Sunday, 22 February 2015

Capital II, Chapter 21 - Part 2

Marx has demonstrated how the money society requires to circulate commodities already exists. It has built up over long periods of history. In being sufficient to circulate all of these commodities, it is automatically able to circulate the surplus value, which is embodied within those commodities. But, the other side of this, which requires the assumption of expanded reproduction, is precisely that, in order that the money form of this surplus value can be realised in additional productive capacity – means of production and labour-power – that money must be able to buy them i.e. the additional means of production and labour-power must be available to be bought.

“It makes no difference if they are not bought as finished products but made to order. They are not paid for until they are in existence and at any rate not until actual reproduction on an extended scale, an expansion of hitherto normal production, has taken place so far as they are concerned. They had to exist potentially, i.e., in their elements, as it requires only the impulse of an order, that is, the purchase of commodities before they actually exist and their anticipated sale, for their production really to take place. The money on the one side then calls forth extended reproduction on the other, because the possibility of it exists without money. For money in itself is not an element of real reproduction.” (p 494)

This is a point I have made recently, in relation to the current situation in Greece, that what it requires to resolve its problems is not more money, but more capital. It is not the money that arises from the realisation of surplus value that constitutes new wealth. The new wealth existed as soon as a surplus product came into existence. If 100 kilos of wheat seed are required to produce wheat, and a worker requires 10 kilos for their own subsistence, then having grown 200 kilos of wheat, the additional wealth resides in the 90 kilos of wheat, that exists at the end of this process over and above what existed prior to it.  This is true whether money exists in an economy or not.  What societies require in order to produce, prosper and grow is not money, but means of production and labour-power.

Moreover, if this additional 90 kilos is left locked up in a store, and used neither to enable additional planting, nor additional consumption, it does not even then function as additional wealth, but only as a sterile hoard. The same is true if the product is realised in the money form. The additional wealth arises with the production of the surplus product. A capitalist may sell that product, and thereby obtain an amount of money over and above what they require to simply reproduce their constant and variable capital. It is not the money equivalent of the surplus product that constitutes additional wealth, however, but the surplus product itself.

If the capitalist is not able to utilise this surplus value, but has to store it up until it can be used, it simply forms a sterile hoard.

“This hoard of A, which is potentially new money-capital, is not additional social wealth, any more than it would be if it were spent in articles of consumption. But money withdrawn from circulation, which therefore previously existed in circulation, may have been stored up at some prior time as a component part of a hoard, may have been the money-form of wages, may have converted means of production or other commodities into money or may have circulated portions of constant capital or the revenue of some capitalist....Only in the production of gold – inasmuch as the gold product contains a surplus-product, a depository of surplus-value – is new wealth (potential money) created, and it increases the money material of new potential money-capitals only so far as the entire money-product enters into circulation.” (p 494-5)

In the latter case, the gold constitutes new wealth not because gold is money, but quite the opposite, because it is a commodity! The hoarded money is potential money-capital because it is being hoarded for the purpose of buying productive-capital, at some point. In this respect, it is like the depreciation fund, analysed in the previous chapter, whose purpose is to store up the money equivalent of the value of the wear and tear of fixed capital so as to be able to purchase its replacement at some future time, when the fixed capital has become worn out.

The apparent problem there was that an amount of value equivalent to wear and tear was being taken out of circulation without an equivalent amount of value appearing to be thrown back in. Department II appeared to be selling to Department I without buying back to an equivalent extent. The answer was that though Department II was selling to Department I without buying, in respect of this wear and tear, a section of Department II was buying from Department I without selling, because that section of Department II was handing over its depreciation fund to buy new fixed capital, without selling an equivalent amount of commodities to Department I, to bring about a reflux of that money.

Here we have a comparable situation. Each year, every individual capital produces surplus value. Every capitalist realises the surplus value in money form with the selling of the commodities that comprise their commodity-capital. They then hoard the money form of the surplus value.

“Money is withdrawn from circulation and stored up as a hoard by selling commodities without subsequent buying. If this operation is therefore conceived as a general process, it seems inexplicable where the buyers are to come from, since in that process everybody would want to sell in order to hoard, and none would want to buy. And it must be conceived generally, since every individual capital may be in the process of accumulation.” (p 495)

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