## Friday, 26 December 2014

### Capital II, Chapter 20 - Part 38

Marx then examines a number of formulations of the problem.

“Expressed in terms of value, 2,000 II c equals 1,800 c + 200 c (d), this d standing for déchet.” (p 459) (déchet means wear and tear).

If we divide Department II's output up physically into those portions that represent c+v+s then we can consider the exchanges as being the purchase of commodities out of, or exchange with, these different portions. So, Department I(v+s) exchanges with II(c) or put another way, workers and capitalists from Department I buy goods out of that portion of Department II's output equal to the value of c, a proportion of its total output value equal to two-thirds, or £2,000.

So,

“I buys with £1,000, which has gone to the labourers in wages for their labour-power, 1,000 II c of articles of consumption.” (p 459)

Similarly, with the £1,000 received, Department II buys £1,000 of means of production, which can be thought of as coming out of the corresponding proportion of Department I's output, which equals v, i.e. a sixth of its total output value, or £1,000. By this process, the £1,000 that Department I capitalists advanced as variable capital is returned to them, and can be used to buy labour-power once more.

Department II then advances £400 to buy means of production out of I (s), and Department I capitalists use this £400 to buy consumer goods out of II (c), so Department II has received back the £400 it advanced. Department I capitalists then buy another £400 of consumer goods out of II (c) and Department II capitalists buy £400 of means of production out of I (s).

To summarise:-

Department I, buys £1,800 of consumer goods using the following means.

 Wages 1,000 Means of production 400 Money (s) 400 Total 1,800
Department II, buys £1,800 of constant capital using the following means

 Consumer Goods (sold to Department 1 workers) 1,000 Money 400 Consumer Goods (sold to Department 1 capitalists) 400 Total 1800

At the end, Department I has the £1,000 in money capital available to replace its variable capital. Its capitalists have £800 of consumer goods for which they exchanged £400 in means of production and £400 in money. They also have £400 in money.

Department II has £1,800 in means of production obtained from Department I, by exchanging £1,000 consumer goods (for wages) £400 (consumer goods), and £400 in money.

However, out of the total output, Department I still has £200 of means of production, and Department II has £200 of consumer goods, (equal to 200 c (d)) unsold.

Department I capitalists buy those £200 of consumer goods, but Department II capitalists do not spend it to buy means of production, instead hoarding it to replace fixed capital, some time later. As a result, a fifth of Department I's surplus value cannot be realised.

“This not only contradicts our assumption of reproduction on a simple scale; it is by itself not a hypothesis which would explain the transformation of 200 c(d) into money. It means rather that it cannot be explained.” (p 460)

We would have to assume that Department I capitalists exchanged this remaining £200 of means of production gratis, but, of course, that is not a likely course for capital to take, especially considering that this would have to occur year after year. Marx equates the situation to that which applies to all those parasitic classes that also share in the surplus value. If, for whatever reason, they do not spend their share of the loot, then it does not go back into circulation, does not go back into the pocket of the capitalists, and thereby ceases to be available to be paid again as rent, interest and so on.

The problem is not resolved by drawing in the role of the merchant as intermediary. Department I must sell £200 of means of production out of I(s) to Department II capitalists to match the £200 of consumer goods it has bought. Otherwise, Department I surplus value is not fully realised. If Department I sells this £200 to merchants, the merchants still have to sell it to Department II capitalists.

“We see here that, aside from our real purpose, it is absolutely necessary to view the process of reproduction in its basic form — in which obscuring minor circumstances have been eliminated — in order to get rid of the false subterfuges which furnish the semblance of “scientific” analysis when the process of social reproduction is immediately made the subject of the analysis in its complicated concrete form.” (p 461)