Theories of Surplus Value, Part I, Chapter 4 - Part 115

Marx quotes the following passage from Senior, which shows he says, how little of Smith Senior had grasped, and even how confused he was in relation to the distinction between capital and revenue.

““It seems, in truth, that in this case Smith’s attention was entirely absorbed by the position of the great landowners, the only ones to whom his observations on the unproductive classes can in general be applied. I do not know how otherwise to account for his supposition that capital is only employed to maintain productive labourers, while unproductive labourers live from revenue. The greater number of those whom he calls pre-eminently unproductive—teachers, and those who govern the State—are maintained at the expense of capital, that is to say, by means of what is spent in advance for reproduction” (l.c., pp. 204-05).” (p 291)

If Senior means that the teachers live on the profit from capital, then that means that they are being paid out of revenue, not capital, because profit is revenue not capital. If Senior means that they are paid from taxes, which are levied on various commodities, then these taxes are also a deduction from revenues. Marx, elsewhere, however, has demonstrated that the labour of the teacher is productive, when it is employed by capital, with the purpose of creating surplus value. In other words, a school that employs teachers who are paid a wage, sells a commodity – education – the same as any other capitalist enterprise. If the teacher's wage is equal to 20 hours of labour, in the week, and they work for 40 hours, the school fees being set accordingly, then the teacher will produce 20 hours of surplus value.

This is true whether the education is sold to a landlord, capitalist, or worker. The distinction as to whether the teacher's labour is productive or unproductive is determined by whether it is paid for out of capital or revenue. Here, it is bought from capital, and produces a surplus value. It is productive labour. This applies equally whether it is private or state capital which employs this labour.

The distinction is rather between teacher's labour bought from capital, as here, or from revenue, for example, the capitalist who hires the services of a private tutor, and pays for those services from their profits, i.e. from revenue, and with no concern for the creation of a profit.

Senior distinguishes between the provision of services such as education or healthcare, and the product of those services. For example, a teacher may provide several hours of quality education, but this does not mean that the students will be educated by it. A skilful doctor may provide several hours of quality healthcare, but the patient may still die. The labour is paid according to the service provided not the result obtained. In this distinction, Marx says, Senior has at last adopted Smith's distinction between consumption that is either productive or non-productive, and labour which is either productive or non-productive.

“Consumption would be productive if it employed labour that either produced labour-power itself (which for example the schoolmaster’s or the physician’s labour might do) or reproduced the value of the commodities with which it was bought. The consumption of labour which accomplished neither the one nor the other of these would be unproductive. And indeed Smith says: the labour which can only be consumed productively (i.e., industrially) I call productive labour, and that which can be consumed unproductively, whose consumption is by its nature not industrial consumption, I call unproductive labour. Mr. Senior has therefore proved his genius by giving things new names.” (p 292)

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