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.
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