Marx returns to the question in Theories of Surplus Value, Chapter 4, Section 10. He begins, again, by making clear that the solution to the problem of the replacement of this constant capital cannot be found in taking that part of revenues – primarily of profits – used to accumulate capital. As I have previously pointed out, that is the false solution put forward by Michael Roberts, when he says,
“The demand for goods and services in a capitalist economy depends on the new value created by labour and appropriated by capital. Capital appropriates surplus value by exploiting labour-power and buys capital goods with that surplus value. Labour gets wages and buys necessities with those wages. Thus it is wages plus profits that determine demand (investment and consumption).”
As I have also previously noted, this is basically the solution put forward by Forcade, and later by Keynes, which equates the constant capital with net investment. Marx notes, here,
“To be distinguished: 1. The part of the revenue which is transformed into new capital; that is, the part of the profit which is itself again capitalised. Here we leave this entirely out of account—it belongs to the section on accumulation. 2. The revenue which is exchanged with capital consumed in production, so that by means of this exchange not new capital is formed, but old capital replaced—in a word, the old capital is conserved. In this inquiry, therefore, we can put the part of the revenue which is transformed into new capital as equal to nil, and treat the subject as if all revenue covers either revenue or capital consumed.” (p 230)
By capital consumed, here, Marx means the capital consumed in Department II (intermediate production), which exchanges with Department I (v + s). But, as Marx sets out, this revenue only does this because Department I labour does not produce use values that are consumable. The use values it produces are only consumable productively. The revenues of Department I can only find an equivalent in consumption, because Department II produces consumable use values in excess of Department II revenues, an excess equal to the transferred value of means of production provided by Department I, and equal to Department I revenues. In other words, in contrast to the claims of Forcade, Roberts and Keynes, even if all profits were consumed unproductively, in the purchase of only consumption goods, there would still be a large and growing demand for means of production, and that demand comes not from revenues, including profits, but from capital itself, as an exchange of capital with capital, as the means of production are replaced in kind each year out of current production, without ever entering into revenues.
But, likewise, as Marx has shown, for this reason, none of the use values that constitute intermediate production contains any element of value of constant capital, but contains only the value of revenues, of new value created by labour. That is why it is also wrong to view the category of intermediate production as representing the c in c + v + s, in relation to national output, it represents that only in relation to GDP, which is equal only to the total value of revenues, of new value created this year, not total output value.
“The whole amount of the annual product is therefore divided into two parts: one part is consumed as revenue, the other part replaces in kind the constant capital consumed.” (p 230)
In other words, the element of c in c + v + s cannot be equated with intermediate production, or any of the manipulations of it, proposed as alternative measures of total output, which amount to basically double counting. The element of c is that, which is directly replaced on a like for like basis out of current production, either in kind, as with the farmer who replaces their own seed, or mutually, as with the coal and steel producers who replace each others means of production.
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