Capital II, Chapter 4 - Part 7

Marx then sets out a number of explanations of how he proceeds in Volume II to analyse the process of circulation.

“Trading in commodities as the function of merchant’s capital is a premise of capitalist production and develops more and more in the course of development of such production. Therefore we occasionally take its existence for granted to illustrate particular aspects of the process of capitalist circulation; but in the general analysis of this process we assume direct sale, without the intervention of a merchant, because this intervention obscures various facets of the movement.” (p 114)

“In the discussion of the general forms of the circuit and in the entire second book in general, we take money to mean metallic money, with the exception of symbolic money, mere tokens of value, which are designed for specific use in certain states, and of credit-money, which is not yet developed. In the first place, this is the historical order; credit-production plays only a very minor role, or none at all, during the first epoch of capitalist production. In the second place, the necessity of this order is demonstrated theoretically by the fact that everything of a critical nature which Tooke and others hitherto expounded in regard to the circulation of credit-money compelled them to hark back again and again to the question of what would be the aspect of the matter if nothing but metal-money were in circulation. But it must not be forgotten that metal-money may serve as a purchasing medium and also as a paying medium. For the sake of simplicity, we consider it in this second book generally only in its first functional form.” (p 115-6)

The process of the circulation of industrial capital is governed by the laws of commodity exchange set out in Chapter 3 of Volume I. The faster the velocity of money, the greater the capital-value a given amount of money sets in motion. To the extent that money acts as a means of payment, and only has to settle outstanding net balances, again the more capital-value a given amount of money sets in motion. If the velocity of money is given, then the amount of money required to circulate a given capital-value is determined by the volume of commodities and their aggregate prices. If the quantity and price of commodities is given the amount of money required is determined by the value of money.

“But the laws of the general circulation of commodities are valid only when capital’s circulation process consists of a series of simple acts of circulation; they do not apply when the latter constitute functionally determined sections of the circuit of individual industrial capitals.” (p 116)

The acts of circulation M – C – M and C – M – C, are essentially the same act of metamorphosis viewed from opposite perspectives. Every act M – C, necessitates another act C – M. One is the act of the buyer, the other of the seller. The same applies to capital, and the acts of buying and selling by a capitalist in that the commodities he buys (means of production and labour-power) constitute productive capital and the commodities he sells constitute commodity-capital, and “... his capital on that account functions in the form of money opposed to the commodities of another. But this intertwining is not to be identified with the intertwining of the metamorphoses of capitals.” (p 117)

For one thing, the capitalist may buy means of production, M – C, but may not buy them from another capitalist. They may be bought from a peasant producer, slave-owner etc. The purchase of labour-power M – C(L) is never an exchange of capitals because labour-power is not capital for the worker. It only becomes capital in the hands of the capitalist.

Furthermore, C' — M' may not be the money equivalent of a converted commodity-capital. It can be simply the money equivalent of the product of labour-power. A school that employs a teacher only sells the commodity education produced by the teacher's labour-power. Alternatively, it could be the converted form of the product of some other form of labour. For example, yarn may not be the converted form of cotton produced as commodity-capital. It may have been cotton produced merely as a commodity by peasant or slave labour.

But, even if we assume that all production is capitalist, its clear that not all exchanges of commodities represent exchanges of capital. The capitalist also exchanges money for the purchase of commodities for their own consumption. One capitalist exchanges commodity-capital for money C – M, but the other simply exchanges money for commodities.

It is not possible then to analyse the intertwining and exchange of individual capitals, as part of the total social capital, simply by examining the exchange of commodities.

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