The above examples have demonstrated that so far as social capital is concerned, value is produced by Departments 1 and 2, so as to ensure that commodities produced in each can be exchanged with those in the other, so as to ensure all production is fully consumed, and social reproduction can continue. It also demonstrates that the money thrown into circulation by capitalists, either advanced for the purchase of productive-capital, or spent to buy items of personal consumption, provide the necessary means of payment by which these exchanges are affected.
The models demonstrate that some of these elements of social production involve exchanges between Department 1 and 2, whilst others involve circulation confined within the same department or department sub-division.
So, Department 1 constant capital only circulates within Department 1. Its equivalent value represented in Department 1 output does not exchange with Department 2. It simply replaces consumed Department 1 constant capital. It comprises an element of national output, but, considered at the level of social capital, generates no revenue.
Department 1 variable capital, and surplus value exchanges with Department 2. It exchanges with that element of Department 2 output that is equal to the value contributed by constant capital.
Department 1 variable capital only exchanges with Department 2a – necessities, whilst a portion of Department 1 surplus value exchanges with Department 2a, and the remainder with Department 2b – luxuries.
Department 2 variable capital, both from 2a and 2b, circulates within Department 2a. Department 2a surplus value circulates partly within 2a and partly in 2b, and similarly with surplus value from 2b.
“The direct reflux of the money-capital advanced in variable capital, which takes place only in the case of the capitalist department IIa which produces necessities of life, is but an expression, modified by special conditions, of the previously mentioned general law that money advanced to the circulation by producers of commodities returns to them in the normal course of commodity circulation. From this it incidentally follows that if any money-capitalist at all stands behind the producer of commodities and advances to the industrial capitalist money-capital (in the strictest meaning of the word, i.e., capital-value in the form of money), the real point of reflux for this money is the pocket of this money-capitalist. Thus the mass of the circulating money belongs to that department of money-capital which is organised and concentrated in the form of banks, etc., although the money circulates more or less through all hands. The way in which this department advances its capital necessitates the continual final reflux to it in the form of money, although this is once again brought about by the reconversion of the industrial capital into money-capital.” (p 416-7)
That is illustrated in the diagram showing the circuits of money and capital.
As has been demonstrated, the actual money thrown into circulation, in terms of individual coins or money tokens, does not have to be equal to the value of transactions to be undertaken. Each coin or token exchanges many times, being used for many transactions. In addition to this respect of the velocity of money, we have also seen the similar role played by the rate of turnover of capital.
Money wages paid out weekly, may find their way back, as money-capital, in the hands of the capitalist that paid them out, a month later. So, this same money may then act 12 times in the year to effect this exchange of values. Moreover, unlike the situation with barter, where money acts to mediate the exchange, C – M – C, although the commodities themselves may totally disappear, as a result of consumption, the money remains in existence to continue circulating from year to year.