Front Page Titles (by Subject) Part I, Chapter III THE CIRCULATION OF COMMODITY-CAPITAL. - Capital: A Critique of Political Economy. Volume II: The Process of Circulation of Capital
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Part I, Chapter III THE CIRCULATION OF COMMODITY-CAPITAL. - Karl Marx, Capital: A Critique of Political Economy. Volume II: The Process of Circulation of Capital 
Capital: A Critique of Political Economy. Volume II: The Process of Circulation of Capital, by Karl Marx. Ed. Federick Engels. Trans. from the 2nd German edition by Ernest Untermann (Chicago: Charles H. Kerr and Co., 1910).
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Part I, Chapter III
|c = 0.744 lbs. of yarn = 8.928 d.|
|v = 0.100 lbs. of yarn = 1.200 d.|
|s = 0.156 lbs. of yarn = 1.872 d.|
|c+v+s = 1.00 lb. of yarn = 12.00 d.|
If we add the results of the three above partial sales, we obtain the same result as we should when selling the entire 10,000 lbs. at one time.
We have the following parts of constant capital:
|In the first lot 5,535.360 lbs. of yarn at £276.768.|
|In the second lot 744.000 lbs. of yarn at £37.200.|
|In the third lot 1,160.640 lbs. of yarn at £58.032.|
|Total...7,440.000 lbs. of yarn at £372.000.|
Furthermore, the following parts of variable capital:
|In the first lot of 744.000 lbs. of yarn at £37.200.|
|In the second lot 100.000 lbs. of yarn at £5.000.|
|In the third lot 156,000 lbs. of yarn at £7.800.|
|Total...1,000.000 lbs. of yarn at £50.000.|
Finally, the following parts of surplus-value:
|In the first lot 1,160.740 lbs. of yarn at £58.032.|
|In the second lot 156.000 lbs. of yarn at £7.800.|
|In the third lot 343.360 lbs, of yarn at £12.168.|
|Total...1,560.000 lbs. of yarn at £78.000.|
|Constant capital...||7,450 lbs. of yarn at £372.|
|Variable capital...||1,000 lbs. of yarn at £50.|
|Surplus-value...||1,560 lbs. of yarn at £78.|
|Total...||10,000 lbs. of yarn at £500.|
C'—M' stands in itself merely for the sale of 10,000 lbs. of yarn. These 10,000 lbs. of yarn are a commodity like all other yarn. The purchaser is interested in the price of 1 sh. per lb., or 500 pounds sterling for 10,000 lbs. If he analyzes during the negotiations the different values of which this lot is composed, he does so simply with the malignant intention of proving that it can be sold at less than 1 sh. per pound and still leave a fair profit to the seller. But the quantity purchased by him depends on his own requirements. If he is, for instance, the owner of a cloth-factory, the amount of his purchase depends on the composition of his own capital invested in this plant, not on that of the owner of the yarn from whom he buys. The conditions, in which C' has to replace on one side the capital used up in its production (or the component parts of this capital), and on the other to serve as a surplus-product for the spending of surplus-value or for the accumulation of capital, exist only in the cycle of that capital, which exists as a commodity capital in the form of 10,000 lbs. of yarn. These conditions have nothing to do with the sale itself. In the present case we have also assumed the C' is sold at its value, so that it is only a question of its transformation from the commodity-form into that of money. Of course, it is essential for C', when performing a function in the cycle of this individual capital by which the productive capital is to be replaced, that it should be known to what extent, if at all, the price and the value vary in the sale. But this does not concern us here in the discussion of the distinctions of form.
In form I, or M...M', the process of production intervenes midway between the two complementary and opposite phases of the circulation of capital, and is past before the concluding phase C'—M' begins. Money has been advanced as capital, transformed into means of production and labor power, transferred from these to the commodity-product, and this in its turn changed into money. It is a complete cycle of business, which results in money, the universal medium. The renewal of the cycle is then possible, but not necessary. M...P...M' may either be the last cycle, concluding the function of some individual capital withdrawn from business, or the first cycle of some new capital beginning its active function. The general movement is here M...M', from money to more money.
In form II, or P...C'—M'—C...P (P'), the entire circulation process follows after the first P and takes place before the second P; but it takes place in the opposite direction from that of form I. The first P is the productive capital, and its function is the productive process, on which the succeeding circulation process is conditioned. The concluding P, on the other hand, does not stand for the productive process; it is only the return of industrial capital to its form of productive capital. And it has that form by virtue of the last phase of circulation, in which the transformation of capital-value into L plus Pm was accomplished, those subjective and objective factors which combine to form the productive capital. The capital, whether it be P or P', is in the end once more present in a form in which it may again perform the function of productive capital, in which it must go through the productive process. The general form of the movement P...P'(P) is that of reproduction and does not indicate that capital is to be increased by new values, as does M...M'. This enables classic political economy to ignore so much easier the capitalistic form of the process of production end to pretend that production itself is the purpose of this process; just as though it were only a question of producing as much as possible, as cheaply as possible, and of exchanging the product for the greatest variety of other products, either for the renewal of the production (M—C), or for consumption (m—c). It is then quite likely that the peculiarities of money and money-capital may be overlooked, for M and m appear here merely as passing media of circulation. The entire process seems so simple and natural, but natural in the sense of a shallow rationalism. In the same way, the profit is occasionally overlooked in the commodity-capital and it is mentioned merely as a commodity when discussing the productive circulation as a whole. But as soon as the question of the values composing it comes up for discussion, it is spoken of as commodity-capital. Accumulation, of course, is seen in the same light as production.
In form III, or C'—M'—C...P...C', the two phases of the circulation process open the cycle, in the same order which obtains in form II, or P...P; next follows P with its function, the productive process, the same as in form I; the cycle closes with the result of the process of production, C'. While form II closes with P, the return of productive capital to its mere form, so form III closes with C', the return of commodity-capital to its form. Just as in form II the capital, in its concluding form of P, must renew its cycle by beginning with the process of production, so in this case, where the industrial capital re-appears in the form of commodity-capital, the cycle is re-opened by the circulation phase C'—M'. Both forms of the cycle are incomplete, because they do not close with M', that is to say with capital-value retransformed into money and utilized. Both cycles must, therefore, be continued and include the reproduction. The total cycle of form III is represented by C'...C'.
The third form is distinguished from the two first by the fact that it is the only one in which the utilized capital-value appears as the starting point of its utilization, instead of the original value which is to be utilized. C' as a capital-relation is the starting point and has a determining influence on the entire cycle, for it includes the cycle of capital-value as well as that of surplus-value in its first phase, and the surplus-value is compelled to act partly as revenue by going through the circulation c—m—c, partly to perform the function of an element of capital accumulation, at least in the average of the cycles, if not in all of them.
In the form C'...C' the consumption of the entire commodity-product is assumed as the condition of the normal course of the cycles of capital itself. The individual consumption of the laborer and the individual consumption of the unaccumulated part of the surplus-product comprise the entire individual consumption. Hence the consumption in its totality—individual as well as productive consumption—are conditional factors in the cycle C'. Productive consumption, which includes the individual consumption of the laborer as a corollary, since labor-power is a continuous product of the laborer's individual consumption, within certain limits, is performed by every individual capital itself. Individual consumption, in so far as it is not required for the existence of the individual capitalist, is here only regarded as a social act, not as an act of the individual capitalist.
In forms I and II, the aggregate movement appears as a movement of advanced capital-value. In form III, the utilized capital, in the shape of the total commodity-product, is the starting point and has the nature of moving capital, commodity-capital. Not until the transformation into money has been accomplished, does this movement separate into movements of capital and revenue. The distribution of the total social product as well as the special distribution of the product of every individual capital for purposes of individual consumption or for reproduction, is included in the cycle of capital under this form.
In M...M', the possible expansion of the cycle is included, and depends on the volume of m entering into the renewed cycle.
In P...P, the new cycle may be started by P with the same, or even with a smaller, value, and yet may represent a reproduction on an enlarged scale, for instance in the case where certain elements of commodities become cheaper by increased productivity of labor. On the other hand, a productive capital which has increased in value may, in the opposite case, represent a reproduction on a decreased scale with less raw material, for instance, if some elements of production have become dearer. The same is true of C'...C'.
In C'...C' capital in the form of commodities is the premise of production. It re-appears as a premise within this cycle in the second C. If this C has not yet been produced or reproduced, the cycle is arrested in its course. This C must be reproduced, for the greater part as C' of some other industrial capital. In this cycle, C' is found as the point of departure, of transit, and of conclusion; it is always there. It is a permanent condition of the process of reproduction.
C'...C' is distinguished from forms I and II by still another feature. All three cycles have this in common, that capital begins its course in the same form in which it ends the cycle, and thus re-assumes the original form whenever it renews the same cycle. The initial form M,P,C', is always the one in which capital-value (in III together with its increment of surplus-value) is advanced, in other words always the original starting form of this cycle. The concluding form M',P,C', on the other hand, is always a changed form of a functional one, which preceded the final form in the circulation and is not the original one.
Thus M' in I is a changed form of C', the final P in II is a changed form of M, and this transformation is accomplished in I and II by a simple transaction in the circulation of commodities, by a formal change of position of commodity and money; in III, C' is a changed form of the productive capital P. But here, in III, the transformation does not merely concern the functional form of capital, but also its magnitude as a value; and in the second place, the transformation is not the result of a formal change of position pertaining to the circulation process, but of an actual modification experienced by the use-form and value of the commodity parts of productive capital in the process of production.
The forms m,P,C', at the starting end, always precede every one of the cycles I, II, III. The return of these forms at the terminal end is conditioned on the series of metamorphoses in the cycle itself. C', as the terminal product of an individual cycle of industrial capital, presupposes only that form P of the industrial capital which does not belong to the circulation, M', since the terminal point of representing the changed form of C' (C'—M'), presupposes the existence of M in the hand of the buyer, that is to say outside of the cycle M...M', but drawn into it and made it its terminal form by the sale of C'. In the same way, the final P in II presupposes the existence of L and PM(C) outside of II, but incorporated as its final form by means of M—C. But apart from this last extreme, neither the cycle of individual money-capital presupposes the existence of money-capital in general, nor the cycle of individual productive capital that of productive capital, in these cycles. In I, M may be the first money-capital; in II, P may be the first productive capital appearing on the historical scene. But in III,
C is presupposed twice outside of the cycle. The first time, it is assumed to exist in the cycle C'—M'—C. The C in this formula, so far as it consists of Pm, is a commodity in the hands of the seller; it is itself a commodity-capital, in so far as it is the product of a capitalist process of production; and even if it is not, it appears as a commodity-capital in the hands of the merchant. The second time it is assumed in c, in the formula c—m—c, where it must likewise be at hand in the form of a commodity, in order to be available for purchase. At any rate, whether they are commodity-capital or not, L and Pm are commodities as well as C' and maintain towards one another the relation of commodities. The same is true of the second c in the formula c—m—c. Inasmuch as C' is equal to C (L plus Pm), it is composed of commodities and must be replaced by equal commodities in the circulation. In the same way, the second c in c—m—c must be replaced by equal commodities in the circulation.
With the capitalist mode of production for a basis, as the prevailing mode, all commodities in the hands of the seller must be commodity-capital. And they retain this character in the hand of the merchant, or assume it, if they did not have it before. Or they would have to be commodities, such as imported articles, which replace some original commodity-capital by bestowing upon it another form of existence.
The commodity-elements L and Pm, of which the productive capital is composed, do not possess the same form as modes of existence of P, which they have on the various commodity-markets where they are gathered. They are now combined, and so combined they can perform the functions of productive capital.
C appears as the premise of C within the cycle III, because capital in commodity-form is its starting point. The cycle is opened by the transformation of C' (in so far as it performs the functions of capital-value, whether increased by surplus-value or not) into those commodities which are its elements of production. And this transformation comprises the entire process of circulation, C—M—C (equal to L plus Pm), and is its result. C here stands at both extremes, but the second extreme, which receives its form C by means of M—C from the commodity-market on the outside, is not the last extreme of the cycle, but only of its two first stage comprising the process of circulation. Its result is P, which then performs its function, the process of production. It is only as the result of this process, not as that of the circulation, that C' appears as the terminal point of the cycle and in the same form as the starting point, C'. On the other hand, in M...M' and P...P, the final extremes M' and P are the immediate results of the process of circulation. In these instances, it is only M' and P which are supposed to exist at the end in the hands of another. So far as the process of circulation takes place between the extremes, neither M in the hands of another as money, nor P as the productive process of another, are the premises of these cycles. But C'...C' requires the existence of C (equal to L plus Pm) as commodities in the hands of others who are their owners. These commodities are drawn into the cycle by the introductory process of circulation and transformed into productive capital, and as a result of the functions of this capital, C' once more appears at the end of the cycle.
But just because the cycle C'...C' presupposes for its realization the existence of some other industrial capital in the form of C (equal to L plus Pm)—and Pm comprises various other capitals, in our case machinery, coal, oil etc.,—it demands of itself that it be considered not merely as the general form of the cycle, that is to say as a social form common to every industrial capital (except when it is first invested). It is not merely a common mobile form of all industrial capitals, but also the sum of all industrial capitals in action. It is a movement of the aggregate capital of the capitalist class, in which every individual capital appears only as a part whose movements intermingle with those of the others and are conditioned on them. For instance, if we regard the aggregate of commodities annually produced in a certain country, and analyze the movements by which a part of this aggregate product replaces the productive capital in all individual businesses, while another part enters into the individual consumption of the various classes, then we consider C'...C' as the formula indicating the movements of social capital as well as of the surplus-value, or surplus-product, generated by it. The fact that the social capital is equal to the sum of the individual capitals (including the stocks and state capital, so far as governments employ productive wage-labor in mining, railroading, etc., and perform the function of capitalists), and that the aggregate movement of social capital is equal to the algebraic sum of the movements of individual capitals, does not militate against the possibility that this movement, seen as the movement of some individual capital, may present other phenomena than the same movement studied as a part of the aggregate movement of social capital. In the latter case, when studied in connection with all its parts, the movement simultaneously solves problems, the solution of which does not follow from the study of the cycles of some individual capital, but must be taken for granted.
C'...C' is the only cycle, in which the originally advanced capital-value constitutes only a part of the value opening the movement at one extreme, and in which the movement thus reveals itself at the outset as the total movement of the industrial capital. It includes that part of the product which replaces the productive capital as well as that part which creates a surplus-product and which is on an average either spent as revenue or employed as an element of accumulation. In so far as the expenditure of surplus-value in the form of revenue is included in this cycle, the individual consumption is likewise included. The latter is furthermore included for the reason, that the starting point C, commodity, exists in the form of some article of use; but every article produced by capitalist methods is a commodity-capital, no matter whether its use-form destines it for productive or for individual consumption, or for both. M...M' indicates only the quality of value, the utilization of the advanced capital-value for the purposes of the entire process; P...P (P') indicates the process of production of capital in the form of a process of reproduction with a productive capital of the same or of increased value (accumulation); C'...C', while it indicates at the outset that it is a part of the capitalist production of commodities, comprises productive and individual consumption from the start, and productive consumption with its implied generation of more value appears only as one branch of its movement. Finally, since C' may have a use-value which cannot enter any more into any process of production, it follows as a matter of course, that the different elements of value of C' expressed by parts of the product must occupy a different position, according to whether C'...C' is regarded as the formula for the movement of the total social capital, or for the independent movement of some individual industrial capital. All these peculiarities point to the fact that this cycle implies more than the mere cycle of some individual capital.
In the formula C'...C', the movement of the commodity-capital, that is to say of the total product created by capitalist methods, appears simultaneously as the premise of the independent cycle of individual capital and as its effect. If this formula is grasped in its peculiarities, then it is no longer sufficient to be content with the knowledge that the metamorphoses C'—M' and M—C are on the one hand functionally defined sections in the metamorphoses of capital, on the other links in the general circulation of commodities. It becomes necessary to follow the ramifications of the metamorphoses of one industrial capital among those of other individual capitals and with that part of the total product which is intended for individual consumption. In the analysis of an individual industrial capital, we therefore base our studies mainly on the two first formulas.
The cycle C'...C' appears as the movement of an individual and independent capital in the case of agriculture, where calculations are made from crop to crop. In figure II, the sowing is the starting point, in figure III the harvest, or, to speak with the physiocrats, figure II starts out with the avances, and figure III with the reprises. The movement of capital-value in III appears from the outset only as a part of the movement of the general mass of products, while in I and II the movement of C' is only a part of the movement of some individual capital.
In figure III, the commodities on the market are the continuous premise of the processes of production and reproduction. If this formula is regarded as fixed, all elements of the process of production seem to originate in the circulation of commodities and to consist only of commodities. This one-sided conception overlooks those elements of the processes of production, which are independent of the commodity-elements.
Since C'...C' has for its starting point the total product (total value), it follows that (making exception of foreign trade) reproduction on an enlarged scale, productivity remaining otherwise the same, can take place only when the part of the surplus-product to be capitalized already contains the material elements of the additional productive capital; so that a surplus-product is at once produced in that form which enables it to perform the functions of additional capital, so far as the production of one year can serve as the basis of next year's production, or in so far as this can take place simultaneously with the simple process of reproduction in the same year. Increased productivity can increase only the substance of capital, but not its value; of course, it creates additional material for the generation of more value.
C'...C' is the basis of Quesnay's Tableau Economique, and it shows great discrimination on his part that he selected this form instead of P...P as opposed to M...M' (which is the isolated formula retained by the mercantilists).