1 Money and international commodity circulation.
The theory of international trade and world value contributes some additional features also to the problem of money. To the degree that a product is turned into a commodity, accidental equivalents are turned into an universal equivalent, and the latter into money. And since a product gets full development into the commodity form on the world market, where value gets its finished expression in world value, so also developed monetary exchange finds its natural scope there where money is turned into world money, dropping its "national uniform." In domestic trade precious metals, having passed a number of stages of development, function in a determined purely-local form, in the quality of standard of price, coin and currency, as "token of value" by fulfilling the function of means of circulation. Crossing the domestic sphere of trade, taking on itself the role of world money, gold (and silver) returns to the starting point of its development, coming out again, as a direct commodity, an amorphous crude metal, the value of which is embodied in its weight.
We are here not interested in the details concerning the functions of precious metals as world money. We view them here only in one function - in the quality as universal measure of value or the material embodiment of labor time, with the help of which commodity value is compared. We herewith leave aside also the question about inter-currency courses and their fluctuations. "National money discards its local character in the capacity of universal money; one national currency is expressed in another, and thus all of them are reduced to their content of gold or silver.2"
Consequently, we start from the assumption that the exchange ratio of the various national currencies coincides exactly with the ratio of monetary parities, or - what is the same - that in all world commodity circulation there figures only one "currency" - gold in its immediate natural form or formlessness. The question is reduced to the clarification of conditions determining the value of this "currency" in the national and international scale. Let's add that we consider gold here only in its role as universal equivalent - money.
The value of money is often understood in two different senses: as ratio of money to commodities (or, in today's established terminology, - as the purchasing power of money), and as value in the proper sense, taken without relation to the value of any sort of other commodities, but solely as the embodiment of the amount of socially necessary labor expended on the production of money. Marx everywhere strictly distinguished these two conceptions.
If money is considered by us, as world-money, it must represent itself, obviously, also world value, as expression of universal world labor. This world value of money, precisely because it is global, must be identical for all countries. In the opposite case money could not serve as an universal measure. With the help of world-money the product of every single country is subjected to a social market account, and the labor spent on its production is brought to the scale of world labor. Marx emphasizes this identical value of money in his polemic with Ricardo, where he indicates the inability to explain the international movement of price and the redistribution of precious metals in terms of the quantity theory: "In what way is the appropriate level upset, i.e. in what way is the international equilibrium of currencies upset, or in what way does money cease to have the same value in all countries, or finally, in what way does it cease to have its specific value in each country?3"
But the world market turns the variety of national values into world value, the national expenditures of socially necessary labor into world socially necessary labor - through the establishment among different countries of a peculiar economic hierarchy. We have seen how a lower amount of labor of one country can be exchanged for a larger amount of labor of another country. Which expression does this process give the monetary form of exchange? Obviously, an identical amount of labor, expended in different countries, should find its expression in dissimilar amounts of world money, dissimilar in the degree to which these equal national labor expenditures are considered as unequal amounts of world labor. In other words, money, having a single world value in the quality as embodiment of world labor, has at the same time a dissimilar national value, as exponent of national labor expenditure. For the attainment of one and the same sum of money in different countries a dissimilar amount of labor must be expended.
"In proportion as capitalist production is developed in a country, in the same proportion do the national intensity and productivity of labour there rise above the international level... The different quantities of commodities of the same kind, produced in different countries in the same working-time, have, therefore, unequal international values, which are expressed in different prices, i.e., in sums of money varying according to international values. The relative value of money will, therefore, be less in the nation with more developed capitalist mode of production than in the nation with less developed.4" Elsewhere, analyzing the question of the causes of the high cost of agricultural products in the rich industrial countries, Marx also mentions the dissimilar value of money. "The lower value of money in the wealthier countries, i.e., the low relative production costs of money in the wealthier countries, does not enter into it at all. For the question is, why it does not affect their industrial products in competition with poorer countries when it does affect their agricultural products.5"
The unequal value of money, therefore, has in that statement not any relation to the phenomenon of a different purchasing power of money in various countries, which is connected with the laws of fluctuation of the international level of price. On the contrary, even assuming an absolutely identical level of commodity prices worldwide, the value of money will be different from the viewpoint of the labor expenditure which the extraction of money costs in each individual country, from the viewpoint of national value. This inequality of the relative value of money is derived precisely from the fact that money - is an identical measure, applied to dissimilar types of labor. This can be understood with an analogy to another form of inequality, which Marx describes in his "on the Gotha program."
"Equal right is still confined in the bourgeois frame. The right of the producers is proportional to the labor they supply; the equality consists in the fact that measurement is made with an equal standard - labor. But one man is superior to another physically, or mentally, and supplies more labor in the same time, or can labor for a longer time; and labor, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labor. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment, and thus productive capacity, as a natural privilege. It is therefore in its content a right of inequality, like every right. Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only, for instance, in the present case, are regarded [ionly as workers and nothing more is seen in them, everything else being ignored.6"
It suffices to replace here "equal right" with the concept of "equal monetary measure," and to put "national economy" in place of "individuals," - and we get the exact formulation of the dialectical turn of a single world monetary value into various relative or national values. In essence here happens the same which daily and hourly can be observed within the national economy, where equal labor of different individuals is realized in different sums of money only because it proves to be unequal under its discount in units of socially necessary labor. The single amendment which should be made in the provided Marx formulation and which derives from our own preceding discussion, consists only of the point that equal expenditure of individual labor may prove to be unequal not only in intensity, but also in productivity: the results will in general and as a whole be similar, insofar as there will be no possibility of all workers to produce in completely similar technical and natural conditions of production. The same applies to a national economy.7
The value of gold, national or international, exists independently from the level of commodity prices. It is defined, like also the value of every commodity is, by the labor time required for production. But some circumstances complicate the matter. First of all, by far not everywhere gold-bearing land exists, not everywhere, consequently, can one directly mine gold. Consequently, not everywhere the possibility exists to determine the labor time required for the production of gold. Secondly, in world trade the value of gold itself also cannot be determined, it is known by implication through commodity prices, inasmuch as gold acts as the universal equivalent, but prices always are relative figures: they express the value of gold in relation to the value of commodities. Thus, although we also aim under analysis of the value of money, to circumvent the question of its purchasing power, as secondary for our question, practically we only through this purchasing power can reach to the root of things - to the nature of money itself.
Inasmuch as gold is the selected universal equivalent, the labor time, spent on its production, itself is directly universal labor time. World value is expressed in units of gold, which represents from itself the materialized labor time of gold producers. The units of labor time of these manufacturers serve thus as the scale of world values. The world value of gold is thus the amount of labor spent on its actual production. Here, of course, is taken into account the socially necessary labor with which in general the value of products of the mining industry is measured. This labor or the corresponding to it labor time is the world scale, which may perform its function with equal success entirely regardless of its own actual magnitude. Whether an ounce of gold represents 1 hour or one day of labor - this does not at all hinder it from embodying the universal measure. But what determines the value of gold in those countries that do not have proper mines? Here only an account by implication is possible. "It is evident..., that in countries where gold and silver are produced, a definite amount of labour-time is directly incorporated in a definite quantity of gold and silver, whereas countries which produce no gold and silver arrive at the same result in a roundabout way, by direct or indirect exchange of their home products, i.e., of a definite portion of their average national labour, for a definite quantity of labour-time embodied in the gold and silver of countries that possess mines. 8"
But here comes into force the law of value, according to which a lesser amount of labor can be traded for a larger amount. Gold bullion, which on the site of its production represents 5 hours of labor can be exchanged for a commodity which is produced in another country for only 2 hours. It will in this latter country be regarded precisely, as a product of two-hour labor, although it cost five hours. Consequently, gold, depending on one or other proportion of the exchange, will represent in different countries different labor times, although actually it is produced in a determined time. It will have a dissimilar relative value. But also its absolute value, expressed in units of world labor time, will not coincide with the actually expended time of its production. If the average national labor in countries that produce gold, is half below in its intensity compared to world labor, then it will be considered only in half of its actual magnitude, and, vice versa, consequently, the labor time, which gold represents as world commodity or universal equivalent, is the time, actually spent on its extraction, but accounted with world units of labor time. This accounting happens "behind the back of the producers" on the basis of the exchange proportions between commodities and gold, which are established at the place of contact of mined gold with world commodity, and then also further, in world commodity circulation. "At the place where gold is produced, it is a commodity like any other commodity. Its relative value and that of iron or of any other commodity is there reflected in the quantities in which they are exchanged for one another. But this transaction is presupposed in the process of circulation; the value of gold is already given in the prices of commodities.9"
"In addition to particular movements of world money which flows backwards and forwards between national spheres of circulation, there is a general movement of world money; the points of departure being the sources of production, from which gold and silver flow in various directions to all the markets of the world. Thus gold and silver as commodities enter the sphere of world circulation, and in proportion to the labour-time contained in them they are exchanged for commodity equivalents before reaching the area of domestic circulation. They accordingly already have a definite value when they turn up in these areas. Their relative value on the world market is therefore uniformly affected by every fall or rise in their costs of production, and is quite independent of the degree to which gold or silver is absorbed by the various national spheres of circulation.10"
"Just as in theory gold and silver as money are universal commodities, so world money is the appropriate form of existence of the universal commodity. In the same proportion as all commodities are exchanged for gold and silver, these become the transmuted form of all commodities and hence universally exchangeable commodities. They are realised as embodiments of universal labour-time in the degree of the development of the series of particular equivalents, constituting their spheres of exchange. Because the exchange-value of commodities is universally developed in international circulation, it appears transformed into gold and silver as international money. 11"
"As for securing the money materials - gold and silver - from their sources of production, this resolves itself into a direct exchange of commodities, an exchange of gold and silver as commodities for other commodities. Hence, it is itself as much a phase of the exchange of commodities as the securing of iron or other metals. However, so far as the movement of precious metals on the world-market is concerned (we here leave aside movements expressing the transfer of capital by loans - a type of transfer which also obtains in the shape of commodity-capital), it is quite as much determined by the international exchange of commodities, as the movement of money as a national means of purchase and payment is determined by the exchange of commodities in the home market. The inflow and outflow of precious metals from one national sphere of circulation to another, inasmuch as this is caused merely by a depreciation of the national currency, or by a double standard, are alien to money circulation as such and merely represent corrections of deviations brought about arbitrarily by state decrees.12
These statements allow the establishment of a general position, concerning money circulation in international trade. Gold in world trade has two lines of movement (not counting the movement of gold under the influence of fluctuations of exchange courses). In the location of extraction, it exchanges directly for other commodities. Hereafter it is distributed to various countries and participates in international trade, as ordinary means of circulation, i.e. as the result of the movement of commodities. In this second movement gold participates already with previously given prices, because before direct exchange of gold for a commodity there already exists a price of the commodity and in the price of commodities the value of gold is presented. Where is the original value of gold established? At its source where the quantitative proportion first is set of the direct exchange of commodities for gold, which in this case is not yet money, but a simple commodity like any other metal. Countries that do not have their own sources of production of gold can only through these proportions set its value, which will not be equal to the labor time spent in mining gold, but the labor time spent on production of the commodities exchanged for gold at its source. Since these commodities are already found with a determined value relation to the rest of the commodities, circulating on the world market, gold thereby becomes the universal measure and enters further trade with a definite value, of a determined initial proportion, in which it is exchanged for commodities. The problem lies in the establishment of this initial proportion. If gold is mined only in country A and nowhere else, if the exchanged for it commodity is produced in country B and again nowhere else, then it's obvious that the comparative production costs of one and the other cannot be established, because it is unknown, what the relation of labor time A and B is. The latter can be set only from the very proportion of exchange, which, obviously, is determined not by equality of labor time, but by other conditions: namely, by the reciprocal demand for gold and commodity. If country A has the ability to produce along with gold also other commodities, then the correlating time of production of one and the other gives already a foothold for the establishment of the limit below which cannot fall the awarded commodity value of gold. In the other situation it refrains from exchange and itself begins to produce the for itself necessary commodities. The upper limit on the foundation of these data cannot be established. It depends entirely on the intensity of demand for gold from the side of other nations. But competition of several gold-mining countries establishes also an upper limit.
In any case it is clear that the labor time actually spent on gold mining in a given country must be turned into world socially necessary time, determined by the conditions of gold production in all countries, and it can become the universal measure and representative of world labor, only by entering into contact with the diverse world of commodities, with the result that it begins to represent not its own "gold" labor time, but labor time in general, deprived of any concretely shaped particular spheres of production. Here occurs not only a qualitative but also a quantitative transformation: the same sum of gold begins to represent an other amount of world labor time, not that which was directly expended on it.
Thus, one can establish, at least, four different meanings of the expression: gold is the incarnation of universal labor:
1. A pound of gold represents the labor time actually spent on its extraction under average technical conditions in a given country, i.e., "national" socially necessary labor time (let's recall that gold belongs to the category of commodities whose value is determined by the worst conditions of production. But this does not mean - under the worst mining technology. The technology must meet general requirements).
2. A pound of gold itself represents the world labor time actually spent on its extraction, i.e., world socially necessary labor time, expended in all countries where gold in general can be mined. It's completely obvious, that these two figures - national and the world labor time - do not coincide.
3. A pound of gold itself represents a determined amount of world labor time in general, without regard to the areas where it is expended. It itself is this general labor time also in those countries which do not produce gold at all. Again it is completely obvious that this last magnitude does not imperatively have to coincide with the magnitude appearing in the 2nd point. Let's suppose that world socially necessary labor time for the extraction of one pound of gold is a month of labor. But if for some or other reason a proportion is established in the market in which a pound of gold at an average is exchanged for goods, worth 20 days of labor, it is evident that in global trade gold, as the universal equivalent, will represent the second rather than the first magnitude. True, such a variation would mean that the exchange of commodities for gold in world trade does not happen on equivalent principles. However such non-equivalence in relation to gold is quite possible, although not for the reason that annual gold production, in relation to which socially necessary labor time is set, constitutes a smaller magnitude compared to the world stock of gold, mined in earlier ages. It's understood, that an indefinitely prolonged time of this non-equivalence cannot exist. If the annual production of gold is compared to the stock, then the production of ten years for example already is impressive enough to have a corresponding impact, not to mention that proportions of trade may experience the strongest fluctuations, even under small changes of the amounts of commodities, entering into trade. In any case, it was important for us to note that the magnitude of world labor time, taken in the sense of the 2nd and 3rd point, might not coincide.
4. Finally, the same pound of gold, in contact with the commodity world in each country, will itself again depict different amounts of national labor time for the reasons stated above. It can in the U. States, itself represent 10 days of labor, in England - 20, in China - 100, etc., entirely apart from national differences in commodity prices and from the fluctuation of exchange courses, but solely by virtue of differences in productivity of national labor.
On mobility and transfer of productive forces.
The mobility of capital and labor, in general the productive forces in the world economy, as was said earlier, is a function of the development of these productive forces, a function of the development of capitalism. One must distinguish between mobility in the technical and the economic sense. Means of production or labor forces can be very easily transferred in space, but if there are no economic incentives to transfer them, they will remain in place, will be "immobile." On the other hand, the means of production may in their material form prove little mobile, but if economic considerations make their movement profitable, then technical obstacles recede into the background. The choice of place, of "standard" in different historical ages is determined by different circumstances, of a technical as well as of an economic order. In the epoch of capitalism the "rational standard" (Sombart's terminology) dominates, which focuses either on qualitative advantages of a given space before others, or on advantages in the economic sense of production costs.13 The latter orientation is the most universal under capitalism. It was subjected to detailed investigation in the well-known works of Al. Weber and his school on the industrial standard. In it is expressed most clearly the domination of economic over technical principles.
But it would be wrong to assert that the development of capitalism in all its aspects contributes to the growth of the mobility of productive forces. It raises also new obstacles to such movement, which, however, are unable to prevent the deployment of the main trends. So, the concentration of production, the increasing organic composition of capital, the growth of the share of fixed capital compared with circulating, etc. - all this seems to increase the material mass of productive forces, which is attached to place and possesses a very large inertia. In particular for rail transport, i.e. exactly for that industry sector whose whole purpose consists in movement, the huge influence of fixed capital is characteristic, making absolutely impossible its transfer from place to place. One can even establish such a law: the less mobile the capital of transport, the greater mobility it imparts to the national-economic whole.14 Now then, does not this increase in fixed capital erect such obstacles, which, despite the convergence of the levels of capitalist development in different countries, still impede the international transfer of productive forces, giving thereby a special color to international exchange? This question must be answered in the negative. First, the large inertia of fixed capital makes it immobile not only in the international, but also in the domestic economy. There exists no difference between the movement of capitals from one branch to another within a country and their movement from one country to another - from the point of view of bulkiness of the object of transfer. Secondly, the mere fact of an increase of the share of fixed capital in the structure of the undertakings' productive resources is not yet indicative of an increasing inertia of the productive forces of society. After all, trans-located must not be those means of production, which already appear in the form of factories, railways, etc., but the newly produced means of production. The movement of capital is not a movement of finished businesses, but the movement of products of the production of these businesses having a form suitable for the organization of new production. Thus, the question boils down to whether the mass of fixed capital increases by comparison with the annual volume of production or not. An exaggeration of the role of this fixed portion of capital has led economists of an earlier capitalist age to the conclusion that capital of a country in general cannot be exported independently from the movement of people. Here is what in his time, for example, Hodgskin wrote. "It must be quite plain that the greater part of the commodities constituting the capital of a country, cannot, be removed. The most common instruments and tools are useless without the skillful hands, and many of them are connected with fixed spots or buildings, nearly as immovable as the soil itself. They may be destroyed - not carried away. The improvements of the soil, the draining and manuring of it have already been made. Other labourers may make them useless, but neither they nor the benefit that confer on us, can be transported to France or America. Bridges, roads, and canals, may be neglected or suffered to fall into ruin, or they may be broken up; but no one will be at the trouble of shipping the materials off to Spain or to Brazile... Except the acquired and useful abilities of the labourers of a society, and what they can carry with them - for there are some instruments, such as ships, easily transportable - no part of the capital of a country can be either driven or sent away. 15
The considerations of Hodgskin bear the stamp of his era - the era when the export of capital had not yet acquired decisive significance in the economy of the advanced countries. His error is completely obvious. First of all, he confuses the material form of fixed capital with its value. The first, of course, cannot be exported from the country (equally like the movement of any significant mass inside the country), but if the value of fixed capital is not repaid in the form of regular expenditure for the conservation of it in good condition, if the depreciation funds take an other material form, more transportable and easily exportable abroad, then this in essence also is export of capital abroad, moreover precisely that capital, which seemed stuck at home and "intertwined" with the native soil.
But, in addition, Hodgskin does not take into account net production, which a country produces each year and which for a greater degree consists of productive resources, the greater the dimension of fixed capital is, figuring in the shape of the finished productive apparatus of the country. And these resources of production stick already with nothing to the ground, and their movement is much more due to economic than to physical laws. This net production in the course of a short period provides material values that exceed the whole vast mechanism of production accumulated by society from past centuries. Apropos this, Marx, evidently, with full sympathy quotes the following excerpt from Thompson: "It is little thought, by most persons not at all suspected, how very small a proportion, either in extent or influence, the actual accumulations of society bear to human productive powers, even to the ordinary consumption of a few years of a single generation. The reason is obvious; but the effect very pernicious. The wealth that is annually consumed, disappearing with its consumption, is seen but for a moment, and makes no impression but during the act of enjoyment or use. But that part of wealth which is of slow consumption, furniture, machinery, buildings, from childhood to old age stand out before the eye, the durable monuments of human exertion. By means of the possession of this fixed, permanent, or slowly consumed, part of national wealth, of the land and materials to work upon, the tools to work with, the houses to shelter whilst working, the holders of these articles command for their own benefit the yearly productive powers of all the really efficient productive labourers of society, though these articles may bear ever so small a proportion to the recurring products of that labour.16"
Of course, at the time of Thompson, these "durable monuments of human exertion" were many times smaller than in our time. And indeed also the annually created new values were insignificant compared with the current dimension. The ratio of annual production to accumulated capital in our time is at the least not lower, than 50-100 years ago, though the exact statistics in this area are not available for past periods. Annual production of the most important countries makes up in our time 15-20% relative to the value of the national property of each country. But in the sum of this property goes land. Excluding land, annual production makes up relative to property not less than 35-45%. If we take the ratio of these products only to fixed capital, then it in any case will not be a lower percentage. In other words: annual production amounts to a magnitude equal in value of the whole productive apparatus of society. Just in industry, for example, products exceed the value of fixed capital on average 1.5-1.6 times. This is the ratio - in value. The ratio in physical volumes is even more, because value of fixed capital is calculated under old rates of labor productivity, which progresses each year.17 How quickly "monuments of human exertion" lose significance and with what an incredible pace of change the tempo of development of productive forces alters the economic rapport of wealthy countries, is shown by the fact of the change of roles of America and Europe in the world economy, which occurred in the length of some one and a half - two decades.
Similar rearrangements occurred between the most important countries also before the war. So, according to R. Liefmann's testimony, "the increase of wealth in the last decade before the war happened in Germany faster than those nations that had previously had a significant advantage in wealth - in England, France, Holland, and the same - within the limits of their productive capacity - is true in relation of Italy, Switzerland, Scandinavian countries. 18"
We will not dwell here on the ground of these rearrangements, - to this subject we will return, - but confine here to an observation of facts. The wealth of modern nations - from the point of view of its material volume - has no, in Marx's expression - "old date." "It has always been since yesterday." («старой даты». «Оно всегда со вчерашнего дня») But thence also the astonishing growth of its mobility, despite the heaviness and bulkiness of its modern form. The progress of transport overcomes any mass and form, and makes it possible to move whole "factories," like "toys for a Christmas tree." The cheapened traffic in much greater degree is favorable to the movement of productive resources, than finished goods. Thus, for example, transportation of raw materials with the advent of railroads roads, is facilitated to a greater degree than the transport of fabricates.19
Generally speaking, if one takes the concept of "capital" in its technical sense (which, in terms of the problem of material transfer is quite allowable), - then for the contemporary stage in the development of international relations the contrast of commodity circulation and capital circulation appears conditional in the highest degree. What is the kind of trade of commodities, if the majority of these commodities are classified in the category of means of production? It is the reallocation of productive forces. If England exports machines to India, then even in the case when the value of these machines is fully bought with money or commodities, i.e., even in the case when in the economic sense England does not export capital to India, machines all the same are moved to a new place and moved with them a part of the productive forces to an alien country. It promotes industrialization of the backward country regardless of whether it is sold with credit or paid hard cash, of whether with its help is organized production of the undertaking capitalist, who lives in England or of the native industrialist. All these differences become, it's understood, of enormous importance from other points of view, that we here leave aside. From the point of view, which specifically interests us here - the mobility, the transfer of means of production, - they are inessential.
Not all commodity export is export of capital. But all capital export must take the form of commodity circulation; even when exported capital figures in the form of money, it is imported in the country of destination in the form of commodities, purchased at different locations of the world market, decreasing in corresponding magnitude commodity import of countries which export capital. Every capital, imported to any sort of country, is beholden in its origin to commodity trade 20. Therefore it is entirely absurd to imagine, as was sometimes done by the classics, the interaction between two countries as a relation between two with each other trading "economic bodies" ("trading body", to use the terminology of Jevons), whose production relations don't undergo change. Where there exists trade, where objects of trade include means of production, in particular instruments of production, there will inevitably occur also transfer of productive forces, even when not any migration of capital occurs.
However, foreign trade inevitably generates also capital export in the true sense of the word. Between one and the other form of economic relation there exist a close interaction. Schilder showed with the example of England, with what regularity there the rise and fall of commodity export alternates with the fall and rise of capital export. Any hitch in the sale of commodities abroad causes a growth of capital export, in other words, increases the mass of commodities sold with credit, either as monetary loans provided to foreign countries, with the help of which they acquire British goods, or, finally, the exportation abroad of equipment, etc. for the direct organization of industrial enterprises of British undertakers. Purchase of securities is itself an externally similar economic phenomena. In general "the interdependence of exported commerce and invested capital abroad constitutes a regulatory mechanism, that works like the mechanism based on the interdependence of exchange course and foreign commerce, though also slower. 21" Another form of interdependence between trade of commodities and capital O. Bauer notes. "Capitalist economic policy, - he writes, - seeks areas of investing capital and markets for the sale of its commodities. But we must understand that these are not different objectives, but basically one and the same objective. When I with idle capital open a new area of investment..., I create with this a market for commodities: because it is not idle money capital, but productive capital which buys commodities... And vice versa. If I open a new sales market for commodities, the turnover time of capital is reduced, profits increase, a strong demand for capital arises, idle capital pours into production. When I open a new market for goods, I deliver with this as well for capital a new investment area. 22"
We left aside here the question about what kind of impact on the export capital, etc. the different rate of profit in different countries has, - i.e. the most influential reason of capital export. To this theme we come back later. But it is all the more conclusive that, even apart from the rate of profit, we inevitable arrive to the conclusion about the necessity of the turn of commodity trade into migration of capital, about the transfer of productive forces between countries as a result of simple commodity trade between them. The fantasy about countries, whose productive forces are attached to location, and which communicate with each other only through trade in commodities, has no sense even as a fantasy, because the lack of an inner logic.
Transfer of productive forces includes itself not only the migration of idle capital, but also of people. It would be, however, a gross mistake to think, that between export of capital and people there must exist an exact correspondence, as Hodgskin thought. This is unthinkable already for the simple reason that things and people possess completely different transportability. Differences of language, culture, political institution, etc. have especially relation to people, but not to things. That is why there is such a paradoxical at first sight phenomenon that "a man is of all sorts of luggage the most difficult to be transported" (Ad. Smith), although he at the same time possesses the greatest mobility, as living organism. In relation to capitalists the case is more simple. Export of capital, in the sense, which to it is usually given, is such an exportation of capital, in which the capitalist himself remains in his own homeland. If together with capital also the capitalist moves, then this capital is entirely lost to the country where he departs, and then usually is spoken already not about export, but the relocation of capital. Although between these two forms the difference is not so great in essence, as may appear, although the flexible system of funds of capitalism has created a whole series of transitions between them, nevertheless this distinction suggests that the capitalists, exporting capital, usually do not follow it on its heels. This is particularly characteristic, inasmuch as the case is about pre-war times - for French and English forms of export. The Germans for the most part accompanied their capital in its wanderings.
As for the labor forces, which are an integral part of the productive forces, then also here not any correspondence between export of capital and emigration of workers can be established. For the present one can establish sooner the opposite tendency. Countries, exporting capital, together with this import labor forces (U. States - the most prominent example). And, conversely, labor forces emigrate from countries into which foreign capital pours (heavily populated countries, India, China, etc. in pre-war time Russia and in general the countries of Eastern Europe were consumers of foreign capital and together with this suppliers of labor forces on the world market). Worker emigration from the advanced industrial countries, exporting capital, took place only in the course of the first three quarters of the 19th century, and since then sharply declined. But also then there didn't existed any proportion between the import of workers and export of capital. "English additional capital, - Marx writes, - annually transported abroad to be put out at interest is in much greater proportion to the annual accumulation than the yearly emigration is to the yearly increase of population... the greater part of the yearly accruing surplus-product, embezzled, because abstracted without return of an equivalent, from the English labourer, is thus used as capital, not in England, but in foreign countries. 23
We noted that the most characteristic for the contemporary period is the movement of capital and labor forces not in one and the same, but in opposite directions. Capital seeks the places of conglomeration of labor force, labor force seeks places of conglomeration of capital. The labor force goes to the place from where capital is exported, because, despite the outflow of capital, in the country of export the manpower lacks to set in motion the remaining capital. Capital goes to the place from where labor force is emigrating, because, despite that emigration, in the country there remains an huge surplus of workers, for who the means of production lack, i.e. capital. Of course, here is sketched only a scheme, that in reality is modified under the influence of a variety of circumstances. Thus, for example, export of capital to a sparsely populated countries (Canada, Australia, etc.) is accompanied simultaneously also by labor emigration to these countries.
On the other hand, excessive abundance in the country of labor forces and the resulting extreme cheapness of workers may become an obstacle to import into this country capital in the form of technical means of modern large industry. Machines, applied, for example, in European and American industry, can by far not always enter in China or India. The cheapness of workers makes for capitalists unprofitable the mechanization of production. In such cases, sooner is spoken of import of capitalism than of import of capital into these backward countries. The function of the bourgeoisie of ruling countries consists in that it organizes capitalist production in colonies on the basis of those means of production, that it finds in ready form, and not with the help of the productive forces of the more developed industrial countries. This happens not only with machines. The same reason prevents, e.g., the penetration of artificial fertilizers in Chinese agriculture, which with much more success uses human excrement, though at the same time also absorbs with this a countless amount of human labor 24.
With this counter (встречном) movement the means of production (capital) exhibit much greater mobility than labor forces, which in a more strong degree are localized. This raises the so called "worker orientation" in modern industry in the terminology of Al. Weber, i.e., the tendency of production to concentrate in places of a conglomeration of labor forces, the tendency, to overcome the raw material as well as the fuel and consumer orientation. Thus, the considerations of the classical school have much more foundation in relation to labor than to capital (which was also noted by Edgeworth).
There is no doubt that also the mobility of labor force is dependent on the level of cultural and economic development. But here it is much more difficult to reveal the basic tendency. In the analysis of the conditions of capital mobility we have shown that the development of capitalism, destroying some obstacles of movement, simultaneously erects other obstacles, under which the first tendency invariably prevails. As for labor forces, then here such undisputed conclusions cannot be obtained. Inasmuch as labor force experiences attraction to the side of industrial centers, the strength of attraction should be proportional to the magnitude of the attraction of the centers. Concentration and centralization of industry should therefore cause a more animated movement of workers from the periphery - an inflow from village to city, from agrarian to industrial countries is a clear illustration of this pattern. In the same direction operates the improvement of means of transport, the improvement of forms of communication (telegraph, telephone, radio, etc.), creating the famous "unity of the workers' markets" like the unity of the capital market or exchange courses, although in incomparably lesser degree, inasmuch as the value of labor forces yields a far less degree of unification and leveling, than the rate of profit or the course of exchange. Finally, the progressive automation and mechanization of production, accompanied by deskilling of many professions, likewise facilitates the movement of labor forces from one to another sector on the international, as well as national scale. Here a curious analogy is worth noting. The degree of qualification of the worker is fully analogous to the relative mass of fixed capital in the structure of means of production. In the process of growth both increase inertia, restrict movement. But at the same time, as fixed capital has the tendency to grow with the development of capitalism, the qualification of the workers en masse finds the reverse tendency toward descent, precisely by virtue of the increasing relative mass of fixed capital in production. One and the same reason, reducing the mobility of means of production, increases the mobility of labor. (Automation creates, true, a demand in highly skilled labor of technicians, mechanics, etc., but the latter constitute a relatively small percentage in the total mass of unskilled labor.) Such, in most general terms, are the reasons which contribute to the growth of labor force mobility in modern capitalist economy.25
But there is a tendency, operating in the opposite direction. The tendency is so perceptible, that some authoritative bourgeois researchers come to a conclusion about an increasing settlement of humanity, with the growth of capitalism. Here is what, for example, Bücher says: "To all factual material which can be adduced in favor of the position that humanity in the history of its development became increasingly settled, are joined two more considerations of a general character. With the development of culture fixed capital increases: the producer is immobilized, thanks to the instruments of production. The wandering South Slavic blacksmith and Westphalian steel mills, the pack-horse of the medieval merchant and the universal department stores of modern cities, the wandering tomfoolery and the permanent theater -represent the initial and final points of this process of development. Further, modern means of communications in a much greater degree facilitate the transportation of commodities than of people. Because of this, not rarely the distribution on location of the labor forces has greater importance, than natural means of production, since the latter follow after the first; previously the relation was the reverse."
Further, he points out that "all the latest development of the industry leads to the formation of a sedentary worker caste, which already now, thanks to early marriage, has become less mobile than the old craftsmen, and which in the future no doubt will be as firmly attached to factory, as a farmer of a large medieval manor to the land.26"
Bücher's considerations relate to the issue of internal displacement of the workforce, but they also have a general significance. To what extent can they be accepted? Inasmuch as we are talking about the factual side of the case, Bücher himself brings figures which refute his constructed conception. Thus, for example, according to his information, "the number of residents in Europe, beholden to their place of residence not by birth, but resettlement, exceeds hundreds of million," - this was the end of the last century. On the other hand, he himself emphasizes the strong movement of labor forces from the countryside into the city, characteristic precisely for the capitalist era. But this movement, he believes to be the result of the fact that we are still "in the transition period, in which the transformation of city territorial into national economy has not yet been completed, leading constantly to the displacement of the boundaries of division of labor and to changes of the centers of various industrial sectors, and in connection with this to the mobility of labor forces." Another reason is the fact that "most large companies have not yet reached their complete development and, expanding, are forced to cover the demand for new workers by the attraction of excessive rural population.27" It is easy to recognize the affinity of these arguments with the famous theory of Bücher about the stages of national-economic development: the closed (domestic) economy, the urban, the national economy. Strange sounds the claim of Bücher that we (in Germany) "have not ended the process of turning the city into the national economy." He "didn't notice" that the German national-economy long ago managed to become part of the world 'economy.
If one considers the movement of labor forces from countryside to city a "transitory" phenomenon, then, from this point of view also capitalism is a transition to another system, and to it, perhaps, an end will come sooner, than in a world scale the transfer workers from the countryside in the city will end. It won't do to criticize in the same way Bücher's statement, that growth of fixed capital causes immobility of manufacturers. We substantiated above the direct contrary conclusion. Growth of fixed capital is an increase of the immobility of material elements of this capital, but not of people, never mind that the capital, produced with the help of this fixed capital, possesses full mobility also in our time. Of all Bücher's considerations true is only, - and we already noted this, - that the development of means of transport facilitates more the transport of commodities than of people, and therefore means of production increasingly are moved in the direction of the labor force, rather than vice versa. This is the actual real reason of the increasing "sedentariness" of the labor force. It is only necessary to note that the greater ease of transport of commodities, than people, follows not so much from physical but economic conditions. Since the rate of profit is conditioned by the rate of surplus value, and the latter - other things being equal - is determined by the height of wages, which is the lowest in areas of dense working population, then it is understandable why capital "easier" moves towards the direction of the working force, than the contrary, the transfer of workers to the means of production. But this relates already to the discourse about the rate of profit.
There is no doubt also that the population, already concentrated in large cities and in industrial centers, shows bigger inertia than the population, found in the phase of movement from the countryside into the city, or from small towns to large towns. At least this is the case in the epoch of the ascending line of development of capitalism. Modern capitalist Europe, carrying a heavy load of a few million "stabilized" unemployed, for whom there is no place in industrial economy, is another picture. The reason for the greater "sedentariness" of the urban population arises not from the reasons, about which Bücher speaks, not from the growth of fixed capital, etc., but from the simple fact that the difference in living conditions between large cities in one and the same country or in different countries is smaller than the difference in living conditions of the countryside and the city. Be that as it may, one can observe here a phenomenon directly contrary to what the classical school stated: the closer the different countries fit together in the level of culture, material conditions of life, etc., - the weaker the tendency towards transfer of labor between them. The migration of labor between Germany, England, France, is much weaker than the migration of workers from Eastern to Western Europe, from Asia to the U. States, etc. 28). Launhardt, Mathematische Begründung der Volkswirtschaftslehre, 1898, p. 213..
In essence, the same can be said also about the transfer of capital. The traction toward movement is weaker, the closer the rates of profit go to each other in different places, i.e., the more homogeneous their economic structure. We arrived, thus, to a very paradoxical conclusion: the mobility of capital and labor decreases to the degree of the development of conditions, facilitating the movement of means of transport, communication, the communion of the cultural, political and social system, etc. The paradox disappears, however, if we give words their true meaning. It's necessary to distinguish capacity to movement and actual movement. Furthermore, movement itself can be one-sided and multi-sided. Capacity for movement is without a doubt higher the more developed the capitalist system is. But it is precisely for this reason, precisely thanks to the increasing ease of movement, the incentive to movement is reduced, inasmuch as the difference in conditions of life or return of capital investment cannot be significant. The smallest difference immediately is equalized by a corresponding transfer of funds and force, similar to how the slightest oscillation of the exchange course with any point of the world money market causes an immediate reaction of other points that eliminates this oscillation (course or currency arbitrage). The high mobility of capital and labor in most developed capitalist countries is reflected in the point that this movement takes a multi-sided character, - a character of ceaseless fluctuations, the tides and ebbs, in which each country alternately stands now in the role of exporter, then in the role of importer of labor and capital. More precisely speaking, it simultaneously acts in both roles. The same thing, the same fluctuation occurs also between the larger industrial centers of one and the same country. A main role in these incessant transferring of the productive forces plays the local oscillation of the conjuncture, not coinciding over time in different places or in different industrial sectors. This constant "change of motion," the incessant changing direction of the alternating current gives the impression of a relative stability and immobility of the whole, because the counter oscillations mutually cancel each other.
An entirely different character carries the transfer occurring between countries and regions, representing different economic types. Here the transfer carries a strong one-sided character, occurs, usually, in one direction only. Capital, as a general rule, is exported in one direction only - from advanced industrial to backward countries, labor force, as a general rule, moves in the opposite direction (although it may take also the other direction, depending on concrete conditions). Such mobility is a lower form of mobility, since it is not multi-sided, it cannot be compared with the free movement of an autonomous body, but with the forced movement of different parts of a machine mechanism, whose direction once and for all is prescribed by the interrelation of the device, the interrelation of parts, etc.
All the confusion as to the conditions and forms of transfer of productive forces arises from the mixture of different economic types of movement. Meanwhile an exact delineation in this area was set by Marx with full clarity. He establishes three forms of the movement of capital (to which is ranked also labor force): 1. Transfer of capital within each individual sphere of production, as a result of which on the market is developed an ordinary market value of the products of this sector. Usually this transfer takes place in the direction from less productive to more productive units. But if the transfer is limited only in this form, then in the different branches inevitably different rates of return are set, due to differences in the organic composition of capital. Hence arises the second form of movement of capital between sectors in the direction of the higher rate of profit. The second movement happens as a general rule in reverse direction: from advanced to backward sectors. As a result of the movement of the second kind on the market a general rate of profit is formed and market value is turned into price of production. 3. Finally, after the average rate of profit gained a quite stable quantitative shape and became an objective fact, the movement of capital from one sphere to another is determined by fluctuations of individual rates of profit around the average level, as a result of which the movement itself takes an oscillatory character, in contradiction to the one-sidedness of its direction in the period when the general rate of profit did not yet exist at all.
Each subsequent type of transfer supposes an higher requirement of mobility of capital and labor. Movement of the last type requires together with this an higher development of the capitalist mode of production than the movement of the first type.
"The incessant equilibration of constant divergences ("oscillating movement" I.D.) is accomplished so much more quickly, 1) the more mobile the capital, i.e., the more easily it can be shifted from one sphere and from one place to another; 2) the more quickly labour-power can be transferred from one sphere to another and from one production locality to another. The first condition implies complete freedom of trade within the society and the removal of all monopolies with the exception of the natural ones, those, that is, which naturally arise out of the capitalist mode of production. It implies, furthermore, the development of the credit system, which concentrates the inorganic mass of the disposable social capital vis-a-vis the individual capitalist. Finally, it implies the subordination of the various spheres of production to the control of capitalists.
This last implication is included in our premises, since we assumed that it was a matter of converting values into prices of production in all capitalistically exploited spheres of production. But this equilibration itself runs into greater obstacles, whenever numerous and large spheres of production not operated on a capitalist basis (such as soil cultivation by small farmers), filter in between the capitalist enterprises and become linked with them. A great density of population is another requirement. - The second condition implies the abolition of all laws preventing the labourers from transferring from one sphere of production to another and from one local centre of production to another; indifference of the labourer to the nature of his labour; the greatest possible reduction of labour in all spheres of production to simple labour; the elimination of all vocational prejudices among labourers; and last but not least, a subjugation of the labourer to the capitalist mode of production.29" All the listed conditions evolve along with the development of capitalism and in the highest degree exist in the most advanced industrial countries.30.
The question on the forms and on the possibility of transferring values from one country to another acquired in recent years an actual interest in connection with German reparations, the Dawes Plan and the so-called "transfer problem."
In attempts to recover in the benefit of the Entente huge sums of reparations the victors encountered an "unexpected" obstacle: the inability to take the billions which the German government agreed to give. Closely studying this question, the American economist Moulton characterizes the created situation in the following way:
"Whereas an individual may receive his income in money and can transfer this money directly to his creditor, a nation's income, although it may be expressed in money values, cannot be transferred in the form of money values to a foreign nation. When a nation's annual production exceeds its annual consumption by 10 billion dollars, that amount is not stowed away somewhere in national vaults. It's impossible to transfer this wealth to a foreign country simply by writing and delivering a check for 10 billion dollars. There have merely been created within the country various forms of wealth valued at 10 billion dollars in excess of the wealth that has been consumed during the year. This wealth is not necessarily in a form that could be transferred beyond the nation's border. It may consist of factories, equipment, railroads, highways, enriched soil, etc., - in short, fixed capital goods, which can be used for the future expansion of production but which cannot be turned over to foreign lands in payment of debts. Only such portion of the annual production can be turned over to a foreign nation as is in exportable form. It may be observed here, however, that a nation might deliberately seek to avoid having an excess of exports over imports, and then plead inability to pay 31."
Moulton's reasoning is correct, but it does not refute our findings. The whole point is that a country could convert a greater or lesser part of the surplus of its products into a form suitable for export, depending on how much it would be economically advantageous, on how much this will foster international economic relations. Meanwhile in conditions of a reparation burden the question in general acquires a non-economic character, which not at all favors the creation of incentives to move values abroad, all the more, as also foreign countries are not very willing to accept this export. Therefore, Germany will, for example, accumulate the surplus of its production not in the form of railroads, suitable for export, but in the form of railroads, built using the same rails, but impossible to transfer abroad.
To this should be added that in general all the arguments about the possibility or impossibility of transferring values in their immediate material form mutatis mutandis relate also to the field of internal economic circulation. Roads or tunnels cannot only not be moved from one country to another, but in general not from one place to another, in whatever distance.
The influence of capitalist relations on the character of international trade and on the distribution of productive forces.
We analyzed until now questions of international trade, abstracting from its capitalist form. But capitalism and international trade are inextricably linked. At the same time the capitalist form of trade and economic relations brings a lot of new elements into the problem, which were completely ignored by classical theory and only fragmentarily investigated by Marx. That theme deserves a detailed independent consideration. Here we are confined only to a conspectus of the most important features, which, in our opinion, should in the first line be selected for analysis.
We define international trade as the trade among countries, found at different stages of economic development, thereby assuming that in the world economy there is not yet established a single average rate of profit. Indeed for the existence of this a full and comprehensive mobility of capital and labor is necessary. There, where this mobility puts up with interference, is the inevitable formation of more or less delineated from one another economic territories with independent average rates of profit, interest, etc. Differences in countries are found between one another approximately in such a relation in which are found to one another different sectors of production, between which on different stages of development of capitalism the movement of capital and labor would be hampered. According to Marx that is such a stage of development, which is characterized by the formation of a single market value, but lacking an average rate of profit and price of production. This very picture we have in the scale of the world economy: Single world value, single world market price, at least, on the most important objects of international trade, and lack of prices of production in a world scale, lack of a world average rate of profit. The world price, even apart from any additional influences, represents, thus, a category of a very complex structure. It is not the world value of a given commodity. Inasmuch as on the domestic market of each individual country the price of a commodity deflects in one or another direction from the value by operation of the law aligning around the average rate of profit, the world market price on this commodity, being the resultant of national prices, likewise doesn't coincide with its value either: it deflects from both the national and the world value. From national value it deflects for the reasons stated above. From world value - because of the fact that the given sphere of production has a lot of different connecting channels through which it communicates with other spheres of production, but where there exists such a "diffusion", there the match of market price with value already is impossible. The world market price is not at the same time the price of production either, because there doesn't exist in the world economy a single average rate of profit. Each country, or rather, the entrepreneurs of each country fetch with this price a rate of profit different in magnitude, since they have different costs for the production of the given commodity, and these rates gravitate to the national average, and not to the world average. Of course, one can "abstract" from the actual differences in national rates of profit and try to construct a global norm, as a kind of ideal medium, which determines the international movement of capitals. In fact! After all, capital is moved among countries in search of higher profits, as likewise this happens inside countries. Why not generalize the internal and external movements with the help of one scheme, as we did with the law of value? For the simple reason that the international movement of capital is fundamentally different from the internal one - and we have already found out elsewhere: the movement of capital within a country carries an oscillatory character, and the average profit rate plays the role of the real center of oscillation. To the contrary, in an international scale the movement carries a one-sided character and no center of the movement exists. This is the movement of capital towards the formation of an average profit rate, but not around this rate. With world value the matter is essentially otherwise: for the formation of a single price and value developed commodity trade is sufficient, which is possible also at undeveloped forms of movement of capital.
Thus, world price is itself a peculiar market phenomenon, which does not coincide with any of the existing Marxist categories and still awaits its investigation.
Now about the impact of capitalism on the equivalence of international exchange. Arguing in the abstract, one could admit that the laws of trade, as described in the previous chapter, completely continue to operate also in conditions of capitalism. Capitalists, considered, as representatives of the national economy, would receive on their share all those advantages which is achieved by a more productive nation at the expense of the less productive one. In the first country the rate of profit - insofar as it arises from advantages of foreign trade - would have been higher than the second. Everything that we said earlier about nations, would be "forwarded" on the name of capitalists of every nation (of course, with the necessary modifications, such as that capitalists do not exchange their own labor, but the labor of their workers, etc.) - with the rest all would have to have been as before. Higher profits of capitalists of advanced nations would have two sources. On the one hand, capital, directly engaged in foreign trade, gives more profit, which, proceeding "in partition" between capitalists of the given nation, improves the average rate. On the other hand, external trade, contributing to cheapening many products, obtained from countries with the most favorable conditions for their production, allows to correspondingly reduce wages, and thus improve, other conditions being equal, capitalist profit. A reservation is needed here. In the more developed capitalist countries the rate of profit, as a general rule, is lower than backward ones for the well-known reasons (higher organic composition of capital, etc.). But the more favorable position of this country on the world market may to some extent counteract the tendency of the rate of profit to fall. Here we see a curious phenomenon: two counteracting economic tendencies arise directly from one common economic cause. The common cause - is the growth of the organic composition of capital and growth of national labor productivity. It conditions on the one hand, a lowering rate of profit, on the other - its rise, inasmuch as more productive national labor acts on the world market as labor of a higher relative mass. The total movement of the rate of profit is determined as the resultant of these two, as well as many other tendencies of capitalist development.
Thus, an equivalent international exchange could take place freely also in a capitalist frame, executing, so to speak, the legal methods of exploitation of other countries. But we proceeded from an assumption to which a "small" correction needs to be made. We depicted the capitalists as simple "representatives" of the national labor, who besides this "representative" function do not have any other function and by their participation bring not at all any changes to the national-economic structure. In reality relations unfold "a little" different. The issue is that capitalists "represent" the working masses not like the latter themselves would do (Marx). The distribution of productive forces in the national economy also is essentially modified with the intervention of capitalism. One and the other arises from a simple fact: what a product costs producers, and what it costs capitalists - these are two different things. A nation, represented by the workers themselves, would exchange its labor. Would it be represented by capitalists, they are exchanging commodities, the prices of which the capitalist does not measure with expended labor, but with production costs.
Does capitalism fulfill such a distribution of productive forces - in a national or international scale - by which the forces of the nation really are spent in more beneficial areas, in terms of labor expended and received effect? This does not at all emerge with necessity from capitalist relations. Let's take the well-known law of transformation of value into price of production. If this law is translated into the language of distribution of productive forces, then it reads as follows: Since industries with low organic composition of capital (i.e., in most cases the more backward sectors) provide a rate of profit above the average, there is poured capital from other industries for as long as the individual rate of profit in this industry is not equal to the average rate. Conversely, from advanced industries with a high organic composition, capital pours out. Such capital mobility has its positive and negative side. The positive is that the movement of capital contributes to a certain degree of technical re-equipment of the backward industries, fitting them to the level of the more advanced sectors of the economy. (Rural backwardness of agriculture, for example, is caused precisely by the existence of a variety of obstacles, preventing the tide of new capital). But, on the other hand, the influx of capital in the backward sector, caused by high rates of return, insofar as it does not lead to an increase in the organic composition of capital already existing, but to the creation of new enterprises of the same backward type (why improve the technology, when profit is high also without that?) - has, undoubtedly, harmful consequences for the economy as a whole. It promotes the growth of production in less productive branches, instead of to use to the limit the benefits of production in technically perfected branches. Not being a capitalist form of economy, being an economy of "associated producers," the distribution of productive forces would be substantially different. More "capital" would work in the most advanced branches, less - in the backward. Of course, the flow of means would go also then in the direction of the latter. But it would have then only one purpose: technical re-equipment of enterprises, not just their multiplication. These additional means for the upgrading of the backward sectors would sort of have been obtained from the change in value relations. Under capitalism commodities, produced in branches of low organic composition, have a price of production which is below the value. The elimination of capitalist relations eliminates also price of production, and the price of commodities of that category would have to rise to the level of their value. This would up to a certain extent compensate the weakening flow of new capital into these sectors. This, of course, is only a scheme, which is very far from the diverse real relations, but it gives a representation on the general tendencies of redistribution of the productive forces.
In any case one thing is certain: capitalism, contributing on one side of its relation to technical progress and growth of labor productivity, encourages on the other side a disadvantage in terms of the balance of the national labor distribution of production force, coercing above required limits the production of backward industries that - significant coincidence! - to a considerable extent are industries that supply objects of consumption of the ruling classes. More than that: precisely technical progress under conditions of capitalism feeds the backward economic form in many industries. The faster the organic composition of capital grows in the advanced industries, the more extensively the machine replaces human labor (directly in the companies themselves, indirectly, by competition with backward forms of small "independent" production), - the thicker the ranks become of the reserve army of labor, providing so much cheaper worker hands, that it is unprofitable for the capitalists to substitute them with machines, and they serve the basis of technical backwardness, appearing together with this an attractive force for capital seeking quick turnover and high profits. There is no doubt that such a distribution of productive forces is least of all similar to the implementation of the notorious law of maximal benefit for the national-economic whole.
Further. Although in each country there exists a theoretical average wage level and average rate of exploitation (m/v), both of these "averages" oscillate in very wide limits. There exist such fields of the economy, in which more favorable conditions are formed for an unbearable exploitation of labor. These are primarily the industries consuming non-qualified labor force, where the most competition rages of worker hands, ejected from petty production, from villages, etc. There is no need to dwell on the fact that conditions of labor here are worse than anywhere else, so that, despite the low productivity (which could be higher under other organizations of production) the capitalist obtains here extremely high profits. But in addition it is important to note the following. The labor force supplied to these sectors, grows up in petty production. The capitalist finds it finished and doesn't have to pay for the value of its reproduction and education. A determined sum of labor, spent on maintenance and education of the labor force, does not at all take part in the formation of value: the capitalist after all interests in the end not the value of commodities, but profit, and in this case he has the possibility to sell his commodities well below the value and still with vast profits. Marx notes this same phenomenon in relation to the conditions of petty peasant production, located in a capitalist environment. As is known, the small peasant who after the populist view is "not interested" in receiving profits and rent with the price of his products, actually is forced to sell them at such prices that barely give him an existence, i.e. a "wage", although the product contains in itself an amount of labor appropriate to a share of the profit and rent in prices of capitalistically manufactured products. "This is one of the reasons why grain prices are lower in countries with predominant small peasant land proprietorship than in countries with a capitalist mode of production. One portion of the surplus-labour of the peasants, who work under the least favourable conditions, is bestowed gratis upon society and does not at all enter into the regulation of price of production or into the creation of value in general. This lower price is consequently a result of the producers’ poverty and by no means of their labour productivity 32." As we have already noted, this phenomenon is not only characteristic for small producers, who "represent themselves" on the market, but also for the mass of forced producers, who are "represented" by capital. Disregarding that the latter "is interested" also in profit, and rent, and all other earthly goods, he receives in the structure of his profit such an amount of flesh and blood of his slaves, that he can afford himself the "luxury" to discount with the real value of the product, bringing it to market for sale. Thus, a very impressive share of national labor factually is not involved in trade, although also alienated first by the capitalist-entrepreneur, through the purchase-sale of labor forces, and through mediation of capitalist-consumers, domestic and foreign, through the purchase-sale of produced commodities. This is the main form of inequivalent exchange. S. and B. Webb, analyzing the influence of capitalist free trade on the distribution and use of national labor, therefore, could rightly say: "Under free trade the international pressure for cheapness is always tending to select, as the speciality of each nation in the world market, those of its industries in which employers can produce most cheaply... Instead of a world in which each county devoted itself to what it could do best we should get, with the "sweat trades," a world in which every county did that which reduced its people to the lowest degradation. Hence the Protectionist is right when he asserts that, assuming unfettered individual competition within each county, international free trade may easily tend, not to a good, but to an exceedingly vicious international division of labor.33"
It is evidently not the sum of human efforts and sacrifices involved in the production that affects the import and export trade, but simply the expenses that production involves to the capitalist.34"
International trade under capitalist "representatives'' less than anything recalls, thus, the vaunted harmony, so idyllically described by the classical school. Far from always countries concentrate their forces in the backward production where their work can be most effective. On the contrary, time and again, capitalism leads to an unsightly form of international division of labor, under which both sides lose. Suffice to recall the types of one-sided industrial and one-sided agrarian country. Harmony lacks not only in the domain of concrete labor. It lacks likewise in respect of the balance of abstract labor. Equivalent trade is lacking (which does not at all mean that an equivalent exchange would be good: we have shown that national exploitation operates in both forms).
Meanwhile with the foreign side the matter takes the most ugly appearance. Whether exploitation operates in non-equivalent or equivalent form, capitalism has for one and the other a plausible cover in the form of the trade and payment balance, a cover so reliable, that time and again even astute observers pass by it. So, in our Marxist literature, despite the frequent mention of inequivalent exchange, every time, when attempts are made to concrete analysis of the forms of oppression of the colonial countries, they don't go beyond matching assets and liabilities in the balance of payment. As a rule, the colonial countries export more, metropolises, on the contrary, import more. (With young colonies and metropolises the situation, most often, is the opposite.) Tribute of colonies to metropolises is portrayed as a surplus of export from the colonies. But it is in fact much more also the not received pick up in value magnitude. Here it is required to draw the investigation to the physical volume of export and import, the distribution of it by group and type of commodities and establish price equivalents. Then, undoubtedly, it is found that even under an equilibrium of the balance of payment colonial countries factually give more than they receive, because they export their products at lower prices than corresponds to the value, while the products of metropolises gain upon more expensive prices. More precisely, the matter occurs like this: a young colonial country which first imports to itself capital from the metropolis (and has an overbalance of imports on exports), is overcharged usually on imported goods. It is sometimes provided with loans even at the lowest interest, but is forced to make purchases in the creditor country and is assigned at the same time, using the monopoly of the seller, such prices, which more than cover the "concession" in relation to the interest. To the contrary, old colonial countries, to which there comes the time to pay at the course, and which must export more than import, pay, in addition to this surplus export, a tribute in the form of excessively low prices for the exported goods. And forcing them to do so is again this monopoly of the buyer, which together with this is the lender. The interest must be paid, but as the payment can be paid only with produced commodities, and since the seller has to sell, then it's clear, that it is not he who is in the best position. Who is familiar with our prewar trade balance and our international relations before the revolution in general, these things are sufficiently known. Let's recall only that even if trade happens according to equivalence, then it all the same continues to be exchange of unequal amounts of labor, which subjectively cannot be perceived, just as equivalent trade cannot.
Capitalism within each country prepares the ground for international exploitation, which is then carried out, mainly, with the assistance of relations arising from the export and import of capital. Capital turns the producers of the specific country into its slaves, and itself turns into the agent of the ruling capitalism of other countries.
Migration of capital is not the only reason causing unequal or exploitative exchange. Predatory trade exists, as is known, since trade exists. But migration of capital creates for systematic plunder the most solid foundation, provides it, so to say, constant reproduction.
On the other hand, the benefits, accruing to the share of the ruling countries, i.e., countries, exporting capital, do not accrue to the share of its people. It would be a very considerable deviation from the topic, if we engaged here questions about the redistribution of national revenue under the influence of imperialism, etc. It suffices to say that a country, exporting capital, in the end falls in the line of state-rentier, with all the features of stagnation and decay, which guarantee to it a more or less rapid "disablement," as this happened before our eyes with England. The redistribution of productive forces of the country happens in a direction, less conducive to their genuine development, increases the mass of non-productive elements of society, etc. A stagnation ensues in the vast wealth, and already Smith noted that the payment for labor is highest not in the richest countries, but in extensively developing countries.
Under the influence of the capitalist form of international exchange a backward country can be reduced to such status, that the value of the product of its annual production will decrease instead of grow. This happens in cases when commodities, produced at higher technology, penetrate into a backward country, destroying its own production of these commodities, by which the workers thrown out of the given sphere cannot find an application of their labor power in other spheres. The country absolutely grows poorer from foreign trade, instead of prosper, in accordance with the classical theory seeing in foreign trade only an harmony of interests. In similar cases international exploitation is expressed not only in the fact that an advanced country trades a lesser amount of its labor for a larger amount of labor of the other country, but also in the fact that the labor of the population of the advanced country substitutes the labor of the backward, and in capitalist conditions exemption from labor goes together with exemption from means of livelihood.
Analyzing the conditions of international exchange, we all the time revolved in the sphere of value relations. But a nation does not consume the value of commodities, but the commodities themselves, as consumer goods (or production goods, when the matter is about means of production). Therefore the study of the form of international exploitation necessarily must include the question of what is imported in the country and what is exported out of it, for whom is exported and from whom are products taken for export. If the country exploits, for example, mineral wealth or products of its soil, and imports goods such as alcohol, cocaine, all possible counterfeit products of the "civilized" countries, then entirely independent of the value relations the country grows poorer from such trade. If a country exports production of petty producers or workers, due to the malnutrition of both of them, and imports consumer objects of the ruling classes by preference (as for example, in India or before the war in Russia), it is also quite obvious, who in the "country" gets the benefits from international exchange. The international division of labor, which under the influence of these circumstances capitalism realizes, has nothing in common with the distribution of productive forces in the world economy, which must emerge "the next day" after the overthrow of the capitalist system.
International exchange internationalizes the products of national labor. Only in the world market they turn in commodities "sans phrase." But the same occurs with capital. It deploys all its "quality" only when finally released from the local boundedness, when it is internationalized. And the driving force here is the same, as also with the internationalization of the product: to strive to the abstract form of wealth and to its unlimited increase. Without dwelling here on this vast subject, we would like to stress only the following point. From the point of view of the classics, capital would have had to emigrate from the less productive countries into more productive countries. To this conclusion they inevitably came, inasmuch as they explained a fall of the rate of profit with the law of falling consecutive expenditure of labor and capital, i.e. with falling labor productivity. From this point of view the classics could not explain the whole subsequent course of development of capitalism, characterized by the continuous movement of capital just in the opposite direction - in backward countries, in countries of low labor productivity (this, of course, was not the only direction, but we take the question in its broad features). True, Ricardo, and others proceeded from a representation of "natural conditions" of productivity, as if it would be already not so contrary to the facts. But we showed the whole inadequacy and ahistoricity of such a scheme. One of the biggest achievements of Marx was to resolve this contradiction. Marx showed that precisely low labor productivity most often goes along with high rate of profit, and vice versa. Thereby was revealed the "mystery of capital's movement" in the direction of backward countries. The transfer of capital between spheres of production, and especially between different countries is due, however, not only to the high rate of profit, taken in a general way (i.e., as the ratio of total surplus value to capital), but also to the proportion in which the surplus value is distributed among the land owners, the representatives of loan capital, the industrial capitalists. In other words, the movement of capital is determined not only by wages, but also the magnitude of rent and interest, which are different in different localities: and sometimes also in different sectors of the economy. This circumstance is often dropped out of sight, although it is completely obvious that the rate of profit about which usually is spoken, analyzing the causes of outflows and inflows of capital, is first of all the industrial or rather entrepreneurial rate of profit, which forms only part of the surplus value. Under one and the same organic composition of capital the profit rate can, therefore, be more or less, depending on how one measures the magnitudes of interest and rent (about the wage we have already talked), which, it's understood, also are due to the organic composition of the social capital, but only in the final light, through a whole number of intermediary links. This circumstance also Marx underlines: "In the competition of individual capitalists among themselves as well as in the competition on the world-market, it is the given and assumed magnitudes of wages, interest and rent which enter into the calculation as constant and regulating magnitudes; constant not in the sense of being unalterable magnitudes, but in the sense that they are given in each individual case and constitute the constant limit for the continually fluctuating market-prices.
In competition on the world-market it is solely a question of whether commodities can be sold advantageously with existing wages, interest and rent at, or below, existing general market-prices, i.e., realising a corresponding profit of enterprise. If wages and the price of land are low in one country, while interest on capital is high, whereas in another country wages and the price of land are nominally high, while interest on capital is low, then the capitalist employs more labour and land in the one country, and in the other relatively more capital ("Capital," III, last part)."
These multilateral influences explain why the transfer of capital is committed very often not at all in a direction predestined by the difference in the organic composition of capital of different countries, but in the most diverse directions. Thus, for example, in an highly industrialized country the organic composition of capital is high, the general rate of profit is low, but with low interest on invested capital entrepreneurial profits may prove to be higher than in a backward country, and industrial capital will not have an incentive to move abroad. On the contrary, rent acts in the opposite direction: it is higher, the lower the interest on capital, and it promotes the of entrepreneurial profit in those countries where low interest causes a rise of this profit.
Mystically inclined minds could see in all this a kind of pre-established harmony. In fact! How else could culture spread over the terrestrial sphere, if capital, drawn to unknown shores by the thirst of accumulation, did not take on itself the civilizing mission. And can there not be together with this exist the concern, how with the "premature" liquidation of capitalism the reverse tendency would not prevail, - the tendency to autarky, to an "exodus" of capital from the colonies, or rather, to a stop of the flow of new capital towards there, etc.
That capitalism fulfilled "with blood and iron" a determined mission both in a world, and in the national scale - this is entirely indisputable. It would be pointless to engage predictions on how the matter would have turned without capital. The fact is that the world market and the world economy was created by it. Can one fear that with the elimination of capitalism a disintegration happens of this world economy? A monstrous idea! It sounds as wild and "persuasive," as the claim that with the death of capitalism modern culture and technology comes to an end. On the contrary! Doom could threaten, if the existence of capitalism would be delayed for a long time, and it could manage to exhaust itself in all respects, including in its world-economic mission. Precisely capitalism becomes now an obstacle on the road of the industrialization of such colossal countries, like the USSR, which it tries to block economically, like China, where it instead of capital sends now troops and munitions.
A world economy is needed now with higher unity, with unity of an higher type, than the world market, whereas post-war capitalism is powerless to arrange even the market on any tolerable basis. We are even not talking about the fact that the contradictions permeating the capitalist system have shown also in the methods, by which it established a world division of labor, which in its present form less than ever meets a rationalistic use of the labor forces of humanity. The elimination of capitalism cannot eliminate world-economic unity, cannot stop the genuine cultural mission of advanced countries, for the simple reason, that the existence of the latter is entirely inconceivable outside the intimate bond with backward countries, helping them in the matter of economic and technological reorganization. That which capitalism began, chasing after profit, the socialist revolution finishes through consciously directed effort, eliminating together with the category of capital all forms of exploitative trade and fraud, gradually eliminating also international trade in its present form. Perhaps, matters also will not come to the formation of a world average rate of profit and price of production. These categories thus also will remain unfinished.
Original title: Международный обмен и закон стоимости - И. Дашковский, Под Знаменем Марксизма
- 1. Editorial note. The editors do not share some of the positions of the article of c. Dashkovskij.
- 2. Capital, III, part 4, p. 302.
- 3. "Critique of...", page 174, "Moskovskij Rabochij" edition.
- 4. Capital, vol. I, p.566.
- 5. Theories II, p. 125.
- 6. Critique of the Gotha Program
- 7. In a sense this "inequality" is analogous to the so called "consumers rent," with which the psychological school assiduously potters. This rent, as known, is derived as a result of the oneness of the market price under a dissimilar financial position of the buyers-consumers. For the rich as for the poor consumer, a pound of bread for example, has one and the same price, although the marginal utility of the paid sum of money is many times lower for the first than for the second. Whence the consumers rent of the rich consumer. It could be destroyed only in case everyone would pay for the commodity a price which is proportional to one's financial position (more precisely, inversely proportional to the marginal utility of money for the buyer, as the psychological school formulates it). But then the unity of market prices would have disappeared, and together with it, also the market.
It's completely obvious that "consumers rent" is an empty word game and that the issue here lies not in psychological evaluations, but in the objective fact of financial inequality. But the analogy consists of the point that an equal measure - a single market price - applied to unequal figures - gives unequal results. The same thing happens with the scale of a single world value - with world money - when it becomes the measure of national value. One and the same sum of gold expresses different amounts of national labor time depending on the place which is occupied by a given country or nation on the ladder of labor productivity, while at the same time being a representative of a determined amount of average world labor.
- 8. "Critique of..., p.77.
- 9. Ibid, p. 99.
- 10. Ibid, p. 152.
- 11. Ibid, p. 153.
- 12. Capital III, part 4, p. 305.
- 13. See Sombart, Der moderne Kapitalismus, vol. II, 2, p. 901. Ed. 1924.
- 14. Another transportation paradox: the more perfect the means of communication, the cheaper the cost of transport, the greater degree the economy is exempt from territorial boundaries, but at the same time and for this same reason the meaning increases of any local feature, any, although insignificant, local advantage and the territorial division of labor deepens all the more. The ideal state of transport does not lead to the fact that all will produce everywhere (this "ubiquity" describes precisely the era of extreme backwardness of means of transfer), but, on the contrary, to the fact that every particular kind of production will be concentrated in special to it favorable places. Industrial differentiation of individual regions and territories increases with the development of transport, although this enhancement derives not only of the transport conditions, as such, but also of the fact of the transition from the "ubiquitous" raw materials and fabrics of production to localized raw materials and fabrics.
- 15. Th. Hodgskin, Popular political Economy, London 1827, pp. 252 - 253, Cited in "Theories of surplus value," vol. III, p. 262.
- 16. "Capital," vol.II, page 295.
- 17. Contemporary economists, like, for example, Schumpeter use this insignificant relative mass of available (наличных) fixed funds compared to the mass of products in order to prove that the capitalist form of economy has its basis not at all in the ownership of the means of production, but in the personal creativity of the capitalist, organizing the production (See J. Schumpeter, Theorie d. Wirtschaftlichen Entwicklung, ed. 1912, S. 630 and ff.).
Schumpeter prudently leaves the fact out of sight that the basis of this praised capitalist initiative forms precisely the production apparatus, which is owned by the capitalist.
- 18. R. Lieffmann, Vom Reichtum der Nationen, 1925, S. 23. In all this, of course, the duration of economic domination of these or other countries on the world market is much greater than the period of domination of advanced enterprises inside a country.
- 19. See E. Sax, Die Verkehrsmittel in Volks- und Staatswirtschaft, vol. II, 1879.
- 20. See Sartorius v. Waltershausen, Das Volkswirtschaftliche System der Kapitalanlage im Ausland, ed. 1907, p. 15.
- 21. S. Schilder, Entwicklungstendenzen der Weltwirtschaft, vol. II, p. 377.
- 22. Otto Bauer, Die Nationalitätenfrage u. die Sozialdemokratie, 2-te Auflage, 1924, S. 464.
- 23. "Capital," Volume I, page 625.
- 24. See Aereboe, Die Bevölkerungskapazität der Landwirtschaft, Berlin, 1927, p. 20.
- 25. How much the movement of the labor force is subject to the impact of economic factors, shows the pre-war data on immigration to the S. States. Here is what the researcher of this issue I. Gurvich says: "Comparative statistics of industry and population of the U. States show that immigration is determined in general by the opportunity to get a job. At the time of industrial expansion immigrants arrive in increasing numbers; during depression their number decreases. Further, immigration movement balances the emigration from the U. States. As a general rule the same reasons, which stall immigration into the country, accelerate at the same time the reverse movement away (I. Hourwich, Immigration and Labor, New York, 1912, p. 3)."
- 26. K. Bücher, Industrial Evolution, Petrograd, 1923, p. 228 and 239.
- 27. Ibid., p. 239.
- 28. In addition to the difference in standard of living between rural and urban, and also many other reasons, a significant role plays likewise the large steadiness of life in cities (and in industrialized countries), compared with the countryside (and agrarian countries). In previous times "with undeveloped means of communication, the urban population suffered from severe local oscillation in food prices due to fluctuation of crops, while the rural population experienced relatively weak fluctuations in their income: with crop failures prices rose, with yields they dropped, and whence the weak growth of the urban population...
With the improvement of means of transport the converse relationship between village and city is established. Independence from local fluctuations in the prices of agricultural products provides the urban population with a stable standard of living, while the welfare of the rural population becomes dependent on the harvest "(because prices are determined on the world market I.D.
- 29. Marx, Kapital, III, p. 176, II ed., 1919 (ed. by F. Engels).
- 30. The growth of the mobility of capital and labor, going hand in hand with the weakening tendency towards actual movement between points, achieving the highest maturity of conditions of movement, represents one of the forms of the "unity of opposites," which are generally characteristic of the capitalist system. On these assumptions, among others, are based numerous in our times attempts of the theoretical mathematical school of political economy to build a model of a stationary economy, possessing absolute mobility of all its elements and at the same time devoid of incentives to transfer, found in a state of absolute equilibrium. The so called "maximum theorem" articulates this state of equilibrium as a state in which the greatest efficiency is achieved from the perspective of society as a whole, and which therefore lacks incentives to further change once the situation is reached. The achievement of a general equal rate of profit - in terms of capitalism - also is the implementation of such a condition under which incentives disappear to further movements etc., although the implementation of this abstraction implies at the same time the greatest mobility of all elements of the economy (see in this regard the considerations in Schumpeter, "Das Wesen u. der Hauptinhalt der theoretischen Nationalökonomie, 1908, p. 196-212).
- 31. H. Moulton and McGuire, Germany's Capacity to Pay, p. 11 [15-16].
- 32. Marx, Capital, Vol III, p. 343.
- 33. S. and B. Webb, Industrial democracy, Newed. 1902. Appendix. II, p. 864.
- 34. Ibid., p. 865.