Let us now return to our fundamental diagram, which showed in department II the formula 2000 c +500 v + 500 s. All the articles of consumption produced in the course of the year are in that case valued at 3000. And every one of the different elements of the commodities com- posing the total quantity of the product consists, so far as its value is concerned, of 2-3 c +1-6 v + 1-6 s, or in per- centages, QQ 2-3 c + 16 2-3 v + 16 2-3 s. The various kinds of commodities of department II may contain different pro- portions of constant capital. The fixed portion of their constant capitals may be different. The duration of this fixed portion, its wear and tear and therefore that portion of value which it transfers by degrees to the commodities, produced by its assistance, may also differ. But that is im- material. So far as the process of social reproduction is concerned, it is only a question of transactions between de- partments II and I. These two departments are here con- fronted by each other only as social masses. Hence the proportional magnitude of the portion c of the value of the commodity-product of II (which is the only essential one in the settlement of the present question) gives the average proportion, if all the branches of production classed under II are taken as a whole.
Every kind of commodities (and they are largely the same kinds) classed under 2000 c + 500 v + 500 s thus 526 Capital.
shares uniformly in the value to the extent of 66 2-3 % c -f 16 2-3 % v + 16 2-3 % s. This applies equally to every 100 of the commodities classed under c, or v, or s.
The commodities in which the 2000 are incorporated may be further divided into Now, if we add these three formulae, we have 1333 1-3 c + 333 1-3 c + 333 1-3 c = 2000 c. Furthermore 333 1-3 v H-83 1-3 v + 83 1-3 v=500 v. And the same in the case of s. The addition gives the same total value of 3000 as above.
The entire constant capital-value contained in the quan- tity of commodities of II represented by 3000 is therefore incorporated in 2000 c, and neither 500 v nor 500 s contain an atom of it. The same is true of v and s in the case of In other words, the entire quantity of constant capital- value, embodied in the commodities of II and reconvertible either into its natural or its money-form, exists in 2000 c. Everything referring to the conversion of the constant value of the commodities of II is therefore dealing only with the movements of 2000 c of II. And these transactions can be made only with 1000 v + 1000 s of I.
In the same way, all remarks made with reference to the transactions of the constant capital-value of department I are confined to a consideration of 4000 I c.
(1) The Reproduction of the Value of the Worn-out Part in the Form of Money.
Let us first consider the diagram The exchange of the commodities represented by 2000 II c for commodities of I of the same value (1000 v + 1000 s) is conditioned on the assumption that the entire Simple Reproduction. 52T 2000 II c are reconverted from their natural form into that of the elements of the constant capital of II, produced by I. But the value of the commodities of 2000 c, of which the constant capital of II consists, contains an element making good the loss in the value of fixed capital, which is not to be immediately reproduced in its natural form, but converted into money and accumulated until such time as shall re- quire the natural reproduction of the fixed capital on ac- count of its having been completely worn out. Every year registers the finish of some fixed capital which must be re- newed in this or that individual business, or this or that line of industry. In the case of one and the same individual capital, this or that portion of its fixed capital must be re- newed, since its elements have a different durability. In examining annual reproduction, even on a simple scale, that is to say, disregarding all accumulation, we do not be- gin at the very beginning of things. The year which we study is one in the flow of many, it is not the year of the first birth of capitalist production. The various capitals invested in the numerous lines of production of depart- ment II are, therefore, of different age. Just as a great many persons die annually in the service of these lines of production, so scores of fixed capitals expire annually in the same service and must be restored in their natural form by means of the accumulated fund of money. To that ex- tent the exchange of 2000 II c for 2000 I (v + s) implies a conversion of 2000 II c from the form of commodities (articles of consumption) into that of natural elements of constant capital, which consist not only of raw and auxili- ary materials, but also of natural elements of fixed capital, such as machinery, tools, buildings, etc. The wear and tear, which must be reproduced in money in the value of 2000 II c, by no means corresponds to the volume of the actively engaged fixed capital, since a portion of this must be repro- duced every year in its natural form. The necessary prepa- ration for this reproduction is an accumulation of money in preceding years on the part of the capitalists of II. And the same condition holds good for the current year as well as for the preceding ones.
528 Capita!.
In the transaction of I (1000 v + 1000 s) it must be noted that the magnitude I(v + s) does not contain any elements of constant capital, so that none of it implies a reproduc- tion of wear and tear, that is to say, of elements transferred from the fixed portion of some constant capital to the com- modities which represent the natural form of v + s. On the other hand, such elements do exist in II c and consti- tute that portion of value due to fixed capital which is not immediately converted from money into its natural form, but first accumulated in the form of money. The exchange between I (1000 v+1000 s) and 2000 II c, therefore, pre- sents the difficulty, that the means of production of I, which are the natural form of (1000 v + 1000 s), are to be ex- changed to the full value of 2000 for articles of consump- tion of II, while the 2000 II c of articles of consumption cannot be offered entirely in exchange for 1(1000 v + 1000 s), because a portion of them, corresponding in value to the wear and tear of the fixed capital, must be accumu- lated in the form of money and do not serve as a medium of circulation during the current period of annual repro- duction which we are examining. But the money paying for this element of wear and tear incorporated in the value of 2000 II c can come only from department I, since II cannot pay for its own articles, but must secure pay- ment for them by selling them, and since we have assumed that I (1000 v+1000 s) buys the full amount of commodi- ties of 2000 II c. Hence department I must supply the money to cover that wear and tear of II c. Now, according to the rules previously determined, money advanced to the circulation returns to that capitalist producer who later on throws an equal amount of commodities into the circula- tion. It is evident that department I, in buying II c, cannot transfer commodities worth 2000 to department II and yield up to it every time an additional amount of money, without any equivalent returning by way of the circulation. Otherwise department I would buy the com- modities II c at a price exceeding their value. If depart- ment II actually exchanges its 2000 c for 1(1000 v -I- Simple Reproduction. 529 1000 s), then it has no further claims on department I, and the money circulating in this transaction returns either to I or to II, according to whether I or II acted first as a buyer. And in that case department II would have recon- verted the entire value of its commodity-capital into the natural form of means of production, contrary to our as- sumption that it would not reconvert an aliquot portion dur- ing the current period of annual reproduction into the nat- ural form of fixed elements of its constant capital. Depart- ment II could not secure a balance of money in its favor, un- less it sold a value of 2000 to department I and bought less than that from department I, for instance, only 1800. In that case department I would have to make good the bal- ance of 200 in money, which would not return to it, be- cause it would not have recovered this amount by an equiv- alent surrender of commodities to the circulation. Only then could II have a fund of money which it could place to the credit of the wear and tear of its fixed capital. But then we should also have an overproduction of means of production to the amount of 200 on the part of department I, and the basis of our diagram would be destroyed, which assumed reproduction on the same scale, in other words, a complete proportionality between the various systems of production. We should have done away with one difficulty and created another, which would be still worse.
As this problem offers peculiar difficulties and has never been mentioned by political economy, we shall consider one by one all possible solutions (at least apparent solutions), or rather all possible formulations of the problem.
In the first place, we had just assumed that department II sells commodities valued at 2000 to department I, but buys from it only 1800 worth. The value of the commodi- ties of 2000 c contains 200 for wear and tear of fixed capi- tal, which must be accumulated as money. The value of 2000 c would therefore be dissolved into 1800, which would be exchanged for means of production of I, and 200 for the reproduction of worn-out elements of fixed capital, which would be held in the form of money after the sale of 2000 530 Capital.
II c to department I. Expressed in terms of value, this would be 2000 II c = 1800 c + 200 w, this w standing for wear and tear.
We should then be studying the transaction Department I buys with 1000 p. st., which the labours have received as wages in payment for their labor-power, 1000 II c of articles of consumption. Department II buys with the same 1000 p. st. means of production from depart- ment I from the lot 1000 v. The capitalists of I thus re- cover their variable capital in the form of money and can employ it next year in the purchase of labor-power to the same amount, that is to say, they can reproduce the variable portion of their productive capital in its natural form. — Department II furthermore advances 400 p. st. and buys means of production from the lot I s, and department I s buys with the same 400 p. st. articles of consumption from II c. The 400 p. st. advanced by the capitalists of II have thus returned to them, but only as an equivalent for sold commodities. Department I now buys from II articles of consumption to the amount of 400 p. st.; II buys from I 400 worth of means of production, thereby returning the 400 p. st. to department I.
So far, then, we have the following calculation: Depart- ment I b throws into circulation 1000 v+800 s in commodi- ties; it also throws into circulation, in money, 1000 p. st. of wages and 400 p. st., thus facilitating its transaction with II. After the transaction is closed, department I has 1000 v in money, 800 s exchanged for articles of consumption from 800 II c, and 400 p. st. in money.
Department II throws into circulation 1800 c in com- modities (articles of consumption) and 400 p. st. in money. At the close of the transaction it has 1800 in commodities (means of production from department I) and 400 p. st. in money.
There still remain on the side of department I 200 s in means of production, and on the side of II 200 c (w) in articles of consumption.
Simple Reproduction. 531 According to our assumption department I buys with 200 p. st. the articles of consumption II w, valued at the same amount. But II holds these 200 p. st., since 200 w represents wear and tear and is not immediately recon- verted into means of production. Therefore 200 I s cannot be sold. One-tenth of the surplus-value of I cannot be re- alized by any exchange, cannot be converted from the nat- ural form of means of production into that of articles of consumption.
This does not only contradict our assumption of repro- duction on a simple scale, but it is not even a hypothesis which would explain the payment of 200 II w in money. It is another way of saying that it cannot be explained. Since it cannot be demonstrated in what manner 200 w is converted into money, it is assumed that department I is obliging enough to supply the money, just because it is not able to convert its own remainder of 200 s into money. This is as much a legitimate method of analysis as the assump- tion that 200 p. st. fall every year from the clouds in order to convert 200 II w into money.
But the absurdity of such an assumption does not become evident at once, if I s, instead of appearing, as it does in this case, in its primitive mode of existence — that is to say as an element of the value of means of production, as an element of the value of commodities which must be converted into money by their capitalist producers — appears in the hands of capitalist stockholders, for instance as ground rent in the hands of land owners, or as interest in the hands of money- lenders. Now, if that portion of the surplus-value of com- modities, which the industrial capitalist yields in the form of ground rent or interest to other shareholders in the sur- plus-value, cannot be in the long run converted into money by the sale of the commodities, then there is an end to the payment of rent and interest, and the land owners or recipi- ents of interest can no longer serve in the role of miraculous interlopers, who convert aliquot portions of the annual re- production into money by spending their revenue. The same is true of the expenditures of all so-called unproductive la- borers, state officials, physicians, lawyers, etc., and others 532 Capital who serve economists as an excuse for explaining inexplic- able things, in the role of the "general public."
Nor does it improve the matter, if the direct transaction between departments I and II, the two great departments of capitalist producers, is circumvented and the merchant is dragged in as a mediator, in order to overcome all diffi- culties with his "money." In the present case, for instance, 200 I s must ultimately be sold to the industrial capitalists of II. It may pass through the hands of a number of mer- chants, but the last of them will find himself in the same predicament, in which the capitalists of I were at the out- set, that is to say he cannot sell the 200 I s to the capitalists of II. And this amount, being arrested in its course, cannot renew the same process with department I.
We see, then, that, aside from our ultimate purpose, it is quite necessary to view the process of reproduction in its fundamental simplicity, in order to get rid of all obscuring interference and dispose of the false subterfuges, which as- sume the semblance of scientific analysis, but which cannot be removed so long as the process of social reproduction is immediately analyzed in its concrete and complicated form.
The law that under normal conditions of reproduction — whether it be on, a simple or on an enlarged scale — the money advanced by the capitalist producer to the circula- tion must return to its point of departure (no matter wheth- er the money is his own or borrowed) excludes decidedly the hypotheses that 200 II w can be converted into money by an advance of money on the part of department I.
(2) The Reproduction of Fixed Capital in its Natural Form.
Having disposed of the above hypothesis, only such hy- potheses remain as assume the possibility of a reproduction of the worn-out fixed capital partly in money and partly in its natural form.
We had assumed in the preceding case (a) That 1000 p. st. had been paid in wages by depart- ment I and spent by the laborers for articles of consump- tion of II c to the same amount.
It is a simple affirmation of fact that these 1000 p. st. are Simple Reproduction. 533 advanced by I in money. Wages must be paid in money by the various capitalist producers. This money is then spent by the laborers for articles of con- sumption and serves the sellers of articles of con- sumption in their turn as a medium of circulation in the conversion of their constant capital from a commodity- capital into a productive capital. It passes indeed through many channels (store keepers, house owners, tax collectors, unproductive laborers, such as physicians, etc., who are needed by the laborer himself) and therefore it flows only in part directly from the hands of the laborer of I into those of the capitalist of II. Its flow may be retarded more or less and the capitalist may therefore require more re- serve funds of money. But all this is ruled out of the analy- sis of the simplest fundamental form.
(b) We had furthermore assumed that department I ad- vances at a certain time 400 p. st. in money for the pur- chase of articles from II and that this money returns to it, while at some other time department II advances also 400 p. st. for the purchase of commodities from I and like- wise recovers this money. This assumption must be granted, for it would be arbitrary to think that only the capitalist class of I, or only that of II, should advance the money re- quired for the exchange of their commodities. Now, since we have shown (under 1) that it would be absurd to think that department I should throw money into circulation in order to promote the conversion of 200 II w into money, there would remain only the seemingly still more absurd hypothesis that department II itself should advance this money, by which that portion of the value of its commodi- ties which makes good the depreciation of its fixed capital through wear and tear is converted into money. For in- stance, that portion of value which is lost by the spinning machine of Mr. X. in the process of production re-appears as a portion of the value of the yarn. That which his spinning machine loses on the one hand through wear and tear, is supposed on the other hand to be accumulated by him in money. Now take it that X. buys 200 p. st.'s worth of cotton from Y. and advarices 200 p. st. in money for 534 Capital.
this purpose. Y then buys from him 200 p. st.'s worth of yarn, and X. now accumulates this money as a fund for the reproduction of the worn-out portion of his machine. This would simply amount to the statement that X., aside from his production, its product, and the sale of this product, keeps 200 p. st. in reserve, in order to make good to him- self the depreciation of his machine, in other words, that he not only loses 200 p. st. by the depreciation of his ma- chine, but must also put up 200 p. st. additional every year out of his own pocket in order to be finally able to buy a new spinning machine.
This looks only seemingly absurd. For the producers of department II are capitalists whose fixed capital is in various stages of its reproduction. In the case of some of them it has arrived at the stage where it must be entirely renewed in its natural form. In the case of the others it is more or less removed from this stage. All the capital- ists of these last named stages have this in common, that their fixed capital is not actually reproduced, that is to say, not actually renewed in its natural form by a new specimen of the same kind, but that its value is successively accumu- lated in money. The first class of the capitalists of II are in the same (or almost the same) position as they were at the establishment of their business, when they came on the market with their money-capital in order to convert this money partly into constant (fixed and circulating) capital, partly into labor-power (variable capital). They have once more to advance this money to the circulation, the value of fixed constant capital as well as that of circulating con- stant and variable capital.
Hence, if we assume that half of the 400 p. st. thrown into circulation by the capitalist class of II for the purpose of transacting business with department I comes from those capitalists of II who have to reproduce by means of the sale of their commodities not only their means of pro- duction so far as they are circulating capital, but also to buy with money new fixed capital in its natural form, while the other half of the capitalists of II reproduce with their money only the circulating portion of their constant Simple Reproduction. 535 capital in its natural form, but not the fixed portion, then there is no contradiction in the statement that these 400 p. st., when returned by department I in exchange for articles of consumption, arc variously distributed among these two classes of department II. They return to department II, but they do not return into the same hands. They are dis- tributed within this department and pass from one of its sections to another.
One section of II has secured means of production whose value is covered by their commodities, and has furthermore converted 200 p. st. of money into natural elements of new fixed capital. The money thus spent does not return to this section by way of the circulation until after a succession of years and is gradually accumulated by the sale of pro- ducts created by this fixed capital and bearing the value of its worn-out portion.
But the other section of II did not purchase any com- modities from I for 200 p. st. That section is rather paid with the money which the first section of II spent for ele- ments of its fixed capital. The first section of II has its fixed capital-value once more in a natural form, while the second section is still engaged in accumulating money for the purpose of renewing its fixed capital later on.
The basis on which we now have to work, after the pre- vious transactions have been closed, is the remainder of the commodities still to be exchanged by the two departments; 400 s on the part of I, and 400 c on the part of II.47 We assume that II advances 400 p. st. in money for the ex- change of commodities aggregating 800 in value. One-half, or 200 p. st., must be advanced under all circumstances by that section of He which has accumulated 200 in money for making good the depreciation by wear and tear and which has to reconvert this fund into the natural form of its fixed capital.
Just as constant capital-value, variable capital-value, and 47 These figures do not coincide with those previously assumed. But this does not alter the substance of the argument, since it is merely a question of proportions. — F. E.
536 Capita!.
surplus-value — being the elements of the value of the com- modity-capital of II and I — may be represented by propor- tional quantities of the commodities of II and I, so that por- tion of the value of the constant capital which is not to be converted into the natural form of fixed capital for the present, but rather to be accumulated in money, may like- wise be represented. A certain quantity of commodities of II (in the present case one-half of the remainder of 400, or 200) is as yet the bearer of the value of this deprecia- tion, which has to be converted into money by sale. (The first section of the capitalists of II, who renew their fixed capital in its natural form, may have done so with a por- tion of its depreciation by means of a corresponding por- tion of the remaining commodities, but they still have to realize 200 in money.)
The second 200 of the 400 thrown into circulation by II in this remaining transaction buy circulating elements of constant capital from I. A portion of these 200 p. st. may be thrown into circulation by both sections of II, or only by the one not renewing its fixed capital in its natural form.
Department I, then, secures with these 400 p. st. in the first place commodities valued at 200 p. st., consisting only of elements of fixed capital; in the second place, com- modities valued at 200 p. st., reproducing only natural ele- ments of the circulating portion of the constant capital of II. Department I has then sold its entire annual product in commodities, so far as it is sold to department II. And the value of one-fifth, or 400 p. st., is now held in its hands in the form of money. This money is monetized surplus- value which must be spent as revenue for articles of con- sumption. Department I having bought with its 400 p. st. the entire stock of department II, valued at 400, this money flows back to II.
Now we may assume three possibilities. Let us name those capitalists of II, who renew their fixed capital in its natural form, section 1, and those, who accumulate the equivalent for the depreciation of fixed capital, section 2. The three possibilities are: (a) That the 400 still remain- Simple Reproduction. 537 ing in the shape of commodities of II may make good cer- tain portions of the circulating part of the constant capital of both section 1 and section 2 (perhaps one-half for each); (b) that section 1 has already sold all its commodities, so that section 2 has for sale all of the 400; (c) that section 2 has sold all but the 200 which are the bearers of the value of depreciation.
Then we have the following distributions: (a) Of the value of the commodities still in the hands of department II, namely 400 c, section 1 holds 100, and section 2 holds 300; 200 out of the 300 represent deprecia- tion. In that case section 1 originally advanced 300 of the 400 in money returned by department I for commodities of II, namely 200 in money, for which it secured elements of fixed capital from I, and 100 in money for the promotion of its transaction with I. Section 2, on the other hand, ad- vanced only 100 of the 400, likewise for the promotion of its exchange with I.