The People's Marx, Abridged Popular Edition of the the Three Volumes of Capital, Borchardt 1921
(Extracted from vol. I, ch. 8 & 9. Vol. Ill, part. 1, ch. 8-10; vol. II, ch. 8, German ed.)
Now that we know that surplus-value arises during the production of commodities, and, further, how it arises, it is clear that the surplus-value obtained in every individual undertaking must differ in its amount independently of the amount of capital. For we have seen that surplus-value is exclusively derived from living, newly performed labour, and not from the pre-existing means of production. To revert to our example of the cotton spinner, the capitalist paid 24 shillings for all the means of production (cotton and instruments of labour), and 3 shillings wages for labour. The labour of spinning has not changed the value of the 24 shillings - i. e. of the means of production; such labour has transmitted exactly the same value to the yarn. The 3 shillings paid for wages have, on the other hand, been consumed, and in their stead we find a new value of 6 shillings.
The value of that part of the capital expended by the capitalist for procuring means of production - i. e. raw and auxiliary materials, and instruments of labour - is therefore not altered in- the course of process of production. We consequently call it constant capital.
On the other hand, the value of that part of the capital expended on buying labour power is altered during the process of production. It reproduces its own value and yields a surplus-value over and above the latter; and this surplus-value can be greater or less as the case may be. This part of the capital is being continually transformed from a constant (unchangeable) magnitude into a variable (changeable) one. We therefore call it variable capital.
Now it is clear that in the different branches of production the proportions in which the means of production (constant capital) stand to one and the same amount of wages (variable capital) can be different. In an engine-works the quantity, of instruments of production to be utilised and transformed by labour power will be different to what it is in a cotton spinning-mill or in a coal mine, &c. The organic composition of capital (as we will call this relation of the constant and variable parts of capital to each other) differs therefore from branch to branch. The most varied relations are here not only conceivable, but they also really exist.
Let us assume the existence of three different capitals (in 3 different branches) having the following organic composition:
I. |
80 c (constant) |
+ 20 v (variable) |
II. |
50 c |
+ 50 v |
III. |
20 c |
+ 80 v |
If we assume that the exploitation of labour power is identical in all three branches, e.g. that in each case labour power furnishes exactly twice the amount of value which it receives in the shape of wages, we obtain the following result:
capital |
I |
gains |
20 |
shillings |
surplus-value |
" |
II |
" |
50 |
" |
" |
" |
III |
" |
80 |
" |
" |
This means - seeing that profits, as percentage of the surplus-balance, are calculated on the entire consumed capital - profits of 20%, 50%, and 80% respectively. We must also bear in mind that the exploitation of the labourers is not everywhere the same, but that it is greater in some undertakings and less in others. Further, there are ether circumstances which enter into the determination of the amount of surplus-value in the various branches and even in individual undertakings - e. g. the rapidity of the turnover of the capital, of which we shall speak later. It ensues that the amount of surplus-value really produced cannot be the same in two different undertakings, much less in two different branches. How, in spite of this, is the equality of the rate of profit which, as a matter of fact, exists brought about?
Let us take five different branches of production, each having a different organic composition of the capitals invested therein ^and on the assumption that labour power in each case supplies 100% of its own value as surplus-value):
Capital |
Surplus-Value |
Value of Product |
Rate of Profit (%) |
|
I. |
80 c + 20 v |
20 |
120 |
20 |
II. |
70 c + 30 v |
30 |
130 |
30 |
III. |
60 c + 40 v |
40 |
140 |
40 |
IV. |
85 c + 15 v |
15 |
115 |
15 |
V. |
95 c + 5 v |
5 |
105 |
5 |
We have here very different rates of profit for different branches, the exploitation of labour remaining the same in all cases.
The total capital invested in the five branches is equal to 500; the total amount of surplus- value produced by it 110; the total value of the manufactured commodities 610. If we assume that the figure 500 represents one single capital, merely divided into the categories I to V (e. g. as in a cotton manufactory, where a different proportion of variable and constant capital is to be found in the different departments such as the carding room, the roving room, the spinning and weaving rooms, where the average proportion for tire entire factory must first be calculated) if we assume this, we shall find that the average composition of the capital of 500 =. 390 c + 110 v, or, calculated per hundred, 78 c + 22 v. If we regard each capital of 100 as representing only one-fifth of the total capital, its composition would be this average one of 78 c + 22 v; in the same way an average surplus- value of 22 would be obtained by every fraction of 100. The average rate of profit would consequently be equal to 22 per cent, and, finally, the price of each fifth part of the total product would equal 122. The product of each fifth part of the total capital advanced must therefore be sold for 122.
In order not to come to false conclusions, another circum- stance must be taken into account. The constant capital, i. e. the means of production, is in its turn composed of two essentially different parts. The means of production, which constitute the constant capital, are of various kinds. The principal means of production consist of buildings, machinery, tools, raw and auxiliary materials - i. e. of the instruments by means of which labour is performed, and the objects to which labour is applied. It is evident, that, in the process of production, the former play an essentially different part to the latter. The coal utilised for heating the machine completely disappears; so does the oil used for greasing the axle of a wheel; and so forth. Colours and other auxiliary materials likewise disappear, but manifest themselves in the qualities of the product. The raw material constitutes the substance of the product, but changes its form. In short, the raw and the auxiliary materials are completely consumed in the course of the process of production. Nothing remains of the form they had at the beginning of this process. It is different in the case of the means of production. A tool, a machine, a factory, a receptacle etc. are only useful as long as they retain their original form, as long as they are utilisable to-morrow in the labour process under the same form as they possess to-day. And just as they retain their own original form in regard to the product during the whole labour process, they also retain it after they are worn-out. The forms of machines, tools, factories, etc. always exist independently of the products they helped to manufacture. If we consider the whole length of time during which such an instrument of labour serves, from the day of its entry into the workshop to the day when it is relegated to the lumber-room, we find that during this period its value in use has been completely consumed by labour, and that its exchange value has consequently been entirely transferred to the product. For instance, if a spinning-machine has been worn-out in ten years, its total value has, during the ten years labour process, been transferred to the products manufactured during that time. The life period of an instrument of labour thus comprises a greater or smaller number of labour processes which are being continually repeated. In this respect there is similarity between the instrument of labour and the human being. Every day that passes brings the latter 24 hours nearer death, but it is impossible to ascertain, by merely looking at a man, how much nearer that final goal he already is. This fact does not prevent life insurance companies from drawing very accurate, and more- over very profitable, conclusions from a study of the average length of human life. It is the same with instruments of labour. Experience teaches us, how long a given instrument of labour, e. g. a specific sort of machine, lasts on an average. If we assume that its use value in the labour process lasts only six days, this means that it loses on an average 1 /6 th of its use value daily, and thus transfers 1/6 th of its value to the daily product. The wear and tear of every instrument of labour is calculated in this way.
It is thus evident that an instrument of production never transfers to the product a greater sum of value than it loses itself through destruction of its own value in use. If it had no value to lose, i. e. if it were itself not a product of human labour, it would not transfer any value to the product. It would serve as a creator of value in use, but would not create any value in exchange. This is consequently the case with all those means of production which exist independently of human labour, such as the soil, the wind, water, coal in the mine, wood in the virgin forest, etc.
The instrument of labour must always cooperate with its full corporeal power in the process of production, even if the exchange value be less. Let us assume, for instance, that a machine is worth 1000 shillings and wears itself out in 1000 days. In this case 1/000th part of the value of the machine is transfered daily from the latter to its daily product. The total machine operates nevertheless in the labour process, although with diminishing vitality.
What is peculiar about this part of the constant capital, i. e. the instrument of labour, is thus that simultaneously with its entering into activity and with its wear and tear, a part of its value is transferred to the product, whereas another part remains fixed in the instrument of labour, consequently in the process of production. The value thus fixed constantly diminishes, until the instrument of labour is worn out and has thus distributed its value among a quantity of products, which are the result of a number of continuously repeated labour processes. But as long as it still serves as instrument of labour, i. e. as long as it need not be replaced by another instrument of the same sort, constant capital remains fixed in it, whereas another part of the value originally fixed in it is transferred to the product and consequently circulates as a component part of the value of the commodity.
This part of the capital which is fixed in the instruments of labour circulates just the same as any other. The entire capital value is in continual circulation, and in this sense all capital is thus circulating capital. But the circulation of that part of the capital we have just been considering, is a peculiar one. It does not circulate in its use form, but its value alone circulates - - gradually, piecemeal, in the measure in which it is transferred to the product in circulation as commodity. During the whole period of its activity, part of its value remains invariably fixed in itself, and is independent in regard to the commodities which it helps to produce. Owing to this peculiarity, this part of the constant capital assumes the form of fixed capital. All other components of the capital advanced constitute, in contradistinction herewith, circulating capital.
It is clear that the difference in the manner in which the various component parts of the capital transfer their respective value to the product must also influence the amount of surplus-value produced by each individual capital. The said peculiarity likewise tends to obscure the genesis of surplus-value. [1]
When the capitalist contemplates the finished commodity, the difference between constant capital (means of production) and variable capital (wages) does not strike him. He knows, it is true, that a part of his costs of production (of the cost price of the commodity) has been spent on instruments of production, and another part on wages; he also knows that, if the production is to be continued, he must again apply in the same way the money derived from the sale of the commodity to purchasing instruments of production and labour power. But this tells him nothing concerning the origin of value and surplus- value. On the contrary, he only sees that the value of the means of production recurs again in the cost-price of the commodity just as it was before the beginning of the process of production, and that the same holds good of wages. The characteristic difference between constant and variable capital is thus obscured by appearances; and the surplus-value available at the end of the process of production seems to derive equally from all component parts of the capital.
The difference between fixed and circulating capital is on the contrary very obvious. Let us assume that the value of instruments of labour was originally 1200 shillings, exclusive of raw materials worth 380 shillings, and of wages worth ICO shillings. Let us further assume that during the process of production 20 shillings worth of instruments of labour are worn-out; in this case the cost-price of the product will amount to 20 shillings for wear and tear + 380 shillings for raw and auxiliary materials + 100 shillings for wages total 500 shillings. The capitalist holds this value of 500 shillings in the shape of the finished product in his hand, independently of the surplus-value. But machines, factories etc. exist into the bargain, and their total value is 1180 shillings. [2] Their value can certainly not be neglected, and to the mind of the capitalist the matter appears consequently as follows: 20 shillings of the value of the commodity have originated through wear and tear of instruments of labour (fixed capital), 480 shillings through wear and tear of raw materials and the payment of wages (circulating capital). Or in other words: everything that I (the capitalist) invest in the production in the shape of raw materials and wages returns to me again through a single process of production; the sum invested in the instruments of labour remains longer within the process and only returns little by little; it must therefore be accumulated again little by little, in order that, once the machines etc. are completely worn-out, the equivalent for replacing them be available. The difference between fixed and circulating capital is thus, so to speak, hammered into the head of the capitalist. But in this sense wages are also regarded, without further ado, as circulating capital. Just like the expenses for raw materials, must wages be recouped from out of the single' process of production, and be available for the purchase of fresh labour power. In this way wages (i. e. variable capital) are confounded, owing to appearances, with raw materials (i. e. a part of the constant capital) and both are set up in common contradistinction to the instruments of labour (i. e. the other part of the constant capital). For the superficial observer, the buildings, machines, etc., stand on the one side as fixed capital; whereas on the other side there are the raw and auxiliary materials and the wages as circulating capital. In this way, the essential differences between wages, on the one hand, and the other parts of the circulating capital, on the other, are entirely obscured.
[1] From here on vol. III, part. 1, ch. 1, German ed.
[2] These figures are, all of them, quite arbitrarily selected.