Marx then gives an expansive definition of capital that is worth citing in full.
“Capital as self-expanding value embraces not only class relations, a society of a definite character resting on the existence of labour in the form of wage-labour. It is a movement, a circuit-describing process going through various stages, which itself comprises three different forms of circuit-describing process. Therefore it can be understood only as a motion, not as a thing at rest. Those who regard the gaining by value of independent existence as a mere abstraction forget that the movement of industrial capital is this abstraction in actu. Value here passes through various forms, various movements in which it maintains itself and at the same time expands, augments. As we are here concerned primarily with the mere form of this movement, we shall not take into consideration the revolutions which capital-value may undergo during its circuit. But it is clear that in spite of all the revolutions of value, capitalist production exists and can endure only so long as capital-value is made to create surplus-value, that is, so long as it describes its circuit as a value that has gained independence, so long therefore as the revolutions in value are overcome and equilibrated in some way. The movements of capital appear as the action of some individual industrial capitalist who performs the functions of a buyer of commodities and labour, a seller of commodities, and an owner of productive capital, who therefore promotes the circuit by this activity. If social capital experiences a revolution in value, it may happen that the capital of the individual capitalist succumbs to it and fails, because it cannot adapt itself to the conditions of this movement of values. The more acute and frequent such revolutions in value become, the more does the automatic movement of the now independent value operate with the elemental force of a natural process, against the foresight and calculation of the individual capitalist, the more does the course of normal production become subservient to abnormal speculation, and the greater is the danger that threatens the existence of the individual capitals. These periodical revolutions in value therefore corroborate what they are supposed to refute, namely, that value as capital acquires independent existence, which it maintains and accentuates through its movement.” (p 109)
Marx provides further insight into the nature of capital and value, at the same time, dealing with the confusion between value and exchange value.
“If value’s acquisition of independence of the value-creating power, labour-power, is inaugurated by the act M — L (purchase of labour-power) and is effected during the process of production as exploitation of labour-power, this acquisition of independence on the part of value does not re-appear in that circuit, in which money, commodities, and elements of production are merely alternating forms of capital-value in process, and the former magnitude of value is compared with capital’s present changed magnitude of value.” (p 109)
In other words, what he is concerned with here is not investigating any changes in capital-value arising from changes in the value of the productive-capital, but changes in capital-value arising as a consequence of the productive process itself.
To further illustrate the point, he quotes Samuel Bailey. Bailey was a precursor of the Neo-Classical economists in that he developed a subjective theory of value. For Bailey, the value of a commodity was nothing other than its exchange value i.e. how much of other commodities exchanged against it. This exchange value was then not based on the actual values of these different commodities, but was merely a reflection of the subjective preferences of those involved in the exchange, which is why he argued exchange values change as preferences change. Marx responds,
“This he says against the comparison of commodity-values of different epochs, a comparison which amounts only to comparing the expenditure of labour required in various periods for the production of the same sort of commodities, once the value of money has been fixed for every period. This comes from his general misunderstanding, for he thinks that exchange-value is equal to value, that the form of value is value itself; consequently commodity-value can no longer be compared, if they do not function actively as exchange-values and thus cannot actually be exchanged for one another. He has not the least inkling of the fact that value functions as capital-value or capital only in so far as it remains identical with itself and is compared with itself in the different phases of its circuit, which are not at all “contemporary” but succeed one another.” (p 109-10)
In other words, to understand the process of valorisation, of the expansion of capital-value, it is necessary to abstract from any changes in capital-value caused purely as a consequence of temporal disparities i.e. changes in the capital-value due to changes in productivity between one time period and another.
“In order to study the formula of the circuit in its purity it is not sufficient to postulate that commodities are sold at their value; it must also be assumed that this takes place with other things being equal. Take for instance the form P ... P, disregarding all technical revolutions within the process of production by which the productive capital of a certain capitalist might be depreciated; disregarding furthermore all reactions which a change in the elements of value of the productive capital might have on the value of the existing commodity-capital, which might appreciate or depreciate if a stock of it is on hand.” (p 110)Back To Part 2
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