476 Capital.
in other words, consumers (whether commodities are bought in the last instance for productive or individual consump- tion). But if one were to attempt to clothe this tautology with a semblance of a profounder justification by saying that the working class receive too small a portion of their own product, and the evil would be remedied by giving them a larger share of it, or raising their wages, we should reply that crises are precisely always preceded by a period in which wages rise generally and the working class actually get a larger share of the annual product intended for con- sumption. From the point of view of the advocates of "sim- ple" (!) common sense, such a period should rather remove a crisis. It seems, then, that capitalist production comprises certain conditions which are independent of good or bad will and permit the working class to enjoy that relative prosper- ity only momentarily, and at that always as a harbinger of a coming crisis.41 We saw a while ago that the proportion between the pro- duction of necessities of life and that of luxuries requires the division of II (v + s) into Ila and lib, and thus of He into (Ha) c and (lib) c. Hence this division touches the char- acter and the quantitative conditions of production to their very roots, and is an essential factor in its general conforma- tion.
Simple reproduction is essentially directed toward con- sumption as an end, although the securing of surplus-value appears as the compelling motive of the individual capital- ists; but surplus-value in this case, whatever may be its pro- portional magnitude, is supposed to serve merely for the in- dividual consumption of the capitalist.
So far as simple reproduction is a part, and the most im- portant one at that, of annual reproduction on an enlarged scale, consumption remains as a motive accompanying the accumulation of wealth as an end and distinguished from it. In reality, the matter appears more complicated, because some partners in the loot, the surplus-value of the capitalist, figure as consumers independently of him.
41 Advooates of the theory of crises of Rodbertus are requested to make a note of this.
Simple Reproduction. 47*7 V. THE PROMOTION OF THE TRANSACTIONS BY THE CIRCULA- TION OF MONEY.
So far as we have analyzed circulation up to the present, it proceeded between the various classes of producers as indi- cated in the following diagrams: (1) Between class I and class II: This disposes of the circulation of He (2000), which is exchanged for I (1000 v + 1000 s).
Leaving aside for the present the 4000 c of I, there still remains the circulation of v + s within class II. Now II (v + s) is subdivided between the subclasses Ila and lib in the following manner: The 400 v of a circulate within their own subclass; the laborers paid with these wages buy with them articles of con- sumption, produced by themselves, from their employers, the capitalists of Ila.
Since the capitalists of both subclasses spend three-fifths of their surplus-value in products of Ila (necessities) and two-fifths in products of lib (luxuries), the three-fifths of the surplus-value of a, or 240, are consumed within the sub- class Ila itself; likewise two-fifths of the surplus-value of b (produced in the form of articles of luxury and existing as such) within the subclass lib.
There remains to be exchanged between Ila and lib: On the side of Ila: 160 s; on the side of lib: 10U v + 60 s. These compensate one another. The laborers of lib buy with their 100 in the form of money necessities of life to that amount from Ila. The capitalists of lib likewise buy necessities from Ila to the amount of three-fifths, or 60, of their sur- plus-value. The capitalists of Ila thus obtain the money re- quired for investing, as above assumed, two-fifths of their sur- plus-value, or 160 s, in luxuries produced by lib (100 v held by the capitalists of lib as a product reimbursing them for 478 Capital the wages paid by them, and 60 s). The diagram for this transaction is the brackets indicating the amounts circulated and con- sumed within their own subclass.
The direct reflux of the money-capital advanced in vari- able capital, which takes place only in the case of the capital- ist class of Ha who produce necessities of life, is but an ex- pression, modified by special conditions, of the previously mentioned general law, that money advanced to the circula- tion by producers of commodities returns to them in the normal circulation of commodities. Consequently, if a money capitalist stands behind the producer of commodities and advances to the industrial capitalist money-capital (using this term in its strictest meaning, that is to say, capital-value in the form of money), the final point of reflux for this money is the pocket of this money-capitalist. In this way the mass of the circulating money belongs to that depart- ment of money-capital which is concentrated and organized in the form of banks, etc., although the money circulates more or less through all hands. The way in which this de- partment advances its capital necessitates continually the final reflux to it in the form of money, although this takes place by way of the reconversion of the industrial capital into money-capital.
The circulation of commodities always requires two things: Commodities which are thrown into circulation, and money which is likewise thrown into it. "The process of circulation...does not, like direct barter of pro- ducts, become extinguished upon the use-values changing places and hands. The money does not vanish on dropping out of the circuit of the metamorphosis of a given commod- ity. It is constantly being precipitated into new places in the arena of circulation vacated by other commodities," etc. (Volume I, chapter III, page 126.)
For instance, in the circulation between lie and I (v + s) we assumed that 500 pounds sterling in gold had been ad- vanced for it. In the innumerable processes of circulation, Simple Reproduction. 479 into which the circulation between great social groups re- solves itself, now this, now that producer will first appear in one or the other group as a buyer, throwing money into cir- culation. Quite aside from individual, circumstances, this is conditioned on the difference of the periods of production and thus of the turn-overs of the various commodity-capitals. Now II buys with these 500 pounds sterling means of pro- duction of the same value from I, and I buys from II arti- cles of consumption valued at 500 pounds sterling. Hence the money flows back to II, but this department does not in any way increase its wealth by this reflux. It had thrown 500 pounds sterling in money into circulation and drew the same amount out of it in commodities; then it sells 500 pounds sterling worth of commodities and draws out of cir- culation the same amount in money; thus the 500 pounds sterling flow back to it. As a matter of fact, II has thrown into circulation 500 pounds sterling in money and 500 pounds sterling in commodities, a total of 1000 pounds sterling. It draws out of the circulation 500 pounds sterling in commodities and 500 pounds sterling in money. The circulation requires for the handling of 500 pounds sterling in commodities of I and 500 pounds sterling in commodities of II only 500 pounds sterling in money; and whoever has first advanced money in the purchase of commodities from other producers, recovers it when selling his own. Hence, if department I had been the first to buy commodities from II for 500 pounds sterling, and to sell later on to II commodities valued at 500 pounds sterling, these 500 pounds sterling would have returned to I instead of II.
In class I, the money invested in wages, in other words, the variable capital advanced in the form of money, does not return directly in this form, but indirectly by a detour. But in II, the 500 pounds sterling return directly from the laborers to the capitalists, and this return is always direct, in the case where purchase and sale takes place repeatedly between the same persons in such a way that they are acting alternately as buyers and sellers of commodities. The cap- italist of II pays for the labor-power in money; he thereby 480 Capital.
480 Capital.
incorporates his labor-power in his capital and assumes the role of an industrial capitalist over his laborers as wage earners only by means of this transaction in circula- tion, which is for him merely a conversion of money-capital into productive capital. Thereupon the laborer, who is in the first instance a seller of his own labor-power, assumes in the second instance the role of a buyer, a possessor of money, while the capitalist acts now as a seller of commod- ities. In this way the capitalist recovers the money invested by him in wages. Unless this sale of his commodities im- plies cheating, etc., and remains but an exchange of equiv- alents in money and commodities, it is not a process by which the capitalist enriches himself. He does not pay the laborer ■twice, first in money, and then in commodities. His money returns to him as soon as the laborer exchanges it for his commodities.
Now, the money-capital converted into variable capital, the money advanced for wages, plays a prominent role in the circulation of money itself. For the laborer must live from hand to mouth and cannot give the industrial capital- ists any credit for long periods. Hence variable capital in the form of money must be advanced simultaneously at in- numerable localities in the social production in certain short intervals, such as weeks, etc., whatever may be the various periods of turn-over of the capitals in the different lines of industry. These intervals succeed one another with relative rapidity, and the shorter they are, the smaller is relatively the total amount of money thrown into circulation through this channel. In every country with a capitalist production the money-capital so advanced constitutes a proportionately influential share of the total circulation, so much more so as the same money, before its return to its point of depart- ure, roams through many channels and serves as a me- dium of circulation for innumerable other businesses.
Now let us consider the circulation between I (v + s) and lie from a different point of view.
The capitalists of I advance 1000 pounds sterling in the Simple Reproduction. 481 payment of wages. The laborers buy with this money 1000 pounds sterling's worth of commodities from the capitalists of II. These in turn buy with the same money means of production from the capitalists of I. These capitalists of I thereby recover their variable capital in the form of money, while the capitalists of II have reconverted one-half of their constant capital from the form of commodities into that of productive capital. The capitalists of II advance 500 pounds sterling more for the purchase of means of production from the capitalists of I. The capitalists of I spend this money in articles of consumption of II. These 500 pounds ster- ling thus return to the capitalists of II. They advance this amount again, in order to reconvert the last quarter of their constant capital, existing in the form of commodities, into means of production of I, its natural productive form. This money flows back to I, and once more withdraws from II articles of consumption to the same amount, returning 500 pounds sterling to II. The capitalists of II are then once more in possession of 500 pounds sterling in money and 2000 pounds sterling of constant capital, the latter having been reconverted from the form of commodity-capital into that of productive capital. By means of 1500 pounds sterling, a quantity of commodities valued at 5000 pounds ster- ling has been circulated. (1) I paid 1000 pounds sterling to his laborers for their labor-power of the same value; (2) the laborers bought with these same 1000 pounds sterling articles of consumption from II; (3) II bought with the same money means of production from I, thereby restoring to I its variable capital of 1000 pounds sterling in the form of money; (4) II buys 500 pounds sterling's worth of means of production from I; (5) I buys with the same 500 pounds sterling articles of consumption from II; (6) II buys with the same 500 pounds sterling means of produc- tion from I; (7) I buys with the same 500 pounds sterling articles of consumption from II. Thus 500 pounds ster- ling have returned to II, which it had thrown into circula- tion aside from its 2000 pounds sterling in commodities and 482 Capital.
for which it did not withdraw any equivalent from circula- tion.42 The exchange, therefore, follows this course: (1)1 pays 1000 pounds sterling in money for labor-power, or, in short, commodities at 1000 pounds sterling.
(2) The laborers buy with their wages amounting to 1000 pounds sterling articles of consumption from II; therefore we have again commodities at 1000 pounds ster- ling.
(3) II buys with the 1000 pounds sterling received from the laborers means of production to the same amount; hence, once more, commodities at 1000 pounds sterling.
By this transaction the 1000 pounds sterling have re- turned to I in the money-form of its variable capital.
(4) II buys 500 pounds worth of means of production from I, or, commodities at 500 pounds sterling.
(5) I buys with the same 500 pounds sterling articles of consumption from II; or, commodities at 500 pounds sterl- ing.
(6) II buys with the same 500 pounds sterling means of production from I; or, commodities at 500 pounds sterling.
(7) I buys with the same 500 pounds sterling articles of consumption from II; or, commodities at 500 pounds ster- ling.
Total amount of value of commodities converted: 500 pounds sterling.
The 500 pounds sterling advanced by II in its first addi- tional purchase have returned to it.
This, then, is the result: (1) I possesses variable capital in the form of money to the amount of 1000 pounds sterling, which it had originally advanced to the circulation. It has furthermore expended 1000 pounds sterling for its individual consumption, in the shape of its product in commodities; that is to say, has spent 42 This presentation differs somewhat from that given in another place of this section farther along. There I throws likewise an additional amount of 500 p. st. into circulation. Here II alone supplies the addi- tional money for the circulation. But this does not alter the final result— F. E.
Simple Reproduction. 483 money which it had originally received for the sale of means of production to the amount of 1000 pounds sterling.
On the other hand, the natural form in which variable capital existing in the form of money must be incorporated in order to be preserved, in other words, labor-power, has been maintained by consumption, and having been repro- duced exists once more as the sole commodity which its own- ers have for sale in order to make a living. The relation of wage workers and capitalists, then, has likewise been repro- duced.
(2) The constant capital of II is reproduced in its nat- ural form, and the 500 p. st. advanced by the same depart- ment to the circulation have likewise returned to its hands.
So far as the laborers of I are concerned, the circulation takes place according to the simple schedule C — M — C. Labor-power1 C — 1000 p. st. as the money-form of the variable capital of I; M2 — necessities of life to the amount of 1000 p. st.; C3 — these 1000 p. st. monetize to the same amount the constant capital of II existing in the form of commodities, of necessities of life.
From the point of view of the capitalists of II, the pro- cess is C — M, the transformation of a portion of their pro- duct into money, from which it is reconverted into the ele- ments of productive capital, namely into a portion of the means of production required by them.
In the case of the advance of money of 500 p. st., made by the capitalists of II in the purchase of an additional por- tion of means of production, the money-form of that por- tion of lie which exists as yet in the form of commodities, of articles of consumption, is anticipated, in the transaction M — C, in which II buys with M, and C is sold by I, the money (II) is converted into a portion of productive cap- ital, while C (I) passes through the transaction C — M, changes itself into money, which, however, does not repre- sent any component part of productive capital for I, but merely monetized surplus-value expended solely for articles of consumption.
In the circulation M— C.. P.. C1— M1, the first act, M — C. is that of one capitalist, the last C1 — M1, of another (or at 484 Capital.
least in part); whether this C, by which M is converted into productive capital, represents an element of constant capital, variable capital, or surplus- value for the seller of C (who exchanges this C for money), is immaterial for the circula- tion of commodities itself.
Class I, so far as concerns the portion v plus s of its pro- duct in commodities, draws more money out of circulation than it threw in. In the first place, its 1000 p. st. of vari- able-capital are restored to it; in the second place, it sells means of production valued at 500 p. st. (see above trans- action No. 4); one-half of its surplus-value is thus mon- etized; then it sells once more 500 p. st.'s worth of means of production (transaction No. 6), the second half of its sur- plus-value, and thus its entire surplus-value is withdrawn from circulation in the shape of money. The successive transactions, then, have been (1) a reconversion of variable capital into money, to the amount of 1000 p. st.; (2) a monetization of one-half of the surplus-value, to the amount of 500 p. st.; (3) a monetization of the other half of the surplus-value, to the amount of 500 p. st., altogether 1000 v plus 1000 s that have been monetized, or 2000 p. st. Although department I threw only 1000 p. st. into circula- tion (aside from those transactions which promote the re- production of Ic, and which we shall analyze later), it has withdrawn double that amount from it. Of course, the surplus-value passes into another hand, that of II, as soon as it has been converted into money, by being spent for arti- cles of consumption. The capitalists of I withdrew only as much value in money as they threw into circulation in the form of commodities; the fact that this value is surplus- value, that is to say, that it does not cost the capitalists any- thing, does not alter the value of these commodities in any way; so far as the exchange of values in circulation is con- cerned, that fact is entirely irrelevant. The monetization of surplus-value is, of course, a transient act, the same as all other phases through which the advanced capital passes in its metamorphoses. It lasts no longer than the interval be- tween the conversion of the commodities of I into monpy and the subsequent conversion of the money of I into com- modities of II, Simple Reproduction.
If the turn-overs had been assumed to be shorter — or, from the point of view of the simple circulation of commod- ities, the number of turn-overs of the circulating money more rapid — even less money would be required for the cir- culation of the exchanged values of commodities; the amount is always determined — if the number of successive transactions is given — by the sum of the prices, or the sum of values, of the circulating commodities. It is immaterial for this question what proportion of this sum of values con- sists of surplus-value or of capital-value.
If the wages of I, in our illustration, were paid four times per year, we should have 4 times 250, or 1000. In other words, 250 p. st. would suffice for the circulation be- tween Iv and y2 of He, and for that between the variable capital of I and the labor-power of the same department. Furthermore, if the circulation between Is and lie were to take place in four turn-overs, it would require only 250 p. st. in money, or in the aggregate a sum of money, or a money- capital, or 500 p. st. for the circulation of commodities worth 5000 p. st. In that case, the surplus-value would be converted into money by four successive transactions, mone- tizing one-fourth each time, instead of two transactions of one-half each time.
If department I instead of II, should assume the role of buyer in transaction No. 4 by expending 500 p. st. for arti- cles of consumption of the same value, II would buy means of production with the same 500 p. st. in transaction No. 5, I would then buy articles of consumption with the same 500 p. st. in transaction No.. 6; II would then buy means of production with the same 500 p. st. in transaction No. 7; so that the 500 p. st. would finally return to I, the same as they did in our previous illustration to II. The surplus- value is converted into money, in this second case, by means of an expenditure of money for articles of individual con- sumption on the part of its capitalist producer, and this expenditure of money discounts beforehand the revenue to be derived from the monetization of the surplus-value still contained in the unsold commodities. The surplus-value is not monetized by the reflux of the 500 p. st.; for aside 486 Capital.
486 Capital.
from 1000 p. st. in the form of commodities of Iv, depart- ment I threw 500 p. st. in money into circulation at the close of transaction No. 4, and this was additional money, so far as we know, not money obtained by the sale of com- modities. In recovering this money, department I merely pockets once more the additional money advanced by it. It has not monetized its surplus-value by this means. The monetization of the surplus-value of I takes place only by the sale of the commodities of Is, in which it is incorpor- ated, and lasts only so long as the money obtained by the sale of the commodities is not expended in the purchase of new articles of consumption.
Department I buys with an additional amount of 500 p. st. in money articles of consumption from II; after spend- ing this money, I holds its equivalent in commodities of II; the money returns for the first time by the purchase, on the part of II, of commodities to the amount of 500 p. st. from I; in other words, it returns as the equivalent of the commodities sold by I, but these commodities do not 'cost I anything, they constitute surplus-value for I, and thus the money thrown into circulation by this very department monetizes its own surplus-value. On buying for the second time, in transaction No. 6, I has likewise obtained its equiv- alent in commodities of II. Take it, now, that II would not buy means of production from I. In that case, I would have actually paid 1000 p. st. for articles of consumption, it would have consumed its entire surplus-value as revenue, namely 500 in its own commodities (means of production) and 500 in money; on the other hand, it would still have 500 p. st. in commodities (means of production) in stock, and would have gotten rid of 500 p. st. in money.
Department II, again, would have reconverted three- fourths of its constant capital from the form of commodity- capital into that of productive capital; but one-fourth, or 500 p. st., would be held by it in money, which, having interrupted its function and waiting for conversion, would be unproductive for the time being. If this condition of things should last for any length of time, II would have to cut down its scale of reproduction by one-fourth.
Simple Reproduction. 487 However, the 500 in means of production, which I has on its hands, are not surplus-value existing in the form of com- modities; they occupy the place of the 500 p. st. advanced in money, which I possessed aside from its 1000 p. st. in commodities. In the form of money, they would be always convertible, as commodities they are momentarily unsal- able. So much is evident, that simple reproduction — in which every element of productive capital must be repro- duced in both II and I — remains possible in this case only, if the 500 golden birds, which I first sent flying, return to it.
If a capitalist (we have only industrial capitalists to deal with here, who are the representatives of all others) spends money for articles of consumption, it passes out of his life, it goes the way of the flesh. If it returns to him, it can do so only to the extent that he draws it out of circulation by means of his commodity-capital. The value of his entire annual product in commodities (which rep- resents his commodity-capital) the same as that of every one of its elements, that is to say, of every individual com- modity, resolves itself, from his point of view, into constant capital, variable capital, and surplus-value. The mone- tization of every individual commodity (each constituting an element of the product in commodities) is at the same time a monetization of a certain portion of the surplus-value contained in the entire product. In the cited case, then, it is literally true that the capitalist himself threw the very money into circulation by which his surplus-value is monetized, and he did so in the purchase of articles of consumption. Of course, it is not a question of the identical pieces of money, but rather of a certain amount of genuine money equal to the one (or an equal portion of the one) which he had previously thrown into circulation to satisfy his own individual wants.
In practice this is done in two ways: If the business has been opened in the current year, it will take quite a while before the capitalist will be enabled to use any por- tion of the receipts of his business for the satisfaction of his individual consumption. But he does not suspend his con- sumption for all that for a single moment. He advances 488 Capital.