DOCUMENT 16 Marx's Teaching on Production and Consumption (1930)

Isaak Il’ich Rubin

Source: I.I. Rubin, ‘Uchenie Marksa o proizvodstve I potreblenii^,, in Arkhiv K. Marksa i F. Engel’sa, Moscow: Gosudarstvennoe Izdael’stvo, 1930, pp.

Introduction by the Editors

In this essay, Isaak Rubin writes that the relation between production and consumption, although Marx did not treat it systematically in any single text, is nevertheless essential ‘for a proper understanding of the methodological foundations of Marx’s entire economic theory’. Rubin adds, however, that Marx’s views on the topic have ‘hitherto attracted attention not so much from Marxists as from Marx’s critics, who, with considerable monotony, have one after the other repeated the favourite argument that Marx ignores the process of consuming products and forgets the existence of use-value’. Rubin dismisses this argument and attributes it to the marginalist preoccupation with indi­vidualjudgements of utility, which are said to determine a commodity’s value.

Marx, in contrast, always regarded exchange-value in objective terms and treated consumption as one moment in the reproduction process as a whole. In his critique of the Austrian school, written in 1926 for the Great Soviet Encyc­lopaedia, Rubin had already objected that the Austrians excluded social classes; replaced capitalism with ‘pure economic activity’; transformed society into ‘an aggregation of individual Robinson Crusoes’; explained economic decisions in terms of ‘psychological experiences’; transferred the focus of research from the sphere of production to consumption; and thus ignored capitalism’s dynamic tendencies of development.

To this day, undergraduate textbooks explain a consumer’s purchase deci­sions by reference to the point of tangency between a ‘budget line’ and an ‘indifference curve’ (which maps equal utilities); producers, in similar man­ner, determine purchases of ‘factors of production’ at the point of tangency between an ‘equal-cost line’ and an ‘equal-product curve’.

The immediate incentive for Rubin’s study came from publication of sec­tions of Marx’s 1844 Manuscripts, which appeared in 1927 at the initiative of David B. Ryazanov, Rubin’s close friend and Director of the Marx-Engels Insti­tute. These notebooks, which Marx wrote for personal use as background for The Holy Family (1845), demonstrated more clearly than any other source Marx’s debt to Hegel and also to Ludwig Feuerbach’s anthropological reinter­pretation of the Hegelian dialectic of objectification and alienation.

Rubin begins by noting that Feuerbach replaced Hegel’s idealistic under­standing of ‘need’ with the natural needs of man. But Marx went beyond Feuerbach, as Ryazanov commented, by ‘further developing all the revolution­ary elements of the Hegelian dialectic’. Marx asked how the active nature of man manifests itself in work - in ‘the concrete activity of self-objectification’¹ - and how the things created to satisfy needs act in turn upon the producer, enriching his senses and his needs as an historically changing social being. Marx saw needs developing with the social division of labour in the historical process of social production: ‘The history of industry and industry as it objectively exists is an open book of the human faculties, and a human psychology which can be sensuously apprehended’.^{[800] [801]}

From general laws of the development of needs, Marx turned to needs and consumption in commodity-producing society.

For the worker even the need for fresh air ceases to be a need... Light, air, and the simplest animal cleanliness cease to be human needs. Filth, this corruption and putrefaction which runs in the sewers of civilization (this is to be taken literally), becomes the element in which man lives. None of his senses exist any longer, either in a human form, or even in a non­human form.^[803]

In the 1844 Manuscripts, Marx already interpreted consumption and the devel­opment of needs with reference to social class, but he had yet to provide an historical account of the relation between needs and production. At this point Rubin turns to The German Ideology,^[804] in which Marx described production of new needs as ‘the first historical act’.^[805] Whereas bourgeois economists assume a totality of needs to be given in advance and completely independent of the means to satisfy them, Marx linked production of needs with the developing means of production. Rubin observes that now ‘the mediating link between man and nature is the instrument of labour; and the enormous importance of the instrument of labour is emphasised both in the process of develop­ment of man’s productive activity and in the process of development of human needs’.

The next major text that Rubin considers is A Contribution to the Critique of Political Economy (1859).

While Hegel considers first ‘being’ and then ‘nothingness’, in order sub­sequently to reconcile themin ‘becoming’, Marxfollows the same scheme: first he considers both use-value and exchange-value as being; then comes the contradiction of their being, followed by exploration of their becom­ing, i.e. the process of the actual movement of commodities in exchange. The similarity with Hegel’s schemes can also be noted at another point: use-value and exchange-value are initially regarded as isolated determin­ations; then they enter into an external connection, and each is regarded as the external means for realisation of the other. Next comes the inter­penetration of these opposites when they adopt the form of the commod­ity and of money.^[807]

In the remainder of the document Rubin follows, through several levels of com­plexity, the relation between production and consumption in capitalist society.

Marx was concerned neither with the subjective usefulness of labour nor with the objective utility of the product, but rather with the production rela­tions between people. Having set out that methodological principle, Rubin then recounts the various ways in which use-value figures in ‘the determ­inations of economic form', moving from the commodity's initial change of form, through exchange, to the constant and variable forms of capital, which Marx distinguishes in terms of their respective social functions rather than any material-technical differences. In the reproduction schemes of Volume ii of Capital, the natural form of products had to be considered when examin­ing macroeconomic relations between the two departments of industry, but again Rubin emphasises that Marx was concerned principally with the social structure of the reproduction process, not with concrete use-values. Marx also attached unique importance to the ‘formal use-value' of money, as well as to the peculiar use-value of money-capital and of labour power to the capitalist (its capacity, as abstract labour, to create surplus value), but he did so in order to explain capitalism as a social form of production relations.

Rubin's theme throughout this essay is that use-value, while never absent from Marx's work, must always be considered in historical context and cannot be regarded as ‘an independent object for research in theoretical economics':

The capitalist production process is a unity of the labour process (i.e. the process of producing use-values) and the process of the production and expansion of value. Political economy takes the latter aspect of the production process, i.e. the process of the production and expansion of value, to be the special subject matter of its investigation. But the process of the expansion of value represents the form in which the process of the production of products, or of use-values, occurs. Thus, the latter process is always a part of our investigation, although not as an independent object for analysis by this science but rather as another side of the single process of reproduction, which we study as the ‘social structure of production' (Lenin). It follows that use-value is included within the ambit of our investigation only insofar as this is necessary in order to understand the process of the production and expansion of value.

Isaak Rubin on Marx’s Theory of Production and Consumption

Until now, Marxist literature has lacked a systematic presentation and analysis of Marx’s teaching on the link between production and consumption. Mean­while, this teaching is of great importance for a proper understanding of the methodological foundations of Marx’s entire economic theory. This teaching has hitherto attracted attention not so much from Marxists as from Marx’s crit­ics, who, with considerable monotony, have one after the other repeated the favourite argument that Marx ignores the process of consuming products and forgets the existence of use-value. The absurdities that critics reach on this point can be seen in the case of [Emil] Hammacher. The latter attributes to Marx ‘the false background idea that under capitalism the natural properties of the commodity are not valued at all’. And with the learned air of a connois­seur, Hammacher instructs Marx that ‘in the capitalist system, too, the material property of the commodity remains decisive’.^{[808] [809]}

Such absurd reproaches are explained by the completely different ap­proaches taken by Marx and his critics to the problem of use-value. The critics, being close to the Austrian school, or ‘reconciling’ exchange-value with use­value, regard the latter as the factor that determines the commodity’s value. Finding that Marx acknowledges no such role for use-value, they conclude that Marx ‘ignores’ the process of consumption. Further elucidation will convince us of the falsity of this conclusion. In numerous observations by Marx and Engels - which, it is true, are scattered throughout their various works and nowhere treated systematically - we do find considerable material for a proper understanding of the process of consumption, as one of the moments of the reproduction process as a whole. In this article, we intend to give a systematic presentation and analysis of this material, without attempting an exhaustive treatment of the question.

The question of the connection between production and consumption is a borderline question that is equally interesting both to the theory of historical materialism and to economic theory. We therefore find in Marx and Engels: 1) a general teaching on production and consumption, insofar as they represent necessary moments of reproduction in any economic formation; 2) a special teaching on production and consumption in capitalist society. We shall set out the first teaching in chapter I and the second in chapter ii. Finally, chapter iii is devoted to the question of the extent to which the consumption process falls within political economy's sphere of research; in particular, we shall devote considerable attention in the last chapter to ‘formal use-value', which plays a prominent role in Marxist theory but has not attracted the attention of investigators.

ι The General Teaching on Production and Consumption

In this chapter we present Marx's general teaching on the connection between production and consumption as it occurs in various economic formations, not merely in capitalist society. We shall arrange the presentation in chronological order, beginning with the early preparatory works by Marx for The Holy Family (1844), which were published by D.B. Ryazanov in the third volume of The Archive ofK. Marx and F. Engels.^{[810] [811] Following analysis of this work, we shall turn to The German Ideology (in the winter of 1845-6) and then conclude this chapter with the Contribution to the Critique of Political Economy (1858), in which Marx's general teaching on the connection between production and consumption finds it most complete formulation.}

1) Preparatory Work for The Holy Family

In the third volume of the Archive, D.B. Ryazanov published the early preparat­ory notes for The Holy Family, which were written by Marx in 1844.ⁿ During this period, Marx was still interested primarily in problems of philosophy, law and the state. But questions relating to theoretical economics - in the form of sep­arate observations or longer commentaries - were already closely intertwined with these issues. It is precisely because economic material, in these early works by Marx, was still not segregated from the philosophical and historical- sociological material, that analysis of it presents significant difficulties but is also of enormous interest. Together with very interesting observations on the division of labour, the connection of the division of labour with private property, etc., we find in this work the germ of the teaching on the connec­tion between production and consumption that Marx subsequently developed more fully in his Contribution to the Critique of Political economy and in other works.

During 1843-4 Marx was considerably influenced by the philosophical works of Feuerbach. As D.B. Ryazanov justifiably noted, however, ‘Marx, having adop­ted the anthropology of Feuerbach, differs from the latter by preserving and fur­ther developing all the revolutionary elements of the Hegelian dialectic’.^{[812] [813] The correctness of this observation is confirmed in Marx’s discussions of human needs, which we assemble below. They could only be formulated by Marx on the basis of an organic reworking of the ideas that he found in both Hegel and Feuerbach.}

The idea of the unity of human needs and the objects required to satisfy them was clearly expressed by Hegel.1³ But with him it assumes an idealistic character, since man is regarded purely as spiritual ‘self-consciousness’, and the object is something created by spirit itself in its own ‘otherness’ [Anderssein], having only the appearance, therefore, of independence in relation to the subject. The latter is conscious that the external thing is only the product of the otherness of self-consciousness, that it ‘belongs to its own essential nature and yet is lacking in it’. The subject sees in the external thing its own ‘one-sidedness’ and, at the same time, it knows that the object ‘contains the possibility of the satisfying its appetite [or desire], that the object is, therefore, conformable to the appetite and that just for this reason the latter is excited by the object’. Hence, there emerges in the subject the need to satisfy its desire through elimination (consumption) of the external thing, and thus to prove the imaginary character of the latter’s independence and its real identity with the subject itself. ‘By the satisfaction of appetite, the implicit identity of the subject and the object is made explicit [gesetzt], the one-sidedness of subjectivity and the apparent indifference of the object are superseded [aufgehoben]^,.

Bolland, the well-known commentator on Hegel’s works, expressed the basic idea of these arguments from Hegel with the following brief note: ‘The satisfac­tion of desires in fact shows the essential unity of opposites’, i.e. of the subject and the object. For Hegel, this unity has an idealistic character: the object is merely the otherness of the subject, and the latter represents the pure spir­itual essence of self-consciousness. Despite this idealistic character of Hegel’s conception, we see within it a number of interesting moments that Feuerbach and Marx subsequently developed further. These include: the subject's feeling of one-sidedness and ‘need' for the external object; the role of the latter as a necessary complement to the being of the subject itself; the correspondence of the external thing to the desires being satisfied through its assistance; and, finally, as a general philosophical foundation for all of these moments, the doc­trine of the unity of subject and object - interpreted, it is true, in an idealistic spirit.

Feuerbach reworked the teaching on needs in a materialistic spirit. We shall cite two typical quotations from him, taken from exactly those works that made the greatest impression on Marx during this period. In his ‘Preliminary Theses on the Reform of Philosophy' (1843), Feuerbach wrote: ‘Only the needy entity is a necessary entity. Existence without need is unnecessary existence... Only the entity rich in pain is a divine entity. An essence without suffering is an essence without an essence, an entity devoid of sensibility, devoid of matter'.^{[814] [815]}

Whereas man, for Hegel, experiences need for an external thing because the latter originates in the creative act of ‘other-being' by the purely spiritual essence of man himself, of his ‘self-consciousness', with Feuerbach the need for an external thing arises precisely from the sensuous, material nature of man. A non-material, purely spiritual man - despite Hegel's opinion - would have no need whatever for external things.

Feuerbach's thoughts [directed] against Hegel were even more pointed in his next work, Principles of the Philosophy of the Future (1843): ‘Only a sensuous being needs other, external objects for its being. I do need air in order to breathe, water to drink, light to see, vegetable and animal materials to eat; but nothing, at least directly, in order to think. That being that breathes necessarily relates itself to a being external to itself and has its essential object through which it is what it is outside itself 'd⁵

In 1844, when Marx wrote his preliminary work for The Holy Family, he relied upon Feuerbach's philosophy and waged a decisive struggle against Hegel's idealistic views. It is understandable, therefore, that in this early work, when discussing needs and consumption, he follows Feuerbach's example of strongly emphasising the sensuous nature of man. He writes:

Man is directly a natural being. As a natural being and as a living natural being he is, on the one hand, endowed with natural powers and faculties, which exist in him as tendencies and abilities, as drives. On the other hand, as a natural, embodied, sentient, objective being he is a suffering, conditioned and limited being, like animals and plants. The objects of his drives exist outside himself as objects independent of him, yet they are objects of his needs, essential objects which are indispensable to the exercise and confirmation of his faculties... To be objective, natural, sentient and at the same time to have object, nature and sense outside oneself, or to be oneself object, nature and sense for a third person, is the same thing. Hunger is a natural need; it requires therefore a nature outside itself, an object outside itself, in order to be satisfied and stilled. Hunger is the objective need of a body for an object which exists outside itself and which is essential for its integration and the expression of its nature. A being which does not have its nature outside itself is not a natural being and does not share in the being of nature. A being which has no object outside itself is not an objective being.^{[816] [817]}

The reader will easily notice the similarity between these words from Marx and the quotations provided above from the works of Feuerbach. As with Feuerbach, Marx takes the sensuous character of man as the starting point for his discussion, explaining man’s inseparable connection with nature. Marx writes that ‘Sense experience (see Feuerbach) must be the basis of all science’,1⁷ and on this foundation he erects his doctrine of needs. It is precisely from the sensuous nature of man that Marx, following Feuerbach’s example, draws the closest possible connection between human needs and the objects that serve for their satisfaction. As a natural being, man requires natural objects found outside himself; but these objects, on the other hand, serve precisely to satisfy man’s needs, to complement the manifestation of his life.

If Marx had confined himself to clarifying the sensuous-passive nature of man, he would not have moved beyond the circle of ideas sketched by Feuer­bach. But, as D.B. Ryazanov noted concerning the passage cited above, Marx, even in the period of his enthusiasm for Feuerbach, ‘preserves and further develops all the revolutionary elements of the Hegelian dialectic’. And we shall also find confirmation of this fact in Marx’s teaching on needs and consump­tion. In this early work by Marx that we have been discussing, man already appears not merely as a passive being, experiencing the need for external objects, but also as an active, historically changing and social being.

In the passage cited above, Marx already characterises the nature of man from the very outset in terms of his active-passive duality. Man is not merely a passive being, suffering from unsatisfied needs, but also an active being, who is endowed with ‘natural forces' that become manifest in his activity. Whereas Hegel treated the active side of man in terms of the abstract and purely spir­itual activity of ‘self-consciousness', Marx replaces it with ‘the replete, living, sensuous, concrete activity of self-objectification',^[818] that is, with the activity of labour. But man, with his labour activity, already appears not just as a nat­ural but also as a social being: ‘The activity of labour and spirit, both in their content and in their mode of appearance, are social activity and social spirit'd^[819] Man's historically changing nature follows from his social nature: ‘The whole of what is called world history is nothing but the creation of man by human labour'.^{[820] [821]}

As we see, even though Marx took Feuerbach's ‘natural' man as the starting point for his discussion, he did not stop there. From natural man he turned to social man, to the active and historically changing man. And it was precisely with regard to social man that he further developed his essential thoughts on the connection between production and consumption.

It is in society that the connection already noted, between human needs and the objects that serve to satisfy them, appears with the greatest force. In society, all objects appear not in the form directly given by nature; they are no longer natural objects but are created by man himself. They represent the manifestation of his vital powers, a social manifestation of man's own nature.

It is only when objective reality everywhere becomes for man in society the reality of human faculties, human reality, and thus the reality of his own faculties, that all objects become for him the objectification of himself. The objects then confirm and realize his individuality^

The objects themselves appear as humanised, i.e. as the result of human activ­ity and the manifestation of human powers.

However, man’s activity changes not merely the external objects to which it is immediately directed but also the very sensitivities of man himself, his needs. ‘Man’s musical sense is only awakened by music’.^{[822] [823]}

The senses of social man are different from those of non-social man. It is only through the objectively deployed wealth of the human being that the wealth of subjective human sensibility (a musical ear, an eye which is sensitive to the beauty of form, in short, senses which are capable of human satisfaction and which confirm themselves as human faculties) is cultivated or created?³

It is only in the presence of the objectively developed wealth of the human essence, i.e. the diverse world of objects, created through human activity, that the development and refinement of human needs, of human sensitivities, becomes possible. In this manner, a simultaneous process occurs of the human­isation of the world of things surrounding man, and also of the sensitivities (needs) of man himself; and this process results from the activity of man, which serves, in turn, to manifest the vital forces inherent in human nature.

Marx’s thinking, evidently, takes the following course. The active nature of man manifests itself in active work, and thus also in the things it helps to create. These things, created for the satisfaction of human needs, act in turn upon man, enriching his senses and his needs. It is precisely because this vigorous activity of man simultaneously transforms both the objects of the external world and the needs of man himself, that complete correspondence emerges between human needs and the objects that serve to satisfy them. The needs and the objects needed are not two different series of phenomena, alien to one another and interacting externally. What we see is mutual interpenetration of these series of phenomena, for the objects are created by human activity precisely for the satisfaction of needs, and the latter, in turn, become developed and enriched only under the influence of the surrounding, humanly created world of objects. Here Marx already sets out quite clearly the idea of the dialectical connection and interpenetration of man’s needs and the objects that serve to satisfy them. In this early work, he already overcame the widespread view that needs and objects are only externally connected. He already overcame here the fallacy of bourgeois economists, who begin their discourses with the existence of human needs - which they regard as given in advance and not connected to the production process and the world of things it creates - and then treat objects as external means for the satisfaction of these given needs. It is enough just to point out that the Austrian school's entire doctrine concerning needs is founded precisely upon such a purely mechanical representation of the connection between needs and objects. There is no need to add that such representation lay at the basis of Bentham's utilitarian theory and of all those economists of the Ricardian school who followed him on this question. In the work that we are examining, Marx already scornfully rejected this utilitarian and hedonistic psychology, which considers phenomena ‘from the viewpoint of an external relation of utility', and for which the ‘great wealth' of human creativity is expressed only in such terms as ‘need, common need'.^{[824] [825] [826] Marx provided a further and more detailed critique of this utilitarian psychology in his work aimed at [Max] Stirner, which was first published by D.B. Ryazanov in the fourth volume of the Archive ofK. Marx and F. Engels.25}

22

²3

His understanding of the dialectical connection between needs and external objects opened up for Marx wide possibilities for a proper interpretation of the laws of the development of human needs. In fact, in the work already cited we find the germ of the idea that the entire process of the development of human senses and needs results from the development of human activity itself.

The cultivation of the five senses is the work of all previous history. Sense which is subservient to crude needs has only a restricted meaning. For a starving man the human form of food does not exist, but only its abstract character as food. It could just as well exist in the most crude form, and it is impossible to say in what way this feeding-activity would differ from that of animals.2⁶

Here Marx sets out the idea that even when we speak of the need for food, which is rooted in the physical nature of man, this need itself changes and assumes different forms in the course of historical development, i.e. it is a product of history. (A further development of this same idea, again with ref­erence to hunger, is given by Marx in his Contribution to the Critique of Political Economy, of which we shall have more to say later).

Marx then gives a still more precise formula of the development of needs. Since needs develop and are enriched together with enrichment of the world of objects that surrounds man, and since the world of objects is created by human labour, or by industry, it follows that we must look for a final explanation of the process of the change of human needs in the process of industry’s development. In the history of industry, we must find the explanation for the process of development and the growing complexity of human sensitivities and needs. ‘The history of industry and industry as it objectively exists is an open book of the human faculties, and a human psychology which can be sensuously apprehended’.^[827] Industry is ‘the exoteric manifestation of the essential human faculties’.^{[828] [829]}

The discussions by Marx that we have been presenting, which were in his preliminary work for The Holy Family, already contain the nucleus of fruitful thoughts concerning the connection between production and consumption. Needs do not stand mechanically in opposition to external objects but are instead regarded as inseparably connected with the latter. The very process of the development of human needs is considered as an historical process, whose course depends upon the development of industry, i.e. of vital human activity, of human labour. Nevertheless, in the discussions by Marx that we have been considering there remain certain inadequacies that are possibly explained by the influence of Feuerbachian philosophy. Marx begins his discussions with reference to the essential powers of man, which are manifested in the activity that gives birth to the diverse world of objects. The process of simultaneous and parallel enrichment of the world of objects and of human needs is con­sidered as the manifestation of man’s essential powers, as the discovery of his inclinations, which exist - even if in undeveloped form - in the nature of man. Moreover, although Marx already emphasises the importance of vital, practical activity - in the sense of causes that bring about the change of human needs - what stands out is not so much the vital activity of man in the production pro­cess as the perception of things that this activity generates.

To this point we have outlined Marx’s thinking on the general laws of the development of needs. We can presuppose that the conditions for the enrich­ment of human sensitivities and needs that Marx describes can only fully exist, in his opinion, in a socialist society. The picture that is given, of the ‘natural’ development of human sensitivities and needs under the influence of the grow­ing diversity and enrichment of the world of objects, is treated by Marx as an ideal that comes to full realisation in socialist society?⁹ As the antithesis of this picture of the growth of human needs, Marx portrayed for us the state of affairs that prevails in the bourgeois economy.

Let us now turn to the analysis of needs and consumption in a bourgeois eco­nomy. Marx does not yet distinguish between simple commodity economy and capitalist economy, but we shall try to separate those features in his comments that are typical of any commodity economy from those specific to capitalist economy. Marx characterises bourgeois society as follows:

Society, as it appears to the political economist, is civil society, in which each individual is a totality of needs and only exists for another person, as another exists for him, in so far as each becomes a means for the other.^[830]

This characterisation of bourgeois society, which is frequently encountered in Marx, is developed by him in more detail in The Holy Family:

Since the need of one individual has no self-understood sense for the other egotistic individual capable of satisfying that need and therefore no direct connection with its satisfaction, each individual has to create that connection; it thus becomes the intermediary between the need of another and the object of that need^{[831] [832] [833]}

It is easy to see here that Marx has in mind a peculiarity that characterises any commodity economy: every individual satisfies his needs only by means of satisfying the needs of others. This particular aspect of the process of satisfying human needs in commodity economy was observed even by Adam Smith, who wrote in the second chapter of his Wealth of Nations:

... man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them.3²

It is probably due to Smith's influence that Hegel also noted the interdepend­ence of members of ‘civil society' in the satisfaction of their needs.33

Marx expressed the identical thought in the passage that we cited above, characterising the fundamental peculiarity of the process of satisfying needs in commodity economy. Subsequently, in the Critique of Political Economy, Marx developed this idea that satisfaction of the producer’s needs in commodity economy is possible only by means of exchange. From this idea he derived a whole series of extremely important and interesting conclusions regarding the contradiction between use-value and exchange-value. But, in the early work that we are examining, Marx had yet to undertake the analysis of simple commodity economy. He noted the interdependence of commodity producers in satisfying their needs only in order to turn directly to capitalist economy and to reveal all of its essential and irremediable flaws. He did this in the excerpt from the early works that was published by D.B. Ryazanov under the heading ‘Need, Production and Division of Labour’.^{[834] [835] [836]}

Marx begins this passage with the following considerations. Once the com­modity producer can satisfy his needs only after first satisfying the needs of another individual, his interest is in artificially awakening in the latter a new kind of need.

Every man speculates upon creating a new need in another in order to force him to a new sacrifice, to place him in a new dependence, and to entice him into a new kind of pleasure and thereby into economic ruin. Everyone tries to establish over others an alien power in order to find there the satisfaction of his own egoistic need.3?

The result is artificial awakening of refined, unnatural and even imaginary lusts, fantasies, caprices and whims.

No eunuch flatters his tyrant more shamefully or seeks by more infamous means to stimulate his jaded appetite, in order to gain some favor, than does the eunuch of industry, the entrepreneur, in order to acquire a few silver coins or to charm the gold from the purse of his dearly beloved neighbor... The entrepreneur accedes to the most depraved fancies of his neighbor, plays the role of pander between him and his needs, awakens unhealthy appetites in him, and watches for every weakness in order, later, to claim the remuneration for this labor of love.^[837]

Hence the growing refinement of needs, the whims of the rich, the quest for luxuries and profligate consumption.

It is easy to show here that Marx is gradually making the transition from simple commodity economy to capitalist economy. He moves from the fact that every commodity producer can satisfy his needs only by means of exchange to the conclusion that sellers need to awaken the artificial need of the buyer for items of luxury. But it is perfectly obvious that the latter can only occur in class society, where the possessing classes acquire for themselves a greater mass of surplus value. The possibility of profligate luxury is created precisely through the exploitation of one class by another; it is not the result of sellers awakening artificial needs on the part of buyers, as Marx still suggests in this early work.

The great interest that Marx and Engels, in their early works, take in the prob­lem of luxury and wastefulness is to be explained mainly by the way in which they were influenced by the works of utopian socialists, who saw in the luxur­ies and profligacy of the idle rich one of the foremost evils of capitalist society. Marx's interest in the problem of luxury is also partly explained by the fact that this question was a topic of heated debates between two groups of eco­nomists in the classical school. Those economists who represented the land­owning aristocracy (Malthus, Lauderdale and others) argued that the landown­ers' wasteful way of life, involving consumption of significant luxuries, creates the market for capitalist industry. Economists who represented the industrial bourgeoisie (Ricardo, Say and others) demonstrated, in opposition to the first group, the great damage resulting from non-productive consumption on the part of idle landowners, and they recommended the thrift that contributes to accumulation of new capitals and to the expansion of production. In the early work that we are examining, Marx treats in detail this quarrel between the sup­porters of luxury and those of thrift, demonstrating the fallacies in the positions of both sides. The former economists were in error when they proposed waste­fulness as a direct means of enrichment, but the other side was

hypocritical in not admitting that it is caprice and fancy which determine production. They forget the ‘refined needs’, and that without consump­tion there would be no production. They forget that through competi­tion production must become ever more universal and luxurious; that consumption determines the value of a thing, and that consumption is determined by fashion.^[838]

We can see that Marx was still influenced here by arguments developed in the quarrels over luxury by the utopian socialists on the one hand, and by Malthus and his supporters on the other. Marx still attaches decisive importance to the refined needs of the rich, to their whims and caprice, overestimating their sig­nificance for the process of capitalist production as a whole. He even refers to the opinion of economists that a thing’s ‘value is determined by use’, probably having in mind a similar doctrine from Say. The same thought, concerning the influence of the whims of the rich on the value of products, was expressed by Engels in his early article ‘Outlines of a Critique of Political Economy’, in which he wrote that ‘utility depends on chance, on fashion, on the whim of the rich’^[839]

If we leave aside the exaggerated importance that Marx attributes to non­productive consumption by the rich, we can note one very valuable feature of these early reflections. From the very outset he poses the entire problem of con­sumption in terms of a class point of view: he characterises the consumption of the separate classes that constitute capitalist society and meticulously notes the features typical of each of them. Marx describes the profligate way of life that he regards as typical of the landlord class; the industrial bourgeoisie, to the contrary, displays a sober and prosaic way of thinking. It is true that the indus­trialist, as we have already seen, artificially awakens a need in buyers and thus promotes the consumption of items of luxury. But, in the further course of its development, the industrial bourgeoisie actively comes out against the luxury and wastefulness of landowners.

Of course, the industrial capitalist also has his pleasures. He does not by any means return to an unnatural simplicity in his needs, but his enjoyment is only a secondary matter; it is recreation subordinated to production and thus a calculated, economic enjoyment, for he charges his pleasures as an expense of capital and what he squanders must not be more than can be replaced with profit by the reproduction of capital. Thus enjoyment is subordinated to capital and the pleasure-loving individual is subordinated to the capital-accumulating individual, whereas formerly the contrary was the case.^[840]

Here Marx again clearly notes the class character of consumption, the various specific features that characterise consumption by the industrial capitalists, and how it differs from the consumption of landowners.^[841]

However, while the different character of consumption on the part of differ­ent classes already emerges clearly when speaking of landowners and indus­trial capitalists, the class character of consumption appears still more strikingly with regard to the opposition between the possessing classes and the work­ers. Capitalist society simultaneously creates, on the one hand, ‘refinement of needs and of the means to satisfy them' while, on the other hand, it produces ‘a bestial savagery, a complete, primitive and abstract simplicity of needs’^[842] As in the case of other socialists, Marx paints in vivid colours the low level and the simplicity of needs to which the worker is brought in capitalist society. For the worker, not only does the process of gradual enrichment of human needs - which Marx previously described in a society devoid of class differ­ences - cease to operate; in a capitalist economy, not even the purely physical or natural needs, which the worker experiences due to his physical nature, are satisfied.

For the worker even the need for fresh air ceases to be a need... Light, air, and the simplest animal cleanliness cease to be human needs. Filth, this corruption and putrefaction which runs in the sewers of civilization (this is to be taken literally) becomes the element in which man lives. Total and unnatural neglect, putrefied nature, becomes the element in which he lives. None of his senses exist any longer, either in a human form, or even in a non-human, animal form^[843]

Whereas we previously traced the gradual enrichment and humanisation of sensitivities and needs, now we observe the reverse process of the degradation of human needs to the level of animal needs and even beyond. Marx illustrates this process again by taking the example of food.

It is not enough that man should lose his human needs; even animal needs disappear. The Irish no longer have any need but that of eating - eating potatoes, and then only the worst kind, mouldy potatoes.^{[844] [845]}

But Marx regards the workers’ consumption not just as the striking antithesis of consumption by the profligate rich; he emphasises not only their sharp oppos­ition but also the inseparable connection between them. And here we see the fruitfulness of the dialectical method with which Marx operates throughout all of his works. The wasteful consumption of the rich and the meagre con­sumption of workers are two sides of one and the same capitalist society; they complement and mutually condition each other. ‘The growth of needs and of the means to satisfy them results in a lack of needs and of means'.44 The indus­trial bourgeoisie draws profit both from the debauchery of the landlords and from the crude needs of the workers.

The crude need of the worker is a much greater source of profit than the refined need of the wealthy. The cellar dwellings in London bring their landlords more than do the palaces; i.e., they constitute greater wealth as far as the landlord is concerned and thus, in economic terms, greater social wealth. Just as industry speculates upon the refinement of needs so also it speculates upon their crudeness, and upon their artificially produced crudeness^[846]

Marx already notes here the enormous importance for capitalist production not only of luxurious consumption by the propertied classes but also of the mass consumption of simple products by the workers. As we have already seen, however, the young Marx still exaggerates the role of luxuries, as did other early socialists. Subsequently, in The Poverty of Philosophy, Marx assigns primary importance to items of mass consumption.

We can see that the preliminary notes for The Holy Family contain several interesting commentaries by Marx regarding both the laws of development of human needs in general and, in particular, the character of consumption in capitalist society. As for the first part, there Marx emphasises the historically variable character of man's needs and the inseparable connection between the process of development of needs and the process of development of human activity, expressed in the process of production. In the second part, in his con­sideration of capitalist economy, Marx dramatically portrays the class charac­ter of consumption and notes the specific features of consumption by land­lords, industrial capitalists and workers. In this respect, even in his early notes, Marx surpasses many of his contemporary bourgeois economists, who con­trived to discuss ‘consumers' without first of all drawing a clear distinction between worker-consumers and capitalist-consumers. However, Marx's treat­ment of consumption by the different classes is not yet connected with an analysis of the capitalist production process as a whole; instead, it involves separate observations that have more of a sociological and journalistic char­acter rather than an economic one. A second shortcoming of these discussions of capitalist economy is the fact that they are not connected with the preced­ing commentaries on the laws of development of human needs in general. The second excerpt, in which Marx paints consumption in capitalist society, is more of an antithesis to the thinking in the first excerpt than a continuation and development. The first excerpt deals with the enrichment of human needs, the second with their coarsening. In the first manuscript, the issue is humanisa­tion of the senses and of needs, whereas in the second they are deprived of their human character (and this applies not just to the starving worker but also to the profligate rich, as Marx notes).^[847] The first manuscript deals with the ‘natural' process of enrichment of human needs in a society without class differences, while the second describes the ‘anti-natural' character of consumption by the workers, as well as by the rich, in capitalist society.

2) The German Ideology

Marx's subsequent thinking moved in the same two directions that we have already noted in the preliminary work for The Holy Family. On the one hand, Marx had to formulate in more detail and more precisely his views on the general laws of the development of human needs; on the other hand, he had to connect the problem of consumption in capitalist economy with an analysis of the process of capitalist production as a whole. Marx completed the first task in The German Ideology and in his Contribution to the Critique of Political Economy. He worked on completing the second task in The Poverty of Philosophy and in Capital. For the sake of clarity of presentation, in what follows we shall separate these two problems and deal, first of all, with Marx’s doctrine concerning the law of development of human needs insofar as this pattern holds for any social formation. Marx dedicated several interesting observations to exactly this question in The German Ideology, written in the winter of 1845­6 and published by D.B. Ryazanov in the first volume of the Archive ofK. Marx and F. Engels.^[848] On this question, as on others, Marx took an important step forward in The German Ideology compared with the preparatory work for The Holy Family. This is perfectly understandable, for it was precisely in The German Ideology that Marx and Engels gave the first broad outline of their theory of historical materialism. The question of the development of human needs constitutes a part of the theory of historical materialism, and for that reason it is perfectly natural that Marx and Engels, in The German Ideology, gave a more precise formulation of their ideas regarding the development of needs and of consumption.

Whereas Marx began the notes for The Holy Family with man as a natural being, his starting point in The German Ideology is the existence of individuals who are distinguished in terms of a definite physical nature. ‘Thus the first fact to be established is the physical organisation of these individuals and their consequent relation to the rest of nature’.^[849] Due to their physical nature, people have definite needs for food, a habitation, etc.

Men must be in a position to live in order to be able to ‘make history’?^[850] But life involves before everything else eating and drinking, a habitation, clothing and many other things. The first historical act is thus the pro­duction of the means to satisfy these needs, the production of material life itself.^[851]

Here Marx clearly emphasises the decisive role of production for the whole of human life, while in the preliminary work for The Holy Family he more fre­quently uses the vague term ‘human activity'. This emphasis upon the role of the production process immediately gave Marx the possibility of correctly pos­ing the question of the law-governed development of needs. Marx portrayed the connection between the development of production and the growth of needs in the following manner, which has great significance for our theme. Marx initially wrote these words: ‘The facility acquired in satisfying original needs now gives birth to new needs'.^{[852] [853] [854] But these words were crossed out by Marx and replaced with the following: ‘The satisfaction of the first need (the action of satisfying, and the instrument of satisfaction which has been ac­quired) leads to new needs; and this production of new needs is the first his­torical act'.52}

It may seem, at first, that there is no great difference between the original version of the sentence, which was crossed out, and the final version; in fact, the difference between them is significant. In the first version of the sentence, Marx (or Engels) had not yet finally broken with the notion, widespread at the time, of so-called unlimited human needs. According to this notion, which is widespread to this day in bourgeois political economy, the needs of man are by nature infinite, and precisely which portion of these needs will in fact be sat­isfied depends on the availability of external resources. The totality of needs is taken as something given in advance and completely independent of the means for satisfying them. External things appear only in the role of means for the satisfaction of needs that are given in advance. In view of the unlim­ited character of needs, the satisfaction of one portion of them quickly calls forth other needs, which follow in terms of their degree of intensity. The mech­anical opposition between unlimited needs and the limited world of external means for satisfying them, and the detachment of needs from the production process - these are the distinguishing features of this conception^³ Marx's discussion of the dialectical connection between needs and external objects, which he outlines in the early manuscripts for The Holy Family, precludes for him any possibility of believing in the fiction of an unlimited world of needs that exists independently of the development of the production process itself. Indeed, in the new version of the sentence, Marx provides a completely differ­ent conception of the development of needs: already the issue is no longer one of the appearance of needs that exist in themselves (even though they cannot, in fact, be satisfied), without any dependence upon the given process of pro­duction; now it is the very process of production that brings forth new needs. A process occurs of giving ‘birth to new needs’, and this process results from devel­opment of the process of man’s productive activity. Marx particularly notes here the enormous role played by the appearance of new means of produc­tion. Development of the means of production plays a revolutionising role not only in the process of man’s productive activity but also in the development of human needs themselves.

In The German Ideology, the dialectical connection between production and needs is already clarified much more appropriately than in the preliminary work for The Holy Family. Whereas in the earlier work Marx already emphasised the importance of man’s vital activity, in the subsequent work this idea is replaced by a more precise concept of the production of material life. While Marx already spoke in the previous work of the effect of man upon nature, now the mediating link between man and nature is the instrument of labour; and the enormous importance of the instrument of labour is emphasised both in the process of development of man’s productive activity and in the process of development of human needs. Finally, whereas in Marx’s earlier work one encounters, alongside a proper understanding of the historical character of the process of change in human needs, references to man’s natural endowments, now the problem of the change of human nature itself is posed with greater force and specificity.

Despite the proper framing of the problem of the connection between pro­duction and consumption in The German Ideology, this problem still required further elaboration. Only in his final formulation of the theory of historical materialism - and particularly in his economic theory, which is set out in the three volumes of Capital - did Marx provide a number of more concrete ref­erences to the laws of the development of needs. In The German Ideology, the question was still not sufficiently worked out; it is quite understandable, therefore, that along with a generally correct formulation of the dependence of the development of needs upon development of man's productive activity, we also encounter repetition of the current and widespread views concerning the dependence of change in needs on the growth of population. Marx says in one place that ‘increased needs create new social relations and the increased population new needs'.^{[855] [856] [857] [858] [859] [860] Elsewhere, we read that at the basis of the increase of labour productivity and the growth of needs is the increase of population^ To explain the flourishing of weaving during the epoch of early capitalism, Marx refers to the demand for cloth for clothing that comes with the increase of pop­ulation^6 Together with population growth, as a factor determining the level of needs, Marx also refers to the state of culture. He speaks of more coarse or developed needs being conditioned by the existing level of culture^7}

The German Ideology is simultaneously a sociological and an historical study; on the one hand, Marx and Engels set out here the general foundations for the theory of historical materialism, while on the other hand - based upon this theory - they attempt to outline a picture of the economic and social-political development of Europe from the Middle Ages up to the epoch of capitalism. It is understandable, therefore, that together with general discussions of the con­nection between production and consumption, we find a number of separate and brief observations regarding the peculiarities of the process of consump­tion in capitalist economy. We find the interesting comment that in capitalist society, based upon the division of labour, there is already the possibility that ‘enjoyment and labour, production and consumption - devolve upon differ­ent individuals'. Subsequently, as we shall see, Marx often returns to this idea of the detachment of consumption from production in commodity economy, and especially in capitalist economy. Marx further notes that the emergence and growth of towns signifies the ‘concentration' of needs,5⁸ a fact that actu­ally does characterise the process of consumption in capitalist society. We also find the point that the need for items of luxury grows under the influence of an increasing accumulation of capital and the expansion of commerce⁷¹ Here we already have a more realistic and historically correct explanation of the grow­ing need for items of luxury than we find in the notes for The Holy Family.

3) A Contribution to the Critique of Political Economy

In the Contribution to the Critique of Political Economy, Marx presents in a much more complete manner his doctrine regarding the relation between production and consumption. Here Marx specifically discusses the question of the rela­tion between the various moments of the reproduction process as a whole, i.e. between production, in the narrow sense of the word, consumption, and dis­tribution and exchange. Marx devotes a small section of the work, including several very interesting pages, to the specific question of the mutual relation between production and consumption.^[861] We shall see that the issue in this sec­tion is not only the particular features of the consumption process in capitalist economy but also the broader question of the connection between production and consumption in general. Marx shows that this connection is threefold. We can briefly designate these three forms of connection between production and consumption as 1) their direct identity, 2) their external opposition, and 3) their mutual interpenetration.

First of all, we notice the immediate identity between production and con­sumption. Every act of production is also directly an act of consumption, both of labour power itself and of means of production (materials, machines, etc.). On the other hand, every act of consumption represents reproduction of human labour power, i.e. is an act of producing labour power. We can regard both acts (production and consumption) as production. The first act involves production of things; the second, production of human labour power. But we are equally justified in regarding both acts as consumption. In the first act, labour power and means of production are consumed; in the second, the means of consumption that are required for the reproduction of labour power. ‘Pro­duction is thus at the same time consumption, and consumption is at the same time production. Each is simultaneously its opposite’^[862]

However, this direct identity of production and consumption does not in the slightest degree exclude their opposition; we must not close our eyes to the fact that in the one case we have the production of objects that are needed to sat­isfy human needs, whereas in the other case we have the production of labour power, i.e. the consumption of those same objects that were previously pro­duced. In the first stage, human labour power creates objects in the course of productive activity, whereas in the second stage the objects are consumed by man and reproduce his labour power. Each of these acts excludes the other act. The act of production does not include the consumption of means of subsist­ence, which is necessary for restoration of the expended labour power; on the other hand, in the act of consumption, things are by no means produced but are expended and eliminated. Therefore, together with the immediate iden­tity of production and consumption there is also their immediate opposition, the opposition between production, in the narrow sense of the word, and con­sumption in the narrow sense, as between two mutually exclusive acts. ‘The direct unity, in which production is concurrent with consumption and con­sumption with production, does not affect their simultaneous duality’.^[863]

The opposition between the acts of production and consumption does not mean the absence of any connection between them. They are connected, but only as two external acts that are foreign to one another. An ‘intermediary’ movement occurs between them; each of these acts mediates the other, i.e. serves as its external means. Indeed, consumption cannot exist without pro­duction, for in that case there would be no thing or object that could be con­sumed. But without consumption, on the other hand, the very act of produc­tion would be pointless. True, the object might be produced, but, if it does not enter into consumption, it remains simply a natural thing and not a product; it is only a product when it serves the goals of consumption.

We have established, therefore, the link between production and consump­tion: ‘each appears as a means of the other, as being induced by it’, which is the expression of their mutual dependence^^[864] This dependence, however, has an external character; it connects two phenomena that are foreign and external to each other. It is a movement in which they are ‘brought into mutual relation and appear to be indispensable to each other, but nevertheless remain external to each other’^[865]

Thus far we have considered first the direct identity of production and consumption and then their direct opposition. But, if we look more closely at the connection between them, we discover that they are essentially two acts of one and the same process of reproduction. Each act necessarily passes over into the other and, at the same time, includes the latter within itself (although this inclusion is not direct, as in the first case, but rather occurs as the moment of opposition). If we look at the act of production not as an isolated act but rather as a regular and recurring process, we shall see that its first moment - production in the narrow sense - must necessarily pass into the second moment - consumption in the narrow sense. Production cannot resume afresh while the product has not been consumed or the labour power, which was expended in the production process, has not been restored. It is only consumption, by restoring labour power, that creates the possibility of the production process being repeated; at the same time, it creates the necessity for such consumption because disappearance of the product makes further consumption impossible and requires a new production process. Production necessarily causes consumption, which in turn requires the ensuing act of production. Consumption, which necessitates the ensuing act of production, simultaneously guarantees repetition of the act of production. ‘Each of them by being carried through creates the other, it creates itself as the other’ (Kautsky inserted a question mark here, but there is no doubt that Marx intended to use precisely this terminology).^{[866] [867] The necessity of this recurrence expresses the fact that production and consumption, each in the narrow sense, represent merely two subordinate moments of the single process of reproduction.}

The necessary passage of one moment into the other is complemented by their interpenetration. Each of these moments includes the other within itself, but here the issue is not their direct identity, as in the first case, but rather their mediated identity. Each of the two moments, without ceasing to differ from the other, at the same time contains it within itself. Consumption penetrates production, and production penetrates consumption.

Consumption’s penetration of production consists of the fact that in the very act of production the ensuing act of consumption is already anticipated, and the object is produced specifically for the act of consumption. Even before the object is produced, it already exists ideally in the mind of the producer ‘as an internal image, a need, a motive, a purpose’.

Consumption creates the need for new production, and therefore pro­vides the conceptual, intrinsically actuating reason for production, which is the pre-condition for production. Consumption furnishes the impulse to produce, and also provides the object which acts as the determining purpose of production.*’*’

Production is directed in advance to a determinate end, to creation of a determ­inate object that serves consumption. Marx comments upon this peculiarity of human labour in Capital:

A spider conducts operations which resemble those of the weaver, and a bee would put many a human architect to shame by the construction of its honeycomb cells. But what distinguishes the worst architect from the best of bees is that the architect builds the cell in his mind before he constructs it in wax. At the end of every labour process, a result emerges which had already been conceived by the worker at the beginning, hence already existed ideally.^{[868] [869] [870]}

If consumption penetrates and influences production, the reverse is also true - production penetrates consumption and determines its character. The very mode of consumption is determined by the mode of production. ‘Production provides not only the object of consumption, it also gives consumption a dis­tinct form, a character, a finish’^⁸ The very character of consumption changes in accordance with a change of the production process and of the character of products that result from it.

The object is not simply an object in general, but a particular object which must be consumed in a particular way, a way determined by produc­tion. Hunger is hunger; but the hunger that is satisfied by cooked meat, eaten with knife and fork, differs from hunger that devours raw meat with the help of hands, nails and teeth. Production thus produces not only the object of consumption but also the mode of consumption, not only objectively but also subjectively. Production therefore creates the con- sumer.6⁹

We encounter here the same example of hunger that Marx already referred to in his preliminary works for The Holy Family. There, too, he distinguished the human form of hunger from the animal way of satisfying the need for food. But here he emphasises even more clearly the historically variable character even of those needs that are grounded directly in the physical nature of man. Under the influence of change in the production process, the character of the need for food and the mode of satisfying it also change. Insofar as the issue is not consumption in general but a determinate mode of consumption (for example, of cooked meat with the aid of a knife and fork), this determinate mode of consumption is already the result of a determinate condition of production and, consequently, it includes the latter within itself as its own condition.

Production calls forth not only a determinate character of need and con­sumption, but also completely new needs. Economists customarily operate with a broad and indeterminate conception of the need for food, clothing, etc. What is actually involved is not only the need for food in general but also the need for concrete items with which the members of a given society and a given class customarily satisfy their need for food. But the need for determinate items is not something given in advance; it results from the adoption of these very same items. In the preliminary notes for The Holy Family, Marx already said that the very development of human activity summons forth the development of human senses, that only music awakens man’s musical sensitivities. He devel­ops these thoughts further in the work that we are presently analysing. Need itself arises from the object:

The need felt for the object is induced by the perception of the object. An objet d’art creates a public that has artistic taste and is able to enjoy beauty - and the same can be said of any other product. Production accordingly produces not only an object for the subject, but also a subject for the object. Hence, production produces consumption: 1) by providing the material of consumption; 2) by determining the mode of consump­tion; 3) by creating in the consumer a need for the objects which it first presents as products. It therefore produces the object of consumption, the mode of consumption and the urge to consume.^[871]

One can easily see that these commentaries by Marx on production and con­sumption are arranged in a scheme that reminds us of the dialectical triad. At first, Marx considers the direct unity or identity of production and con­sumption; then he turns to their opposition in order, at the third stage of the discussion, to show the unity of these opposites, or the interpenetration of pro­duction and consumption. At the second stage of the discussion, production and consumption are regarded as phenomena that are external to one another, each serving as external means for the other. At the third stage, production and consumption are already being considered from the viewpoint of the law of the unity and interpenetration of opposites.

It would be a mistake to think that Marx adopts this scheme here out of love for Hegelian schemes. Marx uses the Hegelian schemes only when they reflect actual reality. And there is no denying that the link between production and consumption is actually encountered in all three of the forms that Marx discusses: as a direct identity of production and consumption, as an external interaction, and as an internal unity and interpenetration.

Even more interesting is the fact that, in the triad we have been consider­ing, Marx endeavoured not only to reflect actual reality but also to show that the thinking of economists, which was submerged in the analysis of capital­ist reality, dwelt first on the one and then on the other member of this triad. He shows that the direct identity of production and consumption attracted the attention of economists, who considered it in their investigations of productive labour and productive consumption.^{[872] [873] [874] [875] The external interaction also, in Marx words, attracted economists’ attention: ‘There is no consumption without pro­duction, and no production without consumption. This proposition appears in various forms in political economy’?2 Finally, Marx observes that the third type of connection between production and consumption, namely, their inter­penetration, likewise did not escape the view of economists: ‘The last kind of identity, which is defined in point 3, has been variously interpreted by econom­ists when discussing the relation of demand and supply, of objects and needs, of needs created by society and natural needs’?3 But, whereas economists before Marx restricted themselves to separate remarks concerning the connection between production and consumption and usually saw it in a one-sided man­ner, with Marx we see in several pages of the Contribution to the Critique of Political Economy a synthetic understanding of how production and consump­tion are connected as moments of the single process of reproduction.}

Starting from these considerations, Marx investigates not only the unity of production and consumption but also their differences and opposition.

The conclusion which follows from this is not that production, distribu­tion, exchange and consumption are identical, but that they are links of a single whole, different aspects of one unit. Production is the decisive phase, both with regard to the contradictory aspects of production and with regard to the other phases. The process always starts afresh with pro­duction?⁴

The unity of production and consumption does not exclude the fact that the driving moment of the entire process of reproduction is precisely production, not consumption. ‘That exchange and consumption cannot be the decisive elements is obvious’.^{[876] [877] [878] Production is the ‘actual point of departure’ and thus the decisive moment.}

Consumption, as a necessity and as a need, is itself an intrinsic aspect of productive activity; the latter, however, is the point where realisation begins and is therefore also the decisive phase in which the entire process repeats itself from the beginning. An individual produces an object and, by consuming it, returns again to the point of departure: he returns, however, as a productive individual and as an individual who reproduces himself. Consumption is thus a moment of production?⁶

This doctrine of the primacy of production over consumption is the conclu­sion that must follow from the entire preceding exposition of Marx’s teach­ing on consumption. Consumption is the passive reception of things that are created by human labour; the latter is the active creative moment and, pre­cisely because of its active character, the driving moment of the whole of social life. It is not only the satisfaction of needs that is dependent upon production; need itself, as we have already seen above, expresses a determ­inate active manifestation of human power and a perception of the external things that result from this creative activity. Thus, the whole of social life is regarded by Marx as a single process of vital human activity, as the process of reproduction of human life, in which consumption is one of the intermediary moments.

We have presented a detailed exposition of Marx’s reasoning in the Contri­bution to the Critique of Political Economy. In this work, Marx summarised his teaching on the connection between production and consumption as it occurs in any kind of economic formation. Most of the reasoning that Marx presents here is equally applicable both to a capitalist and to a feudal economy, and even to the economy of a single subject. ‘Production and consumption, if con­sidered as activities of one subject or of single individuals, appear in any case as moments of one process whose actual point of departure is production, which is accordingly the decisive factor’.77 Marx shows here that the stated laws of the connection between production and consumption become much more com­plex when it is a case not of a separate individual but of an entire society.

But in society, the relation of the producer to the product after its com­pletion is purely extrinsic, and the return of the product to the subject depends on his relations to other individuals. The product does not imme­diately come into his possession. Its immediate appropriation, moreover, is not his aim, if he produces within society. Distribution, which on the basis of social laws determines the individual’s share in the world of products, intervenes between the producer and the products, i.e., be­tween production and consumption.^[879]

If, in any social formation, the connection between production and consump­tion is complicated by the fact that distribution stands between them, it ac­quires an especially complex form in capitalist society. Here any understanding of this connection becomes impossible apart from an analysis of exchange and distribution, and an analysis of the entire class structure of capitalist society.

11 Production and Consumption in a Commodity-Capitalist Economy In commodity-capitalist society, the connection between production and con­sumption becomes considerably more complex. With commodity economy in general, the intermediate position between production and consumption is taken by exchange: the commodity must pass through the sphere of exchange in order to reach the sphere of consumption. Insofar as capitalist economy is involved, rather than just commodity economy, the decisive influence on the process of consumption becomes the specific class structure of capitalist soci­ety, with its corresponding distribution of incomes between the different social classes. We shall consider these complex forms of the connection between pro­duction and consumption in the second and third sections of this chapter. In the first section, we provide a summary of Marx’s observations concerning the transition from natural economy to commodity-capitalist economy, with its gradual increase of the role of exchange-value as the motivating purpose of the production process.

1) Use-Value and Exchange-Value as the Motivating Purpose of the

Production Process

In commodity economy, the product becomes a use-value for its owner only through its alienation. This means that the commodity producer is directly interested not in his product’s qualities as a use-value, but rather in the mag­nitude of its exchange-value. This is the basis for the general distinction be­tween two types of economy: in certain social formations the use-value of the product is of primary significance, while in others it is the exchange-value. The most vivid example of the former economy is the purely natural economy of primitive peoples, which has no exchange at all; the clearest example of the second sort of economy is developed capitalist production. We often encounter in Marx the distinction between these two types of economy, but we also find him pointing to a whole series of intermediate types of economy that represent the gradual transition from a purely natural to a capitalist economy.

In a purely natural economy, use-value prevails exclusively; for instance, the entire production process of the patriarchal family has nothing to do with exchange and aims directly at satisfying the needs of its members. The first breach in this natural economy comes with the appearance of some product or other in a quantity that surpasses the immediate needs of the given economy.^[880] On the basis of a geographic division of labour, various products are produced by different communities in quantities that exceed the needs of members of a particular community. On this basis arises the first exchange between differ­ent communities; and a given product, being a direct use-value for members of the community, is also partially transformed into a commodity for external exchange. But, since the given product is produced mainly for their own con­sumption, it is not yet a commodity prior to the act of exchange and only becomes such in the act of exchange itself.^[881] We can characterise this stage of exchange as the exchange of surplus production, in which the product only begins to be transformed into a commodity and becomes such only in the actual exchange act.

The next stage of exchange starts from the moment when some of the products begin to be produced especially for exchange.

The need for others’ objects of utility gradually establishes itself. The constant repetition of exchange makes it a normal social process. In the course of time, therefore, at least some part of the products of labour must be produced intentionally for the purpose of exchange. From that moment the distinction between the usefulness of things for direct con­sumption and their usefulness in exchange becomes firmly established. Their use-value becomes distinguished from their exchange-value.^[882]

So long as exchange still has the character of natural exchange, i.e. the direct exchange of products, the separation of exchange-value from use-value is still concealed; the product, in its natural form, serves simultaneously as both use­value and exchange-value. ‘The articles exchanged do not acquire a value­form independent of their own use-value, or of the individual needs of the exchangers'.8^[883] The character of the commodity, as exchange-value, does not become fully developed since the commodity still does not possess the ability to be exchanged for any other product of social labour. The exchange-value of the commodity acquires an independent form only with the appearance of money and its separation from the entire world of other commodities.

While the production of a surplus product brought the appearance of ex­change, the further development of exchange, in turn, ‘promotes the genera­tion of a surplus product designed to go into exchange, so as to increase the consumption or the hoards of the producers (which we take here to mean the owners of the products). It thus gives production a character oriented more and more towards exchange-value'^[884]

Trade naturally reacts back to a greater or lesser extent on the communit­ies between which it is pursued; it subjects production more and more to exchange-value, by making consumption and satisfaction more depend­ent on sale than on the direct use of the product. In this way it dissolves the old relationships. It increases monetary circulation. It no longer just takes hold of surplus production, but gradually gobbles up production itself and makes entire branches of production dependent on it. This solvent effect, however, depends very much on the nature of the com­munity of producers^[885]

In societies where conditions did not exist for the development of capitalism, a significantly developed monetary exchange existed side by side with vari­ous forms of natural economy (the patriarchal family, slave-owning economy, the feudal manor). Thus the development of trade, on the one hand, increas­ingly imparted to the economy the character of production whose purpose was exchange-value, yet the primary goal of the economy still remained the produc­tion of use-value. ‘The circulation of money and commodities can serve spheres of production with the most diverse organisation, which in their internal struc­ture are still oriented principally to the production of use-values’.^[886]

We have outlined several stages in the development of production and exchange, with the gradual strengthening of the role of exchange-value: a purely natural economy, the occasional exchange of surpluses, production of a part of the output especially for exchange, and the gradual increase of that part at the expense of the part intended for direct consumption. It can be said that a struggle occurs in these stages of development between use­value and exchange-value for the role of driving purpose or impelling motive of the production process. They fulfil this role simultaneously, with gradual displacement of the role of use-value and gradual strengthening of the role of exchange-value. This process is only finally completed in capitalist economy.

The extent to which production goes into trade and passes through the hands of merchants depends on the mode of production, reaching a maximum with the full development of capitalist production, where the product is produced simply as a commodity and not at all as a direct means of subsistence^[887]

It is only with fully developed capitalist production that we have the complete dominance of exchange-value. However, we can theoretically imagine this dominance of exchange-value also in the conditions of simple commodity economy, assuming that the latter is the prevalent type of economy and has squeezed out the remnants of natural production. If we imagine a society of simple commodity producers (handicraftsmen, for instance), who produce their entire product for sale, we find that the direct purpose of production is already exchange-value, not use-value. The immediate objective of the simple commodity producers consists of acquiring, through sale of their products, the greatest possible sum of exchange-value. However, even if use-value has already lost the role of motivating purpose for production, it still continues to fulfil this role indirectly by means of exchange-value (money). Indeed, in the society that we are assuming, the handicraftsman spends the sum of money received from sale of the product on the purchase of items that serve to satisfy his needs (together, of course, with necessary means of production). Here there is commodity circulation according to the formula C-M-C; the money, in this case, serves the handicraftsman only as a means to acquire the sum of items of consumption that he requires. Hence, the dual position that a simple commodity economy occupies. It is distinguished from natural economy by the dominance of exchange-value, which is the motivating purpose of the production process itself. But, by comparison with capitalist economy, it is still characterised by production to satisfy the personal needs of the producers themselves (not directly, it is true, but rather indirectly through the medium of money). It is precisely from this point of view that Marx clearly counterposes two forms of circulation, C-M-C and M-C-M:

The path C-M-C proceeds from the extreme constituted by one com­modity, and ends with the extreme constituted by another, which falls out of circulation and into consumption. Consumption, the satisfaction of needs, in short use-value, is therefore its final goal. The path m-c-m, however, proceeds from the extreme of money and finally returns to that same extreme. Its driving and motivating force, its determining purpose, is therefore exchange-value.^{[888] [889]}

The repetition or renewal of the act of selling in order to buy finds its measure and its goal (as does the process itself) in a final purpose which lies outside it, namely consumption, the satisfaction of definite needs.88

The simple circulation of commodities - selling in order to buy - is a means to a final goal which lies outside circulation, namely the appro­priation of use-values, the satisfaction of needs. As against this, the circu­lation of money as capital is an end in itself, for the valorisation of value takes place only within this constantly renewed movement... Use-values must therefore never be treated as the immediate aim of the capitalist^[890]

It may appear, at first sight, that Marx contradicts himself here. He previ­ously said that the development of commerce increasingly gives production the character of production with the goal of exchange-value. It would seem that, with the complete prevalence of simple commodity economy, the sole purpose of production is already exchange-value, not consumption, yet Marx declares that the final goal of the circuit C-M-C is use-value. The seeming con­tradiction vanishes if we recall that a long process of historical development is involved, which begins with purely natural economy and ends with developed capitalism. This protracted process of historical development is characterised by exchange-value gradually squeezing out use-value as the motive and pur­pose of production. It is completely understandable, therefore, that any given stage, by comparison with the previous one, reveals the increasing prevalence of exchange-value while at the same time, when compared to the subsequent stage of development, it reveals an insufficient ascendancy of exchange-value. That is particularly the case with the intermediate place occupied by simple commodity economy. In the latter, the goal of production is immediately ex­change-value alone, although ultimately, or in the final analysis, the goal of production is to satisfy the personal needs of the producer himself. Thus, in all three of the excerpts that we have just cited, Marx says that use-value is the ‘final’ (but not the immediate) goal of the circuit C-M-C.

Marx draws a sharp distinction between the two types of circulation, C- M-C and M-C-M. The difference between simple commodity economy and capitalist economy is expressed by the difference between these two forms of circulation. Faithful to the dialectical method, which enjoins us to look for gradual transitions between opposing forms of phenomena, in this case too Marx endeavours to follow exactly the transitional forms between the two circuits. Marx specifies these transitional forms when investigating the functions of money as a hoard and as means of payment. Within the limits of commodity circulation C-M-C itself, forms emerge that prepare the transition to the circuit m-c-m. In the circuit C-M-C, sale occurs in order that the money received may be used to acquire necessary means of consumption. However, if the commodity producer retains the money acquired through sale in the form of a hoard, in that case commodities are sold ‘not in order to buy commodities, but in order to replace their commodity-form by their money-form. Instead of being merely a way of mediating the metabolic process [Stoffwechsel], this change of form becomes an end in itself’.^[891] Or, as Marx says in the Critique of Political Economy, ‘Exchange-value, which was merely a form, is turned into the content of the movement’; that is to say, it fulfils, in rudimentary form, the role that it fulfils in a more developed manner in the circuit M-C-M. Whereas the final goal of the circuit C-M-C is to satisfy the personal needs of the producer, the withholding of money in the form of a hoard already requires that the commodity producer refrain from satisfying his personal needs.^[892]

When investigating the function of money as means of payment, Marx notes another transitional form between the two circuits of commodity circulation. If the commodity producer sells his product in order, with the money acquired, to retire a monetary obligation entered into previously, then use-value has already ceased to be the final purpose of his sale.

The money no longer mediates the process. It brings it to an end by emerging independently, as the absolute form of existence of exchange­value, in other words the universal commodity. The seller turned his commodity into money in order to satisfy some need; the hoarder in order to preserve the monetary form of his commodity, and the indebted purchaser in order to be able to pay. If he does not pay, his goods will be sold compulsorily. The value-form of the commodity, money, has now become the self-sufficient purpose of the sale, owing to a social necessity springing from the conditions of the process of circulation itself^{[893] [894]}

In this case, sale of the commodity no longer has the satisfaction of needs and of the producer’s personal inclinations as its final goal.

In analysing the functions of money as a hoard and as means of payment, we have seen the further marginalisation of use-value as the final goal of com­modity production and exchange, a process that finally reaches completion, as we noted earlier, in the circuit M-c-M.

The circuit of money capital is thus the most one-sided, hence most striking and characteristic form of appearance of the circuit of industrial capital, in which its aim and driving motive - the valorisation of value, money-making and accumulation - appears in a form that leaps to the eye...9³

This circuit expresses the fact that exchange-value, not use-value, is the end in itself that determines the movement; and it ‘expresses money-making, the driving motive of capitalist production, most palpably. The production process appears simply as an unavoidable middle term, a necessary evil for the purpose of money-making’.^[895]

Whereas in simple commodity economy the producer endeavoured, by sel­ling his product, to receive a determinate sum only in order to use it to satisfy his personal needs, the opposite occurs in capitalist economy; the production of use-value serves merely as a means to extract profit for the expansion of capital.

Use-value is certainly not la chose qu’on aime pour lui-meme in the pro­duction of commodities. Use-values are produced by capitalists only be­cause and in so far as they form the material substratum of exchange­value, are the bearers of exchange-value^[896]

The striving for unlimited enrichment also characterised the accumulator of a hoard, but in the case of the simple commodity producer, who does not exploit another person’s labour, this could only occur to a limited extent. This pursuit could only find a broad sphere of operation in a society founded upon class antagonism and exploitation of the surplus-labour of a significant number of people^[897]

Thus capitalist economy differs markedly from that ‘commodity production, whose purpose is the existence of the producers’.^[898] That is why Marx always vehemently protests against vulgar political economy, which conceives the capitalist production process as

the simple production of commodities, use-values destined for consump­tion of some kind or other, which the capitalist produced only in order to replace them with commodities of a different use-value, or to exchange them with these, as vulgar economics incorrectly puts it^{[899] [900]}

In capitalist society, use-value no longer plays the role of indirect purpose of production as it did in simple commodity economy.

In capitalist economy, exchange-value has overwhelming significance, not use-value. However, even within the limits of capitalist economy itself, in order to mark all the dialectical transitions between different stages of the process, Marx notes the gradually strengthening role of exchange-value at the expense of use-value. In this connection, Marx draws a distinction between the simple reproduction of capital and expanded reproduction. With simple reproduc­tion, the entire mass of surplus value is spent to satisfy the personal needs of the class of capitalists. Although the purpose of the production process is expan­sion of surplus value, i.e. conversion of the sum M into (M+m), the whole of the extracted sum of surplus value (m) is expended only on satisfying the per­sonal needs of the capitalists. This is explained by the following statement from Marx:

Simple reproduction is oriented by nature to consumption as its aim. Even though the squeezing out of surplus-value appears as the driving motive of the individual capitalist, this surplus-value - no matter what its proportionate size - can be used here, in the last analysis, only for his individual consumption.99

With the will to do so, a captious critic might see a contradiction in Marx’s remark even here. Previously Marx argued that the aim of capitalist economy, as distinct from simple commodity economy, is the expansion of exchange­value, yet now he says that the aim of simple reproduction of capital is con­sumption. But, in this case too, the apparent contradiction vanishes with a proper understanding of the dialectical movement of Marx’s thought. By com­parison with simple commodity economy, the simple reproduction of capital signifies an increase in the role of exchange-value at the expense of use-value. With the transition from simple to expanded reproduction, we observe a fur­ther increase in the role of exchange-value.

The remarks that we have cited from Marx show that, for capitalists, the motive of personal consumption, while it does not play the predominant role in capitalist production, still retains a certain importance. ‘In so far as simple reproduction is also part of any annual reproduction on an expanded scale, and the major part at that, this motive remains alongside the motive of enrichment as such and in opposition to it’.^[901] While the motive of personal consumption persists for the capitalists, however, it still gives way gradually to the motive of enrichment. In other words, simple reproduction, as such, contradicts the very essence of capitalist economy and necessarily passes over into expanded reproduction; and it is only with the latter that the scale of personal consump­tion by the capitalists steadily diminishes relative to the accumulated part of surplus value. Only expanded reproduction represents the type of economy in which the predominance of exchange-value acquires full force.

As we see, Marx describes a complex picture of the gradually increasing role of exchange-value at the expense of use-value. We can note the following stages in this lengthy historical process:

1) Purely natural economy, characterised by the complete rule of use-value.

2) The incidental exchange of surplus products. The motivating purpose of production is still use-value, and exchange-value is only beginning to emerge.

3) Part of the product is produced Intentionally for exchange; the goal of production is simultaneously use-value and exchange-value. The relative force of each depends upon the relative volume of production that is intended for personal use and production that is intended for the market.

4) Simple commodity economy, in which all products are produced for sale. The immediate motive for production is exchange-value, but indirectly its purpose is to satisfy the personal needs of the commodity producers.

5) Transitional forms from simple commodity economy to capitalist eco­nomy (the hoard and means of payment). Sale of the product no longer has the goal of satisfying the personal needs of the commodity producers.

6) Capitalist economy, in the form of simple reproduction. The goal of pro­duction is the increase of exchange-value, or the extraction of surplus value, but the resulting sum of surplus value is spent entirely on satisfying the personal needs of the capitalist.

7) Capitalist economy, in the form of expanded reproduction, where the resulting surplus value is accumulated as capital while only a small and steadily diminishing part of it is spent on satisfying the personal needs of the capitalist.

2) The Contradiction between Use-Value and Exchange-Value^[902]

In the first chapter, we examined the link between production and consump­tion in the general form that it assumes in any economic formation. Now we turn to investigate the connection between production and consumption in commodity economy, and we begin the analysis with the particular features of simple commodity economy, or a society of simple commodity producers. Its characteristic feature is the separation of production from consumption - a separation that develops together with the development of commodity eco­nomy itself. In natural economy, the product is a use-value for the producer himself; at a further stage of development, the products that are produced in excess, and therefore are not required for satisfying the needs of their owner, enter into exchange. The nucleus of the value form appears; the process of transforming use-values into commodities begins. If exchange still has a nat­ural character, the exchanging products are still directly use-values, although neither of them is a use-value for its owner. Ultimately, when the products are produced specifically for sale in an unknown market, the final separation of exchange-value from use-value occurs. All the products being produced are now commodities for sale, not for satisfying the needs of the producers them­selves. On the other hand, the producer now acquires all the products that he needs with the help of exchange. The product becomes a commodity, which has a dual nature - as use-value and as exchange-value.

Marx analyses this dual nature of the commodity in the opening pages of the Critique of Political Economy and of Capital. By way of analysis, Marx dissects the single commodity into its two sides, each of which he considers separ­ately. On the first two pages, he briefly considers the commodity’s use-value, in order subsequently to undertake a detailed analysis of the commodity’s other side, its value. Through an analytical approach, Marx here examines the differ­ence between the two aspects of the commodity. But following this analytical dissection of the commodity, Marx turns to a synthetic investigation of the actual exchange process, wherein commodities appear simultaneously as both use-values and exchange-values. Marx emphasises, in both the Critique and in Capital, the need to move from an isolated examination of the commodity’s separate aspects to a synthetic examination of the commodity’s movement as a whole. ‘So far two aspects of the commodity - use-value and exchange-value - have been examined, but each one separately. The commodity, however, is the direct unity of use-value and exchange-value’.^{[903] [904] Once we move from an isol­ated examination of use-value and exchange-value to the conditions of their joint existence within a single commodity, we come to the question of the con­tradiction between value and use-value.}

The commodity is immediate unity of use-value and exchange-value, i.e., of two opposite moments. It is, therefore, an immediate contradiction. This contradiction must develop as soon as the commodity is not, as it has been so far, analytically considered once under the angle of use-value, once under the angle of exchange-value, but as soon as it is placed as a whole into an actual relation with other commodities. The actual relation of commodities with each other, however, is their exchange process.^w3

From the difference between use-value and exchange-value, Marx turns to their contradiction (within unity, i.e. the commodity). To understand Marx’s teaching on the contradiction between use-value and exchange-value presents major difficulties, and this has caused particularly sharp attacks from his critics, who claim that Marx becomes involved here in metaphysical discussions that have no connection with reality. In fact, this teaching from Marx reflects the real processes of commodity economy. The problem that Marx faced here can be expressed as follows: To what extent is there a change in the nature of use­value and exchange-value when they exist jointly within a single commodity? Whereas to this point the isolated study of these two aspects of the commodity has revealed to us the nature of each of them, now the question arises as to the possibility of simultaneous co-existence, within the commodity, of both of these aspects in the form that we found when we considered them in isolation. And Marx comes to the conclusion that the joint existence of these two aspects within the commodity makes a specific impression upon each of them, such that the presence of each of these aspects limits the other, as it were, and prevents it from appearing directly with the whole range of determinations that we saw when we considered each of them in isolation.

Marx begins his discussion with use-value. We know that every commodity is, first of all, a use-value. But if we recall that the commodity is also an exchange-value, we will see that this latter aspect limits its character as a use­value and does not allow it to appear directly in the role of use-value. Actually, once the product has been produced for sale it is no longer directly a use-value for its owner. At the same time, however, it is also not yet a direct use-value for others because they do not yet possess it. It is only by moving from one hand to another, i.e. by means of exchange, that the commodity can become a use-value for other people and thus also for its owner, for it is only by way of exchanging his product that the latter can acquire other products that he requires in order to satisfy his needs.

The commodity is a use-value, wheat, linen, a diamond, machinery, etc., but as a commodity it is simultaneously not a use-value. It would not be a commodity if it were a use-value for its owner, that is, a direct means for the satisfaction of his own needs... The commodity therefore has still to become [werden] a use-value, in the first place a use-value for others. Thus the use-values of commodities become [werden] use-values by a mutual exchange of places: they pass from the hands of those for whom they were means of exchange into the hands of those for whom they serve as consumer goods. Hence, only by being realised as exchange-values can they be realised as use-values.^[905]

This brings us to the following conclusion. The fact that the commodity is an exchange-value precludes it from being a direct use-value either for its owner or for other people. We have two contradictory claims: 1) the commodity is a use­value, and 2) the commodity is not directly a use-value. There is only one way out of this contradiction: the commodity must become a use-value. It is a use­value, but not directly, only in a roundabout way through exchange, in which it realises its use-value. Exchange-value appears here as the external means enabling the commodity to become a use-value.

If realisation of the commodity’s exchange-value is the condition for real­ising its use-value, there is also a reverse relation between these two sides of the commodity: in order to realise its exchange-value, the commodity must display and prove its use-value. Whereas we previously concluded that the commod­ity’s character as exchange-value prevents it from appearing directly in the role of use-value, now we are persuaded that the reverse also holds true: the com­modity’s character as use-value does not allow it to appear directly in the role of exchange-value. As exchange-value, the commodity is an embodiment of directly social labour-time in the sense that ‘it can freely take the place of a definite quantity of any other commodity, irrespective of whether or not it constitutes a use-value for the owner of the other commodity’.^{[906] [907] [908] [909] [910] This char­acteristic is what distinguishes the exchange-value of the commodity so long as we regard it in isolation. But if we remember that the commodity is also a use-value, this latter fact already prevents the commodity from directly mani­festing its inherent character as exchange-value. The commodity cannot yet freely replace any other product of social labour, for ‘alienation of a commod­ity as a use-value is only possible to the person for whom it is a use-value, i.e., an object satisfying particular needs'.ω6 Before it can be replaced with any other product, at the commodity owner’s discretion, the given commod­ity must be brought ‘into contact with the particular need of which it is the objecf.107 In other words, prior to its alienation as use-value, the commodity is ‘not immediately exchange-value, but has still to become [ warden ∖ exchange­value’^8 Here we again have two contradictory assertions: 1) the commodity is exchange-value; 2) the commodity is not directly exchange-value. With this contradiction, too, there can be only one way out: the commodity must still become exchange-value precisely through the roundabout way in which it dis­closes its use-value to a particular person, i.e. through the roundabout route of exchange. The realisation of use-value appears here as an external means for realising its exchange-value. ‘A commodity can only therefore become a use­value if it is realised as an exchange-value, while it can only be realised as an exchange-value if it is alienated and functions as a use-value’.W9}

It is only through the exchange process that the actual realisation of the commodity’s dual nature occurs, i.e. its exchange-value and its use-value. Prior to the exchange process, the joint existence within the commodity of these two contradictory sides makes impossible the direct manifestation of either of them in all the richness of its determinations; each side, as it were, is limited by the presence of the other and, for that reason, acquires a different character, which we could not have revealed by taking them in isolation but which we must now study. Let us consider the novelty that appears in the nature of each of these aspects of the commodity thanks to the presence within it of the other aspect.

First, let us briefly examine the changes that exchange-value undergoes due to being connected with the concrete use-value of the commodity. As use­value, the commodity must pass to precisely the person who requires it in order to satisfy his needs, and this means that it still does not possess a directly social character and cannot yet be exchanged for any other product at the discretion of its owner. The social nature of value is still limited and constrained, as it were, by the fact that it is connected with the concrete natural form of the commodity. The value still has a potential character and will only be fully realised when the commodity casts off its given concrete and natural form, i.e. when it is converted into money. Hence the need for division of the commodity into the commodity and money, or, as Marx sometimes puts it, the division of value into the commodity form and the money form of value. It is only in the latter that the directly social nature of value finds full realisation. In the former, this social nature of value is still confined due to the presence within the commodity of its other side, i.e. concrete use-value. The presence of use­value has an effect upon the character of exchange-value, converting the latter into a potential, or a commodity whose value still needs to be realised.

On the other hand, the presence of exchange-value leaves its mark on the character of the commodity’s use-value. In the first pages of the Critique and of Capital, use-value is considered in isolation from exchange-value, i.e. as the ability to satisfy a human need, which inheres in the product completely apart from one or another form of economy. Use-value is considered in terms of its indifference to the social form of the product. ‘Whatever its social form may be, wealth always consists of use-values, which in the first instance are not affected by this form’.^{[911] [912] [913] But use-value retains this indifference only so long as we regard it in isolation from exchange-value. When we turn to examine the use-value of a commodity, we see that the presence of exchange-value also leaves its mark upon use-value. Insofar as we are speaking of a commodity, its use-value has a special character by comparison, for example, with a product of feudal society. Here the issue is not one of change in the natural form of the product but rather of change in the social nature of use-value itself. The relation of the product as use-value to the producer and consumer becomes a different one in commodity economy by comparison with other forms of economy. Here the product is no longer a use-value for the producer; rather it is produced as a use-value in order to satisfy the needs of other persons, i.e. it is produced for sale. Now the producer ‘must not only produce-use-values, but use-values for others, social use-values'.m This ‘social use-value’ is also the modified form that use-value only acquires in commodity economy under the influence of exchange-value. The joint existence within the commodity of exchange-value and use-value alters the very character of the latter.}

These words from Marx concerning ‘social use-value’ are not always correctly understood. Often this term is used in the sense of any use-value that is pro­duced for the needs of members of a social group. From this point of view, the term social use-value can be applied both to a product that the medieval peasant produced for the needs of the manor and to the product that will be produced in a socialist commune. But with this expansive understanding of the term its whole specificity is eliminated. Marx had in mind not any use-value that is produced for a society with any social form of economy, but rather the use-value of the commodity. This is why Engels considered it necessary to add the following observation to the words that we have cited from Marx:

The medieval peasant produced a corn-rent for the feudal lord and a corn­tithe for the priest; but neither the corn-rent nor the corn-tithe became commodities simply by being produced for others. In order to become a commodity, the product must be transferred to the other person, for whom it serves as a use-value, through the medium of exchange!²

Engels explains that when Marx speaks of social use-value he has in mind the use-value of a commodity, which passes from producer to consumer by way of exchange. This necessary passage through the sphere of exchange leaves a certain mark upon the commodity not merely in the sense that the latter appears as exchange-value; it also leaves a certain mark upon the other aspect of the commodity, upon its use-value. The product's use-value, because of its connection with its exchange-value, acquires a special social character or ‘social distinction'. ‘As a useful thing the commodity has social determinacy insofar as it is a use-value for others but not for its owner, i.e., insofar as it satisfies social needs'.^{[914] [915]}

3) Production and Consumption in Capitalist Society

Marx has traced economic development, which was accompanied by gradual marginalisation of use-value as the motivating goal of production and by grad­ual increase of the role of exchange-value. At the same time, this change also meant an altered relation between production and consumption. In natural economy, for instance in the patriarchal family, production was aimed directly at satisfying members' needs. Such an immediate connection between produc­tion and consumption exists in every organised economy, for example, in a socialist commune. Marx and Engels frequently pointed out that the distin­guishing feature of a socialist commune is the adjustment of production to the volume of social needs that have to be satisfied and, in one manner or another, are calculated in advance.ⁿ⁴

With the emergence and development of exchange, as we know, the product is not produced directly for satisfaction of needs but for sale. So long, however, as it is a matter of simple commodity economy, for instance handicrafts, pro­duction occurs to fulfil a specific order or for a very local market. In such case the volume of demand, or of the social needs to be satisfied, is approximately known in advance and has a determining effect on the volume of production. At the same time, the volume of production is determined by the volume of the craftsman's own customary needs, which have to be met after he has sold the articles he makes. It is only in developed capitalist production that use-value finally ceases to be the motivating goal of the production process. The capit­alist strives to acquire profit, and the entire production process is subordinate to this purpose. Production of the product, as a use-value, is not the capitalist's objective, and the same also applies to the worker: ‘The product of his activ­ity, therefore, is not the aim of his activity. What he produces for himself is not the silk that he weaves, not the gold that he draws up the mining shaft, not the palace that he builds’.^{[916] [917] [918] In capitalist society, there is further separation of production from consumption, of the producer from the consumer.}

Along with the separation of production from consumption, a certain neces­sary connection is preserved between them. As we already clarified in the first chapter, production and consumption are mutually connected and mutually determined. How does this connection occur in capitalist society? This con­nection occurs through demand. Since the needs of society’s members are not calculated in advance and cannot themselves govern production, social needs exert an influence upon the production process only indirectly, through effect­ive demand. If the producer himself does not adopt the goal of satisfying social needs, he must still take them into account because the commodity must be sold to the consumer. Social need, in the form of effective demand, has an effect upon the direction of the production process: the producer must fabricate only those products for which there is a demand. But we must remember, on the other hand, that social need can only have such effect provided that it takes the form of effective demand, i.e. if the consumer is able to pay the neces­sary (money) equivalent, whose value is equal to the value of the product he is purchasing. Marx points out more than once that when we speak of corres­pondence between production and needs in capitalist society, the issue is not one of ‘absolute’ needs or of ‘genuine’ social needs, but only of solvent social need represented in the market, i.e., the sum of social demand.ⁿ⁶

This solvent social need, or social demand, has a determinate character. Pro­duction of the given product must not only satisfy social need in general but also correspond to the specific volume of this social need, i.e. to the determ­inate sum of social demand for the given product. The use-value of a certain volume of particular products ‘depends on its adequacy to the quantitatively specific social need for each particular kind of product and therefore on the proportional division of the labour between these various spheres of produc­tion in accordance with these social needs, which are quantitatively circum- scribed’.ⁿ⁷ Social need, or social demand, has a definite magnitude, and it is precisely through this quantitative specificity that it has an influence upon the direction of the production process.

Are we not introducing a dualism into our economic theory by recognising this effect of demand upon the character of the production process? Are we not abandoning the monistic principle of the primacy of production over con­sumption? It is true that in an organised community we also saw an immediate and direct influence of the character of consumption upon the character of production, but in that case production and consumption were the actions of a single production process: consumption was merely a moment of the produc­tion process as a whole, and it is perfectly understandable that there was inter­action between the individual moments of the latter. In capitalist economy, production has separated off from consumption, and social needs have taken the form of effective demand, which, operating from the side as it were, as a kind of external force, affect the production process. Let us remember, however, that while production is externally separated from consumption this fact does not, even in capitalist economy, eliminate their necessary internal connection. Social needs, having assumed the form of social demand, change and develop according to change in the production process itself. And in capitalist society, production in the narrow sense and consumption are only particular elements of the single process of production. In the first place, the necessary connection between them is preserved, even if only through a long series of intermedi­ate links, through social demand. We must, accordingly, examine this social demand and demonstrate that in its movement it is conditioned by the move­ment of the production process.

It appears at first sight that demand is determined by the needs and arbitrary will of separate individuals, appearing in the role of consumers. But as early as The Poverty of Philosophy Marx noted the incorrectness of such a view of demand:

The consumer is no freer than the producer. His estimation depends on his means and his needs. Both of these are determined by his social position, which itself depends on the whole social organization. True, the worker who buys potatoes and the kept woman who buys lace both follow their respective estimations. But the difference in their estimations is explained by the difference in the positions which they occupy in society, and which themselves are the products of social organization.^[919]

If we consider the demand not of one or another separate individual but rather of a significant mass of purchasers, we will find a certain regular pattern in its movement. Either directly or in the final analysis, demand is determined by the condition of the production process, and specifically by the development of the productive forces and the character of the production relations that prevail in the given society. In chapter ten of the third volume of Capital, Marx examines in detail the dependence of social demand upon social production.

First of all, it is important to point out that the dimensions of social demand are themselves not given and fixed in advance. We took the magnitude of social demand as given when we said earlier that production of each product must correspond to the social need for it (or the demand), but this same magnitude, in turn, requires explanation.

It would seem... that there is on the side of demand a certain magnitude of definite social wants which require for their satisfaction a definite quantity of an article on the market. In fact, however, the quantitative determination of this need is completely elastic and fluctuating. Its fixed character is mere illusion. If means of subsistence were cheaper or money wages higher, the workers would buy more of them, and a greater ‘social need’ for these kinds of commodity would appear.^[920]

Thus, the volume of social demand for a given product depends first of all upon the price of the product, and secondly upon the size of the consumers’ incomes. But the price of the product is determined by its value, which depends, in turn, upon the quantity of labour required for its production, i.e. upon the development of labour productivity. On the other hand, the size of the income of a particular group of people depends upon the class position that they occupy in society, i.e. upon the character of the production relations inherent in the given mode of production. Consequently, insofar as demand depends upon prices and incomes, it is determined by the character of the production process. It is true that with a given level of prices and incomes, demand for a specific product may change depending upon the changing need for it, but this need itself varies according to changes in the society’s living conditions, which in the final analysis depend upon changes in the production process. Let us now examine in more detail the dependence of the volume of demand upon each of the conditions that we have listed.

We shall deal, first of all, with the influence of the product’s price upon the volume of demand. Marx often points out that the volume of demand for a particular product depends upon that product’s price, which is determined, in turn, by its value. ‘The expansion or contraction of the market depends on the price of the individual commodity and stands in an inverse relationship to the rise or fall in this price’.^{[921] [922] [923] [924] [925] Demand ‘moves in the opposite direction to prices, expanding when they fall and vice versa'.121}

If the market value falls, the social need is on average expanded (this always means here the need which has money to back it up), and within certain limits the society can absorb larger quantities of commodities. If the market value rises, the social need for the commodities contracts and smaller quantities are absorbed.122

At this point the reader might raise the following question: If the price of the commodity determines the demand for it, is there not also a reverse depend­ence here of the price of the commodity upon the demand for it? Actually the price of commodities does fluctuate, as everyone knows, under the influence of fluctuations in the demand for them; but demand can have an influence only upon the commodity’s market price, not upon its average price, which depends upon its value.12³ There is a regulator in the very mechanism of commodity eco­nomy that, by means of the expansion and contraction of production, tends to eliminate any deviation of the market prices of commodities from their value (or their price of production). Whatever may be the magnitude of social need for the given product - whether, for example, we are speaking of a product of mass consumption, for which there is a demand from millions of buyers, or of a refined luxury product that is accessible only to a narrow circle of buyers - production of the given product has a tendency to be established at exactly the level where its market prices have their value (or their price of produc­tion in capitalist society) as their centre of gravity. It is precisely because the capitalist is completely indifferent as to which product to produce that the use­value of the product cannot play the role of a factor determining its value. It is not demand that has the determining effect upon the value of the product but rather the opposite; the magnitude of the product’s value determines the average volume of demand that exists for this product. ‘If supply and demand regulate market price, or rather the departures of market price from market value, the market value in turn regulates the relationship between demand and supply'.12⁴

Let us turn now to the question of demand’s dependence upon the distri­bution of incomes between different social classes. In The Poverty of Philosophy Marx already indicated that ‘The use of products is determined by the social conditions in which the consumers find themselves placed, and these condi­tions themselves are based on class antagonism’.^{[926] [927] [928] It is only the class division of a capitalist society, built upon an antagonistic foundation, that can explain to us the character of the supply and demand that prevails within it. Marx emphasised this idea even more decisively in Capital:}

Let us note here, but merely in passing, that the ‘social need’ which gov­erns the principle of demand is basically conditioned by the relationship of the different classes and their respective economic positions; in the first place, therefore, particularly by the proportion between the total surplus-value and wages, and secondly, by the proportion between the various parts into which surplus-value itself is divided (profit, interest, ground-rent, taxes, etc.). Here again we can see how absolutely noth­ing can be explained by the relationship of demand and supply, before explaining the basis on which this relationship functions.^⁶

It follows that the social need for products is determined first and foremost by the relation of surplus value to wages, i.e. by the relations of distribution, which are only the other side of the production relations within capitalist society. The dual class character of incomes (i.e. the division of newly created value into wages and surplus value) has its necessary consequence in the dual class character of demand and consumption.

Let us begin by characterising the consumption of workers and the demand that they bring to the market. The fact that the class of workers in capitalist society is deprived of the means of production, and that it receives income only in the form of wages, has a determining effect upon the character of the demand represented by workers. In the first place, the workers represent demand only for items of consumption, not for means of production;^⁷ and secondly, they represent demand only for the means of subsistence that are necessary for reproduction of their labour power. The workers’ consumption, together with the demand that they represent in the market, is limited to the necessary means of subsistence.

At first sight, it may seem that precisely here we find a vivid example of the dependence of demand upon purely natural conditions that are rooted in the physical nature of man. One may think that the volume of workers' demand is determined by their ‘natural' needs, satisfaction of which is abso­lutely necessary in order to support human life. But this frontier of the so-called physiological minimum means of subsistence is only the lower boundary for the average volume of workers' demand. In his teaching on the value of labour power, Marx assumes that the average wage is determined by the level of the workers' ‘necessary' requirements, which exceed the sum of ‘natural' needs.^{[929] [930] [931]} As examples of natural needs, Marx lists food, clothing, fuel and housing but, as mentioned previously, the very mode of satisfying these natural needs changes in different historical epochs and, accordingly, has a socially conditioned char­acter. This is all the more true of ‘intellectual and social requirements', the extent and number of which are determined by ‘the general level of civilisa- tion'.12⁹

The number and extent of his so-called necessary requirements, as also the manner in which they are satisfied, are themselves products of history, and depend therefore to a great extent on the level of civilization attained by a country; in particular they depend on the conditions in which, and consequently on the habits and expectations with which, the class of free workers has been formed?³⁰

Not only is the character of working-class needs determined by development of the society's living conditions and, in the final analysis, by its productive forces, but even the level of satisfaction that the worker experiences from consuming one or another product depends upon his surrounding social conditions. Marx speaks of this at one place in Wage Labour and Capital:

Although the pleasures of the labourer have increased, the social grati­fication which they afford has fallen in comparison with the increased pleasures of the capitalist, which are inaccessible to the worker, in com­parison with the stage of development of society in general. Our wants and pleasures have their origin in society; we therefore measure them in relation to society; we do not measure them in relation to the objects which serve for their gratification. Since they are of a social nature, they are of a relative nature.^{[932] [933] [934]}

Thus the incomes of workers in capitalist society are so limited that they can only represent demand for necessary means of subsistence. On the other hand, let us recall what was previously said concerning the influence of the price of a given product on the volume of demand for it. This means that workers represent a demand almost exclusively for the least costly and thus the poorest means of consumption. In The Poverty of Philosophy, Marx was most emphatic regarding this condition. ‘Why are cotton, potatoes and spirits the pivots of bourgeois society? Because the least amount of labour is needed to produce them, and, consequently, they have the lowest priced'¹² The character of consumption depends entirely upon production conditions for the products. ‘Economics prevailed, and dictated its orders to consumption’.^

It is obvious, therefore, just how mistaken it is to say - without any further explanation - that capitalist production, as with any production in general, satisfies social needs. This formula is only true if we understand the latter to mean only those needs that are acknowledged by capitalist society, i.e. that are represented by effective demand. The capitalists are not concerned with the fact that the needs of broad masses of people are only minimally satis­fied and that, consequently, an enormous mass of needs remains completely unsatisfied. Capitalist production satisfies only those needs that appear in the form of effective demand. This is precisely why Marx frequently emphasised the entirely different character of the link between production and consump­tion in capitalist and socialist society.

In a fUture society, in which class antagonism will have ceased, in which there will no longer be any classes, use will no longer be determined by the minimum time of production; but the time of production devoted to different articles will be determined by the degree of their social utility.^{[935] [936]}

Since the character of the incomes received by workers determines the char­acter of their consumption and the demand that they bring to the market, it is perfectly understandable that the consumption of workers changes with a change in the wage. We are familiar with Marx's teaching regarding the influ­ence of the rising organic composition of capital and of the reserve army [of labour] upon the magnitude of the wage. We know Marx's teaching involving the tendency that exists within capitalist society towards impoverishment of the working class. It is quite evident that this general pattern for the develop­ment of wages necessarily brings forth a corresponding change in the workers' consumption.

Such changes, although only of a temporary character, are also caused by passing changes in the level of wages. As we know, the wage fluctuates in the course of the industrial cycle: it rises in years of prosperity and falls in years of depression. Marx carefully noted the influence that movement of the conjuncture has upon the workers' consumption: he pointed out that in years of prosperity ‘It is... not only the consumption of necessary means of subsistence that rises; the working class. also takes a temporary share in the consumption of luxury articles'.^⁵ On the contrary, during years of depression the wage falls and the result is to reduce the consumption of workers and the demand that they represent in the market.

We can see that the character of the workers' demand and consumption is determined entirely by their position in the production process, i.e. by the character of production relations in capitalist society. In the first place, the level of imperative needs on the part of the workers is determined by the general conditions of social life; secondly, the class position of the workers entirely determines the general structure of demand that they represent in the market - they represent demand only for the necessary means of subsistence; thirdly, the workers' consumption depends upon the level of prices for products in the sense that workers represent a high demand only for the most inexpensive commodities; fourthly, the general tendency towards reduction of the relative share of the working class in the social product has a definite influence upon the volume of demand and consumption by the workers; fifthly, and finally, temporary fluctuations in the volume of consumption and demand by the workers are determined by the temporary fluctuations of wages in the course of the conjuncture.

Let us turn from workers’ consumption to that of the capitalists. For now, we shall speak only of their personal consumption. The capitalists’ personal con­sumption has a completely different character from the personal consumption of the workers, and this difference in consumption directly reflects the different character and level of their incomes. The capitalists demand products that are different from those consumed by workers. First of all, insofar as they consume necessary means of subsistence (bread, meat and so forth), these products are usually different in terms of their quality and value from the workers’ means of consumption.^{[937] [938] [939] Moreover, the capitalists consume luxury items, which Marx understands to mean those products that enter into consumption only by the capitalist class.137 Thus Marx distinguishes between three groups of items of consumption: 1) the workers’ necessary means of subsistence, 2) the capital­ists’ necessary means of subsistence, and 3) items of luxury.^8 It is interesting to note that Marx takes the basis for this classification of consumer items to be the class principle of including one product or another in the consumer budget of one or another social class.}

Thus the character of the incomes received by capitalists makes its impres­sion upon the character of their consumption. True, in the present case this dependence does not have so direct a character as in the consumption of work­ers. There is a very close connection between the magnitude of the worker’s wage and the extent of his consumption, since the worker usually spends almost the entire wage in buying means of subsistence. The capitalist only spends a small part of his profit on his personal consumption and accumu­lates the remainder in the form of capital, i.e. he spends it to purchase means of production and labour power. Hence the personal consumption of the capit­alist depends not only upon the general sum of profit that he acquires, but also upon the proportion in which he divides this profit between the fund for per­sonal consumption and the fund for accumulation. However, in this case too we can observe a certain regular pattern in the capitalists’ behaviour, which varies according to changes in the general conditions of capitalist production. In different epochs of capitalism’s development, the personal consumption of the capitalists assumes a different character.

At the historical dawn of the capitalist mode of production... avarice, and the drive for self-enrichment, are the passions which are entirely predom­inant. But the progress of capitalist production not only creates a world of delights; it lays open, in the form of speculation and the credit system, a thousand sources of sudden enrichment. When a certain stage of devel­opment has been reached, a conventional degree of prodigality, which is also an exhibition of wealth, and consequently a guarantee of credit­worthiness, becomes a business necessity to the ‘unfortunate’ capitalist. Luxury enters into capital’s expenses of representation... Thus although the expenditure of the capitalist never possesses the bona fide charac­ter of the dashing feudal lord’s prodigality, but, on the contrary, is always restrained by the sordid avarice and anxious calculation lurking in the background, this expenditure nevertheless grows with his accumulation, without the one necessarily restricting the other.^{[940] [941]}

As capitalism develops, the consumption of the capitalist class enormously increases. But, since the volume of profits that they receive grows even more quickly, expenditures on personal consumption take an ever-diminishing share of the capitalists’ profits. Thus, the development of consumption by the cap­italists shows a certain regular pattern, which is determined by the general tendencies of the development of capitalist production.

If the sum of consumer items and luxuries obtained by the capitalist class has a general tendency to grow enormously, at the same time it fluctuates from time to time according to the movement of the conjuncture. In periods of industrial prosperity, the consumption of capitalists grows together with the demand that they represent in the market for consumer items, and especially for luxuries?⁴⁰ Marx anticipated the most recent research into the influence of the conjuncture’s movement on the extent of consumption by both workers and capitalists. He meticulously noted the periodic expansion and contraction of the consumption process, which in turn only reflects the movement of the production process.

Demand from the capitalists for consumer items constitutes only an insig­nificant part of the general demand that they represent in the market. The capitalists spend an enormous and ever-increasing portion of their profits not on personal consumption but in the form of capital that is being accumulated. They enter the market as purchasers of means of production and of labour power. Insofar as the capitalist buys labour power, ‘the capitalist’s demand for labour-power is indirectly also a demand for the means of consumption that enter into the consumption of the working class’.^{[942] [943] [944] [945] But, together with the growth of the organic composition of capital, an ever larger part of the sum they are accumulating is spent not on the purchase of labour power but on the purchase of means of production, i.e. on materials and on the instruments of labour. The sole purchasers of means of production in capitalist society are the capitalists; their demand for means of production constitutes an enormous portion of the total demand in the market.}

This fact is imperative for an understanding of the entire character of capit­alist production. In The Poverty of Philosophy Marx already wrote: ‘Most often, needs arise directly from production or from a state of affairs based on pro­duction. World trade turns almost entirely round the needs, not of individual consumption, but of production’.^² In capitalist society, we must note two completely different sorts of consumers: ‘individual consumers’, representing demand for items of consumption, and ‘productive consumers’, who repres­ent demand for means of production.^³ If the volume of demand for means of consumption, as we have seen above, depends upon the general conditions of the production process, this applies all the more to productive demand, i.e. to demand for the means of production. If the capitalist buys cotton to work up into cotton fabric, his demand for the cotton already has an entirely different character from the consumer’s need for the product in satisfying his personal requirements. The capitalist only buys cotton insofar as processing it promises to bring him a profit. ‘His need for cotton is modified fundamentally by the fact that all it really clothes is his need to make a profit.'.^ The demand for means of production depends most directly upon conditions in the production process, not just indirectly as in the case of demand for items of personal consumption.

Since demand by capitalists for means of production is determined by the capitalists’ pursuit of profit, it has already ceased to be a direct reflection of the social need for items of consumption. And since, on the other hand, the volume of demand for means of production has an enormous influence upon the entire production process, the latter becomes, to a certain extent, independent of the consumption process. Hence the typical capitalist tendency towards expansion of production beyond the limits of effective demand, or beyond the social need supported by effective demand.

Since capital's purpose is not the satisfaction of needs but the production of profit, and since it attains this purpose only by methods that determine the mass of production by reference exclusively to the yardstick of pro­duction, and not the reverse, there must be a constant tension between the restricted dimensions of consumption on the capitalist basis, and a production that is constantly striving to overcome these immanent bar­riers.^{[946] [947] [948] [949]}

‘Production takes place without regard to the existing limits to consumption, but is limited only by capital itself'.14⁶ This endeavour to expand production can only be realised in practice due to the fact that a larger share of the profit is accumulated and, as a result, a new demand for means of production appears in the market. In others words, production in capitalist economy creates, within limits, its own market because the expansion of production represents demand for means of production, and this type of demand is enormously important in capitalist society.

The enormous and ever-growing significance of productive demand makes the scale of production extremely elastic and, within certain limits, independ­ent of social needs in the narrow sense of the word, i.e. of the current condition of effective demand for items of consumption. However, this is only true within certain limits, for in the final analysis the means of production are intended precisely for creating means of consumption. In the first instance, the extent of productive demand is independent of consumption, but in the final analysis it is still limited by personal consumption because the production of constant capital never occurs for its own sake but ultimately results in production of means of consumption.^⁷ It is true that the reproduction process, within cer­tain limits, may be conducted on the previous or even on an expanded scale, even if the commodities being turned out actually have not entered into the sphere of personal or productive consumption.^⁸ But the possibility of a fur­ther expansion of production ultimately encounters the limits imposed by the low level of consumption on the part of the popular masses. In capitalist soci­ety, the antagonistic relations of distribution ‘reduce the consumption of the vast majority of society to a minimum level, only capable of varying within more or less narrow limits’.^{[950] [951] Consequently, ‘the more productivity develops, the more it comes into conflict with the narrow basis on which consump­tion rests’?50 Production’s relative independence of consumption, conditioned by the capitalists’ drive for unlimited expansion of production and by the steadily increasing role of productive demand, nevertheless occurs within cer­tain limits; when these limits are exceeded, the necessary inner connection between production and consumption becomes evident and a crisis breaks out.}

We can now summarise our discussion of the link between production and consumption in capitalist economy. In the first chapters, we clarified Marx’s general doctrine on the link between production and consumption. We saw that these two moments of the process of reproduction penetrate one another: production is directed to the preparation of products that serve consumption; and the latter, in turn, change in a manner that depends upon the production process itself.

In simple commodity economy, the connection between production and consumption already becomes more extended and complex. The goal of pro­duction is not direct satisfaction of the producer’s needs. The latter produces the product not for the sake of use-value but rather for exchange-value. Never­theless, a close link between production and consumption is preserved. On the one hand, the producer is very familiar with the traditional and slowly changing volume of demand that exists for the products that he produces. Consequently, the needs of the purchasers, expressed in the demand that they pose, are con­sidered and taken into account in advance by the producer. On the other hand, in simple commodity economy, where there is no division of classes and class exploitation, the benefits from rising labour productivity accrue to the produ­cer himself. The rise in labour productivity and the growth in the volume of products that serve to satisfy human needs cause an increase of needs and of consumption on the part of the members of society. The development of pro­duction is accompanied by a growth of consumption.

A further separation of production from consumption occurs in capitalist economy, where the capitalists’ goal is the acquisition of profits. The capit­alist produces not to satisfy the needs of members of society but rather to satisfy effective demand. The demand in the market for means of consump­tion has a clearly expressed class character and is conditioned by the distribu­tion of social income between society's different classes. The incomes of the working class remain at a very low level, and the demand from workers for means of consumption remains at that same level. The needs of the broad pop­ular masses are not the motivating purpose that directs production. On the other hand, a colossal increase of labour productivity and of the dimensions of social wealth is not accompanied by a corresponding growth of working­class consumption. Whereas in the economy of a patriarchal family, or of a socialist commune, there is a directly acting law, as a result of which the needs of society develop ‘together with the means of their satisfaction and in dir­ect dependence upon development of the latter', in capitalist society this law appears in modified form. The growth of labour productivity and the colossal increase of social wealth do not cause - or at best cause only to an insig­nificant degree - an increase of the extent of consumption by the working class.

We cannot imagine capitalism without a contradiction between produc­tion and consumption, without the tremendous growth of production being accompanied by an extremely slow growth (or even stagnation and worsening) of consumption by the people.^[952]

This peculiarity of the capitalist economy was already noted by Marx, as we have seen, in his early preparatory works for The Holy Family. But there Marx, being still influenced by the ideas of utopian socialism, sharply contrasted the ‘natural' law of the growth of human needs with the ‘unnatural' law of the degradation of the working class in the conditions of capitalist economy. But now Marx reveals the dialectical contradiction between the two laws: between the general law of the growth of needs, accompanying the development of pro­duction, and the law inherent in capitalist economy that keeps the workers' consumption at a low level despite a gigantic growth of labour productivity. Marx reveals the entire mechanism of capitalist economy, in which the increase of social labour productivity, accompanied by growth of the organic composi­tion of capital and of the reserve army [of labour], does not bring with it a rise of the consumption and well-being of the working class. ‘Marx's theory showed how the contradiction, inherent in capitalism, comes about, how the tremend-

ous growth of production is definitely not accompanied by a corresponding growth in people’s consumption’.^[953]

The general law, according to which the growth of production is accompan­ied by the growth of needs, becomes significantly complicated and modified in capitalist economy, yet in the final analysis it still continues to operate. The growth of labour productivity causes a decline in the value of various items of consumption, thereby making them accessible to the working masses. It is true, even in this best of cases, that only an insignificant part of the benefits resulting from the growth in social labour productivity accrues to the working class; even in this, the most beneficial of all cases for the workers, the volume of products obtained by the worker in natural form increases, but not the sum of the values that he acquires. Accordingly, the increase of labour productiv­ity has an effect upon the volume of the workers’ consumption only to a very limited extent and indirectly (through a reduction of the value of products).

If the increasing scale of production and of social wealth has only an indirect influence upon the workers’ consumption, it has a much more significant influ­ence upon development of the workers’ needs. The very fact of a colossal growth of social wealth, accompanied by an enormous rise of well-being and of the level of personal consumption by capitalists and those groups of the popula­tion close to them, cannot but cause an increase of the workers’ needs, as Marx already noted in his work Wage Labour and Capital. The discrepancy between workers’ needs and the means for their satisfaction assumes an ever more acute character.

In conditions of capitalist economy, the growth of production also has, in addition to its indirect and restricted influence upon the extent of consump­tion by the workers, an indirect influence, namely: 1) it is accompanied by enormous growth of personal consumption on the part of the class of capit­alists and those groups of the population close to them; and 2) it causes an enormous expansion of demand by the capitalists for means of production. An important part of the profits is accumulated in the form of capital and is used - after deducting the sum required for the purchase of labour power - for purchasing means of production. Production itself partially creates its own market, and its expansion causes an enormous increase of demand for means of production even with a stationary, declining, or slowly rising level of per­sonal consumption by the working masses. Growth of this demand for means of production makes capitalist production relatively independent of the narrow basis of personal consumption on the part of the working masses. However, this independence has only a temporary and relative character. An increase of the demand for means of production is equivalent to further expansion of the process of production itself. Consequently, the growth of productive demand, making production for a time independent of the scale of personal consumption, in the final analysis merely intensifies the contradiction between the colossal development of the productive forces and the ‘conditions of dis­tribution and consumption' in which it occurs; this contradiction periodically finds expression in acute crises and ultimately leads to the necessity of social revolution.

As we see, in capitalist society the link between production and consump­tion has a very complex and tangled character. Consumption affects produc­tion only by way of effective demand. For an understanding of the character of demand in capitalist society we must focus attention more upon: 1) the distri­bution of incomes between different social classes, which conditions the extent of their demand for commodities, and 2) the enormous importance of demand for means of production. In his commentaries, Marx strongly emphasised pre­cisely these two conditions, which have an essential influence upon the entire structure of demand in capitalist society.

For simply buying and selling, it is enough that commodity producers confront one another. Demand and supply, on further analysis, imply the existence of various different classes and segments of classes which distribute the total social revenue among themselves and consume it as such, thus making up a demand created out of revenue; while it is also necessary to understand the overall configuration of the capitalist production process if one is to comprehend the demand and supply generated among the producers as such.^[954]

Together with these two extremely important factors, which determine the structure of demand in capitalist society, in the latter there is a whole series of other conditions that further complicate and confuse the link between production and consumption. One need only mention the role of consumption on the part of non-productive groups of the population, or the enormous expansion of the commercial apparatus, which lengthens the path from the producer to the consumer.

It may appear, at first sight, that production and consumption in capital­ist society are completely detached from, and independent of, one another.

Production is conducted not to satisfy the needs of society’s members but to acquire profit; to a significant extent it is independent of the volume of personal consumption and directed in large part to the satisfaction of pro­ductive demand, i.e. to expansion of the production process itself. On the other hand, consumption by the popular masses also does not change directly under the influence of growth of the production process and of social wealth. However, the separation of production from consumption does not eliminate their internal connection. On the one hand, production is ultimately restric­ted within the narrow limits imposed upon it by the ‘conditions of distribution and consumption’; on the other hand, consumption constitutes a moment of the entire process of reproduction, either flowing directly from the needs of the production process (the demand for means of production) or else being con­ditioned by the relations of distribution and, in the first place, by the level of wages (the workers’ demand for items of personal consumption).

ill Use-Value and the Subject Matter of Political Economy

1) Is Use-Value Part of the Subject Matter of Political Economy?

We must now address the question of the extent to which use-value is studied by political economy. As we already know, Marx’s critics often accuse him of ignoring use-value. Scrutiny of Marx’s works has already convinced us that Marx by no means ignored the process of consumption; he considered it to be one of the moments of the process of reproduction as a whole. Now we must answer the question as to how far the economist takes use-value into account when analysing the production process.

The capitalist production process is a unity of the labour process (i.e. the pro­cess of producing use-values) and the process of the production and expansion of value. Political economy takes the latter aspect of the production process, i.e. the process of the production and expansion of value, to be the special subject matter of its investigation. But the process of the expansion of value represents the form in which the process of the production of products, or of use-values, occurs. Thus, the latter process is always a part of our investigation, although not as an independent object for analysis by this science but rather as another side of the single process of reproduction, which we study as the ‘social structure of production’ (Lenin). It follows that use-value is included within the ambit of our investigation only insofar as this is necessary in order to under­stand the process of the production and expansion of value.

Marx often emphasised that use-value does not represent an independent subject matter for investigation in theoretical economics. In the first pages of the Critique he pointed out that use-value as such, i.e. in its indifference to the determination of economic form, lies beyond political economy’s sphere of study.^{[955] [956] [957] Marx spoke of this in his letter to Engels, dated 2 April 1858, in which he explained to him the content of the Critique. In this letter we read:}

Use-value - whether regarded subjectively as the usefulness of labour, or objectively as the utility of the product - is shown here simply as the material prerequisite of value, and one which for the present is entirely irrelevant to the formal economic definition.155

These words from Marx indicate, in the first place, that use-value is not an independent object for research in theoretical economics, and secondly, that it must be taken into account insofar as this is necessary for an investigation of the ‘determinations of economic form', i.e. of the production relations between people. Let us now consider, with a number of examples, the degree to which Marx does pay attention to the use-value of commodities in the course of his investigation.

As we have already seen in Chapter ii (section 2), at the beginning of his study Marx considers exchange-value apart from and completely independ­ently of use-value, in order subsequently to study the conditions of their co­existence in the commodity. Here, in his teaching on the contradiction between use-value and exchange-value, the presence of the latter is always presupposed by Marx and taken into account. We shall not understand the laws of the move­ment of value (for instance, the doctrine of the forms of value, or of the division of the commodity into commodity and money), if we leave aside the fact that exchange-value is only one side of the commodity, which appears on the other side as use-value. But it by no means follows that Marx is engaged here in a study of use-value. Marx limits himself here to the presupposition that the commodity is not only exchange-value but also use-value. This presupposition is quite sufficient for the purpose of his research.

From an analysis of the individual commodity, as a unity of value and use­value, Marx turns to the actual process of the exchange of commodities, i.e. to commodity circulation in the form c-M-c. Marx emphasises that he is studying this circuit of commodities as a process of the ‘change of form' (Formwechsel) of commodities, not as a process of the social ‘exchange of things' (Stoffwechsel). According to Marx, economists were not able to understand correctly the circuit c-M-c precisely because they directed their attention to its material side and overlooked the process involving the form itself of the commodity.^⁶

Does this mean that in his research Marx ignored the ‘exchange of things’, which occurs through the ‘change of form’ C-M-C? Such an assumption would, of course, be incorrect. If we ignored the social exchange of things, we would also be unable to understand the change of form that it serves. To be sure, in order to understand the movement of commodities in the circuit C-M-C, we must take into account the fact that what is involved is a product that is made by the commodity producer for sale and must serve indirectly as an item of consumption not for the commodity producer himself but for another person, i.e. for the purchaser. We shall not understand the first metamorphosis of the commodity, C-M, if we forget that the product follows a certain path from producer to consumer. In a word, in order to understand the circuit C-M-C in terms of its social form, we must always remember the other side of this same circuit, i.e. the process of the movement of products, or of use-values, from the producer to the consumer. But the latter process has a place in our investigation not as an independent topic for analysis but only as the other side of a single process of commodity production and circulation.

To this point, Marx has presupposed that the commodity - considered either as a separate commodity or in the movement of the circuit C-M-C - possesses use-value. But if we turn to investigation of the entire mass of commodities produced in a given branch of production, then it will already not suffice to presuppose that the separate exemplars of this commodity mass represent use-values. We must also assume that this entire commodity mass, taken as a whole and in quantitative terms, corresponds to social need, i.e. to the effective demand for commodities of this particular type. Here we already presuppose not only the existence of use-value but also the presence of ‘use-value on the social scale’, i.e. of a quantitatively determined social need. ‘The social need, i.e. the use-value on the social scale, here appears decisive for the quota of total social labour-time that falls to the share of the various particular spheres of production’.¹⁵⁷ It would be a mistake, however, to think that Marx takes the subject matter of his special investigation here to be the determinate, concrete character of this social need. Marx limits himself to the general presupposition that the social need for each type of product has a quantitatively determined character. This assumption is quite sufficient for understanding the conditions of the process of reproduction as a whole, and Marx provides no further study of the concrete structure of social needs. Here, as elsewhere, the process of the consumption of products is taken into account only as a moment of the process of social reproduction, i.e. insofar as the structure of social needs is determined by the conditions of the production process (see above, Chapter ii, section 3) and, on the other hand, exerts its own influence on the latter.

In the examples that we have cited, Marx took use-value into consideration insofar as he had to begin with certain general assumptions concerning the process of consumption. But the determinate use-value of products is also very significant for the direct process of production itself. Consequently, Marx also takes it into account when studying the latter, insofar as he has to elucidate the technical side of the production process. Let us consider a few examples.

We shall not understand the division of capital into two distinct forms (constant and variable capital) if we ignore the fact that the former is spent on the purchase of dead means of production while the latter is spent on living labour power. Accordingly, at the basis of these two distinct forms of capital lies a material difference between elements required for the technical process of production. Thus, in an examination of constant and variable capital, the specific material form that distinguishes the different elements of production from one another is always taken into account. But, at the same time, it would be the greatest error to identify the difference between constant and variable capital with a material or technical difference between means of production and labour power. Marx spoke out decisively against vulgar economists who saw the difference between the separate parts of capital only in the fact that they serve ‘to pay for materially different elements of production’. Marx sees this difference in the social function of constant and variable capital, in their different functional role in the process of expanding value.¹⁵⁸ The technical difference between elements of production is subject to no special analysis by Marx and is only considered insofar as this is necessary in order to understand the division of capital into constant and variable.

We find the same relation between value and use-value in Marx’s doctrine concerning fixed and circulating capital. This division is also based upon a difference in the technical functioning of the different elements of production. The textile machine wears out slowly and serves for many years, whereas the cotton is processed during a single production period. These technical differences serve as the basis on which the economic difference between fixed and circulating capital arises. But on this point, once again, Marx decisively objects to those economists who attribute a technical rather than an economic character to the difference between fixed and circulating capital. From Marx’s point of view, the difference between fixed and circulating capital consists of

the different manner in which their value is transferred to the product.^[958] As for the technical differences that result from the specific nature of the use­value of cotton and of the machine, and from the different conditions of their functioning in the process of labour, Marx subjects them to no special analysis.

On the basis of his teaching with regard to constant and variable capital, Marx constructed his doctrine concerning the organic composition of capital. Here, too, we can clearly follow the precise way in which Marx associates value with use-value. The organic composition of capital is the composition of cap­ital according to value; but the value composition of capital is regarded as the organic composition of capital only when it reflects the technical composi­tion of capital, i.e. the relation between quantities of living labour and dead means of production. The organic composition of capital grows on the basis of its technical composition, but it does not correspond to the latter. Marx takes precisely the organic composition of capital and the laws of its changes as the subject matter for special investigation. Of course, we are not able to disclose this pattern (for instance, the law of the rising organic composition of capital) unless we turn our attention to processes that are occurring in the technical process of production and that are causing the rise of the technical composi­tion of capital (i.e. growth of the quantity of dead means of production at the expense of living labour). It is extremely interesting to follow the precise man­ner in which Marx brings into his investigation the fact of a rise in the technical composition of capital. He briefly points out that, as a result of the increase of labour productivity, there is a steady increase of the quantity of material and machines at the disposal of a single worker. Without examining this process in detail, Marx only briefly mentions it insofar as this is necessary for understand­ing the very important economic changes that result; for example, the rise in the organic composition of capital, the displacement of workers by machines, the formation of the reserve army, etc. If Marx had made the rise of the tech­nical composition of capital a topic of special investigation, he would have had to provide us with enormous technological material, illustrating the process whereby living labour is displaced by dead labour in the different branches of production. He did not do so because he includes the rise of the technical composition of capital in his research only insofar as this is necessary for under­standing the law-governed development of the organic composition of capital.

Thus, Marx does not make use-value a special subject matter of his invest­igation, although he does take it into account both in his comments on the process of consumption and in his examination of the process of production.

Marx must pay all the more attention to use-value in his teaching on the process of reproduction, which is outlined in Volume ii of Capital. ‘The overall process of reproduction here includes the consumption process mediated by circula­tion, just as much as the reproduction of capital itself’.^{[959] [960] When investigating this process of reproduction as a whole, it is not enough to presuppose that the commodity has use-value; in order that the process of social reproduction might be completed without hindrance, it is necessary that the social product include within itself several subdivisions between products that are differen­tiated in terms of their natural form, or their use-values. In terms of natural form, the social product is divided, first and foremost, between the two great subdivisions: 1) means of production, and 2) means of consumption. The latter group of products, in turn, can be divided into two sub-groups that are distin­guished by their natural form: 1) means of consumption by the workers, and 2) means of consumption by the capitalists. Thus, in studying social reproduction as a whole, it is necessary to consider not just the reproduction process of value and capital, but also reproduction of the product in naturalform.}

The product of an individual capital... may have any natural form what­soever. The only condition is that it really should have a use form, a use­value, that stamps it as a member of the commodity world capable of circulation. It is different with the product of the total social capital. All material elements of the reproduction must be parts of this product in their natural form.161

This is explained by the fact that, in Volume ii of Capital, Marx is not only investigating the process of reproduction of the component parts of capital and surplus value (c, v, s) but also taking into account the reproduction of the product in natural form (means of production, means of consumption by workers, and means of consumption by capitalists).

Of course, in Volume ii of Capital Marx is also examining the direct process of reproduction of capital, not the reproduction process of products, but since the reproduction of capital requires the availability of definite products in natural form (for example, means of production, means of consumption for workers, etc.), we must take into account the production process of the latter. And Marx does in fact include this process in his investigation to the extent that it is necessary for understanding the process of capital’s reproduction. We know, for example, that the value of variable capital must be reproduced in the value of the social product. But the variable capital is spent in the form of wages for the purchase of labour power, and the wages are spent by workers to purchase means of consumption. Accordingly, the social nature of variable capital requires inclusion in the social product of quantitatively determined components that take the natural form of means of consumption for the workers. And the presence of such components is presupposed by Marx. In this context, Marx limits himself to this presupposition, considering it unnecessary to conduct a special analysis of the concrete natural form of the group of means of consumption for the workers.

Thus, in his schemes of reproduction, Marx is not at all concerned with a detailed analysis of the social product in terms of its natural form or use­value. Marx borrows from the sphere of the production process of use-values only a few general conditions that are connected with the process of capital’s reproduction; he includes these conditions in the investigation to the extent required for understanding the social structure of the reproduction process. And this is precisely the sort of formulation that we find in Marx in connection with his theory of reproduction. It is exactly with regard to the latter that Marx says: ‘This is yet another example of how important is the analysis of use-value for the determinations of economic form’.^{[961] [962] Marx uses almost the same words to express this idea in another place:}

In considering surplus-value as such, the original form of the product, hence of the surplus product, is of no consequence. It becomes important when considering the actual process of reproduction, partly in order to understand its forms, and partly in order to grasp the influence of luxury production, etc., on reproduction. Here is another example of how use­value as such acquires economic significance.¹*’³

It is clearly evident from these formulations by Marx that use-value is taken into account insofar as it is important for investigating ‘the determinations of economic form’, i.e. the production relations between people.

This is what explains the fact that Marx and Engels did not include the con­ditions of consumption in the subject matter studied by political economy, although, as we have already been persuaded more than once, they by no means ignored the process of consumption. In his Contribution to the Critique of Political Economy, Marx pursues the idea that the process of reproduction includes within itself production, exchange, distribution and consumption as its subordinate moments. The reader might think that the process of consump­tion must be included in the subject matter of the study of political economy on an equal footing with the processes of exchange and distribution. It is not pos­sible to agree with this opinion. We find direct references on this point in both Marx and Engels. In the preface to Volume I of Capital Marx wrote: ‘What I have to examine in this work is the capitalist mode of production, and the relations of production and forms of intercourse [Verkehrsverhaltnisse] that correspond to it’.^{[963] [964] [965] There is no mention of the process of consumption. It is true that Marx also neglects to mention the relations of distribution, but, if we understand that distributive relations are only the other side of production relations, then the need to include them in the subject matter studied by political economy becomes obvious. Indeed, we find direct references to this fact in Engels’s Anti­Duhring. Political economy, in the broad sense of the term, is defined by Engels as ‘the science of the laws, conditions, and forms of production and exchange of products in different human societies and of the corresponding modes of distri­bution of these products’.^5 In this formula, too, which lists in detail the various aspects of the subject matter of political economy, the latter does not include the process of consumption.166 The process of consumption is not a topic for direct analysis in Marxist political economy, and it is taken into account only insofar as this is necessary for understanding the capitalist process of repro­duction as a whole, with its corresponding relations of production, exchange and distribution.}

2) Formal Use-Value

Along with use-value in the narrow sense of the term, we do encounter in Marx’s teaching the use of this concept in a different sense. While Marx points out at the beginning of Capital that use-value in capitalist society acquires the special social form of exchange-value and thus becomes the commodity, he has something completely different in view when he speaks, for example, of the use-value of money (meaning precisely money, not metal). In this case, it is not use-value that acquires a special social form (such would apply only to the use-value of the metal from which money is made, not to money itself); rather, it is the socialform itself of a given item that acquires for the commodity producer a special use-value thanks to the fact that it gives him the possibility of exchanging that item for any other. In this case, the use-value depends not on the natural features of the item but instead represents a social feature entirely generated by the social form of the economy, i.e. by the character of its prevailing production relations between people.

On the second page of the Critique of Political Economy, we encounter the following vague remark: ‘Use-value, in its indifference to the determination of economic form, i.e., use-value as use-value, lies outside the sphere of investig­ation of political economy. Use-value belongs in the latter sphere only when it is itself a determination of form’.^{[966] [967] At first sight this comment seems so vague and incomprehensible that P. Rumyantsev, the original translator of the Cri­tique, thought it necessary to render it as follows: ‘It [use-value] belongs to this sphere only insofar as it determines itself the economic forms’. Taken on its own, the idea expressed by Rumyantsev is not subject to any particular objections. Indeed, in those cases where use-value has a determining influence on the eco­nomic forms, we must investigate it in order to understand these economic forms correctly. But the fact is that in this case Marx is speaking of something completely different. As can be seen from the literal text of his sentence, he is speaking not of use-value that determines economic forms, but of use-value that ‘is itself a determination of form’.}

At first sight this sentence seems very obscure, but it is fully explicable if we turn to the pages of the Critique where Marx speaks of the use-value of money: ‘This latter use-value [the use-value of the universal equivalent] is itself a determination of form, i.e., it arises from the specific role which this commodity plays as a result of the universal action exerted on it by the other commodities in the exchange process’.^⁸ It is obvious that even on the second page of the Critique Marx understood the use-value that ‘is itself a determination of form’ to mean the use-value of money, which is conditioned not by the natural attributes of the metal from which money is made but rather by the social functions of the latter. Since this use-value is not use-value in the narrow sense of the term, i.e. as conditioned by the natural features of a product, but is rather the social form a thing, expressing the production relations between people, it is directly a topic for study by political economy.

The concept of use-value in the expanded and purely social sense is used by Marx not only with regard to money; he speaks in the same sense of the use-value of labour power and of the use-value of money-capital that is lent. In all of these cases, the concept of use-value has a purely social character and is used by Marx in a special sense that is completely absent from the works of bourgeois economists. We must, therefore, clarify this concept and take note of the important occasions when it is used by Marx.

a) The Use-Value of Money

We have already seen that the making of products for exchange itself causes a ‘distinction between the usefulness of things for direct consumption and their usefulness in exchange’.^{[968] [969] [970] The thing, in addition to its direct usefulness as an item of consumption, acquires for its possessor a special usefulness, con­sisting of its ability to exchange for other products that he requires. If the producer makes a product exclusively for sale, then, essentially speaking, it is the exchange-value alone of this product that represents usefulness for him. For him, ‘its only direct use-value is as a bearer of exchange-value, and con­sequently, a means of exchange’?70 In this sentence, the dialectical movement of Marx’s thought is clearly evident. If use-value, in the conditions of commod­ity economy, acquires the character of exchange-value, the converse also holds: the exchange-value of the product assumes for its possessor a special usefulness or use-value, giving him the possibility of acquiring, in exchange for the given product, the means of consumption that he needs.}

With the detachment of the universal equivalent from the sphere of all other commodities, its specific use-value is reinforced, consisting of its ability to exchange directly for any other commodity. The specific use-value of money emerges:

The commodity which has been set apart as universal equivalent acquires a dual use-value. In addition to its particular use-value as an individual commodity it acquires a universal use-value. This latter use-value is itself a determination of form, i.e., it arises from the specific role which this commodity plays as a result of the universal action exerted on it by the other commodities in the exchange process.171

The money commodity acquires a dual use-value. Alongside its special use-value as a given commodity (gold, for instance, serves to fill teeth, it forms the raw material for luxury articles, etc.) it acquires a formal use­value, arising out of its specific social functions.^{[971] [972] [973] [974]}

Elsewhere Marx calls the use-value of money ‘functional’^ This designation of the use-value of money as ‘formal’ or ‘functional’ is perfectly understandable. The specific use-value of money follows from the special social form or function that the given item fulfils in the capacity of universal equivalent. Only in commodity economy, with its inherent system of production relations between people, does a universal equivalent appear with its inherent formal use-value.

It is perfectly understandable that the use-value of money differs funda­mentally from use-value in the narrow sense, as possessed by other commod­ities.

The use-value of each commodity, as an object which satisfies particular needs, has a different value in different hands, e.g., it has one value for the person who alienates the commodity, and it has a different value for the person who purchases it. The commodity which has been set apart as the universal equivalent is now an object which satisfies a universal need arising from the exchange process itself, and it has the identical use-value for everybody, consisting of its ability to be the bearer of exchange-value, or a universal means of exchange.^⁴

The universal need for money is something completely different from the need that an individual experiences for one or another item of consumption. Items of consumption are necessary to the commodity producer as an individual; the need for money characterises precisely his nature as a commodity producer. Thus, the need for money is a purely social need in the sense that it arises only in a determinate form of economy, namely, the commodity form. Thus Marx wrote in the preliminary work for The Holy Family: ‘The need for money is therefore the real need created by the modern economy, and the only need which it creates'.i7⁵

Accordingly, money has a dual use-value. However, neither of them serves directly to satisfy any concrete need of the possessor of money. The concrete use-value of the money material, gold for example, can be made use of only in the case when gold does not yet serve in the capacity of money: when gold ful­fils the function of money, its concrete use-value cannot be utilised. But the possessor of money, at the same time, still does not acquire any direct use­fulness from the specific use-value of money, which consists of its suitability for exchange. This use-value of money still has an ‘ideal’ character, since it is yet to be realised by way of exchange for those concrete use-values that the commodity producer requires for satisfaction of his needs. Thus Marx char­acterises money as ‘real exchange-value and only nominal use-value’.^{[975] [976] [977] This ideal use-value has yet to be realised: ‘The use-value of this commodity, though real, seems in the exchange process to have merely a formal existence, which has still to be realised by conversion into actual use-values’.177 The formal, functional, or ideal use-value of money has yet to be realised and to find its embodiment in the concrete use-value for which the money exchanges. In the exchange of money for linen, the latter represents concrete embodiment of the use-value of money.™}

As we see, Marx speaks of the use-value of money in different senses. First of all, the material from which money is made possesses concrete use-value, for instance, gold for the filling of teeth, the making of jewellery, etc.; second, money has a formal or functional use-value that satisfies ‘universal need’ and results from the social function that money performs in commodity society; third, the use-value of money can be understood as the use-value of the com­modities that are purchased with the help of money.

b) The Hoard

In simple commodity economy, the commodity producer endeavours to gain from the sale of his product the largest possible sum of money, but the latter serves him in the purchase of necessary items of consumption. Accordingly, the formal use-value of money here plays a role merely as representative of the concrete use-values of those products that will be purchased by the commod­ity producer. Exchange-value is the representative of use-value. But already, within the limits of simple commodity economy, the commodity producer is compelled to undertake a number of activities whose direct goal is the formal use-value of money itself (i.e. exchange-value), and not the concrete use-value of those products that can be purchased with the help of money. In such case, the money already ceases to be a means of circulation that is spent on the pur­chase of necessary items of consumption. This change of character on money’s part is revealed in its functions as a hoard and as means of payment. Marx ini­tially shows that the commodity producer’s need to retain the money, which is gained from sale of the product, is dictated by the requirement of satisfying his personal needs. The commodity producer’s needs continuously recur and impel him to purchase other people’s commodities, while the production and sale of his own commodity involves specific periods of time and is subject to various contingencies.^{[978] [979] [980] [981] [982] For this reason, the commodity producer temporar­ily withholds a part of the money acquired in order gradually to spend it, as required, for the satisfaction of his needs. In this case, money fulfils the role only of ‘detained coin’ (i.e. of temporarily immobilised means of circulation), not the role of a hoard.}

Money begins to play the latter role only from the moment when it is withdrawn from circulation precisely in order to preserve exchange-value in its directly social form. Marx shows that the very fact of the appearance and spread of commodity circulation already brings to life a ‘need and passionate desire’ to hold on to money in the form of a hoard?⁸⁰ The mere fact that it is possible to retain in one’s own hands exchange-value, in its money form, evokes the passionate desire and need to retain money: ‘With the possibility of keeping hold of the commodity as exchange-value, or exchange-value as a commodity, the lust for gold awakens’.i8i Money represents an enormous social power, and this ‘social power becomes the private power of private persons’.^² The passion to accumulate money itself results from the fact that money exists, i.e. it results from the determinate social form of the economy. ‘Money is not just an object of the passion for enrichment; it is the object of it.i8³

As we see, an objective social fact - the emergence and spread of commodity production and of monetary circulation - is the source for the appearance and spread of new human passions, new needs, and new motives for behaviour. The activity of the commodity producer, selling his product with the goal of accumulating a hoard, is already fundamentally different in terms of character and motive from the activity of a commodity producer who sells his product in order to use the money acquired to purchase necessary items of consumption. The behaviour of the latter commodity producer is directed by his endeavour to satisfy personal needs; the activity of the former commodity producer is directed to the satisfaction of his need for money, i.e. a need that appeared and grew only together with a determinate social form of economy.

The simple fact that the commodity-owner is able to retain his commodit­ies in the form of exchange-value, or to retain the exchange-value as com­modities, makes the exchange of commodities, in order to recover them transformed into gold, the specific motive of circulation. The metamorph­osis of commodities c-M takes place for the sake of their metamorphosis, for the purpose of transforming particular physical wealth into general social wealth. Change of form - instead of exchange of matter - becomes an end in itself. Exchange-value, which was merely a form, is turned into the content of the movement.^{[983] [984] [985] [986]}

The newly emerged need, the need for money, not only acts alongside of the personal needs of the commodity producer; it endeavours to drive them out and take their place. In order to accumulate money, the commodity producer must sell as much as possible and purchase as little as possible; he must restrict the satisfaction of his personal needs. ‘The hoarder therefore sacrifices the lusts of his flesh to the fetish of gold. He takes the gospel of abstinence very seri­ously’.^⁵ The ‘natural’ needs of the individual are relegated to the background by his new and purely social need to have in his hands the enormous social power that money represents. ‘Because he desires to satisfy all social require­ments, he scarcely satisfies the most urgent physical wants’.^⁶

By its very nature, the need for accumulation of a hoard is unlimited, as distinct from an individual’s personal needs, which always have a concrete character and require concrete products for their satisfaction.

The formation of hoards therefore has no intrinsic limits, no bounds in itself, but is an unending process, each particular result of which provides an impulse for a new beginning. Although the hoard can only be increased by being preserved, on the other hand it can only be preserved by being increased.i8⁷

The more the need to accumulate a hoard is satisfied, the stronger it becomes in demanding further accumulation of the hoard. The accumulation of hoards, therefore, is an activity that tends perpetually to be repeated, and the need for money is the sort of need that is never satisfied by the result achieved. The continuously repeated activity of accumulating a hoard makes a defin­ite impression upon the individual, transforms him into the specific social type of a ‘professional hoarder’ and imparts to him, as Marx says, a specific ‘economic character’. This hoarder is also distinguished by a specific psycho­logical way of life that has often been clearly described in world literature. Miserliness not only becomes the life’s work of the hoarder, but it is also sanc­tioned and sanctified by religion and encouraged by the Fathers of the Church in their exhortations as well as by the Mercantilists in their works.^[987] The puritan creed, with its severe preaching of frugality and asceticism, reflected the need of early capitalist economy for a more extensive accumulation of hoards.

The spread and strengthening of the function of money as a hoard signifies a new stage in the history of human needs. It indicates the extension and intensification of the specific, formal use-value of money. If the need for money, as means of circulation, reflected only the commodity producer’s need for items of consumption, the need for money as a hoard already lacks any ‘natural’ character and is itself generated by the social form of the economy, namely, by the spread of commodity production and circulation. The functioning of money, in the role of a hoard, is accompanied by the appearance of completely new and ‘formal’ needs that are inherent only in the commodity producer, not in the individual in general. The need for money is already an end in itself in the activity of the commodity producer, no longer involving merely his quest to satisfy personal needs. Moreover, the need for money aims to marginalise the ‘natural’ needs of the individual for items of consumption. Exchange-value already becomes an end in itself and is no longer the representative of use­value. This marginalisation of use-value into the background is revealed not only in the activities of separate commodity producers but also in the character of the entire production process. Whereas previously the simple commodity producer’s scale of production was determined by the extent of his personal needs, which await satisfaction, now these limits upon production already fall away. The commodity producer, withholding and accumulating money as a hoard, must expand production as much as he can with his still backward and imperfect means of production. ‘The accumulation of money for the sake of money is in fact the barbaric form of production for the sake of production, i.e., the development of the productive powers of social labour beyond the limits of customary requirements’.^{[988] [989]}

c) Means of Payment

We see a further increase of the need for money, as such, with the appearance of money's new function, namely, as means of payment. The commodity pro­ducer, who bought a commodity on credit, must now sell his own product not in order to use the money acquired for the purchase of necessary items of con­sumption but rather to retire his debt with the money he has received. For him, the money no longer represents use-value or consumer items but rather an end in itself. Now the commodity producer no longer needs concrete use-values but instead the specific, formal use-value that money possesses.

By comparison with a hoard, the function of money as means of payment demonstrates further intensification of the importance that the formal use­value of money has for the commodity producer. For the accumulator of a hoard, the issue of whether to retain the money himself or to spend it on the purchase of consumer items depended upon his arbitrary judgement. If the money must fulfil the role of means of payment, the commodity producer is already compelled to use the money for this purpose and cannot spend it upon his own personal consumption. He must convert the product into money; and he needs the money, in turn, to pay the debt, i.e. it must serve as formal use­value.

The conversion of products into money in the sphere of circulation ap­pears originally simply as an individual necessity for the commodity­owner when his own product does not constitute use-value for himself, but has still to become a use-value through alienation. In order to make payment on the contractual settlement day, however, he must already have sold commodities. The evolution of the circulation process thus turns selling into a social necessity for him, quite irrespective of his indi­vidual needs... The conversion of commodities into money as a final act, or the first metamorphosis of commodities as the ultimate goal, which in hoarding appeared to be the whim of the commodity-owner, has now become an economic function. The motive and the content of selling for the sake of payment constitutes the content of the circulation process, a content arising from its very form?⁹⁰

The development of commodity circulation itself causes the appearance of a new need, the need for money for payment; this need for money presupposes the extension of commodity production and circulation, and the intensifica­tion of the formal use-value that inheres in money. The need for money, as means of payment, is independent of the personal needs of the commodity producer; it represents a purely social need that arises only in the given sys­tem of production relations between people, and it entirely subordinates the commodity producer to itself.

The activities of the commodity producer are subordinated to the laws of social necessity; and this necessity has an economic character, since the need for payment of debt is imposed by the entire system of relations among people as commodity producers. But this economic necessity is also sanctioned byjur- idical necessity; the commodity producer knows that, if he refuses to pay the debt, his property will be subject to forced sale according to the law.^{[990] [991] [992] As the activity of the hoarder is sanctified by religion, so the relation between the com­modity producer-creditor and the commodity producer-debtor is regulated by the law.192}

We have seen that money, as a hoard, already ceased to be the representative of concrete use-values for the commodity producer; and conversely, concrete use-values were significant to him only insofar as they represented universal wealth - money. It is exactly the same with the commodity producer who sells his product with the purpose of retiring a previous debt; concrete use-values only play the role of representatives of abstract wealth - money. For this reason, any inability to sell the product in periods of crisis is the equivalent for him of the complete loss of use-value. In moments of monetary crisis, use-values become something completely useless by comparison with cash.^w3

Thus, the spread of money in the role of means of payment signifies a strengthening and expansion of the need for money for the sake of its specific, formal use-value. This need is independent of the personal needs of individual commodity producers. The satisfaction of this universal need for money is dictated to each individual commodity producer by the force of laws of social necessity; it is imposed upon him by the entire network of social production relations in which he is included.

d) The Use-Value of Labour Power

The development of commodity economy brings the appearance of a new use­value, the ‘formal’ use-value of money. As we know, however, the development of commodity economy does not stop there. As a result of the expropriation of small producers, the simple commodity economy is transformed into a capitalist one. In the latter, money already serves not simply as means of circulation, i.e. as the mediating link in exchange of one product for another, but also as capital. The emergence and development of capitalist relations causes the appearance of new types of ‘functional’, or ‘formal’, use-value. Insofar as the process of producing capital is concerned, the self-expansion of the latter has its source in the exploitation of wage-labour or labour power. For the capitalist, labour power is the means for extraction of surplus value or profit. In that capacity, labour power acquires for the capitalist a special use-value that is formal, or functional, in the sense that labour power possesses it only in the conditions of capitalist economy.

The use-value of labour power consists, above all, in its active manifesta­tions, i.e. in labour.^{[993] [994] [995] The use-value of labour power is expressed ‘only in the actual utilization, in the process of the consumption of the labour-power’.^5}

The capitalist buys labour power, which, in the process of production, ap­pears as activity, as labour. But since labour in capitalist society has a dual character, the following question arises: Does the use-value of labour power lie in its ability to be the source of concrete labour or of abstract labour? Marx provides an unequivocal response to this question:

The value of labour-power, and the value which that labour-power val­orizes [verwertet] in the labour-process, are two entirely different mag­nitudes; and this difference was what the capitalist had in mind when he was purchasing the labour-power. The useful quality of labour-power, by virtue of which it makes yarn or boots, was to the capitalist merely the necessary condition for his activity; for in order to create value labour must be expended in a useful manner. What was really decisive for him was the specific use-value which this commodity possesses of being the source of value, even of more value than it has itself. This is the specific service the capitalist expects from labour-power.19⁶

Thus, the specific use-value of labour power is its property of being the source of abstract labour, or of value. It is true that we encounter expressions at certain places in Marx that appear to suggest, at first sight, that the use-value of labour power appears in concrete acts of labour, or in concrete labour. But Marx always emphasises that concrete labour appears here only as the necessary condition for appropriation by the capitalist of abstract labour, or of value.

It is not this concrete character of labour, its use-value as such - that it is for example tailoring labour, cobbling, spinning, weaving, etc. - which forms its specific use-value for capital... what forms its specific use-value for capital is its character as the element which creates exchange-value, abstract labour.^{[996] [997]}

If we considered the use-value of labour power to be its ability to serve as the source of concrete labour, we would have no way of showing the difference between the purchase of labour power and the purchase of a service. Yet Marx thought it necessary to make a clear distinction between these two types of purchase and sale, regarding only the first type as the characteristic accompaniment of capitalist economy.

Labour-power is not purchased under this system for the purpose of satisfying the personal needs of the buyer, either by its service or through its product. The aim of the buyer is to increase the value of his capital, the production of commodities which contain more labour than he paid for, and therefore contain a portion of value which costs him nothing and is nevertheless realized [realisiert] through the sale of those com­modities.™

Thus the purchase of labour power must be strictly distinguished from the purchase of so-called ‘services’, i.e. from purchase of the worker’s capacity for concrete labour that serves to satisfy the personal needs of the buyer. The hiring of a gardener by the capitalist owner of a great horticultural establishment is an act of purchasing labour power, but if the same capitalist hires a gardener to care for the garden of his own estate, this involves not the purchase of labour power but rather the purchase of a service. Marx always condemned the representatives of vulgar political economy for confusing these two types of purchase.

Instead of speaking of wage-labour, the term ‘services’ is used. This word again omits the specific characteristic of wage-labour and of its use - namely, that it increases the value of the commodities against which it is exchanged, that it creates surplus-value - and in doing so, it disregards the specific relationship through which money and commodities are transformed into capital. ‘Service’ is labour seen only as use-value (which is a side issue in capitalist production) just as the term ‘product’ fails to express the essence of commodity and its inherent contradiction.^[998]

Thus, the use-value of labour power is its ability to create value. This is why labour power is defined by Marx as a commodity, whose use-value possesses the specific property of being the source of value.^{[999] [1000] But labour power is purchased by the capitalist only because it is the source of a greater sum of values than the value of this labour power itself. Labour power is the source not only of value but also of surplus value, and it is precisely acquisition of the latter that constitutes the purpose for which the capitalist buys labour power. For this reason, Marx often defines the use-value of labour power as its ability to create a surplus of value, or surplus value. ‘The use-value of labour power for the industrial capitalist is that of producing more value (profit) in its use than it possesses and costs itself. This excess value is its use-value for the industrial capitalist’.201}

Following this exposition, it is easy to understand that the use-value of labour power also has a formal, or functional, character, just as the use-value of money does. Labour power only has the ability to be a source of value and surplus value within a determinate social-economic formation and in the presence of a determinate system of production relations between people. When Marx speaks of the specific use-value of labour power, he has in mind not its technical ability to be the source of concrete labour but rather its social ability to be the source of abstract labour, or of value. This use-value has a formal character because it results from the specific form of wage-labour that is inherent in the capitalist economy.

e) The Use-Value of Loanable Money-Capital

It is only due to the exploitation of labour power in the production process that the capitalist class as a whole can extract surplus value. But with the division of this class into industrial and money capitalists, the latter acquire the possibility of extracting surplus value in the form of interest without participating directly in the organisation of the production process. The money capitalist lends his money-capital to the industrialist from whom he receives, in the form of interest, a portion of the surplus value extracted by the latter. The sum of money that the industrial capitalist receives on loan has for him a special use-value, consisting of its ability to be a source of surplus value.

What then is the use-value that the money capitalist alienates for the duration of the loan and makes over to the productive capitalist, the borrower? It is the use-value that money receives through the fact that it can be transformed into capital, that it can function as capital so as to produce in its movement a definite surplus-value, the average profit... besides conserving its original value. With other commodities, the use-value is ultimately consumed, and in this way the substance of the commodity disappears, and with it its value. The commodity of capital, on the other hand, has the peculiar property that the consumption of its use-value not only maintains its value and use-value but in fact increases it. It is this use-value that money has as capital - the capacity to produce the average profit - that the money capitalist alienates to the industrial capitalist for the period during which he gives him control of the capital loaned.^{[1001] [1002] [1003]}

It is quite obvious that this use-value of the loan of money-capital has a formal or functional character, i.e. it results from the capitalist system of production relations. ‘As distinct from an ordinary commodity, however, this use-value is itself a value, i.e., the excess of the value that results from the use of the money as capital over its original magnitude. The profit is this use-value^,.20'Λ ‘Value as such (interest) comes to be the use-value of capital’?*¹⁴

This use-value is possessed by capital that is provided as a loan, i.e. cap­ital as a commodity. But in a developed capitalist economy, every more or less important sum of money can function in the role of capital. Consequently, the aforementioned specific use-value inheres not only in capital as a commodity but also in money as capital. In a developed capitalist economy, every signific­ant sum of money can be regarded as a specific form of capital and, in turn, has the ability to be transformed into capital. Thus money, together with the formal use-value that it possesses in any commodity economy (namely, the ability to serve as means of circulation, as a hoard and as means of payment), also acquires in capitalist economy a second, formal use-value, consisting of its ability to serve as a source of surplus value.

It goes without saying that the use-value of capital as a commodity, and of money as capital, is itself inextricably connected with the use-value of labour power that we considered previously. If labour power did not possess the property of being a source of value and surplus value, neither money-capital nor money could be a source of the latter. Money-capital has the capacity to be a source of the average profit precisely because it can be spent on the purchase of labour power, which has the capacity to be a source of value and surplus value.

Since, on the basis of capitalist production, a certain sum of values rep­resented in money or commodities - actually in money, the converted form of the commodity - makes it possible to extract a certain amount of labour gratis from the workers and to appropriate a certain amount of surplus-value, surplus-labour, surplus product, it is obvious that money itself can be sold as a commodity, that is, as a commodity sui generis.^[1004]

Accordingly, the use-value of capital as a commodity has its source in the use­value of labour power. On the surface of the market, however, this internal con­nection between phenomena is obscured and hidden due to the separation of the class of money capitalists from industrial capitalists. Since the money cap­italist is not directly involved in the production process and does not purchase labour power, the illusion arises that money capital, by itself, has the capacity to create interest, completely apart from its use to purchase labour power, which is employed in the process of production.

Since the use-value of loanable money-capitalhas its source in labour power, it is not surprising that a certain analogy can be drawn between them.

The money loaned in this way is to a certain extent analogous in this respect to labour-power, in its position vis-a-vis the industrial capitalist... The use-value of labour-power for the industrial capitalist is that of producing more value (profit) in its use than it possesses and costs itself. This excess value is its use-value for the industrial capitalist. And the use­value of the loaned money capital similarly appears as a capacity to annex and increase value.^{[1005] [1006]}

Marx makes the same point in another place: ‘Just as in the case of labour­power, the use-value of money here becomes that of creating exchange-value, more exchange-value than It itself contains’^

We began with the use-value of money, and we have ended with the same issue. But if money appeared originally as money, now it plays the role of cap­ital. If the use-value of money, as money, resulted from the particular features of commodity economy, the use-value of money as capital results from the particular features of capitalist economy. In both cases, the social form of the commodity itself (i.e. money) acquires a particular and specific use-value. As distinct from the use-value that inheres in a concrete product, independently of any determinate social form of the production process, the present case involves use-value as the result of a specific social form of economy. This use­value has a functional, or formal, character.