“It is based on his false assertion that the whole product consists of revenue, and in fact only means that the part of the exchange of commodities which is equal to the exchange between capital and revenue is equal to the total exchange of commodities.” (p 251)
But, as has again been demonstrated here, this cannot be the case, because the total value of output exceeds, the total value of all revenues, by an amount equal to the constant capital.
“As the assertion is wrong, the practical applications Tooke made of it for the circulation of money are also wrong (especially the relation between the quantity of money circulating between dealers and the quantity of money circulating between dealers and consumers).” (p 251)
Marx examines this in relation to a merchant who is the last dealer in the chain of dealers of a commodity, before it is sold to a consumer. The consumer buys the commodity out of their revenue. As we have seen, the value of this commodity, in Marx's example linen, comprises the new value added by the weaver, plus the value of the constant capital. But, the constant capital in the shape of yarn, machinery and so on, is itself the product of new labour expended in the production of these commodities (intermediate production).
What never enters this circulation of revenue with revenue, or revenue with capital, is the replacement of the constant capital used in the production of means of production. In other words, the exchange of capital with capital. Where this involves a direct replacement of that constant capital, for example, the farmer's replacement of seed, this involves no circulation of money either. However, to the extent that the replacement is indirect it does. For example, the coal producer who reproduces part of their constant capital by exchanging coal for steel (just as the steel producer replaces part of their constant capital by exchanging steel for coal) does so via a money transaction.
In other words, the coal producer does not simply give the steel producer a quantity of coal in exchange for a quantity of steel, and vice versa. The coal producer sells a quantity of coal to the steel producer and obtains money in exchange. They then exchange the money for steel. This is an additional money transaction to any of those involved in the firm's sale of commodities to the consumer. It is a transaction that only involves dealers with dealers.
In fact, the coal producer may sell coal not to the steel producer, but to a range of others customers, and then use this money to buy steel.
“These dealings—not those between the producers of B and the producers of A, but those between the producers of B— have not to be replaced by the buyer of A to the seller of A, any more than the value of this part of B enters into the value of A. These dealings too require money, and are carried out through merchants. But the part of the circulation of money which exclusively belongs to this sphere is completely separate from that between dealers and consumers.” (p 252)
Up to now, the analysis has been undertaken on the basis of dividing the value into two component parts – the value of the constant capital, and the new value created by labour. This latter is the basis of all revenue. But, Marx asks,
“How far in this connection have we to take account of the fact that wages are at the same time part of the circulating capital of the capitalist?” (p 252)
Also, the analysis has been conducted on the basis of an assumption of simple reproduction. So, all revenue is consumed. A further question then is what happens if a portion of revenue is accumulated instead.
“That a part of the product which represents surplus-value is reconverted, partly into wages and partly into constant capital, presents no difficulty. Here we have to examine how this affects the exchange of commodities under the headings previously considered—under which it can be examined in relation for its holders, that is to say, as exchange of revenue for revenue, exchange of revenue for capital, or finally, exchange of capital for capital.” (p 252)
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