CHAPTER XIX.

Commercial Capital and the Work of the Commercial Employes.
(Extracted from vol. Ill, part 1, ch. 10, 17. German ed.)
Every capital that produces must — as we have seen - transform the finished commodities into money and the money, in its turn, into Mp and L (means of production and labour); in other words, it must be continually buying and selling. It is, to a certain extent, relieved of these func- tions by merchants having an independent capital of their own.
Let us assume that a merchant possesses £ 3COO, and that he buys therewith 3COCO yards of linen from the linen manufacturer. He sells these 30 000 yards at a profit of, let us say, ten per cent. With the money thus obtained he again buys linen, which he again sells. He constantly repeats this operation of buying in view of , subsequent re- selling, without himself producing anything in the meantime.
As regards the linen manufacturer, he has been paid the value of his linen with the money of the merchant; and, circumstances remaining the same, he can once more buy, with that money, yarn, coal, labour power etc., and continue to produce.
But althougft the sale of the linen has taken place, as far as he is concerned, this is not the case, as far as the linen itself is concerned. The latter is still on the market, as a commodity destined to be sold. Nothing further has happened to the linen, beyond a change in the person of its owner.
Let us assume that the merchant does not succeed in selling the original 30000 yards of linen before the manu- facturer has the second 30000 yards ready. In this case, the merchant is unable to buy a second time. Production comes to a standstill and has to be interrupted. Of course it is possible that the manufacturer has other money at his disposal, wherewith to continue the process of production.
212 CHAPTER MX.
But the fact none the less remains that that process cannot, for the time being, be continued with the help of the ori- ginal capital. Here we see clearly that the activity of the merchant simply consists in undertaking the sale of the commodity, which otherwise would have to be undertaken by the manufacturer himself. If, instead of an independent merchant, an employe of the manufacturer were to be exclusively entrusted with the functions of purchase and sale, this fact could not possibly be doubtful for a moment.
If the manufacturer of linen had to wait until his goods had really reached the last purchaser, /. e. the consumer, the process of his reproduction would be interrupted. Or else, to avoid this, he would have had to narrow the scope of his business operations and maintain a larger reserve of money. This division of his capital does not cease in consequence of the intervention of the merchant. But without the latter, the money reserve would have to be larger, and the scope of production correspondingly smaller. At the same time the manufacturer saves the time required for selling, and can utilise it for the work of supervising the process of production.
In the event of the merchant's capital not overstepping its necessary limits, we may assume:
1. that in consequence of the division of labour, the capital, occupied solely in buying and selling (and we must here reckon not only the money necessary to purchase com- modities, but also the money necessary for storage, buildings, transport, commercial wage-labour, etc.), will be smaller than it would be if the manufacturer had personally to undertake the whole work of selling his commodities;
2. that because the merchant undertakes exclusively such work, not only are the manufacturer's commodities converted sooner into money, but the commodity-capital it- self finds a market more rapidly than it would in the hands of the manufacturer;
'}. that -- when we consider the total commercial ca- pital in relation to the capital that produces — a rotation1 of the commercial capital may not only represent the rota-
i ! a term employed by Marx to describe (he entire
movement of capital from the moment of ita outlay for m
labour power, etc., till the moment when it is the finished commodity. (Translator'* note.)
COMMERCIAL CAPITAL AND 1 HE WORK &c. 213
liens of several capitals in a single branch, but also the rotations of a number of capitals in different branches. If the linen merchant has sold the product of the first manufacturer before the latter has another equivalent quan- tity of linen ready, he can meanwhile buy linen from other manufacturers, and sell it. Or, after the sale of the linen, during the interval which elapses before new linen is to hand, he may sell silk.
The same commercial capital can thus bring about successively the various rotations of the capitals invested in a given branch; and, consequently, it does not only replace the individual money reserve which every manu- facturer should have. For example, after the merchant has sold the corn of 'a farmer, he can, with the same money, buy the corn of a second farmer and sell it; whereas the rotation of the farmer's capital, abstraction made of the time of circulation, is limited by the time of production, which lasts a year.
The more rapidly the commercial capital rotates, the smaller is the part of the total money capital which figures as commercial capital; inversely, the slower the rotation, the larger is that part.
We have seen that the acts of selling and buying create neither value nor surplus- value, but — on the con- trary — place limits on the formation of value and surplus- value. Nothing is changed in this, of course, if such acts, instead of being performed by the industrial capitalist, are performed by other persons. Abstraction being thus made of all those functions which are not, properly speaking, com- mercial - - e. g. storage, forwarding, carrying, sorting, retailing, which constitute a continuation of the process of production -- and limited to its real function of buying in order to sell, commercial capital creates neither value nor surplus-value, but merely serves as the medium for transforming available commodities into money. Neverthe- less it must yield the average yearly profit. If it were to yield a larger annual profit than the capital which is engaged in producing does, part of the latter would be converted into commercial capital. The contrary phenome- non would occur if it were. to yield a smaller annual profit. No species of capital can change its functions more easily than commercial capital.
214 w.v.
As commercial capital itself creates no surplus-value, it is clear that the surplus-value accruing to it in the shape of an average profit forms a part of the surplus-value created by the totality of productive capital. But the question now arises as to how commercial capital draws to itself its share of such surplus-value.
The belief that commercial profit merely consists in rai- sing the price of commodities above their value, is an illusion.
It is evident that the tradesman can only reap his profit from the price of the commodities sold by him; and it is also evident that this profit, which he realises when selling the commodities, must be equal to the excess of the selling price over the purchase price.
It is possible that after the purchase of a commodity, and before its sale, extra costs (costs of circulation) are incurred. If this be the case, it is clear that the excess of the selling price over the purchase price does not repre- sent profit alone. In order to facilitate our 'inquiry, we shall assume for the moment that no such costs are incurred.
How, then, is it possible that the tradesman sells the commodities at a higher price than he paid for them?
In the case of the capitalist who produces, we have already answered the same question. His cost price is equal to that part of his capital which is effectually con- sumed, c + v; to this must be added the average profit, and thus the selling price of the manufacturer is arrived at — /. c. what we have termed the «price of production*. If we add together all the prices of production of all available commodities, then the sum will be equal to the real value of the totality of such commodities, /'. c. will be equal to the amount of labour effectively contained in them. Thus it comes about at least at the present stage of our discussion - that the selling prices of the manufacturers are, in their totality, equal to the value of the commodities, /. c. to the amount of labour contained in the latter; their cost prices, on the other hand, are only equal to that part of such labour as is paid for.
But it is not so in the case of the dealer in commodities, or tradesman. He .does not produce, but only continues the
COMMERCIAL (.M'llM !.\7) ////. \\(JKK &c. 215
process of selling the commodities which the manufacturer1 began. Already before the sale the manufacturer has the surplus-value in hand, in the shape of the commodities, and through the sale he merely transforms it into money. The tradesman must make his profit by selling. This only appears possible if he increases still further the manu- facturer's ' price of production. As the totality of prices of production is equal to the total value of all commodities, it would seem that the tradespeople can only make profit by selling commodities for more than they are worth.
Such a form of additional charge is v>ry easy to understand. But, on looking at the matter more closely, \ve shall find that this is only an illusion. (It is always question here only of the average, not of individual cases.)
Why do we assume that the tradesman can only realise a profit of, say, 10 % on his goods, if he sells them at 10% above their prices of production? Because we have taken for granted that the manufacturer sells the commodi- ties to the tradesman for their price of production. But we must bear in mind once more that the price of produc- tion is equal to the cost price -f- the average profit. This means that we have taken for granted that the tradesman pays to the manufacturer ,the price of production which would arise if the average profit were to be adjusted without any regard for commercial capital! We have taken for granted that commercial capital plays no part in the forma- tion of the general rate of profit. But this is a perfectly absurd assumption.
Let us asssume that the total amount of productive capital advanced during the year to be equal to 720 c + 180 v —" QOO (say thousands of pounds sterling), and let 4-is further assume the rate of surplus-value to be equal to 100 %. The product is thus equal to 720 c -f 180 v + 180s .— 1080. The rate of profit for the total capital is, then,
180
qT^-j — 20 per cent. This is, therefore, the average
rate of profit. But we will now assume that, in addition to the QOO of capital which produces, com-
t It will already have been observed by the reader that we substitute the word ^manufacturer for the more complicated expression ^capita- list who produces:: . To the class of manufacturers, in this sense of the word, therefore, landed proprietors fcc.. in so far as they produce, belong.
mercial capital to the extent of 10U is required, which has the same share of profit in proportion to its size. This commercial capital is one-tenth of the total capital of 1000, and takes, therefore, one-tenth share of the total surplus-value of 180, /. e. it gets a profit of 18 per cent. As a consequence, the profit remaining to be divided between the other nine-tenths of the total capital is but 162, /. e. also 18 per cent on a capital of 900. Hence the price at which the total number of commodities pro- duced are sold to the trade by the owners of the produc- tive capital is equal to 720 c + 180 v + 162 s =: 1062. And if the merchant adds the average profit of 18% to his capital of 100, he sells the commodities for 1062 + 18 - 1080, /. e. for their value, although he only makes his pro- fit in and through the process of circulation, and only through the excess of his selling price over his price of purchase.
Thus, in the formation of the general rate of profit, commercial capital co-operates in proportion to the part played by it in the total capital. The share of the total profit due to the commercial capital is already reckoned in the average rate of profit.
The price of production, at which the productive capi- talist, as such, sells, is therefore smaller than the real price of production of the commodity; or, if we consider the total amount of commodities, the prices at which the productive class of capitalists sells them, are less than their value. In the above example, the tradesman, by selling for 118 commodities which cost him 100, adds, it is true, 18% to them. But as the commodity which he purchased for 100 is worth 118, he does not, on that account, sell them above their value.
The question now arises: what is the position of the commercial wage-labourers whom the tradesman employs?
From one point of view, such a commercial eni| is a wage-labourer like any other. The variable capital of the tradesman, and not that money destined for his private upkeep, serves to buy the employe's labour power. His labour power is not bought for the purpose of private service, but for the purpose of utilising the capital advanced in com- merce. The value of his labour power, and consequently his wages, are therefore — as in the case of all other wage
COMMERCIAL CAPITAL AND THE WORK &c. 217
labourers — not determined by the product of his labour, but by the costs of restoring his labour power.
•Cut the same difference must exist between him and those labourers directly employed by the capital which pro- duces, as separates commercial from productive capital, the tradesman from the manufacturer. For since the trades- man or merchant merely serves as medium for the sale of the commodities, and produces neither value nor surplus- value, the commercial employes cannot directly produce sur- plus-value for him. (As in the case of the productive labourers, we assume that the wages are determined by the value of the labour power, that the tradesman, consequently, does not enrich himself by deductions from them).
What is difficult, in the case of the commercial em- ployes, is by no means to explain how they produce directly profit for their employer, although not directly producing surplus-value. This question is already settled by the fact of our having shown whence commercial profit is derived. Just as productive capital makes profit by selling labour, incorporated in the goods, which it has never remunerated; so commercial capital makes its profit by paying to pro- ductive capital only a part of this unremunerated labour, whilst obtaining payment, when the commodities are sold, for that part also. Productive capital engenders surplus- value by directly appropriating unpaid labour; commercial capital causes part of the already available surplus-value be transferred to itself. The quantity of his profit depends, in the case of the individual tradesman, on the quantity of capital which he can apply to buying and selling; and the larger, the amount of unpaid labour of his employes, the larger that quantity will be. The function itself, through the exercise of which profit accrues to commercial capital, is for the greater part abandoned by the tradesman to his employes. The unpaid labour of the latter, although not creating surplus-value, enables the tradesman none the less to appropriate surplus-value - - which is, in practice, the same thing as far as individual capitals are concerned; such unpaid labour is hence the source of profit for those capi- tals. Commercial transactions could otherwise never be car- ried out on a large scale, could never develop on a capita- listic basis. Just as the unpaid labour of the productive worker directly creates surplus-value for the latter's em-
218
ployer, so does the unpaid labour of the commercial employe obtain for commercial capital a share of that sur- plus-value.
With the commercial employe the difficulty lies, ra- ther, in the following direction: seeing that the labour of the tradesman himself creates no value — although it ob- tains for him a share of already available surplus-value; what is the position in regard to his variable capital, out of which he pays the wages of his employes? Is such variable capital to be reckoned as commercial capital ad- vanced by him? If not, this would seem to contradict the law of the mutual balancing of the rates of profit; what capitalist would advance 150 if he could only reckon 100 as capital advanced? If, on the contrary, his variable capital is to be reckoned, this would appear to be incompatible with the nature itself of commercial capital. For such capi- tal does not obtain its profit by putting the labour of others into motion, but because it buys and sells.
If every merchant only possessed so much capital as he could cause to rotate by means of his own personal la- bour, a great frittering away of commercial capital would be the result; this frittering away would increase in the measure in which productive capital increases its scale of production and extends the scope of its operations. There would thus arise a growing disproportion between the two. In the measure in which capital is centralised in the pro- cess of production, it would become decentralised in tin.1 process of circulation. The productive capitalist would then be obliged to spend much time, labour, and money on purely commercial activities, seeing thai instead of dealing with 100 tradespeople, he would have to deal with 1000. In this way the advantages entailed by ihe differentiation of com- mercial capital as an independent entity would be, to a large extent, lost, not only would the purely commercial increase, but also the other costs of circulation sorting, forwarding, etc. Such would he the state of affairs so far as productive capital is concerned.
Let us now consider the commercial capital. Firstly, in regard to the purely commercial activities. More time is not required for calculating with large figures, than with small ones. It takes ten times longer to make ten pun lor r 5 each, than to make a single purchase for -
COMMERCIAL CAPITAL AND THE WORK &c. 219
It costs ten times as many letters and stamps, ten times as much paper, to correspond with ten tradespeople in a small way of business, than it does to correspond with one large firm. The limited division of labour in commer- cial houses, where one employe is bookkeeper and another cashier, whilst others are respectively correspondent, buyer, salesman, traveller, etc., saves a vast amount of labour- time; so that the number of commercial workers employed in the wholesale trade is quite out of proportion to the size of the business. This is the case, because in commerce - far more than in industry - - the same function, whether exercised on a large scale or a small one, requires the same amount of labour time. (For this reason, the pheno- menon of concentration appears historically at an earlier date in commerce than in industry). Then comes the expen- diture of constant capital. 100 small offices are far more expensive than a single large one; similarly 100 small stores are far more expensive than one large warehouse; and so forth. The costs of transport — which, at least in the form of costs which have to be advanced, enter into the merchant's business — increase with the development of the frittering away process. ,
The productive capitalist would have to expend more labour and money on the commercial part of his business. The same commercial capital, ' distributed among numerous small tradespeople, would require — precisely on account of its being frittered away — a much larger number of labour- ers in order to carry out its functions; and a larger com- mercial capital would be necessary in order to bring about the rotation of the same commodities-capital. If we call the total commercial capital invested in the purchase and sale of commodities B, and the corresponding variable capital (advanced for the purpose of payment of the commercial employes) b, then B + b is smaller than the total commer- cial capital B would have to be, if b did not exist, /. e. if every tradesman got along without the help of any em- ployes.
But we have not yet got over the difficulty.
The price at which the commodities are sold must suf- fice, firstly, to pay the average profit on B + b. Here, already, the reader might hesitate. We assume that the selling price is equal to the value of the commodities. We
15*
220 CHAI'lli-
have just seen in what way the commercial capital B shares in the average profit. The latter is contained, therefore, in the price of sale. But what is the case with b? From where is the profit on the supplementary capital h, which has been advanced for the purpose of paying the employes, lo be derived — over and above the profit apportioned to the commercial capital B? It would appear as if the profit on b were, in reality, constituted by an arbitrary increase in the price. But we must bear in mind that B -f- b is smaller than B without b would be. The average profit realised with the cooperation of B is thus sufficient to yield also a profit for b.
But the selling price must, moreover, suffice, in the se- cond place, not only to yield a profit for b, but to recu- perate the sum b itself. /. e. to make good the amount ad- vanced for wages of the commercial employes. And here lies the difficulty.
If the selling price of the commodities represents no- thing but the latter's value, there is -- according to the stage of our examination — a sum contained in that price, out of which the cost price and the average profit of the manufacturers are paid, and further the commercial capital with its profit; and this commercial profit is large enough to yield also a profit on the sum advanced by the trades- man for wages of his employes. But how does this sum advanced for wages — ,the tradesman's variable capital - come itself to be included in the selling price? Can the tradesman, merely by reason of the fact that he employs and pays employes, arbitrarily add the sums thus advanced to the selling price? Or must he pay them from out of his profit, and the latter be reduced in proportion?
That which the tradesman buys with b is — according to our assumption only commercial work, /'. r. Inhnir necessary for transforming commodities into money, and, inversely, money into commodities. Hence it is labour which transforms values, but does not create values. But if such labour be not performed, commercial capital cannot fulfil1 its functions; and in this case it has no share in i ting the general rate of profit, /. e. it draws no dividend from cut of the total profit.
I.ct us suppose B to be equal to ICO, /; to be equal to 10, and the rate of profit to l.e 10 V (We make abstraction
COMMERCIAL CAPITAL AND THE WORK &c. 221
of the material business costs, so as not to unnecessarily complicate the calculation. For they have nothing to do with the difficulty here confronting us. The constant capital of the tradesman is, at the most, just as large, but as a matter of fact smaller, than it would be if the manufac- turer had himself to do the selling.)
If the tradesman employed nobody, and therefore had no outlay b, the work otherwise performed by the employes would none the less have to be done. The tradesman would have to do it himself. In order to buy or sell to the extent of B (100), the tradesman would give his time — and we will assume that it is the only time at his disposal. The commercial work represented by b (10) would, in this case, have to be paid out of profit, /. e. presupposes the existence of another commercial capital of 100. This second B (or 100) would not become merged into the price of the commodities (as a supplement to such price); but this would be the case with the 10 per cent. Two operations would thus take place of 100 — 200, buying commodities for 200 + 20 = 220.
As commercial capital is absolutely nothing else than a differentiated part of productive capital having become in- dependent of the latter, we will endeavour to find a solution by assuming that the differentiation of the two species of capi- tal has not yet taken place. As a matter of fact the manufac- turer also employs commercial employes in his offiqe. Let us therefore consider, first of all, the variable capital b advanced for them.
This office is always very small compared with the industrial factory. It is clear that in the measure that pro- duction develops, the more numerous will the commercial activities become, which must be performed in order to permit of the turnover of the productive capital — of the sale of the product, and of the purchase of the means of production -- and in order to keep account of the entire business. To such activities belong the calculation of prices, bookkeeping, financial management, correspondence, etc. The employment of commercial wage-labourers hence becomes necessary, and these persons constitute the office properly so-called. The outlay for these employes, although it takes the form of wages, differs from the variable capital expen- ded on the wages of the productive labourers. Such outlay
222 CHAPTER MX.
increases the manufacturers^ expenses, the quantity of capi- tal to be advanced, without directly augmenting the sur- plus-value. Like all expenditure of a like nature, the out- lay in question reduces the rate of profit, seeing that the amount of capital advanced, but not the surplus-value, in- creases. Consequently the manufacturer seeks to keep down such expenditure — just as in the case of his expenditure for constant capital — as much as possible and to reduce it to a mini- mum. Productive capital thus adopts a different position towards its commercial employes, from that which it adopts towards its productive wage-labourers. The greater the number of these — 4 other circumstances remaining the same — > and the greater will be the amount produced, and the greater will be the quantity of surplus-value or profit. On the other hand, the more production develops, the greater the quantity of commodities produced, and which must be sold in order to realise the value and surplus-value contained in them — and the more do the office expenses increase (ab- solutely, if not relatively), and give rise to a sort of divi- sion of labour. The fact that such expenses are recuperated out of the profit — and thus presuppose the latter's existence - is manifested by the fact (amongst others), that concur- rently with the growth of the commercial salaries, these are frequently paid — in part — by percentual participation in the profits. Not because much commercial work is done, is much value produced, but inversely -- because, and if, a great quantity of values have to be calculated and turned over, much commercial work is required. It is the same with the other costs 'of circulation. In order to measure, weigh, pack, transport a large quantity of commodities, that quantity must be available. The quantity of labour required for packing and forwarding etc. depends on the quantity of commodities to be packed and forwarded; and not vice versa.
The commercial employe'' does not directly produce sur- plus-value. But the price of his labour power is determined by its value (/. e. its cost of production), whereas the exer- cise of "thai power - labourers of all categories — is not limited by its value. Therefore his wages are by no means necessarily proportionate to the quantity of profit lie helps the capitalist to realise in money. What he costs the capitalist, and what the latter gets out
COMMERCIAL CAPITAL AND HIE WORK &c. 223
of him, are different magnitudes. He is worth something to the capitalist, seeing that — by means of work which is partly unpaid --he helps to reduce the costs due to the conversion of the surplus-value into money. The commer- cial employe properly so-called belongs to the class of better paid wage-labourer — of those whose labour is qua- lified labour that stands higher than average labour. Nevertheless the wages have a tendency to sink, as the capitalist system of production develops, and even relati- vely to the average labour. Partly, this phenomenon is due to the division of labour inside the office; this entails a one-sided development of working capacity, and such de- velopment costs to a certain extent the capitalist nothing, since the skill of the labourer is furthered auto- matically by his activity, and the more rapidly, the more one-sided that activity becomes in consequence of growing division of labour. In the second place, it is due to the fact that the preparatory education, the knowlege of commer- cial routine, foreign languages, etc., are constantly spreading and being acquired more rapidly, more easily, more cheap- ly, with every progress of science and of the educational systems, and especially in the measure in .which the capi- talist mode of production develops the practical tendencies of the methods of education. The spread of education per- mits of the recruiting of commercial employes among classes of the population formerly excluded from such professions, and used to a more primitive standard of living. In this manner the democratisation of education engenders over- crowding and sharpens competition within the commercial profession. With few exceptions, therefore, the labour power of the commercial employes diminishes in value as the capi- talist system of production develops; their wages sink, where- as their capacity for labour increases.1
If we consider commercial work in connection with the productive capital, it is quite evident that the former can- not be a source of surplus-value. It will occur to no one
i Note by Friedrich Engels: fate of the commercial proletariat — written in 1865 — has proved to be, is clearly shown by the example of the hundreds of German clerks, who, well up in all branches of commercial work and knowing 3 or 4 languages, to-day (1894) in the City of London vainly offer their ser- vices for* 25 shillings a week — a wage far less than that of a skilled machint-operator. - A lacuna of 2 pages in the manuscript left by Ma.-x indicates that he intended discussing this subject further.
224 \PTER XX.
to suggest thai the costs entailed by the office of a fac- tory are anything else but costs which diminish the profits to the whole extent of their amount. Apparently — but only apparently - - it is different in the case of the wholesale merchant. In his case the outlay for costs of circulation appear much larger, because — apart from their own com- mercial offices, which are included in all factories -- that part of the capital which otherwise has to be applied in this manner by the totality of manufacturers is now concen- trated in the hands of individual tradesmen. But this, of course, cannot alter the nature of the thing. Costs of cir- culation appear to productive capital as what they are in reality, /. e. costs. To the tradesman they appear as the source of his profit, which the general rate of profit being assumed a priori — is precisely in proportion to the amount of such costs. For commercial capital these costs of circulation are a productive investment. Therefore the commercial labour bought by such capital is directly pro- ductive for the latter.