Simple Reproduction Chap. 2.20.9 by Karl Marx Lyrics
Simple Reproduction (Chap. 2.20.9)
IX. A Retrospect to Adam Smith, Storch, and Ramsay
The aggregate value of the social product amounts to 9,000, equal to 6,000c + 1,500c + 1,500s, i.e., 6,000 reproduce the value of the means of production and 3,000 that of the articles of consumption. The value of the social revenue (v + s) amounts therefore to only one-third of the value of the aggregate product, and the totality of consumers, labourers as well as capitalists, can draw commodities, products out of the total social product and incorporate them in their consumption-fund only to the amount of this one-third. On the other hand 6,000, or two-thirds, of the value of the product, are the value of the constant capital which must be replaced in kind. Means of production to this amount must therefore again be incorporated in the production-fund. Storch recognised this as essential without being able to prove it:
“It is clear that the value of the annual product is divided partly into capital and partly into profits, and that each one of these portions of the value of the annual product is regularly employed in buying the products which the nation needs both for the maintenance of its capital and for replenishing its consumption-fund... . The products which constitute the capital of a nation are not to be consumed.” (Storch, Considèrations sur la nature du revenu national Paris, 1824, pp. 134-35, 150.)
Adam Smith, however, has promulgated this astounding dogma, which is believed to this day, not only in the previously mentioned form, according to which the entire value of the social product resolves itself into revenue, into wages plus surplus-value, or, as he expresses it, into wages plus profit (interest) plus ground-rent, but also in the still more popular form, according to which the consumers must “ultimately” pay to the producers the entire value of the product. This is to this day one of the best-established commonplaces, or rather eternal truths, of the so-called science of political economy. This is illustrated in the following plausible manner: Take any article, for instance a linen shirt. First, the spinner of linen yarn has to pay the flax-grower the entire value of the flax, i.e., the value of flax-seed, fertilisers, labouring cattle feed, etc., plus that part of the value which the fixed capital, such as buildings, agricultural implements, etc., of the flax-grower gives up to the product; the wages paid in the production of the flax; the surplus-value (profit, ground-rent) embodied in the flax; finally the carriage costs of the flax from its place of production to the spinnery. Next, the weaver has to reimburse the spinner of the linen yarn not only for the price of the flax, but also for that portion of the value of machinery, buildings, etc., in short of the fixed capital, which is transferred to the flax; furthermore, all the auxiliary materials consumed in the spinning process, the wages of the spinners, the surplus-value, etc., and so the thing goes on with the bleacher, the transportation costs of the finished linen, and finally the shirtmaker, who has to pay the entire price of all preceding producers, who supplied him only with his raw material. In his hands a further addition of value takes place, partly through the value of constant capital consumed in the manufacture of shirts in the shape of instruments of labour, auxiliary materials, etc., and partly through the labour expended, which adds the value of the shirtmakers’ wages plus the surplus-value of the shirt manufacturer. Now let this entire product in shirts cost ultimately £100 and let this be the aliquot part of the value of the total annual product expended by society on shirts. The consumers of the shirts pay these £100, i.e., the value of all the means of production contained in the shirts, and of the wages plus surplus-value of the flax-grower, spinner, weaver, bleacher, shirt manufacturer, and all carriers. This is absolutely correct. Indeed, every child can see that. But then it says: that’s how matters stand with regard to the value of all other commodities. It should say: That’s how matters stand with regard to the value of all articles of consumption, with regard to the value of that portion of the social product which passes into the consumption-fund, i.e., with regard to that portion of the value of the social product which can be expended as revenue. True enough, the sum of the values of all these commodities is equal to the value of all the means of production (constant portions of capital) used up in them plus the value created by the labour last added (wages plus surplus-value). Hence the totality of the consumers can pay for this entire sum of values because, although the value of each individual commodity is made up of c + v + s, nevertheless the sum of the values of all commodities passing into the consumption-fund, taken at its maximum, can be equal only to that portion of the value of the social product which resolves itself into v + s, in other words, equal to that value which the labour expended during the year has added to the existing means of production — i.e., to the value of the constant capital. As for the value of the constant capital, we have seen that it is replaced out of the mass of social products in a two-fold way. First, through an exchange by capitalists II, who produce articles of consumption, with capitalists I, who produce the means of production for them. And here is the source of the saying that what is capital for the one is revenue for the other. But this is not the actual state of affairs. The 2,000 IIc existing in the shape of articles of consumption worth 2,000 constitute a constant capital-value for the capitalist class of II. They therefore cannot consume this value themselves, although the product in accordance with its bodily form is intended for consumption. On the other hand, the 2,000 I(v + s) are wages plus surplus-value produced by capitalist and working-class I. They exist in the bodily form of means of production, of things in which their own value cannot be consumed. We have here, then, a sum of values to the amount of 4,000, one half of which, before and after the exchange, replaces only constant capital, while the other half forms only revenue.
In the second place the constant capital of department I is replaced in kind, partly by exchange among capitalists I, partly by replacement in kind in each individual business.
The phrase that the value of the entire annual product must ultimately be paid by the consumer would be correct only if consumer were taken to comprise two vastly different kinds: individual consumers and productive consumers. However that one portion of the product must be consumed productively means nothing but that it must function as capital and not be consumed as revenue.
If we divide the value of the aggregate product, equal to 9,000, into 6,000c + l,500v + 1,500s and look upon the 3,000(v + s) only in its quality of revenue, then, on the contrary, the variable capital seems to disappear and capital, socially speaking, to consist only of constant capital. For that which appeared originally as 1,500v has resolved itself into a portion of the social revenue, into wages, the revenue of the working-class, and its character of capital has thus vanished. This conclusion is actually drawn by Ramsay. According to him, capital, socially considered, consists only of fixed capital, but by fixed capital be means the constant capital, that quantity of values which consists of means of production, whether these means of production are instruments or materials of labour, such as raw materials, semi-finished products, auxiliary materials, etc. He calls the variable capital circulating capital:
“Circulating capital consists exclusively of subsistence and other necessaries advanced to the workmen, previous to the completion of the produce of their labour... Fixed capital alone, not circulating, is properly speaking a source of national wealth... Circulating capital is not an immediate agent in production, nor even essential to it at all, but merely a convenience rendered necessary by the deplorable poverty of the mass of the people... Fixed capital alone constitutes an element of cost of production in a national point of view.” (Ramsay, l.c., pp. 23 to 26, passim.)
Ramsay defines fixed capital, by which he means constant capital, more closely in the following words:
“On the length of time during which any portion of the product of that labour” (namely labour bestowed on any commodity) “has existed as fixed capital; that is, in a form in which, though assisting to raise the future commodity, it does not maintain labourers.” Ibid., p. 59.)
Here we see once more the calamity Adam Smith brings on by submerging the distinction between constant and variable capital in that between fixed capital and circulating capital. Ramsay’s constant capital consists of instruments of labour, his circulating capital of means of subsistence. Both of them are commodities of a given value. The one can no more create surplus-value than the other.
IX. A Retrospect to Adam Smith, Storch, and Ramsay
The aggregate value of the social product amounts to 9,000, equal to 6,000c + 1,500c + 1,500s, i.e., 6,000 reproduce the value of the means of production and 3,000 that of the articles of consumption. The value of the social revenue (v + s) amounts therefore to only one-third of the value of the aggregate product, and the totality of consumers, labourers as well as capitalists, can draw commodities, products out of the total social product and incorporate them in their consumption-fund only to the amount of this one-third. On the other hand 6,000, or two-thirds, of the value of the product, are the value of the constant capital which must be replaced in kind. Means of production to this amount must therefore again be incorporated in the production-fund. Storch recognised this as essential without being able to prove it:
“It is clear that the value of the annual product is divided partly into capital and partly into profits, and that each one of these portions of the value of the annual product is regularly employed in buying the products which the nation needs both for the maintenance of its capital and for replenishing its consumption-fund... . The products which constitute the capital of a nation are not to be consumed.” (Storch, Considèrations sur la nature du revenu national Paris, 1824, pp. 134-35, 150.)
Adam Smith, however, has promulgated this astounding dogma, which is believed to this day, not only in the previously mentioned form, according to which the entire value of the social product resolves itself into revenue, into wages plus surplus-value, or, as he expresses it, into wages plus profit (interest) plus ground-rent, but also in the still more popular form, according to which the consumers must “ultimately” pay to the producers the entire value of the product. This is to this day one of the best-established commonplaces, or rather eternal truths, of the so-called science of political economy. This is illustrated in the following plausible manner: Take any article, for instance a linen shirt. First, the spinner of linen yarn has to pay the flax-grower the entire value of the flax, i.e., the value of flax-seed, fertilisers, labouring cattle feed, etc., plus that part of the value which the fixed capital, such as buildings, agricultural implements, etc., of the flax-grower gives up to the product; the wages paid in the production of the flax; the surplus-value (profit, ground-rent) embodied in the flax; finally the carriage costs of the flax from its place of production to the spinnery. Next, the weaver has to reimburse the spinner of the linen yarn not only for the price of the flax, but also for that portion of the value of machinery, buildings, etc., in short of the fixed capital, which is transferred to the flax; furthermore, all the auxiliary materials consumed in the spinning process, the wages of the spinners, the surplus-value, etc., and so the thing goes on with the bleacher, the transportation costs of the finished linen, and finally the shirtmaker, who has to pay the entire price of all preceding producers, who supplied him only with his raw material. In his hands a further addition of value takes place, partly through the value of constant capital consumed in the manufacture of shirts in the shape of instruments of labour, auxiliary materials, etc., and partly through the labour expended, which adds the value of the shirtmakers’ wages plus the surplus-value of the shirt manufacturer. Now let this entire product in shirts cost ultimately £100 and let this be the aliquot part of the value of the total annual product expended by society on shirts. The consumers of the shirts pay these £100, i.e., the value of all the means of production contained in the shirts, and of the wages plus surplus-value of the flax-grower, spinner, weaver, bleacher, shirt manufacturer, and all carriers. This is absolutely correct. Indeed, every child can see that. But then it says: that’s how matters stand with regard to the value of all other commodities. It should say: That’s how matters stand with regard to the value of all articles of consumption, with regard to the value of that portion of the social product which passes into the consumption-fund, i.e., with regard to that portion of the value of the social product which can be expended as revenue. True enough, the sum of the values of all these commodities is equal to the value of all the means of production (constant portions of capital) used up in them plus the value created by the labour last added (wages plus surplus-value). Hence the totality of the consumers can pay for this entire sum of values because, although the value of each individual commodity is made up of c + v + s, nevertheless the sum of the values of all commodities passing into the consumption-fund, taken at its maximum, can be equal only to that portion of the value of the social product which resolves itself into v + s, in other words, equal to that value which the labour expended during the year has added to the existing means of production — i.e., to the value of the constant capital. As for the value of the constant capital, we have seen that it is replaced out of the mass of social products in a two-fold way. First, through an exchange by capitalists II, who produce articles of consumption, with capitalists I, who produce the means of production for them. And here is the source of the saying that what is capital for the one is revenue for the other. But this is not the actual state of affairs. The 2,000 IIc existing in the shape of articles of consumption worth 2,000 constitute a constant capital-value for the capitalist class of II. They therefore cannot consume this value themselves, although the product in accordance with its bodily form is intended for consumption. On the other hand, the 2,000 I(v + s) are wages plus surplus-value produced by capitalist and working-class I. They exist in the bodily form of means of production, of things in which their own value cannot be consumed. We have here, then, a sum of values to the amount of 4,000, one half of which, before and after the exchange, replaces only constant capital, while the other half forms only revenue.
In the second place the constant capital of department I is replaced in kind, partly by exchange among capitalists I, partly by replacement in kind in each individual business.
The phrase that the value of the entire annual product must ultimately be paid by the consumer would be correct only if consumer were taken to comprise two vastly different kinds: individual consumers and productive consumers. However that one portion of the product must be consumed productively means nothing but that it must function as capital and not be consumed as revenue.
If we divide the value of the aggregate product, equal to 9,000, into 6,000c + l,500v + 1,500s and look upon the 3,000(v + s) only in its quality of revenue, then, on the contrary, the variable capital seems to disappear and capital, socially speaking, to consist only of constant capital. For that which appeared originally as 1,500v has resolved itself into a portion of the social revenue, into wages, the revenue of the working-class, and its character of capital has thus vanished. This conclusion is actually drawn by Ramsay. According to him, capital, socially considered, consists only of fixed capital, but by fixed capital be means the constant capital, that quantity of values which consists of means of production, whether these means of production are instruments or materials of labour, such as raw materials, semi-finished products, auxiliary materials, etc. He calls the variable capital circulating capital:
“Circulating capital consists exclusively of subsistence and other necessaries advanced to the workmen, previous to the completion of the produce of their labour... Fixed capital alone, not circulating, is properly speaking a source of national wealth... Circulating capital is not an immediate agent in production, nor even essential to it at all, but merely a convenience rendered necessary by the deplorable poverty of the mass of the people... Fixed capital alone constitutes an element of cost of production in a national point of view.” (Ramsay, l.c., pp. 23 to 26, passim.)
Ramsay defines fixed capital, by which he means constant capital, more closely in the following words:
“On the length of time during which any portion of the product of that labour” (namely labour bestowed on any commodity) “has existed as fixed capital; that is, in a form in which, though assisting to raise the future commodity, it does not maintain labourers.” Ibid., p. 59.)
Here we see once more the calamity Adam Smith brings on by submerging the distinction between constant and variable capital in that between fixed capital and circulating capital. Ramsay’s constant capital consists of instruments of labour, his circulating capital of means of subsistence. Both of them are commodities of a given value. The one can no more create surplus-value than the other.