If fixed capital is really unproductive, how is it that modern production is always increasing the quantity of fixed capital which it employs, until this has now become one of its most familiar features? Is it because it yields less profit than that yielded by the smaller handicrafts or agriculture? Again, how are we to account for the variation in the rates of profit in different industries according to the different quantities of capital employed, seeing that it is an axiom of political economy that under a régime of free competition with equal security for everybody the returns on different capitals should everywhere be the same?
Marx replies by saying that the rate of profit is the same for all capitalists within the country, but that this rate is the average of the different rates in all the different industries. In other words, it is the rate that would obtain if every industry in the country employing varying amounts of fixed and circulating capital formed a part of one whole. It must not be thought of as a kind of statistical average, but simply as a kind of average which competition brings about. The result is other than might have been expected.[977] Those industries which have a large amount of variable capital—agriculture, for example—find themselves with just the average rate of return, but draw much less in the way of surplus value than they had expected, and so Marx refers to them as undertakings of an inferior character. On the contrary, those industries which possess a large amount of constant capital draw more than their capital had led them to hope for, and Marx refers to them as industries of a superior character.[978] Hence those industries which employ a considerable amount of machinery expand at the expense of the others. It is because the latter kind find themselves in a more favourable position, or, in other words, realize greater profits, that they do employ surplus labour, from which surplus value is naturally derived.[979]
While admiring the ingenuity of the dialectics, we must not blind ourselves to the simple fact which Marx was so anxious to hide, but which is nevertheless implicit in all this, namely, that the rate of profit, which means also the value of the goods, is regulated by competition—that is, by demand and supply—but bears no relation to the quantity of labour employed. We must also remember that the entrepreneur, far from seeing his profits diminish as he employs less human labour, finds them increasing. This contradiction is just one of those flaws that finally cause the downfall of the majestic edifice so laboriously raised by Marx.
2. The Law of Concentration or Appropriation
The law of concentration of capital,[980] which can only be interpreted in the light of economic history, is an attempt to show that the régime of private property and personal gain under which we live is about to give place to an era of social enterprise and collective property.[981] Let us try to follow the argument as given by Marx.
Again must we cast back our thoughts to a period before the earliest beginnings of capital in the sixteenth century—a period when, according to the socialists, there existed neither capital nor capitalist. Capital in the economic sense of a mere instrument of production must have existed even before this time, but the socialists are of opinion that it had quite a different significance then, and it is important that we should appreciate their point of view. Their employment of the term is closely akin to the vulgar use of the word as anything that yields a rent, and yields the said rent as the result, not of the capitalist’s labour, but of the toil of others. But under the guild system which preceded this condition of things the majority of the workers possessed most of the instruments of production themselves.
Then follows a description of a series of changes which we cannot attempt to study in detail, but which forms a singularly dramatic chapter in the writings of Marx. New means of communication are established and new markets opened as the result of important mechanical discoveries coupled with the consolidation of the great modern States. The rise of banks and of trading companies, together with the formation of public debts, all this resulted in the concentration of capital in the hands of a few and the expropriation of the small proprietor.
But all this was only a beginning. If capital in this newer sense of an instrument for making profit out of the labour of others was ever to come into its own and develop, if the surplus labour and surplus value of which we have given an analysis were really to contribute to the growth and upkeep of this capital, it was necessary that the capitalist should be able to buy that unique merchandise which possesses such wonderful qualities in the open market. But labour-force can never be bought unless it has been previously detached from the instruments of production and removed from its surroundings. Every connexion with property must be severed, every trace of feudalism and of the guild system must be removed. Labour must be free—that is, saleable; or, in other words, it “must be forced to sell itself because the labourer has nothing else to sell.” For a long time the artisan was in the habit of selling his goods to the public without the intervention of any intermediary, but a day dawned when, no longer able to sell his products, he was reduced to selling himself.[982]
The creation of this new kind of property based upon the labour of others meant the extinction of that earlier form of property founded upon personal labour and the substitution for it of the modern proletariat. This was the task to which the bourgeoisie resolutely set itself for about three centuries, and its proclamation of the liberty of the labourer and the rights of man is just its pæan of victory. Its task was accomplished. The expropriated artisan who was already swelling the ranks of the proletariat seemed an established fact.
In reality this end was only partially accomplished even in the more capitalistic countries, but that there is a general movement in that direction seems clear in view of the following considerations.