"By properly following the rule," said Rodbertus, "the sum total of value to be disposed of must be exactly equal to the total value certified; and inasmuch as the total value certified corresponds exactly to the total value allotted, the latter must necessarily resolve itself into available value, all requirements are satisfied and the values balance accurately."

Although Rodbertus was an agriculturist, he forgets that a fortnight of drought or of rain might disturb this beautiful equilibrium. Still, he worked it out and had it verified by one of the overseers of the public debt in Pomerania, and therefore asserts that it supplies every guarantee of soundness. He admits, however, that "in the absence of special legislation, it is impossible for work to be the measure of value."

Karl Marx, in order to prove that he was not a disciple of Rodbertus, made fun of this childish system, which pre-supposes that an administration can set up an exact relation between the value of gems and of manure, as determined by a standard of working time, regardless of demand and supply, which can only be indicated by competition.

When Karl Marx's "Capital" appeared in 1867, Rodbertus, the conservative and landowner, was alarmed, like a hen which has hatched ducklings. In order to reassure himself and his fellow landed proprietors, he proposed "to consider the function of the capitalist employer as a public function entrusted to him by the medium of capitalist property, and his profit as a form of salary. salaries can be regulated or reduced if they become unduly large."

But

All systems of collectivist organisation end, through the force of circumstances, in vouchers for work, and the witticisms of Marx and Engels only go to prove the incoherence of their own theories.

H

CHAPTER VI

KARL MARX AND FORMULE A, B, and C

i. Ricardo's formula and Marx' amendment-A third mysterious quantity-"Labour power"-Definition of value-Surplus value.

ii. Variable capital and surplus-value -- Example1,307.69 per cent.-Total surplus value proceeding from 2.50 per cent. of capital-The vampire.

iii. Disinterestedness of the "vampires"-Destruction of surplus value by establishment.

iv. The elements of profit-Marx' assertion that establishment is not a factor in profit.

V. Raw material-Definition of profits.

is

vi. Variation in surplus-value Marx' and Engels' qualifications-The theory abandoned-Profit derived, not from the quantity of unpaid labour, but from the management of the enterprise.

I.

RICARDO said: "The value of a commodity depends upon the amount of the labour necessary to produce it." This definition has the advantage of simplicity, and therefore did not suit Karl Marx, who adopted Ricardo's definition, with the substitution of the expression "labour-power" for "labour," and this constitutes his great discovery to the admiring eyes of Engels.1 But he does not always make use of this complementary expression.

In order to establish his proposition, Karl Marx starts with the elementary arithmetical truism that two quantities which are equal to a third are equal to one another. Let us see how this truism becomes distorted by Karl Marx's dialectical method.

A given quantity of corn is equated to some quantity of iron. What does this equation tell us? It tells us that in two different things there exists in equal quantities something common to both. The two things must therefore be equal to a third, which

1 "Das Kapital" (German edition), Introduction to vol. iii.

Each of

in itself is neither the one nor the other.
them must be reducible to the third, independently
of the other.1

In exchange, these two commodities are equal to the reciprocal desire of their two owners to exchange them, and in proportion to such desire. As money serves as the common denominator in exchange, these two quantities are equal to a certain quantity of money. Karl Marx does not care to take the facts leading to this conclusion into account. He supposes that this third quantity is the mysterious quantity of labour which is incorporated in the corn and the iron. His great discovery is then complete :

"The value of each commodity is determined by the quantity of labour expended on and materialised in it, by the working-time necessary, under given social conditions, for its production."2

In Karl Marx' view, value cannot be the relation between the desire and the need of two individuals. He declares that "value only consists in articles of utility, in an object." Still labour-power is not an object; it is the expression of an effort which may even possibly remain without any result. In order to meet this objection, Karl Marx declares that man himself, viewed as the impersonation of labour-power, is a natural object," and further that “the real value of a commodity is not its individual value, but its social value."4 Value is defined as "a definite social manner of expressing the amount of labour bestowed upon an object."5 Karl Marx takes care to call attention to the importance of this conception of value, "the discovery of value marks an epoch in the history of the development of the

1 "Das Kapital," vol. i., chap. i.

2 Ibid, vol. i., chap. vii., §2.

3 Ibid, vol. i., chap. viii.

4 Ibid, vol. i., chap. vii.

5 Ibid, vol. i., chap. i.

human race."1 Nevertheless Engels subsequently said that even if Marx' law of value ought not to be considered as inaccurate, it is too vague, and is capable of being laid down with greater precision, and he recognises that it fails to correspond with actual facts. Werner Sombart declares that "the law of value is not an empiric fact, but a fact founded upon ideas, a stimulus to our minds." Another disciple, Bernstein, looks upon it as a "subjective conception," and Karl Marx in his third volume recognises that it is entirely removed from reality by saying that "the cost of production includes not only labour-power and work-time, but also the intermediate profit of the capitalist."

Karl Marx then invokes the aid of formula "B," called by Lassalle "the iron law of wages," and transforms it into his theory of "surplus labour." The value of the working day is determined by the working time necessary for the production of the means of subsistence that are daily required for the production of labour power. If this costs six hours, the labourer must work on an average for six hours. During these six hours he is working for himself, but by working for twelve hours he gives six hours of extra labour or surplus labour or unpaid labour, which constitute the profit of the capitalist, and this is what Karl Marx calls "surplus-value." Reducing all this to a ratio we have

Surplus labour,

Necessary labour.

This proportion determines the rate of surplusvalue. The total amount of necessary labour and of surplus-labour forms the grand total of labourtime or in other words a working day.

II.

Karl Marx places capital employed in production in three categories. Fixed capital, representing

1 "Das Kapital,” vol. i., chap. i.

establishment or plant; constant capital, representing rent, raw material, heating and lighting; and variable capital, representing wages.

The variable capital of a capitalist is the expression in money of the total value of all the labour-powers that he employs simultaneously. Its value is, therefore, equal to the average value of one labour-power, multiplied by the number of labour powers employed.1

Why should capital be constant when it is a question of raw material and variable when it is one of wages? The price of the former is subject to more rapid and more frequent fluctuations than that of the latter. Karl Marx recognises that the price of cotton may rise in the market from sixpence at the time when it enters a factory to a shilling during the process of manufacture, and that this rise in price may become incorporated in the product, but "this charge is independent of the increment or surplus value added to the value of the cotton by the spinning itself."

That part of capital which is represented by the means of production, by the raw material, auxiliary material, and the instruments of labour, does not, in the process of production, undergo any quantitative alteration of value. I therefore call it the constant part of capital, or, more shortly, constant capital.

On the other hand, that part of capital, represented by labour-power, does, in the process of production, undergo an alteration of value. It both reproduces the equivalent of its own value, and also produces an excess, a surplus-value, which may itself vary, may be more or less according to circumstances. This part of capital is constantly being transformed from a constant into a variable magnitude. I therefore call it the variable part of capital, or, shortly, variable capital. "

2

1 "Das Kapital," vol. i., chap. xi.

2 Ibid, vol. i., chap. viii.