Theories of Surplus Value, Marx 1861-3

Addenda.  Revenue and its Sources.  Vulgar Political Economy

[1.]  The Development of Interest-Bearing Capital on the Basis of Capitalist Production.  [Transformation of the Relations of the Capitalist Mode of Production into a Fetish.  Interest-Bearing Capital as the Clearest Expression of This Fetish.  The Vulgar Economists and the Vulgar Socialists Regarding Interest on Capital]

||XV-891| The form of revenue and the sources of revenue are the most fetishistic expression of the relations of capitalist production.  It is their form of existence as it appears on the surface, divorced from the hidden connections and the intermediate connecting links.  Thus the land becomes the source of rent, capital the source of profit, and labour the source of wages.  The distorted form in which the real inversion is expressed is naturally reproduced in the views of the agents of this mode of production.  It is a kind of fiction without fantasy, a religion of the vulgar.  In fact, the vulgar economists—by no means to be confused with the economic investigators we have been criticising—translate the concepts, motives, etc., of the representatives of the capitalist mode of production who are held in thrall to this system of production and in whose consciousness only its superficial appearance is reflected.  They translate them into a doctrinaire language, but they do so from the standpoint of the ruling section, i.e., the capitalists, and their treatment is therefore not naïve and objective, but apologetic.  The narrow and pedantic expression of vulgar conceptions which are bound to arise among those who are the representatives of this mode of production is very different from the urge of political economists like the Physiocrats, Adam Smith and Ricardo to grasp the inner connection of the phenomena.

However, of all these forms, the most complete fetish is interest-bearing capital.  This is the original starting-point of capital—money—and the formula M—C—M' is reduced to its two extremes—M—M'—money which creates more money.  It is the original and general formula of capital reduced to a meaningless résumé.

The land or nature as the source of rent, i.e., landed property, is fetishistic enough.  But as a result of a convenient confusion of use-value with exchange-value, the common imagination is still able to have recourse to the productive power of nature itself, which, by some kind of hocus-pocus, is personified in the landlord.

Labour as the source of wages, that is, of the worker’s share in his product, which is determined by the specific social form of labour; labour as the cause of the fact that the worker by means of his labour buys the permission to produce from the product (i.e., from capital considered in its material aspect) and has in labour the source by which a part of his product is returned to him in the form of payment made by this product as his employer—this is pretty enough.  But the common conception is in so far in accord with the facts that, even though labour is confused with wage-labour and, consequently, wages, the product of wage-labour, with the product of labour, it is nevertheless obvious to anybody who has common sense that labour itself produces its own wages.

Capital, insofar as it is considered in the production process, still continues to a certain extent to be regarded as an instrument for acquiring the labour of others.  This may be treated as “right” or “wrong”, as justified or not justified, but here the relation of the capitalist to the worker is always presupposed and assumed.

Capital, insofar as it appears in the circulation process, confronts the ordinary observer mainly in the form of merchant capital, that is, a kind of capital which is engaged only in this operation, hence profit in this field is in part linked with a vague notion of general swindling, or more specifically, with the idea that the merchant swindles the industrial capitalist in the same way as the industrial capitalist swindles the worker, or again that the merchant swindles the consumer, just as the producers swindle one another.  In any case, profit here is explained as a result of exchange, that is, as arising from a social relation and not from a thing.

On the other hand, interest-bearing capital is the perfect fetish.  It is capital in its finished form—as such representing the unity of the production process and the circulation process—and therefore yields a definite profit in a definite period of time.  In the form of interest—bearing capital only this function remains, without the mediation of either production process or circulation process.  Memories of the past still remain in capital and profit, although because of the divergence of profit from surplus-value and the uniform profit yielded by all capitals—that is, the general rate of profit—capital becomes ||892| very much obscured, something dark and mysterious.

Interest-bearing capital is the consummate automatic fetish, the self-expanding value, the money-making money, and in this form it no longer bears any trace of its origin.  The social relation is consummated as a relation of things (money, commodities) to themselves.

This is not the place for a more detailed examination of interest and its relation to profit; nor is it the place for an examination of the ratio in which profit is divided into industrial profit and interest.  It is clear that capital, as the mysterious and automatically generating source of interest, that is, source of its [own] increase, finds its consummation in capital and interest.  It is therefore especially in this form that capital is imagined.  It is capital par excellence.

Since, on the basis of capitalist production, a certain sum of values represented in money or commodities—actually in money, the converted form of the commodity—makes it possible to extract a certain amount of labour gratis from the workers and to appropriate a certain amount of surplus-value, surplus labour, surplus product, it is obvious that money itself can be sold as capital, that is, as a commodity sui generis, or that capital can be bought in the form of commodities or of money.

It can be sold as the source of profit.  I enable someone else by means of money, etc., to appropriate surplus-value.  Thus it is quite in order for me to receive part of this surplus-value.  Just as land has value because it enables me to intercept a portion of surplus-value, and I therefore pay for this land only the surplus-value which can be intercepted thanks to it, so I pay for capital the surplus-value which is created by means of it.  Since, in the capitalist production process, the value of capital is perpetuated and reproduced in addition to its surplus-value, it is therefore quite in order that, when money or commodities are sold as capital, they return to the seller after a period of time and he does not alienate it [capital] in the same way as he would a commodity but retains ownership of it.  In this way, money or commodities are not sold as money or commodities, but in their second power, as capital, as self-increasing money or commodities.  Capital is not only increased, but is preserved in the total process of production.  It therefore remains capital for the seller and comes back to him.  The sale consists in the fact that another person, who uses the capital as productive capital, has to pay its owner a certain part of his profit, which he only makes through this capital.  Like land, it is rented out as a value-creating thing which in this process of generating value is preserved and continually returned, and therefore can also be returned to the original seller.  It is only capital in virtue of its return to him.  Otherwise he would sell it as a commodity or buy with it as money.

In any case, the form considered in itself (in fact, it [money] is alienated periodically as a means for exploiting labour, for making surplus-value) is this, that the thing now appears as capital and capital appears as a mere thing; the whole result of the capitalist production and circulation process appears as a property inherent in a thing, and it depends on the owner of money, i.e., of the commodity in its constantly exchangeable form, whether he expends it as money or rents it out as capital.

We have here the relation of capital as principal to itself as yield, and the profit which it yields is measured against its own value, which (in accordance with the nature of capital) is not diminished in this process.

It is thus clear why superficial criticism—in exactly the same way as it wants to maintain commodities and combats money—now turns its wisdom and reforming zeal against interest-bearing capital without touching upon real capitalist production, but merely attacking one of its consequences.  This polemic against interest-bearing capital, undertaken from the standpoint of capitalist production, a polemic which today parades as “socialism”, occurs, incidentally, as a phase in the development of capital itself, for example, in the seventeenth century, when the industrial capitalist had to assert himself against the old-fashioned usurer who, at that time, still [confronted] him as a superior power.

||893| The complete objectification, inversion and derangement of capital as interest-bearing capital—in which, however, the inner nature of capitalist production, [its] derangement, merely appears in its most palpable form—is capital which yields “compound interest”.  It appears as a Moloch demanding the whole world as a sacrifice belonging to it of right, whose legitimate demands, arising from its very nature, are however never met and are always frustrated by a mysterious fate.

The characteristic movement of capital, both in the production and in the circulation processes, is the return of the money or commodity to its starting-point—to the capitalist.  This expresses, on the one hand, the real metamorphosis, the conversion of the commodity into its conditions of production, and the conversion of the conditions of production back into the form of the commodity—i.e., reproduction, and, on the other hand, the formal metamorphosis, the conversion of the commodity into money and of the money back into the commodity.  Finally, the multiplication of value: M—C—M'.  The original value, which is however increased during the process, always remains in the possession of the same capitalist.  Only the forms change in which he possesses it: money, commodity, or the form of the production process itself.

In the case of interest-bearing capital, this return of capital to its starting-point acquires a quite external aspect, divorced from the real movement whose form it is.  A spends his money not as money but as capital.  No change takes place here in the money.  It only changes hands.  Its real conversion into capital takes place only while it is in the hands of B.  But it has become capital for A as a result of the transfer of the money from A’s hands into those of B.  The real return of capital from the production and circulation process takes place for B.  But for A, the return takes place in the same way as the alienation did.  The money passes from B back again to A.  He lends the money instead of spending it.

In the real production process of capital, each particular movement of money expresses an aspect of reproduction, whether it be the conversion of money into labour, the conversion of the finished commodity into money (the end of the act of production) or the reconversion of the money into commodities (renewal of the production process, recommencement of reproduction).  The movement of money when it is lent as capital, that is, when it is not converted into capital but enters into circulation as capital, expresses nothing more than the transfer of the same money from one person to another.  The property rights remain with the lender, but the possession is transferred to the industrial capitalist.  For the lender, however, the conversion of the money into capital begins at the moment when he spends it as capital instead of spending it as money, i.e., when he hands it over to the industrial capitalist.  (It remains capital for him even if he does not lend it to the industrial capitalist but to a spendthrift, or to a worker who cannot pay his rent.  The whole pawnshop business [is based on this].)  True, the other person converts it into capital, but this is an operation beyond that in which the lender and the borrower are involved.  This development is effaced, is not visible, is not directly included in it.  Instead of the real conversion of money into capital, there appears only the empty form of this process.  Just as in the case of labour-power, the use-value of money here becomes that of creating exchange-value, more exchange-value than it itself contains.  It is lent as self-expanding value, as a commodity, but a commodity which, precisely because of this quality, differs from commodities as such and therefore also possesses a specific form of alienation.

The starting-point of capital is the commodity owner, the owner of money, in short, the capitalist.  Since in the case of capital both starting-point and point of return coincide, it returns to the capitalist.  But the capitalist exists here in a dual form, as the owner of capital and as the industrial capitalist who really converts money into capital.  The capital actually issues ||894| from him [the industrial capitalist] and returns again to him.  But only as possessor.  The capitalist exists in a dual form—juridically and economically.  The capital as property consequently returns to the juridical capitalist the left-handed Sam.  But the return of the capital, which includes the maintenance of its value and establishes it as a self-maintaining and self-perpetuating value, is indeed brought about by intermediate steps for capitalist II but not for capitalist I.  In this case therefore, the return is not the consequence and result of a series of economic processes but is effected by a particular juridical transaction between buyer and seller, by the fact that it is lent instead of being sold, and therefore it is alienated only temporarily.  What is sold is, in fact, its use-value, whose function in this case is to produce exchange-value, to yield profit, in other words to produce more value than it itself contains.  As money it does not change through being used.  It is however expended as money and it flows back as money.

The form in which it returns depends on the mode of reproduction of the capital.  If it is loaned as money, then it comes back in the form of circulating capital, that is, its whole value is returned plus surplus-value, in this case, that part of surplus-value or of profit which consists of interest; the sum of money loaned plus the additional amount which has arisen from it.

If it is loaned out in the form of machinery, buildings, etc., in short, in a material form in which it functions as fixed capital in the process of production, then it returns in the form of fixed capital, as an annuity, that is, for example, as an annual amount equal to the replacement of the wear and tear, i.e., equal to that part of the value which has entered the circulation process, plus that part of the surplus-value which is calculated as profit (in this case a part of the profit, interest) on the fixed capital (not insofar as it is fixed capital, but insofar as in general it is capital of a definite amount).

In profit as such, surplus-value, and consequently its real source, is already obscured and mystified:

1) Because, considered from the formal standpoint, profit is surplus-value calculated on the whole of the capital advanced, so that each part of capital—fixed and circulating—laid out on raw materials, machinery or labour, yields an equal amount of profit.

2) Because, just as in the case of a single given capital of 500, for example, every fifth part yields 10 per cent, if the surplus-value amounts to 50, so now, as a result of the establishment of the general rate of profit, every capital of 500 or 100, no matter which sphere it operates in, irrespective of the relative proportions of variable and constant capital, no matter how varied the periods of turnover, etc., will yield the same average profit—say 10 per cent—in the same period of time as any other capital under quite different organic conditions.  Because, therefore, the profit of individual capitals regarded in isolation and the surplus-value which is produced by them in their own sphere of production become in fact different magnitudes.

It is true that point 2 merely develops further what has already been implied in point 1.

The basis of interest however is this already externalised form of surplus-value, i.e., its existence as profit.  This form differs from its first simple aspect, in which it still reveals the umbilical cord of its birth, and is, at first sight, by no means recognisable as a form of surplus-value.  Interest directly presupposes not sur-plus-value, but profit, of which it is merely a part placed in a special category or division.  It is therefore much more difficult to recognise surplus-value in interest than in profit, since interest is directly connected with surplus-value only in the form of profit.

The time needed for the return of capital depends on the real production process; in the case of interest-bearing capital, its return as capital appears to depend merely on the agreement between lender and borrower.  So that the return of the capital in this transaction no longer appears to be a result determined by the production process, but it seems that the capital never loses the form of money for a single instant.  These transactions are nevertheless determined by the real returns.  But this is not evident in the transaction.

||895| Interest, as distinct from profit, represents the value of mere ownership of capital—i.e., it transforms the ownership of money (of a sum of values, commodities, whatever the form may be) in itself, into ownership of capital, and consequently commodities or money as such into self-expanding values.  The conditions of labour are of course capital, only insofar as they confront the labourer as his non-property and consequently function as someone else’s property.  But they can function in this way only in contradiction to labour.  The antagonistic existence of these conditions in relation to labour makes their owners capitalists, and turns these conditions owned by them into capital.  But capital in the hands of moneyed capitalist A does not have this contradictory character which turns it into capital and which therefore makes ownership of money appear as ownership of capital.  The concrete distinct form by means of which money or a commodity is converted into capital is obliterated.  Moneyed [capitalist] A does not confront the worker at all, but only another capitalist—capitalist B.  What he sells him is actually the “use” of the money, the results it will produce when converted into productive capital.  But in fact it is not the use which he sells directly.  If I sell a commodity, then I sell a specific use-value.  If I buy money with commodities, then I buy the functional use-value which money, as the converted form of commodities, possesses.  I do not sell the use-value of the commodity along with its exchange-value, nor do I buy the particular use-value of the money along with the money itself.  But money as money—before its conversion into and its function as capital, a function which it does not perform while it is in the hands of the moneylender—has no other use-value than that which it possesses as a commodity (gold, silver, its material substance) or as money which is the converted form of a commodity.  What the moneylender sells in actual fact to the industrial capitalist, what really happens in the transaction, is simply this: he transfers the ownership of the money to the industrial capitalist for a certain period of time.  He disposes of his ownership title for a certain term, and as a result the industrial capitalist has bought the ownership for a certain period.  Thus his money appears to be capital before it is sold and the mere ownership of money or a commodity—separated from the capitalist production process—is regarded as capital.

The fact that it becomes capital only after it has been disposed of, makes no difference, any more than the use-value of cotton is altered by the fact that its use-value only emerges after it has been disposed of to the spinner or that the use-value of meat only becomes apparent after it has been transferred from the butcher’s shop to the consumer’s table.  Hence money, once it is not spent on consumption, and commodities, once they are not used as means of consumption by their owners, transform those who possess them into capitalists and are in themselves—separated from the capitalist production process and even before their conversion into “productive” capital—capital, that is, they are selfexpanding, self-maintaining and self-increasing value.  It is their immanent attribute to create value, to yield interest, just as the attribute of the pear tree is to produce pears.  And it is as such an interest-bearing thing that the money-lender sells his money to the industrial capitalist.  Because money preserves itself, i.e., is value which preserves itself, the industrial capitalist can return it at any time fixed by contract.  Since it produces a definite amount of surplus-value, interest, annually, or rather since value accrues to it over any period of time, he can also pay back this surplus-value to the lender annually or in any other conventionally established period of time.  Money as capital yields surplus-value daily in exactly the same way as wage-labour.  While interest is simply a part of the profit established under a special name, it appears here as [the surplus-value specifically created by] capital as such, separated from the production process, and consequently [due] only to the mere ownership of capital, the ownership of money and commodities, separated from the relations which give rise to the contradiction between this property and labour, thus turning it into capitalist property.  [Interest seems to be] a specific kind of surplus-value the generation of which is due to the mere ownership of capital and therefore to an intrinsic characteristic of capital; whereas on the contrary, industrial profit appears to be a mere addition which the borrower obtains by employing capital productively, that is, by exploiting the workers with the help of the capital borrowed (or, as people also say, by his work as a capitalist, the function of the capitalist being equated here with labour, and even identified with wage-labour, since the industrial capitalist, by really taking part in the ||896| production process, appears in fact as an active agent in production, as a worker, in contrast to the idle, inactive moneylender whose function of property owner is separate from and outside the production process).

Thus it is interest, not profit, which appears to be the creation of value arising from capital as such and therefore from the mere ownership of capital; consequently it is regarded as the specific revenue created by capital.  This is also the form in which it is conceived by the vulgar economists.  In this form all intermediate links are obliterated, and the fetishistic feature of capital, as also the concept of the capital-fetish, is complete.  This form arises necessarily, because the juridical aspect of property is separated from its economic aspect and one part of the profit under the name of interest accrues to capital which is completely separated from the production process, or to the owner of this capital.

To the vulgar economist who desires to represent capital as an independent source of value, a source which creates value, this form is of course a godsend, a form in which the source of profit is no longer recognisable and the result of the capitalist process—separated from the process itself—acquires an independent existence.  In M—C—M' an intermediate link is still retained.  In M—M' we have the incomprehensible form of capital, the most extreme inversion and materialisation of production relations.

A general rate of interest corresponds naturally to the general rate of profit.  It is not our intention to discuss this further here, since the analysis of interest-bearing capital does not belong to this general section but to that dealing with credit.  However the observation that the average rate of profit appears much less as a palpable, solid fact than does the rate of interest is important for the elaboration of this aspect of capital.  True, the rate of interest fluctuates continuously.  [It may be] 2 per cent today (on the money market for the industrial capitalist—and this is all we are discussing), 3 per cent tomorrow, and 5 per cent the day after.  But it is 2 per cent, 3 per cent, 5 per cent for all borrowers.  It is a general condition that every sum of money of £100 yields 2 per cent, 3 per cent or 5 per cent, while the same value in its real function as capital yields very different amounts of real profit in the different spheres of production.  The real profit deviates from the ideal average level, which is established only by a continuous process, a reaction, and this only takes place during long periods of circulation of capital.  The rate of profit is in certain spheres higher in some years, while it is lower in succeeding years.  Taking the years together, or taking a series of such evolutions, one will in general obtain the average profit.  Thus it never appears as something directly given, but only as the average result of contradictory oscillations.  It is different with the rate of interest.  In its generality, it is a fact which is established daily, a fact which the industrial capitalist regards as a pre-condition and an item of calculation in his operations.  The average rate of profit exists indeed only as an ideal average figure, insofar as it serves to estimate the real profit; it exists only as an average figure, as an abstraction, insofar as it is established as something which is in itself complete, definite, given.  In reality, however, it exists only as the determining tendency in the movement of equalisation of the real, different rates of profit, whether of individual capitals in the same sphere or of different capitals in the different spheres of production.

||897| What the lender demands of the capitalist is calculated on the general (average) rate of profit, not on individual deviations from it.  Here the average becomes the pre-condition.  The rate of interest itself varies, but does so for all borrowers.

A definite, equal rate of interest, on the other hand, exists not only on the average but in actual fact (even though it is accompanied by variations between minimum and maximum rates according to whether or not the borrower is first-rate) and the deviations appear rather as exceptions brought about by special circumstances.  The meteorological bulletins do not indicate the state of the barometer more exactly than stock-exchange bulletins do the state of interest rates, not for this or that capital, but for the capital available on the money market, that is, capital available for lending.

This is not the place to go into the reasons for this greater stability and equality of the rate of interest on loan capital in contradistinction to the less tangible form of the general rate of profit.  Such a discussion belongs to the section on credit.  But this much is obvious: the fluctuations in the rate of profit in every sphere—quite apart from the special advantages which individual capitalists in the same sphere of production may enjoy—depend on the existing level of market prices and their fluctuations around cost-prices.  The difference in the rates of profit in the various spheres can only be discerned by comparison of the market prices in the different spheres, that is, the market prices of the different commodities, with the cost-prices of these commodities.  A decline in the rate of profit below the ideal average in any particular sphere, if prolonged, suffices to bring about a withdrawal of capital from this sphere, or to prevent the entry of the average amount of new capital into it.  For it is the inflow of new, additional capital, even more than the redistribution of capital already invested, that equalises the distribution of capital in the different spheres.  The surplus profit in the different spheres, on the other hand, is discernible only by comparison of the market prices with cost-prices.  As soon as any difference becomes apparent in one way or another, then an outflow or inflow of capital from or to the particular spheres [begins].  Apart from the fact that this act of equalisation requires time, the average profit in each sphere becomes evident only in the average profit rates obtained, for example, over a cycle of seven years, etc., according to the nature of the capital.  Mere fluctuations—below and above [the general rate of profit]—if they do not exceed the average extent and do not assume extraordinary forms, are therefore not sufficient to bring about a transfer of capital, and in addition the transfer of fixed capital presents certain difficulties.  Momentary booms can only have a limited effect, and are more likely to attract or repel additional capital than to bring about a redistribution of the capital invested in the different spheres.

One can see that all this involves a very complex movement in which, on the one hand, the market prices in each particular sphere, the relative cost-prices of the different commodities, the position with regard to demand and supply within each individual sphere, and, on the other hand, competition among the capitalists in the different spheres, play a part, and, in addition, the speed of the equalisation process, whether it is quicker or slower, depends on the particular organic composition of the different capitals (more fixed or circulating capital, for example) and on the particular nature of their commodities, that is, whether their nature as use-values facilitates rapid withdrawal from the market and the diminution or increase of supply, in accordance with the level of the market prices.

In the case of money capital on the other hand, only two sorts of buyers and sellers, only two types of demand and supply, confront each other on the money market.  On the one side, the borrowing class of capitalists—on the other, the money-lenders.  The commodity has only one form—money.  All the different forms assumed by capital according to the different spheres of production or circulation in which it is invested, are obliterated here.  It exists here in the undifferentiated, always identical form, that of independent exchange-value, i.e., of money.  Here competition between the different spheres ceases; they are all lumped together as borrowers of money, and capital too confronts them all in a form in which it is still indifferent to the way it is utilised.  Whereas productive capital ||898| emerges only in the movement of competition between the different spheres as the joint capital of the whole class, capital here actually—as regards the pressure exerted—acts as such in the demand for capital.  On the other hand, money capital (the capital on the money market) really possesses the form which enables it as a common element, irrespective of its particular employment, to be distributed amongst the different spheres, amongst the capitalist class, according to the production needs of each separate sphere.  With the development of large-scale industry, moreover, money capital, insofar as it appears on the market, is represented less and less by the individual capitalist, the owner of this or that parcel of capital available on the market, but is concentrated, organised and is [subject] in quite a different way from real production to the control of a banker who represents the capital.  So that insofar as the form of the demand is concerned, the pressure of a class confronts it [loan capital]; and as far as supply is concerned, it appears as loan capital en masse, the loan capital of society, concentrated in a few reservoirs.

These are some of the reasons why the general rate of profit appears as a hazy mirage in contrast to the fixed rate of interest which, although it fluctuates in magnitude, nevertheless fluctuates in the same measure for all borrowers and therefore always confronts them as something fixed, given; just as money despite the changes in its value has the same value for all commodities.  Just as the market prices of commodities fluctuate daily, which does not prevent them from being quoted daily, so it is with the rate of interest, which is likewise quoted regularly as the price of money.  This is the established price of capital, for capital is here offered as a special kind of commodity—money—and consequently its market price is established in the same way as that of all other commodities.  The rate of interest is therefore always expressed as the general rate of interest, as a fixed amount [to be paid] for a certain amount of money; whereas the rate of profit within a particular sphere may vary although the market prices of commodities are the same (depending on the conditions under which individual capitals produce the same commodities; since the individual rate of profit does not depend on the market price of the commodity but on the difference between the market price and the cost-price) and it is equalised in the different spheres in the course of operations only as a result of constant fluctuations.  In short, only in moneyed capital, the capital which can be lent, does capital become a commodity, whose quality of self-expansion has a fixed price, which is quoted as the prevailing rate of interest.

Thus capital acquires its pure fetish form in interest-bearing capital, and indeed in its direct form of interest-bearing money capital (the other forms of interest-bearing capital, which do not concern us here, are in turn derived from this form and presuppose it).  Firstly, as a result of its continuous existence as money, a form in which all its determining features are obliterated and its real elements invisible; in this form it represents merely independent exchange-value, value which has become independent.  The money form is a transient form in the real process of capital.  On the money market capital always exists in this form.  Secondly, the surplus-value it produces, which [here] again assumes the form of money, seems to accrue to capital as such, consequently to the mere owner of money capital, i.e., of capital separated from its process.  Here M—C—M' becomes M—M', and just as its form here is the undifferentiated money form (for money is precisely the form in which the differences between commodities as use-values are obliterated, consequently also the differences between productive capitals, which are made up of the conditions of existence of these commodities, the particular forms of the productive capitals themselves are obliterated) so the surplus-value it produces, the surplus money which it is or which it becomes, appears as a definite rate measured by the amount of the money.  If the rate of interest is 5 per cent, then £100 used as capital becomes £105.  This is the quite tangible form of self-expanding value or of money-making money, and at the same time the quite irrational form, the incomprehensible, mystified form.  In the discussion of capital we started from M—C—M, of which M—M' was only the result.  We now find M—M' as the subject.  Just as growth is characteristic of trees, so money-bearing (ιόχος)[a] is characteristic of capital in this, its pure form as money [capital].  The incomprehensible superficial form we encounter and which has therefore constituted the starting-point of our analysis, is found again as the result of the process in which the form of capital is gradually more and more alienated and rendered independent of its inner substance.

||899| We started with money as the converted form of the commodity.  What we arrive at is money as the converted form of capital, just as we have perceived that the commodity is the pre-condition and the result of the production process of capital.

This aspect of capital, which is the most fantastic and at the same time comes nearest to the popular notion of it, is both regarded as the “basic form” by the vulgar economists and made the first point of attack by superficial critics; the former, partly because the inner connections are least apparent here and capital emerges in a form in which it appears to be an independent source of value, partly because its contradictory character is totally concealed and effaced in this form and no contradiction to labour [is evident].  On the other hand, [capital is subjected to] attack because it is the form in which it is at its most irrational and provides the easiest point of attack for the vulgar socialists.

The polemic waged by the bourgeois economists of the seventeenth century (Child, Culpeper and others) against interest as an independent form of surplus-value merely reflects the struggle of the rising industrial bourgeoisie against the old-fashioned usurers, who monopolised the pecuniary resources at that time.  Interest-bearing capital in this case is still an antediluvian form of capital which has yet to be subordinated to industrial capital and to acquire the dependent position which it must assume—theoretically and practically—on the basis of capitalist production.  The bourgeoisie did not hesitate to accept State aid in this as in other cases, where it was a question of making the traditional production relations which it found, adequate to its own.

It is clear that any other kind of division of profit between various kinds of capitalists, that is, increasing the industrial profit by reducing the rate of interest and vice versa, does not affect the essence of capitalist production in any way.  The kind of socialism which attacks interest-bearing capital as the “basic form” of capital not only remains completely within the bounds of the bourgeois horizon.  Insofar as its polemic is not a misconceived attack and criticism prompted by a vague notion and directed against capital itself, though identifying it with one of its derived forms, it is nothing but a drive, disguised as socialism, for the development of bourgeois credit and consequently only expresses the low-level of development of the existing conditions in a country where such a polemic can masquerade as socialist and is itself only a theoretical symptom of capitalist development although this bourgeois striving can assume quite startling forms such as that of “crédit gratuit”[b] for example.  The same applies to Saint-Simonism with its glorification of banking (Crédit mobilier later).

[2.]  Interest-Bearing Capital and Commercial Capital in Relation to Industrial Capital.  Older Forms.  Derived Forms

The commercial and interest-bearing forms of capital are older than industrial capital, which, in the capitalist mode of production, is the basic form of the capital relations dominating bourgeois society—and all other forms are only derived from it or secondary: derived as is the case with interest-bearing capital; secondary means that the capital fulfils a special function (which belongs to the circulation process) as for instance commercial capital.  In the course of its evolution, industrial capital must therefore subjugate these forms and transform them into derived or special functions of itself.  It encounters these older forms in the epoch of its formation and development.  It encounters them as antecedents, but not as antecedents established by itself, not as forms of its own life-process.  In the same way as it originally finds the commodity already in existence, but not as its own product, and likewise finds money circulation, but not as an element in its own reproduction.  Where capitalist production has developed all its manifold forms and has become the dominant mode of production, interest-bearing capital is dominated by industrial capital, and commercial capital becomes merely a form of industrial capital, derived from the circulation process.  But both of them must first be destroyed as independent forms ||900| and subordinated to industrial capital.  Violence (the State) is used against interest-bearing capital by means of compulsory reduction of interest rates, so that it is no longer able to dictate terms to industrial capital.  But this is a method characteristic of the least developed stages of capitalist production.  The real way in which industrial capital subjugates interest-bearing capital is the creation of a procedure specific to itself—the credit system.  The compulsory reduction of interest rates is a measure which industrial capital itself borrows from the methods of an earlier mode of production and which it rejects as useless and inexpedient as soon as it becomes strong and conquers its territory.  The credit system is its own creation, and is itself a form of industrial capital which begins with manufacture and develops further with large-scale industry.  The credit system originally is a polemical form directed against the old-fashioned usurers (goldsmiths in England, Jews, Lombards, and others).  The seventeenth-century writings in which its first mysteries are discussed are all produced in this polemical form.

Commercial capital is subordinated to industrial capital in various ways or, what amounts to the same thing, [it becomes] a function of the latter, it is industrial capital engaged in a special function.  The merchant, instead of buying commodities, buys wage-labour with which he produces the commodities which he intends to sell on the market.  But commercial capital thereby loses the fixed form which it previously possessed in contrast to production.  This was the way the medieval guilds were undermined by manufacture and the handicrafts confined to a narrower sphere.  The merchant in the Middle Ages was simply a dealer in commodities produced either by the town guilds or by the peasants (apart from sporadic areas where manufacture developed, for instance in Italy and Spain).

The transformation of the merchant into an industrial capitalist is at the same time the transformation of commercial capital into a mere form of industrial capital.  The producer, conversely, becomes a merchant.  For example, the cloth producer himself buys material in accordance with the size of his capital, etc., instead of gradually obtaining his material in small amounts from the merchant and working for him.  The conditions of production enter into the process [of production] as commodities which he himself ha s bought.  And instead of producing for individual merchants or for particular customers, he now produces for the world of commerce.

In the first form, the merchant dominates production and commercial capital dominates the handicrafts and rural domestic industry which it sets in motion.  The crafts are subordinated to him.  In the second form, production becomes capitalist production.  The producer is himself a merchant, merchant capital now acts as an intermediary only in the circulation process, thus fulfilling a definite function in the reproduction process of capital.  These are the two forms.  The merchant as such becomes a producer, an industrialist.  The industrialist, the producer, becomes a merchant.

Originally, trade is the pro-condition for the transformation of guild, rural domestic and feudal agricultural production into capitalist production.  It develops the product into a commodity, partly by creating a market for it, partly by giving rise to new commodity equivalents and partly by supplying production with new materials and thereby initiating new kinds of production which are based on trade from the very beginning because they depend both on production for the market and on elements of production derived from the world market.

As soon as manufacture gains strength (and this applies to an even greater extent to large-scale industry), it in turn creates the market, conquers it, opens up, partly by force, markets which it conquers, however, by means of its commodities.  From now on, trade is merely a servant of industrial production for which a constantly expanding market has become a very condition of existence, since constantly expanding mass production, circumscribed not by the existing limits of trade (insofar as trade is only an expression of the existing level of demand), but solely by the amount of capital available and the level of productivity of the workers, always floods the existing market and consequently seeks constantly to expand and remove its boundaries.  Trade is now the servant of industrial capital, and carries out one of the functions emanating from the conditions of production of industrial capital.

During its first stages of development, industrial capital seeks to secure a market and markets by force, by the colonial system (together with the prohibition system).  The industrial capitalist faces the world market; [he] therefore compares ||901| and must constantly compare his own cost-prices with market prices not only at home, but also on the whole market of the world.  He always produces taking this into account.  In the earlier period this comparison is carried out only by the merchants, thus enabling merchant capital to dominate over productive [capital].  |901||




||902| Interest is therefore nothing but a part of the profit (which, in its turn, is itself nothing but surplus-value, unpaid labour), which the industrial capitalist pays to the owner of the borrowed capital with which he “works”, either exclusively or partially.  Interest is a part of profit—of surplus-value—which, established as a special category, is separated from the total profit under its own name, a separation which is by no means based on its origin, but only on the manner in which it is paid out or appropriated.  Instead of being appropriated by the industrial capitalist himself—although he is the person who at first holds the whole surplus-value in his hands no matter how it may be distributed between himself and other people under the names of rent, industrial profit and interest—this part of the profit is deducted by the industrial capitalist from his own revenue and paid to the owner of capital.

If the rate of profit is given, then the relative level of the rate of interest depends on the ratio in which profit is divided between interest and industrial profit.  If the ratio of this division is given, then the absolute level of the rate of interest (that is, the ratio of interest to capital) depends on the rate of profit.  It is not intended to investigate here how this ratio is determined.  This belongs to the section dealing with the real movement of capital, i.e., of capitals, while we are concerned here with the general forms of capital.

The formation of interest-bearing capital, its separation from industrial capital, is a necessary product of the development of industrial capital, of the capitalist mode of production itself.  Money (a sum of value, which is always convertible into the conditions of production) or the conditions of production into which it can be converted at any time and of which it is only the converted form—money employed as capital, commands a definite quantity of other people’s labour, more labour than it itself contains.  It not only preserves its value in exchange with labour, but increases it, produces surplus-value.  The value of money or of commodities as capital is not determined by the value they possess as money or as commodities, but by the amount of surplus-value which they “produce”  for their owners.  The product of capital is profit.  On the basis of capitalist production, whether money is spent as money or as capital depends only on the different ways in which money is employed.  Money (a commodity) in itself is capital on the basis of capitalist production (just as labour-power in itself is labour) since, first, it can be converted into the conditions of production and is, as it exists, only an abstract expression of them, their existence as value; and secondly, the material elements of wealth in themselves possess the property of being capital because their opposite—wage-labour—which turns them into capital—is present as the basis for social production.

Rent is likewise simply a name for a part of the surplus-value which the industrialist has to pay out, in the same way as interest is another part of surplus-value which, although it accrues to him (like rent), has to be handed over to someone else.  But the great difference here is the following: through landed property, the landowner prevents capital from making the value of agricultural products equal to their cost-price.  Monopoly of landed property enables the landowner to do this.  It enables him to pocket the difference between value and cost-price.  On the other hand—as far as differential rent is concerned—this monopoly enables the landowner to pocket the excess of the market value over the individual value of the product of a particular piece of land; in contrast to the other spheres of production, where this difference in the form of surplus profit flows into the pockets of the capitalists who operate under more favourable conditions than the average conditions which satisfy the greater part of demand, thus determining the bulk of production and consequently regulating the market value of each particular sphere of production.

Landed property is a means for grabbing a part of the surplus-value produced by industrial capital.  On the other hand, loan capital—to the extent that the capitalist operates with borrowed capital—is a means for producing the whole of the ||903| surplus-value.  That money (commodities) can be loaned out as capital means nothing more than that it is itself capital.  The abolition of landed property in the Ricardian sense, that is, its conversion into State property so that rent is paid to the State instead of to the landlord, is the ideal, the heart’s desire, which springs from the deepest, inmost essence of capital.  Capital cannot abolish landed property.  But by converting it into rent [which is paid to the State] the capitalists as a class appropriate it and use it to defray their State expenses, thus appropriating in a roundabout way what cannot be retained directly.  Abolition of interest and of interest-bearing capital, on the other hand, means the abolition of capital and of capitalist production itself.  As long as money (commodities) can serve as capital, it can be sold as capital.  It is therefore quite in keeping with the views of the petty-bourgeois Utopians that they want to keep commodities but not money, industrial capital but not interest-bearing capital, profit but not interest.

There are not two different kinds of capital—interest-bearing and profit-yielding—but the selfsame capital which operates in the process of production as capital, produces a profit which is divided between two different capitalists—one standing outside the process, and, as owner, representing capital as such <but it is an essential condition of this capital that it is represented by a private owner; without this it does not become capital as opposed to wage-labour>, and the other representing operating capital, capital which takes part in the production process.

[3.  The Separation of Individual Parts of Surplus-Value in the Form of Different Revenues.  The Relation of Interest to Industrial Profit.  The Irrationality of the Fetishised Forms of Revenue]

The further “ossification” or transformation of the division of profit into something independent appears in such a way that the profit on every single capital—and therefore also the average profit based on the equalisation of capitals—is split or divided into two component parts separated from, or independent of, each other, namely, interest and industrial profit, which is now sometimes called simply profit or acquires new names such as wages of labour of superintendence, etc.  If the rate of profit (average profit) is 15 per cent and the rate of interest (which, as we have seen, is always established in the general form) is 5 per cent (the general rate being always quoted in the money market as the “value” or “price” of money), then the capitalist—even when he is the owner of the capital and has not borrowed any part of it, so that the profit does not have to be divided between two capitalists—considers that 5 per cent of the 15 per cent represents interest on his capital, and only 10 per cent represents the profit he makes by the productive employment of the capital.  This 5 per cent interest, which he as an “industrial capitalist” owes to himself as “owner” of the capital, is due to his capital as such, and consequently it is due to him as owner of the capital as such (which is at one and the same time the existence of capital in itself, or the existence of capital as the capitalist, as property which debars other people from owning it), capital abstracted from the production process as opposed to operating capital, capital involved in the production process, and to the “industrial capitalist” as representative of this operating, “working” capital.

Interest” is the fruit of capital insofar as it does not “work” or operate, and profit is the fruit of “working”, operating capital.  This is similar to the way in which the farming capitalist—who is at the same time also a landowner, the owner of the soil which he exploits in capitalist fashion—assigns that part of his profit which constitutes rent, this surplus profit, to himself not as capitalist but as landowner, attributing it not to capital but to landed property so that he, the capitalist, owes himself “rent” as a landowner.  Thus one aspect of capital confronts another aspect of the same capital just as rigidly as do landed property and capital which, in fact, constitute the separate claims to appropriation of other people’s labour which are based on two essentially different means of production.

If, on the one hand, five partners own a cotton mill which represents a capital of £100,000 and yields a profit of 10 per cent, that is, £10,000, then each of them gets a fifth of the profit or £2,000.  On the other hand, if a single capitalist invested the same amount of capital in a mill and made the same amount of profit—£10,000—he would not consider that he received £2,000 profit as a partner and the other £8,000 company profit for the nonexistent four partners.  Consequently, in itself the mere division of profit between different ||904| capitalists who have different legal claims on the same capital and who are in one way or another joint owners of the same capital, does not by any means establish different categories for the separate portions.  Why then should the accidental division between lender and borrower of capital do so?

Prima facie it is simply a question of the division of profit when there are two owners of the capital with different titles—a prima facie legal, but not economic aspect.  In itself it makes no difference at all whether a capitalist produces with his own or with other people’s capital or in what proportion he uses his own capital to that of other people.  How does it happen that this division of profit into [industrial] profit and interest does not appear as an accidental division, dependent on the accident whether or not the capitalist really has a share with someone else, or on whether he by chance is operating with his own or with someone else’s capital, but that, on the contrary, even when he operates exclusively with his own capital, he in any case splits himself into two—into a mere owner of capital and into a user of capital, into capital which is outside the production process and capital which takes part in the production process, into capital which as such yields interest and capital which yields profit because it is used in the production process?

There is a real reason at the root of this.  Money (as an expression of the value of commodities in general) in the [production] process appropriates surplus-value, no matter what name it bears or whatever parts it is split into, because it is already presupposed as capital before the production process.  It maintains, produces and reproduces itself as capital in the process [of production] and moreover on a continually expanding scale.  Once the capitalist mode of production is given and work is undertaken on this basis and within the social relations which correspond to it, that is, when it is not a question of the process of formation of capital, then even before the [production] process begins money as such is capital by its very nature, which, however, is only realised in the process and indeed only becomes a reality in the process itself.  If it did not enter into the process as capital it would not emerge from it as capital, that is, as profit-yielding money, as self-expanding value, as value which produces surplus-value.

It is the same as with money.  For example, this coin is nothing but a piece of metal.  It is only money in virtue of its function in the circulation process.  But if the existence of the circulation process of commodities is presupposed, the coin not only functions as money, but as such it is in every single case a pre-condition for the circulation process before it enters into it.  Capital is not only the result of, but the pre-condition for, capitalist production.  Money and commodities as such are therefore latent capital, potential capital; this applies to all commodities insofar as they are convertible into money, and to money insofar as it is convertible into those commodities which constitute the elements of the capitalist process of production.  Thus money—as the pure expression of the value of commodities and of the conditions of labour—is itself as capital antecedent to capitalist production.  What is capital regarded not as the result of, but as the prerequisite for, the process [of production]?  What makes it capital before it enters the process so that the latter merely develops its immanent character?  The social framework in which it exists.  The fact that living labour is confronted by past labour, activity is confronted by the product, man is confronted by things, labour is confronted by its own materialised conditions as alien, independent, self-contained subjects, personifications, in short, as someone else’s property and, in this form, as “employers” and “commanders” of labour itself, which they appropriate instead of being appropriated by it.  The fact that value—whether it exists as money or as commodities—and in the further development the conditions of labour confront the worker as the property of other people, as independent properties, means simply that they confront him as the property of the non-worker or, at any rate, that, as a capitalist, he confronts them [the conditions of labour] not as a worker but as the owner of value, etc., as the subject in which these things possess their own will, belong to themselves and are personified as independent forces.  Capital as the prerequisite of production, capital, not in the form in which it emerges from the production process, but as it is before it enters it, [is] the contradiction in which it is confronted by labour as the labour of other people and in which capital itself, as the property of other people, confronts labour.  It is the contradictory social framework which is expressed in it and which, separated from the [production] process itself, ||905| expresses itself in capitalist property as such.

This aspect—separated from the capitalist production process itself of which it is the constant result, and as its constant result it is also its constant prerequisite—manifests itself in the fact that money [and] commodities are as such, latently, capital, that they can be sold as capital, and that in this form they represent the mere ownership of capital, and the capitalist as the mere owner, apart from his capitalist functions.  Money and commodities considered as such constitute command over other people’s labour, and therefore self-expanding value and a claim to the appropriation of other people’s labour.

It is thus quite obvious that the title to and the means for the appropriation of other people’s labour is this relationship and not some kind of labour or equivalent supplied by the capitalist.

Interest therefore appears as the surplus-value due to capital as capital, to the mere ownership of capital, as the surplus-value derived by capital from the production process because it enters it as capital, and therefore due to capital as such independently of the production process, although it is only realised in the production process; capital thus already contains the surplus-value in a latent form.  On the other hand, industrial profit [appears] as the portion of surplus-value accruing to the capitalist not as the owner of capital, but as the operating owner representing the operating capital.  In the same way as everything in this mode of production appears to be upside down, so likewise does the final reversal in the relation of interest to profit, so that the portion of profit separated under a special heading [interest] appears as the product intrinsically belonging to capital, and industrial profit appears as a mere addition appended to it.

Since the moneyed capitalist in fact receives his part of the surplus-value only as owner of capital, while he himself remains outside the production process; since the price of capital—that is, of the mere title to ownership of capital—is quoted on the money market as the rate of interest in the same way as the market price of any other commodity; since the share of surplus-value which capital as such, the mere ownership of capital, secures is thus of a stable magnitude, whereas the rate of profit fluctuates, at any given moment it varies in the different spheres of production and within each sphere it is different for the individual capitalists, partly because the conditions under which they produce are more or less favourable, partly because they exploit labour in capitalist fashion with different degrees of circumspection and energy, and partly because they cheat buyers or sellers of commodities with different degrees of luck and cunning (profit upon expropriation, alienation)—it therefore appears natural to them, whether they are or are not owners of the capital involved in the production process, that interest is something due to capital as such, to the ownership of capital, to the owner of capital, whether they themselves own the capital or someone else; industrial profit, on the other hand, appears to be the result of their labour.  As operating capitalists—as real agents of capitalist production—they therefore confront themselves or others representing merely idle capital, as workers they consequently confront themselves and others as property owners.  And since they are, as matters stand, workers, they are in fact wage-workers, and because of their superiority they are simply better-paid workers, which they owe partly also to the fact that they pay themselves their wages.

Whereas, therefore, interest and interest-bearing capital merely express the contradiction of materialised wealth as against labour, and thereby its existence as capital, this position is turned upside down in the consciousness of men because, prima facie, the moneyed capitalist does not appear to have any relations with the wage-worker, but only with other capitalists, while these other capitalists, instead of appearing to be in opposition to the wage-workers, appear rather as workers, in opposition to themselves or to other [capitalists] considered as mere owners of capital, representing the mere existence of capital.  The individual capitalist, moreover, can either lend his money as capital or employ it himself as capital.  Insofar as he obtains interest on it, he only receives for it the price which he would receive if he did not “operate” as a capitalist, if he did not “work”.  It is clear, therefore, that what he really gets from the production process—insofar as it is only interest—is due to capital alone, not to the production process itself and ||906| not to himself as a representative of operating capital.

Hence also the pretty phrases used by some vulgar economists to the effect that, if the industrial capitalist did not get any profit in addition to interest, he would lend his capital out for interest and become a rentier, so that all capitalists would stop producing and all capital would cease operating as capital, but nevertheless it would still be possible to live on the interest.  In similar vein, Turgot has already [said] that if the capitalist received no interest, be would buy land (capitalised rent) and live off rent.  But in this case the interest would still be derived from surplus-value, since for the Physiocrats rent represents the real surplus-value.  Whereas in that vulgarised concept things are turned upside down.

Another fact should be noted.  Interest is part of the costs for the industrial capitalist who has borrowed money, the term costs is here used in the sense that it represents the value advanced.  For example, a capital of £1,000 does not enter the capitalist production process as a commodity worth £1,000 but as capital, this means that if a capital of £1,000 yields 10 per cent interest per annum, then it enters into the annual product as a value of £1,100.  This shows clearly that the sum of values (and the commodities in which it is embodied) becomes capital not only in the production process but that, as capital, it is antecedent to the production process and therefore already contains within itself the surplus-value due to it as mere capital.  For the industrial capitalist who operates with borrowed capital, interest, in other words capital as capital—and it is this only insofar as it yields surplus-value (so that if it is worth £1,000 as a commodity, for example, it is worth £1,100 as capital, i.e., 1,000+1,000/10, C+C/x)—enters into his costs.  If the product only yielded interest, this, though it would be a surplus over and above the value of the capital employed, regarded as a mere commodity, would not be a surplus over and above the value of the commodity considered as capital, for the capitalist has to pay out this surplus-value; it is part of his outlay, part of the expenses he has incurred in order to produce the commodities.

As far as the industrialist who operates with his own capital is concerned, he pays the interest on his capital to himself and regards the interest as part of his outlay.  In fact, what he has advanced is not simply a capital of £1,000 for example, but the value of £1,000 as capital, and this value would be £1,050 if the rate of interest were 5 per cent.  This is moreover no idle consideration as far as he is concerned.  For the £1,000 used as capital would yield him £1,050 if he lent it out instead of employing it productively.  Thus, insofar as he advances the £1,000 to himself as capital, he is advancing himself £1,050.  Il faut bien se rattraper sur quelqu’un et fusse-t-il sur lui méme![c]

The value of commodities worth £1,000 is £1,050 as capital.  This means that capital is not a simple quantity.  It is not a simple commodity, but a commodity raised to a higher power; not a simple magnitude, but a proportion.  It is a proportion of the principal, a given value, to itself as surplus-value.  The value of C is C (1+1/x) (for one year) or C+C/x.  It is no more possible by means of the elementary rules of calculation to understand capital, that is, the commodity raised to a higher power, or money raised to a higher power, than it is to understand or to calculate the value of x in the equation ax=n.

Just as in the case of interest, part of the profit, of the surplus-value produced by capital, appears to have been advanced by the capitalist, so also in agricultural production another part of surplus-value—rent—appears to have been advanced.  This seems to be less obviously irrational because in this case rent appears to be the annual price of the land which thus enters into production as a commodity.  A “price of land” is indeed even more irrational than a price of capital, but this is not apparent in the form as such.  Because in this case the land appears to be the use-value of a commodity and the rent its price.  (The irrationality consists in this, that land, i.e., something which is not the product of human labour, has a price, that is, a value expressed in money and consequently a value, and is therefore to be regarded as materialised social labour.)  Considered purely formally, land, just as any other commodity, is expressed in two ways, as use-value and as exchange-value, and the exchange-value is expressed nominally as price, that is, as something which the commodity as use-value is absolutely not.  On the other hand, in the statement: [a capital of] £1,000 equals £1,050, or £50 is the annual price of £1,000, something is compared with itself, exchange-value with exchange-value, and the exchange-value as something different from itself is supposed to be its own price, that is, the exchange-value expressed in money.

||907| Thus two forms of surplus-value—interest and rent, the results of capitalist production—enter into it as prerequisites, as advances which the capitalist himself makes; for him, therefore, they do not represent any surplus-value, i.e., any surplus over and above the advances made.  As far as these forms of surplus-value are concerned, it appears to the individual capitalist that the production of surplus-value is a part of the production costs of capitalist production, and that the appropriation of other people’s labour and of the surplus over and above the value of the commodities consumed in the process (whether these enter into the constant or into the variable capital) is a dominating condition of this mode of production.  To a certain extent this applies also to average profit, insofar as it constitutes an element of cost-price, and hence a condition of supply, of the very creation of the commodity.  Nevertheless, the industrial capitalist rightly regards this surplus, this part of surplus-value—although it constitutes an element of production—as a surplus over his costs; he does not regard it as belonging to his advances in the same way as interest and rent.  In critical moments, profit too confronts the capitalist in fact as a condition of production, since he curtails or stops production when profit disappears or is reduced to a marked degree as a result of a fall in prices.  Hence the nonsensical pronouncements of those who consider the different forms of surplus-value to be merely forms of distribution; they are just as much forms of production.  |907||


||937| It might appear that in the trinity land—rent, capital—profit (interest), labour—wages, the last group is the most rational.  At least it states the source from which wages flow.  But it is on the contrary the most irrational of them all, and the basis for the other two, in the same way as wage-labour in general presupposes land in the form of landed property and the product in the form of capital.  Only when labour confronts its conditions [of production] in this form, is it wage-labour.  As wage-labour it is defined by the formula labour—wages.  Since wages here appear to be the specific product of labour, its sole product (and they are indeed the sole product of labour for the wage-worker), the other parts of value—rent and profit (interest)—appear to flow just as necessarily from other specific sources.  And just as that part of the value of the product which consists of wages [is conceived] as the specific product of labour, so those parts of value which are made up of rent and profit must be regarded as specific results of agencies for which they exist and to which they accrue, that is, as offspring of the earth and of capital, respectively.  |937||

[4.  The Process of Ossification of the Converted Forms of Surplus-Value and Their Ever Greater Separation from Their Inner Substance—Surplus Labour.  Industrial Profit as “Wages for the Capitalist”]

||910| Let us consider the road travelled by capital before it appears in the form of interest-bearing capital.

In the immediate process of production, the matter is fairly simple.  Surplus-value has not as yet assumed a separate form, apart from the fact that it is surplus-value as distinct from the value which is equivalent to the value reproduced in the product.  In the same way as value in general consists of labour, so surplus-value consists of surplus labour, unpaid labour.  Hence surplus-value is only measured by that part of capital which really changes its value—the variable capital, i.e., the capital which is laid out in wages.  Constant capital appears only as the condition enabling the variable part of capital to operate.  It is quite simple: if with £100, i.e., the labour of 10 [men], one buys the labour of 20 [men] (that is, commodities in which the labour of 20 [men] is embodied), the value of the product will be £200 and the surplus-value will amount to £100, equal to the unpaid labour of 10 [men].  Or, supposing 20 men worked half a day each for themselves and half for capital—20 half-days equal 10 whole ones—the result would be the same as if only 10 men were paid and the others worked for the capitalist gratis.

Here, in this embryonic state, the relationship is still very obvious, or rather it cannot be misunderstood.  The difficulty is simply to discover how this appropriation of labour without any equivalent arises from the law of commodity exchange—out of the fact that commodities exchange for one another in proportion to the amount of labour-time embodied in them—and, to start with, does not contradict this law.

||911| The circulation process obliterates and obscures the connection.  Since here the mass of surplus-value is also determined by the circulation time of capital, an element foreign to labour-time seems to have entered.

Finally, in capital as the finished phenomenon, as it appears as a whole, [as] the unity of the circulation and the production process, as the expression of the reproduction process—as a definite sum of values which produces a definite amount of profit (surplus-value) in a definite time, a definite period of circulation—in capital in this form the production and circulation processes exist only as a reminiscence and as aspects which determine the surplus-value equally, thereby disguising its simple nature.  Surplus-value now appears as profit.  This profit is, first, received for a definite period of circulation of capital, and this period is distinct from the labour-time; it is, secondly, surplus-value calculated and drawn not on that part of capital from which it originates directly, but quite indiscriminately on the total capital.  In this way its source is completely concealed.  Thirdly, although the mass of profit is still quantitatively identical in this first form of profit with the mass of surplus-value produced by the individual capital, the rate of profit is, from the very beginning, different from the rate of surplus-value; since the rate of surplus-value is s/v and the rate of profit is s/c+v.  Fourthly, if the rate of surplus-value is presumed given, it is possible for the rate of profit to rise or to fall and even to move in the opposite direction to the rate of surplus-value.

Thus, surplus-value in the first form of profit already assumes a form which not only makes it difficult to perceive that it is identical with surplus-value, i.e., surplus labour, but appears directly to contradict this view.

Furthermore, as a result of the conversion of profit into average profit, the establishment of the general rate of profit and, in connection with it and determined by it, the conversion of values into cost-prices, the profit of the individual capital becomes different from the surplus-value produced by the individual capital in its particular sphere of production, and different, moreover, not only in the way it is expressed—i.e., rate of profit as distinct from rate of surplus-value—but it becomes substantially different, that is, in this context, quantitatively different.  Profit does not merely seem to be different, but is now in fact different from surplus-value not only with regard to the individual capital but also with regard to the total capital in a particular sphere of production.  Capitals of equal magnitude yield equal profits; in other words, profit is proportional to the size of the capital.  Or profit is determined by the amount of capital advanced.  The relation of profit to the organic composition of capital is completely obliterated and no longer recognisable in all these formulae.  On the other hand, it is quite obvious that capitals of the same magnitude which set in motion very different amounts of labour, thus commanding very different amounts of surplus labour and consequently producing very different amounts of surplus-value, yield the same amount of profit.  Indeed, the basis itself—the determination of the value of commodities by the labour-time embodied in them—appears to be invalidated as a result of the conversion of values into cost-prices.

In this quite alienated form of profit and in the same measure as the form of profit hides its inner core, capital more and more acquires a material form, is transformed more and more from a relationship into a thing, but a thing which embodies, which has absorbed, the social relationship, a thing which has acquired a fictitious life and independent existence in relation to itself, a natural-supernatural entity; in this form of capital and profit it appears superficially as a ready-made pre-condition.  It is the form of its reality, or rather its real form of existence.  And it is the form in which it exists in the consciousness and is reflected in the imagination of its representatives, the capitalists.

This fixed and ossified (metamorphosed) form of profit (and thereby of capital as its producer, for capital is the cause and profit is the result; capital is the reason, profit is the effect; capital is the substance, profit is the adjunct; capital is capital only insofar as it yields profit, only insofar as it is a value which produces profit, an additional value)—and therefore also of capital as its cause, capital which maintains itself and expands by means of profit—the external aspect of this ossified form is strengthened even more by the fact that the same process of the equalisation of capital, which gives profit the form of average profit, separates part of it in the form of rent as something independent of it and arising from a different foundation, the land.  It is true that rent originally emerges as a part of profit which the farmer pays to the landlord.  But since this surplus profit is not pocketed by the farmer, and the capital he employs does not differ in any way as capital from other capitals (it is precisely because surplus profit is not derived from capital as such that the farmer pays it to the landlord), the land itself appears to be the source of this part of the value of the commodity (its surplus-value) and the landlord [appears to represent] the land only ||912| as a juridical person.

If the rent is calculated on the capital advanced, then a thread still remains which indicates its origin as a distinct part of profit, that is, of surplus-value in general.  (The position is, of course, quite different in a social order where landed property exploits labour directly.  In that case, it is not difficult to recognise the origin of surplus wealth.)  But the rent is paid on a definite area of land; it is capitalised in the value of the land; this value rises and falls in accordance with the rise or fall of rent.  The rise or fall of rent is calculated with regard to a piece of land which remains unchanged (whereas the amount of capital operating on it changes); the difference in the types of land is reflected in the amount of rent which has to be paid for a given yardage, the total rental is calculated on the total area of the land in order to determine the average rental, for example, of a square yard.  Rent, like every phenomenon created by capitalist production, appears at the same time as a stable, given pre-condition existing at any particular moment, and thus, it is for each individual an independently existing magnitude.  The farmer has to pay rent, so much per acre of land, according to the quality of the land.  If its quality improves or deteriorates, then the rent he has to pay on so many acres rises or falls.  He has to pay rent for the land quite irrespective of the capital he employs on it, just as he has to pay interest irrespective of the profit he makes.

The calculation of rent on industrial capital is another important formula of political economy which demonstrates the inner connection between rent and profit, its basis.  But this connection does not appear in reality, for the calculation of rent is based on the real area of land, the intermediate links are thereby eliminated and rent acquires its externalised independent aspect.  It is an independent form only in this externalisation, in its complete separation from its antecedents.  So many square yards of land bring in so much rent.  In this formula, in which rent, a part of surplus-value, is represented in relation to a particular natural element, independent of human labour, not only the nature of surplus-value is completely obliterated, because the nature of value itself is obliterated; but, just as the source of rent appears to be land, so now profit itself appears to be due to capital as a particular material element of production.  Land is part of nature and brings in rent.  Capital consists of products and these bring in profit.  That one use-value which is produced brings in profit, while another which is not produced brings in rent are simply two forms in which things produce value, and the one form is just as comprehensible and as incomprehensible as the other.

It is clear that, as soon as surplus-value [is split up] into different, separate parts, related to various production elements—such as nature, products, labour—which only differ physically, that is, as soon as in general surplus-value acquires special forms, separate from one another, independent of one another and regulated by different laws, the common unit—surplus-value—and consequently the nature of this common unit, becomes more and more unrecognisable and does not manifest itself in the appearance but has to be discovered as a hidden mystery.  This assumption of independent forms by the various parts—and their confrontation as independent forms—is completed as a result of each of these parts being related to a particular element as its measure and its special source; in other words, each part of surplus-value is conceived as the effect of a special cause, as an adjunct of a particular substance.  Thus profit is related to capital, rent to land, wages to labour.

These ready-made relations and forms, which appear as pre-conditions in real production because the capitalist mode of production moves within the forms it has created itself and which are its results, confront it equally as ready-made pre-conditions in the process of reproduction.  As such, they in fact determine the actions of individual capitalists, etc., and provide the motives, which are reflected in their consciousness.  Vulgar political economy does nothing more than express in doctrinaire fashion this consciousness, which, in respect of its motives and notions, remains in thrall to the appearance of the capitalist mode of production.  And the more it clings to the shallow, superficial appearance, only bringing it into some sort of order, the more it considers that it is acting “naturally” and avoiding all abstract subtleties.

||913| In connection with the circulation process dealt with above[d] it has to be added that the categories arising out of the circulation process crystallise as attributes of particular sorts of capital, fixed, circulating and so on, and thus appear as definite material attributes of certain commodities.

In the final state in which profit, assumed as something given, appears in capitalist production, the innumerable transformations and intervening stages through which it passes are obliterated and unrecognisable, and consequently the nature of capital is also unrecognisable.  This state becomes even more rigid owing to the fact that the same process which gives it its final finish causes part of the profit to confront it as rent, thus transforming profit into a particular aspect of surplus-value, an aspect based on capital as a special material instrument of production, in exactly the same way as rent is based on land; thus this state, separated from its inner essence by a mass of invisible intermediate links, reaches an even more externalised form, or rather the form of absolute externalisation, in interest-bearing capital, in the separation of interest from profit in interest-bearing capital as the simple form of capital, the form in which capital is antecedent to its own reproduction process.  On the one hand, this expresses the absolute form of capital M—M', self-expanding value.  On the other hand, the intermediate link C, which still exists in genuine merchant capital whose formula is M—C—M', has disappeared.  Only the relation of M to itself and measured by itself remains.  It is capital expressly removed, separated from the process, as an antecedent it stands outside the process whose result it is and through which alone it is capital.

{[Here] the fact is disregarded that interest may be a mere transfer and need not represent real surplus-value, as, for example, when money is lent to a “spendthrift”, i.e., for consumption.  The position may be similar when money is borrowed in order to make payments.  In both cases it is loaned as money, not as capital, but it becomes capital to its owner through the mere act of lending it out.  In the second case, [if it is used to] discount [bills] or as a loan on temporarily not vendible commodities, it can be associated with the circulation process of capital, the necessary conversion of commodity capital into money capital.  Insofar as the acceleration of this conversion process—such acceleration is a general feature of credit—speeds up reproduction, and therefore the production of surplus-value, the money lent is capital.  On the other hand, insofar as it only serves to pay debts without accelerating the reproduction process, perhaps even limiting it or making it impossible, it is a mere means of payment, only money for the borrower, and for the lender it is, in fact, capital independent of the process of capital.  In this case interest, like profit upon expropriation, is a fact independent of capitalist production—the production of surplus-value.  It is in these two forms of money—money as means of purchase of commodities intended for consumption and as means of payment of debts—that interest, like profit upon expropriation, constitutes a form which, although it is reproduced in capitalist production, is nevertheless independent of it and [represents] a form of interest which belongs to earlier modes of production.  It is in the nature of capitalist production, however, that money (or commodities) can exist as capital and can be sold as capital outside the production process, and that this can also be the case with the older forms, which are not converted into capital but only serve as money.

The third of the older forms of interest-bearing capital is based on the fact that capitalist production does not as yet exist, but that profit is still acquired in the form of interest and the capitalist appears as a mere usurer.  This implies: first, that the producer still works independently with his own means of production, and that the means of production do not yet work with him[e] (even if slaves form a part of these means of production, for in these circumstances slaves do not constitute a separate economic category any more than draught animals do; there is at best a physical difference between them, i.e., dumb instruments, and speaking and feeling instruments); secondly, that the means of production belong only nominally to the producer; in other words, that because of some incidental circumstances he is unable to reproduce them from the proceeds of the sale of his commodities.  These forms of interest-bearing capital occur, consequently, in all social formations which include commodity and money circulation, whether slave labour, serf labour or free labour is predominant in them.  In the last-mentioned form, the producer pays the capitalist his surplus labour in the form of interest, which therefore includes profit.  We have here the whole of ||914| capitalist production without its advantages, the development of the social forms of labour and of the productivity of labour to which they give rise.  This form is very prevalent among peasant nations who already have to buy a portion of the necessaries of life and means of production as commodities (alongside whom, therefore, separate urban industries already exist) and who, in addition, have to pay taxes, rent, etc., in money.}

Interest-bearing capital functions as such only insofar as the money lent is really converted into capital and produces a surplus of which interest constitutes a part.  This does not however invalidate the fact that interest and interest-bearing have become attributes of it independently of the [production] process.  Any more than the use-value of cotton as cotton is nullified by the fact that it has to be spun or used in some other way, in order to demonstrate its useful properties.  And thus capital [demonstrates] its capacity to yield interest only by becoming part of the production process.  But labour-power likewise demonstrates its capacity to produce value when it functions as labour, is realised as labour in this process.  This does not rule out that, in itself, as a faculty, it is a value-creating activity and does not merely become such as a result of the process, but rather is antecedent to the process.  It is bought as such.  A person can buy it without setting it to work (as, for example, when a theatre manager hires an actor not in order to give him a role in a play, but to prevent him from performing in a rival theatre).  Whether or not a man who buys labour-power uses its faculty for which he pays, i.e., its faculty to create value, is of no concern to the man who sells it, and makes no difference to the commodity sold, just as it makes no difference whether the man who buys capital uses it as such, that is, employs the quality of creating value which is inherent in it, in the [production] process.  What he pays for in these two cases is the surplus-value and the capacity of maintaining its own value—potentially, by the very nature of the commodity bought—contained in the capital in the one case and in the labour-power in the other.  This is why the capitalist who operates with his own capital regards part of the surplus-value as interest, that is, as surplus-value which is yielded by the production process, because it has been brought into the production process by the capital independently of the process.

Rent and the relationship land—rent may appear as a much more mysterious form than that of interest, [and the relationship] capital—interest.  But the irrational element in rent is not formulated in such a way that it expresses a relation of capital itself.  Since land itself is productive (of use-value) and is itself a living productive force (of use-value or for the creation of use-values), it is possible either superstitiously to confuse use-value with exchange-value, i.e., to confuse it with a specific social form of the labour contained in the product.  In this case, the reason for the irrationality lies in itself, since rent as a particular category is independent of the capitalist process as such.  Or “enlightened” political economy may deny altogether that rent is a form of surplus-value, because it is not connected with either labour or capital, and declare that it is merely a surcharge which the landowner is able to make as a result of his monopoly of landownership.

The position is different in the case of interest-bearing capital.  Here it is a question not of a relation which is alien to capital, but of the capital relation itself; of a relation which arises out of capitalist production, is specific to it, and expresses the essence of capital; of an aspect of capital in which it appears as capital.  Profit is still related to operating capital, to the process in which surplus-value (and profit itself) is produced.  Whereas in profit the form of surplus-value has become alienated, strange, so that its simple form and therefore its substance and source of origin are not immediately discernible, this is not the case in interest-bearing capital; on the contrary it is precisely this alienated form which is presupposed and declared to be the essential feature of interest.  The alienated form has assumed an independent and rigid existence as something antagonistic to the real nature of surplus-value.  The relationship of capital to labour is obliterated in interest-bearing capital.  In fact, interest presupposes profit, of which it is only a part.  The way in which surplus-value ||915| is divided into interest and profit and distributed between different sorts of capitalists is actually a matter of complete indifference to the worker.

Interest is definitely regarded as the offspring of capital, separate, independent and outside the capitalist process itself.  It is due to capital as capital.  It enters into the production process and therefore proceeds from it.  Capital is impregnated with interest.  It does not derive interest from the production process, but brings it into it.  The surplus of profit over interest, the amount of surplus-value which capital derives solely from the production process, i.e., the surplus-value it produces as operating capital, acquires a separate form, namely, that of industrial profit (employer’s profit, industrial or commercial, depending on whether the stress is laid on the production process or the circulation process), in contrast to interest, a value created by capital in itself and due to capital, to capital as capital.  Thus even the last form of surplus-value, which to some extent recalls its origin, is separated and conceived not only as an alienated form, but as one which is in direct contradiction to its origin; consequently the nature of capital and of surplus-value as well as that of capitalist production in general is, finally, completely mystified.

Industrial profit, in contradistinction to interest, represents capital in the [production] process in contradistinction to capital outside the process, capital as a process in contradistinction to capital as property; it therefore represents the capitalist as functioning capitalist, as representative of working capital as opposed to the capitalist as mere personification of capital, as mere owner of capital.  He thus appears as working capitalist in contrast to himself as capitalist, and further, as worker in contrast to himself as mere owner.  Consequently, insofar as any relation between surplus-value and the process is still preserved, or apparent, this is done precisely in the form in which the very notion of surplus-value is negated.  Industrial profit is resolved into labour, not into unpaid labour of other people but into wage-labour, into wages for the capitalist, who in this case is placed into the same category as the wage-worker and is merely a more highly paid worker, just as in general wages vary greatly.

Money is indeed not converted into capital as a result of the fact that it is exchanged against the material conditions required for the production of the commodity, and that in the labour process these conditions—materials of labour, instruments of labour and labour—begin to ferment, act on one another, combine with one another, undergo a chemical process and form the commodity like a crystal as a result of this process.  The outcome of this would be no capital, no surplus-value.  This abstract form of the labour process is common to all modes of production whatever their social form or their particular historical character.  The process only becomes a capitalist process, and money is converted into capital only: 1) if commodity production, i.e., the production of products in the form of commodities, becomes the general mode of production; 2) if the commodity (money) is exchanged against labour-power (that is, actually against labour) as a commodity, and consequently if labour is wage-labour; 3) this is the case however only when the objective conditions, that is (considering the production process as a whole), the products, confront labour as independent forces, not as the property of labour but as the property of someone else, and thus in the form of capital.

Labour as wage-labour and the conditions of labour as capital (that is, consequently, as the property of the capitalist; they are themselves properties personified in the capitalist and whose property in them, their property in themselves, they represent as against labour) are expressions of the same relationship, only seen from opposite poles.  This condition of capitalist production is its invariable result.  It is its antecedent posited by itself.  Capitalist production is antecedent to itself and is therefore posited with its conditions as soon as it has evolved and functions in circumstances appropriate to it.  However, the capitalist production process is not just a production process pure and simple.  The contradictory, socially determined feature of its elements evolves, becomes reality only in the process itself, and this feature is the predominant characteristic of the process, which it turns precisely into that socially determined mode of production, the capitalist process of production.

||916| The formation process of capital—when capital, i.e., not any particular capital, but capital in general, only evolves—is the dissolution process, the parting product of the social mode of production preceding it.  It is thus a historical process, a process which belongs to a definite historical period.  This is the period of its historical genesis.  (In the same way the existence of the human race is the result of an earlier process which organic life passed through.  Man comes into existence only when a certain point is reached.  But once man has emerged, he becomes the permanent pre-condition of human history, likewise its permanent product and result, and he is pre-condition only as his own product and result.)  It is here that labour must separate itself from the conditions of labour in their previous form, in which it was identical with them.  It becomes free labour only in this way and only thus are its conditions converted into capital and confront it as such.  The process of capital becoming capital or its development before the capitalist production process exists, and its realisation in the capitalist process of production itself belong to two historically different periods.  In the second, capital is taken for granted, and its existence and automatic functioning is presupposed.  In the first period, capital is the sediment resulting from the process of dissolution of a different social formation.  It is the product of a different [formation], not the product of its own reproduction, as is the case later.  The existing basis on which capitalist production works is wage-labour, which is however at the same time reproduced continuously by it.  It is therefore based also on capital, the form assumed by the conditions of labour, as its given prerequisite, a prerequisite however which, like wage-labour, is its continuous presupposition and its continuous product.

On this basis, money, for example, is, as such, capital because the conditions of production in themselves confront labour in an alienated form, they confront it as someone else’s property and thus dominate it.  Then capital can also be sold as a commodity which has this attribute, that is, it can be sold as capital, as is the case when capital is loaned at interest.

But while thus the aspect of the specific social determination of capital and of capitalist production—a specific social determination which is expressed juridically in capital as property, in capital property as a special form of property—is established, and interest, therefore, appears as that part of surplus-value which is produced by capital in this determinate form, independent of this determination considered as the determination of the process as a whole, then the other part of surplus-value, the surplus of profit over interest, industrial profit, must obviously represent value which does not arise from capital as such, but from the production process separated from its social determination, which has indeed already found its special mode of existence in the formula, capital—interest.  Separated from capital, however, the production process becomes labour process in general.  [Consequently] the industrial capitalist as distinct from himself as capitalist, that is, the industrialist in contradistinction to himself as capitalist, i.e., owner of capital, is thus merely a simple functionary in the labour process; he does not represent functioning capital, but is a functionary irrespective of capital, and therefore a particular representative of the labour process in general, a worker.  In this way, industrial profit is happily converted into wages and is equated with ordinary wages, differing from them only quantitatively and in the special form in which they are paid, i.e., that the capitalist pays wages to himself instead of someone else paying them to him.

The nature of surplus-value (and therefore of capital) is not only obliterated in this final division of profit into interest and industrial profit, but it is definitely presented as something quite different.

Interest represents part of surplus-value; it is merely a portion of profit which is separated and classified under a special name, the portion which accrues to the person who merely owns the capital, the portion he intercepts.  But this merely quantitative division is turned into a qualitative division which transforms both parts in such a way that not even a trace of their original essence seems to remain.  ||917| This is first of all confirmed by the fact that interest does not appear as a division which makes no difference to production, and takes place only “occasionally” when the industrialist operates with someone else’s capital.  Even when he operates with his own capital his profit is split into interest and industrial profit, thereby transforming the mere quantitative division into a qualitative one which does not depend on the accidental circumstance whether the industrialist owns or does not own his capital; the qualitative division arises out of the nature of capital and of capitalist production itself.  There exist not simply two portions of profit distributed to two different persons, but two separate categories of profit which are related in different ways to capital and consequently to different determinate aspects of capital.  Apart from the reasons mentioned earlier, this assumption of an independent existence is established all the more easily since interest-bearing capital appears on the scene as a historic form before industrial capital and continues to exist alongside it in its old form and it is only in the course of the development of industrial capital that the latter subordinates it to capitalist production by turning it into a special form of industrial capital.

The mere quantitative division thus becomes a qualitative one.  Capital is itself divided.  Insofar as it is a prerequisite of capitalist production, insofar, therefore, as it expresses a specific social relation, the alienated form of the conditions of labour, it is realised in interest.  It realises its character as capital in interest.  On the other hand, insofar as it operates in the process, this process appears as something separate from its specific capitalist character, from its specific social determination—as mere labour process in general.  Therefore, insofar as the capitalist plays any part in it, he does so not as a capitalist—for this aspect of his character is allowed for in interest—but as a functionary of the labour process in general, as a worker, and his wages take the form of industrial profit.  It is a special type of labour—labour—of superintendence—but after all types of labour in general differ from one another.

Thus the nature of surplus-value, the essence of capital and the character of capitalist production are not only completely obliterated in these two forms of surplus-value, they are turned into their opposites.  But even insofar as the character and form of capital are complete [it is] nonsensical [if] presented without any intermediate links and expressed as the subjectification of objects, the objectification of subjects, as the reversal of cause and effect, the religious quid pro quo, the pure form of capital expressed in the formula M—M'.  The ossification of relations, their presentation as the relation of men to things having a definite social character is here likewise brought out in quite a different manner from that of the simple mystification of commodities and the more complicated mystification of money.  The transubstantiation, the fetishism, is complete.

Thus interest in itself expresses precisely the existence of the conditions of labour as capital in their social contradiction and in their transformation into personal forces which confront labour and dominate labour.  It sums up the alienated character of the conditions of labour in relation to the activity of the subject.  It represents the ownership of capital or mere capital property as the means for appropriating the products of other people’s labour, as the control over other people’s labour.  But it presents this character of capital as something belonging to it apart from the production process itself and by no means as resulting from the specific determinate form of the production process itself.  Interest presents capital not in opposition to labour, but, on the contrary, as having no relation to labour, and merely as a relation of one capitalist to another; consequently, as a category which is quite extrinsic to, and independent of, the relation of capital to labour.  The division of the profit amongst the capitalists does not affect the worker.  Thus interest, the form of profit which is the special expression of the contradictory character of capital, is an expression in which this contradiction is completely obliterated and explicitly left out of account.  Apart from expressing the capacity of money, commodities, etc., to expand their own value, interest, insofar as it presents surplus-value as something deriving from money, commodities, etc., as their natural fruit, is therefore merely a manifestation of the mystification of capital in its most extreme form; insofar as it at all represents a social relation as such, it expresses ||918| merely relations between capitalists, and by no means relations between capital and labour.

On the other hand, the existence of this form of interest gives the other part of profit the qualitative form of industrial profit, of wages for the labour of the industrial capitalist not in his capacity as capitalist, but as a worker (industrialist).  The particular functions which the capitalist as such has to perform in the labour process and which are incumbent precisely on him as distinct from the workers, are represented as mere labour functions, He produces surplus-value not because he works as a capitalist, but because he, the capitalist, also works.  It is just as if a king, who, as king, has nominal command of the army, were to be assumed to command the army not because he, as the owner of the kingship, commands, plays the role of commander-in-chief, but on the contrary that he is king because he commands, exercises the function of commander-in-chief.  If thus one part of surplus-value, i.e., interest, is completely separated from the process of exploitation, then the other part, that is, industrial profit, emerges as its direct opposite, not as appropriation of other people’s labour, but as the creation of value by one’s own labour.  This part of surplus-value is therefore no longer surplus-value, but its opposite, an equivalent given for labour performed.  Since the alienated character of capital, its opposition to labour, is displayed outside the exploitation process, that is, outside the sphere where the real action of this alienation takes place, all the contradictory features are eliminated from this process itself.  Consequently, real exploitation, the sphere where these contradictory features are put into practice and where they manifest themselves in reality, appears as its exact opposite, as a substantially different kind of labour, which belongs however to the same socially determined form of labour—wage-labour—to the same category of labour.  The work of the exploiter is identified here with the labour which is exploited.

This conversion of one part of profit into industrial profit arises, as we have seen, from the conversion of the other part into interest.  The social form of capital—that it is property—devolves on the latter part; on the former part devolves the economic function of capital, its function in the labour process, but detached, abstracted from the social form, the contradictory form in which it exercises this function.  How this is further justified by learned reasoning is to be examined in greater detail in connection with the apologetic interpretation of profit as [remuneration for] labour of superintendence.  Here the capitalist is equated with his manager, as Adam Smith already noted.

Industrial profit does indeed include some part of wages—in those cases where the manager does not draw them.  Capital appears in the production process as the director of labour, as its commander (captain of industry) and thus plays an active role in the labour process.  But insofar as these functions arise out of the specific form of capitalist production—that is, out of the domination of capital over labour as its labour and, therefore, over the workers as its instruments, out of the nature of capital, which appears as the social entity, the subject of the social form of labour personified in it [capital] as power over labour—this work (it may be entrusted to a manager) which is linked with exploitation is, of course, labour which, in the same way as that of the wage-worker, enters into the value of the product; just as in the case of slavery, the labour of the overseer has to be paid for like that of a worker.  If man attributes an independent existence, clothed in a religious form, to his relationship to his own nature, to external nature and to other men so that he is dominated by these notions, then he requires priests and their labour.  With the disappearance of the religious form of consciousness and of these relationships, the labour of the priests will likewise cease to enter into the social process of production.  The labour of priests will end with the existence of the priests themselves and, in the same way, the labour which the capitalist performs qua capitalist, or causes to be performed by someone else, will end together with the existence of the capitalists.  (The example of slavery has to be amplified by quotations.)

Incidentally, these apologetics aimed at reducing profit to wages, i.e., the wages of superintendence, boomerang on the apologists themselves, for English ||919| socialists have rightly declared: Well, in future, you shall only draw the wages usually paid to managers.  Your industrial profit should not be reduced to wages of superintendence or direction of labour merely in words, but in practice.

<It is of course impossible to examine in detail this nonsense and twaddle with all its contradictions.  For example, industrial profit rises and falls in inverse [proportion] to interest or rent.  The superintendence of labour, the particular amount of labour really performed by the capitalist, has however nothing whatever to do with it, any more than with the decline in wages.  This kind of wages has the peculiarity that it falls and rises in inverse proportion to real wages (insofar as the rate of profit is determined by the rate of surplus-value, and insofar as all the conditions of production remain unchanged, it is determined exclusively by this).  But “little contradictions” of this kind do not prevent the apologetic vulgarian from regarding them as identical.  The labour performed by the capitalist remains absolutely the same whether he pays low or high wages, whether the worker receives high or low wages.  Just as the wages paid for a working-day do [not] affect the amount of labour involved.  Moreover, the worker works more intensively when he gets better wages.  The labour of the capitalist, on the other hand, is something strictly determined, it is determined both qualitatively and quantitatively by the amount of labour he has to direct, not by the wages paid for this labour.  He can no more intensify his labour than the cotton operative can work up more cotton than is available in the mill.>

And they[f] add: the function of the manager, the labour of superintendence, can now be bought on the market in the same way as any other kind of labour-power, and is relatively just as cheap to produce and therefore to buy.  Capitalist production itself has brought about that the labour of superintendence walks the streets, separated completely from the ownership of capital, whether one’s own or other people’s.  It has become quite unnecessary for capitalists to perform this labour of superintendence.  It is actually available, separate from capital, not in the sham separation which exists between the industrial capitalist and the moneyed capitalist, but that between industrial managers, etc., and capitalists of every sort.  The best demonstration of this are the co-operative factories built by the workers themselves.  They are proof that the capitalist as functionary of production has become just as superfluous to the workers as the landlord appears to the capitalist with regard to bourgeois production.  Secondly: Insofar as the labour of the capitalist does not arise from the [production] process as a capitalist production process, and therefore disappears automatically with the disappearance of capital, i.e., insofar as it is not simply a name for the function of exploiting other people’s labour, but insofar as it arises from the social form of labour—co-operation, division of labour, etc.—it is just as independent of capital as is this form [of labour] itself once it has stripped off its capitalist integument.  To assert that this labour, as capitalist labour, as the function of the capitalist, is necessary, only shows that the vulgarian cannot conceive the social productive forces and the social character of labour developed within the framework of capital as something separate from the capitalist form, from the form of alienation, from the antagonism and contradiction of its aspects, from its inversion and quid pro quo.  (And this is precisely what we say.)  |XV-919||


||XVIII-1142| <The capitalist’s real profit is largely profit upon expropriation and the “individual labour” of the capitalist has an especially wide scope in this field, where it is not a question of the creation of surplus-value but of the distribution of the aggregate profit of the whole class of capitalists among the individual members in the field of commerce.  This does not concern us here.  Certain kinds of profit, those based on speculation for example, are restricted merely to this field.  It is therefore quite impossible to examine them here.  It is an indication of the bovine stupidity of vulgar economy that (particularly in order to represent profit as “wages”) it confuses this with profit insofar as it originates in surplus-value.  See the worthy Roscher, for example.  It is thus quite natural that, when dealing with the division of the aggregate profit of the whole capitalist class, such asses should mix up the items in the accounts and grounds for compensation of capitalists in different spheres of production with the grounds for the exploitation of the workers by the capitalists, with the grounds, so to speak, for the origin of profit as such.>  |XVIII-1142||

[5.  Essential Difference Between Classical and Vulgar Economy.  Interest and Rent as Constituent Elements of the Market Price of Commodities.  Vulgar Economists Attempt to Give the Irrational Forms of Interest and Rent a Semblance of Rationality]

||XV-919| It is in interest-bearing capital—in the division of profit into interest and [industrial] profit—that capital finds its most objectified form, its pure fetish form, and the nature of surplus-value is presented as something which has altogether lost its identity.  Capital—as an entity—appears here as an independent source of value; as something which creates value in the same way as land [produces] rent, and labour wages (partly wages in the proper sense, and partly industrial profit).  Although it is still the price of the commodity which has to pay for wages, interest and rent, it pays for them because the land which enters into the commodity produces the rent, the capital which enters into it produces the interest, and the labour which enters into it produces the wages, [in other words these elements] produce the portions of value which accrue to their respective owners or representatives—||920| the landowner, the capitalist, and the worker (wage-worker and industrialist).  From this standpoint therefore, the fact that, on the one hand, the price of commodities determines wages, rent and interest and, on the other hand, the price of interest, rent and wages determines the price of commodities, is by no means a contradiction contained in the theory, or if it is, it is a contradiction, a vicious circle, which exists in the real movement.

True, the rate of interest fluctuates, but only like the market price of any other commodity in accordance with the ratio of demand and supply.  This by no means invalidates the notion of interest being inherent in capital just as the fluctuations in the prices of commodities do not invalidate prices as designations appropriate to commodities.

Thus land, capital and labour on the one hand—insofar as they are the sources of rent, interest and wages and these are the constituent elements of commodity prices—appear as the elements which create value, and on the other hand, insofar as they accrue to the owner of each of these means for the production of value, i.e., insofar as he derives the portion of the value created by them, they appear as sources of revenue, and rent, interest and wages appear as forms of distribution.  (As we shall see later, it is the result of stupidity that the vulgarians, as opposed to critical economy, in fact regard forms of distribution simply as different aspects of forms of production whereas the critical economists separate them and fail to recognise their identity.)

In interest-bearing capital, capital appears to be the independent source of value or surplus-value it possesses as money or as commodities.  And it is indeed this source in itself, in its material aspect.  It must of course enter into the production process in order to realise this faculty; but so must land and labour.

One can therefore understand why the vulgar economists prefer [the formula]: land—rent; capital—interest; labour—wages, to that used by Smith and others for the elements of price (or rather for the parts into which it can be broken down) and where [the relation] capitalprofit figures, just as on the whole the capital relation as such is expressed in this form by all the classical economists.  The concept of profit still contains the inconvenient connection with the [production] process, and the real nature of surplus-value and of capitalist production, in contra-distinction to their appearance, is still more or less recognisable.  This connection is severed when interest is presented as the intrinsic product of capital and the other part of surplus-value, industrial profit, consequently disappears entirely and is relegated to the category of wages.

Classical political economy seeks to reduce the various fixed and mutually alien forms of wealth to their inner unity by means of analysis and to strip away the form in which they exist independently alongside one another.  It seeks to grasp the inner connection in contrast to the multiplicity of outward forms.  It therefore reduces rent to surplus profit, so that it ceases to be a specific, separate form and is divorced from its apparent source, the land.  It likewise divests interest of its independent form and shows that it is a part of profit.  In this way it reduces all types of revenue and all independent forms and titles under cover of which the non-workers receive a portion of the value of commodities, to the single form of profit.  Profit, however, is reduced to surplus-value since the value of the whole commodity is reduced to labour; the amount of paid labour embodied in the commodity constitutes wages, consequently the surplus over and above it constitutes unpaid labour, surplus labour called forth by capital and appropriated gratis under various titles.  Classical political economy occasionally contradicts itself in this analysis.  It often attempts directly, leaving out the intermediate links, to carry through the reduction and to prove that the various forms are derived from one and the same source.  This is however a necessary consequence of its analytical method, ||921| with which criticism and understanding must begin.  Classical economy is not interested in elaborating how the various forms come into being, but seeks to reduce them to their unity by means of analysis, because it starts from them as given premises.  But analysis is the necessary prerequisite of genetical presentation, and of the understanding of the real, formative process in its different phases.  Finally a failure, a deficiency of classical political economy is the fact that it does not conceive the basic form of capital, i.e., production designed to appropriate other people’s labour, as a historical form but as a natural form of social production; the analysis carried out by the classical economists themselves nevertheless paves the way for the refutation of this conception.

The position is quite different as regards vulgar political economy, which only becomes widespread when political economy itself has, as a result of its analysis, undermined and impaired its own premises and consequently the opposition to political economy has come into being in more or less economic, utopian, critical and revolutionary forms.  For the development of political economy and of the opposition to which it gives rise keeps pace with the real development of the social contradictions and class conflicts inherent in capitalist production.  Only when political economy has reached a certain stage of development and has assumed well-established forms—that is, after Adam Smith—does the separation of the element whose notion of the phenomena consists of a mere reflection of them take place, i.e., its vulgar element becomes a special aspect of political economy.  Thus Say Separates the vulgar notions occurring in Adam Smith’s work and puts them forward in a distinct crystallised form.  Ricardo and the further advance of political economy caused by him provide new nourishment for the vulgar economist (who does not produce anything himself): the more economic theory is perfected, that is, the deeper it penetrates its subject-matter and the more it develops as a contradictory system, the more is it confronted by its own, increasingly independent, vulgar element, enriched with material which it dresses up in its own way until finally it finds its most apt expression in academically syncretic and unprincipled eclectic compilations.

To the degree that economic analysis becomes more profound it not only describes contradictions, but it is confronted by its own contradiction simultaneously with the development of the actual contradictions in the economic life of society.  Accordingly, vulgar political economy deliberately becomes increasingly apologetic and makes strenuous attempts to talk out of existence the ideas which contain the contradictions.  Because he finds the contradictions in Smith relatively undeveloped, Say’s attitude still seems to be critical and impartial compared, for example, with that of Bastiat, the professional conciliator and apologist, who, however, found the contradictions existing in the economic life worked out in Ricardian economics and in the process of being worked out in socialism and in the struggles of the time.  Moreover, vulgar economy in its early stages does not find the material fully elaborated and therefore assists to a certain extent in solving economic problems from the standpoint of political economy, as, for example, Say, whereas a Bastiat needs merely to busy himself with plagiarism and attempts to argue away the unpleasant side of classical political economy.

But Bastiat does not represent the last stage.  He is still marked by a lack of erudition and a quite superficial acquaintance with the branch of learning which he prettifies in the interests of the ruling class.  His apologetics are still written with enthusiasm and constitute his real work, for he borrows the economic content from others just as it suits his purpose.  The last form is the academic form, which proceeds “historically” and, with wise moderation, collects the “best” from all sources, and in doing this contradictions do not matter; on the contrary, what matters is comprehensiveness.  All systems are thus made insipid, ||922| their edge is taken off and they are peacefully gathered together in a miscellany.  The heat of apologetics is moderated here by erudition, which looks down benignly on the exaggerations of economic thinkers, and merely allows them to float as oddities in its mediocre pap.  Since such works only appear when political economy has reached the end of its scope as a science, they are at the same time the graveyard of this science.  (That they look down in an equally superior manner on the phantasies of the socialists need hardly be stressed.)  Even the genuine thought of a Smith or a Ricardo, and others—not just their vulgar elements—is made to appear insipid in these works and becomes a vulgarism.  Professor Roscher is a master of this sort of thing and has modestly proclaimed himself to be the Thucydides of political economy.  His identification of himself with Thucydides may perhaps be based on his conception of Thucydides as a man who constantly confuses cause with effect.

In the form of interest-bearing capital it becomes quite obvious that capital without expending any labour appropriates the fruits of other people’s labour.  For it appears here in a form in which it is separated from the production process as such.  But it can do this only because, in this form, it indeed enters by itself, without labour, into the labour process, as an element which in itself creates value, i.e., is a source of value.  While it appropriates part of the value of the product without labour, it has also created it without labour, ex proprio sinu, out of itself.

Whereas the classical, and consequently the critical, economists are exercised by the form of alienation and seek to eliminate it by analysis, the vulgar economists, on the other hand, feel completely at home precisely with the alienated form in which the different parts of value confront one another; just as a scholastic is familiar with God the Father, God the Son, and God the Holy Ghost, so are the vulgar economists with land—rent, capital—interest, and labour—wages.  For this is the form in which these relationships appear to be directly connected with one another in the world of phenomena, and therefore they exist in this form in the thoughts and the consciousness of those representatives of capitalist production who remain captive to it.  The more the vulgar economists in fact content themselves with translating common notions into doctrinaire language, the more they imagine that their writings are plain, in accordance with nature and the public interest, and free from all theoretical hair-splitting.  Therefore, the more alienated the form in which they conceive the manifestations of capitalist production, the closer they approach the nature of common notions, and the more they are, as a consequence, in their natural element.

This, moreover, renders a substantial service to apologetics.  For [in the formula:] land—rent, capital—interest, labour—wages, for example, the different forms of surplus-value and configurations of capitalist production do not confront one another as alienated forms, but as heterogeneous and independent forms, merely different from one another but not antagonistic.  The different revenues are derived from quite different sources, one from land, the second from capital and the third from labour.  Thus they do not stand in any hostile connection to one another because they have no inner connection whatsoever.  If they nevertheless work together in production, then it is a harmonious action, an expression of harmony, as, for example, the peasant, the ox, the plough and the land in agriculture, in the real labour process, work together harmoniously despite their dissimilarities.  Insofar as there is any contradiction between them, it arises merely from competition as to which of the agents shall get more of the value they have jointly created.  Even if this occasionally brings them to blows, nevertheless the outcome of this competition between land, capital and labour finally shows that, although they quarrel with one another ||923| over the division, their rivalry tends to increase the value of the product to such an extent that each receives a larger piece, so that their competition, which spurs them on, is merely the expression of their harmony.

Herr Arnd, for example, says in criticism of Rau:

“Similarly, the author allows himself to be led by some of his predecessors to adding to the three elements of national wealth (wages, capital rent, land rent) a fourth, that of employers’ profit.  This entirely destroys the basis—constructed with such circumspection by Adam Smith—for any further development of our science” (!); “such a development is consequently quite out of the question in the work under consideration” (Karl Arnd, Die naturgemäße Volkswirthschaft, gegenüber dem Monopoliengeiste und dem Communismus, mit einem Rückblicke auf die einschlagende Literatur, Hanau, 1845, S.477).

By “capital rent” Herr Arnd means interest (op. cit., p. 123).  According to this one might think that Adam Smith reduces national wealth to interest, rent and wages, whereas on the contrary he quite expressly declares that profit results from the use of capital and repeatedly and expressly states that interest—insofar as it constitutes surplus-value at all—is only a form derived from profit.  Thus the vulgar economist reads into his sources the direct opposite of what they contain.  Where Smith writes “profit” Arnd reads “interest”.  It would be interesting to know what he supposes Adam Smith’s “interest” to mean.

This same “circumspect” developer of “our science” makes the following interesting discovery:

“In the natural course of the production of wealth, there is only one phenomenon which—in fully cultivated countries—seems to be destined to regulate the rate of interest to some extent, and it is the ratio in which the amount of wood in the European forests increases as a result of annual additional growth.  This annual increase takes place quite independently of their exchange-value” (how strange that the trees arrange their additional growth “independently of exchange-value”!) “in the ratio of 3 to 4 per 100.  Accordingly therefore” <since this additional increase in the number of trees is “independent of their exchange-value”, no matter how much their exchange-value may depend on their additional growth>, “a decline” (in the rate of interest) “below the level at present prevailing in the richest countries is not likely” (loc. cit., pp. 124-25).

This deserves to he called the “rate of interest originating in the forest”, and in the same work its inventor has rendered another service to “our science” as the philosopher of the “dog tax”.


{Profit (including industrial profit) is proportionate to the amount of the capital advanced; on the other hand, the wages drawn by the industrial capitalist [stand] in inverse ratio to the amount of capital.  [They are] considerable where the capital is small (because, in this case, the capitalist is something between an exploiter of other people’s labour and a person who lives off his own labour), and insignificant where the capital is large, or they are quite independent of it in the case where a manager is [employed].  One part of the labour of superintendence merely arises from the antagonistic contradiction between capital and labour, from the antagonistic character of capitalist production, and belongs to the incidental expenses of production in the same way as nine-tenths of the “labour” occasioned by the circulation process.  A conductor does not have to be the owner of the instruments used by the orchestra, nor is it one of his functions as a conductor to speculate on the subsistence costs of the members of the orchestra, or, in general, to have anything to do with their “wages”.  It is very remarkable that economists like John Stuart Mill, who cling to the forms of “interest” and “industrial profit” in order to convert “industrial profit” into wages for superintendence of labour, admit along with Smith, Ricardo and all other economists worth mentioning, that the average rate of interest is determined by the average rate of profit, [which according to] Mill stands in inverse ratio to the rate of wages, and it is therefore nothing but unpaid labour, surplus labour.

Two facts provide the best proof that the wages of superintendence do not enter [into the] average rate of profit at all.

||924| 1) That in co-operative factories, where the general manager receives a salary as in all other factories, and is responsible for the whole labour of superintendence—the overseers themselves are simply workers—the rate of profit is not below, but above, the average rate.

2) That where profit is continuously substantially above the average rate, as in individual, non-monopolised branches of business such as those of small shopkeepers, farmers, etc., this is correctly explained by the economists as being due to the fact that these people pay themselves their own wages.  Where only the proprietor himself works, his profit consists of—1) the interest on his small capital; 2) his wages; 3) that part of the surplus time which, because of his capital, he is able to work for himself instead of for someone else; i.e., the part not already represented by interest.  If, however, he employs workers, then their surplus labour has to be added.

Of course the worthy Senior (Nassau) also converts industrial profit into wages of superintendence.  But he forgets this humbug as soon as it is a question, not of doctrinaire phrases, but of practical struggles between workers and factory owners.  Thus, he opposes the shortening of the working-day, because in a working-day of say 11 1/2 hours, the workers allegedly work only one hour for the capitalist, and the product of this one hour constitutes the capitalist’s profit (apart from the interest for which they also work an hour according to his own calculation).  Suddenly here industrial profit is equal to the value added by the unpaid labour-time of the worker and not to the value added by the labour which the capitalist performs in the production process of commodities.  If industrial profit were the product of the capitalist’s own labour, then Senior should not have deplored that the workers work only one hour for the capitalist for nothing instead of two, and even less should he have said that, if the workers worked only 10 1/2 hours instead of 11 1/2, there [would be] no profit at all.  He should have said that if the workers worked only 10 1/2 hours instead of 11 1/2, the capitalist would not receive wages of superintendence for 11 1/2 hours but only for 10 1/2 hours, he would thus lose one hour’s wages of superintendence.  In which case the workers would answer that if ordinary wages for 10 1/2 hours have to suffice for them, then the higher wages the capitalist receives for 10 1/2 hours should suffice for him.

It is incomprehensible how economists like John Stuart Mill, who are Ricardians and even express the principle that profit is equal to surplus-value, surplus labour, in the form that the rate of profit and wages stand in inverse ratio to one another and that the rate of wages determines the rate of profit (which is incorrect when put in this form), suddenly convert industrial profit into the individual labour of the capitalist instead of into the surplus labour of the worker, unless the function of exploitation of other people’s labour is called labour by them, the result of this is indeed that the wages of this labour are exactly equal to the amount of other people’s labour appropriated, in other words, they depend directly on the degree of exploitation, not on the degree of exertion that this costs the capitalist.  (Insofar as this function of exploitation really requires labour in the course of capitalist production, it is represented by the wages of general managers.)  I say that it is incomprehensible that, after they as Ricardians have reduced profit to its real element, they allow themselves to be misled by the antithesis of interest and industrial profit which is simply a disguised form of profit and is merely regarded as an independent form due to ignorance of the nature of profit.  Only because one part of profit, interest, appears to be due to capital as a thing, an automatically functioning, automatically creating thing, apart from the production process, the other part appears as industrial profit, as arising from the activity taking place in the process (really the active process, this however also includes the activity of the operating capitalist) and therefore as due to the labour of the capitalist.  Consequently, because capital and the surplus-value which arises from it and is called interest are considered mysteries.  This view, which clearly arises from notions reflecting the most superficial aspects of the external form of capital, is the exact opposite of Ricardo’s view and altogether inconsistent with his conception of value.  Insofar as capital is value, its value is determined by the labour contained in it before it enters into the [production] process.  Insofar as it enters the process as a thing, it does so as use-value, and as such, it can never create exchange-value, whatever its use.  One can see how splendidly the Ricardians understand their own master.  In relation to the moneyed capitalist, the industrial capitalist, who embodies functioning capital and therefore actually squeezes out surplus labour, is of course quite justified in pocketing a part of this surplus.  In relation to the moneyed capitalist, he is a worker, but a worker who is a capitalist, in other words, an exploiter of other people’s labour||925| But in relation to the workers it is strange to plead that the exploitation of their labour costs the capitalist labour and that, therefore, they have to pay him for this exploitation; it is the plea of the slave-driver addressed to the slave.}


Every pre-condition of the social production process is at the same time its result, and every one of its results appears simultaneously as its pre-condition.  All the production relations within which the process moves are therefore just as much its products as they are its conditions.  The more one examines its nature as it really is, [the more one sees] that in the last form it becomes increasingly consolidated, so that independently of the process these conditions appear to determine it, and their own relations appear to those competing in the process as objective conditions, objective forces, aspects of things, the more so as, in the capitalist process, every element, even the simplest, the commodity for example, is already an inversion and causes relations between people to appear as attributes of things and as relations of people to the social attributes of things.

< Interest is the remuneration for the productive employment of savings; profit, properly so called, is the remuneration for the agency for superintendence during this productive employment[g] (The Westminster Review, Vol. V, January–April 1826, p. 107).

Thus interest here is declared to be remuneration for the fact that money, etc., is employed as capital; it therefore arises from capital as such, which is remunerated for its quality qua capital.  Industrial profit, on the other hand, is remuneration for the function of the capital or capitalist “during this productive employment”, i.e., in the production process itself.> |925||

||925| Interest is only a part of profit, the part which is paid to the owner of capital by the industrial, functioning capitalist.  Since he can appropriate surplus labour only by means of capital (money, commodities), etc., he has to hand over a portion of it to the man who makes capital available to him.  And the lender, who wants to enjoy the advantages of money as capital without letting it function as capital, can do this only by being content with a part of the profit.  They are in fact co-partners, one of them being the juridical owner of the capital, and the other, while he employs it, the economic owner.  But since the profit only arises from the production process, is only its result and has first to be produced, interest is in fact merely a claim on part of the surplus labour which has yet to be performed, a title to future labour, a claim on a portion of the value of commodities which do not as yet exist, it is therefore only the result of a production process which takes place during the period at the end of which the interest only falls due.

||926| Capital is bought (that is, it is lent at interest) before it is paid for.  Money functions here as means of payment as it does in relation to labour-power, etc.  The price of capital—i.e., interest—enters therefore just as much into the advances made by the industrialist (and into the advances made to himself where a man is operating with his own capital) as the price of cotton which, for example, is bought today, but for which he has to pay perhaps in six weeks’ time.  This fact is in no way altered either by the fluctuations in the rate of interest—the market price of money—or the fluctuations in the market prices of other commodities.  On the contrary.  The market price of money—the name for interest-bearing capital as money capital—is fixed on the money market by competition between buyer and seller, by demand and supply, like the price of any other commodity.  The struggle between the moneyed and industrial capitalists is simply a struggle over the division of the profit, over the share which is to accrue to each of the two sections when the division is made.  The relationship (demand and supply), like each of its two extremes, is itself a result of the production process or, in common parlance, [is determined] by the business situation existing at the time, the actual position in which the reproduction process and its elements find themselves.  But, formally and apparently, it is this struggle which determines the price of capital (i.e., interest) before capital enters into the production process.  This determination, moreover, occurs outside the real production process, and depends on factors independent of the process; this price determination appears rather as one of the conditions within which the process has to take place.  Thus the struggle appears not only to establish the property title to a definite part of the future profit, but to cause this part not to emerge as a result of the production process, but on the contrary to enter into it as a pre-condition, as the price of capital, just as the prices of commodities or wages enter into it as pre-conditions, although in the course of the reproduction process they in fact continuously emerge from it.  Each component of the price of a commodity, insofar as it appears as an advance—as an already existing commodity price which enters into the production price—ceases to represent surplus-value as far as the industrial capitalist is concerned.  That part of the profit which thus enters into the production process as the price of capital is reckoned as part of the cost of the outlay; it therefore no longer appears to be surplus-value and is converted from a product of the process into one of its given pre-conditions—a condition of production—which as such enters into the process in an independent form and determines its result.

(If, for example, the rate of interest falls, and the situation obtaining on the market requires a reduction in the price of commodities below cost-price, the industrialist can lower the commodity price without reducing the rate of industrial profit; he can indeed lower the price and secure a higher industrial profit, which, however, will be regarded by the man operating only with his own capital as a fall in the rate of profit, a reduction in the gross profit.  Everything which appears as a given condition of production, such as the prices of commodities, wages, capital—the market prices of these elements—affects the determination of the market price of the commodity at any particular time; the real cost-price of a particular commodity is established only within the fluctuations of the market prices, and is only the self-equalisation of these market prices, just as the value of commodities is only established as a result of the equalisation of the cost-prices of all the different commodities.  Thus, the vicious circle of the vulgarian, whether he is a theoretician regarding matters from the capitalist standpoint or is in fact a capitalist—namely, that the prices of commodities determine wages, interest, profit and rent and that, on the other hand, the prices of labour, interest, profit and rent determine the prices of commodities—is merely an expression of the circular movement in which the general laws assert themselves in contradictory fashion in the real movement and in appearance.)

A part of the surplus-value—interest—thus appears as the market price of capital, which enters into the [production] process, and is therefore regarded not as surplus-value but as a condition of production.  Thus, the fact that two sets of capitalists share the surplus-value, one set remaining outside the production process and the other participating in it, is presented in such a way that one part of surplus-value is due to capital outside the process and the other part to capital within the process.  The fact that the division [of the surplus-value] is established beforehand is presented as the independence of one part from the other, as the independence of one part from the production process itself; and finally as the immanent attribute of things, money, commodities, but of these things as capital; this again appears not as the expression of a relationship, but in such a way that this money, these commodities are technologically intended for the labour process and because of this they become capital.  Defined in this way, they are the simple elements of the labour process itself ||927| and as such they are capital.

There is nothing mysterious at all in the fact that the value of the commodity is made up partly of the value of the commodities contained in it, partly of the value of the labour—that is to say, the paid labour—partly of the unpaid but none the less salable labour, and that the part of its value which consists of unpaid labour—i.e., its surplus-value—is in turn divided into interest, industrial profit and rent; in other words, the person who “produces” and first of all takes possession of the whole of this surplus-value has to hand over portions of it to others, one portion to the landlord, another to the owner of the capital, and he keeps the third for himself; he does so however under a name—industrial profit—which distinguishes it from interest and rent, and from surplus-value and profit.  The breakdown of surplus-value, that is, of part of the value of commodities, into these special headings or categories, is very understandable and does not conflict in the least with the law of value.  But the whole matter is mystified because these different parts of surplus-value acquire an independent form, because they accrue to different people, because the titles to them are based on different elements, and finally because of the autonomy with which certain of these parts of surplus-value confront the production process as its conditions.  From parts into which value can be divided, they become independent elements which constitute value, they become component parts.  This is what they are as far as market prices are concerned.  They really become the constituent elements of the market price.  How their apparent independence as conditions of the process is regulated by the inherent law and that they are only apparently independent, does not become evident at any moment in the course of the production process, nor does it operate as a determining conscious motive.  Exactly the opposite.  The highest consistency which can be assumed by this semblance of results taking the form of independent conditions becomes firmly established when parts of surplus-value—in the form of prices of the conditions of production—are included in the price.

And this is the case with regard to both interest and rent.  They are part of the outlay of the industrial capitalist and the farmer.  They seem here to represent not unpaid surplus labour, but paid surplus labour, that is, surplus labour for which an equivalent is paid during the production process, although not to the worker whose surplus labour it is, but to other people, i.e., the owners of capital and of land.  They constitute surplus labour as far as the worker is concerned, but they are equivalents as regards the capitalist [who lends the money] and the landowner to whom they have to be paid.  Interest and rent therefore appear not as surplus-value, and still less as surplus labour, but as prices of the commodities “capital” and “land”, for they are paid to the capitalist and the landowner only in their capacities as owners of commodities, only as owners and sellers of these commodities.  That part of the value of the commodity which represents interest, therefore, appears as reproduction of the price paid for capital, and that part which represents rent appears as reproduction of the price paid for the land.  These prices therefore become constituent parts of the total price.  This does not merely appear to be the case to the industrial capitalist; for him interest and rent really constitute part of his outlay, and whereas, on the one hand, they are determined by the market price of his commodity—as the market price it is a determination of a commodity in which a social process or the result of a social process appears as a particular aspect belonging to the commodity, and the up and down of this process, its movement, appears as the fluctuations of the commodity price—on the other hand, the market price is determined by them, in just the same way as the market price of cotton determines the market price of yarn and, on the other hand, the market price of yarn determines the demand for cotton, hence the market price of cotton.

Since parts of surplus-value, i.e., interest and rent, enter into the production process as the prices of commodities—of the commodity land and the commodity capital—they exist in forms which not only conceal, but which disavow their real origin.

That surplus labour, unpaid labour, constitutes just as essential an element of the capitalist production process as paid labour, is expressed by the fact that factors of production—land and capital—distinct from labour have to be paid for, in other words, that costs besides the price of the commodities advanced and wages enter into the price.  Parts of surplus-value—interest and rent—appear here as costs, as advances made by the exploiting capitalist.

Average profit enters into the production price of commodities as a determining factor and thus already here surplus-value [appears to be] not a result, but a condition, not one of the parts into which the value of the commodity is divided, but a component part of its price.  But average profit, like the production price itself, acts rather as a determining ideal and at the same time appears as surplus over and above the advances made ||928| and as a price which is different from the cost-price properly speaking.  Whether or not [average profit is obtained] and whether it is higher or lower than the profit corresponding to the market price—that is, corresponding to the direct result of the [production] process—determines the reproduction process, or rather the scale of reproduction; it determines whether more or less of the capital existing in this or that sphere of production is withdrawn or invested; it also determines the ratio in which newly accumulated capital flows into these particular spheres, and finally, to what extent these particular spheres act as buyers in the money market.  On the other hand, as interest and rent, the separate portions of surplus-value in a quite definite form become pre-conditions for the individual production prices and are anticipated in the form of advances.


<Advances, that is, what is paid out by the capitalist, may be defined as costs.  Profit accordingly appears as a surplus over these costs.  This applies to the individual prices of production.  And consequently, one can call the prices determined by the advances cost-prices.

Costs of production can be defined as prices determined by the average profit—that is, the price of the capital advanced plus the average profit—since this profit is the condition for reproduction, a condition which regulates the supply and the distribution of capital amongst the various spheres of production.  These prices are production prices.

Finally, the real amount of labour (materialised and immediate labour) it costs to produce a commodity, is its value.  It constitutes the real production cost of the commodity itself.  The price which corresponds to it is simply the value expressed in money.

The term “cost of production” is used alternately in all three senses.>


If no surplus-value were produced, then of course together with surplus-value the part of it which is called interest would also cease to exist, and so would the part which is called rent; the anticipation of surplus-value would likewise come to an end, in other words, it would no longer constitute a part of the costs of production in the shape of the price of commodities.  The existing value entering into the production process would not emerge from it as capital at all, and accordingly, could not enter into the reproduction process as capital, nor be lent out as capital.  It is thus the continuous reproduction of the same relations—the relations which postulate capitalist production—that not only causes them to appear as the social forms and results of this process, but at the same time as its continual prerequisites.  But they are these only as prerequisites continually posited, created, produced by the process itself.  This reproduction is therefore not conscious reproduction; on the contrary, it only manifests itself in the continuous existence of these relations as prerequisites and as conditions dominating the production process.  The parts, for example, into which the commodity value can be divided are turned into its component parts which confront one another as independent parts, and they are consequently also independent in relation to their unity, which on the contrary appears to be a compound of these parts.  The bourgeois sees that the product continually becomes the condition of production.  But he does not perceive that the production relations themselves, the social forms in which he produces and which he regards as given, natural relations, are the continuous product—and only for that reason the continuous prerequisite—of this specific social mode of production.  The different relations and aspects not only become independent and assume a heterogeneous mode of existence, apparently independent of one another, but they seem to be the direct properties of things; they assume a material shape.

Thus the participants in capitalist production live in a bewitched world and their own relationships appear to them as properties of things, as properties of the material elements of production.  It is however in the last, most derivative forms—forms in which the intermediate stage has not only become invisible but has been turned into its direct opposite—that the various aspects of capital appear as the real agencies and direct representatives of production.  Interest-bearing capital is personified in the moneyed capitalist, industrial capital in the industrial capitalist, rent-bearing capital in the landlord as the owner of the land, and lastly, labour in the wage-worker.  They enter into the competitive struggle and into the real process of production as these rigid forms, personified in independent personalities that appear at the same time to be mere representatives of personified things.  Competition presupposes this externalisation.  These forms conform to its nature and have come into being in the natural evolution of competition, and on the surface competition appears to be ||929| simply the movement of this inverted world.  Insofar as the inner connection asserts itself in this movement, it appears as a mysterious law.  The best proof is political economy itself, a science which seeks to rediscover the hidden connection.  Everything enters into competition in this last, most externalised form.  The market price, for example, appears to be the dominant factor here, just as the rate of interest, rent, wages, industrial profit appear to be the constituents of value, and the price of land and the price of capital appear as given items with which one operates.

We have seen how Adam Smith first reduces value to wages, profit (interest) and rent, and then, conversely, presents these as independent constituent elements of commodity prices.  He expresses the secret connection in the first version and the outward appearance in the second.

If one comes still closer to the surface of the phenomenon, then, in addition to the average rate of profit, interest and even rent can be represented as constituent parts of commodity prices (that is, of market prices).  Interest can be so represented quite directly, since it enters into the cost-price.  Rent—as the price of land—may not determine the price of the product directly, but it determines the method of production, whether a large amount of capital is concentrated on a small area of land, or a small amount of capital is spread over a large area of land, and whether this or that type of product is produced—e.g., cattle or corn—the market price of which  covers the rent most effectively, for the rent must be paid before the term stipulated by contract expires.

In order that rent should not bring about a reduction in industrial profit, pasture is turned into arable land and arable land into pasture, etc.  Rent therefore determines the market prices of individual commodities not directly, but only indirectly, by influencing the proportions in which the various types of commodities are produced in such a way that demand and supply will produce the best price for each so that rent can be paid.  Even though rent does not directly determine the market price of corn, for example, it determines directly the market price of cattle, etc., in short, of commodities produced in the spheres where rent is not regulated by the market prices of their products but where the market prices of products are regulated by the amount of rent borne by the grain-producing land.  The price of meat, for example, is always too high in industrially developed countries, that is, it is not only far above its production price, but above its value.  For the price must cover not only the cost of production, but also the rent which the land would carry if corn were grown on it.  Otherwise, meat produced by large-scale stock-breeding—where the organic composition of capital approximates more closely [to the composition of capital in industry] or may have an even greater preponderance of constant capital over variable capital—could only pay a very small amount of absolute rent, or even none at all.  The rent which it pays, and which enters directly into its price, is, however, determined by the absolute plus the differential rent which the land would pay as arable land.  This differential rent, moreover, does not exist here in most cases.  The best proof is that meat pays rent on the kind of land where corn does not.

If, therefore, profit enters into the production price as a determining factor, it can be said that wages, interest arid, to a certain degree, rent constitute determining elements of the market price and certainly of the production price.  Of course, ultimately everything can be reduced to value which is determined by labour-time, for on the whole the movement of interest is determined by profit, while corn rent on the other hand is determined partly by the rate of profit, partly by the value of the product and the equalisation of the different values produced on different kinds of land to the market value; the rate of profit, however, is determined partly by wages, partly by the productivity of labour in those spheres of production which produce constant capital—in the last analysis therefore by the level of wages and the productivity of labour; wages, however, are the equivalent of a part of the commodity (that is, [they are] equal to the paid portion of labour contained in the commodity, and profit is equal to the unpaid portion of labour contained in the commodity).  Finally, the productivity of labour can affect the price of commodities only in two ways, either it affects their value, i.e., reduces it, or it affects their surplus-value, that is, increases it.  Cost-price is nothing but the value of the capitals advanced plus the surplus-value they produce distributed amongst the different spheres according to the quota of the total capital which each sphere represents.  Thus, cost-price resolves into value if one considers the total capital and not the individual spheres.  On the other hand, the market prices in each sphere are continually reduced to the cost-price as a result of the competition between the capitals of the different spheres.  Competition amongst the capitalists in each individual sphere seeks to reduce the market price of commodities to their market value.  Competition between capitalists of different spheres reduces market values to common cost-prices.

Ricardo opposes Smith’s establishment of value out of the parts of value which are determined by itself.  But he is not consistent.  Otherwise it would have been impossible for him to argue with Smith whether profit, wages and rent or, as he says, merely profit and wages, enter into price, that is, enter as constituent parts.  Regarded analytically, they enter into it as soon as they are paid.  He ought to have put it in this way: The price of every commodity is reducible to profit and wages, the prices of some commodities (and of very many, indirectly) are reducible to profit, rent and wages.  But no commodity price is constituted by them ||930| for they are not independent factors acting of their own accord, having a definite magnitude, and making up the value of commodities; on the contrary, when the value is given, it can be divided into those parts in many different proportions.  The magnitude of value is not determined by the addition or combination of given factors—i.e., profit, wages and rent—but one and the same magnitude of value, a given amount of value, is broken down into wages, profit and rent, and according to different circumstances it is distributed between these three categories in very different ways.

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 labour 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 recognised 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 crystallises 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.

<What value is for the genuine economist the market price is for the practical capitalist, that is, in each case the primary factor of the whole movement.>

The form of interest-bearing capital characteristic of and in accordance with capitalist production is credit.  It is a form created by capitalist production itself.  (The subordination of commercial capital [by the capitalist mode of production] does not in fact require such a new creation since commodity and money, and the circulation of commodities and money, remain the elementary prerequisites of capitalist production and are only turned into absolute prerequisites; commercial capital, on the one hand, is therefore the general form of capital and, on the other hand, insofar as it represents capital in a specific function—capital which operates exclusively in the circulation process—its determination by productive capital does not in any way alter its form.)

The equalisation of values to cost-prices occurs only because the individual capital functions as a commensurate part of the total capital of the whole class and, on the other hand, because the total capital of the class is distributed amongst the various individual spheres according to the needs of production.  This is brought about by means of credit.  Credit not only makes this equalisation possible and facilitates it, but one part of capital—in the form of moneyed capital—appears in fact to be the material common to the whole class and employed by it.  This is one purport of credit.  The other is the continual attempt made by capital to shorten the metamorphoses which it has to undergo in the circulation process, to anticipate the circulation time, its transformation into money, etc., and in this way to counteract its own ||931| limitations.  Finally, the function of accumulating, insofar as it is not conversion [of revenue] into capital but the supply of surplus-value in the form of capital, becomes, in part, the responsibility of a special class, in part everything accumulated by society in this sense becomes accumulation of capital and is placed at the disposal of the industrial capitalists.  Operations of this kind take place at a very large number of isolated points in society, [their results] are concentrated and collected in certain reservoirs.  Money which lies idle due to freezing of the commodities in the metamorphosis, is thus converted into capital.


Land—rent and capital—interest are irrational expressions insofar as rent is defined as the price of land and interest as the price of capital.  The common origin [of all these different revenues] is still recognisable in the forms of interest-bearing capital, rent-bearing capital, profit-bearing capital, since, in general, capital involves appropriation of surplus labour; so that these different forms merely express the fact that the surplus labour produced by capital is, as concerns capital in general, divided between two types of capitalists, and in the case of agricultural capital, it is divided between capitalist and landlord.

Rent as the (annual) price of land and interest as the price of capital are just as irrational as √-3.  The latter form contradicts the number in its simple, elementary form just as those do in the case of capital in its simple form of commodities and money.  They are in the converse sense irrational.  Land—rent, i.e., rent as the price of land, defines land as a commodity, a use-value which has a value whose monetary expression is its price.  But a use-value which is not the product of labour cannot have a value; in other words, it cannot be defined as the materialisation of a definite quantity of social labour, as the social expression of a certain quantity of labour.  It is nothing of the kind.  Only if it is the product of concrete labour can use-value take the form of exchange-value—become a commodity.  Only under this condition can concrete labour, for its part, be expressed as social labour, value.  Land and price are incommensurable magnitudes, nevertheless they are supposed to bear a certain relation to each other.  Here a thing which has no value has a price.

Interest as the price of capital, on the other hand, expresses the converse irrationality.  Here a commodity which has no use-value has a dual value, it has a value in the first place and in addition a price, which is different from this value.  For capital is, to begin with, nothing but a sum of money or a quantity of commodities equal to a certain sum of money.  If the commodity is lent out as capital, then it is nothing but a sum of money in camouflaged form.  For what is lent as capital is not so many pounds of cotton, but so much money whose value exists in the form of cotton.  The price of the capital is therefore related to it only as the existence of a sum of money, that is, a certain value expressed in money and existing in the form of exchange-value.  How is it possible for a value to have a price apart from the price which is expressed in its own money form?  Price after all is the value of the commodity as distinct from its use-value.  Price in contradistinction to the value of the commodity, price as the value of a sum of money (for price is simply the expression of value in money) is therefore a contradiction in terms.

This irrationality of expression (the irrationality of the thing itself arises from the fact that, as regards interest, capital as the prerequisite appears divorced from its own process, in which it becomes capital and consequently self-expanding value, and that, on the other hand, rent-bearing capital exists only as agricultural capital, as capital which only yields rent in a particular sphere, and this form in which it appears is transmitted to the element that differentiates it in general from industrial capital), this irrationality of expression is so much felt by the vulgarian that he falsifies both expressions in order to make them appear rational.  He asserts that interest is paid on capital insofar as it is use-value, and therefore talks about the utility which the products or means of production have for reproduction and of the utility which capital has as a material element of the labour process.

But, after all, its utility, its use-value, already exists in its form as a commodity and without this it would not be a commodity and would have no value.  As money, it is the expression of the value of commodities and is ||932| convertible into them in proportion to their own value.  But if I convert money into a machine, into cotton, etc., then I convert it into use-values of the same value.  The conversion is concerned only with the value form.  As money, it has the use-value of being convertible into any other commodity, a commodity, however, of the same value.  As a result of this transformation, the value of money changes no more than that of the commodity when it is converted into money.  The use-value of the commodities into which I can convert money does not give the money, in addition to its value, a price which is different from its value.  If, however, I presuppose the conversion and assert that the price is paid for the use-value of the commodities, then the use-value of the commodities is not paid for at all or is only paid insofar as their exchange-value is paid for.  How the use-value of any commodity is utilised, whether it enters into individual or industrial consumption, has absolutely no bearing on its exchange-value.  It only determines who will buy it—the industrial capitalist or the immediate consumer.  The productive usefulness of a commodity can therefore account for the fact that the commodity has exchange-value at all, for the labour embodied in the commodity is paid for only if it has use-value.  Otherwise it is not a commodity—it is a commodity only as the unity of use-value and exchange-value.  But this use-value can by no means account for the fact that as exchange-value or as price, it has in addition another and different price as well.

One can see how the vulgarian wants to get over the difficulty here by seeking to convert capital—that is, the money or the commodity insofar as these have a specifically different form from themselves as money or commodity—into a mere commodity, in other words, by disregarding precisely the specific difference which has to be explained.  He does not wish to say that capital is a means for the exploitation of surplus labour and that it therefore represents greater value than the value contained in it.  Instead he says: It has more value than its own value because it is an ordinary commodity like any other, that is, it possesses a use-value.  Here capital is identified with commodity, whereas the point to be explained is how the commodity can function as capital.

The vulgarian, insofar as he does not echo the Physiocrats, deals with land in the opposite way.  In the previous case, he converted capital into a commodity in order to explain the difference between capital and commodity and the conversion of the commodity into capital.  Now he converts land into capital because the capital relation as such is more in tune with his ideas than the price of land.  Rent can be regarded as interest on capital.  For example, if the rent is 20 and the rate of interest is 5, then it can be said that this 20 is interest on a capital of 400.  And in fact the land then sells at 400, which simply amounts to the sale of the rent for a period of 20 years.  This payment of the anticipated 20 years’ rent is thus the price of the land.  The land is thereby converted into capital.  The annual payment of 20 merely represents 5 per cent interest on the capital which was paid for the land.  And in this way, the formula land—rent is converted into capital—interest, which, for its part, is transmogrified into payment for the use-value of commodities, that is, into the relationship of use-value to exchange-value.

The more analytical vulgarians understand that the price of land is nothing more than an expression for the capitalisation of rent; [that] in fact [it is] the purchase price of rent for a number of years and that it is determined by the prevailing rate of interest.  They understand that rent is antecedent to this capitalisation of rent and that, on the other hand, it is therefore impossible to explain rent by its own capitalisation.  They therefore deny the existence of rent itself by asserting that it is interest on the capital invested in the land.  This does not prevent them from admitting that land in which no capital is invested carries rent, any more than it prevents them from admitting that equal amounts of capital invested in land of different fertility yield different amounts of rent, or that unequal amounts of capital invested in land of unequal fertility may yield the same amounts of rent.  [They admit] that likewise the capital invested in land—if indeed it is to account for the rent paid for the land—may yield perhaps five times as much interest, that is, five times as much rent, as is yielded by the same amount of capital invested as fixed capital in industry.

One perceives that here the difficulty is always eliminated by disregarding it and substituting a relationship expressing the opposite of the specific difference which has to be explained, and therefore, in any case, not expressing the difference at all.  |932||

[6.  The Struggle of Vulgar Socialism Against Interest (Proudhon).  Failure to Understand the Inner Connection Between Interest and the System of Wage-Labour]

||935| Proudhon’s polemic against Bastiat on the question of interest is characteristic both of the manner in which the vulgarian defends the categories of political economy and of the way in which superficial socialism (Proudhon’s polemic hardly deserves the name) attacks them.  We shall return to this in the section on the vulgarians.  Here only a few preliminary remarks.

The return movement [of money] should not have shocked Proudhon as being something peculiar if he understood anything at all about the movement of capital.  Neither should the surplus-value contained in the returning amount.  This is a characteristic feature of capitalist production.

<For Proudhon however, as we shall see, the surplus is a surcharge.  Altogether his criticism is that of a novice, he has not mastered the first elements of the science he intends to criticise.  Thus, he has never understood that money is a necessary aspect of the commodity (see Part I).  Here he even confuses money and capital because loan capital appears as money capital in the form of money.>

What might have struck him was not the surplus for which no equivalent was paid, since surplus-value—and capitalist production is based on it—is value which has cost no equivalent.  This is not a specific feature of interest-bearing capital.  The specific feature—insofar as we are considering the form of the movement—is only the first phase, that is, precisely the opposite of what Proudhon has in mind, namely, that the lender hands over the money without receiving an equivalent for it at the outset and that, therefore, the return of the capital with interest, as regards the transaction between borrower and lender, [is not related to] the metamorphoses which capital undergoes and which, insofar as they are mere metamorphoses of economic form, consist of a series of exchanges, conversion of commodities into money and conversion of money into commodities; insofar as they are real metamorphoses, that is, elements of the production process, they coincide with industrial consumption.  Here consumption itself constitutes a phase of the movement of economic forms.

But what money in the hands of the lender does not do, it does in the hands of the borrower who really employs it as capital.  It performs its real movement as capital in the hands of the borrower.  It returns to him as money plus profit, money plus 1/x money.  The movement between lender and borrower only expresses the starting-point and the final point of capital.  It is money when it passes from the hands of A into those of B.  It becomes capital in B’s hands, and as such, after undergoing a certain revolution, it returns with profit.  This interlude, the real process, which comprises both the circulation process and the production process, is not connected with the transaction between borrower and lender.  It [the transaction] recommences only after the money has been realised as capital.  The money now passes back into the hands of the lender along with a surplus, which, however, comprises only part of the surplus realised by the borrower.  The equivalent which the borrower receives is industrial profit, that is, the part of the surplus which he retains and which he appropriates only by means of the money borrowed.  All this is not visible in the transaction between him and the lender.  This is limited to two acts.  Transfer from A’s hands into those of B.  Interval during which the money remains in B’s hands.  After this interval the money along with interest returns into A’s hands.

If one examines merely this form—the transaction between A and B—then one regards the mere form of capital without the intervening stage: a certain amount of money a is handed over and after a certain period returns as a+1/xa without the assistance of any intermediate link apart from the period of time which elapses between the departure of the sum of money a and its return as a+1/xa.

And it is in this abstract form, which, indeed, exists as an independent movement alongside the real movement of capital, opens it and closes it, that Mr. Proudhon considers the matter in hand, so that everything inevitably remains incomprehensible to him.  If instead of buying and selling, lending in this form were to be abolished, then, according to Proudhon, the surplus would disappear.  In fact only the division of the surplus between two sets of capitalists would disappear.  But this division can and must be constantly generated anew whenever it is possible to convert commodities or money into capital, and, on the basis of wage-labour, this is always possible.  In order that it should be impossible for commodities and money to become capital and therefore be lent as capital in posse, they must not confront wage-labour.  If they are thus not to confront it as commodities and money and consequently labour itself is not to become a commodity, then that amounts to a return to pre-capitalist modes of production ||936| in which it [labour] does not become a commodity, and for the greater part still exists in the form of serf or slave labour.  On the basis of free labour, this is only possible where the workers are the owners of their means of production.  Free labour develops within the framework of capitalist production as social labour.  To say that they are the owners of the means of production amounts to saying that these belong to the united workers and that they produce as such, and that their own output is controlled jointly by them.  But wanting to preserve wage-labour and thus the basis of capital, as Proudhon does, and at the same time to eliminate the “drawbacks” by abolishing a secondary form of capital, reveals the novice.

Gratuité du Crédit.  Discussion entre M. Fr. Bastiat et M. Proudhon, Paris, 1850.

He regards lending as something evil because it is not a sale.

To lend at interest “is the ability to sell the same object again and again and always to receive a price for it without ever relinquishing ownership of the object which one sells” (op. cit., p. 9) (First Letter written by Chevé, one of the editors of La Voix du Peuple).

What confuses him is that the “object” (money or a house, for example) does not change owners as in the case of buying and selling.  But he does not see that when money is handed over, no equivalent is received in return; that, on the contrary, in the real [production] process, in the form and on the basis of exchange, not only an equivalent, but a surplus which is not paid for, is returned; insofar as exchange, exchange of things, takes place, no change of values occurs, the same person remains the “owner” of the same value, and insofar as there is a surplus, there is no exchange.  When the exchange of commodity and money begins again, the surplus is already absorbed in the commodity.  Proudhon does not understand how profit, and consequently interest as well, arise from the law of the exchange of values.  “House”, “money”, etc., ought therefore to be exchanged not as “capital”, but as “commodities … at cost-price” (op. cit., pp. 43-44).

“Indeed the hatter, who sells hats…gets back […] their value, neither more nor less.  But the capitalist who lends money, not only…gets his capital back undiminished, he receives more than the capital, more than he put into the exchange; he receives interest in addition to the capital…” (op. cit., p. 69).

Mr. Proudhon’s hatters do not appear to be capitalists but journeymen.

“Since in trade the price of the commodity is formed by adding interest on capital to the workers’ wages, the worker is therefore unable to buy back the product of his own labour.  To live by one’s labour is a principle which, under the rule of interest, comprises a   contradiction” (op. cit., p. 105).

The worthy Proudhon confuses money as a means of circulation with money as capital in Letter IX (pp. 144-52) and therefore concludes that “capital” in France yields 160 per cent, namely, 1,600 million interest annually in State debts, mortgages, etc., on a capital of one thousand million, i.e., “the amount of currency … circulating in France…”


“Since, as a result of the accumulation of interest, money capital always returns to its source, from one exchange to another, it follows that re-lending is always undertaken by the same hand, always brings profit to the same person” (op. cit., p. 154).

Because capital is lent out in the form of money, Proudhon believes that money capital, that is, currency, possesses this specific attribute.  Everything should be sold but nothing lent.  In other words: In the same way as he wanted commodities to exist but did not want them to become “money”, so here he wants commodities, money, to exist but they must not develop into capital.  When all phantastic forms have been stripped away, this means nothing more than that there should be no advance from small, petty-bourgeois peasant and artisan production to large-scale industry.

“Since value is nothing but a proportion, and all products are necessarily proportional to one another, it follows that, from a social point of view, products are always values, and stable values at that.  For society, the difference between capital and product does not exist.  This difference is quite subjective, it exists only for individuals” (op. cit., p. 250).

What mischief is caused when such philosophical German terms as “subjective” fall into the hands of a Proudhon.  The bourgeois social forms are “subjective” for him.  And the subjective, and moreover erroneous, abstraction that, because the exchange-value of commodities expresses a proportion, it expresses every possible proportion between commodities and does not express a third thing to which the commodities are proportional—this false “subjective” abstraction is the social point of view ||937| according to which not only commodity and money, but commodity, money and capital are identical.  Thus, from this “social point of view”, all cats are indeed grey.

Finally there is also the surplus in the form of morality:

“All labour must produce a surplus” (op. cit., p. 200).

With which moral precept the surplus is naturally defined very nicely.  |937||

[7.  Historical Background to the Problem of Interest.  Luther’s Polemic Against Interest Is Superior to That of Proudhon.  The Concept of Interest Changes as a Result of the Evolution of Capitalist Relations]

||937| Luther, who lived in the period of the dissolution of medieval civil society into the elements of modern society—a process which was accelerated by world trade and the discovery of new gold deposits—naturally knew capital only in its two antediluvian [forms] of interest-bearing capital and merchant capital.  Whereas in its early phase capitalist production, haying gained strength, seeks to subordinate interest-bearing capital to industrial capital by force—this was in fact done first of all in Holland, where capitalist production in the form of manufacture and large-scale trade first blossomed, and in England in the seventeenth century it was, partly in very naive terms, declared to be the primary requisite of capitalist production—on the other hand, during the transition to capitalist production, the first step is the recognition that “usury”, the old-fashioned form of interest-bearing capital, is a condition of production, a necessary production relation; in the same way as later on its justification is recognised by industrial capital, which regards it as flesh of its own flesh, as soon as industrial capital subordinates interest-bearing capital to itself (eighteenth century, Bentham).

Luther is superior to Proudhon.  The difference between lending and selling does not confuse him, for he perceives that usury exists equally in both.  The most striking feature of his polemic is that he makes his main point of attack the fact that interest is an innate element of capital.

I.  Books on trade and usury written in 1524.  [Von Kauffshandlung und Wucher in] Part VI of Luther’s Works, Wittenberg, 1589.

(This was written on the eve of the Peasant War.)

[About] trade (merchant capital):

“There is now great outcry against the nobles or robbers amongst the merchants” (one can see why the merchants are for the princes and against the peasants and knights), “that they have to conduct their trade in great danger and that they are arrested, beaten, despoiled and robbed, etc., in consequence of trading.  But if they suffered these things for the sake of righteousness, then, in truth, all merchants would be holy men…  But since such great unrighteousness and un-Christian thieving is rife throughout the whole world because of the merchants, and often enough amongst them themselves, why should we wonder if God wills it that such great wealth, gained by unrighteous means, is lost or stolen in its turn, and that because of it, the merchants are knocked on the head or arrested?… And it is the duty of the princes to punish such unrighteous commerce with due force and to see to it that their subjects are not fleeced so shamefully by the merchants.  But because they do not do this, God uses the knights and the robbers and punishes the wickedness of the merchants through them; they must be His devils.  Just as He plagues with devils or destroys with enemies the Land of Egypt and the whole world.  Thus He causes one scoundrel to be flogged by another, but He does not indicate thereby that knights are lesser robbers than merchants, since the merchants rob the whole world every day while a knight only robs one or two people once or twice a year” (p. 296).

“… Follow the words of Isaiah: Your princes have become the companions of thieves.  While they hang thieves who have stolen a guilder or half a guilder, they consort with those who rob the whole world and who steal more safely than any others; truly, the proverb—big thieves hang ||938| little thieves—still holds good, and, as Cato, the Roman senator, said: Little thieves are put into dungeons and in the stocks, but great thieves parade in gold and silk.  But what will God have to say in the end?  He will do as He said when He spoke through the mouth of Ezekiel: He will crush and melt prince and merchant, one thief and another, into one another like lead and brass, just as happens when a town is burned down, so that there will be princes and merchants no longer, and I fear that this is not so far off” (p. 297).

[On] usury.  Interest-bearing capital:

“I am told that nowadays 10 guilders, i.e., 30 per cent, are charged in any Leipzig market; some add also the Neunburg market so that it comes to 40 per cent.  I don’t know whether it is even higher.  Shame on you, where the devil will it end?… Whoever in Leipzig now has 100 florins, takes 40 in a year, this means that he has eaten up a peasant or a burgher in a year.  If he has 1,000 florins, then he takes 400 in a year, that is, he eats up a squire or a rich gentleman in a year.  If he has 10,000, he takes 4,000, that is, he eats up a rich count in a year.  If he has 100,000, as must happen in the case of the great merchants, then he takes 40,000 in a year, that is, he eats up a great, rich prince in a year.  If he has 1,000,000, then he takes 400,000 in a year, that is, he eats up some great king in a year.  And he suffers not any danger in so doing, neither to his body nor to his treasure, labours not, sits by the fire and roasts apples; thus a chair thief may sit at home and eat up a whole world in 10 years” (pp. 312-13).

<II.  Eyn Sermon auf das Evangelion von dem reichen Mann und armen Lazaro etc., Wittemberg, 1555 [A Sermon on the Gospel of the Rich Man and Poor Lazarus, etc.].

“We must not regard the rich man according to his outer bearing, for he wears sheep’s clothing and his life shines and seems pretty and covers up the wolf most perfectly.  For the Gospel does not charge him that he committed adultery, murder, robbery, sacrilege or anything that the world or reason would censure.  Indeed he is as honest in his life as that Pharisee who fasts twice a week and is not as other men.”>

Here Luther tells us how usurer’s capital arises, [through] the ruination of the citizens (small townspeople and peasants), the gentry, the nobility and the princes.  On the one hand, the usurer comes into possession of the surplus labour and, in addition, the conditions of labour of plebeians, peasants, members of craft guilds, in short, of the small commodity producers who need money in order, for example, to make payments before they convert their commodities into money, and who have to buy certain of their conditions of labour, etc.  On the other hand, the usurer appropriates rent from the owners of rent, that is, from the prodigal, pleasure-seeking rich.  Usury is a powerful means for establishing the pro-conditions for industrial capital—a mighty agency for separating the conditions of production from the producers, insofar as it has the twofold result, firstly, of establishing independent fortunes in the form of money, secondly, of appropriating the conditions of labour to itself, that is, ruining the owners of the old conditions of labour, just like the merchant.  And both have the common feature that they acquire an independent fortune, that is, they accumulate in their hands in the form of money claims part of the annual surplus labour, [part] of the conditions of labour [and also part] of the accumulated annual labour.  The money actually in their hands constitutes only a small portion of both the annual and the annually accumulated wealth and circulating capital.  That they acquire fortunes means that a significant portion of both the annual production and the annual revenue accrues to them, and this is payable not in kind, but in the converted form, in money.  Consequently, insofar as money does not circulate actively as currency, is not in movement, it is accumulated in their hands.  They also hold some of the reservoirs of circulating money and to an even larger extent they hold and accumulate titles to products, but in the form of money titles, titles to commodities converted into money.  ||939| On the one hand, usury leads to the ruin of feudal wealth and property; on the other hand, it brings about the ruin of petty-bourgeois, small-peasant production, in short, of all forms in which the producer is still the owner of his means of production.

The worker in capitalist production does not own the means of production, [he owns] neither the land he cultivates nor the tools with which he works.  This alienation of the conditions of production corresponds here, however, to a real change in the mode of production itself.  The tool becomes a machine, and the worker works in the workshop, etc.  The mode of production no longer tolerates the dispersal of the means of production connected with small property, just as it does not tolerate the dispersal of the workers themselves.  In capitalist production, usury can no longer separate the conditions of production from the workers, from the producers, because they have already been separated from them.

Usury centralises property, especially in the form of money, only where the means of production are scattered, that is, where the worker produces more or less independently as a small peasant, a member of a craft guild (small trader), etc.  As peasant or artisan, whether the peasant is or is not a serf, or the artisan is or is not a member of a craft guild.  The usurer here not only appropriates the part of the surplus labour belonging to the bondsman himself, or in the case of the free peasant, etc., the whole surplus labour, but he also appropriates the instruments of production, though the peasant, etc., remains their nominal owner and treats them as his property in the process of production.  This kind of usury rests on this particular basis, on this mode of production, which it does not change, to which it attaches itself as a parasite and which it impoverishes.  It sucks it dry, enervates it and compels reproduction to be undertaken under constantly more atrocious conditions.  Thus the popular hatred of usury, especially under the conditions prevailing in antiquity, where this form of production—in which the conditions of production are the property of the producer—was at the same time the basis of the political relationships, of the independence of the citizen.  This comes to an end as soon as the worker no longer possesses any conditions of production.  And with it the power of the usurer likewise comes to an end.  On the other hand, insofar as slavery predominates or [insofar as] the surplus labour is consumed by the feudal lord and his retainers and they fall prey to the usurer, the mode of production also remains the same, only it becomes more oppressive.  The debt-ridden slave-holder or feudal lord squeezes more out because he himself is being squeezed dry.  Or, finally, he makes way for the usurer, who becomes a landowner, etc., like the eques,[h] etc., in Ancient Rome.  In place of the old exploiter, whose exploitation was to some extent a means of political power, there appears a coarse, money-hunting parvenu.  But the mode of production itself remains unchanged.

The usurer in all pro-capitalist modes of production has a revolutionary impact only in the political sense, in that he destroys and wrecks the forms of property whose constant reproduction in the same form constitutes the stable basis of the political structure.  [The usurer] has a centralising [effect] as well, but only on the basis of the old mode of production, thus leading to the disintegration of society—apart from the slaves, serfs, etc., and their new masters—into a mob.  Usury can continue to exist for a long time in Asiatic forms of society without bringing about real disintegration, but merely giving rise to economic decay and political corruption.  It is only in an epoch where the other conditions for capitalist production exist—free labour, a world market, dissolution of the old social connections, a certain level of the development of labour, development of science, etc.—that usury appears as one of the factors contributing to the establishment of the new mode of production; and at the same time causing the ruin of the feudal lords, the pillars of the anti-bourgeois elements, and the ruin of small-scale industry and agriculture, etc., in short, as a factor leading to the centralisation of the conditions of production in the form of capital.

The fact that the usurers, merchants, etc., possess “monetary fortunes” simply means that the wealth of the nation, insofar as it takes the form of commodities or money, is concentrated in their hands.

At the outset capitalist production has to fight against usury to the extent that the usurer himself does not become a producer.  With the establishment of capitalist production the domination of the usurer over surplus labour, a domination which depends on the continued existence of the old mode of production, ceases.  The industrial capitalist collects surplus-value directly in the form of profit; he has also already seized part of the means of production and he appropriates part of the annual accumulation directly.  From this moment, and especially as soon as industrial and commercial wealth develops, the usurer—that is, the lender at interest—is a person who is differentiated from the industrial capitalist only as the result of the division of labour, but is subordinated to industrial capital.

||940| III.  An die Pfarrherrn wider den Wucher zu predigenVermanung, Wittemberg, 1540 (without pagination).

[Discusses] trading (buying, selling) and lending.  (Unlike Proudhon, Luther is not deceived by these differences of form.)

“Fifteen years ago I wrote against usury since it had already become so widespread that I could hope for no improvement.  Since that time, it has exalted itself to such a degree that it no longer wishes to be a vice, sin or infamy but extols itself as downright virtue and honour as if it conferred a great favour on and did a Christian service to the people.  What will help and counsel us now that infamy has become honour and vice virtue?  Seneca says with good reason: Deest remedii locus, ubi, quae vitia fuerunt, mores fiunt.[i] Germany has become what it had to become, accursed avarice and usury have corrupted it completely…

“First concerning lending and borrowing: Where money is lent and more or better is demanded and taken in return, that is usury, anathemised in all laws.  Therefore all those who take five, six or more on a hundred on money lent are usurers, and they know they are acting as such and are called the idolatrous servants of covetousness and of Mammom… And one should say the same in respect of corn, barley and other goods, where more or better is: demanded in return, that it is usury, goods stolen and extorted.  For lending means my handing over my money, goods or chattels to somebody for as long as he needs them, or for as long as I can and wish to, and he returns the same things to me in his own good time, in as good a condition as that in which I lent him them.”

“Thus they also make a usury out of buying and selling.  But this is too much to deal with in one single bite.  We must deal with one thing now, with usury as regards loans; when we have put a stop to this (as on the Day of Judgement), then we will surely read the lesson with regard to usurious trade.”

“Thus Squire Usurer says: Friend, as things are at present, I do my neighbour a great service in that I lend him a hundred at five, six, ten.  And he thanks me for such a loan as a very special favour.  He does, in truth, entreat me for it and pledges himself freely and willingly to give me five, six, ten guilders in a hundred…  Should I not be able without extortion to take this interest with a good conscience?…

“Let [whoever wants to do so] extol himself, put on finery and adorn himself [but pay no heed and keep firmly to the scripture] … whoever takes more or better than he gives, that is usury and is not a service, but a wrong done to his neighbour, as when one steals and robs.  All is not service and benefit to a neighbour that is called service and benefit.  For an adultress and an adulterer do one another a great service and pleasure.  A horseman does a great service to a robber by helping him to rob on the highway, and attack the people and the land.  The papists do us a great service in that they do not drown, burn, murder all or let them rot in prison, but let some live and drive them out or take from them what they have.  The devil himself does his servants a great, inestimable service…  To sum up: the world is full of great, excellent daily services and good deeds…  The poets write about the Cyclops Polyphemus, who said he would do Ulysses an act of friendship, namely, that he would eat his companions first and then Ulysses last.  In sooth, this would have been a service and a fine favour.  Such services and good deeds are performed nowadays most diligently by the high-born and the low-born, by peasants and burgesses, who buy goods up, pile up stocks, bring dear times, ||941| increase the price of corn, barley and of everything people need; they then wipe their mouths and say: Yes—one must have what one must have; I let my things out to help people although I might—and could—keep them for myself; and God is thus fooled and deceived…  The sons of men have become very holy…  So that now nobody can profiteer, be covetous or wicked; the world has really become holy, everyone serves his fellows, nobody harms anybody else… 

“But if this is the kind of service he does, then he does it for Satan himself; although a poor needy man requires such service and must accept it as a service or favour that he is not eaten up completely… 

“He[j] does and must do thee such a favour” (pay interest to the usurer) “if he wants to get money.”

<One can see from the above that usury increased greatly in Luther’s time and was already justified as a “service” (Say, Bastiat).  Even the formulation of competition or harmony existed already: “Everyone serves his fellows.”

In the world of antiquity, during the better period, usury was forbidden (i.e., interest was not allowed).  Later [it was] lawful, and very prevalent.  Theoretically the view always [predominated] that interest in itself is wicked (as was stated by Aristotle).

In the Christian Middle Ages, it was a “sin” and prohibited by “the canon”.

Modern times.  Luther.  The Catholic-pagan view still [prevailed].  Usury became very widespread (as a result partly of the monetary needs of the government, [partly] of the development of trade and manufacture, [and the] necessity to convert the products into money).  But its civic justification is already asserted.

Holland.  The first apologia for usury.  It is also here that it is first modernised and subordinated to industrial or commercial capital.

England.  Seventeenth century.  The polemics are no longer directed against usury as such, but against the amount of interest, and the fact that it dominates credit.  The desire to establish the form of credit.  Regulations are imposed.

Eighteenth century.  Bentham.  Unrestricted usury is recognised as an element of capitalist production.>

[A few more extracts from Luther’s An die Pfarrherrn wider den Wucher zu predigen.]

Interest as compensation for loss.

[“The following case can happen and no doubt does happen often, that I, Hans, lend you, Baltzer, a hundred guilders on condition that I must have it back by Michaelmas when I shall need it urgently, otherwise (if you fail me) I shall be in dire trouble.  Michaelmas comes and you do not give me the hundred guilders back.  Thereupon the judge takes me by the throat, or throws me in the dungeon or prison, or some other trouble befalls me until I pay.  There I sit, or remain locked away, missing my food and improvement to my great cost; and you with your delay have brought me to this pass and returned my good deed so badly.  What shall I now do?  My losses increase day by day and I suffer additional expenses because, and so long as, you delay and do nothing.  Who is now to bear the loss or penalty?  For my losses with remain an insufferable guest in my house until I am utterly ruined.”]

“Well then, speaking in worldly and juridical fashion (we shall have to wait until later to speak about it theologically), you, Baltzer, are due to give me the hundred guilders along with all the losses and charges which have been added.” <By charges, he means legal charges, etc., which the lender has incurred because he himself could not pay his debts.> “It is therefore right and proper and likewise according to reason and natural haw that you make restitution to me of everything—both the capital sum and the loss…  In legal books, the Latin word for this indemnification is interesse

“Something else can happen in the way of loss.  If you, Baltzer, do not give me back my hundred guilders by Michaelmas and l have to make a purchase, say to buy a garden, a plot of land or a house, or anything from which I and my children could derive great use or sustenance, then I must forego it and you do me damage and are a hindrance to me so that I can never get such a bargain again because of your delay and inactivity, etc.  But since I lent you the hundred guilders, you have caused me to suffer twofold damage because I cannot pay on the one hand and cannot buy on the other and thus must suffer loss on both sides.  This is called duplex interesse, damni emergentis et lucri cessantis[k]… 

“Having heard that Hans has suffered loss on the hundred guilders which he lent and demands just recompense for this loss, they rush in and charge such double compensation on every 100 guilders, namely, for expenses incurred and for the inability to buy the garden; just as though every hundred could grow double interest naturally, so that whenever they have a hundred guilders, they loan them out and charge for two such losses which however they have not incurred at all

“Therefore thou art a usurer, who makes good thine own imagined losses with your neighbour’s money, losses which no one has caused thee and which thou canst neither prove nor calculate.  The lawyers call such losses non verum, sed phantasticum interesse.[l] A loss which each man dreams up for himself

“It will not do ||942| to say I might incur a loss because I might not have been able to pay or buy.  That would mean ex contingente necessarium,[m] making something that must be out of something which is not, to turn a thing which is uncertain into a thing which is absolutely sure.  Would such usury not eat up the world in a few years… 

“If the lender accidentally incurs a loss through no fault of his own, he must be recompensed, but it is different in such deals and just the reverse.  There he seeks and invents losses to the detriment of his needy neighbours; thus he wants to maintain himself and get rich, to be lazy and idle and to live in luxury and splendour of other people’s labour and worry, danger and loss.  So that I sit behind the stove and let my hundred guilders gather wealth for me throughout the land, and, because they are only loaned, I keep them safely in my purse without any risk or worry; my friend, who would not like that?

“And what has been said about money which is loaned applies also to corn, wine and such like goods which are lent, for they also may occasion such double damage.  But such double damage is not something naturally accruing to the goods, but may arise by accident only and cannot therefore be reckoned as damage unless it has actually occurred and been proved, etc… 

“Usury there must be, but woe to the usurers…

“All wise, reasonable heathens have also inveighed against usury as something exceedingly evil.  Thus Aristotle, in his Politics, says that usury is against nature and for this reason: it always takes more than it gives.  Thereby it abolishes the means and measure of all virtue, which we call like for like, aequalitas arithmetica[n], etc.…

“But taking from other people, stealing or robbing, is called a shameful way of maintaining oneself, and those who do so are called, by your leave, thieves and robbers, whom we are accustomed to hang on the gallows; a usurer however is a nice thief and robber and sits in a chair, therefore we call him a chair thief… 

“The heathens were able, by the light of reason, to conclude that a usurer is a double-dyed thief and murderer.  We Christians, however, hold them in such honour that we fairly worship them for the sake of their money…  Whoever eats up, robs and steals the nourishment of another, commits as great a murder (so far as in him lies) as he who starves a man to death or utterly undoes him.  But such does a usurer, and sits the while, safe on his chair, when he ought rather to be hanging on the gallows and eaten by as many ravens as he has stolen guilders, if only there was so much flesh on him that so many ravens could stick their beaks in and share it… 

“But the dealers and usurers will cry out that what is written under hand and seal must be honoured.  To this the jurists have given a prompt and sufficient answer.  In malis promissis.[o] Thus the theologians say that some people give the devil something under hand and seal signifies nothing, even if it is written and sealed in blood.  For what is against God, Right and Nature is null and void.  Therefore let a Prince who can do so, take action, tear up bond and seal, take no notice of it, etc. …

“Therefore there is on this earth no greater enemy of men, after the devil, than a miser and usurer, for he wants to be God over all men.  Turks, soldiers, tyrants are also bad men, yet they must let the people live and confess that they are bad and enemies, and can, nay must, now and then show pity on some.  But a usurer and money-grubber, such a one would have the whole world perish of hunger and thirst, misery and want, so far as in him lies, so that he may have all to himself and everyone receive from him as from a God and ||943| be his serf for evermore.  This is what gladdens his heart, refreshes his blood.  And, at the same time, he can wear sable cloaks, golden chains, rings, gowns, wipe his mouth, be deemed and taken for a worthy, pious man, who is more merciful than God Himself, more loving than the Mother of God, and all the holy Saints… 

“And they write of the great deeds of Hercules, how he overcame so many monsters and frightful horrors in order to save his country and his people.  For usury is a great horrible monster, like the werewolf, who lays everything waste, more than any Cacus, Geryon or Antaeus, etc.  And yet he decks himself out and wants to appear pious so that people may not see where the oxen have gone (that he drags backwards into his den).”

<An excellent picture, it fits the capitalist in general, who pretends that what he has taken from others and brought into his den, emanates from him, and by causing it to go backwards he gives it the semblance of having come from his den.>

But Hercules shall hear the cry of the oxen and of the prisoners and shall seek out Cacus even on the cliffs and among the rocks, and he shall set the oxen loose again from the villain.  For Cacus means the villain that is a pious usurer who steals, robs and eats everything.  And will not admit that he has done it and thinks no one will find him out, because the oxen, drawn backwards into his den, make it seem from their footprints that they have been let out.  Thus the usurer wants to deceive the world, as though he were of use and gave the world oxen, whereas, in reality, he seizes them for himself and consumes them… 

“Therefore, a usurer and miser is, indeed, not truly a human being, sins not in a human way and must be looked upon as a werewolf, more than all the tyrants, murderers and robbers, nearly as evil as the devil himself, but one who sits in peace and safety, not like an enemy, but like a friend and citizen, yet robs and murders more horribly than any enemy or incendiary.  And since we break on the wheel and behead highwaymen and burglars, how much more ought we to break on the wheel and kill all usurers, and drive out, curse and behead all misers… ”

A highly picturesque and striking description of both the character of old-fashioned usury, on the one hand, and of capital in general, on the other, with the “imagined loss”, the “indemnification which naturally accrues” to money and commodities, the general phrases about usefulness, the “pious” air of the usurer who is not “like the rest of men”, the appearance of giving when one is taking, and of letting out when one is pulling in, etc.


“The great premium attached to the possession of Gold and Silver, by the power it gives of selecting advantageous moments of purchasing, gradually gave rise to the trade of the Banker.” The Banker “differs from the old Usurer in this respect, that he lends to the rich and seldom or never to the poor.  Hence he lends with less risk, and can afford to do it on cheaper terms; and for both reasons, he avoids the popular odium which attended the Usurer” (Francis William Newman, Lectures on Political Economy, London, 1851, p. 44).

The involuntary alienation of feudal landed property develops along with the development of usury and money.

“The introduction of money which buys all things, and in consequence of that, the favour due to creditors, who have lent their money to a possessor of land, brings in the necessity of legal alienation for the payment of what has been thus lent…” (John Dalrymple, An Essay towards a General History of Feudal Property in Great Britain, London, 1759, fourth ed., p. 124).

||944| “According to Thomas Culpeper (1641), Josiah Child (1670) and Paterson (1694) wealth depends on the self-imposed reduction in the rate of interest on gold and silver.” [This rule] “was observed in England for almost two centuries” (Charles Ganilh, (Des systémes d’économie politique…, seconde éd., tome premier, Paris, 1821, pp. 58-59]).

When Hume—in opposition to Locke—declared that the rate of interest is regulated by the rate of profit, he had a much higher development of capitalism in mind.  This was even more true of Bentham when he wrote his defence of usury towards the end of the eighteenth century.

A reduction in the rate of interest was imposed by law from the time of Henry VIII to that of Queen Anne.

No country had a general rate of interest during the Middle Ages.  Only the priests [prohibited all transactions involving interest] with great sternness.  Legal measures safeguarding loans were unreliable.  The rate of interest was consequently very high in individual cases.  The amount of money in circulation was small and it was necessary to make most money payments in cash, for bills of exchange were not yet widely used.  Hence interest and the concept of usury varied considerably.  In Charlemagne’s time it was regarded as usurious if 100 per cent was charged.  The local burghers in Lindau on Lake Constance charged 216 2/3 per cent in 1344.  The legal rate of interest in Zürich was fixed at 43 1/3 per cent by the Council.  In Italy, 40 per cent had to be paid occasionally although the usual rate did not exceed 20 per cent from the twelfth to the fourteenth centuries.  Verona decreed a legal rate of 121/2 per cent.  Frederick II 10 per cent, but this only for Jews.  He would not say what the rate should be for Christians.  The usual rate in the Rhenish part of Germany was 10 per cent as early as the thirteenth century (Hüllmann, Städtewesen des Mittelalters, Zweiter Teil, Bonn, 1827, pp. 55-57).

The enormous rates of interest in the Middle Ages (insofar as they were not paid by the feudal aristocracy, etc.) were based in the towns, in very large measure, on the gigantic profits upon alienation which the merchants and urban craftsmen made out of country people, whom they cheated.

In Rome, as in the entire ancient world—apart from merchant cities, like Athens and others, which were particularly developed industrially and commercially—[high interest was] a means used by the big landowners not only for expropriating the small proprietors, the plebeians, but for appropriating their persons.

Usury was originally permitted freely in Rome.  The Law of the Twelve Tables (303 A.U.C.[p]) “fixed interest on money at 1 per cent per year” (Niebuhr says 10 per cent).  “This law was promptly infringed […] Duilius”(398 A.U.C.) “reduced the rate of interest to l per cent again […] unciario foenore[q] […]  It was limited to 1/2 per cent in the year 408, and in 413 lending at interest was totally prohibited as a result of a referendum initiated by the Tribune Genucius [… ] It is not surprising that in a republic in which the citizens were forbidden to carry on industry and both wholesale and retail trade, trading in money should also be prohibited” (Dureau de la Malle, [Économie politique des Romains,] t. II, [Paris, 1840,] pp. 259-61).  “This lasted for 300 years until the fall of Carthage.  It then [became legal to charge up to] 12 per cent, but the usual rate of annual interest was 6 per cent” (loc. cit., p. 261).  “Justinian fixed the rate of interest at 4 per cent; in Trajan’s time the legal rate of interest was 5 per cent, usura quincunx.[r] In Egypt the legal commercial interest was 12 per cent in 146 B.C.” (loc. cit., pp. 262-63).  |944||


||950a| James William Gilbart in his The History and Principles of Banking (London, 1834) says the following with regard to interest.

“That a man who borrows money with a view of making a profit by it, should give some portion of his profit to the lender, is a self-evident principle of natural justice.  A man makes a profit usually by means of traffick.  But in a country purely agricultural, and under such government as was the feudal system,[s] there can be but little traffick, and hence but little profit.” Legislation against extortionate interest is therefore justified in the Middle Ages.  “Besides, in an agricultural country a person seldom wants to borrow money except he be reduced to poverty or distress by misfortune” (p. 163).

“In the reign of Henry VIII, interest was limited to 10 per cent.  James I reduced it to 8 per cent […] Charles II […] to 6 per cent […] Anne […] to 5 per cent” (pp. 164-65).  “…in those times, the lenders […] had in fact, though not a legal, yet an actual monopoly, and hence it was necessary that they, like other monopolists, should be placed under restraint.  In our times, it is the rate of profit which regulates the rate of interest.  In those times, it was the rate of interest which regulated the rate of profit.  If the money-lender charged a high rate of interest to the merchant, the merchant must have charged a higher rate of profit on his goods.  Hence, a large sum of money would be taken from the pockets of the purchasers to be put into the pockets of the money-lenders.  This additional price, too, put upon the goods, would render the public less able and less inclined to purchase them” (p.165).

In the seventeenth century, Josiah Child in his Brief Observations concerning Trade and Interest of Money, and Thomas Culpeper in his Traité contre l’usure (1621) likewise, attacks Thomas Manley (author of the tract Interest of Money Mistaken) whom he calls the “champion of the usurers”.  Naturally the point of departure—like that of all the arguments of English economists of the seventeenth century—was the wealth of Holland where there was a low rate of interest.  Child considers that this low rate of interest is the cause of wealth.  Manley declares that it is only the result [of wealth].

“Insomuch that to know whether any Country be rich or poor … no other question needs to he resolved, but this, viz. What Interest do they pay for Money?” ([Josiah Child, Brief Observations concerning Trade and Interest of Money, London, 1668, p. 9;] Troités, p. 74).[t]

“…the gentleman brings up his battalia, and, like a stout champion for the sly and timorous herd of usurers, plants his main battery against that part which I confessed to be weakest…  And he positively denies that the lowness of interest is the cause” (of wealth), “and affirms it to be only the affect thereof…” ([Josiah Child, A New Discourse of Trade…, London, 1775, p. 39;] Traités, p. 120).

“When interest is abated, they who call in their money must either buy land” (whose price goes up as a result of the number of buyers), “or trade with it…”([A New Discourse…, p. 47;] Traités, p. 133).

“… whilst interest is at 6 per cent no man will run an adventure to sea for the gain of 8 or 9 per cent which the Dutch, having money at 4 or 3 per cent at interest, are contented with…”([A New Discourse…, p.47;] Traités, p. 134).

The low rate of interest and the high price of land force the merchant to stick to commerce.  “…it” (a low rate of interest) “inclines a nation to thriftiness” ([A New Discourse…, p. 52;] Traités, p. 144).

“…if trade be that which enricheth any kingdom, and lowering of interest advanceth trade…then the abatement of interest, or more properly restraining of usury… is doubtless a primary and principal cause of the riches of any nation; it being not improper to say, nor absurd to conceive, that the same thing ||950b| may be both a cause and an effect” ([A New Discourse…, p.58;] Traités, p. 155).

“…an egg is the cause of a hen, and a hen the cause of an egg.

“… [The like may be said of nations:] the abatement of interest causeth an increase of wealth, and the increase of wealth may cause a further abatement of interest.  But that is best done by the midwifery of good laws…” ([A New Discourse…, p. 59;] Traités, p. 156).

“… I am an advocate for industry, he for idleness…” ([A New Discourse…, p.71;] Traités, p. 179).

He appears here as the direct champion of industrial and commercial capital.  |XV-950b||

[a] Tokos—to bear, produce, the product; figuratively: interest on money lent.—Ed.

[b] Free credit.—Ed.

[c] One must, after all, recover what is due to oneself, even if one takes it out of one’s own pocket.—Ed.

[d] See this volume, pp. 480-81.—Ed.

[e] This can also mean: “the means of production do not yet work with it”, i.e., capital.—Ed.

[f] The English socialists.—Ed.

[g] Marx gives this passage in his own words.—Ed.

[h] Knight.—Ed.

[i] There is no remedy where that which was regarded as unvirtuous becomes the habit.—Ed.

[j] The poor man.—Ed.

[k] Twofold compensation, for the loss incurred and for the gain missed.—Ed.

[l] Not real but imagined losses.—Ed.

[m] Making a necessity out of an accident.—Ed.

[n] Arithmetical equality.—Ed.

[o] In evil promises.—Ed.

[p] A.U.C.—anno urbis conditae—in the year of the founding of the City, used to express the date since the foundation of Rome (753 B.C.).—Ed.

[q] Increase by one twelfth (one ounce).—Ed.

[r] Interest of five twelfths (five ounces).—Ed.

[s] In Marx’s manuscript this sentence reads (in German) as follows: “But in the Middle Ages the population was wholly agricultural.  And in this case, just as under a feudal government”, etc.—Ed.

[t] Marx quotes this and the following passages from the French translation of Child’s work—Traités sur le commerce et sur les avantages qui résultent de la réduction de l’interest de l’argent, Amsterdam et Berlin, 1754.—Ed.