## Fixed Capital and Circulating Capital

### 1) Distinctions of Form

Fixed capital loses a portion of its use value, as a consequence of wear and tear. In the same proportion, it transfers value, as constant capital, to the product it helps create. The proportion of its use value lost, and the proportion of its value transferred to the product, is calculated as an average. A machine that lasts, on average, ten years before it has to be replaced, loses a tenth of its use value, on average, each year, and transfers a tenth of its value, each year, to the products it helps create.

The products, created by the instruments of labour, leave the sphere of production as commodities and enter the sphere of circulation. A part of the value of the instruments of labour is embodied in them, but the instruments of labour themselves never leave the sphere of production.

“Their function holds them there. A portion of the advanced capital-value becomes fixed in this form determined by the function of the instruments of labour in the process. In the performance of this function, and thus by the wear and tear of the instruments of labour, a part of their value passes on to the product, while the other remains fixed in the instruments of labour and thus in the process of production. The value fixed in this way decreases steadily, until the instrument of labour is worn out, its value having been distributed during a shorter or longer period over a mass of products originating from a series of constantly repeated labour-processes. But so long as they are still effective as instruments of labour and need not yet be replaced by new ones of the same kind, a certain amount of constant capital-value remains fixed in them, while the other part of the value originally fixed in them is transferred to the product and therefore circulates as a component part of the commodity-supply. The longer an instrument lasts, the slower it wears out, the longer will its constant capital-value remain fixed in this use-form. But whatever may be its durability, the proportion in which it yields value is always inverse to the entire time it functions. If of two machines of equal value one wears out in five years and the other in ten, then the first yields twice as much value in the same time as the second.” (p 161)

In a sense, all capital is circulating capital. It is just that the total value of fixed capital takes much longer to circulate. Only a portion of it circulates at a time. A machine that lasts ten years will circulate a tenth of its value each year, so that after ten years, all of its value will have been circulated, i.e. each year, a tenth of its value will have entered the value of the commodity, which will then have been converted into money, C-M, which is the equivalent to a tenth of the value of the machine, and so can be used to reproduce it.

But, unlike raw material, which enters bodily into the commodity, it is not the use value of the machine that enters the commodity, but only the value. The machine can only continue to function, indeed, if it remains fully intact.

“It is this peculiarity which gives to this portion of constant capital the form of fixed capital. All the other material parts of capital advanced in the process of production form by way of contrast the circulating, or fluid, capital.” (p 161)

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