Turnover of Capital

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Turnover of Capital


the circulation of capital, considered not as an isolated act but as a periodic process of renewal and a repetition of the movement of all advanced capital. In the process of reproduction, capital passes through the spheres of production and circulation. The time interval from the moment that capital value is advanced until it returns to the capitalist in its original (monetary) form is the turnover time of capital. This interval consists of the time of production and the time of circulation. Rate of turnover is measured by the year.

The number of turnover cycles of the given capital is determined by the formula N = T/t where N is the number of cycles, T is the time unit (in years) required for the turnover of capital, and t is the turnover time of the particular capital. Knowing the number of times capital circulates in a year makes it possible to establish and compare the rates of turnover for individual sums of capital.

In one cycle capital is changed from monetary form into productive capital, then into commodity capital, and is finally retransformed into money capital. During the process of turnover, capital operates simultaneously in all three forms, making its circuits in different time intervals. Fixed capital, the part of productive capital spent for the purchase of buildings, structures, machinery, and equipment, turns over in the course of a few periods of production, preserving its physical form. Its duration encompasses a few circulations of capital. The various elements of fixed capital differ in their longevity, and therefore their turnover times differ. Only their value turns over, and that gradually, in parts and to the extent to which this value is transferred to the finished product.

A part of circulating capital, which is the other component of capital and is expended on raw materials, auxiliary materials, and the like, turns over in one period of production, and its duration encompasses one complete circulation of capital. It is consumed in each production cycle. During its functioning it does not keep an independent physical form; for each new process of production it must be wholly replaced. The value of this part of capital is transferred fully to the finished commodity and returns to the capitalist in monetary form after the commodity is entirely sold. The total turnover of all advanced capital is the average turnover of its constituent parts, that is, of fixed and circulating capital.

To create a turnover not only in the value of productive capital but also in its physical form, it is necessary to put advanced capital into circulation again and again until all the fixed capital is productively consumed. The advanced capital should make a definite series of turnovers during which the fixed capital expended will be amortized.

With technological progress, advanced fixed capital grows more rapidly than circulating capital. Therefore, the index of the organic composition of capital increases and the internal contradictions of capitalism—above all the contradiction between production and consumption—grow worse. Growth in the index of the organic composition of capital increases the scope of production while it limits consumption, giving rise to disproportion and conflict between the potential for increasing production and the limited purchasing power of the population and the working masses in particular. This conflict gives rise to economic crises of overproduction.

Under contemporary capitalism, the contradictory nature of growth in fixed capital is becoming more intense. Using technological progress as the main weapon of competitive struggle, the monopolies are investing large amounts of money in the fixed capital of their enterprises in order to secure an economic advantage. This leads to a rise in labor productivity, a drop in employment, an expansion of social production, and an increase in socialization of the means of production. However, ownership of the fruits of production remains private, and this inevitably deepens and exacerbates the antagonistic contradiction between productive forces and capitalist production relationships.

The factors that determine the rate of turnover of capital exercise a significant influence on the production and realization of surplus value. Reducing circulation time decreases the proportion of commodity and money capital and increases the proportion of productive capital. As a result, it also increases the dimensions of the surplus value produced. Acceleration of natural processes and reduction of the working period through increased labor intensity, together with reduction of commodity and production reserves, enlarges the proportion of functioning capital and reduces idle capital. The rate of turnover of capital influences the rate of profit. The more rapidly capital turns over, the less capital needs to be advanced for a particular circuit and, where other conditions are equal, the greater the rate of profit will be. Acceleration of the turnover of capital as a whole also speeds up the turnover of variable capital.


Marx, K. Kapital, vol. 2. In K. Marx and F. Engels, Soch., 2nd ed., vol. 24, secs. 2 and 3, ch. 18.


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
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