Marx's Capital II, Chapter 4 - Part 5

In conditions other than simple reproduction, a rise in the price of the means of production reduces the extent to which accumulation can occur, just as with any new capital entering production, the scale of operation it can undertake is lower the higher the price of means of production it confronts.

Looking at the effect of these changes in capital-value from the perspective of M-M', therefore, Marx writes,

“When value (prices) fall three cases are possible: The process of reproduction is continued on the same scale; in that event a part of the money-capital existing hitherto is set free and money-capital is accumulated, although no real accumulation (production on an extended scale) or transformation of m (surplus-value) into an accumulation-fund initiating and accompanying such accumulation has previously taken place. Or the process of reproduction is carried on on a more extensive scale than ordinarily would have been the case, provided the technical proportions admit it. Or, finally, a larger stock of raw materials, etc., is laid in.” (p 111)

The opposite occurs when prices rise, but viewed from the opposite perspective of P... P, and C' – C', things look different.

“If our spinning-mill proprietor for example has a large stock of cotton (a large proportion of his productive capital in the form of a stock of cotton), a part of his productive capital is depreciated by a fall in the prices of cotton; but if on the contrary these prices rise, this part of his productive capital appreciates. On the other hand, if he has tied up huge quantities in the form of commodity-capital, for instance of cotton yarn, a part of his commodity-capital, hence of his circuit describing capital in general, is depreciated by a fall of cotton, or appreciated by a rise in its prices. Finally take the process C' — M — C. If C' — M, the realisation of the commodity-capital, has taken place before a change in the value of the elements of C, then capital is affected only in the way indicated in the first case, namely in the second act of circulation, M — C; but if such a change has occurred before C' — M has been effected, then, other conditions remaining equal, a fall in the price of cotton causes a corresponding fall in the price of yarn, and a rise in the price of cotton means conversely a rise in the price of yarn. The effect on the various individual capitals invested in the same branch of production may differ widely, according to the circumstances in which they find themselves.” (p 112)

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