Safe haven investment and safe haven Currency

Safe Haven Assets

People want to invest wisely and desire that their assets shall not depreciate due to inflation or due to any economic turmoil. Investment in real estate is localized and always under the scanner of government scrutiny, therefore investors rush for a safe-haven investment.

Decline global economy is attracting investment in gold as a safe haven. 

Example of Safe Haven investment

  1. Gold: For years, gold has been considered a store of value.
  2. Treasury bills (T-bills): Due to government guarantee it s considered as safe with assured return, untouched by inflation.
  3. Defensive stocks: Utility stock such as food, healthcare, and diversified consumer goods, which have always demand in the market.
  4. Cash in hand: It is always good to keep good amount of cash in hand. It shall always pay at the time of trouble without depending on the Bank or return of dividends.

 “The Swiss franc[CHF] is considered a safe-haven currency.” 

Switzerland was previously a Tax haven with its robust Banking system, tax evaders may stash their wealth secretly in Swiss Bank and therefore Swiss frank always had an upward pressure comparing to the other currencies. Therefore, converting one national currency to Swiss frank is to be considered safe in terms of value. On the other hand in a market system where the market is volatile itself due to political or other factors, something in the morning and something in the evening, people never put trust in their own national currency, rush to convert it in Swiss frank or any other stable currencies for saving the value.

Japanese yen, another safe haven, was the only Asian currency to appreciate during the Great Recession, impacting the global economy and altering the balance of power in global FX markets. []

Therefore, three major safe-haven currencies are the U.S. dollar and U.S. Treasuries; the Japanese yen and Japan’s government bonds; and the Swiss franc and Swiss government bonds.

As exemplified above Gold is the Safe-haven asset. At the time of the declining economy, the gold glitters more. Gold lost its charm the moment the economy recovers.

Bitcoin recently joined the ranks of safe-haven assets []

The trade war between the U.S. and China of this summer stipulated a global synchronized slowdown which is wreaking havoc on emerging market countries such as India. People of India love to invest in Gold rather than in any volatile market. Indian market is considerably stable due to political stability under a Modi government. Investors have confidence that even in the 2022 election the same dispensation shall function, so there shall not be any major shift in policy.


Trade War: Is it a prelude to deglobalisation?

1. I am delighted to be here today and am grateful to the FAI and the organisers of this conference for inviting me to speak to this gathering. I am also happy to be in Singapore, a country which truly epitomises all that can be called achievements of globalisation, and a country with which India had and continues to have multifaceted engagement covering cultural, ethnic and economic spheres. FAI, a body of forex market professionals who intermediate between the supply and demand for foreign currency and act as ‘price givers’ to the rest of the economy has been active in promoting transparency, professionalism and ethical conduct in the forex market since 1979. I commend them for the role they have played and hope that they will continue to do so in future with utmost efficiency and fairness.

2. The forex market is unique in several ways. A foreign currency is essentially a commodity outside its jurisdiction and therefore has attributes of an asset. But the exchange rate, the price of the foreign currency normalised to the home currency is an important macroeconomic variable that ought to be determined by economic fundamentals and influences behaviour of economic agents. Principally because of this twin nature, the exchange rate exhibits great volatility and decouples from its value indicated by the economic fundamentals that calls for policy response. I must add that the only thing next to extreme volatility that disorients a forex trader is a situation of very low volatility!

3. It is ironical that amidst several disruptive factors, the volatility in the global foreign exchange markets has been quite low in recent times. In fact, the JPMorgan Global FX volatility Index has been at its lowest since 2014. Market participants have seen this as a lull before the storm and have recounted past episodes when such a trough was followed by a sharp rise in the US Dollar. Despite the 25-basis-point rate cut announced by the US Federal Reserve, the US Dollar rose sharply, probably anticipating more accommodating measures in the future. If anything, this underscores uncertainty.

4. The global economic scenario is not very encouraging, though there is no room for pessimism yet. The IMF continues to revise the global growth projections for 2019 downward though the outlook for 2020 is more positive. The growth in the developed countries remains sluggish and the emerging economies including China and India, the dominant contributors to global growth in recent years, appear to be facing a challenge. Another era of accommodative monetary policy regime seems to be round the corner as evident from synchronised rate cut by several Central Banks.

5. Global trade tensions between the two largest economies are a dominant theme of discourse today. As of now, there does not appear to be any possibility of quick resolution of the tension, nor does it seem to escalate and get out of hand rapidly in near future. Whatever may be the rational and economic logic behind the competitive protectionism through tariff barriers, it is certainly contributing to the global economic slowdown. The exit of Britain from the European Union, the so-called Brexit also is shrouded in uncertainty and it is recognised that a no-deal Brexit will surely be a disruptive factor. There are also risks emanating from geopolitical tensions in the Gulf and elsewhere that can adversely affect the sentiments.

6. Delicately poised as the global economy is at this juncture, much of which, as IMF Chief Economist Gita Gopinath says, is self-inflicted, it is entirely premature to think of deglobalisation. Globalisation is an irreversible process and has been progressing for millennia. It has progressed rapidly beyond expectation in recent times because of quantum advancements in communication and technology. All aspects of human existence including economies, markets, social interactions, education and so on have become intertwined. True, the process of globalisation has brought problems and discontent in its wake, but wisdom lies in addressing them rather than disbanding the process.

7. Free Trade has been one of the main planks of globalisation. It has been generally held that free trade amongst nations enhances welfare. The underpinning logic is the same as that in case of free market economics: specialisation, comparative advantage and productivity gains. Just as in case of free market economics, there are factors that affect the gains from trade. Besides, there has always been an asymmetric approach to free exports versus free imports. While every country favours exports (except when the terms of trades are deteriorating) because it contributes to domestic employment and growth, there is an abhorrence for imports because the country loses employment, growth and foreign exchange. This brings in deterrent measures like tariff and when one hears talk about optimum tariff, it simply means optimum for the welfare of the country concerned not for the global welfare as a whole. And if all the trading countries impose retaliatory tariffs, it becomes a negative-sum game affecting global welfare and welfare of individual nations to a varied extent.

8. Ordinarily, the exchange rate is supposed to play some kind of an equilibrating role in addressing the current account deficit, subject of course to several preconditions. A country with trade surplus should experience appreciation of its currency making its exports more expensive and imports cheaper and vice versa for a country with trade deficit. The success of this mechanism depends on to what extent the exchange rates are allowed to be determined by the market forces without intervention of national authorities. It is not surprising that allegations of currency manipulation were fairly common in the run up to the recent trade tension.

9. The increasing globalisation of trade, manufacturing, services, supply chain, capital movement, etc. has created a web of complex interdependence. Moreover, the externalities of national economic policies have also become substantially magnified. While the national governments and policy makers are supposed to act in interest of their respective constituencies, the collateral effect of their action on the rest of the world can be significant. The need for coordinated action amongst the leaders of the larger nations is urgent. It must be borne in mind that such coordinated action did contribute to contain the global financial crisis.

10. Speaking recently, Governor Das drew attention to the US Treasury’s monitoring of countries as currency manipulators since 2015 in which India figured for some time till 2018. He further pointed out that the charter of the IMF has elaborate provisions to bind its member countries not to manipulate their currencies so as to gain unfair comparative advantage in trade and it is best that the issues relating to any alleged currency manipulation are best dealt with in a multilateral framework than bilateral attempts to correct a wrong. The same logic applies to trade in goods and services and other areas of discord as well. That was the purpose behind the erstwhile GATT, now WTO. The current trade tensions are best sorted out multilaterally through cooperation lest as Paul Krugman tweeted some time back, “In the long run the world would be poorer and in the short run there would be immense disruption.”

11. The Indian forex markets have been fairly stable in recent months. As you know, the Reserve Bank is mandated to maintain orderly conditions in the foreign exchange market. Its intervention in the forex market is solely directed at curbing sudden turbulences not backed by the economic fundamentals. As has been said repeatedly, market operations are not intended to achieve any target exchange rate or band of rates. It must be pointed out that the exchange rate dynamics in India for more than a decade has been driven by capital flows rather than current account balances. As an aside, India has mostly run a current account deficit, notwithstanding a bilateral trade surplus with the US, marginally more than USD 20 billion during 2018. Though long-term flows related to FDI and long-term debt have been fairly stable keeping in tandem with the economic fundamentals, the portfolio flows have their own dynamics depending as much on attractiveness of returns of Indian assets as the global factors determining their risk appetite. Gyrations in the forex market in these circumstances leave no option other than market intervention to restore orderliness in the market. One also need to bear in mind that India’s forex reserves are borrowed reserves and not built out of export surplus. Inasmuch as it provides a bulwark against sudden flow reversals, it enhances the country’s ability to cope with the fall out and indeed, contributes to global stability as well.

12. The policy regime is also oriented to providing adequate instruments of hedging to all resident economic agents who have exposure to a foreign currency as well as all non-residents who have a Rupee exposure. The onshore markets are fairly deep and liquid but needs further strengthening. There is a wide menu of hedging instruments available and further expansion would be in keeping with understanding of their risk implication. In recent times, global institutions and investors have shown a healthy appetite for Rupee denominated assets, which while ensuring flow of foreign exchange protects the Indian issuers from exchange risk. This trend needs to be given further policy nudges.

13. In fine, I would like to say that though there are discouraging portents for the global economy and uncertainties arising from trade tensions and geopolitical developments, I am optimistic that coordinated policy response and dispute resolution within a multilateral framework will see us through the day.

14. I will also take this opportunity to highlight two other important issues. First, the issue of transparent and fair pricing of foreign exchange transactions which has been brought to our notice by various category of users. The problem of getting fair prices was especially acute for MSMEs and small businesses who were not allowed to access the FX trading platforms of individual banks. In order to address this issue, RBI decided to develop, through CCIL, a web-based platform wherein such participants could place their purchase/sale orders directly. The platform, is accessible to users from early August 2019 through an internet-based application, allows bid/offers from retail clients and Authorised Dealer banks to be matched anonymously and automatically, thereby allowing complete transparency to the users about the levels of their trades. Banks will have to declare and recover their processing charges separately leading to competition amongst banks for customer business. I urge banks to make the platform popular among retail and small business houses/MSMEs.

15. Second, the Global Forex Code developed by the BIS as a common set of guidance for the proper functioning of the FX market. It comprises a common set of principles (55 in total with 6 leading principles) aimed at restoring trust and allowing greater confidence in the forex market and its functioning after various scandals (like LIBOR fixing scandal, etc.) eroded confidence in the markets. The Code provides the corporate/intermediary with an opportunity to review/improve its internal FX operations and align them to global standards. It provides a positive signal to its clients, investors, counterparties and the wider market of the corporate’s commitment to follow good practices while dealing in the FX market.

16. In India, all banks, barring one, and several non-bank participants have signed the Statement of Commitment (SoC) to the Code. Though the adoption of the code is voluntary, I urge all the non-bank participants present here to study the Code, examine their processes and, thereafter, sign the SoC to the Global Code.

17. I wish your deliberations all success.

(Shri B.P Kanungo, Deputy Governor – August 10, 2019 – Forex Association of India Conference, Singapore)

Date : Aug 26, 2019

Originally published bt RBI

Indian digital payment platform

Powerful Legal Research enterprise

Narendra Modi 31st May 2018  launched three Indian mobile payment apps in Singapore at a business event aimed at internationalisation of the country’s digital payment platform. At the ‘Business, Innovation and Community Event’ Modi launched India’s BHIM, RuPay and SBI app. India’s RuPay digital payments system was linked up with Singapore’s 33-year old Network for Electronic Transfers (NETS).

RuPay users will be able to make payments at all of NETS acceptance points across Singapore. Holders of Singapore NETS will be able to make online purchase on any National Payment Corporation of India (NPCI) e-commerce merchant website in India, using 2.8 million RuPay point of sale terminals in India. Industry observers said it would create multi-billion dollar transactions as some five million Indians travel to and transit through Singapore, internationalising the RuPay beginning with the first cross border usage.

Remittance of up to Rupees 100,000 will be made quick, easy and convenient with the help of Virtual Payment Address (VPA). This service will be available to all savings account holders of SBI Singapore. SBI has six branches in Singapore as well as Auto Teller Machines (ATMs).

Bharat Interface for Money App [BHIM]

Powerful Legal Research enterprise

Law Library

Bharat Interface for Money app allows payments of mobile postpaid bills, electricity bills, gas bills, water bills, and more. It is developed by National Payments Corporation of India (NPCI) and was officially launched last year by PM Narendra Modi.

Initially, the BHIM app offered P2P money transfers via UPI (Unified Payments Interface), however, the app was later revamped to offer cashback of up to Rs 750 to become more utilitarian, much like other payment apps.

Also, one can save bills for future payments. Biller Categories: Post-paid Mobile, Landline, Broadband, DTH, Electricity, Gas & water.” The mentioned categories enlist popular and nearly all the merchants to convenience the users. However, the mobile postpaid bills are only applicable on Vodafone, BSNL, Idea Cellular, and Tata DoCoMo. Reliance Jio and Airtel are not available in the BHIM app as of now.

In order to make payments, the users will find a new section called Bill Pay below the Transfer Money section. It should be kept in mind that since BHIM app is a UPI-based app, the customers will not be able to make payments using debit, credit cards or net banking. The only option available to them is transferring money from their account using UPI address.

With the launch of bill payments functionality, BHIM app is set to take on rivals such as Google Tez, Samsung Pay, Paytm, and MobiKwik, which offer a wide range of billers to the customers.

The Capital A Critique of Political Economy [1867]


Preface to the
First German Edition

The work, the first volume of which I now submit to the public, forms the continuation of my Zur Kritik der Politischen Oekonomie (A Contribution to the Criticism of Political Economy) published in 1859. The long pause between the first part and the continuation is due to an illness of many years’ duration that again and again interrupted my work.

The substance of that earlier work is summarised in the first three chapters of this volume. This is done not merely for the sake of connexion and completeness. The presentation of the subject matter is improved. As far as circumstances in any way permit, many points only hinted at in the earlier book are here worked out more fully, whilst, conversely, points worked out fully there are only touched upon in this volume. The sections on the history of the theories of value and of money are now, of course, left out altogether. The reader of the earlier work will find, however, in the notes to the first chapter additional sources of reference relative to the history of those theories.

Every beginning is difficult, holds in all sciences. To understand the first chapter, especially the section that contains the analysis of commodities, will, therefore, present the greatest difficulty. That which concerns more especially the analysis of the substance of value and the magnitude of value, I have, as much as it was possible, popularised. The value-form, whose fully developed shape is the money-form, is very elementary and simple. Nevertheless, the human mind has for more than 2,000 years sought in vain to get to the bottom of it all, whilst on the other hand, to the successful analysis of much more composite and complex forms, there has been at least an approximation. Why? Because the body, as an organic whole, is more easy of study than are the cells of that body. In the analysis of economic forms, moreover, neither microscopes nor chemical reagents are of use. The force of abstraction must replace both. But in bourgeois society, the commodity-form of the product of labour — or value-form of the commodity — is the economic cell-form. To the superficial observer, the analysis of these forms seems to turn upon minutiae. It does in fact deal with minutiae, but they are of the same order as those dealt with in microscopic anatomy.

With the exception of the section on value-form, therefore, this volume cannot stand accused on the score of difficulty. I presuppose, of course, a reader who is willing to learn something new and therefore to think for himself.

The physicist either observes physical phenomena where they occur in their most typical form and most free from disturbing influence, or, wherever possible, he makes experiments under conditions that assure the occurrence of the phenomenon in its normality. In this work, I have to examine the capitalist mode of production, and the conditions of production and exchange corresponding to that mode. Up to the present time, their classic ground is England. That is the reason why England is used as the chief illustration in the development of my theoretical ideas. If, however, the German reader shrugs his shoulders at the condition of the English industrial and agricultural labourers, or in optimist, fashion comforts himself with the thought that in Germany things are not nearly so bad; I must plainly tell him, “De te fabula narratur!” [It is of you that the story is told. – Horace]

Intrinsically, it is not a question of the higher or lower degree of development of the social antagonisms that result from the natural laws of capitalist production. It is a question of these laws themselves, of these tendencies working with iron necessity towards inevitable results. The country that is more developed industrially only shows, to the less developed, the image of its own future.

But apart from this. Where capitalist production is fully naturalised among the Germans (for instance, in the factories proper) the condition of things is much worse than in England, because the counterpoise of the Factory Acts is wanting. In all other spheres, we, like all the rest of Continental Western Europe, suffer not only from the development of capitalist production, but also from the incompleteness of that development. Alongside the modern evils, a whole series of inherited evils oppress us, arising from the passive survival of antiquated modes of production, with their inevitable train of social and political anachronisms. We suffer not only from the living, but from the dead. Le mort saisit le vif! [The dead holds the living in his grasp. – a formula of French common law]

The social statistics of Germany and the rest of Continental Western Europe are, in comparison with those of England, wretchedly compiled. But they raise the veil just enough to let us catch a glimpse of the Medusa head behind it. We should be appalled at the state of things at home, if, as in England, our governments and parliaments appointed periodically commissions of inquiry into economic conditions; if these commissions were armed with the same plenary powers to get at the truth; if it was possible to find for this purpose men as competent, as free from partisanship and respect of persons as are the English factory-inspectors, her medical reporters on public health, her commissioners of inquiry into the exploitation of women and children, into housing and food. Perseus wore a magic cap down over his eyes and ears as a make-believe that there are no monsters.

Let us not deceive ourselves on this. As in the 18th century, the American war of independence sounded the tocsin for the European middle class, so that in the 19th century, the American Civil War sounded it for the European working class. In England the process of social disintegration is palpable. When it has reached a certain point, it must react on the Continent. There it will take a form more brutal or more humane, according to the degree of development of the working class itself. Apart from higher motives, therefore, their own most important interests dictate to the classes that are for the nonce the ruling ones, the removal of all legally removable hindrances to the free development of the working class. For this reason, as well as others, I have given so large a space in this volume to the history, the details, and the results of English factory legislation. One nation can and should learn from others. And even when a society has got upon the right track for the discovery of the natural laws of its movement — and it is the ultimate aim of this work, to lay bare the economic law of motion of modern society — it can neither clear by bold leaps, nor remove by legal enactments, the obstacles offered by the successive phases of its normal development. But it can shorten and lessen the birth-pangs.

To prevent possible misunderstanding, a word. I paint the capitalist and the landlord in no sense couleur de rose [i.e., seen through rose-tinted glasses]. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them.

In the domain of Political Economy, free scientific inquiry meets not merely the same enemies as in all other domains. The peculiar nature of the materials it deals with, summons as foes into the field of battle the most violent, mean and malignant passions of the human breast, the Furies of private interest. The English Established Church, e.g., will more readily pardon an attack on 38 of its 39 articles than on 1/39 of its income. Now-a-days atheism is culpa levis [a relatively slight sin, c.f. mortal sin], as compared with criticism of existing property relations. Nevertheless, there is an unmistakable advance. I refer, e.g., to the Bluebook published within the last few weeks: “Correspondence with Her Majesty’s Missions Abroad, regarding Industrial Questions and Trades’ Unions.” The representatives of the English Crown in foreign countries there declare in so many words that in Germany, in France, to be brief, in all the civilised states of the European Continent, radical change in the existing relations between capital and labour is as evident and inevitable as in England. At the same time, on the other side of the Atlantic Ocean, Mr. Wade, vice-president of the United States, declared in public meetings that, after the abolition of slavery, a radical change of the relations of capital and of property in land is next upon the order of the day. These are signs of the times, not to be hidden by purple mantles or black cassocks. They do not signify that tomorrow a miracle will happen. They show that, within the ruling classes themselves, a foreboding is dawning, that the present society is no solid crystal, but an organism capable of change, and is constantly changing.

The second volume of this book will treat of the process of the circulation of capital (Book II.), and of the varied forms assumed by capital in the course of its development (Book III.), the third and last volume (Book IV.), the history of the theory.

Every opinion based on scientific criticism I welcome. As to prejudices of so-called public opinion, to which I have never made concessions, now as aforetime the maxim of the great Florentine is mine:

“Segui il tuo corso, e lascia dir le genti.”
[Follow your own course, and let people talk – paraphrased from Dante]

Karl Marx
July 25, 1867

Table of Contents

Prefaces and Afterwords

Volume I
Book One: The Process of Production of Capital

Part I: Commodities and Money

Ch. 1: Commodities
Ch. 1 as per First German Edition
Ch. 2: Exchange
Ch. 3: Money, or the Circulation of Commodities

Part II: The Transformation of Money into Capital

Ch. 4: The General Formula for Capital
Ch. 5: Contradictions in the General Formula of Capital
Ch. 6: The Buying and Selling of Labour-Power

Part III: The Production of Absolute Surplus-Value

Ch. 7: The Labour-Process and the Process of Producing Surplus-Value
Ch. 8: Constant Capital and Variable Capital
Ch. 9: The Rate of Surplus-Value
Ch. 10: The Working-Day
Ch. 11: Rate and Mass of Surplus-Value

Part IV: Production of Relative Surplus Value

Ch. 12: The Concept of Relative Surplus-Value
Ch. 13: Co-operation
Ch. 14: Division of Labour and Manufacture
Ch. 15: Machinery and Modern Industry

Part V: The Production of Absolute and of Relative Surplus-Value

Ch. 16: Absolute and Relative Surplus-Value
Ch. 17: Changes of Magnitude in the Price of Labour-Power and in Surplus-Value
Ch. 18: Various Formula for the Rate of Surplus-Value

Part VI: Wages

Ch. 19: The Transformation of the Value (and Respective Price) of Labour-Power into Wages
Ch. 20: Time-Wages
Ch. 21: Piece-Wages
Ch. 22: National Differences of Wages

Part VII: The Accumulation of Capital

Ch. 23: Simple Reproduction
Ch. 24: Conversion of Surplus-Value into Capital
Ch. 25: The General Law of Capitalist Accumulation

Part VIII: Primitive Accumulation

Ch. 26: The Secret of Primitive Accumulation
Ch. 27: Expropriation of the Agricultural Population from the Land
Ch. 28: Bloody Legislation against the Expropriated, from the End of the 15th Century. Forcing down of Wages by Acts of Parliament
Ch. 29: Genesis of the Capitalist Farmer
Ch. 30: Reaction of the Agricultural Revolution on Industry. Creation of the Home-Market for Industrial Capital
Ch. 31: Genesis of the Industrial Capitalist
Ch. 32: Historical Tendency of Capitalist Accumulation
Ch. 33: The Modern Theory of Colonisation


Book II: The Process of Circulation of Capital

Part One: The Metamorphoses of Capital and their Circuits

Chapter 1: The Circuit of Money-Capital

  1. First Stage. M-C
  2. Second Stage. Function of Productive Capital
  3. Third Stage. C’-M’
  4. The Circuit as a Whole

Chapter 2: The Circuit of Productive Capital

  1. Simple Reproduction
  2. Accumulation and Reproduction on an Extended Scale
  3. Accumulation of Money
  4. Reserve Fund

Chapter 3: The Circuit of Commodity-Capital

Chapter 4: The Three Formulas of the Circuit

Natural, Money and Credit Economy
The Meeting of Demand and Supply

Chapter 5: The Time of Circulation

Chapter 6: The Costs of Circulation

  1. Genuine Costs of Circulation

(a) The Time of Of Purchase and Sale
(b) Book-keeping
(c) Money

  1. Costs of Storage

(a) Formation of Supply in General
(b) The Commodity-Supply Proper

  1. Costs of Transportation

Part Two: The Turnover of Capital

Chapter 7: The Turnover Time and Number of Turnovers

Chapter 8: Fixed Capital and Circulating Capital

  1. Distinctions of Form
  2. Components, Replacement, Repair and Accumulation of the Fixed Capital

Chapter 9: The Aggregate Turnover of the Capital Advanced. Cycles of Turnover

Chapter 10: Theories of Fixed and Circulating Capital
The Physiocrats and Adam Smith

Chapter 11: Theories of Fixed and Circulating Capital. Ricardo

Chapter 12: The Working Period

Chapter 13: The Time of Production

Chapter 14: The Time of Circulation

Chapter 15: Effect of Turnover Time on Magnitude of Advanced Capital

  1. The Working Period Equal to the Circulation Period
  2. The Working Period Greater Than the Period of Circulation
  3. The Working Period Smaller Than the Circulation Period
  4. Conclusions
  5. The Effect of Change of Prices

Chapter 16: The Turnover of Variable Capital

  1. The Annual Rate of Surplus-Value
  2. The Turnover of an Individual Variable Capital
  3. The Turnover of Variable Capital from the Social Point of View

Chapter 17: The Circulation of Surplus-Value

  1. Simple Reproduction
  2. Accumulation and Reproduction on an Extended Scale

Part Three: The Reproduction and Circulation of the Aggregate Social Capital

Chapter 18: Introduction

  1. The Subject Investigated
  2. The Role of Money-Capital

Chapter 19: Former Presentations of the Subject

  1. The Physiocrats
  2. Adam Smith

(a) Smith’s General Points of View
(b) Adam Smith Resolves Exchange-Value into v+s
(c) The Constant Part of Capital
(d) Capital and Revenue in Adam Smith
(e) Recapitulation

  1. Later Economists

Chapter 20: Simple Reproduction (Part 1 of 4)

  1. The Formulation of the Question
  2. The Two Departments of Social Production
  3. Exchange Between the Two Departments: I(v+s) against IIc
  4. Exchange Within Department II. Necessities of Life and Articles of Luxury
  5. The Mediation of the Exchange by the Circulation of Money

(Chapter 20: Simple Reproduction (Part 2 of 4))

  1. The Constant Capital in Department I
  2. Variable Capital and Surplus-Value in Both Departments
  3. The Constant Capital in Both Departments
  4. A Retrospect to Adam Smith, Storch and Ramsay
  5. Capital and Revenue: Variable Capital and Wages

(Chapter 20: Simple Reproduction (Part 3 of 4))

  1. Replacement of the Fixed Capital

(a) Replacement of the Wear and Tear Portion of the Value in the Form of Money
(b) Replacement of Fixed Capital in Kind
(c) Results

(Chapter 20: Simple Reproduction (Part 4 of 4))

  1. The Reproduction of the Money Material
  2. Destutt de Tracy’s Theory of Reproduction

Chapter 21: Accumulation and Reproduction on an Expanded Scale (part 1 of 2)

  1. Accumulation in Department I

(a) The Formation of a Hoard
(b) The Additional Constant Capital
(c) The Additional Variable Capital

  1. Accumulation in Department II

(Chapter 21: Accumulation and Reproduction on an Expanded Scale (part 2 of 2))

  1. Schematic Presentation of Accumulation

(a) First Illustration
(b) Second Illustration
(c) Replacement of IIc, in Accumulation

  1. Supplementary Remarks


The Process of Capitalist Production as a Whole

Part I
The Conversion of Surplus-Value into Profit and of
the Rate of Surplus-Value into the Rate of Profit

Ch. 1: Cost-Price and Profit
Ch. 2: The Rate of Profit
Ch. 3: The Relation of the Rate of Profit to the Rate of Surplus-Value
Ch. 4: The Effect of the Turnover on the Rate of Profit
Ch. 5: Economy in the Employment of Constant Capital
Ch. 6: The Effect of Price Fluctuations
Ch. 7: Supplementary Remarks

Part II
Conversion of Profit into Average Profit

Ch. 8: Different Compositions of Capitals in Different Branches of Production and Resulting Differences in Rates of Profit
Ch. 9: Formation of a General Rate of Profit (Average Rate of Profit) and Transformation of the Values of Commodities into Prices of Production
Ch. 10: Equalisation of the General Rate of Profit Through Competition. Market-Prices and Market-Values. Surplus-Profit.
Ch. 11: Effects of General Wage Fluctuations on Prices of Production
Ch. 12: Supplementary Remarks

Part III
The Law of the Tendency of the Rate of Profit to Fall

Ch. 13: The Law as Such
Ch. 14: Counteracting Influences
Ch. 15: Exposition of the Internal Contradictions of the Law

Part IV
Conversion of Commodity-Capital and Money-Capital into Commercial
Capital and Money-Dealing Capital (Merchant’s Capital)

Ch. 16: Commercial Capital
Ch. 17: Commercial Profit
Ch. 18: The Turnover of Merchant’s Capital
Ch. 19: Money-Dealing Capital
Ch. 20: Historical Facts about Merchant’s Capital

Part V
Division of Profit into Interest and Profit of Enterprise.
Interest-Bearing Capital.

Ch. 21: Interest-Bearing Capital
Ch. 22: Division of Profit. Rate of Interest. Natural Rate of Interest.
Ch. 23: Interest and Profit of Enterprise
Ch. 24: Externalisation of the Relations of Capital in the Form of Interest-Bearing Capital
Ch. 25: Credit and Fictitious Capital
Ch. 26: Accumulation of Money-Capital. Its Influence on the Interest Rate.
Ch. 27: The Role of Credit in Capitalist Production
Ch. 28: Medium of Circulation and Capital; Views of Tooke and Fullarton
Ch. 29: Component Parts of Bank Capital
Ch. 30: Money-Capital and Real Capital. I
Ch. 31: Money-Capital and Real Capital. II
Ch. 32: Money-Capital and Real Capital. III
Ch. 33: The Medium of Circulation in the Credit System
Ch. 34: The Currency Principle and the English Bank Legislation of 1844
Ch. 35: Precious Metal and Rate of Exchange
Ch. 36: Pre-Capitalist Relationships

Part VI
Transformation of Surplus-Profit into Ground-Rent

Ch. 37: Introduction
Ch. 38: Differential Rent: General Remarks
Ch. 39: First Form of Differential Rent (Differential Rent I)
Ch. 40: Second Form of Differential Rent (Differential Rent II)
Ch. 41: Differential Rent II — First Case: Constant Price of Production
Ch. 42: Differential Rent II — Second Case: Falling Price of Production
Ch. 43: Differential Rent II — Third Case: Rising Price of Production
Ch. 44: Differential Rent Also on the Worst Cultivated Soil
Ch. 45: Absolute Ground-Rent
Ch. 46: Building Site Rent. Rent in Mining. Price of Land.
Ch. 47: Genesis of Capitalist Ground-Rent

Part VII
Revenues and their Sources

Ch. 48: The Trinity Formula
Ch. 49: Concerning the Analysis of the Process of Production
Ch. 50: Illusions Created by Competition
Ch. 51: Distribution Relations and Production Relations
Ch. 52: Classes

Frederick Engels.
Supplement to Capital, Volume Three

A) Introduction
B) The Law of Value and Rate of Profit
C) The Stock Exchange


 Original Source: Progress Publishers, Moscow 1956, translated by I. Lasker;

Re-edited with modification  by Tanmoy Bhattacharyya [2018]