Capital: A Critique of Political Economy, Vol. I. The Process of Capitalist Production

By Karl Marx

One of Econlib’s aims is to put online the most significant works in the history of economic thought, and there can be no doubting the significance of Marx’s influence on both economic theory in the late 19th century and on the creation of Marxist states in the 20th century. From the time of the emergence of modern socialism in the 1840s (especially in France and Germany), free market economists have criticised socialist theory and it is thus useful to place that criticism in its intellectual context, namely beside the main work of one of its leading theorists,
Karl Marx.In 1848, when Europe was wracked by a series of revolutions in which both liberals and socialists participated and which both lost out to the forces of conservative monarchism or Bonapartism,
John Stuart Mill published his
Principles of Political Economy. The chapter on Property shows how important Mill thought it was to confront the socialist challenge to classical liberal economic theory. In hindsight it might appear that Mill was too accommodating to socialist criticism, but I would argue that in fact he offered a reasonable framework for comparing the two systems of thought, which the events of the late 20th century have finally brought to a conclusion which was not possible in his lifetime. Mill states in
Book II Chapter I “Of Property” that a fair comparison of the free market and socialism would compare both the ideal of liberalism with that of socialism, as well as the practice of liberalism versus the practice of socialism. In 1848 the ideals of both were becoming better known (and there were some aspects of the ideal of socialism which Mill found intriguing) but the practice of each was still not conclusive. Mill correctly observed that in 1848 no European society had yet created a society fully based upon private property and free exchange and any future socialist experiment on a state-wide basis was many decades in the future. After the experiments in Marxist central planning with the Bolshevik Revolution in 1917, the Chinese Communists in 1949, and numerous other Marxist states in the post-1945 period, there can be no doubt that the reservations Mill had about the practicality of fully-functioning socialism were completely borne out by historical events. What Mill could never have imagined, the slaughter of tens of millions of people in an effort to make socialism work, has ended for good any argument concerning the Marxist form of socialism.Econlib now offers online two important defences of the socialist ideal, Karl Marx’s three volume work on
Capital and the
collection of essays on Fabian socialism edited by George Bernard Shaw. These can be read in the light of the criticism they provoked among defenders of individual liberty and the free market: Eugen Richter’s anti-Marxist
Pictures of the Socialistic Future, Thomas Mackay’s
2 volume collection of essays rebutting Fabian socialism,
Ludwig von Mises post-1917 critique of
Socialism. One should not forget that
Frederic Bastiat was active during the rise of socialism in France during the 1840s and that many of his essays are aimed at rebutting the socialists of his day. The same is true for Gustave de Molinari and the other authors of the
Dictionnaire d’economie politique (1852). Several key articles on communism and socialism from the
Dictionnaire are translated and reprinted in Lalor’s
Cyclopedia.For further reading on Marx’s
Capital see David L. Prychitko’s essay
“The Nature and Significance of Marx’s
Capital: A Critique of Political Economy“.For further readings on socialism see the following entries in the
Concise Encyclopedia of Economics:
Eastern Europe,
Marxism, and
Socialism.Also related:

Poor Law Commissioners’ Report of 1834,
edited by Nassau W. Senior, et al.

The Illusion of the Epoch: Marxism-Leninism as a Philosophical Creed by H. B. Acton

The Perfectibility of Man, by John Passmore
David M. Hart

March 1, 2004

Book Cover

Translator/Editor

Frederick Engels, Ernest Untermann, eds. Samuel Moore, Edward Aveling, trans.

First Pub. Date

1867

Publisher

Chicago: Charles H. Kerr and Co.

Pub. Date

1906

Comments

First published in German. Revised and Amplified According to the Fourth German Edition by Ernest Untermann Das Kapital, based on the 4th edition.

Copyright

The text of this edition is in the public domain. Picture of Marx courtesy of The Warren J. Samuels Portrait Collection at Duke University.

PART VII.

THE ACCUMULATION OF CAPITAL.

THE conversion of a sum of money into means of production and labour-power, is the first step taken by the quantum of value that is going to function as capital. This conversion takes place in the market, within the sphere of circulation. The second step, the process of production, is complete so soon as the means of production have been converted into commodities whose value exceeds that of their component parts, and, therefore, contains the capital originally advanced, plus a surplus-value. These commodities must then be thrown into circulation. They must be sold, their value realised in money, this money afresh converted into capital, and so over and over again. This circular movement, in which the same phases are continually gone through in succession, forms the circulation of capital.

The first condition of accumulation is that the capitalist must have contrived to sell his commodities, and to reconvert into capital the greater part of the money so received. In the following pages we shall assume that capital circulates in its normal way. The detailed analysis of the process will be found in Book II.

The capitalist who produces surplus-value—
i.e., who extracts unpaid labour directly from the labourers, and fixes it in commodities, is, indeed, the first appropriator, but by no means the ultimate owner, of this surplus-value. He has to share it with capitalists, with landowners, &c., who fulfill other functions in the complex of social production. Surplus-value, therefore, splits up into various parts. Its fragments fall to various categories of persons, and take various forms,
independent the one of the other, such as profit, interest, merchants’ profit, rent, &c. It is only in Book III. that we can take in hand these modified forms of surplus-value.

On the one hand, then, we assume that the Capitalist sells at their value the commodities he has produced, without concerning ourselves either about the new forms that capital assumes while in the sphere of circulation, or about the concrete conditions of reproduction hidden under these forms. On the other hand, we treat the capitalist producer as owner of the entire surplus-value, or, better perhaps, as the representative of all the sharers with him in the booty. We, therefore, first of all consider accumulation from an abstract point of view—
i.e., as a mere phase in the actual process of production.

So far as accumulation takes place, the capitalist must have succeeded in selling his commodities, and in reconverting the sale-money into capital. Moreover, the breaking-up of surplus-value into fragments neither alters its nature nor the conditions under which it becomes an element of accumulation. Whatever be the proportion of surplus-value which the industrial capitalist retains for himself, or yields up to others, he is the one who, in the first instance, appropriates it. We, therefore, assume no more than what actually takes place. On the other hand, the simple fundamental form of the process of accumulation is obscured by the incident of the circulation which brings it about, and by the splitting up of surplus-value. An exact analysis of the process, therefore, demands that we should, for a time, disregard all phenomena that hide the play of its inner mechanism.

“Mais ces riches, qui consomment les produits du travail des autres, ne peuvent les obtenir que par des échanges [purchases of commodities.]. S’ils donnent cependant leur richesse acquise et accumulée en retour contre ces produits nouveaux qui sont l’objet de leur fantaisie, ils semblent exposés à épuiser bientôt leur fonds de réserve; ils ne travaillent point, avons-nous dit, et ils ne peuvent même travailler; on croirait donc que chaque jour doit voir diminuer leurs vieilles richesses, et que lorsqu’il ne leur en restera plus, rien ne sera offert en éxchange aux ouvriers qui travailient exclusivement pour eux…. Mais dans l’ordre social, la richesse a acquis la propriété de se reproduire par le travail d’autrui, et sans que son propriétaire y concoure. La richesse, comme le travail, et par le travail, donne un fruit annuel qui peut étre détruit chaque année sans que le riche en devienne plus pauvre. Ce fruit est le
revenu qui nait du
capital.” (Sismondi: Nouv. Princ. d’Econ. Pol. Paris, 1819. t. I. pp. 81-82.)

“Wages as well as profits are to be considered, each of them, as really a portion of the finished product.” (Ramsay, l.c., p. 142.) “The share of the product which comes to the labourer in the form of wages.” (J. Mill, Elements, &c. Translated by Parissot. Paris, 1823. p. 34.)

“When capital is employed in advancing to the workmen his wages, it adds nothing to the funds for the maintenance of labour.” (Cazenove in note to his edition of Malthus, Definitions in Pol. Econ. London, 1853, p. 22.)

“The wages of labour are advanced by capitalists in the case of less than one fourth of the labourers of the earth.” (Rich. Jones: Textbook of Lectures on the Pol. Econ. of Nations. Hertford, 1852, p. 16.)

“Though the manufacturer” (
i.e. the labourer) “has his wages advanced to him by his master, he in reality costs him no expense, the value of these wages being generally reserved, together with a profit, in the improved value of the subject upon which his labour is bestowed.” (A. Smith l. c. Book II. ch. III. p. 311.)

“This is a remarkably peculiar property of productive labour. Whatever is productively consumed is capital, and it becomes capital by consumption.” (James Mill l. c. p. 242.) James Mill, however, never got on the track of this “remarkably peculiar property.”

“It is true indeed, that the first introducing a manufacture employs many poor, but they cease not to be so, and the continuance of it makes many.” (Reasons for a limited Exportation of Wool. London, 1677, p. 19.) “The farmer now absurdly asserts, that he keeps the poor. They are indeed kept in misery.” (Reasons for the late increase of the Poor Rates; or a comparative view of the prices of labour and provisions. London, 1777, p. 37.)

Rossi would not declaim so emphatically against this, had he really penetrated the secret of “productive consumption.”

“The labourers in the mines of S. America, whose daily task (the heaviest perhaps in the world) consists in bringing to the surface on their shoulders a load of metal weighing from 180 to 200 pounds, from a depth of 450 feet, live on bread and beans only; they themselves would prefer the bread alone for food, but their masters, who have found out that the men cannot work so hard on bread, treat them like horses, and compel them to eat beans; beans, however, are relatively much richer in bone-earth (phosphate of lime) than is bread” (Liebig, l. c., vol. 1, p. 194, note).

10.

James Mill, l. c., p. 238.

11.

“If the price of labour should rise so high that, notwithstanding the increase of capital, no more could be employed, I should say that such increase of capital would be still unproductively consumed.” (Ricardo, l. c., p. 163.)

12.

“The only productive consumption, properly so-called, is the consumption or destruction of wealth” (he alludes to the means of production) “by capitalists with a view to reproduction…The workman…is a productive consumer to the person who employs him, and to the State, but not, strictly speaking, to himself.” (Malthus’ Definitions, &c., p. 30.)

13.

“The only thing, of which one can say, that it is stored up and prepared before-hand, is the skill of the labourer…. The accumulation and storage of skilled labour, that most important operation, is, as regards the great mass of labourers, accomplished without any capital whatever.” (Tho. Hodgskin: Labour Defended, &c., p. 13.)

14.

“That letter might be looked upon as the manifesto of the manufacturers.” (Ferrand: Motion on the Cotton Famine, H. o. C., 27th April, 1863.)

15.

It will not be forgotten that this same capital sings quite another song, under-ordinary circumstances, when there is a question of reducing wages. Then the masters exclaim with one voice: “The factory operatives should keep in wholesome remembrance the fact that theirs is really a low species of skilled labour; and that there is none which is more easily acquired, or of its quality more amply remunerated, or which, by a short training of the least expert, can be more quickly, as well as abundantly, acquired…. The master’s machinery” (which we now learn can be replaced with advantage in 12 months) “really plays a far more important part in the business of production than the labour and skill of the operative” (who cannot now be replaced under 30 years), “which six months’ education can teach, and a common labourer can learn.” (See ante, p. 423.)

16.

Parliament did not vote a single farthing in aid of emigration, but simply passed some Acts empowering the municipal corporations to keep the operatives in a half-starved state,
i.e., to exploit them at less than the normal wages. On the other hand, when 3 years later, the cattle disease broke out, Parliament broke wildly through its usages and voted, straight off, millions for indemnifying the millionaire landlords, whose farmers in any event came off without loss, owing to the rise in the price of meat. The bull-like bellow of the landed proprietors at the opening of Parliament, in 1866, showed that a man can worship the cow Sabala without being a Hindoo, and can change himself into an ox without being a Jupiter.

17.

“L’ouvrier demandait de la subsistence pour vivre, le chef demandait du travail pour gagner.” (Sismondi, l. c., p. 91.)

18.

A boorishly clumsy form of this bondage exists in the county of Durham. This is one of the few counties, in which circumstances do not secure to the farmer undisputed proprietary rights over the agricultural labourer. The mining industry allows the latter some choice. In this county, the farmer, contrary to the custom elsewhere, rents only such farms as have on them labourers’ cottages. The rent of the cottage is a part of the wages. These cottages are known as “hinds’ houses.” They are let to the labourers in consideration of certain feudal services, under a contract called “bondage,” which, amongst other things, binds the labourer during the time he is employed elsewhere, to leave some one, say his daughter, &c., to supply his place. The labourer himself is called a “bondsman.” The relationship here set up also shows how individual consumption by the labourer becomes consumption on behalf of capital—or productive consumption—from quite a new point of view: “It is curious to observe that the very dung of the hind and bondsman is the perquisite of the calculating lord…and the lord will allow no privy but his own to exist in the neighbourhood, and will rather give a bit of manure here and there for a garden than bate any part of his seigneurial right.” (Public Health, Report VII., 1864, p. 188.)

19.

It will not be forgotten, that, with respect to the labour of children, &c., even the formality of a voluntary sale disappears.

20.

“Capital pre-supposes wage-labour, and wage-labour pre-supposes capital. One is a necessary condition to the existence of the other; they mutually call each other into existence. Does an operative in a cotton-factory produce nothing but cotton goods? No, he produces capital. He produces values that give fresh command over his labour, and that, by means of such command, create fresh values.” (Karl Marx: Lohnarbeit und Kapital, in the Neue Rheinische Zeitung, No. 266, 7th April, 1849.) The articles published under the above title in the N. Rh. Z. are parts of some lectures given by me on that subject, in 1847, in the German “Arbeiter-Verein” at Brussels, the publication of which was interrupted by the revolution of February.

Part VII, Chapter XXIV.

Categories: Karl Marx