Simple Reproduction (Chap. 2.20.3)

III. Exchange between the Two Departments I(v + s) versus IIc

We begin with the great exchange between the two classes. (1,000v + 1,000s) I — these values consisting, in the hands of their producers, of means of production in their natural form, are exchanged for 2,000 IIc, for values consisting of articles of consumption in their bodily form. The capitalist class of II thereby reconverts its constant capital of 2,000 from the form of articles of consumption into that of means of production of articles of consumption, into a form in which it can once more function as a factor of the labour-process and for purposes of self-expansion of value as constant capital-value. On the other hand the equivalent of the labour-power of I (1,000v) and the surplus-value of the capitalists of I (1,000s) are realised thereby in articles of consumption; both of them are converted from their bodily form of means of production into a bodily form in which they can be consumed as revenue.

Now, this mutual exchange is accomplished by means of a circulation of money, which promotes it just as much as it renders its understanding difficult, but which is of decisive importance because the variable portion of capital must ever resume the form of money, as money-capital converting itself from the form of money into labour-power. The variable capital must be advanced in the form of money in all branches of production carried on at the entire periphery of society simultaneously alongside each other, regardless of whether they belong to category I or II. The capitalist buys the labour-power before it enters into the process of production, but pays for it only at stipulated times, after it has been expended in the production of use-values. He owns, together with the remainder of the value of the product, also that portion of it which is only an equivalent for the money expended in the payment of labour-power, that portion of the value of the product which represents variable capital. In this portion of value the labourer has already supplied the capitalist with the equivalent of his wages. But it is the reconversion of commodities into money, their sale, which restores to the capitalist his variable capital in the form of money-capital, which he may advance once more for the purchase of labour-power.

In department I, then, the aggregate capitalist has paid £1,000 (I say £ solely to indicate that it is value in the form of money), equal to 1,000v, to the labourers for the value of product I already existing as the v-portion, i.e., of the means of production created by them. With these £1,000 the labourers buy articles of consumption of the same value from capitalists II, thereby converting one half of the constant capital II into money; capitalists II, in their turn, buy with these £1,000 means of production, valued at 1,000, from capitalists I; thereby, as far as the latter are concerned, the variable capital-value equal to 1,000v, which, being part of their product, existed in the bodily form of means of production, is thus reconverted into money and can now function anew in the hands of capitalists I as money-capital, which is transformed into labour-power, hence into the most essential element of productive capital. In this way their variable capital flows back to them in the form of money, as a result of the realisation of some of their commodity-capital.

As for the money required to exchange the s-portion of commodity-capital I for the second half of constant capital II, it may be advanced in various ways. In reality this circulation embraces innumerable separate purchases and sales by the individual capitalists of both categories, the money coming in any event from these capitalists, since we have already accounted for the money put into circulation by the labourers. A capitalist of category II can buy, with the money-capital he has besides his productive capital, means of production from capitalists of category I, and, vice versa, a capitalist of category I can buy, with money-funds assigned for personal and not for capital expenditure, articles of consumption from capitalists of category II. A certain supply of money, to be used either for the advancement of capital or for the expenditure of revenue must under all circumstances be assumed to exist beside the productive capital in the hands of the capitalists, as we have shown above in parts I and II. Let us assume — the proportion is wholly immaterial for our purpose — that one half of the money is advanced by capitalists II in the purchase of means of production for the replacement of their constant capital, while the other half is spent by capitalists I for articles of consumption. In that case department II advances £500 for the purchase of means of production from department I, thereby replacing (inclusive of the above £1,000 coming from the labourers of department I) three-quarters of its constant capital in kind, with the £500 so obtained department I buys articles of consumption from II, thereby completing for one half of the s-portion of its commodity-capital the circulation c — m — c, and thus realising its product in the consumption-fund. By means of this second process the £500 return to the hands of II as money-capital existing beside its productive capital. On the other hand I expends money to the amount of £500 for the purchase of II’s articles of consumption in anticipation of the sale of that half of the s-portion of its commodity-capital which is still lying in store as product. With the same £500 II buys from I means of production, thereby replacing in kind its entire constant capital (1,000 + 500 + 500 = 2,000) while I realises its entire surplus-value in articles of consumption. On the whole, the entire exchange of commodities in the amount of £4,000 would be effected with a money-circulation of £2,000 which amount is attained only because the entire annual product is described as exchanged in bulk, in a few large lots. The important point here is that II has not only reconverted its constant capital reproduced in the form of articles of consumption, into the form of means of production, but has besides recovered the £500 which it had advanced to the circulation for the purchase of means of production; and that, similarly, I again possesses not only its variable capital, which it had reproduced in the form of means of production, in money-form, as money-capital once more directly convertible into labour-power, but also the £500 expended in the purchase of articles of consumption in anticipation of the sale of the s-portion of its capital. These £500 flow back to it not because of the expenditure incurred, but because of the subsequent sale of a part of its commodity-product incorporating one half of its surplus-value.

In both cases it is not only that the constant capital of II is reconverted from the form of a product into the bodily form of means of production, in which alone it can function as capital; and likewise it is not only that the variable portion of the capital of I is converted into its money-form, and the surplus-value portion of the means of production of I into its consumable form, the form in which it can be used as revenue. It is also that the £500 of money-capital, advanced by II in the purchase of means of production prior to selling the corresponding compensating portion of the value of its constant capital – existing in the form of means of consumption – flow back to II; and furthermore back to I flow the £500 which were expended anticipando by it for the purchase of articles of consumption. If the money advanced by II at the expense of the constant portion of its commodity-product, and by I at the expense of the surplus-value portion of its commodity-product, flows back to them, this is solely because the one class of capitalists throws £500 into circulation over and above the constant capital existing in the form of commodities in II, and the other class a like amount over and above the surplus-value existing in the form of commodities in I. In the last analysis the two departments have mutually paid one another in full by the exchange of equivalents in the shape of their respective commodities. The money thrown into circulation by them in excess of the values of their commodities, as a means of effecting the exchange of these commodities, returns to each one of them out of the circulation in proportion to the quota which each of the two had thrown into circulation. Neither has grown a farthing richer thereby. I possessed a constant capital of 2,000 in the form of articles of consumption plus 500 in money; now it possesses 2,000 in means of production plus 500 in money, the same as before; in the same way I possesses, as before, a surplus-value of 1,000 (consisting of commodities, means of production, now converted into a consumption-fund) plus 500 in money. The general conclusion is this: Of the money which the industrial capitalists throw into circulation to accomplish their own commodity circulation, whether at the expense of the constant part of the commodity-value or at the expense of the surplus-value existing in the commodities to the extent that it is laid out as revenue, as much returns into the hands of the respective capitalists as was advanced by them for the money-circulation.

As for the reconversion of the variable capital of class I into the form of money, this capital, after the capitalists of I invested it in wages, exists for them first in the form of commodities in which the labourers delivered it to them. They paid this capital in the form of money to these labourers as the price of their labour-power. To this extent the capitalists have paid for that constituent part of the value of their commodity-product which is equal to the variable capital expended in the form of money. They are, for this reason, the owners of this portion of the commodity-product as well. But that part of the working-class which is employed by them does not buy the means of production created by it; these labourers buy articles of consumption produced by II. Hence the variable capital advanced by the capitalists of I in the payment of labour-power does not return to them directly. It passes by means of purchases made by the labourers into the hands of the capitalist producers of the commodities necessary for and within the reach of working folks; in other words, it passes into the hands of capitalists II. And not until these expend the money in the purchase of means of production does it return by this circuitous route into the hands of capitalists I. It follows that, on the basis of simple reproduction, the sum of the values of v + s of the commodity-capital of I (and therefore a corresponding proportional part of the total commodity-product of I) must be equal to the constant capital IIc, which is likewise taken as a proportional part of the total commodity-product of department II; or I(v + s) = IIc.