Capital II, Chapter 15 - Part 17

At this point, Engels reminds us that Volume II has been put together by himself, on the basis of the notebooks left by Marx, and that, therefore, unlike Volume I, it is not the complete and polished work of Marx. Engels points out that although Marx was well grounded in algebra, and left numerous examples of commercial computations, these were not the same as the commercial arithmetic that Engels himself was familiar with, in his practical role as a businessman.

Marx had then, Engels says, got a bit muddled up and bogged down in some of these calculations, some of which had been left unfinished or else were wrong. Engels repeats the point I made earlier.

“No matter what may be the ratio between the working period and circulation time, hence between capital I and capital II, there is returned to the capitalist, in the form of money, after the end of the first turnover and thereafter at regular intervals equal to the duration of one working period, the capital required for one working period, i.e., a sum equal to capital I. 

If the working period is 5 weeks, the circulation time 4 weeks, and capital I £500, then a sum of money equal to £500 returns each time at the end of the 9th, 14th, 19th, 24th, 29th week, etc.” (p 288)

However, I'm not sure I agree with Engels' dismissal of Marx’s concern with the 'release' of money capital, though I think Marx might have set out his ideas more clearly had he lived long enough to set it out in a complete and polished manner.

The notion of 'released' money-capital does seem confused in the way it is presented, but I think that what Marx was trying to demonstrate was the way in which social capital, in the aggregate, has to produce a quantity of money-capital that is necessarily surplus to the requirements of production, and so is continually supplied into the money market, before being fed back out again into productive investment. I think that what Marx was doing was working towards a basis for understanding the movements of that money market, and of interest rates.  It also seems central to his idea that a portion of this social capital is continually in the process of formation as new capitals, i.e. as capital invested in new lines of production.

What is also significant in relation to current discussions over QE and interest rates etc. is Marx's comment,

"In this case it is likewise evident and obvious that this pressure, like that plethora before, had nothing whatever to do with a movement either of prices of the commodities or the mass of existing circulating medium.” (p 287)

In other words, Marx is pointing out that the determinant of interest rates is the demand and supply of this money-capital.  Interest rates do not rise because of a reduction of money tokens (circulating medium) in the economy (tapering), nor do they fall because of an increase in money tokens put into circulation (QE).  An increase in money tokens simply reduces the value of the money tokens, causing the prices of the things they measure (houses, shares, bonds, commodities) to rise (inflation).  It means currencies that are printed in greater quantity fall against other currencies that have not, which is why the Euro and Pound have risen against the dollar, causing disinflation in Europe and Britain, as they import commodities denominated in dollars, like oil.

Either way, as Engels points out,

“The essential point in the text is the proof that on the one hand a considerable portion of the industrial capital must always be available in the form of money and that on the other hand a still more considerable portion must temporarily assume the form of money.” (p 289)

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