## Wednesday, 29 October 2014

### Capital II, Chapter 20 - Part 17

Marx then demonstrates how this money flow can bring about these exchanges of value, by looking again at the exchange between Department 1 (v+s) and 2 (c). Marx assumes that Department 2 begins with £2000 in the form of commodity-capital and with £500 in money-capital. Department 1 begins with £1000 in money-capital, which it advances as wages.

 Department 1 Department 2 1) 1000 wages → Consumer goods 2) Means Of Production ← 1000 3) Means of Production ← 500 4) 500 surplus value → Consumer goods 5) Means of Production ← 500 6) 500 surplus value → Consumer goods

Only £1500 has been used to finance the circulation of £5,000 of commodities here. At the end Department 2 has received £1,000 (1), £500 (4) and £500 (6), making £2,000 altogether. It has paid out £1,000 (2) £500 (3) and £500 (5), again making £2,000 altogether. So, their cash position is exactly as it was at the beginning.

They sold £2,000 of commodities and they replaced it with purchases of £2,000 of constant capital. So, they end up with £2,000 of constant capital also.

£1,000 of commodity-capital was used up in the commodities they sold to Department 1 workers (1). But, they obtained £1,000 in money from that transaction. They used that money to buy £1,000 of constant capital from Department 1 (2). Thereby, Department 1 capitalists receive back the £1,000 they had paid in wages to their workers.

Department 2 capitalists throw the additional £500 of money-capital into circulation they began with, and buy further means of production (3). With the proceeds, Department 1 capitalists buy £500 of consumer goods from Department 2 (4).

Department 2 use this £500 to buy additional means of production (5), and Department 1 capitalists use this to buy consumer goods (6).

Department 1 workers have bought £1,000 of consumer goods equal to their wages. Department 1 capitalists have bought £1,000 of consumer goods equal to their surplus value.

Department 2 capitalists have used up the £2,000 of commodity-capital they began with and have bought £2,000 of constant capital in its place, and have also recovered the extra £500 they threw into circulation to buy constant capital.

Department 1 capitalists have bought £1,000 of consumer goods to meet their needs, which is equal to their surplus value, but they also have £1,000 in money, which they can now once more advance as wages to their workers.

“On the other hand the bodily form into which the variable capital existing in the form of money must be transformed, i.e., labour-power, has been maintained, reproduced and again made available by consumption as the sole article of trade of its owners, which they must sell in order to live. The relation of wage-labourers and capitalists has likewise been reproduced.” (p 420)

In advancing the £500 at (3) for the purchase of additional means of production, Department 2 capitalists thereby anticipate its reflux, i.e. they assume that their future output will actually find a buyer. The money they throw into circulation makes this possible, but, of course, there is no guarantee that it will be the case. Simply because a seller has sold does not mean they are compelled to buy.