Volume 1, Chapter 7, showed this: one part of constant capital keeps the exact useful shape it had when it entered the production process, all the way through the making of the products it helps produce. So, over some shorter or longer stretch of time, it performs the same job again and again, in labour process after labour process. Think of work buildings, machines — everything we group together as instruments of labour. This part of constant capital passes its value on to the product exactly in step with how much it loses of its own use-value — and so of its own exchange-value. How much value it hands over, and at what rate, is worked out as an average: measured by how long, on average, it functions — from the moment it enters the production process to the moment it is fully worn out, used up, and has to be replaced or reproduced by a new one of the same kind.
This part of constant capital — the actual instruments of labour — has this peculiarity:
Part of the capital has been advanced in the form of constant capital, that is, of means of production, which now act as factors in the labour process for as long as the independent useful shape they entered it with holds up. The finished product — and so also the things that helped form it, once they have been turned into product — leaves the production process to pass, as a commodity, from the sphere of production into the sphere of circulation. The instruments of labour, by contrast, never leave the sphere of production once they have entered it. Their function locks them there. So part of the capital-value advanced is fixed in this form, determined by the function the instruments of labour perform in the process. As the instrument functions — and so wears — part of its value passes over to the product, while another part stays fixed in the instrument, and so in the production process. This fixed value keeps shrinking, until the instrument has finished its working life and its whole value has, over a longer or shorter period, been spread across a mass of products coming out of a series of repeated labour processes. But as long as it is still doing its job as an instrument — as long as it does not yet need replacing by a new one of the same kind — some constant capital-value always stays fixed in it, while the other part of the value originally fixed in it has passed to the product and circulates as part of the stock of commodities. The longer an instrument lasts, the more slowly it wears out, the longer the constant capital-value stays fixed in this useful shape. But whatever its degree of durability, the proportion of value it gives off is always inversely related to its whole working life. If, of two machines of equal value, one wears out in five years and the other in ten, the first gives off twice as much value in the same span of time as the second.
This part of the capital-value fixed in the instrument of labour circulates just as much as any other. We have already seen that the whole capital-value is in constant circulation, and in that sense all capital is circulating capital. But the circulation of this particular part of capital has its own peculiarity. First, it is not the instrument itself, in its useful shape, that circulates — only its value circulates, and even that only gradually, in pieces, exactly as fast as it passes over to the product, which then circulates as a commodity. Throughout the whole time it functions, part of its value always stays fixed in it, standing apart from the commodities it helps produce. It is this peculiarity that gives this part of constant capital the form: fixed capital. All the other material components of the capital advanced in the production process, by contrast, form what stands opposed to it: circulating, or fluid, capital.
Part of the means of production — specifically auxiliary materials that get used up by the instruments of labour themselves while they work, like coal burned by a steam engine, or that merely support the process, like gas for lighting — do not enter the product materially. Only their value becomes part of the product's value, and it is the product, in its own circulation, that carries that value onward. In this they resemble fixed capital. But in every labour process they enter, they are used up completely, and so for every new labour process they must be replaced entirely by new supplies of the same kind. They do not keep their own independent useful shape while they function. So even while they are at work, no part of the capital-value stays fixed in their old useful shape, their natural form. It was exactly this — that this kind of auxiliary material enters the value of the product only through its value, not materially, together with the related fact that its function is locked within the sphere of production — that led economists like Ramsay, who also mixed up fixed and constant capital, to apply the category of fixed capital to it. The part of the means of production that does enter the product materially — raw material and so on — thereby partly takes on shapes in which it can later enter individual consumption as an article of consumption. The actual instruments of labour, the material bearers of fixed capital, are only ever productively consumed and can never enter individual consumption, because they do not enter the product, the use-value they help produce; instead they keep their independent shape against it until they are fully worn out. Means of transport are an exception. The useful effect they produce during their productive function — while they are, so to speak, staying within the sphere of production — namely a change of place, enters individual consumption at the very same time, for instance the traveller's. The traveller pays for that use just as he pays for the use of other articles of consumption. We have already seen that in, say, chemical manufacture, raw material and auxiliary material blend into one another. The same holds for instruments of labour, auxiliary material, and raw material. So in agriculture, for instance, substances added to improve the soil partly enter the plant product as product-forming material. But their effect is also spread over a longer period — say four or five years. So part of them enters the product materially, and in doing so passes its value to the product, while another part, in its old useful shape, keeps its value fixed too. That part goes on existing as a means of production, and so takes the form of fixed capital. An ox, as a draught animal, is fixed capital. Eaten, it does not function as an instrument of labour, and so not as fixed capital either.
What gives one part of the capital-value laid out in means of production the character of fixed capital lies solely in the peculiar way this value circulates. That peculiar way of circulating comes from the peculiar way the instrument of labour gives off its value to the product — the way it behaves as a value-former during the production process. And that, in turn, comes from the particular kind of function instruments of labour perform in the labour process.
The same use-value that comes out of one labour process as a product goes into another as a means of production. Only when a product functions as an instrument of labour within a production process does it become fixed capital. As long as it has itself just come out of a process, it is not fixed capital at all. A machine, for instance, as the product — the commodity — of the machine-builder, belongs to his commodity-capital. It becomes fixed capital only once it is in the hands of the buyer, the capitalist who puts it to productive use.
With everything else equal, the degree of fixity grows along with how durable the instrument of labour is. That is because this durability decides how large the gap is between the capital-value fixed in the instrument and the part of that value it gives off to the product through repeated labour processes. The more slowly this giving-off of value happens — and value is given off by the instrument every time the same labour process repeats — the larger the fixed capital, and the larger the gap between the capital applied in the production process and the capital used up in it. Once that gap has closed, the instrument has lived out its working life: along with its use-value, it has lost its value too. It has stopped being a bearer of value. Because the instrument of labour, like any other material bearer of constant capital, only gives off value to the product to the extent that it loses value along with use-value, it follows that the more slowly its use-value is lost — the longer it lasts in the production process — the longer the period over which constant capital-value stays fixed in it.
If a means of production that is not, strictly speaking, an instrument of labour — an auxiliary material, a raw material, a semi-finished good, say — behaves like instruments of labour when it comes to giving off value, and so to how its value circulates, then it too is a material bearer, a form of existence, of fixed capital. This is the case with the soil improvements already mentioned, which add chemical substances to the soil whose effect stretches over several production periods, or years. Here part of the value goes on existing apart from the product, in its own independent shape — that is, in the shape of fixed capital — while another part of the value is given off to the product and so circulates with it. In this case, it is not only a part of the value of the fixed capital that enters the product, but also the use-value, the substance, in which that part of the value exists.
Setting aside the fundamental error — mixing up the categories fixed and circulating capital with the categories constant and variable capital — the confusion in how economists have defined these terms up to now rests, to begin with, on the following points:
One takes certain properties that belong materially to instruments of labour and turns them into direct properties of fixed capital — physical immobility, say, as in a house. It is then always easy to point out that other instruments of labour, which are just as much fixed capital, have the opposite property — physical mobility, say, as in a ship.
Or one confuses an economic form-determination that arises from the circulation of value with a material [dinglich] property — as if things that are not, in themselves, capital at all, but only become capital under certain social relations, could already be capital of a determinate kind, fixed or circulating, in themselves, by nature. We saw in Volume 1, Chapter 6, that in every labour process, whatever the social conditions it takes place under, the means of production divide into instruments of labour and objects of labour. But only within the capitalist mode of production do both become capital — specifically, become 'productive capital', as defined in the previous section. What happens is that the difference between instrument of labour and object of labour, which is grounded in the nature of the labour process itself, is reflected in the new form of the difference between fixed capital and circulating capital. Only with this does a thing that functions as an instrument of labour become fixed capital. If, by its material properties, it can also serve functions other than that of an instrument of labour, then whether it is fixed capital or not depends on which function it is performing. Cattle used as draught animals are fixed capital; as animals being fattened, they are raw material, which eventually enters circulation as a product — so not fixed capital, but circulating capital.
The mere fact that a means of production stays fixed for a longer stretch across repeated labour processes — processes that are connected, continuous, and so together make up a production period, that is, the whole production time needed to finish the product — calls, just like fixed capital does, for a longer or shorter advance from the capitalist. But it does not make his capital fixed capital. Seed, for instance, is not fixed capital, only raw material that stays fixed in the production process for about a year. All capital, so long as it functions as productive capital, is fixed in the production process — and so are all the elements of productive capital, whatever their material shape, their function, and the way their value circulates. Whether this fixing lasts a longer or shorter time, depending on the kind of production process or the useful effect aimed at, is not what makes the difference between fixed and circulating capital.
Part of the means of labour - which includes the general conditions of labour - becomes tied to one spot the moment it starts working - machines, for instance, get fixed in place once they are set up to function. Other means of labour are built fixed to a place from the very start: land improvements, factory buildings, blast furnaces, canals, railways. These stay locked to the production process they serve because of what they physically are. But other means of labour keep moving - a locomotive, a ship, a team of draught animals - and still count as constantly at work in production the whole time. Being immobile doesn't make the first group fixed capital, and moving around doesn't stop the second group from being fixed capital either. Still, when a means of labour is rooted in the ground, that gives this part of fixed capital a special role in a nation's economy: it can't be shipped abroad, can't circulate as a commodity on the world market. What can change hands is the title of ownership - it can be bought and sold, and in that sense circulate, even as shares on foreign markets. But when the people who own this kind of fixed capital change, that doesn't change the ratio, within a country, between its rooted, fixed wealth and its movable wealth.
This peculiar way fixed capital circulates produces a peculiar kind of turnover. The value it loses through wear, in its physical form, circulates as part of the product's value. As the product turns from a commodity into money, so does this value-part carried by the means of labour - it drips out as money in exactly the proportion that the means of labour stops carrying value in production. So its value now exists in two places at once. Part stays tied to its physical, working form; another part has split off as money. As it keeps working, the part still in physical form keeps shrinking, and the part turned into money keeps growing, until eventually it is used up completely and its whole value, separated from its worn-out body, has become money. This is what is peculiar about how this piece of productive capital turns over. Its value turns into money in step with the product - which carries this value - turning into money. But its turning back from money into a working thing again does not happen in step with the product's own replacement. Instead it follows its own timetable: the time it takes the means of labour to wear itself out and need replacing with another of the same kind. Say a machine worth £10,000 lasts 10 years: then the turnover time of the value originally laid out in it is 10 years. Before those 10 years are up it is not replaced - it just keeps working in its physical form. Meanwhile its value circulates bit by bit, as part of the value of the goods it keeps helping to produce, and is gradually turned into money, until by the end of the 10 years it has been turned entirely into money and then back from money into a new machine - its turnover complete. Until that replacement time arrives, its value accumulates gradually, first of all in the form of a money reserve fund.
The remaining parts of productive capital are, on one side, the constant capital tied up in auxiliary materials and raw materials, and on the other, the variable capital laid out in labour-power.
As shown earlier (Volume 1, Chapter V), these different parts behave quite differently, both as builders of the product and as builders of value. The value of the constant capital in auxiliary and raw materials - like the value of the part in means of labour - reappears in the product's value only as transferred value, while labour-power, through the labour process, adds an equivalent of its own value to the product, actually reproducing its value. Also: some auxiliary materials, like heating coal or gas, get used up in the labour process without physically entering the product, while others go bodily into the product and become part of its material substance. None of this matters for circulation, and so none of it matters for how turnover works. Insofar as auxiliary and raw materials are used up entirely in making the product, they transfer their whole value to it. So their value is entirely circulated by the product too - turned into money, and turned back from money into fresh materials. Their turnover is never interrupted, the way fixed capital's is; instead it keeps running through the whole circuit of its forms, so these parts of productive capital are constantly replaced afresh.
Now for the variable part of productive capital, laid out in labour-power. Labour-power is bought for a set stretch of time. Once the capitalist has bought it and put it to work, it forms part of his capital - specifically the variable part. Each day it works for a period in which it adds to the product not only its own full daily value but also a surplus over and above that, which we are setting aside for now. Once labour-power has been bought - for a week, say - and has done its work, the purchase has to be renewed again and again, at the usual intervals. The equivalent of its value that labour-power adds to the product while it works, and which turns into money along with the product, has to keep being turned back from money into labour-power - has to keep completing its full circuit of forms, that is, keep turning over - if the circuit of continuous production is not to be broken.
So the value-part of productive capital advanced in labour-power passes entirely onto the product (we keep setting surplus-value aside here), goes through the two changes of form that belong to the sphere of circulation together with the product, and through this constant renewal stays permanently bound up with the production process. However differently labour-power may otherwise behave, when it comes to forming value, compared with the parts of constant capital that do not form fixed capital, it shares this particular way of turning over its value with them - and that puts it in contrast to fixed capital. These parts of productive capital - the value laid out in labour-power and in means of production that are not fixed capital - stand opposed to fixed capital, through this shared way of turning over, as circulating or fluid capital.
As seen earlier, the money the capitalist pays the worker for the use of labour-power is really just the general equivalent-form for the worker's necessary means of subsistence. In that sense, variable capital materially consists of means of subsistence. But here, when we are looking at turnover, what matters is the form. What the capitalist buys is not the worker's means of subsistence, but his labour-power itself. What makes up the variable part of the capitalist's capital is not the worker's means of subsistence, but his labour-power at work. What the capitalist productively consumes in the labour process is labour-power itself, not the worker's means of subsistence. It is the worker himself who converts the money he gets for his labour-power into means of subsistence, in order to turn them back into labour-power and keep himself alive - just as the capitalist converts part of the surplus-value of the commodity he sells for money into means of subsistence for himself, without anyone saying that the buyer of his commodity is paying him in means of subsistence. Even when part of the worker's wage is paid in means of subsistence directly, that is nowadays a second transaction. He sells his labour-power for a set price, and it is agreed that he will get part of that price in means of subsistence. This only changes the form of payment - it does not change the fact that what he actually sells is his labour-power. It is a second transaction, one that no longer runs between worker and capitalist as such, but between the worker as buyer of a commodity and the capitalist as seller of a commodity; whereas in the first transaction the worker is the seller of a commodity - his labour-power - and the capitalist is its buyer. It is just like when a capitalist has one of his commodities paid for in another commodity - say, the machine he sells to the ironworks paid for in iron. So it is not the worker's means of subsistence that give fluid capital its character, in contrast to fixed capital. Nor is it his labour-power as such. It is the value-part of productive capital laid out in that labour-power, which, through the form of its turnover, shares this character with some parts of constant capital and stands in contrast to others.
The value of fluid capital - in labour-power and means of production - is advanced only for the time it takes to finish the product, depending on the scale of production, which is set by the size of the fixed capital. This value passes entirely into the product, so it comes back entirely out of circulation once the product is sold, and can be advanced again. The labour-power and means of production that make up fluid capital are withdrawn from circulation only to the extent needed to make and sell the finished product - but they have to be constantly replaced and renewed by buying them back, converting them from money back into elements of production. They are withdrawn from the market in smaller amounts at a time than the elements of fixed capital, but they have to be withdrawn that much more often, and the capital laid out in them has to be advanced again in shorter cycles. This constant renewal happens through the constant sale of the product, which circulates their whole value. And finally, they constantly go through the whole circuit of changing forms, not just in value but in their material shape too: they are constantly turned back from commodity into the production elements of that same commodity.
With its own value, labour-power constantly adds surplus-value to the product - the embodiment of unpaid labour. This, just like the product's other value-elements, is just as constantly circulated by the finished product and turned into money. But here, where we are concerned first with the turnover of the capital-value, not of the surplus-value that turns over alongside it, we are setting the latter aside for now.
From all this, the following results.
1. The form-determinations of fixed and fluid capital arise only from the different way capital-value at work in the production process - productive capital - turns over. This difference in turnover in turn arises from the different way the different parts of productive capital transfer their value to the product - not from any difference in how much they contribute to the product's value, or from any special role in the valorization process. The difference in how value is handed over to the product - and hence also in how that value circulates through the product and gets renewed through its changes of form, back into its original physical shape - arises from the difference in the material shapes in which productive capital exists: one part gets wholly used up in making a single product, another only wears out gradually. So it is only productive capital that can split into fixed and fluid. This contrast does not exist for the other two forms industrial capital takes - not for commodity-capital, not for money-capital, and not as a contrast between either of those and productive capital. It exists only for productive capital, and within it. Money-capital and commodity-capital may function ever so much as capital, and circulate ever so fluidly - they can only become fluid capital, as opposed to fixed capital, once they have turned into fluid parts of productive capital. But because these two forms of capital live in the sphere of circulation, economics since Adam Smith has, as we will see, been misled into lumping them together with the fluid part of productive capital under one heading: circulating capital. They really are capital of circulation, in contrast to productive capital - but they are not circulating capital in contrast to fixed capital.
2. The turnover of the fixed part of capital - and so the turnover time it needs - spans several turnovers of the fluid parts. In the time it takes fixed capital to turn over once, fluid capital turns over several times. A value-component of productive capital only gets the form-determination of fixed capital insofar as the means of production carrying it is not worn out in the time it takes to finish the product and send it out of the production process as a commodity. Part of its value has to stay bound up in its old, continuing working form, while another part is circulated by the finished product - whose circulation, at the same time, circulates the whole value of the fluid parts of capital.
3. The value-part of productive capital laid out in fixed capital has been advanced all at once, in full, for the entire working life of that part of the means of production which makes up the fixed capital. So this value is thrown into circulation by the capitalist all at once - but it is only withdrawn from circulation again bit by bit and gradually, as the value-parts that fixed capital keeps adding to the goods are realized piece by piece. On the other hand, the means of production themselves, in which part of productive capital is fixed, are withdrawn from circulation all at once, to be put to work in the production process for their entire working life - but for that whole time, they do not need to be replaced by new specimens of the same kind, do not need reproducing. For a longer or shorter time they go on contributing to the goods thrown into circulation, without themselves taking the means of their own renewal out of circulation. During that time, then, they do not call for the capitalist to renew his advance either. Finally: the capital-value laid out in fixed capital runs through the circuit of its forms over the whole working life of the means of production it exists in - not physically, but only as value, and even that only partially and gradually. That is, part of its value is constantly circulated as part of the value of the goods, and turned into money, without being turned back from money into its original physical form. That turning of money back into the physical form of the means of production happens only at the end of its working life, once the means of production is completely used up.
4. The elements of fluid capital are just as constantly tied down in the production process as the elements of fixed capital are - if production is to be continuous. But the tied-down elements of fluid capital are constantly renewed in kind: means of production by new specimens of the same sort, labour-power by constantly renewed purchase. The elements of fixed capital, by contrast, are, for as long as they last, neither renewed themselves nor bought again. There are constantly raw and auxiliary materials in the production process - but always fresh specimens of the same kind, once the old ones have been used up making the finished product. There is likewise constantly labour-power in the production process - but only through the constant renewal of its purchase, often with a change of the actual people. The same identical buildings, machines, and so on, by contrast, go on functioning through repeated turnovers of fluid capital, in the same repeated production processes.
Within one and the same investment, the different pieces of fixed capital have different lifespans, and so also different turnover times. Take a railway: rails, sleepers, earthworks, station buildings, bridges, tunnels, locomotives and wagons all last different lengths of time and take different lengths of time to replace — so the capital tied up in each of them turns over at a different pace. For long stretches of years the buildings, platforms, water tanks, viaducts, tunnels, cuttings and embankments — everything English railway engineers call "works of art" — need no renewal at all. What actually wears out is mainly the track and the rolling stock.
When modern railways were first built, the prevailing opinion — nourished by the eminent engineers of the day — held that a railway would last practically forever, and that the rails wore so imperceptibly that it could be ignored for every financial and practical purpose — good rails were reckoned to last 100 to 150 years. It soon turned out that a rail's life, which of course depends on how fast the trains run, how heavy and how frequent they are, how thick the rails themselves are, and a host of other circumstances, averaged no more than 20 years. At some busy stations the rails wear out every single year. Around 1867 steel rails began to be introduced — about twice the price of iron rails, but lasting more than twice as long. Wooden sleepers lasted 12 to 15 years. Among rolling stock, goods wagons wore out considerably faster than passenger carriages. In 1867 a locomotive's life was reckoned at 10 to 12 years.
Wear is caused, first of all, by use itself. In general, rails wear roughly in proportion to the number of trains that run over them, as one railway inquiry heard. And when speed increased, wear grew faster than the square of the speed: doubling the trains' speed increased the wear more than fourfold.
Further wear comes from the action of natural forces. Sleepers, for instance, suffer not only from actual wear but from rot.
"The cost of maintaining the line depends less on the wear caused by traffic than on the quality of the wood, iron and masonry exposed to the weather. A single severe winter month will do more damage to the track than a whole year of traffic" — R. P. Williams, in a paper on the maintenance of the permanent way given to the Institute of Civil Engineers, autumn 1867.
Finally, as everywhere in large-scale industry, moral depreciation plays its part here too: after about ten years you can usually buy the same quantity of wagons and locomotives for £30,000 that used to cost £40,000. So this equipment has to be reckoned as having lost 25% of its market price, even if its usefulness hasn't diminished at all.
"Tubular bridges will not be renewed in their present form."
(Because better designs for such bridges now exist.)
"Ordinary repairs to them, taking out and replacing individual pieces, are not practicable" — W. B. Adams, Roads and Rails, London 1862.
Means of labour are, for the most part, continually being revolutionized by the progress of industry. So when they're replaced, it isn't in their original form but in the improved one. On one hand, the sheer mass of fixed capital tied up in one particular material form, which has to last out its average lifetime in that form, makes new machinery get introduced only gradually — it's an obstacle to the rapid, general adoption of better means of labour. On the other hand, competition, especially at moments of decisive change, forces the old means of labour to be replaced by new ones before their natural life is up. It's mainly catastrophes and crises that force such premature renewal of equipment on a larger social scale.
Wear (leaving moral depreciation aside) is the portion of value that fixed capital gradually gives off to the product as it's used up — in the same average proportion as it loses its usefulness.
Part of this using-up works like this: the fixed capital has a certain average lifetime; it's laid out in full for that whole period, and once the period is over it has to be replaced whole. For living means of labour — horses, say — nature itself sets the replacement time. Their average working life is fixed by natural law. Once that term is up, the worn-out animals must be replaced by new ones. A horse can't be replaced piece by piece — only by another horse.
Other pieces of fixed capital allow periodic or partial renewal. Here we need to distinguish partial or periodic replacement from the gradual expansion of the business.
Some fixed capital is made up of like parts that don't all last the same length of time, and get renewed piece by piece at different times. The rails at stations, for instance, have to be replaced more often than the rest of the track. So do sleepers: on Belgian railways in the 1850s, by one calculation, 8% were renewed every year, meaning all the sleepers were replaced over 12 years. The relationship is this: a sum is advanced, say for ten years, in one particular kind of fixed capital, and that outlay is made all at once. But a certain part of this fixed capital — the part whose value has gone into the value of the product and been turned into money along with it — gets replaced in kind every year, while the rest goes on existing in its original material form. It's this combination — laying the outlay out all at once, but only reproducing it in material form piece by piece — that marks this capital off as fixed rather than circulating.
Other pieces of fixed capital are made up of unlike parts that wear out, and so have to be replaced, at unequal times. This happens above all with machinery. What was just said about the different lifespans of the different pieces of a body of fixed capital holds here for the different components of a single machine that itself counts as one piece of that fixed capital.
Now for the gradual expansion of a business in the course of partial renewal. Although, as we've seen, fixed capital goes on working in kind in the production process, a part of its value — depending on the average wear — circulates along with the product, gets turned into money, and forms part of the money reserve fund set aside to replace the capital when it comes due for reproduction in kind. This part of the fixed capital's value, once turned into money, can be used to expand the business, or to make improvements to the machines that increase their effectiveness. So, in shorter or longer stretches, reproduction takes place — and seen from society's standpoint, it's reproduction on an expanded scale: extensive, if the field of production is enlarged; intensive, if the means of production are made more effective. But this expanded reproduction does not spring from accumulation: it is not surplus-value (the profit over and above what was laid out) being turned into new capital. It springs instead from reconverting value that had already branched off and come loose, in money form, from the body of the fixed capital, into new fixed capital of the same kind — more of it, or, failing that, a more effective version of it. How far, and on what scale, a given business is capable of this kind of gradual addition — and so how large a reserve fund must be built up to be reinvested this way, and over what stretches of time — depends of course partly on the specific nature of the business. How far detailed improvements can be made to existing machinery likewise depends on the nature of the improvement and the construction of the machine itself. Just how much this is kept in view from the outset in, say, building railways, is shown by Adams:
"The whole design ought to follow the principle that governs the beehive — the capacity for unlimited expansion. Anything over-solid, and symmetrical from the outset, is a mistake: if expansion is needed, it has to be torn down." (Adams, p. 123.)
This depends largely on the space available. Some buildings can simply add storeys upward; others need to expand sideways, which takes more ground. Under capitalist production, on one hand a great deal of means get wasted, and on other hand this gradual expansion of business often produces a lot of pointless sideways sprawl of this kind (partly at the expense of the workforce), because nothing happens according to any social plan — it all depends on the endlessly varied circumstances and means that the individual capitalist happens to have to work with. Out of this comes a great waste of productive forces.
This piecemeal reinvestment of the money reserve fund — that is, of the part of fixed capital reconverted into money — is easiest in agriculture. A given plot of land can absorb the largest amount of capital gradually. The same holds wherever natural reproduction takes place, as with livestock breeding.
Fixed capital involves special costs of upkeep. Part of this upkeep is achieved simply by the labour process itself: fixed capital spoils if it isn't kept working in the labour process. English law recognizes as much, treating it as damage ("waste") when a leased plot of land isn't cultivated according to local custom. This preservation, arising from use in the labour process, is a free gift of nature through living labour. And the preserving power of labour is of a double kind. On one hand it preserves the value of the materials worked on, by transferring that value to the product. On the other hand — insofar as it doesn't transfer this value to the product too — it preserves the value of the means of labour themselves, by keeping their usefulness intact through its action in the production process.
But fixed capital also demands actual, positive work to keep it up. Machinery has to be cleaned from time to time. This is extra labour, without which it would become unusable — it's simply warding off the harmful natural effects that are inseparable from the production process, keeping it fit to work in the most literal sense. The normal lifetime reckoned for fixed capital obviously assumes that the conditions for it to work normally throughout that time are actually met — just as, if a person lives 30 years on average, it's assumed he also washes himself. This isn't about replacing the labour built into the machine; it's about the constant extra labour that using the machine requires. It's not labour the machine does, but labour done to it — here the machine isn't the agent of production but the raw material being worked on. The capital laid out on this labour, although it doesn't enter into the actual labour process that gives the product its origin, belongs to circulating capital. This work has to be carried out continually in production, so its value also has to be continually replaced out of the value of the product; the capital spent on it belongs to that part of circulating capital covering general overhead, spread over the value-product on an annual average. We've seen that in ordinary industry this cleaning is done by the workers for nothing, in their rest breaks, and for that very reason often during the production process itself, where it becomes the source of most accidents. This labour isn't counted in the price of the product — the consumer, in effect, gets it for free. But by the same token, the capitalist gets the upkeep of his machine for nothing too. The worker pays for it in person, and this is one of capital's little mysteries of self-preservation, which in effect gives the worker a genuine legal claim on the machinery — makes him, even from the standpoint of bourgeois law, a kind of co-owner of it. In some branches of production, though, machinery has to be taken out of the production process to be cleaned, so the cleaning can't be slipped in on the side — locomotives, for instance. There this maintenance work counts among the running costs, as part of circulating capital. A locomotive has to be brought into the shed after at most three days' work and cleaned there; the boiler has to cool down first before it can be washed out without damage.
Actual repairs, or patching-up work, call for an outlay of capital and labour that wasn't included in the capital originally advanced — so it can't always be replaced and covered by the gradual replacement of the fixed capital's value. Say the value of a piece of fixed capital is £10,000 and its whole lifetime is 10 years: that £10,000, fully turned into money after ten years, only replaces the value of the original outlay. It doesn't replace the capital, or labour, added in the meantime through repairs. That's an extra value component, not advanced all at once but as needed, and the timing of these separate outlays is, by its very nature, a matter of chance. Every piece of fixed capital calls for this kind of later, doled-out, extra outlay of capital in means of labour and labour-power.
The damage that individual parts of machinery and the like suffer is, by nature, a matter of chance, and so are the repairs it calls for. Even so, two kinds of repair work stand out from this general mass with a more or less fixed character, falling into different periods of a machine's life — the teething troubles of its youth, and the much more frequent infirmities of its old age, once it's past the middle of its average lifetime. A machine, however perfect its design, may enter the production process and, once actually in use, show flaws that have to be corrected by further work. On the other hand, the further it's moved past the middle of its average lifetime, the more normal wear has piled up and the more the material it's made of has worn thin and grown decrepit — the more numerous and serious the repairs needed to keep it going to the end of its average working life, just as an old man, to avoid dying before his time, needs more medical care than a vigorous young one. So despite being a matter of chance, repair work still distributes itself unevenly across the different periods of a fixed capital's life.
From this, as well as from the otherwise chance character of repair work on machinery, two things follow:
First, the actual outlay of labour-power and means of labour on repairs is a matter of chance, just like the circumstances that call for those repairs in the first place — the amount of repair needed falls unevenly across the different periods of a fixed capital's life. Second, when the average lifetime of a piece of fixed capital is estimated, it's assumed the whole time that it's kept in working order — partly through cleaning (which includes keeping the premises clean), partly through repair, as often as needed. The transfer of value through the wear of fixed capital is calculated on the basis of its average lifetime — but that average lifetime itself is only reckoned on the assumption that the extra capital needed for its upkeep keeps being advanced.
On the other hand, it's just as clear that the value added by this extra outlay of capital and labour can't enter the price of goods at the very moment the outlay is made. A spinner can't sell his yarn dearer this week than last week just because a wheel broke or a belt snapped this week — the general costs of spinning haven't changed one bit because of an accident in one particular factory. Here, as with every determination of value, it's the average that decides. Experience shows the average scale of such accidents, and of the maintenance and repair work needed over the average lifetime of the fixed capital used in a given line of business. This average outlay is spread across the average lifetime, added to the price of the product in corresponding proportional shares, and so gets recovered when the product is sold.
The extra capital that gets replaced this way belongs to circulating capital, even though the outlay itself comes at irregular times. Because it's vitally important to fix any fault in the machinery straight away, every large factory has, alongside its ordinary workforce, a staff of its own — engineer, joiner, mechanic, locksmith and so on. Their wages form part of the variable capital, and the value of their work is spread over the product. Meanwhile, the outlays needed for materials and equipment are figured on that same average basis, and on this reckoning continually make up part of the value of the product — even though in fact they're advanced at irregular times, and so enter the product, or the fixed capital, at irregular times too. This capital laid out in actual repairs is, in some respects, a capital of its own kind — properly speaking neither circulating nor fixed — though as part of the running expenses it counts more with the former.
The way the books are kept obviously doesn't change the real state of affairs they're recording. But it's worth noting that in many lines of business it's customary to lump repair costs together with the actual wear of fixed capital in the following way. Suppose the fixed capital advanced is £10,000 and its lifetime is 15 years: the annual wear would then be £666⅔. But instead, the wear is calculated as if the lifetime were only ten years — meaning £1,000 a year gets added to the price of the goods produced for wear of fixed capital, instead of £666⅔ — in other words, £333⅓ is set aside for repair work and the like. (The figures 10 and 15 are only examples.) That's roughly how much, on average, gets spent on repairs to keep the fixed capital going for 15 years. Naturally this way of reckoning doesn't stop the fixed capital and the extra capital laid out on repairs from being different categories. On this basis of reckoning, for instance, the lowest estimate for maintaining and replacing steamships was put at 15% a year, giving a reproduction time of 6½ years. In the 1860s the English government compensated the Peninsular and Oriental Company at 16% a year for this, equal to a reproduction time of 6¼ years. On the railways, a locomotive's average lifetime is 10 years, but once repairs are included, wear is reckoned at 12½%, cutting the effective lifetime to 8 years. For passenger and goods wagons the figure is 9%, giving an assumed lifetime of 11⅑ years.
Wherever the law deals with leases of houses and other things that count as fixed capital for their owner and are rented out as such, it has everywhere recognized a distinction: between normal wear — brought about by time, the weather, and normal use itself — and the occasional repairs needed from time to time to keep the house in shape through its normal lifetime and normal use. As a rule, the first falls on the owner, the second on the tenant. Repairs are further divided into ordinary and substantial. The substantial ones amount to a partial renewal of the fixed capital in its material form, and these too fall on the owner, unless the lease says otherwise. Under English law, for instance:
"A yearly tenant is only bound to keep the buildings wind- and water-tight, so far as this can be done without substantial repairs, and generally only to see to such repairs as can be called ordinary. And even here, the age and general condition of the relevant parts of the building at the time the tenant took it on must be kept in mind, for he is bound neither to replace old and worn-out material with new, nor to make good the unavoidable loss of value that comes from the passage of time and regular use" — Holdsworth, The Law of Landlord and Tenant.
Insurance is something else again — not wear-replacement, not maintenance and repair either. It covers destruction by extraordinary events: fire, flood, and the like. This has to be made good out of surplus-value; it is a deduction from it. Or look at it from society's side. There has to be constant overproduction — production on a bigger scale than what's needed just to replace and reproduce the wealth already on hand, and this is separate from any growth in population. Only that surplus gives society the means of production it needs to make up for the extraordinary destruction that accidents and natural forces cause.
In fact only the smallest part of the capital needed for replacement sits in a money reserve fund. The most important part consists in the expansion of the scale of production itself — partly real expansion, and partly just the normal size of the branches that produce fixed capital. A machine factory, for instance, is set up expecting that every year some of its customers' factories will be enlarged, and that some part of its customers' machinery will constantly need whole or partial reproduction.
When wear and repair costs are set by the social average, big inequalities are bound to show up — even between capital investments of the same size, in the same branch, under the same conditions. In practice one capitalist's machine lasts longer than the average; another's doesn't last as long. One capitalist's repair bills run above average, another's below. But the price markup for wear and for repair is the same for everyone, fixed by the average. So one capitalist collects more through that markup than he actually spends, and another collects less. This, like every other circumstance that makes profits differ between capitalists in the same line of business even when they exploit labour-power just as hard, helps make it harder to see the true nature of surplus-value.
The line between actual repair and replacement, between upkeep costs and renewal costs, is more or less fluid. That's why there's endless argument — with railways, for example — over whether certain expenses count as repair or as replacement, and whether they should come out of current spending or out of the original capital. Charging repair expenses to the capital account instead of the revenue account is the well-known trick railway boards use to inflate their dividends artificially. But even here, experience has already supplied the main guideposts. The follow-up work done during a railway's early years, for example, is "not repairs, but must be seen as an essential part of building the line, and so must be charged to the capital account, since it doesn't come from wear or from the normal effect of traffic, but from the original, unavoidable imperfection of the construction." (Lardner)
"The only correct method, on the other hand, is to charge each year's revenue with the loss of value that necessarily had to occur for that revenue to be earned — whether or not the sum was actually spent." (Captain Fitzmaurice, Committee of Inquiry on the Caledonian Railway)
In agriculture, separating replacement from upkeep of fixed capital becomes practically impossible and pointless — at least wherever farming doesn't yet run on steam power.
"With a full but not excessive stock of implements" (meaning the ploughs and other working and household implements a farm needs), "the usual practice, taking the broad average, is to reckon the annual wear and upkeep of this stock at 15–25% of the capital spent to acquire it, depending on the particular circumstances." (Kirchhof)
With a railway's rolling stock, repair and replacement can't be separated at all.
"We keep our rolling stock's numbers steady. Whatever number of locomotives we have, we keep that number up. If one becomes unusable over time, so that it's more worthwhile to build a new one, we build it out of revenue — crediting revenue, of course, with the value of the materials left over from the old machine. Quite a lot is always left over — the wheels, the axles, the boiler, in short a good part of the old locomotive remains." (T. Gooch, Chairman of the Great Western Railway Co.) "Repairing means renewing; the word 'replacement' doesn't exist for me. Once a railway company has bought a wagon or a locomotive, it should repair it so that it can keep running forever." "We reckon 8½d. per English train-mile for locomotive costs. Out of that 8½d. we keep our locomotives going forever. We renew our machines. If you want to buy a machine outright new, you spend more money than you need to. On the old machine there's always a wheel or two, an axle, or some other part still usable, and that helps produce a machine just as good as a brand new one, more cheaply." "I now produce a new locomotive every week — that is, one as good as new, since the boiler, cylinders and frame are new." (Archibald Sturrock, Locomotive Superintendent of the Great Northern Railway)
The same holds for the wagons:
"Over time the stock of locomotives and wagons is continually renewed — one time new wheels are fitted, another time a new frame is made. The parts that carry the motion, and take the most wear, are gradually renewed; the machines and wagons can then go through such a series of repairs that in some of them not a trace of the original material remains. Even when they become completely beyond repair, pieces of the old wagons or locomotives are worked into new ones, so they never quite disappear from the line altogether. The moving capital is therefore in constant reproduction. What has to happen to the track all at once, at a fixed point in time, when the whole line is relaid — happens to the rolling stock gradually, year by year. Its existence is perennial; it is caught up in continuous rejuvenation." (Lardner)
This process, as Lardner pictures it for the railway, doesn't fit a single factory. But it does work as a picture of the constant, partial reproduction of fixed capital running together with repair across a whole branch of industry — or across production as a whole, viewed on the scale of society.
Here is proof of just how far skilled boards can stretch the concepts of repair and replacement to produce dividends. According to the lecture by R. P. Williams cited above, various English railway companies wrote off, on average over a run of years, the following sums to the revenue account for repair and upkeep of the track and buildings (per English mile of line, per year):
These differences come only to the smallest possible degree from any real difference in what was actually spent. They come almost entirely from different ways of doing the accounting — from whether an expense item gets charged to the capital account or to the revenue account. Williams says it outright:
"The lighter charge is adopted because it's needed to produce a good dividend, and the heavier charge is made because there's a stronger revenue on hand that can bear it."
In certain cases wear — and so replacement too — becomes a practically negligible quantity, so that only repair costs come into the reckoning at all. What Lardner says below about "works of art" on the railways holds generally for all such durable works: canals, docks, iron and stone bridges, and the rest. "The wear that the slow action of time produces on the more solid works is almost imperceptible over shorter stretches of time; but after a long stretch has passed — centuries, say — it must eventually bring about renewal, whole or partial, even in the most solid constructions. This imperceptible wear, compared with the more noticeable wear on other parts of the line, can be compared to the secular and periodic irregularities in the movement of the heavenly bodies. The action of time on a railway's more massive structures — bridges, tunnels, viaducts and the like — gives examples of what one might call secular wear. The faster, more visible loss of value that gets made good over shorter periods by repair or replacement is analogous to the periodic irregularities. The annual repair costs also include making good the accidental damage the exterior of even the more durable constructions suffers from time to time; but even apart from these repairs, age does not pass them by without effect, and however distant it may be, the time must come when their condition calls for rebuilding. In financial and economic terms, though, that time may well be far too distant to bring into practical account." (Lardner)
This holds for all works of this secular duration — where the capital advanced in them does not have to be gradually replaced to match its wear. Only the average annual costs of upkeep and repair need to be carried over into the price of the product.
We have seen that a larger part of the money flowing back to replace the wear of fixed capital is reconverted into its natural form again every year, or even at short intervals. Even so, every individual capitalist still needs an amortisation fund — for the part of his fixed capital that only reaches its moment of reproduction after a run of years, all at once, and then has to be replaced wholesale. A significant component of fixed capital simply rules out piecemeal reproduction by its very nature. And even where reproduction does happen piecemeal — new stock added to the devalued stock at shorter intervals — some prior accumulation of money, larger or smaller depending on the particular branch of production, is still needed before that replacement can take place. Not just any sum of money will do; a sum of a definite size is required.
Let's look at this purely under simple money circulation, setting aside the credit system, which comes later. The mechanism works like this. Volume 1 showed that when part of the money existing in a society always lies idle as a hoard, while another part functions as a means of circulation — or as the immediate reserve fund for the money directly circulating — the proportion between the two keeps changing. In our case, money that has to be piled up as a hoard, in fairly large amounts, in the hands of a bigger capitalist, gets thrown into circulation all at once when he buys fixed capital. It then distributes itself again through society, partly as a means of circulation, partly as hoard. Through the amortisation fund — the fund by which the value of fixed capital flows back to its starting point in step with its wear — part of that circulating money once again becomes a hoard, for a longer or shorter time, in the hands of the very same capitalist whose hoard had turned into a means of circulation and left him when he bought the fixed capital. It is a constantly shifting distribution of the hoard that exists in society — money that functions at one moment as a means of circulation, and is then separated out again as a hoard from the mass of circulating money. As the credit system develops — and it necessarily develops alongside large-scale industry and capitalist production — this money no longer functions as a hoard but as capital, though now in the hands not of its owner, but of other capitalists it's made available to.
Volume 1, Chapter 7, showed this: one part of constant capital keeps the exact useful shape it had when it entered the production process, all the way through the making of the products it helps produce. So, over some shorter or longer stretch of time, it performs the same job again and again, in labour process after labour process. Think of work buildings, machines — everything we group together as instruments of labour. This part of constant capital passes its value on to the product exactly in step with how much it loses of its own use-value — and so of its own exchange-value. How much value it hands over, and at what rate, is worked out as an average: measured by how long, on average, it functions — from the moment it enters the production process to the moment it is fully worn out, used up, and has to be replaced or reproduced by a new one of the same kind.
This part of constant capital — the actual instruments of labour — has this peculiarity:
Part of the capital has been advanced in the form of constant capital, that is, of means of production, which now act as factors in the labour process for as long as the independent useful shape they entered it with holds up. The finished product — and so also the things that helped form it, once they have been turned into product — leaves the production process to pass, as a commodity, from the sphere of production into the sphere of circulation. The instruments of labour, by contrast, never leave the sphere of production once they have entered it. Their function locks them there. So part of the capital-value advanced is fixed in this form, determined by the function the instruments of labour perform in the process. As the instrument functions — and so wears — part of its value passes over to the product, while another part stays fixed in the instrument, and so in the production process. This fixed value keeps shrinking, until the instrument has finished its working life and its whole value has, over a longer or shorter period, been spread across a mass of products coming out of a series of repeated labour processes. But as long as it is still doing its job as an instrument — as long as it does not yet need replacing by a new one of the same kind — some constant capital-value always stays fixed in it, while the other part of the value originally fixed in it has passed to the product and circulates as part of the stock of commodities. The longer an instrument lasts, the more slowly it wears out, the longer the constant capital-value stays fixed in this useful shape. But whatever its degree of durability, the proportion of value it gives off is always inversely related to its whole working life. If, of two machines of equal value, one wears out in five years and the other in ten, the first gives off twice as much value in the same span of time as the second.
This part of the capital-value fixed in the instrument of labour circulates just as much as any other. We have already seen that the whole capital-value is in constant circulation, and in that sense all capital is circulating capital. But the circulation of this particular part of capital has its own peculiarity. First, it is not the instrument itself, in its useful shape, that circulates — only its value circulates, and even that only gradually, in pieces, exactly as fast as it passes over to the product, which then circulates as a commodity. Throughout the whole time it functions, part of its value always stays fixed in it, standing apart from the commodities it helps produce. It is this peculiarity that gives this part of constant capital the form: fixed capital. All the other material components of the capital advanced in the production process, by contrast, form what stands opposed to it: circulating, or fluid, capital.
Part of the means of production — specifically auxiliary materials that get used up by the instruments of labour themselves while they work, like coal burned by a steam engine, or that merely support the process, like gas for lighting — do not enter the product materially. Only their value becomes part of the product's value, and it is the product, in its own circulation, that carries that value onward. In this they resemble fixed capital. But in every labour process they enter, they are used up completely, and so for every new labour process they must be replaced entirely by new supplies of the same kind. They do not keep their own independent useful shape while they function. So even while they are at work, no part of the capital-value stays fixed in their old useful shape, their natural form. It was exactly this — that this kind of auxiliary material enters the value of the product only through its value, not materially, together with the related fact that its function is locked within the sphere of production — that led economists like Ramsay, who also mixed up fixed and constant capital, to apply the category of fixed capital to it. The part of the means of production that does enter the product materially — raw material and so on — thereby partly takes on shapes in which it can later enter individual consumption as an article of consumption. The actual instruments of labour, the material bearers of fixed capital, are only ever productively consumed and can never enter individual consumption, because they do not enter the product, the use-value they help produce; instead they keep their independent shape against it until they are fully worn out. Means of transport are an exception. The useful effect they produce during their productive function — while they are, so to speak, staying within the sphere of production — namely a change of place, enters individual consumption at the very same time, for instance the traveller's. The traveller pays for that use just as he pays for the use of other articles of consumption. We have already seen that in, say, chemical manufacture, raw material and auxiliary material blend into one another. The same holds for instruments of labour, auxiliary material, and raw material. So in agriculture, for instance, substances added to improve the soil partly enter the plant product as product-forming material. But their effect is also spread over a longer period — say four or five years. So part of them enters the product materially, and in doing so passes its value to the product, while another part, in its old useful shape, keeps its value fixed too. That part goes on existing as a means of production, and so takes the form of fixed capital. An ox, as a draught animal, is fixed capital. Eaten, it does not function as an instrument of labour, and so not as fixed capital either.
What gives one part of the capital-value laid out in means of production the character of fixed capital lies solely in the peculiar way this value circulates. That peculiar way of circulating comes from the peculiar way the instrument of labour gives off its value to the product — the way it behaves as a value-former during the production process. And that, in turn, comes from the particular kind of function instruments of labour perform in the labour process.
The same use-value that comes out of one labour process as a product goes into another as a means of production. Only when a product functions as an instrument of labour within a production process does it become fixed capital. As long as it has itself just come out of a process, it is not fixed capital at all. A machine, for instance, as the product — the commodity — of the machine-builder, belongs to his commodity-capital. It becomes fixed capital only once it is in the hands of the buyer, the capitalist who puts it to productive use.
With everything else equal, the degree of fixity grows along with how durable the instrument of labour is. That is because this durability decides how large the gap is between the capital-value fixed in the instrument and the part of that value it gives off to the product through repeated labour processes. The more slowly this giving-off of value happens — and value is given off by the instrument every time the same labour process repeats — the larger the fixed capital, and the larger the gap between the capital applied in the production process and the capital used up in it. Once that gap has closed, the instrument has lived out its working life: along with its use-value, it has lost its value too. It has stopped being a bearer of value. Because the instrument of labour, like any other material bearer of constant capital, only gives off value to the product to the extent that it loses value along with use-value, it follows that the more slowly its use-value is lost — the longer it lasts in the production process — the longer the period over which constant capital-value stays fixed in it.
If a means of production that is not, strictly speaking, an instrument of labour — an auxiliary material, a raw material, a semi-finished good, say — behaves like instruments of labour when it comes to giving off value, and so to how its value circulates, then it too is a material bearer, a form of existence, of fixed capital. This is the case with the soil improvements already mentioned, which add chemical substances to the soil whose effect stretches over several production periods, or years. Here part of the value goes on existing apart from the product, in its own independent shape — that is, in the shape of fixed capital — while another part of the value is given off to the product and so circulates with it. In this case, it is not only a part of the value of the fixed capital that enters the product, but also the use-value, the substance, in which that part of the value exists.
Setting aside the fundamental error — mixing up the categories fixed and circulating capital with the categories constant and variable capital — the confusion in how economists have defined these terms up to now rests, to begin with, on the following points:
One takes certain properties that belong materially to instruments of labour and turns them into direct properties of fixed capital — physical immobility, say, as in a house. It is then always easy to point out that other instruments of labour, which are just as much fixed capital, have the opposite property — physical mobility, say, as in a ship.
Or one confuses an economic form-determination that arises from the circulation of value with a material [dinglich] property — as if things that are not, in themselves, capital at all, but only become capital under certain social relations, could already be capital of a determinate kind, fixed or circulating, in themselves, by nature. We saw in Volume 1, Chapter 6, that in every labour process, whatever the social conditions it takes place under, the means of production divide into instruments of labour and objects of labour. But only within the capitalist mode of production do both become capital — specifically, become 'productive capital', as defined in the previous section. What happens is that the difference between instrument of labour and object of labour, which is grounded in the nature of the labour process itself, is reflected in the new form of the difference between fixed capital and circulating capital. Only with this does a thing that functions as an instrument of labour become fixed capital. If, by its material properties, it can also serve functions other than that of an instrument of labour, then whether it is fixed capital or not depends on which function it is performing. Cattle used as draught animals are fixed capital; as animals being fattened, they are raw material, which eventually enters circulation as a product — so not fixed capital, but circulating capital.
The mere fact that a means of production stays fixed for a longer stretch across repeated labour processes — processes that are connected, continuous, and so together make up a production period, that is, the whole production time needed to finish the product — calls, just like fixed capital does, for a longer or shorter advance from the capitalist. But it does not make his capital fixed capital. Seed, for instance, is not fixed capital, only raw material that stays fixed in the production process for about a year. All capital, so long as it functions as productive capital, is fixed in the production process — and so are all the elements of productive capital, whatever their material shape, their function, and the way their value circulates. Whether this fixing lasts a longer or shorter time, depending on the kind of production process or the useful effect aimed at, is not what makes the difference between fixed and circulating capital.
Part of the means of labour - which includes the general conditions of labour - becomes tied to one spot the moment it starts working - machines, for instance, get fixed in place once they are set up to function. Other means of labour are built fixed to a place from the very start: land improvements, factory buildings, blast furnaces, canals, railways. These stay locked to the production process they serve because of what they physically are. But other means of labour keep moving - a locomotive, a ship, a team of draught animals - and still count as constantly at work in production the whole time. Being immobile doesn't make the first group fixed capital, and moving around doesn't stop the second group from being fixed capital either. Still, when a means of labour is rooted in the ground, that gives this part of fixed capital a special role in a nation's economy: it can't be shipped abroad, can't circulate as a commodity on the world market. What can change hands is the title of ownership - it can be bought and sold, and in that sense circulate, even as shares on foreign markets. But when the people who own this kind of fixed capital change, that doesn't change the ratio, within a country, between its rooted, fixed wealth and its movable wealth.
This peculiar way fixed capital circulates produces a peculiar kind of turnover. The value it loses through wear, in its physical form, circulates as part of the product's value. As the product turns from a commodity into money, so does this value-part carried by the means of labour - it drips out as money in exactly the proportion that the means of labour stops carrying value in production. So its value now exists in two places at once. Part stays tied to its physical, working form; another part has split off as money. As it keeps working, the part still in physical form keeps shrinking, and the part turned into money keeps growing, until eventually it is used up completely and its whole value, separated from its worn-out body, has become money. This is what is peculiar about how this piece of productive capital turns over. Its value turns into money in step with the product - which carries this value - turning into money. But its turning back from money into a working thing again does not happen in step with the product's own replacement. Instead it follows its own timetable: the time it takes the means of labour to wear itself out and need replacing with another of the same kind. Say a machine worth £10,000 lasts 10 years: then the turnover time of the value originally laid out in it is 10 years. Before those 10 years are up it is not replaced - it just keeps working in its physical form. Meanwhile its value circulates bit by bit, as part of the value of the goods it keeps helping to produce, and is gradually turned into money, until by the end of the 10 years it has been turned entirely into money and then back from money into a new machine - its turnover complete. Until that replacement time arrives, its value accumulates gradually, first of all in the form of a money reserve fund.
The remaining parts of productive capital are, on one side, the constant capital tied up in auxiliary materials and raw materials, and on the other, the variable capital laid out in labour-power.
As shown earlier (Volume 1, Chapter V), these different parts behave quite differently, both as builders of the product and as builders of value. The value of the constant capital in auxiliary and raw materials - like the value of the part in means of labour - reappears in the product's value only as transferred value, while labour-power, through the labour process, adds an equivalent of its own value to the product, actually reproducing its value. Also: some auxiliary materials, like heating coal or gas, get used up in the labour process without physically entering the product, while others go bodily into the product and become part of its material substance. None of this matters for circulation, and so none of it matters for how turnover works. Insofar as auxiliary and raw materials are used up entirely in making the product, they transfer their whole value to it. So their value is entirely circulated by the product too - turned into money, and turned back from money into fresh materials. Their turnover is never interrupted, the way fixed capital's is; instead it keeps running through the whole circuit of its forms, so these parts of productive capital are constantly replaced afresh.
Now for the variable part of productive capital, laid out in labour-power. Labour-power is bought for a set stretch of time. Once the capitalist has bought it and put it to work, it forms part of his capital - specifically the variable part. Each day it works for a period in which it adds to the product not only its own full daily value but also a surplus over and above that, which we are setting aside for now. Once labour-power has been bought - for a week, say - and has done its work, the purchase has to be renewed again and again, at the usual intervals. The equivalent of its value that labour-power adds to the product while it works, and which turns into money along with the product, has to keep being turned back from money into labour-power - has to keep completing its full circuit of forms, that is, keep turning over - if the circuit of continuous production is not to be broken.
So the value-part of productive capital advanced in labour-power passes entirely onto the product (we keep setting surplus-value aside here), goes through the two changes of form that belong to the sphere of circulation together with the product, and through this constant renewal stays permanently bound up with the production process. However differently labour-power may otherwise behave, when it comes to forming value, compared with the parts of constant capital that do not form fixed capital, it shares this particular way of turning over its value with them - and that puts it in contrast to fixed capital. These parts of productive capital - the value laid out in labour-power and in means of production that are not fixed capital - stand opposed to fixed capital, through this shared way of turning over, as circulating or fluid capital.
As seen earlier, the money the capitalist pays the worker for the use of labour-power is really just the general equivalent-form for the worker's necessary means of subsistence. In that sense, variable capital materially consists of means of subsistence. But here, when we are looking at turnover, what matters is the form. What the capitalist buys is not the worker's means of subsistence, but his labour-power itself. What makes up the variable part of the capitalist's capital is not the worker's means of subsistence, but his labour-power at work. What the capitalist productively consumes in the labour process is labour-power itself, not the worker's means of subsistence. It is the worker himself who converts the money he gets for his labour-power into means of subsistence, in order to turn them back into labour-power and keep himself alive - just as the capitalist converts part of the surplus-value of the commodity he sells for money into means of subsistence for himself, without anyone saying that the buyer of his commodity is paying him in means of subsistence. Even when part of the worker's wage is paid in means of subsistence directly, that is nowadays a second transaction. He sells his labour-power for a set price, and it is agreed that he will get part of that price in means of subsistence. This only changes the form of payment - it does not change the fact that what he actually sells is his labour-power. It is a second transaction, one that no longer runs between worker and capitalist as such, but between the worker as buyer of a commodity and the capitalist as seller of a commodity; whereas in the first transaction the worker is the seller of a commodity - his labour-power - and the capitalist is its buyer. It is just like when a capitalist has one of his commodities paid for in another commodity - say, the machine he sells to the ironworks paid for in iron. So it is not the worker's means of subsistence that give fluid capital its character, in contrast to fixed capital. Nor is it his labour-power as such. It is the value-part of productive capital laid out in that labour-power, which, through the form of its turnover, shares this character with some parts of constant capital and stands in contrast to others.
The value of fluid capital - in labour-power and means of production - is advanced only for the time it takes to finish the product, depending on the scale of production, which is set by the size of the fixed capital. This value passes entirely into the product, so it comes back entirely out of circulation once the product is sold, and can be advanced again. The labour-power and means of production that make up fluid capital are withdrawn from circulation only to the extent needed to make and sell the finished product - but they have to be constantly replaced and renewed by buying them back, converting them from money back into elements of production. They are withdrawn from the market in smaller amounts at a time than the elements of fixed capital, but they have to be withdrawn that much more often, and the capital laid out in them has to be advanced again in shorter cycles. This constant renewal happens through the constant sale of the product, which circulates their whole value. And finally, they constantly go through the whole circuit of changing forms, not just in value but in their material shape too: they are constantly turned back from commodity into the production elements of that same commodity.
With its own value, labour-power constantly adds surplus-value to the product - the embodiment of unpaid labour. This, just like the product's other value-elements, is just as constantly circulated by the finished product and turned into money. But here, where we are concerned first with the turnover of the capital-value, not of the surplus-value that turns over alongside it, we are setting the latter aside for now.
From all this, the following results.
1. The form-determinations of fixed and fluid capital arise only from the different way capital-value at work in the production process - productive capital - turns over. This difference in turnover in turn arises from the different way the different parts of productive capital transfer their value to the product - not from any difference in how much they contribute to the product's value, or from any special role in the valorization process. The difference in how value is handed over to the product - and hence also in how that value circulates through the product and gets renewed through its changes of form, back into its original physical shape - arises from the difference in the material shapes in which productive capital exists: one part gets wholly used up in making a single product, another only wears out gradually. So it is only productive capital that can split into fixed and fluid. This contrast does not exist for the other two forms industrial capital takes - not for commodity-capital, not for money-capital, and not as a contrast between either of those and productive capital. It exists only for productive capital, and within it. Money-capital and commodity-capital may function ever so much as capital, and circulate ever so fluidly - they can only become fluid capital, as opposed to fixed capital, once they have turned into fluid parts of productive capital. But because these two forms of capital live in the sphere of circulation, economics since Adam Smith has, as we will see, been misled into lumping them together with the fluid part of productive capital under one heading: circulating capital. They really are capital of circulation, in contrast to productive capital - but they are not circulating capital in contrast to fixed capital.
2. The turnover of the fixed part of capital - and so the turnover time it needs - spans several turnovers of the fluid parts. In the time it takes fixed capital to turn over once, fluid capital turns over several times. A value-component of productive capital only gets the form-determination of fixed capital insofar as the means of production carrying it is not worn out in the time it takes to finish the product and send it out of the production process as a commodity. Part of its value has to stay bound up in its old, continuing working form, while another part is circulated by the finished product - whose circulation, at the same time, circulates the whole value of the fluid parts of capital.
3. The value-part of productive capital laid out in fixed capital has been advanced all at once, in full, for the entire working life of that part of the means of production which makes up the fixed capital. So this value is thrown into circulation by the capitalist all at once - but it is only withdrawn from circulation again bit by bit and gradually, as the value-parts that fixed capital keeps adding to the goods are realized piece by piece. On the other hand, the means of production themselves, in which part of productive capital is fixed, are withdrawn from circulation all at once, to be put to work in the production process for their entire working life - but for that whole time, they do not need to be replaced by new specimens of the same kind, do not need reproducing. For a longer or shorter time they go on contributing to the goods thrown into circulation, without themselves taking the means of their own renewal out of circulation. During that time, then, they do not call for the capitalist to renew his advance either. Finally: the capital-value laid out in fixed capital runs through the circuit of its forms over the whole working life of the means of production it exists in - not physically, but only as value, and even that only partially and gradually. That is, part of its value is constantly circulated as part of the value of the goods, and turned into money, without being turned back from money into its original physical form. That turning of money back into the physical form of the means of production happens only at the end of its working life, once the means of production is completely used up.
4. The elements of fluid capital are just as constantly tied down in the production process as the elements of fixed capital are - if production is to be continuous. But the tied-down elements of fluid capital are constantly renewed in kind: means of production by new specimens of the same sort, labour-power by constantly renewed purchase. The elements of fixed capital, by contrast, are, for as long as they last, neither renewed themselves nor bought again. There are constantly raw and auxiliary materials in the production process - but always fresh specimens of the same kind, once the old ones have been used up making the finished product. There is likewise constantly labour-power in the production process - but only through the constant renewal of its purchase, often with a change of the actual people. The same identical buildings, machines, and so on, by contrast, go on functioning through repeated turnovers of fluid capital, in the same repeated production processes.
Within one and the same investment, the different pieces of fixed capital have different lifespans, and so also different turnover times. Take a railway: rails, sleepers, earthworks, station buildings, bridges, tunnels, locomotives and wagons all last different lengths of time and take different lengths of time to replace — so the capital tied up in each of them turns over at a different pace. For long stretches of years the buildings, platforms, water tanks, viaducts, tunnels, cuttings and embankments — everything English railway engineers call "works of art" — need no renewal at all. What actually wears out is mainly the track and the rolling stock.
When modern railways were first built, the prevailing opinion — nourished by the eminent engineers of the day — held that a railway would last practically forever, and that the rails wore so imperceptibly that it could be ignored for every financial and practical purpose — good rails were reckoned to last 100 to 150 years. It soon turned out that a rail's life, which of course depends on how fast the trains run, how heavy and how frequent they are, how thick the rails themselves are, and a host of other circumstances, averaged no more than 20 years. At some busy stations the rails wear out every single year. Around 1867 steel rails began to be introduced — about twice the price of iron rails, but lasting more than twice as long. Wooden sleepers lasted 12 to 15 years. Among rolling stock, goods wagons wore out considerably faster than passenger carriages. In 1867 a locomotive's life was reckoned at 10 to 12 years.
Wear is caused, first of all, by use itself. In general, rails wear roughly in proportion to the number of trains that run over them, as one railway inquiry heard. And when speed increased, wear grew faster than the square of the speed: doubling the trains' speed increased the wear more than fourfold.
Further wear comes from the action of natural forces. Sleepers, for instance, suffer not only from actual wear but from rot.
"The cost of maintaining the line depends less on the wear caused by traffic than on the quality of the wood, iron and masonry exposed to the weather. A single severe winter month will do more damage to the track than a whole year of traffic" — R. P. Williams, in a paper on the maintenance of the permanent way given to the Institute of Civil Engineers, autumn 1867.
Finally, as everywhere in large-scale industry, moral depreciation plays its part here too: after about ten years you can usually buy the same quantity of wagons and locomotives for £30,000 that used to cost £40,000. So this equipment has to be reckoned as having lost 25% of its market price, even if its usefulness hasn't diminished at all.
"Tubular bridges will not be renewed in their present form."
(Because better designs for such bridges now exist.)
"Ordinary repairs to them, taking out and replacing individual pieces, are not practicable" — W. B. Adams, Roads and Rails, London 1862.
Means of labour are, for the most part, continually being revolutionized by the progress of industry. So when they're replaced, it isn't in their original form but in the improved one. On one hand, the sheer mass of fixed capital tied up in one particular material form, which has to last out its average lifetime in that form, makes new machinery get introduced only gradually — it's an obstacle to the rapid, general adoption of better means of labour. On the other hand, competition, especially at moments of decisive change, forces the old means of labour to be replaced by new ones before their natural life is up. It's mainly catastrophes and crises that force such premature renewal of equipment on a larger social scale.
Wear (leaving moral depreciation aside) is the portion of value that fixed capital gradually gives off to the product as it's used up — in the same average proportion as it loses its usefulness.
Part of this using-up works like this: the fixed capital has a certain average lifetime; it's laid out in full for that whole period, and once the period is over it has to be replaced whole. For living means of labour — horses, say — nature itself sets the replacement time. Their average working life is fixed by natural law. Once that term is up, the worn-out animals must be replaced by new ones. A horse can't be replaced piece by piece — only by another horse.
Other pieces of fixed capital allow periodic or partial renewal. Here we need to distinguish partial or periodic replacement from the gradual expansion of the business.
Some fixed capital is made up of like parts that don't all last the same length of time, and get renewed piece by piece at different times. The rails at stations, for instance, have to be replaced more often than the rest of the track. So do sleepers: on Belgian railways in the 1850s, by one calculation, 8% were renewed every year, meaning all the sleepers were replaced over 12 years. The relationship is this: a sum is advanced, say for ten years, in one particular kind of fixed capital, and that outlay is made all at once. But a certain part of this fixed capital — the part whose value has gone into the value of the product and been turned into money along with it — gets replaced in kind every year, while the rest goes on existing in its original material form. It's this combination — laying the outlay out all at once, but only reproducing it in material form piece by piece — that marks this capital off as fixed rather than circulating.
Other pieces of fixed capital are made up of unlike parts that wear out, and so have to be replaced, at unequal times. This happens above all with machinery. What was just said about the different lifespans of the different pieces of a body of fixed capital holds here for the different components of a single machine that itself counts as one piece of that fixed capital.
Now for the gradual expansion of a business in the course of partial renewal. Although, as we've seen, fixed capital goes on working in kind in the production process, a part of its value — depending on the average wear — circulates along with the product, gets turned into money, and forms part of the money reserve fund set aside to replace the capital when it comes due for reproduction in kind. This part of the fixed capital's value, once turned into money, can be used to expand the business, or to make improvements to the machines that increase their effectiveness. So, in shorter or longer stretches, reproduction takes place — and seen from society's standpoint, it's reproduction on an expanded scale: extensive, if the field of production is enlarged; intensive, if the means of production are made more effective. But this expanded reproduction does not spring from accumulation: it is not surplus-value (the profit over and above what was laid out) being turned into new capital. It springs instead from reconverting value that had already branched off and come loose, in money form, from the body of the fixed capital, into new fixed capital of the same kind — more of it, or, failing that, a more effective version of it. How far, and on what scale, a given business is capable of this kind of gradual addition — and so how large a reserve fund must be built up to be reinvested this way, and over what stretches of time — depends of course partly on the specific nature of the business. How far detailed improvements can be made to existing machinery likewise depends on the nature of the improvement and the construction of the machine itself. Just how much this is kept in view from the outset in, say, building railways, is shown by Adams:
"The whole design ought to follow the principle that governs the beehive — the capacity for unlimited expansion. Anything over-solid, and symmetrical from the outset, is a mistake: if expansion is needed, it has to be torn down." (Adams, p. 123.)
This depends largely on the space available. Some buildings can simply add storeys upward; others need to expand sideways, which takes more ground. Under capitalist production, on one hand a great deal of means get wasted, and on other hand this gradual expansion of business often produces a lot of pointless sideways sprawl of this kind (partly at the expense of the workforce), because nothing happens according to any social plan — it all depends on the endlessly varied circumstances and means that the individual capitalist happens to have to work with. Out of this comes a great waste of productive forces.
This piecemeal reinvestment of the money reserve fund — that is, of the part of fixed capital reconverted into money — is easiest in agriculture. A given plot of land can absorb the largest amount of capital gradually. The same holds wherever natural reproduction takes place, as with livestock breeding.
Fixed capital involves special costs of upkeep. Part of this upkeep is achieved simply by the labour process itself: fixed capital spoils if it isn't kept working in the labour process. English law recognizes as much, treating it as damage ("waste") when a leased plot of land isn't cultivated according to local custom. This preservation, arising from use in the labour process, is a free gift of nature through living labour. And the preserving power of labour is of a double kind. On one hand it preserves the value of the materials worked on, by transferring that value to the product. On the other hand — insofar as it doesn't transfer this value to the product too — it preserves the value of the means of labour themselves, by keeping their usefulness intact through its action in the production process.
But fixed capital also demands actual, positive work to keep it up. Machinery has to be cleaned from time to time. This is extra labour, without which it would become unusable — it's simply warding off the harmful natural effects that are inseparable from the production process, keeping it fit to work in the most literal sense. The normal lifetime reckoned for fixed capital obviously assumes that the conditions for it to work normally throughout that time are actually met — just as, if a person lives 30 years on average, it's assumed he also washes himself. This isn't about replacing the labour built into the machine; it's about the constant extra labour that using the machine requires. It's not labour the machine does, but labour done to it — here the machine isn't the agent of production but the raw material being worked on. The capital laid out on this labour, although it doesn't enter into the actual labour process that gives the product its origin, belongs to circulating capital. This work has to be carried out continually in production, so its value also has to be continually replaced out of the value of the product; the capital spent on it belongs to that part of circulating capital covering general overhead, spread over the value-product on an annual average. We've seen that in ordinary industry this cleaning is done by the workers for nothing, in their rest breaks, and for that very reason often during the production process itself, where it becomes the source of most accidents. This labour isn't counted in the price of the product — the consumer, in effect, gets it for free. But by the same token, the capitalist gets the upkeep of his machine for nothing too. The worker pays for it in person, and this is one of capital's little mysteries of self-preservation, which in effect gives the worker a genuine legal claim on the machinery — makes him, even from the standpoint of bourgeois law, a kind of co-owner of it. In some branches of production, though, machinery has to be taken out of the production process to be cleaned, so the cleaning can't be slipped in on the side — locomotives, for instance. There this maintenance work counts among the running costs, as part of circulating capital. A locomotive has to be brought into the shed after at most three days' work and cleaned there; the boiler has to cool down first before it can be washed out without damage.
Actual repairs, or patching-up work, call for an outlay of capital and labour that wasn't included in the capital originally advanced — so it can't always be replaced and covered by the gradual replacement of the fixed capital's value. Say the value of a piece of fixed capital is £10,000 and its whole lifetime is 10 years: that £10,000, fully turned into money after ten years, only replaces the value of the original outlay. It doesn't replace the capital, or labour, added in the meantime through repairs. That's an extra value component, not advanced all at once but as needed, and the timing of these separate outlays is, by its very nature, a matter of chance. Every piece of fixed capital calls for this kind of later, doled-out, extra outlay of capital in means of labour and labour-power.
The damage that individual parts of machinery and the like suffer is, by nature, a matter of chance, and so are the repairs it calls for. Even so, two kinds of repair work stand out from this general mass with a more or less fixed character, falling into different periods of a machine's life — the teething troubles of its youth, and the much more frequent infirmities of its old age, once it's past the middle of its average lifetime. A machine, however perfect its design, may enter the production process and, once actually in use, show flaws that have to be corrected by further work. On the other hand, the further it's moved past the middle of its average lifetime, the more normal wear has piled up and the more the material it's made of has worn thin and grown decrepit — the more numerous and serious the repairs needed to keep it going to the end of its average working life, just as an old man, to avoid dying before his time, needs more medical care than a vigorous young one. So despite being a matter of chance, repair work still distributes itself unevenly across the different periods of a fixed capital's life.
From this, as well as from the otherwise chance character of repair work on machinery, two things follow:
First, the actual outlay of labour-power and means of labour on repairs is a matter of chance, just like the circumstances that call for those repairs in the first place — the amount of repair needed falls unevenly across the different periods of a fixed capital's life. Second, when the average lifetime of a piece of fixed capital is estimated, it's assumed the whole time that it's kept in working order — partly through cleaning (which includes keeping the premises clean), partly through repair, as often as needed. The transfer of value through the wear of fixed capital is calculated on the basis of its average lifetime — but that average lifetime itself is only reckoned on the assumption that the extra capital needed for its upkeep keeps being advanced.
On the other hand, it's just as clear that the value added by this extra outlay of capital and labour can't enter the price of goods at the very moment the outlay is made. A spinner can't sell his yarn dearer this week than last week just because a wheel broke or a belt snapped this week — the general costs of spinning haven't changed one bit because of an accident in one particular factory. Here, as with every determination of value, it's the average that decides. Experience shows the average scale of such accidents, and of the maintenance and repair work needed over the average lifetime of the fixed capital used in a given line of business. This average outlay is spread across the average lifetime, added to the price of the product in corresponding proportional shares, and so gets recovered when the product is sold.
The extra capital that gets replaced this way belongs to circulating capital, even though the outlay itself comes at irregular times. Because it's vitally important to fix any fault in the machinery straight away, every large factory has, alongside its ordinary workforce, a staff of its own — engineer, joiner, mechanic, locksmith and so on. Their wages form part of the variable capital, and the value of their work is spread over the product. Meanwhile, the outlays needed for materials and equipment are figured on that same average basis, and on this reckoning continually make up part of the value of the product — even though in fact they're advanced at irregular times, and so enter the product, or the fixed capital, at irregular times too. This capital laid out in actual repairs is, in some respects, a capital of its own kind — properly speaking neither circulating nor fixed — though as part of the running expenses it counts more with the former.
The way the books are kept obviously doesn't change the real state of affairs they're recording. But it's worth noting that in many lines of business it's customary to lump repair costs together with the actual wear of fixed capital in the following way. Suppose the fixed capital advanced is £10,000 and its lifetime is 15 years: the annual wear would then be £666⅔. But instead, the wear is calculated as if the lifetime were only ten years — meaning £1,000 a year gets added to the price of the goods produced for wear of fixed capital, instead of £666⅔ — in other words, £333⅓ is set aside for repair work and the like. (The figures 10 and 15 are only examples.) That's roughly how much, on average, gets spent on repairs to keep the fixed capital going for 15 years. Naturally this way of reckoning doesn't stop the fixed capital and the extra capital laid out on repairs from being different categories. On this basis of reckoning, for instance, the lowest estimate for maintaining and replacing steamships was put at 15% a year, giving a reproduction time of 6½ years. In the 1860s the English government compensated the Peninsular and Oriental Company at 16% a year for this, equal to a reproduction time of 6¼ years. On the railways, a locomotive's average lifetime is 10 years, but once repairs are included, wear is reckoned at 12½%, cutting the effective lifetime to 8 years. For passenger and goods wagons the figure is 9%, giving an assumed lifetime of 11⅑ years.
Wherever the law deals with leases of houses and other things that count as fixed capital for their owner and are rented out as such, it has everywhere recognized a distinction: between normal wear — brought about by time, the weather, and normal use itself — and the occasional repairs needed from time to time to keep the house in shape through its normal lifetime and normal use. As a rule, the first falls on the owner, the second on the tenant. Repairs are further divided into ordinary and substantial. The substantial ones amount to a partial renewal of the fixed capital in its material form, and these too fall on the owner, unless the lease says otherwise. Under English law, for instance:
"A yearly tenant is only bound to keep the buildings wind- and water-tight, so far as this can be done without substantial repairs, and generally only to see to such repairs as can be called ordinary. And even here, the age and general condition of the relevant parts of the building at the time the tenant took it on must be kept in mind, for he is bound neither to replace old and worn-out material with new, nor to make good the unavoidable loss of value that comes from the passage of time and regular use" — Holdsworth, The Law of Landlord and Tenant.
Insurance is something else again — not wear-replacement, not maintenance and repair either. It covers destruction by extraordinary events: fire, flood, and the like. This has to be made good out of surplus-value; it is a deduction from it. Or look at it from society's side. There has to be constant overproduction — production on a bigger scale than what's needed just to replace and reproduce the wealth already on hand, and this is separate from any growth in population. Only that surplus gives society the means of production it needs to make up for the extraordinary destruction that accidents and natural forces cause.
In fact only the smallest part of the capital needed for replacement sits in a money reserve fund. The most important part consists in the expansion of the scale of production itself — partly real expansion, and partly just the normal size of the branches that produce fixed capital. A machine factory, for instance, is set up expecting that every year some of its customers' factories will be enlarged, and that some part of its customers' machinery will constantly need whole or partial reproduction.
When wear and repair costs are set by the social average, big inequalities are bound to show up — even between capital investments of the same size, in the same branch, under the same conditions. In practice one capitalist's machine lasts longer than the average; another's doesn't last as long. One capitalist's repair bills run above average, another's below. But the price markup for wear and for repair is the same for everyone, fixed by the average. So one capitalist collects more through that markup than he actually spends, and another collects less. This, like every other circumstance that makes profits differ between capitalists in the same line of business even when they exploit labour-power just as hard, helps make it harder to see the true nature of surplus-value.
The line between actual repair and replacement, between upkeep costs and renewal costs, is more or less fluid. That's why there's endless argument — with railways, for example — over whether certain expenses count as repair or as replacement, and whether they should come out of current spending or out of the original capital. Charging repair expenses to the capital account instead of the revenue account is the well-known trick railway boards use to inflate their dividends artificially. But even here, experience has already supplied the main guideposts. The follow-up work done during a railway's early years, for example, is "not repairs, but must be seen as an essential part of building the line, and so must be charged to the capital account, since it doesn't come from wear or from the normal effect of traffic, but from the original, unavoidable imperfection of the construction." (Lardner)
"The only correct method, on the other hand, is to charge each year's revenue with the loss of value that necessarily had to occur for that revenue to be earned — whether or not the sum was actually spent." (Captain Fitzmaurice, Committee of Inquiry on the Caledonian Railway)
In agriculture, separating replacement from upkeep of fixed capital becomes practically impossible and pointless — at least wherever farming doesn't yet run on steam power.
"With a full but not excessive stock of implements" (meaning the ploughs and other working and household implements a farm needs), "the usual practice, taking the broad average, is to reckon the annual wear and upkeep of this stock at 15–25% of the capital spent to acquire it, depending on the particular circumstances." (Kirchhof)
With a railway's rolling stock, repair and replacement can't be separated at all.
"We keep our rolling stock's numbers steady. Whatever number of locomotives we have, we keep that number up. If one becomes unusable over time, so that it's more worthwhile to build a new one, we build it out of revenue — crediting revenue, of course, with the value of the materials left over from the old machine. Quite a lot is always left over — the wheels, the axles, the boiler, in short a good part of the old locomotive remains." (T. Gooch, Chairman of the Great Western Railway Co.) "Repairing means renewing; the word 'replacement' doesn't exist for me. Once a railway company has bought a wagon or a locomotive, it should repair it so that it can keep running forever." "We reckon 8½d. per English train-mile for locomotive costs. Out of that 8½d. we keep our locomotives going forever. We renew our machines. If you want to buy a machine outright new, you spend more money than you need to. On the old machine there's always a wheel or two, an axle, or some other part still usable, and that helps produce a machine just as good as a brand new one, more cheaply." "I now produce a new locomotive every week — that is, one as good as new, since the boiler, cylinders and frame are new." (Archibald Sturrock, Locomotive Superintendent of the Great Northern Railway)
The same holds for the wagons:
"Over time the stock of locomotives and wagons is continually renewed — one time new wheels are fitted, another time a new frame is made. The parts that carry the motion, and take the most wear, are gradually renewed; the machines and wagons can then go through such a series of repairs that in some of them not a trace of the original material remains. Even when they become completely beyond repair, pieces of the old wagons or locomotives are worked into new ones, so they never quite disappear from the line altogether. The moving capital is therefore in constant reproduction. What has to happen to the track all at once, at a fixed point in time, when the whole line is relaid — happens to the rolling stock gradually, year by year. Its existence is perennial; it is caught up in continuous rejuvenation." (Lardner)
This process, as Lardner pictures it for the railway, doesn't fit a single factory. But it does work as a picture of the constant, partial reproduction of fixed capital running together with repair across a whole branch of industry — or across production as a whole, viewed on the scale of society.
Here is proof of just how far skilled boards can stretch the concepts of repair and replacement to produce dividends. According to the lecture by R. P. Williams cited above, various English railway companies wrote off, on average over a run of years, the following sums to the revenue account for repair and upkeep of the track and buildings (per English mile of line, per year):
These differences come only to the smallest possible degree from any real difference in what was actually spent. They come almost entirely from different ways of doing the accounting — from whether an expense item gets charged to the capital account or to the revenue account. Williams says it outright:
"The lighter charge is adopted because it's needed to produce a good dividend, and the heavier charge is made because there's a stronger revenue on hand that can bear it."
In certain cases wear — and so replacement too — becomes a practically negligible quantity, so that only repair costs come into the reckoning at all. What Lardner says below about "works of art" on the railways holds generally for all such durable works: canals, docks, iron and stone bridges, and the rest. "The wear that the slow action of time produces on the more solid works is almost imperceptible over shorter stretches of time; but after a long stretch has passed — centuries, say — it must eventually bring about renewal, whole or partial, even in the most solid constructions. This imperceptible wear, compared with the more noticeable wear on other parts of the line, can be compared to the secular and periodic irregularities in the movement of the heavenly bodies. The action of time on a railway's more massive structures — bridges, tunnels, viaducts and the like — gives examples of what one might call secular wear. The faster, more visible loss of value that gets made good over shorter periods by repair or replacement is analogous to the periodic irregularities. The annual repair costs also include making good the accidental damage the exterior of even the more durable constructions suffers from time to time; but even apart from these repairs, age does not pass them by without effect, and however distant it may be, the time must come when their condition calls for rebuilding. In financial and economic terms, though, that time may well be far too distant to bring into practical account." (Lardner)
This holds for all works of this secular duration — where the capital advanced in them does not have to be gradually replaced to match its wear. Only the average annual costs of upkeep and repair need to be carried over into the price of the product.
We have seen that a larger part of the money flowing back to replace the wear of fixed capital is reconverted into its natural form again every year, or even at short intervals. Even so, every individual capitalist still needs an amortisation fund — for the part of his fixed capital that only reaches its moment of reproduction after a run of years, all at once, and then has to be replaced wholesale. A significant component of fixed capital simply rules out piecemeal reproduction by its very nature. And even where reproduction does happen piecemeal — new stock added to the devalued stock at shorter intervals — some prior accumulation of money, larger or smaller depending on the particular branch of production, is still needed before that replacement can take place. Not just any sum of money will do; a sum of a definite size is required.
Let's look at this purely under simple money circulation, setting aside the credit system, which comes later. The mechanism works like this. Volume 1 showed that when part of the money existing in a society always lies idle as a hoard, while another part functions as a means of circulation — or as the immediate reserve fund for the money directly circulating — the proportion between the two keeps changing. In our case, money that has to be piled up as a hoard, in fairly large amounts, in the hands of a bigger capitalist, gets thrown into circulation all at once when he buys fixed capital. It then distributes itself again through society, partly as a means of circulation, partly as hoard. Through the amortisation fund — the fund by which the value of fixed capital flows back to its starting point in step with its wear — part of that circulating money once again becomes a hoard, for a longer or shorter time, in the hands of the very same capitalist whose hoard had turned into a means of circulation and left him when he bought the fixed capital. It is a constantly shifting distribution of the hoard that exists in society — money that functions at one moment as a means of circulation, and is then separated out again as a hoard from the mass of circulating money. As the credit system develops — and it necessarily develops alongside large-scale industry and capitalist production — this money no longer functions as a hoard but as capital, though now in the hands not of its owner, but of other capitalists it's made available to.