Capital II, Chapter 18 - Part 1

Introduction 

1)The Subject Investigated 

“The direct process of the production of capital is its labour and self-expansion process, the process whose result is the commodity-product and whose compelling motive is the production of surplus-value.” (p 355)

In Volume I, Marx analysed fundamental categories, primarily the commodity and commodity exchange and production. From this he derived his analysis of capital. That analysis is conducted at the level of “many capitals”. In other words, he looks at how capital is produced and reproduced at the level of the individual firm. In Volume II, his analysis so far has dealt with the circulation of capital rather than commodities, and with capital in circulation rather than in production. But, it has continued to be an analysis at the level of “many capitals”, rather than “capital in general”. In other words, it has been an analysis of the turnover periods etc. of individual capitals. Now, Marx moves to examine how this circulation of individual capitals is an integral part of the circulation of capital in aggregate, how the circulation of one capital intertwines with the circulation of others.

“Every individual capital forms, however, but an individualised fraction, a fraction endowed with individual life, as it were, of the aggregate social capital, just as every individual capitalist is but an individual element of the capitalist class. The movement of the social capital consists of the totality of the movements of its individualised fractional parts, the turnovers of the individual capitals. Just as the metamorphosis of the individual commodity is a link in the series of metamorphoses of the commodity-world — the circulation of commodities — so the metamorphosis of the individual capital, its turnover, is a link in the circuit described by social capital.” (p 356)

This involves a qualitative change in the analysis. In order to understand the process as a whole, it is now necessary not to consider the circulation of capital and the circulation of commodities as two distinct circuits, but to consider them together.

“The circuit of the individual capitals in their aggregate as social capital, hence considered in its totality, comprises not only the circulation of capital but also the general circulation of commodities.” (p 356)

At various points, within the circuit of capital, a circulation of commodities was also initiated, but these were ignored, because the goal was to analyse the circuit of the individual capital. For example, starting with M – C(MP + L), variable capital was transformed into labour-power. The worker was paid wages, and these wages were used to buy commodities. But, here the worker sells a commodity, labour-power, to capital. The wages that the capitalist pays to the worker are not capital, but only money, the general commodity, universal equivalent form of value. This is not a circuit of capital, but of commodities. The capital does not pass from the hands of the capitalist to the worker in this exchange, but remains in the hands of the capitalist, now as labour-power, productive-capital, rather than money-capital.  It has simply changed its form. Similarly, the worker does not exchange capital for the commodities they buy, but only money. Once again, in each of these transactions, M – C, what is involved is not a circuit of capital, but of commodities (if we consider especially that money itself is a commodity, the universal equivalent form of value).

This can be seen in the diagram.  The circuit of capital is shown in red, and of money in green.  Here capital is metamorphosed in its circuit from money, into commodities (labour-power, and means of production), which constitute the productive-capital, K.  As part of this metamorphosis, capital sheds its money form.  The money is paid as wages, and at this point ceases being capital.  The capital now assumes the form of productive-capital in the hands of the capitalist.  The worker then uses the money to buy the commodities they need to reproduce their labour-power, which can be seen by the green arrows via bank deposits to, C', which represents commodity-capital, already including surplus value.  But, in the same way that in selling labour-power to the capitalist, the worker does not sell, capital, but only a commodity, in buying commodities from other capitalists, they do not buy capital, but only commodities, exchanging the general commodity, money, for them.  

But, when the worker buys commodity X with their wages, this ties in with the fact that commodity X, for its producer is commodity-capital. It does form part of their circuit of capital. The money they receive for it, from the worker, realises its capital-value, as money-capital, which then forms a part not of the circulation of commodities, but of the circuit of capital for the producer of X.  For the producer of X, the metamorphosis is the opposite of that described above.  They do not sell capital to the worker but commodities.  They obtain money from the worker in return, and by this exchange, the commodity-capital is metamorphosed into money-capital, or at least potential money-capital.

But, similarly, the money laid out by the first capitalist, M – C(MP +L), on means of production, involves the circulation of commodities. Capitalist 1 hands over money to capitalist 2, for means of production, which are themselves commodities. But, there is a difference here to the former case. What capitalist 1 exchanges here is not money, as the worker does in buying means of subsistence. Capitalist 1 exchanges money-capital, for productive-capital, in the form of means of production. The commodities they buy form a part of the commodity-capital of capitalist 2. In other words, what we have here is an exchange of capital for capital. For Capitalist 1, their capital value is metamorphosed from money-capital into productive-capital, whereas for Capitalist 2, their capital value is metamorphosed from the form of commodity-capital into money-capital.

Finally, Capitalist 1 obtains surplus-value. A portion of this is spent unproductively, in the purchase of commodities for personal consumption. These form, as with the workers wages, a part of the circulation of commodities. What is spent is merely money, revenue not capital. But, the other portion, which is advanced to buy productive-capital, is an advance of capital not an expenditure of money.

Speaking of the analysis so far, Marx writes,

“But in both the first and the second Parts it was always only a question of some individual capital, of the movement of some individualised part of social capital. 

However the circuits of the individual capitals intertwine, presuppose and necessitate one another, and form, precisely in this interlacing, the movement of the total social capital. Just as in the simple circulation of commodities the total metamorphosis of a commodity appeared as a link in the series of metamorphoses of the world of commodities, so now the metamorphosis of the individual capital appears as a link in the series of metamorphoses of the social capital. But while simple commodity circulation by no means necessarily comprises the circulation of capital — since it may take place on the basis of non-capitalist production — the circuit of the aggregate social capital, as was noted, comprises also the commodity circulation lying outside the circuit of individual capital, i.e., the circulation of commodities which do not represent capital. 

We have now to study the process of circulation (which in its entirety is a form of the process of reproduction) of the individual capitals as components of the aggregate social capital, that is to say, the process of circulation of this aggregate social capital.” (p 357-8)

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