Capital, Volume II
III. Costs of Transportation
It is not necessary to go here into all the details of the costs of circulation, such as packing, sorting, etc. The general law is that all costs of circulation, which arise only from changes in the forms of commodities do not add to their value . They are merely expenses incurred in the realisation of the value or in its conversion from one form into another. The capital spent to meet those costs (including the labour done under its control) belongs among the faux frais of capitalist production. They must be replaced from the surplus-product and constitute, as far as the entire capitalist class is concerned, a deduction from the surplus-value or surplus-product, just as the time a labourer needs for the purchase of his means of subsistence is lost time. But the costs of transportation play a too important part to pass them by without a few brief remarks.
Within the circuit of capital and the metamorphosis of commodities, which forms a part of the circuit, an interchange of matter takes place in social labour. This interchange of matter may necessitate a change of location of products, their real motion from one place to another. Still, circulation of commodities can take place without physical motion by them, and there can be transportation of products without circulation of commodities, and even without a direct exchange of products. A house sold by A to B does not wander from one place to another, although it circulates as a commodity. Movable commodity-values, such as cotton or pig iron, may lie in the same storage dump at a time when they are passing through dozens of circulation processes, are bought and resold by speculators. [17] What really does move here is the title of ownership in goods, not the goods themselves. On the other hand, transportation played a prominent role in the land of the Incas, although the social product neither circulated as a commodity nor was distributed by means of barter.
Consequently, although the transportation industry when based on capitalist production appears as a cause of circulation costs, this special form of appearance does not alter the matter in the least.
Quantities of products are not increased by transportation. Nor, with a few exceptions, is the possible alteration of their natural qualities, brought about by transportation, an intentional useful effect; it is rather an unavoidable evil. But the use-value of things is materialised only in their consumption, and their consumption may necessitate a change of location of these things, hence may require an additional process of production, in the transport industry. The productive capital invested in this industry imparts value to the transported products, partly by transferring value from the means of transportation, partly by adding value through the labour performed in transport. This last-named increment of value consists, as it does in all capitalist production, of a replacement of wages and of surplus-value.
Within each process of production, a great role is played by the change of location of the subject of labour and the required instruments of labour and labour-power — such as cotton trucked from the carding to the spinning room or coal hoisted from the shaft to the surface. The transition of the finished product as finished goods from one independent place of production to another located at a distance shows the same phenomenon, only on a larger scale. The transport of products from one productive establishment to another is furthermore followed by the passage of the finished products from the sphere of production to that of consumption. The product is not ready for consumption until it has completed these movements.
As was shown above, the general law of commodity production holds: The productivity of labour is inversely proportional to the value created by it. This is true of the transport industry as well as of any other. The smaller the amount of dead and living labour required for the transportation of commodities over a certain distance, the greater the productive power of labour, and vice versa. [18]
The absolute magnitude of the value which transportation adds to the commodities stands in inverse proportion to the productive power of the transport industry and in direct proportion to the distance traveled, other conditions remaining the same.
The relative part of the value added to the prices of commodities by the costs of transportation, other conditions remaining the same, is directly proportional to their cubic content and weight, and inversely proportional to their value. But there are many modifying factors. Transportation requires, for instance, more or less important precautionary measures, and therefore more or less expenditure of labour and instruments of labour, depending on how fragile, perishable, explosive, etc., the articles are. Here the railway kings show greater ingenuity in the invention of fantastic species than do botanists and zoologists. The classification of goods on English railways, for example, fills volumes and, in principle, rests on the general tendency to transform the diversified natural properties of goods into just as many ills of transportation and routine pretexts for fraudulent charges.
“Glass, which was formerly worth £11 per crate , is now worth only £2 since the improvements which have taken place in manufactures, and since the abolition of the duty; but the rate for carriage is the same as it was formerly, and higher than it was previously, when carried by canal. Formerly, manufacturers inform me that they had glass and glass wares for the plumbers’ trade carried at about 10 s. per ton, within 50 miles of Birmingham. At the present time, the rate to cover risk of breakage is three times that amount... The companies always resist any claim that is made for breakages.“ [19]
The fact that furthermore the part of the value added to an article by the costs of transportation is inversely proportional to its value furnishes special grounds to the railway kings to tax articles in direct proportion to their values. The complaints of the industrialists and merchants on this score are found on every page of the testimony given in the report quoted.
The capitalist mode of production reduces the costs of transportation of the individual commodity by the development of the means of transportation and communication, as well as by concentration — increasing scale — of transportation. It increases that part of the living and materialised social labour which is expended in the transport of commodities, firstly by converting the great majority of all products into commodities, secondly, by substituting distant for local markets.
The circulation, i.e., the actual locomotion of commodities in space, resolves itself into the transport of commodities. The transport industry forms on the one hand an independent branch of production and thus a separate sphere of investment of productive capital. On the other hand its distinguishing feature is that it appears as a continuation of a process of production within the process of circulation and for the process of circulation.
10 The bracketed text is taken from a note at the end of Manuscript VIII. — F.E.
11 “The costs of commerce, although necessary, must be regarded as an onerous outlay. “ (Quesnay, Analyse du Tableau économique , in Daire, Physiocrates , Part I, Paris, 1846, p. 71.) According to Quesnay, the “profit“ which the competition among merchants produces, in that it compels them to “content themselves with a smaller reward or gain ... is, strictly speaking, nothing but a prevention of loss (privation de perte) for the seller at first hand and for the buyer-consumer. Now, a prevention of loss on the costs of commerce is not a real product or an accession of wealth through commerce. If considered simply as an exchange, whether with or without the cost of transportation.“ (pp. 145 and 146.) “The costs of commerce are always paid by those who sell the products and who would enjoy the full prices paid for them by the buyers, if there were no intermediate expenses.“ (p. 163.) The proprietors and producers are “ salariants “ (payers of wages), the merchants are “ salariès “ (recipients of wages). (p.164, Quesnay, Dialogues sur le Commerce et sur les Travaux des Artisans . In Daire, Physiocrates , Part I, Paris, 1846.)
12 In the Middle Ages we find book-keeping for agriculture only in the monasteries. But we have seen (Buch I, p. 343 [English edition: p. 357, — Ed .]) that a book-keeper was installed for agriculture as early as the primitive Indian communities. Book-keeping is there made the independent and exclusive function of the communal officer. This division of labour saves time, effort and expense, but production and book-keeping in the sphere of production remain as much two different things as the cargo of a ship and the bill of lading. In the person of the book-keeper, a part of the labour-power of the community is withdrawn from production, and the costs of his function are not made good by his own labour but by a deduction from the communal product. What is true of the book-keeper of an Indian community is true mutatis mutandis of the book-keeper of the capitalist. (From Manuscript II).
13 “The money circulating in a country is a certain portion of the capital of the country, absolutely withdrawn from productive purposes, in order to facilitate or increase the productiveness of the remainder. A certain amount of wealth is, therefore, as necessary in order to adopt gold as a circulating medium, as it is to make a machine, in order to facilitate any other production.“ ( Economists , Vol. V, p. 520.)
14 Corbet calculates, in 1841, that the cost of storing wheat for a season of nine months amounts to a loss of ½ per cent in quantity, 3 per cent for interest on the price of wheat, 2 percent for warehouse rental, 1 percent for sifting and drayage, ½ percent for delivery, together 7 percent, or 3s. 6d. on a price of 50s. per quarter. (Th. Corbet, An Inquiry into the Causes and Modes of Wealth of Individuals, etc ., London, 1841.) According to the testimony of Liverpool merchants before the Railway Commission, the (net) costs of grain storage in 1865 amounted to about 2d. per quarter per month, or 9d. or 10d. a ton. ( Royal Commission on Railways , 1867. Evidence, p. 19, No. 331.)
15 Book II. Introduction. [A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations . A new edition in four volumes, London, 1843, Vol. II, pp. 249-52. — Ed .]
16 Instead of a supply arising only upon and from the conversion of the product into a commodity, and of the consumption-supply into a commodity-supply, as Adam Smith wrongly imagines, this change of form, on the contrary, causes most violent crises in the economy of the producers during the transition from production for one’s own needs to commodity production. In India, for instance, “the disposition to hoard largely the grain for which little could be got in years of abundance“ was observed until very recent times. (Return. Bengal and Orissa Famine H. of C., 1867 , I, pp. 230-31, No. 74.) The sudden increase in the demand for cotton, jute, etc., due to the American Civil War led in many parts of India to a severe restriction of rice culture, a rise in the price of rice, and a sale of the producers’ old rice supplies. To this must be added the unexampled export of rice to Australia, Madagascar, etc., after 1864-66. This accounts for the acute character of Orissa alone (loc. cit., 174, 175, 213, 214, and III: Papers relating to the famine in Behar , pp. 32, 33, where the “ drain of old stocks “ is emphasised as one of the causes of the famine). (From Manuscript II.)
17 Storch calls this “circulation factice“ (fictitious circulation).
18 Ricardo quotes Say, who considers it one of the blessings of commerce that by means of the costs of transportation it increases the price, or the value, of products. “Commerce,“ writes Say, “enables us to obtain a commodity in the place where it is to be found, and to convey it to another where it is to be consumed; it therefore gives us the power of increasing the value of the commodity, by the whole difference between its price in the first of these places, and its price in the second.“ [J.B. Say, Traitè d’èconomie politique , Troisième edition, Paris, 1817, Tome II, p. 433. — Ed .] Ricardo remarks with reference to this: “True, but how is this additional value given to it? By adding to the cost of production, first, the expenses of conveyance; secondly, the profit on the advances of capital made by the merchant. The commodity is only more valuable, for the same reason that every other commodity may become more valuable, because more labour is expended on its production and conveyance before it is purchased by the consumer. This must not be mentioned as one of the advantages of commerce.“ (Ricardo, Principles of Political Economy , 3rd. ed., London, 1821, pp. 309, 310.)
19 Royal Commission on Railways, p. 31, No. 630.
Chapter 5 | Table of Contents | Chapter 7
Part II: The Turnover of Capital
Chapter 7: The Turnover Time and the Number of Turnovers
We have seen that the entire time of turnover of a given capital is equal to the sum of its time of circulation and its time of production. It is the period of time from the moment of the advance of capital-value in a definite form to the return of the functioning capital-value in the same form.
The compelling motive of capitalist production is always the creation of surplus-value by means of the advanced value, no matter whether this value is advanced in its independent form, i.e., in the money-form, or in commodities, in which case its value-form possesses only ideal independence in the price of the advanced commodities. In both cases this capital-value passes through various forms of existence during its circular movement. Its identity with itself is fixed in the books of the capitalists, or in the form of money of account.
Whether we take the form of M ... M' or the form P ... P, the implication is (1) that the advanced value performs the function of capital-value and has created surplus-value; (2) that after completing its process it has returned to the form in which it began it. The self-expansion of the advanced value M and at the same time the return of capital to this form (the money-form) is plainly visible in M ... M'. But the same takes place in the second form. For the starting-point of P is the existence of the elements of production, of commodities having a given value. The form includes the self-expansion of this value (C' and M') and the return to the original form, for in the second P the advanced value has again the form of the elements of production in which it was originally advanced.
We have seen previously: “If production be capitalistic in form, so, too, will be reproduction. Just as in the former the labour-process figures but as a means towards the self-expansion of capital, so in the latter it figures but as a means of reproducing as capital — i.e ., as self-expanding value — the value advanced.“ (Buch I, Kap. XXI, S. 588.) [English edition: Ch. XXIII, p. 566. — Ed .]
The three forms (I) M ... M' (II) P ... P, and (III) C' ... C', present the following distinctions: in form II, P ... P, the renewal of the process, the process of reproduction, is expressed as a reality, while in form I only as a potentiality. But both differ from form III in that with them the advanced capital-value — advanced either in the form of money or of material elements of production — is the starting-point and therefore also the returning point. In M ... M' the return is expressed by M' = M + m. If the process is renewed on the same scale, M is again the starting-point and m does not enter into it, but shows merely that M has self-expanded as capital and hence created a surplus-value, m, but cast it off. In the form P ... P capital-value P advanced in the form of elements of production is likewise the starting-point. This form includes its self-expansion. If simple reproduction takes place, the same capital-value renews the same process in the same form P. If accumulation takes place, then P' (equal in magnitude of value to M', equal to C') reopens the process as an expanded capital-value. But the process begins again with the advanced capital-value in its initial form, although with a greater capital-value than before. In form III, on the contrary, the capital-value does not begin the process as an advance, but as a value already expanded, as the aggregate wealth existing in the form of commodities, of which the advanced capital-value is but a part. This last form is important for Part III, in which the movements of the individual capitals are discussed in connection with the movement of the aggregate social capital. But it is not to be used in connection with the turnover of capital, which always begins with the advance of capital-value, whether in the form of money or commodities, and which always necessitates the return of the rotating capital-value in the form in which it was advanced. Of the circuits I and II, the former is of service in a study primarily of the influence of the turnover on the formation of surplus-value and the latter in a study of its influence on the creation of the product.
Economists have little distinguished between the different forms of circuits, nor have they examined them individually with relation to the turnover of capital. They generally consider the form M ... M', because it dominates the individual capitalist and aids him in his calculations, even if money is the starting-point only in the shape of money of account. Others start with outlays in the form of elements of production to the point when returns are received, without alluding at all to the form of the returns, whether made in commodities or money. For instance,
“the Economic Cycle, ... the whole course of production, from the time that outlays are made till returns are received. In agriculture, seedtime is its commencement, and harvesting its ending.“ S. P. Newman, Elements of Political Economy , Andover and New York, p. 81.
Others begin with C' (the third form): Says Th. Chalmers, in his work On Political Economy , 2nd ed., Glasgow, 1832, p. 85 et seq.:
“The world of trade may be conceived to revolve in what we shall call an economic cycle, which accomplishes one revolution by business, coming round again, through its successive transactions, to the point from which it set out. Its commencement may be dated from the point at which the capitalist has obtained those returns by which his capital is replaced to him: whence he proceeds anew to engage his workmen; to distribute among them, in wages, their maintenance, or rather, the power of lifting it; to obtain from them, in finished work, the articles in which he specially deals; to bring these articles to market and there terminate the orbit of one set of movements, by effecting a sale, and receiving, in its proceeds, a return for the whole outlays of the period.“
As soon as the entire capital-value invested by some individual capitalist in any branch of production whatever has described its circuit, it finds itself once more in its initial form and can now repeat the same process. It must repeat it, if the value is to perpetuate itself as a capital-value and to create surplus-value. An individual circuit is but a constantly repeated section in the life of a capital; hence a period. At the end of the period M ... M' capital has once more the form of money-capital, which passes anew through that series of changes of form in which its process of reproduction, or self-expansion, is included. At the end of the period P ... P capital resumes the form of elements of production, which are the prerequisites for a renewal of its circuit. 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. It measures the interval of time between one circuit period of the entire capital-value and the next, the periodicity in the process of life of capital or, if you like, the time of the renewal, the repetition, of the process of self-expansion, or production, of one and the same capital-value.
Apart from the individual adventures which may accelerate or shorten the time of turnover of certain capitals, this time differs in the different spheres of investment. Just as the working day is the natural unit for measuring the function of labour-power, so the year is the natural unit for measuring the turnovers of functioning capital. The natural basis of this unit is the circumstance that the most important crops of the temperate zone, which is the mother country of capitalist production, are annual products. If we designate the year as the unit of measure of the turnover time by T, the time of turnover of a given capital by t, and the number of its turnovers by n, then n = T/t. If, for instance, the time of turnover t is 3 months, then n is equal to 12/3, or 4; capital is turned over four times per year. If t = 18 months, then n = 12/18 = ⅔, or capital completes only two-thirds of its turnover in one year. If its time of turnover is several years, it is computed in multiples of one year.
From the point of view of the capitalist, the time of turnover of his capital is the time for which he must advance his capital in order to create surplus-value with it and receive it back in its original shape.
Before examining more closely the influence of the turnover on the processes of production and self-expansion, we must investigate two new forms which accrue to capital from the process of circulation and affect the form of its turnover.
Chapter 6 | Table of Contents | Chapter 8
Chapter 8: Fixed Capital and Circulating Capital
1. Distinctions of Form
We have seen (Buch I, Kap. VI) [English edition: Ch. VIII. — Ed .] that, in relation to the products toward the creation of which it contributes, a portion of the constant capital retains that definite use-form in which it enters into the process of production. Hence it performs the same functions for a longer or shorter period, in ever repeated labour-processes. This applies for instance to industrial buildings, machinery, etc. — in short to all things which we comprise under the name of instruments of labour . This part of constant capital yields up value to the product in proportion as it loses its own exchange-value together with its own use-value. This delivery of value, or this transition of the value of such a means of production to the product which it helps to create is determined by a calculation of averages. It is measured by the average duration of its function, from the moment that the means of production enters into the process of production to the moment that it is completely spent, dead and gone, and must be replaced by a new sample of the same kind, or reproduced.
This, then, is the peculiarity of this part of constant capital, of the labour instruments proper:
A part of capital has been advanced in the form of constant capital, i.e., of means of production, which function as factors of the labour-process so long as they retain the independent use-form in which they enter this process. The finished product, and therefore also the creators of the product, so far as they have been transformed into product, is thrust out of the process of production and passes as a commodity from the sphere of production to the sphere of circulation. But the instruments of labour never leave the sphere of production, once they have entered it. Their function holds them there. A portion of the advanced capital-value becomes fixed in this form determined by the function of the instruments of labour in the process. In the performance of this function, and thus by the wear and tear of the instruments of labour, a part of their value passes on to the product, while the other remains fixed in the instruments of labour and thus in the process of production. The value fixed in this way decreases steadily, until the instrument of labour is worn out, its value having been distributed during a shorter or longer period over a mass of products originating from a series of constantly repeated labour-processes. But so long as they are still effective as instruments of labour and need not yet be replaced by new ones of the same kind, a certain amount of constant capital-value remains fixed in them, while the other part of the value originally fixed in them is transferred to the product and therefore circulates as a component part of the commodity-supply. The longer an instrument lasts, the slower it wears out, the longer will its constant capital-value remains fixed in this use-form. But whatever may be its durability, the proportion in which it yields value is always inverse to the entire time it functions. If of two machines of equal value one wears out in five years and the other in ten, then the first yields twice as much value in the same time as the second.
This portion of the capital-value fixed in the instrument of labour circulates as well as any other. We have seen in general that all capital-value is constantly in circulation, and that in this sense all capital is circulating capital. But the circulation of the portion of capital which we are now studying is peculiar. In the first place it does not circulate in its use-form, but it is merely its value that circulates, and this takes place gradually, piecemeal, in proportion as it passes from it to the product, which circulates as a commodity. During the entire period of its functioning, a part of its value always remain fixed in it, independently of the commodities which it helps to produce. It is this peculiarity which gives to this portion of constant capital the form of fixed capital . All the other material parts of capital advanced in the process of production form by way of contrast the circulating , or fluid, capital .
Some means of production do not enter materially into the product. Such are auxiliary materials, which are consumed by the instruments of labour themselves in the performance of their functions, like coal consumed by a steam-engine; or which merely assist in the operation, like gas for lighting, etc. It is only their value which forms a part of the value of the products. The product circulates in its own circulation the value of these means of production. This feature they have in common with fixed capital. But they are entirely consumed in every labour-process which they enter and must therefore be wholly replaced by new means of production of the same kind in every new labour-process. They do not preserve their independent use-form while performing their function. Hence while they function no portion of capital-value remains fixed in their old use-form, their bodily form, either. The circumstance that this portion of the auxiliary materials does not pass bodily into the product but enters into the value of the product only according to its own value, as a portion of that value, and what hangs together with this, namely, that the function of these substances is strictly confined to the sphere of production, has misled economists like Ramsay (who at the same time got fixed capital mixed up with constant capital) to classify them as fixed capital. [Karl Marx, Theorien über den Mehrwert (Vierter Band des Kapitals), 3. Teil, Berlin, 1962, SS. 323-25. — Ed .]
That part of the means of production which bodily enters into the product, i.e., raw materials, etc., thus assumes in part forms which enable it later to enter into individual consumption as articles of use. The instruments of labour properly so called, the material vehicles of the fixed capital, are consumed only productively and cannot enter into individual consumption, because they do not enter into the product, or the use-value, which they held to create but retain their independent form with reference to it until they are completely worn out. The means of transportation are an exception to this rule. The useful effect which they produce during the performance of their productive function, hence during their stay in the sphere of production, the change of location, passes simultaneously into the individual use in the same way in which he pays for the use of other articles of consumption. We have seen [Karl Marx, Capital , Vol. I, pp. 181-82. — Ed .] that for instance in chemical manufacture raw and auxiliary materials blend. The same applies to instruments of labour and auxiliary and raw materials. Similarly in agriculture the substances added for the improvement of the soil pass partly into the plants raised and help to form the product. On the other hand their effect is distributed over a lengthy period, say four or five years. A portion of them therefore passes bodily into the product and thus transfers its value to the product while the other portion remains fixed in its old use-form and retains its value. It persists as a means of production and consequently keeps the form of fixed capital. As a beast of toil an ox is fixed capital. If he is eaten, he no longer functions as an instrument of labour, nor as fixed capital either.
What determines that a portion of the capital-value invested in means of production is endowed with the character of fixed capital is exclusively the peculiar manner in which this value circulates. This specific manner of circulation arises from the specific manner in which the instrument of labour transmits its value to the product, or in which it behaves as a creator of values during the process of production. This manner again arises from the special way in which the instruments of labour function in the labour-process.
We know that a use-value which emerges as a product from one labour-process enters into another as a means of production. [Karl Marx, Capital , Vol. I, p. 181. — Ed .] It is only the functioning of a product as an instrument of labour in the process of production that makes it fixed capital. But when it itself only just emerges from a process, it is by no means fixed capital. For instance a machine, as a product or commodity of the machine-manufacturer, belongs to his commodity-capital. It does not become fixed capital until it is employed productively in the hands of its purchaser, the capitalist.
All other circumstances being equal, the degree of fixity increases with the durability of the instrument of labour. It is this durability that determines the magnitude of the difference between the capital-value fixed in instruments of labour and that part of its value which it yields to the product in repeated labour-processes. The slower this value is yielded — and value is given up by the instrument of labour in every repetition of the labour-process — the larger is the fixed capital and the greater the difference between the capital employed in the process of production and the capital consumed in it. As soon as this difference has disappeared the instrument of labour has outlived its usefulness and has lost with its use-value also its value. It has ceased to be the depository of value. Since an instrument of labour, like every other material carrier of constant capital, parts with value to the product only to the extent that together with its use-value it loses its value, it is evident that the more slowly its use-value is lost, the longer it lasts in the process of production, the longer is the period in which constant capital-value remains fixed in it.
If a means of production which is not an instrument of labour strictly speaking, such as auxiliary substances, raw material, partly finished articles, etc., behaves with regard to value yield and hence manner of circulation of its value in the same way as the instruments of labour, then it is likewise a material depository, a form of existence, of fixed capital. This is the case with the above-mentioned improvements of the soil, which add to it chemical substances whose influence is distributed over several periods of production or years. Here a portion of the value continues to exist alongside the product, in its independent form or in the form of fixed capital, while the other portion of the value has been delivered to the product and therefore circulates with it. In this case it is not alone a portion of the value of the fixed capital which enters into the product, but also the use-value, the substance, in which this portion of value exists.
Apart from the fundamental mistake — the mixing up of the categories “fixed“ and “circulating capital“ with the categories “constant“ and “variable capital“ — the confusion of the economists hitherto in the definitions of concepts is based first of all on the following points:
One turns certain properties materially inherent in instruments of labour into direct properties of fixed capital; for instance physical immobility, say, of a house. However it is always easy to prove in such case that other instruments of labour, which as such are likewise fixed capital, possess the opposite property: for instance physical mobility, say, of a ship.
Or one confuses the economic definiteness of form which arises from the circulation of value with an objective property; as if objects which in themselves are not capital at all but rather become so only under definite social conditions could in themselves and in their very nature be capital in some definite form, fixed or circulating. We have seen (Buch I, Kap. V) [English edition: Ch. VII. — Ed .] that the means of production in every labour-process, regardless of the social conditions in which it takes place, are divided into instruments of labour and subjects of labour. But both of them become capital only under the capitalist mode of production, when they become “productive capital,“ as shown in the preceding part. Thus the distinction between instruments of labour and subject of labour, which is grounded on the nature of the labour-process, is reflected in a new form: the distinction between fixed capital and circulating capital. It is only then that a thing which performs the function of an instrument of labour becomes fixed capital. If owing to its material properties it can function also in other capacities than that of instrument of labour, it may be fixed capital or not, depending on the specific function it performs. Cattle as beasts of toil are fixed capital; as beef cattle they are raw material which finally enters into circulation as a product; hence they are circulating, not fixed capital.
The mere fixation of a means of production for a considerable length of time in repeated labour-processes, which however are connected, continuous, and therefore form a production period — i.e., the entire time of production required to finish a certain product — obliges the capitalist, just as fixed capital does, to make his advances for a longer or shorter term, but this does not make his capital fixed capital. Seeds for instance are not fixed capital, but only raw material which is held for about a year in the process of production. All capital is held in the process of production so long as it functions as productive capital, and so are therefore all elements of productive capital, whatever their material forms, their functions and the modes of circulation of their values. Whether this period of fixation lasts a long or a short time — a matter depending on the kind of process of production involved or the useful effect aimed at — this does not effect the distinction between fixed and circulating capital. [20] A part of the instruments of labour, which includes the general instruments of labour, is either localised as soon as it enters the process of production as an instrument of labour, i.e., is prepared for its productive function, such as for instance machinery, or is produced from the outset in its immovable, localised form, such as improvements of the soil, factory buildings, blast furnaces, canals, railways, etc. The constant attachment of the instrument of labour to the process of production in which it is to function is here also due to its physical mode of existence. On the other hand an instrument of labour may physically change continually from place to place, may move about, and nevertheless be constantly in the process of production; for instance a locomotive, a ship, beasts of burden, etc. Neither does immobility in the one case bestow upon it the character of fixed capital, nor does mobility in the other case deprive it of this character. But the fact that some instruments of labour are localised, attached to the soil by their roots, assigns to this portion of fixed capital a peculiar role in the economy of nations. They cannot be sent abroad, cannot circulate as commodities in the world-market. Title to this fixed capital may change, it may be bought and sold, and to this extent may circulate ideally. These titles of ownership may even circulate in foreign markets, for instance in the form of stocks. But a change of the persons owning this class of fixed capital does not alter the relation of the immovable, materially fixed part of the national wealth to its movable part. [21]
The peculiar circulation of fixed capital results in a peculiar turnover. That part of the value which it loses in its bodily form by wear and tear circulates as a part of the value of the product. The product converts itself by means of its circulation from commodities into money; hence the same applies to the value-part of the instrument of labour circulated by the product, and this value drips down in the form of money from the process of circulation in proportion as this instrument of labour ceases to be a depository of value in the process of production. Its value thus acquires a double existence. One part of it remains attached to its use-form or bodily form belonging in the process of production. The other part detaches itself from that form in the shape of money. In the performance of its function that part of the value of an instrument of labour which exists in its bodily form constantly decreases, while that which is transformed into money constantly increases until the instrument is at last exhausted and its entire value, detached from its corpse, is converted into money. Here the peculiarity of the turnover of this element of productive capital becomes apparent. The transformation of its value into money keeps pace with the pupation into money of the commodity which is the carrier of its value. But its reconversion from the money-form into a use-form proceeds separately from the reconversion of the commodities into other elements of their production and is determined rather by its own period of reproduction, that is, by the time during which the instrument of labour wears out and must be replaced by another of the same kind. If a machine worth £10,000 lasts for, say, a period of ten years, then the period of turnover of the value originally advanced for it amounts to ten years. It need not be renewed and continues to function in its bodily form until this period has expired. In the meantime its value circulates piecemeal as a part of the value of the commodities whose continuous production it serves and it is thus gradually transformed into money until finally at the end of ten years it entirely assumes the form of money and is reconverted from money into a machine, in other words, has completed its turn-over. Until this time of reproduction arrives, its value is gradually accumulated, in the form of a money reserve fund to start with.
The remaining elements of productive capital consist partly of those elements of constant capital which exist as auxiliary and raw materials, partly of variable capital invested in labour-power.
The analysis of the labour-process and of the process of producing surplus-value (Buch I, Kap. V) [English edition: Ch. VII. — Ed .] showed that these different components behave quite differently as creators of products and as creators of values. The value of that part of constant capital which consists of auxiliary and raw materials — the same as of that part which consists of instruments of labour — re-appears in the value of the product as only transferred value, while labour-power adds an equivalent of its value to the product by means of the labour-process, in other words, actually reproduces its value. Furthermore, one part of the auxiliary substances — fuel, lighting gas, etc. — is consumed in the process of labour without entering bodily into the product, while the other part of them enters bodily into the product and forms its material substance. But all these differences are immaterial so far as the circulation and therefore the mode of turnover is concerned. Since auxiliary and raw materials are entirely consumed in the creation of the product, they transfer their value entirely to the product. Hence this value is circulated in its entirety by the product, transforms itself into money and from money back into the elements of production of the commodity. Its turnover is not interrupted, as is that of fixed capital, but passes uninterruptedly through the entire circuit of its forms, so that these elements of productive capital are continually renewed in kind.
As for the variable component of productive capital, which is invested in labour-power, be it noted that labour-power is purchased for a definite period of time. As soon as the capitalist has bought it and embodied it in the process of production, it forms a component part of his capital, its variable component. Labour-power acts daily during the period of time in which it adds to the product not only its own value for the whole day but also a surplus-value in excess of it. We shall not consider this surplus-value for the present. After labour-power has been bought and it has performed its function, say for a week, its purchase must be constantly renewed within the customary intervals of time. The equivalent of its value, which the labour-power adds to the product during its functioning and which is transformed into money in consequence of the circulation of the product, must continually be reconverted from money into labour-power or continually pass through the complete circuit of its forms, that is, must be turned over, if the circuit of continuous production is not to be interrupted.
Hence that part of the value of the productive capital which has been advanced for labour-power is entirely transferred to the product (we constantly leave the question of surplus-value out of consideration here), passes with it through the two metamorphoses belonging in the sphere of circulation and always remains incorporated in the process of production by virtue of this continuous renewal. Hence, however different otherwise may be the relation between labour-power, so far as the creation of value is concerned, and the component parts of constant capital which do not constitute fixed capital, this kind of turnover of its value labour-power shares with them, in contradistinction to fixed capital. These components of the productive capital — the parts of its value invested in labour-power and in means of production which do not constitute fixed capital — by reason of their common turnover characteristics confront the fixed capital as circulating or fluent capital.
We have already shown [Karl Marx, Capital , Vol. I, Ch. VI, pp. 167-76. — Ed .] that the money which the capitalist pays to the labourer for the use of his labour-power is nothing more or less than the form of the general equivalent for the means of subsistence required by the labourer. To this extent, the variable capital consists in substance of means of subsistence. But in this case, where we are discussing turnover, it is a question of form. The capitalist does not buy the labourer’s means of subsistence but his labour-power. And that which forms the variable part of his capital is not the labourer’s means of subsistence but his labour-power in action. What the capitalist consumes productively in the labour-process is the labour-power itself and not the labourer’s means of subsistence. It is the labourer himself who converts the money received for his labour-power into means of subsistence, in order to reconvert them into labour-power, to keep alive, just as the capitalist for instance converts a part of the surplus-value of the commodities he sells for money into means of subsistence for himself without thereby warranting the statement that the purchaser of his commodities pays him in means of subsistence. Even if the labourer is paid a part of his wages in means of subsistence, in kind, this nowadays amounts to a second transaction. He sells his labour-power at a certain price, with the understanding that he shall receive a part of this price in means of subsistence. This changes merely the form of the payment, but not the fact that what he actually sells is his labour-power. It is a second transaction, which does not take place between the labourer and the capitalist, but between the labourer as a buyer of commodities and the capitalist as a seller of commodities, while in the first transaction the labourer is a seller of a commodity (his labour-power) and the capitalist its buyer. It is exactly the same as if a capitalist, on selling his commodity, say, a machine, to an iron works, has it replaced by some other commodity, say, iron. It is therefore not the labourer’s means of subsistence which acquire the definite character of circulating capital as opposed to fixed capital. Nor is it his labour-power. It is rather that part of the value of productive capital which is invested in labour-power and which, by virtue of the form of its turnover, receives this character in common with some, and in contrast with other, component parts of the constant capital.
The value of the circulating capital — in labour-power and means of production — is advanced only for the time during which the product is in process of production, in accordance with the scale of production determined by the volume of the fixed capital. This value enters entirely into the product, is therefore fully returned by its sale from the sphere of circulation, and can be advanced anew. The labour-power and means of production, in which the circulating component of capital exists, are withdrawn from circulation to the extent required for the creation and sale of the finished product, but they must be continually replaced and renewed by purchasing them back, by reconverting them from the money-form into the elements of production. They are withdrawn from the market in smaller quantities at a time than the elements of fixed capital, but they must be withdrawn again from it so much the more frequently and the advance of capital invested in them must be renewed at shorter intervals. This constant renewal is effected by the continuous conversion of the product which circulates their entire value. And finally, they pass through the entire circuit of metamorphoses, not only so far as their value is concerned but also their material form. They are perpetually reconverted from commodities into the elements of production of the same commodities.
Together with its own value, labour-power always adds to the product surplus-value, the embodiment of unpaid labour. This is continuously circulated by the finished product and converted into money just as are other elements of its value. But here, where we are primarily concerned with the turnover of capital-value, and not with that of the surplus-value occurring at the same time, we dismiss the latter for the present.
From the foregoing one may conclude the following:
1. The definiteness of form of fixed and circulating capital arises merely from the different turnovers of the capital-value, functioning in the process of production, or of the productive capital . This difference in turnover arises in its turn from the different manner in which the various components of productive capital transfer their value to the product; it is not due to the different parts played by these components in the generation of product value, nor to their characteristic behaviour in the process of self-expansion. Finally the difference in the delivery of value to the product — and therefore the different manner in which this value is circulated by the product and is renewed in its original bodily form through the metamorphoses of the product — arises from the difference of the material shapes in which the productive capital exists, one portion of it being entirely consumed during the creation of an individual product and the other being used up only gradually. Hence it is only the productive capital which can be divided into fixed and circulating capital. But this antithesis does not apply to the other two modes of existence of industrial capital, that is to say, commodity-capital and money-capital, nor does it exist as an antithesis of these two modes to productive capital. It exists only for productive capital and within its sphere . No matter how much money-capital and commodity-capital may function as capital and no matter how fluently they may circulate, they cannot become circulating capital as distinct from fixed capital until they are transformed into circulating components of productive capital. But because these two forms of capital dwell in the sphere of circulation, Political Economy as we shall see has been misled since the time of Adam Smith into lumping them together with the circulating part of productive capital and assigning them to the category of circulating capital. They are indeed circulation capital in contrast to productive capital, but they are not circulating capital in contrast to fixed capital.
2. The turnover of the fixed component part of capital, and therefore also the time of turnover necessary for it, comprises several turnovers of the circulating constituents of capital. In the time during which the fixed capital turns over once, the circulating capital turns over several times. One of the component parts of the value of the productive capital acquires the definiteness of form of fixed capital only in case the means of production in which it exists is not wholly worn out in the time required for the fabrication of the product and its expulsion from the process of production as a commodity. One part of its value must remain tied up in the form of the still preserved old use-form, while the other part is circulated by the finished product, and this circulation on the contrary simultaneously circulates the entire value of the fluent component parts of the capital.
3. The value-part of the productive capital, the part invested in fixed capital, is advanced in one lump sum for the entire period of employment of that part of the means of production of which the fixed capital consists. Hence this value is thrown into the circulation by the capitalist all at one time. But it is withdrawn again from the circulation only piecemeal and gradually by realising the parts of value which the fixed capital adds piecemeal to the commodities. On the other hand the means of production themselves, in which a component part of the productive capital becomes fixed, are withdrawn from the circulation all at one time to be embodied in the process of production for the entire period in which they function. But they do not require for this period any replacement by new samples of the same kind, do not require reproduction. They continue for a longer or shorter period to contribute to the creation of the commodities thrown into circulation without withdrawing from circulation the elements of their own renewal. Hence they do not require from the capitalist a renewal of his advance during this period. Finally the capital-value invested in fixed capital does not pass bodily through the circuit of its forms, during the functioning period of the means of production in which this capital-value exists, but only as concerns its value, and even this it does only parts and gradually. In other words, a portion of its value is continually circulated and converted into money as a part of the value of the commodities, without being reconverted from money into its original bodily form. This reconversion of money into the bodily form of the means of production does not take place until the end of its functioning period, when the means of production has been completely consumed.
4. The elements of circulating capital are as permanently fixed in the process of production — if it is to be uninterrupted — as the elements of fixed capital. But the elements of circulating capital thus fixed are continually renewed in kind (the means of production by new products of the same kind, labour-power by constantly renewed purchases) while in the case of the elements of fixed capital neither they themselves are renewed nor need their purchases be renewed so long as they continue to exist. There are always raw and auxiliary materials in the process of production, but always new products of the same kind, after the old elements have been consumed in the creation of the finished product. Labour-power likewise always exists in the process of production, but only by means of ever new purchases, frequently involving changes of persons. But the same identical buildings, machines, etc., continue to function, during repeated turnovers of the circulating capital, in the same repeated processes of production.