Capital Volume 2, Chapter 21: Accumulation and Reproduction on an Expanded Scale

Marx’s intentions in laying out the schemes of expanded reproduction of social capital which are the central topic of this chapter, for all the subsequent fascination they have attracted, are not immediately transparent. Is it the case that Marx wished to paint a ‘picture of an economy in perpetual balanced growth’, of a capitalist reproduction in perpetual equilibrium? Or does he want to portray the conditions for equilibrium in social reproduction so as to demonstrate their practical unattainability? Is Marx painting a picture of an inevitably crisis-free capitalism, or an inherently crisis-ridden one?

In good part, Marx’s inspiration for the reproduction schemes came from the impact made on him by Quesnay’s Tableau Économique, ‘incontestably the most brilliant [conception] for which political economy had up to then been responsible.’ In Marx’s words, what Quesnay wanted to portray was

the whole production process of capital as a process of reproduction, with circulation merely as the form of this reproductive process; and the circulation of money only as a phase in the circulation of capital; at the same time to include in this reproductive process the origin of revenue, the exchange between capital and revenue, the relation between reproductive consumption and final consumption; and to include in the circulation of capital the circulation between consumers and producers (in fact between capital and revenue); and finally to present the circulation between the two great divisions of productive labour – raw material production and manufacture – as phases of this reproductive process.

It does not require a too far stretch of the imagination to conceive of Marx wanting to achieve something similar. And, in so doing, prominent in his mind was his critique of Adam Smith’s ‘dogma’ that the value of commodities in its totality could be ‘resolved’ into ‘revenue’, that is profit and wages. If this were true, argued Marx, the total social product would be consumed (by capitalists and workers) and there would be no accumulation: ‘society would have to start each year de novo, without capital.’ But if it were not true, if a part of the product was not consumed, but accumulated, then the problem to be solved was the apparent imbalance between revenue and product, between what was consumed and what was produced. How, if what was spent as ‘revenue’ was necessarily less than the value of what had been produced, would that part of the product to be accumulated be sold?

How is it […] possible for the worker with his wages, the capitalist with his profit, the landowner with his rent, to buy commodities that contain not only one of these components [constant capital, variable capital and surplus-value] but all three, and how is it possible for the value sum of wages, profit and rent, i.e. the three sources of income taken together, which are to buy the commodities which are to enter into the total consumption of the recipients of these incomes, to contain a further additional value component on top of these three, i.e. constant capital? How can a value of four be bought with a value of three?

Marx’s expanded reproduction schemes show that capitalists are not only able to recover the constant capital component of the social product (so as to continue production on the same scale) but also to accumulate more of the social product as new capital (both constant and variable).

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Capital Volume 2, Chapter 20: Simple Reproduction. Part 3: Fixed Capital in the Reproduction Process

The Replacement of the Fixed Capital

I: 4,000_c + 1,000_v + 1,000_s

II: 2,000_c + 500_v + 500_s

which resolves into:

4,000I_c + 2,000II_c + 1,000I_v + 500II_v + 1,000I_s + 500II_s

= 6,000_c + 1,500_v + 1,500_s

= 9,000

We now have to consider a new difficulty. One part of the constant capital value, that which consists of instruments of labour, is transferred to the commodity product while these instruments continue to function as part of productive capital. We shall not be considering here those components of fixed capital whose life is shorter than a single (here, annual) production period, for if they need to be replaced during the production period, they can be treated in the same way as circulating capital.

The problem under consideration here is this:

[T]he part of the money received from the sale of commodities that represents the realised value component of the commodities, which is equal to the wear and tear of the fixed capital, is not transformed back again into the component of productive capital whose loss of value it replaces. It settles down alongside the productive capital and persists in its money form. This precipitation of money is repeated until the reproduction period during which the fixed element of the constant capital continues to function in the production process in its old natural form, and which consists of a greater or lesser number of years, has elapsed.

This disruption in the circulation of money supposes a disruption in reproduction itself.

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Capital Volume 2, Chapter 20: Simple Reproduction. Part 2: On Political Economy

Variable Capital and Surplus-value in the Two Departments

Evidently, under conditions of simple reproduction the total means of consumption produced in a single production period is equal in value to the variable capital reproduced and the surplus-value newly produced in the same period in both departments: the total value product (new value) is equal to the total value of means of consumption produced. On the assumptions here – II_{(c +v +s)} = 3,000 and s/v = 100 % – the ‘total social working day’ breaks down into necessary labour = 1,500_v and surplus labour = 1,500_s . The total value of means of consumption therefore = the total value the whole social working day produces during the production period = the value of total social variable capital plus total social surplus-value = total annual new product.

These equalities exist not because the total value of means of consumption has been produced in department II but because the constant value that reappears in department II is equal to the new value (variable capital plus surplus-value) produced in department I, i.e. because I_{(v + s)} = II_c .

Consequence: the product of department I, which breaks down into c + v + s, also breaks down into v + s when considered from the social point of view. But this ‘resolution’ of commodity value (Adam Smith’s ‘dogma’) only applies to that part of the total product consisting of means of consumption, and only applies in the sense that:

II_{(c + v + s)} = II_{(v + s)} + I_{(v + s)}

because, in other words,

II_c = I_{(v + s)}

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Capital Volume 2, Chapter 20: Simple Reproduction. Part 1: Simple Reproduction and the Exchange between the Two Departments of Production

This chapter, along with the one which follows, follows logically from the preceding analyses of this volume and of volume 1.

The object of analysis of volume 1 was the immediate process of production, the P  in M–C … P … C′–M′: ‘[t]he immediate production process of capital is its process of labour and valorisation, the result of this process being the commodity product’, i.e., volume 1 considered capitalist production abstracted from its total process or reproduction, specifically from its process of circulation. This has been the subject of volume 2: precisely the process of circulation of capital, or, more exactly, the place of this circulation in its reproduction. We began, in part 1, by tracing the cyclical movement of capital at the scale of the individual capital and its individual cyclical movement. Then, in part 2, we considered this cycle as a periodic one, and the implications of this periodicity. Now, since ‘the circuits [cycles] of individual capitals […] presuppose one another’, we are going to consider the movement of the total social capital: ‘[t]he movement of the social capital is made up of the totality of movements of these autonomous fractions, the turnovers of the individual capitals.’

Given the length of the chapter, and the fact that it was compiled from different manuscripts written over a period of some years, I have broken it down into three more easily digestible parts. This first part deals with the question of simple reproduction as such, and introduces the notion of the two departments of production and that of the mechanisms and conditions of exchange between them; in the second part, Marx explicitly directs his critical attention to the concepts of classical political economy in general and Adam Smith in particular; and in the third, Marx addresses the specific question of the reproduction of fixed capital (and consequently both changes the abstracting assumptions adopted during the rest of the chapter and more directly anticipates the subject matter of the following one, i.e. expanded reproduction). This first part incorporates the first six sections of the chapter; the second deals with sections seven, eight, nine, ten, twelve and thirteen; the third, dealing with the question of fixed capital, summarises section eleven.

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Capital Volume 2, Chapter 19: Former Presentations of the Subject

I  Purpose

Despite the title of the chapter, its contents almost exclusively refer to what Marx called ‘[Adam] Smith’s dogma’,  that is, the widely held classical political economic view that that the price of commodities, and hence that of the total social product, is entirely ‘resolved’ into ‘revenue’, i.e. into wages, profit and rent (a resolution which excludes constant capital). As Marx wrote to Engels in 1863 (when he was working on a draft of material that was to form a part of volume 2):

You know that according to Adam Smith, the ‘natural price’ or ‘necessary price’ is composed of wages, profit (interest), rent – and is thus entirely resolved into revenue. […]. Nearly all economists have accepted this from Smith […]. According to this, society would have to start afresh, without capital, every year.

Marx’s famous reproduction schemes, which appear in the following two chapters, are based in good part on his refutation of this ‘dogma’.

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Capital Volume 2, Chapter 18: Introduction

1  The Object of the Inquiry

Marx here summarises where we are in our analysis. ‘The immediate production process of capital is the process of labour and valorisation.’ The immediate process of production, the P  in M–C … P … C′–M′, was the object of analysis of volume 1: ‘the result of this process […] [is] the commodity product, and its determining motive the production of surplus-value.’

The process of reproduction of capital also involves the process of circulation of capital, or, more precisely, the place of this circulation in the reproduction of capital. This process, of the constant repetition of the cycle of capital, of its perpetual re-emergence as productive capital, is conditioned by its transformations in its cyclical movement; at the same time, the constant repetition of the production process is the condition for transformation of capital in the sphere of circulation.

At the same time, we have to take account of the fact that each individual capital forms a fraction of the total social capital. ‘The movement of the social capital is made up of the totality of movements of these autonomous fractions, the turnovers of the individual capitals.’

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