This process, of the development of socialised capital, in the form of the joint stock company, also removes another fetter on production, that the monopoly of private capital had imposed. Under the latter, firms were developed as capitalist enterprises by owners who were themselves already involved in the field. Wedgwood was a potter, and developed a pottery business, Matthew Boulton was an engineer and developed an engineering business, and so on.
Even with businesses that were established by former merchants, they were merchants who had been involved in that particular trade. To the extent that diversification took place, then, as Marx sets out in Capital I, it tended to be in associated industries. For example, because mirror manufacturers used brass to surround their mirrors, some expanded into the production of brass fittings.
But, alongside the development of credit and the joint stock company also comes the development of the functioning capitalist, the professional manager or entrepreneur, who may not own capital themselves, but does know how to organise some particular type of business. At this point, the social function of the actual capitalist ceases. They have no remaining functional role. Their only real function then is a provider of money-capital, so that these professional managers can buy the productive-capital and engage in production.
Marx deals with the further ramifications of this process later in the chapter.
The second fact about credit, that the analysis so far has disclosed, is that it brings about a reduction in the costs of circulation. As was demonstrated in Capital II, the production of a money-commodity, such as gold or silver, requires resources. It imposes a cost, thereby, on the circulation of commodities, because, to the extent that these money commodities act as money, they do not act as a commodity. An amount of gold, tied up to act as coins, does not act as a commodity, in the form of jewellery, for example.
The development of credit, in the form of a bill of exchange, reduces this cost, because, to the extent it takes the place of money, it reduces the quantity of an actual money-commodity that must be produced and circulated. Money is reduced to only that required to settle the balance of the total of bills of exchange. As Marx puts it,
“One of the principal costs of circulation is money itself, being value in itself. It is economised through credit in three ways.
A. By dropping away entirely in a great many transactions.
B. By the accelerated circulation of the circulating medium. This corresponds in part with what is to be said under 2). On the one hand, the acceleration is technical; i.e., with the same magnitude and number of actual turnovers of commodities for consumption, a smaller quantity of money or money tokens performs the same service. This is bound up with the technique of banking. On the other hand, credit accelerates the velocity of the metamorphoses of commodities and thereby the velocity of money circulation.
C. Substitution of paper for gold money.” (p 435-6)
The point 2, that Marx refers to, is the acceleration of the circulation of commodities, and thereby also the acceleration of the circulation of capital, which increases the rate of turnover of capital, and thereby increases the general annual rate of profit.
This also means that a reduced proportion of capital has to be retained in the money form, which means more can be held in the productive form, again thereby raising the mass and rate of profit.
“On the other hand, credit helps to keep the acts of buying and selling longer apart and serves thereby as a basis for speculation.” (p 436)
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