Capital III, Chapter 18 - Part 1

The Turnover of Merchant's Capital. Prices.

In this analysis, Marx discounts the various circulation costs, discussed in the previous chapter, in order to concentrate solely on the process of the turnover of the merchant capital. In other words, the capital laid out solely for the purchase of commodities and its reflux.

For the industrial capitalist, the turnover period consists of both the production time and the circulation time. Its circuit is P...P, or C' – M – C'. It begins with the produced commodities already containing the surplus value, C', which are then sold. The money proceeds are then used to buy the elements of productive-capital, which, after the production process, results in C' being reproduced. Its circulation period is C1 – M – C2. That is C1 is sold and the proceeds are used to buy the elements of productive-capital, which itself is comprised of commodities – means of production and labour-power. C2 denotes that these are different commodities to those that result from the production process.

“This amounts to a practical exchange of C1 for C2, and the same money thus changes hands twice. Its movement mediates the exchange of two different kinds of commodities, C1and C2.” (p 303)

But, for the merchant, this is not the case. The merchant only ever buys completed commodities, and sells those same commodities. Their circuit is then M – C – M'. Where, for the industrial capitalist, the same money functions twice – once as a receipt for their produced commodities, and once as payment for the commodities they buy, as productive-capital – for the merchant capital, it is the same commodities that function twice, but which result in different sums of money.

For the merchant, his turnover consists solely in the time between the purchase of commodities, and their sale, making possible further purchases. The number of turnovers this capital can make in a year, is limited only by the time it takes to complete such sales. In this respect, the turnover of the merchant's capital is like the velocity of money. In the same way that a single piece of money can be used in many transactions, so the same merchant's capital can be used to turn over a much greater value of commodities. The difference is this, it is the same piece of money used in different transactions, which signifies the velocity of money, but it is different pieces of money that signify the rate of turnover of the merchant's capital. It is different pieces of money, but the same capital-value that is repeatedly turned over.

“But in the merchant's case it is the same money capital, the same money-value, regardless of what pieces of money it may be composed, which repeatedly buys and sells commodity-capital to the amount of its value and which therefore returns to the same hands, the same point of departure as M + DM, i.e., value plus surplus-value.” (p 303) 

However, the two things are related, as Marx points out. The development of credit and then of a more efficient credit and payments system, is one means by which the sale of commodities can be speeded up. The more the sale of commodities is speeded up, the faster the money-capital is turned over, and precisely because money-capital is in the form of money, the higher the velocity of money.

“A repeated turnover of commercial capital, however, never connotes more than repeated buying and selling; while a repeated turnover of industrial capital connotes the periodicity and renovation of the entire reproduction process (which includes the process of consumption).” (p 303)

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