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suffering an unfair loss and the other gaining an unfair advan-
tage. Marx, in a word, has rested his theory not on reality, but
on a fictitious abstraction. His units of measurement and cal-
culation are arbitrary and inapplicable. His " simple average
labour " is akin to '• le moyen homme," " the economic man," and
various other pseudo-scientific myths.

I only require to add that the theory of Marx which has been
unJer review receives many contradictions from experience. As
we have seen it supplies us with no measure for the economic
appreciation of inventive mechanical genius, industrial and com-
mercial enterprise, or talent for business management. Nor does
it account for the value of specially skilled and artistic labour ;
nor for the value of rare, and still less of unique objects ; nor
for the value of natural advantages, or of the spontaneous pro-
ducts of nature ; nor for the slight value of abnormally ill-paid
labour. But this line of argument has been so often and so
conclusively followed up both by the critics of Ricardo and the
critics of Rodbertus and Marx that it may suffice merely to refer
to it.

Let us now pass to the account which Marx gives of the
relation of labour to capital. As regards this portion of his
teaching, however, I shall here confine myself to mere exposi-
tion, reserving criticism for the next supplementary note.
Marx conceives of capital in a peculiar way. It is, in his view,
not simply wealth which is applied to the production of wealth,
but wealth which is applied for the exploitation of labour.
It consists of "the means of exploitation," of "the instru-
ments of production which capitalists employ for the
exploitation and enslavement of labourers." None of these



150 SOCIALISM

means and instruments are in themselves capital ; they are not
capital if personally used by their possessors; they are only
capital when so employed as to extract profit, unpaid labour,
from those Avho do not possess them. " Capital is dead labour,
■which, vampii'e-like, becomes animate only by sucking living
labour, and the more labour it sucks the more it lives."

Capital is further " an historical category," and even a late
historical category. " 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 sixteenth century of a world-embracing commerce
fl>ud 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."

The capitalist causes his capital to cii'culate with a view to
obtaining not commodities or use-values but profit, an excess over
the value of his capital, surplus-value, Mehrwerth. But the
pi'ocess of circulation or exchange, although necessary to the
attainment of this end, does not itself secure it. It is merely a
change of form of commodities, which does not, whether equiva-
lents or non-equivalents are exchanged, effect a change in the
magnitude of the value. Neither by regularly buying commodi-
ties under their value nor by regularly selling them over their
value can the capitalist create the surplus-value which is the
object of his desire. He can only do so by finding one commodity
whose use-value possesses the peculiar faculty of being the source
of exchange-value. This he finds in the capacity of labour, or
labour-power. It is ollered for sale under the two indispensable
conditions, first, that its possessors are personally free, so that
what they sell is not themselves but only their labour-power, and
secondly, that they are destitute of the means of realising this
labour-power in products or commodities which they could use or
sell for their own advantage, and, consequently, are under the
necessity of selling the power itself. This power the capitalist



SOCIALISM AND LABOUR 151

buys, supplies with all that it requires to realise itself, and
obtains in return for the price he pays for it all that it
produces.

How does he from this source draw surplus-value? Thus,
according to Marx, labour-power, the source of all value, itself
possesses a value. What value ? Like aU commodities, the value
of the social normal labour-time incorporated in it, or necessary
to its reproduction ; in this case, the value of the means of sub-
sistence necessary to the maintenance of the labourer. If six
hours of average social labour be sufficient to provide the
labourer with the physically indispensable means of subsistence,
and the value of these means be represented by three shillings,
these three shillings correctly represent the value of the labour-
power put forth by the labourer during a working-day of six
hours. This sum the capitalist gives, and must give, to the
labourer. There is, therefore, still no surplus-value. The
capitalist has paid away just as much as he has received ; the
labourer has put into the product in which his work is incorporated
no more than that work has cost.

This, of course, does not satisfy the capitalist. But he sees
that the labourer can produce more than he costs : that he can
labour twelve hours instead of six, yet maintain himself each day
in working efficiency and renew his vital powers on three shillings,
the equivalent of the value of six hours. Accordingly he compels
the labourer to work for him twelve hours instead of six at the
price of six, and appropriates the value created by the labourer
during the six extra hours. Ca2)italistic profit is simply the surplus-
value obtained from unpaid labour.

As we have now reached the very heart of Marx's doctrine we
shall allow him to speak for himself. He wiites :

"Let us examine the matter more closely. The value of a day's labour-
power amounts to 3 shillings, because on our assumption half a day's
labour is embodied in that quantity of labour-power- -i.e., because the
means of subsistence that are daily required for the production of
labour-power, cost half a day's labour. But the past labour that is
embodied in the labour-power, and the living labour that it can call into
action; the daily cost of maintaining it, and its daily expenditure in
work, are two totally different things. The former determines the
exchange-value of the labour-power, the latter is its use-value. The fact
that half a day's labour is neceesary to keep the labourer alive during



152 SOCIALISM

twenty-four hours, does not in any way prevent him from working a whole
day. Therefore, the value of labour-power, and the value which that
labour-power creates in the labour process, are two entirely different
magnitudes ; and this difference of the two values was what the capitalist
had in view, when he was purchasing the laboui'-power. The useful
qualities that labour-power possesses, and by virtue of which it makes
yarn or boots, were to him nothing more than a conditio sine qnd non; for
in order to create value labour must be expended in a useful manner.
What really influenced him was the specific use-value which this com-
modity possesses of being a source not onlij of value, hut of more value than,
it has itself. This is the special service that the capitalist expects from
labour-power, and in this transaction he acts in accordance with the
' eternal laws ' of the exchange of commodities. The seller of labour-
power, like the seller of any other commodity, realises its exchange-value,
and parts with its use-value. He cannot take the one without giving the
other. The use-value of labour-power, or in other words labour, belongs
just as little to its seller as the use-value of oil after it has been sold
belongs to the dealer who has sold it. The owner of the money h.as paid
the value of a day's labour-power ; his, therefore, is the use of it for a
day; a day's labour belongs to him. The circumstance that on the one
hand the daily sustenance of labour-power costs only half a day's labour
while, on the other hand, the very same labour-power can work during a
whole day, that consequently the value which its use during one day
day creates is double what he pays for that use is, without doubt, a
piece of good luck for the buyer, but by no means an injury to the
seller.

" Our capitalist foresaw this state of things. The labourer therefore
finds, in the workshop, the means of production necessary for working,
not only during six, but during twelve hours. Just as during the six
hours' process our lo lbs. of cotton absorbed six hours' labour, and
became lo lbs. of yarn, so now 20 lbs. of cotton will absorb twelve hours'
labour and be changed into 20 lbs. of yarn. Let us now examine the
product of this prolonged process. There is now materialised in this
20 lbs. of yarn the labour of five days, of which four days are due to the
cotton and the lost steel of the spindle, the remaining day having been
absorbed by the cotton during the spinning process. Expressed in gold,
the labour of five days is 30 shillings. This is, therefore, the price of the
20 lbs. of yarn, giving, as before, 18 pence as the price of a pound. But
the sum of the value of the commodities that entered into the process
amounts to 27 shillings. The value of the yarn is 30 shillings. Therefore
the value of the product is one-ninth greater than the value advanced in
its production ; 27 shillings having been transformed into 30 shillings ; a
surplus-value of 3 shillings has been created. The trick has at last
succeeded ; money has been converted into capital.

"Every condition of the problem is satisfied, while the laws that
regulate the exchange of commodities have been in no way violated.



SOCIALISM AND LABOUR 153

Equivalent has been exchanged for equivalent. For the capitalist as
buyer paid for each commodit}-, for the cotton, the spindle, and the
labour-power, its full value. He then did what is done by every pur-
chaser of commodities ; he consumed their use-value. The consumption of
the labour-power, which was also the process of producing commodities,
resulted in 20 lbs. of yarn, having a value of 30 shillings. The capitalist
formerly a buyer, now returns to market as a seller of commodities. He
sells his yarn at 18 pence a pound, which is its exact value. Yet for all
that he withdraws 3 shillings more from circulation than he originally
threw into it. This metamorphosis, this conversion of money into capital,
takes place both within the sphere of circulation and also outside it ;
within the circulation, because conditioned by the purchase of the labour-
power in the market ; outside the circulation, because what is done within
it is only a stepping-stone to the production of surplus-value, a process
which is entirely confined to the sphere of production. Thus 'tout est pour
le mieux dans le meilleur des mondes possibles.'

"By turning his money into commodities that serve as the material
elements of a new product, and as factors in the labour-process, by incor-
porating living labour with their dead substance, the capitalist at the
same time converts value — i.e., past, materialised, and dead labour — into
capital, into value big with value, a live monster that is fruitful and
multiplies."*

The foregoing extract deserves careful perusal. It may not
disclose, as Marx pretends, " the secret " of capitalistic produc-
tion, but it either explicitly states, or inferentially involves
almost everything essential in the Marxian system.

The latter and most interesting portion of the treatise of Marx
on Capital consists of little more than the deduction and illustra-
tion of the consequences implied in his doctrine of surplus-value.
Of these consequences the chief are the following : —

(i) The capitalist constantly and successfully strives to appro-
priate more and more of the productive power of labour. In this
endeavour he finds, in machinery, which is the most powerful
means of shortening labour-time, the most powerful instrument
for accomplishing his purpose. While he lessens, by its aid, the
time in which the labourer can gain what is necessary to maintain
him, he at the same time increases the length of the labour-day.

" In its blind unrestrainable passion, its were-wolf hunger for surplus-
labour, capital oversteps, not only the moral, but even the merely phvbical

* " Capital," pp. 174-6.



154 SOCIALISM

maximum bounds of the working day. It usurps the time for growth,
development, and healthy maintenance of the body. It steals the time
required for the consumption of fresh air and sunlight. It higgles over a
meal-time, incorporating it where possible with the process of production
itself, so that food is given to the labourer as to a mere means of production,
as coal is supplied to the boiler, grease and oil to the machinery. It
reduces the sound sleep necessary for the restoration, reparation, refresh-
ment of the bodily powers to just so many hours of torpor as the revival
of an organism, absolutely exhausted, renders essential. It is not the
normal maintenance of the labour-power which is to determine the limits
of the working day ; it is the greatest possible daily expenditure of labour-
power, no matter how diseased, compulsory, and painful it may be, which
is to determine the limits of the labourer's period of repose. Capital cares
nothing for the length of life of labour-power. All that concerns it is
simply and solely the maximum of labour power that can be rendered
fluent in a working-day. It attains this end by shortening the extent of
the labourer's life, as a greedy farmer snatches increased produce from the
soil by robbing it of its fertility." *

(2) "When Law interposes and shortens the hours of labour,
the capitaHst still attains his end by " squeezing out of the work-
man more labour in a given time by increasing the speed of the
machinery, and by giving the workman more machinery to
tend." He substitutes intensified labour for labour of more
extensive duration, and so exploits the labourer as successfully
as before.

(3) Capital appropriates the supplementary labour-power of
women and children.

" In so far as machinery dispenses with muscular power, it becomes a
means of employing labourers of slight muscular strength, and those
whose bodily development is incomplete, but whose limbs are all the
more supple. The labour of women and children was, therefore, the first
thing sought for by capitalists who used machinery. That mighty sub-
stitute for labour and labourers was forthwith changed into a means for
increasing the number of wage-labourers by enrolling, under the direct
sway of capital, every member of the workman's family, without dis-
tinction of age or sex. Compulsory work for the capitalist usurped the
place, not only of the children's play, but also of free labour at home
within moderate limits for the support of the family.

" The value of labour-power was determined, not only by the labour-time
necessary to maintain the individual adult labourer, but also by that neces-



" Capital," vol. i., p. 250.



SOCIALISM AND LABOUR 155

sary to maintain his family. Machinery, by throwing every member of
that family on to the labour market, spreads the value of the man's labour-
power over his whole family. It thus depreciates his labour-power. To
purchase the labour-power of a family of four workers may, perhaps, cost
more than it formerly did to purchase the labour-power of the head of the
family, but, in return four days' labour takes the price of one, and their
price falls in proportion to the excess of the surplus-labour of four over
the surplus-labour of one. In order that the family may live, four people
must now not only labour, but expend surplus-labour for the capitalist.
Thus we see that machinery, while augmenting the human material that
forms the principal object of capital's exploiting power, at the same time
raises the degree of exploitation." *

(4) Capitalist accumulation necessarily leads to a continuous
increase of the proletariat. It cannot content itself with the dis-
posable labour-power which the natural increase of population
yields, but demands and creates an always enlarging surplus-popu-
lation in a destitute and dependent condition, an industrial
reserve army in search of employment.

"The greater the social wealth, the functioning capital, the extent and
energy of its growth, and, therefore, also the absolute mass of the pro-
letariat and the productiveness of its labour, the greater is the industrial
reserve army. The same causes which develop the expansive power of
capital, develop also the labour-power at its disposal. The relative mass
of the industrial reserve army increases therefore with the potential
energy of wealth. But the greater this reserve army in proportion to the
active labour army, the greater is the mass of consolidated surplus- popula-
tion, whose misery is in inverse ratio to its torment of labour. The more
extensive, finally, the Lazarus-layers of the working-class, and the indus-
trial reserve army, the greater is official pauperism. This is the absolute
general laiv of capitalist accumulation.

" The folly is now patent of the economic wisdom that preaches to the
labourers the accommodation of their number to the requirements of
capital. The mechanism of capitalist production and accumulation con-
stantly effects this adjustment. The first word of this adaptation is the
creation of a relative surplus-population, or industrial reserve army. Its
last word is the misery of constantly extending strata of the active army
of labour, and the deadweight of pauperism." t

(5) Society tends under the operation of capitalism to
inequality of wealth with all its attendant evils. Small and



* " Capital," vol. ii., 391-2. t Ihid., vol. ii., 659-60.



156 SOCIALISM

moderate fortunes are being absorbed in large, and these in those
which are larger ; intermediate distinctions and grades aie l)eing
effaced and eliminated ; riches and luxury are accumulating at one
pole, and poverty and misery at the opposite ; and the time is
approaching when, unless capitalist-accumulation be arrested,
there will be only a bloated mammonism confronting a squalid
pauperism.



CHAPTER y.

SOCIALISM AND CAPITAL.

The teaching of Socialism as to labour having been
considered, we must now turn our attention to its
doctrine concerning capital.

There is no portion of its teaching to which
Socialists themselves attach greater importance.
They trace to false views of the functions and
rights of capital the chief evils which prevail in
modern society. They rest all their hopes of a just
social organisation in the future on the belief that
they can dispel these false views and substitute for
them others which are true. Socialists aim at
freeing labour from what they regard as the tyranny
of capital, and in order to attain their end they
strive to expose and destroy the conceptions of
capital which are at present dominant. This they
consider, indeed, to be their most obvious and most
urgent duty.

What is capital ? It is a kind of wealth : wealth
which is distinguished from other wealth by the
application made of it ; wealth which, instead of
being devoted to enjoyment, or to the satisfaction of
immediate wants and desires, is employed in main-
taining labour, and in providing it with materials
and instruments for the production of additional



158 SOCIALISM

wealth. It is, in fact, just that portion or kind of
wealth which, from its very nature, cannot but co-
operate with labour. There is much wealth spent
in such a way that the labouring poor may well be
excused if they feel aggrieved when they see how it
is expended. There are many wealthy persons
among us whom Socialists are as fully entitled to
censure as the Hebrew prophets were to denounce
the " wicked rich," among their contemporaries. By
all means let us condemn the " wicked rich ; " but
let us be sure that it is the " wicked rich," and only
the " ivicked rich," that we condemn.

Now, a capitalist may be wicked, but he is not
wicked simply as a capitalist. Viewed merely in
the capacity of a capitalist, he is a man who employs
his wealth in a way advantageous to labour ; who
distributes the wealth which he uses as capital
among those who labour. As a consumer of wealth
the rich man may easily be an enemy of labour, but
as a capitalist he must be its friend ; and this
w^hether he wish to be so or not. For capital
attains its end only through co-operation with
labour. Separated from labour it is helpless and
useless. Hence, however selfish a man may be in
character and intention, he cannot employ his
wealth as capital without using it to sustain labour,
to provide it with materials, to put instruments into
its hands, and to secure for it fresh fields of enter-
prise, new markets, new acquisitions.

It seems manifestly to follow that those who seek
the crood of labour should desire the increase of
capital. It appears indubitable that if the wealthy



SOCIALISM AND CAPITAL 159

could be persuaded to use more of their wealth as
capital and to spend less of it in the gratification of
their appetites and vanities ; and if the poor could
be induced to form capital as far as their circum-
stances and means allow, so as to be able to supple-
ment and aid their labour in some measure with
capital, the condition of the labouring classes would
be improved ; and, on the other hand, that to re-
present capital as the enemy of labour and the cause
of poverty, and to discourage and impede its forma-
tion, can only tend to their injury. But obvious
and certain as this consequence looks, Socialists
refuse to acknowledge it. They labour to discredit
capital, deny or depreciate its benefits, and urge the
adoption of measures which would suppress the
motives, or remove the means, essential to its pre-
servation and increase.

There are Socialists who charge capital with
doing nothing for production ; who represent it as
idle, ineflicacious, sterile. They say labour does
everything and capital nothing ; and that, con-
sequently, labour deserves to receive everything and
capital is not entitled to receive anything.

Assuredly they are utterly mistaken. Manifestly
the assistance given by capital to production is im-
mense. Without its aid the most fertile soil, the
most genial climate, the most energetic labour, all
combined, will produce but little. By means of the
capital which the people of Britain have invested in
machinery they can do more work and produce more
wealth, than all the inhabitants of the earth could
do through the mere exertion of their unaided



i6o SOCIALISM

muscles. Surely that portion of capital is not less
efficacious than the muscular exertion required to
impel and direct it. Deprived of the capital which
is spent as wages, the most skilled workmen, how-
ever numerous and however familiar with machinery,
are helpless.

Exactly to estimate the efficacy of capital, as
distinct from that of the other agents of production,
is indeed impossible ; and for the very sufficient
reason that it never is distinct from them, or they
independent of it. Nature itself, when no capital is
spent upon it, soon becomes incapable of sujDplying
the wants of men, at least if thev increase in number
and rise above a merely animal stage of existence.
The more labour advances in power and skill, the
more industrial processes become complex and re-
fined, the more dependent do labour and capital
grow on the aid of each other. If the influence of
capital then be, as must be admitted, incapable of
exact measurement, that is only because it is so
vast, so varied in the forms it assumes, so compre-
hensive and pervasive. It operates not as a separate
and distinct factor of production, but in and through
all the instruments and agencies of industry, sup-
plying materials, making possible invention and the
use of its results, securing extensive and prolonged
co-operation, facilitating exchange by providing
means of communication often of an exceedingly
costly kind, and, in a word, assisting labour in every
act and process by which nature is subdued and
adapted to the service of humanity.

With every desire to deny or depreciate the



SOCIALISM AND CAPITAL i6i

influence of capital in production, Socialists have
naturally found it very difficult to find reasons for



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