Capital, Vol. II, Ch. XX

C A P I T A L
Vol. II

CHAPTER XX. Simple Reproduction . . . . . . . . . . . .		396
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. XIII.	The Formulation of the Question . . . . . . . . . . . The Two Departments of Social Production . . . . . . . Exchange Between the Two Departments I(v+s) versus IIc. Exchange within Department II. Necessities of Life and Articles of Luxury . . . . . . . . . . . . . . . . . The Mediation of Exchange by the Circulation of Money . . The Constant Capital of Department I . . . . . . . . . Variable Capital and Surplus-Value in Both Departments . The Constant Capital in Both Departments . . . . . . . A Retrospect to Adam Smith, Storch, and Ramsay . . . . Capital and Revenue: Variable Capital and Wages . . . . Replacement of the Fixed Capital . . . . . . . . . . . 1. Replacement of the Wear and Tear Portion of the Value in the Form of Money . . . . . . . . . . . . 2. Replacement of Fixed Capital in Kind . . . . . . . . 3. Results . . . . . . . . . . . . . . . . . . . . The Reproduction of the Money Material . . . . . . . . Destutt de Tracy's Theory of Reproduction . . . . . . .	396 399 402 406 415 426 429 433 437 441 453 457 462 471 473 484

Prepared © for the Internet by David J. Romagnolo, djr@cruzio.com (May 1997)

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C H A P T E R XX

SIMPLE REPRODUCTION

I. THE FORMULATION OF THE QUESTION

If we study^[42] the annual function of social capital -- hence of the total capital of which the individual capitals form only fractional parts, whose movement is their individual movement and simultaneously integrating link in the movement of the total capital -- and its results, i.e., if we study the commodity-product furnished by society during the year, then it must become apparent how the process of reproduction of the social capital takes place, what characteristics distinguish this process of reproduction from the process of reproduction of an individual capital, and what characteristics are common to both. The annual product includes those portions of the social product which replace capital, namely social reproduction, as well as those which go to the consumption-fund, those which are consumed by labourers and capitalists, hence both productive and individual consumption. It comprises also the reproduction (i.e., maintenance) of the capitalist class and the working-class, and thus the reproduction of the capitalist character of the entire process of production.

It is evidently the circulation formula C'-- which we have to analyse, and consumption necessarily plays a role in it; for the point of departure, C'=C+c, the commodity capital, embraces both the constant and variable capital-value, and the surplus-value. Its movement therefore includes both individual and productive consumption. In the circuits M--C . . . P . . . C'--M' and P. . . C'--M'--C . . . P, the movement of the capital is the starting and finishing point. And of course this includes consumption, for the commodity, the product, must be

^[42] From Manuscript II. --F. E.

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sold. When this has assumedly been done it is immaterial for the movement of the individual capital what becomes of the commodities subsequently. On the other hand in the movement of C' . . . C the conditions of social reproduction are discernible precisely from the fact that it must be shown what becomes of every portion of value of this total product, C. In this case the total process of reproduction includes the process of consumption brought about by the circulation quite as much as the process of reproduction of the capital itself.

For our present purpose this process of reproduction must be studied from the point of view of the replacement of the value as well as the substance of the individual component parts of C'. We cannot rest content any longer, as we did in the analysis of the value of the product of the individual capital, with the assumption that the individual capitalist can first convert the component parts of his capital into money by the sale of his commodities, and then reconvert them into productive capital by renewed purchase of the elements of production in the commodity-market. Inasmuch as those elements of production are by nature material, they represent as much a constituent of the social capital as the individual finished product, which is exchanged for them and replaced by them. Contrariwise the movement of that portion of the social commodity-product which is consumed by the labourer in expending his wages, and by the capitalist, in expending his surplus-value, not only forms an integral part of the movement of the total product but intermingles with the movements of the individual capitals, and therefore this process cannot be explained by merely assuming it.

The question that confronts us directly is this: How is the capital consumed in production replaced in value out of the annual product and how does the movement of this replacement intertwine with the consumption of the surplus-value by the capitalists and of the wages by the labourers? It is then first a matter of reproduction on a simple scale. It is furthermore assumed that products are exchanged at their values and also that there is no revolution in the values of the component parts of productive capital. The fact that prices diverge from values cannot, however, exert any influence on the movements of the social capital. On the whole, there is the same exchange of the same quantities of products, although the individual capitalists are involved in value-relations no longer proportional to their respective advances and to the quantities of surplus-value produced singly by every one of them. As for revolutions in value, they do not alter anything

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in the relations between the value-components of the total annual product, provided they are universally and evenly distributed. To the extent however that they are partially and unevenly distributed, they represent disturbances which, in the first place, can be understood as such only as far as they are regarded as divergences from unchanged value-relations, but in the second place, once there is proof of the law according to which one portion of the value of the annual product replaces constant, and another portion variable capital, a revolution either in the value of the constant or that of the variable capital would not alter anything in this law. It would change merely the relative magnitudes of the portions of value which function in the one or the other capacity, because other values would have taken the places of the original ones.

So long as we looked upon the production of value and the value of the product of capital individually, the bodily form of the commodities produced was wholly immaterial for the analysis, whether it was machines, for instance, corn, or looking glasses. It was always but a matter of illustration, and any branch of production could have served that purpose equally well. What we dealt with was the immediate process of production itself, which presents itself at every point as the process of some individual capital. So far as the reproduction of capital was concerned, it was sufficient to assume that that portion of the product in commodities which represents capital-value finds an opportunity in the sphere of circulation to reconvert itself into its elements of production and thus into its form of productive capital; just as it sufficed to assume that both the labourer and the capitalist find in the market those commodities on which they spend their wages and the surplus-value. This merely formal manner of presentation is no longer adequate in the study of the total social capital and of the value of its products. The reconversion of one portion of the value of the product into capital and the passing of another portion into the individual consumption of the capitalist as well as the working-class form a movement within the value of the product itself in which the result of the aggregate capital finds expression; and this movement is not only a replacement of value, but also a replacement in material and is therefore as much bound up with the relative proportions of the value-components of the total social product as with their use-value, their material shape.

Simple[43] reproduction, reproduction on the same scale, ap-

^[43] From Manuscript VIII. --F. E.

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pears as an abstraction, inasmuch as on the one hand the absence of all accumulation or reproduction on an extended scale is a strange assumption in capitalist conditions, and on the other hand conditions of production do not remain exactly the same in different years (and this is assumed). The assumption is that a social capital of a given magnitude produces the same quantity of commodity-value this year as last, and supplies the same quantum of wants, although the forms of the commodities may change in the process of reproduction. However, as far as accumulation does take place, simple reproduction is always a part of it, and can therefore be studied by itself, and is an actual factor of accumulation. The value of the annual product may decrease, although the quantity of use-values may remain the same; or the value may remain the same although the quantity of the use-values may decrease; or the quantity of value and of the reproduced use-values may decrease simultaneously. All this amounts to reproduction taking place either under more favourable conditions than before or under more difficult ones, which may result in imperfect -- defective -- reproduction. All this can refer only to the quantitative aspect of the various elements of reproduction, not to the role which they play as reproducing capital or as a reproduced revenue in the entire process.

II. THE TWO DEPARTMENTS OF SOCIAL PRODUCTION ^[44]

The total product, and therefore the total production, of society may be divided into two major departments:

I. Means of Production, commodities having a form in which they must, or at least may, pass into productive consumption.

II. Articles of Consumption, commodities having a form in which they pass into the individual consumption of the capitalist and the working-class.

All the various branches of production pertaining to each of these two departments form one single great branch of production, that of the means of production in the one case, and that of articles of consumption in the other. The aggregate capital employed in each of these two branches of production constitutes a separate large departmcnt of the social capital.

In each department the capital consists of two parts:

1) Variable Capital. This capital, so far as its value is concerned.

^[44] Mainly from Manuscript II, the schemes from Manuscript VIII. --F. E.

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is equal to the value of the social labour-power employed in this branch of production; in other words, it is equal to the sum of the wages paid for this labour-power. So far as its substance is concerned, it consists of the labour-power in action, i.e., of the living labour set in motion by this capital-value.

2) Constant Capital. This is the value of all the means of production employed for productive purposes in this branch. These, again, are divided into fixed capital, such as machines, instruments of labour, buildings, labouring animals, etc., and circulating constant capital, such as materials of production: raw and auxiliary materials, semi-finished products, etc.

The value of the total annual product created with the aid of this capital in each of the two departments consists of one portion which represents the constant capital c consumed in the process of production and only transferred to the product in accordance with its value, and of another portion added by the entire labour of the year. This latter portion is divided in turn into the replacement of the advanced variable capital v and the excess over and above it, which forms the surplus-value s. And just as the value of every individual commodity, that of the entire annual product of each department consists of c+v+s.

Portion c of the value, representing the constant capital consumed in production, does not coincide with the value of the constant capital employed in production. True, the materials of production are entirely consumed and their values completely transferred to the product. But only a portion of the employed fixed capital is wholly consumed and its value thus transferred to the product. Another part of the fixed capital, such as machines, buildings, etc., continues to exist and function the same as before, though depreciated to the extent of the annual wear and tear. This persistent portion of the fixed capital does not exist for us, when we consider the value of the product. It is a portion of the capital-value, which exists independently and alongside of this newly produced commodity-value. This was shown previously in the analysis of the value of the product of individual capital (Buch I, Kap. VI, p. 192).[*] However, for the present we must leave aside the method of analysis employed there. We saw in the study of the value of the product of individual capital that the value of which the fixed capital was shorn through wear and tear is transferred to the product created during the time of wear, irrespective of whether or not any portion of this fixed capital is

* English edition: Ch. VIII, pp. 202-04. --Ed.

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replaced in kind during this time out of the value thus transferred. At this point in the study of the total social product and of its value, however, we are compelled, at least for the present, to leave out of account that portion of value which is transferred from the fixed capital to the annual product by wear and tear, unless fixed capital is replaced in kind during the year. In one of the following sections of this chapter we shall discuss this point in particular.

We shall base our study of simple reproduction on the following scheme, in which c stands for constant capital, v for variable capital, and s for surplus-value, assuming the rate of surplus-value ^s/_v to be l00 per cent. The figures may indicate millions of marks, francs, or pounds sterling.

I. Production of Means of Production: ^[¥]

Capital   .    .    .    .    .    .    4,000c + 1,000v = 5,000
Commodity-Product  .    .    4,000c + 1,000v + 1,000s = 6,000,

II. Production of Articles of Consumption:

Capital   .    .    .    .    .    .    2,000c + 500v = 2,500
Commodity-Product  .    .    2,000c + 500v + 500s = 3,000,

Recapitulation: Total annual commodity-product:

 I. 4,000c + 1,000v = 6,000 means of production.
II. 2,000c + 500v = 3,000 articles of consumption.

If we were now to examine the transformations necessary on the basis of simple reproduction, where the entire surplus-value is unproductively consumed, and leave aside for the present the money-circulation that brings them about, we should obtain at the outset three great points of support.

1) The 500v, representing wages of the labourers, and 500s, representing surplus-value of the capitalists, in department II, must be spent for articles of consumption. But their value exists in articles of consumption worth 1,000, held by the capitalists of department II, which replace the advanced 500v and represent the 500s. Consequently the wages and surplus-value of department II are exchanged within this department for products of

^[¥] [-- Transcriber's Note: Beginning here, with the "schemes of reproduction," and continuing throughout the remainder of Volume II, Marx always presented the letters c, v, s, and (v+s) as subscripts, except when he was referring to them in general as individual components of commodities, which became very infrequent, or when he was assigning them an initial quantity for inclusion in his symbolic expressions.

In lieu of trying to reproduce subscripted symbols, I have presented them in a smaller font size (10 point), and retained the "normal" (12 point) font for the other context. The reason for this is that the wide-spread use of subscripts left uneven spacing between lines of the text which were very distracting and reaked havoc on one's ability to concentrate on the material. -- DJR]

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this same department. Thereby articles of consumption to the amount of (500v + 500s) II = 1,000, drop out of the total product.

2) The 1,000v plus 1,000s, of department I must likewise be spent for articles of consumption; in other words, for products of department II. Hence they must be exchanged for the remainder of this product equal to the constant capital part, 2,000c. Department II receives in return an equal quantity of means of production, the product of I, in which the value of 1,000v + 1,000s of I is incorporated. Thereby 2,000 IIc and (1,000v + 1,000s) I, drop out of the calculation.

3) There still remain 4,000 Ic. These consist of means of production which can be used only in department I to replace its consumed constant capital, and are therefore disposed of by mutual exchange between the individual capitalists of I, just as the (500v + 500s) II by an exchange between the labourers and capitalists, or between the individual capitalists of II.

Let this serve for the moment to facilitate the understanding of what follows.

III. EXCHANGE BETWEEN THE TWO DEPARTMENTS
I_(v+s) versus II_c^[45]

We begin with the great exchange between the two classes. (1,000v + 1,000s) I -- these values consisting, in the hands of their producers, of means of production in their natural form, are exchanged for 2,000 IIc, for values consisting of articles of consumption in their bodily form. The capitalist class of II thereby reconverts its constant capital of 2,000 from the form of articles of consumption into that of means of production of articles of consumption, into a form in which it can once more function as a factor of the labour-process and for purposes of self-expansion of value as constant capital-value. On the other hand the equivalent of the labour-power of I (1,000v) and the surplus-value of the capitalists of I (1,000s) are realised thereby in articles of consumption; both of them are converted from their bodily form of means of production into a bodily form in which they can be consumed as revenue.

Now, this mutual exchange is accomplished by means of a circulation of money, which promotes it just as much as it renders its understanding difficult, but which is of decisive im-

^[45] Here Manuscript VIII is resumed. --F. E.

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portance because the variable portion of capital must ever resume the form of money, as money-capital converting itself from the form of money into labour-power. The variable capital must be advanced in the form of money in all branches of production carried on at the entire periphery of society simultaneously alongside each other, regardless of whether they belong to category I or II. The capitalist buys the labour-power before it enters into the process of production, but pays for it only at stipulated times, after it has been expended in the production of use-values. He owns, together with the remainder of the value of the product, also that portion of it which is only an equivalent for the money expended in the payment of labour-power, that portion of the value of the product which represents variable capital. In this portion of value the labourer has already supplied the capitalist with the equivalent of his wages. But it is the reconversion of commodities into money, their sale, which restores to the capitalist his variable capital in the form of money-capital, which he may advance once more for the purchase of labour-power.

In department I, then, the aggregate capitalist has paid �1,000 (I say � solely to indicate that it is value in the form of money), equal to 1,000v, to the labourers for the value of product I already existing as the v-portion, i.e., of the means of production created by them. With these �1,000 the labourers buy articles of consumption of the same value from capitalists II, thereby converting one half of the constant capital II into money; capitalists II, in their turn, buy with these �1,000 means of production, valued at 1,000, from capitalists I; thereby, as far as the latter are concerned, the variable capital-value equal to 1,000v, which, being part of their product, existed in the bodily form of means of production, is thus reconverted into money and can now function anew in the hands of capitalists I as money-capital, which is transformed into labour-power, hence into the most essential element of productive capital. In this way their variable capital flows back to them in the form of money, as a result of the realisation of some of their commodity-capital.

As for the money required to exchange the s-portion of commodity-capital I for the second half of constant capital II, it may be advanced in various ways. In reality this circulation embraces innumerable separate purchases and sales by the individual capitalists of both categories, the money coming in any event from these capitalists, since we have already accounted for the money put into circulation by the labourers. A capitalist of category II can buy, with the money-capital he has besides his

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productive capital, means of production from capitalists of category I, and, vice versa, a capitalist of category I can buy, with money-funds assigned for personal and not for capital expenditure, articles of consumption from capitalists of category II. A certain supply of money, to be used either for the advancement of capital or for the expenditure of revenue must under all circumstances be assumed to exist beside the productive capital in the hands of the capitalists, as we have shown above in parts I and II. Let us assume -- the proportion is wholly immaterial for our purpose -- that one half of the money is advanced by capitalists II in the purchase of means of production for the replacement of their constant capital, while the other half is spent by capitalists I for articles of consumption. In that case department II advances �500 for the purchase of means of production from department I, thereby replacing (inclusive of the above �1,000 coming from the labourers of department I) three-quarters of its constant capital in kind, with the �500 so obtained department I buys articles of consumption from II, thereby completing for one half of the s-portion of its commodity-capital the circulation c--m--c, and thus realising its product in the consumption-fund. By means of this second process the �500 return to the hands of II as money-capital existing beside its productive capital. On the other hand I expends money to the amount of �500 for the purchase of II's articles of consumption in anticipation of the sale of that half of the s-portion of its commodity-capital which is still Iying in store as product. With the same �500 II buys from I means of production, thereby replacing in kind its entire constant capital (1,000 + 500 + 500 = 2,000) while I realises its entire surplus-value in articles of consumption. On the whole, the entire exchange of commodities in the amount of �4,000 would be efiected with a money-circulation of �2,000 which amount is attained only because the entire annual product is described as exchanged in bulk, in a few large lots. The important point here is that II has not only reconverted its constant capital reproduced in the form of articles of consumption, into the form of means of production, but has besides recovered the �500 which it had adyanced to the circulation for the purchase of means of production; and that, similarly, I again possesses not only its variable capital, which it had reproduced in the form of means of production, in money-form, as money-capital once more directly convertible into labour-power, but also the �500 expended in the purchase of articles of consumption in anticipation of the sale of the s-portion of its capital. These �500 flow back to it not be-

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cause of the expenditure incurred, but because of the subsequent sale of a part of its commodity-product incorporating one half of its surplus-value.

In both cases it is not only that the constant capital of II is reconverted from the form of a product into the bodily form of means of production, in which alone it can function as capital; and likewise it is not only that the variable portion of the capital of I is converted into its money-form, and the surplus-value portion of the means of production of I into its consumable form, the form in which it can be used as revenue. It is also that the �500 of money capital, advanced by II in the purchase of means of production prior to selling the corresponding compensating portion of the value of its constant capital -- existing in the form of means of consumption -- flow back to II; and furthermore back to I flow the �500 which were expended anticipando by it for the purchase of articles of consumption. If the money advanced by II at the expense of the constant portion of its commodity-product, and by I at the expense of the surplus-value portion of its commodity-product, flows back to them, this is solely because the one class of capitalists throws �500 into circulation over and above the constant capital existing in the form of commodities in II, and the other class a like amount over and above the surplus-value existing in the form of commodities in I. In the last analysis the two departments have mutually paid one another in full by the exchange of equivalents in the shape of their respective commodities. The money thrown into circulation by them in excess of the values of their commodities, as a means of effecting the exchange of these commodities, returns to each one of them out of the circulation in proportion to the quota which each of the two had thrown into circulation. Neither has grown a farthing richer thereby. II possessed a constant capital of 2,000 in the form of articles of consumption plus 500 in money; now it possesses 2,000 in means of production plus 500 in money, the same as before; in the same way I possesses, as before, a surplus-value of 1,000 (consisting of commodities, means of production, now converted into a consumption-fund) plus 500 in money. The general conclusion is this: Of the money which the industrial capitalists throw into circulation to accomplish their own commodity circulation, whether at the expense of the constant part of the commodity-value or at the expense of the surplus-value existing in the commodities to the extent that it is laid out as revenue, as much returns into the hands of the respective capitalists as was advanced by them for the money-circulation.

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As for the reconversion of the variable capital of class I into the form of money, this capital, after the capitalists of I invested it in wages, exists for them first in the form of commodities in which the labourers delivered it to them. They paid this capital in the form of money to these labourers as the price of their labour-power. To this extent the capitalists have paid forthat constituent part of the value of their commodity-product which is equal to the variable capital expended in the form of money. They are, for this reason, the owners of this portion of the commodity-product as well. But that part of the working-class which is employed by them does not buy the means of production created by it; these labourers buy articles of consumption produced by II. Hence the variable capital advanced by the capitalists of I in the payment of labour-power does not return to them directly. It passes by means of purchases made by the labourers into the hands of the capitalist producers of the commodities necessary for and within the reach of working folks; in other words, it passes into the hands of capitalists II. And not until these expend the money in the purchase of means of production does it return by this circuitous route into the hands of capitalists I.

It follows that, on the basis of simple reproduction, the sum of the values of v+s of the commodity-capital of I (and therefore a corresponding proportional part of the total commodity product of I) must be equal to the constant capital IIc, which is likewise taken as a proportional part of the total commodity-product of department II; or I(v+s)= IIc.

IV. EXCHANGE WITHIN DEPARTMENT II.
NECESSITIES OF LIFE AND ARTICLES OF LUXURY

Of the value of the commodity-product of department II there still remain to be studied the constituents v plus s. This analysis has nothing to do with the most important question which occupies our attention here, namely to what extent the division of the value of every individual capitalist commodity-product into c+v+s -- even if brought about by different forms of appearance -- applies also to the value of the total annual product. This question finds its answers on the one hand in the exchange of I(v+s) for IIc, and on the other hand in the investigation, to be made later, of the reproduction of Ic in the annual product of I. Since II(v+s) exists in the bodily form of articles of consumption; since the variable capital advanced to the labourers in payment

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of their labour-power must generally speaking be spent by them for articles of consumption; and since the s-portion of the value of commodities, on the assumption of simple reproduction, is practically spent as revenue for articles of consumption, it is prima facie evident that the labourers II buy back, with the wages received from the capitalists II, a portion of their own product, corresponding to the amount of the money-value received as wages. Thereby the capitalist class II reconverts the money-capital advanced by it in the payment of labour-power into the form of money. It is quite the same as if it had paid the labourers in mere value tokens. As soon as the labourers would realise these value tokens by the purchase of a part of the commodities produced by them but belonging to the capitalists, these tokens would return into the hands of the capitalists. Only, these tokens do not merely represent value but possess it, in golden or silver embodiment. We shall analyse in greater detail later on this sort of reflux of variable capital advanced in the form of money by means of a process in which the working-class appears as the purchaser and the capitalist class as the seller. Here however a different point is at issue, which must be discussed in connection with this return of the variable capital to its point of departure.

Category II of the annual production of commodities consists of a great variety of branches of production, which may, however, be divided into two great sub-divisions by their products:

a) Articles of consumption, which enter into the consumption of the working-class, and, to the extent that they are necessities of life -- even if frequently different in quality and value from those of the labourers -- also form a portion of the consumption of the capitalist class. For our purposes we may call this entire sub-division consumer necessities, regardless of whether such a product as tobacco is really a consumer necessity from the physiological point of view. It suffices that it is habitually such.

b) Articles of luxury, which enter into the consumption of only the capitalist class and can therefore be exchanged only for spent surplus-value, which never falls to the share of the labourer.

As far as the first category is concerned it is obvious that the variable capital advanced in the production of the commodities belonging in it must flow back in money-form directly to that portion of the capitalist class II (i.e., the capitalists IIa) who have produced these necessities of life. They sell them to their own labourers to the amount of the variable capital paid to them in

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wages. This reflux is direct so far as this entire sub-dlvision a of capitalist class II is concerned, no matter how numerous the transactions may be between the capitalists of the various pertinent branches of industry, by means of which the returning variable capital is distributed pro rata. These are processes of circulation, whose means of circulation are supplied directly by the money expended by the labourers. It is different, however, with sub-division IIb. The entire portion of the value produced in this sub-division, IIb(v+s), exists in the bodily form of articles of luxury, i.e., articles which the labouring class can buy no more than it can buy commodity-value Iv existing in the form of means of production, notwithstanding the fact that both the articles of luxury and the means of production are the products of these labourers. Hence the reflux by which the variable capital advanced in this sub-division returns to the capitalist producers in its money-form cannot be direct but must be mediated, as in the case of Iv.

Let us assume for instance that v = 500 and s = 500, as they did in the case of the entire class II; but that the variable capital and the corresponding surplus-value are distributed as follows:

Sub-division a, Necessities of Life: v = 400; s = 400; hence a quantity of commodities in consumer necessities of the value of 400v + 400s = 800, or IIa (400v + 400s).

Sub-division b, Articles of Luxury: of the value of 100v + 100s = 200, or IIb (100v + 100s).

The labourers of IIb have received 100 in money as payment for their labour-power, or say �100. With this money they buy articles of consumption from capitalists IIa to the same amount. This class of capitalists buys with the same money �100 worth of the IIb commodities, and in this way the variable capital of capitalists IIb flows back to them in the form of money.

In IIa there are available once more 400v in money, in the hands of the capitalists, obtained by exchange with their own labourers. Besides, a fourth of the part of the product representing surplus-value has been transferred to the labourers of IIb, and in exchange IIb (100v) have been received in the form of articles of luxury.

Now, assuming that the capitalists of IIa and IIb divide the expenditure of their revenue in the same proportion between necessities of life and luxuries -- three-fifths for necessities for instance and two-fifths for luxurieg -- the capitalists of sub-class IIa will spend three-fifths of their revenue from surplus-value, amounting to 400s, or 240, for their own products, necessities of life, and two-fifths, or 160, for articles of luxury. The capitalists

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of sub-class IIb will divide their surplus-value of 100s in the same way: three-fifths, or 60, for necessities, and two-fifths, or 40, for articles of luxury, the latter being produced and exchanged in their own sub-class.

The 160 in articles of luxury received by (IIa)s pass into the hands of the IIa capitalists in the following manner: As we have seen, 100 of the (IIa) 400s were exchanged in the form of necessities of life for an equal amount of (IIb)v, which exists as articles of luxury, and another 60, consisting of necessities of life, for (IIb) 60s, consisting of luxuries. The total calculation then stands as follows:

IIa: 400v + 400s;   IIb: 100v + 100s.

1) 400v (a) are consumed by the labourers of IIa, a part of whose product (necessities of life) they form The labourers buy them from the capitalist producers of their own sub-division. These capitalists thereby recover �400 in money, which is the value of their variable capital of 400 paid by them to these same labourers as wages. They can now once more buy labour-power with it.

2) A part of the 400s (a), equal to the 100v (b), one-fourth of the surplus-value (a), is realised in luxuries in the following way: The labourers (b) received from the capitalists of their sub-division (b) �100 in wages. With this amount they buy one-fourth of the surplus-value (a), i.e., commodities consisting of necessities of life. With this money the capitalists of (a) buy articles of luxury to the same amount, which equals 100v (b), or one half of the entire output of luxuries. In this way the b capitalists get back their variable capital in the form of money and are enabled to resume reproduction by again purchasing labour-power, since the entire constant capital of the whole category II has already been replaced by the exchange of I(v+s) for IIc. The labour-power of the luxury workers is therefore saleable anew only because the part of their own product created as an equivalent for their wages is drawn by capitalists IIa into their consumption-fund, is turned into money. (The same applies to the sale of the labour-power of I, since the IIc for which I(v+s) is exchanged, consists of both articles of luxury and necessities of life, and that which is renewed by means of I(v+s) constitutes the means of production of both luxuries and necessities.)

3) We now come to the exchange between a and b, which is merely exchange between the capitalists of the two sub-divisions. So far we have disposed of the variable capital (400v) and

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part of the surplus-value (100s) in a, and the variable capital (100v) in b. We have furthermore assumed that the average proportion of the expenditure of the capitalist revenue was in both classes two-fifths for luxuries and three-fifths for necessities. Apart from the 100 already expended for luxuries, the entire sub-division a stiII has to be aIIotted 60 for luxuries, and b has proportionately to be aIIotted 40.

(IIa)s is then divided into 240 for necessities and 160 for luxuries, or 240 + 160 = 400s (IIa).

(IIb)s is divided into 60 for necessities and 40 for luxuries; 60 + 40 = 100s (IIb). The last 40 are consumed by this class out of its own product (two-fifths of its surplus-value); the 60 in necessities are obtained by this class through the exchange of 60 of its surplus-value for 60s (a).

We have, then, for the entire capitalist class II the foIIowing (v plus s in sub-division [al consisting of necessities, in [b] of luxuries):

IIa (400v + 400s) + IIb (100v + 100s) = 1,000; by this movement there is thus realised: 500v (a+b) [realised in 400v (a) and 100s (a)] + 500s (a+b) [realised in 300s (a) + 100v (b) + 100s (b)] = 1,000.

For a and b, each considered by itself, we obtain the foIIowing realisation:

              v                                       s
a)     ^{_______      _________________________}   = 800
         400v(a) + 240s (a) + 100v (b)+ 60s (b) 

               v                         s                                   200 
b)     ^{_______      ______________                =  _____}
         100v(a) + 60s (a) + 40s (b) .  .  .  .  .   1,000.

If, for the sake of simplicity, we assume the same proportion between the variable and constant capital (which, by the way, is not at aII necessary), we obtain for 400v (a) a constant capital of 1,600, and for 100v (b) a constant capital of 400. We then have the foIIowing two sub-divisions, a and b, in II:

IIa) 1,600c + 400v + 400s = 2,400 
IIb)    400c + 100v + 100s =    600,

adding up to 2,000c + 500v + 500s = 3,000

Accordingly 1,600 of the 2,000 IIc in articles of consumption which are exchanged for 2,000 I(v+s), are exchanged for means

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of production of necessities of life and 400 for means of production of luxuries.

The 2,000 I(v+s) would therefore break up into (800v + 800s) I for a, equal to 1,600 means of production of necessities of life, and (200v + 200s) I for b, equal to 400 means of production of luxuries.

A considerable part of the instruments of labour as such, as weII as of the raw and auxiliary materials, etc., is the same for both departments. But so far as the exchange of the various portions of value of the total product I(v+s) is concerned, such a division would be whoIIy immaterial. Both the above 800v of I and the 200v of I are realised because the wages are spent for articles of consumption 1,000 IIc; hence the money-capital advanced for this purpose is distributed evenly on its return among the capitalist producers of I, their advanced variable capital is replaced pro rata in money. On the other hand, so far as the realisation of the 1,000 Is is concerned, the capitalists wiII here like wise draw uniformly (in proportion to the magnitude of their s) 600 IIa and 400 IIb in means of consumption out of the entire second half of IIc equal to 1,000; consequently those who replace the constant capital of IIa wiII draw.

480 (three-fifths) out of 600c (IIa) and 320 (two-fifths) out of 400c (IIb), a total of 800; those who replace the constant capital of IIb wiII draw.

120 (three-fifths) out of 600c (IIa) and 80 (two-fifths) out of 400c (IIb), which equals 200. Grand total, 1,000.

What is arbitrary here is the ratio of the variable to the constant capital of both I and II and so is the identity of this ratio for I and II and their sub-divisions. As for this identity, it has been assumed here merely for the sake of simplification, and it would not alter in any way the conditions of the problem and its solution if we were to assume different proportions. However, the necessary result of aII this, on the assumption of simple reproduction, is the foIIowing:

1) That the new value created by the labour of one year (divisible into v+s) in the bodily form of means of production is equal to the value of the constant capital c contained in the value of the product created by the other part of the annual labour and reproduced in the form of articles of consumption. If it were smaIIer than IIc, it would be impossible for II to replace its constant capital entirely; if it were greater, a surplus would remain unused. In either case, the assumption of simple reproduction would be violated.

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2) That in the case of annual product which is reproduced in the form of articles of consumption, the variable capital v advanced in the form of money can be realised by its recipients inasmuch as they are labourers producing luxuries, only in that portion of the necessities of life which embodies for their capitalist producers prima facie their surplus-value; hence that v, laid out in the production of luxuries, is equal in value to a corresponding portion of s produced in the form of necessities of life, and hence must be smaller than the whole of this s, namely (IIa), and that the variable capital advanced by the capitalist producers of luxuries returns to them in the form of money only by means of the realisation of that v in this portion of s. This phenomenon is quite analogous to the realisation of I(v+s) in IIc, except that in the second case (IIb)v realises itself in a part of (IIa)s of the same value. These proportions remain qualitatively determinant in every distribution of the total annual product, since it actually enters into the process of the annual reproduction brought about by circulation. I(v+s) can be realised only in IIc, just as IIc can only be renewed in function as A component part of productive capital by means of this realisation in the same way, (IIb)v can be realised only in a portion of (IIa)s and (IIb)v can only thus be reconverted into the form of money-capital. It goes without saying that this applies only to the extent that it all is really a result of the process of reproduction itself, i.e., to the extent that the capitalists of IIb, for instance, do not obtain money-capital for v on credit from others. Quantitatively however the exchanges of the various portions of the annual product can take place in the proportions indicated above only so long as the scale and value-relations in production remain stationary and so long as these strict relations are not altered by foreign commerce.

Now, if we were to say after the manner of Adam Smith that I(v+s) resolve themselves into IIc and IIc resolves itself into I(v+s) or, as he used to say more frequently and still more absurdly, I(v+s) constitute component parts of the price (or value in exchange, as he has it) of IIc and IIc constitutes the entire component part of the value of I(v+s) then one could and should likewise say that (IIb)v resolves itself into (IIa)s, or (IIa)s into (IIb)v, or (IIb)v forms a component part of the surplus-value of IIa, and, vice versa, the surplus-value thus resolves itself into wages, or into variable capital, and the variable capital forms a component part of the surplus-value. This absurdity is indeed found in Adam Smith, since with him wages are de-

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termined by the value of the necessities of life, and these commodity-values in their turn by the value of the wages (variable capital) and surplus-value contained in them. He is so absorbed in the fractional parts into which the value-product of one working-day is divided on the basis of capitalism -- namely into v plus s -- that he quite forgets that it is immaterial in simple commodity exchange whether the equivalents existing in various bodily forms consist of paid or unpaid labour, since their production costs in either case the same amount of labour; and that it is also immaterial whether the commodity of A is a means of production and that of B an article of consumption, and whether one commodity has to serve as a component part of capital after its sale while another passes into the consumption-fund and, secundum Adam, is consumed as revenue. The use to which the individual buyer puts his commodity does not come within the scope of commodity-exchange, the sphere of circulation, and does not affect the value of the commodity. This is in no wise altered by the fact that in the analysis of the circulation of the total annual social product, the definite use for which it is intended, the factor of consumption of the various component parts of that product, must be taken into consideration.

In the exchange established above of (IIb)v for a portion of (IIa)s of the same value, and in the further exchanges between (IIa)s and (IIb)s it is by no means assumed that either the individual capitalists of IIa and IIb or their respective totalities divide their surplus-value in the same proportion between necessary articles of consumption and articles of luxury. The one may spend more on this consumption, the other more on that. On the basis of simple reproduction it is merely assumed that a sum of values equal to the entire surplus-value is realised in the consumption-fund. The limits are thus given. Within each department the one may spend more in a, the other in b. But this may compensate itself mutually, so that the capitalist groups of a and b, taken as a whole, each participate in the same proportion in both. The value-relations -- the proportional shares of the two kinds of producers, a and b, in the total value of product II -- consequently also a definite quantitative relation between the branches of production supplying those products -- are however necessarily given in each concrete case; only the proportion chosen as an illustration is a hypothetical one. It would not alter the qualitative aspects if another illustration were selected; only the quantitative determinations would be altered. But if on ac-

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count of any circumstances there arises an actual change in the relative magnitude of a and b, the conditions of simple reproduction would also change accordingly.

Since (IIb)v is realised in an equivalent part of (IIa)s, it follows that in proportion as the luxury part of the annual product grows, as therefore an increasing share of the labour-power is absorbed in the production of luxuries, the reconversion of the variable capital advanced in (IIb)v into money-capital functioning anew as the money-form of the variable capital, and thereby the existence and reproduction of the part of the working-class employed in IIb -- the supply to them of consumer necessities -- depends upon the prodigality of the capitalist class, upon the exchange of a considerable portion of their surplus-value for articles of luxury.

Every crisis at once lessens the consumption of luxuries. It retards, delays the reconversion of (IIb)v into money-capital, permitting it only partially and thus throwing a certain number of the labourers employed in the production of luxuries out of work, while on the other hand it thus clogs the sale of consumer necessities and reduces it. And this without mentioning the unproductive labourers who are dismissed at the same time, labourers who receive for their services a portion of the capitalists' luxury expense fund (these labourers are themselves pro tanto luxuries), and who take part to a very considerable extent in the consumption of the necessities of life, etc. The reverse takes place in periods of prosperity, particularly during the times of bogus prosperity, in which the relative value of money, expressed in commodities, decreases also for other reasons (without any actual revolution in values), so that the prices of commodities rise independently of their own values. It is not alone the consumption of necessities of life which increases. The working-class (now actively reinforced by its entire reserve army) also enjoys momentarily articles of luxury ordinarily beyond its reach, and those articles which at other times constitute for the greater part consumer "necessities" only for the capitalist class. This on its part calls forth a rise in prices.

It is sheer tautology to say that crises are caused by the scarcity of effective consumption, or of effective consumers. The capitalist system does not know any other modes of consumption than effective ones, except that of sub forma pauperis or of the swindler. That commodities are unsaleable means only that no effective purchasers have been found for them, i.e., consumers (since commodities are bought in the final analysis for productive or in-

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dividual consumption). But if one were to attempt to give this tautology the semblance of a profounder justification by saying that the working-class receives too small a portion of its own product and the evil would be remedied as soon as it receives a larger share of it and its wages increase in consequence, one could only remark that crises are always prepared by precisely a period in which wages rise generally and the working-class actually gets a larger share of that part of the annual product which is intended for consumption. From the point of view of these advocates of sound and "simple" (!) common sense, such a period should rather remove the crisis. It appears, then, that capitalist production comprises conditions independent of good or bad will, conditions which permit the working-class to enjoy that relative prosperity only momentarily, and at that always only as the harbinger of a coming crisis.[47]

We saw a while ago that the proportion between the production of consumer necessities and that of luxuries requires the division of II(v+s) between IIa and IIb, and thus of IIc between (IIa)c and (IIb)c. Hence this division affects the character and the quantitative relations of production to their very roots, and is an essential determining factor of its general structure.

Simple reproduction is essentially directed toward consumption as an end, although the grabbing of surplus-value appears as the compelling motive of the individual capitalists; but surplus-value, whatever its relative magnitude may be, is after all supposed to serve here only for the individual consumption of the capitalist.

As simple reproduction is a part, and the most important one at that, of all annual reproduction on an extended scale, this motive remains as an accompaniment of and contrast to the self-enrichment motive as such. In reality the matter is more complicated, because partners in the loot -- the surplus-value of the capitalist -- figure as consumers independent of him.

V. THE MEDIATION OF EXCHANGE
BY THE CIRCULATION OF MONEY

So far as we have analysed circulation up to the present, it proceeded between the various classes of producers as indicated in the following scheme:

^[47] Ad notum for possible followers of the Rodbertian theory of crises. --F. E.
[Transcriber's Note: There is no footnote number "46" in the editions prepared by either Progress Publishers or International Publishers. -- DJR]

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1) Between class I and class II:

 I.  4,000c + 1,000v + 1,000s
                   ^{______________} 
II. .  .  .  .  .           2,000c        .  .  .  .  . + 500v + 500s

This disposes of the circulation of IIc equal to 2,000, which is exchanged for I (1,000v + 1,000s).

Leaving aside for the present the 4,000 Ic there still remains the circulation of v+s within class II. Now II(v+s) is divided between the sub-classes IIa and IIb in the following manner:

2) II.  500v + 500s = a (400v + 400s) + b (100v + 100s).

The 400v (a) circulates within its own sub-class; the labourers paid with it buy from their employers, the capitalists IIa, necessary means of subsistence produced by themselves.

Since the capitalists of both sub-classes spend three-fifths of their surplus-value in products of IIa (necessities) and two-fifths in products of IIb (luxuries), the three-fifths of the surplus-value of a, or 240, are consumed within the sub-class. IIa itself; likewise, two-fifths of the surplus-value of b (produced and existing in the form of articles of luxury), within the sub-class IIb.

There remains to be exchanged between IIa and IIb: On the side of IIa: 160s;

On the side of IIb: 100v + 60s. These cancel each other. With their 100, received in the form of money wages, the labourers of IIb buy necessities of life in that amount from IIa. The IIb capitalists likewise buy necessities from IIa to the amount of three-fifths of their surplus-value, or 60. The IIa capitalists thus obtain the money required for investing, as above assumed, two-fifths of their surplus-value, or 160s, in luxuries produced by IIb (100v held by the IIb capitalists as a product replacing the wages paid by them, and 60s). The scheme for this is therefore:

3) IIa. [400v]   [240s] +      160s
                                    ^__________ 
       b.   .    .    .    .    .    100v + 60s   + [40s],

the bracketed items circulating and being consumed only within their own sub-class.

The direct reflux of the money-capital advanced in variable capital, which takes place only in the case of the capitalist department IIa which produces necessities of life, is but an expression, modified by special conditions, of the previously mentioned general law that money advanced to the circulation by producers of commodities returns to them in the normal course

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of commodity circulation. From this it incidentally follows that if any money-capitalist at all stands behind the producer of commodities and advances to the industrial capitalist money-capital (in the strictest meaning of the word, i.e., capital-value in the form of money), the real point of reflux for this money is the pocket of this money-capitalist. Thus the mass of the circulating money belongs to that department of money-capital which is organised and concentrated in the form of banks, etc., although the money circulates more or less through all hands. The way in which this department advances its capital necessitates the continual final reflux to it in the form of money, although this is once again brought about by the reconversion of the industrial capital into money-capital.

The circulation of commodities always requires two things: Commodities which are thrown into circulation and money which is likewise thrown into it. "The process of circulation . . . does not, like direct barter of products, become extinguished upon the use-values changing places and hands. The money does not vanish on dropping out of the circuit of the metamorphosis of a given commodity. It is constantly being precipitated into new places in the arena of circulation vacated by other commodities," etc. (Buch I, Kap. III, p. 92).[*]

For instance in the circulation between IIc and I(v+s) we assumed that II had advanced �500. in money for it. In the innumerable processes of circulation, into which the circulation between large social groups of producers resolves itself, representatives of the various groups will at various times be the first to appear as buyers, and hence throw money into circulation. Quite apart from particular circumstances, this is necessitated by the difference, if nothing else, in the periods of production, and thus of the turnovers, of the various commodity-capitals. So with these �500 II buys from I means of production of the same value and I buys from II articles of consumption valued at �500. Hence the money flows back to II, but this department does not in any way grow richer by this reflux. It had first thrown �500 in money into circulation and drew commodities of the same value out of it; then it sells �500 worth of commodities and draws the same amount of money out of circulation; thus the �500 flow back to it. As a matter of fact, II has thrown into circulation �500 in money and �500 in commodities, which is equal to �1,000. It draws out of the circulation �500 in commoditles and �500 in

* English edition: Ch. III, pp. 112-13. --Ed.

page

money. The circulation requires for the handling of �500 in I commodities and �500 in II commodities only �500 in money; hence whoever advanced the money in the purchase of commodities from other producers recovers it when selling his own. Consequently if I had at first bought commodities from II for �500, and later sold to II commodities of the value of �500, these �500 would have returned to I instead of to II.

In class I the money invested in wages, i.e., the variable capital advanced in the form of money, does not return directly in this form but indirectly, by a detour. But in II the �500 of wages return directly from the labourers to the capitalists, and this return is always direct in the case where purchase and sale take place repeatedly between the same persons in such a way that they are acting alternately as buyers and sellers of commodities. The capitalist of II pays for the labour-power in money; he thereby incorporates labour-power in his capital and assumes the role of an industrial capitalist in relation to his labourers as wage-earners, but does so only by means of this act of circulation, which is for him merely a conversion of money-capital into productive capital. Thereupon the labourer, who in the first instance was a seller, a dealer in his own labour-power, appears in the second instance as a buyer, a possessor of money, in relation to the capitalist, who now acts as a seller of commodities. In this way the capitalist recovers the money invested by him in wages. As the sale of these commodities does not imply cheating, etc., but is an exchange of equivalents in commodities and money, it is not a process by which the capitalist enriches himself. He does not pay the labourer twice, first in money and then in commodities. His money returns to him as soon as the labourer exchanges it for his commodities.

However, the money-capital converted into variable capital, i.e., the money advanced for wages, plays a prominent role in the circulation of money itself, since the labourers must live from hand to mouth and cannot give the industrial capitalists credit for any length of time. For this reason variable capital must be advanced in the form of money simultaneously at innumerable territorially different points in society at certain short intervals, such as a week, etc. -- in periods of time that repeat themselves rather quickly (and the shorter these periods, the smaller relatively is the total amount of money thrown at one time into circulation through this channel) -- whatever the various periods of turnover of the capitals in the different branches of industry. In every country with a capitalist production the money-capital so

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advanced constitutes a relatively decisive share of the total circulation, the more so as the same money, before its reflux to its point of departure, passes through the most diverse channels and functions as a medium of circulation for countless other businesses.

Now let us consider the circulation between I(v+s) and IIc from a different angle.

Capitalists I advance �1,000 in the payment of wages. With this money the labourers buy �1,000 worth of means of subsistence from capitalists II. These in turn buy for the same money means of production from capitalists I. Capitalists I thus get back their variable capital in the form of money, while capitalists II have reconverted one half of their constant capital from the form of commodity-capital into that of productive capital. Capitalists II advance another �500 in money to get means of production from I. The capitalists I spend this money on articles of consumption from II. These �500 thus return to capitalists II. They advance this amount again in order to reconvert the last quarter of their constant capital, converted into commodities into its productive bodily form. This money flows back to I and once more withdraws articles of consumption of the same amount from II. Thus the �500 return to II. The capitalists II are now as before in possession of �500 in money and �2,000 in constant capital, the latter having been newly converted from the form of commodity-capital into that of productive capital. By means of �1,500 a quantity of commodities worth �5,000 has been circulated. Namely: 1) I pays �1,000 to his labourers for their labour-power of the same value; 2) With these same �1,000 the labourers buy means of subsistence from II; 3) With the same money II buys means of production from I, thereby restoring to I variable capital to the amount of �1,000 in the form of money; 4) II buys �500 worth of means of production from I; 5) With the same �500 I buys articles of consumption from II; 6) With the same �500 II buys means of production from I; 7) With the same �500 I buys means of subsistence from II. Thus �500 have returned to II, which had thrown them into circulation besides its �2,000 in commodities and for which it did not withdraw from circulation any equivalent in commodities.[48]

The exchange therefore takes the following course:

^[48] This presentation differs somewhat from that given on p. 394 [present volume, pp. 404-05]. There I likewise throws an independent amount of �500 into circulation. Here II alone supplies the additional money for the circulation. But this does not alter the final result. --F. E.

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1) I pays �1,000 in money for labour-power, hence for commodities equal to �1,000.

2) The labourers buy with their wages amounting in money to �1,000 articles of consumption from II; hence commodities equal to �1,000.

3) With the �1,000 received from the labourers II buys means of production of the same value from I; hence commodities equal to �1,000.

In this way the �1,000 have returned to I as the money-form of its variable capital.

4) II buys �500 worth of means of production from I, hence commodities equal to �500.

5) With the same �500 I buys articles of consumption from II; hence commodities equal to �500.

6) With the same �500 II buys means of production from I; hence commodities equal to �500.

7) With the same �500 I buys articles of consumption from II; hence commodities equal to �500.

Total amount of commodity-values exchanged: �5,000.

The �500 advanced by II for the purchase have returned to it.

The result is as follows:

1) I possesses variable capital in the form of money to the amount of �1,000, which it originally advanced to the circulation. It furthermore expended �1,000 for its individual consumption, in the shape of its own products; i.e., it has spent the money which it had received for the sale of means of production to the amount of �1,000.

On the other hand the bodily form into which the variable capital existing in the form of money must be transformed, i.e., labour-power, has been maintained, reproduced and again made available by consumption as the sole article of trade of its owners, which they must sell in order to live. The relation of wage-labourers and capitalists has likewise been reproduced.

2) The constant capital of II is replaced in kind, and the �500 advanced by the same II to the circulation have returned to it.

As for the labourers I, the circulation is the simple one of C--M--C: see [¥] [¥] (labour-power)-- (�1,000, money-form of variable capital I)-- (necessities of life to the amount of �1,000); these �1,000 convert into money to the same amount of value the constant capital II existing in the form of commodities, of means of subsistence.

^[¥] [Transcribers Note for those without a graphic browser: In the text the expression is "C (labour-power)--M (�1,000, money-form of variable capital I)--C (necessities of life to the amount of �1,000)" and includes the following symbolic notation: above the first C is a small bowl- or crater-like arc with the number 1 placed above it; the M has the same symbol with a 2; and the last C, a 3. -- DJR]

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As for the capitalists II, the process is C--M, the transformation of a portion of their commodity-product into the money-form, from which it is reconverted into the constituents of productive capital, namely into a portion of the means of production required by them.

In the money advance (�500) made by capitalists II for the purchase of the other parts of the means of production, the money-form of that portion of IIc which exists as yet in the form of commodities (articles of consumption) is anticipated; in the act M--C, in which II buys with M, and C is sold by I, the money (II) is converted into a portion of the productive capiial, while C (I) passes through the act C--M, changes into money, which however does not represent any component part of capital-value for I, but surplus-value converted into money and expended solely for articles of consumption.

In the circuit M--C . . . P . . . C'--M', the first act, M--C, is that of one capitalist, the last, C'--M' (or part of it), is that of another; whether the C, by which M is converted into productive capital, represents a component of constant capital, of variable capital, or surplus-value for the seller of C (who exchanges this C for money), is wholly immaterial for the commodity circulation itself.

Class I, so far as concerns the component v+s of its commodity product, draws more money out of the circulation than it has thrown in. In the first place, the �1,000 of variable capital return to it; in the second place, it sells means of production worth �500 (see above, exchange No. 4); one half of its surplus-value is thus turned into money; then (exchange No. 6) it sells once more �500 worth of means of production, the second half of its surplus-value, and thus the entire surplus-value is withdrawn from circulation in the shape of money. Hence in succession: 1) variable capital reconverted into money, equal to �1,000; 2) one half of the surplus-value turned into money, equal to �500; 3) the other half of the surplus-value, equal to �500; altogether 1,000v + 1,000s turned into money, equal to �2,000. Although I threw only �1,000 into circulation (aside from those exchanges which promote the reproduction of Ic and which we shall have to analyse later), it has withdrawn double that amount from it. Of course s passes into other hands, (II), as soon as it has been converted into money, by being spent for articles of consumption. The capitalists of I withdrew only as much in money as they threw into it in value in the form of commodities; the fact that this value is surplus-value, i.e., that it does not cost

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the capitalists anything, does not alter the value of these commodities in any way; so far as the exchange of values in commodity circulation is concerned, that fact is of no consequence at all. The existence of surplus-value in money is of course transient, the same as all other forms which the advanced capital assumes in its metamorphoses. It lasts no longer than the interval between the conversion of commodities I into money and the subsequent conversion of the money I into commodities II.

If the turnovers had been assumed to be shorter -- or, from the point of view of the simple circulation of commodities, the circulation of money more rapid -- even less money would be ample to circulate the exchanged commodity-values; the amount is always determined -- if the number of successive exchanges is given -- by the sum of the prices, or the sum of values, of the circulating commodities. It is immaterial in what proportion this sum of values consists of surplus-value on the one hand, and of capital-value on the other.

If the wages of I, in our illustration, were paid four times per year, we should have 4 times 250, or 1,000. Hence �250 in money would suffice for the circulation Iv -- l/2 IIc, and for that between the variable capital Iv and the labour-power I. Likewise, if the circulation between Is and IIc were to take place in four turnovers, it would require only �250, or in the aggregate a sum of money, or a money-capital, of �500 for the circulation of commodities amounting to �5,000. In that case the surplus-value would be converted into money four times successively, one-quarter each time, instead of twice successively, one half each time.

If I instead of II should act as buyer in exchange No. 4 and expend �500 for articles of consumption of the same value, II would buy means of production with the same �500 in exchange No. 5; 6) I buys articles of consumption with the same �500; 7) II buys means of production with the same �500 so that the �500 finally return to I, the same as before to II. The surplus-value is here converted into money by means of the money spent by the capitalist producers themselves for their individual consumption. This money represents the anticipated revenue, the anticipated receipts from the surplus-value contained in the commodities still to be sold. The surplus-value is not converted into money by the reflux of the �500; for aside from �1,000 in the form of commodities Iv, I threw �500 in money into circulation at the close of exchange No. 4, and this was additional money, so far as we know, and not the proceeds from the sale of

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commodities. If this money flows back to I, I merely gets back its additional money, and does not thereby convert its surplus-value into money. The conversion of the surplus-value I into money takes place only by the sale of the commodities Is, in which it is incorporated, and lasts each time only until the money obtamed by the sale of the commodities is expended anew in the purchase of articles of consumption.

With additional money (�500) I buys articles of consumption from II; this money was spent by I, which holds its equivalent in II commodities; the money returns for the first time by the purchase from I by II of commodities to the amount of �500; in other words, it returns as the equivalent of the commodities sold by I, but these commodities do not cost I anything, they constitute surplus-value for I, and thus the money thrown into circulation by this very department turns its own surplus-value into money. On buying for the second time (No. 6) I has likewise obtained its equivalent in II commodities. Take it, now, that II does not buy (No. 7) means of production from I. In that case I would have actually paid �1,000 for articles of consumption, thereby consuming its entire surplus-value as revenue; namely, 500 in its own I commodities (means of production) and 500 in money: on the other hand, it would still have �500 in its own commodities (means of production) in stock, and would have got rid of �500 in money.

On the contrary II would have reconverted three-fourths of its constant capital from the form of commodity-capital into that of productive capital; but one-fourth (�500) would be held by it in the form of money-capital, actually in the form of idle money, or of money which has suspended its function and is held in abeyance. Should this state of affairs last for any length of time, II would have to cut down its scale of reproduction by one-fourth.

However the 500 in means of production, which I has on its hands, are not surplus-value existing in the form of commodities, they occupy the place of the �500 advanced in money, which I possessed aside from its �1,000 of surplus-value in commodity-form. In the form of money, they are always convertible; as commodities they are momentarily unsaleable. So much is evident: that simple reproduction -- in which every element of productive capital must be replaced in both II and I -- remains possible in this case only if the 500 golden birds, which I first sent flying, return to it.

If a capitalist (we have only industrial capitalists still to

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deal with here, who are the representatives of all others) spends money for articles of consumption, he is through with it, it goes the way of all flesh. It can flow back to him only if he fishes it out of circulation in exchange for commodities, i.e., for his commodity-capital. As the value of his entire annual commodity-product (his commodity-capital), so that of every one of its elements, i.e., the value of every individual commodity, is divisible, as far as he is concerned, into constant capital-value, variable capital-value, and surplus-value. The conversion into money of every individual commodity (as elements constituting the commodity-product) is consequently at the same time such a conversion of a certain portion of the surplus-value contained in the entire commodity-product. In this case, then, it is literally true that the capitalist himself threw the money into circulation -- when he spent it on articles of consumption -- by which his surplus-value is converted into money, or realised. Of course it is not a question of the identical coins but of a certain amount of hard cash equal to the one (or to a portion of the one) which he had previously thrown into circulation to satisfy his personal wants.

In practice this occurs in two ways: If the business has just been opened, in the current year, it will take quite a while, at least a few months, before the capitalist is able to use any portion of the receipts of his business for his personal consumption. But for all that he does not suspend his consumption for a single moment. He advances to himself (immaterial whether out of his own pocket or by means of credit from the pocket of somebody else) money in anticipation of surplus-value still to be snatched by him; but in doing so he also advances a circulating medium for the realisation of surplus-value to be realised later. If, on the contrary, the business has been running regularly for a longer period payments and receipts are distributed over different terms throughout the year. But one thing continues uninterruptedly, namely, the consumption of the capitalist, which anticipates, and whose volume is computed on a definite proportion of, the customary or estimated revenue. With every portion of commodities sold, a portion of the surplus-value to be produced annually is also realised. But if during the entire year only as much of the produced commodities is sold as is required to replace the constant and variable capital-values contained in them, or if prices were to fall to such an extent that only the advanced capital-value contained in the entire annual commodity-product should be realised on its sale, then the anticipatory character of the expend-

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iture of money in expectation of future surplus-value would be clearly revealed. If our capitalist fails, his creditors and the court investigate whether his anticipated private expenditures were in proper proportion to the volume of his business and to the receipt of surplus-value usually or normally corresponding to it.

So far as the entire capitalist class is concerned, the proposition that it must itself throw into circulation the money required for the realisation of its surplus-value (correspondingly also for the circulation of its capital, constant and variable) not only fails to appear paradoxical, but stands forth as a necessary condition of the entire mechanism. For there are here only two classes: the working-class disposing only of its labour-power, and the capitalist class, which has a monopoly of the social means of production and money. It would rather be a paradox if the working-class were to advance in the first instance from its own resources the money required for the realisation of the surplus-value contained in the commodities. But the individual capitalist makes this advance only by acting as a buyer, expending money in the purchase of articles of consumption or advancing money in the purchase of elements of his productive capital, whether of labour-power or means of production. He never parts with his money unless he gets an equivalent for it. He advances money to the circulation only in the same way as he advances commodities to it. He acts in both instances as the initial point of their circulation.

The actual process is obscured by two circumstances:

1) The appearance in the process of circulation of industrial capital of merchant's capital (the first form of which is always money, since the merchant as such does not create any "product" or "commodity") and of money-capital as an object of manipulation by a special kind of capitalists.

2) The division of surplus-value -- which must always be first in the hands of the industrial capitalist -- into various categories, as vehicles of which there appear, aside from the industrial capitalist, the landlord (for ground-rent), the usurer (for interest), etc., furthermore the government and its employees, rentiers, etc. These gentry appear as buyers vis-à-vis the industrial capitalist and to that extent as converters of his commodities into money; they too throw "money" pro parte into the circulation and he gets it from them. But it is always forgotten from what source they derived it originally, and continue deriving it ever anew.

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VI. THE CONSTANT CAPITAL
0F DEPARTMENT I ^[48a]

It remains for us to analyse the constant capital of department I, amounting to 4,000c. This value is equal to the value -- appearing anew in the commodity-product I -- of the means of production consumed in the creation of this quantity of commodities. This re-appearing value, which was not produced in the process of production of I, but entered into it during the preceding year as constant value, as the given value of its means of production, exists now in the entire part of commodity mass I not absorbed by category II. And the value of this quantity of commodities thus left in the hands of the I capitalists equals two-thirds of the value of their entire annual commodity-product. In the case of the individual capitalist producing some particular means of production we could say: He sells his commodity-product; he converts it into money. By converting it into money he has also reconverted into money the constant portion of the value of his product. With this portion of value converted into money he then buys his means of production once more from other sellers of commodities or transforms the constant portion of the value of his product into a bodily form in which it can resume its function of productive constant capital. But now this assumption becomes impossible. The capitalist class of I comprises the totality of the capitalists producing means of production. Besides, the commodity-product of 4,000, which is left on their hands, is a portion of the social product which cannot be exchanged for any other, because no such other portion of the annual product remains. With the exception of these 4,000, all the remainder has been disposed of. One portion has been absorbed by the social consumption-fund, and another portion has to replace the constant capital of department II, which has already exchanged everything it could dispose of in an exchange with department I.

The difficulty is solved very easily if we remember that the entire commodity-product I in its bodily form consists of means of production, i.e., of the material elements of the constant capital itself. We meet here the same phenomenon which we witnessed before under II, only in a different aspect. In the case of II the entire commodity-product consisted of articles of consumption. Hence one portion of it, measured by the wages plus surplus-value contained in this product, could be consumed by its

^[48a] From here, Manuscript II. --F. E.

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own producers. Here, in the case of I, the entire product consists of means of production, of buildings, machinery, vessels, raw and auxiliary materials, etc. One portion of them, namely that replacing the constant capital employed in this sphere, can therefore immediately function anew in its bodily form as a component of the productive capital. So far as it goes into circulation, it circulates within class I. In II a part of the commodity-product is individually consumed in kind by its own producers while in I a portion of the product is productively consumed in kind by its capitalist producers.

In the part of the commodity-product I equal to 4,000c the constant capital-value consumed in this category re-appears, and does so in a bodily form in which it can immediately resume its function of productive constant capital. In II that portion of the commodity-product of 3,000 whose value is equal to the wages plus the surplus-value (equal to 1,000) passes directly into the individual consumption of the capitalists and labourers of II, while on the other hand the, constant capital-value of this commodity-product (equal to 2,000) cannot re-enter the productive consumption of the II capitalists but must be replaced by exchange with I.

In I, on the contrary, that portion of its commodity-product of 6,000 whose value is equal to the wages plus the surplus-value (equal to 2,000) does not pass into the individual consumption of its producers, and cannot do so on account of its bodily form. It must first be exchanged with II. Contrariwise the constant portion of the value of this product, equal to 4,000, exists in a bodily form in which -- taking the capitalist class I as a whole -- it can immediately resume its function of constant capital of that class. In other words, the entire product of department I consists of use-values which, on account of their bodily form, can under a capitalist mode of production serve only as elements of constant capital. Hence one-third (2,000) of this product of 6,000 replaces the constant capital of department II, and the other two-thirds the constant capital of department I.

The constant capital I consists of a great number of different groups of capital invested in the various branches of production of means of production, so much in iron works, so much in coal-mines, etc. Every one of these groups of capital, or every one of these social group capitals, is in its turn composed of a larger or smaller number of independently functioning individual capitals. In the first place, the capital of society, for instance 7,500 (which may mean millions, etc.) is composed of various groups of capital;

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the social capital of 7,500 is divided into separate parts, every one of which is invested in a special branch of production; each portion of the social capital-value invested in some particular branch of production consists, so far as its bodily form is concerned, partly of means of production required in that particular sphere of production, partly of the labour-power needed in that business and trained accordingly, variously modified by division of labour, according to the specific kind of labour to be performed in each individual sphere of production. Each portion of social capital invested in any particular branch of production in its turn consists of the sum of the individual capitals invested in it and functioning independently. This patently applies to both departments, I as well as II.

As for the constant capital-value re-appearing in I in the form of its commodity-product, it re-enters in part as means of production into the particular sphere of production (or even into the individual business) from which it emerges as product; for instance corn into the production of corn, coal into the production of coal, iron in the form of machines into the production of iron, etc.

However since the partial products constituting the constant capital-value I do not return directly to their particular or individual sphere of production, they merely change their place. They pass in their bodily form to some other sphere of production of department I, while the product of other spheres of production of department I replaces them in kind. It is merely a change of place of these products. All of them re-enter as factors replacing constant capital in I, only instead of the same group of I they enter another. Since an exchange takes place here between the individual capitalists of I, it is an exchange of one bodily form of constant capital for another bodily form of constant capital, of one kind of means of production for other kinds of means of production. It is an exchange of the different individual parts of constant capital I among themselves. Products which do not serve directly as means of production in their own sphere are transferred from their place of production to another and thus mutually replace one another. In other words (similarly to what we saw in the case of the surplus-value II), every capitalist I draws from this quantity of commodities, proportionally to his share in the constant capital of 4,000, the means of production required by him. If production were socialised instead of capitalistic, these products of department I would evidently just as regularly be redistributed as means of production to the various branches

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of this department, for purposes of reproduction, one portion remaining directly in that sphere of production from which it emerged as a product, another passing over to other places of production, thereby giving rise to a constant to-and-fro movement between the various places of production in this department.

VII. VARIABLE CAPITAL AND SURPLUS-VALUE
IN BOTH DEPARTMENTS

The total value of the annually produced articles of consumption is thus equal to the variable capital-value II reproduced during the year plus the newly produced surplus-value II (i.e., equal to the value produced by II during the year) plus the variable capital-value I reproduced during the year and the newly produced surplus-value I (i.e., plus the value created by I during the year).

On the assumption of simple reproduction the total value of the annually produced articles of consumption is therefore equal to the annual value-product, i.e., equal to the total value produced during the year by social labour, and this must be so, because in simple reproduction this entire value is consumed.

The total social working-day is divided into two parts: 1) Necessary labour which creates in the course of the year a value of 1,500v; 2) surplus-labour, which creates an additional value, or surplus-value, of 1,500s. The sum of these values, 3,000, is equal to the value of the annually produced articles of consumption -- 3,000. The total value of the articles of consumption produced during the year is therefore equal to the total value produced by the total social working-day during the year, equal to the value of the social variable capital plus the social surplus-value, equal to the total new product of the year.

But we know that although these two magnitudes of value are equal the total value of commodities II, the articles of consumption, is not produced in this department of social production. They are equal because the constant capital-value re-appearing in II is equal to the value newly produced by I (value of variable capital plus surplus-value); therefore I(v+s)can buy the part of the product of II which represents the constant capital-value for its producers (in department II). This shows, then, why the value of the product of capitalists II, from the point of view of society, may be resolved into v+s although for

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these capitalists it is divided into c+v+s. This is so only because IIc is here equal to I(v+s), and because these two components of the social product interchange their bodily forms by exchange so that after this transformation IIc exists once more in means of production and I(v+s) in articles of consumption.

And it is this circumstance which induced Adam Smith to maintain that the value of the annual product resolves itself into v+s. This is true 1) only for that part of the annual product which consists of articles of consumption; and 2) it is not true in the sense that this total value is produced in II and that the value of its product is equal to the value of the variable capital advanced in II plus the surplus-value produced in II. It is true only in the sense that II(c+v+s) is equal to II(v+s) + I(v+s) or because IIc is equal to I(v+s).

It follows furthermore:

The social working-day (i.e., the labour expended by the entire working-class during the whole year), like every individual working-day, breaks up into only two parts, namely into necessary labour and surplus-labour, and the value produced by this working-day consequently likewise resolves itself into only two parts, namely into the value of the variable capital, or that portion of the value with which the labourer buys the means of his own reproduction, and the surplus-value which the capitalist may spend for his own individual consumption. Nevertheless, from the point of view of society, one part of the social working-day is spent exclusively on the production of new constant capital, namely of products exclusively intended to function as means of production in the labour-process and hence as constant capital in the accompanying process of self-expansion of value. According to our assumption the total social working-day presents itself as a money-value of 3,000, only one-third of which, or 1,000, is produced in department II, which manufactures articles of consumption, that is, the commodities in which the entire value of the variable capital and the entire surplus-value of society are ultimately realised. Thus, according to this assumption, two-thirds of the social working-day are employed in the production of new constant capital. Although from the standpoint of the individual capitalists and labourers of department I these two-thirds of the social working-day serve merely for the production of variable capital-value plus surplus-value, the same as the last third of the social working-day in department II, still from the point of view of society and likewise of the use-value of the product, these two-thirds of the social working-day produce

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only replacement of constant capital in the process of productive consumption or already so consumed. Also when viewed individually these two-thirds of the working-day, while producing a total value equal only to the value of the variable capital plus surplus-value for the producer, nevertheless do not produce any use-values of a kind on which wages or surplus-value could be expended; for their products are means of production.

It must be noted in the first place that no portion of the social working-day, whether in I or in II, serves for the production of the value of the constant capital employed and functioning in these two great spheres of production. They produce only additional value, 2,000 I(v+s) + 1,000 II(v+s), in addition to the value of the constant capital equal to 4,000 Ic + 2,000 IIc. The new value produced in the form of means of production is not yet constant capital. It merely is intended to function as such in the future.

The entire product of II -- the articles of consumption -- viewed concretely as a use-value, in its bodily form, is a product of the one-third of the social working-day spent by II. It is the product of labour in its concrete form -- such as the labour of weaving, baking, etc., performed in this department -- the product of this labour, inasmuch as it functions as the subjective element of the labour-process. As to the constant portion of the value of this product II, it re-appears only in a new use-value, in a new bodily form, the form of articles of consumption, while it existed previously in the form of means of production. Its value has been transferred by the labour-process from its old bodily form to its new bodily form. But the value of these two-thirds of the product-value, equal to 2,000, has not been produced in this year's self-expansion process of II.

Just as from the point of view of the labour-process, the product of II is the result of newly functioning living labour and of the assumed means of production assigned to it, in which that labour materialises itself as in its objective conditions, so, from the point of view of the process of self-expansion, the value of the product of II, equal to 3,000, is composed of a new value (500v + 500s =1,000) produced by the newly added one-third of the social working-day and of a constant value in which are embodied two-thirds of a past social working-day that had elapsed before the present process of production of II here under consideration. This portion of the value of the II product finds expression in a portion of the product itself. It exists in a quantity of articles of consumption worth 2,000, or two-thirds of

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a social working-day. This is the new use-form in which this value-portion re-appears. The exchange of part of the articles of consumption equal to 2,000 IIc for means of production of I equal to I (1,000v + 1,000s) thus really represents an exchange of two-thirds of an aggregate working-day -- which do not constitute any portion of this year's labour, and elapsed before this year -- for two-thirds of the working-day newly added this year. Two-thirds of this year's social working-day could not be employed in the production of constant capital and at the same time constitute variable capital-value plus surplus-value for their own producers unless they were to be exchanged for a portion of the value of the annually consumed articles of consumption in which are incorporated two-thirds of a working-day spent and realised before this year. It is an exchange of two-thirds of this year's working-day for two-thirds of a working-day spent before this year, an exchange of this year's labour-time for last year's. This explains the riddle of how the value-product of an entire social working-day can resolve itself into variable capital-value plus surplus-value, although two-thirds of this working-day were not expended in the production of articles in which variable capital or surplus-value can be realised, but rather in the production of means of production for the replacement of the capital consumed during the year. The explanation is simply that two-thirds of the value of the product of II, in which the capitalists and labourers of I realise the variable capital-value plus surplus-value produced by them (and which constitute two-ninths of the value of the entire annual product), are, so far as their value is concerned, the product of two-thirds of a social working-day of a year prior to the current one.

The sum of the social product I and II -- means of production and articles of consumption -- is indeed, viewed from the stand-point of their use-value, in their concrete, bodily form, the product of this year's labour, but only to the extent that this labour itself is regarded as useful and concrete and not as an expenditure of labour-power, as value-creating labour. And even the first is true only in the sense that the means of production have transformed themselves into new products, into this year's products solely by dint of the living labour added on to them, operating on them. On the contrary, this year's labour could not have transformed itself into products without means of production independent of it, without instruments of labour and materials of production.

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VIII. THE CONSTANT CAPITAL IN BOTH DEPARTMENTS

The analysis of the total value of the product of 9,000, and of the categories into which it is divided, does not present any greater difficulty than that of the value produced by an individual capital. On the contrary, they are identical.

The entire annual social product here contains three social working-days, each of one year. The value expressed by each one of these working-days is 3,000, so that the value expressed by the total product is equal to 3 x 3,000, or 9,000.

Furthermore the following portions of this working time have elapsed prior to the one-year process of production, the product of which we are now analysing: In department I four-thirds of a working-day (with a product worth 4,000), and in department II two-thirds of a working-day (with a product worth 2,000), making a total of two social working-days with a product worth 6,000. For this reason 4,000 Ic + 2,000 IIc = 6,000c figure as the value of the means of production, or the constant capital-value re-appearing in the total value of the social product.

Furthermore one-third of the social working-day of one year newly added in department I is necessary labour, or labour replacing the value of the variable capital of 1,000 Iv and paying the price of the labour employed by I. In the same way one-sixth of a social working-day in II is necessary labour with a value of 500. Hence 1,000 Iv + 500 IIv = 1,500v, expressing the value of one half of the social working-day, is the value-expression of the first half of the aggregate working-day added this year and consisting of necessary labour.

Finally, in department I one-third of the aggregate working-day, with a product worth 1,000, is surplus-labour, and in department II one-sixth of the working-day, with a product worth 500, is surplus-labour. Together they constitute the other half of the added aggregate working-day. Hence the total surplus value produced is equal to 1,000 Is + 500 IIs, or 1,500s.

Thus:

The constant capital portion of the value of the social product (c):

Two working-days expended prior to the process of production; expression of value = 6,000.

Necessary labour (v) expended during the year:

One half of a working-day expended on the annual production; expression of value = 1,500.

Surplus-labour (s) expended during the year:

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One half of a working-day expended on the annual production; expression of value = 1,500.

Value produced by annual labour (v+s) = 3,000.

Total value of product (c+v+s) = 9,000.

The difficulty, then, does not consist in the analysis of the value of the social product itself. It arises in the comparison of the component parts of the value of the social product with its material constituents.

The constant, merely re-appearing portion of value is equal to the value of that part of this product which consists of means of production and is incorporated in that part.

The new value-product of the year, equal to v+s, is equal to the value of that part of this product which consists of articles of consumption and is incorporated in it.

But with exceptions of no consequence here, means of production and articles of consumption are wholly different kinds of commodities, products of entirely different bodily or use-forms, and, therefore, products of wholly different classes of concrete labour. The labour which employs machinery in the production of means of subsistence is vastly different from the labour which makes machinery. The entire aggregate annual working-day, whose value-expression is 3,000, seems spent in the production of articles of consumption equul to 3,000, in which no constant portion of value re-appears, since these 3,000, equal to 1,500v + 1,500s, resolve themselves only into variable capital-value and surplus-value. On the other hand the constant capital-value of 6,000 re-appears in a class of products quite different from articles of consumption, namely in means of production, while as a matter of fact no part of the social working-day seems spent in the production of these new products. It seems rather that the entire working-day consists only of classes of labour which do not result in means of production but in articles of consumption. This mystery has already been cleared up. The value-product of the year's labour is equal to the value of the products of department II, to the total value of the newly produced articles of consumption. But the value of these products is greater by two-thirds than that portion of the annual labour which has been expended in the sphere of production of articles of consumption (department II). Only one-third of the annual labour has been expended in their production. Two-thirds of this annual labour have been expended in the production of means of production, that is to say, in department I. The value-product created during this time in I, equal to the variable capital-value plus surplus-value pro-

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duced in I, is equal to the constant-capital-value of II re-appearing in articles of consumption of II. Hence they may be mutually exchanged and replaced in kind. The total value of the articles of consumption of II is therefore equal to the sum of the new value-product of I and II, or II(c+v+s) is equal to I(v+s) + II(v+s), hence equal to the sum of the new values produced by the year's labour in the form of v plus s.

On the other hand the total value of the means of production (I) is equal to the sum of the constant capital-value re-appearing in the form of means of production (I) and in that of articles of consumption (II); in other words, equal to the sum of the constant capital-value re-appearing in the total product of society. This total value is equal in terms of value to four-thirds of a working day preceding the process of production of I and two-thirds of a working-day preceding the process of production of II, in all equal to two aggregate working-days.

The difficulty with the annual social product arises therefore from the fact that the constant portion of value is represented by a wholly different class of products -- means of production -- than the new value v+s added to this constant portion of value and represented by articles of consumption. Thus the appearance is created, so far as value is concerned, that two-thirds of the consumed mass of products are found again in a new form as new product, without any labour having been expended by society in their production. This is not so in the case of an individual capital. Every individual capitalist employs some particular concrete kind of labour, which transforms the means of production peculiar to it into a product. Let for instance the capitalist be a machine-builder, the constant capital expended during the year 6,000c, the variable 1,500v, the surplus-value 1,500s, the product 9,000, the product, say, 18 machines of 500 each. The entire product here exists in the same form, that of machines. (If he produces various kinds, each kind is calculated separately.) The entire commodity-product is the result of the labour expended during the year in machine-building; it is a combination of the same concrete kind of labour with the same means of production. The various portions of the value of the product therefore present themselves in the same bodily form: 12 machines embody 6,000c, 3 machines 1,500v, 3 machines 1,500s. In the present case it is evident that the value of the 12 machines is equal to 6,000c, not because there is incorporated in these 12 machines only labour performed previously to the manufacture of these machines and not labour expended on build-

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ing them. The value of the means of production for 18 machines did not of itself become transformed into 12 machines but the value of these 12 machines (consisting itself of 4,000c + 1,000v + 1,000s) is equal to the total value of the constant capital contained in the 18 machines. The machine-manufacturer must therefore sell 12 of the 18 machines in order to replace his expended constant capital, which he requires for the reproduction of 18 new machines. On the contrary, the thing would be inexplicable if in spite of the fact that the labour expended was employed solely in the manufacture of machines, the result were to be: On the one hand 6 machines equal to 1,500v + 1,500s, on the other iron, copper, screws, belts, etc., of a value amounting to 6,000c, i.e., the means of production of the machines in their bodily form, which, as we know, the individual machine-building capitalist does not produce himself but must replace by way of the process of circulation. And yet it seems at first glance that the reproduction of the annual product of society takes place in this absurd way.

The product of an individual capital, i.e., of every fraction of the social capital endowed with a life of its own and functioning independently, has a bodily form of one kind or another. The only condition is that this product must really have a use-form, a use-value, which gives it the imprint of a member of the world of commodities capable of circulation. It is immaterial and accidental whether or not it can re-enter as a means of production into the same process of production from which it emerged as a product; in other words, whether the portion of its value representing the constant part of the capital has a bodily form in which it can actually function again as constant capital. If not, this portion of the value of the product is reconverted into the form of its material elements of production by means of sale and purchase and thus the constant capital is reproduced in the bodily form capable of functioning.

It is different with the product of the aggregate social capital. All the material elements of reproduction must in their bodily form constitute parts of this product. The consumed constant part of capital can be replaced by the aggregate production only to the extent that the entire constant part of the capital re-appearing in the product re-appears in the bodily form of new means of production which can really function as constant capital. Hence, simple reproduction being assumed, the value of that portion of the product which consists of means of production must be equal to the constant portion of the value of social capital.

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Furthermore: Considered individually, the capitalist produces in the value of his product by means of the newly added labour only his variable capital plus surplus-value, while the constant part of the value is transferred to the product owing to the concrete character of the newly added labour.

Considered socially that portion of the social working-day which produces means of production, hence adding new value to them as well as transferring to them the value of the means of production consumed in their manufacture, creates nothing but new constant capital intended to replace that consumed in the shape of old means of production in both departments I and II. It creates only product intended for productive consumption. The entire value of this product, then, is only value which can function anew as constant capital, which can only buy back constant capital in its bodily form, and which, for this reason, resolves itself, considered socially, neither into variable capital nor surplus-value.