Capital III, Chapter 50 - Part 3

If we take this total social commodity-capital, or national output, it can be seen to break down into these three funds, in which the physical product, required for reproduction is contained, and which also contain the value equivalents of this physical reproduction.

But, the fact that the total value of this national output can be broken down into a component of value equal to the value of the constant capital consumed (c), the value of the variable capital (v), and the value of the surplus value (s), does not at all mean that the same thing applies in reverse.

In other words, the value of the total national output cannot be derived by adding together a value for constant capital, variable capital and surplus value, which is also a further objection to undertaking such a valuation on the basis of historic prices.

Suppose we calculate on the basis of historic prices, so that we look at the amount of money that was paid for the elements of productive capital, consumed in the annual production, and we then take the amount of money paid as profit, interest and rent (the money equivalent of surplus value). Even if we assume that there is no inflation, i.e. no change in the value of money, or velocity of circulation, it becomes obvious, on the basis of what Marx has said above, why this would lead to false conclusions, and would do so for two reasons.

Suppose the figures are as follows:-

c 5000 + v 2000 + s 2000 = 9000

Assume that these money values are equal to equivalent quantities of standard commodity units, i.e. the constant capital comprises 5000 commodity units, the variable capital and the surplus value 2000. Marx has already set out why, whether there is simple reproduction or expanded reproduction, the 5000 units of constant capital must be physically replaced, out of the 9000 units of final output.

But, the replacement of this constant capital in kind requires that its value equivalent is also reproduced in the value of the total output. If productivity falls, so that the value of constant capital rises, its clear that the 5000 units of constant capital could not be replaced out of £5,000 of value reproduced in the total output value. If the value of the commodities comprising constant capital rises by 10%, then, if £2,000 has been paid out as wages, and £2,000 as profit, interest and rent, equal to the new value created, in the following year, if the total commodity-capital is valued at £9,000, with a consequent effect on the price of production of each individual commodity, then its clear that the constant capital could not be physically reproduced, because there is insufficient social labour-time available.

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