The People's Marx, Borchardt 1921
(Extracted from vol. Ill, part. 1, sections 1 & 2, German ed. Vol. I, ch. 5.)
But how can profit derive spontaneously from capital? For the production of any given commodity the capitalist needs a certain sum, say £5. In this sum are included all the costs of production, i. e. raw and auxiliary materials, wages, the wear of the machinery, tools, buildings etc. He subsequently sells the finished commodity for £5 10 s. If we conclude that the finished commodity is really worth £5 10 s., we must necessarily conclude that this increased value, which has accrued during the process of production, has arisen out of nothing, seeing that all the values for which the capitalist has paid £5 existed previous to the existence of the commodity in question. The idea of something being thus created out of nothing is unacceptable to human reason. Hence economists have always held in the past, and still hold to-day, that the value of the commodity does not increase during the process of production, but that when this process is finished the capitalist has only in his possession an object of the same value as previously - that is to say, in the case assumed by us, of the value of £5.
But from what then do the surplus 10 shillings derive, which he receives out of the sale of the commodity? The simple fact that the commodity passes out of the hands of the seller into those of the buyer, cannot enhance its value; for this would likewise be equivalent to the creation of something out of nothing.
Two courses are generally adopted in order to get out of the difficulty. Some maintain that in the hands of the purchaser the commodity is really more valuable than in those of the vendor, seeing that it satisfies a want of the purchaser which is non-existent in the case of the vendor. Others say that the commodity does not, as a matter of fact, possess the value represented by the price paid, and that the purchaser has to pay the surplus without obtaining any equivalent.
Let us analyse the two views. The French economist Condillac wrote in 1776, in an essay on Commerce and Government: "It is false that, in the exchange of commodities, equal value is given and obtained. The contrary is true. Each of the two contracting parties invariably gives a smaller value for a greater one .... If, as a matter of fact, equal values were always exchanged, neither of the contracting parties would earn a profit. But both profit, or at any rate both should do so. Why? The value of things resides solely in their relation to our wants. What is more to one man, is less to the other, and vice-versa .... We wish to give away a thing which is useless for us, in order to obtain something necessary; in other words, we wish to give less in order to obtain more ..."
Truly a singular example of arithmetical reasoning! When two persons exchange something, does each give the other more than he receives? That would imply that if I buy a coat from the tailor for £ 1, the coat in question is worth less than £ 1 as long as it remains in the hands of the tailor, but that its value rises to £ 1 when I take possession of it! Neither do we get any further with the makeshift argument that the value of commodities resides exclusively in (heir relation to our wants. For (apart from the confusion of value in use and value in exchange, which we shall come to later) even if the coat be more valuable than the money for the purchaser, the money is more valuable than the coat for the vendor.
If, on the other hand, we accept the hypothesis that commodities in general are sold for a higher price than they are worth, the consequences which ensue are stranger still. Let us provisionally admit that through some inexplicable privilege the vendor is able to sell the goods at a price over and above their value, for £5 10 s. when they are worth but £5, i. e. at a premium of 10 %. The vendor thus obtains an increase of value of 10 %. But after having been the vendor, he becomes purchaser. He now meets a third owner of commodities; and the latter, in his capacity as vendor, enjoys in his turn the privilege of selling the commodity 10 % too dear. Our man has thus gained 10 shillings as vendor, and lost 10 shillings as purchaser. As a matter of fact, the whole process resolves itself into this: every owner of commodities sells every other owner his goods at the rate of 10% over and above their value; and this is exactly the same as if they had sold them at their exact value; the prices oi the commodities increase, but the real relation of their values to each other remains unchanged.
Let us suppose, on the other hand, that it is the privilege of the purchaser to buy commodities below their value. In this case it is not even necessary to recall the fact that the purchaser becomes again later-on a vendor, just as he was a vendor before becoming a purchaser. He had already lost 10 % as vendor, before gaining 10 % as purchaser. Everything thus remains as it was.
It may be objected that such a counterbalancing of a previous loss by a subsequent profit only takes place in the case of purchasers who afterwards become vendors, and that there are persons who have nothing to sell. The consistent representatives of the illusion according to which increase of value derives from a nominal increase of prices, or from the privilege of the vendor to sell the commodity too dear - these representatives take for granted the existence of a class which only purchases and does not sell, i. e. which only consumes and does not produce. But the money with which such a class is able to keep on continually purchasing must be obtained from the owners of commodities themselves - without any exchange, gratuitously, on the strength of any given legal or non-legal titles. To sell such a class of commodities above their value thus simply means recovering, in part and by fraudulent means, money given away gratuitously. For instance, in ancient times the towns in Asia Minor paid annually money tributes to Rome. With this money Rome purchased commodities from them and purchased them too dear. The inhabitants of Asia defrauded the Romans by retaking a part of the tribute money in the course of trade. But none the less were those inhabitants swindled in the long run. Their commodities, both before and after, were paid them with their own money. This is not the way to increase one's wealth or to create surplus-value.
Of course we do not contest that the individual owner of commodities may enrich himself by selling too dear. The owner A may be smart enough to take-in his colleagues B or C, whereas the latter are unable to obtain a revanche, despite all their efforts. A sells wine for £ 2 to B, and obtains in exchange corn to the value of £ 2 10 s. A has transformed his £ 2 into £ 2 10 s. or in other words has made more money out of less. But let us examine the matter more closely. Previous to the exchange A possessed £ 2 worth of wine, and B £ 2 10 s. worth of corn, the total value thus amounting to 4 10 s. After the exchange, the same total value of 4 10 s. remains. The value in circulation has not been increased by a single farthing; merely the proportion in which the sum total was divided between A and B has been reversed. The same change would have taken place if A, instead of veiling the transaction by having recourse to an exchange, had purely and simply stolen the 10 s. from B. The total value of the commodities in circulation can manifestly not be increased by chain the proportion of their distribution; just as little as a Jew can increase the quantity of precious metals in a country by selling a copper coin of the 18th century for a gold coin. The totality of the capitalist class in a given country cannot impose on itself.
We may thus twist and turn the matter as much as we will - the result remains the same. If commodities of equal value are exchanged, no surplus-value arises; and neither does such a surplus-value arise in the event of commodities of unequal value being exchanged. The circulation or exchange of commodities in itself creates no value.
The increase of value, which is visible after the sale of a commodity, cannot in any case be derived from the sale. It cannot be explained as the result of the discrepancy between the price of a commodity and its value. If the price really differs from the value we must reduce the former to the latter - in other words we must eliminate this phenomenon as a purely accidental one, so as not to let ourselves be confused by disturbing side-issues. Such a process of reduction is moreover not limited to the domain of science. The continual fluctuations of the market prices, their increase and decrease, neutralise each other and reduce themselves to an average price as their internal determining principle. The latter serves as guide to the merchant or the industrial undertaker in every enterprise of long duration. The merchant thus knows that, if we contemplate a long period of time in its entirety, commodities are in reality sold for their average price, and neither above nor below that price. The origin of profit, the creation of a surplus-value, must hence be explained on the presumption that commodities are sold at their real value. But in this case the surplus value must manifestly have its origin in the process of production. Already in the minute when the commodity is finished, and before it leaves the hands of its first vendor, it must be worth as much as the final purchaser, i. e. the consumer, pays for it at the end. In other words its value must exceed the manufacturer's costs of production; during the process of production of the commodity a new value must have been created.
This leads us to the question as to how the value of commodities arises.