Capital III, Chapter 32 - Part 2

“The most important point of our presentation so far is that the expansion of the part of the revenue intended for consumption (leaving out of consideration the worker, because his revenue is equal to the variable capital) shows itself at first as an accumulation of money-capital. A factor, therefore, enters into the accumulation of money-capital that is essentially different from the actual accumulation of industrial capital; for the portion of the annual product which is intended for consumption does not by any means become capital. A portion of it replaces capital, i.e., the constant capital of the producers of means of consumption, but to the extent that it is actually transformed into capital, it exists in the natural form of the revenue of the producers of this constant capital.” (p 505)

In Capital II, it was shown that the constant capital, bought by Department II capitalists, under simple reproduction, is equal to the revenue of Department I workers and capitalists. In other words, I (v+s) = II(c). So, what Marx is describing here is that the portion of the total output of society destined for consumption, i.e. the output of Department II, does not become capital – other than obviously it forms, temporarily, the commodity-capital of Department II. But, it is destined to be consumed, not accumulated as capital.

A portion of its value, which above forms the portion consumed by Department I workers and capitalists, goes to replace the capital used in its production. Under expanded reproduction, consumption expands, and along with it, as part of the total social exchange, between Department I and II, the revenue of Department I and II workers and capitalists expands to purchase it. This is funded by the increased value of the constant capital, bought by Department II from Department I.

But, as stated above, this revenue is not all expended at once.

“The same money, which represents the revenue and serves merely for the promotion of consumption, is regularly transformed into loanable money-capital for a period of time. In so far as this money represents wages, it is at the same time the money-form of the variable capital; and in so far as it replaces the constant capital of the producers of means of consumption, it is the money-form temporarily assumed by their constant capital and serves to purchase the components of their constant capital to be replaced in kind. Neither in the one nor in the other form does it express in itself accumulation, although its quantity increases with the growth of the reproduction process. But it performs temporarily the function of loanable money, i.e., of money-capital. In this respect, therefore, the accumulation of money-capital must always reflect a greater accumulation of capital than actually exists, owing to the fact that the extension of individual consumption, because it is promoted by means of money, appears as an accumulation of money-capital, since it furnishes the money-form for actual accumulation, i.e., for money which permits new investments of capital.” (p 505-6)

This gives the appearance then that capital is not advanced by the industrial capitalist, but always borrowed by the industrial capitalist. Money is placed on deposit, in order to obtain interest, but, this same money, deposited from the realised money value of the commodity-capital, of the industrial and merchant capitals, is then loaned out to them by the banks.

“In fact, on the basis of commercial credit, one person lends to another the money required for the reproduction process. But this now assumes the following form: the banker, who receives the money as a loan from one group of the reproductive capitalists, lends it to another group of reproductive capitalists, so that the banker appears in the role of a supreme benefactor; and at the same time, the control over this capital falls completely into the hands of the banker in his capacity as middleman.” (p 506)

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