Readings: Capital II, ch. 12-14
The total turnover time of capital is equal to the sum of the production time and the circulation time. Production time can be further broken down into the working period and the period of production during which no labor is done. During the non-working period, constant capital undergoes natural processes set in motion by labor that are necessary to obtaining a finished commodity. As is always the case with Marx, the working period is key to understanding the economics of the turnover period.
He outlines a temporal spectrum that defines the working period. On the short end of the spectrum is discrete commodities, those that can be sold as they are produced, such as yarn. On the long end is commodities whose completion demands a highly complex and protracted production process, such as large ships. The latter are vulnerable to disruptions in the production process. If it takes a year to build a ship, the capitalist who controls production will not realize his capital until the end of that full year. The capitalist who controls production of yarn can realize his capital on a daily basis if he so desires. (The reality is slightly more complex because yarn is sold in bulk, but the working period is significantly shorter.)
During early capitalism, production of commodities with longer connected working periods was most often not undertaken by capitalists because the realization of capital would take too long. Building roads and canals was thus often undertaken by the state. This changed with the growing centralization of capital (Marx uses the term “concentration,” but to be consistent with his terminology from Volume I, I use “centralization”). He writes, “If the shortening of the working period is thus generally bound up with an increase in the capital advanced for this shorter time… it comes down to a question of the extent to which the means of production and subsistence, i.e. disposal over them, are fragmented, or united in the hands of individual capitalists, i.e. the extent reached by the concentration of capital. In so far as credit mediates, accelerates and intensifies the concentration of capital in a single hand, it contributes to shortening the working period, and with this also the turnover time.” (312-3; my emphasis)
The key to shortening the working period is increasing productivity through relative surplus value—applying cooperation, machinery and efficient division of labor. Finance allows the industrial capitalist to mobilize large amounts of other people’s capital to increase productivity in this way.
Financialization essentially represents the culmination of the centralization of capital. It accomplishes centralization in the most efficient way by channeling social power through money. The social essence of this process is twofold: (1) the capitalist class becomes more and more powerful vis-à-vis the working class and other classes and (2) capitalism is able to shape nature in greater and greater magnitude. The piece that is not addressed here is the role of the capitalist state as the brute-force arm of finance capital, but that is beyond the scope of Marx’s work in Capital.
But this dual quality of finance gets to Marx and Lenin’s question of whether it represents a transitional formation to socialism. The key question is who controls the central financing—and ultimately, planning—mechanism. The workers or the capitalists? Under the rule of capitalism, there seems to be a tension built into finance—that between centralization and fragmentation.
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