Marx then examines the historical evidence. In the first half of the 18th century, its true that wages rose gradually, and the population grew slowly, whilst little or no machinery was employed, and relatively little other fixed capital. However, in the second half of the 18th century, not only did wages fall continuously, but the population expanded massively, whilst machinery not only began to be employed, but was employed on a significant scale.
“But it was precisely the machinery which on the one hand made the existing population superfluous, thus reducing wages, and on the other hand, as a result of the rapid development of the world market, absorbed the population again, made it redundant once more and then absorbed it again; while at the same time, it speeded up the accumulation of capital to an extraordinary extent, and increased the amount of variable capital, although variable capital fell relatively, both compared with the total value of the product and also compared with the number of workers it employed.” (p 583)
The difference between these two periods, during which wages fell, is that, in the first half of the 18th century, there was no large scale capitalist production. The capitalist production of the time consisted only of domestic handicraft production on the “Putting-Out System” or of manufacture, in which the same handicraft production was simply brought under one roof, and on the basis of a division of labour.
“The principal component part of capital was still variable capital laid out in wages. The productivity of labour developed slowly, compared with the second half of the century. The demand for labour, and therefore also wages, rose almost proportionately to the accumulation of capital.” (p 583)
This is also why, during this period, the potential causes of crises of overproduction do not become translated into actual crises of overproduction, because the increase in the volume of output only rises gradually, in line with the rise in population, and the market. Indeed, during the first half of the 18th century, Britain was still predominantly agricultural, and the existing cottage industry expanded during this period. Large scale capitalist production, however, requires large markets. Otherwise, machinery can never be utilised on a scale that makes it profitable. Large scale capitalist industrial production is thereby premised on a significant rise in population. This rise in population comes from the agricultural revolution of the 18th century. But, this same agricultural revolution displaces peasants from the land. It removes their ability for self-sufficiency making them dependent on markets to meet their needs, whilst simultaneously hurling them into the towns as a large labour supply.
“In the first half of the eighteenth century, variable capital was relatively dominant; in the second, fixed capital; but the latter requires a large mass of human material. Its introduction on a large scale must be preceded by an increase of population. The whole course of things, however, contradicts Barton’s presentation, in as much as it is evident that a general change in the method of production took place. The laws which correspond to large-scale industry are not identical with those corresponding to manufacture. The latter constitutes merely a phase of development leading to the former.” (p 583)
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