Capital is physically composed of commodities. The circuit of capital is simultaneously a circuit of these commodities, as they are metamorphosed into different forms of capital. Commodities are bought as means of production, and labour-power, which represent productive-capital. These commodities undergo a process of change, in their shape and location, as part of the productive process, and as a result are metamorphosed into commodity-capital, itself comprised of commodities, which must themselves become either means of production or means of consumption. As a consequence of this sale, the commodity-capital is metamorphosed into money, which divides into money (revenue) and money-capital, with the money-capital once more metamorphosing into productive capital, whilst the money as revenue (initially in the form of realised profit, which is divided into rent, interest, taxes and profit of enterprise) acts in part as revenue to fund unproductive consumption, and in part becomes potential money-capital, available for accumulation, and thereby to commence a new separate circuit of capital.
Commodities come into one end of this process of the circuit of capital, and go out of the other end of it. And, in this respect, the circuit of capital consists of C – M – C; commodities become money, which again becomes commodities, although if we extend this circuit of industrial capital, it is actually C...P...C – M – C. In other words, commodities come in at one end, production occurs, creating other commodities, which are metamorphosed into money, before being once more metamorphosed into commodities. The money here, as Marx sets out elsewhere, is only money as unit of account, as a money equivalent of the value, the current reproduction cost, of the values of the commodities that enter at one end of this circuit, and are thereby reproduced at the other end of that circuit.
“In calculating the aggregate turnover of the advanced productive capital we therefore fix all its elements in the money-form, so that the return to that form concludes the turnover. We assume that value is always advanced in money, even in the continuous process of production, where this money-form of value is only that of money of account. Thus we can compute the average.”
(Capital II, p 187)
It should not be at all confused with the price paid for commodities that enter at one end, or received for the commodities that exit at the other end.
“If we abstract here from all the other factors determining its content, then the total commodity capital and each individual commodity of which it is made up, must go through the process C—M—C, the metamorphosis of the commodity. The general possibility of crisis, which is contained in this form—the falling apart of purchase and sale—is thus contained in the movement of capital, in so far as the latter is also commodity and nothing but commodity. From the interconnection of the metamorphoses of commodities it follows, moreover, that one commodity is transformed into money because another is retransformed from the form of money into commodity. Furthermore, the separation of purchase and sale appears here in such a way that the transformation of one capital from the form commodity into the form money, must correspond to the retransformation of the other capital from the form money into the form commodity. The first metamorphosis of one capital must correspond to the second metamorphosis of the other; one capital leaves the production process as the other capital returns into the production process. This intertwining and coalescence of the processes of reproduction or circulation of different capitals is on the one hand necessitated by the division of labour, on the other hand it is accidental; and thus the definition of the content of crisis is already fuller.” (p 510-11)
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