3) Results
“If — all other things, and not only the scale of production, but above all the productivity of labour, remaining the same — a greater part of the fixed element of II c expires than did the year before, and hence a greater part must be renewed in kind, then that part of the fixed capital which is as yet only on the way to its demise and is to be replaced meanwhile in money until its day of expiry, must shrink in the same proportion, inasmuch as it was assumed that the sum (and the sum of the value) of the fixed part of capital functioning in II remains the same.” (p 471)
But, this leads to the series of problems listed above.
“If the greater part of commodity-capital I consists of elements of the fixed capital of II c, then a correspondingly smaller portion consists of circulating component parts of II c, because the total production of I for II c remains unchanged. If one of these parts increases the other decreases, and vice versa. On the other hand the total production of class II also retains the same volume. But how is this possible if its raw materials, semi-finished products, and auxiliary materials (i.e., the circulating elements of constant capital II) decrease?” (p 471)
Secondly, the greater the proportion of fixed capital to be physically replaced, the greater the amount of money that flows to Department 1 to purchase it, i.e. as means of payment rather than as means of circulation. But, then this greater quantity of money in the hands of Department 1 capitalists is unable to find an increased quantity of Department 2 consumer goods to buy with it. On the contrary, the more Department 2 spends on fixed capital the less it has to spend on circulating capital, and so the less it is able to increase or even sustain its level of output.
Department 1 then has an excess of money over the available consumer goods. It can overcome this by buying imported consumer goods. As stated previously, however, if the expenditure on fixed capital falls, this means that less money-capital is advanced by Department 2, whilst the value of wear and tear on fixed capital, continues to accumulate in the depreciation fund. Department 1 is then unable to sell all of its output.
“There would be a crisis — a crisis of over-production — in spite of reproduction on an unchanging scale.”(p 472)
In contrast to the previous situation, one way to resolve this would be for Department 1 to export its surplus production. Yet, as Marx points out, all this does is to extend the problem to a wider international sphere, and thereby create the conditions for a national crisis to become an international crisis.
“Such surplus is not an evil in itself, but an advantage; however it is an evil under capitalist production.” (p 472)
Once capitalism is abolished, the problem does not disappear, Marx says, but the means of dealing with it changes. If more fixed capital has to be physically replaced in one year, less will need to be replaced in the next. To maintain production at a stable level, the quantities of circulating capital have to be maintained. The solution to this problem then simply becomes the production each year of relative surpluses.
“There must be on the one hand a certain quantity of fixed capital produced in excess of that which is directly required; on the other hand, and particularly, there must be a supply of raw materials, etc., in excess of the direct annual requirements (this applies especially to means of subsistence). This sort of over-production is tantamount to control by society over the material means of its own reproduction. But within capitalist society it is an element of anarchy.” (p 473)
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