Capital III, Chapter 16 - Part 4

For the productive-capitalist, the circuit of their capital is P..P or C' – M – C'. In other words, the productive-capital engages in production and creates commodities which already contain surplus value. Hence C'. These commodities are sold and the surplus value thereby realised. With the proceeds, other commodities – means of production and labour-power – are bought, which form productive-capital, thereby completing the circuit. In this process, the same money changes hands twice. The capitalist receives money from the sale of their commodities, and uses the same money to buy other commodities. The commodities they buy – means of production and labour-power – are not the same commodities they sell. But, for the merchant capitalist, it is the same commodities which change hands twice. The merchant buys commodities with one sum of money, and sells the same commodities for a different sum of money.

The merchant may, of course, sell this commodity to another merchant, and it may pass through the hands of several merchants before it finally ends up in the hands of the final consumer. But, however many hands it passes through, the fundamental reality remains that, until it is bought by that final consumer, the commodity itself has not completed its circuit, no matter how long that may be after its producer was paid for it, by the merchant. If none of these merchants existed, in the intervening process, it would be clear that the producer had not reproduced their capital, until such time as the commodity was in the hands of the consumer.

It does not matter whether this consumer is an unproductive or productive consumer. In other words, whether they want the commodity for their personal consumption or for use in the production of some other commodity. Once the merchant has sold the commodity, they replicate this circuit once more, buying additional commodities to sell. This is not fundamentally changed by whether the merchant buys the commodities with their own money, buys them on credit from the seller, or with money borrowed from a money-capitalist. The only difference is the situation they face if market prices change, in the interval between the time they buy and sell, and when they have to make payment.

If a merchant buys from a producer, on the basis of credit, payment being due in six weeks, then, if the merchant sells the commodities in that time, they can pay the producer without ever having had to advance any capital of their own. But, if he has not sold in that time, he will have to advance his capital in payment. Similarly, if in the intervening period, market prices fall, then, even if he sells all of the commodities, he will have to make up any shortfall from his own capital.

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