Marx returns to the circuit
of Capital arrived at in Vol. I, i.e. M – C … P... C1 –
M1. Here, Money Capital [M] is laid out to buy
commodities [C] (Constant Capital and Variable Capital), which are
then consumed in the production process [P]. The labour involved in
this process creates Surplus Value, so that the commodities produced
in this process now have a greater value than those which entered it
– represented by C1. These commodities are then sold,
realising the monetary equivalent of that value M1. This
Capital is ready to begin its next circuit on an expanded scale.
In Volume I, Marx was
concerned with analysis of the part of this process in the middle
i.e. the production process, because it is this part of the circuit
that explains how capital itself is produced via the accumulation of
Surplus Value. Now he turns his attention to the aspects of
Circulation of Capital i.e. the forms that Capital takes outside the
production process. This breaks down into Capital as Money Capital,
and as Commodity Capital.
Once again, in order to
analyse this in its purest form, Marx assumes that commodities
exchange at their Exchange Values, and that no change in these values
occurs within the circuit (other than that resulting from the
production of Surplus Value).
Looking at this in more
detail, we can break down C into L and MP, where [L] = Labour Power,
and [MP] = Means of Production. So, the first part of the circuit is
now M – C [L + MP]. But, we also know that, because of the
Technical Composition of Capital, L and MP are both quantitatively
and qualitatively related.
The capitalist only buys
these commodities for the purposes of creating Surplus Value. If
they lay out £1,000 of Capital, this has to be divided between L and
MP in specific proportions determined by the Technical Composition of
Capital, in order for the Capitalist to maximise Surplus Value.
Suppose there is a 100% Rate of Surplus Value. So, for every £1 of
wages received the worker produces £1 of Surplus Value. If the
worker works for 2 hours, 1 hour goes to cover their wages, the other
to produce surplus value.
If it takes 10 hours to
process 100 k. of cotton into yarn, then with a 10 hour working day,
one worker will process 100 k. per day. If a day's wage is £10,
then a capitalist with £1000 could employ 100 workers, but this
would leave no capital left to buy cotton. The capitalist must
divide the £1,000 between cotton and workers to maximise Surplus
Value. Suppose cotton costs £10 per 100 k. With £1,000 the
capitalist could buy 10,000 k. But then they would have no capital
to buy labour power.
If, however, the capitalist
buys 5,000 k. of cotton, costing £500, this will require 50 workers
to process it = £500 wages. On that basis, all of the available
capital is just consumed. No more means of production are bought
than can be processed by the 50 workers, and by the same token these
workers are kept fully employed throughout the day so that the
maximum amount of surplus value is extracted from them.
If less MP were bought, the
workers would not be kept fully employed, so some potential surplus
value would be lost. If too much MP were bought some of it could not
be processed, meaning capital was standing idle, and was therefore
unproductive.
Once capital has ceased
being in its money form, (Money Capital) and has taken the form of
these commodities (means of production and labour-power) in the above
proportions, it has now become Productive Capital. In other words,
it has become Capital in another form, where its potential to
reproduce the means of production and labour-power plus an amount of
Surplus Value already exists.
The Value of P (Productive
Capital) is equal to L and MP, which is equal to M. But, once the
production process takes place, that potential to expand its value,
that was inherent in P is released. The result of the production
process – the end commodity (here yarn) – has a higher value than
P. The additional value is equal to the surplus value created by the
workers. We can now calculate this amount.
We know that the worker was
paid £10 for a 10 hour day. But, we also know that the Rate of
Surplus Value is 100%. In other words, this £10 actually represents
5 hours labour, the amount required to produce the workers
labour-power. So, for every £1 the worker is paid wages, they
produce £1 of surplus value. Here £500 was paid in wages, and
because the workers were fully employed they produced £500 of
surplus value. We now have:
M 1000 – C (L 500 + MP
500) … P... C1 1500.
If we take a step back here,
we can see that a number of processes of metamorphosis have occurred.
Money has been metamorphosed into various commodities – cotton and
labour-power. These in turn have metamorphosed into yarn, as a
consequence of the production process. But, Money Capital has also
metamorphosed into Productive Capital.
If we look at the initial
stage of this process we can see that it is the money form which is
the necessary form for capital to begin this circuit, because it is
in this form that it is able to purchase means of production and
labour-power. It acts here as money in its capacity as means of
payment. Labour-power is first bought, but only paid its wages at
the end of the day/week/month. Cotton is bought, but only paid for
on Invoice. In other words,“This capacity is not due to the fact that money-capital is capital but that it is money.” (p 28)
Marx makes an important point here. He writes,
“On the other hand capital-value in the form of money cannot perform any other functions but those of money. What turns the money-functions into functions of capital is the definite role they play in the movement of capital, and therefore also the interrelation of the stage in which these functions are performed with the other stages of the circuit of capital. Take, for instance, the case with which we are here dealing. Money is here converted into commodities the combination of which represents the bodily form of productive capital, and this form already contains latently, potentially, the result of the process of capitalist production.” (p 28)
In other words, money becomes capital by purchasing means of production and labour-power, which “represents the bodily form of productive capital, and this form already contains latently, potentially, the result of the process of capitalist production.” But, the value of those same commodities in money form is not capital, it “cannot perform any other functions but those of money.”
This
is important because it means for Marx
there can be no question of moving from M - M1, without
there being some process of production in between, which creates the
additional value. Or more specifically, any such instance can be
based only upon unequal exchange. As was seen in Volume I, the
totality of such unequal exchanges cancel each other out. Moreover,
although it is money which buys these commodities, the context in
which it does so, as capital is itself conditioned by the social
relations in which this exchange occurs. In order to buy these means
of production and labour power as commodities a given set of social
conditions must themselves exist. Marx described this in
Chapter 16,
where he discussed the situation of the natives who could live all
week for just 6 hours work harvesting the sago tree. The fact they
could do so, and leave the rest of the week free as leisure time or
else surplus labour, does not of itself determine which of these
options will be adopted. It is only the development of social
relations that ultimately determines that this surplus labour-time
will be appropriated by Capital.
But,
just as the various metamorphoses of money into commodities was
described above, so an opposite movement occurs. So, whilst money
metamorphosed into Labour-power, so Labour-power likewise
metamorphosed into money. That is the worker sells their
Labour-power and obtains money in the form of wages. For the worker,
the process is C – M – C. They sell their commodity
labour-power, obtain money as wages, which they in turn exchange for
commodities required to reproduce their labour-power.
At the
same time, in order to act as money capital, and buy this
labour-power, the money capital itself has to abandon its role as
capital, and simply assume the role of money. The wages paid to the
worker are in the form merely of money not capital. That conforms
with the observation in Chapter 3, of Volume I, that in each of these
acts of exchange, the commodity exits the circuit, as it is consumed,
whereas the money is continually thrown back into circulation.
It is M-
L rather than M – MP, which is the “characteristic moment”
in the transformation of money capital into productive capital,
because it is only the labour which creates the surplus value. It is
the relation between paid and unpaid labour that is again decisive
here. Suppose £1 = 1 hour of labour-time. If the value of
labour-power is £5 = 5 hours, then with a 100% rate of surplus
value, we have a 10 hour day, with £5 of Surplus Value.
In this
10 hour day, 100 k. of cotton is processed. However, suppose the
rate of surplus value rises to 200%, but we still have £5 laid out
as wages = 5 hours. But, now surplus value rises to £10 = 10 hours
= 15 hours worked. This could be because of a longer working day, or
because the same wage bill now buys more workers. Either way, if 100
k. of cotton is processed in 10 hours then 150 k. will be processed
in 15 hours. Consequently the means of production that need to be
bought will move up and down in line with the ratio of unpaid to paid
labour.
It is
the labour-power purchased with the money capital that produces the
surplus value, whereas the means of production purchased is
determined by the amount of labour power to be exploited.
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