Explain the bookclub: We are reading Volumes 1, 2, and 3 in one year and discussing it in weekly threads. (Volume IV, often published under the title Theories of Surplus Value, will not be included in this particular reading club, but comrades are encouraged to do other solo and collaborative reading.) This bookclub will repeat yearly.
This week’s reading is shorter than most.
I’ll post the readings at the start of each week and @mention anybody interested. Let me know if you want to be added or removed.
Just joining us? You can use the archives below to help you reading up to where the group is. There is another reading group on a different schedule at https://lemmygrad.ml/c/genzhou (federated at !genzhou@lemmygrad.ml ) which may fit your schedule better. The idea is for the bookclub to repeat annually, so there’s always next year.
Archives: Week 1 – Week 2 – Week 3 – Week 4 – Week 5 – Week 6 – Week 7 – Week 8 – Week 9 – Week 10 – Week 11 – Week 12 – Week 13 – Week 14 – Week 15 – Week 16 – Week 17 – Week 18 – Week 19 – Week 20 – Week 21 – Week 22 – Week 23 – Week 24 – Week 25 – Week 26 – Week 27 – Week 28 – Week 29 – Week 30 – Week 31 – Week 32 – Week 33 – Week 34 – Week 35 – Week 36 – Week 37 – Week 38 – Week 39
The industrial capitalist…
Okay so here’s my layman understanding of it, hopefully someone corrects me if I’m way off the mark.
spoiler
The financier is dealing in capital as a commodity. The industrialist is buying the use value of the capital, which is its capacity in his hands to be turned into the necessaries for the labor process.
So the capital does get turned into raw materials and machinery and wages like usual, and that stuff does depreciate like usual. He buys the use of the money for a portion of the surplus. Otherwise he would have to wait for the market to turnover and unlock that capital he already has tied up in the process.
Or more succinctly, the loan is a commodity he is buying, the capital that belongs to the financier becomes a raw material that depreciates into the new commodity. The financier is paying 100 for 105, the industrialist is paying 105 for 140.
Edit: the industrialist is using 100 percent of the loan, in our example, to do the whole labor process. So the variable and constant capital are all part of the original sum, the surplus on 100 loaned to him would be 140%, if he owes 5% on the loan he pockets the other 35% himself. The variable capital isn’t an additional sum on top, the loan can be used for constant and variable capital as money.
He is buying the ability to produce more surplus value now without waiting, using someone else’s money. He doesn’t keep the capital, he just wants the profit, he owes the capital he was loaned back, and it gets turned into commodities to pay for his loan.
I’m not sure if this helps, but I think the bold part answers your question most directly?
The rest of your points seem fine, though
^Correction: 140 is the value of the commodties, 120 is merely the cost of constant and variable capital bought to make commodities
But just to reiterate my point, how does the industrial capitalist preserve his capital value of 120, while adding a surplus value of 20 onto it, despite the financial capitalist’s taking of principal and sum?
Because it seems to me, that after the process of selling the commodities, the industrial capitalist has to deal with the following costs:
100 + 5 = principal + interest, taken by the money capitalist (note: the interest is derived from the surplus value created, due to 5% interest)
20 = variable capital paid
140 - 125 = 15
Leaving 15 to be the industrial capitalist’s profit, of the original surplus value of 20.
However, a transformation from 120 capital --> 15 increase seems to me a decrease… to counter this, this would indicate some preservation of the initial capital used in production, to continue capitalist expansion.
TO make it so that 120 capital -> + 20 surplus value -> 140 capital
I realized partway through editing my answer what I missed, I think I got it now though.
He owes the capital back. He doesn’t keep it, he is buying its use temporarily. He started without it and pays it back at the end, everything has depreciated in the normal process in the interim.
Oooh… that explains the 5% interest
So, overall, he borrows a serviced loan, possibly for constant and variable capital,
whose net price is = 5 (100 - 105 -> borrowed money - {future principal + future interest} ), but that which can help form the 40% value/ surplus value of the full 140%/ commodities
40 - 5 = 35 in profit
Right, what I hadn’t accounted for was that you were having him throw in 20 of his own capital as well, but the math works out the same from the perspective of the lender. He gets his split of the profit, and our industrial capitalist walks away with 15 even if he has to pay 20 into the process as well. He’s just using the loaned capital as a raw material in the process, capital has become a commodity through finance.