Let us recapitulate the conclusions to which Smith's analysis has
brought us:
(1) There is a fixed capital of society, no part of which enters into
its net revenue. This fixed capital consists in 'the materials necessary
for supporting their useful machines and instruments of trade' and 'the
produce of labour necessary for fashioning those materials into the
proper form'.[77] By singling out the production of such fixed capital
as of a special kind, and explicitly contrasting it with the production
of consumer goods, Smith in effect transformed fixed capital into what
Marx calls 'constant capital'--that part of capital which consists of
all material means of production, as opposed to labour power.
(2) There is a circulating capital of society. After eliminating the
part of fixed, or constant, capital, there remains only the category of
consumer goods; these are not capital for society but net revenue, a
fund of consumption.
(3) Capital and net revenue of an individual do not strictly correspond
with capital and net revenue of society. What is nothing but fixed, or
constant capital for society as a whole cannot be capital for the
individual; it must be revenue, too, a fund of consumption, comprising
as it does those parts of fixed capital which represent the workers'
wages and the capitalists' profits. On the other hand, the circulating
capital of the individuals cannot be capital for society but must be
revenue, especially in so far as it takes the form of provisions.
(4) As regards the value of the total annual social product, no trace of
capital remains. It can be resolved completely into the three kinds of
income: wages, profits of capital, and rents.
If we tried from this haphazard collection of odd ideas to build up a
picture of the annual reproduction of total social capital, and of its
mechanism, we should soon despair of our task. Indeed, all these
observations leave us infinitely remote from the solution of the problem
how social capital is annually renewed, how everybody's consumption is
ensured by his income, while the individuals can nevertheless adhere to
their own points of view on capital and income. Yet if we wish to
appreciate fully Marx's contribution to the elucidation of this problem,
we must be fully aware of all this confusion of ideas, the mass of
conflicting points of view.
Let us begin with Adam Smith's last thesis which alone would suffice to
wreck the treatment of the problem of reproduction in classical
economics.
Smith's basic principle is that the total produce of society, when we
consider its value, resolves itself completely into wages, profits and
rents: this conception is deeply rooted in his scientific theory that
value is nothing but the product of labour. All labour performed,
however, is wage labour. This identification of human labour with
capitalist wage labour is indeed the classical element in Smith's
doctrine. The value of the aggregate product of society comprises both
the recompense for wages advanced and a surplus from unpaid labour
appearing as profit for the capitalist and rent for the landowner. What
holds good for the individual commodity must hold good equally for the
aggregate of commodities. The whole mass of commodities produced by
society--taken as a quantity of value--is nothing but a product of
labour, of paid as well as unpaid labour, and thus it is also to be
completely resolved into wages, profits, and rents.
It is of course true that raw materials, instruments, and the like, must
be taken into consideration in connection with all labour. Yet is it not
true also that these raw materials and instruments in their turn are
equally products of labour which again may have been paid or unpaid? We
may go back as far as we choose, we may twist and turn the problem as
much as we like, yet we shall find no element in the value of any
commodity--and therefore none in the price--which cannot be resolved
purely in terms of human labour. We can distinguish, however, two parts
in all labour: one part repays the wages and the other accrues to the
capitalist and landlord. There seems nothing left but wages and
profits--and yet, there is capital, individual and social capital. How
can we overcome this blatant contradiction? The fact that Marx himself
stubbornly pursued this matter for a long time without getting anywhere
at first as witness his _Theories of the Surplus Value_,[78] proves that
this theoretical problem is indeed extremely hard to solve. Yet the
solution he eventually hit on was strikingly successful, and it is based
upon his theory of value. Adam Smith was perfectly right: nothing but
labour constitutes the value of the individual commodity and of the
aggregate of commodities. He was equally right in saying that from a
capitalist point of view all labour is either paid labour which restores
the wages, or unpaid labour which, as surplus value, accrues to the
various classes owning the means of production. What he forgot, however,
or rather overlooked, is the fact that, apart from being able to create
new value, labour can also transfer to the new commodities the old
values incorporated in the means of production employed. A baker's
working day of ten hours is, from the capitalist point of view, divided
into paid and unpaid hours, into _v + s_. But the commodity produced in
these ten hours will represent a greater value than that of ten hours'
labour, for it will also contain the value of the flour, of the oven
which is used, of the premises, of the fuel and so on, in short the
value of all the means of production necessary for baking. Under one
condition alone could the value of any one commodity be strictly equal
to _v + s_; if a man were to work in mid-air, without raw materials,
without tools or workshop. But since all work on materials (material
labour) presupposes means of production of some sort which themselves
result from preceding labour, the value of this past labour is of
necessity transferred to the new product.
The process in question does not only take place in capitalist
production; it is the general foundation of human labour, quite
independent of the historical form of society. The handling of man-made
tools is a fundamental characteristic of human civilisation. The concept
of past labour which precedes all new labour and prepares its basis,
expresses the nexus between man and nature evolved in the history of
civilisation. This is the eternal chain of closely interwoven labouring
efforts of human society, the beginnings of which are lost in the grey
dawn of the socialisation of mankind, and the termination of which would
imply the end of the whole of civilised mankind. Therefore we have to
picture all human labour as performed with the help of tools which
themselves are already products of antecedent labour. Every new product
thus contains not only the new labour whereby it is given its final
form, but also past labour which had supplied the materials for it, the
instruments of labour and so forth. In the production of value, that is
commodity production into which capitalist production also enters, this
phenomenon is not suspended, it only receives a particular expression.
Here the labour which produces commodities assumes a twofold
characteristic: it is on the one hand useful concrete labour of some
kind or other, creating the useful object, the value-in-use. On the
other hand, it is abstract, general, socially necessary labour and as
such creates value. In its first aspect it does what labour has always
done: it transfers to the new product past labour, incorporated in the
means of production employed, with this distinction only, that this past
labour, too, now appears as value, as old value. In its second aspect,
labour creates new value which, in capitalist terms, can be reduced to
paid and unpaid labour, to _v + s_. Thus the value of every commodity
must contain old value which has been transferred by labour _qua_ useful
concrete labour from the means of production to the commodity, as well
as the new value, created by the same labour _qua_ socially necessary
labour merely as this labour is expended hour by hour.
This distinction was beyond Smith: he did not differentiate the twofold
character of value-creating labour. Marx once claimed to have discovered
the ultimate source of Smith's strange dogma--that the aggregate of
produced values can be completely resolved into _v + s_--in his
fundamentally erroneous theory of value.[79] Failure to differentiate
between the two aspects of commodity-producing labour as concrete and
useful labour on the one hand, and abstract and socially necessary
labour on the other, indeed forms one of the most important
characteristics of the theory of value as conceived not only by Smith
but by all members of the classical school.
Disregarding all social consequences, classical economics recognised
that human labour alone is the factor which creates value, and it worked
out this theory to that degree of clarity which we meet in Ricardo's
formulation. There is a fundamental distinction, however, between
Marx's theory of value and Ricardo's, a distinction which has been
misunderstood not only by bourgeois economists but also in most cases by
the popularisers of Marx's doctrine: Ricardo, conceiving as he did, of
bourgeois economy in terms of natural law, believed also that the
creation of value, too, is a natural property of human labour, of the
specific and concrete labour of the individual human being.
This view is even more blatantly revealed in the writings of Adam Smith
who for instance declares what he calls the 'propensity to exchange' to
be a quality peculiar to human nature, having looked for it in vain in
animals, particularly in dogs. And although he doubted the existence of
the propensity to exchange in animals, Smith attributed to animal as
well as human labour the faculty of creating value, especially when he
occasionally relapses into the Physiocrat doctrine:
'No equal capital puts into motion a greater quantity of productive
labour than that of the farmer. Not only his labouring servants, but his
labouring cattle, are productive labourers....'[80]
'The labourers and labouring cattle, therefore, employed in agriculture,
not only occasion, like the workmen in manufactures, the reproduction of
a value equal to their own consumption, or to the capital which employs
them, together with its owner's profits, but of a much greater value.
Over and above the capital of the farmer and all its profits, they
regularly occasion the reproduction of the rent of the landlord.'[81]
Smith's belief that the creation of value is a direct physiological
property of labour, a manifestation of the animal organism in man, finds
its most vivid expression here. Just as the spider produces its web from
its own body, so labouring man produces value--labouring man pure and
simple, every man who produces useful objects--because labouring man is
by birth a producer of commodities; in the same way human society is
founded by nature on the exchange of commodities, and a commodity
economy is the normal form of human economy.
It was left to Marx to recognise that a given value covers a definite
social relationship which develops under definite historical conditions.
Thus he came to discriminate between the two aspects of
commodity-producing labour: concrete individual labour and socially
necessary labour. When this distinction is made, the solution of the
money problem becomes clear also, as though a spotlight had been turned
on it.
Marx had to establish a dynamic distinction in the course of history
between the commodity producer and the labouring man, in order to
distinguish the twin aspects of labour which appear static in bourgeois
economy. He had to discover that the production of commodities is a
definite historical form of social production before he could decipher
the hieroglyphics of capitalist economy. In a word, Marx had to approach
the problem with methods of deduction diametrically opposed to those of
the classical school, he had in his approach to renounce the latter's
faith in the human and normal element in bourgeois production and to
recognise their historical transience: he had to reverse the
metaphysical deductions of the classics into their opposite, the
dialectical.
On this showing Smith could not possibly have arrived at a clear
distinction between the two aspects of value-creating labour, which on
the one hand transfers the old value incorporated in the means of
production to the new product, and on the other hand creates new value
at the same time. Moreover, there seems to be yet another source of his
dogma that total value can be completely resolved into _v + s_. We
should be wrong to assume that Smith lost sight of the fact that every
commodity produced contains not only the value created by its
production, but also the values incorporated in all the means of
production that had been spent upon it in the process of manufacturing
it. By the very fact that he continually refers us from one stage of
production to a former one--sending us, as Marx complains, from pillar
to post, in order to show the complete divisibility of the aggregate
value into _v + s_--Smith proves himself well aware of the point. What
is strange in this connection is that he again and again resolves the
old value of the means of production, too, into _v + s_, so as finally
to cover the whole value contained in the commodity.
'In the price of corn, for example, one part pays the rent of the
landlord, another pays the wages of maintenance of the labourers and
labouring cattle employed in producing it, and the third pays the profit
of the farmer. These three parts (wages, profit, and rent) seem either
immediately or ultimately to make up the whole price of corn. A fourth
part, it may perhaps be thought, is necessary for replacing the stock of
the farmer, or for compensating the wear and tear of his labouring
cattle and other instruments of husbandry. But it must be considered
that the price of any instrument of husbandry, such as a labouring
horse, is itself made up of the same three parts: the rent of the land
upon which he is reared, the labour of tending and rearing him, and the
profits of the farmer who advances both the rent of this land and the
wages of this labour. Though the price of the corn, therefore, may pay
the price as well as the maintenance of the horse, the whole price still
resolves itself either immediately or ultimately into the same three
parts of rent, of labour, and profit.'[82]
Apparently Smith's confusion arose from the following premises: first,
that all labour is performed with the help of means of production of
some kind or other--yet what are these means of production associated
with any given labour (such as raw materials and tools) if not the
product of previous labour? Flour is a means of production to which the
baker adds new labour. Yet flour is the result of the miller's work, and
in his hands it was not a means of production but the very product, in
the same way as now the bread and pastries are the product of the baker.
This product, flour, again presupposes grain as a means of production,
and if we go one step further back, this corn is not a means of
production in the hands of the farmer but the product. It is impossible
to find any means of production in which value is embodied, without it
being itself the product of some previous labour.
Secondly, speaking in terms of capitalism, it follows further that all
capital which has been completely used up in the manufacture of any
commodity, can in the end be resolved into a certain quantity of
performed labour.
Thirdly, the total value of the commodity, including all capital
advances, can readily be resolved in this manner into a certain quantity
of labour. What is true for every commodity, must go also for the
aggregate of commodities produced by a society in the course of a year;
its aggregate value can similarly be resolved into a quantity of
performed labour.
Fourthly, all labour performed under capitalist conditions is divided
into two parts: paid labour which restores the wages advanced, and
unpaid labour which creates profit and rent, or surplus value. All
labour carried out under capitalist conditions thus corresponds to our
formula _v + s_.[83]
All the arguments outlined above are perfectly correct and unassailable.
Smith handled them in a manner which proves his scientific analysis
consistent and undeviating, and his conceptions of value and surplus
value a distinct advance on the Physiocrat approach. Only occasionally,
in his third thesis, he went astray in his final conclusion, saying that
the aggregate value of the annually produced aggregate of commodities
can be resolved into the labour of that very year, although he himself
had been acute enough to admit elsewhere that the value of the
commodities a nation produces in the course of one year necessarily
includes the labour of former years as well, that is the labour embodied
in the means of production which have been handed down.
But even if the four statements enumerated are perfectly correct in
themselves, the conclusion Smith draws from them--that the total value
of every commodity, and equally of the annual aggregate of commodities
in a society, can be resolved entirely into _v + s_--is absolutely
wrong. He has the right idea that the whole value of a commodity
represents nothing but social labour, yet identifies it with a false
principle, that all value is nothing but _v + s_. The formula _v + s_
expresses the function of living labour under capitalism, or rather its
double function, first to restore the wages, or the variable capital,
and secondly, to create surplus value for the capitalist. Wage labour
fulfils this function whilst it is employed by the capitalists, in
virtue of the fact that the value of the commodities is realised in
cash. The capitalist takes back the variable capital he had advanced in
form of wages, and he pockets the surplus value as well. _v + s_
therefore expresses the relation between wage labour and capitalist, a
relationship that is terminated in every instance as soon as the
process of commodity production is finished. Once the commodity is sold,
and the relation _v + s_ is realised for the capitalist in cash, the
whole relationship is wiped out and leaves no traces on the commodity.
If we examine the commodity and its value, we cannot ascertain whether
it has been produced by paid or by unpaid labour, nor in what proportion
these have contributed. Only one fact is beyond doubt: the commodity
contains a certain quantity of socially necessary labour which is
expressed in its exchange. It is completely immaterial for the act of
exchange as well as for the use of the commodity whether the labour
which produced it could be resolved into _v + s_ or not. In the act of
exchange all that matters is that the commodity represents value, and
only its concrete qualities, its usefulness, are relevant to the use we
make of it. Thus the formula _v + s_ only expresses, as it were, the
intimate relationship between capital and labour, the social function of
wage labour, and in the actual product this is completely wiped out. It
is different with the constant capital which has been advanced and
invested in means of production, because every activity of labour
requires certain raw materials, tools, and buildings. The capitalist
character of this state of affairs is expressed by the fact that these
means of production appear as capital, as _c_, the property of a person
other than the labourer, divorced from labour, the property of those who
themselves do not work. Secondly, the constant capital _c_, a mere
advance laid out for the purpose of creating surplus value, appears here
only as the foundation of _v + s_. Yet the concept of constant capital
involves more than this: it expresses the function of the means of
production in the process of human labour, quite independently of all
its historical or social forms. Everybody must have raw materials and
working tools, the means of production, be it the South Sea Islander for
making his family canoe, the communist peasant community in India for
the cultivation of their communal land, the Egyptian fellah for tilling
his village lands or for building Pharaoh's pyramids, the Greek slave in
the small workshops of Athens, the feudal serf, the master craftsman of
the medieval guild, or the modern wage labourer. They all require means
of production which, having resulted from human labour, express the link
between human labour and natural matter, and constitute the eternal and
universal prerequisites of the human process of production. _c_ in the
formula _c + v + s_ stands for a certain function of the means of
production which is not wiped out in the succession of the labour
process. Whereas it is completely immaterial, for both the exchange and
the actual use made of a commodity, whether it has been produced by paid
or by unpaid labour, by wage labour, slave labour, forced labour or any
other kind of labour; on the other hand, it is of decisive importance,
as for using it, whether the commodity is itself a means of production
or a consumer good. Whether paid or unpaid labour has been employed in
the production of a machine, matters to the machinery manufacturer and
to his workers, but only to them; for society, when it acquires this
machine by an act of exchange, only the quality of this machine as a
means of production, only its function in the process of production is
of importance. Just as every producing society, since time immemorial,
has had to give due regard to the important function of the means of
production by arranging, in each period of production, for the
manufacture of the means of production requisite for the next period, so
capitalist society, too, cannot achieve its annual production of value
to accord with the formula _v + s_--which indicates the exploitation of
wage labour--unless there exists, as the result of the preceding period,
the quantity of means of production necessary to make up the constant
capital. This specific connection of each past period of production with
the period following forms the universal and eternal foundation of the
social process of reproduction and consists in the fact that in every
period parts of the produce are destined to become the means of
production for the succeeding period: but this relation remained hidden
from Smith's sight. He was not interested in means of production in
respect of their specific function within the process to which they are
applied; he was only concerned with them in so far as they are like any
other commodity, themselves the product of wage labour that has been
employed in a capitalist manner. The specifically capitalist function of
wage labour in the productive process completely obscured for him the
eternal and universal function of the means of production within the
labour process. His narrow bourgeois approach overlooked completely the
general relations between man and nature underneath the specific social
relations between capital and wage labour. Here, it seems, is the real
source of Adam Smith's strange dogma, that the total value of the
annual social product can be resolved into _v + s_. He overlooked the
fact that _c_ as the first link in the formula _c + v + s_ is the
essential expression of the general social foundation of exploitation of
wage labour by capital.
We conclude that the value of every commodity must be expressed by the
formula _c + v + s_. The question now arises how far this formula
applies to the aggregate of commodities within a society. Let us turn to
the doubts expressed by Smith on this point, the statement that an
individual's fixed and circulating capital and his revenue do not
strictly correspond to the same categories from the point of view of
society. (Cf. above, p. 64, no. 3.) What is circulating capital for one
person is not capital for another, but revenue, as for instance capital
advances for wages. This statement is based upon an error. If the
capitalist pays wages to the workers, he does not abandon his variable
capital and let it stray into the workers' hands, to become their
income. He only exchanges the value-form of his variable capital against
its natural form, labour power. The variable capital remains always in
the hand of the capitalist, first as money, and then as labour power, to
revert to him later together with the surplus value as the cash proceeds
from the commodities. The worker, on the other hand, never gains
possession of the variable capital. His labour power is never capital to
him, but it is his only asset, the power to work is the only thing he
possesses. Again, if he has sold it and taken a money wage, this wage is
for him not capital but the price of his commodity which he has sold.
Finally, the fact that the worker buys provisions with the wages he has
received, has no more connection with the function this money once
fulfilled as variable capital in the hands of the capitalist, than has
the private use a vendor of a commodity can make of the money he has
obtained by a sale. It is not the capitalist's variable capital which
becomes the workers' income, but the price of the worker's commodity
'labour power' which he has sold, while the variable capital, now as
ever, remains in the hands of the capitalist and fulfils its specific
function. Equally erroneous is the conception that the income of the
capitalist (the surplus value) which is hidden in machines--in our
example of a machinery manufacturer--which has not as yet been realised,
is fixed capital for another person, the buyer of the machines. It is
not the machines, or parts of them, which form the income of the
machinery manufacturer, but the surplus value that is hidden in
them--the unpaid labour of his wage labourers. After the machine has
been sold, this income simply remains as before in the hand of the
machinery manufacturer; it has only changed its outward shape: it has
been changed from the 'machine-form' into the 'money-form'. Conversely,
the buyer of this machine has not, by its purchase, newly obtained
possession of his fixed capital, for he had this fixed capital in hand
even before the purchase, in the form of a certain amount of cash. By
buying this machine, he has only given to his capital the adequate
material form for it to become productive. The income, or surplus value,
remains in the hands of the machinery manufacturer before and after the
sale of the machine, and the fixed capital remains in the hands of the
other person, the capitalist buyer of the machine, just as the variable
capital in the first example always remained in the hands of the
capitalist and the income in the hands of the worker.
Smith and his followers have caused confusion because, in their
investigation of capitalist exchange, they mixed up the use-form of the
commodities with their relations of value. Further, they did not
distinguish the individual circulations of capitals and commodities
which are ever interlacing. One and the same act of exchange can be
circulation of capital, when seen from one aspect, and at the same time
simple commodity exchange for the purpose of consumption. The fallacy
that whatever is capital for one person must be income for another, and
_vice versa_, must be translated thus into the correct statement that
what is circulation of capital for one person, may be simple commodity
exchange for another, and _vice versa_. This only expresses the capacity
of capital to undergo transformations of its character, and the
interconnections of various spheres of interest in the social process of
exchange. The sharply outlined existence of capital in contrast with
income still stands in both its clearly defined forms of constant and
variable capital. Even so, Smith comes very close to the truth when he
states that capital and income of the individual are not strictly
identical with the same categories from the point of view of the
community. Only a few further connecting links are lacking for a clear
revelation of the true relationship.