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 value of the instrument of labor circulated by the product does the same, and this value is precipitated in the form of money by the process of circulation in the same proportion in which the instrument of labor loses its value in the process of production. This value has then a double existence. One part of it remains attached to the form of its use-value in the process of pro- duction, another is detached from the instrument of labor and becomes money. In the performance of its function, that part of the value of an instrument of labor which ex- ists in its natural form constantly decreases, while that which is transformed into money constantly increases, until at last the instrument is exhausted and its entire value, detached from its body, has assumed the form of money. Here the peculiarity in the turn-over of this element of productive capital becomes apparent. The transformation of its value into money keeps pace with the like transformation of the commodity which is its bearer. But its reconversion from the form of money into that of a use-value separates itself from the reconversion of the commodities into their other elements of production and is determined by its own period of reproduction, that is to say by the time during which the instrument of labor has worn out and must be replaced by another specimen of the same kind. If a machine lasts for, say, a period of ten years, then the period of turn-over of the value originally advanced for it amounts to ten years. It need not be replaced until this period has expired, and performs its function in this natural form until then. Its value circulates in the meantime piecemeal as a part of the value of the commodities which it turns out successively, and it is thus gradually transformed into money, until it has entirely assumed the form of money at the end of ten years and is reconverted from money into a machine, in other words, has completed its turn-over. Until this time arrives, its value is meanwhile accumulated in the form of a reserve fund of money.
186 Capital.
The other elements of productive capital consist partly of those elements of constant capital which exist in auxiliary and raw materials, partly of variable capital which is in- vested in labor-power.
The analysis of the processes of labor and self-expansion (vol. I, chap. VII) showed that these different elements be- have differently in their role of producers of commodities and 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 labor — reappears in the value of the product as transferred value, while labor- power actually adds the equivalent of its value to the prod- uct by means of the labor-process, in other words, actually reproduces its value. Furthermore, a part of the auxiliary material, fuel, gas, etc., is consumed in the process of labor without entering bodily into the product, while another part of them enters bodily into the product and forms a part of its substance. But all these differences are imma- terial so far as the mode of circulation and turn-over is con- cerned. To the extent that 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 entirely circulated by the product, transformed into money and from money back into the elements of pro- duction of the commodity. Its turn-over is not interrupted, as that of fixed capital is, but it rather passes uninterrupted through the entire cycle of its transformations, so that these elements of production are continually reproduced in sub- stance.
As for the variable part of productive capital, which is invested in labor-power, it buys labor-power for a definite period of time. As soon as the capitalist has bought labor- power and embodied it in his process of production, it forms a component part of his capital, definitely speaking, the variable part of his capital. Labor-power performs its func- tion daily during a period of time, in which it not only re- produces its own daily value, but also adds a surplus-value in excess of it to the product. We do not consider this sur- plus-value for the moment. After labor-power has been bought, say, for a week, and performed its function, its Fixed Capital and Circulating Capital. 187 purchase must be continually renewed within the accus- tomed space of time. The equivalent of its value, which labor-power embodies in its product during its function and which is transformed into money by means of the circula- tion of the product, must be continually reconverted from money into labor-power, must continually pass through the complete cycle of its transformations, in other words, must be turned over, lest the continuous rotation of its production be interrupted.
That part of the value of capital, then, which has been advanced for labor-power, is entirely transferred to the prod- uct— we still leave the question of surplus-value out of con- sideration— passes with it through the two metamorphoses belonging to the circulation, and always remains in the process of production by means of this continual reproduc- tion. Whatever may be the differences by which labor- power is distinguished, so far as the formation of value is concerned, from those parts of constant capital which do not represent fixed capital, it nevertheless has this manner of turn-over in common with them, as compared to the fixed capital. It is these elements of productive capital — the val- ues invested in labor-power and in means of production which are not fixed capital — that by their common charac- teristics of turn-over constitute the circulating capital as opposed to the fixed capital.
We have already stated that the money which the capital- ist pays to the laborer for the use of his labor-power is but the form of the general equivalent for the means of subsist- ence required by the laborer. To this extent, the variable capital consists in substance of means of existence. But in this case, where we are discussing the turn-over, it is a ques- tion of form. The capitalist does not buy the means of the existence of the laborer, but his labor-power. And that which forms the variable part of capital is not the subsist- ence of the laborer, but his active labor-power. The capital- ist consumes productively in the labor-process the labor- power of the laborer, not his means of existence. It is the laborer himself who converts the money received for his labor-power into means of subsistence, in order to reproduce 188 Capital.
his labor-power, to keep alive, just as the capitalist converts a part of the surplus-value realized by the sale of commodi- ties into means of existence for himself, and yet would not thereby justify the statement, that the purchaser of his commodities pays him with means of existence. Even if the laborer receives a part of his wages in the form of means of existence, this is still a second transaction in our days. He sells his labor-power at a certain price, with the under- standing that he shall receive a part of this price in means of production. This changes merely the form of the pay- ment, but not the fact that that which he actually sells is his labor-power. It is a second transaction, which does not take place between the parties in their capacity as laborer and capitalist, but on the part of the laborer as a buyer of com- modities and on that of the capitalist as a seller of commod- ities; while in the first transaction, the laborer is a seller of a commodity (his labor-power) and the capitalist its buyer. It is the same with the capitalist who replaces his commodi- ty by another, for instance when he takes iron for a machine which he sells to some iron-works. It is, therefore, not the means of subsistence of the laborer which determine the character of circulating capital as opposed to fixed capi- tal. Nor is it his labor-power. It is rather that part of the value of productive capital which is invested in labor-power that receives this character in common with some other parts of constant capital by means of the manner of its turn-over.
The value of the circulating capital — invested in labor- power and means of production — is advanced only for the time during which the product is in process of formation, in harmony with the scale of production dependent on the volume of the fixed capital. This value enters entirely into the product, is therefore fully returned by the sale of the product in the circulation, and can be advanced anew. The labor-power and means of production carrying the circulat- ing part of capital are withdrawn from the circulation to the extent that is required for the formation and sale of the finished product, but they must be continually replaced and reproduced by purchasing them back and reconverting them Fixed Capital and Circulating Capital. 189 from money into elements of production. They are with- drawn from the market in smaller quantities at a time than the elements of fixed capital, but they must be withdrawn so much more frequently and the advance of capital invest- ed in them must be repeated in shorter periods. This con- tinual reproduction is promoted by the continuous conver- sion of the product which circulates the entire value of these elements. And finally, they pass through the entire cycle of metamorphoses, not only so far as their value is con- cerned, but also their material substance. They are continually reconverted from commodities into the elements of production of the same commodities.
Together with its value, labor-power always adds sur- plus-value to the product, and this surplus-value represents unpaid labor. This is just as continuously circulated by the finished product and converted into money as its other elements of value. But in this instance, where we are first concerned about the turn-over of capital-value, and not of the surplus-value turned over at the same time, we dismiss the latter for the present.
From the foregoing, the following deductions are made: 1. The definite distinctions of the forms of fixed and circulating capital arise merely from the different turn- overs of the capital-value employed in the process of produc- tion, the productive capital. This difference of turn-over arises in its turn from the different manner in which the various elements of productive capital transfer their value to the product; they are not due to the different participa- tion of these elements in the production of value, nor to their characteristic role in the process of self-expansion. The dif- ference in the transfer of value to the product — and there- fore the different manner of circulating this value by means of the product and renewing it in its original material form by means of its metamorphoses — arises from the difference of the material forms in which the productive capital ex- ists, one portion of it being entirely consumed during the creation of the individual product, and another being used up gradually. Hence it is only the productive capital, which can be divided into fixed and circulating capital.
190 Capital.
190 Capital.
But this distinction 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 express the difference of these two capitals as compared to productive capital. It applies only to productive capital and its internal processes. No matter how much money-capital and commodity-capital may perform the functions of capital and circulate, they cannot become circulating capital as distinguished from fixed capital, until they have been transformed into cir- culating elements of productive capital. But because these two forms of capital dwell in the circulation, the economists since the time of Adam Smith, as we shall presently see, have been misled into confounding them with the circulat- ing parts of productive capital under the head of circulating capital. Money-capital and commodity-capital are indeed circulation capital as distinguished from productive capi- tal, but they are not circulating capital as opposed to fixed capital.
2. The turn-over of the fixed part of capital, and there- fore also its time of turn-over, comprises several turn-overs of the circulating parts of capital. In the same time, in which the fixed capital turns over once, the circulating capi- tal turns over several times. One of the component parts of the value of productive capital acquires the definite form of fixed capital only in the case that the instrument of pro- duction in which it is embodied is not worn out in the time required for the finishing of the product and its removal from the process of production as a commodity. One part of its value must remain tied up in the form of the old use-value, while another part is circulated by the finished product, and this circulation simultaneously carries with it the entire value of the circulating parts of productive capi- tal.
3. The value invested in the fixed part of productive capital is advanced in a lump-sum for the entire period of employment of that part of the instrument of labor which constitutes the fixed capital. Hence this value is thrown into the circulation by the capitalist all at one time. But it is withdrawn from the circulation only in portions cor- Fixed Capital and Circulating Capital. 191 responding to the degree in which those values are realized which the fixed capital yields successively to the commodi- ties. On the other hand, the means of production them- selves, in which a portion of the productive capital becomes fixed, are withdrawn from the circulation in one bulk and embodied in the process of circulation for the entire period which they last. But they do not require reproduction, they need not be replaced by new specimens of the same kind, until this time is gone by. They continue for a shorter or longer period to contribute to the creation of the com- modities to be thrown into circulation, without withdraw- ing from circulation the elements of their own reproduction. Hence they do not require from the capitalist a renewal of his advances during this period. Finally, the capital- value invested in fixed capital passes through the cycle of its transformations, not in its bodily substance, but only with its ideal value, and even this it does only in successive por- tions 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 reconverting itself from money into its original bodily form. This reconver- sion of money into the natural form of an instrument of labor does not take place until at the end of its period of usefulness, when the instrument has been completely worn out.
4. The elements of circulating capital are as continually engaged in the process of production — provided it is to be uninterrupted — as the elements of fixed capital. But the elements of circulating capital held in this condition are continually reproduced in their natural form (the instru- ments of production by other specimens of the same kind, and labor-power by renewed purchases) while in the case of the elements of fixed capital, neither the substance has to be renewed during their employment, nor the purchases. There are always raw and auxiliary materials in the proc- ess of production, but always new specimens of the same kind, whenever the old elements have been consumed in the creation of the finished product. Labor-power is like- wise always in the process of production, but only by means of ever new purchases, and frequently with changed indi- viduals. But the same identical buildings, machinery, etc., continue their function during repeated turn-overs of the circulating capital in the same repeated processes of produc- tion.
77. Composition, Reproduction, Repair, and Accu- mulation of Fixed Capital.
In the same investment of capital, the individual elements of fixed capital have a different life-time, and therefore differ- ent periods of turn-over. In a railroad, for instance, the rails, ties, earthworks, station-buildings, bridges, tunnels, locomotives, and carriages have different periods of wear and of reproduction, hence the capital advanced for them has different periods of turn-over. For a long term of years, the buildings, platforms, water tanks, viaducts, tunnels, ex- cavations, dams, in short everything called "works of art" in English railroading, do not require any reproduction. The things which wear out most are the rails, ties, and rolling stock.
Originally, in the construction of modern railways it was the current opinion, nursed by the most prominent prac- tical engineers, that a railroad would last a century and that the wear and tear of the rails was so imperceptible, that it could be ignored for all financial and practical purposes; from 100 to 150 years was supposed to be the life-time of good rails. But it was soon learned that the life-time of a rail, which naturally depends on the velocity of the locomo- tives, the weight and number of trains, the diameter of the rails themselves, and on a multitude of other minor circum- stances, did not exceed an average of 20 years. In some railway-stations, which are centers of great traffic, the rails even wear out every year. About 1867, the introduction of steel rails began, which cost about twice as much as iron rails but which on the other hand last more than twice as long. The life-time of wooden ties was from 12 to 15 years. It was also found, that freight cars wear out faster than passen- ger cars. The life-time of a locomotive was calculated in 1867 at about 10 to 12 years.
Fixed Capital and Circulating Capital. 193 The wear and tear is first of all a result of usage. As a rule, the rails wear out in proportion to the number of trains. (R. C. No. 17,645.)" If the speed was increased, the wear and tear increased faster in proportion than the square of the velocity, that is to say, if the speed of the trains increased twofold, the wear and tear increased more than fourfold.
Wear and tear are furthermore caused by the influence of natural forces. For instance, the ties do not only suffer from actual wear, but also from mold. The cost of mainte- nance does not depend so much on the wear and tear inci- dental to the railway traffic, as on the quality of the wood, the iron, the masonry, which are exposed to the weather. One single month of hard winter will injure the track more than a whole year of traffic. (R. P. Williams, On the Main- tenance of Permanent Way. Lecture given at the Institute of Civil Engineers, Autumn, 1867.)
Finally, here as everywhere else in great industry, the virtual wear and tear plays a role. After the lapse of ten years, one can generally buy the same quantity of cars and locomotives for 30,000 pounds sterling, which would have cost 40,000 pounds sterling at the beginning of that time. Thus one must calculate on a depreciation of 25 per cent on the market price of this material, even though no deprecia- tion of its use-value has taken place. (Lardner, Railway Economy.)
Tubular bridges in their present form will not be renewed, writes W. P. Adams in his "Roads and Rails," London, 1862. Ordinary repairs of them, removal and replacing of single parts, are not practicable. (There are now better forms for such bridges.) The instruments of labor are largely modified by the constant progress of industry. Hence they are not replaced in their original, but in their modified form. On the one hand, the quantity of the fixed capital invested in a certain natural form and endowed with a certain average vitality in that form constitutes one 22The quotations marked R. C. are from the work: Royal Commis- sion of Railways. Minutes of Evidence taken before the commissioners. Presented to both houses of Parliament, London, 1867. The questions and answers are numbered, as indicated above.
194 Capital.
reason for the gradual pace of the introduction of new machinery, etc., and therefore an obstacle to the rapid gen- eral introduction of improved instruments of labor. On the other hand, competition enforces the introduction of new machinery before the old is worn out, especially in the case of important modifications. Such a premature repro- duction of the instruments of labor on a large social scale is generally enforced by catastrophes or crises.
By wear and tear (excepting the so-called virtual wear) is meant that part of value which is yielded gradually by the fixed capital to the product in course of creation in pro- portion to the average degree in which it loses its use-value.
This wear and tear takes place partly in such a way that the fixed capital has a certain average life-time. It is ad- vanced for this entire period in one sum. After the lapse of this period, it must be replaced. So far as living instruments of labor are concerned, for instance horses, their reproduction is timed by nature itself. Their average life- time as means of production is determined by laws of nature. As soon as this term has expired, the worn-out specimens must be replaced by new ones. A horse cannot be replaced piecemeal, it must be replaced by another horse.
Other elements of fixed capital permit of a periodical or partial renewal. In this instance, the partial or periodical renewal must be distinguished from the gradual extension of the business.
The fixed capital consists in part of homogeneous ele- ments, which do not, however, last the same length of time, but are renewed from time to time and piecemeal. This is true, for instance, of the rails in railway stations, which must be replaced more frequently than those of the remainder of the track. It also applies to the ties, which for instance on the Belgian railroads in the fifties had to be renewed at the rate of 8 per cent, according to Lardner, so that all the ties were renewed in the course of 12 years. Hence we have here the following proposition: A certain sum is advanced for a certain kind of fixed capital for, say, ten years. This expenditure is made at one time. But a certain part of this fixed capital, the value of which has been transferred to the Fixed Capital and Circulating Capital. 195 value of the product and converted with it into money, is bodily renewed every year, while the remainder persists in its original natural form. It is this advance in one sum and the reproduction in natural form by small degrees, which distinguishes this capital in the role of fixed from circulating capital.
Other parts of the fixed capital consist of heterogeneous elements, which wear out in unequal periods of time and must be so replaced. This applies particularly to machines. What we have just said concerning the different life-times of different parts of fixed capital applies in this case to the life-time of different parts of the same machine, which per- forms a part of the function of this fixed capital.
With regard to the gradual extension of the business in the course of the partial renewal, we make the following re- marks: Although we have seen that the fixed capital con- tinues to perform its functions in the process of production in its natural state, a certain part of its value, proportion- ate to the average wear and tear, has circulated with the prod- uct, has been converted into money, and forms an element in the money reserve fund intended for the renewal of the capital pending its reproduction in the natural form. This part of the value of fixed capital transformed into money may serve to extend the business or to make improvements in machinery with a view to increasing the efficiency of the latter. Thus reproduction takes place in larger or smaller periods of time, and this is, from the standpoint of society, reproduction on an enlarged scale. It is extensive expansion, if the field of production is extended; it is inten- sive expansion, if the efficiency of the instruments of produc- tion is increased. This reproduction on an enlarged scale does not result from accumulation — not from the transform- ation of surplus-value into capital — but from the reconver- sion of the value which has detached itself in the form of money from the body of the fixed capital and has resumed the form of additional, or at least of more efficient, fixed capital of the same kind. Of course, it depends partly on the specific nature of the business, to what extent and in what proportion it is capable of such expansion, and to what 196 Capital.
amount, therefore, a reserve-fund must be collected, in order to be invested for this purpose; also, what period of time is required, before this can be done. To what extent, further- more, improvements in the details of existing machinery can be made, depends, of course, on the nature of these im- provements and the construction of the machine itself. That this is well considered from the very outset in the construc- tion of railroads, is apparent from a statement of Adams to the effect that the entire construction should follow the principle of a beehive, that is to say, it should have a faculty for unlimited expansion. All oversolid and preconceived symmetrical structures are impracticable, because they must be torn down in the case of an extension. (Page 123 of the above-named work.)
This depends largely on the available space. In the case of some buildings, additional stories may be built, in the case of others lateral extension and more land are required. Within capitalist production, there is on one side much waste of wealth, on the other much impracticable lateral exten- sion of this sort (frequently to the injury of labor-power) in the expansion of the business, because nothing is under- taken according to social plans, but everything depends on the infinitely different conditions, means, etc., with which the individual capitalist operates. This results in a great waste of the productive forces.
This piecemeal re-investment of the money-reserve fund, that is to say of that part of fixed capital which has been re- converted into money, is easiest in agriculture. A field of production of a given space is capable of the greatest possi- ble absorption of capital. The same applies also to natural reproduction, for instance to stock raising.