1) Replacement of the Wear and Tear Portion of the Value in the Form of Money
Considering then this exchange between I(v+s) and II(c), its clear that I (v+s) contains no constant capital. The value being exchanged from this side comprises only variable capital and surplus value. But, on the other side, the constant capital is only constant capital and part of it is a part of that value that is equivalent to wear and tear. That portion is not to be replaced immediately. It is to be hoarded as money, and only used to replace fixed capital when it is exhausted. This, of course, is happening all the time. The analysis is one of an existing capitalism in which firms have existed for varying periods of time, and along with them, that fixed capital, which itself is made up of a range of equipment with varying durability.
“Therefore the exchange of 2,000 II c for 2,000 I(v + s) includes a conversion of 2,000 II c from its commodity-form (articles of consumption) into natural elements which consist not only of raw and auxiliary materials but also of natural elements of fixed capital, such as machinery, tools, buildings, etc. The wear and tear, which must be replaced in money in the value of 2,000 II c, therefore by no means corresponds to the amount of the functioning fixed capital, since a portion of this must be replaced in kind every year. But this assumes that the money necessary for this replacement was accumulated in former years by the capitalists of class II. However that very condition holds good in the same measure for the current year as for the preceding ones.” (p 457)
The reason for approaching things in this way becomes clear here because on the other side,
“In the exchange between I (1,000 v + 1,000 s) and 2,000 II c it must be first noted that the sum of values I(v + s) does not contain any constant element of value, hence also no element of value to replace wear and tear, i.e., value that has been transmitted from the fixed component of the constant capital to the commodities in whose bodily form v + s exist.” (p 458)
It is only in relation to II(c) that this exists, and hence the problem. The shortfall of £200, referred to earlier can only come from Department I, but that leads to absurd conclusions. Department II has commodities for sale whose value is £2,000. Department I workers and capitalists must pay £2,000 for them, if the condition that commodities exchange at their value is to hold. If Department II has only bought £1,800 of commodities from Department I, only Department I can make up the difference. However, unlike the money that Department I capitalists throw into circulation to cover their consumption, which is equal to their surplus value, this additional money would not return to them, because it is not equivalent to any component of the value of the commodities they sell to Department II.
“In such an event we would have a money-fund for II, placed to the credit of the wear and tear of its fixed capital. But then we would have an over-production of means of production in the amount of 200 on the other side, the side of I, and the basis of our scheme would be destroyed, namely reproduction on the same scale, where complete proportionality between the various systems of production is assumed. We would only have done away with one difficulty in order to create another one much worse.” (p 459)
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