Sunday, 1 March 2015

Capital II, Chapter 21- Part 5

If A sells to B commodities with a value of £600, made up of C 400 + V 100 + S 100, and then hoards the £100 of surplus value, this simply means that this £100 cannot go to expanding production. If, as with simple reproduction, he, along with other capitalists, throws it back into circulation to buy articles of consumption, this provides the means for him and other capitalists to realise their surplus value.

But, if they realise that surplus value as described previously, by buying gold and thereby accumulating a money hoard, this in no sense means that simple reproduction ceases. The necessary funds are still generated to once more purchase the constant and variable capital, and the surplus value now exists in the form of a hoard of gold rather than a quantity of commodities to be consumed by capitalists. All of the individual acts of hoarding appear as obstacles to circulation, but, in fact, the opposite is true.

“But it must be borne in mind that hoarding takes place in the simple circulation of commodities long before this is based on capitalist commodity production. The quantity of money existing in society is always greater than the part of it in actual circulation, although this swells or subsides according to circumstances. We find here again the same hoards, and the same formation of hoards, but now as an element immanent in the capitalist process of production. 

One can understand the pleasure experienced when all these potential capitals within the credit system, by their concentration in the hands of banks, etc., become disposable, "loanable capital," money-capital, which indeed is no longer passive and music of the future, but active capital growing rank.” (p 497)

We are still concerned here only with the situation as regards accumulation in Department I. So, here, capitalist A is selling elements of constant capital to some other businesses in Department I. That is they are selling means of production for the purpose of producing means of production, e.g. a coal producer selling coal to a steel producer. So, if A is a coal producer and their capital is made up C 400 + V 100 + S 100, then one sixth of their output is equal to their surplus value. If their output is equal to 6000 tonnes, 1000 tonnes is equal to their surplus product.

We have seen the significance of this previously in Volume I, in explaining how it is possible for this expanded reproduction to occur . That is the surplus production of each individual capital constitutes an aliquot part of the aggregate social surplus product. One capital is able to expand its purchases of physical elements of its capital precisely because other capitals have themselves increased their output of those commodities, which in turn form their surplus production.

This is obvious and tautologically true if we think about it in terms of Robinson Crusoe. He reproduces his means of production and consumption and is left with a surplus product. How can he then invest this surplus product e.g. a quantity of seeds, additional livestock etc.? The question answers itself. Whatever his physical surplus product, it is thereby available as additional means of production for next year. Even surplus food for his own consumption means the potential to devote less time procuring it next year, and thereby additional available social labour-time for alternative activities.

Similarly, the steel producer is able to increase their output and buy more coal, because the coal producer has also produced a surplus product of coal that is itself available to meet the additional needs of the steel producer.

“It must be noted at this point first and foremost that although withdrawing money to the amount of his surplus-value from circulation and hoarding it, A on the other hand throws commodities into it without withdrawing other commodities in return. The capitalists B, B', B'', etc., are thereby enabled to throw money into circulation and withdraw only commodities from it. In the present case these commodities, according to their bodily form and their destination, enter into the constant capital of B, B', etc., as fixed or circulating element. We shall hear more about this anon when we deal with the buyer of the surplus-product, with B, B', etc.” (p 497)

Suppose, here we think about our coal producer. They sell coal to be able to obtain the money to once again buy means of production and labour-power. Suppose they used the surplus product represented by 1000 tonnes for their own personal consumption. But, then there would be no surplus available for the steel producers to increase their consumption of coal to increase their own output. 

The coal producer sells his surplus coal production to the steel producer and hoards the money they receive. The steel producer takes money from their hoard and buys the surplus coal, thereby increasing their capital and output. The former throws commodities into the market without taking commodities of the same value out. The latter takes commodities out of the market without throwing commodities of the same value in. The former takes money out of the market, the latter throws money in to it.

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