The Accumulation of Capital

by Rosa Luxemburg

Let us recapitulate the conclusions to which Smith’s analysis has brought us:

(1) There is a fixed capital of society, no part of which enters into its net revenue. This fixed capital consists in ‘the materials necessary for supporting their useful machines and instruments of trade’ and ‘the produce of labour necessary for fashioning those materials into the proper form’.[77] By singling out the production of such fixed capital as of a special kind, and explicitly contrasting it with the production of consumer goods, Smith in effect transformed fixed capital into what Marx calls ‘constant capital’—that part of capital which consists of all material means of production, as opposed to labour power.

(2) There is a circulating capital of society. After eliminating the part of fixed, or constant, capital, there remains only the category of consumer goods; these are not capital for society but net revenue, a fund of consumption.

(3) Capital and net revenue of an individual do not strictly correspond with capital and net revenue of society. What is nothing but fixed, or constant capital for society as a whole cannot be capital for the individual; it must be revenue, too, a fund of consumption, comprising as it does those parts of fixed capital which represent the workers’ wages and the capitalists’ profits. On the other hand, the circulating capital of the individuals cannot be capital for society but must be revenue, especially in so far as it takes the form of provisions.

(4) As regards the value of the total annual social product, no trace of capital remains. It can be resolved completely into the three kinds of income: wages, profits of capital, and rents.

If we tried from this haphazard collection of odd ideas to build up a picture of the annual reproduction of total social capital, and of its mechanism, we should soon despair of our task. Indeed, all these observations leave us infinitely remote from the solution of the problem how social capital is annually renewed, how everybody’s consumption is ensured by his income, while the individuals can nevertheless adhere to their own points of view on capital and income. Yet if we wish to appreciate fully Marx’s contribution to the elucidation of this problem, we must be fully aware of all this confusion of ideas, the mass of conflicting points of view.

Let us begin with Adam Smith’s last thesis which alone would suffice to wreck the treatment of the problem of reproduction in classical economics.

Smith’s basic principle is that the total produce of society, when we consider its value, resolves itself completely into wages, profits and rents: this conception is deeply rooted in his scientific theory that value is nothing but the product of labour. All labour performed, however, is wage labour. This identification of human labour with capitalist wage labour is indeed the classical element in Smith’s doctrine. The value of the aggregate product of society comprises both the recompense for wages advanced and a surplus from unpaid labour appearing as profit for the capitalist and rent for the landowner. What holds good for the individual commodity must hold good equally for the aggregate of commodities. The whole mass of commodities produced by society—taken as a quantity of value—is nothing but a product of labour, of paid as well as unpaid labour, and thus it is also to be completely resolved into wages, profits, and rents.

It is of course true that raw materials, instruments, and the like, must be taken into consideration in connection with all labour. Yet is it not true also that these raw materials and instruments in their turn are equally products of labour which again may have been paid or unpaid? We may go back as far as we choose, we may twist and turn the problem as much as we like, yet we shall find no element in the value of any commodity—and therefore none in the price—which cannot be resolved purely in terms of human labour. We can distinguish, however, two parts in all labour: one part repays the wages and the other accrues to the capitalist and landlord. There seems nothing left but wages and profits—and yet, there is capital, individual and social capital. How can we overcome this blatant contradiction? The fact that Marx himself stubbornly pursued this matter for a long time without getting anywhere at first as witness his Theories of the Surplus Value,[78] proves that this theoretical problem is indeed extremely hard to solve. Yet the solution he eventually hit on was strikingly successful, and it is based upon his theory of value. Adam Smith was perfectly right: nothing but labour constitutes the value of the individual commodity and of the aggregate of commodities. He was equally right in saying that from a capitalist point of view all labour is either paid labour which restores the wages, or unpaid labour which, as surplus value, accrues to the various classes owning the means of production. What he forgot, however, or rather overlooked, is the fact that, apart from being able to create new value, labour can also transfer to the new commodities the old values incorporated in the means of production employed. A baker’s working day of ten hours is, from the capitalist point of view, divided into paid and unpaid hours, into v + s. But the commodity produced in these ten hours will represent a greater value than that of ten hours’ labour, for it will also contain the value of the flour, of the oven which is used, of the premises, of the fuel and so on, in short the value of all the means of production necessary for baking. Under one condition alone could the value of any one commodity be strictly equal to v + s; if a man were to work in mid-air, without raw materials, without tools or workshop. But since all work on materials (material labour) presupposes means of production of some sort which themselves result from preceding labour, the value of this past labour is of necessity transferred to the new product.

The process in question does not only take place in capitalist production; it is the general foundation of human labour, quite independent of the historical form of society. The handling of man-made tools is a fundamental characteristic of human civilisation. The concept of past labour which precedes all new labour and prepares its basis, expresses the nexus between man and nature evolved in the history of civilisation. This is the eternal chain of closely interwoven labouring efforts of human society, the beginnings of which are lost in the grey dawn of the socialisation of mankind, and the termination of which would imply the end of the whole of civilised mankind. Therefore we have to picture all human labour as performed with the help of tools which themselves are already products of antecedent labour. Every new product thus contains not only the new labour whereby it is given its final form, but also past labour which had supplied the materials for it, the instruments of labour and so forth. In the production of value, that is commodity production into which capitalist production also enters, this phenomenon is not suspended, it only receives a particular expression. Here the labour which produces commodities assumes a twofold characteristic: it is on the one hand useful concrete labour of some kind or other, creating the useful object, the value-in-use. On the other hand, it is abstract, general, socially necessary labour and as such creates value. In its first aspect it does what labour has always done: it transfers to the new product past labour, incorporated in the means of production employed, with this distinction only, that this past labour, too, now appears as value, as old value. In its second aspect, labour creates new value which, in capitalist terms, can be reduced to paid and unpaid labour, to v + s. Thus the value of every commodity must contain old value which has been transferred by labour qua useful concrete labour from the means of production to the commodity, as well as the new value, created by the same labour qua socially necessary labour merely as this labour is expended hour by hour.