Wednesday, 26 July 2017

Theories of Surplus Value, Part I, Chapter 6 - Part 17

The second case is more complex and offers more alternatives.

“There are various possible cases of the circulation assumed above of 3 milliards in commodities, of which 2 milliards are means of subsistence and 1 milliard manufactures; we must however note: first that on Quesnay’s assumption there is 1 milliard in money in the hands of S and 1 milliard of money in the hands of F at the moment when the circulation between the two of them begins; secondly, we will assume by way of illustrating the point that in addition to the 1 milliard which S receives from L, S has in his till another 1 milliard in money.” (p 335)

Marx sets out first the case as Quesnay puts it. S buys ₣1 billion in money. Along with the ₣1 billion that has returned to him from L, it represents capital. It is the money equivalent of part of his commodity-capital. It could be used, as money-capital to reproduce productive-capital, but, in fact, will be used to pay the ₣2 billion of rent due in the following year. In other words, this is a situation whereby capital is converted into revenue, because in the hands of L, this ₣2 billion will be used as revenue and consumed unproductively.

“1 milliard in money has here circulated three times— from S to F, from F to S, from S to F—and each time in exchange for 1 milliard in commodities, that is, for 3 milliards in all. If the money itself has value, values to a total of 4 milliards are in circulation. Money here functions only as means of circulation; but for F, in whose hands it finally remains, it is transformed into money and possibly into capital.” (p 336)

In the second case, money only acts as means of payment. S sells ₣1 billion of commodities to F, whilst buying ₣2 billion of commodities from F. If they keep accounts with each other, then S has to pay a balance of ₣1 billion.

“As in the former case, 1 milliard in money comes into F’s money-box, but without having served as means of circulation. The money is a transfer of capital for him, as it only replaces his capital of 1 milliard in commodities.” (p 336)

Again, if the money has value ₣4 billion are in circulation, but where previously the ₣1 billion of money moved three times, here it moves only once. It has acted only as means of payment for the balance of commodities equal to itself. In effect, the commodities themselves here that were exchanged acted as money, with the money commodity itself merely making up the difference.

In the third case, having received back ₣1 billion from L, F use it to buy manufactured goods, rather than leaving it in a hoard to cover next year's rent. They can buy goods from S with it, because S has ₣2 billion of commodities produced last year, as their commodity-capital.

S now then has ₣2 billion in money, ₣1 billion received from L, and a second ₣1 billion received from F. With this ₣2 billion S can now buy ₣2 billion of commodities from F.

“Now values to the amount of 5 milliards have been in circulation (3 milliards in commodities, 2 milliards in money). There has been a circulation of 1 milliard in money and 1 milliard in commodities, and a circulation of 2 milliards in money and 2 milliards in commodities. Of these 2 milliards in money, the milliard originating with the farmer circulates twice, the milliard originating with 5 only once. Now 2 milliards in money return to F, of which however only 1 milliard settles his balance; the other 1 milliard in money, which he himself had thrown into circulation because he took the initiative as buyer, flows back to him through circulation.” (p 336)

In the fourth case, S buys ₣2 billion of from F. They do so with ₣1 billion of money from L, and ₣1 billion of their own, thrown into circulation. F then buys ₣1 billion of commodities from S, so that the ₣1 billion they had thrown into circulation returns to themselves

“Values to the amount of 5 milliards have circulated. There are two acts of circulation.” (p 337)

In case 3, of the ₣2 billion in money, which S returns to F, ₣1 billion is money thrown into circulation by F and ₣1 billion in money that S had thrown into circulation. ₣1 billion returned to S, but was then returned to F. In case 4, ₣1 billion returns also to S, but is not then paid out again to F. However, unlike case 3, this is only a return of the same ₣1 billion that S had themselves thrown into circulation from their own funds.

“In case I and indeed in case II there is never more than 1 milliard in money circulating; but in case I it circulates three times and in case II it only once changes hands; this is merely due to the fact that in case II a high development of credit, and consequently economy in payments, is assumed; while in case I the movement is rapid; however, each time the money functions as means of circulation, and therefore the value at the two poles must each time appear twice, once in money and once in commodity. In case III and IV 2 milliards circulate, instead of 1 milliard as in I and II. This is because on one occasion in both cases (in case III by S as buyer who closes the circulation process, in case IV by S as buyer who opens the circulation process) commodity values to the amount of 2 milliards are at a single stroke thrown into circulation; that is, 2 milliards of commodities enter into circulation in a single act; it is assumed, moreover, that the commodities have to be paid for on the spot and not after the balance has been struck.” (p 337)

This latter would, therefore, suggest a less developed system of credit, and a lower rate of turnover of capital.

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