ate sale of his yarn for the renewal of his supply of cotton, coal, etc., — and this dependence will be so much smaller, the more the credit-system is developed — the smaller can be the relative size of these supplies, in order to insure inde- 162 Capital.
pendence from the hazards of the sale of yarn for the con- tinuous production of yarn on a given scale. In the fourth place, many raw materials, and half-finished products, etc., require long periods of time for their production, and this applies especially to all raw materials furnished by agricul- ture.
If no interruption of the process of production is to take place, there must be a certain amount of raw materials on hand for the entire period, in which no new products can take the places of the old. If this supply decreases in the hands of the capitalist, it proves merely that it increases in the hands of the merchant in the form of a supply of commodities. The development of transportation, for in- stance, makes it possible to convey the cotton stored in the import warehouses of Liverpool rapidly to Manchester, so that the manufacturer can renew his supply in small por- tions according to his needs. But in that case, the cotton remains in so much larger quantities as a commodity- supply in the hands of the merchants in Liverpool. It is therefore merely a question of a change of form, and Lalor and others have overlooked this. And from the standpoint of social capital, the same quantity of products still remains in the form of a supply. The quantity of the supply re- quired for, say, a whole nation during the period of one year decreases to the extent that the means of transporta- tion are developed. If a large number of sailing vessels trade between America and England, the opportunities of England for the renewal of its supply of cotton are increased and the quantity of the cotton supply to be held in storage on an average decreases. The same effect is pro- duced by the development of the world-market and thus of the multiplication of the sources of supply of the same arti- cles. Various quantities of this supply are carried to the market from different countries and at different intervals.
2. The Commodity-Supply in Particular.
We have already seen that the product assumes the gen- eral form of commodities on the basis of capitalist produc- tion, and to the extent that the scale and scope of this pro- The Expenses of Circulation. 163 duction increase, this character becomes prevalent. Even if production retains the same scale, there will still be a far greater proportion of the product in the form of commodi- ties, compared to other modes of production. And all com- modities, and therefore all commodity-capital, which is but another expression for commodities in the form of capital- value, constitute an element of the commodity-supply, unless they pass immediately from the sphere of production into productive or individual consumption, instead of remain- ing on the market in the interval between production and consumption. If the scale of production remains the same, the commodity-supply, that is to say, the individualization and fixation of the commodity-form of the product, grows therefore with the development of capitalist production. We have seen, furthermore ■, that this is merely a change of form on the part of the supply, that is to say the supply in the form of commodities increases on one side, while on the other the supply in the form of direct means of production for consumption decreases. It is merely a question of a changed form of the social supply. The fact that it is not only the relative size of the commodity-supply com- pared to the aggregate social product which increases, but also its absolute size, is due to the growth of the aggregate product with the advance of capitalist production.
With the development of capitalist production, the scale of production becomes less and less dependent on the im- mediate demand for the product and falls more and more under the determining influence of the amount of capital available in the hands of the individual capitalist, of the instinct for the creation of more value inherent in capital, of the need for the continuity and expansion of its processes of production. This necessarily increases the mass of prod- ucts required in each branch of production in the shape of commodities. The amount of capital fixed for a longer or shorter period in the form of commodity-capital grows pro- portionately. In short, the commodity-supply increases.
Finally, the majority of the members of human society are transformed into wage workers, into people who live from hand to mouth, who receive their wages weekly and spend them daily, who therefore must find a supply of the 164 Capital.
necessities of life ready at hand. Although the individual elements of this supply may be in continuous flow, a part of them must always suffer delay in order that the supply may be ever renewed.
All these characteristics are due to the form of capitalist production and to t"he metamorphoses incidental to it, which the product must undergo in the process of circula- tion.
Whatever may be the social form of the supply of prod- ucts, its preservation requires an outlay for buildings, stor- age facilities, etc., which protect the product; furthermore for means of production and labor, more or less of which must be expended, according to the nature of the product, in order to preserve it against injurious influences. The more the supply is socially concentrated, the smaller are the rela- tive expenses. These expenses always consume a part of the social labor, either in a materialized or in a subjective form; they require an outlay of capital which does not enter into the productive process itself and thus diminish the product. They constitute the cost of preserving the social wealth, and are, therefore, necessary expenses, without re- gard to the fact whether the existence of the social product in the form of a commodity-supply is due merely to the so- cial form of production, to the commodity-form and its metamorphoses, or whether we regard the commodity-sup- ply merely as a special form of the supply of products, a supply common to all societies, though not always in the form of a commodity-supply, which is a form of the sup- ply of products belonging to the process of circulation.
The question is now, to what extent these expenses enter into the value of the commodities.
If the capitalist has converted the capital advanced by him for means of production and labor-power into a prod- uct, into a mass of commodities ready for sale, and these commodities remain in stock unsold, then it is not only the creation of values by means of his capital which is inter- rupted. The expenses required for the conservation and storage of this supply in buildings, etc., and for additional labor, signify a positive loss for him. The final buyer would laugh in his face, if he were to say to him: "My articles The Expenses of Circulation. 165 were unsalable for six months, and their preservation dur- ing that period did not only make so and so much of my capital unproductive, but also cost me so much extra-ex- penses." "So much the worse for you," would the buyer say. "Here is another seller, whose articles were completed the day before yesterday. Your articles are old and proba- bly more or less injured by the ravages of time. Therefore you will have to sell cheaper than your rival."
It does not alter the life-processes of a commodity, wheth- er its producer is a direct producer or a capitalist producer, who is merely a representative of the actual producer. The product must be converted into money. The expenses caused by the fixation of the product in the form of com- modities are a part of the individual adventures of the seller, and the buyer does not concern himself about them. The buyer does not pay for the time of circulation of the com- modities. Even if the capitalist holds his goods back inten- tionally, in times of an actual or expected revolution of values, it depends on the materialization of this revolution of values, on the correctness or incorrectness of the seller's speculation, whether he will recover his outlay or not. In- asmuch, therefore, as the formation of a supply involves a delay in the circulation, the expenses caused thereby do not add anything to the value of the commodities. On the other hand, there cannot be any supply without a sojourn of the commodities in circulation, without the stay of capi- tal for a longer or shorter time in the form of a commod- ity; hence there cannot be any supply without a delay of the circulation. It is the same with money, which cannot circulate without the formation of a money-reserve. Hence there cannot be any circulation of commodities without a supply of commodities. If this necessity does not confront the capitalist in C — M', it will do so in M — C; not so far a3 his own commodity-capital is concerned, but that of other capitalists, who produce means of production for him and necessities of life for his laborers.
It appears that the nature of the case is not altered, whether the formation of a supply is voluntary or involun- tary, that is to say whether the producer accumulates a sup- 166 Capital.
ply intentionally or whether his product forms a supply in ' consequence of the resistance offered to its sale by the con- ditions of the process of circulation. But it is useful for the solution of this question to know what distinguishes the voluntary from the involuntary formation of a supply. The involuntary formation of a supply arises from, or is identical with, an interruption of the circulation, which is independ- ent of the knowledge of the producer of commodities and thwarts his will. And what characterizes the voluntary formation of a supply? The seller seeks to get rid of his commodity as much as ever. He always offers his product as a commodity. If he were to withdraw it from sale, it would be only a, latent, not an effective organ of the com- modity-supply. The commodity as such is still as much as ever a bearer of exchange-value and can become effective only by discarding the commodity-form and assuming the money-form.
The commodity-supply must have a certain size, in order to satisfy the demand during a given period. The contin- ual extension of the circle of buyers is one of the factors in the calculation. For instance, in order to last to a certain day, a part of the commodities on the market must retain the form of commodities while the remainder continue in flow and are converted into money. The part which is de- layed while the rest keep moving decreases continually, to the extent that the size of the entire supply decreases, until it is all sold. The delay of the commodities is thus calcu- lated on as a necessary requirement of their sale. The size of the supply must be larger than the average sale or the average extent of the demand. Otherwise the excess over this average could not be satisfied. At the same time, the supply must be continually renewed, because it is contin- ually dissolved. This renewal cannot come from anywhere in the last instance than from production, from a new sup- ply of commodities. Whether this comes from abroad or not, does not alter the case. The renewal depends on the periods required by the commodities for their reproduction. The commodity-supply must last during these periods. The fact that it does not remain in the hands of the original producer, but passes through various stores from the whole- The Expenses of Circulation. 167 saler to the retailer, changes merely the aspect, not the na- ture of the thing. From the point of view of society, a part of capital still retains the form of a commodity-supply, so long as the commodities have not been consumed produc- tively or individually. The producer tries to keep a supply corresponding to his average demand, in order to be some- what independent of the process of production and to insure for himself a steady circle of customers. Corresponding to the periods of production, terms of sale are formed and the commodities form a supply for a longer or shorter time, until they can be replaced by new commodities of the same kind. Tne continuity and regularity of the process of cir- culation, and therefore of the process of reproduction, which includes the circulation, is safeguarded only by the forma- tion of a supply.
It must be remembered that C — M' may have been trans- acted for the producer of C, although C may still be on the market. If the producer were to keep his own commodities until they are sold to the last consumer, he would have to invest two capitals, one as a producer and one as a merchant. For the commodity itself, whether we look upon it as an in- dividual commodity or as a part of social capital, it is im- material whether the expenses of the formation of a supply fall on the shoulders of its producer or on those of a series of merchants from A to Z.
In so far as the commodity-supply is nothing but the commodity-form of the supply which would exist at a given scale of social production either as a productive supply or as a supply of means of consumption, if it did not have the form of a commodity-supply, the expenses required for its conservation and formation, that is to say the expenses for materialized and subjective labor, are merely converted ex- penses for maintaining either the social fund for production or the social fund for consumption. The increase of the value of commodities caused by them distributes these expenses simply pro rata to the different commodities, since the cost is different for different kinds of commodities. And the expenses for the formation of the supply are as much as ever deductions from the social wealth, although they are one of its requirements.
168 Capital The circulation of commodities is normal only to the ex- tent that the formation of a commodity-supply is its prem- ise and necessarily arises by means of it, only in so far as this apparent stagnation is a part of the rotation itself, just as it is in the case of the formation of a money-reserve. But as soon as the commodities resting in the reservoirs of cir- culation refuse to give space to the succeeding wave of so that the reservoirs are overstocked, the commodity-sup- ply expands just as the hoards do, if the circulation of money is clogged. It does not make any difference, whether this stop occurs in the magazines of the industrial capital- ist or in the warehouses of the merchant. The supply is in that case not the premise of the uninterrupted sale, but the result of the impossibility of selling the goods. The expenses remain the same, but since they now arise entirely out of the form, that is to say, out of the necessity of selling the commodities, and out of the obstacles to this metamor- phosis into money, they do not enter into the values of the commodities, but cause deductions, losses, from the value to be realized. Since the normal and abnormal form of the supply cannot be distinguished externally, and both of them are clogging the circulation, these phenomena may be confounded and may deceive the agent in production so much easier as the process of circulation of the capital of the producer may continue smoothly, while that of the com- modities he has sold to merchants may be arrested. If the size of production and consumption increase, other condi- tions remaining the same, then the size of the commodity- supply increases likewise. It is renewed and absorbed just as fast, but its size is greater. Hence the growing size of the commodity-supply caused by a delay in the circulation may be mistaken for a symptom of the expansion of the process of reproduction, especially when the development of the credit-system makes it possible to mystify the real nature of the movement.
The expenses of the formation of the supply consist (1) of quantitative losses of the mass of the product (for in- stance, in the case of a supply of flour); (2) in a spoiling of the quality; (3) in the materialized and individual labor required for the conservation of the supply.
The Expenses of Circulation. 169 III. EXPENSES OF TRANSPORTATION.
It is not necessary to enter at this place into all the details of the expenses of circulation, such as packing, sorting, etc. The general law is that all expenses of circulation, which arise only from changes of form, do not add any value to the commodities. They are merely expenses required for the realization of value, or for its conversion from one form into another. The capital invested in those expenses (in- cluding the labor employed by it) belongs to the dead ex- penses of capitalist production. They must be made up out of the surplus-product and are, from the point of view of the entire capitalist class, a deduction from the surplus- value or surplus product, just as the labor required for the purchase of the necessities of life is lost time for the labor- er. But the expenses of transportation play a too prominent role to pass them by without a few short remarks.
Within the rotation of capital and the metamorphoses of commodities which are a part of that rotation, the mutation- processes of social labor take place. These mutation-processes may require a change of location on the part of the prod- ucts, their transportation from one place to another. Still, a circulation of commodities may take place without their change from place to place, and a transportation of prod- ucts without a circulation of commodities, or even with- out a direct exchange of products. A house which is sold by A to B does not wander from one place to another, al- though it circulates as a commodity. Movable commodity- values, such as cotton or iron ore, remain in the same ware- house at a lime when they are passing through dozens of circulation processes, when they are bought and resold by speculators." That which really changes its place here is the title of ownership, not the thing itself. On the other hand, transportation played a prominent role in the land of the Incas, although the social product did not circulate either as a commodity or by means of exchange.
Even though the transportation industry under capital- ist production appears as a cause of expenses of circula- 17 Storch calls this circulation factice.
170 Capital.
tion, this special form does not alter the nature of the prob- lem.
Quantities of products are not increased by transporta- tion, neither is the eventual alteration of their natural quali- ties, with a few exceptions, the result of premeditated action, but an inevitable evil. But the use-value of things has no existence except in consumption, and this may necessitate a change of place on the part of the product, in other words, it may require the additional process of production of the transportation industry. The productive capital invested in this industry adds value to the transported products, partly by transferring value from the means of transportation, partly by adding value through the labor-power used in transportation. This last-named addition of value consists, as it does in all capitalist production, of a reproduction of wages and of surplus-value.
Within each process of production, the change of place of the object of labor and the required instruments of labor and labor-power — such as cotton which passes from the card- ing to the spinning room, or coal which is hoisted from the shaft to the surface — play a great role. The transition of the finished product, in the role of a finished commodity, from one independent place of production to another in a different location shows the same phenomenon on a larger scale. The transport of the products from one factory to another is finally succeeded by the passage of the finished products from the sphere of production to that of consump- tion. The product is not ready for consumption until it has completed these movements.
We have shown previously that a general law of the production of commodities decrees: The productivity of labor and its faculty of creating value stand in opposition to one another. This is true of the transportation industry as well as of any other. The smaller the amount of mate- rialized and subjective labor required for the transportation of the commodities over a certain distance, the greater is the productivity of labor, and vice versa.18 18 Ricardo quotes Say, who considers it one of the blessings of com- merce that it increases the price, or the value, of the products by trans- portation. "Commerce," writes Say, "enables us to obtain a commodity The Expenses of Circulation. 171 The absolute magnitude of the value which the trans- portation of the commodities adds to them is smaller in proportion as the productivity of the transportation industry increases, and vice versa, and directly proportional to the distance traveled, other conditions remaining the same.
The relative magnitude of the value added to the prices of commodities by the cost of transportation, other condi- tions remaining the same, is directly proportional to their volume and weight. But there are many modifying cir- cumstances. Transportation requires, for instance, more or less provision for protection against accidents, and therefore more or less expenditure of labor and instruments of labor, according to the relative fragility, perishable nature, explo- siveness of the articles. In this department, the railroad mag- nates show a greater talent for inventing fantastic species than botanists and zoologists. The classification of the arti- cles on English railroads fills volumes and rests in general on the tendency of transforming the many-sided natural quali- ties of commodities into so many difficulties of transportation and inevitable excuses for exploitation. "Glass, which was formerly valued at the rate of 11 pounds sterling per crate, is now valued at only 2 pounds sterling in consequence of industrial improvements and the abolition of the glass-tax, but the railway rates are as high as ever and exceed the cost of transportation by water. Formerly glass and glass ware for lead work was carried for 10 shillings per ton with- in a radius of 50 miles of Birmingham. Now the rates have been raised to thrice that figure on the pretext of the risk involved by the fragility of the article. But if any- thing is broken, the railway management does not pay for at its original place of production and to transport it to another place for consumption; it enables us, therefore, to increase the value of com- modities by.the entire difference between their price at the first and that at the second place." Ricardo remarks with reference to this: "True, but how is the additional value given to it? By adding to the cost of pro- duction, 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 labor 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.)
172 Capital.
it."19 The fact that the relative magnitude of the value added by the cost of transportation to the articles is inversely pro- portional to their values furnishes a special excuse for the railroads to tax the articles in direct proportion to their values. The complaints of the industrials and merchants on this score are found on every page of the testimony of witnesses given before the royal commission on railways.
The capitalist mode of production reduces the cost of transportation for the individual commodities by the de- velopment of the means of transportation and communica- tion, by their concentration, the scale of their traffic, etc. It increases that part of the materialized and subjective social labor, which is expended in the transportation of commodi- ties, first by converting the great majority of all products into commodities, secondly, by substituting distant for local markets.
The circulation, that is to say the actual perambulation of the commodities through space, is carried on in the form of transportation. The transportation industry forms on one hand an independent branch of production, and thus a special sphere of investment of productive capital. On the other hand, it is distinguished from other spheres of production by the fact that it represents a continuation of a process of production within the process of circulation and for its benefit.
19 Royal Commission of Railways, p. 31, No.
The Period and Number of Turn-Overs. 173 PART II The Turn-Over of Capital.
CHAPTER VII.
THE PERIOD AND NUMBER OF TURN-OVERS.