Wednesday, 18 February 2015

Capital II, Chapter 20 - Part 55

Returning to Destutt's argument, the final group from which he sees profit being extracted is the 'idle capitalists'.  Destutt argues that the industrial capitalists cover their own consumption out of a portion of their profits. But, the industrial capitalists also have to pay the 'idle capitalists'.  If the industrial capitalist makes a profit of £200, and uses £100 to cover their consumption, they may pay over the other £100 as rent to the landlord, and interest to the money capitalist. These idle capitalists may in turn require £80 for their own consumption, and pay £20 to servants etc.

The servants with the £20 in wages, buy commodities worth £20, and thereby £20 flows back to the industrial capitalists who produced those commodities. Similarly, the idle capitalists spend their £80 on buying commodities from the industrial capitalists. But, its clear that no profit can arise for the industrial capitalists from this process.

Firstly, if this £100 (80 + 20) simply flows back to the industrial capitalists in return for £100 of commodities, the industrial capitalist only gets back in money what they have handed over in commodities. They now just have back £100 in money in place of the £100 in commodities they have sold. But, even if the industrial capitalist gets back £100 in money, whilst cheating the idle capitalists by selling them commodities only worth £80, they have not gained thereby. They have only reduced their loss by £20. The industrial capitalist gave the landlord, money-capitalist etc. the £100 in the first place. They have simply been handed part of it back.

“Of course the land and capital borrowed by the industrial capitalists from the idle capitalists and for which they have to pay a portion of their surplus-value in the form of ground-rent, interest, etc., are profitable for them, for this constitutes one of the conditions of production of commodities in general and of that portion of the product which constitutes surplus-product or in which surplus-value is represented. This profit accrues from the use of the borrowed land and capital, not from the price paid for them. This price rather constitutes a deduction from it. Otherwise one would have to contend that the industrial capitalists would not get richer but poorer, if they were able to keep the other half of their surplus-value for themselves instead of having to give it away. This is the confusion which results from mixing up such phenomena of circulation as a reflux of money with the distribution of the product, which is merely promoted by these phenomena of circulation.” (p 490)

But, even Destutt, who began by claiming that a part of the industrial capitalists profit came from selling commodities to the idle capitalists above their value, is forced to recognise this.

“'Whence come the revenues of these idle gentry? Do the revenues not come out of the rent paid to them out of their profits by those who put the capitals of the former to work, i.e., by those who pay with the funds of the former a labour which produces more than it costs, in a word, the industrial capitalists? It is always necessary to hark back to them to find the source of all wealth. It is they who in reality feed the wage-labourers employed by the former.' (p. 246.)” (p 490) 

If the industrial capitalist sells £80 of commodities to the idle capitalists for £100, they thereby reduce the reduction of their own profit from £100 to £80. If they sell £100 of commodities to them for £120 they still only reduce the reduction of their own profit by £20. But, now this also presumes that the idle capitalists have some other form of wealth to make up the difference. If they get £100 from the industrial capitalists, but each year pay them back £120, then each year the amount of that wealth decreases, and must ultimately be exhausted.

Moreover, by the same token, that the industrial capitalists simply put a higher price tag on their commodities, they were selling, to achieve Destutt's profit, there would be no reason for the landlords and the money capitalists not to increase their own price tags for rent and interest to the industrial capitalists.

“This brilliant analysis is quite worthy of that deep thinker who copies on the one hand from Adam Smith that 

'labour is the source of all wealth' (p. 242) 

that the industrial capitalists 

'employ their capital to pay for labour that reproduces it with a profit' (p. 246) 

and who concludes on the other hand that these industrial capitalists 

'feed all the other people, are the only ones who increase the public wealth, and create all our means of enjoyment' (p. 242)

that it is not the capitalists who are fed by the labourers, but the labourers who are fed by the capitalists, for the brilliant reason that the money with which the labourers are paid does not remain in their hands, but continually returns to the capitalists in payment of the commodities produced by the labourers. 

'All they do is receive with one hand and return with the other. Their consumption must therefore be regarded as engendered by those who hire them.' (p. 235.)” (p 491-2)

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