From Marxists Internet Archive
Karl Marx. Capital Volume One
Chapter Five: Contradictions in the General Formula of Capital
The form which circulation takes when money becomes capital, is opposed to
all the laws we have hitherto investigated bearing on the nature of commodities,
value and money, and even of circulation itself. What distinguishes this form
from that of the simple circulation of commodities, is the inverted order of
succession of the two antithetical processes, sale and purchase. How can this
purely formal distinction between these processes change their character as it
were by magic?
But that is not all. This inversion has no existence for two out of the three
persons who transact business together. As capitalist, I buy commodities from A
and sell them again to B, but as a simple owner of commodities, I sell them to B
and then purchase fresh ones from A. A and B see no difference between the two
sets of transactions. They are merely buyers or sellers. And I on each occasion
meet them as a mere owner of either money or commodities, as a buyer or a
seller, and, what is more, in both sets of transactions, I am opposed to A only
as a buyer and to B only as a seller, to the one only as money, to the other
only as commodities, and to neither of them as capital or a capitalist, or as
representative of anything that is more than money or commodities, or that can
produce any effect beyond what money and commodities can. For me the purchase
from A and the sale to B are part of a series. But the connexion between the two
acts exists for me alone. A does not trouble himself about my transaction with
B, nor does B about my business with A. And if I offered to explain to them the
meritorious nature of my action in inverting the order of succession, they would
probably point out to me that I was mistaken as to that order of succession, and
that the whole transaction, instead of beginning with a purchase and ending with
a sale, began, on the contrary, with a sale and was
concluded with a purchase. In truth, my first act, the purchase, was from the
standpoint of A, a sale, and my second act, the sale, was from the standpoint of
B, a purchase. Not content with that, A and B would declare that the whole
series was superfluous and nothing but Hokus Pokus; that for the future A would
buy direct from B, and B sell direct to A. Thus the whole transaction would be
reduced to a single act forming an isolated, non-complemented phase in the
ordinary circulation of commodities, a mere sale from A’s point of view, and
from B’s, a mere purchase. The inversion, therefore, of the order of
succession, does not take us outside the sphere of the simple circulation of
commodities, and we must rather look, whether there is in this simple
circulation anything permitting an expansion of the value that enters into
circulation, and, consequently, a creation of surplus-value.
Let us take the process of circulation in a form under which it presents
itself as a simple and direct exchange of commodities. This is always the case
when two owners of commodities buy from each other, and on the settling day the
amounts mutually owing are equal and cancel each other. The money in this case
is money of account and serves to express the value of the commodities by their
prices, but is not, itself, in the shape of hard cash, confronted with them. So
far as regards use-values, it is clear that both parties may gain some
advantage. Both part with goods that, as use-values, are of no service to them,
and receive others that they can make use of. And there may also be a further
gain. A, who sells wine and buys corn, possibly produces more wine, with given
labour-time, than farmer B could, and B on the other hand, more corn than
wine-grower A could. A, therefore, may get, for the same exchange-value, more
corn, and B more wine, than each would respectively get without any exchange by
producing his own corn and wine. With reference, therefore, to use-value, there
is good ground for saying that “exchange is a transaction by which both sides
gain.” [1] It is otherwise with
exchange-value. “A man who has plenty of
wine and no corn treats with a man who has plenty of corn and no wine; an
exchange takes place between them of corn to the value of 50, for wine of the
same value.This act produces no increase of exchange-value either for the one or
the other; for each of them already possessed, before the exchange, a value
equal to that which he acquired by means of that operation.” [2]
The result is not altered by introducing money, as a medium of circulation,
between the commodities, and making the sale and the purchase
two distinct acts. [3] The value of a
commodity is expressed in its price before it goes into circulation, and is
therefore a precedent condition of circulation, not its result. [4]
Abstractedly considered, that is, apart from circumstances not immediately
flowing from the laws of the simple circulation of commodities, there is in an
exchange nothing (if we except the replacing of one use-value by another) but a
metamorphosis, a mere change in the form of the commodity. The same
exchange-value, i.e., the same quantity of incorporated social labour, remains
throughout in the hands of the owner of the commodity, first in the shape of his
own commodity, then in the form of the money for which he exchanged it, and
lastly, in the shape of the commodity he buys with that money. This change of
form does not imply a change in the magnitude of the value. But the change,
which the value of the commodity undergoes in this process, is limited to a
change in its money-form. This form exists first as the price of the commodity
offered for sale, then as an actual sum of money, which, however, was
already expressed in the price, and lastly, as the price of an equivalent
commodity. This change of form no more implies, taken alone, a change in the
quantity of value, than does the change of a £5 note into sovereigns, half
sovereigns and shillings. So far therefore as the circulation of commodities
effects a change in the form alone of their values, and is free from disturbing
influences, it must be the exchange of equivalents. Little as Vulgar-Economy
knows about the nature of value, yet whenever it wishes to consider the
phenomena of circulation in their purity, it assumes that supply and demand are
equal, which amounts to this, that their effect is nil. If therefore, as regards
the use-values exchanged, both buyer and seller may possibly gain something,
this is not the case as regards the exchange-values. Here we must rather say,
“Where equality exists there can be no gain.” [5]
It is true, commodities may be sold at prices deviating from their values, but
these deviations are to be considered as infractions of the laws of the exchange
of commodities [6], which in its
normal state is an exchange of equivalents, consequently, no method for
increasing value. [7]
Hence, we see that behind all attempts to represent the circulation of
commodities as a source of surplus-value, there lurks a quid pro quo, a
mixing up of use-value and exchange-value. For instance, Condillac says: “It
is not true that on an exchange of commodities we give value for value. On the
contrary, each of the two contracting parties in every case, gives a less for a
greater value. ... If we really exchanged equal values, neither party could make
a profit. And yet, they both gain, or ought to gain. Why? The value of a thing
consists solely in its relation to our wants. What is more to the one is less to
the other, and vice versâ. ... It is not to be assumed that we offer
for sale articles required for our own consumption. ... We wish to part with a
useless thing, in order to get one that we need; we want to give less for more.
... It was natural to think that, in an exchange, value was given for value,
whenever each of the articles exchanged was of equal value with the same
quantity of gold. ... But there is another point to be considered in our
calculation. The question is, whether we both exchange something superfluous for
something necessary.” [8] We see in
this passage, how Condillac not only confuses use-value with exchange-value, but
in a really childish manner assumes, that in a society, in which the production
of commodities is well developed, each producer produces his own means of
subsistence, and throws into circulation only the excess over
his own requirements. [9] Still,
Condillac’s argument is frequently used by modem economists, more especially
when the point is to show, that the exchange of commodities in its developed
form, commerce, is productive of surplus-value. For instance, “Commerce ...
adds value to products, for the same products in the hands of consumers, are
worth more than in the hands of producers, and it may strictly be considered an
act of production.” [10] But
commodities are not paid for twice over, once on account of their use-value, and
again on account of their value. And though the use-value of a commodity is more
serviceable to the buyer than to the seller, its money-form is more serviceable
to the seller. Would he otherwise sell it? We might therefore just as well say
that the buyer performs
"strictly an act of production,” by converting stockings, for example,
into money.
If commodities, or commodities and money, of equal exchange-value, and
consequently equivalents, are exchanged, it is plain that no one abstracts more
value from, than he throws into, circulation. There is no creation of
surplus-value. And, in its normal form, the circulation of commodities demands
the exchange of equivalents. But in actual practice, the process does not retain
its normal form. Let us, therefore, assume an exchange of non-equivalents.
In any case the market for commodities is only frequented by owners of
commodities, and the power which these persons exercise over each other, is no
other than the power of their commodities. The material variety of these
commodities is the material incentive to the act of exchange, and makes buyers
and sellers mutually dependent, because none of them possesses the object of his
own wants, and each holds in his hand the object of another’s wants. Besides
these material differences of their use-values, there is only one other
difference between commodities, namely, that between their bodily form and the
form into which they are converted by sale, the difference between commodities
and money. And consequently the owners of commodities are distinguishable only
as sellers, those who own commodities, and buyers, those who own money.
Suppose then, that by some inexplicable privilege, the seller is enabled to
sell his commodities above their value, what is worth 100 for 110, in which case
the price is nominally raised 10%. The seller therefore pockets a surplus-value
of 10. But after he has sold he becomes a buyer. A third owner of commodities
comes to him now as seller, who in this capacity also enjoys the privilege of
selling his commodities 10% too dear. Our friend gained 10 as a seller only to
lose it again as a buyer. [11] The
net result is, that all owners of commodities sell their goods to one another at
10% above their value, which comes precisely to the same as if they sold them at
their true value. Such a general and nominal rise of prices has the same effect
as if the values had been expressed in weight of silver instead of in weight of
gold. The nominal prices of commodities would rise, but the real relation
between their values would remain unchanged.
Let us make the opposite assumption, that the buyer has the privilege of
purchasing commodities under their value. In this case it is no longer necessary
to bear in mind that he in his turn will become a seller. He
was so before he became buyer; he had already lost 10% in selling before he
gained 10% as buyer. [12] Everything
is just as it was.
The creation of surplus-value, and therefore the conversion of money into
capital, can consequently be explained neither on the assumption that
commodities are sold above their value, nor that they are bought below their
value. [13]
The problem is in no way simplified by introducing irrelevant matters after
the manner of Col. Torrens: “Effectual demand consists in the power and
inclination (!), on the part of consumers, to give for commodities, either by
immediate or circuitous barter, some greater portion of ... capital than their
production costs.” [14] In
relation to circulation, producers and consumers meet only as buyers and
sellers. To assert that the surplus-value acquired by the producer has its
origin in the fact that consumers pay for commodities more than their value, is
only to say in other words: The owner of commodities possesses, as a seller, the
privilege of selling too dear. The seller has himself produced the commodities
or represents their producer, but the buyer has to no less extent produced the
commodities represented by his money, or represents their producer. The
distinction between them is, that one buys and the other sells. The fact that
the owner of the commodities, under the designation of producer, sells them over
their value, and under the designation of consumer, pays too much for them, does
not carry us a single step further. [15]
To be consistent therefore, the upholders of the delusion that surplus-value
has its origin in a nominal rise of prices or in the privilege which the seller
has of selling too dear, must assume the existence of a class that only buys and
does not sell, i.e., only consumes and does not produce. The existence of such a
class is inexplicable from the standpoint we have so far reached, viz., that of
simple circulation. But let us anticipate. The money with which such a class is
constantly making purchases, must constantly flow into their pockets, without
any exchange, gratis, by might or right, from the pockets of the
commodity-owners themselves.
To sell commodities above their value to such a class, is only to crib back
again a part of the money previously given to it. [16]
The towns of Asia Minor thus paid a yearly money tribute to ancient Rome. With
this money Rome purchased from them commodities, and purchased them too dear.
The provincials cheated the Romans, and thus got back from their conquerors, in
the course of trade, a portion of the tribute. Yet, for all that, the conquered
were the really cheated. Their goods were still paid for with their own money.
That is not the way to get rich or to create surplus-value.
Let us therefore keep within the bounds of exchange where sellers are also
buyers, and buyers, sellers. Our difficulty may perhaps have arisen from
treating the actors as personifications instead of as individuals.
A may be clever enough to get the advantage of B or C without their being
able to retaliate. A sells wine worth £40 to B, and obtains from him in
exchange corn to the value of £50. A has converted his £40 into £50, has made
more money out of less, and has converted his commodities into capital. Let us
examine this a little more closely. Before the exchange we had £40 worth of
wine in the hands of A, and £50 worth of corn in those of B, a total value of
£90. After the exchange we have still the same total value of £90. The value
in circulation has not increased by one iota, it is only distributed differently
between A and B. What is a loss of value to B is surplus-value to A; what is
“minus” to one is “plus” to the other. The same change would have taken
place, if A, without the formality of an exchange, had directly stolen the £10
from B. The sum of the values in circulation can clearly not be augmented by any
change in their distribution, any more than the quantity of the precious metals
in a country by a Jew selling a Queen Anne’s farthing for a guinea. The
capitalist class, as a whole, in any country, cannot over-reach themselves. [17]
Turn and twist then as we may, the fact remains unaltered. If equivalents are
exchanged, no surplus-value results, and if non-equivalents
are exchanged, still no surplus-value. [18]
Circulation, or the exchange of commodities, begets no value. [19]
The reason is now therefore plain why, in analysing the standard form of
capital, the form under which it determines the economic organisation of modern
society, we entirely left out of consideration its most popular, and, so to say,
antediluvian forms, merchants’ capital and money-lenders’ capital.
The circuit M-C-M, buying in order to sell dearer, is seen most clearly in
genuine merchants’ capital. But the movement takes place entirely within the
sphere of circulation. Since, however, it is impossible, by circulation alone,
to account for the conversion of money into capital, for the formation of
surplus-value, it would appear, that merchants’ capital is an impossibility,
so long as equivalents are exchanged; [20]
that, therefore, it can only have its origin in the two-fold advantage gained,
over both the selling and the buying producers, by the merchant who
parasitically shoves himself in between them. It is in this sense that Franklin
says, “war is robbery, commerce is generally cheating.” [21]
If the transformation of merchants’ money into capital is to be explained
otherwise than by the producers being simply cheated, a long series of
intermediate steps would be necessary, which, at present, when the simple
circulation of commodities forms our only assumption, are entirely wanting.
What we have said with reference to merchants’ capital, applies still more
to money-lenders’ capital. In merchants’ capital, the two extremes, the
money that is thrown upon the market, and the augmented money that is withdrawn
from the market, are at least connected by a purchase
and a sale, in other words by the movement of the circulation. In
money-lenders’ capital the form M-C-M is reduced to the two extremes without a
mean, M-M , money exchanged for more money, a form that is incompatible with the
nature of money, and therefore remains inexplicable from the standpoint of the
circulation of commodities. Hence Aristotle: “since chrematistic is a double
science, one part belonging to commerce, the other to economic, the latter being
necessary and praiseworthy, the former based on circulation and with justice
disapproved (for it is not based on Nature, but on mutual cheating), therefore
the usurer is most rightly hated, because money itself is the source of his
gain, and is not used for the purposes for which it was invented. For it
originated for the exchange of commodities, but interest makes out of money,
more money. Hence its name ([greek: tokos] interest and offspring). For the
begotten are like those who beget them. But interest is money of money, so that
of all modes of making a living, this is the most contrary to Nature.” [22]
In the course of our investigation, we shall find that both merchants’
capital and interest-bearing capital are derivative forms, and at the same time
it will become clear, why these two forms appear in the course of history before
the modern standard form of capital.
We have shown that surplus-value cannot be created by circulation, and,
therefore, that in its formation, something must take place in the background,
which is not apparent in the circulation itself. [23]
But can surplus-value possibly originate anywhere else than in circulation,
which is the sum total of all the mutual relations of commodity-owners, as far
as they are determined by their commodities? Apart from circulation, the
commodity-owner is in relation only with his own commodity. So far as regards
value, that relation is limited to this, that the commodity contains a quantity
of his own labour, that quantity being measured by a definite social standard.
This quantity is expressed by the value of the commodity, and since the value is
reckoned in money of account, this quantity is also expressed by the price,
which we will suppose to be £10. But his labour is not represented both by the
value of the commodity, and by a surplus over that value, not by a price of 10
that is also a price of 11, not by a value that is greater than itself. The
commodity owner can, by his labour, create value, but not self-expanding value.
He can increase the value of his commodity, by adding fresh labour, and
therefore more value to the value in hand, by making, for instance, leather into
boots. The same material has now more value,
because it contains a greater quantity of labour. The boots have therefore more
value than the leather, but the value of the leather remains what it was; it has
not expanded itself, has not, during the making of the boots, annexed
surplus-value. It is therefore impossible that outside the sphere of
circulation, a producer of commodities can, without coming into contact with
other commodity-owners, expand value, and consequently convert money or
commodities into capital.
It is therefore impossible for capital to be produced by circulation, and it
is equally impossible for it to originate apart from circulation. It must have
its origin both in circulation and yet not in circulation.
We have, therefore, got a double result.
The conversion of money into capital has to be explained on the basis of the
laws that regulate the exchange of commodities, in such a way that the
starting-point is the exchange of equivalents. [24]
Our friend, Moneybags, who as yet is only an embryo capitalist, must buy his
commodities at their value, must sell them at their value, and yet at the end of
the process must withdraw more value from circulation than he threw into it at
starting. His development into a full-grown capitalist must take place, both
within the sphere of circulation and without it. These are the conditions of the
problem. Hic Rhodus, hic salta!25]
Footnotes
1.
“L’échange est une transaction admirable dans laquelle les deux
contractants gagnent - toujours (!)” [“Exchange is a transaction in which
the two contracting parties always gain, both of them (!)”] (Destutt de Tracy:
“Traité de la Volonté et de ses effets.” Paris, 1826, p. 68.) This work
appeared afterwards as “Traité d’Econ. Polit.”
2.
“Mercier de la Rivière,” l. c., p. 544.
3.
“Que l’une de ces deux valeurs soit argent, ou qu’elles soient toutes deux
marchandises usuelles, rien de plus indifférent en soi.” [“Whether one of
those two values is money, or they are both ordinary commodities, is in itself a
matter of complete indifference.”] (“Mercier de la Rivière,” l.c., p.
543.)
4.
“Ce ne sont pas les contractants qui prononcent sur la valeur; elle est décidée
avant la convention.” [“It is not the parties to a contract who decide on
the value; that has been decided before the contract.”] (Le Trosne, p. 906.)
5.
“Dove è egualità non è lucro.” (Galiani, “Della Moneta in Custodi,
Parte Moderna,” t. iv., p. 244.)
6.
“L’échange devient désavantageux pour l’une des parties, lorsque quelque
chose étrangère vient diminuer ou exagérer le prix; alors l’égalité est
blessée, mais la lésion procède de cette cause et non de l’échange.”
[“The exchange becomes unfavourable for one of the parties when some external
circumstance comes to lessen or increase the price; then equality is infringed,
but this infringement arises from that cause and not from the exchange
itself.”] (Le Trosne, l.c., p. 904.)
7.
“L’échange est de sa nature un contrat d’égalité qui se fait de valeur
pour valeur égale. Il n’est donc pas un moyen de s’enrichir, puisque l’on
donne autant que l’on reçoit.” [“Exchange is by its nature a contract
which rests on equality, i.e., it takes place between two equal values, and it
is not a means of self-enrichment, since as much is given as is received.”]
(Le Trosne, l.c., p. 903.)
8.
Condillac: “Le Commerce et le Gouvernement” (1776). Edit. Daire et Molinari
in the “Mélanges d’Econ. Polit.” Paris, 1847, pp. 267, 291.
9.
Le Trosne, therefore, answers his friend Condillac with justice as follows:
“Dans une ... société formée il n’y a pas de surabondant en aucun
genre.” [“In a developed society absolutely nothing is superfluous.”] At
the same time, in a bantering way, he remarks: “If both the persons who
exchange receive more to an equal amount, and part with less to an equal amount,
they both get the same.” It is because Condillac has not the remotest idea of
the nature of exchange-value that he has been chosen by Herr Professor Wilhelm
Roscher as a proper person to answer for the soundness of his own childish
notions. See Roscher’s “Die Grundlagen der Nationalökonomie, Dritte Auflage,”
1858.
10.
S. P. Newman: “Elements of Polit. Econ.” Andover and New York, 1835, p. 175.
11.
“By the augmentation of the nominal value of the produce... sellers not
enriched... since what they gain as sellers, they precisely expend in the
quality of buyers.” (“The Essential Principles of the Wealth of Nations.”
&c., London, 1797, p. 66.)
12.
“Si l’on est forcé de donner pour 18 livres une quantité de telle
production qui en valait 24, lorsqu’on employera ce même argent à acheter,
on aura également pour 18 l. ce que l’on payait 24.” [“If one is
compelled to sell a quantity of a certain product for 18 livres when it has a
value of 24 livres, when one employs the same amount of money in buying, one
will receive for 18 livres the same quantity of the product as 24 livres would
have bought otherwise.”] (Le Trosne, I. c., p. 897.)
13.
“Chaque vendeur ne peut donc parvenir à renchérir habituellement ses
marchandises, qu’en se soumettant aussi à payer habituellement plus cher les
marchandises des autres vendeurs; et par la même raison, chaque consommateur ne
peut payer habituellement moins cher ce qu’il achète, qu’en se soumettant
aussi à une diminution semblable sur le prix des choses qu’il vend.” [“A
seller can normally only succeed in raising the prices of his commodities if he
agrees to pay, by and large, more for the commodities of the other sellers; and
for the same reason a consumer can normally only pay less for his purchases if
he submits to a similar reduction in the prices of the things he sells.”]
(Mercier de la Rivière, l.c., p. 555.)
14.
Torrens. “An Essay on the Production of Wealth.” London, 1821, p. 349.
15.
The idea of profits being paid by the consumers, is, assuredly, very absurd. Who
are the consumers?” (G. Ramsay: “An Essay on the Distribution of Wealth.”
Edinburgh, 1836, p. 183.)
16.
“When a man is in want of a demand, does Mr. Malthus recommend him to pay some
other person to take off his goods?” is a question put by an angry disciple of
Ricardo to Malthus, who, like his disciple, Parson Chalmers, economically
glorifies this class of simple buyers or consumers. (See “An Inquiry into
those Principles Respecting the Nature of Demand and the Necessity of
Consumption, lately advocated by Mr. Malthus,” &c. Lond., 1821, p. 55.)
17.
Destutt de Tracy, although, or perhaps because, he was a member of the
Institute, held the opposite view. He says, industrial capitalists make profits
because “they all sell for more than it has cost to produce. And to whom do
they sell? In the first instance to one another.” (I. c., p. 239.)
18.
“L’échange qui se fait de deux valeurs égales n’augmente ni ne diminue
la masse des valeurs subsistantes dans la société. L’échange de deux
valeurs inégales ... ne change rien non plus à la somme des valeurs sociales,
bien qu’il ajoute à la fortune de l’un ce qu’il ôte de la fortune de
l’autre.” [“The exchange of two equal values neither increases nor
diminishes the amount of the values available in society. Nor does the exchange
of two unequal values ... change anything in the sum of social values, although
it adds to the wealth of one person what ir removes fomr the wealth of
another.”] (J. B. Say, l.c., t. II, pp. 443, 444.) Say, not in the least
troubled as to the consequences of this statement, borrows it, almost word for
word, from the Physiocrats. The following example will show how Monsieur Say
turned to account the writings of the Physiocrats, in his day quite forgotten,
for the purpose of expanding the “value” of his own. His most celebrated
saying, “On n’achète des produits qu’avec des produits” [“Products
can only be bought with products.”](l.c., t. II. p. 441.) runs as follows in
the original physiocratic work: “Les productions ne se paient qu’avec des
productions.” [“Products can only be paid for with products.”] (Le Trosne,
l.c., p. 899.)
19.
“Exchange confers no value at all upon products.” (F. Wayland: “The
Elements of Political Economy.” Boston, 1843, p. 169.)
20.
Under the rule of invariable equivalents commerce would be impossible. (G.
Opdyke: “A Treatise on Polit. Economy.” New York, 1851, pp. 66-69.) “The
difference between real value and exchange-value is based upon this fact,
namely, that the value of a thing is different from the so-called equivalent
given for it in trade, i.e., that this equivalent is no equivalent.” (F.
Engels, l.c., p. 96).
21.
Benjamin Franklin: Works, Vol. II, edit. Sparks in “Positions to be examined
concerning National Wealth,” p. 376.
22.
Aristotle, I. c., c. 10.
23.
“Profit, in the usual condition of the market, is not made by exchanging. Had
it not existed before, neither could it after that transaction.” (Ramsay,
l.c., p. 184.)
24.
From the foregoing investigation, the reader will see that this statement only
means that the formation of capital must be possible even though the price and
value of a commodity be the same; for its formation cannot be attributed to any
deviation of the one from the other. If prices actually differ from values, we
must, first of all, reduce the former to the latter, in other words, treat the
difference as accidental in order that the phenomena may be observed in their
purity, and our observations not interfered with by disturbing circumstances
that have nothing to do with the process in question. We know, moreover, that
this reduction is no mere scientific process. The continual oscillations in
prices, their rising and falling, compensate each other, and reduce themselves
to an average price, which is their hidden regulator. It forms the guiding star
of the merchant or the manufacturer in every undertaking that requires time. He
knows that when a long period of time is taken, commodities are sold neither
over nor under, but at their average price. If therefore he thought about the
matter at all, he would formulate the problem of the formation of capital as
follows: How can we account for the origin of capital on the supposition that
prices are regulated by the average price, i. e., ultimately by the value of the
commodities? I say “ultimately,” because average prices do not directly
coincide with the values of commodities, as Adam Smith, Ricardo, and others
believe.
25.
See MIA
Glossary.
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