Capital, Volume Two: The Process of…

In Quesnay the distinction between fixed and circulating capital presents itself as avances primitives and avances annuelles. He correctly represents this distinction as one existing within productive capital, capital directly engaged in the process of production. As he regards the capital employed in agriculture, the capital of the farmer, as the only really productive capital, he draws these distinctions only for the capital of the farmer. This also accounts for the annual period of turnover of one part of the capital, and the more than annual (decennial) period of the other part. In the course of the development the physiocrats incidentally applied these distinctions also to other kinds of capital and to industrial capital in general. The distinction between annual advances and others of longer duration has retained such importance for society that many economists, even after Adam Smith, return to this definition.

The difference between these two kinds of advances does not arise until advanced money has been transformed into the elements of productive capital. It is a difference that exists solely within productive capital. It therefore never occurs to Quesnay to classify money either among the original or the annual advances. As advances for production, i.e., as productive capital, both of them stand opposed to money as well as the commodities existing in the market. Furthermore the difference between these two elements of productive capital is correctly reduced in Quesnay to the different manner in which they enter into the value of the finished product, hence to the different manner in which their values are circulated together with those of the products, and hence to the different manner of their replacement or their reproduction, the value of the one being wholly replaced annually, that of the other partly and at longer intervals.1