Wednesday, 7 May 2014

Capital II, Chapter 16 - Part 6

“The annual rate of surplus-value, or the comparison between the surplus-value produced during one year and the variable capital advanced in general (as distinguished from the variable capital turned over during the year), is therefore not merely subjective comparison; the actual movement of the capital itself gives rise to this contraposition. So far as the owner of capital A is concerned, his advanced variable capital of £500 has returned to him at the end of the year, and £5,000 of surplus-value in addition.” (p 310) 

By comparison, capitalist B had to provide £5,000 of capital rather than £500, before they could commence business. Yet, in a year, both only get back the same £5,000 of surplus value.

Capitalist A will have seen his £500 of capital return to him ten times, during the year, along with £500 of surplus value on each occasion. Each time, the £1,000 received, will be used to buy new labour-power as well as to provide for the needs of the capitalist. They may well have used some of the returned capital to buy in means of production that are stored up as a productive supply, as well as some of it being held in bank deposits, as money-capital waiting to be used.

Capitalist B, who's capital turns over just once a year, may, like A, find that this capital, at that point, is partly held as money-capital, partly as productive-capital, partly as commodity-capital.

Capitalist C, who's capital only turns over every 55 weeks, finds that at the end of the year, they too have produced £5,000 of surplus value, like A and B, but they have neither had the return of their capital or the surplus value it has produced.

The rate of surplus value, in one turnover period, is the surplus value produced in it, divided by the variable capital employed in that period. But, as set out in Volume I, capital is never actually spent, but only ever 'advanced'. That is, money that is spent does not return. If I spend money to buy food to eat, I don't expect to see the money again. But, a capitalist that 'advances' capital does expect to see it again, plus a surplus value when they sell the commodities, or the product of the commodities they have bought.

“The entire circular movement described by capital-value, measured by the time from its advance to its return, constitutes its turnover, and the duration of this turnover is a period of turnover. When this period has expired and the circuit is completed, the same capital-value can renew the same circuit, can therefore expand anew, can create surplus-value. If the variable capital is turned over ten times in one year, as in the case of capital A, then the same advance of capital begets in the course of one year ten times the quantity of surplus-value that corresponds to one period of turnover.” (p 310-11)

It is not that ten capitals of £500 are advanced, but that the same £500 capital is able to be advanced ten times, because it returns ten times rather than just once a year.

Marx compares it to the position of the circulation of money. If there is a £1 coin in the economy, on each occasion its used, it buys £1 of commodities. Yet, A might buy £1 of sweets from B, who then uses this same coin to buy an ice cream from C, who then uses it to buy a newspaper from D and so on. The same coin over a year, might change hands 100 times. It will have enabled £100 of transactions to take place. Yet, only this single £1 coin continues to exist, and on each occasion has been worth just £1.

“In the same way capital A indicates at each successive return, and likewise on its return at the end of the year, that its owner has operated always with the same capital-value of £500. Hence only £500 return to him each time. His advanced capital is therefore never more than £500. Hence the advanced capital of £500 forms the denominator of the fraction which expresses the annual rate of surplus-value.” (p 311)

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