1. Formation of Supply in General
During its existence as commodity capital or its stay in the market, in other words, during the interval between the process of production, from which it emerges, and the process of consumption, into which it enters, the product constitutes a commodity supply. As a commodity in the market, and therefore in the shape of a supply, commodity capital figures in a dual capacity in each circuit: one time as the commodity product of that capital in process whose circuit is being examined; the other time however as the commodity product of another capital, which must be available in the market to be bought and converted into productive capital. It is, indeed, possible that this last-named commodity capital is not produced until ordered. In that event an interruption occurs until it has been produced. But the flow of the process of production and reproduction requires that a certain mass of commodities (means of production) should always be in the market, should therefore form a supply. Productive capital likewise comprises the purchase of labour power, and the money form is here only the value form of the means of subsistence, the greater part of which the labourer must find at hand in the market. We shall discuss this more in detail further on in this paragraph. But at this point the following is already clear. As far as concerns capital value in process which has been transformed into a commodity and must now be sold or reconverted into money, which therefore functions for the moment as commodity capital in the market, the condition in which it constitutes a supply is to be described as an inexpedient, involuntary stay there. The quicker the sale is effected the more smoothly runs the process of reproduction. Delay in the form conversion of C — M' impedes the real exchange of matter which must take place in the circuit of capital, as well as its further functioning as productive capital. On the other hand, so far as M — C is concerned, the constant presence of commodities in the market, commodity supply, appears as a condition of the flow of the process of reproduction and of the investment of new or additional capital.
The abidance of the commodity capital as a commodity supply in the market requires buildings, stores, storage places, warehouses, in other words, an expenditure of constant capital; furthermore the payment of labour power for placing the commodities in storage. Besides, commodities spoil and are exposed to the injurious influences of the elements. Additional capital must be invested, partly in instruments of labour, in an objectified form, and partly in labour power to pro-tect the commodities against the above.14)
Thus the existence of capital in its form of commodity capital and hence of commodity supply gives rise to costs which must be classed as costs of circulation, since they do not come within the sphere of production. These costs of circulation differ from those mentioned under I by the fact that they enter to a certain extent into the value of the commodities, i. e., they increase the prices of commodities. At all events the capital and labour power which serve the need of preserving and storing the commodity supply are withdrawn from the direct process of production. On the other hand the capitals thus employed, including labour power as a constituent of capital, must be replaced out of the social product. Their expenditure has therefore the effect of diminishing the productive power of labour, so that a greater amount of capital and labour is required to obtain a particular useful effect. They are unproductive costs.
As the costs of circulation necessitated by the formation of a commodity supply are due merely to the time required for the conversion
14) Corbet calculates, in 1841, that the cost of storing wheat for a season of nine months amounts to a loss of ' /[2]% in quantity, 3% for interest on the price of wheat, 2% for warehouse rental, 1% for sifting and drayage, 'l[2]% for delivery, together 7%, or 3 s. 6d. on a price of 50 s. per quarter (Th. Corbet, An Inquiry into the Causes and Modes of the Wealth of Individuals, etc., London, 1841, [p. 140]).[22] According to the testimony of Liverpool merchants before the Railway Commission, the (net) costs of grain storage in 1865 amounted to about 2d. per quarter per month, or 9d. or lOd. a ton {Royal Commission on Railways, 1867. Evidence, p. 19, No. 331).
of existing values from the commodity form into the money form, hence merely to the particular social form of the production process (i.e., are due only to the fact that the product is brought forth as a commodity and must therefore undergo the transformation into money), these costs completely share the character of the circulation costs enumerated under I. On the other hand the value of the commodities is here preserved or increased only because the use value, the product itself, is placed in definite objective conditions which cost capital outlay, and is subjected to operations which bring additional labour to bear on the use values. However the computation of the values of commodities, the bookkeeping incidental to this process, the transactions of purchase and sale, do not affect the use value in which the commodity value exists. They have to do only with the form of the commodity value. Although in the case submitted here[3] the costs of forming a supply (which is here done involuntarily) arise only from a delay in the change of form and from its necessity, still these costs differ from those mentioned under I, in that their purpose is not a change in the form of the value, but the preservation of the value existing in the commodity as a product, a utility, and which cannot be preserved in any other way than by preserving the product, the use value, itself. The use value is neither raised nor increased here; on the contrary, it diminishes. But its diminution is restricted and it is preserved. Neither is the advanced value contained in the commodity increased here; but new labour, objectified and living, is added.
We have now to investigate furthermore to what extent these costs arise from the peculiar nature of commodity production in general and from commodity production in its general, absolute form, i. e., capitalist commodity production; and to what extent on the other hand they are common to all social production and merely assume a special shape, a special form of appearance, in capitalist production.
Adam Smith entertained the splendid notion that the formation of a supply was a phenomenon peculiar to capitalist production.[15]' More recent economists, for instance Lalor, insist on the contrary that it declines with the development of capitalist production. Sismondi even regards it as one of the drawbacks of the latter.(1)
As a matter of fact, supplies exist in three forms: in the form of pro-l5'Book II, Introduction. [A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations.] ductive capital, in the form of a fund for individual consumption, and in the form of a commodity supply or commodity capital. The supply in one form decreases relatively when it increases in another, although its quantity may increase absolutely in all three forms simultaneously.
It is plain from the outset that wherever production is carried on for the direct satisfaction of the needs of the producer and only to a minor extent for exchange or sale, hence where the social product does not assume the form of commodities at all or only to a rather small degree, the supply in the form of commodities, or commodity supply, forms only a small and insignificant part of wealth. But here the consumption fund is relatively large, especially that of the means of subsistence proper. One need but take a look at old-fashioned peasant economy. There the overwhelming part of the product is transformed directly into supplies of means of production or means of subsistence, without becoming supplies of commodities, for the very reason that it remains in the hands of its owner. It does not assume the form of a commodity supply and for this reason Adam Smith declares that there is no supply in societies based on this mode of production. He confuses the form of the supply with the supply itself and believes that society hitherto lived from hand to mouth or trusted to the hap of the morrow.[16]' This is a naïve misunderstanding.
A supply in the form of productive capital exists in the shape of means of production, which are already in the process of production or at least in the hands of the producer, hence latently already in the process of production. It was seen previously that with the development of the productivity of labour and therefore also with the development of the capitalist mode of production — which develops the
16) Instead of a supply arising only upon and from the conversion of the product into a commodity, and of the consumption supply into a commodity supply, as Adam Smith wrongly imagines, this change of form, on the contrary, causes most violent crises in the economy of the producers during the transition from production for one's own needs to commodity production. In India, for instance, "the disposition to hoard largely the grain for which little could be got in years of abundance" was observed until very recent times {Return. Bengal and Orissa Famine, H. of C, 1867, I, pp.. 230-31, No. 74). The sudden increase in the demand for cotton, jute, etc., due to the American Civil War,[2]* led in many parts of India to a severe restriction of rice culture, a rise in the price of rice, and a sale of the producers' old rice supplies. To this must be added the unexampled export of rice to Australia, Madagascar, etc., in 1864-66. This accounts for the acute character of the famine of 1866, which cost the lives of a million people in the district of Orissa alone (loc. cit., [pp.] 174, 175, 213, 214, and III: Papers relating to the Famine in Behar, pp. 32, 33, where the "DRAIN OF OLD STOCKS" is emphasised as one of the causes of the famine). //From Manuscript 11.// social productive power of labour more than all previous modes of production — there is a steady increase in the mass of means of production (buildings, machinery, etc.) which are incorporated once and for all in the process in the form of instruments of labour, and perform with steady repetition their function in it for a longer or shorter time. It was also observed that this increase is at the same time the premise and consequence of the development of the social productive power of labour. The growth, not only absolute but also relative, of wealth in this form (cf. Buch I, Kap. XXIII, 2)(2) is characteristic above all of the capitalist mode of production. The material forms of existence of constant capital, the means of production, do not however consist only of such instruments of labour but also of materials of labour in various stages of processing, and of auxiliary materials. With the enlargement of the scale of production and the increase in the productive power of labour through co-operation, division of labour, machinery, etc., grows the quantity of raw materials, auxiliary materials, etc., entering into the daily process of reproduction. These elements must be ready at hand at the place of production. The volume of this supply existing in the form of productive capital increases therefore absolutely. In order that the process may keep going — apart from the fact whether this supply can be renewed daily or only at fixed intervals — there must always be a greater accumulation of ready raw material, etc., at the place of production than is used up, say, daily or weekly. The continuity of the process requires that the presence of its conditions should not be jeopardised by possible interruptions when making purchases daily, nor depend on whether the product is sold daily or weekly, and hence is reconvertible into its elements of production only irregularly. But it is evident that productive capital may be latent or form a supply in quite different proportions. There is for instance a great difference whether a spinning-mill owner must have on hand a supply of cotton or coal for three months or for one. Patently this supply, while increasing absolutely, may decrease relatively.
This depends on various conditions, all of which practically amount to a demand for greater rapidity, regularity, and reliability in furnishing the necessary amount of raw material, so that no interruption will ever occur. The less these conditions are complied with, hence the less rapid, regular, and reliable the supplies, the greater must be the latent part of the productive capital, that is to say, the supply of raw material, etc., in the hands of the producer, waiting to be worked up. These conditions are inversely proportional to the degree of development of capitalist production, and hence of the productive power of social labour. The same applies therefore to the supply in this form.
Endnotes
[22] Passages from Th. Corbet's book, An Inquiry into the Causes and Modes of the Wealth of Individuals; or the Principles of Trade and Speculation Explained, were copied out by Marx in Notebook XVI, compiled in London in 1851.— 142
[3] From the numerous notebooks compiled by Marx in the period indicated by Engels, the Institute of Marxism-Leninism of the CC CPSU published nearly all the passages from Russian sources (see Marx-Engels Archives, vols XI-XII, XVI, Moscow, 1948, 1952, 1955, 1982) as well as Mathematical Manuscripts (Moscow, 1968). Marx's notebooks are published in full in Section IV of Marx-Engels Gesamtausgabe.— 7
[15] A reference to the Peasant Reform of 1861, which abolished serfdom in Russia and brought "freedom" to about 22.5 million peasants. Even after the official abolition of serfdom, however, part of the peasantry remained dependent on its former land-lords. For the use of land these so-called temporarily obligated peasants had to perform corvée services and pay quit-rent. Under the law of December 28, 1881, peasants could redeem their allotments as of January 1, 1883, and corvée and quit-rent as they had previously existed were officially abolished. In actual fact, however, they continued to, the beginning of the 20th century.— 39
[16] Marx had both volumes of this book by A. Chuprov in his personal library. His extracts from the first volume are extant.— 61
[2] Engels did not have time to publish Marx's Theories of Surplus Value as the fourth volume of Capital. It was first published in 1905-10 by Karl Kautsky. In 1954-61 and 1962-64, the Institute of Marxism-Leninism of the CC CPSU in Moscow published in Russian a new edition of Theories... which differed from that of Kautsky. In 1956-62 this Russian edition was used by the Institute of Marxism-Leninism of the CC SUPG as the basis for the publication of Theories... in German. In the present edition Theories of Surplus Value is published, according to MEGA 2, Abt. II, Bd. 3, Berlin, 1976-82, as part of the Economic Manuscript of 1861-63 (see present edition, vols 30-34).— 6