[b) Mill’s Vain Efforts to Bring the Exchange Between Capital and Labour into Harmony with the Law of Value]
In the same way that Mill deals with the contradictions of the Ricardian system by denying reality, and presenting the economy as though it was based on barter, so he denies the reality of capitalism, and the exchange of wage-labour with capital, and posits instead an exchange between commodity producers. In this scenario, the worker does not sell labour-power itself, as a commodity, to the capitalist, but sells the product of their labour. In other words, if the product of a day's labour is six metres of linen, and, of these, four metres are the equivalent of the value of the means of production, and two the equivalent of the value of labour, the worker sells these 2 metres of linen to the capitalist, and their wages are then the equivalent of the payment for these two metres.
As Marx says, the real basis for this explanation is the attempt, by Mill, to reconcile the contradictions within Ricardo's theory of value, and the attacks on it by his critics. But, the historical basis for this view also arises from the situation of the worker prior to the real subordination of labour to capital that arises with industrial capitalism and machine industry. In the “Putting Out System”, the worker still has the superficial appearance of being a commodity producer. They work in their own cottage, often alongside continuing to cultivate an area of land. The hand tools they use are still their own, but they are provided with material, often by the same merchant capitalists they previously sold their commodities to. The merchant then pays an agreed price for the finished product, but, as Engels describes in his Supplement to Capital III, this price is always less than what the worker would previously have received, because now the merchant capitalist seeks the average profit on the advance of capital they have undertaken, in providing material to the worker. In reality, the worker is being paid wages under the guise of being paid for a commodity.
Marx previously made the same point about the Scottish pebble collectors, who appeared to be selling pebbles as a commodity, to stone cutters, but who were really being paid a wage, because they had to sell the pebbles below their exchange-value to the stone cutter, who thereby extracted surplus value from their labour. Similarly, in the stage of manufacture, the workers are brought under one factory roof, but continue to operate, essentially, as independent handicraft producers, much the same as the worker under the Putting Out System. Each such handicraft worker, within the manufactory, continues for some time to see themselves as an independent producer, each negotiating their own payment for their output, in much the same way that they would as an independent producer, using their own tools, and materials, and operating on their own account. Indeed, many such craftsmen would continue to own and control their own hand tools.
For so long as production continues on this handicraft basis, within the factory, this conception of independent producers is still a reflection of material conditions. But, the division of labour within the factory quickly changes those material conditions. Division of labour means that the craftsman quite clearly is no longer the sole producer of a commodity, which they sell, but is only one element within a process of co-operative and collective labour. The individual worker can no longer sell a product, and be paid accordingly for it, because every product/commodity becomes the result of this cooperative, collective labour, not that of an individual producer.
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