Capital II, Chapter 8 - Part 4

Productive capital may be engaged in the production process for a long time. But this prolonged time of production does not make all the productive capital involved in it fixed capital. Raw material can take a long time to pass all the way through some production processes, but raw material constitutes circulating rather than fixed capital. All of it is consumed in the production process.

For example, seeds may take a year to go through the production process and become plants. But, the seeds are circulating capital. All of their value and use value is consumed in that production process.

Fixed capital may be stationary or mobile. It may be produced in and for a specific location e.g. a factory, canal, or railway, but it can also be produced to be moved to some other permanent or semi-permanent position e.g. a machine. Finally, it can be produced to be constantly mobile e.g. a train, bus, ship or aeroplane.

“But the fact that some instruments of labour are localised, attached to the soil by their roots, assigns to this portion of fixed capital a peculiar role in the economy of nations. They cannot be sent abroad, cannot circulate as commodities in the world-market. Title to this fixed capital may change, it may be bought and sold, and to this extent may circulate ideally. These titles of ownership may even circulate in foreign markets, for instance in the form of stocks. But a change of the persons owning this class of fixed capital does not alter the relation of the immovable, materially fixed part of the national wealth to its movable part.” (p 166)

Its this nature of fixed capital, by which it gives up only a fraction of its use value, and therefore value, during the production process, that results in a peculiar turnover of this capital.

A portion of its use value is reduced by wear and tear. The more it is used, the more wear and tear, and so the more of its use value is consumed. But, this use value is not transferred to the end product, in the way that of raw material is. Only the value of that use value is transferred. That value is absorbed in the value of the end product. When that is sold, this value is transformed into money. However, this money sum is in excess of what is required to reproduce the circulating capital.

Suppose we have yarn produced as follows:-

Spindles £10,000, Cotton £1,000, Labour-power £1,000, Surplus Value £1,000. Assume that the capitalist consumes all of the surplus value. If wear and tear of the spindles amounts to 10% during the year, then the value of the yarn will be:-

£1,000 Spindles

£1,000 Cotton

£1,000 Labour-power

£1,000 Surplus Value

= £4,000

But, in order to continue production, this capital only requires £2,000 – enough to reproduce the cotton and labour-power. £1,000 of surplus value is consumed by the capitalist, leaving £1,000 left over. It is not needed to reproduce the spindles because, although they have lost 10% of their value, they continue to function.

Only after ten years will they be totally worn out, and have to be replaced. The £1,000 then has to be accumulated each year, over this period, to build up the fund for their replacement.

“The transformation of its value into money keeps pace with the pupation into money of the commodity which is the carrier of its value. But its reconversion from the money-form into a use-form proceeds separately from the reconversion of the commodities into other elements of their production and is determined rather by its own period of reproduction, that is, by the time during which the instrument of labour wears out and must be replaced by another of the same kind. If a machine worth £10,000 lasts for, say, a period of ten years, then the period of turnover of the value originally advanced for it amounts to ten years.” (p 166-7)

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