## Wednesday, 5 November 2014

### 6) The Constant Capital of Department I

Returning to the model,

Department I: c 4000 + v 1000 + s 1000 = 6000

Department II: c 2000 + v 500 + s 500 = 3000

it can be seen that in Department 1, of the total commodity-product of 6,000, 4,000 comprised constant capital. In other words, this is means of production consumed in the production of means of production. This is the element of national output that Adam Smith, Keynes and others omit from their calculations. They do so because they operate under the misapprehension that National Output equals National Income, whereas, in fact, National Output is equal to National Income (v+s) plus the constant capital consumed (c).

They omit this figure, therefore, because it has no corresponding income. The £4,000 of constant capital already exists as a stock of capital, in the form of materials etc., produced in the previous year/s, as illustrated in the Tableau Economique. Constant capital is produced to replace this existing stock, and to replace other constant capital consumed by Department I, in the production process during the year.

But, precisely because this is a process of reproducing constant capital, it involves no exchange with Department 2. The only circulation here is that arising from exchanges of one Department I firm with another. The £4,000 (c), of Department 1, plus the £1,000 (v) and £1,000 (s) make up the total commodity product of Department 1. The £6,000 of Department 1 commodities can only be used as means of production, because they are not consumption goods. £2,000 of means of production were required by Department 2 for its production. That leaves this £4,000 remaining, which Department 1 capitalists consume to replace their own means of production.

In Department 2, that component of the commodity-product, which is equal to the wages and surplus value of Department 2, is consumed by those workers and capitalists. That component of Department 2 commodity-product, that is equal to the constant capital, used in production, is exchanged with Department 1, which provides those means of production. Similarly, the constant capital used in production, in Department 1, reappears in the same physical form, as part of the output of Department 1, ready, once again, to resume its function, and is consumed, by Department 1 capitalists, for that purpose.

Each capitalist, within Department 1, appears to produce all of their output as commodity-capital, which they sell, and thereby obtain a revenue, distributed as wages and surplus value, but taken in the aggregate, it is clear that this is not the case, because, in reality, two-thirds of Department 1 output, i.e. £4,000 of £6,000 only circulates within Department 1. It is only the remaining £2,000, equal to the wages and surplus value, that exchanges with Department 2, and thereby produces revenue.

But, in the same way that the output of Department 2, that circulates within Department 2, i.e. that portion equal to its wages and surplus value, still constitutes part of its total output, so that portion of Department 1's output, equal to the constant capital consumed, that only circulates within Department 1, still also constitutes a part of its output value.

“However since the partial products constituting the constant capital-value I do not return directly to their particular or individual sphere of production, they merely change their place. They pass in their bodily form to some other sphere of production of Department I, while the product of other spheres of production of Department I replaces them in kind. It is merely a change of place of these products. All of them re-enter as factors replacing constant capital in I, only instead of the same group of I they enter another. Since an exchange takes place here between the individual capitalist of I, it is an exchange of one bodily form of constant capital for another bodily form of constant capital, of one kind of means of production for other kinds of means of production. It is an exchange of the different individual parts of constant capital I among themselves.” (p 428)

#### 1 comment:

Victor Onrust said...

Hi! I agree with your long comment on Michael Roberts Blog. I fear I have no time to study Capital like you, because Gramsci and others seem more pressing. Wonder what you think about my ideas as stated in http://onrust.2fd.eu/2014/05/capital-should-be-in-solid-hands/?q=mrb you can contact me if you like at victor.onrust (at) xsall(dot)nl or by commenting on my blog.