Theories of Surplus Value, Marx 1861-3

[Chapter XIX] Thomas Robert Malthus

||XIII-753| The writings of Malthus which have to be considered here are:

1) The Measure of Value Stated and Illustrated etc., London, 1823.

2) Definitions in Political Economy etc., London, 1827 (as well as the same work published by John Cazenove in London in 1853 with Cazenove’s “Notes and Supplementary Remarks”).

3) Principles of Political Economy etc., second ed., London, 1836 (first [edition] 1820 or thereabout, to be looked up).

4) Also to be taken into consideration the following work by a Malthusian (i.e., a Malthusian in contrast to the Ricardians)—Outlines of Political Economy etc., London, 1832.

[1. Malthus’s Confusion of the Categories Commodity and Capital]

In his Observations on the Effects of the Corn Laws etc. (1814) Malthus still says the following about Adam Smith:

“Adam Smith[a] was evidently led into this train of argument from his habit of considering labour” (that is, the value of labour) “as the standard measure of value and corn as the measure of labour… And that[b] neither labour nor any other commodity can be an accurate measure of real value in exchange, is now considered as one of the most incontrovertible doctrines of political economy; and indeed follows, […] from the very definition of value in exchange” [pp. 11-12].

But in his Principles of Political Economy (1820), Malthus borrows this “standard measure of value” from Smith to use it against Ricardo, though Smith himself never used it when he was really analysing his subject matter. Malthus himself, in his book on the Corn Laws already referred to, adopted Smith’s other definition concerning the determination of value by the quantity of capital (accumulated labour) and (immediate) labour necessary for the production of an article.

One cannot fail to recognise that both Malthus’s Principles and the two other works mentioned, which were intended to amplify certain aspects of the Principles, were largely inspired by envy at the success of Ricardo’s book and were an attempt by Malthus to regain the leading position which he had attained by skilful plagiarism before Ricardo’s book appeared. In addition, Ricardo’s definition of value, though somewhat abstract in its presentation, was directed against the interests of the landlords and their retainers, which Malthus represented even more directly than those of the industrial bourgeoisie. At the same time, it cannot be denied that Malthus presented a certain theoretical, speculative interest. Nevertheless his opposition to Ricardo—and the form this opposition assumed—was possible only because Ricardo had got entangled in all kinds of inconsistencies.

The points of departure for Malthus’s attack are, on the one hand, the origin of surplus-value and [on the other] the way in which Ricardo conceives the equalisation of cost-prices in different spheres of the employment of capital as a modification of the law of value itself [as well as] his continual confusion of profit with surplus-value (direct identification of one with the other). Malthus does not unravel these contradictions and quid pro quos but accepts them from Ricardo in order to be able to overthrow the Ricardian law of value, etc., by using this confusion and to draw conclusions acceptable to his protectors.

The real contribution made by Malthus in his three books is that he places the main emphasis on the unequal exchange between capital and wage-labour, whereas Ricardo does not actually explain how the exchange of commodities according to the law of value (according to the labour-time embodied in the commodities) gives rise to the unequal exchange between capital and living labour, between a definite amount of accumulated labour and a definite amount of immediate labour, and therefore in fact leaves the origin of surplus-value obscure (since he makes capital exchange immediately for labour and not for labour power). ||754| Cazenove, one of the few later disciples of Malthus, realises this and says in his preface to Definitions etc., mentioned above:

Interchange of commodities and Distribution (wages, rent and profit) must be kept distinct from each other … the Laws of Distribution are not altogether dependent upon those relating to Interchange[c] ([T. R. Malthus, Definitions in Political Economy, ed. by John Cazenove, London, 1853, ] Preface, pp. vi and vii).

Here this can only mean that the relation of wages to profit, the exchange of capital and wage-labour, of accumulated labour and immediate labour, do not directly coincide with the law of the interchange of commodities.

If one considers the utilisation of money or commodities as capital—that is, not their value but their capitalist utilisation— it is clear that surplus-value is nothing but the surplus of labour (the unpaid labour) which is commanded by capital, i.e., which the commodity or money commands over and above the quantity of labour it itself contains. In addition to the quantity of labour it itself contains (equal to the sum of labour contained in the elements of production of which it is made up, plus the immediate labour which is added to them), it buys a surplus of labour which it does not itself embody. This surplus constitutes the surplus-value; its size determines the rate of expansion of capital. And this surplus quantity of living labour for which it is exchanged is the source of profit. Profit (or rather surplus-value) does not result from the exchange of an amount of materialised labour for an equivalent amount of living labour, but from the portion of living labour which is appropriated in this exchange without an equivalent payment in return, that is, from unpaid labour which capital appropriates in this pseudo-exchange. If one disregards how this process is mediated—and Malthus is all the more justified in disregarding it as the intermediate link is not mentioned by Ricardo—if one considers only the factual content and the result of this process, then production of surplus-value, profit, transformation of money or commodities into capital, arises not from the fact that commodities are exchanged according to the law of value, namely, in proportion to the amount of labour-time which they cost, but rather conversely, from the fact that commodities or money (i.e., materialised labour) are exchanged for more living labour than is embodied or worked up in them.

Malthus’s sole contribution in the books mentioned is the emphasis he places on this point, which emerges all the less sharply in Ricardo as Ricardo always presupposes the finished product which is divided between the capitalist and the worker without considering exchange, the intermediate process which leads to this division. However, this contribution is cancelled out by the fact that he confuses the utilisation of money or the commodity as capital, and hence its value in the specific function of capital, with the value of the commodity as such; consequently he falls back in his exposition, as we shall see, on the fatuous conceptions of the Monetary System, on profit upon expropriation, and gets completely entangled in the most hopeless confusion. Thus Malthus, instead of advancing beyond Ricardo, seeks to drag political economy back to where it was before Ricardo, even to where it was before Adam Smith and the Physiocrats.

“…in the same country, and at the same time, the exchangeable value of those commodities which can be resolved into labour and profits alone, would be accurately measured by the quantity of labour which would result from adding to the accumulated and immediate labour actually worked up in them the[d] varying amount of the profits on all the advances estimated in labour. But this must necessarily be the same as the quantity of labour which they will command” ([T. R. Malthus,] The Measure of Value Stated and Illustrated, London, 1823, pp. 15-16).

“… the labour which a commodity would command”[e] [is] “a standard measure of value” (op. cit., p. 61).

“… I had nowhere seen it stated” (that is, before his own book The Measure of Value appeared), “that the ordinary quantity of labour which a commodity will command must represent and measure the quantity of labour worked up in it, with the addition of profits” ([T. R. Malthus,] Definitions in Political Economy etc., London, 1827, p. 196).

Mr. Malthus wants to include “profit” directly in the definition of value, so that it follows immediately from this definition, which is not the case with Ricardo. This shows that he felt where the difficulty lay.

Besides, it is particularly absurd that he declares the value of the commodity and its realisation as capital to be identical. When commodities or money (in brief, materialised labour) are exchanged as capital against living labour, they are always exchanged against a ||755| greater quantity of labour than they contain. And if one compares the commodity before this exchange on the one hand, with the product resulting from this exchange with living labour on the other, one finds that the commodity has been exchanged for its own value (equivalent) plus a surplus over and above its own value—the surplus-value. But it is therefore absurd to say that the value of a commodity is equal to its value plus a surplus over and above this value. If the commodity, as a commodity, is exchanged for other commodities and not as capital against living labour, then, insofar as it is exchanged for an equivalent, it is exchanged for the same quantity of materialised labour as is embodied in it.

The only notable thing is therefore that according to Malthus the profit exists already in the value of the commodity and that it is clear to him that the commodity always commands more labour than it embodies.

“…it is precisely because the labour which a commodity will ordinarily command measures the labour actually worked up in it with the addition of profits, that it is justifiable to consider it” (labour) “as a measure of value. If then the ordinary value of a commodity be considered as determined by the natural and necessary conditions of its supply, it is certain that the labour which it will ordinarily command is alone the measure of these conditions”([T. R. Malthus,] Definitions in Political Economy, London, 1827, p. 214).

“Elementary costs of Production. An expression exactly equivalent to the conditions […] of the supply” (Definitions in Political Economy, ed. by John Cazenove, London, 1853, p.14).

“Measure of the Conditions of […] the Supply […]. The quantity of labour for which the commodity will exchange, when it is in its natural and ordinary state” (loc. cit., p. 14).

“… the quantity of labour which a commodity commands represents exactly the quantity of labour worked up in it, with the profits upon the advances, and does therefore really represent and measure those natural and necessary conditions of the supply, those elementary costs of production which determine value…” (op. cit., p. 125).

“… the demand for a commodity, though not proportioned to the quantity of any other commodity which the purchaser is willing and able to give for it, is really proportioned to the quantity of labour which he will give for it; and for this reason: the quantity of labour which a commodity will ordinarily command, represents exactly the effectual demand for it; because it represents exactly that quantity of labour and profits united necessary to effect its supply; while the actual quantity of labour which a commodity will command when it differs from the ordinary quantity, represents the excess or defect of demand arising from temporary causes” (op. cit., p. 135).

Malthus is right in this also. The conditions of supply, i.e., of the production or rather the reproduction of a commodity on the basis of capitalist production, are that it or its value (the money into which it is transformed) is exchanged in the process of its production or reproduction for more labour than is embodied in it, for it is only produced in order to realise a profit.

For example, a cotton manufacturer sells his calico. The condition for the supply of new calico is that he exchanges the money—the exchange-value of the calico—for more labour in the process of the reproduction of the calico than was embodied in it or than is represented by the money. For the cotton manufacturer produces calico as a capitalist. What he wants to produce is not calico, but profit. The production of calico is only a means for the production of profit. But what follows from this? The calico he produces contains more labour-time, more labour than was contained in the calico advanced. This surplus labour-time, this surplus-value, is also represented by a surplus product, i.e., more calico than was exchanged for labour. Therefore one part of the product does not replace the calico exchanged for labour, but constitutes surplus product which belongs to the manufacturer. Or, if we consider the whole product, each yard of calico contains an aliquot part, or its value contains an aliquot part, for which no equivalent is paid; this represents unpaid labour. If the manufacturer sells a yard of calico at its value, that is, if he exchanges it for money or for commodities which contain an equal amount of labour-time, he realises a sum of money, or receives a quantity of commodities which cost him nothing. For he sells the calico not for the labour-time for which he has paid, but for the labour-time embodied in the calico, and he did not pay for part of this labour-time. ||756| He receives, for example, labour-time equal to 12 shillings, but he only paid 8 shillings of this amount. When he sells it at its value, he sells it for 12 shillings, and thus gains 4 shillings.

[2. Malthus’s Vulgarised View of Surplus-Value]

As far as the buyer is concerned, the assumption is that, under all circumstances, he pays nothing but the value of the calico. This means that he gives a sum of money which contains as much labour-time [as] there is in the calico. Three cases are possible. The buyer is a capitalist. The money (i.e., the value of the commodity) with which he pays, also contains a portion of unpaid labour. Thus, if one person sells unpaid labour, the other person buys with unpaid labour. Both realise unpaid labour—One as seller, the other as buyer. Or, the buyer is an independent producer. In this case he receives equivalent for equivalent. Whether the labour which the seller sells him in the shape of commodities is paid for or not, does not concern him. He receives as much materialised labour as he gives. Or, finally, he is a wage-worker. In this case also, like every other buyer—provided the commodities are sold at their value—he receives an equivalent for his money in the shape of commodities. He receives as much materialised labour in commodities as he gives in money. But for the money which constitutes his wages he has given more labour than is embodied in the money. He has replaced the labour contained in it along with surplus labour which he gives gratis. He paid for the money above its value, and therefore also pays for the equivalent of the money, the calico, etc., above its value. The cost for him as purchaser is thus greater than it is for the seller of any commodity although he receives an equivalent of the money in the commodity; but in the money he did not receive an equivalent of his labour; on the contrary, he gave more than the equivalent in labour. Thus the worker is the only one who pays for all commodities above their value even when he buys them at their value, because he buys money, the universal equivalent, above its value for labour. Consequently, no gain accrues to those who sell commodities to the worker. The worker does not pay the seller any more than any other buyer, he pays the value of labour. In fact, the capitalist who sells the commodity produced by the worker back to him, realises a profit on this sale, but only the same profit as he realises on every other buyer. His profit—as far as this worker is concerned—arises not from his having sold the worker the commodity above its value, but from his having previously bought it from the worker, as a matter of fact in the production process, below its value.

Now Mr. Malthus, who transformed the utilisation of commodities as capital into the value of commodities, quite consistently transforms all buyers into wage-workers, in other words he makes them all exchange with the capitalist not commodities, but immediate labour, and makes them all give back to the capitalist more labour than the commodities contain, while conversely, the capitalist’s profit results from selling all the labour contained in the commodities when he has paid for only a portion of the labour contained in them. Therefore, whereas the difficulty with Ricardo [arises from] the fact that the law of commodity exchange does not directly explain the exchange between capital and wage-labour, but rather seems to contradict it, Malthus solves the difficulty by transforming the purchase (exchange) of commodities into an exchange between capital and wage-labour. What Malthus does not understand is the difference between the total sum of labour contained in a particular commodity and the sum of paid labour which is contained in it. It is precisely this difference which constitutes the source of profit. Further, Malthus inevitably arrives at the point of deriving profit from the fact that the seller sells his commodity not only above the amount it costs him (and the capitalist does this), but above what it costs; he thus reverts to the vulgarised conception of profit upon expropriation and derives surplus-value from the fact that the seller sells the commodity above its value (i.e., for more labour-time than is contained in it). What he thus gains as a seller of a commodity, he loses as a buyer of another and it is absolutely impossible to discover what profit is to be made in reality from such a general nominal price increase. ||757| It is in particular difficult to understand how society as a whole can enrich itself in this way, how a real surplus-value or surplus product can thus arise. An absurd, stupid idea.

Relying on some propositions of Adam Smith—who, as we have seen, naïvely expresses all sorts of contradictory elements and thus becomes the source, the starting-point, of diametrically opposed conceptions—Mr. Malthus attempts in a confused way, though on the basis of a correct surmise, and of the realisation of the existence of an unsolved difficulty, to counterpose a new theory to that of Ricardo and thus to maintain a “front rank” position. The transition from this attempt to the nonsensical, vulgarised conceptions proceeds in the following way.

If we consider the utilisation of a commodity as capital—that is, in its exchange for living, productive labour—we see that it commands—besides the labour-time it itself contains, i.e., besides the equivalent reproduced by the worker—surplus labour-time, which is the source of profit. Now if we transfer this utilisation of the commodity to its value, then each purchaser of a commodity must act as if he were a worker, that is, in buying it, besides the quantity of labour contained in the commodity, he must give for it a surplus quantity of labour. But since other purchasers, apart from the workers, are not related to commodities as workers <even when the worker appears as a mere purchaser, the old, original difference persists indirectly, as we have seen>, it must be assumed that although they do not directly give more labour than is contained in the commodities, they give a value which contains more labour, and this amounts to the same thing. It is by means of this [quantity] of “surplus labour, or, what amounts to the same thing, the value of more labour”, that the transition is made. In fact, it comes to this: the value of a commodity consists of the value paid for it by the purchaser, and this value is equal to the equivalent (the value) of the commodity plus a surplus over and above this value, surplus-value. Thus we have the vulgarised view that profit consists in a commodity being sold more dearly than it was bought. The purchaser buys it for more labour or for more materialised labour than it costs the seller.

But if the purchaser is himself a capitalist, a seller of commodities, and his money, his means of purchase, represents only goods which have been sold, then it follows that both have sold their goods too dearly and are consequently swindling each other, moreover they are swindling each other to the same extent, provided they both merely secure the average rate of profit. Where are the buyers to come from who will pay the capitalist the quantity of labour equal to that contained in his commodity plus his profit? For example, the commodity costs the seller 10 shillings. He sells it for 12 shillings. He thus commands labour not to the value of 10s. only, but of 2s. more. But the buyer also sells his commodity, which cost l0s., for 12s. So that each loses as a buyer what he gained as a seller. The only exception is the working class. For since the price of the product is increased beyond its cost, they can only buy back a part of that product, and thus another part of the product, or the price of another part of the product, constitutes profit for the capitalist. But as profit arises precisely from the fact that the workers can only buy back part of the product, the capitalist (the capitalist class) can never realise his profit as a result of demand from the workers, he cannot realise it by exchanging the whole product against the workers’ wage, but rather by exchanging the whole of the workers’ wage against only part of the product. Additional demand and additional buyers apart from the workers themselves are therefore necessary, otherwise there could not be any profit. Where do they come from? If they themselves are capitalists, sellers, then the mutual swindling within the capitalist class mentioned earlier occurs, since they mutually raise the nominal prices of their commodities and each gains as a seller what he loses as a buyer. What is required therefore are buyers who are not sellers, so that the capitalist can realise his profit and sell his commodities “at their value”. Hence the necessity for landlords, pensioners, sinecurists, priests, etc., not to forget their menial servants and retainers. How these “purchasers” come into possession of their means of purchase ||758| , how they must first take part of the product from the capitalists without giving any equivalent in order to buy back less than an equivalent with the means thus obtained, Mr. Malthus does not explain. At any rate, what follows from this is his plea for the greatest possible increase in the unproductive classes in order that the sellers may find a market, a demand for the goods they supply. And so it turns out further that the author of the pamphlet on population preaches continuous over-consumption and the maximum possible appropriation of the annual product by idlers, as a condition of production. In addition to the plea arising inevitably out of this theory, comes the argument that capital represents the drive for abstract wealth, the drive to expand its value, which can only be put into effect by means of a class of buyers representing the drive to spend, to consume, to squander, namely, the unproductive classes, who are buyers without being sellers.

[3. The Row Between the Supporters of Malthus and Ricardo in the Twenties of the 19th Century. Common Features in Their Attitude to the Working Class]

There developed on this basis a fine old row between the Malthusians and the Ricardians in the 20s (from 1820 to 1830 was in general the great metaphysical period in English political economy). Like the Malthusians, the Ricardians deem it necessary that the worker should not himself appropriate his product, but that part of it should go to the capitalist, in order that the worker should have an incentive for production, and that the development of wealth should thus be ensured. But they rage against the view of the Malthusians that landlords, state and church sinecurists and a whole lot of idle retainers must first lay hold—without any equivalent—of a part of the capitalist’s product (just as the capitalist does in respect of the workers) therewith to buy their own goods from the capitalist with a profit for the latter, although this is exactly what the Ricardians affirm with regard to the workers. In order that accumulation may increase and with it the demand for labour, the worker must relinquish as much of his product as possible gratis to the capitalist, so that the latter can transform the net revenue, which has been increased in this way, back again into capital. The same sort [of argument is used by] the Malthusians. As much as possible should be taken away gratis from the industrial capitalists in the form of rent, taxes, etc., to enable them to sell what remains to their involuntary “shareholders” at a profit. The worker must not be allowed to appropriate his own product, otherwise he would lose the incentive to work, say the Ricardians along with the Malthusians. The industrial capitalist [the Malthusians say] must relinquish a portion of his product to the classes which only consume—fruges consumere nati[f]—in order that these in turn may exchange it again, on unfavourable terms, with the capitalist. Otherwise the capitalist would lose the incentive for production, which consists precisely in the fact that he makes a big profit, that he sells his goods far above their value. We shall return to this comic struggle later.

[4. Malthus’s One-sided Interpretation of Smith’s Theory of Value. His Use of Smith’s Mistaken Theses in His Polemic Against Ricardo]

First of all, some evidence showing that Malthus arrives at a very common conception:

“Whatever may be the number of intermediate acts of barter which may take place in regard to commodities—whether the producers send them to China, or sell them in the place where they are produced: the question as to an adequate market for them, depends exclusively upon whether the producers can replace their capitals with ordinary profits, so as to enable them successfully to go on with their business. But what are their capitals? They are, as Adam Smith states, the tools to work with, the materials to work upon, and the means of commanding the necessary quantity of labour” [Definitions in Political Economy, ed. by Cazenove, London, 1853, p. 70].

(And this, he affirms, is all the labour worked up in the commodity. Profit is a surplus over and above the labour expended in the production of the commodity. In fact, therefore, a nominal surcharge over and above the cost of the commodity.) And in order that there may remain no doubt about his meaning, he quotes Colonel Torrens’s On the Production of Wealth (Chap. VI, p. 349) approvingly as confirming his own views:

“… effectual demand consists in the power and inclination, on the part of consumers” <the antithesis of buyers and sellers becomes that of consumers and producers>, ||759| “to give for commodities, either by immediate or circuitous barter, some greater proportion of all ingredients of capital than their production costs” ([R. Torrens, An Essay on the Production of Wealth… London, 1821, p. 349, quoted by T. R. Malthus:] loc. cit., pp. 70-71).

And Mr. Cazenove himself, the publisher of, apologist for and commentator on the Malthusian Definitions, says:

“Profit does not depend on the proportion in which commodities are exchanged with each other”

“… (seeing that the same proportion may be maintained under every variety of profit) but upon the proportion which goes to wages, or is required to cover the prime cost, and which is in all cases determined by the degree in which the sacrifice made by the purchaser (or the labour’s worth which he gives) in order to acquire a commodity, exceeds that made by the producer, in order to bring it to market” (op. cit., p. 46).

In order to achieve these wonderful results, Malthus has to make some very great theoretical preparations. First of all, seizing on that side of Adam Smith’s theory according to which the value of a commodity is equal to the quantity of labour which it commands, or by which it is commanded, or against which it exchanges, he must cast aside all the objections raised by Adam Smith himself, by his followers and also by Malthus, to the effect that the value of a commodity—value [in general]— can be the measure of value.

The Measure of Value Stated and Illustrated (London, 1823) is a real example of feeble-minded thought, which winds its way in a casuistical and self-stupefying manner through its own inner confusion, and whose difficult, clumsy style leaves the unprejudiced and incompetent reader with the impression that the difficulty of making sense out of the confusion does not lie in the contradiction between confusion and clarity, but in a lack of understanding on the part of the reader.

Malthus has first of all to obliterate Ricardo’s differentiation between “value of labour” and “quantity of labour” and to reduce Smith’s juxtaposition of the two to the one false aspect.

“… any given quantity of labour must be of the same value as the wages which command it, or for which it actually exchanges” (The Measure of Value Stated and Illustrated, London, 1823, p. 5).

The purpose of this phrase is to equate the expressions “quantity of labour” and “value of labour”.

This phrase itself is a mere tautology, an absurd truism. Since wages or that “for which it” (i.e., a quantity of labour) “exchanges” constitute the value of this quantity of labour, it is tautologous to say: the value of a certain quantity of labour is equal to the wages or to the amount of money or commodities for which this labour exchanges. In other words, this means nothing more than: the exchange-value of a definite quantity of labour is equal to its exchange-value—otherwise called wages. But (apart from the fact that it is not labour, but labour-power, which exchanges directly for wages; it is this confusion that makes the nonsense possible) it by no means follows from this that a definite quantity of labour is equal to the quantity of labour embodied in the wages, or in the money or the goods which represent the wages. If a labourer works for 12 hours and receives the product of 6 hours labour as wages, then the product of the 6 hours constitutes the value of 12 hours labour (because the wages [represent] the exchangeable commodity for [12 hours labour]). It does not follow from this that 6 hours of labour are equal to 12 hours, or that the commodities in which 6 hours of labour are embodied [are] equal to the commodities in which 12 hours of labour are embodied. It does not follow that the value of wages is equal to the value of the product in which the labour is embodied. It follows only that the value of labour (because it is measured by the value of the labour-power, not by the labour carried out), the ||760| value of a given quantity of labour contains less labour than it buys; that, consequently, the value of the commodities in which this purchased labour is embodied, is very different from the value of the commodities with which this given quantity of labour was purchased, or by which it was commanded.

Mr. Malthus draws the opposite conclusion. Since the value of a given quantity of labour is equal to its value, it follows, according to him, that the value in which this quantity of labour is embodied is equal to the value of the wages. It follows further from this that the immediate labour (that is, disregarding the means of production) which is absorbed by and contained in a commodity, creates no greater value than that which is paid for it; [that it] only reproduces the value of the wages. The necessary consequence ensuing from this is that profit cannot be explained if the value of commodities is determined by the amount of labour embodied in them, but must rather be explained in some other way; provided the profit a commodity realises is to be included in the value of that commodity. For the labour worked up in a commodity consists 1) of the labour contained in the machinery, etc., used, which consequently reappears in the value of the product; 2) of the labour contained in the raw material used up. The amount of labour contained in these two elements before the new commodity is produced is obviously not increased merely because they become production elements of a new commodity. There remains therefore 3), the labour embodied in the wages which is exchanged for living labour. However, according to Malthus, this latter is not greater than the materialised labour against which it is exchanged. Hence, a commodity contains no portion of unpaid labour but only labour which replaces an equivalent. Hence it follows that if the value of a commodity were determined by the amount of labour embodied in it, it would yield no profit. If it does yield a profit, then this profit is a surplus in the price over and above the labour embodied in the commodity. Therefore, in order to be sold at its value (which includes the profit), a commodity must command a quantity of labour equal to the quantity of labour worked up in itself plus a surplus of labour representing the profit realised in the sale of the commodity.

[5. Smith’s Thesis of the Invariable Value of Labour as Interpreted by Malthus]

Moreover, in order to make labour, not the quantity of labour required for production, but labour as a commodity, serve as a measure of value, Malthus asserts

“…the constant value of labour(The measure of Value, p.29, note).

<There is nothing original in this; it is a mere paraphrase and further elaboration of a passage of Adam Smith’s (l. I, ch. V, [Recherches sur la nature et les causes de la richesse des nations,] éd. Garnier, t, I, [Paris, 1802,] pp. 65-66).

“Equal quantities of labour, at all times and places, may be said to be of equal value to the labourer. In his ordinary state of health, strength, and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty, and his happiness. The price which he pays must always be the same, whatever may be the quantity of goods which he receives in return for it. Of these, indeed, it may sometimes purchase a greater and sometimes a smaller quantity; but it is their value which varies, not that of the labour which purchases them. At all times and places, that is dear which it is difficult to come at, or which it costs much labour to acquire; and that cheap which is to be had easily, or with very little labour. Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared.”> [Wealth of Nations, Vol. I, p. 36.][g]

<Further, Malthus’s discovery—of which he is very proud and which he claims he was the first to make—namely, that value is equal to the quantity of labour embodied in a commodity plus a quantity of labour which represents the profit; [this discovery] seems likewise to be quite simply a combination of two sentences from Smith. (Malthus never escapes plagiarism.)

“The real value of all the different component parts of price, it must be observed, is measured by the quantity of labour which they can, each of them, purchase or command. Labour measures the value, not only of that part of the price which resolves itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit” ( [Wealth of Nations, O.U.P., p. 55; Garnier,] t. I, l. I, ch. VI, p. 100).>

||761| Malthus writes in this context:

“In the former case of[h] the demand for labour, it appeared that the greater earnings of the labourer were occasioned,[i] not by a rise in the value of labour but by a fall in the value of the produce for which the labour was exchanged. And in the […] case of an abundance of labour […] the small earnings of the labourer were occasioned by a rise in the value of the produce, and not by a fall in the value of […] labour” (The Measure of Value, [London, 1823,] p. 35) (cf. pp. 33-35).

Bailey ridicules most excellently Malthus’s proof that the value of labour is constant (Malthus’s further demonstration, not that of Smith; [and] in general the sentence [about] the invariable value of labour):

“In the same way any article might be proved to be of invariable value; for instance, 10 yards of cloth. For whether we gave £5 or £10 for the 10 yards, the sum given would always be equal in value to the cloth for which it was paid, or, in other words, of invariable value in relation to cloth. But that which is given for a thing of invariable value, must itself be invariable, whence the 10 yards of cloth must be of invariable value … it is just the same kind of futility to call wages invariable in value, because though variable in quantity they command the same portion of labour, as to call the sum given for a hat, of invariable value, because, although sometimes more and sometimes less, it always purchases the hat” ([Samuel Bailey,] A Critical Dissertation on the Nature, Measures, and Causes of Value… , London, 1825, pp. 145-47).

In the same work, Bailey bitingly derides the insipid, impressive-sounding tables with which Malthus “illustrates” his measure of value.

In his Definitions in Political Economy (London, 1827), in which Malthus gives full vent to his annoyance over Bailey’s sarcasm, he seeks, amongst other things, to prove the invariable value of labour, as follows:

“… there is one[j] large class of commodities, such as raw products, which in the progress of society tends to rise[k] as compared with labour […] such as[l] manufactured articles, […] fall; it may not be far from […] truth to say, that […] the average mass of commodities which a given quantity of labour will command in the same country, during the course of some centuries, may not very essentially vary” (Definitions in Political Economy… London, 1827, p. 206).

Malthus’s proof that a rise in the money price of labour must lead to an all-round rise in the money price of commodities is of just the same quality as his proof of the invariable value of labour:

“… if the money wages of labour universally rise, the value of money proportionally falls; and when the value of money falls … the prices of goods always rise” (op. cit., p. 34).

It has to be proved that, when the value of money compared with labour falls, then the value of all commodities compared with money rises, or that the value of money, not estimated in labour, but in the other commodities, falls. And Malthus proves this by presupposing it.

[6. Malthus’s Use of the Ricardian Theses of the Modification of the Law of Value in His Struggle Against the Labour Theory of Value]

Malthus bases his polemic against Ricardo’s definition of value entirely on the principles advanced by Ricardo himself, to the effect that variations[m] in the exchangeable values of commodities, independent of the labour worked up in them, are produced by the different composition of capital as resulting from the process of circulation—different proportions of circulating and fixed capital, different degrees of durability in the fixed capitals employed, different returns of circulating capitals. In short, on Ricardo’s confusing cost-price with value and regarding the equalisation of cost-prices, which are independent of the mass of labour employed in the particular spheres of production, as modifications of value itself, thereby throwing the whole principle overboard. Malthus seizes on these contradictions in the determination of value by labour-time—contradictions that were first discovered and emphasised by Ricardo himself— not in order to solve them but in order to relapse into quite meaningless conceptions and to pass off the mere formulation of contradictory phenomena, their expression in speech, as their solution. We shall see the same method employed during the decline of the Ricardian school, i.e., by [James] Mill and McCulloch, who, in order to reason the contradictory phenomena out of existence, seek to bring them into direct conformity with the general law by gabble, by scholastic and absurd definitions and distinctions, with the result, by the way, that the foundation itself vanishes.

The passages in which Malthus uses the material provided by Ricardo against the law of value, and turns it against him, are the following:

“It is observed by Adam Smith that corn is an annual crop, butchers’ meat a crop which requires four or five years to grow; and consequently, if we compare two quantities of corn and beef which are of equal exchangeable value, it is certain that a difference of three or four additional years profit

at fifteen per cent upon the capital employed in the production of the beef would, exclusively of any other considerations, make up in value for a much smaller quantity of labour, ||762| and thus we might have two commodities of the same exchangeable value, while the accumulated and immediate labour of the one was forty or fifty per cent less than that of the other. This is an event of daily occurrence in reference to a vast mass of the most important commodities in the country; and if profits were to fall from fifteen per cent to eight per cent, the value of beef compared with corn would fall above twenty per cent” (The Measure of Value, pp. 10-11).

Since capital consists of commodities, and a large proportion of the commodities which enter into it or constitute it have a price (or exchange-value in the ordinary sense) which consists neither of accumulated nor of immediate labour, but—insofar as we are discussing only this particular commodity—of a purely nominal increase in the value caused by the addition of the average profit, Malthus says:

“… labour is not the only element worked up in capital” (Definitions etc., ed. by John Cazenove, p. 29).

“… what are the costs of production? … the quantity of labour in kind required to be worked up in the commodity, and in the tools and materials consumed in its production with such on additional quantity as is equivalent to the ordinary profits upon the advances for the time that they have been advanced” (op. cit., pp. 74-75).

“On the same grounds Mr. Mill is quite incorrect, in calling capital hoarded labour. It may, perhaps, be called hoarded labour and profits; but certainly not hoarded labour alone, unless we determine to call profits labour” (op. cit., pp. 60-61).

“To say that the values of commodities are regulated or determined by the quantity of Labour and Capital necessary to produce them, is essentially false. To say that they are regulated by the quantity of Labour and Profits necessary to produce them, is essentially true” (op. cit., p. 129).

In this connection Cazenove adds a note on p. 130:

“The expression Labour and Profits is liable to this objection, that the two are not correlative terms,—labour being an agent and profits a result; the one a cause, the other a consequence. On this account Mr. Senior has substituted for it the expression Labour and Abstinence… It must be acknowledged, indeed, that it is not the abstinence, but the use of the capital productively, which is the cause of profits” (according to Senior: “He who converts his revenue into capital, abstains from the enjoyment which its expenditure would afford him”).

Marvellous explanation. The value of the commodity consists of the labour contained in it plus profit; [i.e.] of the labour contained in it and the labour not contained in it, but which must be paid for.

Malthus continues his polemic against Ricardo: Ricardo’s “proposition, that as the value of wages rises profits proportionably fall, cannot be true, except[n] on the assumption that commodities, which have the same quantity of labour worked up in them, are always of the same value, an assumption which probably will not be found to be true[o] in one case out of five hundred; and […] from that […] necessary state of things, which,[p] in the progress of civilisation and improvement, tends continually to increase the quantity of fixed capital employed, and to render more various and unequal the times of the returns of the circulating capital” (Definitions etc., pp. 31-32).

(The same point is made on pp. 53-54 in Cazenove’s edition where Malthus actually says:

“…that[q] natural […] state of things, falsifies Ricardo’s measure of value because this state “… in the progress of civilisation and improvement, tends continually to increase the quantity of fixed capital employed, and to render more various and unequal the times of the returns of the circulating capital”.)

“Mr. Ricardo […] himself admits of considerable exceptions to his rule; but if we examine the classes which come under his exceptions, that is, where the quantities of fixed capital employed are different and of different degrees of duration, and where the periods of the returns of the circulating capital employed are not the same, we shall find that they are so numerous, that the rule may be considered as the exception, and the exceptions the rule” (op. cit., p. 50).

[7. Malthus’s Vulgarised Definition of Value. His View of Profit as Something Added to the Price. His Polemic Against Ricardo’s Conception of the Relative Wages of Labour]

In accordance with what has been said above, Malthus also declared value to be:

“The estimation in which a commodity is held, founded upon its cost to the purchaser or the sacrifice which he must make in order to acquire it, which sacrifice is measured by the quantity of labour that he gives in exchange for it, or what comes to the some thing, by the labour which it will command” (op. cit., pp. 8-9).

Cazenove also emphasises as a difference between Malthus and Ricardo:

||763| “Mr. Ricardo has, with Adam Smith, adopted labour as the true standard of cost; but he has applied it to producing cost only… it is equally applicable as a measure of cost to the purchaser…” (op. cit., pp. 56-57).

In other words: the value of a commodity is equal to the sum of money which the purchaser must pay, and this sum is best estimated in terms of the amount of ordinary labour which can be bought with it.* But what determines the sum of money is, naturally, not explained. It is the quite ordinary idea of the matter that is prevalent in everyday life. A mere triviality expressed in high-flown language. In other words, it means nothing more than that cost-price and value are identical, a confusion which, in the case of Adam Smith, and still more in the case of Ricardo, contradicts their real analysis, but which Malthus elevates into a law. It is the conception of value held by the philistine who, being a captive of competition, only knows the outward appearance of value. What then determines the cost-price? The capital outlay plus profit. And what determines profit? Where do the funds for the profit come from, where does the surplus product in which the surplus-value manifests itself come from? If it is simply a matter of a nominal increase of the money price, then nothing is easier than to increase the value of commodities. And what determines the value of the capital outlay? The value of the labour contained in it, says Malthus. And what determines this? The value of the commodities on which the wages are spent. And the value of these commodities? The value of the labour plus profit. And so we keep going round and round in a circle. Granting that the worker is in fact paid the value of his labour, that is, that the commodities (or sum of money) which constitute his wages are equal to the value of the commodities (or sum of money) in which his labour is realised, so that if he receives 100 thaler in wages he also adds only 100 thaler of value to the raw material, etc.—in short, to the capital outlay—then profit can only arise from a surcharge added by the seller over and above the real value of the commodity. All sellers do this. Thus, insofar as capitalists engage in exchange amongst themselves, nobody gains from this surcharge, and least of all is a surplus fund thus produced from which they can draw their revenue. Only the capitalists whose commodities are consumed by the working class will make a real and not an imaginary profit, by selling commodities back again to the workers at a higher price than they paid the workers for them. The commodities for which they paid the workers 100 thaler will be sold back again to them for 110 thaler. That means that they will only sell ¹⁰/₁₁ of the product back to the workers and retain ¹/₁₁ for themselves. But what else does that mean but that the worker who, for example, works for 11 hours, gets paid for only 10 hours; that he is given the product of only 10 hours, while the capitalist receives one hour or the product of one hour without giving any equivalent. And what does it mean but that profit—as far as the working class is concerned—is made by their working for the capitalists for nothing part of the time, that therefore “the quantity of labour” does not come to the same as “the value of labour”. The other capitalists however would only he making an imaginary profit, since they would not have this expedient.

How little Malthus understood Ricardo’s first propositions, how completely he failed to comprehend that a profit is possible in other ways than by means of a surcharge is shown conclusively by the following passage:

“Allowing that the first commodities, if completed and brought into use immediately, might be the result of pure labour, and that their value would therefore be determined by the quantity of that labour; yet it is quite impossible that such commodities should be employed as capital to assist in the production of other commodities, without the capitalist being deprived of the use of his advances for a certain period, and requiring a remuneration in the shape of profits.

In the early periods of society, on account of the comparative scarcity of these advances of labour, this remuneration would be high, and would affect the value of such commodities to a considerable degree, owing to the high rate of profits. In the more advanced stages of society, the value of capital and commodities is largely affected by profits, on account of the greatly increased quantity of fixed capital employed, and the greater length of time for which much of the circulating capital is advanced before the capitalist is repaid by the returns. In both cases, the rate at which commodities exchange with each other, is essentially affected by the varying amount of profits” (Definitions etc., ed. by Cazenove, p. 60).

The concept of relative wages is one of Ricardo’s greatest contributions. It consists in this—that the value of the wages (and consequently of the profit) depends absolutely on the proportion of that part of the working-day during which the worker works for himself (producing or reproducing his wage) to that part of his time which belongs to the capitalist. This is important economically, in fact it is only another way of expressing the real theory of surplus-value. It is important further in regard to the social relationship between the two ||764| classes. Malthus smells a rat and is therefore constrained to protest.

“No writer that I have met with, anterior to Mr. Ricardo, ever used the term wages, or real wages, as implying proportions.”

(Ricardo speaks of the value of wages, which is indeed also presented as the part of the product accruing to the worker.)

Profits, indeed, imply proportions; and the rate of profits has always justly been estimated by a percentage upon the value of the advances.“

<What Malthus understands by value of advances is very hard, and for him even impossible, to say. According to him, the value of a commodity is equal to the advances contained in it plus profit. Since the advances, apart from the immediate labour, also consist of commodities, the value of the advances is equal to the advances in them plus profit. Profit thus equals profit upon the advances plus profit. And so on, ad infinitum.>

“But wages had uniformly been considered as rising or falling, not according to any proportion which they might bear to the whole produce obtained by a certain quantity of labour, but by the greater or smaller quantity of any particular produce received by the labourer, or by the greater or smaller power which such produce would convey, of commanding the necessaries and conveniences of life” (Definitions etc., London, 1827, pp. 29-30).

Since the production of exchange-value—the increase of exchange-value—is the immediate aim of capitalist production, it is important [to know] how to measure it. Since the value of the capital advanced is expressed in money (real money or money of account), the rate of increase is measured by the amount of capital itself, and a capital (a sum of money) of a certain size—100—is taken as a standard.

“Profits of stock,”[r] says Malthus, “… consist of the difference between the value of the capital advanced, and the value of the commodity when sold or used” (op. cit., pp. 240-41).

[8. Malthus on Productive Labour and Accumulation]

[a)] Productive and Unproductive Labour

“… Revenue […] is expended with a view to immediate support and enjoyment, and […] capital […] is expended with a view to profit” (op. cit., p. 86).

A labourer and a menial servant are “two instruments […] used for purposes distinctly different, one to assist in obtaining wealth, the other to assist in consuming it” (op. cit., p. 94).

The following is a good definition of the productive labourer.

The productive labourer directly “increases[s] his master’s wealth” (Principles of Political Economy, [second ed., London, 1836], p. 47, note).

In addition the following passage should be noted.

“The only productive consumption, properly so called, is the consumption or[t] destruction of wealth by capitalists with a view to reproduction… The workman whom the capitalist employs certainly consumes that part of his wages which he does not save, as revenue, with a view to subsistence and enjoyment; and not as capital, with a view to production. He is a productive consumer to the person who employs him and to the state, but not, strictly speaking to himself” (Definitions, ed. by Cazenove, p. 30).

[b)] Accumulation

“No political economist of the present day can by saving mean mere hoarding; and beyond this contracted and inefficient proceeding, no use of the term in reference to the national wealth can well be imagined, but that which must arise from a different application of what is saved, founded upon a real distinction between the different kinds of labour maintained by it” (Principles of Political Economy, [London, 1836,] pp. 38-39).

“Accumulation of Capital. The employment of a portion of revenue as capital. Capital may therefore increase without an increase of stock or wealth” (Definitions, ed. by Cazenove, p. 11).

“Prudential habits with regard to marriage carried to a considerable extent, among the labouring classes of a country mainly depending upon manufactures and commerce, might injure it” (Principles of Political Economy, [London, 1836,] p. 215).

This from the preacher of checks against over-population.

“It is the want of necessaries which mainly stimulates the labouring classes to produce luxuries; and were this stimulus removed or greatly weakened, so that the necessaries of life could be obtained with very little labour, instead of more time being devoted to the production of conveniences, there is every reason to think that less time would be so devoted” (op. cit., p. 334).

Most important for the exponent of the over-population theory, however, is this passage:

“… from the nature of a population, an increase of labourers cannot be brought into the market, in consequence of a particular demand, till after the lapse of sixteen or eighteen years, and the conversion of revenue into capital by saving, may take place much more rapidly; a country is always liable to an increase in the quantity of the funds for the maintenance of labour faster than the increase of population” (op. cit., pp. 319-20).

||765| Cazenove rightly remarks:

“When capital is employed in advancing to the workman his wages, it adds nothing to the funds for the maintenance of labour, but simply consists in the application of a certain portion of […] funds already in existence, to[u] the purposes of production” (Definitions, ed. by Cazenove, p. 22, note).

[9.] Constant and Variable Capital [According to Malthus]

“Accumulated labour”. (It should really be called materialised labour, objectified labour.) “The[v] labour worked up in the raw materials and tools applied to the production of other commodities” (op. cit., p. 13).

In speaking of the labour worked up in commodities “… the labour worked up in the capital necessary to their production were[w] designated by the term accumulated labour, as contra-distinguished from the immediate labour employed by the last capitalist” (op. cit., pp. 28-29).

It is indeed very important to make this distinction. In Malthus, however, it leads to nothing.

He does make an attempt to reduce the surplus-value or at least its rate (which, by the way, he always confuses with profit and rate of profit) to its relation to variable capital, that part of capital which is expended on immediate labour. This attempt, however, is childish and could not be otherwise in view of his conception of value. In his Principles of Political Economy [second ed,], he says:

Supposing that the capital is expended only on wages, [if] “… a hundred pounds [is] expended in immediate labour, […] the returns come in at the end of the year […] £110, £120, or £130, it is evident that in each case the profits will be determined by the proportion of the value of the whole produce which is required to pay the labour employed. If the value of the produce in [the] market be £110, the proportion required to pay the labourers will be[x] ¹⁰/₁₁ of the value of the produce, and profits will be ten per cent. If the value of the produce be £120, the proportion required to pay the labour employed will bed ¹⁰/₁₂, and profits will be twenty per cent. If […] £130, the proportion required to pay the labour advanced will be ¹⁰/₁₃, and profits will be thirty per cent.” [Principles of Political Economy, London, 1836, p. 267.] Supposing that “… the advances of the capitalist do not consist of labour alone […] the capitalist […] expects an equal profit upon all the parts of the capital which he advances. Let us suppose that a certain portion of the value of his advances, one-fourth for instance, consists of the wages of immediate labour, and[y] three-fourths consist of accumulated labour and profits, with any additions which may arise from rents, taxes or[z] other outgoings […] it will be[aa] strictly true that the profits of the capitalist will vary with the varying value of this one-fourth of the[bb] produce compared with the quantity of labour employed […] a farmer[cc] employs in the cultivation […]£2,000, £1,500 of which […] in seed, keep of horses, wear and tear of his fixed capital, interest upon his fixed and circulating capitals, rents, tithes, taxes, etc. and £500 upon immediate labour, and […] the returns […] at the end of the year are worth[dd] £2,400 […] the farmer’s profit will be £400, or twenty per cent.[ee] And it is equally obvious that if we took one-fourth of the value of the produce, namely £600, and compared it with the amount paid in the wages of immediate labour, the result would shew exactly the same rate of profits” (loc. cit., pp. 267-68).

Here Malthus lapses into Lord Dundrearyism. What he wants to do (he has an inkling that surplus-value, hence profit, has a definite relation to variable capital, the portion of capital expended on wages) is to show that “profits” are “determined by the proportion of the value of the whole produce which is required to pay the labour employed” [loc. cit., p. 267]. He begins correctly insofar as he assumes that the whole of the capital consists of variable capital, capital expended on wages. In this case, profit and surplus-value are in fact identical. But even in this case he confines himself to a very silly reflection. If the capital expended equals 100 and the profit is 10 per cent, the value of the product is, accordingly, 110 and the profit is ¹/₁₀ of the capital expended (hence 10 per cent if calculated on the capital), and ¹/₁₁ of the value of the total product, in the value of which its own value is included. Thus profit constitutes ¹/₁₁ of the value of the total product and the capital expended forms ¹⁰/₁₁ of this value. In relation to the total, 10 per cent profit can be so expressed that the part of the value of the total product which is not made up of profit amounts to ¹⁰/₁₁ of the total product; or, a product of 110 which includes 10 per cent profit consists of ¹⁰/₁₁ outlay, on which the profit is made. This brilliant mathematical effort amuses him so much that he repeats the same calculation using a profit of 20 per cent, 30 per cent, etc. But so far we have merely a tautology. The profit is a percentage on the capital expended, the value of the total Product includes the value of the profit and the capital expended ||766| is the value of the total product minus the value of the profit. Thus 110-10=100. And 100 is ¹⁰/₁₁ of 110. But let us proceed.

Let us assume a capital consisting not merely of variable but also of constant capital. “… the capitalist […] expects an equal profit upon all the parts of the capital which he advances.” This however contradicts the proposition advanced above that profit (it should be called surplus-value) is determined by the proportion of the capital expended on wages. But never mind. Malthus is not the man to contradict either the “expectations” or the notions of “the capitalists”. But now comes his tour de force. Assume a capital of £2,000, three-quarters of which, or £1,500, is constant capital, one-quarter, or £500, is variable capital. The profit amounts to 20 per cent. Thus the profit equals £400 and the value of the product is £2,000 plus £400 =£2,400. But what about Mr. Malthus’s calculation? If one takes a quarter of the total product, it amounts to 600; a quarter of the capital expended is equal to 500, which is equal to the portion expended on wages; and 100, a quarter of the profit, which equals that part of the profit falling to this amount of wages. And this is supposed to prove that “the profits of the capitalist will vary with the varying value of this one-fourth of the[ff] produce compared with the quantity of labour employed”. It proves nothing more than that a profit of a given percentage, e.g. of 20 per cent, on a given capital—say of £4,000— yields a profit of 20 per cent on each aliquot part of the capital, that is a tautology, But it proves absolutely nothing about a definite, special, distinguishing relationship of this profit to the part of the capital expended on wages. If, instead of [¹/₄] taken by Mr. Malthus, I take ¹/₂₄ of the total product, i.e., 100 (out of 2,400), then this 100 contains 20 per cent profit, or ¹/₆ of it is profit. The capital would be [£] 83 ¹/₃ and the profit [£1 16 ²/₃. If the 83 ¹/₃ were equal, for instance, to a horse which was employed in production, then it could be demonstrated according to Malthus’s recipe that the profit would vary with the varying value of the horse or the 28 ⁴/₅ part of the total product.

Such are the wretched things Mr. Malthus comes out with when he stands on his own feet and cannot plagiarise Townsend, Anderson or anyone else. What is really remarkable and pertinent (apart from what is characteristic of the man) is the inkling that surplus-value must be calculated on the part of capital expended on wages.

[10.] Malthus’s Theory of Value [Supplementary Remarks]

The value of labour is supposed not to vary (derived from Adam Smith) but only the value of the commodities I acquire for it. Wages are, say, two shillings a day in one case, one shilling in another. In the first case, the capitalist pays out twice as many shillings for the same labour-time as in the second. But in the second case, the worker performs twice as much labour for the same product as in the first, since in the second case he works a whole day for one shilling and in the first case only half a day. Mr. Malthus believes that the capitalist pays sometimes more shillings, sometimes less, for the same labour. He does not see that the worker, correspondingly, performs either less or more labour for a given amount of produce.

“… giving more produce for a given quantity of labour, or getting more labour for a given quantity of produce, are one and the same thing in his”(Malthus’s) “‘view’; in stead of being, as one would have supposed, just the contrary” (Observations on Certain Verbal Disputes in Political Economy, Particularly Relating to Value, and to Demand and Supply, London, 1821, p. 52).

It is stated very correctly in the same work (Observations on Certain Verbal Disputes etc.) that labour as a measure of value, in the sense in which Malthus borrows it from Adam Smith, would be just as good a measure of value as any other commodity and that it would not be so good a measure as money in fact is.

Here it would be in general a question only of a measure of value in the sense in which money is a measure of value.

||767| In general, it is never the measure of value (in the sense of money) which makes commodities commensurable (see Part I of my book, p. 45).

“On the contrary, it is only the commensurability of commodities as materialised labour-time which converts gold into money.”

Commodities as values constitute one substance, they are mere representations of the same substance—social labour. The measure of value (money) presupposes them as values and refers solely to the expression and size of this value. The measure of value of commodities always refers to the transformation of value into price and already presumes the value.

The passage in the Observations alluded to reads as follows:

Mr. Malthus says: “‘In the same place, and at the same time, the different quantities of day-labour, which different commodities can command, will be exactly in proportion to their relative values in exchange’, and vice versa. If this is true of labour, it is just as true of anything else” (op. cit., p. 49). “Money does very well as a measure at the same time and place… But it”(Malthus’s proposition) “seems not to be true of labour. Labour is not a measure even at the same time and place. Take a portion of corn, such as is at the same time and place said to be of equal value with a given diamond; will the corn and the diamond, paid in specie, command equal portions of labour? It may be said […] No; but the diamond will buy money, which will command an equal portion of labour … the test is of no use, for it cannot be applied without being rectified by the application of the other test, which it professed to supersede. We can only infer, that the corn and the diamond will command equal quantities of labour, because they are of equal value, in money. But we were told to infer that two things were of equal value, because they would command equal quantities of labour” (loc. cit., pp. 49-50).

[11.] Over-Production, “Unproductive Consumers”, etc.

Malthus’s theory of value gives rise to the whole doctrine of the necessity for continually rising unproductive consumption which this exponent of over-population (because of shortage of food) preaches so energetically. The value of a commodity is equal to the value of the materials, machinery, etc., advanced plus the quantity of direct labour which the commodity contains; this, according to Malthus, is equal to the value of the wages contained in the commodity, plus a profit increment on these advances according to the general rate of profit. This nominal price increment represents the profit and is a condition of supply, and therefore of the reproduction of the commodity. These elements constitute the price for the purchaser as distinct from the price for the producer, and the price for the purchaser is the real value of the commodity. The question now arises—how is this price to be realised? Who is to pay it? And from what funds is it to be paid?

In dealing with Malthus we must make a distinction (which he has neglected to make). One section of capitalists produce goods which are directly consumed by the workers; another section produce either goods which are only indirectly consumed by them, insofar, for example, as they are part of the capital required for the production of necessaries, as raw materials, machinery, etc., or commodities which are not consumed by the workers at all, entering only into the revenue of the non-workers.

Let us first of all consider the capitalists who produce the articles which are consumed by the workers. These capitalists are not only buyers of labour, but also sellers of their own products to the workers. If the quantity of labour contributed by the worker is valued at 100 thaler the capitalist pays him 100 thaler. And this [according to Malthus] is the only value added to the raw material, etc., by the labour which the capitalist has bought. Thus the worker receives the value of his labour and only gives the capitalist an equivalent of that value in return. But although the worker nominally receives the value, he actually receives a smaller quantity of commodities than he has produced. In fact, he receives back only a part of his labour materialised in the product. Let us assume for the sake of simplicity—as Malthus does quite frequently—that capital consists only of capital laid out in wages. If 100 thaler are advanced to the worker in order to produce commodities, and these 100 thaler are the value of the labour purchased and the sole value which it adds to the product—then the capitalist sells these commodities for 110 thaler, and the worker, with his 100 thaler, can buy back only ¹⁰/₁₁ of the product; ¹/₁₁ remains in the hands of the capitalist, to the value of 10 thaler, or the amount of surplus product in which this surplus-value of 10 thaler is embodied. If the capitalist sells the product for 120, then the worker receives only ¹⁰/₁₂ of the product and the capitalist ²/₁₂ of the product and its value. If he sells it for 130 (30 per cent), then the worker [receives] only ¹⁰/₁₃ and the capitalist ³/₁₃ of the product. If he sells it at 50 per cent profit, i.e., for 150, the worker receives ²/₃ and the ||768| capitalist ¹/₃ of the product. The higher the price at which the capitalist sells, the lower the share of the worker, and the higher his own share in the value of the product and therefore also in the quantity of the product. And the less the worker can buy back of the value or of the product with the value of his labour. It makes no difference to the situation if, in addition to variable capital, constant capital is also advanced, for example, if, in addition to the 100 thaler wages, there is another 100 for raw materials, etc. In this case, if the rate of profit is 10, then the capitalist sells the goods for 220 instead of for 210 (namely, 100 constant capital and 120 the product of [direct] labour).

<Sismondi’s Nouveaux Principes etc. first published in 1819.>

Here, as regards the class of capitalists A, who produce articles which are directly consumed by the workers—necessaries, we have a case where as a result of the nominal surcharge—the normal profit increment added to the price of the advances—a surplus fund is in fact created for the capitalist, since, in this roundabout way, he gives back to the worker only a part of his product while appropriating a part for himself. But this result follows not because he sells the entire product to the worker at the increased value, but precisely because the increase in the value of the product makes the worker unable to buy back the whole product with his wages, and allows him to buy back only part of it. Consequently, it is clear that demand by the workers can never suffice for the realisation of the surplus of the purchase price over and above the cost-price, i.e., the realisation of the profit and the “value” of the commodity. On the contrary, a profit fund only exists because the worker is unable to buy back his whole product with his wages, and his demand, therefore, does not correspond to the supply. Thus capitalist A has in hand a certain quantity of products of a certain value, 20 thaler in the present case, which he does not require for the replacement of the capital, and which he can now partly spend as revenue, and partly use for accumulation. N.B. The extent to which he has such a fund in hand depends on the value of the surcharge he adds over and above the cost-price and which determines the proportions in which he and the worker share the total product.

Let us now turn to the class of capitalists B, who supply raw materials, machinery, etc., in short constant capital, to class A. The capitalists of class B can sell only to class A, for they cannot sell their products back to the workers who have nothing to do with capital (raw material, machinery, etc.), or to the capitalists who produce luxury goods (all goods which are not necessaries and which are not commonly used by the labouring class), or to the capitalists who produce the constant capital required for the production of luxury goods.

Now we have seen that, in the capital advanced by A, 100 is included as constant capital. If the rate of profit is 10 per cent, the manufacturer of this constant capital has produced it at a cost-price of 90 ¹⁰/₁₁, but sells it for 100 (90 ¹⁰/₁₁ : 9 ¹/₁₁ = 100:10). Thus he makes his profit by imposing a surcharge on class A. And thereby he receives from their product of 220, his 100 instead of only 90 ¹⁰/₁₁, with which, we will assume, he buys immediate labour. B does not by any means make his profit from his workers whose product, valued at 90 ¹⁰/₁₁, he cannot sell back to them for 100, because they do not buy his goods at all. Nevertheless, they are in the same position as the workers of A. For 90 ¹⁰/₁₁ they receive a quantity of goods which has only nominally a value of 90 ¹⁰/₁₁, for every part of A’s product is made uniformly dearer, or each part of its value represents a smaller part of the product because of the profit surcharge.

(This surcharging can only be carried out up to a certain point, for the worker must receive enough goods to be able to live and to reproduce his labour-power. If capitalist A were to add a surcharge of 100 per cent and to sell commodities which cost 200 for 400, the worker would be able to buy back only a quarter of the product (if he receives 100). And if he needed half of the product in order to live, the capitalist would have to pay him 200. Thus he would retain only 100 (100 go to constant capital and 200 to wages). It would therefore be the same as if he sold the commodity for 300, etc.)

B makes his profit fund not (directly) through his workers, but through his sales to A. A’s product not only serves to realise his profit, but constitutes his own profit fund. It is clear that A cannot realise the profit he makes on his workers by selling to B, and that B cannot provide sufficient demand for his product (enabling him to sell it at its value) any more than his own workers can. On the contrary, a retroaction takes place here. ||769| The more he raises the profit surcharge, the greater, in relation to his workers, is the portion of the total product which he appropriates and of which he deprives B.

Capitalist B adds a surcharge of the same size as A. B pays his workers 90 ¹⁰/₁₁ thaler as he did before, although they get less goods for this sum. But if A takes 20 per cent instead of 10 per cent, he [B] likewise takes 20 per cent instead of 10 per cent and sells for 109 ¹/₁₁ instead of 100. As a result, this part of the outlay increases for A.

A and B may even be considered as a single class. (B belongs to A’s expenditure and the more A has to pay to B from the total product, the less remains for him.) Out of the capital of 290 ¹⁰/₁l, B owns 90 ¹⁰/₁₁ and A 200. Between them they expend 290 ¹⁰/₁₁ and make a profit of 29 ¹/₁₁. B can never buy back from A to the tune of more than 100 and this includes his profit of 9 ¹/₁₁. As stated, both of them together have a revenue of 29 ¹/₁₁.

As far as classes C and D are concerned, C being the capitalists who produce the constant capital necessary for the production of luxuries, and D being those who directly produce the luxuries, in the first place it is clear that the immediate demand for C is only formed by D. D is the purchaser of C. And C can only realise profit if he sells his goods to D too dearly by means of a nominal surcharge over and above the cost-price. D must pay C more than is necessary for C to replace all the constituent parts [of the cost-price] of his commodities. D for his part makes a profit surcharge partly on the advances made by C and partly on the capital expended directly on wages by D. From the profits which C makes out of D, he can buy some of the commodities made by D, although he cannot expend all his profit in this way, for he also needs necessaries for himself, and not only for workers for whom he exchanges the capital realised from D. In the first place, the realisation of the commodities by C depends directly on their sale to D; secondly, after that sale is effected, the value of the commodities sold by D cannot be realised as a result of the demand arising from C’s profit, any more than the total value of A’s commodities can be realised as a result of the demand coming from B. For the profit made by C is made out of D, and if C spends it again on commodities made by D instead of on others, his demand can still never be greater than the profit he makes out of D. It must always be much smaller than D’s capital, than his total demand, and it never constitutes a source of profit for D (the most he can do is a little swindling of C by means of the surcharge on the goods he sells back to him) for C’s profit comes straight out of D’s pocket.

Further it is clear that, insofar as the capitalists—whether of class C or of D—mutually sell each other goods within each class, nobody gains anything or realises a profit thereby. A certain capitalist, M, sells to N for 110 thaler goods which cost only 100, but N does the same to M. After the exchange as before, each of them owns a quantity of goods the cost-price of which is 100. For 110 thaler each receives goods which cost only 100. The surcharge gives him no greater command over the goods of the other seller than it gives the other over his. And as far as value is concerned, it would be the same as if every M and N were to give himself the pleasure of baptising his commodities 110 instead of 100 without exchanging them at all.

It is clear further that [according to Malthus] the nominal surplus-value in D (for C is included in it) does not constitute real surplus product. The fact that the worker receives less necessaries for 100 thaler because of the surcharge imposed by A can, at first, be a matter of indifference to D. He has to expend 100 as he did before in order to employ a certain number of workers. He pays the workers the value of their labour and they add nothing more to the product, they only give him an equivalent. He can obtain a surplus over and above this equivalent only by selling to a third person and by selling his commodity above the cost-price.

In reality, the product of a mirror manufacturer [D] contains both surplus-value and surplus product just as that of the farmer. For his product contains unpaid labour (surplus-value) and this unpaid labour is embodied in the product just as much as is the paid labour. It is embodied in surplus product. One part of the mirrors costs him nothing although it has value, because labour is embodied in it in exactly the same way as in that part of the mirrors which replaces the capital advanced. This surplus-value exists as surplus product before the sale of the mirrors and is not [brought into being] only through this sale. If, on the contrary, the worker by his immediate labour had only provided an equivalent for the accumulated labour which he received in the form of wages, then neither ||770| the surplus product nor the surplus-value corresponding to it would exist. But according to Malthus, who declares that the worker only gives back an equivalent, things are different.

It is clear that class D (including C) cannot artificially create for itself a surplus fund in the same way as class A, namely, [by ] selling their commodities back to the workers at a higher price than the workers were paid for producing them, thus appropriating part of the total product after replacing the capital expended. For the workers are not buyers of the goods made by D. No more can the surplus fund of this class [arise] from the sale of commodities or their mutual exchanges among the different capitalists of this class. It can be achieved only by the sale of their product to class A and to class B. [Because] the capitalists of class D sell commodities worth 100 thaler for 110, capitalist A can buy only ¹⁰/₁₁ of their product for 100 thaler and they retain ¹/₁₁ of their output, which they can either consume themselves or exchange for commodities produced by other members of their own class D.

[According to Malthus] things happen in the following way to all capitalists who do not themselves directly produce necessaries and therefore do not sell back to the workers the major, or at least a significant, portion of their products.

Let us say that their constant capital is 100. If the capitalist pays another 100 in wages, he is paying the workers the value of their labour. To this 100 the workers add a value of 100, and the total value (the cost-price) of the product is therefore 200. Where then does the profit come from? If the average rate of profit is 10 per cent, then the capitalist sells goods worth 200 for 220. If he really sells them for 220, then it is clear that 200 is sufficient for their reproduction—100 for raw materials, etc., 100 for wages, and he pockets 20, which he can dispose of as revenue or use to accumulate capital.

But to whom does he sell the commodities at 10 per cent above their “production value”, which, according to Malthus, is different from the “market value” or real value, so that profit, in fact, is equal to the difference between production value and sale value, equal to sale value minus production value? These capitalists cannot realise any profit through exchange or sale amongst themselves. If A sells B for 220 commodities worth 200, then B plays the same trick on A. The fact that these goods change hands does not alter either their value or their quantity. The quantity of goods which belonged formerly to A is now in the possession of B, and vice versa. The fact that what was previously 100 is now called 110, makes no difference. The purchasing power either of A or of B has in no way altered.

But, according to the hypothesis, these capitalists cannot sell their goods to the workers.

They must, therefore, sell them to the capitalists who produce necessaries. These, indeed, have a real surplus fund at their disposal resulting from their exchange with the workers.

The creation of a nominal surplus-value has, in fact, placed surplus product in their possession. And this is the only surplus fund which has existed up to now. The other capitalists can only acquire a surplus fund by selling their goods above their production value to those capitalists who possess a surplus fund.

As for the capitalists who produce the constant capital required for the production of necessaries, we have already seen that the producer of necessaries must perforce buy from them. These purchases enter into his production costs. The higher his profit, the dearer are the advances to which the same rate of profit is added. If he sells at 20 per cent instead of at 10 per cent, then the producer of his constant capital likewise adds 20 per cent instead of 10 per cent. And instead of demanding 100 for 90 ¹⁰/₁₁, he demands 109 ¹/₁₁ or, in round figures, 110, so that the value of the product is now 210, 20 per cent of which is 42, so that the value of the whole product is 252. Out of this the worker receives 100. The capitalist now receives more than ¹/₁₁ of the total product as profit, whereas previously he received only ¹/₁₁ when he sold the product for 220. The total amount of the product has remained the same, but the portion at the disposal of the capitalist has increased both in value and in quantity.

As for those capitalists who produce neither necessaries nor the capital required for their production, their profit [can] only be made by sales to the first two classes of capitalists. If the latter take 20 per cent, then the other capitalists will take [the same].

[Exchange by] the first class of capitalists and exchange between the two classes of capitalists are, however, two very different things. [As a result of exchange] with the workers, the first class has established a real surplus fund of necessaries (surplus product) which [as an increment] of capital is in their hands to dispose of, so that they can accumulate part of it and [spend] part of it [as revenue] either on necessaries or on luxuries. Surplus-value here, in fact, [represents] ||XIV-771| surplus labour and surplus product, although this is achieved [according to Malthus] by the clumsy, roundabout method of a surcharge on prices. Let us assume that the value of the product of the workers producing necessaries is, in fact, only equal to 100. Since, however, ¹⁰/₁₁ of this is sufficient to pay the wages, it follows that the capitalist only needs to spend 90 ¹⁰/₁₁, upon which he makes a profit of 9 ¹/₁₁. But if he pays the workers 100 thaler and sells them the product for 110, under the illusion that value of labour and quantity of labour are identical, he still retains ¹/₁₁ of the product as he did previously. The fact that this is now worth 10 thaler instead of 9 ¹/₁₁ represents no gain for him, for he has now advanced 100 thaler as capital, not 90 ¹⁰/₁₁.

But as far as the other classes of capitalists are concerned, they have no real surplus product, nothing in which surplus labour-time is embodied. They sell the product of labour worth 100 for 110 and merely by the addition of a surcharge this capital is supposed to be transformed into capital plus revenue.

But how stands the case now, as Lord Dundreary would say, between these two classes of capitalists?

The producers of necessaries sell surplus product valued at 100 for 110 (because they paid 100 in wages instead of 90 ¹⁰/₁₁). But they are the only ones who have surplus product in their possession. If the other capitalists likewise sell them products valued at 100 for 110, then they do in fact replace their capital and make a profit. Why? Because necessaries to the value of 100 suffice for them to pay their workers, they can therefore keep 10 for themselves. Or rather because they in fact receive necessaries to the value of 100, but ¹⁰/₁₁ of this is sufficient to pay their workers, since they are in the same position as capitalists in classes A and B. These, on the other hand, receive in return only an amount of produce representing a value of 100. The fact that its nominal cost is 110 is of no significance to them, for it neither embodies a greater amount quantitatively, as use-value, than was produced by the labour-time the 100 thaler contain, nor can it add 10 [thaler] to a capital of 100. This would be only possible if the commodities were resold.

Although the capitalists of both classes sell to one another for 110 commodities worth 100, only in the hands of the second class has 100 really the significance of 110. In actual fact, the capitalists of the first class only receive the value of 100 for 110. And they only sell their surplus product for a higher price because for the articles on which they spend their revenue they have to pay more than they are worth. In fact, however, the surplus-value realised by the capitalists of the second class is limited only to a share in the surplus product realised by the first class, for they themselves do not create any surplus product.

In connection with this increased cost of luxuries, it occurs just in time to Malthus that accumulation and not expenditure is the immediate object of capitalist production. As a result of this unprofitable trade, in the course of which the capitalists of class A lose a portion of the fruits wrung out of the workers , they are compelled to moderate their demand for luxuries. But if they do so, and increase their accumulation, then effective demand falls, the market for the necessaries they produce shrinks, and this market cannot expand to its full extent on the basis of the demand on the part of the workers and the producers of constant capital. This leads to a fall in the price of necessaries, but it is only through a rise of these prices, through the nominal surcharge on them—and in proportion to this surcharge—that the capitalists of class A are able to extract surplus product from the workers. If the price were to fall from 120 to 110, then their surplus product (and their surplus-value) would fall from ²/₁₂ to ¹/₁₁, and consequently the market, the demand for the commodities offered by the producers of luxuries, would decline as well, and by a still greater proportion.

In the course of exchange with the second class, the first class sells real surplus product after having replaced its capital. The second class, on the other hand, merely sells its capital in order to turn its capital into capital plus revenue by this trade. The whole of production is thus only kept going (and this is especially the case with regard to its expansion) by means of increasing the prices of necessaries; to this, however, would correspond a price for luxuries in inverse proportion to the amount of luxuries actually produced. Class II, which sells for 110 goods of the value of 100, likewise does not gain by this exchange. For in actual fact, the 110 which it gets back is also only worth 100. But this 100 (in necessaries) replaces capital plus profit, while the other 100 [in luxuries] is merely called 110. Thus [it would] amount to class I receiving luxuries to the value of 100. It buys for 110 luxuries to the value of 100. For the other class, however, 110 is worth 110, because it pays 100 for the labour (thus replacing its capital) and therefore retains a surplus of 10.

||772| It is difficult to understand how any profit at all can be derived if those who engage in mutual exchange sell their commodities by overcharging one another at the same rate and cheating one another in the same proportion.

This incongruity would be remedied if, in addition to exchange by one class of capitalists with its workers and the mutual exchange between the capitalists of the different classes, there also existed a third class of purchasers—a deus ex machina—a class which paid the nominal value of commodities without itself selling any commodities, without itself playing the same trick in return; that is a class which transacted one phase only: M—C, but not M—C—M; [a class] which bought not in order to get its capital back plus a profit, but in order to consume the commodities: a class which bought without selling. In this case the capitalists would realise a profit not by exchange amongst themselves but 1) by exchange between them and the workers, by selling back to them a portion of the total product for the same amount of money as they paid the workers for the total product (after deducting the constant capital) and 2) from the portion of luxuries as well as necessaries sold to the third sort of purchaser. Since these pay 110 for 100 without selling 100 for 110 in their turn, a profit of 10 per cent would be made in actual fact and not simply nominally. The profit would be made in dual fashion by selling as little as possible of the total product back to the workers and as much as possible to the third class, who pay ready money, who, without themselves selling, buy in order to consume.

But buyers who are not at the same time sellers, must be consumers who are not at the same time producers, that is unproductive consumers, and it is this class of unproductive consumers which, according to Malthus, solves the problem. But these unproductive consumers must, at the same time, be consumers able to pay, constituting real demand, and the money they possess and spend annually must, moreover, suffice to pay not only the production value of the commodities they buy and consume, but also the nominal profit surcharge, the surplus-value, the difference between the market value and the production value. This class will represent consumption for consumption’s sake in society, in the same way as the capitalist class represents production for production’s sake, the one representing “the passion for expenditure”, the other “the passion for accumulation” (see Principles of Political Economy, [second ed.,] p. 326). The urge for accumulation is kept alive in the capitalist class by the fact that their returns are constantly larger than their outlays, and profit is indeed the stimulus to accumulation. In spite of this enthusiasm for accumulation, they are not driven to over-production, or at least, not at all easily, since the unproductive consumers not only constitute a gigantic outlet for the products thrown on to the market, but do not themselves throw any commodities on to the market, and therefore, no matter how numerous they may be, they constitute no competition for the capitalists, but, on the contrary, all represent demand without supply and thus help to make up for the preponderance of supply over demand on the part of the capitalists.

But where do the annual financial resources of this class come from? There are, in the first place, the landed proprietors, who collect a great part of the value of the annual product under the title of rent and spend the money thus taken from the capitalists in consuming the goods produced by the capitalists, in the purchase of which they are cheated. These landed proprietors do not have to engage in production and do not on the average do so. It is significant, that insofar as they spend money on labour, they do not employ productive workers but menial servants, mere fellow-consumers of their fortune, who help to keep the prices of necessaries up, since they buy without helping to increase their supply or the supply of any other kind of commodity. But these landed proprietors do not suffice to create “an adequate demand”. Artificial means must be resorted to. These consist of heavy taxation, of a mass of sinecurists in State and Church, of large armies, pensions, tithes for the priests, an impressive national debt, and from time to time, expensive wars. These are the “remedies” (Principles of Political Economy, [second ed.,] p. 408 et seq.).

The third class, proposed by Malthus as a “remedy”, the class which buys without selling and consumes without producing, thus receives first of all an important part of the value of the annual product without paying for it and enriches the producers by the fact that the latter must first of all advance the third class money gratis for the purchase of their commodities, in order to draw it back again ||773| by selling the third class commodities above their value, or by receiving more value in money than is embodied in the commodities they supply to this class. And this transaction is repeated every year.

[12. The Social Essence of Malthus’s Polemic Against Ricardo. Malthus’s Distortion of Sismondi’s Views on the Contradictions in Bourgeois Production]

Malthus correctly draws the conclusions from his basic theory of value. But this theory, for its part, suits his purpose remarkably well—an apologia for the existing state of affairs in England, for landlordism, “State and Church”, pensioners, tax-gatherers, tenths, national debt, stock-jobbers, beadles, parsons and menial servants (“national expenditure”) assailed by the Ricardians as so many useless and superannuated drawbacks of bourgeois production and as nuisances. For all that, Ricardo championed bourgeois production insofar as it [signified] the most unrestricted development of the social productive forces, unconcerned for the fate of those who participate in production, be they capitalists or workers. He insisted upon the historical justification and necessity of this stage of development. His very lack of a historical sense of the past meant that he regarded everything from the historical standpoint of his time. Malthus also wishes to see the freest possible development of capitalist production, however only insofar as the condition of this development is the poverty of its main basis, the working classes, but at the same time he wants it to adapt itself to the “consumption needs” of the aristocracy and its branches in State and Church, to serve as the material basis for the antiquated claims of the representatives of interests inherited from feudalism and the absolute monarchy. Malthus wants bourgeois production as long as it is not revolutionary, constitutes no historical factor of development but merely creates a broader and more comfortable material basis for the “old” society.

On the one hand, therefore, [there is] the working class, which, according to the population principle, is always redundant in relation to the means of life available to it, over-population arising from under-production; then [there is ] the capitalist class, which, as a result of this population principle, is always able to sell the workers’ own product back to them at such prices that they can only obtain enough to keep body and soul together; then [there is ] an enormous section of society consisting of parasites and gluttonous drones, some of them masters and some servants, who appropriate, partly under the title of rent and partly under political titles, a considerable mass of wealth gratis from the capitalists, whose commodities they pay for above their value with money extracted from these same capitalists; the capitalist class, driven into production by the urge for accumulation, the economically unproductive sections representing prodigality, the mere urge for consumption. This is moreover [advanced as] the only way to avoid over-production, which exists alongside over-population in relation to production. The best remedy for both [is declared to be] over-consumption by the classes standing outside production. The disproportion between the labouring population and production is eliminated by part of the product being devoured by non-producers and idlers. The disproportion arising from over-production by the capitalists [is eliminated] by means of over-consumption by the owners of wealth.

We have seen how childishly weak, trivial and meaningless Malthus is when, basing himself on the weak side of Adam Smith, he seeks to construct a counter-theory to Ricardo’s theory, which is based on Adam Smith’s stronger sides. One can hardly find a more comical exertion of impotence than Malthus’s book on value. However, as soon as he comes to practical conclusions and thereby once again enters the field which he occupies as a kind of economic Abraham a Santa Clara, he is quite at his ease. For all that, he does not abandon his innate plagiarism even here. Who at first glance would believe that Malthus’s Principles of Political Economy is simply the Malthusianised translation of Sismondi’s Nouveaux Principes d’économie politique? But this is the case. Sismondi’s book appeared in 1819. A year later, Malthus’s English caricature of it saw the light of day. Once again, with Sismondi, as previously with Townsend and Anderson, he found a theoretical basis for one of his stout economic pamphlets, in the production of which, incidentally, he also turned to advantage the new theories learned from Ricardo.

||774| While Malthus assailed in Ricardo that tendency of capitalist production which is revolutionary in relation to the old society, he took, with unerring parsonical instinct, only that out of Sismondi which is reactionary in relation to capitalist production and modern bourgeois society.

I exclude Sismondi from my historical survey here because a critique of his views belongs to a part of my work dealing with the real movement of capital (competition and credit) which I can only tackle after I have finished this book.

Malthus’s adaptation of Sismondi’s views can easily be seen from the heading of one of the chapters in the Principles of Political Economy:

“Of the Necessity of a Union of the Powers of Production with the Means of Distribution, in order to ensure a continued Increase of Wealth” ([second ed.,] p. 361).

[In this chapter it is stated:]

“… the powers of production […] not alone […] secure the creation of a proportionate degree of wealth. Something else seems to be necessary in order to call these powers fully into action. This is an effectual and unchecked demand for all that is produced. And what appears to contribute most to the attainment of this object, is, such a distribution of produce, and such an adaptation of this produce to the wants of those who are to consume it, as constantly to increase the exchangeable value of the whole mass” (Principles of Political Economy, [second ed.,] p. 361).

Furthermore, written in the same Sismondian manner and directed against Ricardo:

“… the wealth of a country depends partly upon the quantity of produce obtained by its labour, and partly upon such an adaptation of this quantity to the wants and powers of the existing population as is calculated to give it value. Nothing can be more certain than that it is not determined by either of them alone” (op. cit., p. 301).

“But where wealth and value are perhaps the most nearly connected, is in the necessity of the latter to the production of the former (loc. cit., p. 301).

This is aimed especially against Ricardo: Chapter XX, “Value and Riches, Their Distinctive Properties” [On the Principles of Political Economy, and Taxation, third ed., London, 1821, p. 320]. There Ricardo says, among other things:

“Value, then, essentially differs from riches, for value depends not on abundance, but on the difficulty or facility of production.”

<Value, incidentally, can also increase with “the facility of production”. Let us suppose that the number of men in a country rises from one million to six million. The million men worked 12 hours. The six million have so developed the productive powers that each of them produces as much again in 6 hours. In these circumstances, according to Ricardo’s own views, wealth would have been increased sixfold and value threefold.>

“ … riches do not depend on value. A man is rich or poor, according to the abundance of necessaries and luxuries which he can command… It is through confounding the ideas of value and wealth, or riches that it has been asserted, that by diminishing the quantity of commodities, that is to say of the necessaries, conveniences, and enjoyments of human life, riches may be increased. If value were the measure of riches, this could not be denied, because by scarcity the value of commodities is raised; but … if riches consist in necessaries and enjoyments, then they cannot be increased by a diminution of quantity” (op. cit., pp. 323-24).

In other words, Ricardo says here: wealth consists of use-values only. He transforms bourgeois production into mere production of use-value, a very pretty view of a mode of production which is dominated by exchange-value. He regards the specific form of bourgeois wealth as something merely formal which does not affect its content. He therefore also denies the contradictions of bourgeois production which break out in crises.

Hence his quite false conception of money. Hence, in considering the production process of capital, he ignores completely the circulation process, insofar as it includes the metamorphosis of commodities, the necessity of the transformation of capital into money. At any rate nobody has better and more precisely than Ricardo elaborated the point that bourgeois production is not production of wealth for the producers (as he repeatedly calls the workers) and that therefore the production of bourgeois wealth is something quite different from the production of “abundance”, of “necessaries and luxuries” for the men who produce them, as this would have to be the case if production were only a means for satisfying the needs of the producers through production dominated by use-value alone. Nevertheless, the same Ricardo says:

“If we lived in one of Mr. Owen’s parallelograms, and enjoyed all our productions in common, then no one could suffer in consequence of abundance, but as long as society is constituted as it now is, abundance will often be injurious to producers, and scarcity beneficial to them” ([Ricardo], On Protection to Agriculture, fourth ed., London, 1822, p.21).

||775| Ricardo regards bourgeois, or more precisely, capitalist production as the absolute form of production, whose specific forms of production relations can therefore never enter into contradiction with, or enfetter, the aim of production—abundance—which includes both mass and variety of use-values, and which in turn implies a profuse development of man as producer, an all-round development of his productive capacities. And this is where he lands in an amusing contradiction: when we are speaking of value and riches, we should have only society as a whole in mind. But when we speak of capital and labour, then it is self-evident that “gross revenue” only exists in order to create “net revenue”. In actual fact, what he admires most about bourgeois production is that its definite forms— compared with previous forms of production—provide scope for the boundless development of the productive forces. When they cease to do this, or when contradictions appear within which they do this, he denies the contradictions, or rather, expresses the contradiction in another form by representing wealth as such—the mass of use-values in itself—without regard to the producers, as the ultima Thule.

Sismondi is profoundly conscious of the contradictions in capitalist production; he is aware that, on the one hand, its forms—its production relations—stimulate unrestrained development of the productive forces and of wealth; and that, on the other hand, these relations are conditional, that their contradictions of use-value and exchange-value, commodity and money, purchase and sale, production and consumption, capital and wage-labour, etc., assume ever greater dimensions as productive power develops. He is particularly aware of the fundamental contradiction: on the one hand, unrestricted development of the productive forces and increase of wealth which, at the same time, consists of commodities and must be turned into cash; on the other hand, the system is based on the fact that the mass of producers is restricted to the necessaries. Hence, according to Sismondi, crises are not accidental, as Ricardo maintains, but essential outbreaks—occurring on a large scale and at definite periods—of the immanent contradictions. He wavers constantly: should the State curb the productive forces to make them adequate to the production relations, or should the production relations be made adequate to the productive forces? He often retreats into the past, becomes a laudator temporis acti,[gg] or he seeks to exorcise the contradictions by a different adjustment of revenue in relation to capital, or of distribution in relation to production, not realising that the relations of distribution are only the relations of production seen from a different aspect. He forcefully criticises the contradictions of bourgeois production but does not understand them, and consequently does not understand the process whereby they can be resolved. However, at the bottom of his argument is indeed the inkling that new forms of the appropriation of wealth must correspond to productive forces and the material and social conditions for the production of wealth which have developed within capitalist society; that the bourgeois forms are only transitory and contradictory forms, in which wealth attains only an antithetical existence and appears everywhere simultaneously as its opposite. It is wealth which always has poverty as its prerequisite and only develops by developing poverty as well.

We have now seen how nicely Malthus appropriates Sismondi. Malthus’s theory is expressed in an exaggerated and even more nauseating form in On Political Economy in connexion with the Moral State and Moral Prospects of Society, second ed., London, 1832, by Thomas Chalmers (Professor of Divinity). Here the parsonic element is more in evidence not only theoretically but also practically, since this member of the Established Church defends it “economically” with its “loaves and fishes” and the whole complex of institutions with which this Church stands or falls.

The passages in Malthus (referred to above) having reference to the workers are the following:

“… the consumption and demand occasioned by the workmen employed in productive labour can never alone furnish a motive to the accumulation and employment of capital” (Principles of Political Economy, [London, 1836,] p. 315).

“No farmer will take the trouble of superintending the labour of ten additional men merely because his whole produce will then sell in the market at an advanced price just equal to what he had paid his additional labourers. There must be something in the previous state of the demand and supply of the commodity in question, or in its price, antecedent to and independent of the demand occasioned by the new labourers, in order to warrant the employment of an additional number of people in its production” (op. cit., p. 312).

“The demand created by the productive labourer himself can never be an adequate demand, ||776| because it does not go to the full extent of what he produces. If it did, there would be no profit, consequently no motive to employ him. The very existence of a profit upon any commodity presupposes a demand exterior to that of the labour which has produced it” (op. cit., p. 405, note).

“… as a great increase of consumption among the working classes must greatly increase the cost of production, it must lower profits, and diminish or destroy the motive to accumulate…” (loc. cit., p. 405).

“It is the want of necessaries which mainly stimulates the labouring[hh] classes to produce luxuries; and were this stimulus removed or greatly weakened, so that the necessaries of life could be obtained with very little labour, instead of more time being devoted to the production of conveniences, there is every reason to think that less time would be so devoted” (op cit., p.334).

Malthus is interested not in concealing the contradictions of bourgeois production, but on the contrary, in emphasising them, on the one hand, in order to prove that the poverty of the working classes is necessary (as it is, indeed, for this mode of production) and, on the other hand, to demonstrate to the capitalists the necessity for a well-fed Church and State hierarchy in order to create an adequate demand for the commodities they produce. He thus shows that for “… continued increase[ii] of wealth” [op. cit., p. 314] neither increase of population nor accumulation of capital suffices (op. cit., pp. 319-20), nor “fertility of the soil” (op. cit., p. 331), nor “labour-saving inventions”, nor the extension of the “foreign markets” (op. cit., pp. 352 and 359).

“…both labourers and capital may be redundant, compared with the means of employing them profitably” (op. cit., p. 414 [note]).

Thus he emphasises the possibility of general over-production in opposition to the view of the Ricardians (inter alia op. cit., p. 326).

The principal propositions dealing with this matter are the following:

“… demand is always determined by value, and supply by quantity” (op. cit., p. 316, note).

Commodities are exchanged not only for commodities but also for productive labour and personal services and in relation to them, and also to money, there can be a general glut of commodities[jj] (loc. cit.).

“… supply must always be proportioned to quantity, and demand to value” (Definitions in Political Economy, ed. by John Cazenove, London, 4853, p. 65 [note]).

“‘It is evident,’ says James Mill ‘that whatever a man has produced, and does not wish to keep for his own consumption, is a stock which he may give in exchange for other commodities. His will, therefore, to purchase, and his means of purchasing, in other words, his demand, is […] equal to the amount of what he has produced, and does not mean to consume.’… It is quite obvious” [answers Malthus] “that his means of purchasing other commodities are not proportioned to the quantity of his own commodity which he has produced, and wishes to part with; but to its value in exchange; and unless the value of a commodity in exchange be proportioned to its quantity, it cannot be true that the demand and supply of every individual are always equal to one another” (loc. cit., pp. 64-65).

“If the demand of every individual were equal to his supply, in the correct sense of the expression, it would be a proof that he could always sell his commodity for the costs of production, including fair profits; and then even a partial glut would be impossible. The argument proves too much … supply must always be proportioned to quantity, and demand to value “(Definitions in Political Economy, London, 1827, p. 48, note).

Here, by demand Mill understands the “means of purchasing” of the person who demands. But “… his[kk] means of purchasing other commodities are not proportioned to the quantity of his own commodity which he has produced, and wishes to part with; but to its value in exchange; and unless the value of a commodity in exchange be proportioned to its quantity, it cannot be true that the demand and supply of every individual are always equal to one another” (loc. cit., pp. 48-49).

“It is still further from the truth”[ll] for Torrens to say “‘that increased supply is the one and only cause of increased effectual demand’ […]. If it were, how difficult would it be for a society[mm] to recover itself, under a temporary diminution of food and clothing, But […][nn] food and clothing […] diminished in quantity will rise in value […] the money-price of the remaining food and clothing will for a time rise in a greater degree than [in proportion to] the diminution of its quantity, while the money-price of labour may remain the same. The necessary consequence […] the power of setting in motion a greater quantity of productive industry than before” (op. cit., pp. 59-60).

All a nation’s commodities may fall compared with money or labour (op. cit., p.64 et seq.). Thus a general glut of the market is possible (loc. cit.). Their prices can all fall below their production costs (loc. cit.).[oo]

* * *

||777| For the rest, only the following passage from Malthus, which deals with the circulation process, need be noted.

“… if we reckon the value of the fixed capital employed as a part of the advances, we must reckon the remaining value of such capital at the end of the year as a part of the annual returns … in reality his” (the capitalist’s) “annual advances consist only of his circulating capital, the wear and tear of his fixed capital with the interest upon it, and the interest of that part of his circulating capital which consists of the money employed in making his annual payments as they are called for” (Principles of Political Economy, [second ed., London, 1836,] p. 269).

The sinking fund, i.e., the fund for wear and tear of the fixed capital, is, in my opinion, at the same time a fund for accumulation.

[13. Critique of Malthus’s Conception of “Unproductive Consumers” by Supporters of Ricardo]

I wish to quote yet a few passages from a Ricardian book directed against Malthus’s theory. As regards the attacks from the capitalist point of view which are made in the book against Malthus’s unproductive consumers in general and landlords in particular I shall demonstrate elsewhere that they can be used word for word against the capitalists from the workers’ standpoint. (This is to be included in the section “The Relationship Between Capital and Wage-Labour Presented from an Apologetic Standpoint”.)

[An anonymous follower of Ricardo writes:]

“Considering, that an increased employment of capital will not take place unless a rate of profits equal to the former rate, or greater than it, can be ensured, and considering, that the mere addition to capital does not of itself tend to ensure such a rate of profits, but the reverse, Mr. Malthus, and those who reason in the same manner as he does, proceed to look out for some source, independent of and extrinsic to production itself, whose progressive increase may keep pace with the progressive increase of capital, and from which continual additional supplies of the requisite rate of profits may be derived” (An Inquiry into those Principles, respecting the Nature of Demand and the Necessity of Consumption, lately advocated by Mr. Malthus etc., London, 1821, pp. 33-34).

According to Malthus, the “unproductive consumers” are such a source (loc. cit., p. 35).

“Mr. Malthus sometimes talks as if there were two distinct funds, capital and revenue, supply and demand, production and consumption, which must take care to keep pace with each other, and neither outrun the other. As if, besides the whole mass of commodities produced, there was required another mass, fallen from Heaven, I suppose, to purchase them with… The fund for consumption, such as he requires, can only be had at the expense of production” (op. cit., pp. 49-50).

“We are continually puzzled, in his” (Malthus’s) “speculations, between the object of increasing production and that of checking it. When a man is in want of a demand, does Mr. Malthus recommend him to pay some other person to take off his goods? Probably not” (op. cit., p. 55). Certainly yes.

“The object of selling your goods is to make a certain amount of money; it never can answer to part with that amount of money for nothing, to another person, that he may bring it back to you, and buy your goods with it: you might as well have just burnt your goods at once, and you would have been in the same situation” (op. cit., p. 63).

[He is] right in regard to Malthus. But because it is one and the same fund—”the whole mass of commodities produced”— which constitutes the production fund and the consumption fund, the fund of supply and the fund of demand, the fund of capital and the fund of revenue, it does not by any means follow that it is irrelevant how the total fund is divided between these various categories.

The anonymous author does not understand what Malthus means when he speaks of the “demand” of the workers being “inadequate” for the capitalist.

“… as to the demand from labour; that is, either the giving labour in exchange for goods, or … in exchange[pp] for present complete products, a future and accruing addition of value… This is the real demand that it is material to the producers to get increased” (op. cit., p. 57).

What Malthus means is not the offer of labour (which our author calls demand from labour) but the demand for commodities which the wages the worker receives enable him to make, the money with which the worker buys commodities on the market. And Malthus rightly says of this demand that it can never be adequate to the supply of the capitalist. Otherwise the worker would be able to buy back the whole of his product with his wages.

||778| The same writer says:

“… the very meaning of an increased demand by them” (the labourers) “is a disposition to take less themselves, and leave a larger share for their employers; and if it be said[qq] that this, by diminishing consumption, increases glut, I can only answer, that glut […] is synonymous with high profits” (op. cit., p. 59).

This is meant to be witty, but in fact it contains the essential secret of “glut”.

In connection with Malthus’s Essay on Rent, our author says:

“When Mr. Malthus published his Essay on Rent, it seems to have been partly with a view to answer the cry of ‘No Landlords’, which then ‘stood rubric on the walls’, to stand up in defence of that class, and to prove that they were not like monopolists. That rent cannot be abolished, that its increase is a natural concomitant, in general, of increasing wealth and numbers, he shewed; but neither did the vulgar cry of ‘No Landlords’ necessarily mean that there ought to be no such thing as rent, but rather that it ought to be equally divided among the people, according to what was called ‘Spence’s plan’. But when he proceeds to vindicate landlords from the odious name of monopolists, from the observation of Smith, ‘that they love to reap where they never sowed’, he seems to be fighting for a name… There is too much the air of an advocate in all these arguments of his” (op. cit., pp. 108-09)

[14. The Reactionary Role of Malthus’s Writings and Their Plagiaristic Character. Malthus’s Apologia for the Existence of “Upper” and “Lower” Classes]

Malthus’s book On Population was a lampoon directed against the French Revolution and the contemporary ideas of reform in England (Godwin, etc.). It was an apologia for the poverty of the working classes. The theory was plagiarised from Townsend and others.

His Essay on Rent was a piece of polemic writing in support of the landlords against industrial capital. Its theory was taken from Anderson.

His Principles of Political Economy was a polemic work written in the interests of the capitalists against the workers and in the interests of the aristocracy, Church, tax-eaters, toadies, etc., against the capitalists. Its theory was taken from Adam Smith. Where he inserts his own inventions, it is pitiable. It is on Sismondi that he bases himself in further elaborating the theory. |XIV-778||

* * *

||VIII-345| {Malthus makes the following remarks, laced with his usual “profound philosophy’, against any plan to provide the cottagers of England with cows (in the French translation of his An Essay on the Principles of Population, fifth ed., translated by P. Prévost, Genève, 1836, troisième éd., t. IV, pp. 104-05):

“it has been observed that those cottagers, who keep cows, are more industrious and more regular in their conduct, than those who do not… Most of those who keep cows at present have purchased them with the fruits of their own industry. It is therefore more just to say that their industry has given them a cow, than that a cow has given them their industry” [Malthus, An Essay on the Principles of Population, fifth ed., Vol. 2, London, 1817, pp. 296-97].

And it is therefore correct that diligence in labour (together with the exploitation of other people’s labour) has given cows to the parvenus amongst the bourgeoisie, while the cows give their sons the taste for idleness. If one took away from their cows not the ability to give milk, but to command other people’s unpaid labour, it would be a very good thing for their taste for labour.

The selfsame “profound philosopher” remarks:

“But it is evident that all cannot be in the middle. Superior and inferior parts are in the nature of things absolutely necessary; and […] “ (naturally there can be no mean without extremes) “strikingly beneficial. If no man could hope to rise, or fear to fall in society; if industry did not bring with it its reward, and indolence its punishment; we could not expect to see that animated activity in bettering our condition, which now forms the master-spring ||346| of public prosperity” ([Malthus, Principles of Population, p. 303,] Prévost, p. 112).

Thus there must be lower classes in order that the upper ones may fear to fall and there must be upper classes in order that the lower ones may hope to rise. In order that indolence may carry its own punishments the worker must be poor and the rentier and the landlord, so beloved of Malthus, must be rich. But what does Malthus mean by the reward of industry? As we shall see later, he means that the worker must perform part of his labour without an equivalent return. A wonderful stimulus, provided the “reward” and not hunger were the stimulus. What it all boils down to is that a worker may hope to exploit other workers some day.

Rousseau says: “The more monopoly spreads, the heavier do the chains become for the exploited.”

Malthus, “the profound thinker”, has different views. His supreme hope, which he himself describes as more or less utopian, is that the mass of the middle class should grow and that the proletariat (those who work) should constitute a constantly declining proportion (even though it increases absolutely) of the total population. This in fact is the course taken by bourgeois society.

“We might even venture,” says Malthus, “to indulge a hope that at some future period the processes for abridging human labour, the progress of which has of late years been so rapid, might ultimately supply all the wants of the most wealthy society with less personal effort than at present; and if they did not diminish the severity of individual exertion” (he must go on risking just as much as before, and relatively more and more for others and less and less for himself), “might, at least, diminish the number of those employed in severe toil” ([Malthus, Principles of Population, p. 304,] Prévost, p. 113).} |VIII-346||

[15. Malthus’s Principles Expounded in the Anonymous “Outlines of Political Economy”]

||XIV-778| A book in which Malthus’s principles are elaborated is Outlines of Political Economy; being a Plain and Short View of the Laws relating to the Production, Distribution, and Consumption of Wealth etc., London, 1832.

First of all the author[rr] explains the practical reasons governing the opposition of the Malthusians to the determination of value by labour-time.

“That labour is the sole source of wealth seems to be a doctrine as dangerous as it is false, as it unhappily affords a handle to those who would represent all property as belonging to the working classes, and the share which is received by others as a robbery or fraud upon them” ([John Cazenove, Outlines of Political Economy, London, 1832, ] p. 22, note).

In the following sentence it emerges more clearly than in Malthus that the author confuses the value of commodities with the utilisation of commodities, or of money as capital. In the latter sense it correctly expresses the origin of surplus-value.

“The value of capital, the quantity of labour which it is worth or will command, is […] always greater than that which it has cost, and the difference constitutes the profit or remuneration to its owner” (op. cit., p. 32).

The following, too, which is taken from Malthus, is correct as an explanation of why profit is to be reckoned as part of the production costs of capitalist production:

“… profit upon the capital employed” < “unless this profit were obtained, there would be no adequate motive to produce the commodity”> “is an essential condition of the supply, and, as such, constitutes a component part of the costs of production” (loc. cit., p. 33).

In the following passage we have, on the one hand, the correct statement that profit directly arises out of the exchange of capital for labour, and on the other hand, the Malthusian thesis that profit is made in selling.

“… a man’s profit does not depend upon his command of the produce of other men’s labour, but upon his command of Labour itself.” (Here the correct distinction is made between the exchange of one commodity for another and the exchange of the commodity as capital for labour.) “If”(when the value of money falls) “he ||779| can sell his goods at a higher price, while his workmen’s wages remain unaltered, he is clearly benefited by the rise, whether other goods rise or not. A smaller proportion of what he produces is sufficient to put that labour into motion, and a larger proportion consequently remains for himself “ (op. cit, , pp. 49-50).

The same thing happens when, for example, as a result of the introduction of new machinery, chemical processes, etc., the capitalist produces commodities below their old value and, either sells them at their old value or, at any rate, above the individual value to which they have fallen. It is true that when this happens, the worker does not directly work a shorter period for himself and a longer one for the capitalist, but in the reproduction process, “a smaller proportion of what he produces is sufficient to put that labour into motion”. In actual fact, the worker therefore exchanges a greater part of his immediate labour than previously for his own realised labour. For example, he continues to receive what he received previously, £10. But this £10, although it represents the same amount of labour to society, is no longer the product of the same amount of labour-time as previously, but may represent one hour less. So that, in fact, the worker works longer for the capitalist and a shorter period for himself. It is as if he received only £8, which, however, represented the same mass of use-values as a result of the increased productivity of his labour.

The author remarks in connection with [James] Mill’s s arguments regarding the identity of demand and supply, discussed earlier:

“The supply of each man depends upon the quantity which he brings to market: his demand for other things depends upon the value of his supply. The former is certain; it depends upon himself: the latter is uncertain; it depends upon others. The former may remain the same, whilst the latter may vary. A hundred quarters of corn, which a man brings to market, may at one time be worth thirty shillings, and at another time sixty shillings, the quarter. The quantity or supply is in both instances the same; but the man’s demand or power of purchasing other things is twice as great in the latter as in the former case” (op. cit., pp. 111-12).

About the relationship of labour and machinery, the author writes the following:

“… when commodities are multiplied by a more judicious distribution of labour, no greater amount of demand than before is required in order to maintain all the labour which was previously employed;”

(How so? If the distribution of labour is more judicious, more commodities will be produced by the same labour; hence the supply will grow, and does its absorption not require an increased amount of demand? Does Adam Smith not rightly say that division of labour depends upon the extent of the market? In actual fact, the difference as regards demand from outside is the same except [that demand] on a larger scale [is required] when machinery is used. But “a more judicious distribution of labour” may require the same or even a greater number of labourers than before, while the introduction of machinery must under all circumstances diminish the proportion of capital laid out in immediate labour)

“whereas, when machinery is introduced, if there be not an increased amount of demand, or a fall in wages or profits, some of the labour will undoubtedly be thrown out of employment […] let the case be supposed of a commodity worth £1,200, of which £1,000 consists of the wages of 100 men, at £10 each, and £200 of profits, at the rate of 20 per cent. Now, let it be imagined that the same commodity can be produced by the labour of 50 men, and a machine which has cost the labour of 50 men, and which requires the labour of 10 men to keep it in constant repair; the producer will then be able to reduce the price of the article to £800, and still continue to obtain the same remuneration for the use of his capital […]

The wages of 50 men at £10, are		£500
[The wages] of £10 to keep[ss] [the machine] in repair		£100
Profit 20 per cent
on circulating capital		£500	} £200
[…] on fixed capital		£500
	[Total] £800”

(op. cit., pp. 114-15).

<(The “10 men to keep it in […] repair” represent here the annual wear and tear. Otherwise the calculation would be wrong, since the labour of repairing would then have to be added to the original production costs of the machinery.) Previously the manufacturer had to lay out £1,000 annually, but the product was [worth] £1,200. Now he has laid out £500 on machinery once and for all; he has not therefore to lay out this sum again in any other way. What he has to lay out is £100 annually for repairs and £500 in wages (since there are no raw materials in this example). He has to lay out only £600 per annum, but he makes a profit of £200 on his total capital just as he did previously. The amount and rate of profit remain the same as they were before. But his annual product amounts to only £800.>

“Those who used to pay £1,200 for the commodity will now have £400 to spare, which they can lay out either on something else, or in purchasing more of the same commodity. If it be laid out in ||780| the produce of immediate labour, it will give employment to no more than 33.4 men, whereas the number thrown out of employment by the introduction of the machine will have been 40, for—

The wages of 33.4 men at £10, are £334

Profits 20 per cent £66

Total £400”

(loc. cit., pp. 114-16).

“If it” (i.e., the £400) “be laid out in the purchase of more of the same commodity, or of any other, where the same species and quantity of fixed capital were used, it would employ only 30 men, for—

The wages of 25 men at £10 each, are £250

[The wages of] 5 men [at £10 each] to keep [it] in repair £50

Profits on £250 circulated and £250 fixed capital £100

£400”

(loc. cit., p. 116).

“When the total sum of £1,200 was spent on the produce of immediate labour, the division was £1,000 wages, £200 profits” (100 workers whose wages come to £1,000). “When it was spent partly in the one way and partly in the other … the division was £934 wages and £266 profits” (i.e., 60 workers in the machine shop and 33.4 immediate labour making a total of 93.4 workers, whose wages come to £934), “and, as in the third supposition, when the whole sum was spent on the joint produce of the machine and labour, the division was £900 wages” (i.e., 90 workers) “and £300 profits” (loc. cit., pp. 114-17 [passim]).

||781| After the introduction [of the machine] the capitalist “certainly cannot employ as much labour as he did before, without accumulating further capital; but […] the revenue which is saved by the consumers of the article after its price has fallen, will, by increasing their consumption of that or something else, create a demand for some though not for all the labour which has been displaced by the machine” (op. cit., p. 119 [note]).

“Mr. McCulloch […] conceives that the introduction of machines into any employment necessarily occasions on equal or greater demand for the disengaged labourers in some other employment, […] In order to prove this, he supposes that the annuity necessary to replace the value of the machine by the time it is worn out, will every year occasion an increasing demand for labour. But as the successive annuities added together up to the end of the term, can only equal the original cost of the machine, and the interest upon it during the time it is in operation, in what way it can ever create a demand for labour, beyond what it would have done had no machine been employed, it is not easy to understand” (loc. cit., pp. 119-20 [note]).

The sinking fund itself can, indeed, be used for accumulation in the interval when the wear and tear of the machine is shown in the books, but does not actually affect its work. But in any case, the demand for labour created in this way is much smaller than if the whole capital invested in machinery were laid out in wages, instead of merely the annual wear and tear. MacPeter is an ass—as always. This passage is only noteworthy, because it contains the idea that the sinking fund is itself a fund for accumulation.

[a] In the manuscript “Doctor Smith” instead of “Adam Smith”.—Ed.

[b] In the manuscript “That” instead of “And that”.—Ed.

[c] Marx here summarises Cazenove’s remarks.—Ed.

[d] The manuscript has “worked up in them+the”.-Ed.

[e] The manuscript has “can command is” instead of “would command”.-Ed.

[f] Those born to enjoy the fruits (Horace).—Ed.

[g] This and the following passage from Adam Smith, which Marx quotes from Garnier’s French translation, are printed in this volume according to Adam Smith, Wealth of Nations, Oxford University Press, London, 1928.— Ed.

[h] In the manuscript the word “Rises” takes the place of “In the former case of”.—Ed.

[i] The word “caused” is used instead of “occasioned” in the manuscript.—Ed.

[j] Instead of “there is one”, the manuscript has “a”.—Ed.

[k] Instead of “tends to rise, rises” is used in the manuscript.—Ed.

[l] Instead of “such as”, the words “whereas the” are used in the manuscript.—Ed.

[m] From here the sentence is written in English in the manuscript.—Ed.

[n] Instead of “cannot be true, except”, the manuscript has “and vice versa, only true”.—Ed.

[o] Instead of “an assumption which probably will not be found to be true”, the manuscript has “and this is true”.—Ed.

[p] Instead of “… from that … necessary state of things, which”, the manuscript has “indeed necessarily, because”.—Ed.

[q] Instead of “that”, the manuscript has “The”.—Ed.

* Malthus presupposes the existence of profit in order to be able to measure its value by an external standard. He does not deal with the question of the origin and intrinsic possibility of profit.

[r] The manuscript gives “Profit of capital” instead of “Profits of stock”.— Ed.

[s] The manuscript gives “augments” instead of “increases”,—Ed.

[t] The manuscript has “and”. —Ed.

[u] Instead of “to”, the manuscript has “for”.—Ed.

[v] The manuscript has “Accumulated labour=the”.—Ed.

[w] The manuscript has “should be” instead of “were”.—Ed.

[x] Instead of “required to pay the labour employed will be”, the manuscript has “for labour”.—Ed.

[y] The manuscript has “let us suppose ¹/₄ of the advances for labour (immediate)” instead of the words used above.—Ed.

[z] The manuscript has “and” instead of “or”.—Ed.

[aa] The manuscript has “Then” instead of “it will be”.—Ed.

[bb] The manuscript has “his” instead of “of the”.—Ed.

[cc] The manuscript has “e.g. a farmer”.—Ed.

[dd] The manuscript has “are” instead of “are worth”.—Ed.

[ee] The manuscript has “his profit 400 on 2,000=20 per cent” instead of “the farmer’s profit will be £400, or twenty per cent”.—Ed.

[ff] The manuscript has “his” instead of “of the”.—Ed.

[gg] Eulogiser of the past (Horace, Ars poetica).—Ed.

[hh] In the manuscript “working” instead of “labouring”.—Ed.

[ii] “Progress” instead of “increase” in the manuscript.—Ed.

[jj] Marx summarises here the contents of a paragraph from Malthus’s book Principles of Political Economy, London, 1836, p. 316.—Ed.

[kk] In the manuscript “these” instead of “his”.—Ed.

[ll] In the manuscript “It is wrong” instead of “It is still further from the truth”.—Ed.

[mm] “Mankind” instead of “Society” in the manuscript.—Ed.

[nn] In the manuscript “when” instead of the omitted words.—Ed.

[oo] In this paragraph Marx paraphrases some of the ideas expressed by Malthus in his book Definitions in Political Economy, London, 1827, p. 64 et seq.—Ed.

[pp] In the manuscript “or … the giving in exchange” instead of “or … in exchange”.—Ed.

[qq] In the manuscript “if it is said”.—Ed.

[rr] John Cazenove.—Ed.

[ss] In the manuscript “10 men to keep it” instead of “£10 to keep”.—Ed.