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On Wed, 3 May 2000 P.J.Wells@open.ac.uk wrote:
> Try this instead -- take a cotton-spinning enterprise which has
>
> (a) spare capacity
>
> (b) at the end of a day's work
>
> (i) enough cotton inventory to sustain tomorrow's production at the present
> level
> (ii) yarn which is sold realising surplus value of £100
>
> (c) plans to increase output the day after tomorrow.
>
> The planned output increase will require an increase in capital advanced of
> £100.
>
> Rather than buy the extra inventory required now, the managers put the £100
> in the bank for a day.
>
> What's the status of the £100 while it's in the bank?
Same story. The £100 is just an accounting entry. The real
asset is the yarn that was sold for that amount. Presumably it
figures as working capital for whatever enterprise bought it.
It's funny to ask about the status of the £100 "while it's in
the bank" because it's _always_ in the bank. When one agent
spends it, it doesn't leave the bank but rather is transferred
to some other agent's account.
Allin Cottrell.
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