[4. The Connection Between Different Branches of Production in the Process of Accumulation. The Direct Transformation of a Part of Surplus-Value into Constant Capital—a Characteristic Peculiar to Accumulation in Agriculture and the Machine-building Industry]
Marx's argument at the start of this section does not seem logically consistent. He says,
“Even if the total capital employed in machine-building were only large enough to replace the annual wear and tear of machinery, it would produce much more machinery each year than required, since in part the wear and tear merely exists nominally, and in reality it only has to be replaced in kind after a certain number of years. The capital thus employed, therefore yields annually a mass of machinery which is available for new capital investments and anticipates these new capital investments.” (p 480-1)
But, this makes no sense. If we assume that, in this economy, there are 12 machines bought at different times, and each with a 12 year average lifespan, it remains the case that, on average, only 1 machine per year needs to be replaced. It may be the case that in one year no machines are replaced, and in the second, two are replaced, and so on average it is one machine per year. So, a machine producing industry would gear its output to producing one machine a year, to meet this replacement demand. It will, when it sees signs of economic strength and potentially increased demand, increase this output accordingly, but, as the Accelerator Theory indicates, even if this results in it producing one extra machine that would represent a 100% increase in its output from one to two machines a year.
So, when Marx says,
“He supplies £12,000 worth of machinery during the year. If he were merely to replace the machinery produced by him, he would only have to produce machinery worth £1,000 in each of the eleven following years and even this annual production would not be annually consumed. An even smaller part of his production would be used, if he invested the whole of his capital. A continuous expansion of production in the branches of industry which use these machines is required in order to keep his capital employed and merely to reproduce it annually. (An even greater expansion is required if he himself accumulates.)” (p 481)
this shows the effect of the accelerator though in a rather exaggerated fashion. Marx's example, here, assumes that all of the machines in the economy are acquired at the same time, in Year 1, as the machine maker produces and supplies these 12 machines. On average, then, it would be 12 years before those machines were due for replacement, at which point they would again all come up for replacement at the same time. Logically, here, the machine maker, not having this demand for 12 machines, would drastically reduce their capital, so as to produce only 1 machine a year, so that after 12 years, they had in stock the machines required to meet the needs of the replacement cycle. Given this 12 year turnover period, for their capital, they would need to adjust their prices accordingly, so as to make the average annual profit.
The other alternative set out by Marx would be just as extreme. In his example, the machine maker is geared to produce 12 machines a year, whereas the replacement demand is only for 1. An economy would have to be running at an astronomical rate of growth if every firm was adding 11 new machines to its fixed capital for every one it replaced as being worn out!
In practice, neither of these extremes are realistic. Synchronisation of replacement cycles does mean that the investment required for such replacement becomes bunched, rather than smoothed. But, one reason that a machine maker would not produce one machine a year over a 12 year period, besides the fact of its physical deterioration/depreciation, in storage, over the period, is that it would have suffered a moral depreciation, as newer technologies, in the intervening period, would have made it redundant.
In Capital I, Marx discusses periods in the industrial revolution when machines had to be destroyed, even before they were completed, because, in just the time of their manufacture, new machines had been developed that made them redundant. For some items of fixed capital, with very long production times, that can continue to be the case.
“Thus even the mere reproduction of the capital invested in this sphere requires continuous accumulation in the remaining spheres of production. But because of this, one of the elements of continuous accumulation is always available on the market. Here, in one sphere of production—even if only the existing capital is reproduced in this sphere—exists a continuous supply of commodities for accumulation, for new, additional industrial consumption in other spheres.” (p 481)
But, here, as Marx also showed in Capital II, and as the theory of the Accelerator Effect shows, a further potential source of crises exists. If this machine building industry is geared to producing an average one machine a year, as a replacement for the one machine out of twelve that, on average, is worn out, if it has to produce an additional machine, as a result of growth and accumulation, that means its output doubles, even though the machine consuming industries may only have seen an 8.5% increase in their own demand.
The machine producers must then double their employment of labour-power and materials etc. But, similarly, if the machine consuming industries see only a similarly small reduction in demand, they may not even replace the worn out machines, so the demand for machines disappears altogether, and the machine makers output represents an overproduction of capital. They have to lay off workers, and so on.
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