Friday, 19 September 2014

Capital II, Chapter 20 - Part 2

Marx describes the situation under capitalist production in similar terms to set out in Part 1. In other words, just as for Robinson, a capitalist society has to devote a portion of its time to producing means of production as well as means of consumption, part of which is required to reproduce workers, and part of which is appropriated as surplus product consumed by non-producers.

The value of this total national output is equal to C', the total national commodity-capital. That comprises both those commodities destined for consumption and those destined to reproduce the means of production.

In other words, for the national commodity-capital, it is no different than for the commodity-capital of a firm. That we have seen is produced as follows. M – C (L + MP) … P … C' – M'. So, part of the value of C' is equal to the value of the means of production – constant capital – that went to produce it.  Part is equal to the wages paid to the workers, which they spend buying commodities from society's consumption fund, and a part comprises the surplus value created by the workers, which the capitalists spend, also buying commodities from the consumption fund.

So, these are the same three funds that existed for Robinson and Friday. The Law of Value, which determines how much social labour-time is required, for that production, by them, still determines how much is required, under Capitalism. As Marx says in his letter to Kugelmann, it simply assumes a different form, the form of commodity production and exchange.

The difference is the way the capitalist society goes about producing those funds, and the consequences that then has for how these funds are distributed.

Marx has uncovered the specificity of capitalist production in Volume I. The task now is to uncover the specifics of the distribution of social capital. If the national output is nothing more than the total commodity-capital, C', i.e. already incorporating the surplus-value, then the starting point is the circuit of commodity-capital itself. This is why Marx says that the Physiocrats were correct, as against Adam Smith, in that they began their analysis, of the exchange of the total social capital, not with this year's production, but with last year's harvest.

C' —
{
M — C ... P... C'
m — c

Here, as Marx explains, M has to be seen not simply as money-capital, but more accurately as the money equivalent of C. That is the money equivalent of the value of the productive-capital consumed in the productive-process. That is important, because the value of that capital may have changed for reasons outside its self-expansion. For example, suppose the capital produces yarn. It requires the purchase of cotton. But, if the labour-time required for producing cotton falls, after it has been bought, then the value of C (in the shape of the cotton in stock, being processed, and in yarn waiting to be sold) will fall. This fall in the value of the cotton will then be reflected in the price of the yarn. The nominal value of M will then fall, because M here is only the money equivalent of C, but the real value of M is unchanged, for the same reason. In other words, this lower value of M is able to exactly reproduce C, the physical quantity of cotton consumed in production.

This illustrates another point made by Marx, which is that the circuit, M - C... P... C' - M', is only the circuit of newly invested money-capital.  Here, M is neither the start nor end point of the circuit, but only a mere moment within the actual circuit.  The value of M is determined by the value of C, because M is merely its monetary reflection.  As Marx puts it, M here does not stand for an actual advance of money-capital, it is simply the current value of C expressed in money terms, for the purpose of calculation and comparison.  Money here is money only as unit of account.  However, the circuit, which begins with m, the money equivalent of the surplus value, does represent the commencement of a new circuit of money-capital, if it is invested productively.  Unlike M, m is not determined by the value of C.  Where, the nominal value of M, may have fallen, because the value of C has fallen, whilst its real value is unchanged, i.e. it buys/reproduces exactly the quantity of productive-capital previously consumed, this is not the case for m.  The real value of m here has risen, because the value of C has fallen.  In other words, if m is used productively, accumulated to buy more cotton for processing, it will buy proportionately more than it would have done previously. This is why, as Marx describes, when the value of productive-capital falls, the rate of profit rises.

Consumption necessarily plays a part in this, for the reasons set out previously. In other words, at various points in this circuit, new circuits of commodities are established. For example, at P, both the workers spend their wages, on commodities (necessities), and the sellers of means of production spend their receipts, from the sale of commodities, on commodities themselves, including labour-power, replacement materials, as well as articles of personal consumption. And at M'(M + m), this individual capitalist not only spends M on buying C (Productive Capital) but also spends m on articles of personal consumption, c, given that this is only simple reproduction. Under expanded reproduction, a portion of m would also be spent on commodities in the form of additional productive capital.

So, the analysis, of this circuit of commodity-capital, at a social level, necessarily involves, also, an analysis of the circulation of money and commodities, for both productive and unproductive consumption.

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