Sunday, 8 March 2015

Capital II, Chapter 21 - Part 8

We have now gone from a situation under simple reproduction where the surplus value of one capital is realised in the surplus production of other capitals, as a result of each capitalist throwing into circulation the monetary equivalent of their surplus value, to one in which the surplus value instead is realised in a money hoard. In the former, the capitalists were sellers to become buyers, as well as buyers to become sellers, but in the latter they are sellers without being buyers. It is then a simple logical step from there to understand this process in terms of the capitalists once again also becoming buyers, but this time buyers of additional productive-capital, rather than buyers of consumer goods.

“It follows, then, that, considering the matter merely from the angle of volume of values, the material substratum of extended reproduction is produced within simple reproduction. It is simply surplus-labour of working-class I expended directly in the production of means of production, in the creation of virtual additional capital I. The formation of virtual additional money-capital on the part of A, A' and A'' (1) – by the successive sale of their surplus-product which was formed without any capitalist expenditure of money – is therefore simply the money-form of additionally produced means of production 1.” (p 501)

Our coal producer continues to throw his product into circulation, withdrawing gold/money from it, without throwing that money back into circulation. They accumulate a hoard of money that is potential money-capital. At a point where this potential money-capital is sufficiently large to become actual capital, the coal producer can then expand their capital, for example, by opening an additional mine. This process is essentially no different, in this respect, to any new capital coming into existence. The only requirement here is that the new capital should find in existence the means of production and labour-power required to start production.

“Consequently production of virtual additional capital expresses in our case (we shall see that it may also be formed in a quite different way) nothing but a phenomenon of the process of production itself, production, in a particular form, of elements of productive capital. 

The production of additional virtual money-capital on a large scale, at numerous points of the periphery of circulation, is therefore but a result and expression of multifarious production of virtually additional productive capital, whose rise does not itself require additional expenditure of money on the part of the industrial capitalist.” (p 501)

Repeated one sided sales without purchases swells this money hoard, and thereby creates the potential for a new large productive-capital, just as the process of primary accumulation created the potential for the beginning of capitalist production. But, as other forms of money are introduced – notes, coins, credit, bank deposits – besides gold, there is no need for this money hoard to be in the form of gold. 

“Except in the case where the buyer is a gold producer, this hoarding does not in any way imply additional wealth in precious metals, but only a change in the function of money previously circulating. A while ago it functioned as a medium of circulation, now it functions as a hoard, as virtually new money-capital in the process of formation. Thus the formation of additional money-capital and the quantity of the precious metals existing in a country are not in any causal relation to each other.” (p 501)

Moreover, precisely because it is the physical surplus product that is at the root of this potential for expansion, the more developed the economy, the larger the existing stock of productive capacity, the higher the level of productivity, the greater the potential for such expansion

“... the greater therefore the quantity of the surplus-product both as to its value and as to the quantity of use-values in which it is represented – so much the greater is 

1) the virtually additional productive capital in the form of surplus-product in the hands of A, A', A'', etc., and

2) the quantity of this surplus-product transformed into money, and hence that of the virtually additional money-capital in the hands of A, A', A''. The fact that Fullarton for instance does not want to hear of over-production in the ordinary sense but only of the over-production of capital, meaning money-capital, again shows how extremely little of the mechanism of their own system even the best bourgeois economists understand.” (p 502)

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