Wednesday, 25 June 2014

Capital II, Chapter 17 - Part 8

All purchases then come from only one of two sources. Either from the workers, from their wages, but these are only a secondary source, because the wages themselves come from capital, or else from capital itself. That includes all those with whom capital shares its spoils, e.g. the landlord's rent, the money-capitalists interest, the merchant capitalists profit, and the capitalist state's taxes.

“The capitalist class remains consequently the sole point of departure of the circulation of money. If they need £400 for the payment of means of production and £100 for the payment of labour-power, they throw £500 into circulation. But the surplus-value incorporated in the product, with a rate of surplus-value incorporated in the product, with a rate of surplus-value of 100%, is equal in value to £100. How can they continually draw £600 out of circulation, when they continually throw only £500 into it? Nothing comes from nothing. The capitalist class as a whole cannot draw out of circulation what was not previously thrown into it.” (p 338) 

This is not a question about the velocity of money or the rate of turnover of capital discussed earlier. Nor is it a question of the circulation of value, or the source of surplus value. It is a question of where the money that is the equivalent of this value itself comes from. We know that a given amount of money, say £500, can circulate £5,000 of commodities, if it is exchanged ten times a year. Similarly, that £500 of money capital can set in motion £5,000 of productive capital if it is turned over ten times a year.

Rather this is assuming that all these other factors remain constant, and asking the question where the amount of money comes from. In other words, if £500 was required before, and £600 is required now, where does this additional £100 come from?

“Indeed, paradoxical as it may appear at first sight, it is the capitalist class itself that throws the money into circulation which serves for the realisation of the surplus-value incorporated in the commodities. But, nota bene, it does not throw it into circulation as advanced money, hence not as capital. It spends it as a means of purchase for its individual consumption. The money is not therefore advanced by the capitalist class, although it is the point of departure of its circulation.” (p 338-9) 

This is only true if we are talking, as Marx is here, about a situation of simple reproduction. Where we are talking about expanded reproduction, then a portion of society's surplus product has to exist in the form of the constant capital, and means of subsistence, that will be used to expand production. The money advanced to buy this additional productive capital can only be advanced as additional money-capital.

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