Capital II, Chapter 15 - Part 22

It doesn't matter whether the capital described in the foregoing example is the private property of some individual capitalist, or if it is capital borrowed from a bank etc. In the latter case, it simply means only £800, rather than £900, would be borrowed. The £100 not then borrowed would, in the same way, mean £100 of money-capital was available for other purposes.

Similarly, if the producer of X gets his materials on credit, from his supplier, he would only need to obtain £400 worth, rather than £480 worth. His supplier would be left with £80 worth of commodity-capital, but by the same token, this could be offered as credit to some other buyer. The producer of X would still have freed up £20 of money-capital because of their reduced need to advance wages for the additional week.

If this shortening of the circulation time means that the additional capital advanced results in less being held in the form of a productive supply, but production remains on the same scale, then its clear that what must happen is that smaller amounts are bought more frequently. That is illustrated in the tables above. The same amount of material is consumed in a year, but if a smaller supply/stock of materials is maintained, this can only occur if it is replenished more frequently.

So, above, we see that the additional capital was reduced from £300 to £200, and that broke down into £160 for materials and £40 for wages i.e. enough for 2 weeks rather than 3 weeks.

Marx gives an example of the purchase of cotton.

“The additional supply for production is now reduced by one-third. It consisted of £240 constituting four-fifths of £300, the additional capital II, but now it is only £160, i.e., additional supply for 2 instead of 3 weeks. It is now renewed every 2 weeks instead of every 3, but only for 2 instead of 3 weeks. The purchases, for instance in the cotton market, are thus more frequent and smaller. The same amount of cotton is withdrawn from the market, for the quantity of the product remains the same. But the withdrawals are distributed differently in time, extending over a longer period. Supposing that it is a question of 3 months or 2. If the annual consumption of cotton amounts to 1,200 bales, the sales in the first case will be:” (p 293)

Date	Sales	Left In Storage
January 1,	300	900
April 1,	300	600
July 1,	300	300
October 1,	300	0

“But in the second case:”

Date	Sold	Left In Storage
January 1	200	1,000
March 1,	200	800
May 1,	200	600
July 1,	200	400
September 1,	200	200
November 1,	200	0

The contraction of the circulation time and the releasing of £100 of money-capital here is represented by the fact on the one hand of a saving of £80 for materials and £20 for wages, and on the other hand to a £100 increase in the commodity-capital of the cotton dealer.

“The longer this cotton lies in the latter’s warehouse as a commodity, the less it lies in the storeroom of the manufacturer as a productive supply.” (p 294)

We see here the theoretical basis for capital's introduction of “Just In Time”. As well as the circulation period being shortened, by being able to sell faster, it could also be shortened by being able to buy faster. In other words, it may be the circulating periods of other capitals that supply the producer of X that are shortened.

“For instance if cotton, coal, etc., with the old methods of transport, are three weeks in transit from their place of production or storage to the place of production of capitalist X, then X’s productive supply must last at least for three weeks, until the arrival of new supplies. So long as cotton and coal are in transit, they cannot serve as means of production. They are then rather a subject of labour for the transport industry and the capital employed in it; they are also commodity-capital in the process of circulation for the producer of coal or the dealer in cotton. Suppose improvements in transport reduce the transit to two weeks. Then the productive supply can be changed from a three-weekly into a fortnightly supply. This releases the additional advanced capital £80 set aside for this purpose and likewise the £20 for wages, because the turned-over capital of £600 returns one week sooner.” (p 294)

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