The problem Duhring faced was, if no surplus labour is undertaken, no surplus value or surplus product created, how could it be extracted, however much force is mobilised? Even if Duhring argues that surplus labour is undertaken as a result of the coordinated use of force by the state/ruling-class, he is, then, forced to accept that the social cost of production, i.e. the total labour undertaken, is greater than simply the labour-time represented by wages. If workers are forced to work 10 million hours, whereas only 8 million are required to reproduce the labour-power of the workers/wages, then the total social cost of production is still 10 million hours/£100 million, and not 8 million hours/£80 million, and so he finds himself having to answer the question he posed to Marx of how the capitalists realise this value of £100 million.
As set out earlier, Marx's scientific resolution of this question also enabled him to explain the basis of the existence of an appropriation of the surplus product in previous modes of production, and, thereby, to establish a scientific theory of the evolution of class society. It is the potential for the labourer to perform surplus labour, i.e. to produce more in a day than is required to reproduce their own labour-power (to create more new value than the value of their labour-power) which enables a section of society to consume without producing. It is the amount of surplus production which determines how much can be extracted by an exploiting class, be they slave-owners, feudal lords, or capitalists.
The idea of Duhring's that the capitalists came together as some kind of cabal to determine what “certain measure of earnings of capital” are required can be found, today, in other forms. For example, Michael Roberts perennially predicts an imminent recession, on the basis that capitalists will reduce or refrain from capital accumulation, as a result of a falling rate of profit. But, why would that be the case, unless, as with Duhring, he believes that there is some given, unspoken, “measure of earnings of capital” that is required? Marx specifically rejected such a view. It is a completely different thing to say, as Marx did, that capital will tend o move in to spheres where the rate of profit is highest, and away from where it is lowest than to claim that it will, in total, sit on its hands!
As Engels puts it,
“Just as little can we be satisfied with the assurance that a certain measure of earnings of capital is a necessity in this kind of economy, once it is dominant; for the point to be proved is precisely why this is so.” (p 276)
Duhring utilises the argument put forward by Adam Smith, which led him to advance a cost of production theory of value as against his original labour theory of value. Smith set out the Labour Theory of Value, adopted by Ricardo, and developed by Marx, whereby the value of commodities is determined by the amount of labour-time required for their production. However, because Smith did not distinguish between labour and labour-power, he found himself in a dilemma in trying to explain why wages were not equal to the new value added by labour, and so how profit, rent and interest was possible, as component of the price of the commodity. He concluded that, when landed property and capital comes into existence, the Labour Theory of Value cases to operate as the basis of the price of commodities. In essence, he argues labour is plentiful and so its price falls below its value, whereas capital is scarce and so its price rises above its value. This was also the foundation of Smith's theory of a falling rate of profit. He believed that capital would accumulate and so its supply would rise, whereas labour supply would not increase in proportion. The price of capital (profit) would fall, and wages rise.
All consumers, as buyers of commodities, therefore, buy commodities at their value, in aggregate, i.e. at their social cost of production. The difference is that it is only capitalists who also sell those commodities at those values, but whose costs of production of them is less than that value.
“According to Herr Dühring, the natural outlays of production consist
“in the expenditure of labour or energy, and this in turn, in the last analysis, can be measured by the expenditure of food”
that is, in present-day society, these costs consist in the outlays actually expended on raw materials, instruments of labour, and wages, as distinguished from the “tax”, the profit, the surcharge levied sword in hand. Now everyone knows that in the society in which we live the competing entrepreneurs do not realise their commodities at the natural costs of production, but that they add on — and as a rule also receive — the so-called surcharge, the profit. The question which Herr Dühring thinks he has only to raise to blow down the whole Marxian structure — as Joshua blew down the walls of Jericho of yore — this same question also exists for Herr Dühring's economic theory.” (p 274-5)
In other words, Duhring's theory amounts to the same claim as that made by Proudhon that the value of commodities is determined by wages, the value of labour-power. Profit is, then, not an integral part of the value of commodities, but an arbitrary surcharge added to that value/price by the capitalist. That reduces it to being purely subjective and arbitrary, and so is not scientific. What determines that this surcharge is, say, 10% as opposed to 100% etc.? Moreover, if it is not an inherent component of the value of the commodity, why would not competition between capitalists reduce it to zero, as happens with surplus profits? That, of course, was, also, the conclusion that Walras and others were forced into, as the consequence of the neoclassical theory.
How does Duhring deal with this problem?
“Capital ownership,” he says, “has no practical meaning, and cannot be realized, unless indirect force against human material is simultaneously included in it. The product of this force is the earnings of capital, and the magnitude of the latter will therefore depend on the range and intensity of this exercise of domination ... Earnings of capital are a political and social institution which operates more powerfully than competition. In this connection the capitalists act as a social estate, and each one maintains his position. A certain measure of earnings of capital is a necessity in this kind of economy, once it is dominant” (p 275)
In other words, Duhring can only resolve his dilemma by claiming that the capitalists, as a class, come together in some kind of conspiratorial and coordinated manner, to agree amongst themselves what the level of this surcharge will be, and, thereby, utilise the force provided by the state to extract it. The fact that this fails the test of prima facie credibility is the least of its deficiencies. How, where, and when do the capitalists organise such meetings? Where is there evidence of such activity? Its true that, prior to the ascendancy of capitalist production, as Engels deribes in his Supplement To Capital III, the feudal guilds, and the merchants guilds did set agreed selling prices and profit margins, but capitalist production dismantled all of those monopolies. In fact, as Marx describes, so long as these antediluvian forms of capital – merchant capital and usurers capital – dominated, industrial capital could not become firmly established. They drained the surplus value produced both by the independent commodity producers and the small capitalist producers. In so doing, they thwarted capital accumulation, and threatened production itself.
The capitalist class do not sell commoditiesabove their value, but at their value. In Capital II, Marx explains how the capitalist class sells all of these commodities at their value. The workers are paid the value of their labour-power, as wages. It is best seen by excluding the value of constant capital, which is merely preserved in current production. If the total new value of production is equal to 10 million hours of labour, wages are equal to 8 million hours, or 80% of total new value. Each commodity is sold to workers at its value, but, workers can only, thereby, buy 80% of what they produced. The other 20% is in the hands of capitalists.
If capitalists simply consumed the surplus product of their own production the question of realising its value would not even arise. But, of course, capitalist production does not work like that. Assume, however, then, for the sake of simplicity, there are just two commodities produced and sold, A and B. They each have a value equal to 1 million hours of labour. The capitalists who produce A require half for their own consumption, and seek to sell the other half to the capitalists who produce B. As Marx notes, the capitalists do not enter the market only with money to fund their purchases of elements of capital, but also, money to fund their own personal consumption.
Let us say that 1 hour of labour is equal £6. So, the capitalists producing A and B start off with £50 million each. Of this, they each advance £40 million in wages, but, each, then, has £10 million, which they throw into circulation simply to buy commodities for their own personal consumption. So, A capitalists throw £5 million into circulation to buy A commodities. What they spend as a consumer of A, therefore, comes back to them as a capitalist producer of A. They also throw into circulation £5 million to buy the B commodities they require for personal consumption, and that goes into the pocket of the capitalist producers of B.
But, the same applies to the capitalist producers of B. They simultaneously throw £5 million into circulation to buy their own B commodities, and another £5 million to buy A commodities. The first £5 million flows back into their own pocket, but the second £5 million flows into the pocket of A capitalists. At the end of this process of simple reproduction, all commodities have been sold at their value of £100 million. £80 million that had been paid as wages flows back to the capitalists, in payment for 80% of the total product in their hands. The capitalists, themselves, as consumers, rather than as producers, began with £20 million to fund their own consumption, and they throw this into circulation to fund that consumption of the remaining 20% of output. As capitalists, this £20 million flows back into their pockets too.
So, they have £80 million to fund wages in the following year, and they have £20 million in profits to fund their personal consumption in the next year.
“In Marx, the surplus-product as such has absolutely no cost of production; it is the part of the product which costs the capitalist nothing. If therefore the competing entrepreneurs desired to realise the surplus-product at its natural cost of production, they would have to give it away.” (p 274)
Which, as described earlier, is precisely what would happen in a society divided entirely into slaves and slave-owners. It is also what would be the case in a society where all production was undertaken entirely by machines, and so where no new value was produced. The point about commodity production and later capitalist production that distinguishes it from those conditions is the existence of free labour, and that the labourer, whether the independent commodity producer, or the wage-labourer, enters the market as both the seller and buyer of commodities.
Similarly, rent is equal to surplus profit, i.e. profit above the average industrial rate of profit. The simple movement of capital into these high profit spheres acts to compete away such surplus profits. However, that assumes that capital is free o enter such spheres, and, thereby, raise the level of supply. Where landed property already exists, that is not possible. The land owner says to the capitalist, who seeks to use their land, that they must pay them a rent, equal to this surplus profit. Competition to be able to produce those surplus profits, therefore, explains this movement of capital, but, also, explains the basis of the sub-form of surplus value as rent.
Finally, because all capital (not to be confused with the commodities that comprise capital, i.e. capital not as a thing but a social relation) has the potential to produce the average industrial rate of profit (the use-value of capital), it means that capital itself, then, becomes a commodity that can be bought and sold. A potential capitalist who does not own capital can buy it, i.e. borrowmoney-capital (or lease equipment, buildings etc.) so as to undertake production, and so obtain the average industrial rate of profit. Provided the price of that capital (i.e. rate of interest) is less than the average industrial rate of profit, they can engage in capitalist production. Similarly the owner of money-capital (lessor of premises, equipment etc.) will not lend it for nothing. So, as Marx sets out, in Capital III, the average industrial rate of profit sets an upper limit to the rate of interest, and zero a lower limit. The actual rate of interest then depends on the relation of demand for and supply of this money-capital, at the given time. Once again, therefore, it is this specific form of capitalist competition that provides the dynamic and explains the division of surplus-value into profit and interest.
“But competition is precisely the absolute obstacle to Herr Dühring's understanding of the process. He cannot comprehend how the competing entrepreneurs are able constantly to realise the full product of labour, including the surplus-product, at prices so far above the natural costs of production.” (p 274)
The solution has been set out earlier. The social cost of production is equal to the total social labour-time expended. That total social labour-time includes an amount of surplus labour, embodied in a social surplus product/value. The total product is in the hands of the capitalist class. It hands back, i.e. sells to the working-class, a part of that total product equal to the value of labour-power/wages. That leaves the surplus product in the hands of the capitalist class, just as, in previous modes of production, it remains in the hands of the slave-owners, or landlords.
What we are dealing with, here, is the way in which a natural law, The Law of Value, becomes manifest in specific historical forms. As Marx sets out in his Letter To Kugelmann, its not that The Law of Value, itself, changes, but only that its form of manifestation changes in different modes of production. In fact, as Engels sets out, in hisSupplement to Capital III, it is not under capitalism that The Law of Value assumes the classic form in which commodities exchange on the basis of their values, but under the generalized commodity production that precedes capitalist production.
“Thus, the Marxian law of value has general economic validity for a period lasting from the beginning of exchange, which transforms products into commodities, down to the 15th century of the present era. But the exchange of commodities dates from a time before all written history — which in Egypt goes back to at least 2500 B.C., and perhaps 5000 B.C., and in Babylon to 4000 B.C., perhaps to 6000 B.C.; thus, the law of value has prevailed during a period of from five to seven thousand years.”
From the time that capitalist production begins, in the 15th century, this particular manifestation of The Law of Value, of commodities exchanging at their values, ceases, because the driving force of capital is the maximization of the annual rate of profit. Because capital, then, is drawn towards those spheres where the annual rate of profit is highest, it increases the supply of those commodities relative to the demand, and, consequently, reduces their market prices below their exchange-value. The opposite occurs in relation to those commodities where the annual rate of profit is lowest. That does not mean that The Law of Value itself ceases to exist, but simply that its form of manifestation, under capitalism, is transformed, just as it took a different form under commodity production and exchange as against direct production.
And, although competition between commodity producers, to gain market share, is what leads, itself, to the development of capitalism, the competition which, then, arises, under capitalism, has different laws and dynamic to those existing under simple commodity production and exchange, as Marx sets out in Capital III, Chapter 10.
"The exchange of commodities at their values, or approximately at their values, thus requires a much lower stage than their exchange at their prices of production, which requires a definite level of capitalist development.... Apart from the domination of prices and price movement by the law of value, it is quite appropriate to regard the values of commodities as not only theoretically but also historically antecedent (prius) to the prices of production. This applies to conditions in which the labourer owns his own means of production, and this is the condition of the land-owning working farmer and the craftsman, in the ancient as well as in the modern world. This agrees also with the view we expressed previously, that the evolution of products into commodities arises through exchange between different communities, not between the members of the same community. It holds not only for this primitive condition, but also for subsequent conditions, based on slavery and serfdom, and for the guild organization of handicrafts, so long as the means of production involved in each branch of production can be transferred from one sphere to another only with difficulty and therefore the various spheres of production are related to one another, within certain limits, as foreign countries or communist communities."
Under capitalism, it is the drive to maximize profit that creates the specific dynamic of capitalist competition.
“therefore a scientific analysis of competition is only possible when the inner nature of capital is understood, just as the apparent motions of the heavenly bodies are not intelligible to any but him who is acquainted with their real motions, which are not directly perceptible by the senses; and then Marx gives an example to show how in a definite case, a definite law, the law of value, manifests itself and exercises its motive power in competition. Herr Dühring might see from this alone that competition plays a leading part in the distribution of surplus-value, and with some reflection the indications given in the first volume are in fact enough to make clear the transformation of surplus-value into its subforms, at least in its main features.” (p 274)
As Marx sets out, in Capital III, and Theories of Surplus Value, this specific form, of capitalist competition, also, then, provides an objective, scientific basis for an explanation of rent and interest, and commercial profit. The last has been described earlier, but Marx, also, explains why it is the average industrial rate of profit, which also, determines the allocation of capital between productive and commercial capital. If capital engaged in the latter sphere is making more than the average industrial rate of profit, more capital will be drawn towards it. That will increase competition in that sphere, meaning that productive-capital will be able to raise the prices it charges the commercial capitals, and, consequently increasing its own rate of profit, while reducing that of commercial capital. The opposite would apply where commercial capital was making less than the average industrial rate of profit.
Under capitalism, the labourers are no longer independent commodity producers, per se. The only commodity they produce, and are able to sell, is their labour-power, itself. They produce their labour-power by continually reproducing themselves as labourers, via the consumption of other commodities. Unlike the slave, however, they do enter the market themselves, freely, as sellers of their commodity, labour-power, and, also, as buyers of other commodities/wage goods. As sellers of labour-power, they sell it at its value, i.e. the value of the commodities they must consume for its reproduction, which is equal to 8 hours labour. As buyers of commodities, and, increasingly, as the most numerous buyers of commodities, they must, also, value those commodities on the basis of their social cost of production, i.e. the 10 hours labour required for their reproduction. It is that value which, then, forms the basis of the exchange-value/prices of commodities that all consumers must pay.
But, the sellers of all these other commodities, i.e. capitalists, like the slave owners, do not expend 10 hours of labour/value on their production. Like the slave owners (if we set aside the cost of constant capital) the capitalists private cost of production is only equal to 8 hours, i.e. what they pay in wages. The surplus labour, therefore, takes the form of a surplus product, and of a surplus value, in the hands of capital. Capital realises that surplus value not by selling these commodities above their value, but by selling them, in aggregate, at their value/social cost of production, a cost of production, which is greater than their own, private cost of production.
The productive-capitalist, however, as described earlier, does not sell commodities at their value – leaving aside the question of the transformation of values into prices of production. The productive-capitalist sells commodities to the merchant capitalist at prices below their value, because, in doing so, they release themselves – and their capital – from the costs of marketing and selling. The merchants, by specialising in this function reduce the costs of selling, and so increase the mass of realised profits, and, thereby, the rate of profit. They, also, facilitate a faster rate of turnover of capital, which, thereby, raises the annual rate of profit. Once, again, the merchant's do not sell commodities above their value, in aggregate, but at their value, their profit deriving from the difference between that value and the price they pay the productive-capitalists.
Similarly, other forms of commercial capital, such as money-dealers, specialise in undertaking other functions required for the realisation of the value of commodities. They act to pay suppliers, and collect payments from buyers, which becomes more significant in the case of international trade. As Marx and Engels describe, in Capital III, when companies use Bills of Exchange for their transactions one to another, commercial credit, they, can, also, hand over what amounts to a portion of the value of commodities to the bill broker, who provides payment to the seller earlier than would have been the case.
Marx sets that out, in detail, in Volume III, as well as in Theories of Surplus Value. But, Engels says, if Duhring just read Volume I more closely he would see the answer.
“In addition to the passages already quoted, he would see, for example on p. 323, that according to Marx the immanent laws of capitalist production assert themselves in the external movements of masses of capital as coercive laws of competition, and in this form are brought home to the consciousness of the individual capitalist as the directing motives of his operations...” (p 273-4)
Now, consider a different set of social relations. Suppose that society is characterised by slave production. Now, it may still be the case that A and B require 10 hours of this slave labour to produce them, and that the same 8 hours of labour is required to reproduce the labour-power of the slave. So, the slave undertakes 2 hours of surplus labour, which takes the form of a surplus product. But, in this case, the surplus labour does not take the form of a surplus value. Why? Because, if the society is divided entirely into slaves and slave-owners, it is only the latter that enter the market as buyers and sellers of commodities. The slave does not buy commodities, required for the reproduction of their labour-power, any more than does, say, a horse, or a machine. The slave either receives back from the slave owner a portion of what they have produced, or else obtains the equivalent in the form of other products, obtained by the slave-owner in the market.
But, in such a society, where it is only the slave owners that take commodities to the market, and who buy other commodities, in exchange, the question then arises as to what determines the value of those commodities? It is no longer the social labour-time required for their production, i.e. the 10 hours of labour by the slave, but only what it costs the slave owner to produce them, i.e. the 8 hours of labour required to reproduce the labour-power of the slave. More correctly, it is, in this case, the private cost of production for the slave owner that becomes the social cost of production, because it is only they that enter the market as producers and consumers of commodities. The slave, just like a horse or a machine, creates a surplus product, but this surplus product has no value. From the perspective of society, i.e. of the slave owners, it has no cost of production.
If slave owner 1 seeks to sell A, at a value equal to 10 hours, slave owner 2 will refuse to pay that price, on the basis that they could use their own slaves to produce it at a cost, to them, of only 8 hours. With multiple buyers and sellers in the market, all of whom are slave owners, competition between them would reduce the values of these commodities to their private cost of production, i.e. 8 hours. This does not change the fact that a surplus product is created, only that it does not take the form of a surplus value.
As Marx puts it, in The Grundrisse,
“In production based on slavery, as well as in patriarchal agriculture…..the slave does not come into consideration as engaged in exchange at all.”
(p 419)
and
“in the relations of slavery and serfdom….The slave stands in no relation whatsoever to the objective conditions of his labour; rather, labour itself, both in the form of the slave and in that of the serf, is classified as an inorganic condition of production along with other natural beings, such as cattle, as an accessory of the earth.”
(p 489)
The only thing that obscures this reality is that in no society do we see a division, entirely, into slaves and slave owners. In all societies, a large number of people are engaged as independent labourers and commodity producers who, also, enter the market as buyers as well as sellers of commodities. Their private cost of production, therefore, is determined by the labour they expend on the production of the given commodity. Dependent on the proportion of such producers, as against the proportion of slave production, it is this expenditure of free labour that determines the value of commodities, and the more this is the case, the more the surplus labour takes the form of a surplus value. However, as Marx and Engels set out, if slave production can undercut those independent commodity producers, it, inevitably, ruins the latter, driving them out of the market, and, potentially, into slavery themselves.
In fact, Marx does explain this, even in Capital I. He explains it in even greater detail, in Capital II, as well as in Theories of Surplus Value, and The Grundrisse. In the latter, in particular, Marx explains the difference between the manifestation of the surplus labour as either surplus product or surplus value. The essence of the solution to this problem resides in the distinction between the social cost of production and the private cost of production, and the role of the producer as consumer. If we take product A, it takes, let us say, 10 hours of labour to produce. If, however, only 8 hours of labour are required to reproduce the labourer themselves, they will have undertaken 2 hour of surplus labour. Now, let's consider how this appears under different sets of social relations.
Firstly, if the labourer is a free, independent commodity producer, the fact that they only required 8 hours of labour for their own reproduction, does not change the fact that they expended 10 hours of labour on the production of A. If we ignore, for the sake of simplicity, here, the question of simple or complex labour etc., then, when they come to exchange A, as a commodity, for some other commodity, B, they will value A as equal to 10 hours labour, including the 2 hours of surplus labour, and will exchange it for a quantity of B, also, equal to 10 hours of labour. The producer of B will do the same.
In both cases, the commodities exchange at their value, which, inherently, includes the 2 hours of surplus labour, which, in this case, assumes the form of both a surplus product, and a surplus value. In other words, for both labourers, the product of their labour includes a surplus product, over and above what was required for the reproduction of their labour-power. This surplus product is what was physically produced in the 2 hours of surplus labour. Because, in this set of social relations, based on commodity production and exchange, the labour expended is manifest as the value of he commodity, and forms the basis of the proportions in which different commodities exchange with each other, their exchange-values, this surplus labour, in the surplus product, also, takes the form of a surplus value.
If A and B are not produced by commodity producers but simply self sustaining, direct producers, the surplus labour does not take the form of a surplus value, but, only, of a surplus product. That surplus product may be used to save for the future, as insurance, or to cover the needs of population growth, i.e. the expansion of the household, or to allow time to be spent on other forms of production, and so on. The only basis upon which the labour expended will play a role in terms of the value of the production, is in terms of setting this value/labour expended against the use-value obtained, as against the use-value of what could have been produced instead.
In terms of the producers of A and B, no force is required to obtain this surplus product or surplus value; it is the inevitable consequence of their performance of surplus labour. Nor is any force, compulsion or exploitation required to realise the produced surplus value, when commodity A is exchanged with commodity B, by two, free, commodity producers. A and B have a value of 10 hours labour, which includes 2 hours of surplus labour. When the producer of A obtains a quantity of B, and vice versa, they both obtain a quantity of surplus labour/value proportionate to the surplus labour they performed, and which is contained in the 10 hours value of both A and B.
In both cases, the 10 hours value is equal to the social cost of production of these commodities, i.e. if society desires them, this is the quantity of social labour-time it must expend. In both cases, this is also equal to their private cost of production. In other words, the producers of A and B both had to expend 10 hours of their own labour in their production. Note that this cost of production/socially necessary labour-time is quite different from the value of the labour-power of the labourers that produced them. That value was only equal to 8 hours of labour. It is the difference between these two that is the basis of the surplus labour/product/value.
In a society based on commodity production and exchange, where commodities are produced and exchanged by free labourers, it is the social cost of production which forms the basis of the value of commodities, and, thereby, their exchange-values. There is no greater problem, therefore, in realising the surplus-value, inherent within that value than were the labourer to be simply a direct producer, who expends 2 hours of surplus labour in producing a surplus product for their own future consumption.
Each commodity producer, here, is, also, an independent consumer. They enter the market in search of commodities to buy for their own consumption (personal or productive) and, consequently, are confronted by other commodity producers who seek to exchange their own commodities at their value, i.e. the labour-time expended on their production.
Marx sets out, in numerous places, that the producedsurplus-value should not be equated with, or confused with profit, let alone profit of enterprise. If we take commercial profit, for example, as Marx sets out, in Capital III, Chapter 17 et sub, it is a deduction from the produced surplus value, as a necessary cost of circulation and realisation of the value of commodities. It forms an integral part of the circuit of industrial capital, and, thereby, participates in the formation and distribution of the average industrial rate of profit.
All productive capitals, as Marx sets out, in Capital III, also undertake this function of circulation. They have their own commercial workers employed as sales and marketing staff, and so on. But, productive-capital, as a whole, sub-contracts a large part of this role to specialist commercial capitals – wholesalers, retailers, money dealers, factors and so on – because such division of labour, and specialisation reduces the necessary costs of circulation. The commercial capital does not produce additional surplus-value, but, by reducing costs of circulation, increases the mass of realised profit, and rate of profit. Its profit comes from the fact that, as part of the circuit of industrial capital, it obtains the average industrial rate of profit. The means of achieving that is that the productive-capitals sell commodities to the merchant capitals, on average, at prices below their value, and the merchant capitals, then, sell those commodities, on average, at their value.
Duhring, therefore, misrepresents Marx's theory of surplus value and profits. He, then, accuses Marx of a moralistic and emotional response to this. “business of extortion”. He continues,
“But even mightier wrath and even fuller recognition of the exploitative character of the economic form based on wage-labour is possible without accepting the theoretical position expressed in Marx's doctrine of surplus-value”.” (p 272)
According to Duhring, Marx's emotional hatred of the extortion is perfectly ethical, but based upon a false theory. Duhring's even greater hatred of ths extortion, he bases upon what he considers his own correct and scientific theory, but which, as seen earlier, amounts only to his claim that all such social relations stem from the use of force by some in society against the rest.
In fact, this claim falls apart as soon as Duhring seeks to apply it to explain the existence of surplus-value in societies based on commodity production and exchange. Engels quotes his statement,
“Now the question arises, how the competing entrepreneurs are able constantly to realize the full product of labour, including the surplus-product, at a price so far above the natural cost of production as is indicated by the ratio, already mentioned, of the surplus labour-hours. No answer to this is to be found in Marx's doctrine, and for the simple reason that there could be no place in it for even raising that question. The luxury character of production based on hired labour is not seriously dealt with at all, and the social constitution with its bloodsucking opportunities is in no way recognised as the ultimate basis of white slavery. On the contrary, political and social matters are always to be explained by the economic.” (p 272-3)
Engels quotes Duhring's comment in which he describes Marx's analysis of surplus value, as the surplus labour performed by the wage-worker and appropriated as profit by the industrial capitalist. Engels comments,
“According to Herr Dühring, therefore, Marx’s surplus-value would be nothing more than what, is known in everyday language, as the earnings of capital, or profit. Let us see and hear what Marx says himself. On page 195 of Capital, surplus-value is explained in the following words placed in brackets after it: “Interest, Profit, Rent”.” (p 270)
In other words, Engels (and it should be remembered Marx, himself, either wrote or proof-read these sections on political-economy) seeks to emphasise that, in Marx's analysis, surplus value is not equated with profit, but to all of these other sub-forms, of rent, interest and taxes. Indeed, as Marx describes, commercial profit is also a deduction from produced surplus-value. However, its necessary to make a clarification, here, that is only possible on the basis of Marx's further analysis and elaboration in Capital III.
In Capital III, Marx, himself begins this analysis by equating the produced surplus-value with profit. He does so, because, inChapter 15, he sets out that it is in the form of this industrial profit that the surplus-value is manifest. This is important, because it is this “profit”, before the deduction of rent, interest and taxes, that is the basis for the calculation of the general industrial rate of profit. Unless that is the case, thee is no basis upon which to calculate surplus profits, over and above the average rate of profit, and so no basis upon which to calculate rent.
So, in Capital III, Marx sets out the basis upon which surplus value does materialise, first, in the form of industrial profit, realised in the price of commodities, and its division, therefrom into rent, interest, taxes and profit of enterprise. He notes, in Chapter 15, that, therefore, the same average rate of industrial profit can result in different amounts and rates of profit of enterprise, simply because more or less of the surplus-value/profit going to rent, interest, or taxes.
“If we consider the total social capital C, and use p1 for the industrial profit that remains after deducting interest and ground-rent, i for interest, and r for ground-rent, then s/C = p/C = p1 + i + r/C = p1/C + i/C + r/C. We have seen that while s, the total amount of surplus-value, is continually increasing in the course of capitalist development, s/C is just as steadily declining, because C grows still more rapidly than s. Therefore it is by no means a contradiction for p1, i, and r to be steadily increasing, each individually, while s/C = p/C, as well as p1/C, i/C, and r/C, should each by itself be steadily shrinking, or that p1 should increase in relation to i, or r in relation to p1 or to p1 and i. With a rising total surplus-value or profit s = p, and a simultaneously falling rate of profit s/C = p/C, the proportions of the parts p1, i, and r, which make up s = p, may change at will within the limits set by the total amount of s without thereby affecting the magnitude of s or s/C.”
(Capital III, Chapter 15)
Engels, here, however, is keen to make the point against Duhring, that surplus-value is not simply what is commonly referred to as the capitalist's profit (profit of enterprise), but is also the basis of these other revenues, rent, interest, taxes. Engels quotes Marx.
“Surplus-value, therefore, splits up into various parts. Its fragments fall to various categories of persons, and take various forms, independent the one of the other, such as profit, interest, merchants’ profit, ground-rent, etc.” (p 271)
For Classical Political Economy, Engels notes, capital and profit or interest are inseparable. Hence its distinction with simply means of production.
“But the word “capital” in its modern economic meaning is first met with at the time when the thing itself makes its appearance, when movable wealth increasingly acquires the function of capital by exploiting the surplus-labour of free workers for the production of commodities; and in fact it was introduced by the first nation of capitalists in history, the Italians of the fifteenth and sixteenth centuries.” (p 268)
Marx's analysis of capital and its evolution was not sucked from his thumb, but “brought the concept of capital into harmony with the historical facts from which, in the last analysis, it had been abstracted, and to which it owed its existence; if Marx thus cleared this economic concept of those obscure and fluctuating ideas which still clung to it even in classical bourgeois political economy and among socialists up to now — then it was Marx who applied that “definitive and most strictly scientific treatment“ which Herr Dühring is so constantly talking about and which we so painfully miss in his works.”" (p 268)
The barren and subjective nature of Duhring's theory is contained, as seen earlier, in his reliance on the idea of force to explain the evolution of class society. Unfortunately, this same vulgarity and subjectivism carries through, as Marx noted in The Critique of The Gotha Programme, to vulgar economics and vulgar socialism. As Engels demonstrated earlier, it fails to explain the material foundations upon which the superior force of one part of society arises as against the rest. It is also lacking any justification in history itself. It is undoubtedly the case that ruling classes do obtain superior force over the majority, but this is a consequence of them becoming the ruling class, not the cause of it.
For Duhring, Engels says,
“This one sentence contains the complete constitution of the economic world up to the present day. It is extremely short, and runs:
Article One: Labour produces.
Article Two: Force distributes.
“In plain human language”, this sums up the whole of Herr Dühring's economic wisdom.” (p 270)
Unfortunately, the same vulgar socialism persists, today, in the ideas of he welfarists and redistributionists, as well as in the Stalinoid concepts of “unequal exchange” and “super-exploitation” imposed by the superior force of imperialism.
The racist, Blue Labour Government is creating division in society, by inciting hatred of immigrants to distract from its own failed policies, and its defence of the real parasites and causes of workers' problems, in Britain – the ruling-class. Just as with the failure of Brexit, rather than acknowledging that failure, it has simply doubled down on its lies, and increased the ferocity of its own reactionary nationalism and jingoism, as seen in the disgraceful statement put out by its Home Secretary, Shabana Mahmoud, in parliament on Monday. The vileness of its racist politics is indicated by the fact that its position is now welcomed and supported by Stephen Yaxley Lennon, aka, Tommy Robinson.
But, of course, the initial welcome and support from the likes of Yaxley-Lennon, will be only a staging post. Already, Farage has said that it is not enough, as the ratchet to the Far Right along which Blue Labour is now firmly tied, means that the calls to withdraw from the ECHR, will intensify. The godfather of Blue Labour, Maurice Glasman, has openly stated, on Newsnight, that he does not want Labour to be a progressive party, and raised the question of withdrawal from the ECHR, as being a necessary requirement if Blue Labour's anti-migrant policies are to be implemented.
Like all the other racists, Blue Labour has conflated refugees and asylum seekers with illegal migrants. Its position now calls for refugees and asylum seekers to be sent back, once the conditions that led to them becoming refugees, in their own country, have ended. But, logically, on that basis, the only Ukrainian refugees and asylum seekers, should have been ethnic Russians, fleeing the persecution they faced from the ultra-nationalist regime of Zelensky, and its neo-Nazi components of the Azov Battalion, and Right Sector. For ethic Ukrainians, there was no reason for them not to have simply moved into western and central Ukraine, other than that the reason many of them fled was to avoid being conscripted.
Blue Labour is scapegoating migrants, in order to divert attention from the real cause of the problems British workers, of whatever ethnicity, face, in relation to the cost of living, lack of housing, a collapsing NHS, education and social care system, crumbling infrastructure in roads, buildings, railways, telecommunications and so on. The proximate cause of all those problems is the lack of investment in them over a long period of time, and specifically in all of the period of austerity introduced after 2010. Rachel Reeves' budget will double down on all of that austerity, once more, just as Mahmoud has doubled down on the racist targeting of migrants, in order to divert attention from it.
The less proximate reason for all of those problems is Brexit. It is Brexit that has caused a significant drop in British economic growth, and a consequent loss of tax revenues for the government. It is costing the government £40 billion, each year, in lost tax revenues, as a result of the fall in economic growth. But, Blue Labour's hands are so steeped in the blood of Brexit, which it has now backed for the last six years, since Starmer became Leader, that it, also, cannot reverse that policy either, or even effectively draw attention to the damage it has caused, without simultaneously damning its own backing of Brexit for the last six years.
Of course, the reason it has not, and does not, do that is more complex. In part, it is because it has falsely concluded that opposition to Brexit cost Labour the election in 2019, and that, to win, it has to appease all of that reactionary petty-bourgeois nationalist section of the electorate. But, the facts are clear that in 2017, when Labour most vociferously opposed Brexit, Corbyn's Labour won 40% of the vote, increasing its seats by the most since 1945. It was the drift back towards Brexitism in 2019 that caused Labour to lose that support.
Another factor in that was the attacks on Starmer by the agents of Blue Labour, who had been shocked at the size of Labour's vote in 2017, when they thought they could mostly sit back and see him fail. After 2017, supported by money from Zionists, and channelled through various tax havens, they successfully and fraudulently equated anti-Zionism with anti-Semitism, and launched their wrecking operation of Labour's electoral chances, ready to remove Corbyn, and the Left. That, also, left Blue Labour beholden to the Zionist state, a debt repaid in its support for the genocide, but that, also, tied Blue Labour to Trump, a connection which, itself, went back at least to Trump's support for Brexit, and the cultivation of elements such as Spiked Online, itself with close connections to Glasman.
Moreover, in 2024, when Blue Labour won its parliamentary majority, it did not do so by winning over the votes of petty-bourgeois, nationalist Brexit voters. It won very few of them. A continuation of Brexit, however, was baked in for Blue Labour, because of these previous debts to its sponsors, ideological and financial and organisational, even after the large majority of the electorate, itself abandoned Brexit, so that it became an electoral liability. Blue Labour pursued Brexit, and could only do so by seeking to tie Britain closer to Trump's America.
It won only be default, as the reactionary, petty-bourgeois vote split between Tories and Reform. That period is over, as Reform has simply taken the place of the Tory wing of the Conservatives. It is not a fundamental change in politics, or of a shift in class based voting, merely a relabelling, like changing the packaging of a Marathon to a Snickers. Despite the superficiality of the bourgeois media reporting, that claims that some qualitative change bringing about the end of class based voting has occurred, no such change has happened. The Conservative Party always got its core vote from the petty-bourgeoisie, but it always had to serve the interests of the bourgeois ruling-class. All that has happened, much as when the Liberal Party split, with its working-class core creating the Labour Party, is that a strengthened petty-bourgeoisie has asserted its own reactionary interests, and split to the Right.
The Tories are dead, reborn as Reform. Nor has the class basis of voting changed on the other side. Just as the Liberals were replaced by a newly created Labour Party, at the start of the 20th century, so it only reflected that a strengthened working-class, now sought to assert its own interests, albeit by a continuation of the same social-democratic ideology it had pursued within the Liberals, and which is inherent to the main organs of that class, the trades unions, based on bargaining within, but, thereby, remaining within, the existing bourgeois system. That class basis of ideology, and voting has not changed, but as Labour has abandoned even that social-democratic ideology, in favour of a quixotic chase after reactionary, petty-bourgeois nationalist windmills, so its class base has increasingly deserted it in favour of other, superficially, more social-democratic alternatives be it the Greens, Liberals, Plaid, SNP or Your Party.
Already we see the fruits of Blue Labour's further ratchet of the racist screw. The racists and “patriots” also conflate the terms refugee and illegal immigrant, but, also, they conflate illegal immigrant with the term immigrant itself, by which they, also, mostly, mean anyone with a darker skin. Whether Mahmoud actually believed any of what she was shovelling in her statement or not, about illegal immigration stoking racist abuse against people like her, or whether it is just a consequence of knowing that spouting such nonsense is required to keep her job, the truth is that her own racist scapegoating of migrants, as it always has and does, only acts to validate the lies of the racists and stokes even greater division in society, greater hostility of anyone with a darker skin whether they are a migrant, or have lived in this country for several generations! The proof of that was seen the day of the Brexit vote, when racists immediately began openly attacking anyone that looked foreign, and demanding they went home!! Its not migration legal or illegal causing division, but the racist demagogy of politicians like Mahmoud.
The racists like Yaxley-Lennon, Farage and so on will not simply acquiesce in Blue Labour's adoption of their own racist language and politics, but, will inevitably shift their own positions even further right, as has already happened. Farage has even invited Mahmoud to join Reform.
The racists of Reform know that they are not going to lose any votes by adopting an even more hard-line racist stance. The truth is that they are pretty much at the limit of their vote, as has happened in the past, because their vote is limited to that petty-bourgeois mass and its periphery, which amounts to around 30-40% of the electorate. Moreover, as has happened elsewhere, and as Trotsky analysed in relation to the rise of the Nazis in Germany, in the 1930's, having reached that limit, its coalition begins to fragment as a result of the inherently amorphous nature of the petty-bourgeoisie, and its own internal contradictory interests.
But, if the Conservatives try to follow, they do risk losing more of their voters to the Liberals, having already shed their Tory vote to Reform. Its notable, therefore, that whilst Farage responded by simply turning the racist screw further to the Right, Bad Enoch responded by, instead, focusing on the other fascination of the reactionaries, welfare benefits and their recipients. As with Trump in the US, the attacks on migrants can only go so far, for a reactionary petty-bourgeois party, which still cannot address the real issues, which would attack the wealth and power of the bourgeois ruling class. The contradiction of that for Trump, means that his own petty-bourgeois, MAGA base is fracturing, because that petty-bourgeoisie of the self-employed, and small businesses, are themselves impoverished, many of them rely on various benefits too. They all are impacted by higher prices, which have resulted from Trump's attempts to keep asset prices inflated, and by his imposition of consumption taxes (tariffs) on many of the staple items of these households. Not surprisingly, Trump, as his base disintegrates, has been led to rapidly reverse many of those tariffs on food imports.
The racists be it of the type of Yaxley-Lennon, or Farage or the remains of the Tory Party, will take Blue Labour's latest racist attacks on migrants as the cue to simply step up their own vile, racist demands, but, not only those racist attacks, but also their reactionary attacks on benefits recipients too, which again, they conflate with migrants, or the unemployed etc. Bad Enoch talked about the removal of the Two-Child Benefit cap as though these child benefits are only paid to the unemployed, long-term sick and so on. But, the reality is that two-thirds of those that receive these benefits, as also with Housing Benefit, are in work. They only get these benefits because the actual level of wages in Britain is itself so appallingly low, a process that has been going on since the regime of Thatcher in the 1980's.
Blue Labour's racist attacks on migrants, will inevitably lead to racist attacks on anyone who simply looks like a migrant, whether they and their families have lived here for generations or not. We have seen Blue Labour take up the demand for even settled migrants to risk being deported, and Farage and the Tories are now adopting the stance of Mosely in the 1960's, and the NF in the 1970's, of the repatriation of people from ethnic minorities, though where they would be repatriated to, remains a mystery, given that the majority of them were born here! In turn, that inevitably leads to attacks on the unemployed, sick and anyone on benefits, who the reactionaries need as their next additional scapegoat to distract from their own failures, to explain why the implementation of their previous policies, such as Brexit, have only made things worse.
All the time, whilst these reactionaries try to blame migrants, or those on benefits, for the failures of British capitalism, they signally fail to point the finger at the real parasites and scroungers, of whom the royals are only a minor, but visible representation. When the reactionaries talk about those not getting out of bed in the morning to go to work, they do not mean the royals who are paid millions each year to live the life of Riley, traipsing across the world by luxury jet and yacht, at tax payers expense. Nor do they mean the top 0.01% that owns the controlling majority of financial assets, bringing each of them in billions of pounds in interests/dividends, simply on the back of ownership of bonds and shares, or property, without needing to lift a finger. No wonder they have the time to associate with the likes of Jeffrey Epstein, and engage in the kinds of behaviour that characterised the decadence of the Roman Empire, prior to its fall.
Pointing the finger at those elements, and their role in holding back economic development, and causing the problems of working-people would, of course, be a useful act of creating division in society, a class division between the vast majority and this ruling-class. But, Blue Labour, the Tories, Farage, Bad Enoch, and also, the likes of Ed Davey will not do that. Their whole political system continues to depend on serving the needs of that ruling-class, even if they have to balance that with the need to rhetorically present themselves as champions of the petty-bourgeoisie, and even to engage in measures, such as Brexit to that end. The petty-bourgeoisie, itself, will not engage in a full on attack on the bourgeois, ruling-class, precisely because it deludes itself into thinking that it has some affinity with it, that this ruling-class is just them writ large, where they can aspire to being, at some future time, even though all the evidence shows that is an impossibility.
Only the organised working-class can consistently oppose the ruling-class and its interests, and does so based on advancing its own class interests, as a global class, based on the collective ownership of socialised capital, which, nowadays, only has a rational existence as multinational capital. The real division we should encourage in society is that division between the organised working-class, comprising around 60% of the population, and the ruling-class, which is insignificant in size, but has immense wealth and power, and control of the state. To do that we need a mass, communist workers party, and only it will be able, on that basis, to draw the rest of society behind it. It is for that reason that the existing bourgeois and reactionary petty-bourgeois parties, seek to prevent such a class based division, and instead to cultivate a division of the working-class based on ethnicity, nationality, sex, gender, religion, sexual preference and so on. We should not let them get away with it.
Duhring had criticised Marx for his analysis of capital and capitalism as being merely a historical phase of human social development. In other words, capital is not simply “produced means of production” as Duhring insisted, but is a social relation. The peasant's plough, after all, is “produced means of production”, but is not capital. However, Engels notes,
“But not content with ascribing a historical beginning to the social function through which alone a sum of values becomes capital, Herr Dühring prophesies that it will also have a historical end. It is “precisely this which must disappear”. In ordinary parlance it is customary to call a phenomenon which arose historically and again disappears historically, “a historical phase”. Capital, therefore, is a historical phase not only in Marx but also in Herr Dühring, and we are consequently forced to the conclusion that we are among Jesuits here.” (p 265-6)
In other words, as seen previously, Duhring attacks the concepts and arguments of others, but, then, frequently uses the same concepts and arguments himself, but simply using other words and phrases.
Engels sets out the Marxian concept of capital.
““Capital,” says Marx, “has not invented surplus-labour. Wherever a part of society possesses the monopoly of the means of production, the labourer, free or not free, must add to the working-time necessary for his own maintenance an extra working-time in order to produce the means of subsistence for the owners of the means of production.” Surplus-labour, labour over and above the time required for the worker's own maintenance, and appropriation by others of the product of this surplus-labour, the exploitation of labour, is therefore common to all forms of society up to now, in so far as these have moved in class antagonisms. But it is only when the product of this surplus-labour assumes the form of surplus-value, when the owner of the means of production finds himself facing the free worker — free from social fetters and free from possessions of his own — as an object of exploitation, and exploits him for the purpose of the production of commodities—it is only then, according to Marx, that the means of production take on the specific character of capital. This first took place on a large scale at the end of the fifteenth and the beginning of the sixteenth century.” (p 266-7)
For Duhring, however, all means of production are capital, but, even here, he runs into contradiction. He says,
“every sum of means of production which “forms shares in the fruits of the general labour-power” , that is, yields surplus-labour in any form, is capital.” (p 267)
On that basis, Engels notes, it is not only “produced means of production”, as Duhring had claimed earlier, but all means of production, produced or not produced.
“So Herr Dühring himself does not hold “the accepted view of capital, according to which it is a means of production”, but rather a diametrically opposite one, a view which includes in capital even unproduced means of production namely the earth and its natural resources. But the idea that capital is simply “produced means of production” is once again the accepted view only in vulgar economics. Outside of this vulgar economics, so dear to Herr Dühring, the “produced means of production” or any sum of values whatever, becomes capital only by yielding profit or interest, i.e., by appropriating the surplus-product of unpaid labour in the form of surplus-value, and that, moreover, in these two definite subforms of surplus-value. It is of no importance whatever that the whole of bourgeois economy is still chained to the idea that the characteristic of yielding profit or interest is inherent in every sum of values which is employed under normal conditions in production or exchange.” (p 267-8)
So, by working backwards from the developed form of capital – industrial capital – we uncover the source of surplus-value in surplus labour. Under capitalist production, this surplus value first takes the form of profit, and it is, then, the industrial capitalist that pays out of it the other deductions that go in rent, interest and taxes. But, working back, we see that the same surplus labour of the independent commodity producer is the source, also, of the rent of the landlord, interest of the usurer, of commercial profit, and of taxes. It is just that, in these cases, it is the independent commodity producer that must hand over this surplus value directly to the landlord, commercial capitalist and usurer.
“this relation between the owners of money or of commodities on the one hand, and those who possess nothing beyond their own labour-power on the other, is not a relation arising from natural history, nor is it one that is common to all historical periods: “It is itself clearly the result of a past historical development, the product ... of the extinction of a whole series of older forms of social production.” In fact we first encounter this free labourer on a mass scale in history at the end of the fifteenth and the beginning of the sixteenth century, as a result of the dissolution of the feudal mode of production. With this, however, and with the creation of world trade and the world market dating from the same epoch, the basis was laid on which the mass of the existing movable wealth was of necessity increasingly converted into capital, and the capitalist mode of production, which is directed towards the production of surplus-value, of necessity increasingly the exclusively prevailing one.” (p 263)
Capital did not then arise simply out of money, as Duhring claims Marx said, but arises out of a historical process, and requires a series of material conditions created by that process. Duhring himself has no explanation for that development based on either history or logic. He is left once more to simply assert that it arises as a result of force.
“... he explains its origin by means of the old familiar adventures of the two men, one of whom at the dawn of history converted his means of production into capital by the use of violence against the other.” (p 265)
What determines these different forms is the mode of production, which itself is a consequence of the stage of development of the productive forces. In Theories of Surplus Value, Marx sets out that, for millennia, when individuals and households failed, the consequence was that they became debt slaves, serfs and servants, or else, became destitute paupers. They did not become wage-workers, employed by capital. The simple reason for that is that before capitalist production can arise, it must have a basis to exist, and that means that it must be able to produce more efficiently than the existing forms of production. To do so requires it to be able to produce on a large-scale, to be able to use machines, and to bring together sizeable numbers of labourers under one roof. But, to be able to produce on such a scale requires a large market for that production.
So long as the majority of the population are direct producers, i.e. largely self-sufficient peasants, that meet the majority of their own needs, and only sell a small amount of their surplus products in exchange for others, no such large market can exist. It is the expansion of the market in the Middle Ages, as the towns and cities expanded that creates the conditions in which capitalist production can exist.
On the one hand, capitalist production requires the existence of this large market, but it also requires the existence of labourers free to be employed by that capital. As Lenin sets out, for example, in On The So Called Market Question, these two factors go together. It was the release of serfs and feudal retainers in Western Europe that, in the Middle Ages, swelled the town populations and created urban markets. These migrants to the towns, then became independent commodity producers who must sell their output to obtain the other commodities they require. Competition between them results in winners and losers, the winners becoming bourgeois and the losers now becoming wage workers.
“For the conversion of money into capital the owner of money must meet in the market with the free labourer, free in the double sense, that as a free man he disposes of his labour-power as his own commodity, and that on the other hand he has no other commodity for sale, has no ties and is free of everything necessary for the realisation of his labour-power.” (p 263)
This double context of “free labourer”, i.e. free to sell their labour-power as a commodity on the market, and free in that they have no other means of subsistence, is considered in greater detail by Marx in The Grundrisse. It distinguishes the wage labourer from the slave or serf, for example, both of which undertake surplus labour, but which takes the form of a surplus product not surplus value. The reason is that the slave and the serf have the same position in production as animals or machines. They create no newvalue, and surplus value is only possible where labour creates new value that is in excess of the value of labour-power.
“... in the relations of slavery and serfdom….The slave stands in no relation whatsoever to the objective conditions of his labour; rather, labour itself, both in the form of the slave and in that of the serf, is classified as an inorganic condition of production along with other natural beings, such as cattle, as an accessory of the earth.”
(The Grundrisse, p 489)
The peasant producer does create new value, and it exceeds the value of labour-power, so creating a surplus product and surplus value, but a large part of this surplus product/value is taken as feudal rent by the landlord. The independent commodity producer creates new value and surplus value, and for some of them this leads to greater affluence, a greater accumulation of means of production. A proportion of this surplus value goes to pay rents, interest and taxes, and a portion goes to the commercial profit of merchants and money-dealing capitalists, who specialise in those functions, and so reduce the overhead costs of the producer.
