ignates the “instruments of trade” as fixed capital, and the portion of capital laid out in wages and raw materials, including auxiliary materials, as circulating capital (“repaid with a profit by the price of the work”).
And so he starts out, in the first place, from the various constituents of the labour-process, from labour-power (labour) and raw materials on the one hand, and instruments of labour on the other. But these are constituents of capital, because a sum of value which is to function as capital is invested in them. To this extent they are material elements, modes of existence of productive capital, that is to say, of capital functioning in the process of production. But why is one of these parts called fixed? Because
"some parts of the capital must be fixed in the instruments of trade." [Vol. II, p. 254.]
But the other part is also fixed — in wages and raw materials. Machines however and
"instruments of trade ... or suchlike things ... yield a revenue or profit without changing masters, or circulating any further. Such capitals, therefore, may very properly be called fixed capitals." [Vol. II, p. 254.]
Take for instance the mining industry. No raw material at all is used there, because the subject of labour, such as copper, is a product of nature, which must first be appropriated by labour. The copper to be first appropriated, the product of the process, which circulates later as a commodity, or commodity-capital, does not form an element of productive capital. No part of its value is invested in it. On the other hand the other elements of the productive process, labour-power and auxiliary materials such as coal, water, etc., do not enter materially into the product, either. The coal is entirely consumed and only its value enters into the product, just as a part of the value of the machine, etc., enters into it. Finally, the labourer remains as independent vis-à-vis the product, the copper, as the machine; except that the value which he produces by means of his labour is now a component part of the value of the copper. Hence in this illustration not a single constituent of productive capital changes “masters,” nor is any of them circulated further, because none of them enter materially into the product. What becomes of the circulating capital in this case? According to Adam Smith’s own definition the entire capital employed in a copper mine consists of fixed capital and nothing else.
Let us take on the other hand a different industry, one which utilises raw materials that form the substance of its product, and auxiliary materials that enter into the product bodily and not only as so much value, as is the case with fuel coal. The product, for instance the yarn, changes hands together with the raw material, the cotton, composing it, and passes from the process of production into that of consumption. But so long as the cotton functions as an element of productive capital, its master does not sell it, but processes it, has it made into yarn. He does not part with it. Or, to use Smith’s crudely erroneous and trivial terms, he does not make any profit “by parting with it, by its changing masters, or by circulating it.” He does not permit his materials to circulate any more than his machines. They are fixed in the process of production, the same as the spinning machines and the factory buildings. Indeed, a part of the productive capital must be just as continually fixed in the form of coal, cotton, etc., as in the form of instruments of labour. The difference is only that for instance the cotton, coal, etc., required for one week’s yarn production, are always entirely consumed in the manufacture of the weekly product, so that new cotton, coal, etc., must be supplied in their place; in other words, these elements of productive capital, although remaining identical in kind, always consist of new specimens of the same kind, while the same individual spinning machine or the same individual factory building continues its participation in a whole series of weekly productions without being replaced by a new specimen of it