Theories of Surplus Value, Marx 1861-3

[Chapter XXIII]  Cherbuliez

||1102| Cherbuliez, Richesse au pauvreté, Paris, 1841 (Reprint of the Geneva edition) [published under the title Riche ou pauvre].

(It is questionable whether we should specially include this fellow in this group [of economists] since most of what he writes is based on Sismondi, or whether we should on occasion insert his pertinent remarks in the form of quotations.  |1102||

[1.  Distinction Between Two Parts of Capital—the Part Consisting of Machinery and Raw Materials and the Part Consisting of “Means of Subsistence” for the Workers]

||1103| Capital, says Cherbuliez, consists of “the raw materials, the tools, the means of subsistence” (op. cit., p. 16).  “There is no difference between a capital and any other part of wealth.  It is only the way in which it is employed which determines whether a thing becomes capital, that is, if it is employed in a production as raw material, as tools, or as means of subsistence” (loc. cit., p. 18).

This is the standard way of reducing capital to the material elements in which it presents itself in the labour process, i.e., means of production and means of subsistence.  The latter category, moreover, is not accurate since, though means of subsistence are indeed a condition for the producer, a prerequisite enabling him to exist during production, they themselves do not enter into the labour process, into which nothing enters but the object of labour, the means of production and labour itself.  Thus the objective factors of the labour process—which are common to all forms of production—are here called capital, although the means of subsistence (in which wages are already included) tacitly implies the capitalist form of these conditions of production.

Cherbuliez, like Ramsay, [assumes] that the means of subsistence—which Ramsay calls circulating capital—diminish (relatively, at any rate, to the total amount of capital and absolutely insofar as machinery continually throws workers out of employment).  But both he and Ramsay appear to think that there is an inevitable reduction in the amount of means of subsistence, of necessaries, which can be employed as productive capital.  But this is by no means the case.  In this context, people always confuse that part of the gross product which replaces capital and is employed as capital, with that part which represents the surplus product.  The means of subsistence decrease because a large portion of capital, that is, the part of the gross product employed as capital, is reproduced as constant capital instead of as variable capital.  A larger portion of the surplus product, consisting of means of subsistence, is consumed by unproductive workers or idlers or exchanged for luxuries.  That’s all.

True, the fact that a constantly smaller part of the total capital is converted into variable capital can also be expressed in other ways.  The part of capital which consists of variable capital is equal to that part of the total product which the worker himself appropriates, produces for himself.  Therefore, the smaller this part is the smaller accordingly is the portion of the total number of workers which is required to reproduce it (just as in the case of the individual worker, who works correspondingly less labour-time for himself).  The total product, like the total labour of the workers, falls into two parts.  One part the workers produce for themselves; the other part, they produce for the capitalist.  Just as the [labour-] time of the individual worker can be divided into two parts, so can the [labour-] time of the whole working class.  If the surplus labour is equal to half a day, it is the same as if half the working class produces means of subsistence for the working class and the other half produces raw materials, machinery and finished products for the capitalists, partly as producers and partly as consumers.

It is ridiculous that Cherbuliez and Ramsay believe that the part of the gross product which can be consumed by the workers and can enter into their consumption in kind has been reduced of necessity or reduced at all.  Only that part has been reduced which is consumed in this form and therefore as variable capital.  On the other hand, a larger portion is eaten up by servants, soldiers, etc., or exported and exchanged for more sumptuous means of subsistence.

The only important thing in both Ramsay and Cherbuliez is that they counterpose constant and variable capital and do not confine themselves to the distinction between fixed and circulating capital derived from circulation.  For Cherbuliez counterposes that part of capital which goes on means of subsistence to that which consists of raw materials, auxiliary materials and means of labour, i.e., instruments, machines.  Although two constituent elements of constant capital—raw material and auxiliary material—belong to circulating capital as far as the mode of circulation is concerned.

The important thing in variations in the constituent elements of capital is not that relatively more workers are occupied in the production of raw materials and machinery than in that of direct means of subsistence—this concerns only the division of labour— but the proportion of the product which has to be used to replace past labour (i.e., to replace constant capital) to that which has to be used to pay living labour.  The larger the scale of capitalist production, and hence the greater the accumulation of capital—the greater is the share in the value of the product falling to the machinery and raw material of which the capital employed in the production of machinery and raw material consists.  A correspondingly larger portion of the product must therefore be returned to production either in kind or by the producers of constant capital exchanging some of their products amongst themselves.  The part of the product which belongs to production becomes larger, and the part which represents living, newly added labour becomes relatively smaller.  Although, this part grows in terms of commodities—use-values—the development described is synonymous with increased productivity of labour.  But the portion of this part which the worker receives falls relatively all the more.  And the same process gives rise to a continuous relative redundancy of the working population.

[2.  On the Progressive Decline in the Number of Workers in Relation to the Amount of Constant Capital]

||1104| <It is an incontrovertible fact that, as capitalist production develops, the portion of capital invested in machinery and raw materials grows, and the portion laid out in wages declines.  This is the only question with which both Ramsay and Cherbuliez are concerned.  For us, however, the main thing is: does this fact explain the decline in the rate of profit?  (A decline, incidentally, which is far smaller than it is said to be.)  Here it is not simply a question of the quantitative ratio but of the value ratio.

If one worker can spin as much cotton as 100 [workers spun previously], then the supply of raw material must be increased a hundredfold, and this is moreover brought about only by the spinning-machine which enables one worker to control 100 spindles.  But if simultaneously, one worker produces as much cotton as 100 workers did previously and one worker produces a spinning-machine whereas previously he produced only a spindle, then the ratio of value remains the same, that is, the labour expended in the spinning, [in the production of] the cotton and the spinning-machine remains the same as that expended previously in spinning, the cotton and the spindle.

As far as the machinery is concerned, its cost is not as great as that of the labour it displaces, although the spinning-machine is much more expensive than the spindle.  The individual capitalist who owns a spinning-machine must possess a greater amount of capital than the individual spinner who buys a spinning-wheel.  But the spinning-machine is cheaper than the spinning-wheel in relation to the number of workers it employs.  Otherwise it would not have displaced the spinning-wheel.  The place of the spinner is taken by a capitalist.  But the capital which the former laid out on the spinning-wheel was larger relative to the size of the product, than that which the capitalist lays out on the spinning-machine.>

The increasing productivity of labour (insofar as it is connected with machinery) is identical with the decreasing number of workers relatively to the number and extent of the machinery employed.  Instead of a simple and cheap instrument a collection of such instruments (even though they are modified) is used, and to that collection has to be added the whole part of the machinery which consists of the moving and transmitting parts; and also the materials used (like coal, etc.)  to produce the motive power (such as steam).  Finally, the buildings.  If one worker is in charge of 1,800 spindles instead of driving a spinning-wheel, it would be quite ridiculous to ask why these 1,800 spindles are not as cheap as the single spinning-wheel.  The productivity in this case is brought about precisely by the amount of capital employed as machinery.  The ratio of the wear and tear of the machinery affects only the commodity; the worker confronts the total amount of machinery and similarly the value of the capital laid out in labour confronts the value of the capital laid out in machinery.

There can be no doubt that machinery becomes cheaper, and this for two reasons: [1] The application of machinery to the production of raw materials from which the machinery is made.  [2] The application of machinery in the transformation of these materials into machinery.  In saying this, we already say two things.  Firstly, that in both these branches, compared with the instruments required in the manufacturing industry, the value of the capital laid out in machinery also grows as compared with that laid out in wages.  Secondly, what becomes cheaper is the individual machine and its component parts, but a system of machinery develops; the tool is not simply replaced by a single machine, but by a whole system, and the tools which perhaps played the major part previously, the needle for example (in the case of a stocking-loom or a similar machine), are now assembled in thousands.  Each individual machine confronting the worker is in itself a colossal assembly of instruments which he formerly used singly, e.g. 1,800 spindles instead of one.  But in addition, the machine contains elements which the old instrument did not have.  Despite the cheapening of individual elements, the price of the whole aggregate increases enormously and the [increase in] productivity consists in the continuous expansion of the machinery.

Further, one factor in the cheapening of machinery apart from that of its elements, is the cheapening of the source of the motive power (the steam-boiler, for example) and of the transmission mechanism.  Economy of power.  But this results precisely from the fact that to an increasing extent the same motor can drive a larger system of machines.  The motor becomes relatively cheaper (or its cost does not grow in the same ratio as the increase in the size of the system in which it is employed; the motor becomes more expensive as its power grows, but not in the same degree in which it grows); even when its cost increases absolutely, it declines relatively.  This is therefore a new and important motive, quite apart from the price of the individual machine, for increasing the capital that is laid out in machinery and confronts labour.  One element—the increasing speed of machinery—increases productivity enormously but it does not affect the value of the machinery itself in any way.

It is therefore self-evident or a tautological proposition that the increasing productivity of labour caused by machinery corresponds to increased value of the machinery relative to the amount of labour employed (consequently to the value of labour, the variable capital).

||1105| All circumstances which result in the use of machinery leading to a reduction in the price of commodities can be attributed, firstly, to a decrease in the amount of labour embodied in each individual commodity, secondly, however, to a decrease in the wear and tear of the machinery whose value enters into the individual commodity.  The less rapid the wear and tear of the machinery, the less labour is required for its reproduction.  This therefore increases the amount and the value of the capital existing as machinery as compared with that existing in labour.

Only the question of raw material therefore remains to be dealt with.  It is obvious that the quantity of raw material must increase proportionally with the productivity of labour; that is, the amount of raw material must be proportionate to that of labour.  This relationship is closer than it appears.

Let us assume, for example, that 10,000 lbs. of cotton are consumed weekly.  Calculating 50 weeks to the year, this would amount to 10,000×50, that is, 500,000 lbs.  Let us also assume that the amount paid out in wages is £5,000 over the year.  And if a pound of cotton is assumed to cost 6d. this comes to 250,000 shillings or £12,500.  Let us assume that the capital turns over 5 times during the year.  This means that in the course of a fifth of a year, 100,000 pounds of raw material—cotton—is used, equal to a value of £2,500.  And £1,000 goes on wages in the same fifth of a year.  This is more than a third of the value of the capital laid out on the cotton.  This does not alter the ratio.  If the value of the cotton amounts to £10,000 every fifth of a year and that of the labour to £1,000, then it amounts to one-tenth.  (If one considers the product of the whole year, £50,000 on one side and £5,000 on the other—it is also one-tenth.)

<The value of a commodity, as far as machinery is concerned, is determined by the wear and tear of the machinery, that is, solely by the value of the machinery insofar as it enters into the process of the formation of value, in other words, insofar as it is used up in the labour process.  Profit, on the contrary, is determined (leaving raw materials out of account) by the value of the whole of the machinery which enters into the labour process irrespective of the degree to which it is used up.  Profit must therefore decline as the total amount of labour employed declines compared with the part of capital laid out in machinery.  It does not decline in the same proportion because surplus labour increases.>

One may ask with regard to raw material: If, for example, productivity in spinning increases tenfold, that is, a single worker spins as much as ten did previously, why should not one Negro produce ten times as much cotton as ten did previously, that is, why should the value ratio not remain the same?  The spinner uses ten times as much cotton in the same time, but the Negro produces ten times as much cotton in the same time.  The ten times larger amount of cotton therefore costs no more than a tenth of this amount cost previously.  This means that despite the increase in the amount of the raw material, its value ratio to variable capital remains the same.  In fact it was only the large fall in the price of cotton which enabled the cotton industry to develop in the way it did.* The dearer the material (gold and silver, for example) the less are machinery and the division of labour applied in transforming it into articles of luxury.  This is because too much capital has been advanced for the raw materials and the demand for these products is limited owing to the expensive raw materials.

To this it is quite easy to answer that some kinds of raw materials, such as wool, silk, leather, are produced by animal organic processes, while cotton, linen, etc., are produced by vegetable organic processes and capitalist production has not yet succeeded, and never will succeed in mastering these processes in the same way as it has mastered purely mechanical or inorganic chemical processes.  Raw materials such as skins, etc., and other animal products become dearer partly because the insipid law of rent increases the value of these products as civilisation advances.  As far as coal and metal (wood) are concerned, they become much cheaper with the advance of production; this will however become more difficult as mines are exhausted, etc.

<While it can be said with regard to corn-rent and mine-rent that they do not increase the value of the product (only its market price) but are rather the expression of the value of the product (the excess of its value over the production price), there is, on the other hand, no doubt that animal rent, house rent, etc., are not consequences but causes of the increasing values of these things.>

The cheapening of raw materials, and of auxiliary materials; etc., checks but does not cancel the growth in the value of this part of capital.  It checks it to the degree that it brings about a fall in profit.

This rubbish is herewith disposed of |1105|| .

||1105| <In considering profit, surplus-value is assumed as given.  And only the variations in constant capital and their influence on the rate of profit are considered.  There is only one way in which surplus-value directly affects constant capital, namely through absolute surplus labour, lengthening of the working-day, as a result of which the relative value of constant capital is reduced.  Relative surplus labour—where the working-day remains unaltered (apart from the greater intensification of labour)—in-creases the value ratio of profit to total capital by increasing the surplus itself.  Absolute surplus labour-time reduces the cost of constant capital relatively.>

[3.  Cherbuliez’s Inkling that the Organic Composition of Capital Is Decisive for the Rate of Profit.  His Confusion on This Question.  Cherbuliez on the “Law of Appropriation” in Capitalist Economy]

||1106| Let us return to Cherbuliez.

The formulas he uses for the rate of profit are either mathematical expressions for profit as it is commonly understood, without involving any kind of law, or they are quite wrong, although he has an inkling of the matter, approaches close to it.

“… commercial profit is determined by the value of the products compared with the value of the different elements of productive capital”[op. cit., p. 70].

<In point of fact, profit is the relationship of the surplus-value of the product to the value of the total capital outlay regardless of the differences in its elements.  But the surplus-value is itself determined by the size of the variable capital and the rate at which it produces surplus-value, and the ratio of this surplus-value to the total capital is again determined by the ratio of the variable to the constant capital and also by changes in the value of constant capital.>

“Evidently the two chief elements in this determination are the price of the raw materials and amount of means of subsistence required to work them up […] the economic progress of society affects these two elements in an opposite way […] it tends to make raw materials dearer by increasing the value of all the products of the extractive industries, which are carried out on land that is privately owned and limited in extent” (loc. cit., p. 70).  On the other hand, the means of subsistence decrease (relatively), a matter to which we shall return presently.

“The total amount of products, less the total amount of capital expended in producing them, provides us with the total amount of profit gained during a definite period of time.  The growth in the total amount of products is proportionate to the capital advanced and not the capital used up.  The rate of pro/it, or the ratio of profit to capital, is therefore the result of the combination of two other ratios, namely, the ratio between the capital laid out and that used up, and the ratio between the capital used up and the product” (loc. cit., p. 70).

Cherbuliez first states correctly that profit is determined by the value of the product in relation to the “different elements” of productive capital.  Then he flies off suddenly to the product itself, to the total amount of products.  But the amount of products may increase without its value increasing.  Secondly, a comparison between the amount of the product and the quantity of products of which the capital—used up and not used up—consisted, can at best only be made in the way Ramsay does, by comparing the aggregate national product with the constituent elements expended in kind during its production.[a] But as regards capital, the form taken by the product is different from its ingredients in every sphere of production (even in those branches of industry in which, as in agriculture, one part of the product is used in kind as a production element of the product).  Why does Cherbuliez stray on to this false path?  Because, despite his vague idea that the organic composition of capital is decisive for the rate of profit, he in no way uses the contradiction between variable capital and the other part of capital in order to explain surplus-value—which, like value itself, he does not explain at all.  He has not shown how surplus-value arises and therefore has recourse to surplus product, i.e., to use-value.

Although all surplus-value takes the form of surplus product, surplus product as such does not represent surplus-value.  <A product may contain no surplus-value, as, for example, in the case of a peasant who owns his own implements as well as his own land and only works exactly the same amount of time as any wage-worker does to reproduce his own wages, say six hours.  In a good year, he might produce twice as much [as usual].  But the value would remain the same.  There would be no surplus-value, although there would be surplus product.>

In itself it was already a mistake on the part of Cherbuliez to represent variable capital in the “passive” and purely material form of means of subsistence, that is, as use-value, a form which it obtains in the hands of the workers.  If, on the other hand, he had considered it in the form in which it actually appears, namely, as money (as the form in which exchange-value, i.e., a certain amount of social labour-time as such, exists), then [he would have seen that] for the capitalist it represents the labour which he exchanges for it (and, as a result of this exchange of materialised labour for living labour, the variable capital would be set in motion and would grow); variable capital in the shape of labour—but not if it is regarded as means of subsistence—becomes an element of productive capital.  Means of subsistence, on the other hand, are the use-value, the material existence of the variable capital when it becomes the revenue of the worker.  Variable capital regarded as means of subsistence is, therefore, just as “passive” an element as both the other parts of capital which Cherbuliez describes as “passive”.*

The same distortion of views prevents him from elaborating the rate of profit out of the relationship of this active element to the passive element, and from showing that it declines as society advances.  Cherbuliez in fact reaches no other conclusion but that the means of subsistence ||1107| decline as a consequence of the development of productivity while the working population grows, that is, as a result of the redundant population, wages are consequently pushed down below their value.  None of his explanations are based on the exchange of [equal] values—or the payment of labour-power at its value—and profit thus actually appears to be a deduction from wages (although he doesn’t say so).  This deduction may indeed occasionally constitute a part of real profits, but it can never serve as the foundation for the elaboration of the category of profit.

Let us first of all reduce the first proposition to its correct formulation.

“The value of the total amount of products, less the value of the total amount of capital used up in its production, provides us with the total amount of profit gained during a definite period of time.”

This is the primary (usual) form in which profit appears and it is likewise the form in which it appears in the consciousness of capitalists.  In other words, [profit is] the excess of the value of the product gained during a definite period of time over the value of the capital expended.  Or the excess of the value of the product over the cost-price of the product.  Even the “definite period of time” in Cherbuliez’s statement appears like a bolt from the blue, since he has not dealt with the circulation process of capital.  The first proposition, therefore, is nothing but the usual definition of profit, of the immediate form in which it appears.

The second proposition:

The growth in the total amount of products is proportionate to the capital employed and not to the capital used up.”

Paraphrased again, it would read thus:

“the growth in the value of the total amount of products is proportionate to the capital advanced” (whether used up or not).

The only purpose of this is the surreptitious introduction of the completely unproven and, in the way it is formulated, quite false proposition (for it already presupposes equalisation to the general rate of profit) that the amount of profit depends on the amount of capital employed.  But an apparent causal nexus is to be introduced because “the growth in the total amount of products is proportionate to the capital employed and not to the capital used up”.

Let us take this sentence in both its formulations—that in which it is written and that in which it ought to have been written.  In this context—and in accordance with the conclusion which it is intended to serve as intermediate clause—it should be written as follows:

“The growth in the value of the total amount of products is proportionate to the capital employed and not to the capital used up.”

Here, evidently, surplus-value is to be evolved on the basis of the fact that the excess of the capital employed over that used up creates the excess value of the products.  But the capital which is not used up (machinery, etc.) retains its value (for the fact that it is not used up means precisely that its value has not been used up); it retains the same value after the conclusion of the production process as it had before this process started.  If any change in value has taken place, it can only have happened in that part of the capital which has been used up, and which therefore entered into the process of the formation of value.  In point of fact it is also wrong to say that, for example, a capital of which a third is not used up and two-thirds are used up in production, would inevitably yield a higher profit than one in which two-thirds are not used up and one-third is used up, provided the rate of exploitation is the same (and disregarding the equalisation of the rate of profit).  For obviously, the second capital contains more machinery, etc., and other elements of constant capital, while the first capital contains less of these elements and sets more living labour in motion, and therefore produces more surplus labour as well.

If we take the proposition as formulated by Cherbuliez himself, then it must be said first that it is of no use to him, because the amount of products or the amount of use-values as such by no means determines either the value or the surplus-value or the profit.  But what is behind all this?  A part of constant capital consisting of machinery, etc., enters into the labour process without entering into the formation of value, it helps to increase the volume of products without adding anything to its value.  (For insofar as its wear and tear adds value to the product, it belongs to the capital used up and not to the capital employed as opposed to that used up.)  But, by itself, this unconsumed part of constant capital does not bring about a growth in the amount of products.  It helps to produce a greater output in a given labour-time.  Therefore, if only the same amount of labour-time were expended as is contained in the means of subsistence, the same amount of products would be produced.  The excess of products is therefore due to a change which takes place in this part of the capital used up and not to the excess of the capital employed over that consumed (assuming that it is not a matter of branches of industry in which—as in agriculture—the volume of products is, or can be, independent of the amount of capital laid out, [because] the productivity of labour is, in part, dependent on uncontrollable natural conditions).

If however he considers constant capital—used up or otherwise—as independent of the labour-time, independent of the change in the variable capital which takes place in the realisation process, then he might just as well say:

“The growth in the total amount ||1108| of products” (at beast in manufacturing industry) “is proportionate to the growth of the part of capital consisting of raw materials which is used up.”

For the increase of products is physically identical with the growth of this part of capital.  In agriculture on the other hand (and likewise in the extractive industries), where only a small proportion of the capital invested is not [annually] used up (i.e., constant capital) and a relatively large proportion of capital is used up (as wages for example), the amount of products, provided the land is fairly fertile, can be much larger than in the advanced countries where the ratio of capital invested to capital used up is infinitely greater.

The second proposition thus amounts to an attempt to bring in surreptitiously surplus-value (the indispensable basis of profit).

[Cherbuliez’s conclusion:]

The rate of profit or the ratio of the profit to capital is therefore the result of the combination of two other ratios, namely the ratio between the capital laid out and that used up, and the ratio between the capital used up and the product” (op.  cit., p.  70).

Previously, profit ought to have been explained.  But nothing emerged except a definition of it which merely states the form in which it appears, i.e., the fact that profit is equal to the excess of the value of the total product over the cost-price of the product or over the value of the capital used up, which is the vulgar definition of profit.

Now the rate of profit ought to be explained.  But once again nothing emerges except the vulgar definition.  The rate of profit is equal to the ratio of profit to the total capital, or, what amounts to the same thing, it is equal to the ratio of the excess of the value of the product over its cost-price to the total capital advanced for production.  The distorted conception and bungling application of the approximately correct distinction between the elements of capital, and the vague idea that profit and rate of profit are directly connected with the ratio of these elements to one another, only lead to a repetition of the generally known phrases in a rather doctrinaire fashion, in fact merely to a statement that profit and rate of profit exist without, however, anything being said about their nature.

The matter is not improved by the fact that Cherbuliez expresses his doctrinaire formulae in algebraic language:

“Let P be the aggregate product of a given period of time, C the capital invested, π the profit, r the ratio of profit to capital (rate), c the capital used up, then P–c=π, r=π/C therefore Cr=π. Therefore P–c=Cr; therefore r=P–c/C” (loc. cit., p. 70, Note 1).

Which means nothing more than that the rate of profit equals the ratio of profit to capital and that profit equals the excess of the value of the product over its cost-price.

In general, when Cherbuliez speaks about consumed and unconsumed capital he has at the back of his mind the difference between fixed and circulating capital, and not the distinction which he himself has drawn, namely, that between the different types of capital based on the production process.  Surplus-value is antecedent to circulation and no matter how much the differences arising out of circulation affect the rate of profit, they have nothing to do with the origin of profit.

“Productive capital […] is composed of a consumable part […] and a non-consumable part [… ] The more wealth and population increase, the more the consumable part tends to increase, because the extractive industries demand an ever greater supply of labour.  On the other hand, this same progress […] causes the amount of capital invested to increase at a much faster rate than the amount of capital consumed.  Thus although the total mass of capital consumed tends to increase […] the effect is neutralised, because the mass of products grows in more rapid progression and the total amount of profit must be considered as growing at a rate at beast as high as that at which the total amount of capital invested grows” (loc. cit., p. 71).

“The amount of profit grows, not the rate, which is the ratio of this amount to the capital invested, r=P–c/C.  It is clear that P–c or the profit, since P–c=π can grow although r declines, if C grows more rapidly than P–c” (p. 71, note).

Here the reason for the decline in the rate of profit is touched on, but in view of the preceding distortions, it can only lead to confusion and contradictions which cancel each other out.  First the amount of capital consumed grows but the amount of products grows even more rapidly (i.e., the excess of the value of the products over their cost-price in this case), for it grows in proportion to the capital invested and this grows more rapidly than the capital consumed.  Why the fixed capital grows more rapidly than the mass of raw materials, for example, is not explained anywhere.  But never mind, the amount of profit grows in proportion to the capital invested, to the total capital, but ||1109|| the rate of profit is nevertheless supposed to fall, because the total capital grows more rapidly than the mass of products or rather than the amount of profit.

First the amount of profit grows at a rate at least as great as that at which “the total amount of the capital invested” grows, and then the rate of profit falls, because the total amount of capital invested grows more rapidly than the amount of profit. First P-c grows “at least” proportionally to C, and then P-c/C falls, because C increases even more rapidly than P-c, which increases at least as rapidly as C.  If we throw aside all this confusion, then all that remains is the tautology that P-c/C can fall again although P-c increases, that is, that the rate of profit can fall although profit increases when the rate falls.  The rate of profit simply signifies the ratio of P-c to C, [and this ratio declines] when capital increases more rapidly than the amount of profit.

Thus the final pearl of wisdom is that the rate of profit can fall, that is, the ratio of an increasing amount of profit to capital can fall when the capital increases more rapidly than the amount of profit, or if the amount of profit, despite the absolute growth, declines relatively in comparison with the capital.  This is nothing but a different expression for the decline in the rate of profit.  But that this phenomenon is within the bounds of possibility, and even its existence, has never been called to question.  The sole point at issue was precisely to explain the cause of this phenomenon, and Cherbuliez explains the decline in the rate of profit, the decline in the amount of profit in relation to the total capital, by the relative increase in the amount of profit which is at least proportionate to the growth of the capital.  He obviously surmises that the mass of living labour employed declines relatively to past labour, although it increases absolutely, and that therefore the rate of profit must decline.  But he never arrives at a clear understanding.  The closer one comes to the threshold of understanding, the more distorted the statements become, unless the threshold is actually crossed and [the greater is] the illusion of having crossed it.

On the other hand, what he says about the equalisation of the general rate of profit is very much to the point.  |1109||

||1109| “After the deduction of rent, what remains of the amount of profit, that is, of the excess of products over the capital consumed, is divided between the capitalist producers in proportion to the capital each has invested, whereas the portion of the product which corresponds to the capital used up and is intended to replace it, is divided in proportion with the capital actually used up.  This dual law of division comes about as a result of competition, which tends to equalise the advantages of the different investments of capital.  Finally, this dual law of division determines the respective values and prices of the different kinds of products” (loc. cit., pp. 71-72).

This is very good.  Only the concluding words are wrong, namely, that the formation of the general rate of profit determines the values and prices (it should be prices of production) of commodities.  On the contrary, the determination of the value is the primary factor, antecedent to the rate of profit and to the establishment of production prices.  How can any kind of division of the “amount of profit”, i.e., of the surplus-value ||1110|—which is itself only a part of the total value of commodities—determine the “amount of profit”, that is, the surplus-value, that is, the value of the commodities?  This is only correct if, by relative values of commodities, one means their production prices, The whole lopsidedness of Cherbuliez’s presentation arises from the fact that he does not examine the origin and the laws of value and surplus-value independently.

In other respects, he describes the relation between wage-labour and capital more or less correctly.

People who neither receive anything by devolution (legal transfer, inheritance, etc.), nor have any possessions they can exchange, can[b] “obtain what they need only by offering their labour to the capitalist.  They only acquire the right to the things which are allocated to them as the price of labour, but they have no right to the product of their labour, nor to the value which they have added” (op. cit., pp. 55-56).  “By exchanging his labour for a certain volume of means of subsistence, […] the worker completely renounces all right to the other portions of capital […]  The distribution of these products remains the same as it was previously; it is not modified in any way by the above-mentioned convention.  The products continue to belong exclusively to the capitalist who has provided the raw materials and the means of subsistence.  This is an inescapable sequence of the law of appropriation, the fundamental principle of which was, conversely, the exclusive right of every worker to the product of his labour” (p. 58).

This fundamental principle, according to Cherbuliez, is as follows:

“The worker has an exclusive right to the value resulting from his labour” (p. 48).

Cherbuliez does not understand nor does he explain how the law of commodities, according to which commodities are equivalents and exchange with one another in proportion to their value, i.e., to the labour-time embodied in them, unexpectedly leads to the result that on the contrary capitalist production—and only on the basis of capitalist production is it essential for the product to be produced as a commodity—depends on the fact that one portion of labour is appropriated without exchange.  He only senses that a transformation has suddenly taken place.

This fundamental principle is a pure fiction.  It arises from the surface appearance of commodity circulation.  Commodities are exchanged with one another according to their value, that is, according to the labour embodied in them.  Individuals confront one another only as commodity owners and can therefore only acquire other individuals’ commodities by alienating their own.  It therefore appears as if they exchanged only their own labour since the exchange of commodities which contain other people’s labour, insofar as they themselves were not acquired by the individuals in exchange for their own commodities, presupposes different relations between people than those of [simple] commodity owners, of buyers d of sellers.  In capitalist production this appearance, which its surface displays, disappears.  What does not disappear, however, is the illusion that originally men confront one another only as commodity owners and that, consequently, a person is only a property owner insofar as he is a worker.  As has been stated, this “originally” is a delusion arising from the surface appearance of capitalist production and has never existed historically.  In general, man (isolated or social) always comes on to the stage as a property owner before he appears as a worker, even if the property is only what he procures for himself from nature (or what he as a member of the family, tribe, communal organisation, procures partly from nature, partly from the means of production which have already been produced in common).  And as soon as the first animal state is left behind, man’s property in nature is mediated by his existence as a member of a communal body, family, tribe, etc., by his relationship to other men, which determines his relationship to nature.  The “propertyless labourer” as a “fundamental principle” is rather a creature of civilisation and, on the historical scale, of “capitalist production”.  This is a law of “expropriation” not of “appropriation”, at least not simply of appropriation in the way Cherbuliez imagines it, but a kind of appropriation which corresponds to a definite, specific mode of production.  |1110||

||1111| Cherbuliez says:

“The products are appropriated before they are converted into capital; and this conversion does not eliminate such appropriation” (op. cit., p. 54).

But this applies not only to the products, but also to labour.  Raw materials, etc., and instruments belong to the capitalist. They are the converted form of his money.  On the other hand, when he has bought labour-power or the daily (say 12 hours) use of labour-power, with a sum of money equal to the product of six hours of labour, then the labour of 12 hours belongs to him; it is appropriated by him before it is carried out.  The process of production itself turns labour into capital.  But this transformation is an act which takes place later than its appropriation.

The “products” are converted into capital, physically converted insofar as in the process of production they function as conditions of labour, conditions of production, objects and instruments of labour, and formally converted insofar as not only their value is perpetuated but as they become means for absorbing labour and surplus labour, insofar as they actually function as absorbers of labour.  ||1112| On the other hand: the labour-power appropriated before the [production] process is turned directly into capital in the course of the process by being converted into the conditions of labour and into surplus-value, [since] as a result of its embodiment in the product, it not only preserves the constant capital but replaces the variable capital and adds surplus-value.  |1112||

[4.  On Accumulation as Extended Reproduction]

[Cherbuliez writes:]

||1110| “Every accumulation of wealth provides the means for accelerating further accumulation” (op. cit., p. 29).

{Ricardo’s view (derived from Smith) that all accumulation can be reduced to expenditure on wages, would be incorrect even if no accumulation in kind took place—which is the case, for example, when the farmer sows more seed, the stock-breeder increases his stock of cattle for breeding or for fattening, the owner of engineering works uses part of his surplus-value in the form of machine tools—and even if all producers who produce the elements of some part of capital did not over-produce regularly, counting on the fact of annual accumulation, i.e., the expansion of the general scale of production.  Moreover, the peasant can exchange part of his surplus corn with the stock-breeder, who may convert this corn into variable capital while the peasant converts his corn into constant capital [by means of this exchange].  The flax-grower ||1111| sells part of his surplus product to the spinner, who converts it into constant capital.  With this money the flax-grower can buy tools and the tool-maker can then buy iron, etc., so that all these elements are turned directly into constant capital.

But disregarding all this, let us assume that a manufacturer of machines wants to convert an additional capital of £1,000 into elements of production.  He will of course lay out part of it on wages, say £200.  But he buys iron, coal, etc., with the remaining £800.  Let us assume that this iron, coal, etc., has first to be produced.  Then, if the iron or coal producers either have no excess (accumulated) stocks of their commodities, and likewise have no additional machinery and are unable to buy it immediately (for in this case too constant capital would be exchanged for constant capital), they can only produce the required iron and coal if they work their old machinery longer.  As a result, they would have to replace it more rapidly, but a part of its value would enter into the new product.  Irrespective of this, however, the iron manufacturer needs more coal in any case and must therefore transform at least part of his share in the £800 into constant capital.  Both coal and iron producers sell their wares in such a way that they contain unpaid surplus labour.  And if this amounts to a quarter, then this alone means that £200 out of the £800 is not converted into wages, not to mention the part which has to make good the wear and tear of the old machinery.

The surplus consists always of the articles produced by the particular capital, i.e., coal, iron, etc.  Part of the surplus is converted directly into constant capital when the producers whose commodities serve as elements of production for other producers exchange these commodities with one another.  That part of the surplus value, however, which is exchanged against the products of those who produce means of subsistence and replaces the constant capital in these branches, provides the necessary variable capital.  The producers of means of subsistence that can no longer enter as elements into their production (except as variable capital) acquire additional constant capital through the same process which provides the other producers with additional variable capital.

The following features distinguish reproduction—insofar as it constitutes accumulation —from simple reproduction.

Firstly: Both the constant and variable elements of production which are accumulated consist of newly added labour.  They are not used as revenue, although they arise from profit.  They consist of profit or surplus labour, whereas in the case of simple reproduction part of the product represents past labour (i.e., in this context, labour which has not been performed in the current year).

Secondly: If the labour-time in certain branches is lengthened, that is, if no additional instruments or machines are employed, the new product must indeed, to a certain extent, pay for the more rapid wear and tear of the old [tools or machines], and this accelerated consumption of the old constant capital is likewise an aspect of accumulation.

Thirdly: As a result of the additional money capital which arises in the process of [extended] reproduction—partly through the freeing of capital, partly through the conversion of part of the product into money, partly because, as a result of the money collected by the producer, the demand for other [commodities], e.g., [those offered by the] sellers of luxury goods, is reduced—the systematic replacement of the elements [of production] is by no means a necessity, as it is in the case of simple reproduction.

With the additional money anyone can buy or command products, although the producer from whom the purchase is made may neither expend his revenue on the product of the purchaser nor replace his capital with it}.  <Additional capital (constant or variable) must appear in the form of money capital on one side, even if this only exists in the form of outstanding claims, whenever it is not balanced by a corresponding addition on the other side.>

[5.  Elements of Sismondism in Cherbuliez.  On the Organic Composition of Capital Fixed and Circulating Capital]

For the rest, Cherbuliez presents a remarkable amalgam of Sismondian and Ricardian contradictory views.  |1111||

||1112| Sismondian.

“The hypothesis […] that an invariable ratio exists between the different elements of capital is not substantiated at any stage of the development of society.  The relationship is essentially variable and for two reasons: a)the division of labour, and b) the replacement of human labour by natural agents.  These two factors tend to reduce the ratio of the means of subsistence to the other two elements of capital” (op. cit., pp. 61-62).

In this situation, “the increase in productive capital does not necessarily bead to an increase in the amount of means of subsistence intended to constitute the price of labour; it can be accompanied—at beast for a time—by an absolute diminution of this element of capital, and consequently by a reduction in the price of labour” (loc. cit., p. 63).

<This is Sismondian; the effect on the wage level is the only aspect considered by Cherbuliez.  This problem does not arise at all in an investigation where labour is always supposed to be paid at its value and the fluctuations of the market price of labour above or below that point (the value [of labour]) are not taken into consideration.>

“The producer who wishes to introduce a new division of labour in his enterprise or to exploit some natural force, will not wait until he has accumulated sufficient capital to be able to employ in this new way all the workers he needed previously.  In the case of division of labour, he will perhaps be satisfied to produce with five workers what he previously produced with ten.  In the case of the exploitation of a natural force, he will perhaps use only one machine and two workers.  The means of subsistence will, in consequence, be reduced to 1,500 in the first case and to 600 in the second.  But since the number of workers remains the same, their corn petition will soon force the price of labour below its original level” (loc. cit., pp. 63-64).  “This is one of the most astonishing results of the law of appropriation.  The absolute increase in wealth, that is, in the products of labour, does not give rise to a proportional increase and may lead to a diminution in the means of subsistence for the workers, in the portion they receive of all kinds of products” (p. 64).  “The factors determining the price of labour”<in this context it is always a question only of the market price of labour> “are the absolute amount of productive capital and the ratio between the different elements of capital, two social facts on which the will of the workers can exercise no influence” (p. 64).  “Nearly all the odds are against the worker” (loc. cit.).

The ratio between the different elements of productive capital is determined in two ways:

First: By the organic composition of productive capital.  By this we mean the technological composition.  With a given productivity of labour, which can be taken as constant so long as no change occurs, the amount of raw material and means of labour, that is, the amount of constant capital—in terms of its material elements—which corresponds to a definite quantity of living labour (paid or unpaid), that is, to the material elements of variable capital, is determined in every sphere of production.

If the proportion of the materialised labour to the living labour employed is small, then the portion of the product that represents living labour will be large regardless of how this portion is divided between capitalist and worker.  If the reverse is the case, the portion will be small.  With a given rate of exploitation of labour, the surplus labour too will be large in the former case and small in the latter.  This can only change as a result of a change in the mode of production which alters the technological relationship between the two parts of capital.  Even in this case, the absolute amount of living labour employed by the capital which uses a greater proportion of constant capital may be equal or even larger if capitals of different size are compared.  But it must be smaller relatively.  For capitals of the same size, or calculated in proportion to the total capital—100 for example—it must be smaller both relatively and absolutely.  All changes arising from the development (not the decline) of the productive power of labour, reduce that part of the product which represents living labour, that is, they reduce variable capital.  Regarding capital invested in different branches of production ||1113| , one can say [that these changes] reduce the variable capital absolutely in those branches which have reached a higher level of production, since wages are assumed to be equal.

So much with regard to the changes arising from changes in the mode of production.

Secondly, however, if one assumes that the organic composition of capitals is given and likewise the differences which arise from the differences in their organic composition, then the value ratio can change although the technological composition remains the same.  What can happen is: a) a change in the value of constant capital; b) a change in the value of the variable capital; c) a change in both, in equal or unequal proportions.

a) If the technological composition remains the same and a change in the value of constant capital takes place, its value will either fall or rise.  If it falls, and only the same amount of living labour is employed as previously, i.e., if the scale or level of production remains the same, if, for example, 100 men are employed as previously, then in physical terms, the same amount of raw material and means of labour is required as previously.  But the surplus labour bears a greater proportion to the total capital advanced.  The rate of profit rises.  In the opposite case it declines.  In the former case, for the capitals already employed in that sphere (not those newly invested in it after the change of value in the elements of constant capital has taken place), the total sum of the capital employed diminishes, that is, some portion of the capital is set free, although production continues to be carried on on the same scale; or the capital thus liberated is again employed in the same sphere of production and has then the same effect as an accumulation of capital.  The scale of production is enlarged, and the absolute amount of surplus labour is increased proportionally.  With a given method of production, every accumulation of capital results in an increase in the total amount of surplus-value whatever the rate of surplus-value may be.

Conversely, if the value of the elements of constant capital increases, then either the scale of production (hence the mass of the total capital advanced) must increase to employ the same quantity of labour (the same variable capital the value of which has remained unchanged) as before; and then although the absolute amount of surplus-value—and the rate of surplus-value—remains the same, its proportion to the total capital advanced decreases, and hence the rate of profit falls.  Or the scale of production and the total capital advanced is not enlarged, then in all circumstances, the variable capital must decrease.

If the same sum as previously is laid out in constant capital, it now represents a smaller amount of material elements and since the technological conditions remain the same, less labour will be employed.  The total capital advanced therefore decreases by [an amount corresponding to] the labour dismissed; the total value of the capital advanced thus decreases, but a greater proportion of the diminished capital is laid out in constant capital (in terms of value).  The surplus-value decreases absolutely, because less labour is employed, and the ratio of the remaining surplus-value to the total capital advanced falls, because variable capital bears a smaller proportion to constant capital.

On the other hand, if the same total capital is employed as before—the reduced value of the variable capital (representing a smaller quantity of labour, living labour, employed), being counterbalanced by the increased value of the constant capital; the one being diminished in the same proportion as the other is augmented, then the absolute quantity of surplus-value falls; because less labour is employed, and at the same time, the proportion of this surplus-value to the total capital advanced falls.  Thus the rate of profit falls for two reasons, the diminution in the amount of surplus labour, and the decreasing proportion of that surplus labour to the total capital advanced.

In the first case where (with decreasing value of the elements of constant capital) the rate of profit rises in all circumstances, the scale of production must be extended if the amount of profit is to increase.  Let us assume that the capital is 600—half constant, half variable.  If the constant capital were to lose half its value, it would only amount to 150, although the variable capital would remain 300.  The total capital employed would be only 450, 150 being freed.  If the 150 are added to the capital again, then 100 of the 150 will now be laid out in variable capital.  ||1114| Thus the scale of production is expanded and more labour employed, if the same capital continues to be used in the production process.

In the opposite case, where with rising value of the elements of constant capital the rate of profit falls in all circumstances, the scale of production, and therefore the capital advanced, must be increased if the amount of profit is not to decrease and the amount of labour employed (and therefore surplus-value) is to remain the same.  If this is not done, if only the old or less than the old capital is employed, then not only does the rate of profit decline, but also the amount of profit.

The rate of surplus-value remains unchanged in both cases; it changes, however, if any change in the technological composition of capital takes place: it increases if the constant capital increases (because labour is then more productive) and declines when it falls (because labour is then less productive).

b) If there is any change in the value of variable capital independent of the organic composition, it can only occur because of a fall or a rise in the price of means of subsistence that are not produced in the sphere of production under consideration but enter into it as commodities from outside.

If the value of variable capital falls, it nevertheless represents the same amount of living labour as before.  The same quantity of labour merely costs less.  If therefore the scale of production remains the same (since the value of constant capital is unchanged), then the part of the total capital used for the purchase of labour is diminished.  Less capital needs to be laid out in order to pay the same number of workers.  Thus, in this case, if the scale of production remains the same, the amount of capital laid out diminishes.  The rate of profit increases, and this for two reasons.  The [amount of] surplus-value has increased; the ratio of living labour to materialised labour has remained the same, but the increased surplus-value correlates with a smaller total capital.  If, on the other hand, the capital freed is again invested, then this amounts to accumulation.

If the value of the variable capital increases, then a greater total capital must also be laid out in order to employ the same number of workers as before, because the value of the constant capital remains the same and that of the variable capital has risen.  The amount of labour remains the same, but a smaller part of it is surplus labour, and this smaller part corresponds to a larger capital.  This takes place when the scale of production remains the same, while the value of the total capital increases.  If the value of the total capital does not increase, the scale of production must be reduced.  The amount of labour declines and a smaller portion of this reduced amount constitutes surplus labour, which, too, bears a smaller proportion to the total capital advanced.

The organic changes and those brought about by changes of value can have a similar effect on the rate of profit in certain circumstances.  They differ however in the following way.  If the latter are not due simply to fluctuations of market prices and are therefore not temporary, they are invariably caused by an organic change in the spheres that provide the elements of constant or of variable capital.

[c)] It is not necessary here to examine case 3 in detail.

In the case of capitals of equal size—or if the calculation is based on equal amounts of the total capital, 100, for example— the organic composition may be the same in different spheres of production, but the value ratio of the primary component parts of constant and variable capital may be different according to the different values of the amount of instruments and raw materials used.  For example, copper instead of iron, iron instead of lead, wool instead of cotton, etc.

On the other hand, is it possible for the organic composition to be different if the value ratio remains the same?  If the organic composition is the same, the relative amounts which constitute constant capital and living labour are the same per 100.  The quantitative proportions are the same.  The value of the constant capital may be the same, although the relative amounts of labour set in motion are different.  If the machinery or raw materials are dearer (or cheaper), less labour, for example, may be required, but in this case the value of the variable capital is also relatively smaller or vice versa.

||1115| Let us take A and B.  c’ and v’ are the component parts (in terms of value) of A, and c and v those of B (again in terms of value).  If c’:v’ is equal to c:v then c’v equals v’c.  Consequently likewise c’/c equals v’/v.

Since the value ratios [of constant to variable capital] are equal, only the following variations are possible.  If in one sphere more surplus labour is carried out than in another sphere, <for example, night work is impossible in agriculture, and although the individual agricultural labourer can be over-worked, nevertheless the total amount of labour which can be expended on a given area of land is limited by the object being produced (corn), whereas in a factory of a given size the amount produced depends (δυνάμει[c]) on the hours of labour worked—that is to say, it is due to the different kinds of production that more surplus labour can be employed in one sphere at a given level of production than in another> then, even if the value ratio of constant and variable capital is the same, the amount of labour employed in proportion to the total capital will nevertheless be different.

Or, let us assume that the raw material is dearer and labour (of greater skill) is dearer, in the same proportion.  In this case [capitalist] A employs 5 workers, where [capitalist] B employs 25, and they cost him £100—as much as the 25 workers, because their labour is dearer (their surplus labour is therefore also worth more).  These 5 workers work up 100 lbs. of raw material, y, worth [£] 500 and B’s workers work up 1,000 lbs. of raw material, x, worth [£] 500, because the raw material is dearer and the productive power of the workers is less highly developed in the case of A.  The value ratio here—£100 v to [£] 500 c is he same in both cases, but the organic composition is different.

The value ratio is the same: The value of constant capital in A is the same as in B, and proportionately A lays out the same amount of capital in, wages as B.  But the quantity of his products will be smaller.  Although he employs the same absolute quantity of labour as B, he uses more relatively, because his constant capital is dearer.  He processes less raw material, etc., in the same time, but this smaller quantity costs him as much as the larger quantity processed by B.  The value ratio in this case is the same, the organic composition is different.  In the other case the value ratio being assumed to be the same, this can occur only if the amounts of the surplus labour are different or if the value of the different kinds of labour are different.

The organic composition can be taken to mean the following: Different ratios in which it is necessary to expend constant capital in the different spheres of production in order to absorb the same amount of labour.  The combination of the same amount of labour with the object of labour requires either that both more raw material and more machinery are used in one case than in the other, or that more of only one of these is used.

{Where the ratios between fixed and circulating capital are very different, those between constant and variable capital can be the same, consequently the surplus-value can be the same although the values produced annually must be different.  Let us assume that in the coal industry—where no raw materials are used (apart from auxiliary materials), the fixed capital constitutes half the total capital and variable capital the other half.  Let us assume that in tailoring the fixed capital is zero (as in the previous case we disregard auxiliary materials), that the raw materials constitute half and the variable capital the other half of the total capital.  Given the same degree of exploitation of labour, both will realise the same amount of surplus-value, since both employ the same amount of labour in proportion to capital, i.e., per 100.  But let us assume that fixed capital in the coal industry turns over once every 10 years while there is no difference in the rate of turnover of circulating capital in both cases.  At the end of the year (we will assume that the variable capital turns over once a year in both cases) the tailor’s capital will have produced va1ues amounting to 150 if the surplus-value is 50.  The coal producer, on the other hand, will have produced values amounting to 105 at the end of the first year (consisting of 5 for fixed capital, 50 for variable and 50 for surplus labour).  As in the case of the tailor, the total value of his product plus the fixed capital will amount to 150, that is, the product, 105, plus 45 for the remaining fixed capital.  The production of different magnitudes of value therefore does not preclude the production of the same amount of surplus-value.

In the second year, the fixed capital of the coal producer would amount to 45, variable capital to 50 and surplus-value to 50, that is, the capital advanced would be 95 and the profit would be 50.  The rate of profit would have risen, because the value of the fixed ||1116| capital would have declined by one tenth as a result of wear and tear during the first year.  Thus there can be no doubt that in the case of all capitals employing a great deal of fixed capital—provided the scale of production remains unchanged—the rate of profit must rise in proportion as the value of the machinery, the fixed capital, declines annually, because wear and tear has already been taken into account.  If the coal producer sells his coal at the same price throughout the ten years, then his rate of profit must be higher in the second year than it was in the first and so forth.  Or one would have to assume that the maintenance work, etc., stands in direct proportion to the depreciation, so that the total sum advanced annually under the heading of fixed capital remains the same.  This extra profit may be equalised also as a result of the fact that—apart from wear and tear—the value of fixed capital alls in the course of time, because it has to compete with new, more recently invented, better machinery.  On the other hand this rising rate of profit, which results naturally from wear and tear, makes it possible for the declining value of the fixed capital to compete with newer, better machinery, the full value of which has still to be taken into account.  Finally, the coal producer sold his coal more cheaply [at the end of the second year], on the basis of the following calculation: 50 on 100 means 50 per cent profit, 50 per cent on 95 comes to 47 1/2; if therefore he sold the same quantity of coal [not for 105 but] for 102 1/2—then he would have sold it more cheaply than the man whose machinery, for example, began to operate only in the current year.  Large installations of fixed capital presuppose possession of large amounts of capital.  And since these big owners of capital dominate the market, it appears that only for this reason their enterprises yield surplus profit (rent).  In the case of agriculture, this rent derives from working relatively fertile land, but here we are dealing with a case where relatively cheaper machinery is utilised.}

<A large number of instances which are adduced in connection with the relation of fixed to circulating capital, refer to the difference between variable and constant capital.  First of all, the proportion of constant to variable capital can be the same although the proportion of fixed to circulating capital is different.  Secondly, in the case of constant and variable capital it is a question of the primary division of capital between living and materialised labour, not of the modification of this relationship by the circulation process or the influence of this latter on reproduction.

It is clear first of all that the difference between fixed and circulating capital can affect surplus-value (apart from the differences in the mass of living labour employed, i.e., differences which are related to the ratio of variable to constant capital) only insofar as it affects the turnover of the total capital.  It is therefore necessary to investigate how the turnover affects surplus-value.  Two factors are obviously closely connected with it: 1) surplus-value cannot be accumulated, reconverted into capital, so rapidly (so often); 2) the capital advanced must increase both to continue to employ the same number of workers, etc., and because the advances of money which the capitalist makes to himself to cover his own consumption costs must extend over a longer period.  These factors are important in connection with profit.  Here, however, it is, to begin, with, only necessary to examine how they affect surplus-value.  One must moreover always clearly distinguish between these two factors.>

<Everything which increases the capital outlay without proportionally increasing the surplus-value, reduces the rate of profit even if the surplus-value remains the same; the opposite is the case with everything which reduces the outlay.  Insofar, therefore, as a large amount of fixed capital in proportion to circulating capital—or different turnover periods of capital— affects the size of the capital outlay, it affects the rate of profit even if it does not at all affect the surplus-value.>

<The rate of profit is not simply the surplus-value calculated on the capital advanced, but the mass of surplus-value realised within a given period, that is, in a definite period of circulation.  Insofar as the difference between fixed and circulating capital affects the mass of surplus-value which a particular capital yields within a given period, it affects the rate of profit.  Two aspects must be taken into consideration: firstly, the difference in the size of the capital advanced (relative to the surplus-value realised) and secondly, the difference in the length of time for which these advances have to be made before they are returned with a surplus.>

||1117| {The reproduction time, or rather, the number of reproductions taking place in a definite period of time, is substantially affected by two circumstances.

1)The product remains longer in the sphere of production, in the strict sense of the term.

It is possible firstly that, in order to be produced, one product requires a longer period of time than another; it may require a larger part of a year, a whole year or even more than a year.(The latter is the case for example with buildings, in stock-breeding and the production of certain luxuries.)  In this case, the product continually absorbs labour—often a great deal of labour is absorbed (for instance by luxury articles and buildings) in relation to the constant capital—the amount depending on the composition of the productive capital, its division into constant and variable capital.  Thus in the measure as the time required for the production of the commodity increases and the labour process continues uniformly, a continuous absorption of labour and of surplus labour takes place.  This happens for example with cattle or buildings if the latter require more than a year’s work.  The product can enter the sphere of circulation, that is, it can be sold, be thrown on the market, only when the work is completed.  The surplus labour expended in the first year is embodied with the rest of the labour in the unfinished product of the first year.  It is neither greater nor smaller than in other branches of production where constant and variable capital are used in the same proportions.  But the value of the product cannot be realised, that is, in the sense that it cannot be converted into money, and neither can the surplus-value.  The latter cannot therefore be accumulated as capital nor used for consumption.  The capital advanced, and also the surplus-value, serve, so to speak, as foundations for further production.  They are a precondition for it and enter, to some extent, as semi-finished products, or, in one way or another, as raw material into the production process of the second year.

Let us assume that the capital is [£] 500, labour [£] 100 and surplus-value [£] 50, so that the capital advanced in production amounts to [£] 550 plus [£] 500 which is advanced in the second year.  The surplus-value is again [£] 50.  The value of the product is therefore [£] 1,100, of which [£] 100 is surplus-value.  In this case, the surplus-value is the same as if the capital had been reproduced in the first year and [£] 500 had been invested again in the second year.  In each year the variable capital employed is [£] 100 and the surplus-value [£] 50.  But the rate of profit is different.  In the first year it is 50/500, or 10 per cent.  But in the second year the capital outlay amounts to [£] 550 plus [£] 500, that is, [£] 1,050, and a tenth of this is [£] 105.  If one adds the same rate of profit, then the value of the product comes to: [£] 550 in the first year; [£] 550+ [£]500+ [£] 55 + [£] 50= [£]1,155 in the second year.  At the end of the second year, the value of the product is [£] 1,155.  Otherwise it would have been only [£] 1,100.  In this case, the profit is greater than the surplus-value produced, for this only amounts to [£] 100.  If one includes the consumption costs which the capitalist has to advance over two years, then the capital laid out is even greater in proportion to the surplus-value.  On the other hand, it is true that the entire surplus-value gained in the first year has been converted into capital in the second.  Furthermore, the capital laid out in wages is greater, because the £100 is not reproduced at the end of the first year, so that in the second year £200 must be advanced for the same labour for which £100 would have been sufficient if it had been reproduced in the first year.

Secondly.  After the labour process has been completed, the product must continue to remain in the production sphere in order to undergo natural processes which require either no labour or relatively quite insignificant amounts of it, like wine in the cellar.  Only when this period has elapsed can the capital be reproduced.  It is obvious that in this case quite irrespective of what the ratio of variable to constant capital may have been, the effect is the same as if more constant and less variable capital had been laid out.  The surplus labour, as well as the total amount of labour employed during a de finite period of time, is smaller.  If the rate of profit is the same, this is due to equalisation, not to the amount of surplus-value produced in this sphere.  More capital must be advanced beforehand to maintain the reproduction process—the continuity of production.  And for this very reason the surplus-value declines in proportion to the capital advanced.

ThirdlyInterruptions in the labour process while the product is in the production process, as in agriculture or in processes such as tanning, etc., where chemical processes involve intervals before the product can proceed from one stage to the next, higher one.  If in such cases, the interval is reduced by chemical discoveries, the productivity of labour rises, the surplus-value is increased and materialised labour has to be advanced for a shorter period of time.  In all these cases, the surplus-value is smaller and the capital outlay larger.

2) The same thing happens if the rate of turnover of the circulating capital is lower than the average because of distant markets, In this case, too, the capital outlay is greater, the surplus-value smaller and its proportion to the capital advanced is also smaller.}  <In the latter case [the capital] is retained longer in the circulation sphere, in the former case, in the production sphere.>

||1118| {Let us assume that the capital advanced in some branch or other of the transport industry is [£] 1,000—fixed capital [£] 500, which will be worn out in five years.  The variable capital, which amounts to [£] 500, turns over four times during the year.  The annual value of the product will thus be [£] 100 + [£] 2,000 + [£] 100, if the [annual] rate of surplus-value is 20 per cent, a total of [£] 2,200.  On the other hand, let us assume that in a branch of tailoring the constant capital, which consists only of circulating capital since fixed capital is assumed to be zero, amounts to 500 and the variable capital to 500, surplus-value is 100.  [The capital] turns over four times a year.  Then the (annual) value of the product will be 4(500+500)+100, that is, 4,100.  The surplus-value is the same in both cases.  In the last-mentioned case, the entire capital turns over four times a year or once a quarter.  Of the other capital [£] 600 turn over in the course of a year [of which £ 500 turn over four times], therefore [£] 500 + 100/4 = [£] 525 in a quarter of a year.  That is, 175 in a month, [£] 350 in two months, and [£] 1,400 in eight months.  The whole capital requires 5 5/7 months in order to turn over.  It turns over only 21/10 times a year.

Now it will be said that in order to make a profit of 10 per cent, less is added per quarter on a value of [£]1,000 in the case of the first capital than in that of the other.  But here it is not a question of addition.  One makes more surplus-value on the capital used up but not on the capital employed.  The difference here arises from the surplus-value, not from the addition of profit.  The difference here lies in the value not in the surplus-value.  In both cases the variable capital amounting to 500 turns over four times in a year.  Both capitals yield a surplus-value of [£]100 in a year, the [annual] rate of surplus-value amounts to 20 per cent.  But £25 in a quarter, therefore a higher percentage?  [£]25 on [£]500 each quarter is 5 per cent a quarter, that is, 20 per cent per annum.

The first [capitalist] turns over half his capital 4 times a year and only a fifth of the remaining half once during the year.  A half of four times is twice.  Thus he turns his capital over 2 1/10 times during the year.  The entire capital of the second capitalist turns over four times a year.  But this makes absolutely no difference to the surplus-value.  If the second capitalist continues the reproduction process uninterruptedly, then he must constantly convert [£] 500 into raw materials, etc., and must always use [£] 500 for labour, while the other capitalist likewise uses [£] 500 for labour and has invested the remaining [£]500 once and for all (that is, for five years) in such a form that he does not need to reconvert it again.  This applies however only when the ratio of variable to constant capital is the same [in both capitals] despite the difference between fixed and circulating capital.

If in both cases, one half consists of constant and the other half of variable capital, then it is only possible for one half [in one case] to consist of fixed capital if the circulating constant capital amounts to zero, and [in the other case], one half can consist of circulating constant capital only if the fixed capital amounts to zero.  Although the circulating constant capital can amount to zero, as in the extractive and transport industries where, however, the auxiliary materials rather than the raw materials constitute the circulating constant capital, the fixed capital can never be zero (except in banking, etc.).  This is however immaterial so long as the ratio of constant capital to variable capital is the same in both cases, even though in one case there may be more fixed and less circulating constant capital than in the other, or vice versa.  The only difference here is the time of reproduction required by one half of the capital and by the total capital.  One capitalist must invest a capital of £500 for five years before it is returned to him, the other, for a quarter of a year or a whole year.  The ability to dispose of the capital is different.  The amount advanced is the same but the time for which it is advanced is different.  This difference does not concern us here.  When one considers the total capital outlay, surplus-value and profit are the same—£100 in the first year on the £1,000 advanced.  In the second year, it is rather the fixed capital that has a higher rate of profit, since the variable capital has remained the same, whereas the value of the fixed capital has declined.  The capitalist only advances [£] 400 fixed and [£] 500 variable capital in the second year and receives a profit of [£] 100 as he did before.  But 100 on 900 amounts to 11 1/9 per cent, while the other capitalist, if he continues to reproduce his capital, advances [£] 1,000 as he did previously and makes a profit of [£]100, that is, 10 per cent.

The position is different, of course, if, along with the fixed capital, the constant capital as a whole increases as compared with the variable, or if altogether more capital must be advanced in order to set the same amount of labour in motion.  In the case discussed above, the question is not how often the total capital is returned or how large the advance is, but how often that portion is returned which is sufficient to set the same amount of productive labour in motion as that used in the other instance, in order to renew the process of production.  However, if in the case cited above, the fixed capital were [not £500 but £] 1,000 and the circulating capital only [£] 500 [as previously], then matters would be different.  This, however, would not be due to the fact that it is fixed capital.  For if the circulating part of the constant capital in the second case were to amount to [£]1,000 instead of [£] 500 (because of the dearness of raw materials, for example), then the result would be the same.  Because in the first examples [of the two cases] the larger the fixed capital, the greater the relative size of the capital outlay as a whole to the variable capital, these two factors are often confused.  Moreover, the whole business of the turnover was in fact originally derived from merchant capital, where it is determined by different laws.  In the case of merchant capital, as I have demonstrated, the rate of profit is indeed determined by the average number of turnovers, regardless of the composition of this type of capital which, incidentally, consists mainly of circulating capital.  For in the case of merchant capital, profit is determined by the general rate of profit.}

||1119| <(The point is this.  If the fixed capital equals x, and it turns over only once every 15 years, then 1/15 of it is turned over in a single year, but likewise only 1/15 needs to be replaced each year.  It would make no difference at all if it were replaced 15 times in a year.  Its mass would still be the same as before.  The product would only become dearer as a result.  But it is more difficult to dispose of it and the risk of depreciation is greater than if the same amount of capital were advanced in the form of circulating capital.  But this does not affect the surplus [-value] in any way, although it does enter into the capitalists calculation of the rate of profit since this risk is included in the calculation of the depreciation.

As far as the other part of capital is concerned, let us assume that the circulating part of constant capital—raw materials and auxiliary materials—amounts to [£] 25,000 a year and wages to [£] 5,000.  If it were returned only once during the year £30,000 would have to be advanced during the whole year, and if the surplus-value were at the rate of 100 per cent it would amount to £5,000, and profit at the end of the year would be 5,000 on 30,000, or 16 2/3 per cent. If, on the other hand, [the capital turns over] five times during the year, then a capital outlay of only [£] 5,000 for constant circulating capital and [£] 1,000 for wages will be sufficient.  Profit will be [£] l ,000, and for five-fifths of a year [£] 5,000.  But this surplus-value is made on a capital of £6,000, because more than this amount is never advanced.  Profit would therefore be 5,000 on 6,000, or 5/6, five times as much [as previously], that is, 83 1/3 per cent.  (Disregarding fixed capital.)  There is thus a very considerable difference in the rate of profit because, in fact, labour worth [£] 5,000 is bought with a capital of [£] 1,000 and raw materials, etc., worth [£] 25,000 with a capital of [£] 5,000.  If the amounts of capital were equal in these cases of different rates of turnover, then only [£] 6,000 need have been advanced in the first case, that is only [£] 500 a month, five-sixths of which would have consisted of constant capital and one-sixth of variable capital.  This sixth would amount to [£] 83 1/3, on which surplus-value at 100 per cent would be £83 1/3, and this would amount in a year to (83+1/3)12 = 12/3(or 4)+996= [£]1,000.  But 1,000 on 6,000=16 2/3 per cent.>

[6.  Cherbuliez Eclectically Combines Mutually Exclusive Propositions of Ricardo and Sismondi]

To return to Cherbuliez.

[The following is] Sismondian:

“Insofar as the economic progress of society is characterised by an absolute growth of productive capital and by a change in the proportions between the different elements of capital, it offers the workers some advantages [… ] First, productivity[d] of labour […], resulting especially from the use of machinery, brings about such a rapid growth of productive capital that despite the change that takes place in the proportion of the means of subsistence to the other elements of capital, this element nevertheless increases absolutely, which makes it possible not only to employ the same number of workers as before, but also an additional number, so that for the workers the result of progress […] apart from some interruptions means an increase in productive capital and in the demand for labour.  Secondly, the[e] greater productivity of capital tends to diminish the value of the whole mass of products considerably, thus placing them within reach of the workers, thereby increasing the range of enjoyments they are able to obtain” (op. cit., p. 65).

On the other hand:

First, however impermanent, however partial the temporary diminution of the means of subsistence which constitute the price of labour may be, it produces harmful effects nevertheless…  Second, the factors tending to promote the economic advance of society are for the most part accidental, independent of the will of the producing capitalist.  The effects of these causes are therefore not permanent…” etc. (p. 66).  “Third, it is not so much the absolute as the relative amount consumed by the worker which makes his lot happy or unhappy.  What does it matter to the worker if he is able to obtain a few more products which formerly were inaccessible to him if the number of products inaccessible to him has grown in even greater proportion, if the distance which separates him from the capitalist has only increased, if his social position has deteriorated and become more disadvantageous?  Apart from the consumption strictly necessary for the maintenance of our strength, the value of our enjoyments is essentially relative” (loc. cit., p. 67).

“People frequently forget […] that the wage-labourer is a thinking man, endowed with the same capacities, impelled by the same motives as the working capitalist” (p. 67).

||1120| “Whatever advantages a rapid growth in social wealth may bring to the wage-workers, it does not cure the causes of their poverty…  They continue to be deprived of all rights to capital and are consequently obliged to sell their labour and to renounce all claims to the products of their labour” (loc. cit., p. 68).  “This is the principal error of the law of appropriation…  The evil lies in this absolute lack of any bond between the wage-worker and the capital which is set in motion by his industry” (p. 69).

This last phrase about “bond” is written in the typical Sismondian manner and is quite silly to boot.

About the normal man [who is] equated with capitalist, etc., see op. cit., pp. 74 to 76.

About the concentration of capitals and the elimination of the smaller capitalists (l.c., pp. 85-88).

“If in present circumstances real pro fit derives from the thrift of the capitalists, it could derive just as well from that of the wage earners” (loc. cit., p. 89).

[On the other hand] Cherbuliez shares:

1).  [James] Mill’s view that all taxes should be imposed only on rent (p. 128), but since it is impossible “to impose a tax which is levied only on rent and affects nothing but rent”, since it is difficult to separate profit from rent and impossible when the landowner is himself the cultivator, Cherbuliez proceeds to

2).  the real conclusion of the Ricardian theory:

“Why do people not take a step further and abolish private ownership of land?” (p. 129) “The landowners are idlers who are maintained at the public expense without any kind of benefit to industry or to the general welfare of society” (p. 129).  “What makes land productive is the capital employed in agriculture.  The landowner contributes nothing to it.  He only exists to pocket rent, which does not constitute a part of the profit on his capital, neither is it the product of labour nor that of the productive power of the soil, but the effect of the price of the agricultural products, which is increased by the competition of the consumers…” etc. (p. 129).  “Since the elimination of the private ownership of band would in no way change the causes responsible for rent, rent would continue to exist, but the state would receive it, for all the land would belong to it and it would lease out arable sections of the land to private persons owning sufficient capital to exploit them” (p. 130).  Rent would replace all state revenues.  “Finally industry, liberated, released from all fetters, would take an unprecedented leap forward…” (p. 130).

But how does this Ricardian conclusion agree with the pious Sismondian wish to place “bonds” on capital and capitalist production?  How does it agree with the lamentation:

“Capital will ultimately rule the world if an upheaval does not halt the course which the development of our society is taking under the domination of the law of appropriation” (op. cit., p. 152).  “Capital will eliminate the old social distinctions everywhere in order to replace them by this simple classification of men into rich and poor, the rich, who enjoy themselves and rule, and the poor who work and obey” (p. 153).  “The general appropriation of productive wealth and of the products has always reduced the numerous class of proletarians to a position of subjugation and political impotence, but this appropriation was once combined with a system of restrictive laws which, by impeding the development of industryand the accumulation of capital ||1121| , placed limits on the growth of the class of the disinherited, restricted their civil rights within narrow bounds and thus in different ways rendered this class harmless.  Today, capital has broken part of these fetters.  It is preparing to break all of them” (pp. 155-56).

“The demoralisation of the proletarians is the second result of the distribution of wealth” (p. 156).

* ||1105| < If tomorrow the price of cotton were to drop by 90 per cent, the spinning industry would develop even more rapidly the day after tomorrow.> |1105||

[a] See this volume, p. 337.—Ed.

* ||1110| On page 59, Cherbuliez calls raw materials and machinery, etc., “the two passive elements of capital” in contrast to the means of subsistence.  |1110||

[b] In this phrase Marx summarises (in German) a lengthy paragraph from Riche ou pauvre and then quotes from the book.—Ed.

[c] Potentially.—Ed.

[d] The manuscript has “1).  the greater productivity”.—Ed.

[e] The manuscript has “2).  the”.—Ed.