Wages of Labour

Profit of Capital

Rent of Land

[VIII. 1.]
...."It can be asserted that those occupations which demand specific abilities or longer training have on the whole become more lucrative; while the commensurate wage for mechanically uniform activity, in which everyone can be quickly and easily trained, has fallen, and inevitably so, as a result of growing competition. And it is precisely this kind of labour which, under the present system of labour organisation, is by far the most common.
....So, if a worker in the first category now earns seven times as much as he did 50 years ago, while another in the second category continues to earn the same as he did then, then on average they earn four times as much.
....But if in a given country there are only a thousand workers in the first category and a million in the second, then 999,000 are no better off than 50 years ago, and they are worse off if the prices of staple goods have risen.
....And yet people are trying to deceive themselves about the most numerous class of the population with superficial average calculations of this sort.
....Moreover, the size of wages is only one factor in evaluating a worker's income: it is also essential to take into account the length of time for which such wages are guaranteed, and there is no question of guarantees in the anarchy of so-called free competition with its continual fluctuations and stagnation. Finally, we must bear in mind the hours of work which were usual earlier and those which are usual now. And for the English cotton workers, the working day has been increased, as a result of the entrepreneurs' mania for profit,

[IX. 1.]

[VIII. 2.]
a large capital accumulates more rapidly, in proportion to its size, than does a small capital.
....This means that, quite apart from competition, the accumulation of large capital takes place at a much faster rate than that of small capital. But, let us follow this process further.
....As capitals multiply, the profits on capital diminish, as a result of competition. So, the first to suffer is the small capitalist.

...."In a country which had acquired its full complement of riches, the ordinary rate of clear profit would be very small, so the usual market rate of interest which could be afforded out of it would be so low as to render it impossible for any but the very wealthiest of people to live upon the interest of their money. All people of small or middling fortunes would be obliged to super-intend themselves the employment of their own stocks. It would be necessary that almost every man should be a man of business, or engage in some sort of trade."
[Smith I, p. 86]
....This is the situation most dear to the heart of political economy.
...."The proportion between capital and revenue, therefore, seems everywhere to regulate the proportion between industry and idleness. Wherever capital predominates, industry prevails: wherever revenue, idleness." [Smith, p. 301]
....But, what about the employment of capital in this increased competition?
...."As the quantity of stock to be lent at interest increases, the interest, or the price which must be paid for the use of that stock, necessarily diminishes, not only from those general causes, which make the market price of things commonly diminish as their quantity increases, but from other causes which are peculiar to this particular case.
....As capitals increase in any country, the profits which can be made by employing them necessarily diminish. It becomes gradually more and more difficult to find within the country a profitable method of employing any new capital. There arises, in consequence, a competition between different capitals, the owner of one endeavouring to get possession of that employment which is occupied by another.
But, on most occassions he can hope to jostle that other out of this employment by no other means but by dealing upon more reasonable terms. He must not only sell what he deals in somewhat cheaper, but, in order to get it to sell, he must sometimes, too, buy it dearer.
The demand for productive labour, by the increase of the funds which are destined for maintaining it, grows every day greater and greater. Labourers easily find employment,

[IX. 2.]

[VIII. 3.]
....Let us now sees how the landlord exploits everything which is to the benefit of society.
....(1) The rent of land increases with population.
....(2) We have already learnt from Say how ground rent rises with railways, etc., and with the improvement, security, and multiplication of the means of communication.

...."(3) ... every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landlord, his power of purchasing the labour, or the produce of the labour of other people.
....The extension of improvement and cultivation tends to raise it directly. The landlord's share of the produce necessarily increases with an increase of the produce.
....That rise in the real price of those parts of the rude produce of land... the rise in the price of cattle, for example, tends too to raise the rent of land directly, and in a still greater proportion. The real value of the landlord's share, his real command of the labour of other people, not only rises with the real value of the produce, but the proportion of his share to the whole produce rises with it. That produce, after the rise in its real price, requires no more labour to collect it than before. A smaller proportion of it will, therefore, be sufficient to replace, with the ordinary profit, the stock which employs that labour. A greater proportion of it must, consequently, belong to the landlord."
[Smith, I, pp. 228-29]

[IX. 3.]
















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