Capital II, Chapter 21 - Part 25

The fact that capitalism is a system of continuous production – there is no zero of time, any more than capitals reduce any portion of their capital to zero before increasing it again – means that each individual capital has stores of money-capital, productive-capital, and commodity-capital. It is the existence of these stores that enables not only production to proceed smoothly and continuously, but also enables accumulation to take place.

One capital can, for example, increase its activity, and employ more workers, precisely because elsewhere, stocks of consumer goods exist to meet their subsistence needs, whilst this prompts an increase in Department 2 production, not just to replace the draw down in these inventories, but to respond to the increased demand.

One capital can increase its activity by expanding its constant capital, precisely because stocks of constant capital exist – even if for some of it, it is only the potential that exists, which is set in motion once an order is received. The existence of hoards of money-capital, stocks of productive-capital, and commodity-capital enables the initial increase to be met from stocks, and subsequently for the various capitals then to replace and add to these stocks themselves. 

That is why capitalism never runs to a level of 100% capacity utilisation, and why the first stage of any economic boom is seen in a drawing down of inventories.

Marx has now, in Volume I, analysed the building blocks of capital, i.e. the commodity, and the general laws that determine its production and exchange. He has developed that analysis to show at the level of many capitals how the production and exchange of commodities necessarily results in the production of capital.

In Volume II, he has moved from an analysis of the production of capital at the level of many capitals, i.e. of the firm, to an analysis of the circulation of capital, first at the level of many-capitals, and then at the level of capital in general. That meant an analysis at its most abstract level, of a mass social exchange of commodities and capital between Department 1 and 2.

In doing so, he has shown how this mass social exchange can occur. But also in doing so, he has demonstrated the many different points of exchange both of commodities and of capital, where this can, and is likely to break down. It opens up the possibility of crises of a number of sorts – financial or monetary crises arising in, but not necessarily contained within, financial markets; crises of overproduction of commodities that then lie unsold in markets; and crises of over accumulation of capital whereby capital has been accumulated to such a degree, relative to the available supply of labour-power, that it cannot extract either additional absolute or relative surplus value, by further expansion.

In Volume III, Marx examines how these potential forms of crisis become actualised. His analysis is conducted, now, not at the level of abstraction of mass social exchanges, but at a more concrete level, of the way capital in general is divided into Money-capital, Productive-capital, and Merchant-Capital as distinct branches.

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