Library:Capital, vol. I

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Capital, vol. I
Written by Karl Marx
First published 1867
Type Book
Source Marxists Internet Archive

Commodities and money


The two factors of a commodity: use-value and value (the substance of value and the magnitude of value)

The wealth of societies in which the capitalist mode of production prevails appears as an ‘immense collection of commodities’; the individual commodity appears as its elementary form. Our investigation therefore begins with the analysis of the commodity.

The commodity is, first of all, an external object, a thing which through its qualities satisfies human needs of whatever kind. The nature of these needs, whether they arise, for example, from the stomach, or the imagination, makes no difference. Nor does it matter here how the thing satisfies man’s need, whether directly as a means of subsistence, i.e. an object of consumption, or indirectly as a means of production.

Every useful thing, for example, iron, paper, etc., may be looked at from the two points of view of quality and quantity. Every useful thing is a whole composed of many properties; it can therefore be useful in various ways. The discovery of these ways and hence of the manifold uses of things is the work of history. So also is the invention of socially recognized standards of measurement for the quantities of these useful objects. The diversity of the measures for commodities arises in part from the diverse nature of the objects to be measured, and in part from convention.

The usefulness of a thing makes it a use-value. But this usefulness does not dangle in mid-air. It is conditioned by the physical properties of the commodity, and has no existence apart from the latter. It is therefore the physical body of the commodity itself, for instance iron, corn, a diamond, which is the use-value or useful thing. This property of a commodity is independent of the amount of labour required to appropriate its useful qualities. When examining use-values, we always assume we are dealing with definite quantities, such as dozens of watches, yards of linen, or tons of iron. The use-values of commodities provide the material for a special branch of knowledge, namely the commercial knowledge of commodities. Use-values are only realized in use or in consumption. They constitute the material content of wealth, whatever its social form may be. In the form of society to be considered here they are also the material bearers of…exchange-value.

Exchange-value appears first of all as the quantitative relation, the proportion, in which use-values of one kind exchange for use-values of another kind. This relation changes constantly with time and place. Hence exchange-value appears to be something accidental and purely relative, and consequently an intrinsic value, i.e. an exchange-value that is inseparably connected with the commodity, inherent in it, seems a contradiction in terms.

Let us consider the matter more closely.

A given commodity, a quarter of wheat for example, is exchanged for x boot-polish, y silk or z gold, etc. In short, it is exchanged for other commodities in the most diverse proportions. Therefore the wheat has many exchange values instead of one. But x boot-polish, y silk or z gold, etc., each represent the exchange-value of one quarter of wheat. Therefore x boot-polish, y silk, z gold, etc., must, as exchange-values, be mutually replaceable or of identical magnitude. It follows from this that, firstly, the valid exchange-values of a particular commodity express something equal, and secondly, exchange-value cannot be anything other than the mode of expression, the ‘form of appearance’, of a content distinguishable from it.

Let us now take two commodities, for example corn and iron. Whatever their exchange relation may be, it can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron, for instance 1 quarter of corn = x cwt[note 1] of iron. What does this equation signify? It signifies that a common element of identical magnitude exists in two different things, in 1 quarter of corn and similarly in x cwt of iron. Both are therefore equal to a third thing, which in itself is neither the one nor the other. Each of them, so far as it is exchange-value, must therefore be reducible to this third thing.

A simple geometrical example will illustrate this. In order to determine and compare the areas of all rectilinear figures we split them up into triangles. Then the triangle itself is reduced to an expression totally different from its visible shape: half the product of the base and the altitude. In the same way the exchange values of commodities must be reduced to a common element, of which they represent a greater or a lesser quantity.

This common element cannot be a geometrical, physical, chemical or other natural property of commodities. Such properties come into consideration only to the extent that they make the commodities useful, i.e. turn them into use-values. But clearly, the exchange relation of commodities is characterized precisely by its abstraction from their use-values. Within the exchange relation, one use-value is worth just as much as another, provided only that it is present in the appropriate quantity. Or, as old Barbon says: ‘One sort of wares are as good as another, if the value be equal. There is no difference or distinction in things of equal value…One hundred pounds worth of lead or iron, is of as great a value as one hundred pounds worth of silver and gold.’

As use-values, commodities differ above all in quality, while as exchange-values they can only differ in quantity, and therefore do not contain an atom of use-value.

If then we disregard the use-value of commodities, only one property remains, that of being products of labour. But even the product of labour has already been transformed in our hands. If we make abstraction from its use-value, we abstract also from the material constituents and forms which make it a use-value. It is no longer a table, a house, a piece of yarn or any other useful thing. All its sensuous characteristics are extinguished. Nor is it any longer the product of the labour of the joiner, the mason or the spinner, or of any other particular kind of productive labour. With the disappearance of the useful character of the products of labour, the useful character of the kinds of labour embodied in them also disappears; this in turn entails the disappearance of the different concrete forms of labour. They can no longer be distinguished, but are all together reduced to the same kind of labour, human labour in the abstract.

Let us now look at the residue of the products of labour. There is nothing left of them in each case but the same phantom-like objectivity; they are merely congealed quantities of homogeneous human labour, i.e. of human labour-power expended without regard to the form of its expenditure. All these things now tell us is that human labour-power has been expended to produce them, human labour is accumulated in them. As crystals of this social substance, which is common to them all, they are values – commodity values.

We have seen that when commodities are in the relation of exchange, their exchange-value manifests itself as something totally independent of their use-value. But if we abstract from their use-value, there remains their value, as it has just been defined The common factor in the exchange relation, or in the exchange-value of the commodity, is therefore its value. The progress of the investigation will lead us back to exchange-value as the necessary mode of expression, or form of appearance, of value. For the present, however, we must consider the nature of value independently of its form of appearance.

A use-value, or useful article, therefore, has value only because abstract human labour is objectified [vergegenständlicht] or materialized in it How, then, is the magnitude of this value to be measured? By means of the quantity of the ‘value-forming substance’, the labour, contained in the article. This quantity is measured by its duration, and the labour-time is itself measured on the particular scale of hours, days etc.

It might seem that if the value of a commodity is determined by the quantity of labour expended to produce it, it would be the more valuable the more unskilful and lazy the worker who produced it, because he would need more time to complete the article. However, the labour that forms the substance of value is equal human labour, the expenditure of identical human labour-power. The total labour-power of society, which is manifested in the values of the world of commodities, counts here as one homogeneous mass of human labour-power, although composed of innumerable individual units of labour-power. Each of these units is the same as any other, to the extent that it has the character of a socially average unit of labour-power and acts as such, i.e. only needs, in order to produce a commodity, the labour time which is necessary on an average, or in other words is socially necessary. Socially necessary labour-time is the labour-time required to produce any use-value under the conditions of production normal for a given society and with the average degree of skill and intensity of labour prevalent in that society. The introduction of power-looms into England, for example, probably reduced by one half the labour required to convert a given quantity of yarn into woven fabric. In order to do this, the English hand-loom weaver in fact needed the same amount of labour-time as before; but the product of his individual hour of labour now only represented half an hour of social labour, and consequently fell to one half its former value.

What exclusively determines the magnitude of the value of any article is therefore the amount of labour socially necessary, or the labour-time socially necessary for its production. The individual commodity counts here only as an average sample of its kind. Commodities which contain equal quantities of labour, or which can be produced in the same time, have therefore the same value. The value of a commodity is related to the value of any other commodity as the labour-time necessary for the production of the one is related to the labour-time necessary for the production of the other. ‘As exchange-values, all commodities are merely definite quantities of congealed labour-time,’

The value of a commodity would therefore remain constant, if the labour-time required for its production also remained constant. But the latter changes with every variation in the productivity of labour. This is determined by a wide range of circumstances; it is determined amongst other things by the workers’ average degree of skill, the level of development of science and its technological application, the social organization of the process of production, the extent and effectiveness of the means of production, and the conditions found in the natural environment. For example, the same quantity of labour is present in eight bushels of corn in favourable seasons and in only four bushels in unfavourable seasons. The same quantity of labour provides more metal in rich mines than in poor. Diamonds are of very rare occurrence on the earth’s surface, and hence their discovery costs, on an average, a great deal of labour-time. Consequently much labour is represented in a small volume. Jacob questions whether gold has ever been paid for at its full value. This applies still more to diamonds. According to Eschwege, the total produce of the Brazilian diamond mines for the eighty years ending in 1823 still did not amount to the price of 1½ years’ average produce of the sugar and coffee plantations of the same country, although the diamonds represented much more labour, therefore more value. With richer mines, the same quantity of labour would be embodied in more diamonds, and their value would fall. If man succeeded, without much labour, in transforming carbon into diamonds, their value might fall below that of bricks. In general, the greater the productivity of labour, the less the labour-time required to produce an article, the less the mass of labour crystallized in that article, and the less its value. Inversely, the less the productivity of labour, the greater the labour-time necessary to produce an article, and the greater its value. The value of a commodity, therefore, varies directly as the quantity, and inversely as the productivity, of the labour which finds its realization within the commodity. (Now we know the substance of value. It is labour. We know the measure of its magnitude. It is labour-time. The form, which stamps value as exchange-value, remains to be analysed. But before this we need to develop the characteristics we have already found somewhat more fully.)

A thing can be a use-value without being a value. This is the case whenever its utility to man is not mediated through labour. Air, virgin soil, natural meadows, unplanted forests, etc. fall into this category. A thing can be useful, and a product of human labour, without being a commodity. He who satisfies his own need with the product of his own labour admittedly creates use-values, but not commodities. In order to produce the latter, he must not only produce use-values, but use-values for others, social use-values. (And not merely for others. The medieval peasant produced a corn-rent for the feudal lord and a corn-tithe for the priest; but neither the corn-rent nor the corn-tithe became commodities simply by being produced for others. In order to become a commodity, the product must be transferred to the other person, for whom it serves as a use-value, through the medium of exchange.) Finally, nothing can be a value without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value.

The dual character of the labour embodied in commodities

Initially the commodity appeared to us as an object with a dual character, possessing both use-value and exchange-value. Later on it was seen that labour, too, has a dual character: in so far as it finds its expression in value, it no longer possesses the same characteristics as when it is the creator of use-values. I was the first to point out and examine critically this twofold nature of the labour contained in commodities. As this point is crucial to an understanding of political economy, it requires further elucidation.

Let us take two commodities, such as a coat and 10 yards of linen, and let the value of the first be twice the value of the second, so that, if 10 yards of linen = W, the coat = 2 W.

The coat is a use-value that satisfies a particular need. A specific kind of productive activity is required to bring it into existence. This activity is determined by its aim, mode of operation, object, means and result. We use the abbreviated expression ‘useful labour’ for labour whose utility is represented by the use-value of its product, or by the fact that its product is a use-value. In this connection we consider only its useful effect.

As the coat and the linen are qualitatively different use-values, so also are the forms of labour through which their existence is mediated – tailoring and weaving. If the use-values were not qualitatively different, hence not the products of qualitatively different forms of useful labour, they would be absolutely incapable of confronting each other as commodities. Coats cannot be exchanged for coats, one use-value cannot be exchanged for another of the same kind.

The totality of heterogeneous use-values or physical commodities reflects a totality of similarly heterogeneous forms of useful labour, which differ in order, genus, species and variety: in short, a social division of labour. This division of labour is a necessary condition for commodity production, although the converse does not hold; commodity production is not a necessary condition for the social division of labour. Labour is socially divided in the primitive Indian community, although the products do not thereby become commodities. Or, to take an example nearer home, labour is systematically divided in every factory, but the workers do not bring about this division by exchanging their individual products. Only the products of mutually independent acts of labour, performed in isolation, can confront each other as commodities.

To sum up, then: the use-value of every commodity contains useful labour, i.e. productive activity of a definite kind, carried on with a definite aim. Use-values cannot confront each other as commodities unless the useful labour contained in them is qualitatively different in each case. In a society whose products generally assume the form of commodities, i.e. in a society of commodity producers, this qualitative difference between the useful forms of labour which are carried on independently and privately by individual producers develops into a complex system, a social division of labour.

It is moreover a matter of indifference whether the coat is worn by the tailor or by his customer. In both cases it acts as a use-value. So, too, the relation between the coat and the labour that produced it is not in itself altered when tailoring becomes a special trade, an independent branch of the social division of labour. Men made clothes for thousands of years, under the compulsion of the need for clothing, without a single man ever becoming a tailor. But the existence of coats, of linen, of every element of material wealth not provided in advance by nature, had always to be mediated through a specific productive activity appropriate to its purpose, a productive activity that assimilated particular natural materials to particular human requirements. Labour, then, as the creator of use-values, as useful labour, is a condition of human existence which is independent of all forms of society; it is an eternal natural necessity which mediates the metabolism between man and nature, and therefore human life itself.

Use-values like coats, linen, etc., in short, the physical bodies of commodities, are combinations of two elements, the material provided by nature, and labour. If we subtract the total amount of useful labour of different kinds which is contained in the coat, the linen, etc., a material substratum is always left. This substratum is furnished by nature without human intervention. When man engages in production, he can only proceed as nature does herself, i.e. he can only change the form of the materials. Furthermore, even in this work of modification he is constantly helped by natural forces. Labour is therefore not the only source of material wealth, i.e. of the use-values it produces. As William Petty says, labour is the father of material wealth, the earth is its mother.

Let us now pass from the commodity as an object of utility to the value of commodities.

We have assumed that the coat is worth twice as much as the linen. But this is merely a quantitative difference, and does not concern us at the moment. We shall therefore simply bear in mind that if the value of a coat is twice that of 10 yards of linen, 20 yards of linen will have the same value as a coat. As values, the coat and the linen have the same substance, they are the objective expressions of homogeneous labour. But tailoring and weaving are qualitatively different forms of labour. There are, however, states of society in which the same man alternately makes clothes and weaves. In this case, these two different modes of labour are only modifications of the labour of the same individual and not yet fixed functions peculiar to different individuals, just as the coat our tailor makes today, and the pair of trousers he makes tomorrow, require him only to vary his own individual labour. Moreover, we can see at a glance that in our capitalist society a given portion of labour is supplied alternately in the form of tailoring and in the form of weaving, in accordance with changes in the direction of the demand for labour. This change in the form of labour may well not take place without friction, but it must take place.

If we leave aside the determinate quality of productive activity, and therefore the useful character of the labour, what remains is its quality of being an expenditure of human labour-power. Tailoring and weaving, although they are qualitatively different productive activities, are both a productive expenditure of human brains, muscles, nerves, hands etc., and in this sense both human labour. They are merely two different forms of the expenditure of human labour-power. Of course, human labour-power must itself have attained a certain level of development before it can be expended in this or that form. But the value of a commodity represents human labour pure and simple, the expenditure of human labour in general. And just as, in civil society, a general or a banker plays a great part but man as such plays a very mean part, so, here too, the same is true of human labour. It is the expenditure of simple labour-power, i.e. of the labour-power possessed in his bodily organism by every ordinary man, on the average, without being developed in any special way. Simple average labour, it is true, varies in character in different countries and at different cultural epochs, but in a particular society it is given. More complex labour counts only as intensified, or rather multiplied simple labour, so that a smaller quantity of complex labour is considered equal to a larger quantity of simple labour. Experience shows that this reduction is constantly being made. A commodity may be the outcome of the most complicated labour, but through its value it is posited as equal to the product of simple labour, hence it represents only a specific quantity of simple labour. The various proportions in which different kinds of labour are reduced to simple labour as their unit of measurement are established by a social process that goes on behind the backs of the producers; these proportions therefore appear to the producers to have been handed down by tradition. In the interests of simplification, we shall henceforth view every form of labour-power directly as simple labour-power; by this we shall simply be saving ourselves the trouble of making the reduction.

Just as, in viewing the coat and the linen as values, we abstract from their different use-values, so, in the case of the labour represented by those values, do we disregard the difference between its useful forms, tailoring and weaving. The use-values coat and linen are combinations of, on the one hand, productive activity with a definite purpose, and, on the other, cloth and yarn; the values coat and linen, however, are merely congealed quantities of homogeneous labour. In the same way, the labour contained in these values does not count by virtue of its productive relation to cloth and yarn, but only as being an expenditure of human labour-power. Tailoring and weaving are the formative elements in the use-values coat and linen, precisely because these two kinds of labour are of different qualities; but only in so far as abstraction is made from their particular qualities, only in so far as both possess the same quality of being human labour, do tailoring and weaving form the substance of the values of the two articles mentioned.

Coats and linen, however, are not merely values in general, but values of definite magnitude, and, following our assumption, the coat is worth twice as much as the 10 yards of linen. Why is there this difference in value? Because the linen contains only half as much labour as the coat, so that labour-power had to be expended twice as long to produce the second as to produce the first.

While, therefore, with reference to use-value, the labour contained in a commodity counts only qualitatively, with reference to value it counts only quantitatively, once it has been reduced to human labour pure and simple. In the former case it was a matter of the ‘how’ and the ‘what’ of labour, in the latter of the ‘how much’, of the temporal duration of labour. Since the magnitude of the value of a commodity represents nothing but the quantity of labour embodied in it, it follows that all commodities, when taken in certain proportions, must be equal in value.

If the productivity of all the different sorts of useful labour required, let us say, for the production of a coat remains unchanged, the total value of the coats produced will increase along with their quantity. If one coat represents x days’ labour, two coats will represent 2x days’ labour, and so on. But now assume that the duration of the labour necessary for the production of a coat is doubled or halved. In the first case, one coat is worth as much as two coats were before; in the second case two coats are only worth as much as one was before, although in both cases one coat performs the same service, and the useful labour contained in it remains of the same quality. One change has taken place, however: a change in the quantity of labour expended to produce the article.

In itself, an increase in the quantity of use-values constitutes an increase in material wealth. Two coats will clothe two men, one coat will only clothe one man, etc. Nevertheless, an increase in the amount of material wealth may correspond to a simultaneous fall in the magnitude of its value. This contradictory movement arises out of the twofold character of labour. By ‘productivity’ of course, we always mean the productivity of concrete useful labour; in reality this determines only the degree of effectiveness of productive activity directed towards a given purpose within a given period of time. Useful labour becomes, therefore, a more or less abundant source of products in direct proportion as its productivity rises or falls. As against this, however, variations in productivity have no impact whatever on the labour itself represented in value. As productivity is an attribute of labour in its concrete useful form, it naturally ceases to have any bearing on that labour as soon as we abstract from its concrete useful form. The same labour, therefore, performed for the same length of time, always yields the same amount of value, independently of any variations in productivity. But it provides different quantities of use-values during equal periods of time; more, if productivity rises; fewer, if it falls. For this reason, the same change in productivity which increases the fruitfulness of labour, and therefore the amount of use-values produced by it, also brings about a reduction in the value of this increased total amount, if it cuts down the total amount of labour-time necessary to produce the use-values. The converse also holds.

On the one hand, all labour is an expenditure of human labour-power, in the physiological sense, and it is in this quality of being equal, or abstract, human labour that it forms the value of commodities. On the other hand, all labour is an expenditure of human labour-power in a particular form and with a definite aim, and it is in this quality of being concrete useful labour that it produces use-values.

The value-form, or exchange-value

Commodities come into the world in the form of use-values or material goods, such as iron, linen, corn, etc. This is their plain, homely, natural form. However, they are only commodities because they have a dual nature, because they are at the same time objects of utility and bearers of value. Therefore they only appear as commodities, or have the form of commodities, in so far as they possess a double form, i.e. natural form and value form.

The objectivity of commodities as values differs from Dame Quickly in the sense that ‘a man knows not where to have it’. Not an atom of matter enters into the objectivity of commodities as values; in this it is the direct opposite of the coarsely sensuous objectivity of commodities as physical objects. We may twist and turn a single commodity as we wish; it remains impossible to grasp it as a thing possessing value. However, let us remember that commodities possess an objective character as values only in so far as they are all expressions of an identical social substance, human labour, that their objective character as values is therefore purely social. From this it follows self-evidently that it can only appear in the social relation between commodity and commodity. In fact we started from exchange-value, or the exchange relation of commodities, in order to track down the value that lay hidden within it. We must now return to this form of appearance of value. Everyone knows, if nothing else, that commodities have a common value-form which contrasts in the most striking manner with the motley natural forms of their use-values. I refer to the money-form. Now, however, we have to perform a task never even attempted by bourgeois economics. That is, we have to show the origin of this money-form, we have to trace the development of the expression of value contained in the value-relation of commodities from its simplest, almost imperceptible outline to the dazzling money-form. When this has been done, the mystery of money will immediately disappear. The simplest value-relation is evidently that of one commodity to another commodity of a different kind (it does not matter which one). Hence the relation between the values of two commodities supplies us with the simplest expression of the value of a single commodity.

The simple, isolated, or accidental form of value
x commodity A = y commodity B or: x commodity A is worth y commodity B.
(20 yards of linen = 1 coat, or: 20 yards of linen are worth 1 coat)
The two poles of the expression of value: the relative form of value and the equivalent form

The whole mystery of the form of value lies hidden in this simple form. Our real difficulty, therefore, is to analyse it.

Here two different kinds of commodities (in our example the linen and the coat) evidently play two different parts. The linen expresses its value in the coat; the coat serves as the material in which that value is expressed. The first commodity plays an active role, the second a passive one. The value of the first commodity is represented as relative value, in other words the commodity is in the relative form of value. The second commodity fulfils the function of equivalent, in other words it is in the equivalent form.

The relative form of value and the equivalent form are two inseparable moments, which belong to and mutually condition each other; but, at the same time, they are mutually exclusive or opposed extremes, i.e. poles of the expression of value. They are always divided up between the different commodities brought into relation with each other by that expression. I cannot, for example, express the value of linen in linen. 20 yards of linen = 20 yards of linen is not an expression of value. The equation states rather the contrary: 20 yards of linen are nothing but 20 yards of linen, a definite quantity of linen considered as an object of utility. The value of the linen can therefore only be expressed relatively, i.e. in another commodity. The relative form of the value of the linen therefore presupposes that some other commodity confronts it in the equivalent form. On the other hand, this other commodity, which figures as the equivalent, cannot simultaneously be in the relative form of value. It is not the latter commodity whose value is being expressed. It only provides the material in which the value of the first commodity is expressed. Of course, the expression 20 yards of linen = 1 coat, or 20 yards of linen are worth 1 coat, also includes its converse: 1 coat = 20 yards of linen, or 1 coat is worth 20 yards of linen. But in this case I must reverse the equation, in order to express the value of the coat relatively; and, if I do that, the linen becomes the equivalent instead of the coat. The same commodity cannot, therefore, simultaneously appear in both forms in the same expression of value. These forms rather exclude each other as polar opposites. Whether a commodity is in the relative form or in its opposite, the equivalent form, entirely depends on its actual position in the expression of value. That is, it depends on whether it is the commodity whose value is being expressed, or the commodity in which value is being expressed.

The relative form of value

(i) The content of the relative form of value

In order to find out how the simple expression of the value of a commodity lies hidden in the value-relation between two commodities, we must, first of all, consider the value-relation quite independently of its quantitative aspect. The usual mode of procedure is the precise opposite of this: nothing is seen in the value-relation but the proportion in which definite quantities of two sorts of commodity count as equal to each other. It is overlooked that the magnitudes of different things only become comparable in quantitative terms when they have been reduced to the same unit. Only as expressions of the same unit do they have a common denominator, and are therefore commensurable magnitudes.

Whether 20 yards of linen = 1 coat or = 20 coats or = x coats, i.e. whether a given quantity of linen is worth few or many coats, it is always implied, whatever the proportion, that the linen and the coat, as magnitudes of value, are expressions of the same unit, things of the same nature. Linen = coat is the basis of the equation.

But these two qualitatively equated commodities do not play the same part. It is only the value of the linen that is expressed. And how? By being related to the coat as its ‘equivalent’, or ‘the thing exchangeable’ with it. In this relation the coat counts as the form of existence of value, as the material embodiment of value, for only as such is it the same as the linen. On the other hand, the linen’s own existence as value comes into view or receives an independent expression, for it is only as value that it can be related to the coat as being equal in value to it, or exchangeable with it. In the same way, butyric acid is a different substance from propyl formate. Yet both are made up of the same chemical substances, carbon (C), hydrogen (H) and oxygen (O). Moreover, these substances are combined together in the same proportions in each case, namely C4H8O2. If now butyric acid were to be equated with propyl formate, then, in the first place, propyl formate would count in this relation only as a form of existence of C4H8O2; and in the second place, it would thereby be asserted that butyric acid also consists of C4H8O2. Thus by equating propyl formate with butyric acid one would be expressing their chemical composition as opposed to their physical formation.

If we say that, as values, commodities are simply congealed quantities of human labour, our analysis reduces them, it is true, to the level of abstract value, but does not give them a form of value distinct from their natural forms. It is otherwise in the value relation of one commodity to another. The first commodity’s value character emerges here through its own relation to the second commodity.

By equating, for example, the coat as a thing of value to the linen, we equate the labour embedded in the coat with the labour embedded in the linen. Now it is true that the tailoring which makes the coat is concrete labour of a different sort from the weaving which makes the linen. But the act of equating tailoring with weaving reduces the former in fact to what is really equal in the two kinds of labour, to the characteristic they have in common of being human labour. This is a roundabout way of saying that weaving too, in so far as it weaves value, has nothing to distinguish it from tailoring, and, consequently, is abstract human labour. It is only the expression of equivalence between different sorts of commodities which brings to view the specific character of value-creating labour, by actually reducing the different kinds of labour embedded in the different kinds of commodity to their common quality of being human labour in general.

However, it is not enough to express the specific character of the labour which goes to make up the value of the linen. Human labour-power in its fluid state, or human labour, creates value, but is not itself value. It becomes value in its coagulated state, in objective form. The value of the linen as a congealed mass of human labour can be expressed only as an ‘objectivity’ [Gegen-ständlichkeit], a thing which is materially different from the linen itself and yet common to the linen and all other commodities. The problem is already solved.

When it is in the value-relation with the linen, the coat counts qualitatively as the equal of the linen, it counts as a thing of the same nature, because it is a value. Here it is therefore a thing in which value is manifested, or which represents value in its tangible natural form. Yet the coat itself, the physical aspect of the coat-commodity, is purely a use-value. A coat as such no more expresses value than does the first piece of linen we come across. This proves only that, within its value-relation to the linen, the coat signifies more than it does outside it, just as some men count for more when inside a gold-braided uniform than they do otherwise. In the production of the coat, human labour-power, in the shape of tailoring, has in actual fact been expended. Human labour has therefore been accumulated in the coat From this point of view, the coat is a ‘bearer of value’, although this property never shows through, even when the coat is at its most threadbare. In its value-relation with the linen, the coat counts only under this aspect, counts therefore as embodied value, as the body of value [Wertkörper]. Despite its buttoned-up appearance, the linen recognizes in it a splendid kindred soul, the soul of value. Nevertheless, the coat cannot represent value towards the linen unless value, for the latter, simultaneously assumes the form of a coat. An individual, A, for instance, cannot be ‘your majesty’ to another individual, B, unless majesty in B’s eyes assumes the physical shape of A, and, moreover, changes facial features, hair and many other things, with every new ‘father of his people’.

Hence, in the value-relation, in which the coat is the equivalent of the linen, the form of the coat counts as the form of value. The value of the commodity linen is therefore expressed by the physical body of the commodity coat, the value of one by the use-value of the other. As a use-value, the linen is something palpably different from the coat; as value, it is identical with the coat, and therefore looks like the coat. Thus the linen acquires a value-form different from its natural form. Its existence as value is manifested in its equality with the coat, just as the sheep-like nature of the Christian is shown in his resemblance to the Lamb of God.

We see, then, that everything our analysis of the value of commodities previously told us is repeated by the linen itself, as soon as it enters into association with another commodity, the coat. Only it reveals its thoughts in a language with which it alone is familiar, the language of commodities. In order to tell us that labour creates its own value in its abstract quality of being human labour, it says that the coat, in so far as it counts as its equal, i.e. is value, consists of the same labour as it does itself. In order to inform us that its sublime objectivity as a value differs from its stiff and starchy existence as a body, it says that value has the appearance of a coat, and therefore that in so far as the linen itself is an object of value [Wertding], it and the coat are as like as two peas. Let us note, incidentally, that the language of commodities also has, apart from Hebrew, plenty of other more or less correct dialects. The German word ‘Wertsein’ (to be worth), for instance, brings out less strikingly than the Romance verb ‘valere’, ‘valer’, ‘valoir’ that the equating of commodity B with commodity A is the expression of value proper to commodity A. Paris vaut bien une messe!

By means of the value-relation, therefore, the natural form of commodity B becomes the value-form of commodity A, in other words the physical body of commodity B becomes a mirror for the value of commodity A. Commodity A, then, in entering into a relation with commodity B as an object of value [Wertkörper], as a materialization of human labour, makes the use-value B into the material through which its own value is expressed. The value of commodity A, thus expressed in the use-value of commodity B, has the form of relative value.

(ii) The quantitative determinacy of the relative form of value

Every commodity whose-value is to be expressed is a useful object of a given quantity, for instance 15 bushels of corn, or 100 lb. of coffee. A given quantity of any commodity contains a definite quantity of human labour. Therefore the form of value must not only express value in general, but also quantitatively determined value, i.e. the magnitude of value. In the value-relation of commodity A to commodity B, of the linen to the coat, therefore, not only is the commodity-type coat equated with the linen in qualitative terms as an object of value as such, but also a definite quantity of the object of value or equivalent, 1 coat for example, is equated with a definite quantity of linen, such as 20 yards. The equation 20 yards of linen = 1 coat, or 20 yards of linen are worth 1 coat, presupposes the presence in 1 coat of exactly as much of the substance of value as there is in 20 yards of linen, implies therefore that the quantities in which the two commodities are present have cost the same amount of labour or the same quantity of labour-time. But the labour-time necessary for the production of 20 yards of linen or 1 coat varies with every change in the productivity of the weaver or the tailor. The influence of such changes on the relative expression of the magnitude of value must now be investigated more closely.

I. Let the value of the linen change while the value of the coat remains constant. If the labour-time necessary for the production of linen be doubled, as a result of the increasing infertility of flax-growing soil for instance, its value will also be doubled. Instead of the equation 20 yards of linen = 1 coat, we should have 20 yards of linen = 2 coats, since 1 coat would now contain only half as much labour-time as 20 yards of linen. If, on the other hand, the necessary labour-time be reduced by one half, as a result of improved looms for instance, the value of the linen will fall by one half. In accordance with this the equation will now read 20 yards of linen = ½ coat. The relative value of commodity A, i.e. its value expressed in commodity B, rises and falls in direct relation to the value of A, if the value of B remains constant.

II. Let the value of the linen remain constant, while the value of the coat changes. If, under these circumstances, the labour-time necessary for the production of a coat is doubled, as a result, for instance, of a poor crop of wool, we should have, instead of 20 yards of linen = 1 coat, 20 yards of linen = ½ coat. If, on the other hand, the value of the coat sinks by one half, then 20 yards of linen = 2 coats. Hence, if the value of commodity A remains constant, its relative value, as expressed in commodity B, rises and falls in inverse relation to the change in the value of B.

If we compare the different cases examined under headings I and II, it emerges that the same change in the magnitude of relative value may arise from entirely opposed causes. Thus the equation 20 yards of linen = 1 coat becomes 20 yards of linen = 2 coats, either because the value of the linen has doubled or because the value of the coat has fallen by one half, and it becomes 20 yards of linen = ½ coat, either because the value of the linen has fallen by one half, or because the value of the coat has doubled. III. Let the quantities of labour necessary for the production of the linen and the coat vary simultaneously in the same direction and the same proportion. In this case, 20 yards of linen = 1 coat, as before, whatever change may have taken place in their respective values. Their change of value is revealed only when they are compared with a third commodity, whose value has remained constant. If the values of all commodities rose or fell simultaneously, and in the same proportion, their relative values would remain unaltered. The change in their real values would be manifested by an increase or decrease in the quantity of commodities produced within the same labour-time. IV. The labour-time necessary for the production respectively of the linen and the coat, and hence their values, may vary simultaneously in the same direction, but to an unequal degree, or in opposite directions, and so on. The influence of all possible combinations of this kind on the relative value of a commodity can be worked out simply by applying cases I, II and III.

Thus real changes in the magnitude of value are neither unequivocally nor exhaustively reflected in their relative expression, or, in other words, in the magnitude of the relative value. The relative value of a commodity may vary, although its value remains constant. Its relative value may remain constant, although its value varies; and finally, simultaneous variations in the magnitude of its value and in the relative expression of that magnitude do not by any means have to correspond at all points. (iii) The equivalent form We have seen that a commodity A (the linen), by expressing its value in the use-value of a commodity B of a different kind (the coat), impresses upon the latter a form of value peculiar to it, namely that of the equivalent. The commodity linen brings to view its own existence as a value through the fact that the coat can be equated with the linen although it has not assumed a form of value distinct from its own physical form. The coat is directly exchangeable with the linen; in this way the linen in fact expresses its own existence as a value [Wertsein], The equivalent form of a commodity, accordingly, is the form in which it is directly exchangeable with other commodities.

If one kind of commodity, such as a coat, serves as the equivalent of another, such as linen, and coats therefore acquire the characteristic property of being in a form in which they can be directly exchanged with linen, this still by no means provides us with the proportion in which the two are exchangeable. Since the magnitude of the value of the linen is a given quantity, this proportion depends on the magnitude of the coat’s value. Whether the coat is expressed as the equivalent and the linen as relative value, or, inversely, the linen is expressed as equivalent and the coat as relative value, the magnitude of the coat’s value is determined, as ever, by the labour-time necessary for its production, independently of its value-form. But as soon as the coat takes up the position of the equivalent in the value expression, the magnitude of its value ceases to be expressed quantitatively. On the contrary, the coat now figures in the value equation merely as a definite quantity of some article.

For instance, 40 yards of linen are ‘worth’ – what? 2 coats. Because the commodity coat here plays the part of equivalent, because the use-value coat counts as the embodiment of value vis-à-vis the linen, a definite number of coats is sufficient to express a definite quantity of value in the linen. Two coats can therefore express the magnitude of value of 40 yards of linen, but they can never express the magnitude of their own value. Because they had a superficial conception of this fact, i.e. because they considered that in the equation of value the equivalent always has the form of a simple quantity of some article; of a use-value, Bailey and many of his predecessors and followers were misled into seeing the expression of value as merely a quantitative relation; whereas in fact the equivalent form of a commodity contains no quantitative determinant of value.

The first peculiarity which strikes us when we reflect on the equivalent form is this, that use-value becomes the form of appearance of its opposite, value.

The natural form of the commodity becomes its value-form. But, note well, this substitution only occurs in the case of a commodity B (coat, or maize, or iron, etc.) when some other commodity A (linen etc.) enters into a value-relation with it, and then only within the limits of this relation. Since a commodity cannot be related to itself as equivalent, and therefore cannot make its own physical shape into the expression of its own value, it must be related to another commodity as equivalent, and therefore must make the physical shape of another commodity into its own value-form.

Let us make this clear with the example of a measure which is applied to commodities as material objects, i.e. as use-values. A sugar-loaf, because it is a body, is heavy and therefore possesses weight; but we can neither take a look at this weight nor touch it. We then take various pieces of iron, whose weight has been determined beforehand. The bodily form of the iron, considered for itself, is no more the form of appearance of weight than is the sugar-loaf. Nevertheless, in order to express the sugar-loaf as a weight, we put it into a relation of weight with the iron. In this relation, the iron counts as a body representing nothing but weight. Quantities of iron therefore serve to measure the weight of the sugar, and represent, in relation to the sugar-loaf, weight in its pure form, the form of manifestation of weight. This part is played by the iron only within this relation, i.e. within the relation into which the sugar, or any other body whose weight is to be found, enters with the iron. If both objects lacked weight, they could not enter into this relation, hence the one could not serve to express the weight of the other. When we throw both of them into the scales, we see in reality that considered as weight they are the same, and therefore that, taken in the appropriate proportions, they have the same weight. Just as the body of the iron, as a measure of weight, represents weight alone, in relation to the sugar-loaf, so, in our expression of value, the body of the coat represents value alone. Here, however, the analogy ceases. In the expression of the weight of the sugar-loaf, the iron represents a natural property common to both bodies, their weight; but in the expression of value of the linen the coat represents a supra-natural property: their value, which is something purely social. The relative value-form of a commodity, the linen for example, expresses its value-existence as something wholly different from its substance and properties, as the quality of being comparable with a coat for example; this expression itself therefore indicates that it conceals a social relation. With the equivalent form the reverse is true. The equivalent form consists precisely in this, that the material commodity itself, the coat for instance, expresses value just as it is in its everyday life, and is therefore endowed with the form of value by nature itself. Admittedly, this holds good only within the value-relation, in which the commodity linen is related to the commodity coat as its equivalent. However, the properties of a thing do not arise from its relations to other things, they are, on the contrary, merely activated by such relations. The coat, therefore, seems to be endowed with its equivalent form, its property of direct exchangeability, by nature, just as much as its property of being heavy or its ability to keep us warm. Hence the mysteriousness of the equivalent form, which only impinges on the crude bourgeois vision of the political economist when it confronts him in its fully developed shape, that of money. He then seeks to explain away the mystical character of gold and silver by substituting for them less dazzling commodities, and, with ever-renewed satisfaction, reeling off a catalogue of all the inferior commodities which have played the role of the equivalent at one time or another. He does not suspect that even the simplest expression of value, such as 20 yards of linen = 1 coat, already presents the riddle of the equivalent form for us to solve. The body of the commodity, which serves as the equivalent, always figures as the embodiment of abstract human labour, and is always the product of some specific useful and concrete labour. This concrete labour therefore becomes the expression of abstract human labour. If the coat is merely abstract human labour’s realization, the tailoring actually realized in it is merely abstract human labour’s form of realization. In the expression of value of the linen, the usefulness of tailoring consists, not in making clothes, and thus also people, but in making a physical object which we at once recognize as value, as a congealed quantity of labour, therefore, which is absolutely indistinguishable from the labour objectified in the value of the linen. In order to act as such a mirror of value, tailoring itself must reflect nothing apart from its own abstract quality of being human labour. Human labour-power is expended in the form of tailoring as well as in the form of weaving. Both therefore possess the general property of being human labour, and they therefore have to be considered in certain cases, such as the production of value, solely from this point of view. There is nothing mysterious in this. But in the value expression of the commodity the question is stood on its head. In order to express the fact that, for instance, weaving creates the value of linen through its general property of being human labour rather than in its concrete form as weaving, we contrast it with the concrete labour which produces the equivalent of the linen, namely tailoring. Tailoring is now seen as the tangible form of realization of abstract human labour.

The equivalent form therefore possesses a second peculiarity: in it, concrete labour becomes the form of manifestation of its opposite, abstract human labour.

But because this concrete labour, tailoring, counts exclusively as the expression of undifferentiated human labour, it possesses the characteristic of being identical with other kinds of labour, such as the labour embodied in the linen. Consequently, although, like all other commodity-producing labour, it is the labour of private individuals, it is nevertheless labour in its directly social form. It is precisely for this reason that it presents itself to us in the shape of a product which is directly exchangeable with other commodities. Thus the equivalent form has a third peculiarity: private labour takes the form of its opposite, namely labour in its directly social form.

The two peculiarities of the equivalent form we have just developed will become still clearer if we go back to the great investigator who was the first to analyse the value-form, like so many other forms of thought, society and nature. I mean Aristotle.

In the first place, he states quite clearly that the money-form of the commodity is only a more developed aspect of the simple form of value, i.e. of the expression of the value of a commodity in some other commodity chosen at random, for he says:

5 beds = 1 house (Κλĩναι πέντε άντἱ οἰχίας)

is indistinguishable from

5 beds = a certain amount of money (Κλĩναι πέντε άντἱ… ὅɛου αἱ πέντε χλĩναι)

He further sees that the value-relation which provides the framework for this expression of value itself requires that the house should be qualitatively equated with the bed, and that these things, being distinct to the senses, could not be compared with each other as commensurable magnitudes if they lacked this essential identity. ‘There can be no exchange,’ he says, ‘without equality, and no equality without commensurability’ (‘οűτ’ ἰɛοτης μή οὕɛης ɛνμμετρἰας’). Here, however, he falters, and abandons the further analysis of the form of value. ‘It is, however, in reality, impossible (“τῆ μέν οὕν ἀληθεἰᾳ ἀδύνςτον”) that such unlike things can be commensurable,’ i.e. qualitatively equal. This form of equation can only be something foreign to the true nature of the things, it is therefore only ‘a makeshift for practical purposes’.

Aristotle therefore himself tells us what prevented any further analysis: the lack of a concept of value. What is the homogeneous element, i.e. the common substance, which the house represents from the point of view of the bed, in the value expression for the bed? Such a thing, in truth, cannot exist, says Aristotle. But why not? Towards the bed, the house represents something equal, in so far as it represents what is really equal, both in the bed and the house. And that is – human labour.

However, Aristotle himself was unable to extract this fact, that, in the form of commodity-values, all labour is expressed as equal human labour and therefore as labour of equal quality, by inspection from the form of value, because Greek society was founded on the labour of slaves, hence had as its natural basis the inequality of men and of their labour-powers. The secret of the expression of value, namely the equality and equivalence of all kinds of labour because and in so far as they are human labour in general, could not be deciphered until the concept of human equality had already acquired the permanence of a fixed popular opinion. This however becomes possible only in a society where the commodity-form is the universal form of the product of labour, hence the dominant social relation is the relation between men as possessors of commodities. Aristotle’s genius is displayed precisely by his discovery of a relation of equality in the value-expression of commodities. Only the historical limitation inherent in the society in which he lived prevented him from finding out what ‘in reality’ this relation of equality consisted of.

(iv) The simple form of value considered as a whole

A commodity’s simple form of value is contained in its value-relation with another commodity of a different kind, i.e. in its exchange relation with the latter. The value of commodity A is qualitatively expressed by the direct exchangeability of commodity B with commodity A. It is quantitatively expressed by the exchangeability of a specific quantity of commodity B with a given quantity of A. In other words, the value of a commodity is independently expressed through its presentation [Darstellung] as ‘exchange-value’. When, at the beginning of this chapter, we said in the customary manner that a commodity is both a use-value and an exchange-value, this was, strictly speaking, wrong. A commodity is a use-value or object of utility, and a ‘value’. It appears as the twofold thing it really is as soon as its value possesses its own particular form of manifestation, which is distinct from its natural form. This form of manifestation is exchange-value, and the commodity never has this form when looked at in isolation, but only when it is in a value-relation or an exchange relation with a second commodity of a different kind. Once we know this, our manner of speaking does no harm; it serves, rather, as an abbreviation. Our analysis has shown that the form of value, that is, the expression of the value of a commodity, arises from the nature of commodity-value, as opposed to value and its magnitude arising from their mode of expression as exchange-value. This second view is the delusion both of the Mercantilists (and people like Ferrier, Ganilh, etc., who have made a modern rehash of Mercantilism) and their antipodes, the modern bagmen of free trade, such as Bastiat and his associates. The Mercantilists place their main emphasis on the qualitative side of the expression of value, hence on the equivalent form of the commodity, which in its finished form is money. The modern pedlars of free trade, on the other hand, who must get rid of their commodities at any price, stress the quantitative side of the relative form of value. For them, accordingly, there exists neither value, nor magnitude of value, anywhere except in its expression by means of the exchange relation, that is, in the daily list of prices current on the Stock Exchange. The Scotsman Macleod, whose function it is to trick out the confused ideas of Lombard Street in the most learned finery, is a successful cross between the superstitious Mercantilists and the enlightened pedlars of free trade.

A close scrutiny of the expression of the value of commodity A contained in the value-relation of A to B has shown that within that relation the natural form of commodity A figures only as the aspect of use-value, while the natural form of B figures only as the form of value, or aspect of value. The internal opposition between use-value and value, hidden within the commodity, is therefore represented on the surface by an external opposition, i.e. by a relation between two commodities such that the one commodity, whose own value is supposed to be expressed, counts directly only as a use-value, whereas the other commodity, in which that value is to be expressed, counts directly only as exchange-value. Hence the simple form of value of a commodity is the simple form of appearance of the opposition between use-value and value which is contained within the commodity.

The product of labour is an object of utility in all states of society; but it is only a historically specific epoch of development which presents the labour expended in the production of a useful article as an ‘objective’ property of that article, i.e. as its value. It is only then that the product of labour becomes transformed into a commodity. It therefore follows that the simple form of value of the commodity is at the same time the simple form of value of the product of labour, and also that the development of the commodity-form coincides with the development of the value-form. We perceive straight away the insufficiency of the simple form of value: it is an embryonic form which must undergo a series of metamorphoses before it can ripen into the price-form. The expression of the value of commodity A in terms of any other commodity B merely distinguishes the value of A from its use-value, and therefore merely places A in an exchange-relation with any particular single different kind of commodity, instead of representing A’s qualitative equality with all other commodities and its quantitative proportionality to them. To the simple relative form of value of a commodity there corresponds the single equivalent form of another commodity. Thus, in the relative expression of value of the linen, the coat only possesses the form of equivalent, the form of direct exchangeability, in relation to this one individual commodity, the linen.

Nevertheless, the simple form of value automatically passes over into a more complete form. Admittedly, this simple form only expresses the value of a commodity A in one commodity of another kind. But what this second commodity is, whether it is a coat, iron, corn, etc., is a matter of complete indifference. Therefore different simple expressions of the value of one and the same commodity arise according to whether that commodity enters into a value-relation with this second commodity or another kind of commodity. The number of such possible expressions is limited only by the number of the different kinds of commodities distinct from it. The isolated expression of A’s value is thus transformed into the indefinitely expandable series of different simple expressions of that value.

The total or expanded form of value
z commodity A = u commodity B or = v commodity C or = w commodity D or = x commodity E or = etc.
(20 yards of linen = 1 coat or = 10 lb. tea or = 40 lb. coffee or = 1 quarter of corn or = 2 ounces of gold or = ½ ton of iron or = etc.)
The expanded relative form of value

The value of a commodity, the linen for example, is now expressed in terms of innumerable other members of the world of commodities. Every other physical commodity now becomes a mirror of the linen’s value. It is thus that this value first shows itself as being, in reality, a congealed quantity of undifferentiated human labour. For the labour which creates it is now explicitly presented as labour which counts as the equal of every other sort of human labour, whatever natural form it may possess, hence whether it is objectified in a coat, in corn, in iron, or in gold. The linen, by virtue of the form of value, no longer stands in a social relation with merely one other kind of commodity, but with the whole world of commodities as well. As a commodity it is a citizen of that world. At the same time, the endless series of expressions of its value implies that, from the point of view of the value of the commodity, the particular form of use-value in which it appears is a matter of indifference.

In the first form, 20 yards of linen = 1 coat, it might well be a purely accidental occurrence that these two commodities are exchangeable in a specific quantitative relation. In the second form, on the contrary, the background to this accidental appearance, essentially different from it, and determining it, immediately shines through. The value of the linen remains unaltered in magnitude, whether expressed in coats, coffee, or iron, or in innumerable different commodities, belonging to as many different owners. The accidental relation between two individual commodity-owners disappears. It becomes plain that it is not the exchange of commodities which regulates the magnitude of their values, but rather the reverse, the magnitude of the value of commodities which regulates the proportion in which they exchange.

The particular equivalent form

Each commodity, such as coat, tea, iron, etc., figures in the expression of value of the linen as an equivalent, hence as a physical object possessing value. The specific natural form of each of these commodities is now a particular equivalent form alongside many others. In the same way, the many specific, concrete, and useful kinds of labour contained in the physical commodities now count as the same number of particular forms of realization or manifestation of human labour in general.

Defects of the total or expanded form of value

Firstly, the relative expression of value of the commodity is incomplete, because the series of its representations never comes to an end. The chain, of which each equation of value is a link, is liable at any moment to be lengthened by a newly created commodity, which will provide the material for a fresh expression of value. Secondly, it is a motley mosaic of disparate and unconnected expressions of value. And lastly, if, as must be the case, the relative value of each commodity is expressed in this expanded form, it follows that the relative form of value of each commodity is an endless series of expressions of value which are all different from the relative form of value of every other commodity. The defects of the expanded relative form of value are reflected in the corresponding equivalent form. Since the natural form of each particular kind of commodity is one particular equivalent form amongst innumerable other equivalent forms, the only equivalent forms which exist are limited ones, and each of them excludes all the others. Similarly, the specific, concrete, useful kind of labour contained in each particular commodity-equivalent is only a particular kind of labour and therefore not an exhaustive form of appearance of human labour in general. It is true that the completed or total form of appearance of human labour is constituted by the totality of its particular forms of appearance. But in that case it has no single, unified form of appearance.

The expanded relative form of value is, however, nothing but the sum of the simple relative expressions or equations of the first form, such as:

20 yards of linen = 1 coat 20 yards of linen = 10 lb. of tea, etc.

However, each of these equations implies the identical equation in reverse:

1 coat = 20 yards of linen 10 lb. of tea = 20 yards of linen, etc.

In fact, when a person exchanges his linen for many other commodities, and thus expresses its value in a series of other commodities, it necessarily follows that the other owners of commodities exchange them for the linen, and therefore express the values of their various commodities in one and the same third commodity, the linen. If, then, we reverse the series 20 yards of linen = 1 coat, or = 10 lb. of tea, etc., i.e. if we give expression to the converse relation already implied in the series, we get:

The general form of value
1 coat
10 lb. of tea
40 lb. of coffee
1 quarter of corn
2 ounces of gold
½ ton of iron
x commodity A etc.
20 yards of linen
The changed character of the form of value

The commodities now present their values to us, (1) in a simple form, because in a single commodity; (2) in a unified form, because in the same commodity each time. Their form of value is simple and common to all, hence general. The two previous forms (let us call them A and B) only amounted to the expression of the value of a commodity as something distinct from its own use-value or its physical shape as a commodity. The first form, A, produced equations like this: 1 coat = 20 yards of linen, 10 lb. of tea = ½ ton of iron. The value of the coat is expressed as comparable with linen, that of the tea as comparable with iron. But to be comparable with linen and with iron, these expressions of the value of coat and tea, is to be as different as linen is from iron. This form, it is plain, appears in practice only in the early stages, when the products of labour are converted into commodities by accidental occasional exchanges.

The second form, B, distinguishes the value of a commodity from its own use-value more adequately than the first, for the value of the coat now stands in contrast with its natural form in all possible shapes, in the sense that it is equated with linen, iron, tea, in short with everything but itself. On the other hand any expression of value common to all commodities is directly excluded; for, in the expression of value of each commodity, all other commodities now appear only in the form of equivalents. The expanded form of value comes into actual existence for the first time when a particular product of labour, such as cattle, is no longer exceptionally, but habitually, exchanged for various other commodities.

The new form we have just obtained expresses the values of the world of commodities through one single kind of commodity set apart from the rest, through the linen for example, and thus represents the values of all commodities by means of their equality with linen. Through its equation with linen, the value of every commodity is now not only differentiated from its own use-value, but from all use-values, and is, by that very fact, expressed as that which is common to all commodities. By this form, commodities are, for the first time, really brought into relation with each other as values, or permitted to appear to each other as exchange-values.

The two earlier forms express the value of each commodity either in terms of a single commodity of a different kind, or in a series of many commodities which differ from the first one. In both cases it is the private task, so to speak, of the individual commodity to give itself a form of value, and it accomplishes this task without the aid of the others, which play towards it the merely passive role of equivalent. The general form of value, on the other hand, can only arise as the joint contribution of the whole world of commodities. A commodity only acquires a general expression of its value if, at the same time, all other commodities express their values in the same equivalent; and every newly emergent commodity must follow suit. It thus becomes evident that because the objectivity of commodities as values is the purely ‘social existence’ of these things, it can only be expressed through the whole range of their social relations; consequently the form of their value must possess social validity. In this form, when they are all counted as comparable with the linen, all commodities appear not only as qualitatively equal, as values in general, but also as values of quantitatively comparable magnitude. Because the magnitudes of their values are expressed in one and the same material, the linen, these magnitudes are now reflected in each other. For instance, 10 lb. of tea = 20 yards of linen, and 40 lb. of coffee = 20 yards of linen. Therefore 10 lb. of tea = 40 lb. of coffee. In other words, 1 lb. of coffee contains only a quarter as much of the substance of value, that is, labour, as 1 lb. of tea. The general relative form of value imposes the character of universal equivalent on the linen, which is the commodity excluded, as equivalent, from the whole world of commodities. Its own natural form is the form assumed in common by the values of all commodities; it is therefore directly exchangeable with all other commodities. The physical form of the linen counts as the visible incarnation, the social chrysalis state, of all human labour. Weaving, the private labour which produces linen, acquires as a result a general social form, the form of equality with all other kinds of labour. The innumerable equations of which the general form of value is composed equate the labour realized in the linen with the labour contained in every other commodity in turn, and they thus convert weaving into the general form of appearance of undifferentiated human labour. In this manner the labour objectified in the values of commodities is not just presented negatively, as labour in which abstraction is made from all the concrete forms and useful properties of actual work. Its own positive nature is explicitly brought out, namely the fact that it is the reduction of all kinds of actual labour to their common character of being human labour in general, of being the expenditure of human labour-power. The general value-form, in which all the products of labour are presented as mere congealed quantities of undifferentiated human labour, shows by its very structure that it is the social expression of the world of commodities. In this way it is made plain that within this world the general human character of labour forms its specific social character.

The development of the relative and equivalent forms of value: their interdependence

The degree of development of the relative form of value, and that of the equivalent form, correspond. But we must bear in mind that the development of the equivalent form is only the expression and the result of the development of the relative form.

The simple or isolated relative form of value of one commodity converts some other commodity into an isolated equivalent. The expanded form of relative value, that expression of the value of one commodity in terms of all other commodities, imprints those other commodities with the form of particular equivalents of different kinds. Finally, a particular kind of commodity acquires the form of universal equivalent, because all other commodities make it the material embodiment of their uniform and universal form of value.

But the antagonism between the relative form of value and the equivalent form, the two poles of the value-form, also develops concomitantly with the development of the value-form itself.

The first form, 20 yards of linen = 1 coat, already contains this antagonism, without as yet fixing it. According to whether we read the same equation forwards or backwards, each of the two commodity poles, such as the linen and the coat, is to be found in the relative form on one occasion, and in the equivalent form on the other occasion. Here it is still difficult to keep hold of the polar antagonism.

In form B, only one commodity at a time can completely expand its relative value, and it only possesses this expanded relative form of value because, and in so far as, all other commodities are, with respect to it, equivalents. Here we can no longer reverse the equation 20 yards of linen = 1 coat without altering its whole character, and converting it from the expanded form into the general form of value.

Finally, the last form, C, gives to the world of commodities a general social relative form of value, because, and in so far as, all commodities except one are thereby excluded from the equivalent form. A single commodity, the linen, therefore has the form of direct exchangeability with all other commodities, in other words it has a directly social form because, and in so far as, no other commodity is in this situation.

The commodity that figures as universal equivalent is on the other hand excluded from the uniform and therefore universal relative form of value. If the linen, or any other commodity serving as universal equivalent, were, at the same time, to share in the relative form of value, it would have to serve as its own equivalent. We should then have: 20 yards of linen = 20 yards of linen, a tautology in which neither the value nor its magnitude is expressed. In order to express the relative value of the universal equivalent, we must rather reverse the form C This equivalent has no relative form of value in common with other commodities; its value is, rather, expressed relatively in the infinite series of all other physical commodities. Thus the expanded relative form of value, or form B, now appears as the specific relative form of value of the equivalent commodity.

The transition from the general form of value to the money form

The universal equivalent form is a form of value in general. It can therefore be assumed by any commodity. On the other hand, a commodity is only to be found in the universal equivalent form (form C) if, and in so far as, it is excluded from the ranks of all other commodities, as being their equivalent. Only when this exclusion becomes finally restricted to a specific kind of commodity does the uniform relative form of value of the world of commodities attain objective fixedness and general social validity.

The specific kind of commodity with whose natural form the equivalent form is socially interwoven now becomes the money commodity, or serves as money. It becomes its specific social function, and consequently its social monopoly, to play the part of universal equivalent within the world of commodities. Among the commodities which in form B figure as particular equivalents of the linen, and in form C express in common their relative values in linen, there is one in particular which has historically conquered this advantageous position: gold. If, then, in form C, we replace the linen by gold, we get:

The money form
20 yards of linen
1 coat
10 lb. of tea
40 lbs. of coffee
1 quarter of corn
½ ton of iron
x commodity A etc.
2 ounces of gold

Fundamental changes have taken place in the course of the transition from form A to form B, and from form B to form C. As against this, form D differs not at all from form C, except that now instead of linen gold has assumed the universal equivalent form. Gold is in form D what linen was in form C: the universal equivalent. The advance consists only in that the form of direct and universal exchangeability, in other words the universal equivalent form, has now by social custom finally become entwined with the specific natural form of the commodity gold.

Gold confronts the other commodities as money only because it previously confronted them as a commodity. Like all other commodities it also functioned as an equivalent, either as a single equivalent in isolated exchanges or as a particular equivalent alongside other commodity-equivalents. Gradually it began to serve as universal equivalent in narrower or wider fields. As soon as it had won a monopoly of this position in the expression of value for the world of commodities, it became the money commodity, and only then, when it had already become the money commodity, did form D become distinct from form C, and the general form of value come to be transformed into the money form. The simple expression of the relative value of a single commodity, such as linen, in a commodity which is already functioning as the money commodity, such as gold, is the price form. The ‘price form’ of the linen is therefore: 20 yards of linen = 2 ounces of gold, or, if 2 ounces of gold when coined are £2, 20 yards of linen = £2. The only difficulty in the concept of the money form is that of grasping the universal equivalent form, and hence the general form of value as such, form C. Form C can be reduced by working backwards to form B, the expanded form of value, and its constitutive element is form A: 20 yards of linen = 1 coat or x commodity A = y commodity B. The simple commodity form is therefore the germ of the money-form.

The fetishism of the commodity and its secret

A commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties. So far as it is a use-value, there is nothing mysterious about it, whether we consider it from the point of view that by its properties it satisfies human needs, or that it first takes on these properties as the product of human labour. It is absolutely clear that, by his activity, man changes the forms of the materials of nature in such a way as to make them useful to him. The form of wood, for instance, is altered if a table is made out of it. Nevertheless the table continues to be wood, an ordinary, sensuous thing. But as soon as it emerges as a commodity, it changes into a thing which transcends sensuousness. It not only stands with its feet on the ground, but, in relation to all other commodities, it stands on its head, and evolves out of its wooden brain grotesque ideas, far more wonderful than if it were to begin dancing of its own free will.

The mystical character of the commodity does not therefore arise from its use-value. Just as little does it proceed from the nature of the determinants of value. For in the first place, however varied the useful kinds of labour, or productive activities, it is a physiological fact that they are functions of the human organism, and that each such function, whatever may be its nature or its form, is essentially the expenditure of human brain, nerves, muscles and sense organs. Secondly, with regard to the foundation of the quantitative determination of value, namely the duration of that expenditure or the quantity of labour, this is quite palpably different from its quality. In all situations, the labour-time it costs to produce the means of subsistence must necessarily concern mankind, although not to the same degree at different stages of development. And finally, as soon as men start to work for each other in any way, their labour also assumes a social form.

Whence, then, arises the enigmatic character of the product of labour, as soon as it assumes the form of a commodity? Clearly, it arises from this form itself. The equality of the kinds of human labour takes on a physical form in the equal objectivity of the products of labour as values; the measure of the expenditure of human labour-power by its duration takes on the form of the magnitude of the value of the products of labour; and finally the relationships between the producers, within which the social characteristics of their labours are manifested, take on the form of a social relation between the products of labour.

The mysterious character of the commodity-form consists therefore simply in the fact that the commodity reflects the social characteristics of men’s own labour as objective characteristics of the products of labour themselves, as the socio-natural properties of these things. Hence it also reflects the social relation of the producers to the sum total of labour as a social relation between objects, a relation which exists apart from and outside the producers. Through this substitution, the products of labour become commodities, sensuous things which are at the same time supra-sensible or social. In the same way, the impression made by a thing on the optic nerve is perceived not as a subjective excitation of that nerve but as the objective form of a thing outside the eye. In the act of seeing, of course, light is really transmitted from one thing, the external object, to another thing, the eye. It is a physical relation between physical things. As against this, the commodity-form, and the value-relation of the products of labour within which it appears, have absolutely no connection with the physical nature of the commodity and the material [dinglich] relations arising out of this. It is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things. In order, therefore, to find an analogy we must take flight into the misty realm of religion. There the products of the human brain appear as autonomous figures endowed with a life of their own, which enter into relations both with each other and with the human race. So it is in the world of commodities with the products of men’s hands. I call this the fetishism which attaches itself to the products of labour as soon as they are produced as commodities, and is therefore inseparable from the production of commodities. As the foregoing analysis has already demonstrated, this fetishism of the world of commodities arises from the peculiar social character of the labour which produces them. Objects of utility become commodities only because they are the products of the labour of private individuals who work independently of each other. The sum total of the labour of all these private individuals forms the aggregate labour of society. Since the producers do not come into social contact until they exchange the products of their labour, the specific social characteristics of their private labours appear only within this exchange. In other words, the labour of the private individual manifests itself as an element of the total labour of society only through the relations which the act of exchange establishes between the products, and, through their mediation, between the producers. To the producers, therefore, the social relations between their private labours appear as what they are, i.e. they do not appear as direct social relations between persons in their work, but rather as material [dinglich] relations between persons and social relations between things. It is only by being exchanged that the products of labour acquire a socially uniform objectivity as values, which is distinct from their sensuously varied objectivity as articles of utility. This division of the product of labour into a useful thing and a thing possessing value appears in practice only when exchange has already acquired a sufficient extension and importance to allow useful things to be produced for the purpose of being exchanged, so that their character as values has already to be taken into consideration during production. From this moment on, the labour of the individual producer acquires a twofold social character. On the one hand, it must, as a definite useful kind of labour, satisfy a definite social need, and thus maintain its position as an element of the total labour, as a branch of the social division of labour, which originally sprang up spontaneously. On the other hand, it can satisfy the manifold needs of the individual producer himself only in so far as every particular kind of useful private labour can be exchanged with, i.e. counts as the equal of, every other kind of useful private labour. Equality in the full sense between different kinds of labour can be arrived at only if we abstract from their real inequality, if we reduce them to the characteristic they have in common, that of being the expenditure of human labour-power, of human labour in the abstract. The private producer’s brain reflects this twofold social character of his labour only in the forms which appear in practical intercourse, in the exchange of products. Hence the socially useful character of his private labour is reflected in the form that the product of labour has to be useful to others, and the social character of the equality of the various kinds of labour is reflected in the form of the common character, as values, possessed by these materially different things, the products of labour. Men do not therefore bring the products of their labour into relation with each other as values because they see these objects merely as the material integuments of homogeneous human labour. The reverse is true: by equating their different products to each other in exchange as values, they equate their different kinds of labour as human labour. They do this without being aware of it. Value, therefore, does not have its description branded on its forehead; it rather transforms every product of labour into a social hieroglyphic. Later on, men try to decipher the hieroglyphic, to get behind the secret of their own social product: for the characteristic which objects of utility have of being values is as much men’s social product as is their language. The belated scientific discovery that the products of labour, in so far as they are values, are merely the material expressions of the human labour expended to produce them, marks an epoch in the history of mankind’s development, but by no means banishes the semblance of objectivity possessed by the social characteristics of labour. Something which is only valid for this particular form of production, the production of commodities, namely the fact that the specific social character of private labours carried on independently of each other consists in their equality as human labour, and, in the product, assumes the form of the existence of value, appears to those caught up in the relations of commodity production (and this is true both before and after the above-mentioned scientific discovery) to be just as ultimately valid as the fact that the scientific dissection of the air into its component parts left the atmosphere itself unaltered in its physical configuration.

What initially concerns producers in practice when they make an exchange is how much of some other product they get for their own; in what proportions can the products be exchanged? As soon as these proportions have attained a certain customary stability, they appear to result from the nature of the products, so that, for instance, one ton of iron and two ounces of gold appear to be equal in value, in the same way as a pound of gold and a pound of iron are equal in weight, despite their different physical and chemical properties. The value character of the products of labour becomes firmly established only when they act as magnitudes of value. These magnitudes vary continually, independently of the will, foreknowledge and actions of the exchangers. Their own movement within society has for them the form of a movement made by things, and these things, far from being under their control, in fact control them. The production of commodities must be fully developed before the scientific conviction emerges, from experience itself, that all the different kinds of private labour (which are carried on independently of each other, and yet, as spontaneously developed branches of the social division of labour, are in a situation of all-round dependence on each other) are continually being reduced to the quantitative proportions in which society requires them. The reason for this reduction is that in the midst of the accidental and ever-fluctuating exchange relations between the products, the labour-time socially necessary to produce them asserts itself as a regulative law of nature. In the same way, the law of gravity asserts itself when a person’s house collapses on top of him. The determination of the magnitude of value by labour-time is therefore a secret hidden under the apparent movements in the relative values of commodities. Its discovery destroys the semblance of the merely accidental determination of the magnitude of the value of the products of labour, but by no means abolishes that determination’s material form.

Reflection on the forms of human life, hence also scientific analysis of those forms, takes a course directly opposite to their real development. Reflection begins post festum, and therefore with the results of the process of development ready to hand. The forms which stamp products as commodities and which are therefore the preliminary requirements for the circulation of commodities, already possess the fixed quality of natural forms of social life before man seeks to give an account, not of their historical character, for in his eyes they are immutable, but of their content and meaning. Consequently, it was solely the analysis of the prices of commodities which led to the determination of the magnitude of value, and solely the common expression of all commodities in money which led to the establishment of their character as values. It is however precisely this finished form of the world of commodities – the money form – which conceals the social character of private labour and the social relations between the individual workers, by making those relations appear as relations between material objects, instead of revealing them plainly. If I state that coats or boots stand in a relation to linen because the latter is the universal incarnation of abstract human labour, the absurdity of the statement is self-evident. Nevertheless, when the producers of coats and boots bring these commodities into a relation with linen, or with gold or silver (and this makes no difference here), as the universal equivalent, the relation between their own private labour and the collective labour of society appears to them in exactly this absurd form.

The categories of bourgeois economics consist precisely of forms of this kind. They are forms of thought which are socially valid, and therefore objective, for the relations of production belonging to this historically determined mode of social production, i.e. commodity production. The whole mystery of commodities, all the magic and necromancy that surrounds the products of labour on the basis of commodity production, vanishes therefore as soon as we come to other forms of production. As political economists are fond of Robinson Crusoe stories, let us first look at Robinson on his island. Undemanding though he is by nature, he still has needs to satisfy, and must therefore perform useful labours of various kinds: he must make tools, knock together furniture, tame llamas, fish, hunt and so on. Of his prayers and the like, we take no account here, since our friend takes pleasure in them and sees them as recreation. Despite the diversity of his productive functions, he knows that they are only different forms of activity of one and the same Robinson, hence only different modes of human labour. Necessity itself compels him to divide his time with precision between his different functions. Whether one function occupies a greater space in his total activity than another depends on the magnitude of the difficulties to be overcome in attaining the useful effect aimed at. Our friend Robinson Crusoe learns this by experience, and having saved a watch, ledger, ink and pen from the shipwreck, he soon begins, like a good Englishman, to keep a set of books. His stock-book contains a catalogue of the useful objects he possesses, of the various operations necessary for their production, and finally of the labour-time that specific quantities of these products have on average cost him. All the relations between Robinson and these objects that form his self-created wealth are here so simple and transparent that even Mr Sedley Taylor could understand them. And yet those relations contain all the essential determinants of value.

Let us now transport ourselves from Robinson’s island, bathed in light, to medieval Europe, shrouded in darkness. Here, instead of the independent man, we find everyone dependent – serfs and lords, vassals and suzerains, laymen and clerics. Personal dependence characterizes the social relations of material production as much as it does the other spheres of life based on that production. But precisely because relations of personal dependence form the given social foundation, there is no need for labour and its products to assume a fantastic form different from their reality. They take the shape, in the transactions of society, of services in kind and payments in kind. The natural form of labour, its particularity – and not, as in a society based on commodity production, its universality – is here its immediate social form. The corvée can be measured by time just as well as the labour which produces commodities, but every serf knows that what he expends in the service of his lord is a specific quantity of his own personal labour-power. The tithe owed to the priest is more clearly apparent than his blessing. Whatever we may think, then, of the different roles in which men confront each other in such a society, the social relations between individuals in the performance of their labour appear at all events as their own personal relations, and are not disguised as social relations between things, between the products of labour.

For an example of labour in common, i.e. directly associated labour, we do not need to go back to the spontaneously developed form which we find at the threshold of the history of all civilized peoples. We have one nearer to hand in the patriarchal rural industry of a peasant family which produces corn, cattle, yarn, linen and clothing for its own use. These things confront the family as so many products of its collective labour, but they do not confront each other as commodities. The different kinds of labour which create these products – such as tilling the fields, tending the cattle, spinning, weaving and making clothes – are already in their natural form social functions; for they are functions of the family, which, just as much as a society based on commodity production, possesses its own spontaneously developed division of labour. The distribution of labour within the family and the labour-time expended by the individual members of the family, are regulated by differences of sex and age as well as by seasonal variations in the natural conditions of labour. The fact that the expenditure of the individual labour-powers is measured by duration appears here, by its very nature, as a social characteristic of labour itself, because the individual labour-powers, by their very nature, act only as instruments of the joint labour-power of the family.

Let us finally imagine, for a change, an association of free men, working with the means of production held in common, and expending their many different forms of labour-power in full self-awareness as one single social labour force [note 2]. All the characteristics of Robinson’s labour are repeated here, but with the difference that they are social instead of individual. All Robinson’s products were exclusively the result of his own personal labour and they were therefore directly objects of utility for him personally. The total product of our imagined association is a social product. One part of this product serves as fresh means of production and remains social. But another part is consumed by the members of the association as means of subsistence. This part must therefore be divided amongst them. The way this division is made will vary with the particular kind of social organization of production and the corresponding level of social development attained by the producers. We shall assume, but only for the sake of a parallel with the production of commodities, that the share of each individual producer in the means of subsistence is determined by his labour-time. Labour-time would in that case play a double part. Its apportionment in accordance with a definite social plan maintains the correct proportion between the different functions of labour and the various needs of the associations. On the other hand, labour-time also serves as a measure of the part taken by each individual in the common labour, and of his share in the part of the total product destined for individual consumption. The social relations of the individual producers, both towards their labour and the products of their labour, are here transparent in their simplicity, in production as well as in distribution.

For a society of commodity producers, whose general social relation of production consists in the fact that they treat their products as commodities, hence as values, and in this material [sachlich] form bring their individual, private labours into relation with each other as homogeneous human labour, Christianity with its religious cult of man in the abstract, more particularly in its bourgeois development, i.e. in Protestantism, Deism, etc., is the most fitting form of religion. In the ancient Asiatic, Classical-antique, and other such modes of production, the transformation of the product into a commodity, and therefore men’s existence as producers of commodities, plays a subordinate role, which however increases in importance as these communities approach nearer and nearer to the stage of their dissolution. Trading nations, properly so called, exist only in the interstices of the ancient world, like the gods of Epicurus in the intermundia, or Jews in the pores of Polish society. Those ancient social organisms of production are much more simple and transparent than those of bourgeois society. But they are founded either on the immaturity of man as an individual, when he has not yet torn himself loose from the umbilical cord of his natural species-connection with other men, or on direct relations of dominance and servitude. They are conditioned by a low stage of development of the productive powers of labour and correspondingly limited relations between men within the process of creating and reproducing their material life, hence also limited relations between man and nature. These real limitations are reflected in the ancient worship of nature, and in other elements of tribal religions. The religious reflections of the real world can, in any case, vanish only when the practical relations of everyday life between man and man, and man and nature, generally present themselves to him in a transparent and rational form. The veil is not removed from the countenance of the social life-process, i.e. the process of material production, until it becomes production by freely associated men, and stands under their conscious and planned control. This, however, requires that society possess a material foundation, or a series of material conditions of existence, which in their turn are the natural and spontaneous product of a long and tormented historical development.

Political economy has indeed analysed value and its magnitude, however incompletely,. and has uncovered the content concealed within these forms. But it has never once asked the question why this content has assumed that particular form, that is to say, why labour is expressed in value, and why the measurement of labour by its duration is expressed in the magnitude of the value of the product. These formulas, which bear the unmistakable stamp of belonging to a social formation in which the process of production has mastery over man, instead of the opposite, appear to the political economists’ bourgeois consciousness to be as much a self-evident and nature-imposed necessity as productive labour itself. Hence the pre-bourgeois forms of the social organization of production are treated by political economy in much the same way as the Fathers of the Church treated pre-Christian religions.

The degree to which some economists are misled by the fetishism attached to the world of commodities, or by the objective appearance of the social characteristics of labour, is shown, among other things, by the dull and tedious dispute over the part played by nature in the formation of exchange-value. Since exchange-value is a definite social manner of expressing the labour bestowed on a thing, it can have no more natural content than has, for example, the rate of exchange. As the commodity-form is the most general and the most undeveloped form of bourgeois production, it makes its appearance at an early date, though not in the same predominant and therefore characteristic manner as nowadays. Hence its fetish character is still relatively easy to penetrate. But when we come to more concrete forms, even this appearance of simplicity vanishes. Where did the illusions of the Monetary System come from? The adherents of the Monetary System did not see gold and silver as representing money as a social relation of production, but in the form of natural objects with peculiar social properties. And what of modern political economy, which looks down so disdainfully on the Monetary System? Does not its fetishism become quite palpable when it deals with capital? How long is it since the disappearance of the Physiocratic illusion that ground rent grows out of the soil, not out of society?

But, to avoid anticipating, we will content ourselves here with one more example relating to the commodity-form itself. If commodities could speak, they would say this: our use-value may interest men, but it does not belong to us as objects. What does belong to us as objects, however, is our value. Our own inter-course as commodities proves it. We relate to each other merely as exchange-values. Now listen how those commodities speak through the mouth of the economist:

‘Value (i.e. exchange-value) is a property of things, riches (i.e. use-value) of man. Value, in this sense, necessarily implies exchanges, riches do not.’

‘Riches (use-value) are the attribute of man, value is the attribute of commodities. A man or a community is rich, a pearl or a diamond is valuable…A pearl or a diamond is valuable as a pearl or diamond.’

So far no chemist has ever discovered exchange-value either in a pearl or a diamond. The economists who have discovered this chemical substance, and who lay special claim to critical acumen, nevertheless find that the use-value of material objects belongs to them independently of their material properties, while their value, on the other hand, forms a part of them as objects. What confirms them in this view is the peculiar circumstance that the use-value of a thing is realized without exchange, i.e. in the direct relation between the thing and man, while, inversely, its value is realized only in exchange, i.e. in a social process. Who would not call to mind at this point the advice given by the good Dogberry to the night-watchman Seacoal?

‘To be a well-favoured man is the gift of fortune; but reading and writing comes by nature.’

The process of exchange

Commodities cannot themselves go to market and perform exchanges in their own right. We must, therefore, have recourse to their guardians, who are the possessors of commodities. Commodities are things, and therefore lack the power to resist man. If they are unwilling, he can use force; in other words, he can take possession of them. In order that these objects may enter into relation with each other as commodities, their guardians must place themselves in relation to one another as persons whose will resides in those objects, and must behave in such a way that each does not appropriate the commodity of the other, and alienate his own, except through an act to which both parties consent. The guardians must therefore recognize each other as owners of private property. This juridical relation, whose form is the contract, whether as part of a developed legal system or not, is a relation between two wills which mirrors the economic relation. The content of this juridical relation (or relation of two wills) is itself determined by the economic relation. Here the persons exist for one another merely as representatives and hence owners, of commodities. As we proceed to develop our investigation, we shall find, in general, that the characters who appear on the economic stage are merely personifications of economic relations; it is as the bearers of these economic relations that they come into contact with each other.

What chiefly distinguishes a commodity from its owner is the fact that every other commodity counts for it only as the form of appearance of its own value. A born leveller and cynic, it is always ready to exchange not only soul, but body, with each and every other commodity, be it more repulsive than Maritornes herself. The owner makes up for this lack in the commodity of a sense of the concrete, physical body of the other commodity, by his own five and more senses. For the owner, his commodity possesses no direct use-value. Otherwise, he would not bring it to market. It has use-value for others; but for himself its only direct use-value is as a bearer of exchange-value, and consequently, a means of exchange. He therefore makes up his mind to sell it in return for commodities whose use-value is of service to him. All commodities are non-use-values for their owners, and use-values for their non-owners. Consequently, they must all change hands. But this changing of hands constitutes their exchange, and their exchange puts them in relation with each other as values and realizes them as values. Hence commodities must be realized as values before they can be realized as use-values.

On the other hand, they must stand the test as use-values before they can be realized as values. For the labour expended on them only counts in so far as it is expended in a form which is useful for others. However, only the act of exchange can prove whether that labour is useful for others, and its product consequently capable of satisfying the needs of others.

The owner of a commodity is prepared to part with it only in return for other commodities whose use-value satisfies his own need. So far, exchange is merely an individual process for him. On the other hand, he desires to realize his commodity, as a value, in any other suitable commodity of the same value. It does not matter to him whether his own commodity has any use-value for the owner of the other commodity or not. From this point of view, exchange is for him a general social process. But the same process cannot be simultaneously for all owners of commodities both exclusively individual and exclusively social and general.

Let us look at the matter a little more closely. To the owner of a commodity, every other commodity counts as the particular equivalent of his own commodity. Hence his own commodity is the universal equivalent for all the others. But since this applies to every owner, there is in fact no commodity acting as universal equivalent, and the commodities possess no general relative form of value under which they can be equated as values and have the magnitude of their values compared. Therefore they definitely do not confront each other as commodities, but as products or use-values only.

In their difficulties our commodity-owners think like Faust: ‘In the beginning was the deed.’ They have therefore already acted before thinking. The natural laws of the commodity have manifested themselves in the natural instinct of the owners of commodities. They can only bring their commodities into relation as values, and therefore as commodities, by bringing them into an opposing relation with some one other commodity, which serves as the universal equivalent. We have already reached that result by our analysis of the commodity. But only the action of society can turn a particular commodity into the universal equivalent. The social action of all other commodities, therefore, sets apart the particular commodity in which they all represent their values. The natural form of this commodity thereby becomes the socially recognized equivalent form. Through the agency of the social process it becomes the specific social function of the commodity which has been set apart to be the universal equivalent. It thus becomes-money.

‘Illi unum consilium habent et virtutem et potestatem suam bestiae tradunt…Et ne quis possit emere aut vendere, nisi qui habet characterem aut nomen bestiae, aut numerum nominis eius’ (Apocalypse).

Money necessarily crystallizes out of the process of exchange, in which different products of labour are in fact equated with each other, and thus converted into commodities. The historical broadening and deepening of the phenomenon of exchange develops the opposition between use-value and value which is latent in the nature of the commodity. The need to give an external expression to this opposition for the purposes of commercial intercourse produces the drive towards an independent form of value, which finds neither rest nor peace until an independent form has been achieved by the differentiation of commodities into commodities and money. At the same rate, then, as the transformation of the products of labour into commodities is accomplished, one particular commodity is transformed into money.

The direct exchange of products has the form of the simple expression of value in one respect, but not as yet in another. That form was x commodity A = y commodity B. The form of the direct exchange of products is x use-value A = y use-value B. The articles A and B in this case are not as yet commodities, but become so only through the act of exchange. The first way in which an object of utility attains the possibility of becoming an exchange-value is to exist as a non-use-value, as a quantum of use-value superfluous to the immediate needs of its owner. Things are in themselves external to man, and therefore alienable. In order that this alienation [Veräusserung] may be reciprocal, it is only necessary for men to agree tacitly to treat each other as the private owners of those alienable things, and, precisely for that reason, as persons who are independent of each other. But this relationship of reciprocal isolation and foreignness does not exist for the members of a primitive community of natural origin, whether it takes the form of a patriarchal family, an ancient Indian commune or an Inca state. The exchange of commodities begins where communities have their boundaries, at their points of contact with other communities, or with members of the latter. However, as soon as products have become commodities in the external relations of a community, they also, by reaction, become commodities in the internal life of the community. Their quantitative exchange-relation is at first determined purely by chance. They become exchangeable through the mutual desire of their owners to alienate them. In the meantime, the need for others’ objects of utility gradually establishes itself. The constant repetition of exchange makes it a normal social process. In the course of time, therefore, at least some part of the products must be produced intentionally for the purpose of exchange. From that moment the distinction between the usefulness of things for direct consumption and their usefulness in exchange becomes firmly established. Their use-value becomes distinguished from their exchange-value. On the other hand, the quantitative proportion in which the things are exchangeable becomes dependent on their production itself. Custom fixes their values at definite magnitudes.

In the direct exchange of products, each commodity is a direct means of exchange to its owner, and an equivalent to those who do not possess it, although only in so far as it has use-value for them. At this stage, therefore, the articles exchanged do not acquire a value-form independent of their own use-value, or of the individual needs of the exchangers. The need for this form first develops with the increase in the number and variety of the commodities entering into the process of exchange. The problem and the means for its solution arise simultaneously. Commercial intercourse, in which the owners of commodities exchange and compare their own articles with various other articles, never takes place unless different kinds of commodities belonging to different owners are exchanged for, and equated as values with, one single further kind of commodity. This further commodity, by becoming the equivalent of various other commodities, directly acquires the form of a universal or social equivalent, if only within narrow limits. The universal equivalent form comes and goes with the momentary social contacts which call it into existence. It is transiently attached to this or that commodity in alternation. But with the development of exchange it fixes itself firmly and exclusively onto particular kinds of commodity, i.e. it crystallizes out into the money-form. The particular kind of commodity to which it sticks is at first a matter of accident. Nevertheless there are two circumstances which are by and large decisive. The money-form comes to be attached either to the most important articles of exchange from outside, which are in fact the primitive and spontaneous forms of manifestation of the exchange-value of local products, or to the object of utility which forms the chief element of indigenous alienable wealth, for example cattle. Nomadic peoples are the first to develop the money-form, because all their worldly possessions are in a movable and therefore directly alienable form, and because their mode of life, by continually bringing them into contact with foreign communities, encourages the exchange of products. Men have often made man himself into the primitive material of money, in the shape of the slave, but they have never done this with the land and soil. Such an idea could only arise in a bourgeois society, and one which was already well developed. It dates from the last third of the seventeenth century, and the first attempt to implement the idea on a national scale was made a century later, during the French bourgeois revolution.

In the same proportion as exchange bursts its local bonds, and the value of commodities accordingly expands more and more into the material embodiment of human labour as such, in that proportion does the money-form become transferred to commodities which are by nature fitted to perform the social function of a universal equivalent Those commodities are the precious metals.

The truth of the statement that ‘although gold and silver are not by nature money, money is by nature gold and silver’, is shown by the appropriateness of their natural properties for the functions of money. So far, however, we are acquainted with only one function of money, namely to serve as the form of appearance of the value of commodities, that is as the material in which the magnitudes of their values are socially expressed. Only a material whose every sample possesses the same uniform quality can be an adequate form of appearance of value, that is a material embodiment of abstract and therefore equal human labour. On the other hand, since the difference between the magnitudes of value is purely quantitative, the money commodity must be capable of purely quantitative differentiation, it must therefore be divisible at will, and it must also be possible to assemble it again from its component parts. Gold and silver possess these properties by nature.

The money commodity acquires a dual use-value. Alongside its special use-value as a commodity (gold, for instance, serves to fill hollow teeth, it forms the raw material for luxury articles, etc.) it acquires a formal use-value, arising out of its specific social function.

Since all other commodities are merely particular equivalents for money, the latter being their universal equivalent, they relate to money as particular commodities relate to the universal commodity.

We have seen that the money-form is merely the reflection thrown upon a single commodity by the relations between all other commodities. That money is a commodity is therefore only a discovery for those who proceed from its finished shape in order to analyse it afterwards. The process of exchange gives to the commodity which it has converted into money not its value but its specific value-form. Confusion between these two attributes has misled some writers into maintaining that the value of gold and silver is imaginary. The fact that money can, in certain functions, be replaced by mere symbols of itself, gave rise to another mistaken notion, that it is itself a mere symbol. Nevertheless, this error did contain the suspicion that the money-form of the thing is external to the thing itself, being simply the form of appearance of human relations hidden behind it. In this sense every commodity is a symbol, since, as value, it is only the material shell of the human labour expended on it. But if it is declared that the social characteristics assumed by material objects, or the material characteristics assumed by the social determinations of labour on the basis of a definite mode of production, are mere symbols, then it is also declared, at the same time, that these characteristics are the arbitrary product of human reflection. This was the kind of explanation favoured by the eighteenth century: in this way the Enlightenment endeavoured, at least temporarily, to remove the appearance of strangeness from the mysterious shapes assumed by human relations whose origins they were unable to decipher.

It has already been remarked above that the equivalent form of a commodity does not imply that the magnitude of its value can be determined. Therefore, even if we know that gold is money, and consequently directly exchangeable with all other commodities, this still does not tell us how much lb. of gold is worth, for instance. Money, like every other commodity, cannot express the magnitude of its value except relatively in other commodities. This value is determined by the labour-time required for its production, and is expressed in the quantity of any other commodity in which the same amount of labour-time is congealed. This establishing of its relative value occurs at the source of its production by means of barter. As soon as it enters into circulation as money, its value is already given. In the last decades of the seventeenth century the first step in the analysis of money, the discovery that money is a commodity, had already been taken; but this was merely the first step, and nothing more. The difficulty lies not in comprehending that money is a commodity, but in discovering how, why and by what means a commodity becomes money.

We have already seen, from the simplest expression of value, x commodity A = y commodity B, that the thing in which the magnitude of the value of another thing is represented appears to have the equivalent form independently of this relation, as a social property inherent in its nature. We followed the process by which this false semblance became firmly established, a process which was completed when the universal equivalent form became identified with the natural form of a particular commodity, and thus crystallized into the money-form. What appears to happen is not that a particular commodity becomes money because all other commodities express their values in it, but, on the contrary, that all other commodities universally express their values in a particular commodity because it is money. The movement through which this process has been mediated vanishes in its own result, leaving no trace behind. Without any initiative on their part, the commodities find their own value-configuration ready to hand, in the form of a physical commodity existing outside but also alongside them. This physical object, gold or silver in its crude state, becomes, immediately on its emergence from the bowels of the earth, the direct incarnation of all human labour. Hence the magic of money. Men are henceforth related to each other in their social process of production in a purely atomistic way. Their own relations of production therefore assume a material shape which is independent of their control and their conscious individual action. This situation is manifested first by the fact that the products of men’s labour universally take on the form of commodities. The riddle of the money fetish is therefore the riddle of the commodity fetish, now become visible and dazzling to our eyes.

Money, or the circulation of commodities

The measure of values

Throughout this work I assume that gold is the money commodity, for the sake of simplicity.

The first main function of gold is to supply commodities with the material for the expression of their values, or to represent their values as magnitudes of the same denomination, qualitatively equal and quantitatively comparable. It thus acts as a universal measure of value, and only through performing this function does gold, the specific equivalent commodity, become money.

It is not money that renders the commodities commensurable. Quite the contrary. Because all commodities, as values, are objectified human labour, and therefore in themselves commensurable, their values can be communally measured in one and the same specific commodity, and this commodity can be converted into the common measure of their values, that is into money. Money as a measure of value is the necessary form of appearance of the measure of value which is immanent in commodities, namely labour-time. The expression of the value of a commodity in gold – x commodity A = y money commodity – is its money-form or price. A single equation, such as 1 ton of iron = 2 ounces of gold, now suffices to express the value of the iron in a socially valid manner. There is no longer any need for this equation to figure as a link in the chain of equations that express the values of all other commodities, because the equivalent commodity, gold, already possesses the character of money. The general relative form of value of commodities has therefore resumed its original shape of simple or individual relative value. On the other hand, the expanded relative expression of value, the endless series of equations, has now become the specific relative form of value of the money commodity. However, the endless series itself is now a socially given fact in the shape of the prices of the commodities. We have only to read the quotations of a price-list backwards, to find the magnitude of the value of money expressed in all sorts of commodities. As against this, money has no price. In order to form a part of this uniform relative form of value of the other commodities, it would have to be brought into relation with itself as its own equivalent.

The price or money-form of commodities is, like their form of value generally, quite distinct from their palpable and real bodily form; it is therefore a purely ideal or notional form. Although invisible, the value of iron, linen and corn exists in these very articles: it is signified through their equality with gold, even though this relation with gold exists only in their heads, so to speak. The guardian of the commodities must therefore lend them his tongue, or hang a ticket on them, in order to communicate their prices to the outside world. Since the expression of the value of commodities in gold is a purely ideal act, we may use purely imaginary or ideal gold to perform this operation. Every owner of commodities knows that he is nowhere near turning them into gold when he has given their value the form of a price or of imaginary gold, and that it does not require the tiniest particle of real gold to give a valuation in gold of millions of pounds’ worth of commodities. In its function as measure of value, money therefore serves only in an imaginary or ideal capacity. This circumstance has given rise to the wildest theories. But, although the money that performs the functions of a measure of value is only imaginary, the price depends entirely on the actual substance that is money. The value, i.e. the quantity of human labour, which is contained in a ton of iron is expressed by an imaginary quantity of the money commodity which contains the same amount of labour as the iron. Therefore, according to whether it is gold, silver or copper which is serving as the measure of value, the value of the ton of iron will be expressed by very different prices, or will be represented by very different quantities of those metals.

If therefore two different commodities, such as gold and silver, serve simultaneously as measures of value, all commodities will have two separate price-expressions, the price in gold and the price in silver, which will quietly co-exist as long as the ratio of the value of silver to that of gold remains unchanged, say at 15 to 1. However, every alteration in this ratio disturbs the ratio between the gold-prices and the silver-prices of commodities, and thus proves in fact that a duplication of the measure of value contradicts the function of that measure.

Commodities with definite prices all appear in this form: a commodity A = x gold; b commodity B = y gold; c commodity C = z gold, etc., where a, b, c represent definite quantities of the commodities A, B, C and x, y, z definite quantities of gold. The values of these commodities are therefore changed into imaginary quantities of gold of different magnitudes. Hence, in spite of the confusing variety of the commodities themselves, their values become magnitudes of the same denomination, gold-magnitudes. As such, they are now capable of being compared with each other and measured, and the course of development produces the need to compare them, for technical reasons, with some fixed quantity of gold as their unit of measurement. This unit, by subsequent division into aliquot parts, becomes itself the standard of measurement. Before they become money, gold, silver and copper already possess such standards in their weights, so that, for example, a pound, which serves as a unit of measurement, can on the one hand be divided into ounces, and on the other hand be combined with others to make up hundredweights. It is owing to this that, in all metallic currencies, the names given to the standards of money or of price were originally taken from the preexisting names of the standards of weight.

As measure of value, and as standard of price, money performs two quite different functions. It is the measure of value as the social incarnation of human labour; it is the standard of price as a quantity of metal with a fixed weight. As the measure of value it serves to convert the values of all the manifold commodities into prices, into imaginary quantities of gold; as the standard of price it measures those quantities of gold. The measure of values measures commodities considered as values; the standard of price measures, on the contrary, quantities of gold by a unit quantity of gold, not the value of one quantity of gold by the weight of another. For the standard of price, a certain weight of gold must be fixed as the unit of measurement. In this case, as in all cases where quantities of the same denomination are to be measured, the stability of the measurement is of decisive importance. Hence the less the unit of measurement (here a quantity of gold) is subject to variation, the better the standard of price fulfils its office. But gold can serve as a measure of value only because it is itself a product of labour, and therefore potentially variable in value.

It is, first of all, quite clear that a change in the value of gold in no way impairs its function as a standard of price. No matter how the value of gold varies, different quantities of gold always remain in the same value-relation to each other. If the value of gold fell by 1,000 per cent, 12 ounces of gold would continue to have twelve times the value of one ounce of gold, and when we are dealing with prices we are only concerned with the relation between different quantities of gold. Since, on the other hand, an ounce of gold undergoes no change in weight when its value rises or falls, no change can take place in the weight of its aliquot parts. Thus gold always renders the same service as a fixed measure of price, however much its value may vary. Moreover, a change in the value of gold does not prevent it from fulfilling its function as measure of value. The change affects all commodities simultaneously, and therefore, other things being equal, leaves the mutual relations between their values unaltered, although those values are now all expressed in higher or lower gold-prices than before. Just as in the case of the estimation of the value of a commodity in the use-value of any other commodity, so also in this case, where commodities are valued in gold, we assume nothing more than that the production of a given quantity of gold costs, at a given period, a given amount of labour. As regards the fluctuations of commodity prices in general, they are subject to the laws of the simple relative expression of value which we developed in an earlier chapter. A general rise in the prices of commodities can result either from a rise in their values, which happens when the value of money remains constant, or from a fall in the value of money, which happens when the values of commodities remain constant. The process also occurs in reverse: a general fall in prices can result either from a fall in the values of commodities, if the value of money remains constant, or from a rise in the value of money, if the values of commodities remain constant. It therefore by no means follows that a rise in the value of money necessarily implies a proportional fall in the prices of commodities, or that a fall in the value of money implies a proportional rise in prices. This would hold only for commodities whose value remains constant. But commodities whose value rises simultaneously with and in proportion to that of money would retain the same price. And if their value rose either slower or faster than that of money, the fall or rise in their prices would be determined by the difference between the path described by their value and that described by the value of money. And so on.

Let us now go back to considering the price-form. For various reasons, the money-names of the metal weights are gradually separated from their original weight-names, the historically decisive reasons being:

  1. The introduction of foreign money among less developed peoples. This happened at Rome in its early days, where gold and silver coins circulated at first as foreign commodities. The names of these foreign coins were different from those of the indigenous weights.
  2. With the development of material wealth, the more precious metal extrudes the less precious from its function as measure of value. Silver drives out copper, gold drives out silver, however much this sequence may contradict the chronology of the poets. The word pound, for instance, was the money-name given to an actual pound weight of silver. As soon as gold had driven out silver as a measure of value, the same name became attached to, say, one fifteenth of a pound of gold, depending on the ratio between the values of gold and silver. Pound as a money-name and pound as the ordinary weight-name of gold are now two different things.
  3. Centuries of continuous debasement of the currency by kings and princes have in fact left nothing behind of the original weights of gold coins but their names.

These historical processes have made the separation of the money-name from the weight-name into a fixed popular custom. Since the standard of money is on the one hand purely conventional, while on the other hand it must possess universal validity, it is in the end regulated by law. A given weight of one of the precious metals, an ounce of gold for instance, becomes officially divided into aliquot parts, baptized by the law as a pound, a thaler, etc. These aliquot parts, which then serve as the actual units of money, are subdivided into other aliquot parts with legal names, such as a shilling, a penny etc. But, despite this, a definite weight of metal remains the standard of metallic money. All that has changed is the subdivision and the denomination of the money.

The prices, or quantities of gold, into which the values of commodities are ideally changed are therefore now expressed in the money-names, or the legally valid names of the subdivisions of the gold standard made for the purpose of reckoning. Hence, instead of saying that a quarter of wheat is worth an ounce of gold, people in England would say that it was worth £3 17s. 10½d. In this way commodities express by their money-names how much they are worth, and money serves as money of account whenever it is a question of fixing a thing as a value and therefore in its money-form.

The name of a thing is entirely external to its nature. I know nothing of a man if I merely know his name is Jacob. In the same way, every trace of the money-relation disappears in the money-names pound, thaler, franc, ducat, etc. The confusion caused by attributing a hidden meaning to these cabalistic signs is made even greater by the fact that these money-names express both the values of commodities and, simultaneously, aliquot parts of a certain weight of metal, namely the weight of the metal which serves as the standard of money. On the other hand, it is in fact necessary that value, as opposed to the multifarious objects of the world of commodities, should develop into this form, a material and non-mental one, but also a simple social form.

Price is the money-name of the labour objectified in a commodity. Hence the expression of the equivalence of a commodity with the quantity of money whose name is that commodity’s price is a tautology, just as the expression of the relative value of a commodity is an expression of the equivalence of two commodities. But although price, being the exponent of the magnitude of a commodity’s value, is the exponent of its exchange-ratio with money, it does not follow that the exponent of this exchange-ratio is necessarily the exponent of the magnitude of the commodity’s value. Suppose two equal quantities of socially necessary labour are respectively represented by 1 quarter of wheat and £2 (approximately ½ ounce of gold). £2 is the expression in money of the magnitude of the value of the quarter of wheat, or its price. If circumstances now allow this price to be raised to £3, or compel it to be reduced to £1, then although £ 1 and £ 3 may be too small or too large to give proper expression to the magnitude of the wheat’s value, they are nevertheless prices of the wheat, for they are, in the first place, the form of its value, i.e. money, and, in the second place, the exponents of its exchange-ratio with money. If the conditions of production, or the productivity of labour, remain constant, the same amount of social labour-time must be expended on the reproduction of a quarter of wheat, both before and after the change in price. This situation is not dependent either on the will of the wheat producer or on that of the owners of the other commodities. The magnitude of the value of a commodity therefore expresses a necessary relation to social labour-time which is inherent in the process by which its value is created. With the transformation of the magnitude of value into the price this necessary relation appears as the exchange-ratio between a single commodity and the money commodity which exists outside it. This relation, however, may express both the magnitude of value of the commodity and the greater or lesser quantity of money for which it can be sold under the given circumstances. The possibility, therefore, of a quantitative incongruity between price and magnitude of value, i.e. the possibility that the price may diverge from the magnitude of value, is inherent in the price-form itself. This is not a defect, but, on the contrary, it makes this form the adequate one for a mode of production whose laws can only assert themselves as blindly operating averages between constant irregularities. The price-form, however, is not only compatible with the possibility of a quantitative incongruity between magnitude of value and price, i.e. between the magnitude of value and its own expression in money, but it may also harbour a qualitative contradiction, with the result that price ceases altogether to express value, despite the fact that money is nothing but the value-form of commodities. Things which in and for themselves are not commodities, things such as conscience, honour, etc., can be offered for sale by their holders, and thus acquire the form of commodities through their price. Hence a thing can, formally speaking, have a price without having a value. The expression of price is in this case imaginary, like certain quantities in mathematics. On the other hand, the imaginary price-form may also conceal a real value-relation or one derived from it, as for instance the price of uncultivated land, which is without value because no human labour is objectified in it.

Like the relative form of value in general, price expresses the value of a commodity (for instance a ton of iron) by asserting that a given quantity of the equivalent (for instance an ounce of gold) is directly exchangeable with iron. But it by no means asserts the converse, that iron is directly exchangeable with gold. In order, therefore, that a commodity may in practice operate effectively as exchange-value, it must divest itself of its natural physical body and become transformed from merely imaginary into real gold, although this act of transubstantiation may be more ‘troublesome’ for it than the transition from necessity to freedom for the Hegelian ‘concept’, the casting of his shell for a lobster, or the putting-off of the old Adam for Saint Jerome. Though a commodity may, alongside its real shape (iron, for instance), possess an ideal value-shape or an imagined gold-shape in the form of its price, it cannot simultaneously be both real iron and real gold. To establish its price it is sufficient for it to be equated with gold in the imagination. But to enable it to render its owner the service of a universal equivalent, it must be actually replaced by gold. If the owner of the iron were to go to the owner of some other earthly commodity, and were to refer him to the price of iron as proof that it was already money, his answer would be the terrestrial equivalent of the answer given by St Peter in heaven to Dante, when the latter recited the creed:

‘Assai bene è trascorsa

D’esta moneta già la lega e il peso,

Ma dimmi se tu l’hai nella tua borsa.’

The price-form therefore implies both the exchangeability of commodities for money and the necessity of exchanges. On the other hand, gold serves as an ideal measure of value only because it has already established itself as the money commodity in the process of exchange. Hard cash lurks within the ideal measure of value.

The means of circulation

The metamorphosis of commodities

We saw in a former chapter that the exchange of commodities implies contradictory and mutually exclusive conditions. The further development of the commodity does not abolish these contradictions, but rather provides the form within which they have room to move. This is, in general, the way in which real contradictions are resolved. For instance, it is a contradiction to depict one body as constantly falling towards another and at the same time constantly flying away from it. The ellipse is a form of motion within which this contradiction is both realized and resolved.

In so far as the process of exchange transfers commodities from hands in which they are non-use-values to hands in which they are use-values, it is a process of social metabolism. The product of one kind of useful labour replaces that of another. Once a commodity has arrived at a situation in which it can serve as a use-value, it falls out of the sphere of exchange into that of consumption. But the former sphere alone interests us here. We therefore have to consider the whole process in its formal aspect, that is to say, the change in form or the metamorphosis of commodities through which the social metabolism is mediated. This change of form has been very imperfectly grasped as yet, owing to the circumstance that, quite apart from the lack of clarity in the concept of value itself, every change of form in a commodity results from the exchange of two commodities, namely an ordinary commodity and the money commodity. If we keep in mind only this material aspect, that is, the exchange of the commodity for gold, we overlook the very thing we ought to observe, namely what has happened to the form of the commodity. We do not see that gold, as a mere commodity, is not money, and that the other commodities, through their prices, themselves relate to gold as the medium for expressing their own shape in money.

Commodities first enter into the process of exchange ungilded and unsweetened, retaining their original home-grown shape. Exchange, however, produces a differentiation of the commodity into two elements, commodity and money, an external opposition which expresses the opposition between use-value and value which is inherent in it. In this opposition, commodities as use-values confront money as exchange-value. On the other hand, both sides of this opposition are commodities, hence themselves unities of use-value and value. But this unity of differences is expressed at two opposite poles, and at each pole in an opposite way. This is the alternating relation between the two poles: the commodity is in reality a use-value; its existence as a value appears only ideally, in its price, through which it is related to the real embodiment of its value, the gold which confronts it as its opposite. Inversely, the material of gold ranks only as the materialization of value, as money. It is therefore in reality exchange-value. Its use-value appears only ideally in the series of expressions of relative value within which it confronts all the other commodities as the totality of real embodiments of its utility. These antagonistic forms of the commodities are the real forms of motion of the process of exchange.

Let us now accompany the owner of some commodity, say our old friend the linen weaver, to the scene of action, the market. His commodity, 20 yards of linen, has a definite price, £2. He exchanges it for the £2, and then, being a man of the old school, he parts for the £2 in return for a family Bible of the same price. The linen, for him a mere commodity, a bearer of value, is alienated in exchange for gold, which is the shape of the linen’s value, then it is taken out of this shape and alienated again in exchange for another commodity, the Bible, which is destined to enter the weaver’s house as an object of utility and there to satisfy his family’s need for edification. The process of exchange is therefore accomplished through two metamorphoses of opposite yet mutually complementary character – the conversion of the commodity into money, and the re-conversion of the money into a commodity. The two moments of this metamorphosis are at once distinct transactions by the weaver – selling, or the exchange of the commodity for money, and buying, or the exchange of the money for a commodity – and the unity of the two acts: selling in order to buy.

The end result of the transaction, from the point of view of the weaver, is that instead of being in possession of the linen, he now has the Bible; instead of his original commodity, he now possesses another of the same value but of different utility. He procures his other means of subsistence and of production in a similar way. For the weaver, the whole process accomplishes nothing more than the exchange of the product of his labour for the product of someone else’s, nothing more than an exchange of products.

The process of exchange is therefore accomplished through the following changes of form:

Commodity-Money-Commodity C-M-C

As far as concerns its material content, the movement is C-C, the exchange of one commodity for another, the metabolic interaction of social labour, in whose result the process itself becomes extinguished.

C-M. First metamorphosis of the commodity, or sale. The leap taken by value from the body of the commodity into the body of the gold is the commodity’s salto mortale, as I have called it elsewhere. If the leap falls short, it is not the commodity which is defrauded but rather its owner. The social division of labour makes the nature of his labour as one-sided as his needs are many-sided. This is precisely the reason why the product of his labour serves him solely as exchange-value. But it cannot acquire universal social validity as an equivalent-form except by being converted into money. That money, however, is in someone else’s pocket. To allow it to be drawn out, the commodity produced by its owner’s labour must above all be a use-value for the owner of the money. The labour expended on it must therefore be of a socially useful kind, i.e. it must maintain its position as a branch of the social division of labour. But the division of labour is an organization of production which has grown up naturally, a web which has been, and continues to be, woven behind the backs of the producers of commodities. Perhaps the commodity is the product of a new kind of labour, and claims to satisfy a newly arisen need, or is even trying to bring forth a new need on its own account. Perhaps a particular operation, although yesterday it still formed one out of the many operations conducted by one producer in creating a given commodity, may today tear itself out of this framework, establish itself as an independent branch of labour, and send its part of the product to market as an independent commodity. The circumstances may or may not be ripe for such a process of separation. Today the product satisfies a social need. Tomorrow it may perhaps be expelled partly or completely from its place by a similar product. Moreover, although our weaver’s labour may be a recognized branch of the social division of labour, yet that fact is by no means sufficient to guarantee the utility of his 20 yards of linen. If the society’s need for linen – and such a need has a limit like every other need – has already been satisfied by the products of rival weavers, our friend’s product is superfluous, redundant and consequently useless. Although people do not look a gift-horse in the mouth, our friend does not frequent the market to make presents of his products. Let us assume, however, that the use-value of his product does maintain itself, and that the commodity therefore attracts money. Now we have to ask: how much money? No doubt the answer is already anticipated in the price of the commodity, which is the exponent of the magnitude of its value. We leave out of consideration here any possible subjective errors in calculation by the owner of the commodity, which will immediately be corrected objectively in the market. We suppose him to have spent on his product only the average socially necessary quantity of labour-time. The price of the commodity, therefore, is merely the money-name of the quantity of social labour objectified in it. But now the old-established conditions of production in weaving are thrown into the melting-pot, without the permission of, and behind the back of, our weaver. What was yesterday undoubtedly labour-time socially necessary to the production of a yard of linen ceases to be so today, a fact which the owner of the money is only too eager to prove from the prices quoted by our friend’s competitors. Unluckily for the weaver, people of his kind are in plentiful supply. Let us suppose, finally, that every piece of linen on the market contains nothing but socially necessary labour-time. In spite of this, all these pieces taken as a whole may contain superfluously expended labour-time. If the market cannot stomach the whole quantity at the normal price of 2 shillings a yard, this proves that too great a portion of the total social labour-time has been expended in the form of weaving. The effect is the same as if each individual weaver had expended more labour-time on his particular product than was socially necessary. As the German proverb has it: caught together, hung together. All the linen on the market counts as one single article of commerce, and each piece of linen is only an aliquot part of it. And in fact the value of each single yard is also nothing but the materialization of the same socially determined quantity of homogeneous human labour.

We see then that commodities are in love with money, but that ‘the course of true love never did run smooth’. The quantitative articulation [Gliederung] of society’s productive organism, by which its scattered elements are integrated into the system of the division of labour, is as haphazard and spontaneous as its qualitative articulation. The owners of commodities therefore find out that the same division of labour which turns them into independent private producers also makes the social process of production and the relations of the individual producers to each other within that process independent of the producers themselves; they also find out that the independence of the individuals from each other has as its counterpart and supplement a system of all-round material dependence. The division of labour converts the product of labour into a commodity, and thereby makes necessary its conversion into money. At the same time, it makes it a matter of chance whether this transubstantiation succeeds or not. Here, however, we have to look at the phenomenon in its pure shape, and must therefore assume it has proceeded normally. In any case, if the process is to take place at all, i.e. if the commodity is not impossible to sell, a change of form must always occur, although there may be an abnormal loss or accretion of substance – that is, of the magnitude of value.

The seller has his commodity replaced by gold, the buyer has his gold replaced by a commodity. The striking phenomenon here is that a commodity and gold, 20 yards of linen and £2, have changed hands and places, in other words that they have been exchanged. But what is the commodity exchanged for? For the universal shape assumed by its own value. And what is the gold exchanged for? For a particular form of its own use-value. Why does gold confront the linen as money? Because the linen’s price of £2, its money-name, already brings it into relation with the gold as money. The commodity is divested of its original form through its sale, i.e. the moment its use-value actually attracts the gold, which previously had a merely imaginary existence in its price. The realization of a commodity’s price, or of its merely ideal value-form, is therefore at the same time, and inversely, the realization of the merely ideal use-value of money; the conversion of a commodity into money is the conversion of money into a commodity. This single process is two-sided: from one pole, that of the commodity-owner, it is a sale, from the other pole, that of the money-owner, it is a purchase. In other words, a sale is a purchase, C–M is also M–C.

Up to this point we have considered only one economic relation between men, a relation between owners of commodities in which they appropriate the produce of the labour of others by alienating [entfremden] the produce of their own labour. Hence, for one commodity-owner to meet with another, in the form of a money-owner, it is necessary either that the product of the latter should possess by its nature the form of money, i.e. it should be gold, the material of which money consists, or that his product should already have changed its skin and stripped off its original form of a useful object. In order to function as money, gold must of course enter the market at some point or other. This point is to be found at its source of production, where the gold is exchanged, as the immediate product of labour, for some other product of equal value. But from that moment onwards, it always represents the realized price of some commodity. Leaving aside its exchange for other commodities at the source of production, gold is, in the hands of every commodity-owner, his own commodity divested [entäussert] of its original shape by being alienated [veräussert]; it is the product of a sale or of the first metamorphosis C–M. Gold, as we saw, became ideal money, or a measure of value, because all commodities measured their values in it, and thus made it the imaginary opposite of their natural shape as objects of utility, hence the shape of their value. It became real money because the commodities, through their complete alienation, suffered a divestiture or transformation of their real shapes as objects of utility, thus making it the real embodiment of their values. When they thus assume the shape of values, commodities strip off every trace of their natural and original use-value, and of the particular kind of useful labour to which they owe their creation, in order to pupate into the homogeneous social materialization of undifferentiated human labour. From the mere look of a piece of money, we cannot tell what breed of commodity has been transformed into it. In their money-form all commodities look alike. Hence money may be dirt, although dirt is not money. We will assume that the two golden coins in return for which our weaver has parted with his linen are the metamorphosed shape of a quarter of wheat. The sale of the linen, C–M, is at the same time its purchase, M–C. But this process, considered as the sale of the linen, starts off a movement which ends with its opposite: the purchase of a Bible. Considered as purchase of the linen, on the other hand, the process completes a movement which began with its opposite, the sale of the wheat. C–M (linen–money), which is the first phase of C–M–C (linen–money–Bible), is also M–C (money–linen), the last phase of another movement C–M–C (wheat–money–linen). The first metamorphosis of one commodity, its transformation from the commodity-form into money, is therefore also invariably the second, and diametrically opposite, metamorphosis of some other commodity, the retransformation of the latter from money into a commodity.

M–C. The second or concluding metamorphosis of the commodity: purchase. Money is the absolutely alienable commodity, because it is all other commodities divested of their shape, the product of their universal alienation. It reads all prices backwards, and thus as it were mirrors itself in the bodies of all other commodities, which provide the material through which it can come into being as a commodity. At the same time the prices, those wooing glances cast at money by commodities, define the limit of its convertibility, namely its own quantity. Since every commodity disappears when it becomes money it is impossible to tell from the money itself how it got into the hands of its possessor, or what article has been changed into it. Non olet, from whatever source it may come. If it represents, on the one hand, a commodity which has been sold, it also represents, on the other hand, a commodity which can be bought.

M–C, a purchase, is at the same time C–M, a sale; the concluding metamorphosis of one commodity is the first metamorphosis of another. For our weaver, the life of his commodity ends with the Bible into which he has reconverted his £2. But suppose the seller of the Bible turns the £2 set free by the weaver into brandy. M–C, the concluding phase of C–M–C (linen–money–Bible), is also C–M, the first phase of C–M–C (Bible–money–brandy). Since the producer of the commodity offers only a single product, he often sells it in large quantities, whereas the fact that he has many needs compels him to split up the price realized, the sum of money set free, into numerous purchases. Hence a sale leads to many purchases of different commodities. The concluding metamorphosis of a commodity thus constitutes an aggregate of the first metamorphoses of other commodities.

If we now consider the completed metamorphosis of a commodity as a whole, it appears in the first place that it is made up of two opposite and complementary movements, C–M and M–C. These two antithetical transmutations of the commodity are accomplished through two antithetical social processes in which the commodity-owner takes part, and are reflected in the antithetical economic characteristics of the two processes. By taking part in the act of sale, the commodity-owner becomes a seller; in the act of purchase, he becomes a buyer. But just as, in every transmutation of a commodity, its two forms, the commodity-form and the money-form, exist simultaneously but at opposite poles, so every seller is confronted with a buyer, every buyer with a seller. While the same commodity is successively passing through the two inverted transmutations, from a commodity into money and from money into another commodity, the owner of the commodity successively changes his role from seller to buyer. Being a seller and being a buyer are therefore not fixed roles, but constantly attach themselves to different persons in the course of the circulation of commodities.

The complete metamorphosis of a commodity, in its simplest form, implies four dénouements and three dramatis personae. First, a commodity comes face to face with money; the latter is the form taken by the value of the former, and exists over there in someone else’s pocket in all its hard, material reality. A commodity-owner is thus confronted with a money-owner. Now as soon as the commodity has been changed into money, the money becomes its vanishing equivalent-form, whose use-value or content exists here on the spot, in the bodies of other commodities. Money, the final stage of the first transformation, is at the same time the starting-point for the second. The person who is a seller in the first transaction thus becomes a buyer in the second, in which a third commodity-owner comes to meet him as a seller.

The two inverted phases of the movement which makes up the metamorphosis of a commodity constitute a circuit: commodity-form, stripping off of this form, and return to it. Of course, the commodity itself is here subject to contradictory determinations. At the starting-point it is a non-use-value to its owner; at the end it is a use-value. So too the money appears in the first phase as a solid crystal of value into which the commodity has been transformed, but afterwards it dissolves into the mere equivalent-form of the commodity. The two metamorphoses which constitute the commodity’s circular path are at the same time two inverse partial metamorphoses of two other commodities. One and the same commodity (the linen) opens the series of its own metamorphoses, and completes the metamorphosis of another (the wheat). In its first transformation, the sale, the linen plays these two parts in its own person. But then it goes the way of all flesh, enters the chrysalis state as gold, and thereby simultaneously completes the first metamorphosis of a third commodity. Hence the circuit made by one commodity in the course of its metamorphoses is inextricably entwined with the circuits of other commodities. This whole process constitutes the circulation of commodities.

The circulation of commodities differs from the direct exchange of products not only in form, but in its essence. We have only to consider the course of events. The weaver has undoubtedly exchanged his linen for a Bible, his own commodity for someone else’s. But this phenomenon is only true for him. The Bible-pusher, who prefers a warming drink to cold sheets, had no intention of exchanging linen for his Bible; the weaver did not know that wheat had been exchanged for his linen. B’s commodity replaces that of A, but A and B do not mutually exchange their commodities. It may in fact happen that A and B buy from each other, but a particular relationship of this kind is by no means the necessary result of the general conditions of the circulation of commodities. We see here, on the one hand, how the exchange of commodities breaks through all the individual and local limitations of the direct exchange of products, and develops the metabolic process of human labour. On the other hand, there develops a whole network of social connections of natural origin, entirely beyond the control of the human agents. Only because the farmer has sold his wheat is the weaver able to sell his linen, only because the weaver has sold his linen is our rash and intemperate friend able to sell his Bible, and only because the latter already has the water of everlasting life is the distiller able to sell his eau-de-vie. And so it goes on.

The process of circulation, therefore, unlike the direct exchange of products, does not disappear from view once the use-values have changed places and changed hands. The money does not vanish when it finally drops out of the series of metamorphoses undergone by a commodity. It always leaves behind a precipitate at a point in the arena of circulation vacated by the commodities. In the complete metamorphosis of the linen, for example, linen-money-Bible, the linen first falls out of circulation, and money steps into its place. Then the Bible falls out of circulation, and again money takes its place. When one commodity replaces another, the money commodity always sticks to the hands of some third person. Circulation sweats money from every pore.

Nothing could be more foolish than the dogma that because every sale is a purchase, and every purchase a sale, the circulation of commodities necessarily implies an equilibrium between sales and purchases. If this means that the number of actual sales accomplished is equal to the number of purchases, it is a flat tautology. But its real intention is to show that every seller brings his own buyer to market with him. Sale and purchase are one identical act, considered as the alternating relation between two persons who are in polar opposition to each other, the commodity-owner and the money-owner. They constitute two acts, of polar and opposite character, considered as the transactions of one and the same person. Hence the identity of sale and purchase implies that the commodity is useless if, when it is thrown into the alchemist’s retort of circulation, it does not come out again as money; if, in other words, it cannot be sold by its owner, and therefore bought by the owner of the money. This identity further implies that the process, if it reaches fruition, constitutes a point of rest, an interval, long or short, in the life of the commodity. Since the first metamorphosis of a commodity is at once a sale and a purchase, this partial process is at the same time an independent process in itself. The buyer has the commodity, the seller has the money, i.e. a commodity which remains in a form capable of circulating, whether it reappears on the market at an earlier or later date. No one can sell unless someone else purchases. But no one directly needs to purchase because he has just sold. Circulation bursts through all the temporal, spatial and personal barriers imposed by the direct exchange of products, and it does this by splitting up the direct identity present in this case between the exchange of one’s own product and the acquisition of someone else’s into the two antithetical segments of sale and purchase. To say that these mutually independent and antithetical processes form an internal unity is to say also that their internal unity moves forward through external antitheses. These two processes lack internal independence because they complement each other. Hence, if the assertion of their external independence [äusserliche Verselbständigung] proceeds to a certain critical point, their unity violently makes itself felt by producing – a crisis. There is an antithesis, immanent in the commodity, between use-value and value, between private labour which must simultaneously manifest itself as directly social labour, and a particular concrete kind of labour which simultaneously counts as merely abstract universal labour, between the conversion of things into persons and the conversion of persons into things; the antithetical phases of the metamorphosis of the commodity are the developed forms of motion of this immanent contradiction. These forms therefore imply the possibility of crises, though no more than the possibility. For the development of this possibility into a reality a whole series of conditions is required, which do not yet even exist from the standpoint of the simple circulation of commodities.

The circulation of money

The change of form through which the metabolism of the products of labour is accomplished, C–M–C, requires that a given value shall form the starting-point of the process, in the shape of a commodity, and that it shall return to the same point in the shape of a commodity. This movement of commodities is therefore a circuit. On the other hand, the form of this movement excludes money from the circuit. The result of the movement is not the return of the money, but its continued removal further and further away from its starting-point. As long as the seller sticks fast to his money, which is the transformed shape of his commodity, that commodity is still at the stage of the first metamorphosis, in other words it has completed only the first half of its circulatory course. Once the process of selling in order to buy is complete the money again leaves the hands of its original possessor. Of course, if the weaver, having bought the Bible, sells more linen, money comes back into his hands. But this return is not a result of the circulation of the first 20 yards of linen; that circulation rather removed money from the hands of the weaver and placed it in those of the Bible-pusher. The return of money to the weaver results only from the renewal or repetition of the same process of circulation with a fresh commodity, and it ends in the same way as the previous process. Hence the movement directly imparted to money by the circulation of commodities takes the form of a constant removal from its starting-point, a path followed from the hands of one commodity-owner into those of another. This path is its circulation (currency, cours de la monnaie).

The circulation of money is the constant and monotonous repetition of the same process. The commodity is always in the hands of the seller; the money, as a means of purchase, always in the hands of the buyer. And money serves as a means of purchase by realizing the price of the commodity. By doing this, it transfers the commodity from the seller to the buyer, and removes the money from the hands of the buyer into those of the seller, where it again goes through the same process with another commodity. That this one-sided form of motion of the money arises out of the two-sided form of motion of the commodity is a circumstance which is hidden from view. The very nature of the circulation of commodities produces a semblance of the opposite. The first metamorphosis of a commodity is visibly not only the money’s movement, but also that of the commodity itself; in the second metamorphosis, on the contrary, the movement appears to us as the movement of the money alone. In the first phase of its circulation the commodity changes places with the money. Thereupon the commodity, in its shape as an object of utility, falls out of circulation into consumption. Its value-shape or monetary larva steps into its shoes. It then passes through the second phase of its circulation, no longer in its own natural shape, but in its monetary shape. With this, the continuity of the movement depends entirely on the money, and the same movement which, for the commodity, includes two opposed processes, is, when considered as the movement of the money, always one and the same process, a constant change of places with commodities which are always different. Hence the result of the circulation of commodities, namely the replacement of one commodity by another, appears not to have been mediated by its own change of form, but rather by the function of money as means of circulation. As means of circulation, money circulates commodities, which in and for themselves lack the power of movement, and transfers them from hands in which they are non-use-values into hands in which they are use-values; and this process always takes the opposite direction to the path of the commodities themselves. Money constantly removes commodities from the sphere of circulation, by constantly stepping into their place in circulation, and in this way continually moving away from its own starting-point. Hence although the movement of money is merely the expression of the circulation of commodities, the situation appears to be the reverse of this, namely the circulation of commodities seems to be the result of the movement of money.

Again, money functions as a means of circulation only because in it the value possessed by commodities has taken on an independent shape. Hence its movement, as the medium of circulation, is in fact merely the movement undergone by commodities while changing their form. This fact must therefore make itself plainly visible in the circulation of money. (Thus the linen, for instance, first of all changes its commodity-form into its money-form. The final term of its first metamorphosis C–M, the money-form, then becomes the first term of its final metamorphosis M–C, its transformation back into the shape of the Bible. But each of these two changes of form is accomplished by an exchange between commodity and money, by their reciprocal displacement. The same pieces of coin come into the seller’s hand as the alienated form of the commodity and leave it as the commodity in its absolutely alienable form. They are displaced twice. The first metamorphosis of the linen puts these coins into the weaver’s pocket, the second draws them out of it. The two opposite changes undergone by the same commodity are reflected in the displacement, twice repeated but in opposite directions, of the same pieces of coin.

If however only a one-sided metamorphosis takes place, if there are only sales or only purchases, then a given piece of money changes its place only once. Its second change of place always expresses the second metamorphosis of the commodity, its reconversion from money. The frequently repeated displacement of the same coins reflects not only the series of metamorphoses undergone by a single commodity, but also the mutual entanglement of the innumerable metamorphoses in the whole world of commodities.) It is in any case evident that all this is valid only for the simple circulation of commodities, the form we are considering here.

Every commodity, when it first steps into circulation and undergoes its first change of form, does so only to fall out of circulation once more and be replaced again and again by fresh commodities. Money, on the contrary, as the medium of circulation, haunts the sphere of circulation and constantly moves around within it. The question therefore arises of how much money this sphere continuously absorbs.

In a given country there take place every day at the same time, though in different places, numerous one-sided metamorphoses of commodities; in other words, simple sales on one hand, simple purchases on the other. In their prices, the commodities have already been equated with definite but imaginary quantities of money. And since, in the direct form of circulation-being considered here, money and commodities always come into physical confrontation with each other, one at the positive pole of purchase, the other at the negative pole of sale, it is clear that the amount of means of circulation required is determined beforehand by the sum of the prices of all these commodities. As a matter of fact, the money is only the representation in real life of the quantity of gold previously expressed in the imagination by the sum of the prices of the commodities. It is therefore self-evident that these two quantities are equal. We know however that, the values of commodities remaining constant, their prices vary with the value of gold (the material of money), rising in proportion as it falls, and falling in proportion as it rises. Given that the sum of the prices of commodities falls or rises in this way, it follows that the quantity of money in circulation must fall or rise to the same extent. This change in the quantity of the circulating medium is certainly caused by the money itself, yet not in virtue of its function as a medium of circulation, but rather in virtue of its function as a measure of value. First the price of the commodities varies inversely as the value of the money, and then the quantity of the medium of circulation varies directly as the price of the commodities. Exactly the same phenomenon would arise if, for instance, instead of the value of gold falling, silver were to replace it as the measure of value, or if, instead of the value of silver rising, it were to be driven out of its function as measure of value by gold. In the one case, more silver would be in circulation than there was previously gold, and in the other case, less gold would be in circulation than there was previously silver. In each case the value of the money material, i.e. the value of the commodity serving as the measure of value, would have undergone a change, and so too, therefore, would the prices of commodities which express their values in money, as well as the quantity of money which would need to be in circulation to realize those prices. We have already seen that the sphere of circulation has a gap in it, through which gold (or silver, or the money material in general) enters as a commodity with a given value. Hence, when money begins to function as a measure of value, when it is used to determine prices, its value is presupposed. If that value falls, the fall first shows itself in a change in the prices of those commodities which are directly exchanged with the precious metals at their source. The greater part of all other commodities, especially at the less developed stages of bourgeois society, will continue for a long time to be estimated in terms of the former value of the measure of value, which has now become antiquated and illusory. Nevertheless, one commodity infects another through their common value-relation, so that their prices, expressed in gold or silver, gradually settle down into the proportions determined by their comparative values, until finally the values of all commodities are estimated in terms of the new value of the monetary metal. This process of equalization is accompanied by a continued increase in the quantity of the precious metals, owing to the influx needed to replace the commodities directly exchanged with them. In proportion therefore as the adjusted prices of the commodities become universal, in proportion as their values come to be estimated according to the new value of the metal (which has fallen and may, up to a certain point, continue to fall), in that same proportion does the increased mass of metal which is necessary for the realization of the new prices become available. A one-sided observation of the events which followed the discovery of fresh supplies of gold and silver led some people in the seventeenth and more particularly in the eighteenth century to the false conclusion that the prices of commodities had risen because there was more gold and silver acting as the means of circulation. Henceforth we shall assume the value of gold as a given factor, as in fact it is if we take it at the moment when we estimate the price of a commodity.

On this assumption, then, the quantity of the medium of circulation is determined by the sum of the prices to be realized. If we now further assume that the price of each commodity is given, the sum of the prices clearly depends on the total amount of commodities found in circulation. We do not need to rack our brains to grasp that if our quarter of wheat costs £2,100 quarters will cost £200, 200 quarters £400, and so on, and therefore that the quantity of money which changes places with the wheat, when it is sold, must increase as the quantity of the wheat increases. If the mass of commodities remains constant, the quantity of money in circulation surges up or down according to the fluctuations in the prices of the commodities. It rises and falls because the sum of the prices increases or diminishes as a result of the change of price. For this it is by no means necessary that the prices of all commodities should rise or fall simultaneously. A rise or a fall in the prices of a number of leading articles is sufficient in the one case to increase, in the other to diminish, the sum of the prices of all commodities, and therefore to put more or less money in circulation. Whether the change in the price reflects an actual change in the value of the commodities, or merely fluctuations in their market prices, the effect on the quantity of the medium of circulation remains the same. Let us assume that there occur a number of unconnected and simultaneous sales, or partial metamorphoses, in different localities; sales of, say, 1 quarter of wheat, 20 yards of linen, 1 Bible and 4 gallons of brandy. If the price of each article is £2, and the sum of the prices to be realized is consequently £8, it follows that £8 in money must enter into circulation. If, on the other hand, these same articles are links in the following chain of metamorphoses: 1 quarter of wheat – £2 – 20 yards of linen – £2 – 1 Bible – £2–4 gallons of brandy – £2, a chain which is already well known to us, in that case the £2 causes the different commodities to circulate after realizing their prices successively, and therefore realizing the sum of those prices, which is £8, the £2 finally comes to rest in the hands of the distiller. The £2 has turned over four times. It has performed four acts of circulation. This repeated change of place of the same pieces of money corresponds to the double change of form undergone by the commodities, it corresponds to their movement through two diametrically opposed stages of circulation, and the intertwining of the metamorphoses of different commodities. These antithetical and mutually complementary phases, through which the process passes, cannot take place alongside each other. They must follow in temporal succession. It is segments of time therefore which form the measure of the duration of the process, in other words, the velocity of the circulation of money is measured by the number of times the same piece of money turns over within a given period. Suppose the process of circulation of the four articles takes a day. The sum of prices to be realized is £8, the number of times the £2 turns over during the day is four, and the quantity of money in circulation is £2. Hence, for a given interval of time during the process of circulation, we have the following equation: the quantity of money functioning as the circulating medium = the sum of the prices of the commodities divided by the number of times coins of the same denomination turn over. This law holds generally. The process of circulation in a given country is made up, on the one hand, of numerous isolated and simultaneous partial metamorphoses, sales (and purchases) running parallel to each other in which each coin changes its position only once, or performs only one act of circulation; on the other hand, it is made up of many distinct series of metamorphoses, partly running parallel, partly coalescing with each other, and in each of these series each coin turns over a number of times. How often each coin turns over varies according to the circumstances. Given the total number of times all the circulating coins of one denomination turn over, we can arrive at the average number of times a single coin turns over, or, in other words, the average velocity of circulation of money. The quantity of money thrown into the process of circulation at the beginning of each day is of course determined by the sum of the prices of all the commodities circulating simultaneously and side by side. But within that process coins are, so to speak, made responsible for each other. If one increases its velocity of circulation, the other slows down or completely leaves the sphere of circulation. This is because the sphere of circulation can absorb only the amount of gold which, multiplied by the average number of times its basic unit turns over, is equal to the sum of prices to be realized. Hence, if the number of acts of circulation performed by the separate pieces increases, the total number of those pieces in circulation diminishes. If the number of acts of circulation diminishes, the total number of pieces increases. Since the quantity of money which can function as means of circulation is fixed for a given average velocity of circulation, one has only to throw a given quantity of £1 notes into circulation in order to extract the same number of sovereigns from it. This trick is well known to all banks.

Just as the circulation of money is in general merely a reflection of the process of circulation of commodities, i.e. their circular path through diametrically opposed metamorphoses, so too the velocity of circulation of money is merely a reflection of the rapidity with which commodities change their forms, the continuous interlocking of the series of metamorphoses, the hurried nature of society’s metabolic process, the quick disappearance of commodities from the sphere of circulation, and their equally quick replacement by fresh commodities. In the velocity of circulation, therefore, there appears the fluid unity of the antithetical and complementary phases, i.e. the transformation of the commodities from the form of utility into the form of value and their re-transformation in the reverse direction, or the two processes of sale and purchase. Inversely, when the circulation of money slows down, the two processes become separated, they assert their independence and mutual antagonism; stagnation occurs in the changes of form, and hence in the metabolic process. The circulation itself, of course, gives no clue to the origin of this stagnation; it merely presents us with the phenomenon. Popular opinion is naturally inclined to attribute this phenomenon to a quantitative deficiency in the circulating medium, since it sees money appear and disappear less frequently at all points on the periphery of circulation, in proportion as the circulation of money slows down.

The total quantity of money functioning during a given period as the circulating medium is determined on the one hand by the sum of the prices of the commodities in circulation, and on the other hand by the rapidity of alternation of the antithetical processes of circulation. The proportion of the sum of the prices which can on average be realized by each single coin depends on this rapidity of alternation. But the sum of the prices of the commodities depends on the quantity, as well as on the price, of each kind of commodity. These three factors, the movement of prices, the quantity of commodities in circulation, and the velocity of circulation of money, can all vary in various directions under different conditions. Hence the sum of the prices to be realized, and consequently the quantity of the circulating medium conditioned by that sum, will vary with the very numerous variations of the three factors in combination. Here we shall outline only the most important variations in the history of commodity prices. While prices remain constant, the quantity of the circulating medium may increase owing to an increase in the number of commodities in circulation, or a decrease in the velocity of circulation of money, or a combination of the two. On the other hand, the quantity of the circulating medium may decrease with a decreasing number of commodities, or with an increasing rapidity of circulation. With a general rise in the prices of commodities, the quantity of the circulating medium will remain constant, if the number of commodities in circulation decreases proportionally to the increase in their prices, or if the velocity of monetary circulation increases at the same rate as prices rise, the number of commodities in circulation remaining constant. The quantity of the circulating medium may decrease, owing to a more rapid decrease in the number of commodities, or to a more rapid increase in the velocity of monetary circulation, in comparison with the fall in the prices of commodities.

The law that the quantity of the circulating medium is determined by the sum of the prices of the commodities in circulation, and the average velocity of the circulation of money, may also be stated as follows: given the sum of the values of commodities, and the average rapidity of their metamorphoses, the quantity of money or of the material of money in circulation depends on its own value. The illusion that it is, on the contrary, prices which are determined by the quantity of the circulating medium, and that the latter for its part depends on the amount of monetary material which happens to be present in a country, had its roots in the absurd hypothesis adopted by the original representatives of this view that commodities enter into the process of circulation without a price, and money enters without a value, and that, once they have entered circulation, an aliquot part of the medley of commodities is exchanged for an aliquot part of the heap of precious metals.

Coin. The symbol of value

Money takes the shape of coin because of its function as the circulating medium. The weight of gold represented in the imagination by the prices or money-names of the commodities has to confront those commodities, within circulation, as coins or pieces of gold of the same denomination. The business of coining, like the establishing of a standard measure of prices, is an attribute proper to the state. The different national uniforms worn at home by gold and silver as coins, but taken off again when they appear on the world market, demonstrate the separation between the internal or national spheres of commodity circulation and its universal sphere, the world market.

The only difference, therefore, between coin and bullion lies in their physical configuration, and gold can at any time pass from one form to the other. For a coin, the road from the mint is also the path to the melting pot. In the course of circulation, coins wear down, some to a greater extent, some to a lesser. The denomination of the gold and its substance, the nominal content and the real content, begin to move apart. Coins of the same denomination become different in value, because they are different in weight. The weight of gold fixed upon as the standard of prices diverges from the weight which serves as the circulating medium, and the latter thereby ceases to be a real equivalent of the commodities whose prices it realizes. The history of these difficulties constitutes the history of the coinage throughout the Middle Ages and in modern times down to the eighteenth century. The natural and spontaneous tendency of the process of circulation to transform the coin from its metallic existence as gold into the semblance of gold, or to transform the coin into a symbol of its official metallic content, is itself recognized by the most recent laws on the degree of metal loss which demonetizes a gold coin, i.e. renders it incapable of being circulated.

The fact that the circulation of money itself splits the nominal content of coins away from their real content, dividing their metallic existence from their functional existence, this fact implies the latent possibility of replacing metallic money with tokens made of some other material, i.e. symbols which would perform the function of coins. The technical obstacles to coining extremely minute quantities of gold or silver, and the circumstance that at first the less precious metal is used as a measure of value instead of the more precious, copper instead of silver, silver instead of gold, and that the less precious circulates as money until dethroned by the more precious – these facts provide a historical explanation for the role played by silver and copper tokens as substitutes for gold coins. Silver and copper coins replace gold in those regions of the circulation of commodities where coins pass from hand to hand most rapidly, and are therefore worn out most quickly. This happens where sales and purchases on a very small scale recur unceasingly. In order to prevent these satellites from establishing themselves permanently in the place of gold, the law determines the very minute proportions in which alone they can be accepted as alternative payment. The particular tracks pursued by the different sorts of coin in circulation naturally run into each other. Small change appears alongside gold for the payment of fractional parts of the smallest gold coin; gold constantly enters into retail circulation, although it is just as constantly being thrown out again by being exchanged with small change.

The metallic content of silver and copper tokens is arbitrarily determined by law. In the course of circulation they wear down even more rapidly than gold coins. Their function as coins is therefore in practice entirely independent of their weight, i.e. it is independent of all value. In its form of existence as coin, gold becomes completely divorced from the substance of its value. Relatively valueless objects, therefore, such as paper notes, can serve as coins in place of gold. This purely symbolic character of the currency is still somewhat disguised in the case of metal tokens. In paper money it stands out plainly. But we can see: everything depends on the first step.

Here we are concerned only with inconvertible paper money issued by the state and given forced currency. This money emerges directly out of the circulation of metallic money. Credit-money on the other hand implies relations which are as yet totally unknown, from the standpoint of the simple circulation of commodities. But it may be noted in passing that just as true paper money arises out of the function of money as the circulating medium, so does credit-money take root spontaneously in the function of money as the means of payment.

Pieces of paper on which money-names are printed, such as £1, £5, etc., are thrown into the circulation process from outside by the state. In so far as they actually circulate in place of the same amount of gold, their movement is simply a reflection of the laws of monetary circulation itself, A law peculiar to the circulation of paper money can only spring up from the proportion in which that paper money represents gold. In simple terms the law referred to is as follows: the issue of paper money must be restricted to the quantity of gold (or silver) which would actually be in circulation, and which is represented symbolically by the paper money. Now it is true that the quantity of gold which can be absorbed by the sphere of circulation constantly fluctuates above and below a certain average level. But despite this, the mass of the circulating medium in a given country never sinks below a certain minimum, which can be ascertained by experience. The fact that this minimum mass continually undergoes changes in its constituent parts, or that the pieces of gold of which it consists are constantly being replaced by other pieces, naturally causes no change either in its amount or in the continuity with which it flows around the sphere of circulation. It can therefore be replaced by paper symbols. If however all the channels of circulation were today filled with paper money to the full extent of their capacity for absorbing money, they might the next day be over-full owing to the fluctuations in the circulation of commodities. There would no longer be any standard. If the paper money exceeds its proper limit, i.e. the amount in gold coins of the same denomination which could have been in circulation, then, quite apart from the danger of becoming universally discredited, it will still represent within the world of commodities only that quantity of gold which is fixed by its immanent laws. No greater quantity is capable of being represented. If the quantity of paper money represents twice the amount of gold available, then in practice £1 will be the money-name not of ¼ of an ounce of gold, but 18 of an ounce. The effect is the same as if an alteration had taken place in the function of gold as the standard of prices. The values previously expressed by the price of £1 would now be expressed by the price of £2.

Paper money is a symbol of gold, a symbol of money. Its relation to the values of commodities consists only in this: they find imaginary expression in certain quantities of gold, and the same quantities are symbolically and physically represented by the paper. Only in so far as paper money represents gold, which like all other commodities has value, is it a symbol of value.

Finally, one may ask why gold is capable of being replaced by valueless symbols of itself. As we have already seen, it is capable of being replaced in this way only if its function as coin or circulating medium can be singled out or rendered independent. Now this function of being the circulating medium does not attain an independent position as far as the individual gold coins are concerned, although that independent position does appear in the case of the continued circulation of abraded coins. A piece of money is a mere coin, or means of circulation, only as long as it is actually in circulation. But what is not valid for the individual gold coin is valid for that minimum mass of gold which is capable of being replaced by paper money. That mass constantly haunts the sphere of circulation, continually functions as a circulating medium, and therefore exists exclusively as the bearer of this function. Its movement therefore represents nothing but the continued alternation of the inverse phases of the metamorphosis C–M–C, phases in which the commodity’s shape as a value confronts it only to disappear again immediately. The presentation of the exchange-value of a commodity as an independent entity is here only a transient aspect of the process. The commodity is immediately replaced again by another commodity. Hence in this process which continually makes money pass from hand to hand, it only needs to lead a symbolic existence. Its functional existence so to speak absorbs its material existence. Since it is a transiently objectified reflection of the prices of commodities, it serves only as a symbol of itself, and can therefore be replaced by another symbol. One thing is necessary, however: the symbol of money must have its own objective social validity. The paper acquires this by its forced currency. The state’s compulsion can only be of any effect within that internal sphere of circulation which is circumscribed by the boundaries of a given community, but it is also only within that sphere that money is completely absorbed in its function as medium of circulation, and is therefore able to receive, in the form of paper money, a purely functional mode of existence in which it is externally separated from its metallic substance.


The commodity which functions as a measure of value and therefore also as the medium of circulation, either in its own body or through a representative, is money. Gold (or silver) is therefore money. It functions as money, on the one hand, when it has to appear in person as gold. It is then the money commodity, neither merely ideal, as when it is the measure of value, nor capable of being represented, as when it is the medium of circulation. On the other hand, it also functions as money when its function, whether performed in person or by a representative, causes it to be fixed as the sole form of value, or, in other words, as the only adequate form of existence of exchange value in the face of all the other commodities, here playing the role of use-values pure and simple.


The continuous circular movement of the two antithetical metamorphoses of commodities, or the repeated alternating flow of sale and purchase, is reflected in the unceasing turnover of money, in the function it performs of a perpetuum mobile of circulation. But as soon as the series of metamorphoses is interrupted, as soon as sales are not supplemented by subsequent purchases, money is immobilized. In other words, it is transformed, as Boisguillebert says, from ‘meuble’ into ‘immeuble’, from coin into money.

When the circulation of commodities first develops, there also develops the necessity and the passionate desire to hold fast to the product of the first metamorphosis. This product is the transformed shape of the commodity, or its gold chrysalis. Commodities are thus sold not in order to buy commodities, but in order to replace their commodity-form by their money-form. Instead of being merely a way of mediating the metabolic process [Stoffwechsel], this change of form becomes an end in itself. The form of the commodity in which it is divested of content is prevented from functioning as its absolutely alienable form, or even as its merely transient money-form. The money is petrified into a hoard, and the seller of commodities becomes a hoarder of money.

In the very beginnings of the circulation of commodities, it is only the excess amounts of use-value which are converted into money. Gold and silver thus become of themselves social expressions for superfluity or wealth. This naïve form of hoarding is perpetuated among those peoples whose traditional mode of production, aimed at fulfilling their own requirements, corresponds to a fixed and limited range of needs. This is true of the Asiatics, particularly the Indians. Vanderlint, who imagines that the prices of commodities in a country are determined by the quantity of gold and silver to be found in it, asks himself why Indian commodities are so cheap. Answer: because the Indians bury their money. From 1602 to 1734, he remarks, they buried 150 million pounds worth of silver, which originally came from America to Europe. From 1856 to 1866, in other words in ten years, England exported to India (and China, but most of the metal exported to China flows back again to India) £120,000,000 in silver, which had been received in exchange for Australian gold.

With more developed commodity production, every producer is compelled to secure for himself the nexus rerum, the ‘social pledge’. His needs are ceaselessly renewed, and necessitate the continual purchase of other people’s commodities, whereas the production and sale of his own commodity costs time and is subject to various accidents. In order then to be able to buy without selling, he must have sold previously without buying. This operation, conducted on a general scale, seems to involve a self-contradiction. But at the sources of their production the precious metals are directly exchanged for other commodities. And here we have sales (by the owners of commodities) without purchases (by the owners of gold or silver). And later sales, again without subsequent purchases, merely bring about a further distribution of the precious metals among all the owners of commodities. In this way, hoards of gold and silver of the most various sizes are piled up at all the points of commercial intercourse. With the possibility of keeping hold of the commodity as exchange-value, or exchange-value as a commodity, the lust for gold awakens. With the extension of commodity circulation there is an increase in the power of money, that absolutely social form of wealth which is always ready to be used. ‘Gold is a wonderful thing! Its owner is master of all he desires. Gold can even enable souls to enter Paradise’ (Columbus, in his letter from Jamaica, 1503). Since money does not reveal what has been transformed into it, everything, commodity or not, is convertible into money. Everything becomes saleable and purchaseable. Circulation becomes the great social retort into which everything is thrown, to come out again as the money crystal. Nothing is immune from this alchemy, the bones of the saints cannot withstand it, let alone more delicate res sacrosanctae, extra commercium hominum Just as in money every qualitative difference between commodities is extinguished, so too for its part, as a radical leveller, it extinguishes all distinctions. But money is itself a commodity, an external object capable of becoming the private property of any individual. Thus the social power becomes the private power of private persons. Ancient society therefore denounced it as tending to destroy the economic and moral order. Modern society, which already in its infancy had pulled Pluto by the hair of his head from the bowels of the earth, greets gold as its Holy Grail, as the glittering incarnation of its innermost principle of life.

The commodity, as a use-value, satisfies a particular need and forms a particular element of material wealth. But the value of a commodity measures the degree of its attractiveness for all other elements of material wealth, and therefore measures the social wealth of its owner. To the simple owner of commodities among the barbarians, and even to the peasant of Western Europe, value is inseparable from the value-form, hence an increase in his hoard of gold and silver is an increase in value. It is true that the value of money varies, whether as a result of a variation in its own value, or of a change in the values of commodities. But this on the one hand does not prevent 200 ounces of gold from continuing to contain more value than 100 ounces, nor on the other hand does it prevent the metallic natural form of this object from continuing to be the universal equivalent form of all other commodities, and the directly social incarnation of all human labour. The hoarding drive is boundless in its nature. Qualitatively or formally considered, money is independent of all limits, that is it is the universal representative of material wealth because it is directly convertible into any other commodity. But at the same time every actual sum of money is limited in amount, and therefore has only a limited efficacy as a means of purchase. This contradiction between the quantitative limitation and the qualitative lack of limitation of money keeps driving the hoarder back to his Sisyphean task: accumulation. He is in the same situation as a world conqueror, who discovers a new boundary with each country he annexes.

In order that gold may be held as money, and made to form a hoard, it must be prevented from circulating, or from dissolving into the means of purchasing enjoyment. The hoarder therefore sacrifices the lusts of his flesh to the fetish of gold. He takes the gospel of abstinence very seriously. On the other hand, he cannot withdraw any more from circulation, in the shape of money, than he has thrown into it, in the shape of commodities. The more he produces, the more he can sell. Work, thrift and greed are therefore his three cardinal virtues, and to sell much and buy little is the sum of his political economy.

Alongside the direct form of the hoard there runs its aesthetic form, the possession of commodities made out of gold and silver. This grows with the wealth of civil society. ‘Let us be rich, or let us appear rich’ (Diderot). In this way there is formed, on the one hand, a constantly extending market for gold and silver which is independent of their monetary functions, and on the other hand a latent source of monetary inflow which is used particularly in periods of social disturbance.

Hoarding serves various purposes in an economy where metallic circulation prevails. Its first function arises out of the conditions of the circulation of gold and silver coins. We have seen how, owing to the continual fluctuations in the extent and rapidity of the circulation of commodities and in their prices, the quantity of money in circulation unceasingly ebbs and flows. This quantity must therefore be capable of expansion and contraction. At one time money must be attracted as coin, at another time coin must be repelled as money. In order that the mass of money actually in circulation may always correspond to the saturation level of the sphere of circulation, it is necessary for the quantity of gold and silver available in a country to be greater than the quantity required to function as coin. The reserves created by hoarding serve as channels through which money may flow in and out of circulation, so that the circulation itself never overflows its banks.

Means of payment

In the direct form of commodity circulation hitherto considered, we found a given value always presented to us in a double shape, as a commodity at one pole, and money at the opposite pole. The owners of commodities therefore came into contact as the representatives of equivalents which were already available to each of them. But with the development of circulation, conditions arise under which the alienation of the commodity becomes separated by an interval of time from the realization of its price. It will be sufficient to indicate the most simple of these conditions. One sort of commodity requires a longer, another a shorter time for its production. The production of different commodities depends on different seasons of the year. One commodity may be born in the market place, another must travel to a distant market. One commodity-owner may therefore step forth as a seller before the other is ready to buy. When the same transactions are continually repeated between the same persons, the conditions of sale are regulated according to the conditions of production. On the other hand, the use of certain kinds of commodity (houses, for instance) is sold for a definite period. Only after the lease has expired has the buyer actually received the use-value of the commodity. He therefore buys it before he pays for it. The seller sells an existing commodity, the buyer buys as the mere representative of money, or rather as the representative of future money. The seller becomes a creditor, the buyer becomes a debtor. Since the metamorphosis of commodities, or the development of their form of value, has undergone a change here, money receives a new function as well. It becomes the means of payment.

The role of creditor or of debtor results here from the simple circulation of commodities. The change in its form impresses this new stamp on seller and buyer. At first, therefore, these new roles are just as transient as those of seller and buyer, and are played alternately by the same actors. Nevertheless, this opposition now looks less pleasant from the very outset, and it is capable of a more rigid crystallization. However, the same characteristics can emerge independently of the circulation of commodities. The class struggle in the ancient world, for instance, took the form mainly of a contest between debtors and creditors, and ended in Rome with the ruin of the plebeian debtors, who were replaced by slaves. In the Middle Ages the contest ended with the ruin of the feudal debtors, who lost their political power together with its economic basis. Here, indeed, the money-form – and the relation between creditor and debtor does have the form of a money-relation – was only the reflection of an antagonism which lay deeper, at the level of the economic conditions of existence.

Let us return to the sphere of circulation. The two equivalents, commodities and money, have ceased to appear simultaneously at the two poles of the process of sale. The money functions now, first as a measure of value in the determination of the price of the commodity sold; the price fixed by contract measures the obligation of the buyer, i.e. the sum of money he owes at a particular time. Secondly it serves as a nominal means of purchase. Although existing only in the promise of the buyer to pay, it causes the commodity to change hands. Not until payment falls due does the means of payment actually step into circulation, i.e. leave the hand of the buyer for that of the seller. The circulating medium was transformed into a hoard because the process stopped short after the first phase, because the converted shape of the commodity was withdrawn from circulation. The means of payment enters circulation, but only after the commodity has already left it. The money no longer mediates the process. It brings it to an end by emerging independently, as the absolute form of existence of exchange-value, in other words the universal commodity. The seller turned his commodity into money in order to satisfy some need; the hoarder in order to preserve the monetary form of his commodity, and the indebted purchaser in order to be able to pay. If he does not pay, his goods will be sold compulsorily. The value-form of the commodity, money, has now become the self-sufficient purpose of the sale, owing to a social necessity springing from the conditions of the process of circulation itself.

The buyer converts money back into commodities before he has turned commodities into money: in other words, he achieves the second metamorphosis of commodities before the first. The seller’s commodity circulates, and realizes its price, but only as a title to money in civil law. It is converted into a use-value before it has been converted into money. The completion of its first metamorphosis occurs only subsequently.

The obligations falling due within a given period of the circulation process represent the sum of the prices of the commodities whose sale gave rise to those obligations. The quantity of money necessary to realize this sum depends in the first instance on the rapidity of circulation of the means of payment. The quantity is conditioned by two factors: first, the way in which relations between creditors and debtors interlock, as when A receives money from B, who is in debt to him, and then pays it out to his creditor C; and second, the length of time between the different days in which the obligations fall due. The chain of payments, or retarded first metamorphoses, which participate in the process, is essentially different from that intertwining of the series of metamorphoses considered earlier. The flow of the circulating medium does not merely express the connection between buyers and sellers: the connection itself arises within, and exists through, the circulation of money. The movement of the means of payment, however, expresses a social connection which was already present independently.

The fact that sales take place simultaneously and side by side limits the extent to which the rapidity of turnover can make up for the quantity of currency available. On the other hand, this fact gives a new impulse towards the economical use of the means of payment. With the concentration of payments in one place, special institutions and methods of liquidation develop spontaneously. For instance, the virements in medieval Lyons. The debts due to A from B, to B from C, to C from A, and so on, have only to be brought face to face in order to cancel each other out, to a certain extent, as positive and negative amounts. There remains only a single debit balance to be settled. The greater the concentration of the payments, the less is this balance in relation to the total amount, hence the less is the mass of the means of payment in circulation.

There is a contradiction immanent in the function of money as the means of payment. When the payments balance each other, money functions only nominally, as money of account, as a measure of value. But when actual payments have to be made, money does not come onto the scene as a circulating medium, in its merely transient form of an intermediary in the social metabolism, but as the individual incarnation of social labour, the independent presence of exchange-value, the universal commodity. This contradiction bursts forth in that aspect of an industrial and commercial crisis which is known as a monetary crisis. Such a crisis occurs only where the ongoing chain of payments has been fully developed, along with an artificial system for settling them. Whenever there is a general disturbance of the mechanism, no matter what its cause, money suddenly and immediately changes over from its merely nominal shape, money of account, into hard cash. Profane commodities can no longer replace it. The use-value of commodities becomes valueless, and their value vanishes in the face of their own form of value. The bourgeois, drunk with prosperity and arrogantly certain of himself, has just declared that money is a purely imaginary creation. ‘Commodities alone are money,’ he said. But now the opposite cry resounds over the markets of the world: only money is a commodity. As the hart pants after fresh water, so pants his soul after money, the only wealth. In a crisis, the antithesis between commodities and their value-form, money, is raised to the level of an absolute contradiction. Hence money’s form of appearance is here also a matter of indifference. The monetary famine remains whether payments have to be made in gold or in credit-money, such as bank-notes.

If we now consider the total amount of money in circulation during a given period, we find that, for any given turnover rate of the medium of circulation and the means of payment, it is equal to the sum of prices to be realized, plus the sum of the payments falling due, minus the payments which balance each other out, and, finally, minus the number of circuits in which the same piece of coin serves alternately as medium of circulation and means of payment. The farmer, for example, sells his wheat for £2, and this money serves thus as the medium of circulation. On the day when the payment falls due, he uses it to pay for linen which the weaver has delivered. The same £2 now serves as the means of payment. The weaver now buys a Bible for cash. This serves again as the medium of circulation, and so on. Therefore, even when prices, speed of monetary circulation and economies in the use of the means of payment are given, the quantity of money in circulation no longer corresponds with the mass of commodities in circulation during a given period, such as a day. Money which represents commodities long since withdrawn from circulation continues to circulate. Commodities circulate, but their equivalent in money does not appear until some future date. Moreover, the debts contracted each day, and the payments falling due on the same day, are entirely incommensurable magnitudes.

Credit-money springs directly out of the function of money as a means of payment, in that certificates of debts owing for already purchased commodities themselves circulate for the purpose of transferring those debts to others. On the other hand, the function of money as a means of payment undergoes expansion in proportion as the system of credit itself expands. As the means of payment money takes on its own peculiar forms of existence, in which it inhabits the sphere of large-scale commercial transactions. Gold and silver coin, on the other hand, are mostly relegated to the sphere of retail trade.

When the production of commodities has attained a certain level and extent, the function of money as means of payment begins to spread out beyond the sphere of the circulation of commodities. It becomes the universal material of contracts. Rent, taxes and so on are transformed from payments in kind to payments in money. The great extent to which this transformation is conditioned by the total shape of the process of production is shown for example by the twice-repeated failure of the Roman Empire to levy all contributions in money. The unspeakable misery of the French agricultural population under Louis XIV, a misery so eloquently denounced by Boisguillebert, Marshall Vauban and others, was due not only to the weight of the taxes but also to the conversion of taxes in kind into taxes in money. In Asia, on the other hand, the form of ground rent paid in kind, which is at the same time the main element in state taxation, is based on relations of production which reproduce themselves with the immutability of natural conditions. And this mode of payment in its turn acts to maintain the ancient form of production. It forms one of the secrets of the self-preservation of the Ottoman Empire. If the foreign trade imposed on Japan by Europe brings with it the transformation of rents in kind into money rents, then the exemplary agriculture of that country will be done for. Its narrowly based economic conditions of existence will be swept away.

In every country, certain days become established as the dates on which general settlements are made. They depend in part, leaving aside other circular movements described by reproduction, upon the natural conditions of production, which are bound up with the alternation of the seasons. They also regulate the dates for payments which have no direct connection with the circulation of commodities, such as taxes, rents and so on. The fact that the quantity of money required to make these isolated payments over the whole surface of society falls due on certain days of the year causes periodic, but entirely superficial, perturbations in the economy of the means of payment. From the law of the rapidity of circulation of the means of payment, it follows that the quantity of the means of payment required for all periodic payments, whatever their source, is in direct proportion to the length of the periods.

The development of money as a means of payment makes it necessary to accumulate it in preparation for the days when the sums which are owing fall due. While hoarding, considered as an independent form of self-enrichment, vanishes with the advance of bourgeois society [die bürgerliche Gesellschaft], it grows at the same time in the form of the accumulation of a reserve fund of the means of payment.

World money

When money leaves the domestic sphere of circulation it loses the local functions it has acquired there, as the standard of prices, coin, and small change, and as a symbol of value, and falls back into its original form as precious metal in the shape of bullion. In world trade, commodities develop their value universally. Their independent value-form thus confronts them here too as world money. It is in the world market that money first functions to its full extent as the commodity whose natural form is also the directly social form of realization of human labour in the abstract. Its mode of existence becomes adequate to its concept.

Within the sphere of domestic circulation, there can only be one commodity which by serving as a measure of value becomes money. On the world market a double standard prevails, both gold and silver.

World money serves as the universal means of payment, as the universal means of purchase, and as the absolute social materialization of wealth as such (universal wealth). Its predominant function is as means of payment in the settling of international balances. Hence the slogan of the Mercantile System: balance of trade. Gold and silver serve essentially as international means of purchase when the customary equilibrium in the interchange of products between different nations is suddenly disturbed. And, lastly, world money serves as the universally recognized social materialization of wealth, whenever it is not a matter of buying or paying, but of transferring wealth from one country to another, and whenever its transfer in the form of commodities is ruled out, either by the conjuncture of the market, or by the purpose of the transfer itself.

Just as every country needs a reserve fund for its internal circulation, so too it requires one for circulation in the world market. The functions of hoards, therefore, arise in part out of the function of money as medium of payment and circulation internally, and in part out of its function as a world currency. In this latter role it is always the genuine money-commodity, gold and silver in their physical shape, which is required. For that reason Sir James Steuart expressly characterizes gold and silver as ‘money of the world’ in order to distinguish them from their merely local representatives.

The stream of gold and silver has a twofold motion. On the one hand, it spreads out from its sources all over the world, and is absorbed to various extents into the different national spheres of circulation, where it enters into the various channels of internal circulation. There it replaces abraded gold and silver coins, supplies the material for articles of luxury, and petrifies into hoards. This first movement is transmitted through the medium of the direct exchange of the labour of individual countries which has been realized in commodities for the labour realized in the precious metals by the gold- and silver-producing countries. On the other hand, gold and silver continually flow backwards and forwards between the different national spheres of circulation, and this movement follows the unceasing fluctuations of the rate of exchange.

Countries with developed bourgeois production limit the hoards concentrated in the strong rooms of the banks to the minimum required for the performance of their specific functions. Whenever these hoards are strikingly above their average level, this is, with some exceptions, an indication of stagnation in the circulation of commodities, i.e. of an interruption in the flow of their metamorphoses.

Transformation of money into capital

The general formula for capital

The circulation of commodities is the starting-point of capital. The production of commodities and their circulation in its developed form, namely trade, form the historic presuppositions under which capital arises. World trade and the world market date from the sixteenth century, and from then on the modern history of capital starts to unfold.

If we disregard the material content of the circulation of commodities, i.e. the exchange of the various use-values, and consider only the economic forms brought into being by this process, we find that its ultimate product is money. This ultimate product of commodity circulation is the first form of appearance of capital.

Historically speaking, capital invariably first confronts landed property in the form of money; in the form of monetary wealth, merchants’ capital and usurers’ capital. However, we do not need to look back at the history of capital’s origins in order to recognize that money is its first form of appearance. Every day the same story is played out before our eyes. Even up to the present day, all new capital, in the first instance, steps onto the stage – i.e. the market, whether it is the commodity-market, the labour-market, or the money-market – in the shape of money, money which has to be transformed into capital by definite processes.

The first distinction between money as money and money as capital is nothing more than a difference in their form of circulation. The direct form of the circulation of commodities is C–M–C, the transformation of commodities into money and the re-conversion of money into commodities: selling in order to buy. But alongside this form we find another form, which is quite distinct from the first: M–C–M, the transformation of money into commodities, and the re-conversion of commodities into money: buying in order to sell. Money which describes the latter course in its movement is transformed into capital, becomes capital, and, from the point of view of its function, already is capital.

Let us examine the circular movement M–C–M a little more closely. Just as in the case of simple circulation, it passes through two antithetical phases. In the first phase, M–C (the purchase), the money is changed into a commodity. In the second phase, C–M (the sale), the commodity is changed back again into money. These two phases, taken together in their unity, constitute the total movement which exchanges money for a commodity, and the same commodity for money, which buys a commodity in order to sell it, or, if one neglects the formal distinction between buying and selling, buys a commodity with money and then buys money with a commodity. The result, in which the whole process vanishes, is the exchange of money for money, M–M. If I purchase 2,000 lb. of cotton for £100, and resell the 2,000 lb. of cotton for £110, I have in fact exchanged £100 for £110, money for money.

Now it is evident that the circulatory process M–C–M would be absurd and empty if the intention were, by using this roundabout route, to exchange two equal sums of money, £100 for £100. The miser’s plan would be far simpler and surer: he holds on to his £100 instead of exposing it to the dangers of circulation. And yet, whether the merchant who has paid £100 for his cotton sells it for £110, or lets it go for £100, or even £50, his money has at all events described a characteristic and original path, quite different in kind from the path of simple circulation, as for instance in the case of the peasant who sells corn, and with the money thus set free buys clothes. First, then, we have to characterize the formal distinctions between the two circular paths M–C–M and C–M–C. This will simultaneously provide us with the difference in content which lies behind these formal distinctions.

Let us first see what the two forms have in common.

Both paths can be divided into the same two antithetical phases, C–M, sale, and M–C, purchase. In each phase the same material elements confront each other, namely a commodity and money, and the same economic dramatis personae, a buyer and a seller. Each circular path is the unity of the same two antithetical phases, and in each case this unity is mediated through the emergence of three participants in a contract, of whom one only sells, another only buys and the third both buys and sells. What however first and foremost distinguishes the two paths C–M–C and M–C–M from each other is the inverted order of succession of the two opposed phases of circulation. The simple circulation of commodities begins with a sale and ends with a purchase, while the circulation of money as capital begins with a purchase and ends with a sale. In the one case both the starting-point and the terminating-point of the movement are commodities, in the other they are money. The whole process is mediated in the first form by money, and in the second, inversely, by a commodity. In the circulation C–M–C, the money is in the end converted into a commodity which serves as a use-value; it has therefore been spent once and for all. In the inverted form M–C–M, on the contrary, the buyer lays out money in order that, as a seller, he may recover money. By the purchase of his commodity he throws money into circulation, in order to withdraw it again by the sale of the same commodity. He releases the money, but only with the cunning intention of getting it back again. The money therefore is not spent, it is merely advanced.

In the form C–M–C, the same piece of money is displaced twice. The seller gets it from the buyer and pays it away to another seller. The whole process begins when money is received in return for commodities, and comes to an end when money is given up in return for commodities. In the form M–C–M this process is inverted. Here it is not the piece of money which is displaced twice, but the commodity. The buyer takes it from the hands of the seller and passes it into the hands of another buyer. Whilst in the simple circulation of commodities the twofold displacement of the same piece of money effects its definitive transfer from one hand into another, here the twofold displacement of the same commodity causes the money to flow back to its initial point of departure. This reflux of money to its starting-point does not depend on the commodity’s being sold for more than was paid for it. That only has a bearing on the amount of money which flows back. The phenomenon of reflux itself takes place as soon as the purchased commodity is resold, i.e. as soon as the cycle M–C–M has been completed. We have here, therefore, a palpable difference between the circulation of money as capital, and its circulation as mere money. The cycle C–M–C reaches its conclusion when the money brought in by the sale of one commodity is withdrawn again by the purchase of another. If there follows a reflux of money to its starting-point, this can happen only through a renewal or repetition of the whole course of the movement. If I sell a quarter of corn for £3, and with this £3 buy clothes, the money, so far as I am concerned, is irreversibly spent. I have nothing more to do with it. It belongs to the clothes merchant. If I now sell a second quarter of corn, money indeed flows back to me, not however as a result of the first transaction, but of its repetition. The money again leaves me as soon as I complete this second transaction by a fresh purchase. In the cycle C–M–C, therefore, the expenditure of money has nothing to do with its reflux. In M–C–M on the other hand the reflux of the money is conditioned by the very manner in which it is expended. Without this reflux, the operation fails, or the process is interrupted and incomplete, owing to the absence of its complementary and final phase, the sale.

The path C–M–C proceeds from the extreme constituted by one commodity, and ends with the extreme constituted by another, which falls out of circulation and into consumption. Consumption, the satisfaction of needs, in short use-value, is therefore its final goal. The path M–C–M, however, proceeds from the extreme of money and finally returns to that same extreme. Its driving and motivating force, its determining purpose, is therefore exchange-value.

In the simple circulation of commodities the two extremes have the same economic form. They are both commodities, and commodities of equal value. But they are also qualitatively different use-values, as for example corn and clothes. The exchange of products, the interchange carried out between the different materials in which social labour is embodied, forms here the content of the movement. It is otherwise in the cycle M–C–M. At first sight this appears to lack any content, because it is tautological. Both extremes have the same economic form. They are both money, and therefore are not qualitatively different use-values, for money is precisely the converted form of commodities, in which their particular use-values have been extinguished. To exchange £100 for cotton, and then to exchange this same cotton again for £100, is merely a roundabout way of exchanging money for money, the same for the same, and appears to be an operation as purposeless as it is absurd. One sum of money is distinguishable from another only by its amount The process M–C–M does not therefore owe its content to any qualitative difference between its extremes, for they are both money, but solely to quantitative changes. More money is finally withdrawn from circulation than was thrown into it at the beginning. The cotton originally bought for £100 is for example re-sold at £100+£10, i.e. £110. The complete form of this process is therefore M–C–M′, where M′ = M + Δ M, i.e. the original sum advanced plus an increment. This increment or excess over the original value I call ‘surplus-value’. The value originally advanced, therefore, not only remains intact while in circulation, but increases its magnitude, adds to itself a surplus-value, or is valorized [verwertet sich]. And this movement converts it into capital.

Of course, it is also possible that in C–M–C the two extremes C and C, say corn and clothes, may represent quantitatively different magnitudes of value. The peasant may sell his corn above its value, or may buy the clothes at less than their value. He may, on the other hand, be cheated by the clothes merchant. Yet, for this particular form of circulation, such differences in value are purely accidental. The fact that the corn and the clothes are equivalents does not deprive the process of all sense and meaning, as it does in M–C–M. The equivalence of their values is rather a necessary condition of its normal course.

The repetition or renewal of the act of selling in order to buy finds its measure and its goal (as does the process itself) in a final purpose which lies outside it, namely consumption, the satisfaction of definite needs. But in buying in order to sell, on the contrary, the end and the beginning are the same, money or exchange-value and this very fact makes the movement an endless one. Certainly M becomes M + Δ M, £100 becomes £110. But, considered qualitatively, £100 is the same as £110, namely money; while, from the quantitative point of view, £110 is, like £100, a sum of definite and limited value. If the £110 is now spent as money, it ceases to play its part. It is no longer capital. Withdrawn from circulation, it is petrified into a hoard, and it could remain in that position until the Last Judgement without a single farthing accruing to it. If, then, we are concerned with the valorization [Verwertung] of value, the value of the £110 has the same need for valorization as the value of the £100, for they are both limited expressions of exchange-value, and therefore both have the same vocation, to approach, by quantitative increase, as near as possible to absolute wealth. Momentarily, indeed, the value originally advanced, the £100, is distinguishable from the surplus-value of £10, added to it during circulation; but the distinction vanishes immediately. At the end of the process, we do not receive on one hand the original £100, and on the other the surplus-value of £10. What emerges is rather a value of £110, which is in exactly the same form, appropriate for commencing the valorization process, as the original £100. At the end of the movement, money emerges once again as its starting-point. Therefore the final result of each separate cycle, in which a purchase and consequent sale are completed, forms of itself the starting-point for a new cycle. The simple circulation of commodities – selling in order to buy – is a means to a final goal which lies outside circulation, namely the appropriation of use-values, the satisfaction of needs. As against this, the circulation of money as capital is an end in itself, for the valorization of value takes place only within this constantly renewed movement. The movement of capital is therefore limitless.

As the conscious bearer [Träger] of this movement, the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which the money starts, and to which it returns. The objective content of the circulation we have been discussing – the valorization of value – is his subjective purpose, and it is only in so far as the appropriation of ever more wealth in the abstract is the sole driving force behind his operations that he functions as a capitalist, i.e. as capital personified and endowed with consciousness and a will. Use-values must therefore never be treated as the immediate aim of the capitalist; nor must the profit on any single transaction. His aim is rather the unceasing movement of profit-making. This boundless drive for enrichment, this passionate chase after value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The ceaseless augmentation of value, which the miser seeks to attain by saving his money from circulation, is achieved by the more acute capitalist by means of throwing his money again and again into circulation.

The independent form, i.e. the monetary form, which the value of commodities assumes in simple circulation, does nothing but mediate the exchange of commodities, and it vanishes in the final result of the movement. On the other hand, in the circulation M–C–M both the money and the commodity function only as different modes of existence of value itself, the money as its general mode of existence, the commodity as its particular or, so to speak, disguised mode. It is constantly changing from one form into the other, without becoming lost in this movement; it thus becomes transformed into an automatic subject. If we pin down the specific forms of appearance assumed in turn by self-valorizing value in the course of its life, we reach the following elucidation: capital is money, capital is commodities. In truth, however, value is here the subject of a process in which, while constantly assuming the form in turn of money and commodities, it changes its own magnitude, throws off surplus-value from itself considered as original value, and thus valorizes itself independently. For the movement in the course of which it adds surplus-value is its own movement, its valorization is therefore self-valorization [Selbstverwertung], By virtue of being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or at least lays golden eggs.

As the dominant subject [übergreifendes Subjekt] of this process, in which it alternately assumes and loses the form of money and the form of commodities, but preserves and expands itself through all these changes, value requires above all an independent form by means of which its identity with itself may be asserted. Only in the shape of money does it possess this form. Money therefore forms the starting-point and the conclusion of every valorization process. It was £100, and now it is £110, etc. But the money itself is only one of the two forms of value. Unless it takes the form of some commodity, it does not become capital. There is here no antagonism, as in the case of hoarding, between the money and commodities. The capitalist knows that all commodities, however tattered they may look, or however badly they may smell, are in faith and in truth money, are by nature circumcised Jews, and, what is more, a wonderful means for making still more money out of money. In simple circulation, the value of commodities attained at the most a form independent of their use-values, i.e. the form of money. But now, in the circulation M–C–M, value suddenly presents itself as a self-moving substance which passes through a process of its own, and for which commodities and money are both mere forms. But there is more to come: instead of simply representing the relations of commodities, it now enters into a private relationship with itself, as it were. It differentiates itself as original value from itself as surplus-value, just as God the Father differentiates himself from himself as God the Son, although both are of the same age and form, in fact one single person; for only by the surplus-value of £10 does the £100 originally advanced become capital, and as soon as this has happened, as soon as the son has been created and, through the son, the father, their difference vanishes again, and both become one, £110. Value therefore now becomes value in process, money in process, and, as such, capital. It comes out of circulation, enters into it again, preserves and multiplies itself within circulation, emerges from it with an increased size, and starts the same cycle again and again. M–M, ‘money which begets money’, such is the description of capital given by its first interpreters, the Mercantilists.

Buying in order to sell, or, more accurately, buying in order to sell dearer, M–C–M, seems admittedly to be a form peculiar to one kind of capital alone, merchants’ capital. But industrial capital too is money which has been changed into commodities, and reconverted into more money by the sale of these commodities. Events which take place outside the sphere of circulation, in the interval between buying and selling, do not affect the form of this movement. Lastly, in the case of interest-bearing capital, the circulation M–C–M′ presents itself in abridged form, in its final result and without any intermediate stage, in a concise style, so to speak, as M–M′, i.e. money which is worth more money, value which is greater than itself. M–C–M′ is in fact therefore the general formula for capital, in the form in which it appears directly in the sphere of circulation.

Contradictions in the general formula of capital

The form of circulation within which money is transformed into capital contradicts all the previously developed laws bearing on the nature of commodities, value, money and even circulation itself. What distinguishes this form from that of the simple circulation of commodities is the inverted order of succession of the two antithetical processes, sale and purchase. How can this purely formal distinction change the nature of these processes, as if by magic?

But that is not all. This inversion has no existence for two of the three persons who transact business together. As a capitalist, I buy commodities from A and sell them again to B, but as a simple owner of commodities I sell them to B and then purchase further commodities from A. For A and B this distinction does not exist. They step forth only as buyers or sellers of commodities. I myself confront them each time as a mere owner of either money or commodities, as a buyer or a seller, and what is more, in both sets of transactions I confront A only as a buyer and B only as a seller. I confront the one only as money, the other only as commodities, but neither or them as capital or a capitalist, or a representative of anything more than money or commodities, or of anything which might produce any effect beyond that produced by money or commodities. For me the purchase from A and the sale to B are part of a series. But the connection between these two acts exists for me alone. A does not trouble himself about my transaction with B, nor does B about my business with A. And if I offered to explain to them the meritorious nature of my action in inverting the order of succession, they would probably point out to me that I was mistaken as to that order, and that the whole transaction, instead of beginning with a purchase and ending with a sale, began, on the contrary, with a sale and was concluded with a purchase. In truth, my first act, the purchase, was from the standpoint of A a sale, and my second act, the sale, was from the standpoint of B a purchase. Not content with that, A and B would declare that the whole series was superfluous and nothing but hocus-pocus; that for the future A would buy direct from B, and B sell direct to A. With this the whole transaction would shrink down to a single, one-sided phase of the ordinary circulation of commodities, a mere sale from A’s point of view, and from B’s, a mere purchase. Thus the inversion of the order of succession does not take us outside the sphere of the simple circulation of commodities, and we must rather look to see whether this simple circulation, by its nature, might permit the valorization of the values entering into it and consequently the formation of surplus-value.

Let us take the process of circulation in a form in which it presents itself to us as the exchange of commodities pure and simple. This is always the case when two owners of commodities buy from each other, and on the date of settlement the amounts they owe to each other balance out equally. Money serves here as money of account, and expresses the values of the commodities in their prices, but does not itself confront the commodities in a material shape. In so far as use-values are concerned, it is clear that both parties may gain. Both of them part with commodities which are of no service to them as use-values, and receive others they need to use. And this may not be the only advantage gained. A, who sells wine and buys corn, possibly produces more wine in the same labour-time than B, the corn-farmer, could produce, and B, on the other hand, may produce more corn than A, the wine-grower, could produce. A may therefore get more corn for the same exchange-value, and B more wine, than each would respectively get without any exchange if they had to produce their own corn and wine. With reference, therefore, to use-value, it can indeed be said that ‘exchange is a transaction by which both sides gain’. It is otherwise with exchange-value.

‘A man who has plenty of wine and no corn treats with a man who has plenty of corn and no wine; an exchange takes place between them of corn to the value of 50, for wine of the same value. This act produces no increase of exchange-value either for the one or the other; for each of them already possessed, before the exchange, a value equal to that which he acquired by means of that operation.’

This situation is not altered by placing money, as a medium of circulation, between the commodities, and making the sale and the purchase into two physically distinct acts. The value of a commodity is expressed in its price before it enters into circulation, and it is therefore a pre-condition of circulation, not its result.

If we consider this in the abstract, i.e. disregarding circumstances which do not flow from the immanent laws of simple commodity circulation, all that happens in exchange (if we leave aside the replacing of one use-value by another) is a metamorphosis, a mere change in the form of the commodity. The same value, i.e. the same quantity of objectified social labour, remains throughout in the hands of the same commodity-owner, first in the shape of his own commodity, then in the shape of the money into which the commodity has been transformed, and finally in the shape of the commodity into which this money has been re-converted. This change of form does not imply any change in the magnitude of the value. But the change which the value of the commodity undergoes in this process is limited to a change in its money-form. This form exists first as the price of the commodity offered for sale, then as an actual sum of money, which was, however, already expressed in the price, and lastly as the price of an equivalent commodity. This change of form no more implies, taken alone, a change in the quantity of value than does the changing of a £5 note into sovereigns, half-sovereigns and shillings. In so far, therefore, as the circulation of commodities involves a change only in the form of their values, it necessarily involves the exchange of equivalents, provided the phenomenon occurs in its purity. The vulgar economists have practically no inkling of the nature of value; hence, whenever they wish to consider the phenomenon in its purity, after their fashion, they assume that supply and demand are equal, i.e. that they cease to have any effect at all. If, then, as regards the use-values exchanged, both buyer and seller may possibly gain something, this is not the case as regards exchange-values. Here we must rather say: ‘Where equality exists there is no gain.’ It is true that commodities may be sold at prices which diverge from their values, but this divergence appears as an infringement of the laws governing the exchange of commodities. In its pure form, the exchange of commodities is an exchange of equivalents, and thus it is not a method of increasing value.

Hence we see that behind all attempts to represent the circulation of commodities as a source of surplus-value, there lurks an inadvertent substitution, a confusion of use-value and exchange-value. In Condillac, for instance: ‘It is not true that in an exchange of commodities we give value for value. On the contrary, each of the two contracting parties in every case gives a less for a greater value…If we really exchanged equal values, neither party could make a profit. And yet they both gain, or ought to gain. Why? The value of a thing consists solely in its relation to our needs. What is more to the one is less to the other, and vice versa… It is not to be assumed that we offer for sale articles essential for our own consumption…We wish to part with a useless thing, in order to get one that we need; we want to give less for more…It was natural to think that, in an exchange, one value was given for another equal to it whenever each of the articles exchanged was of equal value with the same quantity of gold…But there is another point to be considered in our calculation. The question is, whether we both exchange something superfluous for something necessary.’ We see in this passage how Condillac not only confuses use-value with exchange-value, but in a really childish manner assumes that, in a society in which the production of commodities is well developed, each producer produces his own means of subsistence, and throws into circulation only what is superfluous, the excess over his own requirements. Still, Condillac’s argument is frequently repeated by modern economists, especially when the point is to show that the exchange of commodities in its developed form, commerce, is productive of surplus-value. For instance, ‘Commerce…adds value to products, for the same products in the hands of consumers are worth more than in the hands of producers, and it may strictly be considered an act of production.’ But commodities are not paid for twice over, once on account of their use-value, and a second time on account of their value. And though the use-value of a commodity is more serviceable to the buyer than to the seller, its money-form is more so to the seller. Would he sell it otherwise? We might therefore just as well say that the buyer performs what is ‘strictly’ an ‘act of production’ by converting stockings, for example, into money.

If commodities, or commodities and money, of equal exchange-value, and consequently equivalents, are exchanged, it is plain that no one abstracts more value from circulation than he throws into it. The formation of surplus-value does not take place. In its pure form, the circulation process necessitates the exchange of equivalents, but in reality processes do not take place in their pure form. Let us therefore assume an exchange of non-equivalents.

In any case the market for commodities is frequented only by owners of commodities, and the power which these persons exercise over each other is no other than the power of their commodities. The material variety of the commodities is the material driving force behind their exchange, and it makes buyers and sellers mutually dependent, because none of them possesses the object of his own need, and each holds in his own hand the object of another’s need. Apart from this material variety in their use-values, there is only one other mark of distinction between commodities, the distinction between their natural form and their converted form, between commodities and money. Consequently, the owners of commodities can be differentiated only into sellers, those who own commodities, and buyers, those who own money.

Suppose then that some inexplicable privilege allows the seller to sell his commodities above their value, to sell what is worth 100 for 110, therefore with a nominal price increase of 10 per cent. In this case the seller pockets a surplus-value of 10. But after he has sold he becomes a buyer. A third owner of commodities now comes to him as seller, and he too, for his part, enjoys the privilege of selling his commodities 10 per cent too dear. Our friend gained 10 as a seller only to lose it again as a buyer. In fact the net result is that all owners of commodities sell their goods to each other at 10 per cent above their value, which is exactly the same as if they sold them at their true value. A universal and nominal price increase of this kind has the same effect as if the values of commodities had been expressed for example in silver instead of in gold. The money-names or prices of the commodities would rise, but the relations between their values would remain unchanged.

Let us make the opposite assumption, that the buyer has the privilege of purchasing commodities below their value. In this case we do not even need to recall that he in his turn will become a seller. He was a seller before he became a buyer; he had already lost 10 per cent as a seller before he gained 10 per cent as a buyer. Everything remains as it was before.

The formation of surplus-value, and therefore the transformation of money into capital, can consequently be explained neither by assuming that commodities are sold above their value, nor by assuming that they are bought at less than their value.

The problem is in no way simplified if extraneous matters are smuggled in, as with Colonel Torrens: ‘Effectual demand consists in the power and inclination (!), on the part of consumers, to give for commodities, either by immediate or circuitous barter, some greater portion of…capital than their production costs.’ In circulation, producers and consumers confront each other only as buyers and sellers. To assert that the surplus-value acquired by the producer has its origin in the fact that consumers pay for commodities more than their value is only to disguise the following simple phrase: the owner of commodities possesses, as a seller, the privilege of selling too dear. The seller has himself produced the commodities or represents their producer, but the buyer has to no less an extent produced the commodities represented by his money, or represents the producer of those commodities. One producer is therefore confronted with another producer. The distinction between them is that one buys and the other sells. The fact that the owner of the commodities sells them at more than their value, under the designation of producer, and pays too much for them, under the designation of consumer, does not carry us a single step further.

The consistent upholders of the mistaken theory that surplus-value has its origin in a nominal rise of prices or in the privilege which the seller has of selling too dear assume therefore that there exists a class of buyers who do not sell, i.e. a class of consumers who do not produce. The existence of such a class is inexplicable from the standpoint we have so far reached, that of simple circulation. But let us anticipate. The money with which such a class is constantly making purchases must constantly flow into its coffers without any exchange, gratis, whether by might or by right, from the pockets of the commodity-owners themselves. To sell commodities at more than their value to such a class is only to get back again, by swindling, a part of the money previously handed over for nothing. Thus, the towns of Asia Minor paid a yearly money tribute to ancient Rome. With this money Rome bought commodities from them, and bought them too dear. The provincials cheated the Romans, and in this way swindled back from their conquerors a portion of the tribute in the course of trade. Yet, for all that, the provincials remained the ones who had been cheated. Their goods were still paid for with their own money. That is not the way to get rich or to create surplus-value.

Let us therefore keep within the limits of the exchange of commodities, where sellers are buyers, and buyers are sellers. Our perplexity may perhaps have arisen from conceiving people merely as personified categories, instead of as individuals.

A may be clever enough to get the advantage of B and C without their being able to take their revenge. A sells wine worth £40 to B, and obtains from him in exchange corn to the value of £50. A has converted his £40 into £50, has made more money out of less, and has transformed his commodities into capital. Let us examine this a little more closely. Before the exchange we had £40 of wine in the hands of A, and £50 worth of corn in those of B, a total value of £90. After the exchange we still have the same total value of £90. The value in circulation has not increased by one iota; all that has changed is its distribution between A and B. What appears on one side as a loss of value appears on the other side as surplus-value; what appears on one side as a minus appears on the other side as a plus. The same change would have taken place if A, without the disguise provided by the exchange, had directly stolen the £10 from B. The sum of the values in circulation can clearly not be augmented by any change in their distribution, any more than a Jew can increase the quantity of the precious metals in a country by selling a farthing from the time of Queen Anne for a guinea. The capitalist class of a given country, taken as a whole, cannot defraud itself.

However much we twist and turn, the final conclusion remains the same. If equivalents are exchanged, no surplus-value results, and if non-equivalents are exchanged, we still have no surplus-value. Circulation, or the exchange of commodities, creates no value.

It can be understood, therefore, why, in our analysis of the primary form of capital, the form in which it determines the economic organization of modern society, we have entirely left out of consideration its well-known and so to speak antediluvian forms, merchants’ capital and usurers’ capital.

The form M–C–M′, buying in order to sell dearer, is at its purest in genuine merchants’ capital. But the whole of this movement takes place within the sphere of circulation. Since, however, it is impossible, by circulation alone, to explain the transformation of money into capital, and the formation of surplus-value, merchants’ capital appears to be an impossibility, as long as equivalents are exchanged; it appears, therefore, that it can only be derived from the twofold advantage gained, over both the selling and the buying producers, by the merchant who parasitically inserts himself between them. It is in this sense that Franklin says ‘war is robbery, commerce is cheating’. If the valorization of merchants’ capital is not to be explained merely by frauds practised on the producers of commodities, a long series of intermediate steps would be necessary, which are as yet entirely absent, since here our only assumption is the circulation of commodities and its simple elements.

What we have said with reference to merchants’ capital applies still more to usurers’ capital. In merchants’ capital the two extremes, the money which is thrown upon the market and the augmented money which is withdrawn from the market, are at least mediated through a purchase and a sale, through the movement of circulation. In usurers’ capital the form M–C–M′ is reduced to the unmediated extremes M–M′, money which is exchanged for more money, a form incompatible with the nature of money and therefore inexplicable from the standpoint of the exchange of commodities. Hence Aristotle says: ‘Since chrematistics is a double science, one part belonging to commerce, the other to economics, the latter being necessary and praiseworthy, the former based on circulation and with justice disapproved (for it is not based on Nature, but on mutual cheating), the usurer is most rightly hated, because money itself is the source of his gain, and is not used for the purposes for which it was invented. For it originated for the exchange of commodities, but interest makes out of money, more money. Hence its name.’ (τóxoς interest and offspring.) ‘For the offspring resembles the parent. But interest is money, so that of all modes of making a living, this is the most contrary to Nature.’

In the course of our investigation, we shall find that both merchants’ capital and interest-bearing capital are derivative forms, and at the same time it will become clear why, historically, these two forms appear before the modern primary form of capital.

We have shown that surplus-value cannot arise from circulation, and therefore that, for it to be formed, something must take place in the background which is not visible in the circulation itself. But can surplus-value originate anywhere else than in circulation, which is the sum total of all the mutual relations of commodity-owners? Outside circulation, the commodity-owner only stands in a relation to his own commodity. As far as the value of that commodity is concerned, the relation is limited to this, that the commodity contains a quantity of his own labour which is measured according to definite social laws. This quantity of labour is expressed by the magnitude of the value of his commodity, and since the value is reckoned in money of account, this quantity is also expressed by the price, £10 for instance. But his labour does not receive a double representation: it is not represented both in the value of the commodity and in an excess quantity over and above that value, it is not represented in a price of 10 which is simultaneously a price of 11, i.e. in a value which is greater than itself. The commodity-owner can create value by his labour, but he cannot create values which can valorize themselves. He can increase the value of his commodity by adding fresh labour, and therefore more value, to the value in hand, by making leather into boots, for instance. The same material now has more value, because it contains a greater quantity of labour. The boots have therefore more value than the leather, but the value of the leather remains what it was. It has not valorized itself, it has not annexed surplus-value during the making of the boots. It is therefore impossible that, outside the sphere of circulation, a producer of commodities can, without coming into contact with other commodity-owners, valorize value, and consequently transform money or commodities into capital.

Capital cannot therefore arise from circulation, and it is equally impossible for it to arise apart from circulation. It must have its origin both in circulation and not in circulation.

We therefore have a double result.

The transformation of money into capital has to be developed on the basis of the immanent laws of the exchange of commodities, in such a way that the starting-point is the exchange of equivalents. The money-owner, who is as yet only a capitalist in larval form, must buy his commodities at their value, sell them at their value, and yet at the end of the process withdraw more value from circulation than he threw into it at the beginning. His emergence as a butterfly must, and yet must not, take place in the sphere of circulation. These are the conditions of the problem. Hic Rhodus, hic salta!

The buying and selling of labour-power

The change in value of the money which has to be transformed into capital cannot take place in the money itself, since in its function as means of purchase and payment it does no more than realize [realisieren] the price of the commodity it buys or pays for, while, when it sticks to its own peculiar form, it petrifies into a mass of value of constant magnitude. Just as little can this change originate in the second act of circulation, the resale of the commodity, for this act merely converts the commodity from its natural form back into its money-form. The change must therefore take place in the commodity which is bought in the first act of circulation, M–C, but not in its value, for it is equivalents which are being exchanged, and the commodity is paid for at its full value. The change can therefore originate only in the actual use-value of the commodity, i.e. in its consumption. In order to extract value out of the consumption of a commodity, our friend the money-owner must be lucky enough to find within the sphere of circulation, on the market, a commodity whose use-value possesses the peculiar property of being a source of value, whose actual consumption is therefore itself an objectification [Vergegenständlichung] of labour, hence a creation of value. The possessor of money does find such a special commodity on the market: the capacity for labour [Arbeitsvermögen], in other words labour-power [Arbeitskraft].

We mean by labour-power, or labour-capacity, the aggregate of those mental and physical capabilities existing in the physical form, the living personality, of a human being, capabilities which he sets in motion whenever he produces a use-value of any kind.

But in order that the owner of money may find labour-power on the market as a commodity, various conditions must first be fulfilled. In and for itself, the exchange of commodities implies no other relations of dependence than those which result from its own nature. On this assumption, labour-power can appear on the market as a commodity only if, and in so far as, its possessor, the individual whose labour-power it is, offers it for sale or sells it as a commodity. In order that its possessor may sell it as a commodity, he must have it at his disposal, he must be the free proprietor of his own labour-capacity, hence of his person. He and the owner of money meet in the market, and enter into relations with each other on a footing of equality as owners of commodities, with the sole difference that one is a buyer, the other a seller; both are therefore equal in the eyes of the law. For this relation to continue, the proprietor of labour-power must always sell it for a limited period only, for if he were to sell it in a lump, once and for all, he would be selling himself, converting himself from a free man into a slave, from an owner of a commodity into a commodity. He must constantly treat his labour-power as his own property, his own commodity, and he can do this only by placing it at the disposal of the buyer, i.e. handing it over to the buyer for him to consume, for a definite period of time, temporarily. In this way he manages both to alienate [veräussern] his labour-power and to avoid renouncing his rights of ownership over it.

The second essential condition which allows the owner of money to find labour-power in the market as a commodity is this, that the possessor of labour-power, instead of being able to sell commodities in which his labour has been objectified, must rather be compelled to offer for sale as a commodity that very labour-power which exists only in his living body.

In order that a man may be able to sell commodities other than his labour-power, he must of course possess means of production, such as raw materials, instruments of labour, etc. No boots can be made without leather. He requires also the means of subsistence. Nobody – not even a practitioner of Zukunftsmusik – can live on the products of the future, or on use-values whose production has not yet been completed; just as on the first day of his appearance on the world’s stage, man must still consume every day, before and while he produces. If products are produced as commodities, they must be sold after they have been produced, and they can only satisfy the producer’s needs after they have been sold. The time necessary for sale must be counted as well as the time of production.

For the transformation of money into capital, therefore, the owner of money must find the free worker available on the commodity-market; and this worker must be free in the double sense that as a free individual he can dispose of his labour-power as his own commodity, and that, on the other hand, he has no other commodity for sale, i.e. he is rid of them, he is free of all the objects needed for the realization [Verwirklichung] of his labour-power.

Why this free worker confronts him in the sphere of circulation is a question which does not interest the owner of money, for he finds the labour-market in existence as a particular branch of the commodity-market. And for the present it interests us just as little. We confine ourselves to the fact theoretically, as he does practically. One thing, however, is clear: nature does not produce on the one hand owners of money or commodities, and on the other hand men possessing nothing but their own labour-power. This relation has no basis in natural history, nor does it have a social basis common to all periods of human history. It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older formations of social production.

The economic categories already discussed similarly bear a historical imprint. Definite historical conditions are involved in the existence of the product as a commodity. In order to become a commodity, the product must cease to be produced as the immediate means of subsistence of the producer himself. Had we gone further, and inquired under what circumstances all, or even the majority of products take the form of commodities, we should have found that this only happens on the basis of one particular mode of production, the capitalist one. Such an investigation, however, would have been foreign to the analysis of commodities. The production and circulation of commodities can still take place even though the great mass of the objects produced are intended for the immediate requirements of their producers, and are not turned into commodities, so that the process of social production is as yet by no means dominated in its length and breadth by exchange-value. The appearance of products as commodities requires a level of development of the division of labour within society such that the separation of use-value from exchange-value, a separation which first begins with barter, has already been completed. But such a degree of development is common to many economic formations of society [ökonomische Gesellschaftsformationen], with the most diverse historical characteristics.

If we go on to consider money, its existence implies that a definite stage in the development of commodity exchange has been reached. The various forms of money (money as the mere equivalent of commodities, money as means of circulation, money as means of payment, money as hoard, or money as world currency) indicate very different levels of the process of social production, according to the extent and relative preponderance of one function or the other. Yet we know by experience that a relatively feeble development of commodity circulation suffices for the creation of all these forms. It is otherwise with capital. The historical conditions of its existence are by no means given with the mere circulation of money and commodities. It arises only when the owner of the means of production and subsistence finds the free worker available, on the market, as the seller of his own labour-power. And this one historical pre-condition comprises a world’s history. Capital, therefore, announces from the outset a new epoch in the process of social production.

This peculiar commodity, labour-power, must now be examined more closely. Like all other commodities it has a value. How is that value determined?

The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this specific article. In so far as it has value, it represents no more than a definite quantity of the average social labour objectified in it. Labour-power exists only as a capacity of the living individual. Its production consequently presupposes his existence. Given the existence of the individual, the production of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a certain quantity of the means of subsistence. Therefore the labour-time necessary for the production of labour-power is the same as that necessary for the production of those means of subsistence; in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of its owner. However, labour-power becomes a reality only by being expressed; it is activated only through labour. But in the course of this activity, i.e. labour, a definite quantity of human muscle, nerve, brain, etc. is expended, and these things have to be replaced. Since more is expended, more must be received. If the owner of labour-power works today, tomorrow he must again be able to repeat the same process in the same conditions as regards health and strength. His means of subsistence must therefore be sufficient to maintain him in his normal state as a working individual. His natural needs, such as food, clothing, fuel and housing vary according to the climatic and other physical peculiarities of his country. On the other hand, the number and extent of his so-called necessary requirements, as also the manner in which they are satisfied, are themselves products of history, and depend therefore to a great extent on the level of civilization attained by a country; in particular they depend on the conditions in which, and consequently on the habits and expectations with which, the class of free workers has been formed. In contrast, therefore, with the case of other commodities, the determination of the value of labour-power contains a historical and moral element Nevertheless, in a given country at a given period, the average amount of the means of subsistence necessary for the worker is a known datum.

The owner of labour-power is mortal. If then his appearance in the market is to be continuous, and the continuous transformation of money into capital assumes this, the seller of labour-power must perpetuate himself ‘in the way that every living individual perpetuates himself, by procreation’. The labour-power withdrawn from the market by wear and tear, and by death, must be continually replaced by, at the very least, an equal amount of fresh labour-power. Hence the sum of means of subsistence necessary for the production of labour-power must include the means necessary for the worker’s replacements, i.e. his children, in order that this race of peculiar commodity-owners may perpetuate its presence on the market.

In order to modify the general nature of the human organism in such a way that it acquires skill and dexterity in a given branch of industry, and becomes labour-power of a developed and specific kind, a special education or training is needed, and this in turn costs an equivalent in commodities of a greater or lesser amount The costs of education vary according to the degree of complexity of the labour-power required. These expenses (exceedingly small in the case of ordinary labour-power) form a part of the total value spent in producing it.

The value of labour-power can be resolved into the value of a definite quantity of the means of subsistence. It therefore varies with the value of the means of subsistence, i.e. with the quantity of labour-time required to produce them.

Some of the means of subsistence, such as food and fuel, are consumed every day, and must therefore be replaced every day. Others, such as clothes and furniture, last for longer periods and need to be replaced only at longer intervals. Articles of one kind must be bought or paid for every day, others every week, others every quarter and so on. But in whatever way the sum total of these outlays may be spread over the year, they must be covered by the average income, taking one day with another. If the total of the commodities required every day for the production of labour-power = A, and of those required every week = B, and of those required every quarter = C, and so on, the daily average of these commodities =


Suppose that this mass of commodities required for the average day contains 6 hours of social labour, then every day half a day of average social labour is objectified in labour-power, or in other words half a day of labour is required for the daily production of labour-power. This quantity of labour forms the value of a day’s labour-power, or the value of the labour-power reproduced every day. If half a day of average social labour is present in 3 shillings, then 3 shillings is the price corresponding to the value of a day’s labour-power. If its owner therefore offers it for sale at 3 shillings a day, its selling price is equal to its value, and according to our original assumption the owner of money, who is intent on transforming his 3 shillings into capital, pays this value.

The ultimate or minimum limit of the value of labour-power is formed by the value of the commodities which have to be supplied every day to the bearer of labour-power, the man, so that he can renew his life-process. That is to say, the limit is formed by the value of the physically indispensable means of subsistence. If the price of labour-power falls to this minimum, it falls below its value, since under such circumstances it can be maintained and developed only in a crippled state, and the value of every commodity is determined by the labour-time required to provide it in its normal quality.

It is an extraordinarily cheap kind of sentimentality which declares that this method of determining the value of labour-power, a method prescribed by the very nature of the case, is brutal, and which laments with Rossi in this matter: ‘To conceive capacity for labour (puissance de travail) in abstraction from the workers’ means of subsistence during the production process is to conceive a phantom (être de raison). When we speak of labour, or capacity for labour, we speak at the same time of the worker and his means of subsistence, of the worker and his wages.’ When we speak of capacity for labour, we do not speak of labour, any more than we speak of digestion when we speak of capacity for digestion. As is well known, the latter process requires something more than a good stomach. When we speak of capacity for labour, we do not abstract from the necessary means of subsistence. On the contrary, their value is expressed in its value. If his capacity for labour remains unsold, this is of no advantage to the worker. He will rather feel it to be a cruel nature-imposed necessity that his capacity for labour has required for its production a definite quantity of the means of subsistence, and will continue to require this for its reproduction. Then, like Sismondi, he will discover that ‘the capacity for labour…is nothing unless it is sold’.

One consequence of the peculiar nature of labour-power as a commodity is this, that it does not in reality pass straight away into the hands of the buyer on the conclusion of the contract between buyer and seller. Its value, like that of every other commodity, is already determined before it enters into circulation, for a definite quantity of social labour has been spent on the production of the labour-power. But its use-value consists in the subsequent exercise of that power. The alienation [Veräusserung] of labour-power and its real manifestation [Äusserung], i.e. the period of its existence as a use-value, do not coincide in time. But in those cases in which the formal alienation by sale of the use-value of a commodity is not simultaneous with its actual transfer to the buyer, the money of the buyer serves as means of payment.

In every country where the capitalist mode of production prevails, it is the custom not to pay for labour-power until it has been exercised for the period fixed by the contract, for example, at the end of each week. In all cases, therefore, the worker advances the use-value of his labour-power to the capitalist. He lets the buyer consume it before he receives payment of the price. Everywhere the worker allows credit to the capitalist. That this credit is no mere fiction is shown not only by the occasional loss of the wages the worker has already advanced, when a capitalist goes bankrupt, but also by a series of more long-lasting consequences.

Whether money serves as a means of purchase or a means of payment, this does not alter the nature of the exchange of commodities. The price of the labour-power is fixed by the contract, although it is not realized till later, like the rent of a house. The labour-power is sold, although it is paid for only at a later period. It will therefore be useful, if we want to conceive the relation in its pure form, to presuppose for the moment that the possessor of labour-power, on the occasion of each sale, immediately receives the price stipulated in the contract.

We now know the manner of determining the value paid by the owner of money to the owner of this peculiar commodity, labour-power. The use-value which the former gets in exchange manifests itself only in the actual utilization, in the process of the consumption of the labour-power. The money-owner buys everything necessary for this process, such as raw material, in the market, and pays the full price for it. The process of the consumption of labour-power is at the same time the production process of commodities and of surplus-value. The consumption of labour-power is completed, as in the case of every other commodity, outside the market or the sphere of circulation. Let us therefore, in company with the owner of money and the owner of labour-power, leave this noisy sphere, where everything takes place on the surface and in full view of everyone, and follow them into the hidden abode of production, on whose threshold there hangs the notice ‘No admittance except on business’. Here we shall see, not only how capital produces, but how capital is itself produced. The secret of profit-making must at last be laid bare.

The sphere of circulation or commodity exchange, within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. It is the exclusive realm of Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, let us say of labour-power, are determined only by their own free will. They contract as free persons, who are equal before the law. Their contract is the final result in which their joint will finds a common legal expression. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent Property, because each disposes only of what is his own. And Bentham, because each looks only to his own advantage. The only force bringing them together, and putting them into relation with each other, is the selfishness, the gain and the private interest of each. Each pays heed to himself only, and no one worries about the others. And precisely for that reason, either in accordance with the pre-established harmony of things, or under the auspices of an omniscient providence, they all work together to their mutual advantage, for the common weal, and in the common interest.

When we leave this sphere of simple circulation or the exchange of commodities, which provides the ‘free-trader vulgaris’ with his views, his concepts and the standard by which he judges the society of capital and wage-labour, a certain change takes place, or so it appears, in the physiognomy of our dramatis personae. He who was previously the money-owner now strides out in front as a capitalist; the possessor of labour-power follows as his worker. The one smirks self-importantly and is intent on business; the other is timid and holds back, like someone who has brought his own hide to market and now has nothing else to expect but – a tanning.

Production of absolute surplus-value

The labour-process and the process of producing surplus-value

The labour-process or the production of use-values

The use of labour-power is labour itself. The purchaser of labour-power consumes it by setting the seller of it to work. By working, the latter becomes in actuality what previously he only was potentially, namely labour-power in action, a worker. In order to embody his labour in commodities, he must above all embody it in use-values, things which serve to satisfy needs of one kind or another. Hence what the capitalist sets the worker to produce is a particular use-value, a specific article. The fact that the production of use-values, or goods, is carried on under the control of a capitalist and on his behalf does not alter the general character of that production. We shall therefore, in the first place, have to consider the labour process independently of any specific social formation.

Labour is, first of all, a process between man and nature, a process by which man, through his own actions, mediates, regulates and controls the metabolism between himself and nature. He confronts the materials of nature as a force of nature. He sets in motion the natural forces which belong to his own body, his arms, legs, head and hands, in order to appropriate the materials of nature in a form adapted to his own needs. Through this movement he acts upon external nature and changes it, and in this way he simultaneously changes his own nature. He develops the potentialities slumbering within nature, and subjects the play of its forces to his own sovereign power. We are not dealing here with those first instinctive forms of labour which remain on the animal level. An immense interval of time separates the state of things in which a man brings his labour-power to market for sale as a commodity from the situation when human labour had not yet cast off its first instinctive form. We presuppose labour in a form in which it is an exclusively human characteristic. A spider conducts operations which resemble those of the weaver, and a bee would put many a human architect to shame by the construction of its honeycomb cells. But what distinguishes the worst architect from the best of bees is that the architect builds the cell in his mind before he constructs it in wax. At the end of every labour process, a result emerges which had already been conceived by the worker at the beginning, hence already existed ideally. Man not only effects a change of form in the materials of nature; he also realizes [verwirklicht] his own purpose in those materials. And this is a purpose he is conscious of, it determines the mode of his activity with the rigidity of a law, and he must subordinate his will to it. This subordination is no mere momentary act. Apart from the exertion of the working organs, a purposeful will is required for the entire duration of the work. This means close attention. The less he is attracted by the nature of the work and the way in which it has to be accomplished, and the less, therefore, he enjoys it as the free play of his own physical and mental powers, the closer his attention is forced to be.

The simple elements of the labour process are

  1. purposeful activity, that is work itself,
  2. the object on which that work is performed, and
  3. the instruments of that work.

The land (and this, economically speaking, includes water) in its original state in which it supplies man with necessaries or means of subsistence ready to hand is available without any effort on his part as the universal material for human labour. All those things which labour merely separates from immediate connection with their environment are objects of labour spontaneously provided by nature, such as fish caught and separated from their natural element, namely water, timber felled in virgin forests, and ores extracted from their veins. If, on the other hand, the object of labour has, so to speak, been filtered through previous labour, we call it raw material. For example, ore already extracted and ready for washing. All raw material is an object of labour [Arbeitsgegenstand]. but not every object of labour is raw material; the object of labour counts as raw material only when it has already undergone some alteration by means of labour.

An instrument of labour is a thing, or a complex of things, which the worker interposes between himself and the object of his labour and which serves as a conductor, directing his activity onto that object. He makes use of the mechanical, physical and chemical properties of some substances in order to set them to work on other substances as instruments of his power, and in accordance with his purposes. Leaving out of consideration such ready-made means of subsistence as fruits, in gathering which a man’s bodily organs alone serve as the instruments of his labour, the object the worker directly takes possession of is not the object of labour but its instrument. Thus nature becomes one of the organs of his activity, which he annexes to his own bodily organs, adding stature to himself in spite of the Bible. As the earth is his original larder, so too it is his original tool house. It supplies him, for instance, with stones for throwing, grinding, pressing, cutting, etc. The earth itself is an instrument of labour, but its use in this way, in agriculture, presupposes a whole series of other instruments and a comparatively high stage of development of labour-power. As soon as the labour process has undergone the slightest development, it requires specially prepared instruments. Thus we find stone implements and weapons in the oldest caves. In the earliest period of human history, domesticated animals, i.e. animals that have undergone modification by means of labour, that have been bred specially, play the chief part as instruments of labour along with stones, wood, bones and shells, which have also had work done on them. The use and construction of instruments of labour, although present in germ among certain species of animals, is characteristic of the specifically human labour process, and Franklin therefore defines man as ‘a tool-making animal’. Relics of bygone instruments of labour possess the same importance for the investigation of extinct economic formations of society as do fossil bones for the determination of extinct species of animals. It is not what is made but how, and by what instruments of labour, that distinguishes different economic epochs. Instruments of labour not only supply a standard of the degree of development which human labour has attained, but they also indicate the social relations within which men work. Among the instruments of labour, those of a mechanical kind, which, taken as a whole, we may call the bones and muscles of production, offer much more decisive evidence of the character of a given social epoch of production than those which, like pipes, tubs, baskets, jars etc., serve only to hold the materials for labour, and may be given the general denotation of the vascular system of production. The latter first begins to play an important part in the chemical industries.

In a wider sense we may include among the instruments of labour, in addition to things through which the impact of labour on its object is mediated, and which therefore, in one way or another, serve as conductors of activity, all the objective conditions necessary for carrying on the labour process. These do not enter directly into the process, but without them it is either impossible for it to take place, or possible only to a partial extent. Once again, the earth itself is a universal instrument of this kind, for it provides the worker with the ground beneath his feet and a ‘field of employment’ for his own particular process. Instruments of this kind, which have already been mediated through past labour, include workshops, canals, roads, etc.

In the labour process, therefore, man’s activity, via the instruments of labour, effects an alteration in the object of labour which was intended from the outset. The process is extinguished in the product. The product of the process is a use-value, a piece of natural material adapted to human needs by means of a change in its form. Labour has become bound up in its object: labour has been objectified, the object has been worked on. What on the side of the worker appeared in the form of unrest [Unruhe] now appears, on the side of the product, in the form of being [Sein], as a fixed, immobile characteristic. The worker has spun, and the product is a spinning.

If we look at the whole process from the point of view of its result, the product, it is plain that both the instruments and the object of labour are means of production and that the labour itself is productive labour.

Although a use-value emerges from the labour process, in the form of a product, other use-values, products of previous labour, enter into it as means of production. The same use-value is both the product of a previous process, and a means of production in a later process. Products are therefore not only results of labour, but also its essential conditions.

With the exception of the extractive industries, such as mining, hunting, fishing (and agriculture, but only in so far as it starts by breaking up virgin soil), where the material for labour is provided directly by nature, all branches of industry deal with raw material, i.e. an object of labour which has already been filtered through labour, which is itself already a product of labour. An example is seed in agriculture. Animals and plants which we are accustomed to consider as products of nature, may be, in their present form, not only products of, say, last year’s labour, but the result of a gradual transformation continued through many generations under human control, and through the agency of human labour. As regards the instruments of labour in particular, they show traces of the labour of past ages, even to the most superficial observer, in the great majority of cases.

Raw material may either form the principal substance of a product, or it may enter into its formation only as an accessory. An accessory may be consumed by the instruments of labour, such as coal by a steam-engine, oil by a wheel, hay by draft-horses, or it may be added to the raw material in order to produce some physical modification of it, as chlorine is added to unbleached linen, coal to iron, dye to wool, or again it may help to accomplish the work itself, as in the case of the materials used for heating and lighting workshops. The distinction between principal substance and accessory vanishes in the chemical industries proper, because there none of the raw material re-appears, in its original composition, in the substance of the product.

Every object possesses various properties, and is thus capable of being applied to different uses. The same product may therefore form the raw material for very different labour processes. Corn, for example, is a raw material for millers, starch-manufacturers, distillers and cattle-breeders. It also enters as raw material into its own production in the shape of seed; coal both emerges from the mining industry as a product and enters into it as a means of production.

Again, a particular product may be used as both instrument of labour and raw material in the same process. Take, for instance, the fattening of cattle, where the animal is the raw material, and at the same time an instrument for the production of manure.

A product, though ready for immediate consumption, may nevertheless serve as raw material for a further product, as grapes do when they become the raw material for wine. On the other hand, labour may release its product in such a form that it can only be used as raw material. Raw material in this condition, such as cotton, thread and yarn, is called semi-manufactured, but should rather be described as having been manufactured up to a certain level. Although itself already a product, this raw material may have to go through a whole series of different processes, and in each of these it serves as raw material, changing its shape constantly, until it is precipitated from the last process of the series in finished form, either as means of subsistence or as instrument of labour.

Hence we see that whether a use-value is to be regarded as raw material, as instrument of labour or as product is determined entirely by its specific function in the labour process, by the position it occupies there: as its position changes, so do its determining characteristics.

Therefore, whenever products enter as means of production into new labour processes, they lose their character of being products and function only as objective factors contributing to living labour. A spinner treats spindles only as a means for spinning, and flax as the material he spins. Of course it is impossible to spin without material and spindles; and therefore the availability of these products is presupposed at the beginning of the spinning operation. But in the process itself, the fact that they are the products of past labour is as irrelevant as, in the case of the digestive process, the fact that bread is the product of the previous labour of the farmer, the miller and the baker. On the contrary, it is by their imperfections that the means of production in any process bring to our attention their character of being the products of past labour. A knife which fails to cut, a piece of thread which keeps on snapping, forcibly remind us of Mr A, the cutler, or Mr B, the spinner. In a successful product, the role played by past labour in mediating its useful properties has been extinguished.

A machine which is not active in the labour process is useless. In addition, it falls prey to the destructive power of natural processes. Iron rusts; wood rots. Yarn with which we neither weave nor knit is cotton wasted. Living labour must seize on these things, awaken them from the dead, change them from merely possible into real and effective use-values. Bathed in the fire of labour, appropriated as part of its organism, and infused with vital energy for the performance of the functions appropriate to their concept and to their vocation in the process, they are indeed consumed, but to some purpose, as elements in the formation of new use-values, new products, which are capable of entering into individual consumption as means of subsistence or into a new labour process as means of production.

If then, on the one hand, finished products are not only results of the labour process, but also conditions of its existence, their induction into the process, their contact with living labour, is the sole means by which they can be made to retain their character of use-values, and be realized.

Labour uses up its material elements, its objects and its instruments. It consumes them, and is therefore a process of consumption. Such productive consumption is distinguished from individual consumption by this, that the latter uses up products as means of subsistence for the living individual; the former, as means of subsistence for labour, i.e. for the activity through which the living individual’s labour-power manifests itself. Thus the product of individual consumption is the consumer himself; the result of productive consumption is a product distinct from the consumer.

In so far then as its instruments and its objects are themselves products, labour consumes products in order to create products, or in other words consumes one set of products by turning them into means of production for another set. But just as the labour process originally took place only between man and the earth (which was available independently of any human action), so even now we still employ in the process many means of production which are provided directly by nature and do not represent any combination of natural substances with human labour.

The labour process, as we have just presented it in its simple and abstract elements, is purposeful activity aimed at the production of use-values. It is an appropriation of what exists in nature for the requirements of man. It is the universal condition for the metabolic interaction [Stoffwechsel] between man and nature, the everlasting nature-imposed condition of human existence, and it is therefore independent of every form of that existence, or rather it is common to all forms of society in which human beings live. We did not, therefore, have to present the worker in his relationship with other workers; it was enough to present man and his labour on one side, nature and its materials on the other. The taste of porridge does not tell us who grew the oats, and the process we have presented does not reveal the conditions under which it takes place, whether it is happening under the slave-owner’s brutal lash or the anxious eye of the capitalist, whether Cincinnatus undertakes it in tilling his couple of acres, or a savage, when he lays low a wild beast with a stone.

Let us now return to our would-be capitalist. We left him just after he had purchased, in the open market, all the necessary factors of the labour process; its objective factors, the means of production, as well as its personal factor, labour-power. With the keen eye of an expert, he has selected the means of production and the kind of labour-power best adapted to his particular trade, be it spinning, bootmaking or any other kind. He then proceeds to consume the commodity, the labour-power he has just bought, i.e. he causes the worker, the bearer of that labour-power, to consume the means of production by his labour. The general character of the labour process is evidently not changed by the fact that the worker works for the capitalist instead of for himself; moreover, the particular methods and operations employed in bootmaking or spinning are not immediately altered by the intervention of the capitalist He must begin by taking the labour-power as he finds it in the market, and consequently he must be satisfied with the kind of labour which arose in a period when there were as yet no capitalists. The transformation of the mode of production itself which results from the subordination of labour to capital can only occur later on, and we shall therefore deal with it in a later chapter.

The labour process, when it is the process by which the capitalist consumes labour-power, exhibits two characteristic phenomena.

First, the worker works under the control of the capitalist to whom his labour belongs; the capitalist takes good care that the work is done in a proper manner, and the means of production are applied directly to the purpose, so that the raw material is not wasted, and the instruments of labour are spared, i.e. only worn to the extent necessitated by their use in the work.

Secondly, the product is the property of the capitalist and not that of the worker, its immediate producer. Suppose that a capitalist pays for a day’s worth of labour-power; then the right to use that power for a day belongs to him, just as much as the right to use any other commodity, such as a horse he had hired for the day. The use of a commodity belongs to its purchaser, and the seller of labour-power, by giving his labour, does no more, in reality, than part with the use-value he has sold. From the instant he steps into the workshop, the use-value of his labour-power and therefore also its use, which is labour, belongs to the capitalist. By the purchase of labour-power, the capitalist incorporates labour, as a living agent of fermentation, into the lifeless constituents of the product, which also belong to him. From his point of view, the labour process is nothing more than the consumption of the commodity purchased, i.e. of labour-power; but he can consume this labour-power only by adding the means of production to it. The labour process is a process between things the capitalist has purchased, things which belong to him. Thus the product of this process belongs to him just as much as the wine which is the product of the process of fermentation going on in his cellar.

The production of surplus-value

The product – the property of the capitalist – is a use-value, as yarn, for example, or boots. But although boots are, to some extent, the basis of social progress, and our capitalist is decidedly in favour of progress, he does not manufacture boots for their own sake. Use-value is certainly not la chose qu’on aime pour lui-même in the production of commodities. Use-values are produced by capitalists only because and in so far as they form the material substratum of exchange-value, are the bearers of exchange-value. Our capitalist has two objectives: in the first place, he wants to produce a use-value which has exchange-value, i.e. an article destined to be sold, a commodity; and secondly he wants to produce a commodity greater in value than the sum of the values of the commodities used to produce it, namely the means of production and the labour-power he purchased with his good money on the open market. His aim is to produce not only a use-value, but a commodity; not only use-value, but value; and not just value, but also surplus-value.

It must be borne in mind that we are now dealing with the production of commodities, and that up to this point we have considered only one aspect of the process. Just as the commodity itself is a unity formed of use-value and value, so the process of production must be a unity, composed of the labour process and the process of creating value [Wertbildungsprozess].

Let us now examine production as a process of creating value.

We know that the value of each commodity is determined by the quantity of labour materialized in its use-value, by the labour-time socially necessary to produce it. This rule also holds good in the case of the product handed over to the capitalist as a result of the labour-process. Assuming this product to be yarn, our first step is to calculate the quantity of labour objectified in it.

For spinning the yarn, raw material is required; suppose in this case 10 lb. of cotton. We have no need at present to investigate the value of this cotton, for our capitalist has, we will assume, bought it at its full value, say 10 shillings. In this price the labour required for the production of the cotton is already expressed in terms of average social labour. We will further assume that the wear and tear of the spindle, which for our present purpose may represent all other instruments of labour employed, amounts to the value of 2 shillings. If then, twenty-four hours of labour, or two working days, are required to produce the quantity of gold represented by 12 shillings, it follows first of all that two days of labour are objectified in the yarn.

We should not let ourselves be misled by the circumstance that the cotton has changed its form and the worn-down portion of the spindle has entirely disappeared. According to the general law of value, if the value of 40 lb. of yarn = the value of 40 lb. of cotton + the value of a whole spindle, i.e. if the same amount of labour-time is required to produce the commodities on either side of this equation, then 10 lb. of yarn are an equivalent for 10 lb. of cotton, together with a quarter of a spindle. In the case we are considering, the same amount of labour-time is represented in the 10 lb. of yarn on the one hand, and in the 10 lb. of cotton and the fraction of a spindle on the other. It is therefore a matter of indifference whether value appears in cotton, in a spindle or in yarn: its amount remains the same. The spindle and cotton, instead of resting quietly side by side, join together in the process, their forms are altered, and they are turned into yarn; but their value is no more affected by this fact than it would be if they had been simply exchanged for their equivalent in yarn.

The labour-time required for the production of the cotton, the raw material of the yarn, is part of the labour necessary to produce the yarn, and is therefore contained in the yarn. The same applies to the labour embodied in the spindle, without whose wear and tear the cotton could not be spun.

Hence in determining the value of the yarn, or the labour-time required for its production, all the special processes carried on at various times and in different places which were necessary, first to produce the cotton and the wasted portion of the spindle, and then with the cotton and the spindle to spin the yarn, may together be looked on as different and successive phases of the same labour process. All the labour contained in the yarn is past labour; and it is a matter of no importance that the labour expended to produce its constituent elements lies further back in the past than the labour expended on the final process, the spinning. The former stands, as it were, in the pluperfect, the latter in the perfect tense, but this does not matter. If a definite quantity of labour, say thirty days, is needed to build a house, the total amount of labour incorporated in the house is not altered by the fact that the work of the last day was done twenty-nine days later than that of the first. Therefore the labour contained in the raw material and instruments of labour can be treated just as if it were labour expended in an earlier stage of the spinning process, before the labour finally added in the form of actual spinning.

The values of the means of production which are expressed in the price of 12 shillings (the cotton and the spindle) are therefore constituent parts of the value of the yarn, i.e. of the value of the product.

Two conditions must nevertheless be fulfilled. First, the cotton and the spindle must genuinely have served to produce a use-value; they must in the present case become yarn. Value is independent of the particular use-value by which it is borne, but a use-value of some kind has to act as its bearer. Second, the labour-time expended must not exceed what is necessary under the given social conditions of production. Therefore, if no more than 1 lb. of cotton is needed to spin 1 lb. of yarn, no more than this weight of cotton may be consumed in the production of 1 lb. of yarn. The same is true of the spindle. If the capitalist has a foible for using golden spindles instead of steel ones, the only labour that counts for anything in the value of the yarn remains that which would be required to produce a steel spindle, because no more is necessary under the given social conditions.

We now know what part of the value of the yarn is formed by the means of production, namely the cotton and the spindle. It is 12 shillings, i.e. the materialization of two days of labour. The next point to be considered is what part of the value of the yarn is added to the cotton by the labour of the spinner.

We have now to consider this labour from a standpoint quite different from that adopted for the labour process. There we viewed it solely as the activity which has the purpose of changing cotton into yarn; there, the more appropriate the work was to its purpose, the better the yarn, other circumstances remaining the same. In that case the labour of the spinner was specifically different from other kinds of productive labour, and this difference revealed itself both subjectively in the particular purpose of spinning, and objectively in the special character of its operations, the special nature of its means of production, and the special use-value of its product. For the operation of spinning, cotton and spindles are a necessity, but for making rifled cannon they would be of no use whatever. Here, on the contrary, where we consider the labour of the spinner only in so far as it creates value, i.e. is a source of value, that labour differs in no respect from the labour of the man who bores cannon, or (what concerns us more closely here) from the labour of the cotton-planter and the spindle-maker which is realized in the means of production of the yarn. It is solely by reason of this identity that cotton planting, spindle-making and spinning are capable of forming the component parts of one whole, namely the value of the yarn, differing only quantitatively from each other. Here we are no longer concerned with the quality, the character and the content of the labour, but merely with its quantity. And this simply requires to be calculated. We assume that spinning is simple labour, the average labour of a given society. Later it will be seen that the contrary assumption would make no difference.

During the labour process, the worker’s labour constantly undergoes a transformation, from the form of unrest [Unruhe] into that of being [Sein], from the form of motion [Bewegung] into that of objectivity [Gegenständlichkeit]. At the end of one hour, the spinning motion is represented in a certain quantity of yarn; in other words, a definite quantity of labour, namely that of one hour, has been objectified in the cotton. We say labour, i.e. the expenditure of his vital force by the spinner, and not spinning labour, because the special work of spinning counts here only in so far as it is the expenditure of labour-power in general, and not the specific labour of the spinner.

In the process we are now considering it is of extreme importance that no more time be consumed in the work of transforming the cotton into yarn than is necessary under the given social conditions. If under normal, i.e. average social conditions of production, x pounds of cotton are made into y pounds of yarn by one hour’s labour, then a day’s labour does not count as 12 hours’ labour unless 12x lb. of cotton have been made into 12y lb. of yarn; for only socially necessary labour-time counts towards the creation of value.

Not only the labour, but also the raw material and the product now appear in quite a new light, very different from that in which we viewed them in the labour process pure and simple. Now the raw material merely serves to absorb a definite quantity of labour. By being soaked in labour, the raw material is in fact changed into yarn, because labour-power is expended in the form of spinning and added to it; but the product, the yarn, is now nothing more than a measure of the labour absorbed by the cotton. If in one hour 1⅔lb. of cotton can be spun into 1⅔ lb. of yarn, then 10 lb. of yarn indicate the absorption of 6 hours of labour. Definite quantities of product, quantities which are determined by experience, now represent nothing but definite quantities of labour, definite masses of crystallized labour-time. They are now simply the material shape taken by a given number of hours or days of social labour.

The fact that the labour is precisely the labour of spinning, that its material is cotton, its product yarn, is as irrelevant here as it is that the object of labour is itself already a product, hence already raw material. If the worker, instead of spinning, were to be employed in a coal-mine, the object on which he worked would be coal, which is present in nature; nevertheless, a definite quantity of coal, when extracted from its seam, would represent a definite quantity of absorbed labour.

We assumed, on the occasion of its sale, that the value of a day’s labour-power was 3 shillings, and that 6 hours of labour was incorporated in that sum; and consequently that this amount of labour was needed to produce the worker’s average daily means of subsistence. If now our spinner, by working for one hour, can convert 1⅔ lb. of cotton into 1⅔ lb. of yarn, it follows that in 6 hours he will convert 10 lb. of cotton into 10 lb. of yarn. Hence, during the spinning process, the cotton absorbs 6 hours of labour. The same quantity of labour is also embodied in a piece of gold of the value of 3 shillings. A value of 3 shillings, therefore, is added to the cotton by the labour of spinning.

Let us now consider the total value of the product, the 10 lb. of yarn. Two and a half days of labour have been objectified in it. Out of this, two days were contained in the cotton and the worn-down portion of the spindle, and half a day was absorbed during the process of spinning. This two and a half days of labour is represented by a piece of gold of the value of 15 shillings. Hence 15 shillings is an adequate price for the 10 lb. of yarn, and the price of 1 lb. is 1s. 6d.

Our capitalist stares in astonishment. The value of the product is equal to the value of the capital advanced. The value advanced has not been valorized, no surplus-value has been created, and consequently money has not been transformed into capital. The price of the yarn is 15 shillings, and 15 shillings were spent in the open market on the constituent elements of the product or, what amounts to the same thing, on the factors of the labour process; 10 shillings were paid for the cotton, 2 shillings for the wear of the spindle and 3 shillings for the labour-power. The swollen value of the yarn is of no avail, for it is merely the sum of the values formerly existing in the cotton, the spindle and the labour-power: out of such a simple addition of existing values, no surplus-value can possibly arise. These values are now all concentrated in one thing; but so they were in the sum of 15 shillings, before it was split up into three parts by the purchase of the commodities.

In itself this result is not particularly strange. The value of one pound of yarn is 1s. 6d., and our capitalist would therefore have to pay 15 shillings for 10 lb. of yarn on the open market. It is clear that whether a man buys his house ready built, or has it built for him, neither of these operations will increase the amount of money laid out on the house.

Our capitalist, who is at home in vulgar economics, may perhaps say that he advanced his money with the intention of making more money out of it. The road to hell is paved with good intentions, and he might just as well have intended to make money without producing at all. He makes threats. He will not be caught napping again. In future he will buy the commodities in the market, instead of manufacturing them himself. But if all his brother capitalists were to do the same, where would he find his commodities on the market? And he cannot eat his money. He recites the catechism: ‘Consider my abstinence. I might have squandered the 15 shillings, but instead I consumed it productively and made yarn with it.’ Very true; and as a reward he is now in possession of good yarn instead of a bad conscience. As for playing the part of a miser, it would never do for him to relapse into such bad ways; we have already seen what such asceticism leads to. Besides, where there is nothing, the king has lost his rights; whatever the merits of his abstinence there is no money there to recompense him, because the value of the product is merely the sum of the values thrown into the process of production. Let him therefore console himself with the reflection that virtue is its own reward. But no, on the contrary, he becomes insistent. The yarn is of no use to him, he says. He produced it in order to sell it. In that case let him sell it, or, easier still, let him in future produce only things he needs himself, a remedy already prescribed by his personal physician MacCulloch as being of proven efficacy against an epidemic of over-production. Now our capitalist grows defiant. ‘Can the worker produce commodities out of nothing, merely by using his arms and legs? Did I not provide him with the materials through which, and in which alone, his labour could be embodied? And as the greater part of society consists of such impecunious creatures, have I not rendered society an incalculable service by providing my instruments of production, my cotton and my spindle, and the worker too, for have I not provided him with the means of subsistence? Am I to be allowed nothing in return for all this service?’ But has the worker not performed an equivalent service in return, by changing his cotton and his spindle into yarn? In any case, here the question of service does not arise. A service is nothing other than the useful effect of a use-value, be it that of a commodity, or that of the labour. But here we are dealing with exchange-value. The capitalist paid to the worker a value of 3 shillings, and the worker gave him back an exact equivalent in the value of 3 shillings he added to the cotton: he gave him value for value. Our friend, who has up till now displayed all the arrogance of capital, suddenly takes on the unassuming demeanour of one of his own workers, and exclaims: ‘Have I myself not worked? Have I not performed the labour of superintendence, of overseeing the spinner? And does not this labour, too, create value?’ The capitalist’s own overseer and manager shrug their shoulders. In the meantime, with a hearty laugh, he recovers his composure. The whole litany he has just recited was simply meant to pull the wool over our eyes. He himself does not care twopence for it. He leaves this and all similar subterfuges and conjuring tricks to the professors of political economy, who are paid for it. He himself is a practical man, and although he does not always consider what he says outside his business, within his business he knows what he is doing.

Let us examine the matter more closely. The value of a day’s labour-power amounts to 3 shillings, because on our assumption half a day’s labour is objectified in that quantity of labour-power, i.e. because the means of subsistence required every day for the production of labour-power cost half a day’s labour. But the past labour embodied in the labour-power and the living labour it can perform, and the daily cost of maintaining labour-power and its daily expenditure in work, are two totally different things. The former determines the exchange-value of the labour-power, the latter is its use-value. The fact that half a day’s labour is necessary to keep the worker alive during 24 hours does not in any way prevent him from working a whole day. Therefore the value of labour-power, and the value which that labour-power valorizes [verwertet] in the labour-process, are two entirely different magnitudes; and this difference was what the capitalist had in mind when he was purchasing the labour-power. The useful quality of labour-power, by virtue of which it makes yarn or boots, was to the capitalist merely the necessary condition for his activity; for in order to create value labour must be expended in a useful manner. What was really decisive for him was the specific use-value which this commodity possesses of being a source not only of value, but of more value than it has itself. This is the specific service the capitalist expects from labour-power, and in this transaction he acts in accordance with the eternal laws of commodity-exchange. In fact, the seller of labour-power, like the seller of any other commodity, realizes [realisiert] its exchange-value, and alienates [veräussert] its use-value. He cannot take the one without giving the other. The use-value of labour-power, in other words labour, belongs just as little to its seller as the use-value of oil after it has been sold be longs to the dealer who sold it. The owner of the money has paid the value of a day’s labour-power; he therefore has the use of it for a day, a day’s labour belongs to him. On the one hand the daily sustenance of labour-power costs only half a day’s labour, while on the other hand the very same labour-power can remain effective, can work, during a whole day, and consequently the value which its use during one day creates is double what the capitalist pays for that use; this circumstance is a piece of good luck for the buyer, but by no means an injustice towards the seller.

Our capitalist foresaw this situation, and that was the cause of his laughter. The worker therefore finds, in the workshop, the means of production necessary for working not just 6 but 12 hours. If 10 lb. of cotton could absorb 6 hours’ labour, and become 10 lb. of yarn, now 20 lb. of cotton will absorb 12 hours’ labour and be changed into 20 lb. of yarn. Let us examine the product of this ex tended labour-process. Now five days of labour are objectified in this 20 lb. of yarn; four days are due to the cotton and the lost steel of the spindle, the remaining day has been absorbed by the cotton during the spinning process. Expressed in gold, the labour of five days is 30 shillings. This is therefore the price of the 20 lb. of yarn, giving, as before, 1s. 6d. as the price of 1 lb. But the sum of the values of the commodities thrown into the process amounts to 27 shillings. The value of the yarn is 30 shillings. Therefore the value of the product is one-ninth greater than the value advanced to produce it; 27 shillings have turned into 30 shillings; a surplus-value of 3 shillings has been precipitated. The trick has at last worked: money has been transformed into capital.

Every condition of the problem is satisfied, while the laws governing the exchange of commodities have not been violated in any way. Equivalent has been exchanged for equivalent. For the capitalist as buyer paid the full value for each commodity, for the cotton, for the spindle and for the labour-power. He then did what is done by every purchaser of commodities: he consumed their use-value. The process of consuming labour-power, which was also the process of producing commodities, resulted in 20 lb. of yarn, with a value of 30 shillings. The capitalist, formerly a buyer, now returns to the market as a seller. He sells his yarn at 1s. 6d. a pound, which is its exact value. Yet for all that he withdraws 3 shillings more from circulation than he originally threw into it. This whole course of events, the transformation of money into capital, both takes place and does not take place in the sphere of circulation. It takes place through the mediation of circulation because it is conditioned by the purchase of the labour-power in the market; it does not take place in circulation because what happens there is only an introduction to the valorization process, which is entirely confined to the sphere of production. And so ‘everything is for the best in the best of all possible worlds’.

By turning his money into commodities which serve as the building materials for a new product, and as factors in the labour process, by incorporating living labour into their lifeless objectivity, the capitalist simultaneously transforms value, i.e. past labour in its objectified and lifeless form, into capital, value which can perform its own valorization process, an animated monster which begins to ‘work’, ‘as if its body were by love possessed’.

If we now compare the process of creating value with the process of valorization, we see that the latter is nothing but the continuation of the former beyond a definite point. If the process is not carried beyond the point where the value paid by the capitalist for the labour-power is replaced by an exact equivalent, it is simply a process of creating value; but if it is continued beyond that point, it becomes a process of valorization.

If we proceed further, and compare the process of creating value with the labour process, we find that the latter consists in the useful labour which produces use-values. Here the movement of production is viewed qualitatively, with regard to the particular kind of article produced, and in accordance with the purpose and content of the movement. But if it is viewed as a value-creating process the same labour process appears only quantitatively. Here it is a question merely of the time needed to do the work, of the period, that is, during which the labour-power is usefully expended. Here the commodities which enter into the labour process no longer count as functionally determined and material elements on which labour-power acts with a given purpose. They count merely as definite quantities of objectified labour. Whether it was already contained in the means of production, or has just been added by the action of labour-power, that labour counts only according to its duration. It amounts to so many hours, or days, etc.

Moreover, the time spent in production counts only in so far as it is socially necessary for the production of a use-value. This has various consequences. First, the labour-power must be functioning under normal conditions. If a self-acting mule is the socially pre dominant instrument of labour for spinning, it would be impermissible to supply the spinner with a spinning-wheel. The cotton too must not be such rubbish as to tear at every other moment, but must be of suitable quality. Otherwise the spinner would spend more time than socially necessary in producing his pound of yarn, and in this case the excess of time would create neither value nor money. But whether the objective factors of labour are normal or not does not depend on the worker, but rather on the capitalist. A further condition is that the labour-power itself must be of normal effectiveness. In the trade in which it is being employed, it must possess the average skill, dexterity and speed prevalent in that trade, and our capitalist took good care to buy labour-power of such normal quality. It must be expended with the average amount of exertion and the usual degree of intensity; and the capitalist is as careful to see that this is done, as he is to ensure that his workmen are not idle for a single moment. He has bought the use of the labour-power for a definite period, and he insists on his rights. He has no intention of being robbed. Lastly – and for this purpose our friend has a penal code of his own – all wasteful consumption of raw material or instruments of labour is strictly forbidden, because what is wasted in this way represents a superfluous expenditure of quantities of objectified labour, labour that does not count in the product or enter into its value.

We now see that the difference between labour, considered on the one hand as producing utilities, and on the other hand as creating value, a difference which we discovered by our analysis of a commodity, resolves itself into a distinction between two aspects of the production process.

The production process, considered as the unity of the labour process and the process of creating value, is the process of production of commodities; considered as the unity of the labour process and the process of valorization, it is the capitalist process of production, or the capitalist form of the production of commodities.

We stated on a previous page that in the valorization process it does not in the least matter whether the labour appropriated by the capitalist is simple labour of average social quality, or more complex labour, labour with a higher specific gravity as it were All labour of a higher, or more complicated, character than average labour is expenditure of labour-power of a more costly kind, labour-power whose production has cost more time and labour than unskilled or simple labour-power, and which therefore has a higher value. This power being of higher value, it expresses itself in labour of a higher sort, and therefore becomes objectified, during an equal amount of time, in proportionally higher values. Whatever difference in skill there may be between the labour of a spinner and that of a jeweller, the portion of his labour by which the jeweller merely replaces the value of his own labour-power does not in any way differ in quality from the additional portion by which he creates surplus-value. In both cases, the surplus-value results only from a quantitative excess of labour, from a lengthening of one and the same labour-process: in the one case, the process of making jewels, in the other, the process of making yarn.

But, on the other hand, in every process of creating value the reduction of the higher type of labour to average social labour, for instance one day of the former to x days of the latter, is unavoidable. We therefore save ourselves a superfluous operation, and simplify our analysis, by the assumption that the labour of the worker employed by the capitalist is average simple labour.

Constant capital and variable capital

The various factors of the labour process play different parts in forming the value of the product.

The worker adds fresh value to the material of his labour by expending on it a given amount of additional labour, no matter what the specific content, purpose and technical character of that labour may be. On the other hand, the values of the means of production used up in the process are preserved, and present themselves afresh as constituent parts of the value of the product; the values of the cotton and the spindle, for instance, re-appear again in the value of the yarn. The value of the means of production is therefore preserved by being transferred to the product. This transfer takes place during the conversion of those means into a product, in other words during the labour process. It is mediated through labour. But how is this done?

The worker does not perform two pieces of work simultaneously, one in order to add value to the cotton, the other in order to pre serve the value of the means of production, or, what amounts to the same thing, to transfer to the yarn, as product, the value of the cotton on which he works, and part of the value of the spindle with which he works. But by the very act of adding new value he preserves their former values. Since however the addition of new value to the material of his labour, and the preservation of its former value, are two entirely distinct results, it is plain that this twofold nature of the result can be explained only by the twofold nature of his labour; it must at the same time create value through one of its properties and preserve or transfer value through another.

Now how does every worker add fresh labour-time and therefore fresh value? Evidently, only by working productively in a particular way. The spinner adds labour-time by spinning, the weaver by weaving, the smith by forging. But although these operations add labour as such, and therefore new values, it is only through the agency of labour directed to a particular purpose, by means of the spinning, the weaving and the forging respectively, that the means of production, the cotton and the spindle, the yarn and the loom, and the iron and the anvil, become constituent elements of the product, of a new use-value. The old form of the use-value disappears, but it is taken up again in a new form of use-value. We saw, when we were considering the process of creating value, that if a use-value is effectively consumed in the production of a new use-value, the quantity of labour expended to produce the article which has been consumed forms a part of the quantity of labour necessary to produce the new use-value; this portion is therefore labour transferred from the means of production to the new product Hence the worker preserves the values of the already consumed means of production or transfers them to the product as portions of its value, not by virtue of his additional labour as such, but by virtue of the particular useful character of that labour, by virtue of its specific productive form. Therefore, in so far as labour is productive activity directed to a particular purpose, in so far as it is spinning, weaving or forging, etc., it raises the means of production from the dead merely by entering into contact with them, infuses them with life so that they become factors of the labour process, and combines with them to form new products.

If the specific productive labour of the worker were not spinning, he could not convert the cotton into yarn, and therefore he could not transfer the values of the cotton and spindle to the yarn. Suppose the same worker were to change his trade to that of a joiner, he would still by a day’s labour add value to the material he worked on. We see therefore that the addition of new value takes place not by virtue of his labour being spinning in particular, or joinery in particular, but because it is labour in general, abstract social labour; and we see also that the value added is of a certain definite amount, not because his labour has a particular useful content, but because it lasts for a definite length of time. On the one hand, it is by virtue of its general character as expenditure of human labour-power in the abstract that spinning adds new value to the values of the cotton and the spindle; and on the other hand, it is by virtue of its special character as a concrete, useful process that the same labour of spinning both transfers the values of the means of production to the product and preserves them in the product. Hence a twofold result emerges within the same period of time.

By the simple addition of a certain quantity of labour, new value is added, and by the quality of this added labour, the original values of the means of production are preserved in the product. This twofold effect, resulting from the twofold character of labour, appears quite plainly in numerous phenomena.

Let us assume that some invention enables the spinner to spin as much cotton in 6 hours as he was able to spin before in 36 hours. His labour is now six times as effective as it was, considered as useful productive activity directed to a given purpose. The product of 6 hours’ labour has increased sixfold, from 6 lb. to 36 lb. But now the 36 lb. of cotton absorb only the same amount of labour as did the 6 lb. formerly. One-sixth as much new labour is absorbed by each pound of cotton, and consequently the value added by the labour to each pound is only one-sixth of what it formerly was. On the other hand, in the product (the 36 lb. of yarn) the value transferred from the cotton is six times as great as before. The value of the raw material preserved and transferred to the product by the 6 hours of spinning is six times as great as before, although the new value added by the labour of the spinner to each pound of the very same raw material is one-sixth of what it was formerly. This shows that the two properties of labour, by virtue of which it is enabled in one case to preserve value and in the other to create value, within the same indivisible process, are different in their very essence. On the one hand, the longer the time necessary to spin a given weight of cotton into yarn, the greater the amount of fresh value added to the cotton; but, on the other hand, the greater the weight of the cotton spun in a given time, the greater is the value preserved, by being transferred from it to the product.

Let us now assume that the productivity of the spinner’s labour, instead of varying, remains constant, that he therefore requires the same time as he formerly did to convert one pound of cotton into yarn, but that the exchange-value of the cotton varies, either by rising to six times its former value or by falling to one-sixth of that value. In both these cases, the spinner puts the same quantity of labour into a pound of cotton, and therefore adds as much value, as he did before the change in the value; he also produces a given weight of yarn in the same time as he did before. Nevertheless, the value he transfers from the cotton to the yarn is either six times what it was before, or, in the second case, one-sixth as much. The same result occurs when the value of the instruments of labour rises or falls, while their usefulness in the labour process remains unaltered.

Again, if the technical conditions of the spinning process remain unchanged, and no change of value takes place in the means of production, the spinner continues to consume in equal working-times equal quantities of raw material and equal quantities of machinery of unvarying value. The value preserved in the product is directly proportional to the new value added to the product. In two weeks the spinner adds twice as much labour, and therefore twice as much value, as in one week, and during the same time he consumes twice as much material, and wears out twice as much machinery, of double the value in each case; he therefore preserves, in the product of two weeks, twice as much value as in the product of one week. As long as the conditions of production remain the same, the more value the worker adds by fresh labour, the more value he transfers and preserves. However, this does not happen because he adds new value, but because the addition of new value takes place under unvaried conditions which are independent of his own labour.

Of course it may be said, in a relative sense, that the worker always preserves old value in proportion to the added quantity of new value. Whether the value of cotton rises from one shilling to two shillings, or falls to sixpence, the worker invariably preserves in the product of one hour only half as much value as he preserves in two hours. Similarly, if the productivity of his own labour rises or falls, he will in the course of one hour spin either more or less cotton then he did before, and will consequently preserve more or less of the value of the cotton in the product of one hour; but, all the same, he will preserve twice as much value by two hours’ labour as he will by one.

Value exists only in use-values, in things, if we leave aside its purely symbolic representation in tokens. (Man himself, viewed merely as the physical existence of labour-power, is a natural object, a thing, although a living, conscious thing, and labour is the physical manifestation [dingliche Aüsserung] of that power.) If therefore an article loses its use-value it also loses its value. The reason why means of production do not lose their value at the same time as they lose their use-value is that they lose in the labour process the original form of their use-value only to assume in the product the form of a new use-value. But however important it may be to value that it should have some use-value to exist in, it is still a matter of complete indifference what particular object serves this purpose. We saw this when dealing with the metamorphosis of commodities. Hence it follows that in the labour process the means of production transfer their value to the product only in so far as they lose their exchange-value along with their independent use-value. They only give up to the product the value they themselves lose as means of production. But in this respect the objective factors of the labour process do not all behave in the same way.

The coal burnt under the boiler vanishes without leaving a trace; so too the oil with which the axles of wheels are greased. Dyestuffs and other auxiliary substances also vanish, but re-appear in the properties of the product. The raw material forms the substance of the product, but only after it has undergone a change in its form. Hence raw material and auxiliary substances lose the independent form with which they entered into the labour process. It is otherwise with the actual instruments of labour. Tools, machines, factory buildings and containers are only of use in the labour process as long as they keep their original shape, and are ready each morning to enter into it in the same form. And just as during their lifetime, that is to say during the labour process, they retain their shape independently of the product, so too after their death. The mortal remains of machines, tools, workshops etc., always continue to lead an existence distinct from that of the product they helped to turn out. If we now consider the case of any instrument of labour during the whole period of its service, from the day of its entry into the workshop to the day of its banishment to the lumber room, we find that during this period its use-value has been completely consumed, and therefore its exchange-value completely transferred to the product. For instance, if a spinning machine lasts for ten years, it is plain that during that working period its total value is gradually transferred to the product of the ten years. The lifetime of an instrument of labour is thus spent in the repetition of a greater or lesser number of similar operations. The instrument suffers the same fate as the man. Every day brings a man twenty-four hours nearer to his grave, although no one can tell accurately, merely by looking at a man, how many days he has still to travel on that road. This difficulty, however, does not prevent life insurance companies from using the theory of averages to draw very accurate, and what is more, very profitable conclusions about the length of a man’s life. So it is with the instruments of labour. It is known by experience how long on the average a machine of a particular kind will last. Suppose its use-value in the labour process lasts only six days. It then loses on average one-sixth of its use-value every day, and therefore parts with one-sixth of its value to each day’s product. The deterioration of all instruments, their daily loss of use-value, and the corresponding quantity of value they part with to the product, are accordingly calculated on this basis.

It is thus strikingly clear that means of production never transfer more value to the product than they themselves lose during the labour process by the destruction of their own use-value. If an instrument of production has no value to lose, i.e. if it is not the product of human labour, it transfers no value to the product. It helps to create use-value without contributing to the formation of exchange-value. This is true of all those means of production supplied by nature without human assistance, such as land, wind, water, metals in the form of ore, and timber in virgin forests.

Here we are confronted with another interesting phenomenon. Suppose a machine is worth £1,000, and wears out in 1,000 days. Then every day one-thousandth of the value of the machine is transferred to the day’s product. At the same time the machine as a whole continues to take part in the labour process, though with diminishing vitality. Thus it appears that one factor of the labour process, a means of production, continually enters as a whole into that process, while it only enters in parts into the valorization process. The distinction between the labour process and the valorization process is reflected here in their objective factors, in that one and the same means of production, in one and the same process of production, counts in its totality as an element in the labour process, but only piece by piece as an element in the creation of value.

On the other hand a means of production may enter as a whole into the valorization process, although it enters only piece by piece into the labour process. Suppose that in spinning cotton, the waste for every 115 lb. used amounts to 15 lb., which is converted, not into yarn, but into ‘devil’s dust’. Now, although this amount of waste is normal and inevitable under average conditions of spinning, the value of the 15 lb. of cotton is just as surely transfer red to the value of the yarn as is the value of the 100 lb. that form the substance of the yarn. The use-value of 15 lb. of cotton must vanish into dust before 100 lb. of yarn can be made. The destruction of this cotton is therefore a necessary condition for the production of the yarn. And because it is a necessary condition, and for no other reason, the value of that cotton is transferred to the product. The same holds good for every kind of refuse resulting from a labour process, where that refuse cannot be further employed as a means in the production of new and independent use-values. Such an employment of refuse can be seen in the large machine-building factories at Manchester, where mountains of iron turnings are carted away to the foundry in the evening, only to re-appear the next morning in the workshops as solid masses of iron.

We have seen that the means of production transfer value to the new product only when during the labour process they lose value in the shape of their old use-value. The maximum loss of value the means of production can suffer in the process is plainly limited by the amount of the original value with which they entered into it, or, in other words, by the labour-time required to produce them. Therefore the means of production can never add more value to the product than they themselves possess independently of the process in which they assist. However useful a given kind of raw material, or a machine, or other means of production may be, even if it cost £150 or, say, 500 days of labour, it cannot under any circumstances add more than £150 to the value of the product. Its value is determined not by the labour process into which it enters as a means of production, but by that out of which it has issued as a product. In the labour process it serves only as a use-value, a thing with useful properties, and cannot therefore transfer any value to the product unless it possessed value before its entry into the process.

While productive labour is changing the means of production into constituent elements of a new product, their value undergoes a metempsychosis. It deserts the consumed body to occupy the newly created one. But this transmigration takes place, as it were, behind the back of the actual labour in progress. The worker is unable to add new labour, to create new value, without at the same time preserving old values, because the labour he adds must be of a specific useful kind, and he cannot do work of a useful kind without employing products as the means of production of a new product, and thereby transferring their value to the new product. The property therefore which labour-power in action, living labour, possesses of preserving value, at the same time that it adds it, is a gift of nature which costs the worker nothing, but is very advantageous to the capitalist since it preserves the existing value of his capital. As long as trade is good, the capitalist is too absorbed in making profits to take notice of this gratuitous gift of labour. Violent interruptions of the labour process, crises, make him painfully aware of it.

As regards the means of production, what is really consumed is their use-value, and the consumption of this use-value by labour results in the product. There is in fact no consumption of their value and it would therefore be inaccurate to say that it is reproduced. It is rather preserved; not by reason of any operation it itself undergoes in the labour process but because the use-value in which it originally existed vanishes (although when it vanishes, it does so into another use-value). Hence the value of the means of production re-appears in the value of the product, but it is not strictly speaking reproduced in that value. What is produced is a new use-value in which the old exchange-value re-appears.

It is otherwise with the subjective factor of the labour process, labour-power, which sets itself in motion independently. While labour, because it is directed to a specific purpose, preserves and transfers to the product the value of the means of production, at the same time, throughout every instant it is in motion, it is creating an additional value, a new value. Suppose the process of production breaks off just when the worker has produced an equivalent for the value of his own labour-power, when for example by six hours of labour he has added a value of three shillings. This value is the excess of the total value of the product over the portion of its value contributed by the means of production. It is the only original value formed during this process, the only portion of the value of the product created by the process itself. Of course, we do not forget that this new value only replaces the money advanced by the capitalist in purchasing labour-power, and spent by the worker on means of subsistence. With regard to the three shillings which have been expended, the new value of three shillings appears merely as a reproduction. Nevertheless, it is a real reproduction, and not, as in the case of the value of the means of production, simply an apparent one. The replacement of one value by another is here brought about by the creation of new value.

We know however from what has gone before that the labour process may continue beyond the time necessary to reproduce and incorporate in the product a mere equivalent for the value of the labour-power. For this, six hours alone would be sufficient: but the process lasts longer, say for twelve hours. The activity of labour-power, therefore, not only reproduces its own value, but produces value over and above this. This surplus-value is the difference between the value of the product and the value of the elements consumed in the formation of the product, in other words the means of production and the labour-power.

In presenting the different parts played by the various factors of the labour process in the formation of the product’s value, we have in fact characterized the different functions allotted to the different elements of capital in its own valorization process. The excess of the total value of the product over the sum of the values of its constituent elements is the excess of the capital which has been valorized over the value of the capital originally advanced. The means of production on the one hand, labour-power on the other, are merely the different forms of existence which the value of the original capital assumed when it lost its monetary form and was transformed into the various factors of the labour process.

That part of capital, therefore, which is turned into means of production, i.e. the raw material, the auxiliary material and the instruments of labour, does not undergo any quantitative alteration of value in the process of production. For this reason, I call it the constant part of capital, or more briefly, constant capital.

On the other hand, that part of capital which is turned into labour-power does undergo an alteration of value in the process of production. It both reproduces the equivalent of its own value and produces an excess, a surplus-value, which may itself vary, and be more or less according to circumstances. This part of capital is continually being transformed from a constant into a variable magnitude. I therefore call it the variable part of capital, or more briefly, variable capital. The same elements of capital which, from the point of view of the labour process, can be distinguished respectively as the objective and subjective factors, as means of production and labour-power, can be distinguished, from the point of view of the valorization process, as constant and variable capital.

The definition of constant capital given above by no means excludes the possibility of a change of value in its elements. Suppose that the price of cotton is one day sixpence a pound, and the next day, as a result of a failure of the cotton crop, a shilling a pound. Each pound of the cotton bought at sixpence, and worked up after the rise in value, transfers to the product a value of one shilling; and the cotton already spun before the rise, and perhaps circulating in the market as yarn, similarly transfers to the product twice its original value. It is plain, however, that these changes of value are independent of the valorization of the cotton in the spinning process itself. If the old cotton had never been spun, it could be resold at a shilling a pound after the rise, instead of at sixpence. Further, the fewer the processes the cotton has gone through, the more certain is this result. We therefore find that speculators make it a rule, when such sudden changes in value occur, to speculate in the raw material in its least worked-up form: to speculate, therefore, in yarn rather than in cloth, and indeed in cotton itself rather than in yarn. The change of value in the case we have been considering originates not in the process in which the cotton plays the part of a means of production, and in which it therefore functions as constant capital, but in the process in which the cotton itself is produced. The value of a commodity is certainly determined by the quantity of labour contained in it, but this quantity is itself socially determined. If the amount of labour-time socially necessary for the production of any commodity alters – and a given weight of cotton represents more labour after a bad harvest than after a good one – this reacts back on all the old commodities of the same type, because they are only individuals of the same species, and their value at any given time is measured by the labour socially necessary to produce them, i.e. by the labour necessary under the social conditions existing at the time.

As the value of the raw material may change, so too may that of the instruments of labour, the machinery, etc. employed in the process; and consequently that portion of the value of the product transferred to it from them may also change. If, as a result of a new invention, machinery of a particular kind can be produced with a lessened expenditure of labour, the old machinery undergoes a certain amount of depreciation, and therefore transfers proportionately less value to the product. But here too the change in value originates outside the process in which the machine is acting as a means of production. Once engaged in this process the machine cannot transfer more value than it possesses independently of the process.

Just as a change in the value of the means of production, even after they have begun to take part in the labour process, does not alter their character as constant capital, so too a change in the proportion of constant to variable capital does not affect the distinction in their functions. The technical conditions of the labour process may be revolutionized to such an extent that where formerly ten men using ten implements of small value worked up a relatively small quantity of raw material, one man may now, with the aid of one expensive machine, work up one hundred times as much raw material. In the latter case we have an enormous increase in the constant capital, i.e. the total value of the means of production employed, and at the same time a great reduction in the variable part of the capital, which has been laid out in labour-power. This change however alters only the quantitative relation between the constant and the variable capital, or the proportion in which the total capital is split up into its constant and variable constituents; it has not in the least degree affected the essential difference between the two.

The rate of surplus-value

The degree of exploitation of labor-power

The representation of the components of the value of the product by corresponding proportional parts of the product itself

Senior’s “last hour”


The working day

The limits of the working day

The greed for surplus-labour, manufacturer and boyard

Branches of English industry without legal limits to exploitation

Day and night work. The relay system

The struggle for a normal working day. Compulsory laws for the extension of the working day from the middle of the 14th to the end of the 17th century

The struggle for a normal working day. Compulsory limitation by law of the working-time. English factory acts, 1833

The struggle for a normal working day. Reaction of the English factory acts on other countries

Rate and mass of surplus-value

Production of relative surplus-value

The concept of relative surplus-value


Division of labour and manufacture

Two-fold origin of manufacture

The detail labourer and his implements

The two fundamental forms of manufacture: heterogeneous manufacture, serial manufacture

Division of labour in manufacture, and division of labour in society

The capitalistic character of manufacture

Machinery and modern industry

The development of machinery

The value transferred by machinery to the product

The proximate effects of machinery on the workman

The factory

The strife between workman and machine

The theory of compensation as regards the workpeople displaced by machinery

Repulsion and attraction of workpeople by the factory system. Crises in the cotton trade

Revolution effected in manufacture, handicrafts, and domestic industry by modern industry

The factory acts. Sanitary and educational clauses of the same. Their general extension in England

Modern industry and agriculture

Production of absolute and relative surplus-value

Absolute and relative surplus-value

Changes of magnitude in the price of labour-power and in surplus-value

Length of the working day and intensity of labour constant. Productiveness of labour variable

Working day constant. Productiveness of labour constant. Intensity of labour variable

Productiveness and intensity of labour constant. Length of the working day variable

Simultaneous variations in the duration, productiveness, and intensity of labour

Various formula for the rate of surplus-value


The transformation of the value (and respective price) of labour-power into wages


Piece wages

National differences of wages

The accumulation of capital

Simple reproduction

Conversion of surplus-value into capital

Capitalist production on a progressively increasing scale. Transition of the laws of property that characterise production of commodities into laws of capitalist appropriation

Erroneous conception, by political economy, of reproduction on a progressively increasing scale

Separation of surplus-value into capital and revenue. The abstinence theory

Circumstances that, independently of the proportional division of surplus-value into capital and revenue, determine the amount of accumulation. Degree of exploitation of labour-power. Productivity of labour. Growing difference in amount between capital employed and capital consumed. Magnitude of capital advanced

The so-called labour fund

The general law of capitalist accumulation

The increased demand for labour power that accompanies accumulation, the composition of capital remaining the same

Relative diminution of the variable part of capital simultaneously with the progress of accumulation and of the concentration that accompanies it

Progressive production of a relative surplus population or industrial reserve army

Different forms of the relative surplus population. The general law of capitalistic accumulation

Illustrations of the general law of capitalist accumulation

Primitive accumulation

The secret of primitive accumulation

Expropriation of the agricultural population from the land

Bloody legislation against the expropriated, from the end of the 15th century. Forcing down of wages by acts of parliament

Genesis of the capitalist farmer

Reaction of the agricultural revolution on industry. Creation of the home-market

For industrial capital

The genesis of the industrial capitalist

Historical tendency of capitalist accumulation

The modern theory of colonisation



  1. In the original, "Zentner", old unit of measurement of weight, equivalent to 50 kilograms. The word was also commonly translated to the English hundredweight (cwt, centum weight), which is equivalent to 50.8 kilos.
  2. Marx's description of communism