## Sunday, 15 June 2014

### Capital II, Chapter 17 - Part 5

Suppose the circulating capital is £500, the turnover time 5 weeks, made up of a working period of 4 weeks, and a circulating period of 1 week. The circulation period here is not made up of the time to sell the commodity, because it is immediately money. It is the period prior to production required to buy the productive capital. In this case, as in previous ones discussed, this £500 to cover the 5 weeks turnover time, must be available in advance, to buy the productive capital.

Consequently, £100 is laid out for productive capital each week. With a working period of 4 weeks, the output at the end of week 5 has a value of £400. But, £500 had been advanced. When at the beginning of week 6, the £400 value of production returns – immediately as money – therefore, as in previous cases it also releases £100 of money capital, equal to the additional £100 capital advanced to cover the circulation period. This £100 of additional money-capital here, just like the £400, however, is actual new money, produced as part of the labour process.

With a turnover time of 5 weeks, and a 50 week year, there are 10 turnovers and a total value of output of £5,000 in gold, i.e. 50 weeks x £100. In every other sphere of production, with a similar £500 of capital, and turnover time, every 4 weeks, money is withdrawn from the market, in exchange for the commodities thrown into it. Similarly, that money is thrown back into the market as other commodities – means of production and labour power (means of subsistence) - are withdrawn from it. Here, by contrast, every four weeks, £400 of output is produced and thrown into the market, but does not withdraw £400 of money from the market, precisely because this product is the money-commodity. The output, as money, goes to buy new means of production and labour-power.

If the workers are paid £20 a week, or £100 for a five week period, that is £1,000 a year. But, this £1,000 is not a converted form of their output. It is a portion of their actual output. In other words, the workers are paid with a portion of the gold they produce.

“The £1,000 thus expended annually in labour-power and thrown by the labourers into circulation do not return therefore via this circulation to their starting-point.” (p 332)

The fixed capital required for starting the mine is a considerable sum that must be thrown into circulation from the start. The value of fixed capital passes into the value of the end product only gradually, as wear and tear. For other commodities, that value is reflected in the value of the commodity, which results in an equivalent amount of money being withdrawn from the market, which is then hoarded to cover the cost of replacement. But, for gold production, the wear and tear is not just transferred to the value of the end product, it is represented by a physical quantity of gold itself. In other words, if the wear and tear amounts to £10, then this is represented in the output of £10 worth of gold. This has to be the case for the reason set out at the beginning, i.e. the value of the output is equal to the circulating capital, plus wear and tear of fixed capital, plus surplus value. But, the value of the output is equal to its unit value x the number of units produced.

“In other words, it gradually assumes its money-form not by a withdrawal of money from the circulation but by an accumulation of a corresponding portion of the product. The money-capital so restored is not a quantity of money gradually withdrawn from the circulation to compensate for the sum originally thrown into it for the fixed capital. It is an additional sum of money.” (p 332-3)

Similarly, the portion of the total output that is equal to the surplus product, and is therefore, equal to the surplus value, does not have to be sold, but is immediately available to the capitalist as money. He throws this money directly into circulation, buying articles of luxury, and unproductive consumption with it.