Capital III, Chapter 21 - Part 7

Looked at from the process of circulation, capital always appears in the form of money or commodities. If we break this process of circulation down it appears as simply a series of sales and purchases, exchanges of equal amounts of value, no different to the situation under previous forms of commodity production and exchange. But, if we examine the process of the reproduction of capital as a whole, it becomes apparent that this cannot be the case, because the sum of value thrown into this process, at the start, has turned into a larger sum of value at the end, which could not have been the case unless, somewhere along the line, a surplus value had been created, i.e. a sum of new value for which nothing has been given in exchange.

From the analysis in Capital I, we know that this surplus value is created in the stage of production, rather than circulation, and is a new value, created by labour, for which no equivalent payment has been received.

But, its different with capital that is loaned out. Here, the money loaned out does not obtain some commodity in exchange. There is no process by which additional value is created, and yet the money-capital returns enhanced.

“This relation to itself, in which capital presents itself when the capitalist production process is viewed as a whole and as a single unity, and in which capital appears as money that begets money, is here imparted to it as its character, its designation, without any intermediary movement.” (p 345)

It is precisely because of this designation of capital, of self-expanding value, that forms the basis of it as interest bearing capital, because without this capacity to return enhanced, there would be no reason to lend it. Proudhon failed to grasp this nature of interest-bearing capital as a commodity, Marx says. Proudhon did not grasp the basis of exchange in general. He did not see that in a process of exchange, one party gives up use value, but in doing so they do not give up its value, because that value is metamorphosed into the form of the use value they receive in exchange. If I exchange a coat for a pig, I give up ownership of the coat, but I do not give up the value of the coat, because I now still have that value, but in the shape of the pig.

Because he did not understand the basis of exchange, Proudhon thought that there was something “evil” about loaning for interest, because it appeared to him that, unlike a sale, the money being lent was always retained in the ownership of the lender, so it could be lent out over and over again. But, of course, this is true of all exchanges. If I obtain a pig for a coat, I can now exchange the pig for ten yards of linen, because the value of the coat remained in my possession, in the form of the pig, and now in the form of the linen. So, just as my ownership of a sum of money-capital enables me to keep lending it, so my ownership of this other commodity value enables me to exchange it over and over again, in the shape of different commodities.

But, when I loan out a sum of capital, what I am exchanging is not this capital. If I loan out £100, unlike a sale, I do not receive in exchange an equivalent of this £100, precisely because I am not exchanging the £100. What I am exchanging, what I am giving up, for the period of the loan, is the ability to use this capital, as capital. I am giving up its use value, to act as self-expanding value, and what I am being paid is for that use value, I have given up.

“Inasmuch as there is an exchange, i.e., an exchange of articles, there is no change in the value. The same capitalist always retains the same value. But so long as surplus-value is produced by the capitalist, there is no exchange. As soon as an exchange occurs, the surplus-value is already incorporated in the commodities.” (p 345)

In other words, all the exchanges conform with the laws of commodity exchange. The commodity labour-power is bought at its value. The surplus value arises not because someone has been short changed, in any of these exchanges, but because workers produce more new value in production, and this act of production of new value takes place outside the realm of exchange. The worker has been paid the value of the commodity they supply, the power to perform labour. The performance of the labour simply fulfils their side of the exchange. The product of that labour has nothing to do with the exchange itself. The product and its value belongs to the capitalist.

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