The base of a triangle or the axis of an ellipse

From reading secondary literature on this last section, I learned that Marx wrote the following chapter on "former presentations of the subject" long before he wrote his specific criticisms of Smith and Ricardo in Part II. In fact, at this point in the text, one begins to receive the clear impression that this is an unfinished, unedited manuscript. This becomes more evident in the next two chapters. At any rate, Marx's writing here is clear and can be followed, but the specific importance of each line is uneven and sometimes barely there at all. At the risk of doing violence to the text, let me try to speculate on the actual theoretical significance at stake here.

He begins with Quesnay, who is chronologically situated before Smith but is really Marx's foil for Smith. Quesnay was wrong about agriculture as the source of value, but he was correct in his interpretation of production as the heart of the system and the way in which constant capital reappears in a renewed form in the commodity. Smith correctly expands value from agriculture to all realms of production, but he errs by not understanding the distinction between the pairs A) fixed and circulating capital versus B) constant and variable capital.

Rather than going into the details of the distinction (and I missed a large part of it since I did not read part II) let me give you a table from Harvey's Limits to Capital.



As far as I understand it, the misunderstanding is no more complex than: 1) the two binaries are overlapping and hence are confusing (perhaps due to the way Smith focuses upon the immediate physical properties of capitals in motion, unable to distinguish abstractions like constant and variable capital), and 2) by not seeing constant capital, Smith misses key analytical points.

Those key analytical points are: 1) by not seeing constant, Smith cannot see variable capital, by not seeing variable capital, Smith does not understand how exploitation occurs in the movement of:

M - C (CC + VC) - C' (CC + VC + SV) - M'

2) By not understanding constant capital, Smith cannot explain where the means of production come from, which means he does not understand the division of production into two departments (in the next chapter) and he does not understand that some departments of production will require more or less turnover time than others. In other words, Smith sees every individual capitalist as an isolated cycle of fixed and circulating capital generating revenue, which is then split three ways as wages, profits and rent (439).
However, Smith is aware of the failures of his equations; that is, he is aware that his equations cannot explain how capital (constant capital, investments) occurs. That is why "he has to smuggle in a fourth element by an indirect route, namely the element of capital." Marx then demonstrates that if Smith is going to insist that part of the "revenue" can be accounted for as capital, then Smith begs the question of where the value of that capital came from. For Marx, it is value that has been transferred from constant capital to the commodity.

On 444, Marx argues that Smith's fixed and circulating capital, described in terms of im/mobility, really just points to the two departments of production. Those that produce means of production (machines, gadgets, etc.) and those that produce commodities for immediate consumption (food, clothing). Because the latter circulate among consumers, Smith sees them as circulating capital. What he really should have been analyzing was the process in which value is transferred from department I to department II, that is, from Smith's fixed to Smith's circulating capital.

On 449, Marx points out a particularly vulgar part of Smith's calculus, when he argues that a commodity's original source of value is its division into revenues. I'm not sure exactly what Smith was arguing, but Marx's point is clear: Smith has inverted the historical process of production such that he first sees the finished product, the commodity, and retroactively constructs exchange-value from there. It is the ultimate economics of appearances.

On 451, Marx points out that even within Smith's own theories, the lacuna left by surplus-value emerging from variable capital is clearly detectable.

On 456, Marx shows another grave consequence of Smith's theory: by arguing that the workers' wages are paid out as revenue resulting from the sale of the commodity, he has collapsed the whole process of exploitation and rendered it invisible. Remember, the crux of Volume I is that a mystification occurs at the time of the sale of labour-power. That is, the commodity labour-power is sold at its exchange-value (the wage) in exchange for the use-value of labour-power (the ability to add surplus-value to the means of production). This site of mystification is where the worker gets paid and not at the time of sale of the commodity made by the worker. If Smith were correct, a jump in prices for a product would imply a jump in wages for the worker. But that is of course never the case.

Another conclusion Marx continually makes is that, according to Smith's formula, simple reproduction is the only possibility. If the output is equal to the inputs -- if revenue is only equal to the money paid by the capitalist -- then expanded reproduction is ruled out (457).

On 462, a crazy paragraph that argues that within a regime of value premised upon expended labour-power, a serf in feudal times produces value much in the same way as the wage worker. Wow, this is interesting. I'll have to think about this for my own research..."The substance of value is and remains nothing but expended labour-power — labour independent of the specific, useful character of this expenditure. A serf for instance expends his labour-power for six days, labours for six days, and the fact of this expenditure as such is not altered by the circumstance that he may be working three days for himself, on his own field, and three days for his lord, on the field of the latter."

"In this a commodity produced by a capitalist does not differ in any way from that produced by an independent labourer or by communities of working-people or by slaves."

Finally, on 464, Marx concludes that by not describing the commodity's components as different sections of capital, Smith has tried to create a transhistorical theory of value and production. In this way, Smith's serious error is that for him "the various factors of the labour process .... appear from the start in the character masks of the era of capitalist production." In other words, a bourgeoisie economist unable to think beyond the forms of appearance of capital.

Object of the inquiry

Chapter eighteen can easily be summarized as a perspective on where Marx has gone thus far in terms of looking at production capital from the standpoint of individual capital. A simultaneous movement is made in this last section: one from production towards accounting for circulation; and hence one from individual to total social capital.

He begins by stating that the "determining motive" of the production process is the production and valorization of surplus-value. "On top" of production, one must add circulation, and their combination forms the "overall circuit" that is "constantly repeated afresh at definite intervals" (427).

Circulation for Marx can be broken down into "1) The circuit of capital proper and 2) the circuit of the commodities which enter into individual consumption, consequently of the commodities for which the labourer expends his wages and the capitalist his surplus-value (or a part of it)." However, "the expenditure of this surplus-value and wages for commodities does not form a link in the circulation of capital, although at least the expenditure of wages is essential for this circulation" (428).

This is a tricky quote to unravel. My understanding is that Marx wants to ensure we understand that spending wages is a movement of M - C, not C - M, and so no value can be realized. Circulation can only entail the movement of C - M or C - P. That is, it includes the process of turning constant capital into a commodity and selling it, and it includes tracking the value attached to capital such as labor-power and its subsequent valorization. That is, circulation only counts for the things that remain in the capitalists hands. Once in the hands of the workers, capital becomes money, that is, nothing that can be self-valorized in the exchange for commodities.

Marx then summarizes the prior work up until now:

"In Book I the process of capitalist production was analysed as an individual act as well as a process of reproduction: the production of surplus-value and the production of capital itself...

"In the first part of this Book II, the various forms were considered which capital assumes its circular movement, and the various forms of this movement itself. The circulation time must now be added to the working times discussed in Book I....

"But in both the first and the second Parts it was always only a question of some individual capital, of the movement of some individualised part of social capital. However the circuits of the individual capitals intertwine, presuppose and necessitate one another, and form, precisely in this interlacing, the movement of the total social capital.

"We have now to study the process of circulation (which in its entirety is a form of the process of reproduction) of the individual capitals as components of the aggregate social capital, that is to say, the process of circulation of this aggregate social capital."

All the components must now be synthesized.

For the sake of their blue eyes

With these final two chapters in part one, I felt like Marx was really setting down the distinctions between the concerns of Volumes II and III, distinct from Volume I. By introducing circulation, Marx introduces two elements that, for simplicity's sake, were left suspended in his consideration of production in the first volume: time and the negotiation/struggle of selling goods. At the risk of getting ahead of myself, it seems to me that in the first volume, Marx's main goal is to enact a critique of the production sphere itself. You could call this a critique of exploitation, an explanation of his theory of value, an emphasis on production at the heart of capital economies. Whatever it is, however, it falls short of demonstrating how multiple individual capitals interact. When expanded to the level of total social capital, however, Marx's critique centers around the crisis-ridden character of capital. It seems to me that these chapters on circulation time and circulation costs are the return of the real, the concrete, in short, use-value. Because production and circulation do not, historically, run smoothly like in the models of individual capital sketched out in Volume I, all sorts of irregular interruptions can always occur, cascade and snowball into larger cyclical crises. For the reader unfamiliar with this larger theoretical trajectory, these two chapters must seem pretty boring. But from the standpoint of figuring out the categories of how to maximize valorization and then how individual capitalists are prone to errors, these chapters are important contributions to the overall flow of the argument.

Chapter Five in a few bullet points:

• (200): Production time includes both "the period of the labour process" as well as "periodic interruptions." Thus it can be broken down into: "1) the time during which they function as means of production, hence serve in the productive process; 2) the stops during which the process of production, and thus the functioning of the means of production embodied in it, are interrupted; 3) the time during which they are held in readiness as prerequisites of that process, hence already represent productive capital but have not yet entered into the process of production."

• (201): The latent state of production time is often due to the natural, material properties of the product: "corn that is sown, wine that ferments in the cellar." In other words, use-value.

• Interruptions are counted as a loss: "normal interruptions of the overall production process ... produce neither value nor surplus-value. Hence the drive towards night work."

• (202): A distinction between regular pauses (night time, weekends) and irregular interruptions (crises, embargoes). The former can still be counted towards a commodity's value. The latter adds no surplus-value.

• (203): The need for individual capitalists to employ merchants and stocks to minimize time spent on sales and circulation: "The more the metamorphoses of circulation of a certain capital are only ideal, i.e., the more the time of circulation is equal to zero, or approaches zero, the more does capital function, the more does its productivity and the self-expansion of its value increase. For instance, if a capitalist executes an order by the terms of which he receives payment on delivery of the product, and if this payment is made in his own means of production, the time of circulation approaches zero."

• (205): Interesting line that makes my head hurt: "There is a difference between C — M and M — C which has nothing to do with the difference in forms of commodities and money but arises from the capitalist character of production. Intrinsically both C — M and M — C are mere conversions of given values from one form into another. But C' — M' is at the same time a realisation of the surplus-value contained in C'. M — C however is not. Hence selling is more important than buying. Under normal conditions M — C is an act necessary for the self-expansion of the value expressed in M, but it is not a realisation of surplus-value; it is the introduction to its production, not an afterword."

• (206): Spoiling is the absolute limit of a commodity's value (the revenge of use-value).

• The need for markets and urban centers: to reduce selling time.

Chapter Six

• (208): An interesting analogy of labor to latent heat in chemistry. Labor produces potential value, which must still be realized in the sale. Doesn't this type of argumentation veer towards a "circulation is more important" than production type of thinking? But Marx has told us in the last chapter that in fact both are key. Nonetheless, a shift away from Volume I, where Marx wouldn't be caught dead talking about circulation on the same level of production.

• (209): The merchant enters as perhaps the first, delineated "nonproductive" worker in Marx's universe: "a man who sells his labour. He expends his labour-power and labour-time in the operations C — M and M — C. And he makes his living that way, just as another does by spinning or making pills. He performs a necessary function, because the process of reproduction itself include unproductive functions. He works as well as the next man, but intrinsically his labour creates neither value nor product." Later, Marx will refer to lawyers and doctors, too, in this category of nonproductive workers.

• (211): Great line comparing the function of the merchant to a machine: "It is as though one part of the product were transformed into a machine which buys and sells the rest of the product. This machine brings about a reduction of the product. It does not participate in the productive process, although it can diminish the labour-power, etc., spent on circulation. It constitutes merely a part of the costs of circulation."

• Next, Marx discusses bookkeeping as a necessary mental reflection of the entire circulation process. I'm not sure what Marx is suggesting here. It is an interesting excursion into the mind of his capitalists, as Marx otherwise seems loathe to speculate about what the inside of his characters' head looks like. Unlike a merchant, which has only a one-dimensional role in the economy, bookkeeping is necessary and social, underpining the function of total social capital (212). But hasn't Marx already made the case for why merchants are also necessary in large, sprawling economies? I just don't understand the distinction he wants to make between necessary and unnecessary unproductive labor.

Stock Formation

Have to admit, I loved this section. Not sure why.

• (214): In this key, beginning introduction, Marx has complicated things greatly. He tells us that while stock costs do not add use-value, they add value added to costs. Further, while keeping stocks does nothing from the social standpoint, it still adds value to the commodities of individual capitals. So here we have suggestions that commodities may be sold at values detached from their actual use-value. That is: a hammer may cost $2 because of how useful it is, but if you add the value of keeping it in stock, it could sell for $3.50. This also asserts the primacy of labor-time as the measure of value, as opposed to use-value.

• Marx seems to suggest a key difference between individual capital and total social capital. Where "from the social point of view" stock is just an "unproductive expenditure of labor," individual capitalists can still profit by charging more money for the hammer. Marx is suggesting there isn't more material wealth - more things - produced by stock, so there is less collective total social capital. Is he? That interpretation would see TSC as composed of material wealth, not value; of use-value, not exchange-value. That would deviate from previous understandings of TSC as nothing but the sums of value of individual capital. Hmm, maybe there is a tendency to see TSC as a drive towards producing material wealth and to see individual capitals as one of value alone.

• (215): The key concept and the contradiction of stock formation: because irregular supplies would hurt the ability of capitalists to realize value, keeping a smooth flow is paramount. For this reason, an unproductive activity is key to the realization of productive labor: "The quicker the sale is effected the more smoothly runs the process of reproduction. Delay in the form of conversion of C' — M' impedes the real exchange of matter which must take place in the circuit of capital, as well as its further functioning as productive capital. On the other hand, so far as M — C is concerned, the constant presence of commodities in the market, commodity-supply, appears as a condition of the flow of the process of reproduction and of the investment of new or additional capital."

• (218): A key footnote about cash crop economies suffering crises in the nineteenth century (hmm...).

• (217-221): Marx refutes Lalor's argument that with the development of capitalism, stocks declined. Over four pages, Marx elucidates how this is just an optical illusion that doesn't see how the quantity of stocks sitting in any one place has been reduced, while the speed, intensity and geographic scope of commodity circulation has skyrocketed such that the overall amounts of commodities in circulation have increased. They simply are no longer kept in the same simple commodity stock form (they are instead more likely to be in forms of productive capital or the individual consumption fund).

• A great many historical changes are implicated and quickly reviewed by Marx here, especially on pages 219 to 220: increased intensity of production (machinery); speed and cheapness of transfer (transportation and communication); regular flow of money in the face of irregular conversion of capital (the credit system); and the diversification of raw material production (cash crop economies in agrarian societies).

• (221): Marx suggests there is a shift from producing for consumption (supply and demand) towards one of simply "produce, dammit!" "With the development of capitalist production, the scale of production is determined less and less by the direct demand for the product and more and more by the amount of capital available in the hands of the individual capitalist, by the urge of self-expansion inherent in his capital and by the need of continuity and expansion of the process of production."

• With this shift, an inversion of priorities has taken place. With the emphasis on smooth flow of operations, merchants and capitalists' number one enemy was scarcity, so hoarding stocks was imperative for profit. With scarcity less of a threat, capitalists now focus upon newness, both in the sense of perishable commodities and new technology. Hoarding stock thus loses its appeal.

• (223): Signs of crisis begin to emerge again. One sign emerges in Marx's constant invocation of continual supplies as the imperative facing all capitalists. I kept thinking, why exactly is a constant supply so important? Is there something else besides the danger of selling out one's own product? I suppose that today, selling out one's product is not such a big danger. It happens all the time at the bakeries and stores here (in Tokyo) that replenish stocks from scratch daily. In an earlier time, I'm sure that the atmosphere of unregulated competition made such moments much more dire: "Constancy and continuity of the process of circulation, and therefore of the process of reproduction, which includes the process of circulation, are safeguarded only by the formation of such supplies." Anyway, the point is that there is an unpredictable encounter between what the capitalist has and what the consumer wants to buy. The model of equilibrium is already put into question.

• (224): The second dimension of crisis is, of course, overproduction. This arises in Marx's distinction between voluntary and involuntary stock. Involuntary indicates a capitalist has too many commodities because it just cannot find the consumers to take them off its hands. Uh-oh. And with the mystification of the credit system ("give me a loan on this car even though I don't have a job") and the general ambiguity in appearance between an intentional and unintentional stock ("no, see, these toys are going to sell any day now, just you wait"), overproduction crises can compound and multiply pretty quickly.

• (225): the three costs of stock formation are: "The costs of supply formation consist: 1) of a quantitative diminution of the mass of the products (for instance in the case of a flour supply; 2) of a deterioration of quality; 3) of the materialised and living labour required for the preservation of the supply."

The Transport Industry

• Here Marx concludes that transportation, like merchants, are a necessary loss to surplus-value that in the end helps capitalists realize more value out of their commodities. Interestingly, Marx delineates two dimensions of the transportation sector. On the one hand, it is part of production (construction of railroads, boats, etc.) and is also a wing of circulation (229). Obviously, this is a key section for future reference in thinking about the geographical implications of capital accumulation.

• To end this post, I thought I'd include this great line: "A house that is sold by A to B circulates as a commodity, but it does not get up and walk" (226).

Towards Accumulation: Chapters 18 and 19.

Chapter 18: Introduction to Part III

I want to move through these preliminary chapters of Part III in order to get to Marx’s discussion of Simple Reproduction and Accumulation (Ch. 20 and 21). Chapter 18 begins with a great summation of the various components of Marx’s study thus far – showing how the forms in Part One and the processes (turnovers) of Part Two point to a much larger social process – approached here via the concepts of social capital. Following Marx’s mode of analysis in Volume I, wherein the commodity opened into a much larger social process of capitalist production, here Marx writes that:

“Just as the metamorphosis of the individual commodity is but one term in the series of metamorphoses of the commodity world as a whole, of commodity circulation, so the metamorphosis of the individual capital, its turnover, is a single term in the circuit of the social capital. (427-428)”

The problem then becomes how to think this general social process of commodity production and circulation in a general social form. In this regard, Marx writes:

“the circuits of individual capitals are interlinked, they presuppose one another and condition one another, and it is precisely by being interlinked in this way that they constitute the movement of the total social capital. (429)”

Here, it almost seems as if Marx is saying the total social capital IS the sum of its individual parts, but as was noted multiple times before, the determinative factors are at the level of the social (socially necessary labour time, surplus-value being transcendent of an individual capital, etc.). This problem leads to a discussion of two points of the role of money in this interlinking of individual capitals: (1) provides the means in which each individual capital begins the process [appearing as a ‘prime mover’] and; (2) that this advanced money stands “in a different ratio to the productive capital that it sets in motion” (430) Regarding the first point, Marx makes an interesting point, one that brings us back to the question of logical explication and actually economic-description:

“Commodity production presupposes commodity circulation, and commodity circulation presupposes the representation of commodity in money, monetary circulation; the duplication of commodities into commodities and money is a law of the emergence of the product as a commodity. Capitalist commodity production, for its part, whether we consider it socially or individually, similarly presupposes capital in the money form, or money capital, both as the prime mover for each business when it first begins, and as a permanent driving force. Circulating capital, especially, presupposes the constantly repeated appearance, at short intervals, of the motor of money capital. (431)”

Now this obviously is a discussion of the internal logic of capital – thus not one of origins per se – though I think it can possibly be tied to our discussion of the problem of primitive accumulation at the end of Vol I. More importantly however, is that this accounts for the fetishization of money capital in political economy, wherein the effect of the process (augmented value) at the level of appearance (money), is taken as the prime mover. It is both the necessary means (capital advanced) and objective goal (profit) of the entire process.

Regarding the second point, that the advanced capital stands in a different ratio from the productive capital it set in motion, Marx time and time again reminds us that this process in no way is affected by the amount of money in circulation – in other words, money does not provide an ultimate limit (economically nor logically) to this process. The limit at the level of the individual capital is overcome, as we saw in Part II, by credit and joint-stock companies – which again open into a discussion of social capital determining the functioning of its constitutive individual processes. On this second point, see pp. 443-443.

Chapter 19: Former Presentations
Engels assembles here sections wherein Marx reviews how political economy has attempted to understand the general social process of capitalist accumulation. Once again, Marx begins by showing how Quesnay had correctly found the ‘source’ of accumulation within labour – albeit limited to agriculture, and how his terms (avances primitives and avances annuelles) being “fixed” and “circulating” capital in Smith. On a side note, Marx goes back and forth on Smith; both showing how he inadvertently pointed to essential processes of capitalist accumulation, but also reducing his work to simplistic – at one point exclaiming that the only advance effected by Smith’s translation of Quesnay’s terms was bringing in ‘capital.’

Rather than working through the extensive analysis of Smith’s understanding of accumulation, Marx’s critique seems to be that the three forms of ‘revenue’ in Smith: wages, profit and rent do not open into how accumulation can occur, and in this regard, Smith has to sneak in a fourth element – that of capital (see 439). To take one short example, Marx critiques Smith for overlooking that “if capital is to come in as revenue, then capital must previously have been spent. (440)” In his summary beginning on page 461 (concerning revenue and commodities), Marx shifts the discussion to his own analysis – arguing that the “substance of value is and remains nothing more than expended labour-power – labour independent of its particular useful character – and value production is nothing but the process of this expenditure. (462)”

Marx finishes by noting that Ricardo, Ramsay, Say, Proudhon, Storch, Sismondi, Mill and others were unable – for various reasons - to move beyond Smith’s conceptual system, and thus “Smith’s confusion” remains as “an article of orthodox belief in political economy. (467)” Now onto the Simple Reproduction and Accumulation…..

Combined and uneven development and Total Social Capital

I read Max's post on part one several months ago and remembered that he argued "all three circuits come together in the fourth chapter." And while that is true on some level -- analytically, at least -- I feel like the short chapter three on commodity capital is really the key to understanding the three circuits.

I want to do some theoretical speculation in this post. I want to avoid redundant summarization but I feel like chapter three is too important not to summarize at least a bit. If you're uninterested in summarization, skip to the next part.

1. Why is third figure, the circulation of commodity capital, distinct from figures I and II (money and productive capital)?

Marx is constantly differentiating figure III from I and II, and I started numbering all the different ways he does so. Ultimately, they are related but heuristically we can see perhaps four:

a) "First, in this case the total circulation with its two antithetical phases opens the circuit, while in the Form I the circulation is interrupted by the process of production and in Form II the total circulation with its two complementary phases appears merely as a means of effecting the process of reproduction and therefore constitutes the movement mediating between P ... P."

I take this to mean that C' is caught between P and M where P and M, in theory, could end at P and M without further reproduction.

b) "Secondly, when circuits I and II are repeated, even if the final points M' and P' form the starting-points of the renewed circuit, the form in which M' and P' were produced disappears."

This is pretty self-explanatory. But it requires a bit more of an understanding of why P and M are inward-looking circuits, which I'll try to explain a bit more below.

c) "As commodity-capital it is always two-fold. From the point of view of use-value it is the product, in the present case yarn, of the functioning of P whose elements L and MP, coming as commodities from the sphere of circulation, have functioned only as factors in the creation of this product. "

This is not a big one, but I guess you could think "M = x-value" and "P=u-value" and C combines both x and u-values.

d) "C is presupposed twice outside the circuit. The first time in the circuit C' — M' — C { L+MP . This C, so far as it consists of MP, is commodity in the hands of the seller; it is itself commodity-capital, so far as it is the product of a capitalist process of production; and even if it is not, it appears as commodity-capital in the hands of the merchant. The second time, in the second c of c — m — c, which must likewise be at hand as a commodity so that it can be bought."

This is not so much a logical distinction as it is a deeper theoretical implication emanating from the first two. So let's talk about that a bit.

2. Why is the circulation of commodity capital critical, and what is total social capital?

In theory, the circuits M and P could die with the second M or second P. That actually is too psychologizing; rather, one must emphasize that with M and P, the circulations are isolated from one another. As Marx says, P-P' implies that production is the "purpose of the process." M-M' is at least more honest in implying that valorization is the purpose, but it fails to take into account the whole circuit of P.

Think of it this way. If you only dealt with money, as most of us do, we could presume that zero production occurs, but logically we know it happens somewhere. But we just can't see it. If we only dealt in production, say as workers who never have a chance to personally spend the money we earn, we would know that commodity transactions occur, but we would have no idea how it happens.

In other words, M and P circuits represent standpoints in the total circuit that need to be connected, and C is the best way to connect them.

One really easy way to think about this is to look closely at the total process:

Figure I: M - C' - P - C'' - M'
Figure II: P - C' - M - C'' - P
Figure III: C' - M - C - P - C''

For every M or P, C appears three times! C is always in transition between M or P, always in anticipation to be valorized, always the mediator between two isolated standpoints. C does all the traveling.

I think we can argue that unlike M or P, C is outward looking beyond individual capital circuits in two ways.

A) Temporally. Every C is always in anticipation of future realization in money, and it always contains valorization from the past. It implies a history that is non-existent in P and M circuits.

B) Spatially. The quote I use to demonstrate point d) above speaks to this. From the standpoint of individual commodity capital, other commodity capitals must exist in order to enter as a capital to be bought (labor-power and means of production, where do these workers come from? who made these machines for them to use? These questions must be answered); and they must come in the form of commodities to be bought by the individual capitalist for its individual consumption. Who feeds workers, what keeps them reproducing?

This movement outwards thus implies a key concept which, I believe, symbolically moves Volume II beyond the abstract, individual focus of production: total social capital. What is total social capital?

But just because the circuit C' ... C' presupposes within its sphere the existence of other industrial capital in the form of C (equal to L + MP) — and MP comprises diverse other capitals, in our case for instance machinery, coal, oil, etc. — it clamours to be considered not only as the general form of the circuit, i.e., not only as a social form in which every single industrial capital (except when first invested) can be studied, hence not merely as a form of movement common to all individual industrial capitals, but simultaneously also as a form of movement of the sum of the individual capitals, consequently of the aggregate capital [translated also as "total social capital"] of the capitalist class, a movement in which that of each individual industrial capital appears as only a partial movement which intermingles with the other movements and is necessitated by them.

TSC is thus contrasted to particular, individual capitals. It is the regulatory framework within which the accumulation of capital occurs. What is the significance of this?

3. Combined and Uneven Development

To return to my previous post about Geoff Eley, and to which Max responded, I think the question about how slavery and non-wage labor fits into the histories of capitalism is best answered by distinguishing between individual and total social capital. Consider the Jairus Banaji article which argues that unfree labor has been, contra most Eurocentric and developmentalist accounts, part of the history of capital accumulation. The reason people say "capitalism as a system can't perform underneath a regime of slavery" stems from a conceptual conflation of individual with TSC:

Regarding the related issue of whether capital can exploit workers who are truly unfree (who represent bondage in Kant’s sense), the major problem with Brass’s way of handling this thesis, apart from his definition of unfree labour, is that the needs of individual and social capital are conflated throughout his argument. Brass conceives capitalism entirely from the standpoint of individual capital, ignoring the fact that the logic that regulates capitalist economy is, necessarily, that of the total social capital. Thus, the real issue of theory here is whether we can sensibly visualise the accumulation of capital being founded on unfree labour (in the strict sense just noted) at the level of the expansion of the total social capital. And the obvious res pons e is , no, since the mobility of labour is essential to the mechanism of capital at this level. (80)

Banaji could have written this paragraph more easily, so allow me to try to translate: Yes, of course slavery cannot function as the underlying framework for total social capital. Total social capital is still premised upon free (as in, free to move; not free to decide) labor. But given that total social capital, there is always the possibility of the entrance from the outside of commodities produced in non-free labor situations. Hence, slave-produced cotton on the world market in competition with cotton produced under superficially free conditions. Banaji says as much on the next page:

Thus the overworking of slaves in the Southern states of the American Union was, [Marx] tells us in Volume I, a question of the ‘production of surplus-value itself ’.58 In the Grundrisse, he refers to ‘[t]he fact that we now not only call the plantation owners in America capitalists, but that they are capitalists’ 59 and implies that these ‘anomalous’ forms of capitalist enterprise could exist because capitalism as a whole was based on free labour. (My interpretation of this is: the American slave owners are capitalists because they are part of the total social capital.) In Theories of Surplus Value, he writes that the ‘business in which slaves are used in conducted by capitalists’, though this is qualified by saying that here the capitalist mode of production ‘exists only in a formal sense’.60 Finally, in Volume III of Capital, he writes, ‘Where the capitalist conception prevails, as on the American plantations, this entire surplus-value is conceived as profit’,61 and, in Volume II, slaves are described as ‘fixed capital’. (81)

Now, this raises the conceptual question of how one defines what is TSC and what is merely one particular individual capital within the TSC. Doesn't this give rise to homogenization, precisely when the concept of TSC vs. individual capital seems to explain how a diversity of production regimes can co-exist? This is an important question.

One way I've resolved this in my head is to rely upon a statement from one of the champions of the concept of uneven and combined development, Ernest Mandel:

There is only one basic driving force which compels capital in general to step up capital accumulation, extraction of surplus value and exploitation of labour, and feverishly to look for profits, over and above average profit: this is competition.

What unites slave and free cotton is nothing but the competition between the two on the world market. To the extent that the average profit against which an individual capital must exceed is determined by the most advanced techniques, say industrial production, then all other modes of production are thus placed into the framework of industrial production as the regulator of total social capital. Once an industry becomes totally uncompetitive, then it withdraws or goes bankrupt, in either case it no longer interacts with the other individual capitals in the circulation of the commodity circuit.

Hints at the existence of uneven and combined development, i.e. the competition between commodities produced under radically different conditions, can be found in chapter four:

Within its process of circulation, in which industrial capital functions either as money or as commodities, the circuit of industrial capital, whether as money-capital or as commodity-capital, crosses the commodity circulation of the most diverse modes of social production, so far as they produce commodities. No matter whether commodities are the output of production based on slavery, of peasants (Chinese, Indian ryots). of communes (Dutch East Indies), of state enterprise (such as existed in former epochs of Russian history on the basis of serfdom) or of half-savage hunting tribes, etc. — as commodities and money they come face to face with the money and commodities in which the industrial capital presents itself and enter as much into its circuit as into that of the surplus-value borne in the commodity-capital, provided the surplus-value is spent as revenue; hence they enter in both branches of circulation of commodity-capital. The character of the process of production from which they originate is immaterial. They function as commodities in the market, and as commodities they enter into the circuit of industrial capital as well as into the circulation of the surplus-value incorporated in it. It is therefore the universal character of the origin of the commodities [also translated as: "characterized by the many-sided character of its origins], the existence of the market as world-market, which distinguishes the process of circulation of industrial capital.

Marx's point is here is not that they follow the same conditions of production but rather that they compete. They compete as commodity capital; hence, the unity of total social capital must be thought at the level of the commodity.

4. Other thoughts on Chapter Four.

Sorry this post is huge. There is not a lot to add from this chapter since I think the main points are covered in Chapter Three.

It is noteworthy that Marx is constantly talking about how the circulation and production processes are interrupted and not internally connected. At one point, Marx writes that the continuity of individual capitals is interrupted on three levels: their quantities, division of portions (I assume how they are invested, consumed and utilized differently) and temporal variations (seasonal work, etc.). Thus Marx is setting the stage for crisis theory, although he will not go into the details yet. He simply points out there is no reason for the market to work. Disequilibrium, not equilibrium, should be the presumed state of affairs.

Near the end, Marx also begs the question of where laborers come from, how the world market has actually worked outside of abstract models (the question of histories).

To cap off this post, I thought I would highlight this line:

As a matter of fact capitalist production is commodity production as the general form of production. But it is so and becomes so more and more in the course of its development only because labour itself appears here as a commodity, because the labourer sells his labour, that is, the function of his labour-power, and our assumption is that he sells it at its value, determined by its cost of reproduction. To the extent that labour becomes wage-labour, the producer becomes an industrial capitalist. For this reason capitalist production (and hence also commodity production) does not reach its full scope until the direct agricultural producer becomes a wage-labourer.

One could interpret this to say "capitalism is ONLY when wage-labor appears and the divorce between labor and the means of production are complete." But could one interpret the line "full scope" to suggest that there is such a thing as capitalist production as a less than full scope? The semiproletarianization of some in a system (a total social capital) determined by the real subsumption and proletarianization of others?

Vol II, Part Two in 10 Pages or Less. My Brain Hurts.

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.

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.:

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?