Capital III, Chapter 20 - Part 3

Under capitalism, merchant capital simply performs the specific function of the circulation of commodities. It is subordinated to industrial capital. But, under previous modes of production, where production itself is less developed, a far greater proportion of money wealth is concentrated in the hands of the merchants.

“In all previous modes of production, and all the more, wherever production ministers to the immediate wants of the producer, merchant's capital appears to perform the function par excellence of capital.

There is, therefore, not the least difficulty in understanding why merchant's capital appears as the historical form of capital long before capital established its own domination over production. Its existence and development to a certain level are in themselves historical premises for the development of capitalist production 1) as premises for the concentration of money wealth, and 2) because the capitalist mode of production presupposes production for trade, selling on a large scale, and not to the individual customer, hence also a merchant who does not buy to satisfy his personal wants but concentrates the purchases of many buyers in his one purchase.” (p 327)

Merchant's capital arises not by selling commodities, but by exchanging the surplus products of different communities. But, the merchant must ascertain the values of these different products, i.e. the quantity of labour-time required for their production, by one community as opposed to another, if he is to be able to make a profit from such an exchange.

The more the merchants do this, so that products increasingly have this value more openly manifest, as different merchants compete with each other for the purchase of these products, the more the value of the product becomes transformed into its exchange value, its value relative to other products, and specifically to money, as the universal equivalent form of value. The more, in the process, the product is transformed into the commodity.

“... all development of merchant's capital tends to give production more and more the character of production for exchange-value and to turn products more and more into commodities. Yet its development, as we shall presently see, is incapable by itself of promoting and explaining the transition from one mode of production to another.” (p 327)

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