Capital II, Chapter 20 - Part 34

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

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

“The variable capital of I passes through three metamorphoses, which do not appear at all in the exchange of the annual product or do so only suggestively.” (p 450-1)

1. Labour-power is bought by Department 1 capitalists in exchange for £1,000 wages. There is no exchange between Department 1 and 2 here. However, after receiving their wages, the Department 1 workers use them to buy Department 2 consumer goods.
2. When labour operates in the production process, and thereby creates new value in the form of new use values.
3. In the completion of that process and the production of new use values, which form new commodities, which embody surplus value. 

“During all these transformations capitalist I continually holds the variable capital in his hands; 1) to start with as money-capital; 2) then as an element of his productive capital; 3) still later as a portion of the value of his commodity-capital, hence in the form of commodity-value; 4) finally once more in money which is again confronted by the labour-power for which it can be exchanged.” (p 451)

“As the variable capital always stays in the hands of the capitalist in some form or other, it cannot be claimed in any way that it converts itself into revenue for anyone. On the contrary, 1,000 Iv in commodities converts itself into money by its sale to II half of whose constant capital it replaces in kind.” (p 452) 

The variable capital-value remains in the hands of the capitalist. It has merely changed its form from the money form to that of productive labour. The only conversion into revenue is that which results from the workers sale of their commodity – labour-power – for wages. That is clearest, Marx says, where what is being produced is the money commodity itself – gold.

“If the capitalist is a producer of gold, then the variable portion of value — i.e., the equivalent in commodities which replaces for him the purchasing price of the labour — appears itself directly in the form of money and can therefore function anew as variable money-capital without the circuitous route of a reflux.” (p 452)

What is spent by the worker to buy consumer goods is not variable capital but wages. The wages spent by the workers are the same monetary amount as the variable capital, but they are two different things. They are the same money amounts because the variable capital advanced buys labour-power of the same value. The worker who sells that labour-power, is paid wages of that amount, and the worker spends all their wages to reproduce their labour-power.

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