Capital: A Critique of Political Economy, Vol. II. The Process of Circulation of Capital

It was no easy task to prepare the second volume of “CAPITAL” for the printer in such a way that it should make a connected and complete work and represent exclusively the ideas of its author, not of its publisher. The great number of available manuscripts, and their fragmentary character, added to the difficulties of this task. At best one single manuscript (No. 4) had been revised throughout and made ready for the printer. And while it treated its subject-matter fully, the greater part had become obsolete through subsequent revision. The bulk of the material was not polished as to language, even if the subject-matter was for the greater part fully worked out. The language was that in which Marx used to make his outlines, that is to say his style was careless, full of colloquial, often rough and humorous, expressions and phrases, interspersed with English and French technical terms, or with whole sentences or pages of English. The thoughts were jotted down as they developed in the brain of the author. Some parts of the argument would be fully treated, others of equal importance only indicated. The material to be used for the illustration of facts would be collected, but barely arranged, much less worked out. At the conclusion of the chapters there would be only a few incoherent sentences as mile-stones of the incomplete deductions, showing the haste of the author in passing on to the next chapter. And finally, there was the well-known handwriting which Marx himself was sometimes unable to decipher.

The mere enumeration of the manuscripts left by Marx as a basis for Volume II proves the unparalleled conscientiousness and strict self-criticism which he practiced in his endeavor to fully elaborate his great economic discoveries before he published them. This self-criticism rarely permitted him to adapt his presentation of the subject, in content as well as in form, to his ever widening horizon, which he enlarged by incessant study.

The manuscript next following in the order of time is that of Volume III. It was written for the greater part in 1864 and 1865. After this manuscript had been completed in its essential parts, Marx undertook the elaboration of Volume I, which was published in 1867. I am now preparing this manuscript of Volume III for the printer.

There is another interruption after 1870, due mainly to ill health. Marx employed this time in his customary way, that is to say he studied agronomics, agricultural conditions in America and especially Russia, the money market and banking institutions, and finally natural sciences, such as geology and physiology. Independent mathematical studies also form a large part of the numerous manuscripts of this period. In the beginning of 1877, Marx had recovered sufficiently to resume once more his chosen life’s work. The beginning of 1877 is marked by references and notes from the above-named four manuscripts intended for a new elaboration of Volume II, the beginning of which is represented by Manuscript V (56 pages in folio). It comprises the first four chapters and is not very fully worked out. Essential points are treated in foot notes. The material is rather collected than sifted, but it is the last complete presentation of this most important first section. A preliminary attempt to prepare this part for the printer was made in Manuscript VI (after October, 1877, and before July, 1878), embracing 17 quarto pages, the greater part of the first chapter. A second and last attempt was made in Manuscript VII, dated July 2, 1878, and consisting of 7 pages in folio.

Manuscript VIII is likewise merely a preliminary presentation of the subject, and its main object was to ascertain and develop the new points of view not set forth in Manuscript II, while those points were ignored about which there was nothing new to say. An essential part of Chapter XVII, Section II, which is more or less relevant to Section III, was at the same time drawn into this discussion and expanded. The logical sequence was frequently interrupted, the treatment of the subject was incomplete in various places, and especially the conclusion was very fragmentary. But Marx expressed as nearly as possible what he intended to say on the subject.

This is the material for Volume II, out of which I was supposed “to make something,” as Marx said to his daughter Eleanor shortly before his death. I have interpreted this request in its most literal meaning. So far as this was possible, I have confined my work to a mere selection of the various revised parts. And I always based my work on the last revised manuscript and compared this with the preceding ones. Only the first and third section offered any real difficulties, of more than a technical nature, and these were indeed considerable. I have endeavored to solve them exclusively in the spirit of the author of this work.

He could so much the more afford this, as I know positively that he was not in the least acquainted with the literary activity of Rodbertus until about 1859, when his own critique of political economy had been completed, not only in its fundamental outlines, but also in its more important details. Marx began his economic studies in Paris, in 1843, starting with the prominent Englishmen and Frenchmen. Of German economists he knew only Rau and List, and he did not want any more of them. Neither Marx nor I heard a word of Rodbertus’ existence, until we had to criticise, in the “Neue Rheinische Zeitung,” 1848, the speeches he made as the representative of Berlin and as Minister of Commerce. We were both of us so ignorant that we had to ask the Rhenish representatives who this Rodbertus was that had become a Minister so suddenly. But these representatives could not tell us anything about the economic writings of Rodbertus. On the other hand, Marx showed that he knew even then, without the help of Rodbertus, whence came “the surplus value of the capitalists,” and he showed furthermore how it was produced, as may be seen in his “Poverty of Philosophy,” 1847, and in his lectures on wage labor and capital, delivered in Brussels in 1847, and published in Nos. 264-69 of the “Neue Rheinische Zeitung,” 1849. Marx did not learn that an economist Rodbertus existed, until Lassalle called his attention to the fact in 1859, and thereupon Marx looked up the “Third Letter on Political Economy” in the British Museum.

And what has this third letter on political economy to say in regard to the origin of surplus-value? Simply this: That the “rent,” as he terms the sum of ground rent and profit, does not consist of an “addition to the value” of a commodity, but is obtained “by means of a deduction of value from the wages of labor, in other words, the wages represent only a part of the value of a certain product,” and provided that labor is sufficiently productive, wages need not be “equal to the natural exchange value of the product of labor in order to leave enough of it for the replacing of capital and for rent.” We are not informed, however, what sort of a “natural exchange value” of a product it is that leaves nothing for the “replacing” of capital, or in other words, I suppose, for the replacing of raw material and the wear and tear of tools.

Now it is a fact, that capitalist humanity has been producing surplus-value for several hundred years, and has in the course of this time also arrived at the point where people began to ponder over the origin of surplus-value. The first explanation for this phenomenon grew out of the practice of commerce and was to the effect that surplus-value arose by raising the value of the product. This idea was current among the mercantilists. But James Steuart already saw that in that case the one would lose what the other would gain. Nevertheless, this idea persists for a long time after him, especially in the heads of the “socialists.” But it is crowded out of classical science by Adam Smith.

He says in “Wealth of Nations,” Vol. I, Ch. VI: “As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work, or, by what their labor adds to the value of the materials…. The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced.” And a little farther on he says: “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce…. The laborer…must give up to the landlord a portion of what his labor either collects or produces. This portion, or what comes to the same thing, the price of this portion, constitutes the rent of land.”

Adam Smith says, furthermore, Vol. I, Chap. VIII: “As soon as land becomes private property, the landlord demands a share of almost all the produce which the laborer can either raise or collect from it. His rent makes the first deduction from the produce of labor which is employed upon land. It seldom happens that the person who tills the ground has wherewithal to maintain himself till he reaps the harvest. His maintenance is generally advanced to him from the stock of a master, the farmer who employs him, and who would have no interest to employ him, unless he was to share in the produce of his labor, or unless his stock was to be replaced by him with a profit. This profit makes a second deduction from the produce of the labor which is employed upon land. The produce of almost all other labor is liable to the like deduction of profit. In all arts and manufactures the greater part of the workmen stand in need of a master to advance them the materials for their work, and their wages and maintenance till it be completed. He shares in the produce of their labor, or in the value which it adds to the materials upon which it is bestowed; and in this share consists his profit.”

The comment of Marx on this passage (on page 256 of his manuscript) is as follows: “Here Adam Smith declares in so many words that ground rent and profit of capital are simply deductions from the product of the laborer, or from the value of his product, and equal to the additional labor expended on the raw material. But this deduction, as Adam Smith himself has previously explained, can consist only of that part of labor which the laborer expends over and above the quantity of work which pays for his wages and furnishes the equivalent of wages; in other words, this deduction consists of the surplus labor, the unpaid part of his labor.”

“Nevertheless,” continues Marx, “Smith did not separate surplus-value proper as a separate category from the special form which it assumes in profit and ground rent. Hence there is much error and incompleteness in his investigation, and still more in that of Ricardo.” This statement literally fits Rodbertus. His “rent” is simply the sum of ground rent plus profit. He builds up an entirely erroneous theory of ground rent, and he takes surplus-value without any critical reservation just as his predecessors hand it over to him. On the other hand, Marx’s surplus-value represents the general form of the sum of values appropriated without any equivalent return by the owners of the means of production, and this form is then seen to transform itself into profit and ground rent by very particular laws which Marx was the first to discover. These laws are traced in Volume III. We shall see there how many intermediate links are required for the passage from an understanding of surplus-value in general to that of its transformation into profits and ground rent; in other words, for the understanding of the laws of the distribution of surplus-value within the capitalist class.

But the Ricardian theory of value and surplus-value did not have to wait for Rodbertus’ “Zur Erkenntniss” in order to be utilized for socialist purposes. On page 609 of the second edition of the German original of “CAPITAL,” Vol. I, we find the following quotation: “The possessors of surplus produce or capital.” This quotation is taken from a pamphlet entitled “The Source and Remedy of the National Difficulties. A Letter to Lord John Russell. London, 1821.” In this pamphlet, the importance of which should have been recognized on account of the terms surplus produce or capital, and which Marx saved from being forgotten, we read the following statements:

This last passage fits Rodbertus just as if it were made to order for him. He, too, is limited by the economic categories which he finds at hand. He, too, applies the name of one of the minor categories to surplus-value, and he makes it quite indefinite at that by calling it “rent.” The result of these two mistakes is that he relapses into the economic slang, that he makes no attempt to follow up his advance over Ricardo by a critical analysis, and that he is misled into using his imperfect theory, even before it has gotten rid of its egg-shells, as a basis for a utopia which is in every respect too late. The above-named pamphlet appeared in 1821 and anticipated completely Rodbertus “rent” of 1842.

But what is there that is new about Marx’s statements on surplus-value? How is it that Marx’s theory of surplus-value struck home like a thunderbolt out of a clear sky, in all modern countries, while the theories of all his socialist predecessors, including Rodbertus, remained ineffective?

The history of chemistry offers an illustration which explains this:

Marx stands in the same relation to his predecessors in the theory of surplus-value that Lavoisier maintains to Priestley and Scheele. The existence of those parts of the value of products, which we now call surplus-value, had been ascertained long before Marx. It had also been stated with more or less precision that it consisted of that part of the laborer’s product for which its appropriator does not give any equivalent. But there the economists halted. Some of them, for instance the classical bourgeois economists investigated, perhaps, the proportion in which the product of labor was divided among the laborer and the owner of the means of production. Others, the socialists, declared that this division was unjust and looked for utopian means of abolishing this injustice. They remained limited by the economic categories which they found at hand.

And Rodbertus? After he has read all that, he regards it as “an assault on society,” and finds that he has said much more briefly and clearly by what means surplus-value is originated, and finally declares that all this does indeed apply to “the present form of capital,” that is to say to capital as it exists historically, but not to the “conception of capital,” that is to say, not to the utopian idea which Rodbertus has of capital. He is just like old Priestley, who stood by phlogiston to the end and refused to have anything to do with oxygen. There is only this difference: Priestley had actually produced oxygen, while Rodbertus had merely rediscovered a common-place in his surplus-value, or rather his “rent;” and Marx declined to act like Lavoisier and to claim that he was the first to discover the fact of the existence of surplus-value.

The Ricardian school failed about the year 1830, being unable to solve the riddle of surplus-value. And what was impossible for this school, remained still more insoluble for its successor, vulgar economy. The two points which caused its failure were these:

1. Labor is the measure of value. However, actual labor in its exchange with capital has a lower value than labor embodied in the commodities for which actual labor is exchanged. Wages, the value of a definite quantity of actual labor, are always lower than the value of the commodity produced by this same quantity of labor and in which it is embodied. The question is indeed insoluble, if put in this form. It has been correctly formulated by Marx and then answered. It is not labor which has any value. As an activity which creates values it can no more have any special value in itself than gravity can have any special weight, heat any special temperature, electricity any special strength of current. It is not labor which is bought and sold as a commodity, but labor-power. As soon as labor-power becomes a commodity, its value is determined by the labor embodied in this commodity as a social product. This value is equal to the social labor required for the production and reproduction of this commodity. Hence the purchase and sale of labor-power on the basis of this value does not contradict the economic law of value.

The second and third volumes of “CAPITAL” were to be dedicated, as Marx stated repeatedly, to his wife.

The third volume, which presented quite unforeseen difficulties, is likewise almost ready for the printer. If my health holds out, it will be ready for the press this fall.