Capital II, Chapter 10 - Part 9

A version of this Smithian idea was put forward by Mike McNair,  in a discussion I had with him some time ago.  Mike argued that workers can be owners of “human capital” in the form of various acquired skills and talents, and that they are able to charge a rent for use of this intellectual property. But, Marx specifically rejects this idea. He writes,

“The “acquired and useful abilities” (p. 187) which Smith mentions under the head of fixed capital are on the contrary component parts of circulating capital, since they are “abilities” of the wage-labourer and he has sold his labour together with its “abilities.”” (p 211)

Smith's necessity of dividing all capital into being either fixed or circulating stems from his division of all social wealth into a consumption fund and into capital – fixed and circulating. This contrasts to Marx’s analysis, which identifies money-capital and commodity-capital as capital involved in the process of circulation, and productive capital comprising fixed and circulating capital. 

“Inasmuch as under capitalist production the entire mass of social products circulates in the market as commodity-capital, with the exception of that part of the products which is directly used up again by the individual capitalist producers in its bodily form as means of production without being sold or bought, it is evident that not only the fixed and circulating elements of productive capital, but likewise all the elements of the consumption-fund are derived from the commodity-capital. This is tantamount to saying that on the basis of capitalist production both means of production and articles of consumption first appear as commodity-capital, even though they are intended for later use as means of production or articles of consumption, just as labour-power itself is found in the market as a commodity, although not as commodity-capital.” (p 212)

Smith: “Of these four parts three — provisions, materials, and finished work, are either annually or in a longer or shorter period, regularly withdrawn from it and placed either in the fixed capital, or in the stock reserved for immediate consumption. Every fixed capital is both originally derived from, and requires to be continually supported by, a circulating capital. All useful machines and instruments of trade are originally derived from a circulating capital which furnishes the materials of which they are made and the maintenance of the workmen who make them. They require, too, a capital of the same kind to keep them in constant repair.” [p. 188.]” (p 212)

This is thoroughly confused, as Marx demonstrates. Of course, everything not provided by nature, that is bought under capitalism, be it for individual or productive consumption, be it raw material or a machine, is bought as a commodity and has circulated in the market as the commodity-capital of some capitalist.

“But it does not follow from this by any means that every fixed capital stems originally from some circulating capital; that follows only from the Smithian confusion of capital of circulation with circulating or fluent, i.e., non-fixed capital. Besides, Smith actually refutes himself. According to him himself, machines, as commodities, form a part of No. 4 of the circulating capital. Hence to say that they come from the circulating capital means only that they functioned as commodity-capital before they functioned as machines, but that materially they are derived from themselves; so is cotton, as the circulating element of some spinner’s capital, derived from the cotton in the market. But if Adam Smith in his further exposition derives fixed capital from circulating capital for the reason that labour and raw material are required to build machines, it must be borne in mind that in the first place, instruments of labour, hence fixed capital, are also required to build machines, and in the second place fixed capital, such as machinery, etc., is likewise required to make raw materials, since productive capital always includes instruments of labour, but not always material of labour. He himself says immediately afterwards: 

“Land, mines, and fisheries, require all both a fixed and a circulating capital to cultivate them;”

(thus he admits that not only circulating but also fixed capital is required for the production of raw material)

“and” (new error at this point) “their produce replaces with a profit, not only those capitals, but all the others in the society.” (p. 188.) 

This is entirely wrong. Their produce furnishes the raw material, auxiliary material, etc., for all other branches of industry. But their value does not replace the value of all other social capitals; it replaces only their own capital-value (plus the surplus-value). Adam Smith is here again in the grip of his physiocratic reminiscences.” (p 213-4)

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