Constant capital

“ As regards their material form, all these products come into being in the given period of production—though in point of value the constant capital had been produced in a previous period and is merely being transferred to new products. On this basis, we can also divide all the workers employed into three mutually exclusive categories: those who produce the aggregate constant capital of the society, those who provide the upkeep for all the workers, and finally those who create the entire surplus value for the capitalist class. ”

“ As long as B, B ́ and B ́ ́, etc., buy producer goods from their colleagues A, A ́ and A ́ ́ in order to renew their constant capital that has in fact been used up, the limits of simple reproduction are not transcended, and the whole thing has nothing to do with our problem. The moment the producer goods purchased by B, B ́, B ́ ́, etc., serve to increase their constant capital, however, for purposes of accumulation, a number of new questions clamour for attention. ”

“ Yet it would be perfectly absurd if capitalist production—or any other—would use up its entire constant capital and create it anew in every period of production. On the contrary, we assume that the whole mass of means of production, for the periodical total renewal of which the diagram provides in annual instalments—renewal of the used-up part—lies at the back of production as presented in the diagram. ”

“ Just as simple reproduction requires a regulated renewal of the constant capital, the material means of production, quite apart from the production of consumer goods in the necessary quantity for labourer and capitalist, equally so in the case of expanding production must part of the new additional capital be used to enlarge the constant capital, that is to add to the material means of production. ”

“ Now, the owner of the valuable, having transformed it into capital from this motive, is under a commercial necessity to hire laborers, in order by their help to make his capital yield a profit. Capital lying idle decreases in value even, to say nothing of its yielding no increase to itself; and the motive of the capital-owner, accordingly, is strong [192] and constant to buy the services of laborers, to marry these services with his own capitalized products, and thus to produce commodities for sale, whose value shall be greater than the present value of the capital and the services combined. ”

“ The fallacy that whatever is capital for one person must be income for another, and vice versa, must be translated thus into the correct statement that what is circulation of capital for one person, may be simple commodity exchange for another, and vice versa. This only expresses the capacity of capital to undergo transformations of its character, and the interconnections of various spheres of interest in the social process of exchange. The sharply outlined existence of capital in contrast with income still stands in both its clearly defined forms of constant and variable capital. ”

“ So far as the constant circulating capital is concerned, it is obvious that not all invest it simultaneously. While the capitalist A sells his commodities so that his advanced capital assumes the form of money, there is on the other hand, the available money-capital of the buyer B which assumes the form of his means of production which A is just producing. The same transaction, which restores that of B to its productive form, transforms it from money into materials of production and labour-power ”

“ With the growth of the total capital, its variable constituent or the labour incorporated in it, also does increase, but in a constantly diminishing proportion. The intermediate pauses are shortened, in which accumulation works as simple extension of production, on a given technical basis. It is not merely that an accelerated accumulation of total capital, accelerated in a constantly growing progression, is needed to absorb an additional number of labourers, or even, on account of the constant metamorphosis of old capital, to keep employed those already functioning. ”

“ Thus we see how the different kinds of wealth successively come into being and become distinct. One part of the wealth accumulated by society is devoted by every one who possesses it to render labour more profitable by slow consumption, and make the blind forces of nature execute the work of man; this part is called fixed capital and comprises reclaiming, irrigation, factories, the tools of trade, and mechanical contrivances of every description. ”

“ The conditions for the capitalisation of surplus value clash increasingly with the conditions for the renewal of the aggregate capital—a conflict which, incidentally, is merely a counterpart of the contradictions implied in the law of a declining profit rate. ”

“ Therefore in the accumulation of wealth, so far as it arises from the saving by anyone of the products of his labour, from his bequest of this capital to another who farther adds to it by saving some of the profit which the capital yields, as employed in the payment for labour or in trade either by the capitalist himself or someone to whom he lends it, and from the continuation of this process through generations, there is nothing which tends to lessen for anyone else the possibilities of ownership. ”

“ No, labor consumes all of the total product that its wages will buy back.
"Two billions are left to capital. After it has paid its expenses, does it consume the remainder? Does capital consume all of its two billions?" ”

“ But the same effect cannot be produced in any other way than by the gradual creation and accumulation of wealth. The accumulation of capital and consequent low rates of interest are the result of the work of generations. It cannot be created by the establishment of banks, or by the issues of paper money ”

“ Investigation of the circulation of money in society shows that the individual capitalist can never invest the whole of his money capital in production but must always keep a certain money reserve to be employed as variable capital, i.e. as wages. Further, he must keep a capital reserve for the purchase of means of production at any given period, and in addition, he must have a cash reserve for his personal consumption. ”

“ The progress of accumulation would no doubt be considerably checked, if the returns to capital were to be reduced still lower than at present. But why should any possible increase of capital have that effect? This question carries the mind forward to the remaining one of the three requisites of production. The limitation to production, not consisting in any necessary limit to the increase of the other two elements, labour and capital, must turn upon the properties of the only element which is inherently, and in itself, limited in quantity. It must depend on the properties of land. ”

“ It is the circulating capital which furnishes the materials and wages of labour, and puts industry into motion. Every saving, therefore, in the expense of maintaining the fixed capital, which does not diminish the productive powers of labour, must increase the fund which puts industry into motion, and consequently the annual produce of land and labour, the real revenue of every society. ”

“ Together with this additional quantity of commodities, a portion of the additional money required for its circulation is thrown into circulation, so far as the value of this mass of commodities is equal to that of the productive capital consumed in their production. This additional quantity of money has precisely been advanced as an additional money-capital, and therefore it flows back to the capitalist through the turn-over of his capital. ”

“ How much then is the case strengthened, when we consider that these transformations of capital are of the nature of improvements in production, which, instead of ultimately diminishing circulating capital, are the necessary conditions of its increase, since they alone enable a country to possess a constantly augmenting capital without reducing profits to the rate which would cause accumulation to stop. ”

“ It may be true generally that, in old countries, where there is a great accumulation of surplus capital, and a consequent low rate of interest, they will be made. But, in a new country, the condition of society may be ripe for public works long before there is, in the hands of individuals, the necessary accumulation of capital to effect them ”

“ He merely receives a certain value in money, for an equivalent value in goods. Neither does this give employment to his capital; for there never exists more capital than can find employment, and if one person does not buy his goods another will; or if nobody does, there is over-production in that business, he can remove his capital, and find employment for it in another trade. ”

“ It has proved that the first condition of the rapid accumulation of capital is the diversion of money from unproductive to productive channels, and that the amount of accumulated capital is one of the two regulating influences of the wages of the labourer. ”

“ Assuming capitalist methods of production, the value of his product yields him a surplus over and above his expenses, that surplus value which does not replace his capital but constitutes [Pg 54] his net income, which he can consume completely without encroaching upon his capital and which is thus his fund of consumption. ”

“ As any country grows older in time and richer through abstinence, and as the whole world thus grows [234] older and richer, the tendency there and everywhere towards a general decline in the rate per centum for the use of capital becomes patent and universal. The rate of interest on money loaned, and the rate of profits on capital used, tend all the while to go down as and because capital accumulates. ”

“ Having a monopoly of the safe investments, the great masses of unremunerative capital would be directed, not to the production of more surplus value, but to the making of permanent improvements, which would give employment to the people, and make them content with the new order of things. ”

“ By the conversion of the commodity-capital into money, the surplus-product, in which the surplus-value is incorporated, is also monetised. The capitalist reconverts the surplus-value thus monetised into additional natural elements of his productive capital. In the next cycle of production the increased capital furnishes an increased product. ”

“ In proportion as fixed capital is less durable, it approaches to the nature of circulating capital. It will be consumed in a shorter time, and its value reproduced in order to preserve the capital of the manufacturer. ”

“ It is potential money-capital on account of its capacity and destination of being converted into the elements of productive capital. But practically he merely accumulates a simple hoard, which is not an element of actual production. His activity for the time being consists only in withdrawing circulating money out of circulation. ”

“ First, the capitalist must calculate on at least as large a return on the capital he was to put into the venture as he could obtain by lending it on good security--that is to say, the ruling rate of interest. ”

“ This large capital, which had so fructified as to produce more than twenty-five millions as interest, was an accumulation, penny by penny, shilling by shilling, and pound by pound, of the savings of that class of persons who, in every country, have the greatest difficulty in accumulating. Habitual efforts of self-denial, and a rigid determination to postpone temporary gratification to permanent good, could alone have enabled these accumulators to retain so much of what they had produced beyond the amount of what they consumed. ”

“ If in reality the distribution of income between workers and capitalists, and the propensity to save of capitalists, are such as to require a rate of accumulation which exceeds the rate of increase in the stock of capital appropriate to technical conditions, then there is a chronic excess of the potential supply of real capital over the demand for it and the system must fall into chronic depression. ”

“ And so, if I use my own capital in directly aiding production, as by machinery, or in indirectly aiding production, in exchange, I receive a special and distinguishable advantage from the reproductive character of capital, which is as real, though perhaps not as clear, as though I had lent my capital to another and he had paid me interest. ”

“ That there must be a limit to the accumulation of capital is obvious. The downward course of the rate of interest, notwithstanding that many new employments have been made possible for capital, indicates how large is the increase of surplus value. ”

“ The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit.
The third and last of the three portions into which the general stock of the society naturally divides itself, is the circulating capital, of which the characteristic is, that it affords a revenue only by circulating or changing masters. ”

“ Or capital may increase without its value increasing, and even while its value is actually diminishing; not only may an addition be made to the food and clothing of a country, but the addition may be made by the aid of machinery, without any increase, and even with an absolute diminution in the proportional quantity of labour required to produce them. The quantity of capital may increase, while neither the whole together, nor any part of it singly, will have a greater value than before. ”

“ The artisan is not living on the proceeds of the work he has in hand, but on those of work previously executed and disposed of. Each is supported by a small capital of his own, which he periodically replaces from the produce of his labor. The large capitalist is, in like manner, maintained from funds provided in advance.
§ 3. Examination of Cases Illustrative of the Idea of Capital. That which is virtually capital to the individual is or is not capital to the nation, according as the fund which by the supposition he has not dissipated has or has not been dissipated by somebody else. ”