Part Three — The Reproduction and Circulation of the Total Social Capital Chapters 18–21. The two departments of social production, the reproduction schemas, and the conditions of simple and expanded reproduction.

This is the summit of Volume II and one of the most consequential passages Marx wrote. Having analysed the circuit and turnover of the individual capital, Part Three shifts to the total social capital — the sum of all individual capitals — and asks how the annual social product is reproduced, in both its value and its material form, so that production can begin again. The answer is the reproduction schema: society's total output is divided into two great departments, Department I producing means of production and Department II producing means of consumption, and reproduction is possible only if the products of each can find their needed buyers in the other. Chapter 18 defines the object; Chapter 19 clears the ground by settling accounts with the classical economists, above all Adam Smith's dogma that the whole product resolves into revenue; Chapter 20 builds the schema of simple reproduction and derives its fundamental condition, that Department I's variable capital plus surplus-value must equal Department II's constant capital; Chapter 21 extends the analysis to reproduction on an expanded scale, where accumulation requires that Department I's output exceed what simple replacement demands. The reproduction schemas are the charter's capture-target for this volume, and they are the direct ancestor of input–output analysis, of the crisis and realization debates from Luxemburg onward, and of the disproportionality theory of crisis. The brief lays out Marx's own construction and holds the interpretive debates in view without adjudicating them.

Marx defines the new object. The movement of the total social capital is nothing but the interlocking totality of the individual turnovers, but analysing it requires including what the study of the individual capital could set aside: the consumption of the whole society, both productive and individual.

But each individual capital forms only a fraction of the total social capital, a fraction that has acquired independence and been endowed with individual life, so to speak, just as each individual capitalist is no more than an element of the capitalist class. The movement of the social capital is made up of the totality of movements of these autonomous fractions, the turnovers of the individual capitals.

Marx, Capital II, page 427.

Considered as a totality, the movement now includes what the analysis of the individual capital could bracket: consumption in both of its forms.

This overall process involves both productive consumption (the immediate production process) together with the changes of form that mediate it (which considered in their material aspect are exchanges), and individual consumption, with the changes of form or exchanges which mediate this. It involves on the one hand the conversion of variable capital into labour-power and the consequent incorporation of labour-power into the capitalist production process. In this aspect, the worker enters the scene as the seller of his commodity, labour-power, and the capitalist as its buyer. On the other hand, however, the sale of commodities involves their purchase by the working class, i.e. the workers’ individual consumption. Here, the working class appears as a buyer of commodities, and the capitalists as sellers of commodities to the workers.

Marx, Capital II, page 428.

And the object of Part Three is fixed accordingly.

The circuits of the individual capitals, therefore, when considered as combined into the social capital, i.e. considered in their totality, do not encompass just the circulation of capital, but also commodity circulation in general. In its fundamentals, the latter can consist of only two components: (1) the specific circuit of capital, and (2) the circuit of those commodities that go into individual consumption, i.e. the commodities on which the workers spend their wages and the capitalists their surplus-value (or part of it).

Marx, Capital II, page 428.

The decisive addition is that the total annual product must be traced not only in value but in its natural form: means of production must be replaced by means of production, means of consumption consumed and replaced. The question is no longer whether an individual capital returns enlarged, but whether the aggregate product contains, in the right proportions and the right physical shapes, everything needed to replace what was used up and to feed and employ the population — so that the same scale of production can resume. This is a question about the material composition of the product, not just its value, and it is what the schema is built to answer.

Before building his own account, Marx surveys the field. He credits Quesnay's Tableau économique as a work of genius — the first attempt to represent the annual reproduction of a whole nation's capital as a circuit of flows between classes — while noting the limits imposed by the Physiocrats' belief that only agriculture is productive. The bulk of the chapter is a sustained attack on Adam Smith's dogma, the error that blocked all subsequent analysis of reproduction: that the price of the entire annual product resolves without remainder into revenues — wages, profit, and rent.

Quesnay first. The opening tribute states what the Tableau achieved.

Quesnay’s Tableau économique shows in a few broad lines how the annual result of national production, defined in terms of value, is distributed by circulation in such a way that, with other circumstances remaining the same, simple reproduction can take place, i.e. reproduction on the same scale.

Marx, Capital II, page 435.

Adam Smith's dogma that the price or 'exchangeable value' of every single commodity – and thus of all the commodities comprising the annual social product (he correctly assumes capitalist production everywhere) – is composed of, or 'resolves itself into', the three 'component parts' wages, profit and rent, can be reduced to the thesis that commodity value = v + s, i.e. the value of the variable capital advanced, plus the surplus-value.

Marx, Capital II, page 446.