Capital III, Chapter 51 - Part 3

On the one hand, capitalist production can only demonstrate its superiority, and begin to supplant feudal production if, as a minimum, production can be undertaken by handicraft workers brought together on the basis of the division of labour. But, on the other hand, there is only a basis for such production, on a larger scale, if sufficiently developed markets exist to absorb it, which means that a development of towns is required.

“... a precondition which is itself the historical result and product of a preceding process, and from which the new mode of production proceeds as its given basis; that the production relations corresponding to this specific, historically determined mode of production — relations which human beings enter into during the process of social life, in the creation of their social life — possess a specific, historical and transitory character; and, finally, that the distribution relations essentially coincident with these production relations are their opposite side, so that both share the same historically transitory character.” (p 878)

As stated earlier, in examining the distribution of the social product, a fallacy has arisen, going back to Adam Smith, that this product, the National Output, is equal to the National Income or National Expenditure. Put another way, it suggests that all of this output is bought by some form of revenue or income – wages, profit, interest or rent.

“But if so expressed, it is a misstatement. The product is apportioned on one side to capital, on the other to revenue.” (p 878)

If we take wages, Marx says, they do not assume the form of revenue without first taking the form of capital. In other words, wages, as a return to labour is itself dependent upon the existence of capital and wage labour. This is not strictly true. There has always been a number of people, in society, who obtain revenue from the sale of labour-power, and this labour-power is not always exchanged with capital, as Marx discusses in Theories of Surplus Value, Chapter 4. The providers of various forms of personal services, for example, sell the product of their labour, in return for revenue, and the buyers of those services buy them from their own revenue, not from capital. The retainers that provided labour to meet the needs of feudal lords, for example, were paid wages out of the revenue of the aristocracy.

However, the numbers of such workers is small. Today, although the proportion of the economy that derives from service production is by far the largest, this service production is still capitalist production, organised by capitalist enterprises that employ wage labour, to undertake the required production.

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