We have seen that the entire time of rotation of a given capital is equal to the sum of its time of circulation plus its time of production. It is the period of time from the mo- ment of the advance of capital-value in a definite form to the return of the rotating capital-value in the same form.
The compelling motive of capitalist production is always the creation of value by means of the advanced value, no matter whether this value is advanced in its independent money-form, or in commodities, in which case its value is only ideally independent in the price of the advanced com- modities. In both cases this capital-value passes through various forms of existence during its rotation. Its identity with itself is confirmed by the books of the capitalists, or in the ideal form of calculating money.
No matter whether we consider the formula M...M' or the formula P...P, both forms imply (1) that the advanced value performs the function of capital-value and has created more value; (2) that it has returned to the form in which it began its rotation, having completed its cycle. The creation of more value by means of the advanced value M and the re- turn of capital to this money-form is plainly visible in M...M'. But the same takes place in the second formula. For the startiiig point of P is the existence of the elements of production, of commodities having a given value. The formula includes the creation of value by means of the ad- 174 Capital.
vanced 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 labor-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." (Vol. I, chap. XXIII, p. 620.)
The three formulas (I) M...M', (II) P...P, and (III) C...C, present the following distinctions: In formula II. P...P, the renewal of the process by the process of reproduc- tion is expressed as a reality, while it is only implied as a probability in formula I. But both of these formulas dif- fer from III by the fact that in them the advanced capital- value, either in the form of money or of material elements of production, is the starting and returning point. In M...M', the return to M' means M plus 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 per- formed the function of capital and created surplus-value m, which it threw off. In the formula P...P, capital-value P advanced in the form of means of production is likewise the starting point. This form includes the creation of more value. If simple reproduction takes place, the same capital- ist renews the same process in the same form P. If accumu- lation takes place, then P' (equal in magnitude of value to M' and C) reopens the cycle as an expanded capital- value. But it begins with the advanced capital-value in its original form, although it is of greater value than before. In form III, on the other hand, capital-value does not begin the process as an advance, but as an expanded value, as the aggregate wealth existing in the form of commodities, of which the advanced value is but a part. This last form is important for the third part of this volume, in which the movement of the individual capitals is discussed in connec- tion with the movements of the aggregate social capital. But it is not available for the discussion of the turn-over of capi- The Period and Number of Turn-Overs. 1 * o tal, which always begins with the advance of capital-value in the forms of money or commodities, and which always requires the return of the rotating capital-value to the form in which it had been advanced. Of these cycles I and II, the former is serviceable in the study of the influence of the turn-over on the formation of surplus-value, the latter in the study of its influence on the formation of the prod- uct.
Economists have not distinguished the different relations of the turn-over of capital to its cycles any more than they have distinguished between these cycles. They generally con- sider the formula M...M, because it dominates the individual capitalist and serves for a basis of his calculations, even if money is the starting point of this cycle only in the form of calculating money. Others start out from the outlay of capital in the form of elements of production and follow the cycle to the point of return, without alluding to the form of the returns, be they 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, seed time is its commence- ment, 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.,' London, 1832, p. 84 and following, in substance: The world of the pro- ductive traffic may be regarded as rotating in a cycle, which we will call the economic cycle. Each cycle is completed, whenever the business, after passing through its successive transactions, returns to its starting point. The beginning may be made at the point where the capitalist gets his re- ceipts, which return his capital. From this point, the capi- talist proceeds once more to hire his laborers and parcel out to them their subsistence, or rather the means to purchase it with wages. They manufacture for him the articles which are his specialty. And the capitalist then takes his articles to the market and brings the cycle of this one series of transactions to a close by selling and receiving in the price of his commodities a return for his entire investment of capital.
170 Capital.
As soon as the entire capital-value invested by some in- dividual capitalist in any one branch of production has completed the cycle of its movements, it finds itself once more in the form in which it started and is ready to repeat the same process. It must repeat this process, if value is to perpetuate itself as capital-value and create more value. The individual cycle is but a fragment in the life of capital, it is a period which is continually repeated. At the end of the period M...M' capital has once more the form of money- capital, which passes anew through that series of metamor- phoses in which its process of reproduction, or self -expan- sion, is included. At the end of the period P...P, capital has resumed the form of elements of production, which are the requirement for a renewal of its cycle. The rotation of capital, considered as a periodical process, not as an indi- vidual event, constitutes its turn-over. The duration of this turn-over is determined by the sum of its time of produc- tion plus its time of circulation. This sum constitutes the time of turn-over. It measures the passing of time while the entire capital-value goes through the period of its cycle until it reaches the next one. It counts the periods in the life of capital, or, the time of the renewal, repetition, of the process of self-expansion, which is the process of production, of the same capital-value.
Apart from the individual adventures which may ac- celerate or retard the time of turn-over of individual capi- tals, this time is different according to the different spheres of investment of capitals.
Just as the working day is the natural unit for the func- tion of labor-power, so the year is the natural unit for the periods of turn -over of rotating capital. The natural basis of this unit is found in the fact 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 the time of turn- over by T, the time of turn-over of a given capital by t, and the number of its turn-overs by n, then n =? If» for instance, the time of turn-over t is 3 months, then n is equal to g2, or 4: in other words, capital is turned over The Period and Number of Turn- Overs. 177 four times per year. If it is equal to 18 months then n = \% = |, capital completes only two-thirds of its turn-over in one year. If its time of turn-over is several years, it is com- puted in multiples of one year.
From the point of view of the capitalist, the time of turn- over is the time for which he must advance his capital in order to create value with it and have it returned in its orig- inal form.
Before we can study the influence of the turn-over on the processes of production and self-expansion, we must take a look at two new forms which accrue to capital from the process of circulation and influence the form of its turn- over.
178 Capital.
CHAPTER VIII.
FIXED CAPITAL AND CIRCULATING CAPITAL.
I. Distinctions of Form.
We have seen in vol. I, chap. VIII, that a portion of the constant capital retains that form of the use-value, in which it entered into the process of production and does not share in the transfer to the products toward the creation of which it contributes. In other words, it performs for a longer or shorter period, in the ever repeated labor process, the same function. This applies, for instance, to buildings, machin- ery, etc., in short to all things which we comprise under the name of instruments of labor. This part of constant capital yields value to the product in proportion as it loses its own exchange-value with the dwindling of its use-value. This transfer of value from an instrument of production to the product which it helps to create is determined by a cal* culation of averages. It is measured by the average dura- tion of its function, from the moment that the instrument of labor transfers its parts to the product to the moment that it is completely spent and must be reproduced, or re- placed by a new specimen of the same kind.
This, then, is the peculiarity of this part of constant capital of the instruments of labor: A certain part of capital has been advanced in the form of constant capital, of instruments of labor, which now per- form their function in the labor-process so long as their own use-value lasts, which they bring with them into this process. The finished product, with the elements it absorbed from the instruments of production, is pushed out of the process of production and transferred as a commodity to the sphere of circulation. But the instruments of labor never leave the sphere of production, once that they have entered Fixed Capital and Circulating Capital. 179 it. Their function holds them there. A certain portion of the advanced capital-value is fixed in this form by the func- tion of the instruments of labor in the process of produc- tion. In the performance of this function, and thus by *he wear and tear incidental to it, a part of the value of tfie instruments of labor is transferred to the product, while •mother remains fixed in the instruments of labor and thus \n the process of production. The value thus fixed decreases constantly, until the instrument of labor is worn out, its value having been distributed during a shorter or longer period, over a mass of products which emanated from a series of currently repeated labor processes. But so long as an instrument of labor is still effective and has not been replaced by a new specimen of the same kind, a certain amount of constant capital-value remains fixed in it, while another part of the value originally fixed in it is trans- ferred to the product and 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 remain fixed in this form of use-value. But whatever may be its durability, the proportion in which it yields its value is always inverse to its entire time of service. If of two ma- chines 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 value fixed in the instruments of labor circulates as well as any other. We have seen that all capital-value is constantly in circulation, and ihat 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 exchange-value which circulates, and this takes place gradually and piecemeal, in proportion as it is transferred to the product which circulates as a commodity. During the entire period of its service, a portion of its value always re- mains fixed in it, independent of the commodities which it helps to produce. It is this peculiarity which gives to this portion of capital the character of fixed capital. On the 180 Capital.
other hand, all other substantial parts of the capital ad- vanced in the process of production form the circulating, or fluid, capital.
Some portions of the means of production do not yield their substance to the product. Such are auxiliary substances, which are consumed by the instruments of labor themselves in the performance of their functions, such as coal consumed by a steam engine; or substances which merely assist in the operation, such as gas for lighting, etc. It is only their value which forms a part of the value of products. In cir- culating its own value, the product circulates theirs. To this extent they share the fate of the fixed capital. But they are entirely consumed in every labor-process which they enter, and must therefore be replaced by new speci- mens of their kind in every new labor-process. They do not preserve their own use-form while performing their func- tion. Hence no portion of capital-value remains fixed in their natural use-value during their service. The fact that this portion of the auxiliary substances does not pass bodily into the product, but yields only its value to swell thereby the value of the product, although the function of these substances is confined to the sphere of production, has mis- led some economists, for instance Ramsay — who also con- founded fixed capital with constant capital — to class them among the fixed capital.
That part of the means of production which yields its substance to the product, in other words, the raw materials, may eventually assume forms which enable it to pass into individual consumption. The instruments of labor, prop- erly so called, that is to say, the material bearers of the fixed capital, can be consumed only productively and cannot pass into individual consumption, because their substance does not enter into the product, into the use-value, which they help to create, but they rather retain their independent form until they are completely worn out. The means of trans- portation are an exception to this rule. The useful effect which they produce by their productive function during their stay in the sphere of production, that is to say, the change of location, passes simultaneously into the individual con- Fixed Capital and Circulating Capital. 181 sumption, for instance into that of a traveler. He pays for its use in the same way in which he pays for the use of other articles of consumption. We have seen that some- times the raw material and auxiliary substances pervade one another, for instance in the manufacture of chemicals. In the same way, instruments of labor, raw material and aux- iliary substances may pervade one another. In agriculture, for instance, the substances employed for the improvement of the soil pass into the plants and help to form the product. On the other hand, their influence is distributed over a lengthy period, say four or five years. A portion of them, therefore, pass into the product and enhance its value, while another portion remains fixed in its old use-form and re- tains its value. It persists as an instrument of production and retains the form of fixed capital. An ox is fixed capi- tal, so long as it is a beast of toil. If it is eaten, it does not perform the functions of an instrument of production, and is, therefore, not fixed capital.
That which determines whether a certain portion of the capital-value invested in means of production is fixed capi- tal or not is exclusively the peculiar manner in which this value circulates. This peculiar manner of circulation arises from the peculiar manner in which the means of produc- tion yield their value to the product, that is to say the man- ner in which the means of production participate in the creation of values in the process of production. This, again, arises from the special nature of the function of these means of production in the labor-process.
We know that the same use-value, which comes as a prod- uct from one labor-process, passes as a means of production into another. It is only the function of a product as a means of production in the labor-process which stamps it as fixed capital. But to the extent that it arises itself out of such a process, it is not fixed capital. For instance, a ma- chine, as a product, as a commodity of the machine manu- facturer, belongs to his commodity-capital. It does not be- come fixed capital, until it is employed productively in the hands of its purchaser.
All other circumstances being equal, the degree of fixity 182 Capital.
increases with the durability of the means of production. This durability determines the magnitude of the difference be- tween the capital-value fixed in the instruments of labor and between that part of its value which is yielded to the prod- uct in successive labor-processes. The slower this value is yielded — and some of it is given up in every repetition of the labor-process — the larger will be the fixed capital, and the greater will be the difference between the capital em- ployed and the capital consumed in the process of produc- tion. As soon "as this difference has disappeared, the instru- ment of labor has ceased to live and lost, with its use-value, also its exchange-value. It has ceased to be the bearer of value. Since an instrument of labor, the same as every other material bearer of constant capital, yields value only to the extent that its use-value is converted into exchange-value, it is evident that the period in which its constant capital- value remains fixed will be so much longer, the longer it lasts in the process of production, the more slowly its use- value is lost.
If any one means of production, which is not an instru- ment of labor, strictly speaking, such as auxiliary substances, raw material, partly finished articles, etc., yields and circu- lates its value in the same way as the instruments of produc- tion, then it is likewise the material bearer, the form of existence, of fixed capital. This is the case with the above- mentioned improvements of the soil, which add chemical substances to the soil, the influence of which is distributed over several periods of production, or years. In this case, a portion of the value continues to exist independently of the product, it persists in the form of fixed capital, while an- other portion has been transferred to the product and cir- culates with it. And in the latter case, it is not alone a portion of the value of the fixed capital which is transferred to the product, but also a portion of the use-value, the sub- stance in which this portion of value is embodied.
Apart from the fundamental mistake — the confounding of the categories "fixed capital and circulating capital" with the categories "constant capital and variable capital"— the confusion of the economists in the matter of definitions is based on the following points: Fixed Capital and Circulating Capital. 183 They make of certain qualities, embodied in the sub- stances of the instruments of labor, direct qualities of fixed capital, for instance, the physical immobility of a house. It is always easy in that case to prove that other instruments of labor, which are likewise fixed capital, have an opposite quality, for instance, physical mobility, such as a vessel's.
Or, they confound the definite economic form, which arises from the circulation of value, with some quality of the object itself, as though things which are not at all cap- ital in themselves, but rather become so under given social conditions, could be of themselves and intrinsically capital in some definite forms, such as fixed or circulating capital. We have seen in volume I that the means of production in every labor-process, regardless of the social conditions in which it takes place, are divided into instruments of labor and objects of labor. But both of them do not become capi- tal until the capitalist mode of production is introduced, and then they become "productive capital," as shown in the preceding part. Henceforth the distinction between instru- ments and objects of labor, based on the nature of the labor- process, is reflected in the new distinction between fixed and circulating capital. It is then only, that a thing which performs the function of an instrument of labor, becomes fixed capital. If it can serve also in other capacities, owing to its material composition, it may be fixed capital or not, according to the functions it performs. Cattle as beasts of toil are fixed capital; if they are fattened, they are raw material which finally enters into circulation as commodities, in other words, they are circulating, not fixed capital.
The mere fixation of some means of production for a cer- tain length of time in repeated labor-processes, which are consecutively connected and form a period of production, that is to say, the entire period required to complete a cer- tain product, demands advances from the capitalist for a longer or shorter term, just as fixed capital does, but this does not give to his capital the character of fixed capital. Seeds, for instance, are not fixed capital, but only raw ma- terial which is held for about a year in the process of pro- duction. All capital is held in the process of production, 184 Capital.
so long as it performs the functions of productive capital, and so are, therefore, all elements of productive capital, whatever may be their substantial composition, their func- tion and the mode of circulation of their value. Whether the period of fixation lasts a long or a short time, according to the manner of the process of production or the effect aimed at, it does not determine the distinction between fixed and cir- culating capital.20 A portion of the instruments of labor, which determine the general conditions of labor, may be located in a fixed place, as soon as it enters on its duties in the process of pro- duction or is prepared for them, for instance, machinery. Or it is produced from the outset in its locally fixed form, such as improvements of the soil, factory buildings, kilns, canals, railroads, etc. The constant fixation of the instru- ment of labor in the process of production is in that case also due to its mode of material existence. On the other hand, an instrument of labor may continually be shifted bodily from place to place, may move about, and neverthe- less be continually in the process of production, for instance, a locomotive, a ship, beasts of burden, etc. Neither does im- mobility in the one case bestow the character of fixed capi- tal on the instrument of labor, nor does mobility in the other case deprive it of this character. But the fact that some instruments of labor are attached to the soil and remain so fixed, assigns to this portion of fixed capital a peculiar role in the economy of nations. They cannot be sent abroad, cannot circulate as commodities on the market of the world. The titles to this fixed capital may be exchanged, it may be bought and sold, and to this extent it may circulate ideally. These titles of ownership may even circulate on foreign markets, for instance in the form of stocks. But the change of the persons of the owners of this class of fixed capital does not alter the relation of the immobile, substantially fixed part of national wealth to its circulating part.21 The peculiar circulation of fixed capital results in a pecu- liar turn-over. That part of value which is lost by wear "On account of the difficulty of determining what constitutes the dis- tinguishing mark of fixed and circulating capital, Mr. Lorenz Stein thinks that this distinction is suitable only for lighter study.
21End of Manuscript IV, beginning of Manuscript II.
Fixed Capital and Circulating Capital. 185