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CLASSICS
CAPITAL VOLUME 2
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PENGUIN
(Q)
CLASSICS
CAPITAL VOLUME 2
KARL MARX was born at Trier in 1818 of a German-Jewish family con verted to Christianity. As a student in Bonn and Berlin he was influenced by Hegel's dialectic, but he later reacted against idealist philosophy and began to develop his theory of historical materialism. He related the state of society to its economic foundations and mode of production, and recom mended armed revolution on the part of the proletariat. In Paris in 1844 Marx met Friedrich Engels, with whom he formed a life-long partnership. Together they prepared the Manifesto of the Communist Party (1848) as a statement of the Communist League's policy. In 1848 Marx returned to Germany and took an active part in the unsuccessful democratic revolution. The following year he arrived in England as a refugee and lived in London until his death in 1883. Helped financially by Engels, Marx and his family nevertheless lived in great poverty. After years of research (mostly carried out in the British Museum), he published in 1867 the first volume of his great work, Capital. From 1864 to 1872 Marx played a leading role in the International Working Menis Association, and his last years saw the de velopment of the first mass workers' parties founded on avowedly Marxist principles. Besides _ the two posthumous volumes of Capital compiled by Engels,
Karl Marx's other writings include The German Ideology, The
Poverty of Philosophy, The 18th Brumaire of Louis Bonaparte, The Civil War in France, A Contribution to the Critique of Political Economy, Grund risse: Foundations of the Critique of Political Economy and Theories of Surplus- Value. ERNEST MANDEL was born in 1923. He was educated at the Free University of Brussels, where he was later Professor for many years, and the Ecole Pratique ,des Hautes Etudes in Paris. He gained his Ph.D. from the Free University of Berlin. He was a Member of the Economic Studies Commission of FGTB (Belgian TUC) from 1954 to 1963 and was chosen for the annual Alfred Marshall Lectures by Cambridge University in 1978. His many books include
The Formation of the Economic Thought of Karl Marx, Late
Capitalism, The Long Waves of Capitalist Development, The Second Slump and The Marxist Theory of Bureaucracy. His influential pamphlet, An Introduction to Marxist Economi�s, sold over half a million copies and was translated into thirty languages. Ernest Mandel died in July 1995. In its obituary the Guardian· described him as 'one of the most creative and independent-minded revolutionary Marxist thinkers of the post-war world'.
KARL MARX
Capital A Critique of Political Economy Volume Two Introduced by Ernest Mandel Translated by David Fernbach
Penguin Books
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with New Left Review
Contents
PENGUIN BOOKS
Introduction by Ernest Mandel
Published by the Penguin Group
Translator's Preface
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Preface (Frederick Engels)
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80 83
Preface to the Second Edition (Frederick Engels)
103
Book II: The Process of Circulation of Capital
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Part One: The Metamorphoses of Capital and their Circuit
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Chapter 1 : The Circuit of Money Capital
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New Left Review,
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This edition first published
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in Pelican Books 1978 1992
Reprinted in Penguin Classics
19
© New Left Review, 1978 Introduction copyright © Ernest Mandel, 1978 Translation copyright © David Fernbach, 1978
Edition and notes copyright
All rights reserved Printed in England by Clays Ltd, St Ives pIc Set in Monotype Times Roman
109 1 . First Stage. M-C 1 1 0 , 2. Second Stage. The Function of Productive Capital 3. Third Stage. C/-M' 121 4. The Circuit as a Whole 1 3 1
Chapter 2: The Circuit o f Productive Capital
144 1. Simple Reproduction 1 �5 2. Accumulation and Reproduction on an Expanded Scale 3. Accumulation of Money 1 62 4. The Reserve Fund 1 64
Chapter 3 : The Circuit of Commodity Capital
Chapter 5: Circulation Time
Chapter 6: The Costs of Circulation
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1 67
1 80 (Natural Economy, Money Economy and Credit Economy) (The Matching of Demand and Supply) 196
to the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out, or otherwise circulated without the publisher's
158
Chapter 4: The Three Figures of the Circuit
Except in the United States of America, this book is sold subject
prior consent in any form of binding or cover other than that in
1 18
1. Pure Circulation Costs
200 207
207
(a) Buying and Selling Time
207
(b) Book-keeping 211 (c) Money 213 2. Costs o f Storage 21 4
(a) Stock Formation in General
(b) The Commodity Stock Proper
3. Transport Costs
225
215 220
194
8
Contents
Contents 9
Part Two: The Turnover of Capital Chapter 7: Turnover Time and Number of Turnovers 23 3 Chapter 8: Fixed Capital and Circulating Capital 237 1 . The Formal Distinctions 237 2. Components, Replacement, Repairs and Accumulation of the Fixed Capital 248 Chapter 9: The Overall Turnover of t he Capital Advanced. Turnover Cycles 262 Chapter 10: Theories of Fixed and Circulating Capital. The Physiocrats and Adam Smith 268 Chapter J 1 : Theories of Fixed and Circulating Capital. Ricardo 293 Chapter 12: The Working Period Chapter 13 : Production Time
306
316
Chapter 1 4: Circulation Time 326 Chapter 15: Effect of Circulation Time on the Magnitude of the Capital Advanced 334 1. Working Period and Circulation Period Equal 3 43 2. Working Period Longer than Circulation Period 3 47 3 . Working Period Shorter than Circulation Period 351 4. Results 355 5. Effect o f Changes in Price 360 Chapter 1 6 : The Turnover of Variable Capital 3 69 1 . The Annual Rate of Surplus-Value 369 2. The Turnover of an Individual Variable Capital 3 83 3 . The Turnover of Variable Capital Considered fro m the Social Point of View 3 87 Chapter 17: The Circulation of SurplUS-Value 394 1. Simple Reproduction 399 2. Accumulation and Expanded Reproduction 418 Part Three: The Reproduction and Circulation of the Total Social Capital Chapter 1 8: Introduction 427 1 . The Object of the Inquiry 427 2. The Role of Money Capital 430 Chapter 1 9 : Former Presentations of the Subject 43 5 1 . The Physiocrats 435 2. Adam Smith 43 8 (a) Smith's General Perspectives 438 (b) Smith's Resolution of Exchange-Value into v+s 446 (c) The Constant Capital Component 449
(d) Capital and Revenue in Adam Smith (e) Summary 461 3. Later Writers 465
45 4
Chapter 20: Simple Reproduction 468 1 . Formulation of the Problem 468 2. The Two Departments of Social Production 471 3. Exchange Between the Two Departments: I(tJ+I) against IIe 474 4. Exchange Within Department II. Necessary Means of Subsistence and Luxury Items 478 5. The Mediation of t he Exchanges by Monetary Circulation 487 6. The Constant Capital in Department I 498 7. Variable Capital and Surplus-Value in the Two Departments 501 8 . The Constant Capital in Both Departments 505 9. A Look Back at Adam Smith, Storch and Ramsay 509 10. Capital and Revenue: Variable Capital and Wages 513 11. Replacement of the Fixed Capital 524 (a) Replacement of the Depreciation Component in the Money Form 528 (b) Replacement of the Fixed Capital in Kind 533 (c ) Results 542 12. The Reproduction of t he Money Material 545 1 3 . Destutt de Tracy''l. Theory of Reproduction 556 Chapter 21 : Accumulation and Reproduction on an Expanded Scale 1. Accumulation in Department I 568 (a) Hoard Formation 568 (b) The Additional Constant Capital 572 (c) The Additional Variable Capital 577 2. Accumulation in Departmen t II 577 3. Schematic Presentation of Accumulation 581 (a) First Example 586 (b) Second Example 589 (c) The Exchange of lIe in the Case of Accumulation 595 4. Supplementary Remarks 598 Quotations in Languages Other than English and German 601 Index of Authorities Quoted 603 General Index 609 Note on Previous Editions o f t he Works of Marx and Engels 61 9 Chronology of Works by Marx and Engels 621
565
Introduction
I. T H E P L A C E OF V O L U M E 2 IN M A RX ' S GENERAL A N A L YSIS O F C A P I T A L IS M
'The second volume is purely scientific, only dealing with questions/rom
one bourgeois to another, ' wrote Frederick Engels to the Russian populist, Lavrov, on 5 February 1884. Seventeen months later, he told Sorge: 'The second volume will provoke great disappointment, because it is purely scientific and does not contain much material for agitation.' Finally, on
13 November 1 885, he wrote to Danielson: 'I had no doubt that the second volume would afford you the same pleasure as it has done to me. The developments it contains are indeed of such superior order that the vulgar reader will not take the trouble to fathom them and to follow them out. This is actually the case in Germany where all historical science, including political economy, has fallen so low that it can scarcely fall any lower. Our
Kathedersozialisten have never been much Vu/giirokonomen, and
more, theoretically, than slightly philanthropic
now they have sunk to the level of simple apologists of Bismarck's
Staatssozialismus. To them, the second volume will always remain a sealed book ... Official economic literature observes a cautious silence with regard to it.' 1 These predictions were to be verified far beyond Engels's fears. In fact, ten years passed before two young Russian Marxists -Tugan-Baranowski followed by S. Bulgakov - made the first application of the main con ceptual innovations of Volume 2. And it took nearly another decade for these concepts finally to penetrate Germany and the Western world, through an international debate in which Tugan-Baranowski - albeit 1. E nge ls to Lavrov : Marx-Engels Werke, vo l. 36 , p. 99; E nge ls to Sorge : ibi d., pp. 296 a nd 324; E ngels to Da nie lso n: ib id., pp. 298 a nd 384 (see a lso Marx/E nge ls, Selected Correspondence, Mo scow, 1975, pp. 36 5-6 ). For Kathedersozialisten, e tc., s ee no tes o npp.88 a nd 101 be low.
12
Introduction
Introduction
for the moment continuing to call himself a Marxist - began to revise some of Marx's key theories.2 Volume 2 of Capital has indeed been not only a 'sealed book', but also a forgotten one. To a large extent, it remains so to this very day. Grave misunderstandings arise, however, if the reader attempts to pass straight from Volume
1 to Volume 3, under-estimating the key place of
Volume 2 in the monumental theoretical construction. Marx himself quite precisely clarified this place, in a letter sent to Engels on
1868: ' In Book I
. .. •
30 April
we content ourselves with the assumption that if in
the self-expansion process
£100 becomes £1 10, the latter will find already
in existence in the market the elements into which it will change once more. But now we investigate the conditions under which these elements are found at hand, namely the social intertwining of the different capitals, of the component parts of capital and of revenue ( =
S).'3
This inter
twining, conceived as a movement of commodities and ofmoney, enabled Marx to work out at least the essential elements, if not the definitive form of a coherent theory of the trade cycle, based upon the inevitability of periodic disequilibrium between supply and demand under the capitalist mode of production. To forget this role of Volume 2 and jump to Volume 3 carries the danger of evacuating all problems specific to the inner contradictions of the commodity - problems of the market, of the realization of value and surplus-value, etc. - which, although touched upon in Volume
1, are only fully developed in Volume 2. We may even
say that it was only by dealing with the reproduction of capital in its
totality that Marx could bring out in their full complexity the inevitable contradictions of the basic cell of capitalist wealth - the individual commodity. The ' intertwining of the different capitals, of the component parts of 2. Tugan-Baranowski's Studies on the Theory and History of the Commercial Crises in England originally appeared in Russian in 1894. Acc�rding to Rosdolsky
this version was radically different from the famous German edition of 1901 which sparked off the international debate (see Roman Rosdolsky, The Making of Marx's Capital, London, 1977, p. 470, note 66). Bulgakov's On the Markets for Capitalist Production was published in Russian in 1 897. In autumn 1893, Lenin had made considerable use of Marx's reproduction schemas in a lengthy article, ' On the So-Called Market Question', which was based on a verbal report given to a St Petersburg social-democratic circle in answer to G. Krassin's lecture on the same subject. However, while the article seems to have circulated in ma�u script form in Petersburg, it was not published at the time and was thought to have been lost until its publication in 1937. It now appears in Volume 1 of Lenin's Collected Works.
3. Marx/Engels, Selected Correspondence, Ope cit., p. 191.
capital and o f revenue' - that
13
dual movement o f both specific use-values
and exchange-values, of supply and demand - also enabled Marx to develop an analysis of the reproduction of capitalist economy and bourgeois
society in its totality. Of course, in this achievement, which is one of the greatest in the whole of social science, Marx did not have to start out from scratch; he was able to base himself above all on Quesnay's pioneering work,
Tableau economique.4 Nor should it be claimed that
Marx solved ' all ' problems of reproduction. In particular, he left only an unfinished sketch of the section on expanded reproduction and had no time to work on the vexed question of how it can attain occasional equilibrium while encompassing the famous ' laws of motion' of capital (especially those outlined in Volume
3: rising organic composition of
capital; increasing rate of surplus-value; competition leading to con centration and centralization and to renewed competition, in spite of the tendency of equalization of the rate of profit; tendency of the average rate of profit to decline). Nevertheless, Volume 2 may be seen in a very real sense as the predecessor and initiator of modern aggregation techniques, which were sometimes even directly inspired by the book. On the road from Quesnay through Marx, Walras, Leontiev and Keynes, the leap forward made by Marx is immediately apparent. And the move ment away from Marx in neo-classical and vulgar ' macro-economics ' contains elements of enormous regression, of which contemporary economists are only now slowly beginning to take note. S
4. It should be stressed that from 1 758 onwards Quesnay's writings demonstrate a clear understanding of a circuit of commodities and income, as well as a grasp that, in the last analysis, all incomes originate in production (see Tableau economique, Extraits des economies reelles de Sully, Explication du tableau economique and Analyse de laforme economique du tableau).
5. For an interesting comparison between Quesnay's Tableau economique and Marx's reproduction schemas, see Shigeto Tsuru, ' On Reproduction Schemes ', in Paul M. Sweezy, The Theory of Capitalist Development, New York, 1942, pp. 365ff. Also worthy of note is Jacques Nagels, Genese, contenu et prolongements de la notion de reproduction du capital selon Karl Marx (Boisguillebert, Quesnay, Leontiev),
Brussels, 1970. While there seems to be a relation between Leontiev's input-output tables lind th� labour theory of value (see, for exampl,e, B. Cameron, 'The Labour Theory of Value in Leontiev's Models ', in Economic Journal, March 1952), these tables reflect only the use-value inter-relationships (' exchanges ') between different departments, and abstract from the question of the source of the purchasing power necessary to mediate these ' exchanges '. See also Koshimura's assessment: ' Leontiev, immersed in the minutiae of numerous small departments, fails to abstract or generalize and so ignores both the capital structure as a whole, and the component parts of c�m , For this reason his table, while useful for the statIstIcal modities, i.e. c, v, and m • • •
14
Introduction
Introduction
Volume 2 of
Capital carries the subtitle: The Process o/Circulation of Capital, while Volume 1 was subtitled: The Process 0/ Production 0/ Capital. At first sight, the distinction is clear. Volume 1 is centred around the factory, the workplace. It explains the character of the production of commodities under capitalism as both a process of material production and one of valorization (Le. production of surplus value).6 Volume 2, by contrast, is centred around the market-place. It explains not how value and surplus-value are produced, but how they are realized. Its
dramatis personae are not so much the worker and the
industrialist, but rather the money-owner (and money-lender), the wholesale merchant, the trader and the entrepreneur or 'functioning capitalist'. More broadly defined than simple industrialists, entre preneurs are those capitalists who, having a certain amount of capital at their disposal (whether they own or borrow it is irrelevant here), try to increase that capital through the purchase of means of production and labour-power, the production and then the sale of commodities, the reinvestment of part of realized profit in additional machinery, raw materials and labour-power, and the production of an increased quantity of commodities. The role of workers in Volume 2 will cause some surprise, both to
15
production has outgrown the primitive form of subsistence-farming and handicrafts, which prevailed in more or less isolated communities of producer-consumers. The progress of the division of labour and labour
productivity, as well as the growth of transport and communications, have steadily increased the range and depth of human interdependence. More and more local, regional, even national and continental COPl
munities depend upon one another for the supply and combination of raw materials, instruments of labour and human producers themselves. The labour process has thereby become to an increasing extent objectively
socialized. At the same time, however, private ownership of the means
of production and circulation combines with the appearance and growth of (money) capital to make private appropriation both the starting-point
and the goal of all productive endeavour. Thus, while labour is objectively more and more socialized, it remains to a greater degree than ever before
organized on the basis of private production. Commodity production, value production, the 'value form', as Marx calls it at the beginning of Volume 1 , are rooted in this basic contradic tion.7 Production is impossible without social labour - without the co-operation of thousands (in some cases, hundreds of thousands) for the production of a given commodity, under optimum conditions of
and to dogmatic pseudo-Marxists whose understanding of Marx is
productivity of labour. But since production is based upon and tuned to private appropriation, social labour 1s not immediately organized as such - its input into the production process is not decided by society as
based more on second-hand vulgarizations than on the genuine article.
a whole, and it is expended as private
non-Marxist readers heavily armed with current academic preconceptions of Marx as 'an outdated and typically nineteenth-century economist',
For if workers appear at all in Volume 2, it is essentially as
buyers of consumer goods and, therefore, as sellers of the commodity labour
power, rather than as producers of value and surplus-value (althOUgh, of course, this latter quality, established in Volume
1 , remains the solid
foundation on which the whole of the unfolding analysis is based). However, in order to grasp the deeper significance of the concept 'process of circulation of capital', as well as the exact place of Volume 2 in Marx's overall analysis of the capitalist mode of production attempted in his three-volume
magnum opus, we have to understand the inner
connection between the production of value and its realization. Com modity production is the expression of a specific form of social organiza tion, which encompasses a basic contradiction. On the one hand, human
de scr ipt io n o f e mp ir ica l p he no me na , ignores the inner stru cture of ca p ital is t pro du ct io n.' (Shinzaburo Ko shimura , Theory oj Capital Reproduction and Accumu lation, Kitche ner , Ont., 1975, p. 9.) 6. See my intro du ct io nto Capital Vo lu me 1, Lo ndo n, 1976.
labour. Its social nature can only
be recognized a posteriori, through the sale of the commodity, the realization of its value and, under capitalism, the appropriation in the form of profit by its capitalist owner of a given portion of the total
surplus-value created by productive workers in their entirety. Value production or commodity production thus expresses the contradictory fact that goods are at one and the same time the product of social labour and private labour; that the social character of the private labour spent
in their production cannot be immediately and directly established; and that commodities must circulate, their value must be realized, before we
can know the proportion of private labour expended in their production
that is recognized as social labour. There is thus an indissoluble unity between the production of value and surplus-value on the one hand, and the circulation (sale) of
commodities, the realization of value, on the other. Under commodity , production, and even more so under its capitalist form, the one cannot 7. ib id., p.131.
>
16
Introduction
Introduction
take place without the other. That is why the study of ' capital in general' - provisionally abstracted from competition and 'many capitals' -
17
in Volume 2. The key concepts are those of capitalization
of(part of) surplus-value and expanded reproduction. For economic growth to occur,
encompasses both the process ofproduction and the process ofcirculation
part of the surplus-value produced by the working class and appro
of commodities. 8
priated by the capitalists must be
spent productively and not wasted
However, once we begin to examine the circulation of commodities
unproductively on consumer goods (and luxury goods) by the ruling
their value) we are considering much more than simple
under capitalism (in the first place, their sale with the purpose of realizing commodity
transformed into additional constant capital (buildings, equipment,
circulation. We are in fact dealing with the circulation of commodities
energy, raw materials, auxiliary products, etc.) and additional variable
class and its retainers and hangers-on. In other words, it must be
as capital, that is to say, with the circulation of capital. In the course of
capital (money capital available to hire an increased labour force). The
his progressive analysis of the circulation process, Marx introduces a
accumulation of capital is nothing other than this (partial) capitalization
new and passionately interesting object of study : the reproduction and circulation (' turnover ') of the total social capital. While formally this is the title of only the third Part of Volume 2, it could well be argued that
capital.10
it expresses the underlying subject-matter of the whole volume.
capital (both individual capitals and total social capital, although not
Marx himself explains9 that the circulation and reproduction of each
of surplus-value, i.e. the (partial) transformation of profit into additional Expanded reproduction denotes a process whereby the turnover of necessarily all individual capitals; given competition, we may even say:
individual capital, analysis of which is begun in the first sections of
in the long run,
Volume 2, must be seen as part of a more general movement of circula
intermediary stages minutely studied in Volume 2, to a larger and larger
never all capitals) leads, after a certain number of
tion and reproduction - that of the sum total of social capital. This is so
scale ofproductive operation. More raw materials are transformed by
not only because such a study must methodologically precede examina
more workers using more machinery into more finished products, with
tion of the effects of competition on the division of surplus-value among
greater overall value than in the previous turnover cycle. This results in
various capitalist firms, but also because a broader question still has to
higher total sales and final profits, which in turn allow a higher absolute
(if
be answered. How can an anarchic social system, based upon private
sum
determination of investment, ' factor-combination ' and output, assure
capital. Thus does the spiral of growth continue .
the presence of the objective, material elements necessary for further production and growth ? What are the
absolute preconditions of such
not in all cases a higher percentage) of profit to be added to .
•
The study of the circulation of commodities, the reproduction (and accumulation) of capital and the rotation of capital in its totality
growth ? It was in order to answer these eminently ' modern' questions
constantly encompasses
that Marx developed his famous reproduction schemas and showed that
opposites contained in the commodity form of production, namely, the
growth could be accommodated within his theory of capitalism. Since capitalist production is production for profit (value production oriented towards an accretion of value), growth always has the meaning
of capital. While this is already made clear in Volume 1 Capiial (Chapters 22 and 23), the argument is only fully elaborated
of accumulation of
Marxists have generally attached much less importance to problems of circulation than to those of production, often overlooking their essential unity. A rare example of bending the stick too far in the other direction is the book by the 'right-wing ' Austro-Marxist and former president of the Austrian Republic, Dr Karl Renner Die Wirtschaft als Gesamtprozess und die Sozialisierung, Berlin, 1924. Renner focuses his analysis entirely on the circulation of commodities and deliberately seeks to make of the sphere of circulation the springboard for the socialization of economic life. 9. See below, pp. 427-30. 8.
-
the
dialectical unity-and-contradiction of
contradictory unity of use-value and exchange-value, doubled in that of commodities and money. One of the outstanding features of
Capital
Volume 2, to which insufficient attention has been paid by academic and
Marxist commentators alike,l1 is precisely the masterly way in which Marx develops this initial theme of
Capital Volume 1 throughout his
analysis of the process of circulation. We shall have occasion to come back to this. 10. Most significantly, capital accumulation also requires that means of pro duction producing additional means ofproduction be added to means of production producing consumer goods or simply replacing means of production used up in current production. 11. An important exception is Rosdolsky, op. cit.
18
Introduction
Introduction
2. THE THREE FORMS OF CAPITAL
ing of productive capital; it is also its necessary basis. Indeed, current production is only possible (and this applies especially to commodities
From the outset, Marx makes it clear that capital, in the capitalist mode
with an above-average life span or production period)
of production,12 appears in three forms: money capital, productive capital and commodity capital. Money capital is the original form and
modities produced during the previous turnover cycle have
final purpose of the whole devilish undertaking. Productive capital is the basic precondition of the constantly enlarging spiral. Without the
19
been sold to the final consumers - if,
if all com not already that is, stocks and reserves of raw
materials, energy, auxiliary products, intermediary products and con sumer goods needed to reproduce labour-power are available on a large
penetration of capital into the sphere of production, the social product
scale. Continuity of the production process may be said to depend upon
and surplus product can only be re-apportioned and re-appropriated,
discontinuity or desynchronization of the turnover cycle of money
not increased by capitalist enterprise. Under such conditions, capitalists
capital, productive capital and commodity capital.
would act essentially as parasites upon and plunderers of pre-capitalist
Furthermore, the very nature of capitalist relations of production
(or post-capitalist) forms of production, rather than as masters of the
requires the existence of money capital prior to the initiation of the
production and appropriation of surplus-value (of the social surplus
production process. The separation of' free' workers from their means
product). As for commodity capital, it is the basic curse of capitalism
of production and livelihood implies a constraint upon the owners of the
that commodities
must go through the phase in which they contain - i n
means of production
to purchase labour-power before the commence
as yet unrealized form - the surplus-value produced b y the working
ment of productive operations. And they must have at their disposal
class. In other words, before money capital can return to its original
adequate money capital to effect the transaction:'In the relation between
form, swollen by surplus-value, it
has to go through the intermediate
stage of commodity-value - of value embodied in commodities which still have to pass the acid test by being sold. Marx used the formula 'metamorphosis of capital' to indicate that,
capitalist and wage-labourer, the money relation, the relation of buyer and seller, becomes a relation inherent in production itself.H3 Thus, to a large extent, Volume 2 examines the
constant intertwining
of appearance and disappearance of money capital, productive capital
like a butterfly passing through the successive stages of larva, chrysalis
and commodity capital - from the sphere of circulation into that of
and moth, capital takes on the forms of money capital, productive
production, and back into the sphere of circulation, until the commodity
capital and commodity capital, before returning to the stage of money
is finally consumed. Each form passes over into the other, without
capital. While these three forms are to a large extent successive in the
expelling it entirely from the sphere of circulation, let alone from the
process of rotation of capital, they are also co-existent with one another.
overall social arena. Indeed, we can say that the dialectics of money
One of the most important and brilliant sections of Volume 2 is that
(money capital) and commodities (commodity capital) is the basic
which stresses again and again the discontinuous nature of reproduction
contradiction examined in
of the three forms of capital, and the organic link of this discontinuity
'modernism' is particularly striking.
with the very essence of the capitalist mode of production. Precisely because the capitalist mode of production is generalized production of commodities, money capital cannot and does not merely precede and succeed the widespread appearance of capital; it has to
Capital Volume 2. Here again Marx's
These considerations show the crucial importance of the'time factor' in Marx's analysis of the capitalist mode of production. Its functioning cannot be understood
if complete abstraction is made of time sequences
and schedules, the duration of the production and turnover cycles of
exist side by side with it. Simil�ly, money capital is not just the result of
commodities, and the length of the turnover period of capital. Marx's
the sale of commodities; its social· existence is a precondition of that
important distinction between circulating capital and fixed capital· is
sale. Finally, commodity capital is not simply the outcome of the function-
based exclusively on the amount of time required for each of these two
12. This specification is necessary. Although capital may appear and survive in pre-capitalist and post-capitalist societies (ones in transition from capitalism to socialism), it does so essentially outside the realm of production. In no case can it dominate the main sectors of production. This occurs only with the appearance of productive capital- the form proper to the capitalist mode of production.
parts of money capital to revert to its original form. Circulating capital (spent on raw materials and wages) is recovered by the capitalist firm after each production cycle and circulation cycle of commodities. Fixed 13. See below, p. 196.
20 Introduction
Introduction 21
capital, however, is recovered in its entirety only after
n
cycles of
production and circulation, whose number depends on the longevity of machinery and buildings. As is well known, Marx wQrked on the hypothesis that the average longevity of machinery (not, of course
�
buildings) is equivalent to, and indeed determines, the average duratio
of the trade cycle. It would be a fruitful task for Marxist scholars to
deepen our understanding of the role and function of this 'time dimension' in Marx's
Capital. For time appears there as the measure of
production, value and surplus-value (labour time); a·s the nexus
connecting production, circulation and reproduction of commodities and capital (cycles of turnover and reproduction of capital); as the . of the laws of motion of capital (trade cycles, cycles of class medIUm struggle, long-term historical cycles); and as the very essence of man . (leisure time, life span, creative time, time of social intercourse). The study of the process of circulation of commodities and capital is concerned essentially with metamorphosis - the change from one form to another which we have just mentioned. But this analysis, starting from a high level of abstraction and drawing nearer and nearer to the everyday 'phenomena' of capitalist life, itself represents this process of circulation in successive stages of concreteness. First there is the circula
tion of (money) capital in its most general form as we encountered it in Volume
1:
Money buys commodities so that they may be sold with an accretion of
money - a profit - part of which will be added to the initial money capital.
If we translate this formula into the real operations of the capitalist
�
m de of production, we have to replace
C, the commodities bought,
WIth the specific operation of the industrialist, namely, the purchase of means of production and labour-power in order that the labour-power may produce additional value, surplus-value. This combination of means of production and labour-power gives rise, through the process of production, to new commodities embodying additional value which have to be sold to result in the formation of accumulated capital. ThUb the initial formula becomes:
�
M-C The Turnover of Variable Capital 383 rather on a capital of £500 advanced once ; just as, when a shilling circulates ten times, there is still only one shilling in circulation, even though it performs the functions of ten shiUings. However, no matter in whose hand it exists for the moment, it remains as always the same identical value of one shilling. Capital A shows in just the same way, each time it returns, including its return at the end of the year, that its owner has always operated simply with the same capital value of £500. All that he receives back each time is £500. The capital he advances is therefore never more than £500. The capital of £500 that is advanced forms the denominator of the fraction that expresses the annual rate of surplus-value. We already had for this the formula S' value
Sf
=
=
s'vn v
=
s'n. Since the real rate of surplus-
s
-
v
, the mass of surplus-value divided by the variable capital
that produced it, we can substitute in s'n the equivalent of s', i.e. �, and v
arrive at the further formula : Sf
=
�. v
However, by turning over ten times, and hence repeating its advance ten times, the capital of £500 performs the function of a capital ten times as great, a capital of £5,000, just as 500 shilling pieces that turn over ten times in the year perform the same function as 5,000 turning over only once.
2. T H E T U R N O V E R O F A N I N D I V I D U A L V A R I A B L E C A P I T A L
' Whatever the social form o f the production process, it has to b e con tinuous, it must periodically repeat the same phases . . . When viewed, therefore, as a connected whole, and in the constant flux of its incessant renewal, every social process of production is at the same time a process of reproduction . . . As a periodic increment of the value of the capital, or a periodic fruit borne by capital-in-process, surplus-value acquireS the form of a revenue arising out of capital' (Volume 1, Chapter 23, pp. 71 1-12). We have ten five-week turnover periods for capital A. In the first turnover period, £500 variable capital is advanced ; i.e. £100 is converted each week into labour-power, so that at the end of the first turnover
3 84
The Turnover 0/ Capital
The Turnover 0/ Variable Capital
period, £500 has been spent on labour-power. This £500, originally part of the total capital advanced, has ceased to be capital. It has been paid out in wages. The workers, for their part, pay it out again in purchasing their means of subsistence, and consume means of subsistence to the value of £500. A mass of commodities amounting altogether to this value is thereby annihilated (what the worker may save as money, etc. is also not capital). This mass of commodities is consumed unpro ductively, as far as the worker is concerned, except in as much as he thereby maintains his labour-power, which is
an
indispensable instru
ment for the capitalist, in working condition. In the second place, however, this £500 is converted, for the capitalist, into labour-power of the same value (or price). He consumes the labour-power productively in the labour process. At the end of the five weeks, a value product of
£1 ,000 has been brought into existence. Half of this, £500, is the repro duced value of the variable capital spent as payment for labour-power. The other half, £500, is newly produced surplus-value. But the five weeks' labour-power, by conversion into which a part of capital has been transformed into variable capital, is also spent or consumed, even if productively. The labour active yesterday is not the same labour as is active today. Its value, together with the surplus-value created by it, now exists as the value of a thing distinct from labour-power, the pro duct. But because the product is transformed into money, the part of its value equal to the value of the variable capital advanced is con verted once more into fabour-power and hence functions afresh as variable capital. The fact that the capital value that is not only repro duced, but also transformed back into the money form, may engage the same workers, i.e. the same bearers of labour-power, is beside the point. It is quite possible for the capitalist to employ new workers in place of the old ones in the s'econd turnover period. In fact, therefore, in the course of the ten five-week turnover periods a capital of £5,000 is successively spent on wages, and not one of £500, these wages being spent again by the workers on means of subsistence. The capital of £5,000 advanced in this way is consumed. It no longer exists. On the other hand, it is labour-power to the value of £5,000, and not just £500, that is successively incorporated , into the production process, not only reproducing its own value of £5,000, but producing in
p
addition to this a surplus-value of £5,000. The variable ca ital of £500 that is advanced in the second turnover period is not the identical capital of £500 advanced in the first t
�over
period. The latter has
been consumed, spent on wages. But it has been
replaced by
a new
385
variable capital of £500, which was produced in the first turnover period in the commodity form and was then transformed back into the money form. This new money capital of £500 is therefore the money form of the mass of commodities newly produced in the first turnover period. The faCt that an identical money sum of £500 exists once more in the hands of the capitalist - i.e. if we disregard the surplus-value, the same amount of money capital as he originally advanced - conceals the fact that he is operating with a newly produced capital. (As far as the other value components of the commodity capital are concerned, those that replace the constant parts of the capital, their value is not newly produced ; it is only the form in which the value exists that is changed.) Let us take the third turnover period. Here it is evident that the vari able capital of £500 advanced for the third time is not an old capital, but one newly produced, for it is the money form of the mass of com modities produced in the second turnover period and not in the first turnover period, i.e. the money form of that mass of commodities whose value is equal to the value of the variable capital advanced. The part of their value that equals the variable part of the capital advanced was converted into the new labour-power for the second turnover period, and produced a new mass of commodities ; this was again sold, and a part of their value forms the capital of £500 advanced in the third turnover period. The same thing happens for all ten turnover periods. Every five weeks, newly produced masses of commodities (whose value, in so far as it replaces variable capital, is also newly produced, and does not simply reappear, as with the constant circulating capital) are thrown on the market, so that ever new labour-power can be incorporated into the production process. What is attained by the ten-fold turnover of the variable capital ad vanced, therefore, is not that this capital of £500 can be productively consumed ten times over or that a variable capital that suffices for five weeks can be applied for fifty. In fact, 10 x £500 of variable capital is applied in the fifty weeks ; the capital of £500 is only ever sufficient for five weeks, and must be replaced at the end of these five weeks with a
newly produced capital of £500. This occurs just as much for capital A as for capital B. But now comes the difference.
At the close of the first section of five weeks, a variable capital of
£500 has been advanced and spent both in case B and in case A. For B just as for A, its value has been converted into labour-power and re placed by a part of the value of the product newly produced by this
386
The Turnover of Capital
The Turnover of Variable Capital
labour-power equal in value to the advanced variable capital of £500.
387
amount of variable capital is spent in fifty weeks in case B as in case A ;
For both B and A, the labour-power has not just replaced the value of
the same amount of labour-power paid for and used. But in
the variable capital expended, £500, with a new value to the same
B this has
to be paid for with a capital advance equal to its entire value, £5,000.
amount, but also added to it a surplus-value - one of the same size,
In A, however, it is paid for successively by the ever renewed money
according to our assumption. In case B, however, the value product which replaces the variable
form of the replacement value .that is produced every five weeks for the
capital advanced and adds to its value a surplus-value does not exist in the form in which it can function once again as productive capital, i.e.
money capital advanced is never greater than that needed for five weeks,
as variable capital. This is the form in which it does exist for A. For B,
weeks. This £500 is sufficient for the whole year. It is clear, therefore,
in the first five weeks, and then successively every five weeks again, is
rate of surplus-value, the annual rates in cases A and
capital of £500 advanced for each five weeks. In this case, therefore, the
i.e. never greater than the capital of £500 advanced for the first five
however, through to the end of the year, while the variable capital spent
that with the same degree of exploitation of labour, i.e. the same real
replaced by newly produced value and surplus-value, it does not exist in the form in which it can function as productive capital or in particular
value has certainly been replaced by a new value, but the form of its value (in this case the absolute
variable capital. Its and thus renewed,
B must
stand in
inverse proportion to the magnitudes of the variable money capitals that have had to be advanced in order to set in motion the same
*
.
quantIty of labour-power over the year. A :
value form, its money form) has not been renewed. For the second period of five weeks (and successively for every five
B:
weeks during the year), a further £500 must be on hand, just as for the
5,000s 5 , 00Ov
=
100 per cent. But 500v : 5,000v
5 000s ' -
500v
=
1 :10
=
1 ,000 per cent, and
=
100 per cent :l ,OOO
first period. If we ignore credit, then £5,000 must be on hand at the
per cent.
beginning of the year, and exist as latent money capital advanced, even
The distinction arises from the divergence in the turnover periods,
though it is only actually spent and converted into labour':'power bit by
i.e. the intervals at which the replacement value 'of the variable capital applied in a certain period of time can function afresh as capital, and
bit in the course of the year.
therefore as new capital. With both B and A, we find the same replace
In case A, on the other hand, since the circuit or turnover of the
capital advanced has been completed, the replacement value already
ment value for the variable capital applied during the same period.
exists, after five weeks have elapsed, in the form in which it can set in
There is also the same additional surplus-value produced during the same period. But with B, even though every five weeks there is a re
In both cases, A and B, new labour-power is consumed in the second
placement value of £500, plus £500 surplus-value, this replacement value does not yet form any new capital, since it does not exist in the
motion new labour-power for five weeks : in its original money form.
five-week period, and a new capital of £500 spent in payment for this
labour-power. The workers' means of subsistence, which were paid for with the first £500, have disappeared, or at any rate the value of these has vanished from the hands of the capitalist. The second £500 serves to buy new labour-power, to withdraw new means of subsistence from the market. In short, a new capital of £500 is spent, not the old one.
But in case
A,
this new capital is the money form of the newly pro..
duced replacement value for the £500 spent previously.
In case
B, the
replacement value exists in a form in which it cannot function as vari..
able capital. It does exist, but not in the form of variable capital. An
additional capital of £500 must therefore be available in the money form, which is here unavoidable, to continue the production process for the next five weeks, and it must be advanced as such. Thus thl;; ::'