Commodity Flows in the Three-Department Model of Simple Reproduction

Title: Commodity Flows in the Three-Department Model of Simple Reproduction
Description: For part of his analysis of simple reproduction, Marx divides Department II (the production of articles of consumption) into two sub-departments: Department IIa, which produces necessities consumed by both workers and capitalists; and Department IIb, which produces luxury goods consumed only by capitalists. For simplicity, Marx assumes that capitalists in all departments divide their consumption into necessities and luxuries in the same proportions: suppose that k represents the proportion of capitalists' revenue spent for necessities and the remainder, 1- k, the proportion spent for luxuries.

Note that for equilibrium to obtain, not only must there be balanced exchange between Departments I and II (c2 = c2a + c2b = v1 + s1), but as well, there must be a division of production of articles of consumption into necessities and luxuries that reflects capitalists' expenditures for these goods. The more complex commodity flows for the three department model are shown in [the Figure]. As before, money and commodities flow in opposite directions.
Designer: Fox, John
Date: 1985
Source: Understanding Capital Volume II
Bibliographic Citation: John Fox, 1985. Understanding Capital Volume II. Progress Books. Figure 8