Sunday, 1 July 2018

Theories of Surplus Value, Part II, Chapter 17 - Part 3

As stated earlier, when Ricardo talks about this accumulation of variable capital that is the accumulation of all those commodities required as wage goods by workers, required for the reproduction of their labour-power. Ricardo, like Smith, has no conception of constant and variable-capital, and rather makes a distinction between fixed and circulating capital. Ricardo has some conception of the accumulation of fixed capital, as was seen earlier, but, like Smith, he resolves all of the value of the circulating constant capital into revenues. Yet, in order to understand the process of reproduction, the rate of profit, and the process of accumulation, it is vital to have a clear understanding of the nature of the constant capital. The reason that Smith, Ricardo and others make a distinction between fixed and circulating capital, rather than constant and variable-capital, is that the distinction is more obvious. 

The fixed capital, although it is always present, only transfers a portion of its value to production at a time. It continues to exist over several production cycles. But, the circulating capital, whether it is viewed as those commodities consumed by workers, as means of consumption, or as those commodities consumed productively by workers in the production process itself, is continually being consumed, in its entirety, and thereby needing to be continually reproduced in its entirety. 

The greater the proportion of fixed capital, the more its reproduction, in any one year, takes on a purely formal character. In other words, it gives up a portion of its value to production, as wear and tear, and this value is, therefore, withdrawn for the purpose of reproduction, but, because the factory, machine or other equipment is not actually worn out, it is not physically replaced. The reproduction is purely formal, in the sense that this corresponding value is withdrawn from circulation and set aside as a money reserve, to cover the actual reproduction, as and when the fixed capital is really worn out. Any repairs undertaken on the fixed capital are taken as being part of its original value. As Marx sets out, in Capital, for some types of fixed capital, their lifetime is so long, for example a canal, that these repairs constitute the main form of their reproduction. 

The use value of the fixed capital, as with the use value of all constant capital, is preserved by the action of labour on it. And, where labour does not act upon constant capital, to preserve this use value, the constant capital suffers deterioration not through wear and tear, but through depreciation, which results not only in a reduction in its use value, but also its value. Even if the passage of time does not result in an actual deterioration of the fixed capital, this depreciation is manifest in its moral depreciation, as technological development introduces newer, better machines, and rising social productivity continually reduces the value of the existing fixed capital stock. 

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