Thirdly: It does not alter the circumstances here de- scribed, whether or not the time of production is longer than the working time. True, the aggregate of the periods of turn-over is prolonged thereby, but this prolongation does not imply any additional capital for the labor-process. The additional capital serves merely the purpose of filling up the fallow places left by the time of circulation. Its mission is simply to protect production against interruption by the time of circulation. Interruptions arising from the conditions of production itself are compensated for in an- other way, which we do not discuss at this point. There are, however, some businesses, in which work is carried on only in intervals and to order, so that there may be inter- ruptions in the working periods. In such cases, the neces- sity of additional capital is eliminated to that extent. On the other hand, in most cases of season work, there is a limit for the time of reflux. The same work cannot be renewed next year with the same capital, if the time of circulation of this capital is not completed. Still, the time of circulation may be shorter than the intervals between two periods of 302 Capital.
production. In such an eventuality, capital lies fallow, un- less it is employed otherwise in the meantime.
Fourthly: The capital advanced for a certain working period, for instance, the 600 pounds sterling in the third illustration, is invested partly in raw and auxiliary mate- rials, in a productive supply for the working period, in constant circulating capital, partly in variable circulating capital, in the payment of labor itself. The portion invest- ed in constant circulating capital may not exist for the same length of time in the form of a productive supply, the raw material, for instance, may not be on hand for the en- tire working period, coal may be purchased only every two weeks. However, credit being out of the question, accord- ing to our assumption, this portion of capital, to the extent that it is not available in the form of a productive supply, must be kept on hand in the form of money in order to be converted into a productive supply when needed. This does not alter the magnitude of the constant circulating capital-value advanced for 6 weeks. The wages, on the other hand, are generally paid weekly, making exception of the money supply for unforeseen expenses, the strict reserve fund for the compensation of disturbances. Unless the capitalist, therefore, compels the laborer to advance his labor for a longer time, the money required for the payment of wages must be on hand. During the reflux of the capital, a portion must, therefore, be reserved in the form of money for the payment of labor, while the remaining portion may be converted into a productive supply.
The additional capital is subdivided exactly like the orig- inal. But it is distinguished from capital I by the fact that (apart from conditions of credit), in order to be available for its own period of labor, it must be advanced during the entire duration of the first working period of capital I, in which it does not take part. During this time, it may be converted into constant circulating capital, at least in part, being advanced for the entire period of turn-over. To what extent it will assume this form, or persist in the form of additional money-capital, up to the time where this con- version becomes necessary will depend partly on the special conditions of production of definite lines of business, partly Influence of the Time of Circulation. 303 on the fluctuations in the prices of raw material, etc. Look- ing at it from the point of view of the aggregate social capi- tal, there will always be a more or less considerable part of this additional capital for a rather long time in the form of money-capital. But as for that portion of capital II which is to be advanced for wages, it is always gradually converted into labor-power to the extent that small working periods are closed and paid for. This portion of capital II, then, is available in the form of money-capital for the en- tire working period, until it is converted into labor-power and thus takes part in the function of productive capital.
The advent of the additional capital required for the transformation of the time of circulation of capital I into a time of production increases not only the magnitude of the advanced capital and length of time for which the ag- gregate capital must be necessarily advanced, but it also increases specifically that portion of the advanced capital which exists in the form of a money-supply, which per- sists in the condition of money-capital, and has the form of potential capital.
The same takes also place, as concerns both the advance in the form of a productive supply and in that of a money supply, when the separation of capital into two parts re- quired by the time of circulation, namely, capital for the first working period and reserve capital for the time of cir- culation, is not caused by the increase of the invested capi- tal, but by a decrease of the scale of production. In pro- portion to the scale of production, the increase of the capi- tal tied up in the form of money is apt to grow still more in this case.
It is the continuous succession of the working periods, the continuous function of an equal portion of the advanced capital as productive capital, which is insured by this sep- aration of capital into an original productive and a reserve capital.
Let us look at the second illustration. The capital con- tinuously employed in the process of production amounts to 500 pounds sterling. The working period being 5 weeks, it works ten times during a working year of 50 weeks. Hence 304 Capital.
its product, apart from surplus-value, is 10 times 500 or 5,000 pounds sterling. From the point of view of a direct- ly and uninterruptedly working capital in the process of production, a capital-value of 500 pounds sterling, the time of circulation seems entirely eliminated. The period of turn-over coincides with the working period, the time of circulation being assumed as equal to zero.
But if the capital of 500 pounds sterling were interrupted in its productive activity by regular times of circulation covering 5 weeks, so that it could not become productively active until after the close of the entire period of turn-over of 10 weeks, we should have 5 turn-overs of ten weeks each in 50 running weeks. These would comprise 5 periods of production of 5 weeks each, or 25 productive weeks with a total product of 5 times 500, or 2,500 pounds sterling; and 5 times of circulation of 5 weeks each, or a total period of circulation of 25 weeks. If we say in this case that the capi- tal of 500 pounds sterling has been turned over 5 times in the year, it is evident and obvious that this capital of 500 pounds sterling did not serve at all as a productive capital during one-half of each period of turn-over, and that, tak- ing all in all, it performed its function only during one half of the year, while it did not serve at all during the other half.
In our illustration, the reserve capital of 500 pounds ster- ling comes to the rescue during those five periods of circula- tion, and the turn-over is thus expanded from 2,500 to 5,000 pounds. But now the advanced capital is 1,000 in- stead of 500 pounds sterling. Hence there are only five turn -overs instead of ten. This is indeed the way in which people count. But when it is said that the capital of 1,000 pounds has been turned over five times in the year, the recollection of the time of circulation disappears in the hol- low skulls of the capitalists, and a confused idea is formed that this capital has served continuously in the process of production during the successive five turn-overs. As a mat- ter of fact, if we say that the capital of 1,000 pounds has been turned over five times in a year, we include both the time of circulation and the time of production. For, in- Influence of the Time of Circulation. 305 deed, if 1,000 pounds sterling had actually been continuous- ly active in the process of production, the product would have to be 10,000 pounds sterling instead of 5,000, accord- ing to our assumptions. But in order to have 1,000 pounds sterling continuously in the process of production, 2,000 pounds would have to be advanced. The economists, who as a general rule have nothing clear to say in reference to the mechanism of the turn-over, always overlook this main point, to-wit, that only a part of the industrial capital can actually be engaged in the process of production, if produc- tion is to proceed uninterruptedly. While one part is busy in the process of production, another must always be en- gaged in the process of circulation. Or in other words, one part can perform the functions of productive capital only on condition that another part is withdrawn from production in the form of commodity or money-capital. In overlooking this, the significance and role of money-capital is entirely ignored.
We have now to ascertain to what extent differences in the turn-over are caused according to whether the two sec- tions of the period of turn-over, the working period and the circulating period, are equal to one another, or the working period greater or smaller than the circulating period, and furthermore, what effect this has on the reten- tion of capital in the form of money-capital.
We assume, that the capital advanced weekly is in all cases 100 pounds sterling, and the period of turn-over 9 weeks, so that the capital invested in each period of turn- over is 900 pounds sterling.
I. The Working Period Equal to the Period of Circulation.
Although this case occurs in reality only accidentally, as an exception, it must serve as our point of departure in this analysis, because conditions here shape themselves in the simplest and most intelligible way.
The two capitals (capital I advanced for the first working period, and reserve capital II advanced during the time of circulation of capital I) relieve one another in their move- ments without crossing. With the exception of the first period, either of the two capitals is therefore advanced only Capital.
Capital.
for its own period of turn-over. Let the period of turn- over be 9 weeks, as indicated in the two following illustra- tions, so that the working period and the time of circulation are each of them 4% weeks. Then we have the following annual diagram: Periods of Turn-Over.
Table I. CAPITAL I.
Working Periods. Advance.
Periods of Circulation.
I.
CAPITAL II.
Periods of Periods of Turn-Over. Working Period. Advance. Circulation.
Within the 50 weeks which we here assume to stand for one year, capital I has absolved six full working periods, making 6 times 450, or 2,700 pounds sterling, and capital II making in five full working periods 5 times 450, or 2,250 pounds sterling's worth of commodities. In addition there- to, capital II has produced, within the last one and a half weeks of the year (middle of the 50th to the end of the 51st week) an extra 150 pounds sterling's worth, making the aggregate product 5,100 pounds sterling. So far as the di- zect production of surplus-value is concerned, which is pro- duced only during the working period, the aggregate capi- tal of 900 pounds sterling would have been turned over 5 2-3 times (5 2-3 times 900 equal to 5,100 pounds sterling). But if we consider the actual turn-over, then capital I has been turned over 5 2-3 times, since at the close of the 51st week it still has to absolve 3 weeks of its sixth period of turn-over; 5 2-3 times 450 make 2,550 pounds sterling; and capital II turned over 5 1-6 times, since it has completed only 1 1-2 week of its sixth period of turn-over, so that 7 1-2 weeks of it fall within the next year; 5 1-6 times 450 make 28 The weeks falling within the second year of turn-over are placed in parentheses.
Influence of the Time of Circulation. 30% 2,325 pounds sterling; actual aggregate turn-over 4,875 pounds sterling.
Let us regard capital I and capital II as two capitals in- dependent of one another. They are independent in their movements; these movements supplement one another merely because their working and circulating periods di- rectly relieve one another. They may be regarded as two entirely independent capitals belonging to different capi- talists.
Capital I has completed five full turn-overs and two-thirds of its sixth period of turn-over. At the end of the year it has the form of commodity-capital, which lacks three weeks of its normal realization. During this time, it cannot take part in the process of production. It performs the function of commodity-capital, it circulates. It has completed only two-thirds of its last period of turn-over. This is expressed in the words: It has been turned over only two-thirds, only two-thirds of its total value have completed their turn- over. We say that 450 pounds sterling complete their turn- over in 9 weeks, hence 300 do in 6 weeks. But in this ex- pression, the organic conditions of the two specifically dif- ferent portions of the period of turn-over are neglected. The exact meaning of the expression, that the advanced capital of 450 pounds sterling has made 5 2-3 turn-overs, is merely that it has completed five turn-overs fully and of the sixth only two-thirds. On the other hand, the expression that the turned-over capital is equal to 5 2-3 of the advanced capital, or, in the above case, 5 2-3 times 450 pounds ster- ling, making 2,550, is correct only in so far as it means that unless this capital of 450 pounds sterling were supplemented by another capital of 450 pounds sterling, one por- tion of it would have to be in the process of circulation while another is in the process of production. If the period of turn-over is to be expressed in the quantity of the turned- over capital, it can be expressed only in a quantity of exist- ing values (embodied in the finished product). The fact that the advanced capital is not in a condition in which it may reopen the process of production is due to the cir- cumstance that only a part of it is in a condition suitable for production, or that, in order to be in a condition suitable 308 Capital.
for continuous production, it would have to be divided into a portion which would be continually in the period of pro- duction and into another which would be continually in the period of circulation, according to the mutual relation of these periods. It is the same law which determines the quantity of the continually serving productive capital by the proportion of the time of circulation to the period of turn-over.
As for capital II, 150 pounds sterling of it are advanced in the production of unfinished goods at the close of the 51st running week, which we regard here as the last of the year. Another part exists in the form of circulating constant capi- tal— raw materials, etc., — that is to say, in a form, in which it can serve as productive capital in the process of produc- tion. But a third part of it exists in the form of money, namely at least the amount of the wages for the remainder of the working period (3 weeks), which is not paid, how- ever, until the end of each week. Now, although this portion of capital, in the beginning of a new year, and of a new cycle of turn-over, is not in the condition of productive capi- tal, but in that of money-capital, in which it cannot take part in the process of production, there is, nevertheless, cir- culating variable capital, namely labor-power, active in the process of production at the opening of the new cycle of turn- over. This is due to the fact that labor-power is not paid until at the end of the week, although it was bought at the beginning of the working period, say, per week, and so con- sumed. Money serves here as a means of payment. For this reason, it is still in the hands of the capitalist, while on the other hand labor-power is already busy in the process of production, so that the same capital-value here appears twice.
If we look merely at the working periods, 'then there has been produced: By capital I, 5 2-3 times 450, or 2,550 pounds sterling, By capital II, 5 1-3 times 450, or 2,400 pounds sterling, Total, 5 2-3 times 900, or 5,100 pounds sterling.
Hence the advanced capital of 900 pounds sterling has Influence of the Time of Circulation. 309 performed the function of productive capital 5 2-3 times per year. It is immaterial for the production of surplus-value, whether there are always 450 pounds sterling in the process of production and always 450 pounds sterling in the process of circulation, or whether 900 pounds sterling serve 4 1-2 weeks in ihe process of production and 4 1-2 weeks in the process of circulation.
On the other hand, if we consider the periods of turn- over, there has been produced: By capital I, 5 2-3 times 450, or 2,550 pounds sterling, By capital II, 5 1-6 times 450, or 2,325 pounds sterling, Or, by the aggregate capital, 5 5-12 times 900, or 4,875 pounds sterling, in the total turn-over. For the turn-over of the total capital is equal to the sum of the quantities turned over by capital I and II, divided by the sum of I and II.
It is to be noted, that capital I and II, if they were inde- pendent of one another, would nevertheless be merely dif- ferent independent portions of the social capital advanced for the same sphere of production. Hence, if the social capi- tal within this sphere of production were solely composed of I and II, the same calculation would apply to the turn-over of the social capital, which here applies to the two constitu- ent parts I and II, of the same private capital. In a wider generalization, every portion of the entire social capital in- vested in any special sphere of production may be so calcu- lated. But in the last analysis, the amount of the turn-over of the entire social capital is equal to the sum of the capitals turned over in the various spheres of production, divided by the sum of the capitals advanced in those spheres.
It must be further noted that just as the capitals I and II in the same private business have, strictly speaking, dif- ferent years of turn-over (the cycle of turn-over of capital II beginning 4 1-2 weeks later than that of capital I, so that the year of capital I closes 4 1-2 weeks earlier than that of capi- tal II), just so the various private capitals in the same sphere of production begin their activities at totally different sec- tions of time and, therefore, conclude their years of turn- over at different times of the year. The same calculation of 310 Capital.
averages, which we employed above for capitals I and II, suffices also for the reduction of the years of turn-over of the various independent portions of the social capital to one uniform year of turn-over.
II. The Working Period Greater Than the Period of Circulation.
The working and circulating periods of capitals I and II cross one another instead of relieving one another. Simul- taneously some capital is set free. This was not so in the previously considered case.
But this does not alter the fact that, as before, (1) the number of working periods of the advanced total capital is equal to the sum of the values of the annual products of both advanced portions of capital divided by the advanced total capital, and (2) the amount turned over by the total capital is equal to the sum of the two amounts turned over, divided by the sum of the two advanced capitals. Here, again, we must regard both portions of capital as though they per- formed movements of turnover entirely independent of one another.
We assume once more, then, that 100 pounds sterling are advanced weekly in the working process. Let the working period last 6 weeks, requiring every time an advance of 600 pounds sterling (capital I). Let the time of circulation be 3 weeks, so that the period of turn-over is 9 weeks, as before. Let a capital of 300 pounds sterling step in as a substitute during the three weeks of the time of circulation of capital I. Considering both capitals as independent of one another, we find the diagram of the annual turn-over 'to be as follows: Table II.
CAPITAL I, 600 POUNDS STERLING.
Periods of Periods of Turn-Over.
Working Periods. Advance.
Circulation.
I.
II.
III.
IV.
V.
VI.
Influence of the Time of Circulation. 311 ADDITIONAL CAPITAL II, 300 POUNDS STERLING.
Periods of Periods of Turn-Over. Working Periods.
Advance.
Circulation.
The process of production continues uninterruptedly all year on the same scale. The two capitals I and II remain entirely separate. But in order to represent them thus as separate, we had to tear apart their actual interrelations and intersections, and thus also to change the amount of turn- over. For according to the above diagram, the amounts turned over would be: Capital II, 5 times 300 or 1,500 p. st.
Total capital 5 4-9 times 900, or 4,900 p. st.
But this is not correct, for we shall see that the actual periods of production and 'circulation do not absolutely coin- cide with the above diagrams, in which it was mainly a ques- tion of presenting capitals I and II as independent of one another.
Now, in reality, capital II has no working and circulating periods separate and distinct from capital I. The working period is 6 weeks, the circulation period 3 weeks. Since capital II amounts to only 300 pounds sterling, it can fill out only a part of the working period. This is indeed the case. At the close of the 6th week, a product valued at 600 pounds sterling passes into circulation and flows back in money at the close of the 9th week. Then capital II begins its activity at the opening of the 7th week and responds to the requirements of the next working period for the 7th to 9th week. But according to our assumption, the working period is only half completed at the end of the 9th week. Hence, in the beginning of the 10th week, capital I of 600 pounds sterling, having just returned, comes once more into activity and advances 300 pounds sterling for the require- ments of the 10th to 12th week. This completes the second 312 Capital.
312 Capital.
working period. Products valued at 600 pounds,.sterling are once again in circulation and will return in money at the close of the 15th week. Furthermore, 300 pounds ster- ling are set free, equal to the original amount of capital II, and are enabled to serve in the first half of the following working period, that is to say, in the 13th to 15th week. After the lapse of these, the 600 pounds sterling flow back; 300 of them suffice for the remainder of the working period, 300 are set free -for the following working period. The course of events is, therefore, as follows: 1. Working period: 1 — 6. week. Capital I, of 600 p. st., performs its function, 1. Period of circulation: 7 — 9. week. After the lapse of the 9th week, 600 p. st. flow back in money.
II. Period of turn-over: 7 — 15 week.
First half: 7—9. week. Capital II, of 300 p. st., performs its function. After <the lapse of the 9th week, 600 p. st. (capital I) flow back in money. Second half: 10—12. week. 300 p. st. of capital I perform their function. The other 300 p. st. of capital I remain free.
2. Period of circulation: 13 — 15. week.
After the close of the 15. week, 600 p. st. (one half belonging to capital I, the other to capital II) flow back in money.
III. Period of turn-over: 13 — 21. week.
First half: 13-15. week. The free 300 p. st. perform their function. After the close of the 15th week, 600 p. st. flow back in money.
Second half: 16—18. week, 300 of the returned 600 perform their function, the other 300 again remain free.
Influence of the Time of Circulation. 313 3. Period of circulation: 19 — 21. week. After the close of the 21st week, 600 p. st. flow back in money. In this amount of 600 p. st., capital I and II are amal- gamated and indistinguishable.
In this way, there are eight full periods of turn-over of a capital of 600 p. st. (I: 1—9. week; II: 7—15. week; III: 13—21; IV: 19—27.; V: 25—33.; VI: 31—39.; VII: 37 —45.; VIII: 43—51) to the end of the 51st week. But as the 49 — 51st weeks fall within the eighth period of circu- lation, the 300 p. st., of free capital must step in and keep production moving. Thus the turn-over at the end of the year is as follows: 600 p. st. have completed their cycle eight times, making 4,800 p. st. In addition thereto we have the product of the last 3 weeks (49 — 51.), which, however, has completed but one third of its cycle of 9 weeks, so that it counts in the amount turned over only with one third of its value, 100 p. st. If, then, the annual product of 51 weeks is 5,100 p. st., the capital actually turned over is only 4,800 plus 100, or 4,900 p. st. The advanced total capital of 900 p. st. has, therefore, been turned over 5 4-9 times, somewhat more than in the first case.
In the present example, we had assumed a case, in which the working 'time was 2-3, the circulation time 1-3, of the period of turn-over, so that the working time was a simple multiple of the circulation time. The question is now, whether capital is likewise set free, in the same way as shown before, when this assumption is not made.
Let us assume a working time of 5 weeks, a circulation time of 4 weeks, and a capital advance of 100 p. st. per week.
1. Working period: 1 — 5. week. Capital I, of 500 p. st., performs its function.
1. Circulation period: 6 — 9. week. After the close of the 9th week, 500 p. st. flow back in money.
II. Period of turn-over: 6 — 14. week.
314 Capital.
First section: 6 — 9. week. Capital II, of 400 p. st., performs its function. After the close of the 9th week, capital I, of 500 p. st., flows back in money. Second section: 10. week. 100 of the returned 500 p. st. perform their function. The remaining 400 p. st. are set free for the following working period.
After the close of the 14. week, 500 p. st. flow back in money.
Up to the end of the 14th week (11—14.), the free 400 p. st. perform their function; 400 of the 500 p. st. then returned fill the requirements of the third working period (11 — 15. week), so that 400 p. st. are once more set free for the fourth working period. The -same phenomenon is re- peated in every working period; in its beginning, 400 p. st. are ready at hand, sufficing for the requirements of the first 4 weeks. After the close of the 4th week, 500 p.' st. flow back in money, only 100 of which are needed for the last week, while the remaining 400 are set free for the next working period.
Let us furthermore assume a working period of 7 weeks, with a capital I of 700 p. st.; a circulation period of 2 weeks, with a capital II of 200 p. st.
In that case, the first period of turn-over lasts from the 1st to the 9th week; its first working period from the 1st to the 7th week, with an advance of 700 p. st., its first circula- tion period from the 8th to the 9th week. After the close of the 9th week, 700 p. st. flow back in money.