Thursday, 27 July 2017

Theories of Surplus Value, Part I, Chapter 6 - Part 18

The most interesting thing about the movement in case 3 and 4, Marx says, is the ₣1 billion in money. This comes down to this. F sells ₣2 billion of commodities to S, whilst S only sells ₣1 billion of commodities to F. In both cases 3 and 4, therefore, this difference must be made up by a payment of ₣1 billion in money. The difference is in relation to where this money originates.

“In both cases S receives 2 milliards in commodities, and F 1 milliard in commodities plus 1 milliard in money, that is to say, the balance in money.” (p 338-9)

“In both cases S has to pay a balance of 1 milliard in money, because he takes commodities to the value of 2 milliards out of circulation, and puts into it commodities only to the value of l milliard. In both cases F has to receive a balance of 1 milliard in money, because he has thrown 2 milliards in commodities into circulation and only drawn from it 1 milliard in commodities; the second 1 milliard must therefore be paid in money to him.” (p 339)

If F bought ₣2 billion of commodities from S, rather than ₣1 billion there would be no balance to pay, whatever the sequence of transactions. If F bought ₣1 billion of goods from S, and S bought then ₣2 billion of goods from F, both would each have had to have ₣1 billion in money to begin with. F pays ₣1 billion to S, and S then uses this plus their additional ₣1 billion to buy ₣2 billion of commodities from F. F then uses ₣1 billion of this to buy ₣1 billion of commodities from S.

As at the start of this exchange both have ₣2 billion in commodities, and ₣1 billion in money. Money has acted only as means of circulation. Had they both had accounts with each other, the total value of commodities on each side would have cancelled out. Each's commodities would have acted as money, so that no actual money would need to be exchanged.

“Thus the money which circulates as means of circulation between two persons who confront each other mutually as buyers and sellers returns to its source; there are three cases in which it can circulate.” (p 339)

In the first case, if the commodity values are equal, the money returns to whoever used their capital to initiate the circulation. In other words, if F pays ₣1 billion to buy commodities from S, this ₣1 billion returns to them when S buys ₣1 billion of commodities from them.

If S rather buys ₣2 billion of commodities from F, they must not only return the first ₣1 billion, but advance ₣1 billion of their own capital. In reality, both have then advanced an equal amount to circulation, and receive the same amount back.

Secondly: The commodity values exchanged between the two parties do not cancel each other out. There is a balance to be paid in money. If, as above in case I, the circulation of the commodities has taken place in such a way that no more money has entered into circulation than is required for the payment of this balance— it being always only this sum that passes to and fro between the two parties—then it comes finally into the hands of the last seller, in whose favour the balance is.” (p 340)