A History of Economic Doctrines / from the time of the physiocrats to the present day

by Charles Gide; Charles Rist

Naturally the capitalist’s interest is to augment this surplus value which goes to swell his profits. This can be effected in a number of ways, and an analysis of some of these processes is one of the most characteristic features of the Marxian doctrine. This analysis may be summed up under two main divisions.

1. The first method is to prolong the working day as much as possible in order to increase the number of hours of surplus labour. If the number of working hours can be increased from ten to twelve the surplus will automatically grow from five to seven. This is exactly what manufacturers have always tried to do. Factory legislation, however, has forced some of them to limit the number of hours, and this has resulted in checking the growth of surplus value somewhat. But this check applies only to a limited number of industries.

2. A second method is to diminish the number of hours necessary to produce the worker’s sustenance. Were this to fall from five to three it is clear that the surplus would again rise from five to seven. Such reduction is possible through the perfection of industrial organisation or through a reduction in the cost of living, a result which is usually effected by means of co-operation.[970] The capitalist also often manages to bring this about by setting up philanthropic institutions or by employing women and children, who require less for their upkeep than adults. Women and children have been taken from the house and the task of housekeeping and cookery has been left in the hands of the men. But laws regulating the employment of women and children have again defeated these tactics.[971]

Such is a very brief summary of Marx’s demonstration. Its real originality lies in the fact that it does not consist of commonplace recriminations concerning the exploitation of workers and the greed of exploiters, but shows how the worker is robbed even when he gets all that he is entitled to.[972] It cannot be said that the capitalist has robbed him. He has paid him a fair price for his labour; that is, he has given it its full exchange value. The conditions of the wage bargain have been observed in every particular: equal value has been given in exchange for equal value. Given the capitalistic régime and the free competition of labour, the result could not be otherwise. The worker, perhaps, may be surprised at this unexpected result, which only secures him half the value of his labour, but he can only look on like a bewildered spectator. Everything has passed off quite correctly. The capitalist, no doubt, is a shrewd person, and knows that when he buys labour power he has got hold of a good thing, because it is the only merchandise which possesses the mysterious capacity of producing more value than it itself contains.[973] He knows this beforehand, and, as Marx says, it is “the source of considerable pleasure to him.” “It is a particularly happy condition of things when the buyer is also allowed to sell it wherever and whenever he likes without having to part with any of his privileges as a vendor.” The result is that the worker has no means of defence either legal or economic, and is as helpless as a peasant who has sold a cow in calf without knowing it.

Hitherto we have spoken only of labour. But the outstanding personage in the book—the hero of the volume—is capital, whose name appears on the title-page. Our exposition of the Marxian doctrine of production would accordingly be very incomplete if we omitted to make reference to his treatment of capital.

Taken by itself capital is, of course, sterile, for it is understood that labour is the sole source of value. But labour cannot produce unless it consumes a certain proportion of capital, and it is important that we should understand something of the combination of capital and labour.

Marx distinguishes between two kinds of capital. The first serves for the upkeep of the working-class population, either in the way of wages or direct subsistence. The older economists referred to it as the Wages Fund, and Marx calls it “variable capital.” If this kind of capital does not directly take part in production, it is this fund, after all, when consumed by labour that begets value and the surplus which is attached to it.

That other kind of capital which directly assists the productive activity of labour by supplying it with machinery, tools, etc., Marx calls “constant capital.” This latter kind of capital, which is not absorbed or vitalized by labour, does not result in the production of surplus value. It simply produces the equivalent of its value, which is the sum total of all the values absorbed during the time when it was being produced. This constant capital is evidently the crystallized product of labour, and its value, like that of any other product, is determined solely by the number of hours of labour it has taken to produce. This value, whether it include the cost of producing the raw material or merely the cost of labour employed in elaborating it, should be rediscoverable in the finished product. But there is nothing more—no surplus. The economists refer to this as depreciation, and everyone knows that depreciation implies no profits at any rate.[974]

It seems quite obvious that it is to the interest of the capitalist to employ only variable capital, or at least that it will pay him to reduce the amount of constant capital used to the irreducible minimum.[975] But we are here met with an anomaly which is the despair of all Marxian commentators, and which must have caused Marx himself some amount of embarrassment, if we may judge by the laborious demonstration which he gives.[976]