“In reality, the constant capital is replaced by being constantly produced anew and in part by reproducing itself. The part of the constant capital which enters into the consumable product is however paid for out of the living labour which enters into the non-consumable products. Because the latter labour is not paid for in its own products, it can resolve the whole consumable product into income. A part of the constant capital, considered as part of the annual product, is only seemingly constant capital. Another part, although it enters into the total product, does not enter into the consumable product either as a component part of its value or as a use-value, but is replaced in kind, remaining always incorporated in production.” (p 147)
Because capitalism is a system based on continuous production, it always comprises the consumable product, i.e. the consumption fund, required to physically reproduce the workers, equal to their wages, and to reproduce the capitalists, equal to that portion of their profits used for their consumption of necessities and luxuries. Without the commodities that comprise this consumption fund continually being in existence, the workers could not be reproduced and production itself would cease.
But, for these commodities to always exist, given that they are continually being consumed, they must be equally continually be being produced. Consequently, alongside the capital which comprises this consumption fund, another portion of capital must also constantly exist as productive-capital, used in the production of this consumable product.
Finally, because the constant capital engaged in this production must itself be continually reproduced to replace that which is continually consumed in the production process, another portion of capital must itself continually be in existence, which never enters the consumable product, never forms a part of revenue, but which only ever goes to replace the constant capital used in the production of constant capital.
“In the same way, each capital is always simultaneously divided into constant and variable capital, and although the constant capital, like the variable, is continuously replaced by new products, it is always in existence in the same form, so long as production of the same kind goes on.” (p 147)
If the obscuring role of money is taken out of these exchanges, then the underlying reality is that the producers of these different types of constant capital replace each others consumed constant capital. So, for example, the machine maker supplies machines to the wood producer, to replace those machines that the wood producer has used up in production. But, the machine maker needs wood to build machines. The machine maker supplies a machine to the wood producer, and the wood producer provides the machine maker with wood to an equal amount of value.
In reality, of course, the exchange is not so straightforward as that. The machine maker may provide the wood producer with a machine worth £1,000, and the wood producer will provide the machine maker with say £500 in wood, and have to make up the rest in money. The wood producer is able to do that because they sell £500 of wood to the iron maker, whilst not buying any iron from them, so that they obtain £500 in money from the iron producer.
Meanwhile, the iron producer may sell £1500 of iron to the machine maker, whilst only buying a machine worth £1,000 from the machine maker, and so obtains £500 in money. The point being that if all of these different exchanges are netted off, the constant capital consumed in the production of constant capital is always reproduced out of current production, and never enters circulation against the consumption fund.
“This part of the machine builder’s constant capital is for him just the same as seed is for the peasant. It is part of his annual product which he replaces in kind for himself and which is not resolved into revenue for him.” (p 147-8)