Part Two: The Turnover of Capital
Returning to the text after a six month break has proven to be a little challenging; especially considering this section is rather dry in its object of analysis and Marx’s own method of presentation. Unfortunately I fear that I replicate the rather dry form/content under discussion here in my own engagement with it.
At the most general level, if you look at the Contents page of Vol. II, you notice that Marx is moving through: (1) the specific and interrelated forms/circuits of capital – money, productive and commodity – each with their own necessary function within the dynamic of capital, yet in their interrelatedness, capital cannot be reduced to any one circuit (e.g., see Ch. 4); (2) into circulation (costs) which poses then question; (3) of turnover of capital and the interrelated yet specific temporalities of its components (Fixed/Circulating, production time vs. working period, general circulation, variable capital (and importantly, the location of surplus-value within this temporal dynamic), etc, into finally; (4) the reproduction of total social capital. One can see a similar move here that Marx conducted in Volume One: where the commodity form – the ‘hieroglyph’ of capitalism – opened into ever larger and expansive forms and processes. The task here then is to connect the multiple forms, circuits, and turnovers of capital into a larger and more general process of accumulation and expansive dynamic.
Though somewhat buried in my discussion here, I should emphasize that Marx continues his immanent critique of political economy in order to not only to show the errors of political economy (here, Smith’s conflation of fixed/circulating capital and the displacement of the constant/variable capital component) but to also account for how/why these conflations or lacunae are necessary appearances of the socio-economic form. In other words, that these are not merely falsities, but falsities that are necessary at the level of political economy, industrial book-keeping, accounting, etc. Having read Postone recently, he would differentiate these two into two categorical levels of Marx’s understanding of capital: one of the deep structure of capital (value, labour-power, etc) and the appearances in everyday (prices, wages etc). Thus Marx is working within the conceptual apparatus of political-economy, working through its categorical logic in order to expose spaces through which a deeper structure of socio-economic categories are operating. It’s as if these forms are latent in political-economy itself, without the necessary move to bring these to the fore. With that......
Chapter Seven: Turnover Time
Marx begins by summarizing what was discussed in Chapter Four – namely the dynamics of each specific circuit of capital and their unique qualities. He reminds us that C’...C’ “does not begin the process as capital advanced, but as capital value already valorized, as the total wealth existing in the form of commodities, of which the capital value advanced forms only a part. (234)” This is important as the commodity circuit necessarily entails prior augmentation – and thus an open and dynamic process of valuation (prior, present and anticipated). While the other circuits were necessary to the overall process due to the specific qualities of their forms and fetishistic effects, they, taken in themselves, appear segmented into a series of similar yet singular circuits; i.e., their beginning component (e.g., P for production, M for money advanced) did not explicitly entail prior augmentation – thus not containing within their specific circuit the opening out and multiplicity of the other circuits. Once again, the commodity stands in as a primary form that contains (or mediates/structures) larger processes.
In contrast to this emphasis on the commodity circuit, Marx returns to the question of how political economy fails to understand the complexities of the interrelated circuits in one dynamic – reminding us that poli-econ and industrialists have fetishized M…M’. This is not just an error though, but is a necessary and real ‘appearance’ (i.e., necessary for the operation of calculation – what Marx earlier had called “a symbolic reflection in the imagination” p. 211).
With that, Marx begins by defining his concepts. Following classical political economy, turnover here is understood as when “the circuit of capital...is taken not as an isolated act but as a periodic process…The duration of this turnover is given by the sum of its production time and its circulation time. (235)”
He ends this short chapter by noting that while the day “forms the natural measuring unit for the function of labour-power” (think of Ch. 10 of Vol. I), so “the year forms the natural measuring unit for the turnovers of capital in process. (236)” One question would be, why? Additionally, how can we think of this fiscal-year (derived obviously from industrial production) in relation to other temporal forms of capitalism (the temporal compression of financialization, etc)?
Chapter Eight: Fixed/Circulating Capital
Building off and clarifying the categories of political economy, Marx notes the distinction between fixed and circulating (or ‘fluid’) capital by noting that fixed entails that a “part of its value always remains fixed in it as long as it continues to function, and remains distinct from the commodities that it helps to produce” while the latter are “all other material components of the capital advanced” (238). Towards the end of the chapter he makes this distinction clearer: “The elements of fluid capital are just as permanently fixed in the production process – if this it to be continuous – as are the elements of fixed capital. But while the elements of the form that are fixed in this way are steadily renewed in kind (the means of production by new items of the same kind; labour-power by ever-repeated purchases), the elements of fixed capital are neither themselves renewed as long as they last, nor does their purchase have to be repeated. (248)” If I understand this specific distinction correctly, the key point is that fixed capital traverses multiple production processes (the slow wear of a machine which is incrementally transferring its value to a commodity over successive production cycles) as distinguished from the capital outlay which is exhausted within the single production circuit process. Tying together these two forms of capital outlays, both necessary for the production, will allow Marx to pose problems related to the hoard, credit, joint-stock companies, etc.
However, more important than the distinction within fixed/circulating capital, is the distinction between variable/constant capital and fixed/circulating capital – which Smith, Ricardo and others failed to comprehend. Here, he tentatively notes that political economy’s conflation of the two sets emerges from the following points (both originally from Smith); (1) physical immobility is misunderstood as the sole determination of fixed capital, and; 2) that the circulation of value is confused with an inherent property of the material itself – “as if things, which are never capital at all in themselves, could already in themselves and by nature be capital in a definite form” (241) We will see this repeated again and again in the later chapters.
Chapter 9: Overall Turnover of Capital Advanced
The logical problem that needs to be answered is, if there are multiple turnovers of fixed/circulating capital, it is “necessary…to reduce the separate turnovers of the various parts of the fixed capital to a similar form of turnover, so that these differ only quantitatively, in the duration of their turnover (262)” – in other words, to generalize turnover cycles.
This then reveals the necessity of credit (actual and apparent variations of turnovers) as well as business cycles/crisis:
“The result is that with the cycle of related turnovers, extending over a number of years, within which the capital is confined by its fixed component, is one of the material foundations of the periodic *cycle* [German text has ‘crisis’ here] in which business passes through successive periods of stagnation, moderate activity, over-excitement and crisis. The periods for which capital is invested certainly differ greatly, and do not coincide in time. But a crisis is always the starting-point of a large volume of new investment. It is also, therefore, if we consider the society as a whole, more or less a new material basis of the next turnover cycle. (264)”
If we had more time, it might be useful to think this along with other theories of the ‘business cycle’ and its relation to credit, but that would take us well beyond our general discussion. Another point for consideration is what concept of crisis is being posed here? Obviously, here, crisis actually sustains the system (similar to Schumpeter’s ‘creative destruction’) – where large capital outlays in fixed capital underwrite more specific and periodic interruptions and/or crises of production/circulation. These crises in turn spawn new outlays of fixed capital.
Chapter 10 and 11: The Physiocrats, Smith and Ricardo
Marx then works through the classical theories of fixed and circulating theories in relation to turnover:
Quesnay:
Quesnay proposes the categories of avances primitives and avances annuelles, which Smith would later render as fixed, and circulating respectively. Although Quesnay correctly sees this distinction as internal to production itself (productive capital), he fails to see that this distinction extends beyond agriculture – i.e., the only production that Quesnay sees as ‘productive’ or value creating. It’s interesting to note Marx’s admiration for Quesnay though, as the first person that tried to systematically comprehend the production process – and correctly saw valuation coming from production itself, albeit via agriculture.
Smith:
Smith generalizes these terms, extending them to the economy as a whole, yet with some fundamental errors. Without reproducing the extended criticism that Marx levels at Smith’s theory, suffice it to note that Marx’s main criticism is that Smith fetishizes the fixity (materiality) and circulation (fluidity) of some elements of production and circulation, failing to clarify his terms. Marx argues that he fetishizes these forms “as if…[these] characteristic[s] belonged to these things materially, by nature, and did not rather derive from their specific function within the capitalist production process. (281)”
More importantly, however, this confusion over fluid/fixed capital then gets more muddled in relation to the capital outlay for labour in the production process. Ultimately Smith does not understand wages as circulating capital; rather he finds the commodities that constitute the means of subsistence for the worker as fixed.
“…it is only within the production process that the value laid out on labour-power is transformed (not for the worker, but for the capitalist) from a definite, constant quantity into a variable one, and the value advanced in capital value, in capital, is thereby transformed for the first time into self-valorizing value. But because it is not the value laid out on labour-power that Smith defines as a fluid component of the productive capital, but rather the value laid out on the worker’s means of subsistence, it is impossible for him to understand the distinction between variable and constant capital, and thus the capitalist production process in general. The characteristic of this part of capital as variable capital in opposition to the constant capital laid out on the objective elements of product formation is buried underneath the characteristic that the part of capital laid out on labour-power belongs to the fluid part of the productive capital with respect to the turnover. This burial is made complete in so far as in place of labour-power it is the workers’ means of subsistence that are counted as an element of productive capital. (291-92)”
In other words, this confusion/conflation of various components of fixed and circulating capital WITHIN productive capital, and Smith’s extension of this out into the market, confuses both the dynamic internal to production (and the internal forms of productive capital) and its relation to circulation (i.e., commodity capital). Those following Smith would fail to see capitalist valuation as effected by labour power in the production process, set in motion by variable capital. This is where Ricardo’s labor theory of value comes in – though, as Marx notes here, it replicates Smith’s basic confusion over fixed/circulating.
Ricardo:
Ricardo inherits Smith’s conflation of fixed and circulating capital with constant and variable capital. Marx argues that following Smith, Ricardo and other classical economists “no longer distinguished at all between the portion of capital laid out on wages and the portion of capital laid out on raw material, and only formally distinguished the former from constant capital in terms of whether it was circulated bit by bit or all at once through the product. The basis for understanding the real movement of capitalist production, and thus of capitalist exploitation was thus submerged at one blow. All that was involved, on this view, was the reappearance of values advanced. (297)”
In other words, the categorical distinctions – between fixed/circulating, between that set and the constant/variable set, and the distinction between productive and circulating capital – had delimited the ability to see the relationship between value and labour-power. In one of the more powerful statements from these chapters, Marx argues that without the concept of variable capital, the distinction between value (both as process and objectified) and labour power (the subject of valuation) is lost: “if we are to speak of a material difference that affects the circulation process, this is simply that it follows from the nature of value, which is nothing other than objectified labour, and from the nature of self-acting labour-power, which is nothing other than self-objectifying labour, that labour-power constantly creates value and surplus-value as long as it continues to function; that what presents itself on its side as movement, as the creation of value, presents itself on the side of its product in a motionless form, as created value. (300)”
Along with this obscuring of the valuation process in the conflation of his own categories, Ricardo continues the material fetishism that was seen in Smith earlier – namely the fetish that “transforms the social, economic character that things are stamped with in the process of social production into a natural character arising from the material nature of these things. (303)”
Marx ends the chapter on Ricardo with a general statement on the errors of classical political-economy following Smith (304-5):
(1) “The distinction between fixed and fluid capital is confused with the distinction between productive capital and commodity capital. (304)”
(2) “All circulating capital is identified with capital laid out or to be laid out on wages.”
(3) The confusion over variable/constant capital and its relation to fixed/circulating capital is eventually reduced to merely fixed/circulating capital. Constant and variable capital is lost.
Chapter 12, 13 and 14: The Working Period, Production Time and Circulation Time
In these chapters Marx distinguishes between multiple temporal periods part and parcel of the larger turnover cycle: (1) working period (not to be confused with the working day), (2) production time, and finally (3) circulation time – each illuminating specific tendencies or compositions of capital outlays. Generally speaking, turnover time, thus, is understood as “the sum of its production time and its circulation time. (309)”
(1) Working Period
Distinct from the working day (Vol. 1, Ch. 10) the “working period” is “the number of inter-related working days required, in a particular line of business, to complete a finished product. (308)” This is important because the production process includes multiples interruptions, disturbances or crises – ones that are not recorded within the category of the ‘working day’. This then allows for an analysis of the differential transfer (from means) and creation of (labour) value to commodities over different working periods.
The category of the working-period enframes the relationship between fixed and circulating capital within the production process and allows for an analysis of the differential relationship between the two. For example, Marx, introducing the notion of “reflux,” explains that:
“According to the duration of the working period, and thus also the period till a commodity ready for circulation is completed, the portion of value that the fixed capital surrenders layer by layer to the product mounts up, and the reflux of this portion of value is delayed. This delay, however, does not necessitate a renewed outlay of fixed capital. The machine continues to operate in the production process whether the replacement for its wear and tear flows back quicker or more slowly in the money form. It is different with circulating capital. Here not only must capital be tied up for a longer time, in proportion to the duration of the labour process, but new capital must continually be advanced for wages, raw and ancillary materials. The delayed reflux this has a different effect in the two cases. Whether the reflux is slower or quicker, the fixed capital continues to operate. The circulating capital, on the contrary, becomes unable to function when the reflux is delayed, if it is tied up in the form of unsold, or unfinished and not yet saleable products, and there is no additional capital to renew it in kind. (314)”
I quoted this as I think this is a clear explanation of these categories within Marx’s larger project. Related to the differential capital outlays that the ‘working-period’ illuminates, Marx also notes the role of credit in this dynamic, and the by-product of concentration and acceleration:
“If the shortening of the working period is thus generally bound up with an increase in the capital advanced for this shorter time, so that the amount of capital advanced increases to the degree that the time of advance is shortened, we should remember that, apart from the total volume of social capital available, it comes down to a question of the extent to which the means of production and subsistence, i.e. disposal over them, are fragmented, or united in the hands of individual capitalists, i.e., the extent reached by the concentration of capital. In so far as credit mediates, accelerates and intensifies the concentration of capital in a single hand, it contributes to shortening the working period, and with this also the turnover time. (313)”
(2) Production Time
Production time is the working day plus those interruptions or natural developments (chemical reactions, fermentation, etc) necessary for the creation of a final commodity. This differentiates how the productive capital is actually applied in the production process, here as two periods: “a period in which the capital exists in the labour process, and a second period in which its form of existence – that of an unfinished product – is handed over to the sway of natural processes, without being involved in the labour process. (317)” In other words, “the working period and the production period do not coincide (317).” This divergence illuminates variations in different production processes (industry proper, transport, agriculture, etc) and how specifically the outlay of circulating capital is unique to that specific branch.
Here Marx reintroduced the role of the productive stock and its function in relation to the variations in production time. What’s interesting is that, just as credit allows for the extension of turnover time, this often takes the form of a productive stock – adding yet another intersection between multiple (synchronic) circuits, here, one between an extended production process and the market conditions that affect the acquisition of this stock. The reason I think this is important is this is yet another sight that makes this a general form of multiple capitals in relations to each other – here linking production and circulation; in other words, we move out of the realm of an individual capital circuit and into a much larger (and determinative) social process. This also sets the stage for the later discussion of how Dept I and Dept II are related. Anyway, here, after discussing market conditions, transport, proximity to market, etc Marx writes:
“All these circumstance affect the minimum capital that must exist in the form of productive stock, and thus the period of time for which advances of capital have to be made, and the volume of capital that has to be advanced at once. This volume, which also has an effect on the turnover, is determined by the longer or shorter time for which circulating capital is tired up in the form of productive stock, as only potentially productive capital. On the other hand, in so far as the extent of this stagnation depends on the greater or lesser possibility of rapid replacement, on market conditions, etc. it itself arises from the circulation time, from circumstances that pertain to the circulation sphere. (323)”
This also opens the possibility of the onset of crisis not so much from overproduction, but of the inability to replenish the productive stock in an extended production time.
(3) Circulation time
Circulation time is understood as a dual process: selling time (as commodity capital) and buying time (conversion into money capital). As for the former, Marx notes again that it is essential that an individual capital finds an outlet for their commodity capital; in effect they are exposed to market conditions – not is the outlet itself necessary for the reproduction/accumulation of capital, but that within the time it takes to deliver the commodity, market conditions (prices) can fluctuate. Under the rubric of selling time, Marx outlines multiple factors that affect the relative difference of selling time between individual capitals: distance of market, means of communication and transport (“the speed of movement in space is accelerated, and spatial distance is thus shortened in time” p. 327), etc. However, the most interesting aspect is how this takes on a general social process of successive waves of goods constantly entering/exiting the market. For those interested in social geography, Marx’s description on pages 328-329 of this process – both of acceleration and spatial concentration – is interesting. As Marx connects selling time (commodity capital) to its necessary component, buying time (money capital), he makes the following observation:
“If the progress of capitalist production and the consequent development of the means of transport and communication shortens the circulation time for a given quantity of commodities, the same progress and the opportunity provided by the development of the means of transport and communication conversely introduces the necessity of working for ever more distant markets, in a word, for the world market. The mass of commodities in transit grows enormously, and hence so does the part of the social capital that stays for long periods in the stage of commodity capital, in circulation time – both absolutely and relatively. A simultaneous and associated growth occurs in the portion of social wealth that, instead of serving as direct means of production, is laid out on means of transport and communication, and on the fixed and circulating capital required to keep these in operation. (329)”
As for buying time – Marx notes that the spatial distance between production and market not only causes a delay of selling time, but also a delay of the conversion of capital back into its money form (or at least its destination as a reinvestment in the new production circuit). He notes how if trade between nations occurs, not only do the products have to reach market, but the payment also has to return to the site of production – thus a delay before that money returns to begin a new production cycle – what he calls the “delayed reflux of money” 331). Marx notes that because of this delay, credit is essential for keeping the continued process of capitalist production going – above and beyond the double-delay in circulation time. It is interesting to think how the financialization of the world economy has affected this process, both in the emphasis of finance speculation, but also through technology harnessed. How do contemporary production circuits experience this differential at the level of selling/buying time that Marx is emphasizing here? Is the latter obliterated, while the former remains (Wal-Mart production in the SOE’s of China, etc)? What crisis-possibilities can we imagine now through Marx’s understanding of circulation time?
Finally, Marx notes that political-economy often overlooks this constant process of capital moving through its multiple forms (money, productive and commodity) and that the money form’s constant presence in this process – as credit, at purchase, etc - is “very necessary for the understanding of the bourgeois economy. (333)”
Chapter 15: Effect of Circulation Time on the Magnitude of the Capital Advanced
The problem here is “the influence of circulation time on the valorization of capital” (334). I found this chapter mind-numbing, with Marx working through the intricate differences between the composition of capital and its forms within various turnover scenarios. For those interested, you can jump to page 355 for the results of his analysis.
The most important aspect in this exposition is that, as a general rule, capital is set free via the turnover process (and necessarily so as it functions to continue reproduction). Marx traces this process as capital moves through its various forms and, more importantly, the composition of its forms within a larger process of reproduction. He summarizes:
“as far as he total social capital is concerned, considering the fluid part of this, the setting-free of capital is the rule, while the simple mutual replacement of portions of capital functioning successively in the production process must form the exception. For the equality of working period and circulation period, or the equality of circulation period and a whole number of working periods, in other words a regular proportion between the two components of the turnover period, has nothing at all to do with the nature of the case, and can therefore occur, by and large, only exceptionally….A very significant portion of the social circulating capital, which is turned over several times in the year, will thus periodically exist in the course of the annual turnover cycle in the form of capital set free. (355)”
Why is this important? This “set-free” capital – or the social circulating capital – becomes the credit in which the system can maintain itself at the level of interruptions/delays at the level of multiple individual capitals. Additionally, Marx notes how the contraction of the turnover period creates a ‘surfeit’ of money capital. In a passage that differentiates between relative surplus and surfeit money capital, Marx writes:
“We can see from this how a surfeit of money capital can arise – and not only in the sense that the supply of money capital is greater than the demand for it; the latter is never more than a relative surplus, which is found for instance in the depressed period that opens the new business cycle after the crisis is over. It is rather in the sense that a definite part of the capital advanced is superfluous for the overall process of social reproduction (which includes the circulation process), and is therefore precipitated out in the form of money capital; it is thus a surplus which has arisen with the scale of production and prices remaining the same, simply by a contraction in the turnover period. The mass of money in circulation, whether this is larger or smaller, does not have the slightest influence on this. (358)”
This chapter ends with Marx looking at various cases of how price is affected by circulation/turnover fluctuations. I have to admit that I glossed over this section as I am more interested in the ‘transformation problem’ (value into price) that so many have harped on (Bohm-Bawerk, Sweezy), rather than the fluctuation of price in relation to circulation/turnover fluctuations. But maybe I missed something important…..Andy?
Chapter 16: The Turnover of Variable Capital
Returning to the distinction between fixed/circulating capital and variable/constant capital, Marx notes that:
“What these two parts of the circulating capital – the constant and the variable – have in common, and what distinguishes them from fixed capital, is not that the value they have transferred to the product is circulated by commodity capital, i.e. circulates through the circulation of the product as a commodity. A portion of the product’s value, and hence of the product itself circulating as a commodity, of the commodity capital, always consists of the wear and tear of the fixed capital, or the part of the fixed capital’s value that it has transferred to the product in the course of production. The difference is rather that the fixed capital continues to function in the productive process in its old shape through a longer or shorter cycle of turnover periods of the circulating capital (=circulating constant+circulating variable capital), while any single turnover has as its precondition the replacement of the entire circulating capital that enters the circulation sphere from the production sphere in the shape of commodity capital. (370)”
With this restated distinction, Marx then turns to dealing with variable capital’s function/transformation within the turnover period. The most important section being where Marx distinguishes, within the component of advanced capital, that surplus-value is ONLY produced when applied. This is Marx’s answer to Ricardo/Smith and others who had conflating the fixed/circulating and variable/constant distinction:
“The circumstances that differentiate the ratio between the advanced and the applied variable capital affect the production of surplus value – at a given rate of profit – only in so far as they differentiate the amount of variable capital which can actually be applied in a definite period of time, e.g. in one week, five weeks, etc. The variable capital advanced functions as variable capital only to the extent that it is actually applied; not during the time for which it remains advanced in reserve without being applied. But all circumstances that differentiate the ration between advanced and applied variable capital can be summed up in the difference in turnover periods (determined by a difference either in working periods or in circulation periods, or in both). The law of surplus-value production is that, with the same rate of surplus-value, equal amounts of functioning variable capital create equal masses of surplus-value. So if equal amounts of variable capital are applied by capitals A and B for the same space of time at the same rate of surplus-value, then they must produce equal amounts of surplus-value in this time, no matter how different may be the ratio between the variable capital applied in the time in question and the variable capital advanced during the same time, and hence how different also the ration between the mass of surplus-value produced and the total variable capital advanced, rather than that actually applied. (374-5)”
From this distinction between advanced and applied, Marx moves into various examples of how this effects the turnover of variable capital, which leads him to posit an equation outlining the annual rate of surplus value, or S’: S’ = s’vn/v = s’n, wherein s’ = real rate of surplus-value, v=variable capital advanced and n=annual number of turnovers. Thus if there is only one turnover in the year (n=1), you get S’=s’ x 1 = s’. In other words, turnover affects the annual rate of surplus-value even if the mass of surplus value remains the same across individual capitals. To clarify the definition of advanced, Marx reminds us that this “capital value is always advanced and not genuinely spent, in that one this value has gone through the various phases of its circuit [e.g., M – P – C – back to M] it returns again to its starting-point, and moreover, it does so enriched with surplus-value. This is what characterizes it as advanced. (382)”
In the section on the turnover of individual variable capital, Marx reminds us that based on the turnover period, and the resulting augmentation of value through this circuit, that in its own turnover cycle, it is a completely NEW value created; a different value, yet still in the same form (variable capital – see 386).
The last few pages of this chapter has some really interesting observations related to the turnover of variable capital:
a) Marx suggests that in a communist society (a rare projection for him) through planning “the society must reckon in advance how much labour, means of production and means of subsistence it can spend, without dislocation, on branches of industry which, like the building of railways, for instance….” “In capitalist society, on the other hand, where any kind of social rationality asserts itself only post festum, major disturbances can and must occur constantly…(390)”
b) The notion of effective demand emerges to show how “prices rise, both for the means of subsistence and for the material elements of production. During this time, too, there are regular business swindles, and great transfers of capital. (390)” On the next page, Marx ties effective demand, wages, and the reserve army of workers into the fluctuations of prices, demand and wages.
c) In a long footnote Engels includes some cursory notes on contradiction and crisis that Marx had jotted down. It reads: “Contradiction in the capitalist mode of production. The workers are important for the market as buyers of commodities. But as sellers of their commodity – labour-power – capitalist society has the tendency to restrict them tot heir minimum price. Further contradiction: the periods in which capitalist production exerts all its forces regularly show themselves to be periods of over-production; because the limit to the application of the productive powers is not simply the production of value, but also its realization. However the sale of commodities, the realization of commodity capital, and thus of surplus-value as well, is restricted not by the consumer needs of society in general, but by the consumer needs of a society in which the great majority are always poor and must always remain poor. This however belongs rather to the next Part. (391)”
Chapter Seventeen: the Circulation of Surplus-Value
Here Marx is trying to logically explicate accumulation within the conceptual apparatus he has outlined thus far. This provides a transition into Part Three, which will deal with simple reproduction and accumulation at the level of society.
Marx is outlining an expanding and accelerating system of interconnected turnovers; where one capital emerges from a turnover cycle with real accumulation (in money) this then becomes the basis for credit to someone else. Marx returns to the stages of the development of the surplus money capital: in its most basic form, the latent hoard – but in its expanded social form – social capital (most clearly expressed in credit).
Marx then moves into preliminary outlining simple reproduction and accumulation (i.e. capitalization of surplus-value)
Simple Reproduction:
Surplus value is consumed unproductively by its “owners, the capitalists. (399)” However, the bulk of this section seems to be a working through of the problem of reproduction in regards to the assumption that “the total quantity of money must be equal to the quantity of money required for circulation plus a sum of money existing in the hoard form which increases or decreases according to the contraction or expansion of circulation…(403)” In other words, if money is hoard, or value unproductively consumed by the capitalist class, from where does the money come from that replaces/sustains reproduction? In critiquing Tooke, Marx argues that the “question is not: here does surplus-value come from? But rather: were does the money come from which it is turned into? (404)” Tooke and other have failed to deal with this question – and Marx provides a curious answer – the problem itself does not exist:
“the general answer has already been given: if a mass of commodities of x times £1,000 is to circulate, it in no way affects the quantity of money needed for this circulation whether the value of this commodity mass contains surplus-value or not, or whether the mass of commodities is produced under capitalist conditions or not. Thus the problem itself does not exist.” He continues later “there does exist, from the standpoint of capitalist production, the semblance of a special problem. For here it is the capitalist, the man who casts the money into circulation, who appears as the point of departure. The money that the worker spends in payment for his means of subsistence existed previously as the money form of the variable capital, and was therefore originally cast into circulation by the capitalist as a means of purchase or payment for labour-power. (407-9).”
The worker’s payment for his means of subsistence is only secondary (think of Smith’s error outlined before) – rather “In point of fact, paradoxical as it may seem at the first glance, the capitalist class itself casts into circulation the money that serves towards the realization of the surplus-value contained in its commodities. But note well: it does not cast this in as money advanced, and therefore not as capital. It spends it as a means of purchase for its individual consumption. Thus the money is not advanced by the capitalist class, even though this class is the starting-point of its circulation. (409)”
Here is a great example of Marx’s mode of immanent critique – where taking the problem posed by Tooke and others as, at one level, a false question, but accounting for why there is a ‘semblance’ at the level of appearance (i.e., political economy).
Accumulation and Expanded Reproduction
Marx makes the (logical) transition to accumulation by positing a historical moment of development:
“Hence the increased supply of precious metals from the sixteenth century onwards was a decisive moment in the historical development of capitalist production. In so far as we are dealing with the further supply of money material needed on the basis of the capitalist mode of production, we can say that on the one hand surplus-value is cast into circulation in the product without the money for its conversion, while on the other hand surplus-value in gold is cast into circulation without its previous transformation from product to money. (418)”
The distinction between unproductive surplus-value (capitalist consumption) and productive surplus-value (reinvestment) is a matter of application since it exists in both forms.
Towards the end of this section Marx returns to the necessary function of credit in expanded reproduction, and this can only happen with a diversification of forms of surplus-value (what was called ‘capital set free’) into various bearers of value, since expansion would clearly run into limitations of metallic money production/circulation. Marx notes that capitalists “all possess a certain money fund which they cast into the circulation sphere as means of circulation for their consumption, and of which each receives a certain part back again from the circulation sphere. But this monetary fund is then precisely a circulation fund, acquired by the conversion into money of surplus-value…(422-423). Specific examples are: (1) bank deposits, (2) government bonds and (3) shares. He argues “In all these cases, there is no storage of money, and what appears on the one hand as storage of money capital appears on the other hands as the continuous real expenditure of money. Whether the money is spent by the person it belongs to, or by other people, by people in debt to him, does not affect the situation. (423)”
This rather short section on understanding the circulation of surplus-value in regards to accumulation (in contrast to simple reproduction) sets us up for Part Three – The Reproduction and Circulation of the Total Social Capital.
June 28, 2009
Lying unsold on the shelves
Marx ends this chapter by saying "The circuit of productive capital is the form in which classical Political Economy examines the circular movement of industrial capital."
I interpreted this chapter as how individual, industrial capitalists view the circuit of capital. It is important to bear this in mind, as money takes on a different function than it did in the last chapter, which was viewed from the standpoint of circulation and the market.
But Marx clearly writes at one point that productive capital is indifferent to circulation. For instance: "For as soon as C' has been sold, been converted into money, it can be reconverted into the real factors of the labour process, and thus of the reproductive process. Whether C' is bought by the ultimate consumer or by a merchant for resale does not affect the case" (156). Once a commodity is expelled into circulation, the industrial/individual capitalist just does not care.
This indifference is detrimental to the capitalist, expressed most clearly in the form of crisis. Marx seems to presage his later remarks in volume III on the tendency of the falling rate of profit. For here, he simply limits himself to a few comments on how a focus on production to the exclusion of circulation and non-production factors (e.g. the market) can produce crisis. And crisis for Marx represents the most scathing critique of classical political economy's idea that supply and demand regulates the economy, or that production is always simple and premised upon the consumption and hence minimal existence of producers: "And this is something very different from production and even commodity production, which has for its end the existence of the producer. A replacement — commodity by commodity — thus contingent on the production of surplus-value is quite a different matter from the bare exchange of products brought about merely by means of money. But the economists take this matter as proof that no overproduction is possible" (155).
The exclusive focus on exchange-value over use-value results in capitalists producing without regard for external conditions. Products begin to lie unsold, prices are slashed, it snowballs and hence "crisis breaks out." It is interesting to note that in the early twentieth century, a debate existed over whether this phenomenon should be labeled underconsumption or overproduction. The stakes are pretty simple: one blames consumers, one blames producers. If you side with the Marxian stand that these things are determined by the logic of production and not a logic of consumption, then you probably wind up with some variation of the overproduction thesis. Again, Marx goes into this with more detail in Volume III.
For now it enough to ask why there is this chain effect of price slashing and crises. Why won't supply and demand correct itself? It is because, as producers, the capitalists' exclusive concern is not to correct an overall imbalance between production and consumption; their concern has to do with "the absolute necessity of transforming commodities into money." This is, simply, competition: "the constant enlargement of his capital becomes a condition for its preservation" (159).
It is important to note here NOT that historical reality is really so simple as to be determined by a single force or mechanism. It is rather to say that, among the several tendencies acting upon the economic and social, there is the tendency of industrial capitalists, and we need sufficient analytical rigor to separate and analyze that logic as one of many several logics overdetermining given historical circumstances.
This is related to the change of tone when discussing money. Money has only limited functions for the capitalist: as the end of the process (at which time, it expects money to do nothing) and at the beginning of the process (at which time, it converts the money into commodities like labor power and means of production). Looking at the latter as the primary function of money for the capitalist, money can do one of two things: convert itself into mp or L, OR wait until later to be converted. This is the hoarding function.
But is this money as converter/hoarde a different money than the money which circulated in chapter one? Nope. MATERIALLY, they are the same thing. They play different functions but remain the same, and hence we must be careful not to reify money as money outside of money for production, money for commodities, etc. etc.:
But based on the interior logic of money and commodities, we do not see production. Money and commodities, reified as objects, cannot express the surplus-value and dead labor contained in them. They are only "money which breeds money"; money always appears as only M, and never M' or M+m.
By upholding the process behind money, as well as the implication that money is merely an evanescent form of capital, the reified and fetishized appearance suddenly changes. Marx even calls this a "critique": "The semblance of independence which the money-form of capital-value possesses in the first form of its circuit (the form of money-capital) disappears in this second form, which thus is a critique of Form I and reduces it to merely a special form" (154).
Other notes:
Page 144: A contrast between industrial/capitalist and agricultural production:
Page 153: Marx remarks on the presumed stability of the market, which is something outside the capitalists' control. Does this imply that the capitalists require the intervention of non-economic forces, such as the state, to regulate markets?
I interpreted this chapter as how individual, industrial capitalists view the circuit of capital. It is important to bear this in mind, as money takes on a different function than it did in the last chapter, which was viewed from the standpoint of circulation and the market.
But Marx clearly writes at one point that productive capital is indifferent to circulation. For instance: "For as soon as C' has been sold, been converted into money, it can be reconverted into the real factors of the labour process, and thus of the reproductive process. Whether C' is bought by the ultimate consumer or by a merchant for resale does not affect the case" (156). Once a commodity is expelled into circulation, the industrial/individual capitalist just does not care.
This indifference is detrimental to the capitalist, expressed most clearly in the form of crisis. Marx seems to presage his later remarks in volume III on the tendency of the falling rate of profit. For here, he simply limits himself to a few comments on how a focus on production to the exclusion of circulation and non-production factors (e.g. the market) can produce crisis. And crisis for Marx represents the most scathing critique of classical political economy's idea that supply and demand regulates the economy, or that production is always simple and premised upon the consumption and hence minimal existence of producers: "And this is something very different from production and even commodity production, which has for its end the existence of the producer. A replacement — commodity by commodity — thus contingent on the production of surplus-value is quite a different matter from the bare exchange of products brought about merely by means of money. But the economists take this matter as proof that no overproduction is possible" (155).
The exclusive focus on exchange-value over use-value results in capitalists producing without regard for external conditions. Products begin to lie unsold, prices are slashed, it snowballs and hence "crisis breaks out." It is interesting to note that in the early twentieth century, a debate existed over whether this phenomenon should be labeled underconsumption or overproduction. The stakes are pretty simple: one blames consumers, one blames producers. If you side with the Marxian stand that these things are determined by the logic of production and not a logic of consumption, then you probably wind up with some variation of the overproduction thesis. Again, Marx goes into this with more detail in Volume III.
For now it enough to ask why there is this chain effect of price slashing and crises. Why won't supply and demand correct itself? It is because, as producers, the capitalists' exclusive concern is not to correct an overall imbalance between production and consumption; their concern has to do with "the absolute necessity of transforming commodities into money." This is, simply, competition: "the constant enlargement of his capital becomes a condition for its preservation" (159).
It is important to note here NOT that historical reality is really so simple as to be determined by a single force or mechanism. It is rather to say that, among the several tendencies acting upon the economic and social, there is the tendency of industrial capitalists, and we need sufficient analytical rigor to separate and analyze that logic as one of many several logics overdetermining given historical circumstances.
This is related to the change of tone when discussing money. Money has only limited functions for the capitalist: as the end of the process (at which time, it expects money to do nothing) and at the beginning of the process (at which time, it converts the money into commodities like labor power and means of production). Looking at the latter as the primary function of money for the capitalist, money can do one of two things: convert itself into mp or L, OR wait until later to be converted. This is the hoarding function.
But is this money as converter/hoarde a different money than the money which circulated in chapter one? Nope. MATERIALLY, they are the same thing. They play different functions but remain the same, and hence we must be careful not to reify money as money outside of money for production, money for commodities, etc. etc.:
Here the money-function and the commodity-function are at the same time functions of commodity-capital, but solely because they are interconnected as forms of functions which industrial capital has to perform at the different stages of its circuit. It is therefore wrong to attempt to derive the specific properties and functions which characterise money as money and commodities as commodities from their quality as capital, and it is equally wrong to derive on the contrary the properties of productive capital from its mode of existence in means of production" (161).
But based on the interior logic of money and commodities, we do not see production. Money and commodities, reified as objects, cannot express the surplus-value and dead labor contained in them. They are only "money which breeds money"; money always appears as only M, and never M' or M+m.
By upholding the process behind money, as well as the implication that money is merely an evanescent form of capital, the reified and fetishized appearance suddenly changes. Marx even calls this a "critique": "The semblance of independence which the money-form of capital-value possesses in the first form of its circuit (the form of money-capital) disappears in this second form, which thus is a critique of Form I and reduces it to merely a special form" (154).
Other notes:
Page 144: A contrast between industrial/capitalist and agricultural production:
This part of value does not enter into the circulation. Thus values enter into the process of production which do not enter into the process of circulation. The same is true of that part of C' which is consumed by the capitalist in kind as part of the surplus-product. But this is insignificant for capitalist production. It deserves consideration, if at all, only in agriculture.Page 151: A meditation on the temporality of the circuit (that each segment must be completed before moving onto the next) and the possibility that such temporality can be changed with the advent of loans and advances.
Page 153: Marx remarks on the presumed stability of the market, which is something outside the capitalists' control. Does this imply that the capitalists require the intervention of non-economic forces, such as the state, to regulate markets?
A response to Max's post.
I have only skimmed the rant and the stuff about chapter one. I think the most important stuff is contained in the rant.
I haven't read the Thompson but I have read the Althusser lately and understand it better. Logic vs. history is important, and it shows up most clearly in the moments when Marx says things like "so it is presupposed that somehow labor was separated from the means of production" but he refuses to speculate on how that happened. That is of course the lacuna for primitive accumulation and the historical backdrop to these economic models.
I think the more one reads historical work, the more one can pick fights with Marx's arguments about the spread of capital and the function of capital throughout the world. It almost seems like one could use two highlighters to break down the text: blue for capital's logic and green for capital's history. And you could contest the green sections while fully accepting the blue. Or use the green to contest the blue. Is this a dishonest mode of reading? At any rate, I agree that the division between history and logic is, unsurprisingly, well and alive.
I think that this distinction is perhaps what lies behind, for example, the recent call by Geoff Eley for looking closer at histories of capitalism. Namely, he argues that Marx and most Marxists presume capital's pure form to be free labor in urban settings. But if you look at the historical record of the last two centuries, those instances are a minority, at best (sorry for what I'm about to do):
So what? One response to Eley has been: "Well if you had been an Asian/non-European historian for the last twenty years, you would've known this all along, genius."
But that is an unacceptable position too. Because the argument that Marx is too Eurocentric ignores the usefulness of Capitalfor understanding places that, although not a purely capitalist PRODUCERS, are nonetheless enmeshed in capital MARKETS (I made this distinction in my last post). And then combined and uneven development, etc. etc.
I haven't read the Thompson but I have read the Althusser lately and understand it better. Logic vs. history is important, and it shows up most clearly in the moments when Marx says things like "so it is presupposed that somehow labor was separated from the means of production" but he refuses to speculate on how that happened. That is of course the lacuna for primitive accumulation and the historical backdrop to these economic models.
I think the more one reads historical work, the more one can pick fights with Marx's arguments about the spread of capital and the function of capital throughout the world. It almost seems like one could use two highlighters to break down the text: blue for capital's logic and green for capital's history. And you could contest the green sections while fully accepting the blue. Or use the green to contest the blue. Is this a dishonest mode of reading? At any rate, I agree that the division between history and logic is, unsurprisingly, well and alive.
I think that this distinction is perhaps what lies behind, for example, the recent call by Geoff Eley for looking closer at histories of capitalism. Namely, he argues that Marx and most Marxists presume capital's pure form to be free labor in urban settings. But if you look at the historical record of the last two centuries, those instances are a minority, at best (sorry for what I'm about to do):
Once we revise our understanding of the early histories of capital accumulation by acknowledging the generative contributions of slavery and servitude, in fact, we have already begun questioning the presumed centrality of waged work in manufacturing, extractive and other forms of modern industry for the overall narrative of the rise of capitalism. By shifting the perspective in that way, we effectively relativize wage labour’s place in the social histories of working-class formation and open our accounts of the latter to other regimes of labour. By that logic, the claim of waged work to analytical precedence in the developmental histories of capitalism no longer seems secure. As it happens, in fact, the de-skilling, de-unionizing, de-benefiting, and de-nationalizing of labour via the processes of metropolitan deindustrialization and transnationalized capitalist restructuring in our own time have also been undermining that claim from the opposite end of the chronology, namely from a vantage-point in the present. Today the social relations of work are being drastically transformed in the direction of the new low-wage, semi-legal, and deregulated labour markets of a mainly service-based economy increasingly organized in complex transnational ways. In light of that radical reproletarianizing of labour under today’s advanced capitalism, I want to argue, the preceding prevalence of socially valued forms of organized labour established after 1945, which postwar social democrats hoped so confidently could become normative, re-emerges as an extremely transitory phenomenon. The life of that recently defeated redistributive social- democratic vision of the humanizing of capitalism becomes revealed as an extremely finite and exceptional project, indeed as one that was mainly confined to the period between the postwar settlement after 1945 and its long and painful dismantling after the mid 1970s.
So what? One response to Eley has been: "Well if you had been an Asian/non-European historian for the last twenty years, you would've known this all along, genius."
But that is an unacceptable position too. Because the argument that Marx is too Eurocentric ignores the usefulness of Capitalfor understanding places that, although not a purely capitalist PRODUCERS, are nonetheless enmeshed in capital MARKETS (I made this distinction in my last post). And then combined and uneven development, etc. etc.
Back, bitches.
Near the end of Chapter one, Marx demonstrates the simple idea that in the chain of
that one could either begin with M (money capital) and end with M`; C (commodity capital) and end with C`; or P and end with P.
Is it simply arbitrary how one chooses to break up this series? Isn't it the case that all of these elements merely mutually presuppose one another in an unending cycle of reproduction?
Marx writes that M-C is "not the presupposition, but is rather posited or conditioned by the production process. However, this holds only for this individual capital." In other words, gathering money is a form of preparation, but if you gather money you better damn well have a production process at hand to convert that money into commodities and more money. A capitalist won't get a loan without an idea of how to use that money to make more money. But this is from the standpoint of an individual capitalist.
What about the standpoint of total social capital? "The general form of the circuit of industrial capital is the circuit of money capital, insofar as the capitalist mode of production is presupposed" (143). Why is this so? I can only guess it has something to do with this line:
On another level, it makes sense that in capital, the imperative is to make money for money's sake, not to produce for production's sake, not to make commodities for commodities' sake. When we speak of total social capital, we are talking about the competition between individual capitals. What drives competition? Not the scarcity of commodities or the imperative to produce. It is the imperative to accumulate wealth.
Other comments:
Pages 116 - 118: Marx comments that the M-C-P-C`-M` chain presumes the prior separation between free workers and the means of production. This is the gap filled by primitive accumulation. But it also begs the question (sorry, I'm importing my own intellectual interests here) of what about commodity production that does not presume free labor? Bonded labor, slavery, etc? I suppose those forms assume the separation from the means of production, but they do not presuppose the same iterated process of reproduction that signifies free, wage labor.
Page 120: Marx makes an argument that prioritizes exchange and markets over production itself. Or rather, he makes the midas touch argument: once you touch capitalism, you become capitalism. This is the argument of both the development and underdevelopment schools: "wherever it takes root capitalist production destroys all forms of commodity production which are based either on the self-employment of the producers, or merely on the sale of the excess product as commodities."
At the same time, Marx makes room for the possibility of uneven and combined development -- noncapitalist and precapitalist PRODUCTION for capitalist MARKETS: "at first apparently without affecting the mode of production itself. Such was for instance the first effect of capitalist world commerce on such nations as the Chinese, Indians, Arabs, etc."
What is the difference between commodity production and capitalist commodity production in this sentence?
130: Money has two functions. One, to circulate; two, to "breed" more money. But this second function is actually a function of commodities, not money.
132: The antinomy between real and formal arises once again.
136: Marx seems to give a definition of industry as:
How do we understand this in relation to industry's other: agriculture? What escapes capital in agriculture? Land? The soil? It'll be interesting to see in Volume III.
M-C (P) -C`- M`. M-C (P) -C`- M`. M-C (P) ...etc.
that one could either begin with M (money capital) and end with M`; C (commodity capital) and end with C`; or P and end with P.
Is it simply arbitrary how one chooses to break up this series? Isn't it the case that all of these elements merely mutually presuppose one another in an unending cycle of reproduction?
Marx writes that M-C is "not the presupposition, but is rather posited or conditioned by the production process. However, this holds only for this individual capital." In other words, gathering money is a form of preparation, but if you gather money you better damn well have a production process at hand to convert that money into commodities and more money. A capitalist won't get a loan without an idea of how to use that money to make more money. But this is from the standpoint of an individual capitalist.
What about the standpoint of total social capital? "The general form of the circuit of industrial capital is the circuit of money capital, insofar as the capitalist mode of production is presupposed" (143). Why is this so? I can only guess it has something to do with this line:
"The circuit made by money-capital is therefore the most one-sided, and thus the most striking and typical form in which the circuit of industrial capital appears, the capital whose aim and compelling motive — the self-expansion of value, the making of money, and accumulation — is thus conspicuously revealed (buying to sell dearer)" (140).What does Marx mean? Only money has the ability to mask the changes done to it, to obliterate the past. When you turn one hundred into $102 does not appear as the $100 principal + $2 increment. It appears as $102. It appears, in fetishized form, as "money breeding money."
On another level, it makes sense that in capital, the imperative is to make money for money's sake, not to produce for production's sake, not to make commodities for commodities' sake. When we speak of total social capital, we are talking about the competition between individual capitals. What drives competition? Not the scarcity of commodities or the imperative to produce. It is the imperative to accumulate wealth.
*
Other comments:
Pages 116 - 118: Marx comments that the M-C-P-C`-M` chain presumes the prior separation between free workers and the means of production. This is the gap filled by primitive accumulation. But it also begs the question (sorry, I'm importing my own intellectual interests here) of what about commodity production that does not presume free labor? Bonded labor, slavery, etc? I suppose those forms assume the separation from the means of production, but they do not presuppose the same iterated process of reproduction that signifies free, wage labor.
Page 120: Marx makes an argument that prioritizes exchange and markets over production itself. Or rather, he makes the midas touch argument: once you touch capitalism, you become capitalism. This is the argument of both the development and underdevelopment schools: "wherever it takes root capitalist production destroys all forms of commodity production which are based either on the self-employment of the producers, or merely on the sale of the excess product as commodities."
At the same time, Marx makes room for the possibility of uneven and combined development -- noncapitalist and precapitalist PRODUCTION for capitalist MARKETS: "at first apparently without affecting the mode of production itself. Such was for instance the first effect of capitalist world commerce on such nations as the Chinese, Indians, Arabs, etc."
What is the difference between commodity production and capitalist commodity production in this sentence?
"Capitalist production first makes the production of commodities general and then, by degrees, transforms all commodity production into capitalist commodity production."128-9: Marx on how the money form obliterates difference.
130: Money has two functions. One, to circulate; two, to "breed" more money. But this second function is actually a function of commodities, not money.
132: The antinomy between real and formal arises once again.
"The change in value pertains exclusively to the metamorphosis P, the process of production, which thus appears as a real metamorphosis of capital, as compared with the merely formal metamorphosis of circulation."134: "The yarn cannot be sold until it has been spun." Capital can only take on one appearance at a time. They are mutually exclusive. This implies the need for temporal sensitivity.
136: Marx seems to give a definition of industry as:
"The capital which assumes this forms in the course of its total circuit and then discards them and in each of them performs the function corresponding to the particular form, is industrial capital, industrial here in the sense it comprises every branch of industry run on a capitalist basis."
and
"Industrial capital is the only mode of existence of capital in which not only the appropriation of surplus-value, or surplus-product, but simultaneously its creation is a function of capital."
How do we understand this in relation to industry's other: agriculture? What escapes capital in agriculture? Land? The soil? It'll be interesting to see in Volume III.
December 17, 2008
The Forest Lost Among the Trees
Part One: Chapters I – VI
First, allow me a momentary tangent:
With these first chapters of Volume II I got the immediate sense that we are now going to be taken through the intricacies of capital’s multiple forms and dynamics at a depth not undertaken in Volume One. Yet, following Mandel’s argument in the introduction, I find that the conventional approach to Volume II – that this is the dry, “economic” component of the series – is somewhat misleading. Connecting Mandel’s views with the last few Harvey lectures, I think we can approach Volume Two as Marx now having to necessarily expand into the realm of multiple capital circuits in interaction (i.e., the market, not just market-consumption, but competition and the production of means of production as commodities, realization of value, labour market, etc) in order to view capitalism in its general and complicated form. The category or function of the “social” appears to be absent in this analysis, since we are not taken through factory inspector reports or Marx’s scathing indignation against the sycophants of capital. But this does not, of course, mean that we have entered into the realm of a pure, abstract economic model being constructed – Marx is still conducting an immanent critique OF political economy – or at least that is what I will argue here. Which brings us back to the earlier questions posed in this blog, ones that, I think, should be on our minds when are moving through this volume as well – i.e., is Marx developing a counter-economic model? A ‘higher’ model of political economy? Or is political economy being approached as ideology? Are the ‘appearances’ that political economy assume as its conceptual components – ones derived from the everyday dynamics of exchange, labour, money transactions, etc – point to a reality that has been only partially understood by political economy, i.e. remaining at the level of appearances? Or is political economy masking the reality of the commodity form with natural law and Crusoe?
Extension of tangent to outside reading:
I want to quickly connect this with something I just finished reading - E.P. Thompson’s diatribe against Althusser and his students (“The Poverty of Philosophy”, 1978). Thompson’s entire argument is structured around the logic/history binary that has emerged in this blog – and I think that its safe to say this is one of the major dividing points within Marx’s own writings. Thus, I think this binary IS THERE in the argument itself (whether at the mode of analysis, or method of presentation), and it will continue to be a useful entry-point into these later volumes as long as we don’t reproduce the analytical dead-ends of humanism vs. economics, or empiricism vs. theory that the Althusser/Thompson debate exemplifies.
One of the more intriguing ideas that Thompson argues is that Althusser’s privileged “later-Marx” (i.e., Capital) expresses a “trap” that Marx himself could not escape and one that Althusser reifies into a static structure. For Thompson, Marx had gotten “trapped” in the very political economic mode that he hoped to untangle – a diversion from Marx’s life-long attempt to develop historical materialism (emphasis on historical) by a detour into the conceptual realm of political economy (emphasis on static-model). In other words, once Marx entered into the realm of political economy in order to critique its constitutive concepts (value, rent, price, market, tax, wage, interest, etc), these very concepts began to drive his work into a closed conceptual system. Thompson sees this as a conflict between historical materialism, an unfinished project for Marx (and a necessarily always unfinished project because of the transitory nature of its object - history) and the closed conceptual model of poli-econ in his later work.
I bring this up because the circuits that Marx works through in the first few chapters (money, productive, and commodity capital) seem to be reified at an abstract level where necessary assumptions both internal and external to these circuits have to be accepted in order for them to be explicated within their own logic (e.g., things are sold for their value, no market limitations, that buyers are available for sellers, etc – refer to the later Harvey lectures in Volume One where he discusses the function of these assumptions). Chapter Four addresses this issue somewhat. But these necessary assumptions indicate that we are working within the self-logic of capital, not necessarily the actual manifestation of these circuits in historical time (even though time seems to be a primary concern here – e.g., “circuit”). Can the two speak to each other? Of course, or we wouldn’t even be reading this. But I am still struggling with my own understanding of the implications of Marx’s oscillation between history and logic, and where, if any, these two tendencies contradict or reinforce each other. I think this makes Capital an immensely dynamic text – one that can go in multiple directions –each productive in their own right. Ok, the tangent is over.
SECTION ONE:
A suggestion for those just beginning these first chapters of Vol II.; the analysis culminates in chapter four, within which the three circuits of capital come together into a theoretical whole. I had spent hours trying to understand the intricate differences of each circuit (chapters one through three), and in the end I lost sight of the forest among the trees. Anyhow, Marx’s objective is clearly expressed at the beginning of Chapter four:
“[If] we take all three forms together, then all the premises of the process appear as its result, as premises produced by the process itself. Each moment appears as a point of departure, of transit, and of return. The total process presents itself as the unity of the process of production and the process of circulation; the production process is the mediator of the circulation process, and vice versa. (180)”
Additionally, we get a further explanation of why circuit III (circuit of commodity capital: C’…C’) is the circuit that allows a fuller analysis of the total process – since it begins with the assumption of augmented capital (C’) and ends with augmented capital (C’), while encompassing the other circuits as mediating processes. This aligns with the argument posed in the first chapters of Vol. I; namely, that it is only when commodity production emerges as the universal form of production that the historical ‘moment’ of capitalism is located.
Generally speaking then, we have moved into the project of trying to think of the process as an organic, albeit contradictory, whole, one quite different from the last chapters of Vol I., consisting of an expansion into a much larger social process involving multiple and intertwined capitals. So before going any further, I want to discuss the specifics of each circuit of capital:
CHAPTER ONE: THE CIRCUIT OF MONEY-CAPITAL
So the M-C…P…C’-M’ circuit of money capital expresses and/or hides certain aspects depending on where the analysis enters into the circuit – for this can be understood within its own multiple processes as:
1) M-C-L/mp…P….C’-M’
2) M-C, C’-M’
3) M….M’, C….C’
4) M-C…..P….C’(C+c)/M’ (M+m)
5) Etc.
Each of these express their own ‘appearances’ or functions within the dynamics of the circuit, and can affect the analysis when one enters into a specific level of the circuit(s). These are not isolated sub-circuits, of course, but various durations within a larger process – and moving out from the simple circuits of Vol I (individual circuit of both simple reproduction and expanded accumulation) through these more generalized circuits of Volume II, we are moving towards a complex process of that appears to be more than the sum of its individual circuits.
Here, in regards to the money-capital circuit, we return to themes that came up in Volume One: that capitalist accumulation appears as the valorization of value (M….M’), but that this requires use-values (or commodities) to bleed out of the circuit (chapter three); the fetishistic function of the money-form; etc – all of which are engaged at a much deeper logical analysis than the social manifestations discussed in Volume One.
It is important to note that Marx writes of all three of these (money, productive and commodity capital) as forms with their own unique and necessary functions. In regards to money-capital:
“As money capital, it exists in a state in which it can perform monetary functions, in the present case the functions of general means of purchase and payment….Money capital does not possess this capacity because it is capital, but because it is money. (112)”
This then produces certain fetishistic expressions, such as when money operates as wages (L-M-C); where at the level of appearance, it is an equal, monetary transaction for labour power. Yet, as Marx explored in Volume I, not only is this tautological (value being measures by value), but also that labour-power actually adds more value (surplus –value) to the commodity via production:
“This irrationality is rather overlooked. The irrationality consists in the fact that labour as the value-forming element cannot itself posses any value, and so a certain quantity of labour cannot have a value that is expressed in its price, in its equivalence with a certain definite quantity of money. We know, however, that wages are simply a disguised form, a form in which the price of a day’s labour-power, for example, presents itself as the price of the labour set in motion in the course of a day by this labour-power, so that the value produced by this labour-power in six hours’ labour, say, is expressed as the value of its twelve-hour functioning of labour. (113)”
More importantly, at the level of the total circuit, the money-form elides the other necessary components of its own transformations, appearing as M….M’:
“Since the mediating effect of its history is obliterated in the simply existence of this sum of money, and every trace of the specific difference which the various component parts of capital possess in the production process has vanished, the only remaining distinction is the crude, non-conceptual distinction between a ‘principal’….At the conclusion of its process the realized capital therefore appears as a sum of money, within which the distinction between principal and surplus expresses, in a naïve, non-conceptual manner, the capital relation. (129)”
Or later:
“The formula M-C…P…C’-M’, with the result M’=M+m, contains in its form a certain deception; it bears an illusory character that derives from the existence of the advanced and valorized value in its equivalent form, in money. What is emphasized is not the valorization of the value, but the money form of this process, the fact that the more value in the money form is finally withdrawn from the circulation sphere than was originally advanced to it…(141)”
These two paragraphs, I think, summarize the most important aspect of the chapter, that in M…M’-M…M’-M….M’ circuit, whereby valorized value is perpetually recapitalized (but only in the form of M, never M’), glosses over the necessary aspect of valorization in the production process (think of this in regard to the circuit of commodity capital; C’…C’).
Two things I wanted to throw out for discussion are:
1) Its interesting to take the notion of an ‘interruption’ that appears in these first few chapters. Here, P itself is the interruption, and yet it does seem to be the necessary ‘motor’ for valorization/re-capitalization. In Chapter Two, forms the ‘interruption’ of productive capital (P….P[P’]). I wonder what other ways we might think about the notion of an ‘interruption’ beyond the theoretical function internal to Marx’s exegesis. For instance, in the discourse of “post-modernity”, post-industrial society, post-this, post-that, etc. that possibly the interruption is mapped spatially – where the analytical optic has been enamored with the service-based economies and financial windfalls of Wall Street, overlooking the fact that this is still valorized in the process of global production (special economic zones anyone?). Think of this in regards to our current financial meltdown and the necessary implication of so-called “emerging markets” in this chain-reaction. Which brings me to a related, but more complicated issue…
2) On the same page as the quotation above (p. 141), this appearance (M….M’ with P as mere interruption) is located in the specific schools of earlier economic thought, namely the Monetary System and the Mercantile System. Although this is the translator’s note, the info from the Grundrisse on these economic schools (see footnote on 141) returns us to a question posed many times before: Are these discursive systems of political economy, or are they actual economic systems (state or otherwise) that operated within their terms? If political-economists are the sycophants of capital (an actual system and a its particular conceptual express), does Mercantilism relate to, or is the ideological effect of, a unique monetary system? In other words, money is not, of course, capitalism, thus was money operating as a means of purchase and sale in a different stage of capitalist development? Marx utilizes the Monetary and Mercantile System as an example of reproducing the fetishistic character of M-C-M’ (or more particularly, M…M’) – in other words, reproducing the appearances of M…M’. But does not mercantilism constitute an ‘actual’ stage of monetary development, rather than an incomplete comprehension of the circulation of capital in its fully ‘developed’ logical form? Is this not conflating early modes of monetary theory, in relation to their own respective historical time, with the higher abstraction of capitalism’s forms, here represented by the abstract logic of the circuit of money-capital? I can feel Andy rolling his eyes 5000 miles away. Sorry Andy.
CHAPTER TWO: THE CIRCUIT OF PRODUCTIVE CAPITAL
Here we move into the formula expressing the circuit of productive capital:
P….C’-M’-C….P
Which, as we saw earlier with M….M’, can be entered at specific moments, or broken down into other sub-sequences, such as:
1) Simple Reproduction:
M-C…P…C’ (C+c) – M’ (M+m) {in other words, P….P}
> where m continues into c (capitalist consumption or reserve fund)
> and C continues into the production process (C-L/mp)
a) these can themselves be isolated into their own trajectories, such as c – m – c (surplus value in commodity, realized in money form, consumed by capitalist) and C-M-C-L/mp… for the continuation into simple reproduction
2) Accumulation
P…C’-M’-C’-L/mp…P’...etc {in other words, P…P’}
> which entails that the earlier trajectory of c-m-c does not exist since surplus value is re-capitalized and not consumed/reserved.
It is within the particularity of this circuit that we can (logically) locate simple reproduction: c-m-c (consumption), which we could not do when following the circuit of money-capital. Yet, as I will argue below, and something Marx only discusses in passing in a later chapter, simple reproduction is historically impossible yet logically necessary for the explication of capitalist accumulation (-we return to the ‘pre-history’ of capitalism: not actual history, but the ghostly logic of its dynamics when not expanding in accumulation – which of course, is impossible by its own definition).
As we saw in the circuit of money-capital, the augmented P in the second circuit never appears as P’, but as P thus {money-capital: M-C…P…C’-M’. M-C…P} and {productive-capital: P…C’-M’…P}. What happens is that as P occupied the position of an “interruption” in M-C-M’, here C’-M’/ M-C operates as a durational interruption that is not emphasized in this circuit (and yet, still necessary – as all of these circuits necessarily assume the other). Marx writes:
“…here the entire circulation process of industrial capital, its whole movement within the circulation phase [M-C and C’-M’], merely forms an interruption, and hence a mediation, between the productive capital that opens the circuit as the first extreme and closes it in the same form as the last extreme, i.e. in the form of its new beginning. (144)”
At first I assumed that the productive would be the privileged circuit – since it indicates ‘production’ and thus the site in which value becomes valorized (surplus value), but interestingly, Marx argues that just as money appears automatically augmented in M…M’, the same is assumed in P….P’, as productive capital does not necessarily express the valorization in the process of production; only that prior surplus-value has been recapitalized (in other words, indicating a prior augmentation rather than augmentation itself). To work through how Marx presents this dilemma:
“This origin [i.e., the origin of augmented money, or M’] was obliterated in its form as money capital just beginning its circuit. It is just the same with P’, as soon as it functions as the point of departure for a new circuit. (p. 160)”
And farther down the page:
“In the circuit of P...the process of valorization is already complete as soon as the first stage, the production process, has taken place, and once it has passed through the second stage C’-M’ (the first of the circulation stages), capital value and surplus-value already exist as realized money capital, as M’, which in the first circuit appeared as the final extremity. (160)”
Lastly, and important to the internal (and self-referential) logic of this circuit:
“In P…P’, P’ does not express the fact that surplus-value is produced, but rather that the produced surplus-value is capitalized, i.e. that capital has been accumulated, and hence P’, as opposed to P, consists of the original capital value plus the value of the capital accumulated through its movement. (160)”
Thus P…P’ doesn't move us any closer to how value is valorized, only that P’ stands in for more components of the production process (mp/L) set into motion due to earlier augmentation/recapitalization.
What I think is important to note in this regard is that Marx is trying to show capital in its many forms, and that its own logic is determinative, not the forms themselves (even though necessary). Capital needs to be in the form of money-capital for specific processes (wages, means of payment, purchase, etc), in productive-capital (in order to express increased mp/L) and, as we will see in the next chapter, commodity-capital. The forms do not determine this process, but are subsets within a larger dynamic of capital accumulation (see 161).
Additionally, all these forms, while isolated for analytical purposes, and each containing their own special functions and silences (e.g. fetishism of money-form, etc), each presume the others – thus they never are isolated; they merely express earlier processes or anticipate later ones – a major theme that will be further theorized in chapter four. As we saw earlier, P’ (augmented productive-capital) is merely expressing augmented capital put back into the accumulation process.
A few remaining points that I wanted to emphasize for Chapter Two:
1) Temporal dimensions of these circuits:
- See Marx’s comments on the temporality of wages and past labour/future labour on 151-152 – I think this is where we move out of a singular circuit into the larger dynamics of social relations and processes. For instance, the subsets of the circuit M-C and C-M can be separated in time and space:
“The difference in time between the execution of C-M and that of M-C may be more or less considerable. Although, as the result of the act C-M, M represents past labour, M can represent for the act M-C the transformed form of commodities that are not yet present on the market at all, but will be there only in the future, since M-C does not need to take place until C has been produced afresh. (151-152)”
Further down, Marx discusses capitalist consumption as well as labour’s subsistence purchases in temporal terms (this is one of the most interesting passages of the chapter):
“this money [m] is not only the monetary form of the workers’ past labour, but also a draft on simultaneous or future labour that will only be realized, or is supposed to be realized, in the future. The worker may use it to buy a coat that will only be made one week later. This is in particular the case with the very large number of necessary means of subsistence that must be consumed almost immediately, the moment they are produced, if they are not to spoil. In the money with which his wage is paid, therefore, the worker receives the transformed form of his own future labour or that of other workers. With one part of his past labour the capitalist gives him a draft on his own future labour. It is his own simultaneous or future labour which forms the as yet non-existent reserve stock with which his past labour is paid for. (152)”
2) Whether or not simple reproduction can be historically understood or if this is for analytical purposes only.
- Marx stipulates that his analysis of simple reproduction rests upon certain assumptions, such as that “the entire surplus-value goes into the personal consumption of the capitalist. (145)” But in capitalism’s own definitional terms, how could this occur? I don’t think Marx is assuming this as a preparatory stage towards accumulation, but rather, as a logical hypothesis from which to then understand actual accumulation.
However, within Marx’s analysis we do learn of certain tendencies or forms based on the function of labour’s and capital’s consumption – one being mediated by wages, the other of the surplus-value produced in the production process. For instance, Marx emphasizes that, in the terms set out here (i.e. simple reproduction), crises that emerge concerning commodities in the market are not crises of demand, but of the “demand for payment” (156); in other words, a crisis within the capital circuit:
“At this point the crisis breaks out. It first becomes evident not in the direct reduction of consumer demand, the demand for individual consumption, but rather in a decline in the number of exchanges of capital for capital, in the reproduction process of capital. (157)”
Although this is in terms of simple reproduction, I wonder if this potential crisis can permeate expanded accumulation as well?
3) Expansion of Business, Latency, and Temporal Interruption
Marx begins by arguing that:
“If m is to serve as money capital in a second independent business alongside the first, it is clear that is can be invested in this only if it possess the minimal magnitude required for such business. (162)”
It is interesting to note that the “required for such business” brings us back to that open question of a ‘certain stage of development’, expressed earlier at the societal level, but here as internal to a realm of industry, market conditions, etc.
More interestingly, however, is that the accumulation of money (m, not consumed, but not directly put directly back into an immediate circuit) is latent in its preparation of expansion of business, and the spatio-temporal aspects of this process. Marx writes:
“Thus the accumulation of money, the formation of a hoard, appears here as process that temporarily accompanies an extension of the scale on which industrial capital operates. Temporarily, because as long as the hoard persists in its state as a hoard, it does not function as capital, does not participate in the valorization process, but remains a sum of money that grows only because money available to it without any effort on its part is cast into the same coffer. (163)”
This money, money that is “interrupted” (163), is understood as “latent money capital” since by the terms of the circuit, it can only be that if presupposing the investment into a new outlet. This is expressed as the “reserve fund” (164), which “serves as a reserve fund to cope with disturbances in the circuit. (165)”
The reason this last section drew my attention is that what could possibly be the contemporary reserve fund within a single firm? While the idea functions at a logical level rather than an actual exposition of how to run a firm here, its interesting to tie this in with the current freezing of credit markets – where the commercial paper market acts as a ‘general reserve fund’ and points to the financialization of the process of capital innovation, etc. Maybe there is a way to think this along with Schumpeter’s earlier writings on business cycles and credit.
CHAPTER THREE: THE CIRCUIT OF COMMODITY-CAPITAL
Marx begins by differentiating the first two forms with this last form of the commodity-capital circuit:
“C’ can therefore never open a circuit as mere C [as the others did, e.g., as M or P], as merely the commodity form of the capital value. As commodity value, it always has a dual aspect. From the point of view of use-value, it is the product of the function of P,…whose elements L and mp, emerging from circulation commodities, have only functioned to fashion this product. Secondly, from the point of view of value, it is the capital value P plus the surplus-value m produced in the function of P…It is only in the circuit of C’ itself that C=P= the capital value can and must separate itself from the portion of C’ in which surplus-value exists, from the surplus product in which the surplus-value is hidden… (169)”
Here, then, is the commodity-form analyzed in Volume One, set in motion and providing the analytical means through which to understand the perpetual valorization of value via its dialectic (use-value / exchange-value). More explicitly, Marx argues later:
“What differentiates the third form from the two earlier ones is that it is only in this circuit that the valorized capital value, and not the original capital value that has still to be valorized, appears as the starting-point of its own valorization. C’, as capital-relation, is here the point of departure, and thus has a determining effect on the whole circuit, in so far as this concludes , even in its first phase, both the circuit of the capital value and that of the surplus-value…(173)”
This is the “permanent condition for the reproduction process” (174), one that comprises the entire process of circulation and production within its internal transformations. Additionally, and most importantly, C’…C’:
“presupposes in its description the existence of another industrial capital in the form C (=L+mp)…it itself demands to be considered not only as the general form of the circuit, i.e. as a social form in which every individual industrial capital can be considered….hence not only as a form of motion common to all of the sum of individual capitals, i.e. of the total social capital of the capitalist class, a member in which the movement of any individual industrial capital simply appears as a partial one, intertwined with the others and conditioned by them. (177)”
In other words, in the circuit of C’…C’ we have the possibility of thinking of this process as a general process of interrelated capitals – a social form. It can be thought of both at the level of an individual capital circuit, but also expands outwards to enframe as well as necessarily assume, the generalized social process. This poses the question for Volume II:
“It is necessary to make clear how the metamorphoses of an individual capital are intertwined with those of other individual capitals, and with the part of the total product that is destined for individual consumption. (178)”
Marx closes this chapter with a brief mention of this circuits own, specific fetishistic effect – that it appears that valorization is merely the circulation of commodities (e.g. classical political economy). Which raises an interesting paradox – that this circuit captures, or at least opens into, the possibility of ‘thinking’ the social process in its totality, also replicates the fetish of political economy. Is this to say that political economy, at the level of its utilized ‘appearances’, posed the analysis of capitalism in a potentially correct, yet partial, form? Thus does that make Capital a ‘completion’ of political economy?
CHAPTER FOUR: THE THREE FIRGURES OF THE CIRCUIT
Marx puts these three circuits together and posits that, on one level, their internal differences are merely subjective (analytical?):
“the entire distinction [of the three circuits] presents itself as merely one of form, a merely subjective distinction that exists only for the observer. (181)”
But taken together, the dynamic of these three circuits is not the sum of their parts, but rather it is “the valorization of value as the determining purpose, the driving motive. (180)” By page 183 Marx develops a very interesting temporal form – succession and coexistence, wherein immediate succession (linear dynamic) is held together through a synchronic process of abstract coexistence (unity). For instance:
“All portions of the capital go through the circuit in succession, and, at any on time, they find themselves in various stages of it. Thus industrial capital in the continuity of its circuit is simultaneously in all of its stages, and in the various functional forms corresponding to them. (182)”
And…
“The real circuit of industrial capital in its continuity is therefore not only a unified process of circulation and production, but also a unity of all its three circuits. But it can only be such a unity in so far as each different part of the capital runs in succession through the successive phases of the circuit, can pass over from one phase and one functional form into the other; hence industrial capital, as the whole of these parts, exists simultaneously in its various phases and functions, and thus describes all three circuits at once. The succession [Nacheinander] of the various parts is here determined by their coexistence [Nebeneinander], i.e. by the way in which the capital is divided…(183)”
We have, then, entered the analytical level of the process as a whole (synchronically intertwined capitals and the multiplicity of their linear circuits). Marx spends the next few pages working out the implication of this notion of simultaneity in succession, which, he argues is not solely for analytical purposes, but constitutes a social dynamic:
“It is a movement, a circulatory process through different stages, which itself in turn includes three different forms of the circulatory process. Hence it can only be grasped as a movement, and not as a static thing. Those who consider the autonomization [Verselbstständigung] of value as a mere abstraction forget that the movement of industrial capital is this abstraction in action. (185)”
This also opens into possibilities of thinking systemic crisis simultaneously at the level of the individual circuit and its relation within the total process:
“Every delay in the succession brings the coexistence into disarray, every delay in one stage causes a greater or lesser delay in the entire circuit, not only that of the portion of the capital that is delayed, but also that of the entire individual capital. (183)”
Crisis, which was located at specific points of individual (logical) processes in Volume One (refer to Harvey’s last lecture) are now posed at the level of the entire process. In addition, Marx enters this total process through the question of value (assumed as expressed in its price) and the systemic effect of a fall or rise. (187-188) and the abstraction into money/world-money (189-190).
One aspect that I found very interesting was that even products produced in other modes of production enter into the production/circulation process of capitalism (i.e., as raw material, consumption items, etc), it does not matter to capital’s logic – i.e., capitalist forms obliterate this (external) difference:
“Whatever the origin of the commodities that go into the circulation process of industrial capitalism…whatever therefore may be the social form of the production process which these commodities derive – they confront industrial capital straight away in its form of commodity capital, they themselves having the form of commodity-dealing or merchant’s capital; and this by its very nature embraces commodities from all modes of production. (190)”
One final note on this chapter is that Marx (belatedly) states that reproduction (surplus being consumed by capitalist) is impossible both theoretically (“For capitalism is already essentially abolished once we assume that it is enjoyment that is the driving motive and not enrichment itself” 199) and technically (the necessity of a reserve fund to counteract market fluctuations).
CHAPTER FIVE: CIRCULATION TIME
If we accept that a circuit’s turnover time is “equal to the sum of its production time and its circulation time (200)”, then the problem of circulation time needs to be posed. Mutually exclusive to production time, Marx argues that:
“it is clear that the longer [capital’s] aliquot parts remain in the circulation sphere, the smaller must be the part that functions at any time in the production sphere. The expansion and contraction of the circulation time hence acts as a negative limit on the contraction or expansion of the production time, or of the scale on which a capital of a given magnitude can function. (203)”
From this comes political economy’s misrecognition of the circulation process as the site of valorization via circulation time. In other words, by posing the question as a related, yet mutually exclusive aspect in regards to valorization, Marx has both accounted for why political economy has only assumed the appearances of circulation, as well as the “actual” process of valorization in relation to circulation time. This does not mean that circulation is secondary – since Marx does concede the agents of circulation (merchants, or lets say, the sales department) are “just as necessary” to the total process (205).
The last paragraph of this chapter re-states the argument so-far in the terms of the commodity-form analysis of Volume One (the dialectic between use-value and exchange-value) – see 205-206.
CHAPTER SIX: THE COSTS OF CIRCULATION
This chapter is divided up between “pure circulation costs” (buying and selling time, book-keeping, replacement of money in circulation), “costs of storage” (stock formation and the commodity stock proper) and finally transportation costs.
Pure Circulation Costs:
Buying and Selling Time: The labour involved in the buying and selling of commodities (i.e., traders), this labour – which should be painfully obvious by this point – does not create any value, although they do provide the necessary function of realizing the value of a commodity. This is understood as a functional mediation between two forms of value (commodity form – money form). For Marx’s long exposition of the merchant’s function, see 208-211.
Book-Keeping: Firstly, Marx discusses the conditions in which book-keeping emerges:
“The movement of production, and particularly of valorization – in which commodities figure only as bearers of value, as the names of things whose ideal value-existence is set down in money of account – thus receives a symbolic reflection in the imagination. (211)”
Compared to selling/buying, or what Marx deems “unproductive expenditure of labour-time” (212), book-keeping becomes more necessary as commodity production becomes the general form since it is the “supervision and the ideal recapitulation of the process. (212)”
Money: Secondly Marx goes into a discussion of metallic money and that as a necessary form within the circulation of commodity production/circulation, a “part of the social wealth [e.g., metallic money]…has to be sacrificed to the circulation process. (214)” This line of reasoning could open into an interesting discussion of national-space and currency policies, but as it is posed here, there’s not much here to tease out.
Costs of Storage:
The key to this section is that while the previous aspects were merely phenomena of the circulation sphere (i.e., unproductive), costs of storage can be extensions of the production process and thus could be approached as anticipated within the surplus-product/surplus value. A huge theoretical lacunae arises here, since now we have two qualitatively different types of value-adding labour – one in production, and one an extension of production, but without the logical exegesis performed in Vol I. Anyhoo..here is what I understood from this section….
Stock Formation in General: Stock formation is merely the commodity-stock within the C-M and M-C circuits – and since the production circuit requires that a “mass of commodities (means of production) is constantly present on the market” this commodity stock is a necessary (and a re-occurring) condition of production – this, again, is a logical premise posed internal to the logic of the circuits rather than a historically understood point.
Furthermore, as Marx stipulated in the introduction of this section, costs of storage are anticipated in the value of commodities – in their necessary delay within the transformation from commodity value into money value (i.e. circulation, C-M):
“the value of commodities is conserved, or increased, only because the use-value, the product itself, is transferred under certain objective conditions that cost an outlay of capital, and subjected to operations in which additional labour works on the use-values. The calculation of the commodity value (the book-keeping for this process) and the buying and selling, on the contrary, do not operate on the use-value in which the commodity value exists. (216)”
And later….
“The use-value is not increased or raised; on the contrary, it declines. But its decline is restricted, and it itself is conserved. The value that is advanced and exists in the commodity is also not increased here. But new labour, both objectified and living, is added to it. (217)”
Marx then moves into a discussion of how the commodity stock has been misunderstood by Adam Smith and Lalor – see 217-220. This opens into spatio-temporal considerations of production and circulation, as well as national magnitude of social wealth (see 220) which I won’t get into. But what is important is that Marx has differentiated between the general commodity stock (and its three forms: productive stock, individual consumption fund and commodity stock) and the commodity stock proper. The general commodity stock of a society or nation is assumed to be locatable and understood in its three relative forms through history, or as a index of a social/historical form of production – i.e., how these are understood and measured give certain indices of spatio-temporal aspects of what went into the production of a specific commodity as well as its circulation within a larger space (or, in individual consumption, restricted space). Compare this with…..
The Commodity Stock Proper: Here, the difference is that:
“the commodity stock therefore grows with capitalist production. We have already seen that this is only a change of form for the stock, i.e. that the stock increases in commodity form because it decreases in the form of direct production or consumption stock. There is simply a changed form of the stock.” But as “capitalist production develops, the scale of production is determined to an ever less degree by the immediate demand for the product, and to an ever greater degree by the scale of the capital which the individual capitalist has at his disposal, by his capital’s drive for valorization and the need of his production process for continuity and extension. (221)”
I may be wrong, but it seems that the same analytical logic that we saw in Volume One, where by at a certain quantitative level we get a qualitatively different form (Hegel) is applied here as well – in the differentiation between the general commodity stock (and its three forms) and the commodity stock proper. In other words, with the magnitude, speed and spatial dispersion of production and commodity circulation that results from capitalist production, we now are supplied with a new category – the commodity stock proper.
But this is not Marx’s objective here – this is to discover to what extent the expenses accrued as “stocks are socially concentrated (222)” and as the interruption and spatio-temporal distanciation within the value transformation (C-M) goes back into the value of commodities.
He answers this with a general law on 225: “all circulation costs that arise simply form a change in form of the commodity cannot add any value to it.” He continues that they “are simply costs involved in realizing the value or transferring it from one form into another. The capital expended in these costs (including the labour it commands) belongs to the faux frais of capitalist production. The replacement of these costs must come from the surplus product, and from the standpoint of the capitalist class as a whole it forms a deduction of surplus-value or surplus product (226).
Ok, I feel I lost sight of the forest amongst the trees again, but what can you do. Now onto section two…….
First, allow me a momentary tangent:
With these first chapters of Volume II I got the immediate sense that we are now going to be taken through the intricacies of capital’s multiple forms and dynamics at a depth not undertaken in Volume One. Yet, following Mandel’s argument in the introduction, I find that the conventional approach to Volume II – that this is the dry, “economic” component of the series – is somewhat misleading. Connecting Mandel’s views with the last few Harvey lectures, I think we can approach Volume Two as Marx now having to necessarily expand into the realm of multiple capital circuits in interaction (i.e., the market, not just market-consumption, but competition and the production of means of production as commodities, realization of value, labour market, etc) in order to view capitalism in its general and complicated form. The category or function of the “social” appears to be absent in this analysis, since we are not taken through factory inspector reports or Marx’s scathing indignation against the sycophants of capital. But this does not, of course, mean that we have entered into the realm of a pure, abstract economic model being constructed – Marx is still conducting an immanent critique OF political economy – or at least that is what I will argue here. Which brings us back to the earlier questions posed in this blog, ones that, I think, should be on our minds when are moving through this volume as well – i.e., is Marx developing a counter-economic model? A ‘higher’ model of political economy? Or is political economy being approached as ideology? Are the ‘appearances’ that political economy assume as its conceptual components – ones derived from the everyday dynamics of exchange, labour, money transactions, etc – point to a reality that has been only partially understood by political economy, i.e. remaining at the level of appearances? Or is political economy masking the reality of the commodity form with natural law and Crusoe?
Extension of tangent to outside reading:
I want to quickly connect this with something I just finished reading - E.P. Thompson’s diatribe against Althusser and his students (“The Poverty of Philosophy”, 1978). Thompson’s entire argument is structured around the logic/history binary that has emerged in this blog – and I think that its safe to say this is one of the major dividing points within Marx’s own writings. Thus, I think this binary IS THERE in the argument itself (whether at the mode of analysis, or method of presentation), and it will continue to be a useful entry-point into these later volumes as long as we don’t reproduce the analytical dead-ends of humanism vs. economics, or empiricism vs. theory that the Althusser/Thompson debate exemplifies.
One of the more intriguing ideas that Thompson argues is that Althusser’s privileged “later-Marx” (i.e., Capital) expresses a “trap” that Marx himself could not escape and one that Althusser reifies into a static structure. For Thompson, Marx had gotten “trapped” in the very political economic mode that he hoped to untangle – a diversion from Marx’s life-long attempt to develop historical materialism (emphasis on historical) by a detour into the conceptual realm of political economy (emphasis on static-model). In other words, once Marx entered into the realm of political economy in order to critique its constitutive concepts (value, rent, price, market, tax, wage, interest, etc), these very concepts began to drive his work into a closed conceptual system. Thompson sees this as a conflict between historical materialism, an unfinished project for Marx (and a necessarily always unfinished project because of the transitory nature of its object - history) and the closed conceptual model of poli-econ in his later work.
I bring this up because the circuits that Marx works through in the first few chapters (money, productive, and commodity capital) seem to be reified at an abstract level where necessary assumptions both internal and external to these circuits have to be accepted in order for them to be explicated within their own logic (e.g., things are sold for their value, no market limitations, that buyers are available for sellers, etc – refer to the later Harvey lectures in Volume One where he discusses the function of these assumptions). Chapter Four addresses this issue somewhat. But these necessary assumptions indicate that we are working within the self-logic of capital, not necessarily the actual manifestation of these circuits in historical time (even though time seems to be a primary concern here – e.g., “circuit”). Can the two speak to each other? Of course, or we wouldn’t even be reading this. But I am still struggling with my own understanding of the implications of Marx’s oscillation between history and logic, and where, if any, these two tendencies contradict or reinforce each other. I think this makes Capital an immensely dynamic text – one that can go in multiple directions –each productive in their own right. Ok, the tangent is over.
SECTION ONE:
A suggestion for those just beginning these first chapters of Vol II.; the analysis culminates in chapter four, within which the three circuits of capital come together into a theoretical whole. I had spent hours trying to understand the intricate differences of each circuit (chapters one through three), and in the end I lost sight of the forest among the trees. Anyhow, Marx’s objective is clearly expressed at the beginning of Chapter four:
“[If] we take all three forms together, then all the premises of the process appear as its result, as premises produced by the process itself. Each moment appears as a point of departure, of transit, and of return. The total process presents itself as the unity of the process of production and the process of circulation; the production process is the mediator of the circulation process, and vice versa. (180)”
Additionally, we get a further explanation of why circuit III (circuit of commodity capital: C’…C’) is the circuit that allows a fuller analysis of the total process – since it begins with the assumption of augmented capital (C’) and ends with augmented capital (C’), while encompassing the other circuits as mediating processes. This aligns with the argument posed in the first chapters of Vol. I; namely, that it is only when commodity production emerges as the universal form of production that the historical ‘moment’ of capitalism is located.
Generally speaking then, we have moved into the project of trying to think of the process as an organic, albeit contradictory, whole, one quite different from the last chapters of Vol I., consisting of an expansion into a much larger social process involving multiple and intertwined capitals. So before going any further, I want to discuss the specifics of each circuit of capital:
CHAPTER ONE: THE CIRCUIT OF MONEY-CAPITAL
So the M-C…P…C’-M’ circuit of money capital expresses and/or hides certain aspects depending on where the analysis enters into the circuit – for this can be understood within its own multiple processes as:
1) M-C-L/mp…P….C’-M’
2) M-C, C’-M’
3) M….M’, C….C’
4) M-C…..P….C’(C+c)/M’ (M+m)
5) Etc.
Each of these express their own ‘appearances’ or functions within the dynamics of the circuit, and can affect the analysis when one enters into a specific level of the circuit(s). These are not isolated sub-circuits, of course, but various durations within a larger process – and moving out from the simple circuits of Vol I (individual circuit of both simple reproduction and expanded accumulation) through these more generalized circuits of Volume II, we are moving towards a complex process of that appears to be more than the sum of its individual circuits.
Here, in regards to the money-capital circuit, we return to themes that came up in Volume One: that capitalist accumulation appears as the valorization of value (M….M’), but that this requires use-values (or commodities) to bleed out of the circuit (chapter three); the fetishistic function of the money-form; etc – all of which are engaged at a much deeper logical analysis than the social manifestations discussed in Volume One.
It is important to note that Marx writes of all three of these (money, productive and commodity capital) as forms with their own unique and necessary functions. In regards to money-capital:
“As money capital, it exists in a state in which it can perform monetary functions, in the present case the functions of general means of purchase and payment….Money capital does not possess this capacity because it is capital, but because it is money. (112)”
This then produces certain fetishistic expressions, such as when money operates as wages (L-M-C); where at the level of appearance, it is an equal, monetary transaction for labour power. Yet, as Marx explored in Volume I, not only is this tautological (value being measures by value), but also that labour-power actually adds more value (surplus –value) to the commodity via production:
“This irrationality is rather overlooked. The irrationality consists in the fact that labour as the value-forming element cannot itself posses any value, and so a certain quantity of labour cannot have a value that is expressed in its price, in its equivalence with a certain definite quantity of money. We know, however, that wages are simply a disguised form, a form in which the price of a day’s labour-power, for example, presents itself as the price of the labour set in motion in the course of a day by this labour-power, so that the value produced by this labour-power in six hours’ labour, say, is expressed as the value of its twelve-hour functioning of labour. (113)”
More importantly, at the level of the total circuit, the money-form elides the other necessary components of its own transformations, appearing as M….M’:
“Since the mediating effect of its history is obliterated in the simply existence of this sum of money, and every trace of the specific difference which the various component parts of capital possess in the production process has vanished, the only remaining distinction is the crude, non-conceptual distinction between a ‘principal’….At the conclusion of its process the realized capital therefore appears as a sum of money, within which the distinction between principal and surplus expresses, in a naïve, non-conceptual manner, the capital relation. (129)”
Or later:
“The formula M-C…P…C’-M’, with the result M’=M+m, contains in its form a certain deception; it bears an illusory character that derives from the existence of the advanced and valorized value in its equivalent form, in money. What is emphasized is not the valorization of the value, but the money form of this process, the fact that the more value in the money form is finally withdrawn from the circulation sphere than was originally advanced to it…(141)”
These two paragraphs, I think, summarize the most important aspect of the chapter, that in M…M’-M…M’-M….M’ circuit, whereby valorized value is perpetually recapitalized (but only in the form of M, never M’), glosses over the necessary aspect of valorization in the production process (think of this in regard to the circuit of commodity capital; C’…C’).
Two things I wanted to throw out for discussion are:
1) Its interesting to take the notion of an ‘interruption’ that appears in these first few chapters. Here, P itself is the interruption, and yet it does seem to be the necessary ‘motor’ for valorization/re-capitalization. In Chapter Two,
2) On the same page as the quotation above (p. 141), this appearance (M….M’ with P as mere interruption) is located in the specific schools of earlier economic thought, namely the Monetary System and the Mercantile System. Although this is the translator’s note, the info from the Grundrisse on these economic schools (see footnote on 141) returns us to a question posed many times before: Are these discursive systems of political economy, or are they actual economic systems (state or otherwise) that operated within their terms? If political-economists are the sycophants of capital (an actual system and a its particular conceptual express), does Mercantilism relate to, or is the ideological effect of, a unique monetary system? In other words, money is not, of course, capitalism, thus was money operating as a means of purchase and sale in a different stage of capitalist development? Marx utilizes the Monetary and Mercantile System as an example of reproducing the fetishistic character of M-C-M’ (or more particularly, M…M’) – in other words, reproducing the appearances of M…M’. But does not mercantilism constitute an ‘actual’ stage of monetary development, rather than an incomplete comprehension of the circulation of capital in its fully ‘developed’ logical form? Is this not conflating early modes of monetary theory, in relation to their own respective historical time, with the higher abstraction of capitalism’s forms, here represented by the abstract logic of the circuit of money-capital? I can feel Andy rolling his eyes 5000 miles away. Sorry Andy.
CHAPTER TWO: THE CIRCUIT OF PRODUCTIVE CAPITAL
Here we move into the formula expressing the circuit of productive capital:
P….C’-M’-C….P
Which, as we saw earlier with M….M’, can be entered at specific moments, or broken down into other sub-sequences, such as:
1) Simple Reproduction:
M-C…P…C’ (C+c) – M’ (M+m) {in other words, P….P}
> where m continues into c (capitalist consumption or reserve fund)
> and C continues into the production process (C-L/mp)
a) these can themselves be isolated into their own trajectories, such as c – m – c (surplus value in commodity, realized in money form, consumed by capitalist) and C-M-C-L/mp… for the continuation into simple reproduction
2) Accumulation
P…C’-M’-C’-L/mp…P’...etc {in other words, P…P’}
> which entails that the earlier trajectory of c-m-c does not exist since surplus value is re-capitalized and not consumed/reserved.
It is within the particularity of this circuit that we can (logically) locate simple reproduction: c-m-c (consumption), which we could not do when following the circuit of money-capital. Yet, as I will argue below, and something Marx only discusses in passing in a later chapter, simple reproduction is historically impossible yet logically necessary for the explication of capitalist accumulation (-we return to the ‘pre-history’ of capitalism: not actual history, but the ghostly logic of its dynamics when not expanding in accumulation – which of course, is impossible by its own definition).
As we saw in the circuit of money-capital, the augmented P in the second circuit never appears as P’, but as P thus {money-capital: M-C…P…C’-M’. M-C…P} and {productive-capital: P…C’-M’…P}. What happens is that as P occupied the position of an “interruption” in M-C-M’, here C’-M’/ M-C operates as a durational interruption that is not emphasized in this circuit (and yet, still necessary – as all of these circuits necessarily assume the other). Marx writes:
“…here the entire circulation process of industrial capital, its whole movement within the circulation phase [M-C and C’-M’], merely forms an interruption, and hence a mediation, between the productive capital that opens the circuit as the first extreme and closes it in the same form as the last extreme, i.e. in the form of its new beginning. (144)”
At first I assumed that the productive would be the privileged circuit – since it indicates ‘production’ and thus the site in which value becomes valorized (surplus value), but interestingly, Marx argues that just as money appears automatically augmented in M…M’, the same is assumed in P….P’, as productive capital does not necessarily express the valorization in the process of production; only that prior surplus-value has been recapitalized (in other words, indicating a prior augmentation rather than augmentation itself). To work through how Marx presents this dilemma:
“This origin [i.e., the origin of augmented money, or M’] was obliterated in its form as money capital just beginning its circuit. It is just the same with P’, as soon as it functions as the point of departure for a new circuit. (p. 160)”
And farther down the page:
“In the circuit of P...the process of valorization is already complete as soon as the first stage, the production process, has taken place, and once it has passed through the second stage C’-M’ (the first of the circulation stages), capital value and surplus-value already exist as realized money capital, as M’, which in the first circuit appeared as the final extremity. (160)”
Lastly, and important to the internal (and self-referential) logic of this circuit:
“In P…P’, P’ does not express the fact that surplus-value is produced, but rather that the produced surplus-value is capitalized, i.e. that capital has been accumulated, and hence P’, as opposed to P, consists of the original capital value plus the value of the capital accumulated through its movement. (160)”
Thus P…P’ doesn't move us any closer to how value is valorized, only that P’ stands in for more components of the production process (mp/L) set into motion due to earlier augmentation/recapitalization.
What I think is important to note in this regard is that Marx is trying to show capital in its many forms, and that its own logic is determinative, not the forms themselves (even though necessary). Capital needs to be in the form of money-capital for specific processes (wages, means of payment, purchase, etc), in productive-capital (in order to express increased mp/L) and, as we will see in the next chapter, commodity-capital. The forms do not determine this process, but are subsets within a larger dynamic of capital accumulation (see 161).
Additionally, all these forms, while isolated for analytical purposes, and each containing their own special functions and silences (e.g. fetishism of money-form, etc), each presume the others – thus they never are isolated; they merely express earlier processes or anticipate later ones – a major theme that will be further theorized in chapter four. As we saw earlier, P’ (augmented productive-capital) is merely expressing augmented capital put back into the accumulation process.
A few remaining points that I wanted to emphasize for Chapter Two:
1) Temporal dimensions of these circuits:
- See Marx’s comments on the temporality of wages and past labour/future labour on 151-152 – I think this is where we move out of a singular circuit into the larger dynamics of social relations and processes. For instance, the subsets of the circuit M-C and C-M can be separated in time and space:
“The difference in time between the execution of C-M and that of M-C may be more or less considerable. Although, as the result of the act C-M, M represents past labour, M can represent for the act M-C the transformed form of commodities that are not yet present on the market at all, but will be there only in the future, since M-C does not need to take place until C has been produced afresh. (151-152)”
Further down, Marx discusses capitalist consumption as well as labour’s subsistence purchases in temporal terms (this is one of the most interesting passages of the chapter):
“this money [m] is not only the monetary form of the workers’ past labour, but also a draft on simultaneous or future labour that will only be realized, or is supposed to be realized, in the future. The worker may use it to buy a coat that will only be made one week later. This is in particular the case with the very large number of necessary means of subsistence that must be consumed almost immediately, the moment they are produced, if they are not to spoil. In the money with which his wage is paid, therefore, the worker receives the transformed form of his own future labour or that of other workers. With one part of his past labour the capitalist gives him a draft on his own future labour. It is his own simultaneous or future labour which forms the as yet non-existent reserve stock with which his past labour is paid for. (152)”
2) Whether or not simple reproduction can be historically understood or if this is for analytical purposes only.
- Marx stipulates that his analysis of simple reproduction rests upon certain assumptions, such as that “the entire surplus-value goes into the personal consumption of the capitalist. (145)” But in capitalism’s own definitional terms, how could this occur? I don’t think Marx is assuming this as a preparatory stage towards accumulation, but rather, as a logical hypothesis from which to then understand actual accumulation.
However, within Marx’s analysis we do learn of certain tendencies or forms based on the function of labour’s and capital’s consumption – one being mediated by wages, the other of the surplus-value produced in the production process. For instance, Marx emphasizes that, in the terms set out here (i.e. simple reproduction), crises that emerge concerning commodities in the market are not crises of demand, but of the “demand for payment” (156); in other words, a crisis within the capital circuit:
“At this point the crisis breaks out. It first becomes evident not in the direct reduction of consumer demand, the demand for individual consumption, but rather in a decline in the number of exchanges of capital for capital, in the reproduction process of capital. (157)”
Although this is in terms of simple reproduction, I wonder if this potential crisis can permeate expanded accumulation as well?
3) Expansion of Business, Latency, and Temporal Interruption
Marx begins by arguing that:
“If m is to serve as money capital in a second independent business alongside the first, it is clear that is can be invested in this only if it possess the minimal magnitude required for such business. (162)”
It is interesting to note that the “required for such business” brings us back to that open question of a ‘certain stage of development’, expressed earlier at the societal level, but here as internal to a realm of industry, market conditions, etc.
More interestingly, however, is that the accumulation of money (m, not consumed, but not directly put directly back into an immediate circuit) is latent in its preparation of expansion of business, and the spatio-temporal aspects of this process. Marx writes:
“Thus the accumulation of money, the formation of a hoard, appears here as process that temporarily accompanies an extension of the scale on which industrial capital operates. Temporarily, because as long as the hoard persists in its state as a hoard, it does not function as capital, does not participate in the valorization process, but remains a sum of money that grows only because money available to it without any effort on its part is cast into the same coffer. (163)”
This money, money that is “interrupted” (163), is understood as “latent money capital” since by the terms of the circuit, it can only be that if presupposing the investment into a new outlet. This is expressed as the “reserve fund” (164), which “serves as a reserve fund to cope with disturbances in the circuit. (165)”
The reason this last section drew my attention is that what could possibly be the contemporary reserve fund within a single firm? While the idea functions at a logical level rather than an actual exposition of how to run a firm here, its interesting to tie this in with the current freezing of credit markets – where the commercial paper market acts as a ‘general reserve fund’ and points to the financialization of the process of capital innovation, etc. Maybe there is a way to think this along with Schumpeter’s earlier writings on business cycles and credit.
CHAPTER THREE: THE CIRCUIT OF COMMODITY-CAPITAL
Marx begins by differentiating the first two forms with this last form of the commodity-capital circuit:
“C’ can therefore never open a circuit as mere C [as the others did, e.g., as M or P], as merely the commodity form of the capital value. As commodity value, it always has a dual aspect. From the point of view of use-value, it is the product of the function of P,…whose elements L and mp, emerging from circulation commodities, have only functioned to fashion this product. Secondly, from the point of view of value, it is the capital value P plus the surplus-value m produced in the function of P…It is only in the circuit of C’ itself that C=P= the capital value can and must separate itself from the portion of C’ in which surplus-value exists, from the surplus product in which the surplus-value is hidden… (169)”
Here, then, is the commodity-form analyzed in Volume One, set in motion and providing the analytical means through which to understand the perpetual valorization of value via its dialectic (use-value / exchange-value). More explicitly, Marx argues later:
“What differentiates the third form from the two earlier ones is that it is only in this circuit that the valorized capital value, and not the original capital value that has still to be valorized, appears as the starting-point of its own valorization. C’, as capital-relation, is here the point of departure, and thus has a determining effect on the whole circuit, in so far as this concludes , even in its first phase, both the circuit of the capital value and that of the surplus-value…(173)”
This is the “permanent condition for the reproduction process” (174), one that comprises the entire process of circulation and production within its internal transformations. Additionally, and most importantly, C’…C’:
“presupposes in its description the existence of another industrial capital in the form C (=L+mp)…it itself demands to be considered not only as the general form of the circuit, i.e. as a social form in which every individual industrial capital can be considered….hence not only as a form of motion common to all of the sum of individual capitals, i.e. of the total social capital of the capitalist class, a member in which the movement of any individual industrial capital simply appears as a partial one, intertwined with the others and conditioned by them. (177)”
In other words, in the circuit of C’…C’ we have the possibility of thinking of this process as a general process of interrelated capitals – a social form. It can be thought of both at the level of an individual capital circuit, but also expands outwards to enframe as well as necessarily assume, the generalized social process. This poses the question for Volume II:
“It is necessary to make clear how the metamorphoses of an individual capital are intertwined with those of other individual capitals, and with the part of the total product that is destined for individual consumption. (178)”
Marx closes this chapter with a brief mention of this circuits own, specific fetishistic effect – that it appears that valorization is merely the circulation of commodities (e.g. classical political economy). Which raises an interesting paradox – that this circuit captures, or at least opens into, the possibility of ‘thinking’ the social process in its totality, also replicates the fetish of political economy. Is this to say that political economy, at the level of its utilized ‘appearances’, posed the analysis of capitalism in a potentially correct, yet partial, form? Thus does that make Capital a ‘completion’ of political economy?
CHAPTER FOUR: THE THREE FIRGURES OF THE CIRCUIT
Marx puts these three circuits together and posits that, on one level, their internal differences are merely subjective (analytical?):
“the entire distinction [of the three circuits] presents itself as merely one of form, a merely subjective distinction that exists only for the observer. (181)”
But taken together, the dynamic of these three circuits is not the sum of their parts, but rather it is “the valorization of value as the determining purpose, the driving motive. (180)” By page 183 Marx develops a very interesting temporal form – succession and coexistence, wherein immediate succession (linear dynamic) is held together through a synchronic process of abstract coexistence (unity). For instance:
“All portions of the capital go through the circuit in succession, and, at any on time, they find themselves in various stages of it. Thus industrial capital in the continuity of its circuit is simultaneously in all of its stages, and in the various functional forms corresponding to them. (182)”
And…
“The real circuit of industrial capital in its continuity is therefore not only a unified process of circulation and production, but also a unity of all its three circuits. But it can only be such a unity in so far as each different part of the capital runs in succession through the successive phases of the circuit, can pass over from one phase and one functional form into the other; hence industrial capital, as the whole of these parts, exists simultaneously in its various phases and functions, and thus describes all three circuits at once. The succession [Nacheinander] of the various parts is here determined by their coexistence [Nebeneinander], i.e. by the way in which the capital is divided…(183)”
We have, then, entered the analytical level of the process as a whole (synchronically intertwined capitals and the multiplicity of their linear circuits). Marx spends the next few pages working out the implication of this notion of simultaneity in succession, which, he argues is not solely for analytical purposes, but constitutes a social dynamic:
“It is a movement, a circulatory process through different stages, which itself in turn includes three different forms of the circulatory process. Hence it can only be grasped as a movement, and not as a static thing. Those who consider the autonomization [Verselbstständigung] of value as a mere abstraction forget that the movement of industrial capital is this abstraction in action. (185)”
This also opens into possibilities of thinking systemic crisis simultaneously at the level of the individual circuit and its relation within the total process:
“Every delay in the succession brings the coexistence into disarray, every delay in one stage causes a greater or lesser delay in the entire circuit, not only that of the portion of the capital that is delayed, but also that of the entire individual capital. (183)”
Crisis, which was located at specific points of individual (logical) processes in Volume One (refer to Harvey’s last lecture) are now posed at the level of the entire process. In addition, Marx enters this total process through the question of value (assumed as expressed in its price) and the systemic effect of a fall or rise. (187-188) and the abstraction into money/world-money (189-190).
One aspect that I found very interesting was that even products produced in other modes of production enter into the production/circulation process of capitalism (i.e., as raw material, consumption items, etc), it does not matter to capital’s logic – i.e., capitalist forms obliterate this (external) difference:
“Whatever the origin of the commodities that go into the circulation process of industrial capitalism…whatever therefore may be the social form of the production process which these commodities derive – they confront industrial capital straight away in its form of commodity capital, they themselves having the form of commodity-dealing or merchant’s capital; and this by its very nature embraces commodities from all modes of production. (190)”
One final note on this chapter is that Marx (belatedly) states that reproduction (surplus being consumed by capitalist) is impossible both theoretically (“For capitalism is already essentially abolished once we assume that it is enjoyment that is the driving motive and not enrichment itself” 199) and technically (the necessity of a reserve fund to counteract market fluctuations).
CHAPTER FIVE: CIRCULATION TIME
If we accept that a circuit’s turnover time is “equal to the sum of its production time and its circulation time (200)”, then the problem of circulation time needs to be posed. Mutually exclusive to production time, Marx argues that:
“it is clear that the longer [capital’s] aliquot parts remain in the circulation sphere, the smaller must be the part that functions at any time in the production sphere. The expansion and contraction of the circulation time hence acts as a negative limit on the contraction or expansion of the production time, or of the scale on which a capital of a given magnitude can function. (203)”
From this comes political economy’s misrecognition of the circulation process as the site of valorization via circulation time. In other words, by posing the question as a related, yet mutually exclusive aspect in regards to valorization, Marx has both accounted for why political economy has only assumed the appearances of circulation, as well as the “actual” process of valorization in relation to circulation time. This does not mean that circulation is secondary – since Marx does concede the agents of circulation (merchants, or lets say, the sales department) are “just as necessary” to the total process (205).
The last paragraph of this chapter re-states the argument so-far in the terms of the commodity-form analysis of Volume One (the dialectic between use-value and exchange-value) – see 205-206.
CHAPTER SIX: THE COSTS OF CIRCULATION
This chapter is divided up between “pure circulation costs” (buying and selling time, book-keeping, replacement of money in circulation), “costs of storage” (stock formation and the commodity stock proper) and finally transportation costs.
Pure Circulation Costs:
Buying and Selling Time: The labour involved in the buying and selling of commodities (i.e., traders), this labour – which should be painfully obvious by this point – does not create any value, although they do provide the necessary function of realizing the value of a commodity. This is understood as a functional mediation between two forms of value (commodity form – money form). For Marx’s long exposition of the merchant’s function, see 208-211.
Book-Keeping: Firstly, Marx discusses the conditions in which book-keeping emerges:
“The movement of production, and particularly of valorization – in which commodities figure only as bearers of value, as the names of things whose ideal value-existence is set down in money of account – thus receives a symbolic reflection in the imagination. (211)”
Compared to selling/buying, or what Marx deems “unproductive expenditure of labour-time” (212), book-keeping becomes more necessary as commodity production becomes the general form since it is the “supervision and the ideal recapitulation of the process. (212)”
Money: Secondly Marx goes into a discussion of metallic money and that as a necessary form within the circulation of commodity production/circulation, a “part of the social wealth [e.g., metallic money]…has to be sacrificed to the circulation process. (214)” This line of reasoning could open into an interesting discussion of national-space and currency policies, but as it is posed here, there’s not much here to tease out.
Costs of Storage:
The key to this section is that while the previous aspects were merely phenomena of the circulation sphere (i.e., unproductive), costs of storage can be extensions of the production process and thus could be approached as anticipated within the surplus-product/surplus value. A huge theoretical lacunae arises here, since now we have two qualitatively different types of value-adding labour – one in production, and one an extension of production, but without the logical exegesis performed in Vol I. Anyhoo..here is what I understood from this section….
Stock Formation in General: Stock formation is merely the commodity-stock within the C-M and M-C circuits – and since the production circuit requires that a “mass of commodities (means of production) is constantly present on the market” this commodity stock is a necessary (and a re-occurring) condition of production – this, again, is a logical premise posed internal to the logic of the circuits rather than a historically understood point.
Furthermore, as Marx stipulated in the introduction of this section, costs of storage are anticipated in the value of commodities – in their necessary delay within the transformation from commodity value into money value (i.e. circulation, C-M):
“the value of commodities is conserved, or increased, only because the use-value, the product itself, is transferred under certain objective conditions that cost an outlay of capital, and subjected to operations in which additional labour works on the use-values. The calculation of the commodity value (the book-keeping for this process) and the buying and selling, on the contrary, do not operate on the use-value in which the commodity value exists. (216)”
And later….
“The use-value is not increased or raised; on the contrary, it declines. But its decline is restricted, and it itself is conserved. The value that is advanced and exists in the commodity is also not increased here. But new labour, both objectified and living, is added to it. (217)”
Marx then moves into a discussion of how the commodity stock has been misunderstood by Adam Smith and Lalor – see 217-220. This opens into spatio-temporal considerations of production and circulation, as well as national magnitude of social wealth (see 220) which I won’t get into. But what is important is that Marx has differentiated between the general commodity stock (and its three forms: productive stock, individual consumption fund and commodity stock) and the commodity stock proper. The general commodity stock of a society or nation is assumed to be locatable and understood in its three relative forms through history, or as a index of a social/historical form of production – i.e., how these are understood and measured give certain indices of spatio-temporal aspects of what went into the production of a specific commodity as well as its circulation within a larger space (or, in individual consumption, restricted space). Compare this with…..
The Commodity Stock Proper: Here, the difference is that:
“the commodity stock therefore grows with capitalist production. We have already seen that this is only a change of form for the stock, i.e. that the stock increases in commodity form because it decreases in the form of direct production or consumption stock. There is simply a changed form of the stock.” But as “capitalist production develops, the scale of production is determined to an ever less degree by the immediate demand for the product, and to an ever greater degree by the scale of the capital which the individual capitalist has at his disposal, by his capital’s drive for valorization and the need of his production process for continuity and extension. (221)”
I may be wrong, but it seems that the same analytical logic that we saw in Volume One, where by at a certain quantitative level we get a qualitatively different form (Hegel) is applied here as well – in the differentiation between the general commodity stock (and its three forms) and the commodity stock proper. In other words, with the magnitude, speed and spatial dispersion of production and commodity circulation that results from capitalist production, we now are supplied with a new category – the commodity stock proper.
But this is not Marx’s objective here – this is to discover to what extent the expenses accrued as “stocks are socially concentrated (222)” and as the interruption and spatio-temporal distanciation within the value transformation (C-M) goes back into the value of commodities.
He answers this with a general law on 225: “all circulation costs that arise simply form a change in form of the commodity cannot add any value to it.” He continues that they “are simply costs involved in realizing the value or transferring it from one form into another. The capital expended in these costs (including the labour it commands) belongs to the faux frais of capitalist production. The replacement of these costs must come from the surplus product, and from the standpoint of the capitalist class as a whole it forms a deduction of surplus-value or surplus product (226).
Ok, I feel I lost sight of the forest amongst the trees again, but what can you do. Now onto section two…….
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