Capital II, Chapter 3 - Part 1

The Circuit of Commodity-Capital 

The general formula for the circuit of commodity-capital is, C' — M' — C ... P ... C'. C' is not just the product, but also the premise of the previous two circuits – money capital and productive capital. That is because M - C for one capital is at the same time C – M for some other capital. A productive capitalist who lays out money-capital, to buy coal and machinery, M – C, thereby enables the capitalist who owns a coal mine, or produces machines, to sell those commodities, C – M.

The circuit P...P, and the circuit C' – C,as was previously described is assumed in the first repetition of the circuit M – M', because as soon as M' or M is used to buy new means of production, the only purpose of that is to undertake production, to produce additional commodities, embodying surplus value.

“If reproduction takes place on an extended scale, then the final C' is greater than the initial C' and should therefore be designated here as C''.” (p 89)

Capitalism can appear as a system in which money
 simply makes money.  That certainly is a central
aspect of orthodox economic theory, which believes
that increases in value arise as a result of exchange
rather than production.  Stock market and other speculative
 gains can seem to confirm that view.  On that basis, production
itself can appear as nothing more than an inconvenient
interruption in the process of money making from such exchanges. 

The circuit of money capital, M – C – M, appears to have production interrupting the circuit. The circuit of productive capital, P...P, is actually C – M – C, because P is made up of commodities (means of production and labour-power) transformed into new commodities, which are then sold, for money, which is then used to buy commodities (means of production and labour power). Here it is the two ends of the production process, which appear to be the interruption of the circuit i.e. the period of exchanging the final product for money, and the period of exchanging the money for means of production, and labour-power.

For the circuit of commodity capital, it is again C – M – C, but this time viewed from its opposite pole. Here the circuit begins not with those commodities bought as productive capital, but the commodities produced as the end product. They are exchanged for money, C – M, which is then exchanged for commodities (means of production and labour power). So, C – M – C.

But, there is a difference between this last circuit and the other two. In the circuit of money capital, M – M', where M then forms the start of the new circuit, it appears only as M not M', whether or not the surplus value from the previous circuit is accumulated, i.e. whether there is simple or expanded reproduction. That is because the M that commences the circuit is only the monetary equivalent of the capital value actually thrown into production. M' signifies that an expansion of the capital has occurred, which is the case in M – M'. But, at the start of the circuit, no such expansion has occurred, it is yet to be accomplished as a consequence of the production process. Whether M here is equal to the M that commenced the previous circuit, or else equal to the M + m that completed it, is not relevant. The new circuit can only begin with M as a monetary equivalent of the capital-value as it exists. Only when production occurs does this capital value expand.

The same is true in the circuit of the productive capital P...P'. If the surplus value from the previous cycle has been accumulated, then this still appears at the start of the new circuit as P, because its capital value is what it is. In this circuit it has not been expanded. It can only expand as a result of the production process.

Commodity Capital C' already incorporates surplus value.
Whether that surplus value is used for expanded
 reproduction or to finance unproductive consumption.

But, that is not the case in respect of the circuit of the commodity capital. It always begins with C', and that applies whether there is simple or expanded reproduction. That is because C here, as the end product, always starts life as a product in which surplus value has been embodied. Even with simple reproduction, the production process ensures that C has a higher value than the C (means of production and labour-power) which preceded it. So, the circuit is C' – M'. M – C … P... C'.

“Consequently if simple reproduction takes place in this form, the C' at the terminal point is equal in size to the C' at the starting-point. If a part of the surplus-value enters into the capital circuit, C'', an enlarged C', appears at the close instead of C'. This is merely a larger C' than that of the proceeding circuit, with a larger accumulated capital-value. Hence it begins its new circuit with a relatively larger, newly created surplus-value. In any event C' always inaugurates the circuit as a commodity-capital which is equal to capital-value plus surplus-value.” (p 90)

C', the end product, does not appear as C (means of production and labour-power) in the circuit of the industrial capital that produced it. It only appears as C in the circuit of some other capital. For example, a coal mine produces coal. Its circuit is C – M – C'. The coal is represented by C', because it includes a surplus value. But, when it is sold to some other company for fuel, it appears as means of production, i.e. as C. By, the same token, the coal mine buys machinery that appears in its circuit as means of production, C, but, for the machine maker, it is an end product embodying surplus value, and therefore, C'.

But, whilst means of production sold as a commodity by a capitalist constitute commodity capital, because they embody surplus value, that is not the case with the labour-power sold as a commodity by the worker. That is sold merely as a commodity. To the capitalist that buys means of production and labour-power, both appear merely as commodities, C. But, whilst for the seller of machines, for example, that C is actually C', for the worker, their labour-power only ever constitutes C. The production of the workers' labour-power is not a capitalistic process of production undertaken by the worker, in which they embed surplus value in the commodity they have to sell. The worker can only sell their Labour-Power at the price it costs to produce it, i.e. to buy the necessaries required to reproduce the worker.

Labour can only be capital as part of the productive capital of the capitalist, and therefore, capital not for the worker but for the capitalist that buys it.

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