The Forum: The troubles of a “Marxian Student”

As a student of Marxian economics, it is rather disconcerting to find a serious difference of opinion among many prominent Marxists, regarding a vital part of Marx’s theories.

The first point about which the controversy revolves, is the part played by merchants’ capital and the workers engaged in the sphere of circulation. Let us take the well-known American Marxian student, Ernest Untermann, as typical of one side of the case.

In his book, “Marxian Economics,” he lays down the following position. Value is only produced in the process of production and transportation. Any labour expended in the circulation of commodities, even though socially necessary, is unproductive, not only of use-value, (as is obvious), but also of exchange-value. To quote from “Marxian Economics,” page 192 : “The quicker a capitalist can sell his commodities, the sooner he will reproduce his capital and pocket his profits. But the selling of commodities requires time and expenses. If the manufacturing capitalist wants to be his own merchant and sell his own commodities, he must have a special department in his establishment attending to the sales. For this purpose he must invest a large portion of his capital unproductively and tie it up in the sales department. Whatever he has tied up in this fashion he cannot invest as productive capital. It will not produce any surplus value. It is a dead expense to him. The labour of the wage workers in the sales department is also unproductive from the point of view of society, because it does not produce new values, but only assists in the circulation of already existing values. 0f course, the labour of these wage workers is socially necessary, because the product must be sold before the capitalist can recover its value. Bat it is unproductive labour and belongs to the dead expense of social production.”

From this proposition, which he says is the position taken up by Marx in the second and third volumes of “Capital,” it follows that the profits of the capitalist engaged in the circulation process, are derived from the surplus value which originates in production. This Untermann declares to be the case ; he says (page 194): “One way of getting rid quickly of his newly produced commodities is to sell them to somebody who will undertake the risk of buying and selling, without going into the sphere of production. In this way, a division of labour arises between the industrial capitalist, who confines himself to the sphere of production, and the merchant capitalist, who operates wholly in the sphere of circulation . . . But it is evident that the merchant, capitalist, who undertakes the risk of circulating the products of the industrial capitalist, will not do so for pleasure, but will exact a certain reward from the industrial capitalist for his risk. In other words, the industrial capitalist must sell his commodities to the merchant capitalist at a lower figure than he would ask if he sold them himself. He must yield up a portion of his profits to the merchant,”

Now it would seem that, if the workers engaged in the process of circulation create no new values they are not exploited. This Untermann denies, for he says (page 192): “So far as the relation of these wage workers to the capitalist is concerned, he pays only for their labour-power, not for the time that he employs them . . . To that extent the wage workers in the department of circulation are exploited like the wage workers in the department of production. But they do not produce any surplus-value for the capitalist. They merely save some of the already produced surplus-value for him in proportion as they work longer than they are paid for, and thus sell more commodities and help to realise more of the already existing surplus-value for him than he could realise if they worked shorter hours.”

To me this is a most absurd statement for a Marxist to make ; for how can a labourer work longer than he is paid for if he creates no value ? Again he states on page 198: “The merchant has invested a certain amount of money-capital in a store, equipment, and wage labourers (clerks, salesmen, etc.) These wage labourers are unproductive like the merchant himself, although they work for him a longer time than he pays for. But their surplus labour is as unproductive as the capital of the merchant. They merely realise the surplus-value for the merchant, which was produced in the sphere of production, and make profits for him go much quicker, the more their unproductive surplus-labour is extended and their necessary labour shortened,” to which I would retort, what is there to distinguish between their surplus and their necessary labour if the workers can never produce the equivalent of their wages, or reproduce for the capitalist the variable capital he has invested in their labour-power.

Untermann is supported in his interpretation of Marx’s theory of circulation by Louis B. Boudin. Two quotations from his work, “The Theoretical System of Karl Marx,” must suffice. On page 76 he says: “The division of the surplus-value takes place in the circulation process, and expresses itself in the different prices at which the commodity is sold at the different stages of this process,” and again on page 130: “The price of production at which commodities are sold at a certain stage of their existence is always below their value; and the capitalists engaged in the circulation of commodities exclusively, the merchants, get as profits on their capitals surplus-value not produced by them but merely realised by them. The capitalists who produced this surplus-value are forced to divide up with them by the very economic conditions which permit them to retain their own proportionate share.”

Karl Kautsky also appears to hold the same views, for we in his pamphlet, “The Capitalist Class”, we find on page 5 : “The owners pf industrial capital, however, obtain their profit by exploiting the propertyless wage workers. But as the capitalist mode of production develops, so industrial capital gains the ascendancy over other kinds of capital, and subjects these to its service, as we have seen. This, however, is possible only by assigning to merchants’ and usurers’ capital part of the surplus-value wrung from the wage workers.” Now, it appears to me that if this view is correct, quite a large proportion of the proletariat of a capitalist country are not exploited, notwithstanding the statements of Untermann to the contrary.

Before we examine the case of the Marxists who oppose the above construction of Marx’s economics, let us first see what Marx himself has to say about the matter in the first volume of “Capital.” On page 576 (English edition) we find :

“The capitalist, who produces surplus-value—i.e. who extracts unpaid labour directly from the labourers, and fixes it in commodities, is, indeed, the first appropriator, but by no means the ultimate owner, of this surplus-value,. He has to share it with capitalists, with landowners, &c., who fulfil other functions in the complex of social production. Surplus-value, therefore, splits up into various parts. Its fragments fall to various categories of persons and take various forms, independent the one of the other, such as profit, interest, merchants’ profits, rent, &c. It is only in Book III. that we can take in hand these modified forms of surplus-value.” Here Marx appears to hold the view which Untermann says he develops in the second and third volumes.

Whenever I have been in a discussion with fellow-Socialists, and this matter has been brought up, I have usually found that a totally different view is held by many of those present. They hold that the labour of clerks, warehousemen, etc., adds to the value of the commodities which they handle, and that the profit of the merchant is derived from the surplus-value created by his employees in the same manner as the profit of the industrial capitalist. They point to the statement of Marx, that a schoolmaster, although he produces no material object or use-value, yet produces value and surplus-value, and thus is exploited by the proprietor of the school.

Here, then, are the two groups of Marxists, with the two theories ; which is the true, which the false ? Are the workers in a warehouse for instance or in an office exploited of the product of their labour ? Is the profit of a merchant derived from the labour of his own employees, or from the labour of the employees of the industrial capitalist ? If you can help me to arrive at a knowledge of the correct position on the problem herein discussed I, and I believe many other Socialist students will be grateful.
—Yours fraternally,

Now it would seem that if the workers engaged in the process of circulation create no new values they are not exploited.” (Italics ours.) It is significant that Mr. Housley gives no reasons for this statement. Probably if he tried to reason the matter out he would find that he had wrapped up his conclusion in his premise by assuming that exploitation can only take place when new values are produced. This, of course, is absurd. Perhaps an illustration will make this clear.

A burglar is an “unproductive worker” as he only handles wealth already produced. When he takes the goods he burgles to the receiver he is certainly exploited by the latter—that is robbed of the wealth he has himself stolen.

So under capitalism. The industrial capitalist is the first appropriator of surplus-value. A portion of this surplus-value is used for the expenses of circulation. But in a business of modern type—that is on a large scale—whether the industrial capitalist runs the department himself or hands it over to another capitalist, the circulation is carried on, not by either of these capitalists, but by those they employ.

It should be clear to any student of Marx that the cost of this circulation department will have a certain social average, depending upon the branch and size of the business. The industrial capitalist will be prepared to hand over to the second capitalist an amount approximating to this average, and this is the kernal of the matter.

The second capitalist engages wage workers to carry through the operations connected with this circulation. Obviously he only puts his money into the business for the profit he can get out of it. But whence this profit ? He does nothing himself. The original producers have already been robbed by the industrial capitalist. The latter has only paid for the time socially necessary for the circulation operations. But the second capitalist pays less than this amount to his employees, and thus his profit is contained in the margin between the socially necessary expense of circulation and the amount he pays his wage slaves. Clearly this margin is only obtained by exploiting his employees, without whom he would have obtained nothing.

But, says our correspondent, “to me this is a most absurd statement for a Marxist to make ; for how can a labourer work longer than he is paid for if he creates no value ?” (Italics ours). This statement is utter confusion. Does Mr. Housley wish to infer that a labourer is only paid when he creates value ? Such an absurdity should be apparent even to him when—to take one instance only—in so small a country as this there are about 2,000,000 domestic servants engaged. And again, how long should these servants work ? Evidently 24 hours every day, for “how can they work longer” than they are paid for ?

Again, in the same paragraph he says: “What is there to distinguish between their surplus and their necessary labour ?” This is answered above where we point out the difference between the labour time necessary to carry on the operations of the circulation of capital and the labour time necessary to produce the subsistence of the wage slaves employed in that circulation.

After references to Boudin and Kautsky we come to paragraph 9, where Marx is quoted and we are told that “Marx himself appears to hold the same view.”

On this point we are at one with our correspondent, for on several occasions we have found Marx indulging in the disconcerting habit of agreeing with himself—even where he has been accused of contradicting Marx.

Thus his own words with relation to the school-master are as follows: “If we may take an example from outside the sphere of production of material objects, a school-master is a productive labourer when, in addition to belabouring the heads of his scholars, he works like a horse to enrich the school proprietor. That the latter has laid out his capital in a teaching factory instead of a sausage factory does not alter the relation.” (“Capital,” Eng. ed., page 517.) And further on he says: “Hence the notion of a productive labourer implies …. also a specific social relation …. “Ibid.)

All this is quite clear to the serious student. From the employers’ point of view all labourers are “productive labourers” who bring them profit whether as actual producers or through some intermediate process of capitalism. As he only obtains his profit by employing them he must evidently exploit them.

So far the only “two groups of Marxists” our correspondent has shown are those who agree with Marx and those who—like Mr. Housley—have failed to understand him.

Whether the workers in a warehouse or an office are exploited of the “product of their labour” depends upon whether they are engaged in production and distribution of commodities or not. If the former, the answer is yes ! If engaged in the circulation of capital, then, as shown above, they are exploited in the process of diverting surplus-value (made in production) into the pockets of their employer. The profit of a merchant is derived so far as he is concerned from his own employees, though the total cost of these operations are met out of the surplus-value made in actual production.

J. F.

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