Value, Price, and Profit
#PUBLICATION NOTE
This edition of Value, Price, and Profit has been prepared and revised for digital publication by the Institute of Marxism-Leninism-Maoism under the Central Committee of the Communist Party in Switzerland on the basis of the edition published in the Collected Works of Marx and Engels, First English Edition, Vol. 20, Lawrence & Wishart, London.
#INTRODUCTION NOTE
This is a report delivered by Comrade Karl Marx in the General Council of the Workers' First International in London, England, United Kingdom on the 20th and 27th of June, 1865. It was written between the end of May and the 27th of June, 1865. It was first published as a separate pamphlet in 1898.
Being a further step in the elaboration of Marx's economic theory, this report was, at the same time, thanks to its popular form, a model of how to present such material to advanced workers.
Marx was prompted to make this report by the speeches of the Central Council member, John Weston, an Owenite. At the meetings of the 11th of April and 2nd, 20th, and 23rd of May, 1865, Weston sought to prove the uselessness of a general rise in wages for the workers and hence concluded that the corresponding efforts on the part of the trade unions would have deleterious consequences. The problems raised by Weston became the subject of discussion in the General Council in May-August 1865. On the 20th and 23rd of May, Marx made preliminary remarks, and, on the 20th and 27th of June, countered Weston's views with an extended scientific substantiation of the working-class tactics of economic struggle and elucidated a number of key points in proletarian political economy. Other speakers at these and subsequent meetings (Eccarius and Cremer) expressed their solidarity with Marx's report and disagreement with Weston's views; they recommended the publication of the discussion, Marx's report included.
As is seen from Marx's letter to Comrade Friedrich Engels dated the 24th of June, 1865, Marx thought that, in principle, the publication of the report would be expedient, but was afraid that this would prematurely anticipate his Capital, on which he was working hard at the time. These considerations, the excessive burden of theoretical studies connected with the writing of Capital, and the various affairs of the International prevented Marx from publishing his work, which has survived in manuscript form. Notes for the report have also been preserved in his notebook.
The report was first published in London in 1898 by Marx's daughter, Comrade Eleanor Marx-Aveling, under the title Value, Price, and Profit with a preface by Comrade Edward Aveling.
#Workers and oppressed people of the world, unite!
#VALUE, PRICE, AND PROFIT
#REPORT TO THE GENERAL COUNCIL OF THE WORKERS' FIRST INTERNATIONAL
#Karl Marx
#May-June 1865
#★
#INTRODUCTION
Citizens:
Before entering into the subject matter, allow me to make a few preliminary remarks.
There reigns now on the Continent a real epidemic of strikes, and a general clamour for a rise of wages. The question will turn up at our Congress.1 You, as the head of the International Association, ought to have settled convictions on this paramount question. For my own part, I considered it, therefore, my duty to enter fully into the matter, even at the peril of putting your patience to a severe test.
Another preliminary remark I have to make in regard to Citizen Weston. He has not only proposed to you, but has publicly defended, in the interest of the working class, as he thinks, opinions he knows to be most unpopular with the working class. Such an exhibition of moral courage all of us must highly honour. I hope that, despite the unvarnished style of my paper, at its conclusion, he will find me agreeing with what appears to me the just idea lying at the bottom of his theses, which, however, in their present form, I cannot but consider theoretically false and practically dangerous.
I shall now at once proceed to the business before us.
#1. [PRODUCTION AND WAGES]
Citizen Weston's argument rested, in fact, on two premises:
- Firstly, that the amount of national production is a fixed thing, a constant quantity or magnitude, as the mathematicians would say.
- Secondly, that the amount of real wages, that is to say, of wages as measured by the quantity of the commodities they can buy, is a fixed amount, a constant magnitude.
Now, his first assertion is evidently erroneous. Year after year, you will find that the value and mass of production increase, that the productive powers of the national labour increase, and that the amount of money necessary to circulate this increasing production continuously changes. What is true at the end of the year, and for different years compared with each other, is true for every average day of the year. The amount or magnitude of national production changes continuously. It is not a constant, but a variable magnitude, and, apart from changes in population, it must be so, because of the continuous change in the accumulation of capital and the productive powers of labour. It is perfectly true that, if a rise in the general rate of wages should take place today, that rise, whatever its ulterior effects might be, would, by itself, not immediately change the amount of production. It would, in the first instance, proceed from the existing state of things. But if, before the rise of wages, the national production was variable, and not fixed, it will continue to be variable and not fixed after the rise of wages.
But suppose the amount of national production to be constant instead of variable. Even then, what our friend Weston considers a logical conclusion would still remain a gratuitous assertion. If I have a given number, say eight, the absolute limits of his number do not prevent its parts from changing their relative limits. If profits were six and wages two, wages might increase to six and profits decrease to two, and still the total amount remains eight. Thus, the fixed amount of production would by no means prove the fixed amount of wages. How, then, does our friend Weston prove this fixity? By asserting it.
But, even conceding him his assertion, it would cut both ways, while he presses it only in one direction. If the amount of wages is a constant magnitude, then it can be neither increased nor diminished. If, then, in enforcing a temporary rise of wages, the workers act foolishly, the capitalists, in enforcing a temporary fall of wages, would not act no less foolishly. Our friend Weston does not deny that, under certain circumstances, the workers can enforce a fall of wages, and, indeed, continuously try to enforce it. According to the principle of the constancy of wages, a reaction ought to follow in this case no less than in the former. The workers, therefore, reacting against the attempt at, or the act of, lowering wages, would act rightly. They would, therefore, act rightly in enforcing a rise in wages, because every reaction against the lowering of wages is an action for raising wages. According to Citizen Weston's own principle of the constancy of wages, the workers ought, therefore, under certain circumstances, to combine and struggle for a rise of wages.
If he denies this conclusion, he must give up the premise from which it flows. He must not say that the amount of wages is a constant quality, but that, although it cannot and must not rise, it can and must fall, whenever capital pleases to lower it. If the capitalists please you feed you potatoes instead of meat, and oats instead of wheat, you must accept their will as a law of political economy, and submit to it. If, in one country, the rate of wages is higher than in another, in the United States, for example, than in England, you must explain this difference in the rate of wages by the difference between the will of the US capitalists and the will of the English capitalists, a method which would certainly very much simplify, not only the study of economic phenomena, but of all other phenomena.
But, even then, we might ask, why the will of the US capitalists differs from the will of the English capitalists? And, to answer the question, you must go beyond the domain of will. A parson may tell me that God wills one thing in France, and another thing in England. If I summon them to explain this duality of will, they might have the brass to answer me that God wills to have one will in France and another will in England. But our friend Weston is certainly the last person to make an argument of such a complete negation of all reasoning.
The will of the capitalists is certainly to take as much as possible. What we have to do is not to talk about their will, but to inquire into their power, the limits of that power, and the character of those limits.
#2. [PRODUCTION, WAGES, AND PROFITS]
The address Citizen Weston read to us might have been compressed into a nutshell.
All his reasoning amounted to this: If the working class forces the capitalist class to pay GBP 0,25 instead of GBP 0,20 in the shape of money wages, the capitalists will return in the shape of commodities GBP 0,20 worth instead of GPB 0,25 worth. The working class would have to pay GBP 0,25 for what, before the rise of wages, they bought with GBP 0,20. But why is this the case? Why do the capitalists only return GBP 0,20 worth for GBP 0,25? Because the amount of wages if fixed. But why is it fixed at GBP 0,20 worth of commodities? Why not at GBP 0,15, 0,10, or any other sum? If the limit of the amount of wages is settled by an economic law, independent alike of the will of the capitalists and the will of the workers, the first thing Citizen Weston had to do was to state that law and prove it. He ought then, moreover, to have proved that the amount of wages actually paid at every given moment always corresponds exactly to the necessary amount of wages, and never deviates from it. If, on the other hand, the given limit of the amount of wages is founded on the mere will of the capitalists, or the limits of their avarice, it is an arbitrary limit. There is nothing necessary in it. It may be changed by the will of the capitalists, and may, therefore, be changed against their will.
Citizen Weston illustrated his theory by telling you that, when a bowl contains a certain quantity of soup, to be eaten by a certain number of persons, an increase in the broadness of the spoons would not produce an increase in the amount of soup. He must allow me to find this illustration rather spoony. It reminded me somewhat of the simile employed by Menenius Agrippa. When the Roman plebeians struck against the Roman patricians, the patrician Agrippa told them that the patrician belly fed the plebeian members of the body politic.2 Agrippa failed to show that you feed the members of one person by filling the belly of another. Citizen Weston, on his part, has forgotten that the bowl from which the workers eat is filled with the whole produce of the national labour, and that what prevents them from fetching more out of it is neither the narrowness of the bowl nor the scantiness of its contents, but only the smallness of their spoons.
By what contrivance are the capitalists enabled to return GBP 0,20 worth for GBP 0,25? By raising the prices of the commodities they sell. Now, does a rise and, more generally, a change in the prices of commodities, do the prices of commodities themselves, depend on the mere will of the capitalists? Or are, on the contrary, certain circumstances wanted to give effect to that will? If not, the ups and downs, the incessant fluctuations of market prices, become an insoluble riddle.
As we suppose that no change whatsoever has taken place either in the productive powers of labour, or in the amount of capital and labour employed, or in the value of the money wherein the values of products are estimated, but only a change in the rate of wages, how could that rise of wages affect the prices of commodities? Only by affecting the actual proportion between the demand for, and the supply of, these commodities.
It is perfectly true that, considered as a whole, the working class spends, and must spend, its income on necessities. A general rise in the rate of wages would, therefore, produce a rise in the demand for, and, consequently, in the market prices of, necessities. The capitalists who produce these necessities would be compensated for the risen wages by the rising market prices of their commodities. But how with the other capitalists, who do not produce necessities? And you must not fancy them a small body. If you consider that 2/3 of the national produce are consumed by 1/5 of the population — a member of the House of Commons stated it recently to be but 1/7 of the population — you will understand what an immense proportion of the national produce must be produced in the shape of luxuries, or be exchanged for luxuries, and what an immense amount of the necessities themselves must be wasted on flunkeys, horses, cats, and so on, a waste we know from experience to become always much limited with the rising prices of necessities.
Well, what would be the position of those capitalists who do not produce necessities? For the fall in the rate of profit, consequent on the general rise of wages, they could not compensate themselves by a rise in the price of their commodities, because the demand for those commodities would not have increased. Their income would have decreased, and from this decreased income they would have to pay more for the same amount of higher-priced necessities. But this would not be all. As their income had diminished, they would have less to spend on luxuries, and therefore their mutual demand for their respective commodities would diminish. Consequent on this diminished demand, the prices of their commodities would fall. In these branches of industry, therefore, the rate of profit would fall, not only in simple proportion to the general rise in the rate of wages, but in the compound ratio of the general rise of wages, the rise in the prices of necessities, and the fall in the prices of luxuries.
What would be the consequence of this difference in the rates of profit for capitals employed in the different branches of industry? Why, the consequence that generally results whenever, for whatever reason, the average rate of profit comes to differ in the different spheres of production. Capital and labour would be transferred from the less remunerative to the more remunerative branches; and this process of transfer would go on until the supply in the one department of industry would have risen proportionately to the increased demand, and would have sunk in the other departments according to the decreased demand. This change effected, the general rate of profit would again be equalized in the different branches. As the whole derangement originally arose from a mere change in the proportion of the demand for, and the supply of, different commodities, the cause ceasing, the effect would cease, and prices would return to their former level and equilibrium. Instead of being limited to some branches of industry, the fall in the rate of profit consequent on the rise of wages would have become general. According to our supposition, there would have taken place no change in the productive powers of labour, nor in the aggregate amount of production, but that given amount of production would have changed its form. A greater part of the produce would exist in the shape of necessities, a lesser part in the shape of luxuries, or what comes to the same, a lesser part would be exchanged for foreign luxuries, and be consumed in its original form, or, what again comes to the same, a greater part of the native produce would be exchanged for foreign necessities instead of for luxuries. The general rise in the rate of wages would, therefore, after a temporary disturbance of market prices, only result in a general fall of the rate of profit without any permanent change in the prices of commodities.
If I am told that, in the previous argument, I assume the whole surplus wages to be spent on necessities, I answer that I have made the supposition most advantageous to the opinion of Citizen Weston. If the surplus wages were spent on articles formerly not entering into the consumption of the workers, the real increase of their purchasing power would need no proof. Being, however, only derived from an advance of wages, that increase of their purchasing power must exactly correspond to the decrease of the purchasing power of the capitalists. The aggregate demand for commodities would, therefore, not increase, but the constituent parts of that demand would change. The increasing demand on the one side would be counterbalanced by the decreasing demand on the other side. Thus, the aggregate demand remaining stationary, no change whatsoever could take place in the market prices of commodities.
You arrive, therefore, at this dilemma: Either the surplus wages are equally spent on all articles of consumption — then the expansion of demand on the part of the working class must be compensated by the contraction of demand on the part of the capitalist class — or the surplus wages are only spent on some articles whose market prices will temporarily rise. Then, the consequent rise in the rate of profit in some, and the consequent fall in the rate of profit in other branches of industry will produce a change in the distribution of capital and labour, going on until the supply is brought up to the increased demand in the one department of industry, and brought down to the diminished demand in the other departments of industry. On the one supposition, there will occur no change in the prices of commodities. On the other supposition, after some fluctuations of market prices, the exchange values of commodities will subside to the former level. On both suppositions, the general rise in the rate of wages will ultimately result in nothing else but a general fall in the rate of profit.
To stir up your powers of imagination, Citizen Weston requested you to think of the difficulties which a general rise of English agricultural wages from GBP 0,45 to GBP 0,90 would produce. Think, he exclaimed, of the immense rise in the demand for necessities, and the consequent fearful rise in their prices! Now, all of you know that the average wages of US agricultural labourers amount to more than double that of English agricultural labourers, although the prices of agricultural produce are lower in the United States than in the United Kingdom, although the general relations of capital and labour are the same in the United States as in England, and although the annual amount of production is much smaller in the United States than in England. Why, then, does our friend ring this alarm bell? Simply to shift the real question before us. A sudden rise of wages from GBP 0,45 to GBP 0,90 would be a sudden rise to the amount of 100%. Now, we are not at all discussing the question of whether the general rate of wages in England could be suddenly increased by 100%. We have nothing at all to do with the magnitude of the rise, which in every practical instance must depend on, and be suited to, given circumstances. We have only to inquire how a general rise in the rate of wages, even if restricted to 1%, will act.
Dismissing our friend Weston's fanciful rise of 100%, I propose calling your attention to the real rise of wages that took place in Britain from 1849 to '59.
You are all aware of the Ten Hours' Bill, or, rather, the Ten-and-a-Half Hours' Bill, introduced since 1848.3 This was one of the greatest economic changes we have witnessed. It was a sudden and compulsory rise of wages, not in some local trades, but in the leading industrial branches by which England sways the markets of the world. It was a rise of wages under circumstances singularly unpropitious. Dr. Ure, Professor Senior, and all the other official economic mouthpieces of the bourgeoisie, proved, and I must say on much stronger grounds than those of our friend Weston, that it would sound the death-knell of English industry. They proved that it not only amounted to a simple rise of wages, but to a rise of wages initiated by, and based on, a diminution of the quantity of labour employed. They asserted that the 12th hour you wanted to take from the capitalists was exactly the one hour from which they derived their profit. They threatened a decrease of accumulation, rise of prices, loss of markets, stinting of production, consequent reaction on wages, ultimate ruin. In fact, they declared Maximilien Robespierre's Maximum Laws4 to be a small affair compared to it; and they were right in a certain sense. Well, what was the result? A rise in the money wages of the factory operatives, despite the curtailing of the workday, a great increase in the number of factory hands employed, a continuous fall in the prices of their products, a marvelous development in the productive powers of their labour, an unheard-of progressive expansion of the markets for their commodities. In Manchester, at the meeting, in 1861, of the Society for the Advancement of Science, I myself heard Mr. Newmarch confess that he, Dr. Ure, Senior, and all other official propounders of economic science had been wrong, while the instinct of the people had been right.5 I mention Mr. W. Newmarch, not Professor Francis Newman, because he occupies an eminent position in economic science, as the contributor to, and editor of, Mr. Thomas Tooke's History of Prices, that magnificent work which traces the history of prices from 1793 to 1856. If our friend Weston's fixed idea of a fixed amount of wages, a fixed amount of production, a fixed degree of the productive power of labour, a fixed and permanent will of the capitalists, and all his other fixedness and finality were correct, Professor Senior's woeful forebodings would have been right, and Robert Owen, who, already in 1816, proclaimed a general limitation of the workday the first preparatory step to the emancipation of the working class,6 and actually in the teeth of the general prejudice inaugurated it on his own hook in his cotton factory at New Lanark, would have been wrong.
In the very same period, during which the introduction of the Ten Hours' Bill and the rise of wages consequent on it, occurred, there took place in Britain, for reasons which it would be out of place to enumerate here, a general rise in agricultural wages.
Although it is not required for my immediate purpose, in order not to mislead you, I shall make some preliminary remarks.
If a person got GBP 0,10 weekly wages, and if their wages rose to GBP 0,20, the rate of wages would have risen by 100%. This would seem a very magnificent thing if expressed as a rise in the rate of wages, although the actual amount of wages, GBP 0,20 weekly, would still remain a wretchedly small, a starvation pittance. You must not, therefore, allow yourselves to be carried away by the high-sounding percentages in the rate of wages. You must always ask: What was the original amount?
Moreover, you will understand that, if there were ten people receiving each GBP 0,10 per week, five people receiving each GBP 0,25, and five people receiving GBP 0,55 weekly, the 20 people together would receive GBP 5 weekly. If, then, a rise, say by 20%, on the aggregate sum of their weekly wages took place, there would be an advance from GBP 5 to 6. Taking the average, we might say that the general rate of wages had risen by 20%, although, in fact, the wages of the ten people had remained stationary, the wages of the one lot of five people had risen from GBP 0,25 to 0,30 only, and the wages of the other lot of five people from GBP 27,5 to 35. 1/2 of the people would not have improved at all their position, 1/4 would have improved it in an imperceptible degree, and only 1/4 would have bettered it really. Still, reckoning by the average, the total amount of the wages of those 20 people would have increased by 20%, and, as far as the aggregate capital that employs them, and the prices of the commodities they produce, are concerned, it would be exactly the same as if all of them had equally shared in the average rise of wages. In the case of agricultural labour, the standard wages being very different in the different counties of England and Scotland, the rise affected them very unequally.
Lastly, during the period when that rise of wages took place, counteracting influences were at work, such as the new taxes resulting from the Crimean War, the extensive demolition of the dwelling houses of the agricultural labourers,7 and so on.
Having premised so much, I proceed to state that, from 1849 to '59, there took place a rise of about 40% in the average rate of the agricultural wages of Britain. I could give you ample details in proof of my assertion, but, for the present purpose, think it sufficient to refer you to the conscientious and critical paper read in 1859 by the late Mr. John C. Morton at the London Society of Arts,8 on The Forces Used in Agriculture. Mr. Morton gives the returns, from bills and other authentic documents, which he had collected from about 100 farmers, residing in 12 Scottish and 35 English counties.
According to our friend Weston's opinion, and taken together with the simultaneous rise in the wages of the factory operatives, there ought to have occurred a tremendous rise in the prices of agricultural produce during the period from 1849 to '59. But what is the fact? Despite the Crimean War, and the consecutive unfavourable harvests from 1854 to '56, the average price of wheat, which is the leading agricultural produce of England, fell from about GBP 3 per quarter [around 291 litres] for the years 1838 to '48 to about GBP 2,50 per quarter for the years 1849 to '59. This constitutes a fall in the price of wheat of more than 16%, simultaneously with an average rice of agricultural wages of 40%. During the same period, if we compare its end with its beginning, 1859 with '49, there was a decrease of official pauperism from 934'419 to 860'470, the difference being 73'949; a very small decrease, I grand, and which, in the following years, was again lost, but still a decrease.
It might be said that, resulting from the abolition of the Corn Laws,9 the import of foreign grain was more than doubled during the period from 1849 to '59, as compared with the period from 1838 to '48. And what of that? From Citizen Weston's standpoint, one would have expected that this sudden, immense, and continuously increasing demand for foreign markets must have sent up the prices of agricultural produce there to a frightful height, the effect of increased demand remaining the same, whether it comes from the outside or from the inside. What was the fact? Apart from some years of failing harvests, during the whole period, the ruinous fall in the price of grain formed a standing theme of declamation in France; the Americans were again and again compelled to burn their surplus produce; and Russia, if we are to believe Mr. Urquhart, prompted the Civil War in the United States,10 because its agricultural exports were crippled by the Yankee competition in the markets of Europe.11
Reduced to its abstract form, Citizen Weston's argument would come to this: Every rise in demand occurs always on the basis of a given amount of production. It can, therefore, never increase the supply of the articles demanded, but can only enhance their money prices. Now, the most common observation shows that an increased demand will, in some instances, leave the market prices of commodities altogether unchanged, and will, in other instances, cause a temporary rise of market prices followed by an increased supply, followed by a reduction of the prices to their original level, and, in many cases, below their original level. Whether the rise of demand springs from surplus wages, or from any other cause, does not at all change the conditions of the problem. From Citizen Weston's standpoint, the general phenomenon was as difficult to explain as the phenomenon occurring under the exceptional circumstances of a rise of wages. His argument had, therefore, no peculiar bearing whatsoever on the subject we treat. It only expressed his perplexity at accounting for the laws by which an increase of demand produces an increase of supply, instead of a final rise of market prices.
#3. [WAGES AND CURRENCY]
On the second day of the debate, our friend Weston clothed his old assertions in new forms. He said: Resulting from a general rise in money wages, more currency will be wanted to pay the same wages. The currency being fixed, how can you pay with this fixed currency increased money wages? First, the difficulty arose from the fixed amount of commodities accruing to the workers, despite their increase of money wages; now, it arises from the increased money wages, despite the fixed amount of commodities. Of course, if you reject his original dogma, his secondary grievance will disappear.
However, I shall show that this currency question has nothing at all to do with the subject before us.
In your country, the mechanism of payments is much more perfected than in any other country of Europe. Thanks to the extent and concentration of the banking system, much less currency is wanted to circulate the same amount of values, and to transact the same or a greater amount of business. For example, as far as wages are concerned, the English factory operatives pay their wages weekly to the shopkeepers, who send them weekly to the bankers, who return them weekly to the manufacturers, who again pay them away to their workers, and so on. By this contrivance, the yearly wages of an operative, say of GBP 52, may be paid by one single sovereign turning around every week in the same circle. Even in England, the mechanism is less perfect than in Scotland, and is not everywhere equally perfect; and, therefore, we find, for example, that, in some agricultural districts, as compared with the mere factory districts, much more currency is wanted to circulate a much smaller amount of values.
If you cross the Channel, you will find that the money wages are much lower than in England, but that they are circulated in Germany, Italy, Switzerland, and France by a much larger amount of currency. The same sovereign will not be so quickly intercepted by the bankers or returned to the industrial capitalists; and, therefore, instead of one sovereign circulating GBP 52 yearly, you want, perhaps, three sovereigns to circulate yearly wages to the amount of GBP 25. Thus, by comparing Continental countries with England, you will see at once that low money wages may require a much larger currency for their circulation than high money wages, and that this is, in fact, a merely technical point, quite foreign to our subject.
According to the best calculations I know, the yearly income of the working class of this country may be estimated at GBP 250'000'000. This immense sum is circulated by about GBP 3'000'000. Suppose a rise of wages of 50% to take place. Then, instead of GBP 3'000'000 of currency, GBP 4'500'000 would be wanted. As a very considerable part of the workers' daily expenses is laid out in silver and copper, that is to say, in mere tokens, whose relative value to gold is arbitrarily fixed by law, like that of inconvertible money paper, a rise of money wages by 50% would, in the extreme case, require an additional circulation of sovereigns, say to the amount of 1'000'000. 1'000'000, now dormant, in the shape of bullion or coin, in the cellars of the Bank of England, or of private bankers, would circulate. But even the trifling expense resulting from the additional minting or the additional wear and tear of that 1'000'000 might be spared, and would actually be spared, if any friction should arise from the want of the additional currency. All of you know that the currency of this country is divided into two great departments. One sort, supplied by bank notes of different descriptions, is used in the transactions between dealers and dealers, and the larger payments from consumers to dealers, while another sort of currency, metallic coin, circulates in the retail trade. Although distinct, these two sorts of currency intermix with each other. Thus, gold coin, to a very great extent, circulates even in larger payments for all the odd sums under GBP 5. If tomorrow, GBP 4 notes, or GBP 3 notes, or GBP 2 notes were issued, the gold filling these channels of circulation would at once be driven out of them, and flow into those channels where it would be needed from the increase of money wages. Thus, the additional 1'000'000 required by an advance of wages by 50% would be supplied without the addition of one single sovereign. The same effect might be produced, without one additional bank note, by an additional bill circulation, as was the case in Lancashire for a very considerable time.
If a general rise in the rate of wages, for example, of 100%, as Citizen Weston supposed it to take place in agricultural wages, would produce a great rise in the prices of necessities, and, according to his views, require an additional amount of currency not to be procured, a general fall in wages must produce the same effect, on the same scale, in an opposite direction. Well! All of you know that the years 1858 to '60 were the most prosperous years for the cotton industry, and that, peculiarly, the year 1860 stands in that respect unrivaled in the annals of commerce, while, at the same time, all other branches of industry were most flourishing. The wages of the cotton operatives and of all the other workers connected with their trade stood, in 1860, higher than ever before. The American crisis12 came, and those aggregate wages were suddenly reduced to about 1/4 of their former amount. This would have been in the opposite direction a rise of 300%. If wages rise from GBP 0,25 to 1, we say that they rise by 300%; if they fall from GBP 1 to 0,25, we say that they fall by 75%; but the amount of rise in the one and the amount of fall in the other would be the same, namely, GBP 0,75. This, then, was a sudden change in the rate of wages unprecedented, and, at the same time, extending over a number of operatives which, if we count all the operatives, not only directly engaged in, but indirectly dependent on, the cotton trade, was larger by 1/2 than the number of agricultural labourers. Did the price of wheat fall? It rose from the annual average of GBP 23,53 per quarter [around 291 litres] during the three years of 1858 to '60 to the annual average of GBP 27,54 per quarter during the three years from 1861 to '63. As to the currency, there were coined in the mint in 1861 GBP 8'673'232, against GBP 3'378'102 in 1860. That is to say, there were coined GBP 5'294'130 more in 1861 than in 1860. It is true that the bank-note circulation was in 1861 less by GBP 1'319'000 than in 1860. Take this off. There remains still a surplus of currency for the year 1861, as compared with the prosperity year, 1860, to the amount of GBP 3'976'130, or about GBP 400'000'000; but the bullion reserve in the Bank of England had simultaneously decreased, not quite to the same, but in an approximating proportion.
Compare the year 1862 with '42. Apart from the immense increase in the value and amount of commodities circulated, in 1862, the capital paid in regular transactions for shares, loans, and so on for the railways in England and Wales amounted alone to GBP 320'000'000, a sum that would have appeared fabulous in 1842. Still, the aggregate amounts in currency in 1862 and '42 were pretty nearly equal, and, generally, you will find a tendency to a progressive diminution of currency in the face of an enormously increasing value, not only of commodities, but of monetary transactions generally. From our friend Weston's standpoint, this is an unsolvable riddle.
Looking somewhat deeper into this matter, he would have found that, quite apart from wages, and supposing them to be fixed, the value and mass of the commodities to be circulated, and generally the amount of monetary transactions to be settled, vary daily; that the amount of bank notes issued varies daily; that the amount of payments realized without the intervention of any money, by the instrumentality of bills, checks, credit, clearing houses, varies daily; that, as far as actual metallic currency is required, the proportion between the coin in circulation and the coin and bullion in reserve or sleeping in the cellars of banks varies daily; that the amount of bullion absorbed by the national circulation and the amount being sent abroad for international circulation vary daily. He would have found that his dogma of a fixed currency is a monstrous error, incompatible with the everyday movement. He should have inquired into the laws which enable a currency to adapt itself to circumstances so continually changing, instead of turning his misconception of the laws of currency into an argument against a rise of wages.
#4. [SUPPLY AND DEMAND]
Our friend Weston accepts the Latin proverb that repetitio est mater studiorum, that is to say, that repetition is the mother of study, and, consequently, he repeated his original dogma again under the new form that the contraction of currency, resulting from an enhancement of wages, would produce a diminution of capital, and so on. Having already dealt with his currency crotchet, I consider it quite useless to enter on the imaginary consequences he fancies to flow from his imaginary currency mishap. I shall proceed to at once reduce his one and the same dogma, repeated in so many different shapes, to its simplest theoretical form.
The uncritical way in which he has treated his subject will become evident from one single remark. He pleads against a rise of wages or against high wages as the result of such a rise. Now, I ask him: What are high wages and what are low wages? Why constitute, for example, GBP 0,25 weekly low, and GBP 1 weekly high, wages? If GBP 0,25 is low as compared with GBP 1, GBP 1 is still lower as compared with GBP 10. If a person was to lecture on the thermometre, and commenced by declaiming on high and low decrees, they would impart no knowledge whatsoever. They must first tell me how the freezing point is found out, and how the boiling point, and how these standard points are settled by natural laws, not by the fancy of the sellers or makers of thermometres. Now, in regard to wages and profits, Citizen Weston has not only failed to deduce such standard points from economic laws, but he has not even felt the necessity to look after them. He satisfied himself with the acceptance of the popular slang terms of low and high as something having a fixed meaning, although it is self-evident that wages can only be said to be high or low as compared with a standard by which to measure their magnitudes.
He will be unable to tell me why a certain amount of money is given for a certain amount of labour. If he should answer me, «This was settled by the law of supply and demand», I should ask him, in the first instance, by what law supply and demand are themselves regulated. And such an answer would at once put him out of court. The relations between the supply and demand of labour undergo perpetual change, and, with them, the market prices of labour. If the demand overshoots the supply, wages rise; if the supply overshoots the demand, wages sink, although it might, in such circumstances, be necessary to test the real state of demand and supply by a strike, for example, or any other method. But, if you accept supply and demand as the law regulating wages, it would be as childish as useless to declaim against a rise of wages, because, according to the supreme law to which you appeal, a periodical rise of wages is quite as necessary and legitimate as a periodical fall of wages. If you do not accept supply and demand as the law regulating wages, I again repeat the question, why a certain amount of money is given for a certain amount of labour?
But to consider matters more broadly: You would be altogether mistaken in fancying that the value of labour or any other commodity whatsoever is ultimately fixed by supply and demand. Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for that value itself. Suppose supply and demand to equilibrate, or, as the economists call it, to cover each other. Why, the very moment these opposite forces become equal, they paralyse each other, and cease to work in the one or the other direction. At the moment when supply and demand equilibrate each other, and therefore cease to act, the market price of a commodity coincides with its real value, with the standard price, around which its market prices oscillate. In inquiring into the nature of that value, we have, therefore, nothing at all to do with the temporary effects on market prices of supply and demand. The same holds true of wages and of the prices of all other commodities.
#5. [WAGES AND PRICES]
Reduced to their simplest theoretical expression, all our friend's arguments resolve themselves into this one single dogma: «The prices of commodities are determined or regulated by wages.»
I might appeal to practical observation to bear witness against this antiquated and exploded fallacy. I might tell you that the English factory operatives, miners, shipbuilders, and so on, whose labour is relatively high-priced, undersell, by the cheapness of their produce, all other nations; while the English agricultural labourers, for example, whose labour is relatively low-priced, are undersold by almost every other nation, because of the expensiveness of their produce. By comparing article with article in the same country, and the commodities of different countries, I might show, apart from some exceptions more apparent than real, that, on average, the high-priced labour produces the low-priced, and the low-priced labour produces the high-priced commodities. This, of course, would not prove that the high price of labour in the one, and its low price in the other instance, are the respective causes of those diametrically opposed effects, but, at all events, it would prove that the prices of commodities are not ruled by the prices of labour. However, it is quite superfluous for us to employ this empirical method.
It might, perhaps, be denied that Citizen Weston has put forward the dogma: «The prices of commodities are determined or regulated by wages.» In point of fact, he has never formulated it. He said, on the contrary, that profit and rent form also constituent parts of the prices of commodities, because it is out of prices of commodities that not only the workers' wages, but also the capitalists' profits and the landlords' rents, must be paid. But how, in his idea, are prices formed? First, by wages. Then, an additional percentage is joined to the price on behalf of the capitalists, and another additional percentage on behalf of the landlords. Suppose the wages of the labour employed in the production of a commodity to be 10. If the rate of profit was 100% to the wages advanced, the capitalists would add 10, and if the rate of rent was also 100% on the wages, there would be added 10 more, and the aggregate price of the commodity would amount to 30. But such a determination of prices would be simply their determination by wages. If wages in the above case rose to 20, the price of the commodity would rise to 60, and so on. Consequently, all the superannuated writers on political economy, who propounded the dogma that wages regulate prices, have tried to prove it by treating profit and rent as mere additional percentages on wages. None of them was, of course, able to reduce the limits of those percentages to any economic law. They seem, on the contrary, to think that profits are settled by tradition, custom, the will of the capitalists, or by some other equally arbitrary and inexplicable method. If they assert that they are settled by the competition between the capitalists, they say nothing. That competition is sure to equalize the different rates of profit in different trades, or reduce them to one average level, but it can never determine the level itself, or the general rate of profit.
What do we mean by saying that the prices of the commodities are determined by wages? Wages being but a name for the price of labour, we main that the prices of commodities are regulated by the price of labour. As «price» is exchange value — and, in speaking of value, I speak always of exchange value — is exchange value expressed in money, the proposition comes to this, that «the value of commodities is determined by the value of labour», or that «the value of labour is the general measure of value».
But how, then, is the «value of labour» itself determine? Here, we come to a standstill. Of course, to a standstill if we try reasoning logically. Yet the propounders of that doctrine make short work of logical scruples. Take our friend Weston, for example. First, he told us that wages regulate the price of commodities and that, consequently, when wages rise, prices must rise. Then, he turned around to show us that a rise of wages will be no good, because the prices of commodities had risen, and because wages were indeed measured by the prices of the commodities on which they are spent. Thus, we begin by saying that the value of labour determines the value of commodities, and we wind up by saying that the value of commodities determines the value of labour. Thus, we move to and from in the most vicious circle, and arrive at no conclusion at all.
On the whole, it is evident that, by making the value of one commodity, say labour, grain, or any other commodity, the general measure and regulator of value, we only shift the difficulty, since we determine one value by another, which on its side wants to be determined.
The dogma that «wages determine the prices of commodities», expressed in its most abstract terms, comes to this, that «value is determined by value», and this tautology means that, in fact, we know nothing at all about value. Accepting this premise, all reasoning about the general laws of political economy turns into mere twaddle. It was, therefore, the great merit of Ricardo that, in his work On the Principles of Political Economy, published in 1817, he fundamentally destroyed the old, popular, and outdated fallacy that «wages determine prices», a fallacy which Adam Smith and his French predecessors had spurned in the really scientific parts of their researches, but which they reproduced in their more esoteric and vulgarizing chapters.
#6. [VALUE AND LABOUR]
Citizens, I have now arrived at a point where I must enter the real development of the question. I cannot promise to do this in a very satisfactory way, because to do so, I should be obliged to go over the whole field of political economy. I can, as the French would say, but effleurer la question, touch upon the main points.
The first question we have to put is: What is the value of a commodity? How is it determined?
At first sight, it would seem that the value of a commodity is thing quite relative, and not to be settled without considering one commodity in its relations to all other commodities. In fact, in speaking of the value, the exchange value of a commodity, we mean the proportional quantities in which it exchanges with all other commodities. But then arises the question: How are the proportions in which commodities exchange with each other regulated?
We know from experience that these proportions vary infinitely. Taking one single commodity, wheat, for instance, we shall find that a quarter [around 291 litres] of wheat exchanges in almost countless variations of proportion with different commodities. Yet, its value remaining always the same, whether expressed in silk, gold, or any other commodity, it must be something distinct from, and independent of, these different rates of exchange with different articles. It must be possible to express, in a very different form, these various equations with various commodities.
Besides, if I say that a quarter of wheat exchanges with iron in a certain proportion, or the value of a quarter of wheat is expressed in a certain amount of iron, I say that the value of wheat and its equivalent in iron are equal to some third thing, which is neither wheat nor iron, because I suppose them to express the same magnitude in two different shapes. Either of them, the wheat or the iron, must, therefore, independently of the other, be reducible to this third thing, which is their common measure.
To elucidate this point, I shall recur to a very simple geometric illustration. In comparing the areas of triangles of all possible forms and magnitudes, or comparing triangles with rectangles, or any other rectilinear figure, how do we proceed? We reduce the area of any triangle whatsoever to an expression quite different from its visible form. Having found from the nature of the triangle that its area is equal to half the product of its base by its height, we can then compare the different values of all sorts of triangles, and of all rectilinear figures whatsoever, because all of them may be dissolved into a certain number of triangles.
The same mode of procedure must result with the values of commodities. We must be able to reduce all of them to an expression common to all, distinguishing them only by the proportions in which they contain that identical measure.
As the exchange values of commodities are only social functions of those things, and have nothing at all to do with their natural qualities, we first first ask: What is the common social substance of all commodities? It is labour. To produce a commodity, a certain amount of labour must be bestowed upon it, or worked up in it. And I say not only labour, but social labour. Someone who produces an article for their own immediate use, to consume it themself, creates a product, but not a commodity. As a self-sustaining producer, they have nothing to do with society. But to produce a commodity, someone must not only produce an article satisfying some social want, but their labour itself must form part and parcel of the total sum of labour expended by society. It must be subordinate to the social division of labour. It is nothing without the other divisions of labour, and, on its part, is required to integrate them.
If we consider commodities as values, we consider them exclusively under the single aspect of realized, fixed, or, if you like, crystallized social labour. In this respect, they can differ only by representing greater or smaller quantities of labour, as, for example, a greater amount of labour may be worked up in a silken handkerchief than in a brick. But how does one measure quantities of labour? By the time the labour lasts, in measuring the labour by the hour, the day, and so on. Of course, to apply this measure, all sorts of labour are reduced to average or simple labour as their unit.
We arrive, therefore, at this conclusion. A commodity has a value, because it is a crystallization of social labour. The greatness of its value, or its relative value, depends on the greater or lesser amount of that social substance contained in it; that is to say, on the relative mass of labour necessary for its production. The relative values of commodities are, therefore, determined by the respective quantities or amounts of labour, worked up, realized, fixed in them. The correlative quantities of commodities which can be produced in the same labour time are equal. Or the value of one commodity is to the value of another commodity as the quantity of labour fixed in the one is to the quantity of labour fixed in the other.
I suspect that many of you will ask: Does, then, indeed, there exist such a vast, or any difference whatsoever, between determining the values of commodities by wages, and determining them by the relative quantities of labour necessary for their production? You must, however, be aware that the reward for labour, and the quantity of labour, are quite disparate things. Suppose, for example, equal quantities of labour to be fixed in one quarter of wheat and one ounce [around 28,4 grams] of gold. I resort to this example, because it was used by Benjamin Franklin in his first essay published in 1729, and entitled, A Modest Inquiry Into the Nature and Necessity of a Paper Currency, where he, one of the first, hit upon the true nature of value. Well. We suppose, then, that one quarter of wheat and one ounce of gold are equal values or equivalents, because they are crystallizations of equal amounts of average labour, of so many days' or so many weeks' labour respectively fixed in them. In thus determining the relative values of gold and grain, do we refer in any way whatsoever to the wages of agricultural labourers and miners? Not a bit. We leave it quite indeterminate how their day's or week's labour was paid, or even whether wage labour was employed at all. If it was, wages may have been very unequal. The labourers whose labour is realized in the quarter of wheat may receive two bushels [around 340,2 grams] only, and the labourers employed in mining may receive half of the ounce of gold. Or, supposing their wages to be equal, they may deviate in all possible proportions from the values of the commodities produced by them. They may amount to 1/2, 1/3, 1/4, 1/5, or any other proportional part of the one quarter of grain or the one ounce of gold. Their wages can, of course, not exceed, not be more than the values of the commodities they produced, but they can be less in every possible degree. Their wages will be limited by the values of the products, but the values of their products will not be limited by the wages. And, above all, the values, the relative values of grain and gold, for example, will have been settled without any regard whatsoever to the value of the labour employed, that is to say, to wages. To determine the values of commodities by the relative quantities of labour fixed in them is, therefore, a thing quite different from the tautological method of determining the values of commodities by the value of labour, or by wages. This point, however, will be further elucidated in the process of our inquiry.
In calculating the exchange value of a commodity, we must add to the quantity of labour last employed the quantity of labour previously worked up in the raw material of the commodity, and the labour bestowed on the implements, tools, machinery, and buildings, with which such labour is assisted. For example, the value of a certain amount of cotton yarn is the crystallization of the quantity of labour added to the cotton during the spinning process, the quantity of labour previously realized in the cotton itself, the quantity of labour realized in the coal, oil, and other auxiliary substances used, the quantity of labour fixed in the steam engine, the spindles, the factory building, and so on. Means of production properly so-called, such as tools, machinery, buildings, serve again and again for a longer or shorter period during repeated processes of production. If they were used up at once, like the raw material, their whole value would at once be transferred to the commodities they assist in producing. But as a spindle, for example, is but gradually used up, an average calculation is made, based on the average time it lasts, and its average waste or wear and tear during a certain period, say a day. In this way, we calculate how much of the value of the spindle is transferred to the yarn daily spun, and how much, therefore, of the total amount of labour realized in a pound [around 453,6 grams] of yarn, for example, is due to the quantity of labour previously realized in the spindle. For our present purpose, it is not necessary to dwell any longer on this point.
It might seem that, if the value of a commodity is determined by the quantity of labour bestowed upon its production, the lazier a person, or the clumsier a person, the more valuable their commodity, because the greater the time of labour required for finishing the commodity. This, however, would be a sad mistake. You will recollect that I used the word «social labour», and many points are involved in this qualification of «social». In saying that the value of a commodity is determined by the quantity of labour worked up or crystallized in it, we mean the quantity of labour necessary for its production in a given state of society, under certain social average conditions of production, with a given social average intensity, and average skill of the labour employed. When, in England, the power loom came to compete with the hand loom, only 1/2 of the former labour time was wanted to convert a given amount of yarn into a yard [around 0,9 metres] of cotton or cloth. The poor hand-loom weavers now worked 17 or 18 hours daily each, instead of the nine or ten hours they had each worked before. Still, the product of 20 hours of their labour represented now only ten social hours of labour, or ten hours of labour socially necessary for the conversion of a certain amount of yarn into textile stuffs. Their product of 20 hours had, therefore, no more value than their former product of ten hours.
If then the quantity of socially necessary labour realized in commodities regulates their exchange values, every increase in the quantity of labour wanted for the production of a commodity must augment its value, as every diminution must lower it.
If the respective quantities of labour necessary for the production of the respective commodities remained constant, their relative values also would be constant. But such is not the case. The quantity of labour necessary for the production of a commodity changes continuously with the changes in the productive powers of the labour employed. The greater the productive powers of labour, the more produce is finished in a given labour time, and the smaller the productive powers of labour, the less produce is finished in the same time. If, for example, in the progress of population, it should become necessary to cultivate less fertile soil, the same amount of produce would be only attainable by a greater amount of labour spent, and the value of agricultural produce would consequently rise. On the other hand, if, with the modern means of production, a single spinner converts into yarn, during one workday, many thousand times the amount of cotton which they could have spun during the same time with the spinning wheel, it is evident that every single pound of cotton will absorb many thousand times less of spinning labour than it did before, and, consequently, the value added by spinning to every single pound of cotton will be a thousand times less than before. The value of yarn will sink accordingly.
Apart from the different natural energies and acquired working abilities of different peoples, the productive powers of labour must principally depend on the following:
- The natural conditions of labour, such as fertility of soil, mines, and so on.
- The progressive improvement of the social powers of labour, such as are derived from production in a grans scale, concentration of capital and combination of labour, subdivision of labour, machinery, improved methods, appliance of chemical and other natural agencies, shortening of time and space by means of communication and transport, and every other contrivance by which science presses natural agencies into the service of labour, and by which the social or cooperative character of labour is developed. The greater the productive powers of labour, the less labour is bestowed upon a given amount of produce; hence the smaller the value of this produce. The smaller the productive powers of labour, the more labour is bestowed upon the same amount of produce; hence the greater its value.
As a general law, we may, therefore, set it down that the values of commodities are directly as the labour times employed in their production, and are inversely as the productive powers of the labour employed.
Having until now only spoken of value, I shall add a few words about price, which is a peculiar form assumed by value.
Price, taken by itself, is nothing but the monetary expression of value. The values of all commodities in this country, for example, are expressed in gold prices, while, on the Continent, they are mainly expressed in silver prices. The value of gold or silver, like that of all other commodities, is regulated by the quantity of labour necessary for getting them. You exchange a certain amount of your national products, in which a certain amount of your national labour is crystallized, for the produce of the gold- and silver-producing countries, in which a certain quantity of their labour is crystallized. It is in this way, in fact by barter, that you learn to express in gold and silver the value of all commodities, that is, the respective quantities of labour bestowed upon them. Looking somewhat closer into the monetary expression of value, or what comes to the same, the conversion of value into price, you will find that it is a process by which you give to the values of all commodities an independent and homogeneous form, or by which you express them as quantities of equal social labour. So far as it is but the monetary expression of value, price has bee called natural price by Adam Smith, «prix nécessaire» [«necessary price»] by the French Physiocrats.
What, then, is the relation between value and market prices, or between natural prices and market prices? You all know that the market price is the same for all commodities of the same kind, however the conditions of production may differ for the individual producers. The market price expresses only the average amount of social labour necessary, under the average conditions of production, to supply the market with a certain mass of a certain article. It is calculated on the whole lot of a commodity of a certain description.
So far, the market price of a commodity coincides with its value. On the other hand, the oscillations of market prices, rising now over, sinking now under the value or natural price, depend on the fluctuations of supply and demand. The deviations of market prices from values are continual, but, as Adam Smith says:
The natural price [...] is [...] the central price, to which the prices of all commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But, whatever may be the obstacles which hinder them from settling in this centre of repose and continuance, they are constantly tending toward it.13
I cannot now sift this matter. It suffices to say that, if supply and demand equilibrate each other, the market prices of commodities will correspond to their natural prices, that is to say, to their values, as determined by the respective quantities of labour required for their production. But supply and demand must constantly tend to equilibrate each other, although they do so only by compensating one fluctuation with another, a rise by a fall, and the other way around. If, instead of considering only the daily fluctuations, you analyse the movement of market prices for longer periods, as Mr. Tooke, for example, has done in his History of Prices, you will find that the fluctuations of market prices, their deviations from values, their ups and downs, paralyse and compensate each other; so that, apart from the effect of monopolies and some other modifications I must now pass by, all descriptions of commodities are, on average, sold at their respective values or natural prices. The average periods during which the fluctuations of market prices compensate each other are different for different kinds of commodities, because with one kind it is easier to adapt supply to demand than with the other.
If, then, speaking broadly, and embracing somewhat longer periods, all descriptions of commodities sell at their respective values, it is nonsense to suppose that profit, not in individual cases, but that the constant and usual profits of different trades, spring from surcharging the prices of commodities, or selling them at a price over and above their value. The absurdity of this notion becomes evident if it is generalized. What a person would constantly win as a seller, they would as constantly lose as a buyer. It would not do to say that there are people who are buyers without being sellers, or consumers without being producers. What these people pay to the producers, they must first get from them for nothing. If a person first takes your money and afterward returns that money in buying your commodities, you will never enrich yourselves by selling your commodities too expensively to that same person. This sort of transaction might diminish a loss, but would never help in realizing a profit.
To explain, therefore, the general nature of profits, you must start from the theorem that, on average, commodities are sold at their real value, and that profits are derived from selling them at their values, that is, in proportion to the quantity of labour realized in them. If you cannot explain profit on this supposition, you cannot explain it at all. This seems paradoxical and contrary to everyday observation. It is also paradoxical that the Earth moves around the Sun, and that water consists of two highly flammable gases. Scientific truth is always paradoxical, if judged by everyday experience, which catches only the delusive appearance of things.
#7. LABOUR POWER
Having now, as far as it could be done in such a cursory manner, analysed the nature of value, of the value of any commodity whatsoever, we must turn our attention to the specific value of labour. And here, again, I must startle you by a seeming paradox. All of you feel sure that what they daily sell is their labour; that, therefore, labour has a price, and that, the price of a commodity being only the monetary expression of its value, there must certainly exist such a thing as the value of labour. However, there exists no such thing as the value of labour in the common acceptance of the word. We have seen that the amount of necessary labour crystallized in a commodity constitutes its value. Now, applying this notion of value, how could we define, say, the value of a ten hours' workday? How much labour is contained in that day? Ten hours' labour. To say that the value of a ten hours' workday is equal to ten hours' labour, or the quantity of labour contained in it, would be a tautological and, moreover, a nonsensical expression. Of course, having once found out the true but hidden sense of the expression «value of labour», we shall be able to interpret this irrational, and seemingly impossible, application of value, in the same way that, having once made sure of the real movement of the celestial bodies, we shall be able to explain their apparent or merely phenomenal movements.
What the workers sell is not directly their labour, but their labour power, the temporary disposal of which they make over to the capitalists. This is so much the case that I do not know whether by the English laws, but certainly by some Continental laws, the maximum time is fixed for which a person is allowed to sell their labour power. If allowed to do so for any indefinite period whatsoever, slavery would be immediately restored. Such a sale, if it comprised their lifetime, for example, would make them at once the lifelong slave of their employer.
One of the oldest economists and most original philosophers of England — Thomas Hobbes — has already, in his Leviathan, instinctively hit upon this point overlooked by all his successors. He says:
The value or worth of a person is, as in all other things, their price: that is, so much as would be given for the use of their power.
— Thomas Hobbes: Leviathan (1651)
Proceeding from this basis, we shall be able to determine the value of labour as that of all other commodities.
But, before doing so, we might ask, how does this strange phenomenon arise, that we find on the market a set of buyers, possessed of land, machinery, raw material, and the means of subsistence, all of them, save land in its crude state, the products of labour, and, on the other hand, a set of sellers, who have nothing to sell except their labour power, their working arms and brains? That the one set buys continually in order to make a profit and enrich themselves, while the other set continually sells in order to earn their livelihood? The inquiry into this question would be an inquiry into what the economists call «original or primitive accumulation», but which ought to be called original expropriation. We should find that this so-called primitive accumulation means nothing but a series of historical processes, resulting in a decomposition of the original union existing between the labourers and their instruments of labour. Such an inquiry, however, lies beyond the pale of my present subject. The separation between the labourers and the instruments of labour once established, such a state of things will maintain itself and reproduce itself on a constantly increasing scale, until a new and fundamental revolution in the mode of production should again overturn it, and restore the original union in a new historical form.
What, then, is the value of labour power?
Like that of every other commodity, its value is determined by the quantity of labour necessary to produce it. The labour power of a person exists only in their living individuality. A certain mass of necessities must be consumed by a person to grow up and maintain their life. But the person, like the machine, will wear out, and must be replaced by another person. Beside the mass of necessities required for their own maintenance, they need another amount of necessities to bring up a certain quota of children that are to replace them on the labour market and to perpetuate the race of labourers. Moreover, to develop their labour power, and acquire a given skill, another amount of values must be spent. For our purpose, it suffices to consider only average labour, the costs of whose education and development are vanishing magnitudes. Still, I must seize on this occasion to state that, as the costs of producing labour powers of different quality differ, so must differ the values of the labour powers employed in different trades. The cry for an equality of wages rests, therefore, on a mistake, is an insane wish never to be fulfilled. It is an offspring of that false and superficial radicalism that accepts premises and tries to evade conclusions. On the basis of the wage system, the value of labour power is settled like that of every other commodity; and, as different kinds of labour power have different values, or require different quantities of labour for their production, they must fetch different prices in the labour market. To clamour for equal or even equitable retribution on the basis of the wage system is the same as to clamour for freedom on the basis of the slave system. What you think just or equitable is out of the question. The question is: What is necessary and unavoidable with a given system of production?
After what has been said, it will be seen that the value of labour power is determined by the value of the necessities required to produce, develop, maintain, and perpetuate the labour power.
#8. PRODUCTION OF SURPLUS VALUE
Now, suppose that the average amount of the daily necessities of a labourer require six hours of average labour for their production. Suppose, moreover, six hours of average labour to be also realized in a quantity of gold equal to GBP 0,15. Then, GBP 0,15 would be the price, or the monetary expression, of the daily value of that person's labour power. If they worked daily six hours, they would daily produce a value sufficient to buy the average amount of their daily necessities, or to maintain themself as a labourer.
But our labourer is a wage-labourer. They must, therefore, sell their labour power to a capitalist. If they sell it at GBP 0,15 daily, or GBP 0,90 weekly, they sell it at its value. Suppose them to be a spinner. If they work six hours daily, they will add to the cotton a value of GBP 0,15 daily. This value, daily added by them, would be an exact equivalent for the wages, or the price of their labour power, received daily. But, in that case, no surplus value or surplus product whatsoever would go to the capitalist. Here, then, we come to the rub.
In buying the labour power of the workers, and paying its value, the capitalist, like every other buyer, has acquired the right to consume or use the commodity bought. You consume or use the labour power of a person by making them work as you consume or use a machine by making it run. By paying the daily or weekly value of the labour power of the worker, the capitalist has, therefore, acquired the right to use or make that labour power work during the whole day or week. The workday or the workweek has, of course, certain limits, but those we shall afterward look more closely at.
For the present, I want to turn your attention to one decisive point-
The value of the labour power is determined by the quantity of labour necessary to maintain or reproduce it, but the use of that labour power is only limited by the active energies and physical strength of the labourers. The daily or weekly value of the labour power is quite distinct from the daily or weekly exercise of that power, the same as the food a horse wants and the time it can carry the rider are quite distinct. The quantity of labour by which the value of the worker's labour power is limited forms by no means a limit to the quantity of labour which their labour power is apt to perform. Take the example of our spinner. We have seen that, to daily reproduce their labour power, they must daily reproduce a value of GBP 0,15, which they will do by working six hours daily. But this does not disable them from working 10, 12, or more hours a day. But, by paying the daily or weekly value of the spinner's labour power, the capitalist has already acquired the right of using that labour power during the whole day or week. They will, therefore, make them work daily, say, 12 hours. Over and above the six hours required to replace their wages, or the value of their labour power, they will, therefore, have to work six other hours, which I shall call hours of surplus labour, which surplus labour will realize itself in a surplus value and a surplus product. If our spinner, for example, by their daily labour of six hours, added GBP 0,15 of value to the cotton, a value forming an exact equivalent to their wages, they will, in 12 hours, add GBP 0,30 of worth to the cotton, and produce a proportional surplus of yarn. As they have sold their labour power to the capitalist, the whole value or product created by them belongs to the capitalist, the owner pro tempore [for the time] of their labour power. By advancing GBP 0,15, the capitalist will, therefore, realize a value of GBP 0,30, because, advancing a value in which six hours of labour are crystallized, they will receive in return a value in which 12 hours of labour are crystallized. By repeating this same process daily, the capitalist will daily advance GBP 0,15 and daily pocket GBP 0,30, 1/2 of which will go to pay wages anew, and the other 1/2 of which will form surplus value, for which the capitalist pays no equivalent. It is this sort of exchange between capital and labour on which capitalist production, or the wage system, is founded, and which must constantly result in reproducing the workers as workers, and the capitalists as capitalists.
The rate of surplus value, all other circumstances remaining the same, will depend on the proportion between that part of the workday necessary to reproduce the value of the labour power and the surplus time or surplus labour performed for the capitalist. It will, therefore, depend on the ratio in which the workday is prolonged over and above that extent, by working which the worker would only reproduce the value of their labour power, or replace their wages.
#9. VALUE OF LABOUR
We must now return to the expression, «value or price of labour».
We have seen that, in fact, it is only the value of the labour power, measured by the values of commodities necessary for its maintenance. But since the worker receives their wages after their labour is performed, and know, moreover, that what they actually give to the capitalist is their labour, the value or price of their labour power necessarily appears to them as the price or value of their labour itself. If the price of their labour power is GBP 0,15, in which six hours of labour are realized, and if they work 12 hours, they necessarily consider these GBP 0,15 as the value or price of 12 hours of labour, although these 12 hours of labour realize themselves in a value of GBP 0,30. A double consequence flows from this.
Firstly. The value or price of the labour power takes the semblance of the price or value of labour itself, although, strictly speaking, value and price of labour are senseless terms.
Secondly. Although one part only of the worker's daily labour is paid, while the other part is unpaid, and while that unpaid or surplus labour constitutes exactly the fund out of which surplus value or profit is formed, it seems as if the aggregate labour was paid labour.
This false appearance distinguishes wage labour from other historical forms of labour. On the basis of the wage system, even the unpaid labour seems to be paid labour. With the slave, on the contrary, even that part of their labour which is paid appears to be unpaid. Of course, in order to work, the slave must live, and one part of their workday goes to replace the value of their own maintenance. But since no bargain is struck between them and their master, and no acts of selling and buying are going on between the two parties, all their labour seems to be given away for nothing.
Take, on the other hand, the peasant serf, such as they, I might say, until yesterday existed in all of Eastern Europe. This peasant worked, for example, three days for themself on their own field or the field allotted to them, and the three subsequent days, they performed compulsory and gratuitous labour on the estate of their lord. Here, then, the paid and unpaid parts of labour were visibly separated, separated in time and space; and our Liberals overflowed with moral indignation at the preposterous notion of making a person work for nothing.
In point of fact, however, whether a person works three days of the week for themself on their own field and three days for nothing on the estate of their lord, or whether they work in the factory or the workshop six hours daily for themself and six for their employer, comes to the same, although, in the latter case, the paid and unpaid portions of labour are inseparably mixed up with each other, and the nature of the whole transaction is completely masked by the intervention of a contract and the pay received at the end of the week. The gratuitous labour appears to be voluntarily given in the one instance, and to be compulsory in the other. That makes all the difference.
In using the expression «value of labour», I shall only use it as a popular slang term for «value of labour power».
#10. PROFIT IS MADE BY SELLING A COMMODITY AT ITS VALUE
Suppose an average hour of labour to be realized in a value equal to GBP 0,025, or 12 average hours of labour to be realized in GBP 0,30. Suppose, further, the value of labour to be GBP 0,15 or the product of six hours' labour. If, then, in the raw material, machinery, and so on, used up in a commodity, 24 hours of average labour were realized, its value would amount to GBP 0,60. If, moreover, the worker employed by the capitalist added 12 hours of labour to those means of production, these 12 hours would be realized in an additional value of GBP 0,30. The total value of the product would, therefore, amount to 36 hours of realized labour, and be equal to GBP 0,90. But, as the value of labour, or the wages paid to the worker, would be GBP 0,15, no equivalent would have been paid by the capitalist for the six hours of surplus labour worked by the worker, and realized in the value of the commodity. By selling this commodity at its value of GBP 0,90, the capitalist would, therefore, realize a value of GBP 0,15, for which they had paid no equivalent. These GBP 0,15 would constitute the surplus value or profit pocketed by them. The capitalist would consequently realize the profit of GBP 0,15, not by selling their commodity at a price over and above its value, but by selling it at its real value.
The value of a commodity is determined by the total quantity of labour contained in it. But part of that quantity of labour is realized in a value for which an equivalent has been paid in the form of wages; part of it is realized in a value for which no equivalent has been paid. Part of the labour contained in the commodity is paid labour; part is unpaid labour. By selling, therefore, the commodity at its value, that is, as the crystallization of the total quantity of labour bestowed upon it, the capitalist must necessarily sell it at a profit. They sell not only what has cost them an equivalent, but they sell also what has cost them nothing, although it has cost their worker labour. The cost of the commodity to the capitalist and its real cost are different things. I repeat, therefore, that normal and average profits are made by selling commodities, not above, but at their real values.
#11. THE DIFFERENT PARTS INTO WHICH SURPLUS VALUE IS DECOMPOSED
The surplus value, or that part of the total value of the commodity in which the surplus labour or unpaid labour of the worker is realized, I call profit. The whole of that profit is not pocketed by the employing capitalist. The monopoly of land enables the landlord to take one part of that surplus value, under the name of rent, whether the land is used for agriculture, buildings, or railways, or for any other productive purpose. On the other hand, the very fact that the possession of the means of labour enables the employing capitalist to produce a surplus value, or, what comes to the same, to appropriate to themself a certain amount of unpaid labour, enables the owner of the means of labour, which they lend wholly or partly to the employing capitalist — enables, in one word, the money-lending capitalist to claim for themself under the name of interest another part of that surplus value, so that there remains to the employing capitalist as such only what is called industrial or commercial profit.
By what laws this division of the total amount of surplus value among the three categories of people is regulated is a question quite foreign to our subject. This much, however, results from what has been stated.
Rent, interest, and industrial profit are only different names for different parts of the surplus value of the commodity, or the unpaid labour enclosed in it, and they are equally derived from this source, and from this source alone. They are not derived from land as such or from capital as such, but rather, land and capital enable their owners to get their respective shares out of the surplus value extracted by the employing capitalist from the labourer. For the labourer themself, it is a matter of subordinate importance whether that surplus value, the result of their surplus labour, or unpaid labour, is altogether pocketed by the employing capitalist, or whether the latter is obliged to pay portions of it, under the name of rent and interest, away to third parties. Suppose the employing capitalist to use only their own capital and to be their own landlord, then the whole surplus value would go into their pocket.
It is the employing capitalist who immediately extracts from the labourer this surplus value, whatever part of it they may ultimately be able to keep for themself. On this relation, therefore, between the employing capitalist and the wage-labourer, the whole wage system and the whole present system of production hinge. Some of the citizens who took part in our debate were, therefore, wrong in trying to mince matters, and to treat this fundamental relation between the employing capitalist and the worker as a secondary question, although they were right in stating that, under given circumstances, a rise of prices might affect in very unequal degrees the employing capitalist, the landlord, the moneyed capitalist, and, if you please, the tax collector.
Another consequence follows from what has been stated.
That part of the value of the commodity which represents only the value of the raw materials, the machinery, in one word, the value of the means of production used up, forms no revenue at all, but replaces only capital. But, apart from this, it is false that the other part of the value of the commodity, which forms revenue, or may be spent in the form of wages, profits, rent, interest, is constituted by the value of wages, the value of rent, the value of profits, and so on. We shall, in the first instance, discard wages, and only treat industrial profits, interest, and rent. We have just seen that the surplus value contained in the commodity or that part of its value in which unpaid labour is realized, dissolves itself into different fractions, bearing three different names. But it would be quite the reverse of the truth to say that its value is composed of, or formed by, the addition of the independent values of these three constituents.
If one hour of labour realizes itself in a value of GBP 0,025, if the workday of the labourer comprises 12 hours, if half of this time is unpaid labour, that surplus labour will add to the commodity a surplus value of GBP 0,15, that is, a value for which no equivalent has been paid. This surplus value of GBP 0,15 constitutes the whole fund which the employing capitalist may divide, in whatever proportions, with the landlord and the money-lender. The value of these GBP 0,15 constitutes the limit of the value they have to divide among them. But it is not the employing capitalist who adds to the value of the commodity an arbitrary value for their profit, to which another value is added for the landlord, and so on, so that the addition of these arbitrarily fixed values would constitute the total value. You see, therefore, the fallacy of the popular notion, which confounds the decomposition of a given value into three parts, with the formation of that value by the addition of three independent values, thus converting the aggregate value, from which rent, profit, and interest are derived, into an arbitrary magnitude.
If the total profit realized by a capitalist is equal to GBP 100, we call this sum, considered as absolute magnitude, the amount of profit. But, if we calculate the ratio which those GBP 100 bear to the capital advanced, we call this relative magnitude the rate of profit. It is evident that this rate of profit may be expressed in a double way.
Suppose GBP 100 to be the capital advanced in wages. If the surplus value created is also GBP 100 — and this would show us that half the workday of the labourer consists of unpaid labour — and if we measured this profit by the value of the capital advanced in wages, we should say that the rate of profit amounted to 100%, because the value advanced would be 100 and the value realized would be 200.
If, on the other hand, we should not only consider the capital advanced in wages, but the total capital advanced, say, for example, GBP 500, of which GBP 400 represented the value of raw materials, machinery, and so on, we should say that the rate of profit amounted only to 20%, because the profit of 100 would be but 1/5 of the total capital advanced.
The first mode of expressing the rate of profit is the only one which shows you the real ratio between paid and unpaid labour, the real degree of the exploitation (you must allow me this French word) of labour. The other mode of expression is that in common use, and is, indeed, appropriate for certain purposes. At all events, it is very useful for concealing the degree in which the capitalist extracts gratuitous labour from the worker.
In the remarks I have still to make, I shall use the word profit for the whole amount of the surplus value extracted by the capitalist, without any regard to the division of the surplus value between different parties, and, in using the term rate of profit, I shall always measure profits by the value of the capital advanced in wages.
#12. GENERAL RELATION OF PROFITS, WAGES, AND PRICES
Deduct from the value of a commodity the value replacing the value of the raw materials and other means of production used on it, that is to say, deduct the value representing the past labour contained in it, and the remainder of its value will dissolve into the quantity of labour added by the worker last employed. If that worker works 12 hours daily, if 12 hours of average labour crystallize themselves in an amount of gold equal to GBP 0,30, this additional value of GBP 0,30 is the only value their labour will have created. This given value, determined by the time of their labour, is the only fund from which both they and the capitalist have to draw their respective shares or dividends, the only value to be divided into wages and profits. It is evident that this value itself will not be altered by the variable proportions in which it may be divided among the two parties. There will also be nothing changed if, in the place of one worker, you put the whole working population, 12'000'000 workdays, for example, instead of one.
Since the capitalist and worker have only to divide this limited value, that is, the value measured by the total labour of the worker, the more the one gets, the less will the other get, and the other way around. Whenever a quantity is given, one part of it will increase inversely as the other decreases. If the wages change, profits will change in an opposite direction. If wages fall, profits will rise; and, if wages rise, profits will fall. If the worker, on our former supposition, gets GBP 0,15, equal to 1/2 of the value they have created, or if their whole workday consists half of paid, half of unpaid labour, the rate of profit will be 100%, because the capitalist would also get GBP 0,15. If the worker receives only GBP 0,10, or works only 1/3 of the whole day for themself, the capitalist will get GBP 0,20, and the rate of profit will be 200%. If the worker receives GBP 0,20, the capitalist will only receive GBP 0,10, and the rate of profit would sink to 50%, but all these variations will not affect the value of the commodity. A general rise of wages would, therefore, result in a fall of the general rate of profit, but not affect values.
But, although the values of commodities, which must ultimately regulate their market prices, are exclusively determined by the total quantities of labour fixed in them, and not by the division of that quantity into paid and unpaid labour, it by no means follows that the values of the single commodities, or lots of commodities, produced during 12 hours, for example, will remain constant. The number or mass of commodities produced in a given labour time, or by a given quantity of labour, depends on the productive power of the labour employed, and not on its extent or length. With one degree of the productive power of spinning labour, for example, a workday of 12 hours may produce 12 pounds [around 5,4 kilograms] of yarn, with a lesser degree of productive power only two pounds [around 0,9 kilograms]. If then 12 hours' average labour were realized in the value of GBP 0,30, in the one case, the 12 pounds of yarn would cost GBP 0,30, in the other case, the two pounds of yarn would also cost GBP 0,30. One pound [around 0,5 kilograms] of yarn would, therefore, cost GBP 0,025 in the one case, and GBP 0,15 in the other. This difference of price would result from the difference in the productive powers of the labour employed. One hour of labour would be realized in one pound of yarn with the greater productive power, while, with the smaller productive power, six hours of labour would be realized in one pound of yarn. The price of a pound of yarn would, in the one instance, be only GBP 0,025, although wages were relatively high and the rate of profit low; it would be GBP 0,15 in the other instance, although wages were low and the rate of profit high. This would be so, because the price of the pound of yarn is regulated by the total amount of labour worked up in it, and not by the proportional division of that total amount into paid and unpaid labour. The fact I have before mentioned, that high-priced labour may produce cheap, and low-priced labour may produce expensive commodities, loses, therefore, its paradoxical appearance. It is only the expression of the general law that the value of a commodity is regulated by the quantity of labour worked up in it, and that the quantity of labour worked up in it depends altogether on the productive powers of the labour employed, and will, therefore, vary with every variation in the productivity of labour.
#13. MAIN CASES OF ATTEMPTS AT RAISING WAGES OR RESISTING THEIR FALL
Let us now seriously consider the main cases in which a rise of wages is attempted or a reduction of wages resisted.
Firstly. We have seen that the value of labour power, or, in more popular parlance, the value of labour, is determined by the value of necessities, or the quantity of labour required to produce them. If, then, in a given country, the value of the daily average necessities of the labourer represented six hours of labour expressed in GBP 0,15, the labourer would have to work six hours daily to produce an equivalent for their daily maintenance. If the whole workday was 12 hours, the capitalist would pay them the value of their labour by paying them GBP 0,15. Half the workday would be unpaid labour, and the rate of profit would amount to 100%. But now, suppose that, resulting from a decrease of productivity, more labour should be needed to produce, say, the same amount of agricultural products, so that the price of the average daily necessities should rise from GBP 0,15 to 0,20. In that case, the value of labour would rise by 1/3, or 33,3%. Eight hours of the workday would be required to produce an equivalent for the daily maintenance of the labourer, according to their old standard of living. The surplus labour would therefore sink from six hours to four, and the rate of profit from 100 to 50%. But, in insisting on a rise of wages, the labourer would only insist on getting the increased value of their labour, like every other seller of a commodity, who, the costs of their commodities having increased, tries to get its increased value paid. If wages did not rise, or not sufficiently rise, to compensate for the increased values of necessities, the price of labour would sink below the value of labour, and the labourer's standard of living would deteriorate.
But a change might also take place in an opposite direction. By virtue of the increased productivity of labour, the same amount of the average daily necessities might sink from GBP 0,15 to 0,10, or only four hours out of the workday, instead of six, be needed to reproduce an equivalent for the value of the daily necessities. The worker would now be able to buy with GBP 0,10 as many necessities as they did before with GBP 0,15. Indeed, the value of labour would have sunk, but that diminished value would command the same amount of commodities as before. Then, profits would rise from GBP 0,15 to 0,20, and the rate of profit from 100 to 200%. Although the labourer's absolute standard of living would have remained the same, their relative wages, and, with them, their relative social position, as compared with that of the capitalist, would have been lowered. If the worker should resist that reduction of relative wages, they would only try to get some share in the increased productive powers of their own labour, and to maintain their former relative position in the social scale. Thus, after the abolition of the Corn Laws, and in flagrant violation of the most solemn pledges given during the anti-Corn Law agitation, the English factory lords generally reduced wages 10%. The resistance of the workers was at first baffled, but, resulting from circumstances I cannot now enter upon, the 10% lost were afterward regained.
Secondly. The values of necessities, and, consequently, the value of labour, might remain the same, but a change might occur in their money prices, resulting from a previous change in the value of money.
By the discovery of more fertile mines and so on, two ounces [around 57 grams] of gold might, for example, cost no more labour to produce than one ounce [around 28,4 grams] did before. The value of gold would then be depreciated by 1/2, or 50%. As the values of all other commodities would then be expressed in twice their former money prices, so also the same with the value of labour. 12 hours of labour, formerly expressed in GBP 0,30, would now be expressed in GBP 0,60. If the worker's wages should remain GBP 0,15, instead of rising to GBP 0,30, the money price of their labour would only be equal to half the value of their labour, and their standard of living would fearfully deteriorate. This would also happen in a greater or lesser degree if their wages should rise, but not proportionately to the fall in the value of gold. In such a case, nothing would have been changed, either in the productive powers of labour, or in supply and demand, or in values. Nothing could have changed except the money names of those values. To say that, in such a case, the worker ought not to insist on a proportionate rise of wages is to say that they must be content to be paid with names instead of with things. All past history proves that, whenever such a depreciation of money occurs, the capitalists are on the alert to seize this opportunity for defrauding the worker. A very large school of political economists assert that, resulting from the new discoveries of gold lands, the better working of silver mines, and the cheaper supply of quicksilver, the value of precious metals has been again depreciated. This would explain the general and simultaneous attempts on the Continent at a rise of wages.
Thirdly. We have until now supposed that the workday has given limits. The workday, however, has, by itself, no constant limits. It is the constant tendency of capital to stretch it to its utmost physically possible length, because, in the same degree, surplus value, and, consequently, the profit resulting from it, will be increased. The more capital succeeds in prolonging the workday, the greater the amount of other people's labour it will appropriate. During the 17th and even the first 2/3 of the 18th century, a ten hours' workday was the normal workday all over England. During the Anti-Jacobin War, which was in fact a war waged by the British barons against the British working masses,14 capital celebrated its bacchanalia, and prolonged the workday from 10 to 12, 14, 18 hours. Malthus, by no means a person whom you would suspect of a maudlin sentimentalism, declared in a pamphlet, published around 1815, that, if this sort of thing was to go on, the life of the nation would be attacked at its very source.15 A few years before the general introduction of the newly invented machinery, around 1765, a pamphlet appeared in England under the title, An Essay on Trade.16 The anonymous author, an avowed enemy of the working classes, declaims on the necessity of expanding the limits of the workday. Among other means to this end, he proposes workhouses, which, he says, ought to be «houses of terror». And what is the length of the workday he prescribes for these «houses of terror»? 12 hours, the very same which, in 1832, was declared by capitalists, political economists, and ministers to be, not only the existing, but the necessary labour time for a child under the age of 12.17
By selling their labour power, and they must do so under the present system, the worker makes over to the capitalist the consumption of that power, but within certain rational limits. They sell their labour power in order to maintain it, apart from its natural wear and tear, but not to destroy it. In selling their labour power at its daily or weekly value, it is understood that, in one day or one week, that labour power shall not be submitted to two days' or two weeks' waste or wear and tear. Take a machine worth GBP 1'000. If it is used up in ten years, it will add to the value of the commodities in whose production it assists GBP 100 yearly. If it were used up in five years, it would add GBP 200 yearly, or the value of its annual wear and tear is in inverse ratio to the quickness with which it is consumed. But this distinguishes the worker from the machine. Machinery does not wear out exactly in the same ratio in which it is used. People, on the contrary, decay in a greater ratio than would be visible from the mere numerical addition of work.
In their attempts at reducing the workday to its former rational dimensions, or, where they cannot enforce a legal fixation of a normal workday, at checking overwork by a rise of wages, a rise not only in proportion to the surplus time extracted, but in a greater proportion, workers fulfil only a duty to themselves and their race. They only set limits to the tyrannical usurpations of capital. Time is the room of human development. A person who has no free time to dispose of, or whose lifetime, apart from the mere physical interruptions by sleep, meals, and so on, is absorbed by their labour for the capitalist, is less than a beast of burden. They are a mere machine for producing foreign wealth, broken in body and brutalized in mind. Yet the whole history of modern industry shows that capital, if not checked, will recklessly and ruthlessly work to cast down the whole working class to the utmost state of degradation.
In prolonging the workday, the capitalist may pay higher wages and still lower the value of labour, if the rise of wages does not correspond to the greater amount of labour extracted, and the quicker decay of the labour power thus caused. This may be done in another way. Your bourgeois statisticians will tell you, for instance, that the average wages of factory families in Lancashire have risen. They forget that, instead of the labour of the man, the head of the family, his wife and perhaps three or four children are now thrown under the Juggernaut wheels18 of capital, and that the rise of the aggregate wages does not correspond to the aggregate surplus labour extracted from the family.
Even with given limits of the workday, such as now exist in all branches of industry subjected to the factory laws, a rise of wages may become necessary, if only to keep up the old standard value of labour. By increasing the intensity of labour, a person may be made to expend as much life force in one hour as they formerly did in two. This has, to a certain degree, been effected in the trades, placed under the Factory Acts, by the acceleration of machinery, and the greater number of working machines which a single individual has now to superintend. If the increase in the intensity of labour or the mass of labour spent in an hour keeps some fair proportion to the decrease in the extent of the workday, the worker will still be the winner. If this limit is overshot, they lose in one form what they have gained in another, and ten hours of labour may then become as ruinous as 12 hours were before. In checking this tendency of capital, by fighting for a rise of wages corresponding to the rising intensity of labour, the worker only resists the depreciation of their labour and the deterioration of their race.
Fourthly. All of you know that, from reasons I have not now to explain, capitalist production moves through certain periodical cycles. It moves through a state of quiescence, growing animation, prosperity, overtrade, crisis, and stagnation. The market prices of commodities, and the market rates of profit, follow these phases, now sinking below their averages, now rising above them. Considering the whole cycle, you will find that one deviation of the market price is being compensated by the other, and that, taking the average of the cycle, the market prices of commodities are regulated by their values. Well! During the phase of sinking market prices and the phases of crisis and stagnation, the worker, if not thrown out of unemployment altogether, is sure to have their wages lowered. Not to be defrauded, they must, even with such a fall of market prices, debate with the capitalist in what proportional degree a fall of wages has become necessary. If, during the phases of prosperity, when superprofits are made, they did not battle for a rise of wages, they would, taking the average of one industrial cycle, not even receive their average wages, or the value of their labour. It is the utmost height of folly to demand that, while their wages are necessarily affected by the adverse phases of the cycle, they should exclude themself from compensation during the prosperous phases of the cycle. Generally, the values of all commodities are only realized by the compensation of the continuously changing market prices, springing from the continuous fluctuations of demand and supply. On the basis of the present system, labour is only a commodity like others. It must, therefore, pass through the same fluctuations to fetch an average price corresponding to its value. It would be absurd to treat it, on the one hand, as a commodity, and to want, on the other hand, to exempt it from the laws which regulate the prices of commodities. The slave receives a permanent and fixed amount of maintenance; the wage-labourer does not. They must try to get a rise of wages in the one instance, if only to compensate for a fall of wages in the other. If they resigned themself to accept the will, the dictates of the capitalist as a permanent economic law, they would share in all the miseries of the slave, without the security of the slave.
Fifthly. In all the cases I have considered, and they form 99/100, you have seen that a struggle for a rise of wages follows only in the track of previous changes, and is the necessary offspring of previous changes in the amount of production, the productive powers of labour, the value of labour, the value of money, the extent or the intensity of labour extracted, the fluctuations of market prices, dependent on the fluctuations of demand and supply, and consistent with the different phases of the industrial cycle; in one word, as reactions of labour against the previous action of capital. By treating the struggle for a rise of wages independently of all these circumstances, by looking only on the change of wages, and overlooking all the other changes from which they emanate, you proceed from a false premise in order to arrive at false conclusions.
#14. THE STRUGGLE BETWEEN CAPITAL AND LABOUR AND ITS RESULTS
Firstly. Having shown that the periodical resistance on the part of the workers against a reduction of wages, and their periodical attempts at getting a rise of wages, are inseparable from the wage system, and dictated by the very fact of labour being assimilated to commodities, and therefore subject to the laws regulating the general movement of prices; having, furthermore, shown that a general rise of wages would result in a fall in the general rate of profit, but not affect the average prices of commodities, or their values, the question now ultimately arises, how far, in this incessant struggle between capital and labour, the latter is likely to prove successful.
I might answer by a generalization, and say that, as with all other commodities, so with labour, its market price will, in the long run, adapt itself to its value; that, therefore, despite all the ups and downs, and do what they may, the worker will, on average, only receive the value of their labour, which resolves into the value of their labour power, which is determined by the value of the necessities required for its maintenance and reproduction, which value of necessities finally is regulated by the quantity of labour needed to produce them.
But there are some peculiar features which distinguish the value of labour power, or the value of labour, from the values of all other commodities. The value of labour power is formed by two elements — the one merely physical, the other historical or social. Its ultimate limit is determined by the physical element, that is to say, to maintain and reproduce itself, to perpetuate its physical existence, the working class must receive the necessities absolutely indispensable for living and multiplying. The value of those indispensable necessities forms, therefore, the ultimate limit of the value of labour. On the other hand, the length of the workday is also limited by ultimate, although very elastic, boundaries. Its ultimate limit is given by the physical force of the labourer. If the daily exhaustion of their life forces exceeds a certain degree, it cannot be exerted anew, day by day. However, as I said, this limit is very elastic. A quick succession of unhealthy and short-lived generations will keep the labour market as well supplied as a series of vigorous and long-lived generations.
Besides this mere physical element, the value of labour is in every country determined by a traditional standard of living. It is not mere physical life, but rather the satisfaction of certain needs springing from the social conditions in which people are placed and reared up. The English standard of living may be reduced to the Irish standard; the standard of life of a German peasant to that of a Livonian peasant. The important part which historical tradition and social habits play in this respect, you may learn from Mr. Thornton's work on Overpopulation, where he shows that the average wages in different agricultural districts of England still nowadays differ more or less according to the more or less favourable circumstances under which the districts have emerged from the state of serfdom.
This historical or social element, entering into the value of labour, may be expanded, or contracted, or altogether extinguished, so that nothing remains but the physical limit. During the time of the Anti-Jacobin War, undertaken, as the incorrigible tax-eater and sinecurist, old George Rose, used to say, to save the comforts of our holy religion from the inroads of the French infidels, the honest English farmers, so tenderly handled in a former chapter of ours, depressed the wages of the agricultural labourers even beneath that mere physical minimum, but made up by the Poor Laws19 the remainder necessary for the physical perpetuation of the race. This was a glorious way to convert the wage-labourer into a slave, and Shakespeare's proud yeoman into a pauper.
By comparing the standard wages or values of labour in different countries, and by comparing them in different historical epochs of the same country, you will find that the value of labour itself is not a fixed, but a variable magnitude, even supposing the values of all other commodities to remain constant.
A similar comparison would prove that not only the market rates of profit change, but its average rates.
But, as to profits, there exists no law which determines their minimum. We cannot say what is the ultimate limit of their decrease. And why cannot we fix that limit? Because, although we can fix the minimum of wages, we cannot fix their maximum. We can only say that, the limits of the workday being given, the maximum profit corresponds to the physical minimum wage; and that, wages being given, the maximum profit corresponds to such a prolongation of the workday as is compatible with the physical forces of the labourer. The maximum profit is, therefore, limited by the physical minimum wage and the physical maximum workday. It is evident that, between the two limits of this maximum rate of profit, an immense scale of variations is possible. The fixation of its actual degree is only settled by the continuous struggle between capital and labour, the capitalist constantly tending to reduce wages to their physical minimum, and to extend the workday to its physical maximum, while the worker constantly presses in the opposite direction.
The matter resolves itself into a question of the respective powers of the combatants.
Secondly. As to the limitation of the workday in England, as in all other countries, it has never been settled except by legislative interference. Without the workers' continuous pressure from the outside, that interference would never have taken place. But, at all events, the result was not to be attained by private settlement between the workers and the capitalists. This very necessity of general political action affords the proof that, in its merely economic action, capital is the stronger side.
As to the limits of the value of labour, its actual settlement always depends on supply and demand. I mean the demand for labour on the part of capital, and the supply of labour by the workers. In colonial countries, the law of supply and demand favours the worker. Hence the relatively high standard of wages in the United States. Capital may there try its utmost. It cannot prevent the labour market from being continuously emptied by the continuous conversion of wage-labourers into independent, self-sustaining farmers. The position of a wage-labourer is, for a very large part of the American people, but a probational state, which they are sure to leave within a longer or shorter term. To mend this colonial state of things, the paternal British government accepted for some time what is called the modern theory of colonization, which consists in putting an artificially high price on colonial land, in order to prevent the too quick conversion of the wage-labourer into the independent farmer.20
But let us now come to old developed countries, in which capital dominates the whole process of production. Take, for example, the rise in England of agricultural wages from 1849 to '59. What was its consequence? The farmers could not, as our friend Weston would have advised them, raise the value of wheat, nor even its market prices. They had, on the contrary, to submit to their fall. But, during these 11 years, they introduced machinery of all sorts, adopted more scientific methods, converted part of arable land into pasture, increased the size of farms, and, with this, the scale of production, and, by these and other processes, diminishing the demand for labour by increasing its productive power, made the agricultural population again relatively redundant. This is the general method in which a reaction, quicker or slower, of capital against a rise of wages takes place in old, settled countries. Ricardo has justly remarked that machinery is in constant competition with labour, and can often be only introduced when the price of labour has reached a certain height, but the appliance of machinery is but one of the many methods for increasing the productive powers of labour.21 This very same development which makes common labour relatively redundant simplifies, on the other hand, skilled labour, and thus depreciates it.
The same law results in another form. With the development of the productive powers of labour, the accumulation of capital will be accelerated, even despite a relatively high rate of wages. Hence, one might infer, as Adam Smith, in whose days modern industry was still in its infancy, did infer, that the accelerated accumulation of capital must turn the balance in favour of the worker, by securing a growing demand for their labour. From this same standpoint, many contemporary writers have wondered that English capital, having grown in the last 20 years so much quicker than the English population, wages should not have been more enhanced. But, simultaneously, with the progress of accumulation, there takes place a progressive change in the composition of capital. That part of the aggregate capital which consists of fixed capital, machinery, raw materials, means of production in all possible forms, progressively increases as compared with the other part of capital, which is laid out in wages or in the purchase of labour. This law has been stated in a more or less accurate manner by Mr. Barton, Ricardo, Sismondi, Professor Richard Jones, Professor Ramsay, Cherbuliez, and others.
If the proportion of these two elements of capital was originally 1:1, it will, in the progress of industry, become 5:1, and so on. If, of a total capital of 600, 300 is laid out in instruments, raw materials, and so on, and 300 in wages, the total capital needs only to be doubled to create a demand for 600 workers instead of for 300. But, if of a capital of 600, 500 is laid out in machinery, materials, and so on, and 100 only in wages, the same capital must increase from 600 to 3'600 in order to create a demand for 600 workers instead of 300. In the progress of industry, the demand for labour keeps, therefore, no peace with accumulation of capital. It will still increase, but increase in a constantly diminishing ratio as compared with the increase of capital.
These few hints will suffice to show that the very development of modern industry must progressively turn the scale in favour of the capitalist against the worker, and that, consequently, the general tendency of capitalist production is not to raise, but to sink, the average standard of wages, or to push the value of labour more or less to its minimum limit. Such being the tendency of things in this system, is this saying that the working class ought to renounce their resistance against the encroachments of capital, and abandon their attempts at making the best of the occasional chances for their temporary improvement? If they did, they would be degraded to one level mass of broken wretches past salvation. I think I have shown that their struggles for the standard of wages are incidents inseparable from the whole wage system, that, in 99/100 cases, their efforts at raising wages are only efforts at maintaining the given value of labour, and that the necessity of debating their price with the capitalist is inherent in their condition of having to sell themselves as commodities. By cowardly giving way in their everyday conflict with capital, they would certainly disqualify themselves for the initiation of any larger movement.
At the same time, and quite apart from the general servitude involved in the wage system, the working class ought not to exaggerate to themselves the ultimate working of these everyday struggles. They ought not to forget that they are fighting against effects, but not against the causes of those effects; that they are slowing down the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady. They ought, therefore, not to be exclusively absorbed in these unavoidable guerrilla struggles incessantly spring up from the never-ceasing encroachments of capital or changes of the market. They ought to understand that, with all the miseries it imposes on them, the present system simultaneously engenders the material conditions and the social forms necessary for an economic reconstruction of society. Instead of the conservative slogan, «A fair day's wage for a fair day's work!», they ought to inscribe on their banner the revolutionary slogan: «Abolition of the wage system!»
After this very long and, I fear, tedious exposition, which I was obliged to enter into to do some justice to the subject matter, I shall conclude by proposing the following resolutions:
- Firstly, a general rise in the rate of wages would result in a fall of the general rate of profit, but, broadly speaking, not affect the prices of commodities.
- Secondly, the general tendency of capitalist production is not to raise, but to sink, the average standard of wages.
- Thirdly, trade unions work well as centres of resistance against the encroachments of capital. They fail partially from an injudicious use of their power. They fail generally from limiting themselves to a guerrilla war against the effects of the existing system, instead of simultaneously trying to change it, instead of using their organized forces as a lever for the final emancipation of the working class, that is to say, the ultimate abolition of the wage system.
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Editor's Note: At that time, the General Council debated the date and the agenda of the Congress of the International, which, in keeping with the Provisional Rules, was planned for September 1865 in Brussels. The report of the Standing Committee, approved by the General Council on the 25th of July, 1865, proposed to have a conference in London in September of that year instead of the Congress. It was to discuss the agenda of the Congress, which was postponed until the following tear. This agenda contained points about workers' international aid in the struggle (including strikes) against capital, and about the role of the trade unions. ↩
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Editor's Note: Tradition has it that the Roman patrician Menenius Agrippa persuaded the plebeians who had rebelled and withdrawn to the Mons Sacer in 494 BCE to submit by telling them the fable about the other parts of the human body revolting against the stomach, because, they said, it consumed food and did not work, but afterward becoming convinced that they could not exist without it. ↩
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Editor's Note: This refers to the Ten Hours' Bill of 1847, which came into force on the 1st of May, 1848. In August 1850, Parliament introduced an additional factory act, which prolonged the workday for women and adolescents to 10 1/2 hours on the first five days of the week and reduced it to 7 1/2 hours on Saturday. ↩
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Editor's Note: This refers to the laws passed by the Convention on the 4th of May and 11th and 29th of September, 1793, and the 20th of March, 1794, which introduced maximum prices on grain, flour, and other consumer goods, together with maximum wages. ↩
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Editor's Note: Marx attended the 31st Annual Meeting of the British Association for the Advancement of Science in September 1861 at Manchester, when he was there on a visit to Engels. The meeting was addressed by William Newmarch, President of the Economic Science and Statistics Section, publisher of Tooke's History of Prices mentioned below. Marx is referring to his speech. ↩
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See: Robert Owen: Observations on the Effect of the Manufacturing System (1815) ↩
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Editor's Note: The extensive demolition of dwelling houses of the agricultural labourers in England in the middle of the 19th century took place in the midst of the rapid growth of capitalist industry and the reorganization of agriculture along capitalist lines, which was accompanied by relative overpopulation in rural areas. This can be explained to some extent by the fact that the amount of taxes paid by the landlords for the benefit of the poor largely depended on the number of the poor people residing on their land. The landlords intentionally demolished the houses they did not need but which could still be used as shelter by the «surplus» agricultural population. ↩
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Editor's Note: The Society of Arts was a bourgeois educational and philanthropic society founded in London in 1754. Marx joined it in 1869. ↩
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Editor's Note: The Corn Laws were repealed in June 1846. They imposed high import duties on agricultural products in the interests of the landlords, so as to maintain high prices on the home market. The repeal of the Corn Laws was a victory for the industrial bourgeoisie, who opposed them under the slogan of free trade. ↩
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Editor's Note: The US Civil War broke out in April 1861. The Southern slave-owners rose up against the Union and formed the Confederate States of America. The war was caused mainly by the conflict between the two social systems: the capitalist system of wage labour established in the North, and the slave system dominant in the South. The Civil War, which had the nature of a bourgeois-democratic revolution, passed two stages in its development: the period of a constitutional war for maintaining the Union, and the period of a revolutionary for for the abolition of slavery. The decisive role in the defeat of the Southern slave-owners and the victory of the North in April 1865 was played by the workers and farmers. Marx analysed the causes and the nature of the Civil War in his articles published in the Vienna newspaper Die Presse [The Press]. However, the subsequent failure of the attempts to consolidate the revolution, the period of Reconstruction, resulted in the maintenance of certain leftovers of the slave system, which to this day form the economic basis for the Black national question in the United States. The discontinuation of cotton imports from the United States as a result of the blockade of the South by the Northern fleet caused a crisis in the cotton industry of several European countries. In England, for two or three years, beginning in 1862, over 75% of spinners and weavers in Lancashire, Cheshire, and other counties were fully or partly unemployed. Despite privation and distress, the European proletariat gave all possible support to the American fighters against slavery. ↩
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See: David Urquhart: The Right of Search (January 1862) ↩
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Editor's Note: This refers to the so-called cotton crisis caused by the discontinuation of cotton exports from the United States during the US Civil War. ↩
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Source: Adam Smith: An Inquiry Into the Nature and Causes of the Wealth of Nations, Volume 1 (1814) ↩
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Editor's Note: This refers to the wars which England waged as a member of the European coalitions against the First French Republic and the First French Empire. During these wars, which lasted, with intervals, from 1792 to 1815, the British ruling circles established a brutal regime of terror in their country, several revolts were put down, and laws were adopted banning workers' associations. ↩
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See: T.R. Malthus: An Inquiry Into the Nature and Progress of Rent, and the Principles by Which It Is Regulated (1815) ↩
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See: An Essay on Trade and Commerce (1770) ↩
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Editor's Note: This refers to the stand taken by the representatives of British capitalist and official circles when the Ten Hours' Bill of 1831 for children and adolescents was debated in Parliament in February-March 1832. ↩
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Editor's Note: Juggernaut (Jagannath) is a title of Krishna, the eighth avatar of Vishnu. The cult of Juggernaut was marked by sumptuous ritual and extreme religious fanaticism, which manifested itself in the self-torture and suicide of believers. On feast day, some believers threw themselves under the wheels of the chariot bearing the idol of Juggernaut. ↩
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Editor's Note: According to the Poor Laws, which were introduced in England in the 16th century and remained in force at the beginning of the 19th century, a special tax to support the poor was collected in each parish. The parishioners unable to provide for themselves and their families received support through the poor box. ↩
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Editor's Note: In Volume 1 of Capital, Marx devoted a special chapter to the analysis of «The Modern Theory of Colonization», using as an example the works of Edward Gibbon Wakefield, who was one of its main originators. ↩
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See: David Ricardo: On the Principles of Political Economy (1821) ↩