Sunday 30 March 2014

For A Political Revolution At The Co-op - Part 19

In the previous part I described how the perspective of the sects amounts to a form of electoralism rather than a struggle to build workers self-government. In other words, we have the same idealistic and elitist outlook here in relation to the trades unions and Labour Party, as exists to the construction of Socialism. The emphasis is placed on a struggle for ideas – which degenerates into a continual schism, because of a search for purity – whose confirmation is to be found not in the construction of some new advanced position for the working-class, some advance in its economic and social position, but only in the ability to secure representaives to elected positions, to win support for this or that resolution. The statist conception of a top down transformation based on control of the state, the more the sects are removed from any hope of achieving that, becomes transformed into the banal objective instead of winning control of the local anti-cuts committee!!

It is not that ideas are unimportant, but the most important idea for workers to absorb is that they can take control of their own lives, that they can run their own enterprises, communities, and organisations. That is the idea that Marxists have to promote whether it is in relation to the building of workplace organisation, community organisation or the building of co-ops. In the end, even the most militant workplace organisation is limited in what it can achieve so long as the workplace is outside the workers ownership. But, the development of a factory committee in which workers increasingly develop their solidarity, and their confidence that they can exert such control is a solid basis for those workers taking over the enterprise as a co-op.

To the extent that workers transform the Co-op itself, so its substantial resources can be brought to bear in developing a national/international co-op federation in which that belief can be strengthened further.

As Ernest Jones put it,

“A national fund thus established, would, in all probability, be a large one—and place a great power in the hands of the association. Persecution would be far more difficult. Now each society stands isolated, and is attacked in detail by the combined forces of monopoly—then to touch one would be to touch all. The national centralisation of popular power and popular wealth (not its local centralization), is the secret of success. Then restrictive political laws would be far more difficult, for they would encounter a gigantic union, instead of a disorganised body. Then the combination of the rich would be far less formidable—for, though superior in wealth, they would be far inferior in numbers. So they are now—but the numbers at present are without a connecting bond; nay, in but too many cases, essentially antagonistic...

If, then, you would recreate society, if you would destroy profitmongering, if you would supplant competition by the genial influence of fraternity, and counteract the centralization of wealth and all its concomitant evils,

NATIONALISE CO-OPERATION.”

But, today not only are these resources in the hands of workers greatly enhanced, not only, as Marx proposed, is there the possibility of mobilising credit to support the extension of worker-owned property, but vast resources exist within the workers own pension funds. Around £800 billion exists in workers pension funds in Britain; enough to buy up whole of the shares of three-quarters of the FTSE 100. If workers were to engage in a political struggle for control of the Co-op and its resources, if they were to demand that their trades unions insist on democratic control over the resources in these pension funds that would put them in a strong material and social position. 

Workers in a factory faced with closure could occupy it, and instead of simpering pleas to the capitalist state to nationalise it, the workers could begin to operate it as a co-op, immediately integrated into such a national co-operative federation, backed by these sizeable financial resources.

As Engels put it,

“...as demanded by the Paris Commune, the workers should operate the factories shut down by the factory-owners on a cooperative basis. That is the great difference. And Marx and I never doubted that in the transition to the full communist economy we will have to use the cooperative system as an intermediate stage on a large scale.” 

Workers technically own the Co-op, but they do not have direct control of it. Workers as individual co-op members, as trades unionists and members of the Labour Party should take back that control, and transform it into a worker-owned Co-op. We should then use the resources of the Co-op to directly support workers in struggles, and to bring together all other Co-ops into the kind of national federation proposed by Marx, as well as using that to extend the number of Co-ops, especially where workers face the closure of their workplace.

The bosses will resist such a process by whatever means needed. For that reason, it will be necessary to mobilise the unions and the Labour Party to resist the bosses offensive.

In the final part, I will examine how the development of worker owned property requires the development of workers democracy.

Saturday 29 March 2014

Northern Soul Classics - Standing In The Need Of Love - Dee Dee Sharp

My favourite record of all time is "What Kind of Lady" by Dee Dee Sharp.  But, keeping with the old Twisted Wheel theme, this is another deep soul classic.




Friday 28 March 2014

Capital II, Chapter 15 - Part 13

Marx then details another example where the working period is 4 weeks and the circulation period 5 weeks. This breaks down again into three capitals; Capital 1 and 2 £400 each and Capital 3 £100.

These are detailed in the following tables.
CAPITAL I
Periods of Turnover
Working Periods
Periods of Circulation
I. 1st - 9th week
1st - 4th week
5th - 9th week
II. 10th - 18th
10th - 13th
14th - 18th
III. 19Th - 27th
19th - 22nd
23rd - 27th
IV. 28th - 36th
28th - 31st
32nd - 36th
V 37th - 45th
37th - 40th
41st - 45th
VI. 46th - 54th
46th - 49th
50th - 54th


CAPITAL II
Periods of Turnover
Working Periods
Periods of Circulation
I. 5th - 13th week
5th - 8th week
9th - 13th week
II. 14th - 22nd
14th - 17th
18th - 22nd
III. 23Rd - 31st
23rd - 26th
27th - 31st
IV. 32nd - 40th
32nd - 35th
36th - 40th
V. 41st - 49th
41st - 44th
45th - 49th
VI. 50th - 58th
50th - 53rd
54th - 58th


CAPITAL III
Periods of Turnover
Working Periods
Periods of Circulation
I. 9th - 17th week
9th
10th - 17th week
II. 18th - 26th
18th
19th - 26th
III. 27Th - 35th
27th
28th - 35th
IV. 36th - 44th
36th
37th - 44th
V. 45th - 53rd
45th
46th - 53rd


I have extended them to a full year as opposed to the 3 turnovers that Marx sets out. I've also adjusted the labelling of week numbers to conform with Marx’s previous method for consistency.

Once again, the total output is 51 weeks x £100 = £5,100, and the aggregate capital is £900. That gives 5⅔ working periods.

Looking at the capital turned over, that is

Capital 1 £400 x 5⅔ = £2266.67

Capital 2 £400 x 5 2/9= £2088.89

Capital 3 £100 x 4 7/9 = £477.78

Total = £900 x 5.37 = £4833.34

Here, the three capitals do overlap. Capital 3 has no independent existence, because its £100 is not enough to cover a working period of 4 weeks. An amount of Capital = £300 has to be added to Capital 3 to complete the working period. Having done so it sets free £100 from Capital 1, equal to the value of Capital 3. That commences the next working period.

“In all cases investigated it was assumed that both the working period and the circulation period remain the same throughout the year in any of the businesses here examined. This assumption was necessary if we wished to ascertain the influence of the time of circulation on the turnover and advancement of capital. That in reality this assumption is not so unconditionally valid, and that it frequently is not valid at all does not alter the case in the least.” (p 282) 

The capital analysed here was only the working capital, rather than the fixed capital, and for good reason. As discussed previously, a portion of fixed capital is transferred as wear and tear, to the end product, throughout the production process, and returned from circulation, as is that of the circulating capital. However, unlike the circulating capital, the fixed capital is not dependent upon the continual return. The circulating capital can only be reproduced when the capital is returned. But, fixed capital continues to function even as its value is reduced, and only needs to be reproduced when it is worn out.

“The difference is merely this: In proportion to the varying length of a single working period of each period of turnover of the circulating capital, the fixed capital gives up a greater or smaller part of its original value to the product of that working period, and proportionally to the duration of the circulation time of each period of turnover this value-part of the fixed capital given up to the product returns quicker or slower in money-form. The nature of the subject we are discussing in this section — the turnover of the circulating portion of productive capital — derives from the very nature of this portion.” (p 282-3)

Thursday 27 March 2014

Capital II, Chapter 15 - Part 12

3) The Working Period Smaller than the Circulation Period

Marx assumes a turnover time of 9 weeks. £100 of capital is laid out each week. The working period is 3 weeks, and circulation period 6 weeks. That means that now, 3 capitals rather than 2 are required, to ensure continuous production.

This is similar to the previous situation where there were two equal capitals, which did not overlap.

Marx sets this out in the following tables.

CAPITAL I
Periods of Turnover
Working Periods
Periods of Circulation
I. 1st - 9th week
1st - 3rd week
4th - 9th week
II. 10th - 18th "
10th - 12th "
13th - 18th "
III. 19Th - 27th "
19th - 21st "
22nd - 27th "
IV. 28th - 36th "
28th - 30th "
31st - 36th "
V. 37th - 45th "
37th - 39th "
40th - 45th "
VI. 46th - [54th] "
46th - 48th "
49th - [54th] "


CAPITAL II
Periods of Turnover
Working Periods
Periods of Circulation
I. 1st - 9th week
4th - 6th week
7th - 12th week
II. 10th - 18th "
13th - 15th "
16th - 21st "
III. 19Th - 27th "
22nd - 24th "
25th - 30th "
IV. 28th - 36th "
31st - 33rd "
34th - 39th "
V. 37th - 45th "
40th - 42nd "
43rd - 48th "
VI. 46th - [54th] "
49th - 51st "
51st - [57th] "


CAPITAL III
Periods of Turnover
Working Periods
Periods of Circulation
I. 7th - 15th week 
7th - 9th week
10th - 15th week
II. 16th - 24th "
16th - 18th "
19th - 24th "
III. 25Th - 33rd "
25th - 27th "
28th - 33rd "
IV. 34th - 42nd "
34th - 36th "
37th - 42nd "
V. 43rd - 51st "
43rd - 45th "
46th - 51st "

Because they do not overlap, none of these capitals has to make up the rest of a working period for any other, and so none has left over, freed capital, after having done so. Each of them can be traced to the end of the year as self-contained capitals.

Over 51 weeks the total output is 51 x £100 = £5,100. The capital advanced by the three capitals is 3 x £300 = £900. The number of working periods of the aggregate capital is then 5100/900 = 5⅔. 

The amount actually turned over by the three capitals is:

Capital 1 5⅔ x £300 = £1,700

Capital 2 5⅓ x £300 = £1,600

Capital 3 5 x £300 = £1,500

Total £900 x 5⅓ = £4,800

Wednesday 26 March 2014

Capital II, Chapter 15 - Part 11

Marx then shows that these rules apply where a different length of working period applies. He describes the case where the working period is 5 weeks, and the circulation period 4 weeks, and one where it is 7 weeks, and the circulation period 2 weeks.

In the first case, £400 of Capital 2, makes up weeks 6-9, when Capital 1 is circulating. At the end of week 9, £500 returns to Capital 1. Capital 2 only has sufficient capital to cover 4 weeks of a 5 week working period. So, £100 of the capital returned to Capital 1, goes to supplement Capital 2, to cover the fifth week. That leaves £400 free for Capital 1, to commence its own next working period. £400 continues to be set free every 5 weeks.

In the second case, £700 is advanced by Capital 1, and £200 by Capital 2.

“In that case the first period of turnover lasts from the 1st to the 9th week; its first working period from the 1st to the 7th week, with an advance of £700, its first circulation period from the 8th to the 9th week. End of the 9th week, £700 flow back in money-form. 

The second period of turnover, from the 8th to the 16th week, contains the second working period of the 8th to the 14th week. The requirements of the 8th and 9th weeks of this period are covered by capital II. End of the 9th week, the above £700 return. Up to the close of this working period (10th-14th week), £500 of this sum are used up; £200 remain free for the next working period. The second circulation period lasts from the 15th to the 16th week. End of the 16th week £700 return once more. From now on, the same thing is repeated in every working period. The need for capital during the first two weeks is covered by the £200 set free at the close of the preceding working period; at the close of the second week £700 return; but only 5 weeks remain of the working period, so that it can consume only £500; therefore £200 always remain free for the next working period. 

We find, then, that in the given case, where the working period has been assumed to be greater than the circulation period, a money-capital will at all events have been set free at the close of each working period, which is of the same magnitude as capital II advanced for the circulation period. In our three illustrations capital II was £300 in the first, £400 in the second, and £200 in third. Accordingly, the capital set free at the close of each working period was £300, £400 and £200 respectively.” (p 278-9)

Tuesday 25 March 2014

Capital II, Chapter 15 - Part 10

2) The Working Period Greater than the Period of Circulation 


Here the working period and turnover period overlap. For example, if the working period is six weeks, and the turnover-time is nine weeks, the working period will be weeks, 1 - 6, 7 -12, 13-18 and so on, whilst the turnover periods will be weeks 1 - 9, 10 – 18, 19 – 27 and so on. In order to make up the difference, additional Capital 2 has to be employed. So, we could treat these again as though they were two separate capitals. Capital 1 has a working period of 6 weeks, and then lies fallow for three weeks when it circulates. During those three weeks, Capital 2 operates, but then itself lies fallow for the six weeks when Capital 1 is producing.

This is set out in the next tables that Marx provides.

Table II
CAPITAL I, £600
Periods of Turnover
Working Periods
Advance
Periods of Circulation
I. 1st - 9th week
1st - 6th week
£600
7th - 9th week
II. 10th - 18th "
10th - 15th "
£600
16th - 18th"
III. 19Th - 27th "
19th - 24th "
£600
25th - 27th "
IV. 28th - 36th "
28th - 33rd "
£600
34th - 36th "
V. 37th - 45th "
37th - 42nd "
£600
43rd - 45th "
VI. 46th - [54th] "
46th - 51st "
£600
[52nd - 54th] "


ADDITIONAL CAPITAL II, £300
Periods of Turnover
Working Periods
Advance
Periods of Circulation
I. 7th - 15th week
7th - 9th week
£300
10th - 15th week
II. 16th - 24th "
16th - 18th "
£300
19th - 24th "
III. 25Th - 33rd "
25th - 27th "
£300
28th - 33rd "
IV. 34th - 42nd "
34th - 36th "
£300
37th - 42nd "
V. 43rd - 51st "
43rd - 45th "
£300
46th - 51st "

But, as Marx says, this is, in reality, a false picture because here Capital 2 has no real separate existence from Capital 1. The working period is six weeks, but Capital 2 only has sufficient capital to operate for three weeks, on the basis of the scale of production assumed. Its period of circulation is listed as being for 6 weeks, even though it is only 3 weeks, the same as that for Capital 1. The additional 3 weeks, is actually time when it is forced to lie fallow, for lack of capital to advance.

This is the same situation as that described in the first example at the beginning of the chapter. In reality, whilst the additional capital allows production to continue, during the circulation period, of Capital 1, it is not sufficient to continue production for the whole working period.

When Capital 1 completes its turnover, it realises sufficient value to enable the working period of Capital 2, to be completed, and leaves sufficient capital free to commence a new working period. The capital free to do so, is equal to the size of Capital 2. That is the same as previously described here:

Working Period
Weeks
Circulation Time
Financed By
1
1 - 6
7 - 9
£600 Capital
2
7 - 12
13 - 15
£300 Capital + £300 (sale week 9)
3
13 -18
19 - 21
£300 (sale week 9) + £300 (sale week 15)
4
19 - 24
25 - 27
£300 (sale week 15) + £300 (sale week 21)
5
25 - 30
31 - 33
£300 (sale week 21) + £300 (sale week 27)
6
31 - 36
37 - 39
£300 (sale week 27) + £300 (sale week 33)
7
37 - 42
43 - 45
£300 (week 33) + £300 (sale week 39)
8
43 - 48
49 - 51
£300 (week 39) + £300 (sale week 45)
9
49 - 54
55 - 57
£300 (week 45) + £300 (sale week 51)

This demonstrates two of the propositions alluded to. Firstly, it demonstrates that Capital is returned every 6 weeks, equal to the working period, not the turnover period, and secondly, that the amount of Capital freed up in each of these returns is equal to the additional Capital 2, required to cover the circulation period – here £300.

£600 of Capital 1, is returned at the end of its turnover period – week 9. £300 of this supplements the £300 of Capital 2 that starts operation in week 7, so that production can continue for six weeks up to the end of week 12. The other £300 is freed up, and starts the second working period of Capital 1, which begins in week 13. The £300 of Capital 1, that supplemented Capital 2, is returned alongside the £300 of Capital 2, when its turnover is completed at the end of week 15.

Consequently, £600 of capital is turned over every six weeks after week 9, i.e. weeks 9, 15, 21, 27, 33, 39, 45, 51. That is 8 turnovers. But, at week 51, there is also the output of weeks 49- 51. That is worth £300, but has completed only ⅓ of its turnover. So, in 51 weeks, £4,900 has been turned over – 8 x £600 = £4,800 + ⅓ x £300 = £100 = £4,900.

The aggregate capital is £900 (£600 Capital 1 plus £300 Capital 2), so the number of turnovers of the aggregate capital is £4,900 / £900 = 5 4/9 times.

Looking at the total output it is £5,100, i.e. 51 weeks x £100. The difference in this figure, and the value of the turned over capital - £200 – is equal to the output in weeks 49 - 51, which had not completed its turnover. Using the previous formula the number of working periods, amounts to £5,100/£900 = 5⅔.

Sunday 23 March 2014

For A Political Revolution At The Co-op - Part 18

The concept of the existence of a trade union and labour movement bureaucracy goes back more than 100 years, and, along with it, the idea that, in response, it was necessary to build rank and file movements, such as the Minority Movement. In the period since, revolutionaries have put considerable effort into the building of such rank and file organisations. But, there is a strong correlation between the basis on which these movements have been constructed, and the general outlook of those revolutionaries, about how Socialism is to be constructed.

In the 1950's and 60's, as the Long Wave Boom raised the demand for labour-power, which placed workers on firmer ground, as far as their economic and social position is concerned, one reflection of this was an increased level of confidence, which meant that workers were prepared to take matters directly into their own hands to resolve problems. In other words, a form of workers' self-government of the type that Marx describes. This was not manifest in the establishment of co-ops, but in a spontaneous development of shop-floor organisation, whose clearest representation was the growth of the shop stewards movement.

This shop-floor organisation was geared to workers taking direct action, usually via short duration, unofficial (wildcat) strikes. In the early 1970's, as a shop steward, I organised such action, and, because of the building of such workplace organisation, I was able, on one occasion, even to get non-union members to agree to join in, with the result that the management quickly conceded. The Bolsheviks placed considerable importance on such workplace organisation, via Factory Committees, which brought together union and non-union workers, and Trotsky also emphasises such organisation, for example, in his Action Programme for France. It is an illustration of the need to build appropriate structures of workers self-organisation and self-government.

But, there is an important difference between these kinds of rank and file organisations, and the kinds of “rank and file” and “broad left” organisations that the sects have devoted attention to. In the main, the latter have not been structures aimed at developing workers self-government, and self-activity, but instead have reflected the privileging of ideas over material conditions. The organisations that the sects have constructed – where they have not simply been fronts for an individual sect – have been little more than electoral vehicles, designed to get this or that slate elected, this or that resolution passed at conference. The ephemeral gains made by the Left in the Labour Party in the early 1980's, were based largely on the same weak foundation.




Friday 21 March 2014

Capital II, Chapter 15 - Part 9

The output of a working period might be, for instance a machine, here with an exchange value of £900. But, the £900 is likely only to be actually returned in one lump sum. If the circulation period is 4.5 weeks, it is unlikely to be the case that in each of these weeks, the buyer of the machine will return £200 to the seller. Of course, that may happen, the seller might receive stage payments from the buyer of some big piece of equipment, or for a house etc.

On the other hand, although a working period might last for 4.5 weeks, that might only be in the sense that this is the amount of time required to process a given amount of material. That might be the case where commodities are produced to order; for example, a large wholesaler places orders for regular large quantities, or it might simply be that this is the period required for some historically determined optimum long production run. For example, car manufacturers used to have such long runs that made best use of the jigs and other machinery set up for producing particular models, rather than having to stop production to change the set up to produce some other model. But, it may also be the case that where production is truly homogeneous i.e. only one identical commodity is continuously produced in huge quantities, the working period is merely a convenient mathematical abstraction of the time required to produce a given quantity of that commodity, which may or may not be related to the usual quantities shipped to the market.

Especially, in the latter case, therefore, where quantities are being continually sent to market, and payment received, it may well be the case that the capital returned represents a proportion of the advanced capital for a given working period. For example, a company may produce 10,000 ball bearings, or metres of linen per month, or a potbank might produce 10,000 cups per month. It may limit its output to this quantity, because it knows this is on average the amount it can sell in that time. But, all of that output is unlikely to be sold in one go. Buyers will place orders etc. throughout the month. So, although the circulation time might be 1 month, a proportion of the month's output will be being sold every day, so that a proportion of the capital will be continually being returned throughout the month.

So, the fact that Capital 1 is said to be ⅔ of the way through a turnover, simply reflects the fact that the capital has been employed, produced value, and is not currently available for employment as productive capital, but will be after another 3 weeks.

Similarly, for Capital 2, which does not begin its turnover until week 4.5 (as may well be the case with different businesses that begin operating at different times), when it arrives at week 51, its capital will be in a number of different forms.

Its 6th working period starts at week 49.5. At the end of week 51, it is then ⅓ of the way through its working period. So, ⅓ of its capital will have been advanced for labour-power, and materials. Two-thirds will be in the form of money-capital, or materials waiting to be used in production.

“The same calculation of averages that we employed above for I and II suffices also here to bring down the turnover years of the various independent portions of the social capital to one uniform turnover year.” (p 274)

Thursday 20 March 2014

Capital II, Chapter 15 - Part 8

Having set Marx's example out on this simpler basis, let's apply this to Marx's actual example.


Table I
CAPITAL I
Periods of Turnover
Working Periods
Advance
Periods of Circulation
I.1st - 9th week
1st - 4th ½ week
£450
4th ½ - 9th week
II. 10th - 18th "
10th - 13th ½ "
£450
13th ½ - 18th "
III. 19th - 27th "
19th - 22nd ½ "
£450
22nd ½ - 27th "
IV. 28th - 36th "
28th - 31st ½ "
£450
31st ½ - 36th "
V. 37th - 45th "
37th - 40th ½ "
£450
40th ½ - 45th "
VI. 46th - [54th]
46th - 49th ½ "
£450
49th ½ - [54th]”


CAPITAL II
Periods of Turnover
Working Periods
 Advance 
Periods of Circulation
I. 1st - 9th week
4th ½ - 9th week
£450
10th - 13th ½ week
II. 10th - 18th "
13th ½ - 18th "
£450
19th - 22nd ½ "
III. 19Th - 27th "
22nd ½ - 27th "
£450
28th - 31st ½ "
IV. 28th - 36th "
31st ½ - 36th "
£450
37th - 40th ½ "
V. 37th - 45th "
40th ½ - 45th "
£450
46th - 49th ½ "
VI. 46th - [54th] "
49th ½ - [54th] "
£450
[55th - 58th ½] "


In 51 weeks (taken as the year) Capital 1 goes through 6 working periods, ending in week 49.5. It advances £100 per week = £450 in a 4.5 week working period. So, its output in a year equals 6 x £450 = £2,700. Note, it does not produce even a portion of output in weeks 49.5 – 51, because this is its circulation period, where we are assuming that the capital lies fallow. Similarly, it does not advance any capital during that period.

Capital 2, goes through 5⅓ working periods. That is its last working period begins in week 49.5, and ends in week 54. At week 51, it has gone through 1.5 weeks of a 4.5 week working period i.e. ⅓ of a working period. So, its output in the year equals 5 ⅓ x £450 = £2,400. In total, £5,100 of output is produced (£2,700 Capital 1, and £2,400 Capital 2).

The aggregate capital advanced by Capital 1 and 2 is £450 (Capital 1) and £450 (Capital 2) = £900. Using the propositions previously set out then, we have the number of working periods. That is £5,100/£900 = 5⅔. 

“Hence the total advanced capital of £900 has functioned 5⅔ times throughout the year as productive capital. It is immaterial for the production of the surplus-value whether there are always £450 in the production process and always £450 in the circulation process, or whether £900 function 4½ weeks in the process of production and the following 4½ weeks in the process of circulation.” (p 273)

We can then look at how things stand from the perspective of the turnover of the advanced capital.

Looking at the capital returned it is less than the value of the output produced, for the simple reason that the turnover period extends beyond the working period. So, Capital 1 receives a return of capital in weeks 9,18,27 etc. and Capital 2 receives a return of capital in weeks, 13.5, 22.5 and so on. Capital 1 turns over 5⅔ times in 51 weeks, because it only completes the sixth turnover in week 54. Capital 2 only turned over 5 1/6 times, because it only completes its sixth turnover in week 58.5.

So, the actual capital turned over is 5⅔ x £450 + 5 1/6 x £450 = £2550 + £2,325 = £4,875. So, the aggregate capital turns over 4875/900 = 5 5/12 times.

This is mathematically always true, in the sense that if we assume continuous capitalist production, and recognise that the working period and the circulation period form one whole of the circuit of capital, the capital in circulation is, in whatever form, proportionally through its period of turnover. Of course, the fact that this capital is part way through a period of turnover, does not mean that a proportion of it actually has been turned over, in the sense that it has returned in the form of money-capital, ready to be used again.

Wednesday 19 March 2014

Capital II, Chapter 15 - Part 7

1. The Working Period Equal to the Circulation Period 

This occurs, in reality, only as an exception. Marx says, its a good starting point, because it illustrates relations in the simplest way. It allows us to present the original and the additional capital, as though they are two completely separate capitals, like two separate firms. Capital 1 operates in the first working period, and then lies fallow whilst it circulates, and Capital 2 operates in the second working period, then lying fallow in circulation, whilst Capital 1 is in the next working period. So, there is never any overlap between the two.

“With the exception of the first period, either of the two capitals is therefore advanced only for its own period of turnover.” (p 270-1)

Marx sets out the relations for such a situation in a series of tables, which I will come to later. However, he assumes a turnover period of 9 weeks, meaning a working period of 4.5 weeks, and the same for the circulation period. This seems to me to be unnecessarily complicated, so before detailing that, let me try to set out the basic principles instead using a turnover period of 4 weeks, 2 weeks for the working period, 2 weeks for circulation.

Marx sets out two basic laws, which these examples are intended to demonstrate.

“1) the number of working periods of the total capital advanced is equal to the sum of the value of the annual product of both advanced portions of capital divided by the total capital advanced, and 

2) the number of turnovers made by the total capital is equal to the sum of the two amounts turned over divided by the sum of the two advanced capitals. Here too we must consider both portions of capital as if they performed turnover movements entirely independent of each other.” (p 274-5)

So, in a 52 week year, Capital 1, will have working periods in weeks, 1-2, 5-6, 9-10,...49-50. Amounting to 13 working periods. Capital 2 will have working periods in weeks 3-4, 7-8, 11-12, … 51-52. Again amounting to 13 working periods. Looking at Marx's two propositions above, the total capital advanced by Capital 1, if we assume £100 per week is advanced, amounts to £200 in each working period. It advances no capital in the circulation periods, weeks 3-4, and so on. The same is true for Capital 2.

So, Capital 1 lays out £2,600 in a year, and Capital 2 lays out the same amount. A total of £5,200 is laid out in a year, and because we have assumed no surplus value, this is also the value of the output. If we divide the value of this total output, by the total advanced by both capitals we get the number of working periods. Both Capital 1 and 2 advance £200 each = £400. £5,200/ £400 = 13, which in fact we already know to be the number of working periods. This is tautologically true in this instance because of the assumptions that have been made, but the further examples will demonstrate it is true when other assumptions are made.

If we look now at the second proposition, in relation to turnover, we know that the turnover period is 4 weeks – 2 weeks working period and 2 weeks circulation time. Capital 1, turns over in weeks 4,8,12,...52. In other words 13 complete turnovers. However, Capital 2 turns over in weeks 6,10, 14,...54. But week 54 is in the following year. So, Capital 2 only completes 12 turnovers. At week 52, it has completed its working period, and the capital has become commodity capital, in circulation. But, at this point it is only half way through its 13th turnover. It has turned over 12.5 times.

The total amount turned over by Capital 1 is 13 x £200 = £2,600. The amount turned over by Capital 2 is 12.5 times £200 = £2,500. The total amount turned over is then £2,600 + £2,500 = £5,100. Using proposition 2, we then have £5,100 / £400 (the total advanced capital) = 12.75.

So, if we think of these two capitals as two firms constituting an industry, the capital of that industry would have turned over 12.75 times, and would have had 13 working periods. We can extend this principle to represent the total social capital. The reason this is important, is because of what has been said previously about the influence of the rate of turnover on the rate of profit, which in turn influences the rate of capital accumulation i.e. the pace of growth.

But, similarly, looking at things from the perspective of the number of working periods is also important, because it is only during the working period i.e. production, that surplus value is created. The more working periods, the more frequently surplus value is produced. The surplus value is only realised in the circulation period.

The circulation period is also important for another reason. In reality, if we look at Capital 1 and 2, not as two separate capitals, but as Capital 2, being an additional capital to Capital 1, that allows production to be continuous, we see another feature. Now, capital is returned not every 4 weeks, but every two weeks, apart from the first working period. Capital 1, sells its output in week 4, bringing in £200. But, Capital 2, sells its output in week 6, bringing in another £200. From that point, capital returns every 2 weeks. Moreover, if we take any 4 week period after week 4, we will see that £400, or the whole advanced capital is returned – turned over. In short, after the first turnover period is up, capital is returned at periods equal in length not to the turnover period, but the working period. The further examples will show this is the case not just where the working period and circulation period are equal in length.

Tuesday 18 March 2014

Capital II, Chapter 15 - Part 6

The longer the circulation time as a proportion of the total turnover time, the greater proportion of capital must be held as money-capital.

“The same thing also takes place — as far as it concerns both the advance in the form of a productive supply and in that of a money-supply — when the separation of capital into two parts made necessary by the time of circulation, namely into capital for the first working period and replacement capital for the time of circulation, is not caused by the increase of the capital laid out but by a decrease of the scale of production. The amount of capital tied up in the money-form grows here still more in relation to the scale of production.” (p 268-9)

The additional capital ensures that working periods are continuous, so that an equal portion of the advanced capital is always engaged productively. In the second example, £500, or 50%, of the total advanced capital, is continuously employed productively, i.e. over each five week period. It produces then 10 x £500 = £5,000 in the year.

“But if the capital of £500 were regularly interrupted in its productive activity by a 5-week circulation time, so that it would again become capable of production only after the close of the entire 10-week turnover period, we should have 5 turnovers of ten weeks each in the 50 weeks of the year. These would comprise five 5-week periods of production, or a sum of 25 productive weeks with a total product worth 5 times £500 or £2,500, and five 5-week periods of circulation, or a total circulation time of likewise 25 weeks. If we say in this case that the capital of £500 has been turned over 5 times in the year, it will be clear and obvious that during half of each period of turnover this capital of £500 did not function at all as a production capital and that, all in all, it performed its functions only during one half of the year, but did not function at all during the other half.” (p 269)

But, as illustrated previously, it is not £500 that is the advanced capital, but £1,000 - £500 original capital, and £500 additional capital, to cover the circulation period, so that production is continuous.

“In our illustration the replacement capital of £500 appears on the scene during those five periods of circulation and the turnover is thus expanded from £2,500 to £5,000. But now the advanced capital is £1,000 instead of £500. 5,000 divided by 1,000 is 5. Hence, there are five turnovers instead of ten. And that is just the way people figure. But when it is said that the capital of £1,000 has been turned over five times during the year, the recollection of the time of circulation disappears from the hollow skulls of the capitalists and a confused idea is formed that this capital has served continuously in the production process during the five successive turnovers. But if we say that the capital of £1,000 has been turned over five times this includes both the time of circulation and the time of production. Indeed, if £1,000 had really been continuously active in the process of production, the product would, according to our assumptions, have to be £10,000 instead of £5,000. But in order to have £1,000 continuously in the process of production, £2,000 would have to be advanced. The economists, who as a general rule have nothing clear to say in reference to the mechanism of the turnover, always overlook this main point, to wit, that only a part of the industrial capital can actually be engaged in the process of production if production is to proceed uninterruptedly. While one part is in the period of production, another must always be in the period of circulation. Or in other words, one part can perform the function of productive capital only on condition that another part is withdrawn from production proper in the form of commodity- or money-capital. In overlooking this, the significance and role of money-capital is entirely ignored.” (p 269-70)

Monday 17 March 2014

Crimea

The US and EU are making themselves look increasingly ridiculous and hypocritical over Crimea. Whatever, the bourgeois democratic niceties over the referendum, it is clear that the large majority of Crimeans wish to rejoin Russia. Marxists support their right to do so, and oppose the increasingly hysterical attempts of the West to prevent it. It really is farcical to see the US and EU complain about the referendum in Crimea, on the basis that Russian troops are present in the province. When the US and EU prised Kosovo away from Serbia, of which it had been a part for centuries, it was done on the back of a massive campaign of bombing and military intervention. At the moment, the only Russian troops in Crimea are the ones that have been there for years legally, and unlike Kosovo, there has been not one shot fired in anger in the Crimea.

The idea that the referendum in Crimea is all the work of Russia, is as wacky and unfounded as Russian claims that the Maidan was all the work of the CIA. Outside forces played a role in both, but the majority of people in the Maidan crowds were honest opponents of a corrupt regime, just as its clear even in the coverage of the western media that the vast majority of people in Crimea want out of Ukraine, and to rejoin Russia, of which they were a part for centuries. The US and EU argue that the referendum is unconstitutional, but the Ukrainian Constitution ceased to exist when the Maidan overthrew it. The US and EU complain about a Russian invasion of Ukraine, which has not yet happened, whilst over the last fifty years, they have repeatedly invaded sovereign states in order to push forward their own agenda. But, saying all this does not at all mean giving any support to the Bonapartist regime in Russia either. It simply means that we expose the hypocrisy of both camps, without being lured into the idea that just because the regime in Russia is reactionary and undemocratic we should see the US and EU as in some sense a lesser evil.

In the Balkan Wars, people were fighting for liberation against the reactionary and oppressive Ottoman Empire. That Empire carried out many atrocities, but when liberal interventionists in Russia sought to provoke intervention in support of those fighting for liberation, Trotsky made clear his opposition to it. He made clear that the interventionist forces were carrying out their own atrocities, that were just as bad. Socialists in the countries that were intervening, therefore, had a duty to oppose that intervention, and to point out the atrocities that were being committed, and which were being hushed up by their own media and politicians. It was against the atrocities committed by those interventionist forces that Trotsky made his comment,

“An individual, a group, a party, or a class that ‘objectively’ picks its nose while it watches men drunk with blood massacring defenceless people is condemned by history to rot and become worm-eaten while it is still alive.

“On the other hand, a party or the class that rises up against every abominable action wherever it has occurred, as vigorously and unhesitatingly as a living organism reacts to protect its eyes when they are threatened with external injury – such a party or class is sound of heart. Protest against the outrages in the Balkans cleanses the social atmosphere in our own country, heightens the level of moral awareness among our own people. The working masses of the population in every country are both a potential instrument of bloody outrages and a potential victim of such deeds. Therefore an uncompromising protest against atrocities serves not only the purpose of moral self-defence on the personal and party level but also the purpose of politically safeguarding the people against adventurism concealed under the flag of ‘liberation’.” (p 293)

The liberal-interventionists attacked Trotsky for opposing the intervention, and for writing about these atrocities. But, Trotsky responded,

“But it is not at all a matter of indifference by what methods this emancipation is being accomplished. The method of “liberation” that is being followed today means the enslavement of Macedonia to the personal regime in Bulgaria and to Bulgarian militarism; it means, moreover, the strengthening of reaction in Bulgaria itself. That positive, progressive result which history will, in the last analysis, extract from the ghastly events in the Balkans, will suffer no harm from the exposures made by Balkan and European democracy; on the contrary, only a struggle against the usurpation of history's tasks by the present masters of the situation will educate the Balkan peoples to play the role of superseding not only Turkish despotism but also those who, for their own reactionary purposes, are, by their own barbarous methods, now destroying that despotism...

Our agitation, on the contrary, against the way that history's problems are at present being solved, goes hand in hand with the work of the Balkan Social Democrats. And when we denounce the bloody deeds of the Balkan 'liberation' from above we carry forward the struggle not only against liberal deception of the Russian masses but also against enslavement of the Balkan masses.” (p 293-4)

There is no chance, other than by accident, that the US and EU will intervene in this way, militarily in Ukraine. Their interests are against it. Even any economic sanctions will be limited, because they will back-fire on Europe. If Russian and other oligarchs take their money out of London property, or sell their UK Bonds, for example, it would cause a financial crisis in Britain. Nor is the West likely to provide the economic support required by Ukraine, the majority of whose economic power, such as it is, resides in the South-East, rather than the North-West. But, Marxists have a duty to oppose the imperialist posturing of the EU and US, and to point out this hypocrisy, just as we oppose any military intervention by Russia into Ukraine. Our focus is on building the unity of workers across all these borders to resolve the problems that exist.

Writing about these questions, Lenin argued,

“Norway was ceded to Sweden by the monarchs during the Napoleonic wars, against the will of the Norwegians; and the Swedes had to bring troops into Norway to subdue her.

Despite the very extensive autonomy which Norway enjoyed (she had her own parliament, etc.), there was constant friction between Norway and Sweden for many decades after the union, and the Norwegians strove hard to throw off the yoke of the Swedish aristocracy. At last, in August 1905, they succeeded: the Norwegian parliament resolved that the Swedish king was no longer king of Norway, and in the referendum held later among the Norwegian people, the overwhelming majority (about 200,000 as against a few hundred) voted for complete separation from Sweden. After a short period of indecision, the Swedes resigned themselves to the fact of secession.”


For the US and EU to claim that the Crimean referendum is illegitimate because the fascists and nationalists that have now taken over many of the positions in the Ukrainian government are opposed to it, shows just how little the US and EU really care about democracy and the right of self-determination, other than where it can be used in their own interest, as in Kosovo, or as with Britain in the Falklands. When their puppet Saakashvili invaded South Ossetia, in 2008, and began a campaign of genocide against its people, the western governments and media began by attacking Russia for sending in its troops to defend the South Ossetians. They claimed that it was the Russians that had started things. Today, they make the same claims, as a means of attacking Russia. Yet, even within weeks, western journalists reported that it was Georgia that had invaded, and kicked off the fighting. That was confirmed by later independent inquiries into what happened.

Even so, Marxists could not support Russian intervention in South Ossetia, to prevent such crimes by Georgia and its western backers even on the grounds of 'liberal intervention' to protect its people, any more than they could support such action by western imperialism in Libya, Syria etc. Our job is to argue against all such intervention, against all such reliance on external intervention by our class enemies, and instead to do whatever we can to build an independent working-class solution. The fact that we are weak, and so may likely fail, does not change that. We are likely to lose many strikes and other industrial actions for the same reason. It is no cause for us then to place our faith in the capitalist state, in its institutions and so on, to provide us with the solution that our own weakness denies us. It is instead a lesson that we have to remedy that weakness quickly.