Letters: What is Capital?

Dear Sir,

I should be obliged with your opinion on the following: —Is it illogical to say “that under Socialism we cannot or will not have capital ”?

My affirmation of the above proposition brought me into conflict with a person who says: “Yes; you will have capital under Socialism.” His point was that, scientifically speaking, the form of ownership of any given thing cannot affect its name which means or implies certain qualities not altering with ownership, i.e., the qualities of gunpowder, of a rifle, of an engine, etc., are not determined by ownership, but by function.

Thus you have now quantities of wealth reserved for the purpose of further wealth production (capital); of a necessity you would have this repeated under Socialism; consequently you would have capital.

Reply:
The above letter was mislaid, and consequently there has been some delay in dealing with it.

Capital is not merely “wealth reserved for the purpose of further wealth production.’’ It is wealth used for the purpose of profit.

To be strictly accurate, capital is a function of money; it is money which begets money; money invested for the purpose of bringing back a larger amount of money than that which was originally advanced.

The starting point of all capitalist operations is the investing of money. A glance at the prospectus of any company will make this evident. A long period of time, and complicated processes, may intervene between the original investing of the money and its final return, plus an increment; nevertheless the increment was the object of the investment.

The increment, or extra money, is the form taken by unpaid labour — surplus value. The cause of the production of this increment is the fact that the worker produces more in a given time than he receives for working during that time; in other words, he produces a surplus of value above the value of his means of subsistence. This surplus goes to the capitalist, as the worker receives on the average only a sum equal to his cost of subsistence.

Production of articles for sale with a view to profit is the basis upon which capitalism is built. Before this can become the rule, two essentials are requisite. First, wealth must be privately owned; and second, there must be a stock of free labourers on the market—free to be bought along with the other articles necessary for the production of wealth. The free labourer is a product of modern times. He is free in the sense that neither family nor territorial ties interfere with the sale of his labour power. He is also free in the sense that he may starve (providing he does not make himself a public nuisance !) if he does not find a buyer for his labour power.

In past stages of social development, capital has appeared here and there, but only as the odd, the unusual element in production. Originally it appeared as lending money in the hands of usurers. It only became the social rule when a new type of worker appeared, who was bound by no feudal or other ties, and was free to sell his energy to whoever wished to buy. Capital is therefore bound up with wage slavery.

To sum the matter up: the existence of capital as the general condition of a society presupposes the existence of a class producing surplus value and a class appropriating it; a robbed and a robber class; a class producing wealth which it does not own, and a class owning wealth which it does not produce.
With the introduction of Socialism, the private ownership of wealth will cease to prevail; wealth will be produced for use and not for profit. Consequently wealth wilt not function as capital. The conditions for the existence of capital having disappeared, capital will do likewise.

There is a well-known case of a fellow named Othello who, owing to certain circumstances found his occupation gone. Pity the poor capitalist—he will emulate Othello!