Capital II, Chapter 21 - Part 20

2) Second Illustration

Here the organic composition of capital is 5:1 in both Departments, reflecting a greater level of development.

Department 1 c 5000 + v 1000 + s 1000 = 7000

Department 2 c 1430 + v 285 + s 285 = 2000.

All of this output exists as commodity-capital, i.e. it has been produced, and is available to be exchanged.

Department 1 accumulates half its surplus value in the same proportion, so:-

c 5000 + (500 x 5/6 = 416.66 rounded to 417) + v 1000 + (500 x 1/6 = 83.33 rounded to 83), so

c 5417 + v 1083.

Department 1 workers now buy £1,083 of consumer goods from Department 2, whilst Department 1 capitalists buy £500 of consumer goods. In return, Department 2 buys an equivalent amount of constant capital from Department 1, i.e. 1(v+s) = 2(c) or £1583. However, the proportion of Department 2 consumer goods, currently available to be allocated to this exchange, amounts to only £1,430, because currently £285 of Department 2 output is allocated to reproduce Department 2 labour-power, and £285 is allocated to meet the consumption needs of Department 2 capitalists.

The deficit can only be made up if part of the allocation to Department 2 capitalists is used to exchange with Department 1. That would, in turn, mean that Department 2 not only replaces its £1,430 of constant capital, but increases it to £1583, to meet this higher level of demand. Consequently, £153 of Department 2 output currently destined for consumption by Department 2 capitalists goes to Department 1, whilst Department 2 capitalists reduce their own unproductive consumption, by £153, and use this money as capital to advance for additional constant capital.

So, Department 2 constant capital rises to £1,583, but in order to maintain its own organic composition of capital, it also has to advance more variable capital, i.e. 1583/5 = 316. That means Department 2 capitalists have to reduce their own unproductive consumption by a further (316 – 285 = £31) So, Department 2, now has:-

C 1583 + V 316. Department 2 capitalists have (285 – [153 + 31 = 184] = 101) left over to spend on consumption goods, equal to the amount of consumer goods left to be bought.

Department 1 capital has risen from (5000 + 1000) £6,000 to (5417 + 1083) 6500. That is an increase of 500/6000 = 8.33%.

Department 2 Capital has risen from (1430 + 285) £1715 to (1583+316) £1899 = 10.7%.

If production continues on this basis.

Department 1 C 5417 + V 1083 + S 1083 = 7583

Department 2 C 1583 + V 316 + S 316 = 2215

The Table below shows this accumulation over five years.

		Constant Capital	Variable Capital	Surplus Value	Output		Total Output
Year 1	Department 1	5000.00	1000.00	1000.00	7000.00
	After Accumulation	5416.67	1083.33	500.00	7000.00
	Department 2	1430.00	285.00	285.00	2000.00
	After Accumulation	1583.33	316.67	100.00	2000.00
							9000.00
Year 2	Department 1	5416.67	1083.33	1083.33	7583.33
	After Accumulation	5868.06	1173.61	541.67	7583.33
	Department 2	1583.33	316.67	316.67	2216.67
	After Accumulation	1715.28	343.06	158.33	2216.67
							9800.00
Year 3	Department 1	5868.06	1173.61	1173.61	8215.28
	After Accumulation	6357.06	1271.41	586.81	8215.28
	Department 2	1715.28	343.06	343.06	2401.39
	After Accumulation	1858.22	371.64	171.53	2401.39
							10616.67
Year 4	Department 1	6357.06	1271.41	1271.41	8899.88
	After Accumulation	6886.82	1377.36	635.71	8899.88
	Department 2	1858.22	371.64	371.64	2601.50
	After Accumulation	2013.07	402.61	185.82	2601.50
							11501.39
Year 5	Department 1	6886.82	1377.36	1377.36	9641.54
	After Accumulation	7460.72	1492.14	688.68	9641.54
	Department 2	2013.07	402.61	402.61	2818.30
	After Accumulation	2180.82	436.16	201.31	2818.30
							12459.84
Rise in Output in %		38.44
Rise Capital Department 1 in %		37.74
Rise Capital Department 2 in %		52.59

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