Wage-Labour and Capital by Karl Marx: An Introduction Written by Frederick Engels
Editor's Note: This is the material utilized by the first in a series of Detroit Marxism Classes spanning from May-July 2018. The beginning section is an introduction by Frederick Engels for the 1891 edition. The texts are taken from lectures delivered by Marx in Brussels during 1847 to the German Workingmen's Association.
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This pamphlet first appeared in the form of a series of leading articles in the Neue Rheinische Zeitung, beginning on April 4th, 1849. The text is made up of from lectures delivered by Marx before the German Workingmen’s Club of Brussels in 1847. The series was never completed. The promise “to be continued,” at the end of the editorial in Number 269 of the newspaper, remained unfulfilled in consequence of the precipitous events of that time: the invasion of Hungary by the Russians [Tsarist troops invaded Hungary in 1849 to keep the Austrian Hapsburg dynasty in power], and the uprisings in Dresden, Iserlohn, Elberfeld, the Palatinate, and in Baden [Spontaneous uprisings in Germany in May-July 1849, supporting the Imperial Constitution which were crushed in mid-July], which led to the suppression of the paper on May 19th, 1849. And among the papers left by Marx no manuscript of any continuation of these articles has been found.
“Wage-labour and Capital” has appeared as an independent publication in several editions, the last of which was issued by the Swiss Co-operative Printing Association, in Hottingen-Zurich, in 1884. Hitherto, the several editions have contained the exact wording of the original articles. But since at least 10,000 copies of the present edition are to be circulated as a propaganda tract, the question necessarily forced itself upon me, would Marx himself, under these circumstance, have approved of an unaltered literal reproduction of the original?
Marx, in the ’40s, had not yet completed his criticism of political economy. This was not done until toward the end of the fifties. Consequently, such of his writings as were published before the first installment of his Critique of Political Economy was finished, deviate in some points from those written after 1859, and contain expressions and whole sentences which, viewed from the standpoint of his later writings, appear inexact, and even incorrect. Now, it goes without saying that in ordinary editions, intended for the public in general, this earlier standpoint, as a part of the intellectual development of the author, has its place; that the author as well as the public, has an indisputable right to an unaltered reprint of these older writings. In such a case, I would not have dreamed of changing a single word in it. But it is otherwise when the edition is destined almost exclusively for the purpose of propaganda. In such a case, Marx himself would unquestionably have brought the old work, dating from 1849, into harmony with his new point of view, and I feel sure that I am acting in his spirit when I insert in this edition the few changes and additions which are necessary in order to attain this object in all essential point.
Therefore, I say to the reader at once: this pamphlet is not as Marx wrote it in 1849, but approximately as Marx would have written it in 1891. Moreover, so many copies of the original text are in circulation, that these will suffice until I can publish it again unaltered in a complete edition of Marx’s works, to appear at some future time.
My alterations centre about one point. According to the original reading, the worker sells his labour for wages, which he receives from the capitalist; according to the present text, he sells his labour-power. And for this change, I must render an explanation: to the workers, in order that they may understand that we are not quibbling or word-juggling, but are dealing here with one of the most important points in the whole range of political economy; to the bourgeois, in order that they may convince themselves how greatly the uneducated workers, who can be easily made to grasp the most difficult economic analyses, excel our supercilious “cultured" folk, for whom such ticklish problems remain insoluble their whole life long.
Classical political economy[1] borrowed from the industrial practice the current notion of the manufacturer, that he buys and pays for the labour of his employees. This conception had been quite serviceable for the business purposes of the manufacturer, his bookkeeping and price calculation. But naively carried over into political economy, it there produced truly wonderful errors and confusions.
Political economy finds it an established fact that the prices of all commodities, among them the price of the commodity which it calls “labour,” continually change; that they rise and fall in consequence of the most diverse circumstances, which often have no connection whatsoever with the production of the commodities themselves, so that prices appear to be determined, as a rule, by pure chance. As soon, therefore, as political economy stepped forth as a science, it was one of its first tasks to search for the law that hid itself behind this chance, which apparently determined the prices of commodities, and which in reality controlled this very chance. Among the prices of commodities, fluctuating and oscillating, now upward, now downward, the fixed central point was searched for around which these fluctuations and oscillations were taking place. In short, starting from the price of commodities, political economy sought for the value of commodities as the regulating law, by means of which all price fluctuations could be explained, and to which they could all be reduced in the last resort.
And so, classical political economy found that the value of a commodity was determined by the labour incorporated in it and requisite to its production. With this explanation, it was satisfied. And we, too, may, for the present, stop at this point. But, to avoid misconceptions, I will remind the reader that today this explanation has become wholly inadequate. Marx was the first to investigate thoroughly into the value-forming quality of labour and to discover that not all labour which is apparently, or even really, necessary to the production of a commodity, imparts under all circumstances to this commodity a magnitude of value corresponding to the quantity of labour used up. If, therefore, we say today in short, with economists like Ricardo, that the value of a commodity is determined by the labour necessary to its production, we always imply the reservations and restrictions made by Marx. Thus much for our present purpose; further information can be found in Marx’s Critique of Political Economy, which appeared in 1859, and in the first volume of Capital.
But, as soon as the economists applied this determination of value by labour to the commodity “labour", they fell from one contradiction into another. How is the value of “labour” determined? By the necessary labour embodied in it. But how much labour is embodied in the labour of a labourer of a day a week, a month, a year. If labour is the measure of all values, we can express the “value of labour” only in labour. But we know absolutely nothing about the value of an hour’s labour, if all that we know about it is that it is equal to one hour’s labour. So, thereby, we have not advanced one hair’s breadth nearer our goal; we are constantly turning about in a circle.
Classical economics, therefore, essayed another turn. It said: the value of a commodity is equal to its cost of production. But, what is the cost of production of “labour"? In order to answer this question, the economists are forced to strain logic just a little. Instead of investigating the cost of production of labour itself, which, unfortunately, cannot be ascertained, they now investigate the cost of production of the labourer. And this latter can be ascertained. It changes according to time and circumstances, but for a given condition of society, in a given locality, and in a given branch of production, it, too, is given, at least within quite narrow limits. We live today under the regime of capitalist production, under which a large and steadily growing class of the population can live only on the condition that it works for the owners of the means of production – tools, machines, raw materials, and means of subsistence – in return for wages. On the basis of this mode of production, the labourer’s cost of production consists of the sum of the means of subsistence (or their price in money) which on the average are requisite to enable him to work, to maintain in him this capacity for work, and to replace him at his departure, by reason of age, sickness, or death, with another labourer – that is to say, to propagate the working class in required numbers.
Let us assume that the money price of these means of subsistence averages 3 shillings a day. Our labourer gets, therefore, a daily wage of 3 shillings from his employer. For this, the capitalist lets him work, say, 12 hours a day. Our capitalist, moreover, calculates somewhat in the following fashion: Let us assume that our labourer (a machinist) has to make a part of a machine which he finishes in one day. The raw material (iron and brass in the necessary prepared form) costs 20 shillings. The consumption of coal by the steam-engine, the wear-and-tear of this engine itself, of the turning-lathe, and of the other tools with which our labourer works, represent, for one day and one labourer, a value of 1 shilling. The wages for one day are, according to our assumption, 3 shillings. This makes a total of 24 shillings for our piece of a machine.
But, the capitalist calculates that, on an average, he will receive for it a price of 27 shillings from his customers, or 3 shillings over and above his outlay.
Whence do they 3 shillings pocketed by the capitalist come? According to the assertion of classical political economy, commodities are in the long run sold at their values, that is, they are sold at prices which correspond to the necessary quantities of labour contained in them. The average price of our part of a machine – 27 shillings – would therefore equal its value, i.e., equal the amount of labour embodied in it. But, of these 27 shillings, 21 shillings were values were values already existing before the machinist began to work; 20 shillings were contained in the raw material, 1 shilling in the fuel consumed during the work and in the machines and tools used in the process and reduced in their efficiency to the value of this amount. There remains 6 shillings, which have been added to the value of the raw material. But, according to the supposition of our economists, themselves, these 6 shillings can arise only from the labour added to the raw material by the labourer. His 12 hours’ labour has created, according to this, a new value of 6 shillings. Therefore, the value of his 12 hours’ labour would be equivalent to 6 shillings. So we have at last discovered what the “value of labour” is.
“Hold on there!” cries our machinist. “Six shillings? But I have received only 3 shillings! My capitalist swears high and day that the value of my 12 hours’ labour is no more than 3 shillings, and if I were to demand 6, he’d laugh at me. What kind of a story is that?"
If before this we got with our value of labour into a vicious circle, we now surely have driven straight into an insoluble contradiction. We searched for the value of labour, and we found more than we can use. For the labourer, the value of the 12 hours’ labour is 3 shillings; for the capitalist, it is 6 shillings, of which he pays the workingman 3 shillings as wages, and pockets the remaining 3 shilling himself. According to this, labour has not one but two values, and, moreover, two very different values!
As soon as we reduce the values, now expressed in money, to labour-time, the contradiction becomes even more absurd. By the 12 hours’ labour, a new value of 6 shillings is created. Therefore, in 6 hours, the new value created equals 3 shillings – the amount which the labourer receives for 12 hours’ labour. For 12 hours’ labour, the workingman receives, as an equivalent, the product of 6 hours’ labour. We are, thus, forced to one of two conclusions: either labour has two values, one of which is twice as large as the other, or 12 equals 6! In both cases, we get pure absurdities. Turn and twist as we may, we will not get out of this contradiction as long as we speak of the buying and selling of “labour” and of the “value of labour.” And just so it happened to the political economists. The last offshoot of classical political economy – the Ricardian school – was largely wrecked on the insolubility of this contradiction. Classical political economy had run itself into a blind alley. The man who discovered the way out of this blind alley was Karl Marx.
What the economists had considered as the cost of production of “labour” was really the cost of production, not of “labour,” but of the living labourer himself. And what this labourer sold to the capitalist was not his labour.
“So soon as his labour really begins,” says Marx, “it ceases to belong to him, and therefore can no longer be sold by him.”
At the most, he could sell his future labour – i.e., assume the obligation of executing a certain piece of work in a certain time. But, in this way, he does not sell labour (which would first have to be performed), but not for a stipulated payment he places his labour-power at the disposal of the capitalist for a certain time (in case of time-wages), or for the performance of a certain task (in case of piece-wages). He hires out or sells his labour-power. But this labour-power has grown up with his person and is inseparable from it. Its cost of production, therefore, coincides with his own cost of production; what the economist called the cost of production of labour is really the cost of production of the labourer, and therewith of his labour-power. And, thus, we can also go back from the cost of production of labour-power to the value of labour-power, and determine the quantity of social labour that is required for the production of a labour-power of a given quantity, as Marx has done in the chapter on “The Buying and Selling of labour Power.” [Capital, Vol.I]
Now what takes place after the worker has sold his labour-power, i.e., after he has placed his labour-power at the disposal of the capitalist for stipulated-wages – whether time-wages or piece-wages? The capitalist takes the labourer into his workshop or factory, where all the articles required for the work can be found – raw materials, auxiliary materials (coal, dyestuffs, etc.), tools, and machines. Here, the worker begins to work. His daily wages are, as above, 3 shillings, and it makes no difference whether he earns them as day-wages or piece-wages. We again assume that in 12 hours the worker adds by his labour a new value of 6 shillings to the value of the raw materials consumed, which new value the capitalist realizes by the sale of the finished piece of work. Out of this new value, he pays the worker his 3 shillings, and the remaining 3 shillings he keeps for himself. If, now, the labourer creates in 12 hours a value of 6 shillings, in 6 hours he creates a value of 3 shillings. Consequently, after working 6 hours for the capitalist, the labourer has returned to him the equivalent of the 3 shillings received as wages. After 6 hours’ work, both are quits, neither one owing a penny to the other.
“Hold on there!” now cries out the capitalist. “I have hired the labourer for a whole day, for 12 hours. But 6 hours are only half-a-day. So work along lively there until the other 6 hours are at an end – only then will we be even.” And, in fact, the labourer has to submit to the conditions of the contract upon which he entered of “his own free will", and according to which he bound himself to work 12 whole hours for a product of labour which cost only 6 hours’ labour.
Similarly with piece-wages. Let us suppose that in 12 hours our worker makes 12 commodities. Each of these costs a shilling in raw materials and wear-and-tear, and is sold for 2.5 shillings. On our former assumption, the capitalist gives the labourer .25 of a shilling for each piece, which makes a total of 3 shillings for 12 pieces. To earn this, the worker requires 12 hours. The capitalist receives 30 shillings for the 12 pieces; deducting 24 shillings for raw materials and wear-and-tear, there remains 6 shillings, of which he pays 3 shillings in wages and pockets the remaining 3. Just as before! Here, also, the worker labours 6 hours for himself – i.e., to replace his wages (half-an-hour in each of the 12 hours), and 6 hours for the capitalist.
The rock upon which the best economists were stranded, as long as they started out from the value of labour, vanishes as soon as we make our starting-point the value of labour-power. labour-power is, in our present-day capitalist society, a commodity like every other commodity, but yet a very peculiar commodity. It has, namely, the peculiarity of being a value-creating force, the source of value, and, moreover, when properly treated, the source of more value than it possesses itself. In the present state of production, human labour-power not only produces in a day a greater value than it itself possesses and costs; but with each new scientific discovery, with each new technical invention, there also rises the surplus of its daily production over its daily cost, while as a consequence there diminishes that part of the working-day in which the labourer produces the equivalent of his day’s wages, and, on the other hand, lengthens that part of the working-day in which he must present labour gratis to the capitalist.
And this is the economic constitution of our entire modern society: the working class alone produces all values. For value is only another expression for labour, that expression, namely, by which is designated, in our capitalist society of today, the amount of socially necessary labour embodied in a particular commodity. But, these values produced by the workers do not belong to the workers. They belong to the owners of the raw materials, machines, tools, and money, which enable them to buy the labour-power of the working class. Hence, the working class gets back only a part of the entire mass of products produced by it. And, as we have just seen, the other portion, which the capitalist class retains, and which it has to share, at most, only with the landlord class, is increasing with every new discovery and invention, while the share which falls to the working class (per capita) rises but little and very slowly, or not at all, and under certain conditions it may even fall.
But, these discoveries and inventions which supplant one another with ever-increasing speed, this productiveness of human labour which increases from day to day to unheard-of proportions, at last gives rise to a conflict, in which present capitalistic economy must go to ruin. On the one hand, immeasurable wealth and a superfluidity of products with which the buyers cannot cope. On the other hand, the great mass of society proletarianized, transformed into wage-labourers, and thereby disabled from appropriating to themselves that superfluidity of products. The splitting up of society into a small class, immoderately rich, and a large class of wage-labourers devoid of all property, brings it about that this society smothers in its own superfluidity, while the great majority of its members are scarcely, or not at all, protected from extreme want.
This condition becomes every day more absurd and more unnecessary. It must be gotten rid of; it can be gotten rid of. A new social order is possible, in which the class differences of today will have disappeared, and in which – perhaps after a short transition period, which, though somewhat deficient in other respects, will in any case be very useful morally – there will be the means of life, of the enjoyment of life, and of the development and activity of all bodily and mental faculties, through the systematic use and further development of the enormous productive powers of society, which exists with us even now, with equal obligation upon all to work. And that the workers are growing ever more determined to achieve this new social order will be proven on both sides of the ocean on this dawning May Day, and on Sunday, May 3rd. [Engels is referring to the May Day celebrations of 1891]
FREDERICK ENGELS
London, April 30, 1891.
Footnotes
1. “By classical political economy, I understand that economy which, since the time of W. Petty, has investigated the real relations of production in bourgeois society, in contradistinction to vulgar economy, which deals with appearances only, ruminates without ceasing on the materials long since provided by scientific economy, and there seeks plausible explanations of the most obtrusive phenomena for bourgeois daily use, but for the rest confines itself to systematizing in a pedantic way, and proclaiming for everlasting truths, trite ideas held by the self-complacent bourgeoisie with regard to their own world, to them the best of all possible worlds.”
Preliminary
From various quarters we have been reproached for neglecting to portray the economic conditions which form the material basis of the present struggles between classes and nations. With set purpose we have hitherto touched upon these conditions only when they forced themselves upon the surface of the political conflicts.
It was necessary, beyond everything else, to follow the development of the class struggle in the history of our own day, and to prove empirically, by the actual and daily newly created historical material, that with the subjugation of the working class, accomplished in the days of February and March, 1848, the opponents of that class – the bourgeois republicans in France, and the bourgeois and peasant classes who were fighting feudal absolutism throughout the whole continent of Europe – were simultaneously conquered; that the victory of the "moderate republic" in France sounded at the same time the fall of the nations which had responded to the February revolution with heroic wars of independence; and finally that, by the victory over the revolutionary workingmen, Europe fell back into its old double slavery, into the English-Russian slavery. The June conflict in Paris, the fall of Vienna, the tragi-comedy in Berlin in November 1848, the desperate efforts of Poland, Italy, and Hungary, the starvation of Ireland into submission – these were the chief events in which the European class struggle between the bourgeoisie and the working class was summed up, and from which we proved that every revolutionary uprising, however remote from the class struggle its object might appear, must of necessity fail until the revolutionary working class shall have conquered; – that every social reform must remain a Utopia until the proletarian revolution and the feudalistic counter-revolution have been pitted against each other in a world-wide war. In our presentation, as in reality, Belgium and Switzerland were tragicomic caricaturish genre pictures in the great historic tableau; the one the model State of the bourgeois monarchy, the other the model State of the bourgeois republic; both of them, States that flatter themselves to be just as free from the class struggle as from the European revolution.
But now, after our readers have seen the class struggle of the year 1848 develop into colossal political proportions, it is time to examine more closely the economic conditions themselves upon which is founded the existence of the capitalist class and its class rule, as well as the slavery of the workers.
We shall present the subject in three great divisions:
The Relation of Wage-labour to Capital, the Slavery of the Worker, the Rule of the Capitalist.
The Inevitable Ruin of the Middle Classes [petty-bourgeois] and the so-called Commons [peasants] under the present system.
The Commercial Subjugation and Exploitation of the Bourgeois classes of the various European nations by the Despot of the World Market – England.
We shall seek to portray this as simply and popularly as possible, and shall not presuppose a knowledge of even the most elementary notions of political economy. We wish to be understood by the workers. And, moreover, there prevails in Germany the most remarkable ignorance and confusion of ideas in regard to the simplest economic relations, from the patented defenders of existing conditions, down to the socialist wonder-workers and the unrecognized political geniuses, in which divided Germany is even richer than in duodecimo princelings. We therefore proceed to the consideration of the first problem.
What are Wages?--How are they Determined?
If several workmen were to be asked: "How much wages do you get?", one would reply, "I get two shillings a day", and so on. According to the different branches of industry in which they are employed, they would mention different sums of money that they receive from their respective employers for the completion of a certain task; for example, for weaving a yard of linen, or for setting a page of type. Despite the variety of their statements, they would all agree upon one point: that wages are the amount of money which the capitalist pays for a certain period of work or for a certain amount of work.
Consequently, it appears that the capitalist buys their labour with money, and that for money they sell him their labour. But this is merely an illusion. What they actually sell to the capitalist for money is their labour-power. This labour-power the capitalist buys for a day, a week, a month, etc. And after he has bought it, he uses it up by letting the worker labour during the stipulated time. With the same amount of money with which the capitalist has bought their labour-power (for example, with two shillings) he could have bought a certain amount of sugar or of any other commodity. The two shillings with which he bought 20 pounds of sugar is the price of the 20 pounds of sugar. The two shillings with which he bought 12 hours' use of labour-power, is the price of 12 hours' labour. Labour-power, then, is a commodity, no more, no less so than is the sugar. The first is measured by the clock, the other by the scales.
Their commodity, labour-power, the workers exchange for the commodity of the capitalist, for money, and, moreover, this exchange takes place at a certain ratio. So much money for so long a use of labour-power. For 12 hours' weaving, two shillings. And these two shillings, do they not represent all the other commodities which I can buy for two shillings? Therefore, actually, the worker has exchanged his commodity, labour-power, for commodities of all kinds, and, moreover, at a certain ratio. By giving him two shillings, the capitalist has given him so much meat, so much clothing, so much wood, light, etc., in exchange for his day's work. The two shillings therefore express the relation in which labour-power is exchanged for other commodities, the exchange-value of labour-power.
The exchange value of a commodity estimated in money is called its price. Wages therefore are only a special name for the price of labour-power, and are usually called the price of labour; it is the special name for the price of this peculiar commodity, which has no other repository than human flesh and blood.
Let us take any worker; for example, a weaver. The capitalist supplies him with the loom and yarn. The weaver applies himself to work, and the yarn is turned into cloth. The capitalist takes possession of the cloth and sells it for 20 shillings, for example. Now are the wages of the weaver a share of the cloth, of the 20 shillings, of the product of the work? By no means. Long before the cloth is sold, perhaps long before it is fully woven, the weaver has received his wages. The capitalist, then, does not pay his wages out of the money which he will obtain from the cloth, but out of money already on hand. Just as little as loom and yarn are the product of the weaver to whom they are supplied by the employer, just so little are the commodities which he receives in exchange for his commodity – labour-power – his product. It is possible that the employer found no purchasers at all for the cloth. It is possible that he did not get even the amount of the wages by its sale. It is possible that he sells it very profitably in proportion to the weaver's wages. But all that does not concern the weaver. With a part of his existing wealth, of his capital, the capitalist buys the labour-power of the weaver in exactly the same manner as, with another part of his wealth, he has bought the raw material – the yarn – and the instrument of labour – the loom. After he has made these purchases, and among them belongs the labour-power necessary to the production of the cloth he produces only with raw materials and instruments of labour belonging to him. For our good weaver, too, is one of the instruments of labour, and being in this respect on a par with the loom, he has no more share in the product (the cloth), or in the price of the product, than the loom itself has.
Wages, therefore, are not a share of the worker in the commodities produced by himself. Wages are that part of already existing commodities with which the capitalist buys a certain amount of productive labour-power.
Consequently, labour-power is a commodity which its possessor, the wage-worker, sells to the capitalist. Why does he sell it? It is in order to live.
But the putting of labour-power into action – i.e., the work – is the active expression of the labourer's own life. And this life activity he sells to another person in order to secure the necessary means of life. His life-activity, therefore, is but a means of securing his own existence. He works that he may keep alive. He does not count the labour itself as a part of his life; it is rather a sacrifice of his life. It is a commodity that he has auctioned off to another. The product of his activity, therefore, is not the aim of his activity. What he produces for himself is not the silk that he weaves, not the gold that he draws up the mining shaft, not the palace that he builds. What he produces for himself is wages; and the silk, the gold, and the palace are resolved for him into a certain quantity of necessaries of life, perhaps into a cotton jacket, into copper coins, and into a basement dwelling. And the labourer who for 12 hours long, weaves, spins, bores, turns, builds, shovels, breaks stone, carries hods, and so on – is this 12 hours' weaving, spinning, boring, turning, building, shovelling, stone-breaking, regarded by him as a manifestation of life, as life? Quite the contrary. Life for him begins where this activity ceases, at the table, at the tavern, in bed. The 12 hours' work, on the other hand, has no meaning for him as weaving, spinning, boring, and so on, but only as earnings, which enable him to sit down at a table, to take his seat in the tavern, and to lie down in a bed. If the silk-worm's object in spinning were to prolong its existence as caterpillar, it would be a perfect example of a wage-worker.
Labour-power was not always a commodity (merchandise). Labour was not always wage-labour, i.e., free labour. The slave did not sell his labour-power to the slave-owner, any more than the ox sells his labour to the farmer. The slave, together with his labour-power, was sold to his owner once for all. He is a commodity that can pass from the hand of one owner to that of another. He himself is a commodity, but his labour-power is not his commodity. The serf sells only a portion of his labour-power. It is not he who receives wages from the owner of the land; it is rather the owner of the land who receives a tribute from him. The serf belongs to the soil, and to the lord of the soil he brings its fruit. The free labourer, on the other hand, sells his very self, and that by fractions. He auctions off eight, 10, 12, 15 hours of his life, one day like the next, to the highest bidder, to the owner of raw materials, tools, and the means of life – i.e., to the capitalist. The labourer belongs neither to an owner nor to the soil, but eight, 10, 12, 15 hours of his daily life belong to whomsoever buys them. The worker leaves the capitalist, to whom he has sold himself, as often as he chooses, and the capitalist discharges him as often as he sees fit, as soon as he no longer gets any use, or not the required use, out of him. But the worker, whose only source of income is the sale of his labour-power, cannot leave the whole class of buyers, i.e., the capitalist class, unless he gives up his own existence. He does not belong to this or that capitalist, but to the capitalist class; and it is for him to find his man – i.e., to find a buyer in this capitalist class.
Before entering more closely upon the relation of capital to wage-labour, we shall present briefly the most general conditions which come into consideration in the determination of wages.
Wages, as we have seen, are the price of a certain commodity, labour-power. Wages, therefore, are determined by the same laws that determine the price of every other commodity. The question then is, How is the price of a commodity determined?
By what is the price of a commodity determined?
By the competition between buyers and sellers, by the relation of the demand to the supply, of the call to the offer. The competition by which the price of a commodity is determined is threefold.
The same commodity is offered for sale by various sellers. Whoever sells commodities of the same quality most cheaply, is sure to drive the other sellers from the field and to secure the greatest market for himself. The sellers therefore fight among themselves for the sales, for the market. Each one of them wishes to sell, and to sell as much as possible, and if possible to sell alone, to the exclusion of all other sellers. Each one sells cheaper than the other. Thus there takes place a competition among the sellers which forces down the price of the commodities offered by them.
But there is also a competition among the buyers; this upon its side causes the price of the proffered commodities to rise.
Finally, there is competition between the buyers and the sellers: these wish to purchase as cheaply as possible, those to sell as dearly as possible. The result of this competition between buyers and sellers will depend upon the relations between the two above-mentioned camps of competitors – i.e., upon whether the competition in the army of sellers is stronger. Industry leads two great armies into the field against each other, and each of these again is engaged in a battle among its own troops in its own ranks. The army among whose troops there is less fighting, carries off the victory over the opposing host.
Let us suppose that there are 100 bales of cotton in the market and at the same time purchasers for 1,000 bales of cotton. In this case, the demand is 10 times greater than the supply. Competition among the buyers, then, will be very strong; each of them tries to get hold of one bale, if possible, of the whole 100 bales. This example is no arbitrary supposition. In the history of commerce we have experienced periods of scarcity of cotton, when some capitalists united together and sought to buy up not 100 bales, but the whole cotton supply of the world. In the given case, then, one buyer seeks to drive the others from the field by offering a relatively higher price for the bales of cotton. The cotton sellers, who perceive the troops of the enemy in the most violent contention among themselves, and who therefore are fully assured of the sale of their whole 100 bales, will beware of pulling one another's hair in order to force down the price of cotton at the very moment in which their opponents race with one another to screw it up high. So, all of a sudden, peace reigns in the army of sellers. They stand opposed to the buyers like one man, fold their arms in philosophic contentment and their claims would find no limit did not the offers of even the most importunate of buyers have a very definite limit.
If, then, the supply of a commodity is less than the demand for it, competition among the sellers is very slight, or there may be none at all among them. In the same proportion in which this competition decreases, the competition among the buyers increases. Result: a more or less considerable rise in the prices of commodities.
It is well known that the opposite case, with the opposite result, happens more frequently. Great excess of supply over demand; desperate competition among the sellers, and a lack of buyers; forced sales of commodities at ridiculously low prices.
But what is a rise, and what a fall of prices? What is a high and what a low price? A grain of sand is high when examined through a microscope, and a tower is low when compared with a mountain. And if the price is determined by the relation of supply and demand, by what is the relation of supply and demand determined?
Let us turn to the first worthy citizen we meet. He will not hesitate one moment, but, like Alexander the Great, will cut this metaphysical knot with his multiplication table. He will say to us: "If the production of the commodities which I sell has cost me 100 pounds, and out of the sale of these goods I make 110 pounds – within the year, you understand – that's an honest, sound, reasonable profit. But if in the exchange I receive 120 or 130 pounds, that's a higher profit; and if I should get as much as 200 pounds, that would be an extraordinary, and enormous profit." What is it, then, that serves this citizen as the standard of his profit? The cost of the production of his commodities. If in exchange for these goods he receives a quantity of other goods whose production has cost less, he has lost. If he receives in exchange for his goods a quantity of other goods whose production has cost more, he has gained. And he reckons the falling or rising of the profit according to the degree at which the exchange value of his goods stands, whether above or below his zero – the cost of production.
We have seen how the changing relation of supply and demand causes now a rise, now a fall of prices; now high, now low prices. If the price of a commodity rises considerably owing to a failing supply or a disproportionately growing demand, then the price of some other commodity must have fallen in proportion; for of course the price of a commodity only expresses in money the proportion in which other commodities will be given in exchange for it. If, for example, the price of a yard of silk rises from two to three shillings, the price of silver has fallen in relation to the silk, and in the same way the prices of all other commodities whose prices have remained stationary have fallen in relation to the price of silk. A large quantity of them must be given in exchange in order to obtain the same amount of silk. Now, what will be the consequence of a rise in the price of a particular commodity? A mass of capital will be thrown into the prosperous branch of industry, and this immigration of capital into the provinces of the favored industry will continue until it yields no more than the customary profits, or, rather until the price of its products, owning to overproduction, sinks below the cost of production.
Conversely: if the price of a commodity falls below its cost of production, then capital will be withdrawn from the production of this commodity. Except in the case of a branch of industry which has become obsolete and is therefore doomed to disappear, the production of such a commodity (that is, its supply), will, owning to this flight of capital, continue to decrease until it corresponds to the demand, and the price of the commodity rises again to the level of its cost of production; or, rather, until the supply has fallen below the demand and its price has risen above its cost of production, for the current price of a commodity is always either above or below its cost of production.
We see how capital continually emigrates out of the province of one industry and immigrates into that of another. The high price produces an excessive immigration, and the low price an excessive emigration.
We could show, from another point of view, how not only the supply, but also the demand, is determined by the cost of production. But this would lead us too far away from our subject.
We have just seen how the fluctuation of supply and demand always bring the price of a commodity back to its cost of production. The actual price of a commodity, indeed, stands always above or below the cost of production; but the rise and fall reciprocally balance each other, so that, within a certain period of time, if the ebbs and flows of the industry are reckoned up together, the commodities will be exchanged for one another in accordance with their cost of production. Their price is thus determined by their cost of production.
The determination of price by the cost of production is not to be understood in the sense of the bourgeois economists. The economists say that the average price of commodities equals the cost of production: that is the law. The anarchic movement, in which the rise is compensated for by a fall and the fall by a rise, they regard as an accident. We might just as well consider the fluctuations as the law, and the determination of the price by cost of production as an accident – as is, in fact, done by certain other economists. But it is precisely these fluctuations which, viewed more closely, carry the most frightful devastation in their train, and, like an earthquake, cause bourgeois society to shake to its very foundations – it is precisely these fluctuations that force the price to conform to the cost of production. In the totality of this disorderly movement is to be found its order. In the total course of this industrial anarchy, in this circular movement, competition balances, as it were, the one extravagance by the other.
We thus see that the price of a commodity is indeed determined by its cost of production, but in such a manner that the periods in which the price of these commodities rises above the costs of production are balanced by the periods in which it sinks below the cost of production, and vice versa. Of course this does not hold good for a single given product of an industry, but only for that branch of industry. So also it does not hold good for an individual manufacturer, but only for the whole class of manufacturers.
The determination of price by cost of production is tantamount to the determination of price by the labor-time requisite to the production of a commodity, for the cost of production consists, first of raw materials and wear and tear of tools, etc., i.e., of industrial products whose production has cost a certain number of work-days, which therefore represent a certain amount of labor-time, and, secondly, of direct labor, which is also measured by its duration.
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This pamphlet first appeared in the form of a series of leading articles in the Neue Rheinische Zeitung, beginning on April 4th, 1849. The text is made up of from lectures delivered by Marx before the German Workingmen’s Club of Brussels in 1847. The series was never completed. The promise “to be continued,” at the end of the editorial in Number 269 of the newspaper, remained unfulfilled in consequence of the precipitous events of that time: the invasion of Hungary by the Russians [Tsarist troops invaded Hungary in 1849 to keep the Austrian Hapsburg dynasty in power], and the uprisings in Dresden, Iserlohn, Elberfeld, the Palatinate, and in Baden [Spontaneous uprisings in Germany in May-July 1849, supporting the Imperial Constitution which were crushed in mid-July], which led to the suppression of the paper on May 19th, 1849. And among the papers left by Marx no manuscript of any continuation of these articles has been found.
“Wage-labour and Capital” has appeared as an independent publication in several editions, the last of which was issued by the Swiss Co-operative Printing Association, in Hottingen-Zurich, in 1884. Hitherto, the several editions have contained the exact wording of the original articles. But since at least 10,000 copies of the present edition are to be circulated as a propaganda tract, the question necessarily forced itself upon me, would Marx himself, under these circumstance, have approved of an unaltered literal reproduction of the original?
Marx, in the ’40s, had not yet completed his criticism of political economy. This was not done until toward the end of the fifties. Consequently, such of his writings as were published before the first installment of his Critique of Political Economy was finished, deviate in some points from those written after 1859, and contain expressions and whole sentences which, viewed from the standpoint of his later writings, appear inexact, and even incorrect. Now, it goes without saying that in ordinary editions, intended for the public in general, this earlier standpoint, as a part of the intellectual development of the author, has its place; that the author as well as the public, has an indisputable right to an unaltered reprint of these older writings. In such a case, I would not have dreamed of changing a single word in it. But it is otherwise when the edition is destined almost exclusively for the purpose of propaganda. In such a case, Marx himself would unquestionably have brought the old work, dating from 1849, into harmony with his new point of view, and I feel sure that I am acting in his spirit when I insert in this edition the few changes and additions which are necessary in order to attain this object in all essential point.
Therefore, I say to the reader at once: this pamphlet is not as Marx wrote it in 1849, but approximately as Marx would have written it in 1891. Moreover, so many copies of the original text are in circulation, that these will suffice until I can publish it again unaltered in a complete edition of Marx’s works, to appear at some future time.
My alterations centre about one point. According to the original reading, the worker sells his labour for wages, which he receives from the capitalist; according to the present text, he sells his labour-power. And for this change, I must render an explanation: to the workers, in order that they may understand that we are not quibbling or word-juggling, but are dealing here with one of the most important points in the whole range of political economy; to the bourgeois, in order that they may convince themselves how greatly the uneducated workers, who can be easily made to grasp the most difficult economic analyses, excel our supercilious “cultured" folk, for whom such ticklish problems remain insoluble their whole life long.
Classical political economy[1] borrowed from the industrial practice the current notion of the manufacturer, that he buys and pays for the labour of his employees. This conception had been quite serviceable for the business purposes of the manufacturer, his bookkeeping and price calculation. But naively carried over into political economy, it there produced truly wonderful errors and confusions.
Political economy finds it an established fact that the prices of all commodities, among them the price of the commodity which it calls “labour,” continually change; that they rise and fall in consequence of the most diverse circumstances, which often have no connection whatsoever with the production of the commodities themselves, so that prices appear to be determined, as a rule, by pure chance. As soon, therefore, as political economy stepped forth as a science, it was one of its first tasks to search for the law that hid itself behind this chance, which apparently determined the prices of commodities, and which in reality controlled this very chance. Among the prices of commodities, fluctuating and oscillating, now upward, now downward, the fixed central point was searched for around which these fluctuations and oscillations were taking place. In short, starting from the price of commodities, political economy sought for the value of commodities as the regulating law, by means of which all price fluctuations could be explained, and to which they could all be reduced in the last resort.
And so, classical political economy found that the value of a commodity was determined by the labour incorporated in it and requisite to its production. With this explanation, it was satisfied. And we, too, may, for the present, stop at this point. But, to avoid misconceptions, I will remind the reader that today this explanation has become wholly inadequate. Marx was the first to investigate thoroughly into the value-forming quality of labour and to discover that not all labour which is apparently, or even really, necessary to the production of a commodity, imparts under all circumstances to this commodity a magnitude of value corresponding to the quantity of labour used up. If, therefore, we say today in short, with economists like Ricardo, that the value of a commodity is determined by the labour necessary to its production, we always imply the reservations and restrictions made by Marx. Thus much for our present purpose; further information can be found in Marx’s Critique of Political Economy, which appeared in 1859, and in the first volume of Capital.
But, as soon as the economists applied this determination of value by labour to the commodity “labour", they fell from one contradiction into another. How is the value of “labour” determined? By the necessary labour embodied in it. But how much labour is embodied in the labour of a labourer of a day a week, a month, a year. If labour is the measure of all values, we can express the “value of labour” only in labour. But we know absolutely nothing about the value of an hour’s labour, if all that we know about it is that it is equal to one hour’s labour. So, thereby, we have not advanced one hair’s breadth nearer our goal; we are constantly turning about in a circle.
Classical economics, therefore, essayed another turn. It said: the value of a commodity is equal to its cost of production. But, what is the cost of production of “labour"? In order to answer this question, the economists are forced to strain logic just a little. Instead of investigating the cost of production of labour itself, which, unfortunately, cannot be ascertained, they now investigate the cost of production of the labourer. And this latter can be ascertained. It changes according to time and circumstances, but for a given condition of society, in a given locality, and in a given branch of production, it, too, is given, at least within quite narrow limits. We live today under the regime of capitalist production, under which a large and steadily growing class of the population can live only on the condition that it works for the owners of the means of production – tools, machines, raw materials, and means of subsistence – in return for wages. On the basis of this mode of production, the labourer’s cost of production consists of the sum of the means of subsistence (or their price in money) which on the average are requisite to enable him to work, to maintain in him this capacity for work, and to replace him at his departure, by reason of age, sickness, or death, with another labourer – that is to say, to propagate the working class in required numbers.
Let us assume that the money price of these means of subsistence averages 3 shillings a day. Our labourer gets, therefore, a daily wage of 3 shillings from his employer. For this, the capitalist lets him work, say, 12 hours a day. Our capitalist, moreover, calculates somewhat in the following fashion: Let us assume that our labourer (a machinist) has to make a part of a machine which he finishes in one day. The raw material (iron and brass in the necessary prepared form) costs 20 shillings. The consumption of coal by the steam-engine, the wear-and-tear of this engine itself, of the turning-lathe, and of the other tools with which our labourer works, represent, for one day and one labourer, a value of 1 shilling. The wages for one day are, according to our assumption, 3 shillings. This makes a total of 24 shillings for our piece of a machine.
But, the capitalist calculates that, on an average, he will receive for it a price of 27 shillings from his customers, or 3 shillings over and above his outlay.
Whence do they 3 shillings pocketed by the capitalist come? According to the assertion of classical political economy, commodities are in the long run sold at their values, that is, they are sold at prices which correspond to the necessary quantities of labour contained in them. The average price of our part of a machine – 27 shillings – would therefore equal its value, i.e., equal the amount of labour embodied in it. But, of these 27 shillings, 21 shillings were values were values already existing before the machinist began to work; 20 shillings were contained in the raw material, 1 shilling in the fuel consumed during the work and in the machines and tools used in the process and reduced in their efficiency to the value of this amount. There remains 6 shillings, which have been added to the value of the raw material. But, according to the supposition of our economists, themselves, these 6 shillings can arise only from the labour added to the raw material by the labourer. His 12 hours’ labour has created, according to this, a new value of 6 shillings. Therefore, the value of his 12 hours’ labour would be equivalent to 6 shillings. So we have at last discovered what the “value of labour” is.
“Hold on there!” cries our machinist. “Six shillings? But I have received only 3 shillings! My capitalist swears high and day that the value of my 12 hours’ labour is no more than 3 shillings, and if I were to demand 6, he’d laugh at me. What kind of a story is that?"
If before this we got with our value of labour into a vicious circle, we now surely have driven straight into an insoluble contradiction. We searched for the value of labour, and we found more than we can use. For the labourer, the value of the 12 hours’ labour is 3 shillings; for the capitalist, it is 6 shillings, of which he pays the workingman 3 shillings as wages, and pockets the remaining 3 shilling himself. According to this, labour has not one but two values, and, moreover, two very different values!
As soon as we reduce the values, now expressed in money, to labour-time, the contradiction becomes even more absurd. By the 12 hours’ labour, a new value of 6 shillings is created. Therefore, in 6 hours, the new value created equals 3 shillings – the amount which the labourer receives for 12 hours’ labour. For 12 hours’ labour, the workingman receives, as an equivalent, the product of 6 hours’ labour. We are, thus, forced to one of two conclusions: either labour has two values, one of which is twice as large as the other, or 12 equals 6! In both cases, we get pure absurdities. Turn and twist as we may, we will not get out of this contradiction as long as we speak of the buying and selling of “labour” and of the “value of labour.” And just so it happened to the political economists. The last offshoot of classical political economy – the Ricardian school – was largely wrecked on the insolubility of this contradiction. Classical political economy had run itself into a blind alley. The man who discovered the way out of this blind alley was Karl Marx.
What the economists had considered as the cost of production of “labour” was really the cost of production, not of “labour,” but of the living labourer himself. And what this labourer sold to the capitalist was not his labour.
“So soon as his labour really begins,” says Marx, “it ceases to belong to him, and therefore can no longer be sold by him.”
At the most, he could sell his future labour – i.e., assume the obligation of executing a certain piece of work in a certain time. But, in this way, he does not sell labour (which would first have to be performed), but not for a stipulated payment he places his labour-power at the disposal of the capitalist for a certain time (in case of time-wages), or for the performance of a certain task (in case of piece-wages). He hires out or sells his labour-power. But this labour-power has grown up with his person and is inseparable from it. Its cost of production, therefore, coincides with his own cost of production; what the economist called the cost of production of labour is really the cost of production of the labourer, and therewith of his labour-power. And, thus, we can also go back from the cost of production of labour-power to the value of labour-power, and determine the quantity of social labour that is required for the production of a labour-power of a given quantity, as Marx has done in the chapter on “The Buying and Selling of labour Power.” [Capital, Vol.I]
Now what takes place after the worker has sold his labour-power, i.e., after he has placed his labour-power at the disposal of the capitalist for stipulated-wages – whether time-wages or piece-wages? The capitalist takes the labourer into his workshop or factory, where all the articles required for the work can be found – raw materials, auxiliary materials (coal, dyestuffs, etc.), tools, and machines. Here, the worker begins to work. His daily wages are, as above, 3 shillings, and it makes no difference whether he earns them as day-wages or piece-wages. We again assume that in 12 hours the worker adds by his labour a new value of 6 shillings to the value of the raw materials consumed, which new value the capitalist realizes by the sale of the finished piece of work. Out of this new value, he pays the worker his 3 shillings, and the remaining 3 shillings he keeps for himself. If, now, the labourer creates in 12 hours a value of 6 shillings, in 6 hours he creates a value of 3 shillings. Consequently, after working 6 hours for the capitalist, the labourer has returned to him the equivalent of the 3 shillings received as wages. After 6 hours’ work, both are quits, neither one owing a penny to the other.
“Hold on there!” now cries out the capitalist. “I have hired the labourer for a whole day, for 12 hours. But 6 hours are only half-a-day. So work along lively there until the other 6 hours are at an end – only then will we be even.” And, in fact, the labourer has to submit to the conditions of the contract upon which he entered of “his own free will", and according to which he bound himself to work 12 whole hours for a product of labour which cost only 6 hours’ labour.
Similarly with piece-wages. Let us suppose that in 12 hours our worker makes 12 commodities. Each of these costs a shilling in raw materials and wear-and-tear, and is sold for 2.5 shillings. On our former assumption, the capitalist gives the labourer .25 of a shilling for each piece, which makes a total of 3 shillings for 12 pieces. To earn this, the worker requires 12 hours. The capitalist receives 30 shillings for the 12 pieces; deducting 24 shillings for raw materials and wear-and-tear, there remains 6 shillings, of which he pays 3 shillings in wages and pockets the remaining 3. Just as before! Here, also, the worker labours 6 hours for himself – i.e., to replace his wages (half-an-hour in each of the 12 hours), and 6 hours for the capitalist.
The rock upon which the best economists were stranded, as long as they started out from the value of labour, vanishes as soon as we make our starting-point the value of labour-power. labour-power is, in our present-day capitalist society, a commodity like every other commodity, but yet a very peculiar commodity. It has, namely, the peculiarity of being a value-creating force, the source of value, and, moreover, when properly treated, the source of more value than it possesses itself. In the present state of production, human labour-power not only produces in a day a greater value than it itself possesses and costs; but with each new scientific discovery, with each new technical invention, there also rises the surplus of its daily production over its daily cost, while as a consequence there diminishes that part of the working-day in which the labourer produces the equivalent of his day’s wages, and, on the other hand, lengthens that part of the working-day in which he must present labour gratis to the capitalist.
And this is the economic constitution of our entire modern society: the working class alone produces all values. For value is only another expression for labour, that expression, namely, by which is designated, in our capitalist society of today, the amount of socially necessary labour embodied in a particular commodity. But, these values produced by the workers do not belong to the workers. They belong to the owners of the raw materials, machines, tools, and money, which enable them to buy the labour-power of the working class. Hence, the working class gets back only a part of the entire mass of products produced by it. And, as we have just seen, the other portion, which the capitalist class retains, and which it has to share, at most, only with the landlord class, is increasing with every new discovery and invention, while the share which falls to the working class (per capita) rises but little and very slowly, or not at all, and under certain conditions it may even fall.
But, these discoveries and inventions which supplant one another with ever-increasing speed, this productiveness of human labour which increases from day to day to unheard-of proportions, at last gives rise to a conflict, in which present capitalistic economy must go to ruin. On the one hand, immeasurable wealth and a superfluidity of products with which the buyers cannot cope. On the other hand, the great mass of society proletarianized, transformed into wage-labourers, and thereby disabled from appropriating to themselves that superfluidity of products. The splitting up of society into a small class, immoderately rich, and a large class of wage-labourers devoid of all property, brings it about that this society smothers in its own superfluidity, while the great majority of its members are scarcely, or not at all, protected from extreme want.
This condition becomes every day more absurd and more unnecessary. It must be gotten rid of; it can be gotten rid of. A new social order is possible, in which the class differences of today will have disappeared, and in which – perhaps after a short transition period, which, though somewhat deficient in other respects, will in any case be very useful morally – there will be the means of life, of the enjoyment of life, and of the development and activity of all bodily and mental faculties, through the systematic use and further development of the enormous productive powers of society, which exists with us even now, with equal obligation upon all to work. And that the workers are growing ever more determined to achieve this new social order will be proven on both sides of the ocean on this dawning May Day, and on Sunday, May 3rd. [Engels is referring to the May Day celebrations of 1891]
FREDERICK ENGELS
London, April 30, 1891.
Footnotes
1. “By classical political economy, I understand that economy which, since the time of W. Petty, has investigated the real relations of production in bourgeois society, in contradistinction to vulgar economy, which deals with appearances only, ruminates without ceasing on the materials long since provided by scientific economy, and there seeks plausible explanations of the most obtrusive phenomena for bourgeois daily use, but for the rest confines itself to systematizing in a pedantic way, and proclaiming for everlasting truths, trite ideas held by the self-complacent bourgeoisie with regard to their own world, to them the best of all possible worlds.”
Preliminary
From various quarters we have been reproached for neglecting to portray the economic conditions which form the material basis of the present struggles between classes and nations. With set purpose we have hitherto touched upon these conditions only when they forced themselves upon the surface of the political conflicts.
It was necessary, beyond everything else, to follow the development of the class struggle in the history of our own day, and to prove empirically, by the actual and daily newly created historical material, that with the subjugation of the working class, accomplished in the days of February and March, 1848, the opponents of that class – the bourgeois republicans in France, and the bourgeois and peasant classes who were fighting feudal absolutism throughout the whole continent of Europe – were simultaneously conquered; that the victory of the "moderate republic" in France sounded at the same time the fall of the nations which had responded to the February revolution with heroic wars of independence; and finally that, by the victory over the revolutionary workingmen, Europe fell back into its old double slavery, into the English-Russian slavery. The June conflict in Paris, the fall of Vienna, the tragi-comedy in Berlin in November 1848, the desperate efforts of Poland, Italy, and Hungary, the starvation of Ireland into submission – these were the chief events in which the European class struggle between the bourgeoisie and the working class was summed up, and from which we proved that every revolutionary uprising, however remote from the class struggle its object might appear, must of necessity fail until the revolutionary working class shall have conquered; – that every social reform must remain a Utopia until the proletarian revolution and the feudalistic counter-revolution have been pitted against each other in a world-wide war. In our presentation, as in reality, Belgium and Switzerland were tragicomic caricaturish genre pictures in the great historic tableau; the one the model State of the bourgeois monarchy, the other the model State of the bourgeois republic; both of them, States that flatter themselves to be just as free from the class struggle as from the European revolution.
But now, after our readers have seen the class struggle of the year 1848 develop into colossal political proportions, it is time to examine more closely the economic conditions themselves upon which is founded the existence of the capitalist class and its class rule, as well as the slavery of the workers.
We shall present the subject in three great divisions:
The Relation of Wage-labour to Capital, the Slavery of the Worker, the Rule of the Capitalist.
The Inevitable Ruin of the Middle Classes [petty-bourgeois] and the so-called Commons [peasants] under the present system.
The Commercial Subjugation and Exploitation of the Bourgeois classes of the various European nations by the Despot of the World Market – England.
We shall seek to portray this as simply and popularly as possible, and shall not presuppose a knowledge of even the most elementary notions of political economy. We wish to be understood by the workers. And, moreover, there prevails in Germany the most remarkable ignorance and confusion of ideas in regard to the simplest economic relations, from the patented defenders of existing conditions, down to the socialist wonder-workers and the unrecognized political geniuses, in which divided Germany is even richer than in duodecimo princelings. We therefore proceed to the consideration of the first problem.
What are Wages?--How are they Determined?
If several workmen were to be asked: "How much wages do you get?", one would reply, "I get two shillings a day", and so on. According to the different branches of industry in which they are employed, they would mention different sums of money that they receive from their respective employers for the completion of a certain task; for example, for weaving a yard of linen, or for setting a page of type. Despite the variety of their statements, they would all agree upon one point: that wages are the amount of money which the capitalist pays for a certain period of work or for a certain amount of work.
Consequently, it appears that the capitalist buys their labour with money, and that for money they sell him their labour. But this is merely an illusion. What they actually sell to the capitalist for money is their labour-power. This labour-power the capitalist buys for a day, a week, a month, etc. And after he has bought it, he uses it up by letting the worker labour during the stipulated time. With the same amount of money with which the capitalist has bought their labour-power (for example, with two shillings) he could have bought a certain amount of sugar or of any other commodity. The two shillings with which he bought 20 pounds of sugar is the price of the 20 pounds of sugar. The two shillings with which he bought 12 hours' use of labour-power, is the price of 12 hours' labour. Labour-power, then, is a commodity, no more, no less so than is the sugar. The first is measured by the clock, the other by the scales.
Their commodity, labour-power, the workers exchange for the commodity of the capitalist, for money, and, moreover, this exchange takes place at a certain ratio. So much money for so long a use of labour-power. For 12 hours' weaving, two shillings. And these two shillings, do they not represent all the other commodities which I can buy for two shillings? Therefore, actually, the worker has exchanged his commodity, labour-power, for commodities of all kinds, and, moreover, at a certain ratio. By giving him two shillings, the capitalist has given him so much meat, so much clothing, so much wood, light, etc., in exchange for his day's work. The two shillings therefore express the relation in which labour-power is exchanged for other commodities, the exchange-value of labour-power.
The exchange value of a commodity estimated in money is called its price. Wages therefore are only a special name for the price of labour-power, and are usually called the price of labour; it is the special name for the price of this peculiar commodity, which has no other repository than human flesh and blood.
Let us take any worker; for example, a weaver. The capitalist supplies him with the loom and yarn. The weaver applies himself to work, and the yarn is turned into cloth. The capitalist takes possession of the cloth and sells it for 20 shillings, for example. Now are the wages of the weaver a share of the cloth, of the 20 shillings, of the product of the work? By no means. Long before the cloth is sold, perhaps long before it is fully woven, the weaver has received his wages. The capitalist, then, does not pay his wages out of the money which he will obtain from the cloth, but out of money already on hand. Just as little as loom and yarn are the product of the weaver to whom they are supplied by the employer, just so little are the commodities which he receives in exchange for his commodity – labour-power – his product. It is possible that the employer found no purchasers at all for the cloth. It is possible that he did not get even the amount of the wages by its sale. It is possible that he sells it very profitably in proportion to the weaver's wages. But all that does not concern the weaver. With a part of his existing wealth, of his capital, the capitalist buys the labour-power of the weaver in exactly the same manner as, with another part of his wealth, he has bought the raw material – the yarn – and the instrument of labour – the loom. After he has made these purchases, and among them belongs the labour-power necessary to the production of the cloth he produces only with raw materials and instruments of labour belonging to him. For our good weaver, too, is one of the instruments of labour, and being in this respect on a par with the loom, he has no more share in the product (the cloth), or in the price of the product, than the loom itself has.
Wages, therefore, are not a share of the worker in the commodities produced by himself. Wages are that part of already existing commodities with which the capitalist buys a certain amount of productive labour-power.
Consequently, labour-power is a commodity which its possessor, the wage-worker, sells to the capitalist. Why does he sell it? It is in order to live.
But the putting of labour-power into action – i.e., the work – is the active expression of the labourer's own life. And this life activity he sells to another person in order to secure the necessary means of life. His life-activity, therefore, is but a means of securing his own existence. He works that he may keep alive. He does not count the labour itself as a part of his life; it is rather a sacrifice of his life. It is a commodity that he has auctioned off to another. The product of his activity, therefore, is not the aim of his activity. What he produces for himself is not the silk that he weaves, not the gold that he draws up the mining shaft, not the palace that he builds. What he produces for himself is wages; and the silk, the gold, and the palace are resolved for him into a certain quantity of necessaries of life, perhaps into a cotton jacket, into copper coins, and into a basement dwelling. And the labourer who for 12 hours long, weaves, spins, bores, turns, builds, shovels, breaks stone, carries hods, and so on – is this 12 hours' weaving, spinning, boring, turning, building, shovelling, stone-breaking, regarded by him as a manifestation of life, as life? Quite the contrary. Life for him begins where this activity ceases, at the table, at the tavern, in bed. The 12 hours' work, on the other hand, has no meaning for him as weaving, spinning, boring, and so on, but only as earnings, which enable him to sit down at a table, to take his seat in the tavern, and to lie down in a bed. If the silk-worm's object in spinning were to prolong its existence as caterpillar, it would be a perfect example of a wage-worker.
Labour-power was not always a commodity (merchandise). Labour was not always wage-labour, i.e., free labour. The slave did not sell his labour-power to the slave-owner, any more than the ox sells his labour to the farmer. The slave, together with his labour-power, was sold to his owner once for all. He is a commodity that can pass from the hand of one owner to that of another. He himself is a commodity, but his labour-power is not his commodity. The serf sells only a portion of his labour-power. It is not he who receives wages from the owner of the land; it is rather the owner of the land who receives a tribute from him. The serf belongs to the soil, and to the lord of the soil he brings its fruit. The free labourer, on the other hand, sells his very self, and that by fractions. He auctions off eight, 10, 12, 15 hours of his life, one day like the next, to the highest bidder, to the owner of raw materials, tools, and the means of life – i.e., to the capitalist. The labourer belongs neither to an owner nor to the soil, but eight, 10, 12, 15 hours of his daily life belong to whomsoever buys them. The worker leaves the capitalist, to whom he has sold himself, as often as he chooses, and the capitalist discharges him as often as he sees fit, as soon as he no longer gets any use, or not the required use, out of him. But the worker, whose only source of income is the sale of his labour-power, cannot leave the whole class of buyers, i.e., the capitalist class, unless he gives up his own existence. He does not belong to this or that capitalist, but to the capitalist class; and it is for him to find his man – i.e., to find a buyer in this capitalist class.
Before entering more closely upon the relation of capital to wage-labour, we shall present briefly the most general conditions which come into consideration in the determination of wages.
Wages, as we have seen, are the price of a certain commodity, labour-power. Wages, therefore, are determined by the same laws that determine the price of every other commodity. The question then is, How is the price of a commodity determined?
By what is the price of a commodity determined?
By the competition between buyers and sellers, by the relation of the demand to the supply, of the call to the offer. The competition by which the price of a commodity is determined is threefold.
The same commodity is offered for sale by various sellers. Whoever sells commodities of the same quality most cheaply, is sure to drive the other sellers from the field and to secure the greatest market for himself. The sellers therefore fight among themselves for the sales, for the market. Each one of them wishes to sell, and to sell as much as possible, and if possible to sell alone, to the exclusion of all other sellers. Each one sells cheaper than the other. Thus there takes place a competition among the sellers which forces down the price of the commodities offered by them.
But there is also a competition among the buyers; this upon its side causes the price of the proffered commodities to rise.
Finally, there is competition between the buyers and the sellers: these wish to purchase as cheaply as possible, those to sell as dearly as possible. The result of this competition between buyers and sellers will depend upon the relations between the two above-mentioned camps of competitors – i.e., upon whether the competition in the army of sellers is stronger. Industry leads two great armies into the field against each other, and each of these again is engaged in a battle among its own troops in its own ranks. The army among whose troops there is less fighting, carries off the victory over the opposing host.
Let us suppose that there are 100 bales of cotton in the market and at the same time purchasers for 1,000 bales of cotton. In this case, the demand is 10 times greater than the supply. Competition among the buyers, then, will be very strong; each of them tries to get hold of one bale, if possible, of the whole 100 bales. This example is no arbitrary supposition. In the history of commerce we have experienced periods of scarcity of cotton, when some capitalists united together and sought to buy up not 100 bales, but the whole cotton supply of the world. In the given case, then, one buyer seeks to drive the others from the field by offering a relatively higher price for the bales of cotton. The cotton sellers, who perceive the troops of the enemy in the most violent contention among themselves, and who therefore are fully assured of the sale of their whole 100 bales, will beware of pulling one another's hair in order to force down the price of cotton at the very moment in which their opponents race with one another to screw it up high. So, all of a sudden, peace reigns in the army of sellers. They stand opposed to the buyers like one man, fold their arms in philosophic contentment and their claims would find no limit did not the offers of even the most importunate of buyers have a very definite limit.
If, then, the supply of a commodity is less than the demand for it, competition among the sellers is very slight, or there may be none at all among them. In the same proportion in which this competition decreases, the competition among the buyers increases. Result: a more or less considerable rise in the prices of commodities.
It is well known that the opposite case, with the opposite result, happens more frequently. Great excess of supply over demand; desperate competition among the sellers, and a lack of buyers; forced sales of commodities at ridiculously low prices.
But what is a rise, and what a fall of prices? What is a high and what a low price? A grain of sand is high when examined through a microscope, and a tower is low when compared with a mountain. And if the price is determined by the relation of supply and demand, by what is the relation of supply and demand determined?
Let us turn to the first worthy citizen we meet. He will not hesitate one moment, but, like Alexander the Great, will cut this metaphysical knot with his multiplication table. He will say to us: "If the production of the commodities which I sell has cost me 100 pounds, and out of the sale of these goods I make 110 pounds – within the year, you understand – that's an honest, sound, reasonable profit. But if in the exchange I receive 120 or 130 pounds, that's a higher profit; and if I should get as much as 200 pounds, that would be an extraordinary, and enormous profit." What is it, then, that serves this citizen as the standard of his profit? The cost of the production of his commodities. If in exchange for these goods he receives a quantity of other goods whose production has cost less, he has lost. If he receives in exchange for his goods a quantity of other goods whose production has cost more, he has gained. And he reckons the falling or rising of the profit according to the degree at which the exchange value of his goods stands, whether above or below his zero – the cost of production.
We have seen how the changing relation of supply and demand causes now a rise, now a fall of prices; now high, now low prices. If the price of a commodity rises considerably owing to a failing supply or a disproportionately growing demand, then the price of some other commodity must have fallen in proportion; for of course the price of a commodity only expresses in money the proportion in which other commodities will be given in exchange for it. If, for example, the price of a yard of silk rises from two to three shillings, the price of silver has fallen in relation to the silk, and in the same way the prices of all other commodities whose prices have remained stationary have fallen in relation to the price of silk. A large quantity of them must be given in exchange in order to obtain the same amount of silk. Now, what will be the consequence of a rise in the price of a particular commodity? A mass of capital will be thrown into the prosperous branch of industry, and this immigration of capital into the provinces of the favored industry will continue until it yields no more than the customary profits, or, rather until the price of its products, owning to overproduction, sinks below the cost of production.
Conversely: if the price of a commodity falls below its cost of production, then capital will be withdrawn from the production of this commodity. Except in the case of a branch of industry which has become obsolete and is therefore doomed to disappear, the production of such a commodity (that is, its supply), will, owning to this flight of capital, continue to decrease until it corresponds to the demand, and the price of the commodity rises again to the level of its cost of production; or, rather, until the supply has fallen below the demand and its price has risen above its cost of production, for the current price of a commodity is always either above or below its cost of production.
We see how capital continually emigrates out of the province of one industry and immigrates into that of another. The high price produces an excessive immigration, and the low price an excessive emigration.
We could show, from another point of view, how not only the supply, but also the demand, is determined by the cost of production. But this would lead us too far away from our subject.
We have just seen how the fluctuation of supply and demand always bring the price of a commodity back to its cost of production. The actual price of a commodity, indeed, stands always above or below the cost of production; but the rise and fall reciprocally balance each other, so that, within a certain period of time, if the ebbs and flows of the industry are reckoned up together, the commodities will be exchanged for one another in accordance with their cost of production. Their price is thus determined by their cost of production.
The determination of price by the cost of production is not to be understood in the sense of the bourgeois economists. The economists say that the average price of commodities equals the cost of production: that is the law. The anarchic movement, in which the rise is compensated for by a fall and the fall by a rise, they regard as an accident. We might just as well consider the fluctuations as the law, and the determination of the price by cost of production as an accident – as is, in fact, done by certain other economists. But it is precisely these fluctuations which, viewed more closely, carry the most frightful devastation in their train, and, like an earthquake, cause bourgeois society to shake to its very foundations – it is precisely these fluctuations that force the price to conform to the cost of production. In the totality of this disorderly movement is to be found its order. In the total course of this industrial anarchy, in this circular movement, competition balances, as it were, the one extravagance by the other.
We thus see that the price of a commodity is indeed determined by its cost of production, but in such a manner that the periods in which the price of these commodities rises above the costs of production are balanced by the periods in which it sinks below the cost of production, and vice versa. Of course this does not hold good for a single given product of an industry, but only for that branch of industry. So also it does not hold good for an individual manufacturer, but only for the whole class of manufacturers.
The determination of price by cost of production is tantamount to the determination of price by the labor-time requisite to the production of a commodity, for the cost of production consists, first of raw materials and wear and tear of tools, etc., i.e., of industrial products whose production has cost a certain number of work-days, which therefore represent a certain amount of labor-time, and, secondly, of direct labor, which is also measured by its duration.
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