Understanding Capital Volume II, John Fox, 1985

Chapter 6: The Costs of Circulation

"The general law is that all costs of circulation which arise only from changes in the forms of commodities do not add to their value. They are merely expenses incurred in the realisation of the value or in its conversion from one form into another." (p. 152 [225-226])

Marx's discussion of the costs of circulation extends his examination of productive and unproductive labor begun in Volume I of Capital. Parts of this chapter are among the most difficult sections in Volume II, and Marx's argument often appears obscure, or even contradictory. To attempt to clarify the distinction between productive and unproductive labor, we shall return at some length to the formulations of Volume I. Then we shall proceed to consider the development of these concepts in the present chapter. Although our reading here is by no means definitive, we shall try to avoid the opposing pitfalls of over-simplification and scholasticism.

Marx's treatment of productive labor in Volume I of Capital began at a very high level of abstraction, not in the specific context of the capitalist mode of production. In general, productive labor is labor that produces a useful effect. This labor may or may not be embodied in material objects -- Marx's several examples employing services (e.g., education in Volume I, transportation in the present chapter) make this point clear -- but to be productive, labor must be productive of use-value. Marx goes on to explain that under capitalism the scope of productive labor is both narrowed and expanded: it is narrowed in that only labor producing surplus-value is productive for capital; therefore, from the point of view of capitalism, independent commodity producers do not labor productively, even if they produce use-values in the form of commodities. To work productively, laborers must sell their labor-power to a capitalist and must be exploited, that is, must produce surplus-value for the capitalist. Labor that is exchanged for revenue is not productive, even if it is wage labor, for the labor is consumed directly, not used in the production of value and surplus-value. Thus, personal servants are not productive laborers, because their services are consumed. This is the case despite the fact that a servant may labor beyond necessary labor-time, and therefore be exploited. (In contrast, servants who sell their labor-power to a capitalist enterprise, which then contracts out this labor, are productive, producing value and surplus-value for their employer.)

At the same time, capitalism expands the definition of productive labor as a consequence of the division of labor that it institutes in the workplace. Here, Marx introduces the concept of the collective worker. If laborers participate in the production of a useful effect, that is, function as parts of the collective laborer working for capital, the laborers work productively, even if their labor contributes only indirectly to the production of use-value. Thus, mental labor (e.g., that of draftsmen and engineers) necessary to the proiductive process is productive labor. Marx differentiates tasks that are intrinsic to the production of use-value from tasks that are necessitated by the capitalist production of these use-values. Labor of supervision, for example, is productive insofar as it fulfills executive functions required by the productive process generally, and unproductive to the degree that it is necessitated by the class antagonism between workers and capitalists engendered by capitalism.

Let us now turn to Marx's discussion of the costs of circulation. The crucial distinction in this discussion is between unproductive costs entailed by the commodity form of the product, necessitating a process of circulation proper (i.e., exchange of values), and productive costs which are a function of the use-form of the product and, in this sense, are incidental to circulation of values. Circulation as the exchange of values is an abstract process in which the seller acquires money and the buyer obtains title to the commodity exchanged. Material movement of objects ("circulation of matter") does not necessarily take place when commodities are exchanged as values, and, if it does, it is incidental not central to exchange.

The acts of buying and selling, whether these are performed by the industrial capitalist, by wage-workers under the capitalist's employ, or by intermediaries (i.e., merchants) who function exclusively as traders, are therefore unproductive because these functions are entailed by the commodity form of the product.

Note that unproductive wage-workers are exploited when their working day extends beyond necessary labor time, even though they produce no value or surplus-value. These workers' surplus labor serves to decrease the capitalists' unproductive costs. The distinction between productive and unproductive labor, therefore, is not a distinction between social classes.

Costs of storage of commodities are productive insofar as the labor employed in storage is a function of the material properties of the product, and not merely of their commodity form (that is, the fact that they are exchanged as values). Here, Marx argues that the formation of supplies is common to all modes of social production, not just to commodity production or to capitalist commodity production. The particular form of supplies is different under different modes of production, however. In peasant economies, for example, most supplies of means of production and consumption remain in the hands of their direct producers. Under capitalism, the portion of supplies existing in commodity form (as commodity capital) expands greatly. To the extent that the maintenance of a supply is entailed by the commodity form of the product, as, for example, when commodities are kept from the market for speculative purposes, the labor expended in maintenance of the supply creates neither value nor surplus-value: it is unproductive. Moreover, under these circumstances, constant capital employed in storage does not transfer its value to the product.

Marx treats transportation as a branch of industrial capital, even though transport is often entailed by the process of commodity circulation, and despite the fact that transportation does not produce a material product. This treatment is consistent with Marx's general discussion. Transportation produces a useful effect, change of location, and as such adds to the value of the goods transported. Labor in the transportation industry is, therefore, productive labor. We should note, in this context, that transportation as a service may be consumed directly, as in the transportation of passengers.

Marx's treatment of productive and unproductive costs of circulation is made more difficult by his distinction between labor that is productive for the individual capitalist, that is, labor that produces value and surplus-value, and labor that is productive from the point of view of "society." The first sense of productive labor is the sense discussed above. From the point of view of society, only labor that increases the mass of use-values comprising the social product is productive labor. From this perspective, therefore, all costs of storage, for example, are unproductive, because storage diminishes rather than augments the use-values of the articles stored. This is as true of storage necessitated by the use-form of the product as by its commodity form, despite the fact that storage labor necessitated by the use-form of the product produces value and surplus-value (i.e., is productive from the point of view of the capitalist).

Marx's consideration of labor expended in bookkeeping also presents analytic difficulties. To the extent that bookkeeping is necessitated by commodity exchange, that is, by the exchange of products as values, it creates no new value, and hence is unproductive for the capitalist. Likewise, the instruments of labor employed in unproductive bookkeeping activity (e.g., writing implements, ledgers) do not transfer their value to the product. Marx acknowledges, however, that bookkeeping also serves partially to regulate social production, and, as such, transcends the commodity form of the product. He does not pursue this point, however, because the context of the discussion is the exchange of products as values.

To conclude, then, productive labor under capitalism is labor that produces surplus-value for a capitalist. To produce surplus-value, workers must sell their labor-power to a capitalist, must (as parts of the collective worker) produce a use value, material or nonmaterial, and must be exploited. The importance of the productive/unproductive-labor distinction for Marx's political economy lies in his argument that only productive workers make a positive contribution to the production of surplus-value; instead of contributing to the production of surplus-value, unproductive workers must ultimately be paid from it.