First case: Unchanged Scale of Production, Unchanged Prices of the Elements of Production and of Products, and a Change in the Period of Circulation and Thus of Turnover.
If the period of circulation falls from 3 weeks to 2 weeks, then the period of turnover falls from 9 weeks to 8 weeks. Previously, £900 was required to cover 9 weeks, now only £800 is required to cover 8 weeks. £100 of money-capital is released.
The working period remains 6 weeks, and similarly, in 51 weeks, the total output remains £5,100. The number of working periods necessarily rises, however, for this aggregate capital to 5100/800 = 6⅜.
Although, the £100 released is in the form of money-capital, this does not mean that it is simply a reduction in the amount of the advanced capital that was originally in the money form. In other words, as previously described, a firm's capital is always divided into the three forms that make up the three circuits of capital. A certain proportion is in the form of money-capital, waiting to purchase means of production and labour-power, another portion is already in the form of productive capital, and the final portion is in the form of commodity-capital, waiting to be sold.
So, if the original £900 were divided into £300 money-capital, £300 productive-capital, and £300 commodity-capital, this reduction in the turnover time, releasing £100 of money-capital does not mean that these proportions are reduced to £200, £300 and £300 respectively. That is because a proportion of the capital released is in the form of productive-capital, and commodity-capital which then necessarily is held as money-capital.
Suppose we have the 9 week turnover described previously. £100 of capital is laid out weekly, over a 6 week working period. Let's assume of the £100, £80 is spent on means of production and £20 on wages. This division obviously applies also to the £300 of additional capital required during the 3 week circulation period. But, if the circulation period falls from 3 weeks to 2 weeks, whilst the working period and the scale of production remain constant, its clear that instead of £300 of additional capital being required, only £200 is required.
So, instead of £240 being laid out for means of production during this period, and £60 for wages, the figures are £160 and £40. But, at any point over the turnover period, a certain proportion of capital will be held in its three different forms.
The wages always have to be paid in money form. So, at the end of the turnover period, of the £600 received, there is £120 to cover wages for the next working period, which has to be held in the money-form, because the wages are not paid in advance.
By contrast, £480 of it could be used immediately to buy means of production, some of which is then engaged in production, and the rest forms a productive supply, waiting to be used. But, likewise, a proportion of this £480 could be retained as money-capital, only being used to buy means of production closer to when they are required.
However, as set out previously, because the circulation time has now fallen from 3 weeks to 2 weeks, the additional capital required for means of production has fallen by £80 from £240 to £160, and for wages by £20 from £60 to £40.
So, out of the £600 returned, the amount required for the next working period falls from £480 to £400 for means of production, and from £120 to £100 for wages. £400 of money-capital goes to buy means of production, whilst £100 remains in the money form to cover wages. The further £100 of money capital is thereby released, and can go into the money market.
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