(c) Vulgar Assumptions of Garnier’s Polemics against smith, Garnier’s Relapse into Physiocratic Ideas. The View of the Unproductive Labourers’ Consumption as the source of Production—a step Backwards as Compared with the Physiocrats
Garnier, like Smith, was wrong then to believe that the whole capital could be replaced by revenue, because a part must be replaced in kind by capital.
“Secondly, it is in itself a silly statement, since revenue itself, in so far as it is not wages (or wages paid by wages, revenue derived from wages), is profit on capital (or revenue derived from profit on capital). Finally, it is silly to say that the part of capital which does not circulate (in the sense that it is not replaced by consumer’s revenue) “yields no profit to its possessor”. In fact— conditions of production remaining the same—this part yields no profit (or rather, no surplus-value). But without it capital could in no case produce its profit.” (p 199)
Marx quotes the following statement from Garnier.
““All that can be deduced from this difference is that, in order to employ productive people, what is required is not only the revenue of the person who enjoys their labour, but also a capital which yields profit to intermediaries, while to employ non-productive people the revenue which pays them is most often sufficient” (l.c., p. 175).” (p 199)
It is such nonsense, Marx says, that shows that Garnier had understood nothing of Adam Smith, “... and in particular had no conception whatever of the essence of the Wealth of Nations—namely, the view that the capitalist mode of production is the most productive mode (which it absolutely is, in comparison with previous forms).” (p 199)
Garnier's objection against Smith, that to employ non-productive people only the revenue of the person enjoying their labour is needed, is silly, says Marx, because it was Smith who in his first definition of unproductive labour had declared that it is labour that exchanges with revenue rather than capital. But, Marx points out that Garnier's antithesis, that to employ productive labour, both the revenue of the person enjoying the labour, and a capital that employs them is needed, is clearly wrong. All that is required is capital. The capital that is advanced, itself produces revenue, in the form of the wages paid out of that capital. Moreover, as capital, is self expanding value, it produces a further revenue, in the form of profit.
“If as a capitalist tailor I lay out £100 in wages, this £100 produces for me say £120. It produces for me a revenue of £20, with which I can then, if I want to, also enjoy tailoring labour in the form of a “frockcoat”. If on the other hand I buy clothes for £20 in order to wear them, it is obvious that these clothes have not created the £20 with which I buy them. And the case would be the same if I got a jobbing tailor to come to my house and made him sew coats for me for £20. In the first case I received £20 more than I had before, and in the second case, after the transaction, I have £20 less than I had before. Moreover, I would soon realise that the tailor whom I pay directly from revenue does not make the coat as cheaply as if I bought it from the intermediary.” (p 199-200)
In the first case, £100 was used as capital. £100 of this capital became revenue, as wages in the hands of workers. The total value of output is £120, and so workers could buy £100 of this output with their wages. This £100 of revenue, in their hands, is not an additional sum to that advanced as capital, but merely a metamorphosed form of it.
On the one hand, £100 of variable-capital, in money form, metamorphosed into £100 of variable-capital, in the form of productive-capital, labour-power. In the process, the capital value shed its money shell. That money shell was filled with the content of revenue, as wages in the hands of workers.
This portion of the capital value is then metamorphosed, via the production process, into a portion of the commodity capital. It takes the form of tailored products. The workers could then exchange their £100 of revenue for this product. But, in the production process, the productive capital produces an additional surplus product, and surplus value, of £20, and the capitalist obtains this surplus value, as revenue, which could itself be simply consumed in the form of tailored products, or could be realised as money, by selling that surplus product.
The revenue, as either wages or profit here clearly did not stem from the consumption of the tailored products, but arose from the advance of capital. It was this advance of capital which both created these revenues, and created the commodities upon which those revenues could be expended.
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