Friday 14 January 2022

Adam Smith's Absurd Dogma - Part 41 of 52

Speaking of that portion of the output that constitutes revenues, whether of the producers of means of production or consumption, Marx says,

“In this exchange it is a matter of complete indifference to them whether the sellers of the consumable articles exchange capital or revenue for the coal; that is to say, whether for example the cloth manufacturer exchanges his cloth for coal in order to heat his private dwelling (in this case the coal itself in turn is an article of consumption for him, and he pays for it with revenue, with a quantity of cloth that represents profit); or whether James, the cloth manufacturer’s footman, exchanges the cloth he has received as wages for the coal (in this case the latter is once more an article of consumption and exchanged for the revenue of the cloth manufacturer, who in turn however has exchanged his revenue for the unproductive labour of the footman); or whether the cloth manufacturer exchanges cloth for coal in order to replace the coal required in his factory that has been used up. (In the latter case the cloth that the cloth manufacturer exchanges represents for him constant capital, the value of one of his means of production; and the coal represents for him not only the value but his means of production in kind, But for the coal producer the cloth is an article of consumption, and both cloth and coal represent for him revenue; the coal, revenue in its non-realised form; the cloth, revenue in its realised form.)” (p 189-90)

But, in respect of the portion of value that represents the constant capital, it must – assuming production on the same scale, and no change in productivity – always go to the reproduction of that constant capital.

“He could, it is true, exchange also this one-third for articles of consumption (or, what is the same thing, for the money of the producers of these articles), but in fact only on the condition that he exchanges these consumption articles in turn for iron, timber, machinery—that they enter neither into his own consumption nor into the outlay of his revenue, but into the consumption and revenue outlays of the producers of timber, iron and machinery; all of whom, however, in turn find themselves in the position of not being able to expend one-third of their product on articles for individual consumption.” (p 190)

In relation to the situation described above, whereby Department I producers mutually replace each others constant capital, in kind, but where this may not be to the extent of 100%, in each case, Marx notes,

“In so far as these products of theirs enter [into their] mutual [constant capital] to the same amount of value, they replace themselves in kind, and one has to pay the other only the balance for the surplus that he has bought from him in excess of what he has sold to him. In fact, in such a transaction money appears in practice (through the medium of bills of exchange, etc.) only as means of payment, not as coin, means of circulation; and only the balance is paid in money.” (p 190)

This mutual exchange of constant capital, in Department I, therefore, has nothing to do with the exchange of revenue for constant capital, or of revenues for revenues.

“It plays exactly the same role as seed in agriculture or the capital stock of cattle in cattle-rearing. It is a part of the yearly product of labour, but it is not a part of the product of the year’s [newly- added] labour (on the contrary it is a part of the product of the year’s labour plus the pre-existing labour), which (conditions of production remaining the same) replaces itself annually as means of production, as constant capital, without entering into any circulation other than that between dealers and dealers and without affecting the value of the part of the product which enters into the circulation between dealers and consumers.” (p 191)


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