Tuesday, 17 December 2013

Capital II, Chapter 10 - Part 10

Fixed capital, such as a machine only has use-value, as fixed capital, if it is sold as a machine. So looked at from one perspective, its destiny is set. But, it cannot be considered fixed capital on that basis. For one thing, a machine can be used in a non-capitalist manner, but also, as Marx points out, the fact that it may occupy a fixed position in a factory does not stop this machine being exported.

“It may be exported from the country in which it was produced and sold abroad directly or indirectly for raw materials, etc., or for champagne. In that case it has functioned only as a commodity-capital in the country in which it was produced, but never as fixed capital, not even after its sale.” (p 214)

But, things like buildings, which cannot be exported, are no more fixed capital simply because they are immovable. Take a house. For the capitalist builder, its sale is a source of profit. For Smith, it changes hands and so is circulating capital, but, for the buyer, it can only constitute any kind of capital if it is used in the production process. But, in that case, according to Smith, it is fixed capital. But, for most houses, they are not used in the production process, but only for living in. In that case, they are not capital of any sort, but part of society's consumption fund, “although they constitute an element of the social wealth of which capital is only a part.” (p 214)

Where things are physically fixed in their location, ownership of them may not be. Shares in a railway company can be sold all over the world. For Smith then, the fact that these shares are mobile, and that the owner of them can make a “profit” from their sale, would make them circulating capital. But, the railway itself if it is not to lie unused has to operate as fixed capital. A can sell a factory to B, but the factory itself still operates for B as it did for A, as fixed capital.

“Therefore, while the locally fixed instruments of labour, which cannot be detached from the soil, will nevertheless, in all probability, have to function as commodity-capital for their producer and not constitute any elements of his fixed capital (which is made up as far as he is concerned of the instruments of labour he needs for the construction of buildings, railways, etc.), one should not by any means draw the contrary conclusion that fixed capital necessarily consists of immovables.” (p 215)

As stated previously, a ship is movable but is fixed capital. But, other things which are fixed in location constitute circulating capital.

“Such are for instance the coal consumed to drive the machine in the process of production, the gas used to light the factory, etc. They are circulating capital not because they bodily leave the process of production together with the product and circulate as commodities, but because their value enters wholly into that of the commodity which they help to produce and which therefore must be entirely replaced out of the proceeds of the sale of the commodity.” (p 215)

Back To Part 9

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