Margin

“ He who produces from and upon better grades will naturally achieve greater or better results with the same expenditure of Labor than he who produces from poorer grades. This difference is measureable by variations in the productive grades of Land, from nothing in excess of production cost on the lower side of the Margin of Production—the poorest in demand, the Economic frontier—to something in excess of production cost on the higher side of the Margin, the hither side of the Economic frontier, and to more and more for higher and higher grades up to the best. ”

“ An analysis of such facts that does not bring in the marginal is not an analysis of consciousness, but an analysis of physical reality. Even if we consider non-physical objects, such as mathematical or economic concepts, we find that our analysis 260 is not psychological as long as the marginal is left out. The consideration of the margin, however, brings us into the presence of facts which are of a distinctive kind and which warrant a new science. Let the margin be eliminated and psychology disappears at the same time. ”

“ Thus, with alterations in the so-called Margin of Production, the natural85 allocations from Wealth to Wages would rise or fall as the Margin receded or advanced, whereas the natural allocations from Wealth to Rent would rise with the advances of the Margin and fall with its recession. ”

“ You own whatever security you buy, and get its dividend. Your margin is your equity in it. In property whose market value fluctuates so widely and rapidly, I naturally require you to keep your margin at the per cent. ”

“ That analysis of the character of the margin between the farmer and wholesaler will show that decreases in price find immediate reflection on the farmer, while immediate increases in price are absorbed by the trades between and the farmer gets but a lagging increase. ”

“ Sometimes the banks were overhung with thick masses of willows that wholly hid the ground behind; sometimes we had noble hills on one hand, clothed densely with foliage to their tops, and on the other hand open levels blazing with poppies, or clothed in the rich blue of the corn-flower; sometimes we drifted in the shadow of forests, and sometimes along the margin of long stretches of velvety grass, fresh and green and bright, a tireless charm to the eye. ”

“ When these things are brought together in society their value is found by the comparison and measurement of marginal utilities. Economic forces, like other classes of forces, act and react upon each other. ”

“ Remember that we do not sell our labor. We sell our strength to work our laboring power, our labor power. Labor is the expenditure of labor-power. See Value, Price and Profit, pages 71, 72 and 73. When we apply for a job, we do not offer to sell our WORK, but our strength to WORK. The commodities we make are crystallizations of our work or of our LABOR, but it is our strength to labor, or laboring power—our labor-power which we sell to the boss. ”

“ Given the single rate of wages and profits, and assuming the capital employed to be in the same proportion, things must exchange in proportion to the quantity of labour employed; for if I got the same value by employing one labourer as you get by employing two, my profits would be higher. ”

“ You compare a commodity, in the production of which the advances in labour remain the same while the profits of stock diminish, to another commodity 'obtained by a given quantity of labour, a given quantity of capital, and a given rate of profits.' Is not this supposing two rates of profit at the same time? ”

“ The whole of the surplus value which arises in this manner in the process of production is called the mass of the surplus value, or shortly, m.s., that is to say, the individual rate of surplus value multiplied by the total number of workers engaged in an undertaking, or the total amount of wages.
5. Profit.
The mass of surplus value appears to the capitalist in the shape of profit. Surplus value is a Marxian scientific term which exactly expresses the principle of profit. ”

“ In business accounts, for example, whatever will bring a price to the owner is accounted Wealth, or Capital as a sub-classification of Wealth, whether the object of the price be a building, a domesticated animal, a slave, a vacant building-lot, an unused agricultural area, or an improved and cultivated farm. Some of those items of “wealth” or “capital” do belong, Economically, in the Wealth category, buildings and domesticated animals being among them; but many fall wholly or in part into one or the other of the two other categories, Labor and Land. ”

“ On the other hand, if the mass of labour-power employed, or the amount of variable capital, increases, but not in proportion to the fall in the rate of surplus-value, the mass of the surplus-value produced, falls. ”

“ It may be laid down, however, as a general proposition, liable to no exception, that when the value of any produce can be resolved into labour and profits, then as the proportion of such produce which goes to labour increases, the proportion which goes to profits must decrease in the same degree, and as the proportion which goes to labour decreases, the proportion which goes to profits must increase in the same degree. ”

“ That money, therefore, which constantly preserves an equal value, which poises itself, as it were, in a just equilibrium between the fluctuating proportion of the value of things, is the only permanent and equal scale, by which value can be measured. ”

“ As the gross profit may be very different though the rate of profit be the same; so also may the absolute price paid for labour and tools be very different, and yet the proportion between the price paid and the produce obtained may be just the same. ”

“ It is impossible, perhaps, to formulate this point, as wages are habitually estimated in quantity and interest in a ratio; but if we suppose a given quantity of wealth to be the produce of a given amount of labor, cooperating for a stated time with a certain amount of capital, the proportion in which the produce would be divided between the labor and the capital would afford a comparison. ”

“ Now, we wish to throw our labor as so much capital into your business, on the understanding that, if your profits are greater than the average profits of the period we have been considering, you will pay us in proportion, and that, if they are less, you will pay us in proportion also. ”

“ The ratio between the price which he has to pay for these means of production, and the produce which they enable him to raise, is the rate of his profit. If he must give for labour and tools four-fifths of what they will produce, the remaining fifth will constitute his profit, and will give him a rate of one in four, or twenty-five per cent, on his outlay. ”

“ By profits, must of course be understood the rate of profit; for a lower rate of profit on a larger capital may yield a larger gross profit, considered absolutely, though a smaller in proportion to the entire produce. ”

“ Rent is paid for land, interest for capital, wages for labour, because in subjective valuation a share of the aggregate return is imputed to land, a share to capital, a share to labour; nor could any more precisely quantitative expression be found for price, were it not that subjective value, by its bearing on supply, number, and cost of production, already admitted of computation. ”

“ All the species of each class according to their different qualities of goodness, may be reduced to a proportion of value. A pound of gold, of lead, of different grains, of different butters, or of what you will, valued by the pound, may at any precise time, be reduced to a scale of proportional values, which the wants, demands, competition and faculties of buyers and sellers, keep in a perpetual fluctuation. ”

“ What would be the consequence of this difference in the rates of profit for capitals employed in the different branches of industry? Why, the consequence that generally obtains whenever, from whatever reason, the average rate of profit comes to differ in the different spheres of production. ”

“ Rent, Interest, and Industrial Profit are only different names for different parts of the surplus value of the commodity, or the unpaid labour enclosed in it, and they are equally derived from this source, and from this source alone. ”

“ In the last resort production will not be carried on unless labour and capital receive a sufficient reward and the sufficient reward is the normal value of the factors of production. But when we are comparing the relative values of commodities and are seeking to explain, for example, how it is that for long periods of time these relative values are stable, or conform to some regular law, we have to break up the elements of value into the constituents of the expenses of the various factors of production. ”

“ Next, we are told that in modern times the relative value of two things is affected by the proportions in which fixed capital and circulating enter into their production; if fixed capital enters more into one than into another, then a rise of wages will lower the value of the first, for it will lower the rate of profits, and, as there are more profits concerned in the first, the value of this first will fall in relation to the other. ”

“ This accumulated stock of the produce of labour is termed Capital. The function of Capital in production, it is of the utmost importance thoroughly to understand, since a number of the erroneous notions with which our subject is infested, originate in an imperfect and confused apprehension of this point.
Capital, by persons wholly unused to reflect on the subject, is supposed to be synonymous with money. To expose this misapprehension, would be to repeat what has been said in the introductory chapter. Money is no more synonymous with capital than it is with wealth. ”

“ We shall see that wages are the earnings-that is to say, the makings - of labour, not the advances of capital, and that the labourer who receives his wages in money (coined or printed, it may be, before his labour commenced) really receives in return for the addition his labour has made to the general stock of wealth a draft upon that general stock, which he may utilize in any particular form of wealth that will best satisfy his desires. ”

“ The proportion consecrated may be a certain ratio of income fixed on a sliding scale, on the principle that the greater the profits, the greater the proportion which me be spared. For instance, on the first day of each week, or month, or quarter, or year, one may consecrate a certain proportion of his profits of that week, month, quarter, or year to the Lord, say five, eight, or ten per cent., in case they rise to a specified amount ”

“ I saw my host in the apartment in which we had supped. Wherever you employ a force of any sort, to carry a point of real importance, reject all nice calculations of economy. Better to be a thousand per cent, over the mark, than the smallest fraction of a unit under it. ”

“ And, in general, whenever a fall in the value of money takes place, without a fall in the rate of profits, an event which is generally open to observation, it is to be attributed to incidental and secondary causes affecting the relations of money to labour, and not to that which is connected with the taking of poorer land into cultivation. ”

“ According to this analysis, value, considered from the point of view of the association which producers, by division of labor and by exchange, naturally form among themselves, is the PROPORTIONAL RELATION OF THE PRODUCTS WHICH CONSTITUTE WEALTH, and what we call the value of any special product is a formula which expresses, in terms of money, the proportion of this product to the general wealth.—Utility is the basis of value; labor fixes the relation ”

“ That is to say, land, labor, capital and managerial ability have contributed in varying degrees to the production of a certain amount of current wealth, and the problem of functional distribution is to ascertain how the net product resulting from these joint efforts is divided. How much goes to rent, how much to wages, how much to interest and how much to profits? The second kind of distribution is the division of the wealth of society among individuals or families ”

“ In order to show the reader that capital is an actual producer, in as true a sense as labour is, or the ability by which labour is directed, let us begin by considering fixed capital as distinct from wage capital, and by considering it in its simplest forms. By fixed capital is meant any tools, machines, or materials by which man’s efficiency as a producer of wealth is increased ”

“ It therefore by no means follows, that a rise in the value of money necessarily implies a proportional fall in the prices of commodities; or that a fall in the value of money implies a proportional rise in prices. ”

“ The fact is that this matter of capital, as it is called, of business, and of labor, is an equation, and you cannot disturb one side of the equation without disturbing the other. If it costs for labor 50 per cent. more to produce a ton of iron, that 50 per cent. more goes into what that iron must sell for, or some part of it. ”

“ When we do not distinguish different parts in the final process of production we do distinguish the value of the materials. The value of these materials may often be again decomposed many times, exhibiting as many clearly defined steps in the creation of the final value. At each of these steps we habitually estimate a creation of value, an addition to capital. ”

“ How shall we decide how much weight should be given, in forming the index, to the stock of durable capital and how much weight to the flow of goods and services through a period of time,—the flow to individuals, which mirrors consumption? ”

“ Such undiscriminating uses of the term Capital are doubtless defensible enough in business accountings; for in private business anything may be thought of as business “capital” if it can be summarized in terms of Money. But for Economics as a comprehensive social science, the dumping into the same basic category of such radically different things as Labor, Land57 and Wealth—Man, Natural Resources and Artificial Objects—is indefensible and miraculously confusing. ”