|—||Karl Marx, Das Kapital (via catatomic8)|
Capital is thus the governing power over labour and its products. The capitalist possesses this power, not on account of his personal or human qualities, but inasmuch as he is an owner of capital.
His power is the purchasing power of his capital, which nothing can withstand.
As you know, A. Smith sees the ‘Natural’ or ‘Necessary price’ as being composed of wages, profit (interest) and rent — i.e. as wholly resolved into revenue. This nonsense has been taken over by Ricardo, although he excludes rent from the catalogue as being purely fortuitous. Nearly all economists have taken this over from Smith, and those who contest it succumb to some other folly.
Smith himself is conscious of the nonsensicality of subsuming the gross product of a society simply under revenue (which may be consumed annually), whereas in the case of each individual branch of production he resolves price into capital (raw materials, machinery, etc.) and revenue (wages, profit, rent). If this were so, a society would have to start each year de novo, without capital.
Now as regards my table (above - see high resolution version here), which figures in one of the last chapters of my work by way of recapitulation, the following is essential to a proper understanding of it:
1. The figures, which are arbitrary, represent millions.
2. Here means of subsistence are taken to mean everything that goes into the consumption fund each year (or might without accumulation, which is excluded from the table, go into the consumption fund).
In Class I (means of subsistence) the gross product (700) consists of meansof subsistence which are, by their very nature, not therefore included in constant capital (raw materials and machinery, buildings, etc.). Similarly, in Class II, the entire product consists of commodities that constitute constant capital, i.e. re-enter the process of reproduction in the form of raw materials and machinery.
3. Ascending lines are dotted, descending ones continuous.
4. Constant capital is that part of capital that consists of raw materials and machinery. Variable capital that which is exchanged for labour.
5. For example, in agriculture, etc., one part of the same product (e.g. wheat) goes to form means of subsistence, whereas another part (wheat, for instance) re-enters reproduction in its natural form (e.g. as seed) as a raw material. But this does nothing to alter the case, since such branches of production figure under Class II or Class I according to which capacity is involved.
6. The hub of the matter, then, is as follows:
Category I. Means of Subsistence
Working materials and machinery = e.g. £400 (i.e. that part of these that is included in the annual product as dechet; that part of the machinery, etc., which is not used up does not figure at all in the table). The variable capital exchanged for labour = 100, reproduces itself as 300, since 100 replaces wages in the shape of the product, and 200 represents surplus value (unpaid surplus labour). The product = 700, of which 400 represents the value of the constant capital which, however, has passed entirely into the product and must hence be replaced.
In the case of this relationship between variable capital and surplus value it is assumed that the worker works 1/3 of the working day for himself and 2 /3 for his natural superiors.
Hence 100 (variable capital), as is indicated by the dotted line, is paid out in money as wages; with this 100 (indicated by the descending line) the worker buys the productof this class, i.e. means of subsistence for 100. Thus, the money flows back to capitalist class I.
The surplus value of 200 in its general form = profit, which, however, is split up into industrial profit (commercial included), and further into interest, which the industrial capitalist pays in money, and rent, which he likewise pays in money. This money paid out for industrial profit, interest and rent, flows back (indicated by descending lines) since the product of class I is bought in return for it. Hence all the money laid out by the industrial capitalist within class I flows back to him, while 300 of the product, 700, is consumed by the workers, entrepreneurs, monied men and landlords. In class I this leaves a surplus of products (of means of subsistence) of 400, and a deficit of constant capital of 400.
Category II. Machinery and Raw Materials
Since the gross product of this category, not only that part of the product which replaces constant capital, but also that which represents the equivalent of wages and surplus value, consists of raw materials and machinery, the revenue of this category cannot be realised in its own product but only in the product of category I. Disregarding accumulation, as is done here, category I can, however, buy only as much from category II as it needs for the replacement of its constant capital, while category II can lay out on the product of category I only that part of its product which represents wages and surplus value (revenue). Hence the workers in category II lay out their money, = 133 1/3, on the product of category II. The same thing happens with the surplus value in category II, which, as sub I. is split up into industrial profit, interest, and rent. Hence 400 in money flows from category II to the industrial capitalists in category I, who, in return, transfer the remainder of their product, = 400, to the former.
With this 400 in money, class I buys what is necessary to replace its constant capital, = 400, from category II, to which the money paid out in wages and consumption (by the industrial capitalists themselves, the monied men and the landlords) thus flows back. Hence category II retains 533 1/3 of its gross product, and, with this, it replaces its own constant capital, which has been used up.
The movement, partly within category I, partly between categories I and II, also shows how money flows back to the respective industrial capitalists in both categories, money which will again go to pay wages, interest and rent.
Category III represents reproduction as a whole.
The gross product of category II is shown here as the constant capital of society as a whole, and the gross product of category I as that part of the product which replaces the variable capital (the wages fund) and the revenues of the classes which share the surplus value between them.
I have put Quesnay’s table underneath and will explain it in some words in my next letter.
Karl Marx, Letter to Engels (July 6, 1863)