Monday, 24 July 2017

Theories of Surplus Value, Part I, Chapter 6 - Part 15

[5. Circulation of Commodities and Circulation of Money in the Tableau Économique. Different Cases in Which the Money Flows Back to Its Starting-Point]


Marx here turns to this question of what the Tableau Economique demonstrates in terms of the role of money, in these great social exchanges, and the circulation of commodities and capital. A number of things are apparent. Firstly, it has already been discussed earlier that the amount of money required to effect the exchanges depicted is the result of the assumption that the rent is paid in one lump sum rather than in say ten instalments during the year.

In short, the amount of money required is itself a function of the velocity of circulation, which is driven by the pace of economic activity, as well as the rate of turnover of capital. If commodities change hands quickly, the same piece of money can be used for more transactions than if they change hands slowly. Similarly, if capital is thrown into circulation quickly, and metamorphoses into money-capital more quickly, i.e. if the rate of turnover of capital is high, less capital itself must be advanced to achieve a given level of output, and consequently less capital, in its money form, is required.

In addition, the amount of money required to effect a given circulation of production, as depicted in the Tableau, depends upon other assumptions, for example, in relation to the sequence of exchanges. If we take the ₣2 billion paid to landlords, for example, its possible that ₣1 billion may be paid in rent, which is used by landlords to buy manufactured goods. The manufacturers then use this to buy means of subsistence. The ₣1 billion now back in the hands of farmers, is then used to pay a second instalment of rent, which in turn flows back, as landlords buy food. In that case, only ₣1 billion in money would have been required to circulate ₣3 billion of commodities - ₣1 billion manufactures sold to landlords, ₣1 billion food sold to manufacturers, and ₣1 billion food sold to landlords, from the second instalment of rent.

Moreover, different results arise if we assume that money is already in the hands of landlords and manufacturers, prior to the payment of rent by farmers. Marx now examines some of these various means by which money flows back. If we look at the exchanges between manufacturers and farmers, the former buys ₣2 billion of food and raw material from the latter. But, they only sell ₣1 billion of manufactured goods to the former. That leaves a balance of ₣1 billion that the manufacturer must pay to the farmer. As Marx says,

“Quesnay seems to confuse this payment of 1 milliard to F with the purchase of F’s product to the amount of 1 milliard.” (p 333)

In fact, the balance must be made up in money, and this money comes from the ₣1 billion paid in rent by the farmer to the landlord, and which passes from landlord to manufacturer, in exchange for manufactured goods.

“In fact (on our calculation) the 2 milliards have only served to: (1) pay rent to the amount of 2 milliards in money; (2) circulate 3 milliards of the farmer’s gross product (1 milliard means of subsistence to L, 2 milliards means of subsistence and raw materials to S) and to circulate 2 milliards of the gross product of S (1 milliard of it to L, who consumes it, and 1 milliard to F, who consumes it reproductively).” (p 333)

Marx is distinguishing here between those transactions whereby commodities exchange for commodities, and money only acts as means of circulation, and those exchanges where no commodities are exchanged on the other side, and where money acts, therefore, as a means of payment.

“In the last purchase (a''–b'') in which S buys raw materials from F, he pays him back in money.” (p 333)

This is money that has come from L in exchange for manufactured goods, a-c. But, it originally came from F as payment of rent to L. When S buys means of subsistence from F, therefore, it simply flows back to F. It does not, in fact, represent any exchange of commodities between F and S. F has provided commodities to S, not in exchange for an equivalent value of commodities from S, but for ₣1 billion of their own money, originally paid as rent to L.

With the same ₣1 billion, F then buys manufactured goods from S. Finally, S buys ₣1 billion of raw materials from F. So, here there is an actual exchange of commodities with the money acting merely as means of circulation.

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