Turnover of Capital

The continuous circuit of capital performed by industrial capital again and again. Marx pointed out that the circuit performed by a capital and meant to be a cyclical, constantly repeated process is its turnover.

In order to realize the continuous augmentation of capital, the circuit of capital must be repeated over and over again. The turnover of capital consists of the turnover time of capital, the turnover rate of capital and the numbers of turnover of capital. The turnover time of capital is the time during which capital is in continuous motion in the processes of production and circulation, and is the sum of time of production and time of circulation. In different branches of production, due to the different conditions of production and circulation, the capital turnover time varies, and thus the turnover rate of capital in a given period also varies. In order to compare the turnover time of different branches of production, it is necessary to determine a unified standard for the turnover time of capital. Generally, “year” is taken as the standard. The turnover rate of capital is measured in “years” divided by the time it takes for capital to turn over once. The turnover rate of capital is inversely proportional to the turnover time and directly proportional to the numbers of turnover.

The factors that affect the turnover of capital are: (1) Time of production and time of circulation. Under certain other conditions, the shorter the time of production and circulation, the higher the turnover rate of capital; conversely, the lower it is. (2) The composition of capital, i.e., the proportion of fixed capital and circulating capital in productive capital. When other conditions remain unchanged, the greater the proportion of fixed capital, the slower the turnover rate of capital; conversely, the higher it is.

The velocity of the turnover rate of has an important influence on capitalist reproduction. Accelerated turnover of capital also allows for faster and greater utilization of variable capital, increasing surplus-value even more. Therefore, capitalists always try to speed up the turnover of capital by all means in order to reduce the amount of the capital advanced and increase the annual rate of surplus-value.