The Accumulation Of Capital Part 3

The position is different with regard to circulating capital. 'But though the whole expenses of maintaining the fixed capital is thus necessarily excluded from the neat revenue of the society, it is not the same case with that of maintaining the circulating capital. Of the four parts of which this latter capital is composed, money, provisions, materials and finished work, the three last, it has already been observed, are regularly withdrawn from it and placed either in the fixed capital of the society, or in their stock reserved for immediate consumption. Whatever portion of those consumable goods is not employed in maintaining the former, goes all to the latter, and makes a part of the neat revenue of the society, besides what is necessary for maintaining the fixed capital.'[74]

We see that Smith here simply includes in this category of circulating capital everything but the fixed capital already employed, that is to say, foodstuffs and raw materials and in part commodities which, according to their natural form, belong to the replacement of fixed capital. Thus he has made the concept of circulating capital vague and ambiguous. But a further and most important distinction crops up and cuts right through this conception: 'The circulating capital of a society is in this respect different from that of an individual. That of an individual is totally excluded from making any part of his neat revenue, which must consist altogether in his profits. But though the circulating capital of every individual makes a part of that of the society to which he belongs, it is not upon that account totally excluded from making a part likewise of their neat revenues.'[75]

In the following ill.u.s.tration Smith expounds what he means: 'Though the whole goods in a merchant's shop must by no means be placed in his own stock reserved for immediate consumption, they may in that of other people, who, from a revenue derived from other funds, may regularly replace their value to him, together with its profits, without occasioning any diminution either of his capital or theirs.'[76]

Here Smith has established fundamental categories with regard to the reproduction and movement of circulating social capital. Fixed and circulating capital, private and social capital, private and social revenue, means of production and consumer goods, are marked out as comprehensive categories, and their real, objective interrelation is partly indicated and partly drowned in the subjective and theoretical contradictions of Smith's a.n.a.lysis. The concise, strict, and cla.s.sically clear scheme of the Physiocrat theory is dissolved here into a disorderly jumble of concepts and relations which at first glance appears an absolute chaos. But we may already perceive new connections within the social process of reproduction, understood by Smith in a deeper, more modern and vital way than was within Quesnay's grasp, though, like Michelangelo's slave in the unhewn block of marble, they are still inchoate.

This is the only ill.u.s.tration Smith gives of this problem. But at the same time he attacks it from another angle--by an a.n.a.lysis of value.

This very same theory which represents an advance beyond the Physiocrats--the theory that it is an essential quality of all labour to create value; the strictly capitalist distinction between paid labour replacing wages, and unpaid labour creating surplus value; and, finally, the strict division of surplus value into its two main categories, of profit and rent--all this progress from the a.n.a.lysis of the Physiocrats leads Smith to the strange proposition that the price of every commodity consists of wages, plus profits, plus rent, or, in Marx's shorthand, of _v + s_. In consequence, the commodities annually produced by society as a whole can be resolved completely, as to value, into the two components: wages and surplus value. Here the category of capital has disappeared all of a sudden; society produces nothing but income, nothing but consumer goods, which it also consumes completely.

Reproduction without capital becomes a paradox, and the treatment of the problem as a whole has taken an immense backward step against that of the Physiocrats.

The followers of Adam Smith have tackled this twofold theory from precisely the wrong approach. Before Marx n.o.body concerned himself with the important beginnings of an exact exposition of the problem in Smith's second book, while most of his followers jealously preserved Smith's radically wrong a.n.a.lysis of prices, accepting it, like Ricardo, without question, or else, like Say, elaborating it into a trite doctrine. Where Smith raised fruitful doubts and stimulating contradictions, Say flaunted the opinionated presumption of a commonplace mind. Smith's observation that the capital of one person may be the revenue of another induced Say to proclaim every distinction between capital and income on the social scale to be absurd. The absurdity, however, that income should completely absorb the total value of annual production which is thus consumed completely, a.s.sumes in Say's treatment the character of an absolutely valid dogma. If society annually consumes its own total product completely, social reproduction without any means of production whatever must become an annual repet.i.tion of the Miracle of the Creation.

In this state the problem of reproduction remained up to the time of Karl Marx.

FOOTNOTES:

[60] 'Quesnay's _Tableau economique_ shows ... how the result of national production in a certain year, amounting to some definite value, is distributed by means of the circulation in such a way, that ...

reproduction can take place.... The innumerable individual acts of circulation are at once viewed in their characteristic social ma.s.s movement--the circulation between great social cla.s.ses distinguished by their economic function' (_Capital_, vol. ii, p. 414).

[61] Cf. _a.n.a.lyse du Tableau economique_, in _Journal de l'Agriculture, du Commerce et des Finances_, by Dupont (1766), pp. 305 ff. in Oncken's edition of _OEuvres de F. Quesnay_. Quesnay remarks explicitly that circulation as he describes it is based upon two conditions: unhampered trade, and a system of taxation applying only to rent: 'Yet these facts have indispensable conditions; that the freedom of commerce sustains the sale of products at a good price, ... and moreover, that the farmer need not pay any other direct or indirect charges but this income, part of which, say two sevenths, must form the revenue of the Sovereign' (op.

cit., p. 311).

[62] Adam Smith, _An Enquiry into the Nature and Causes of the Wealth of Nations_ (ed. MacCulloch, Edinburgh London, 1828), vol. i, pp. 86-8.

[63] Op. cit., vol. ii, pp. 17-18.

[64] Ibid., pp. 18-19.

[65] Ibid., p. 23.

[66] As to the concept of 'national capital' specific to Rodbertus, see below, Section II.

[67] J. B. Say, _A Treatise on Political Economy_ (transl. by C. R.

Prinsep, vol. ii, London, 1821); pp. 75-7.

[68] Attention must be drawn to the fact that Mirabeau in his _Explications_ on the _Tableau economique_ explicitly mentions the fixed capital of the unproductive cla.s.s: 'The primary advances of this cla.s.s, for the establishment of manufactures, for instruments, machines, mills, smithies (ironworks) and other factories ... (amount to) 2,000 million livres' (_Tableau economique avec ses Explications_, 1760, p. 82). In his confusing sketch of the _Tableau_ itself, Mirabeau, too, fails to take this fixed capital of the sterile cla.s.s into account.

[69] Smith accordingly arrives at this general formulation: 'The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced' (op. cit., vol. i, p. 83). Further, in Book II, chap. 8, on industrial labour in particular: 'The labour of a manufacturer adds generally to the value of the materials which he works upon, that of his own maintenance and of his master's profit. The labour of a menial servant, on the contrary, adds to the value of nothing.

Though the manufacturer has his wages advanced to him by his master, he in reality costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed' (op. cit., vol. ii, pp.

93-4).

[70] 'The labourers ... therefore, employed in agriculture, not only occasion, like the workmen in manufactures, the reproduction of a value equal to their own consumption, or to the capital which employs them, together with its owner's profit, but of a much greater value. Over and above the capital of the farmer and all its profits, they regularly occasion the reproduction of the rent of the landlord' (ibid., p. 149).

[71] Ibid., pp. 97-8. Yet already in the following sentence Smith converts capital completely into wages, that is variable capital: 'That part of the annual produce of the land and labour of any country which replaces a capital, never is immediately employed to maintain any but productive hands. It pays the wages of productive labour only. That which is immediately destined for const.i.tuting a revenue, either as profit or as rent, may maintain indifferently either productive or unproductive hands' (ibid., p. 98).

[72] Ibid., p. 19.

[73] Smith, op. cit., vol. ii, pp. 19-20.

[74] Ibid., vol. i, pp. 21-2.

[75] Ibid., p. 22.

[76] Ibid.

_CHAPTER III_

A CRITICISM OF SMITH'S a.n.a.lYSIS

Let us recapitulate the conclusions to which Smith's a.n.a.lysis has brought us:

(1) There is a fixed capital of society, no part of which enters into its net revenue. This fixed capital consists in 'the materials necessary for supporting their useful machines and instruments of trade' and 'the produce of labour necessary for fashioning those materials into the proper form'.[77] By singling out the production of such fixed capital as of a special kind, and explicitly contrasting it with the production of consumer goods, Smith in effect transformed fixed capital into what Marx calls 'constant capital'--that part of capital which consists of all material means of production, as opposed to labour power.

(2) There is a circulating capital of society. After eliminating the part of fixed, or constant, capital, there remains only the category of consumer goods; these are not capital for society but net revenue, a fund of consumption.

(3) Capital and net revenue of an individual do not strictly correspond with capital and net revenue of society. What is nothing but fixed, or constant capital for society as a whole cannot be capital for the individual; it must be revenue, too, a fund of consumption, comprising as it does those parts of fixed capital which represent the workers'

wages and the capitalists' profits. On the other hand, the circulating capital of the individuals cannot be capital for society but must be revenue, especially in so far as it takes the form of provisions.

(4) As regards the value of the total annual social product, no trace of capital remains. It can be resolved completely into the three kinds of income: wages, profits of capital, and rents.

If we tried from this haphazard collection of odd ideas to build up a picture of the annual reproduction of total social capital, and of its mechanism, we should soon despair of our task. Indeed, all these observations leave us infinitely remote from the solution of the problem how social capital is annually renewed, how everybody's consumption is ensured by his income, while the individuals can nevertheless adhere to their own points of view on capital and income. Yet if we wish to appreciate fully Marx's contribution to the elucidation of this problem, we must be fully aware of all this confusion of ideas, the ma.s.s of conflicting points of view.

Let us begin with Adam Smith's last thesis which alone would suffice to wreck the treatment of the problem of reproduction in cla.s.sical economics.

Smith's basic principle is that the total produce of society, when we consider its value, resolves itself completely into wages, profits and rents: this conception is deeply rooted in his scientific theory that value is nothing but the product of labour. All labour performed, however, is wage labour. This identification of human labour with capitalist wage labour is indeed the cla.s.sical element in Smith's doctrine. The value of the aggregate product of society comprises both the recompense for wages advanced and a surplus from unpaid labour appearing as profit for the capitalist and rent for the landowner. What holds good for the individual commodity must hold good equally for the aggregate of commodities. The whole ma.s.s of commodities produced by society--taken as a quant.i.ty of value--is nothing but a product of labour, of paid as well as unpaid labour, and thus it is also to be completely resolved into wages, profits, and rents.

It is of course true that raw materials, instruments, and the like, must be taken into consideration in connection with all labour. Yet is it not true also that these raw materials and instruments in their turn are equally products of labour which again may have been paid or unpaid? We may go back as far as we choose, we may twist and turn the problem as much as we like, yet we shall find no element in the value of any commodity--and therefore none in the price--which cannot be resolved purely in terms of human labour. We can distinguish, however, two parts in all labour: one part repays the wages and the other accrues to the capitalist and landlord. There seems nothing left but wages and profits--and yet, there is capital, individual and social capital. How can we overcome this blatant contradiction? The fact that Marx himself stubbornly pursued this matter for a long time without getting anywhere at first as witness his _Theories of the Surplus Value_,[78] proves that this theoretical problem is indeed extremely hard to solve. Yet the solution he eventually hit on was strikingly successful, and it is based upon his theory of value. Adam Smith was perfectly right: nothing but labour const.i.tutes the value of the individual commodity and of the aggregate of commodities. He was equally right in saying that from a capitalist point of view all labour is either paid labour which restores the wages, or unpaid labour which, as surplus value, accrues to the various cla.s.ses owning the means of production. What he forgot, however, or rather overlooked, is the fact that, apart from being able to create new value, labour can also transfer to the new commodities the old values incorporated in the means of production employed. A baker's working day of ten hours is, from the capitalist point of view, divided into paid and unpaid hours, into _v + s_. But the commodity produced in these ten hours will represent a greater value than that of ten hours'

labour, for it will also contain the value of the flour, of the oven which is used, of the premises, of the fuel and so on, in short the value of all the means of production necessary for baking. Under one condition alone could the value of any one commodity be strictly equal to _v + s_; if a man were to work in mid-air, without raw materials, without tools or workshop. But since all work on materials (material labour) presupposes means of production of some sort which themselves result from preceding labour, the value of this past labour is of necessity transferred to the new product.

The process in question does not only take place in capitalist production; it is the general foundation of human labour, quite independent of the historical form of society. The handling of man-made tools is a fundamental characteristic of human civilisation. The concept of past labour which precedes all new labour and prepares its basis, expresses the nexus between man and nature evolved in the history of civilisation. This is the eternal chain of closely interwoven labouring efforts of human society, the beginnings of which are lost in the grey dawn of the socialisation of mankind, and the termination of which would imply the end of the whole of civilised mankind. Therefore we have to picture all human labour as performed with the help of tools which themselves are already products of antecedent labour. Every new product thus contains not only the new labour whereby it is given its final form, but also past labour which had supplied the materials for it, the instruments of labour and so forth. In the production of value, that is commodity production into which capitalist production also enters, this phenomenon is not suspended, it only receives a particular expression.

Here the labour which produces commodities a.s.sumes a twofold characteristic: it is on the one hand useful concrete labour of some kind or other, creating the useful object, the value-in-use. On the other hand, it is abstract, general, socially necessary labour and as such creates value. In its first aspect it does what labour has always done: it transfers to the new product past labour, incorporated in the means of production employed, with this distinction only, that this past labour, too, now appears as value, as old value. In its second aspect, labour creates new value which, in capitalist terms, can be reduced to paid and unpaid labour, to _v + s_. Thus the value of every commodity must contain old value which has been transferred by labour _qua_ useful concrete labour from the means of production to the commodity, as well as the new value, created by the same labour _qua_ socially necessary labour merely as this labour is expended hour by hour.

This distinction was beyond Smith: he did not differentiate the twofold character of value-creating labour. Marx once claimed to have discovered the ultimate source of Smith's strange dogma--that the aggregate of produced values can be completely resolved into _v + s_--in his fundamentally erroneous theory of value.[79] Failure to differentiate between the two aspects of commodity-producing labour as concrete and useful labour on the one hand, and abstract and socially necessary labour on the other, indeed forms one of the most important characteristics of the theory of value as conceived not only by Smith but by all members of the cla.s.sical school.

Disregarding all social consequences, cla.s.sical economics recognised that human labour alone is the factor which creates value, and it worked out this theory to that degree of clarity which we meet in Ricardo's formulation. There is a fundamental distinction, however, between Marx's theory of value and Ricardo's, a distinction which has been misunderstood not only by bourgeois economists but also in most cases by the popularisers of Marx's doctrine: Ricardo, conceiving as he did, of bourgeois economy in terms of natural law, believed also that the creation of value, too, is a natural property of human labour, of the specific and concrete labour of the individual human being.

This view is even more blatantly revealed in the writings of Adam Smith who for instance declares what he calls the 'propensity to exchange' to be a quality peculiar to human nature, having looked for it in vain in animals, particularly in dogs. And although he doubted the existence of the propensity to exchange in animals, Smith attributed to animal as well as human labour the faculty of creating value, especially when he occasionally relapses into the Physiocrat doctrine:

'No equal capital puts into motion a greater quant.i.ty of productive labour than that of the farmer. Not only his labouring servants, but his labouring cattle, are productive labourers....'[80]

'The labourers and labouring cattle, therefore, employed in agriculture, not only occasion, like the workmen in manufactures, the reproduction of a value equal to their own consumption, or to the capital which employs them, together with its owner's profits, but of a much greater value.

Over and above the capital of the farmer and all its profits, they regularly occasion the reproduction of the rent of the landlord.'[81]