Friday, 10 January 2014

Capital II, Chapter 11 - Part 6

Ricardo says,

“According as capital is rapidly perishable and requires to be frequently reproduced, or is of slow consumption, it is classed under the heads of circulating or fixed capital.” (p 227)

But, the demarcation between durability is vague. Moreover, many of those things that comprise the workers consumption – a house, their furniture, tools etc. - are just as durable as similar things, which in the workplace would be considered fixed capital.

“Thus we have once more happily arrived in the camp of the Physiocrats, where the distinction between avances annuelles and avances primitives was one referring to the time of consumption, and consequently also to the different times of reproduction of the capital employed. Only, what with them constitutes an important phenomenon of social production and is described in the Tableau Économique in connection with the process of circulation, becomes here a subjective and, in Ricardo’s own words, superfluous distinction.” (p 227) 

On Ricardo's basis the fundamental distinction between constant and variable capital is once more obliterated , and along with it any hope of understanding the source of surplus value.

“This wholly contradicts Ricardo’s doctrine of value, likewise his theory of profit, which is in fact a theory of surplus-value. In general he considers the distinction between fixed and circulating capital only to the extent that different proportions of both of them in equally large capitals invested in different branches of production influence the law of value, particularly the extent to which an increase or decrease of wages in consequence of these conditions affects prices. But even within this restricted investigation he commits the gravest errors on account of his confusing fixed and circulating with constant and variable capital.” (p 228)

Ricardo's analysis of this effect on prices is necessarily flawed because like Smith, he confuses variable with circulating capital.

Back To Part 5

Back To Vol.II Index

Forward To Chapter 12

No comments: