Capital Volume II

Chapter 20: Simple Reproduction

Part 4

XII. The Reproduction of the Money Material

One factor has so far been entirely disregarded, namely the annual reproduction of gold and silver. As mere material for articles of luxury, gilding, etc., there is as little occasion for special mention of them as there is of mentioning any other products. But they play an important role as money material and hence as potential money. For the sake of simplicity we here regard only gold as material for money.

According to older data the entire annual production of gold amounted to 800,000-900,000 lbs., equal roundly to 1,100 or 1,250 million marks. But according to Soetbeers it amounted to only 170,675 kilograms, valued at roundly 476 million marks, based on the average for 1871 to 1875. Of this amount Australia supplied roundly 167, the United States 166, and Russia 93 million marks. The remainder is distributed over various countries in amounts of less than 10 million marks each. During the same period, the annual production of silver amounted to somewhat less than 2 million kilograms, valued at 354½ million marks. Of this amount, Mexico supplied roundly 108, the United States 102, South America 67, Germany 26 million, etc.

Among the countries with predominantly capitalist production only the United States is a producer of gold and silver. The capitalist countries of Europe obtain almost all their gold, and by far the greater part of their silver, from Australia, the United States, Mexico, South America, and Russia.

But we take it that the gold mines are in a country with capitalist production whose annual reproduction we are here analysing, and for the following reasons:

Capitalist production does not exist at all without foreign commerce. But when one assumes normal annual reproduction on a given scale one also assumes that foreign commerce only replaces home products by articles of other use or bodily form, without affecting value-relations, hence without affecting either the value-relations in which the two categories “means of production” and “articles of consumption” mutually exchange, or the relations between constant capital, variable capital, and surplus-value, into which the value of the product of each of these categories may be divided. The involvement of foreign commerce in analysing the annually reproduced value of products can therefore only confuse without contributing any new element of the problem, or of its solution. For this reason it must be entirely discarded. And consequently gold too is to be treated here as a direct element of annual reproduction and not as a commodity element imported from abroad by means of exchange.

The production of gold, like that of metals generally, belongs in class I, the category which embraces the production of means of production. Supposing the annual production of gold is equal to 30 (for convenience’s sake; actually the figure is much too high compared to the other figures of our scheme). Let this value be divisible into 20c + 5v + 5s; 20c is to be exchanged for other elements of Ic and this is to be studied later; but the 5v + 5s (I) are to be exchanged for elements of IIc, i.e., articles of consumption.

As for the 5v, every gold-producing establishment begins by buying labour-power. This is done not with gold produced by this particular enterprise, but with a portion of the money-supply in the land. The labourers buy with this 5v articles of consumption from II, and that buys with this money means of production from I. Let II buy gold from I to the amount of 2 as commodity material, etc. (component part of its constant capital), then 2v flow back to gold producers I in money which has already belonged to the circulation. If II does not buy any more material from I, then I buys from II by throwing its gold into circulation as money, since gold can buy any commodity. The difference is only that I does not act here as a seller, but only as a buyer. Gold miners I can always get rid of their commodity; it is always in a directly exchangeable form.

Let us assume that some producer of yarn has paid 5v to his labourers, who create for him in return — aside from the surplus-value — a yarn product equal to 5. For 5 the labourers buy from IIc, and the latter buys yarn from I for 5 in money, and thus 5 flows back in money to the spinner of yarn. Now in the case assumed I g (as we shall designate the producers of gold) advances to its labourers 5v in money which previously belonged to the circulation. The labourers spend it for articles of consumption, but only 2 of the 5 return from II to I g. However I g can begin the process of reproduction anew, just as well as the producer of yarn. For his labourers have supplied him with 5 in gold, 2 of which he sold and 3 of which he still has, so that he has but to coin [45] them, or turn them into bank-notes to have his entire variable capital again directly in his hands in money-form, without the further intervention of II.

Even this first process of annual reproduction has wrought a change in the quantity of money actually or virtually belonging to the circulation. We assumed that IIc bought 2v (I g) as material, and that I g has again laid out 3 — as the money-form of its variable capital — within II. Hence 3 of the mass of money supplied by the new gold production remained within II and did not return to I. According to our assumption II has satisfied its requirements in gold material. The 3 remain in its hands as a gold hoard. Since they cannot constitute any element of its constant capital, and since II had previously enough money-capital for the purchase of labour-power; since furthermore these additional 3 g, with the exception of the depreciation element, have no function to perform within IIc, for a portion of which they were exchanged (they could only serve to cover the depreciation element pro tanto, if IIc (1) should be smaller than IIc (2), which would be accidental); on the other hand, however, namely with the exception of the depreciation element, the entire commodity-product IIc, must be exchanged for means of production I(v + s) — this money must be transferred in its entirety from IIc to IIs, no matter whether it exists in necessities of life or articles of luxury, and vice versa corresponding commodity-value must be transferred from IIs to IIc. Result: A portion of the surplus-value is stored up as a money-hoard.

In the second year of reproduction, provided the same proportion of annually produced gold continues to be used as material, 2 will again flow back to I g, and 3 will be replaced in kind, i.e., will be released again in II as a hoard, etc.

With reference to the variable capital in general: The capitalist I g, like every other capitalist, must continually advance this capital in money for the purchase of labour-power. But so far as this v is concerned, it is not he but his labourers who have to buy from II. It can therefore never happen that he should act as a buyer, throwing gold into II without the initiative of II. But to the extent that II buys material from him, and must convert constant capital II c into gold material, a portion of (I g)v flows back to him from II in the same way that it does to other capitalists of I. And so far as this is not the case, he replaces his v in gold directly from his product. But to the extent that the v advanced in money does not flow back to him from II, a portion of the already available means of circulation (received from I and not returned to I) is converted in II into a hoard and for that reason a portion of its surplus-value is not expended for articles of consumption. Since new gold-mines are continually opened or old ones re-opened, a certain portion of the money to be laid out by I g in v is always part of the money existing prior to the new gold production; it is thrown by I g through its labourers into II, and unless it returns from II to I g it forms there an element of hoard formation.

But as for (I g)s, I g can always act here as buyer. He throws his s in the shape of gold into circulation and withdraws from it in return articles of consumption IIc. In II the gold is used in part as material, and thus functions as a real element of the constant constituent portion c of the productive capital. When this is not the case it becomes once more an element of hoard formation as a part of IIs persisting in the form of money. We see, then, aside from Ic which we reserve for a later analysis, [46] that even simple reproduction, excluding accumulation proper, namely reproduction on an extended scale, necessarily includes the storing up, or hoarding, of money. And as this is annually repeated, it explains the assumption from which we started in the analysis of capitalist production, namely, that at the beginning of the reproduction a supply of money corresponding to the exchange of commodities is in the hands of capitalist classes I and II. Such an accumulation takes place even after deducting the amount of gold being lost through the depreciation of money in circulation.

It goes without saying that the more advanced capitalist production, the more money is accumulated in all hands, and therefore the smaller the quantity annually added to this hoard by the production of new gold, although the absolute quantity thus added may be considerable. We revert once more in general terms to the objection raised against Tooke; how is it possible that every capitalist draws a surplus-value in money out of the annual product, i.e., draws more money out of the circulation than he throws into it, since in the long run the capitalist class itself must be regarded as the source of all the money thrown into circulation?

We reply by summarising the ideas developed previously (in Chapter XVII):

1) The only assumption essential here, namely, that in general there is money enough for the exchange of the various elements of the mass of the annual reproduction, is not affected in any way by the fact that a portion of the commodity-value consists of surplus-value. Supposing that the entire production belonged to the labourers themselves and that their surplus-labour were therefore only surplus-labour for themselves, not for the capitalists, then the quantity of circulating commodity-values would be the same and, other things being equal, would require the same amount of money for their circulation. The question in either case is therefore only: Where does the money come from to make possible the exchange of this total of commodity-values? It is not at all: where does the money come from to turn the surplus-value into money? It is true, to revert to it once more, that every individual commodity consists of c + v + s, and the circulation of the entire quantity of commodities therefore requires on the one hand a definite sum of money for the circulation of the capital c + v and on the other hand another sum for the circulation of the revenue of the capitalists, the surplus-value s. For the individual capitalist, as well as for the entire capitalist class; the money in which they advance capital is different from the money in which they spend their revenue. Where does the latter money come from? Simply from the mass of money in the hands of the capitalist class, hence by and large from the total mass of money in society, a portion of which circulates the revenue of the capitalists. We have seen above that every capitalist establishing a new business recoups the money which he spent for his maintenance in articles of consumption as money serving to convert his surplus-value into money, once his business is fairly under way. But generally speaking the whole difficulty has two sources:

In the first place, if we analyse only the circulation and the turnover of capital, thus regarding the capitalist merely as a personification of capital, not as a capitalist consumer and man about town, we see indeed that he is continually throwing surplus-value into circulation as a component part of his commodity-capital, but we never see money as a form of revenue in his hands. We never see him throwing money into circulation for the consumption of his surplus-value.

In the second place, if the capitalist class throws a certain amount of money into circulation in the shape of revenue, it looks as if it were paying an equivalent for this portion of the total annual product, and this portion thereby ceases to represent surplus-value. But the surplus-product in which the surplus-value is represented does not cost the capitalist class anything. As a class, the capitalists possess and enjoy it gratuitously, and the circulation of money cannot alter this fact. The alteration brought about by this circulation consists merely in the fact that every capitalist, instead of consuming his surplus-product in kind, a thing which is generally impossible, draws commodities of all sorts up to the amount of the surplus-value he has appropriated out of the general stock of the annual surplus-product of society and appropriates them. But the mechanism of the circulation has shown that while the capitalist class throws money into circulation for the purpose of spending its revenue, it also withdraws this money from the circulation, and can continue the same process over and over again; so that, considered as a class, capitalists remain as before in possession of the amount of money necessary for the conversion of surplus-value into money. Hence, if the capitalist not only withdraws his surplus-value from the commodity-market in the form of commodities for his consumption-fund, but at the same time gets back the money with which he has paid for these commodities, he has evidently withdrawn the commodities from circulation without paying an equivalent for them. They do not cost him anything, although he pays money for them. If I buy commodities for one pound sterling and the seller of the commodities gives me the pound back for surplus-product which I got for nothing, it is obvious that I received the commodities gratis. The constant repetition of this operation does not alter the fact that I constantly withdraw commodities and constantly remain in possession of the pound, although I part with it temporarily to purchase commodities. The capitalist constantly gets this money back as a money equivalent of surplus-value that has not cost him anything.

We have seen that with Adam Smith the entire value of the social product resolves itself into revenue, into v + s, so that the constant capital-value is set down as zero. It follows necessarily that the money required for the circulation of the yearly revenue must also suffice for the circulation of the entire annual product, that therefore in our illustration the money required for the circulation of the articles of consumption worth 3,000 also suffices for the circulation of the entire annual product worth 9,000. This is indeed the opinion of Adam Smith, and it is repeated by Th. Tooke. This erroneous conception of the ratio of the quantity of money required for the realisation of revenue to the quantity of money required to circulate the entire social product is the necessary result of the uncomprehended, thoughtlessly conceived manner in which the various elements of material and value of the total annual product are reproduced and annually replaced. It has therefore already been refuted.

Let us listen to Smith and Tooke themselves.

Smith says in Book II, Ch. 2:

“The circulation of every country may be considered as divided into two different branches: the circulation of the dealers with one another, and the circulation between the dealers and the consumers. Though the same pieces of money, whether paper or metal, may be employed sometimes in the one circulation and sometimes in the other; yet as both are constantly going on at the same time, each requires a certain stock of money of one kind or another, to carry it on. The value of the goods circulated between the different dealers, never can exceed the value of those circulated between the dealers and the consumers; whatever is bought by the dealers, being ultimately destined to be sold to the consumers. The circulation between the dealers, as it is carried on by wholesale, requires generally a pretty large sum for every particular transaction. That between the dealers and the consumers, on the contrary, as it is generally carried on by retail, frequently requires but very small ones, a shilling, or even a halfpenny, being often sufficient. But small sums circulate much faster than large ones... Though the annual purchases of all the consumers, therefore, are at least” [this “at least” is rich] “equal in value to those of all the dealers, they can generally be transacted with a much smaller quantity of money;” etc.

Th. Tooke remarks to this passage from Adam Smith (in An Inquiry into the Currency Principle, London, 1844, pp. 34 to 36 passim):

“There can be no doubt that the distinction here made is substantially correct ... the interchange between dealers and consumers including the payment of wages, which constitute the principal means of the consumers... All the transactions between dealers and dealers, by which are to be understood all sales from the producer or importer, through all the stages of intermediate processes of manufacture or otherwise to the retail dealer or the exporting merchant, are resolvable into movements or transfers of capital. Now transfers of capital do not necessarily suppose, nor do actually as a matter of fact entail, in the great majority of transactions, a passing of money, that is, bank-notes or coin — I mean bodily, and not by fiction — at the time of transfer... The total amount of the transactions between dealers and dealers must, in the last resort, be determined and limited by the amount of those between dealers and consumers.”

If this last sentence stood by itself, one might think Tooke simply stated the fact that there was a ratio between the exchanges among dealers and those among dealers and consumers, in other words, between the value of the total annual revenue and the value of the capital with which it is produced. But this is not the case. He explicitly endorses the view of Adam Smith. A special criticism of his theory of circulation is therefore superfluous.

2) Every industrial capital, on beginning its career, throws at one fling money into circulation for its entire fixed constituent part, which it recovers but gradually, in the course of years, by the sale of its annual products. Thus it throws at first more money into circulation than it draws from it. This is repeated at every renewal of the entire capital in kind. It is repeated every year for a certain number of enterprises whose fixed capital is to be renewed in kind. It is repeated piecemeal at every repair, every only partial renewal of the fixed capital. While, then, on the one hand more money is withdrawn from circulation than is thrown into it, the opposite takes place on the other hand.

In all lines of industry whose production period — as distinguished from its working period — extends over a long term, money is continually thrown into circulation during this period by the capitalist producers, partly in payment for labour-power employed, partly in the purchase of means of production to be consumed. Means of production are thus directly withdrawn from the commodity-market, and articles of consumption, partly indirectly, by the labourers spending their wages, and partly directly, by the capitalists, who do not by any means suspend their consumption, although they do not simultaneously throw any equivalent in commodities on the market. During this period the money thrown by them into circulation serves to convert commodity value, including the surplus-value embodied in it, into money. This factor becomes very important in an advanced stage of capitalist production in the case of long-drawn out enterprises, such as are undertaken by stock companies, etc., for instance the construction of railways, canals, docks, large municipal buildings, iron shipbuilding, large-scale drainage of land, etc.

3) While the other capitalists, aside from the investment in fixed capital, draw more money out of the circulation than they threw into it on purchasing the labour-power and the circulating elements, the gold- and silver-producing capitalists throw only money into the circulation, aside from the precious metal which serves as raw material, while they withdraw only commodities from it. The constant capital, with the exception of the depreciated portion, the greater portion of the variable capital and the entire surplus-value, save the hoard which may be accumulating in their own hands, are all thrown into circulation as money.

4) On the one hand all kinds of things circulate as commodities which were not produced during the given year, such as land lots, houses, etc.; furthermore goods whose period of production exceeds one year, such as cattle, timber, wine, etc. For this and other phenomena it is important to establish that aside from the quantity of money required for the immediate circulation there is always a certain quantity in a latent non-functioning state which may start functioning if the impulse is given. Furthermore, the value of such products circulates often piecemeal and gradually, like the value of houses in the rents over a number of years.

On the other hand not all movements of the process of reproduction are effected through the circulation of money. The entire process of production, once its elements have been procured, is excluded from circulation. All products which the producer himself consumes directly, whether individually or productively, are also excluded. Under this head comes also the feeding of agricultural labourers in kind.

Therefore the quantity of money which circulates the annual product, exists in society, having been gradually accumulated. It does not belong to the value produced during the given year, except perhaps the gold used to make good the loss of depreciated coins.

This exposition presupposes the exclusive circulation of precious metals as money, and in this circulation the simplest form of cash purchases and sales; although money can function also as a means of payment, and has actually done so in the course of history, even on the basis of circulating plain metal coin, and though a credit system and certain aspects of its mechanism have developed upon that basis. This assumption is not made from mere considerations of method, although these are important enough, as demonstrated by the fact that Tooke and his school, as well as their opponents, were continually compelled in their controversies concerning the circulation of bank-notes to revert to the hypothesis of a purely metallic circulation. They were forced to do so post festum and did so very superficially, which was unavoidable, because the point of departure in their analysis thus played merely the role of an incidental point.

But the simplest study of money — circulation presented in its primitive form — and this is here an immanent element of the process of annual reproduction — demonstrates:

a) Advanced capitalist production, and hence the domination of the wage system, being assumed, money-capital obviously plays a prominent role, since it is the form in which the variable capital is advanced. In step with the development of the wage system, all products are transformed into commodities and must therefore — with a few important exceptions — pass in their entirety through the transformation into money as one phase of their movement. The quantity of circulating money must suffice for this conversion of commodities into money, and the greater part of this mass is furnished in the form of wages, of the money advanced by the industrial capitalists as the money-form of the variable capital in payment for labour-power, and which functions in the hands of the labourers, generally speaking, only as a medium of circulation (means of purchase). It is quite the opposite of natural economy such as is predominant under every form of bondage (including serfdom), and still more so in more or less primitive communities, whether or not they are attended by conditions of bondage or slavery.

In the slave system, the money-capital invested in the purchase of labour-power plays the role of the money-form of the fixed capital, which is but gradually replaced as the active period of the slave’s life expires. Among the Athenians therefore, the gain realised by a slave owner directly through the industrial employment of his slave, or indirectly by hiring him out to other industrial employers (e.g., for mining), was regarded merely as interest (plus depreciation allowance) on the advanced money-capital, just as the industrial capitalist under capitalist production places a portion of the surplus-value plus the depreciation of his fixed capital to the account of interest and replacement of his fixed capital. This is also the rule with capitalists offering fixed capital (houses, machinery, etc.) for rent. Mere household slaves, whether they perform necessary services or are kept as luxuries for show, are not considered here. They correspond to the modern servant class. But the slave system too — so long as it is the dominant form of productive labour in agriculture, manufacture, navigation, etc., as it was in the advanced states of Greece and Rome — preserves an element of natural economy. The slave market maintains its supply of the commodity labour-power by war, piracy, etc., and this rapine is not promoted by a process of circulation, but by the actual appropriation of the labour-power of others by direct physical compulsion. Even in the United States, after the conversion of the buffer territory between the wage-labour states of the North and the slavery states of the South into a slave-breeding region for the South, where the slave thrown on the market thus became himself an element of the annual reproduction, this did not suffice for a long time, so that the African slave trade was continued as long as possible to satisfy the market.

b) The fluxes and refluxes of money taking place spontaneously on the basis of capitalist production in the exchange of the annual products; the one-time advances of fixed capitals to the full extent of their value and the successive extraction of this value from the circulation in the course of years, in other words, their gradual reconstitution in money-form by the annual formation of hoards, a hoarding which is essentially different from the parallel accumulation of hoards based on the annual production of new gold; the different lengths of time for which, depending on the duration of the production period of the commodities, money must be advanced, and consequently always hoarded anew before it can be recovered from the circulation by the sale of the commodities; the different lengths of time for which money must be advanced, if only resulting from the different distances of the places of production from their markets; furthermore the differences in the magnitude and period of the reflux according to the condition or relative size of the productive supplies in the various lines of business and in the individual businesses of the same line, and hence the lengths of periods for which the elements of constant capital are bought, and all this during the year of reproduction — all these different aspects of spontaneous movement had only to be noted, and made conspicuous, through experience, in order to give rise to a methodical use of the mechanical appliances of the credit system and to a real fishing out of available loanable capitals.

To this must be added the difference between those lines of business whose production proceeds under otherwise normal conditions continuously on the same scale, and those which apply varying quantities of labour-power in different periods of the year, such as agriculture.

XIII. Destutt De Tracy’s Theory of Reproduction

Let us illustrate the confused and at the same time boastful thoughtlessness of political economists analysing social reproduction, with the example of the great logician Destutt de Tracy (Vol. 1, Ch. V, Note), whom even Ricardo took seriously and called a very distinguished writer. (Principles, p. 333.)

This “distinguished writer” gives the following explanations concerning the entire process of social reproduction and circulation:

“I shall be asked how these industrial entrepreneurs can make such large profits and out of whom they can draw them. I reply that they do so by selling everything which they produce for more than it has cost to produce; and that they sell:

“1) to one another for the entire portion of their consumption intended for the satisfaction of their needs, which they pay with a portion of their profits;

“2) to the wage-labourers, both those whom they pay and those whom the idle capitalists pay; from these wage-labourers they thus extract their entire wages except perhaps their small savings;

“3) to the idle capitalists who pay them with the portion of their revenue which they have not yet given to the wage-labourers employed by them directly; so that the entire rent which they pay them annually flows back to them in this way or the other.” (Destutt de Tracy, Traité de la volonté et de ses effets, Paris, 1826, p. 239.)

In other words, the capitalists enrich themselves by mutually getting the best of one another in the exchange of that portion of their surplus-value which they set apart for their individual consumption or consume as revenue. For instance, if this portion of their surplus-value or of their profits is equal to £400, this sum of £400 is supposed to grow to, say, £500 by each stockholder of the £400 selling his share to another 25 per cent in excess. But since all do the same, the result will be the same as if they had sold to one another at the real values. They merely need £500 in money for the circulation of commodities worth £400, and this would seem to be rather a method of impoverishing than of enriching themselves since it compels them to keep a large portion of their total wealth unproductively in the useless form of circulation media. The whole thing boils down to this, that despite the all-round nominal rise in the price of their commodities the capitalist class has only £400 worth of commodities to divide among themselves for their individual consumption, but that they do one another the favour of circulating £400 worth of commodities by means of a quantity of money which is required to circulate £500 worth of commodities.

And this quite aside from the fact that a “portion of their profits,” and therefore in general a supply of commodities in which there exist profits, is here assumed. But Destutt undertook precisely to tell us where those profits come from. The quantity of money required to circulate the profit is a very subordinate question. The quantity of commodities in which the profit is represented seems to have its origin in the circumstance that the capitalists not only sell these commodities to one another, although even this much is quite fine and profound, but sell them to one another at prices which are too high. So we now know one source of the enrichment of the capitalists. It is on a par with the secret of the “Entspektor Bräsig"” [47] that the great poverty is due to the great “pauvreté.”

2) The same capitalists furthermore sell

“to the wage-labourers, both those whom they pay and those whom the idle capitalists pay; from these wage-labourers they thus recover their entire wages, except perhaps their small savings.”

According to Monsieur Destutt, then, the reflux of the money-capital, the form in which the capitalists have advanced wages to the labourers, is the second source of the enrichment of these capitalists. If therefore the capitalists paid for instance £100 to their labourers as wages and if these same labourers then buy from the same capitalists commodities of this same value, of £100, so that the sum of £100 which the capitalists had advanced as buyers of labour-power returns to the capitalists when they sell to the labourers £100 worth of commodities, the capitalists get richer thereby. It would appear to anyone endowed with ordinary common sense that they only find themselves once more in possession of their £100, which they owned before this procedure. At the beginning of the procedure they have £100 in money. For these £100 they buy labour-power. The labour bought produces for these £100 in money commodities of a value which, so far as we now know, amounts to £100. By selling the £100 worth of commodities to their labourers the capitalists recover £100 in money. The capitalists then have once more £100 in money, and the labourers have £100 worth of commodities which they have themselves produced. It is hard to understand how that can make the capitalists any richer. If the £100 in money did not flow back to them they would first have to pay to the labourers £100 in money for their labour and secondly to give them the product of this labour, £100 worth of articles of consumption, for nothing. The reflux of this money might therefore at best explain why the capitalists do not get poorer by this transaction, but by no means why they get richer by it.

To be sure it is another question how the capitalists came into possession of the £100 and why the labourers, instead of producing commodities for their own account, are compelled to exchange their labour-power for these £100. But this, for a thinker of Destutt’s calibre, is self-explanatory.

Destutt himself is not quite satisfied with the solution. After all, he did not tell us that one gets richer by spending a sum of money, a hundred pounds, and then taking in again a sum of money amounting to £100; hence, by the reflux of £100 in money, which merely shows why the £100 in money do not get lost. He tells us that the capitalists get richer

“by selling everything which they produce for more than it has cost to produce.”

Consequently the capitalists must get richer also in their transactions with the labourers by selling to them too dear. Very well!

“They pay wages ... and all this flows back to them through the expenditures of all these people who pay them more” [for the products] “than they cost them [the capitalists] in wages.” (Ibid., p. 240.)

In other words, the capitalists pay £100 in wages to the labourers, and then they sell to these labourers their own product at £120, so that they not only recover their £100 but also gain £20? That is impossible. The labourers can pay only with the money which they have received in the form of wages. If they get £100 in wages from the capitalists they can buy only £100 worth, not £120 worth. So this will not work. But there is still another way. The labourers buy from the capitalists commodities for £100, but actually receive commodities worth only £80. Then they are absolutely cheated out of £20. And the capitalist has absolutely gained £20, because he actually paid for the labour-power 20 per cent less than its value, or cut nominal wages 20 per cent by a circuitous route.

The capitalist class would accomplish the same end if it paid the labourers at the start only £80 in wages and afterwards gave them for these £80 in money actually £80 worth of commodities. This seems to be the normal way, considering the class of capitalists as a whole, for according to Monsieur Destutt himself the labouring class must receive a “sufficient wage” (p. 219), since their wages must at least be adequate to maintain their existence and capacity to work,“"to procure the barest subsistence.” (p. 180). If the labourers do not receive such sufficient wages, that means, according to the same Destutt, “the death of industry” (p. 208), which does not seem therefore to be a way in which the capitalists can get richer. But whatever may be the scale of wages paid by the capitalists to the working-class, they have a definite value, e.g., £80. If the capitalist class pays the labourers £80, then it has to supply them with commodities worth £80 for these £80 and the reflux of the £80 does not enrich it. If it pays them £100 in money, and sells them £80 worth of commodities for £100 it pays them in money 25 per cent more than their normal wage and supplies them in return with 25 per cent less in commodities.

In other words, the fund from which the capitalist class in general derives its profits is supposedly made up of deductions from the normal wages by paying less than its value for labour-power, i.e., less than the value of the means of subsistence required for their normal reproduction as wage-labourers. If therefore normal wages were paid, which is supposed to be the case according to Destutt, there could be no profit fund for either the industrial or the idle capitalists.

Hence Destutt should have reduced the entire secret of how the capitalist class gets richer to the following: by a deduction from wages. In that case the other surplus-value funds, which he mentions under 1) and 3), would not exist.

Hence in all countries, in which the money wages of the labourers should be reduced to the value of the articles of consumption necessary for their subsistence as a class, there would be no consumption-fund and no accumulation-fund for the capitalists, and hence also no existence-fund for the capitalist class, and hence also no capitalist class. And, according to Destutt, this should be the case in all wealthy and developed countries with an old civilisation, for in them,

“in our ancient societies, the fund for the maintenance of wage-labourers is ... an almost constant magnitude.” (Ibid., p. 202.)

Even with a deduction from the wages, the capitalist does not enrich himself by first paying the labourer £100 in money and then supplying him with £80 worth of commodities for these £100, thus actually circulating £80 worth of commodities by means of £100, an excess of 25 per cent. The capitalist gets richer by appropriating, besides the surplus-value — that portion of the product in which surplus-value is represented — 25 per cent of that portion of the product which the labourer should receive in the form of wages. The capitalist class would not gain anything by the silly method Destutt conceived. It pays £100 in wages and gives back to the labourer for these £100 £80 worth of his own product. But in the next transaction it must again advance £100 for the same procedure. It would thus be indulging in the useless sport of advancing £100 in money and giving in exchange £80 in commodities, instead of advancing £80 in money and supplying in exchange for it £80 in commodities. That is to say, it would be continually advancing to no purpose a money-capital which is 25 per cent in excess of that required for the circulation of its variable capital, which is a very peculiar method of getting rich.

3) Finally the capitalist class sells

“to the idle capitalists, who pay them with the portion of their revenue which they have not yet given to the wage-labourers employed by them directly; so that the entire rent, which they pay them (the idle ones) annually, flows back to them in this way or the other.”

We have seen above that the industrial capitalists

“pay with a portion of their profits the entire portion of their consumption intended for the satisfaction of their needs.”

Take it, then, that their profits are equal to £200. And let them use up, say, £100 of this in their individual consumption. But the other half, or £100, does not belong to them; it belongs to the idle capitalists, i.e., to those who receive the ground-rent, and to capitalists who lend money on interest. So they have to pay £100 to these gentry. Let us assume that these gentry need £80 of this money for their individual consumption, and £20 for the hire of servants, etc. With those £80 they buy articles of consumption from the industrial capitalists. Thus while these capitalists part with commodities to the value of £80, they receive back £80 in money, or four-fifths of the £100 paid by them to the idle capitalists under the name of rent, interest, etc.

Furthermore the servant class, the direct wage-labourers of the idle capitalists, have received £20 from their masters. These servants likewise buy articles of consumption from the industrial capitalists to the amount of £20. In this way, while parting with commodities worth £20, these capitalists have £20 in money flow back to them, the last fifth of the £100 which they paid to the idle capitalists for rent, interest, etc. At the close of the transaction the industrial capitalists have recovered in money the £100 which they remitted to the idle capitalists in payment of rent, interest, etc. But one half of their surplus-product, equal to £100, passed meanwhile from their hands into the consumption-fund of the idle capitalists.

It is evidently quite superfluous for the question now under discussion to bring in somehow or other the division of the £100 between the idle capitalists and their direct wage-labourers. The matter is simple: their rent, interest, in short, their share in the surplus-value equal to £200, is paid to them by the industrial capitalists in money to the amount of £100. With these £100 they buy directly or indirectly articles of consumption from the industrial capitalists. Thus they pay back to them the £100 in money and take from them articles of consumption worth £100.

This completes the reflux of the £100 paid by the industrial capitalists in money to the idle capitalists. Is this reflux of money a means of enriching the industrial capitalists, as Destutt imagines? Before the transaction they had a sum of values amounting to £200, 100 being money and 100 articles of consumption. After the transaction they have only one half of the original sum of values. They have once more the £100 in money, but they have lost the £100 in articles of consumption which have passed into the hands of the idle capitalists. Hence they are poorer by £100 instead of richer by £100. If instead of taking the circuitous route of first paying out £100 in money and then receiving this £100 in money back in payment of articles of consumption worth £100, they had paid rent, interest, etc., directly in the bodily form of their products, there would be no £100 in money flowing back to them from the circulation, because they would not have thrown that amount of money into the circulation. Via payment in kind the matter would simply have taken this course: they would keep one half of the surplus-product worth £200 for themselves and give the other half to the idle capitalists without any equivalent in return. Even Destutt would not have been tempted to declare this a means of getting richer. Of course the land and capital borrowed by the industrial capitalists from the idle capitalists and for which they have to pay a portion of their surplus-value in the form of ground-rent, interest, etc., are profitable for them, for this constitutes one of the conditions of production of commodities in general and of that portion of the product which constitutes surplus-product or in which surplus-value is represented. This profit accrues from the use of the borrowed land and capital, not from the price paid for them. This price rather constitutes a deduction from it. Otherwise one would have to contend that the industrial capitalists would not get richer but poorer, if they were able to keep the other half of their surplus-value for themselves instead of having to give it away. This is the confusion which results from mixing up such phenomena of circulation as a reflux of money with the distribution of the product, which is merely promoted by these phenomena of circulation.

And yet the same Destutt is shrewd enough to remark:

“Whence come the revenues of these idle gentry? Do the revenues not come out of the rent paid to them out of their profits by those who put the capitals of the former to work, i.e., by those who pay with the funds of the former a labour which produces more than it costs, in a word, the industrial capitalists? It is always necessary to hark back to them to find the source of all wealth. It is they who in reality feed the wage-labourers employed by the former.” (p. 246.)

So now the payment of this rent, etc., is a deduction from the profit of the industrial capitalists. Before it was a means wherewith they could enrich themselves.

But at least one consolation is left to our Destutt. These good industrialists handle the idle capitalists the same way they have been handling one another and the labourers. They sell them all commodities too dear, for instance, by 20 per cent. Now there are two possibilities. The idle capitalists either have other money resources aside from the £100 which they receive annually from the industrial capitalists, or they have not. In the first case the industrial capitalists sell them commodities worth £100 at a price of, say, £120. Consequently on selling their commodities they recover not only the £100 paid to the idlers but £20 besides, which constitute really new value for them. How does the account look now? They have given away £100 in commodities for nothing, because the £100 in money that they were paid in part for their commodities were their own money. Thus their own commodities have been paid with their own money. Hence they have lost £100. But they have also received an excess of £20 in the price of their commodities over and above their value, which makes £20 to the good. Balance this against the loss of £100, and you still have a loss of £80. Never a plus, always a minus. The cheating practised against the idle capitalists has reduced the loss of the industrial capitalists, but for all that it has not transformed a diminution of their wealth into a means of enrichment. But this method cannot go on indefinitely, for the idle capitalists cannot possibly pay year after year £120 in money if they take in only £100 in money year after year.

There remains the other approach: The industrial capitalists sell commodities worth £80 in exchange for the £100 in money they paid to the idle capitalists. In this case, the same as before, they still give away £80 for nothing, in the form of rent, interest, etc. By this fraudulent means the industrial capitalists have reduced their tribute to the idlers, but it still exists nevertheless and the idlers are in a position — according to the same theory proclaiming that prices depend on the good will of the sellers — to demand in the future £120 instead of £100, as formerly, for rent, interest, etc., on their land and capital.

This brilliant analysis is quite worthy of that deep thinker who copies on the one hand from Adam Smith that

“labour is the source of all wealth” (p. 242)

that the industrial capitalists

“employ their capital to pay for labour that reproduces it with a profit” (p. 246)

and who concludes on the other hand that these industrial capitalists

“feed all the other people, are the only ones who increase the public wealth, and create all our means of enjoyment” (p. 242)

that it is not the capitalists who are fed by the labourers, but the labourers who are fed by the capitalists, for the brilliant reason that the money with which the labourers are paid does not remain in their hands, but continually returns to the capitalists in payment of the commodities produced by the labourers.

“All they do is receive with one hand and return with the other. Their consumption must therefore be regarded as engendered by those who hire them.” (p. 235.)

After this exhaustive analysis of social reproduction and consumption, as being brought about by the circulation of money, Destutt continues:

“This is what perfects this perpetuum mobile of wealth, a movement which, though badly understood” (mal connu, I should say so!), “has justly been named circulation. For it is indeed a circuit and always returns to its point of departure. This is the point where production is consummated.” (pp. 239 and 240.)

Destutt, that very distinguished writer, membre de l’Institut de France et de la Société Philosophique de Philadelphie, and in fact to a certain extent a luminary among the vulgar economists, finally requests his readers to admire the wonderful lucidity with which he has presented the course of social process, the flood of light which he has poured over the matter, and is even condescending enough to communicate to his readers, where all this light comes from. This must be read in the original:

“It will be noted, I hope, how much this manner of viewing the consummation of our wealth is in accord with all we have been saying concerning its production and distribution, and at the same time how much light it throws on the entire course of society. Whence this accord and this lucidity? From the fact that we have met truth face to face. This recalls the effect of those mirrors in which things are reflected accurately and in their true proportions when correctly focussed, but in which everything appears confused and disjointed when one is too close or too far away from them.” (pp. 242 and 243.)

Voilà le crétinisme bourgeois dans toute sa béatitude! [There you have the bourgeois idiocy in all its beatitude!]


45. “A considerable quantity of gold bullion ... is taken direct to the mint at San Francisco by the owners.” Reports of H. M. Secretaries of Embassy and Legation, 1879, Part III, p. 337.

46. The study of the exchange of newly produced gold within the constant capital of department I is not contained in the manuscript. — F.E.

47. A character in a number of works by the German humorist Fritz Reuter (1810-74). — Ed.