Wednesday, 10 December 2014

Capital II, Chapter 20 - Part 33

The model is:

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

Department II - c 2000 + v 500 + s 500 = 3000, which is expanded to

Department IIa) - c 1600 + v 400 + s 400 = 2400

Department IIb) - c 400 + v 100 + s 100 = 600

The situation with Department II workers is more straightforward. They are paid £500. They produce commodities with a value of £3,000 (2000 c + 500 v + 500 s). The workers spend their £500 of wages buying a portion of the commodities they have themselves produced. Department II capitalists thereby realise in that sale the £500 they need to buy that labour-power once more. The workers having consumed those commodities once more need to sell that labour-power to obtain wages to continue to live.

The same is true in relation to those workers that work in Department IIa producing necessities. As for workers in IIb the relation is the same as for workers in Department I. 

“ But it nevertheless makes a difference whether the labourers buy their means of subsistence directly from the capitalist producers to whom they sell their labour-power or whether they buy them from capitalists of another category, through whose agency the money returns to the former only by a circuitous route.” (p 449)

The reason is that workers live hand to mouth and need to spend all their wages to buy necessities. (This remains effectively true today for workers in aggregate. Some workers may save to cover expenditure at some future date, whilst other workers will only be able to spend by going into debt, or drawing down on savings).

But, that is not true for capitalists. They may buy in advance of needs, if they think they may benefit by it, but equally they will refrain from spending on consumption goods or advancing capital if they think that is beneficial. In that case, his payment to Department 1 will be delayed, and consequently Department 1 will only be able to reproduce its capital and continue production if it advances additional capital from the resources of Department 1 capitalists. 

“If the exchange of the various elements of the current annual reproduction is to be investigated, so are the results of the labour of the preceding year, of the labour of the year that has already come to a close.” (p 450)

That is because the existing national product already exists, it has been produced, the labour process has been completed. The commodity-capital that comprises it is not something currently being produced, but something that has been produced. Even more is that the case with the productive-capital – both the means of production and the labour-power – that produced that commodity-capital. The exchanges that led to the purchase of that productive-capital are further in the past, and the processes that created the labour-power and means of production, so that they were available to be exchanged, further back still.

In terms of the current situation, in relation to the national commodity-capital, the worker now only features as a buyer of commodities. He has already sold his labour-power, received wages, and produced commodities. His only function now is spending his wages.

“On the other hand the annual product must contain all the elements of reproduction, restore all the elements of productive capital, above all its most important element, the variable capital.” (p 450)

By spending his wages, the worker reproduces his labour-power, and is thereby enabled to once more throw it into the labour market, ready for capital to buy it again, and advance it as variable capital. In Department 1, the capitalists had £1,000 in money-capital, and advanced it as variable capital, having bought the labour-power of workers that had a value of £1,000. Those workers bought £1,000 of consumption goods from Department II, with those wages, and that £1,000 was also equal to half the constant capital used by Department II, which was equal to the value of the Department 1 variable capital.

Department II was then able to use the money received to reconvert that portion of its constant capital, buying £1,000 worth from Department 1. In turn, Department 1 thereby obtained £1,000 of money capital, restoring the variable capital previously advanced.

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