Circulating Productive Capital

Circulating Productive Capital


that part of the productive capital of socialist enterprises and associations which is entirely consumed in each production cycle and which fully transfers its value to the new product of labor. Circulating productive capital changes its physical form in the process of production, and its value during the course of one production cycle is included fully in the production costs of output.

Circulating productive capital consists of the objects of labor and the components of incomplete production. Raw materials, basic and auxiliary processed materials, fuel, and purchased semifinished articles, and the like constitute the objects of labor; incomplete production includes semifinished articles manufactured at the enterprise and expenditures for future years, that is, outlays for future production. The value of incomplete production includes that portion of wages paid to production workers and clerical and professional employees which is calculated as part of the production costs for this output. Circulating productive capital also includes inexpensive and fast-wearing objects and tools that have either a value of less than 50 rubles or a service life of less than one year.

The functioning of socialist enterprises is tied to the existence of definite production stocks (objects of labor) in all stages of reproduction. These stocks ensure continuity and regularity in all production processes and serve as a form of insurance in all stages of social reproduction. Excess production stocks, however, retard the turnover of capital, reduce production efficiency, and create strains in the supply network. Therefore, the volume of circulating productive capital in the national economy is one of the key indicators of the country’s economic potential, and the velocity of turnover of circulating productive capital is an index of economic efficiency. The circulating productive capital of the Soviet national economy at the beginning of 1973 totaled 109 billion rubles, as compared to 36.5 billion in 1960.

Growth in social production leads to an increased demand for circulating productive capital. This demand, however, grows less rapidly than output. Among the major reserves for increasing the efficiency of social production are intensification of industrial processes, extensive development of enterprise specialization and cooperation, and improvement in the system of material and technical supply and transport, especially with regard to the size, reliability, and speed of deliveries. Technologically and economically sound standards for inventories and for outlays of raw and processed materials required to turn out a given product will also increase the efficiency of social production, as will reduction in the volume of wasted raw materials that are remnants of the production process.