Karl Marx's Capital is a lengthy work that has been held up by some as the most important text ever written, and derided as absolute drivel by others, with every view point in between represented by smaller groups. It also has a reputation for being very difficult to comprehend. It's true that academic Marxists have turned "Capital Explained" and "Capital for Dummies" into a lucrative cottage industry. Some of the guides can be very expensive, I guess Capital was an excellent title choice.
This isn't a new phenomenon, people were explaining what Karl Marx meant while Karl Marx was still alive. There were several officially approved Summaries and commentaries in circulation, Karl Marx personally believed that Carlo Cafiero's 1879 Summary was the best out there. Cafiero was an Italian Anarchist, and his version didn't get translated into English until 2020.
While reading through a book on British working class literature, it mentioned another early example of an attempt to spread the ideas of Capital throughout the public. This time in the English language, A.P. Hazell's Summary. I wasn't able to find out much information about the author I do not in fact know what the A.P. stood for, nor can I find the first publication. The copy I managed to track down was published in Canada in the early 1900s by the Socialist Party of Canada, I don't have an exact date for publication, but that party was founded in 1904 and disbanded in 1925 and the general remarks sections of the book make no reference to events that happened later than 1910, no commentary on the First World War for example or the Russian Revolution.
I could find many expensive second hand copies for sale, so will be reproducing my transcription here. My pdf copy was surprisingly legible despite the passage of time, though there were several passages that were faded, requiring some estimations as to the contents. The text is in two parts, the first is an explanation of what Hazell considers the key points of the first Volume of Capital, the second which starts with General Remarks is a borader argument in favour of what is know known as Marxist Social Democracy. Her strategy for transforming capitalist society into a socialist one has aged must worse than the text itself. The strategy she outlines was followed in pretty much all major economies to a greater or lesser degree, and far from increasing class consciousness amongst the masses they stagnated and remain stuck in a cycle of competing styles of capitalistic organisation. Still I find value here as both a time capsule and as a warning for the socialists of today.
Summary of Marx's Capital by A.P. Hazell
Marx was attracted as a young man to the working class movement which
was then fermenting in Germany and throughout the Continent of
Europe. In 1848, a now celebrated period in the history of the German
workers, the ruling classes were afraid of an actual general
revolution, and there was some ground for their alarm, for the young
men of broad minds and keen intellect, &among whom was Karl Marx,
had been drawn into the revolutionary vortex of the hour.
Marx father, who had
formally adopted the Christian religion for political reasons, had
great hopes of the future of his son as a government official. Marx,
however, pursued a course of his own. He became a press
controversialist and agitator, finally accepting the editorship of a
revolutionary organ. The police were commissioned to give him no
quarter, and he was, consequently, exiled, first from one country and
then from another, until he was forced to come to England, where he
resided till his death.
Political economy
and general philosophy had always been favourite subjects with Marx,
and he found his acquaintance with them of invaluable assistance to
him in his polemical discussions with the ordinary scribes of the
capitalist press. He resolved, at the earliest possible moment, to
attack the orthodox economists, and with this aim he published his
first criticism on political economy, which, strange to say, has only
recently been published in the English language in America.
In his English
retreat he further developed his first essay, which he ultimately
expanded into his celebrated work, entitled "Capital: An
Analysis of the Capitalist System of Production," the latter
part of which is not yet printed in English.
The object of this
pamphlet is to give a brief outline of the contents of Marx's work,
so that the reader may readily see how he deals with the economic
problem.
Marx's
Proposition.
Is that "Labor is the Source of All Wealth" The true value
of a social product he says, is the amount of actual labor It
contains, its quantity being measurable by time.
Why one man is poor and another one rich Marx proves to be due to
exploitation, which has its genesis in the subjection of man to man,
which in time became sanctioned by custom, evolving various social
grades of workers, such as we see under feudalism, ultimating in our
present complicated capitalist system of free exchange and
wage-labor. Men may seem to be free contractors, but they are, in
fact, so bound by their economic environment that they are forced to
toil as a servile race like chattel slaves and serfs did of old, of
whom, indeed, they are the real lineal descendants.
The capitalist system is an embodiment of many other economic systems
which have preceded it, and thus we often find social conditions
which at first sight appear to be in contradiction to the ordinary
laws governing capitalism. In the industrial systems preceding the
present, the chief aim of the producers was directed to creating
commodities that they might sell them for money to obtain commodities
of a different kind for the purpose of consumption. That simple
system of exchange has passed away. Producers do not now start
creating commodities to get money that they may get other commodities
o consume, but they commence with money to create commodities that
they may sell them for more money. This new set of conditions is
peculiar to the capitalist system. The aim of the capitalists being
to turn everything into gold, the production of pure and well-made
commodities becomes quite a secondary matter to them.
When “honest" capitalists like John Bright[1] easily convince themselves that adulterated goods and child labor are
necessary factors in production we cannot expect unscrupulous
capitalists to bother about the evil social conditions or the right
of the worker to live, so long as they secure their object — unpaid
labor converted into gold. Capitalists are impelled by the stress of
economic circumstances to bring everything into the vortex of
exchange. Thus things, from articles of virtu[sic] to churches, are
placed on the market, and priced so that a portion of the
surplus-value created in the workshop may come to them, and add to
their pile of wealth. They do not trouble whether this or that Is a
commodity pure and simple, so long as it secures them a profit on the
transaction. By means of the price form of value all sorts of things
and all kinds of services are brought within the commodity world.
What Marx has done for political economy is to analyse the capitalist
system, in which labor products are created and exchanged as
commodities. He has done so with great precision, showing how It is
that the worker is compelled to create wealth for which he gets no
equivalent whatever. Why the worker subjects himself to the
capitalists and goes working on in his misery, even going so far as
to repel those who wish to help him. Is a psychological problem which
Marx in his work does not feel compelled to answer; but the lines on
which he would answer this problem can be clearly perceived in his
materialist conception of history where he states that man's material
needs govern both his emotional and intellectual being.
Wealth.
The primary form of wealth Is that of use value — a thing which we
appropriate for use. Broadly speaking, anything that we use may be
termed wealth. We therefore, have to come to this conclusion, that
utility is the substance which converts material things Into wealth;
meaning by "substance" the principal element which
distinguishes It from other things. It is true that things such as
the air and the sea are useful, and from the point of view of strict
logic ought to be included in our definition. But air and the sea
always remain In the simplest form of wealth, and do not, like
minerals for Instance, (pass through phases of development until they
become regarded, not only as commodities, but as capital. Society,
which does not bother about fine distinctions, turns Its attention to
the objects of wealth which it dally handles, leaving exact
definition to the professional economist, who, in turn, follows
society in its indefiniteness.
Commodity.
In the course of time use-values are not only appropriated from
Nature, but are created by man. These latter, therefore, become labor
products, as well as being use-values. When man takes to a pastoral
life, and then to agricultural pursuits, we have an interchange of
superfluous products, which creates barter. The benefits accruing
from the exchange of these articles are recognized as being so great
that there comes a time when products are specially created for the
purpose of exchange. It is natural that if a community grows things
for Its own consumption and also for the purpose of exchange it
should invent a term to distinguish the latter. We might call them
either exchange or market products, but society has determined in the
name of its economists to call them commodities. It will help us if
we are careful in noting how the distinction arises between one form
of wealth and that of another, and the reason why. For Instance, why
does a labor product become a commodity? — To denote a given usage
to which a labor product is put, namely, that of being placed on the
market for the purpose of exchange Instead of being used for home
consumption In the ordinary way. Usage, then, by means of exchange,
converts a labor product into a commodity, and usage likewise
performs the same office for the commodity by changing It into money.
Money.
We come to the next development In the form of wealth— that of
money.
We see that a commodity is a labor product put to a certain use. Now,
money, in its turn, is also a commodity put to a given use, and to
denote this usage it is called money. Let us proceed carefully, for
if we miss understanding how money comes into existence, we cannot
claim to know much of economics. When communities exchanged their
labor products they had to barter. If they grew corn, they had to
calculate, when they bartered, in this way: So much corn is worth so
much salt, so many cattle, so many skins. But this form of
calculation is a tedious method. Custom soon found It easier to
reverse the process, making everything worth so much corn. Corn and
cattle and skins have each been money in their time. And why?
Because, being the most staple articles produced, they in the natural
order of things became used for the purpose of reckoning. Money,
then, is a commodity used for the purpose of reckoning the value of
other commodities as a medium of exchange.
When we say salt is worth so much butter, we accept butter as
representing value, and salt as the one we wish to measure. Marx is
rather careful in pointing out the relations of this transaction, and
he characterises one commodity as occupying the relative form of
value, and the other the equivalent form of value, which corresponds
to the position of two things we weigh In our instance the butter
would correspond to the weight and the salt to the article we wish to
weigh. The equivalent is the one we accept as representing value, and
our object is to find the relative value of the other. From this
equivalent form arises what we now term the money-form of the
commodity.
Usage determines whether one commodity or another shall be money. The
commodity selected for the purpose of reckoning naturally begets a
social importance, for anyone who has money can exchange it, as it is
accepted as a universal equivalent for every commodity brought to
market. To recount: We have, first of all, use-value, then
labor-product, then market-product or commodity, then money, and now
we come to the next form of wealth — capital. As we have seen, a
commodity put to a certain usage becomes money; now, money, in its
turn, also gets put to a certain usage, and gets a particular name —
that of Capital.
The money-commodity being recognized as the universal equivalent and
medium of exchange, and therefore possessing considerable social
advantages over any kind of commodity, everyone has need to command a
certain quantity of it, and is prepared on occasions to give
something to those who will loan it — thus we get usury, or
interest. Then, as society evolves and commerce becomes prevalent,
merchants find themselves compelled to start production or a business
with money. Their object is to make more money out of the
transaction, but they do not like the odium attached to those who
make money by loans, which Is called interest, so they call their
increase of money, profit. Money used for the purpose of begetting
profit is now called capital. Let us again review the progress made.
We have firstly, use-value, then labor-product, then commodity, then
money, then capital. Capital under these conditions possesses the
attributes of money of a commodity, of a labor product, and of a
use-value combined. Thus capital is wealth, money is wealth, a
commodity is wealth, a labor-product is a wealth, a use-value is
wealth.
Use-Value, Exchange-Value, and Value.
After defining wealth we come to a disquisition on the most difficult
subject of political economy, over which professors discuss without
ceasing. But we need not be troubled. Professors of economy want an
explanation which accords with their preconceived views, and one
which justifies social inequalities; whereas we only want an
explanation in accordance with facts. If we care-fully follow the
analysis of value, we shall find that it is so easy that we shall be
somewhat chagrined at ever imagining it difficult.
We have three values to examine. Two of them are of the concrete
order, one of the abstract. But do not be alarmed by the terms of
“concrete” and “abstract”. They are terms easily mastered. We
arrive at the abstract through the concrete. Take man as an
illustration. Our experience tells us of white, red and black men.
Our power of reflection informs us that if we abstract whiteness,
redness, or blackness, man is still left. Man is an abstract
conception; a black, a white, or a red man is a concrete conception.
A thing, it is plain, is in the concrete when it has attributes; in
the abstract when in imagination all attributes are abstracted and
only one substance left. Let us not forget this.
Use-value and exchange-value are concrete or particular forms of
value, and come first in point of experience, but our purpose will be
better served by examining value in the abstract. Now, what does
value express? A comparison. If I say what is the value of your watch
as compared with my chain, it is equal to saying what amount of a
given substance is there in your watch as compared with the same
substance in my chain? It by comparison of two quantities expressed
in a given substance are compelled to assent that value is a
quantitative relation. They are so in obedience to psychological law,
for the human mind is subject to physical law like all other physical
things. Marx to illustrate his point, takes the question of weight.
When we weigh things, we compare, and our comparison is one of
quantity in a given gravitating substance. How do we weigh articles?
By ascertaining their gravitative force, usually by a pair of scales.
The articles we compare must both have one substance, the property of
weight. There would be no comparison if we compared the sound of a
gramophone with the brass weight. It is clear then, when we analyse a
value relation our task is to find the substance by means of which we
compare? Our present task is to find the substance of exchange-value.
We have acknowledged that a commodity is our unit of capitalist
wealth and our comparison is, therefore, between two commodities
which takes place at the point of exchange because it is there the
equation is made. We produce commodities, and then distribute by
means of exchange. Our method of distribution thus compels us to find
the exchange-value. We can agree without argument that the
value-substance is in the commodities before we exchange and compare
them, just as the weight is in a cabbage, and in the iron or brass
weights before we put them into the scales. From this circumstance we
call exchange-value an objective relation because the object is there
in the commodities in front of us, and all that is required Is to
measure It. By common consent there are two substances only by which
the value of commodities can be expressed— utility and labor. Of
course, we can have as many values as we can find substances to make
a comparison. Thus we can have bread values, cloth values, land
values without number. But for general purposes we can include these
in one category, and call them use-values, or things of utility, as
they can all be ranged under this title, so for the purpose of
argument we can agree that our substance must be either utility or
labor. How do we test utility? At the point of exchange? No. We can
only test it by means of consumption. We realize the utility or
usevalue of a pair of boots by wearing them. Sugar is useful to me
because it is sweet, and I test it by tasting it or consuming it—
not by exchanging It. Utility is evidently of a subjective character,
varying with the taste of each individual. I like acid drops you
prefer cloves. The utility of the two depends on our tastes. It is
evident that utility has to be discarded as the substance of
exchange-value because it cannot become manifest at the point of
exchange. If utility was the test of value, a man ought to pay more
for a loaf when he was hungry than when satisfied, but the price of a
loaf remains the same whether a man is hungry or not. Exchanging a
thing does not tell us its utility that as we see, depends upon its
consumption, so we have to fall back upon the only alternative—
labor.
Can we measure labor at the point of exchange? Yes, by means of
labor-time. Ascertain the time taken to produce two commodities, and
we know their relative exchange-value. And this quality tallies with
market valuations. Reduce the labor in a commodity by means of some
labor-saving contrivance, and the price falls. Let conditions change,
and more labor be expended on it then the price rises.
Marx, in dealing with this question of value, made an important
discovery, which forms the greatest contribution to political economy
since the time of Aristotle— namely, that of reducing labor to the
abstract. The different kinds of labor are too numerous to count, but
we can view them in the abstract as one product- human energy. Thus
when we compare commodities, we compare them as products of human
energy, and not as samples of carpentry and shoe-making labor— a
fact which had escaped previous economists.
So far as creating value is concerned, then, one man creates as much
value as another, and on the basis of equal labor time equal value,
Socialists rest their argument of social equality.
Price
Form Value
Briefly put, an exchange of two commodities is an exchange between
labor; we are, however, confronted with this fact, that the market
does not say that a commodity is worth so much labor, but it is worth
so much money. This brings us to the price-form of value.
In dealing with wealth, we saw that a commodity had to be selected to
measure other commodities. And that every commodity, as a
consequence, had to assume the money-form of wealth. We do not under
capitalism measure things directly by labor time, the true standard,
but by their price. If we consider a moment we shall realise that
exchange value can have no direct time standard. For how is the
market to know the exact time that one manufacturer takes to produce
a commodity as compared with another. Besides, manufacturers are very
secretive as to their methods of production. The consequence is that
the market has to fall back upon the price-value-form of the
articles, such price being settled by higgling or competition. We are
so used to pricing things that we never consider what it means, and
we do not suppose one in a thousand could explain it if asked. Yet
it is very simple. We say boots are worth half-a-sovereign. How do we
mentally arrive at that and conform to all the conditions attached to
value? Why we turn our boots, by imagination, into a piece of gold,
then we compare it with a sovereign. As soon as our boots assume the
gold form, the rest is easy. We can compare the two pieces of gold by
their weight. And that is what really happens. We fulfil by this
method all the conditions attached to value. By reducing all
commodities to gold, we reduce them to gold-labor and though we may
not precisely know the time taken to produce half a sovereign, we
know collectively considered, that the time taken to produce one
half- sovereign is equal to that of any other. The price-form
measures two quantities by one substance, by means of their weight,
and this is how the capitalist system arrives at the value of
commodities. Weight becomes thus the standard of price, and price
becomes the exponent of exchange-value. Now price being an ideal or
imaginary form of value, is also subject to the vagaries of the
imagination, and thus we price the value of honesty, and all sorts of
absurd things which are really not commodities. Such things often
disturb the student of economy. By studying the price-form of value,
however, we get an explanation of many seeming anomalies which arise
out of the complex social relations going on around us. Take, for
instance, the sale of sites. Why does a piece of land fetch such a
high price in the City compared with other situations? Because the
City represents a place where business can be done on a large scale.
There a greater quantity of profit can be realised, and a buyer is
glad to pay $5,000 that he may enjoy $10,000 which the site enables
him to secure. Thus there arise discrepancies between price and
value, similarly as between price of production and the cost of
production.
But we are digressing. Before dealing with cost of production, we
have to deal with surplus-value, and to do that we must analyse
constant and variable capital, labor and labor-power, then we can
return to price of production and cost of production.
Capital.
For the better analysis of capital, Marx divides capital into two
divisions— constant and variable. These respectively represent the
means of production and wages. The reason Marx uses the term
"constant," is because anything in the nature of plant
cannot alter its value when transformed or changed into another
product. For instance, a skin of an animal is worth a sovereign. When
converted into a rug, the skin, by itself, still represents a
sovereign, neither more nor less. The same argument applies to a
building, a machine, or any other instrument of production. The old
economists used to divide capital into many divisions. They would put
a building in one category, because it was a long time circulating,
and they put seeds and such-like things in another category because
they circulated quicker. These latter divisions are really useless.
What concerns us is whether that portion merged in the new product
alters its value. Marx points out that instruments of production do
not change their value when transformed into a commodity. That is if
a capitalist buys a machine worth a thousand pounds, it can only
impart the value of a thousand pounds, and whether this value is
imparted in one year or ten makes no difference from its value point
of view; and he, therefore, applies the term constant to this form of
capital— constant, because i has no power to expand its value.
With regard to wage-labour, or labour-power, Marx shows that its
value changes when it is transformed into a commodity. Thus a man who
sells his labour-power for a given sum imparts three or four times
its value into a commodity and for this reason he calls that portion
of capital which is spent in wages variable capital, as it increases
its value when embodied in a product.
Labour-Power
and Labour[2].
We have already touched upon labour. Upon analysing it, we find we
require three terms to express its variable phases, (l) One to
express labour as stored up in a man's body; (2) one to express its
activity; (3) one to express its embodiment in a commodity. Generally
only one is used which has led to some confusion in ideas. Marx
observed this, and he introduced the word labourpower, meaning the
power to labour. It is this power to labour which the workers sell to
the capitalist ill exchange for a wage. Firstly labour-power is the
crystallised energy of the worker; secondly, labouring or working
expresses the expenditure of this crystallised energy; and thirdly,
labour expresses the embodiment of this energy in the product. The
only evidence we have of expended labour is, of course, the objective
form of the commodity. We know that a chain has labour embodied in it
because of its form. Now labour, like value, must, also be looked at
from the quantitive and the qualitative standpoint. When we regard
labour as human energy only, we ignore its qualitative side.
Objection is often taken to Marx reducing all lands of labour to one
given quality, and only counting them as simple energy. The objectors
are not very logical, however, for they never object to the
capitalist doing the same thing under the price form. The capitalist,
when he sells a commodity, never thinks about the various kinds of
labour in it. He calculates them all in gold, which is only stating
that every commodity is equal to gold, and therefore to gold-labour,
to affirm which is equal to saying that there is only one quality of
labour- which, in the eyes of orthodox economists, is Marx’s
greatest sin.
Surplus-Value.
We have now to deal with surplus-value. Marx means by this term the
difference between the cost of labour-power and the value it creates.
The worker toils 48 hours. His wages represent twelve hours, the 36
hours represent surplus-value. Or it can be put in another way. A
number of men are agriculturists. Their labour-power costs £100. The
products of their labour are put on the market and realise £400— a
difference of £300, which is the measure of their exploitation. The
same argument applies to other industries. If a man produces the
equivalent of his wages in the first three hours of his day's work,
it is plain that if he work twelve hours he is exploited of nine
hours' labour. The latter portion, therefore, represents unpaid
labour, or surplus-value. By this means the capitalist not only gets
an equivalent for the wages he disburses as variable capital, but an
addition, which enables him to add to his plant and to live in
luxury. Millionaires accumulate their hoards because they tap or get
tribute from a great number of workers, or draw from a surplus fund
which has already been accumulated by other capitalists, as on the
Exchange Market. Surplus-value, be it noted, is a subsidiary form of
value. The capitalist enters into production, and he purchases
machinery, plant, and labour-power, which represent so much value.
When he places his commodities on the market he realises more value
than their cost of production. That part of value which the
capitalist gets for nothing, and on which his class and the
aristocratic classes fatten is surplus-value, or unpaid labour. Value
is a general term, used as an equivalent to express the whole of the
time worked on a commodity; surplus-value is that portion of the time
for which no equivalent is given.
By analysing the returns of the income-tax, various economists show
that the value received by the working-class and the superintendents
of labour amount to a third or less of the wealth produced. The
income-tax returns, however, are not a very reliable test of the
degree of exploitation, though, of course, they afford us valuable
and incontestable evidence that the worker does not receive more than
a third of what he produces. One to four, or one to five, in my
opinion, expresses more accurately the rate of exploitation.
“Price
of Production”- “Cost of Production.”
In our examination of the price-form of value, it was shown clearly
that the price of a thing did not necessarily correspond to the exact
amount of labour embodied in it, although in the mass prices would do
so. Some people imagine that there is no limit to prices, forgetting
that price at bottom is a labour estimate of one commodity with
another. A little thought will show that the sum of prices cannot
exceed the hours of labour. For instance, if the gold commodity on
which prices are based represent 100 million pounds because it takes
100 million days to produce it, and the rest of commodities
represented one thousand millions on the same basis, then it would be
useless for individuals to estimate their commodities beyond the
1,100 millions minus 1, as there would be no products to represent
their price value.
The high prices of pictures and objects of virtu, etc., are often a
source of perplexity to the student. We can only observe here that
the accumulation of surplus value in the hands of a small class
enables individuals to indulge in peculiar ways to ostentatiously
display their wealth in order to gain the homage of the people or
excite the envy of their fellows. Thus one man will give fabulous
sums for special pictures, and another will do the same for old
china. Such prices may increase as the mass of surplus value
increases in the hands of these individuals.
“Price of production” corresponds to the market price, and the
market price corresponds to the money-value of the article. “Cost
of production” represents the amount of actual labor embodied in an
article. “Price of production” represents its money value in the
market in accordance with the historic development of capitalist
prices. To recapitulate: society creates so many commodities,
expending on their production so many hours of labor, the latter
being their real cost of production. But when they are placed upon
the markets, the number of hours does not tally with individual
commodities. Some commodities with ten hours of labor may actually
sell at the same price as those containing two hours of labor.
“Cost of production” and “price of production” are often used
as synonymous terms, which leads to confusion. Marx in some of his
writings, as for instance in “Wage-Labor and Capital,” leaves the
reader in doubt sometimes as to the interpretation he wishes to put
upon the phrase, “cost of production.” For the above reasons, I
have accentuated the difference between the two phrases.
The “composition” of capital expresses the relation between the
variable and constant capital, both the later altering as the
conditions of production vary. For instance, the adoption of a new
invention in machinery in a given industry may cause less wages to be
paid, and more material to be used. This at once alters the
composition of the capital in that industry. The most advanced
industries are those which have most successfully reduced the amount
of variable capital, representing wages, and increased that of
constant capital, representing plant and materials. By studying the
variations in the composition of capital, we see how the labor-time
may change in one commodity as compared with another, though prices
remain the same. To illustrate this, let us for argument’s sake
assume that two capitalists deal with each other and exchange equally
on the basis of 100 hours in their particular commodities. One of the
capitalists reduces the labor-time taken to produce his commodity to
75 hours, and keeps this advantage for years, with no variation in
his price. The other capitalist only gets the product of 75 for his
100. as time progresses, however, the other capitalist suddenly
reduces the hours taken to produce his commodities to one-half, thus
turning the tables on his fellow capitalist. It may happen that both
of them may be unconscious of the economic conditions which have
determined the price of their goods with each other. Competition, of
course, comes in here as a regulating factor sooner or later.
Social conditions, it is evident, may enable one given capital to
draw more products from the market in exchange than it is entitled
to, for a long period of time, but the gain of one involves loss to
another. Readers will see that underlying these two forms of capital,
constant and variable, endless changes are possible, both in price
and labor time, labor remaining the governing factor all the while.
General
Rate of Profit.
Marx deals with these variations represented in price of production
under the heading of "General Rate of Profit." For example:
a capitalist invests his capital with a view of obtaining on it the
highest rate of profit possible. Having done so, he quickly finds
that competition compels him to alter the proportion of capital spent
in plant, and that disbursed in wages. He is compelled to introduce
machinery, which, of course, adds proportionately to his raw material
and general plant. His wages bill may by this means become less,
though his absolute amount of capital remains the same, or more, as
necessity compels. The consequence is that the proportion of money
spent in plant and in wages in the production of various commodities
varies greatly in the course of capitalist development. All
industries are subject to changes in the composition of their
capital. First it is one and then another which takes the lead. These
variations in the composition of capital of different commodities
have a tendency to equalise. Marx takes up five of the most important
industries, and demonstrates that their variation results in an
average which, in a remarkable manner, shows how their price of
production, when massed, conforms to their cost of production.
That the price of commodities gravitates to their labour-value is
shown by the fact that, given their composition of capital, their
price falls with the diminution of labor-time taken to produce them,
and the converse happens when the time taken to produce them
increases. Labor becomes therefore, the regulating factor of “Price
of production”.
Marx then proceeds to elaborate this argument.
He goes on to say
that if we look around we shall find evidence of certain commodities
in a sufficiently primary stage of production to show that labor-time
is the basis of their exchange. For instance, the products of a
peasant proprietary more approximately exchange according to their
real value than the fully-developed capitalist ...[3] of commodities. Again, when hand labor was predominant, products
naturally conformed to their labor-time. Special work, however, would
evolve special tools, instruments, and machinery, and with this
specialisation of tools, capital spent in plant and material would
necessarily increase as compared with the capital spent in wages. The
purchases of improved instruments and machinery would, from the point
of view of capital expended, require the same profit on the money
disbursed in machinery as if it were spent on labor, and thus a
difference is set up which varies with the development of each
particular industry.
The application of scientific methods and invention increases the
productivity of labor, but very little indeed of this productiveness
goes to the owner of labor-power. A certain number of workers, it is
true, receive a higher rate of pay as superintendents, but that is
accounted for by the fact that they relieve the capitalist of the
onus of superintendence. Every invention, every improvement in
production, goes to the capitalist, and thus the worker becomes
relatively exploited more and more as capitalism progresses.
The proletarian (or man with not capital) sells his labor at its cost
of production, which represents his standard of comfort. To account
for the differences in the price of labor-power we have, as before
intimated, to go back into history. The difference is founded on
physical force, and commenced with the time when man forced his
fellow-woman and fellow-man into slavery by the power of the sword.
Exploitation commenced with slavery, was continued with serfdom, and
is now being perpetuated by capitalism in the form of wage-slavery.
Custom and convention caused men to acquiesce in their slavery and
serfdom, and the same habit of though possesses the wage slave, who
now looks upon his wage-slavery as a natural method of reward.
Unhappily the principle of competition, which drives the wheel of
capitalism, is compared by the worker to the natural law of the
survival of the fittest in Nature, and he has come to regard his
servile position as being in accordance with natural causes, and not
due to artificial law created by man.
The law of the rate of profit, while it explains the process of the
differences in the prices of production, does not, of course, account
for all the various methods of distribution of wealth. The arbitrary
distribution of wealth commenced, as we see, with the subjection of
man. The men of the sword made the laws in conformity with their
interests, and to this day their descendants hold command of the Law
Courts, the Army and Navy, and of the Government, which they use as a
means of rewarding their own class. These men have ever exacted a
tribute in the form of labour or rent, and with the development of
the capitalist system they manage to extort their share of
surplus-value. The new money Prince, Capital, has secured equal
rights with the feudal lord, but the capitalist has not yet displaced
him. He prefers to share with him the power to control the destinies
of the social bees, to whom they allow a little that they may be
robbed of much.
Owing to the “splendid” organisation of our “captains of
industry”, each one producing blindly against the other, there is
always going on a see-saw between supply and demand. Some economists
recognize that though at times there may be a considerable
disturbance caused in production by lack of supply or
over-production, yet that over a given time supply and demand equal
to each other. John Stuart Mill went so far as to say that economists
might always assume, in considering value, that supply and demand
equated each other. This view has not altogether had the unqualified
assent of the ordinary capitalist economist. Unlike John Stuart Mill,
he has an axe to grind. He finds that the difference in supply and
demand acts as a very convenient cover under which he may explain
variations in prices and justify social inequalities.
Supposing, however, that value is governed by supply and demand, then
it follows that value is dependent upon the difference between the
two, and when they are equal, commodities have no value because there
is no difference to express it. Thus Marx very pertinently asks: When
supply and demand are equal, what governs their value? This question
has never been answered. The capitalists, who kindly undertake for
our advantage the industrial organisation of the community, would, if
they knew their business, keep supply and demand at an equation, for
that is their business. Poor Ruskin, who was not a business man, once
said it was their “duty”. If capitalists should by any chance
become more efficient in their business, this question put by Marx
will become still more urgent, and out orthodox economists ought not
to delay furnishing an answer to the question. Surely half a century
ought to be long enough for learned professors of economy to answer
such a simple query.
Economic
Rent.
The classical definition of economic rent given by Ricardo is now
generally accepted by orthodox economists. He describes it as being
“that portion of the product of the earth which is paid to the
landlord for the use of the original and indestructible powers of the
soil”.
Marx, in dealing with the subject, points out that economic rent
so-called is the outcome of special social relations peculiar to the
capitalist system. What Ricardo failed to see was that, under
capitalism, land as a factor of production, becomes capitalised
according to its labor-saving attributes. Land which requires less
labor to produce a given product than that of an inferior quality, is
capitalised as being so much more valuable than the latter. Thus one
acre may be valued at as much as four of another quality.
Ricardo, in common with other classical economists, overlooked the
fact that the capitalist is not so much concerned about the fertility
of a given piece of land as he is to secure a given rate of profit on
his capital. The latter is prepared to pay a certain price for on
acre, or, failing that, the same for four acres, as the case may be,
so long as he gets his usual rate of interest on his invested
capital. Fertility of the soil is thus of secondary importance to
that of profit to the capitalist. It often happens that an acre of
land which will produce 24 bushels of wheat upwards may be less
profitable to the capitalist than one which produces only 12 bushels,
the former, in consequence, being compelled to fall out of
cultivation. In fact, experience tells us that the less fertile soil
of America competes out of the market the more fertile soil of
England.
Economic rent is dependent on the amount of profit secured by the
exploitation of labor. This view of the matter explains away the
apparent anomaly of inferior soils competing out of the market
superior soils. For example: A capitalist farmer employs a given
quantity of capital on a fertile soil near a market, and realises a
profit. The landlord raises his rent accordingly. The farmer, as
greedy as the landlord, soon tires of paying a tribute to his
landlord in the form of economic rent, so-called. He shifts his
capital to America, and employs it on less fertile soil than before,
actually obtaining a higher profit on his capital. The reason is that
a twenty-acre field in America under present social conditions turns
out to be a more profit-making factor, requiring less labor and
capital, than a ten-acre field in England, although the latter may be
twice as fertile. Rent, it is plain, is not based on the difference
between the fertility of the soil, but upon the fact whether the soil
is a better instrument for the exploitation of labor with a given
amount of capital.
The Ricardian theory pre-supposes land which pays no rent, which is
an absurdity. It also ignores the fact that the fertility of land is
not inexhaustible, and that its fertility has to be renewed by the
application of labor.
The Marxian theory that rent is unpaid labor covers all the phenomena
connected with land. The farmer pays rent for land, so that he may
employ labor and exploit it; but he cannot do this without entering
into social relations with the landlord. The particular social
relations with the landlord. The particular social relation that
binds the farmer to the landlord is the landlord’s proprietary
right in the soil which enables him to exact a toll of the
surplus-value the farmer gets from his laborers.
The same social relation which demonstrates that economic rent is a
tax on labor also applies to the rent of sites. A high rent is
exacted from tenants near a market town or city because the landlord
sees his opportunity of participating in the profits secured by the
occupier. Rent, under such circumstances, will rise with the profits
secured by the tenant.
Those who wish to study the question further should read “Economics
of Socialism”, by H.M. Hyndman, and Marx’s “Poverty of
Philosophy”.
General
Remarks.
Marx at some length shows how the principle of exchange, when arrived
at a given stage of development, overcomes all obstacles to its
progress. The old system of feudalism, with its cumbersome methods of
production, gives way to the labor-saving appliance and improved
method of distribution which capital enables to be introduced. Serfs
as free laborers are more profitable as artisans and factory hands,
and feudalism passes away to return no more. But this increase of
production does little to improve the workers’ position. The wealth
they produce goes in the hands of the capitalist and those of the
aristocratic class, the latter still retaining its grip on a great
portion of wealth produced under the superintendence of the
capitalist. The accumulation of wealth is aided by the law of
competition both capitalist and worker having to bow before it. The
capitalist has to compete to secure the market, which he does by
lowering the cost of his commodity, and the worker has to compete
with his fellows for the right to labor. As the market expands, it
becomes possible for large capitalists to cheapen production by
increasing their machinery and buying in larger quantities, and by
specialisation of labor, to compete the smaller holders of capital
out of the market. Hence we get the company form, and then a
combination of companies into combines and trusts, the greatest
examples of which we see in America, in the Rockefeller’s oil and
steel trusts. Competition leads to monopoly, and is a refined form of
conflict similar to that which takes place in brute evolution. It is
only a matter of time for all industries to develop into the trust
form. These, in their turn, will compete, as science can often
destroy one industry and give rise to another, and thus assist
continuos competition and friction. We have here sketched the natural
law of direct evolution of the trust, but, as M. Lefage, the French
naturalist, warned Darwin, we must not dogmatise on direct descent in
physical evolution, so must we be careful not to dogmatise too much
on the direct development of all industries into the trust form, for
it is possible that many of the industries may never reach this stage
of the ripe trust, they coming under the influence of, and developing
under other laws – the laws of collectivism and co-operation set up
by society itself in opposition to capitalist individualism. The
triumph of the company, the combine and trust is also a victory for
the law of collectivism, for the amalgamation brings into one
combination competing capitals, and then separate establishments,
thereby economising labor and capital. This amalgamation of capital
and consequent growth of collectivism become, equally with the
latter, a triumph for co-operation.
As capital increases, it continues to bring under one roof a greater
number of workers who, instead of competing for the market under
various capitalists, now co-operate under one capital, and with
further accumulation of capital, there correspondingly grow
collectivism and co-operation which are the antitheses of competition
and of capitalism.
Capitalism, and its dominance over the forces of industry, appear so
great that it overshadows all other forces which are growing up
silently side by side with it. But national and municipal bodies grow
up, whose powers and multiplicity of functions increase with time,
until we find them coming into conflict with possessors of capital,
who openly declare that public bodies are taking up their functions.
So great and so powerful have these municipal and national bodies
become, that the people are beginning to recognize in them the
working forces of collectivism and co-operation which they fail to
appreciate under the dominion of the larger capitals. Thus many
industries are being taken over by municipal bodies which will
prevent them reaching the higher competition stage of the trust form.
Under this heading we may instance the supply of water, lighting,
housing, and various forms of transit, and we anticipate before long
that industries connected with our food supply will be taken up with
a view to palliate the miseries which capitalism entails.
Capitalist accumulation will go on increasing, but so will municipal
and national production, and with it the class-consciousness of the
worker, who will politically support social collectivism for the
benefit of his class. There can be but one issue- victory for the
people.
And what does this victory mean? – Universal co-operation, securing
the well-being of every individual. At the present hour it is
calculated that the wealth of the United Kingdom exceeds 2,000
millions per year. This divided among 40 millions gives £250 per
family. It is said that the abolition of waste labor and the
conscription of the idle classes would quadruple the production.
£1,000 per year per family is a very good standard of comfort under
a co-operative system of living.
Universal co-operation with an assured subsistence for all means the
abolition of classes and the establishment of social equality.
Much of the opposition to Marx’s teachings arises from his
triumphant claim that the substance of value is labor denuded of the
Fabians’ rent of ability. Men and women like to dominate and keep
others in subjection to them. An assured subsistence to all means
that no one will place himself in a servile position to another, and
this accounts for the opposition of those whose brute animalism
prompts them to oppose a system which offers no prospective pleasure
for the exercise of those propensities acquired in an age of
animalism.
A great deal is made by Marx’s opponents of the claim that the
differences in individual talent ought to correspond with their share
of material products. The answer to this is that each social economic
unit equals each other, and that all healthful men and women possess
faculties, when trained, which will enable them to produce more than
sufficient for their wants. Thus it would be idle to give a man more
than he needs, which would be the case if differences in the award of
wealth were made according to supposed talent.
With the abolition of social inequality will also come the abolition
of those physical and intellectual differences which are so marked
to-day. As soon as society feeds, clothes, and carefully educates its
members, it will at once tend to restore a physical and mental
equilibrium between its members. The individuality of its members
will be maintained by the special cultivation of a given number of
their faculties in the following of certain pursuits in arts,
science, or philosophy, as the cause may be. Thus we shall,
comparatively speaking, secure in the future a race of healthy
giants, whose individuality will consist in the specialised culture
of their intellect, which, in its turn, will form the basis of an
intellectual individualism upon which the future progress of society
may securely rest.
________________________________
in giving our concluding remarks, we cannot impress upon the reader
too much that to understand Marx thoroughly, great attention must be
given to the price-form of value, for we believe it was through his
patient study of the money-form of commodities that Marx conquered
all the difficulties attending his analysis of the capitalist system.
The conclusion forces itself upon one when reading his first work,
“Economique Critique”.
His philosophical studies convinced him that an exchange of two
commodities implied an equation. Exchange-value to Marx, like all
other comparisons, resolved itself into a quantitative relation in
the terms of a given substance. These facts were already apprehended,
though imperfectly, by the classical economists. Experience forced
them to consider labor as the substance of value; but to exalt labor
was to depreciate capital, and condemn profit, so they fell back on
the shibboleths of “supply and demand”, “economic rent”, “the
reward of abstinence”, “rent of ability”, etc., to justify the
exploitation of labor.
Marx, of course, had still to explain how one commodity with many
hours of labor came to exchange with a commodity containing less.
To say that labor, governed by time, is the substance of
exchange-value, is to assert that one hour’s labor is equal to that
of any other, and to affirm that the amount of labor in a shilling’s
worth of ordinary matches is the same as that contained in a shilling
toy at a West End bazaar, when it is patent to all that the matches
represent at least ten times as much labor as the other.
Furthermore, labor-power being a commodity, that also should,
approximately at least, attain to an even price, whereas it varies as
1 to 100.
These facts seemed to destroy the basis of Marx’s labor equation,
which implied a determination of equal quantities.
The price-form of value solved this difficulty for Marx, for it
showed him that it turned all commodities into imaginary pieces of
gold, and then measured them by means of their weight. An ounce of
gold is equal to that contained in any other. The price-form of
commodities, notwithstanding any variation in their cost of
production measured by labor, conforms to all the conditions laid
down by the laws governing comparisons, and enabled Marx to sustain
his proposition that labor was the substance of exchange-value.
The price-form of value solves many difficulties. Marx, by studying
the effect that the amount of interest, or, as he calls it, “the
rate of profit”, had upon the price of commodities, coupled with
the variations between “constant” and “variable” capital in
the development of an industry, discovered the key to these seeming
anomalies. Capitalists, says Marx, enter into production to get
profit or interest on money. It is a matter of indifference to them
whether they spend their money on machinery or on labor so long as
they get a return in the form of interest. To beat a competitor they
spend more money in machinery and plant, and less in labor. They
produce quicker, and with less labor, a given commodity. Its price,
however, may still remain for some time approximately the same.
However this may be, there is set up a great difference between the
amount of labor in that as compared with other commodities.
Competition equates many of these differences, and in the process of
time these commodities become fixed in price, and maintain a given
proportion or disproportion of labor, as the case may be. These
disparities between the labor-time contained in commodities are also
reflected in the price of labor-power, which is explained best by
considering the origin of the differences in the price of labor. To
reduce the differences of labor-time which lay hidden in the
price-form of commodities, we must go back to the first form of
exploitation -that of slavery- before the price-form of value
existed.
Slaves are equal producers with their masters in the first instance.
The only difference between slave and owner is that the slave has to
be content with a portion of what he produces, the other going to
keep his master. In time, when slaves become numerous enough, their
surplus product becomes divided between the family and individuals
who assist in maintaining the slaves in subjection. The number of
this exploiting class depends upon the number of slaves. The number
of idlers who live upon slaves must necessarily be small as compared
with the producers. When slaves become serfs, the same principle of
exploitation continues. There grow up, of course, ever so many more
grades of workers and shirkers, whose powers over consumption express
their power to exploit their fellows. When the conditions of
production, exchange, and capitalism become supreme, those who have
control over the means of production pay their serfs wages instead of
allowing them to produce their own subsistence and then work for
their serf lords. Those serfs who have been allowed as artisans,
retainers, and superintendents, to have a greater share over
consumption than wage-slaves, receive as wages the equivalent of what
they had in the past secured, and thus the social inequalities and
evils of exploitation attached to slavery and serfdom are handed down
to the present day. Convention sanctions the power of the sword, on
which slavery and serfdom are based. Men now receive as wages not
what they earn, but what they can secure as remuneration, governed by
the social influence they have in society. The aristocracy control
the land, the capitalists the plant and machinery, and between the
two are divided all the political forces and also control over the
Army and Navy and Law. Thus the price of labor is a reflex of the
exploitation by force which was carried on under slavery. So many men
work so many hours, and produce a given quantity of wealth. Society
allows their products to be divided up by individuals or classes of
individuals, according as they claim it under the form of rent,
interest and profit, or cost of subsistence. Because one man has a
power over consumption equal to £100, and another equal to £10, it
does not follow that the former produces more or that the latter
produces less than the other; the question is not one of earning, but
social power over consumption. On an average all produce the same.
Any variation over command of wealth is due to forces which can only
be explained by studying history.
______________________________________________________
Marx is also celebrated for his adoption of what is known as the
“Materialist conception of history”, by means of which he is said
to reduce all men’s activities (including physical, mental and
moral) to the forms of production. Very few of Marx’s works are
translated into English[4],
but we know that Marx was a sociologist, who regarded economics as a
branch of that science. He saw that so long as the means of life were
held by a class then those dependent on them would within certain
limits, be controlled by their economic environment. His book was
written with the hope and purpose of freeing society from capitalist
domination, and giving it democratic control over its economic forms
of production. This view appeals to us as a reasonable and right one,
and does not land us in the coils of an absolute economic determinism
or economic fatalism, which are only forms resurrected from the study
of the absolute.
