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Elements of Marxist Economics

Latest update on Novembre 11, 2022
From the 1971 Presentation
1947 Introduction
Section I
and Money
 1. The commodity
 2. Exchange value
 3. The simple form of value
 4. Total or expanded form of value
 5. Historical and social character of the question
 6. Circulation. Value and price
 7. The circulation of money
Section II
of Money
into Capital
 8. From the circulation of money to the appearance of surplus-value
 9. Seeking the origin of surplus-value
10. The commodity “labor power”
11. Purchase of “labor power”
Section III
Surplus Value
12. Characteristic of labor in the capitalist era
13. The source of surplus-value
14. Summary of the demonstration
15. Constant capital and variable capital
16. Rate of surplus-value
17. General law of surplus-value
18. Demonstration of the fundamental law
19. Representation of the value of the product into proportional parts of the quantities of the product or the working day
20. Appendix - calculation of the enterprise referred to in paragraph 18.
21. Duration of the working day
22. Plus labor and capitalism
23. Capital and surplus-value
Section IV
Capitalism and Empowerment
of Labor
24. Relative surplus value
25. Collaboration
26. Manufacturing
27. Machinery
28. Replacement of machines for workers
29. Other characteristic of mechanisms
30. Large-scale industry and agriculture
31. Historical events in the production of surplus-value. Evolution of economic science
Section V
and Relative

32. Distribution of the value produced by labor between the capitalist and the wage-earner
Section VI
The Wage
33. General law of surplus value
Sections VII

of Capital
34. Reproduction of capital
35. Simple reproduction
36. Progressive reproduction
37. Variations in the magnitude of accumulation
38. Theory of the alleged wage fund
39. General law of capitalist accumulation
40. Change in the composition of the capital - Concentration - Centralization
41. Redundancy of working-class population or “industrial reserve army”
42. Forms of the redundancy of the working-class population
Sections VII

or Primitive
43. Historical forms of ownership and the origins of capital
44. Conditions for the formation of capitalism
45. The expropriation of the peasants
46. Fight for the “liberation” of the workers
47. Genesis of the agrarian capitalist
48. Genesis of industrial production
49. Genesis of the industrial capitalist
50. Factors of original (or primitive) accumulation
51. The theory of modern colonization
Conclusion 52. The historical outlet of capitalist accumulation
53. What will be the further development of capitalism
54. New contrast between productive forces and forms of property - The proletarian revolution

Adopted Symbols

    It En
Commodity   M G
Money   D M
Advanced Capital C+V K
Final Capital C+V+S K’
Constant Capital A+B+H C
Variable Capital   V
Surpuls Value   S
Revenue   R
Interest   I
Turnover C+V+S F
Depreciation rate   A
Raw Materials   B
Incidental Expenses   H
Market Price   P
Rate of Surplus Value S:V s
Rate of Profit S:(C+V) p
Interest Rate I:(C+V) i
Organic Composition C:V o
Labor Time n+e t
Necessary Labor   n
Surplus Labor   e

[From the 1971 Presentation]

The Elements of Marxist Economics was originally composed in Ponza in 1929. It was in these years, despite our defeat at Lyon and shortly afterwards at the VI Enlarged Executive of the Communist International in 1926, that our current, in emigration or confinement, in prison or in solitude, nevertheless supported the last and vehement battle in defense of the Marxist doctrine and program against all mystification. Since then is it our characteristic, repeated a thousand times in this text, that Marxism is a unique and invariant block which cannot be reduced to a simple “method” of interpreting facts as they happen. Rather, it offers a global vision of the course of human history and the very becoming of nature; it is not a mosaic of which one can change the tesserae at will, leaving the overall picture unchanged, but a scientific and global conception of the world in which everything is linked, and no one can willingly accept or reject any seperate part at will without disfiguring it and thus destroying its revolutionary power.

The text, in its original form, was intended “in a certain way to sort out and align the economic part” of Capital but from all its pages, as from those of Marx’s cyclopean work, both the battle cry of the working class fighting for the overthrow of the bourgeois mode of production, whose infamies hidden behind a democratic screen and its State superstructure are denounced, is the anticipated vision of society in which mankind will finally emerge from its prehistory and, ideally rejoining the beginnings of an associated community life, will base all relations of production and human coexistence on criteria that are not mercantile, not individualistic, not vulgarly contingent, but finally human and rational.

So it’s all economics, “philosophy”, politics: in short, class warfare.

Elements of Marxist Economics

1947 Introduction
[Prometeo, No. 5, January-February 1947]

The work we take to publish is an exposition, in a somewhat different form from the original, of the First Book of Capital. It is not a summary and much less a vulgarisation. The study of Marx’s fundamental work requires a historical and philosophical economic preparation whose results must be applied in parallel. Here, the economic part of the text is in a certain way thinned out and aligned.

A similar work for the historical and philosophical part can give sufficient basis to the work for a correct approach and knowledge of the integral doctrine of communism, in its classic original enunciation.

[Prometeo, n. 6, March-April 1947]

The first part of this study corresponds to the First Section of the First Book entitled by the author Commodities and Money.

For the Practical purpose of establishing a new numbering, we will consider the study divided into the seven following points:

1. Definition of the commodity and its two properties: value in use and exchange value.

2. Exchange value. The quantitative concept and difficulty in finding the measure.

3. The simple form of value. Whenever we talk about value, we will henceforth refer to exchange value. The simple form is the statement of equivalence, for the purpose of exchange, between two goods which are both susceptible to use (consumption), so that a given quantity of commodity A corresponds to a given quantity of commodity B.

4. General form of value and equivalent form. It occurs when we consider a given number of different goods and we know all the equivalences between pairs of them. With two goods we have one equivalence, the simple form. With three goods we have six equivalences, with four twelve. With ten goods we would have ninety equivalences, a system too complicated for practical and mnemonic purposes. To remember the ninety relationships it is enough to know those of nine goods with only one and therefore only nine relationships from which the others easily derive. One commodity has been chosen as the equivalent of all. We are at the general form of value.

5. Historical-social character of the whole question. We have briefly summarized a chapter, the one on “The fetishism of commodities and the secret thereof” that summarizes all the elements of the Marxist doctrine in a masterful foreshortening, on the economic, historical and philosophical side together. We have reported just enough to clarify that Marxist economics does not go into the subtleties in the analysis of commodities to find immanent and immutable laws of the economic process (the claimed natural laws of economics) but – in order to expose with rigorous development the scientific investigation on the becoming of human society in all its complexity and in the historical succession of its events – referred to different eras from a different mechanics of the economic world. It therefore investigates not the relationship between the piece of cloth and the iron pound, but the relationship between real men in production and consumption to data carried out in history.

6. Circulation. Value and price. At this point the market as a whole is studied, when a commodity chosen as a general equivalent, such as salt, is finally replaced by currency, first metallic and then also paper and conventional. In this development is put in front of the hypothesis that in order to have a measure of the value we can adopt the one of the average human working time that every goods requires in general to be produced. The progressive application of this hypothesis (which, as is known, is not found for the first time in Marx but is due to the economists of the first capitalist era and in particular to David Ricardo (1772-1823) who published his fundamental work, Principles of Political Economics, in London in 1821) to the whole economic world present in the development of research will decide on the validity of the hypothesis itself.

7. Path of the money. The Second Section, where Capital finally comes onto the scene, deals precisely with the transformation of money into capital – investigated by studying the dynamics no longer of those who enter the market to bring goods or withdraw them for their own use, but of those who descend as bearers of money. As a premise Marx recalls how much it is necessary to establish regarding the essential monetary mechanism in the bourgeois economy, before continuing with the exposition of all “the process of capitalist production”, the theme of the First Book of the work.

* * *

Having said this as a prologue to the First Section of the First Book, it will be good to give some indication of the partition of the whole work, which in Marx’s plan was to include four Books or Volumes. Of them only the First is known in full in Italian, while the Fourth could not have be written by Marx.

The Second Book deals with the process of the circulation of Capital, the third of the aspects that cover the overall economic process; the Fourth was to expose the history of theory, of which, however, there are copious materials in the first Books and their annotations.

Among the many Prometeo tasks may be that of an exposition of the two subsequent Books of Capital, much less known than the First.

It is good, however, to remove a current convention and much used for revisionist purposes,that is, that the two subsequent Books examine a part of the real economic process that was omitted in the First, and that this analysis was carried out by the author to the point of leading him to important corrections if not to renunciations of the main doctrines of the First Book such as those of surplus value, the accumulation of capital, the growing misery, etc. This opinion, contradicted by the context of even the most recent works that appeared until Marx’s death (1883) and afterwards, as by the posthumous reworking and exegesis by Engels, corresponds to an erroneous evaluation of the constructive framework of the work. The First Book covers the complete field of Marx’s doctrine on capitalism and is certainly not an abstract treatment of relations that are established in the sphere of production and that prescind from the relations of the circulation of goods and currency. To believe this would be to consider the substantial content of Marx’s method destroyed.

What defines the relationship between the First Book of Capital and the rest of the Work is an entirely different criterion. As rich as it is in historical, critical, bibliographic and polemical material, the First Book carries out the economic study of the whole process, from the first exchange to barter on through the birth and accumulation of capital to the conclusion that capitalism will be succeeded by a social economy and not a mercantile one, traced out lapidarily in the penultimate chapter, as we shall see at the appropriate time. The data, the study and the laws of circulation are already fully understood in this development. But all the material is taken up and re-examined in the following books – and, explaining the concept better, we can well say in all the later and also future work of Marxists – by way of study of the particular phenomena of capitalist development, from which, given the character of the method, the verification and control of the general theory and the proof of its efficiency must incessantly be drawn.

The First Book therefore gives us the essential development of the capitalist process and its real social characteristics in the relationship between capitalist and wage-earners, which is impractical and unimaginable without taking into account the phenomena of circulation and consumption, and finds the laws of this process, although not crystallizing them in the statics of an abstract world but verifying them in all situations: of nascent capitalism and put in relation with different economic types, and then in the course of its development and its conquest of the world. Therefore, it always takes into account the real historical environment, since it can never be said to be in the presence of a “model” of capitalist economy in the “pure” state.

And, in fact, the famous First Section of the First Book, on circulation, is the cornerstone on which the whole study of production rests, and because of the well-known warnings of Marx himself and of the best commentators it is the most difficult, especially for readers who are not well prepared, even though its comprehension is completely indispensable to the whole.

But it has also been said many times that a work like Marx’s, from which every apriorism and every metaphysics of principles have been expelled, must be acquired in all its parts, and reading the first chapters presupposes a certain assimilation of the theses of the following parts. Marx himself suggested to some readers to start halfway through the book from the descriptive and historical chapters and then to the decisive ones of scientific analysis.

The First Book therefore stands for everything else as the fundamental trace, the guideline of the whole system, which has its own completeness and complete cycle, and was written by the author on the basis of all the materials that economic history up to its time offered him, and of which he reserved detailed exposure to the following volumes.

It holds the place that in modern physics and astronomy hold the Philosophiae Naturalis Principia Mathematica by Isaac Newton (1687). Of a single jet, from the truth due to Galileo that the force acting on a material body in motion is the cause not of its speed but of its acceleration (i.e. it increases or decreases the speed itself), the mathematical procedure, with the methods of calculation of the very small quantities found by Newton, leads directly to establish the laws of motion of a planet around the sun and finds deductively the laws that Kepler had inferred from Tycho Brahe’s observations on planetary revolutions. The theoretical principle thus receives dazzling confirmation. It is worth noting that even the first part of Newton’s work, which establishes in geometric form the first propositions of infinitesimal calculus, found at the same time by Leibniz in another more expressive form, is hard to study and boring, while the deduction of the following chapters in which the famous law of universal gravitation is great and brilliant even in form.

The three or four very simple statements by Galileo, Newton, Kepler give full reason for all the motions of the bodies of the solar system, planets and satellites, and have definitive value in the history of science. This does not detract from the fact that they derive from a pure and abstract case, that of central motion, which considers only two celestial bodies, while in the system there are a great number of them. The real effect is therefore very complicated. Already the problem of the three bodies appears, analytically, much more difficult. Yet admitted the Newton’s famous action at a distance, each body attracts each other and deforms its trajectory more or less. Something similar to the passage from Marx’s simple M → M’ barter to the general picture of today’s economic movement. To the following volumes of Capital we will therefore compare the gigantic later work performed by astronomers in deducing the particular motions of the various bodies, and especially the fundamental and classical Mécanique Céleste by Laplace, the famous applications such as the discovery of Neptune made by Le Verrier by calculating the perturbations of Saturn’s orbit, identifying its precise position in the sky, then verified by observation through the telescope.

The same theory therefore regulates the study of many effective deviations of detail from the standard law and the pure Keplerian ellipses, but Newton’s law remains solidly established and reconfirmed. The standard process is absolutely valid and yet it never happens. Not only are the heavens no longer immutable and incorruptible as they were for Aristotle and Thomas, and they are rectified by the same valid mechanics for the motion of the grave earths studied by Galileo, but Kepler’s geometrically exquisite orbits are not immutable traces to the motion of the planets. Each of them never traces them twice, the real phenomenon is always different from the theoretical one, but this only confirms the validity and effectiveness of the scientific law.

Introduced further considerations on thermal processes it becomes possible to attempt a history of the solar system and Laplace puts forward his hypothesis on the origin of the planets from the sun and their future fallout into it. This, of course, does not take away the validity of the scientific conquest contained in the first classical construction of the general law of motion.

To avoid confusion, not always innocent, we mention one last point. The methodological issues mentioned here are not affected, in the development of the comparison with the cosmogonic problem, by recent acquisitions and scientific doctrines that introduce in the balance in addition to the thermal considerations those of atomic energy, nor by broader constructions such as those of relativistic theory that have not denied (in the sense that interests us here) the classical law of gravitation, but have framed it in a broader conception as a “limit case”. All this, like the question of determinism in the science of nature and in the science of man, must be reserved for further studies such as those on Marxism and theory of knowledge.

* * *

The notes we are publishing serve as an introduction to the reading of Capital, and even better to the political work with the handling of that fundamental and revolutionary instrument. A book is for us like a machine; more, like a weapon.

It would be useful, since any work of investigation is nowadays for us socialists collective and not personal, for the illumination of the text by already prepared militants.

For example, the fourth paragraph of the first chapter on the fetish character of the commodity contains very topical propaganda material on points that the opportunists of the moment put under their feet at least three times a day, while they claim to be students of Marx

In a few pages it provides a historical glimpse of the various economies whose use of the dialectical method we will discuss in our course extensively, it is shown that not all past economies were mercantile, and that the socialist economy is defined, as a first condition, by being non-commercial and non-monetary. The thesis is contained that any apologetics of capitalism in economics and of equality and freedom in politics, tending to contrast the perfection and dignity of bourgeois institutions with the “artificiality” of feudal ones, is scientifically worth as little as the position of all theologians, according to whom the religions of others are artificial, theirs alone is natural. Any religion that is not theirs is an invention of men, theirs is the revelation of God. Marx quotes himself here in his answer to Proudhon on the Misery of Philosophy. For us Marxists all religions are “inventions” of men.

Today, under the incredible label of Marxism, from Attlee to Stalin, from Saragat to Togliatti, of all the nuances that fit in, under the incredible label of Marxism, no one is beating mercantilism or deism. They all feel they are going in an anti-capitalistic sense without bothering the commodity fetish, the “beast” (it is Marx who quotes the Apocalypse of John) currency, nor the god of the altars.

None of them remember reading:

     «The religious world is but a reflection of the real world. A society in which the product of labour generally takes the form of a commodity; where consequently the most common relationship between producers consists in buying the values of their products and, in this simple form, in comparing their private work with each other as equal human labour (these characteristics remain intact in the statizations of both Labour and Russian totalitarianism); such a society finds in Christianity with its cult of abstract man, and especially in its bourgeois development, Protestantism, deism, etc., the most appropriate form of religion.
     «In general, the religious reflection of the real world can only disappear because the conditions of work and practical life will present man with clear and reasonable relations with his fellow human beings and with nature.
     «Social life, of which material production and the relationships it implies form the basis, will not tear the mystical veil of fog that hides its appearance except on the day when the work of men freely associated, consciously acting according to a determined plan and masters of their own social movement, will manifest itself. But this requires a material basis of society or a set of conditions of material existence, which in turn are but the product of a long and painful historical development».

But now, in order not to frighten the allies of the fideist movements, the “Marxists” no longer speak of these problems. Their followers are made to believe that silence is only a temporary skillful maneuver.

At most they say that Lenin quotes from Marx that religion is the opium of the people: a phrase of passage in which the terms are not in the light of theoretical rigor. Do we need a passage from Lenin, to avoid they say that we are the ones who invent a Marx and a Lenin in our own way? Here it is:

«We materialists, after Engles, term the Kantians and Humeans agnostics, because they deny the objective reality of the source of our sensations. The agnostics says: I do not know if there is an objective reality, reflected, represented by our sensations; I declare it impossible to know. Hence the denial of objective truth the agnostic and a tolerance −a bourgeois, philistine, cowardly tolerance− of the dogmas of house goblins and wood demons, Catholic saints and the like»
(Materialism and Empirio criticsm, Chap II, par. 4).

The allusion to werewolves and spirits comes from a polemic with the self-styled Russian Marxist Bagdanov who, embracing the philosophy fashionable in 1910 of Mach & Avenarius, however, claimed the anti-fideist position. Lenin contests this and among other things says «If truth (including scientific truth) is but an organizing form of human experience, then the fundamental postulate of clericalism is admitted, the door remains open to it, and room is made for the “organizing forms” of religious experience».

Where we see that for the Marxist the terms fideism, clericalism, religion Christianity and deism, are equal expressions of an enemy thesis, and that the same heterodox as Bogdanov were until yesterday ashamed to have a tolerance for them.

But today, a duly purged edition of Marx and Lenin is expected. While you’re at it, couldn’t you include the formation of the commission in the Lateran Pacts?






[Prometeo, n.5, January-February 1947]


1. The commodity

A commodity is an object which possesses two properties: a) being useful, that is able to satisfy human needs; b) and susceptible to exchange with other commodities.

We use the term use-value to describe this property a). Does it correspond to a measurable quantity? No, because use-value of even the same commodity varies according to the circumstances of time, place and person. Use-value is therefore a qualitative property that cannot be treated as a quantitative magnitude (1).

Exchange-value: We thus designate the second property of the commodity, that is, its exchangability.

Is exchange value quantitatively measurable? And if so, to what known quantities must it be attributed to? We answer the first question in the affirmative because, although at first sight a given commodity allows for many isolated exchanges for various quantities of other commodities, in all these relations there must be something in common.

As for the second question, we cannot ascribe a measure of exchange value to the specific properties that define use-value, such as color, flavor, shape, chemical composition, etc., because the commodity can be exchanged for other commodities of any use-value without changing its exchange value. The common character of various commodities that can be exchanged indiscriminately can only be reduced to the fact that they are all products of human labor.

2. Exchange value

We then propose to measure exchange value by referring to labor, a common measurable quantity. Human labor is only measurable as labor time.

It must be immediately understood that it is not a matter of the time of work occasionally required to produce a given commodity, which can vary under a thousand circumstances, but of the average time of work required to reproduce it systematically, i.e. socially necessary labor time

Exchange value is the ability of a commodity to be exchanged with others in a given relationship, and is a measurable quantity.

The number which will measure exchange value with respect to an agreed unit of measurement is always proportional to the social-average labor time required to produce a given commodity, i.e. the number itself is given by this time divided by the labor time required to produce the agreed unit of the exchange value.

The productive force of average labor varies if the processes of technology vary. When this happens, the exchange value of goods of that type varies. Of course, it also varies for the goods still existing, produced with the unimproved system and with a longer working time.

Hence it can be seen that the formula that value is crystallized labor is also erroneous and it is necessary to formulate the law in the precise terms stated above.

Labor is represented in a dual form within the commodity: use value is in relation to the particular quality of the labor required; the exchange value is in relation to the quantity of average human labor time is required to reproduce it.

When we speak of time and labor power, we are referring to simple labor, from which complex or qualified labor must be distinguished. Throughout this discussion, complex labor is always reduced to simple labor, as we will see later.

3. The simple form of value

A commodity has two forms: its natural form, most often physical and material, and its value form.

And in which form does value appear to us? In practice, as experimental data, value appears to us in the form of money, which is basically the price. It is a matter of arriving at this practical data, familiar to all, by a deductive analysis that starts from the simple property of exchange that all goods possess, since we have established that they have a value (of exchange) insofar as they can be exchanged.

Let’s start from the simplest fact of the exchange between two lots of commodities:

x commodity A  =  y commodity B

The form of value appears here at first in a way we can describe as simple or particular. We then have an equality, with two members. Although we can, as in any quantitative equality, change their places, nevertheless the expressions x Commodity A and y Commodity B have a different character. They express the same quantities of value; but y Commodity B is used to define how much Commodity A is worth. So we will call the first member the relative form, and the second the equivalent form.

Simple form of value:
Value of x commodity A  =  Value of y commodity B  =  Value V
Relative Form Equivalent Form

If we wanted to express the absolute magnitude of the value V by a number, that is to say, to express it according to a general unit of measurement, applicable to all goods A, B, C, D, etc. we could not do so starting from the data of the simple formula. We can in fact deduce from this relation:

Value of x commodity A  =  Value of y commodity B  =  Value V

But this does not allow us to say what is the magnitude of a unit (Kg, etc.) of A, because it depends on the value of B. Moreover the value of A, as well as that of B, can change as a result of variations in the time of the work necessary for A or B; in this case the ratio will change, and we will thus have various expressions of the value sought, i.e. we will not have yet arrived at an absolute measure.

4. Total or expanded value form

With the simple form, the commodity of interest to us finds only one equivalent, and we do not arrive at a general measure of value. Taking a step further, suppose we know all the equivalents of commodity A expressed by the other commodities on the market.

Value of x
goods A
 =  Value of y
goods B
 =  Value of z
goods C
 =  etc...
 =  Value V

To have an idea of the whole market (we think of the time of barter) we must know how to write for each commodity the developed form indicated above. If there are n goods, this one consists of n-1 equalities, and in all there are n(n-1) equalities. For example, for 10 goods we must know 90 relations.

The n(n-1) or 90 relations are not all independent, however, and are all contained in the n-1 or 9 of the developed form. We then only have to reverse the latter and to refer the value of all the other n-1 goods to that of the commodity A, which has become the unique equivalent or general equivalent. We will have:

y commodity B = commodity C = commodity D etc. = commodity A

In practice this means that, as bartering has become widespread, in order not to have to remember 90 relationships, one commodity has been elevated to the rank of common equivalent of all others.

We do not yet have an absolute expression of the measure or quantity of value, but we do have a measure of it, as it were, expressed by the quantity of the equivalent commodity which corresponds to each special commodity. Thus the savages, for example, trade in cattle by expressing their value in pounds of salt.

With the development of trade the equivalent commodity fulfills not only a mnemonic function, but is in fact exchanged for all other commodities, the direct contact between the individual exchangers having disappeared. The simple form (for example: 1 cow = 3 goats) is no longer realized, but we have the exchange between a cow and 30 pounds of salt, then between 10 pounds of salt and a goat. Or the trader interposes himself between the one who sells the cow and the one who sells the goat, because they can both be materially distant; the trader carries the merchandise or the salt equivalent to bring everyone together. The salt no longer circulates only to be consumed, but much more frequently to facilitate the circulation of other goods.

It is necessary, however, that the equivalent commodity be easy to transport, not very bulky, absolutely unalterable. These qualities are combined in gold, which has become the general equivalent: and so we pass to the form of value.

5. Historical and social character of the question

Having reached this stage of the analysis of value, Marx inserts a chapter on “the fetish character of the commodity and its secret”. This chapter has a historical and polemical character and it presupposes an enunciation of the doctrine of economic determinism that does not enter into the object of Capital, but is inseparable from the Marxist doctrine on the character of the Marxist economics.

This chapter is not a digression, and it is not the intention here to give a summary of it, whereas it should rather be given the widest development.

In analyzing the forms of value, we applied the positive scientific method to the question. But the object of our research was not facts of absolute and immanent character, as for example the nature of chemical elements – discovered in 1800, but valid also for discussing the conditions of the original nebula as well as those of the distant future of the universe. We had to go into the historical field to explain the stages of our research, linking the simple form of value to the time of barter in kind, the general form and to that of trade, etc... Thus the results to which we tend do not have an immanent character, but are relative to the various times and degrees of development of the society.

Recognizing labor time as the measure of quantities of value is not enough without an analysis that applies this key to various economies.

What is acquired for the first time by Marxist research is that exchange value is not an absolute property of things, but the reflection of the relations of social organization. Objects are commodities because there is a certain system of relations between the people who produce and consume them. Moreover, it is natural that the economists who preceded us should see in the commodity a primary datum, because they take for definitive and natural relations those which correspond to the society in which they live and to the interests of the classes they represent. Marx develops here our doctrine, which makes opinions depend on the stage of development of the social economy and on the class struggle.

Above all, the polemic against the traditional economists does not take place on ground that is common to any of them, and they play the role of passive objects of research, rather than collaborators – or even adversaries. We are not concerned with what they may allege later, even for a very long time to come: in the same way the founders of modern mechanics and astronomy do not consider biblical and peripatetic developments as working material. If one does not understand this, it is useless to hope to understand how the analysis, starting from the minimal fact of the permutation of two objects, arrives at the doctrine of surplus-value which must provide the key to the positive and historical interpretation of the contemporary productive mechanism.

We therefore strip the commodity of its fetish character by discovering the laws that assign it a value and provide us with the means to measure it in the relations between men and groups of men for whom commodities and values are involved.

(Chapter II, “the process of exchange”, is implicitly summarized in the historical considerations indicated in parallel to the passage from the simple form to the money form).

6. Circulation. Value and price

We have tried to consider value as a measurable quantity, in order to treat it by the scientific method and to discover the laws relative to it. We have assumed that the quantitative value is proportional to the average social work time. By analyzing the experimental facts, we applied and verified the hypothesis. We have reached the general equivalent commodity and a new step forward has brought us to money.

We leave aside the observations on mono or bi-metallism.

Gold by its quantity and weight, expressed in the monetary terminology, indicates therefore with a certain unit to measure the value of goods.

In conclusion we have reduced the measure we are looking for to the value of gold, that is, according to our hypothesis, to the time of work necessary to produce the gold. So the term of comparison is variable, and therefore general oscillations can occur, which are easy to interpret.

The price expresses the ratio between the value of the commodity considered and the value of the gold unit (for example, according to the original ratio: one pound = sterling). Or, which is the same thing, the price, according to us, expresses the ratio between the labor time needed for the commodity and the labor time needed for the pound of gold.

When we talk about the necessary working time, we want to distinguish it from the working time that was actually required in a specific case; this time can be higher or lower as a result of mistakes or, on the contrary, of the producer’s manufacturing secrets. In addition, due to other considerations, the price can express more or less than the abstract value of the merchandise, because of exceptional circumstances of the alienation.

If, for example, while using the necessary average time, all the producers provide a given market with a quantity of the commodity X exceeding the consumption, let’s say of 20%, as a result of an error in the social division of labor, this 20% will be lost. And this can also manifest itself in the form of a temporary fall in price below value, with each producer discounting 20% of his working time, as in the case where, as a result of clumsiness, he has used 6 hours instead of 5. The opposite case can also occur, that is, a rise in price above value.

This case should not be confused with that of a fall in price as a consequence of new technical inventions which reduce the necessary working time; for in this case it is the value itself which has fallen and which will not rise again. In the previous cases, known phenomena, provoking the opening of new enterprises or the closing of old ones, tend to level the prices.

(The winning horse of the Derby has a very high price because among 20 competing horses, which have absorbed equal care (working time), only one can win this price. The profit of one breeder compensates for the losses of the other 19, but this does not prevent the relationship between the value of a horse and the amount of work absorbed by its breeding. It is only a question of a production that, for technical reasons, does not give a series of equal objects, but products that are very different due to unforeseeable circumstances at the beginning of the enterprise).

We can therefore speak of a quantity of value which does not necessarily coincide with the price form, but which is its basis, since the price can oscillate above and below the value. An opportune research will succeed in determining it.

In the same way, in the physical sciences, it is difficult to establish at first sight the mass of a given body, of a wooden ball for example. We feel that it tends to fall, and we measure its weight: but it varies according to whether we are at the pole or at the equator, at sea level or in the mountains, and finally it even becomes negative if we immerse the ball in water. This does not prevent the constant quantity of mass from being measurable, and from being used to formulate the laws that will elucidate all these variations of weight, which previously appeared as an arena of contradictory data. A later refinement of the scientific results, which establishes that the mass of a body in motion varies at the same time as its speed, does not prevent that it is rightly introduced and treated this quantity in the field of the phenomena considered in the research.

The science of mechanics was born when mass was measured, a datum which, in a certain sense, is neither concrete nor sensible; the science of economics was born with the measurement of the quantity value, whereas it is not a scientific work if one claims to have to limit oneself to knowing and recording contingent prices, under the pretext that it is only these that are measured and expressed in figures.

Let us now continue the analysis of the market by examining the path followed by the commodity. The possessor brings it to the market, sells it for a certain amount of money, which is not for his own use, but only to buy another commodity. The cycle is:

Commodity → Money → Commodity

G → M → G

The second part of this cycle (MG) is, for the owner of the other commodity, the first part (CM) of another cycle and so on, indefinitely. The set of all these cycles, each of which has a common half with another, represents the circulation, according to the diagram:

Co1MCo2MCo3MCo4 → etc.

7. The circulation of money

In the movement of the circulation of goods, money passes in its turn from hand to hand; but while each commodity arrives on the market from the outside to leave it immediately, money on the contrary remains constantly there.

It is obviously not necessary for the money in circulation to be equal to the sum of the prices of all the individual “buy-sells”; on the contrary, since each gold fragment circulates several times, a smaller sum is sufficient. The quotient of the sum of all prices (business figures) in a given time by the mass of money available is called the speed of circulation in that time.

It is worth noting, with regard to money, the transition from the form in which pure gold is used to the form of gold money – the weight of which may be less than the theoretical value – then to coins of silver and non-noble metals with a partly conventional value, and finally to paper money, the value of which is purely figurative: all forms which, under normal conditions, do not alter in any way the circulation relations between money and goods.

Money can, moreover, assume other functions, besides those of measuring the value of goods or serving as a vehicle for their exchange. These forms are: hoarding or accumulation; deposit to meet payments in advance or delayed in relation to the moment when the merchandise changes owner (the game of debit and credit); universal currency or element of compensation in exchanges between nations, for which gold transfers compensate for the imbalances in trade balances, gold being, in this sense, the only currency that is effectively valid throughout the world. Today, something that did not exist in Marx’s time, it is not only gold that is capable of assuming a worldwide validity, but also a paper currency: the dollar, which circulates without being exchanged against other national currencies.

The detailed study of these economic phenomena is not necessary before proceeding to the study of the transformation of money into capital, which is the starting point of the laws of circulation that bring into play the commodity and money.







[Prometeo, n. 6, marzo-aprile 1947]


8. From the circulation of money to the appearance of surplus-value

The formula for the circulation of money and commodities is thus G → M → G. If we consider the person who brings commodities to exchange them for others of different use values while having the same quantity of (exchange) value, except for secondary circumstances. For this person, money is only an indication of value and a vehicle of exchange. But in the whole mercantile system, currency immediately introduces new relations and new actors, whose intervention makes the exchange of use values possible for others. They use money and with it they buy goods which they resell for more money. Circulation, from this second point of view, is represented by the formula M → G → M. The intervention of this second group of actors cannot be explained without a motive.

This is not a quest for use values, since their money eventually returns to money, without qualitative change. Therefore there can be no purpose and motive except in a quantitative change. While in the case of G → M → G, the movement of a constant value is explained. This is no longer the case for M → G → M, if the amount of money remained the same after purchase and sale. Philanthropy or other ideal forces cannot be the incentive for the bearers of money, this is determined by the fact that in general the amount of money the second time is greater than the first time. The formula therefore becomes M → G → M’, where M’ = M + ΔM. The original amount of money, M, is increased by an increment ΔM (Delta M). This increase is called surplus value.

For the money bearer the movement of money in exchange serves as production of surplus value, which is immediately added to the per-existing value and returns to the cycle to increase yet again.

It is in this way that money, from simple representation of value and vehicle of exchange, neccesarialy becomes capital.

Capital is value whose peculiarity is to increase continuously.

A mercantile system, once past the stage of bartering in kind, must blossom into capitalism.

In this definition, summarized in the formula M → G → M’, only commercial capital would seem to be considered. That is, all the goods which stay in possession of the professional money bearers of the market, who offer goods purchased from producers.

But even for industrial capital there is money which is transformed into commodities only to return to money with the sale of the latter, this will be the subject of further discussion.

Marx at the beginning of this Section establishes – in a fundamental historical reference that accompany the illustrative exposition of the capitalist process – that «capital appears only where production and the circulation of goods, or trade, have reached a certain development. The modern history of capital dates from the creation of trade and the world market in the sixteenth century».

The pure form M → M’ then represents usury, in which there is no passage through a commodity. Usury is meant in the sense of any arrangement of money for interest.

In M → M it is possible to reduce the formula to hording, which removes money from circulation. In doing so this takes away money’s possibility to generate surplus value, and thus is not yet in the form of capital.

9. Seeking the origin of surplus value

Surplus value, the increase (ΔM) in the amount M underwent to become M’, can not and will never be explained in the field of circulation alone.

All attempts made in this sense fail before the elementary fact that circulation consists of a series of exchanges between equivalents.

One can point to many exceptions to this law, but they are not worth expounding on, when the increase from M to M’ occurs with confirmable regularity.

If one ascribes to buying the virtue of bringing about an imbalance in favor of the money-bearer, or such virtue is ascribed to selling, since both in the simple circuit M → G → M, and in the whole of circulation each interested party appears as many times a seller and buyer, the supposed differences offset each other in a general equality. The same is true if all prices went up or down together.

The explanation that the one who buys in order to consume pays more than the one who sells having made a product does not hold up either. As the consumer draws his money from the fact of having been in turn a producer. Therefore we should suppose consumers who draw value from something other than productive work, i.e. not through exchange. Such a class will therefore receive money, not through circulation, but by extorting, in the material sense of the term, the merchandise or money belonging to others. This explanation is inadequate for the mercantile age.

It is not even worth mentioning exceptionally disproportionate or even fraudulent buying and selling, because this explains the transfer of special values from one hand to another, rather than the formation of the smallest part of surplus value.

We insert a parenthesis to show that not even the trade unions or even monopoly regime of producers can explain the normal genesis of surplus value in the circulation sphere. If in the ordinary mercantile regime of free competition the producer of commodity A was free to raise their price, they would have realized a surplus value. But this can never happen, because it is obvious that buyers would abandon them and turn to other sellers of the same commodity, so that this mechanism, except for secondary phenomena, maintains all prices at a minimum level corresponding to exchange value. Now, we could suppose that all or some of the producers of commodity A agree to raise its price arbitrarily; the game of competition would be eliminated and a surplus value resulting purely and simply from circulation would be realized.

To such an objection one may reply that if, in the analysis, we wanted to substitute for the general and typical system of free competition, a stable system of monopolies – and not an intermediate system which will always remain to be examined, but which serves for the application and not for the research of general laws – we would then be led to consider that all the groups of producers have constituted themselves into monopolies, and sell each other commodities at overvalued prices but which find a new equilibrium by compensation. We would thus find ourselves back at the same point. The monopolization agreements will have achieved, in an intermediate stage, an appropriation of value on the backs of the lagging monopolists, but they will not have been able to produce surplus-value.

In conclusion, the problem reduces down to these seemingly contradictory terms: In circulation, exchanges take place only between equivalents; money circulating as capital leaves circulation having undergone an increase.

In pursuit of the solution, do not lose sight of the fact that for a capitalist economic society in a stable and normal set-up both statements have systematic value, that is, they are realized in the vast majority of cases, so that citing particular cases and moments of instability cannot serve to evade the need to give an equally general solution to the “system of equations” that we can write:

     Value of M = value of G
     Value of G = value of M’
     Value of M’ is larger than the value of M.

We shall see why the equations are not incompatible, as would be found if we gave them a purely arithmetical sense – or, in other words, why this patently contradiction to the formal rules of logical syllogism (a contradiction which, as Marx recalls, Aristotle discerned but could not explain, nor could he with the data of his time explain) is implemented in the reality of economic life, since in this, Capital is generated.

10. The commodity “labor power”

At what stage of the process can the increase in value have originated? It cannot come from money from itself since a quantity of money remains materially unchanged. Therefore, the increase arises from the exchange of money for commodity. It cannot arise from the second act G → M’ just as it cannot arise from the first M → G, if these are exchanges between equivalents.

Marx’s fundamental discovery is this: the increase in value cannot arise from the two exchanges; it arises, rather, from the use of the commodity, since there exists in the market a commodity whose use coincides with a systematic increase in its exchange value.

If the use of a commodity produces value, and if value corresponds to the availability of labor time, the mysterious commodity in question must be such as to make human labor available: that commodity is precisely labor, or, more accurately, labor power.

Under certain historical conditions, while those who buy any commodity generally resell it for the same amount of money (value), those who buy labor power pay for it at a certain amount while systematically reselling it for a higher amount. What the buyer of labor power resells are actually material goods to which has undergone transformations by applying purchased labor power to them. This is the case when the worker, or owner of labor power, because of legal and social conditions cannot make contact with the commodity to be transformed (raw material). Either because he does not possess money, and therefore cannot anticipate the value of the raw material itself; or the transformation of labor requires technical means (tools of labor, concentration of large numbers of workers) which are the monopoly of others (of the owners of money or capital).

There is another condition: namely, that the worker is free, for he must remain in possession of his own labor power in order to sell it in portions (periods of time). Should he be able or required to sell or surrender it all at once he himself would become a commodity (slavery).

Hence, in certain historical conditions, which they cannot claim to have always existed, just as they cannot claim to always exist in the future, conditions which we call peculiar to the capitalist epoch, we have the production of surplus value, and the accumulation of it into capital. This is realized through the buying and selling of labor power, that is, through the organization of the wage earner by those who possess the money and the technical tools of labor.

Surplus value and capital as economic phenomena appear later than exchange and exchange value, and also later than money.

11. Purchase of “labor force”

How then is payment determined for the commodity labor power (wage labor)? As with any other commodity, those who seek it pay the minimum possible i.e. they run elsewhere if they are offered better terms; so that the price tends to reach a minimum, given by the labor time required to produce that commodity.

Labor power is also a commodity in this sense, since in order to produce it the worker must provide for the expenditure of his own body, that is, he must procure:
     1. personal means of subsistence, such as food and a minimum of satisfaction of other needs;
     2. the means of subsistence for his family (without which the working class would become extinct);
     3. vocational education, which also involves time and expense.

This minimum is reducible to a sum of commodities which, demanded from producers, and in any case from possessors, must be paid at a price determined by the labor time required to produce them (just by our fundamental assumption). This price will be demanded by the worker to alienate his labor power (under average conditions, that is, disregarding interference from exceptional phenomena).

Having thus occurred the buying and selling of labor power, the capitalist, becoming its master, employs it. (We neglect here the other benefit of employing labor before actually paying for it, thanks to the custom of paying wages at deferred periods.)

The use of labor power, purchased at the right price, is done by applying it to raw materials equally purchased at the right price.

In order to understand how the right selling price of the finite commodities left at the capitalist’s disposal exceeds the sum of the fair prices paid (the birth of surplus-value), it is necessary to move from the field of circulation, where everything proceeds in the name of pure equivalence and full freedom, to the study of that of production, where instead the basis of in-equivalence or surplus-value and class division are discovered.


(1) - It is of particular importance to deal with measurable quantitative magnitudes in scientific research. The aim of all science is the organic exposition of a given group of facts or phenomena acquired by our experience, in such a way as to highlight the relationships which constantly run between the facts themselves. The scientific experience of this relationship is called law. The most complete and satisfactory form of a scientific law is that of a relationship between measurable quantities (mathematical formula). For quantities to be measurable it is necessary to be able to refer them to other quantities already known, and in this reference lies the law itself. Example: you know how to measure space (length) in meters, time in seconds, you measure speed taking as a unit that of a meter in a second, and apply the law speed = space / time.

Some laws translate relations, corresponding to experience, between quantities already all known, we have then a real new discovery; others, like that given in example, are reduced to introducing deductively a new quantity, and have value of theoretical conventions; however the application to phenomena of their logical consequences will decide their validity or not. Therefore not all conventions, which define quantities by giving the way to measure them and to refer them to others, are arbitrarily possible, but, even if first assumed as hypotheses, they are finally either confirmed or rejected by the application to experimental facts. So for example with the atomic hypothesis the notion of the quantity “atomic weight” was introduced and while for a long time it was thought to be an expedient of convenience to make the chemical formulae square, further studies on experimental data allowed to ascertain the real existence of atoms and to determine their weight both absolute and relative to that of hydrogen unity.

Anticipating a conclusion that may be part of research on the “theory of knowledge” in the Marxist system, we also note that treating the entities investigated with numerical measures and mathematical relations between their quantitative measures leads to making the notions and relations and their possession and handling less individual, more impersonal and collectively valid. The pure qualitative appreciation contained in judgments and investigations communicated in words of common language, retains the personal imprint because the words and their relationships take on a different value from man to man according to previous tendencies and material emotional and cognitive predispositions. Therefore, all judgments and moral, aesthetic, religious, philosophical and political principles communicated and disseminated verbally and in writing are personal and subjective. The systems of figures and relationships of mathematical symbols (algorithms) with which even many people who claim to be educated are unfamiliar, tend to establish results that are valid for all researchers, or at least transferable to broader fields without being easily distorted by particular interpretations.

The transition, in the history of society and its knowledge, is certainly not simple; it is hard and difficult and not without returns and errors, but in this sense the modern scientific method is constituted.

Of great interest for this purpose, and in order to give a real and material objective value to human knowledge, will be the examination of modern “algorithms” that have reached such power to work and walk “on their own” in a certain sense outside of consciousness and intelligence, and as real “machines” for knowledge. Their science becomes no longer a fact of the ego, but a social fact. The theoretical “I”, like the economic and juridical “I”, must be broken!

Marx wanted to treat with scientific method even human economic facts, similarly to what science and bourgeois philosophy had done for the phenomena of physical nature.

He did not simply use an algorithm because he thought and worked, he exposed and fought at the same time; and in addition to the weapons of the new era, he had to and knew how to use those with which the enemy resisted: polemics, eloquence, invective and sarcasm, under which he prostrated his contradictors many times.

It is in the din of this battle that the new science of society and history was built.

Now we have to overcome a first point: to make a science of value, whether the ideological and philosophical economists like it or not, it is necessary to introduce a measure, just as Galileo and Newton were able to make science of gravity by measuring masses, accelerations and forces. The fruitfulness of the new method – while giving solutions susceptible to future more grandiose developments, and not leading to “true absolutes” alien to science – routed and buried forever the wrong approaches of the past on these problems.