Sunday 19 March 2023

A Contribution To The Critique of Political Economy, Chapter 2.C Theories of The Medium of Circulation and of Money - Part 2 of 20

As Marx described earlier, in the circuit C-M-C, it is always the case that M is suspended for some time, before again resuming its circuit. This fact is what enables it, in its congealed form, to become merchant and interest-bearing capital. What the mercantilist theories observed was this reality on a national scale. In fact, as Marx describes, in Capital II, it is necessary for merchant capital, and money-lending capital, to resume its circuit, for it to grow, as it is for productive-capital

Commodities only ever remain in their money form ephemerally, because the merchant must advance a larger sum of money, to buy a larger quantity of commodities, if they are again to sell these commodities, and obtain a larger mass of profit. The same is true for the money lender, but, for a moment, this wealth is always congealed as a sum of money.

“It is no refutation of the Monetary System to point out that a ton of iron whose price is £3 has the same value as £3 in gold. The point at issue is not the magnitude of the exchange-value, but its adequate form.” (p 156)

It is only when considering productive-capital, and, thereby, industrial capital that this argument applies, because, for industrial capital, it is not capital in its monetary form that is decisive, but capital, precisely, in the form of commodities required for production. For industrial capital, the circuit does not begin and end with money, but with productive-capital. 

Here, money forms just a fleeting moment in this circuit, and the accumulation of capital takes the form, not of an increased quantity of money, but an increased physical quantity of productive-capital. Indeed, as Marx demonstrates in his analysis of the release of capital, such an increase of capital, is consistent even with a reduction in its money equivalent, and so of the mass of money-capital.

Capital is a social relation, and the accumulation of capital means an expansion of this social relation, i.e. an expansion in the quantity of labour exploited by capital. What determines that is not the value of the capital, but its physical mass, as Marx sets out in Theories of Surplus Value. For example, take a linen producer. Yarn has a value of, say £100 for 100 kilos, which can be converted into 100 metres of linen, by 10 workers, who are paid £50, and produce £50 of profit. The workers are paid in arrears. If the value of yarn drops to £50, the capitalist can now buy 200 kilos, and employ 20 workers, or employ the same 10 workers for twice as long. The total money-capital employed remains the same at £150 (now comprising £50 constant and £100 variable), but the total capital as a social relation has doubled, because twice as much labour is now employed and exploited. The total surplus value produced has doubled from £50 to £100, and it is this that capital is concerned with.

“Growth of capital involves growth of its variable constituent or of the part invested in labour power...

Accumulation of capital is, therefore, increase of the proletariat.”

(Capital I, Chapter 25)

The industrial capitalist increases the surplus value they produce by employing more labour, but the quantity of labour they employ given any technical composition of capital is determined by what physical quantity of material they process. So, as Marx describes in Theories of Surplus Value, Part II, the cheaper the commodities that comprise this constant capital, i.e. the lower the value composition of capital, the more of them the industrial capitalist can advance to production, and so the more labour they can employ, and the more surplus value it produces. But, the mercantilists were writing before this industrial capital became dominant.

“With regard to the special attention paid by the Monetary and Mercantile systems to international trade and to individual branches of national labour that lead directly to international trade, which are regarded by them as the only real source of wealth or of money, one has to remember that in those times national production was for the most part still carried on within the framework of feudal forms and served as the immediate source of subsistence for the producers themselves.” (p 158)


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