As Marx described earlier, and this is the basis of his description of a crisis of overproduction in Capital III, Chapter 15, if capital expands on the basis of extensive accumulation, i.e. essentially little changes in productivity, then relative income shares can remain stable, as described above, provided that the workforce expands in line with the accumulation of capital, so that surplus value expands proportionately. But, if capital expands at a faster rate than the social working-day, the mass of surplus value grows by a smaller proportion than the capital, so the rate of profit falls. That could be countered if wages could be reduced, but, under such conditions, the demand for labour-power causes wages to rise not fall, causing a further squeeze on profits, which results in a crisis of overproduction. Its to resolve this crisis that capital is led to innovate, to raise productivity, and, thereby, to reduce wages and raise profits.
“Interest and rent, which anticipate surplus-value, presuppose that the general character of reproduction will remain the same. And this is the case as long as the capitalist mode of production continues. Secondly, it is presupposed moreover that the specific relations of this mode of production remain the same during a certain period, and this is in fact also more or less the case. Thus the result of production crystallises into a permanent and therefore prerequisite condition of production, that is, it becomes a permanent attribute of the material conditions of production. It is crises that put an end to this apparent independence of the various elements of which the production process continually consists and which it continually reproduces.” (p 518)
On the one hand, in a crisis, as commodity prices collapse, rents collapse. It becomes obvious that it is not low rents that cause low commodity prices, but that rents are themselves a function of commodity prices, or, more specifically, of profits. But, alongside collapsing commodity prices also goes soaring interest rates, as firms scramble to borrow money to stay afloat.
“What value is for the genuine economist the market price is for the practical capitalist, that is, in each case the primary factor of the whole movement.” (p 518)
Capitalism could not have developed unless there already existed generalised commodity production and exchange, along with the circulation of money as the general commodity. Commodity production and exchange goes back around 10,000 years, as Engels describes. The use of a money commodity, of some kind, be it cattle, copper, silver or gold also goes back thousands of years. We have evidence of coins themselves being minted as far back as 600 B.C. Early in human development, communities appointed individuals as merchants to act on their behalf in commercial dealings with other communities, in relation to these exchanges of products, as they became transformed into commodities. Its on this basis that commercial capital, and, alongside it, usurer's capital, develops as antediluvian forms of capital. Capitalism does not need to create these forms, which it takes as they already exist, and which are prerequisites of it, and then subordinates them. Early human societies themselves were able to use commercial credit in dealings between themselves, though this still requires the development of a money commodity that acts as unit of account.
If community A provides B with 100 goats, the exchange-value of the goats may be 50 sheep, or expressed in a money-commodity, 20 grams of gold. B may not need to provide A with either the 50 sheep or 20 grams of gold, on immediate receipt of the goats. Provided a sufficient degree of trust between A and B exists, and this is the original meaning of credit, B can simply give A some token identifying the extent of their debt to A. Capitalist firms can also undertake commercial relations between themselves on this basis, which provides them with a means of by-passing money-lending capital, and thereby of subordinating it. Industrial capital only needs to resort to bank credit when commercial credit dries up, due to a credit crunch, in so far as its normal circulation of commodities is concerned. It only resorts to borrowing for accumulation where the rate of interest is lower than the rate of profit, and, in practice, low enough to provide a minimum level of profit of enterprise. In the same way, productive-capital will only hand over the function of circulation of money and commodities to commercial capital, where that results in increased realised profits.
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