All of these commodities, such as buildings, machines, raw and auxiliary materials that exists as means of production, also form the physical components of capital, but what is it that constitutes them as capital rather than just commodities, or means of production? As commodities they are not just physical use-values, but, also, exchange-values. A machine with an exchange-value/price of £100 can be sold, again, for that £100 less any wear and tear and depreciation. But, on that basis, it is only a commodity, like any other, not capital.
To be capital, the machine, as previously described, must employ wage-labour, and, in so doing, brings about the creation of surplus-value, in production. That surplus value, embodied in the commodity, is appropriated by capital and realised as money-profit, in the sale of the commodity. The original exchange-value of the commodities advanced to production, thereby, self-expands, in the production process itself, and it is this which constitutes capital as distinct from merely commodities or money. The value of capital is always greater than the value of the commodities that constitute its physical components. It is greater by an amount equal to the average industrial rate of profit.
As Marx sets out, in Capital III, it is this use-value of capital, to be able to produce the average rate of profit, that enables capital itself to be sold as a commodity, so as to acquire this use-value. In other words, £100 can be sold as capital, and, if the average rate of profit is 20%, the use value of this £100 is its ability to produce this £20 of profit. The value of £100 as capital is £120. The owner of the £100 sells this use-value to a buyer for a contracted period, i.e. they loan them the money. The price the buyer pays for this use-value depends upon the demand and supply for capital. If there are many lenders and few borrowers, the price – rate of interest – will be low, and vice versa.
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