We have seen in the introduction how competition created the proletariat at the very beginning of the industrial movement by increasing the wages of weavers in consequence of the increased demand for woven goods, so inducing the weaving peasants to abandon their farms and earn more money by devoting themselves to their looms. We have seen how it crowded out the small farmers by means of the large farm system, reduced them to the rank of proletarians, and attracted them in part into the towns; how it further ruined the small bourgeoisie in great measure and reduced its members also to the ranks of the proletariat; how it centralised capital in the hands of the few, and population in the great towns. Such are the various ways and means by which competition, as it reached its full manifestation and free development in modern industry, created and extended the proletariat. We shall now have to observe its influence on the working-class already created. And here we must begin by tracing the results of competition of single workers with one another.
Competition is the completest expression of the battle of all against all which rules in modern civil society. This battle, a battle for life, for existence, for everything, in case of need a battle of life and death, is fought not between the different classes of society only, but also between the individual members of these classes. Each is in the way of the other, and each seeks to crowd out all who are in his way, and to put himself in their place. The workers are in constant competition among themselves as are the members of the bourgeoisie among themselves. The power-loom weaver is in competition with the hand-loom weaver, the unemployed or ill-paid hand-loom weaver with him who has work or is better paid, each trying to supplant the other. But this competition of the workers among themselves is the worst side of the present state of things in its effect upon the worker, the sharpest weapon against the proletariat in the hands of the bourgeoisie. Hence the effort of the workers to nullify this competition by associations, hence the hatred of the bourgeoisie towards these associations, and its triumph in every defeat which befalls them.
The proletarian is helpless; left to himself, he cannot live a single day. The bourgeoisie has gained a monopoly of all means of existence in the broadest sense of the word. What the proletarian needs, he can obtain only from this bourgeoisie, which is protected in its monopoly by the power of the state. The proletarian is, therefore, in law and in fact, the slave of the bourgeoisie, which can decree his life or death. It offers him the means of living, but only for an "equivalent", for his work. It even lets him have the appearance of acting from a free choice, of making a contract with free, unconstrained consent, as a responsible agent who has attained his majority.
Fine freedom, where the proletarian has no other choice than that of either accepting the conditions which the bourgeoisie offers him, or of starving, of freezing to death, of sleeping naked among the beasts of the forests! A fine "equivalent" valued at pleasure by the bourgeoisie! And if one proletarian is such a fool as to starve rather than agree to the "equitable" propositions of the bourgeoisie, his "natural superiors", another is easily found in his place; there are proletarians enough in the world, and not all so insane as to prefer dying to living.
Here we have the competition of the workers among themselves. If all the proletarians announced their determination to starve rather than work for the bourgeoisie, the latter would have to surrender its monopoly. But this is not the case – is, indeed, a rather impossible case – so that the bourgeoisie still thrives. To this competition of the workers there is but one limit; no worker will work for less than he needs to subsist. If he must starve, he will prefer to starve in idleness rather than in toil. True, this limit is relative; one needs more than another, one is accustomed to more comfort than another; the Englishman, who is still somewhat civilised, needs more than the Irishman, who goes in rags, eats potatoes, and sleeps in a pig-sty. But that does not hinder the Irishman's competing with the Englishman, and gradually forcing the rate of wages, and with it the Englishman's level of civilisation, down to the Irishman's level. Certain kinds of work require a certain grade of civilisation, and to these belong almost all forms of industrial occupation; hence the interest of the bourgeoisie requires in this case that wages should be high enough to enable the workman to keep himself upon the required plane.
The newly immigrated Irishman, encamped in the first stable that offers, or turned out in the street after a week because he spends everything upon drink and cannot pay rent, would be a poor mill-hand. The mill-hand must, therefore, have wages enough to enable him to bring up his children to regular work; but no more, lest he should be able to get on without the wages of his children, and so make something else of them than mere working-men. Here, too, the limit, the minimum wage, is relative. When every member of the family works, the individual worker can get on with proportionately less, and the bourgeoisie has made the most of the opportunity of employing and making profitable the labour of women and children afforded by machine-work. Of course it is not in every family that every member can be set to work, and those in which the case is otherwise would be in a bad way if obliged to exist upon the minimum wage possible to a wholly employed family. Hence the usual wages form an average according to which a fully employed family gets on pretty well, and one which embraces few members able to work, pretty badly. But in the worst case, every working-man prefers surrendering the trifling luxury to which he was accustomed to not living at all; prefers a pig-pen to no roof, wears rags in preference to going naked, confines himself to a potato diet in preference to starvation. He contents himself with half-pay and the hope of better times rather than be driven into the street to perish before the eyes of the world, as so many have done who had no work whatever. This trifle, therefore, this something more than nothing, is the minimum of wages. And if there are more workers at hand than the bourgeoisie thinks well to employ – if at the end of the battle of competition there yet remain workers who find nothing to do, they must simply starve; for the bourgeois will hardly give them work if he cannot sell the produce of their labour at a profit.
From this it is evident what the minimum of wages is. The maximum is determined by the competition of the bourgeoisie among themselves; for we have seen how they, too, must compete with each other. The bourgeois can increase his capital only in commerce and manufacture, and in both cases he needs workers. Even if he invests his capital at interest, he needs them indirectly; for without commerce and manufacture, no one would pay him interest upon his capital, no one could use it. So the bourgeois certainly needs workers, not indeed for his immediate living, for at need he could consume his capital, but as we need an article of trade or a beast of burden – as a means of profit. The proletarian produces the goods which the bourgeois sells with advantage. When, therefore, the demand for these goods increases so that all the competing working-men are employed, and a few more might perhaps be useful, the competition among the workers falls away, and the bourgeoisie begin to compete among themselves. The capitalist in search of workmen knows very well that his profits increase as prices rise in consequence of the increased demand for his goods, and pays a trifle higher wages rather than let the whole profit escape him. He sends the butter to fetch the cheese, and getting the latter, leaves the butter ungrudgingly to the workers. So one capitalist after another goes in chase of workers, and wages rise; but only as high as the increasing demand permits. If the capitalist, who willingly sacrificed a part of his extraordinary profit, runs into danger of sacrificing any part of his ordinary average profit, he takes very good care not to pay more than average wages.
From this we can determine the average rate of wages. Under average circumstances, when neither workers nor capitalists have reason to compete, especially among themselves, when there are just as many workers at hand as can be employed in producing precisely the goods that are demanded, wages stand a little above the minimum. How far they rise above the minimum will depend upon the average needs and the grade of civilisation of the workers. If the workers are accustomed to eat meat several times in the week, the capitalists must reconcile themselves to paying wages enough to make this food attainable; not less, because the workers are not competing among themselves and have no occasion to content themselves with less; not more, because the capitalists, in the absence of competition among themselves, have no occasion to attract working-men by extraordinary favours.
This standard of the average needs and the average civilisation of the workers has become very complicated by reason of the complications of English industry, and is different for different sorts of workers, as has been pointed out. Most industrial occupations demand a certain skill and regularity, and for these qualities, which involve a certain grade of civilisation, the rate of wages must be such as to induce the worker to acquire such skill and subject himself to such regularity. Hence it is that the average wages of industrial workers are higher than those of mere porters, day-labourers, etc., higher especially than those of agricultural labourers, a fact to which the additional cost of the necessities of life in cities contributes somewhat. In other words, the worker is, in law and in fact, the slave of the property-holding class, so effectually a slave that he is sold like a piece of goods, rises and falls in value like a commodity. If the demand for workers increases, the price of workers rises; if it falls, their price falls. If it falls so greatly that a number of them become unsaleable, if they are left in stock, they are simply left idle; and as they cannot live upon that, they die of starvation. For, to speak in the words of the economists, the expense incurred in maintaining them would not be reproduced, would be money thrown away, and to this end no man advances capital; and, so far, Malthus was perfectly right in his theory of population. The only difference as compared with the old, outspoken slavery is this, that the worker of today seems to he free because he is not sold once for all, but piecemeal by the day, the week, the year, and because no one owner sells him to another, but he is forced to sell himself in this way instead, being the slave of no particular person, but of the whole property- holding class. For him the matter is unchanged at bottom, and if this semblance of liberty necessarily gives him some real freedom on the one hand, it entails on the other the disadvantage that no one guarantees him a subsistence, he is in danger of being repudiated at any moment by his master, the bourgeoisie, and left to die of starvation, if the bourgeoisie ceases to have an interest in his employment, his existence. The bourgeoisie, on the other hand, is far better off under the present arrangement than uncover the old slave system; it can dismiss its employees at discretion without sacrificing invested capital, and gets its work done much more cheaply than is possible with slave labour, as Adam Smith comfortingly pointed out. 
Hence it follows, too, that Adam Smith was perfectly right in making the assertion:
"That the demand for men, like that for any other commodity, necessarily regulates the production of men, quickens it when it goes on too slowly, and stops it when it advances too fast."
Just as in the case of any other commodity! If there are too few labourers on hand, prices, i.e., wages, rise, the workers are more prosperous, marriages multiply, more children are born and more live to grow up, until a sufficient number of labourers has been secured. If there are too many on hand, prices fall, want of work, poverty, and starvation, and consequent diseases arise, and the "surplus population" is put out of the way. And Malthus, who carried the foregoing proposition of Smith farther, was also right, in his way, in asserting that there is always a "surplus population"; that there are always too many people in the world; he is wrong only when he asserts that there are more people on hand than can be maintained from the available means of subsistence. Surplus population is engendered rather by the competition of the workers among themselves, which forces each separate worker to labour as much each day as his strength can possibly admit. If a manufacturer can employ ten hands nine hours daily, he can employ nine if each works ten hours, and the tenth goes hungry. And if a manufacturer can force the nine hands to work an extra hour daily for the same wages by threatening to discharge them at a time when the demand for hands is not very great, he discharges the tenth and saves so much wages. This is the process on a small scale, which goes on in a nation on a large one. The productiveness of each hand raised to the highest pitch by the competition of the workers among themselves, the division of labour, the introduction of machinery, the subjugation of the forces of Nature, deprive a multitude of workers of bread. These starving workers are then removed from the market, they can buy nothing, and the quantity of articles of consumption previously required by them is no longer in demand, need no longer be produced; the workers previously employed in producing them are therefore driven out of work, and are also removed from the market, and so it goes on, always the same old round, or rather, so it would go if other circumstances did not intervene. The introduction of the industrial forces already referred to for increasing production leads, in the course of time, to a reduction of prices of the articles produced and to consequent increased consumption, so that a large part of the displaced workers finally, after long suffering, find work again. If, in addition to this, the conquest of foreign markets constantly and rapidly increases the demand for manufactured goods, as has been the case in England during the past sixty years, the demand for hands increases, and, in proportion to it, the population. Thus, instead of diminishing, the population of the British Empire has increased with extraordinary rapidity, and is still increasing. Yet, in spite of the extension of industry, in spite of the demand for working-men which, in general, has increased, there is, according to the confession of all the official political parties (Tory, Whig, and Radical), permanent surplus, superfluous population; the competition among the workers is constantly greater than the competition to secure workers.
Whence comes this incongruity? It lies in the nature of industrial competition and the commercial crises which arise from it. In the present unregulated production and distribution of the means of subsistence, which is carried on not directly for the sake of supplying needs, but for profit, in the system under which every one works for himself to enrich himself, disturbances inevitably arise at every moment. For example, England supplies a number of countries with most diverse goods. Now, although the manufacturer may know how much of each article is consumed in each country annually, he cannot know how much is on hand at every given moment, much less can he know how much his competitors export thither. He can only draw most uncertain inferences from the perpetual fluctuations in prices, as to the quantities on hand and the needs of the moment. He must trust to luck in exporting his goods. Everything is done blindly, as guess-work, more or less at the mercy of accident. Upon the slightest favourable report each one exports what he can, and before long such a market is glutted, sales stop, capital remains inactive, prices fall, and English manufacture has no further employment for its hands. In the beginning of the development of manufacture, these checks were limited to single branches and single markets; but the centralizing tendency of competition, which drives the hands thrown out of one branch into such other branches as are most easily accessible and transfers the goods which cannot be disposed of in one market to other markets, has gradually brought the single minor crises nearer together and united them into one periodically recurring crisis. Such a crisis usually recurs once in five years after a brief period of activity and general prosperity; the home market, like all foreign ones, is glutted with English goods, which it can only slowly absorb, the industrial movement comes to a standstill in almost every branch, the small manufacturers and merchants who cannot survive a prolonged inactivity of their invested capital fail, the larger ones suspend business during the worst season, close their mills or work short time, perhaps half the day; wages fall by reason of the competition of the unemployed, the diminution of working-time and the lack of profitable sales; want becomes universal among the workers, the small savings, which individuals may have made, are rapidly consumed, the philanthropic institutions are overburdened, the poor-rates are doubled, trebled, and still insufficient, the number of the starving increases, and the whole multitude of "surplus" population presses in terrific numbers into the foreground. This continues for a time; the "surplus" exist as best they may, or perish; philanthropy and the Poor Law help many of them to a painful prolongation of their existence. Others find scant means of subsistence here and there in such kinds of work as have been least open to competition, are most remote from manufacture. And with how little can a human being keep body and soul together for a time! Gradually the state of things improves; the accumulations of goods are consumed, the general depression among the men of commerce and manufacture prevents a too hasty replenishing of the markets, and at last rising prices and favourable reports from all directions restore activity. Most of the markets are distant ones; demand increases and prices rise constantly while the first exports are arriving; people struggle for the first goods, the first sales enliven trade still more, the prospective ones promise still higher prices; expecting a further rise, merchants begin to buy upon speculation, and so to withdraw from consumption the articles intended for it, just when they are most needed. Speculation forces prices still higher, by inspiring others to purchase, and appropriating new importations at once. All this is reported to England, manufacturers begin to produce with a will, new mills are built, every means is employed to make the most of the favourable moment. Speculation arises here, too, exerting the same influence as upon foreign markets, raising prices, withdrawing goods from consumption, spurring manufacture in both ways to the highest pitch of effort. Then come the daring speculators working with fictitious capital, living upon credit, ruined if they cannot speedily sell; they hurl themselves into this universal, disorderly race for profits, multiply the disorder and haste by their unbridled passion, which drives prices and production to madness. It is a frantic struggle, which carries away even the most experienced and phlegmatic; goods are spun, woven, hammered, as if all mankind were to be newly equipped, as though two thousand million new consumers had been discovered in the moon. All at once the shaky speculators abroad, who must have money, begin to sell, below market price, of course, for their need is urgent; one sale is followed by others, prices fluctuate, speculators throw their goods upon the market in terror, the market is disordered, credit shaken, one house after another stops payments, bankruptcy follows bankruptcy, and the discovery is made that three times more goods are on hand or under way than can be consumed. The news reaches England, where production has been going on at full speed meanwhile, panic seizes all hands, failures abroad cause others in England, the panic crushes a number of firms, all reserves are thrown upon the market here, too, in the moment of anxiety, and the alarm is still further exaggerated. This is the beginning of the crisis, which then takes precisely the same course as its predecessor, and gives place in turn to a season of prosperity. So it goes on perpetually,– prosperity, crisis, prosperity, crisis, and this perennial round in which English industry moves is, as has been before observed, usually completed once in five or six years.
From this it is clear that English manufacture must have, at all times save the brief periods of highest prosperity, an unemployed reserve army of workers, in order to be able to produce the masses of goods required by the market in the liveliest months. This reserve army is larger or smaller, according as the state of the market occasions the employment of a larger or smaller proportion of its members. And if at the moment of highest activity of the market the agricultural districts and the branches least affected by the general prosperity temporarily supply to manufacture a number of workers, these are a mere minority, and these too belong to the reserve army, with the single difference that the prosperity of the moment was required to reveal their connection with it. When they enter upon the more active branches of work, their former employers draw in somewhat, in order to feel the loss less, work longer hours, employ women and younger workers, and when the wanderers discharged at the beginning of the crisis return, they find their places filled and themselves superfluous – at least in the majority of cases. This reserve army, which embraces an immense multitude during the crisis and a large number during the period which may be regarded as the average between the highest prosperity and the crisis, is the "surplus population" of England, which keeps body and soul together by begging, stealing, street-sweeping, collecting manure, pushing hand-carts, driving donkeys, peddling, or performing occasional small jobs. In every great town a multitude of such people may be found. It is astonishing in what devices this "surplus population" takes refuge. The London crossing-sweepers are known all over the world; but hitherto the principal streets in all the great cities, as well as the crossings, have been swept by people out of other work, and employed by the Poor Law guardians or the municipal authorities for the purpose. Now, however, a machine has been invented which rattles through the streets daily, and has spoiled this source of income for the unemployed. Along the great highways leading into the cities, on which there is a great deal of wagon traffic, a large number of people may be seen with small carts, gathering fresh horse-dung at the risk of their lives among the passing coaches and omnibuses often paying a couple of shillings a week to the authorities for the privilege. But this occupation is forbidden in many places, because the ordinary street-sweepings thus impoverished cannot be sold as manure. Happy are such of the "surplus" as can obtain a push-cart and go about with it. Happier still those to whom it is vouchsafed to possess an ass in addition to the cart. The ass must get his own food or is given a little gathered refuse, and can yet bring in a trifle of money.
Most of the "surplus" betake themselves to huckstering. On Saturday afternoons, especially, when the whole working population is on the streets, the crowd who live from huckstering and peddling may be seen. Shoe and corset laces, braces, twine, cakes, oranges, every kind of small articles are offered by men, women, and children; and at other times also, such peddlers are always to be seen standing at the street corners, or going about with cakes and ginger-beer or nettle-beer. Matches and such things, sealing-wax, and patent mixtures for lighting fires are further resources of such vendors. Others, so-called jobbers, go about the streets seeking small jobs. Many of these succeed in getting a day's work, many are not so fortunate.
"At the gates of each of the [London] docks," says the Rev. W. Champneys, preacher of the East End, "hundreds of poor men may be seen before daybreak waiting for the opening of the gates in the hope of obtaining a day's work; and when the youngest and most able-bodied, and those best known, have been engaged, hundreds still may be seen returning to their destitute families with that sickness of heart which arises from hope deferred."
When these people find no work and will not rebel against society, what remains for them but to beg? And surely no one can wonder at the great army of beggars, most of them able-bodied men, with whom the police carries on perpetual war. But the beggary of these men has a peculiar character. Such a man usually goes about with his family singing a pleading song in the streets or appealing, in a speech, to the benevolence of the passers-by. And it is a striking fact that these beggars are seen almost exclusively in the working-people's districts, that it is almost exclusively the gifts of the poor from which they live. Or the family takes up its position in a busy street, and without uttering a word, lets the mere sight of its helplessness plead for it. In this case, too, they reckon upon the sympathy of the workers alone, who know from experience how it feels to be hungry, and are liable to find themselves in the same situation at any moment; for this dumb yet most moving appeal, is met with almost solely in such streets as are frequented by working-men, and at such hours as working men pass by; but especially on summer evenings, when the "secrets" of the working-people's quarters are generally revealed, and the middle-class withdraws as far as possible from the district thus polluted. And he among the "surplus" who has courage and passion enough openly to resist society, to reply with declared war upon the bourgeoisie to the disguised war which the bourgeoisie wages upon him, goes forth to rob, plunder, murder, and burn!
Of this surplus population there are, according to the reports a the Poor Law commissioners, on an average, a million and a half in England and Wales; in Scotland the number cannot be ascertained for want of Poor Law regulations, and with Ireland we shall deal separately. Moreover, this million and a half includes only those who actually apply to the parish for relief; the great multitude who struggle on without recourse to this most hated expedient, it does not embrace. On the other hand, a good part of the number belongs to the agricultural districts, and does not enter into the present discussion. During .a crisis this number naturally increases markedly, and want reaches its highest pitch. Take, for instance, the crisis of 1842, which, being the latest, was the most violent; for the intensity of the crisis increases with each repetition, and the next, which may be expected not later than 1847, will probably be still more violent and lasting. During this crisis the poor-rates rose in every town to a hitherto unknown height. In Stockport, among other towns, for every pound paid in house-rent, eight shillings of poor-rate had to be paid, so that the rate alone formed forty per cent of the house-rent. Moreover whole streets stood vacant, so that there were at least twenty thousand fewer inhabitants than usual, and on the doors of the empty houses might be read: "Stockport to let." In Bolton where, in ordinary years, the rents from which rates are paid average £86,000, they sank to £36,000. The number of the poor to be supported rose, on the other hand, to 14,000, or more than twenty per cent of the whole number of inhabitants. In Leeds, the Poor Law guardians had a reserve fund of £10,000. This, with a contribution of £7,000, was wholly exhausted before the crisis reached its height. So it was everywhere. A report drawn up in January, 1845, by a committee of the Anti-Corn Law League, on the condition of the industrial districts in 1842, which was based upon detailed statements of the manufacturers, asserts that the poor-rate was, taking the average, twice as high as in 1839, and that the number of persons requiring relief has trebled, even quintupled, since that time; that a multitude of applicants belong to a class which had never before solicited relief; that the working-class commands more than two-thirds less of the means of subsistence than from 1834-1836; that the consumption of meat had been decidedly less, in some places twenty per cent, in others reaching sixty per cent less; that even handicraftsmen, smiths, bricklayers, and others, who usually have full employment in the most depressed periods, now suffered greatly from want of work and reduction of wages; and that, even now, in January, 1845, wages are still steadily falling. And these are the reports of manufacturers!
The starving workmen, whose mills were idle, whose employers could give them no work, stood in the streets in all directions, begged singly or in crowds, besieged the sidewalks in armies, and appealed to the passers-by for help; they begged, not cringing like ordinary beggars, but threatening by their numbers, their gestures, and their words. Such was the state of things in all the industrial districts, from Leicester to Leeds, and from Manchester to Birmingham. Here and there disturbances arose, as in the Staffordshire potteries, in July. The most frightful excitement prevailed among the workers until the general insurrection broke out throughout the manufacturing districts in August. When I came to Manchester in November, 1842, there were crowds of unemployed working-men at every street corner, and many mills were still standing idle. In the following months these unwilling corner loafers gradually vanished, and the factories came into activity once more.
To what extent want and suffering prevail among these unemployed during such a crisis, I need not describe. The poor-rates are insufficient, vastly insufficient; the philanthropy of the rich is a rain-drop in the ocean, lost in the moment of falling, beggary can support but few among the crowds. If the small dealers did not sell to the working-people on credit at such times as long as possible – paying themselves liberally afterwards, it must be confessed – and if the working-people did not help each other, every crisis would remove a multitude of the surplus through death by starvation. Since, however, the most depressed period is brief, lasting, at worst, but one, two, or two and a half years, most of them emerge from it with their lives after dire privations. But indirectly by disease, etc., every crisis finds a multitude of victims, as we shall see. First, however, let us turn to another cause of abasement to which the English worker is exposed, a cause permanently active in forcing the whole class downwards.
 A favourite expression of the English manufacturers.– Note by Engels.
 Adam Smith, Wealth of Nations, I., McCulloch's edition in one volume, sect. 8, p. 36: "The wear and tear of a slave, it has been said, is at the expense of his master, but that of a free servant is at his own expense. The wear and tear of the latter, however, is, in reality, as much at the expense of his master as that of the former. The wages paid to journeymen and servants of every kind, must be such as may enable them, one with another, to continue the race of journeymen and servants, according as the increasing, diminishing, or stationary demand of the society may happen to require. But though the wear and tear of a free servant be equally at the expense of his master, it generally costs him much less than that of a slave. The fund for replacing or repairing, if I may say so, the wear and tear of the slave, is commonly managed by the negligent master or careless overseer." – Note by Engels.
 Two cooling effervescent drinks, the former made of water, sugar and some ginger, the latter of water, sugar and nettles. They are much liked by the workers, especially the teetotallers.– Note by Engels.