Capital II, Chapter 20 - Part 22

The social working day, in our example, produces a value of £3,000, but only £1,000 of that is produced in Department 2, despite the fact that the entire social revenue (National Income) is expended on Department 2 consumer goods.

“Thus, according to this assumption, two-thirds of the social working-day are employed in the production of new constant capital. Although from the standpoint of the individual capitalists and labourers of Department I these two-thirds of the social working-day serve merely for the production of variable capital-value plus surplus-value, the same as the last third of the social working-day in Department II, still from the point of view of society and likewise of the use-value of the product, these two-thirds of the social working-day produce only replacement of constant capital in the process of productive consumption or already so consumed.” (p 430-1)

But, although the new value produced in Department 1 amounts to only £2,000, the total value produced in that Department is £6,000, because £4,000 are already embodied in the means of production used within the Department itself. That can perhaps be seen clearer if we look at physical outputs rather than values.

Department 1 output is:

c 4000 + v 1000 + s 1000 = 6000.

Let us assume that this is equal also to 6,000 units of output. So, although we have said that the whole of v+s here are spent in Department 2, and that the whole of this value is sold to Department 2, this tends to obscure the reality.

The reality is that what is sold to Department 2 is 2000 units of output, with a value of £2,000. But, if we look at the value composition of those 2000 units, it will comprise c+v+s, in the same proportion as in the whole of Department 1's production. In other words, of that £2,000, ⅔ or £1,333 will comprise the constant capital consumed in its production, £333 will comprise the variable capital, and £333 the surplus value.

In the same way, Department 1, in producing means of production, that is bought and circulates within Department 1, to a value of £4,000 does so on the same basis. Of those 4000 units, £2,666 will comprise the constant capital, used in their production, whilst £666 will comprise variable capital, and £666 surplus value. Each individual capital, within Department 1, whoever it sells to, be it in Department 1 or 2, will see its costs divided in this way. It is only because, in aggregate, Department 1 capitalists and workers use their revenue to buy Department 2 commodities that it appears that the value of Department 1 commodities, sold to Department 2, comprise only v+s.

They clearly do not. In realising the total value, of those Department 1 commodities, which comprise c+v+s, what is realised is also the constant capital consumed in their production. In focussing on the value rather than physical exchanges, and on the equality between I(v+s) and II(c), Marx seems to miss this point.

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