Thursday 2 April 2015

Capital II, Chapter 21 - Part 20

2) Second Illustration


Here the organic composition of capital is 5:1 in both Departments, reflecting a greater level of development.

Department 1 c 5000 + v 1000 + s 1000 = 7000
Department 2 c 1430 + v 285 + s 285 = 2000.

All of this output exists as commodity-capital, i.e. it has been produced, and is available to be exchanged.

Department 1 accumulates half its surplus value in the same proportion, so:-

c 5000 + (500 x 5/6 = 416.66 rounded to 417) + v 1000 + (500 x 1/6 = 83.33 rounded to 83), so

c 5417 + v 1083.

Department 1 workers now buy £1,083 of consumer goods from Department 2, whilst Department 1 capitalists buy £500 of consumer goods. In return, Department 2 buys an equivalent amount of constant capital from Department 1, i.e. 1(v+s) = 2(c) or £1583. However, the proportion of Department 2 consumer goods, currently available to be allocated to this exchange, amounts to only £1,430, because currently £285 of Department 2 output is allocated to reproduce Department 2 labour-power, and £285 is allocated to meet the consumption needs of Department 2 capitalists.

The deficit can only be made up if part of the allocation to Department 2 capitalists is used to exchange with Department 1. That would, in turn, mean that Department 2 not only replaces its £1,430 of constant capital, but increases it to £1583, to meet this higher level of demand. Consequently, £153 of Department 2 output currently destined for consumption by Department 2 capitalists goes to Department 1, whilst Department 2 capitalists reduce their own unproductive consumption, by £153, and use this money as capital to advance for additional constant capital.

So, Department 2 constant capital rises to £1,583, but in order to maintain its own organic composition of capital, it also has to advance more variable capital, i.e. 1583/5 = 316. That means Department 2 capitalists have to reduce their own unproductive consumption by a further (316 – 285 = £31) So, Department 2, now has:-

C 1583 + V 316. Department 2 capitalists have (285 – [153 + 31 = 184] = 101) left over to spend on consumption goods, equal to the amount of consumer goods left to be bought.

Department 1 capital has risen from (5000 + 1000) £6,000 to (5417 + 1083) 6500. That is an increase of 500/6000 = 8.33%.

Department 2 Capital has risen from (1430 + 285) £1715 to (1583+316) £1899 = 10.7%.

If production continues on this basis.

Department 1 C 5417 + V 1083 + S 1083 = 7583
Department 2 C 1583 + V 316 + S 316 = 2215

The Table below shows this accumulation over five years.



Constant Capital Variable Capital Surplus Value Output
Total Output
Year 1 Department 1 5000.00 1000.00 1000.00 7000.00


After Accumulation 5416.67 1083.33 500.00 7000.00










Department 2 1430.00 285.00 285.00 2000.00


After Accumulation 1583.33 316.67 100.00 2000.00








9000.00
Year 2 Department 1 5416.67 1083.33 1083.33 7583.33


After Accumulation 5868.06 1173.61 541.67 7583.33










Department 2 1583.33 316.67 316.67 2216.67


After Accumulation 1715.28 343.06 158.33 2216.67








9800.00
Year 3 Department 1 5868.06 1173.61 1173.61 8215.28


After Accumulation 6357.06 1271.41 586.81 8215.28










Department 2 1715.28 343.06 343.06 2401.39


After Accumulation 1858.22 371.64 171.53 2401.39








10616.67
Year 4 Department 1 6357.06 1271.41 1271.41 8899.88


After Accumulation 6886.82 1377.36 635.71 8899.88










Department 2 1858.22 371.64 371.64 2601.50


After Accumulation 2013.07 402.61 185.82 2601.50








11501.39
Year 5 Department 1 6886.82 1377.36 1377.36 9641.54


After Accumulation 7460.72 1492.14 688.68 9641.54










Department 2 2013.07 402.61 402.61 2818.30


After Accumulation 2180.82 436.16 201.31 2818.30








12459.84








Rise in Output in %
38.44




Rise Capital Department 1 in %
37.74




Rise Capital Department 2 in %
52.59






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