It is only productive-capital, and in particular variable-capital, that produces surplus value. The real self-expansion of value occurs in production because the employed labour creates more new value than is required to reproduce the labour-power that is consumed in production. That is why the other forms of capital – interest-bearing capital, and merchant-capital, including money-dealing capital – are subordinated to it. Merchant capital does not produce surplus value, but, by reducing the costs of circulation, increasing the amount of realised profit, claims its right to obtain the average rate of profit, as an integral part of the industrial capital. Interest-bearing capital, like landed property, not only does not produce surplus value, but also does nothing to increase the mass of realised profit. Interest, like rent, is merely a parasitic excrescence that acts to drain surplus value away from productive investment.
The whole point of capitalist production is to increase the physical mass of capital, and thereby the mass of labour employed, so as to increase the mass of surplus value further. It is expressed in the circuit of industrial capital, set out by Marx in Capital II – P... C` - M`. M – C … P. And, more specifically its expanded form,
As Marx says,
“The money form is a transient form in the real process of capital.” (p 466),
which is a repetition of what he says, in Capital III,
“In so far as reproduction obtains on the same scale, every consumed element of constant capital must be replaced in kind by a new specimen of the same kind, if not in quantity and form, then at least in effectiveness.”
(Chapter 49, p 849),
and,
“In the reproduction process of capital, the money-form is but transient – a mere point of transit.”
(Capital III, Chapter 24)
Yet, the superficial appearance is given that the purpose of capital is to increase the mass of money, as at least symbolised by the circuit M – C – M`. But, in its most fetishised form, as interest-bearing capital becomes M – M`.
“This is the quite tangible form of self-expanding value or of money-making money, and at the same time the quite irrational form, the incomprehensible, mystified form.” (p 466)
This is a mirror of what has been seen, also, in relation to commodities. The commodity arises because products are increasingly traded. A product is a use value produced by labour. Every product, thereby, combines use value and value/labour. The value is inevitably individual value, i.e. determined by the labour embodied within it. The more these products become traded, the more this value assumes the form of a social or market value. In other words, if communities A – D each come to trade, say cloth for wine, with community E, then the representatives of E will soon begin to exchange a given quantity of wine for a given quantity of cloth. The producers of cloth will each produce cloth with different individual values, determined by the labour-time that each requires for production. But, as the trade develops, E will exchange a given amount of wine for cloth, at a rate of exchange that represents the average value, or social or market value for cloth.
This is the process that Marx describes, in Capital I, Chapter III, in his value form analysis, which describes how values are transformed into exchange values, alongside products being transformed into commodities. The end result of this process is that a single commodity is separated out to act as the universal equivalent form of value, to become the general commodity, or money commodity. On this basis, the value of the product, which is inseparable from it as a use value, and measurable only intrinsically by labour-time, becomes transformed first into exchange-value, the relative measurement of that value in terms of a quantity of some other use value, and then this exchange-value itself takes on a life of its own, and becomes independent exchange-value incarnate, in the form of money.
Now the same is true with capital, as interest-bearing capital. It is again money that appears to be capital itself, to be the representative of all capital, whilst being no specific type of capital, or even real capital at all. That is like money which becomes the generalised commodity, the representative of all commodities, whilst abandoning its nature as a commodity in its own right, to perform that function. This was something, as Marx showed earlier, that Ricardo, Mill and others could not understand, of how value could be alienated, and take on independent existence as money, and who continued to see money, particularly gold, still in terms of it being a commodity, and its development simply in terms of its functional convenience to circulation.
“We started with money as the converted form of the commodity. What we arrive at is money as the converted form of capital, just as we have perceived that the commodity is the precondition and the result of the production process of capital.” (p 467)
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