Chapter XVI. The Turnover of Variable Capital
Let us assume a circulating capital of £2,500, [4]/[5] of which, or £2,000, are constant capital (materials of production) and '/[5] = £500 is variable capital invested in wages.
Let the period of turnover be 5 weeks; the working period 4 weeks, the period of circulation 1 week. Then capital I = £2,000, consisting of £1,600 of constant capital and £400 of variable capital; capital II = £500, £400 of which are constant and £100 variable. In every working week a capital of £500 is invested. In a year of 50 weeks an annual product of 50 x 500 = £25,000 is manufactured. Capital I of £2,000, constantly employed in the working period, is therefore turned over 12 '/[2] times. 12 '/[2] x 2,000 = £25,000. Of these £25,000 [4]/s = £20,000 are constant capital laid out in means of production, and '/[5] = £5,000 is variable capital laid out in wages. The total capital of £2,500 is thus turned over 25,000 = 10 times. . . . 2,500 The variable circulating capital expended in production can serve afresh in the process of circulation only to the extent that the product in which its value is reproduced has been sold, converted from a commodity capital into a money capital, in order to be once more laid out in payment of labour power. But the same is true of the constant circulating capital (materials of production) invested in production, the value of which reappears in the product as a portion of its value. What these two portions — the variable and the constant part of the circulating capital — have in common and what distinguishes them from the fixed capital is not that the value transferred from them to the product is circulated by the commodity capital, i. e., through the circulation of the product as a commodity. One portion of the value of the product, and thus of the product circulating as a commodity, of the commodity capital, always consists of the wear and tear of the fixed capital, that is to say, of that portion of the value of the fixed capital which is transferred to the product during the process of production. The difference is really this: The fixed capital continues to function in the process of production in its old use form for a longer or shorter cycle of turnover periods of the circulating capital ( = constant circulating + variable circulating capital), while every turnover is conditioned on the replacement of the entire circulating capital passing from the sphere of production — in the form of commodity capital — into the sphere of circulation. The constant circulating and variable circulating capital have the first phase of circulation, C — M', in common. In the second phase they separate. The money into which the commodity is reconverted is in part transformed into a productive supply (constant circulating capital). Depending on the different terms of purchase of its constituent parts, one portion of the money may sooner, another later, be converted from money into materials of production, but finally it is wholly consumed that way. Another portion of the money realised by the sale of the commodity is held in the form of a money supply, in order to be gradually expended in payment of the labour power incorporated in the process of production. This part constitutes the variable circulating capital. Nevertheless the entire replacement of either portion always originates from the turnover of the capital, from its conversion into a product, from a product into a commodity, from a commodity into money. This is the reason why, in the preceding chapter, the turnover of the circulating capital, constant and variable, was treated jointly and separately without paying any regard to the fixed capital.
In the question which we shall now take up, we must go a step farther and proceed with the variable portion of the circulating capital as though it alone constituted the circulating capital. In other words, we leave out of consideration the constant circulating capital which is turned over together with it.
A sum of £2,500 has been advanced and the value of the annual product is £25,000. But the variable portion of the circulating capital is £500; therefore the variable capital contained in £25,000 amounts t 0 25,000 = £ 5 ;000. If we divide these £5,000 by £500, we find that the number of turnovers is 10, just as it is in the case of the total capital of £2,500.
Here, where it is only a question of the production of surplus value, it is absolutely correct to make this average calculation, according to which the value of the annual product is divided by the value of the advanced capital and not by the value ofthat portion of this capital which is employed constantly in one working period (thus, in the present case not by 400 but by 500, not by capital I but by capital I + capital II). We shall see later that, from another point of view, the calculation is not quite exact, just as this average calculation generally is not quite exact. That is to say, it serves well enough for the practical purposes of the capitalist, but it does not express exactly or properly all the real circumstances of the turnover.
We have hitherto ignored one part of the value of the commodity capital, namely the surplus value contained in it, which was produced during the process of production and incorporated in the product. To this we have now to direct our attention.
Suppose the variable capital of £100 invested weekly produces a surplus value of 100% = £100, then the variable capital of £500 invested over a 5-week turnover period produces £500 of surplus value, i.e., one half of the working day consists of surplus labour.
But if £500 of variable capital produce a surplus value of £500, then £5,000 produce 10 x 500 = £5,000 in surplus value. But the advanced variable capital amounts to £500. The ratio of the total surplus value produced during one year to the sum of value of the advanced variable capital is what we call the annual rate of surplus value. In the case at hand it is ' = 1,000%. If we analyse this rate more closely, we find that it is equal to the rate of surplus value produced by the advanced variable capital during one period of turnover, multiplied by the number of turnovers of the variable capital (which coincides with the number of turnovers of the entire circulating capital).
The variable capital advanced in the case before us for one period of turnover is £500; the surplus value produced during this period is likewise £500. The rate of surplus value for one period of turnover is therefore ^ = 100%. This 100%, multiplied by 10, the number of 500v - ç.nr\ turnovers in one year, makes ' s = 1,000%. That refers to the annual rate of surplus value. As for the amount of surplus value obtained during a specified period of turnover, it is equal to the value of the variable capital advanced during this period, or £500 in the present case, multiplied by the rate of surplus value, in the present case therefore 500 x M = 500 x 1 = £500. If the advanced capital were £1,500, then with the same rate of surplus value the amount of surplus value would be 1,500 x I°° = £1,500.
We shall apply the term capital A to the variable capital of £500, which is turned over ten times per year, producing an annual surplus value of £5,000 for which, therefore, the yearly rate of surplus value = 1,000%.
Now let us assume that another variable capital, B, of £5,000, is advanced for one whole year (i. e., here for 50 weeks), so that it is turned over only once a year. We assume furthermore that at the end of the year the product is paid for on the same day that it is finished, so that the money capital, into which it is converted, returns on the same day. The circulation period is then zero, the period of turnover = the working period, namely = 1 year. As in the preceding case there is to be found in the labour process each week a variable capital of £100, or of £5,000 in 50 weeks. Let the rate of surplus value be the same, or 100%, i. e., let one half of the working day of the same length consist of surplus labour. If we consider 5 weeks, the invested variable capital is £500, the rate of surplus value 100% and therefore the amount of surplus value produced in 5 weeks £500. The quantity of labour power here exploited, and the intensity of its exploitation, are assumed to be exactly the same as those of capital A.
Each week the invested variable capital of £100 produces a surplus value of £100, hence in 50 weeks the invested capital of 50 x 100 = £5,000 produces a surplus value of £5,000. The amount of surplus value produced annually is the same as in the previous case, £5,000, but the yearly rate of surplus value is entirely different. It is equal to the surplus value produced in one year divided by the advanced variable capital: ^ - = 100%, while in the case of capital ' 5,000v / 0 ' ^ A it was 1,000%.
In the case of both capitals A and B, we have invested a variable capital of £100 a week. The degree of self-expansion, or the rate of surplus value, is likewise the same, 100%, and so is the magnitude of the variable capital, £100. The same quantity of labour power is exploited, the volume and degree of exploitation are equal in both cases, the working days are the same and equally divided into necessary labour and surplus labour. The amount of variable capital employed in the course of the year is £5,000 in either case; it sets the same amount of labour in motion, and extracts the same amount of surplus value, £5,000, from the labour power set in motion by these two equal capitals. Nevertheless there is a difference of 900% in the annual rate of surplus value of the two capitals A and B.
This phenomenon creates the impression, at all events, that the rate of surplus value depends not only on the quantity and intensity of exploitation of the labour power set in motion by the variable capital, but besides on inexplicable influences arising from the process of circulation. And it has indeed been so interpreted, and has — if not in this its pure form, then at least in its more complicated and disguised form, that of the annual rate of profit — completely routed the Ricardian school since the beginning of the twenties.[3]
The strangeness of this phenomenon disappears at once when we place capitals A and B in exactly the same conditions, not only seemingly but actually. These equal conditions exist only when the variable capital B in its entire volume is expended for the payment of labour power in the same period of time as capital A.
In that case the £5,000 of capital B are invested for 5 weeks, £1,000 per week makes an investment of £50,000 per year. The surplus value is then likewise £50,000, according to our premises. The turned-over capital of £50,000 divided by the advanced capital of £5,000 makes the number of turnovers 10. The rate of surplus value = ' s = 100%, multiplied by the number of turnovers, 10, makes
the annual rate of surplus value = -[5]-0-'-°-0-°-s- = ^ = 1,000%. Now the
^ . 5,000V 1 annual rates of surplus value are alike for A and B, namely, 1,000%, but the amounts of the surplus value are £50,000 in the case of B, and £5,000 in the case of A. The amounts of the surplus value produced are now in the same proportion to one another as the advanced capital values B and A, to wit: 5,000:500 = 10:1. But capital B has set in motion ten times as much labour power as capital A within the same time.
Only the variable capital actually employed in the labour process produces surplus value and to it apply all laws relating to surplus value, including therefore the law according to which the quantity of surplus value, its rate being given, is determined by the relative magnitude of the variable capital.b
The labour process itself is measured by time. If the length of the working day is given (as here, where we assume all conditions relating to A and B to be equal, in order to elucidate the difference in the annual rate of surplus value), the working week consists of a definite number of working days. Or we may consider any working period, for instance this working period of 5 weeks, as one single working day of, say, 300 hours, if the working day = 10 hours and the week = 6 days. We must further multiply this number by the number of labourers who are employed conjointly every day simultaneously in the same labour process. If that number is taken as 10, there will be 60 x 10 = 600 hours in one week, and a working period of 5 weeks would have 600 x 5 = 3,000 hours. The rate of surplus value and the length of the working day being the same, variable capitals of equal magnitude are therefore employed, if equal quantities of labour power (a labour power of the same price multiplied by the number of labourers) are set in motion in the same time.
Let us now return to our original examples. In both cases, A and B, equal variable capitals of £100 per week are invested every week throughout the year. The invested variable capitals actually functioning in the labour process are therefore equal, but the advanced variable capitals are very unequal. In the case of A, £500 are advanced for every 5 weeks, of which £100 are employed every week. In the case of B, £5,000 must be advanced for the first 5-week period, of which only £100 per week, or only £500 in 5 weeks, or J/io of the advanced capital, is employed. In the second 5-week period £4,500 must be advanced, but only £500 of this are employed, etc. The variable capital advanced for a definite period of time is converted into employed, hence actually functioning and operative variable capital only to the extent that it really steps into the sections ofthat period of time taken up by the labour process, to the extent that it really functions in the labour process. In the intermediate time, in which a portion of it is advanced in order to be employed later, this portion is practically non-existent for the labour process and has therefore no influence on the formation of either value or surplus value. Take for instance capital A, of £500. It is advanced for 5 weeks, but every week only £100 enter successively into the labour process. In the first week '/s of this capital is employed; [4]/[5] are advanced without being employed, although they must be in stock, and therefore advanced, for the labour processes of the following 4 weeks.
The circumstances which differentiate the relation between the advanced and the employed variable capital affect the production of surplus value — the rate of surplus value being given — only to the extent, and only by reason of the fact that they differentiate the quantity of variable capital which can be really employed in a stated period of time, for instance in one week, 5 weeks, etc. The advanced variable capital functions as variable capital only to the extent and only during the time that it is actually employed, and not during the time in which it remains in stock, is advanced, without being employed. But all the circumstances which differentiate the relation between the advanced and the employed variable capital come down to the difference of the periods of turnover (determined by the difference of either the working period, or the circulation period, or both). The law of the production of surplus value states that equal quantities of functioning variable capital produce equal quantities of surplus value if the rate of surplus value is the same. If, then, equal quantities of variable capital are employed by the capitals A and B in equal periods of time with equal rates of surplus value, they must generate equal quantities of surplus value in equal periods of time, no matter how different the ratio of this variable capital employed during a definite period of time to the variable capital advanced during the same time, and no matter therefore how different the ratio of the quantities of surplus value produced, not to the employed but to the advanced variable capital in general. The difference of this ratio, far from contra-dicting the laws of the production of surplus value that have been demonstrated, rather corroborates them and is one of their inevitable consequences.
Let us consider the first 5-week productive period of capital B. At the end of the fifth week £500 have been employed and consumed. The value of the product is £1,000, hence ^OOs = 100%. Just the same as with capital A. The fact that, in the case of capital A, the surplus value is realised together with the advanced capital, while in the case of B it is not, does not concern us here, where it is only a question of the production of surplus value and of its ratio to the variable capital advanced during its production. But if on the contrary we calculate the ratio of surplus value in B, not to that portion of the advanced capital of £5,000 which has been employed and hence consumed during its production, but to this total advanced capital itself, we find that it is -5P-0-[8]- =-L = 10%. Hence it is 10% for capital B and
5,000v 10 / 0 ' v . 100% for capital A, i. e., tenfold. If it were said that this difference in the rate of surplus value for equal capitals, which have set in motion equal quantities of labour equally divided at that into paid and unpaid labour, is contrary to the laws of the production of surplus value, the answer would be simple and prompted by a mere glance at the actual relations: In the case of A, the actual rate of surplus value is expressed, i. e., the relation of a surplus value produced in 5 weeks by a variable capital of £500, to this variable capital of £500. In the case of B on the other hand the calculation is of a kind which has nothing to do either with the production of surplus value or with the determination of its corresponding rate of surplus value. For the £500 of surplus value produced by a variable capital of £500 are not calculated with reference to the £500 of variable capital advanced during their production, but with reference to a capital of £5,000, [9]/[10] of which, or £4,500, have nothing whatever to do with the production of this surplus value of £500, but are on the contrary intended to function gradually in the course of the following 45 weeks, so that they do not exist at all so far as the production of the first 5 weeks is concerned, which alone is at issue in this instance. Hence in this case the difference in the rates of surplus value of A and B presents no problem at all.
Let us now compare the annual rates of surplus value for capitals B and A. For capital B it is M2°i = 100%; for capital A it ^ 5,000v / 0 ' K
is M22! = 1 000%. But the ratio of the rates of surplus value
500v ' , 0 ^ is the same as before. There we had
Rate of Surplus Value of Capital B _ 10% Rate of Surplus Value of Capital A 100%
Now we have
Annua[1] Rate of Surplus Value of Capital B _ 100% Annual Rate of Surplus Value of Capital A 1,000%
But 10% : 100%, = 100% : 1,000%, so that the proportion is the same.
But now the problem has changed. The annual rate of capital B, 5,000s _ looo/ offers not the slightest deviation — not even the 5,000v [5] semblance of a deviation — from the laws of production known to us and of the rate of surplus value corresponding to them. During the year 5,000v have been advanced and productively consumed, and they have produced 5,000s. The rate of surplus value therefore equals the above fraction, ' = 100%. The annual H _ ' 5,000v / 0 rate agrees with the actual rate of surplus value. In this case it is therefore not capital B but capital A which presents an anomaly that has to be explained.
We have here the rate of surplus value M22! = 1,000%. But r 500v ' / 0 while in the first case 500s, the product of 5 weeks, was calculated for an advanced capital of £5,000,[9]/[10] of which were not employed in its production, we have now 5,000s calculated for 500v, i.e., for only '/io of the variable capital actually employed in the production of 5,000s; for the 5,000s are the product of a variable capital of £5,000 productively consumed during 50 weeks, not that of a capital of £500 consumed in one single period of 5 weeks. In the first case the surplus value produced in 5 weeks had been calculated for a capital advanced for 50 weeks, a capital ten times as large as the one consumed during the 5 weeks. Now the surplus value produced in 50 weeks is calculated for a capital advanced for 5 weeks, a capital ten times smaller than the one consumed in 50 weeks.
Capital A, of £500, is never advanced for more than 5 weeks. At the end of this time it returns and can renew the same process in the course of the year ten times, as it makes ten turnovers. Two conclusions follow from this.
Firstly: The capital advanced in the case of A is only five times larger than that portion of capital which is constantly employed in the productive process of one week. On the other hand capital B which is turned over only once in 50 weeks and must therefore be advanced for 50 weeks, is 50 times larger than that one of its portions which can constantly be employed for one week. The turnover therefore modifies the relation between the capital advanced during the year for the process of production and the capital constantly employable for a definite period of production, say, a week. Here we have, then, the first case, in which the surplus value of 5 weeks is not calculated for the capital employed during these 5 weeks, but for a capital ten times larger, employed for 50 weeks ;
Secondly: The 5-week period of turnover of capital A comprises only '/io of the year, so that one year contains ten such turnover periods, in which capital A of £500 is successively re-invested. The employed capital is here equal to the capital advanced for 5 weeks, multiplied by the number of periods of turnover per year. The capital employed during the year is 500 x 10 = £5,000. The capital advanced during the year = ^£Ê1 = £500. Indeed, although the £500 are always re-employed, the sum advanced every 5 weeks never exceeds these same £500. On the other hand in case of capital B only £500 are employed during 5 weeks and advanced for these 5 weeks. But as the period of turnover in this case = 50 weeks, the capital employed in one year is equal to the capital advanced for 50 weeks and not to that advanced for every 5 weeks. The annually produced quantity of surplus value, given the rate of surplus value, is however commensurate with the capital employed during the year, not with the capital advanced during the year. Hence it is not larger for this capital of £5,000, which is turned over once a year, than it is for the capital of £500, which is turned over ten times a year. And it is so big only because the capital turned over once a year is itself ten times larger than the capital turned over ten times a year.
The variable capital turned over during one year — hence the portion of the annual product, or of the annual expenditure equal to that portion — is the variable capital actually employed, productively consumed, during that year. It follows therefore that if the variable capital A turned over annually and the variable capital B turned over annually are equal and employed under equal conditions of self-expansion, so that the rate of surplus value is the same for both of them, then the quantity of surplus value produced annually must likewise be the same for both of them. Hence the rate of surplus value calculated for a year must also be the same, since the amounts of capital employed are the same, so far as the rate is expressed by quantity of surplus value produced annually, Q r > e x p r e s s e d generally: variable capital turned over annually Whatever the relative magnitude of the turned-over variable capitals, the rate of the surplus value produced by them in the course of the year is determined by the rate of surplus value at which the respective capitals have worked in average periods (say, the average of a week or day).
This is the only consequence of the laws of production of surplus value and of the determination of the rate of surplus value.
Let us now see further what is expressed by the ratio:
capital turned over annually
capital advanced (taking into account, as we have said before, only the variable capital). The division shows the number of turnovers made by the capital advanced in one year.
In the case of capital A we have:
£5,000 of capital turned over annually. £500 of capital advanced In the case of capital B we have:
£5,000 of capital turned over annually. £5,000 of capital advanced In both ratios the numerator expresses the advanced capital multiplied by the number of turnovers; in the case of A, 500 X 10; in the case of B, 5,000 x 1. Or it may be multiplied by the inverted time of turnover calculated for one year. The time of turnover for A is [1]/[10] of a year; the inverted time of turnover is [10]/, years; hence 500 x [10]/! = 5,000. In the case of B, 5,000 x >/i = 5,000. The de-nominator expresses the turned-over capital multiplied by the inverted number of turnovers; in the case of A, 5,000 x '/,„; in the case of B, 5,000 x '/,.
The respective quantities of labour (the sum of the paid and unpaid labour), which are set in motion by the two variable capitals turned over annually, are equal in this case, because the turned-over capitals themselves are equal and their rates of self-expansion are likewise equal.
The ratio of the variable capital turned over annually to the variable capital advanced indicates 1 ) the ratio of the capital to be advanced to the variable capital employed during a definite working period. If the number of turnovers is 10, as in the case of A, and the year assumed to have 50 weeks, then the period of turnover is 5 weeks. For these 5 weeks variable capital must be advanced and the capital advanced for 5 weeks must be 5 times as large as the variable capital employed during one week. That is to say, only ' /[5] of the advanced capital (in this case £ 500) can be employed in the course of one week. On the other hand, in the case of capital B, where the number of turnovers = '/,, the time of turnover is 1 year, or 50 weeks. The ratio of the advanced capital to the capital employed weekly is therefore 50:1. If matters were the same for B as they are for A, then B would have to invest £ 1,000 per week instead of £ 100. 2) It follows that B has employed ten times as much capital (£ 5,000) as A to set in motion the same quantity of variable capital and hence — the rate of surplus value being given — of labour (paid and unpaid), and thus to produce also the same quantity of surplus value during the year. The real rate of surplus value expresses nothing but the ratio of the variable capital employed during a definite period to the surplus value produced in the same time; or the quantity of unpaid labour set in motion by the variable capital employed during this time. It has absolutely nothing to do with that portion of the variable capital which is advanced during the time in which it is not employed. Hence it has likewise nothing to do with the ratio between that portion of variable capital which is advanced during a definite period of time and that portion which is employed during the same period of time — a ratio that is modified and differentiated for different capitals by the turnover period.
It follows rather from what has been set forth above that the annual rate of surplus value coincides only in one single case with the real rate of surplus value which expresses the degree of exploitation of labour; namely in the case when the advanced capital is turned over only once a year and the capital advanced is thus equal to the capital turned over in the course of the year, when therefore the ratio of the quantity of the surplus value produced during the year to the capital employed during the year in this production coincides and is identical with the ratio of the quantity of surplus value produced during the year to the capital advanced during the year.
A) The annual rate of surplus value is equal to the
quantity of surplus value produced during the year, variable capital advanced
But the quantity of the surplus value produced during the year is equal to the real rate of surplus value multiplied by the variable capital employed in its production. The capital employed in the production of the annual quantity of surplus value is equal to the advanced capital multiplied by the number of its turnovers, which we shall call n. Formula A is therefore transformed into the following:
B) The annual rate of surplus value is equal to the
real rate of surplus value x variable capital advanced x n
variable capital advanced
For instance, in the case of capital B = [10]° x 5'000 x ', or 100%
K 5,000 ' / 0 Only when n is equal to 1, that is, when the variable capital advanced is turned over only once a year, and hence equal to the capital employed or turned over during a year, the annual rate of surplus value is equal to its real rate.
Let us call the annual rate of surplus value S', the real rate of surplus value s', the advanced variable capital v, the number of turnovers n. Then S' = 5-^2 = s'n. In other words, S' = s'n, and = s' only
v when n = 1, and hence S' = s' x 1 = s'.
It follows furthermore that the annual rate of surplus value is always equal to s'n, i. e., to the real rate of surplus value produced in one period of turnover by the variable capital consumed during that period, multiplied by the number of turnovers of this variable capital during one year, or (what amounts to the same) multiplied by its inverted time of turnover calculated for one year. (If the variable capital is turned over ten times per year, then its time of turnover is '/[10] of a year, its inverted time of turnover therefore '"/j or 10.)
It follows furthermore that S' = s' when n = 1. S' is greater than s' when n is greater than 1; i.e., when the advanced capital is turned over more than once a year or the turned-over capital is greater than the capital advanced.
Finally, S' is smaller than s' when n is smaller than 1, that is, when the capital turned over during the year is only a part of the advanced capital, so that the period of turnover is longer than one year.
Let us dwell a moment on this last case. We retain all the premises of our former illustration, except that the period of turnover is lengthened to 55 weeks. The labour process requires a variable capital of £ 100 per week, hence £5,500 for the period of turnover, and produces every week 100s; s' is therefore 100%, as before. The number of turnovers, n, is here [50]/[55] or [1 0]/ u, because the time of turnover is 1 + lll0 of the year (of 50 weeks), or n/ [1 0]
years. S' = ^ ^ J ^ ^ h l = 1 0 0 x "; = i£00 = 1 0 / [7] 5,500 / l x 11 / l x
It is therefore smaller than 100%. Indeed, if the annual rate of surplus value were 100%, then during the year 5,500v would produce 5,500s, whereas "/io years are required for that. The 5,500v produce only 5,000s during one year, therefore the annual rate of
surplus value = ^ = [1 0]/u = 90 [1 0] / n % . K 5,500v / u / n
The annual rate of surplus value, or the comparison between the surplus value produced during one year and the variable capital advanced in general (as distinguished from the variable capital turned over during the year), is therefore not merely a subjective comparison; the actual movement of the capital itself gives rise to this contraposition. So far as the owner of capital A is concerned, his advanced variable capital of £ 500 has returned to him at the end of the year, and £ 5,000 of surplus value in addition. It is not the quantity of capital employed by him during the year, but the quantity returning to him periodically that expresses the magnitude of his advanced capital. It is immaterial for the present issue whether at the end of the year the capital exists partly as a productive supply, or partly as money or commodity capital, and in what proportions it may have been divided into these different parts. So far as the owner of capital B is concerned, £5,000, his advanced capital, has returned to him besides £5,000 in surplus value. For the owner of capital C (the last considered, worth £5,500) surplus value to the amount of £5,000 has been produced during the year (£5,000 invested and rate of surplus value 100%), but his advanced capital has not yet returned to him, nor has his produced surplus value.
S' = s'n indicates that the rate of surplus value valid for the variable capital employed during one period of turnover, to wit,
quantity of surplus value produced in one turnover period, variable capital employed in one turnover period
must be multiplied by the number of turnover periods, or of the periods of reproduction of the advanced variable capital, by the number of periods in which it renews its circuit.
We have already seen (Buch I, Kap. IV(1)) (The Transformation of Money into Capital), and furthermore (Buch I, Kap. XXI b) (Simple Reproduction), that the capital value is in general advanced, not expended, as this value, having passed through the various phases of its circuit, returns to its point of departure, and at that enriched by surplus value. This characterises it as advanced. The time that elapses from the moment of its departure to the moment of its return is the time for which it was advanced. The entire circular movement described by capital value, measured by the time from its advance to its return, constitutes its turnover, and the duration of this turnover is a period of turnover. When this period has expired and the circuit is completed, the same capital value can renew the same circuit, can therefore expand anew, can create surplus value. If the variable capital is turned over ten times in one year, as in the case of capital A, then the same advance of capital begets in the course of one year ten times the quantity of surplus value that corresponds to one period of turnover.
One must get a clear conception of the nature of this advance from the standpoint of capitalist society.
Capital A, which is annually turned over ten times, is advanced ten times during one year. It is advanced anew for every new period of turnover. But at the same time, during the year A never advances more than this same capital value of £500 and in actual fact never disposes of more than these £ 500 for the productive process examined by us. As soon as these £ 500 have completed one circuit A makes them start anew the same circuit; by its very nature capital preserves its character of capital only because it always functions as capital in successive production processes. It is, moreover, never advanced for more than 5 weeks. Should the turnover last longer, it proves in-adequate. Should the turnover be curtailed, a part becomes superfluous. Not ten capitals of £ 500 are advanced, but one capital of £ 500 is advanced ten times at successive intervals. The annual rate of surplus value is therefore not calculated for ten advances of a capital of £500 or for £ 5,000, but for one advance of a capital of £ 500. It is the same as if 1 taler circulates ten times and yet never represents more than one single taler in circulation, although it performs the function of 10 talers. But in the pocket which holds it after each change of hands it retains the same identical value of 1 taler as before.
In the same way capital A indicates at each successive return, and likewise on its return at the end of the year, that its owner has operated always with the same capital value of £ 500. Hence only £ 500 return to him each time. His advanced capital is therefore never more than £ 500. Hence the advanced capital of £ 500 forms the denomi-nator of the fraction which expresses the annual rate of surplus value. We had for it the above formula S' = 5-Ï2 = s'n. Since the real rate
V of surplus value s' = —, the quantity of surplus value divided by
V . the variable capital which produced it, we may substitute ~ for the value of s' in s'n, and get the other formula S' = —.
V But by its ten-fold turnover and thus the ten-fold renewal of its advance, the capital of £ 500 performs the function of a ten times larger capital, of a capital of £5,000, just as 500 talers which circulate ten times per year perform the same function as 5,000 talers which circulate only once.
Endnotes
[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
[8] In the 1861-63 manuscript Marx gives this quotation from Adam Smith in English according to McCulloch's edition of 1828, Vol. I, pp. 109-10. Marx copied out passages from this book in notebooks VII and VIII, which he compiled in London in 1851 (MEGA 2, Bd. IV/8, Berlin, 1986, S. 272, 279, 284-86), and in Notebook VII (London, 1859-63).—13
[50] Concerning Linguet see present edition, Vol. 31, pp. 241-45.— 358
[55] Marx is referring to Smith's assertion that part of capital for an entrepreneur forms workers' revenue. For a detailed criticism of this proposition see this volume, pp. 378-79.-434
[7] In the 1861-63 manuscript Marx quotes Adam Smith in French according to Re-cherches sur la nature et les causes de la richesse des nations trad, par G. Garnier, Paris, 1802, t. 1, pp. 96-97, 99-100. Marx copied out passages from this book in his Paris notebook compiled in 1844. See MEGA 2, Bd. IV/2, Berlin, 1981, S. 332-86. Marx had this French edition in his personal library.—13
[4] State socialism — a bourgeois-reformist and opportunist conception whose adherents reduced the essence of socialism to bourgeois state interference in economics and to a certain degree of regulation of social relations. Among its theoreticians were Louis Blanc (France), Ferdinand Lassalle, Karl Rodbertus-Jagetzow (Germany) and others. Armchair socialism (Kathedersozialismus) — a trend in German bourgeois political economy that emerged in Germany at the close of 1860s as a reaction to the growth of the working-class movement and the dissemination within it of the ideas of scientific socialism propounded by Marx and Engels. Under the banner of socialism its exponents (L. Brentano, A. Wagner, W. Zombart and others) preached bourgeois reformism; they asserted that any state, including the German Empire, had a super-class character and that with its help it was possible to achieve a considerable improvement in the condition of the working class through social reforms effected by governments. The armchair socialists called upon the workers to refrain from economic and political revolutionary struggle.— 9
[5] Engels is referring to the letter written by K. Rodbertus to J.Zeller on March 14, 1875. Rodbertus died in 1875 but his letter to Zeller was not published until 1879. A copy of Briefe und Sozialpolitische Aufsätze mentioned below (ed. by R.Meyer, Berlin, 1881), with Engels' remarks, was kept in Marx's personal library.—10
[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
[9] Marx copied out passages from this pamphlet in Notebook XII (London, 1851).— 15 10 "This most incredible cobbler" — was the way John Wilson, the author of the pam-
[10] phlet Some Illustrations of Mr. McCulloch's Principles of Political Economy (Edin-
[1] In the second half of the 1850s Marx began to study the problems to be dealt with in Volume II of Capital, and continued this work in the 1860s, as is shown, amongst other things, by the Economic Manuscripts of 1861-63 and 1864-65 where the results of these investigations were still, in his words, in the form of preparatory outlines. Later stages in Marx's work on this volume are described at length by Engels in his Preface to the First Edition, which he prepared for the press and published after Marx's death. Manuscript I, written in the early half of 1865, was, in effect, the first composite version of the volume. According to Engels, "Some parts of the argument would be treated in detail, others of equal importance only indicated" in this manuscript (see this volume, p. 5). From the end of 1868 to the middle of 1870 Marx prepared the second version of the volume — Manuscript II — which comprises all three parts (three sections, according to Engels) and "is the only somewhat complete elaboration of Book II" (see this volume, p.7). After 1870 there followed a long interruption in the work on the volume, mainly as a result of the author's illness. Marx was able to resume his work only in 1877. Prior to 1881 he wrote several more manuscripts of varying size; most of them were versions of the beginning of the volume, and only the last represented a revised version of the third chapter of Manuscript II. During the last two years of his life Marx did not work on Volume II. After studying the content of Marx's manuscripts and considering the volume of material involved, Engels decided to divide Volume II into two portions and publish two separate volumes — Vol. II and Vol. III. Engels edited the text with great discretion: according to his own words, he con-tented himself "with reproducing these manuscripts as literally as possible, changing the style only in places where Marx would have changed it himself, and interpolat-ing explanatory sentences or connecting statements only where this was absolutely necessary, and where, besides, the meaning was clear beyond any doubt" (see this volume, pp. 5-6). Structural division was made according to the model used in the Second Edition of Capital, Vol. I (1872). The titles of parts and chapters were also provided by Engels. The first German edition of Vol. II appeared in 1885, the second edition — in 1893. Soon after the publication of the volume the newspaper Le Socialiste printed a review of it in its first number for August 29, 1885. "The second volume of Marx's Capital has just been published in German thanks to the work done by Frederick Engels, his old friend and staunch associate. It was compiled on the basis of manuscripts left by Marx. "In the first volume Marx examined the question of the production of capital; on the basis of a broad and comprehensive analysis he demonstrated that capital was just unpaid labour, in other words, labour stolen from the working class. Although many economists in Germany, France, Italy, Russia and America tried to criticise his book, not one of them could refute Marx's scientific proposition. To this day Capital remains the most formidable indictment written against capitalist society; and the fact that capital is a product of theft is now proved beyond doubt. "In the second volume, which is expected so impatiently, Marx analyses the circulation of capital, that is, the manner in which the bourgeois divide among themselves the products they have stolen from the working class. After making a comprehensive study of all economic theories of ground rent he refuted all of them and formulat-ed a new theory of rent. "Marx's works are not text-books consisting of repetitions, neither are they volumes filled with the banal talk of representatives of various schools, such as the works of Mr. Leroy-Beaulieu and Co.; they are scientific books that must be studied thoroughly as mathematical treatises and works on physics or chemistry; for the moment, therefore, we are merely announcing the fact of publication, and after reading and re-reading it with a clear head we shall return to discuss it with our readers." The first English edition of Capital, Vol. II was published in Chicago in 1907 by the Charles H. Kerr & Company in the translation of Ernest Untermann.— 1