Capital: A Critique of Political Economy, Vol. I. The Process of Capitalist Production
By Karl Marx
One of Econlib’s aims is to put online the most significant works in the history of economic thought, and there can be no doubting the significance of Marx’s influence on both economic theory in the late 19th century and on the creation of Marxist states in the 20th century. From the time of the emergence of modern socialism in the 1840s (especially in France and Germany), free market economists have criticised socialist theory and it is thus useful to place that criticism in its intellectual context, namely beside the main work of one of its leading theorists,
Karl Marx.In 1848, when Europe was wracked by a series of revolutions in which both liberals and socialists participated and which both lost out to the forces of conservative monarchism or Bonapartism,
John Stuart Mill published his
Principles of Political Economy. The chapter on Property shows how important Mill thought it was to confront the socialist challenge to classical liberal economic theory. In hindsight it might appear that Mill was too accommodating to socialist criticism, but I would argue that in fact he offered a reasonable framework for comparing the two systems of thought, which the events of the late 20th century have finally brought to a conclusion which was not possible in his lifetime. Mill states in
Book II Chapter I “Of Property” that a fair comparison of the free market and socialism would compare both the ideal of liberalism with that of socialism, as well as the practice of liberalism versus the practice of socialism. In 1848 the ideals of both were becoming better known (and there were some aspects of the ideal of socialism which Mill found intriguing) but the practice of each was still not conclusive. Mill correctly observed that in 1848 no European society had yet created a society fully based upon private property and free exchange and any future socialist experiment on a state-wide basis was many decades in the future. After the experiments in Marxist central planning with the Bolshevik Revolution in 1917, the Chinese Communists in 1949, and numerous other Marxist states in the post-1945 period, there can be no doubt that the reservations Mill had about the practicality of fully-functioning socialism were completely borne out by historical events. What Mill could never have imagined, the slaughter of tens of millions of people in an effort to make socialism work, has ended for good any argument concerning the Marxist form of socialism.Econlib now offers online two important defences of the socialist ideal, Karl Marx’s three volume work on
Capital and the
collection of essays on Fabian socialism edited by George Bernard Shaw. These can be read in the light of the criticism they provoked among defenders of individual liberty and the free market: Eugen Richter’s anti-Marxist
Pictures of the Socialistic Future, Thomas Mackay’s
2 volume collection of essays rebutting Fabian socialism,
Ludwig von Mises post-1917 critique of
Socialism. One should not forget that
Frederic Bastiat was active during the rise of socialism in France during the 1840s and that many of his essays are aimed at rebutting the socialists of his day. The same is true for Gustave de Molinari and the other authors of the
Dictionnaire d’economie politique (1852). Several key articles on communism and socialism from the
Dictionnaire are translated and reprinted in Lalor’s
Cyclopedia.For further reading on Marx’s
Capital see David L. Prychitko’s essay
“The Nature and Significance of Marx’s
Capital: A Critique of Political Economy“.For further readings on socialism see the following entries in the
Concise Encyclopedia of Economics:
Poor Law Commissioners’ Report of 1834,
edited by Nassau W. Senior, et al.
March 1, 2004
Frederick Engels, Ernest Untermann, eds. Samuel Moore, Edward Aveling, trans.
First Pub. Date
Chicago: Charles H. Kerr and Co.
First published in German. Revised and Amplified According to the Fourth German Edition by Ernest Untermann Das Kapital, based on the 4th edition.
The text of this edition is in the public domain. Picture of Marx courtesy of The Warren J. Samuels Portrait Collection at Duke University.
- Editors Note to the First American Edition, by Ernest Untermann
- Authors Prefaces to the First and Second Editions, by Karl Marx
- Editors Prefaces, by Frederick Engels
- Part I, Chapter 1
- Part I, Chapter 2
- Part I, Chapter 3
- Part II, Chapter 4
- Part II, Chapter 5
- Part II, Chapter 6
- Part III, Chapter 7
- Part III, Chapter 8
- Part III, Chapter 9
- Part III, Chapter 10
- Part III, Chapter 11
- Part IV, Chapter 12
- Part IV, Chapter 13
- Part IV, Chapter 14
- Part IV, Chapter 15
- Part V, Chapter 16
- Part V, Chapter 17
- Part V, Chapter 18
- Part VI, Chapter 19
- Part VI, Chapter 20
- Part VI, Chapter 21
- Part VI, Chapter 22
- Part VII, Introduction
- Part VII, Chapter 23
- Part VII, Chapter 24
- Part VII, Chapter 25
- Part VIII, Chapter 26
- Part VIII, Chapter 27
- Part VIII, Chapter 28
- Part VIII, Chapter 29
- Part VIII, Chapter 30
- Part VIII, Chapter 31
- Part VIII, Chapter 32
- Part VIII, Chapter 33
- Works and Authors
WE have seen that the rate of surplus-value is represented by the following formulæ.
The two first of these formulæ represent, as a ratio of values, that which, in the third, is represented as a ratio of the times during which those values are produced. These formulæ, supplementary the one to the other, are rigorously definite and correct. We therefore find them substantially, but not consciously, worked out in classical political economy. There we meet with the following derivative formulæ.
One and the same ratio is here expressed as a ratio of labour-times, of the values in which those labour-times are embodied, and of the products in which those values exist. It is of course understood that, by “Value of the Product,” is meant only the value newly created in a working-day, the constant part of the value of the product being excluded.
In all of these formulæ (II.), the actual degree of exploitation of labour, or the rate of surplus-value, is falsely expressed. Let the working-day be 12 hours. Then, making the same assumptions as in former instances, the real degree of exploitation of labour will be represented in the following proportions.
From formulæ II. we get very differently,
These derivative formulæ express, in reality, only the proportion
in which the working-day, or the value produced by it, is divided between capitalist and labourer. If they are to be treated as direct expressions of the degree of self-expansion of capital, the following erroneous law would hold good: Surplus-labour or surplus-value can never reach 100%.
*20 Since the surplus-labour is only an aliquot part of the working-day, or since surplus-value is only an aliquot part of the value created, the surplus-labour must necessarily be always less than the working-day, or the surplus-value always less than the total value created. In order, however, to attain the ratio of 100:100 they must be equal. In order that the surplus-labour may absorb the whole day (
i.e., an average day of any week or year), the necessary labour must sink to zero. But if the necessary labour vanish, so too does the surplus-labour, since it is only a function of the former. The ratio Surplus-labour/Working-day or Surplus-value/Value created can therefore never reach the limit of 100/100, still less rise to (100+x)/100. But not so the rate of surplus-value, the real degree of exploitation of labour. Take,
e.g., the estimate of L. de Lavergne, according to which the English agricultural labourer gets only ¼, the capitalist (farmer) on the other hand ¾ of the product
*21 or of its value, apart from the question of how the booty is subsequently divided between the
capitalist, the landlord and others. According to this, the surplus-labour of the English agricultural labourer is to his necessary labour as 3:1, which gives a rate of exploitation of 300%.
The favourite method of treating the working-day as constant in magnitude became, through the use of the formulæ II., a fixed usage, because in them surplus-labour is always compared with a working-day of given length. The same holds good when the repartition of the value produced is exclusively kept in sight. The working-day that has already been realised in a given value, must necessarily be a day of given length.
The habit of representing surplus-value and value of labour-power as fractions of the value created—a habit that originates in the capitalist mode of production itself, and whose import will hereafter be disclosed—conceals the very transaction that characterises capital, namely the exchange of variable capital for living labour-power, and the consequent exclusion of the labourer from the product. Instead of the real fact, we have the false semblance of an association, in which labourer and capitalist divide the product in proportion to the different elements which they respectively contribute towards its formation.
Moreover, the formulæ II. can at any time be reconverted into formulæ I. If, for instance, we have (Surplus-labour of 6 hours)/(Working-day of 12 hours) the necessary labour-time being 12 hours less the surplus-labour of 6 hours, we get the following result,
(Surplus-labour of 6 hours)/(Necessary-labour of 6 hours) = 100/100
There is a third formula which I have occasionally already anticipated; it is
After the investigations we have given above, it is no longer possible to be misled, by the formula (Unpaid-labour)/(Paid labour), into concluding,
that the capitalist pays for labour and not for labour-power. This formula is only a popular expression for (Surplus-labour)/(Necessary labour). The capitalist pays the value, so far as price co-incides with value, of the labour-power, and receives in exchange the disposal of the living labour-power itself. His usufruct is spread over two periods. During one the labourer produces a value that is only equal to the value of his labour-power: he produces its equivalent. Thus the capitalist receives in return for his advance of the price of the labour power, a product of the same price. It is the same as if he had bought the product ready made in the market. During the other period, the period of surplus-labour, the usufruct of the labour-power creates a value for the capitalist, that costs him no equivalent.
*23 This expenditure of labour-power comes to him gratis. In this sense it is that surplus-labour can be called unpaid labour.
Capital, therefore, is not only, as Adam Smith says, the command over labour. It is essentially the command over unpaid labour. All surplus-value, whatever particular form (profit, interest, or rent), it may subsequently crystallise into, is in substance the materialisation of unpaid labour. The secret of the self-expansion of capital resolves itself into having the disposal of a definite quantity of other people’s unpaid labour.
e.g., in “Dritter Brief an v. Kirchmann von Rodbertus. Widerlegung der Ricardo’schen Theorie von der Grundrente und Begründung einer neuen Rententheorie. Berlin, 1851.” I shall return to this letter later on; in spite of its erroneous theory of rent, it sees through the nature of capitalist production.
Note by the Editor of the 3rd Edition. It may be seen from this how favourably Marx judged his predecessors, whenever he found in them real progress, or new and sound ideas. The subsequent publication of Rodbertus’ letters to Rud. Meyer has shown that the above acknowledgment by Marx wants restricting to some extent. In those letters this passage occurs: “Capital must be rescued not only from labour, but from itself, and that will be best effected, by treating the acts of the industrial capitalist as economical and political functions, that have been delegated to him with his capital, and by treating his profit as a form of salary, because we still know no other social organisation. But salaries may be regulated, and may also be reduced if they take too much from wages. The irruption of Marx into Society, as I may call his book, must be warded off…. Altogether, Marx’s book is not so much an investigation into capital, as a polemic against the present form of capital, a form which he confounds with the concept itself of capital.” (Briefe, &c., von Dr. Rodbertus-Jagetzow, herausgg. von Dr. Rud. Meyer, Berlin, 1881, I. Bd. p. 111., 48. Brief von Rodbertus.). To such ideological commonplaces did the bold attack by Rodbertus in his “social letters” finally dwindle down.
Part VI, Chapter XIX.