One portion of the value of the constant capital, which consists of instruments of labour in the strict meaning of the term (as a distinct section of the means of production) is transferred from the instruments of labour to the product of labour (the commodity); these instruments of labour continue to function as elements of the productive capital, doing so in their old bodily form. It is their wear and tear, the depreciation gradually experienced by them during their continual functioning for a definite period which re-appears as an element of value of the commodities produced by means of them, which is transferred from the instrument of labour to the product of labour. With regard to the annual reproduction therefore only such component parts of fixed capital will from the first be given consideration as last longer than a year. If they are completely worn out within the year they must be completely replaced and renewed by the annual reproduction, and the point at issue does not concern them at all. It may happen in the case of machines and other more durable forms of fixed capital and it frequently does happen that certain parts of them must be replaced lock, stock and barrel within one year, although the building or machine in its entirety lasts much longer. These parts belong in one category with the elements of fixed capital which are to be replaced within one year. This element of the value of commodities must not be confused with the costs of repair. If a commodity is sold, this value-element is turned into money, the same as all others. But after it has been turned into money, its difference from the other elements of value becomes apparent. The raw and auxiliary materials consumed in the production of commodities must be replaced in kind in order that the reproduction of commodities may begin (or that the process of production of commodities in general may be continuous). The labour-power spent on them must also be renewed by fresh labour-power. Consequently the money realised on the commodities must be continually reconverted into these elements of the productive capital, from the money-form into the commodity-form. It does not alter the matter if raw and auxiliary materials for instance are bought at certain intervals in larger quantities so that they constitute productive supplies and need not be bought anew during certain periods; and therefore as long as they last the money coming in through the sale of commodities, inasmuch as it is meant for this purpose, may accumulate and this portion of constant capital thus appears temporarily as money-capital whose active function has been suspended. It is not a revenue-capital; it is productive capital suspended in the form of money. The renewal of the means of production must go on all the time, although the form of this renewal with reference to the circulation may vary. The new purchases, the circulation operation by which they are renewed or replaced, may take place at more or at less prolonged intervals: then a large amount may be invested at one stroke, compensated by a corresponding productive supply. Or the intervals between purchases may be small: then follows a rapid succession of money expenditures in small doses, of small productive supplies. This does not alter the matter itself. The same applies to labour-power. Where production is carried on continuously throughout the year on the same scale continuous replacement of consumed labour-power by new. Where work is seasonable, or different portions of labour are applied at different periods, as in agriculture corresponding purchases of labour-power, now in small, now in large amounts. But the money proceeds realised from the sale of commodities, so far as they turn into money that part of the commodity-value which is equal to the wear and tear of fixed capital, are not re-converted into that component part of the productive capital whose diminution in value they cover. They settle down beside the productive capital and persist in the form of money. This precipitation of money is repeated, until the period of reproduction consisting of great or small numbers of years has elapsed, during which the fixed element of constant capital continues to function in the process of production in its old bodily form. As soon as the fixed element, such as buildings, machinery, etc., has been worn out, and can no longer function in the process of production, its value exists alongside it fully replaced by money, by the sum of money precipitations, the values which had been gradually transferred from the fixed capital to the commodities in whose production it participated and which had assumed the form of money as a result of the sale of these commodities. This money then serves to replace the fixed capital (or its elements, since its various elements have different durabilities) in kind and thus really to renew this component part of the productive capital. This money is therefore the money-form of a part of the constant capital-value, namely of its fixed part. The formation of this hoard is thus itself an element of the capitalist process of reproduction; it is the reproduction and storing up in the form of money of the value of fixed capital, or its several elements, until the fixed capital has ceased to live and in consequence has given off its full value to the commodities produced and must now be replaced in kind. But this money loses only its form of a hoard and hence resumes its activity in the process of reproduction of capital brought about by the circulation as soon as it is reconverted into new elements of fixed capital to replace those that died off. Just as simple commodity circulation is in no way identical with a bare exchange of products, the conversion of the annual commodity-product can in no way resolve itself into a mere unmediated mutual exchange of its various components. Money plays a specific role in it, which finds expression particularly in the manner in which the value of the fixed capital is reproduced. (How different the matter would present itself if production were collective and no longer possessed the form of commodity production is left to a later analysis.) Should we now return to our fundamental scheme, we shall get the following for class II: 2,000c + 500v + 500s. All the articles of consumption produced in the course of the year are in that case equal in value to 3,000; and every one of the different commodity elements in the total sum of the commodities is composed, so far as its value is concerned, of c + 1/6v + 1/6s, or, in percentages, 66 c + 16 v + 16 s. The various kinds of commodities of class II may contain different proportions of constant capital. Likewise the fixed portion of the constant capital may be different. The duration of the parts of the fixed capital and hence the annual wear and tear, or that portion of value which they transfer pro rata to the commodities in the production of which they participate, may also differ. But that is immaterial here. As to the process of social reproduction, it is only a question of exchange between classes II and I. These two classes here confront each other only in their social, mass relations. Therefore the proportional magnitude of part c of the value of commodity-product II (the only one of consequence in the question now being discussed) gives the average proportion if all the branches of production classed under II are embraced. Every kind of commodity (and they are largely the same kinds) whose aggregate value is classed under 2,000c + 500v + 500s is therefore equal in value to 66 %c + 16 %v + 16 %s. This applies to every 100 of the commodities, whether classed under c, v or s. The commodities in which the 2,000c are incorporated may be further divided, in value, into: 1) 1,333 c + 333 v + 333 s = 2,000c; similarly 500v may be divided into: 2) 333 c + 83 v + 83 s = 500v; and finally 500s may be divided into: 3) 333 c + 83 v + 83 s = 500s Now, if we add the c s in 1), 2), and 3) we get 1,333 c + 333 c + 333 c = 2,000. Furthermore 333 v + 83 v + 83 v = 500. And the same in the case of s. The addition gives the same total value of 3,000, as above. The entire constant capital-value contained in the commodity mass II representing a value of 3,000 is therefore comprised in 2,000c, and neither 500v nor 500s hold an atom of it. The same is true of v and s respectively. In other words, the entire share of commodity mass II that represents constant capital-value and therefore is reconvertible either into its bodily or its money-form, exists in 2,000c. Everything referring to the exchange of the constant value of commodities II is therefore confined to the movement of 2,000 IIc. And this exchange can be made only with I (1,000v + 1,000s). Similarly, as regards class I, everything that bears in the exchange of the constant capital-value of that class is to be confined to a consideration of 4,000 Ic. In the exchange between I (1,000v + 1,000s) and 2,000 IIc it must be first noted that the sum of values I(v + s) does not contain any constant element of value, hence also no element of value to replace wear and tear, i.e., value that has been transmitted from the fixed component of the constant capital to the commodities in whose bodily form v + s exist. On the other hand this element exists in IIc, and it is precisely a part of this value-element that owes its existence to fixed capital which is not to be converted immediately from the money-form into its bodily form, but has first to persist in the form of money. The exchange between I (1,000v + 1,000s) and 2,000 IIc, therefore, at once presents the difficulty that the means of production of I, in whose bodily form the 2,000(v + s) exist, are to be exchanged to the full value of 2,000 for an equivalent in articles of consumption II, while on the other hand the 2,000 IIc of articles of consumption cannot be exchanged at their full value for means of production I (1,000v + 1,000s) because an aliquot part of their value equal to the wear and tear, or the value depreciation of the fixed capital that is to be replaced must first be precipitated in the form of money that will not function any more as a medium of circulation during the current period of annual reproduction, which alone we are examining. But the money paying for this element of wear and tear incorporated in the commodity-value 2,000 IIc can come only from department I, since II cannot pay for itself but effects payment precisely by selling its goods, and since presumably I(v + s) buys the whole of the commodities 2,000 IIc. Hence class I must by means of this purchase convert that wear and tear into money for II. But according to the law previously evolved, money advanced to the circulation returns to the capitalist producer who later on throws an equal amount of commodities into circulation. It is evident that in buying IIc, I cannot give II commodities worth 2,000 and a surplus amount of money on top of that once and for all (without any return of the same by way of the operation of exchange). Otherwise I would buy the commodity mass II above its value. If II actually exchanges its 2,000c for I (1,000v + 1,000s), it has no further claims on I, and the money circulating in this exchange returns to either I or II, depending on which of them threw it into circulation, i.e., which of them acted first as buyer. At the same time II would have reconverted the entire value of its commodity-capital into the bodily form of means of production, while our assumption is that after its sale it would not reconvert an aliquot portion of it during the current period of annual reproduction from money into the bodily form of fixed components of its constant capital. A money balance in favour of II could arise only if it sold 2,000 worth to I and bought less than 2,000 from I, say only 1,800. In that case I would have to make good the debit balance by 200 in money, which would not flow back to it, because it would not have withdrawn from circulation the money it had advanced to it by throwing into it commodities equal to 200. In such an event we would have a money-fund for II, placed to the credit of the wear and tear of its fixed capital. But then we would have an over-production of means of production in the amount of 200 on the other side, the side of I, and the basis of our scheme would be destroyed, namely reproduction on the same scale, where complete proportionality between the various systems of production is assumed. We would only have done away with one difficulty in order to create another one much worse. As this problem offers peculiar difficulties and has hitherto not been treated at all by the political economists, we shall examine seriatim all possible (at least seemingly possible) solutions, or rather formulations of the problem. In the first place, we have just assumed that II sells commodities of the value of 2,000 to I, but buys from it only 1,800 worth. The commodity-value 2,000 IIc contains 200 for replacement of wear and tear, which must be stored up in the form of money. The value of 2,000 IIc would thus be divided into 1,800, to be exchanged for means of production I, and 200, to replace wear and tear, which are to be kept in the form of money (after the sale of the 2,000c to I). Expressed in terms of value, 2,000 IIc equals 1,800c + 200c(d), this d standing for d chet. [Wear and tear. Ed.] We would then have to study Exchange I. 1,000v + 1,000s II. 1,800c + 200c(d). I buys with 1,000, which has gone to the labourers in wages for their labour-power, 1,000 IIc of articles of consumption. II buys with the same 1,000 means of production 1,000 Iv. Capitalists I thus recover their variable capital in the form of money and can employ it next year in the purchase of labour power to the same amount, i.e., they can replace the variable portion of their productive capital in kind. Furthermore, II buys with advanced 400 means of production Is, and Is buys with the same 400 articles of consumption IIc. The 400 advanced to the circulation by the capitalists of II have thus returned to them, but only as an equivalent for sold commodities. I now buys articles of consumption for advanced 400; II buys from I 400 worth of means of production, whereupon these 400 flow back to I. So far, then, the account is as follows: I throws into circulation l,000v + 800s in commodities; it furthermore throws into circulation, in money, 1,000 in wages and 400 for exchange with II. After the exchange has been made, I has 1,000v in money, 800s exchanged for 800 IIc (articles of consumption) and 400 in money. II throws into circulation 1,800c in commodities (articles of consumption) and 400 in money. On the completion of the exchange it has 1,800 in commodities I (means of production) and 400 in money. There still remain, on the side of I, 200s (in means of production) and, on the side of II, 200c(d) (in articles of consumption). According to our assumption I buys with 200 the articles of consumption c (d) of the value of 200. But II holds on to these 200 since 200 c (d) represent wear and tear, and are not to be immediately reconverted into means of production. Therefore 200 Is cannot be sold. One-fifth of the surplus-value I to be replaced cannot be realised, or converted, from its bodily form of means of production into that of articles of consumption. This not only contradicts our assumption of reproduction on a simple scale; it is by itself not a hypothesis which would explain the transformation of 200c(d) into money. It means rather that it cannot be explained. Since it cannot be demonstrated in what manner 200c(d) can be converted into money, it is assumed that I is obliging enough to do the conversion just because it is not able to convert its own remainder of 200s into money. To conceive this as a normal operation of the exchange mechanism is tantamount to the notion that 200 fall every year from the clouds in order regularly to convert 200c(d) into money. But the absurdity of such a hypothesis does not strike one at once if Is, instead of appearing, as it does in this case, in its primitive mode of existence namely as a component part of the value of means of production, hence as a component part of the value of commodities which their capitalist producers must convert into money by sale appears in the hands of the partners of the capitalists, for instance as ground-rent in the hands of landowners or as interest in the bands of moneylenders. But if that portion of the surplus-value of commodities which the industrial capitalist has to yield as ground-rent or interest to other co-owners of the surplus-value cannot be realised for a long time by the sale of the commodities, then there is also an end to the payment of rent and interest, and the landowners or recipients of interest cannot therefore serve as dei ex machina to convert at pleasure definite portions of the annual reproduction into money by spending rent and interest. The same is true of the expenditures of all so-called unproductive labourers government officials, physicians, lawyers, etc., and others who as members of the general public serve the political economists by explaining what they left unexplained. Nor does it improve matters if instead of direct exchange between I and II between the two major departments of capitalist producers the merchant is drawn in as mediator and helps to overcome all difficulties with his money. In the present case for instance 200 Is must be definitively disposed of to the industrial capitalists of II. It may pass through the hands of a number of merchants, but the last of them will find himself, according to the hypothesis, in the same predicament, vis- -vis II, in which the capitalist producers of I were at the outset, i.e., they cannot sell the 200 Is to II. And this stalled purchase sum cannot renew the same process with I. We see here that, aside from our real purpose, it is absolutely necessary to view the process of reproduction in its basic form in which obscuring minor circumstances have been eliminated in order to get rid of the false subterfuges which furnish the semblance of scientific analysis when the process of social reproduction is immediately made the subject of the analysis in its complicated concrete form. The law that when reproduction proceeds normally (whether it be on a simple or on an extended scale) the money advanced by the capitalist producer to the circulation must return to its point of departure (whether the money is his own or borrowed) excludes once and for all the hypothesis that 200 IIc(d) is converted into money by means of money advanced by I. We assumed hitherto But the absurdity is only apparent. Class II consists of capitalists whose fixed capital is in the most diverse stages of its reproduction. In the case of some of them it has arrived at the stage where it must be entirely replaced in kind. In the case of the others it is more or less remote from that stage. All the members of the latter group have this in common, that their fixed capital is not actually reproduced, i.e., is not renewed in natura by a new specimen of the same kind, but that its value is successively accumulated in money. The first group is in quite the same (or almost the same, it does not matter here) position as when it started in business, when it came on the market with its money-capital in order to convert it into constant (fixed and circulating) capital on the one hand and into labour-power, into variable capital, on the other. They have once more to advance this money-capital to the circulation, i.e., the value of constant fixed capital as well as that of the circulating and variable capital. Hence, if we assume that half of the 400 thrown into circulation by capitalist class II for exchange with I comes from those capitalists of II who have to renew not only by means of their commodities their means of production pertaining to the circulating capital, but also, by means of their money, their fixed capital in kind, while the other half of capitalists II replaces in kind with its money only the circulating portion of its constant capital, but does not renew in kind its fixed capital, then there is no contradiction in the statement that these returning 400 (returning as soon as I buys articles of consumption for it) are variously distributed among these two sections of II. They return to class II, but they do not come back into the same hands and are distributed variously within this class, passing from one of its sections to another. One section of II has, besides the part of the means of production covered in the long run by its commodities, converted 200 in money into new elements of fixed capital in kind. As was the case at the start of the business the money thus spent returns to this section from the circulation only gradually over a number of years as the wear-and-tear portion of the value of the commodities to be produced by this fixed capital. The other section of II however did not get any commodities from I for 200. But I pays it with the money which the first section of II spent for elements of its fixed capital. The first section of II has its fixed capital-value once more in renewed bodily form, while the second section is still engaged in accumulating it in money-form for the subsequent replacement of its fixed capital in kind. The basis on which we now have to proceed after the previous exchanges is the remainder of the commodities still to be exchanged by both sides: 400s on the part of I, and 400c on the part of II.  We assume that II advances 400 in money for the exchange of these commodities amounting to 800. One half of the 400 (equal to 200) must be laid out under all circumstances by that section of IIc which has accumulated 200 in money as the wear-and-tear value and which has to reconvert this money into the bodily form of its fixed capital. Just as constant capital-value, variable capital-value, and surplus-value into which the value of commodity-capital II as well as I is divisible may be represented by special proportional shares of commodities II and I respectively, so may, within the value of the constant capital itself, that portion of the value which is not yet to be converted into the bodily form of the fixed capital, but is rather to be accumulated for the time being in the form of money. A certain quantity of commodities II (in the present case therefore one half of the remainder, or 200) is here only a vehicle of this wear-and-tear value, which has to be precipitated in money by means of exchange. (The first section of capitalists II, which renews fixed capital in kind, may already have realised in this way with the wear-and-tear part of the mass of commodities of which here only the rest still figures a part of its wear-and-tear value, but it still has to realise 200 in money.) As for the second half (equal to 200) of the 400 thrown into circulation by II in this final operation, it buys circulating components of constant capital from I. A portion of these 200 may be thrown into circulation by both sections of II, or only by the one which does not renew its fixed component of value in kind. With these 400 there is thus extracted from I: 1) commodities amounting to 200, consisting only of elements of fixed capital; 2) commodities amounting to 200, replacing only natural elements of the circulating portion of the constant capital of II. So I has sold its entire annual product, so far as it is to be sold to II; but the value of one-fifth of it, 400, is now held by I in the form of money. This money however is surplus-value converted into money which must be spent as revenue for articles of consumption. Thus I buys with its 400 II s entire commodity-value equal to 400; hence this money flows back to II by setting its commodities in motion. We shall now suppose three cases, in which we shall call the section of capitalists II which replaces its fixed capital in kind section 1, and that section which stores up depreciation-value from fixed capital in money-form, section 2. The three cases are the following: a) that a share of the 400 still existing with II as a remnant in the shape of commodities must replace certain shares of the circulating parts of the constant capital for sections 1 and 2 (say, one half for each); b) that section 1 has already sold all its commodities, while section 2 still has to sell 400; c) that section 2 has sold all but the 200 which are the bearers of the depreciation value. Then we have the following distributions: Section 1, then, advanced 300, and section 2 100 of the 400 in money. Of these 400 there return however: To section 1 100 i.e., only one-third of the money advanced by it. But it has in place of the other a renewed fixed capital to the value of 200. Section l has given money to I for this element of fixed capital to the value of 200, but no subsequent commodities. So far as the 200 in money are concerned, section 1 confronts department I only as buyer, but not later on as seller. This money cannot therefore return to section 1; otherwise it would have received the elements of fixed capital from I as a gift. With reference to the last third of the money advanced by it, section 1 first acted as a buyer of circulating constituent parts of its constant capital. With the same money I buys from it the remainder of its commodities worth 100. This money, then, flows back to it (section 1 of department II) because it acts as a vendor of commodities directly after having acted as a buyer. If this money did not return, then II (section 1) would have given to I, for commodities amounting to 100, first 100 in money, and then into the bargain, 100 in commodities, i.e., II would have given away its commodities to I as a present. On the other hand section 2, which laid out 100 in money receives back 300 in money: 100 because first as a buyer it threw 100 in money into circulation, and receives them back as a seller; 200, because it functions only as a seller of commodities to that amount, but not as a buyer. Hence the money cannot flow back to I. The fixed capital depreciation is thus balanced by the money thrown into circulation by II (section 1) in the purchase of elements of fixed capital. But it reaches the hands of section 2 not as money of section 1, but as money belonging to class I. Section 1 has sold all of its commodities, but 200 in money are a transformed shape of the fixed component part of its constant capital which it has to renew in kind. Hence it acts here only as a buyer and receives instead of its money commodity I to the same value in natural elements of its fixed capital. Section 2 has to throw only 200 into circulation, as a maximum (if I does not advance any money for commodity-exchange between I and II), since for half of its commodity-value it is only a seller to I, not a buyer from I. There return to section 2 from the circulation 400: 200, because it has advanced them as a buyer and receives them back as a seller of 200 in commodities; 200, because it sells commodities to the value of 200 to I without obtaining an equivalent in commodities from I. On this supposition section 2 does not have any advance to make in money, because vis- -vis I it no longer acts at all as buyer but only as seller, hence has to wait until someone buys from it. Section 1 advances 400 in money: 200 for mutual commodity-exchange with I, 200 as mere buyer from I. With the last 200 in money it purchases the elements of fixed capital. With 200 in money I buys from section 1 commodities for 200, so that the latter thus recovers the 200 in money it had advanced for this commodity-exchange. And I buys with the other 200, which it has likewise received from section 1, commodities to the value of 200 from section 2, whereby the latter s wear and tear of fixed capital is precipitated in the form of money. The matter is not altered in the least if it is assumed that, in case c), class I instead of II (section 1) advances the 200 in money to promote the exchange of the existing commodities. If I buys in that event first 200 in commodities from II, section 2, on the assumption that this section has only this commodity remnant left to sell then the 200 do not return to I, since II, section 2, does not act again as buyer. But II, section 1, has in that case 200 in money to spend in buying and 200 in commodities for exchange purposes, thus making a total of 400 for trading with I, 200 in money then return to I from II, section 1. If I again lays them out in the purchase of 200 in commodities from II, section 1, they return to I as soon as II, section 1, takes the second half of the 400 in commodities off I s hands. Section 1 (II) has spent 200 in money as a mere buyer of elements of fixed capital; they therefore do not return to it, but serve to turn the 200c, the commodity remnant of II, section 2, into money, while the 200, the money laid out by I for the exchange of commodities, return to I via II, section 1, not via II, section 2. In the place of its commodities of 400 there has returned to it a commodity equivalent amounting to 400; the 200 in money advanced by it for the exchange of 800 in commodities have likewise returned to it. Everything is therefore all right. Since in II, section 1, 200c in commodities are exchanged for 200 Is (in commodities) and since all the money circulating in this exchange of 400 in commodities between I and II returns to him who advanced it, I or II, this money, being an element of the exchange between I and II, is actually not an element of the problem which is troubling us here. Or, to present it differently: Supposing in the exchange between 200 Is (commodities) and 200 IIc (commodities of II, section 1) the money functions as a means of payment, not as a means of purchase and therefore also not as a medium of circulation, in the strictest sense of the words. It is then clear, since the commodities 200 Is and 200 IIc (section 1) are equal in magnitude of value, that means of production worth 200 are exchanged for articles of consumption worth 200, that money functions here only ideally, and that neither side really has to throw any money into the circulation for the payment of any balance. Hence the problem presents itself in its pure form only when we strike off on both sides, I and II, the commodities 200 Is and their equivalent, the commodities 200 IIc (section 1). After the elimination of these two amounts of commodities of equal value (I and II), which balance each other, there is left for exchange a remainder in which the problem evinces its pure form, namely, It is evident here that II, section 1, buys with 200 in money the component parts of its fixed capital, 200 Is. The fixed capital of II, section 1, is thereby renewed in kind and the surplus-value of I, worth 200, is converted from the commodity-form (means of production, or, more precisely, elements of fixed capital) into the money-form. With this money I buys articles of consumption from II, section 2, and the result for II is that for section I a fixed component part of its constant capital has been renewed in kind, and that for section 2 another component part (which compensates for the depreciation of its fixed capital) has been precipitated in money-form. And this continues every year until this last component part, too, has to be renewed in kind. The condition precedent is here evidently that this fixed component part of constant capital II, which is reconverted into money to the full extent of its value and therefore must be renewed in kind each year (section 1), should be equal to the annual depreciation of the other fixed component part of constant capital II, which continues to function in its old bodily form and whose wear and tear, depreciation in value, which it transfers to the commodities in whose production it is engaged, is first to be compensated in money. Such a balance would seem to be a law of reproduction on the same scale. This is equivalent to saying that in class I, which puts out the means of production, the proportional division of labour must remain unchanged, since it produces on the one hand circulating and on the other fixed component parts of the constant capital of department II. Before we analyse this more closely we must see what turn the matter takes if the remainder of IIc (1) is not equal to the remainder of IIc (2), and may be larger or smaller. Let us study the two cases one after the other. In this case IIc (1) buys with 200 in money the commodities 200 Is, and I buys with the same money the commodities 200 IIc (2), i.e., that portion of the fixed capital which is to be precipitated in money. This portion is thus converted into money. But 20 IIc (1) in money cannot be reconverted into fixed capital in kind. It seems this misfortune can be remedied by setting the remainder of Is at 220 instead of at 200, so that only 1,780 instead of 1,800 of the 2,000 I would be disposed of by former exchange. We should then have: IIc, section 1, buys with 220 in money the 220 Is and I buys then with 200 the 200 IIc (2) in commodities. But now 20 in money remain on the side of I, a portion of surplus-value which it can hold on to only in the form of money, without being able to spend it for articles of consumption. The difficulty is thus merely transferred from IIc, section 1, to Is. Let us now assume on the other hand that IIc, section 1, is smaller than IIc, section 2: then we have the With 180 in money II (section 1) buys commodities, 180 Is. With this money I buys commodities of the same value from II (section 2), hence 180 IIc (2). There remain 20 Is unsaleable on one side, and also 20 IIc (2) on the other commodities worth 40, not convertible into money. It would not help us to make the remainder of I equal to 180. True, no surplus would then be left in 1, but now as before a surplus of 20 would remain in IIc (section 2), unsaleable, inconvertible into money. In the first case, where II (1) is greater than II (2), there remains on the side of IIc (1) a surplus in money-form not reconvertible into fixed capital; or, if the remainder Is is assumed to be equal to IIc (1), there remains on the side of Is the same surplus in money-form, not convertible into articles of consumption. In the second case, where IIc (1) is smaller than IIc (2), there remains a money deficit on the side of 200 Is and IIc (2), and an equal surplus of commodities on both sides, or, if the remainder of Is is assumed to be equal to IIc (1), there remains a money deficit and a surplus of commodities on the side of IIc (2). If we assume the remainders of I, always to be equal to IIc (1) since production is determined by orders and reproduction is not altered in any way if one year there is a greater output of fixed component parts and the next a greater output of circulating component part of constant capitals II and I then in the first case Is can be reconverted into articles of consumption only if I buys with it a portion of the surplus-value of II and II accumulates it in money instead of consuming it; and in the second case matters can be remedied only if I spends the money itself, an assumption we have already rejected. If IIc (1) is greater than IIc (2), foreign commodities must be imported to realise the money-surplus in Is. If, conversely, IIc (1) is smaller than IIc (2), commodities II (articles of consumption) will have to be exported to realise the depreciation part of IIc in means of production. Consequently in either case foreign trade is necessary. Even granted that for a study of reproduction on an unchanging scale it is to be supposed that the productivity of all lines of industry, hence also the proportional value-relations of their commodities, remain constant, the two last-named cases, in which IIc (1) is either greater or smaller than IIc (2), will nevertheless always be of interest for production on an enlarged scale where these cases may infallibly be encountered. If all other things, and not only the scale of production, but above all the productivity of labour, remaining the same a greater part of the fixed element of IIc expires than did the year before, and hence a greater part must be renewed in kind, then that part of the fixed capital which is as yet only on the way to its demise and is to be replaced meanwhile in money until its day of expiry, must shrink in the same proportion, inasmuch as it was assumed that the sum (and the sum of the value) of the fixed part of capital functioning in II remains the same. This however brings with it the following circumstances. First: If the greater part of commodity-capital I consists of elements of the fixed capital of IIc, then a correspondingly smaller portion consists of circulating component parts of IIc, because the total production of I for IIc remains unchanged. If one of these parts increases the other decreases, and vice versa. On the other hand the total production of class II also retains the same volume. But how is this possible if its raw materials, semi-finished products, and auxiliary materials (i.e., the circulating elements of constant capital II) decrease? Second: the greater part of fixed capital IIc, restored in its money-form, flows to I to be reconverted from its money-form into its bodily form. So there is a greater flow of money to I, aside from the money circulating between I and II merely for the exchange of their commodities; more money which is not instrumental in effecting mutual commodity exchange, but acts only one-sidedly in the function of a means of purchase. But then the mass of commodities of IIc, which is the bearer of the wear-and-tear equivalent and thus the mass of commodities II that must only be exchanged for money I and not for commodities I would also shrink proportionately. More money would have flown from II to I as mere means of purchase, and there would be fewer commodities II in relation to which I would have to function as a mere buyer. A greater portion of Is for Iv is already converted into commodities II would not therefore be convertible into commodities II, but would persist in the form of money. The opposite case, in which the reproduction of demises of fixed capital II in a certain year is less and on the contrary the depreciation part greater, needs no further discussion. There would be a crisis a crisis of over-production in spite of reproduction on an unchanging scale. In short, if under simple reproduction and other unchanged conditions particularly under unchanged productive power, total volume and intensity of labour no constant proportion is assumed between expiring fixed capital (to be renewed) and fixed capital still continuing to function in its old bodily form (merely adding to the products value in compensation of its depreciation), then, in the one case the mass of circulating component parts to be reproduced would remain the same while the mass of fixed component parts to be reproduced would be increased. Therefore the total production I would have to grow or, even aside from money-relations, there would be a deficit in reproduction. In the other case, if the size of fixed capital II to be reproduced in kind should proportionately decrease and hence the component part of fixed capital II, which must now be replaced only in money, should increase in the same ratio, then the quantity of the circulating component parts of constant capital II reproduced by I would remain unchanged, while that of the fixed component parts to be reproduced would decrease. Hence either decrease in aggregate production of I, or surplus (as previously deficit) and surplus that is not to be converted into money. True, the same labour can, in the first case, turn out a greater product through increasing productivity, extension or intensity, and the deficit could thus be covered in that case. But such a change would not take place without a shifting of capital and labour from one line of production of I to another, and every such shift would call forth momentary disturbances. Furthermore (in so far as extension and intensification of labour would mount), I would have for exchange more of its own value for less of II s value. Hence there would be a depreciation of the product of I. The reverse would take place in the second case, where I must curtail its production, which implies a crisis for its labourers and capitalists, or produce a surplus, which again spells crisis. Such surplus is not an evil in itself, but an advantage; however it is an evil under capitalist production. Foreign trade could help out in either case: in the first case in order to convert commodities I held in the form of money into articles of consumption, and in the second case to dispose of the commodity surplus. But since foreign trade does not merely replace certain elements (also with regard to value), it only transfers the contradictions to a wider sphere and gives them greater latitude. Once the capitalist form of reproduction is abolished, it is only a matter of the volume of the expiring portion expiring and therefore to be reproduced in kind of fixed capital (the capital which in our illustration functions in the production of articles of consumption) varying in various successive years. If it is very large in a certain year (in excess of the average mortality, as is the case with human beings), then it is certainly so much smaller in the next year. The quantity of raw materials, semi-finished products, and auxiliary materials required for the annual production of the articles of consumption provided other things remain equal does not decrease in consequence. Hence the aggregate production of means of production would have to increase in the one case and decrease in the other. This can be remedied only by a continuous relative over-production. There must be on the one hand a certain quantity of fixed capital produced in excess of that which is directly required; on the other hand, and particularly, there must be a supply of raw materials, etc., in excess of the direct annual requirements (this applies especially to means of subsistence). This sort of over-production is tantamount to control by society over the material means of its own reproduction. But within capitalist society it is an element of anarchy. This illustration of fixed capital, on the basis of an unchanged scale of reproduction, is striking. A disproportion of the production of fixed and circulating capital is one of the favourite arguments of the economists in explaining crises. That such a disproportion can and must arise even when the fixed capital is merely preserved, that it can and must do so on the assumption of ideal normal production on the basis of simple reproduction of the already functioning social capital is something new to them.
Economic Manuscripts: Capital: Volume Two