## Tuesday, 25 June 2013

### Capital II, Chapter 3 - Part 2

C', the end product is converted into money, M'. At this point, the surplus value, m = c, can always be separated out. If the commodity is homogeneous, like yarn, then even if it is sold in portions of the total end product, these portions can still function as commodity capital, because the money raised from their sale can go to purchase new means of production and labour power. Similarly, the proportion of surplus value contained in this portion of the total product can be separated out so that the original capital value can be thrown back into circulation, thereby reproducing the means of production and labour power used in the production of that portion of total output.

For example,

C 10,000 + V 5,000 + S 5,000 = E 20,000 = 20,000 kilos of yarn.

Of this 20,000 kilos, 5,000 is surplus product. In each kilo .25 kilos = surplus product. Put another way, as a kilo = £1, in each kilo, £0.25 = surplus value.

Suppose only 4,000 kilos are sold. 1,000 kilos = surplus product. The remaining 3,000 kilos have a value of £3,000. That is used to buy means of production and labour power. It buys C 2,000 and V 1,000. But, this is sufficient to replace the 4,000 kilos sold. Taking this separately,

C 2,000 + V 1,000 + S 1,000 = E 4,000 = 4,000 kilos.

Of course, as discussed in Volume I, the value of all the component parts can themselves be represented by physical amounts of yarn and the value obtained from their sale. So, the Constant Capital is equal to half the total output, the Variable Capital and the Surplus Value, each equal to a quarter. On this basis, if half the output were sold, it could pay for the replacement of all the Constant Capital. Alternatively, it could be used to cover the payment of wages, as well as revenue for the capitalist to spend. As the other half is sold, it produces the fund to cover purchase of the other components.

And, of course, in reality, the output always is sold in portions rather than one job lot. Even where output is sold to a wholesaler, it is usually sold to more than one. The industrial capitalist will always have some quantity of the end product, as commodity-capital, sitting in their warehouse. That is one reason, as discussed previously, why they need a money reserve to help smooth out the discrepancies between incomes and expenditures.

The buyer is not concerned with the particularities of the producer's costs, other than if they can use it to negotiate a lower price. They are only concerned with what that price is, for what they need to buy. How much they need to buy, will itself depend on the requirements of their business, and how much capital they have.

In the circuit of money capital, M – C – M', we have a complete business cycle. At its completion, a new cycle may commence or this could be the last cycle. All of M' could leave the circuit of capital.

In the circuit of productive capital, P...P', P' is not the production process represented by P, but the productive capital, now ready to engage in production.

The general form of the movement P ... P is the form of reproduction and, unlike M ... M', does not indicate the self-expansion of value as the object of the process. This form makes it therefore so much easier for classical Political Economy to ignore the definite capitalistic form of the process of production and to depict production as such as the purpose of this process; namely that as much as possible must be produced and as cheaply as possible, and that the product must be exchanged for the greatest variety of other products, partly for the renewal of production (M — C), partly for consumption (m — c). It is then possible to overlook the peculiarities of money and money-capital, for M and m appear here merely as transient media of circulation.” (p 95)

For commodity capital, the circuit begins with C', the commodities that comprise the end product, and in which the surplus value is embedded. It is transformed into money M', which then buys commodities, (means of production and labour power) which comprise the productive capital, P, production occurs resulting in C', again the end product.

The third form is distinguished from the first two by the fact that it is only in this circuit that the self-expanded capital-value — and not the original one, the capital-value that must still produce surplus-value — appears as the starting point of its self-expansion. C as a capital-relation is here the starting point and as such relation has a determining influence on the entire circuit because it includes the circuit of the capital-value as well as that of the surplus-value in its first phase, and because the surplus-value must at least in the average, if not in every single circuit, be expended partly as revenue, go through the circulation c — m — c, and must perform the function of an element of capital accumulation.” (p 96)

In other words, part is taken out to spend by the capitalist, but another part is accumulated. C' is transformed into C. C', the output, includes the surplus value. But, C' is bought as commodities. Some is bought by workers for their consumption, and some is bought by capitalists, part for their own consumption, and part as means of production. In all these cases, for all these buyers their purchase appears as M – C.

In M... M' possible enlargement of the circuit is included, depending on the volume of m entering into the renewed circuit.

In P ... P the new circuit may be started by P with the same or perhaps even a smaller value and yet may represent a reproduction on an extended scale, for instance when certain elements of commodities become cheaper on account of increased productivity of labour. Vice versa, a productive capital which has increased in value may, in a contrary case, represent reproduction on a materially contracted scale as for instance when elements of production have become dearer. The same is true of C' ... C'.” (p 96-7)

Which reinforces the point made previously, that for Marx the expansion of capital is not signified by an expansion of its value, but of its physical amount.