Tuesday, March 22, 2011
Karl Marx: Capital Volume II
The “circuit of money capital” follows the formula: M-C…P…C’-M’. Money is transformed into commodities, which, during the production process, are productively consumed to create new commodities that are exchanged for money. The creation of surplus-value during production makes the final M’ greater than the original M advanced. In volume I, Marx studied the middle stage of production, P, so in this volume he turns to the first and third stages, M-C and C’-M’. In M-C, the original money capital is transformed into two kinds of commodities: labor-power, L, and means of production, mp. When money capital has been transformed in this way into L + mp, it can now function as “productive capital,” P, which is capable of breeding surplus-value. In this seemingly abstract formula, the fact that L and mp are separate commodities reflects the historical separation of workers from the means of production. At this point there is “an interruption” in the circulation of capital indicated by the dots in M-C…P. “By the transformation of money capital into productive capital, the capital value has received a natural form in which it cannot circulate any further, but has to go into consumption, that is into productive consumption. The use of labor-power, labor, can be realized only in the labor process. The capitalist cannot sell the worker again as a commodity, for he is not his slave, and the capitalist has bought nothing more than the utilization of his labor-power for a certain time.” Rather than exchanging them, productive capital “consumes its own components,” exploiting labor so as to produce commodities that are “impregnated with surplus-value.” Productive capital has now become commodity capital, C’, a “bearer of the valorized capital.” But before the circuit of money capital is complete, C’ must first “fully undergo the metamorphosis C’-M’,” so that capital returns to its money form and is ready to once again function as the starting point for a fresh round of valorization. M-M’ thus “expresses the capital-relation,” the breeding of value from value. “The two forms that the capital value assumes within its circulation stages are those of money capital and commodity capital; the form pertaining to the production stage is that of productive capital. The capital that assumes these forms in the course of the total circuit, discards them again and fulfils in each of them its appropriate function, is industrial capital—industrial here in the sense that it encompasses every branch of production that is pursued on a capitalist basis.” “The circuit of capital proceeds normally only as long as its various phases pass into each other without delay. If capital comes to a standstill in the first phase, M-C, money capital forms into a hoard; if this happens in the production phase, the means of production cease to function, and labor-power remains unoccupied; if in the last phase, C’-M’, unsaleable stocks of commodities obstruct the flow of circulation.” In the circuit of money capital, M-M’, “it is the exchange-value, not the use-value, that is the decisive inherent purpose of the movement. . . . The production process appears simply as an unavoidable middle term, a necessary evil for the purpose of money-making. (This explains why all nations characterized by the capitalist mode of production are periodically seized by fits of giddiness in which they try to accomplish the money-making without the mediation of the production process.).” Money capital, M, is not the only starting point, so Marx then turns to the circuit of productive capital and the circuit of commodity capital. The circuit of productive capital follows the formula P…C’-M’-C…P. In P-P, productive capital is “reproduced,” allowing production to continue. Although the formulas for money capital and productive capital are similar, the different starting and ending points create important contrasts between the two circuits. “[W]hile in the first form, M…M’, the production process, the function of P, interrupts the circulation of money capital and appears only as a mediator between its two phases M-C and C’-M’, here the entire circulation process of industrial capital, its whole movement within the circulation phase, merely forms an interruption, and hence a mediation, between the productive capital that opens the circuit as the first extreme and closes it in the same form as the last extreme.” P-P is simply the reproduction of production at the same scale. But as the first volume demonstrated, the individual capitalist, in order to survive, must enlarge the scale of production, so the circuit actually must take the form P-P’, so that in each repetition of the circuit the value of productive capital is “augmented.” The circuit of commodity capital follows the formula C’-M’-C…P…C’. In the previous two circuits, an increase of value is the end point (M’, P’), but the circuit of commodity capital begins with C’, commodities that are already the bearers of surplus-value. “In this circuit, C’ exists as the point of departure, the point of transit, and the conclusion of the movement.” The circuit C’-C’ implies the existence of other commodity capital that is drawn into the circuit, and therefore should be considered a “social form.” Having examined the three forms of the circulation of capital independently, Marx draws some comparisons. He claims, “not only does every particular circuit (implicitly) presuppose the others, but also that the repetition of the circuit in one form includes the motions which have to take place in the other forms of the circuit. Thus, the entire distinction presents itself as merely one of form, a merely subjective distinction that exists only for the observer.” Capital continuously reproduces itself and undergoes a “metamorphosis” in its form. “The circuit of capital is a constant process of interruption; one stage is left behind, the next stage embarked upon; one form is cast aside, and the capital exists in another; each of these stages not only conditions the other, but at the same time excludes it. But continuity is the characteristic feature of capitalist production, and is required by its technical basis, even if it is not always completely attainable.” “Capital, as self-valorizing value, does not just comprise class relations, a definite social character that depends on the existence of labor as wage-labor. It is a movement, a circulatory process through different stages, which itself in turn includes three different forms of the circulatory process. Hence, it can only be grasped as a movement, and not as a static thing.” The time it takes for capital to complete its circuit can be divided into two parts: production time and circulation time, which are “mutually exclusive. During its circulation time, capital does not function as productive capital, and therefore produces neither commodities nor surplus-value.” Therefore, the less time capital spends in circulation, the more time it is available in the sphere of production and capable of generating surplus-value. As a result, there is great pressure to reduce circulation time to an absolute minimum. This pressure is increased by the fact that many commodities lose their value if they are not quickly exchanged and used. Nonetheless, “Circulation is just as necessary for commodity production as is production itself, and thus agents of circulation are just as necessary as agents of production.” A great deal of circulation time is spent on buying and selling. Although necessary for the conversion or realization of value, “the time taken up with buying and selling creates no value.” The labor required for buying or selling is “unproductive,” a necessary cost in the valorization process. The labor-power and constant capital needed for storing commodities are also necessary but unproductive “expenses.” Transportation, however, is necessary for most commodities to be used, and therefore can be considered a part of the production process that contributes to the value of the commodities. The sum of production time and circulation time is the length of capital’s “turnover,” of one interval of capital’s cycle. The turnover of capital is complicated by the division of constant capital into two forms: circulating capital and fixed capital. Circulating capital includes those means of production that are immediately consumed in the production process and therefore transfer their value to the commodities produced during each cycle. Fixed capital includes those means of production, such as factories or machinery, that are purchased up front but not productively consumed all at once. Instead, they slowly transfer their value to the commodities over a number of capital cycles. The confinement of large sums of capital as fixed capital for extended periods of time contributes to the formation of business cycles, a specific kind of periodicity characterized by “successive periods of stagnation, moderate activity, over-excitement, and crisis.” So far, Marx has examined the circuits of capital from the standpoint of the individual capital. “But each individual capital forms only 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. 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.” It is necessary to now go beyond examining the reproduction of individual capitals and consider the reproduction of the social capital considered in its entirety. “[S]ociety’s total product” can be divided into two “departments.” Department I consists of “Means of production: commodities that possess a form in which they either have to enter productive consumption, or at least can enter this.” Department II consists of “Means of consumption: commodities that possess a form in which they enter the individual consumption of the capitalist and working classes.” “In each of these departments, all the various branches of production belonging to it form a single great branch of production, one of these being that of means of production, the other that of means of consumption.” An individual capital is free to produce any commodity that has a use-value, and it matters little to the individual capital whether this commodity serves as a means of production or a means of consumption. But in order for the social capital as a whole to reproduce itself or to expand and accumulate, there must be certain proportionalities and growth rates in the two departments. These “reproduction schema” have been the source of no end of disagreement, but, as Mandel points out in his introduction, they not only prove that the reproduction and expansion of the capitalist system is at least theoretically possible, but also underscore the extremely tenuous stability of that system, which continuously risks slight disproportions growing into full blown crises.