Capital III, Chapter 16 - Part 7

“The turnover of merchant's capital in one sphere of production is naturally restricted by the total production of that sphere. But it is not restricted by the scale of production, or the period of turnover, of any one capital of the same sphere, so far as its period of turnover is qualified by its time of production.” (p 276)

In this respect, merchant capital acts in a similar way to that in which the same piece of money can facilitate several transactions. The same merchants capital can effect the turnover of several different productive-capitals. Its turnover is then equal to several of these productive-capitals.

The more quickly it is turned over, the less, relatively, of the total social capital is in the form of commodity-capital, and the less, therefore, has to be held in the form of money-capital. The less developed production, the smaller, in absolute terms, is the quantity of commodity-capital, and so of merchant capital. The more production develops, the greater the quantity and range of use values sent into the market. Consequently, the larger the absolute quantity of commodity-capital and merchant capital. More stores are opened etc.

But, as with the economies of scale in production, so too in circulation. A large store selling a large number of items, will require proportionately less capital than a small store selling fewer items and so on.

“The velocity of circulation of the money-capital advanced by the merchant depends 1) on the speed with which the process of production is renewed and the different processes of production are linked together; and 2) on the velocity of consumption.” (p 277)

The merchant's capital must necessarily always comprise two parts, just as the industrial capital comprised three. The merchant must always have part of their capital in the form of commodity-capital waiting to be transformed into money-capital, and a second part comprising money-capital waiting to be transformed into commodity-capital. The larger one portion, the smaller the other, but to the extent that the merchant is able to also utilise credit, the more this reduces the proportion they must maintain as money-capital.

As stated earlier, if market-prices move against him, in the intervening period, this may mean making a loss, but even if he bought with cash, market prices may fall, before he has metamorphosed his commodity-capital into money-capital. He will then only be prepared to pay a lower price when he next buys from the producer, so this is really no different than had the producer had to sell at these lower market prices.

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