their value must be entirely reproduced by this product, while in the case of the fixed capital this takes place gradu- ally and piecemeal. The part of productive capital ad- vanced for labor-power (or for the laborer's articles of con- sumption) differs here only in the matter of material from the other material elements of productive capital, not in the matter of the process of production or self-expansion. It differs only in so far as it falls into the same category, name- ly, that of circulating capital, with one part of the objective elements active in the formation of the product (materials, Theories of Fixed and Circulating Capital. 243 Adam Smith calls them), while another part of these be- longs in the category of fixed capital.
The fact that the capital invested in wages belongs to the circulating part of productive capital and shares this circu- lating quality, as distinguished from the fixed character of productive capital, with a part of the material objects, the raw materials, etc., instrumental in creating the product, has nothing whatever to do with the role played by this variable part of capital in the process of self-expansion, as distinguished from the constant part of capital. It refers merely to the manner in which this part of the invested capital-value is reproduced out of the value of the product by way of the circulation. The purchase and repeated pur- chase of labor-power belongs in the process of circulation. But it is only within the process of production that the value invested in labor-power (not for the benefit of the laborer, but that of the capitalist) is converted from a defi- nite constant into a variable magnitude, and only thus the advanced value is converted into capital-value, into self- expanding value. But by classing the value advanced for articles of consumption among the circulating elements of productive capital, as Smith does, instead of the value in- vested in labor-power, the understanding of the difference between variable and constant capital, and thus the understanding of the capitalist process of production in general, is rendered impossible. The mission of this part of capital of being variable as distinguished from the constant capital invested in material objects instrumental in production, is hidden under the mission of the capital invested in labor- power of serving in the turn-over as a circulating part of productive capital. And the obscurity is made complete by enumerating the laborer's maintenance among the ele- ments of productive capital, instead of his labor-power. It is immaterial, whether the value of labor-power is advanced in money or immediately in articles of consumption. How- ever, under capitalist production, the last-named eventuality can be but an exception.24 24 To what extent Adam Smith has blocked his own way to an under- standing of the role of labor-power in the process of self-expansion is proven by the following sentence, which places the labor of human labor- ers on the same level with that of laboring cattle, after the manner of the physiocrats. "Not only his (the farmer's) laboring servants, but his laboring cattle are productive laborers." (Book II, chap. V, p. 243.)
244 Capital.
244 Capital.
By thus emphasizing the role of the circulating capital as the determining element of the capital-value invested in labor-power, by using this physiocratic conception without the fundamental premise of the physiocrats, Adam Smith haply rendered the understanding of the role of variable capital as a determinant of capital invested in labor-power impossible for his followers. The more profound and correct analyses given by him in other places did not survive, but this mistake of his did. Other writers after him went even farther. They were not content to make it the essential characteristic of capital invested in labor-power to be cir- culating as distinguished from fixed capital; they rather made it an essential mark of circulating capital to be invest- ed in articles of consumption for laborers. This resulted naturally in the doctrine of a labor fund of definite magni- tude consisting of requirements of life, which on one side established a physical limit for the share of the laborers in the social product, and on the other had to be fully ex- pended in the purchase of labor-power.
Theories of Fixed and Circulating Capital. 245 CHAPTER XI.
THEORIES OF FIXED AND CIRCULATING CAPITAL. RICARDO.
Ricardo mentions the distinction between fixed and cir- culating capital merely for the purpose of illustrating the exceptions to the law of value, namely, in cases where the rate of wages affects the prices. The discussion of this point is reserved for volume III.
But the original confusion is apparent at the outset in the following indifferent parallel: "This difference in the degree of durability of fixed capital, and this variety in the proportions in which the two sorts of capital may be combined." (Principles, page 25.)
And if we ask him which two sorts of capital he is refer- ring to, we are told: "The proportions, too, in which the capital that is to support labor, and the capital that is in- vested in tools, machinery, and buildings, may be variously combined." (1. c.) In other words, fixed capital consists of instruments of labor, and circulating capital is such as is invested in labor. "Capital that is to support labor" is a senseless term culled from Adam Smith. On one hand, the circulating capital is here confounded with the variable capital, that is to say, with that part of productive capital which is invested in labor. On the other hand, twice con- founded conceptions arise for the reason that the distinction is not between variable and constant capital and derived from the process of self -expansion, but from the process of circulation repeating the old confusion of Smith.
1. The difference in the degree of durability of fixed cppital and the difference in the proportion in which con- stant and variable capital may be combined, are conceived as being of equal significance. But the last-named differ- ence determines the difference in the production of surplus- value; the first-named, on the other hand, refers merely to the manner in which a given value is transferred from a mean? of production to the product, in so far as the process 246 Capital.
246 Capital.
of self -expansion is concerned; and as for the process of cir- culation, this difference refers only to the period of the re- production of the advanced capital, or, from 9 pother point of view, the time for which it has been advanced. Of course, if one looks upon the capitalist process of production in the light of a completed phenomenon, instead of seeing through its internal machinery, then these differences coincidp In the distribution of the social surplus-value among the vari- ous capitals invested in different lines of production, the proportions of the different periods of time for which capi- tal has been advanced (for instance, the different durability of fixed capital) and the different organic composition of capital (and therefore also the different circulation of constant and variable capital) contribute equally toward »a equalization of the general rate of profit and the conversion of values into prices of production.
2. From the point of view of the process of circulation, we have on one side the instruments of labor — fixed capital, on the other the materials of labor and wages — circulating capital. But from the point of view of the process of pro- duction and self-expansion, we have on one side means of production (instruments of labor and raw material) — con- stant capital; on the other, labor-power — variable capital. It is immaterial for the organic composition of capital (Book I, Chap. XXV, 2, page 683) whether the same quantity of constant capital consists of many instruments of labor and little raw material, or of much raw material and few instruments of labor, but everything depends on the proportion of the capital invested in means of produc- tion to that invested in labor-power. Vice versa, from the point of view of the process of circulation, of the difference between fixed and circulating capital, it is just as imma- terial in what proportions a given amount of circulating capital is divided between raw material and wages. From one of these points of view the raw material is classed in the same category with the instruments of labor, as com- pared to the capital-value invested in labor-power; from the other the capital-value invested in labor-power ranks with that invested in raw material, as compared to that invested in instruments of labor.
Theories of Fixed and Circulating Capital. 247 For this reason, the capital-value invested in materials of labor (raw and auxiliary materials) does not appear on either side. It disappears entirely. For it does not agree with the side of fixed capital, because its mode of circulation coincides entirely with that of the capital-value invested in labor-power. And on the other hand, it must not be placed on the side of circulating capital, because in that case the identification of the distinction between fixed and circulat- ing capital with that of constant and variable capital, which had been carried over from Adam Smith and tacitly perpet- uated, would abolish itself. Ricardo has too much logical instinct not to feel this, and for this reason that part of capi- tal disappears entirely for him.
It is to be noted at this point that the capitalist, to use the language of political economy, advances the capital in- vested in wages for different periods, according to whether he pays these wages weekly, monthly, or quarterly. But in reality, the reverse takes place. The laborer advances his labor to the capitalist for one week, one month, or three months, according to whether he is paid by the week, by the month, or every three months. If the capitalist really were to buy labor-power, instead of only paying for it, in other words, if he were to pay the laborer in advance for a day, a week, a month, or three months, then he would be justi- fied in claiming that he advanced wages for those periods. But since he does not pay until labor has lasted for days, weeks, or months, instead of buying it and paying for the time which it is intended to last, we have here a confusion of terms on the part of the capitalist, who performs the trick of converting an advance of labor made to the capital- ist by the laborer into an advance of money made to the la- borer by the capitalist. It does not alter the case that the capitalist may not get any returns from his product by way of the circulation in the shape of a reproduction of his product or of its value (increased by the surplus value em- bodied in it) until after a certain length of time, according to the different periods required for its manufacture, or for its circulation. It does not concern the seller of a com- modity what its buyer is going to do with it. The capital- ist does not get a machine cheaper, because he must ad- 248 Capital.
vance its entire value at one time, while this value returns to him only gradually and piecemeal by way of the circu- lation; nor does he pay more for cotton, because its value is assimilated fully by the product into which it is made over, and is therefore fully recovered at one time by the sale of the product.
Let us return to Ricardo.
1. The characteristic mark of variable capital is that a certain given, and to that extent constant, part of capital representing a given sum of values (supposed to be equal to the value of labor-power, although it is immaterial for this discussion whether wages are equal to the value of labor-power or higher or lower than it) is exchanged for a self-expand- ing power which creates value, namely, labor-power, which not only reproduces the value paid for it by the capitalist, but produces a surplus-value, a value not previously ex- isting and not paid for by any equivalent. This character- istic mark of the capital-value advanced for wages, which distinguishes it as a variable capital from constant capital, disappears whenever the capital-value advanced for wages is considered solely from the point of view of the circulation, for then it appears as a, circulating capital as distinguished from the fixed capital invested in instruments of labor. This is apparent from the simple fact that it is then classed under one head, namely, under that of circulating capital, to- gether with a part of the constant capital, namely, that which is invested in raw materials, and thus distinguished from another part of constant capital, namely, that invested in instruments of labor. The surplus-value, the very fact which converts the advanced sum of values into capital, is entirely ignored under these circumstances. Furthermore, the fact is ignored that the value added to the product by the capital invested in wages is newly produced (and there- fore actually reproduced), while the value transferred from the raw material to the product is not newly produced, not actually reproduced, but only preserved in the value of the product and merely reappears as a part of the value of the product. The distinction, as seen from the point of vie*; Theories of Fixed and Circulating Capital. 249 of the contrast between fixed and circulating capital, con- sists now simply in this: The value of the instruments of labor used for the production of a certain commodity is transferred only partially to the value of the commodi- ty and is therefore only partially recovered by its sale, is only partially and gradually returned. On the other hand, the value of the labor-power and materials of labor (raw materials, etc.) used in the production of a cer- tain commodity is entirely assimilated by it, and is therefore entirely recovered by its sale. From this stand- point, and with reference to the process of circulation, one part of capital appears as fixed, the other as cir- culating. In both cases it is a matter of a transfer of definite advanced values to the product and of their recov- ery by the sale of the product. The only difference which is essential at this point is whether the transfer of values, and consequently their recovery, proceeds gradually or in one bulk. By this means the really decisive difference be- tween the variable and constant capital is blotted out, the whole secret of the production of surplus-value and of capi- talist production, namely, the circumstances which trans- form certain values and the things in which they are contained into capital, are obliterated. All constituent parts of capital are then distinguished merely by their mode of circulation (and, of course, circulation concerns itself solely with already existing values of definite size). And the capital invested in wages then shares a peculiar mode of cir- culation with a part of capital invested in raw materials, partly finished articles, auxiliary substances, as distinguished from another part of capital invested in instruments of labor.
It is, therefore, easy to understand why the bourgeois political economy instinctively clung to Adam Smith's con- fusion of the categories of "constant and variable capital" with the categories "fixed and circulating capital," and re- peated it parrotlike from generation to generation for a century. The capital invested in wages is not in the least distinguished by bourgeois political economy from capital invested in raw materials, and differs only formally from constant capital to the extent that it is partially or in bulk 250 Capital.
circulated by the product. In this way the fiwf retirement for an understanding of the actual movement of capitalist production, and thus of capitalist exploitation, is buried pt one stroke. It is henceforth but a question of the reap- pearance of advanced values.
In Ricardo the uncritical adoption of the Smithian con- fusion is annoying, and not only more so than in the later apologetic writers, in whom the confusion of terms is rather otherwise than annoying, but also more than in Adam Smith himself, because Ricardo is comparatively more consistent and clear in his analysis of value and surplus-value, and indeed rescues the esoteric Adam Smith from the exoteric Adam Smith.
Among the physiocrats this confusion is not found. The distinction between avarices annuelles and avances primi- tives refers only to the different periods of reproduction of the various parts of capital, especially of agricultural capi- tal; while their ideas concerning the production of surplus- value form a part of their theory, apart from these dis- tinctions, being upheld by them as the salient point 0/ this theory. The formation of surplus-value is not explained out of capital as such, but only attributed to one special sphere of production of capital, namely, agriculture.
2. The essential point in the determination of variable capital — and therefore for the conversion of any sum of values into capital — is that the capitalist exchanges a defi- nite given, and to that extent constant, magnitude of values for a power which creates values, a magnitude of values for a production, a self-expansion, of values. It does not alter this essential fact that the capitalist may pay the laborer either in money or in means of subsistence. This alters merely the mode of existence of the value advanced by the capitalist, seeing that in one case it has the form of money for which the laborer himself buys his means of subsistence on the market, in the other case that of means of subsistence which he consumes directly. A developed capitalist produc- tion rests indeed on the assumption that the laborer is paid in money and more generally on the assumption that the proc- ess of production is promoted by the process of circulation, in other words, by the monetary system. But the production of Theories of Fixed and Circulating Capital. 251 surplus-value — and consequently the capitalization of the ad- vanced sum of values — has its source neither in the money- form, nor in the natural form, of wages, or of the capital invested in the purchase of labor power. It arises out of the exchange of value for a power creating value, the con- version of a constant into a variable magnitude.
The greater or smaller fixity of the instruments of labor depends on the degree of their durability, on their physical properties. According to the degree of their durability, other circumstances being equal, they will wear out fast or slowly, will serve a long or a short time as fixed capital. The raw material in metal factories is just as durable as the machines used in manufacturing, and more durable than many parts of these machines, such as leather, wood, etc. Nevertheless the metal serving as raw material forms a part of the circulating capital, while the instrument of labor, although probably built of the same metal, is a part of the fixed capital, when in use. Hence it is not the sub- stantial physical nature, not its great or small durability, to which the same metal owes its place, now in the category of the fixed, now of the circulating capital. This distinction is rather due to the role played by it in the process of pro- duction, being an object of labor in one case, and an instru- ment of labor in another.
The function of an instrument of labor in the process of production requires generally, that it should serve for a longer or shorter period in ever renewed labor processes. Its function, therefore, determines the greater or lesser dura- bility of its substance. But it is not the durability of the material of which it is made that gives to it the character of fixed capital. The same material, if in the shape of raw material, becomes a circulating capital, and among those economists who confound the distinction between commodi- ty-capital and productive-capital with that between circu- lating and fixed capital the same material, the same ma- chine, are circulating capital as products and fixed capital as instruments of labor.
Although it is not the durability of the material of which it is made that gives to an instrument of labor the charac- ter of fixed capital, nevertheless its role as such an instru- 252 Capital.
ment requires that it should be composed of relatively dura- ble material. The durability of its material is, therefore, a condition of its function as an instrument of labor, and consequently the material basis of the mode of circulation which renders it a fixed capital. Other circumstances being equal, the greater or lesser durability of its material endows it in a higher or lower degree with the quality of fixedness, in other words, its durability is closely interwoven with its quality of being a fixed capital.
If the capital-value advanced for labor-power is considered exclusively from the point of view of circulating capital, in distinction from fixed capital, and if consequently the dis- tinction between constant and variable capital is confounded with that between fixed and circulating capital, then it is natural to attribute the character of circulating capital, in distinction from fixed capital, to the substantial reality of the capital invested in labor-power, just as the substantial reality of the instrument of labor constitutes an essential element of its character of fixed capital, and to determine the circulating capital by the substantial reality of the vari- able capital.
The real substance of the capital invested in wages is labor itself, active, value creating, living labor, which the capitalist trades for dead, materialized labor and embodies in his capital, by which means alone the value in his hands is transformed into a self-expanding value. But this self- expanding power is not sold by the capitalist. It is always solely a constituent part of his productive capital, the same as his instruments of labor; it is never a part of his com- modity-capital, as, for instance, the finished product which he sells. Within the process of production, as parts of his productive capital, the instruments of labor are not distin- guished from labor-power as fixed capital any more than the raw materials and auxiliary substances are identified with it as circulating capital. Labor confronts both of them as a personal factor, while they are objective things — speaking from the point of view of the process of production. Both of them stand opposed to labor-power, to variable capital, as constant capital — speaking from the point of view of the process of self -expansion. Or, if mention is to be made Theories of Fixed and Circulating Capital. 253