Capital II, Chapter 10 - Part 7

Marx refers back to the distinction he had made in Capital I, Chapter 8, between raw and auxiliary material, which loses its form, in the labour process, and the instruments of labour, which do not.

“The corpses of machines, tools, workshops, etc., are always separate and distinct from the product they helped to turn out.” (Buch I, Kap. VI, S. 192.)” (p 206) 

But, the distinction applies whether this labour process is one undertaken under capitalism or under production purely for personal consumption, but this is falsified by Smith.

“He does so 1) by introducing here the totally irrelevant definition of profit, claiming that some of the means of production yield a profit to their owner by preserving their form, while the others do so by losing it; 2) by jumbling together the alterations of a part of the elements of production in the labour-process with the change of form (purchase and sale) that is characteristic of the exchange of products, of commodity circulation, and which at the same time includes a change in the ownership of the circulating commodities.” (p 206)

Turnover of capital presumes the circulation of capital, C' – C', or P..P, i.e. that the commodity-capital is sold, and the proceeds turned into productive-capital once more, replacing that consumed. The fact that, in some instances, a capitalist producer uses some of their own product to directly replace raw material or auxiliary material, used in their own production process does not change this reality, or the nature of the productive-capital.

Seed, produced by a farmer, that is used to replace the seed used in its own production, is still circulating not fixed capital, because the original seed used in the process was completely used up, and its value wholly transferred to the end product. None of the original seed remained at the end of that process, none of its value remained fixed, waiting to be transferred in some subsequent production.

The same is true of coal produced by a mine, some of which goes to replace coal used to power a steam engine, at the same mine, to pump out water, that enabled the replacement coal to be produced. The coal used for that purpose is circulating not fixed capital, despite the fact that it does not change hands. It is wholly consumed in the production process, and all its value transferred.

“Adam Smith tells us now what circulating and fixed capital consist of. He enumerates the things, the material elements, which form fixed, and those which form circulating capital, as if this definiteness were inherent in these things materially, by nature, and did not rather spring from their definite function within the capitalist process of production.” (p 207)

But, as Marx points out, in the same chapter, Smith refers to a dwelling, saying it can act as capital for its owner, providing him with revenue, and yet from the perspective of society, does not, because it does not increase society's revenue or wealth at all.

“Here, then, Adam Smith clearly states that the property of being capital is not inherent in things as such and in any case, but is a function with which they may or may not be invested, according to circumstances. But what is true of capital in general is also true of its subdivisions.” (p 207)

Moreover, it is function which determines whether a particular form of capital fulfils the role of fixed or circulating capital. Cattle used for labouring (oxen pulling ploughs) or, for example, dairy cattle producing milk, form part of the fixed capital. Only a part of their value is transferred into the product they help produce, the rest remaining fixed within them, to be transferred piecemeal to future production. Cattle used simply for fattening to be sold, are raw material, and thereby circulating capital. The fact that the latter may take several years to fatten and be sold, also does not change their nature as circulating capital. At no point do they transfer a part of their value into the end product, whilst a part of their value remains fixed within them. They are sold, and at that point, the whole of their value is transferred to the end product, and reproduced in their exchange value.

“On the other hand the same thing may now function as a constituent part of productive capital and now belong to the fund for direct consumption. A house for instance when performing the function of a workshop, is a fixed component part of productive capital; when serving as a dwelling it is in no wise a form of capital. The same instruments of labour may in many cases serve either as means of production or as means of consumption.” (p 207)

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