Marx's economic theory continued

Beginning: Marx's economic theory

6) "Capital", vol. 2, ch. 1-4, 7-9, 12-14. Circulation of individual capital.

1) The process of circulation consists of the following:

A) Buying of labor power and means of production: M - C (LP+MP)

B) Productive use of these means: ...P...

C) Sale of produced articles: C' (C+c) - M' (M+m)

Hence, the entire process of circulation consists of:
M - C (LP+MP) ... P ... C' (C+c) - M' (M+m)
2) If we're dealing with such branches of production as transportation, where the production itself is the commodity, then the formula above changes a bit:
M - C (LP+MP) ... P ... M'
This formula stands for those sphere of capitalist production where services are given. This sphere is growing in importance in modern economy.

3) The above formulas can be looked at as circulation of money capital. The initial and the final form of capital in this case is money. But capital can take other forms as well. Circulation of productive capital, i.e. one consisting of the means of production and labor power, is:
P ... C' - M' - C' (LP + MP) ... P
4) If a capitalist starts the circulation from a heap of commodities he intends to sell, then we have circulation of commodity capital:
C' - M' - C (LP+MP) ... P ... C'
5) The goal of all three kinds of circulation - increase in value. Meanwhile, capitalists like to talk about "production of goods" as the goal. Real circulation of individual capital is the unity of the three forms; capital is always at the three stages of its circulation simultaneously.

6) The turnover of capital is the total time during which capital is in production and circulation. General turnover of capital is the average time of turnover of various composite parts of the given capital. Composite parts of productive capital are the principal capital and turnover capital. Principal capital is that part of capital which, in the process of its functioning, transfers part of its value to the product, and part of its value remains intact. Such are the machines, buildings, etc. Turnover capital is that capital which transfers the whole of its value to the product in the process of its functioning. Such for example are the raw materials, labor power, etc. The turnover time of principal capital differs significantly from the turnover time of turnover capital.

7) The working time is the time necessary in the given branch of production for producing a given article. Different working times require: (A) different times during which the capital is advanced; (B) different sums of capital. Development of technology changes the scale of production, as well as what is produced; both (A) and (B) have a tendency to increase. This serves as a weighty argument in favor of planning and against the so-called "free market".

8) The time of production is the total time during which the capital is sphere of production. It consists of the time during which labor is added to the capital, and also the time during which capital is exposed to the forces of nature.

9) The time of circulation is the time during which capital is in sphere of circulation. It consists of the time necessary for sale of commodities, and also of the time necessary to buy new productive capital. Time for sale of commodities is influenced by the state of the market, distance of the markets from centers of production, development of the means of transportation. The time necessary to "refinance" the given capital is also influenced by development of the credit system, presence or absence of the means of subsistence among the workers, state of the market for labor power and the means of production, the degree of organization of the productive process itself. The turnover of capital, therefore, is the time of production and the time of circulation.

7) "Capital", v. 2, ch.18, 20, 21. Circulation of social capital.

1) Circulation of social capital is the sum total production and circulation of individual capitals. Circulation of social capital includes both the productive and individual consumption.

2) Circulation of capital is also called "reproduction". There are two kinds of reproduction: A) simple reproduction - the surplus value is separated from capital and is fully consumed by capitalist individually; B) extended reproduction - a part of surplus value remains in circulation of capital, is accumulated by capitalists, and then consumed productively.

3) There are two sectors of social production:

I. The sector that produces the means of production.

II. The sector that produces the means of personal consumption.

What happens during the extended reproduction is that part of surplus value of sector I is not spent on products of sector II, but is saved and is used to produce, or buy, new means of production. Similarly for sector II: not all surplus value is consumed personally by capitalists, but part is used to buy new means of production from sector I.

4) One application of this analysis is understanding the problem of national debt. For example, in Latin America national debt to imperialist countries is #1 economic problem. Payment of this debt means that the economies can not grow, or enter the cycle of extended reproduction. Most of the product produced inside a country does not remain within the country, is not used for consumption or extended reproduction, but is sold on the world market at damping prices to pay for the external debt. For example, a leaflet from International Workers' League from 1st September 1992 describes the situation in Brazil:

"Due to the payment of debt there is no economic growth for the last 10 years. During the 2 years of reign of Collor the economy has fallen 15%. Each Brazilian is born with external debt of 779 dollars".

As a consequence of this slavery to the International Monetary Fund, "Brazil is the fourth largest producer of food products, but it is the second in the number of hungry people (after India!); 8 million children are hungry. 34 million Brazilians are illiterate; among those who enter the first grade of mandatory primary education, 78% do not finish it."

(end of volume 2)

Marx's economic theory ending