Marx gives the example of the production of linen. Modernising the data, he assumes 12 metres of linen are produced, an hour's labour is equated to £1, and the 12 metres has an exchange-value of £36, £24 being the exchange-value of constant capital £10 wages, and £2 profit. Put another way, as Marx did in Capital I, it is as though 4 metres of linen represents the new value added by labour, and 8 metres represents the consumed constant capital. The latter then contains no new value, and so no revenue, and the former contains no constant capital and only revenue. The weaving labour represents Department II, and the 12 hours of labour it provides represents revenue. The 12 hours of revenue can only buy consumption goods, here, 4 metres of linen. But, where, then is the demand for the other 8 metres of linen to come from? It cannot come from Department II. Its clear that it can only come from Department I, and is merely the equivalent of the constant capital consumed in its production, constant capital sold to Department II, in exchange for linen.
If we assume that the suppliers of constant capital to the weavers have the same organic composition of capital, i.e. 2:1, then, in fact, they can only buy a part of these 8 metres. A metre of linen is £3. The suppliers of constant capital to the weaver sell £24 of constant capital, and obtain £24, or £24 value of linen in exchange. But, for them, only £8 of this £24 constitutes revenue, i.e. represents the new value they have added to their own constant capital. They must set aside £16 to replace the money they have paid to their own suppliers, for example, flax-growers, machine makers and so on. Going a step back further, the suppliers of this £16 of constant capital cannot spend all of this £16 as revenue either, because, two-thirds of that also represents the amount they must set aside to replace the constant capital consumed in their own production, and so on.
But, this only relates to the constant capital sold by Department I to Department II. However, as described earlier, the constant capital sold by Department I to Department II constitutes only a fraction of its own production. In Marx's schema, in Capital II, Chapter 20, Department I's production is made up of 4000 c + 1000 v + 1000 s = 6000. It only sells 2000 to Department II, i.e. a third of its output. Two-thirds of its output is required simply to reproduce its own consumed constant capital. In other words, if, in the example above, Department I sells £24 of constant capital to the linen producer, this represents only a third of its total output, equal to total its total revenues. Its total output would amount to £72, £48 being merely production that replaces its own constant capital on a like for like basis.
Put another way, and on the same basis as applied to Department II, the £72 of output of Department I, can be considered as 72 units, but can be broken down as being 48 units containing only constant capital, and 24 units containing only labour/revenue. Only the latter can exchange with Department II for linen. The latter has the physical form/use value of constant capital, but in value terms, it represents only new labour/revenue. Marx, again, emphasises the nature of this process as one of the reproduction of material balances/use values.
“Hence it seems that at least a part of the constant capital exchanges for constant capital in another form. The replacement of the products is real, because at the same time as the yarn is being worked up into linen, flax is being worked up into yarn and flax seed into flax; in the same way, while the loom is wearing out, a new loom is being made; and similarly, while the latter is being manufactured, new wood and iron is being produced. The elements are produced in one sphere of production at the same time as they are being worked up in the others. But in all these simultaneous processes of production, although each of them represents a higher stage of the product, constant capital is simultaneously being used up in varying proportions.” (p 113-4)
Again, the proponents of the TSSI abhor this concept of simultaneity that is central to Marx's analysis of reproduction.
“The value of the finished product, the linen, therefore resolves itself into two parts, of which one repurchases the simultaneously produced elements of constant capital, while the other is expended on articles of consumption.” (p 114)
And,
“The simultaneous production of yarn and loom as products alongside the production process into which they enter as products but from which they do not emerge as products, explains how it is that the part of the value of the linen equal to the value of the material worked up into it—[such as yarn], loom, etc.—can be again transformed into yarn, loom, etc. If this production of the elements of linen did not proceed simultaneously with the production of the linen itself, the 8 yards of linen, even when they have been sold and transformed into money, could not be retransformed once more from money into the constant elements of linen.” (p 115)
Marx, in a note, refers to the condition also referenced in Capital III, Chapter 6, of the crisis caused by the US Civil War, in which, even though the value of the commodities produced by the textile producers was realised, it could not be re-transformed into productive-capital, because there was no cotton available for production, i.e. the use values could not be replaced on a like for like basis.
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