Capital III, Chapter 16 - Part 2

In Capital II, in examining these circuits of capital, and the nature of the turnover of capital, it was seen that, although the capital assumes these different forms, it is one and the same capital. The turnover period of the capital is divided into its working period, when it is in its productive form, and its circulation period, when it is in its commodity form or money form, but it was seen that the advanced capital must be sufficient to cover both periods so that production is continuous.

Its not just a reduction in the working period, therefore, that reduces the capital that needs to be advanced. A reduction in the circulation period also reduces the required amount of advanced capital. Capital, therefore, has an incentive to reduce the circulation period, as well as as the working period.

“Commercial capital is nothing but a transmuted form of a part of this capital of circulation constantly to be found in the market, ever in the process of its metamorphosis, and always encompassed by the sphere of circulation. We say a part, because a part of the selling and buying of commodities always takes place directly between industrial capitalists.” (p 268)

Every capitalist, of whatever form, is characterised by the fact that they appear in the market as the owner of a sum of capital. This is the difference with simple commodity production and exchange. Under the latter, commodity owners appear on the market as the owners of commodities, which they want to exchange for other commodities, to meet their needs. Money only intervenes here as a means of facilitating the exchange process, C – M – C.

But, the capitalist appears with a sum of money, not to buy commodities to meet their needs, but solely with the intention of turning it into a larger sum of money, M – C – M'. The merchant capitalist seeks to achieve this by buying low and selling high, taking advantage of inadequate market knowledge, by sellers and buyers, and arbitrage between varying prices in different markets. The productive capitalist seeks to achieve it by purchasing the value creating substance itself – labour – and extracting a surplus value in the production process. The money capitalist, as will be seen later, even cuts out any intervening process, going straight from M to M', as a result of providing the use value of money-capital itself.

For the merchant capitalist, the circuit of his capital begins as M – C – M'. But, as Marx set out in Capital II, it is only for newly employed money-capital, that the circuit begins with M. For already functioning productive-capital, the circuit is P...P, and for already functioning commodity-capital, it is C' – C'. That is commodity-capital is always capital that has been self-expanded, because it already contains surplus value. It has already gone through the production process, which embodies surplus value within it. But, if we consider the movement of the capital of the merchant capitalist it appears to be a continual repetition of this movement M – C – M'. That is, they appear in the market with a sum of money with which they buy commodities. They sell these commodities for a greater sum of money. With this greater sum of money, they appear in the market once more, and buy commodities once again, which they in turn sell for an even greater sum of money.

For the merchant capitalist, the production process plays no part for him, in the same way that for the productive-capitalist, the circuit is delayed by the circulation process.

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