(Referred to in text of papers as SG)
There is nothing theoretical here to define. 'Products of labour and commodities' are expressions in everyday use in our society. The genera! characteristic of a commodity is that it cannot be used until it is bought. In our society commodities are used both as means of production (25) and means of personal consumption. Marx is not explicit that commodities in Chapter 1 are industrial products of labour, and this qualification is necessary to follow the presentation (i.e. commodities like labour power, works of art and land are excluded at this level of the analysis).
Productive activity in our society is that social activity which produces industrial commodities (1). Productive activity is a vital part of every form of society but in our society industrial production (including mining and agriculture) plays the key role. (Cf. CI 175).
Industrial commodities (1 and 2) stand in an exchange relation to one another mediated by money (17). The mediation by money however comes in at a later stage of the analysis. Within this exchange relation the owners of commodities give up the commodity which they own for another commoditv. 'A commodity cannot stand in an exchange relation to itself' (CI 49). We are not interested in the definite quantities here; the analysis starts from the fact of the exchange of products of labour considered in its qualitative social aspect. The exchange relation is the point of departure in everyday life for the determination of the central category of Marx's analysis; Value (8). The aim of the first part of the presentation is to develop the concept of money on the basis of an analysis of the practice of commodity exchange.
All the commodities which are in an exchange relation (3) with a given commodity are the exchange-values of that commodity. For our society, where commodity production is universal, this means that every other commodity is an exchange value for a given commodity.
Every commodity is produced by a very particular kind of labouring activity. The labours required to produce different commodities differ as concrete labours, e.g. as spinning differs from weaving.
Industrial commodities are produced by independent producers (capitalists (20) ) who undertake production on their own account. Therefore labours which produce commodities can differ not only as concrete labours (5) but also as private labours. Two labours which are considered the same as concrete labours may differ as private labours.
In the exchange relation (3) between industrial commodities one commodity is as good as another. Commodities which are the product of different concrete labours and different private labours are factually reduced in the practice of exchange to the products of abstract general labour. The exchange relation forms the social connexion between private labours factually reducing them to general labour and between concrete labours factually reducing them to abstract labour, i.e. in the practice of exchange both concrete labours and private labours are transformed into their respective opposites: abstract labour and general labour. In the theoretical explication of this factual reduction (by the social practice of exchange) the theoretical project of the capital-analysis can begin.
As a value a commodity is an embodiment of abstract general labour (7). Although a commodity has many exchange-values it has only one value. We can only talk of abstract general labour and therefore of value with reference to the exchange relation (3) of industrial commodities. Before exchange the value of a commodity is only anticipated; value can only be manifested in another commodity.
Once a commodity is treated as a value by virtue of exchange its use-value as a product of a determinate concrete labour can be realised in consumption. Before consumption the use-value is only anticipated. For a material commodity its use-value can be said to reside in its physical body, because it is the physical body which is consumed. But use-value and value exist only within the framework of historical social practices namely, consumption and exchange respectively. In commodities those social practices are objectified as properties (use-value and value) of non-human entities (commodities). Although commodities which are material objects provide the simplest case it should be noted that immaterial industrial commodities e.g. transport and making electricity can also be 'embodiments' of value. There is no theory of wants connected with the concept use-value; when Marx relates use-value to human wants he adds, 'the nature of such wants, whether, for instance they spring from the stomach or from fancy, makes no difference' (CI 43). Neither is use-value connected exclusively with personal consumption but includes the consumption of industrial commodities as means of production (25).
The substance of value is abstract general labour (7) and the forms of its . appearance are the various exchange-values (4) of the commodities which are in exchange relation (3) with a given commodity.
This pair of terms is used to talk about the commodity as a unity of use-value and value. Every commodity is both an object of utility and a depository of value and so has the form of a commodity 'only in so far as (it) has two forms, a physical or natural form, and a value-form' (CI 54).
The expanded expression of value expresses the exchange relation of a given commodity with respect to all other commodities. This is illustrated in the schema:
x commodity A is exchanged for:
y1 commodity B1
In the expanded expression of value (12) the commodity (standing on the left-hand side of the schema) whose value is expressed (i.e. whose exchange-values are listed on the right-hand side) is in the position of relative value-form.
In the expanded expression of value (12) the commodities (standing on the right-hand side of the schema) which express the value of the commodity on the left-hand side are in the position of equivalent Value-form. (Note that we make a clear distinction between 'expression of value' and 'value-form'. The former refers to the whole exchange relation whereas the latter refers to the part played by a commodity in this expression).
Where the value of all commodities is expressed in one commodity (which is thereby set apart from all the other commodities) we have the general expression of value. This is illustrated in the schema:
y1 commodity B1
is exchanged for x commodity A
The general expression of value has to be systematically conceived as a step towards the money expression of value (16) and not as a merely formalistic turning around of the expanded expression of value. The connexion between the expanded and general expressions of value is that one and the same exchange relation (3) is viewed from two complementary perspectives. What, in the exchange relation, is for x commodity A its value-expression in all other commodities is, for the world of commodities excepting commodity A, a value-expression in a single commodity. In the general expression of value all the commodities (excepting commodity A) have an expression of value common to all of them. At this point in the presentation we definitely leave the level of pure commodity exchange (cf. (3)) i.e. abstracting from its mediation by money. Using the categories which have been developed at the level of pure commodity exchange the concept of money can now be articulated in connection with and distinction from the concept of commodity.
Once having reached the level of presentation on which the mediation of commodity exchange by money can be dealt with, the general expression of value (15) becomes the money expression of value. It is part of everyday knowledge that commodities do not express their value directly in another commodity but indirectly. Commodities directly express their value in money:
y1 commodity B1
is sold for x money
In this expression of value the money is in the position of the General Equivalent Value-form and all the commodities are in the position of relative Value-Form. What was at the preceding level of presentation (cf. 15) only a difference in positions in an expression of value is now fixed in different social things: commodities and money. As things they can be looked at in isolation; a single commodity is linked to all other commodities by its price-form; Y commodity B is sold for x money which is a segment of the money expression of value. In the price-form the value of a commodity is divorced from the social practice of commodity exchange and is objectified in a single thing-money. (Terminological note: Whereas the expression of value relates to the totality of commodities the value-form relates to a separate commodity).
Once the concept of price-form (16) is systematically developed value can be found in two forms: the commodity-form and the money-form. We can now talk about value changing its forms.
Commodity exchange at the systematic level of money economy (as opposed to pure commodity exchange cf. 15) we call commodity circulation.
The mediation of commodity exchange by money can be illustrated by looking at two money expressions of value (16) in two subsequent phases of a process of commodity circulation:
The result being YI commodity BI - x money - Ym commodity Bm (for short C - M - C) where money serves as a means of circulation.
Capital is money advanced to make more money. The one who advances the money is the capitalist, who can equally well be an individual or a company. The capitalist here is only a character mask for the category capital. In the language of analysis, this everyday description of capital becomes a special form of circulation of value M - C - M1 where money is the starting point and end point of the circuit. This form of circulation of value is to be contrasted with C1 - M -C2, simple commodity circulation (cf. 18 & 19) where the net result of the circulation is an exchange of commodity C1 for commodity C2. In the circulation of capital the increase in value (valorisation 44) is the determining motive of the circulation whereas in simple commodity circulation it is an exchange of use-values. An individual capital is one sum of value undergoing the special form of circulation of capital. Total capital refers to the aggregate of the circuits of individual capitals.
The aim of capital (20) is to expand value and analysing this requires quantitative considerations, viz. M1 is a greater amount of money than M. Since money is value (cf. 16) and so represents abstract, general labour, we can say that M1 represents more abstract, general labour than M or, equivalently, that M1 is a greater magnitude of value than M (cf. 28). The difference in magnitude of value between M and M1 is called the surplus-value.
To discover the source of surplus-value of total capital the analysis assumes a form of capital where a production process, P (23), intervenes between C and M1 , thus making the formula (20) for the ground-form of capital: M - C … P ... C1 -M1 . The derivative forms of capital are those in which no production process intervenes and the surplus of M1 over M has to be explained by distribution. But there can only be a distribution of something that has already been created. The derivative-forms are dealt with in CIII. Marx also calls ground-form capital 'industrial capital'. We reserve this latter term for the level of analysis where the derivative-forms are developed.
We seek a process which, starting with C produces a commodity of C1 of greater value than C. Since abstract labour is the substance of value this process must incorporate additional labour in C which is thereby transformed into C1 i.e. a labour process. This process is a productive consumption of C for two reasons: 1. the consumption of C is the production of C1 and 2. a surplus-value (21) is produced. We do not make Marx's distinction between labour process and production process, where the former is given a general ahistorical characterisation (cf. CI 173f.). The term 'labour process' is used by us to emphasise that labour is performed during the process and the term 'production process' as the more general term.
What is the connexion between the productive consumption of C and the labour that transforms C into C1? Part of C serves as means of life (36) for the labourers who produce C. In exchange for means of life the labourers give their labour-power, i.e. their capacity for labour, which at this level becomes a commodity. We call labour-power a second-order commodity because it is only on the basis of the industrial commodities which serve as means of life that labour-power can be understood as a commodity.
Up to now we looked at the production of C1 out of C, with all commodities being industrial commodities. This view is modified now that labour-power has been introduced as a second-order commodity. C, in which labour-power has replaced the means of life is thereby changed into
the elements of production. Apart from labour-power (LP) C comprises raw materials and instruments of labour. These latter two are called the means of production (MP). Nature itself as a general condition of production is excluded here and is dealt with when the derivative-forms of capital are considered.
The immediate process of capitalist production is the activity of the labour process which transforms the commodities
into the commodities C1 of greater value (P in 22). The paradigm for a capitalist production process is the large-scale factory. However, any labour process (23) set up by a capitalist which produces an independent material or non-material commodity will do. 'Independent commodity' here is meant to exclude commercial and financial activities of capital which do not produce commodities in their own right but perform services for other capitals.
The duration of a labour process is the time during which labour-power is being expended for the production of a commodity, i.e. the time during which new value (35) is being created. The duration of the labour process which produces C1 includes the labour process which produced C.
The duration and intensity of the labour process (27) determines the magnitude of value of a commodity. The concept of magnitude of value of commodities is necessary to get to the bottom of the surplus-value riddle (37).
The second-order commodity labour-power (24) is bought by the capitalist by a wage which the labourer uses to buy industrial commodities. Those industrial commodities are individually consumed by the labourer and dependants. At this stage of the analysis the individual consumption of the capitalist is not taken into account. (Cf. 23 Labour Process as a Productive Consumption of Commodities.)
Capital sets up a production process on its own account and the labour undertaken in, the productive consumption of labour-power and means of production is the private concern of the capitalist. In contrast to the social exchange of commodities, the sphere of production is a sphere pf private labour.
The commodities MP and LP bought by the capitalist are his private property.
Since the commodities MP and LP are the capitalist's private property (31 (31) and their productive consumption is his private labour (30), the produced commodity C1 is also his private property and is appropriated by him.
The productive consumption of MP and LP (23) which comprises part of the labour which produces C1 and determines the magnitude of its value (28) must be the minimum necessary under the general social conditions of production of C1 i.e. only that labour which is socially necessary counts in the determination of the magnitude of value of C1 . (Cf. CI 183). If the intensity of labour is given, the magnitude of value of C1 depends entirely on the socially necessary labour-time.
The value of MP, which are productively consumed in producing C1 , is not lost but transferred to the product C1. This 'old value' reappears in C1 .
The labour incorporated in MP in its transformation of LP into C1 is newly added value. Thus the value of C1 is composed of two parts: the 'old value' of MP and the 'new value' of the newly incorporated labour.
The means of life are the industrial commodities necessary for the maintenance of the labourer and dependants under prevailing social conditions. The means of life are bought with the wages of the labourer which in turn are determined through class struggle (45). (Means of Life is a translation of Lebensmittel, which elsewhere has been translated as 'means of subsistence')
Surplus-value is the difference in the magnitude of value M and M1 , or what is the same thing, between MP and means of life on the one hand and C1 on the other. Since the value of MP is common to C and C1 the difference in value between C and C1 is explained by the difference in value between the means of life (36) and the new value (35), i.e. the labourer incorporates labour in producing C1 greater than the labour embodied in the means of life.
The necessary labour-time is the duration of that part of the labour process (23) during which the labourer adds new value equal to the value of the means of life (36).
Surplus labour-time is the duration of that part of the labour process (23) during which LP creates surplus-value (21 and 37),
Constant capital (c) is the 'old value' which is transferred to C1 (34). Constant capital is equal to the magnitude of value (28) of MP but is not the same as MP.
Variable capital (v) is the capital expended in LP. It is called variable capital because LP creates new value (35) which varies according to the duration of the labour process. The new value created is equal to v + s, where s is surplus-value.
The labour process (23) which capital sets up goes on from day to day. The working-day is the natural unit for measuring the duration of the labour-process. It is the time each day during which the labourers submit to the control of capital. (Shift-work can be treated as more than one working-day occurring on the same day.) At this level the assumption of presentation is that the working day is uniform.
The rate of surplus-value, s/v denotes the division of the working-day (42) into necessary labour-time (38) and surplus labour-time (39). Hence we can draw the diagram:
Valorisation (Verwertung) refers to the expansion of the value advanced through the production of surplus-value. The rate of surplus-value (43) is the rate of valorisation of variable capital (41). Valorisation is also used as a translation of Selbstverwertung which refers to the self-expansion of capital through its own movement and not according to the will of the capitalist.
The extraction of surplus-value from the labourers by capital is the basic class contradiction which underlies all forms of class struggle between wage-labour and capital. At this level of analysis the concept of class is very restricted: on the one hand to the class of industrial wage labourers and on the other to ground-form capital.
The rate of surplus-value (43) is a measure of the degree of exploitation of labour-power because it expresses the ratio of unpaid to 'paid' labour (47).
The surplus-labour time (39) of the labourers is unpaid labour, for which capital has outlaid nothing. The necessary labour-time (38) is paid for by variable capital (41) advanced by capital. The variable capital advanced however was originally expropriated as surplus-value.
Not only is capital 'money advanced to make more money' (cf. 20) but it is money advanced to make as much money as possible. In the language of analysis, this implies that capital seeks to maximise surplus-value production in its circuit. The circuit of capital can now be depicted as:
|M - C||<||MP
|... P ... C1 - M1,|
where P stands for the labour process in which C1 is produced.
There are two possibilities for increasing the amount of surplus-value produced in the working-day:
Absolute surplus-value is produced by a prolongation of the working-day, thereby increasing the surplus labour-time (cf. 49).
The productivity of labour is measured by the amount of labour embodied in the commodity produced. The higher the productivity of labour, the less labour embodied in each commodity. The amount of labour is determined by the duration and intensity at which labour-power is expended.
Relative surplus-value is produced by decreasing the necessary labour-time (38) of the working-day (42, 49). Given that the (real) wages of the labourers are not forced down, the necessary labour-time can only fall if the value of the means of life falls through an increase in productivity (51) in those industries which produce means of life. In those industries it can happen that necessary labour-time decreases and wages rise at the same time:
Real wages are wages in use-value terms, i.e. in terms of the quantity of use-values which the wage can buy. We emphasise that real wages are determined by class struggle and do not automatically adjust to the value of the means of life, as suggested by a formalistic reading of the determination of the 'value' of labour-power (25). Hence wages (money value paid to labourers) and real wages are distinct concepts. Marx's assumption of presentation that commodities exchange at their values means the following for labour-power: since labour-power has no 'value' (cf. Appendix: Family in Capital), the assumption of presentation must be that the price of labour-power is uniform and equal to the value of a given set of means of life i.e. the concept of class struggle at this stage of the analysis is limited to a struggle to maintain real wages.
By introducing a more efficient method of production a capitalist can reduce the amount of labour embodied in each commodity produced so reducing the individual value of each below the (social) value of the same commodity produced by the socially general method. While this more efficient method does not become socially general, the capitalist can reap an extra surplus-value by selling his commodities at, or a little below, their social value.
In the motives of the individual capitalist (which properly do not come into the analysis at this point) the production of relative surplus-value (52) is mediated by the attempt to improve productivity in order to appropriate extra surplus-value (54). So soon as the new method of production becomes general, however, this extra surplus-value disappears.
The increase in productivity of labour (51) generally requires an increase in the ratio of the mass of means of production to the mass of labour-power. In value terms, this means an increase in the ratio of constant (40) to variable capital (41). The generic name for these (strictly correlated) ratios is organic composition of capital.
The production of relative surplus-value (52 and 55) by the application of machinery displaces value creating labour-power relative to the dead labour objectified in machinery. Thus, while the rate of surplus-value may rise (43), the rate of valorisation (44) of the total capital may fall i.e. although in the ratio: p1 = s/(c+v), s may rise, the increase in c may offset this rise in s so that the net result is a decrease in p1, the rate of profit.
The production of relative-surplus-value (52 and 55) is directly related to the productivity of labour. The rate of profit (57) is inversely related to the productivity of labour. Hence there is a contradiction between relative surplus-value production and the rate of profit, mediated by the incessant drive of capital to increase productivity.
At this level of the analysis, consumption of the working-class is restricted to industrial commodities. For the capital-analysis, the consumption of products of the unpaid labour of wives and lovers is not taken into account (cf. Appendix: Family in Capital).
Methods of Relative Surplus-value Production, or ways of increasing the productivity of labour (51) so that the price of labour-power (24) is reduced, are three: co-operation (61), Division of Labour (62) and Application of Machinery (63).
"When numerous labourers work together side by side, whether in one and the same process, or in different but connected processes, they are said to co-operate, or work in co-operation." (CI 308). Co-operation is, conceptually, improving productivity of labour (51) by developing the subjective factor in the production process: labour-power.
Division of labour is a particular sort of co-operation (61) in which the production process is decomposed into various steps and each step assigned to a different group of labourers.
The application of machinery, historically, marks the characteristic development of capitalist production. It is the increase in productivity of labour (51) through the development of the objective factor in the production process; the instruments of labour.
Fully developed capitalist production involves the combined development of co-operation (61) (including division of labour (62)) and the application of machinery (63) in the production process.
Only when a number of labourers are employed by the capitalist and work together are their individual deviations from socially average labour ironed out and the character of the (combined) working-day as an expenditure of average social labour realised. Thus the everyday knowledge that labour for the capitalist is merely a social average labour only is possible in a society where individual differences in labour-power are compensated in productive practice.
Since it is capital which sets up a labour-process the social productiveness of co-operation (61) and the application of machinery (63) appear as powers immanent in capital itself. The labourer is merely inserted into an already-set-up labour-process of the capitalist.
The social division of labour refers to the division between different capitals, which may form separate branches of industry, of the production of a commodity e.g. the manufacture of cars is divided between engine, electrical, tyre, electro-chemical industries. Division of labour in detail, which is what Marx mainly deals with, refers to the decomposing of the production process within the factory into its components, and the assignment of those component tasks to separate groups of labourers (cf. 62).
The development of division of labour in detail (67), at the same time as being the result of intellectual labour which modifies the production process in the interests of greater productivity, reduces the part of the labourer in the process to the repetition of a simple mind-dulling task. The need for the individual skill of the labourer vanishes.
The division of labour requires that labourers be assigned to the various fragmentary tasks in a certain ratio, which is fixed by the technical requirements of the labour-process. This division creates a dependency of one group of workers on another, since production can only run smoothly when the different parts of the labour-process are in phase.
Historically, while the division of labour was based on handicrafts and the skill of individual work was important, the tricks of the trade were an important possession of the handicraft workers. With the development of the modern factory, it is the collective worker that is the inheritor of the tricks of the trade which no longer are monopolised by a trade.
The production of machinery (63) requires the application of principles of the natural sciences, especially mechanics, chemistry, electronics. The development and importance of the natural sciences in bourgeois society finds its fundamental support in the connection it has with relative surplus-value (52) production. Cf. Appendix 'Science in Capital'. From time to time a breakthrough in natural sciences leads to new technology, a dramatic increase in productivity and a revolution in value of commodities.
A machine 'consists of three essentially different parts: the motor mechanism, the transmitting mechanism, and finally the tool or working machine. The essential characteristic of a machine is that it replaces the labourer, who operates one tool, with a mechanism which operates many tools.'
The application of scientific theory to the construction of machines requires that machines be used to make components of machines with an accuracy not possible by traditional handicraft methods. Instead of ad hoc improvements to machines being made on the basis of experience in use, technology, as the practice of applying the natural sciences to the problems of production, becomes a specialised practice for scientific workers.
The development of the social division of labour calls forth the development of means of transport and communication to facilitate and co-ordinate production that is now broken up into many different industries widely dispersed around the globe.
These terms are, strictly speaking, terms to distinguish between the historically different relations of labour to capital. The formal subordination of labour to capital occurs with the assembling under the command of one capitalist a number of handicraft labourers under the one roof. The real subordination of labour to capital occurs when co-operation and application of machinery have developed to such an extent that the labourer is merely an unskilled appendage of a machine. Cf. 66 and 69; cf. CI 364.
In transforming the labourer into 'a mere appendage to an already existing material condition of production' (CI 364), the pace of the machinery, and the dependence of one group of workers on another brought about by division of labour, dictates the intensity and regularity of work and consequently ameliorates many of the problems which capital has with intransigent labourers.
Once discovered, a scientific result costs capital nothing.
Since the enormous machines used in modern industry are laden with value, the question arises; how can the use of these machines lead to a reduction in value of the commodity produced? This is possible because 1) the enormous productivity of machinery spreads its value over a very large mass of commodities; and 2) the construction of machines according to scientific principles and by machines lessens the wear and tear of machinery.
The value of machinery introduced must be less than the price of the labour-power it replaces. This implies that, for the application of machinery by capital, more than an increase in productivity be achieved i.e. that the increase in productivity achieved must be enough to offset the loss of surplus-labour time caused by displacing labour-power.
As it was treated in Volume I, the circuit of capital has the formula:
|M - C||<||MP
|... P ... C1 - M1,|
(cf. 48) which comprises three stages: 1) Money-capital, i.e. capital in the form of money that buys the elements of production; 2) Productive capital, i.e. capital in the form of a productive consumption of commodities purchased; and 3) Commodity-capital, i.e. capital in the form of industrial products produced by the production process, which are then sold, realising the surplus-value contained in them as money.
After these three stages the circuit is now back to its starting point, capital in the form of money.
The two stages of the circuit of capital apart from the stage of productive capital, P, comprise the circulation process of capital. It thus consists of two changes of form of value:
|M - C||<||MP
|and C1 - M1,|
In simple terms, these two changes of form are the object of investigation in Capital, Volume II.
Capital is not merely money advanced to make more money on a single occasion. Once money returns to the hands of the capitalist it is ready to begin another circuit. Capital is thus a circular movement of value in a process of valorisation (44) (Selbstverwertung).
By taking different starting points in the repeated circuit of capital (82) according to the three stages of the circuit (80) we get three forms of circuit of capital:
|I. Circuit of money-capital M - C||<||MP
|... P ... C1 - M1|
|II. Circuit of productive capital P … C1 - M1 .M - C||<||MP
|III. Circuit of commodity-capital C1 - M1 .M - C||<||MP
|... P ... C1|
In the circuit of money-capital (83), the production process P appears as an unavoidable interruption of the process of money-making represented by the formula M - C - M1 . This appearance disguises its opposite: the interruption of the process of surplus-value production P, by the process of circulation.
Capital as self-expanding value includes a comparison of the change in the magnitude of value brought about by its circuit. In particular the advanced value M is compared with the value containing surplus-value M1 .
The assumption that capital passes 'in bulk' from one stage to the next is made whilst analysing the different circuits. The assumption is dropped when this analysis has been done, and the continuity of capitalist production is conceived as the unity of the three circuits.
Throughout CII the assumption holds that all capital is ground-form capital (22), or as Marx calls it, industrial capital.
The circuit of capital (83) requires that value take on the functional forms of money-capital, productive capital and commodity-capital (80). Hence capital is fixated in these forms for varying lengths of time in the performance of its circuit.
The necessary 'fixation' of capital in its functional forms (88) imposes limitations on its circulation as capital; there is a contradiction between fixation and circulation. To unfold this contradiction is the central topic of CII (cf. 90, 104).
It is only in the stage of productive capital (80) that capital creates surplus-value and thereby expands itself (37). In the other two stages capital (necessarily) assumes a form which is not productive of surplus-value. Money-capital and commodity-capital insofar as they become functions of separate capitalists obtain an independent existence as unproductive capitals. This circumstance is not treated however until Volume III. The necessary fixation (88) of capital in unproductive forms is a limitation on the valorisation (44) of capital (89). The necessary transformations of form of value:
|M - C||<||MP
|and C1 - M1|
create no value, although requiring time and labour-power to perform.
The capitalist or circulation worker who carries out the transformations of form of capital M - C and C1 - M1 (90) performs the functions of circulation. These functions create no value and the labour performed is unproductive labour.
The materials consumed in performing the functions of circulation (91) are called means of circulation, to distinguish them from means of production. The means of circulation are for the most part made up of desks, chairs, office paraphernalia, offices and computers and constitute the outlay on book-keeping.
The extra outlay on labour-power and means of circulation (92) necessary to perform the functions of circulation (91) constitute the costs of circulation.
Continuity is the mark of capitalist production and this is achieved by a division of capital into a number of circuits. Thus capital exists simultaneously in production and circulation.
The duration of capital's stay in production is its time of production. The duration of its stay in circulation is its time of circulation. The total time during which it describes its circuit is therefore equal to the sum of its time of production and its time of circulation.' (CII 124).
In the case of the division of capital into three parts, where the time phases are of equal length (cf. paper 3), the three circuits are in phase and capital released in the commodity capital stage of one circuit is immediately re-employed. In other cases where the circuits are not in phase, the released money capital is not immediately re-employed but is latent for a time until it is required to keep production continuous: here there is a break in circulation of capital.
'A circuit performed by a capital and meant to be a periodical process, not an individual act, is called its turnover. The duration of this turnover is determined by the sum of its time of production and its time of circulation. This time total constitutes the time of turnover of the capital' (CII 153). The concept of turnover already has the notion of time so we can talk of the number of turnovers per year.
Looking at the manner of turnover we can distinguish between fixed and circulating capital. Fixed capital is that capital whose value is transferred to the product only bit by bit during repeated production processes. Circulating capital is composed of variable capital and that constant capital whose value is transferred in bulk to the product during one production process. It is important to emphasise that the distinction between fixed and circulating capital depends on the manner of circulation of value and not on the material character of the particular elements of capital.
These concepts arise from considering again the division of capital (94) with the distinction of fixed and circulating capital in mind. In the productive circuit (83) the original capital is outlaid on fixed and circulating capital. When the circulating capital enters the sphere of circulation, the fixed capital remains, in its natural form (11) with a slightly reduced value, within the sphere of production. An additional capital advanced for circulating capital is then needed to keep the fixed capital functioning.
The circulating constant capital passes its value in bulk to the product during the production process. According to whether the material enters materially into the product or not, it is called raw or auxiliary material respectively. It is worth noting that under auxiliary materials Marx lists oil etc. and the energy for the instruments of labour. We do not see any systematic relevance in these terms and they properly belong perhaps in Theories of Surplus-Value where the mistakes of bourgeois economists are dealt with. (Cf. The Ramsey Critique, CII 162).
Apart from the portion of its value which remains fixed in the sphere of production during its lifetime, the value of the wear and tear of fixed capital must be hoarded so that when it is finally extinguished, enough has been set aside to replace the fixed capital. Thus, fixed capital has a double existence: in the sphere of production and as a hoard of latent money-capital (96).
The rate of surplus-value, s1, given, a functioning variable capital V of a given magnitude results in a surplus-value in one year given by the formula; s = s1.V. (The functioning variable capital is the total variable capital employed in the course of one year). V, in turn, depends on the price of labour- power, w, the advanced variable capital, v, and its number of turnovers per year, n, hence,
V = n . v = n . w . m (where m is the number of labourers employed)
The annual rate of surplus-value coincides with the real rate of surplus-value in the case when turnover time is one year. In that case advanced capital (102) and functioning capital (102) are equal.
|Real rate of surplus-value||=||surplus-value produced per year
functioning variable capital
|Annual rate of surplus-value||=||surplus-value produced per year
advanced variable capital
We have already seen (102, 103) that the longer the turnover time of variable capital, the less surplus-value produced in one year. Apparently, then, capital itself has the property of creating more surplus-value by increasing its rate of turnover. But, a higher rate of turnover only results in a greater functioning variable capital i.e. a greater number of labourers exploited. Hence it is not two factors, turnover and exploitation of labour-power which determines the mass of surplus-value, but only one: the exploitation of labour-power by capital.
Production time (95) comprises two parts: the time when the means of production are functioning (the time of functioning) and the time when they are not (e.g., night time). That part of production time in which the means of production function in the process of production further splits into time during which human labour is incorporated (working-time) and the time when it is not ('fermentation time').
There are two ways in which the application of machinery decreases the turnover time of circulating capital: 1) The use of machinery and other technology can replace a natural process which is part of the production process by a quicker, artificial process that is under human control. In this way the gap between time of functioning (104) and production time (104) is reduced; 2) By increasing productivity so that it takes less time to produce the commodity i.e. by reducing the time of functioning.
The contradiction in the application of machinery with regard to the decreasing of turnover time of circulating capital (106) is that it requires a greater outlay on fixed capital and therefore tends to increase the turnover of the total capital and the total capital advanced (cf. 58).
Up to now there has been an implicit assumption of presentation that an individual capital can find on the market the elements of production (25) it needs to buy. Now that we come to consider the sum total of all these individual capitals, i.e. the aggregate social capital (20), this assumption must be relaxed and the way in which the aggregate capital produces its elements of production must be analysed. The conditions of reproduction mean that certain use-values must be produced in more or less definite quantities by aggregate capital i.e. capital consumed in annual production must be replaced out of the annual product. The complications of these conditions and their failure to be realised is another limitation on valorisation of capital.
1. Products are sold at their values.
2. There are no revolutions in value in the course of the year.
3. Production time of all capitals is one year.
4. Circulation time of all capitals is zero.
5. Costs of Circulation are nil.
6. All commodities are paid for in advance (no credit) cf. 87.
"The total product, and therefore the total production, of society may be divided into two departments:
I Means of production …
II Means of consumption " (CII 399).
Means of consumption include here both the individual consumption (29) of the working-class and the capitalist class. An assumption of presentation at this stage of the analysis is that there are no means of circulation (92).
In simple reproduction the assumption of presentation is that all the surplus-value produced in the course of the year is consumed by the capitalist as means of consumption. This means that the product of department I replaces the constant capital (old value cf. 34) consumed by aggregate capital in the course of the new and the product of department II represents value (35) (variable capital and surplus-value) created in the year, which is distributed for individual consumption of capitalists and workers. The introduction of the two departments enables a presentation which starts from the division between aggregate old value and aggregate new value, and our view is that this is the reason Marx gave the presentation in two steps: simple reproduction and then extended reproduction (116).
The products of department I and department II each embody old value and new value. To be reproduced the old value must be exchanged with products of department I and the new value must be exchanged for products of department II (cf. 111). The old value transferred to products in department I is replaced out of the product of department I. The new value created in department II is consumed by a circulation within department II. This leaves the new value created in department I, which is exchanged for the old value embodied in the products of department II, i.e. vI + sI (the new value of department I) is exchanged for cII (the old value of department II), or simply vI + sI = cII is the formula that governs exchange between departments in simple reproduction.
At the present stage of the analysis all exchanges of commodities are mediated by money (cf. 16). For the reproduction schema, the money needed to accomplish the various exchanges is assumed to exist in the hands of the capitalists of the two departments. The sum of money can be reduced by having several turnovers per year and by credit. (Cf. CII 504).
The exchange of vI for part of cII (cf. 112) is mediated by department I advancing its variable capital to workers of department I as wages. The workers' families buy means of life with these wages from department II. The capitalists of department II then buy means of production from department I, which at the same time returns the advanced variable capital to department I capitalists. Department II advances its variable capital to workers in department II as wages. These workers' families then buy means of life from department II which at the same time returns the advanced variable capital to department II capitalists.
The difference between fixed and circulating capital with regard to reproduction is that all circulating capital must be replaced in kind at the end of the year. The wear and tear of fixed capital must be accumulated in money from year to year so that the money is available to buy new fixed capital when it wears out. Some capitals will have to replace their consumed fixed capital whilst others will still be in the process of forming an accumulation fund for subsequent replacement. For department I, the still accumulating capitals sell more than they buy, and the capitals that are replacing fixed capital buy more than they sell, so that accounts balance within that department. For department II, the still accumulating capitals sell more to department I than they buy, whilst those capitals that are replacing fixed capital buy more from department I than they sell. So in this case too accounts balance. Here again use value shows its face as a limitation of valorisation (cf. CII 471).
Simple reproduction forms an integral part of extended reproduction (cf; CII 399), the only difference being the expenditure of surplus-value. Accumulation, i.e. the employment of a part of surplus-value as extra capital, however is fundamental to capitalist reproduction and hence the assumption of simple reproduction must be relaxed (cf. CII 507). In extended reproduction, part of surplus-value is consumed individually by the capitalists and part is accumulated.
The rate of accumulation, r, is the fraction of surplus-value accumulated by capital. The new value of department I which is individually consumed is now vI + acvI + (1 - r)sI and this is exchanged for the augmented constant capital of department II, cII + accII. i.e. vI + acvI + (1 - r)sI = cII +ac cII governs the exchange between departments in extended reproduction. (The principle of the exchange is the same as in simple reproduction: Department I exchanges means of production for means of consumption, produced in department II, 'ac vI' and 'ac cII' denote accumulated capital; '(1 - r)sI ' can be spelt out as: the part of surplus-value in department I remaining, after the accumulated surplus-value (ac vI + ac cI) has been subtracted.)
Capitalist production as a whole must result in producing its own elements of production, hence enabling social reproduction. But all the agents of circulation (workers in department I, workers in department II, capitalists in departments I and II) are independent of one another. The circulation process in which labour-power is sold and means of life bought, the circulation process in which commodity-capital is transformed into money-capital, and subsequently expended as variable capital, and the circulation process in 116 which commodity-capital of one natural form is exchanged against commodity-capital of another natural form (particularly that of used up constant capital against means of consumption) are all carried out independently and yet depend on each other. Capitalist reproduction is therefore a social practice without a social subject. 'So complicated as this process is, so many occasions for crisis it offers' (CII 500).
At the beginning of CIII a transformed form of surplus-value, average-profit, is derived, in the first place only with regard to industrial capital but subsequently the concept of average-profit is extended to cover commercial capital as well. On the basis of this fully-developed concept of average-profit the forms of appearance of surplus-value: profit of enterprise, interest and rent are developed. The systematic capital-analysis ends with an analysis of the revenue forms in which the difference between the constituent parts of new value is obscured. In the revenue forms the antagonism of class struggle is expressed as a fight over distribution of social wealth between equal bourgeois subjects.
At the most abstract level profit is the difference in value between the selling price of the produced commodities and the cost-price of the consumed elements of production. The cost-price, k = c + v. The next task of the presentation is to give some determinations of the selling-price, whilst relaxing the assumption of presentation that commodities are sold at their values.
Capitals within each sphere of production compete as producers of the same type of commodity over the determination of the ('social') value (51) of the commodity. The aggregate capitals of the different spheres of production compete for a share in the total social surplus-value.
Price of production is the selling price which includes a profit proportional to the relative size of the advanced capital with respect to the social aggregate capital. According to the varying organic compositions of capital in the various spheres of production, different amounts of surplus-value are produced (under the assumption of presentation that the rate of surplus-value is equal in all spheres of production) by capitals of the same size. The competition for profit induces capital to flow into the spheres of production with a higher rate of profit: s/c+v). Subsequently the competition of producers of the same type of commodity presses down the selling-price until no more than average-profit is made. By means of this two-fold competition (121), the social surplus-value tends to be evenly distributed over the different spheres of production so that each capital only makes average-profit.
The market-price of a commodity is the uniform selling price brought about by competition within one sphere of production. The competition between spheres of production causes the market-price to oscillate around the price of production (122).
Extra-profit 1: Because of the higher productivity of a particular capital within a sphere of production that makes average profit, a selling price equal to production price allows that capital to make better than average profit. (Its individual cost-price is below the average cost-price in that sphere.) (Production price may be above or below the value.)
Extra-profit 2 and 3: As a result of restricted entry of capital into a particular sphere of production, that sphere maintains the market price for its product above the price of production. Extra-profit 2 is appropriated when this market price is below the value of the product and Extra-profit 3 is appropriated when the market price is above the value of the product. In the latter case social surplus-value is drawn from other spheres to the given sphere (CIII 832f).
The assumption of presentation that all capital is ground-form capital (22) is replaced by the assumption of presentation that capital is either industrial capital, which produces an industrial commodity, or commercial capital, which is exclusively involved in the transformation of commodity-capital into money-capital and money-capital into productive capital. These two types of capital are called functioning capital to distinguish them from interest-bearing capital (128) and ground-rent bearing-capital (130).
The economic grounds for the existence of commercial capital is that it performs the work of circulation of ground-form capital quicker and at less cost. Once it has established itself as a recognised sphere of investment, commercial capital participates in the competition between spheres like industrial capital and draws average profit.
All spheres of investment (comprising spheres of production and spheres of commercial activity) compete within and between themselves to establish an average rate of profit. To distinguish between levels of presentation we suggest that the final form of average profit be called general profit, although Marx uses the terms 'rate of average profit' and 'general rate of profit' synonymously.
Money that is lent to functioning capitals (125) attracts a share of the average-profit earned by those capitals as interest. What is left of average-profit to the functioning capitals is called profit of enterprise.
Once interest as a derived form of surplus-value has been established, capital as capital becomes a higher-order commodity whose price is interest.
In the analysis of ground-rent nature as the general object of labour is given its systematic place in the presentation. Ground-rent is analysed as a transformed form of extra-profit arising from private ownership of a portion of the earth's surface.
Capitals which derive extra-profit 1 (124) due to advantageous characteristics of the land that they use (e.g. extraordinary fertility or favourable location) have to pass it on either wholly or partially to the landowner as differential ground-rent.
Capitals which derive extra-profit 2 (124) due to landed property acting as a restriction to the influx of capital into that sphere of production have to pass it on either wholly or partially to the landowner as absolute ground-rent.
Capitals which derive extra-profit 3 (124) due to landed property acting as a restriction to the influx of capital into that sphere of production have to pass it on either wholly or partially to the landowner as absolute ground-rent.
Land systematically becomes a commodity through the capitalisation of ground-rent. Investment in land is treated as just another sphere of investment of interest-bearing capital, ground-rent being that interest. The price of land therefore becomes dependent on the rate of interest and can be given by the formula:
||price of land
The basic wage-form is the generic name for all the everyday forms in which the transaction between labour and capital are lived. It is a more abstract way of talking about wages than the two fundamental forms: time-wages and piece-wages. (CI 508).
'On the surface of bourgeois society the wage of the labourer appears as the price of labour; a certain quantity of money that is paid for a certain quantity of labour.' (CI 501).
It is central to the wage-form that all parts of labour appear to be paid. Therefore there appears to be no time left in which unpaid surplus-labour could be done. The division of the working-day into necessary labour-time and surplus labour-time is not signified in the wage-form.
As the creation of value is not signified within the wage-form (cf. 135), it is applicable to workers in productive and unproductive spheres of capital alike. The unproductive labourers, being paid a wage comparable to the productive labourer and working a day of similar length, perform more labour than objectified in their means of life which can be bought with their wages (CII 135).
The time wage-form is the wage-form in which the labourer is paid an hourly-rate. This wage-form internalises within the labourer the capitalist's interest in a long working-day. The practical resolution of the contradiction is to limit the pace of work - and work long hours.
In the piece-wage wage-form the workers are paid a wage determined by the number of pieces they produce and a piece-rate of so much per piece. The piece-wage form separates the determination of the wage from the determination of the value of the commodity produced. The piece-rate has to be lowered when a new level of productivity has become socially general, and the contradiction of the piece-wage form manifests itself in a 'piece-rate crisis'.
In this wage-form labour appears to be a source of revenue which draws a wage to it. Both workers and entrepreneur receive a wage for the labour they perform. The contradictions of this form are that there seems no good reason for the entrepreneur to get a higher wage than the workers and that the entrepreneur can draw an income even after having delegated his labour of supervision to managers. It should be noted that at the level of this revenue-form, the assumption of presentation that labourers are paid a uniform and constant real wage is relaxed (cf. 53) and the determination of wages becomes a matter of competition and all-out class struggle in which up to now the skilled workers have done much better than women, blacks and other oppressed groups.
The three forms of property are the three sources of revenue, land, labour and capital which draw to themselves their respective revenues rent, wages and profit/interest. This trinity formula expresses the equality of bourgeois subjects as each contributing to and sharing in the new value of society. The contradictions in the trinity formula come out in a crisis, where many workers can no longer get a revenue for their labour.
The accumulation of capital is the extension of exploitation by increasing the mass of labour-power exploited. Although this is the kernel, accumulation can only happen with an additional outlay on constant capital. Capital is able to accumulate only by using the surplus-value already appropriated from the working class as additional capital. If wages are high then the application of machinery displaces labour-power and brings wages down. In Volume I, under the assumption of presentation of constant real wages, the application of machinery was dealt with under the heading of relative surplus-value production. Over-accumulation occurs when an additional outlay of money fails to create additional surplus-value. Hence capital accumulation is contradictory. On the one hand, there is the drive by capital to exploit as much labour-power as possible, to maximise variable capital. On the other, capital must periodically throw labour-power idle to force its price down.
Everyday consciousness is the form in which people in bourgeois society signify their everyday life. Everyday knowledge (cf. Introduction) is therefore ideological in that it is a consequence of the practices in bourgeois society and, at the same time, it is the starting point for showing the origins of ideology in deeper social relations. Elements of everyday knowledge can be wrapped up in different ideological forms e.g. beliefs, ideals etc. The capital-analysis only deals with certain of the everyday forms of economic activity.
The systematic analysis attempts to reproduce the categories of normal everyday life in bourgeois society i.e. the ideological forms of the normal functioning of the CMP. However, there is also everyday knowledge of abnormal times provided by experiences of open struggles when, for a time, normal bourgeois life is interrupted. These experiences are not to be systematically accounted for, but point the way forward for possibilities of living in a different way.
The furthering of the project of a systematic theory of the bourgeois epoch devolves on systematically taking account of ideological forms related to the sphere of competition, which constitutes the complementary side of the analysis of economic activity, on the one hand, and other forms related to the spheres of state and private life, on the other (cf. 143 and Introduction).