[ Circulation and Reproduction of Fixed and Circulating Capital]
We have previously noted that the productive power (fixed capital) only imparts value — because it only possesses value — in so far as it is itself produced, is itself a certain quantity of objectified labour time. But there are also natural agents, such as water, land (especially), mines, etc., which are appropriated, hence possess exchange value and therefore must be included as values in the calculation of the production costs. In a word, landed property (it includes the soil, mines, water) enters the reckoning. But the value of means of production which are not the product of labour does not as yet belong here, since they do not come under the heading of capital itself. For capital, they appear in the first place as a given, historical presupposition, and we leave them as such at this point. Only the form of landed property modified to correspond to capital — or of natural agents as value-determining magnitudes — belongs in the discussion of the system of bourgeois economy. For our analysis of capital nothing is changed, at this point, by considering the soil, etc., as a form of fixed capital.
Since fixed capital in the sense of the produced productive power, as agent of production, increases the mass of use values produced in a definite time, fixed capital cannot increase unless there is an increase in the quantity of the raw material which it works up. (This applies to manufacturing industry. In the extractive industries, e.g. fishing, mining, labour consists merely in overcoming the obstacles to the winning and appropriation of raw products or primary products. There, no raw material is worked on for production, but rather the existing raw product is appropriated. In agriculture, on the other hand, the raw material is the soil itself; the circulating capital is the seed, etc.) Hence the employment of fixed capital on a larger scale presupposes an enlargement of the part of circulating capital which consists of raw materials, and consequently a growth of capital in general. It also presupposes a (relative) decline in the portion of capital exchanged for living labour.
In fixed capital, capital exists, physically too, not merely as objectified labour intended to serve as means of new labour, but as value whose use value is the production of new values. The existence of fixed capital is therefore xctT'e^oxTJv(1) its existence as productive capital. Hinc(2) the level of development already attained by the mode of production based on capital — or the extent to which capital itself is already presupposed, has presupposed itself, as the condition for its own production — is measured by the existing volume of fixed capital. Not only by its quantity, but by its quality as well.
Finally: In fixed capital, the social productive power of labour is posited as a property inherent in capital; the SCIENTIFIC POWER as well as the combination of social forces within the production process, and finally the skill translated from immediate labour into machines, into lifeless productive power. In circulating capital, on the other hand, it is the exchange of labours, of the various branches of industry, their inter-meshing and formation of a system, the coexistence of productive labour, that appears as the property of capital.
//The determinations of raw material, product and instrument of production vary in accordance with the determination adopted by the use values in the production process itself. What may be regarded as mere raw material is itself the product of labour. (The description of mere raw material certainly does not apply to agricultural products, all of which are reproduced, and not only reproduced in their original form, but modified in their natural being itself in conformity with human needs. Quote from Hodges, etc. The products of purely extractive industries, e.g. coal, metals, are themselves results of labour, which is required not merely to bring them up to the surface, but also, as with the metals, to give them the form in which they can serve as the raw materials of industry. But they are not reproduced, for as yet we do not know how to make metals.)
The product of one industry is the raw material of another, et vice versa. The instrument of production itself is the product of one industry and serves as instrument of production in another. The waste product of one industry is the raw material of another. In agriculture, a part of the product (seed, livestock, etc.) itself figures as the raw material of that very industry, and therefore, like fixed capital, never emerges from the production process. The part of agricultural produce set aside for consumption by livestock can be regarded as a matière instrumentale. But the seed is reproduced in the production process, while the instrument as such is consumed in it. Since the seed and the working animals always remain in the production process, can not both be regarded as fixed capital? No, since otherwise all raw material would have to be regarded thus. As such, raw material is always engaged in the production process.
Finally, the products entering into direct consumption re-emerge from it as raw materials for production, e.g. fertiliser in the process of nature, etc., paper made of rags, etc. Yet, secondly, their consumption reproduces the individual himself in a particular mode of existence, not merely in his immediate vitality, and in particular social relations. So that the final appropriation by individuals, which takes place in the process of consumption, reproduces them in the original relations in which they figure in the production process and in mutual intercourse; it reproduces them in their social existence, and thus reproduces their social existence itself — society — which appears as the subject of this great overall process to the same extent as it appears as its result. //
Fourthly": We must now examine the other relations of fixed capital and circulating capital.
We said above that in circulating capital the social relation of the different labours to one another is posited as the property of capital, just as the social productive power of labour is in fixed capital.
"The circulating capital of a nation consists of money, means of subsistence, raw materials, and l'ouvrage fait(3)" (A. Smith, [Recherches sur la nature et les causes de la richesse des nations,] Vol. II, p. 218).
As regards money, Smith cannot decide whether he should call it circulating or fixed capital. If it is constantly employed only as the instrument of circulation, which is itself a moment of the total reproduction process, it is fixed capital—as instrument of circulation. Yet its use value then consists solely in circulating; never, then, does it enter either into the production process proper or into individual consumption. It is the part of capital which is permanently fixed in the circulation phase, and in this respect it is the most perfect form of circulating capital. From the other angle, since it is fixed as instrument, it is fixed capital.
In so far as the relation to individual consumption is a criterion for distinguishing between fixed capital and circulating capital, this distinction is already given by the fact that fixed capital does not enter into circulation as use value. (In agriculture, a part of the seed enters [V1I-7] as use value into circulation, since the seed multiplies itself.) The fact that fixed capital does not enter into circulation as use value implies that it does not become an object of individual consumption.
"Fixed capital" serves reiteratedly, again and again, for the same operation,
"AND BY HOW MUCH LARGER HAS BEEN THE RANGE OF THESE ITERATIONS, BY SO MUCH
[THE] MORE INTENSELY IS THE TOOL, ENGINE, OR MACHINERY, ENTITLED TO THE DENOMINATION OF FIXED" (De Quincey, [The Logic of Political Economy, p. 114,] X, 41°).
Assume a capital of £10,000, composed of 5,000 fixed capital and 5,000 circulating capital; the latter turns over once a year, the former once in 5 years. This means that 5,000, or [1]/(4) the total capital, turns over once a year. During the same time, '/s of the fixed capital, or £1,000, turns over; in 1 year, therefore, £6,000, or [3]/[5] of the total capital, turns over. Hence (5)/[5] of the total capital turns over in [12]/[3] months and the whole capital in 2 x 5 months, i.e. in [6]%=20 months=l year 8 months. [3]
The total capital of £10,000 has turned over in 20 months, although it takes 5 years to replace the fixed capital. That turnover time, however, only holds for the repetition of the production process and hence for the creation of surplus value; not for the reproduction of the capital itself. If capital recommences the process — returns from circulation into the form of fixed capital — less frequently, it returns the more frequently into the form of circulating capital. But this does not replace the capital itself.
The same is true of circulating capital. If a capital of 100 returns 4 times a year and, as a result, yields 20%, while a capital of 400 circulates only once and yields an equal amount [in absolute terms], the former capital is, in the outcome, still 100 at the end of the year, and the latter still 400, although the former has acted in the production of use values, and in the positing of surplus value, as a capital four times its size. Here we see the velocity of turnover compensate for the size of the capital— striking proof that it is only the quantity of surplus labour set in motion, and of labour in general, not the size of capital in itself, that determines the creation of value and hence of surplus value. The capital of 100 has successively set in motion as much labour during the year as one of 400, and thus has produced the same quantity of surplus value.
But the point here is this: In the above example the circulating capital of 5,000 first returns in the [first] half of the first year," then at the end of the second [half]; in the [first] half of the second year; in the second half of the second year (the first 4 months) £3,333[2]/[6] of it is returned, and the rest will have been replaced by the end of that half year.
But only '/s of the fixed capital was returned in the first year and [1]/[5] in the second. At the end of the first year, the owner of the capital has £6,000 in hand, at the end of the second, 7,000; and at the end of the third, fourth and fifth years, 8,000, 9,000 and 10,000 respectively. Only at the end of the fifth year is he once again in possession of the total capital with which he began the production process, although his capital has been operative in the production of surplus value as if the whole of it were turned over in 20 months. So the total capital itself is reproduced only in 5 years.
The first determination of the turnover is important for the relation in which capital is valorised; but the second introduces a new relation, which is not present at all in the case of circulating capital. Since circulating capital enters into circulation in its entirety and returns from it in its entirety, it is reproduced as capital as often as it is realised as surplus value or as surplus capital. O n the other hand, since fixed capital never enters into circulation as use value, and enters into it as value only in the degree in which it is consumed as use value, it is by no means reproduced immediately the surplus value determined by the average turnover time of the total capital is posited. The circulating capital must be turned over 10 times in the 5 years which elapse before the fixed capital is reproduced, i.e. the turnover period of the circulating capital must pass 10 times whilst that of fixed capital passes once; and the total average turnover of the capital—20 months—must be repeated 3 times before the fixed capital has been reproduced. Hence, the larger the part of capital consisting of fixed capital — i.e. the greater the extent to which capital is active in the mode of production corresponding to it, with an extensive application of produced productive power — and the more durable the fixed capital, i.e. the longer its reproduction time, the more its use value corresponds to its determination— with so much the greater frequency must the part of capital determined as circulating repeat the period of its turnover, and. the longer the total time capital takes to run the course of its total circulation.
HENCE continuity of production becomes an extreme necessity for capital with the development of thé portion of it determined as fixed capital. For circulating capital, interruptions, unless they are so long as to ruin its use value, are merely interruptions in the creation of surplus value. For fixed capital, however, an interruption constitutes a destruction of its original value itself, so FAR as in the meantime its use value is inevitably destroyed relatively unproductively, i.e. without replacing itself as value. So it is only with the development of fixed capital that the continuity of the production process corresponding to the concept of capital is posited as the conditio sine qua [non] for its maintenance; and therefore, similarly, the continuity and continual growth of consumption.
This is No. I [the first distinction between fixed and circulating capital]. But in respect of form No. II is even more important. The total time in terms of which we measured the RETURN of capital was the year, as the unit of time in which we measured labour was the day. We did so firstly because the year is more or less the natural reproduction time or duration of the production phase for most vegetable raw materials used in industry. The turnover of circulating capital was thus determined by the number of turnovers it completed in a year as the total time. IN FACT, circulating capital begins its reproduction at the end of each turnover, and if the number of turnovers during the year has a bearing on the total value, the particular fates experienced by circulating capital, during each turnover, do appear to determine the conditions under which it recommences its reproduction, but each of these fates constitutes, in itself, a complete life-act of circulating capital. As soon as capital has been reconverted into money, it can e.g. be transformed into conditions of production different from the initial ones, throw itself from one branch of production into another, with the result that its reproduction, materially considered, will not be repeated in the same form.
The introduction of fixed capital alters this, and neither the turnover time of capital nor the unit by reference to which the number of turnovers is measured, the year, appears any longer as the measure of time for the movement of capital. This unit is now determined, rather, by the reproduction time required for the fixed capital and hence by the total circulation time it takes to enter into circulation as value and return from it in the totality of its value. During all this time the reproduction of fixed(6) capital must take place in the same form materially too, and the number of its necessary turnovers, i.e. the number of turnovers necessary for the reproduction of the original capital, is distributed over a longer or shorter period of years. A longer total period is therefore posited as the unit in terms of which its turnovers are measured, and their repetition is now linked to this unit not merely externally but by necessity. According to Babbage,(7) the average reproduction of machinery in England takes 5 years; hence, the real, probably 10 years. There can be no doubt at all that the cycle through which industry has been passing in plus ou moins(8) ten-year periods since the large-scale development of fixed capital, is linked with the total reproduction phase of capital determined in this way. We shall find other determining factors too, but this is one of them. There were good and bad times for industry and for the harvests (in agriculture) in the past, too. But the several-year-long industrial cycle divided up into characteristic periods, epochs, is unique to large-scale industry.
[VII-8] Here we come to distinction No. Ill, which appears for the first time.
Circulating capital was precipitated from the production process in the form of the product, the newly created use value, and entered wholly into circulation. Once reconverted into money, the value of the product (the entire necessary and surplus labour time objectified in it) was fully realised, and thereby both the surplus value was realised and all the conditions of reproduction fulfilled. With the realisation of the price of the commodity, all these conditions were fulfilled and the process could be recommenced. However, this is true only of that part of circulating capital which enters into the large circulation. As TO THE OTHER PORTION OF IT, WHICH
CONTINUOUSLY ACCOMPANIES THE PROCESS OF PRODUCTION ITSELF, THE CIRCULATION OF THAT PART OF IT WHICH is TRANSFORMED INTO WAGES, whether or not these WAGES themselves are replaced by a use value entering into circulation naturally depends upon whether labour is employed in the production of fixed capital or of circulating capital.
Fixed capital, on the other hand, does not itself circulate as use value, but only enters — to the extent that it is used up as use value in the production process — as value into the manufactured raw material (in manufacture and agriculture) or into the raw product directly extracted [from the earth] (as in mining). Hence fixed capital in its developed form only returns over a cycle of years, which comprises a series of turnovers of circulating capital. It is not AT ONCE exchanged in the form of the product for money, so that its reproduction process coincides with the turnover of circulating capital. It enters into the price of the product only piecemeal, and therefore returns as value only piecemeal. It returns piece by piece over longer periods, whereas circulating capital circulates wholly in shorter ones. To the extent that fixed capital exists as such, [it] does not return, because it does not enter into circulation. To the extent that it does enter into circulation, it no longer exists as fixed capital, but constitutes a notional component of the value component of circulating capital. In general, it only returns in so far as it is directly or indirectly converted into the product, and therefore into circulating capital Because it is not an immediate use value for consumption, it does not enter into circulation as use value.
This difference in the form of RETURN of fixed and circulating capital will later appear significant as the distinction between selling and renting, ANNUITY, interest and profit, loyer* in its different forms and profit. Their failure to understand this merely formal distinction led Proudhon and his gang to the most confused conclusions, as we shall see.
In its remarks on the recent crisis,[25] The Economist reduces the whole distinction between fixed and circulating capital to that between the
"RESALE OF ARTICLES WITHIN A SHORT PERIOD AND AT A PROFIT" (The Economist, No. 754, 6 February 1858 [p. 137]) and "PRODUCTION OF A REVENUE LARGE ENOUGH TO PROVIDE FOR EXPENSES, RISK, WEAR AND TEAR, AND THE MARKET RATE OF INTEREST".
//RISK, which plays a role in the economists' determination of profit — it can obviously play none in the case of surplus gain, since the creation of surplus value is not increased as a result of it, and it is impossible that capital may run risks in the realisation of this surplus value — is the danger that capital may not traverse the different phases of circulation, or that it remains fixed in one of them.
We have seen" that surplus gain forms part of the production costs, if not of capital, then certainly of the product. The necessity for capital to realise this surplus gain or part of it, is doubly an external compulsion to it. As soon as interest and profit become separated, hence the industrial capitalist must pay interest, a portion of the surplus gain constitutes production costs from the viewpoint of capital, i.e. forms part of its outlays. On the other hand, to protect itself against the danger of depreciation to which it is exposed in the metamorphoses of the overall process, it gives itself a kind of AVERAGE insurance. A part of the surplus gain appears to it merely as compensation for the risk it runs to make more money; a risk that the advanced value itself may be lost. In this form, the surplus gain appears to capital as having to be realised to ensure its reproduction. Of course, neither of these factors determines surplus value, but they do cause its positing to appear as an external necessity for capital, not merely as the satisfaction of its tendency towards enrichment.//
The quicker RETURN resulting from the sale of the entire article, and the RETURN, only once a year, of part of the fixed capital, have been discussed above. As regards profit — we are not concerned with merchant's profit here — every part of the circulating capital as emerging and returning from the production process, i.e. in so far as objectified labour (the value of the advances), necessary labour (the value of wages) and surplus labour are contained in it,
a See present edition, Vol. 28, pp. 241-45.— Ed.
yields profit as soon as it passes through circulation, because the realisation of the product is also the realisation of the surplus labour contained in it. However, it is neither circulating nor fixed capital that creates profit, but the appropriation of alien labour mediated by both, therefore au fond only that part of circulating capital which enters into the small circulation. And this profit is in fact realised only by capital's entering into circulation, hence only by capital in its form as circulating capital, never in that of fixed capital. And what The Economist means here by fixed capital — so far as its revenues are concerned — is the form of fixed capital in which it does not enter direcdy into the production process as machinery, but exists in RAILWAYS, BUILDINGS, AGRICULTURAL IMPROVEMENTS,
DRAININGS, etC
//We are not concerned here with the illusory view that all parts of capital yield profit evenly.[3] This illusion stems from the division of surplus value into average portions, without reference to the proportions in which capital is divided up into circulating and fixed, or to the part of capital which is converted into living labour. That was, to some extent, also Ricardo's illusion, and in determining value as such he therefore discusses the effect of the proportions of fixed and circulating capital right at the beginning. And the reverend PARSON Malthus speaks with STUPID ingenuousness of the profits accruing to fixed capital, as though capital grew organically by virtue of some natural power. //
In this case, the realisation of the value and surplus value contained in the fixed capital appears in the form of an ANNUITY, with the interest representing surplus value, and the ANNUITY itself the piecemeal RETURN of the value advanced. So what we have here, IN FACT, is not fixed capital entering into circulation as value by virtue of its constituting part of the product (though this is the case with AGRICULTURAL IMPROVEMENTS), but fixed capital being sold in the form of its use value. It is not sold here in one go, but as an
ANNUITY.
It is now quite clear, d'abord, that some forms of fixed capital initially figure as circulating capital, and only become fixed capital when they are fixed in the production process. E.g., the circulating products of the owner of a machine-building factory are machines, just as the product of a cotton-weaver is calico, and they enter into circulation for him in precisely the same way. To him, they are circulating capital; to the manufacturer who uses them in the
[3] See Th. R. Malthus, Principles of Political Economy, 2nd ed., London, 1836, p. 268.— Ed.
production process, they are fixed capital; because they are product to the former, and instrument of production only to the latter. Similarly, for the BUILDING-TRADE, even houses are circulating capital, in spite of their immovability; but they are fixed capital for one [VII-9] who buys them in order to rent them out, or to use them for production as workshops. How fixed capital itself circulates as use value, i.e. is sold, changes hands, will be discussed further on.
However, the point of view that capital is sold as capital— whether as money or in the form of fixed capital — obviously does not belong here, where we are considering circulation as the movement of capital in which it posits itself in its different, conceptually determined moments. Productive capital becomes product, commodity, money, and is reconverted into the conditions of production. In each of these forms it remains capital and becomes capital only by being realised as such. As long as it remains in one of the phases, it is fixed as commodity capital, money capital, or industrial capital. But each of these phases constitutes only one moment of its movement, and in the form in which it rejects itself in order to pass from one phase into another it ceases to be capital. If it rejects itself as a commodity and becomes money, or vice versa, it does not exist as capital in the rejected form but in the newly adopted one. Of course, the rejected form can in turn become the form of another capital, or it can be direcdy the form of a consumable product. Yet this does not concern us, nor does it concern capital itself, in so far as we are discussing its circuit, revolving as it does within itself. Rather, it rejects each of the forms as its being-not-capital, in order to assume them later again. Yet if capital is loaned out as money, land, a house, etc., it becomes a commodity as capital; or the commodity which is put into circulation is capital as capital. This is to be discussed further in the next section.
What is paid when the commodity is converted into money — to the extent that its price concerns the part of the fixed capital turned into value — is the part necessary for the partial reproduction of the fixed capital, the part used up and worn out in the production process. So what the buyer pays for is the use or wear of fixed capital, in so far as it is itself value, objectified labour. Since this wear occurs gradually, he only pays for part of it in the product, while he replaces, in the price he pays for the product, the entire value of the fractional part of raw material contained in that product. The consumed, worn-out fractional part of fixed capital is not only paid for successively; it is paid for simultaneously by a large number of buyers, piecemeal, in the proportion in which they buy products.
Since in the first half of its circulation capital appears as C and the buyer as M, capital's aim being value, and that of the buyer being use (whether, in turn, productive [does not] concern us here, where we only have to consider the formal aspect, as it appears vis-à-vis capital in its circulation), the buyer's relation to the product is, in general, that of the consumer. Hence the buyer indirecdy pays in all commodities successively and in a piecemeal fashion for the use and wear of the fixed capital, although it does not enter into circulation as a use value.
However, there are forms of fixed capital in which he pays for its use value directly — as in the case of means of communication, transport, etc. In all these cases, fixed capital IN FACT never emerges from the production process, e.g. railways, etc. Yet, while it serves some within the production process as means of communication necessary to bring the product to market, and [as] means of circulation for the producers themselves, it may serve others as a means of consumption, as a use value, e.g. the traveller taking a pleasure trip, etc.
Regarded as a means of production, it differs here from machinery, etc., in that it is consumed simultaneously by different capitals as a common condition for their production and circulation. (We are not as yet discussing consumption as such.) It does not appear as comprised within one particular production process, but as a blood-vessel linking together a large number of such production processes carried on by particular capitals, which only consume it piecemeal. Over against all these particular capitals and their particular production processes, fixed capital is therefore determined here as the product of a particular branch of production distinct from them, a branch in which it, in contrast to machinery, cannot be sold by one producer as circulating capital and obtained by another as fixed capital, but can only be sold in the form of fixed capital itself. Then its piecemeal RETURN, concealed in the commodity, becomes apparent.
Yet as itself a product which is sold (for the industrialist, the machine which he uses is not a product), it then simultaneously includes the surplus value, therefore the RETURN of interest and profit, s'il y a.(9) Since it can be consumed in the same common and successive form, can be use value for immediate consumption, its sale — not as an instrument of production but as a commodity in general — appears in the same form. But as far as it is sold as an instrument of production — a machine is sold simply as a commodity, and becomes an instrument of production only in the industrial process — i.e. as far as its sale coincides direcdy with its consumption in the general social production process, this is a determination which does not belong in the discussion of the simple circulation of capital. In simple circulation, fixed capital, as far as it is involved as an agent of production, appears as a presupposition of the production process, not as its result. Hence it can only be a matter of replacing its value, a value in which no surplus value is included for the person who employs it. On the contrary, he has paid surplus value to the producer of the machine. But a railway or buildings rented out for production at one and the same time constitute instruments of production and are realised as a product, as capital, by the person who sells them.
Since every moment that appears as a presupposition of production is at the same time its result—in that production reproduces its own prerequisites — the original division of capital within the production process now appears as the falling-asunder of the production process into 3 production processes, in which different portions of capital — now also appearing as distinct capitals — operate. (Here we can still speak of a single capital operating, since we are considering capital as such, and this method of consideration makes it simpler to discuss the proportions of these different types of capital.)
The capital is annually reproduced in different and varying portions as raw material, product and means of production; in short, as fixed capital and circulating capital. In each of these production processes there appears as a presupposition at least that part of the circulating capital which is to be exchanged for the labour capacity and for the maintenance and consumption of the machinery or the instrument, and of the means of production.
In purely extractive industry, e.g. mining, the mine itself exists as the material of labour, but not as raw material passing on into the product. In manufacturing industry, on the other hand, the raw material must, in all forms, possess a particular existence. In agriculture, the seed, fertiliser, livestock, etc., can be regarded as raw materials and, equally, as matières instrumentales. Agriculture constitutes a form of production sui generis, because the mechanical and chemical process is combined with the organic, and the natural reproduction process is merely controlled and directed. Similarly, the extractive industries (of which mining is the principal one) form an industry sui generis, because no reproduc-don process takes place in them, at least none subject to our control or known to us. (Fishing, hunting, etc., may involve a reproduction process; similarly forestry. So these are not necessarily purely extractive industries.)
Now, in so far as the means of production, fixed capital, as itself [VII-10] produced by capital and hence including objectified surplus time, can only be disposed of by its producer as circulating capital, e.g. the machine by the machine-builder, before it becomes fixed capital, i.e. in so far as it only enters into circulation as a use value, its circulation contains no new determination whatever. But in so far as it can only be realised, like e.g. railways, while simultaneously serving as an instrument of production, or only in the degree in which it is consumed as such, it shares with fixed capital in general the feature that its value only returns piecemeal; but in addition, there is the fact that in this RETURN of value is included the RETURN of its surplus value, the surplus labour objectified in it. It then has a special form of RETURN.
Now, the important point is that the production of capital thus appears as the production of circulating capital and fixed capital in definite portions, so that capital itself produces its dual type of circulation as fixed capital and circulating capital.
Before we SETTLE this last point, there are a few collateral matters.
"FLOATING CAPITAL IS CONSUMED, FIXED CAPITAL MERELY USED, IN THE GREAT WORK OF PRODUCTION" (The Economist, [No. 219, 6 November 1847, p. 1271,] VI, p. 1 1V).
The difference between CONSUMPTION and USE is merely a matter of rapid or gradual DESTRUCTION. We need not dwell on this POINT any further.
"FLOATING CAPITAL ASSUMES AN INFINITE VARIETY OF FORMS, FIXED CAPITAL HAS ONLY ONE" (The Economist, [loc. cit.,] VI, p. 1).
As far as the production process of capital itself is concerned, this "INFINITE VARIETY OF FORMS" is much more correctly reduced by A. Smith to a mere change of form.
Fixed capital is used by its master "as long as it remains in the same shape". I.e. it persists in the production process, as use value, in a particular material form. Circulating capital, on the contrary, (A. Smith, [Recherches sur la nature et les causes de la richesse des nations,] Vol. II, pp. 197, 198) "constantly goes from his hand in one shape" (as a product) "to return to him in another" (as a condition of production) "and only yields profit by means of such CIRCULATION and successive échanges".
Here, Smith is not speaking of the in which circulating capital appears. Considered materially, "fixed capital" also adopts an "INFINITE VARIETY OF FORMS"; he is speaking of the metamorphoses through which circulating capital passes precisely as use value, and this "INFINITE VARIETY OF FORMS" is therefore reducible to the qualitative distinctions between the different phases of circulation. Circulating capital, considered in a definite production process, always returns in the same form of raw materials and money for wages. Its material form at the end of the process is the same as it was at its beginning. Incidentally, elsewhere The Economist itself reduces the "INFINITE VARIETY OF FORMS" to the conceptually determined change of form peculiar to circulation :
"The commodity is entirely consumed IN THE SHAPE IN WHICH IT IS PRODUCED" (i.e. enters into circulation as use value and is precipitated from it) "and REPLACED IN HIS HANDS IN A NEW SHAPE" (as raw material and wages), "READY TO REPEAT A SIMILAR OPERATION" (much rather, the same) (I.e., VI, p. 1).
Smith also explicidy states that fixed capital "needs no circulation" ([op. cit.,] Vol. II, pp. 197, 198).
In the case of fixed capital, value is locked up in a particular use value; in that of circulating capital, value adopts the form of various use values, and also the form independent of any particular use value (as money), just as much as it discards them. Hence a continuous change of its material and form takes place.
"Circulating capital furnishes him" (the entrepreneur) "with the materials and the wages for the labourers and puts industry in action" (A. Smith, Vol. II,
P- 226>-
"Every fixed capital originally derives from, and requires to be continually supported by, a circulating capital" (I.e., p. 207).a
"So great a part of the circulating capital being continually withdrawn from it in order to be placed in the other two branches of the general stock of society, this capital in turn needs to be renewed by continual supplies, without which it would soon be reduced to nought. These supplies are drawn from 3 principal sources: the produce of the land, of mines, and of fisheries" (I.e., p. 208).
//We have already analysed one of the distinctions emphasised by The Economist.
"EVERY PRODUCTION THE WHOLE COST OF WHICH IS RETURNED T O THE PRODUCER OUT OF THE CURRENT INCOME OF THE COUNTRY IS FLOATING CAPITAL; but every PRODUCTION for which ONLY AN ANNUAL SUM IS PAID FOR THE USE, IS—FIXED CAPITAL" (Notebook VI, p. 1). "In the first case the producer depends wholly upon the CURRENT INCOME of the country" (I.e. [The Economist, No. 219, 6 November 1847, p. 1271]).
a Marx quotes this and the following passage from Smith in French.— Ed.
We have seen(10) that only part of the fixed capital returns within the time determined by the circulating capital, the time which serves as the unit by reference to which the number of the latter's turnovers is measured, because it is the natural unit for the reproduction of most means of subsistence and raw materials, just as, and because, it appears as the natural period in the life process (cosmic process) of the Earth. This unit is the year, whose length, as calculated for the ordinary purposes of society, differs more or less, but insignificantly, from its natural length. The more closely the material being of fixed capital corresponds to its concept, i.e. the more adequate its material mode of existence is to that concept, the more likely its turnover time is to comprise a cycle of years.
Since circulating capital is wholly exchanged, first for money and secondly for the elements composing that capital, it presupposes the production of a counter-value equal to its entire value (which includes surplus value). One cannot say that it enters wholly into consumption or is able to do so, for it must, just as much, again serve in part as raw material or as an element for fixed capital, in short as itself an element for production — a counter-production. One part of the use value rejected by capital as a product, as the result of the production process, becomes an object of consumption and thus falls out of the circulation of capital in general; another part enters into another capital as a condition of production. This is posited in the very circulation of capital as such, since in the first half of circulation it pushes itself off from itself as a commodity, i.e. as a use value, that is to say—considered in relation to itself in this form — releases itself from its own circulation as a use value, an article of consumption. And in the second half of its circulation, it is exchanged as money for a commodity as a condition of production. Hence, as itself a circulating use value, it posits its material existence both as an article of consumption and as a new element of production or, rather, an element of reproduction. In both cases, however, its counter-value must be wholly available, i.e. it must be wholly produced, during the year. E.g. the quantity of manufactured products which can be exchanged over a year for agricultural products is determined by the volume of raw products produced in that year, reckoned from harvest to harvest. Since we are dealing here with capital as such, capital in the process of formation — the plurality of capitals does not yet exist for us — all we have outside capital is nothing but capital itself and simple circulation. From this circulation, capital absorbs into itself value in the two-fold form as money and commodity; and into this circulation, it throws value in the two-fold form as money and commodity.
When an industrial nation whose production is based on capital, e.g. England, exchanges with, say, the Chinese, and absorbs value in the form of money and commodity from their production process; or rather if it draws them into the sphere of circulation of its capital, it is immediately obvious that this does not oblige the Chinese themselves to produce as capitalists. Within a society itself, e.g. English society, the mode of production of capital develops in one branch of industry, while in others, e.g. agriculture, [VII-11] pre-capitalist modes of production are still more or less dominant.
Nevertheless, it is (1) the necessary tendency of capital at every point to subject the mode of production to itself, to its domination. Within a particular national society, this necessarily results from the transformation by capital of all labour into wage labour. (2) With respect to foreign markets, capital enforces this propagation of its mode of production by means of international competition. Competition is in general the means by which capital establishes its mode of production.
This much is clear: Quite regardless of what stands on either side of the successive exchanges, each time in the opposite determination, whether a capital again or capital itself as another capital, both determinations are already posited by the circulation of capital itself, even before we consider this two-fold movement. In the first phase, capital expels itself as use value, as commodity from the movement of capital, and is exchanged for money. The commodity expelled from the circulation of capital is no longer the commodity as a moment of self-perpetuating value, as the presence of value. It is its presence as use value, its being for consumption. Capital is converted from the form of commodity into that of money only in that in the usual circulation an exchanger confronts it as a consumer and converts M into C; in that he [carries out] this conversion in its material aspect, so that he relates himself to the use value as use value, his attitude to it being that of a consumer; only in this way is the use value replaced for capital as value. Capital, therefore, produces articles of consumption, but expels them in this form from itself, from its circulation. There is no other relation as far as the determinations hitherto developed are concerned.
The commodity, which as such is expelled from the circulation of capital, loses its determination of value and takes on that of use value in consumption as distinct from production. However, in the second phase of circulation, capital exchanges money for a commodity, and its transformation into a commodity now itself appears as a moment of the positing of value, since the commodity as such is taken into the circulation process of capital. If in the first phase capital presupposes consumption, in the second phase it presupposes production, production for production. For in this phase, value in the form of the commodity is taken into the circulation of capital from outside, or a process opposite to that effected in the first phase takes place. The commodity as use value for capital itself can only be the commodity as element, use value for capital's production process.
The process is a doubled one: In the first phase, capital a exchanges its product as C for the M of capital b; in the second, capital b exchanges itself as C for the M of capital a. Or in the first phase, capital b exchanges itself as M for the C of capital a; and in the second, capital a as M for the C of capital b. I.e. capital is simultaneously posited as M and C in each of the two circulation phases; but in two different capitals, which are always in the opposite phases of their circulation process. In the simple circulation process, the acts of exchange C—M or M—C appear as direcdy coinciding or as directly falling apart. Circulation is not merely the succession of the two forms of exchange, but is simultaneously each of them distributed to two different sides.
But we are not yet dealing here with exchange between many capitals. This belongs in the theory of competition or also in that of the circulation of capitals (credit). What does concern us here is, on the one side, the presupposition of consumption, of the commodity being ejected as use value from the movement of value, and [on the other] the presupposition of production for production, of value being posited in the form of use value as a condition for the reproduction of capital, a condition external to its circulation. What concerns us is that both these aspects result from the consideration of the simple form of circulation of capital.
This much is clear: The whole of the circulating capital is exchanged as C for M in the first phase, and as M for C in the second. Hence, taking the year as the unit of time by reference to which its evolutions are considered, the transformations of circulating capital are limited by the fact that the raw materials, etc., are reproduced annually (the commodity for which it is exchanged as money must be produced, simultaneous production must correspond to it); and also by the fact that an annual revenue (the part of M which is exchanged for the commodity as use value) must be constandy produced, if the product precipitated by capital as use value is to be consumed. As such revenue there only exists that of the capitalists themselves and that of the workers, since we have not yet introduced any more developed relations. Incidentally, analysis of the exchange between capital and revenue, another form of the relation between production and consumption, is not as yet relevant.
On the other hand, since fixed capital is exchanged only to the extent that it enters as value into circulating capital, and since it is therefore only partly realised in the course of the year, it presupposes the existence of only part of the counter-value, and hence the production of only part of this counter-value in the course of the year. It is paid for only in proportion to its consumption. So far it is clear — and this already follows above from the difference in the industrial cycle introduced by fixed capital — that fixed capital engages the production of future years, and in the same way as it contributes to the creation of a large revenue, it anticipates future labour as its counter-value. Hence the anticipation of future fruits of labour is by no means a consequence of the national debt, etc., in short, it is not an invention of the credit system. It has its roots in the specific mode of valorisation, turnover and reproduction of fixed capital//
Since the point for us here is to state the pure determinations of form, without introducing anything irrelevant, the above discussion clearly indicates that analysis of the different forms in which circulating capital and fixed capital yield revenue — or of revenue in general — does not, as yet, belong here at all. Here we should only deal with the different modes in which they return and affect the total turnover of capital, its reproduction movement in general. But the occasional observations above are important because, apart from dismissing the economists' higgledy-piggledy arguments irrelevant to the discussion of the simple distinction between fixed and circulating capital, they have shown us that the differences in the way they yield revenue, etc., stem from the formal distinction in the reproduction of fixed and circulating capital. We are still dealing merely with the simple RETURN of value. How this becomes the RETURN of revenue, and how that in turn gives rise to a difference in the determination of revenue, will only be seen later.
We have not yet spoken about the maintenance costs, the frais d'entretien, of fixed capital. They are partly composed of the matières instrumentales which it consumes in order to operate. They come under the heading of fixed capital in the first sense in which we considered it within the production process.3 These are circulating capital, and may just as well serve for consumption. They become fixed capital only to the extent that they are consumed in the production process. But unlike fixed capital proper, they do not possess a materiality which is determined purely by the form in which they exist. The other part of these frais d'entretien consists of the labour necessary for repairs.
[VII-12] Adam Smith's proposition that every fixed capital originally derives from, and requires to be continually supported by, a circulating capital.
"All fixed capital is originally derived from circulating capital and must constantly be maintained at the expense of the latter. No fixed capital can yield revenue except at the expense of a circulating capital" (Storch, [Cours d'économie politique, Vol. I, p. 246] 26a5).b
As regards Storch's remark about revenue — a determination which does not belong here — it is clear that fixed capital only returns as value to the extent that it perishes in portions as use value, as fixed capital, and enters as value into circulating capital. So far as its value is concerned, it can, therefore, only return in the form of a circulating capital. And as a use value it does not circulate at all.
Further, since it itself only possesses use value for production, it can, likewise, return as value for individual use, for consumption, only in the form of circulating capital. Soil improvements can enter chemically direct into the reproduction process, and so be converted direct into use values. But in that case they are consumed in the form in which they exist as fixed capital. In general, a capital can only yield revenue in the form in which it enters into and returns from circulation, since the production of revenue in direct use values, use values not mediated by circulation, contradicts the nature of capital. Therefore, since fixed capital only returns as value in the form of circulating capital, it is only in this form that it can yield revenue. In general, revenue is merely the part of surplus value intended for immediate consumption. Its RETURNS therefore depend upon the mode in which value itself RETURNS. HENCE the different forms in which fixed capital and circulating capital yield revenue. Similarly, since fixed capital as such never enters into circulation as use value, and so is never precipitated from the valorisation process as use value, it never serves for immediate consumption.
As regards Smith, his view is made clearer to us by his saying that circulating capital must be annually replaced and constantly renewed by being constandy drawn from the sea, the land and the mines.(11) Here circulating capital becomes something purely material to him; it is brought up in nets, mined, harvested. It is constituted by movable primary products, which are made movable by being detached, isolated, from their connection with the earth; or which are separated from their element in their ready-made isolation, like fish, etc.
Moreover, considered in purely material terms, if Smith presupposes the production of capital and does not go back to the beginnings of the world, it is equally certain that every circulating capital just as much provient originairement d'un capital fixer Without nets, man cannot catch fish; without a plough, he cannot till the soil; and without a hammer, etc., he cannot open up a mine. Even if he merely uses a stone as his hammer, etc., CERTAINLY this stone is not circulating, capital, not capital at all, but means of labour. As soon as it becomes necessary for man to carry on production, he resolves to utilise a part of the existing natural objects directly as means of labour, and subsumes them under his activity, as Hegel has correcdy put it, without any further process of mediation.(12)
All capital, circulating as well as fixed, derives, not merely originairement but continuellement, from the appropriation of alien labour. However, as we have seen,(13) this process presupposes constant small circulation, the exchange of wages for the labour capacity, or the provision of means of subsistence. The production process of capital implies that all capital returns only in the form of circulating capital; consequently the renewal of fixed capital depends upon part of circulating capital becoming fixed, i.e. upon part of the produced raw materials being employed, and part of the labour being consumed (and therefore part of the means of subsistence being exchanged for living labour), in order to produce fixed capital. E.g. in agriculture, part of the product is consumed by the labour employed in building irrigation works; or part of the corn is exchanged for guano, chemical substances, etc., which are incorporated into the soil but which, IN FACT, are without use value except to the extent that they are exposed to its chemical process. -—""" A part of the circulating capital possesses use value only for the reproduction of fixed capital, and is only produced to serve the purposes of fixed capital (even if this production merely stands for the labour time needed to transfer it from one place to another). Fixed capital itself, however, can only be renewed as capital by becoming a value component of circulating capital, and by its elements thus being reproduced by the transformation of circulating capital into fixed. The production of circulating capital presupposes fixed capital to just the same extent as the production of fixed capital presupposes circulating capital. Or, the reproduction of fixed capital requires (1) that its value should RETURN in the form of circulating capital, for only thus can it be re-exchanged for its conditions of production; (2) that part of the living labour and raw material should be employed to produce instruments of production, direct or indirect, rather than exchangeable products. Circulating capital enters by relation to its use value into fixed capital in precisely the same way as, labour does, while fixed capital enters by relation to its value into circulating capital, and into use value as MOVEMENT (where it is direct machinery), as movement in repose, as form.
//In connection with our above propositions concerning free labour, in particular, that pauperism is latent in it,(14) the following passages should be cited from Sir Fr. Morton Eden, Bt: The State of the Poor: or, an History of the Labouring Classes in England from the Conquest etc., 3 vols, 4°. London, 1797.[27] In Volume I, Book I, Ch. I, we have the following:
"Our zone requires labour for the satisfaction of wants, and therefore at least a portion of society must work indefatigably, others are occupied in the arts, etc., and a few command the produce of industry even though they do not work. But these proprietors owe this solely to civilisation and order. They are peculiarly the creatures of civil institutions, for these have recognised that one [may] acquire the fruits of labour by other means than labour; the MEN OF INDEPENDENT FORTUNE owe their property almost entirely to the labour of others, not to their own abilities, which are not superior at all. It is not the possession of land, or money, but the COMMAND OF LABOUR that distinguishes the rich from the poorer part of the community" [op. cit., pp. 1-2].
With the emancipation of the peasants, Poverty as such arises — in feudal times, the peasant's being fettered to the soil, or at least to a given locality, spared the legislature from the need to concern itself with VAGRANTS, the poor, etc. Eden believes that the various commercial guilds, etc., supported their own poor [ibid., pp. 57, 60]. He says:
"WITHOUT THE MOST DISTANT IDEA, THEN, OF DISPARAGING THE NUMBERLESS BENEFITS DERIVED FOR THE COUNTRY FROM MANUFACTURES AND COMMERCE, THE RESULT
OF THIS INVESTIGATION SEEMS TO LEAD TO THIS INEVITABLE CONCLUSION THAT MANUFACTURES AND COMMERCE" //i.e. the sphere of production in which capital first establishes its dominance// "ARE THE TRUE PARENTS OF OUR NATIONAL POOR" [ibid., p. 61].
He also states that from the time of Henry VII onwards (the CLEARING of superfluous MOUTHS from the land by the conversion of arable land into pasture begins at that time and continues for over 150 years, [or so] at least [do] the complaints and legislative interference; a period, therefore, when the number of hands placed at the disposal of industry kept growing) wages in industry were no longer laid down [by the law], but only those in agriculture. 11 Henry VII [ibid., pp. 73-75].
//Wage labour is not yet fully posited with the emergence of free labour. The labourers still have a basis in the feudal relations; there are still too few of them, and capital is therefore as yet unable as capital to reduce them to the minimum. Hence the statutory wage regulations. As long as the wages of labour are still regulated by statute, it cannot be said either that capital as capital has subsumed production under itself, or that wage labour has attained the mode of existence adequate to it.//
The Act referred to mentions linen-weavers, building-craftsmen and SHIPWRIGHTS. It also [VII-13] lays down the hours of work:
"As many day-labourers waste half the day in late coming, early departing, sleeping long at afternoon, long sitting at their breakfast, dinner, and supper, etc., etc.," the hours of work shall be as follows: "between March 15 and September 15, from 5 of the clock in the morning, half an hour for BREAKFAST, and hour and a half for DINNER and sleeping, and half an hour FOR NOON MEAT, and work till between 7 and 8 at night. In winter, work throughout the light hours, but no midday sleep, which shall be granted only from May 15 until August 15" [ibid., pp. 75-76].
//In 1514, the wages of labour were again regulated, almost in the same way as in the previous case. The hours of work, too, were once again stipulated. Those unwilling to work UPON APPLICATION, were put into prison [ibid., pp. 81-82].
So, the free workers were still subject to forced labour at a stipulated wage. Initially, they have to be forced to work on the terms set by capital. The propertyless man is more inclined to become a vagabond, a robber and a beggar than a worker. It is only under the developed mode of production of capital that becoming a worker is the self-evident thing for him to do. In the preliminary stage of capital, there is coercion by the State to convert the propertyless into workers on terms favourable to capital, terms that at this stage have not yet been forced upon the workers by their competition among themselves.//
(Savage means of coercion applied to this end u n d e r Henry VIII i.a.) (The dissolution of the monasteries by Henry VIII likewise set many hands free.) (Under Edward VI, the severity of the laws against ABLE-BODIED LABOURERS unwilling to work was further intensified [ibid., pp. 83-100]. 1 Edw, VI, [Ch.] 3:
"Whoever is ABLE TO WORK, but REFUSES TO LABOUR AND LIVES IDLE FOR 3 DAYS,
SHALL BE BRANDED WITH RED-HOT IRON ON THE BREAST WITH THE LETTER V — AND SHALL BE ADJUDGED THE SLAVE FOR 2 YEARS OF THE PERSON WHO SHOULD INFORM AGAINST SUCH IDLER, e t c . " "IF HE RUNS AWAY FROM HIS MASTER FOR [14] DAYS, HE SHALL BECOME HIS SLAVE FOR LIFE AND BE BRANDED ON FOREHEAD OR CHEEK WITH THE LETTER I, AND IF HE RUNS AWAY A SECOND TIME AND SHALL BE CONVICTED THEREOF BY 2 SUFFICIENT WITNESSES, HE SHALL BE TAKEN AS A FELON AND SUFFER PAINS OF DEATH" [ibid., p. 101].
(The first mention of VAGRANTS or STURDY ROGUES was in 1376; that of PAUPERS in 1388.)
(A similarly cruel law was passed in 1572 under Elizabeth.) [Ibid., pp. 42-43, 61-62, 127.]
Circulating capital and fixed capital appeared in the previous determination as alternating forms of the same capital in the different phases of its turnover. Now that fixed capital has been developed to its highest form, they are simultaneously posited as 2 different modes of existence of capital. They become such because they return in different ways. Circulating capital which returns slowly has this feature in common with fixed capital. But what distinguishes it from fixed capital is that its use value itself — its material existence — enters into circulation and is simultaneously eliminated from it, cast beyond the limits of the turnover process. Fixed capital, on the other hand, as developed so far, only enters into circulation as value; and as long as it remains in circulation as a use value, too, as e.g. a machine in the stage of circulation, it is fixed capital only 8uvà|XELa
However, this distinction between fixed capital and circulating capital, based immediately upon the relation of the material existence of capital, or its existence as use value, to circulation, must, in reproduction, simultaneously be posited as the reproduction of capital in the dual form of fixed capital and circulating capital. To the extent that the reproduction of capital in each of its forms posits not merely objectified labour time but surplus labour time as well, i.e. not merely reproduces its value but posits a surplus value too, there is no difference between the production of fixed capital and that of circulating capital in this respect. Hence, in the case of a manufacturer of instruments or machines — in all the forms in which fixed capital at first appears as circulating capital, with respect to its material existence, in its existence as use value, before it is fixed as fixed capital, i.e. before it is consumed (for it is precisely its consumption that attaches it to the production phase and distinguishes it as fixed capital)—there is no difference at all in the form of valorisation of capital, whether it is reproduced as fixed capital or as circulating capital. In economic terms, therefore, no new determination is thereby introduced.
However, when fixed capital as such, and not merely in the determination of circulating capital, is thrown into circulation by its producer, and hence the piecemeal use of it is sold, whether for production or consumption — in the conversion of C into M which takes place in the first section of the circulation of capital, it is immaterial to this capital itself whether the commodity re-enters into the circulation sphere of another productive capital, or whether it serves the purpose of direct consumption, the commodity being always determined as a use value in relation to this capital, whenever the capital rejects it from itself, exchanges it for M—the mode of RETURN for the producer of fixed capital must differ from that for the producer of circulating capital. The surplus value produced by the former can return to him only piecemeal and successively, with the value itself. This is to be examined in the following section.
Finally, although circulating capital and fixed capital now appear as 2 different types of capital, circulating capital is posited by the consumption, the using-up, of fixed capital. Fixed capital for its part is merely circulating capital converted into this particular form. All capital converted into objectified productive power — all fixed capital — is fixed in this form, and is, therefore, use value torn as use value both from consumption and from circulation. When a machine or a railway is built, the fact that wood, iron, coal and living labour (hence, indirectly, also the products consumed by the workers) are transformed into this particular use value, would not render them fixed capital unless there were also the other determinations analysed above. When circulating capital is converted into fixed capital, a part of the use values in the form of which capital circulated, as well as, indirectly, the part of capital exchanged for living labour, are converted into capital whose counter-value is only produced over a longer cycle. This capital enters into circulation as value only piecemeal and successively, and can only be realised by being used up in production.
The conversion of circulating capital into fixed capital presupposes relative surplus capital, since it is capital employed not for direct production but for the production of new means of production. Fixed capital itself can in turn serve as a direct instrument of production — as a means within the immediate production process. In this case, its value enters into the product and is replaced by the successive RETURN of products. Or fixed capital does not enter into the immediate production process, but appears as a general condition for the various production processes, e.g. as buildings, railways, etc., and its value can only be replaced by circulating capital, to whose production it has indirectly contributed.
A more detailed discussion of the proportions of production of fixed capital and circulating capital really belongs in a later section. If valuable machinery were employed to make a small amount of products, it would not be operating as a productive force, but would render the product infinitely more costly than if it had been produced without the aid of the machinery. Machinery produces surplus value, not because it itself possesses value — for this is simply replaced — but only because it increases relative surplus time, or diminishes necessary labour time. Hence, in the proportion in which the volume of machinery employed increases, the amount of products must increase and the living labour employed must relatively decline. The smaller the value of the fixed capital in relation to its effectiveness, the more does it correspond to its purpose. All non-necessary fixed capital appears as faux frais de production,(15) just as do all unnecessary circulation costs. If capital could possess machinery without expending labour on it, capital would raise the productive power of labour and diminish necessary labour, without having to buy labour. Hence, the value of fixed capital is never an end in itself in the production of capital.
[VII-14] Therefore, circulating capital is converted into fixed capital, and fixed capital is reproduced in circulating capital, both processes only taking place in so far as capital appropriates living labour.
"Every saving in fixed capital means an increase in the net revenue of society" (A. Smith [Recherches etc., Vol. II, p. 226]).
The final and last distinction put forward by economists is that between mobile and immobile; not in the sense that the former enters into the movement of circulation and the latter does not; but in the sense that one form is physically fixed, immobile, in the same way as a distinction is made between movable and immovable property. E.g. IMPROVEMENTS SUNK IN THE SOIL, water conduits, buildings, and to a large extent even machinery itself, since it must be physically fixed in order to operate; railways; in short, every form in which the product of industry is anchored to the surface of the earth. Au fond, this adds nothing to the determination of fixed capital; but its determination does imply that the more its use value, its material existence, corresponds to its determination of form, the more eminendy it is fixed capital. Immovable use value, e.g. houses, railways, etc., is, therefore, the most tangible form of fixed capital. True, it is able to circulate just the same, in the sense in which immovable property circulates in general, as title; but not as use value; not in the physical sense. Initially, the growth of movable property, its increase as against immovable property, is evidence of the ASCENDANT MOVEMENT OF CAPITAL as against landed property. But once the mode of production of capital has been assumed, the degree in which capital has subjected the conditions of production to itself is shown by the extent to which capital is converted into immovable property. In this way it strikes roots in the soil itself, and what seemed to be the solid presuppositions— given by Nature itself — of landed property now themselves appear as merely posited by industry.
(Originally, membership of the community and, through that, a relation to the soil as property, are the basic presuppositions for the reproduction of both the individual and the community. Among the pastoral peoples, the land appears merely as a prerequisite for their nomadic life, hence there is no question of appropriating it. When permanent dwelling-places emerge with land cultivation the land is initially common property, and even where things advance to private property, the individual's relation to it appears as posited by his relation to the community. He appears merely to hold it in fief from the community; etc., etc. Its transformation into mere exchangeable value — its mobilisation — is brought about by capital and the complete subordination of the state organism to it. Hence, even where the land has become private property, it is exchange value only in a restricted sense. Exchange value originates in the isolated natural product separated from the earth and individualised by means of industry (or simple appropriation). This is the stage, too, at which individual labour makes its first appearance. In general, exchange does not initially arise within the original communities, but on their borders; where the communities come to an end. To exchange the land which constitutes their territory, to sell it to alien communities, would OF COURSE be treason. Only BY AND BY can exchange be extended from its original sphere, that of movable property, to that of immovable property. It is only by expanding the former that capital gradually takes hold of the latter. Money is the principal agent in this process.)
A. Smith initially distinguishes circulating capital and fixed capital according to their determination in the production process.* Only at a later point does he introduce the following proposition:
"A capital may be employed in different ways to yield profit: (1) as circulating capital, (2) as fixed capital" [ibid., p. 197].
Obviously, that second proposition is, as such, not relevant to the analysis of this distinction, since fixed capital and circulating capital must first be assumed as 2 types of capital before we can go on to argue how capital in both forms may be employed to yield profit.
"The total capital of the undertaker of every work is necessarily divided between his fixed and his circulating capital. Given the same sum, the greater the one part, the smaller will be the other" (A. Smith, [ibid.,] Vol. II, p. 226).
Since capitals (1) are divided up in unequal portions between fixed capital and circulating capital; (2) [have] a phase of production which either is or is not subject to interruption and since they return from markets which are more distant or less distant, and so [have] unequal circulation times, it follows that the surplus value which they produce in a given period of time, e.g.
annually, must be unequal, as the number of reproduction processes which they perform in that period is unequal. The value they create appears to be determined not merely by the labour they employ within the immediate production process, but also by the DEGREE in which this EXPLOITATION OF LABOUR can be repeated in a given period of time.
Finally, therefore: While in the analysis of the simple production process, capital as valorising itself appears solely in relation to wage labour, and circulation lies outside it, in the reproduction process of capital, circulation is absorbed into capital, and indeed both moments of the circulation C—M — M—C are (as a system of exchanges which it has to pass through, and in which it experiences a qualitative transformation each time it is exchanged). The circulation appears to be absorbed in capital in the form M—C—C—M, in so far as the process sets out from capital that is in the form of money and hence returns to that form. Capital now comprises both circuits, and no longer as mere change of form, or mere change of materials which is external to its form, but both as included into the very determination of value.
The production process as containing within itself the conditions for its renewal is the reproduction process, the latter's velocity being determined by the various relations analysed above, all of which stem from the distinctions characteristic of the circuit itself. Within the framework of the reproduction of capital, there simultaneously takes place the reproduction of the use values in which it is realised — or generally the continuous renewal and reproduction by human labour of use values, which are both consumed by man and perishable by nature. From the viewpoint of capital, the change of materials and alteration of form, subordinated to human needs by human labour, appear as the reproduction of capital itself. Au fond it is the constant reproduction of labour itself.
"Values comprising capital perpetuate themselves by means of reproduction: the products which compose a capital are consumed, just like any others; but their value, while being destroyed by consumption, reproduces itself in other materials or in the same" [3] (Say [Traité d'économie politique, Vol. II, p. 185], 14(16)).
Exchange and a system of exchanges, and what is thereby implied, the conversion into money as an independent value, appear both as a condition for, and a barrier to, the reproduction of capital. Under the conditions of capital, production itself is in every respect subjected to exchange. These exchange operations, circulation as such, produce no surplus value, but they are conditions for its realisation. They are conditions for the production of capital itself, in so far as its form as capital is only posited to the extent that it passes through them. The reproduction of capital is at the same time the production of definite formal conditions; of definite [VII-15] modes of the relation in which personified objectified labour is posited. Circulation is therefore not merely the exchange of the product for the conditions of production— hence, e.g. of harvested wheat for seed, new labour, etc. In every form of production, the labourer must exchange his product for the conditions of production if he is to be able to repeat production. The peasant producing for immediate use also converts part of the product into seed, instrument of labour, draught animals, fertiliser, etc., and recommences his labour. The conversion into money is necessary for the reproduction of capital as such, and the reproduction of capital is necessarily production of surplus value.
//With respect to the reproduction phase (circulation time in particular) it should also be noted that limits are set to it by the use value itself. Wheat must be reproduced within a year. Perishable things, like milk, etc., must be reproduced more frequendy. Meat, since the animal lives, i.e. withstands the passage of time, need not be reproduced so frequendy; but the dead meat available in the market must be reproduced in the form of money in a very short period of time, or else it goes bad. The reproduction of value partly coincides with that of use value, and partly does not.//
Although what we previously called the constant part of capital is merely maintained by labour in one production process as value, it must be constandy reproduced by labour in another, because what appears in one production process as the presupposed material and instrument is a product in the other, and this renewal, reproduction, must take place constandy and simultaneously.
We come now to the third section.
Endnotes
[12] Marx quotes Ricardo from his Excerpt Notebook VIII (London, April-mid-May 1851).—33, 77
[2] Marx dealt with the circuit and turnover of capital in the preceding part of Section Two of the "Chapter on Capital" (see present edition, Vol. 28, pp. 439-72), but then he interrupted his exposition of these problems and wrote a section about bourgeois theories of surplus value and profit (see Vol. 28, pp. 473-537). He did, however, return to the topic.— 7
[25] This refers to the great economic crisis that reached its peak in the autumn of 1857 and was the first ever, in the history of capitalism, to develop on a worldwide scale. In March 1858, when these lines were written, in many countries the effects of the crisis had not yet been overcome.—107, 314
[27] Marx is quoting F. M. Eden's book according to the synopsis, drawn up by Engels in July-August 1845 in Manchester.—120
[14] survived.—36, 78, 143 14 The reference is to the Brussels Excerpt Notebooks VII-VIII of 1845.—36, 78, 80
[1] This is the concluding part of Marx's economic manuscript of 1857-1858. Consisting of seven large notebooks, which Marx numbered I-VII, the manuscript is the first rough draft of Capital. On the cover of the last, seventh, notebook, Marx wrote Political Economy, Criticism of in English and "Fortsetzung [Continuation]" in German. This implies that Notebook VII is a continuation of the preceding six notebooks and that Marx did not consider it to be the concluding one. The words Political Economy, Criticism of can be regarded as the author's title for the whole manuscript. The words "rough draft" are taken from Marx's letter to Engels of November 29, 1858 in which Marx calls his economic manuscript of 1857-1858 a Rohentwurf (Rough Draft). The manuscript is, indeed, a rough draft, for it is unfinished and breaks off in mid-sentence. A major part of the manuscript is included in Volume 28 of the present edition and begins with Chapter II—"Chapter on Money", followed by a long third chapter, "Chapter on Capital". Notebook VII contains the conclusion ot this chapter, followed by fragments intended as additions to the two chapters — on money and on capital. The Economic Manuscript of 1857-1858 is being published in the sequence given by Marx. The numbers of the notebooks are indicated in Roman numerals and the pages in Arabic ones, in square brackets. The square brackets in the manuscript are, therefore, replaced by oblique lines. Some passages have been transposed — as indicated by Marx in the manuscript or where there are obvious additions relevant to the preceding text. All such cases are mentioned in the footnotes, which also indicate passages crossed out by Marx and sometimes reproduce them. Where Marx, in quoting, gives references to pages of his excerpt notebooks, these have been supplemented, in brackets, with references to the pages of the editions Marx used. Where he merely gives the authors' names, the titles of the quoted works have been supplied. Foreign words and expressions, including Greek and Latin, are preserved when the author used them for stylistic or terminological purposes. English phrases, expressions and separate words are given in small caps. Quotations from English sources are given according to the editions used by the author. In all cases the form in which Marx quoted is respected. The language in which Marx quotes is indicated, unless it is German. The manuscript was first published in full in the language of the original (German) in Karl Marx, Grundrisse der Kritik der politischen Oekonomie (Rohentwurf). 1857-1858, Moscow, 1939-41 and reproduced by Dietz Verlag, Berlin, in 1953. In English, the manuscript was published in full in Karl Marx, Grundrisse. Foundations of the Critique of Political Economy (Rough Draft). Translated with a foreword by Martin Nicolaus. Penguin Books in association with New Left Review, London, 1973. Separate extracts had been published previously in Marx's Grundrisse, ed. David McLellan, Macmillan Press Ltd., London, 1971.—Title-page
[3] In his manuscript, to denote these categories Marx uses mostly the French terms "capital circulant" and "capital fixe", but sometimes he also uses the German ones "zirkulierendes Kapital" and "fixiertes Kapital", or the English "circulating capital", "floating capital", and "fixed capital".— 9, 201, 515, 526
[5] The reference is to the 1845 Brussels Excerpt Notebook. Other quotations from Storch are on pages 26, 34-35 of this notebook.— 24, 118
[6] When speaking about circulation between dealers, and that between dealers and consumers, Marx has in mind Adam Smith's division of the whole circulation into these two different branches (see Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. II, Book II, Ch. II).—27, 65