Friday, 21 July 2017

Theories of Surplus Value, Part I, Chapter 6 - Part 12

Marx gives a brief excursus here to distinguish the situation being discussed, here, of a return flow of money, to that where money flows back to a bank, which issues bank notes in return for discounting bills or advances notes by other means.

“In this case the transformation of the commodity into money is anticipated. It receives the form of money before it is sold, perhaps before it is produced. Or perhaps it has already been sold (for bills of exchange).” (p 327)

So, goods may have been produced, and are in the process of being shipped. As Marx and Engels describe in Capital III, during periods of speculation, banks would issue banknotes to sellers on the basis of Bills of Lading, or Dock Warrants, as collateral. In this case, the money was handed to the seller before the goods were sold, and the money would flow back to the bank if and when the sale took place.

Similarly, a bank may advance money to a capitalist on the basis that they will produce commodities, which when sold will realise a sum of money, out of which the bank will be repaid. Finally, the capitalist may have sold commodities on commercial credit, having received a Bill of Exchange for the amount of the sale. The bank discounts the bill, giving the seller bank notes in exchange, less their discounting fee, and the bank then obtains payment from the buyer of the commodities.

The return flow to the bank may be in the form of its own bank notes or else banknotes of some other bank, which are then redeemed either for the bank's own notes or for gold coins.

In all these cases, banknotes were put into circulation in anticipation of the sale of commodities, and once these commodities are actually sold, this money flows back to the bank, although it may pass through several hands before it does so, for example, where a bill of exchange has been used by several sellers as a means of circulation

As Marx and Engels set out in Capital III, some of these transactions represent an advance of money-capital, which attracts the payment of interest, whereas others represent only the advance of money.

Where they represent an advance of money-capital, the payment of interest is made possible out of the generation of surplus value by productive-capital.

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