Capital II, Chapter 1 - Part 2

In Part 1, it was stated that the relation M - L, the purchase of labour-power, by money capital, is characteristic of the capitalist relation, because it is labour-power that creates surplus value, and it is the relation of paid to unpaid labour that determines the quantity of constant capital to be bought. But, the relation M-L is characteristic of a capitalist relation for another reason. That is because it signifies the payment of money wages i.e. it signifies the existence of wage labour. This form is, of course, irrational as analysed in Volume I. Labour is the value creating substance, and measure of value, and for that reason has no value itself. Nor therefore can any quantity of labour have any value expressed in money. Yet wages appear as precisely that, as a money price for a certain amount of labour. But, in fact, this money price of labour – wages – as was discovered in Volume I, is in reality just a disguised form of the value of labour-power, not labour. 

“The value produced by this labour-power in, say, six hours of labour is thus expressed as the value of twelve hours’ functioning or operation of the labour-power.” (p 30) 

Money from early on appears as a means of payment for all sorts of commodities i.e. all sorts of use values that possess value. That includes the purchase of services. Yet none of this signifies a capitalist relation, or the transformation of money into capital. It is only because the worker appears in the market as the owner of the commodity labour-power that signifies that M – L is a capitalist relation, because labour-power does appear as a commodity!

“Once labour-power has come into the market as the commodity of its owner and its sale takes the form of payment for labour, assumes the shape of wages, its purchase and sale is no more startling than the purchase and sale of any other commodity. The characteristic thing is not that the commodity labour-power is purchasable but that labour-power appears as a commodity.” (p 30) 

Before the capitalist lays out money for labour-power, however, they must buy means of production, in the form of buildings, machines and raw materials, because these must be present before the worker can begin work.

From the perspective of the worker, his labour-power is unable to produce commodities for sale until it is sold to the capitalist and brought into contact with the means of production. Nor is it capable of furnishing the worker directly with the use values he requires to live, because he no longer owns the means of production required to do so.

“But from the moment that as a result of its sale it is brought into connection with means of production, it forms part of the productive capital of its purchaser, the same as the means of production.” (p 31)

Although capitalist and worker confront each other as commodity owners and the purchase of labour-power appears as merely a money relation, in reality it is much more than that. On the one hand, the capitalist confronts the worker as owner of means of production, without which the labour-power cannot be put to work. On the other hand the worker confronts the capitalist as owner of labour-power without which the means of production have no value, and cannot be processed.

“The class relation between capitalist and wage-labourer therefore exists, is presupposed from the moment the two face each other in the act M — L (L — M on the part of the labourer). It is a purchase and sale, a money-relation, but a purchase and sale in which the buyer is assumed to be a capitalist and the seller a wage-labourer. And this relation arises out of the fact that the conditions required for the realisation of labour-power, viz., means of subsistence and means of production, are separated from the owner of labour-power, being the property of another.” (p 31) 

It is not that the money-capital here buys the commodity labour-power, in its role as means of payment, which marks it out as a capitalist relation. It is only because the worker has been separated from their own means of production that they are led to appear in the market as a seller of labour-power – rather than the products of that labour-power as say a peasant or artisan would do – and that the capitalist now as owner of the means of production can appear as its purchaser. The sale of labour-power to the capitalist is the only method the worker now has of reuniting their labour-power with the means of production.

“The capital-relation during the process of production arises only because it is inherent in the act of circulation, in the different fundamental economic conditions in which buyer and seller confront each other, in their class relation. It is not money which by its nature creates this relation; it is rather the existence of this relation which permits of the transformation of a mere money-function into a capital-function.” (p 32)

This can lead to two errors. One assigns to capital what is in reality only a function of money. At the same time, what is in reality a function of capital, can be mistakenly identified as a function of money. Money on its own can only act as a means of payment in all these transactions. Its actual role is determined by the social relations in which this function is performed.

“The purchase and sale of slaves is formally also a purchase and sale of commodities. But money cannot perform this function without the existence of slavery. If slavery exists, then money can be invested in the purchase of slaves. On the other hand the mere possession of money cannot make slavery possible.

In order that the sale of one’s own labour-power (in the form of the sale of one’s own labour or in the form of wages) may constitute not an isolated phenomenon but a socially decisive premise for the production of commodities, in order that money-capital may therefore perform, on a social scale , the above-discussed function M — C, historical processes are assumed by which the original connection of the means of production with labour-power was dissolved — processes in consequence of which the mass of the people, the labourers, have, as non-owners, come face to face with non-labourers as the owners of these means of production. It makes no difference in this case whether the connection before its dissolution was such in form that the labourer, being himself a means of production, belonged to the other means of production or whether he was their owner.” (p 32-3)

Behind this relation lies the distribution of economic resources. The means of production are monopolised in the hands of capitalists, whereas the workers have only their labour-power to sell.

“The means of production, the material part of productive capital, must therefore face the labourer as such, as capital, before the act M — L can become a universal, social one.” (p 33)

As detailed in Volume I, this relation is not simply reproduced by capital. The very operation of capitalist production leads to its expansion, reproduces it on an expanded scale, such that more independent producers are deprived of their means of production, then more and more small capitalists join them in the ranks of the workers, and as capital is increasingly centralised and concentrated in the hands of fewer capitalists, and the minimum efficient size of capital increases, so these workers are more and more removed from the possibility of owning the means of production.

But, for capital to be able to expand, trade itself must develop to a certain level. There is no point in the capitalist investing in large scale production, which is fundamental for capitalist production, and the means by which manufacture and handicraft is undermined, unless there is a sufficient market for those commodities. At the same time, the production of commodities only becomes dominant when capitalism is its basis.

Marx sets out a practical application of this analysis.

“The Russian landowners, who as a result of the so-called emancipation of the peasants are now compelled to carry on agriculture with the help of wage-labourers instead of the forced labour of serfs, complain about two things: First, about the lack of money-capital. They say for instance that comparatively large sums must be paid to wage-labourers before the crops are sold, and just then there is a dearth of ready cash, the prime condition. Capital in the form of money must always be available, particularly for the payment of wages, before production can be carried on capitalistically. But the landowners may take hope. Everything comes to those who wait, and in due time the industrial capitalist will have at his disposal not alone his own money but also that of others.

The second complaint is more characteristic. It is to the effect that even if one has money, not enough labourers are to be had at any time. The reason is that the Russian farm-labourer, owing to the common ownership of land in the village community, has not yet been fully separated from his means of production and hence is not yet a “free wage-labourer” in the full sense of the word. But the existence of the latter on a social scale is a sine qua non for M — C, the conversion of money into commodities, to be able to represent the transformation of money-capital into productive capital.

It is therefore quite clear that the formula for the circuit of money-capital, M — C ... C' — M', is the matter-of-course form of the circuit of capital only on the basis of already developed capitalist production, because it presupposes the existence of a class of wage-labourers on a social scale.” (p 33-4)

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