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
Part VI, Chapter XIX
THE TRANSFORMATION OF THE VALUE (AND RESPECTIVELY THE PRICE) OF LABOUR-POWER INTO WAGES.
ON the surface of bourgeois society the wage of the labourer appears as the price of labour, a certain quantity of money that is paid for a certain quantity of labour. Thus people speak of the value of labour and call its expression in money its necessary or natural price. On the other hand they speak of the market prices of labour,
i.e., prices oscillating above or below its natural price.
But what is the value of a commodity? The objective form of the social labour expended in its production. And how do we measure the quantity of this value? By the quantity of the labour contained in it. How then is the value,
e.g., of a 12 hours’ working day to be determined? By the 12 working hours contained in a working day of 12 hours, which is an absurd tautology.
In order to be sold as a commodity in the market, labour must at all events exist before it is sold. But could the labourer give it an independent objective existence, he would sell a commodity and not labour.
Apart from these contradictions, a direct exchange of money,
i.e., of realized labour, with living labour would either do away with the law of value which only begins to develop itself freely on the basis of capitalist production, or do away with capitalist production itself, which rests directly on wage-labour. The working day of 12 hours embodies itself,
e.g., in a money value of 6s. Either equivalents are exchanged, and then the labourer receives 6s. for 12 hours’ labour; the price of his labour would be equal to the price of his product. In this case he produces no surplus-value, for the buyer of his labour, the 6s. are not transformed into capital, the basis of capitalist production vanishes. But it is on this very basis that he sells his labour and that his labour is wage-labour. Or else he receives for 12 hours’ labour less than 6s.,
i.e., less than 12 hours’ labour. Twelve hours labour are exchanged against 10, 6, &c., hours’ labour. This equalisation of unequal quantities not merely does away with the determination of value. Such a self-destructive contradiction cannot be in any way even enunciated or formulated as a law.
It is of no avail to deduce the exchange of more labour against less, from their difference of form, the one being realized, the other living.
*4 This is the more absurd as the
value of a commodity is determined not by the quantity of labour actually realized in it, but by the quantity of living labour necessary for its production. A commodity represents, say 6 working hours. If an invention is made by which it can be produced in 3 hours, the value, even of the commodity already produced, falls by half. It represents now 3 hours of social labour instead of the 6 formerly necessary. It is the quantity of labour required for its production, not the realized form of that labour, by which the amount of the value of a commodity is determined.
That which comes directly face to face with the possessor of money on the market, is in fact not labour, but the labourer. What the latter sells is his labour-power. As soon as his labour actually begins, it has already ceased to belong to him; it can therefore no longer be sold by him. Labour is the substance, and the immanent measure of value, but
has itself no value.*5
In the expression “value of labour,” the idea of value is not only completely obliterated, but actually reversed. It is an expression as imaginary as the value of the earth. These imaginary expressions, arise, however, from the relations of production themselves. They are categories for the phenomenal forms of essential relations. That in their appearance things often represent themselves in inverted form is pretty well known in every science except political economy.
Classical political economy borrowed from every-day life the category “price of labour” without further criticism, and then simply asked the question, how is this price determined? It soon recognized that the change in the relations of demand and supply explained in regard to the price of labour, as of all other commodities, nothing except its changes,
i.e., the oscillations of the market price above or below a certain mean. If demand and supply balance, the oscillation of prices ceases, all other conditions remaining the same. But then demand and supply also cease to explain anything. The price of labour, at the moment when demand and supply are in equilibrium, is its natural price, determined independently of the relation of demand and supply. And how this price is determined, is just the question. Or a larger period of oscillations in the market-price is taken,
e.g., a year, and they are found to cancel one the other, leaving a mean average quantity, a relatively constant magnitude. This had naturally to be determined otherwise than by its own compensating variations. This price which always finally predominates over the accidental market-prices of labour and regulates them, this “necessary price” (physiocrats) or “natural price” of labour (Adam Smith) can, as with all other commodities, be nothing else than its value expressed in money. In this way political economy expected to penetrate athwart the accidental prices of labour, to the value of labour. As with other commodities, this value was determined by the cost of production. But what is the cost of production—of the labourer,
i.e., the cost of producing or reproducing the labourer himself? This question unconsciously substituted itself in political economy for the original one; for the search after the cost of production of labour as such turned in a circle and never left the spot. What economists therefore call value of labour, is in fact the value of labour-power, as it exists in the personality of the labourer, which is as different from its function, labour, as a machine is from the work it performs. Occupied with the difference between
the market-price of labour and its-so-called value, with the relation of this value to the rate of profit, and to the values of the commodities produced by means of labour, &c., they never discovered that the course of the analysis had led not only from the market prices of labour to its presumed value, but had led to the resolution of this value of labour itself into the value of labour-power. Classical economy never arrived at a consciousness of the results of its own analysis; it accepted uncritically the categories “value of labour,” “natural price of labour,” &c., as final and as adequate expressions for the value-relation under consideration, and was thus led, as will be seen later, into inextricable confusion and contradiction, while it offered to the vulgar economists a secure basis of operations for their shallowness, which on principle worships appearances only.
Let us next see how value (and price) of labour-power, present themselves in this transformed condition as wages.
We know that the daily value of labour-power is calculated upon a certain length of the labourer’s life, to which, again, corresponds a certain length of working-day. Assume the habitual working-day as 12 hours, the daily value of labour-power as 3s., the expression in money of a value that embodies 6 hours of labour. If the labourer receives 3s., then he receives the value of his labour-power functioning through 12 hours. If, now, this value of a day’s labour-power is expressed as the value of a day’s labour itself, we have the formula: Twelve hours’ labour has a value of 3s. The value of labour-power thus determines the value of labour, or, expressed in money, its necessary price. If, on the other hand, the price of labour-power differs from its value, in like manner the price of labour differs from its so-called value.
As the value of labour is only an irrational expression for the value of labour-power, it follows, of course, that the value of labour must always be less than the value it produces, for the capitalist always makes labour-power work longer than is necessary for the reproduction of its own value. In the above example, the value of the labour-power that functions through 12 hours is 3s., a value for the reproduction of which 6 hours
are required. The value which the labour-power produces is, on the other hand, 6s., because it, in fact, functions during 12 hours, and the value it produces depends, not on its own value, but on the length of time it is in action. Thus, we have a result absurd at first sight—that labour which creates a value of 6s. possesses a value of 3s.
We see, further: The value of 3s. by which a part only of the working day—
i.e., 6 hours’ labour—is paid for, appears as the value or price of the whole working-day of 12 hours, which thus includes 6 hours unpaid for. The wage-form thus extinguishes every trace of the division of the working-day into necessary labour and surplus-labour, into paid and unpaid labour. All labour appears as paid labour. In the corvée, the labour of the worker for himself, and his compulsory labour for his lord, differ in space and time in the clearest possible way. In slave-labour, even that part of the working-day in which the slave is only replacing the value of his own means of existence, in which, therefore, in fact, he works for himself alone, appears as labour for his master. All the slave’s labour appears as unpaid labour.
*8 In wage-labour, on the contrary, even surplus labour, or unpaid labour, appears as paid. There the property-relation conceals the labour of the slave for himself; here the money-relation conceals the unrequited labour of the wage-labourer.
Hence, we may understand the decisive importance of the transformation of value and price of labour-power into the form of wages, or into the value and price of labour itself. This phenomenal form, which makes the actual relation invisible, and, indeed, shows the direct opposite of that relation, forms the basis of all the juridicial notions of both labourer and capitalist, of all the mystifications of the capitalistic mode of
production, of all its illusions as to liberty, of all the apologetic shifts of the vulgar economists.
If history took a long time to get at the bottom of the mystery of wages, nothing, on the other hand, is more easy to understand than the necessity, the
raison d’être, of this phenomenon.
The exchange between capital and labour at first presents itself to the mind in the same guise as the buying and selling of all other commodities. The buyer gives a certain sum of money, the seller an article of a nature different from money. The jurist’s consciousness recognises in this, at most, a material difference, expressed in the juridically equivalent formalæ: “Do ut des, do ut facias, facio ut des, facio ut facias.”
Further, Exchange-value and use-value, being intrinsically incommensurable magnitudes, the expressions “value of labour,” “price of labour,” do not seem more irrational than the expressions “value of cotton,” “price of cotton.” Moreover, the labourer is paid after he has given his labour. In its function of means of payment, money realises subsequently the value or price of the article supplied—
i.e., in this particular case, the value or price of the labour supplied. Finally, the use-value supplied by the labourer to the capitalist is not, in fact, his labour-power, but its function, some definite useful labour, the work of tailoring, shoemaking, spinning, &c. That this same labour is, on the other hand, the universal value-creating element, and thus possesses a property by which it differs from all other commodities, is beyond the cognisance of the ordinary mind.
Let us put ourselves in the place of the labourer who receives for 12 hours’ labour, say the value produced by 6 hours’ labour, say 3s. For him, in fact, his 12 hours’ labour is the means of buying the 3s. The value of his labour-power may vary, with the value of his usual means of subsistence, from 3 to 4 shillings, or from 3 to 2 shillings; or, if the value of his labour-power remains constant, its price may, in consequence of changing relations of demand and supply, rise to 4s. or fall to 2s. He always gives 12 hours of labour. Every change in the amount of the equivalent that he receives
appears to him, therefore, necessarily as a change in the value or price of his 12 hours’ work. This circumstance misled Adam Smith, who treated the working-day as a constant quantity,
*9 to the assertion that the value of labour is constant, although the value of the means of subsistence may vary, and the same working-day, therefore, may represent itself in more, or less money for the labourer.
Let us consider, on the other hand, the capitalist. He wishes to receive as much labour as possible for as little money as possible. Practically, therefore, the only thing that interests him is the difference between the price of labour-power and the value which its function creates. But, then, he tries to buy all commodities as cheaply as possible, and always accounts for his profit by simple cheating, by buying under, and selling over the value. Hence, he never comes to see that, if such a thing as the value of labour really existed, and be really paid this value no capital would exist, his money would not be turned into capital.
Moreover, the actual movement of wages presents phenomena which seem to prove that not the value of labour-power is paid, but the value of its function, of labour itself. We may reduce these phenomena to two great classes: (1.) Change of wages with the changing length of the working-day. One might as well conclude that not the value of a machine is paid, but that of its working, because it costs more to hire a machine for a week than for a day. (2.) The individual difference in the wages of different labourers who do the same kind of work. We find this individual difference, but are not deceived by it, in the system of slavery, where, frankly and openly, without any circumlocution, labour-power itself is sold. Only, in the slave system, the advantage of a labour-power above the average, and the disadvantage of a labour-power below the average, affects the slave-owner; in the wage-labour system it affects the labourer himself, because his labour-power is, in the one case, sold by himself, in the other, by a third person.
For the rest, in respect to the phenomenal form, “value and price of labour,” or “wages,” as contrasted with the essential relation manifested therein, viz., the value and price of labour-power, the same difference holds that holds in respect to all phenomena and their hidden substratum. The former appear directly and spontaneously as current modes of thought; the latter must first be discovered by science. Classical political economy nearly touches the true relation of things, without, however, consciously formulating it. This it cannot so long as it sticks in its bourgeois skin.
i.e., Sismondi), “De la Richesse Commerciale,” Genève, 1803, t. 1, p. 37
e.g., J. B. Say; what is “valeur?” Answer: “C’est ce qu’une chose vaut,” and what is “prix?” Answer; “La valeur d’une chose exprimée en monnaie.” And why has “le travail de la terre…une valeur? Parce qu’on y met un prix.” Therefore value is what a thing is worth, and the land has its “value,” because its value is “expressed in money.” This is, anyhow, a very simple way of explaining the why and the wherefore of things.
Part VI, Chapter XX.