Friday 19 July 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 57

Marx discusses, here, the role of the rate of turnover of capital

“The period during which the commodity stays in circulation and is replaced by new commodities naturally depends also on the length of time in which the commodities remain in the production sphere, that is, on the duration of their reproduction time, and varies in accordance with their different length.” (p 284) 

As Engels also described, in Capital III, Chapter 4, in relation to the rate of turnover, it is a significant factor in relation to crises of overproduction. The longer the period of turnover of capital, the greater the chance of changes in the market. Consumer preferences may change, so that what was in great demand six months ago might today be seen as just a passing fad; some new commodity may have hit the market as a substitute and so on. 

Different commodities have different rates of turnover. Some commodities have prolonged working periods. For example, a ship cannot be sold, and pass into the sphere of consumption until it is complete, and able to set to sea. Other commodities may have shorter working periods, but have prolonged production times, because the production process is dependent on natural processes, for example, crops must grow, wine must ferment and so on. Other commodities may spend less time in production, but spend longer in the circulation phase. That was more the case when goods had to be shipped across the globe by sailing ship, but, even today, some commodities may require considerably longer in the circulation phase than others, though often some of this may be illusory. With flexible specialisation and Just In Time production and stock control system, many commodities can effectively be produced to order. 

Large builders usually only sell houses to buyers off plan, and so only commit capital to construction when they have already sold the house to a potential buyer. Even in the 1970's, when I worked for a large pottery manufacturer, production was determined by the stream of orders that came in from retailers. The retailers always had some pottery in their store, but this played the same role that a show house plays for a builder. It is there as a sample and advertisement. The same applies to cars in a car showroom. Rarely would a buyer buy a new car directly from the showroom. Showroom models are usually sold when they are older, and at a discount. Buyers place orders with dealers, who, in turn, place orders with manufacturers. 

None of that changes the requirement to produce on a massive scale, it simply means that, with flexible specialisation, and Just In Time, variations in production can continually be made at the margin. Similarly, EPOS systems of large retailers enable sales data to be continually passed back along the supply change so that, increasingly, production is planned in line with consumption. At the Toyota plant at Burnaston the Just In Time production and stock control system requires that parts are delivered every 15 minutes, and deliveries cannot be made other than at these times. That means the productive supply is kept to a minimum, whilst any marginal changes in production, for example, to move production from one range to another, one specification to another, can be passed through immediately into the delivery of the appropriate components. 

“These reservoirs serve as channels both for the commodities issuing from production and those going to the consumer. As long as the commodities remain in one of them, they are commodities and are therefore on the market, in circulation. They are withdrawn only piecemeal, in small quantities, by the annual consumption. The replacement, the stream of new commodities which are to displace them, arrives only in the following year. Thus these reservoirs are only depleted gradually, in the measure that their replacements move forward. If there is a surplus and if the new harvest is above the average, then a stoppage takes place. The space which these particular commodities were to have occupied in the market is overstocked. In order to permit the whole quantity to find a place on the market, the price of the commodities is reduced, and this causes them to move again. If the total quantity of use-values is too large, they accommodate themselves to the space they have to occupy by a reduction of their prices. If the quantity is too small, it is expanded by an increase of their prices.” (p 284) 

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