Chapter VIII. Fixed Capital and Circulating Capital
We have seen (Buch I, Kap. VI) (1) that, in relation to the products toward the creation of which it contributes, a portion of the constant capital retains that definite use form in which it enters into the process of production. Hence it performs the same functions for a longer or shorter period, in ever repeated labour processes. This applies for instance to industrial buildings, machinery, etc.— in short to all things which we comprise under the name of instruments of labour. This part of constant capital yields up value to the product in proportion as it loses its own exchange value together with its own use value. This delivery of value, or this transition of the value of such a means of production to the product which it helps to create is determined by a calculation of averages. It is measured by the average duration of its function, from the moment that the means of production enters into the process of production to the moment that it is completely spent, dead and gone, and must be replaced by a new sample of the same kind, or reproduced.
This, then, is the peculiarity of this part of constant capital, of the labour instruments proper:
A part of capital has been advanced in the form of constant capital, i.e., of means of production, which function as factors of the labour process so long as they retain the independent use form in which they enter this process. The finished product, and therefore also the creators of the product, so far as they have been transformed into product, is thrust out of the process of production and passes as a commodity from the sphere of production to the sphere of circulation. But the instruments of labour never leave the sphere of production, once they have entered it. Their function holds them there. A portion of the advanced capital value becomes fixed in this form determined by the function of the instruments of labour in the process. In the performance of this function, and thus by the wear and tear of the instruments of labour, a part of their value passes on to the product, while the other remains fixed in the instruments of labour and thus in the process of production. The value fixed in this way decreases steadily, until the instrument of labour is worn out, its value having been distributed during a shorter or longer period over a mass of products originating from a series of constantly repeated labour processes. But so long as it is still effective and need not yet be replaced by a new one of the same kind, a certain amount of constant capital value remains fixed in it, while the other part of the value originally fixed in it is transferred to the product and therefore circulates as a component part of the commodity supply. The longer an instrument of labour lasts, the slower it wears out, the longer will its constant capital value remain fixed in this use form. But whatever may be its durability, the proportion in which it yields value is always inverse to the entire time it functions. If of two machines of equal value one wears out in five years and the other in ten, then the first yields twice as much value in the same time as the second.
This portion of the capital value fixed in the instrument of labour circulates as well as any other. We have seen in general that all capital value is constantly in circulation, and that in this sense all capital is circulating capital. But the circulation of the portion of capital which we are now studying is peculiar. In the first place it does not circulate in its use form, but it is merely its value that circulates, and this takes place gradually, piecemeal, in proportion as it passes from it to the product, which circulates as a commodity. During the entire period of its functioning, a part of its value remains fixed in it, independently of the commodities which it helps to produce. It is this peculiarity which gives to this portion of constant capital the form of fixed capital. All other material parts of the capital advanced in the process of production form by way of contrast the circulating, or fluid, capital.
Some means of production do not enter materially into the product. Such are auxiliary materials, which are consumed by the instruments of labour proper in the performance of their functions, like coal consumed by a steam-engine; or which merely assist in the operation, like gas for lighting, etc. It is only their value which forms a part of the value of the products. The product circulates in its own circulation the value of these means of production. This feature they have in common with fixed capital. But they are entirely consumed in every labour process which they enter and must therefore be wholly replaced by new means of production of the same kind in every new labour process. They do not preserve their independent use form while performing their function. Hence while they function no portion of capital value remains fixed in their old use form, their bodily form, either. The circumstance that this portion of the auxiliary materials does not pass bodily into the product but enters into the value of the product only according to its own value, as a portion of that value, and what hangs together with this, namely, that the function of these substances is strictly confined to the sphere of production, has misled economists like Ramsay (who at the same time got fixed capital mixed up with constant capital) to classify them as fixed capital.[28]
That part of the means of production which bodily enters into the product, i.e., raw materials, etc., thus assumes in part forms which enable it later to enter into individual consumption as articles of use.
The instruments of labour properly so called, the material vehicles of the fixed capital, are consumed only productively and cannot enter into individual consumption, because they do not enter into the product, or the use value, which they help to create but retain their independent form with reference to it until they are completely worn out. The means of transportation are an exception to this rule. The useful effect which they produce during the performance of their productive function, hence during their stay in the sphere of production, the change of location, passes simultaneously into the individual consumption of, for instance, the passenger. He pays for their use in the same way in which he pays for the use of other articles of consumption. We have seena that for instance in chemical manufacture raw and auxiliary materials blend. The same applies to instruments of labour and auxiliary and raw materials. Similarly in agriculture the substances added for the improvement of the soil pass partly into the plants raised and help to form the product. On the other hand their effect is distributed over a lengthy period, say four or five years. A portion of them therefore passes bodily into the product and thus immediately transfers its value to the product while the other portion remains fixed in its old use form and retains its value. It persists as a means of production and consequently keeps the form of fixed capital. As a beast of toil an ox is fixed capital. If he is eaten, he no longer functions as an instrument of labour, nor as fixed capital either.
What determines that a portion of the capital value invested in means of production is endowed with the character of fixed capital is exclusively the peculiar manner in which this value circulates. This specific manner of circulation arises from the specific manner in which the instrument of labour transmits its value to the product, or in which it behaves as a creator of values during the process of production. This manner again arises from the special way in which the instruments of labour function in the labour process.
We know that a use value which emerges as a product from one labour process enters into another as a means of production. b It is only the functioning of a product as an instrument of labour in the process of production that makes it fixed capital. But when it itself only just emerges from a process, it is in no way fixed capital. For instance a machine, as a product or commodity of the machine-manufacturer,
See présent edition, Vol. 35 (Capital, Vol. I, Ch. VII, 1).- bIbid.
belongs to his commodity capital. It does not become fixed capital until it is employed productively in the hands of its purchaser, the capitalist.
All other circumstances being equal, the degree of fixity increases with the durability of the instrument of labour. It is this durability that determines the magnitude of the difference between the capital value fixed in instruments of labour and that part of its value which it yields to the product in repeated labour processes. The slower this value is yielded — and value is given up by the instrument of labour in every repetition of the labour process — the larger is the fixed capital and the greater the difference between the capital employed in the process of production and the capital consumed in it. As soon as this difference has disappeared the instrument of labour has outlived its usefulness and has lost with its use value also its value. It has ceased to be the depository of value. Since an instrument of labour, like every other material carrier of constant capital, gives up value to the product only to the extent that together with its use value it loses its value, it is evident that the more slowly its use value is lost, the longer it lasts in the process of production, the longer is the period in which constant capital value remains fixed in it.
If a means of production which is not an instrument of labour strictly speaking, such as auxiliary substances, raw material, partly finished articles, etc., behaves with regard to value yield and hence manner of circulation of its value in the same way as the instruments of labour, then it is likewise a material depository, a form of existence, of fixed capital. This is the case with the above-mentioned improvements of the soil, which add to it chemical substances whose influence is distributed over several periods of production or years. Here a portion of the value continues to exist alongside the product, in its independent form or in the form of fixed capital, while another portion of the value has been delivered to the product and therefore circulates with it. In this case it is not only a portion of the value of the fixed capital which enters into the product, but also the use value, the substance, in which this portion of value exists.
Apart from the fundamental mistake — the mixing up of the categories of fixed and circulating capital with the categories of constant and variable capital — the confusion of the economists hitherto in the definitions of concepts is based first of all on the following points:
One turns certain properties materially inherent in instruments of labour into direct properties of fixed capital; for instance physical im-mobility, say, of a house. However it is always easy to prove in such case that other instruments of labour, which as such are likewise fixed capital, possess the opposite property; for instance physical mobility, say, of a ship.
Or one confuses the economic definiteness of form which arises from the circulation of value with an objective property; as if things which in themselves are not capital at all but rather become so only under definite social conditions could in themselves and in their very nature be capital in some definite form, fixed or circulating. We have seen (Buch I, Kap. V) (2) that the means of production in every labour process, regardless of the social conditions in which it takes place, are divided into instruments of labour and subjects of labour. But both of them become capital only under the capitalist mode of production, when they become "productive capital", as shown in the preceding part. Thus the distinction between instruments of labour and subject of labour, which is grounded on the nature of the labour process, is reflected in a new form: the distinction between fixed capital and circulating capital. It is only then that a thing which performs the function of an instrument of labour becomes fixed capital. If owing to its material properties it can function also in other capacities than that of instrument of labour, it may be fixed capital or not, depending on the specific function it performs. Cattle as beasts of toil are fixed capital; as beef cattle they are raw material which finally enters into circulation as a product; hence they are circulating, not fixed capital.
The mere fixation of a means of production for a considerable length of time in repeated labour processes, which however are connected, continuous, and therefore form a production period — i.e., the entire time of production required to finish a certain product — obliges the capitalist, just as fixed capital does, to make his advances for a longer or shorter term, but this does not make his capital fixed capital. Seeds for instance are not fixed capital, but only raw material which is held for about a year in the process of production. All capital is held in the process of production so long as it functions as productive capital, and so are therefore all elements of productive capital, whatever their material forms, their functions and the modes of circulation of their values. Whether this period of fixation lasts a long or a short time — a matter depending on the kind of process of production involved or the useful effect aimed at — this does not effect the distinction between fixed and circulating capital.20)
A part of the instruments of labour, which includes the general conditions of labour, is either localised as soon as it enters the process of production as an instrument of labour, i. e., is prepared for its productive function, such as for instance machinery, or is produced from the outset in its immovable, localised form, such as improvements of the soil, factory buildings, blast furnaces, canals, railways, etc. The constant attachment of the instrument of labour to the process of production in which it is to function is here also due to its physical mode of existence. On the other hand an instrument of labour may physically change continually from place to place, may move about, and nevertheless be constantly in the process of production; for instance a locomotive, a ship, beasts of burden, etc. Neither does immobility in the one case bestow upon it the character of fixed capital, nor does mobility in the other case deprive it of this character. But the fact that some instruments of labour are localised, attached to the soil by their roots, assigns to this portion of fixed capital a peculiar role in the economy of nations. They cannot be sent abroad, cannot circulate as commodities in the world market. Title to this fixed capital may change, it may be bought and sold, and to this extent may circulate ideally. These titles of ownership may even circulate in foreign markets, for instance in the form of stocks. But a change of the persons owning this class of fixed capital does not alter the relation of the immovable, materially fixed part of the national wealth to its movable part.[21]'
The peculiar circulation of fixed capital results in a peculiar turnover. That part of the value which it loses in its bodily form by wear and tear circulates as a part of the value of the product. The product converts itself by means of its circulation from a commodity into money; hence the same applies to the value part of the instrument of labour circulated by the product, and this value drips down in the form of money from the process of circulation in proportion as this instrument of labour ceases to be a depository of value in the process of production. Its value thus acquires a double existence. One part of it remains attached to its use form or bodily form belonging in the process of production. The other part detaches itself from that form in the shape of money. In the performance of its function that part of the value of an instrument of labour which exists in its bodily form constantly decreases, while that which is transformed into money constantly increases until the instrument of labour is at last exhausted and its entire value, detached from its corpse, is converted into money. Here the peculiarity in the turnover of this element of productive capital becomes apparent. The transformation of its value into money keeps pace with the pupation into money of the commodity which is the carrier of its value. But its reconversion from the money form into a use form proceeds separately from the reconversion of the commodities into other elements of their production and is determined rather by its own period of reproduction, that is, by the time during which the instrument of labour wears out and must be replaced by another of the same kind. If a machine worth £10,000 lasts for, say, a period of ten years, then the period of turnover of the value originally advanced for it amounts to ten years. It need not be renewed and continues to function in its bodily form until this period has expired. In the meantime its value circulates piecemeal as a part of the value of the commodities whose continuous production it serves, and it is thus gradually transformed into money until finally at the end of ten years it entirely assumes the form of money and is reconverted from money into a machine, in other words, has completed its turnover. Until this time of reproduction arrives, its value is gradually accumulated, in the form of a money reserve fund to start with.
The remaining elements of productive capital consist partly of those elements of constant capital which exist as auxiliary and raw materials, partly of variable capital invested in labour power.
The analysis of the labour process and of the process of producing surplus value (Buch I, Kap. V)a showed that these different components behave quite differently as creators of products and as creators of values. The value ofthat part of constant capital which consists of auxiliary and raw materials— the same as ofthat part which consists of instruments of labour — re-appears in the value of the product as only transferred value, while labour power adds an equivalent of its value to the product by means of the labour process, in other words, actually reproduces its value. Furthermore, one part of the auxiliary substances — fuel, lighting gas, etc.— is consumed in the process of labour without entering bodily into the product, while the other part of them enters bodily into the product and forms its material substance. But all these differences are immaterial so far as the circulation and therefore the mode of turnover is concerned. Since auxiliary and raw materials are entirely consumed in the creation of the product, they transfer their value entirely to the product. Hence this value is circulated in its entirety by the product, transforms itself into money and from money back into the elements of production of the commodity. Its turnover is not interrupted, as is that of fixed capital, but passes uninterruptedly through the entire circuit of its forms, so that these elements of productive capital are continually renewed in natura.
As for the variable component of productive capital, which is invested in labour power, be it noted that labour power is purchased for a definite period of time. As soon as the capitalist has bought it and embodied it in the process of production, it forms a component part of his capital, its variable component. Labour power acts daily during a period of time in which it adds to the product not only its own value for the whole day but also a surplus value in excess of it. We shall not consider this surplus value for the present. After labour power has been bought and it has performed its function, say for a week, its purchase must be constantly renewed within the customary intervals of time. The equivalent of its value, which the labour power adds to the product during its functioning and which is transformed into money in consequence of the circulation of the product, must continually be reconverted from money into labour power or continually pass through the complete circuit of its forms, that is, must be turned over, if the circuit of continuous production is not to be interrupted.
Hence that part of the value of the productive capital which has been advanced for labour power is entirely transferred to the product (we constantly leave the question of surplus value out of consideration here), passes with it through the two metamorphoses belonging in the sphere of circulation and always remains incorporated in the process of production by virtue of this continuous renewal. Hence, however different otherwise may be the relation between labour power, so far as the creation of value is concerned, and the component parts of constant capital which do not constitute fixed capital, this kind of turnover of its value labour power shares with them, in contradistinc-tion to fixed capital. These components of the productive capital — the parts of its value invested in labour power and in means of production which do not constitute fixed capital — by reason of their common turnover characteristics confront the fixed capital as circulating ox fluid capital.
We have already seen(3) that the money which the capitalist pays to the labourer for the use of his labour power is in fact only the general equivalent form of the means of subsistence required by the labourer. To this extent, the variable capital consists in substance of means of subsistence. But in this case, where we are discussing turnover, it is a question of form. The capitalist does not buy the labourer's means of subsistence but his labour power. And that which forms the variable part of his capital is not the labourer's means of subsistence but his labour power in action. What the capitalist consumes productively in the labour process is the labour power itself and not the labourer's means of subsistence. It is the labourer himself who converts the money received for his labour power into means of subsistence, in order to reconvert them into labour power, to keep alive, just as the capitalist for instance converts a part of the surplus value of the commodities he sells for money into means of subsistence for himself without thereby warranting the statement that the purchaser of his commodities pays him in means of subsistence. Even if the labourer is paid a part of his wages in means of subsistence, in natura, this nowa-days amounts to a second transaction. He sells his labour power at a certain price, with the understanding that he shall receive a part of this price in means of subsistence. This changes merely the form of the payment, but not the fact that what he actually sells is his labour power. It is a second transaction, which does not take place between the labourer and the capitalist, but between the labourer as a buyer of commodities and the capitalist as a seller of commodities, while in the first transaction the labourer is a seller of a commodity (his labour power) and the capitalist its buyer. It is exactly the same as if a capitalist, on selling his commodity, say, a machine, to an iron works, has it replaced by some other commodity, say, iron. It is therefore not the labourer's means of subsistence which acquire the definite character of circulating capital as opposed to fixed capital. Nor is it his labour power. It is rather that part of the value of productive capital which is invested in labour power and which, by virtue of the form of its turnover, receives this character in common with some, and in contrast with other, component parts of the constant capital.
The value of the circulating capital — in labour power and means of production — is advanced only for the time during which the product is in process of production, in accordance with the scale of production determined by the volume of the fixed capital. This value enters entirely into the product, is therefore fully returned by its sale from the sphere of circulation, and can be advanced anew. The labour power and means of production, in which the circulating component of capital exists, are withdrawn from circulation to the extent required for the creation and sale of the finished product, but they must be continually replaced and renewed by purchasing them back, by reconvert-ing them from the money form into the elements of production. They are withdrawn from the market in smaller quantities at a time than the elements of fixed capital, but they must be withdrawn again from it so much the more frequently and the advance of capital invested in them must be renewed at shorter intervals. This constant renewal is effected by the continuous conversion of the product which circulates their entire value. And finally, they pass through the entire circuit of metamorphoses, not only so far as their value is concerned but also their material form. They are perpetually reconverted from commodities into the elements of production of the same commodities.
Together with its own value, labour power always adds to the product surplus value, the embodiment of unpaid labour. This is continuously circulated by the finished product and converted into money just as are other elements of its value. But here, where we are primarily concerned with the turnover of capital value, and not with that of the surplus value occurring at the same time, we dismiss the latter for the present.
From the foregoing one may conclude the following:
1. The definiteness of form of fixed and circulating capital arises merely from the different turnovers of the capital value, functioning in the process of production, or of the productive capital. This difference in turnover arises in its turn from the different manner in which the various components of productive capital transfer their value to the product; it is not due to the different parts played by these components in the generation of product value, nor to their characteristic behaviour in the process of self-expansion. Finally the difference in the delivery of value to the product — and therefore the different manner in which this value is circulated by the product and is renewed in its original bodily form through the metamorphoses of the product — arises from the difference of the material shapes in which the productive capital exists, one portion of it being entirely consumed during the creation of an individual product and the other being used up only gradually. Hence it is only the productive capital which can be divided into fixed and circulating capital. But this antithesis does not apply to the other two modes of existence of industrial capital, that is to say, commodity capital and money capital, nor does it exist as an antithesis of these two modes to productive capital. It exists only for productive capital and within its sphere. No matter how much money capital and commodity capital may function as capital and no matter how fluently they may circulate, they cannot become circulating capital as distinct from fixed capital until they are transformed into circulating components of productive capital. But because these two forms of capital dwell in the sphere of circulation, political economy, as we shall see, has been misled since the time of Adam Smith into lumping them together with the circulating part of productive capital and assigning them to the category of circulating capital. They are indeed circulation capital in contrast to productive capital, but they are not circulating capital in contrast to fixed capital.
2. The turnover of the fixed component part of capital, and therefore also the time of turnover necessary for it, comprises several turnovers of the circulating constituents of capital. In the time during which the fixed capital turns over once, the circulating capital turns over several times. One of the component parts of the value of the productive capital acquires the definiteness of form of fixed capital only in case the means of production in which it exists is not wholly worn out in the time required for the fabrication of the product and its expulsion from the process of production as a commodity. One part of its value must remain tied up in the form of the still preserved old use form, while the other part is circulated by the finished product, and this circulation on the contrary simultaneously circulates the entire value of the fluid component parts of the capital.
3. The value part of the productive capital, the part invested in fixed capital, is advanced in one lump sum for the entire period of employment of that part of the means of production of which the fixed capital consists. Hence this value is thrown into the circulation by the capitalist all at one time. But it is withdrawn again from the circulation only piecemeal and gradually by realising the parts of value which the fixed capital adds piecemeal to the commodities. On the other hand the means of production themselves, in which a component part of the productive capital becomes fixed, are withdrawn from the circulation all at one time to be embodied in the process of production for the entire period in which they function. But they do not require for this period any replacement by new samples of the same kind, do not require reproduction. They continue for a longer or shorter period to contribute to the creation of the commodities thrown into circulation without withdrawing from circulation the elements of their own renewal. Hence they do not require from the capitalist a renewal of his advance during this period. Finally the capital value invested in fixed capital does not pass bodily through the circuit of its forms, during the functioning period of the means of production in which this capital value exists, but only as concerns its value, and even this it does only in parts and gradually. In other words, a portion of its value is continually circulated and converted into money as a part of the value of the commodities, without being reconverted from money into its original bodily form. This reconversion of money into the bodily form of the means of production does not take place until the end of its functioning period, when the means of production has been completely consumed.
4. The elements of circulating capital are as permanently fixed in the process of production — if it is to be uninterrupted — as the elements of fixed capital. But the elements of circulating capital thus fixed are continually renewed in natura (the means of production by new products of the same kind, labour power by constantly renewed purchases) while in the case of the elements of fixed capital neither they themselves are renewed nor need their purchases be renewed so long as they continue to exist. There are always raw and auxiliary materials in the process of production, but always new products of the same kind, after the old elements have been consumed in the creation of the finished product. Labour power likewise always exists in the process of production, but only by means of ever new purchases, frequently involving changes of persons. But the same identical buildings, machines, etc., continue to function, during repeated turnovers of the circulating capital, in the same repeated processes of production.
Endnotes
[28] A reference to George Ramsay's work An Essay on the Distribution of Wealth, Edinburgh, London, 1836. Marx copied out passages from it in notebooks IX and X, compiled in London in 1851. MEGA 2, Bd. IV/8, Berlin, 1986, S. 643-47, 651-67. For details see present edition, Vol. 33, pp. 255-84.—161, 229
[21] ritory that is now occupied by Peru, Equador, Bolivia and the northern part of Chile. It was a slave-owning state with considerable remnants of the primitive-communal system. The dominant tribe of the Incas was subdivided into 100 gentile communities which gradually assumed the character of rural (neighbouring) communities with a self-sustained natural economy. Social product was not produced as a commodity, but the movement of its various kinds between communities, though not in the form of trade, already played an important role.— 121, 153 21 Marx copied out passages from Quesnay's work Analyse du Tableau économique in one of his notebooks compiled in London between 1859 and 1863 and in Notebook C (Beiheft C); the latter also contains excerpts from Dialogues sur le commerce et sur les travaux des artisans.— 135