of the shirt, so it is reasonable to say that the value of the cotton is incorporated into the shirt. But the energy used in producing the shirt doesn’t end up in the shirt. And you certainly wouldn’t like it if bits of a machine ended up in the shirt. A distinction exists, therefore, between the physical transfers and the circulation of values. The two circulation processes are different because cotton is a physical, material use-value but value is immaterial and social (but nevertheless, as was earlier argued, objective). The raw materials also contain a certain amount of past value, as do the machines and other instruments of labor. All these accumulated past values are brought into a new production process in the form of dead labor that living labor reanimates. So the laborer in effect preserves the values already congealed in raw materials, partially manufactured products, machines and the like and does so by using them up (in productive consumption). Marx is going to make a great deal of the fact that the laborer does this favor for the capitalist gratis.
These past use-values and their congealed values don’t and can’t create anything new. They are simply used and preserved. Machines, for example, cannot create value. This is an important point, since it is often held, fetishistically, that machines are a source of value. But in Marx’s accounting schema, they absolutely are not. All that happens is that the value of the machine is transferred into the commodity during the labor process. But with machines there is a problem, because a machine may last for twenty years, and you are producing lots of shirts with it, so the question is how much of the value of the machine ends up in each shirt? The simplest way to account for the flow of value from the machine into the shirt is to say that, for example, one-twentieth of the value of a machine that lasts twenty years will flow each year into the shirts produced in that year. The labor process preserves all these values by passing them through into the commodity to be sold on the market. This can happen, notice, only because value is immaterial but objective, so it is open to being socially accounted for in this way.
Then there is the variable capital, the value given over to hiring the laborers. How does this circulate, and with what consequences? Dead labor is resuscitated and passed on into the value of the new commodity by living labor. This is a very important idea for Marx, and you can see immediately its political significance. Laborers have the power to destroy constant capital (e.g., machines) simply by refusing to work with it. If labor is withdrawn (and “productive consumption” ceases), then the transfer of capital from the machine to the final product stops, and the value of the constant capital is decreased or totally lost. Clearly, the laborer is potentially empowered by this, and to the degree that laborers perform this function they should surely claim some sort of remuneration for so doing. After all, if capitalists can argue for the right to surplus-value on the grounds that they bring employment to laborers, why cannot laborers argue that they deserve surplus-value because without their efforts all the constant capital held by capitalists would be valueless?
The laborers also add value by congealing socially necessary labor-time in products. But the value they create has two components. First, the laborers have to produce enough value to cover the costs of their own hiring. This, when rendered into money-form, permits the reproduction of labor-power at a given standard of living in a given place and time. The laborers spend their money to buy the commodities they want, need or desire in order to live. In this way, variable capital literally circulates through the body of the laborer in the C-M-C circulation process that reproduces the living laborer through individual consumption and social reproduction. The second aspect of variable capital concerns the production of surplus-value, the production of value over and above that which would be required to reproduce the laborers at a given standard of living. This surplus-value produces and reproduces the capitalist. Marx is, in effect, proposing a value-added theory of surplus-value production.
The total value of the commodity is made up of the value of constant and variable capitals plus the surplus-value (c + v + s). If the capitalist is to gain surplus-value, then it is the variable part that needs to be controlled. After all, machines don’t go on strike, and machines don’t behave in cantankerous ways (though they can sometimes appear to be temperamental). The active element in the labor process is variable capital. This is the “form-giving fire” of living labor applied to production. Again, there is a political point to this argument. “Look, dear workers,” Marx is saying, “you are the ones who are really doing all the work here. You are the ones who preserve values from the past. You are the ones who reproduce yourselves by way of your laboring. And you are the ones who produce the surplus-value that capital appropriates so that capitalists can live, all too often in luxury. Obviously, it is very much in the interest of the capitalists to make sure that you don’t recognize your central role and your massive powers. They prefer that you imagine yourself just going out and getting a job with a decent wage so that you can go home and reproduce yourself and your family, preferably fit enough to come back to work the next day. You are in a C-M-C circulation process, and they think you should confine your ambitions to that station in life.” Marx wants to counter this deliberate fetishization by alerting the working class to its true position in relation to surplus-value production and capital accumulation.
So the full circulation process of capital has been defined, and the definitions of constant and variable capital are laid out. “That part of capital,” he writes in summary form,
which is turned into means of production, i.e. the raw material, the auxiliary material and the instruments of labour, does not undergo any quantitative alteration of value in the process of production. For this reason, I call it the constant part of capital, or more briefly, constant capital … On the other hand, that part of capital which is turned into labour-power does undergo an alteration of value in the process of production. It both reproduces the equivalent of its own value and produces an excess, a surplus-value … I therefore call it the variable part of capital, or more briefly, variable capital. (317)
This leads into chapter 9, where Marx uses the categories he has just defined and examines the relationships between them in a more structured way. He here puts his accounting hat back on. Ostensibly, he is looking “for an exact expression” of the degree of exploitation of labor-power. But there are several ratio measures he comes up with that are of interest. Consider, for example, the ratio of constant to variable capital, c/v. This ratio is a measure of the productivity of labor, the value of means of production that a single value unit of labor-power can transform. The higher the ratio, the more productive the labor. Then consider the ratio of surplus-value to variable capital, s/v. This measures the rate of exploitation of labor-power. It is the amount of surplus-value that a single value unit of labor-power can produce. The higher the ratio, the greater the exploitation of labor-power. Finally, there is the rate of profit, which is the ratio of the surplus-value to the total value used (constant plus variable capital) or s/(c + v). The rate of profit is different from the rate of exploitation. The latter captures how much extra labor the laborers give up to the capitalist in return for the value they receive to reproduce themselves at a given standard of living. Of course, you can see straight away that the rate of profit is always lower than the rate of exploitation. If you complain about a high rate of exploitation, then the capitalists may show you their books to prove that their rate of profit is low. So you then are supposed to feel sorry for the capitalist and forget the high rate of exploitation! The more constant capital employed, the lower the rate of profit (with everything else held equal). A low rate of profit can accompany a high rate of exploitation. This is going to be a crucial argument for Volume III of Capital. Capitalists themselves work on the basis of the rate of profit, and they tend to allocate their capital according to wherever the rate of profit is highest. The result is a tendency (driven by competition) toward the equalization of the rate of profit. If I look at a situation and I think I can get a higher rate of profit over there, I take my capital over there. But that doesn’t necessarily lead me to make good decisions from the standpoint of maximizing the rate of exploitation, which is the key element the capitalist should be interested in. In fact, this is where the fetishism of the system captures the capitalist. Even if capitalists recognized all this, there wouldn’t be anything they could do about it. Competition drives them to make decisions on the basis of the rate of profit rather than the rate of exploitation. If they go to a bank to borrow money, then the bank will make its decisions based on the rate of profit, not on the rate of exploitation.
Of course, the ratio of surplus-value