D . A total capital of, say £900 must be divided into two portions, as above, £600 for the working period and £300for the period of circulation. That portion which is really invested in the labour-process is thus reduced by one-third, from £900 to £600;consequently, the scale of production is diminished by one-third. On the other hand the £300 function only to make the working period continuous, in order that £100 may be invested every week of the year in the labour-process.
Abstractly speaking, it is all the same whether £600 work during 6 times 8, or 48, weeks (product £4,800) or whether the total capital of £900 is expended during 6 weeks in the labour-process and then lies idle during the 3-week period of circulation. In the latter case, it would be working, in the course of the 48 weeks, 5 1/3 times 6, or 32 weeks (product 5 1/3 times 900, or £4,800), and lie idle for 16 weeks. But, apart from the greater spoilage of the fixed capital during the idle 16 weeks and apart from the appreciation of labour, which must be paid during the entire year, even if employed only during a part of it, such a regular interruption of the process of production is altogether irreconcilable with the operations of modern big industry. This continuity is itself a productive power of labour.
Now, if we take a closer look at the released, or rather suspended, capital, we find that a considerable part of it must always be in the form of money-capital. Let us adhere to our illustration: Working period --6 weeks, period of circulation -- 3 weeks, investment per week -- £100.
In the middle of the second working period, end of the 9th week, £600return, and only £300 of them must be invested for the remainder of the working period. At the end of the second working period, £300are therefore released. In what state are these £300? We shall assume that 1/3 is invested for wages and 2/3 are for raw and auxiliary materials.
Then £200 of the returned £600 exist in the form of money for wages and £400 in the form of productive supply, in the form of elements of the constant circulating productive capital. But since only one half of this productive supply is required for the second half of the second working period, the other half exists for 3 weeks in the form of a surplus productive supply, i.e., of a supply exceeding the requirements of one working period. But the capitalist knows that he needs only one half, or £200, of this portion (£400) of the returned capital for the current working period. It will therefore depend on market conditions whether he will immediately reconvert these £200, in whole or in part, into a surplus productive supply, or keep them entirely or partially in the form of money-capital in anticipation of a more favourable market. On the other hand it goes without saying that the portion to be laid out for wages (£200) is retained in the form of money. The capitalist cannot store labour-power in warehouses after he has bought it, as he may do with the raw material. He must incorporate it in the process of production and pay for it at the end of the week. At any rate these £100 of the released capital of £300 will therefore have the form of money-capital set free, i.e., not required for the working period. The capital released in the form of money-capital must therefore be at least equal to the variable portion of capital invested in wages. At a maximum, it may comprise the entire released capital. In reality it fluctuates constantly between this minimum and maximum.
The money-capital thus released by the mere mechanism of the turnover movement (together with that freed by the successive reflux of fixed capital and that required in every labour-process for variable capital) must play an important role as soon as the credit system develops and must at the same time form one of the latter's foundations.
Let us assume that the time of circulation in our illustration is shortened from 3 to 2 weeks. This is not to be a normal change, but due, say, to prosperous times, shorter terms of payment, etc. The capital of £600, which is laid out during the working period, returns one week earlier than need. It is therefore released for this week. Furthermore, in the middle of the working period, as before, £300 are released (a portion of those £600), but for 4 weeks instead of 3. There are then, on the money-market £600 for one week and £300 for 4instead of 3 weeks. As this concerns not one capitalist alone but many and occurs in various periods in different businesses, more available money-capital makes its appearance in the market. If this conditions lasts for some time, production will be expanded wherever feasible. Capitalists operating on borrowed money will exercise less demand on the money-market, which eases it as much as increased supply; or finally the sums which have become superfluous for the mechanism are thrown definitely on the money-market.
