What Are Capital Flows?

Capital flow is the movement of capital from money to commodities and then from commodities to money. Capital flows are part of the capital cycle. The capital cycle includes three stages: the purchase stage, where currency is converted into means of production and labor; the production stage, where means of production and labor are combined to produce new value in use and create surplus value; in the sales stage, the goods produced are sold Converted into money, realizing value and surplus value. Capital flows include only two of the preceding three phases. In these two stages, value is not multiplied, but it is an indispensable condition for value multiplication: on the one hand, it prepares for the capitalist production process, that is, the production of surplus value; on the other hand, it realizes The necessary link of value and surplus value created in the production process. ^[1]

Capital flow

Right!

Capital flow is the movement of capital from money to commodities and then from commodities to money. Capital flows are part of the capital cycle. The capital cycle includes three stages: the purchase stage, where currency is converted into means of production and labor; the production stage, where means of production and labor are combined to produce new value in use and create surplus value; in the sales stage, the goods produced are sold Converted into money, realizing value and surplus value. Capital flows include only two of the preceding three phases. In these two stages, value is not multiplied, but it is an indispensable condition for value multiplication: on the one hand, it prepares for the capitalist production process, that is, the production of surplus value; on the other hand, it realizes The necessary link of value and surplus value created in the production process. ^[1]

Economic growth and capital supply and demand;

Interest rate and

(One)

I. Positive effects

Promote the improvement of world production level and economic benefits;

good for countries

Capital is usually divided into two categories, and this must be addressed in order to fully illustrate the subject. This distinction is very obvious, although it has not been given a name in the previous two chapters, but it is often mentioned. Now it is precisely defined and pointed out

It's time for some of the consequences.

After some of the capital for the production of any kind of goods is used once, it will no longer be capital; it can no longer provide services for production, at least it cannot provide the same services, and it can no longer provide services for the same production. This is the case, for example, with the portion of capital made up of raw materials. Tallow and caustic soda used to make soap, once used to make soap, are no longer tallow and caustic soda, and can no longer be used in soap manufacturing, although its variant soap can be used as raw materials or tools in other manufacturing sectors. The portion of capital paid as wages, or the portion of capital consumed as a means of subsistence for workers, should also be included in this category of capital. The part of the capital paid by the cotton owner to his workers will no longer be his capital once it is paid, and the part of the capital consumed by the workers will no longer be capital at all, and even if the workers save some, they can only Think of the saved capital as new capital as the result of a second accumulation. The capital that completes all production functions in this way, that is, the capital used for one use, is called working capital. This name is not very appropriate. This name is taken because this part of the capital needs to be constantly updated by selling finished products, and after the update, it is used to buy raw materials and pay wages. So it does not rely on holding, but on changing hands to perform its functions.

However, there is still a large portion of capital that exists in durable or large or small production equipment. This part of capital does not work by changing hands, but by maintenance, and its utility will not be exhausted by one use. In this category are houses, machines and all or most of the items called appliances or tools. Some of them are very durable, and their function as production equipment can persist in repeated production operations. The capital invested in the permanent improvement of land should also fall into this category. In addition, there is the capital once spent to pave the way for future operations at the beginning of the business, such as the expenses of mining, channeling, road building, and dock building. There are other examples, but these are sufficient. All capital that exists in the above-mentioned durable form and generates income in the corresponding period is called fixed capital.

Some fixed capital needs to be renewed from time to time or periodically. This is true of all appliances and houses. They need to be partially updated at regular intervals through maintenance and overhauls. They will eventually be used completely, and they can no longer be used as houses and equipment, and reclassified as raw materials. In other cases, fixed capital does not need to be completely renewed unless it suffers an unusual accident, but it also always requires some expenditure for maintenance, which is either periodic or at least irregular. A dock or canal, once created, does not need to be remanufactured like a machine unless it is intentionally destroyed or blocked by a catastrophe such as an earthquake. But regular and recurring expenses are needed to repair it. There is no need to spend a second time on mining, but unless someone is willing to pay for drainage, the mine will soon be abandoned. The most durable of all types of fixed capital is the capital used to increase the productivity of a certain natural factor, such as land. Draining marshes or flooded areas such as Bedford Plain, reclamation, or embankment protection are permanent improvements, but drains and dikes need frequent maintenance and repairs. The land improvement carried out by digging underground drainage ditches has the same permanent nature. This improvement can greatly increase the production capacity of clay. The application of long-acting fertilizer is also a permanent improvement of the land. It is not substances that will enter the plant and will be consumed by the plants, but substances that only change the relationship between soil and air and water, such as adding sand and lime to heavy soil and clay and light soil. Marl. However, even for such improvements, irregular expenditures are required to maintain their full effectiveness, although the amount of expenditure may be small.

However, these reforms deserve a real boost to earnings, leaving a balance after deducting the full cost of the improvements. This balance is the return on the initial investment. This return does not end like a machine, due to wear and tear of the machine, but will last forever. As a result, land with increased productivity will have a proportional value in the market. Therefore, it is generally believed that the capital invested in land improvement still exists in the increased land value. However, there should be no misunderstanding. The capital here, like all other capital, has already been consumed, the life of the land reformers and the wear and tear of the tools they use. However, it is consumed in production, which has a permanent impact on the natural factor land occupied by people and improves the productivity of the land. We can think that the increase in output is the result of the combined effect of land and fixed capital. But because capital is actually consumed and can no longer be taken away, its productivity is inseparably integrated with the productivity of the original quality of the soil; therefore, the remuneration for the use of land no longer depends on the control of labor and The law of capital gains depends on the law governing the compensation of natural factors.