Page:Manual of Political Economy.djvu/90

 Of Capital. 41

through countless ages, fertilize the same tracts of land. Circulating capital, since it is destroyed by one use, must receive an immediate return; the application of fixed capital is rewarded by industrial advantages continued for a long period of time. A farmer expects that each successive crop will remunerate him for the wages he has paid during the current year. But if he purchases a steam thrashing-machine, he does not expect that his outlay will be returned to him in one year; he hopes to use the machine for a great number of years, and thus he will be gradually repaid for his original outlay. As another example, raw material is circulating capital to a manufacturer: the raw cotton is only once woven into cloth; and the manufacturer, when he sells the cloth, is repaid the sum which he has expended in the raw material. But the money which he has invested in fixed capital—such as the machinery used in his manufactory—is gradually returned to him. When the capital which administers to the production of any wealth is entirely circulating, the amount of wealth produced must in value be at least equal to the capital employed; for since this capital, according to our hypothesis, is circulating, it is entirely consumed by one use, and therefore the particular industry would not be remunerative unless the value of the wealth produced was somewhat more than sufficient to replace the capital consumed. All capital, as we have before said, is intended to be either sooner or later consumed: circulating capital is destroyed by once ministering to the production of wealth; but capital is maintained by reproduction. Hence, since circulating capital implies immediate consumption, circulating capital mast also necessarily imply immediate reproduction. Fixed capital, however, may repeat for a long period the assistance it renders to production; fixed capital, therefore, is only gradually consumed, and the amount of wealth expended upon fixed capital is not immediately reproduced. The most important practical consequences follow from these considerations. Let it be supposed that a considerable amount of capital, which has been previously employed as circulating capital, is converted into fixed capital; when employed as circulating capital it was at once reproduced, and therefore

BOOK I. CH. IV.

Practical consequences of the distinction between fixed and circulating capital.