Capital II, Chapter 5 - Part 2

The time of circulation is the time required for the commodity capital to be sold, and converted into money-capital. This time also covers the time required for the surplus value to be realised. It is also the time required for the money-capital to be converted into productive-capital.

“... these processes, as processes of circulation, are processes of the simple metamorphosis of commodities.” (p 127)

Time of circulation and time of production are mutually exclusive. During the former period, capital produces neither commodities nor value, and consequently surplus value. The longer the time of circulation, therefore, the shorter the time capital is being actively expanded, or put another way, if we view the process as the unity of the three circuits of capital, the longer the time of circulation the bigger proportion of the total capital is held as money-capital and commodity-capital, and the smaller the proportion is held as productive capital.

“The more the metamorphoses of circulation of a certain capital are only ideal, i.e., the more the time of circulation is equal to zero, or approaches zero, the more does capital function, the more does its productivity and the self-expansion of its value increase. For instance, if a capitalist executes an order by the terms of which he receives payment on delivery of the product, and if this payment is made in his own means of production, the time of circulation approaches zero.” (p 128)

Political economy sees the consequence that the longer the period of circulation the higher prices seem to be, as a positive contribution to value, but this is not the case.

“We shall see later that even scientific Political Economy has been deceived by this appearance of things. Various phenomena, it will turn out, give colour to this semblance: 1) The capitalist method of calculating profit, in which the negative cause figures as a positive one, since with capitals in different spheres of investment, where only the time of circulation are different, a longer time of circulation tends to bring about an increase in prices, in short, serves as one of the causes of equalising profits. 2) The time of circulation is but a phase of the time of turnover; the latter however includes the time of production or reproduction. What is really due to the latter seems to be due to the time of circulation. 3) The conversion of commodities into variable capital (wages) is necessitated by their previous conversion into money. In the accumulation of capital, the conversion into additional variable capital therefore takes place in the sphere of circulation, or during the time of circulation. Consequently it seems that the accumulation thus achieved is owed to the latter.” (p 128-9)

The effect of higher prices for commodities with longer time of circulation that Marx refers to in equalising the Rate of Profit is not one he goes into in Volume III, in discussing the Transformation Problem. However, the effect referred to here amounts to the fact that the longer the time of circulation, the more total capital is required, and so the capital participates accordingly in the sharing of the total surplus value.

In general, it takes longer for commodity-capital to be sold and converted into money-capital than it does for money-capital to be converted into productive capital.

“However, in capital’s process of circulation, its phase M — C has to do with its transformation into commodities which constitute definite elements of productive capital in a given enterprise. The means of production may not be available in the market and must first be produced or they must be procured from distant markets or their ordinary supply has become irregular or prices have changed, etc., in short there are a multitude of circumstances which are not noticeable in the simple change of form M — C, but which nevertheless requires now more, now less time also for this part of the circulation phase.” (p 129)

The processes of buying (means of production) and selling (final product) occur not just at different times, but usually in different places. Increasingly, the capitalist employs specialists to undertake these two aspects of the circulation process. But, the fact that workers are employed to undertake these functions does not thereby make them productive activities, any more than money-capital or commodity-capital is productive capital.

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