Marx’s Capital Chapter 8: Fixed Capital and Circulating Capital

This chapter continues Marx’s account of the “Turnover of Capital” by considering the formal distinction between two types of capital: fixed and circulating. Immediately the questions we are faced with are, “What are these?” and, “What’s the use in knowing the difference between them?” To briefly define them: Circulating (or fluid) capital includes raw materials and inputs that are used up in the process of production. This capital imputes its value onto the commodity being produced all at once and is then disposed. In contrast, items of fixed capital are materials like machinery and buildings, which give up their value only slowly, in a series of productions over the course of months or years. Marx’s objective here is to illuminate the movement from capital in production to capital in circulation.

In order to grasp the function of the distinction discussed in this chapter, it must be clarified that in a sense, as Marx says, “all capital is circulating capital” (238). The value of any form of capital is potentially fungible. We can simply revisit his three steps of capital circulation in Chapter 1 of Volume 2 to see how the three steps are fundamentally interrelated and lead one into the other. So, we should not view the factory or any other site of production as somehow outside of the market; rather, as a site of valorization, it is integral to the subsequent circulation process.

The categories introduced in Chapter 8 of Volume 2 are analytical since both fixed and circulating capital valorize commodities. That is, they provide for the turnover of capital — the movement of value through step 2, production, to step 3, when the capitalist returns to market with newly produced commodities for sale. Yet we can separate the capital into these two categories based on how long it takes for them to valorize a commodity being produced; one is used up in one moment of production and one is used up across “a series of continually repeated labour processes” (238). Thus, all circulating capital is fixed when its value isgraduallyaccreted into marketable use-values.

But again, the two types are not simply distinct from each other in how they are affected by the circulation process; they also have a specific relationship to the turnover of capital. As with the example of ancillaries we can tell that they do not themselves become (strictly speaking) the commodity being produced. All the same, their value is transmitted. Thus, what we are looking at is not what materials are used, but how their value circulates. Fixed capital is often immobile, as with a factory or an irrigations system in a field and its material substance thus affects the way in which it can circulate. Means of labour can also suffer from wear and tear – they don’t last indefinitely. As we have seen in Volume 1, if a machine used in production is purchased for 10,00 Pounds and it is used to produce 1,000 items of a commodity, we can say that it imparts 1/1,000th, or 10 Pounds of its value each time it is used.

Circulating capital is an element of production that is destined to enter the sphere of circulation. Like the commodity produced in a hypothetical factory, “The finished product, and thus also the element of its formation, in so far as they are transformed into the product, is ejected from the production process, and passes as a commodity from the sphere of production into that of circulation” (237). While fixed capital remains in the production sphere, only gradually transferring its value onto commodities that will enter into circulation: they “never leave the production sphere once they step into it” (ibid).

Fixed capital is something whose entire value is not imparted into every commodity in which it helps to produce. Everything else, from the ancillary elements such as the electricity used in the factory and the gasoline used to transport raw materials to the factory to the raw materials transformed into commodities, is circulating capital. Because circulating capital must be replaced with every iteration of production, none of its value can remain fixed in the process. The value of the means of labour “thus acquires a dual existence. A part of it remains tied to its use form or natural form, which pertains to the production process, while another part separates off from this form as money.” (243)

In summary, I would suggest that the fixity of capital defines the quality of the capital transference of value to the production process itself. Alternately, thefluidity of capital defines capital’s transference of value to the circulation process. Again, I would emphasize the inseparability of production and circulation within the overall circuit of capital.

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