“The real limitation upon capitalist production is capital itself. It is the fact that capital and its self-expansion are the beginning and end, the motive and aim of production; that production is regarded as production for capital, instead of the means of production being considered simply as means for extending the condition of human life for the benefit of the society of producers”. – Karl Marx
Commodities and Money
A utility is a use value. One thing use values have in common is that they are “products of human labour”. Human labour in the abstract – a congelation of homogenous human labour. Labour is divided into time, day etc. The total labour power of society is a homogenous mass with innumerable individual units – for with e.g. the invention of the power loom, the time taken by hand loom is double: labour therefore drops to half the value.
Value
The amount of labour socially necessary; i.e. the labour time socially necessary for the production of a commodity.
Use-Values for Sale
Coat equals 10 yards of Linen. 10 yards of Linen equals W. Coat therefore equals W.
“Division of labour is the necessary condition for the production of commodities, but it does not follow conversely, that the production of commodities is a necessary condition for the division of labour”.
There is a social division of labour. The use values are combinations of two elements: matter and labour. The value of a commodity represents human labour in the abstract – skilled and simple or unskilled labour. Skilled counts as a multiple of unskilled labour. Increased quantity of material wealth means a fall in value. The two-fold nature of labour – commodities have value and use value (e.g. chairs, shirts etc).
Relative Value and Equivalent Value
The relative expression of value is incomplete, and is reflected in an interminable series.
The General Form of Value
One coat equals 10 lbs of tea, 40 lbs of coffee, 2 ounces of gold, X commodity A – expression in one commodity. Human labour constitutes its specific character.
Universal Equivalent
“The particular commodity with whose bodily form the equivalent form is thus socially identified, now becomes the money commodity, or serves as money.”
Social Monopoly; Universal Equivalent
Money could be cattle, copper, silver – gold becomes the accepted form: the General Form of Value – money form.
“… the products of labour become commodities, social things whose qualities are at the same time perceptible and imperceptible by the senses. There it is a definite social relation between men that assumes, in their eyes, the fantastic form of a relation between things.” Analogy – religious world, man creates God in his own image. Commodities are the products of men’s hands.
Fetishism of Commodities
The sum total of labour of private individuals forms the aggregate labour of society. The active exchange between products appears as material relations between persons and social relations between things. The product must not only be useful, but useful for others – to stamp an object of utility as a value is just as much a social product as language.
The forms of thought of the bourgeoisie are determined by the mode of production – the production of commodities. This is the mystery of commodities.
Exchange
This represents the right of private proprietors to the use value of others. Labour spent upon use values counts effectively only insofar as it is spent in a form that is useful for others. The exchange of commodities begins between primitive commodities – exchange by chance; the original explorers exchanged gold and copper for a handful of beads and trinkets.
Gold is divisible into portions – the act of exchange; – into money – is the value form. Gold is money because it is the direct incarnation of human labour – this constitutes the magic of money, why people go into lotteries, pools etc.
Money and the Circulation of Commodities
By virtue of its function as the Universal Measure of Value, gold becomes money. It is not money that renders commodities commensurable – it is because all commodities as values are realised in human labour that the value can be measured by one and the same special commodity. Money as the measure of value is of that which is imminent in commodities, labour time.
The price of commodities is the ideal or mental form. It is possible to estimate millions of pounds worth of goods. Commodities once had a gold and silver price; once gold replaced silver, all commodities were measured in gold.
The Measure of Value and the Standard of Price
As the measure of value, money is the incarnation of human labour; as a standard of price it is a fixed weight of metal.
At a certain stage there can be the sale of non-commodities – conscience, honour etc. – Under the ideal measure of value there lurks the hard cash. Gold, when a mere commodity, is not money, and when other commodities express their prices in gold, this gold is but the money form of these commodities themselves.
C-M-C (Commodity-Money-Commodity)
This is a sale and a purchase – the “circuit” of commodities. “The total of all the different circuits constitutes the circulation of commodities”.
Marx points out that nothing could be more childish than the idea that there must be equilibrium of sales and purchases. One cause of slumps is the disruption of such equilibrium. The circulation of commodities splits up into antitheses of sale and purchase, formerly the direct identity.
The “confidence” that the bourgeois economists are always talking about is a subjective factor, but can cause a crisis if the antithesis of sale and purchase is prolonged.
Commodities are used up in “consumption”. “Continuity of the (movement) is therefore kept up by the money alone.” The movement of money is an expression of the circulation of commodities, yet the circulation of commodities seems to be the result of the movement of the money.
“The total quantity of money functioning during a given period as the circulating medium, is determined on the one hand by the sum of the prices of the circulating commodities, and on the other hand by the rapidity with which the antithetical phases of the metamorphoses follow one another.”
Now the 3 factors are variable. Coining, like the establishment of a standard of prices, is the business of the state. Silver and copper became tokens of gold coins. The inflation which we are experiencing is the inflation of paper money. In its original form on the world market as universal money, gold takes the form of bullion. The swindle of the gold exchange standard, where the dollar and the pound are mediums of exchange internationally, is becoming clearer with the American and British deficits in the balance of payments.
The Transformation of Money Into Capital
The circulation of commodities is a starting point of capital. The modern history of capital begins in the 16th century with world commerce and the world market. M-C-M (money-commodity-money).
M-M’ (money-more money) is the formula of capitalist production; The original sum of money, plus an increment.
Marx’s Great Discovery on Which His Whole Theory is Based is the Discovery of “Surplus Value”
From the former simply circulation of commodities, the circulation of money as capital becomes a goal in itself. As Marx puts it, the capitalist is a rational miser! He increases his wealth by constantly throwing his money into circulation instead of hoarding it. “Money begets money.”
“In order to be able to extract value from the consumption of a commodity, our friend Money Bags must be so lucky as to find in the market a commodity whose use-value possesses the peculiar property of being a source of value, and consequently a creation of value. This special commodity is Labour Power. The capitalist and the worker face each other with equal rights, the one as a purchaser and other as seller of the commodity labour power. This is the difference between wage labour and other forms of exploitation. In slavery it appears as if the owner of the slave gets the entire value of the labour of the slave (of course this is not so). Under serfdom, the relation between serfs and lords, and the division of labour of the serfs, was clear.”
The value of labour power is determined by the labour time necessary for production and reproduction of the labourer. It is determined, therefore, by means of subsistence. The value of labour power is the value of the means of subsistence necessary for the maintenance of the labourer in his normal state. This is elastic, and has a moral element. “It is the product of historical development and depends, therefore, to a great extent on the degree of civilisation of a country.” In a given country, in a given period, at different times, the average quantity of the means of subsistence necessary for the labourer is practically known.
The use-value of labour power is advanced to the capitalist. The workers give them credit. Labour power is paid for after it is used, monthly, weekly etc.
The consumption of labour power is the production of commodities and of surplus value. The consumption of labour power lies within the hidden abode of production.
The Production of Absolute Surplus Value
Labour power in use is labour. The elementary factors of the labour process are
- The personal activity of man
- Subject of the work
- The instruments of labour – the raw materials.
The raw material is mainly filtered through labour. There are specially prepared instruments of labour – nowadays atomic, chemical, electronic etc. The instruments and raw materials are means of production. The labour is productive labour. The objective factors are the means of production; the subjective factor is labour power.
The product is the property of the capitalist, not the worker. The aim of the capitalist is to produce use-value, value and surplus value.
“Specific Use-Value of Labour Power is the Source not only of Value, but of More Value than it has Itself”.
The special service the capitalist expects from labour-power is the production of the surplus. To him, these are “eternal laws” of the exchange of commodities. The seller of labour power [the worker] is like the seller of any other commodity. The owner of money has a piece of luck; by paying half a day’s work, he receives in return the labour of a full day. He gets not 6 hours of labour, but 12 hours. “Equivalent was exchanged for equivalent.” – “This metamorphosis, this conversion of money into capital, takes place both within the sphere of circulation and also outside it; The capitalist at the same time converts value, past materialised and dead labour, into capital – value pregnant with value.”
The necessary labour is, of course, under given social conditions. The labour time must be under normal conditions. The average labour power is used up. There must be no waster of raw materials, etc. The work must be under average conditions. This is the capitalist process of production.
Labour is skilled and unskilled. Skilled labour counts as compound labour. In an equal time it creates proportionally more value.
Constant Capital and Variable Capital
The constant capital is preserved and transferred as value in proportion. Constant capital is used up in this way; what modern bourgeois economists call “amortisation”. The element of constant capital results in a transfer of value in to fractions. It is gradually transferred. A new use-value is created in which the old exchange value reappears. The means of production are raw materials; auxiliary materials; and the instruments of labour – These are constant capital.
Labour power is called variable capital because it undergoes a change. Labour power produces an equivalent plus an excess, called surplus value.
The Rate of Surplus Value
“… the labourer, during one portion of the labour process, produces only the value of his labour power, that is, the value of his means of subsistence.” That portion of the working day during which this reproduction takes place is called “necessary” labour-time, and the labour expended during that time is called “necessary” labour. “Necessary, as regards the labourer, because independent of the particular social form of his labour; necessary, as regards to capital, and the world of capitalists, because on the continued existence of the labourer depends on their existence also”.
The rest of the working day creates value only for the capitalists. This is surplus value, surplus labour time or surplus labour. “The essential difference between the various economic forms of society, between, for instance, a society based on slave labour, and one based on wage labour, lies only in the mode in which this surplus-labour is in each case extracted from the actual producer, the labourer.”
Rate of surplus value is surplus value divided by variable capital, or surplus labour divided by necessary labour. The equation is:
The working day is, say, 12 hours, in which 20 lbs of yarn to the value of £30 is produced. 80% of this (£24) is the re-appearance of dead labour, of constant capital (ie. 20 lbs of cotton, value £20, the wear and tear of the spindle £4 etc). 20%, or £6 is the new value.
Therefore 20lbs of yarn equals 24C (constant capital) + 3V (variable capital) + 3S (surplus value)
12 working hours equals £6, so in yarn valued at £30 there must be embodied 60 working hours. This extra 48 hours of labour expended comes before the commencement of the spinning process, on the means of production.
“The portion of the product that represents the surplus value we call surplus produce.” Surplus produce has a relative magnitude.
The rate of profit is surplus value divded by the sum of variable and constant capital. The equation is:
The Working Day
The working day is variable – its limitations are physical, moral, intellectual and social as far as labour power is concerned. Therefore it fluctuates. Capital is personified in the capitalist who tries to extract the greatest amount of surplus labour. If the normal life of the labourer is 30 years, then a day’s labour is 1/(365×30), or 1/10950 of its total value. In the mad greed for surplus value, capitalists can use it up more quickly; If used up in 10 years, it equals 1/3650 of its total value. This is brutal robbery. The working day is a working day of normal length. Here there is a clash, right against right, labourer against capitalist. When two tights clash, force decides. This is the struggle of collective capital (capitalist class) against collective labour (working class).
In the early stages of capitalism, the civilised horrors of overwork are grafted onto the barbaric horrors of slavery and serfdom; Capitalism has a werewolf hunger for surplus value. Capitalism celebrates its orgies – struggle first for the 12 hour working day, then the 8 hour working day.
The Rate and Mass of Surplus Value
“The mass of the surplus value produced is equal to the amount of the variable capital advanced, multiplied by the rate of surplus value. I.e. it is determined by the compound ratio between the number of labour powers exploited simultaneously by the same capitalist and the degree of exploitation of each individual labour power.” E.g. The necessary labour is 6 hours = £3. The rate of surplus value equals 100% = £3 surplus created. This represents 6 hours of surplus labour [in a 12 hour day to create £3 surplus value].
Production of Relative Surplus Value
The absolute surplus value is derived from the prolongation of the working day. The relative surplus value is gained by a cut in the necessary labour time.
Cooperation
This results in the collective power of the masses, the combination of labour. Man is a social animal. Cooperation results in the development of the species. An industrial army is produced with officers and sergeants. Cooperation leads to the division of labour and manufacture – it produces the detail labourer, the labourer performing a single task. It results in an increased intensity of labour. Manufacture is work by labourers in a single factory. This leads to a hierarchy of labour power. Crafts exist even today – the propaganda of the capitalists against “restricted practices”.
Machinery and Modern Industry
There is a fundamental difference between the machine and an implement. The productiveness of a machine is measured by the human labour power it replaces. Machinery is used to lengthen the labour time – relative surplus value is increased through the use of machinery. Machinery squeezes out more labour in a given time. Manufacture and detail work are replaced by machines. In the early days of capitalism this results in the production of luxury and parasitic servants.
The increased intensity of labour results in the continuity, uniformity, regularity and order of labour through manufacture. The less value a machine gives up, so much the more productive it is, and so much the more its services approximate to those of natural forces. Capitalist creates the service trades and entirely new branches of production.
Capitalism is constantly revolutionised – the new technology revolution and the new industries and techniques of the last 20 years are examples of this. Capital tends more and more to be concentrated – the example today is the 350 monopolies which have garnered the greater part of the wealth of Britain [nowadays more like 100 monopolies]. The soil and the labourer are sapped by capital.
The Production of Absolute and Relative Surplus Value
Given the following:
- Commodities are sold at their value
- There is a given length of the working day
- There is normal intensity of labour
We have the following formula for the rate of surplus value:
= surplus value/value of labour power = surplus labour/necessary labour = unpaid labour/paid labour.
Profit, interest and rent represent the unpaid labour of the working class.
Wages
Labour is the substance and the immanent measure of value, but has itself no value. With the wage system, all labour appears as paid labour. With the slave system, all labour appears as unpaid labour. Wages can be calculated as time wages or as piece wages, but in both are represented [quantities of] paid and unpaid labour.
National Differences in Wages
In different countries, at different times in different periods, labour power has a different value. At the same time, labour power in USA, UK, Chile and India, as today, have a different value, as previously explained.
Accumulation of Capital
Simple reproduction is a mere repetition of the process of production on the old scale, but that is not the aim of the capitalist mode of production. Capital reproduced sooner or later becomes appropriated unpaid labour. From the point of view of the capitalist, the labourer is a mere source of wealth. The labourer produces wealth, and capital produces the labourer, but as a wage-labourer. From a social point of view, the working class is a mere appendage of capital. Capitalist production produces and reproduces the capitalist relationship.
Conversion of Surplus Value into Capital
Employing surplus value as capital, reconverting it [back] into capital, is the accumulation of capital.
“… the mechanism of capitalist production provides beforehand, by converting the working class into a class dependent on wages, a class whose ordinary wages suffice not only for its maintenance but for its increase. It is only necessary for capital to incorporate this additional labour power, with the surplus means of production, and the conversion of surplus value into capital is complete.”
e.g. The original capital of £10,000 brings in a surplus value of £2,000, which is capitalised. This in turn brings in a surplus value of £400, which in turn is capitalised and brings in a further £80, and so on.
The separation of property from labour has become the necessary consequence of a law that apparently originated in their identity. Through the greed of wealth of the capitalists, the productive powers of labour have been developed to an undreamed of extent. One worker in America today produces as much wealth as 2,500 slaves in antiquity. Science and technology allied with labour power gives capital a power of expansion independent of the given magnitude of the capital actually functioning.
The General Law of Capitalist Accumulation
The value composition of capital is determined by the proportion in which it is divided into constant and variable capital. On the side of material, as it functions in the process of production, all capital is divided into means of production and living labour-power; this is the technical composition of capital between the two compositions there is a strict correlation.
“I call the value composition of capital, in so far as it is determined by its technical composition and mirrors the changes of the latter, the organic composition of capital.”
The composition of the total social capital of a country is the average of all the individual compositions of each branch of production.
The best conditions for the proletariat are conditions of the greatest accumulation of capital, such as the [post-WW2] boom of the last few decades. The tension of the golden chain of capitalism is loosened, and the standards of living of the workers rise accordingly – They [the workers] have a [advantageous] sellers’ market for their commodity, labour power. Centralisation, accumulation and concentration are the general law of capitalist production. This has been particularly strikingly demonstrated in the last two decades, where the army of labour has increased tremendously, and small businesses, shop keepers, peasants etc have reduced in numbers. I.e. [there has been] the tendency towards monopoly.
Primitive Accumulation
Capital in its early stages accumulated by divorcing the producer from the means of production – the plunder of the people of England, and the seizure of land which belongs to the people, by the landowners – the plunder of the monasteries, and the looting of the colonial peoples by British and other imperialists. The history of capitalism is written in letters of fire and blood. It was in this way that there was a transformation from feudal exploitation into capitalist exploitation.
England forms a classic example of the creation of the proletariat. As early as 1349, Edward III passed his “Statue of Labourers”, forcing the workers to work long hours, and limiting the payment of wages. In its rosy dawn, capitalism was ushered into existence dripping blood from every pore.
Force is also an economic power. The state was and is used as an instrument of coercion of the working people. Children from the age of 5 to 14 were compelled to slave in the early factories. But at the same time, capitalism transformed individual means of production into social means of production. It creates the world market. It creates the proletariat. It transforms the means of production into social means of production, while individual appropriation remains.
This contradiction can only be resolved by the expropriation of the expropriators – by transforming the social means of production into means of production owned in common [i.e. socialism].
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