“It is as the final form that money appears in Marx's analysis of the economic forms within which the process of the circulation of commodities develops. “This final product of the circulation of commodities is the first form in which capital appears. As a matter of history, capital, as opposed to landed property, invariably takes the form at first of money; it appears as moneyed wealth, as merchant's and of the usurer's capital ... We can see it daily under our very eyes. All new capital, to commence with, comes on the stage, that is, on the market, whether of commodities, labour, or money, even in our days, in the shape of money that by a definite process has to be transformed into capital.”” (p 259)
This statement by Marx has, also, been misrepresented and misunderstood by many “Marxists”. They take it as meaning that the circuit of all capital is defined as starting and ending with money. It forms a significant element in the argument of those that propound the use of historic prices to determine the rate of profit. But, a closer look shows that Marx only says, here, that money forms the initial moment, the starting point for all “new” capital.
And, that is clearly true, as he sets out in Capital II, in discussing the circuit of money-capital, commodity capital and industrial capital. In each of these cases, the elements – commodities – that comprise the physical capital for any business, just starting to operate, are bought with money. Its what makes this money money-capital. Indeed, in terms of “new” capital, i.e. capital that is accumulated by existing businesses, its starting point is also money. But, the vast majority of capital is not “new” capital. It is capital that is simply reproduced over and over again out of current production. The circuit of this existing industrial capital, does not start with, or end with money, but starts and ends with the productive-capital itself, as Marx sets out in Capital II.
Its circuit is P ... C' — M' — C ... P. In this circuit of industrial capital, money is only a transitory moment, not a start or finish of the circuit. The importance of this analysis by Marx is that it is the requirement to physically reproduce the use-values/commodities that comprise the productive-capital that defines it. It is the way in which the value of current output resolves into the reproduction of these physical use values, to ensure reproduction on the same scale, that determines the rate of profit, and not the historic prices paid for them, which may or may not result in ephemeral capital gains/losses, and a tie-up or release of capital, creating an illusion of profit/loss.
In fact, the proponents of historic pricing, in claiming that it is money that forms the start and finish points of all capital, end up closer to Duhring than Marx.
“Here once again Marx is stating a fact. Unable to dispute it, Herr Dühring distorts it: Capital is born of money!” (p 259)
Money comes into existence not as currency, but as the indirect measure of the value of commodities – the universal equivalent form of value. Currency/money tokens/credit only arise as further consequence of the development of money. In place of the exchange of commodities C – C, under barter, money inserts itself in this process, C – M – C. The commodity producer only wants money in order to exchange it later for other commodities they require. This fact is what leads to the error of Mill, Say and Ricardo – Say's Law – that there could be no generalised overproduction of commodities.
“The simple owner of commodities sells in order to buy; he sells what he does not need, and buys what he does need with the money acquired. The incipient capitalist starts by buying what he does not need himself; he buys in order to sell, and to sell at a higher price, in order to get back the value of the money originally thrown into the purchase, augmented by an increment in money; and this increment Marx calls surplus-value.” (p 259)
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