Capital II, Chapter 12 - Part 2

“The difference in the duration of the productive act must evidently give rise to a difference in the velocity of the turnover, if invested capitals are equal, in other words, must make a difference in the time for which a certain capital is advanced.” (p 233)

Compare the situation of the spinner and the locomotive manufacturer. Suppose both have the same organic composition of capital, and both can sell their output as soon as its completed. Suppose, the cotton spinner sells their output by the week, and the locomotive maker sells theirs after 12 weeks. Each week, they spend £1,000 on constant capital, and £1,000 on variable capital. There is a 100% rate of surplus value.

Week 1

Cotton Spinner: C 1000 + V 1000 + S 1000 = E 3000

Locomotive Maker: C 1000 + V 1000 + S 1000 = E 3000.

However, at the end of this week, the cotton spinner sells their output. From the proceeds they now have the capital to replace the productive capital consumed. The locomotive manufacturer does not. They have to cover the next week's capital advance from their own pocket or by borrowing from the bank. If we look at how much capital is actually advanced by each then at the end of week 2:

Week 2

Cotton Spinner: C 1000 + V 1000 + S 1000 = E 3000

Locomotive Manufacturer: C 2000 + V 2000 + S 2000 = E 6000

But, this output for the locomotive manufacturer still cannot be sold. The capital actually advanced by the cotton spinner remains £1,000 constant capital, and £1,000 variable capital, because each week it is reproduced out of the proceeds of the sale of yarn. But, the locomotive maker will have to advance additional capital each week. At the end of the 12 weeks, although the cotton spinner will have paid out £12,000 in constant capital, and £12,000 in variable capital, the same as the locomotive maker, they will only have had to advance £1,000 for each, because every week that capital has returned to them to be laid out once more.

The locomotive maker, however, each week, has had to dig into their own pocket to obtain additional capital. So, the real situation facing each is:

Cotton Spinner: £1,000 (Constant) + £1,000 (Variable) = £2,000 advanced, to produce £12,000 surplus value. Their rate of profit is 12,000/2,000 = 600%.

Locomotive Producer: £12,000 (Constant) + £12,000 (Variable) = £24,000 advanced to produce £12,000 surplus value. Their rate of profit is 12,000/24,000 = 50%.

“The expenditure of the one is made for one week, that of the other is the weekly expenditure multiplied by twelve. All other circumstances being assumed as equal, the one must have twelve times as much circulating capital at his disposal as the other.” (p 233)

Of course, the same relation applies whether we assume that the same amount of constant and variable capital is laid out or not. What is determinate is the rate of turnover.

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