Capital III, Chapter 23 - Part 3

The quantitative difference in the division of surplus value, between profit of enterprise and interest, becomes solidified into a qualitative difference between money-capital and industrial capital. Yet, even for the industrial capitalist, using their own rather than borrowed capital, and who, therefore, pays no interest, this capital is still designated as interest-bearing capital, and so the return on it is divided into interest and profit of enterprise. It is as though, therefore, the industrial capitalist also acts as a money-capitalist, lending money to themselves and paying interest to themselves on the money they have lent.

To the industrial capitalist, be they a productive capitalist or merchant capitalist, their capital appears to produce profit only when it is functioning either to produce or to circulate commodities.

The gross profit, before interest is deducted, may be equal to the average profit, or may deviate from it. That is because the average rate of profit only exists as a tendency, but also a whole range of factors may cause the rate of profit of different firms to vary. Some work under more advantageous conditions, some will have bought the elements of capital at prices below the price of production, some will have managers who are more astute etc. than others.

In fact, this is most clear where the functioning capitalist is indeed a manager of capital rather than the owner of capital. Because the gross profit they make from utilising the capital appears to them to derive from all the things above, and particularly from their own astuteness in business, their ability to buy low and sell high, to organise production more efficiently and so on, this profit appears to be a result of this activity rather than the nature of capital itself. Consequently, the interest then appears as purely the consequence of capital. Capital then becomes synonymous with money-capital, with the actual capital being reduced to the status of merely means of production and labour-power, inputs bought with capital.

On this basis, arises the notion of factor incomes, so that we have Capital – Interest, Entrepreneurship – Profit, Land – Rent, and Labour – Wages. This illusion is perpetuated by those Marxist economists who continue to present the circuit of capital as being M – C ... P... C' – M', whereas Marx made clear back in Capital II, that this is only the circuit of newly invested money-capital.

The circuit of already functioning productive-capital is P...C' – M'.M – C...P.  Marx gives the expanded form of this as the following.

As Marx points out later, in Capital III, M' is not a termination point but only a moment within this circuit. The functioning productive-capitalist does not begin with a sum of money-capital, but with a stock of productive-capital in the shape of buildings and other fixed capital, of stocks of materials, ready to be processed, with an existing workforce and so on, and their whole raison d'etre is to expand this existing capital value, in the shape of productive-capital.

In the same way, the merchant capitalist does not start their circuit with a sum of money-capital, but with a stock of existing fixed capital in the shape of stores and warehouses etc. with an existing workforce, and stock of commodity-capital. Their raison d'etre is to expand this capital, and in both cases the realisation of value in its money form is not an end goal, but merely a moment within this circuit, a means towards the actual end of expanding the productive capital in the one case, and the commodity-capital in the other.

Back To Part 2

Forward To Part 4