Tuesday, 15 April 2014

Capital II, Chapter 15 - Part 23

If the working period of the materials suppliers is reduced, this also means that materials can be supplied more frequently, and so less needs to be held as a productive supply. By contrast, if the turnover period is prolonged, because of difficulties in obtaining supplies, additional capital has to be advanced.

In the end, this additional capital is capital that has to come from the money market. If it comes from the pocket of the producer of X, it is still capital he could have invested in other ways.

“To make it available, it must be pried loose from its old form. For instance stocks must be sold, deposits withdrawn, so that in this case too the money-market is indirectly affected. Or he must borrow it.” (p 295)

Marx goes on to say,

“But this is indispensable for the part which must be invested in materials of production only if he must pay for them in cash. If he can get them on credit, this does not have any direct influence on the money-market, because the additional capital is then advanced directly as a productive supply and not in the first instance as money-capital. But if the lender throws the bill of exchange received from X directly on the market, discounts it, etc., this would influence the money-market indirectly, through someone else. If, however, he uses this note to cover a debt not yet due for instance, this additional advanced capital does not affect the money-market either directly or indirectly.” (p 295)

This, I think is wrong. The supplier here is extending credit in the form of commodity-capital, but in so doing is increasing their own period of turnover. They are advancing an additional amount of commodity-capital for which they themselves have to advance additional capital to produce. They require additional money-capital so as to produce that extra output.

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