Samezō Kuruma; 1936

An Overview of Marx’s Theory of Crisis

Japanese title: Marukusu no kyōkō-ron tenkiyō
First published: August 1936 issue of Journal of the Ohara Institute for Social Research
Source: Chapter 3 of Kyōkō kenkū (Investigation of Crisis), Tokyo: Otsuki Shoten, 1965;
Translated: for by Michael Schauerte;
CopyLeft: Creative Commons (Attribute & ShareAlike) 2007.

Because this had to be written quickly I merely selected some passages that I believe to be of particularly direct significance from a certain perspective (mainly a methodological one) from out of the materials Marx wrote on crisis, and then I put this into some order and added some simple opinions of my own. I would be quite pleased if this can at least be of use to a few researchers on crisis. — Samezō Kuruma

1. Marx’s General Grasp of Crisis

Marx’s general grasp of crisis—as in the case of other problems he deals with—is both the outcome of a certain investigation he carried out and at the same time useful as a guiding principle for further research. This general understanding of crisis is directly expressed in the following propositions.

The commercial crises of the nineteenth century, and in particular the great crises of 1825 and 1836 [were] big storms on the world market, in which the antagonism of all elements in the bourgeois process of production explodes. (A Contribution to the Critique of Political Economy)

The world trade crises must be regarded as the real concentration and forcible adjustment of all the contradictions of bourgeois economy. (Theories of Surplus Value)

In world market crises, all the contradictions of bourgeois production erupt collectively; in particular crises (particular in their content and in extent) the eruptions are only sporadically, isolated and one-sided. (Theories of Surplus Value)

2. Marx’s Theory of Crisis and Capital

Marx’s grasp of crisis expressed above naturally determines his entire plan for the clarification of crisis. Because crisis is the concentrated explosion of all of the contradictions of capitalistic production, to concretely grasp crisis as such, one must first unfold all of the contradictions of capitalistic production according to their internal relations, and thus the significance of each contradiction as a moment within the totality must be elucidated, and then next one must clarify what processes they pass through and in what sense they must explode in a concentrated manner. And this is above all precisely what Marx sought to achieve throughout his entire critique of political economy (of which Capital is the most basic part). In other words, Capital at the same time can be said to include a theory of crisis (its most fundamental part).

3. Central Perspective to Take when Contemplating Capital as a Theory of Crisis—
Considering the Developmental Process of Contradictions as the Developmental Process of Moments that Become Independent

However, the contemplation of Capital as a theory of crisis, by its nature, requires a special central perspective. All of the contradictions of capitalistic production must be considered while focusing mainly on the relation to their ultimate explosion. And the main issue naturally becomes, in this case, how moments that are essentially one become independent.

Crisis is the forcible establishment of unity between elements [“moments”] that have become independent and the enforced separation from one another of elements which are essentially one. (Theories of Surplus Value)

In other words:

These two processes lack internal independence because they complement each other. Hence, if the assertion of their external independence proceeds to a certain critical point, unity violently makes itself felt by producing—a crisis. (Capital, Vol. 1)

4. The Development of the Independence of Moments and the Necessity of their Real Unity in a Forced and Sudden Form

This reestablishment of equilibrium realized in crisis is premised on the forceful progression, to some extent, of the external independence of the moments that are essentially not independent (the fact that essentially non-independent moments are made externally independent itself means that this is forceful), and therefore this is necessarily manifested in the form of a forceful as well as periodic and sudden. In other words, with this progression of the independence of moments, their inherent unity which is compressed in a latent state and necessarily suppressed, once this progression reaches a certain limit, abruptly a great force is revealed, like the sudden release of pent-up forces. This is the explosion of contradictions that develop, become concrete, and become real along with their own moments becoming independent, are themselves again actually synthesized, thus obtaining a new equilibrium. This is precisely why Marx looked on crisis as the “explosion” of all the contradictions of capitalistic production, a “realistic synthesis” and a “forceful rearrangement.”

5. Moments Become Independent and the Elasticity of the Production Process

The fact that crisis is periodic and sudden is due to the fact, already mentioned, that to some extent the moments are forcefully rendered independent. The basis that makes possible this forcefulness can be found in the elasticity of the reproduction process. At the same time, we should also not overlook that the elasticity of the reproduction process is expanded through the moments becoming independent.

The separation of sale and purchase makes possible not only commerce proper, but also numerous pro forma transactions, before the final exchange of commodities between producer and consumer takes place. It thus enables large numbers of parasites to invade the process of production and to take advantage of this separation. But this again means only that money, the universal form of labor in bourgeois society, makes the development of the inherent contradictions possible. (A Contribution to the Critique of Political Economy)

However (aside from the turnovers in the world of commerce, in which one merchant always sells the same commodity to another, and this sort of circulation may appear highly prosperous in times of speculation), the merchant's capital, in the first place, curtails phase C—M for productive capital. Secondly, under the modern credit system it disposes of a large portion of the total social money-capital, so that it can repeat its purchases even before it has definitely sold what has previously been purchased. And it is immaterial in this case, whether our merchant sells directly to the ultimate consumer, or there are a dozen other intermediate merchants between them. Owing to the immense elasticity of the reproduction process, which may always be pushed beyond any given bounds, it does not encounter any obstacle in production itself, or at best a very elastic one. Aside from the separation of C—M and M—C, which follows from the nature of the commodities, a fictitious demand is then created. In spite of its independent status, the movement of merchant's capital is never more than the movement of industrial capital within the sphere of circulation. But by virtue of its independent status it moves, within certain limits, independently of the bounds of the reproduction process and thereby even drives the latter beyond its bounds. This internal dependence and external independence push merchant's capital to a point where the internal connection is violently restored through a crisis. ( Capital, Vol. 3)

The credit system appears as the main lever of over-production and over-speculation in commerce solely because the reproduction process, which is elastic by nature, is here forced to its extreme limits, and is so forced because a large part of the social capital is employed by people who do not own it and who consequently tackle things quite differently than the owner, who anxiously weighs the limitations of his private capital in so far as he handles it himself. This simply demonstrates the fact that the self-expansion of capital based on the contradictory nature of capitalist production permits an actual free development only up to a certain point, so that in fact it constitutes an immanent fetter and barrier to production, which are continually broken through by the credit system. Hence, the credit system accelerates the material development of the productive forces and the establishment of the world-market. It is the historical mission of the capitalist system of production to raise these material foundations of the new mode of production to a certain degree of perfection. At the same time credit accelerates the violent eruptions of this contradiction — crises — and thereby the elements of disintegration of the old mode of production. (Capital, Vol. 3)

6. Examples from Capital and Theories of Surplus Value Emphasizing the Independence of Moments
• Social Character of the Labor of Commodity Producers (and the Social Relations between Commodity Producers) become Independent as the Character of the Value of Things (and the Value Relations between Things)

There does not seem to be any real need here to again enter into a discussion of commodity fetishism, which was first clarified by Marx.

This fetishism increasingly develops with commodity value itself becoming independent of the forms of money and capital. And along with this, in place of the control of production by Man, there is the development of the control of Man by production.

• The Independence of Value within Money (Division of Commodity into Commodity and Money)

The contradiction of the commodity, which must be both a use-value and a value, unfolds in reality in the exchange process, necessarily bringing forth the division of the commodity into regular commodities and money. This means that the value of a commodity comes to have an independent form of existence in money. At the same time, the internal opposition within the commodity between use-value and value, is now manifested externally in the oppositonal relation between two independent things—commodity and money. This occurs first of all in the guise of various oppositions within commodity circulation. (Value becoming independent in the case of money itself has several further stages. This develops along with the development of the determinations of money, gradually advancing from something formal into something substantial. But we won’t enter into the details of this here.)

• Along with Value becoming Independent in Money, the Exchange Process Splits into the Two Processes of Sale and Purchase—
General Potential for Crisis (General Form)

Along with the commodity splitting into commodity and money, and the value of a commodity becoming independent in the form of money, the direct exchange of products divides into the processes of sale and purchase, which are internally mutually dependent and externally mutually independent. And here is posited, at the same time, the most general and most abstract possibility of crisis.

Circulation bursts through all restrictions as to time, place, and individuals, imposed by direct barter, and this it effects by splitting up, into the antithesis of a sale and a purchase, the direct identity that in barter does exist between the alienation of one’s own and the acquisition of some other man’s product. To say that these two independent and antithetical acts have an intrinsic unity, are essentially one, is the same as to say that this intrinsic oneness expresses itself in an external antithesis. If the interval in time between the two complementary phases of the complete metamorphosis of a commodity become too great, if the split between the sale and the purchase become too pronounced, the intimate connection between them, their oneness, asserts itself by producing — a crisis. The antithesis, use-value and value; the contradictions that private labor is bound to manifest itself as direct social labor, that a particularized concrete kind of labor has to pass for abstract human labor; the contradiction between the personification of objects and the representation of persons by things; all these antitheses and contradictions, which are immanent in commodities, assert themselves, and develop their modes of motion, in the antithetical phases of the metamorphosis of a commodity. These modes therefore imply the possibility, and no more than the possibility, of crises. The conversion of this mere possibility into a reality is the result of a long series of relations, that, from our present standpoint of simple circulation, have as yet no existence. (Capital, Vol. 1)

The general, abstract possibility of crisis denotes no more than the most abstract form of crisis, without content, without a compelling motivating factor. Sale and purchase may fall apart. They thus represent potential crisis and their coincidence always remains a critical factor for the commodity. The transition from one to the other may, however, proceed smoothly, The most abstract form of crisis (and therefore the formal possibility of crisis) is thus the metamorphosis of the commodity itself; the contradiction of exchange-value and use-value, and furthermore of money and commodity, comprised within the unity of the commodity, exists in metamorphosis only as an involved movement. The factors which turn this possibility of crisis into [an actual] crisis are not contained in this form itself; it only implies that the framework for a crisis exists.

And in a consideration of the bourgeois economy, that is the important thing. The world trade crises must be regarded as the real concentration and forcible adjustment of all the contradictions of bourgeois economy. The individual factors, which are condensed in these crises, must therefore emerge and must be described in each sphere of the bourgeois economy and the further we advance in our examination of the latter, the more aspects of this conflict must be traced on the one hand, and on the other hand it must be shown that its more abstract forms are recurring and are contained in the more concrete forms.

It can therefore be said that the crisis in its first form is the metamorphosis of the commodity itself, the falling asunder of purchase and sale.

The crisis in its second form is the function of money as a means of payment, in which money has two different functions and figures in two different phases, divided from each other in time.( Theories of Surplus Value)

We won’t enter into the details of this second form of crisis here.

• Value becomes Independent in the Case of Capital

We have already said that commodity value becoming independent increasingly develops with the development of the determinations of money, but value becoming independent develops rapidly with the transformation of money into capital:

The independent form, i.e. the monetary form, which the value of commodities assumes in simple circulation, does nothing but mediate the exchange of commodities, and it vanishes in the final result of the movement. On the other hand, in the circulation M-C-M both the money and the commodity function only as different modes of existence of value itself, the money as the general mode of existence, the commodity as its particular or, so to speak, disguised mode. It is constantly changing from one form into the other, without becoming lost in the movement; it thus becomes transformed into an automatic subject. If we pin down the specific forms of appearance assumed in turn by self-valorizing value in the course of its life, we reach the following elucidation: capital is money, capital is commodities. In truth, however, value is here the subject of a process in which, while constantly assuming the form in turn of money and commodities, it changes its own magnitude, throws off surplus-value from itself considered as original value, and thus valorizes itself independently. For the movement in the course of which it adds surplus-value is its own movement, its valorization is therefore self-valorization [Selbstverwertung]. By virtue of being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or at least lays golden eggs...

In simple circulation, the value of commodities attained at the most a form independent of their use-values, i.e. the form of money. But now, in the circulation of M-C-M, value suddenly presents itself as a self-moving substance which passes through a process of its own, and for which commodities and money are both mere forms. But there is more to come: instead of simply representing the relations of commodities, it now enters into a private relationship with itself, as it were. It differentiates itself as original value from itself as surplus-value, just as God the Father differentiates himself from himself as God the Son, although both are of the same age and form, in fact one single person; for only by the surplus value of £10 does the £100 originally advanced become capital, and as soon as this has happened, as soon as the son has been created and, through the son, the father, their difference vanishes again, and both become one, £110.

Value therefore now becomes value in process, money in process, and, as such, capital. It comes out of circulation, enters into it again, preserves and multiplies itself within circulation, emerges from it with an increased size, and starts the same cycle again and again. M-M, “money which begets money,” such is the description of capital given by its first interpreters, the Mercantilists. (Capital, Vol. 1)

Capital, as self-valorizing value, does not just comprise class relations, a definite social character that depends on the existence of labor as wage-labor. It is a movement, a circulatory process through different stages, which itself in turn includes three different forms of the circulatory process. Hence it can only be grasped as a movement, and not as a static thing. Those who consider the autonomization [Verselbstst ändigung] of value as a mere abstraction forget that the movement of industrial capital is this abstraction in action. Here value passes through different forms, different movements in which it is both preserved and increases, is valorized. Since we are firstly dealing here simply with the forms of movement, we have not considered the revolutions that the capital value may suffer in its circulatory process; it is clear however that despite all revolutions in value, capitalist production can exist and continue to exist only so long as the capital value is valorized, i.e. describes its circuit as value that has become independent, and therefore so long as the revolutions in value are somehow or other mastered and balanced out. The movements of capital appear as actions of the individual industrial capitalist in so far as he functions as buyer of commodities and labor, seller of commodities and productive capitalist, and thus mediates the circuit of his own activity. If the social capital value suffers a revolution in value, it can come about that his individual capital succumbs to this and is destroyed, because it cannot meet the conditions of this movement of value. The more acute and frequent these revolutions in value become, the more the movement of the independent value, acting with the force of an elemental natural process, prevails over the foresight and calculation of the individual capitalist, the more the course of normal production is subject to abnormal speculation, and the greater becomes the danger to the existence of the individual capitals. These periodic revolutions in value thus confirm what they ostensibly refute: the independence which value acquires as capital, and which is maintained and intensified through its movement.

This sequence of metamorphoses of capital in process implies the continuous comparison of the change in value brought about in the circuit with the original value of the capital. The independence of value in relation to the value-forming power, labor-power, is introduced by the act M-L (purchase of labor-power), and is realized during the production process as exploitation of labor-power. But this independence does not reappear in the circuit in which money, commodity and elements of production are only alternating forms of the capital value in process, and in which the past magnitude of the value is compared with the present, changed value of the capital.

“Value,” says Bailey, opposing the autonomization of value which characterizes the capitalist mode of production, and which he treats as the illusion of certain economists, “value is a relation between contemporary commodities, because such only admit of being exchanged with each other.”

He says this in opposition to the comparison of commodity values at different points in time, a comparison which, if the value of money at each period is taken as fixed, is simply a comparison between the expenditure of labor required in different epochs for the production of the same kind of commodities. This derives from his general misunderstanding, according to which exchange-value equals value, the form of value is value itself; thus commodity values cease to be comparable once they no longer actively function as exchange-values, and cannot actually be exchanged for one another. He does not in the least suspect, therefore, that value functions as capital value or capital only in so far as it remains identical with itself and is compared with itself in the different phases of its circuit, which are in no way “contemporary,” but rather occur in succession.(Capital, Vol. 2)

In actual fact, however, this sphere is the sphere of competition, which is subject to accident in each individual case; i.e. where the inner law that prevails through the accidents and governs them is visible only when these accidents are combined in large numbers, so that it remains invisible and incomprehensible to the individual agents of production themselves. Further, however, the actual production process, as the unity of the immediate production process and the process of circulation, produces new configurations in which the threads of the inner connection get more and more lost, the relations of production becoming independent of one another and the components of value ossifying into independent forms.

The transformation of surplus-value into profit is, as we saw, just as much determined by the circulation process as by the process of production. Surplus-value in the form of profit is no longer related to the portion of capital laid out on labor, which is where it derives from, but rather to the total capital. The profit rate is governed by its own laws, which permit it to vary while the rate of surplus-value remains the same, and even require this variation. All this conceals the true nature of surplus-value more and more, concealing therefore the real mechanism of capital. This happens still more with the transformation of profit into average profit and of values into prices of production, the governing averages of market prices. A complex social process intervenes here, the equalization of capitals, which cuts the relative average prices of commodities loose from their values, and the average profits in the various spheres of production from the actual exploitation of labor by the particular capitals involved (quite apart from the individual capital investments in each particular sphere of production). The average prices of commodities not only seem to differ from their value, i.e. from the labor realized in them, but actually do differ, and the average profit of a particular capital differs from the surplus-value this capital has extracted from the workers employed by it. The value of commodities appears directly only in the influence of the changing productivity of labor on the rise and fall of prices of production; on their movement, not on their final limits. Profit now appears as determined only secondarily by the direct exploitation of labor, in so far as, given market prices that are seemingly independent of this exploitation, it permits the capitalist to realize a profit departing from the average. Normal average profit as such seems immanent in capital independently of exploitation; abnormal exploitation or even average exploitation under exceptionally favorable conditions seems only to determine divergences from average profit, and not this average profit itself. The division of profit into profit of enterprise and interest (not to speak of the intervention of commercial profit and money-dealing profit, which are founded in the circulation sphere and seem to derive entirely from this, and not from the production process itself at all) completes the autonomization of the form of surplus-value, the ossification of its form as against its substance, its essence. One portion of profit, in contrast to the other, separates itself completely from the capital-relation as such and presents itself as deriving not from the function of exploiting wage-labor but rather from the wage-labor of the capitalist himself. As against this, interest then seems independent both of the wage-labor of the worker and of the capitalist’s own labor; it seems to derive from capital as its own independent source. If capital originally appeared on the surface of circulation as the capital fetish, value-creating value, so it now presents itself once again in the figure of interest-bearing capital as its most estranged and peculiar form. This is why the form “capital-interest,” as a third in the series to “earth-rent” and “labor-wages,” is much more consistent than “capital-profit,” since profit still retails a memory of its origin which in interest is not simply obliterated but actually placed in a form diametrically opposed to this origin.

Finally, besides capital as an independent source of surplus-value, there appears landed property, as a limit to the average profit which transfers a portion of the surplus-value to a class that neither works itself nor directly exploits workers, and cannot even, like interest-bearing capital, launch forth in edifying homilies about the risk and sacrifice in lending capital. Since in this case one part of the surplus-value seems directly bound up not with social relations but rather with a natural element, the earth, the form of mutual alienation and ossification of the various portions of surplus-value is complete, the inner connection definitely torn asunder and its source completely buried, precisely through the assertion of their autonomy vis-a-vis each other by the various relations of production which are bound up with the different material elements of the production process.

Capital-profit (or better still capital-interest), land-ground-rent, labor-wages, this economic trinity is the connection between the components of value and wealth in general and its sources, completes the mystification of the capitalist mode of production, the reification of social relations, and the immediate coalescence of the material relations of production with their historical and social specificity: the bewitched, distorted and upside-down world haunted by Monsieur le Capital and Madame la Terre, who are at the same time social characters and mere things...

In presenting the reification of the relations of production and the autonomy they acquire vis-a-vis the agents of production, we shall not go into the form and manner in which these connections appear to them as overwhelming natural laws, governing them irrespective of their will, in the form that the world market and its conjunctures, the movement of market prices, the cycles of industry and trade and the alternation of prosperity and crisis prevails on them as blind necessity. This is because the actual movement of competition lies outside our plan, and we are only out to present the internal organization of the capitalist mode of production, its ideal average, as it were. (Capital, Vol. 3)

• The Reification of the Relations of Production and the Independent Development that Accompanies the Development of Capital

In the case of the simplest categories of the capitalist mode of production, and even of commodity-production, in the case of commodities and money, we have already pointed out the mystifying character that transforms the social relations, for which the material elements of wealth serve as bearers in production, into properties of these things themselves (commodities) and still more pronouncedly transforms the production relation itself into a thing (money). All forms of society, in so far as they reach the stage of commodity-production and money circulation, take part in this perversion. But under the capitalist mode of production and in the case of capital, which forms its dominant category, its determining production relation, this enchanted and perverted world develops still more. If one considers capital, to begin with, in the actual process of production as a means of extracting surplus-labor, then this relationship is still very simple, and the actual connection impresses itself upon the bearers of this process, the capitalists themselves, and remains in their consciousness. The violent struggle over the limits of the working-day demonstrates this strikingly. But even within this non-mediated sphere, the sphere of direct action between labor and capital, matters do not rest in this simplicity. With the development of relative surplus-value in the actual specifically capitalist mode of production, whereby the productive powers of social labor are developed, these productive powers and the social interrelations of labor in the direct labor-process seem transferred from labor to capital. Capital thus becomes a very mystic being since all of labor’s social productive forces appear to be due to capital, rather than labor as such, and seem to issue from the womb of capital itself. Then the process of circulation intervenes, with its changes of substance and form, on which all parts of capital, even agricultural capital, devolve to the same degree that the specifically capitalist mode of production develops. This is a sphere where the relations under which value is originally produced are pushed completely into the background. In the direct process of production the capitalist already acts simultaneously as producer of commodities and manager of commodity-production. Hence this process of production appears to him by no means simply as a process of producing surplus-value. But whatever may be the surplus-value extorted by capital in the actual production process and appearing in commodities, the value and surplus-value contained in the commodities must first be realized in the circulation process. And both the restitution of the values advanced in production and, particularly, the surplus-value contained in the commodities seem not merely to be realized in the circulation, but actually to arise from it; an appearance which is especially reinforced by two circumstances: first, the profit made in selling depends on cheating, deceit, inside knowledge, skill and a thousand favorable market opportunities; and then by the circumstance that added here to labor-time is a second determining element — time of circulation. This acts, in fact, only as a negative barrier against the formation of value and surplus-value, but it has the appearance of being as definite a basis as labor itself and of introducing a determining element that is independent of labor and resulting from the nature of capital. In Book II we naturally had to present this sphere of circulation merely with reference to the form determinations which it created and to demonstrate the further development of the structure of capital taking place in this sphere. But in reality this sphere is the sphere of competition, which, considered in each individual case, is dominated by chance; where, then, the inner law, which prevails in these accidents and regulates them, is only visible when these accidents are grouped together in large numbers, where it remains, therefore, invisible and unintelligible to the individual agents in production. But furthermore: the actual process of production, as a unity of the direct production process and the circulation process, gives rise to new formations, in which the vein of internal connections is increasingly lost, the production relations are rendered independent of one another, and the component values become ossified into forms independent of one another.

The conversion of surplus-value into profit, as we have seen, is determined as much by the process of circulation as by the process of production. Surplus-value, in the form of profit, is no longer related back to that portion of capital invested in labor from which it arises, but to the total capital. The rate of profit is regulated by laws of its own, which permit, or even require, it to change while the rate of surplus-value remains unaltered. All this obscures more and more the true nature of surplus-value and thus the actual mechanism of capital. Still more is this achieved through the transformation of profit into average profit and of values into prices of production, into the regulating averages of market-prices. A complicated social process intervenes here, the equalization process of capitals, which divorces the relative average prices of the commodities from their values, as well as the average profits in 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 particular capitals. Not only does it appear so, but it is true in fact that the average price of commodities differs from their value, thus from the labor realized in them, and the average profit of a particular capital differs from the surplus-value which this capital has extracted from the laborers employed by it. The value of commodities appears, directly, solely in the influence of fluctuating productivity of labor upon the rise and fall of the prices of production, upon their movement and not upon their ultimate limits. Profit seems to be determined only secondarily by direct exploitation of labor, in so far as the latter permits the capitalist to realize a profit deviating from the average profit at the regulating market-prices, which apparently prevail independent of such exploitation. Normal average profits themselves seem immanent in capital and independent of exploitation; abnormal exploitation, or even average exploitation under favorable, exceptional conditions, seems to determine only the deviations from 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 profit from money-dealing, which are founded upon circulation and appear to arise completely from it, and not from the process of production itself) consummates the individualization of the form of surplus-value, the ossification of its form as opposed to its substance, its essence. One portion of profit, as opposed to the other, separates itself entirely from the relationship of capital as such and appears as arising not out of the function of exploiting wage-labor, but out of the wage-labor of the capitalist himself. In contrast thereto, interest then seems to be independent both of the laborer’s wage-labor and the capitalist’s own labor, and to arise from capital as its own independent source. If capital originally appeared on the surface of circulation as a fetishism of capital, as a value-creating value, so it now appears again in the form of interest-bearing capital, as in its most estranged and characteristic form. Wherefore also the formula capital — interest, as the third to land — rent and labor — wages, is 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 is also placed in a form thoroughly antithetical to this origin.

Finally, capital as an independent source of surplus-value is joined by landed property, which acts as a barrier to average profit and transfers a portion of surplus-value to a class that neither works itself, nor directly exploits labor, nor can find morally edifying rationalizations, as in the case of interest-bearing capital, e.g., risk and sacrifice of lending capital to others. Since here a part of the surplus-value seems to be bound up directly with a natural element, the land, rather than with social relations, the form of mutual estrangement and ossification of the various parts of surplus-value is completed, the inner connection completely disrupted, and its source entirely buried, precisely because the relations of production, which are bound to the various material elements of the production process, have been rendered mutually independent.

In capital — profit, or still better capital — interest, land — rent, labor — wages, in this economic trinity represented as the connection between the component parts of value and wealth in general and its sources, we have the complete mystification of the capitalist mode of production, the conversion of social relations into things, the direct coalescence of the material production relations with their historical and social determination. It is an enchanted, perverted, topsy-turvy world, in which Monsieur le Capital and Madame la Terre do their ghost-walking as social characters and at the same time directly as mere things. It is the great merit of classical economy to have destroyed this false appearance and illusion, this mutual independence and ossification of the various social elements of wealth, this personification of things and conversion of production relations into entities, this religion of everyday life. It did so by reducing interest to a portion of profit, and rent to the surplus above average profit, so that both of them converge in surplus-value; and by representing the process of circulation as a mere metamorphosis of forms, and finally reducing value and surplus-value of commodities to labor in the direct production process. Nevertheless even the best spokesmen of classical economy remain more or less in the grip of the world of illusion which their criticism had dissolved, as cannot be otherwise from a bourgeois standpoint, and thus they all fall more or less into inconsistencies, half-truths and unsolved contradictions. On the other hand, it is just as natural for the actual agents of production to feel completely at home in these estranged and irrational forms of capital — interest, land — rent, labor — wages, since these are precisely the forms of illusion in which they move about and find their daily occupation. It is therefore just as natural that vulgar economy, which is no more than a didactic, more or less dogmatic, translation of everyday conceptions of the actual agents of production, and which arranges them in a certain rational order, should see precisely in this trinity, which is devoid of all inner connection, the natural and indubitable lofty basis for its shallow pompousness. This formula simultaneously corresponds to the interests of the ruling classes by proclaiming the physical necessity and eternal justification of their sources of revenue and elevating them to a dogma.In our description of how production relations are converted into entities and rendered independent in relation to the agents of production, we leave aside the manner in which the interrelations, due to the world-market, its conjunctures, movements of market-prices, periods of credit, industrial and commercial cycles, alternations of prosperity and crisis, appear to them as overwhelming natural laws that irresistibly enforce their will over them, and confront them as blind necessity. We leave this aside because the actual movement of competition belongs beyond our scope, and we need present only the inner organization of the capitalist mode of production, in its ideal average, as it were. (Capital, Vol. 3, ch. 48)

• Distribution Relations and Production Relations

Assuming that the production process repeats itself continuously under the same conditions, in other words, that reproduction takes place under the same conditions as production, which presupposes that productivity of labor remains unchanged, or at least that variations in productivity do not alter the relationships of the different factors of production; thus, even if the value of commodities were to rise or fall as a result of changes in productivity, the distribution of the value of commodities amongst the different factors of production would remain the same. In that case, although it would not be theoretically accurate to say that the different parts of value determine the value or price of the whole [output], it would be useful and correct to say that they constitute it insofar as one understands by constituting the formation of the whole by adding up the parts. The value would be divided at a steady and constant rate into [pre-existing] value and surplus-value, and the [newly created] value would be resolved at a constant rate into wages and profit, the profit again being broken down at a constant rate into interest, industrial profit and rent. It can therefore be said that P—the price of the commodity—is divided into wages, profit (interest) and rent, and, on the other hand, wages, profit (interest) and rent are the constituents of the value or rather of the price.

This uniformity or similarity of reproduction—the repetition of production under the same conditions—does not exist. Productivity itself changes and changes the conditions [of production]. The conditions, on their part, change productivity. But the divergences are reflected partly in superficial oscillations which even themselves out in a short time, partly in a gradual accumulation of divergences which either lead to a crisis, [to a] violent, seeming restoration of the old relationships, or very gradually assert themselves and are recognized as a change in the conditions.

Interest and rent, which anticipate surplus-value, presuppose that the general character of reproduction will remain the same. And this is the case as long as the capitalist mode of production continues. Secondly, it is presupposed moreover that the specific relations of this mode of production remain the same during a certain period, and this is in fact also more or less the case. Thus the result of production crystallizes into a permanent and therefore prerequisite condition of production, that is, it becomes a permanent attribute of the material conditions of production. It is crises that put an end to this apparent independence of the various elements of which the production process continually consists and which it continually reproduces. (Theories of Surplus Value)

At the same time, this reveals the significance of the distinction between the phenomena of production and of distribution. Profit, a phenomenon of distribution, is here simultaneously a phenomenon of production, a condition of production, a necessary constituent part of the process of production. How absurd it is, therefore, for John Stuart Mill and others to conceive bourgeois forms of production as absolute, but the bourgeois forms of distribution as historically relative, hence transitory. I shall return to this later. The form of production is simply the form of distribution seen from a different point of view. The specific features—and therefore also the specific limitation—which set bounds to bourgeois distribution, enter into bourgeois production itself, as a determining factor, which overlaps and dominates production. The fact that bourgeois production is compelled by its own immanent laws, on the one hand, to develop the productive forces as if production did not take place on a narrow restricted social foundation, while, on the other hand, it can develop these forces only within these narrow limits, is the deepest and most hidden cause of crises, of the crying contradictions within which bourgeois production is carried on and which, even at a cursory glance, reveal it as only a transitional, historical form. (Theories of Surplus Value)