Capital II, Chapter 17 - Part 16

Marx also deals here with the idea that capital was forced into expansion under all circumstances, particularly where the rate of profit was rising. Marx, of course, believed nothing so crude and mechanistic. So, he begins here by looking at the way capital accumulates as realised surplus value in money hoards.

“We have now to investigate the case in which there takes place no real accumulation, i.e., no direct expansion of the scale of production, but where a part of the realised surplus-value is accumulated for a longer or shorter time as a money-reserve fund, in order to be transformed later into productive capital.” (p 351)

Such a money hoard can arise because surplus gold has been imported. The products exchanged for the gold obviously no longer circulate in the home market as an equivalent to that gold. They are now in the gold exporting country. The capitalist has sold commodities to the gold exporting country and received gold in exchange. A portion of this gold represents the realised surplus value in the commodities. This portion represents money over and above the money-capital, the capitalist has laid out.

A portion of the additional money goes to cover the money-capital laid out for the reproduction of the means of production and labour-power, and is thereby thrown into circulation. The additional money that is the equivalent of the surplus value, however, may or may not all be thrown into circulation. A portion may go to cover unproductive consumption, and the rest may go to accumulation, but not necessarily. A portion may simply be hoarded. In fact, if we look at the situation as regards capital, as a whole, it is inevitable that this additional money will be divided into a portion for unproductive consumption, a portion for accumulation, and another portion that is hoarded, as well as that which goes to reproduce the productive capital.

“For it has not been premised in the least that one part of the capitalists accumulates money-capital, while the other consumes its surplus-value entirely, but only that one part does its accumulating in the shape of money, forms latent money-capital, while the other part accumulates genuinely, that is to say, enlarges the scale of production, genuinely expands its productive capital. The available quantity of money remains sufficient for the requirements of circulation, even if, alternately, one part of the capitalists accumulates money, while the other enlarges the scale of production, and vice versa.” (p 352)

In other words, it will always be the case that taken as a whole, some capitalists will have money-capital, which, for one reason or another, they will not be ready to put to work productively, and which they do not require for unproductive consumption. By the same token, there will be others who will want to employ money-capital productively, over and above what they have at their disposal. In fact, it is the interaction between this supply and demand for money-capital which determines interest rates.

“But the difficulty arises when we assume not an individual, but a general accumulation of money-capital on the part of the capitalist class.” (p 352)

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