Merchant capital acts as the servant of productive-capital. It depends on the average rate of profit, created in production, as the basis of itself obtaining this average profit. It acts as the agent of industrial capital to create new markets, and new sources of supply of the raw materials required by productive-capital. It does this, initially, via the colonial system, originally established in conjunction with feudalism, as huge merchant companies, like the East India Company, take charge of large areas of the globe. Once large-scale industrial capital becomes dominant, this colonial system itself becomes an impediment, as these large industrial companies themselves derive their profits from the production of relative surplus value, obtained from the industrial labour they employ across the globe.
The merchant's profit is dependent on, and derivative from the surplus value created by productive-capital. Interest is a derivative of profit, which is itself dependent upon the creation of surplus value. Interest-bearing capital is an inevitable product of industrial capital, because the starting point of any new industrial capital is the possession of money-capital. The large profits of industrial capitals cannot all be invested by the capital that produced them, immediately. Nor can the other money reserves accrued by these capitals. Yet, those pools of money-capital cannot be allowed to remain sterile. The money-capital is then thrown into the money market, where other industrial capitals that currently lack sufficient funds, to finance their capital accumulation, are able to borrow it. The reservoirs of loanable money-capital, thereby, accumulate separate from the accumulation of real productive-capital. The owners of the loanable money-capital are not the same as the borrowers of that money-capital, and, it is the competition between these two groups that determines the rate of interest.
Ultimately, this rate of interest is constrained by the rate of profit. The rate of profit is the value of capital.
“The value of money or of commodities as capital is not determined by the value they possess as money or as commodities, but by the amount of surplus-value which they “produce” for their owners. The product of capital is profit.” (p 471)
Under capitalism, money can be spent as money, i.e. as currency or means of payment, to buy commodities or assets, or it can be used as capital. But, so can any other commodity. I can buy a commodity simply to consume it. If I use money for that purpose, I have used the money only as money. Alternatively, I might by the commodity I want to consume by exchanging some other commodity, in my possession, for it. As Marx set out previously, in this respect, every commodity is money. Money is simply the general commodity.
What determines whether this general commodity, or any other commodity, acts only as a commodity/money or whether it acts as capital, is the purpose to which it is put. In other words, is it used only to obtain some other commodity, in exchange, of equal value, for the purpose of consumption, or is it used for the specific purpose of creating additional value. If I own a machine, and I use it productively, to produce commodities for sale, I use the machine as capital, not as a commodity. I do not expect to sell the commodity only for an equivalent amount of value to that which I have expended as constant and variable-capital for its production. I expect also to realise an amount of profit equal to the average profit. If we assume that the price of production of this commodity is equal to its exchange-value, then this profit will be equal to the surplus value created in its own production, i.e. the excess of the amount of new value created by labour in its production over the value of the labour-power employed for its production.
Similarly, if I own an amount of money, which I use to buy the machine plus materials and labour-power, to produce the commodity, the money itself, here, has been used as capital, money-capital, which is metamorphosed into the productive-capital, which is actually the basis of the production of surplus value, and the only means by which the money-capital can be metamorphosed into a greater capital value. To produce surplus value/profit, productive-capital must engage in production.
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