Friday, 20 March 2015

3) Schematic Presentation of Accumulation

Marx repeats the point made earlier that the essence of expanded reproduction is that a portion of surplus value is used for capital accumulation rather than revenue. In other words, there is a rearrangement of various components of total social capital. It is the reorganisation of these components that is the key to understanding how the extended reproduction is achieved without the problem of imbalance. To make this clear, and to show that it is not just a matter of how much capital is involved, Marx sets up another model where the total social capital is smaller than the £9,000 in the original scheme.

To show that it is the reorganisation of different components that is key, Marx provides two versions of this model with varying proportions – one where there is simple reproduction, the other where there is extended reproduction. Because I think it makes it easier to understand, I'm giving his second version (Scheme b – simple reproduction) first, and (Scheme a – extended reproduction) second.

b)

Department 1) C 4000 + V 875 + S 875 = 5750

Department 2) C 1750 + V 376 + S 376 = 2502

Total 8252

There is simple reproduction here because 1(v+s) = 1750 = 2(c). £4,000 of Department 1 output simply replaces Department 1 constant capital. The other £1750 of output is sold to Department 2, who in turn, sell £1750 of consumer goods to Department 1 workers and capitalists.

The remaining £752 of Department 2 output is consumed by Department 2 workers and capitalists. Everything is consumed, and in the proportions that ensure things continue on the same scale.

In scheme a), the amount of social production is still £8252, but the elements are arranged differently showing extended reproduction.

a)

Department 1) C 4000 + V 1000 + S 1000 = 6000

Department 2) C 1500 + V 376 + S 376 = 2252

Total = £8252

There are several obvious differences here. Firstly, 1(v+s) no longer equals 2(c). The former is £2,000, the latter only £1500. Secondly, the output of Department 1 is larger, whilst the output of Department 2 is smaller than in scheme b). Given that a fundamental requirement of expanded reproduction is that more means of production are required, this is to be expected. Even if Department 2 output rises, it will require more materials to effect that increase in production, thereby necessitating an increase in Department 1 production.

A society can increase its consumption by cannibalising its existing capital stock, but this is only possible under certain conditions and for limited periods. For example, less resources can be given to carrying out repairs and replacing fixed capital, and the resources used for increased production of consumer goods, but sooner or later, more material has to be produced, broken machines result in fewer consumer goods being produced and so on, so resources then have to be switched from Department 2 to Department 1.