Turnover of Fixed and Circulating Capital

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 It might be outdated or ideologically biased.

Turnover of Fixed and Circulating Capital

 

of socialist enterprises, the circulation of capital considered not as a distinct act but as a constantly renewed movement of material factors of reproduction during the process of employment of capital. This movement encompasses the spheres of production and circulation. The value of all fixed capital in the USSR national economy at the end of 1973 exceeded 1 trillion rubles in current prices.

During the process of turnover, fixed and circulating capital go through three stages to which the three functional forms of money capital, productive capital, and commodity capital correspond. There is a constant alternation of these forms during the turnover of fixed and circulating capital. The assets of socialist enterprises exist in all three forms simultaneously. While these assets always function in a unified, interrelated way, they also have their own specific characteristics that make it possible to distinguish the relatively independent nature of their individual turnovers within the bounds of aggregate turnover.

Fixed productive capital circulates over an extended period because it participates in the production process many times over the course of several years or decades. This capital transfers its value to the product in parts, as it wears out (amortization deductions compensate for this wear). The volume of fixed capital is enlarged through the part of national income directed toward capital accumulation. To some extent, it is also enlarged through the amortization fund.

The turnover of circulating capital takes place within a single production cycle; its value is transferred completely to the newly created product of labor and is thus completely included in production costs. The turnover time for circulating capital is comparatively short; in industry, for example, it is 70–75 days. Growth in circulating capital is also accomplished through allocations from national income. Return on capital is the index of the efficiency of use of fixed and circulating capital. The economic-accountability indexes of enterprise operations depend largely upon the return to capital, as do the proportions of national income allocated, respectively, to accumulation and consumption.

Growth in the return on capital is an important factor in raising the efficiency of social production. During the seventh five-year plan (1961–65) the return on capital in the Soviet national economy dropped slightly, but in the eighth five-year plan (1966–70), it stabilized as a result of a general rise in the level of planning and economic activity in the course of the economic reform (1966). Steps are being taken to further improve the use of fixed and circulating capital. In proportion to increases in the effectiveness of capital use, the turnover time will be decreased, and there will be growth in the output achieved with the same or smaller financial resources than before. Interest payments on fixed and circulating capital constitute an important economic lever for influencing the efficiency of use of production funds.

V. L. PERLAMUTROV

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