CHAPTER IV
Of the Products of Circulating Capital, or Wage Capital, as distinguished from the Products of Human Exertion.
◆1 Wage Capital enables men to undertake work which will not support them till a considerable time has elapsed.
◆¹CirculatingCapital, or, as it is better to call it, Wage Capital, is practically a store of those things which wages are used to buy—that is to say the common necessaries of subsistence. And the primary function—the simplest and most obvious function—which such Capital performs is this: it enables men, by supplying them with the means of living, to undertake long operations, which when completed will produce much or be of much use, but which until they are completed will produce nothing and be of no use, and will consequently supply nothing themselves to the men whilst actually engaged in them.
◆1 A tunnel is a good instance of such work.
◆¹ Let us imagine, for instance, a tunnel whichpierces a range of mountains, and facilitates communication between two populous cities. Five hundred navvies, we will say, have to work five years to make it. Now if two yards of tunnel were made every day, and if each yard could be used as soon as made, the tolls of passengers would at once yield a daily revenue which would provide the navvies with subsistence, as their work proceeded. But as a matter of fact until the last day’s work is done, and the end of the fifth year sees the piercing of the mountain completed, the tunnel is as useless as it was when it was only just begun, and when it was nothing more than a shallow cavity in a rock. Five years must elapse before a single toll is paid, and before the tunnel itself supplies a single human being with the means of providing bread for even a single day. The possibility then of the tunnel being made at all, depends on the existence of a five-years’ supply of necessaries, for which indirectly the tunnel will pay hereafter, but in producing or providing which, it has had no share whatever.
◆1 But the above-mentioned function of Wage Capital is not its principal function in the modern world.
Wage Capital, in fact, imparts to industry the power of waiting for its own results. Thisis its simplest, its most obvious, and its primeval function. ◆¹ It has been the function of such capital from the days of the earliest civilisations; and it is, indeed, its fundamental function still: but in the modern world it is far from being its principal function. I call its principal functions in the modern world the functions by which during the past century and a quarter it has produced results so incomparably, and so increasingly greater, than were ever produced by it in the whole course of preceding ages.
◆1 Its principal function now is to enable a few men of exceptional powers to assist by these powers the exertions of the ordinary labourers.
◆2 The modern employer in this respect differs from the ancient.
◆3 Wage Capital in the modern world is the means by which exceptional intellect is lent to Labour.
◆¹ What this function is must be explained very clearly and carefully. It is not to enable labourers to wait for the results of their labours. It is to enable the exceptional knowledge, ingenuity, enterprise, and productive genius of a few men so to animate, to organise, and direct the average physical exertions of the many, as to improve, to multiply, or to hasten the results of that exertion without increasing its quantity. All civilisations, ancient as well as modern, have involved, in a certain sense, the direction by the few of the many. The temples and palaces of early Egypt and Assyria, which excite the wonderof modern engineers and architects by the size of the blocks of stone used in their astounding structure, are monuments of a control, absolute and unlimited and masterly, exercised by a few human minds over millions of human bodies. But in that control, as exercised in the ancient world, one element was wanting which is the essence of modern industry. When the masters of ancient labour wished to multiply commodities, or to secure an increase of power for accomplishing some single work, the sole means known to them was to increase the number of labourers; and when one thousand slaves were insufficient, to reinforce them with (let us say) four thousand more. The masters of modern labour pursue a new and essentially opposite course. Instead of seeking in such a case to secure four thousand new labourers, they seek to endow one thousand with the industrial power of five. ◆² If Nebuchadnezzar had set himself to tunnel a mountain, he could have hastened the work only by flogging more slaves to it. The modern contractor, in co-operation with the modern inventor, instead of flogging labour, would assist it with tram-lines, trucks, andboring engines. In other words, whereas in former ages the aim of the employing class was simply to secure the service of an increasing quantity of labour, the aim of the employing class in the present age is to increase the productive power of the same quantity. The employing class in former ages merely forced the employed to exert their own industrial faculties, and appropriated what those faculties produced. The employing class of the present age not only commands the employed, but it co-operates with them by lending them faculties which they do not themselves possess. ◆³ It applies to the guidance of the muscles of the most ordinary worker the profoundest knowledge of science, all the strength of will, all the spirit of enterprise, and the exceptional aptitude for affairs, that distinguish the most gifted and the vigorous characters of the day. And it is the peculiar modern function of Capital, as spent in Wages, to enable this result to take place.
◆1 Wage Capital does this in a way which the socialistic definition of Capital altogether ignores.
◆¹ Let us consider how it does so. Socialists tell us that Capitalism in the modern world means merely the appropriation by the few of all the materials of production, so that the manymust either work as the few bid them, or must starve. But this is a very small part of what modern Capitalism means, and it is not the essential part, nor does it even suggest the essential part. The majority of men must always work or starve. Nature, not modern Capitalism, is responsible for that necessity. The essential difference which modern Capitalism has introduced into the situation is this—and it is an enormous difference—that whereas in former ages the livelihood of a man was contingent on his working in the best way that the average man knew, modern Capitalism has made his livelihood contingent on his working in the best way that exceptional men know. Now this best way, as we shall see more clearly presently, does not involve the forcing of each man to work harder, or the exacting from him any more difficult effort. It involves merely the supplying him with a constant external guide for even his minutest actions—a guide for every movement of arm and hand, or a pattern of each of the objects which are the direct result of these movements; and consequently the one thing which before all others it requires is constant obedience orconformity to such guides and patterns. The entire industrial progress of the modern world has depended, and depends altogether on this constant obedience being secured; and the possession of Wage Capital by the employing class is the sole means which is possible in the modern world of securing it. In the ancient world the case would no doubt have been different. The lash of the taskmaster, the fear of prison, of death, of torture, were then available for the stimulation and organisation of Labour. But they are available no longer. The masses of civilised humanity have taken this great step—they have risen from the level on which they could be driven to industrial obedience, to the level on which they must be induced to it. Obedience of some sort is a social necessity now as ever, and always must be: but social necessity spoke merely to the fear of the slave; it speaks to the will and the reason of the free labourer. The free labourer may be, and must be, in one or other of two positions. He may work for himself, consuming or selling his own produce; or he may work for an employer, who pays him wages, and exacts in return for them notwork only, but work performed in a certain prescribed way. The first position is that of the peasant proprietor or the hand-loom weaver. The second is that of the employee in a mill or factory. In both cases, the voice of social necessity, or of society, speaks to the man’s reason, informing him of the homely fact that he cannot live unless he labours: but in the first case, the voice of society cries to him out of the ground, “You will get no food unless you labour in some way”; and in the second case it cries to him from the mouths of the wisest and strongest men, “You will get no food unless you consent to labour in the best way.”[31]
◆1 Wage Capital is merely the means by which intellect impresses itself as Labour;
◆¹ In other words, Wage Capital in the modern world promotes that growth of wealth by which the modern world is distinguished, simply because Wage Capital is the vehicle by which the exceptional qualities of the few communicate themselves to the whole industrial community. The real principle of progress and production is not in the Capital, but in thequalities of the men who control it; just as the vital force which goes to make a great picture is not in the brush, but in the great painter’s hand; or as the skill which pilots a coach and four through London is not in the reins, but in the hand of the expert coachman.
◆1 As we can see by following the steps by which a company would introduce some new machine.
◆¹ This can easily be seen by turning our attention once again to machinery, and supposing that a company is floated for the improved manufacture of something by means of some new invention. The directors must of course begin with securing a site for the factory; but with this exception their entire initial expenditure will directly or indirectly consist in the payment of wages—in purchasing the services of a certain number of men by whose exertions certain masses of raw material are to be produced and fashioned into certain definite forms—that is to say, into the new machinery and a suitable building to protect it.
◆1 The whole success of such a company depends on the amount of intellect used in the expenditure of the Wage Capital.
◆¹ Now, the powers of these men resemble a mass of fluid metal which is capable of being run into any variety of mould. If the directors were bound by no articles of association, and if, at their first boardmeeting, before they had entered into any contract for the machinery, some other invention for the manufacture of some other commodity were suddenly brought to their notice, and happened to take their fancy, the men they were on the point of employing to produce one kind of machinery might, with equal ease, be employed to produce another. We will assume that the machinery which the men are set to produce actually is a great improvement on anything of the kind used hitherto, and ends in adding greatly to the productive powers of the nation; but, so far as the men are concerned whose exertions are paid for out of the capital of the company, the machinery might just as well have been absolutely valueless—a mere aggregation of wheels and axles, as meaningless as a madman’s dream. What makes their exertions not only useful instead of useless, but more useful than any exertion similarly applied had ever been hitherto, is, firstly, the ingenuity of the inventor of the new machine; secondly, the judgment of the promoters and directors of the company; and lastly, the confidence in their judgment felt by thesubscribing public. Or, we may suppose the inventor to have himself supplied the Capital, and to unite in himself the parts of the directors and the shareholders. In that case the exertions of the men employed derive their value entirely from the talent of this one man. The men employed by him, we will say, number a thousand, and the Wage Capital he owns and administers aids and increases production only because it is the means by which the one man induces the thousand to accept him as the steersman of their exertions, and to allow him to direct their course towards new and remote results which for them lie hidden behind the horizon of contemporary habit or ignorance.
◆1 The case of Arkwright’s spinning-frame illustrates this.
◆¹ Let us take an actual case—the case of Arkwright’s spinning-frame. This invention, which was destined to influence the prosperity of so many millions, was in great danger of being altogether lost, simply on account of the difficulty experienced by the inventor in securing sufficient capital to construct and perfect his machine, and, what was equally necessary, to exhibit it in actual use. After many rebuffs and disappointments, a sum was at lastadvanced him by a certain firm of bankers—the Messrs. Wright of Nottingham; but before the preliminary experiments had advanced far their courage failed them, they repented of what they had done, and they passed the inventor on to two other capitalists whose insight was fortunately keener, and whose characters were more courageous. These gentlemen, Mr. Need and Mr. Strutt of Derby, took Arkwright into partnership, and by means of the Capital which they placed at his disposal, his machine, which till now had existed only in his own brain and in a few unfinished models, was before long in operation, and a new industrial era was inaugurated. Now, to the accomplishment of this result Wage Capital was essential; but it was essential only as the means of giving effect to the genius and strong character of certain specially gifted persons—Arkwright with his marvellous inventive genius, Messrs. Need and Strutt with their sagacity and spirit and enterprise. If it had not been for the qualities of these three men, the wages paid to the labourers who made the machine of Arkwright would have probably been paid indeed to the very same labourers,but their exertions would have been directed to producing some different product—some product which added nothing to the existing powers of the community.
◆1 Now machinery is necessarily Wage Capital congealed;
◆¹ Machinery, therefore, or Fixed Capital, though it differs as soon as it is made from Capital employed in wages, is the result of the use of such Capital, and is indeed but another form of it. And now comes the point on which I am concerned to insist here: that conversely Wage Capital, when employed so as to increase the productivity of labour,—in other words when employed by men with the requisite capacity,—is in its essence but another form of machinery. Machinery may be called congealed Wage Capital. Wage Capital may be called fluid machinery. For the function of both—namely, to increase wealth—is the same, and they fulfil this function by means of the same virtue residing in them. It is easy to see the truth of this. The increase of wealth means the improvement and multiplication of commodities which reward the exertions of the same number of men. The number and quality of these commodities are increased by application of Capital, because Capital enables personswho are exceptionally gifted to control and direct the exertions of the majority; and Capital, as embodied in machinery, differs from Capital continuously employed in wages, only because the former gives us machinery which is inanimate, and the latter, machinery which is living. For a thousand men so organised as to produce some given product or result, and to produce it with the greatest precision or in the least possible time, are to all intents and purposes as much an invention and a machine as a thousand wheels or rollers adjusted for a similar purpose.
◆1 And therefore all Capital, equally with Wage Capital, represents the control of Intellect over Labour—or one kind of Human Exertion over another.
◆¹ All Capital, therefore, in all its distinctively modern applications—all those applications which have caused what is called industrial progress—is virtually this, and this only: it is the exceptional capacities of one set of men applied to the average capacities of another set. We may accordingly include all Capital—fixed and circulating—under one head, and say of it as a whole what in the last chapter was said of machinery: that when by its application to the exertions of a given number of men a larger product results than resulted from them before it was applied, Capital is tobe credited with producing the amount of the increase; or—to put the same thing in another way—with the amount of the decrease which would result if its application were withdrawn.
◆1 This aspect of the question will be considered further in the next chapter.
How this is the case with machinery I have already illustrated by examples. It is less easy to illustrate by examples, but equally easy to see how it is the case with Capital continuously employed as wages. It is less easy to select illustrations, because the whole of modern progress is itself one great, though infinitely complex example of it; and it will be enough here as we shall recur to the subject presently, to consider one obvious and very familiar fact. Many new commodities, and many new methods of production, depend on the invention not of new machines, but of new processes. The Capital employed in working a new process is mainly employed as wages, by the administration of which the actions of the workmen are guided, controlled, and organised. Thus if fifty men, working independently and selling their own produce, produce a hundred articles of a certain sort weekly, and another fifty men, ◆¹ working for awage-paying employer, produce, owing to the way in which their labour is guided and organised, just double the number of such articles in the same time, we shall say that the hundred extra articles are the product of Wage Capital, just as we should say, if the increased production had been due to the introduction of a machine, that these extra hundred articles were the product of Fixed Capital. And in both cases we should mean, as I am now going to insist more particularly, that they were really the product of the capacities which each kind of Capital represents. This brings us to the heart of the whole problem.