Karl Kautsky

The Economic Doctrines of Karl Marx

 

Part III.
WAGES AND PROFITS


Chapter IV. THE CONVERSION OF SURPLUS-VALUE INTO CAPITAL

(1) How Surplus-value becomes Capital

IT is rare that the capitalist consumes the whole of the surplus-value. As a rule, he converts at least a portion of it into capital. “Employing surplus-value as capital, reconverting it into capital, is called accumulation of capital.”

The process is easy to grasp. Let us recall the example in the preceding chapter. A capital of £500 yields an annual surplus-value of £100 to its employer. If the capitalist does not consume this, but adds it to his initial capital, he will own a capital of £600, which, under similar circumstances, would bring in an annual surplus-value of £120. Adding this to the amount of capital will increase the latter to £720, and the annual surplus-value to £144; repeating the same process in the following year will result in a capital of £864, yielding a surplus-value of £172 16s making £1,036 16s. together, and so on. After four years the capital has more than doubled in consequence of the accumulation of surplus-value.

So far we are not concerned with the question as to whether the whole or merely a part of the surplus-value is accumulated. Nor is it any more important for the present investigation in what manner the surplus-value is accumulated, whether it forms additional or fresh capital. An owner of a spinning factory could utilise the surplus-value in extending his factory, installing more machines and engaging more workers, buying more raw materials; he could also employ it to construct a new mill or to establish an entirely different business, a weaving shed or a coal mine, and so on. However the surplus-value may be employed, in this case it will always be reconverted into capital, into value that breeds surplus-value.

In order, however, that surplus-value may become capital, after it has been transformed from commodities into money, it must undergo a further transformation from money into the corresponding commodities. Let us take a cotton spinner for example. He has sold his yarn and now owns surplus-value in the shape of money, in addition to the capital originally advanced. As well as the original capital, this surplus-value is now to be converted into fresh capital. This is only possible if he can find in the market a quantity of commodities correspondingly increased which may be used by him as means of production; if the surplus-value is to become extra capital, additional raw materials – in our example, cotton, additional instruments of labour, such as machines, additional means of life for the maintenance of more labour-power, and finally additional labour-power – must be available, that is, the material prerequisites for an extension of production must exist before an accumulation of capital is possible.

The cotton spinner, however, may expect to find in the commodity market the necessary additional means of production.

For surplus-values, that is to say, surplus-produce, are being created not alone in cotton spinning, but also in cotton planting, in machine construction, in coal mining, and so on.

If we lose sight of the surplus-value which falls annually to the individual capitalist, and keep in mind the annual sum of surplus-value which is appropriated by the whole of the capitalist class, the following rule may be formulated: Surplus-value cannot (wholly or in part) be converted into capital unless there exists a corresponding amount of surplus-produce, consisting of means of production and means of life for the workers.

But where do the additional workers come from? This question need not cause the capitalist to grow any grey hairs; it is sufficient that he gives the workers in wages what is necessary to keep them alive, and they will look after their own propagation and increase.

The working class itself produces the additional workers who are necessary for the extension of production, for reproduction upon an extended scale.

We have already observed, under the assumptions pertaining to simple reproduction, that after a number of years each capital will consist of an accumulation, of mere surplus-value. But such a capital can at least represent the produce of the labour of its owner when it commences to function. Not so the capital which springs from accumulated surplus-value. From the outset this is plainly the produce of the labour of those who do not own it. The accumulation of surplus-value means the appropriation of unpaid labour for the purpose of extending the appropriation of unpaid labour.

What a contradiction of the principles of commodity exchange! We have seen that originally the exchange of commodities was conditioned, an the one hand, by the private property of the commodity producer in his product, and, on the other hand, by the exchange of equal values, so that none could obtain possession of a value except through his own labour or through the surrender of an equal value.

Now we find, as the foundation of the capitalist mode of production, on the one hand, the separation of the labourer from the product of his labour; he who creates the product and he who owns it are two different persons; and on the other hand we find the appropriation of value without the surrender of an equal value, surplus-value. Moreover, we now find that surplus-value is not only a result, but is also the foundation of the capitalist process of production. Capital not only produces surplus-value, but surplus-value turns into capital, so that finally the greater part of all wealth consists of value which has been appropriated without an equivalent value.

This distortion of the foundation of commodity production into its contrary is effected, however, not in contradiction to its laws, but on the basis there of.

“Just as at a given stage in its development, commodity production necessarily passes into capitalistic commodity production (in fact, it is only on the basis of capitalistic production that products take the general and predominant form of commodities), so the laws of property that are based on commodity production necessarily turn into the laws of capitalist appropriation. We may well, therefore, feel astonished at the cleverness of Proudhon, who would abolish capitalistic property by enforcing the eternal laws of property that are based on commodity production!”
 

(2) The Abstinence of the Capitalist

So far we have considered only the two extreme cases, when the surplus-value is wholly consumed or wholly accumulated. But, as already indicated, as a rule only a portion of surplus-value is consumed, and a portion is accumulated. The first portion may be regarded as revenue in the narrower sense.

It is at the option of the capitalist to decide how large a portion of surplus-value he will consume, and bow large a portion is to be converted into capital. The decision of this question provokes a stubborn internal conflict.

With Faust he may exclaim

                ... in my breast
Alas, two souls dwell – all there is unrest;
Each with the other strives for mastery,
Each from the other struggles to be free.
One to the fleshly joys the coarse earth yields,
With clumsy tendrils clings, and one would rise
In native power and vindicate the fields,
Its own by birthright – its ancestral skies.

Yes, in the capitalist the old antagonism between fleshly lusts and asceticism, between Heathenism and Christianity, repeats itself in a peculiar way. The capitalist sighs longingly after the joys of this world, but every enjoyment seems to him sinful, and he cannot have it with impunity.

The portion of surplus-value which the capitalist personally consumes is as a rule not an arbitrarily, but an historically, determined magnitude; determined like the wage of the worker by the customary standard of life of the section of society that is concerned.

Like the worker, although in another sense, the capitalist also belongs to capital for the whole period of his life. Competition not only compels him to execute the laws of the capitalist mode of production in his business, but also dominates his private life. If he outruns the constable, the word goes round that he is a waster, and his credit falls. If he is miserly and does not keep up appearances, it gives the impression that his business does not yield the average profit, and his credit likewise falls. Thus the capitalist is obliged to consume a certain portion of his surplus-value, which is determined by the period and circle in which he lives. This magnitude, however, is far more elastic than the magnitude of wages.

As regards that portion of surplus-value which is to be accumulated, no limits are prescribed except the total mass of surplus-value itself and the elastic standard of life of the capitalist. The more there is accumulated, so much the better. The capitalist mode of production itself makes a continuous accumulation of capital a necessity. We have seen how, with the technical development, the amount of capital necessary for the installation and the operation of an undertaking in a specific branch of labour becomes ever larger, if the products are to be created with an average expenditure of necessary labour. If, for example, the minimum sum which must be embarked in an undertaking is £1,000, in order to maintain it in a competitive state, this minimum sum may be increased to £2,500 within twenty years through the introduction of new methods of labour and new and more comprehensive machines and so on. The capitalist who originally set up in business with £1,000, but neglected to accumulate sufficient surplus-value, so that after twenty years only £1,500, instead of £2,500, is at his disposal, will probably be incapable of holding his own, and will become bankrupt. But the capitalist does not need this incentive to accumulation. The incentive to accumulate for the sake of accumulation is developed in the capitalist under the modern mode of production just as at an earlier stage of commodity production the miser was moved to hoard gold and silver. As in the case of the hoarding of treasure, the accumulation of capital has no limits in itself; it is boundless. However much the capitalist may own, and when his income has long since exceeded his capacity for enjoyment, he is tireless in hunting for the proceeds of fresh surplus-value, not to increase his enjoyments, but to augment his capital.

Classical political economy discussed the consequences and causes of accumulation, on the one hand, and of the consumption by the capitalist class, on the other hand, without any prepossessions. It dealt with the accumulation of capital only from the economic, not from the moral standpoint, as the morality of the proceeding was very dubious.

The proletariat then began to grow, and to attain to a definite class-consciousness. At the end of the eighteen-twenties, in England as well as in France, the Labour Movement began to make its influence felt. Now it was no longer a question of investigating economic problems, but of justifying capital. “Ethics” was introduced into political economy; that worthy dame became moral in her old age. Knowledge took a back seat, and sentiment became the chief factor. With the help of this sentiment, it was soon discovered that the capitalist manifested a heroism worthy of all admiration when, instead of consuming the surplus-value, he refrained therefrom and accumulated it. It went without saying that the worker owed reverence and gratitude to this new pillar of sanctity, and it was equally obvious that the saint, despite his great abstinence, could not live on reverence and gratitude alone; and so, for the encouragement of rich virtue and lucrative morality, the economists granted him a moral right to remuneration for the accumulation of unpaid labour: the common-sounding word “profit” was transfigured, and “wages of abstinence” appeared.
 

(3) The Abstinence of the Worker and other Circumstances affecting the Extent of Accumulation

The greater the “renunciation” of the capitalist, the greater the extent of accumulation. Luckily for him, there are other factors which exercise a decisive influence upon the extent of accumulation. Everything that augments the mass of surplus-value widens the extent of accumulation – other circumstances remaining equal. We are already familiar with the causes that determine the mass of surplus-value. Only a few of them need here be mentioned, which, from the standpoint already gained, open up new prospects. One of the most important among them is the abstinence of the worker. It is clear that the smaller the remuneration of the worker, the greater is the rate of surplus-value, and the greater is the portion of surplus-value destined for accumulation, assuming that the consumption of the capitalist remains the same. Everything that reduces the value of labour-power or that is calculated to depress wages below this value promotes the accumulation of capital. Hence the moral indignation of capital and its advocates at the “luxury” of the workers who undermine national prosperity by smoking cigarettes or drinking beer.

With admirable ingenuity the capitalist world has devised innumerable institutions and methods which promote the abstinence of the worker, from Rumfordian suppers to public kitchens and vegetarianism. Marx quotes a number of typical examples of such institutions in Capital.

It is very inconvenient for the capitalist that every extension of business necessitates a relatively large outlay of constant capital; an outlay which becomes ever greater, the more the machinery of modern industry is perfected. But the sweet consolation remains to him that, once the amount of constant capital necessary for the business has been obtained, production can be extended within certain limits by the advance of variable capital, without an advance of the same proportion of constant capital being necessary. If a manufacturer is doing good business and desires to produce more, he can perhaps obtain this result by prolonging the working-day by two or three hours. He need install no new machines, provide no new factory buildings. He merely has to increase the raw and auxiliary materials.

But there are industries which have no raw materials to buy, as for example, mines, or which have only small quantities of raw materials to supply, as seeds and manure in agriculture. These industries extract their raw materials from the earth. In such cases, it is often sufficient to increase the supply of labour in order to augment the quantity of the product. This increase in the product is due to the earth and to labour alone, but capital has acquired both, and with them the opportunity of “augmenting the elements of its accumulation beyond the limits apparently fixed by its own magnitude, or by the value and mass of the means of production, already produced, in which it has its being.”

In addition to the earth and the workers, capital has appropriated science; although it has no part in the scientific development as such, to it alone fall all the fruits ripened by the progress of science, in promoting the productivity of labour. It thereby promotes the accumulation of capital. With the productivity of labour, the value of labour-power falls, while the rate of surplus-value rises. Moreover, an increase in the productivity of labour enables the capitalist to obtain for his personal consumption a larger quantity of the cheapening means of life and of enjoyment, without an increased expenditure of surplus-value, or to obtain the same quantity as before with a smaller expenditure: to live more conveniently or to accumulate more without retrenchment, and frequently to do both things at the same time.

The greater the sum of the capital outlay, the more productive is labour, the greater is not only the rate, but also the mass of surplus-value, and the more the capitalist can enjoy and also accumulate.

From the indications that have been furnished, it is plain that capital is no fixed, but a very elastic magnitude, which is capable of considerable expansions and contractions; it constitutes only a portion of the social wealth; by advances from other portions of the same, it can increase the consumption fund of the capitalist class and also of the working class, whilst these funds can be diminished by levying taxes thereon. Its influence is augmented by the prolongation of labour-time, increasing the productivity of labour, and greater exploitation of the earth. We leave entirely out of account the conditions of the process of circulation, as for instance the acceleration or the retardation of the turnover of capital, we also ignore the conditions of the credit system, which are of such great importance for the extension and contraction of capital and its scope. These factors cannot be discussed at this juncture. But the conditions of the process of production have already revealed the elasticity of capital. The economists, however, regard capital as a definite magnitude with a circumscribed sphere of influence. Thus variable capital appears to them as a fixed magnitude, the so-called labour fund. “So much capital,” they say, “ is ear-marked to serve for the payment of the workers. The more workers there are, the less the share that falls to each of them; the fewer workers, the larger this share is.” The variable capital is also equated with the means of life which it represents for the workers, and it was said:–

“The number of workers who are employed in a country and the level of their wages depend upon the quantity of the means of life that are in existence. If the level of wages is too low, or if there are many workers who can find no employment, this merely arises from the fact that the number of workers increases more quickly than the supply of the means of life. It is to Nature, and not to the mode of production, that the poverty of the working class is due.”

Upon these assumptions the so-called Malthusian theory was constructed.

 


Last updated on 22.11.2003