[(c) Exchange of Capital for Capital between the Producers of Means of Production. Annual Product of Labour and the Product of Labour Newly Added Annually]
Marx sets out the position as it now stands. 0.80 metres of linen, in value, has to be replaced by the machine maker, to cover the wear and tear of their own machines, used in machine production. 0.75 metres of linen, in value, has been given by the machine maker to the producers of wood and iron, in exchange for his raw material.
The 0.80 metres, which the machine maker pays to themselves, to cover the cost of the wear and tear of their machine, is equal in value to £2.50, or two and a half hours of labour. But, the machine maker cannot pay himself in linen for this amount. In other words, it cannot form a part of his revenue or consumption. That is because, if he were to take linen for this value, he would again have to exchange it to be able to obtain wood, iron, leather, so as to reproduce his machines.
But, this leads back to the problem encountered previously. If he has been paid 0.80 metres of linen to cover the value of the wear and tear of his own machines, used in the production of other machines, and transferred to the value of those other machines, to whom is he to sell this 0.80 metres, in order to obtain the value required to reproduce his capital?
Adding up the total value of machinery, we get the following:-
The weaver replaces machinery equal to 2 metres of linen = £6 = 6 hours of labour.
The spinner 1 metre = £3 = 3 hours of labour.
The flax grower 0.5 metres = £1.50 = 1.5 hours.
Iron and wood producers 0.58 metres = £1.75 = 1.75 hours.
The total is 4.08 metres = £12.25 = 12.25 hours.
For ease of calculation, and illustration, Marx rounds this to 4 metres = £12 = 12 hours of labour. Of this machinery, a third is equal to the new value created in its production, and equal to the revenue of wages and profit, whilst two-thirds is equal to the value of constant capital used in production – wood, iron, wear and tear of machine etc.
In other words, this is equal to 1.33 metres of linen = £4 = four hours of labour for the former, and 2.66 metres of linen = £8 = eight hours of labour for the latter.
Of the latter, it is divided 3:1 between raw material and wear and tear of machinery. So, of this 2.66 metres, a quarter, or 0.66 metres covers wear and tear, and 2 metres covers raw materials. The machine maker has then obtained 4 metres in total. They have consumed 1.33 metres as revenue, in the form of wages and profit; they have exchanged 2 metres with the producers of wood and iron, to obtain the raw materials they require, and this leaves them with just 0.66 metres, equal to the value of the wear and tear of their own machinery.
In other words, the total value of output of machinery is greater than the total value of machinery that is reproduced in final output. But, it is not just for the machine producer that this is and must be the case. It is the case also for the producers of wood, iron, leather, the flax grower, and so on, because all of the producers will produce a quantity of use values, which never enter into circulation, but which only ever go directly to reproducing themselves on a like for like basis, i.e. the seed of the flax grower and wood of the wood producer, the iron of the iron maker, the wear and tear of machines of the machine maker and so on.
It is impossible for the whole output of wood, iron, leather, flax, yarn and so on to be exchanged against linen, the final output, because the value of this total output is greater than the value of the output of linen. The former is equal to c + v + s, whereas the latter is equal only to v + s. The value of c is already removed, so as to replace the consumed constant capital, so it never enters into circulation, and consequently it is only the new value created by labour, including that used in the production of wood, iron, flax, yarn and machines, which enters circulation.
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