When capital changes shape - from goods into money, and from money into goods - that change happens through the capitalist's own dealings: acts of buying and selling. From his own point of view, the time these changes take is selling-time and buying-time - the time he spends on the market as seller and as buyer.
Just as circulation-time is a necessary part of capital's whole reproduction-time, the time the capitalist spends buying and selling, moving about the market, is a necessary part of his time functioning as a capitalist - that is, as capital in human form. It is part of his working day as a man of business - a necessary cost, as we shall see, that adds no value of its own.
We have been assuming that goods are bought and sold at their values. On that assumption, these dealings only shift the same value from one form into another - from the form of a good into the form of money, and from money back into a good. It is a change of state, nothing more.
If goods sell at their values, the amount of value stays exactly the same in the hands of both buyer and seller; only the shape it exists in has changed. And if goods do not sell at their values, the total sum of value exchanged still stays the same - what one side gains, the other loses.
The changes from goods into money and money into goods are dealings between a buyer and a seller. They take time to settle, all the more because each side is trying to get the better of the other - business people facing off, as the saying goes, "when Greek meets Greek then comes the tug of war". This change of state costs time and labour-power, but not in order to create value - only to carry out the shift of value from one form into another. That both sides try, in the process, to grab some extra value for themselves changes nothing about this. The labour spent haggling, swollen as it is by ill will on both sides, creates value no more than the labour spent on a lawsuit increases the value of the thing being fought over.
This labour is a necessary part of the capitalist process of production taken as a whole — a whole that includes circulation, or that is itself included within circulation. It behaves rather like the work of burning a fuel to produce heat. Burning coal does not itself create heat, even though it is a necessary step in producing heat. To burn coal, I have to combine it with oxygen and so turn it from a solid into a gas - since in the carbon dioxide that combustion produces, the carbon is in gas form. That is, I have to bring about a change of physical state. Before the new bonding can happen, the carbon molecules bound together in a solid lump have to be pulled apart, and the carbon molecule itself split into separate atoms - and this costs a certain expenditure of force, which is therefore not turned into heat but subtracted from it.
Where the owners of goods are not capitalists but independent producers working for themselves, the time spent buying and selling is simply time taken away from their working time - which is why, in antiquity as in the Middle Ages, they always tried to push such business onto holidays.
However large commodity-turnover grows in the hands of capitalists, this cannot turn labour that creates no value - labour that only carries value from one form into another - into value-creating labour. Nor can this miracle of transformation be brought about by simply handing the job to someone else: by industrial capitalists, instead of doing that "work of combustion" themselves, making it the exclusive business of other people whom they pay. Those other people will naturally not put their labour-power at the capitalists' disposal out of love for their beautiful eyes. It is equally beside the point to the rent-collector working for a landowner, or the porter carrying money for a bank, that their labour does not increase the value of the rent, or of the sacks of gold coin carried to another bank, by one jot.
For the capitalist who has others work for him, buying and selling becomes a chief business. Since he takes possession of the product of many workers on a large social scale, he also has to sell it on that scale, and later turn the money back into the elements of production. As before, none of this buying-and-selling time creates value. An illusion does creep in here, through the working of merchant's capital - though this is not the place to go into that. But this much is clear from the outset: when the division of labour turns a function that is in itself unproductive, yet a necessary part of reproduction, from something many people do on the side into the exclusive business of a few - into their own special trade - the character of the function itself does not change. A merchant, considered here purely as an agent who changes the form of goods, a mere buyer and seller, may through his work shorten the buying-and-selling time for many producers. He should then be seen as a kind of machine: one that cuts down wasted effort, or helps free up time for actual production.
To keep things simple - we will look at the merchant as a capitalist, and at merchant's capital, later - let us assume this go-between who buys and sells is a man who sells his own labour. He spends his labour-power and his labour-time on these operations, goods into money and money into goods, and lives off it, just as another man lives off spinning or making pills. He is performing a necessary function, because the process of reproduction itself includes functions that are unproductive. He works as hard as the next man, but the content of his work creates neither value nor product. He himself belongs among the faux frais - the incidental, unavoidable costs - of production. His usefulness does not lie in turning an unproductive function into a productive one, or unproductive labour into productive labour: it would be a miracle if simply handing the job to someone else could achieve that. His usefulness lies, rather, in the fact that a smaller share of society's labour-power and labour-time ends up tied down in this unproductive function.
There is more to say. Suppose he is a plain wage-worker - better paid, if you like. Whatever his wage, as a wage-worker he works part of his day for nothing. Say he is paid the value produced by eight hours' work, but works ten. The two hours of surplus labour he puts in create no more value than his eight hours of necessary labour do - even though it is through those eight hours that a share of the social product is handed over to him. First: society as a whole is still using up one worker's labour-power for ten hours on this mere function of circulation — labour-power fit for nothing else, certainly not for productive work. But second: society does not pay for those two hours of surplus labour, even though the man performs them. Society gains no extra product or value from this. What happens instead is that the circulation costs he stands for shrink by a fifth, from ten hours to eight: society pays no equivalent for a fifth of the working time this agent spends on active circulation.
But where it is a capitalist who employs this agent, not paying for those two hours reduces the circulation costs charged against his capital - costs that are a deduction from his income. For the capitalist this is a straightforward gain, because it narrows the ceiling that limits how far his capital can be valorized. As long as small independent producers spend part of their own time buying and selling, this shows up for them only as time spent in the gaps between their productive work, or as a bite taken out of their production time.
Whatever the circumstances, the time spent on this adds nothing to the values being exchanged - it is simply the cost of translating them out of the form of goods and into the form of money. As long as the capitalist producer of goods is himself acting as the agent of circulation, he differs from the independent producer only in that he sells and buys on a larger scale, and so acts as circulation-agent on a larger scale too. But once the size of his business forces or allows him to buy in - to hire - his own circulation agents as wage-workers, nothing about the substance of the matter changes. Labour-power and labour-time still have to be spent, to some degree, on the process of circulation, so far as that process is a mere change of form. But this now shows up as an extra outlay of capital: part of the variable capital has to go on buying these workers who function only in circulation. This advance of capital creates neither product nor value. It reduces, correspondingly, the share of the advanced capital that functions productively. It is as if part of the product were turned into a machine that buys and sells the rest of the product. That machine takes a cut out of the product. It plays no part in the process of production, even though it may cut down the labour-power spent on circulation. It is simply one part of the costs of circulation.
Besides the actual buying and selling, labour-time is spent on bookkeeping - which also draws in labour already fixed in things: pen, ink, paper, a writing-desk, office costs generally. So this function too uses up labour-power on one side and means of labour on the other. It works exactly like buying-and-selling time.
As a single moving whole across its circuits - as value in process, whether inside the sphere of production or across the two stages of the sphere of circulation - capital exists only in idea, in the shape of money of account: first of all inside the head of the producer of goods, or of the capitalist producer of goods. Bookkeeping - which also covers fixing prices, working out what goods should cost - pins this movement down and keeps it under control. The movement of production, and above all of the growth of value, in which goods figure only as carriers of value, as names for things whose ideal existence as value is fixed in money of account, gets, in this way, a symbolic picture in the mind.
As long as an individual producer of goods either only keeps his books in his head - as the peasant does; it is capitalist agriculture that first produces the book-keeping tenant farmer - or only keeps, on the side, outside his production-time, a book of his outgoings, income, payment dates and so on, it is plain to see that this activity of his, and whatever means of labour he uses for it, such as paper, are an extra use of labour-time and means of labour. They are necessary, but they are still a deduction - both from the time he could otherwise spend productively, and from the means of labour that are actually at work in the process of production, going into the making of product and value. The nature of the function itself does not change - not through the scale it takes on once it is gathered into the hands of the capitalist producer of goods and appears, instead of as the sideline of many small producers, as the business of a single capitalist, a function within a production process on a large scale; and not through being torn loose from the productive functions it was once an appendage of, and becoming its own separate function, carried out by agents whose only job it is.
Dividing up labour, and letting a function stand on its own, does not make that function create product or value - not unless it already did so before it became independent. If a capitalist puts fresh capital into his business, he has to lay out part of it on hiring a bookkeeper and the like, and on the means of keeping books. And once his capital is already at work, caught up in its constant round of reproduction, he has to keep converting part of the commodity-product, by turning it into money, back into bookkeepers, clerks, and so on. This part of his capital is withdrawn from the process of production and counts among the costs of circulation - a deduction from the total return. (This includes the labour-power itself that is used for nothing but this function.)
There is, though, a real difference between the costs that come from bookkeeping - the unproductive spending of labour-time there - and the costs of mere buying-and-selling time. The second kind arises only from the particular social form the process of production takes: from the fact that it is a process of producing goods. Bookkeeping, as a way of controlling and mentally summing up the process, becomes more necessary the more the process runs on a social scale and loses its purely individual character - so it is more necessary under capitalist production than in the scattered production of craft workshops and peasant farms, and more necessary again under production organized in common than under capitalist production. But the costs of bookkeeping themselves shrink as production becomes more concentrated, and the more it turns into a single, social act of bookkeeping.
The point here is only the general character of the costs of circulation that arise from the mere change of form. There is no need to go through every detailed shape they take. But forms that belong to this pure change of form of value - and so arise from the particular social form of the process of production - are, for the individual producer of goods, only fleeting, barely noticeable moments running alongside his productive work, or tangled up with it. How these same costs can strike the eye as costs of circulation on a massive scale is easy to see in the simple business of taking in and paying out money, once that has been made the sole business of banks and the like, or of the cashier in an individual firm, and gathered together on a large scale. What matters is to hold onto this: these costs of circulation do not change their character just because their shape has changed.
Whether or not a product is produced as a commodity, it is always a material form of wealth - a use-value, meant to go into consumption, whether by a person or by production. As a commodity, its value exists only in idea, in its price, which changes nothing about its actual, usable shape. But that certain commodities - gold and silver - function as money, and as such live exclusively inside the process of circulation (even as a hoard, a reserve, and so on, they stay within the sphere of circulation, if only in a dormant way), is purely a product of the particular social form the process of production takes: the fact that it is a process of producing commodities. Because, on the basis of capitalist production, the commodity becomes the general shape of the product, and because the greatest mass of the product is produced as a commodity and so has to take on the form of money - because, in other words, the mass of commodities, the share of social wealth that functions as a commodity, keeps growing - so too does the amount of gold and silver serving as means of circulation, means of payment, reserve, and so on.
Gold and silver used in this way, as means of circulation, payment, and reserve, keep growing in amount. These commodities that function as money go into neither personal consumption nor productive consumption. They are social labour, fixed in a form where all it does is serve as a mere machine for circulation. Besides tying up part of social wealth in this unproductive form, the wear and tear on money constantly demands that it be replaced - that more social labour, in the shape of products, be turned into more gold and silver. These replacement costs are considerable in capitalistically developed nations, because the share of wealth bound up in the form of money is, generally, extensive there. Gold and silver, as the commodities that serve as money, form costs of circulation for society - costs that arise only from the social form production takes. They are faux frais of commodity production in general, which grow as commodity production develops, and especially as capitalist production develops. They are a part of social wealth that has to be sacrificed to the process of circulation.
Circulation costs that arise from a mere change in the form of value — from circulation looked at ideally — don't enter into the value of commodities. The parts of capital laid out on them are mere deductions from the capital laid out productively, so far as the capitalist is concerned. The circulation costs we're now looking at are of a different nature. They can spring from production processes that are simply continued within circulation, so that their productive character is only hidden by the form of circulation. On the other hand, looked at socially, they can be mere costs, unproductive expenditure of either living or objectified labour, and yet, precisely because of that, act as value-forming for the individual capitalist, adding to the sale price of his commodity. This already follows from the fact that these costs differ from one sphere of production to another, and even, in places, between different individual capitals within the same sphere. Through their
addition to the price of the commodity, they get distributed according to how they fall on individual capitalists. But all labour that adds value can also add surplus value, and on a capitalist basis it always will: the value it forms depends on its own size, while the surplus value it forms depends on how much the capitalist pays for it. So costs that make a commodity dearer without adding any use-value to it — costs that, for society, belong among the incidental expenses (faux frais) of production — can still be a source of enrichment for the individual capitalist.
On the other hand, where the addition to price merely spreads these circulation costs out evenly, that doesn't stop them being unproductive. Insurance companies, for instance, spread individual capitalists' losses across the whole capitalist class. But that doesn't stop those evened-out losses from still being losses, once you look at the total social capital.
For as long as it exists as commodity-capital, staying on the market — that is, in the gap between the production process it comes out of and the consumption process it goes into — the product forms a stock of commodities. As a commodity on the market, and so in the shape of a stock, commodity-capital turns up twice in every circuit: once as the commodity-product of the very capital whose circuit we're tracing, and again as the commodity-product of some other capital, which has to be found ready on the market so that it can be bought and turned into productive capital.
It's true this second commodity-capital might only be made to order — in which case there's a gap until it's produced. But the smooth flow of production and reproduction requires that a mass of commodities (means of production) is constantly to be found on the market — that is, forms a stock. In the same way, productive capital includes the purchase of labour-power, and here money is only the value-form of means of subsistence which the worker mostly has to find ready-made on the market. We'll come back to this more closely later in this paragraph. For now, this much is established: if we take the standpoint of the capital-value in process that has turned into a commodity-product and now has to be sold, turned back into money — that now works as commodity-capital on the market — then sitting there as a stock is an involuntary stay on the
market that runs against its whole purpose. The faster it sells, the more smoothly the reproduction process runs. Sitting in the change of form from commodity back to money holds up the real exchange of matter that has to take place in the circuit of capital, just as it holds up capital's further working as productive capital.
But looked at from the other side — from money turning into commodities — the constant presence of goods on the market, the stock of commodities, appears as a condition for the reproduction process to flow, and just as much a condition for laying out new or extra capital.
For commodity-capital to sit on the market as a stock of commodities calls for buildings, warehouses, containers for the goods, storage space — that is, an outlay of constant capital — and just as much for paying labour-power to put the goods into storage. On top of that, goods spoil and are exposed to damaging natural forces. Guarding against this needs extra capital laid out, partly in means of labour, in physical form, and partly in labour-power.
So capital's existence in the form of commodity-capital, and therefore as a stock of commodities, causes costs which, since they don't belong to the sphere of production, count as circulation costs. These circulation costs differ from the ones listed under I in that they do, to some extent, enter into the value of the commodities — that is, they make the commodity dearer.
In every case, the capital and labour-power used to keep and store the stock of commodities are withdrawn from the direct process of production. On the other hand, the capital applied here, labour-power included, still has to be replaced out of the social product, as a component of capital. So laying it out acts like a drop in the productive power of labour: a larger quantity of capital and labour is needed to get the same useful effect. These are extra costs.
Now, so far as the circulation costs caused by forming a stock of commodities spring only from how long it takes for values that already exist to change from commodity-form into money-form — that is, only from the particular social
form of the production process (only from the fact that the product is produced as a commodity and so must also go through the change into money) — they fully share the character of the circulation costs listed under I.
But on the other hand, here the value of the commodities is only preserved, or even increased, because the use-value — the product itself — is placed under certain physical conditions that cost capital to provide, and undergoes operations that put extra labour into the use-values. Working out commodity-values, keeping the books on that process, buying and selling — none of that touches the use-value in which the commodity's value exists. All of that deals only with its form.
So although, in the case we're assuming, these extra costs of forming a stock (which here is involuntary) come purely from a delay in changing form and from the need for that delay, they still differ from the extra costs under I in this: what they're aimed at isn't the change of form of value but the preservation of value — value that exists in the commodity as product, as use-value, and so can only be kept by keeping the product, the use-value itself, intact. Here the use-value is neither raised nor increased — if anything it falls. But its fall is held in check, and it's preserved. Nor is the value already advanced, sitting in the commodity, increased here either. But new labour, both objectified and living, is added to it.
It now needs looking into further: how far do these extra costs spring from the special character of commodity production as such, and of commodity production in its general, full-blown form — that is, capitalist commodity production — and how far, on the other hand, are they common to all social production, only taking a special shape here, a special way of appearing, within capitalist production.
A. Smith put forward the fantastic view that forming a stock is a phenomenon peculiar to capitalist production. More recent economists, Lalor for instance, claim the opposite: that it decreases as capitalist production develops. Sismondi even treats this as one of capitalism's drawbacks.
In fact, stock exists in three forms: as productive capital, as an individual fund of consumption, and as a stock of commodities, or commodity-capital. Stock in one of these forms decreases relatively when it grows in another, even though its absolute size might grow in all three forms at once.
It's clear from the outset that where production is aimed directly at meeting one's own needs, and only a small part is produced for exchange or sale — so that the social product takes the commodity-form not at all, or only to a small extent — stock in the form of a commodity forms only a small, vanishing part of wealth. But here the fund of consumption is relatively large, especially of actual means of subsistence. One only has to look at old-fashioned peasant farming. Here the greater part of the product turns directly — without ever forming a stock of commodities, precisely because it stays in the hands of its owner — into a stock of means of production or means of subsistence held ready.
It doesn't take the form of a stock of commodities, and precisely for that reason A. Smith holds that in societies built on this kind of production there's no stock at all. A. Smith mixes up the form the stock takes with the stock itself, and thinks that such societies have always lived from hand to mouth, trusting to the luck of the next day. It's a childish misunderstanding.
Stock in the form of productive capital exists as means of production that are already inside the production process, or at least in the producer's hands — that is, already latent within the production process. We saw earlier that as the productive power of labour develops — and so also as the capitalist mode of production develops, which raises the social productive power of labour more than any earlier mode of production did — the mass of means of production built once and for all into the process as instruments of labour, working over and over across a longer or shorter period (buildings, machines, and so on), keeps growing, and that this growth is both a condition for and a result of the growing social productive power of labour. This growth of wealth in this form — not just absolute but relative (see Volume 1, Chapter XXIII, 2) — is above all a mark of the capitalist mode of production.
But the material shapes constant capital takes, the means of production, don't consist only of such instruments of labour: they also include material being worked on at every stage of processing, and auxiliary materials. As the scale of production grows, and the productive power of labour rises through cooperation, division of labour, machinery, and so on, the mass of raw material and auxiliary materials entering the daily reproduction process grows too. These things have to lie ready at the place of production. So the size of this stock existing as productive capital grows in absolute terms.
For the process to keep flowing — quite apart from whether this stock can be renewed daily or only at set intervals — there always has to be more raw material and the like piled up and ready at the workplace than gets used, say, daily or weekly. The continuity of the process demands that its conditions don't depend either on possible breaks in daily buying, or on the commodity-product being sold daily or weekly and so only turned back irregularly into its production elements.
Still, productive capital can clearly lie latent, or form a stock, on very different scales. It makes a real difference, say, whether a spinner needs cotton or coal lying ready for three months or for one. So you can see this stock can shrink relatively even while it grows in absolute terms.
This depends on various conditions, which essentially all come down to how quickly, regularly, and reliably the needed mass of raw material can be delivered, so that no break ever happens. The less these conditions are met — the less reliable, regular, and quick the supply — the bigger the latent part of productive capital has to be: that is, the bigger the stock of raw materials and so on, still waiting to be processed, sitting in the producer's hands. These conditions stand in inverse
relation to how far capitalist production has developed, and so to the productive power of social labour — and so does stock in this form.
Yet what looks here like a decrease in stock (in Lalor, for instance) is partly just a decrease in the stock taking the form of commodity-capital, the actual stock of commodities — that is, merely a change of form in the same stock. If, say, the mass of coal produced daily in the country itself is large — if the scale and vigour of coal production is high — then the spinner doesn't need a large coal store to secure the continuity of his production. The constant, reliable renewal of the coal supply makes that unnecessary.
Second: how fast the product of one process can pass, as a means of production, into another process depends on how developed transport and communication are. The cheapness of transport matters a great deal here. Constantly renewed transport of coal, say, from pit to spinning-mill, would cost more than bringing in a larger mass of coal for a longer stretch of time at relatively cheaper transport rates. Both of these circumstances — the two considered so far — spring from the production process itself.
Third, the development of the credit system also plays a part. The less the spinner depends, for renewing his stocks of cotton, coal, and so on, on immediately selling his yarn — and the more developed the credit system, the smaller that immediate dependence — the smaller these stocks can be relatively, while still securing continuous yarn production on a given scale, independent of the ups and downs of yarn sales.
Fourth, though, many raw materials and semi-finished goods need longer periods to be produced — this is especially true of everything agriculture supplies. If production is not to be interrupted, a certain stock of these has to be on hand for the whole stretch of time during which new product can't yet replace the old. If this stock shrinks in the hands of the industrial capitalist, that only shows it's growing, as a stock of commodities, in the hands of the merchant. The development of transport, for example, lets cotton lying in the import harbour move quickly from Liverpool to Manchester, so the manufacturer can renew his cotton stock in relatively small batches as needed. But then that same cotton sits in all the larger quantities as a stock of commodities in merchants' hands at Liverpool. So it's merely a change of form in the stock — something Lalor and others have missed. Looked at as social capital, the very same mass of product is, now as before, sitting there in the form of a stock.
For a single country, the amount that has to be ready, say, to cover a year's needs shrinks as transport develops. If many steamships and sailing ships go between America and England, the chances to renew England's cotton stock multiply, so the average mass of cotton that has to sit stored in England shrinks. The growth of the world market has the same effect, by multiplying the sources a single article can be drawn from — it's then supplied piecemeal from different countries at different times.
We've already seen that on the basis of capitalist production the commodity becomes the general form the product takes, and the more that basis develops in scope and depth, the more this holds. So there exists — even at the same scale of production — an unequally larger part of the product as commodity, compared either with earlier modes of production or with capitalist production at a less developed stage.
But every commodity — and so also all commodity-capital, which is only a commodity, but a commodity as the form capital-value takes — forms an element of the stock of commodities so far as it leaves its sphere of production without going straight into productive or individual consumption, that is, so far as it sits in the gap, found on the market. In itself, with the scale of production staying the same, the stock of commodities (that is, this independent fixing of the commodity-form of the product) therefore grows along with capitalist production.
We've already seen that this is only a change of form in the stock: on one side stock in commodity-form grows because, on the other side, it shrinks as a direct stock held for production or consumption. It's just an altered social form of the same stock. If, at the same time, not only the relative size of the stock of commodities grows against the total social product, but its absolute size too, that's because the total mass of the product grows along with capitalist production.
As capitalist production develops, the scale of production is decided less and less by direct demand for the product, and more and more by the size of capital the individual capitalist has at his disposal, by his capital's drive to expand itself, and by the need to keep his production process continuous and growing. This necessarily increases, in every particular branch, the mass of product sitting as a commodity on the market or looking for a buyer. The mass of capital fixed, for a shorter or longer time, in the form of commodity-capital grows. So the stock of commodities grows.
Finally, the greater part of society is turned into wage-labourers — people who live from hand to mouth, get their wages weekly and spend them daily, and so have to find their means of subsistence ready as a stock. However much the individual parts of this stock may keep flowing, some part of it always has to stand still, so that the stock as a whole can stay in flow.
All these factors spring from the form production takes, and from the change of form, bound up with that, which the product has to go through in the process of circulation.
Whatever social form the stock of products takes, keeping it in store costs something: buildings, containers, and the like, which hold the product; and also means of production and labour, more or less depending on what the product is, spent warding off damage. The more the stocks are concentrated socially, the relatively smaller these costs are.
These outlays are always a part of social labour, whether objectified or living — that is, in capitalist terms, outlays of capital — and they don't go into making the product itself, so they're deductions from it. They're necessary; they're extra costs of social wealth. They're the costs of keeping the social product intact, whether its existence as an element of the stock of commodities comes purely from the social form production takes — the commodity-form and the change of form it necessarily goes through — or whether we treat the stock of commodities as just one special version of the stock of products in general, something every society needs even where it doesn't take commodity-form: this form, belonging to the circulation process, that a stock of products takes.
The question now is: how far do these costs enter into the value of the commodities?
Suppose the capitalist has turned his capital, laid out in means of production and labour-power, into a finished mass of commodities meant for sale — and it sits there unsold. Then not only does the process of growing his capital's value stall for that whole time. The outlays needed to keep this stock — buildings, extra labour, and so on — are a straightforward loss.
The eventual buyer would laugh at him if he said: my goods sat unsold for six months, and keeping them through those six months not only tied up so much of my capital but cost me extra on top of that. So much the worse for you, says the buyer. There's another seller standing right next to you whose goods were only finished the day before yesterday. Yours have gone stale on the shelf, and are probably more or less the worse for wear. So you'll have to sell cheaper than your rival.
Whether the commodity-producer is the actual maker of his goods, or their capitalist producer — really just standing in for the actual makers — makes no difference to the conditions the commodity has to live under. He still has to turn his goods into money. The extra costs that fixing them in commodity-form causes him are his own private business, none of the buyer's concern. The buyer doesn't pay him for the time his goods spent sitting in circulation.
Even if the capitalist deliberately holds his goods off the market — whether values are actually shifting or he merely expects or suspects a shift — whether he gets back his extra costs depends on whether that shift arrives, and on whether his bet was right or wrong. But the shift in values is not a consequence of his extra costs. So, so far as forming a stock is a stoppage in circulation, the costs it causes add no value to the commodity.
On the other hand, no stock can exist without some stay in the sphere of circulation, without capital sitting, for a longer or shorter time, in its commodity-form — so no stock without a stoppage in circulation, exactly as no money can circulate without a money reserve forming somewhere. So: no circulation of commodities without a stock of commodities. If this necessity doesn't confront the capitalist on the selling side, it confronts him on the buying side — not for his own commodity-capital, but for the commodity-capital of other capitalists, who supply him with means of production, and his workers with means of subsistence.
Whether forming a stock is voluntary or not — whether the commodity-producer holds a stock on purpose, or his goods pile up as a stock because the circulation process itself resists their sale — seems, on the face of it, to make no difference to what's really going on. Still, it's worth knowing what tells voluntary stock-formation apart from involuntary, in order to settle the question.
Involuntary stock-formation springs from, or amounts to, a stoppage in circulation that the commodity-producer knows nothing of and that gets in the way of what he wants. What marks out voluntary stock-formation? As always, the seller is trying to get rid of his goods as fast as he can. He keeps offering the product as a
commodity for sale. If he held it back from sale, it would only form a possible, not an actual, element of the stock of commodities. The commodity, as such, is for him still nothing but the carrier of its exchange-value, and it can only do its work once it has shed its commodity-form and taken on the form of money.
The stock of commodities has to be a certain size to cover the extent of demand over a given period. This reckoning assumes the circle of buyers keeps expanding. To last through a day, say, part of the goods on the market has to sit constantly in commodity-form while the rest flows, turning into money. The part that stands still while the rest flows keeps shrinking, just as the whole stock keeps shrinking, until it's all finally sold. So here, goods standing still is reckoned as a necessary condition for selling them.
The size of the stock also has to be bigger than average sales, or the average level of demand — otherwise any surge above that couldn't be met. On the other hand, the stock has to be constantly renewed, because it's constantly being used up. In the end, this renewal can only come from production, from a fresh supply of goods — whether from abroad or not makes no difference. The renewal depends on how long the goods take to be reproduced; the stock has to last through that whole stretch.
That the stock doesn't stay in the original producer's hands but passes through various stores, from the big merchant down to the retailer, only changes how it looks, not what it is. Looked at socially, some part of the capital is still, now as before, sitting there in the form of a stock of commodities, for as long as the goods haven't gone into productive or individual consumption.
The producer himself tries to keep a stock matching his average demand, so as not to depend directly on production, and to secure himself a steady set of customers. In line with the rhythms of production, buying takes place at set intervals, and the goods form a stock for a longer or shorter time, until they can be replaced by fresh goods of the same kind. Only by forming this stock is the steadiness and continuity of the circulation process secured — and so of the reproduction process, which includes circulation within it.
It's worth remembering: the sale of a commodity can be complete for its producer even though the commodity is still sitting on the market. If a producer wanted to keep his own goods in storage himself, until they're sold to the final consumer, he'd have to run two capitals at once: one as producer of the goods, the other as merchant. For the commodity itself — whether you look at it as a single item or as part of social capital — it makes no difference whether the costs of forming a stock fall on its producer, or on a whole chain of merchants from one end to the other.
So far as the stock of commodities is nothing but the commodity-form of a stock that, at a given scale of social production, would exist anyway — either as a productive stock (a latent fund for production) or as a fund of consumption (a reserve of means of consumption) — even if it never took the form of a stock of commodities, then the costs of keeping that stock, the costs of forming it, meaning the objectified or living labour spent on it, are simply the same maintenance costs in a different guise: costs of keeping up either the social fund of production or the social fund of consumption.
The rise in the commodity's value that these costs cause only spreads them out, pro rata, across the different commodities, since the costs differ for different kinds of goods. Costs of forming a stock remain, now as before, deductions from social wealth — even though they're also a condition for that wealth to exist at all.
Only so far as the stock of commodities is a condition of commodity circulation, and is itself a form that necessarily arises within commodity circulation — only so far as this apparent standstill is itself a form the flow takes, just as forming a money reserve is a condition of money circulation — only so far is it normal.
But as soon as the goods sitting in their circulation reservoirs fail to make room for the next wave coming from production — that is, as soon as the reservoirs get overfull — the stock of commodities expands because of a stoppage in circulation, exactly as hoards of money grow when money circulation stalls. It makes no difference whether this stoppage happens in the industrial capitalist's own storerooms or in the merchant's warehouses. The stock of commodities is then no longer a condition for uninterrupted selling, but a result of the goods being unsellable.
The costs stay the same, but since they now spring purely from the form — from the sheer need to turn the goods into money, and the difficulty of doing so — they don't enter into the value of the commodity. Instead they form deductions, a loss of value in the act of realizing that value.
Since the normal and the abnormal form of the stock don't look any different, and both are stoppages in circulation, the two can be mixed up — and all the more so because the very people producing can be fooled: the circulation of a producer's capital can be running smoothly even while the circulation of his goods, once they've passed into merchants' hands, has stalled. If the scale of production and consumption swells, then, other things equal, so does the scale of the stock of commodities — it's renewed and used up just as fast, only on a bigger scale. So a stock of commodities swelling because of a stoppage in circulation can be mistaken for a sign that reproduction is expanding — especially once the credit system develops far enough to disguise what's actually happening.
The costs of forming a stock consist of: first, a quantitative shrinkage in the mass of the product (with a stock of flour, say); second, decay in its quality; third, the objectified and living labour that keeping the stock requires.
No need to go through every detail of circulation costs here — packing, sorting, and the rest. The general law is this: any circulation cost that arises purely from the commodity changing form adds no value to the commodity. Such costs only realize the value already there, or carry it from one form into another. The capital laid out on them — including the labour it commands — counts among the faux frais, the incidental costs, of capitalist production. Making up for them has to come out of the surplus product, and for the capitalist class as a whole they are a deduction from surplus-value or surplus product — much as the time a worker spends buying their means of subsistence is time lost to them. But transport costs matter too much to pass over without a closer look.
Within the circuit of capital, and within the metamorphosis of commodities that forms one stage of it, the metabolism of social labour is carried out. This metabolism may require the products to change place — their actual movement from one spot to another. But commodities can circulate without any physical movement, and products can be transported without any commodity circulating, and even without any direct exchange of products at all. A house that A sells to B circulates as a commodity, but it does not go for a walk. Movable commodity-values such as cotton or pig iron can sit in the very same warehouse the whole time, while they
run through dozens of circulation processes, bought and sold again and again by speculators. What really moves here is the title of ownership to the thing, not the thing itself. In the empire of the Incas, on the other hand, the transport industry played a large role, even though the social product neither circulated as a commodity nor was distributed by way of exchange.
So when the transport industry, on the basis of capitalist production, appears as a cause of circulation costs, this particular form of appearance changes nothing about the underlying fact.
Transporting a mass of products does not increase how much of it there is. And apart from certain exceptions, whatever change transport happens to work on a product's natural properties is not an intended benefit but an unavoidable harm. But the use-value of things is only realized in their consumption, and consuming them may require them to change place — hence the further, additional production process carried out by the transport industry. So the productive capital laid out in that process adds value to the transported products: partly by transferring value from the means of transport, partly by adding new value through the labour of transport. That latter portion, as in all capitalist production, splits into replacement of wages and surplus-value.
Within every production process, the change of place of the object being worked on — and of the tools and labour it takes to move it — plays a large role: cotton moving from the carding room to the spinning room, say, or coal being hoisted from the pit to the surface. The passage of the finished product, as a finished commodity, from one self-contained place of production to another, separate one, is the very same phenomenon, only on a larger scale. After the transport of products from one place of production to another comes a further transport still: that of the finished products from the sphere of production to the sphere of consumption. The product is only ready for consumption once it has completed this movement in full.
As shown earlier, it is a general law of commodity production that the productive power of labour and the value that labour creates stand in inverse proportion to each other. This holds for the transport industry as much as for any other. The smaller the quantity of labour, dead and living, that carrying the
goods a given distance requires, the greater the productive power of that labour — and the other way around.
The absolute amount of value that transport adds to commodities stands, other things being equal, in inverse proportion to the productive power of the transport industry, and in direct proportion to the distances covered.
The relative share of value that transport costs add to a commodity's price, other things being equal, stands in direct proportion to the commodity's bulk and its weight. But there are many complicating factors. Transport calls for more or less care — and so more or less expenditure of labour and equipment — depending on how fragile, perishable, or explosive the article happens to be. Here the railway magnates show more ingenuity at inventing fantastical categories than any botanist or zoologist. The classification of goods on English railways, for instance, fills volumes, and it tends to turn the many different natural properties of goods into just as many transport ailments and built-in excuses for overcharging.
One witness testified: 'Glass that used to cost 11 pounds a crate' — a crate being a packing case of a set size — 'is now worth only 2 pounds, thanks to industrial progress and the abolition of the glass tax. But the cost of carrying it is as high as ever, and higher still by canal. Glass and glassware for leadwork used to be carried within 50 miles of Birmingham at 10 shillings a ton. Now the transport price has trebled, on the excuse of the risk from the article's fragility. But it is not the railway company that pays for what actually gets broken.'
That the relative share of value which transport costs add to an article stands in inverse proportion to that article's value becomes, for the railway magnates, a special reason to tax the article in direct proportion to its value instead. The complaints of manufacturers and merchants on this point recur on every page of the witness testimony in the report cited.
Capitalist production cuts the transport cost per individual commodity by developing the means of transport and communication, and by concentrating transport — increasing its scale. But it increases the share of social labour, living and stored up, that is spent transporting commodities — first by turning the vast majority of products into commodities at all, and then by replacing local markets with distant ones.
Circulation — the commodities' actual movement through space — resolves into the transport of the commodity. On the one hand, the transport industry forms an independent branch of production, and so a distinct sphere for investing productive capital. On the other hand, it is distinguished by appearing as the continuation of a production process within the circulation process and for the circulation process.
When capital changes shape - from goods into money, and from money into goods - that change happens through the capitalist's own dealings: acts of buying and selling. From his own point of view, the time these changes take is selling-time and buying-time - the time he spends on the market as seller and as buyer.
Just as circulation-time is a necessary part of capital's whole reproduction-time, the time the capitalist spends buying and selling, moving about the market, is a necessary part of his time functioning as a capitalist - that is, as capital in human form. It is part of his working day as a man of business - a necessary cost, as we shall see, that adds no value of its own.
We have been assuming that goods are bought and sold at their values. On that assumption, these dealings only shift the same value from one form into another - from the form of a good into the form of money, and from money back into a good. It is a change of state, nothing more.
If goods sell at their values, the amount of value stays exactly the same in the hands of both buyer and seller; only the shape it exists in has changed. And if goods do not sell at their values, the total sum of value exchanged still stays the same - what one side gains, the other loses.
The changes from goods into money and money into goods are dealings between a buyer and a seller. They take time to settle, all the more because each side is trying to get the better of the other - business people facing off, as the saying goes, "when Greek meets Greek then comes the tug of war". This change of state costs time and labour-power, but not in order to create value - only to carry out the shift of value from one form into another. That both sides try, in the process, to grab some extra value for themselves changes nothing about this. The labour spent haggling, swollen as it is by ill will on both sides, creates value no more than the labour spent on a lawsuit increases the value of the thing being fought over.
This labour is a necessary part of the capitalist process of production taken as a whole — a whole that includes circulation, or that is itself included within circulation. It behaves rather like the work of burning a fuel to produce heat. Burning coal does not itself create heat, even though it is a necessary step in producing heat. To burn coal, I have to combine it with oxygen and so turn it from a solid into a gas - since in the carbon dioxide that combustion produces, the carbon is in gas form. That is, I have to bring about a change of physical state. Before the new bonding can happen, the carbon molecules bound together in a solid lump have to be pulled apart, and the carbon molecule itself split into separate atoms - and this costs a certain expenditure of force, which is therefore not turned into heat but subtracted from it.
Where the owners of goods are not capitalists but independent producers working for themselves, the time spent buying and selling is simply time taken away from their working time - which is why, in antiquity as in the Middle Ages, they always tried to push such business onto holidays.
However large commodity-turnover grows in the hands of capitalists, this cannot turn labour that creates no value - labour that only carries value from one form into another - into value-creating labour. Nor can this miracle of transformation be brought about by simply handing the job to someone else: by industrial capitalists, instead of doing that "work of combustion" themselves, making it the exclusive business of other people whom they pay. Those other people will naturally not put their labour-power at the capitalists' disposal out of love for their beautiful eyes. It is equally beside the point to the rent-collector working for a landowner, or the porter carrying money for a bank, that their labour does not increase the value of the rent, or of the sacks of gold coin carried to another bank, by one jot.
For the capitalist who has others work for him, buying and selling becomes a chief business. Since he takes possession of the product of many workers on a large social scale, he also has to sell it on that scale, and later turn the money back into the elements of production. As before, none of this buying-and-selling time creates value. An illusion does creep in here, through the working of merchant's capital - though this is not the place to go into that. But this much is clear from the outset: when the division of labour turns a function that is in itself unproductive, yet a necessary part of reproduction, from something many people do on the side into the exclusive business of a few - into their own special trade - the character of the function itself does not change. A merchant, considered here purely as an agent who changes the form of goods, a mere buyer and seller, may through his work shorten the buying-and-selling time for many producers. He should then be seen as a kind of machine: one that cuts down wasted effort, or helps free up time for actual production.
To keep things simple - we will look at the merchant as a capitalist, and at merchant's capital, later - let us assume this go-between who buys and sells is a man who sells his own labour. He spends his labour-power and his labour-time on these operations, goods into money and money into goods, and lives off it, just as another man lives off spinning or making pills. He is performing a necessary function, because the process of reproduction itself includes functions that are unproductive. He works as hard as the next man, but the content of his work creates neither value nor product. He himself belongs among the faux frais - the incidental, unavoidable costs - of production. His usefulness does not lie in turning an unproductive function into a productive one, or unproductive labour into productive labour: it would be a miracle if simply handing the job to someone else could achieve that. His usefulness lies, rather, in the fact that a smaller share of society's labour-power and labour-time ends up tied down in this unproductive function.
There is more to say. Suppose he is a plain wage-worker - better paid, if you like. Whatever his wage, as a wage-worker he works part of his day for nothing. Say he is paid the value produced by eight hours' work, but works ten. The two hours of surplus labour he puts in create no more value than his eight hours of necessary labour do - even though it is through those eight hours that a share of the social product is handed over to him. First: society as a whole is still using up one worker's labour-power for ten hours on this mere function of circulation — labour-power fit for nothing else, certainly not for productive work. But second: society does not pay for those two hours of surplus labour, even though the man performs them. Society gains no extra product or value from this. What happens instead is that the circulation costs he stands for shrink by a fifth, from ten hours to eight: society pays no equivalent for a fifth of the working time this agent spends on active circulation.
But where it is a capitalist who employs this agent, not paying for those two hours reduces the circulation costs charged against his capital - costs that are a deduction from his income. For the capitalist this is a straightforward gain, because it narrows the ceiling that limits how far his capital can be valorized. As long as small independent producers spend part of their own time buying and selling, this shows up for them only as time spent in the gaps between their productive work, or as a bite taken out of their production time.
Whatever the circumstances, the time spent on this adds nothing to the values being exchanged - it is simply the cost of translating them out of the form of goods and into the form of money. As long as the capitalist producer of goods is himself acting as the agent of circulation, he differs from the independent producer only in that he sells and buys on a larger scale, and so acts as circulation-agent on a larger scale too. But once the size of his business forces or allows him to buy in - to hire - his own circulation agents as wage-workers, nothing about the substance of the matter changes. Labour-power and labour-time still have to be spent, to some degree, on the process of circulation, so far as that process is a mere change of form. But this now shows up as an extra outlay of capital: part of the variable capital has to go on buying these workers who function only in circulation. This advance of capital creates neither product nor value. It reduces, correspondingly, the share of the advanced capital that functions productively. It is as if part of the product were turned into a machine that buys and sells the rest of the product. That machine takes a cut out of the product. It plays no part in the process of production, even though it may cut down the labour-power spent on circulation. It is simply one part of the costs of circulation.
Besides the actual buying and selling, labour-time is spent on bookkeeping - which also draws in labour already fixed in things: pen, ink, paper, a writing-desk, office costs generally. So this function too uses up labour-power on one side and means of labour on the other. It works exactly like buying-and-selling time.
As a single moving whole across its circuits - as value in process, whether inside the sphere of production or across the two stages of the sphere of circulation - capital exists only in idea, in the shape of money of account: first of all inside the head of the producer of goods, or of the capitalist producer of goods. Bookkeeping - which also covers fixing prices, working out what goods should cost - pins this movement down and keeps it under control. The movement of production, and above all of the growth of value, in which goods figure only as carriers of value, as names for things whose ideal existence as value is fixed in money of account, gets, in this way, a symbolic picture in the mind.
As long as an individual producer of goods either only keeps his books in his head - as the peasant does; it is capitalist agriculture that first produces the book-keeping tenant farmer - or only keeps, on the side, outside his production-time, a book of his outgoings, income, payment dates and so on, it is plain to see that this activity of his, and whatever means of labour he uses for it, such as paper, are an extra use of labour-time and means of labour. They are necessary, but they are still a deduction - both from the time he could otherwise spend productively, and from the means of labour that are actually at work in the process of production, going into the making of product and value. The nature of the function itself does not change - not through the scale it takes on once it is gathered into the hands of the capitalist producer of goods and appears, instead of as the sideline of many small producers, as the business of a single capitalist, a function within a production process on a large scale; and not through being torn loose from the productive functions it was once an appendage of, and becoming its own separate function, carried out by agents whose only job it is.
Dividing up labour, and letting a function stand on its own, does not make that function create product or value - not unless it already did so before it became independent. If a capitalist puts fresh capital into his business, he has to lay out part of it on hiring a bookkeeper and the like, and on the means of keeping books. And once his capital is already at work, caught up in its constant round of reproduction, he has to keep converting part of the commodity-product, by turning it into money, back into bookkeepers, clerks, and so on. This part of his capital is withdrawn from the process of production and counts among the costs of circulation - a deduction from the total return. (This includes the labour-power itself that is used for nothing but this function.)
There is, though, a real difference between the costs that come from bookkeeping - the unproductive spending of labour-time there - and the costs of mere buying-and-selling time. The second kind arises only from the particular social form the process of production takes: from the fact that it is a process of producing goods. Bookkeeping, as a way of controlling and mentally summing up the process, becomes more necessary the more the process runs on a social scale and loses its purely individual character - so it is more necessary under capitalist production than in the scattered production of craft workshops and peasant farms, and more necessary again under production organized in common than under capitalist production. But the costs of bookkeeping themselves shrink as production becomes more concentrated, and the more it turns into a single, social act of bookkeeping.
The point here is only the general character of the costs of circulation that arise from the mere change of form. There is no need to go through every detailed shape they take. But forms that belong to this pure change of form of value - and so arise from the particular social form of the process of production - are, for the individual producer of goods, only fleeting, barely noticeable moments running alongside his productive work, or tangled up with it. How these same costs can strike the eye as costs of circulation on a massive scale is easy to see in the simple business of taking in and paying out money, once that has been made the sole business of banks and the like, or of the cashier in an individual firm, and gathered together on a large scale. What matters is to hold onto this: these costs of circulation do not change their character just because their shape has changed.
Whether or not a product is produced as a commodity, it is always a material form of wealth - a use-value, meant to go into consumption, whether by a person or by production. As a commodity, its value exists only in idea, in its price, which changes nothing about its actual, usable shape. But that certain commodities - gold and silver - function as money, and as such live exclusively inside the process of circulation (even as a hoard, a reserve, and so on, they stay within the sphere of circulation, if only in a dormant way), is purely a product of the particular social form the process of production takes: the fact that it is a process of producing commodities. Because, on the basis of capitalist production, the commodity becomes the general shape of the product, and because the greatest mass of the product is produced as a commodity and so has to take on the form of money - because, in other words, the mass of commodities, the share of social wealth that functions as a commodity, keeps growing - so too does the amount of gold and silver serving as means of circulation, means of payment, reserve, and so on.
Gold and silver used in this way, as means of circulation, payment, and reserve, keep growing in amount. These commodities that function as money go into neither personal consumption nor productive consumption. They are social labour, fixed in a form where all it does is serve as a mere machine for circulation. Besides tying up part of social wealth in this unproductive form, the wear and tear on money constantly demands that it be replaced - that more social labour, in the shape of products, be turned into more gold and silver. These replacement costs are considerable in capitalistically developed nations, because the share of wealth bound up in the form of money is, generally, extensive there. Gold and silver, as the commodities that serve as money, form costs of circulation for society - costs that arise only from the social form production takes. They are faux frais of commodity production in general, which grow as commodity production develops, and especially as capitalist production develops. They are a part of social wealth that has to be sacrificed to the process of circulation.
Circulation costs that arise from a mere change in the form of value — from circulation looked at ideally — don't enter into the value of commodities. The parts of capital laid out on them are mere deductions from the capital laid out productively, so far as the capitalist is concerned. The circulation costs we're now looking at are of a different nature. They can spring from production processes that are simply continued within circulation, so that their productive character is only hidden by the form of circulation. On the other hand, looked at socially, they can be mere costs, unproductive expenditure of either living or objectified labour, and yet, precisely because of that, act as value-forming for the individual capitalist, adding to the sale price of his commodity. This already follows from the fact that these costs differ from one sphere of production to another, and even, in places, between different individual capitals within the same sphere. Through their
addition to the price of the commodity, they get distributed according to how they fall on individual capitalists. But all labour that adds value can also add surplus value, and on a capitalist basis it always will: the value it forms depends on its own size, while the surplus value it forms depends on how much the capitalist pays for it. So costs that make a commodity dearer without adding any use-value to it — costs that, for society, belong among the incidental expenses (faux frais) of production — can still be a source of enrichment for the individual capitalist.
On the other hand, where the addition to price merely spreads these circulation costs out evenly, that doesn't stop them being unproductive. Insurance companies, for instance, spread individual capitalists' losses across the whole capitalist class. But that doesn't stop those evened-out losses from still being losses, once you look at the total social capital.
For as long as it exists as commodity-capital, staying on the market — that is, in the gap between the production process it comes out of and the consumption process it goes into — the product forms a stock of commodities. As a commodity on the market, and so in the shape of a stock, commodity-capital turns up twice in every circuit: once as the commodity-product of the very capital whose circuit we're tracing, and again as the commodity-product of some other capital, which has to be found ready on the market so that it can be bought and turned into productive capital.
It's true this second commodity-capital might only be made to order — in which case there's a gap until it's produced. But the smooth flow of production and reproduction requires that a mass of commodities (means of production) is constantly to be found on the market — that is, forms a stock. In the same way, productive capital includes the purchase of labour-power, and here money is only the value-form of means of subsistence which the worker mostly has to find ready-made on the market. We'll come back to this more closely later in this paragraph. For now, this much is established: if we take the standpoint of the capital-value in process that has turned into a commodity-product and now has to be sold, turned back into money — that now works as commodity-capital on the market — then sitting there as a stock is an involuntary stay on the
market that runs against its whole purpose. The faster it sells, the more smoothly the reproduction process runs. Sitting in the change of form from commodity back to money holds up the real exchange of matter that has to take place in the circuit of capital, just as it holds up capital's further working as productive capital.
But looked at from the other side — from money turning into commodities — the constant presence of goods on the market, the stock of commodities, appears as a condition for the reproduction process to flow, and just as much a condition for laying out new or extra capital.
For commodity-capital to sit on the market as a stock of commodities calls for buildings, warehouses, containers for the goods, storage space — that is, an outlay of constant capital — and just as much for paying labour-power to put the goods into storage. On top of that, goods spoil and are exposed to damaging natural forces. Guarding against this needs extra capital laid out, partly in means of labour, in physical form, and partly in labour-power.
So capital's existence in the form of commodity-capital, and therefore as a stock of commodities, causes costs which, since they don't belong to the sphere of production, count as circulation costs. These circulation costs differ from the ones listed under I in that they do, to some extent, enter into the value of the commodities — that is, they make the commodity dearer.
In every case, the capital and labour-power used to keep and store the stock of commodities are withdrawn from the direct process of production. On the other hand, the capital applied here, labour-power included, still has to be replaced out of the social product, as a component of capital. So laying it out acts like a drop in the productive power of labour: a larger quantity of capital and labour is needed to get the same useful effect. These are extra costs.
Now, so far as the circulation costs caused by forming a stock of commodities spring only from how long it takes for values that already exist to change from commodity-form into money-form — that is, only from the particular social
form of the production process (only from the fact that the product is produced as a commodity and so must also go through the change into money) — they fully share the character of the circulation costs listed under I.
But on the other hand, here the value of the commodities is only preserved, or even increased, because the use-value — the product itself — is placed under certain physical conditions that cost capital to provide, and undergoes operations that put extra labour into the use-values. Working out commodity-values, keeping the books on that process, buying and selling — none of that touches the use-value in which the commodity's value exists. All of that deals only with its form.
So although, in the case we're assuming, these extra costs of forming a stock (which here is involuntary) come purely from a delay in changing form and from the need for that delay, they still differ from the extra costs under I in this: what they're aimed at isn't the change of form of value but the preservation of value — value that exists in the commodity as product, as use-value, and so can only be kept by keeping the product, the use-value itself, intact. Here the use-value is neither raised nor increased — if anything it falls. But its fall is held in check, and it's preserved. Nor is the value already advanced, sitting in the commodity, increased here either. But new labour, both objectified and living, is added to it.
It now needs looking into further: how far do these extra costs spring from the special character of commodity production as such, and of commodity production in its general, full-blown form — that is, capitalist commodity production — and how far, on the other hand, are they common to all social production, only taking a special shape here, a special way of appearing, within capitalist production.
A. Smith put forward the fantastic view that forming a stock is a phenomenon peculiar to capitalist production. More recent economists, Lalor for instance, claim the opposite: that it decreases as capitalist production develops. Sismondi even treats this as one of capitalism's drawbacks.
In fact, stock exists in three forms: as productive capital, as an individual fund of consumption, and as a stock of commodities, or commodity-capital. Stock in one of these forms decreases relatively when it grows in another, even though its absolute size might grow in all three forms at once.
It's clear from the outset that where production is aimed directly at meeting one's own needs, and only a small part is produced for exchange or sale — so that the social product takes the commodity-form not at all, or only to a small extent — stock in the form of a commodity forms only a small, vanishing part of wealth. But here the fund of consumption is relatively large, especially of actual means of subsistence. One only has to look at old-fashioned peasant farming. Here the greater part of the product turns directly — without ever forming a stock of commodities, precisely because it stays in the hands of its owner — into a stock of means of production or means of subsistence held ready.
It doesn't take the form of a stock of commodities, and precisely for that reason A. Smith holds that in societies built on this kind of production there's no stock at all. A. Smith mixes up the form the stock takes with the stock itself, and thinks that such societies have always lived from hand to mouth, trusting to the luck of the next day. It's a childish misunderstanding.
Stock in the form of productive capital exists as means of production that are already inside the production process, or at least in the producer's hands — that is, already latent within the production process. We saw earlier that as the productive power of labour develops — and so also as the capitalist mode of production develops, which raises the social productive power of labour more than any earlier mode of production did — the mass of means of production built once and for all into the process as instruments of labour, working over and over across a longer or shorter period (buildings, machines, and so on), keeps growing, and that this growth is both a condition for and a result of the growing social productive power of labour. This growth of wealth in this form — not just absolute but relative (see Volume 1, Chapter XXIII, 2) — is above all a mark of the capitalist mode of production.
But the material shapes constant capital takes, the means of production, don't consist only of such instruments of labour: they also include material being worked on at every stage of processing, and auxiliary materials. As the scale of production grows, and the productive power of labour rises through cooperation, division of labour, machinery, and so on, the mass of raw material and auxiliary materials entering the daily reproduction process grows too. These things have to lie ready at the place of production. So the size of this stock existing as productive capital grows in absolute terms.
For the process to keep flowing — quite apart from whether this stock can be renewed daily or only at set intervals — there always has to be more raw material and the like piled up and ready at the workplace than gets used, say, daily or weekly. The continuity of the process demands that its conditions don't depend either on possible breaks in daily buying, or on the commodity-product being sold daily or weekly and so only turned back irregularly into its production elements.
Still, productive capital can clearly lie latent, or form a stock, on very different scales. It makes a real difference, say, whether a spinner needs cotton or coal lying ready for three months or for one. So you can see this stock can shrink relatively even while it grows in absolute terms.
This depends on various conditions, which essentially all come down to how quickly, regularly, and reliably the needed mass of raw material can be delivered, so that no break ever happens. The less these conditions are met — the less reliable, regular, and quick the supply — the bigger the latent part of productive capital has to be: that is, the bigger the stock of raw materials and so on, still waiting to be processed, sitting in the producer's hands. These conditions stand in inverse
relation to how far capitalist production has developed, and so to the productive power of social labour — and so does stock in this form.
Yet what looks here like a decrease in stock (in Lalor, for instance) is partly just a decrease in the stock taking the form of commodity-capital, the actual stock of commodities — that is, merely a change of form in the same stock. If, say, the mass of coal produced daily in the country itself is large — if the scale and vigour of coal production is high — then the spinner doesn't need a large coal store to secure the continuity of his production. The constant, reliable renewal of the coal supply makes that unnecessary.
Second: how fast the product of one process can pass, as a means of production, into another process depends on how developed transport and communication are. The cheapness of transport matters a great deal here. Constantly renewed transport of coal, say, from pit to spinning-mill, would cost more than bringing in a larger mass of coal for a longer stretch of time at relatively cheaper transport rates. Both of these circumstances — the two considered so far — spring from the production process itself.
Third, the development of the credit system also plays a part. The less the spinner depends, for renewing his stocks of cotton, coal, and so on, on immediately selling his yarn — and the more developed the credit system, the smaller that immediate dependence — the smaller these stocks can be relatively, while still securing continuous yarn production on a given scale, independent of the ups and downs of yarn sales.
Fourth, though, many raw materials and semi-finished goods need longer periods to be produced — this is especially true of everything agriculture supplies. If production is not to be interrupted, a certain stock of these has to be on hand for the whole stretch of time during which new product can't yet replace the old. If this stock shrinks in the hands of the industrial capitalist, that only shows it's growing, as a stock of commodities, in the hands of the merchant. The development of transport, for example, lets cotton lying in the import harbour move quickly from Liverpool to Manchester, so the manufacturer can renew his cotton stock in relatively small batches as needed. But then that same cotton sits in all the larger quantities as a stock of commodities in merchants' hands at Liverpool. So it's merely a change of form in the stock — something Lalor and others have missed. Looked at as social capital, the very same mass of product is, now as before, sitting there in the form of a stock.
For a single country, the amount that has to be ready, say, to cover a year's needs shrinks as transport develops. If many steamships and sailing ships go between America and England, the chances to renew England's cotton stock multiply, so the average mass of cotton that has to sit stored in England shrinks. The growth of the world market has the same effect, by multiplying the sources a single article can be drawn from — it's then supplied piecemeal from different countries at different times.
We've already seen that on the basis of capitalist production the commodity becomes the general form the product takes, and the more that basis develops in scope and depth, the more this holds. So there exists — even at the same scale of production — an unequally larger part of the product as commodity, compared either with earlier modes of production or with capitalist production at a less developed stage.
But every commodity — and so also all commodity-capital, which is only a commodity, but a commodity as the form capital-value takes — forms an element of the stock of commodities so far as it leaves its sphere of production without going straight into productive or individual consumption, that is, so far as it sits in the gap, found on the market. In itself, with the scale of production staying the same, the stock of commodities (that is, this independent fixing of the commodity-form of the product) therefore grows along with capitalist production.
We've already seen that this is only a change of form in the stock: on one side stock in commodity-form grows because, on the other side, it shrinks as a direct stock held for production or consumption. It's just an altered social form of the same stock. If, at the same time, not only the relative size of the stock of commodities grows against the total social product, but its absolute size too, that's because the total mass of the product grows along with capitalist production.
As capitalist production develops, the scale of production is decided less and less by direct demand for the product, and more and more by the size of capital the individual capitalist has at his disposal, by his capital's drive to expand itself, and by the need to keep his production process continuous and growing. This necessarily increases, in every particular branch, the mass of product sitting as a commodity on the market or looking for a buyer. The mass of capital fixed, for a shorter or longer time, in the form of commodity-capital grows. So the stock of commodities grows.
Finally, the greater part of society is turned into wage-labourers — people who live from hand to mouth, get their wages weekly and spend them daily, and so have to find their means of subsistence ready as a stock. However much the individual parts of this stock may keep flowing, some part of it always has to stand still, so that the stock as a whole can stay in flow.
All these factors spring from the form production takes, and from the change of form, bound up with that, which the product has to go through in the process of circulation.
Whatever social form the stock of products takes, keeping it in store costs something: buildings, containers, and the like, which hold the product; and also means of production and labour, more or less depending on what the product is, spent warding off damage. The more the stocks are concentrated socially, the relatively smaller these costs are.
These outlays are always a part of social labour, whether objectified or living — that is, in capitalist terms, outlays of capital — and they don't go into making the product itself, so they're deductions from it. They're necessary; they're extra costs of social wealth. They're the costs of keeping the social product intact, whether its existence as an element of the stock of commodities comes purely from the social form production takes — the commodity-form and the change of form it necessarily goes through — or whether we treat the stock of commodities as just one special version of the stock of products in general, something every society needs even where it doesn't take commodity-form: this form, belonging to the circulation process, that a stock of products takes.
The question now is: how far do these costs enter into the value of the commodities?
Suppose the capitalist has turned his capital, laid out in means of production and labour-power, into a finished mass of commodities meant for sale — and it sits there unsold. Then not only does the process of growing his capital's value stall for that whole time. The outlays needed to keep this stock — buildings, extra labour, and so on — are a straightforward loss.
The eventual buyer would laugh at him if he said: my goods sat unsold for six months, and keeping them through those six months not only tied up so much of my capital but cost me extra on top of that. So much the worse for you, says the buyer. There's another seller standing right next to you whose goods were only finished the day before yesterday. Yours have gone stale on the shelf, and are probably more or less the worse for wear. So you'll have to sell cheaper than your rival.
Whether the commodity-producer is the actual maker of his goods, or their capitalist producer — really just standing in for the actual makers — makes no difference to the conditions the commodity has to live under. He still has to turn his goods into money. The extra costs that fixing them in commodity-form causes him are his own private business, none of the buyer's concern. The buyer doesn't pay him for the time his goods spent sitting in circulation.
Even if the capitalist deliberately holds his goods off the market — whether values are actually shifting or he merely expects or suspects a shift — whether he gets back his extra costs depends on whether that shift arrives, and on whether his bet was right or wrong. But the shift in values is not a consequence of his extra costs. So, so far as forming a stock is a stoppage in circulation, the costs it causes add no value to the commodity.
On the other hand, no stock can exist without some stay in the sphere of circulation, without capital sitting, for a longer or shorter time, in its commodity-form — so no stock without a stoppage in circulation, exactly as no money can circulate without a money reserve forming somewhere. So: no circulation of commodities without a stock of commodities. If this necessity doesn't confront the capitalist on the selling side, it confronts him on the buying side — not for his own commodity-capital, but for the commodity-capital of other capitalists, who supply him with means of production, and his workers with means of subsistence.
Whether forming a stock is voluntary or not — whether the commodity-producer holds a stock on purpose, or his goods pile up as a stock because the circulation process itself resists their sale — seems, on the face of it, to make no difference to what's really going on. Still, it's worth knowing what tells voluntary stock-formation apart from involuntary, in order to settle the question.
Involuntary stock-formation springs from, or amounts to, a stoppage in circulation that the commodity-producer knows nothing of and that gets in the way of what he wants. What marks out voluntary stock-formation? As always, the seller is trying to get rid of his goods as fast as he can. He keeps offering the product as a
commodity for sale. If he held it back from sale, it would only form a possible, not an actual, element of the stock of commodities. The commodity, as such, is for him still nothing but the carrier of its exchange-value, and it can only do its work once it has shed its commodity-form and taken on the form of money.
The stock of commodities has to be a certain size to cover the extent of demand over a given period. This reckoning assumes the circle of buyers keeps expanding. To last through a day, say, part of the goods on the market has to sit constantly in commodity-form while the rest flows, turning into money. The part that stands still while the rest flows keeps shrinking, just as the whole stock keeps shrinking, until it's all finally sold. So here, goods standing still is reckoned as a necessary condition for selling them.
The size of the stock also has to be bigger than average sales, or the average level of demand — otherwise any surge above that couldn't be met. On the other hand, the stock has to be constantly renewed, because it's constantly being used up. In the end, this renewal can only come from production, from a fresh supply of goods — whether from abroad or not makes no difference. The renewal depends on how long the goods take to be reproduced; the stock has to last through that whole stretch.
That the stock doesn't stay in the original producer's hands but passes through various stores, from the big merchant down to the retailer, only changes how it looks, not what it is. Looked at socially, some part of the capital is still, now as before, sitting there in the form of a stock of commodities, for as long as the goods haven't gone into productive or individual consumption.
The producer himself tries to keep a stock matching his average demand, so as not to depend directly on production, and to secure himself a steady set of customers. In line with the rhythms of production, buying takes place at set intervals, and the goods form a stock for a longer or shorter time, until they can be replaced by fresh goods of the same kind. Only by forming this stock is the steadiness and continuity of the circulation process secured — and so of the reproduction process, which includes circulation within it.
It's worth remembering: the sale of a commodity can be complete for its producer even though the commodity is still sitting on the market. If a producer wanted to keep his own goods in storage himself, until they're sold to the final consumer, he'd have to run two capitals at once: one as producer of the goods, the other as merchant. For the commodity itself — whether you look at it as a single item or as part of social capital — it makes no difference whether the costs of forming a stock fall on its producer, or on a whole chain of merchants from one end to the other.
So far as the stock of commodities is nothing but the commodity-form of a stock that, at a given scale of social production, would exist anyway — either as a productive stock (a latent fund for production) or as a fund of consumption (a reserve of means of consumption) — even if it never took the form of a stock of commodities, then the costs of keeping that stock, the costs of forming it, meaning the objectified or living labour spent on it, are simply the same maintenance costs in a different guise: costs of keeping up either the social fund of production or the social fund of consumption.
The rise in the commodity's value that these costs cause only spreads them out, pro rata, across the different commodities, since the costs differ for different kinds of goods. Costs of forming a stock remain, now as before, deductions from social wealth — even though they're also a condition for that wealth to exist at all.
Only so far as the stock of commodities is a condition of commodity circulation, and is itself a form that necessarily arises within commodity circulation — only so far as this apparent standstill is itself a form the flow takes, just as forming a money reserve is a condition of money circulation — only so far is it normal.
But as soon as the goods sitting in their circulation reservoirs fail to make room for the next wave coming from production — that is, as soon as the reservoirs get overfull — the stock of commodities expands because of a stoppage in circulation, exactly as hoards of money grow when money circulation stalls. It makes no difference whether this stoppage happens in the industrial capitalist's own storerooms or in the merchant's warehouses. The stock of commodities is then no longer a condition for uninterrupted selling, but a result of the goods being unsellable.
The costs stay the same, but since they now spring purely from the form — from the sheer need to turn the goods into money, and the difficulty of doing so — they don't enter into the value of the commodity. Instead they form deductions, a loss of value in the act of realizing that value.
Since the normal and the abnormal form of the stock don't look any different, and both are stoppages in circulation, the two can be mixed up — and all the more so because the very people producing can be fooled: the circulation of a producer's capital can be running smoothly even while the circulation of his goods, once they've passed into merchants' hands, has stalled. If the scale of production and consumption swells, then, other things equal, so does the scale of the stock of commodities — it's renewed and used up just as fast, only on a bigger scale. So a stock of commodities swelling because of a stoppage in circulation can be mistaken for a sign that reproduction is expanding — especially once the credit system develops far enough to disguise what's actually happening.
The costs of forming a stock consist of: first, a quantitative shrinkage in the mass of the product (with a stock of flour, say); second, decay in its quality; third, the objectified and living labour that keeping the stock requires.
No need to go through every detail of circulation costs here — packing, sorting, and the rest. The general law is this: any circulation cost that arises purely from the commodity changing form adds no value to the commodity. Such costs only realize the value already there, or carry it from one form into another. The capital laid out on them — including the labour it commands — counts among the faux frais, the incidental costs, of capitalist production. Making up for them has to come out of the surplus product, and for the capitalist class as a whole they are a deduction from surplus-value or surplus product — much as the time a worker spends buying their means of subsistence is time lost to them. But transport costs matter too much to pass over without a closer look.
Within the circuit of capital, and within the metamorphosis of commodities that forms one stage of it, the metabolism of social labour is carried out. This metabolism may require the products to change place — their actual movement from one spot to another. But commodities can circulate without any physical movement, and products can be transported without any commodity circulating, and even without any direct exchange of products at all. A house that A sells to B circulates as a commodity, but it does not go for a walk. Movable commodity-values such as cotton or pig iron can sit in the very same warehouse the whole time, while they
run through dozens of circulation processes, bought and sold again and again by speculators. What really moves here is the title of ownership to the thing, not the thing itself. In the empire of the Incas, on the other hand, the transport industry played a large role, even though the social product neither circulated as a commodity nor was distributed by way of exchange.
So when the transport industry, on the basis of capitalist production, appears as a cause of circulation costs, this particular form of appearance changes nothing about the underlying fact.
Transporting a mass of products does not increase how much of it there is. And apart from certain exceptions, whatever change transport happens to work on a product's natural properties is not an intended benefit but an unavoidable harm. But the use-value of things is only realized in their consumption, and consuming them may require them to change place — hence the further, additional production process carried out by the transport industry. So the productive capital laid out in that process adds value to the transported products: partly by transferring value from the means of transport, partly by adding new value through the labour of transport. That latter portion, as in all capitalist production, splits into replacement of wages and surplus-value.
Within every production process, the change of place of the object being worked on — and of the tools and labour it takes to move it — plays a large role: cotton moving from the carding room to the spinning room, say, or coal being hoisted from the pit to the surface. The passage of the finished product, as a finished commodity, from one self-contained place of production to another, separate one, is the very same phenomenon, only on a larger scale. After the transport of products from one place of production to another comes a further transport still: that of the finished products from the sphere of production to the sphere of consumption. The product is only ready for consumption once it has completed this movement in full.
As shown earlier, it is a general law of commodity production that the productive power of labour and the value that labour creates stand in inverse proportion to each other. This holds for the transport industry as much as for any other. The smaller the quantity of labour, dead and living, that carrying the
goods a given distance requires, the greater the productive power of that labour — and the other way around.
The absolute amount of value that transport adds to commodities stands, other things being equal, in inverse proportion to the productive power of the transport industry, and in direct proportion to the distances covered.
The relative share of value that transport costs add to a commodity's price, other things being equal, stands in direct proportion to the commodity's bulk and its weight. But there are many complicating factors. Transport calls for more or less care — and so more or less expenditure of labour and equipment — depending on how fragile, perishable, or explosive the article happens to be. Here the railway magnates show more ingenuity at inventing fantastical categories than any botanist or zoologist. The classification of goods on English railways, for instance, fills volumes, and it tends to turn the many different natural properties of goods into just as many transport ailments and built-in excuses for overcharging.
One witness testified: 'Glass that used to cost 11 pounds a crate' — a crate being a packing case of a set size — 'is now worth only 2 pounds, thanks to industrial progress and the abolition of the glass tax. But the cost of carrying it is as high as ever, and higher still by canal. Glass and glassware for leadwork used to be carried within 50 miles of Birmingham at 10 shillings a ton. Now the transport price has trebled, on the excuse of the risk from the article's fragility. But it is not the railway company that pays for what actually gets broken.'
That the relative share of value which transport costs add to an article stands in inverse proportion to that article's value becomes, for the railway magnates, a special reason to tax the article in direct proportion to its value instead. The complaints of manufacturers and merchants on this point recur on every page of the witness testimony in the report cited.
Capitalist production cuts the transport cost per individual commodity by developing the means of transport and communication, and by concentrating transport — increasing its scale. But it increases the share of social labour, living and stored up, that is spent transporting commodities — first by turning the vast majority of products into commodities at all, and then by replacing local markets with distant ones.
Circulation — the commodities' actual movement through space — resolves into the transport of the commodity. On the one hand, the transport industry forms an independent branch of production, and so a distinct sphere for investing productive capital. On the other hand, it is distinguished by appearing as the continuation of a production process within the circulation process and for the circulation process.