From the May 1947 issue of the Socialist Standard
The aim of commodity production is the realisation of surplus value and the first step towards this end is the purchase of the necessary means of production, either by the individual capitalist or by what is increasingly the case, a state body. Thus beginning with money, the Capitalists buy factories, plant and raw materials plus the energies’ of working men and women and the net return on this outlay is an increased sum of money, sufficient not only to repeat the process, but enough for further expansion of production.
From the unpaid labour of the workers there is— notwithstanding the personal “expenses’’ of the owning class in luxury living—a sum of money to be reinvested in the productive process, either as an addition to the existing capital or as capital seeking fresh fields of exploitation, leading to an inevitable accumulation of capital seeking surplus-value, or profit. Herein lies the dilemma of Capitalism and the slave-like history of its working-class victims. Let us look at this.
All money set aside as industrial capital can for our purpose be divided into two parts, that spent on the inert means of production we can call “constant” capital, while that for buying labour-power, which preserves and furnishes additional value is “variable” capital. Now if the function of labour-power is to labour, then the call for labour by the employing-class will depend on the market demand for commodities, while the market will, in turn, be gained by those owners that have succeeded in reducing the labour in their commodities to the lower level.
Labour-time is therefore the Capitalist’s devil which claims as its victims those that are hindmost, driving them to centralise or amalgamate their capital and concentrate it in labour-saving machinery, and the plant lay-out of mass production—to invest in constant capital rather than variable capital.
This results in large capital devouring its smaller rivals, while the social outcome is such that the means of production call for a progressively smaller number of workers to operate it, making it impossible for Capitalism to find work for the total employable population, hence an industrial reserve army is in constant being, ever threatening the wage level of those in jobs.
Spurred on by the needs of the market and the greed for surplus-value, capital accumulation in the past was built up by driving labour-power below its value by excessive hours, piecework and low wages, but wiser methods hold sway to-day in production-drives advocated by the workers’ own “leaders” coupled with subtle plea that the workers have a "share” in nationalised industries and state planning —an idea writ large in Russia where the old methods of accumulation are joined with the new. Lastly, though the needs of the accumulation of capital may increase the total wage-bill in connection with the total number employed—the wage-bill—decreases in proportion to the national income. So much for the workers’ "share” in Capitalism’s productivity.
Yet not all capital invested in the Capitalist economy is productive of value or surplus-value. To begin with, the industrialists—whose workers directly produce value and thereby surplus-value—must part with some of the surplus to others whose capital forms an integral part in Capitalist production. The merchants. bankers and others, though not in productive industry, nevertheless share in the surplus according to the size of their capital and receive, over a period, an average rate of increment, enforced by competition : for capital flows out of those spheres where the rate is low to where it is higher. At this point it might be asked: “How do those capitals whose workers produce no surplus-value, exploit their workers?”
The finance-capitalists whose service to capital is to centralise all the available loanable money for the use of the whole Capitalist class, reap the difference between the depositors’ rate and the interest charge for borrowers. The work entailed being done by their employees, who merely receive the cost of subsistence or salary consistent with this type of work. The outlay in wages and equipment compared with the charge for the bank services give these Capitalists their share in surplus-value. Again, the merchants who market the products, effect this much more economically than could the many independent industrialists, thus saving them labour-time and capital. The wage costs' for their workers’ abilities and commercial knowledge, set against that part of surplus-value which the industrialists leave them to realise in the selling price, give the merchants their profits.
The landowners, hereditary possessors of the earth’s surface, lend no like "service” to Capitalist production, hence the historic enmity of the Capitalists against this monopoly. National Capitalism, fresh in the saddle of political power has adopted policies, varying from state control to even the "liquidation” of landowners as in Russia and earlier in France. An eventual compromise is always concluded with this "charge on industry,” even though land as land has no value and will only yield rent out of the surplus values of farmers and industrialists. Landowners in this way take their share of the spoils through the undertakings on their land whether these activities be mining, building or agriculture. They accumulate wealth, brought about, by others activities. Their land offered as a commodity is bought and sold for a sum that is equal to an investment whose interest would equal the rent.
To sum up, surplus value is the totality of unpaid labour wrung from the workers' in the productive process. while its distribution to the Capitalists as rent, interest, and profit takes place in the circulatory process.