Saturday, 14 December 2019

Theories of Surplus Value, Part III, Addenda - Part 4

Interest-bearing capital exists outside the circuit of capital entirely. Indeed, it is not capital at all, but merely fictitious capital. Yet, 

“... interest-bearing capital is the perfect fetish. It is capital in its finished form—as such representing the unity of the production process and the circulation process—and therefore yields a definite profit in a definite period of time. In the form of interest—bearing capital only this function remains, without the mediation of either production process or circulation process. Memories of the past still remain in capital and profit, although because of the divergence of profit from surplus-value and the uniform profit yielded by all capitals—that is, the general rate of profit—capital becomes very much obscured, something dark and mysterious.” (p 454-5) 

Industrial capital (productive-capital and commercial capital) is real capital, because it comprises the circuit of capital itself. It is productive-capital that produces surplus value, but it is commercial capital that realises it as profit. Commercial capital (both merchant capital and money-dealing capital, which is only a form of it) is only the commodity-capital, and money-capital phases of the circuit of industrial capital that has taken on an independent existence, as Marx sets out in Capital II. If commercial capital did not exist, the productive-capital would have to take on that function, entirely, itself. Productive-capitalists would have to become the wholesaler and retailer of their goods and services; they would have to act as their own banker, foreign exchange dealer and so on. Commercial capital does not produce surplus value, but by reducing the costs of circulation, it does increase the amount of realised profit, and its on that basis that it acts as self-expanding value, and thereby participates in the formation of, and claims its share of the average rate of profit

A machine used as productive-capital, is capital only to the extent that it is used to produce commodities for sale. Those commodities sell at a price of production, which is made up of the cost of production plus the average profit. Once commodities sell at prices of production, rather than at their exchange-value, no individual capital need produce surplus value, in order to obtain profit. It simply claims its share of the total surplus value, proportionate to the capital it advances

Suppose the owner of this machine need employ no labour to produce commodities. The machine has a value of £1,000, and it processes £1,000 of material in the year. The capital advanced is then £2,000. If the average rate of profit is 10%, the profit this capital expects to obtain, in the sale of its output is, then, £200. Now, suppose the owner of such a machine does not wish to use it as capital. They can, however, loan the machine to someone who does. In the hands of its owner, it is not capital, it is just a machine, with a value of £1,000, as with any other identical machine. It only becomes capital in the hands of productive-capitalist B, who borrows it from its owner A. It only becomes capital for B, because they use it as capital, as self-expanding value, in the production of commodities that sell at their price of production, which includes the average profit. 

What, in fact, A lends to B, is not the machine, but the use value of £1,000 of capital, i.e. the use value of being able to produce the average rate of profit. By lending the machine to B, A enables B to produce £100 of profit, the average profit on £1,000 of capital. Suppose the machine has a lifespan of ten years, so that it loses £100 of its exchange-value each year in wear and tear. The machine still belongs to A. At the end of the year, if A gets the machine back they will expect to get back £100 to cover the loss of value of the machine due to wear and tear. However, if that is all they get back there would have been no point in lending it out. A also stood out of the chance to produce £100 of profit on it themselves, whilst B would have obtained this benefit for free. 

So, A will expect to put a price on the use value of the machine, not as a machine, but as capital. But, unlike other commodities, capital as capital has no value; it is not the product of labour. It is a function of the average rate of profit. So, there can be no natural price of capital, because there is no value to act as a locus around which such a price can revolve. When the average rate of profit is high, the demand for capital will also tend to be high, and vice versa. The price of capital will then come down to competition. 

A might ask B for half of the £100 of profit they make from the machine as interest on the capital they have loaned them. But, if there are lots more owners of such machines seeking to lend them out, B might be able to push that price down to £20, or a 2% rate of interest. On the other hand, if there are more productive-capitalists seeking to borrow machines, the rate of interest might be 8%. 

But, it is only when the machine is actually employed as capital, producing commodities, that it becomes capital. For so long as it sits in A;s hands, waiting to be loaned out to B, it is not capital. Indeed, even when it is loaned out to B, and in B's hands becomes capital, it is only capital for A vicariously, because of its use as capital by B. In other words, although it has the appearance of being self-expanding value for A, because it returns to them with interest, it does so only because B used it as capital, which produced the average profit from which they were able to pay A the required interest. A only obtains the interest, because B's profit, the real self-expansion of value, is diminished by an equal amount. 

No comments: