The Circulation of Surplus Value
So far, Marx has really only analysed the circulation of the existing capital-value. Now he turns his attention to the circulation of the surplus value, created in production.
A part of the value transferred to the new product is that which comprises the value of necessary repairs and maintenance of the fixed capital. So far, it has been assumed that this capital-value must be in existence before production begins. In other words, a capital must not only possess enough money-capital to cover the labour-power and means of production bought, but also to cover the amounts that will need to be spent to maintain and repair the buildings and machines etc.
This is indeed the case for capitalist B, in the example, in the previous chapter. But, it is not the case for capitalist A. Capitalist A, after 5 weeks, realises a surplus value. Some of it may be used for A's personal consumption. But, another part of it can simply go to cover the costs of repairs and maintenance. So, capitalist A, unlike capitalist B, did not have to advance additional capital to cover the costs of repairs and maintenance. The capital required was produced out of the production process itself, as part of the surplus value.
Instead, the capitalist may have covered the cost of the repairs by borrowing from banker C. But, where did they get the money from? At least some of it, is the surplus value created by capitalists D,E, F and G, which is deposited as a money hoard with banker C.
“As far as A is concerned there is as yet no question of accumulated capital. But with regard to D, E, F, etc., A is, in fact, nothing but an agent capitalising surplus-value appropriated by them.” (p 324)
In Volume I, it was shown how accumulation is the use of surplus value to reproduce the relations of production on an extended scale. That can be effected in a number of ways. There can be repeated, small-scale, increments; the working day may be extended so that additional raw materials are bought, and processed using the existing fixed capital; the same thing might be effected by introducing shift working, the expansion is then achieved by using the additional capital to employ more labour-power and constant circulating capital.
But, additional capital might also be used to buy a new machine that employs the same or even less labour-power, but also involves the expansion of the capital, via the need to buy an increased quantity of material to be processed, given the higher level of productivity. However, at a certain point, such expansion requires not just piecemeal increments, but a dramatic expansion of the fixed capital itself – the building of new factories, the large scale replacement of existing equipment and so on.
Marx refers to other aspects of how the surplus value can be used in this way. For example, where it is not needed, for other purposes, and where market conditions favour it, the surplus value can be used to buy up materials speculatively, on the basis that they may be more expensive in future.
All of these things are made possible by the surplus value received, which the initial capital was not sufficient to achieve. At the same time, there will be periods when the surplus value is flooding into the firm's coffers, but where it cannot be used. It may not be possible to expand production incrementally, for example. Yet, to expand production, on a larger scale, by building a bigger factory etc. may require the equivalent of several years accumulation of surplus value. Moreover, as seen previously, the value equivalent of the wear and tear of fixed capital, continues to flow back, but is not used for several years, to replace the fixed capital itself, which continues to function until it is worn out.
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