Capital II. Chapter 20: Simple Reproduction (Parts 7-10)

Part 7 Variable capital and surplus-value in the two departments

Department I – means of production (machines, constant capital etc)

Department II – means of consumption (means of subsistence + luxury commodities)

Labour-power cannot form new values without already existing means of production (MoP). This chapter takes up the focus on the relationship between labour-power (as value forming labour) previously expended. It is an extension upon the discussion of dead and living labour in Volume I, from the perspective of the total social working day. From the relationship of activities between Deps I & II, Marx develops this point.

The following are brief and very rough summaries by paragraph number:

1. Total value of MoC = v + s (ie. total value produced in Dep I and II)

2. For simple reproduction the entire social value produced in a year is consumed.

Therefore, the total value of the MoC= the total value product.

3. Working day

Marx repeats his former formula with different language: social variable capital plus the social surplus-value = total new annual product.

4. Ratio between MoP and MoC may vary, taking into account that not all MoC are produced uniquely in Dep II. Constant capital value that reappears in Dep II = newly produced value in Dep I (variable capital value plus surplus value).

Two points of view of the value products produced in Dep II: Capitalists see as c+v+s, Workers see it as v+s because I(v+s) = II(c)

6. The total social working day– part of which produces fresh constant capital

7. The production of additional value that is not yet constant capital. “no part of the social working day, whether in Dep I or Dep II, serves to produce the value of the constant capital applied and functioning in these two great spheres of production.”

8. The constant value component of Dep II appears as use-values.

The constant capital present in the labour process in Dep II is the product of dead labour, the labour from a previous year. It is an “exchange between labour-time of this year and labour-time of previous year”.

“It therefore explains the riddle as to how the value product of the entire social working day can be resolved into variable capital plus surplus-value, even though 2/3 of this working day was not spent on the production of objects in which variable capital or surplus-value could be realized, but rather on the production of MoP to replace the capital used up during the current year.” (504)

9. Living and dead labour mix to create new value products.

Part 8. The constant capital in both departments

In this section Marx poses the problem of how to analysing the value of the social product. In comparing the value components with material components, the difficulty arises. Section 8, in suit with Volume II, takes up the function of total social capital as its central focus, noting the weaknesses of the bourgeois economists and also Proudhon in their limited focus on individual relations.

As we know from previous chapters, the value of the means of production (constant capital value) reappears in the value of the overall product.

For Marx the constant capital component of the value of the social product (c) is the amount of dead labour, the portion of the day that is composed of necessary labour and the portion that is surplus labour (over the course of a year).

“The difficulty with the annual social product, therefore, comes from the fact that the constant portion of value is represented in a kind of product – means of production – completely different from the means of consumption in which the new value v+s added to this constant portion of value represented.” (507)

Only Dep I contributes to social replacement capital, its products enable the realization of the value of variable capital and the surplus value in Deps I & II. (509)

Part 9. A look back at Adam Smith, Storch and Ramsay

Smith thinks that the entire social product is wages + profit (interest) + rent (ie. v+s) and assumes that the total value of products is ideally paid by consumers. Marx suggests that this cannot be correct as the entire value of a product can never be consumed as revenue but must function as capital.

Ramsay thinks that capital consists, from a social standpoint, as constant capital (which he calls fixed capital) alone. Variable capital (which he calls circulating capital) has no relationship with surplus value. Marx sees that the categories of constant and variable, fixed and circulating are confused in Smith and Ramsay’s works. All labour-power, ie. that which produces MoP and that which produces MoC produces surplus-value.

Part 10. Capital and Revenue: Variable Capital and Wages

Marx begins with the premise that the total value product of a year is greater that the newly created value produced in that same year. Similarly, the total sum of commodity values produced in that year will be smaller than the total value of product. What are the results of the exchange process from the perspectives of capitalists and workers? “Money paid to the worker is still the capitalist’s money.” (p. 523)

The bourgeois economists idea that “what is capital for one person is revenue for another” is interrogated in this section. Marx looks at it from the perspective of total social capital. He points out the elementary confusion of capital and revenue, with money in the exchange that is payment of wages ie. L –M… and then M-C. He makes some pertinent remarks about the nature of wage levels and prices of commodities, in that it makes no difference if workers get paid in commodities other than money. Marx traces the changes in the form that the variable capital in Dep I takes.

Reserves of capital and timing of decisions are referred to from paragraph 19, in the making the point that capitalists always attempt to gain the greatest valorization of capital.

One result of the exchange process is that reproduction can begin afresh (522).

“Since variable capital always remains in one form or another in the hands of the capitalist, it can in no way be said to be converted into revenue for anyone” (523).

“The conversions undergone by the money drawn in wages in the hands of the working class are not conversions of variable capital, but rather of the value of their labour power transformed into money, just as the conversion of the value of the product created by the worker (2000 Iv+s) is simply the conversion of a commodity belonging to the capitalist, and does not affect the worker.” (523)

“What is resolved into revenue is in both cases the wage” (p. 524)


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Reading Capital in Sydney records reading notes on Marx's Capital I, II and III, and other bits and pieces.

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