Wednesday, 18 March 2015

Capital II, Chapter 21 - Part 13

We need here to be aware of something referred to earlier, and central to the analysis of social reproduction. That is the point that Marx made concerning the Tableau Economique. It is that the starting point is not this year's production, but last year's. Neither A nor B start off here as a blank sheet. Both have capital at the start of the year in different forms – money-capital, productive-capital, and commodity-capital. Every business has money in the bank, work in progress, as well as a stock of materials and finished products.

When B buys the commodities that comprise its constant capital from A, therefore, this is to replace the materials it uses in current production, and not the material it uses in that actual current production. That indeed is why, in order to reproduce its capital, the value of the commodities currently being produced is determined by the reproduction cost of that capital not by its historical cost. 

Consequently, B already had constant capital, in the form of materials in stock, and work in progress, and it already had commodity-capital waiting to be sold. Because capitalism produces without knowing whether a market exists for its output, it is possible that B could have continued to produce on the same scale, i.e. £2,000 of output (indeed Marx referred to exactly that situation previously in relation to the supply of commodities to merchants that enabled production to continue even though the commodities themselves were still in the market), but now finds it only has £1500 of demand for that output. Moreover, there is only £1500 of replacement constant capital physically available in the market to reproduce its capital.  Both of these conditions arise due to the decision of A to accumulate an additional £500 portion of their output, rather than to sell it to B, as described in Part 12

“Instead of being converted into articles of consumption (and here in this section of the circulation between I and II the exchange is actually mutual, that is, there is a double change of position of the commodities, unlike the replacement of 1,000 II c by 1,000 I v effected by the labourers of I), it is made to serve as an additional means of production in I itself. It cannot perform this function simultaneously in I and II. The capitalist cannot spend the value of his surplus-product for articles of consumption and at the same time consume the surplus-product itself productively, i.e., incorporate it in his productive capital. Instead of 2,000 I(v+s), only 1,500, namely (1,000 v + 500 s) I, are therefore exchangeable for 2,000 II c ; 500 II c cannot be reconverted from the commodity-form into productive (constant) capital II. Hence there would be an over-production in II, exactly equal in volume to the expansion of production in I. This over-production in II might react to such an extent on I that even the reflux of the 1,000 spent by the labourers of I for articles of consumption of II might take place but partially, so that these 1,000 would not return to the hands of capitalists I in the form of variable money-capital. These capitalists would thus find themselves hampered even in reproduction on an unchanging scale, and this by the bare attempt to expand it.” (p 508)

These stocks of materials, as well as the stocks of commodity-capital, and the money hoards, in the hands of capitals, in both Department 1 and 2, are a necessary condition of the continuity of capitalist production, a continuity which is inseparable from it. This, in fact, goes to the heart of the criticism of the TSSI, whose formalistic rather than dialectical model is based upon a division of periods of capitalist production into discrete segments rather than a continuous flow. I highlighted it, some time ago, in my critique of the argument put forward by Nick Rogers.

Marx writes in almost identical terms to my response to Nick,

“The consumption-fund, which is as yet in the hands of its sellers who are at the same time its producers, cannot fall one year to the point of zero in order to begin the next with zero, any more than such a thing can take place in the transition from today to tomorrow.” (p 509)

In other words, as I pointed out to Nick, there can be no point in time. A point is infinitely small = 0. But, a zero in time is time that does not exist. There can be no single zero point where the day stops being today and becomes tomorrow, for the same reason.

“Since such supplies of commodities must constantly be built up anew, though varying in volume, our capitalist producers II must have a reserve money-capital, which enables them to continue their process of production although one portion of their productive capital is temporarily tied up in the shape of commodities. Our assumption is that they combine the whole business of trading with that of producing. Hence they must also have at their disposal the additional money-capital, which is in the hands of the merchants when the individual functions in the process of reproduction are separated and distributed among the various kinds of capitalists.” (p 509)

But, its not just Department II capitalists that have to have these stocks and hoards; Department 1 does too. Their existence does not change the nature of the problem as cited, of imbalances between the two, but it is a necessary element in understanding how that problem is resolved.

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