Contrary to what many "Marxists" say, Marx's finished concept of variable capital is NOT a Sraffian-Ricardian "commodity bundle". Rather, variable capital is the actual amount of capital that is tied up at any time during the year to fund labour costs (a "stock" value, and not a flow). http://ir.canterbury.ac.nz/handle/10092/1024 In other words, the enterprise manager or owner must continuously keep a certain amount of funds on hand to pay salary costs.
However, since, on average, the gross revenue receipts of the fully-operational enterprise can often replace wage costs after (say) one or two months, the stock value of variable capital is only a fraction of the annual flow - it could be one-sixth or one-tenth, and it could vary from year to year depending on the type of production process. We can easily infer how true this must be, by comparing the annual flow of "intermediate consumption" to the value of inventory held at different balance dates. The inventory holding is only a fraction of the annual flow, and it can also vary from quarter to quarter. The essential scientific point here is, that the concept of variable capital, like any other category of capital, cannot really be defined without a specification of its turnover time (its rotation speed). Most Marxist discussions of the FROP having nothing to say about capital turnovers, but from the point of view of a finance controller this is pretty crazy, since precisely the turnover time of the different components of total capital is a crucial determinant of the net yields. In fact, chapter 4 of Capital Vol. 3 on "the effect of the turnover on the rate of profit" was only a header in Marx's manuscript. There was no text by Marx. Engels therefore wrote the whole chapter himself, basing himself inter alia on Marx's discussion in Capital Vol. 2, chapter 16. As Engels noted specifically in chapter 4 of Capital Vol. 3, Marx himself (unlike most Marxists) was very well aware of the turnover time of variable capital: "The direct effect of the abbreviated turnover time on the production of surplus-value, and therefore also on profit, consists in the increased effectiveness which this gives to the variable portion of capital, as discussed in Volume 2, Chapter 16: 'The Turnover of Variable Capital '. There it was seen how a variable capital of 500 which turns over ten times in the year appropriates just as much surplus-value in this period as a variable capital of 5,000, with the same rate of surplus-value and the same wages, which turns over only once in the year." (quoted from Marx, Capital Vol. 3, p. 165 in the Penguin edition). Marxists often berate Engels for distorting Marx's writing in a "positivist" direction, but their own concoction is strictly a metaphysical Ricardian theory of capital. A metaphysical theory of capital is a theory which, pitched at convenient "levels of abstraction", can never be scientifically tested to confirm it or falsify it - if it is true, it is "true" simply because of the terms which the Marxists decided to use that day. Heinrich's so-called "science of value" is pretty much in this category. It is "true" even if it is false. It might fool gullible Americans, but here in Europe scientifically-minded people don't think very much of Heinrichian scholasticism. Most of all, Heinrich says almost nothing that is actually new. His "magic trick" consists of recycling old arguments, while simultaneously asserting that the "Neue Marxismus" need not discuss the "Alte Marxismus" anymore. He appears to be saying something new, but in reality he is not saying anything new. Thanks very much, Michael Heinrich. J.
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