Tuesday, 10 December 2013

Capital II, Chapter 10 - Part 8

Marx then again points out Smith's confusion, because, having set out this list of fixed and circulating capital, he once again confuses that definition with that for circulation capital i.e. commodity and money capital.

Smith: “The circulating capital consists ... of the provisions, materials, and finished work of all kinds that are in the hands of their respective dealers, and of the money that is necessary for circulating and distributing them, etc.” (p 208)

Smith: “... The third and last of the three portions into which the general stock of the society naturally divides itself, is the circulating capital, of which the characteristic is, that it affords a revenue only by circulating or changing masters. It is composed likewise of four parts: first of the money, secondly, of the stock of provisions which are in the possession of the butcher, the grazier, the farmer ... from the sale of which they expect to derive a profit ... Fourthly and lastly, of the work which is made up and completed, but which is still in the hands of the merchant and manufacturer. And, thirdly, of the materials, whether altogether rude, or more or less manufactured, of clothes, furniture, and buildings, which are not yet made up into any of those three shapes, but which remain in the hands of the growers, the manufacturers, the mercers and drapers, the timber-merchants, the carpenters and joiners, the brick-makers, etc.” (p 208)

All of these constitute capital in circulation, not circulating capital. Circulating and fixed capital are forms of productive-capital. Money-capital exists prior to being metamorphosed into productive-capital. The stock of provisions held by the butcher etc. and that in the hands of the merchant, constitute commodity-capital, and so are neither fixed nor circulating capital.

“The product of the cotton spinner, yarn, is the commodity-form of his capital, is commodity-capital as far as he is concerned. It cannot function again as a constituent part of his productive capital, neither as material of labour nor as an instrument of labour. But in the hands of the weaver who buys it it is incorporated in the productive capital of the latter as one of its circulating constituent parts. For the spinner, however, the yarn is the depository of the value of part of his fixed as well as circulating capital (apart from the surplus-value).” (p 209-10)

In the other category, Smith mixes up those elements of circulating capital, such as the raw materials, including the semi-finished goods, that are used in the production process, and those goods in the hands of the 'mercers', 'drapers' and so on, that constitute commodity-capital.

In this list, Marx notes, Smith does not include labour-power. Smith confuses circulating capital with commodity-capital and money-capital. But, labour-power is not capital at all. The worker is not a capitalist. He sells his commodity labour-power, at its value, but not as a capitalist. He derives no surplus value from it. In fact, as set out in Volume I, it is this fact, that a class exists, the workers, who have to pay the full cost of production for any article, including the unpaid labour-time, which enables surplus value to be produced and realised. The capitalists on the other hand, acquire those products not at the full cost, in labour-time, required for their production, but at the cost in labour-time of the inputs used for their production. The capitalists pay the full value of those inputs, but it is precisely because the workers work for a longer period than is required to cover their own reproduction, that in the production process, a surplus value is created. 

So, using Smith's definition of circulating capital, as either commodity-capital or money-capital, labour-power is neither, and so cannot be circulating capital. Only when labour-power has stopped circulating as a commodity, been bought by the capitalist, and is being used in the production process, does it become capital – productive capital. But, then it is capital in the hands of the capitalist, and does not change from his hands, so, on Smith's definition would now have to be considered fixed capital!

Back To Part 7

Forward To Part 9

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