Sunday 17 May 2015

Capital III, Chapter 4 - Part 2

If we have a capital made up c 80 + v 20 + s 20, the rate of surplus value is 100%. However, if it turns over twice during the year, the laid out capital is c 160 + v 40 = 200, and the output value is c 160 + v 40 + s 40 = 240. But, the annual rate of surplus value and rate of profit is calculated only on the capital advanced – c 80 + v 20 = 100, which gives a rate of surplus value of 200% and rate of profit of 40%.

Another capital with the same organic composition, which turns over just once, is made up c 160 + v 40 + s 40. The total capital laid out is 200, the same, the total surplus value is 40, the same. But, its advanced capital is twice that of the first. Its rate of surplus value is only 100%, and its rate of profit only 20%.

In short, the formula for the rate of profit has to be modified to take account of the rate of turnover of the capital. Its assumed that the turnover of capital is equal to the turnover of the variable capital, as the circulating constant capital is processed by the variable capital, both are reproduced at the same time, though as Marx points out, to ensure continuous production, it may be necessary to hold a sufficient productive supply of materials. The introduction of Just In Time reduces that tie up of capital. Wear and tear is a function of the labour process and so proceeds in tandem with the turnover of the variable capital.

Engels then gives a series of examples.

Capital 1 has £10,000 of fixed capital. Wear and tear is 10% = £1,000. It has £500 of circulating constant capital, and £500 of variable capital. It turns over ten times a year. In each turnover period:

(wear and tear) d 100 + c 500 + v 500 + s 500 = 1,600

In a year:

d 1000 + c 5000 + v 5000 + s 5000 = 16,000.

The rate of profit is then calculated including the fixed capital, as the rate of profit is measured against the total capital advanced. Although the fixed capital does not give up all its value to the commodity, it has to all be present for production to take place, and for the capitalist, it is the total capital advanced that is the relevant figure.

The total capital advanced is £10,000 fixed capital + £500 circulating constant capital + £500 variable capital = £11,000. The rate of profit is 5000/11000 = 45.45%.

In the next example, the capital turns over 5 times a year. The advanced capital is £9,000 fixed capital, £1,000 circulating constant capital, and £1,000 variable capital = £11,000. The wear and tear is £1,000.

For one turnover:

d 200 + c 1000 + v 1000 + s 1000 = 3200

For one year:

d 1000 + c 5000 + v 5000 + s 5000 = 16000

The rate of profit = 5000/11000 = 45.45%

In the third example, there is no fixed capital, and the capital turns over once.

c 6000 + v 5000 + s 5000 = 16000

The advanced capital is £6000 + £5000 = £11,000. The rate of profit is 5000/11000 = 45.45%.

Engels then assumes that the first capital turned over five times instead of 10. The effect can then be seen. In one turnover:

d 200 + c 500 + v 500 + s 500 = 1700

The annual product is then:

d 1000 + c 2500 + v 2500 +s 2500 = 8500


The capital advanced is £11,000, and the rate of profit is, therefore, 2500/11000 = 22.73%.

No comments:

Post a Comment