[Worthing, about 11 August 1884] ?7°9 

p. 1. Beaulieu always writes Schoeffle: the gentleman’s name is 
Schaffle. 

p. 3, nascent capitalist system—? about 1780-1800? The birth of 
that system dates back to the 15th century, whereas nascent big in- 
dustry merely led to its apogee. 

pp.1 and 4. Maine does not in any way deserve to be cited in the 
same breath as Maurer; he discovered nothing and is merely a dis- 
ciple of the disciples of Maurer; long before his day, the communal 
ownership of land in India had been known about and described by 
Campbell, etc.; that in Java by Money, that in Russia by Haxthau- 
sen.* His only merit is to have been the first Englishman to have ac- 
cepted and vulgarised Maurer’s discoveries. 

p. 5, must be entirely recast. The examples you give do not apply 
to the point under discussion. The peasant’s plot which turns into ca- 
pital would be land as capital, a very complex matter not discussed 
by Marx until the 3rd book.” Your slave-owner producing for the New 
Orleans market is no more a capitalist than the Romanian boyar who 
exploits forced peasant labour. No one can be a capitalist unless he 
owns the means of labour and exploits the free working man! 

Rather you should say: the loom of the small peasant of pre- 
revolutionary times, which was used to weave clothing for his family, 
was not capital, nor yet is it capital when the peasant sells to the 
merchant the cloth he has been able to make during the long winter 
evenings; but if he employs a paid hand to weave those commodities 
for the merchant, and if he pockets the difference between the cost of 
production and the price of the sale of the cloth, then the loom is 
transformed into capital The object of production— to produce 
commodities — does not impart to the instrument the character of capi- 

@ G. Campbell, Modern India: a Sketch of the System of Civil Government, J.W.B. Money, 
Java; or, How to Manage a Colony, A. Freiherr von Haxthausen, Die landliche Verfas- 
sung Ruflands.- of Capital 

tal. The production of commodities is one of the preconditions for the 
existence of capital; but so long as the producer sells only what he him- 
self produces, he is not a capitalist; he becomes so only from the mo- 
ment he makes use of his instrument ¢o exploit the wage labour of others. 
This also applies to p. 6. How can you possibly have failed to draw 
that distinction? 

In place of your impossible slave-owner (don’t be so Réache!), you 
might say: a feudal lord whose fields are cultivated by tenants subject 
to labour-rent, and who, moreover, collects tribute from them in the 
form of eggs, poultry, fruit, cattle, etc., is not a capitalist. He lives on 
the surplus labour of others, but he does not transform the product of 
that surplus labour into surplus value; he does not sell, but consumes, 
spends and dissipates it. But if the said lord, as he so frequently did in 
the 18th century, rids himself of some of those tenants, if he combines 
their plots into one big farm and rents it out to one big industrial 
farmer of the kind so beloved of the Physiocrats; if, in the cultivation 
of his farm, the said big farmer employs as wage labour those form- 
erly subject to labour-rent, then agriculture is transformed from feudal 
into capitalist agriculture, and the farmer becomes a capitalist. 

p. 6. The direct form taken by the circulation of commodities is, of 
course, its primitive form ?; this clearly has to exist before the 2nd 
form can come into being. Compared with simple barter it is not primi- 
tive; but the circulation of commodities presupposes the existence of 
money; barter creates only fortuitous exchanges, not the circulation 
of commodities. 

p. 7. Capitalist production is not some form or other, whether di- 
rect or indirect, of the circulation of commodities. Production and 
circulation are two different things. All capitalist production pre- 
supposes the circulation of commodities, this being the element in 
which it moves, but it is not itself circulation, any more than digestion 
is the circulation of the blood. You can delete the whole of that sen- 
tence, which contributes nothing whatever to the sense. 

p. 11. The passage you underline, I find incomprehensible as well 
as wrong on all counts. Your average capitalist does sell and can 
sell for more than 10 frs what is produced at a cost of 10 frs.— 
Where you go wrong is over ‘the costs of production’. But the costs of 
production, in the sense used by economists,* include profit; they con- 
sist 1) of the amount the product has cost the capitalist and 2) of the 

A Engels is actually referring to the price of production. 

profit; in other words: 1) of the amount which replaces the constant 
capital spent, 2) of the amount which replaces the wages paid, 3) of 
the surplus value, either as a whole or in part, created by the surplus 
labour of the wage earners. You should therefore take Beaulieu’s sen- 
tence, his definition of value (p. 9, bottom), and compare the two ex- 
pressions of value one with the other: either the cost price includes the 
profit, in which case the commodities are paid for ‘in accordance with 
the social labour they contain’. In which case the price (or value) in- 
cludes a surplus value created by living labour, over and above the 
wages paid, and appropriated by the capital. Or else the cost price 
does not cover the profit; in which case the value is determined, not 
by the social labour comprised in the object, but by the wages, 
whether high or low, paid for that labour——an outworn concept re- 
futed at some length by Ricardo. 

pp. 12 and 13. The whole value of the machine and of the cotton, 
and even that of the waste, is transmitted to the product; and therein lies 
the true nub of your argument. If the 115 lbs of cotton yield only 100 
Ibs of yarn, the price* of the 115 lbs of raw cotton is added to the 
value of those 100 lbs of yarn. Perhaps it is this, the value of the 15 lbs 
which have disappeared qua material but have reappeared qua value, 
that Mr Beaulieu calls surplus value? 

p. 13. If the capitalist were to lend his machinery, etc., to the work- 
man, the product would belong to the latter—— which is never the 
case. 

pp. 13 and 14, ‘engenders a gain called profit’: cf. para. 1, p. 270, 
where Mr Beaulieu demonstrates that it is not the capitalist but 
rather the consumer who is the beneficiary of technical progress. He 
criticises Marx for forgetting competition; yet all through the chapter 
on manufacture and big industry, Marx demonstrates that machin- 
ery merely helps to lower the price of the products, and that it is com- 
petition which accentuates that effect’; in other words, the gain con- 
sists in manufacturing a greater number of products in the same 
length of time, so that the amount of work involved in each is corres- 
pondingly less and the value of each proportionately lower. Mr Beau- 
lieu forgets to tell us in what respect the wage earner benefits from 
seeing his productivity increase when the product of that increased 

@ In this context Marx uses ‘value’, not ‘price’ (Capital, Vol. I, Part III, Ch. VIII, 
present edition, Vol. 35).-> See K. Marx, Capital, Vol. I, Part IV, Ch. XV 
(present edition, Vol. 35). 

productivity does not belong to him, and when his wage is not deter- 
mined by the productivity of the instrument. 

pp. 14 and 15. The justification of profit here proffered by Beaulieu 
contains what is the quintessence of vulgar economics, namely its 
justification of the exploitation of the working man by the capitalist. 
The creator of capital demands his ‘due’ return for that creation (that 
is to say, the ‘wages of abstinence’ — see Marx’), and that return has 
to be paid by the exploited working man in the form of unpaid la- 
bour. This you commend on the grounds that ‘profit is the legitimate 
offspring of living labour’! “The managerial salary is represented and 
assessed in terms of the salary paid to a salaried manager, a salary 
with which no capitalist would rest content. Cf. Capztal, 3rd German 
edition, pp. 171 and 172 (the French edition is not to hand), where 
you will find all these statements refuted in a few words.” The insur- 
ance premium against ‘risk’ is indeed taken out of surplus value, but it 
is reckoned over and above the profit; every year the capitalist sets aside a 
sum amounting to... as a reserve for what he calls the ‘ducroire’ ° (from 
the Italian del credere, that is, to cover himself against bad faith or bad 
debts). Finally, rewards for greater efficiency, for inventions not yet gene- 
rally exploited, occur only in exceptional cases and may then yield an 
extra profit; but here we are concerned with ordinary, average profit 
such as is common to all industrialists. Come to that, you will find this 
type of profit discussed in Capital, 3rd German edition, pp. 314-17.4 

By taking these statements of Beaulieu’s in earnest, by declaring 
that profit thereby becomes ‘the legitimate offspring of living labour’ 
(not of the working man, but of the labour of the capitalist!), you endorse, 
on Marx’s behalf and in Marx’s name, those doctrines of vulgar eco- 
nomics which he combatted always and everywhere. You must, 
therefore, completely change your mode of expression so as to exclude 
even the semblance of such a meaning. Otherwise it will be you who 
falls into the trap. 

Your assertion on p. 16 that ‘when the products ... capitalist profit 
is nil or all but nil’, runs completely contrary to the facts. For in that 
case, where is the exploitation of the workers? What are you com- 
plaining about? And what do the capitalists live and grow fat on, or 
dissipate? Where the deuce did you light on such an idea, never ex- 
pounded even by vulgar economists and which, furthermore, is not 

* Tbid., Part VII, Ch. XXIV, Sect. 3.-? Ibid., Part II], Ch. VII, Sect. 

2.-© guarantee-4 K. Marx, Capital, Vol. I, Part IV, Chs. XII-XIV_ (present 
edition, Vol. 35). 

even to be found in Beaulieu? And you call it a general law! What is 
true is that, with machines making 100 metres of cloth with the same 
expenditure of labour as manual labour on its own would require for 
1 metre, the capitalist can spread his profit over 100 metres instead of 
concentrating it on only one; the result being that, while every metre 
carries only '/19) of the profit, the profit on the sum total of labour 
expended may stay the same, if not actually increase. 

p. 16. Marx would protest against ‘the political and social ideal’ at- 
tributed to him by you. When one is an economist, ‘a man of science’, 
one does not have an ideal, one elaborates scientific results, and when 
one is, to boot, a party man, one struggles to put them into practice. 
But when one has an ideal, one cannot be a man of science, having, as 
one then does, preconceived ideas. 

In short, the article will have an effect if you eliminate the chief er- 
rors I have indicated. But for the purpose of your riposte,?! which 
must be of a far more serious nature, I am firmly of the opinion that 
you must seriously re-read Capital, from cover to cover, with Beau- 
lieu’s book beside you; and that you should mark all the passages re- 
lating to vulgar economics. I say Capital rather than Deville’s book * 
which would be wholly inadequate because of grave defects in the de- 
scriptive section. 

Again, you must not forget that these gentry, Beaulieu and others, 
are far better versed than you are in the ordinary literature of eco- 
nomics, and that this is a field in which you will not be able to combat 
them on equal terms; it is their business to know such things, not 
yours. So do not venture too far into that field. 

I have spoken frankly and hope you will not take it amiss. It is too 
serious a matter and, if you were to put a foot wrong, the whole party 
would suffer as a result. 

We are dying of heat here, but are pretty well, nonetheless. Every- 
one sends a thousand greetings to Laura and yourself. Unfortunately 
our stock of Pilsener is nearly exhausted and takes two days to be re- 
plenished from Brighton! We are right out in the wilds here. 

Yours ever, 

F. E.