Capital III, Chapter 32 - Part 3

In addition to the money-capital released to be used as loanable capital for the reasons described above, there are a number of others. Firstly, as mentioned earlier, the amount of capital that must be advanced depends on the length of the turnover period. Above, the period was ten weeks, and £100 per week was laid out. But, if the turnover period falls to five weeks, then only £500 of variable capital has to be advanced, so £500 of capital is permanently released. In addition, capital may be released as a result of a fall in the value of the productive-capital. Unless this released capital is used to expand the mass of productive-capital, the released money-capital is thrown on to the money market, as loanable money-capital.

These are expansions of loanable money-capital that flow from an expansion of productive-activity, but it may be a constriction of activity that causes a release of money-capital.

“If the industrial capitalist cannot expand his reproduction process immediately, a portion of his money-capital is expelled from the circuit as superfluous and is transformed into loanable money-capital. Secondly, however, capital in the form of money is released especially by the merchant, whenever interruptions in his business take place. If the merchant has completed a series of transactions and cannot begin a new series because of such interruptions until later, the money realised represents for him only a hoard, surplus-capital. But at the same time, it represents a direct accumulation of loanable money-capital.” (p 506)

Another source of additional loanable money-capital arises from the general development of capitalism. Over time, the number of capitalists, who, as Marx puts it, have “feathered their nests” increase. They retire from active involvement in running their businesses and take the proceeds from selling it to live off. Engels himself sold his shares for the equivalent, in today's terms, of around £3 million, which he used to live off in his later years. But, as Marx set out in previous chapters, with the development of socialised capital, in the form of the joint stock company, nearly all capitalists, other than the small and medium sized productive-capitalists, become money-capitalists, who simply provide money-capital, through the purchase of shares and bonds, on which they obtain a low rate of interest.

“Their number increases as more profits are made in the course of the industrial cycle. In this case, the accumulation of loanable money-capital expresses, on the one hand, an actual accumulation (in accordance with its relative extent), and, on the other hand, only the extent of the transformation of the industrial capitalists into mere money-capitalists.” (p 507)

As stated earlier, even that portion of profit not destined for revenue, is not used immediately for the purchase of productive-capital.

“This may be due to two causes. Either because this sphere of production is saturated with capital, or because accumulation must first reach a certain volume before it can serve as capital, depending on the investment magnitudes of new capital required in this particular sphere. Hence it is converted for a while into loanable money-capital and serves in the expansion of production in other spheres.” (p 507)

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