product, let us consider the part of the value of the products due to labour, composed as usual of variable capital, or wage expenditure or compensation of the worker (V), and of surplus-value, or appropriation of the capitalist (S). We have called the surplus-value ratio the ratio s = S:V.

We always call t the number of hours of work. Let us now call L the quantity of the product, no longer annual but daily, and f its unit price, no longer total but for the part representing labour and surplus-labour (not the total price, including constant capital).

We shall then have

1°) (Case 3 of ch. XVI) - The duration of labour varies

Instead of t hours t’ hours of labour.

Given t’ = αt, the quantity of products L will become αL and their value fαL = αt·£3. That is, the sum of wages and surplus-value has varied. What will have been the variation of each? In general the wage will remain constant, and all the increase will fall on surplus-value (assuming the variation is an increase). However, within certain limits, if workers give more hours of activity they will consume more subsistence, and it will be necessary to increase wages if we do not want to see the intensity and productivity of labour, which for the moment we assume constant, decrease.

Thus an increase in the day corresponds to an increase in the value produced, a certain increase in wages and a corresponding increase in surplus-value.

2°) (Case 2 of ch. XVI) - Labour intensity varies but the day is constant

In a given firm, without prolonging the working hours, we obtain more products in the same time, so that the intensity of labour, previously corresponding to average productivity m, becomes αm. Again, we will obtain more products, L’ = αL. Since there is no reason for their price to change on the market, we will collect more, i.e.:

This increase in V’ + S’ must be distributed over wages and surplus-value. There will be a certain increase in wages because the worker, working the same time but more intensively, consumes more and can always offer himself to other masters by substituting an other worker who produces less. If, however, the increased intensity depended entirely on a secret labour of the capitalist, he could also leave the wage unchanged (V’ = V) and carry over the whole difference to surplus-value.

3°) (Case 1 of ch. XVI) - The working day remains constant and, ignoring particular variations in intensity, the average productivity of labour varies in all sectors of production

As always, the quantity of products from L becomes L’ = αL while still being the result of t average labour hours. But, since this variation by hypothesis affects all commodities, including raw materials, instruments of production and subsistence, all prices will fall, and with them that of labour power. The price f becomes f’ = f/α, the wage bill V’ = V/α.

Then the proceeds from the sale of the product L’ will be

Thus the labour day produces more product, but the same value:

The sum of surplus-value and wages remains unchanged. But we have seen that the wage has decreased from V to V’, with V’ = V/α. Consequently, surplus-value has increased:

How will the rate of surplus-value have varied? It will have increased more strongly since S’ is greater than S, and V’ less than V. Thus the value of labour power decreases, surplus-value increases, and the rate of surplus-value increases.

The rate becomes:

Since α is more than 1, we have that the rate of surplus-value has varied more than proportionally to productivity because, in addition to corresponding to the old rate s multiplied by α, the additional positive quantity (α - 1) must be added. Ricardo’s mistake was, although he saw the increase in the surplus-value rate, to believe it to be proportional to the increase in productivity and the reduction in wages.

To give a clarifying numerical example, given the wage V of £18, the surplus-value of £12, and the total product of £30 (6 hours, 4 hours, 10 hours), let productivity increase by 100%. We will always get £30 because, while the product will be doubled, say 20 kilos instead of 10, the price will be £1.50 instead of £3 per kilogram. The wage will fall in parallel from £18 to £9, the surplus-value will rise from £12 to £21, i.e. it will grow less than 100%. The rate of surplus-value was previously 12/18 = 66%, it now becomes 21/9 = 233%. The rate has increased by 350%, corresponding to a 100% increase in productivity.

The three cases examined can change with simultaneous changes in all magnitudes (4th case).

When, as in the first case, general prices do not change, the wage, or price of labour power, only changes as a consequence of greater surplus-labour (for a greater consumption of labour power). If, on the other hand, prices change due to changes in general productivity, it is the change in wages that directly causes the inverse change in surplus-value. Capitalism means that the increased productive power does not result in decreased average labour, but in an increased proportion between the withdrawal of a privileged class and the compensation of labour. This in addition to the other enormous social ‘liabilities’ caused by the maintenance of such a state of affairs.

33. General law of surplus‑value

In this subject let us only recall that the exact expression designating, in our theory, the wage, i.e. the sum of money paid by the capitalist to the worker for a day’s work, is: price of labour-power, i.e. value of labour-power.

Classical economics strives to find the value of labour analogous to the value of any other commodity. In doing so, it falls into the misunderstanding of defining the value of the working day as the value transmitted to the products by the worker’s daily activity. Now we know that this value, corresponding to the consumption of the commodity ‘labour power’, is much higher than the value of it (id est: purchase value, market value, hence price of that labour power).

In vain, an attempt was made to resolve the contradiction by evading the observation that there is a share of unpaid labour, by referring to the possible fluctuations in the price of wages analogous to the fluctuations in any other price due to supply and demand. This law causes fluctuations or deviations more or less than an average quantity, which is the exchange value. Assuming that the abundance of a commodity in relation to needs obliges the incautious or unfortunate producers to sell it at a reduced price, this phenomenon, accompanied by the reduction of production, or the inverse phenomenon, are phenomena that lead back to equilibrium, and it is precisely the equilibrium figure of the price that we call value and that we seek to explain.

Thus for the commodity labour power and for wages. Irrespective of the play of supply and demand (as independent of further phenomena to be studied further on, such as workers’ and employers’ union resistance) in a regime of equilibrium, the wage is always strongly below the quantity of value supplied by labour.

In vain, therefore, classical economics tries to make people believe that in every purchase on the market there can be a benefit (surplus-price), and so occasionally in the purchase of labour power, surplus-value remaining a miraculous product of capital.

On the basis of these general guidelines, one can study the various forms of wages (hourly wages or piecework wages), the fluctuations in wages from country to country and from epoch to epoch (chapters XVII-XX).

GENERAL LAW

To conclude the first study of the procedure of capitalist production carried out in the preceding notes, we shall once again recall the expression of the fundamental law discovered by Marx

«Capital is not only power to dispose of labour; it is essentially power to dispose of unpaid labour. All surplus-value – in whatever particular form of profit, interest, rent, etc. is subsequently crystallised – is by essence materialisation of unpaid labour time».

«The mystery of capital’s self-valorisation is resolved in its power to dispose of a given amount of other people’s unpaid labour».