Capital, Volume I - AbsoluteAstronomy.com

Capital, Volume I by Karl Marx

Karl Marx

Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...

, is a critical analysis of capitalism

Capitalism

Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

as political economy

Political economy

Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...

, meant to reveal the economic laws of the capitalist

Capitalism

mode of production

Mode of production

In the writings of Karl Marx and the Marxist theory of historical materialism, a mode of production is a specific combination of:...

, how it was the precursor of the socialist mode of production

Mode of production

In the writings of Karl Marx and the Marxist theory of historical materialism, a mode of production is a specific combination of:...

, and of the class struggle

Class struggle

Class struggle is the active expression of a class conflict looked at from any kind of socialist perspective. Karl Marx and Friedrich Engels wrote "The [written] history of all hitherto existing society is the history of class struggle"....

rooted in the capitalist social relations of production. The first of three volumes of Das Kapital, Kritik der politischen Ökonomie (Capital: Critique of Political Economy) was published on 14 September 1867, and was the sole volume published in Marx's lifetime.

Part One: Commodities and Money

Chapters 1, 2, and 3 are a theoretical discussion of the commodity

Commodity (Marxism)

In classical political economy and especially Karl Marx's critique of political economy, a commodity is any good or service produced by human labour and offered as a product for general sale on the market. Some other priced goods are also treated as commodities, e.g...

, value, exchange

Exchange value

In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market...

, and the genesis of money

Money

Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...

. As Marx writes, "Beginnings are always difficult in all sciences ... the section that contains the analysis of commodities, will therefore present the greatest difficulty." The modern reader is often perplexed about Marx going on about "one coat is equal to ten yards of linen..". Professor John Kenneth Galbraith

John Kenneth Galbraith

John Kenneth "Ken" Galbraith , OC was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism...

reminds us that "the purchase of a coat by an average citizen was an action comparable in modern times to the purchase of an automobile or even a house."

Section 1. The Two Factors of the Commodity: Use-Value and Value (Substance of Value, Magnitude of Value)'

Marx begins his analysis with what he calls the "commodity

Commodity (Marxism)

". Marx explains that the commodity is something independent of ourselves that meets a human want or need of any kind. Marx explains that the commodity is a "use-value

Use value

Use value or value in use is the utility of consuming a good; the want-satisfying power of a good or service in classical political economy. In Marx's critique of political economy, any labor-product has a value and a use-value, and if it is traded as a commodity in markets, it additionally has an...

". The use-value is determined by how useful the commodity is. The actual use-value, however, is immeasurable. He explains that use-value can only be determined "in use or consumption". After determining the commodity as being a use-value, he explains that a commodity is also an "exchange-value

Exchange value

In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market...

". He explains this as the quantity of other commodities that it will exchange for. He gives the example of corn

Cereal

Cereals are grasses cultivated for the edible components of their grain , composed of the endosperm, germ, and bran...

and iron

Iron

Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...

. No matter their relationship, there will always be an equation where a certain amount of corn will exchange for a certain amount of iron. He sets up this example to say that all commodities are in essence parallel in that they can always be exchanged for certain quantities of other commodities. He also explains that one cannot determine the exchange-value of the commodity simply by looking at it or examining it natural qualities. The exchange-value is not material but a measure made by humans. In order to determine the exchange-value, one must see the commodity being exchanged with other commodities. Marx explains that these two aspects of commodities are at the same time separate but also connected in that one cannot be discussed without the other. Marx explains that while the use-value of something can only change in quality, the exchange-value can only change in quantity.

Marx then goes on to explain that the exchange-value of a commodity is merely an expression of its value. Value

Theory of value (economics)

"Theory of value" is a generic term which encompasses all the theories within economics that attempt to explain the exchange value or price of goods and services...

is what connects all commodities so that they can all be exchanged with each other. The value of a commodity is determined by its socially necessary labour time

Socially necessary labour time

Socially necessary labour time in Marx's critique of political economy is what regulates the exchange value of commodities in trade and consequently guides producers in their attempt to economise on labour....

, defined as "the labour time required to produce any use-value under the conditions of production, normal for a given society and with the average degree of skill and intensity of labour prevalent in that society." Therefore, Marx explains, the value of a commodity does not stay constant as it advances or it varies in labour productivity, which may occur for many reasons. However, value does not mean anything unless it conjoins back to use value. If a commodity is produced and no one wants it or it has no use, then "the labour does not count as labour," and therefore it has no value. He also says that one can produce use-value without being a commodity. If one produces a commodity solely for his own benefit or need, he has produced use-value but no commodity. Value can only be derived when the commodity has use-value for others. Marx calls this social use-value. He writes all of this to explain that all aspects of the commodity (use-value, exchange-value, and value) are all separate from each other, but are also essentially connected to each other.

Section 2. The Dual Character of the Labour Embodied in Commodities

Marx discusses the relationship

Labor theory of value

The labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...

between labor and value. Marx states if there is a change in the quantity of labor expended to produce an article, the value of the article will change. This is a direct correlation. Marx gives as an example the value of linen

Linen

Linen is a textile made from the fibers of the flax plant, Linum usitatissimum. Linen is labor-intensive to manufacture, but when it is made into garments, it is valued for its exceptional coolness and freshness in hot weather....

versus cloth to explain the worth of each commodity in a capitalist

Capitalism

society. Linen is hypothetically twice as valuable as thread because more socially necessary labor time was used to create it. Use-value of every commodity is produced by useful labor. Use-value measures the actual usefulness of a commodity, whereas value is a measurement of exchange value

Exchange value

In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market...

. Objectively speaking, linen and thread have some value. Different forms of labor create different kinds of use-values. The value of the different use-values created by different types of labor can be compared because both are expenditures of human labor. One coat and ten yards of linen take the same amount of socially necessary labor time to make, so they have the same value.
As we have expected in the production of the commodities, it lessen the capacity to create a high value of products.

(a) The Simple, Isolated, or Accidental Form of Value

In this chapter Marx explains that commodities come in double form: natural form

Natural resource

Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....

and value form

Value-form

The value-form or form of value is a concept in Karl Marx’s critique of the political economy. It refers to a socially attributed characteristic of a commodity which contrasts with its tangible use-value or utility .The concept is introduced in the first chapter of Das Kapital where Marx argues...

. We do not know commodities' value until we know how much human labor was put in it. Commodities are trade

Trade

Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...

d for one another after their values are decided socially. Then there is value-relation, which lets us trade between different kind of commodities. Marx explains value without using money

Money

. Marx uses 20 yards of linen and a coat to show the value of each other (20 yards of linen = 1 coat, or 20 yards of linen are worth 1 coat). Marx calls this an equivalent form. He adds that comparing 20 yards of linen to itself (20 yards of linen = 20 yards of linen, or 20 yards of linen are worth 20 yards of linen) is meaningless, because there is no expression of value. Linen is an object of utility whose value cannot be determined until it is compared to another commodity. Determining the value of a commodity depends on its position in the expression of comparative exchange value.

(b) The Total or Expanded Form of Value

Marx begins this section with an equation

Equation

An equation is a mathematical statement that asserts the equality of two expressions. In modern notation, this is written by placing the expressions on either side of an equals sign , for examplex + 3 = 5\,asserts that x+3 is equal to 5...

for the expanded form of value: "z commodity A = u commodity B or = v commodity C or = w commodity D or = x commodity E or = etc." where the lower case letters (z, u, v, w, and x) represent quantities of a commodity and upper case letters (A, B, C, D, and E) represent specific commodities so that an example of this could be: "20 yards of linen = 1 coat or = 10 lb. tea or = 40 lb. coffee or = 1 quarter of corn or = 2 ounces of gold or = ½ ton of iron or = etc." Marx explains that with this example of the expanded form of value the linen "is now expressed in terms of innumerable other members of the world of commodities. Every other commodity now becomes a mirror of linen's value." At this point, the particular use-value of linen becomes unimportant, but rather it is the magnitude of value

Order of magnitude

An order of magnitude is the class of scale or magnitude of any amount, where each class contains values of a fixed ratio to the class preceding it. In its most common usage, the amount being scaled is 10 and the scale is the exponent being applied to this amount...

(determined by socially necessary labor time) possessed in a quantity of linen which determines its exchange with other commodities. This chain of particular kinds (different commodities) of values is endless: it contains every commodity and changes constantly as new commodities come into being.

(c) The General Form of Value

Marx begins this section with the table:

Then he divides this sub-set of section 3 into three parts:

(1) The changed character of the form of value. After highlighting the previous two sub-sets Marx explains that these commodities now have a unified exchange-value, expressed through comparisons to one single kind of commodity. All commodities are now differentiated from their use-values and are equated to each other as exchange-values. The general value-form, which represents all products of labour, shows that it is the social resume of the world of commodities. In the world of commodities the character possessed by all labour of being human labour constitutes its specific social character.

(2) The development of the relative and equivalent forms of value: their interdependence. Here Marx writes about the interrelatedness of the relative form and the equivalent form. He first explains that there is a correlation between them even though they are polar opposites. He states that we must also realize that the equivalent form is a representation and an offshoot of the relative form.

"This equivalent has no relative form of value in common with other commodities; its value is rather, expressed relatively in the infinite series of all other physical commodities."

Things cannot be either completely relative or completely equivalent. There must be a combination to express the magnitude and universal equivalency

If and only if

In logic and related fields such as mathematics and philosophy, if and only if is a biconditional logical connective between statements....

. That form is the expanded relative form of value, which is a "specific relative form of value of the equivalent commodity."

(3) The transition from the general form of value to the money form. This is the transitional idea between taking the general form (the universal equivalent form for all general commodities) and turning it into the money form. Here Marx describes how there can be a commodity so universal to all commodities that it actually excludes itself to the point of no longer being an equivalent commodity but rather a representation of a commodity. Acceptance#Social acceptance of its commodity exchange value is so universal that it can transition into a form of money, for example, gold

Gold

Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...

(d) The Money Form

Here Marx illustrates the shift to "money form". Universal equivalent form or universal exchangeability has caused gold to take the place of linen in the socially accepted customs of exchange. Once it had reached a set value in the world of commodities gold became the money commodity. Money form is distinct from Sections A, B, and C.

Now that gold has a relative value against a commodity (such as linen), it can attain price

Price

-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...

form:

"The ‘price form' of linen is therefore: 20 yards of linen = 2 ounces of gold, or, if 2 ounces of gold when coined are £2, 20 yards of linen = £2."

This illustrates the application of price form as a universal equivalent. Marx concludes this section by pointing out that "the simple commodity-form is therefore the germ of the money-form." And, the simplified application of this idea is then illustrated as:

x of commodity A = y of commodity B

Section 4. The Fetishism of the Commodity and Its Secret

Marx's inquiry in this section focuses on the nature of the commodity, apart from its basic use-value. In other words, why does the commodity in its value-form (exchange) appear to be something other than the aggregation of homogenous human labor? Marx contends that due to the historical circumstances

History of capitalism

The history of capitalism can be traced back to early forms of merchant capitalism practiced in Western Europe during the Middle Ages, though many economic historians consider the Netherlands as the first thoroughly capitalist country. In Early modern Europe it featured the wealthiest trading city ...

of capitalist society, the values of commodities are usually studied by political economists

Political economy

in their most advanced form: money. These economists see the value of the commodity as something metaphysically autonomous from the social labor that is the actual determinant of value. Marx calls this fetishism

Commodity fetishism

In Marx's critique of political economy, commodity fetishism denotes the mystification of human relations said to arise out of the growth of market trade, when social relationships between people are expressed as, mediated by and transformed into, objectified relationships between things .The...

—the process whereby the society that originally generated an idea eventually, through the distance of time, forgets that the idea is actually a social and therefore all-too-human product. This society will no longer look beneath the veneer of the idea (in this case the value of commodities) as it currently exists. The society will simply take the idea as a natural and/or God-given inevitability that they are powerless to alter.

Marx compares this fetishism to the manufacturing of religious belief: people initially create a deity

Deity

A deity is a recognized preternatural or supernatural immortal being, who may be thought of as holy, divine, or sacred, held in high regard, and respected by believers....

to fulfill whatever desire or need they have in present circumstances, but then these products of the human brain

Imagination

Imagination, also called the faculty of imagining, is the ability of forming mental images, sensations and concepts, in a moment when they are not perceived through sight, hearing or other senses...

appear as autonomous figures endowed with a life of their own and enter into a relations both with each other and with the human race. Similarly, commodities only enter into relation with each other through exchange, which is a purely social phenomenon. Before that, they are simply useful items, but not commodities. Value itself cannot come from use-value because there is no way to compare the usefulness of an item; there are simply too many potential functions.

Once in exchange, commodities' values are determined by the amount of socially useful labor-time put into them because labor can be generalized. For example, it takes longer to mine diamond

Diamond

In mineralogy, diamond is an allotrope of carbon, where the carbon atoms are arranged in a variation of the face-centered cubic crystal structure called a diamond lattice. Diamond is less stable than graphite, but the conversion rate from diamond to graphite is negligible at ambient conditions...

s than it does to dig quartz

Quartz

Quartz is the second-most-abundant mineral in the Earth's continental crust, after feldspar. It is made up of a continuous framework of SiO4 silicon–oxygen tetrahedra, with each oxygen being shared between two tetrahedra, giving an overall formula SiO2. There are many different varieties of quartz,...

, so diamonds are worth more. Fetishism within capitalism occurs once labor has been socially divided and centrally coordinated, and the worker no longer owns the means of production

Means of production

Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...

. They no longer have access to the knowledge of how much labor went into a product because they no longer control its distribution. The only obvious determinant of value remaining to the mass of people is the value that was assigned in the past. Thus, the value of a commodity seems to arise from a mystical property inherent to it, rather than from labor-time, the actual determinant of value.

Chapter 2: Exchange

In chapter 2 Marx explains the social and private characteristics of the process of exchange. According to Marx, owners of commodities must recognise one another as owners of commodities which embody value. He explains exchange not merely as a swapping of items, but as a contract between the two. It is this exchange which also allows the commodity in question to realise its exchange value, and he explains that the realisation of exchange value always precedes that of use value because one must obtain the item in question before its actual utility is realised. Furthermore, Marx explains that the use value in question can only be realised by he who purchases the commodity, whereas he who is selling a commodity must find no utility in the item, save the utility of its exchange value. Marx concludes the chapter with an abstraction about the necessitated advent of money wherever exchange takes place, starting between nations, and gradually becoming more and more domestic. This money form which arises out of the necessity of liquidating exchange becomes the universal equivalent form which is set aside from all commodities as a mere measure of value, creating a money:commodities dualism.Chapter 2

(a) Functions of Metallic Money

In chapter 3, section I Marx examines the functions of money commodities

Commodity (Marxism)

. According to Marx the main function of money is to provide commodities with the medium for the expression of their value

Value (economics)

An economic value is the worth of a good or service as determined by the market.The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods...

s, i.e. labor time. The function of money as a measure of value

Valuation (finance)

In finance, valuation is the process of estimating what something is worth. Items that are usually valued are a financial asset or liability. Valuations can be done on assets or on liabilities...

serves only in an imaginary or ideal capacity. That is, the money that performs the functions of a measure of value is only imaginary because it is society that has given the money its value. The value of one ton of iron

Iron

for example, is expressed by an imaginary quantity of the money commodity, which contains the same amount of labor as the iron.

(b) Multiple Forms of Metallic Money

As a measure of value and a standard of price

Price

, Money performs two functions. First, it is the measure of value as the social incarnation of human labor. Second, it serves as a standard of price as a quantity of metal with a fixed weight. As in any case where quantities of the same denomination are to be measured the stability of the measurement is of the utmost importance. Hence the less the unit of measurement is subject to variations

Price Variance

The price variance of a material is computed as follows:...

the better it fulfills its role. Metallic currency can only serve as a measure of value because it is itself a product of human labor.

Commodities with definite prices appear in this form: a commodity A = x gold

Gold

; b commodity B = y gold; c commodity C = z gold, etc. where a, b, c represent definite quantities of the commodities A, B, C and x, y, z definite quantities of gold.

In spite of the varieties of commodities their values become magnitudes of the same denomination: gold-magnitudes. Since these commodities are all magnitudes of gold they are comparable and interchangeable.

(c) Price

Price

is the money-name of the labor objectified in a commodity. Like the relative form of value in general, price expresses the value of a commodity by asserting that a given quantity of the equivalent is directly interchangeable. The price form implies both the exchangeability of commodities for money and the necessity of exchange. Gold serves as an ideal measure of value only because it has already established itself as the money commodity in the process of exchange.

(a) The Metamorphosis of Commodities

In this section Marx further examines the paradoxical nature of the exchange of commodities. The contradictions that exist within the process of exchange provide the structure for "social metabolism". The process of social metabolism "transfers commodities from hands in which they are non-use-values to hands in which they are use-values

Use value

." Commodities can only exist as "values" for a seller

Sales

A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....

and "use-values" for a buyer. In order for a commodity to be both a "value" and a "use-value" it must be produced for exchange. The process of exchange alienates the ordinary commodity when its antithesis, the "money commodity" becomes involved. During exchange, the money commodity confronts the ordinary commodity disguising the true form of the ordinary commodity. Commodities as use-values, and money as exchange-value are now on the opposite poles, and exist as separate entities. In practice, in the process of exchange, gold or money functions as "exchange-value

Exchange value

In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market...

" while commodities function as "use-values." A commodity's existence is only validated through the form of money, and money is only validated through the form of a commodity. This dualistic phenomenon involving money and commodities is directly related to Marx's concept of "use-value" and "value."

Commodity-Money-Commodity

Marx examines the two metamorphoses of the commodity through sale and purchase. In this process, "as far as concerns its material content, the movement is C-C, the exchange of one commodity for another, the metabolic interaction of social labor, in whose result the process itself becomes extinguished."

First metamorphosis of the commodity, or sale.

In the process of sale, the value of a commodity, which is measured by socially necessary labor-time, is then measured by the universal equivalent, gold.

The second or concluding metamorphosis of the commodity: purchase.

Through the process of purchase all commodities lose their form by the universal alienator, money. "Since every commodity disappears when it becomes money it is impossible to tell from the money itself how it got into the hands of its possessor, or what article has been changed into it".

A purchase represents a sale although they are two separate transformations. This process allows for the movement of commodities and the circulation of money

Money circulation

Banknotes have a limited lifetime, after which they are collected for destruction, usually recycling or shredding. A banknote is removed from the money supply by banks or other financial institutions due to everyday wear and tear from its handling...

(b) The Circulation of Money

The circulation

Circulation (currency)

The social system in which we live has usually developed to the stage for money to be used as the medium for the exchange of goods and services. Hence the money is an important aspect of the general social or macroeconomics system...

of money is first initiated by the transformation of a commodity

Commodity (Marxism)

into money. The commodity is taken from its natural state and transformed into its monetary state. When this happens the commodity "falls out of circulation into consumption." The previous commodity now in its monetary form replaces a new and different commodity continuing the circulation of money. In this process, money is the means for the movement and circulation of commodities. Money assumes the measure of value of a commodity, i.e. the socially necessary labor-time. The repetition of this process constantly removes commodities from their starting places, taking them out of the sphere of circulation. Money circulates in the sphere and fluctuates with the sum of all the commodities that co-exist within the sphere. The price of commodities varies by three factors: "the movement of prices, the quantity of commodities in circulation, and the velocity of circulation of money."

(c) Coin: The Symbol of Value

Money takes the shape of a coin

Coin

A coin is a piece of hard material that is standardized in weight, is produced in large quantities in order to facilitate trade, and primarily can be used as a legal tender token for commerce in the designated country, region, or territory....

because of how it behaves in the sphere of circulation. Gold became the universal equivalent by the measurement of its weight in relation to commodities. This process was a job that belonged to the state

State (polity)

A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...

. The problem with gold was that it wore down as it circulated from hand to hand, so the state introduced new circulating media: silver

Silver

Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...

, copper

Copper

Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...

, and inconvertible paper money issued by the State

Banknote

A banknote is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. In addition to coins, banknotes make up the cash or bearer forms of all modern fiat money...

as a representation of gold. Marx views money as a "symbolic existence" which haunts the sphere of circulation and arbitrarily measures the product of labor.

(a) Hoarding

The exchange of money

Money

is a continuous flow of sales and purchase. Marx writes, "In order to be able to buy without selling, [one] must have previously sold without buying." This simple illustration demonstrates the essence of hoarding. In order to potentially buy without selling a commodity in your possession, you must have hoarded some degree of money in the past. Money becomes greatly desired due to potential purchasing power

Purchasing power

Purchasing power is the number of goods/services that can be purchased with a unit of currency. For example, if you had taken one dollar to a store in the 1950s, you would have been able to buy a greater number of items than you would today, indicating that you would have had a greater purchasing...

. If one has money, one can exchange it for commodities, and vice versa. However, while satisfying this newly arisen fetish for gold

Gold

, the hoard causes the hoarder to make personal sacrifices.

(b) Means of Payment

In this section Marx analyzes the relationship between debtor

Debtor

A debtor is an entity that owes a debt to someone else. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor...

and creditor

Creditor

A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...

and exemplifies the idea of the transfer of debt

Balance transfer

A balance transfer is the transfer of the balance in an account to another account, often held at another institution.-Types of balance transfers:...

. In relation to this, Marx discusses how the money-form has become a means of incremental payment

Payment

A payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation....

for a service or purchase. He states that the "function of money as means of payment begins to spread out beyond the sphere of circulation of commodities. It becomes the universal material of contracts

Contract theory

In economics, contract theory studies how economic actors can and do construct contractual arrangements, generally in the presence of asymmetric information. Because of its connections with both agency and incentives, contract theory is often categorized within a field known as Law and economics...

." Due to fixed payments and the like, debtors are forced to hoard money in preparation for these dates. "While hoarding, as a distinct mode of acquiring riches

Wealth

Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...

, vanishes with the progress of civil society

Civil society

Civil society is composed of the totality of many voluntary social relationships, civic and social organizations, and institutions that form the basis of a functioning society, as distinct from the force-backed structures of a state , the commercial institutions of the market, and private criminal...

, the formation of reserves of the means of payment grows with that progress."

(c) World Money

Countries have reserves of gold

Gold

and silver

Silver

for two purposes:

Home Circulation
Circulation (currency)
The social system in which we live has usually developed to the stage for money to be used as the medium for the exchange of goods and services. Hence the money is an important aspect of the general social or macroeconomics system...
External Circulation in World Markets
International finance
International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, global financial system, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes...

.

Marx says that it is essential for countries to hoard, as money is needed "as the medium of the home circulation and home payments, and in part out of its function of money of the world." Accounting for this hoarding in the context of hoarded money's inability to contribute to the growth

Economic growth

In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...

of a capitalist society, Marx states that bank

Bank

A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

s are the relief to this problem:

Part Two: The Transformation of Money into Capital

In Part II of Volume I of Capital, Karl Marx explains the three components necessary to create capital through the process of circulation: the first section of Part II, Chapter 4, explains the general formula for capital; Chapter 5 delves further by explaining the contradictions of the general formula; and the last section of Part II, Chapter 6, describes the sale and purchase of labor power within the general formula.

Money, as described by Marx, can only be transformed into capital through the circulation of commodities. Money originates not as capital, but only as means of exchange. Money becomes capital when it is used as a standard for exchange. The circulation of commodities has two forms that make up the general formula: C-M-C and M-C-M. C-M-C represents the process of first selling a commodity for money (C-M) and then using that money to buy another commodity (M-C): "selling in order to buy". M-C-M describes transacting money for a commodity (M-C) and then selling the commodity for more capital, (C-M).

The largest distinction between the two forms appears through the result of each. During C-M-C, a commodity sold will be replaced by a commodity bought. In this form money only acts as a means of exchange. The transaction ends there, with the exchange of use-values and the money has, according to Marx, "been spent once and for all." The C-M-C form facilitates the exchange of one use-value for another. On the contrary, during M-C-M, money is essentially exchanged for more money. The person who invested money into a commodity sells it for money. The money returns to the initial starting place, so the money is not spent, as in the C-M-C form of exchange, but ins. The only function of this process lies in its ability to valorize. By withdrawing more money from circulation than the amount put in, money can be reinvested in circulation creating repeated accumulation of monetary wealth—a never ending process. Thus M-C-M' becomes the objective of M-C-M. M' stands for the money returned in the circulative process (M) plus the additional surplus

Economic surplus

In mainstream economics, economic surplus refers to two related quantities. Consumer surplus or consumers' surplus is the monetary gain obtained by consumers because they are able to purchase a product for a price that is less than the highest price that they would be willing to pay...

value gained (M∆): M'=M+M∆. Capital can only be created once the process of M-C-M has been completed and money returns to the starting point to be re-entered into circulation.

Karl Marx points out that, "in its pure form, the exchange of commodities is an exchange of equivalents, and thus it is not a method of increasing value," and so a contradiction reveals itself. If the participating individuals exchanged equal values, neither of the individuals would increase capital. The needs being satisfied would be the only gain. The creation of surplus-value then becomes rather peculiar for Marx, because commodities, in accordance with socially assigned necessary values, should not create surplus-value if traded fairly. Marx investigates the matter and concludes, "surplus-value cannot arise from circulation, and therefore that, for it to be formed, something must take place in the background which is not visible in the circulation itself." According to Marx, labor determines the value of a commodity. Through the example of a piece of leather, Marx then describes how humans can, through the means of labor, increase the value of a commodity. Turning the leather into boots increases the value of the leather, because now more labor has been applied to the leather. Marx then explains the contradiction of the general formula. Capital cannot be created from circulation because equal exchange of commodities creates no surplus value, and unequal exchange of commodities changes the distribution of wealth, but still does not produce surplus-value. Capital cannot be created without circulation either, because labor creates value within the general formula. Marx writes, "It must have its origin both in circulation and not in circulation." A "double result" remains: The capitalist must buy commodities at their value, sell them at their value, and yet conclude the process with more money than at the beginning. The profit seemingly originates both inside and outside the general formula.

The intricacies of the general formula relate to the role of labor-power.

In the last section of Part II, Marx investigates labor-power as a commodity. Labor-power existing on the market depends on two fulfillment's: the workers must offer it for temporary sale on the market

Market economy

A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...

and the workers must not possess the means to their own subsistence. As long as the labor-power is sold temporarily then the worker is not considered a slave. Worker dependence for a means of subsistence ensures a large working force, necessary for the production of capital. The value of labor bought on the market as a commodity represents the definite amount of socially necessary labor objectified in the worker, or according to Marx, "the labor-time necessary for the production [of the worker]," which means the food

Food

Food is any substance consumed to provide nutritional support for the body. It is usually of plant or animal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals...

, education

Education

Education in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...

, shelter

Homelessness

Homelessness describes the condition of people without a regular dwelling. People who are homeless are unable or unwilling to acquire and maintain regular, safe, and adequate housing, or lack "fixed, regular, and adequate night-time residence." The legal definition of "homeless" varies from country...

, health

Health care

Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...

, etc., required to create and maintain a worker. The capitalists need workers to combine with their means of production to create a sell-able commodity, and workers need capitalists to provide a wage that pays for a means of subsistence. Within the capitalist mode of production it is custom to pay for labor-power only after it has been exercised over a period of time, fixed by a contract (i.e. the work week).

Part Three: The Production of Absolute Surplus-Value

In Part Three of Capital Volume I, Karl Marx explores the production of Absolute Surplus Value. To understand this one must first understand the labor process itself. According to Marx, the production of absolute surplus value arises directly out of the labor process.

There are two sides to the labor process. On one side there is the buyer of labor power, or the capitalist. On the other side there is the worker. For the capitalist the worker possesses only one use-value, that of labor power. The capitalist buys from the worker his labor power, or his ability to do work, and in return the worker receives a wage, or a means of subsistence.

Marx says this of the labor process: "In the labor process, therefore, man's activity, via the instruments of labor, effects an alteration in the object of labor…. The product of the process is a use-value, a piece of natural material adapted to human needs by means of change in its form. Labor has become bound up in its object: labor has been objectified, the object has been worked on" The labor that the worker has put forth to produce the object has been transferred to the object, thus giving it value.

Under capitalism it is the capitalist who owns everything in the production process such as: the raw material

Raw material

A raw material or feedstock is the basic material from which a product is manufactured or made, frequently used with an extended meaning. For example, the term is used to denote material that came from nature and is in an unprocessed or minimally processed state. Latex, iron ore, logs, and crude...

s that the commodity is made of, the means of production, and the labor power (worker) itself. At the end of the labor process it is the capitalist who owns the product of their labor, not the workers who produced the commodities. Since the capitalist owns everything in the production process he is free to sell it for his own profit

Profit (economics)

In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...

. The capitalist wants to produce: "An article destined to be sold, a commodity; and secondly he wants to produce a commodity greater in value than the sum of the values of the commodities used to produce it, namely the means of production and the labor-power he purchased with his good money on the open market. His aim is to produce not only a use-value, but a commodity; not only use-value, but value; and not just value, but also surplus value."

The goal of the capitalist is to produce surplus value. However, producing surplus value proves to be difficult. If all goods are purchased at their full price then profit cannot be made. Surplus value cannot arise from buying the inputs of production at a low price and then selling the commodity at a higher price. This is due to the economic law of one price

Law of one price

The law of one price is an economic law stated as: "In an efficient market, all identical goods must have only one price."-Intuition:The intuition for this law is that all sellers will flock to the highest prevailing price, and all buyers to the lowest current market price. In an efficient market...

which states "that if trade were free, then identical goods should sell for about the same price throughout the world". What this law means is that profit cannot be made simply through the purchase and sale of goods. Price changes on the open market

Open market

The term open market is used generally to refer to a situation close to free trade and in a more specific technical sense to interbank trade in securities.-Use of the term in economic theory:...

will force other capitalists to adjust their prices in order to be more competitive, resulting in one price.

So, where does surplus value originate? Quite simply, the origin of surplus value arises from the worker. To better understand how this happens consider the following example from Marx's Capital Volume I. A capitalist hires a worker to spin ten pounds of cotton into yarn. Suppose the value of the cotton is one dollar per pound. The entire value of the cotton is 10 dollars. The production process naturally causes wear and tear on the machinery that is used to help produce the yarn. Suppose this wearing down of machinery costs the capitalist two dollars. The value of labor power is three dollars per day. Now also suppose that the working day is six hours. In this example the production process yields up 15 dollars, and also costs the capitalist 15 dollars. Thus there is no profit.

Now consider the process again, but this time the working day is 12 hours. In this case there is 20 dollars produced from the 20 pounds of cotton. Wear and tear on machinery now costs the capitalist four dollars. However, the value of labor power is still only three dollars per day. The entire production process costs the capitalist 27 dollars. However, the capitalist can now sell the yarn for 30 dollars. This is because the yarn still holds 12 hours of socially necessary labor time in it (equivalent to six dollars).

The key to this is that workers exchange their labor power in return for a means of subsistence. In this example, the means of subsistence has not changed; therefore the wage is still only 3 dollars per day. Notice that while the labor only costs the capitalist 3 dollars, the labor power produces 12 hours worth of socially necessary labor time. The secret of surplus value resides in the fact that there is a difference between the value of labor power and what that labor power can produce in a given amount of time. Labor power can produce more than its own value.

So, by working on materials during the production process the worker both preserves the value of the material and adds new value to the material. This value is added because of the labor that is necessary to transform the raw material into a commodity. But, according to Marx, value only exists in use-values, so how does the worker transfer value to a good? It is because "Man himself, viewed merely as the physical existence of labor power, is a natural object, a thing, although a living, conscious thing, and labor is the physical manifestation of that power." In order for commodities to be produced with surplus value two things must be true. Man must be a living commodity, a commodity that produces labor power, and it must be the nature of this labor power to produce more than its own value.

When capitalists begin production they initially spend their money on two inputs. These inputs can be represented with the capital advanced equation:

; where C is capital advanced, c is constant capital

Constant capital

Constant capital , is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital...

, and v is variable capital. Constant capital is nothing more than the means of production (factories

Factory

A factory or manufacturing plant is an industrial building where laborers manufacture goods or supervise machines processing one product into another. Most modern factories have large warehouses or warehouse-like facilities that contain heavy equipment used for assembly line production...

, machine

Machine

A machine manages power to accomplish a task, examples include, a mechanical system, a computing system, an electronic system, and a molecular machine. In common usage, the meaning is that of a device having parts that perform or assist in performing any type of work...

ry, raw materials, etc.). Constant capital

Constant capital

Constant capital , is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital...

has a fixed value which can be transferred to the commodity, though the value added to the commodity can never be more than the value of constant capital itself. The source of surplus value comes instead from Variable capital or labor power. Labor power is the only commodity capable of producing more value than it possesses.

The accumulation of capital

Capital accumulation

The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...

occurs after the production process is completed. The equation for the accumulation of capital is

. Here C' is the value created during the production process. C' is equal to constant capital plus variable capital plus some extra amount of surplus value (s), which arises out of variable capital. Marx says that surplus value is "merely a congealed quantity of surplus labor-time… nothing but objectified surplus labor."

To better understand the rate of surplus value one must understand that there are two parts to the working day

Working time

Working time is the period of time that an individual spends at paid occupational labor. Unpaid labors such as personal housework are not considered part of the working week...

. One part of the working day is the time necessary in order to produce the value of the workers labor power. The second part of the working day is surplus labor time, which produces no value for the laborer, but produces value for the capitalist. The rate of surplus value is a ratio of surplus labor time (s) to necessary labor time (v). The rate of surplus value (s/v) is also referred to by Marx as the rate of exploitation.

Capitalists often maximize profits by manipulating the rate of surplus value, which can be done through the increase of surplus labor time. This method is referred to as the production of absolute surplus value. In this case capitalists merely increase the length of the working day. Though there are physical restrictions to the working day, such as general human needs, the working day is by no means fixed. This allows for great flexibility in the amount of hours worked per day.

This flexibility in working hours leads to a class struggle between capitalist and worker. The capitalists argue that they have the right to extract all of the value from a day's labor, since that is what they bought. Similarly, the worker demands the full value of his own commodity. The worker needs to be able to renew his labor power so that it can be sold again anew. The capitalist sees working fewer hours as theft from capital, and the worker see working too many hours as theft from laborers. This class struggle

Class struggle

can be seen throughout history, and eventually laws

Labour law

Labour law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations. As such, it mediates many aspects of the relationship between trade unions, employers and employees...

were put in place to limit the length of a working day. This forced capitalists to find a new way in which to exploit workers.

Part Four: The Production of Relative Surplus-Value

Part Four of Capital, Volume I consists of four chapters: 12: The Concept of Relative Surplus-Value, 13: Co-operation, 14: Division of Labour and Manufacture, and 15: Machinery and Modern Industry. In Chapter 12, Marx explains a decrease in the value of labour power by increasing production. Chapters 13–15 examine ways in which the productivity of this labour is increased.

Chapter 12: The Concept of Relative Surplus-Value

A – – – – – – – – – – B – – C

The section from A to B represents the necessary labour, and the section from B to C represents the surplus labour. Remember, the value of labour-power is "the labour-time necessary to produce labour-power." What is of interest to Marx is, "How can the production of surplus-value be increased, i.e. how can surplus labour be prolonged, without any prolongation, or independently of any prolongation, of the line AC?" Marx says it is in the best interest of the capitalist to divide the working day like this:

A – – – – – – – – – B' – B – – C

This is showing that the amount of surplus labour is increased, while the amount of necessary labour is decreased. Marx calls this decrease in necessary labour and increase in surplus value as relative surplus-value (whereas when there is an actual lengthening in the working day and surplus value is produced, this is called absolute surplus-value.) For this to happen, the productivity of labour must increase. The perpetual drive of capital, according to Marx, is to increase the productivity of labor, leading to a decrease in the value of commodities. In this, the value of the workers means of subsistence decreases, resulting in a decrease in the value of his labour power.

Chapter 13: Co-operation

According to Marx, co-operation

Cooperation

Cooperation or co-operation is the process of working or acting together. In its simplest form it involves things working in harmony, side by side, while in its more complicated forms, it can involve something as complex as the inner workings of a human being or even the social patterns of a...

happens "when numerous workers work together side by side in accordance with a plan, whether in the same process, or in different but connected processes." Co-operation also shortens the time needed to complete a given task. Marx says, "If the labour process is complicated, then the sheer number of the co-operators permits the apportionment of various operations to different hands, and consequently their simultaneous performance. The time necessary for the completion of the whole work is thereby shortened." The effort by the capitalist to organize co-operation is simply for reasons of increasing production. While this is the case, Marx is quick to note that the collective powers of co-operation are not created by Capital. This, according to Marx, is a disguise or a fetish. Marx cites the building of the pyramid

Pyramid

A pyramid is a structure whose outer surfaces are triangular and converge at a single point. The base of a pyramid can be trilateral, quadrilateral, or any polygon shape, meaning that a pyramid has at least three triangular surfaces...

s, which occurred prior to the organization of a capitalist mode of production.

Section 1. The Capitalist Character of Division

In this section 1, The Dual Origin of Manufacture, Marx examines manufacture as a method of production involving specialized workers, or craftsmen, working on their own detailed task. Marx cites the assembly of a carriage as an example of the first way this is brought about. In this, multiple skilled workers are brought together to produce specialized parts once unique to their craft, contributing to the overall production of the commodity. Another way this manufacture arises is by splitting up a single handicraft

Handicraft

Handicraft, more precisely expressed as artisanic handicraft, sometimes also called artisanry, is a type of work where useful and decorative devices are made completely by hand or by using only simple tools. It is a traditional main sector of craft. Usually the term is applied to traditional means...

into multiple specialized areas, further introducing a division of labour

Division of labour

Division of labour is the specialisation of cooperative labour in specific, circumscribed tasks and likeroles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation...

Section 2. The Specialized Worker and his Tools

In this section, Marx argues that a worker who performs only one task throughout his life will perform his job at a faster and more productive rate, forcing capital to favor the specialized worker to the traditional craftsman. Marx also states that a specialized worker doing only one task can use a more specialized tool, which cannot do many jobs but can do the one job well, in a more efficient manner than a traditional craftsman

Master craftsman

A master craftsman or master tradesman was a member of a guild. In the European guild system, only masters were allowed to be members of the guild....

using a multi-purpose tool on any specific task.

Section 3. The Two Fundamental Forms of Manufacture- Heterogeneous and Organic

In this section, Marx argues that a division of labour within production produces a hierarchy of labor, skilled and unskilled, and also a variation in wages. Yet according to Marx, this division within the labour process reduces a workers skills collectively, which devalues their labour power.

Section 4. The Division of Labour in Manufacture and the Division of Labour in Society

In this section, Marx states that division of labour

Division of labour

has existed in society long before the establishment of a capitalist mode of production. Marx argues that despite its existence prior to capital, division of labor is unique under capital because its goal is to increase the rate and mass of surplus value, not create a "combined product of specialized labours."

Section 5. The Capitalist Character of Division

In this section, Marx discusses an increased class struggle that is brought about by capital, or in this case in the division of labour. By creating such a division, it disguises the efforts and work of such a division as that of the capitalist. Division of labour under capitalism, according to Marx, is a subdivision of a workers potential and sets limitations on his mental and physical capacity, making him reliant upon the capitalist to exercise his specialized skill.

Section 1. Development of Machinery

In this section, Marx explains the significance of machinery to capitalists and how it is applied to the workforce

Workforce

The workforce is the labour pool in employment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic region like a city, country, state, etc. The term generally excludes the employers or management, and implies those involved in...

. The goal of introducing machinery into the workforce is to increase productivity. When productivity

Productivity

Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...

is increased, the commodity being produced is cheapened. Relative surplus value is amplified because machinery shortens the part of the day that the worker works for his or her means of subsistence and increases the time that the worker produces for the capitalist.

Marx discusses tools and machines and their application to the process of production. Marx claims that many experts, including himself, cannot distinguish between tool

Tool

A tool is a device that can be used to produce an item or achieve a task, but that is not consumed in the process. Informally the word is also used to describe a procedure or process with a specific purpose. Tools that are used in particular fields or activities may have different designations such...

s and machine

Machine

s. Marx states that they "call a tool a simple machine and a machine a complex tool." Marx continues to elaborate on this misinterpretation of definition, explaining that some people distinguish between a tool and a machine "by saying that in the case of the tool, man is the motive power, whereas the power behind the machine is a natural force independent of man, for instance an animal, water, wind and so on." Marx explains a flaw with this approach comparing two examples. He points out that a plow

Plough

The plough or plow is a tool used in farming for initial cultivation of soil in preparation for sowing seed or planting. It has been a basic instrument for most of recorded history, and represents one of the major advances in agriculture...

, which is powered by an animal, would be considered to be a machine and Claussen's circular loom

Loom

A loom is a device used to weave cloth. The basic purpose of any loom is to hold the warp threads under tension to facilitate the interweaving of the weft threads...

, which is able to weave at a tremendous speed, is in fact powered by one worker and there fore considered to be a tool. Marx gives a precise definition of the machine when he says "The machine, therefore, is a mechanism that, after being set in motion, performs with its tools the same operation as the worker formerly did with similar tools. Whether the motive power is derived from man, or in turn from a machine, makes no difference here."

There are three parts to fully developed machinery:

The motor mechanism powers the mechanism. Be it a steam engine
Steam engine
A steam engine is a heat engine that performs mechanical work using steam as its working fluid.Steam engines are external combustion engines, where the working fluid is separate from the combustion products. Non-combustion heat sources such as solar power, nuclear power or geothermal energy may be...

, water wheel
Water wheel
A water wheel is a machine for converting the energy of free-flowing or falling water into useful forms of power. A water wheel consists of a large wooden or metal wheel, with a number of blades or buckets arranged on the outside rim forming the driving surface...

or a person's caloric engine
Manual labour
Manual labour , manual or manual work is physical work done by people, most especially in contrast to that done by machines, and also to that done by working animals...

.
The transmitting mechanism, wheel
Wheel
A wheel is a device that allows heavy objects to be moved easily through rotating on an axle through its center, facilitating movement or transportation while supporting a load, or performing labor in machines. Common examples found in transport applications. A wheel, together with an axle,...

s, screw
Screw
A screw, or bolt, is a type of fastener characterized by a helical ridge, known as an external thread or just thread, wrapped around a cylinder. Some screw threads are designed to mate with a complementary thread, known as an internal thread, often in the form of a nut or an object that has the...

s, and ramps
Inclined plane
The inclined plane is one of the original six simple machines; as the name suggests, it is a flat surface whose endpoints are at different heights. By moving an object up an inclined plane rather than completely vertical, the amount of force required is reduced, at the expense of increasing the...

and pulley
Pulley
A pulley, also called a sheave or a drum, is a mechanism composed of a wheel on an axle or shaft that may have a groove between two flanges around its circumference. A rope, cable, belt, or chain usually runs over the wheel and inside the groove, if present...

s. These are the moving parts of the machine.
The working machine uses itself to sculpt whatever it was built to do.

Marx believes the working machine is the most important part of developed machinery. It is in fact what began the industrial revolution

Industrial Revolution

The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...

of the eighteenth century and even today it continues to turn craft

Craft

A craft is a branch of a profession that requires some particular kind of skilled work. In historical sense, particularly as pertinent to the Medieval history and earlier, the term is usually applied towards people occupied in small-scale production of goods.-Development from the past until...

into industry

Industry

Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...

.

The Machine is able to replace a worker, who works at one specific job with one tool, with a mechanism that accomplishes the same task, but with many similar tools and at a much faster rate. One machine doing one specific task soon turns into a fleet of co-operating machines accomplishing the entire process of production. This aspect of automation

Automation

Automation is the use of control systems and information technologies to reduce the need for human work in the production of goods and services. In the scope of industrialization, automation is a step beyond mechanization...

enables the capitalist to replace large numbers of human workers with machines which creates a large pool of available workers that the capitalist can choose from to form his human workforce. The worker no longer needs to be skilled in a particular trade because their job has been reduced to oversight and maintenance of their mechanical successors.

The development of machinery is an interesting cycle where inventors started inventing machines to complete necessary tasks. The machine making industry grew larger and worker's efforts started focusing toward creating these machines, the objects which steal work from its own creator. With so many machines being developed, the need for new machines to create old machines increased. For example, the spinning machine

Spinning (textiles)

Spinning is a major industry. It is part of the textile manufacturing process where three types of fibre are converted into yarn, then fabric, then textiles. The textiles are then fabricated into clothes or other artifacts. There are three industrial processes available to spin yarn, and a...

started a need for printing

Printing press

A printing press is a device for applying pressure to an inked surface resting upon a print medium , thereby transferring the ink...

and dyeing

Dyeing

Dyeing is the process of adding color to textile products like fibers, yarns, and fabrics. Dyeing is normally done in a special solution containing dyes and particular chemical material. After dyeing, dye molecules have uncut Chemical bond with fiber molecules. The temperature and time controlling...

, and the design

Design

Design as a noun informally refers to a plan or convention for the construction of an object or a system while “to design” refers to making this plan...

ing of the cotton gin

Cotton gin

A cotton gin is a machine that quickly and easily separates cotton fibers from their seeds, a job formerly performed painstakingly by hand...

. "Without steam engines, the hydraulic press

Hydraulic press

A hydraulic is a machine using a hydraulic cylinder to generate a compressive force. It uses the hydraulic equivalenta mechanical lever, and was also known as a Bramah press after the inventor, Joseph Bramah, of England. He invented and was issued a patent on this press in 1795...

could not have been made. Along with the press, came the mechanical lathe

Lathe

A lathe is a machine tool which rotates the workpiece on its axis to perform various operations such as cutting, sanding, knurling, drilling, or deformation with tools that are applied to the workpiece to create an object which has symmetry about an axis of rotation.Lathes are used in woodturning,...

and an iron cutting machine. Labor assumes a material mode of existence which necessitates the replacement of human force by natural forces."

Section 2. The Value Transferred by Machinery to the Product

As we have seen in the previous section, the machine does not replace the tool, which is powered by man. The tool multiplies and expands into the working machine that is created by man. Workers now go to work not to handle the tools of production but to work with the machine, which handles the tools. It is clear that large-scale industry increase the productivity of labor to an extraordinary degree by incorporating its fast paced efficiency with in the process of production. What is not as clear is that this new increase in productivity does not require an equal increase in expended labor by the worker. Machinery creates no new value. The machine accumulates value from the labor, which went into producing it, and it merely transfers its value into the product it's producing until its value is used up.

Only labor power, which is bought by capitalists, can create new value. Machinery transfers its value into the product at a rate, which is dependent upon how much the total value of the machinery is. "The less value it gives up, the more productive it is, and the more its services approach those rendered by natural forces." The general rule of machinery is that the labor used to create it must be less than how much human work it replaces when it is used in the process of production. Otherwise, the machinery would not be effective in raising surplus value and instead depreciate it. This is why some machinery is not chosen to replace actual human workers because it would not be cost effective.

Section 4. The Factory

Marx begins this section with two descriptions of the factory as a whole.

"Combined co-operation of many orders of workpeople, adult and young, in tending with assiduous skill, a system of productive machines, continuously impelled by a central power" (the prime mover); on the other hand, as "a vast automaton, composed of various mechanical and intellectual organs, acting in uninterrupted concert for the production of a common object, all of them being subordinate to a self-regulated moving force."

This twofold description shows the characteristics of the relationship between the collective body of labor power and the machine. In the first description, the workers, or collective labor power, are viewed as separate entities from the machine. In the second description, the machine is the dominant force, with the collective labor acting as mere appendages of the self operating machine. Marx uses the latter description to display the characteristics of the modern factory system under capitalism.

In the factory, the tools of the worker disappear, and the worker's skill is passed on to the machine. The division of labor and specialization of skills re-appear in the factory, only now as a more exploitative form of capitalist production (work is still organized into co-operative groups.) Work in the factory usually consists of two groups, people who are employed on the machines and those who attend to the machines. The third group, outside of the factory, is a superior class of workers, trained in the maintenance and repair of the machines.

Factory work begins at childhood to ensure that a person may adapt to the systematic movements of the automated machine, therefore increasing productivity for the capitalist. Marx describes this work as being extremely exhausting to the nervous system

Nervous system

The nervous system is an organ system containing a network of specialized cells called neurons that coordinate the actions of an animal and transmit signals between different parts of its body. In most animals the nervous system consists of two parts, central and peripheral. The central nervous...

and void of intellectual activity. Factory work robs workers of basic working conditions like clean air, light

Light

Light or visible light is electromagnetic radiation that is visible to the human eye, and is responsible for the sense of sight. Visible light has wavelength in a range from about 380 nanometres to about 740 nm, with a frequency range of about 405 THz to 790 THz...

, space

Space

Space is the boundless, three-dimensional extent in which objects and events occur and have relative position and direction. Physical space is often conceived in three linear dimensions, although modern physicists usually consider it, with time, to be part of a boundless four-dimensional continuum...

, and protection

Personal protective equipment

Personal protective equipment refers to protective clothing, helmets, goggles, or other garment or equipment designed to protect the wearer's body from injury by blunt impacts, electrical hazards, heat, chemicals, and infection, for job-related occupational safety and health purposes, and in...

. Marx ends this section by asking if Fourier

Charles Fourier

François Marie Charles Fourier was a French philosopher. An influential thinker, some of Fourier's social and moral views, held to be radical in his lifetime, have become main currents in modern society...

was wrong when he called factories ‘mitigated jails'?

Section 5. The Struggle between Worker and Machine

"It took both time and experience before workers learned to distinguish between machinery and their employment by capital, and therefore to transfer their attacks

Luddite

The Luddites were a social movement of 19th-century English textile artisans who protested – often by destroying mechanised looms – against the changes produced by the Industrial Revolution, which they felt were leaving them without work and changing their way of life...

from the material instruments of production to the form of society which utilizes those instruments."

Marx describes the machine as the instrument of labor for the capitalists' material mode of existence. The machine competes with the worker, diminishing the use-value of the worker's labor-power. Marx also points out that with the advance in technology of machines led to the substitution of less skilled work for more skilled work which ultimately led to a change in wages. During the progression of machinery the numbers of skilled workers decreased, while child labor

Child labor

Child labour refers to the employment of children at regular and sustained labour. This practice is considered exploitative by many international organizations and is illegal in many countries...

flourished, increasing profits for the capitalist.

Section 6. The Compensation Theory, With Regard to the Workers Displaced by Machinery

In this section, Marx sets forth to illuminate the error within the compensation theory of the political economists. According to this theory, the displacement of workers by machinery will necessarily "set free" an equal stable, amount of variable capital previously used for the purchase of labor-power and remains available for the same purpose. However, Marx argues that the introduction of machinery is simply a shift of variable capital to constant capital. The capital "set free" cannot be used for compensation since the displacement of variable capital available becomes embodied in the machinery purchased.

The capital that may become available for the compensation will always be less than the total amount of capital previously used to purchase labor-power before the addition of machinery. Furthermore, the remainder of variable capital available is directed towards hiring workers with the expertise skills to operate new machinery. Therefore the conversion of the greater part of the total capital is now used as constant capital, a reduction of variable capital necessarily follows. As a result of machinery, displaced workers are not so quickly compensated by employment in other industries but are forced into an expanding labor-market at a disadvantage and available for greater capitalist exploitation without the ability to procure the means of subsistence for survival

Fundamental human needs

Fundamental human needs, according to the school of "" developed by Manfred Max-Neef and others , are seen as ontological , are few, finite and classifiable...

.

Furthermore, Marx argues that the introduction of machinery may increase employment in other industries, yet this expansion "has nothing in common with the so-called theory of compensation." Greater productivity will necessarily generate an expansion of production into peripheral fields that provide raw materials. Conversely, machinery introduced to industries that produce raw materials will lead to an increase in those industries that consume them. The production of greater surplus-value leads to greater wealth of the ruling class

Ruling class

The term ruling class refers to the social class of a given society that decides upon and sets that society's political policy - assuming there is one such particular class in the given society....

es, an increase in the labor-market, and consequently the establishment of new industries. As such Marx cites the growth

Economic growth

of the domestic service industry equated to greater servitude

Slavery

Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...

by the exploited classes

Working class

Working class is a term used in the social sciences and in ordinary conversation to describe those employed in lower tier jobs , often extending to those in unemployment or otherwise possessing below-average incomes...

Section 7. Repulsion and Attraction of Workers Through The Development of Machine Production, Crises in the Cotton Industry

The political economist apology for the displacement of workers by machinery asserts that there is a corresponding increase in employment. Marx is quick to cite the example of the silk

Silk

Silk is a natural protein fiber, some forms of which can be woven into textiles. The best-known type of silk is obtained from the cocoons of the larvae of the mulberry silkworm Bombyx mori reared in captivity...

industry in which an actual decrease of employment appears simultaneously with an increase of existing machinery. On the other hand an increase in the number of factory workers employed is the result of "the gradual annexation of neighboring branches of industry" and "the building of more factories or the extension of old factories in a given industry."

Furthermore, Marx argues that an increase in factory workers is relative since the displacement of workers creates a proportionately wider gap between the increase of machinery and a proportionate decrease of labor required to operate that machinery. The constant expansion of capitalism and ensuing technical advances leads to extension of markets until it reaches all corners of the globe thus creating cycles

Business cycle

The term business cycle refers to economy-wide fluctuations in production or economic activity over several months or years...

of economic prosperity

Prosperity

Prosperity is the state of flourishing, thriving, good fortune and/or successful social status. Prosperity often encompasses wealth but also includes others factors which are independent of wealth to varying degrees, such as happiness and health....

and crisis

Financial crisis

The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these...

. Finally, the "repulsion and attraction" of workers therefore results as a cycle in which there is a constant displacement of workers by machinery which necessarily leads to increased productivity followed by a relative expansion of industry and higher employment of labor. This sequence renews itself as all components of the cycle lead to novel technological innovation for "replacing labor-power."

Part Five: The Production of Absolute and Relative Surplus-Value

Chapters 16-18 examine how the capitalist strategies for the production of both absolute and relative surplus-value are combined and can function simultaneously.

Chapter 16: The Rise of Surplus Value

Marx describes the process of taking the worker's individual productive actions and making them a collective effort of many workers. This action takes the worker further away from the actual production of the commodity and then allows the capitalist to use the worker only to create surplus value. The surplus value is increased first through absolute methods, such as extending the work day, then through relative methods, such as increasing worker productivity. These actions are the general foundations of capitalism as described by Marx.

The worker's transformation from producer of commodities for use in survival to producer of surplus value is necessary in the progression to capitalism. In production outside the capitalist system the worker produces everything they need to survive. When the worker moves beyond producing what they need to survive, they can provide their work for a wage and create part of some product in return for a wage to buy what they need to survive. Capitalism takes advantage of this extra time by paying the worker a wage that allows them to survive but is less than the value the same worker creates. Through large scale manufacturing and economies of scale

Economies of scale

Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...

the workers are placed progressively further away from manufacturing products themselves and only function as part of a whole collective that creates the commodities. This changes the concept of productive labor

Productive and unproductive labour

Productive and unproductive labour were concepts used in classical political economy mainly in the 18th and 19th century, which survive today to some extent in modern management discussions, economic sociology and Marxist or Marxian economic analysis...

from the production of commodities to the production of surplus value. The worker is only productive to the capitalist if they can maximize the surplus value the capitalist is earning.

Not simply content with the transformation of the worker from a creator of commodities to creator of surplus value, capitalist must devise new ways to increase the surplus that he is receiving. The first, or absolute, way the capitalist can increase surplus value is through the prolongation of the working day so the worker has more time to create value. The second, or relative, way the capitalist can increase surplus value is to revolutionize changes in the production method. If the worker can only produce the means for himself in the time he works during the day there would be no extra time for him to create surplus value for the capitalist. The capitalist must then either enable the worker to complete the paid work time more quickly through relative means, or he must increase the work day in absolute terms. Without enabling unpaid work to exist the capitalist system would not be able to sustain itself.

With surplus labor resting on a natural basis, there are no natural obstacles preventing one man from imposing his labor burden on another. As a worker looks into the possible options of getting out of capitalist exploitation or the initial "animal condition", one of the obvious options is becoming a capitalist himself. This is called socialized labor which exists when the surplus labor of one worker becomes necessary for the existence of another.

Marx mentions two natural conditions of wealth

Wealth

Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...

that are helpful in understanding the progression of socialized labor over time. The two conditions are natural wealth in the means of subsistence and natural wealth in the instruments of labor. Over time, society has moved more from the former to the latter. It was not that long ago that the majority of society produced for themselves and did not have to be concerned about producing surplus labor for others. We did labor for others, but it was not in effort to create surplus value, it was to help others.

Marx uses the Egyptians

Ancient Egypt

Ancient Egypt was an ancient civilization of Northeastern Africa, concentrated along the lower reaches of the Nile River in what is now the modern country of Egypt. Egyptian civilization coalesced around 3150 BC with the political unification of Upper and Lower Egypt under the first pharaoh...

as an example to illustrate a society's potential when there is extra time that does not have to be used toward creating surplus value. The Egyptians lived in a very fertile land (natural subsistence wealth) so could raise children at a very low cost. This is the main reason why the population grew so large. One might think all the great Egyptian structures were possible because of the large population, but is due to the availability of labor time.

In regards to capitalism, you might think that a greater natural wealth of subsistence would result in greater growth and capitalist production (like the Egyptians), but that is not the case. So why is capitalism so strong in many countries that do not have excess natural resources? The answer is the necessity of bringing a natural force under the control of society (irrigation in Persia

Iran

Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

and India

India

India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...

, flow of water

Water

Water is a chemical substance with the chemical formula H2O. A water molecule contains one oxygen and two hydrogen atoms connected by covalent bonds. Water is a liquid at ambient conditions, but it often co-exists on Earth with its solid state, ice, and gaseous state . Water also exists in a...

in Egypt

Egypt

Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...

, etc.) As Marx says, "favourable conditions provide the possibility, not the reality of surplus labour

Surplus labour

Surplus labour is a concept used by Karl Marx in his critique of political economy. It means labour performed in excess of the labour necessary to produce the means of livelihood of the worker . According to Marxian economics, surplus labour is usually "unpaid labour"...

."

Marx displays an example of surplus labor occurring in these favorable conditions in the case of the East Indies

East Indies

East Indies is a term used by Europeans from the 16th century onwards to identify what is now known as Indian subcontinent or South Asia, Southeastern Asia, and the islands of Oceania, including the Malay Archipelago and the Philippines...

. The inhabitants would be able to produce enough to satisfy all of his needs with only twelve working hours per week. This provides for more than enough leisure time until capitalist production takes hold. Then he may be required to work six days per week to satisfy his needs—there can be no explanation of why it is necessary for him to provide the extra five days of surplus labor.

Marx then critiques famed economist David Ricardo

David Ricardo

David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...

and the lack of addressing the issue of surplus-value. Ricardo does not take the time to discuss the origin of surplus-value and side-stepped the entire issue altogether. Agreeing with classical economists, John Stuart Mill

John Stuart Mill

John Stuart Mill was a British philosopher, economist and civil servant. An influential contributor to social theory, political theory, and political economy, his conception of liberty justified the freedom of the individual in opposition to unlimited state control. He was a proponent of...

finds that the productive power, surplus value, is the source of profits, but adds that the necessities of life take less time to produce than is required by society. Therefore, this becomes the reason capital will realize a profit. Mill goes on to assert that profit can only be gleaned from productive power and not exchange which falls in line with Marx's theories.

The next critique of Mill goes on to the percentage that is gained from the laborer. Marx finds it to be "absolutely false" in the fact that the percentage of surplus labor will always be more than the profits. This is due to the amount of capital invested

Invested Capital

Invested Capital represents the total cash investment that shareholders and debtholders have made in a company. There are two different but completely equivalent methods for calculating invested capital...

. Following his conclusions, Marx calls Mill's ideas an optical illusion

Optical illusion

An optical illusion is characterized by visually perceived images that differ from objective reality. The information gathered by the eye is processed in the brain to give a perception that does not tally with a physical measurement of the stimulus source...

as he looks into the advancing of capital. Mill looks at laborers and considers them to be a form of capitalist—they are advancing the capitalist their labor ahead of time and receiving it at the end of the project for more of a share. Marx hits the idea out with the analogy of the American

People of the United States

The people of the United States, also known as simply Americans or American people, are the inhabitants or citizens of the United States. The United States is a multi-ethnic nation, home to people of different ethnic and national backgrounds...

peasant

Peasant

A peasant is an agricultural worker who generally tend to be poor and homeless-Etymology:The word is derived from 15th century French païsant meaning one from the pays, or countryside, ultimately from the Latin pagus, or outlying administrative district.- Position in society :Peasants typically...

being his own slave as he is doing forced labor for himself.

Karl Marx examined surplus value and showed it to be a necessity in capitalism. This surplus value is derived from the difference between the value the worker creates and the wage he earns. Chapter 16 looked into the ways in which the capitalist is able to increase surplus-value and takes a direct attack against economists David Ricardo and John Stuart Mill.

Chapter 17: Changes of Magnitude in the price of Labor-Power and in Surplus-Value

The Value of Labor power, also known as wage, is the first thing that Marx begins to re-explain in the opening of the chapter, stressing that it is equal to the quantity of the "necessaries of life habitually required by the average laborer." By re-stressing the importance of this concept he is building a foundation on which he can begin to elaborate his argument on the changing price of labor. In order to make his argument, Marx states that he will leave out two certain factors of change (the expenses of labor power that differ with each mode of production and the diversity of labor power between men and women, children and adults) and that he will also be making two assumptions. The two assumptions made are first, the commodities are sold at their values, and second, the price of labor-power occasionally rises above its value, but never falls beneath it.

Given these assumptions Marx begins to formulate his argument by first establishing the three determinant

Determinant

In linear algebra, the determinant is a value associated with a square matrix. It can be computed from the entries of the matrix by a specific arithmetic expression, while other ways to determine its value exist as well...

s of the price of labor power. These three determinants, or circumstances as Marx calls them, are: the length of the working day, the normal intensity of labor

Labor intensity

Labor intensity is the relative proportion of labor used in a process. Its inverse is capital intensity....

, and the productiveness of labor. Formulating these three circumstances into different combinations of variable

Variable (mathematics)

In mathematics, a variable is a value that may change within the scope of a given problem or set of operations. In contrast, a constant is a value that remains unchanged, though often unknown or undetermined. The concepts of constants and variables are fundamental to many areas of mathematics and...

s and constant

Constant (mathematics)

In mathematics, a constant is a non-varying value, i.e. completely fixed or fixed in the context of use. The term usually occurs in opposition to variable In mathematics, a constant is a non-varying value, i.e. completely fixed or fixed in the context of use. The term usually occurs in opposition...

s Marx begins to clarify the changes in magnitude

Magnitude (mathematics)

The magnitude of an object in mathematics is its size: a property by which it can be compared as larger or smaller than other objects of the same kind; in technical terms, an ordering of the class of objects to which it belongs....

in the price of labor-power. The majority of Chapter XVII is dedicated to the chief combinations of these three factors.

I. Length of the working day and Intensity of labor constant; Productiveness of labor variable.

Starting out with these assumptions Marx explains that there are three laws that determine the value of labor-power. The first of these three laws states that a working day of given amount of hours will always produce the same amount of value. This value will always be a constant, no matter the productiveness of labor, or the price of the commodity produced. The second states that the surplus-value and labor-power are negatively correlated or that when surplus-value increases a unit and value stays the same labor-power must decrease one unit also. The third of these laws is that a change in surplus-value presupposes a change in that of the labor-power.

Given these three laws Marx explains how the productiveness of labor, being the variable, changes the magnitude of labor-value. Marx explains saying "a change in the magnitude of surplus-value, presupposes a movement in the value of labour-power, which movement is brought about by a variation in the productiveness of labour." This variation in the productiveness of labor is what eventually leads to the developing change in value, which is then divided by either the laborers, through extra labor-value, or the capitalist, through extra surplus value.

II. Working-day constant; Productiveness of labor constant; Intensity of labor variable.

The Intensity of labor is the expenditure that the laborer puts into a commodity. The increase in the intensity of labor results in the increase of value that the labor is producing. This increase that the laborer is producing is again divided amongst the capitalist and laborer in the form of either surplus-value or an increase in the value of labor power. Though they may both increase simultaneously the addition to the labor may not be an addition if the extra payment received from his increase in intensity does not cover the wear and tear it has on the laborer.

III. Productivity and Intensity of Labor Constant; Length of Working Day variable.

In this example it is possible to change the length of the working day by either lengthening of shortening the time spent at work. Leaving the other two variables constant, reducing the length of the work day leaves the labor-power's value the same as it was before. This reducing of the length of the work day will reduce the surplus labor and surplus value dropping it below its value.

The other option in changing the workday is to lengthen it. If the labor-power stays the same with a longer workday then the surplus-value will increase relatively and absolutely. The relative value of labor-power will fall even though it will not absolutely. With the lengthening of the workday and the nominal price staying the same, the price of labor-power possibly could fall below its value. The value is estimated to be what is produced by the worker and a longer workday will affect the production and therefore the value.

It is fine to assume the other variables stay constant, but a change in the work day with the others constant will not result in the outcomes supposed here. A change in the work day by the capitalists will most definitely affect the productivity and intensity of the labor.

IV. Simultaneous Variations in the Duration, Productivity and Intensity of Labor.

In the real world it is almost never possible to isolate each of the aspects of labor. Two or even three of the variables may vary and in different aspects. One may move up while another moves down, or in the same direction. The combinations are endless, but may be characterized by the first three examples. However, Marx limits his analysis to two cases.

"Diminishing productivity of labor with a simultaneous lengthening of the workday." This example is one where workers are working longer hours paying less attention or dedication on the job and productivity is in turn reduced; or productivity decreases, increasing the workday to achieve the same output. Therefore, the magnitude of these changes will continue on its path causing longer and longer workdays with lower productivity until the system can sustain no more.
"Increasing intensity and productivity of labor with simultaneous shortening of the working day." Productivity and intensity are closely related and offer similar outcomes. Higher productivity and intensity will increase the workers output allowing for the workday to be shorter as they will achieve their necessary subsistence. The working day can shrink multiple times so long as the other elements live up to their sides of the bargain
Bargaining
Bargaining or haggling is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement. Bargaining is an alternative pricing strategy to fixed prices...

.

The price of labor-power is affected by many things that can be broken down. The three main elements of intensity, productivity and length of workday were broken down and analyzed separately and then together. From the examples presented it is possible to see what would happen in any and all situations.

Part Six: Wages

In part six, Chapters from 19 to 22, Marx examines the ways in which capital manipulates the money wage as ways of both concealing exploitation and of extorting

Extortion

Extortion is a criminal offence which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion. Refraining from doing harm is sometimes euphemistically called protection. Extortion is commonly practiced by organized crime...

increased amounts of unpaid labor from workers.

Chapter 19: The Transformation of the Value (and Respective Price) of Labour-Power into Wages

In this Chapter, Marx discusses how the "value of labor-power is represented in its converted form as wages." The form of wages is intended to disguise the division of the working day into "necessary labor" (labor that is for the value of labor-power) and "surplus labor" (labor that is totally toward the profit of the capitalist). In other words, paid and unpaid labor for the worker. The worker in this situation feels as though he is using his labor as means of producing surplus for his own consumption, when in reality

Reality

In philosophy, reality is the state of things as they actually exist, rather than as they may appear or might be imagined. In a wider definition, reality includes everything that is and has been, whether or not it is observable or comprehensible...

his labor-power has already been purchased by the capitalist and he merely works as a means to produce surplus value for the capitalist.

There are two distinct forms of wages that is used in the production of capital: Time-wages and Piece-wages. These forms facilitate the illusion of the actual value of labor-power and the increase of productivity from the worker employed.

Chapter 20: Time-Wages

Marx presents the unit

Units of measurement

A unit of measurement is a definite magnitude of a physical quantity, defined and adopted by convention and/or by law, that is used as a standard for measurement of the same physical quantity. Any other value of the physical quantity can be expressed as a simple multiple of the unit of...

for measurement

Measurement

Measurement is the process or the result of determining the ratio of a physical quantity, such as a length, time, temperature etc., to a unit of measurement, such as the metre, second or degree Celsius...

of time-wages to be the value of the day's labour-power divided by the number of hours in the average working day. However, an extension in the period of labour produces a fall in the price of labour, culminating in the fall in the daily or weekly wage. Yet as Marx specifies this is to the advantage of the capitalist, as more hours of production leads to surplus value for the capitalist. "If one man does the work of 1½ or 2 men, the supply of labor increases, although the supply of labor-power on the market remains constant. The competition thus created between the workers allows the capitalist to force down the price of labor, while the fall in price allows him, on the other hand, to force up the hours of work even further." To make the worker feel his extra time

Overtime

Overtime is the amount of time someone works beyond normal working hours. Normal hours may be determined in several ways:*by custom ,*by practices of a given trade or profession,*by legislation,...

and labour is well spent, the capitalist employs the trick of "overtime".

Chapter 21: Piece-Wages

Marx explains the exploitative nature of the piece-wage system. Under this system workers are paid a pre-determined amount for each piece they produce, creating a modified form of the time-wage system. A key difference is in the fact that the piece-wage system provides an exact measure of the intensity of labor. Meaning that the capitalists' know about how long it takes to produce one piece of finished product. Those who cannot meet these standards of production will not be allowed to keep their jobs. This system also allows for middlemen (wholesale

Wholesale

Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...

r or reseller

Reseller

A reseller is a company or individual that purchases goods or services with the intention of reselling them rather than consuming or using them. This is usually done for profit...

) to usurp positions between the capitalists and laborers. These middlemen make their money solely from paying labor less than capitalists are actually allotting, thus, bringing about worker on worker exploitation.

Logic

Logic

In philosophy, Logic is the formal systematic study of the principles of valid inference and correct reasoning. Logic is used in most intellectual activities, but is studied primarily in the disciplines of philosophy, mathematics, semantics, and computer science...

would lead a laborer to believe that straining one's labor power "as intensely as possible" works in one's own interests because the more efficiently they produce the more they will be paid. Therefore, the workday will lengthen to the extent that worker's allow and necessitate. However, prolongation in the workday requires the price of labor to fall. Marx elucidates that, "the piece-wage therefore has a tendency, while raising the wages of individuals above the average, to lower this average itself," and "it is apparent that the piece-wage is the form of wage most appropriate to the capitalist mode of production." Marx gives examples of the weaving

Weaving

Weaving is a method of fabric production in which two distinct sets of yarns or threads are interlaced at right angles to form a fabric or cloth. The other methods are knitting, lace making and felting. The longitudinal threads are called the warp and the lateral threads are the weft or filling...

industry

Industry

around the time of the Anti-Jacobin War

French Revolutionary Wars

The French Revolutionary Wars were a series of major conflicts, from 1792 until 1802, fought between the French Revolutionary government and several European states...

where "piece-wages had fallen so low that in spite of the very great lengthening of the working day, the daily wage was then lower than it had been before." So in this example we are able to see how piece-wages do nothing but decrease the value of labor and better disguise the true way the workers are exploited.

Part Seven: The Process of Accumulation of Capital

In Part Seven, Chapters from 23 to 25, Marx explores the ways in which profits are used to recreate capitalist class relations on an ever expanding scale and the ways in which this expansion of capitalism creates periodic crises for capitalist accumulation

Capital accumulation

. For Marx, these crises in accumulation are also always crises in the perpetuation of the class relations necessary for capitalist production and so are also opportunities for revolutionary change

Transformative Social Change

Transformative Social Change is a philosophical, practical and strategic process to effect revolutionary change within society, i.e., social transformation. It is effectively a systems approach applied to broad-based social change and social justice efforts to catalyze sociocultural, socioeconomic...

Chapter 23: Simple Reproduction

Just as a society

Society

A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...

cannot stop consuming, it cannot stop producing. "Every social process of production," writes Marx, "is at the same time a process of reproduction

Reproduction (economics)

In Marxian economics, economic reproduction refers to recurrent processes by which the initial conditions necessary for economic activity to occur are constantly re-created...

." This is one of Marx's most important points, for capital must be seen as a forever developing value. Since labor power and the means of production are constantly consumed in the process of production, they must be reproduced for production to continue.

Simple reproduction refers to a capitalist consuming all of the surplus value created and reinvesting the same amount of capital during each cycle. This causes production levels to remain constant.

Marx pauses here to clarify two points. First, though workers are seemingly paid in money, in actuality they are paid in wages. Off the clock, in order for workers to obtain part of their means of subsistence, they must give these wages back to the capitalist class. "The transaction," Marx writes, "is veiled by the commodity-form of the product and the money-form of the commodity."

Second, Marx points out that the capitalist must produce surplus value in order for production to continue. If surplus value is not created, and the capitalist keeps advancing capital (and consuming) from his own pocket, he will eventually go broke. Simple reproduction therefore "converts all capital into accumulated capital."

Part of the cycle of simple reproduction is the replication of class relations. Workers receive enough to keep them at work and purchase their means of subsistence. "The worker always leaves the process in the same state as he entered it—a personal source of wealth, but deprived of any means of making that wealth a reality for himself." Since there is nothing left over after purchasing their means of subsistence, they must sell their labor power again. The wages paid to him are for the labor power consumed last pay period, so the worker is providing credit to the capitalist without any additional interest

Interest

Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....

or return. In this way workers remain poor and remain at work. Meanwhile, the capitalists advance capital, create surplus value, and are able to profit and reinvest. All of the surplus value does not remain with the capitalist, he must spend it on more means of production and this keeps other capitalists able to create surplus value for themselves.

Marx also points out that all initial capital is transformed into accumulated capital—appropriated from the surplus value of the labor. Used to purchase new but greater means of production uses up the surplus in a continual cycle. The worker, selling his labor power, alienates it from himself and in doing so, produces more surplus value for the capitalist. The capitalist, in turn, produces the wage laborer—by the simple process of buying and selling from one another. Here lies the basis for the class struggle.

Chapter 24: The Transformation of Surplus-Value into Capital

In Chapter 24, Marx explains how capitalists are able to transform surplus value into more capital. Marx begins by expounding upon the accumulation of capital, which he defines as "the employment of surplus-value as capital, or its reconversion into capital." Marx uses the illustration of a cotton

Cotton

Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....

yarn spinner

Spinning (textiles)

to demonstrate how capitalists use more money to invest in more means of production and labor-power. Thus, Marx is able to further reiterate that, "accumulation requires to the transformation of a portion of the surplus product into capital." Marx further elaborates that the reason why surplus-value can be transformed into capital is because the surplus product "already comprises the material components of a new quantity of capital."

Capitalist expansion, according to Marx, requires additional labor-power. Marx explains that the "mechanism of capitalist production" is constantly producing and reproducing a working class that depends on wages to survive, thus replenishing the capitalist need for labor-power and thereby aiding capitalist expansion. Labor power used to reproduce the worker cannot be done without always creating more surplus value that benefits the capitalist. The basic biological requirements of eating and sex will continue to work to the capitalist's advantage, creating a replacement labor force without the capitalist having to supervise this. Marx states that what is true of all accumulated capital in comparison to the addition of capital made by it is that "the original capital continues to reproduce itself and to produce surplus-value alongside the newly formed capital."

Marx lists three results of the original transformation of money:

that the product belongs to the capitalist and not the worker;
that the value of this product includes, apart from the value of the capital advance; a surplus-value which costs the worker labour but the capitalist nothing, and which nonetheless becomes the legitimate property of the capitalist;
that the worker has retained his labour-power and can sell it anew if he finds another buyer.

Marx, therefore concludes, that even in simple reproduction all capital is made into accumulated capital; despite the fact that the capital originally advanced begins to diminish when compared to the directly accumulated capital.

Chapter 25, Section 3 & 4: The General Law of Capitalist Accumulation

Composition of capital is broken into two parts—labor value and means of production. The organic composition is a basic split between the two with each remaining the same. This leads to requiring more labor power with higher wages. When machinery is introduced to increase productivity, the composition of capital undergoes a qualitative change. The composition of capital undergoes a qualitative change when the total social capital

Social capital

Social capital is a sociological concept, which refers to connections within and between social networks. The concept of social capital highlights the value of social relations and the role of cooperation and confidence to get collective or economic results. The term social capital is frequently...

of a society grows, or accumulates. This accumulation presupposes an increase in productivity and efficiency in the affected industries and consequently produces a decreased need for labor in general.

If productivity increases (i.e. if there are more machines that take the place of human labor) then there is less employment; for even if the total quantity of labor employed increases, it is in a "constantly diminishing proportion" to the average amount needed by capital for the valorization process. Thus accumulation creates an industrial reserve army of labor that is available for hire. Conversely, if productivity and accumulation is stagnant

Economic stagnation

Economic stagnation or economic immobilism, often called simply stagnation or immobilism, is a prolonged period of slow economic growth , usually accompanied by high unemployment. Under some definitions, "slow" means significantly slower than potential growth as estimated by experts in macroeconomics...

, or the cost-benefit ratio

Cost-benefit analysis

Cost–benefit analysis , sometimes called benefit–cost analysis , is a systematic process for calculating and comparing benefits and costs of a project for two purposes: to determine if it is a sound investment , to see how it compares with alternate projects...

of machine power to labor power is unfavorable, there exists a greater need for labor to create surplus value. But, this is not what a capitalist wants and is antithetical to the ethos of capitalist production.

What a capitalist wants is increased productivity and thus the increased production of relative surplus value. By making fewer workers (in proportion to the total population and need for labor) work more productively, and thus put more of their labor time into producing surplus value, there is less need to employ more workers, and the superfluous workers already employed can be discarded. Marx states that this creates a division in the working class of a nation; the forcibly unemployed industrial reserve army already mentioned, versus an employed class of workers who are chronically underpaid and overworked.

This affects wages in two ways. If there is a high level of industrial reserve workers in proportion to a low level of employed workers, then obviously demand for labor is low and thus wages are low. Conversely, if there are few in the industrial reserve and many people employed, thus accelerating accumulation, then demand for labor is high and wages are high. However, this upward trend in employment always reaches a critical mass when too much is produced and there are not enough consumer

Consumer

Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...

s to absorb it, and thus products (and therefore surplus value) go to waste. Then workers are "set free", wages drop for those still employed, and the cycle begins anew.

At a point where the labor costs become too high, the capitalist will stop transforming money into capital and cease production. This leads to more unemployment

Unemployment

Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

, which drives wages down once again. The end result will be to produce both bigger capitalists and more poor

Poor

Poor is an adjective related to a state of poverty, low quality or pity.People with the surname Poor:* Charles Henry Poor, a US Navy officer* Charles Lane Poor, an astronomer* Edward Erie Poor, a vice president of the National Park Bank...

workers. This is the workers paradox; work harder, produce more, but get fired in the end because they produced too much. As the total social wealth of a nation grows, so does its population, and as its population suffers through the abovementioned cycle, the more people become unemployed due to their own productivity. That is essentially the absolute general law of capitalist accumulation.

Part Eight: So-Called Primitive Accumulation

In order to understand the desire for and techniques utilized by the bourgeoisie

Bourgeoisie

In sociology and political science, bourgeoisie describes a range of groups across history. In the Western world, between the late 18th century and the present day, the bourgeoisie is a social class "characterized by their ownership of capital and their related culture." A member of the...

to accumulate capital before the rise of capitalism itself, one must look to the notion of primitive accumulation

Primitive accumulation of capital

In Marxist economics and preceding theories, the problem of primitive accumulation of capital concerns the origin of capital, and therefore of how class distinctions between possessors and non-possessors came to be.Adam Smith's account of primitive-original accumulation depicted a peaceful...

as the main impetus for this drastic change in history. Primitive accumulation refers to the essential lucrative

Lucre

Lucre, from the Lat. lucrum, meaning gain in terms of money or wealth within the nation.Often it is used in a negative, as in the phrase “not given to filthy lucre” from the Bible .From this, the term "filthy" became slang for money...

method employed by the capitalist class that brought about the transition in to the capitalist mode of production following the end of the feudal system

Feudalism

Feudalism was a set of legal and military customs in medieval Europe that flourished between the 9th and 15th centuries, which, broadly defined, was a system for ordering society around relationships derived from the holding of land in exchange for service or labour.Although derived from the...

. Karl Marx states that the means of production and a bare level of subsistence must be stripped from the common producer to allow for this to take place. The means of production refers to the tools or processes used to create a product

Product (business)

In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...

or provide a service.

The central process for and secret behind primitive accumulation involved the expropriation of agricultural lands and any form of wealth from the population of commoners by the capitalists, which typically was characterized by brutal and violent struggles between the two opposing classes. Since the peasantry was not subjected to the laws of feudalism any longer, they were ultimately freed from their lords

Landlord

A landlord is the owner of a house, apartment, condominium, or real estate which is rented or leased to an individual or business, who is called a tenant . When a juristic person is in this position, the term landlord is used. Other terms include lessor and owner...

and the land to assimilate into this new mode of production as a wage laborer. Every freed proletariat

Proletariat

The proletariat is a term used to identify a lower social class, usually the working class; a member of such a class is proletarian...

as a result had only their labor power to sell to the bourgeoisie to meet their needs to simply survive.

Unfortunately, the integration process into this new mode of production came at a cost to the proletariat since the strenuous demands of finding alternative work proved to be too much of a burden for most. As a result, the working class

Working class

often initially resorted to thievery

Theft

In common usage, theft is the illegal taking of another person's property without that person's permission or consent. The word is also used as an informal shorthand term for some crimes against property, such as burglary, embezzlement, larceny, looting, robbery, shoplifting and fraud...

and begging

Begging

Begging is to entreat earnestly, implore, or supplicate. It often occurs for the purpose of securing a material benefit, generally for a gift, donation or charitable donation...

to meet their needs under this new form of human existence. To make matters worse, harsh legislation seen in England

England

England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

and France

France

The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

as Marx points out declared these individuals to be vagabond

Vagabond (person)

A vagabond is a drifter and an itinerant wanderer who roams wherever they please, following the whim of the moment. Vagabonds may lack residence, a job, and even citizenship....

s and rogues

Rogue (vagrant)

A rogue is a vagrant person who wanders from place to place. Like a drifter, a rogue is an independent person who rejects conventional rules of society in favor of following their own personal goals and values....

subject to the laws of the state. Furthermore, the working class also suffered due to legislative measures taken in England to keep working wages astonishingly low while the cost of living rose.

The origin of the capitalists in England spawned out of the "great landed proprietors

Landed property

Landed property or landed estates is a real estate term that usually refers to a property that generates income for the owner without the owner having to do the actual work of the estate. In Europe, agrarian landed property typically consisted of a manor, several tenant farms, and some privileged...

" who reaped the benefits of the surplus value made from the expropriated land they had acquired at practically no cost. The progressive fall of the value of precious metals and money brought more profit to the capitalist farmers as the wage laborers beneath them were forced to accept lower wages. It comes as no surprise that the class of capitalist farmers in England became enormously wealthy given the circumstances of the time.

The British Agricultural Revolution

British Agricultural Revolution

British Agricultural Revolution describes a period of development in Britain between the 17th century and the end of the 19th century, which saw an epoch-making increase in agricultural productivity and net output. This in turn supported unprecedented population growth, freeing up a significant...

(17th–19th centuries) not only caused many changes in the way people worked but in social structure as well. When industrialization provided the cheapest and most efficient tools for agricultural production, it caused a reduced need for the peasant farm workers

Farmworker

A farmworker is a person hired to work in the agricultural industry. This includes work on farms of all sizes, from small, family-run businesses to large industrial agriculture operations...

, which displaced most of the working class from the countryside. Faced with the choice of selling their labor for a wage or becoming a capitalist, there emerged a class of entrepreneur

Entrepreneur

An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...

s who through the exploitation of wage laborers became the capitalist class. As the system grew, there became a need for cheaper and more readily available materials. Thus colonization

Colonialism

Colonialism is the establishment, maintenance, acquisition and expansion of colonies in one territory by people from another territory. It is a process whereby the metropole claims sovereignty over the colony and the social structure, government, and economics of the colony are changed by...

was born. By expanding into new territories and enslaving indigenous cultures, primitive accumulation became a source of quick and easy capital. Famine

Famine

A famine is a widespread scarcity of food, caused by several factors including crop failure, overpopulation, or government policies. This phenomenon is usually accompanied or followed by regional malnutrition, starvation, epidemic, and increased mortality. Every continent in the world has...

even became a tool for capitalists in 1769–1770 when England raised the price of rice in India so that only the rich could afford it. National debt

Government debt

Government debt is money owed by a central government. In the US, "government debt" may also refer to the debt of a municipal or local government...

soon became a tool of control for capitalists who turned unproductive money into capital through lending and exchange. Encouraged to participate in the creation of debt, each worker participates in the creation of "joint-stock companies, the stock-exchange

Stock exchange

A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...

, and modern bankocracy." The international credit system conceals the source of its generation; the exploitation of slave and wage laborers.

The shift in the ownership of the means of production from the proletariat to the bourgeoisie left the common producer with only his labor power to sell. This means they are free proprietors of the conditions of their labor. During this process of transference, private property

Private property

Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...

was replaced by capitalist private property through the highest form of exploitation, and the shift from the days of free labor to wage labor had taken place. Capitalist private property was formed from the capital mode of appropriation, which dwindled away the once existent private property founded on the personal labor of workers.

Marx states that as capitalism grows the number of wage laborers grows exponentially. Therefore, ultimately there will be a revolution in which the capitalists are expropriated from their means of wealth by the majority. In other words, the seeds of destruction are already implanted within capitalism. Marx stresses that the demise of capitalism does not necessarily mean the return of feudalism and private property, but rather "it does indeed establish individual property on the basis of the achievements of the capitalist era: namely co-operation

Cooperation

and the possession in common

Cooperative

A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit...

of the land and the means of production produced by labor itself". That is to say that the transformation will be reverted back to the time where private property is seen as social property.

Marx claims that two types of private property exist in a political economy

Political economy

. The first form is the labor of the producer himself and the other form rests in a capitalists exploitation of others. In the industrialized capitalist world of Western Europe

Western Europe

Western Europe is a loose term for the collection of countries in the western most region of the European continents, though this definition is context-dependent and carries cultural and political connotations. One definition describes Western Europe as a geographic entity—the region lying in the...

, this is easily attained through the usage of laws and private property. However, capitalists constantly find obstacles in the colonies where workers work for their own enrichment rather than that of the capitalist. Capitalists overcome this obstacle by the use of force and by the political backing of the "mother land". If domination over the workers free will cannot be achieved, Marx then asks, "how did capital and wage-labour come into existence?" This comes about through the division of workers into owners of capital and owners of labor. This system causes workers to essentially expropriate themselves in order to accumulate capital. This self-expropriation served as primitive accumulation for the capitalists, and therefore, was the catalyst for capitalism in the colonies.

External links

Capital in Lithographs, by Hugo Gellert
Hugo Gellert
Hugo Gellert was a Hungarian-American illustrator and muralist. A committed radical, much of Gellert's work is agitational in nature and distinctive in style, considered by some art critics as among the best political work of the first half of the 20th Century.-Early years:Hugo Gellert was born...

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Capital, Volume I, by Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...

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Capital, Volume I in audio format, from LibriVox
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LibriVox is an online digital library of free public domain audiobooks, read by volunteers and is probably, since 2007, the world's most prolific audiobook publisher...

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Japan gives a comic twist to 'Das Kapital'
Reading Marx's Capital An open course consisting of a close reading of the text of Marx's Capital Volume I in 13 video lectures with David Harvey
David Harvey (geographer)
David Harvey is the Distinguished Professor of Anthropology at the Graduate Center of the City University of New York . A leading social theorist of international standing, he received his PhD in Geography from University of Cambridge in 1961. Widely influential, he is among the top 20 most cited...
Reading Notes on Marx's Capital, by Michael Hardt
Michael Hardt
Michael Hardt is an American literary theorist and political philosopher perhaps best known for Empire, written with Antonio Negri and published in 2000...

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Study Guide to Capital, Volume I, by Harry Cleaver
Harry Cleaver
Harry Cleaver is Associate Professor in the Department of Economics at the University of Texas at Austin, where Cleaver teaches Marxism and Marxist economics. He is best known as the author of Reading Capital Politically, an autonomist reading of Karl Marx's Capital. Dr...

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Synopsis of Capital, Volume I, by Friedrich Engels
Friedrich Engels
Friedrich Engels was a German industrialist, social scientist, author, political theorist, philosopher, and father of Marxist theory, alongside Karl Marx. In 1845 he published The Condition of the Working Class in England, based on personal observations and research...

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The MarX-Files: Resources on Karl Marx and Friedrich Engels

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

Part One: Commodities and Money

Section 1. The Two Factors of the Commodity: Use-Value and Value (Substance of Value, Magnitude of Value)'

Section 2. The Dual Character of the Labour Embodied in Commodities

(a) The Simple, Isolated, or Accidental Form of Value

(b) The Total or Expanded Form of Value

(c) The General Form of Value

(d) The Money Form

Section 4. The Fetishism of the Commodity and Its Secret

Chapter 2: Exchange

(a) Functions of Metallic Money

(b) Multiple Forms of Metallic Money

(c) Price

(a) The Metamorphosis of Commodities

(b) The Circulation of Money

(c) Coin: The Symbol of Value

(a) Hoarding

(b) Means of Payment

(c) World Money

Part Two: The Transformation of Money into Capital

Part Three: The Production of Absolute Surplus-Value

Part Four: The Production of Relative Surplus-Value

Chapter 12: The Concept of Relative Surplus-Value

Chapter 13: Co-operation

Section 1. The Capitalist Character of Division

Section 2. The Specialized Worker and his Tools

Section 3. The Two Fundamental Forms of Manufacture- Heterogeneous and Organic

Section 4. The Division of Labour in Manufacture and the Division of Labour in Society

Section 5. The Capitalist Character of Division

Section 1. Development of Machinery

Section 2. The Value Transferred by Machinery to the Product

Section 4. The Factory

Section 5. The Struggle between Worker and Machine

Section 6. The Compensation Theory, With Regard to the Workers Displaced by Machinery

Section 7. Repulsion and Attraction of Workers Through The Development of Machine Production, Crises in the Cotton Industry

Part Five: The Production of Absolute and Relative Surplus-Value

Chapter 16: The Rise of Surplus Value

Chapter 17: Changes of Magnitude in the price of Labor-Power and in Surplus-Value

Part Six: Wages

Chapter 19: The Transformation of the Value (and Respective Price) of Labour-Power into Wages

Chapter 20: Time-Wages

Chapter 21: Piece-Wages

Part Seven: The Process of Accumulation of Capital

Chapter 23: Simple Reproduction

Chapter 24: The Transformation of Surplus-Value into Capital

Chapter 25, Section 3 & 4: The General Law of Capitalist Accumulation

Part Eight: So-Called Primitive Accumulation

Further reading

External links