July 13, 2009

Mr. Capitalist

Marx begins the final chapter of Volume II with two assumptions:
It is assumed in this case: 1) that this amount is sufficient under the given technical conditions either to expand the functioning constant capital or to establish a new industrial business. But it may also happen that surplus-value must be converted into money and this money hoarded for a much longer time before this process, i.e., before real accumulation, expansion of production, can take place; 2) that production on an extended scale has actually been in process previously.
Thus, we again see the problem of hoards, except this time they are definitely voluntary interruptions to circulation: money is withdrawn so that eventually it can be spent on more means of production, more means of labor. We also see a reference to the logic of expanded reproduction itself. Specifically, each act of reproduction presupposes previous acts of reproduction and hence also subsequent acts. Expanded reproduction cannot occur ex nihilo, nor should it be seen as a one-shot deal.

Marx discusses the hoard as a precondition for expanded reproduction but also notes that in itself, withdrawn money is neither productive nor circulating capital. It is idle, only potential capital (566). The same problem with simple reproduction and fixed capital arises once more: if money is withdrawn, then the perfect equilibrium is disrupted, and eventually you wind up with capitalists who have too many unsold commodities existing alongside capitalists with money that is not being used. This will be resolved below.

In the meantime, we should note that Marx conceives of hoards as an immanent moment to capital (569). These are unavoidable problems which must be overcome through more advanced forms of capital. Part of the problem it seems, is that the abstract models Marx has been working with have oversimplified the actuality of production and circulation's totality. On 570 and 571, Marx describes the total social capital not as a well-oiled, smoothly-functioning metabolizing machine with inputs and outputs more or less running automatically. Instead, total social capital is described as a series of "one-sided purchases" by departments I and II, purchases that may, the capitalist hopes, in the end return capital to its pockets but is by no means guaranteed.

Throughout the process of value traveling from the constant capital of department I through to the realization of commodities produced by department II, a one-sided purchase is always needed before the next step can be taken: "But inasmuch as only one-sided exchanges are made, a number of mere purchases on the one hand, a number of mere sales on the other — and we have seen that the normal exchange of the annual product on the basis of capitalism necessitates such one-sided metamorphoses — the balance can be maintained only on the assumption that in amount the value of the one-sided purchases and that of the one-sided sales tally."

Here perhaps we can think about the significance of the section on bookkeeping earlier: to the individual capitalist and producer, the entire process is invisible. Its trading partners, far away in time and space, are indifferent to the actual exchange at hand. There is no mental conception, except in the form of bookkeeping, that can account for all of this. Which is to say, there is no guiding agency or subject who oversees the encounter between commodity, money and productive capital:
The constant supply of labour-power on the part of working-class I, the reconversion of a portion of commodity-capital I into the money-form of variable capital, the replacement of a portion of commodity-capital II by natural elements of constant capital II c — all these necessary premises demand one another, but they are brought about by a very complicated process, including three processes of circulation which occur independently of one another but intermingle. This process is so complicated that it offers ever so many occasions for running abnormally.
And hence Marx's famous line
The fact that the production of commodities is the general form of capitalist production implies the role which money is playing in it not only as a medium of circulation, but also as money-capital, and en-genders certain conditions of normal exchange peculiar to this mode of production and therefore of the normal course of reproduction, whether it be on a simple or on an extended scale — conditions which change into so many conditions of abnormal movement, into so many possibilities of crises, since a balance is itself an accident owing to the spontaneous nature of this production.
In my mind, this is the argument about political economy Marx wants to make. Sure, there are tendencies and laws and determinate relationships, but those change and are mutable over time with changes in the development of capitalist production. What remains stubborn, however, is the randomness of it all. The fact that, rather than asking why there are imbalances of production and circulation, we should be asking why aren't there more? At this point one can introduce correctives. The state immediately comes to mind. But Marx has something else in mind: credit.

Just as the circulation process entails a series of segmented, one-sided purchases that somehow add up to a complicated totality, it can be supplemented by credit, which will make withdrawn money productive, which will give loans to capitalists who have too many commodities and not enough money capital, in short, will facilitate an easier and smoother flow of goods. And this is done not by compiling the capital of many different capitalists and re-segmenting it into smaller amounts:
The successive transformation of this virtually additional productive capital into virtual money-capital (hoard) .... is accomplished by a repeated withdrawal of money from circulation and a corresponding formation of a hoard.

The surplus-product converted into virtual money-capital will grow so much more in volume, the greater was the total amount of already functioning capital whose functioning brought it into being. With the absolute increase of the volume of the annually reproduced virtual money-capital its segmentation also becomes easier, so that it is more rapidly invested in any particular business, either in the hands of the same capitalist or in those of others (for instance members of the family, in the case of a partition of inherited property, etc.). By segmentation of money-capital is meant here that it is wholly detached from the parent stock in order to be invested as a new money-capital in a new and independent business.
Finally, I'll end the analytical part of this post by drawing attention to pages 577 to 579 and then on 584. Here Marx confronts the problem that the capitalists of department II face: because less money is being circulated, withdrawn from circulation by department I, department II now faces hoards of unsold commodities. How does it get rid of them? Marx's suggestion is that it is sold to its own workers, who pay for their products with their wages. But he then goes on to show why, mathematically, that is not the case. I draw attention to this section because, I believe, Marx never actually answers his own question in the course of the chapter. It is as good an indicator as any that the status of these reproduction schemes are interesting experiments but ultimately unfinished. I wish I had the mathematical credentials to play around with them more, but for now I'm putting this book down.

Other thoughts
  • (572-573): Marx shows tat the process of expansion, at its initial stages, requires nothing more than the parts of simple reproduction. The only difference is that the money capital that would usually be circulated is instead withdrawn into hoards. Those hoards will be put to use when invested in expanded means of production and labor. In the meantime, those hoards must be overcome, possibly through credit.
  • (581): Marx argues that the problem of stocks and hoards and maintaining a smooth flow of commodities and money is unique to reproduction schemas that account for both department I and II. But without department I, expanded reproduction could not occur. So really, they are immanent problems in the actual functioning of individual capitals which thus far have been described only in isolation.
  • (592): Mention of companies that provide boarding to their own workers. Interesting, relevant for studies of plantations and the textile mills of early capital.
  • (596): Marx reiterates that simple reproduction is "incompatible with capitalist production" from the start. He also argues that because of the rate of population, simple reproduction is impossible to maintain, since more and more unemployed workers will put pressure on capitalists to expand.

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