Theories of Surplus Value (1861-3) by Karl Marx, which is often referred to as Volume IV of Das Kapital.

In Chapter 18 (online here), Karl Marx (1818-1883) discusses the economic works of David Ricardo (1772-1823) and John Barton Senior (1789-1852). Marx describes the work of the former as "hair-raising nonsense" and goes on: "as he says himself, he received the impetus for it from Barton’s work, which must therefore be examined." He's much kinder towards Barton's work, however, saying in the section reproduced below: "Mr. Barton, in the above publication, has, I think, taken a correct view of some of the effects of an increasing amount of fixed capital on the condition of the labouring classes. His Essay contains much valuable information" and "indisputably, Barton has very great merit", though he does go on to point out "Barton’s error or deficiency":

Part 2- Barton's Views

"[ Barton’s Thesis that Accumulation of Capital Causes a Relative Decrease in the Demand for Labour. Barton’s and Ricardo’s Lack of Understanding of the Inner Connection Between This Phenomenon and the Domination of Capital over Labour]

Barton’s work is called:

John Barton. Observations on the Circumstances which Influence the Condition of the Labouring Classes of Society, London, 1817.

Let us first gather together the small number of theoretical propositions to be found in Barton’s work.

“The demand for labour depends on the increasing of circulating, and not of fixed capital. Were it true that the proportion between these two sorts of capital is the same at all times, and in all countries, then, indeed, it follows that the number of labourers employed is in proportion to the wealth of the State. But such a position has not the semblance of probability. As arts are cultivated, and civilization is extended, fixed capital bears a larger and larger proportion to circulating capital. The amount of fixed capital employed in the production of a piece of British muslin is at least a hundred, probably a thousand times greater than that employed in the production of a similar piece of Indian muslin. And the ||748| proportion of circulating capital employed is a hundred or a thousand times less. It is easy to conceive that, under certain circumstances, the whole of the annual savings of an industrious people might he added to fixed capital, in which case they would have no effect in increasing the demand for labour” (l.c., pp. 16–17).

〈Ricardo comments on this passage in a note on page 480 of his work:

“It is not easy, I think, to conceive that under any circumstances, an increase of capital should not he followed by an increased demand for labour; the most that can he said is, that the demand will be in a diminishing ratio. Mr. Barton, in the above publication, has, I think, taken a correct view of some of the effects of an increasing amount of fixed capital on the condition of the labouring classes. His Essay contains much valuable information.”〉

To Barton’s above proposition we must add the following one:

“Fixed capital […] when once formed, ceases to affect the demand for labour,” (incorrect, since it necessitates reproduction, even if only at intervals and gradually) “but during its formation it gives employment to just as many hands as an equal amount would employ, either of circulating capital, or of revenue” (l.c., p. 56).

And:

“The demand for labour […] depends absolutely on the joint amount of revenue and circulating capital” (l.c., pp. 34–35).

Indisputably, Barton has very great merit.

Adam Smith believes that the demand for labour grows in direct proportion to capital accumulation. Malthus derives surplus population from capital not being accumulated (that is, reproduced on a growing scale) as rapidly as the population. Barton was the first to point out that the different organic component parts of capital do not grow evenly with accumulation and development of the productive forces, that on the contrary in the process of this growth, that part of capital which resolves into wages decreases in proportion to that part (he calls it fixed capital) which in relation to its size, alters the demand for labour only to a very small degree. He is therefore the first to put forward the important proposition “that the number of labourers employed is” not “in proportion to the wealth of the state”, that relatively more workers are employed in an industrially undeveloped country than in one which is industrially developed.
In the third edition of his Principles, Chapter XXXI “On Machinery”, Ricardo—having followed exactly in Smith’s footsteps in his earlier editions—now takes up Barton’s correction on this point, and moreover, in the same one-sided formulation in which Barton gives it. The only point in which he makes an advance—and this is important—is that, unlike Barton, he not only says that the demand for labour does not grow proportionally with the development of machinery, but that the machines themselves “render the population redundant” [l.c., p. 469], i.e., create surplus population. But he wrongly limits this effect to the case in which the net produce is increased at the cost of the gross produce. This only occurs in agriculture, but he also transfers it into industry. Essentially’ however, the whole of the absurd theory of population was thus overthrown, in particular also the claptrap of the vulgar economists, that the workers must strive to keep their multiplication below the standard of the accumulation of capital. The opposite follows from Barton’s and Ricardo’s presentation, namely that to keep down the labouring population, thus diminishing the supply of labour, and, consequently, raising its price, would only accelerate the application of machinery, the conversion of circulating into fixed capital, and, hence, make the population artificially “redundant”; redundancy exists, generally, not in regard to the quantity of the means of subsistence, but the means of employment, the actual demand for labour.

||749|
Barton’s error or deficiency lies in his conceiving the organic differentiation or composition of capital only in the form in which it appears in the circulation process—as fixed and circulating capital—a difference which the Physiocrats had already discovered, which Adam Smith had developed further and which became a prepossession among the economists who succeeded him; a prepossession in so far as they see only this difference—which was handed ‘down to them—in the organic composition of capital. This difference, which arises out of the process of circulation, has a considerable effect on the reproduction of wealth in general, and therefore also on that part of it which forms the wages fund. But that is not decisive here. The difference between fixed capital such as machinery, buildings, breeding cattle etc. and circulating capital, does not directly lie in their relation to wages, but in their mode of circulation and reproduction.
The direct relation of the different component parts of capital to living labour is not connected with the phenomena of the circulation process. It does not arise from the latter, but from the immediate process of production, and its [expression] is the relation of constant to variable capital, whose difference is based only on their relationship to living labour.
Thus Barton says for example: The demand for labour does not depend on fixed capital, but only on circulating capital. But a part of circulating capital, raw material andauxiliary materials, is not exchanged against living labour, any more than is machinery. In all branches of industry in which raw material enters as an element into the process of the creation of value— in so far as we consider only that portion of the fixed capital which enters into the commodity—it forms the most important part of that portion of capital which is not laid out in wages. Another part of the circulating capital, namely of the commodity capital, consists of articles of consumption which enter into the revenue of the non-productive class (i.e., [not of] the working class). The growth of these two parts of circulating capital therefore does not influence the demand for labour any more than does that of fixed capital. Furthermore, the part of the circulating capital which resolves into raw materials and auxiliary materials increases in the same or even greater proportion as that part of capital which is fixed in machinery etc.
On the basis of the distinction made by Barton, Ramsay goes further. He improves on Barton but retains his method of approach. Indeed he reduces the distinction to constant and variable capital, but continues to call constant capital fixed capital, although he includes raw materials etc., and [calls] variable capital circulating capital, although he excludes from it all circulating capital which is not directly laid out in wages. More on this later, when we come to Ramsay. It does, however, show the intrinsic necessity of the progress.
Once the distinction between constant capital and variable capital has been grasped, a distinction which arises simply out of the immediate process of production, out of the relationship of the different component parts of capital to living labour, it also becomes evident that in itself it has nothing to do with the absolute amount of the consumption goods produced, although plenty with the way in which these are realised. The way, however, of realising the gross revenue in different commodities is not, as Ricardo has it, and Barton intimates it, the cause, but the effect of the immanent laws of capitalistic production, leading to a diminishing proportion, compared with the total amount of produce, of that part of it which forms the fund for the reproduction of the labouring class. If a large part of the capital consists of machinery, raw materials, auxiliary materials etc., then a smaller portion of the working class as a whole will be employed in the reproduction of the means of subsistence ||750| which enter into the consumption of the workers. This relative diminution in the reproduction of variable capital, however, is not the reason for the relative decrease in the demand for labour, but on the contrary, its effect. Similarly: A larger section of the workers employed in the production of articles of consumption which enter into revenue in general, will produce articles of consumption that are consumed by— are exchanged against the revenue of—capitalists, landlords and their retainers (state, church etc.), [and a smaller) section [will produce] articles destined for the revenue of the workers. But this again is effect, not cause. A change in the social relation of workers and capitalists, a revolution in the conditions governing capitalist production, would change this at once. The revenue would be “realised in different commodities”, to use an expression of Ricardo’s.
There is nothing in the, so-to-speak, physical conditions of production which forces the above to take place. The workmen, if they were dominant, if they were allowed to produce for themselves, would very soon, and without great exertion, bring the capital (to use a phrase of the vulgar economists) up to the standard of their needs. The very great difference is whether the available means of production confront the workers as capital and can therefore be employed by them only in so far as it is necessary for the increased production of surplus-value and surplus-produce for their employers, in other words whether the means of production employ the workers, or whether the workers, as subjects, employ the means of production—in the accusative case—in order to produce wealth for themselves. It is of course assumed here that capitalist production has already developed the productive forces of labour in general to a sufficiently high level for this revolution to take place.

〈Take for example 1862 (the present autumn). The plight ‘of the Lancashire unemployed labourers; on the other hand, “the difficulty of finding employment for money” on theLondon money market, this has almost made necessary the formation of fraudulent companies, since it [is] difficult to obtain two per cent for money. According to Ricardo’s theory “some new field of employment ought to have been opened up,” for on the one hand there is capital in London, and on the other, unemployed workers in Manchester.〉

[ Barton’s Views on the Movement of Wages and the Growth of Population]

Barton explains further, that the accumulation of capital increases the demand for labour only very slowly, unless the population has grown to such an extent previously, that the rate of wages is low.

“The proportion which the wages of labour at any particular[ g ] time bear to the whole produce of […] labour […] determine the appropriation” of capital “in one way” (as fixed capital) “or the other” (circulating capital) ([John Barton, Observations on the Circumstances Which Influence the Condition of the Labouring Class of Society, London, 1817], p. 17).
“For if […] the rate of wages should decline, while the price of goods remained the same, or if goods should rise, while wages remained the same, the profit of the employer would increase, and he would be induced to hire more hands. If on the other hand, wages should rise in proportion to commodities” [the] “master[h]’ […] would […] keep as few hands as possible.— He would aim at performing every thing by machinery” (l.c., pp. 17–18).
“We have good evidence that population advanced much more slowly under a gradual rise of wages during the earlier part of the last century, than during the latter part of the same century while the real price of labour fell rapidly” (l. c., p. 25).
“A rise of wages, of itself, then, never increases the labouring population;—a fall of wages may sometimes increase it very rapidly. Suppose that” the Englishman’s demands should sink to the level of the Irishman’s. Then the manufacturer would engage more [workers][i] “in proportion to the diminished expense of maintenance” (l.c., p. 26).
“It is the difficulty of finding employment, much more than the insufficiency of the rate of wages, which discourages marriage” (l.c., p. 27).
“It is admitted that every increase of wealth has a tendency to create a fresh demand for labour; but as labour, of all commodities, requires the greatest length of time for its production”
〈for the same reason, the rate of wages can remain below the average for long periods, because of all commodities, labour is the most difficult to withdraw from the market and thus to bring down to the level of the actual demand〉
“so, of all commodities ||751| it is the most raised […] by a given increase of demand; and as every rise of wages produces a tenfold reduction of profits; it is evident that the accumulation of capital can operate only in an inconsiderable degree in adding to the effectual demand for labour, unless preceded by such an increase of population as shall have the effect of keeping down the rate of wages” (l. c., p. 28).
Barton puts forward various propositions here:
First: It is not the rise of wages in itself which increases the labouring population, but a fall in wages may very easily and rapidly make it rise. Proof: First half of the eighteenth century, gradual rise in wages, slow movement in population; in the second half of the eighteenth century, on the other hand, sharp fall in real wages, rapid increase in the labouring population. Reason: It is not the insufficient rate of wages which prevents marriages, but the difficulty of finding employment.
Secondly: The facility of finding employment stands, however, in inverse ratio to the rate of wages. For capital is transformed into circulating or fixed capital, that is to say, capital which employs labour or capital which does not employ it, in inverse proportion to the high or low level of wages. If wages are low, then the demand for labour is great because it is then profitable for the employer to use much labour, and he can employ more with the same circulating capital. If wages are high, then the manufacturer employs as few workers as possible and seeks to do everything with the aid of machines.
Thirdly: The accumulation of capital by itself raises the demand for labour only slowly, because each increase in this demand, if [labour is] scarce, causes [the wages] of labour to rise rapidly and brings about a fall of profit which is ten times greater than the rise in wages. Accumulation can have a rapid effect on the demand for labour only if accumulation was preceded by a large increase in the labouring population, and wages are therefore very low so that even a rise of wages still leaves them low because the demand mainly absorbs unemployed workers rather than competing for those fully employed.
This is all, cum grano salis, correct so far as fully developed capitalist production is concerned. But it does not explain this development itself.
And even Barton’s historical proof therefore contradicts that which it is supposed to prove.
During the first half of the eighteenth century, wages rose gradually, the population grew slowly and [there was] no machinery; moreover, compared with the following half of the century, little other fixed capital [was employed].
During the second half of the eighteenth century, however, wages fell continuously, population grew amazingly—and [so did] machinery. But it was precisely the machinery which on the one hand made the existing population superfluous, thus reducing wages, and on the other hand, as a result of the rapid development of the world market, absorbed the population again, made it redundant once more and then absorbed it again; while at the same time, it speeded up the accumulation of capital to an extraordinary extent, and increased the amount of variable capital, although variable capital fell relatively, both compared with the total value of the product and also compared with the number of workers it employed. In the first half of the eighteenth century, however, large-scale industry did not as vet exist, but only manufacture based on the division of labour. The principal component part of capital was still variable capital laid out in wages. The productivity of labour developed slowly, compared with the second half of the century. The demand for labour, and therefore also wages, rose almost proportionately to the accumulation of capital. England was as vet essentially an agricultural nation and a very extensive cottage industry—spinning and weaving—which was carried on by the agricultural population, continued to exist, and even to expand. A numerous proletariat could not as yet come into being, any more than there could exist industrial millionaires at the time. In the first half of the eighteenth century, variable capital was relatively dominant; in the second, fixed capital; but the latter requires a large mass of human material. Its introduction on a large scale must be preceded by an increase of population. The whole course of things, however, contradicts Barton’s presentation, in as much as it is evident that a general change in the method of production took place. The laws which correspond to large-scale industry are not identical with those corresponding to manufacture ||752|. The latter constitutes merely a phase of development leading to the former.
But in this context some of Barton’s historical data—comparing the development in England during the first half and the second half of the eighteenth century—are of interest, partly because they show the movement of wages, and partly because they show the movement in corn prices.
“… wages […] increased from the middle of the seventeenth, till near the middle of the eighteenth century, for the price of corn declined within that space of time not less than 35 per cent” [l.c., p. 25]. “The following statement will shew what proportion the wages of husbandry […] have borne[j] to the price of corn […] during the last seventy years.

Periods	Weekly pay	Wheat per quarter	Wages in pints of wheat
1742 to 1752	6s. 0d.	30s. 0d.	102
1761 to 1770	7s. 6d.	42s. 6d.	90
1780 to 1790	8s. 0d.	51s. 2d.	80
1795 to 1799	9s. 0d.	70s. 8d.	65
1800 to 1808	11s. 0d.	86s. 8d.	60

(l.c., pp. 25–26)
‘From a table of the number of Bills for the inclosing of land passed in each session since the revolution, given in the Lord’s Report on the Poor Laws” (1816?), “it appears that in sixty-six years from 1688 to 1754, that number was 123; in the sixty-nine[k] years from 1754 to 1813 it was 3,315.— The progress of cultivation was then about twenty-five times more rapid during the last period than the former. But during the first sixty-six years more and more corn was grown continually for exportation; whereas, during the greater part of the last sixty-nine years, we not only consumed all that we had formerly sent abroad, but likewise imported an increasing, and at last a very large quantity, for our own consumption … the increase of population in the former period, as compared with the latter, was still slower than the progress of cultivation might appear to indicate” (l. c., pp. 11–12).
“In the year 1688, the population of England and Wales was computed by Gregory King, from the number of houses, at five millions and a half.” The population in “1780 is put down by Mr. Malthus at 7,700,000. In ninety-two years then it had increased 2,200,000—in the succeeding thirty years it increased something more than 2,700,000. But of the first increase […] there is every probability, that the far greater part took place from 1750 to 1780” (l. c., p. 13).
Barton calculates from good sources that
“the number of inhabitants in 1750” [was] “5,946,000, making an increase since the revolution of 446,000, or 7,200 per annum” (l.c., p. 14).
“At the lowest estimate then […] the progress of population of late years has been ten times more rapid than a century ago. Yet it is impossible to believe, that the accumulation of capital has been ten times greater” (l. c., p. 14).
It is not a question of how great a quantity of means of subsistence is produced annually, but how large a portion of living labour enters into the annual production of fixed and circulating capital. This determines the size of the variable capital in relation to constant.
Barton explains the remarkable increase in population which took place almost all over Europe during the last 50 to 60 years, from the increased productivity of the American mines, since this abundance of precious metals raised commodity prices more than wages, thus in fact, lowering the latter and causing the rate of profit to rise (l.c., pp. 29–35). |XIII-752||"