Capital III, Chapter 16 - Part 8

When a producer sells to a merchant, the money they receive in return is then used to once again buy means of production, which may in turn be bought from a merchant. But, the money they use to buy these means of production is only the money form of their own capital.

That capital assumed different forms, but its value remained, it simply threw off the shell of its previous existence, going from productive-capital to commodity-capital, to money-capital to once more becoming productive-capital again.

To the merchant from whom the productive-capitalist buys yarn, having themselves sold linen, the money they receive for the yarn appears as a return of money-capital, M – C – M', as they advanced money-capital to buy yarn, which they have now sold to the linen manufacturer.

“But to what extent are they that as distinct from the £2,000 representing the discarded money-form of the linen and the assumed money-form of the yarn? If the yarn dealer bought on credit and sold for cash before the expiration of his term of payment, then these £2,000 do not contain one penny of merchant's capital as distinct from the money-form which the industrial capital itself assumes in the course of its circuit.” (p 278)

In other words, the circuit really here is C' – M – C', not M - C - M', as it appears on the surface. The functioning merchant-capitalist begins not with money-capital, but with commodity-capital, which already contains surplus value. They metamorphose it into money-capital, which is really just the money form of this commodity-capital, the same capital-value in different form. They then metamorphose this money-capital once more into commodity-capital. For the merchant capitalist as much as for the productive-capitalist, it is only newly advanced money-capital, which has the circuit M – C – M'. The merchant capitalist as much as the productive-capitalist does not have as their purpose the increase in the amount of money-capital in their possession but, rather the increase in the amount of commodity-capital for the former, and productive-capital for the latter. M does not constitute a terminal point in the circuit of capital, for either of these types of capital, but is merely a moment within its overall circuit.

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