The Basic Doctrine
B. The Basic Doctrine
An Introduction to the Grundrisse sets out by declaring the intended subject to be “material production” (MECW 28 : 17). The primacy formally accorded production over distribution, consumption, and exchange will be taken for granted in treating surplus value; whether Marx applied the principle in practice is a question we shall address in discussing the problem of “realization” in Chapter 9. We recall the references in the documents of 1847–49 to “labor power” and to the “creative power” of labor. But these are still rather general. It is in the Grundrisse where we take a further step forward with the breakdown of the workday between necessary and surplus labor – the surplus envisaged as unpaid labor. And beyond this we encounter the distinction between the rate of surplus value and the rate of profit; the secular decline in the profit rate with rising organic composition of capital and limits to increase in the rate of surplus value; and the formulation of, and indeed solution to, the Transformation problem.
Fundamental to the capital-labor relation is the circumstance that the worker himself, unlike the slave, “has no value,” that “only the right to dispose over his labour acquired [by the capitalist] by exchange with him, has value” (MECW 28 : 218). Indeed, for industrial capital to exist at all, “[l]abour must confront capital as pure use value, which is offered as a commodity by its owner himself in exchange for capital, in exchange for its exchange value [coin], which, of course, becomes real in the hands of the worker only in its determination as general means of exchange . . . ” (218–19). For it is labor capacity or labor power that is valued by the wage contract, not labor: “[the worker] sells . . . the temporary right to dispose over his labour capacity, hence can always begin the exchange anew as soon as
he has absorbed the required amount of substances to be able to reproduce his life-activity” (220). In this context Marx touches on the source of surplus-value, called here the “wealth-augmenting activity” or “creative power” of labor (232– 3). Here Marx emphasizes the “alienation” entailed for labor by the wage contract:
2 Marx’s first letter to Engels regarding his researches at this time reads: “I am working like mad all night and every night collating my economic studies so that I at least get the outlines
[Grundrisse] clear before the d´eluge,” referring to the consequences of the 1857 trade crisis (8 December 1857; MECW 40 : 217). 3 Marx also wrote to Lassalle at this time of his engagement in “a polemic against Ricardo in as much as even he, qua bourgeois, cannot but commit blunders even from a strictly economic viewpoint” (22 February 1858; MECW 40 : 270).
237 “[The worker] necessarily impoverishes himself . . . in that the creative power of his
B. The Basic Doctrine
labour establishes itself as the power of capital, and confronts him as an alien power. He divests himself of labour as power productive of wealth; capital appropriates it as such. The separation of labour and property in the product of labour . . . is therefore posited in this very act of exchange. What appears as paradoxical result, is already contained in the premise itself ” (233; also 381). And this perspective, Marx asserts – rather surprisingly and unfortunately without elaboration – “[t]he economists have expressed . . . more or less empirically.”
The purchase of labor power by the capitalist that Marx throughout intends – that relating to “value creating, i.e., productive labour” – is to be distinguished from the purchase of labor services out of revenue, including – remarkably – the services provided by the so-called “Lumpenproletariat . . . e.g. the large mob of casual day- labourers, etc., in ports, etc.” (202–3). Such wage payments are treated as mere transfers (203). As expressed elsewhere, the general rule is that in the employment of services – as distinct from labor-power – one “obtain[s] the labour in exchange as an activity which creates utility, use value, not as labour which posits value” (394). 4 It is, in effect, final utility that the employer acquires.
Although “the subject to be discussed is material production” (above, p. 236), the “use value” acquired by the capitalist employer of productive labor “is not mate- rialised in a product, it does not exist in any way external to [the worker]. Conse- quently, his use value does not exist in reality but only potentially, as his capacity”
(197; also 212). 5 Noteworthy is an allowance within labor capacity for skill : “ . . . in addition to the labour time . . . necessary to pay for the products required for the maintenance of his vitality – more labour is objectified in his immediate being, namely the values he has consumed in order to produce a specific labour capacity,
a particular skill, the value of which is given by the costs of production of a simi- lar specific skill” (249; see also 211). For all that, Marx frequently abstracts from “skill” to render the pure doctrine. For example: “as use value as such confronting money posited as capital, it is not this or that labour, but labour pure and simple, abstract labour; absolutely indifferent to its particular determinateness, but capable of assuming any determinateness” (222).
4 Marx also recognizes labor that is “necessary without being productive” alluding to State employees: “All general, social conditions of production – as long as they cannot as yet be
produced by capital as such and under its conditions – are consequently paid for out of a part of the revenue of the country, by the government’s treasury, and the workers do not appear as productive workers even though they increase the productive power of capital” (MECW 28 : 457). 5 On the term labor capacity “(Arbeitsverm¨ogen”), see editorial note: “In his manuscripts of 1857–58 [Marx] as a rule uses this term in place of labor power (“Arbeitskraft”), which occurs once in his earlier work, Wage Labour and Capital (see MECW 9 : 214) and several times in his manuscripts of 1861–63” (MECW 28 : 554 n 85). In Capital 1 the two terms are treated as identical, and understood as “the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of any description” (MECW 35 : 177).
1857–1858 I: Surplus Value
By the contract involving surrender of the “right of disposition over his labour,” the laborer “gets in exchange . . . not exchange value, not wealth, but means of subsistence . . . measured by the production costs of his labour” (214). The point here is that the worker receives “a particular use value,” a claim restricted in effect to wage goods rather than to wealth in general, unlike – strange to say – unproductive labor which is said to acquire “the general form of wealth” (203). In principle, by practicing “self-denial” – by “saving, cutting down his consumption” or by increased exertion – a worker can acquire general wealth and “convert his coin into
money” (215). 6 But any such attempt on the part of a majority of workers would
be self-defeating as capitalist employers are signalled thereby that “wages were in general too high, that [workers] were receiving more than the equivalent for their commodity, the right to dispose over their labour” (216).
Marx saw in contemporary savings-bank proposals an abandonment “by all serious modern economists” of the doctrine of abstinence by capitalists (214–15). Even so, no such device could actually allow workers to engage in net wealth accumulation; and indeed the true object of the proposal was to assure lower labor cost of production for the employer: “ . . . even the economists concede that their real purpose is not wealth, but only a more appropriate distribution of expenditure, so that in old age, or in sickness, crises, etc., the workers do not become a burden on the poorhouses, on the State, or go begging . . . so that they become a burden on the working class itself and not by any means on the capitalists . . . ; i.e. so that they save for the capitalists and reduce the costs of production for them” (215). The impossibility of workers accumulating net wealth for themselves is said to apply on average: “An individual worker can be industrious above the necessary level, more industrious than is necessary to live as a worker, only because another is below the level, is lazier. He can save only because and if another squanders” (216). And even then, “[t]he most he can attain on average with his frugality is to be better able to endure the adjustment of prices – high and low, their circuit; that is only to distribute his enjoyments more appropriately, not to acquire wealth. And that is actually what the capitalists demand. The workers should save enough in times of good business to be able to more or less live in bad times, to endure short time or the reduction of wages, etc.” 7
All in all, it was “essential for capital . . . to limit the consumption of the worker to what is necessary for the reproduction of his labour capacity, i.e. to make the value which expresses necessary labour the limit of the utilization of the worker’s labour capacity and hence of his capacity to exchange, and to try to reduce to a min- imum the ratio of this necessary labour to surplus labour” (350). This perspective suggests that the real wage is determined by a sort of one-sided diktat on the part
6 On money as the “general form of wealth” see also Chapter 9, p. 287. 7 A discussion of the general consequence of the “sheer brutalisation to which this would lead” provides a fascinating perspective of Marx’s vision at this time of the importance of workers’ cultural development, very much in line with J. S. Mill or W. S. Jevons.
239 of employers, at an amount sufficient for “the reproduction of . . . labour capacity,”
B. The Basic Doctrine
implying thereby a “subsistence” wage in the classical sense. (The presumption must, one supposes, be provisional since in a growing economy wages necessarily exceed subsistence to assure net population growth, a matter we shall take up in Section D.)
The preceding formulation refers to the notion of surplus value as surplus labor. And in fact, by this stage in his manuscript, Marx had already elaborated in some detail the source of surplus value in these terms, as we shall now see. In the course of this elaboration he posits capital “as self-preserving exchange value” (238); that the elements comprising capital take different physical forms during the production process is irrelevant to their values. Accordingly: “The value of the [final] product can therefore only = the sum of values which were materialised in the particular physical elements of the process, as raw material, instrument of labour . . . and as labour itself. The raw material has been entirely consumed, as has the labour; the instrument only partly so. . . . ” At this point, be it noted, Marx does not distin- guish between value and price : “The value of the product = the value of the raw material + the value of the destroyed part of the instrument of labour . . . + the value of labour. Or the price of the product is equal to its costs of production, i.e. = the sum of the prices of the commodities which have been consumed in the process of production” (239). The problem to be resolved relates to the source of the profit yielded by the production process if in fact prices equal costs including only the elements just listed.
The greater use value that emerges from the production process is irrelevant: “Whether . . . use value is higher or lower does not as such determine exchange value. Commodities often fall below their price of production, though they doubt- less have obtained a higher use value than they had in the period before production”
(241). 8 Citing Ramsay 1836 favorably, the source of profits in the circulation pro- cess is also rejected: “Profit is not made by exchanging. Had it not existed before, neither could it after that transaction.” Marx elaborates: “That amounts to trying to explain from simple circulation the augmentation of value, whereas, on the contrary, circulation expressly posits value only as an equivalent. It is also clear empirically that if everyone sells 10% too dear, this is the same if they all sold for
the production costs. 9 Surplus value would thereby be purely nominal, fictitious,
8 See editorial note: “Price of production (Produktionspreis) means here . . . ‘production costs’ or ‘the necessary price of the commodity’ . . . In his manuscript of 1857–58 Marx did not yet
make a clear distinction between value and the price of production” (MECW 28 : 555–94). This is far from the case (see below, Section F).
9 A cautionary editorial note points out that Marx sometimes used “the term ‘production costs’ (Produktionskosten) . . . in the sense of ‘the immanent production costs of the commodity,
which are equal to its value,’ i.e., ‘the real production costs of the commodity itself,’ not the costs defrayed by the capitalist, who pays only part of the labour time contained in the commodity” (MECW 28 : 547–29).
1857–1858 I: Surplus Value
conventional, a mere phrase” (241). 10 Ricardo too is paraphrased to the same effect that “trade in general . . . can never raise exchange values, can never pro- duce exchange value” (242). 11 Allowance for superintendence as a form of special labour posed no problem; and Marx allowed readily compensation for risk – that “[c]apital must preserve itself in the fluctuations of prices” – and for depreciation, with specific mention made of technological obsolescence (243).
But none of this touches on the source of the return to capital strictly defined: “It is easy to understand how labour can augment use value; the difficulty lies in understanding how it can create higher exchange values than those with which it began.” In phrasing the matter in this fashion Marx is evidently presupposing that it is labor which creates surplus value – and this is scarcely surprising since the entire discussion is founded on the definition of “exchange value” as labor embodied: “Suppose the exchange value which capital pays to the worker were an exact equivalent for the value which labour produces in the process of production. In this case, an increase in the exchange value of the product would be impossible. What labour as such would have brought into the process of production over and above the original value of the raw material and instrument of labour would be paid to the worker” (244). Or again: “If the capitalist has paid the worker a price = one day’s labour and the day’s labour of the worker adds only one day’s labour to the raw material and instrument, the capitalist would simply have exchanged exchange value in one form for exchange value in another. He would not have acted as capital” (247). The solution, of course, is that profit amounts to unpaid labor time : “The surplus value of capital at the end of the production process . . . signifies . . . that the labour time objectified in the product . . . is greater than that present in the original components of capital. Now this is possible only if the labour objectified in the price of labour is less than the living labour time which has been bought with it” (246). This is the only conceivable source of surplus value since “the labour time objectified in the raw material . . . [and] in the instrument . . . remain unchanged as components of capital; even if they alter their form in the process, their physical modes of being, they remain unchanged as values” (246–7).
That Marx refers to the “price of labour” rather than “labour power” is not tech- nically significant, for the latter notion had been already introduced (see above,
10 “This is the first time Marx uses the term ‘surplus value’ (Mehrwert) to denote that surplus over and above the advanced value which is appropriated by the capitalist without compensa-
tion. Further in the text he frequently uses the combination ‘Surplus-wert’ for surplus value” (editorial note, MECW 28 : 555 n 95). The editors also cite use of the term “surplus value” by Thompson 1824: 167, 169, but add that he meant “the extra profit obtained by the capitalist employing machinery over and above the profit of the manual artisan.” Also noted is Marx’s own use, in an article written in October 1842, of the term “Mehrwert” “for the extra value received by forest owners in the form of fines imposed for the theft of wood” (MECW 1 : 250–5), with no relation to his later usage. 11 See however MECW 28 : 252, 275, for remarks opposed to Ricardo on trade.
B. The Basic Doctrine
241 pp. 236–7), and was evidently intended. 12 The significance for Marx of the labor
power concept emerges very clearly in the present context: “What the worker exchanges for capital is his labour itself (in the exchange, the right of disposing over it); he alienates it. What he receives as price is the value of this alienation. He exchanges the value-positing activity for a predetermined value, regardless of the result of his activity” (248). And at this point the solution to the problem of surplus value is formulated in terms of the working day and its breakdown, so familiar to readers of Capital :
If a whole working day were required in order to keep a worker alive for a working day, capital would not exist, because one working day would exchange for its own product. . . . If, on the contrary, e.g. only half a working day is needed to keep a worker alive for a whole working day, a surplus value of the product is the automatic result, because the capitalist has paid in the price [of labour] only half a working day and he has received a whole working day objectified in the product; therefore has exchanged nothing for the second half of the working day. It is not exchange but a process in which
he obtains without exchange objectified labour time, i.e. value which alone can make him into a capitalist. Half the working day costs capital nothing; it therefore receives a value for which it has given no equivalent. And the augmentation of values can occur only because a value over and above the equivalent is obtained, hence created (249–50).
A later passage reverts to the matter of “alienation” and turns on the proposition that “[t]he exchange of equivalents, which appears to imply property in the product of one’s own labour . . . manifests itself by a necessary dialectic as the absolute separation of labour and property and the appropriation of alien labour without exchange, without equivalent” (438). Only “on the surface” does production based on exchange entail a “free and equal exchange of equivalents. . . . ” The delusion that “[a]n exchange of equivalents occurs . . . is merely the surface layer of a [system of ] production which rests on the appropriation of alien labour without exchange, but under the guise of exchange . . . ,” referring to wage-rate determination via the market (433). 13
There is a further, rather mystical, detail to note. The capitalist “by actually paying the worker an equivalent for the production costs contained in his labour capacity, i.e. by giving him the means to preserve his labour capacity but appro- priating living labour for himself – obtains two things free of charge: firstly, the
12 See also Oakley: “Marx’s failure to use the term labour power in the ‘price of labour’ is not important” (1979: 294).
13 See on this Dobb’s helpful summary: “In the process of circulation everything had the sem- blance of an exchange of equivalents; buyers and sellers freely contracting to barter what they
had available to exchange for what they sought to acquire. . . . If, accordingly, profit or sur- plus were to be made out of such trade, this, it seemed, could only be due to the absence of competition or to some limit on free trading. Thus the so-called ‘Ricardian Socialists’ such as Hodgskin and William Thompson attributed profit on capital to ‘unequal exchanges’ or superior bargaining power of those possessing capital” (Dobb 1982: 80).
1857–1858 I: Surplus Value
surplus labour which increases the value of his capital, but at the same time, sec- ondly, the quality of living labour which preserves the previous labour materi- alised in the component parts of capital and thus preserves the previously existing value of the capital” (289–90). An empirical observation suggests that the sec- ond advantage is something of a formality: “If, e.g. in time of stagnation of trade, etc., the mills are shut down, then it can indeed be seen that the machinery rusts and the yarn is useless ballast, and rots, as soon as their relation to living labour ceases. . . . [A]s soon as he ceases to order work, his already existing capital, too, is depreciated; i.e. . . . living labour not merely adds new value, but by the very act of adding a new value to the old one, maintains, eternalises it” (290). Cer- tainly Marx is not implying the costlessness to the capitalist of maintaining capital intact. 14
Within the framework laid out above, increased productivity does not play on profits directly by increasing “the quantity of products or use values produced with a given amount of labour”; rather, “it reduces necessary labour and thus in the same proportion creates surplus labour, or, what amounts to the same thing, surplus value; because the surplus value of capital, which it obtains by means of the process of production, consists solely in the excess of surplus labour over necessary labour”
(264). 15 This addition to the surplus Marx designates as “new” or “independent” value, that is as “objectified labour, which has become free, relieved of the necessity merely to serve for the exchange of the previous labour power [Arbeitskraft]” (270). As the matter is phrased at the close of the discussion: “Growing productivity increases surplus value, though it does not increase the absolute sum of exchange values. It increases values because it produces a new value as value, i.e. a value which is not intended simply to be exchanged as an equivalent but to maintain itself; in
a word, more money” (313). The increase in exchange values is also identified as 14 On the perceived “eternalisation” of capital by current labor, see a summary statement con-
firming that Marx does not intend to deny that “existing capital” requires costly maintenance: “The preservation of the existing capital by the labour which valorises it, thus costs capital nothing, and therefore does not belong to the production costs, although the existing values are preserved in the product, and in exchange, therefore, equivalents must be given for them” (MECW 28 : 290; emphasis added).
Marx applies the principle to defend Ricardo against “the accusation . . . that he conceives only of profit and wages as necessary components of production costs, and not also of the part of capital contained in the raw material and instrument.”
15 A doubling of productivity with necessary labor initially at (say) l/4 working day, raises surplus value from 3/4 to 7/8, or by 1/8. This piece of arithmetic leads on to an interesting comment
pointing to uniformity of v/(s+v) – implying a uniform rate of surplus value, on which see below Section F – assuming competition and undifferentiated labor: “A general increase in productivity in the same proportion may increase the value of capital differently in different branches of industry, and will do so according to the different ratios of necessary labour to the living working day in these branches. This ratio would of course be the same in all branches of business in a system of free competition, if labour were in all cases simple labour, and hence necessary labour were the same” (MECW 28 : 265).
243 an increase in “wealth” because “there has been an increase in that part of its total
B. The Basic Doctrine
sum which is not merely means of circulation but money, or which is not merely an equivalent but exchange value existing for itself ” (271). 16
A criticism of Proudhon illuminates Marx’s perception of the source of profit and also touches on the value-price relation. The context relates to the problem of overproduction which we shall consider in Chapter 9, but the implications are more general: “Proudhon, who certainly hears the bells ringing, but never knows where, derives overproduction from the fact that ‘the worker cannot buy back his product’ [Proudhon 1841: 202; also in Bastiat 1850: 207–8]. By this he means that interest and profit are charged on it, or that the price charged for the product is in excess of its actual value” (MECW 28 : 352). “This proves d’abord that he understands nothing of value determination, which generally speaking, cannot possibly include an item like overcharge.” Though individual capitalists might “cheat” each other – “[i]n actual commerce, capitalist A can cheat capitalist B. One profits by the amount the other loses . . . ” – in the aggregate only the sum of surplus value is available for distribution between them: “From the entire profits that capital, i.e. the total number of capitalists, makes, there are deducted (1) the constant part of capital; (2) the wages, or the objectified labour time necessary to reproduce the living labour capacity. They can therefore divide among themselves only surplus value. The proportions . . . in which they share out this surplus value among themselves, make absolutely no difference to the exchange and to the relation of exchange between capital and labour” (352–3). “Cheating” by the capitalist in his relation with labor, is similarly set aside: “The fact that in practice, capital both in its general tendency and directly via the price, as e.g. in the truck-system, tries to cheat necessary labour and to depress it below the standard set by nature as well as by a particular state of society, is irrelevant here. Here we must assume throughout that the wages being paid are economically just, i.e. determined by the general laws of political economy” (354).
What though of the argument that the wage itself, since determined by the prices of wage goods, “already include profit”?: “It might be said that necessary labour time (i.e. wages), which therefore does not include profit but is rather to be subtracted from it, is itself in turn determined by the prices of the products, which already include profit” (353). This sort of case is rejected on the grounds that
16 Formally: “Money for itself should be designated neither as use value nor as exchange value, but as value” (MECW 28 : 274 n). On this and similar usages in the Grundrisse, see Arnon
1984; Nelson 1999, Chapter 4. In the first instance, either the “new value” is “accumulated as money i.e., added to the existing exchange values in the abstract form of exchange value” or it “pass[es] immediately into circulation,” but this second case in fact reduces to the former, for if “they all pass into circulation . . . then the prices of the commodities purchased with them rise. They all represent more gold, and, since the cost of production of gold has not fallen . . . more objectified labour” (MECW 28 : 271).
1857–1858 I: Surplus Value
“(1) price and value are confused; (2) relations are brought in which are irrelevant to the determination of value as such.” And this was the source of Proudhon’s error.
Marx set out by asserting generally “that the wages paid by the spinner to his workingmen must be sufficient to buy the necessary bushels of corn, whatever the farmer’s profit entering into the price of the bushel of corn, but that equally, on the other side, the wages paid by the farmer to his labourers must be sufficient to enable them to obtain the necessary quantity of clothing, whatever may be the profit of the spinner and weaver entering into the price of this clothing.” Now in making his case Marx simplified – it is the sort of simplication he condemned when used by others including Proudhon (see Chapter 7, p. 228) – by assuming a capitalist who “himself produces all the means of subsistence which the worker requires. . . . The worker would therefore have to buy back from the capitalist, with the money
he received from him . . . that fractional part of the product which represents his necessary labour.” Proudhon had erroneously supposed that “in the price of the fractional parts of the commodity which he buys there is included the profit in which the surplus value falling to the capitalist appears. If, therefore, his necessary labour time represents 20 thaler = a particular fractional part of the product, and if profit is 10%, the capitalist sells him the commodity for 22 thaler” (354). Accordingly, Proudhon had concluded, “the worker cannot buy back his product,
i.e. the fractional part of the total product which objectifies his necessary labour ” (in Bastiat 1850: 191–208). There follows a series of arithmetical examples purporting to demonstrate that the worker in fact can buy back his necessary wage although the capitalist makes
a profit on all units sold. Unfortunately, Marx takes for granted what requires demonstration; for he sets out by simply restating his main case whereby “exchange value” is defined as the labor embodied in “capital laid out in seed, machinery, etc.,” necessary labor time and surplus labor time – or c + v + s in later ter- minology – the latter component costing the capitalist nothing and constituting a “surplus above his expenses” (MECW 28 : 355). Here lay the source of profits, not in any overcharge. Again: “The profit of the capitalist does not arise from selling the pound of twist too dearly – he sells it for its exact value – but from selling it for more than its production costs him . . . ”(359). Marx readily conceded – as elsewhere in his text (above, p. 241) – that appearances do mislead, for “it seems as if there were an overcharge above the real value of each individual pound, and the creation of surplus value in the individual pound has disappeared from sight.”