Chapter 4 of Capital, Volume 1. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Mary Rodie. Capital, a critical analysis of capitalist production, Volume 1 by Karl Marx. Translated from the third German edition by Samuel Moore and Edward Aveling, and edited by Frederick Engels. Part 2, The Transformation of Money and Capital. Chapter 4, The General Formula for Capital. The circulation of commodities is the starting point of capital. The production of commodities, their circulation, and that more developed form of their circulation called commerce, these form the historical groundwork from which it rises. The modern history of capital dates from the creation in the 16th century of a world embracing commerce and a world embracing market. If we abstract from the material substance of the circulation of commodities, that is, from the exchange of the various use values, and consider only the economic forms produced by this process of circulation, we find its final result to be money. This final product of the circulation of commodities is the first form in which capital appears. As a matter of history, capital as opposed to landed property invariably takes the form at first of money. It appears as money-dwealth as the capital of the merchant and of the user. Footnote 1, the contrast between the power based on the personal relations of dominion and servitude that is conferred by landed property and the impersonal power that is given by money is well expressed by the two French proverbs. Nulter sonseigneur, and l'argent n'a pas de maître, no land without its lord, and money has no master. End of footnote. But we have no need to refer to the origin of capital in order to discover that the first form of appearance of capital is money. We can see it daily under our very eyes. All new capital, to commence with, comes on the stage that is on the market, whether of commodities, labor, or money, even in our days, in the shape of money that by a definite process has to be transformed into capital. The first distinction we notice between money that is money only and money that is capital is nothing more than a difference in their form of circulation. The simplest form of the circulation of commodities is C-M-C, commodities to money to commodities, the transformation of commodities into money, and the change of the money back again into commodities, or selling in order to buy. But alongside of this form we find another specifically different form, M-C-M, money to commodities to money, the transformation of money into commodities, and the change of commodities back again into money, or buying in order to sell. Money that circulates in the latter manner is thereby transformed into, becomes capital, and is already potentially capital. Now let us examine the circuit M-C-M a little closer. It consists, like the other, of two antithetical phases. In the first phase M-C, money to commodities, or the purchase, the money is changed into a commodity. In the second phase C-M, commodities to money, or the sale, the commodity is changed back again into money. The combination of these two phases constitutes the single movement whereby money is exchanged for a commodity, and the same commodity is again exchanged for money, whereby a commodity is bought in order to be sold, or neglecting the distinction and form between buying and selling, whereby a commodity is bought with money, and then money is bought with a commodity. Put note two. Avec de l'argent on achète des marchandises, et avec des marchandises on achète de l'argent. With money one buys commodities, and with commodities one buys money. Merci de la rivière. L'ordre naturel est essentiel des sociétés politiques. Page 543. End of footnote. The result in which the phases of the process vanish is the exchange of money for money, M-M. If I purchased 2,000 pounds of cotton for 100 pounds sterling, and reselled the 2,000 pounds of cotton for 110 pounds sterling, I have in fact exchanged 100 pounds sterling for 110 pounds sterling money for money. Now it is evident that the circuit M-C-M would be observed and without meaning if the intention were to exchange by this means two equal sums of money, 100 pounds for 100 pounds. The Meiser's plan would be far simpler and sure. He sticks to his 100 pounds instead of exposing it to the dangers of circulation. And yet, whether the merchant who has paid 100 pounds for his cotton sells it for 110 pounds, or lets it go for 100 pounds, or even 50 pounds, his money has at all events gone through a characteristic and original movement. Quite different in kind from that which it goes through in the hands of the peasant who sells corn and with the money thus set free buys clothes. We have therefore to examine first the distinguishing characteristics of the forms of the circuit's M-C-M money to commodities to money and C-M-C commodities to money to commodities. And in doing this, the real difference that underlies the mere difference of form will reveal itself. Let us see in the first place what the two forms have in common. Both circuits are resolvable into the same two antithetical phases. C-M commodities to money, a sale, and M-C money to commodities, a purchase. In each of these phases the same material elements, a commodity and money, and the same economic dramatist personae, a buyer and a seller confront one another. Each circuit is the unity of the same two antithetical phases and in each case this unity is brought about by the intervention of three contracting parties of whom only one sells another only buys while the third both buys and sells. What however first and foremost distinguishes the circuit's C-M-C commodities to money to commodities from the circuit M-C-M money to commodities to money is the inverted order of succession of the two phases. 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 goal are commodities. In the other they are money. In the first form the movement is brought about by the intervention of money. In the second by that of a commodity. In the circulation C-M-C commodities to money to commodities the money is in the end converted into a commodity that serves as a use value. It is spent once for all. In the inverted form M-C-M money to commodities to money. 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 lets the money go but only with the sly intention of getting it back again. The money therefore is not spent it is merely advanced. When a thing is bought in order to be sold again the sum employed is called money advanced. When it is bought not to be sold it may be said to be expended. James Stewart works edited by General Sir James Stewart his son London 1805 volume 1 page 274. End of footnote. In the circuit C-M-C commodities to money to commodities the same piece of money changes its place twice. The seller gets it from the buyer and pays it away to another seller. The complete circulation which begins with the receipt concludes with the payment of money for commodities. It is the very contrary in the circuit M-C-M money to commodities to money. Here it is not the piece of money that changes its place twice but the commodity. The buyer takes it from the hands of the seller and passes it into the hands of another buyer. Just as in the simple circulation of commodities the double change of place of the same piece of money affects its passage from one hand into another so here the double change of place of the same commodity brings about the reflux of the money to its point of departure. Such reflux is not dependent on the commodity being sold for more than was paid for it. This circumstance influences only the amount of the money that comes back. The reflux itself takes place so soon as the purchased commodity is resold. In other words, so soon as the circuit M-C-M is completed. We have here therefore a palpable difference between the circulation of money as capital and its circulation as mere money. The circuit C-M-C commodities to money to commodities comes completely to an end so soon as the money brought in by the sale of one commodity is abstracted again by the purchase of another. If nevertheless there follows a reflux of money to its starting point this can only happen through a renewal or repetition of the operation. If I sell a quarter of corn for three pounds sterling and with this three pounds sterling by close the money so far as I am concerned is spent and done with. It belongs to the close merchant. If I now sell a second quarter of corn money indeed flows back to me not however as a sequel to the first transaction but in consequence of its repetition. The money again leaves me so soon as I complete the second transaction by a fresh purchase. Therefore in the circuit C-M-C commodities to money to commodities the expenditure of money has nothing to do with its reflux. On the other hand in M-C-M money to commodities to money the reflux of the money is conditioned by the very mode of its expenditure. 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 circuit C-M-C commodities to money to commodities starts with one commodity and finishes with another which falls out of circulation and into consumption. Consumption the satisfaction of wants in one word use value is its end and aim. The circuit M-C-M money to commodities to money on the contrary commences with money and ends with money. Its leading motive and the goal that attracts it is therefore mere exchange value. In the simple circulation of commodities the two extremes of the circuit have the same economic form. They are both commodities and commodities of equal value but they are also used values differing in their qualities as for example corn and clothes. The exchange of products of the different materials in which the labor of society is embodied forms here the basis of the movement. It is otherwise in the circulation M-C-M money to commodities to money which at first sight appears purposeless because tautological. Both extremes have the same economic form. They are both money and therefore are not qualitatively different use values. For money is but the converted form of commodities in which their particular use values vanish. To exchange 100 pounds sterling for cotton and then the same cotton again for 100 pounds sterling is merely a roundabout way of exchanging money for money. The same for the same and appears to be an operation just as purposeless as it is absurd. Put note 4 We do not exchange money for money. One does not exchange money for money. Thank you very much to the mercantilists. Locoki Tato, page 486 In a work which ex-professor treats of trade and speculation occurs the following. All trade consists in the exchange of things of different kinds and the advantage, aside by Marx, to the merchant end of a side arises out of this difference. To exchange a pound of bread against a pound of bread would be attended with no advantage. Hence trade is advantageously contrasted with gambling which consists in a mere exchange of money for money. Thomas Corbett An inquiry into the causes and modes of the wealth of individuals or the principles of trade and speculation explained London, 1841, page 5 Although Corbett does not see that M.M. the exchange of money for money is the characteristic form of circulation not only of merchants' capital but of all capital yet at least he acknowledges that this form is common to gambling and to one species of trade namely speculation. But then comes McCulloch and makes out that to buy in order to sell is to speculate and thus the difference between speculation and trade vanishes. Every transaction in which an individual buys produce in order to sell it again is in fact a speculation. McCulloch, a dictionary practical of commerce London, 1847, page 1009 With much more naivete Pinto the Pindar of the Amsterdam Stock Exchange remarks Le commerce est un jeu taken from Lockheed et ce n'est pas avec des gueux qu'on peut gagner si l'on gagnait longtemps en tout avec tous il faudrait rendre de bon accord les plus grandes parties du profit pour recommencer le jeu Trade is a game and nothing can be won from beggars If one won everything from everybody all the time it will be necessary to give back the greater part of the profit voluntarily in order to begin the game again. Pinto, traité de la circulation et du crédit Amsterdam, 1771, page 231 End of footnote One sum of money is distinguishable from another only by its amount. The character and tendency of the process MCM money to commodities to money is therefore not due to any qualitative difference between its extremes both being money but solely to their quantitative difference. More money is withdrawn from circulation at the finish than was thrown into it at the start. The cotton that was bought for 100 pounds sterling is perhaps resold for 100 plus 10 or 110 pounds sterling. The exact form of this process is therefore MCM prime where m prime equals m plus dm which equals 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 adds to itself a surplus value or expands itself. It is this movement that converts it into capital. Of course it is also possible that in CMC commodities to money to commodities the two extremes C and C say corn and clothes may represent different quantities of value. The farmer may sell his corn above its value or may buy the clothes at less than their value. He may on the other hand be done by the clothes merchant. Yet in the form of circulation now under consideration such differences in value are purely accidental. The fact that the corn and the clothes are equivalents does not deprive the process of all meaning as a dozen MCM money to commodities to money. The equivalence of their values is rather a necessary condition to its normal course. The repetition or renewal of the act of selling in order to buy is kept within bounds by the very object it aims at namely consumption or the satisfaction of definite wants an aim that lies altogether outside the sphere of circulation. But when we buy in order to sell we on the contrary begin and end with the same thing money, exchange value and thereby the movement becomes interminable. No doubt M becomes M plus DM a hundred pounds become a hundred and ten pounds. But when viewed in the qualitative aspect alone a hundred and ten pounds are the same as a hundred pounds namely money. And considered quantitatively a hundred and ten pounds sterling is like a hundred pounds sterling a sum of definite and limited value. If now the hundred and ten pounds sterling be spent as money they cease to play their part they are no longer capital. With drawn from circulation they become petrified into a hoard and though they remained in that state till doomsday not a single farthing would accrue to them. If then the expansion of value is once aimed at there is just the same inducement to augment the value of the hundred and ten pounds as that of the hundred pounds. For both are but limited expressions for 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 hundred pounds sterling is distinguishable from the surplus value of ten pounds sterling that is annexed to it during circulation. But the distinction vanishes immediately at the end of the process we do not receive with one hand the original hundred pounds and with the other the surplus value of ten pounds. We simply get a value of a hundred and ten pounds which is in exactly the same condition and fitness for commencing the expanding process as the original hundred pounds was. Money ends the movement only to begin it again. Footnote 5 Capital is divisible into the original capital and the profit, the increment to the capital. Although in practice this profit is immediately turned into capital and set in motion with the original. And a footnote. Therefore the final result of every separate circuit in which a purchase and consequence sale are completed forms of itself the starting point of a new circuit. The simple circulation of commodities selling in order to buy is a means of carrying out a purpose unconnected with circulation namely the appropriation of use values, the satisfaction of wants. The circulation of money as capital is on the contrary an end in itself for the expansion of value takes place only within this constantly renewed movement. The circulation of capital has therefore no limits. Footnote 6 Aristotle opposes economic to crematistic. He starts from the former. So far as it is the art of gaining a livelihood it is limited to procuring those articles that are necessary to existence and useful either to a household or the state. True wealth or a lequinos plotus consists of such values in use for the quantity of possessions of this kind capable of making life pleasant is not unlimited. There is however a second mode of acquiring things to which we may by preference and with correctness give the name of crematistic and in this case there appear to be no limits to riches and possessions. Trade aside a capillica is literally retail trade and Aristotle takes this kind because in it values in use predominate end of aside. Trade does not in it's nature belong to crematistic for here the exchange has reference only to what is necessary to themselves the buyer or seller. Therefore as he goes on to show the original form of trade was barter but with the extension of the latter there arose the necessity for money. On the discovery of money barter of necessity developed into capillica into trading in commodities and this again in opposition to it's original tendency grew into crematistic into the art of making money. Now crematistic is distinguishable from economic in this way that in the case of crematistic circulation is the source of riches, poetics, crematon dia crematon dia boles and it appears to revolve about money for money is the beginning end of this kind of exchange to nomes mas doigeon des alagas estin therefore also riches such as crematistic strives for are unlimited just as every art that is not a means to an end but an end in itself has no limit to it's aims because it seeks constantly to approach nearer and nearer to that end while those arts that pursue means to an end are not boundless since the goal itself imposes a limit upon them so with crematistic there are no bounds to it's aims these aims being absolute wealth economic not crematistic has a limit the object of the former is something different from money of the latter the augmentation of money by confounding these two forms which overlap each other some people have been led to look upon the preservation and increase of money ad infinitum as the end and aim of economic Aristotelius de Repubblica edited by Becker volume 1 chapters 8 and 9 end of footnote as the conscious representative 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 expansion of value which is the objective basis or main spring of the circulation MCM money to commodities to money becomes his subjective aim and it is only in so far as the appropriation of ever more and more wealth in the abstract becomes the sole motive of his operations that he functions as a capitalist that is as capital personified and endowed with consciousness and a will use values must therefore never be looked upon as the real aim of the capitalist neither must the profit on any single transaction footnote 7 commodities here used in the sense of use values are not the terminating object of the trading capitalist his terminating object Thomas Charmers on political economy 2nd edition 1832 pages 165 and 166 end of footnote the restless never ending process of profit making alone is what he aims at footnote 8 the merchant does not count almost for nothing profit but always looks for the future the merchant counts the money he has made as almost nothing he always looks to the future a. Genovesi lesioni di economia civile 1765 custodies edition of Italian economists parte moderna volume 8 page 139 end of footnote this boundless greed after riches this passionate chase after exchange 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 footnote 9 the inextinguishable passion for gain the aure sacrafames always lead capitalists McCulloch the principles of political economy London 1830 page 179 this view of course does not prevent the same McCulloch and others of his kidney when in theoretical difficulties such for example as the question of overproduction from transforming the same capitalists into a moral citizen whose sole concern is for use values and who even helps an insatiable hunger for boots, hats, eggs, calico and other extremely familiar sorts of use values end of footnote the never-ending augmentation of exchange value which the miser strives after by seeking to save footnote 10 so zen is a characteristic Greek expression for hoarding so in English to save has the same two meanings fair and eparnier end of footnote his money from circulation is attained by the more cute capitalists by constantly throwing it fresh into circulation footnote 11 that infinity which things do not possess they possess in circulation galiani end of footnote the independent form which the value of commodities assumes in the case of simple circulation serves only one purpose namely their exchange and vanishes in the final result of the movement on the other hand in the circulation MCM money to commodities to money both the money and the commodity in terms of existence of value itself the money it's general mode and the commodity it's particular or so to say disguised mode footnote 12 end of footnote it is constantly changing from one form to the other without thereby becoming lost and thus assumes an automatically active character if now we take in turn each of the two different forms which self-expanding value successively assumes in the course of its life we then arrive at these two propositions capital is money capital is commodities footnote 13 currency employed in producing articles is capital McLeod the theory and practice of banking London 1855 volume 1 chapter 1 page 55 capital is commodities James Mill elements of political economy London 1821 page 74 end of footnote in truth however value is here the active factor in a process in which while constantly assuming the form in turn of money and commodities it at the same time changes in magnitude differentiates itself by throwing off surplus value from itself the original value in other words expands spontaneously for the movement in the course of which it adds surplus value is its own movement its expansion therefore is automatic expansion because it is value it has acquired the occult quality of being able to add value to itself it brings forth living offspring or at the least lays golden eggs value therefore being the active factor in such a process and assuming at one time the form of money at another that of commodities but through all these changes preserving itself and expanding it requires some independent form by means of which its identity may at any time be established and this form it possesses only in the shape of money it is under the form of money that value begins and ends and begins again every act of its own spontaneous generation it began by being 100 pounds sterling it is now 110 pounds sterling and so on 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 scurvy they may look or however badly they may smell are in faith and in truth money inwardly circumcised Jews and what is more a wonderful means whereby out of money to make more money in simple circulation CMC commodities to money to commodities the value of commodities attained at the most a form independent of their use values i.e. the form of money but that same value now in the circulation MCM money to commodities to money or the circulation of capital suddenly presents itself as an independent substance endowed with a motion of its own passing through a life process of its own in which money and commodities are mere forms which it assumes and casts off in turn nay more instead of simply representing the origins of commodities it enters now so to say into private relations with itself it differentiates itself as original value from itself as surplus value as the father differentiates himself from himself while the son yet both are one and of one age for only by the surplus value of ten pounds does the hundred pounds originally advanced become capital as soon as this takes place so soon as the son and by the son the father is begotten so soon does their difference vanish and they again become one a hundred and ten pounds 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 the market comes back out of it with expanded bulk and begins the same round ever afresh footnote number fourteen capital fructifying portion of the wealth accumulated permanent value multiplying six monday, new principle of political economy volume one page eighty-eight, eighty-nine end of footnote m, m prime to the original sum advanced plus an increment money which begets money such is the description of capital from the mouths of its first interpreters the mercantilists buying in order to sell or more accurately buying in order to sell dearer m, c, m prime appear certainly to be a form peculiar to one kind of capital alone namely merchants capital but industrial capital too that is changed into commodities and by the sale of these commodities is reconverted into more money the events that take place outside the sphere of circulation in the interval between the buying and selling do not affect the form of this movement lastly in the case of interest bearing capital the circulation m, c, m prime appears abridged we have its result without the intermediate stage in the form m, m prime and stu lepidaire so to say money that is worth more money value that is greater than itself m, c, m prime is therefore in reality the general formula of capital as it appears prima facie within the sphere of circulation end of part two chapter four recording by mary rody in willow alaska chapter five of capital volume one this is a lipovox recording all lipovox recordings are in the public domain for more information or to volunteer please visit lipovox.org recording by anasimon capital a critical analysis of capitalist production volume one by carl marx translated from the third german edition by samuel moor and edward avaling and edited by frederick engels part two the transformation of money into capital chapter five contradictions in the general formula of capital the form which circulation takes when money becomes capital is opposed to all the laws we've hillar two investigated bearing on the nature of commodities value and money and even of 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 between these processes change their character as it were by magic but that is not all this inversion has no existence for two out of the three persons who transact business together as capitalists 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 fresh ones from A and B see no difference between the two sets of transactions they are merely buyers or sellers and i on each occasion meet them as a mere owner of either money or commodities as a buyer or seller and what is more in both sets of transactions i am opposed to A only as a buyer and to B only as a seller to the one only as money to the other only as commodities and to neither of them as capital or a capitalist or representative of anything that is more than money or commodities or that can produce any effect beyond what money and commodities can for me the purchase from A and the sale to B are part of a series but the connection between the two acts exists from 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 and the order of succession they would probably point out to me that i was mistaken as to that order of succession 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 series was superfluous and nothing but hocus-pocus that for the future A would buy direct from B and B sell direct to A thus the whole transaction would be reduced to a single act forming an isolated non-complimented phase in the ordinary circulation of commodities a mere sale from A's point of view and from B's a mere purchase the inversion therefore of the order of succession does not take us outside the sphere of simple circulation of commodities and we must rather look whether there is in this simple circulation anything permitting an expansion of the value that enters into circulation and consequently a creation of surplus value let us take the process of circulation in a form under which it presents itself as a simple and direct exchange of commodities this is always the case when two owners of commodities buy from each other and on the settling day the amounts that are going are equal and cancel each other the money in this case is money of account and serves to express the value of the commodities by their prices but is not itself in the shape of hard cash confronted with them so far as regards use values it is clear that both parties may gain some advantage both part with goods that as use values are of no service to them and receive others that they can make use of and there may also be a further gain a who sells wine and buys corn possibly produces more wine with given labour time than farmer b could and b on the other hand more corn than wine grower a could a therefore may get for the same exchange value more corn and b more wine than each would respectively get without any exchange by producing his own corn and wine with reference therefore to use value there is good ground for saying that quote exchange is a transaction by which both sides gain and quote footnote quote les chances est une transaction admirable dans laquelle les deux contractons gagnent toujours des steux de tracie traité de la volonté et de ses effect Paris 1826 page 68 this work appeared afterwards as traité d'économie politique and footnote 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 and 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 is equal to that which he acquired by means of that operation footnote merci de la rivière logo sateto page 544 and a footnote the result is not altered by introducing money as a medium of circulation between the commodities and making the cylinder purchase two distinct acts footnote quote que l'une de ses deux valeurs soit argent du machin d'iso gel rien de plus indifférent en soi end quote merci de la rivière logo sateto page 543 and footnote the value of a commodity is expressed in its price before it goes into circulation and is therefore a precedent condition of circulation not its result footnote quote ce ne sont pas les contractants qui prononcent sur la valeur avant la convention end quote page 906 and footnote abstractly considered that is apart from circumstances not immediately flowing from the laws of the simple circulation of commodities there is in an exchange nothing if we accept the replacing of one use value by another but a metamorphosis a mere change in the form of the commodity the same exchange value the same quantity of incorporated social labour remains throughout in the hands of the owner of the commodity first in the shape of his own commodity then in the form of the money for which he exchanged it and lastly in the shape of the commodity he buys with that money this change of form does not imply a 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 however was 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 then there is a change of a five-pound node into sovereigns, half sovereigns and chillings so far therefore as the circulation of commodities affects a change in the form alone and is free from disturbing influences it must be the exchange of equivalents little as vulgar economy knows about the nature of value yet whenever it wishes to consider the phenomena of circulation and their purity it assumes that supply and demand are equal which amounts to this that their effect is nil if therefore as regards to use values exchanged both buyer and seller may possibly gain something this is not the case as regards the exchange values here we must rather say where equality exists there can be no gain footnote quote and quote it is true commodities may be sold at prices deviating from their values but these deviations are to be considered as infractions of the laws of the exchange of commodities it is true commodities may be sold at prices because of the exchange of commodities which in its normal state is an exchange of equivalents consequently no method for increasing value footnote quote deviant from their values for one of the parties when something strange comes down or exaggerates the price so equality is injured but the legalization of this cause is the name of the chance end quote logo sateto page 904 next footnote quote the chance is of this nature a contract of equality for equal value it is therefore not a way to survive because it takes so long to receive it end quote logo sateto page 903 end footnote hence we see that behind all attempts to represent the circulation of commodities as a source of surplus value there lurks a quick pro quo a mixing up of use value and exchange value for instance it is not true that on 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 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 wants 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 required 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 value was given for value whenever each of the articles exchange 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 and quote footnote Kondijak, le commerce et le gouvernement 1776 Édite, Der et Molinari in the mélange d'économie politique Paris 1847 pages 267 and 291 and footnote we see in this passage how Kondijak not only confuses used value with exchange value but in a really childish manner he 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 the excess over his own requirements footnote le trop d'air faux answers his friend Kondijak with just as follows quote dans une société formée il n'y a pas de surabondant en aucune genre and quote he remarks if both the persons who exchange receive more to an equal amount and part with less to an equal amount they both get the same end quote it is because Kondijak has not the remotest idea of the nature of exchange value that he has been chosen by Herr Professor Wilhelm Rocher as a proper person to answer for the soundness of his own childish notions see Roches Die Grundlagen der Nationale Ökonomie 1858 end footnote still Kondijak's argument is frequently used by modern economists more especially when the point is to show 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 the hands of producers and it may strictly be considered an act of production footnote SP Newman elements of political economy and over in New York 1835 page 175 end footnote but commodities are not paid for twice over once on account of their use value and again 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 serviceable to the seller would he otherwise sell it or just as well say that the buyer performs 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 than he throws into circulation there is no creation of surplus value and in its normal form the circulation of commodities demands the exchange of equivalence but in actual practice the process does not retain its normal form let us therefore assume an exchange of non equivalents in any case the market for commodities is only frequented 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 these commodities is the material incentive to the act of exchange and makes buyers and sellers mutually dependent because none of them possesses the object of his own once and each holds in his hand the object of another's once besides these material differences of their use values there is only one other difference between these commodities namely that between their bodily form and the form into which they are converted by sale the difference between commodities and money and consequently the owners of commodities are distinguishable only as sellers those who own commodities and buyers, those who own money suppose then that by some inexplicable privilege the seller is enabled to sell his commodities above their value that is worth 100 for 110 in which case the price is normally raised 10% the seller therefore pockets a surplus value of 10 but after a year sold he becomes a buyer a third owner of commodities comes to him now as seller who in this capacity also enjoys the privilege of selling his commodities 10% too dear our friend gained 10 as a seller only to lose it again as a buyer footnote quote by the augmentation of the nominal value of the produce sellers not enriched since what they gain as sellers they precisely expand in the quality of buyers end quote the essential principles of the wealth of nations etc London 1797 page 66 end footnote is that all owners of commodities sell their goods to one another at 10% above their value which comes precisely to the same as if they sold them at that true value such a general and nominal rise of prices has the same effect as if the values had been expressed in weight of silver instead of in weight of gold the nominal prices of commodities would rise but the real relation between their values would remain unchanged let us make the opposite assumption as the privilege of purchasing commodities under their value in this case it is no longer necessary to bear in mind that he in his turn will become a seller he was so before he became buyer he had already lost 10% in selling before he gained 10% as buyer footnote quote end quote end quote page 897 end a footnote everything is just as it was the creation of surplus value and therefore the conversion of money into capital can consequently be explained neither in the assumption that commodities are sold above their value nor that they are bought below their value footnote end quote each seller can therefore receive habitually these commodities when this buyer also pay habitually the more expensive the other sellers and for the same reason each consumer can not pay habitually less expensive what he buys when this buyer also has a reasonable decrease on the price of the things he wants end quote page 555 end footnote the problem is in no way simplified by introducing irrelevant matters after the manner of colonel turns quote aside exclamation mark added by Marx end of aside on the part of consumers to give for commodities either by immediate or circuitous barter some greater portion of capital than their production costs end quote footnote, Torrance an essay on the production of wealth London 1821 page 349 end footnote in relation to circulation producers and consumers meet 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 say in other words the owner of commodities possesses as a seller the privilege of selling to dear the seller has himself produced the commodities or represents their producer but the buyer has to no less extent produced the commodities represented by his money or represents their producer the distinction between them is that one buys and the other sells the fact that the owner of the commodities under the designation of producer sells them over their value and under the designation of consumer too much for them does not carry us a single step further footnote, the idea of profits being paid by the consumers is assuredly very absurd who are the consumers? G. Ramsey, an essay on the distribution of wealth, Edinburgh 1836 page 183 end footnote to be consistent therefore the upholders of the delusion that surplus value has its origin in a nominal rise of prices or in the privilege which the seller has of selling to dear must assume the existence of a class that only buys and does not sell i.e. only consumes and does not produce the existence of such a class is inexplicable from the standpoint we have so far reached vis that of simple circulation but let us anticipate the money with which such a class is constantly making purchases must constantly flow into their pockets without any exchange by might or right from the pockets of the commodity owners themselves to sell commodities above their value to such a class is only to crib back again a part of the money previously given to it footnote when a man is in want of a demand does Mr. Malthus recommend him to pay some other person to take off his goods is a question put by an angry disciple of Ricardo to Malthus who, like his disciple Pauson Chalmers economically glorifies this class of simple buyers or consumers see an inquiry into those principles respecting the nature of demand and the necessity of consumption lately advocated by Mr. Malthus etc. London 1821 page 55 end footnote the towns of Asia Minor thus paid a yearly money tribute to ancient Rome with this money Rome purchased from them commodities and purchased them to dear the provincials cheated the Romans and thus got back from their conquerors in the cause of trade a portion of the tribute yet for all that the conquered were the really 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 bounds of exchange where sellers are also buyers and buyers sellers our difficulty may perhaps have arisen from treating the actors as personifications instead of individuals a may be clever enough to get the advantage of B or C without their being able to retaliate A sells wine worth 40 pounds to B and obtains from him in exchange coins to the value of 50 pounds A has converted his 40 pounds into 50 pounds has made more money out of less and has converted his commodities into capital let us examine this a little more closely before the exchange we had 40 pounds worth of wine in the hands of A and 50 pounds worth of corn in those of B a total value of 90 pounds after the exchange we have still the same total value of 90 pounds the value in circulation has not increased by one iota it is only distributed differently between A and B what is the loss of value to B is surplus value to A what is minus to one is plus to the other the same change would have taken place if A without the formality of an exchange had directly stolen the 10 pounds from B the sum of the values in circulation can clearly not be augmented by any change in their distribution any more than the quantity of the precious metals in a country by a Jew selling a Queen Anne's farthing for a guinea the capitalist class as a whole in any country cannot overreach themselves footnote Destre de Tracey although or perhaps because he was a member of the institute held the opposite view he says industrial capitalists make profits because quote they all sell for more than it has cost to produce and to whom do they sell in the first instance to one another and quote loco citato page 239 and footnote turn and twist then as we may the fact remains unaltered if equivalents are exchanged no surplus value results and if non equivalents are exchanged still no surplus value footnote quote les chances qu'il se fait de deux valeurs égales n'augment ni ne diminuer la masse des valeurs subsistentes dans la société les chances de deux valeurs inégales ne chance rien non plus à la somme des valeurs sociales bien qu'il ajoute à la fortune de l'un, ce qu'il eau de la fortune de l'autre end quote jbcae loco citato page 443 m444 c'est not in the least troubled as to the consequences of this statement borrows it almost word for word from the physiocrats the following example will show how monsieur c turned to account the writings of the physiocrats in his day quite forgotten for the purpose of expanding the value of his own his most celebrated saying quote en n'achète des produits qu'avec des produits end quote loco citato second book page 441 runs as follows in the original physiocratic work les productions ne se paient qu'avec des productions le trône loco citato page 899 and footnote circulation or the exchange of commodities begets no value footnote quote exchange confers no value at all upon products end quote the elements of political economy boston 1843 page 169 and footnote the reason is now there for plain why in analyzing the standard form of capital the form under which it determines the economic organization of modern society we entirely left out of consideration it's most popular and so to say and deluvian forms merchants capital and money lenders capital the circuit them buying in order to sell dearer is seen most clearly in genuine merchants capital but the movement takes place entirely within the sphere of circulation since however it is impossible by circulation alone to account for the conversion of money into capital for the formation of surplus value it would appear that merchants capital is an impossibility so long as equivalents are exchanged footnote under the rule of invariable equivalents commerce would be impossible j. updyke a treatise on political economy new york 1851 pager 66 to 69 quote the difference between real value and exchange value is based upon this fact namely that the value of a thing is different from the so-called equivalent given for it in trade i.e. that this equivalent is no equivalent end quote f. Engels logo citato page 96 and footnote that therefore it can only have its origin in the two fold advantage gained over both the selling and the buying producers by the merchant who parasitically shoves himself in between them it is in this sense that franklin says quote war is robbery commerce is generally cheating end of quote footnote benjamin franklin works second volume addition sparks in positions to be examined concerning national wealth page 376 and footnote if the transformation of merchants money into capital is to be explained otherwise than by the producers being simply cheated a long series of intermediate steps would be necessary which at present when the simple circulation of commodities forms our only assumption are entirely wanting what we have said with reference to merchants capital applies still more to moneylenders capital in merchants capital the two extremes the money that is thrown upon the market and the augmented money that is withdrawn from the market are at least connected by a purchase and a sale in other words by the movement of the circulation in moneylenders capital the form MCM is reduced to the two extremes without a mean M M money exchanged for more money a form that is incompatible with the nature of money and therefore remains inexplicable from this standpoint of the circulation of commodities hence Aristotle quote since chromatistic is a double science one part belonging to commerce the other to economic the letter being necessary and praiseworthy the former based on circulation and with justice disapproved for it is not based on nature but on mutual cheating therefore the issuer 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 Greek Tocos interest and offspring for the begotten are like those who begat them but interest is money of money so that of all modes of making a living this is the most contrary to nature end quote footnote Aristotle loco sateto page 10 end footnote 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 these two forms appear in the course of history before the modern standard form of capital we've shown that surplus value cannot be created by circulation and therefore that in its formation something must take place in the background which is not apparent in the circulation itself footnote quote profit in the usual condition of the market is not made by exchanging had it not existed before neither could it after that transaction end quote Ramsey loco sateto page 184 end footnote but can surplus value possibly originate anywhere else in its circulation which is the sum total of all the mutual relations of commodity owners as far as they are determined by their commodities apart from circulation the commodity owner is in relation only with his own commodity so far as regards value that relation is limited to this that the commodity contains a quantity of his own labour that quantity being measured by a definite social standard this quantity is expressed by the value of the commodity and since the value is reckoned in money of account this quantity is also expressed by a price which will supposed to be 10 pounds but his labour is not represented both by the value of the commodity or the surplus over that value not by a price of 10 that is also a price of 11 not by a value that is greater than itself the commodity owner can by his labour create value but not self-expanding value he can increase the value of his commodity by adding fresh labour and therefore more value to the value in hand by making for instance leather into boots the same material has now 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 expanded itself has not during the making of the boots annexed surplus value it is therefore impossible that outside the sphere of circulation a producer of commodities can without coming into contact with other commodity owners expand value and consequently convert money or commodities into capital it is therefore impossible for capital to be produced by circulation and it is equally impossible for it to originate apart from circulation it must have its origin both in circulation and yet not in circulation we have therefore got a double result the conversion of money into capital has to be explained on the basis of the laws that regulate the exchange of commodities in such a way that the starting point is the exchange of equivalents footnote from the foregoing investigation the reader will see that this statement only means that the formation of capital must be possible even though the price and value of a commodity be the same for its formation cannot be attributed to any deviation of the one from the other if prices actually differ from values we must first of all reduce the former to the leather in other words treat the difference as accidental in order that the phenomena may be observed in their purity and our observations are not interfered with by disturbing circumstances that have nothing to do with the process in question we know moreover that this reduction is no mere scientific process the continual oscillations in prices, their rising and falling compensate each other and reduce themselves to an average price which is their hidden regulator it forms the guiding star of the merchant or the manufacturer in every undertaking that requires time he knows that when a long period of time is taken commodities are sold neither over nor under but at their average price if therefore he thought about the measure at all he would formulate the problem with the formation of capital as follows how can we account for the origin of capital on the supposition that prices are regulated by the average price i.e. ultimately by the value of the commodities I say ultimately because average prices do not directly coincide with the values of commodities as Smith, Ricardo and others believe and a footnote our friend moneybags who has yet is only an embryo capitalist must buy his commodities at their value must sell them at their value and yet at the end of the process must withdraw more value from circulation than he threw into it at the starting his development into a full grown capitalist must take place both within the sphere of circulation and without it these are the conditions of the problem hig rodus hig salta end of part 2 chapter 5 chapter 6 of capital volume 1 this is a LibriVox recording all LibriVox recordings are in the public domain for more information or to volunteer please visit LibriVox.org recording by Anna Simon capital a critical analysis of capitalist production volume 1 by Karl Marx translated from the 3rd German edition by Samuel Moore and Edward Averling and edited by Frederick Engels part 2 the transformation of money into capital chapter 6 the buying and selling of labour power the change of value that occurs in the case of money intended to be converted into capital cannot take place in the money itself since in its function of means of purchase and of payment it does no more than realize the price of the commodity it buys or pays for and as hard cash it is value petrified never varying footnote in the form of money capital is productive of no profit Ricardo principles of a political economy page 267 and footnote just as little can it originate in the second act of circulation the resale of the commodity which does no more than transform the article from its bodily form back again into its money form the change must therefore will take place in the commodity bought by the first act mc but not in its value for equivalents are exchanged and the commodity is paid for at its full value we are therefore force the conclusion that the change originates in the use value as such of the commodity i.e. in its consumption in order to be able to extract value from the consumption of a commodity our friend money bags must be so lucky as to find within the sphere of circulation in the market a commodity whose use value possesses the peculiar property of being a source of value whose actual consumption therefore is itself an embodiment of labour and consequently a creation of value the possessor of money does find on the market such a special commodity capacity for labour or labour power by labour power or capacity for labour is to be understood the aggregate of those mental and physical capabilities existing in a human being which he exercises whenever he produces a use value of any description but in order that our owner of money may be able to find labour power offered for sale as a commodity various conditions must first be fulfilled the change of commodities of itself implies no other relations of dependence than those which result from its own nature on this assumption labour power can appear upon the market as a commodity only if and 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 he may be able to do this he must have it at his disposal must be the untrammeled owner of his capacity for labour i.e. of his person footnote in encyclopedias of classical antiquities we find such nonsense as this that in the ancient world capital was fully developed except that a free labourer and a system of credit was wanting end quote Momsen also in his history of room commits in this respect one blunder after another end of footnote the owner of money meet in the market and deal with each other as on the basis of equal rights with this difference alone that one is buyer the other seller both therefore equal in the eyes of the law the continuance of this relation demands that the owner of the labour power should sell it only for a definite period for if he were to sell it ramp and stump once 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 look upon his labour power as his own property his own commodity and this he can only do by placing it at the disposal of the buyer temporarily for a definite period of time by this means alone can he avoid renouncing his rights of ownership over it footnote hence legislation in various countries fixes a maximum for labour contract slavery labour is the rule the laws regulate the mode of terminating this contract in some states particularly in mexico before the americans of a war also in the territories taken from mexico and also as a matter of fact in the denubian provinces till the revolution affected by cusa slavery is hidden under the form of peonage by means of advances repayable in labour which are handed down from generation to generation not only the individual labourer but his family become de facto the property of other persons and their families who else abolished peonage the so called emperor maximillion reestablished by a decree which in the house of representatives at washington was aptly denounced as a decree for the reintroduction of slavery into mexico quote I may make over to another the use for a limited time of my particular bodily and mental aptitudes and capabilities because in consequence of this restriction they are impressed with the character of alienation with regard to me as a whole but by the alienation of all my labour power and the whole of my work I should be converting the substance itself in other words my general activity and reality my person into the property of another end quote Hegel philosophie des rechts Berlin 1840 page 104 paragraph 67 end footnote the second essential condition to the owner of money finding labour power in the market as a commodity is this that the labour instead of being in a position to sell commodities in which his labour is incorporated must be obliged to offer for sale as a commodity that very labour power which exists only in his living self in order that a man may be able to sell commodities other than labour power he must of course have the means of production as raw material implements etc no boots can be made without leather he requires also the means of subsistence nobody not even quote a musician of the future end quote can live upon future products or upon use values in an unfinished state and ever since the first moment of his appearance on the world stage man always has been and must still be a consumer both before and while he is producing in a society where all products assume the form of commodities these commodities must be sold after they have been produced it is only after their sale that they can serve in satisfying the requirements of their producer the time necessary for their sale is super added to that necessary for their production for the conversion of his money into capital therefore the owner of money must meet in the market with a free labourer in a double sense that as a free man he can dispose of his labour power as his own commodity and that on the other hand he has no other commodity for sale a short of everything necessary for the realization of his labour power the question why this free labourer confronts him in the market has no interest for the owner of money who regards the labour market as a branch of their general market for commodities and for the present it interests us just as little we cling to the fact theoretically as he does practically one thing however is clear nature does not produce on the one side owners of money or commodities and on the other men possessing nothing but their own labour power this relation has no natural basis neither is it social basis one that is common to all historical periods 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 forms of social production so too the economic categories already discussed by us bear the stamp of history definite historical conditions are necessary that a product may become a commodity it must not 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 in the form of commodities we should have found that this can only happen with production of a very specific kind capitalist production such an inquiry however would have been foreign to the analysis of commodities production and circulation of commodities can take place although the great mass of the objects produced are intended for the immediate requirements of their producers are not turned into commodities and consequently social production is not yet by a long way dominated in its length and breadth by exchange value the appearance of products as commodities presupposes such a development of the social division of labour that the separation of use value from exchange value a separation which first begins with barter must already have been completed but such a degree of development is common to many forms of society which in other respects present the most varying historical features on the other hand if we consider money its existence implies a definite stage in the exchange of commodities the particular functions of money which it performs either as the mere equivalent of commodities or as means of circulation or means of payment as hoard or as universal money point according to the extent and relative preponderance of the one function or the other to very different stages in the process of social production yet we know by experience the circulation of commodities relatively primitive suffices for the production of all these forms otherwise with capital the historical conditions of its existence are by no means given with the mere circulation of money and commodities it can spring into life only when the owner of the means of production and subsistence meets in the market with the free labourer selling his labour power and historical condition comprises a world's history capital therefore announces from its first appearance a new epoch in the process of social production footnote the capitalist epoch is therefore characterised by this that labour power takes in the eyes of the labourer himself the form of a commodity which is his property his labour consequently becomes wage labour on the other hand it is only from this moment that the produce of labour universally becomes a commodity and footnote we must now examine more closely this peculiar commodity labour power like all others it has a value footnote quote the value or worth of a man is as of all other things his price that is to say so much as will be given for the use of his power footnote Thomas Hobbes Leviathan in works edition Mulsworth London 1839 to 44 volume 3 page 76 and footnote 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 special article the labour value it represents no more than a definite quantity of the average labour of society incorporated in it labour power exists only as a capacity or power of the living individual its production consequently presupposes his existence given the individual the production of labour power consists in his reproduction of himself or his maintenance for his maintenance he requires a given quantity of the means of subsistence therefore the labour time requisite for the production of labour power reduces itself to 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 the labour labour power however becomes a reality only by its exercise it sets itself in action only by working but thereby a definite quantity of human muscle, nerve, brain etc is wasted and these require to be restored this increased expenditure demands a larger income footnote hence the Rowan-Villacus as overlooker of the agricultural slaves received quote more meager fare than working slaves because his work was lighter and quote Thomas Momsen 1846 page 810 and footnote the 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 labouring individual his natural wants such as food, clothing, fuel and housing vary according to the climatic and other physical conditions of his country on the other hand the number and extent of his so-called necessary wants and the modes of satisfying them are themselves the product of historical development and depend therefore to a great extent on the degree of civilization of a country more particularly on the conditions under which and consequently on the habits and degree of comfort in which the class of free labourers has been formed footnote compare W.T.H. Thornton overpopulation in its remedy London 1846 and footnote in contrary distinction therefore to the case of other commodities there enters into the determination of the value of labour power a historical and moral element nevertheless in a given country at a given period the average quantity of the means of subsistence necessary for the labourer is practically known the owner of labour power is mortal if then his appearance in the market is to be continuous and the continuous conversion of money into capital assumes this the seller of labour power must perpetuate himself quote in the way that every living individual perpetuates himself by procreation and quote footnote petty and footnote the labour power withdrawn from the market by wear and tear and death must be continually replaced by at the very least an equal amount of fresh labour power hence the sum of the means of subsistence necessary for the production of labour power must include the means necessary for the labourer's substitutes i.e. his children in order that this raise of peculiar commodity owners may perpetuate its appearance in the market footnote quote its labour's natural price consists in such a quantity of necessaries and comforts of life as from the nature of the climate and the habits of the country are necessary to support the labourer and to enable him to rear such a family as may preserve in the market an undiminished supply of labour end quote an essay on the external corn trade London 1815 page 62 the word labour is here wrongly used for labour power and footnote in order to modify the human organism so that it may acquire skill and handiness in a given branch of industry and become labour power of a special kind a special education or training is requisite and this, on its part, costs an equivalent in commodities of a greater or less amount this amount varies according to the more or less complicated character of the labour power the expenses of this education successfully small in the case of ordinary labour power enter pro tento into the total value spent in its production the value of labour power resolves itself into the value of a definite quantity of the means of subsistence it therefore varies with the value of these means or with the quantity of labour requisite for their production some of the means of subsistence such as food and fuel are consumed daily and the fresh supply must be provided daily others such as clothes and furniture last for longer periods and are required to be replaced only at longer intervals one article must be bought or paid for daily another weekly, another quarterly and so on but in whatever way some 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 daily for the production of labour power is A and those required weekly is B and those required quarterly is C and so on the daily average of these commodities is 365 times A plus 52 times B plus 4 times C plus etc. by 365 suppose that in this mass of commodities requisite for the average day there are embodied 6 hours of social labour then there is incorporated daily in labour power half a day's average social labour in other words half a day's labour is requisite 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 daily reproduced if half a day's average social labour is incorporated 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 supposition our friend Moneybags who is intent upon converting his 3 shillings into capital pays this value the minimum limit of the value of labour power is determined by the value of the commodities without the daily supply of which the labourer cannot renew his vital energy consequently by the value of those means of subsistence that are physically indispensable if the price of labour power fall to this minimum it falls below its value since under such circumstances it can be maintained and developed only in a crippled state but the value of every commodity is determined by the labour time requisite to turn it out so as to be of normal quality it is a very cheap sort of sentimentality which declares this method of determining the value of labour power a method prescribed by the very nature of the case to be a brutal method and which wails with Rossi that quote to comprehend capacity for labour puissance de travail at the same time that we make abstraction from the means of subsistence of the labourers during the process of production to comprehend a phantom être de raison when we speak of labour or capacity for labour we speak at the same time of the labourer and his means of subsistence of labourer and wages and quote Rossi Cour d'économie politique Bruxelles 1842 page 3 on 70 and footnote when we speak of capacity for labour capacity for digestion we speak of digestion the letter 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 the labourer derives no benefit from it but rather he will feel it to be a cruel nature imposed necessity that this capacity has cost for its production a definite amount of the means of subsistence and that it will continue to do so for its reproduction he will then agree with cismonny quote that capacity for labour is nothing unless it is sold and quote footnote cismonny nouveau principe etc vol 1 page 112 and footnote one consequence of the peculiar nature of labour power as a commodity is that its use value does not, on the conclusion of the contract between the buyer and seller immediately pass into the hands of the former its value, like that of every other commodity is already fixed before it goes into circulation since the definite quantity of social labour has been spent upon it but its use value consists in the subsequent exercise of its force the alienation of labour power and its actual appropriation by the buyer its employment as a use value are separated by interval of 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 delivery to the buyer the money of the letter usually function as means of payment footnote quote all labour is paid after it has seized and quote an enquiry into those principles respecting the nature of demand etc page 104 the commercial credit had to start at the time where the worker the first artisan of the production was able, through his economy to reach the salary of his work until the end of the week of the 15th of the month of the semester etc Charles Ghanille political economy system second edition Paris 1821 volume 2 page 150 end footnote in every country in which the capitalist mode of production reigns it is the custom not to pay for labour power before it has been exercised for the period fixed by the contract as for example the end of each week in all cases therefore the use value of the labour power is advanced to the capitalist the labourer allows the buyer to consume it before he receives payment of the price he everywhere gives credit to the capitalist that this credit is no mere fiction is shown not only the occasional loss of wages on the bankruptcy of the capitalist but also by a series of more enduring consequences footnote quote l'ouvrier prête son industrie but adds Storch slightly he risks nothing except de perdre son salaire l'ouvrier ne transmet rien de matriels Storch court d'économie politique Petersburg 1815 volume 2 page 37 one example in London there are two sorts of bakers the full priced who sell bread at its full value and the undersellers who sell it under its value the latter class comprises more than three forts with a total number of bakers page Roman 32 in the report of H.S. Tremon here commissioner to examine into the grievances complained of by the journeymen bakers etc London 1862 the undersellers almost without exception sell bread adulterated with alum, soap, pearl ashes chalk, derbyshards, stone dust and such like agreeable nourishing and wholesome ingredients see the above sided blue book as also the report of the committee of 1855 on the adulteration of bread and Dr. Hassell's adulterations detected second edition London 1861 Sir John Gordon stated before the committee of 1855 that quote in consequence of these adulterations the poor man who lives on two pounds of bread a day does not now get one fourth part of nourishing matter let alone the deleterious effects on his health end quote Tremon here states page Roman 48 as the reason why a very large part of the working class although well aware of this adulteration nevertheless accept the alum, stone dust etc of their purchase that it is for them quote a matter of necessity to take from their baker or from the chances shop such bread as they choose to supply end quote as they are not paid their wages before the end of the week they in their turn are unable quote to pay for the bread consumed by their families during the week before the end of the week end quote and Tremon here adds on the evidence of witnesses quote it is notorious that bread composed of those mixtures expressly for sale in this manner end quote in many English and still more scotch agricultural districts wages are paid fortnightly and even monthly with such long intervals between the payments the agricultural labourer is obliged to buy on credit he must pay higher prices and is in fact tied to the shop which gives him credit thus at Horningham in Wilts for example where the wages are monthly the same flour that he could buy elsewhere at one shilling ten pence per stone costs him two shillings four pence per stone sixth report on public health by the medical officer of the privy council etc 1864 page 264 quote the block printers of Paisley and Kilmarnock enforced by a strike fortnightly instead of monthly payment of wages end quote reports of the inspectors of factories for 31st October 1853 page 34 as a further pretty result of the credit given by the workmen to the capitalist we may refer to the method current in many English coal mines whether labourer is not paid till the end of the month and in the meantime receives sums on account from the capitalist often goods for which the miner is obliged to pay more than the market price truck system quote it is a common practice with the coal masters to pay once a month and advance cash to their workmen at the end of each intermediate week cash is given in the shop i.e. the tommy shop which belongs to the master the man take it on one side and lay it out on the other end quote children's employment commission third report London 1864 page 38 end 192 end footnote nevertheless whether money serve as a means of purchase or as a means of payments this makes no alteration in 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 only paid for at a later period it will therefore be useful for a clear comprehension of the relation of the parties to assume provisionally that the possessor of labour power on the occasion of each sale immediately receives the price stipulated to be paid for it we now know how the value paid by the purchaser to the possessor of this peculiar commodity labour power is determined the use value which the former gets in exchange manifests itself only in the actual user fract in the consumption of the labour power the money owner buys everything necessary for this purpose such as raw material in the market and pays for it at its full value the consumption of labour power is at one and the same time the production of commodities and of surplus value the consumption of labour power is completed as in the case of every other commodity outside the limits of the market or of the sphere of circulation accompanied by Mr Moneybags and by the possessor of labour power we therefore take leave for a time of this noisy sphere where everything takes place on the surface and in view of all men and follow them both into the hidden abode of production on whose threshold their stares is in the phase no admittance except on business here we shall see not only how capital produces but how capital is produced we shall at last force the secret of profit making this sphere that we are deserting within whose boundaries the sale and purchase of labour power goes on is in fact a very Eden of the innate rights of man there alone rule freedom, equality, property and Bentham freedom because both buyer and seller of a commodity say of labour power are constrained only by their own free will they contract as free agents and the agreement they come to is but the form in which they give legal expression to their common will equality because each enters into relation with the other as with the 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 himself the only force that brings them together and put them in relation with each other is the selfishness the gain and the private interests of each each looks to himself only and no one troubles himself about the rest and just because they do so do they all in accordance with the pre-established harmony of things or under the auspices of an all-srew providence work together to their mutual advantage for the common will and in the interest of all unleaving this sphere of simple circulation or of exchange of commodities which furnishes the free trader vulgaris with his views and ideas and with the standard by which he judges a society based on capital and wages we think we can perceive a change in the physiognomy of our dramatic personae he who before was the money owner now strides in front as capitalist the possessor of labour power follows as his labourer the one with an air of importance smirking intent on business the other timid and holding back like one who is bringing his own height to market and has nothing to expect but a hiding End of Part 2, Chapter 6


But what is social media? Social media is basically any platform that allows people to communicate and exchange with each other and share in some form. It all started back in the dark ages of 2004, early 2000s where we had, you know, BBSs which are much older actually, and forums where people would exchange information.  And this grew. Eventually we got Facebook, we got Twitter. These platforms are much more friendly for non-technical people to use and they've grown in the usership up to almost a third of humanity now is on these social media platforms. What's interesting is out of that has grown entire new industries that did not exist before. There's an entire version of Hollywood in Beijing which is specialized in creating videos just for the internet. We have our YouTube influencers, it's changed the pathway to fame. It's no longer just going straight through, you know, Disney to become a famous person but you can actually go through YouTube, build your following and then Disney will be chasing after you. So it's created these new industries, created changed consumer behavior and really what is happening right now is it is forcing companies to understand that the way that they relate to their consumers has entirely changed and that's really where our conversation is going to go through this course which is talking about how companies need to change and how companies need to engage and interact with social media which really changes fundamentally in many ways their actual business models.