Wednesday, 19 February 2014

Capital II, Chapter 14 - Part 1

The Time of Circulation 

The turnover time is the sum of the time of production and of circulation. All of the foregoing have shown the effects of fixed and circulating capital, the working period etc. on the time of production. But, similarly, changes in the time of circulation also affects the turnover time.

“One of the sections of the time of circulation — relatively the most decisive — consists of the time of selling, the period during which capital exists in the state of commodity-capital. The time of circulation, and hence the period of turnover in general, are long or short depending on the relative length of this selling time.” (p 252)

There can be considerable differences in this selling period, not just between different industries/commodities, but also between individual producers within the same industry. For example, it takes, on average, much longer to sell a motor car than it does a chocolate bar. The longer it takes to sell commodities, the more it may be necessary to invest additional capital in appropriate storage facilities, so that commodities do not deteriorate in the intervening period.

“One cause which acts permanently in differentiating the times of selling, and thus the periods of turnover in general, is the distance of the market in which a commodity is sold from its place of production. During the entire trip to the market, capital finds itself fettered in the state of commodity-capital.” (p 253)

Improvements in communication, and transport, reduce the amount of time required, and thereby reduce the turnover time, but, they do not alter the differences in time consequent upon the different distances to be travelled. Canals speed up the transport of coal for instance, but, on average, it is still going to take twice as long to transport it 100 miles as 50 miles.

“But the relative difference may be shifted about by the development of the means of transportation and communication in a way that does not correspond to the geographical distances. For instance a railway which leads from a place of production to an inland centre of population may relatively or absolutely lengthen the distance to a nearer inland point not connected by rail, as compared to the one which geographically is more remote. In the same way the same circumstances may alter the relative distance of places of production from the larger markets, which explains the deterioration of old and the rise of new centres of production because of changes in communication and transportation facilities.” (p 253)

In other words, suppose there is a large cotton producing area, based at A. It sells its goods to a series of nearby small towns, B – E. But, a railway is built from A to a large city M. Now, its goods can be sent quickly and cheaply to a much bigger market. By the same token, B-E may have produced foodstuffs and other products sold to A. But, now, the railway means that producers of goods are encouraged to set up in M, and sell their goods to A. This is why, if HS2 were to go ahead, it would benefit London far more than any other city or area.

In addition, and especially as transport and communications improve, the cost per mile is less over longer than shorter distances. That has found its most advanced form in the Internet. It costs, essentially, no more to download a song, film, game, piece of software etc. produced in California, to a computer in Sydney, than it does to one in Los Angeles.

The Internet also demonstrates how improvements in transport and communications increase the rate of turnover without any changes in production time. The Internet means that, even with the production time remaining the same, the selling time is reduced to near zero.

Back To Chapter 13

Forward To Part 2

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