Capital II, Chapter 4 - Part 1

The Three Formulas of the Circuit 

The formulas for the three circuits of capital are:

I. M — C ... P ... C' — M'
II. P ... Tc ... P
III. Tc ... P (C')

“The total process presents itself as the unity of the processes of production and circulation. The process of production becomes the mediator of the process of circulation and vice versa.” (p 103)

What is common to all three is that self-expansion of value is the purpose. It appears that the circulation of capital is only the same metamorphosis of commodities seen in commodity exchange. But, looked at more closely, it can be seen that this is not the case. 

“... if we study the connection between the circuits of individual capitals as partial movements of the process of reproduction of the total social capital, then the mere change of form of money and commodities cannot explain the connection.” (p 103-4)

Each circuit presupposes the other. Money-capital only expands because production occurs and commodity-capital is exchanged for money. Productive-capital is only reproduced because commodity-capital is sold, creating money-capital that buys productive-capital. Commodity-capital only exists because it has been produced by productive-capital, and can only be reproduced because it is converted into money-capital that buys productive-capital.

In reality, of course, what has been discussed, so far, as a linear process, is no such thing, because all of these circuits are occurring simultaneously.

“But in reality every individual industrial capital is present simultaneously in all three circuits. These three circuits, the forms of reproduction assumed by the three forms of capital, are made continuously side by side. For instance, one part of the capital-value, which now performs the function of commodity-capital, is transformed into money-capital, but at the same time another part leaves the process of production and enters the circulation as a new commodity-capital. The circuit form C' ... C' is thus continuously described; and so are the other two forms. The reproduction of capital in each one of its forms and stages is just as continuous as the metamorphosis of these forms and the successive passage through the three stages. The entire circuit is thus a unity of its three forms.” (p 104)

In the analysis until now, each stage has appeared as an interruption of the other circuits. In previous modes of production, this is frequently the case. For example, an artisan, who produced to order, can cease production altogether for periods after they have completed an order. But, capitalism does not work that way. Even during a crisis, production, as a whole, and for the majority of businesses, carries on as a continual process.

In reality, under capitalism, it is this continuous, and therefore simultaneous nature of production and distribution, that are its characteristics. At the same time that production is occurring, previous production is assuming the form of commodity-capital; at the same time that commodity-capital is being sold and converted to money-capital; at the same time that money-capital is being used to buy means of production and labour-power; at the same time that means of production and labour-power are engaging in production.

“All parts of capital successively describe circuits, are simultaneously at its different stages. The industrial capital, continuously progressing along its orbit, thus exists simultaneously at all its stages and in the diverse functional forms corresponding to these stages. That part of industrial capital which is converted for the first time from commodity-capital into money begins the circuit C' ... C', while industrial capital as a moving whole has already passed through that circuit. One hand advances money, the other receives it. The inauguration of the circuit M ... M' at one place coincides with the return of the money at another place. The same is true of productive capital.” (p 105-6)

Industrial capital exists, therefore, as the unity of these three circuits.

“But it can be such a unity only if all the different parts of capital can go through the successive stages of the circuit, can pass from one phase, from one functional form to another, so that the industrial capital, being the whole of all these parts, exists simultaneously in its various phases and functions and thus describes all three circuits at the same time. The succession [das Nacheinander] of these parts is here governed by their co-existence [das Nebeneinander], that is to say, by the division of capital. In a ramified factory system the product is constantly in the various stages of its process of formation and constantly passes from one phase of production to another.” (p 106)

Failure to grasp the dialectical nature of this continuous process, and the simultaneity it involves, is one of the weaknesses of the TSSI.

At the same time, because each capitalist only has a definite amount of capital in total, the capital-value at any of these points is itself limited in size, and must be proportionate to the total capital.

By the same token, if the circuit is broken or stagnates at one point, it causes it to break or stagnate throughout. If commodity-capital is not sold, money-capital is lacking, which means productive-capital cannot be bought and so on.

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Forward To Part 2