Capitalists imagine their mode of production as production for exchange and imagines its origins in trade, in the circulation of the commodities between producers and .....producers, between producers and consumers, producers and "circulators," merchants.
Production based on capital is not exactly how the capitalists imagine it. Capital is more than simply production for exchange. It is the requirement, the economic compulsion, to realize through exchange the expropriation of alienated labor power, of value. To that end, and everything is focused on that end, the movement of the commodity to market, its circulation, is one that both parallels and intersects the movement of the commodity through the production process itself, except... in the production process itself, the commodity's use value, it's specific physical characteristics are the manifest object of labor and its abstract, universal social characteristic, its value in and for exchange are latent, while in the circulation process the concrete is smothered by the commodity's function, its purpose, as the abstract power over labor.
Capital sustains itself in the moment when the intent of production is the compulsion to exchange. Capitalist production does not arise from circulation, simply from exchange, but rather from a specific exchange between property and labor, between owners and laborers.
Capital in its circulation can only realize itself as expanded value to the degree that its commodities command greater supplies of "lost" alienated, wage-labor. Capital produces circulation out of its own condition. Circulation time becomes a moment in the total social reproduction time.
Marx explains how the circulation time of a specific process, a sector of capitalism, impacts the surplus value that can be expropriated. It's no mystery. Takes long or longer to get a return on the capital, takes longer to throw that money back into production and try it all over again. Circulation time then appears as a barrier, as a deduction to the generation of surplus value. In the Grundrisse, Marx writes:
Pretty incredible exploration, isn't it? Capital posits the conditions of its own limitation as part of its total social reproduction. Circulation is a "characteristic form"-- a whole that both embodies and conflicts with the sum of its parts.This is the nature of capital, of production founded on capital, that circulation time becomes a determinant moment of labour time, for the creation of value. The independence of labour time is thereby negated and the production process is itself posited as determined by exchange, so that immediate production is socially linked to it and dependent on this link-- not only as a material moment, but also as an economic moment, a determinant, a characteristic form.
And what can, must the capitalists do? They must seek to reduce the circulation time. To that end, capital compresses, as best it can, circulation time, not just by reducing production time to move the commodities to market, not just by reducing the circulation time by moving more commodities more quickly, but by "pre-empting" circulation time through numerous mechanisms, most of which have something to do with receiving, obtaining advances, or credits. Production is organized around milestones where payments are received prior to the completion of all work, but as the work progresses.
Contracts for production become exchangeable bills themselves, much like bills of lading, upon which advances are received, amounts are discounted, circulation time is suspended, attenuated, shrunk, but most all transferred.
The expansion of credit, of an instrument acting on the assumption of value, is based on the differences in turnover times, the unevenness of capital's times of and to realization.
Loans, hedges, futures, options, credits, bank letters of credit are all mechanisms for reconciling the different turnover times, and mitigating the conflicts between production and circulation times. As with every other exchangeable product, the exchanges themselves serve to distribute, allocate portions of the total available profit.
All of these instruments can be considered "speculative," but the speculation is inherent in the production and circulation of value. All these instruments can be considered fictitious, but only to the extent that capital unrealized is not capital. The "fictitious" component in the credit vehicles is not that these instruments do not correspond to "real values," but that the real values cannot be realized quickly enough, massively enough to maintain profitability.
March 25, 2013