Capital: A Critique of Political Economy, Vol. III. The Process of Capitalist Production as a Whole

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, ed. Ernest Untermann, trans.

First Pub. Date

1894

Publisher

Chicago: Charles H. Kerr and Co.

Pub. Date

1909

Comments

First published in German. Das Kapital, based on the 1st 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.

I.
*144

Part VII, Chapter XLVIII.

THE TRINITARIAN FORMULA.

PART VII.

THE REVENUES AND THEIR SOURCES.

CAPITAL—Profit (Profit of Enterprise plus Interest), Land—Ground-Rent, Labor—Wages, this is the trinitarian formula which comprises all the secrets of the social process of production.

Furthermore, since interest, as previously demonstrated, appear as the characteristic product of capital, and profit of enterprise distinguishes itself from interest by appearing as wages independent of capital, the above trinitarian formula reduces itself more specifically to the following: Capital—Interest, Land—Ground-Rent, Labor—Wages. Here profit, the specific mark characterizing the form of surplus-value belonging to the capitalist mode of production, is happily eliminated.

Now, if we look more closely at this economic trinity, we observe:

1) The alleged sources of the annually available wealth belong to widely dissimilar spheres and have not the least analogy with one another. They have about the same relation to each other as lawyer’s fees, carrots, and music.

Capital, Land, Labor! But capital is not a thing. It is a
definite interrelation in social production belonging to a definite historical formation of society. This interrelation expresses itself through a certain thing and gives to this thing a specific social character. Capital is not the sum of the material and produced means of production. Capital means rather the means of production converted into capital, and means of production by themselves are no more capital than gold or silver are money in themselves. Capital signifies the means of production monopolized by a certain part of society, the products and material requirements of labor made independent of labor-power in living human beings and antagonistic to them, and personified in capital by this antagonism. Capital means not merely the products of the laborers made independent of them and turned into social powers, the products turned into rulers and buyers of their own producers, but also the social powers and the future…(illegible) form of labor, which antagonize the producers in the shape of qualities of their products. Here, then, we have a definite and, at first sight, very mystical, social form of one of the factors in a historically produced process of social production.

By the side of this factor we have the land, the unorganic nature as such, a crude and uncouth mass, in its whole primal wildness. Value is labor. Therefore surplus-value cannot be land. The absolute fertility of the soil accomplishes no more than that a certain quantity of labor produces a certain product conditioned upon the natural fertility of the soil. The difference in the fertility of the soil brings it about that the same quantities of labor and capital, hence the same value, express themselves in different quantities of agricultural products, so that these products have different individual values. The equalization of these individual values into market-values is responsible for the fact that the “advantages of fertile over inferior soil…are transferred from the cultivator or consumer to the landlord.” (Ricardo,
Principles, p. 6.)

And finally, the third party in this conspiracy is a mere ghost, “Labor,” a mere abstraction, and which does not exist
when taken by itself, or, if we take…(illegible), the productive activity of human beings in general, by which they promote the circulation of matter between themselves and nature, divested not only of every definiteness of social form and character, but even of its mere natural existence, independent of society, lifted above all societies, being the common attribute of unsocial man as well as of man with any form of society and a general expression and assertion of life.

II.

Capital—Interest; Private Land, Private Ownership of the Earth, in modern form and corresponding to the capitalist mode of production—Rent; Wage Labor—Wages. This is supposed to be the connection between the sources of revenue. Wage Labor and Private Land, like Capital, are historically determined social forms; one a social form of labor, the other a social form of the monopolized terrestrial globe, and both forms belong to the same economic formation of society corresponding to capital.

The first remarkable thing about this formula is that Land and Labor are placed indiscriminately by the side of Capital. The one, Capital, is a definite form of an element of production belonging to a definite mode of production having a definite cast. It is an element of production combined with and represented by a definite social form. The other two, Land on the one hand and Labor on the other, are two elements of the real labor process. In their material form they are common to all modes of production, they are the material elements of all processes of production, and have nothing to do with the social form of productive processes.

Secondly. In this formula (Capital—Interest, Land—Ground-Rent, Labor—Wages of Labor), capital, land and labor respectively appear as sources of interest (instead of profit), ground-rent and wages, and these things appear as their fruits; capital, land and labor appear as the cause, interest, ground-rent and wages as the effect; and this is done
in such a way that each individual source is combined with the thing which it puts forth and produces. All three revenues, interest (instead of profit), rent, wages, are three parts of the value of the product; generally speaking they are parts of value, or, expressed in money, they are certain parts of money, certain parts of price. The formula “Capital—Interest” has indeed the least meaning of any formula of capital; still it is one of its formulæ. But how is land supposed to create value, that is, a socially defined quantity of labor, or even that particular portion of the value of its own products which forms the rent? For instance, land takes part as an agent of production, in the creation of a use-value, of a material product, of wheat. But it has nothing to do with the production of the value of wheat. To the extent that value is represented by wheat, we consider wheat merely as a definite quantity of materialized social labor, regardless of the particular substance, in which this labor is materialized, or of the particular use-value of this substance.

This is not in contradiction with the fact that, in the first place, other circumstances being equal, the cheapness or dearness of the wheat depends upon the productivity of the soil. The productivity of agricultural labor is conditioned upon natural circumstances, and the same quantity of labor is represented by many or by few products, use-values, according to the productivity of such labor. How large the quantity of labor may be, which is materialized in one bushel of wheat, depends upon the number of bushels produced by the same quantity of labor. It depends, in this case, upon the productivity of the soil, in what proportions of product value shall be materialized. But this value is given, independently of such a distribution. Value is represented by use-value; and use-value is a prerequisite for the creation of exchange-value; but it is folly to construe an antagonism by placing upon one side a use-value, like land, and upon the other side an exchange-value, and at that some particular portion of exchange-value. In the second place…[here the manuscript stops short].

III.

Vulgar economy really does nothing else but to interpret, in doctrinaire fashion, the ideas of persons entrapped in capitalist conditions of production and performing the function of agents in such production, to systematize and to defend these ideas. We need not wonder, then, that vulgar economy feels particularly at home in the estranged form of manifestation, in which economic conditions are absurd and complete contradictions, and that these conditions appear so much more self-explanatory to it, the more their internal connection is concealed. So long as the ordinary brain accepts these conceptions, vulgar economy is satisfied. But all science would be superfluous, if the appearance, the form, and the nature of things were wholly identical. Vulgar economy has not the slightest inkling of the fact that the trinity from which it takes its departure, namely Land—Rent, Capital—Interest, Labor—Wages of Labor (or Price of Labor), are on their very face three incompatible propositions. First we have the use-value Land, which has no value, and the exchange-value Rent. Here a social relation is conceived as a thing and proportioned to nature. Two incommensurable magnitudes are supposed to be proportional to each other. Then we have Capital—Interest. If capital is conceived as a certain sum of values independently represented by money, then it is manifestly nonsense to say that a certain value shall be valued higher than its value. It is precisely in the formula Capital—Interest that all intermediate links are eliminated, and capital is reduced to its most general formula, which for this reason is inexplicable by itself and absurd. It is also for this reason that the vulgar economist prefers the formula Capital—Interest, with its occult faculty of making a value unequal to itself, to the formula of Capital—Profit, which approaches more nearly to the actual capitalist relations. Then again, driven by the restless thought that four is not five and that 100 dollars cannot be 110 dollars, he flees from Capital as an exchange-value to the material substance of capital, to its use-value as a material requirement of labor, as machinery,
raw materials, etc. By this means he succeeds in putting into the place of the first incomprehensible relation, which makes four equal to five, a wholly incommensurable one between a use-value, a thing, upon the one hand, and a definite relation of social production, surplus-value, upon the other, as he does also in the case of private property in land. As soon as the vulgar economist has arrived at this incommensurable magnitude, everything becomes clear to him, and he no longer feels the need of thinking any further. For he has arrived at what is “rational” in bourgeois conception. Finally we have Labor—Wages of Labor, or Price of Labor. This last expression, as we have shown in Volume I, contradicts on its very face the conception of value as well as of price. Price, generally speaking, is but a definite expression of value. And “Price of Labor” is just as irrational as a yellow leogarithm. But here the vulgar economist is all the more satisfied, because it brings him to the deep understanding of the bourgeois, that he pays for labor with money, and because the fact that this formula contradicts the conception of value relieves him from all obligation to understand value.

We
*145 have seen that the capitalist process of production is a historically determined form of the social process of production in general. This process is on the one hand the process by which the material requirements of life are produced, and on the other hand a process which takes place under specific historical and economic conditions of production and which produces and reproduces these conditions of production themselves, and with them the human agents of this process, their material conditions of existence and their mutual relations, that is, their particular economic form of society. For the aggregate of these relations, in which the agents of this production live with regard to nature and to themselves, and in which they produce, is precisely their society, considered from the point of view of its economic structure. Like all its predecessors, the capitalist process of
production takes place under definite material conditions, which are at the same time the bearers of definite social relations maintained towards one another by the individuals in the process of producing their life’s requirements. These conditions and these relations are on the one hand preriquisites, on the other hand results and creations of the capitalist process of production. They are produced and reproduced by it. We have also seen that capital (the capitalist is merely capital personified and functions in the process of production as the agent of capital), in the social process of production corresponding to it, pumps a certain quantity of surplus labor out of the direct producer, or laborer. It extorts this surplus without returning an equivalent. This surplus labor always remains forced labor in essence, no matter how much it may seem to be the result of free contract. This surplus labor is represented by a surplus-value, and this surplus-value is materialized in a surplus product. It must always remain surplus labor in the sense that it is labor performed above the normal requirements of the producer. In the capitalist system as well as in the slave system, etc., it merely assumes an antagonistic form and is supplemented by the complete idleness of a portion of society. A certain quantity of surplus labor is required for the purpose of discounting accidents, and by the necessary and progressive expansion of the process of reproduction in keeping with the development of the needs and the advance of population, called accumulation from the point of view of the capitalist. It is one of the civilizing sides of capital that it enforces this surplus labor in a manner and under conditions which promote the development of the productive forces, of social conditions, and the creation of the elements for a new and higher formation better than did the preceding forms of slavery, serfdom, etc. Thus it leads on the one hand to a stage, in which the coercion and the monopolization of the social development (including its material and intellectual advantages) by a portion of society at the expense of the other portion are eliminated; on the other hand it creates the material requirements and the germ of conditions, which make
it possible to combine this surplus labor in a higher form of society with a greater reduction of the time devoted to material labor. For, according to the development of the productive power of labor, surplus labor may be large in a small total labor day, and relatively small in a large total labor day. If the necessary labor time equals three, and the surplus labor three, then the total working day is equal to six, and the rate of surplus labor 100%. If the necessary labor is equal to nine, and the surplus labor three, then the total working day is twelve and the rate of surplus labor only 33 1/3%. Furthermore, it depends upon the productivity of labor, how much use-value shall be produced in a definite time, hence also in a definite surplus labor time. The actual wealth of society, and the possibility of a continual expansion of its process of reproduction, do not depend upon the duration of the surplus labor, but upon its productivity and upon the more or less fertile conditions of production, under which it is performed. In fact, the realm of freedom does not commence until the point is passed where labor under the compulsion of necessity and of external utility is required. In the very nature of things it lies beyond the sphere of material production in the strict meaning of the term. Just as the savage must wrestle with nature, in order to satisfy his wants, in order to maintain his life and reproduce it, so civilized man has to do it, and he must do it in all forms of society and under all possible modes of production. With his development the realm of natural necessity expands, because his wants increase; but at the same time the forces of production increase, by which these wants are satisfied. The freedom in this field cannot consist of anything else but of the fact that socialized man, the associated producers, regulate their interchange with nature rationally, bring it under their common control, instead of being ruled by it as by some blind power; that they accomplish their task with the least expenditure of energy and under conditions most adequate to their human nature and most worthy of it. But it always remains a realm of necessity. Beyond it begins that development of human power, which is its own end, the true realm
of freedom, which, however, can flourish only upon that realm of necessity as its basis. The shortening of the working day is its fundamental premise.

In a capitalist society, this surplus-value, or this surplus product (leaving aside accidental fluctuations in its distribution and considering only the regulating law of these fluctuations), is divided among the capitalists as a dividend in proportion to the percentage of the total social capital held by each. In this shape the surplus-value appears as the average profit, which falls to the share of the capital, an average profit, which in its turn is separated into profits of enterprise and interest, and which in this way may fall into the hands of different kinds of capitalists. This appropriation and distribution of the surplus-value, or surplus product, by the capital however, has its barrier in private ownership of land. Just as the active capitalist pumps surplus labor, and with it surplus-value and surplus products in the form of profit out of the laborer, so the landlord in his turn pumps a portion of this surplus-value, or surplus product, out of the capitalist, in the shape of rent, according to the laws previously demonstrated by us.

Hence, when speaking of profit as that portion of surplus-value, which falls to the share of capital, we mean average profit (profits of enterprise plus interest), which has already been limited by deducting the rent from the aggregate profits (identical in mass with the aggregate surplus-value). That rent has been deducted in the premise here. Profits of capital (profits of enterprise plus interest) and ground-rent are merely particular constituents of surplus-value, categories, by which surplus-value is distinguished according to whether it falls into the hands of capital or of private land. This classification does not alter its nature in any way. If added together, these parts form the sum of the social surplus-value. Capital pumps the surplus labor, which is represented by surplus-value and surplus product, directly out of the laborers. To this extent it may be regarded as the producer of surplus-value. Private Land has nothing to do with the actual process of production. Its role is confined to carrying a portion
of the produced surplus-value from the pockets of capital to its own. However, the landlord plays a role in the capitalist process of production, not merely by the pressure, which he exerts upon capital, nor by the fact that large property in land is a prerequisite and condition of capitalist production, seeing that it separates the laborer from the means of production, but particularly because the landlord appears as the personification of one of the most essential requirements of production.

Finally, the laborer, in his capacity as the owner and seller of his individual labor-power, receives a portion of his product under the name of wages, in which that portion of his labor is materialized, which we call necessary labor, that is, the labor required for the conservation and reproduction of his labor-power, regardless of whether the conditions of this conservation and reproduction are scanty or bountiful, favorable or unfavorable.

Whatever may be the disparity of these conditions in other respects, they all have this in common: Capital yields year after year a profit to the capitalist, land a ground-rent to the landlord, and labor-power, under normal conditions and so long as it remains a useful labor-power, a wage to the laborer. These three parts of the total value produced annually, and the corresponding parts of the annually created total product, may be annually consumed by their respective owners, without draining the source of their reproduction (leaving aside for the present any consideration of accumulation). They are like the annually consumable fruits of a perennial tree, or rather of three trees. They form the annual revenue of three classes, the capitalist, the landlord and the laborer. They are revenues distributed at large by the active capitalist in his capacity as the direct exploiter of surplus labor and employer of labor in general. In this way the capital appears to the capitalist, the land to the landlord, and the labor-power or rather the labor itself, to the laborer (since he sells labor-power only to the extent that it is actively employed, and since the price of his labor-power, as previously shown, necessarily appears as the price of his labor under the capitalist
system) as three different sources of their respective revenues, of profit, ground-rent and wages. They are so in fact in the sense that capital is for the capitalist a perennial pumping machine of surplus labor, the land for the landlord a perennial magnet attracting a portion of the surplus-value pumped out by capital, and finally, labor the continually self-renewing condition and the ever self-renewing means of acquiring a portion of the value created by the laborer and with it a part of the social product measured by this portion of value, the necessities of life, under the title of wages. They are so, furthermore, in the sense that capital fixes a portion of the value, and thus of the product, of annual labor in the form of profit, the private land fixes another portion in the form of rent, and wage labor fixes a third portion in the form of wages, and converts them by this transformation into revenues of the capitalist, the landlord, and the laborer, without, however, creating the substance itself, which is transformed into these different categories.

Their distribution rather presupposes the existence of this substance, namely the total value of the annual product, which is nothing but materialized social labor. But this is not the form, in which the matter appears to the human agents in production, to the human bearers of the various functions in the process of production. It rather appears to them reversed. We shall point out in the further course of our analysis, why this happens. Capital, ground-rent and labor appear to those human agents in production as three different, independent sources, from which arise three different constituents of the annually produced value, and of the product, in which it exists. They fancy that not merely the different forms of this value as revenues falling to the share of particular agents in the social process of production, but this value itself arises from these sources, and with it the substance of these forms of revenue.

[Here one folio sheet of the manuscript is missing.]

…Differential rent is bound up with the relative fertility of the soil, in other words, with qualities, which arise from the soil as such. But in the first place, to the
extent that it rests upon the different individual values of the products of different kinds of soil, it is determined only in the manner just mentioned; in the second place, to the extent that it rests upon the regulating general market value, which differs from the individual value, it is a social law carried through by means of competition, and this law has nothing to do either with the soil or with the different degrees of its fertility.

It might seem that a rational relation was expressed at least in the term “Labor—Wages of Labor.” But this is no more the case than it is in the term “Land—Ground-Rent.” To the extent that labor creates value, and materializes itself in the value of commodities, it has nothing to do with the distribution of this value among the different categories. And so far as it has the specifically social character of wage labor, it does not create any value. We have already shown that wages of labor, or price of labor, is but an irrational expression for the value, or price, of labor-power; and the definite social conditions, under which this labor-power is sold, have nothing to do with labor as a general agent in production. Labor is also materialized in that portion of the value of a commodity, which forms the price of labor-power in the shape of wages; it creates this portion just as it does the other portions of the product; but it does not materialize itself in this portion to any other extent, or in any other way, than it does in the portions representing rent or profit. Besides, if we regard labor as a faculty creating value, we do not look upon its concrete form as a means of production, but upon its social relation, which differs from that of wage labor.

Even the term “Capital—Profit” is not correct here. If capital is viewed in the only relation, in which it produces surplus-value, namely in its relation to the laborer, in which it extorts surplus labor by compulsion exerted upon the wage laborer and his labor-power, then this surplus-value comprises not merely profit (profit of enterprise plus interest), but also rent, in short, the entire undivided surplus-value. Here, on the other hand, as a source of revenue, it is considered only
in relation with that portion, which falls into the hands of the capitalist. This is not the surplus-value which it extracts, all together, but only that portion, which it extracts for the capitalist. Still more is all connection lost, as soon as the formula is transformed into “Capital—Interest.”

Now, having first considered the disparity of the above three sources, we must note, in the second place, that their products, their offspring, the revenues, all belong to the same sphere, namely that of value. However, this relation, not only between incommensurable magnitudes, but also between wholly unlike, mutually unrelated, and incomparable things, is accounted for by the fact that capital, like land and labor, is indeed taken only in its meaning as a material substance, that is, simply as a produced means of production, and in so doing both its relation to the laborer and its value are ignored.

In the third place, if understood in this way, the formula Capital—Interest (Profit), Land—Rent, Labor—Wages of Labor, presents a uniform and symmetrical inconsistency. In fact, when wage labor does not appear as a socially determined form of labor, but rather all labor is considered naturally as wage labor (because it appears in this light to people who are biased by capitalist conditions of production), then the particular, specific, social forms observed by the material requirements of labor (the produced means of production and the land) towards wage labor (which is in its turn a prerequisite of those conditions), easily coincide with the material existence of these requirements of labor, or with the form possessed by them generally in the actual labor process, divested of all historically determined social forms, or even of any social form. The changed form of the requirements of labor, divested of labor and facing it as an independent element, which is assumed by the produced means of production when they become capital, and by the land when it becomes monopolized land, private property, this form belonging to a definite period of history then coincides with the existence and the function of the produced means of production and of the earth, in the general process of production.
Those means of production are then capital in themselves, by nature; capital is merely an “economic name” for those means of production; and in the same way land is then naturally the earth monopolized by a certain number of landlords. Just as the products become an independent power opposed to the producer when they become capital and capitalists (for capitalists are but the personification of capital), so the land becomes personified in the landlord and likewise rises on its feet to demand, as an independent power, its share of the product created by its assistance. Thus it is not the land, which receives its due portion of its product for the reproduction and improvement of its productivity, but the landlord, who takes a share of this product and sells or wastes it. It is evident that capital is conditioned upon labor in the capacity of wage labor. But it is likewise evident that if wage labor is taken as a point of departure for labor, so that the identity of any labor with wage labor appears to be a matter of course, then capital and monopolized land must also appear as the natural form of the material requirements of production as distinguished from labor. It then appears natural for the material prerequisites of labor to be capital, and this looks like their general character necessarily arising from their function in the labor process. Capital and produced means of production thus become identical terms. In like manner land and land monopolized by private owners become identical terms. In this way the requirements of production in their assumed natural capacity of capital are considered as the source of profit, and so does the land assume the guise of the source of rent.

Labor as such, in its simple capacity as a useful productive activity, refers to the means of production, not as concerns their form due to social conditions, but rather as concerns their material substance, their capacity as material and means of labor. And they are distinguished merely as use-values, the land as an unproduced, the others as produced means of production. If, then, labor is identical with wage labor, so is the particular social form assumed by the requirements of labor in their opposition to labor identical with
their material existence. The requirements of labor are then natural capital, and the land is natural private property. The formal separation of these requirements of labor from labor, the peculiar form of their independence as compared to labor, thus becomes a necessary attribute, an inherent character, inseparable from the material conditions of production. The social character given to them in the process of capitalist production by a definite epoch of history becomes a natural character belonging to them, as it were, from time immemorial, as elements in the process of production. So it is that the respective part played by the earth as the original field of activity of labor, as the realm of natural forces, as the pre-existing armory of all objects of labor, and the other respective part played by the produced means of production (instruments, raw materials, etc.) in the general process of production, must seem to be expressed in the respective shares claimed by them as capital and private land, in other words, which are pocketed by their social representatives in the form of profit (interest) and rent, just as the laborer seems to receive in his wages that share which is due to his labor in the process of production. Rent, profit and wages thus seem to grow out of the role played by the land, the produced means of production, and the labor in the simple labor process, even when we look upon this labor process as one passing merely between man and nature, without regard to any historical determination.

It is merely the same thing in another form, when it is argued that the product, in which the labor of the wage laborer materializes itself for himself, as his income, his revenue, is just his wages, is just that portion of value (and of the social product measured by this value), which represents his wages. If wage labor is identical with any labor, then so is the wage and the product of labor, and so is the portion of value representing wages and the value created by any labor. But in this way the other portions of value, profit and rent, also become independent and separated from wages, and must seem to arise from sources of their own, which differ from that of wages and are independent of it.
They must seem to arise out of the participating elements of production, by the owners of which they are claimed, so that profit seems to come from the means of production, the material elements of capital, and rent from the earth, or nature, represented by the landlord (Roscher).

Private land, capital and wage labor are thus transformed into actual sources of revenue. It is thought that rent, profit and wages and the respective portions of the product representing these parts of value, in which they exist and for which they may be exchanged, arise from these sources directly, and that the value of the product itself arises in the last analysis from them.
*146 They are not considered as sources of revenue in the sense that capital assigns to the capitalist, in the form of profit, a portion of the surplus-value extracted by him from labor, that monopoly in land attracts for the landlord another portion in the form of rent, and that labor gives to the laborer the remaining portion of value in the form of wages. They are not conceived as sources, by which one portion of value is transformed into profit, another into rent, a third into wages.

In the case of the simplest categories of the capitalist mode of production, and even of the production of commodities, in the case of commodities and money, we have already pointed out the mystifying character, which transforms the social conditions that use the material elements of wealth as bearers of production into qualities of these things themselves (commodities) and still more pronouncedly transforms the interrelations of production themselves into a thing (money). All forms of society, to the extent that they reach the stage in which commodities are produced and money circulated, take part in this perversion. But under the capitalist mode of production and in the case of capital, which forms its ruling category, its determining relationship in production, this enchanted and perverted world develops still more. If we consider capital in the actual process of production, as a
means of extracting surplus-value, then this relationship is still very simple. The actual connection impresses itself upon the bearers of this process, the capitalists, and they are conscious of it. The violent struggle about the limits of the working day shows this clearly. But even within this undisguised sphere, the sphere of the direct process between labor and capital, matters do not rest in this simplicity. With the development of relative surplus-value in the typical, specifically capitalist mode of production, by which the social powers of production of labor are developed, these powers of production and the social interrelations of labor in the actual labor process seem transferred from labor to capital. This endows capital with a very mystic nature, since all of labor’s social powers of production appear to be due to capital, not to labor as such, and seem to sprout from the womb of capital itself. Then the process of circulation intervenes, with its changes of substance and form, to which all parts of the capital, even of agricultural capital, must submit to the extent that the specifically capitalist mode of production develops. This is a sphere, in which the conditions under which value is originally produced are pushed completely into the background. Even in the direct process of production the capitalist acts at the same time in the capacity of a producer of commodities, of a manager in the production of commodities. Hence this process of production appears to him by no means as a simple process by which surplus-value is produced. But whatever may be the surplus-value extorted by capital in the actual process of production and offered in the shape of commodities, the value and surplus-value contained in the commodities must first be realized in the process of circulation. And both the restitution of the values advanced in production and, particularly, the surplus-value contained in the commodities do not seem to be merely realized in the circulation, but actually to rise from it. This appearance of things is strengthened by two circumstances. In the first place, it is strengthened by the profit made through cheating, cunning, inside knowledge, ability and a thousand market constellations in the selling of commodities. In the second place, it
is enhanced by the circumstance that a second determining element, the time of circulation, is here added to the labor time. It is true that the time of circulation asserts itself as a negative barrier against the formation of value and surplus-value, but it has the appearance of being quite as positive a cause as labor itself and of carrying into the problem a determining element independent of labor and due to the nature of capital itself.

In Volume II we had of course, to present merely the forms created and determined by this sphere of circulation, to demonstrate the further development of the form of capital, which takes place in it. But in reality this sphere is the sphere of competition, which, considered in each individual case, is dominated by accident. In other words, the internal law, which enforces itself in these accidents and regulates them, does not become visible until large numbers of these accidents are grouped together. It remains invisible and unintelligible to the individual agents in production. Furthermore: The actual process of production, considered as the unison of the strict process of production and the process of circulation, gives rise to new formations, in which the vein of the internal connections is lost, the conditions of production become separate identities, and the component parts of value become ossified into forms independent of one another.

We have seen that the conversion of surplus-value into profit is determined as much by the process of circulation as it is by the process of production. The surplus-value, in the form of profit, is no longer referred back to that portion of capital, which is invested in labor and from which it arises, but to the total capital. The rate of profit is regulated by laws of its own, which admit, or even require, a change in it while the rate of surplus-value remains unaltered. All this obscures more and more the true nature of surplus-value and thus the actual running gear of capital. Still more is this done by the transformation of profit into average profit and of the values into prices of production, into the regulating averages of the market prices. Here a
complicated social process intervenes, the process by which the capitals are equalized, and which separates the relative average prices of the commodities from their values, as it separates also the average profits of the various spheres of production (quite aside from the individual investments of capital in each particular sphere of production) from the actual exploitation of labor by the different capitals. No longer does the average price of the commodities merely seem to differ from their value, but it actually does differ, it actually is not the same as the labor realised in them, and the average profit of some particular capital differs from the surplus-value, which this capital has extracted from the laborers employed by it. The value of the commodities appears no longer directly down to their very last boundaries, but remains visible only in the influence of the fluctuating productivity of labor upon the rise and fall of the prices of production. The profit seems to be determined only incidentally by the direct exploitation of labor, namely to the extent that this exploitation permits the capitalist to realize a profit differing from the average profit at the regulating market prices, which appear to be independent of such exploitation. The normal average profits themselves seem immanent in capital and independent of exploitation. The abnormal exploitation, or even the average exploitation under exceptionally favorable conditions, seems to determine only the deviations from the average profit, not this profit itself. The division of profit into profit of enterprise and interest (not to mention the intervention of commercial profit and financial profit founded upon the circulation and seemingly arising wholly from it and not at all from the process of production itself) completes the self-dependence of the form of surplus-value, the ossification of its form as compared to its substance. One portion of the profit, as compared to the other, separates itself wholly from the relationship of capital as such and pretends to be an offspring not of the process by which wage labor is exploited, but of the wage labor of the capitalist himself. On the other hand, interest then seems to be independent both of the wage
labor of the laborer and of that of the capitalist, and to arise from no other source but capital itself. Capital, appearing originally, on the surface of circulation, as a capitalist fetish, as a self-expanding value, now assumes in the form of interest-bearing capital, its most estranged and peculiar shape. For this reason the formula “Capital—Interest,” as the third link in “Land—Rent” and “Labor—Wages of Labor,” appears much more consistent than “Capital—Profit,” since in “Profit” there still remains a recollection of its origin, which is not only extinguished in “Interest,” but also placed in opposition to this origin and fixed in this antagonistic form.

Capital, as an independent source of surplus-value, is finally joined by private land, which acts as a barrier against average profit and transfers a portion of the surplus-value to a class that neither does any work of its own, nor directly exploits labor, nor can find moral consolation, like interest-bearing capital, in devotional subterfuges such as the alleged risk and sacrifice of lending money to others. Since a part of the surplus-value seems here bound up directly, not with a social relation, but with a natural element, the land, the form of the mutual estrangement and ossification of the various parts of surplus-value is completed, their internal connection completely disrupted, and its source entirely buried, because the relations of production have been made selfdependent in spite of the fact that they are bound up with the different material elements of the process of production.

In Capital—Profit, or better Capital—Interest, Land—Rent, Labor—Wages of Labor, in this economic trinity expressing professedly the connection of value and of wealth in general with their sources, we have the complete mystification of the capitalist mode of production, the transformation of social conditions into things, the indiscriminate amalgamation of the material conditions of production with their historical and social forms. It is an enchanted, perverted, topsy-turvy world, in which Mister Capital and Mistress Land carry on their goblin tricks as social characters and at the same time as mere things. It is the great merit of classic
economy to have dissolved this false appearance and illusion, this self-isolation and ossification of the different social elements of wealth by themselves, this personification of things and conversion of conditions of production into entities, this religion of everyday life. It did so by reducing interest to a portion of profit, and rent to the surplus above the average profit, so that both of them meet in surplus-value. It represented the process of circulation as a mere metamorphosis of forms, and finally reduced value and surplus-value of commodities to labor in the actual process of production. Nevertheless even the best spokesmen of classic economy remained more or less the prisoners of the world of illusion which they had dissolved critically, and this could not well be otherwise from a bourgeois point of view. Consequently all of them fall more or less into inconsistencies, half-way statements, and unsolved contradictions. On the other hand, it is equally natural that the actual agents of production felt completely at home in these estranged and irrational forms of Capital—Interest, Land—Rent, Labor—Wages of Labor, for these are the forms of the illusion, in which they move about and in which they find their daily occupation. It is also quite natural that vulgar economy, which is nothing but a didactic, more or less dogmatic, translation of the ordinary conceptions of the agents of production and which arranges them in a certain intelligent order, should see in this trinity, which is devoid of all internal connection, the natural and indubitiable basis of its shallow assumption of importance. This formula corresponds at the same time to the interests of the ruling classes, by proclaiming the natural necessity and eternal justification of their sources of revenue and raising them to the position of a dogma.

In our description of the way, in which the conditions of production are converted into entities and into independent things as compared to the agents of production, we do not enter into a discussion of the manner, in which the interrelations of the world market, its constellations, the movements of market prices, the periods of credit, the cycles of industry and commerce, the changes from prosperity to crises, appear
to these agents as overwhelming natural laws that rule them irresistibly and enforce their rule over them as blind necessities. We do not enter into such a discussion, because the actual movements of competition belong outside of our plan, and because we have to present only the internal organization of the capitalist mode of production, as it were, in its ideal average.

In preceding forms of society this economic mystification arises principally in the case of money and of interest-bearing capital. In the nature of the case it is out of the question where, in the first place, production is mainly for use, for the satisfaction of immediate wants, and where, in the second place, slavery or serfdom form the broad foundation of social production, as they did in antiquity and during the Middle Ages. The rule of the conditions of production over the producers in those systems is concealed by the relation between masters and servants, which appear and are visible as the direct motive powers of the process of production. In the primitive societies, in which natural communism prevails, and even in the ancient urban communes, it is this community itself which appears as the basis of production, and its reproduction appears as its ultimate purpose. Even in the medieval guild system neither capital nor labor appear untrammeled. Their relations are rather defined by the corporate rules, by the conditions connected with them, and by the conceptions of professional duties, mastership, etc., which accompany them. Only when the capitalist mode of production…

144.

The following three fragments were found in different places of the manuscript for Part VI.—F. E.

145.

Beginning of Chapter XLVIII according to the manuscript.

146.

Wages, profit, and rent are the three original sources of all revenue, as well as of all exchangeable value (A. Smith).—In this way the causes of material production are at the same time the sources of the existing primitive revenues. (Storch, I., p. 259.)

Part VII, Chapter XLIX.

Categories: Karl Marx