Chapter 4: The Three Figures of the Circuit

Ok, this chapter is pretty long and arduous, but here's my effort at summarizing:

Tc=total circulation process


1. M–C…P…C′–M′
2. P…Tc…P
3. Tc…P(C′)

They all share in common the valorization of value as their main purpose.

We see from these three circuits that each point is a beginning and an end. The difference between the circuits is one of form. Each individual industrial capital is in fact involved in all three processes at once.

Assumption: capital is either money capital, productive capital, or commodity capital, and it passes from one to the other. Therefore, there can be (and are) interruptions.

But this is really only the case for our friend the Chinese handicraftsman. For the factory owner, while each part of his capital is only one type of capital at a time, he has a lot of capital, each portion at various stages. The goal is continuity—to have capitals at each of the stages and moving to the subsequent stages. Delays/interruptions at any point can seriously hurt the entire process. Process is therefore both a succession of phases and a unity of phases.

Marx claims that social capital must have this unity in order to reproduce itself and indeed always possesses this continuity and unity. This must mean that in order to be social capital, it has to be comprised of three different types of capital.

3 types of interruptions of individual capitals:
1. “Quantities of value are frequently distributed amongst the various stages and functional forms in unequal portions, at different times” (184).
2. “These portions may be differently divided, according to the character of the commodity which has to be produced, thus according to the particular sphere of production in which the capital has been invested” (184).
3. “the continuity may be more or less interrupted in branches of production that depend on the season” (184-85).

Capital is a movement, not a static thing, not just a definite social character of class relations. Valorization is a process; it doesn’t and in fact couldn’t happen once and for all.

Since we’ve been discussing the forms of capital’s movement, we haven’t considered the revolutions that capital value may suffer. He tells us that regardless of these movements, capitalist production depends on valorization. I think the revolutions are crises of value and perhaps include changes in value due to increased productivity of labor, cheaper means of production, etc. Marx tells us that capitalist production has to master these revolutions. But this can become difficult.

He writes, “The more acute and frequent these revolutions in value become, the more the movement of the independent value [which is value independent of labor-power, though I don’t really understand what this means] acting with the force of an elemental natural process, prevails over the foresight and calculation of the individual capitalist, the more the course of normal production is subject to abnormal speculation, and the greater becomes the danger to the existence of the individual capitals. These periodic revolutions in value thus confirm what they ostensibly refute: the independence which value acquires as capital, and which is maintained and intensified through its movement” (185).

There’s a continuous comparison of change in value w/original value. This is measure of valorization, I suppose.

Digression: Bailey claims that value is a relation btw contemporary commodities that can be exchanged w/one another. He thus criticizes the “comparison of commodity values at different points in time.” He cannot see, however that this comparison, “if the value of money at each period is taken as fixed, is simply a comparison between the expenditures of labour required in different epochs for the production of the same kind of commodities” (186). He thinks exchange-value = value.

Back to business: We have to assume a lot goes right for the circuit to function in its pure state. In reality, however, a lot goes wrong. Valorization involves fits and starts and various problems; capital must be big enough to withstand these and not shut down.

The case is different if you look at the circuit in different ways:

M…M′ (Formula for newly invested capital): ↓ value of mp = ↓ $-capital required to open a business; ↑ value of mp = ↑$-capital required

P…P and C′…C′: not original outlay that is affected, but rather the portion C′…C[l, mp] (the conversion of commodity capital back into its elements of production).

With a fall in value of mp, three cases are possible:
1. Reproduction process may continue on same scale, with a part of former $-capital set free and stored up (though this is not real accumulation nor the formation of an accumulation fund, though I don’t understand why)
2. Reproduction process may be expanded if technical capacity is there
3. Could build up a larger reserve of mp.

With a rise in value of mp, opposite cases:
1. Reproduction no longer takes place on same scale (maybe working hours are cut)
2. Additional $-capital must be injected to continue former scale
3. Monetary accumulation fund has to help keep reproduction process on old scale, instead of expanding it.

M–C[L,mp]:
In era of real subsumption, much of mp =commodity capital or C of others. For the others, then, this formula is really C′–M′.
But Marx tells us this isn’t always the case: “Within its circulation process, in which industrial capital functions either as money or as commodity, the circuit of industrial capital, whether in the form of money capital or commodity capital, cuts across the commodity circulation of the most varied modes of social production, in so far as this commodity circulation simultaneously reflects commodity production” (189). This is a ridiculous sentence. Point here is that the mp commodities could be and often are from different types of production. However, this doesn’t matter. When they enter the circuit of industrial capital, they function as commodities and $$. Market = world market. Doesn’t matter where commodities come from, as long as they function as commodities on market.

Two more points:

1. As soon as M–mp is over, mp functions as P (productive capital). However, replacement of mp “requires their reproduction, and to this extent the capitalist mode of production is conditioned by modes of production lying outside its own stage of development” (190). (Is this an indication that primitive accumulation continues?) When he says this, it seems that he means that as long as other folks outside of capitalism are making mp, capitalism is conditioned by it. However, he then claims that the capitalist tendency is to “transform all possible production into commodity production; the main means by which it does this is precisely by drawing this production into its circulation process; and developed commodity production is itself capitalist commodity production” (190).

2. Whatever the origins of the mp, when they meet industrial capital, they are commodity capital. Capitalism is hospitable. No one is excluded.

Ok, we’ve established that capitalism presupposes large-scale production. Therefore, it also needs large-scale sale. He tells us that this sale is to merchants or middlemen. But merchant is often same person as industrial capitalist. They sell to one another.

Commodity trade is also presupposed, even though we often ignore it. This seems like a dumb point to make.

In this text, Marx takes $ as metallic $ (not symbolic or paper $, or credit $).
While metallic $ can function as means of purchase or means of payment, he looks at it typically as means of purchase.

Discussion of circulation:
Same quantity of $ puts more capitals into circulation the greater the velocity of the circulation. Therefore, capital of same value needs less $$ to circulate the more $ functions as means of payment and the shorter the periods of payment. If velocity is held constant, amt of $ needed depends on prices of commodities; if these prices are held constant, amt of $ depends on value of $.

However, “laws of general commodity circulation apply only in so far as the circulation process of capital is a series of simple acts of circulation, and not in so far as the latter form functionally specific sections of the circuits of individual industrial capitals” (192).

Considers two forms, P…P and C′…C′, in order to illustrate this point that I don’t really understand anyway:
“As a series of acts of circulation in general, the circulation process (C–M–C or M–C–M) simply presents two opposing series of commodity metamorphoses” (193).
M–C and C–M, as the metamorphoses of two individual capitals, are entwined.
However, the mp might not come from capitalist production, as we saw earlier. Therefore, while M–C and C–M are entwined, it’s not always the entwining of the metamorphoses of two individual capitals.
M–L: never an entwining of the metamorphoses of two individual capitals, b/c L becomes capital only when it is sold to capitalist.
A metamorphosis of one capital doesn’t always correspond to an opposite metamorphosis of another capital. C′–M′. Somebody might buy the C′ for individual consumption. The M′ in this case would just be the monetary expression of his surplus value (as opposed to what??). I am a little confused here.

Peculiarity of circuit of industrial capital: elements from which productive capital is formed come from commodity market and must be continually renewed from it and product that emerges comes out as a commodity and must be sold as one. This is a long way to say that everything is commodities; nothing is directly produced for consumption.

3 characteristic economic forms of motion of social production: natural economy, $ economy, and credit economy. Not three stages. Credit economy, however, is a form of the $ economy. But natural economy is different.

Diff btw credit economy and $$ economy—mode of commerce btw various agents of production. These two would then be opposed to barter economy, diff. from a completely natural economy.
“Capitalist production is commodity production as the general form of production, but it is only so, and becomes ever more so in its development, because labour itself here appears as a commodity, because the worker sells labour, i.e. the function of his labour-power, and moreover, as we have assumed, as a value determined by the costs of its reproduction” (196). “The producer becomes an industrial capitalist to the same extent that labour becomes wage-labour; hence capitalist production…appears in its full extent only when the direct agricultural producer is also a wage-labourer” (196). Relation btw capitalist and wage-labourer rests on social character of production not on mode of commerce. Bourgeois thinkers mess this up.
Diff way of looking at supply and demand: industrial capitalist’s supply of commodity-value (at the end of production process) is greater than his demand for commodity-value (at the beginning).
“The capitalist must indeed ‘sell dearer than he has bought’, but he manages to do this only because the capitalist production process enables him to transform the cheaper, because less valuable, commodities that he has bought into more valuable and hence dearer ones” (197).

↑ the diff btw supply and demand=↑ rate of valorization
Demand= demand for mp and L
He buys more mp than L, to an increasing extent.
Demand for L = indirectly a demand for means of subsistence for working class or v.
Maximum limit of capitalist’s demand: C= c+v
However, he supplies the following: c+v+s
His demand is for mp from other capitalists and L from laborers (or means of subsistence from other capitalists that the laborers will buy).

Touches on turnover, but I don’t really understand it.
Capitalist has $5,000 in capital: $4,000 fixed (machinery) and $1,000 circulating (raw materials and labor-power). Circulating is comprised of 800 constant (mp) and 200 variable (wages). Circulating capital must turn over 5x/yr so total capital can turn over once.

This is complicated.

Reproduction:
What if capitalist consumes all of surplus-value m and reconverts only orig capital C into productive capital?
Demand = supply
He demands $100 in L and mp and supplies $120.
However, he eats up $20. So he really just supplies $100.
This is not a capitalist activity. Ruins everything.