The fact that money here is, in reality, only a unit of account, a money equivalent of the value, i.e. the current reproduction cost, of the commodities that comprise the capital, also illustrates the way that the different functions of money also lead to the possibility of crisis, because whilst the money equivalent of the value of those commodities is thereby reproduced in the value of the output, for the reasons Marx has already set out, it is obvious that there is no reason why this abstract metamorphosis of commodity into money, will, in fact, occur. In other words, the prices of those commodities, where money acts as means of circulation or means of payment, may, as a consequence, differ from their exchange-value, as a consequence of variations in demand and supply etc.
If we consider the situation of a direct producer, who also produces cloth as a commodity, they may buy yarn from a spinner, whilst the spinner, buys flax from a flax grower. The direct producer takes their cloth to market and exchanges it, in barter, or sells it for money, or they don't. In the event they do not sell their cloth, they wait to sell it some other day. In that event, they will not buy replacement yarn from the spinner, whilst the spinner will not buy additional flax. Only when the cloth producer sells the cloth they have will they go back to the spinner for additional yarn etc.
But, capitalist production does not work like that. Even in terms of handicraft production or manufacture, the capitalist has the cost of a factory building to pay for, and hired labour paid daily or weekly wages, must be kept busy producing new value. With industrial capitalism proper, with machine industry, that is even more the case. Capitalist production can only exist on the basis of the existence of large markets, which make mass production of commodities, and the advance of the capital required for that worthwhile. And, such mass production has to be continuous. As Marx points out this continuity of production also implies simultaneity of production, outputs are simultaneously inputs, and inputs simultaneously outputs.
A capitalist producer of cloth cannot wait until the capital they have advanced for the cloth they have produced has been returned to them, before they again advance capital for the purchase of yarn and other materials, and the employment of labour-power. If the production time for 1,000 metres of cloth is 4 weeks, at which point it is sent to market, and from there it takes another 2 weeks before the cloth is sold and paid for, so that money-capital is once more available, the industrial capitalist cannot shut down their production for this 2 weeks, waiting for that money to arrive. The industrial capitalist, in this case, must advance sufficient capital, not only to cover the production time, but also the circulation time. In effect, as Marx sets out in Capital II, two lots of productive-capital are advanced, one to cover the initial production period, of 4 weeks, and a second to cover the circulation period of 2 weeks.
The capitalist advances the second capital without knowing whether the first capital they advanced will, in fact, be turned over, i.e. whether the value of the commodities sent to market will be realised. In conditions where the circulation period is very extended, it may be necessary, as Marx sets out in Capital II, to advance not just 2 capitals, but 3 or more. Suppose the production time is 4 weeks, but to send the finished product to market, sell it, receive payment, and then buy the replacement means of production requires 16 weeks. That was the case where goods were shipped from Britain to India or China, by sailing ship. In that case, the textile producer would have to advance productive-capital so as to cover the entire 20 weeks, thereby advancing 5 different capitals. Yet, as they advanced the fifth capital, covering their production for weeks 17-20, they would not even know whether the commodities produced with the first capital, in weeks 1-4, had even been sold.
But, now the cloth producer has bought yarn from the spinner, who has bought flax from the flax grower, who has bought machinery from the machine maker, who has bought wood and steel etc. from other suppliers. All of these producers of means of production are dependent on the textile producer selling their cloth, in order that their own commodities, which form constant capital along this chain of production, can themselves be reproduced. One answer for the textile producer was to sell their output, at week 5, to a merchant. Then, for the textile producer, his capital has turned over. He has been paid, and can use this money to advance as capital for weeks 5-10, so that production could continue.
“Supposing the weaver now sells the cloth for £1,000 to the merchant but in return for a bill of exchange so that money figures as means of payment. The weaver for his part hands over the bill of exchange to the banker, to whom he may thus be repaying a debt or, on the other hand, the banker may negotiate the bill for him. The flax-grower has sold to the spinner in return for a bill of exchange, the spinner to the weaver, ditto the machine manufacturer to the weaver, ditto the iron and timber manufacturer to the machine manufacturer, ditto the coal producer to the spinner, weaver, machine manufacturer, iron and timber supplier. Besides, the iron, coal, timber and flax producers have paid one another with bills of exchange. Now if the merchant does not pay, then the weaver cannot pay his bill of exchange to the banker.” (p 511)
And, the consequence then is a cascade of payments failures, because everyone who has bought along the chain can only pay if those who bought from them have themselves paid. But, the cause of this crisis is not the fact that it was conducted on the basis of credit. Credit merely facilitated the process of exchange and increased the rate of turnover of the capital. The reason the merchant does not, honour the bill of exchange is that they have been unable to sell the £1,000 of cloth they bought from the textile producer. But, the textile producer themselves could have been in that position. The merchant here is only the equivalent of the commodity-capital that has become independent. Had the merchant paid the textile producer with money rather than with credit, then the textile producer could pay the spinner, and so on. But, this would not change the fact that the merchant, being unable to sell the £1,000 of cloth, would thereby have lost their capital.
The textile producer, now having been paid by the merchant, would have bought yarn etc. just as the spinner would have bought flax. But, now, the merchant, having been unable to sell, and having lost their capital, is unable to buy. Consequently, the textile producer, the spinner, the flax grower, the machine maker etc. have all engaged in production, which cannot be sold, because the merchant is unable to buy, whilst the £1,000 of cloth originally produced sits in the market unsold, and pressing down on prices further. This emphasises the point made by Marx in Capital II, in dealing with the circulation of capital. The capital is never actually turned over until such time as the final purchase, and consumption of the produced commodities has occurred, so that the commodity-capital is metamorphosed into money-capital, and thence once more into productive-capital on a like for like basis. As Marx sets out in Capital III, the capital used in the circulation phase, of industrial capital, as commodity-capital, and money-capital, becomes independent, and separated from the productive-capital. It forms independent merchant and money-dealing capitals, that specialise in this activity of capital circulation, the buying and selling of commodities, and the payment, receipt and book-keeping of money in relation to those sales and purchases. The latter is not to be confused with money-lending capital, which operates outside the circuit of industrial capital.
This appears to increase the rate of turnover for the productive-capital, because it now has the return of its money-capital at the end of its production period, now from the merchant capitalist. But, from the perspective of capital in general, nothing has changed, because the merchant and money-dealing capital, is only the commodity-capital, and money-capital of the circuit of industrial capital that has taken on an independent existence of its own, and this industrial capital is only turned over, when the produced commodities are sold and consumed, not simply when they have been sold to a merchant. Of course, as Marx sets out in Capital III, the intervention of merchant capital and money-dealing capital, does increase the rate of turnover for capital in general (and thereby the annual rate of profit), and also raises the rate of profit, because it reduces the amount of capital advanced in total to realise a given amount of profit. It does so, because, as capital specialising in those areas, it is able to benefit from economies of scale and division of labour. However, this does not change the fundamental fact that the industrial capital itself is only turned over at the point of consumption, not the point of sale to the merchant.
And, in the example above, where the circulation time is 16 weeks, this would simply be exacerbated. If the textile producer had to advance 5 different capitals, to ensure their production was continuous, they would not know until week 21 that the first batch of commodities were unsaleable. The problem here would not be a payments crisis, if cash had been paid up front, but the problem would still be that each producer had thereby advanced capital, and produced commodities during this 20 week period that could not be sold. The textile producer would have say £5,000 of cloth on the market, which could not be sold. And the consequence would then be that they would have no requirement for yarn, for machines, or indeed labour-power, for a prolonged period, until this large overproduction was cleared from the market. Consequently, the spinner would have no demand for their yarn, the machine maker no demand for machines and so on.
The basis of Marx and Engels' explanation of a crisis of overproduction is illustrated, here. Marx explains that the reason that such crises do not occur under other forms of commodity production and exchange, including early forms of capitalist handicraft and manufacture, is that production is more closely geared to consumption, production does not increase so rapidly, as against the expansion of the market. Individual producers may go bust, but the scale means that this has no potential for spreading into a generalised crisis of overproduction. Similarly, this development of merchant and money-dealing capitals, and of commercial credit offered by each producer to other producers, as well as the development of a global market, in which circulation times become very extended, creates the potential not for overproduction itself, but for that overproduction to continue for longer, and thereby to become deeper and more acute. As Engels says, in Capital III, the shortening of that circulation-time, significantly reduces the extent to which overproduction continues before it is manifest in a crisis, and thereby diminishes the severity of the overproduction.
“The two large centres of the crises of 1825-57, America and India, have been brought from 70 to 90 per cent nearer to the European industrial countries by this revolution in transport, and have thereby lost a good deal of their explosive nature.”
(Engels, Capital III, Chapter 4)
No comments:
Post a Comment