“The rate of surplus-value may therefore be large, while the absolute magnitude of surplus-value in each unit of the commodity is small. This absolute magnitude of surplus-value in each piece of the commodity depends primarily on the productivity of labour, and only secondarily on its division into paid and unpaid labour.” (p 308)
For the merchant capital, the price of production is already given. It is a function of the costs of production and the general rate of profit. This is different to the situation in the past.
“The high commercial commodity-prices in former times were due 1) to the high prices of production, i.e., the unproductiveness of labour; 2) to the absence of a general rate of profit, with merchant's capital absorbing a much larger quota of surplus-value than would have fallen to its share if capitals enjoyed greater general mobility. The ending of this situation, in both its aspects, is therefore the result of the development of the capitalist mode of production.” (p 308)
Just as different types of industrial capital have different rates of turnover due to the differing production times for one commodity compared to another, so merchant capitals employed in different areas have varying turnover periods. A car showroom, for example, may sell one car per week, whereas a newsagents will sell large numbers of various commodities every day.
But, for any particular type of merchant capital, the rate of turnover will vary with the economic cycle – as well as for seasonal reasons, e.g. car dealers sell more cars when new registrations are released. When considering the rate of turnover, therefore, it is an average figure that must be used.
“In the case of industrial capital, its turnover expresses, on the one hand, the periodicity of reproduction, and, therefore, the mass of commodities thrown on the market in a certain period depends on it.” (p 308-9)
In other words, in any turnover period, industrial capital will produce a certain quantity of commodities, which it sends to market. What quantity is sent to market is historically determined on the basis of what is an efficient quantity to transport etc. For example, a pottery manufacturer in Stoke would not send just one 25-piece dinner service to market, in Birmingham - or anywhere else. The cost of doing so would be prohibitive. They would wait until they had produced enough ware to fill a canal barge, to send to Birmingham or wherever to be sold. It is obvious, therefore, that how quickly there capital turns over - how quickly they can get the capital back that has been consumed in this production, depends upon how quickly that quantity of ware can be produced and then shipped.
How quickly that quantity can be produced , and, therefore, how long the turnover period will be depends on the degree of productivity. The higher productivity rises, the quicker that quantity will be produced, and sent to market. The more the capital will, therefore, turn over.
“On the other hand, its time of circulation creates a barrier, an extensible one, and exerts more or less of a restraint on the creation of value and surplus-value, because it affects the volume of the production process. The turnover, therefore, acts as a determining element on the mass of annually produced surplus-value, and hence on the formation of the general rate of profit, but it acts as a limiting, rather than positive, element.” (p 309)
So, no matter how much productivity rises, so as to reduce the working period, the commodities produced must still be sold, and this requires time. If the circulation time does not decline, then an industrial capital must devote an increasing proportion of capital to cover this period, when it is waiting for the reflux of the capital it has already advanced. Moreover, although the constant rise in productivity reduces the working period, so that any given quantity of commodities can be sent to the market faster, unless the market itself expands, this greater quantity will take longer and longer to sell, so that the circulation time gets longer.
Provided the commodities sent to market can be sold, then, as described in Capital II, the more times the capital is turned over, in a year, the more surplus value the advanced capital produces, and so the higher also the general annual rate of profit.
“For merchant's capital, on the contrary, the average rate of profit is a given magnitude. The merchant's capital does not directly participate in creating profit or surplus-value, and joins in shaping the general rate of profit only in so far as it draws a dividend proportionate to its share in the total capital, out of the mass of profit produced by industrial capital.” (p 309)
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