By the way, in the case of commodities which cannot be cut up into their constituent parts, it is a matter of practice to isolate their different portions of value and surplus-value ideally. In the building-business of London, for instance, which is carried on mainly on credit, the contractor receives advances in proportion to the different stages in which the construction of a house proceeds. None of these stages is a house, but only an actually existing fraction of the growing house; in spite of its actuality, each stage is but an ideal portion of the entire house, but it is real enough to serve as security for an additional advance. (See on this point chapter XII, vol. II.)
Third, if the movement of capital-value and surplus-value, which proceeds unitedly so long as they are in the form of C and M, is separated only in part (so that a portion of the surplus-value is not spent as income), or is not separated at all, a change takes place in the capital-value itself within its own cycle, before it is completed. In our illustration the value of the productive capital was equal to 422 pounds sterling. If it continues its cycle M-C, for instance as 480 pounds sterling or 500 pounds sterling, then it goes through the further stages of its cycle with an increase of 58 pounds sterling or 78 pounds sterling over its original value. This change may also go hand in hand with a change in the proportion of its component parts.
C — M', the second stage of the circulation and the final stage of cycle I (M...M'), is the second stage in our cycle and the first in the circulation of commodities. So far as the circulation is concerned, this stage must be supplemented by M' — C\ But C — M' has not only passed the process of utilization (in this case the function of P, the first stage), but has also realized as its result the commodity C\ The process of utilization of capital, and the realization on the commodities which are its product, are therefore completed in C'—W.
"We have started out with simple reproduction and assumed that m — e separates entirely from M — C. Since both circulations, c — m — c as well as C — M — C, belong to the circulation of commodities, so far as their general form is concerned (and do not show, for this reason, any difference 78 Capital.
in the value of their extremes), it is easy to conceive of the process of capitalist production, after the manner of vulgar economy, as a mere production of commodities, of use-value destined for consumption of some sort, which the capitalist produces for no other purpose than that of getting in their place commodities with different use-values, or exchanging them, as vulgar economy erroneously states.
C appears from the very outset as commodity-capital, and the purpose of the entire process, the accumulation of wealth, does not exclude an increasing consumption on the part of the capitalist in proportion as his surplus- value (and thus his capital) increases; on the contrary, it promotes such an increasing consumption.
Indeed, in the circulation of the income of the capitalist, the produced commodity c, or the ideal fraction of the commodity C corresponding to it, serves merely for its transformation, first into money, and from money into a number of other commodities required for individual consumption. But we must not, at this point, overlook the trifling circumstance that c is that part of the commodity-value which did not cost the capitalist anything, since it is the embodiment of surplus-labor and steps originally on the stage as a part of the commodity-capital C. This c is, by the varying nature of its existence, bound to the cycle of circulating capitalvalue, and if this cycle is clogged, or otherwise disturbed, not only the consumption of c is restricted or entirely arrested, but also the disposal of that series of commodities which are to take the place of c. The same is true in the case that the movement C — M' is a failure, or that only a part of C is sold.
We have seen that c — m — c, as representing the circulation of the revenue of the capitalist, enters into the circulation of capital only so long as c is a part of the value of C, of the commodity-capital; but that, as soon as it materializes in the form of m — c, that is to say, as soon as it completes the entire cycle c — m — c, it does not enter into the movements of the capital advanced by the capitalist, although this advance is its cause. It is connected with the movements of capital only in so far as the existence of capital presupposes The Rotation of Productive Capital. 79 the existence of the capitalist, and this is conditioned on the consumption of surplus-value by the capitalist. ■ Within the general circulation, C, for instance yarn, passes only as a commodity; but as an element in the circulation of capital it performs the function of commoditycapital, and capital-value alternately assumes and discards this form. After the sale of the yarn to a merchant, it has passed out of the circulation of the capital which produced it, but nevertheless, as a commodity, it moves always in the cycle of the general circulation. The circulation of one and the same mass of commodities continues, although it may have ceased to be an element in the independent cycle of the capital of the manufacturer. Hence the actual and final metamorphosis of the mass of commodities thrown into circulation by the capitalist by means of C — M, their final elimination in consumption, may be separated in space and time from that metamorphosis in which this same mass of commodities performs the function of commodity-capital. The same metamorphosis which has been completed in the circulation of capital still remains to be accomplished in the sphere of the general circulation.
This state of things is not changed by the transfer of this yarn to the cycle of some other industrial capital. The general circulation comprises as much the interrelations of the various independent fractions of social capital, in other words, the totality of the individual capitals, as the circulation of those values which are not thrown on the market as capital, but enter into individual consumption.
The different relations in the cycle of capital, according to whether it is a part of the general circulation, or forms certain links in the independent cycles of capital, may be further understood when we consider the circulation of M', or of M plus m. M as money-capital, continues the cycle of capital. On the other hand m, spent as revenue in the act m — c, enters into the general circulation, but is eliminated from the cycle of capital. Only that part enters the capital cycle which performs the.function of additional money-capital. In c — m — c, money serves only as coin, and the purpose of this circulation is the individual consumption of the capitalist. It is significant for the idiocy of 80 i Capital.
vulgar economy that it pretends to regard this circulation, which does not enter into the circulation of capital but is merely the circulation of that part of the surplus-product which is consumed as revenue, as the characteristic cycle of capital.
In its second phase, M — C, the capital-value M (which is equal to P, the value of the productive capital that at this point re-opens the cycle of industrial capital) is again present, delivered of its surplus-value. Therefore it has once more the same magnitude which it had in the first stage of the cycle of money-capital, M — C. In spite of the different place at which we now find it, the function of money-capital, into which form the commodity-capital has now been transformed, is the same: Transformation into Pm and L, into means of production and labor-power.
Simultaneously with c — m, capital-value in the function of commodity-capital (C — M') has also gone through the phase C — M, and enters now into the supplementary phase M — C|pm. Its complete circulation is, therefore, C — M — C Pm.
First: Money-capital M appeared in cycle I (M...M') as the original form in which capital-value is advanced; it appears at the very outset as a part of that sum of money into which commodity-capital transformed itself in the first phase of circulation, C — M'. It is from the beginning the transformation of P by means of the sale of commodities into the money-form. Money-capital exists here as that form of capital-value which is neither its original nor its final one, since the phase M — C, which supplements the phase C — M, can only be completed by again discarding the money-form. Therefore, that part of M — C which is at the same time M — L appears now no longer as a mere advance of money in the purchase of labor-power, but also as an advance by means of which the same 1,000 pounds of yarn, valued at 50 pounds, which form a part of the commodity-value created by labor-power, are given to the laborer in the form of money. The money thus advanced to the laborer is merely a transformed equivalent of a fraction of the value of the commodities produced by himself. And for this very reason, the act M — C, so far as it means M — L, is by no The Rotation of Productive Capital. 81 means simply a replacement of a commodity in the form of money by a commodity in the form of a use-value, but it includes other elements which are in a way independent of the general circulation of commodities.
M' appears as a changed form of C, which is itself a product of a previous function of P, of the process of production.
The entire sum of money M is therefore a money-expression of past labor. In our illustration, 10,000 pounds of yarn (worth 500 pounds sterling), are the product of the spinning process. Of this quantity, 7,440 pounds represent the advanced constant capital c (worth 372 pounds sterling); 1,000 pounds represent the advanced variable capital v (worth 50 pounds sterling); and 1,560 pounds represent the surplusvalue s (worth 78 pounds sterling). If in M', only the original capital of 422 pounds sterling is again advanced, other conditions remaining the same, then the laborer receives next week, in M — L, only a part of the 10,000 pounds of yarn produced in this week (the money-value of 1,000 pounds of yarn). As a result of C — M, money is always the expression of past labor. If the supplementary act M — C takes place at once on the commodity-market and M is given in return for commodities existing in this market, then this act is again a transformation of past labor from the money-form into the commodity-form. But M — C differs in the matter of time from C — M. True, these two acts may exceptionally take place at the same time, for instance when the capitalist who performs the act M — C and the other capitalist for whom this act signifies C — M mutually ship their commodities at the same time and M is used only to square the balance. The difference in time between the performance of C — M and M — C may be considerable or insignificant. Although M, as the result of C — M, represents past labor, it may, in the act M — C, represent the changed form of commodities which are not as yet on the market, but will be thrown upon it in the future, since M — C need not take place until C has been produced anew M may also stand for commodities which are produced simultaneously with the C whose money-expression M is; for instance, in the movement M — C (purchase of means of production), coal may be bought before it has been mined.
82 Capital.
In so far as m represents an accumulation of money which is not spent as revenue, it may stand for cotton which will not be produced until next year. The same holds good of the revenue of the capitalist represented by m — c. It also applies to wages, in this case to L equal to 50 pounds sterling; this money is not only the money-form of the past labor of the laborers, but at the same time a draft on simultaneously performed labor or on future labor. The laborer may buy for his wages a coat which will not be made until next week. This applies especially to the vast number of necessary means of subsistence which must be consumed almost as soon as they have been produced, to prevent their being spoiled. Thus the laborer receives in the money which represents his wages the changed form of his own future labor or that of others. By means of a part of the laborer's past labor, the capitalist gives him a draft on his own future labor. It is the laborer's simultaneous or future labor which represents the not yet existing supply that will pay for his past labor. In this case, the idea of the formation of a sup* ply disappears altogether.
Second: In the circulation C — M — C \ pm the same money changes places twice; the capitalist first receives it as a seller and gives it away as a buyer; the transformation of commodities into the money-form serves only for the purpose of retransforming it from money into commodities; the money-form of capital, its existence as money-capital, is therefore only a passing factor in this movement; or, so far as the movement proceeds, money-capital appears only as a circulating medium when it serves to buy things; on the other hand, money-capital performs the function of a paying medium when capitalists buy mutually from one another and square only the balance of their accounts.
Third: The function of money-capital, whether it is a mere circulating medium or a paying medium, mediates only the renewal of C by L and Pm, that is to say, the renewal of the commodities produced by productive capital, such as yarn (after deducting the surplus-value used as revenue), out of its constituent elements, in other words, the retransformation of capital-value from its commodity -form into the elements constituting this commodity. In the The Rotation of Productive Capital. 83 last analysis, the function of money-capital mediates only the retransformation of commodity-capital into productive capital.
In order that the cycle may be completed normally, C must be sold at its value and completely. Furthermore, C — M — C does not signify merely the replacing of one commodity by another, but also the replacing of the same relative values. We assume that this takes place here. As a matter of fact, however, the values of the means of production vary; it is precisely capitalist production which has for its characteristic a continuous change of value-relations, and this is conditioned on the ever changing productivity of labor, which is another characteristic of capitalist production. This change in the value of the factors of production will be discussed later on, and we merely refer to it here. The transformation of the elements of production into commodity-products, of P into C, takes place in the sphere of production, while their retransformation from C into P takes place in the sphere of circulation; it is accomplished by way of the simple metamorphosis of commodities, but its content is a phase in the process of reproduction, regarded as a whole. C — M — C, considered as a form of the circulation of capital, includes a change of substance due to this function. The process C — M — C requires that C should be identical with the elements of production of the quantity of commodities C, and that these elements maintain their relative proportions toward one another. It is, therefore, understood that the commodities are not only bought at their value, but also that they do not undergo any change of value during their circulation. Otherwise this process cannot run normally.
In M...M', the factor M represents the original form of capital-value, which is discarded only to be resumed. In P...C — M' — C...P, the factor M represents a form which is only assumed in this process and which is discarded before this process is over with. The money-form appears here only as a passing independent form of capital-value. Capital is just as anxious to assume this form in C as it is to discard it in M' after barely assuming it, in order to again transform itself into productive capital. So long as it remains in the 84 Capital.
84 Capital.
money-form, it does not perform the function of capital and does not, therefore, generate new values; it then lies fallow. M serves here as a circulating medium, but as a circulating medium of capital. The semblance of independence, which the money-form of capital-value possesses in the first form of the circulation of money-capital, disappears in this second form, which, therefore, is the negation of the first form and reduces it to a concrete form. If the second metamorphosis M — C meets with any obstacles — for instance, if there are no means of production in the market — the uninterrupted flow of the process of reproduction is arrested, quite as much as it is when capital in the form of commoditycapital is held fast. But there is this difference-. It can remain longer in the money-form than in that of commodities. It does not cease to be money, if it does not perform the functions of money-capital; but it does cease to be a commodity, or even a use-value, if it is interrupted too long in its functions of commodity-capital. Furthermore, it is capable in its money-form, of assuming another form instead of its original one of productive capital, while it does not change places at all if held in the form of C\ C — M' — C includes processes of circulation only for C, and they are phases in its reproduction, but the actual reproduction of C, into which C is transformed, is necessary for the completion of C — M' — C. This, however, is conditioned on a process of reproduction which lies outside of the process of reproduction of the individual capital represented by C\ In the first form, M — C Pm prepares only the first transformation of money-capital into productive capital; in the second form, it prepares the retransformation of commoditycapital into productive capital; that is to say, so far as the investment of industrial capital remains the same, the commodity-capital is retransformed into the same elements of production out of which it originated. Here as well as in the first form, the process of production is in a preparatory stage, but it is a return to it and its renewal, it is for the purpose of repeating the process of self-utilization.
It must be noted, once more, that M — L is not merely the exchange of commodities, but the purchase of a commodity L, which is to serve for the production of surplus-value, just The Rotation of Productive Capital. 85 as M — Pm is a process which is indispensable for the same end.
When M — C |pm has been completed, M has been retransformed into productive capital P, and the cycle begins anew.
The elaborated form of P...C— M'— C...P is c M + + c m The transformation of money-capital into productive capital is the purchase of commodities for the purpose of producing commodities. Consumption falls within the cycle of capital only in so far as it is productive consumption; its premise is that surplus-value is produced by means of the commodities so consumed. And this is quite different from a production, even though it be a production of commodities, which has for its end the existence of the producer. A replacing of one commodity by another for the purpose of producing surplus-value is a different matter than the exchange of products which is perfected merely by means of money. But some economists use this sort of exchange as a proof that there can be no overproduction.
Apart from the productive consumption of M, which is transformed into L and Pm, this cycle contains the first phase M — L, which signifies, from the standpoint of the laborer L — M, or C — M. In the laborer's circulation, L — M — C, which includes his individual consumption, only the first factor falls within the cycle of capital by means of L — M. The second act, M — C, does not fall within the circulation of individual capital, although it is conditioned on it. But the continuous existence of the laboring class is necessary for the capitalist class, and this requires the individual consumption of the laborer, made possible by M — C.
The act C — M' requires only that C be transformed into money, that it be sold, in order that capital-value may continue its cycles and surplus-value be consumed by the capitalist. Of course, C is bought only because the article is a use-value and serviceable for individual or productive consumption. But if C continues to circulate, for instance, in the hand of the merchant who has bought the yarn, this 86 Capital.
does not interfere with the continuation of the cycle of individual capital which produced the yarn and sold it to the merchant. The entire process proceeds uninterruptedly and simultaneously with the individual consumption of the capitalist and the laborer. This point is important in a discussion of commercial crises.
As soon as C has been sold for money, it may re-enter into the material elements of the labor process, and thus of the reproductive process. Whether C is bought by the final consumer or by a merchant, does not alter the case. The quantity of commodities produced by capitalist production depends on the scale of production and on the continual necessity for expansion following from this production. It does not depend on a predestined circle of supply and demand, nor on certain wants to be supplied. Production on a large scale can have no other buyer, apart from other industrial capitalists, than the wholesale merchant. Within certain limits, the process of reproduction may take place on the same or on an increased scale, although the commodities taken out of it may not have gone into individual or productive consumption. The consumption of commodities is not included in the cycle of the capital which produced them. For instance, as soon as the yarn has been sold, the cycle of the capital-value contained in the yarn may begin anew, regardless of what may become of the sold yarn. So long as the product is sold, everything is going its regular course from the standpoint of the capitalist producer. The cycle of his capital-value is not interrupted. And if this process is expanded — including an increased productive consumption of the means of production — this reproduction of capital may be accompanied by an increased individual consumption (demand) on the part of the laborers, since this individual consumption is initiated and mediated by productive consumption. Thus the production of surplus- value, and with it the individual consumption of the capitalist, may increase, the entire process of reproduction may be in a flourishing condition, and yet a large part of the commodities may have entered into consumption only apparently, while in reality they may still remain unsold in the hands of deal- The Rotation of Productive Capital. 87 ers, in other words, they may still be actually in the market. Now one stream of commodities follows another, and finally it becomes obvious that the previous stream had been only apparently absorbed by consumption. The commodity-capitals compete with one another for a place on the market. The succeeding ones, in order to be able to sell, do so below price. The former streams have not yet been utilized, when the payment for them is due. Their owners must declare their insolvency, or they sell at any price in order to fulfill their obligations. This sale has nothing whatever to do with the actual condition of the demand. It is merely a question of a demand for payment, of the pressing necessity of transforming commodities into money. Then a crisis comes. It becomes noticeable, not in the direct decrease of consumptive demand, not in the demand for individual consumption, but in the decrease of exchanges of capital for capital, of the reproductive process of capital.
If the ■commodities Pm and L, into which M is transformed in the performance of its function of money-capital, in its capacity as capital-value destined for retransformation into productive capital, if, I say, those commodities are to be bought or paid at different dates, so that M — C represents a series of successive purchases or payments, then a part of M performs the act M — C, while another part persists in the form of money, and does not serve in the performance of simultaneous or successive acts M — 0, until the conditions of this process itself demand it. This part of M is temporarily withheld from circulation, in order to perform its function at the proper moment. This storing of M for a certain time is a function conditioned on its circulation and intended for circulation. Its existence as a fund for purchase and payment, the suspension of its movement, the condition of its interrupted circulation, are conditions in which money performs one of its functions as money-capital. I say moneycapital; for in this case the money remaining temporarily at rest is itself a part of money-capital M (of M' — m equal to M), of that part of commodity-capital which is equal to P, of that value of productive capital from which the cycle proceeds. On the other hand, all money withdrawn from circulation has the form of a hoard. In the form of a hoard, 88 Capital.
88 Capital.
money is thus likewise a function of money-capital, just as the function of money in M — C as a medium of purchase or payment becomes a function of money-capital. For capitalvalue here exists in the form of money, the money-form is a condition of industrial capital in one of its stages, prescribed by the interrelations of processes within the cycle. At the same time it is here once more obvious, that moneycapital performs no other functions than those of money within the cycle of industrial capital, and that these functions assume the significance of capital functions only by virtue of their interrelations with the other stages of this cycle.
The representation of M' as a relation of m to M, as a capital relation, is not so much a function of money-capital, as of commodity-capital C, which in its turn, as a relation of c to C, expresses but the result of the process of production, of the self-utilization of capital which took place in it.
If the movement of the process of circulation meets with obstacles, so that M must suspend its function M — C on account of external conditions, such as the condition of the market, etc., and if it therefore remains for a shorter or longer time in its money-form, then we have once more money in the form of a hoard which it may also assume in the simple circulation of commodities, as soon as the transition from C — M to M — C is interrupted by external conditions. It is an involuntary formation of a hoard. In the present case, money has the form of fallow, latent, moneycapital. But we will not discuss this point any further for the present.
In both cases, the suspension of money-capital in the form of money is the result of an interruption of its movements, no matter whether this is advantageous or harmful, voluntary or involuntary, in accord with its functions or contrary to them.
The Rotation of Productive Capital. 89 II. Accumulation and Reproduction On An Enlarged Scale.
Since the proportions of the expansion of the productive process are not arbitrary, but determined by technical conditions, the produced surplus-value, though intended for capitalization, frequently does not attain a size sufficient for its function as additional capital, for its entrance into the cycle of circulating capital-value, until several cycles have been repeated so that it must be accumulated until that time.
, Surplus-value thus assures the rigid form of a hoard and is, then, latent capital. It is latent, because it cannot function as capital so long as it persists in the money-form. 6a The formation of a hoard thus appears as a phenomenon included in the process of capitalist accumulation, accompanying it, but nevertheless essentially different from it. For the process of reproduction is not expanded by latent capital. On the contrary, latent money-capital is here formed, because the capitalist producer cannot at once expand the scale of his production. If he sells his surplus-product to a producer of gold or silver, or, what amounts to the same thing, to a merchant who imports additional gold or silver from foreign countries for a part of the national surplus-product, then his latent money-capital forms an increment of the national gold or silver hoard. In all other cases, the surplus-value, for instance the 78 pounds sterling, which were a circulating medium in the hand of the purchaser, have only assumed the form of a hoard in the hands of the capitalist. In other words, a different repartition of the national gold or silver hoard has taken place, that is all.
If the money serves in the transactions of our capitalist as a means of payment, in such a way that the commodities are to be paid for by the buyer on long or short terms, then the surplus-product intended for capitalization is not transformed into money, but into creditor's claims, into titles of 6a The term "latent" is borrowed from the idea of latent heat in physics, which has now been almost replaced by the theory of the transformation of energy Marx therefore uses in the third part, which is of later date, another term borrowed from the idea of potential energy, viz.: "potential," or, analogous to the virtual velocities of D'Alembert, "virtual capital." — F. E.
90 Capital.
ownership of a certain equivalent, which the buyer may either have in his possession, or which he may expect to possess. It does not enter into the reproductive process of the cycle any more than money which is invested in interest^ bearing papers, although it may enter into the cycles of other individual industrial capitals.