Karl Marx Economic and Philosophical Manuscripts of 1844 Wages ...

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19203. The Rule of Capital over Labor and the Motives ofthe Capitalist“The consideration of his own private profit is the solemotive which determines the owner of any capital toemploy it either in agriculture, in manufactures, or in someparticular branch of the wholesale or retail trade. Thedifferent quantities of productive labor which may put itinto motion, and the different values which it may add tothe annual produce of the land and labor of the society,according as it is employed in one or other of thosedifferent ways, never enter into his thoughts.” [Smith, p.355]“The most useful employment of capital for the capitalist isthat which, with the same degree of security, yields himthe largest profit; but this employment is not always themost useful for society... the most useful is that which...stimulates the productive power of its land and labor.”[Say, II, pp. 130-31]“The plans and projects of the employers of stock regulateand direct all the most important operations of labor, andprofit is the end proposed by all those plans and projects.But the rate of profit does not, like rent and wages, risewith the prosperity and fall with the declension of thesociety. On the contrary, it is naturally low in rich and highin poor countries, and it is always highest in countrieswhich are going fastest to ruin. The interest of this thirdorder [those who live by profit], therefore, has not thesame connection with the general interest of the society asthat of the other two.... The interest of the dealer, however,in any particular branch of trade or manufactures, isalways in some respects different from, and even oppositeto, that of the public. To widen the market and to narrowthe competition, is always the interest of the dealers, anorder of men whose interest is never exactly the same asthat of the public, and who have generally an interest todeceive and even to oppress the public...” [Smith I, pp.231-2]4. The Accumulation of Capitals and the Competitionamong the CapitalistsThe increase of capitals, which raises wages, tends to lower profits,as a result of the competition among capitalists. [Smith, p. 78]If, for example, the capital which is necessary for the grocerytrade of a particular town“is divided between two different grocers, theircompetition will tend to make both of them sell cheaperthan if it were in the hands of one only; and if it weredivided among 20, their competition would be just somuch the greater, and the chance of their combiningtogether, in order to raise the price, just so much the less.”[Smith I, p. 322]Since we already know that monopoly prices are as high aspossible, since the interest of the capitalists, even from a straightforwardlyeconomic point of view, is opposed to the interest ofsociety, and since the growth of profits acts on the price of thecommodity like compound interest [Smith, pp. 87-8], it follows thatthe sole defense against the capitalists is competition, which in theview of political economy has the beneficial effect both of raisingwages and cheapening commodities to the advantage of theconsuming public.But, competition is possible only if capitals multiply and areheld by many different people. It is only possible to generate alarge number of capitals as a result of multilateral accumulation,since capital in general stems from accumulation. But, multilateralaccumulation inevitably turns into unilateral accumulation.Competition among capitalists increases accumulation of capitals.Accumulation—which, under the rule of private property, meansconcentration of capital in few hands—inevitably ensues if capitalsare allowed to follow their own natural course. It is only throughcompetition that this natural proclivity of capital begins to takeshape.We have already seen that the profit on capital is in proportionto its size. If we ignore deliberate competition for the moment, alarge capital accumulates more rapidly, in proportion to its size,than does a small capital.
21This means that, quite apart from competition, theaccumulation of large capital takes place at a much faster rate thanthat of small capital. But, let us follow this process further.As capitals multiply, the profits on capital diminish, as a resultof competition. So, the first to suffer is the small capitalist.“In a country which had acquired its full complement ofriches, ... as the ordinary rate of clear profit would be verysmall, so the usual market rate of interest which could beafforded out of it would be so low as to render itimpossible for any but the very wealthiest of people to liveupon the interest of their money. All people of small ormiddling fortunes would be obliged to super-intendthemselves the employment of their own stocks. It wouldbe necessary that almost every man should be a man ofbusiness, or engage in some sort of trade.” [Smith I, p. 86]This is the situation most dear to the heart of politicaleconomy.“The proportion between capital and revenue, therefore,seems everywhere to regulate the proportion betweenindustry and idleness. Wherever capital predominates,industry prevails: wherever revenue, idleness.” [Smith, p.301]But, what about the employment of capital in this increasedcompetition?“As the quantity of stock to be lent at interest increases, theinterest, or the price which must be paid for the use of thatstock, necessarily diminishes, not only from those generalcauses, which make the market price of things commonlydiminish as their quantity increases, but from other causeswhich are peculiar to this particular case.“As capitals increase in any country, the profits whichcan be made by employing them necessarily diminish. Itbecomes gradually more and more difficult to find withinthe country a profitable method of employing any newcapital. There arises, in consequence, a competitionbetween different capitals, the owner of one endeavoringto get possession of that employment which is occupied byanother.“But, on most occasions he can hope to jostle that otherout of this employment by no other means but by dealingupon more reasonable terms. He must not only sell whathe deals in somewhat cheaper, but, in order to get it to sell,he must sometimes, too, buy it dearer.“The demand for productive labor, by the increase ofthe funds which are destined for maintaining it, growsevery day greater and greater. Laborers easily findemployment, but the owners of capitals find it difficult toget laborers to employ. Their competition raises the wagesof labor and sinks the profits of stock.” [Smith p. 316]The small capitalist, therefore, has two choices: he can eitherconsume his capital, since he can no longer live on the interest—i.e., cease to be a capitalist; or, he can himself set up a business, sellhis goods at a lower price, and buy them at a dearer price than thericher capitalist, and pay higher wages, which means that hewould go bankrupt—since the market price is already very low asa result of the intense competition we presupposed. If, on the otherhand, the big capitalist wants to squeeze out the smaller one, hehas all the same advantages over him as the capitalist has over theworker. He is compensated for the smaller profits by the larger sizeof his capital, and he can even put up with short-term losses untilthe smaller capitalist is ruined and he is freed of this competition.In this way, he accumulates the profits of the small capitalist.Furthermore: the big capitalist always buys more cheaply thanthe small capitalist, because he buys in larger quantities. He can,therefore, afford to sell at a lower price.But, if a fall in the rate of interest turns the middle capitalistsfrom renters into businessmen, conversely the increase in businesscapitals and the resulting lower rate of profit produce a fall in therate of interest.“But, when the profits which can be made by use of acapital are diminished... the price which can be paid for theuse of it... must necessarily be diminished with them.”[Smith p. 316]“As riches, improvement, and population, have increased,interest has declined”, and consequently the profits ofstock; “...after these are diminished, stock may not onlycontinue to increase, but to increase much faster than22
Page 3 and 4: 5and brings about, the accumulation
Page 5 and 6: 9degree into other areas, for the r
Page 7 and 8: 13if it is low, then it is much in
Page 9: 17given for the use of it; wherever
Page 13 and 14: 2526eliminating human labor has it
Page 15 and 16: 2930tools than what would have been
Page 17 and 18: 3334the ordinary profits of farming
Page 19 and 20: 37proportion to the interest which
Page 21 and 22: 41still the appearance of a relatio
Page 23 and 24: 45Estranged LaborWe have started ou
Page 25 and 26: 49product of the worker’s activit
Page 27 and 28: 53estranged, alienated labor. We ha
Page 29: 57relation between this man, who is

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