Friday, 6 July 2018

Theories of Surplus Value, Part II, Chapter 17 - Part 8

In Capital II, Marx describes, in his schemas of reproduction, the logical and mechanical means by which the surplus product of society is the physical equivalent of the surplus value. Setting aside the other exploiting classes, the capitalists use their own money to buy commodities from the surplus product, for their own consumption. But, in doing so, they also provide the money in circulation that flows back to them as their own surplus production is sold. The same thing applies with the process of accumulation, except instead of using their revenue only to fund their personal consumption, a portion of this revenue is turned into money-capital, which is then metamorphosed into productive-capital. 

In my book, Marx's Capital Translated For The 21st Century, Volume II, I have set out, following Marx, the way that, because the owners of capital also have this fund of money, or as money-capital, and because the process of accumulation, certainly in respect of circulating capital, can be incremental, it is possible for this fund to be used, both to accumulate capital, and to sustain consumption, or even increase consumption, during the year. So, for example, suppose a capitalist has a productive-capital of £1 million, and they also have £100,000 of money available to fund their personal consumption. If we assume no changes in social productivity, the £1 million of productive-capital reproduces itself over the year. If we assume the capital turns over ten times during the year, it will also thereby return £10,000 of profit at the end of each turnover period. 

If the capitalist has spent £10,000 during that time, his fund of money to cover personal consumption is thereby replenished. But, there is nothing then stopping the capitalist from dipping into the £100,000 fund, at the start of the year, and using £10,000 of it, not for personal consumption, but for capital accumulation, and they could continue to do this throughout the year. And because, by this method, they would accumulate capital, this additional capital would produce additional profit. The additional profit, £10,000 on the accumulated £100,000 of capital, would thereby enable the capitalist to also increase their personal consumption. 

Marx, in his discussion here, focuses more on these real-life means by which the money funds in circulation, or held as hoards and reserves, can be mobilised for accumulation, rather than just the way surplus value itself can be converted into capital. In particular, the money reserves, accumulated by capital, to cover the replacement of fixed capital can be utilised for accumulation. That can occur in a number of ways. Suppose ten firms have accumulated reserves for the replacement of fixed capital, but, in any one year, only one firm wants to replace its worn out fixed capital, and thereby use all of its own money reserves. The other nine firms, not wanting their money-capital to be idle, can throw it into the money-market, where it is then available for anyone to utilise for capital accumulation. Another way would be if a firm, having built up such a reserve fund found that the machine the fund was intended to replace, was still functional. In that case, the reserve can be used to buy additional machines. 

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