Rakesh [6910], below is a 'sketch' of the 'circulation of capital' (*my interpretation*, drawn mostly from the first four chapters of C2). For a much deeper and better analysis, of the circuit's content and methodology, I highly recommend: Chris Arthur (1998): 'The Fluidity of Capital and the Logic of the Concept', in C.J. Arthur and G. Reuten (Eds.), *The Circulation of Capital: Essays on Volume 2 of Marx's Capital* London, Macmillan, pp.95-128 >>Yes, we disagree profoundly. For me the forms of capital (constituted as >>circulating capital through moments of exchange, production and exchange) >>do indeed describe the true essence of capitalism as a form-determined >>system. From this disagreement, all other disagreements follow. > >Well, then let's clear about what you are saying here! > >(1) what are the forms of capital? The forms of capital are the circuits of: Money Capital [Form 1: M...M'], Productive Capital [Form 2: P...P(P')], and Commodity Capital [Form 3: C'-C'] (chapters 1-4, Capital 2).Chapter 1 of Capital, volume 2, and summarised by him in Ch.1 (C2, p.133): "The two forms that capital assumes within its circulation stages are those of money capital and commodity capital; the form pertaining to the production stage is that of productive capital. The capital that assumes these forms in the course of its total circuit, discards them again and fulfils in each of them its appropriate function, is industrial capital - industrial here in the sense that it encompasses every branch of production that is pursued on a capitalist basis. Money capital, commodity capital and productive capital thus do not denote independent varieties of capital, whose functions constitute the content of branches of business that are independent and separate from one another. They are simply particular functional forms of industrial capital, which takes on all three forms in turn" (C2, p.133). Industrial capital as the producer of value is 'the subject of circulation' the movement of which is 'posited as its own life's course' (Marx, 1857-58, p.620). All (functional) differentiation of the concept of capital into its Forms has a relative appearance in the context of a total process, such that the 'fixity' of capital in any one of these 3 forms cannot be understood apart from the movement of one form towards another - which continuously reconstitutes the 'unity' of the whole (on this see Marx, 1861-63, CW, vol 32, p.480). >(2) why do they apparently reduce to circulating capital? The forms never *reduce* to circulating capital, they together *constitute* circulating capital. Why? Because, capital is not a quantity or a thing, but a 'process' that presents 'as the unity of the process of production and the process of circulation, where the production process is the mediator of the circulation process and vice versa (Marx, C2, p.180). What is more, any particular form comprises but an interruption of the metamorphoses of capital. As long as capital is 'fixated' in production it is 'virtually devalued' but as long as it is circulating it is 'not capable of positing surplus value'. Thus 'unity' is capital's 'formal characteristic', as Marx explains in Grundrisse (pp.620): "As the subject predominant [ubergreifend] over the different phases of this movement, as value sustaining and multiplying itself in it, as the subject of these metamorphoses proceeding in a circular course - as a spiral, as an expanding circle - capital is **circulating capital**. Capital is therefore initially **not a particular form of capital**, but is rather capital itself, in a further developed aspect, as subject of the movement just described... But while capital thus, as the whole of circulation is circulating capital, is the process of going from one phase into the other, it is at the same time, within each phase, posited in a specific aspect, restricted to a particular form, which is the negation of itself as the subject of the whole movement. Therefore, capital in each of its particular phases is the negation of itself as the subject of all the various metamorphoses. Not-circulating capital" (C2, pp.620). My interpretation of this: 'capital itself' is a self-directed movement towards the goal of its own realisation - - this involves a notion of the irreducible totality of its three forms. The concept of capital emerges only within circulation as the 'unity', Marx says, of these forms. Conversely the dissolution of capital into its particular forms - its concrete determinations as money, means of production, commodities not yet brought to market - are necessary to the practical reality (existence) of capital as self-valorising value. And value is properly the continual advance of capital 'in which the same phases are continuously gone through in succession'. Or, as Chris A succinctly puts it, capital is motion: 'capital maintains its identity with itself through its flow' (Arthur, 1998, p.99). It's a mistake - from this point of view - to treat Marx's circuit of capital as an economic 'model' where the moments of the circuit can be broken down into production and exchange, with the former (or the latter) afforded analytic priority. The quality of capital is its continuous circulation through moments of production and exchange. Only as circulating capital does value become 'value in process, money in process, and, as such, capital' (Marx, C1, p.256). If the circuit of industrial capital is broken down into aliquot parts, the concept of capital loses its fundamental economic meaning; all that is left is the circulation of commodities on the one hand (an indeterminate exchange relation), and on the other hand an immediate production process (an indeterminate production relation). >(3) as means of production (iron goods for example) and cotton cloth >in particular were bought on the market and such purchases often >financed by debt (which worked against a return to natural economy as >Blackburn underlines in implicit response to Charles Post), why were >these 'investments' not forms of (constant and variable) capital? > This is a simple matter of logic: a) I posited the Value Form as the abstract expression for market determinations that allows dissociated (i.e. 'free') labour to be re-associated with means of production (I explicitly mentioned the labour market as an example). b) I posited value as the concept for 'forms' that arise in this Value-Form determined system: commodity-form, money-form, capital form, etc Therefore, The commodity form is a Value form; i.e. commodities can only be produced by wage labour. Assuming that the iron and the cloth that you talk about (above) are commodities (produced by wage labour), then they enter circulation in the first stage of the capital circuit as debt financed means of production. Do means of production in themselves produce surplus value? I suppose not; to produce surplus value a second exchange would have to take place in the first stage of the circuit; i.e a purchase of wage labour (see justification next para). Suppose now that these commodities leave the circuit of capital and are now worked up into new products by slaves, do the new products contain surplus value? I suppose not. Simply, the products worked up by slaves do not contain new value. To say that they do confuses potential exchange-value for value and the exchange relation for the "capital relation which arises only in the production process because it exists implicitly in the act of circulation, in the basically different economic conditions in which buyer and seller confront one another, in their class relation" (Marx, C2, p.115). This is exactly the conclusion to Marx's argument (C2, pp.113-118) for wage labour as the necessary and sufficient condition for 'production that is pursued on a capitalist basis'. It is expressed in first stage of circulation in the purchase of labour power (denoted L, by Marx: hence (M->L): "M-L [the exchange of money for labour power] is the characteristic moment of the transformation of money capital into productive capital, for it is the essential condition without which the value advanced in the money form cannot really be transformed into capital, into value-producing surplus value. M-mp [the exchange of money for means of production] is necessary only to realise the mass of labour bought by way of M-L" (Marx, C2, p.113). Wage labour is necessary to the capital relation because: 1) it is the *only* input that turns money into money-capital (the first form of capital), and 2) it is the presupposition of its further transformation into 'productive capital', and the latter depends not on money's function as a means of payment (as you are suggesting) but upon the existence of wage labour (i.e. the use to which the means of payment are put). In short, money becomes money-capital (a capital form) only when it enables particular agents in the economy to *buy* the commodity labour power (as an input to production). This means (imo) that hte Value-form is an opposition of possession, that alone enables labour power (a non-capitalistically produced phenomenon) to take the form of a use-value sold on markets to the possessors of means of production (Marx, C2, 113-118). The separation of labour power 'from the objective means of its application' and the need to overcome this separation in labour markets, is the 'true' essence of the capitalist mode of commodity production and characterises it as the only true form of monetary economy in which both labour power and money enter into the productive process as capital (an argument by implication from, C2, p.114) A conclusion logically follows. If wage labour is essential for 'production that is pursued on a capitalist basis', and the monetary wage contract is a 'fundametnal characteristic of the capitalist mode of production' (C2, p.111), then it logically follows that these are necessary in order taht money borrowed and advanced can exist 'in the state or form of productive capital, with the ability to function as creator of value and surplus value (p.111). Since capital is not a thing but the motion and metamorphosis of its forms, capital produces value from wage labour. >Marx is describing a theoretically pure capitalism. Now you are going >on Marx's words: just because Marx only deals with this form of >proletarian exploitation in his pure theoretical work does not mean >that this can be the only form of exploitation consistent with the >production of capital and surplus value. If capitalist production is a social form based on wage labour, a variety of forms of exploitation are ruled out. Slaves do not produce commodities (values) just because they produce products (exchange values) for markets. Producers using slaves may take advantage of capitalist markets, but the exchange relation shouldn't be confused with the capital relation (which implicitly refers to the whole of the circuit and conditions for its reproduction, as Marx himself was at pains to point out). Of course, we don't need to go on Marx's words (it is just that I find them to make a lot of sense in this context). Consider the alternative. If capitalist production is possible on the basis of slave labour, serf labour and wage labour, how is a theory of a specifically capitalist exploitation possible? Production for markets, lending and borrowing, are not after all the features distinguishing capitalism from other social forms. >His journalism is quite responsible, and massively >informed. You ask me how I have a life forwarding journalism to this >list. How did Marx have a life writing journalistic work like this >along with his theoretical investigations. A lot can be learnt from >reading it. I believe you, but its a question of time! Hence my awe of those who manage it :) best N. ----------------------- Nicola Taylor Faculty of Economics Murdoch University South Street Murdoch W.A. 6150 Australia Tel. 61 8 9385 1130 email: n.taylor@stu.murdoch.edu.au
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