The Turnover of Variable Capital (Chap. 2.16.3)

III. The Turnover of the Variable Capital from the Social Point of View

Let us look at this matter for a moment from the point of view of society. Let the wages of one labourer be £1 per week, the working-day 10 hours. In case of A as well as B 100 labourers are employed during a year (£100 for 100 labourers per week, or £500 for 5 weeks, or £5,000 for 50 weeks), and each one of them works 60 hours per week of 6 days. So 100 labourers work 6,000 hours per week and 300,000 hours in 50 weeks. This labour-power is taken hold of by A and B and therefore cannot be expended by society for anything else. To this extent the matter is the same socially with both A and B. Furthermore: In the cases of both A and B the 100 labourers employed by either side receive a yearly wage of £5,000 (or, together for the 200 labourers, £10,000) and withdraw from society means of subsistence to that amount. So far the matter is therefore socially the same in the case of both A and B. Since the labourers in either case are paid by the week, they weekly withdraw their means of subsistence from society and, in either case, throw a weekly equivalent in money into circulation. But here the difference begins.

First. The money which the A labourer throws into circulation is not only, as it is for the B labourer, the money-form of the value of his labour-power (in fact a means of payment for labour already performed); it is, counting from the second turnover period after the opening of the business, the money-form of his own value (equal to the price of the labour-power plus the surplus-value) created during the first period of turnover, by which his labour is paid during the second period of turnover. This is not the case with the B labourer. As far as the latter is concerned, the money is here, true enough, a medium of payment for work already done by him, but this work done is not paid for with the value which it itself produced and which was turned into money (not with the money-form of the value of the labour itself has produced). This cannot be done until the beginning of the second year, when the B labourer is paid with the value produced by him in the preceding year and turned into money.

The shorter the period of turnover of capital — the shorter therefore the intervals at which it is reproduced throughout the year — the quicker is the variable portion of the capital, originally advanced by the capitalist in the form of money, transformed into the money-form of the value (including, besides, surplus-value) created by the labourer to replace this variable capital; the shorter is the time for which the capitalist must advance money out of his own funds, and the smaller is the capital advanced by him in general in proportion to the given scale of production; and the greater comparatively is the quantity of surplus-value which he extracts during the year with a given rate of surplus-value, because he can buy the labourer so much more frequently with the money-form of the value created by that labourer and can so much more frequently set his labour into motion again.

If the scale of production is given, the absolute magnitude of the advanced variable money-capital (and of the circulating capital in general) decreased proportionately to the decrease of the turnover period, while the annual rate of surplus-value increases. If the magnitude of the advanced capital is given, the scale of production grows; hence, if the rate of surplus-value is given, the absolute quantity of surplus-value created in one period of turnover likewise grows, simultaneously with the rise in the annual rate of surplus-value effected by the shortening of the periods of reproduction. It generally follows from the foregoing investigation that the different lengths of the turnover periods make it necessary for money-capital to be advanced in very different amounts in order to set in motion the same quantity of productive circulating capital and the same quantity of labour with the same degree of exploitation of labour.

Second — and this is interlinked with the first difference — the B and A labourers pay for the means of subsistence which they buy with the variable capital that has been transformed in their hands into a medium of circulation. For instance they not only withdraw wheat from the market, but they also replace it with an equivalent in money. But since the money wherewith the B labourer pays for his means of subsistence, which he withdraws from the market, is not the money-form of a value produced and thrown by him on the market during the year, as it is in the case of the A labourer, he supplies the seller of the means of subsistence with money, but not with commodities — be they means of production or means of subsistence — which this seller could buy with the proceeds of the sale, as he can in the case of A. The market is therefore stripped of labour-power, means of subsistence for this labour-power, fixed capital in the form of instruments of labour used in the case of B, and of materials of production, and to replace them an equivalent in money is thrown on the market; but during the year no product is thrown on the market with which to replace the material elements of productive capital withdrawn from it. If we conceive society as being not capitalistic but communistic, there will be no money-capital at all in the first place, not the disguises cloaking the transactions arising on account of it. The question then comes down to the need of society to calculate beforehand how much labour, means of production, and means of subsistence it can invest, without detriment, in such lines of business as for instance the building of railways, which do not furnish any means of production or subsistence, nor produce any useful effect for a long time, a year or more, while they extract labour, means of production and means of subsistence from the total annual production. In capitalist society however where social reason always asserts itself only post festum great disturbances may and must constantly occur. On the one hand pressure is brought to bear on the money-market, while on the other, an easy money-market calls such enterprises into being en masse, thus creating the very circumstances which later give rise to pressure on the money-market. Pressure is brought to bear on the money-market, since large advances of money-capital are constantly needed here for long periods of time. And this regardless of the fact that industrialists and merchants throw the money-capital necessary to carry on their business into speculative railway schemes; etc., and make it good by borrowing in the money-market.

On the other hand pressure on society’s available productive capital. Since elements of productive capital are for ever being withdrawn from the market and only an equivalent in money is thrown on the market in their place, the effective demand rises without itself furnishing any element of supply. Hence a rise in the prices of productive materials as well as means of subsistence. To this must be added that stock-jobbing is a regular practice and capital is transferred on a large scale. A band of speculators, contractors, engineers, lawyers, etc., enrich themselves. They create a strong demand for articles of consumption on the market, wages rising at the same time. So far as foodstuffs are involved, agriculture too is stimulated. But as these foodstuffs cannot be suddenly increased in the course of the year, their import grows, just as that of exotic foods in general (coffee, sugar, wine, etc.) and of articles of luxury. Hence excessive imports and speculation in this line of the import business. Meanwhile, in those branches of industry in which production can be rapidly expanded (manufacture proper, mining, etc.), climbing prices give rise to sudden expansion soon followed by collapse. The same effect is produced in the labour-market, attracting great numbers of the latent relative surplus-population, and even of the employed labourers, to the new lines of business. In general such large-scale undertakings as railways withdraw a definite quantity of labour-power from the labour-market, which can come only from such lines of business as agriculture, etc., where only strong lads are needed. This still continues even after the new enterprises have become established lines of business and the migratory working-class needed for them has already been formed, as for instance in the case of temporary rise above the average in the scale of railway construction. A portion of the reserve army of labourers, which keep wages down, is absorbed. A general rise in wages ensues, even in the hitherto well employed sections of the labour-market. This lasts until the inevitable crash again releases the reserve army of labour and wages are once more depressed to their minimum, and lower.[32]

Inasmuch as the length, great or small, of the period of turnover depends on the working period proper, that is, the period necessary to get the product ready for the market, it is based on the existing material conditions of production specific for the various investments of capital. In agriculture they assume more of the character of natural conditions of production, in manufacture and the greater part of the mining industry they vary with the social development of the process of production itself.

Inasmuch as the length of the working period depends on the size of the supply (the quantitative volume in which the product is generally thrown upon the market as commodities), it is conventional in character. But the convention itself has its material basis in the scale of production, and is therefore accidental only when examined singly.

Finally, inasmuch as the length of the turnover period hinges on that of the period of circulation, it is partly dependent on the incessant change of market conditions, the greater or lesser ease of selling, and the resultant necessity of disposing of part of the product in nearer or remoter markets. Apart from the volume of the demand in general, the movement of prices is here of cardinal importance since sales are intentionally restricted when prices are falling, while production proceeds; vice versa, production and sales keep pace when prices are rising or sales can be made in advance. But we must consider the actual distance of the place of production from the market as the real material basis.

For instance English cotton goods or yarn are sold to India. Suppose the exporter himself pays the English cotton manufacturer (the exporter does so willingly only if the money-market is strong. But when the manufacturer himself replaces his money-capital by some credit transaction, things are not so good). The exporter sells his cotton goods later in the Indian market, from where his advanced capital is remitted to him. Up to this remittance the case runs the very same course as when the length of the working period necessitated the advance of new money-capital to maintain the production process on a given scale. The money-capital with which the manufacturer pays his labourers and renews the other elements of his circulating capital is not the money-form of the yarn produced by him. This cannot be the case until the value of this yarn has returned to England in the form of money or products. It is additional money-capital as before. The only difference is that instead of the manufacturer, it is advanced by the merchant, who in turn may well have obtained it by means of credit operations. Similarly, before this money is thrown on the market, or simultaneously with this, no additional product has been put on the English market that could be bought with this money and would enter the sphere of productive or individual consumption. If this situation continues for a rather long period of time and on a rather large scale, it must have the same effect as the previously mentioned prolongation of the working period.

Now it may be that in India the yarn is again sold on credit. With this credit products are bought in India and sent as return shipment to England or drafts remitted for this amount. If this condition is protracted, the Indian money-market comes under pressure and the reaction on England may here produce a crisis. This crisis, in its turn, even if connected with bullion export to India, calls forth a new crisis in that country on account of the bankruptcy of English firms and their Indian branches, which had received credit from Indian banks. Thus a crisis occurs simultaneously in the market in which the balance of trade is favourable, as well as in the one in which it is unfavourable. This phenomenon may be still more complicated. Assume for instance that England has sent silver bullion to India but India’s English creditors are not urgently collecting their debts in that country, and India will soon after have to ship its silver bullion back to England.

It is possible that the export trade to India and the import trade from India may approximately balance each other, although the volume of the import trade (except under special circumstances, such as a scarcity of cotton, etc.) is determined and stimulated by the export trade. The balance of trade between England and India may seem equilibrated or may disclose slight oscillations in either direction. But as soon as the crisis breaks out in England it turns out that unsold cotton goods are stored in India (hence have not been transformed from commodity-capital into money-capital — an over-production to this extent), and that on the other hand there are stored up in England unsold supplies of Indian goods, and moreover, a great portion of the sold and consumed supplies is not yet paid. Hence what appears as a crisis on the money-market is in reality an expression of abnormal conditions in the very process of production and reproduction.

Third. So far as the employed circulating capital itself (constant and variable) is concerned, the length of the period of turnover, since it derives from the working period, makes this difference: In the case of several turnovers during one year, an element of the variable or constant circulating capital may be supplied through its own product, for instance in the production of coal, the ready-made clothes business, etc. In other cases this cannot occur, at least not within the same year.

Notes

32. In the manuscript, the following note is here inserted for future amplification: “Contradiction in the capitalist mode of production: the labourers as buyers of commodities are important for the market. But as sellers of their own commodity — labour-power — capitalist society tends to keep them down to the minimum price.

—Further contradiction: the periods in which capitalist production exerts all its forces regularly turn out to be periods of over-production, because production potentials can never be utilised to such an extent that more value may not only be produced but also realised; but the sale of commodities, the realisation of commodity-capital and thus of surplus-value, is limited, not by the consumer requirements of society in general, but by the consumer requirements of a society in which the vast majority are always poor and must always remain poor. However, this pertains to the next part.