Capital II, Chapter 17 - Part 11

The only way that the gold money is then “consumed” is by its wear and tear, as it passes from hand to hand. If society's total production remained at the same level, therefore, the only additional gold money that would be required would be that needed to replace that worn out. The society would have an amount of surplus product produced and consumed each year, and a portion of that surplus product would always be in the form of gold.

Suppose, for example, that a 1 gram gold coin circulates ten times, so it could buy 10 hours of value in total. Further, suppose that instead of just potatoes we have a range of commodities produced that comprise the means of subsistence, all of which are exchanged. Now, only a tenth of the gold, previously required, is needed, and only a tenth of available social labour time is expended on it. Now, necessary labour amounts to just 1100 hours.

These 1100 hours are worked producing means of subsistence and 100 hours producing gold. Surplus labour equal to 100 hours has been worked, and this social surplus comprises 100 grams of gold.

The gold producers use this 100 grams of gold to buy the 100 hours worth of means of subsistence they need. Having put this 100 grams of gold into circulation, in buying means of subsistence, these other producers then use this money to buy commodities themselves from other producers. One hundred hours of production of commodities were exchanged directly with the gold producers, and the other 1,000 hours worth of commodities are then circulated by the 100 grams of gold, thrown into circulation.

“The capitalists producing gold possess their entire product in gold — that portion which replaces constant capital as well as that which replaces variable capital, and also that consisting of surplus-value. A portion of the social surplus-value therefore consists of gold, and not of a product which is turned into gold only in the process of circulation. It consists from the outset of gold and is thrown into circulation in order to draw products out of it. The same applies here to wages to variable capital, and to the replacement of the advanced constant capital. Hence, whereas one part of the capitalist class throws into circulation commodities greater in value (greater by the amount of the surplus-value) than the money-capital advanced by them, another part of the capitalists throws into circulation money of greater value (greater by the amount of surplus-value) than that of the commodities which they constantly withdraw from circulation for the production of gold. Whereas one part of the capitalists constantly pumps more money out of the circulation than it pours into it, the part that produces gold constantly pumps more money into it than it takes out in means of production.” (p 340)

The fact that, in practice, gold is often produced in one country and shipped to another doesn't change this. It only means that the country producing the gold uses it as money to buy commodities, such as linen from the countries to which it ships the gold. Suppose, country A expends 500 hours producing linen, which it sells to country B, in return for 500 hours worth of gold. Of this 500 hours, 400 hours may be to cover the wages of the workers and 100 hours constitute the surplus value. Similarly, of the gold received, let us say it is 500 grams, 400 grams would be given to the workers as wages, and 100 grams would be appropriated as surplus value. This 500 grams of gold would then circulate within country A, as the workers spent their 400 grams on means of subsistence, and the capitalists spent their 100 grams on a combination of productive and unproductive consumption.

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