Capital II, Chapter 6 - Part 11

Although under capitalism transportation costs can appear to be the same as circulation costs, they are not.

“Quantities of products are not increased by transportation. Nor, with a few exceptions, is the possible alteration of their natural qualities, brought about by transportation, an intentional useful effect; it is rather an unavoidable evil. But the use-value of things is materialised only in their consumption, and their consumption may necessitate a change of location of these things, hence may require an additional process of production, in the transport industry. The productive capital invested in this industry imparts value to the transported products, partly by transferring value from the means of transportation, partly by adding value through the labour performed in transport. This last-named increment of value consists, as it does in all capitalist production, of a replacement of wages and of surplus-value.” (p 153)

Actually, I think Marx is wrong in his analysis here. I do not believe that transportation costs increase the value of the commodity being transported. I think that what the consumer buys is two separate commodities, one of which is the transport of the other. That can be seen clearly in the way many commodities are advertised for sale. That is that the commodity is advertised at a certain price, irrespective of the location of the buyer, and then a delivery charge is levied, which is specific to the location of the buyer.

Nor is this undermined by the fact that some of these commodities are used as inputs in the production of other commodities.

Marx says, 

“Within each process of production, a great role is played by the change of location of the subject of labour and the required instruments of labour and labour-power — such as cotton trucked from the carding to the spinning room or coal hoisted from the shaft to the surface. The transition of the finished product as finished goods from one independent place of production to another located at a distance shows the same phenomenon, only on a larger scale. The transport of products from one productive establishment to another is furthermore followed by the passage of the finished products from the sphere of production to that of consumption. The product is not ready for consumption until it has completed these movements.” (p 153)

But, Marx's argument does not hold up here. A coal mine that has greater costs, because its coal has to be dug from deeper seams, and moved further to the surface, than its more fortunate competitor, is not able, thereby, to recover these higher costs in a higher price for its coal! The exchange value of coal is determined by the average social labour-time required for its production. That is an average which takes into consideration the higher costs of one, and the lower costs of the other. But, the consequence of this is that the coal producer with lower production costs i.e. whose coal has a lower individual value, makes above average profits, whilst the coal producer with higher than average costs i.e. whose coal has a higher individual value, makes below average profits. That is so because the lower cost producer sells its coal with a lower individual value, still for the exchange value, making an additional surplus, whilst the producer with above average costs sells its coal with a higher individual value, still sells it at the exchange value, and thereby makes less surplus value.

The coal mine clearly represents the sphere of production as much as does the factory, and moving the productive capital and the commodity capital around within it constitute time of production and production costs.

But, the transportation costs in moving the coal to London rather than selling it in Newcastle are not aggregated in the same way into determining the exchange value of coal! They do not constitute part of the socially necessary labour-time required for producing coal, in the same way they are for moving it from deeper seams. If that were the case, coal would sell at the same price in Newcastle as in London including the transportation costs. That would mean consumers in Newcastle bearing some of the costs of shipping coal to London!

That did not and does not generally happen. Iron makers located production first near to forests and then to coal fields precisely to avoid paying the costs of transportation of their fuel. Pottery manufacture was concentrated in North Staffordshire because of the availability of clay, coal and from nearby in Cheshire, salt for glazing. But, it is the specific buyer that pays the necessary additional transport costs not the buyer in general.

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