If we take a piece of fixed capital, such as a machine, it may have a lifespan of 10 years. In other words, it takes 10 years, for its capital value to be turned over. But, this does not affect the rate of turnover of the circulating capital, which is the basis for calculating the rate of turnover of capital. The firm does not have to wait for the 10 years to elapse, for this capital value to be turned over, in order to continue producing. The machine loses only 10% of its value in wear and tear, each year, but it continues to operate as a use value, throughout the period, until it is worn out. In calculating the rate of profit, the capitalist must take into account, the amount of capital value tied up in the machine, because it is capital value that they could have used in some other manner, and which would have been producing the average rate of profit for them. But, that does not affect their calculation of the turnover period. Similarly, because firms cannot depend on supplies of materials reaching them on time, and they need to keep production continuous – a feature being highlighted by Brexit, and the discussion over Just In Time production, and stock control – and because it is more efficient to spread delivery costs over a larger volume of materials, they always maintain a certain level of stock, or what Marx terms productive-supply.
If a machine has a value of £1,000, and a lifespan of 10 years. It loses £100 per year in wear and tear. If the firm turns over its circulating capital 10 times a year, say every 5 weeks, then the machine will have lost £10 in wear and tear in each of these periods, and this value is reproduced, in the value of the commodities produced. That value of wear and tear, every five weeks, is then accumulated in a reserve, available, at the end of ten years, to replace the machine. The turnover time is determined by the circulating capital, which must be continually reproduced in full, not by the fixed capital, which only has to be reproduced incrementally. Similarly with the productive supply. The firm might buy in half a year's supply of materials, which it keeps in its store room, and draws down, on a continuous basis, to feed into production. As with the machine, the value of this productive-supply must be taken into account, in calculating the rate of profit, because this capital value (on a reducing balance basis) is tied up in this form, and could have been producing profit, in some other use. But, this does not change the turnover period for this capital. In other words, the firm might have bought six months supply of material, but its turnover period remains five weeks, not six months. Every five weeks, a portion of the value of the advanced productive-supply, is turned over, in the same way that the wear and tear of the machine is turned over, and this value is then available to be thrown back into circulation, along with an expansion of the capital by the accumulation of the produced surplus value. But, as Marx points out, there is no productive supply of labour-power, it is never held in stock, but is always being continuously advanced to production.
In the following passage, Ricardo correctly describes what capital is, as commodities, means of production, which employ labour, and he correctly identifies productive-labour as that which produces surplus value, and thereby capital.
““In different stages of society, the accumulation of capital, or of the means of employing labour, is more or less rapid, and must in all cases depend on the productive powers of labour. The productive powers of labour are generally greatest where there is an abundance of fertile land” (David Ricardo, Principles of Political Economy, third ed., London, 1821, p. 92). [Quoted from Observations on certain Verbal Disputes in Political Economy etc., London, 1821, p. 74.]” (p 114)
Ricardo was, of course, speaking at a time when a considerable part of the workforce was employed on the land, and when a considerable proportion of raw materials, used in manufacture, were still produced domestically.
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