“The constant flowing back of the money to its starting-point expresses here not only the formal conversion of money into commodity and commodity into money—as in the simple process of circulation or the mere exchange of goods—but at the same time the continuous reproduction of the commodity by the same producer. Exchange-value (money) is converted into commodities which enter into consumption, and are consumed as use-values; they pass however into reproductive or industrial consumption, therefore reproduce the original value and consequently reappear in the same amount of money (in the above example, in which the producer labours only for his own maintenance), M—C—M here shows that M is not only formally converted into C, but C is actually consumed as a use-value, falling out of circulation into consumption, but into industrial consumption, so that its value is maintained and reproduced in consumption, and M therefore reappears at the end of the process, being maintained in the movement M—C—M.” (p 310-11)
But, in the second transaction, no reproduction occurs where the money flows back to the farmer from the landlord.
“ It is as if the farmer had given the landlord tokens or tickets for products to the value of 1,000 millions. When the landlord cashes these tokens, they flow back to the farmer and he redeems them. If the landlord had had half the rent paid directly in kind, no circulation of money would have taken place. The whole circulation would have been limited to a simple change of hands, the transfer of the product from the farmer’s hand to the landlord’s.” (p 311)
This kind of reflux of money outside the reproduction process must always arise in the case of productive-capitalists' payments to creditors, and the other exploiters who share in the surplus value, in the form of rent, interest and taxes, always appear as creditors of the productive-capital.
“For example: all taxes are paid by the producers in money. In this transaction the money is for them means of payment to the State. With this money the State buys commodities from the producers. In the hands of the State it is a means of purchase, and thus returns to the producers in the same measure as they part with their commodities.” (p 311)
This is always the case, Marx says, where what is involved is an exchange of revenue for capital. In reality, the creditor here is the owner of a portion of the output even though it remains in the possession of the producer. The producer buys their own product, by giving to the creditor an equivalent sum of money.
“The person who pays the revenue is supposed to have received from his creditor a part of his own product—for example, in the case of the farmer, the two-fifths of the product which according to Quesnay constitute the rent. He is only its nominal or de facto owner.” (p 312)
If the farmer only has their commodities and no money, the farmer cannot first buy the portion of the rent, which belongs to the landlord, but which is in the possession of the farmer. The farmer must first sell their output, including that portion which does not belong to them, so as to obtain the money, and thereby pay the rent.
“... it has therefore already passed through its first metamorphosis before he can pay it out as money to the landlord. Even taking this into account, there are more changes of place on the part of the money than on the part of the commodity. First C—M [is carried through]; two-fifths of the commodity is sold and transformed into money. Here there is the simultaneous exchange of commodity and money. Then however this same money, without being exchanged for a commodity, passes from the hands of the farmer into those of the landlord.” (p 313)
This is similar, Marx says, to the situation where someone acts as an agent for the owner of a commodity, in its sale. In such a case, the agent has possession of the commodity, and on its sale, has possession of the money, but they are the owner of neither. The agent must pass on the money to the actual commodity owner.
“In this instance the movement of the money from one hand to the other does not express any kind of metamorphosis of the commodity, but is a mere transfer of the money from the hand of its immediate possessor into the hand of its owner.” (p 313)
Where money acts as means of payment rather than circulation, it is taken that it is payment for a commodity that has already passed into the possession of the buyer. But, with the rent the farmer already had possession of that part of the product which constituted the rent, and which is owned by the landlord.
“But in law he becomes its owner only by handing over to the landlord the money received for it. His legal title to the commodity changes; the commodity itself is in his hands both before and after. But first it was in his hands as something in his possession but the owner of which was the landlord. It is now in his hands as his own property. The change in the legal form while the commodity remains in the same hands has naturally not caused the commodity itself to change hands.” (p 314)
The same is true in relation to interest, as Marx describes this being outside the process of reproduction. The money-lending capitalist lends money-capital to the productive-capitalist M-M. But, this money-capital is not additional or different money-capital, which then enters the reproduction process, by metamorphosing into productive-capital. It is simply the same money-capital functioning twice. At the end of the reproduction process this occurs again as M' – M+i. In other words, the commodity-capital, including the surplus value, is realised as M', and out of it the original loaned money-capital, M, is paid back to the lender plus interest.
In reality, a portion of the product, equal to M+i, belonged to the money lender, but was in the possession of the productive-capitalist, who sells it, converts it into money, which they hand to the money lender.
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