[OPE-L:5238] the circular flow of value

Gerald Levy (glevy@pratt.edu)
Wed, 11 Jun 1997 06:57:04 -0700 (PDT)

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A continuation of the "ideal vs. real value" thread".

There has been much talk of the importance of viewing the
determination of value from a temporal perspective. I believe that such
a perspective is inherent in a "circuits of capital" approach.

Let's consider the circuit M-C...P...C'-M'

The following could be drawn as a "circular flow model" but, it is
difficult to draw the circles and graphics via e-mail. So ... bear with
me (and use a little graphic imagination).

= (1) =
= =
= = =====================>
= M ==> C {L, mp} =
= =

[In (1), we see the exchange
of money (M) for labour-
power (L) and means of
production. In the exchange
of M for L we see the
creation of the *value
relationship*. Yet, while
this forms a presupposition
for capitalist production
and the creation of value,
the actual expenditure of
living labour in production
is required for the creation
of value in "ideal" form.
I.e. in (1), we see
the precondition for the
creation of value embedded
within commodity exchange].

= (2) =
= =
===========================> = ... P .... =
= =

[In (2), we have production,
which only existed as
possibility in (1). Here we
see the expenditure of living
labour time and, assuming that
there is surplus labour time,
the *potential* for surplus
value. I.e. emerging from (2)
are "commodities" which have
not been "actualized" as value
since those commodities have
yet to take on a value-form.
Thus, "Ideal" or "potential"
value and surplus value has
been created in production,
but it is not yet _fully_
value and s].

= (3) =
===========================> = =
= C' (C + c) -> M' (M + m) =
= =

[As capitalism is form-dominated,
a presupposition, or expectation,
of capital, is that the result of
(2) will take the commodity-form.
Yet, after (2), there can be a
"reduction in value" in the
process of circulation and some
proportion of the "value" of the
"commodities" can not be "realized/
actualized" _as value_ unless and
until the "ideal value" created in
production is manifested as value.
What has been "created" by the
expenditure of human labor in (2)
may be "lost" if C' ("ideal"
commodities) is not transformed
into M' in (3)].

= (4) =
= =
==============> = M' -> Mcap + Mcons =
= =

[Following (3), capitalists have
a certain quantity of money (M')
which can be used for productive
consumption (reinvestment in c +
v) {Mcap} and/or for individual
consumption (i.e. unproductive
consumption) {Mcons}. Of course,
it is commonly assumed that all of
s will be converted into capital,
i.e. that productive consumption =
100%, but any money which is allocated
for individual consumption reduces the
rate of accumulation in the "circular flow
of value"].

What emerges from an examination of the "circular flow of value" include:

a) the recognition of the inter-relationship and inter-connectedness of
all phases of the circuit.

b) the recognition of the importance of time in concepualizing value.

c) the recognition that not only is the reproduction of capital
*possible*, but that embodied within that process are many different
moments of time in which there can be "disruptions" and "discontinuities"
which can negatively affect the accumulation of capital. I.e. what we see
above is an inherently *disequilibrium* perspective on accumulation
which recognizes the *formal* possibility and requirements for
reproduction but which also highlights the obstacles to that process. Of
course, this same point can be seen through an examination of the
"reproduction schema."

In solidarity, Jerry