Tuesday 4 June 2013

Capital II, Chapter 2 - Part 3

Where m (the money form of the surplus value) is used for unproductive consumption, it flies out of the circuit of capital, and acts only as coin or currency, not capital. That is so even though the commodities it buys, m – c, are the product of some other capital, and so for this other capital appears as C – M. Once again, the key here is not to be confused by the physical coin being exchanged, and instead to focus on its actual role as merely means of purchase of commodities rather than capital. M on the other hand continues within the circuit of capital.

In the second phase M — C, the capital-value M, which is equal to P (the value of the productive capital that at this point opens the circuit of industrial capital), is again present, delivered of its surplus-value, therefore having the same magnitude of value as it had in the first stage of the circuit of money-capital M — C. In spite of the difference in place the function of the money-capital into which the commodity-capital has now been transformed is the same: its transformation into MP and L, into means of production and labour-power.” (p 72)

Once again, its important here to look past the superficial appearances and understand the real underlying relations. It demonstrates one of the errors of the TSSI. As Marx says here, M = P. In other words, the money capital laid out is equal to the value of the means of production and labour power bought with it.

But, Marx points out that the value of commodities, including those that comprise the productive capital here – means of production and labour-power – is determined by the labour-time currently required for their production. This clearly can and does change in the period after they have been bought, M – C, and when they enter production, C … P, or else become the new commodity, P … C1, or else are sold, C1 - M1.

In this case, Marx says, whatever was paid for them originally is irrelevant. These commodities do not inherently possess value, individually, but are merely instances of their class, which manifest the labour-time required for their production. All commodities then, wherever they are in the circuit C – M1 , are revalued according to their current value, along with all other instances of their class. Its a sort of value equivalent of quantum entanglement except all units of the class are entangled rather than just pairs.

But, the TSSI insists this cannot change the value of the money-capital that was initially laid out at M – C. It is true that the value of the money has not changed, but it is not true that its exchange value has not changed! Let us assume that money is denominated in gold coins. Assume 100 coins comprise the money capital, and buy 50 units of means of production, and 50 units of labour-power. Suppose, it requires 1000 hours to produce the 100 coins. By that token, it takes 500 hours to produce the means of production, and the same for labour-power. That is the value of 100 ounces Gold = 1000 hours. The value of 100 units of means of production = 1000 hours, and the value of 100 units of labour-power = 1000 hours.

Provided productivity in gold production does not change, the value of gold coins will remain constant. But, exchange value is the value of one commodity expressed as a quantity of some other use value. The exchange value of 1 gold coin is 1 unit of means of production, and also 1 unit of labour-power. Using Marx's value form, money – here gold – usually stands in the position of universal equivalent form of value i.e. a certain quantity of it expresses the exchange value of some other commodity.

If the value of means of production falls, this will then be reflected in its exchange value against money i.e. its price. Say it halves. In that case, 2 units of means of production = 1 ounce gold. But, it is tautologically true that this same relation means that the exchange value of gold has now doubled expressed in means of production. Now using Marx's value form, 1 ounce of gold = 2 units of means of production.

Consequently, Marx's method, which insists on using values is more a reflection of real relations than the TSSI, which fails to account for changes in the Exchange Value of Money, and thereby money-capital.



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