_Of the Products of Circulating Capital, or Wage
Capital, as distinguished from the Products
of Human Exertion._
[Sidenote ◆1 Wage Capital enables men to undertake work which will
not support them till a considerable time has elapsed.]
◆¹ Circulating Capital, or, as it is better to call it, Wage Capital,
is practically a store of those things which wages are used to buy—that
is to say the common necessaries of subsistence. And the primary
function—the simplest and most obvious function—which such Capital
performs is this: it enables men, by supplying them with the means
of living, to undertake long operations, which when completed will
produce much or be of much use, but which until they are completed will
produce nothing and be of no use, and will consequently supply nothing
themselves to the men whilst actually engaged in them.
[Sidenote ◆1 A tunnel is a good instance of such work.]
◆¹ Let us imagine, for instance, a tunnel which pierces a range of
mountains, and facilitates communication between two populous cities.
Five hundred navvies, we will say, have to work five years to make it.
Now if two yards of tunnel were made every day, and if each yard could
be used as soon as made, the tolls of passengers would at once yield
a daily revenue which would provide the navvies with subsistence, as
their work proceeded. But as a matter of fact until the last day’s
work is done, and the end of the fifth year sees the piercing of the
mountain completed, the tunnel is as useless as it was when it was
only just begun, and when it was nothing more than a shallow cavity
in a rock. Five years must elapse before a single toll is paid, and
before the tunnel itself supplies a single human being with the means
of providing bread for even a single day. The possibility then of the
tunnel being made at all, depends on the existence of a five-years’
supply of necessaries, for which indirectly the tunnel will pay
hereafter, but in producing or providing which, it has had no share
whatever.
[Sidenote ◆1 But the above-mentioned function of Wage Capital is
not its principal function in the modern world.]
Wage Capital, in fact, imparts to industry the power of waiting for its
own results. This is its simplest, its most obvious, and its primeval
function. ◆¹ It has been the function of such capital from the days
of the earliest civilisations; and it is, indeed, its fundamental
function still: but in the modern world it is far from being its
principal function. I call its principal functions in the modern world
the functions by which during the past century and a quarter it has
produced results so incomparably, and so increasingly greater, than
were ever produced by it in the whole course of preceding ages.
[Sidenote ◆1 Its principal function now is to enable a few men
of exceptional powers to assist by these powers the
exertions of the ordinary labourers.]
[Sidenote ◆2 The modern employer in this respect differs from the
ancient.]
[Sidenote ◆3 Wage Capital in the modern world is the means by
which exceptional intellect is lent to Labour.]
◆¹ What this function is must be explained very clearly and carefully.
It is not to enable labourers to wait for the results of their labours.
It is to enable the exceptional knowledge, ingenuity, enterprise, and
productive genius of a few men so to animate, to organise, and direct
the average physical exertions of the many, as to improve, to multiply,
or to hasten the results of that exertion without increasing its
quantity. All civilisations, ancient as well as modern, have involved,
in a certain sense, the direction by the few of the many. The temples
and palaces of early Egypt and Assyria, which excite the wonder of
modern engineers and architects by the size of the blocks of stone used
in their astounding structure, are monuments of a control, absolute and
unlimited and masterly, exercised by a few human minds over millions of
human bodies. But in that control, as exercised in the ancient world,
one element was wanting which is the essence of modern industry. When
the masters of ancient labour wished to multiply commodities, or to
secure an increase of power for accomplishing some single work, the
sole means known to them was to increase the number of labourers; and
when one thousand slaves were insufficient, to reinforce them with
(let us say) four thousand more. The masters of modern labour pursue
a new and essentially opposite course. Instead of seeking in such a
case to secure four thousand new labourers, they seek to endow one
thousand with the industrial power of five. ◆² If Nebuchadnezzar had
set himself to tunnel a mountain, he could have hastened the work only
by flogging more slaves to it. The modern contractor, in co-operation
with the modern inventor, instead of flogging labour, would assist it
with tram-lines, trucks, and boring engines. In other words, whereas
in former ages the aim of the employing class was simply to secure the
service of an increasing quantity of labour, the aim of the employing
class in the present age is to increase the productive power of the
same quantity. The employing class in former ages merely forced the
employed to exert their own industrial faculties, and appropriated what
those faculties produced. The employing class of the present age not
only commands the employed, but it co-operates with them by lending
them faculties which they do not themselves possess. ◆³ It applies to
the guidance of the muscles of the most ordinary worker the profoundest
knowledge of science, all the strength of will, all the spirit of
enterprise, and the exceptional aptitude for affairs, that distinguish
the most gifted and the vigorous characters of the day. And it is the
peculiar modern function of Capital, as spent in Wages, to enable this
result to take place.
[Sidenote ◆1 Wage Capital does this in a way which the socialistic
definition of Capital altogether ignores.]
◆¹ Let us consider how it does so. Socialists tell us that Capitalism
in the modern world means merely the appropriation by the few of all
the materials of production, so that the many must either work as
the few bid them, or must starve. But this is a very small part of
what modern Capitalism means, and it is not the essential part, nor
does it even suggest the essential part. The majority of men must
always work or starve. Nature, not modern Capitalism, is responsible
for that necessity. The essential difference which modern Capitalism
has introduced into the situation is this—and it is an enormous
difference—that whereas in former ages the livelihood of a man was
contingent on his working in the best way that the average man knew,
modern Capitalism has made his livelihood contingent on his working in
the best way that exceptional men know. Now this best way, as we shall
see more clearly presently, does not involve the forcing of each man
to work harder, or the exacting from him any more difficult effort.
It involves merely the supplying him with a constant external guide
for even his minutest actions—a guide for every movement of arm and
hand, or a pattern of each of the objects which are the direct result
of these movements; and consequently the one thing which before all
others it requires is constant obedience or conformity to such guides
and patterns. The entire industrial progress of the modern world has
depended, and depends altogether on this constant obedience being
secured; and the possession of Wage Capital by the employing class is
the sole means which is possible in the modern world of securing it. In
the ancient world the case would no doubt have been different. The lash
of the taskmaster, the fear of prison, of death, of torture, were then
available for the stimulation and organisation of Labour. But they are
available no longer. The masses of civilised humanity have taken this
great step—they have risen from the level on which they could be driven
to industrial obedience, to the level on which they must be induced
to it. Obedience of some sort is a social necessity now as ever, and
always must be: but social necessity spoke merely to the fear of the
slave; it speaks to the will and the reason of the free labourer. The
free labourer may be, and must be, in one or other of two positions.
He may work for himself, consuming or selling his own produce; or he
may work for an employer, who pays him wages, and exacts in return for
them not work only, but work performed in a certain prescribed way.
The first position is that of the peasant proprietor or the hand-loom
weaver. The second is that of the employee in a mill or factory. In
both cases, the voice of social necessity, or of society, speaks to
the man’s reason, informing him of the homely fact that he cannot live
unless he labours: but in the first case, the voice of society cries to
him out of the ground, “You will get no food unless you labour in some
way”; and in the second case it cries to him from the mouths of the
wisest and strongest men, “You will get no food unless you consent to
labour in the best way.”[31]
[Sidenote ◆1 Wage Capital is merely the means by which intellect
impresses itself as Labour;]
◆¹ In other words, Wage Capital in the modern world promotes that
growth of wealth by which the modern world is distinguished, simply
because Wage Capital is the vehicle by which the exceptional qualities
of the few communicate themselves to the whole industrial community.
The real principle of progress and production is not in the Capital,
but in the qualities of the men who control it; just as the vital
force which goes to make a great picture is not in the brush, but in
the great painter’s hand; or as the skill which pilots a coach and
four through London is not in the reins, but in the hand of the expert
coachman.
[Sidenote ◆1 As we can see by following the steps by which a
company would introduce some new machine.]
◆¹ This can easily be seen by turning our attention once again to
machinery, and supposing that a company is floated for the improved
manufacture of something by means of some new invention. The directors
must of course begin with securing a site for the factory; but with
this exception their entire initial expenditure will directly or
indirectly consist in the payment of wages—in purchasing the services
of a certain number of men by whose exertions certain masses of raw
material are to be produced and fashioned into certain definite
forms—that is to say, into the new machinery and a suitable building to
protect it.
[Sidenote ◆1 The whole success of such a company depends on the
amount of intellect used in the expenditure of the Wage
Capital.]
◆¹ Now, the powers of these men resemble a mass of fluid metal which
is capable of being run into any variety of mould. If the directors
were bound by no articles of association, and if, at their first
board meeting, before they had entered into any contract for the
machinery, some other invention for the manufacture of some other
commodity were suddenly brought to their notice, and happened to take
their fancy, the men they were on the point of employing to produce
one kind of machinery might, with equal ease, be employed to produce
another. We will assume that the machinery which the men are set to
produce actually is a great improvement on anything of the kind used
hitherto, and ends in adding greatly to the productive powers of the
nation; but, so far as the men are concerned whose exertions are paid
for out of the capital of the company, the machinery might just as
well have been absolutely valueless—a mere aggregation of wheels and
axles, as meaningless as a madman’s dream. What makes their exertions
not only useful instead of useless, but more useful than any exertion
similarly applied had ever been hitherto, is, firstly, the ingenuity
of the inventor of the new machine; secondly, the judgment of the
promoters and directors of the company; and lastly, the confidence in
their judgment felt by the subscribing public. Or, we may suppose
the inventor to have himself supplied the Capital, and to unite in
himself the parts of the directors and the shareholders. In that case
the exertions of the men employed derive their value entirely from the
talent of this one man. The men employed by him, we will say, number
a thousand, and the Wage Capital he owns and administers aids and
increases production only because it is the means by which the one man
induces the thousand to accept him as the steersman of their exertions,
and to allow him to direct their course towards new and remote results
which for them lie hidden behind the horizon of contemporary habit or
ignorance.
[Sidenote ◆1 The case of Arkwright’s spinning-frame illustrates
this.]
◆¹ Let us take an actual case—the case of Arkwright’s spinning-frame.
This invention, which was destined to influence the prosperity of so
many millions, was in great danger of being altogether lost, simply
on account of the difficulty experienced by the inventor in securing
sufficient capital to construct and perfect his machine, and, what was
equally necessary, to exhibit it in actual use. After many rebuffs and
disappointments, a sum was at last advanced him by a certain firm of
bankers—the Messrs. Wright of Nottingham; but before the preliminary
experiments had advanced far their courage failed them, they repented
of what they had done, and they passed the inventor on to two other
capitalists whose insight was fortunately keener, and whose characters
were more courageous. These gentlemen, Mr. Need and Mr. Strutt of
Derby, took Arkwright into partnership, and by means of the Capital
which they placed at his disposal, his machine, which till now had
existed only in his own brain and in a few unfinished models, was
before long in operation, and a new industrial era was inaugurated.
Now, to the accomplishment of this result Wage Capital was essential;
but it was essential only as the means of giving effect to the genius
and strong character of certain specially gifted persons—Arkwright
with his marvellous inventive genius, Messrs. Need and Strutt with
their sagacity and spirit and enterprise. If it had not been for the
qualities of these three men, the wages paid to the labourers who made
the machine of Arkwright would have probably been paid indeed to the
very same labourers, but their exertions would have been directed to
producing some different product—some product which added nothing to
the existing powers of the community.
[Sidenote ◆1 Now machinery is necessarily Wage Capital congealed;]
◆¹ Machinery, therefore, or Fixed Capital, though it differs as soon
as it is made from Capital employed in wages, is the result of the use
of such Capital, and is indeed but another form of it. And now comes
the point on which I am concerned to insist here: that conversely Wage
Capital, when employed so as to increase the productivity of labour,—in
other words when employed by men with the requisite capacity,—is in
its essence but another form of machinery. Machinery may be called
congealed Wage Capital. Wage Capital may be called fluid machinery.
For the function of both—namely, to increase wealth—is the same, and
they fulfil this function by means of the same virtue residing in them.
It is easy to see the truth of this. The increase of wealth means
the improvement and multiplication of commodities which reward the
exertions of the same number of men. The number and quality of these
commodities are increased by application of Capital, because Capital
enables persons who are exceptionally gifted to control and direct
the exertions of the majority; and Capital, as embodied in machinery,
differs from Capital continuously employed in wages, only because the
former gives us machinery which is inanimate, and the latter, machinery
which is living. For a thousand men so organised as to produce some
given product or result, and to produce it with the greatest precision
or in the least possible time, are to all intents and purposes as much
an invention and a machine as a thousand wheels or rollers adjusted for
a similar purpose.
[Sidenote ◆1 And therefore all Capital, equally with Wage Capital,
represents the control of Intellect over Labour—or one
kind of Human Exertion over another.]
◆¹ All Capital, therefore, in all its distinctively modern
applications—all those applications which have caused what is called
industrial progress—is virtually this, and this only: it is the
exceptional capacities of one set of men applied to the average
capacities of another set. We may accordingly include all Capital—fixed
and circulating—under one head, and say of it as a whole what in the
last chapter was said of machinery: that when by its application to
the exertions of a given number of men a larger product results than
resulted from them before it was applied, Capital is to be credited
with producing the amount of the increase; or—to put the same thing in
another way—with the amount of the decrease which would result if its
application were withdrawn.
[Sidenote ◆1 This aspect of the question will be considered
further in the next chapter.]
How this is the case with machinery I have already illustrated by
examples. It is less easy to illustrate by examples, but equally easy
to see how it is the case with Capital continuously employed as wages.
It is less easy to select illustrations, because the whole of modern
progress is itself one great, though infinitely complex example of it;
and it will be enough here as we shall recur to the subject presently,
to consider one obvious and very familiar fact. Many new commodities,
and many new methods of production, depend on the invention not of new
machines, but of new processes. The Capital employed in working a new
process is mainly employed as wages, by the administration of which the
actions of the workmen are guided, controlled, and organised. Thus if
fifty men, working independently and selling their own produce, produce
a hundred articles of a certain sort weekly, and another fifty men,
◆¹ working for a wage-paying employer, produce, owing to the way in
which their labour is guided and organised, just double the number of
such articles in the same time, we shall say that the hundred extra
articles are the product of Wage Capital, just as we should say, if the
increased production had been due to the introduction of a machine,
that these extra hundred articles were the product of Fixed Capital.
And in both cases we should mean, as I am now going to insist more
particularly, that they were really the product of the capacities which
each kind of Capital represents. This brings us to the heart of the
whole problem.