Shortening the turnover time and its impact on the rate of surplus value

In the reproduction schemes a period of production lasts one year and the working period and period of production are identical. There is no period of circulation and the working periods follow one another immediately.

The duration of the production period is the same in all spheres of production and the assumption is made that in all branches capital turns over once every year. None of these several assumptions corresponds to reality and they are intended purely for simplification. First the working period and production time are not identical in reality. Secondly, apart from the production time, there must also be a circulation time. And finally turnover time varies from one branch of production to another and is determined by the material nature of the process of production. If the analysis is to bear any correspondence to the real appearances those assumptions also have to be modified.

According to Marx the ‘difference in the period of turnover is in itself of no importance except so far as it affects the mass of surplus labour appropriated and realised by the same capital in a given time’ (1959, p. 152). The impact of turnover on the production of surplus value can be summarised 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’ (1959, p. 70).

The reduction of turnover time means reductions of both production and circulation time. Increases in the productivity of labour are the chief means of reducing the production time. As long as technological advances in industry do not entail a simultaneous considerable enlargement of constant capital, the rate of profit will rise. Meanwhile the ‘chief means of reducing the time of circulation is improved communications’ (Marx, 1959, p. 71). The technological advances in shipbuilding mentioned above fall into this category.

The rationalisation of German railways with the introduction of the automatic pneumatic brake made possible total savings of around 100 million marks a year, mainly through reductions in personnel and major changes in the speed of freight traffic. Once shunting was mechanised so that trains could be built more quickly and cheaply, and many lines were electrified, the railway system was completely revolutionised.

Apart from improvements in transport, savings are achieved by reducing expenditure on commodity capital. Before commodities are sold they exist in the sphere of production in the shape of stock whose storage constitutes a cost The producer tries to restrict his inventory to the minimum adequate for his average demand. However this minimum also depends on the periods that different commodities need for their reproduction. With improvements in transport, storage costs can be cut as a proportion of the total volume of sales transactions. In addition such costs tend to fall relative to total output as this output becomes ‘more concentrated socially’ (Marx, 1956, p. 147).

Every crisis precipitates a general attempt at reorganisation which, among other things, attacks the existing level of storage costs. The time during which capital is confined to the form of commodity capital tends to become progressively shorter. That is, the annual turnover of capital is speeded up. This is a further means of surmounting crises. Marx says that:

the scale of reproduction will be extended or reduced commensurate with the particular speed with which that capital throws off its commodity form and assumes that of money, or with the rapidity of the sale (1956, p. 40).