Conversion of Surplus-Value into Capital
1) CAPITALIST PRODUCTION ON A PROGRESSIVELY INCREASING SCALE. TRANSITION OF THE LAWS OF PROPERTY THAT CHARACTERISE PRODUCTION OF COMMODITIES INTO LAWS OF CAPITALIST APPROPRIATION
Suppose we have a capitalist
cotton spinner. They employ a capital of £10,000. Of this, £8,000
is invested in machinery and cotton, and £2,000 in labour-power.
The rate of surplus value is 100%. This gives:
C 8000 + V 2000 + S 2000 = E
12,000.
This £12,000 is the
Exchange Value of 240,000 kilos of spun cotton. That means the
surplus value is equal to 40,000 kilos. Let us assume that the
capitalist does not use any of this £2,000 for their own
consumption, but re-invests it all. Then, if no change in technology
has occurred, this £2,000 will be invested in the same proportion as
the original capital i.e. 80% to constant capital, and 20% to
labour-power (variable capital), or £1600 C, and £400 V. This
means that the capitalist has converted the surplus value into new
capital, making expanded production possible.
We now have:
C 9600 + V 2400 + S 2400 = E
14,400.
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| Every society, including that of Robinson Crusoe, where it produces a physical surplus over what it needs to replace the means of production and consumption used up, thereby creates the conditions to expand its production. This physical surplus product is what Surplus Value in a Capitalist economy purchases. At the same time, the Surplus Value is the monetary equivalent of that surplus product. |
But, where does the
additional constant capital, the machines and cotton, and the
additional labour-power come from? In other words, its one thing to
see how a surplus value, as a monetary sum arises, but, for the
actual capital itself to expand, this monetary value must also be
able to meet, in the market, additional supplies of cotton, machines
and labour-power.
The answer, Marx explains is
quite simple. If we move now from looking at the situation facing
the individual spinner to that of society as a whole, we see that the
spinner's output is merely an aliquot part of the whole social
product. But, the whole social product, like that of the spinner,
can also be broken down into C+V+S. In other words, the total social
product contains within it this social surplus product, which is the
physical equivalent of the surplus value.
So, society in its continual
process of production, does not just produce the cotton that the
spinner requires to meet their current needs, but produces an
additional amount to that. This surplus amount of cotton then forms
an aliquot part of the society's total surplus product.
The spinner, having realised
the surplus value, by selling their spun cotton is able to use this
surplus value to buy the additional cotton that exists as part of the
social surplus. In the same way, the machine maker does not make
only enough machines to meet the existing demand, but an additional
number, which are bought by the spinner with his surplus value.
Similarly, the value of labour-power is represented in wages that are
intended not just to ensure the reproduction of existing
labour-power, but also its increase. So, capital can always meet its
needs for expansion, either from the normal increase in population,
or by working labour more extensively or intensively.
“From a concrete point
of view, accumulation resolves itself into the reproduction of
capital on a progressively increasing scale. The circle in which
simple reproduction moves, alters its form, and, to use
Sismondi's
expression, changes into a spiral.” (p 545)
We began with a capital of
£10,000, which expanded to £12,000. But, the £2,000 then also
expands. It comprised £400 (variable capital) that produces £400
surplus value. That surplus value in turn, when invested produces a
further £80 of surplus value and so on. But, all the time, the
original £10,000 of capital itself continues to expand, as does
every other addition to it. Nor does it matter whether the
additional capital created out of the surplus value is appended to
the original capital, or is separated off. The £2,000 of surplus
value could be used by the spinner to buy more cotton etc, but
alternatively, he might have used it to set up another business, for
example weaving the yarn into cloth. It would still operate as new
capital.
Nor indeed does the spinner
have to use the surplus value to create their own new capital. The
spinner could lend it to some other capitalist who then uses it to
set up a new business, and thereby create new capital.
“The original capital
was formed by the advance of £10,000. How did the owner become
possessed of it? “By his own labour and that of his forefathers,”
answer unanimously the spokesmen of Political Economy. And, in fact,
their supposition appears the only one consonant with the laws of the
production of commodities.
 |
| Wedgwood like many of the first industrial capitalists began as workers themselves who accumulated capital from savings. But, their capital expands from the unpaid labour of their workers, not from abstinence! |
Suppose a worker is employed
by a capitalist to produce a commodity. Suppose further that the
worker produces the constant capital they use too. They spend 8
hours producing this constant capital and 4 hours transforming it
into the end product. This commodity has a value equal to 12 hours.
However, the capitalist pays the worker the equivalent of 10 hours as
wages, which is equal to the value of their labour-power. The
capitalist appropriates the product of the other 2 hours as surplus
value.
The product has, in fact,
only cost the capitalist 10 hours to produce, but if the worker who
produced it, wants to buy it, they will have to pay the equivalent of
12 hours!
So, although the surplus
value, produced by workers may be used to employ more workers, or to
employ existing workers for longer, and for more wages, it is only
workers themselves making available the resources for that to happen.
It is not some gratuitous act by capital.
 |
| Workers produce the surplus value that their employer uses to buy new machines. Workers also produce the machines that the capitalist buys. The machines can then take the place of the workers without whom the capitalist could not have acquired them. |
“If the additional
capital employs the person who produced it, this producer must not
only continue to augment the value of the original capital, but must
buy back the fruits of his previous labour with more labour than they
cost. When viewed as a transaction between the capitalist class and
the working class, it makes no difference that additional labourers
are employed by means of the unpaid labour of the previously employed
labourers. The capitalist may even convert the additional capital
into a machine that throws the producers of that capital out of work,
and that replaces them by a few children. In every case the working
class creates by the surplus-labour of one year the capital destined
to employ additional labour in the following year. And this is what
is called: creating capital out of capital.” (p 546)
The first accumulation of
capital out of surplus value of £2,000, depended on the prior
existence of the £10,000 of capital saved by the capitalist. But,
the accumulation of the second accumulation of £80, only depends on
the £2,000 robbed from the workers as surplus value. As capitalist
accumulation proceeds, the law of compound interest quickly ensures
that the vast bulk of capital is nothing more than the accumulated
surplus value robbed from workers as unpaid labour.
“The ownership of past
unpaid labour is thenceforth the sole condition for the appropriation
of living unpaid labour on a constantly increasing scale. The more
the capitalist has accumulated, the more is he able to accumulate.”
(p 546)
What first appeared as an
exchange of equivalents, a given amount of labour-power sold at its
value, by the worker, a given amount of money of equal value paid by
the capitalist, has now turned into its opposite. The capitalist now
buys labour-power not from their own resources, but from the surplus
value produced by the worker. The workers' labour power is bought by
the capitalist using money that the worker themselves created and
handed over!
“The exchange of
equivalents, the original operation with which we started, has now
become turned round in such a way that there is only an apparent
exchange. This is owing to the fact, first, that the capital which is
exchanged for labour-power is itself but a portion of the product of
others’ labour appropriated without an equivalent; and, secondly,
that this capital must not only be replaced by its producer, but
replaced together with an added surplus. The relation of exchange
subsisting between capitalist and labourer becomes a mere semblance
appertaining to the process of circulation, a mere form, foreign to
the real nature of the transaction, and only mystifying it. The ever
repeated purchase and sale of labour-power is now the mere form; what
really takes place is this — the capitalist again and again
appropriates, without equivalent, a portion of the previously
materialised labour of others, and exchanges it for a greater
quantity of living labour.” (p 546-7)
“At first the rights of
property seemed to us to be based on a man’s own labour. At least,
some such assumption was necessary since only commodity-owners with
equal rights confronted each other, and the sole means by which a man
could become possessed of the commodities of others, was by
alienating his own commodities; and these could be replaced by labour
alone. Now, however, property turns out to be the right, on the part
of the capitalist, to appropriate the unpaid labour of others or its
product, and to be the impossibility, on the part of the labourer, of
appropriating his own product. The separation of property from labour
has become the necessary consequence of a law that apparently
originated in their identity.” (p 547)
Consequently, Marx says that
although capitalist accumulation may seem to contradict the laws of
commodity production, in fact, it is merely an application of those
laws.
“Thus the original
conversion of money into capital is achieved in the most exact
accordance with the economic laws of commodity production and with
the right of property derived from them.
Nevertheless, its result
is:
(2) that the value of this product includes, besides the value of the capital advanced, a surplus-value which costs the worker labour but the capitalist nothing, and which none the less becomes the legitimate property of the capitalist;
(3) that the worker has retained his labour-power and can sell it anew if he can find a buyer.
Simple reproduction is only the periodical repetition of this first operation; each time money is converted afresh into capital. Thus the law is not broken; on the contrary, it is merely enabled to operate continuously.” (p 549)
But, the same is true on
this basis where accumulation occurs.
“The surplus-value is
his property; it, has never belonged to anyone else. If he advances
it for the purposes of production, the advances made come from his
own funds, exactly as on the day when he first entered the market.
The fact that on this occasion the funds are derived from the unpaid
labour of his workers makes absolutely no difference. If worker B is
paid out of the surplus-value which worker A produced, then, in the
first place, A furnished that surplus-value without having the just
price of his commodity cut by a half-penny, and, in the second place,
the transaction is no concern of B’s whatever.” (p 549)
Provided worker B is paid
the full value of his labour-power, then he has no grounds to
complain that the funds for this come from the surplus value produced
by A. And, as we have seen, capitalist production proceeds precisely
on that basis of commodity exchange, so that B is indeed paid the
full value for his labour-power.
That is not the case if
instead of viewing things from the perspective of the individual
contracts between each worker and capitalist, we view things in terms
of the continuous process of capitalist production, or from the
perspective of the relations between workers as a whole and
capitalists as a whole. But, that would not be to analyse things in
terms of commodity production and exchange.
In commodity production, we
have just one buyer and one seller. Each contract is a single event.
The sale of labour-power for a single given period of time. It has
no relation to anything that has gone before, or that happens after.
The laws of commodity production make capitalist production and accumulation inevitable. That is why, as Marx says, the ideas of Proudhon, who believed that the evils of capitalism could be abolished by applying the laws of commodity production, were nonsense.
“We may well, therefore, feel astonished at the cleverness of Proudhon, who would abolish capitalistic property by enforcing the eternal laws of property that are based on commodity production!” (Note 1, p 551)
The same is true of some of the ideas of the anarcho-capitalists and libertarians, who see in the development of monopolies and state capitalism something alien to their 18th century views of commodity production and exchange, rather than what they are, the inevitable consequence of the laws of commodity production and exchange.
Back To Chapter 23
Forward To Part 2
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