Theories of Surplus Value, Marx 1861-3
[Chapter XV] Ricardo’s Theory of Surplus-Value
[A. The Connection Between Ricardo’s Conception of
Surplus-Value and his Views on Profit and Rent]
[1. Ricardo’s Confusion of the Laws of
Surplus-Value with the Laws of Profit]
||636| Nowhere does Ricardo
consider surplus-value separately and independently
from its particular forms—profit (interest) and
rent. His observations on the organic composition of
capital, which is of such decisive importance, are therefore
confined to those differences in the organic composition
which he took over from Adam Smith (actually from the
Physiocrats), namely, those arising from the process of
circulation (fixed and circulating cap-ital). Nowhere
does he touch on or perceive the differences in the organic
composition within the actual process of production.
Hence his confusion of value with cost-price,
his wrong theory of rent, his erroneous laws relating to the
causes of the rise and fall in the rate of profit, etc.
Profit and surplus-value are only identical when the
capital advanced is identical with the capital laid out
directly in wages. (Rent is not taken into account
here since the surplus-value is, in the first place,
entirely appropriated by the capitalist, [irrespective of]
what portion he has subsequently to hand over to his
co-partners. Furthermore, Ricardo himself presents
rent as an item which is separated, detached from
profit.) In his observations on profit and wages,
Ricardo also abstracts from the constant part of capital,
which is not laid out in wages. He treats the matter
as though the entire capital were laid out directly in
wages. To this extent, therefore, he considers
surplus-value and not profit, hence it is
possible to speak of his theory of surplus-value. On
the other hand, however, he thinks that he is dealing with
profit as such, and in fact views which are based on the
assumption of profit and not of surplus-value, constantly
creep in. Where he correctly sets forth the laws of
surplus-value, he distorts them by immediately expressing
them as laws of profit. On the other hand, he seeks to
present the laws of profit directly, without the
intermediate links, as laws of surplus-value.
When we speak of his theory of surplus-value, we are,
therefore, speaking of his theory of profit, in so far as he
confuses the latter with surplus-value, i.e., in so far as
he only considers profit in relation to variable capital,
the part of capital laid out in wages. We shall later
deal with what he says of profit as distinct from
surplus-value.
It is so much in the nature of the subject-matter that
surplus-value can only be considered in relation to the
variable capital, i.e., capital laid out directly in
wages—and without an understanding of surplus-value no
theory of profit is possible—that Ricardo treats the
entire capital as variable capital and abstracts from
constant capital, although he occasionally mentions it in
the form of advances.
||637| In Chapter XXVI
“On Gross and Net Revenue” Ricardo speaks
of:
“trades where profits are in
proportion to the capital, and not in
proportion to the quantity of labour employed”
([David Ricardo, On the Principles of Political Economy,
and Taxation, third edition,] p. 418).
What does his whole doctrine of average profit (on which
his theory of rent depends) mean, but that profits are
“in proportion to the capital, and not
in proportion to the quantity of labour
employed”? If they were “in proportion to
the quantity of labour employed”, then equal capitals
would yield very unequal profits, since their profit
would be equal to the surplus-value created in their own
sphere of production; the surplus-value however depends not
on the size of the capital as a whole, but on the size of
the variable capital, which is equivalent to the quantity of
labour employed. What then is the meaning of
attributing to a specific use of capital, to specific
trades, by way of exception, that in them profits are
proportionate to the amount of capital and not to the
quantity of labour employed? With a given rate of
surplus-value, the amount of surplus-value for a particular
capital must always depend, not on the absolute size of the
capital, but on the quantity of labour employed. On
the other hand, if the average rate of profit is given, the
amount of profit must always depend on the size of the
capital employed and not on the quantity of labour
employed. Ricardo expressly mentions the
“carrying trade, the distant foreign
trade, and trades where expensive machinery is
required” (l.c., p. 418).
That is to say, he speaks of trades which employ
relatively large amounts of constant, and little variable
capital. At the same time, they are trades in which,
compared with others, the total amount of the capital
advanced is large, or which can only be carried on with
large capitals. If the rate of profit is given,
the amount of profit depends entirely on the size of
the capitals advanced. This, however, by no means
distinguishes the trades in which large capitals and much
constant capital are employed (the two always go together)
from those in which small capitals are employed, but is
merely an application of the theory that equal capitals
yield equal profits, a larger capital therefore yields more
profit than a smaller capital. This has nothing to do
with the “quantity of labour employed”.
But whether the rate of profit in general is great or small,
depends indeed on the total quantity of labour employed by
the capital of the whole class of capitalists and on the
proportion of unpaid labour; and, lastly, on the
ratio of the capital spent on labour and the capital that is
merely reproduced as a condition of production.
Ricardo himself argues against Adam Smith’s view,
“… that the great profits
which are sometimes made by particular merchants in foreign
trade, will elevate the general rate of profits in the
country…” (l.c., Chapter VII “On
Foreign Trade”, p. 132).
He says:
“… They contend, that the
equality of profits will be brought about by the general
rise of profits; and I am of opinion, that the profits of
the favoured trade will speedily subside to the general
level” (l.c., pp. 132-33).
We shall see later, how far his view is correct that
exceptional profits (when they are not caused by the rise in
market-price above the value) do not raise the general rate
of profit in spite of the equalisation of profits,
and also how far his view is correct that foreign trade and
the expansion of the market cannot raise the rate of
profit. But granted that he is right, and, on the
whole granted “the equality of profits”, how can
he distinguish between trades “where profits are in
proportion to the capital”and others
where they are “in proportion to the quantity of
labour employed”?
In Chapter XXVI, “On Gross and Net
Revenue”, quoted above, Ricardo says:
“I admit, that from the nature of
rent, a given capital employed in agriculture, on any but
the land last cultivated, puts in motion a greater quantity
of labour than an equal capital employed in manufactures and
trade” (l.c., p. 419).
The whole statement is nonsense. In the first
place, according to Ricardo, a greater quantity of labour is
employed on the land last cultivated than on all the other
land. That is why, according to him, rent arises on
the other land. How, therefore, is a given capital to
set in motion a greater quantity of labour than in
manufactures and trade, on all other land except the
land last cultivated? That the product of the better
land has a market-value that is higher than
the individual value, which is determined by the
quantity of labour employed by the capital that cultivates
it, is surely not the same thing as that this capital
“puts in motion a greater quantity of labour than an
equal capital employed in manufactures and
trade”? But it would have been correct, had
Ricardo said that, apart from differences in the fertility
of the land, altogether rent arises because agricultural
capital sets in motion a greater quantity of labour in
proportion to the constant part of the capital, than does
the average non-agricultural capital.
||638| Ricardo overlooks the
fact that, with a given surplus-value, various
factors may raise or lower and in general influence the rate
of profit. Because he identifies surplus-value with
profit, he quite consistently seeks to demonstrate that the
rise and fall in the rate of profit is caused only by
circumstances that make the rate of surplus-value rise or
fall. Apart from the circumstances which, when the
amount of surplus-value is given, influence the rate of
profit, although not the amount of profit, he
furthermore overlooks the fact that the rate of profit
depends on the amount of surplus-value, and by no
means on the rate of surplus-value. When
the rate of surplus-value, i.e., of surplus-labour, is
given, the amount of surplus-value depends on the organic
composition of the capital, that is to say, on the number of
workers which a capital of given value, for instance £
100, employs. It depends on the rate of surplus-value
if the organic composition of the capital is given. It
is thus determined by two factors: the number of workers
simultaneously employed and the rate of
surplus-labour. If the capital increases, then the
amount of surplus-value also increases whatever its organic
composition, provided it remains unchanged. But this
in no way alters the fact that for a capital of given value,
for example 100, it [the amount of surplus-value] remains
the same. If in this case it is 10, then it is 100 for
£ 1,000, but this does not alter the proportion.
<Ricardo:
“There cannot be two rates of
profit in the same employment, and therefore when the
value of produce is in different proportions to capital, it
is the rent which will differ, and not the profit”
(l.c., Chapter XII “Land-Tax,”
pp. 212-13).
This only applies to the normal rate of profit “in
the same employment”. Otherwise it is in direct
contradiction to the statements quoted earlier on:
“The exchangeable value of all
commodities, whether they be manufactured, or the produce of
the mines, or the produce of land, is always regulated, not
by the less quantity of labour that will suffice for their
production under circumstances highly favourable, and
exclusively enjoyed by those who have peculiar facilities of
production; but by the greater quantity of labour
necessarily bestowed on their production by those who have
no such facilities; by those who continue to produce them
under the most unfavourable circumstances; meaning—by
the most unfavorable circumstances, the most unfavorable
under which the quantity of produce required, renders it
necessary to carry on the production” (l.c.,
Chapter II “On Rent”, pp. 60-61).>
In Chapter XII “Land-Tax”, Ricardo
incidentally makes the following remark directed against
Say; it shows that the Englishman is always very conscious
of the economic distinctions whereas the Continental
constantly forgets them:
“M. Say supposes, ‘A landlord
by his assiduity, economy and skill, to increase his
annual revenue by 5,000 francs;’ but a landlord has no
means of employing his assiduity, economy and skill on his
land, unless he farms it himself; and then it is in quality
of capitalist and farmer that he makes the improvement, and
not in quality of landlord. It is not conceivable that
he could so augment the produce of his farm by any
peculiar skill” (the “skill”
therefore is more or less empty talk) “on his part,
without first increasing the quantity of capital employed
upon it” (l.c., p. 209).
In Chapter XIII “Taxes on Gold”
(important for Ricardo’s theory of money), Ricardo makes
some additional reflections or further definitions relating
to market-price and natural price. They
amount to this, how long the equalisation of the two prices
takes depends on whether the particular sphere of production
permits a rapid or slow increase or reduction of supply,
which in turn is equivalent to a rapid or slow
transfer or withdrawal of capital to or from the
sphere in question. Ricardo has been criticised by
many writers (Sismondi, etc.) because, in his observations
on rent, he disregards the difficulties that the
withdrawal of capital presents for the farmer who
employs a great deal of fixed capital, etc. (The
history of England from 1815 to 1830 provides strong
proof for this.) Although this objection is quite
correct, it does not in any way affect the theory, it
leaves it quite untouched, because in this case it is
invariably only a question of the more or less rapid or slow
operation of the economic law. But as regards the
reverse objection, which refers to the application of
new capital to new land, the situation is quite
different. Ricardo assumes that this can take place
without the intervention of the landlord, that in
this case capital is operating in a field of action ||639|, in which it does not meet
with any resistance. But this is fundamentally
wrong. In order to prove this assumption, that
this is indeed so, where capitalist production and landed
property are developed, Ricardo always presupposes cases in
which landed property does not exist, either in fact
or in law, and where capitalist production too is not
yet developed, at least not on the land.
The statements just referred to are the following:
“The rise in the price of
commodities, in consequence of taxation or of difficulty of
production, will in all cases ultimately ensue; but the
duration of the interval, before the market-price
will conform to the natural price, must depend on the
nature of the commodity, and on the facility with
which it can be reduced in quantity. If the
quantity of the commodity taxed could not be diminished, if
the capital of the farmer or of the hatter for instance,
could not be withdrawn to other employments, it would be of
no consequence that their profits were reduced below the
general level by means of a tax; unless the demand for their
commodities should increase, they would never be able to
elevate the market-price of corn and of bats up to their
increased natural price. Their threats to leave their
employments, and remove their capitals to more favoured
trades, would be treated as an idle menace which could not
be carried into effect; and consequently the price would not
be raised by diminished production.
Commodities, however, of all descriptions can be
reduced in quantity, and capital can be removed from
trades which are less profitable to those which are more so,
but with different degrees of rapidity. In
proportion as the supply of a particular commodity can be
more easily reduced, without inconvenience to the producer,
the price of it will more quickly rise after the difficulty
of its production has been increased by taxation, or by any
other means” (l.c., pp. 214-15).
“The agreement of the market and
natural price of all commodities, depends at all times on
the facility with which the supply can be increased or
diminished. In the case of gold, houses, and labour,
as well as many other things, this effect cannot, under some
circumstances, be speedily produced. But it is
different with those commodities which are consumed and
reproduced from year to year; such as hats, shoes, corn, and
cloth; they may be reduced, if necessary, and the interval
cannot be long before the supply is contracted in proportion
to the increased charge of producing them” (l.c., pp.
220-21).
[2. Changes in the Rate of Profit Caused by Various
Factors]
In the same Chapter XIII “Taxes on
Gold”, Ricardo speaks of
“rent being not a creation, but
merely a transfer of wealth” (l.c., p. 221).
Is profit a creation of wealth, or is it not
rather a transfer of the surplus-labour, from the
workman to the capitalist? In fact wages too,
are not a creation of wealth. But they are not
a transfer. They are the appropriation of part of the
produce of labour by those who produced it.
In the same chapter Ricardo says:
“A tax on raw produce from the
surface of the earth, will…fall on the
consumer, and will in no way affect rent; unless, by
diminishing the funds for the maintenance of labour, it
lowers wages, reduces the population, and diminishes the
demand for corn” (l.c., p. 221).
Whether Ricardo is right when he says that “a tax
on raw produce from the surface of the earth”
falls neither on the landlord nor on the farmer but on the
consumer, does not concern us here. I maintain,
however, that, if he is right, such a tax may raise the
rent, whereas he thinks that it does not affect it,
unless, by increasing the price of the means of subsistence,
etc., it diminishes capital, population and the demand for
corn, etc. For Ricardo imagines that an increase in
the price of raw produce only affects the rate of
profit in so far as it raises the price of the means
of subsistence of the worker. And it is true that
an increase in the price of raw produce can only in
this way affect the rate of surplus-value and
consequently surplus-value itself, thereby
affecting the rate of profit. But assuming a given
surplus-value, an increase in the price of the
“raw produce from the surface of the earth”
would raise the value of constant capital in
proportion to the variable, would increase the ratio of
constant capital to variable and therefore reduce the
rate of profit, thus raising the rent.
Ricardo starts out from the view point ||640| that in so far as the rise or
fall in the price of the raw produce does not affect
wages, it does not affect profit; for, he argues
<except in one passage to which we shall return at a
later stage> that the rate of profit remains the same,
whether the value of the capital advanced falls or
rises. If the value of the capital advanced grows,
then the value of the product grows and also the part of the
product which forms the surplus-product, i.e., profit.
The reverse happens when the value of the capital advanced
falls. This [Ricardo’s assertion] is only correct, if
the values of variable and constant capital change in the
same proportion, whether the change is caused by a
rise in the price of raw materials or by taxes, etc.
In this case the rate remains unaffected, because no change
has occurred in the organic composition of the
capital. And even then it must be
assumed—as is the case with temporary
changes—that wages remain the same, whether the price
of raw produce rises or falls (in other words wages remain
the same, that is, their value remains unchanged
irrespective of any rise or fall in the use-value of the
wages).
The following possibilities exist:
First the two major differences:
A. A change in the method of production
brings about a change in the proportion between the
amounts of constant and variable capital employed. In
this case the rate of surplus-value remains the same
provided wages remain constant (in terms of value) <i.e.,
in terms of the labour-time they represent>. But
the surplus-value itself is affected if a different number
of workers is employed by the same capital, i.e., if there
is an alteration in the variable capital. If the
change in the method of production results in a relative
fall in constant capital, the surplus-value grows and thus
the rate of profit. The reverse case produces the
opposite result.
It is here assumed throughout that the value pro
tanto, per £ 100 for example, of constant
and variable capital remains the same.
In this case the change in the method of production
cannot affect constant and variable capital equally; that
is, for instance, constant and variable
capital—without a change in value—cannot
increase or diminish to the same extent, for the fall or
rise is here always the result of a change in the
productivity of labour. A change in the method of
production has not the same but a different effect
[on constant and variable capital]; and this has nothing to
do with whether a large or small amount of capital has to be
employed with a given organic composition of
capital.
B. The method of production remains the
same. There is a change in the ratio of
constant to variable capital, while their relative
volume [in physical units] remains the same (so that each of
them forms the same proportion of the total capital as
before). This change in their ratio is caused by a
change in the value of the commodities which enter
into constant or variable capital.
The following possibilities exist here:
[1.] The value of the constant capital remains the same
while that of the variable capital rises or falls.
This would always affect the surplus-value, and thereby the
rate of profit.
[2.] The value of the variable capital remains the same
while that of the constant rises or falls. Then the
rate of profit would fall in the first case and rise in the
second.
[3.] If both fall simultaneously, but in different
proportions, then the one has always risen or fallen as
compared with the other.
[4.] The value of the constant and of the variable
capital is equally affected, whether both rise or
both fall. If both rise, then the rate of profit
falls, not because the constant capital rises but because
the variable capital rises and accordingly the
surplus-value falls (for only the value [of the variable
capital] rises, although it sets in motion the same number
of workers as before. or perhaps even a smaller
number). If both fall, then the rate of profit rises,
not because constant capital falls, but because the variable
falls (in terms of value) and therefore the surplus-value
increases.
C. Change in the method of production and change
in the value of the elements that form constant or variable
capital. Here one change may neutralise the other,
for example, when the amount of constant capital grows while
its value falls or remains the same (i.e., it falls pro
tanto, per £ 100) or when its amount falls but its
value rises in the same proportion or remains the same
(i.e., it rises pro tanto). In this case there
would be no change at all in the organic composition.
The rate of profit would remain unchanged. But it can
never happen—except in the case of agricultural
capital—that the amount of the constant capital falls
as compared with the variable capital, while its value
rises.
This type of nullification cannot possibly apply to
variable capital (while the real wage remains
unchanged).
Except for this one case, it is therefore only possible
for the value and amount of the constant capital to fall or
rise simultaneously in relation to the variable capital, its
value therefore rises or falls absolutely as compared with
the variable capital. This case has already been
considered. Or they may fall or rise simultaneously
||641| but in unequal
proportion. On the assumption made, this possibility
always reduces itself to the case in which the value of the
constant capital rises or falls relatively to the
variable.
This also includes the other case. For if the
amount of the constant capital rises, then the amount of the
variable capital falls relatively, and vice versa.
Similarly with the value. |641||
[3. The Value of Constant Capital Decreases While
That of Variable Capital Increases and Vice Versa, and the
Effect of These Changes on the Rate of Profit]
|642| In regard to case C, [page], 640, it
should also be noted:
It would be possible for the wages to rise but for
constant capital to fall in terms of value, not in
physical terms. If the rise and fall were
proportional on both sides, the rate of profit could remain
unchanged. For instance, if the constant capital were
£ 60, wages [£] 40 and the rate of surplus-value
50 per cent, then the product would be [£] 120.
The rate of profit would be 20 per cent. If the
constant capital fell to [£] 40, although its volume
[in physical terms] remained unchanged, and wages rose to
£ 60, while the surplus-value fell from 50 per cent to
33 1/3 per cent, then the product
would be £ 120 and the rate of profit 20 per
cent. This is wrong.
According to the assumption, the total value of the
quantity of labour employed is £ 60. Hence, if
the wage rose to £ 60, surplus-value and therefore the
rate of profit would be nil, But if it did not rise to such
an extent, then any rise in the wage would bring about a
fall in the surplus-value. If wages rose to £
50, then the surplus-value would be £ 10, if [they
rose] to £ 45, then [the surplus-value would be]
£ 15, etc. Under all circumstances, therefore,
the surplus-value and the rate of profit would fall to the
same degree. For we are measuring the unchanged total
capital here. While the magnitude of the capital (the
total capital) remains the same the rate of profit must
always rise and fall, not with the rate of surplus-value but
with the absolute amount of surplus-value. But if, in
the above example, the flax fell so low that the amount
which the same number of workers were spinning could be
bought for £40, then we would have the following:
|
constant capital
|
Variable capital
|
Surplus-value
|
Value of the product
|
Capital advanced
|
Rate of Profit
|
|
40
|
50
|
10
|
100
|
90
|
111/9 per cent
|
The rate of profit would have fallen below 20 per
cent. But supposing:
|
constant capital
|
Variable capital
|
Surplus-value
|
Value of the product
|
Capital advanced
|
Rate of Profit
|
|
30
|
50
|
10
|
90
|
80
|
121/2 per cent
|
Supposing:
|
constant capital
|
Variable capital
|
Surplus-value
|
Value of the product
|
Capital advanced
|
Rate of Profit
|
|
20
|
50
|
10
|
80
|
70
|
142/7 per cent
|
According to the assumption, the fall in the value of the
constant capital never completely counterbalances the rise
in the value of the variable capital. On the
assumption made, it can never entirely cancel it out, since
for the rate of profit to be 20, [£] 10 would have to
be a fifth of the total capital advanced. But in the
case in which the variable capital amounts to [£] 50,
this would only be possible when the constant capital is
nil. Assume, on the other hand, that variable capital
rose only to [£] 45; in this case the surplus-value
would be [£] 15. And, say, the constant capital
fell
|
constant capital
|
Variable capital
|
Surplus-value
|
Value of the product
|
Capital advanced
|
Rate of Profit
|
|
30
|
45
|
15
|
90
|
75
|
20 per cent
|
In this case the two movements cancel each other out
entirely.
||643| Assume further:
|
constant capital
|
Variable capital
|
Surplus-value
|
Value of the product
|
Capital advanced
|
Rate of Profit
|
|
20
|
45
|
15
|
80
|
65
|
231/13 per cent
|
Even with the fall in the surplus-value, therefore, the
rate of profit could rise in this case, because of
the proportionately greater fall in the value of the
constant capital. More workers could be employed with
the same capital of 100, despite the rise in wages and the
fall in the rate of surplus-value. Despite the fall in
the rate of surplus-value, the amount of surplus-value, and
hence the profit, would increase, because the number of
workers had increased, For the above ratio of 20c + 45v
gives us the following proportions with a capital outlay of
100:
|
constant capital
|
Variable capital
|
Surplus-value
|
Value of the product
|
Capital advanced
|
Rate of Profit
|
|
3010/13
|
693/13
|
231/13
|
1231/13
|
100
|
231/13 per cent
|
The relation between the rate of surplus-value and the
number of workers becomes very important here. Ricardo
never considers it. |643||
***
||641| It is clear that what
has been regarded here as a variation within the
organic composition of one capital, can apply equally
to the difference in the organic composition between
different capitals, capitals in different spheres of
production.
Firstly: Instead of a variation in the organic
composition of one capital—a difference in the
organic composition of different capitals.
Secondly: Alteration in the organic composition
through a change in value in the two parts of one
capital, similarly a difference in the value of the
raw materials and machinery employed by
different capitals. This does not apply to variable
capital, since equal wages in the different branches of
production are assumed. The difference in the
value of different days of labour in different
spheres has nothing to do with it. If the
labour of a goldsmith is dearer than that of a labourer,
then the surplus-time of the goldsmith is proportionately
dearer than that of the labourer. |641||
[4. Confusion of Cost-Prices with Value in the
Ricardian Theory of Profit]
||641| In Chapter XV
“Taxes on Profits” Ricardo says:
“Taxes on those commodities, which
are generally denominated luxuries, fall on those only who
make use of them… But taxes on necessaries do
not affect the consumers of necessaries, in proportion to
the quantity that may be consumed by them, but often in a
much higher proportion.” “For example, a tax on
corn…it alters the rate of profits of
stock… Whatever raises the wages of labour,
lowers the profits of stock; therefore every tax on any
commodity consumed by the labourer, has a tendency to lower
the rate of profits” (l.c. p. 231).
Taxes on consumers are at the same time taxes on
producers, in so far as the object taxed enters not only
into individual consumption but also into industrial
consumption, or only into the latter. This does not,
however, apply only to the necessaries consumed by
workmen. It applies to all materials industrially
consumed by the capitalist. Every tax of this kind
reduces the rate of profit, because it raises the value of
the constant capital in relation to the variable. For
example, a tax imposed on flax or wool. ||642| The flax rises in price.
The flax spinner can therefore no longer purchase the same
quantity of flax with a capital of £ 100. Since
the method of production has remained the same, he needs the
same number of workers to spin the same quantity of
flax. But the flax has a greater value than before, in
relation to the capital laid out in wages. The rate of
profit therefore falls. It does not help him at all
that the price of linen-yarn rises. The absolute level
of this price is in fact immaterial to him. What
matters is only the excess of this price over the price of
the capital advanced. If he wanted to raise [the price
of] the total product, not only by [the amount necessary to
cover the increase in] the price of the flax, but to such an
extent that the same quantity of yarn would yield him the
same profit as before, then the demand —which is
already falling as a result of the rising price of the raw
material of the yarn—would fall still further because
of the artificial rise due to the higher profit.
Although the average rate of profit is given, it is not
possible in such cases to raise the price in this way.
|642||
||643| [In] Chapter
XV “Taxes on Profits” Ricardo says:
“In a former part of this work, we
discussed the effects of the division of capital into fixed
and circulating, or rather into durable and perishable
capital, on the prices of commodities. We skewed that
two manufacturers might employ precisely the same amount of
capital, and might derive from it precisely the same amount
of profits, but that they would sell their commodities for
very different sums of money, according as the capitals they
employed were rapidly, or slowly, consumed and
reproduced. The one might sell his goods for £
4,000, the other for £ 10,000, and they might both
employ £10,000 of capital, and obtain 20 per cent
profit, or £ 2,000. The capital of one might
consist, for example,[a] of £ 2,000 circulating
capital, to be reproduced, and £ 8,000 fixed, in
buildings and machinery; the capital of the other, on the
contrary, might consist of £ 8,000 of circulating, and
of only £ 2,000 fixed capital in machinery and
buildings. Now, if each of these persons were to be
taxed ten per cent on his income, or £ 200, the one,
to make his business yield him the general rate of profit,
must raise his goods from £ 10,000 to £10,200;
the other would also be obliged to raise the price of his
goods from £ 4,000 to £ 4,200. Before the
tax, the goods sold by one of these manufacturers were 2
1/2 times more valuable than the goods
of the other; after the tax they will be 2.42 times more
valuable: the one kind will have risen two per cent; the
other five per cent: consequently a tax upon income, whilst
money continued unaltered in value, would alter the relative
prices and value of commodities” (l.c.,
pp. 234-35).
The error lies in this final
“and”—”prices and
value”. This change of prices would only
show—just as in the case of capital containing
different proportions of fixed and circulating
capital—that the establishment of the general rate
of profit requires that the prices or cost-prices which
are determined and regulated by that general rate of profit
[are] very different from the values of the
commodities. And this most important aspect of the
question does not exist for Ricardo at all.
In the same chapter he says:
“If a country were not taxed, and
money should fall in value, its abundance in every
market” (here [he expresses] the absurd notion that a
fall in the value of money ought to be accompanied by its
abundance in every market) ||644| “would produce similar
effects in each. If meat rose 20 per cent, bread,
beer, shoes, labour, and every commodity, would also
rise 20 per cent; it is necessary they should do so, to
secure to each trade the same rate of profits. But
this is no longer true when any of these commodities is
taxed; if, in that case, they should all rise in proportion
to the fall in the value of money, profits would be
rendered unequal; in the case of the commodities taxed,
profits would be raised above the general level, and
capital would be removed from one employment to another,
till on equilibrium of profits was restored, which could
only be, after the relative prices were
altered” (l.c., pp. 236-37).
And so this equilibrium of profits is after all brought
about by the relative values, the “real
values” of the commodities being altered, and so
adjusted that they correspond, not to their real value, but
to the average profit which they must yield.
[5. The General Rate of Profit and the Rate of
Absolute Rent in Their Relation to Each Other. The
Influence on Cost-Prices of a Reduction in Wages]
In Chapter XVII: “Taxes on other Commodities
than Raw Produce”, Ricardo says:
“Mr. Buchanan considers corn and raw
produce as at a monopoly price, because they yield
a rent : all commodities which yield a rent,
he supposes must be at a monopoly price; and thence
he infers, that all taxes on raw produce would fall on the
landlord, and not on the consumer. ‘The price
of corn,’ he says, ‘which always affords a
rent, being in no respect influenced by the expenses of
its production, those expenses must be paid out of
the rent; and when they rise or fall, therefore, the
consequence is not a higher or lower price, but
a higher or […] lower rent. In this
view, all taxes on farm servants, horses, or the implements
of agriculture, are in reality land-taxes; the burden
falling on the farmer during the currency of his lease, and
on the landlord, when the lease comes to be renewed.
In like manner all those improved implements of husbandry
which save expense to the farmer, such as machines for
threshing and reaping, whatever gives him easier access to
the market, such as good roads, canals and bridges, though
they lessen the original cost of corn, do not lessen its
market price. Whatever is saved by those
improvements, therefore, belongs to the landlord as part of
his rent.’
“It is evident” (says Ricardo)
“that if we yield to Mr. Buchanan the basis on which
his argument is built, namely, that the price of corn always
yields a rent, all the consequences which he contends for
would follow of course” (l.c., pp. 292-93).
This is by no means evident. What Buchanan bases
his argument on is not that all corn yields a rent, but that
all corn which yields a rent is sold at a monopoly
price, and that monopoly price—in the sense in
which Adam Smith explains it and it has the same meaning
with Ricardo—is “the very highest price at which
the consumers are willing to purchase it”.[b]
But this is wrong. Corn which yields a rent (apart
from differential rent) is not sold at a monopoly price in
Buchanan’s sense. It is sold at a monopoly price,
only in so far as it is sold above its cost-price and at
its value. Its price is determined by the one
quantity of labour embodied in it, not by the cost of
producing it, and the rent is the excess of the value over
the cost-price, it is therefore determined by the
latter. The smaller is the cost-price relatively to
the value, the greater will be the rent, and the greater the
cost-price in relation to the Value, the smaller the
rent. All improvements lower the value of the corn
because [they reduce] the quantity of labour required for
its production. Whether they reduce the rent, depends
on various circumstances. If the corn becomes cheaper,
and if wages are thereby reduced, then the rate of
surplus-value rises. Furthermore, the farmer’s
expenses in seeds, fodder, etc., would fall. And
therewith the rate of profit in all other, non-agricultural,
branches of production would rise, hence also in
agriculture. The relative amounts of immediate and
accumulated labour would remain unchanged in the
non-agricultural spheres of production; the number of
workers (in relation to constant capital) would remain the
same, but the value of the variable capital [would] fall,
the surplus-value ||645| would
therefore rise, and also the rate of profit.
Consequently [they would] also rise in
agriculture. Rent falls here because the rate of
profit rises. Corn becomes cheaper, but its
cost-price rises. Hence the difference between its
value and its cost-price falls.
According to our assumption the ratio for the average
non-agricultural capital was £ 80c+£ 20v, the
rate of surplus-value 50 per cent, hence surplus-value
£ 10 and the rate of profit 10 per cent. The
value of the product of the average capital of £ 100
was therefore £ 110.
If one assumes, that as a result of the lowering of the
price of grain, wages fell by one-quarter, then the same
number of workers employed on a constant capital of
£ 80, that is on the same amount of raw material and
machinery, would now cost only £ 15. And the
same amount of commodities would be worth £
80c+£ 15v+£ 15s, since, according to the
assumption, the quantity of labour which they perform equals
£ 30. Thus the value of the same amount of
commodities is £ 110, as before. But the capital
advanced would now amount only to £ 95 and [the rate
of profit], £ 15 on £ 95, would be 15
15/19 per cent. If, however, the
same amount of capital were laid out, that is £ 100,
then the ratio would be: £ 84
4/19c+£ 15
15/19v. The profit, however,
would be £ 15 15/19. And
the value of the product would amount to £ 115
15/19. According to the
assumption, however, the agricultural capital was £
60c+£ 40v and the value of its product was £
120. Rent was £ 10, while the cost-price was
£ 110. Now the rent would only be £ 4
4/19. For £ 115
15/19+£ 4
4/19=£ 120.
We see here that the average capital of £ 100
produces commodities at a cost-price of £ 115
15/19 instead of the previous £
110. Has this caused the average price of the
commodity to rise?
Its value has remained the same, since the same amount of
labour is required to transform the same amount of raw
material and machinery into product. But the same
capital of £ 100 sets in motion more labour, and while
previously it transformed £ 80, now it transforms
£ 84 4/19 constant capital into
product. A greater proportion of this labour is,
however, now unpaid. Hence there is an increase in
profit and in the total value of the commodities
produced by [a capital of] £ 100. The value of
the individual commodity has remained the same, but more
commodities at the same value are being produced with
a capital of £ 100. What is however the position
of the cost-price in the individual branches of
production?
Let us assume that the non-agricultural capital consisted
of the following capitals:
|
|
|
[the price of the] product [must be:]
|
Difference between value and cost-price
|
|
I. 80c+20v
|
In order to
|
110 (value = 110)
|
0
|
|
II. 60c+40v
|
sell at the
|
110 (value = 120)
|
-10
|
|
III. 85c+15v
|
same cost-
|
110 (value = 1071/2)
|
+21/2
|
|
IV. 95c+5v
|
prices
|
110 (value = 1021/2)
|
+71/2
|
|
Thus the average capital = 80c + 20v
|
For II the difference is -10, for III and IV [taken
together] +10. For the whole capital of £ 400,
it is 0-10+10=0. If the product of the capital of
£ 400 is sold at £ 440, then the commodities
produced by it are sold at their value. This
yields [a profit of] 10 per cent. But in case II, the
commodities are sold at £ 10 below their value, in
case III at [£] 2 1/2 above
their value and in case IV at [£] 7
1/2 above their value. Only in
case I are they sold at their value if they are sold at
their cost-price, i.e., £ 100 capital + £ 10
profit.
||646| But what would be the
situation as a result of the fall in wages by
one-quarter?
For capital I: Instead of £
80c+£20v, [the outlay is] now 84
4/19c+15 15/19v,
profit £ 15 15/19,
value of the product £ 115
15/19.
For capital II: Now only £30 laid out in
wages, since 1/4 of 40=10 and
40-10=30. The product is £60c+£30v and the
surplus-value £30. (For the value of the
labour applied is £ 60.) [30 surplus-value]
on a capital of £90 equals 331/3
per cent. For a [capital of] £ 100 the ratio is:
£662/3c+£331/3v
and the value [of the product] is
£1331/3. The rate of
profit is 331/3.
For capital III: Now only 11
1/4 [laid out] in wages, for
1/4 of 15=3 3/4
and 15-3 3/4=11
1/4. The product would be
£ 85c+£ 111/4v and
surplus-value £ 11 1/4.
(Value of labour applied is £ 22
1/2.) [11
1/4] on a capital of £ 96
1/4. This amounts to 11
53/77 per cent. For £ 100
the ratio is 88 24/77c+11
53/77v. The rate of profit is
£ 11 53/77 and [the value of
the] product £ 111 53/77.
For capital IV: Now only 3
3/4 laid out in wages, for
1/4 of 5=1 1/4
and 5-11/4=3
3/4. The product is £
95c+£ 33/4v and the
surplus-value £ 3 3/4 (for the
value of the total labour is 7
1/2). [3
3/4] on a capital of 98
3/4. This amounts to 3
63/79 per cent. For 100 the
ratio is: 96 16/79c+3
63/79v. The rate of profit is 3
63/79. The value [of the
product] is 103 63/79.
We would therefore have the following:
|
|
Rate of profit
|
|
[the price of the] product [must be:]
|
Difference between cost-price and value
|
|
I. 844/19c + 1515/19v
|
1515/19
|
In order
|
116 (value = 11515/19)
|
+4/190
|
|
II. 662/3c+331/3v
|
331/3
|
to sell at
|
116 (value = 1131/3)
|
-171/3
|
|
III. 8824/77c+1153/77v
|
1153/77
|
the same
|
116 (value = 11153/77)
|
+424/77
|
|
IV. 9616/79c + 363/79v
|
363/79
|
cost-prices
|
116 (value = 10363/77)
|
+1216/79
|
|
Total 400
|
64 (to the nearest whole number)
|
This makes 16 per cent. More exactly, a little more
than l6 1/7 per cent. The
calculation is not quite correct because we have
disregarded, not taken into account a fraction of the
average profit; this makes the negative difference in II
appear a little too large and [the positive] in 1,111, IV a
little too small. But it can be seen that otherwise
the positive and negative differences would cancel out;
further, it can be seen that on the one hand the sale of II
below its value and of III and particularly of IV
above their value would increase considerably.
True, the addition to or reduction of the price would not be
so great for the individual product as might appear here,
since in all four categories more labour is employed and
hence more constant capital (raw materials and machinery) is
transformed into product. The increase or reduction in
price would thus be spread over a larger volume of
commodities. Nevertheless it would still be
considerable.
It is thus evident that a fall in wages would cause a
rise in the cost-prices of I, III, IV, in fact a very
considerable rise in the cost-price of IV. It is the
same law as that developed by Ricardo in relation to the
difference between circulating and fixed capital, but he did
not by any means prove, nor could he have proved, that this
is reconcilable with the law of value and that the value of
the products remains the same for the total capital.
||647| The calculation and
the adjustment becomes much more complicated if we take into
account those differences in the organic composition of the
capital which arise from the circulation process. For
in our calculation, above, we assumed that the whole of the
constant capital which has been advanced, enters into
the product, i.e., that it contains only the wear and
tear of the fixed capital, for one year, for example
(since we have to calculate the profit for the year).
The va1ues of the total product would otherwise be very
different, whereas here they only change with the variable
capital. Secondly, with a constant rate of
surplus-value but varying periods of circulation, there
would be greater differences in the amount of
surplus-value created, relatively to the capital
advanced. Leaving out of account any differences in
variable capital, the amounts of the surplus-values would be
proportionate to the amounts of the va1ues created by the
same capitals. The rate of profit would be even lower
where a relatively large part of the constant capital
consisted of fixed capital and considerably higher, where a
relatively large part of the capital consisted of
circulating capital. It would be highest where the
variable capital was relatively large as compared with the
constant capital and where the fixed portion of the latter
was at the same time relatively small. If the ratio of
circulating to fixed capital in the constant capital were
the same in the different capitals, then the only
determining factor would be the difference between variable
and constant capital. If the ratio of variable to
constant capital were the same, then it would be the
difference between fixed and circulating capital, that is,
only the difference within the constant capital itself.
As we have seen above, the farmer’s rate of profit would
rise, in any case, if, as a result of the lower price of
corn, the general rate of profit of the non-agricultural
capital increased. The question is whether his rate of
profit would rise directly, and this appears to depend on
the nature of the improvements. If the improvements
were of such a kind that the capital laid out in wages
decreased considerably compared with that laid out in
machinery, etc., then his rate of profit need not
necessarily rise directly. If, for example, it was
such that he required one-quarter less workers, then instead
of his original outlay of £40 in wages, he would now
pay only £ 30. Thus his capital would be £
60c+£ 30v, or on £ 100 it would be £ 66
2/3c+£ 33
1/3v. And since the labour
costing £ 40 [provides a surplus-value of] £ 20,
the labour costing £ 30 provides £ 15. And
£ 16 2/3 [surplus-value is
derived] from the labour costing £ 33
1/3. Thus the organic
composition would approach that of the non-agricultural
capital. And in the above case, with a simultaneous
decrease in wages by one-quarter, it would fall even
below that of the non-agricultural capital. In
this case, rent (absolute rent) would disappear.
Following upon the above-quoted passage on Buchanan,
Ricardo says:
“I hope I have made it sufficiently
clear, that until a country is cultivated in every part, and
up to the highest degree, there is always a portion of
capital employed on the kind which yields no rent,
and” (!) “that it is this portion of
capital, the result of which, as in manufactures, is divided
between profits and wages that regulates the price of
corn. The price of corn, then, which does not
afford a rent, being influenced by the expenses of its
production, those expenses cannot be paid out of rent.
The consequence therefore of those expenses increasing, is a
higher price, and not a lower rent” (l.c.,
p. 293).
Since absolute rent is equal to the excess of the value
of the agricultural product over its price of production, it
is clear that all factors which reduce the total
quantity of labour required in the production of corn,
etc., reduce the rent, because they reduce the value, hence
the excess of the value over the price of production.
In so far as the price of production consists of expenses,
its fall is identical and goes hand in hand with the fall in
value. But in so far as the price of production (or
the expenses) is equal to the capital advanced plus the
average profit, the very reverse is the case. The
market-value of the product falls, but that part of it,
which is equal to the price of production, rises, if the
general rate of profit rises as a result of the fall in the
market-value of corn. The rent, therefore, falls,
because the expenses in this sense rise—and this is
how Ricardo takes expenses elsewhere, when he speaks of cost
of production. Improvements in agriculture, which
bring about an increase in constant capital as compared with
variable, would reduce rent considerably, even if the total
quantity of labour employed fell only slightly, or so
slightly that it did not influence wages (surplus-value,
directly) at all. Suppose, as a result of such
improvements, the composition of the capital altered from
£ 60c+£ 40v to £
662/3c+£
331/3v (this might occur, for example,
as a result of rising wages, caused by emigration, war,
discovery of new markets, prosperity in the non-agricultural
industry [or it could occur as a result of the] competition
of foreign corn, the farmer might feel impelled to find
means of employing more constant capital and less variable;
the same circumstances could continue to operate after the
introduction of the improvement and wages therefore might
not fall despite the improvement).
||648| Then the value of the
agricultural product would be reduced from £ 120 to
£ 116 2/3, that is, by £ 3
1/3. The rate of profit would
continue to be 10 per cent. The rent would fall from
£ 10 to £ 6 2/3 and,
moreover, this reduction would have taken place without any
reduction whatsoever in wages.
The absolute rent may rise because the general rate of
profit falls, owing to new advances in industry. The
rate of profit may fall due to a rise in rent, because of an
increase in the value of agricultural produce which is
accompanied by an increase in the difference between its
value and its cost-price. (At the same time, the rate
of profit falls because wages rise.)
The absolute rent can fall, because the value of
agricultural produce falls and the general rate of profit
rises. It can fall, because the value of the
agricultural produce falls as a result of a fundamental
change in the organic composition of capital, without the
rate of profit rising. It can disappear completely, as
soon as the value of the agricultural produce becomes
equal to the cost-price, in other words when the
agricultural capital has the same composition as the
non-agricultural, average capital.
Ricardo’s proposition would only be correct if expressed
like this : When the value of agricultural produce equals
its cost-price, then there is no absolute rent. But he
is wrong because he says: There is no absolute rent
because value and cost-price are altogether
identical, both in industry and in agriculture.* On the contrary,
agriculture would belong to an exceptional class of
industry, if its value and cost-price were identical.
Even when admitting that there may be no portion of land
which does not pay a rent, Ricardo believes that by
referring to the fact that at least some portion of the
capital employed on this land pays no rent he substantially
improves his case. The one fact is as irrelevant to
the theory as the other. The real question is this: Do
the products of these lands or of this capital regulate the
market-value? Or must they not rather sell their
products below their value, because their additional
supply is only saleable at, not above, this
market-value which is regulated without them. So far
as the portion of capital is concerned, the matter is
simple, because for the farmer who invests an additional
amount of capital landed property does not exist and as
a capitalist he is only concerned with the cost-price; if he
possesses the additional capital, it is more advantageous
for him to invest it on his farm, even below the
average profit, than to lend it out and to receive
only interest and no profit. So far as the land is
concerned, those portions of land which do not pay a rent
form component parts of estates that pay rent and are not
separable from the estates with which they are let; they
cannot however be let in isolation from the rest to a
capitalist farmer (but perhaps to a cottager or to a small
capitalist). In relation to these bits of land, the
farmer is again not confronted by “landed
property”. Alternatively, the owner of the land
must cultivate it himself. The farmer cannot pay a
rent for it and the landlord does not let it for
nothing, unless he wants to have his land made arable in
this fashion without incurring any expense.
The situation would be different in a country in which
the composition of the agricultural capital was equal to the
average composition of the non-agricultural capital, which
presupposes a high level of development in agriculture or a
low level of development in industry. In this case the
value of the agricultural produce would be equal to its
cost-price. Only differential rent could be paid
then. The land which yields no differential rent but
only an agricultural rent, could then pay no
rent. For if the farmer sells the agricultural produce
at its value, it only covers its cost-price. He
therefore pays no rent. The landowner must then
cultivate the land himself, or the so-called rent collected
by him is a part of his tenant’s profit or even of his
wages. That this might be the case in one country does
not mean that the opposite might not happen in another
country. Where, however, industry—and therefore
capitalist production—is at a low level of
development, there are no capitalist farmers, whose
existence would presuppose capitalist production on the
land. Thus, quite different circumstances have to be
considered here, from those involved in the economic
organisation in which landed property as an economic
category exists only in the form of rent.
In the same Chapter XVII, Ricardo says:
“Raw produce is not at a monopoly
price, because the market price of barley and wheat is as
much regulated by their cost of production, as the
market price of cloth and linen. The only difference
is this, that one portion of the capital employed in
agriculture regulates the price of corn, namely, that
portion which pays no rent; whereas, in the production of
manufactured commodities, every portion of capital is
employed with the same results; and as no portion
pays rent, every portion is equally a regulator of
price” (l.c., pp. 290-91).
This assertion, that every portion of capital is employed
with the same results and that none pays rent (which is,
however, called excess profit here) is not only wrong, but
has been refuted by Ricardo himself ||650| as we have seen
previously.
We now come to the presentation of Ricardo’s theory of
surplus-value.
[B. Ricardo on the Problem of Surplus-Value]
1. Quantity of Labour and Value of Labour.
[As Presented by Ricardo the Problem of the Exchange of
Labour for Capital Cannot Be Solved]
Ricardo opens Chapter I, “On Value”,
with the following heading of Section I:
“The value of a commodity, or the
quantity of any other commodity for which it will exchange,
depends on the relative quantity of labour which is
necessary for its production, and not on the greater or less
compensation which is paid for that labour”
(l.c., p. 1).
In the style which runs through the whole of his enquiry,
Ricardo begins his book here by stating that the
determination of the value of commodities by labour-time is
not incompatible with wages, in other words
with the varying compensation paid for that labour-time or
that quantity of labour. From the very outset, he
turns against Adam Smith’s confusion between the
determination of the value of commodities by the relative
quantity of labour required for their production and
the value of labour (or the compensation paid for
labour).
It is clear that the proportional quantity of labour
contained in two commodities A and B, is absolutely
unaffected by whether the workers who produce A and B
receive much or little of the product of their labour.
The value of A and B is determined by the quantity of
labour which their production costs, and not by the
costs of labour to the owners of A and B.
Quantity of labour and value of labour are two different
things. The quantity of labour which is contained in A
and B respectively, has nothing to do with how much of the
labour contained in A and B the owners of A and B,
have paid or even performed themselves.
A and B are exchanged not in proportion to the paid
labour contained in them, but in proportion to the total
quantity of labour they contain, paid and unpaid.
“Adam Smith, who so accurately
defined the original source of exchangeable value, and who
was bound in consistency to maintain, that all things became
more or less valuable in proportion as more or less labour
was bestowed on their production, has himself erected
another standard measure of value, and speaks of things
being more or less valuable, in proportion as they will
exchange for more or less of this standard measure
… as if these were two equivalent expressions, and
as if because a man’s labour had become doubly efficient,
and he could therefore produce twice the quantity of a
commodity, he would necessarily receive twice the former
quantity in exchange for it” (that is for his
labour).
“If this indeed were true, if the
reward of the labourer were always in proportion to what he
produced, the quantity of labour bestowed on a commodity,
and the quantity of labour which that commodity would
purchase, would be equal, and either might accurately
measure the variations of other things: but they are not
equal” (l.c., p. 5).
Adam Smith nowhere asserts that “these were two
equivalent expressions”. On the contrary, he says:
Because in capitalist production, the wage of the worker is
no longer equal to his product, therefore, the
quantity of labour which a commodity costs and the quantity
of commodities that the worker can purchase with this labour
are two different things—for this very reason
the relative quantity of labour contained in commodities
ceases to determine their value, which is now determined
rather by the value of labour, by the quantity of
labour that I can purchase, or command with a given amount
of commodities. Thus the value of labour,
instead of the relative quantity of labour becomes
the measure of value. Ricardo’s reply to Adam Smith is
correct—that the relative quantity of labour
which is contained in two commodities is in no way affected
by how much of this quantity of labour falls to the workers
themselves and by the way this labour is remunerated; if the
relative quantity of labour was the measure of value
of commodities before the supervention of wages
(wages that differ from the value of the products
themselves), there is therefore no reason at all, why it
should not continue to be so after wages have come
into being. He argues correctly, that Adam Smith could
use both expressions so long as they were equivalent, but
that this is no reason for using the wrong expression
instead of the right one when they have ceased to be
equivalent.
But Ricardo has by no means thereby solved the problem
which is the real cause of Adam Smith’s contradiction.
Value of labour and quantity of labour remain
“equivalent expressions”, so long as it is a
question of materialised labour. ||651| They cease to be equivalents
as soon as materialised labour is exchanged for
living labour.
Two commodities exchange in proportion to the
labour materialised in them. Equal quantities
of materialised labour are exchanged for one another.
Labour-time is their standard measure, but precisely for
this reason they are “more or less valuable, in
proportion as they will exchange for more or less of this
standard measure” [l.c., p. 5]. If the commodity
A contains one working-day, then it will exchange against
any quantity of commodities which likewise contains one
working-day and it is “more or less valuable” in
proportion as it exchanges for more or less materialised
labour in other commodities, since this exchange
relationship expresses, is identical with, the relative
quantity of labour which it itself contains.
Now wage-labour, however, is a commodity. It
is even the basis on which the production of products
as commodities takes place. The law of
values is not applicable to it. Capitalist
production therefore is not governed at all by this
law. Therein lies a contradiction. This is the
first of Adam Smith’s problems. The second—which
we shall find further amplified by Malthus—lies in the
fact that the utilisation of a commodity (as capital)
is proportional not to the amount of labour it contains, but
to the ‘extent to which it commands the labour of
others, gives power over more labour of others
than it itself contains. This is in fact a second
latent reason for asserting that since the beginning of
capitalist production, the value of commodities is
determined not by the labour they contain but by the living
labour which they command, in other words, by the value
of labour.
Ricardo simply answers that this is how matters are in
capitalist production. Not only does he fail to solve
the problem; he does not even realise its existence in Adam
Smith’s work. In conformity with the whole arrangement
of his investigation, Ricardo is satisfied with
demonstrating that the changing value of labour—in
short, wages—does not invalidate the
determination of the value of the commodities, which
are distinct from labour itself, by the relative quantity of
labour contained in them. “They are not
equal”, that is “the quantity of labour
bestowed on a commodity, and the quantity of labour which
that commodity would purchase” (l.c., p.5). He
contents himself with stating this fact. But how does
the commodity labour differ from other commodities?
One is living labour and the other
materialised labour. They are, therefore, only
two different forms of labour. Since the difference is
only a matter of form, why should a law apply to one and not
to the other? Ricardo does not answer—he does
not even raise this question.
Nor does it help when he says:
“Is not the value of labour …
variable; being not only affected, as all other
things” (should read commodities) “are, by the
proportion between the supply and demand, which uniformly
varies with every change in the condition of the community,
but also by the varying price of food and other necessaries,
on which the wages of labour are expended?”
(l.c., p. 7).
That the price of labour, like that of other commodities,
changes with supply and demand proves nothing in regard to
the value of labour, according to Ricardo, just as
this change of price with supply and demand proves nothing
in regard to the value of other commodities. But that
the “wages of labour”—which is only
another expression for the value of labour—are
affected by “the varying price of food and other
necessaries, on which the wages of labour are
expended”, shows just as little why the value of
labour is (or appears to be) determined differently from the
value of other commodities. For these too are affected
by the varying price of other commodities which enter into
their production and against which they are
exchanged. That the wages of labour are
spent upon food and necessaries, means after all only
that the value of labour is exchanged against food
and necessaries. The question is just why
labour and the commodities against which it is
exchanged, do not exchange according to the law of
value, i.e., according to the relative quantities of
labour.
Posed in this way, presupposing the law of
value, the question is intrinsically insoluble, because
labour as such is counterposed to commodity, a
definite quantity of immediate labour as such is
counterposed to a definite quantity of materialised
labour.
This weakness in Ricardo’s discourse, as we shall see
later, has contributed to the disintegration of his school,
and led to the proposition of absurd hypotheses.
||652| Wakefield is
right when he says:
“Treating labour as a
commodity, and capital, the produce of labour,
as another, then, if the value of these two
commodities were regulated by equal quantities of
labour, a given amount of labour would, under all
circumstances, exchange for that quantity of capital which
had been produced by the same amount of labour,
antecedent labour […] would always exchange
for the same amount of present labour […] It
follows, that[c] the
value of labour in relation to other commodities, in so far,
at least, as wages depend upon share, is determined, not
by equal quantities of labour, but by the proportion
between supply and demand.” (E. G. Wakefield, Note on
p. 230 of Vol. I of his edition of Adam Smith’s Wealth of
Nations, London, 1835.)
This is also one of Bailey’s hobby-horses; to be
looked up later. Also Say, who is very pleased
to find that here, all of a sudden, supply and demand are
said to be the decisive factors. |652||
***
||652| Re 1.
Another point to be noted here: Chapter I, Section 3,
bears the following superscription:
“Not only the labour applied
immediately to commodities affects their value, but the
labour also which is bestowed on the
implements, tools, and buildings, with which such labour is
assisted” (David Ricardo, On the Principles of
Political Economy, and Taxation, London, 1821,
p. 16).
Thus the value of a commodity is equally determined by
the quantity of materialised (past) labour and by the
quantity of living (immediate) labour required for
its production. In other words: the quantities of
labour are in no way affected by the formal
difference of whether the labour is materialised or
living, past or present (immediate). If this
difference is of no significance in the determination of the
value of commodities, why does it assume such decisive
importance when past labour (capital) is exchanged against
living labour? Why should it, in this case, invalidate
the law of value, since the difference in itself, as
shown in the case of commodities, has no effect on the
determination of value? Ricardo does not answer this
question, he does not even raise it. |652||
2. Value of Labour-Power. Value of
Labour. [Ricardo’s Confusion of Labour with
Labour-Power. Concept of the “Natural Price of
Labour”]
||652| In order to determine
surplus-value, Ricardo, like the Physiocrats, Adam Smith,
etc., must first determine the value of labour-power
or, as he puts it—following Adam Smith and his
predecessors—the value of labour. |652||
||652| How then is the
value or natural price of labour
determined? According to Ricardo, the
natural price is in fact nothing but the
monetary expression of value.
“Labour, like all other things
which are purchased and sold, and which may he increased or
diminished in quantity” (that is like all other
commodities) “has its natural and its market
price. The natural price of labour is that
price which is necessary to enable the labourers, one with
another, to subsist and to perpetuate their race, without
either increase or diminution.” (Should read: with
that rate of increase, required by the average progress of
production.)
“The power of the labourer to support
himself, and the family which may he necessary to keep up
the number of labourers … depends on the price of
the food, necessaries, and conveniences required for the
support of the labourer and his family. With a
rise in the price of food and necessaries, the natural price
of labour will rise; with the fall in their price, the
natural price of labour will fall” (l.c., p. 86).
“It is not to be understood that the
natural price of labour, estimated even in food and
necessaries, is absolutely fixed and constant. It
varies at different times in the same country, and very
materially differs in different countries. It
essentially depends on the habits and customs of the
people” (l.c., p. 91).
The value of labour is therefore determined by the
means of subsistence which, in a given society, are
traditionally necessary for the maintenance and
reproduction of the labourers.
But why? By what law is the value of labour
determined in this way?
Ricardo has in fact no answer, other than that the law of
supply and demand reduces the average price of labour to the
means of subsistence that are necessary (physically or
socially necessary in a given society) for the maintenance
of the labourer. ||653|
He determines value here, in one of the basic
propositions of the whole system, by demand and
supply—as Say notes with malicious pleasure (see
Constancio’s translation).
Instead of labour, Ricardo should have discussed
labour-power. But had he done so,
capital would also have been revealed as the material
conditions of labour, confronting the labourer as power that
had acquired an independent existence and capital would at
once have been revealed as a definite social
relationship. Ricardo thus only distinguishes
capital as “accumulated labour” from
“immediate labour”. And it is something
purely physical, only an element in the
labour-process, from which the relation between
labour and capital, wages and profits, could never be
developed.
“Capital is that part of the
wealth of a country which is employed in production, and
consists of food, clothing, tools, raw materials, machinery,
etc., necessary to give effect to labour” (l.c.,
p. 89). “Less capital, which is the
same thing as less labour …“
(l.c., p. 73). “Labour and capital (that
is accumulated labour)[d]” (l.c., p. 499).
The jump which Ricardo makes here is correctly sensed by
Bailey:
“Mr. Ricardo, ingeniously enough,
avoids a difficulty, which, on a first view, threatens to
encumber his doctrine, that value depends on the quantity of
labour employed in production. If this principle is
rigidly adhered to, it follows, that the value of
labour depends on the quantity of labour employed in
producing it—which is evidently absurd. By a
dexterous turn, therefore, Mr. Ricardo makes the value of
labour depend on the quantity of labour required to produce
wages, or, to give him the benefit of his own language, he
maintains, that the value of labour is to be
estimated by the quantity of labour required to produce
wages, by which lie means, the quantity of labour required
to produce the money or commodities given to the
labourer. This is similar to saying, that the value of
cloth is to be estimated, not by the quantity of labour
bestowed on[e] its
production, but by the quantity of labour bestowed on the
production of the silver, for which the cloth is
exchanged.” (Samuel Bailey, A Critical Dissertation
on the Nature, Measures, and Causes of Value, etc.,
London, 1825, pp. 50-51.)
Literally the objection raised here is
correct. Ricardo distinguishes between nominal
and real wages. Nominal wages are wages
expressed in money, money wages.
Nominal wages are “the number of pounds that
may be annually paid to the labourer” but real
wages are “the number of day’s work,
necessary to obtain those pounds” (David Ricardo,
l.c., p. 152).
As wages are equal to the necessary means of subsistence
of the labourer, and the value of these wages (the real
wages) is equal to the value of these means of subsistence,
it is obvious that the value of these necessary means of
subsistence is also equal to the real wages, that is, to the
labour which they can command. If the value of the
means of subsistence changes, then the value of the real
wages changes. Assume that the means of subsistence of
the labourer consist only of corn, and that the quantity of
means of subsistence which he requires is 1 quarter of corn
per month. Then the value of his wages [for one month]
equals the value of 1 quarter of corn; if the value of the
quarter of corn rises or falls, then the value of the
month’s labour rises or falls. But however much the
value of the quarter of corn rises or falls (however much or
little labour the quarter of corn contains), it is always
equal to the value of one month’s labour.
And here we have the hidden reason for Adam
Smith’s assertion, that as soon as capital, and consequently
wage-labour, intervenes, the value of the product is not
regulated by the quantity of labour bestowed upon it, but by
the quantity of labour it an command. The value of
corn (and of other means of subsistence) determined by
labour-time, changes; but, so long as the natural price of
labour is paid, the quantity of labour that the quarter of
corn can command remains the same. Labour has
therefore, a permanent relative value as compared with
corn. That is why for Smith too, the value of
labour and the value of corn ([representing] food [in
general]. See Deacon Hume) are standard
measures of value, because so long as the natural price of
labour is paid, a given quantity of corn always commands
[the same] quantity of labour, whatever the quantity of
labour bestowed upon one quarter of corn may be. The
same quantity of labour always commands the same
use-value, or rather the same use-value always
commands the same quantity of labour.
Even Ricardo determines the value of labour, its natural
price, in this way. Ricardo says: The quarter of corn
may have very different values, although it always
commands—or is commanded by—the same ||654| quantity of labour. Yes,
says Adam Smith: However much the value of the quarter of
corn, determined by labour-time, may change, the worker must
always pay (sacrifice) the same quantity of labour in order
to buy it. The value of corn therefore alters, but the
value of labour does not, since one month’s labour equals
one quarter of corn. The value of the corn too changes
only in so far as we are considering the labour required for
its production. If, on the other hand, we examine the
quantity of labour against which it exchanges, which it sets
into motion, its value does not change. And that is
precisely why the quantity of labour, against which a
quarter of corn is exchanged, is the standard measure of
value. But the va1ues of the other commodities
have the same relation to labour as they have to corn.
A given quantity of corn commands a given quantity of
labour. A given quantity of every other commodity
commands a certain quantity of corn. Hence every other
commodity—or rather the value of every other
commodity—is expressed by the quantity of labour it
commands, since it is expressed by the quantity of corn it
commands, and the latter is expressed by the quantity of
labour it commands.
But how is the value of other commodities in relation to
corn (means of subsistence) determined? By the
quantity of labour they command. And how is the
quantity of labour they command determined? By the
quantity of corn that labour commands. Here Adam Smith
is inevitably caught up in a vicious circle.
(Incidentally, he never uses this measure of value
when making an actual analysis.) Moreover here he
confuses—as Ricardo also often does—labour, the
intrinsic measure of value, with money, the
external measure, which presupposes that value is
already determined; although he and Ricardo have declared
that labour is “the foundation of the value of
commodities” while “the comparative quantity of
labour which is necessary to their production” is
“the rule which determines the respective quantities
of goods which shall be given in exchange for each
other” (Ricardo, l.c., p.80).
Adam Smith errs when he concludes from the fact that a
definite quantity of labour is exchangeable for a definite
quantity of use-value, that this definite quantity of
labour is the measure of value and that it always has
the same value, whereas the same quantity of
use-value can represent very different
exchange-values. But Ricardo errs twice over; firstly
because he does not understand the problem which causes Adam
Smith’s errors; secondly because disregarding the law of
value of commodities and taking refuge in the law of supply
and demand, he himself determines the value of
labour, not by the quantity of labour expended in the
production of labour-power, but by the quantity of
labour expended in the production of the wages which the
labourer receives. Thus in fact he says: The value of
labour is determined by the value of the money which is paid
for it! And what determines this? What
determines the amount of money ‘that is paid for
it? The quantity of use-value that a given amount of
labour commands or the quantity of labour that a definite
quantity of use-value commands. And thereby he falls
literally into the very inconsistency which he
himself condemned in Smith.
This, as we have seen, also prevents him from grasping
the specific distinction between commodity and
capital, between the exchange of commodity for
commodity and the exchange of capital for commodity—in
accordance with the law of exchange of commodities.
The above example was this: 1 quarter of corn equals 1
month’s labour, say 30 working-days. (A working-day of
12 hours.) In this case the value of 1 quarter corn is
less than 30 working-days. If 1 quarter corn were the
product of 30 working-days, the value of the labour would be
equal to its product. There would be no surplus-value,
and therefore no profit. No capital. In actual
fact, therefore, if 1 quarter corn represents the wages for
30 working-days, the value of 1 quarter corn is always less
than 30 working-days. The surplus-value depends on how
much less it is. For example, 1 quarter corn may be
equal to 25 working-days. Then the surplus-value
equals 5 working-days, which is 1/6 of
the total labour-time. If 1 quarter (8 bushels) equals
25 working-days, then 30 working-days are equal to 1 quarter
1 3/5 bushels. The value
of the 30 working-days (i.e., the wage) is therefore always
smaller than the value of the product which contains the
labour of 30 days. The value of the corn is thus
determined not by the ||655|
labour which it commands, for which it exchanges, but by the
labour which is contained in it. On the other hand,
the value of the 30 days’ labour is always determined
by 1 quarter corn, whatever this may be.
3. Surplus-Value. [An Analysis of the Source
of Surplus-Value Is Lacking in Ricardo’s Work. His
Concept of Working-Day as a Fixed Magnitude]
Apart from the confusion between labour and labour-power,
Ricardo defines the average wages or the value of labour
correctly. For he says that it [the value of labour]
is determined neither by the money nor by the means of
subsistence which the labourer receives, but by the
labour-time which it costs to produce it; that is, by
the quantity of labour materialised in the means of
subsistence of the labourer. This he calls the
real wages. (See later.)
This definition [of the value of labour], moreover,
necessarily follows from his theory. Since the value
of labour is determined by the value of the necessary
means of subsistence on which this value is to be
expended, and the value of the means of subsistence,
like that of all other commodities, is determined by the
quantity of labour they contain, it naturally follows
that the value of labour equals the value of the means of
subsistence, which equals the quantity of labour expended
upon them.
However correct this formula is (apart from the direct
opposition of labour and capital), it is, nevertheless,
inadequate. Although in replacement of his wages the
individual labourer does not directly produce—or
reproduce, taking into account the continuity of this
process—products on which he lives <he may produce
products which do not enter into his consumption at all, and
even if he produces necessary means ‘of subsistence,
he may, due to the division of labour, only produce a single
part of the necessary means of subsistence, for instance
corn—and even that only in one form (for example in
that of corn, not bread)>, but he produces
commodities to the value of his means of subsistence,
that is, he produces the value of his means of
subsistence. This means, therefore, if we consider his
daily average consumption, that the labour-time which is
contained in his daily means of subsistence, forms one part
of h i s working-day. He works one part of the
day in order to reproduce the value of his means of
subsistence; the commodities which he produces in this part
of the working-day have the same value, or represent a
quantity of labour-time equal to that contained in
his daily means of subsistence. It depends on the
value of these means of subsistence—in other words
on the social productivity of labour and not on the
productivity of the individual branch of production in which
he works—how great a part of his working-day is
devoted to the reproduction or production of the
value, i.e., the equivalent, of his means of
subsistence.
Ricardo of course assumes that the labour-time contained
in the daily means of subsistence is equal to the
labour-time which the labourer must work daily in order to
reproduce the value of these means of subsistence. But
by not directly showing that one part of the
labourer’s working-day is assigned to the
reproduction of the value of his own labour-power, he
introduces a difficulty and obscures the clear understanding
of the relationship. A twofold confusion arises from
this. The origin of surplus-value does not
become clear and consequently Ricardo is reproached by his
successors for having failed to grasp and expound the nature
of surplus-value. That is part of the reason for their
scholastic attempts at explaining it. But because thus
the origin and nature of surplus-value is not clearly
comprehended, the surplus-labour plus the necessary labour,
in short, the total working-day, is regarded as a
fixed magnitude, the differences in the amount of
surplus-value are overlooked, and the productivity of
capital, the compulsion to perform
surplus-labour—on the one hand [to perform]
absolute surplus-labour, and on the other its innate urge to
shorten the necessary labour-time—are not recognised,
and therefore the historical justification for
capital is not set forth. Adam Smith, however, had
already stated the correct formula. Important as it
was, to resolve value into labour, it was equally important
to resolve surplus-value into surplus-labour, and to do so
in explicit terms.
Ricardo starts out from the actual fact of capitalist
production. The value of labour is smaller than the
value of the product which it creates. The value of
the product is therefore greater than the value of the
labour which produces it, or the value of the wages.
The excess of the value of the product over the value
of the wages is the surplus-value. (Ricardo wrongly
uses the word profit, but, as we noted earlier, he
identifies profit with surplus-value here and is really
speaking of the latter.) For him it is a fact, that
the value of the product is greater than the value of the
wages. How this fact arises, remains unclear.
The total working-day is greater than that part of
the working-day which is required for the production of the
wages. Why? That does not emerge. The
magnitude of the total working-day is therefore
wrongly assumed to be fixed, and directly entails
wrong conclusions. The increase or decrease in
surplus-value can therefore be explained only from
the growing or diminishing productivity of social labour
which produces the means of subsistence. That is to
say, only relative surplus-value is understood.
||656| It is obvious that if
the labourer needed his whole day to produce his own means
of subsistence (i.e., commodities equal to the value of his
own means of subsistence), there could be no surplus-value,
and therefore no capitalist production and no
wage-labour. This can only exist when the productivity
of social labour is sufficiently developed to make possible
some sort of excess of the total working-day over the
labour-time required for the reproduction of the
wage—i.e., surplus-labour, whatever its
magnitude. But it is equally obvious, that with a
given labour-time (a given length of the working-day) the
productivity of labour [may be very different], on the other
hand, with a given productivity of labour, the labour-time,
the length of the working-day, may be very different.
Furthermore, it is clear that though the existence of
surplus-labour presupposes that the productivity of
labour has reached a certain level, the mere
possibility of this surplus-labour (i.e., the
existence of that necessary minimum productivity of labour),
does not in itself make it a reality. For this
to occur, the labourer must first be compelled to
work in excess of the [necessary] time, and this compulsion
is exerted by capital. This is missing in Ricardo’s
work, and therefore also the whole struggle over the
regulation of the normal working-day.
At a low stage of development of the social productivity
of labour, that is to say, where the surplus-labour is
relatively small, the class of those who live on the labour
of others will generally be small in relation to the number
of labourers. It can considerably grow
(proportionately) in the measure in which productivity and
therefore relative surplus-value develop.
It is moreover understood that the value of labour
varies greatly in the same country at different periods and
in different countries during the same period. The
temperate zones are however the home of capitalist
production. The social productive power of
labour may be very undeveloped; yet this may be compensated
precisely in the production of the means of subsistence, on
the one hand, by the fertility of the natural agents, such
as the land; on the other hand, by the limited requirements
of the population, due to climate, etc.—this is, for
instance, the case in India. Where conditions are
primitive, the minimum wage may be very small
(quantitatively in use-values) because the social needs are
not yet developed though it may cost much labour. But
even if an average amount of labour were required to produce
this minimum wage, the surplus-value created, although it
would be high in proportion to the wage (to the necessary
labour-time) , would, even with a high rate of
surplus-value, be just as meagre
(proportionately)—when expressed in terms of
use-values—as the wage itself.
Let the necessary labour-time be 10 hours, the
surplus-labour 2 hours, and the total working-day 12
hours. If the necessary labour-time were 12 hours, the
surplus-labour 2 2/5 hours and the
total working-day 14 2/5 hours, then
the values produced would be very different. In the
first case they would amount to 12 hours, in the second to
14 2/5 hours. Similarly, the
absolute magnitude of the surplus-value: In the former case
it would be 2 hours, in the latter 2
2/5. And yet the rate of
surplus-value or of surplus-labour would be the
same, because 2:10=2 2/5:12. If,
in the second case, the variable capital which is laid out
were greater, then so also would be the surplus-value or
surplus-labour appropriated by it. If in the latter
case, the surplus-labour were to rise by
5/5 hours instead of by
2/5 hours, so that it would amount to
3 hours and the total working-day to 15 hours, then,
although the necessary labour-time or the minimum
wage had increased, the rate of surplus-value would
have risen, for 2:10=1/5; but
3:l2=1/4. Both could occur if,
as a result of the corn, etc., becoming dearer, the minimum
wage had increased from 10 to 12 hours. Even in this
case, therefore, not only might the rate of surplus-value
remain the same, but the amount and rate of surplus-value
might grow.
But let us suppose that the necessary wage amounted to 10
hours, as previously, the surplus-labour to 2 hours and all
other conditions remained the same (that is, leaving out of
account here any lowering in the production costs of
constant capital). Now let the labourer work 2
2/5 hours longer, and appropriate 2
hours, while the 2/5 forms
surplus-labour. In this case wages and surplus-value
would increase in equal proportion, the former, however,
representing more than the necessary wage or the necessary
labour-time.
If one takes a given magnitude and divides it into
two parts, it is clear that one part can only increase in so
far as the other decreases, and vice versa, But this is by
no means the case with expanding (elastic) magnitudes.
And the working-day represents such an elastic magnitude, as
long as no normal working-day has been won. With such
magnitudes, both parts can grow, either to an equal or
unequal extent. An increase in one is not brought
about by a decrease in the other and vice versa. This
is moreover the only case in which wages and surplus-value,
in terms of exchange-value, can both increase
and possibly even in equal proportions. That
they can increase in terms of use-value is self-evident;
this can increase ||657| even
if, for example, the value of labour decreases. From
1797 to 1815, when the price of corn and [also] the nominal
wage rose considerably in England, the daily hours of labour
increased greatly in the principal industries, which were
then in a phase of ruthless expansion; and I believe that
this arrested the fall in the rate of profit, because it
arrested the fall in the rate of surplus-value. In
this case, however, whatever the circumstances, the normal
working-day is lengthened and the normal span of life of the
labourer, hence the normal duration of his labour-power, is
correspondingly shortened. This applies where a
permanent lengthening of the working-day occurs. If it
is only temporary, in order to compensate for a temporary
rise in wages, it may (except in the case of children and
women) have no other result than to prevent a fall in the
rate of profit in those enterprises where the nature of the
work makes a prolongation of labour-time possible.
(This is least possible in agriculture.)
Ricardo did not consider this at all since he
investigated neither the origin of surplus-value nor
absolute surplus-value and therefore regarded the
working-day as a given magnitude. For this case,
therefore, his law—that surplus-value and wages
(he erroneously says profit and wages) in terms of
exchange-value can rise or fall only in inverse
proportion—is incorrect.
Firstly let us assume that the necessary labour-time and
the surplus-labour remain constant. That is 10 hours
+2 hours; the working-day equals 12 hours, surplus-value
equals 2 hours; the rate of surplus-value is
1/5.
[In the second example] the necessary labour-time remains
the same; surplus-labour increases from 2 to 4 hours.
Hence l0+4=a working-day of 14 hours; surplus-value equals 4
hours; rate of surplus-value is
4:10=4/10=2/5.
In both cases the necessary labour-time is the same; but
the surplus-value in the one case is twice as great as in
the other and the working-day in the second case is
one-sixth longer than in the first. Furthermore,
although the wage is the same, the values produced,
corresponding to the quantities of labour, would be very
different; in the first case it would be equal to 12 hours,
in the second to 12+12/6=14
hours. It is therefore wrong to say that, provided the
wage is the same (in terms of value, of necessary
labour-time), the surplus-value contained in two commodities
is proportionate to the quantities of labour contained in
them. This is only correct where the normal
working-day is the same.
Let us further assume that as a result of the rise in the
productive power of labour, the necessary wage (although it
remains constant in terms of use-values) falls from 10 to 9
hours and similarly that the surplus labour-time falls from
2 to 14/5 hours
(9/5). In this case
10:9=2:14/5. Thus the surplus
labour-time would fall in the same proportion as the
necessary labour-time. The rate of surplus-value would
be the same in both cases, for 2=10/5
and
14/5=9/5.
14/5:9=2:10. The quantity of
use-values that could be bought with the surplus-value,
would—according to the assumption—also remain
the same. (But this would apply only to those
use-values which are necessary means of subsistence.)
The working-day would decrease from 12 to 10
4/5 [hours]. The amount of value
produced in the second case would be smaller than that
produced in the first. And despite these unequal
quantities of labour, the rate of surplus-value would be the
same in both cases.
In discussing surplus-value we have distinguished between
surplus-value and the rate of surplus-value, Considered in
relation to one working-day, the surplus-value is equal to
the absolute number ‘of hours which it represents, 2,
3, etc. The rate is equal to the proportion of this
number of hours to the number of hours which makes up the
necessary labour-time. This distinction is very
important, because it indicates the varying length of the
working-day. If the surplus-value equals 2 hours, then
[the rate] is 1/5, if the necessary
labour-time is 10 hours; and 1/6, if
the necessary labour-time is 12 hours. In the first
case the working-day consists of 12 hours and in the second
of 14. In the first case the rate of surplus-value is
greater, while at the same time the labourer works a smaller
number of hours per day. In the second case the rate
of surplus-value is smaller, the value of the labour-power
is greater, while at the same time the labourer works a
greater number of hours per day. This shows that, with
a constant surplus-value, but a working-day of unequal
length, the rate of surplus-value may be different.
The earlier case, 10:2 and 9:1 4/5,
shows how with a constant rate of surplus-value, but a
working-day of unequal length, the surplus-value itself may
be different, in one case 2 hours and in the other 1
4/5 hours.
I have shown previously (Chapter II), that if the length
of the working-day and the necessary labour-time, and
therefore the rate of surplus-value are given, the amount of
surplus-value depends on the number of workers
simultaneously employed by the same capital. This was
a tautological statement. For if 1 working-day gives
me 2 surplus hours, then 12 working-days give me 24 surplus
hours or 2 surplus days. The statement, however,
becomes very important in connection with the determination
of profit, which is equal to the proportion of surplus-value
to the capital advanced, thus depending on the absolute
amount of surplus-value. It becomes important because
capitals of equal size but different organic composition
employ unequal numbers of labourers; they must thus produce
unequal amounts of surplus-value, and therefore unequal
profits. With a falling rate of surplus-value, the
profit may rise and with a rising rate of surplus-value, the
profit may fall; or the profit may remain unchanged, if a
rise or fall in the rate of surplus-value is compensated by
a counter movement affecting the number of workers
employed. Here we see immediately, how extremely wrong
it is ||658| to identify the
laws relating to the rise and fall of surplus-value with the
laws relating to the rise and fall of profit. If one
merely considers the simple law of surplus-value, then it
seems a tautology to say that with a given rate of
surplus-value (and a given length of the working-day), the
absolute amount of surplus-value depends on the amount of
capital employed. For an increase in this amount of
capital and an increase in the number of labourers
simultaneously employed are, on the assumption made,
identical, or merely [different] expressions of the same
fact. But when one turns to an examination of profit,
where the amount of the total capital employed and the
number of workers employed vary greatly for capitals of
equal size, then the importance of the law becomes
clear.
Ricardo starts by considering commodities of a
given value, that is to say, commodities which represent a
given quantity of labour. And from this
starting-point, absolute and relative surplus-value appear
to be always identical. (This at any rate explains the
one-sidedness of his mode of procedure and corresponds with
his whole method of investigation: to start with the
value of the commodities as determined by the
definite labour-time they contain, and then to examine to
what extent this is affected by wages, profits, etc.)
This appearance is nevertheless false, since it is not a
question of commodities here, but of capitalist production,
of commodities as products of capital.
Assume that a capital employs a certain number of
workers, for example 20, and that wages amount to £
20. To simplify matters let us assume that the fixed
capital is nil, i.e., we leave it out of account.
Further, assume that these 20 workers spin £ 80 of
cotton into yarn, if they work 12 hours per day. If 1
lb. of cotton costs is then 20lbs. cost £ 1 and
£ 80 represents, 1,600 lbs. If 20 workers spin
1,600 lbs. in 12 hours, then they spin
1,600/12 lbs., which is 133
1/3 lbs. in one hour. Thus, if
the necessary labour-time is 10 hours, then the surplus
labour-time is 2 hours and this equals 266
2/3 lbs. yarn. The value of the
1,600 lbs. would be £ 104. For if 10 hours of
work equal £ 20, then 1 hour of work equals £ 2
and 2 hours of work £ 4, hence 12 [hours of work] are
equal to £ 24. ([Raw material] £
80+£ 24 [the newly-created value] are equal to £
104.)
But if each of the workers worked 4 hours of
surplus-labour, then their product would be equal to
£8 (I mean the surplus-value which he
creates—his product is in fact equal to £
28.) The total product would be £ 121
1/3. And this £ 121
1/3 would be the equivalent of 1,866
2/3 lbs. of yarn. As before,
since the conditions of production remained the same, 1
lb. of yarn would have the same value; it would contain the
same amount of labour-time. Moreover, according to the
assumption, the necessary wages— their value, the
labour-time they contained would have remained
unchanged.
Whether these 1,866 2/3 lbs. of
yarn were being produced under the first set of conditions
or under the second, i.e., with 2 or with 4 hours
surplus-labour, they would have the same value in both
cases. The value therefore of the additional 266
2/3 lbs. of cotton that are spun, is
£ 13 1/3. This, added to
the £ 80 for the 1,600 lbs., amounts to £ 93
1/3 and in both cases 4 working-hours
more for 20 men amount to £ 8. Altogether
£ 28 for the labour, that is
£1211/3. The wages are, in
both cases, the same. The pound of yarn costs in both
cases 13/10 s. Since the value
of the pound of cotton is 1s., what remained for the
newly-added labour in 1 lb. of yarn would in both cases
amount to 3/10 s., equal to 3
3/5d (or
18/5d.).
Nevertheless, under the conditions assumed, the relation
between value and surplus-value in each pound of yarn would
be very different. In the first case, since the
necessary labour was equal to £ 20 and the
surplus-labour to £ 4, or since the former amounted to
10 hours and the latter to 2 hours, the ratio of
surplus-labour to necessary labour would be
2:10=2/10=1/5.
(Similarly £ 4:£
20=4/20=1/5.)
The 3 3/5d. [newly-added labour] in a
pound of yarn would in this case contain
1/5 unpaid labour, that is
18/25 d. or
72/25 farthings equal to 2
22/25 farthings. In the second
case, on the other hand, the necessary labour would be
£ 20 (10 working-hours), the surplus-labour £8
(4 working-hours). The ratio of surplus-labour to
necessary labour would be
8:20=8/20=4/10=2/5.
Thus the 3 3/5 d, [of newly-added
labour] in a pound of yarn would contain
2/5 unpaid labour, i.e., 5
19/25 farthings or 1 d. 1
19/25 farthings. ||659| Although the yarn has the same
value in both cases and although the same wages are paid in
both cases, the surplus-value in a pound of yarn is in one
case twice as large as in the other. The ratio of
value of labour to surplus-value is of course the same in
the individual commodity, that is, in a portion of the
product, as in the whole product.
In the one case, the capital advanced is £ 93
1/3 for cotton, and how much for
wages? The wages for 1,600 lbs. amount to £ 20
here, hence for the additional 266 2/3
lbs. a further £3 1/3.
This makes £23 1/3. And
the total capital outlay is £ 93
1/3+£
231/3=£ 116
2/3. The product comes to
£ 121 1/3. (The additional
outlay in [variable] capital, of £3
1/3, only yields 13
1/3s.[£2/3]
surplus-value. £ 20 :£ 4=£ 3
1/3+£
2/3).
In the other case, however, the capital outlay would
amount to only £93 1/9 +
£20 = £ 113 1/3 and
£ 4 would have to be added to the £ 4
surplus-value. The same number of pounds of yarn are
produced in both cases and both have the same value, that is
to say, they represent equal total quantities of labour, but
these equal total qualities of labour are set in motion by
capitals of unequal size, although the wages are the same;
but the working-days are of unequal length and,
therefore, unequal quantities of unpaid labour are
produced. Taking the individual pound of yarn, the
wages paid for it, or the amounts of paid labour a
pound contains, are different. The same wages are
spread over a larger volume of commodities here, not because
labour is more productive in the one case than in the other,
but because the total amount of unpaid labour which is set
into motion in one case is greater than in the other.
With the same quantity of paid labour,
therefore, more pounds of yarn are produced in the one case
than in the other, although in both cases the same
quantities of yarn are produced, representing the same
quantity of total labour (paid and unpaid). If, on the
other hand, the productivity of labour had increased in the
second case, then the value of the pound of yarn would at
all events have fallen, whatever the ratio of surplus-value
to variable capital.
In such a case, therefore, it would be wrong to say
that—because the value of the pound of yarn is
fixed at is, 3 3/5d., the value of the
labour which is added is also fixed and amounts to 3
3/5 d., and the wages, i.e., the
necessary labour-time, remain, according to the
assumption, unchanged—the surplus-value [must] be the
same and the two capitals under otherwise equal conditions
would have produced the yarn with equal profits. This
would be correct if we were concerned with one pound of
yarn, but we are in fact concerned here with a capital which
has produced 1,866 2/3
lbs. yarn. And in order to know the amount of profit
(actually of surplus-value) on one pound, we must know the
length of the working-day, or the quantity of unpaid labour
(when the productivity is given) that the capital sets in
motion. But this information cannot be gathered by
looking at the individual commodity.
Thus Ricardo deals only with what I have called the
relative surplus-value. From the outset he
assumes, as Adam Smith and his predecessors seem to have
done as well, that the length of the working-day is
given. (At most, Adam Smith mentions differences
in the length of the working-day in different
branches of labour, which are levelled out or compensated by
the relatively greater intensity of labour, difficulty,
unpleasantness, etc.) On the basis of this postulate
Ricardo, on the whole, explains relative surplus-value
correctly. Before we give the principal points of his
theory, we shall cite a few more passages to illustrate
Ricardo’s point of view.
“The labour of a million of men in
manufactures, will always produce the same value, but
will not always produce the same riches” (l.c.,
p. 320).
This means that the product of their daily labour will
always be the product of a million working-days containing
the same labour-time; this is wrong, or is only true
where the same normal working-day—taking into
account the various difficulties etc. in different branches
of labour—has been generally established.
Even then, however, the statement is wrong in the general
form in which it is expressed here. If the normal
working-day is 12 hours, and the annual product of one man
is, in terms of money, £ 50 and the value of money
remains unchanged, then, in this case, the product of 1
million men would always amount to £ 50 million per
year. If the necessary labour is 6 hours, then the
capital laid out for these million men would be £
25,000,000 per annum. The surplus-value would also be
£ 25 million. The product would always be 50
million, whether the workers received 25 or 30 or 40
million. But in the first case the surplus-value would
be 25 million, in the second it would be 20 million and in
the third 10 million. If the capital advanced
consisted only of variable capital, i.e., only of the
capital which is laid out in the wages of these 1
million men, then Ricardo would be right. He is,
therefore, only right in the one case, where the
total capital equals the variable capital; a presupposition
which pervades all his, and Adam Smith’s, ||660| observations regarding the
capital of society as a whole, but in capitalist production
this precondition does not exist in a single branch of
industry, much less in the production of society as a
whole.
That part of the constant capital which enters
into the labour-process without entering into the process of
the creation of value. does not enter into the
product, into the value of the product, and,
therefore, important as it is in the determination of the
general rate of profit, it does not concern us here, where
we are considering the value of the annual
product. But matters are quite different with that
part of constant capital which enters into the annual
product. We have seen that a portion of this part of
constant capital, or what appears as constant capital in one
sphere of production, appears as a direct product of labour
within another sphere of production, during the same
production period of one year; a large part of the capital
laid out annually, which appears to be constant
capital from the standpoint of the individual capitalist or
the particular sphere of production, therefore, resolves
itself into variable capital from the standpoint of
society or of the capitalist class. This part is thus
included in the 50 million, in that part of the 50 million
which forms variable capital or is laid out in wages.
But the position is different with that part of
constant capital which is used up in order to replace
the constant capital consumed in industry and
agriculture—with the consumed part of the constant
capital employed in those branches of production which
produce constant capital, raw material in its primary form,
fixed capital and auxiliary materials. The value of
this part reappears, it is reproduced in the product.
In what proportion it enters into the value of the whole
product depends entirely on its actual
magnitude—provided the productivity of labour does not
change; but however the productivity may change, this part
of the constant capital will always have a definite
magnitude. (On the average, apart from certain
exceptions in agriculture, the amount of the product, i.e.,
the riches—which Ricardo distinguishes from the
value—produced by one million men will, indeed, also
depend on the magnitude of this constant capital which is
antecedent to production.) This part of the value of
the product would not exist without the new labour of the
million men during the year. On the other hand, the
labour of the million men would not yield the same amount of
product without this constant capital which exists
independently of their year’s labour. It enters into
the labour-process as a condition of production but not a
single additional hour is worked in order to reproduce the
value of this part. As value it is, therefore, not the
result of the year’s labour, although its value would not
have been reproduced without this year’s labour.
If the part of the constant capital which enters into the
product were 25 million, then the value of the product of
the one million men would be 75 million; if this part
of the constant capital were 10 million, then the value of
the product would only be 60 million, etc. And since
the ratio of constant capital to variable capital increases
in the course of capitalist development, the value of the
annual product of a million men will tend to rise
continuously, in proportion to the growth of the past labour
which plays a part in their annual production. This
alone shows that Ricardo was unable to understand either the
essence of accumulation or the nature of profit.
With the growth in the proportion of constant to variable
capital, grows also the productivity of labour, the
productive forces brought into being, with which social
labour operates. As a result of this increasing
productivity of labour, however, a part of the existing
constant capital is continuously depreciated in value, for
its value depends not on the labour-time that it cost
originally, but on the labour-time with which it can be
reproduced, and this is continuously diminishing as the
productivity of labour grows. Although, therefore, the
value of the constant capital does not increase in
proportion to its amount, it increases nevertheless, because
its amount increases even more rapidly than its value
falls. But we shall return later to Ricardo’s views on
accumulation.
It is evident, however, that if the length of the
working-day is given, the value of the annual product of the
labour of one million men will differ greatly according to
the different amount of constant capital that enters into
the product; and that, despite the growing productivity of
labour, the value of this product will be greater where the
constant capital forms a large part of the total capital,
than under social conditions where it forms a relatively
small part of the total capital. With the advance in
the productivity of social labour, accompanied as it is by
the growth of constant capital, a relatively ever increasing
part of the annual product of labour will, therefore, fall
to the share of capital as such, and thus property in the
form of capital (apart from revenue) will be constantly
increasing and proportionately that part of value which the
individual worker and even the working class creates, will
be steadily decreasing, ||661|
compared with the product of their past labour that
confronts them as capital. The alienation and the
antagonism between labour-power and the objective conditions
of labour which have become independent in the form of
capital, thereby grow continuously. (Not taking into
account the variable capital, i.e., that part of the product
of the annual labour which is required for the reproduction
of the working class; even these means of subsistence,
however, confront them as capital.)
Ricardo’s view, that the working-day is given,
limited, a fixed magnitude, is also expressed by him in
other forms, for instance:
“They” (the wages of labour and
profit of stock) are “together always of the
same value” (l.c., p. 499, [in] Chapter XXXII
“Mr. Malthus’s Opinions on Rent”),
in other words this only means that the (daily)
labour-time whose product is divided between the
wages of labour and the profits of stock, is always the
same, is constant.
“Wages and profits together will be
the same value” (l.c., p. 491, note).
I hardly need to repeat here that in these passages one
should always read “surplus-value” instead of
“profit”.
“Wages and profits taken together
will continue always of the same value” (l.c.,
pp. 490-91).
“Wages are to be estimated by their
real value, viz., by the quantity of labour and
capital employed in producing them, and not by their
nominal value either in coats, hats, money, or
corn” (l.c., Chapter I, “On Value”
p. 50).
The value of the means of subsistence which the worker
obtains (buys with his wages), corn, clothes, etc., is
determined by the total labour-time required for their
production, the quantity of immediate labour as well as the
quantity of materialised labour necessary for their
production. But Ricardo confuses the issue because he
does not state it plainly, he does not say: “their
real value, viz., that quantity of the working-day
required to reproduce the value of their [the workers] own
necessaries, the equivalent of the necessaries paid to them,
or exchanged for their labour”. Real wages have
to be determined by the average time which the worker must
work each day in order to produce or reproduce his own
wages.
“The labourer is only paid a really
high price for his labour, when his wages will purchase the
produce of a great deal of labour” (l.c., p. 322,
(note]).
4. Relative Surplus-Value.
[The Analysis of Relative Wages Is One of Ricardo’s
Scientific Achievements]
This is in fact the only form of surplus-value which
Ricardo analyses under the name of profit.
[According to him:]
The quantity of labour required for the production of a
commodity, and contained in it, determines its value, which
is thus a given factor, a definite
amount. This amount is divided between
wage-labourer and capitalist. (Ricardo, like Adam
Smith, does not take constant capital into account
here.) It is obvious that the share of one can only
rise or fall in proportion to the fall or rise of the share
of the other. Since the value of the commodities is
due to the labour of the workers, labour is under all
circumstances the precondition of value, but there can be no
labour unless the worker lives and maintains himself, i.e.,
receives the necessary wages (the minimum wages—wages
is synonymous with the value of his labour-power).
Wages and surplus-value— these two categories into
which the value of the commodity or the product itself is
divided—are therefore not only in inverse proportion
to each other, but the primary, the determinant factor is
the movement of wages. Their rise or fall causes the
opposite movement on the part of profit
(surplus-value). Wages do not rise or fall because
profit (surplus-value) falls or rises, but on the contrary
surplus-value (profit) falls or rises because wages rise or
fall. The surplus-product (one should really
say surplus-value) which remains after the working
class has received its share of its own annual production
forms the substance on which the capitalist class lives.
Since the value of the commodities is determined by the
quantity of labour contained in them, and since wages and
surplus-value (profit) are only shares, proportions
in which two classes of producers divide the value of the
commodity between themselves, it is clear that a rise or
fall in wages, although it determines the rate of
surplus-value (profit), does not affect the value of the
commodity or the price (as the monetary expression of the
value of a commodity). The proportion in which a whole
is divided between two shareholders makes the whole neither
larger nor smaller. It is, therefore, an erroneous
preconception to assume that a rise in wages raises the
prices of commodities; it only makes profit
(surplus-value) fall. Even the exceptions cited by
Ricardo, where a rise in wages is supposed to make the
exchange-values of some commodities fall and those of others
rise, are wrong so far as value is concerned and only
correct for cost-prices.
||662| Since the rate of
surplus-value (profit) is determined by the relative height
of wages, how is the latter determined? Apart from
competition, by the price of the necessary means of
subsistence. This, in turn, depends on the
productivity of labour, which increases with the fertility
of the land (Ricardo assumes capitalist production
here). Every “improvement” reduces the
prices of commodities, of the means of subsistence.
Wages or the value of labour, thus rise and fall in inverse
proportion to the development of the productive power of
labour, in so far as the latter produces necessary means of
subsistence which enter into the average consumption of the
working class. The rate of surplus-value (profit)
falls or rises, therefore, in direct proportion to the
development of the productive power of labour, because this
development reduces or raises wages.
The rate of profit (surplus-value) cannot fall unless
wages rise, and cannot rise unless wages fall.
The value of wages has to be reckoned not according to
the quantity of the means of subsistence received by the
worker, but according to the quantity of labour which these
means of subsistence cost (in fact the proportion of the
working-day which he appropriates for himself), that is
according to the relative share of the total product,
or rather of the total value of this product, which the
worker receives. It is possible that, reckoned in
terms of use-values (quantity of commodities or money), his
wages rise as productivity increases and yet the value of
the wages may fall and vice versa. It is one of
Ricardo’s great merits that he examined relative or
proportionate wages, and established them as a definite
category. Up to this time, wages had always been
regarded as something simple and consequently the worker was
considered an animal. But here he is considered in his
social relationships. The position of the classes to
one another depends more on relative wages than on the
absolute amount of wages.
Now these propositions have to be substantiated by
quotations from Ricardo.
“The value of the deer, the
produce of the hunter’s day’s labour, would be
exactly equal to the value of the fish, the produce of the
fisherman s day’s labour. The comparative value
of the fish and the game, would be entirely regulated by the
quantity of labour realised in each, whatever might be
the quantity of production, or however high or low
general wages or profits might be. If … the
fisherman … employed ten men, whose annual labour
cost £ 100 and who in one day obtained by
their labour twenty salmon: If … the hunter
[…] also employed ten men, whose annual labour
cost £ 100 and who in one day procured him ten
deer; then the natural price of a deer would he two salmon,
whether the proportion of the whole produce bestowed on
the men who obtained [it,] were large or small.
The proportion which might be paid for wages,
is of the utmost importance in the question of
profits; for it must at once be seen, that profits
would be high or low, exactly in proportion as wages were
low or high; but it could not in the least affect the
relative value of fish and game, as wages would be high or
low at the same time in both occupations” (l.c.,
Chapter I “On Value”, pp. 20-21).
It can be seen that Ricardo derives the whole value of
the commodity from the labour of the men
employed. It is their own labour or the product of
that labour or the value of this product, which is divided
between them and capital.
“No alteration in the wages of labour
could produce any alteration in the relative value of these
commodities; for suppose them to rise, no greater
quantity of labour would be required in any of these
occupations, but it would be paid for at a higher
price… Wages might rise twenty per cent and
profits consequently fall in a, greater or less proportion,
without occasioning the least alteration in the relative
value of these commodities” (l.c., p. 23).
“There can be no rise in the value
of labour without a fall of profits. If the corn
is to be divided between the farmer and the labourer,
the larger the proportion that is given to the
latter, the less will remain for the former. So if
cloth or cotton goods be divided between the workman
and his employer, the larger the proportion given to
the former, the less remains for the latter” (l.c.,
p. 31).
||663|
“Adam Smith, and all the writers who have followed
him, have, without one exception that I know of, maintained
that a rise in the price of labour would be uniformly
followed by a rise in the price of all
commodities. I hope I have succeeded in showing,
that there are no grounds for such an opinion” (l.c.,
p. 45).
“A rise of[f] wages, from the circumstance of the
labourer being more liberally rewarded, or from a difficulty
of procuring the necessaries on which wages are expended,
does not, except in some instances, produce the effect of
raising price, but has a great effect in lowering
profits.”
The position is different, however, when
the rise of wages is due to “… an alteration in
the value of money… In the one case”
<(namely, in the last-mentioned case> “no
greater proportion of the annual labour of the
country is devoted to the support of [the]
labourers; in the other case, a larger portion is so
devoted” (l.c., p. 48). |663|| .
||663|
“With a rise in the price of food and necessaries, the
natural price of labour will rise; with the[g] fall in their price, the natural
price of labour will fall” (l.c., p. 86).
“The surplus produce
remaining, after satisfying the wants of the existing
population, must necessarily be in proportion to the
facility of production, viz., to the smaller
number of persons employed in production” (l.c.,
p. 93).
“Neither the farmer who cultivates
that quantity of land, which regulates price, nor the
manufacturer, who manufactures goods, sacrifice any portion
of the produce for rent. The whole value of their
commodities is divided into two portions only:
one constitutes the profits of stock, the other the wages of
labour” (l.c., p. 107).
“Suppose the price of silks, velvets,
furniture, and any other commodities, not required by the
labourer, to rise in consequence of more labour being
expended on them, would not that affect profits?
Certainly not : for nothing can affect profits but a rise in
wages; silks and velvets are not consumed by the labourer,
and therefore cannot raise wages” (l.c., p. 118).
“If the labour of ten men will, on
land of a certain quality, obtain 180 quarters of wheat, and
its value be £4 per quarter, or £ 720”
(l.c., p. 110), …in all cases, the same sum of
£ 720 must be divided between wages and
profits… Whether wages or profits rise or fall,
it is this sum of £ 720 from which they must both be
provided. On the one hand, profits can never rise so
high as to absorb so much of this £ 720 that enough
will not he left to furnish the labourers with absolute
necessaries; on the other hand, wages can never rise so high
as to leave no portion of this sum for profits” (l.c.,
p. 113).
“Profits depend on high or law
wages, wages on the price of necessaries, and the price
of necessaries chiefly on the price of food, because all
other requisites may be increased almost without
limit” (l.c., p. 119).
“Although a greater value is
produced” (with a deterioration of the land) “a
greater proportion of what remains of that value,
after paying rent, is consumed by the producers,”
<he identifies labourers with producers here>
“and it is this, and this alone, which
regulates profits” (l.c., p. 127).
“It is the essential quality of an
improvement to diminish the quantity of labour before
required to produce a commodity; and this diminution cannot
take place without a fall of its price or relative
value” (l.c., p. 70).
“Diminish the cost of production of
hats, and their price will ultimately fall to their new
natural price, although the demand should be doubled,
trebled, or quadrupled. Diminish the cost of
subsistence of men, by diminishing the natural price of the
food and clothing, by which life is sustained, and wages
will ultimately fall, notwithstanding that the demand for
labourers ||364| may very
greatly increase” (l.c., p. 460).
“In proportion as less is
appropriated for wages, more will be appropriated for
profits, and vice versa” (l.c., p. 500).
“It has been one of the objects of
this work to shew, that with every fall in the real value of
necessaries, the wages of labour would fall, and that the
profits of stock would rise—in other words, that of
any given annual value a less portion would be paid to
the labouring class, and a larger portion to those
whose funds employed this class.”
<It is only in this statement, which has now become a
commonplace, that Ricardo expresses the nature of capital,
though he may not be aware of it. It is not
accumulated labour which is employed by the labouring class,
by the labourers themselves, but the “funds”,
“accumulated labour”, which “employ this
class”, employ present, immediate labour.>
“Suppose the value of the
commodities produced in a particular manufacture to be
£ 1,000, and to be divided between the
master and his labourers” <here again be
expresses the nature of capital; the capitalist is the
master, the workers are his labourers>
“in the proportion of £ 800 to labourers, and
£ 200 to the master; if the value of these commodities
should fall to £ 900, and £ 100 be saved from
the wages of labour, in consequence of the fall of
necessaries, the net income of the masters would be in no
degree impaired” (l.c., pp. 511-12).
“If the shoes and clothing of the
labourer, could, by improvements in machinery, be produced
by one-fourth of the labour now necessary to their
production, they would probably fall 75 per cent; but so far
is it from being true, that the labourer would thereby be
enabled permanently to consume four coats, or four pair of
shoes, instead of one, that it is probable his wages
would in no long time be adjusted by the effects of
competition, and the stimulus to population, to the new
value of the necessaries on which they were
expended. If these improvements extended to all the
objects of the labourer’s consumption, we should find him
probably at the end of a very few years, in possession of
only a small, if any, addition to his enjoyments, although
the exchangeable value of those commodities, compared with
any other commodity […] had sustained a very
considerable reduction; and though they were the produce of
a very considerably diminished quantity of labour”
(l.c., p. 8).
“When wages rise, it is always at the
expense of profits, and when they fall, profits always
rise” (l.c., p. 491, note).
“It has been my endeavour to shew
throughout this work, that the rate of profits can never be
increased but by a fall in wages, and that there can be no
permanent fall of wages but in consequence of a fall of the
necessaries on which wages are expended. If,
therefore, by the extension of foreign trade, or by
improvements in machinery, the food and necessaries
of the labourer can be brought to market, at a
reduced price, profits will rise. If, instead of
growing our own corn, or manufacturing the clothing and
other necessaries of the labourer, we discover a new market
from which we can supply ourselves with these commodities at
a cheaper price, wages will fall and profits rise; but
if the commodities obtained at a cheaper rate[h], by the extension of
foreign commerce, or by the improvement of machinery, be
exclusively the commodities consumed by the rich, no
alteration will take place in the rate of profits. The
rate of wages would not he affected, although wine, velvets,
silks, and other expensive commodities should fall 50 per
cent, and consequently profits would continue unaltered.
“Foreign trade, then, though highly
beneficial to a country, as it increases the amount and
variety of the objects on which revenue may be expended, and
affords, by the abundance and cheapness of commodities,
incentives to saving” (and why not incentives to
spending?), “and to the accumulation of
capital, has no tendency to raise the profits of stock,
unless the commodities imported be of that description on
which the wages of labour are expended.
“The remarks which have been made
respecting foreign trade, apply equally to home trade.
The rate of profits is never increased”
<he has just said the very opposite; evidently he
means never, unless the value of labour is diminished by the
improvements mentioned)
“by a better distribution of
labour, by the invention of machinery, by the
establishment of roads and canals, or by any means
of abridging labour […] in the manufacture or
in the conveyance of goods. These are
causes which operate on price, and never fail to be highly
beneficial to consumers; since they enable them, with the
same labour […] to obtain in exchange a greater
quantity of the commodity to which the improvement is
applied; but they have no effect whatever on profit.
On the other hand, ||665| every
diminution in the wages of labour raises profits, but
produces no effect on the price of commodities. One is
advantageous to all classes, for all classes are
consumers”
<but how is it advantageous to the labouring
class? For Ricardo presupposes that if these
commodities enter into the consumption of the wage-earner
they reduce wages, and if these commodities become cheaper
without reducing wages they are not commodities on which
wages are expended>;
“the other is beneficial only to
producers; they gain more, but every thing remains at its
former price.”
<Again, how is this possible, since Ricardo
presupposes that the reduction of wages which raises profits
takes place precisely because the price of the necessaries
has fallen and therefore by no means does “every thing
remain at its former price”.>
“In the first case they get the same
as before; but every thing” <wrong
again; should read every thing, with the exception of the
necessaries> “on which their gains are
expended, is diminished in exchangeable value” (l.c.,
pp. 137-38).
It is evident that this passage is rather loosely
worded. But apart from this formal aspect, the
statements are only true if one reads “rate of
surplus-value” for rate of profit, and this applies to
the whole of this investigation into relative
surplus-value. Even in the case of luxury articles,
such improvements can raise the general rate of profit,
since the rate of profit in these spheres of production, as
in all others, bears a share in the levelling out of all
particular rates of profit into the average rate of
profit. If in such cases, as a result of the
above-mentioned influences, the value of the constant
capital falls proportionately to the variable, or the period
of turnover is reduced (i.e., a change takes place in the
circulation process) , then the rate of profit rises.
Furthermore, the influence of foreign trade is expounded in
an entirely one-sided way. The development of the
product into a commodity is fundamental to capitalist
production and this is intrinsically bound up with the
expansion of the market, the creation of the world market,
and therefore foreign trade.
Apart from this, Ricardo is right when he states that all
improvements, be they brought about through the division of
labour, improvements in machinery, the perfection of means
of communication, foreign trade—in short all measures
that reduce the necessary labour-time involved in the
manufacture or transport of commodities increase the
surplus-value (hence profit) and thus enrich the capitalist
class because, and in so far as, these
“improvements” reduce the value of labour.
Finally, in this section, we must quote a few passages in
which Ricardo analyses the nature of relative
wages.
“If I have to hire a labourer for a
week, and instead of ten shillings I pay him eight, no
variation having taken place in the value of money, the
labourer can probably obtain more food and necessaries, with
his eight shillings, than he before obtained for ten: but
this is owing, not to a rise in the real value of his
wages, as stated by Adam Smith, and more recently by
Mr. Malthus, but to a fall in the value of the things on
which his wages are expended, things perfectly distinct; and
yet for calling this a fall in the real value of
wages, I am told that I adopt new and unusual language,
not reconcilable with the true principles of the
science” (l.c., pp. 11-12).
“It is not by the absolute
quantity of produce obtained by either class, that we
can correctly judge of the rate of profit, rent, and wages,
but by the quantity of labour required to obtain that
produce. By improvements in machinery and agriculture,
the whole produce may be doubled; but if wages, rent, and
profit be also doubled, these three will bear the same
proportions to one another as before, and neither could
be said to have relatively varied. But if wages
partook not of the whole of this increase; if they, instead
of being doubled, were only increased one-half …it
would, I apprehend, be correct for me to say that
…wages had fallen while profits had risen; for if we
had an invariable standard by which to measure the
value of this produce, we should find that a less
value had fallen to the class of labourers …, and a
greater to the class of capitalists, than had been given
before” (l.c., p. 49).
“It will not the less be a real fall,
because they” (the wages) “might furnish him
with a greater quantity of cheap commodities than his former
wages” (l.c., p. 51).
***
De Quincey points out the contrast between some of
the propositions developed by Ricardo and those of the other
economists.
“When it was asked” [by the
economists before Ricardo] “what determined the value
of all commodities: it was answered that this value was
chiefly determined by wages. When again it was
asked—what determined wages ?—it was recollected
that wages must […] be adjusted to the value of the
commodities upon which they were spent; and the answer was
in effect that wages were determined by the value of
commodities.” ([Thomas de Quincey], Dialogues of
Three Templars on Political Economy, Chiefly in Relation to
the Principles of Mr. Ricardo in The London
Magazine, Vol. IX, 1824, p. 560.)
||666| The same
Dialogues contains the following passage about the
law governing the measurement of value by the quantity of
labour and by the value of labour:
“So far are the two formulae from
presenting merely two different expressions of the same law,
that the very best way of expressing negatively
Mr. Ricardo’s law (viz. A is to B in value as the
quantities of the producing labour) would be to
say—A is not to B in value as the values
of the producing labour” [l.c., p. 348].
(If the organic composition of the capital in A and B
were the same, then it could in fact be said that their
relation to one another is proportionate to the
values of the producing labour. For the
accumulated labour in each would be in the same proportion
as the immediate labour in each. The quantities of
paid labour in each, however, would be proportionate to the
total quantities of immediate labour in each. Assume
the composition to be 80c+20v and the rate of surplus-value
equal to 50 per cent. If one capital were equal to
£ 500 and the other to £ 300, then the product
in the first case would be £ 550 and in the second
£ 330. The products would then be as
5×20=100 (wages) to 3×20=60; that is as 100:60,
as 10:6, as 5:3. [And] 550:330=55:33 or as
55/11:33/11
(5×11=55 and 3×11=33); i.e., as 5:3. But
even then one would only know their relation to one another
and not their true values, since many different values
correspond to the ratio 5:3.)
“If the price is ten shillings, then
[…] wages and profits, taken as a whole, cannot
exceed ten shillings. […] But do not the wages
and profits as a whole, themselves, on the contrary,
predetermine the price? No; that is the old
superannuated doctrine.” (Thomas de Quincey, The
Logic of Political Economy, Edinburgh and London, 1844,
p. 204.)
“The new economy has shown that all
price is governed by proportional quantity of the producing
labour, and by that only. Being itself once settled,
then, ipso facto, price settles the fund out
of which both wages and profits must draw their separate
dividends” (l.c., p. 204). “Any change
that can disturb the existing relations between wages and
profits, must originate in wages” (l.c.,
p. 205).
Ricardo’s doctrine is new in so far as he
poses the question whether in fact it sets aside the law of
actual value (l.c., p. 158).[i]
[a] In the
manuscript: “f.i.”—Ed.
[b] In the
manuscript: “the commodity”.—Ed.
* ||663| (The following passage shows
that Ricardo consciously identifies value with
cost of production: “Mr. Malthus appears to
think that it is a part of my doctrine, that the cost
and value of a thing should be the same;—it is,
if he means by cost, ‘cost of production’
including profits” (l.c., p. 46, note).)
|663||
[c] In the
manuscript “but” instead of “It follows,
that”.—Ed.
[d] The brackets are
omitted in the manuscript—Ed.
[e] In the
manuscript: “upon”.—Ed.
[f] In the
manuscript: “in”.—Ed.
[g] In the
manuscript: “a”.—Ed.
[h] In the
manuscript: “price”.—Ed.
[i] Marx
summarises very briefly here—in his own
words—the idea developed by de Quincey.—Ed.