It is only because a surplus is produced, via the production process, that interest can be paid out of it, whether that is paid via higher wages paid to workers to cover interest on their necessary borrowing, or whether it is a direct interest payment by industrial capital to cover its own borrowing.
“This is obliterated in M — M', the form of interest-bearing capital. For instance, if £1,000 are loaned out by a capitalist at a rate of interest of 5%, the value of £1,000 as a capital for one year = C + Ci', where C is the capital and i' the rate of interest. Hence, 5% = 5/100 = 1/20, and 1,000 + 1,000 × 1/20 = £1,050. The value of £1,000 as capital = £1,050, i.e., capital is not a simple magnitude. It is a relationship of magnitudes, a relationship of the principal sum as a given value to itself as a self-expanding value, as a principal sum which has produced a surplus-value. And capital as such, as we have seen, assumes this form of a directly self-expanding value for all active capitalists, whether they operate on their own or borrowed capital.” (p 391)
The true nature of capital as self-expanding value can only be grasped in terms of this social relation, contained within the production process, just as value itself can only be grasped as labour. Yet, just as commodity-fetishism creates the appearance that value is some innate quality embodied within the commodity, rather than a measure of social labour, so the same fetishism creates the appearance that self-expansion is an inherent quality embodied in capital.
“The thing (money, commodity, value) is now capital even as a mere thing, and capital appears as a mere thing. The result of the entire process of reproduction appears as a property inherent in the thing itself. It depends on the owner of the money, i.e., of the commodity in its continually exchangeable form, whether he wants to spend it as money or loan it out as capital. In interest-bearing capital, therefore, this automatic fetish, self-expanding value, money generating money, are brought out in their pure state and in this form it no longer bears the birth-marks of its origin. The social relation is consummated in the relation of a thing, of money, to itself. Instead of the actual transformation of money into capital, we see here only form without content.” (p 392)
It appears then that capital, no less than labour, is able to produce value and surplus value.
“It becomes a property of money to generate value and yield interest, much as it is an attribute of pear-trees to bear pears. And the money-lender sells his money as just such an interest-bearing thing. But that is not all. The actually functioning capital, as we have seen, presents itself in such a light, that it seems to yield interest not as a functioning capital, but as capital in itself, as money-capital.” (p 392)
In fact, because now the nature of capital appears to be as a value that self expands, in the form of the interest it accrues, the profit of enterprise then appears merely as a variable, left over sum that accrues in the production process, purely as a result of the acumen, or fraudulent capacity of the entrepreneur.
“For vulgar political economy, which seeks to represent capital as an independent source of value, of value creation, this form is naturally a veritable find, a form in which the source of profit is no longer discernible, and in which the result of the capitalist process of production — divorced from the process — acquires an independent existence.” (p 392-3)
Today, this fetish is extended even further. Money-capital is the pure form of the fetish. But, money-capital also assumes the form of fictitious capital, as share capital, or capital invested in bonds, mortgages and so on. Not only does this fictitious capital appear to have the ability to self-expand, in the shape of interest payments (dividends, and coupon etc.) but to directly expand as a capital gain. In the same way, money used to buy property appears to expand magically, like Jack's magic beans, as property prices inflate without any additional value having been created in the property. In this context, money and money-capital obliterates any of the distinctive features of commodities, or other forms of capital, because money is homogeneous.
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