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Title
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Capital Accumulation in Department I
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Description
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Under extended reproduction, part of the surplus-value produced in a given year is capitalized; that is, rather than being spent in its entirety as revenue for the capitalists' personal consumption, a portion of surplus-value is invested in new elements of productive capital (new means of production and labor-power). Let p1 represent the rate of capitalization of surplus-value in Department I -- the proportion of surplus-value that capitalists in Department I invest in new productive capital. p1, then, must be between zero and one: if it is equal to zero, we have simple reproduction; it cannot quite reach one, for then the capitalist class would starve, that is, consume nothing.
When surplus-value is capitalized, part of it is invested as constant capital in new material means of production, and the rest as variable capital in new labor-power. How capitalized surplus-value is divided between these two components depends on the value composition of capital. Marx usually expresses the value composition of capital as a ratio, c/v. Here, we shall express the value composition :as the proportion of constant capital, k = c/(c + v), which conveys the same information, but is in a more convenient mathematical form for present purposes.
When accumulation of capital takes place, as we have mentioned, part of the surplus-value is used to purchase additional elements of constant and variable capital. In Department I, for example, in year t, p1s1t is capitalized for the next year; of this newly capitalized surplus-value, k1p1s1t goes to augment constant capital, and the remainder, (1 - k1)p1s1t , to variable capital.
The relation of year t's product in Department I to capital advanced in this department in year t + 1 is shown schematically in [the Figure].
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Designer
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Fox, John
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Date
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1985
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Source
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Understanding Capital Volume II
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Bibliographic Citation
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John Fox, 1985. Understanding Capital Volume II. Progress Books. Figure 9
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