Crisis in 1861-63.

Rather prescient I reckon:

When speaking of the destruction of capital through crises, one must distinguish between two factors.

In so far as the reproduction process is checked and the labour process is restricted or in some instances is completely stopped, real capital is destroyed. Machinery which is not used is not capital. Labour which is not exploited is equivalent to lost production. Raw material which lies unused is no capital. Buildings (also newly built machinery) which are either unused or remain unfinished, commodities which rot in warehouses — all this is destruction of capital. All this means that the process of reproduction is checked and that the existing means of production are not really used as means of production, are not put into operation. Thus their use value and their exchange value go to the devil.

Secondly, however, the destruction of capital through crises means the DEPRECIATION of values which prevents them from later renewing their reproduction process as capital on the same scale. This is the ruinous effect of the fall in the prices of commodities. It does not cause the destruction of any use values. What one loses, the other gains. Values used as capital are prevented from acting again as capital in the hands of the same person. The old capitalists go bankrupt. If the value of the commodities from whose sale a capitalist reproduces his capital=£12,000, of which say £2,000 were profit, and their price falls to £6,000, then the capitalist can neither meet his contracted obligations nor, even if he had none, could he, with the £6,000, restart his business on the former scale, for the commodity prices have risen once more to the level of their cost prices. In this way, £6,000 has been destroyed, although the buyer of these commodities, because he has acquired them at half their cost price, can go ahead very well once business livens up again, and may even have made a profit. A large part of the nominal capital of the society, i.e. of the exchange value of the existing capital, is once for all destroyed, although this very destruction, since it does not affect the use value, may very much expedite the new reproduction. This is also the period during which MONIED INTEREST enriches itself at the cost of INDUSTRIAL INTEREST. As regards the fall in the purely nominal capital, state bonds, shares, etc. — in so far as it does not lead to the bankruptcy of the state or of the share company, or to the complete stoppage of reproduction through undermining the credit of the industrial capitalists who hold such securities — it amounts only to the transfer of wealth from one hand to another and will, on the whole, act favourably upon reproduction, since the parvenus into whose hands these stocks or shares fall cheaply, are mostly more enterprising than their former owners. MECW 32 127-28

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About HR

Deep in the adjunct crackhole.
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