From the introduction to Book 2:
Page 221: “In that rude state of society in which there is no division of labor, in which exchanges are seldom made, and in which every man provides every thing for himself, it is not necessary that any stock should be accumulated or stores up beforehand, in order to carry on the business of the society . . . But when the division of labor has once been thoroughly introduced, the produce of man’s own labor can supply but a very small part of his occasional wants. The far greater part of them are supplied by the produce of other men’s labor, which he purchases with the produce, or, what is the same thing, with the price of the produce of his own.”
On page 222: “As the accumulation of stock must, in the nature of things, be previous to the division of labor, so labor can be more and more subdivided in proportion only as stock is previously more and more accumulated.” Actually, this isn’t strictly true–in practice it is more a dialectical process, where “accumulation of stock” and division of labor feed on each other, each driving and adding to the other. However, I don’t think this will have a significant effect on the understanding of the substance of the following five chapters.
He divides stock into fixed and circulating, according to how profit is realized from it. For example:
Page 226: “The farmer makes his profit by keeping the laboring cattle, and by parting with their maintainance.” So the cattle (eg, horse or oxen used for plowing) are fixed stock, and the feed for same are circulating stock.
Further down the page I found something interesting, though not directly related to the subject: “It consists in the stock of food, clothes, household furniture, &c, which have been purchased by their proper consumers, but which are not yet entirely consumed.” (emphasis added) In other words, here, very possibly for the first time, is the observation that a commodity has not expanded its use-value until it is destroyed.
In any case, this chapter divides stock–of an individual or a nation–first in fixed and circulating. He also divides it into stock that goes to maintain the person or nation (ie, food for the immediate future, lodging, cloathing), and stock which is intended to create a profit.
As he discusses the fixed stock of a nation, he says the following on page 228: “Fourthly, of the acquired and useful abilities of all the inhabitants or members of the society.” An important point, reminding me of Trotsky’s discussion of culture in the general sense–knowledge and technique acquired by a given society. “Those talents, as they make a part of his fortune, so do they likewise of that of the society to which he belongs.”
Page 229: “Every fixed capital is both originally derived from, and requires to be continally supported by circulating capital.” True and very important. Later he discusses improvements in efficiency, ie, if a the amount necessary to maintain one’s capital can be reduced, this necessarily increases the profit, or the rent, or the amount available for wages. Another thought springs from this:If, as Smith argues (and as seems irrefutable) any reduction in maintainance without reduction in produce is pure gain, and if, as Smith also insists on, all value comes from labor, then maintanance (as Marx would point out in a century) comes out of surplus value, the same place rent and profit comes from.
Page 230: “Thus the farmer annually replaces to the manufacturer the provisions which he had consumed and the materials which he had wrought up the year before; and the manufacturer replaces to the farmer the finished work which had wasted and worn out in the same time. This is the real exchange that is aunnually made between those two orders of people, though it seldom happens that the rude produce of the one and the manufactured produce of the other, are directly bartered for one another . . .” This is lovely, and very important.
Page 231: “It is the produce of land which draws the fish from the waters; and it is the produce of the surface of the earth which extracts the minerals from its bowels.” Nice!
“In all countries where there is a tolerable security, every man of common understanding will endeavor to employ whatever stock he can command in producuring either present enjoyment or future profit. If it is employed in procuring present enjoyment, it is a stock reserved for immediate consumption. If it is employed in procuring future profit, it must procure this profit either by staying with him or by going from him. In the one case it is a fixed, in the other it is a circulating capital.”