At the point that the overproduction becomes apparent, the sellers of commodities have commodity-capital which they cannot dispose of. As the sales of commodities slow down, they require money to cover their own payments. In the 19th century, when Marx was writing, a common form of commercial credit, was the Bill of Exchange. At the expiry date of the bill, the seller of commodities was entitled to payment of the specified amount. So long as economic activity was robust, each supplier could wait until the expiry date to collect the sum due.
The tailor could supply the merchant with a £100 suit, on the basis of such credit, for the simple reason that they were, in turn, supplied with cloth on credit from the weaver, who obtained yarn on credit from the spinner, who obtained wool on credit from the farmer, who could supply the wool on that basis because they had already produced it, and needed to sell it, and did not immediately need to realise its value, in order to continue their own production process.
Indeed, capitalist production, and the accumulation of capital meant that the farmer's production expanded rapidly as did their surplus value, and so they could advance their commodity-capital to the spinner from within their own resources. But, this requires that each of these participants do pay up, on the due date. If the merchant fails to pay the tailor, the tailor will not be able to pay the weaver and so on. The tailor, if they suspect the merchant may not pay, may take the bill of exchange to their bank, and have the bill discounted. That way they obtain money so that they can pay the weaver. As Marx says, what has happened in this case, is not a loan of money-capital to the tailor, or indeed any other kind of loan.
A loan of interest-bearing capital involves the borrower repaying the loan along with a set amount of interest. But, no such situation exists with the discounting of the bill. The tailor has nothing to repay to the bank. What they have done is to sell the bill to the bank, for a set amount of money. In reality, they have sold the commodities represented by the bill to the bank, enabling the bank to realise that value from the merchant, when the bill matures.
The tailor has sold the bill (commodities) to the bank below their value, because they were desperate for cash. In reality, it is no different to the situation described earlier, of where the seller of commodities, on the market, becomes a forced seller, and so sells their commodities at a market price below their value.
Capitalist production is not conceivable without such commercial credit. Even labour-power is provided to the capitalist on credit. The workers advance their labour-power to the capitalists, and are only paid their wages later, after they have produced, and so get back part of their product. Prior to commercial credit, a producer who sought to buy commodities as inputs, but who lacked the required money-capital, would have had to borrow the money from a usurer, and the rates of interest they charged were prohibitive. That is why Marx says that these antediluvian forms of capital – interest-bearing capital and merchant capital – are inimical to capitalism. It is only when industrial capitalism becomes dominant that these other forms of capital are subordinated to it.
Commercial credit is developed by industrial capital as a means of by-passing and thereby undermining usurers capital. It is only in periods of crisis that industrial capital is forced to turn away from the mutual provision of commercial credit, and to turn to bank credit.
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