## Sunday, 26 February 2017

### Theories of Surplus Value, Part I, Chapter 3 - Part 46

“The whole problem was partly solved by the fact that the part of the farmer’s constant capital, which does not itself consist of labour newly added or in machinery, does not circulate at all, but is already deducted, replaces itself in his own production, and therefore also—apart from the machinery—his whole circulating product consists of wages and profit and consequently can be consumed in linen.” (p 140)

But, that is not just the case for the farmer, and this reality that it is only the new value created which enters circulation, is disguised by the fact that what is revenue in one place appears as constant capital in another. So, for example, suppose the flax grower could produce flax without any constant capital. The value of all of their output would then be equal to the new value they created. Suppose they work for ten hours, and so produce £10 of new value, comprising 100 kilos of flax. All of this value is revenue, which they can consume. They sell 100 kilos of flax to the spinner, who pays them £10, or 3.33 metres of linen.

But, for the spinner, all of this £10 of flax is constant capital. None of it constitutes revenue. When its value is incorporated in the value of the yarn, they sell to the weaver, none of that value received in exchange for the yarn can be used as revenue by them, because all of it must be once more paid to the flax grower, to replace the flax they have consumed in production. Only the new value added by the spinner, in the production of the yarn, can be used as revenue, by them, and used for their own consumption.

But, if we return to the flax grower, the reality is that they do use constant capital, in their production. Let us say that it constitutes only seeds, equal to 10 kilos of flax output, or equal to £1 or 1 hour of labour. The actual situation is then that their total output is 110 kilos of flax, and the total value of their output is £1 constant capital (seed) plus £10 new value added = £11, or 11 hours of labour. But, of this total value of output, £1 or 10 kilos is simply returned to replace the consumed seed, leaving just £10 of value (100 kilos of flax) to be thrown into circulation, all of which then constitutes revenue, and all of which can then be consumed.

This effect that what is revenue for one is constant capital for another is best illustrated where different operations are brought together. For example, suppose someone both spins and weaves. In that case the constant capital appears as the flax that comprises the raw material, plus the spinning machine and loom. For a separate weaver, however, the yarn itself comprises constant capital. To illustrate:-

A spinner buys 100 kg of flax with a value of £10. They use a spinning machine that transfers £1 of value in wear and tear, and they add £4 of new value by their labour. The value of their output is then £15, with £11 comprising constant capital and £4 labour.

They sell this yarn to a weaver, for £15. This £15 now comprises part of the constant capital of the weaver. Another £1 of value is added as a result of the wear and tear of their loom. They add another £4 of value by their labour. The value of their output is then £20, comprising £16 of constant capital and £4 labour.

But, if the weaver also spins we would have a situation where he buys £10 of flax, they have £1 of wear and tear on their spinning machine, and the same on their loom. They add £8 of new value, £4 from spinning and £4 from weaving. In that case, the total value of their output is still £20, but it comprises now only £12 of constant capital, and £8 labour.