[OPE-L:5449] Re: turnover time and surplus value

From: Gerald_A_Levy (Gerald_A_Levy@email.msn.com)
Date: Fri Apr 27 2001 - 18:01:56 EDT

Going back a few days, Rakesh wrote in [5373]:

> Grossmann is correct that a  reduction in
> turnover time is a countertendency to the falling
> rate of profit.

Then you might find the following of interest:

"The impact of turnover on the production of
surplus value can be summarized by saying that
during the period of time required for turnover
the whole capital cannot be deployed productively
for the creation of surplus value. A portion of the
capital always lies fallow in the form of either
money capital, commodity capital or productive
capital in stock. The capital active in the production
of surplus value is always limited by this portion
and the mass of surplus value obtained
diminished in proportion. Marx says that the 
'shorter the period of turnover, the smaller
this idle portion of capital as compared with the
whole, and the larger, therefore, the appropriated
surplus value, provided other conditions remain
the same'" (Henryk Grossmann _The Law of
Accumulation and the Breakdown of the Capitalist
System_, London, Pluto Press, 1992, p. 141)

A hypothetical example:

Suppose that the turnover time initially equals y.

Then suppose that:
y  =  production time (1/2 y) + circulation
          time (1/2 y)

The total capital equals:

          c  =  $50
          v  =  $50
          s =   $50
          commodity capital = $50

Suppose that *the rate of surplus value remains
constant throughout this example*.

This commodity capital, in Grossmann's quote
above, is a portion of the total  that lies

If the turnover time remains constant and all
of the c + v + s is productively consumed, then
capitalists will have $150 to now invest in
c + v for the next period. Let's assume that they
would have invested $75 for c and $75
for v in the next period.

NOW let's take the case of where there is a
reduction in the turnover period.

Suppose that the circulation time is cut by 1/2.
Thus, the turnover time has been reduced from
y to 3/4 y (i.e. a 25% reduction in turnover time
caused by a 50% reduction in circulation time).
Suppose then that the commodity capital (the
presumed value of the unsold commodities)
is cut proportionally such that it is now $25.

This then means that, assuming the entire amount
is productively consumed, that capitalists can
now increase investment such that it is now
$175 (up from $150). Capitalists can use that
money-capital to then (assuming the same
proportions) invest $87.50 in c and $87.50
in v.

This then means that the *mass of surplus value*
can be increased even though the rate of
surplus value is assumed to remain constant.
In this case, then, the mass of surplus value
grows because the reduction in turnover time
allows for a  greater amount of capital to be
productively invested (because less of it is now

In this sense, a reduction of turnover time
increases profitability for the same reason that
a decrease in expenditures on unproductive
labor can increase profitability. I.e. it frees
up funds that would otherwise have been 'tied
up' for a longer period (1/4 y in the example
above) in a form that didn't allow for productive

Does that help?

In solidarity, Jerry

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