Archive for the ‘Capital Volume 2, Part 2: The Turnover of Capital’ Category

I  The use of capitalised surplus-value as capital advanced

In the case of the capitalist A of the last chapter, excepting the first turnover period of her business, consumption is met out of the production of surplus-value; capitalist B has to wait for her surplus-value to be realised and hence has to recourse to her own funds not only for consumption but also, when the need for extra capital arises during production, to advance capital as well. The capital necessary to carry on production on a given scale, in effect part of capital advanced, may therefore come from the capital really originally advanced (B) of from capitalised surplus-value (A).

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1  The Annual Rate of Surplus-Value

Let us consider a circulating capital of £2,500,  4/5 of which, £2,000, is constant capital, and 1/5 , £500, variable capital. The turnover period is five weeks: four weeks working period + one week circulation period. Capital I is thus £2,000, £1,600 constant and £400 variable capital; capital II is £500, £400 constant and £100 variable capital. In each working week, £500 is laid out. In a year of 50 weeks, an annual product of 50  500 = £25,000 is produced. Capital I is turned over 50/4, i.e. 12 1/2 times; 12 1/2 x £2,000 = £25,000. Of this £25,000, 4/5 , £20,000, is constant capital, and 1/5 , £5,000, variable. The total capital of £2,500 turns over 25,000/2,500 = 10 times.

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The task of the next two chapters is to consider ‘the influence of circulation time on the valorisation of capital.’

I  Effect of Applying Additional Capital To Maintain Production during Circulation Period

First Example

If we assume:

  • a commodity capital that is the product of a working period of nine weeks;
  • that the value of the product be equal to the circulating capital (raw materials, wages and ancillary materials) advanced for its production, i.e. we disregard – abstract from – the value transferred from the wear and tear of the fixed capital and the surplus-value added;
  • that this value be £900;
  • and a circulation period (independently of why) of three weeks;

then, after nine weeks production time (equal to working time), during which the weekly outlay is £100, production is at a standstill until the completion of the turnover time, i.e., for the three weeks circulation time.

For production to be continuous, therefore, a new turnover period must begin in week 10. If the scale of production is to be maintained, an additional circulating capital, of £300, is necessary.

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The turnover time of capital is the sum of its production time and its circulation time. All the factors which differentiate the circulation periods of different capitals invested in different branches of industry so far considered (the distinction between fixed and circulating capital, variations in the working period, discrepancy between production time and working time) pertain to the former. We also need to take account of the effects on turnover time of capital of differences in the latter sphere.

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The time that capital is confined to the sphere of production and the time that capital actually exists in the production process are not equivalent terms: the former may be, and often actually is, longer than the latter. Here, rather than interruptions in the labour process itself, we are dealing with interruptions arising from the nature of the product and its production in which the product requires chemical, physical, etc. changes during which the labour process is suspended. One example (Marx gives more) would be the fermentation and maturation period necessary in the production of wine. The greater the difference between working time and production time, the greater the turnover period is extended. This phenomenon is particularly pronounced in the agricultural sector.

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Imagine two lines of business, thus:

cotton spinning

manufacture of locomotives

a definite quantity of product is turned out every day

labour process lasts, say, three months to produce a finished product

discrete product; work begins afresh each morning

continuous labour process, stretching over a large number of daily processes

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Ricardo identifies two sorts of capital: ‘capital that is to support labour’ (fixed capital), and ‘capital invested in tools, machinery, and buildings’ (circulating capital); respectively, instruments of labour and variable capital. The distinction is made on the basis not of the valorisation process but – as in the case of Smith – on that of circulation.

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