Wednesday, 23 March 2016

Capital III, Chapter 29 - Part 10

A portion of the money supply must be held as a reserve fund as described earlier, because of the need to balance payments etc. The size of the reserve varies in line with the needs of circulation. Aside from this reserve, bank deposits are always in circulation in one form or another. Either they are circulating so as to circulate capital or else to circulate revenue.

The circulation of capital involves a transfer of capital, in so far as it is an exchange between capitals. For example, a productive capitalist transfers money-capital to a supplier of raw materials, and receives these raw materials as productive-capital. However, when a capitalist buys labour-power, this is not a transfer of capital, at least directly. The capitalist takes a portion of their money-capital, and buys labour-power with it, but what is transferred to the worker as wages is not capital, but revenue.

The money the worker receives is not money-capital, but only money. It is not destined to be used by the worker as capital, as self expanding value, but only as revenue to buy commodities of equal value, for their consumption. Nor does the labour-power, sold by the worker to the capitalist constitute a transfer of capital. It is not capital for the worker; it is not for him self-expanding value, but only a commodity, sold at its value. It only becomes capital in the hands of the capitalist.

Only to the extent that the capitalist uses a portion of their money-capital to pay wages, to the worker, who then buys commodities, which form the commodity-capital of some other capital, is there an exchange of capital, in the same way as if the capitalist had used his money-capital to buy those commodities themselves, and then used them to pay the worker.

The money, in the hands of the capitalist, used to buy commodities, for their own consumption, acts not to circulate capital, but acts as revenue only to circulate commodities. The money they pay in taxes, or rents, or interest when used by their recipients, also acts only as revenue to circulate commodities.

Finally, the money that circulates to buy shares, bonds and property, and other speculative assets, also does not act to circulate capital, but only acts as revenue to circulate commodities, the commodities here being those bits of paper that confer title.

“The deposits themselves play a double role. On the one hand, as we have just mentioned, they are loaned out as interest-bearing capital and are, therefore, not in the safes of the banks, but figure merely on their books as credits of the depositors. On the other hand, they function merely as such book entries, in so far as the mutual claims of the depositors are balanced by cheques on their deposits and can be written off against each other. In this connection, it is immaterial whether these deposits are entrusted to the same banker, who can thus balance the various accounts against each other, or whether this is done in different banks, which mutually exchange cheques and pay only the balances to one another.” (p 469-70)

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