Friedrich Engels
Karl Marx on Capital. Manuscript of the review

for "The Fortnightly Review"

1E] |
|[2]| Karl Marx on Capital.*'

I.

Mr. Thomas Tooke, in his inquiries on currency, points out the fact that
money, in its function as capital, undergoes a reflux to its point of issue,
while this is not the case with money performing the function of mere
currency. This distinction (which, however, had been established long
before by Sir James Steuart) is used by Mr. Tooke merely as a link in his
argumentation against the "Currency men" & their assertions as to the
influence of the issue of paper-money on the prices of commodities. Our
author, on the contrary, makes this distinction the starting point of his
inquiry into the nature of capital itself, & especially as regards the question: How is money, this independent form of existence of value, converted into capital?

All sorts of business-men—says Turgot—have this in common, that
they buy in order to sell; their purchases are an advance which afterwards
is returned to them.

To buy in order to sell, such is indeed the transaction in which money
functions as capital, and which necessitates its return to its point of issue;
in contradistinction to selling in order to buy, in which process money
may function as currency only. Thus it is seen that the different order in
which the acts of selling & buying follow upon each other, impress upon
money two different motions of circulation. In order to illustrate these
two processes, our author gives the following formulae:

*> Das Kapital. Von Karl Marx. Erster Band. Hamburg, Meissner, 1868.

Friedrich Engels: Karl Marx on Capital. Review for "The
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Fortnightly Review".

Karl Marx on Capital. Review for 'The Fortnightly Review"

To sell in order to buy: a Commodity C is exchanged for money M,
which is again exchanged for another commodity C; or: C-M-C. |

|Bl| To buy in order to sell: money is exchanged for a commodity & this
is again re-exchanged for money: M—C-M.

5 The formula C—M-—C represents the simple circulation of commodities, in which money functions as means of circulation, as currency. This
formula is analysed in the first chapter of our book which contains a new
and very simple theory of value and of money, extremely interesting
scientifically, but which we here leave out of consideration as, on the

10 whole, immaterial to what we consider the vital points of Mr Marx's
views on Capital.

The formula M-C-M, on the other hand, represents that form of
circulation in which money resolves itself into Capital.
The process of buying in order to sell: M—C—M, may evidently be

15 resolved into M—M; it is an indirect exchange of money against money.
Suppose I buy Cotton for £ 1,000.- and sell it for £ 1,100.-; then, infine, I
have exchanged £1,000 for £1,100, money for money.

Now, if this process were always to result in returning to me the same
sum of money which I had advanced, it would | be absurd. But, wheth-

20 er the merchant, who advanced £1,000, realises £1,100, or £1,000, or
even £900 only, his money has gone through a phase essentially different
from that of the formula C-M-C: which formula means, to sell in
order to buy, to sell what you do not want in order to be able to buy that
which you do want. Let us compare the two formulae.

25 Each process is composed oftwo phases or acts, and these two acts are
identical in both formulae; but there is a great difference between the two
processes themselves. In C-M-C, money is merely the mediator; the
Commodity, useful value, forms the starting and the concluding point. In
M-C-M, the commodity is the intermediate link, while money is the

30 beginning & the end. In C—M-—C the money is spent once for all; in
M—C-—M it is merely advanced, with the intention to recover it; it returns to its point of issue, & in this we have a first palpable difference
between the circulation of money as currency & of money as capital.

In the process of selling in order to buy, C-M-C, the money can

35 return to its point of issue on the condition only that the whole process
be repeated, that a fresh quantity of commodity be sold. The reflux,
therefore, is independent of the process itself. But in M-C-M, this
reflux is a necessity and intended from the beginning; if it does not take
place, there is a hitch somewhere & the process remains incomplete.

40 To sell in order to buy, has for its object the acquisition of useful value;
to buy in order to sell, that of exchangeable value.

Friedrich Engels

In the formula C—M-—C, the two extremes are, economically speaking, identical. They are both commodities; they are, moreover, of the
same quantitative value, for the whole theory of value implies the supposition that, normally, equivalents only are exchanged. At the same
time, these two extremes C—C are two useful values different in quality,
and they are | exchanged on that very account.—In the process of
M-C-M, the whole operation, at the first glance, appears meaningless.
To exchange £100 for £100, and that by a roundabout process, appears
absurd. A sum of money can differ from another sum of money by its
quantity only. M — C — M, therefore, can only have any meaning by the
quantitative difference of its extremes. There must be more money drawn
out from circulation than had been thrown into it. The cotton bought for
£1,000 is sold for £1,100, = £1,000 + £100; the formula representing the
process, thus, changes to M — C — M', in which M' = M + IM, M plus an
increment. This AM, this increment, Mr. Marx calls surplus valued The
value originally advanced not only maintains itself, it also adds to itself
an increment, it begets value, and it is this process which changes money
into capital.

In the form of circulation C—M — C, the extremes may, certainly, also
differ in value, but such a circumstance would here be perfectly indifferent; the formula does not become absurd if both extremes are equivalents. On the contrary, it is a condition of its normal character that they
should be so.

The repetition of C- M-—C is limited by circumstances entirely extraneous to the process of exchange itself: by the requirements of consumption. But in M — C — M, beginning & end are identical as to quality, and
by that very fact the motion is, or may be, perpetual. No doubt, M + IM
is different in quantity from M; but still it is a mere limited sum of
money. If you spend it, it will cease to be capital; if you withdraw it from
circulation, it will be a stationary hoard. The inducement once | admitted for the process of making value beget value, this inducement exists
as much for M' as it existed for M; the motion of Capital becomes
perpetual and endless, because at the close of each separate transaction
its end is no more attained than before. The performance of this endless
process transforms the owner of money into a capitalist.

Apparently, the formula M — C — M is applicable to merchants' capital
alone. But the manufacturer's capital, too, is money which is exchanged
for commodities and re-exchanged for more money. No doubt, in this

* (footnote) Wherever "value" is here used without qualification, it always means value in
exchange.

Karl Marx on Capital. Review for The Fortnightly Review"

case, a number of operations intervene between purchase & sale, operations which are performed outside of the sphere of mere circulation; but
they do not change anything in the nature of the process. On the other
hand, we see the same process in its most abbreviated form in capital lent

5 on interest. Here the formula dwindles down to M—M', value which is,
so to say, greater than itself.

But whence does this increment of M, this surplus value arise? Our
previous inquiries into the nature of commodities, of value, of money, &
of circulation itself, not only leave it unexplained, but appear even to

10 exclude any form of circulation which results in such a thing as a surplus
value. The whole difference between the circulation of commodities (C
—M-—C) and the circulation of money as capital (M — C — M) appears to
consist in a simple reversion of the process; how should this reversion be
capable of producing such a strange result?

15 Moreover: this reversion exists for one only of the three parties to the
process. I, as a capitalist, buy a commodity from A, and sell it again to B.
A & B appear as mere sellers & buyers of commodities. I, myself, appear,
in buying from A, merely as an owner of money, ||| and in selling to B,
as owner of a commodity; but in neither transaction do I appear as a

20 capitalist, as the representative of something which is more than either
money or commodity. For A the transaction began with a sale, for B it
began with a purchase. If from my point of view there is a reversion of
the formula C—M—C, there is none from theirs. Besides, there is nothing to prevent A from selling his commodity to B without my interven-

25 tion, and then there would be no occasion for any surplus value.

Suppose A and B buy their respective requirements from each other
directly. As far as useful value is concerned, they may both be gainers. A
may even be able to produce more of his particular commodity than B
could produce in the same time, and vice versa, in which case they both

30 would gain. But it is different with regard to value in exchange. In this
latter case equal quantities of value are exchanged, whether money serves
as the medium or not.

Considered in the abstract, that is to say excluding all circumstances
which are not deducible from the inherent laws of the simple circulation

35 ofcommodities, there is in this simple circulation, besides the fact of one
useful value being replaced by another, a mere change of form of the
commodity. The same value in exchange, the same quantity of social
labour fixed in an object, remains in the hands of the owner of the
commodity, be it in the shape of this commodity itself, or in that of the

40 money it is sold for, or in that of the second commodity bought for the
money. This change of form does not in any way involve any change in

Friedrich Engels

the quantity of the value, as little as the exchange of a five pound note for
five sovereigns. Inasmuch as there is merely a change in the form of the
value in exchange, there must be exchange of equivalents, at least whenever the process takes place in its purity and under normal conditions.
Commodities may be sold at prices above or below their values, but if
they are, the law ofthe exchange of commodities is always violated. In its
pure & normal form, therefore, the exchange of commodities is not a
means of creating surplus value. Hence arises the error of all economists
who attempt to derive surplus value from the exchange of commodities,
such as Condillac.

We will, however, suppose that the process does not take place under
normal conditions, and that non-equivalents are exchanged. Let every
seller, for instance, sell his commodity ten per cent | above its value.
Caeteris paribus, everybody loses again as a buyer what he had gained as
a seller. It would be exactly the same as if the value of money had fallen
10 pet. The reverse, with the same effect, would take place if all buyers
bought their goods 10 pet. below their value. We do not get an inch
nearer to a solution by supposing that every owner of commodities sells
them above their value in his quality as a producer, and buys them above
their value in his quality as a consumer.

The consistent representatives of the delusion that surplus value arises
from a nominal addition to the price of commodities, presuppose always
the existence of a class which buys without ever selling, which consumes
without producing. At this stage of our inquiry, the existence of such a
class is as yet inexplicable. But admit it. Whence does that class receive
the money with which it keeps buying? Evidently from the producers of
commodities—on the strength of no matter what legal or compulsory
titles, without exchange. To sell, to such a class, commodities above their
value, means nothing but to recover a portion of the money which had
been given away gratuitously. Thus the cities of Asia minor, while paying
a tribute to the Romans, recovered part of this money by cheating the
Romans in trade; but after all, these cities were the greatest losers of the
two. This, then, is no method of creating surplus value.

Let us suppose the case of cheating. A sells to B wine of the value of
£40 for corn of the value of £50. A has gained £ 10 and B has lost £ 10,
but betwixt them, they have only £90 just as before. Value has been
transferred but not created. The whole capitalist class of a country cannot, by cheating one another, increase their collective wealth.

Therefore: If equivalents are exchanged, there arises no surplus value,
and ifnon-equivalents are exchanged, there arises no surplus value either.
The circulation of commodities creates no new value. This is the reason

Karl Marx on Capital. Review for "The Fortnightly Review"

why the two oldest and most popular forms of capital, commercial capital and interest-bearing capital, are here left entirely out of consideration.
To explain the surplus value appropriated by these two forms of capital
otherwise than as the result of mere cheating, | a number of interme-
5 diate links are required which are still wanting at this stage of the inquiry.
Later on we shall see that they both are secondary forms only, and shall
also trace the cause why both appear, in history, long before modern
capital.
Surplus value, then, cannot originate from the circulation of commod-
10 ities. But can it originate outside of it? Outside of it, the owner of a
commodity is simply the producer of that commodity, the value of which
is established by the amount of his labour contained in it and measured
by a fixed social law. This value is expressed in money of account, say in
a price of £10. But this price of £10 is not at the same time a price of
15 £11; this labour contained in the commodity creates value, but no value
which begets new value; it can add new value to existing value, but merely by adding new labour. How, then, should the owner of a commodity,
outside the sphere of circulation, without coming into contact with other
owners of commodities—how should he be able to produce surplus val-
20 ue, or in other words, to change commodities or money into capital?
"Capital, then, cannot originate from the circulation of commodities,
and no more can it not originate from it. It has to find its source in it, and
yet not in it. The change of money into capital has to be explained on the
basis of the laws inherent to the exchange of commodities, the exchange
25 of equivalents forming the starting-point. Our owner of money, as yet the
mere chrysalis of a capitalist, has to buy his commodities at their value,
to sell them at their value, and yet to extract more money from this
process than he had invested in it. His development into the capitalist
butterfly has to take place within the sphere of the circulation of com-
30 modities, and yet not within it. These are the terms of the problem. Hie
Rhoclus, hic salta."
And now for the solution:
"The change in the value of the money, which is to be transformed into
capital, cannot take place in that money itself; for, as means of purchase
35 and means of payment, it merely realises the price of the commodity
which it buys or pays for; while, if it re|mained in its money-form,
without being exchanged, it could never change its value at all. No more
can the change arise from the second act of the process, the re-sale of the
commodity; because this merely changes the commodity from its natural
40 form into the form of money. The change must take place with the commodity which is bought in the first act M — C; but it cannot take place in

Friedrich Engels

its value in exchange, because we exchange equivalents; the commodity is
bought at its value. The change can only arise from its value in use, that is
from the use which is made of it. In order to extract value in exchange
from the use of acommodity, our owner of money must have the good
luck to discover, within the sphere of circulation, in the market, a commodity, the useful value of which is endowed with the peculiar quality of
being a source of exchangeable value, the using-up of which is the realisation of labour and therefore the creation of value. And the owner of money
finds, in the market, such a specific commodity: the power to work, the
labour-power.

By power to work, or labour-power, we understand the sum total of
the physical and mental faculties which exist in the living person of a
human being and which he puts into motion when he produces useful
values.

But in order to enable the owner of money to meet the labour power as
a commodity in the market, several conditions have to be fulfilled. In
itself, the exchange of commodities does not include any other relations
of dependence except such as arise from its own nature. On this supposition, labour power can appear, as a commodity, in the market, so far
only as it is offered for sale, or sold, by its own owner, the person whose
labour power it is. In order to enable its owner to sell it as acommodity,
he must be able to dispose of it, he must be the free proprietor of his
labour power, of his person. He and the owner of money meet in the
market, and transact business, as each other's peers, as free and independent owners of commodities, so far different only, that the one is the
buyer & the other the seller. This relation of equality before the law must
continue; the owner of the labour power can, therefore, sell it for a
limited time only. If he were to sell it in a lump, once for all, he would sell
himself, he would | | 111 from a free man change into a slave, from an
owner of acommodity into a commodity. ... The second essential condition to enable the money-owner to meet labour-power as a commodity
in the market, is this: that the owner of the labour-power, instead of
selling commodities in which his labour has been embodied, be compelled
to sell this, his labour-power itself, such as it exists in his own personality.

No producer can sell commodities different from his own labour-power, unless possessed of means of production, raw materials, instruments
of labour etc. He can make no boots without leather. Moreover, he
requires the means of subsistence. Nobody can feed upon future products, upon useful values the production of which he has not yet completed; as on the first day of his appearance on the stage ofthe world, man is

Karl Marx on Capital. Review for 'The Fortnightly Review"

compelled to consume before and while he produces. If his products are
produced as commodities, they must be sold after production, and can
satisfy his wants after the sale only. The time of production is lengthened
by the time required for sale.

5 The change of money into capital, thus, requires that the money-owner
meet, in the market, the free labourer, free in that double sense, that he,
as a free person, can dispose of his labour-power; and that, on the other
hand, he have no other commodities to sell; that he be entirely unencumbered with, perfectly free from, all the things necessary for putting his

10 labour power into action.

The question why this free labourer meets him in the market has no
interest for the money-owner. For him, the labour-market is only one of
the various departments of the general market for commodities. And, for
the moment, it has no interest for us either. We stick to the fact theoreti-

15 cally, as he sticks to it practically. One thing, however, is clear. It is not
nature which produces, on the one hand, owners of money and of commodities, and on the other, owners of nothing but their own labour-power. This relation does not belong to natural history; nor is it a social
relation common to all historical periods. It is evidently the result of a

20 long historical process, the product | of a number of economical revolutions, of the destruction of a whole series of older strata of social
production.

The economical categories, which we have previously analysed, bear,
in the same manner, the impress of their historical origin. The existence

25 of a product in the form of a commodity involves certain historical conditions. In order to become a commodity, the product must not be produced as the immediate means of subsistence of the producer. Now, if we
had inquired: How and under what circumstances do all, or at least the
great majority, of products adopt the form of commodities? —we should

30 have found that this occurs exclusively on the basis of a specific system of
production, the capitalistic mode of production. But this inquiry was
entirely foreign to the analysis of Commodity. The production & circulation of commodities may take place, while the overwhelming mass of
products— produced for immediate domestic self-use—is never changed

35 into commodities; while, thus, the process of social production, in all its
breadth and depth, is, as yet, far from being ruled by value in exchange.
... Or, in analysing money, we find that the existence of money presupposes a certain development of the circulation of commodities. The peculiar forms of existence of money, such as the form of simple equivalent,

40 or of means of circulation, means of payment, hoard, or universal money, as either one or the other may prevail, point to very different stages of

Friedrich Engels

the process of social production. Still, experience shows that a relatively
crude state of the circulation of commodities suffices to produce all these
forms. But with Capital it is quite different. The historical conditions
necessary for its existence are far from being created simultaneously with
the mere circulation of commodities and money. Capital can originate
only value when the owner of the means of production and subsistence
meets, in the market, the free labourer offering for sale his labour-power,
and this one condition implies ages of historical development. Thus,
Capital, at once, heralds itself as a specific epoch of the process of social
production."

We have now to examine this peculiar commodity, the labour-power.
It has a value in exchange, as all other commodities; this value is determined in the same way as that of all other commodities: by the time of
labour required for its produc| tion, which includes reproduction. The
value of labour power is the value of the means of subsistence necessary
for the maintenance of its owner in a normal state of fitness for work.
These means of subsistence are regulated by climate & other natural
conditions, and by a standard historically established in every country.
They vary, but for a given country & a given epoch they are also given.
Moreover, they include the means of subsistence for the substitutes of
worn-out labourers, for their children, so as to enable this peculiar species of owners of a commodity to perpetuate itself. They include, finally,
for skilled labour, the expense of education.

The minimal limit of the value of labour power is the value of the
physically absolute necessaries of life. If its price falls to this limit, it falls
below its value, as the latter involves labour power of normal, not of
inferior quality.

The nature of labour makes it evident, that labour power is used after
the conclusion of the sale only; and in all countries with capitalist mode
of production, labour is paid after having been performed. Thus, everywhere, the labourer gives credit to the capitalist. Of the practical consequences of this credit given by the labourer, Mr. Marx gives some interesting examples from Parliamentary papers, for which we refer to the
book itself. —

In consuming labour-power, its purchaser produces at once commodities & surplus value, and, in order to examine this, we have to leave the
sphere of circulation for that of production.

Here we find at once that the process of labour is of a double nature.
On the one hand it is the simple process of production of useful value; as
such, it can & must exist under all historical forms of social existence; on
the other hand, it is this process carried on under the specific conditions

Karl Marx on Capital. Review for 'The Fortnightly Review"

of Capitalistic production, as before stated. These we have now to inquire into.

The process of labour, on a Capitalistic basis, has two peculiarities.
Firstly, the labourer works under the control of the capitalist who takes

5 care that no waste is made and that no more than the socially indispensable amount of labour is spent upon each individual piece of work.
Secondly, the product is the property of the capitalist, the process itself
being carried on between two things belonging to him: the labour-power
and the means of work.

10 The capitalist does not care for the useful value, except | so far as it
is the incorporation of exchangeable value, & above all, of surplus value.
His object is to produce a commodity of a value higher than the sum of
value invested in its production. How can this be done?

Let us take a given commodity, say Cotton Yarn, and analyse the

15 quantity of labour embodied in it. Suppose that for the production of 10
U of yarn we require 10 té of Cotton, value 10/- (leaving waste out of
consideration). There are further required certain means of work, a
steam-engine, carding-engines and other machinery, coal, lubricants etc.
To simplify matters, we call all these "spindle" and suppose that the share

20 of wear & tear, coal etc. required for spinning 10 H of yarn, is represented by 21-. Thus we have 10/- cotton + 21- spindle = 12/-. If 12/-
represent the product of 24 working hours or two working days, then the
cotton and spindle in the yarn incorporate two days' labour. Now, how
much is added in the spinning?

25 We will suppose the value, per diem, of labour power to be 3/-, and
these 3/- to represent the labour of six hours. Further, that six hours are
required to spin 10 H of yarn by one labourer. In this case 3/- have been
added to the product by labour, the value of the 10 ti yarn is 15/- or
1/6 d. per U.

30 This process is very simple, but it does not result in any surplus value.
Nor can it, as in Capitalistic production things are not carried on in this
simple way.

"We supposed the value of labour-power was 3/- per diem and that 6
hours' labour was represented by that sum. But if /*a//a-day's labour is

35 required to maintain a labourer for 24 hours, there is nothing in that to
prevent the same labourer from working a whole day. The exchangeable
value of labour power, and the value which it may produce, are two
entirely different quantities, and it was this difference which the capitalist
had in his eye when he invested his money in that commodity. That it has

40 the quality of producing useful value, was a mere conditio sine qua non,
inasmuch as labour must be invested in a useful form in order to produce

Friedrich Engels

value. But our capitalist looked beyond that, what attracted him, was the
specific circumstance that this labour-power is the source of exchangeable value, and of more exchangeable value | than is contained in
itself. This is the peculiar 'service' which he expects from it. And in doing
so, he acts in accordance with the eternal laws of the exchange of commodities. The seller of the labour-power realises its exchangeable [value],
and parts with its useful value. He cannot obtain the one without giving
away the other. The useful value of the labour-power, labour itself, no
more belongs to its seller, than the useful value of sold oil to an oilmerchant. The capitalist has paid the value per diem ofthe labour power;
to him, therefore, belongs its use during the day, a day's labour. The
circumstance that the maintenance of the labour-power for one day costs
half a day's labour only, although this labour-power can be made to
work a whole day; that, therefore, the value created by its use during a
day, is twice as great as its own daily value—this circumstance is a peculiar piece of good luck for the buyer, but not at all a wrong inflicted
upon the seller."

"The labourer, then, works 12 hours, spins 20 tt of yarn representing
20/- in cotton, 4/- in spindle etc., and his labour costs 3/-,—total, 27/-.
But if 10 U of cotton absorbed 6 hours of labour, 20 t& of cotton have
absorbed 12 hours of labour, equal to 6/-. The 20 U of yarn now represent 5 days of labour; 4 in the shape of Cotton & spindles &c, 1 in the
shape of spinning labour; the expression, in money, for 5 days labour, is
30/-; consequently the price of the 20 U yarn is 30/-, or 1/6 d. per U as
before. But the sum total ofthe value ofthe commodities invested in this
process was 27/-. The value of the product has increased beyond the
value of the commodities invested in its production by '/%. Thus 27/-
have been transformed into 30/-. They have produced a surplus value of
3/-. The trick has, at last, succeeded. Money has been converted into
capital.

All the conditions of the problem have been solved, and the laws ofthe
exchange of commodities have in no way been violated. Equivalent has
been exchanged against equivalent. The capitalist, as purchaser, has paid
every commodity at its value: Cotton, spindles &c, labour-power. After
which, he did what every buyer of commodities does. He consumed their
useful value. The process of consumption of the labour-power, at the
same time process of production of the | commodity, resulted in a
product of 20 U of yarn, value 30/-. Our capitalist returns to the market
& sells the yarn at 1/6 d. per U, not a fraction above or below its value.
And yet he extracts 3/- more from circulation than he originally invested
in it. The whole of this process, the transformation of his money into

Karl Marx on Capital. Review for 'The Fortnightly Review"

capital, passes within the sphere of circulation, and at the same time not
within it. By the intervention of circulation, because the purchase, in the
market, of the labour-power was its indispensable condition. Not within
the sphere of circulation, because this merely initiates the process of value

5 begetting value, which is performed in the sphere of production. And
thus tout est pour le mieux dans le meilleur des mondes possibles.'"

From the demonstration of the mode in which surplus value is produced, Mr. Marx passes to its analysis. It is evident, from what precedes,
that only one portion of the capital invested in any productive undertak-

10 ing directly contributes to the production of surplus value, and that is the
capital laid out in the purchase of labour-power. This portion only produces new value; the capital invested in machinery, raw material, coal &c.
does indeed reappear in the value of the product pro tanto, it is maintained and reproduced, but no surplus value can proceed from it. This

15 induces Mr. Marx to propose a new subdivision of Capital into constant
capital, that which is merely reproduced—the portion invested in machinery, raw materials and all other accessories to labour;—and variable
capital, that which is not only reproduced, but is, at the same time, the
direct source of surplus value —that portion which is invested in the pur-

20 chase of labour power, in wages. From this it is clear, that however
necessary constant capital may be to the production of surplus value, yet
it does not directly contribute to it; and, moreover, the amount of constant capital invested in any trade has not the slightest influence upon
the amount of surplus value produced in that trade.*' Consequently, it 17| ought not to be taken into consideration in fixing the rate of surplus
value. That can be determined only by comparing the amount of surplus
value to the amount of capital directly engaged in creating it, that is to
say, the amount of variable capital. Mr. Marx, therefore, determines the
rate of surplus value by its proportion to variable capital only: if the daily

30 price of labour be 3/-, and the surplus value created daily be also 3/-,
then he calls the rate of surplus value 100 p. ct. What curious blunders
may result from reckoning, according to usual practice, constant capital
as an active factor in the production of surplus value, is shown in an
example from Mr. N.W. Senior "when that Oxford professor, noted for

35 his scientific attainments and his beautiful diction, was invited, in 1836,
to Manchester, in order to learn political economy there (from the Cotton spinners) instead of teaching it in Oxford." —

The working time in which the labourer reproduces the value of his
labour-power, Mr. Marx calls "necessary labour"; the time worked be-

40 *' We must observe, here, that surplus value is not at all identical with profit.

Friedrich Engels

yond that, & during which surplus value is produced, he calls "surplus
labour". Necessary labour & surplus labour combined form the "working
day". —

In a working day, the time required for necessary labour is given; but
the time employed in surplus labour is not fixed by any economical law,
it may be longer or shorter, within certain limits. It can never be zero, as
then the inducement for the capitalist, to employ labour, would have
ceased; nor can the total length ofthe working day ever attain 24 hours,
for physiological reasons. Between a working day of, say six hours, and
one of 24, there are, however, many intermediate stages. The laws of the
exchange of commodities demand that the working day have a length not
exceeding that which is compatible with the normal wear & tear of the
labourer. But what is this normal wear & tear? How many hours of daily
labour are compatible with it? Here the opinions of the capitalist and
those of the labourer differ widely, and, as there is no higher authority,
the question is solved by force. The history of the determination of the
length of the | working day is the history of a struggle about its limits
between the collective capitalist & the collective labourer, between the
two classes of capitalists & working men.

"Capital, as has been stated before, has not invented surplus labour.
Wherever a portion of society holds the exclusive monopoly of the means
of production, there the labourer, slave, serf, or free, has to add, to the
labour necessary for his own subsistence, an increment of labour in order
to produce the means of subsistence for the owner of the means of production, be that owner an Athenian KoJIoc kaya96c, an Etruscan theoerat, a civis Romanus, a Norman baron, an American slave-owner, a
Wallachian boyar, a modern landlord or Capitalist." It is, however, evident that in any form of society, where the value in use of the product is
more important than its value in exchange, surplus labour is restrained
by the narrower or wider range of social wants; and that under these
circumstances there does not exist necessarily a desire for surplus labour
for its own sake. "Thus we find that in the classical period surplus labour
in its extremist form, the working to death of people, existed almost
exclusively in gold & silver mines, where value in exchange was produced
in its independent form of existence: money. But wherever a nation
whose production is carried on in the more rudimentary forms of slavery
or serfage, lives in the midst of a universal market dominated by capitalist production, and where therefore the sale of its products for exports
forms its chief purpose—there to the barbarous infamies of slavery or
serfdom are superadded the civilised infamies of over-working. Thus in
the Southern States of America slave-labour preserved a moderate and

Karl Marx on Capital. Review for 'The Fortnightly Review"

patriarchal character while production was directed to immediate domestic consumption chiefly. But in the same measure as the export of cotton
became a vital interest to those states, the over-working of the negro, in
some instances even the wearing-out of his life in seven working years,
5 became an element in a calculated & calculating system ... Similar with
the corvées of the serfs in the Danubian Principalities." Here the comparison with Capitalist production becomes particularly interesting because, in the corvée surplus labour has an independent, palpable form.
"Suppose the working day counts six hours of necessary and six hours
10 of surplus labour; then the labourer furnishes the capitalist with 36 hours
of surplus labour a week. He might as well have worked three days for
himself and three days for the capitalist. But this is not at once visible.
Surplus labour & necessary labour are | more or less mixed up together. I might express the same relation thus, that, in every minute, the
15 labourer works 30 seconds for himself & 30 more for the capitalist. But
with the serfs' corvée it is different. The two kinds of labour are separated
in space. The labour, which, for instance, a Wallachian peasant performs
for himself, he performs on his own field his surplus labour for the Boyar
he performs on the boyar's estate. The two portions of his labour exist
20 independent of each other, surplus labour, in the shape of corvée, is
completely separated from necessary labour." We must refrain from
quoting the further interesting illustrations from the modern social history of the Danubian principalities, by which Mr. Marx proves the Boyars
there aided by Russian intervention to be quite as clever extractors of
25 surplus labour as any Capitalist employers. But what the réglement organique, by which the Russian General Kisseleff presented the Boyars
with almost unlimited command over the peasants' labour, expresses
positively, the English Factory Acts express negatively. "These acts oppose the inherent tendency of capital to an unlimited exploitation — we
30 ask pardon for introducing this French term, but there does not exist any
English equivalent—of the labour power, by forcibly putting a limit to
the length of the working day by the power of the State, and that a State
ruled by landlords and Capitalists. Not to speak of the working class
movement which was daily gaining greater dimensions, this limitation of
35 factory labour was dictated by the same necessity which brought Peruvian Guano on the fields of England. That same blind rapacity which in
the one case had exhausted the soil, in the other case had attacked the
vitality of the nation at its root. Periodical epidemics here spoke as plainly, as, in France & Germany, the necessity for constantly reducing the
40 standard of height for soldiers."

Friedrich Engels

To prove the tendency of capital to extend the working day beyond all
reasonable limits Mr. Marx quotes amply from the Reports of the Factory Inspectors, ofthe Children's Employment Commission, the Reports
on Public Health and other Parliamentary Papers, and sums up in the
following conclusions: 5

"What is a working day? How long is the time during which Capital
may be allowed to consume the working power on paying for its value
per dierni How far may the working day be extended beyond the time
necessary for reproducing the working power itself? Capital, as we have
seen, replies: the working day | counts full 24 hours, excepting those 10
few hours of rest without which the labour power absolutely refuses to
renew its services. It is a matter of course that the labourer during the
whole of the live-long day is nothing but labour power, that all his disposable time is workingtime and belongs to value-begetting Capital...
But in this madly blind race after surplus-labour, capital outruns not 15
only the moral, but also the purely physical maximum limits of the working day ... Capital does not care for the duration of life of the working
power... it produces its premature exhaustion & death, it effects the
prolongation of the working time during a given period by shortening the
labourer's life." 20

But is not this against the interest of capital itself? Has capital, in the
long run, not to replace the cost of this excessive wear & tear? That may
be the case theoretically. Practically, the organised slave trade in the
interior of the Southern States had raised the practice of using up the
working power of the slaves in seven years to an acknowledged economi- 25
cal principle; practically, the English Capitalist relies upon the supply of
labourers from the agricultural districts. "He sees constant over-population, that is an over-population as compared with the capacity of capital
to absorb living labour, though this over-population be formed by a
constant current of crippled, quickly fading generations of men, pressing 30
upon their successors and plucked before maturity. Certainly, to an uninterested observer, experience would show on the other hand how soon
capitalist production, though dating, historically speaking, from yesterday only, has attacked the vital root of national strength, how the degeneration of the industrial population is retarded only by the constant ab- 35
sorption of agricultural elements, & how even these agricultural
labourers, in spite of fresh air and that principle of natural selection
which is so specially powerful amongst them, have already begun to
decline. Capital, which has such capital motives to deny the sufferings of
the working classes in the midst of which it exists, Capital will be dis- 40
turbed in its practical activity as little and as much by the prospect of

Karl Marx on Capital. Review for The Fortnightly Review"

future degeneracy of the human race and of inevitable ultimate depopulation, as by the possible fall of the earth into the sun. In every joint stock
"limited" swindle, every participator knows that the thunderstorm will
come sooner or later, but every one expects that the lightning will fall on
5 the head of his neighbour, after he, himself, shall have had time to collect
the golden rain & store it up safely. Apres moi le déluge, is the battle-cry
of every capitalist and of every capitalist nation. Capital, therefore, ||21 is
reckless of the health and life of the labourer, unless society compels it to
act otherwise. And, upon the whole, this disregard of the labourer does
10 not depend upon the good or bad will of the individual capitalist. Free
Competition imposes the immanent laws of capitalist production upon
every individual capitalist in the shape of extraneous compulsory laws."
The determination of the normal working day is the result of many
centuries of struggle between employer and labourer. And it is curious to
15 observe the two opposing currents in this struggle. At First, the laws have
for their end to compel the labourers to work longer hours; from the first
statute of labourers 23. Edward III (1349) up to the eighteenth century,
the ruling classes never succeeded in extorting from the labourer the full
amount of possible labour. But with the introduction of steam and mod-
20 em machinery, the tables were turned. So rapidly did the introduction of
the labour of women & children break down all traditional bounds to
working hours, that the nineteenth century began with a system of overworking which is unparalleled in the history of the world, and which, as
early as 1803, compelled the legislation to enact limitations of working
25 hours. Mr. Marx gives a full account of the history of English factory
legislation up to the workshops Act of 1867, and draws from it these
conclusions:
1) Machinery and Steam cause overwork, at first, in those branches of
industry where they are applied, and legislative restrictions are, therefore,
30 first applied to these branches; but in the sequel we find that this system
of overwork has spread also to almost all trades even where no machinery is used, or where the most primitive mode of production continue in
existence. {Vide Children's Employment Commission's Reports.)
2) With the introduction of the labour of women & children in the
35 factories, the individual "free" labourer loses his power of resistance to
the encroachments of Capital and has to submit unconditionally. Thus
he is reduced to collective resistance; the struggle of class against class, of
the collective workmen against the collective capitalists begins. |
 If we now look back to the moment when we supposed our "free"
40 and "equal" labourer to enter into a contract with the capitalist, we find
that, under the process of production, a good many things have changed

Friedrich Engels

considerably. That contract, on the part of the labourer, is not a free
contract. The daily time during which he is at liberty to sell his working
power is the time during which he is compelled to sell it; and it is merely
the opposition of the labourers, as a mass, which forcibly obtains the
enactment of a public law to prevent them from selling themselves and 5
their children, by a "free" contract into death and slavery. "In the place
of the grandiloquent catalogue of the inalienable rights of man, he has
now nothing but the modest Magna Charta of the Factory Act." —

We have next to analyse the rate of surplus value and its relation to the
total quantity of surplus value produced. In this inquiry, as we have done 10
hitherto, we suppose the value of labour power to be a determinate constant quantity.

Under this supposition, the rate of surplus value determines at the
same time the quantity furnished to the capitalist by a single labourer in a
given time. Ifthe value of our labour-power be 3/- a day representing six 15
hours' labour, and the rate of surplus-value be 100 per cent, then the
variable capital of 3/- produces every day a surplus value of 3/-, or the
workman furnishes six hours of surplus labour every day.

Variable capital being the expression in money of all the labour power
employed simultaneously by a capitalist, the sum total of the surplus 20
value produced by the labour power is found by multiplying that variable
capital by the rate of surplus value; in other words it is determined by the
proportion between the number of working powers simultaneously employed, and the degree of exploitation. Either of these factors may vary,
so that the decrease in the one may be compensated by the increase ofthe 25
other. A variable capital required to employ 100 labourers with a rate of
surplus value of 50 pet (say 3 hours of daily surplus labour) will produce
no more surplus value than half that variable capital, employing 50 labourers at a rate of surplus value of 100 pet. (say six hours of daily
surplus labour). Thus, under certain circumstances & within certain lim- 30
its, the supply of labour at the command of capital may become independent of the actual supply of labourers.

There is, however, an absolute limit to this increase of surplus value by
increasing its rate. Whatever may be the | value of labour, whether it
be represented by two or by ten hours of necessary labour, the total value 35
ofthe work performed, day after day, by any labourer, can never attain
the value representing 24 hours' labour. In order to obtain equal quantities of surplus value, variable capital may be replaced by prolongation
of the working day within this limit only. This will be an important
element in explaining, hereafter, various phenomena arising from the two 40
contradictory tendencies of capital: 1) to reduce the number of labourers

Karl Marx on Capital. Review for 'The Fortnightly Review"

employed, i.e. the amount of variable capital, and 2) yet to produce the
greatest possible quantity of surplus labour.
It follows further: "The value of labour being given, and the rate of
surplus value being equal, the quantities of surplus value produced by
5 two different capitals are in direct proportion to the quantities of variable
capital contained in them. This law flatly contradicts all experience
founded upon the appearance of facts. Everybody knows that a cotton
spinner who works with a relatively large constant, & a relatively small
variable capital, does not, on that account obtain a lesser ratio of profit
10 than a baker who puts in motion relatively little constant & relatively
much variable capital. To solve this apparent contradiction, a good many
intermediate links are required, just as, starting from elementary Algebra,
a great number of intermediate links are required in order to understand

that jj may represent a real quantity."

15 For a given country & a given length of working day, surplus value can
be increased only by increasing the number of labourers, i.e. by an increase of population; this increase forms the mathematical limit for the
production of surplus value by the collective capital of that country. On
the other hand, if the number of labourers be determined, this limit is

20 fixed by the possible prolongation of the working day. It will be seen
hereafter that this law is valid for that form only of surplus value which
has been hitherto analysed.

"We find, at this stage of our inquiry, that not every amount of money
is capable of being converted into capital; that there is an extreme mini-

25 mum for it: the cost of a unit of labouring power and of the means of
labour necessary to keep it going. Suppose the rate of surplus value to be
50 pet, our infant-capitalist would be required to be able to employ two
workmen in order to live, himself, as a workman lives. But this would
prevent him from saving anything; and the end of capitalist production is

30 not merely preservation, but also & chiefly increase of wealth. To live
twice as well as a common labourer, and to re-transform one half of the
surplus value produced into capital, he would have to be able to employ
eight workmen. He might certainly take his share ofthe work, along with
his workmen, but he would still remain a small master, a hybrid between

35 capitalist & labourer. Now, a certain development of capitalist production renders it necessary that the capitalist should devote the whole of the
time during which he acts as a capitalist, as capital personified, to the
appropriation and | control of other people's labour, and to the sale of
its products. The restrictive guilds of the middle ages attempted to check

40 the transformation of the small master into a capitalist by fixing a very

Friedrich Engels

low maximum to the number of workmen which each was allowed to
employ. The owner of money or commodities changes into a real capitalist only then, when he is able to advance, for the purpose of production,
a minimum sum far higher than this medieval maximum. Here, just as in
the natural sciences, the correctness is proved of the law discovered by
Hegel that mere quantitative changes, at a certain point, imply a qualitative difference." The minimum amount of value required to change an
owner of money or commodities into a capitalist, varies for different
stages of the development of capitalist production, and for a given stage
of development, it varies for different branches of industry.

"During the process of production detailed above, the relation of capitalist and labourer has changed considerably. First of all, capital has
been developed into command of labour, i.e. into command over the
labourer himself. Personified capital, the capitalist, takes care that the
labourer performs his work regularly, carefully & with the required degree of intensity. Further, Capital has been developed into a compulsory
relation which obliges the working class to perform more labour than is
prescribed by the narrow circle of their own requirements. And as a
producer of other people's industry, as an extortioner of surplus labour
and exploiter of labour power, capital far exceeds in energy, recklessness
and efficiency all former systems of production, though they were based
upon direct forced labour.

Capital, at first, takes the command of labour under such technological conditions as it finds historically established. It does not, therefore,
necessarily at once change the mode of production. The production of
surplus value, in the form hitherto analysed, that is to say by mere prolongation of the working day, appeared independent of every change in
the mode of production itself. It was quite as efficient in the primitive
baking trade as in modern cotton-spinning.

In the process of production considered as a mere process of labour,
the relation between the labourer and his means of production is not that
of labour and capital, but that of labour and the mere instrument and
raw material of productive action. In a tannery, for instance, he treats the
skins as a mere object for labour. It is not the capitalist whose skin he
tans. But things change as soon as we look upon the process of production as a process of creating surplus value. The means of production at
once change into means of absorbing other people's labour. It is no
longer the workman who employs the means of production, it is the
means of production which employ the workman. It is not he who |
 consumes them as material elements of his productive action, it is
they which consume him as the ferment of their own vital process, and

Karl Marx on Capital. Review for "The Fortnightly Review"

the vital process of capital consists in nothing but its progressive motion
as value begetting value. Furnaces and workshops which have to stand
idle at night without absorbing labour, are 'a pure loss' to the capitalist.
Therefore furnaces & workshops constitute 'a title upon the night-work
5 of the hands'. (See Reports of Childrens' Empl. Commission, 4" Report,
1865, pages 79 to 85.) The mere change of money into means of production changes the latter into legal and compulsory titles upon other people's labour and surplus-labour."
There is, however, another form of surplus value. Arrived at the ut-
10 most limit of the working day, another means remains to the capitalist
for increasing surplus labour: by increasing the productivity of labour, by
thereby reducing the value of labour, & thus shortening the period of
necessary labour. This form of surplus value will be examined in a second
article.
15 Samuel Moore. I