Production Capital: Definition, Functions and Features
What is production capital? What functions does it perform? How many phases does it take during one turn?
general information
Initially, let's look at the terminology. The productive capital (sometimes called the industrial capital) is the money that was invested in the process of creating material values and is aimed at generating surplus value. This is a necessary condition for doing business.
The turnover of productive capital can be represented by the simplest formula: Д-Т ... П ... Т-Д, where Д - money, Т - commodity, П - manufacture, and points indicate that the process of access is interrupted. You can describe it in this way: the money is initially paid. They buy goods. In this case, it means basic and circulating funds. With their help, a new product is produced, which is subsequently sold for money. Let's consider in more detail, relying on the scientific basis.
Phases of movement
Conditionally, there are three working moments:
- The phase of circulation. In this case, production capital is channeled into the purchase of means of production, which are instruments and means of labor, as well as for hiring labor.
- The phase of production is a process during which the means of production are transformed by the use of labor power, in the final result, a finished product is obtained.
- The phase of circulation is a process, during which the finished product is sold, the process of obtaining money occurs.
That is why manufacturing working capitalpasses a cycle, starting from advances in cash and ending with the return of funds with the gain received. If we talk about the overall profitability of the enterprise, it depends on the speed of passage.
Classification by participation
There are different forms of production capital. Most often, the active and the passive are isolated. What is the difference between them?
- Active form belongs to a part of production capital, which directly takes part in the process of creating material values.
- Passive form refers to that part of the productive capital that is engaged in servicing the process of creating material values.
All contributions made are subject to material andmoral wear and tear. In the first case, the situation is understood when the acquired means of production become unsuitable for exploitation. Under moral depreciation is understood the depreciation of capital, which is possible under conditions such as the emergence of an analogue that offers better characteristics or a lower cost.
And what should I do?
To avoid these negative aspects,production capital is depreciated. This is the name of the process of transferring part of the value of the means of production to the price of the created goods. There are such types of depreciation:
- Simple provides for the gradual transfer of the cost of means of production to the goods being sold throughout the life of the work.
- Accelerated is characterized by the fact that most of the cost is transferred in the first year of use of equipment, while the rest is evenly distributed over the subsequent period of use.
- Doubled provides for the creation of a depreciation fund, which is enough to buy two analogs.
Performed functions
The modern world is constantly changing the requirements andputs forward new ones. Now the production functions of capital are not just a value, but also assets, which are heavily influenced by the development of science, technology and human consciousness. For better consideration, it can be represented as a system that has constituents. These are material-material, intellectual-information and human sectors. The tasks and functions of productive capital as an integral system are to organize, manage and rationally use everything that is possible for profit.
Integration of production capital
Modern economy provides forsocial division of labor. In the era of communication and information technology, the established order is undergoing an objective transformation. This state of affairs makes it possible to accelerate the repetition of processes, leads to an increase in the intangible component in the form of technology, improves cross-sectoral interaction. Concentration of production simply could not lead to gradual integration, because everything is interconnected.
In the event of a conflict orconflicts can not be won. Therefore, for the concentration of technology, the pooling of efforts and obtaining better results today, the inter-industry integration of productive capital is carried out. Why so? The point is that integration is a higher-quality and higher stage of cooperation, when the interconnectedness, interdependence and interdependence are displayed at the limit. As a result, an integrated structure is formed, which has one system of goals, connections, functions and interests.
Formation and separation
When and from what the productioncapital? To better understand these issues, let's look at a few examples. Suppose a production cooperative is being created that will produce furniture. What do the founders do in this case? Correctly, they agree on the authorized capital of the production cooperative. Each of the founders contributes its share. And as a result, productive capital is formed. Everything is done according to the law. How is our production cooperative going?
The authorized capital was introduced, but it did not work. And how can co-founders figure out where? The best option, of course, is when people themselves agree on a division. If this is not possible, then refer to the intermediary. It can be either a specialized legal company or a court. In the latter case, as a rule, a decision is made on the division of property according to the amounts deposited. Although there may be certain exceptions, they arise only in rare cases. For example, when one of the partners decides to turn the dark deeds behind the back of a friend.
Conclusion
The productive capital is an importantcomponent for any enterprise. To open one's own business without it is unlikely. And for that there are reasons. Today, in the world of mass production and high technologies, it is extremely difficult to compete with giants that are several hundreds or tens of years old.
The only more or less possible option is to compete with them, that is, work in a direction that is not of interest. And why is this happening? There are two options:
- The most common - low volumesimplementation, complexity or impossibility of automation of production processes. Examples include small shops near the house, shoemakers' shops, paintings of street artists.
- There is no understanding of the direction of the direction. A person has an idea, and he realizes it. If he opens and captures a new market, then other companies simply may not have the desire to compete with him. But even if they know about the idea, it's not a fact that they want to use it. After all, the capitalist is interested in profit here and now.
That's all there is to know about the productioncapital. Its owners part with their means only in order to earn even more. And this is not surprising, because money should bring profit, otherwise it will not be investment, but the preservation or simple eating of available supplies. </ strong </ p>
