Capital II, Chapter 20 - Part 31

If we look at the position of the worker – and this applies also to Department 2 workers – they are paid wages in return for selling their commodity – labour-power. The wages they receive are revenue. When they come to spend those wages, to buy commodities, they appear in the market, confronting the seller of those commodities, not as capital, but merely as a commodity owner. The relation between the two is that solely of two equal commodity owners. The consumption goods being bought by the worker might be bought from a capitalist, for whom these form part of his commodity-capital, but in the act of exchange, they stand only as commodities, like any other, that could just as easily have been brought to market by a peasant producer, rather than a capitalist.

The worker sells a commodity (LP) and obtains revenue as wages. But, this revenue is itself a commodity – money – the universal equivalent form of value. They expend that revenue and obtain commodities of equal value. Marx then examines this exchange from the other side, from the perspective of the capitalist.

Department 2 produces consumer goods, all of which serve to realise revenue for someone, i.e. revenue is ultimately spent to purchase goods for consumption rather than to act as capital. Here, a portion of Department 2's output is to realise the revenue of Department 1 workers, i.e. to provide them with consumption goods in exchange for the money paid to them as wages.

But, also for Department 2, a part of their total output/commodity capital is equal to the constant capital used in its production - £2000 – just as another portion is equal to the variable capital used up in its production - £500 – and a final portion equal to the surplus value produced - £500.

In selling commodities to Department 1 workers, with a value of £1,000, Department 2 has recovered half of the value of the constant capital it consumed, and it has to do this via the sale of these commodities in order once more to purchase that constant capital, and continue production on the same scale.

“Hence it is not the variable capital Iv, which has been converted into this first half of the constant capital-value IIc, but simply the money which functioned for I as money-capital in the exchange for labour-power and thus came into the possession of the seller of labour-power, to whom it does not represent capital but revenue in the form of money, i.e., it is spent as a means of purchase of articles of consumption.” (p 446)

The money - £1,000 – received from these workers cannot function as constant capital. Department 2 has to buy it from Department 1. Workers sold labour-power, received wages and spent them to buy commodities, C-M-C. But, this was money acting as revenue. The Department 2 capitalists sell commodities, receive money, and use it to buy commodities in the form of constant capital, C-M-C, but here the money acts as capital. Commodity-capital is realised as money-capital, which buys productive-capital.

“It is the reconversion of commodities into the material elements of which this commodity is made.” (p 446)

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