Mercantile Capital

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Thus mercantile capital enters into the equalisation of surplus value to form an average profit (although it does not enter into the production of that surplus value), and therefor e the AVERAGE RATE OF PROFIT already contains the deduction from surplus value which falls to MERCANTILE capital, hence the MERCANTILE DEDUCTION from the profit of productive capital.

Surplus value
E.g. EXTRACTIVE capital 200 30
AGRICULTURAL capital 300 45
MANUFACTURING capital 200 25
MERCANTILE capital 100
800 100

If the mercantile capital enters here into the distribution of the surplus value, the rate of profit= 12 1/2%- If it does not, the rate=14 2/7% . The mercantile capital of 100 must turn over 8 times in order to buy and sell 800 (for the value of the commodity=700 (cost price)+100 profit=800). And therefore , in order that it may also come to 14 2/7% , it must in every turnover give rise to an eighth of 14 2/7; or 1+3/4% + 1/28= 1+ 11/14%. The 800 would lose 14 2/7. There would therefore remain 785 5/7. And the real profit made by the capital of 700 would = 85 5/7 = 12 12/49- Less than if the mercantile capital enters into the distribution. Because in fact the mercantile capital would make 14 2/7%, whereas the others would be reduced to a quota which emerges if 1/8 of the capital makes 14 2/7%. In fact, however, if a mercantile capital of 100 is necessary to turn over 781 1/2 (at 12 1/2%), a larger MERCANTILE CAPITAL would be necessary to turn over 800. 102 574/1563 would be necessary. More industrial capital would have to be converted into mercantile capital. The amount of surplus value would thereby be lessened, hence the rate of profit; but the mercantile rate of profit would always remain somewhat higher than the industrial rate.

If the CALICO man has realised in the £1,000 for which he sells the 12,000 yards the whole production process of the 12,000, it initially appears to be no concern of his if the MERCHANT adds e.g. 10% to the price. But, first, once he buys yarn, machine, coal, etc., he has for his part to pay for the addition to the price. If the calico enters into the worker’s consumption, his wages rise. In both cases the calico man’s rat e of profit falls. If his product enters into the constant capital of another capital, this is the same thing for the equalisation of the rat e of profit as if it entered into his own. Furthermore , the nomina l increase in the rate of profit brings with it an uncompensated increase in the rate of interest. If the product enters into the consumption of the non-worker, his capacity for accumulation, etc., is reduced.

[XVII-1030] But this way of conceiving the matte r is wholly incorrect.

Firstly, it contradicts the historical FACT that mercantile capital, so FAR FROM BEING EXCLUDED OF PARTICIPATING IN THE REGULATION OF THE AVERAGE PROFIT, rather, as the first free form of capital, is the FIRST to ENTER INTO THAT CREATION. Mercantile profit originally determines the profit of PRODUCTIVE CAPITAL. Only when capitalist production has penetrated fully, and the producer is A MERE MERCHANT, is the MERCANTILE PROFIT REDUCED TO THE ALIQUOT PART OF THE SURPLUS VALUE FALLING DUE TO IT IN REGARD TO THE ALIQUOT PART IT FORMS OF THE GENERAL CAPITAL.

Secondly, it altogether contradicts the concept of a GENERAL RATE OF PROFIT, which is entirely indifferent towards the particular function of the capital WHICH PARTICIPATES IN THE PARTITION OF THE GENERAL MASS OF SURPLUS VALUE, and is indifferent towards THE DEGREE IN WHICH IT CONCURRED IN ITS PRODUCTION.

It can therefore be seen that even MERCANTILE CAPITAL, once it appears as a mere element of capitalist production, is subsumed under it, does not contradict the law that the sum total of the AVERAGE PRICES of the commodities, i.e. the sum of their production prices,=the sum of their values, and the sum of the profits (INTEREST an d RENT INCLUDED)=the sum of the surplus value or the unpaid SURPLUS labour. It is only that the mercantile capital shares the profit with the PRODUCTIVE capital, while the latter directly winkles it out of the worker in the form of surplus value.

The magnitude of the deduction profit suffers through MERCANTILE profit—i.e. the magnitude of the difference between the BUYING PRICE of the MERCHANT (the SELLING PRICE of the PRODUCER) and the SELLING PRICE of the MERCHANT (the BUYING PRICE of the CONSUMER), hence the apparent “extra charge” the merchant makes upon the price of the individual commodity—is determined, since the general rate of profit is already given, by the AVERAGE NUMBER OF turnovers, REVOLUTIONS of MERCANTILE CAPITAL, which is in turn expressed in the proportion in which the MERCANTILE CAPITAL stands to the total capital. For e.g. 100 to realise a profit of 20%, the merchant must add 5% to each sum of commodities of a price of £100 if his capital revolves 4 times, 4% if it revolves 5 times, 2% if it revolves 10 times. The difference between the BUYING PRICE and the SELLING PRICE of the MERCHANT is the smaller, the greater the proportion of the part of capital directly employed in production.

There now remains the question: Since the MERCHANT himself may employ labour, apart from his capital //to the extent that his own labour enters here, it forms a part of WAGES, as with industrial capital //, does he create surplus value through this labour? Does it originate directly as a part of the profit he CHARGES on account of the function of his own capital? What is his relation to his own wage labourers (commis, etc.)?

Just as productive capital makes a profit by selling labour, contained in the commodity, which it has not paid for, so does mercantile capital do the same by paying productive capital not the whole of the unpaid labour contained in the commodity (in the commodity as product of that capital as an aliquot part of the total capital), but only a part of it, [and pocketing] the unpaid part which is still, for mercantile capital, contained within the commodity.

Just as [profit] appears to industrial capital as an extra, a supplement to the cost, the part of the value it has not laid out in production, not advanced, so for commercial capital does the purchase price of the commodity, and the supplement to the price, the difference between SELLING and BUYING PRICE, appear as something independent of the production process and the value of the commodity itself, although it is moderate in degree and is kept within bounds by the laws of competition.

If we therefore take the last price—the MERCANTILE PRICE—as distinct from the factory price, it is only in the former that the production price of the commodity is completely expressed.

The merchant [sells] — if we leave aside the intermediate transactions within the merchant estate itself, which are of no interest at all here—1) to the industrial consumer, i.e. to productive capital. Here the mercantile profit enters as a cost into production. 2) He sells to the individual consumers; to the extent that he is himself one of these, this must be regarded as the direct appropriation of a part of his profit sub specie use value; [XVII-1031] what he himself consumes in this way is a deduction from the amount of the commodity in which the total surplus value is realised; when he sells to the industrial capitalist—profit and interest—this appears under both categories directly as a deduction from surplus value; what he sells to the workers is sale to variable capital. Finally he sells to the recipient of rent.

The merchant lessens the number of buyers for productive capital. The merchant lessens the number of sellers for the consumer. Towards the industrialist he concentrates the consumers into fewer persons, towards the consumer he concentrates the producers into fewer persons. Hence a great curtailment of this exchange process or of the loss of time on labour, etc., conditioned by mere circulation. The function of pure merchants’ capital, separated from the previously mentioned continuation of productive operations in the circulation process, such as transportation, etc., can be reduced simply to buying and selling. With developed capitalist production and a developed division of labour we also find merchants’ capital functioning in a certain sphere in its pure form, separated from its entanglement with other operations. E.g. forwarding and transport only concern the merchant in so far as they enter into the BUYING PRICE of the commodity, as ITEMS among the costs constituting its price. Similarly rent for WAREHOUSING, which falls to the share of another capital, that invested in DOCKS, etc. Finally, RETAILING does not fall within the province of merchants’ capital, but of another section of merchants.

Merely buying and selling involves the MERCHANT in costs over and above the capital directly advanced, hence existing in the form of either money capital or commodity capital; namely the part of capital which really belongs to him. Firstly buying and selling themselves; the time this kind of labour costs (function); writing, calculating, accounting, travel costs, cost of correspondence, etc. And with bigger capital the clerks, the assistants who work for the merchant, finally HIS OFFICE. Whatever of his own labour goes into the shit can be deducted from profit, just as with every other kind of capital. The outlays this causes form a second part of the capital, which is not directly INVESTED IN WARES. They are costs incurred in buying and selling over and above the part of capital which is directly involved in this function. And the merchant adds to this part of capital the same profit as he adds to the other one, or the price of the commodity must not only replace these costs for him, but yield a profit on them. The whole thing therefore enters as an element into the surcharge the merchant adds to the price of the commodity, or into the excess of the SELLING PRICE over the BUYING PRICE. This excess therefore makes good a part of the costs which derive from the operation of BUYING and SELLING itself, and which are for the merchant as it were included in the BUYING PRICE of the commodity, although he does not have to pay them to the seller but must himself advance them.

These circulation costs—or costs of pure merchants’ capital— can be divided up into an insignificant part, which has to do with the consumption of commodities themselves, namely e.g. travel costs, POSTAGE, paper, ink, OFFICE, etc.; and a more important part, which consists in the payment of alien labour, which is formally wage labour, SINCE it is exchanged directly for capital, and is only exchanged for it in the reproduction process of capital. Both sorts of circulation costs occur in part in productive capital itself (its mercantile or office costs); since circulation is after all its own process. With merchants’ capital, in contrast, these costs occur as independent. In the former case the OFFICE stands alongside the factory, mine, FARM, etc. In the latter case the OFFICE is there as such with its outgoings.

These costs are not incurred in the production of the commodity itself, i.e. they are not necessary in the labour process in order to produce its use value. They are rather incurred in or for the circulation of commodities; they are necessary in order to realise them as value. They are necessary for their reproduction process. The commodity is a unity of exchange value and use value; but it is use value whose [XVII-1032] exchange value exists only ideally as price and must first be realised. In so far as this realisation gives rise to costs, those costs enter into the reproduction costs of the commodity, although not into its direct production cost. These reproduction costs also occur without capitalist production, as soon as production becomes commodity production in general. The circulation process is not only the realisation of surplus value, it is rather only the latter in so far as it is simultaneously and above all the realising of value.

Since merchants’ capital is absolutely nothing but a form of productive capital functioning in the circulation process which has achieved an independent position, all questions relating to it must be solved by posing the problem first in the form in which those phenomena peculiar to MERCANTILE capital do not yet appear independently, but rather as directly linked, in direct connection, with productive capital. As OFFICE in contrast to factory, productive capital functions continuously in the circulation process. We therefore have first to consider the OFFICE and its costs, and their relation to the value and surplus value of commodities, where the office appears as the side of productive capital itself which is turned to circulation.

OFFICE costs can be reduced d’abord to the rent of accommodation, which is itself in turn composed of ground rent, interest for the capital fixed in the house, and finally the annual depreciation in replacement of that capital.

The rent is merely a part of the surplus value, as is the interest. The capitalist does not pocket them himself; he pays them to another capitalist. That does not change anything in the situation. They appear to him as costs. They are, nonetheless, deductions from the surplus value created by the worker. This part of the costs of circulation can therefore be reduced to the fact that productive capital has to pay a part of the surplus value, in the form of house rent, to another capitalist and to the LANDLORD.

Only a part of the OFFICE rent remains as a real advance, the depreciation of the house which is to be replaced annually. Now come the office costs, which can all be reduced to paper, ink, pens, STAMPS and the salaries of clerks, travelling salesmen, etc. The fixed capital needed by these fellows, apart from the raw material of the paper, etc., comes down to the depreciation of the house (this part of the rent of the accommodation) and the few miserable sticks of furniture they need to set up an office. These are costs which the productive capitalist must cover, pay cash for, to a greater or lesser extent, depending on the particular nature of his business; they form a real capital advance, and are not concealed surplus value which appears as a cost to the person who must pay it and as interest or rent, i.e. appears in the form of surplus value, to the other person, who pockets it.

In calculating the rate of profit the capitalist counts this part of the capital advanced just as much as he does the part advanced in raw material, machines, etc. These are values which are consumed, and must be consumed, not to produce the commodity itself, i.e. the use value of the commodity, but to make it circulate as a commodity, and it could not be reproduced without them; since it must be converted into money, must have realised its value, before its reproduction. They form part of the faux frais of production, i.e. they are costs of reproduction which are not costs incurred in the manufacture of the use value of the commodities, but derive instead from their economic form as commodity. Relatively, these costs are always very insignificant as compared with the real outlays for production, and they are the more insignificant the larger they appear; because they are only noticeable where a big capital is set in motion, in proportion to which they are visible—on account of their concentration—but relatively weaker than in the case of a small capital. Yet we are not concerned here with the quantity, but with their qualitative determination.

In any case, these outlays have the peculiarity, which distinguishes them from the actual costs of production, that whereas the rate of profit (here=rate of surplus value, as we disregard the adjustment) depends in the best case on the costs of production, here inversely the costs stand in proportion to the amount of profit. If the business is small, the amount of profit is small, so the office costs are minimal, since the producer can take care of this almost alone. If the business is large, the amount of profit is large, so office costs increase and occasion a certain degree of division of labour. The great extent to which these costs are associated with the profit is shown e.g. in the fact that if they increase, a part of the salary is paid by giving a percentage share in that profit. In so far as the salary assumes this form, this part of the office costs is reduced to a deduction from the profit of the capitalists, a deduction which nevertheless leaves him the AVERAGE RATE, because he works under more favourable conditions than the AVERAGE CONDITIONS OF PRODUCTION.

Hence this is also to be eliminated from the question.

In any case, these office costs—in so far as they do not consist of the labour of the capitalist himself, in so far as they have to be paid and require advances — enter into those advances. They enter into the price of the commodity, and, [XVII-1033] for the commodity to be able to be reproduced, a part of its value must be set aside (hence a part of the commodity itself must be exchanged) for the OFFICE, pens, ink, paper, salaries of the clerks, etc. Since these expenses add nothing to the use value of the commodity, are expenses which do not enter into the direct production process, the capitalist seeks to restrict them as much as possible. In so far as that part of the value of the commodity is realised which constitutes wages, these expenses belong to the conditions of production of the commodity- producing labour itself (even if no capitalist were there), they belong therefore to the conditions of reproduction of the salary, [and] to the conditions of labour. A part of the annual labour of the country is therefore employed in the reproduction of these conditions. The worker must therefore reproduce them as capital, if not as profit as well. In so far as they are required to reproduce the part of the value of the commodities which represents surplus value, they have nothing to do with the worker as such. UNDER ALL CIRCUMSTANCES, as expenses which have always to be reproduced, they reduce the rate of profit and the amount of profit in so far as this part of capital cannot be laid out in, raw material, wages, etc.

The only question which opens up here is this: The clerks and other members of the office are formally wage labourers. They sell their labour capacity directly to capital. If the productive capitalist now makes a profit, does he extract surplus value directly from this sort of wage labourer or not? Does their labour enter into the value of the commodity, and how? Here, notabene, it is not a matter of OVERLOOKERS, MANAGERS, who are employed in the act of production in a directing role, but of purely mercantile workers, who are only concerned with the realisation of the value of the commodity, and the functional labours that are involved in the circulation process of the commodity.

There is, at the outset, an analogy between the clerks and the wage labourers: If e.g. a division of labour is introduced among them, the same number will perform more labour. But they receive their wages as individuals. The wage bears no relation to the productivity of their labour. The social character of their labour appears to them as rather a productive power of capital and a form belonging to capital itself.

Further: The more intensive or extensive their working day, the fewer of them does the capitalist need to retain. The higher his rate of profit on a given aliquot part of capital, e.g. 100, the lower is this ITEM of costs, and the more, pro rata, is the capital advanced lessened in proportion to the surplus value. The greater is then the amount of profit, since a proportionately greater part of the capital can be employed directly in production.

Just as labour is involved in direct production, so is the clerk in the direct reproduction of alien wealth. His labour, like that of the worker, is only a means for the reproduction of capital, as the power which commands him, and at the same time as the worker creates surplus value, the clerk is employed in helping its realisation, not for himself, but for capital.

But there always remains this difference between these mercantile workers and the wage labourers engaged in the production process: The more labour the capitalist extracts from the latter, the greater his surplus value. The more unpaid labour they perform, the more saleable, but unpaid, value they produce. And the greater the number of workers employed at a given stage of production, the greater the amount of surplus value. Surplus value can in general only be created by labour, whose realisation depends on its quantity, irrespective of whether this labour is, or is not, paid for. With the mercantile wage labourers, on the other hand, the value they add to the commodity is never greater than what they themselves cost; it depends not on their labour but on the value of their labour capacity. The capitalist can only extract surplus value from them in so far as he pays their labour capacity at less than its value, but reckons it among the ITEMS of cost at its value. This case does not belong here, where we always presuppose that full values are paid. The less the capitalist pays the MERCANTILE worker, i.e. the more he has him work for the same price, the smaller his costs. I.e. the less it costs him to realise the surplus value. But the latter is not itself affected by this (only indirectly, in so far as a large part of the capital can be invested in productive expenditure). The increase in the number of these workers as such therefore occurs only if there is more value and surplus value to be realised, hence more of this kind of labour is required. It is always a result, never a cause of the increase of surplus value.

The mercantile worker has something else in common with the wage labourer proper: What is paid to him is the value—the cost of reproduction—of his specific labour capacity, which stands higher than that of the wage labourer. (Incidentally, this depends very much on competition, and becomes ever cheaper WITH THE PROGRESS OF CIVILISATION.) With the development of capitalist production—and therefore of civilisation—this labour capacity depreciates. Its cost of reproduction becomes cheaper: 1) because of the emergence of the division of labour, which means that [XVII1034] a more one-sided capacity needs to be produced, and part of the cost of this production is not borne by the capitalist since, like the aptitudes of the worker, this capacity develops by the exercise of the function itself, and develops the more rapidly the more one-sided the function becomes with the division of labour; 2) because the preliminary training, the acquisition of the knowledge of reading, writing, arithmetic and commercial matters in general, language skills, etc., becomes ever quicker with the progress of science, and can be reproduced more easily, more universally and more cheaply, the more the capitalist mode of production predominates, and therefore science and methods of teaching are directed to practical ends; 3) [because of] the introduction of universal public education, which permits the recruitment of this kind of worker from classes which were previously excluded, and are accustomed to an inferior living standard. The development of capitalist production therefore devalues the labour capacity of these people, their salaries, while their capacity for work increases; partly through better preliminary training, and superior skill resulting from the increase in the division of labour and the tradition handed down from the past. The auxiliary means of this labour, such as all the necessary books on commercial arithmetic, etc., and the art of book-keeping, etc., are also perfected.

But the labour time these people have to work stands in no connection with the labour time required for the reproduction of their labour capacity. All the labour they perform over and above this is unpaid labour time, which capital appropriates without an equivalent. Its costs would otherwise be very much increased, if it only received an equivalent in EXCHANGE for the value of this labour capacity which it pays. Its rate of profit would be very much reduced. But whatever the relation of the unpaid to the paid labour time which this kind of worker provides for capital, this unpaid labour never increases the value of the commodity, and it therefore does not add any surplus value to it. All it does is lessen the cost of realising the value, hence lessen the ratio of the capital advanced to the surplus value, hence increase the rate of profit in the same proportion as it is not paid and no equivalent for it enters into the costs of production. It never adds to the value of the commodity more than its own value, hence never more than its cost, however far that cost may sink below the labour time for which the labour is active. If the capitalist could reduce this labour to 0, the rate of profit and the amount of profit would be higher to a corresponding degree. But if, on the other hand, the (actual) wage labour were reduced to 0, profit would vanish and, with surplus value, capital itself.

The side of capital turned towards circulation therefore appears double to the money capital, which must always buy. This achieves an independent position in the shape of MERCANTILE capital, as capital which is always in the state of circulation, and which both alternately assumes the forms of commodity and of money and also, although in different proportions at different times, always exists simultaneously in both forms.

But productive capital not only alternately assumes the forms of commodity and money in the circulation process, its function thus appearing as that of selling and buying; not only must it always, for the sake of the continuity of the production process, be represented IN A CERTAIN AMOUNT OF CIRCULATING CAPITAL, CONSISTING IN MONEY. Buying and selling requires labour and this labour gives rise to costs, circulation costs. These are represented, alongside the productive workshop, in the OFFICE and its costs, which can be reduced partly to the consumption of the commodities needed to perform this labour of circulation, partly to the wages of the workers who are only employed in functions which arise from the circulation process of the commodity, partly in the realisation of its value, partly in the reconversion of the realised value into conditions of production, or, to look at this purely formally, in selling and buying. The commodities are sold to realise their value, they are bought (by the productive capitalist) for the purpose of reproduction, of starting industrial consumption or renewing it. This part of the capital advanced does not exist with the FARMER, e.g.; it is barely visible with the small industrialist, it attains a PALPABLE form in large-scale industry, but, like all the determinations which are appropriate to productive capital as circulating capital, it appears independently with MERCANTILE CAPITAL. Besides the part of mercantile capital which functions as commodity or money, another part is advanced in OFFICE costs, and in the wages of its IN and OUT OF DOOR FUNCTIONARIES. This is the only workshop of MERCANTILE capital. The part of capital employed in this way appears much larger with the big MERCHANT than with the industrialist, because apart from the MERCANTILE OFFICES proper which are associated with every productive workshop, the part of productive capital which would have to be employed in this manner by the whole class of productive capitalists is concentrated in the hands of individual MERCHANTS, who, just as they attend to the continuation of the function of circulation, attend also to the continuation of the costs of circulation which grows out of this continuation. What is true of the other part of MERCANTILE CAPITAL is true of this one. Every individual mercantile capital functions for A LOT OF PRODUCTIVE CAPITALS, and the whole of the mercantile capital laid out in this way replaces a capital which in this form was employed by the whole [XVII-1035] PRODUCTIVE CLASS, and it replaces it with a smaller amount, since the total amount of these circulation costs is lessened by division and concentration of labour. It is precisely in this way that it increases the capital employed in production itself and thereby indirectly the productive power and the quantity of the productive capital.

In so far as these costs enter into the function of MERCANTILE CAPITAL, they naturally do not form, as costs of this kind, a part of its profit. As we saw directly with productive capital, they enter into the price of the commodity as capital advanced, costs of production. In so far as these costs of realising the price (selling) or converting value into commodity (buying)—these costs of circulation—enter into the difference between the MERCANTILE SELLING PRICE and the BUYING PRICE, this part of the difference does not form a profit, and it is not a part of the surplus value, but rather a mere reproduction of capital advanced. So that if we are speaking of mercantile profit, this part of the merchant's EXPENSES, or this part of the SELLING PRICE, or RATHER the difference between SELLING PRICE and BUYING PRICE, must be deducted.

But there is a considerable difference between the relation of MERCANTILE capital to its MERCANTILE wage labourers—and the same relation between productive capital and its MERCANTILE clerks, etc.

It goes without saying, first of all, that just as the function of MERCANTILE CAPITAL creates absolutely no surplus value (the same is true of the MERCANTILE part of PRODUCTIVE capital), the workers employed by it create no surplus value either. The costs of circulation always increase the capital outlay, and always reduce the rate of profit. The commodities which are consumed in circulation are withdrawn as much from industrial as from individual consumption, and the labour which is performed there is always a deduction from productive labour.

The relation of MERCANTILE CAPITAL to surplus value is different from the relation of productive capital. The former appropriates a part of the surplus value, TRANSFERS PART OF IT TO ITSELF. The latter produces it by direct exploitation of labour, direct appropriation of alien labour. The costs of circulation appear to productive capital as expenses; they appear to mercantile capital as the source of its profit, which—presupposing the general rate of profit—is in proportion to the magnitude of the costs of circulation. For mercantile capital, therefore, INVESTMENT in these costs of circulation is productive INVESTMENT. Hence the MERCANTILE LABOUR it buys is also, for it, directly productive. It is only through its function of realising value that mercantile capital functions as capital in the reproduction process. The amount of profit it makes depends on the amount of capital it can employ in this process, and the greater the unpaid labour of the clerks, the more of this capital can it employ (the more capital can it employ in buying and selling). For the most part, however, it has its workers perform the function itself, through which its capital acts as reproductive capital (not merely interest-bearing capital, for example), but it pays them as labour capacity. Although the unpaid labour of these clerks does not create surplus value, any more than mercantile capital does in general, it does create for it an appropriation of surplus value, which for the particular capital is the same thing. It is therefore a source of profit for it. Mercantile business could otherwise never be conducted on a large scale—in capitalist fashion. The relation of the MERCHANT to his “clerks, etc.” is therefore much more analogous to the relation of productive capital to the productive wage labourer than the relation of the clerks in the MERCANTILE OFFICES attached to the factory, etc., although the exploitation of the MERCANTILE worker himself is the same in both cases.

Capital employed in money-dealing is a particular kind of commercial capital alongside capital employed in commodity-dealing. The one is a development of commodity capital, the other a development of money capital, or the one is a development of capital as commodity, the other of capital as money. Both are merely forms and modes of existence of productive capital present in the circulation process which have attained an independent role. Just as mercantile capital exists before productive capital, as the first free form of capital, so does money-dealing and capital employed therein (MONEYED CAPITAL, interest-bearing capital, also belongs here) presuppose only merchants’ capital [XVII-1036]; it therefore equally exists as a form of capital which precedes productive capital.

Mercantile capital—within the capitalist reproduction process— is absolutely nothing but on the one hand productive capital in general in its circulation C—M—C (which however simultaneously assumes a shape of its own, because the commodity here is capital: M—C’C”—M), in its function of buying and selling—or in the movement of the complete metamorphosis it passes through in its sphere of circulation, and on the other hand a part of productive capital which has been separated off from it, has become independent, and for which the sphere of circulation is the sphere of production peculiar to it. The situation is exactly the same with money-dealing capital.

Circulating capital (and all capital circulates, even fixed capital, to the extent that its depreciation enters into the commodity as a value component) is precipitated as money when it RETURNS from a circuit or appears as the starting point of a circuit. For a sum of value which must first be converted into capital, money appears as a starting point in isolation. This is only the case for newly invested capital But for capital already involved in the process, and therefore IN A CONTINUAL COURSE OF REPRODUCTION, both the concluding point and the starting point appear only as points of transit In so far as capital has to pass through C—M—C” between its stay in the sphere of production and its return to the latter, the M is in fact only the result of a phase of the metamorphosis, to become after that the starting-point for the opposite phase which complements it. Capital, however, simultaneously passes through the acts C—M and M—C. I.e. not only is there a capital in the stage M—C, while the other is in the stage C—M, but the same capital is simultaneously buying constantly and selling constantly, owing to the continuity of the production process. Capital is continuously to be found in both stages simultaneously. While a part of it is converted into money, to be reconverted into commodities, the other part is simultaneously converted into commodities, to be reconverted into money. Whether the money functions here as means of circulation or means of payment—in the second case so that the balances are paid, in the first case so that the value is always present in a dual form, at one pole as commodity, at the other as money—depends on the form of commodity exchange itself. But in both cases the capitalist has constantly to pay out money (and to many people; the productive capitalist has to pay many merchants, the merchant has to pay many capitalists, etc.) in order constantly to receive money in payment. This merely technical operation of paying money and collecting money in itself constitutes labour, which, in so far as money functions as means of payment, makes acts of account settling necessary, after the balance has been calculated. This labour is a cost of circulation. A definite part of the capital must constantly be available as hoard (as a coin reserve, i.e. a reserve of means of purchase and a fund for payment, a reserve for payments) and a part of the capital constantly returns in this form. This makes necessary, apart from payment and collection, the keeping in safe custody of this hoard, which is in turn a separate operation. It is therefore in fact the constant dissolution of the hoard into means of circulation and means of payment, and its rebuilding as money obtained through sale or payment fallen due—this constant movement of the part of capital which constantly exists as money—separated from the function itself, this technical movement, which gives rise to particular labour and costs. Circulation costs. It is a result of the division of labour that these technical operations, which flow from the functions of capital, are allotted to definite functionaries on behalf of the whole capitalist class, and that these operations are concentrated in their hands. Here, as with merchants’ capital, there is division of labour in a dual sense. It becomes a particular operation, a particular business, and because it becomes a particular business, performed for the whole class, it is concentrated, carried out on a large scale, and a division of labour takes place within it, both through its splitting into different branches which are independent of each other, and through the development of the workshop within these branches. A part of the productive capital involved in this movement is separated off from productive capital, and is employed only in these operations—first the storing of the money, then its payment, collection, settlement of balances, etc.—which are separate from the acts necessitating these technical operations. This is [XVII-1037] productive capital which has attained an independent role in money dealing.

If we now consider the reproduction process of a single capital, we see that the realised surplus value returns in the form of money. The profit is in part expended as income, and it must in part be reconverted into capital. The reproduction process is not only a simple reproduction process but a process of accumulation, reproduction on an increased scale. This manifests itself in part as accumulation of money. Whether the individual capitalist can immediately reconvert into capital his profit which exists in the form of money, i.e. utilise it within his reproduction process, depends 1) on the state of the market, which does not perhaps permit the extension of a particular business at that moment;

2) also on the organic composition of his productive capital; since not every sum can be converted immediately into productive capital, this conversion depending in part on the technological conditions (I may have enough money to extend a factory, not enough to add a new one), in part on the magnitude of the sum, which must be large enough to be divided into variable and constant capital in the appropriate proportions. As long as this is not possible, the money is a hoard lying idle—now capital lying idle. The job of storing it falls to the money dealer. This is an operation of the money dealer which arises from a moment of the capitalist process of accumulation, which initially presents itself as accumulation of money (in part at least). As long as the capitalist cannot invest the money in his own business, he endeavours to valorise this idle hoard as interest-bearing capital, to lend it out. The money dealer does this for the whole class; lending and borrowing, like paying and collecting money, become a particular function of capital employed in money dealing—a function which proceeds from the reproduction process of capital itself. What previously appeared as a concentration of the hoard reservoir, now appears as simultaneously a concentration of money loanable as capital.

The same is true of the capitalist who has brought his gains into safety but wants to consume them not as money but as capital, i.e. wants to live on interest.

Similarly for all productive capitalists themselves—for the part of the profit they expend as income, yet NOT AT ONCE, but au fur et à mesure. This consumption fund (the actual coin reserve) can be lent out as capital in the interval, and it must under all circumstances be accumulated as money IN CERTAIN DIMENSIONS. The same holds for the recipient of rent who wants, apart from this, to consume a part of his income as interest-bearing capital. Ditto for all unproductive workers whose income is in part capitalised, in part consumed au fur et à mesure, but received in larger portions at certain intervals.

All this is concentrated as loan capital with the money dealer, who apart from this himself lends money and must keep READY definite funds, in order always to be able to pay. The function of his particular capital is only the independent form of the processes which emerge from the reproduction process of capital (conversion of profit into capital), in part from the form of circulation; the fact that newly arisen capital steps forth in the form of money. The money dealer lends and borrows for the whole class, or rather he performs the lending and borrowing of the whole class.

Exchange rate business and exchange business proceed from the function of money as world money; the difference between the national currencies. Finally the BULLION trade; in part the settlement of international payments, therefore the movement back and forth of money capital (here capital, because it is a form of capital); in part the procurement of fresh supplies of gold and silver from their sources of production. The latter is in fact brought about by foreign trade. But the technical aspect, the BULLION RETURN, is taken over by the money dealer. Hoard formation—usurers’ capital— the exchange of international coins—the BULLION trade (the ENGLISH GOLDSMITHS) form the foundations of the independent development of money dealing. It is specially connected with dealing in commodities [XVII-1038], since only merchants’ capital—before the development of capitalist production—constantly buys and sells on a mass scale, lends and borrows, pays and collects, in short constantly has its wealth chiefly in the form of money.[1]

Only with the credit system does MONIED CAPITAL and money dealing receive the form which emerges from the capitalist mode of production itself.

The profit of money dealing does not offer the same difficulty as that of mercantile capital. With the latter the difficulty arises from the fact that the profit originates through an addition to the prices of the commodities, and the commodity is sold dearer than it is bought; which appears to contradict the determination of the price of production and ultimately the value of the commodity by labour time. With the former, in contrast, the commodity as such remains entirely outside the picture, and by far the greater part of the money dealer’s profit consists of the interest for which he lends capital, whereas he borrows it for nothing; or of the excess of the interest at which he lends it over the interest at which he borrows it. A part of the surplus value itself therefore directly appears as the source of his profit, and his profit merely appears as a share in that surplus value.

We shall be able to go into this in more detail in the section on capital as credit,[2] but this does not form part of our task at present.



Let us take first the circulation between productive capitalist and SHOPKEEPER and worker. Let the SHOPKEEPER represent all the sellers of the means of subsistence which enter into the worker’s consumption.

Money is paid as wages by the capitalist to the worker; the worker gives out this money as means of circulation, buys commodities from the SHOPKEEPER with it; with the money the SHOPKEEPER replaces his STOCK from the capitalist, who we shall assume produces means of subsistence.

In so far as the money is exchanged on the part of the capitalist for labour, it is money which is converted into productive capital. It is the first element (disregarding the part of the money which is converted into raw material, etc.) in M—C—M, as form of the reproduction process of capital.

Furthermore, as far as this capitalist is concerned, the money functions as means of purchase, means of circulation. C—M—C(L’[3]). (He has converted the commodity into money and now converts this money into labour, another commodity.)

As far as the worker is concerned, the money is simply coin. L (his commodity)—M—C (the commodity he buys from the SHOPKEEPER); a mere money form, which his commodity assumes, to be subsequently converted into means of subsistence.

With the SHOPKEEPER, the money functions initially as means of circulation. C—M—C. He is constantly selling commodities and buying new commodities with the money. But CONSIDERING that he bought the commodity before he sold it, his process presents itself as M—C—M’ M’—C, etc. And this REFLUX represents here the capitalist movement.

This money in the hands of the capitalist in the act M—L (labour[4] as commodity), disregarding the fact that it is means of circulation (means of purchase), represents capital, but only a capital in the course of changing its form. It is converted from the form of money into the form of labour, from the form of money into that of the commodity. This is a change of form which capital undergoes in the reproduction process, but it does not express a valorisation of capital; for the money the capitalist pays=the value of the labour capacity he buys. No surplus value arises out of this process, considered in itself. Surplus value only arises from the industrial consumption of the commodity.

For the worker the money, as being merely coin, merely represents income. This is always the case where the money merely represents the simple metamorphosis C—M—C; the conversion of the commodity into money, so that it can be converted into means of subsistence. In fact exchange of the commodity for means of subsistence. Mr. Tooke calls money that is spent in this manner income, because it must in fact derive from an income, wages, profit—interest or rent.[5]

[XVII-1039] Lastly, if we consider the SHOPKEEPER, for him the money is not only the form of his capital but its REFLUX movement, it is the movement of his capital. M—C—M’, money which returns increased from circulation, self-valorising value. We shall consider this point presently.

However, it is clear even now that nothing can be more incorrect than Tooke’s direct identification of the different determinations of the form of money with the question whether they represent capital or income. Thus for example money as means of circulation=income, but when it is not expended as income it is capital

D’abord[6] money appears as means of circulation in all 3 processes. For the capitalist C—M—L’. For the worker L—M—C. For the SHOPKEEPER C—M—C”. The same money functions here further as a mere change in the form of capital, as income, as capital+income; i.e. as capital which constitutes capital in relation to itself.

If we consider the whole process of the productive capitalist, money is merely a form of his capital, a form which he changes through his exchange with labour; considered from the point of view of the content, this is a reconversion into conditions of production. The same money in the worker’s hands becomes income and circulates as income. The same money returning into the hands of the épicier[7]=capital + profit, and its departure from the shopkeeper in renewed purchases from the productive capitalist is a mere change in the form of his capital, which denotes a moment in the process of reproduction. It is therefore ridiculous to say that this money is income or capital or ANYTHING OF THE SORT.

Let us assume that the productive capitalist has bought labour capacity for £100; the workers buy with this money £100 of commodities (which the SHOPKEEPER has bought from the capitalist) and they thur return his money to him. This REFLUX expresses for him the conc’uding process of a part of his capital. M—C—M’. He has withdrawn more money from circulation than he threw in. If the profit= 10%, the commodities he sold for 100 cost him 90 10/11. (9 1/11 profit on the 100.) He sells the commodities to the workers for 100 and buys them from the capitalist for 90 10/11. But in fact in his sale to the SHOPKEEPER the capitalist does not realise the whole value of these commodities—the production price of these commodities, but leaves the épicier to realise 1/11 of the value. The workers therefore obtain commodities the real production price of which =100. They obtain an equivalent for their 100. And when the épicier makes his profit on the commodities he is merely participating in the capitalist’s profit.

In examining how the different parts of the total capital are exchanged for each other,[8] how their values are realised one through the other, and how their use values replace each other, we saw that if we subsume the épicier under the productive capitalist, or entirely leave him aside, the transaction presents itself like this: The capitalist pays £100 for the labour of the workers: the latter buy back from him £100 worth of commodities. Thus the £100 flow back to him. But in this transaction the capitalist gains nothing. Instead of directly paying the workers commodities to the value of £100, he pays them a value of £100 in the form of exchange value (real money or tokens of value), and as soon as he receives this £100 back, he pays in commodities. Although every part of the commodity contains value, and every individual commodity consists in equal parts of C+P, cost and profit, paid labour and unpaid labour, the part of the total product (or of the value of the total product) which is paid in wages contains no SURPLUS VALUE, if it is considered in isolation, just as the part of the total product which replaces the constant capital contains no surplus value—because the whole of this part of the product (after the remplacements have been deducted) is then calculated as consisting merely of SURPLUS labour.

Hence for the épicier (who trades with the workers) to be able constantly to withdraw more money from circulation than he throws in, all that is needed is that enough money should circulate to pay the workers’ wages. The épicier withdraws more money from circulation than he throws in because he in fact throws more value into circulation than he withdraws from it. Admittedly, the means of subsistence he bought from the capitalist had a value (we say here value for price of production, since we are dealing with capital as a whole and consider every particular sphere only as a part of the total capital) of [XVII-1040] 100, but a realised value of only 90 10/11. But he throws them into circulation with their adequate, full value expression of 100. And for the question we are considering here it is entirely the same thing whether the commodity is thrown into circulation with a higher value than that with which it was originally withdrawn therefrom, because its value has grown, or because a merely latent value has been made manifest, realised. We say: this is the same thing here, where we are considering the relation of circulating money to the reproduction process.

Let us assume that the épicier consumes his profit entirely, and in the same articles he buys from the capitalist. In this case, if he originally buys with £90 10/11, he sells these commodities to the workers for 100, and with this 100 he can buy back not only enough to replace the commodity capital which was to be sold to the workers (namely £100 worth of commodities for £90 10/11) but also 1/11 of the commodity value of 100 for his own consumption. Hence in this case he would buy back from the productive capitalist commodities to the value of £100. The sum of money (£100) the capitalist needs to pay the workers would therefore constantly flow back to him from the épicier. If the épicier buys for £90 10/11, he obtains a commodity value of £100, and he sells this to the workers for £100. If he buys for £100, he obtains a commodity value of £110. Therefore, after he has sold a value of 100 to the workers, he retains a commodity value of £10 for his own personal consumption.

Here, therefore, we see d’abord an example in which it is only required that the capitalist should pay the workers their wages weekly (or over some other period)—hence that money to the amount of their wages should circulate—for the épicier to be able constantly to withdraw from circulation more money than he threw in. In this case 10/11 ((9 1/11)H=99+ 11/11=100) is constantly returned by the épicier to the capitalist from the circulation he requires in order to pay wages. But he would have to procure the remaining 1/11 in some other way, which we shall discuss later. Secondly, however, if the épicier realised his profit of £9 1/11 in the commodities of the capitalist himself, the £100 of wages paid by the capitalist would be sufficient not only for the workers to obtain their wages and the épicier to replace his capital, but also for him simultaneously to realise his profit. To pay the wages of his workers periodically, therefore, the capitalist would need no other fund than this circulation between himself, his workers and the épicier. As for the SHOPKEEPER, he would constantly withdraw from circulation more value than he threw into it (expressed as value), namely £110, while he only threw in £100. Nevertheless he would always throw into circulation as much money as he took out, namely £100. In this case, however, he constantly withdraws £110 worth of commodities from circulation and only throws back £100 worth. This version of the matter appears to contradict the previous one. First we said that he withdrew more money from circulation than he threw in, because he threw in commodities of greater value than he withdrew. Now we say that he throws exactly as much money in as he takes out, because he withdraws commodities of greater value from circulation than he throws back into it. The two are in fact identical expressions. In the one case he realises his surplus value in commodities, in the other in money. The épicier constantly withdraws from circulation a commodity value of £110 for £100, while he only throws into circulation, sells to the workers, a commodity value of £100. This is the result of the fact that he constantly withdraws (realised) commodity value from circulation for £90 10/11. and throws back into it a value of 100 (realised in the same quantity of commodities).

At any rate, we have here an example in which the same circulation (£100) suffices for the capitalist to pay wages; suffices at the same time for the épicier to realise a SURPLUS value of £10, and finally the same amount suffices for the épicier to realise capital and income, and for the capitalist constantly to expend the same amount for the repeated purchase of the same amount of labour.[9]

Let us assume that the capital of the épicier is £1,200. Let this sum turn over 4 times a year, so that every year he makes £4,800 worth of purchases from the capitalist, which is £400 a month and £100 a week. His own capital would be replaced in the first quarter. If the rate of profit were 10% per annum—hence the 4fold turnover were the AVERAGE REVOLUTION OF THE MERCANTILE CAPITAL— the épicier would add 2 1/2% on each 100, for 10% on 1,200=120, and 120 on 4,800=2 1/2%- In this case, if the épicier paid 100 he would obtain a commodity value [XVII-1041] of 102 1/2, and since he only gives the workers a commodity value of 100 for £100, these £100 worth of commodities would cost him £97 23\41. Here, therefore, a weekly circulation of £100 (the £100 turn over 4 times a month and 48 times in the year) would 1) pay for labour[10] with an annual value of £4,800, and 2) realise a commodity value of £4,800. Taken together, a value of £9,600 would be realised. Apart from this, the capital of £100 would return to the capitalist at the end of the whole circuit, whether this was itself equal to a value of £100 (if gold money, etc.) or it was only represented by a token of value or credit paper, which is the same thing for this discussion. While it realised these commodity values, the £100 would at the same time have replaced the épicier’s capital of 1,200 and realised a profit of 120.

(The calculation is in itself absurd on account of the hypotheses. For if the épicier only needs 100 in turnover, he cannot invest a capital of 1,200. We should then have to assume that, apart from the sum which he always has READY and which after all amounts at most to 1/3 of what is being turned over, hence £40 at most, the remainder is counted for his SHOP, wages, etc., circulation costs. We should then have to calculate a higher surcharge: 10% profit and so much, etc., for the replacement of the fixed capital. We should then have had to bring into the calculation as well the circulation between the épicier and his own workers.)

But what we are concerned with here, and what is the case independently of any hypotheses, is this: In one single cycle of the circulation of the capital, in which the capitalist lays out £100 in labour, the workers buy commodities with the £100 from the épicier, and the épicier uses this £100 to buy back commodities from the capitalist, the £100 buy labour for £100 and commodities for £200, namely the £100 of commodities the workers buy from the épicier, and the £100 of commodities the épicier buys from the capitalist. This admittedly expresses, in so far as we are considering the circulation of money, merely its circuit, M—C— M—C, etc. But at the same time, if we look at the process which lies hidden behind this, [it expresses] a complete cycle of the reproduction process, which contains, entwined together, the moments of production, consumption, distribution, circulation andn reproduction. In contrast to this, the 40 turnovers of the £100 in the year express the 40fold repetition of this complete cycle. A single cycle may proceed slowly or quickly, the amount circulating may be big or small, but the money must pass through these turnovers. ITS SUFFICIENCY for the 40 times greater amount, on the other hand, has as its condition a given number of repetitions of the cycle, hence that the reproductions of the whole cycle of reproduction over a year should be sufficiently rapid.

Assume that the capitalist pays the workers £100 out of his own pocket (before he has begun to trade with the épicier). The épicier buys with £100 from his pocket a commodity value of £110 from the capitalist (namely £90 10/11 of commodities for resale and 9 1/11 for his own consumption). £200 of money has now been laid out, therefore. £100 is in the pockets of the workers. The capitalist for his part has replaced the £100 through the sale of the commodities. As soon as the cycle has started, and the £100 has passed from the workers to the épicier, and flowed back from the latter to the capitalist in purchases, £200 is in the capitalist’s pocket. But he pays his workers with the £100 he receives back from the épicier, not with the £100 he received from him before the cycle. £100 of money is now thrown out of this circulation. But the capitalist now may retain £100 less in the form of money. He can invest it elsewhere. The CURRENCY flows to him from the épicier. This is in general the service performed by capital engaged purely in trade. The capitalist does not gain any capital thereby. For he provided £100 of commodities for the first £100, and for the £100 of the épicier, with which he pays the workers from now on, he must always provide commodities afresh. But what he gains is that he can invest this value of £100 elsewhere. Whether the épicier was the original owner of the £100 or not is demonstrated at the end of the first cycle. If it was his, he now has £100, just as before, since he has consumed the surplus value of £10 in commodities. If it belonged to the capitalist, the épicier has to pay out the £100. If he buys anew, this happens in fact with fresh credit.

[XVII-1042] In the real reproduction process we must presume that one part of the profit is consumed as income, another part is accumulated. Let us assume that the épicier, who makes a profit of 10% on a capital of 100 (this 100 needs to be merely an aliquot part of his capital and stands for x here), consumes half of the 10% and accumulates the other half. On our assumption the workers buy from him £100 worth of commodities, which cost him £90 10/11. His profit=£9 1/11- But in order to simplify the calculation we should • prefer to say, and the relation is the same here: the workers buy for £110 commodities which cost him £100. £110 is here what the capitalist has to pay the workers; he only receives the whole sum back from the épicier if the latter constantly consumes the £10 profit, and indeed consumes it in the capitalist’s commodities. If he consumes £5, £105 comes back to the capitalist, and if this occurs regularly this amount is constantly in circulation. The capitalist, on the other hand, would constantly have to draw £5 from sources other than this cycle of circulation and, through wages, throw them into circulation as SURPLUS, except under certain circumstances which will appear shortly.

The £5 the épicier accumulates is initially accumulated by him in the form of money, and this is the sole, most direct, immediate form in which he can accumulate, unlike the productive capitalist. The productive capitalist can accumulate in natura, if his product itself enters as a condition of production into itself, as e.g. wheat does as wheat seed in agriculture, or he can accumulate through exchange, as do e.g. the machine manufacturer and iron producer. (What would correspond to this in the case of the SHOPKEEPER, perhaps, would be an increase in the part of his capital which enters into the circulation costs of his circulating capital, such as buildings, etc. But even so this too requires a prior conversion into money.)

//It is true that accumulation may appear with all capitalists as accumulation of unsold commodities (presupposing here that they have sold the part of the commodities which replaces their capital). But this is always involuntary accumulation and it hinders reproduction, with one sole exception. The capitalist may consider it necessary to produce an increasing reserve fund of commodities to cover increasing demand (this can naturally only happen with commodities which can be preserved FOR SOME TIME, such as clothing materials and the raw material for them, etc., cattle, machines, etc., metals, etc.), and so FAR (this may also be case for the SHOPKEEPER) all accumulation amounts to annual overproduction, an overproduction which is the law of expanding production, not stagnant production.//

Our SHOPKEEPER may now accumulate this £5 straight away in real terms as capital, i.e. convert it into capital, or only accumulate it as the material of capital, as money capital destined for reproduction, but temporarily at rest. This is in fact a mere hoard, but with the determination of capital lying fallow.

With £100 the SHOPKEEPER bought commodities of a value of 110; the capitalist paid the workers £110 of wages; the workers paid the SHOPKEEPER the £110 for commodities which are worth 110 but only cost the SHOP 100. On our first presupposition the SHOp[keeper] spends with the same capitalist, apart from the 100 needed for the replacement of his commodity capital (which has a value of 110), 10 more for his own personal consumption. For 110 he receives commodities of a value of 121, but he consumes this value of 21 or sells it to himself. The commodities cost him only 10, although they are worth £21 ; but cost him as his own customer the value of 21. (Just as he obtained 110 for 100 (in the case where his capital was 90 10/11) but consumed 10. The £110, however, circulates constantly; it provides the money for both the workers’ wages and the épicier’s commodities, as well as the commodities the épicier buys back; equally the £110 replaces his capital and his profit.)

If the épicier always consumes £5 and accumulates £5 (as distinct from the HOARD, which is always involuntary with the capitalist, but which is, both for him and for the hoarder, money withdrawn from circulation, exchange value at rest as money) the situation remains the same in so far as he still buys commodities for £110; £100 to replace his capital, £5 as profit added to the capital, and £5 for his own consumption. But certain distinctions enter here. As far as concerns the £5 consumed by the épicier himself, the old rule still prevails. He buys with it a commodity value of £7 3/4,which he himself consumes, however. [XVII-1043] It is different with the other £7 3/4.

This is wrong. We assume that he always adds 5% to the capital, hence the capital is 100, 105, 110,[11] etc. For him to accumulate this, to apply it as capital, the workers need to buy more from him, the capitalist must therefore buy more labour[12] (whether by employing more workers, or by having to pay more because more work is done. Here we leave out of account any rise in the market price, although this amounts to the same thing for the circulation of money. Similarly, the production price of the commodity could have risen, hence either more labour is employed by the capitalist in order to produce the same amount of commodities, or the raw material, etc., has become dearer. We are not considering any of these CASES here. It is assumed that commodity values remain the same.) The mere accumulation of the SHOp[keeper], so FAR as it is not SPEND OF HIS PROFIT, is not of the slightest use to him in accumulating as capital the money saved, if the workers do not have any more to buy. And we are assuming that this is his LINE OF BUSINESS, and we leave out of account here the competition through which one SHOPKEEPER extends his sphere of action at the expense of another. (This is a very important consideration in dealing with the competition of capitals.[13] Here one of the SHOpfkeepers] represents the class of SHOpfkeepers].) It is admittedly possible that he e.g. expands his SHOP, etc., and maintains a larger service personnel. This already requires a considerable increase in the accumulation of his capital (or RATHER his LATENT CAPITAL). It therefore only comes about in consequence of a long (productive) accumulation or growth of latent capital.

But let us assume that the workers buy more and that the shopkeeper’s accumulation corresponds exactly to the growth in wages (hence to the growth in the reproduction of the variable capital of the capitalist). (If the latter “were to proceed more rapidly, he would have to take credit from the capitalist. His profit would then grow more rapidly than his capital.)

Let us say that this process takes up e.g. 5 years.

Year I) Capital 100. SHOPfkeeper] buys from the capitalist for £100 commodities of the value of £110. Capital pays £110 in wages. The workers buy commodities from the SHOPfkeeper] to the value of £110.

//If the situation is normal, the worker, like anyone else, buys the commodities at their value. They are only dearer for him because he provides more labour for the money with which he buys them than the money represents; not because the commodity is worth less in money than it costs him. The money costs him more labour than it is worth.//

II) Capital 105. SHOPfkeeper] buys from capital for £110 (hence commodities to the value of .£121). But he only has in his shop commodities for £105, hence to the value of £115 1/2- He consumes commodities to the value of £5 1/2%, which cost him £5. (The 1/2 is 10% on 5.) The capitalist pays £115 1/2 in wages, with which the workers buy from the sHOp[keeper] a commodity value of £115 1/2.

III) Capital 110. SHOPfkeeper] buys commodities from capital for £115 1/2. hence commodities of the value of £126 1/2+ 1/20, or £126 11/20- But he has in his shop only £110 of commodities, consumes therefore a commodity value of £5 11/20- The value of these commodities, for which he has laid out £110, is 121. The capitalist pays £121 in wages. The workers buy commodities from the SHOPfkeeper] for £121.

IV) Capital 115. SHOPfkeeper] buys from capital for £121 =a commodity value of £132 1/10- But he only has in his SHOP commodities for 115, the value of which is 126 1/2- He therefore consumes a commodity value of 6 6/10- The capitalist pays £126 1/2 to the workers; they buy with this commodities which cost the SHop[keeper] 115.

[XVII-1044] V) Capital 120. SHOP[keeper] buys from the capitalist for £126 1/2- But he only has enough in his SHOP for £120. He therefore consumes £6 1/2=a commodity value of 6+ 1/2 + 6/10+ 1/20 = 6+ 1/20+ 12/20+ 1/20 = 6+ 14/20 =6 7/10.

He has in his SHOP commodities for £120, hence a value of £132. The capitalist pays £132 to the workers; they buy for this amount from the SHOpfkeeper], etc.

Two things are assumed here for the sHopfkeeper] to be able to add 5% to his capital every year. Firstly, that the individual CONSUMPTION OF the sHOp[keeper] himself grows somewhat every year. Otherwise the accumulation would have to proceed more rapidly. Secondly, that the capitalist (this is what we call the directly productive capitalist xaT’é£ox, nv[14] ) accumulates, since this is demonstrated in the growing magnitude of his variable capital, i.e. the annual growth in his outlay for the purchase of labour. But we see here at the same time that though the circulation of £100 was enough as long as the SHOpfkeeper] did not accumulate but consumed his £10 of profit in commodities, this is no longer the case once he begins to accumulate. Just as at the beginning of the process he bought for £90 10/11 and sold for £100, the capitalist therefore having to add £9 1/11 to circulation, but the £100 being sufficient, so now at the beginning of each year the capitalist has to make an addition to circulation from his own capital in order to keep reproduction going.

Year I) SHOPKEEPER operates with £100. Capital pays wages of £110. Therefore throws £10 more money into circulation.

Year II) SHOPKEEPER operates with £105. Capital pays wages of 115 1/2- Throws £5 1/2 more money into circulation.

Year III) SHOPKEEPER operates with £110. Capital pays wages of £121. Therefore throws £5 1/2 more money into circulation. (115 1/2+5 1/2=120+ 2/2=121.)

Year IV) SHOPKEEPER operates with £115.[15] Capital pays wages of £126 1/2. Therefore throws £5 1/2 more into circulation.

Year V) SHOPKEEPER operates with £120. Capital pays £132. Throws £5 1/2 more into action.[16]

The total amount the capitalist has added to circulation over the five years=£10+4(5 + 1/2)=10+20+ 4/2=£32. This amount replaces the whole of the SHOPKEEPER’S profit, because he consumes part of it in the commodities of the capitalist, hence sells it to himself.

Incidentally, the eventual upshot of all this is the law we developed earlier. The wage of the worker pays the whole capital of the SHOP[keeper] as well as his profit. Therefore, if a SHOpfkeeper] who only provides the workers with the means of subsistence, i.e.n is only sustained by variable capital, accumulates, the money laid out for wages must increase. In fact the causal relation is reversed. The sHOp[keeper] can only accumulate as sHOp[keeper] (i.e. reconvert into CAPITAL his profit in his BUSINESS) if productive capital produces on an expanded scale, and only in so far as this expansion involves an expansion of variable capital, i.e. capital laid out in wages. The expansion of circulation — to the DEGREE of the SHOp[keeper]’s ACCUMULATION — must then be provided by capital.

Now take the second case. The sHOp[keeper] has no opportunity to expand his business, because the capital laid out in the purchase of labour does not increase, or does not increase in the proportion to which the sHOp[keeper] would like to accumulate.

If e.g. his capital is 100, the value of the commodities he buys is 110, and if he consumes half of the 10, he will accumulate £25 in the 5 years; if his capital= 1,000, he will accumulate £250. Thus the accumulation of capital appears here at first as accumulation of money, WHICH IS NOTHING ELSE than HOARDING, although here the hoard has the character of latent capital. All surplus value which is realised in money assumes this form initially, until it has been reconverted into productive capital. The latent capital may also have other forms, those of fixed capital, etc. But then—with the exception of unsold commodities destined for individual consumption (apart from the means of subsistence for the workers)—it already exists as a condition of production, realised (not in the money form) and available.

[XVII-1045] This accumulation of capital in the form of money is however the sole kind which can take place without the presupposition of simultaneous reproduction in other spheres of productive capital. This SHOPKEEPER can thus be compelled to HOARD the £250 as money, because there is no growth in variable capital. This lack of growth does not prevent him from setting aside annually £5 of money, or more, depending on his greed or mania for accumulation, which he cannot however directly apply as capital in his business. This is an incidental feature of the reproduction process which is important for the explanation of many phenomena.

Under the circumstances we have indicated, the SHOP[keeper] buys from capital:

1st year for £100. Capital has to throw £110 into circulation. Thus £10 more than it receives from the sHOP[keeper].

2nd year for £105. Namely £100 for SHOP and £5 for SHOPKEEPER. The SHOPKEEPER accumulates or RATHER HOARDS £5. Capital has as before to throw £110 into circulation. The sHOp[keeper] for the £5 receives £5 1/2 of commodities in natura. But for the £100 he receives a value in commodities of £110, which the capitalist has to pay his workers as wages. But since he receives £105 from the SHOp[keeper] he has to add 5.

3rd year the same. 4th year the same. 5th year the same.

The capitalist has therefore to add to circulation in the first year 10, in the 4 following years £20 (each year 5), in the 5 years £30. It was £32, while the sHop[keeper], instead of putting the £5 into the bank (in short laying it aside), invested it productively in the purchase of capital’s commodities. It is therefore—prima facie—almost the same CASE, quoad circulationem,[17] as if the SHop[keeper] had accumulated productively.

Given the capitalist mode of production, however, it is to be assumed that the SHOP[keeper] deposits this amount every year with a banker. Whether or not he draws interest from this is here irrelevant. Yet it would need to be considered for reproduction as a whole. This much is clear, however, that the amount the SHOP[keeper] puts aside in this case=the amount capital has to add every year over the 5 years—£5. The sHOp[keeper] first puts aside £ 5 at the end of the first year, hence £25 over the 5 years. In the first year capital throws £10 into circulation. But 5 out of this 10 remains in circulation or returns to it from the SHOpfkeeper]. With the exception of the £10 which the capitalist casts into circulation in the first year, he continues to throw in no more than 5 a year, since the other 5 remains in circulation. Since the 105 remains in circulation (the capitalist has thrown in the 5 once and for all) there remains to be added by the capitalist over the 5 years, after the deduction of this amount—and it is in circulation, flows back—only £25, exactly the same amount the sHop[keeper] has lying in the bank. This money — capital lying fallow, accumulating latent money capital for the sHOp[keeper] — forms the source of the supplement capital needs for the circulation. Thus the circulation can last year by year with the sum of £110. The profit of the épicier is verbalement[18] PAID to him IN HIS OWN COIN. He himself puts back £105 a year, and £5 is paid to him in his money which he has deposited with the BANKER. (It is assumed here that he himself receives no interest; otherwise an increase of circulation from one direction or another would be necessary.) The capitalist pays him his annual balance of £5 with his £5 annually deposited with the BANKER. The business is now done in the following way:

First year. Capitalist receives £100 from épicier. Pays 110 to workers, who buy commodities from the épicier with this money. The épicier pays 105 and takes 5 to the banker.

Second year. Capitalist receives £105 from épicier (5 of which is thrown into circulation by capital). He takes from the BANKER the 5 which the épicier has deposited. He pays the workers £110. Back to the épicier. The latter brings to the banker the same £5, which have been returned to him in the £110.

Third year. Capitalist receives £105 from the épicier. He takes the £5 from the banker and pays it to the épicier for the second time, in the 4th year for the 3rd time, in the 5th year for the 4th time. The £25 deposited with the BANKER by the épicier therefore continues to exist only in the form of £5. And in fact the capitalist threw £10 into circulation only at the beginning of the transaction; this £10 passes through the same cycle just as before. Out of the £25, therefore, only £5 is to be found with the BANKER as money accumulated and constantly expended by the capitalist; this £5 constantly travels from the banker to the capitalist and from the [XVII-1046] épicier to the banker. Only by an indirect route does the épicier annually throw £110 into circulation. His capital of £25 deposited with the BANKER amounts to his having a balance of £25 in his favour with the BANKER, which is present (in so far as the BANKER deals at all with his own capital) in the form of SECURITIES, mere drafts on future income, government stocks, bills of exchange, share certificates, etc. What has accumulated here in fact is the épicier’s draft on the BANKER, the BANKER’S draft on the future receipts of the state, share companies, productive capitals. The accumulation is IN FACT here an accumulation of mere drafts on receipts which derive from productive capital. (For the revenue of the state can also be reduced to receipts of this kind, which are paid to it annually by the productive capitalists.) This discussion belongs actually to the credit system.[19] What is important here is that we should see how the £110 continues to suffice for the circulation, although £25 is accumulated as latent money capital One can see from this the difference between actual (apparent) accumulation of money and the inflow of CURRENCY. What must be accumulated here in CURRENCY is nothing but the identical original £110, although the SHOp[keeper] annually withdraws £5 of this from circulation.

//Even if the sHOP[keeper] accumulates productively, and annually buys £5 more of commodities from the capitalist, the latter receives the extra amount from the BANKER in the same way. Yet in this case circulation increases by the whole amount of money the sHOp[keeper] does not consume in commodity value, as his purchasing money. The capitalist must obtain from other sources the increased wages over and above this purchasing money.// The capitalist indeed owes the banker capital (value) to the value of £5 each time, for the £ 5 he withdraws annually in this way. Hence at the end of the 5th year £25. But this is definitely not the same as saying that he has as a result of this changed the figures in his account with the BANKER. If, e.g., he has increased his constant, without increasing his variable, capital, he will have more to receive from the BANKER (who administers his account for him) for the sale of his commodities. We do not say, therefore, that he borrows the £25. To be sure, he must lay out £5 more of his capital every year in money. But for this it is not necessary that the amount of CURRENCY he himself provides via the SHOp[keeper] be increased.

With regard to the MERCHANT (épicier, SHOPKEEPER) who sells the means of subsistence to the workers—with regard to a part of the capital (part of the MERCANTILE CAPITAL)—we have seen, thus, how he constantly “extracts from circulation more money than he throws in”. He extracts a part of the “surplus value” in “commodity value”, but this must be a GENERAL LAW, since all those who live off profit //interest and rent// must expend a PART for their individual consumption. It is enough for the operation that the amount of money necessary to pay the worker his weekly wage should circulate, hence the amount necessary to pay for the commodity values the worker consumes. The money necessary for this circulation is provided (and forms a part of the capital) from the capital of the SHOPKEEPER himself for the most part (unless he is trading on credit from the MANUFACTURER). The part originally provided by the productive capitalist himself=the profit of the SHOPKEEPER, i.e. it is not equal to the annual profit on his capital, but=the part of the profit which falls on the weekly turnover. (In fact the excess contains not only profit but at the same time the depreciation of the capital laid out for the circulation costs.) Let us assume that the SHOp[keeper] circulates £1,000, which turn over 4 times in the year. And the profit (including costs, etc.)=16%. Thus 4% in three months and 4/3% in 1 month, and in one week 4/12=1/3%- (4% in 3 months on 1,000=£40. And in 12 months=£160. And 16% annually on £1,000=£160.) This would be a weekly addition of 1/3% to 1,000. To £100 it is £ 1/3%. To £300 it is 3x£1/3 =£1- To £900 it is £3 . And to £1,000 it is £3 1/3 or £3 6 2/3S. And this would be the amount the manufacturer had to add to the CURRENCY of £1,000. (Naturally all these amounts must in reality be set somewhat higher, because the REFLUX movement does not proceed without friction. A part of the wage, for example, may run into other channels, may be HOARDED by the worker, etc. On the other hand, we are leaving almost entirely out of account compensations for credit.) We have seen how [XVII1047] this amount remains constant, if on the one hand wages (and the number of workers employed) remain the same, and on the other hand the épicier consumes the whole of his profit in the commodities of the capitalist. It is not greatly modified when the SHop[keeper] WITHDRAWS PART OF HIS PROFIT. If the épicier accumulates productively, i.e. expands his business, the prerequisite is that the variable capital employed by the capitalist should increase. In this case too, what the capitalist adds is only equal to the profit, or RATHER the weekly expression of the profit, of the tenant.[20] A very small rate, therefore. Incidentally, see the following

11 Note to P. 1044.[21]

The calculation is wrong, because it is always only the part of the SHOPKEEPER’S money with which he operates as capital which is calculated, thus not the money he expends for his own consumption, the money he expends as income. Then matters proceed in this way:

Year I. SHOPKEEPER buys with £100 for his SHOP a commodity value of £110. Wages 110. The capitalist throws into circulation £10,=the profit of the SHOPKEEPER,=the 11th part of the circulation.

Year II. SHOPKEEPER expends £5 as income. Buys commodities for the SHOP for 105. He therefore expends the £110 he has received from the workers. For the £105 he receives commodities of 115 1/2 The capitalist has to pay wages of £115 1/2- £110 of this has been thrown into circulation by the sHOp[keeper]. The capitalist now has to throw in 5 1/2.

Year III. SHop[keeper] throws in £115 1/2. Capitalist 121. Hence 5 1/2- Similarly in Years IV and V.

The calculation is thus correct after all. Besides this, the amount the capitalist throws in here as an increment is smaller than the amount he originally threw in by almost a half—5 1/2 instead of 10.//

*At first view, it seems a puzzling question, how the capitalist shall be able perpetually to withdraw more money from circulation than he throws into it, the more so since he, in fact, throws all the money into the circulation, or is the starting point as well as the returning point of the circulation?*

With the épicier the capitalist has only to throw once and for all into circulation—if the reproduction process remains the same and the épicier consumes the whole of his profit—the part=the weekly expression of the profit of the MERCANTILE capital of the épicier. This addition to the capital thrown into circulation every week by the épicier himself //we can look later at the differences which enter through the fact that the épicier buys perhaps only once a month or once every 3 months, depending on the circumstances, and sells weekly//+the weekly monetary expression of this capital itself is then sufficient for the épicier to be able to withdraw every week from circulation e.g. £10 more than he threw into it, although the weekly CURRENCY remains £110, as before. And what the capitalist has thrown in, ONCE and FOR ALL, is only 1/11 of the weekly expression of his variable capital, hence, since the weekly variable capital=1/52 of the annual variable capital, 1/11 of this, 1/ 52x11= 1/572 of the variable capital he has to lay out . Whether I pay 1,200 thalers (value) all together at the end of the year, or 12 thalers a month or 3 thalers a week, changes nothing in the amount of value I have to pay for the whole year. In the first case, however, 1,200 thalers of money would be needed to realise the value. In the second, if the 3 thalers flow back, they may be sufficient to pay the 1,200 thalers. 3 thalers, turning over 400 times in the year, realise 1,200. But one sees at the same time that important as the above investigation is for the role played by mercantile capital in relation to the circulation of money proceeding during the reproduction process, the question is not thereby exhausted. This is so in two respects.

1) Since mercantile capital is itself PART and PARCEL OF THE CAPITAL, one should, to begin with, refer it to productive capital itself. The operation would then look like this: The capitalist pays out 110 in wages, the workers buy back from him commodities of 110, and the money thus flows back to him. This shows us indeed how a money capital of 110, laid out weekly (in money as CURRENCY, means of payment), is enough if he has to lay out a variable capital annually to the amount of £5,720. The workers receive from him in the course of the year a commodity value of £5,720. But the sum of £110 is sufficient to pay them this over the whole year. The simple circuit of the money is only that the same coin passes through different hands. In contrast to this, the REFLUX movement—continuity—implies [XVII-1048] that the same coin or ar least the same amount of money passes again and again through the same hands as means of purchase or payment. Hence the money capital the capitalist must have in order to pay his variable capital to the workers is in no way proportionate to the size of this variable capital itself. Although the weekly expression in money of the variable capital for the 2 variable capitals A and B is naturally proportionate to the magnitudes of A and B. If A is 50 times greater than B, its weekly expression in money is 50 times greater than that of B. In either case this is quite compatible with the MONETARY expression of A and B over the whole year never being, respectively, greater than A/52 and B/52. This is an important moment in the REFLUX movement, in order to grasp the mechanism of the circulation of money. But whether the capitalist pays out £110 at the end of the week or 5,720 at the end of the year, this movement does not explain how even a centime of profit flows back to him, hence also profit realised as money. For, reduced to a still simpler expression, the process comes down to this: He first pays out the amount in money; he then pays out the same amount of value in commodities and thus draws back the money. It is reduced to this, that every week he pays out a value of £110 to the workers. No advantage results from this process of payment. And not in the least from the fact that he first gives out the tokens (the money) and then draws them back and gives out the real commodity values.

2) But secondly, with regard to the MERCANTILE CAPITAL of the SHOPKEEPER, the matter can be reduced to this: His specific profit requires merely that the value of the commodity sold by him should be paid; and, since the workers are the buyers of his commodity, that the wage of labour should=the value of the commodities sold to them by him. But expressing this generally we find that the problem itself is only repeated (leaving aside the SPECIFIC NATURE OF MERCANTILE CAPITAL) IN ANOTHER FORM: Expressed generally this means nothing but: for the capitalist to draw from circulation more money than he has thrown into it nothing more is needed except that the value of his commodities should be paid for, or that enough money should be there to pay for the value of his commodities. Or that enough money should be available every week, i.e. that enough money should periodically circulate, to pay for the periodically circulating amount of commodities that he offers for sale. But since the value of his commodities includes surplus value (profit (interest, rent)), hence he has given out less money in order to buy the elements of the commodity, it means that so much money is (periodically) in circulation as to enable him periodically to withdraw from circulation more money than he has thrown in. This solution of the QUESTION, generalised, is therefore nothing more than a repetition of the QUESTION itself.


The fact that the capitalist receives back more value than he gives out is not what constitutes the question. For this would be the question of the origin of surplus value, which we have already solved. Therefore, what is at stake here is the question of how this surplus value is realised in circulation. In the first act of capital, M—C, it buys commodities to which, as shown above, surplus value is added in the production process, i.e. value the capitalist has not paid for but which he can sell. In the second process, C—M, in contrast, in the sale of the reproduced commodities, the capitalist in fact throws into circulation more value than he has withdrawn from it in M—C. The only requirement for the realisation of this higher value is that it should find an equivalent in circulation. We have discussed how this happens, in investigating the way in which, in the total reproduction process, the use values and values of the different capitals replace, pay for, and realise each other.[22] Hence this too is not the problem. In explaining that process we made abstraction from the circulation of money, or we considered money only as the expression of value, as money of account. The question was therefore then posed in this way: Assuming the product is sold, how is it replaced? Or, on the other hand, who buys it, who possesses the values needed to replace it? The question is now related to the money with which the purchase is conducted. Capital’s extraction from the circulation process of a greater commodity value than it originally threw in is explained by the fact that it throws in the surplus in one form, before it extracts it in the other form. And the way it throws in the surplus in advance in the other form has been explained.

[XVII-1049] But the question here is: How is the surplus realised in money? How does the surplus value assume the form of a surplus of money? The money the capitalist lays out at the beginning of the process does not enter into the production process. The capitalist rather gives it away entirely. The fact that he has given it away is a condition for the initiation of the actual production process. Hence whatever increase of value occurs in the production process, the value which was originally represented by money increases, but this increase of value changes absolutely nothing in the quantity of money. It itself is present in circulation in the same quantity, before and after the production process. It has changed hands. If now through the circuit of reproduction it flows back into the hands of the capitalist, how should it flow back in increased quantity? Let us say the total productive capital= 1,000, and there were commodities of that amount in the hands of the MERCHANT. WELL. The commodities are now partly present in the productive process, and are partly being consumed by the workers. The £1,000, in contrast, is now in the hands of the MERCHANT. Once the production process has ended, commodities to the value of 1,100 ought to be found in the hands of the productive capitalist. How is the MERCHANT to buy commodities to the value of £1,100 with £1,000? It is of no assistance to shift the question from one foot to the other and to say: the MERCHANT sells the commodities to the consumers for £1,100. Who are the consumers? The industrial consumers and the individual consumers. Industrial consumers are the capitalist himself and the workers. But they only buy back when the £1,000 has been converted into 1,100. Individual consumers—profit (interest, rent) and RETAINERS. But this profit and its branches—interest, rent and the salaries of the unproductive workers—have first to be realised. They are contained precisely in the £100. One

So BROADLY PUT, the question answers itself. In the form in which the problem is posed, money is only considered in circulation, excluded from the production process. //We disregard here credit money, in which circulation itself functions as the workshop for the production of money.// And it is excluded, as money. But not as commodity. As the latter, it emerges itself from the production process. And the money (gold, silver) is at first a commodity— before it runs its course in circulation as money. Let us transfer gold and silver production from the gold and silver lands to the home country itself, so that the entry of foreign trade does not bring in superfluous incidental details in advance. To WORK A GOLD OR SILVER MINE, the capitalist has to lay out constant and variable capital, as in every other branch of industry. But his constant capital consists only of fixed capital and matières instrumentales[23] Living labour forms a large proportion of the total outlay. Let us assume that when he lays out £100 in money, he gains £130. This £30 then forms the surplus value. ////(Profit and rent) The production of gold and silver is distinguished from all other branches of production by the fact that here, rather than comparing the value of the product with the value of the outlay, we must compare the money value of the outlay, the EXPENSES MONETARILY EXPRESSED, with the total amount of the product. The outlay, £100,=A CERTAIN MASS OF GOLD. Its price of £100 is merely the expression in the language of money of account of the fact that the outlay=a certain quantity of gold. Hence if the product is 130, i.e. if it contains 3/10 more gold than the outlay, the profit=30%. The rate of profit (which here includes rent) is determined purely by the excess of the use value obtained (gold) over the outlay (similarly in gold), expressed in the same use value, gold. And this is entirely independent of the value of the gold. An equalisation of the profit can here only take place to the extent that if the rate of profit=10% and the excess of gold=30, this 30 may be split up into rent and profit. On the other hand, the outlay itself depends, to be sure, on the value of the gold, hence on the productivity of the labour employed in the production of gold and silver—a productivity which is determined by the natural level of yield of the mine, if the mode of production is given, and which depends on the mode of production if the natural level of yield is given. If the value of gold and silver stands high, because the mines yield little //We want to leave aside the mode of production here, although it is important for SURPLUS value, as in every other TRADE; the capitalist [XVII-1050] can extract more surplus labour if he employs division of labour, machinery, etc.// and therefore a large quantity of labour provides a meagre result, £20 may perhaps buy as much labour (i.e. means of subsistence for the workers), instruments and matières instrumentales as in another situation 100. If, therefore, £100 is invested and yields a SURPLUS PRODUCE of only £3, the rate of profit will admittedly only be 3%. But as much can be bought with this £ 3 as with £30 in the other case.////

Or the surplus labour is expressed in £30. Let us assume that the capital consists of 40 constant capital and 60 variable capital, i.e. £60 laid out in wages. In this case the £100 thrown into circulation comes out of the production process itself as gold and silver to the value of £130. The whole of the capital does not need first to be converted into gold or silver by the circulation process, but is converted into gold or silver in natura. The first metamorphosis here is not the conversion of the commodity into gold or silver (money) but inversely the conversion of gold and silver into commodity. Gold and silver are only realised as commodities and converted into money through their exchange with other commodities. Our gold producer would d’abord have had to pay out 6/13 of his product to the workers. The REFLUX of this 6/13 or £60 would not take place with him. The workers buy from the SHOPKEEPER with it, but the SHOPKEEPER does not have to buy from the gold producer with the £60, which is gold. He rather expends £60 in order to buy commodities from the capitalist who produces means of subsistence. The £60 therefore flows towards the latter. (The profit of the SHOPKEEPER continues to consist in his receiving from the capitalist for the £60 a commodity value of say £66 (10%). Whereas he himself naturally only gives out commodities to the value of £60 for the £60.) And the £30 is reconverted by the gold producer into machinery, matières instrumentales, etc.; they therefore flow to the machine manufacturer, coal producer, etc. Finally, profit and rent of £30 is in part consumed, whether in means of subsistence and luxuries or by being handed to unproductive workers (the state, servants, etc.); and a part of it is destined for accumulation, therefore thrown onto the loan market. As long as it is not loaned out, it lies idle as a hoard. Once it is loaned out, it is itself again laid out in constant capital and variable capital and thus thrown into circulation. The gold which the gold producer has thus thrown into circulation flows back to him from circulation only in the form of the commodity; it returns to him (with surplus) out of his own sphere of production as gold and silver. Thus the £130 of new gold flow as money into circulation, partly in exchange for means of subsistence, it may be for the workers, it may be for the other classes, partly in exchange for machinery and matières instrumentales. This commodity, unlike all others, does not have to be converted into money, but becomes money through its conversion into a commodity; it therefore performs the opposite movement to that performed by the other commodities. If on the one hand a SURPLUS of commodity values is thrown into circulation, on the other hand a surplus of gold is thrown in. This is on the assumption that there exists a circulation adequate to begin the new cycle of the reproduction process. On the same assumption, all that needs to be circulated anew, is surplus value. From the other angle, the angle of gold production, it is not only the surplus (the £30), which is thrown into circulation but the whole product (with the exception of the accumulated gold, as long as it lies idle). Thus on the above assumption,[24] if e.g. the capital consists of 1,000 and the profit of 100 (the total SURPLUS VALUE), all that needs to be thrown into circulation is gold for £100. Thus a capital of 71 5/13 would suffice for gold production. For the product equals 100. (Profit 28 8/13.) Relatively little capital suffices here because it is not the surplus of this capital but capital and profit—the total product in which it is reproduced—which is expended in paying for that surplus of commodity values.

The whole of the portion of annual production which is exchanged for gold or silver (this is how the matter presents itself when gold and silver are not produced within the country) or directly employed in the production of gold and silver, 1) represents more gold or silver than is expended to produce it; it represents SURPLUS value directly in gold or silver, as a surplus of gold and silver; 2) reproduces in gold or silver the whole of the capital laid out. This gold (let us leave out silver to simplify matters), in so far as it enters as a material into gold and silver manufacturing, is as we have seen[25] also a form of hoardformation, which we are not concerned with here. It replaces the constant capital of the jeweller, GOLDSMITH, watchmaker, etc. Another part enters the CURRENCY, whether to replace worn out, [XVI I-1051] abraded coins, or because the realisation of the commodity values requires a greater QUANTITY OF CURRENCY. A third part becomes a hoard, and in this form it is either a mere hoard (capital lying idle) or a reserve fund for means of payment and purchase, or, finally, for the settlement of international balances, or a means of purchase abroad. As BULLION, gold can only serve as means of payment on the world market; within the country it must be converted into actual coin or at least transferred into money of account.

According to our assumption, gold production takes place within the country.

The gold producer has to exchange his product 1) for variable capital by means of the wage paid to the workers; 2) for constant capital, for machinery and matières instrumentales; 3) for means of subsistence, etc., in which PROFIT (RENT INCLUDED) ISSPENDED [expended]; 4) a part of the profit is accumulated. If this accumulation is not to be mere HOARDING, it must in turn be laid out as variable and constant capital.

Let us start from 4); the part of the newly produced gold which is accumulated as profit. It must either BE HOARDED, if there is no direct employment for it, or, if there is employment for it, it replaces constant and variable capital. If the latter takes place, the gold producer may either invest it in his own business or loan it out as interest-bearing capital. As far as the first is concerned, the gold producer has it in common with all other producers whose SURPLUS is realised in money that it is initially a hoard which lies idle, latent money capital. As such it lies with the banker, and waits for its conversion into productive capital. The sole difference is that in the one case it can exist in the form of tokens of value (government stocks) or as banknotes or some other form of credit money, but here it exists itself as value, i.e. money. The second case is as follows: He accumulates, i.e. capitalises the profit existing as a SURPLUS of gold. This happens either through his investing it in his own business or loaning it out.

Let us assume that he invests it in his own business. Then, in this particular case, his accumulation will be different from that of the other capitalists. The other capitalists can only employ their own product again as a condition of production if it really enters as a condition of production into their own product. E.g. coal enters into coal production, machines enter into machine production, metal enters into metal production, corn enters into corn production. But they can never do more than reproduce it in natura as constant capital. One might refer to the producers of means of subsistence which can be stored; e.g. living cattle, corn, clothes, etc., are variable capital which is accumulated in natura. But cattle-breeders, FARMERS, CLOTHIERS, etc., must all first sell cattle, corn, clothes before they can pay the workers with them. The wage must be paid in money. They indeed accumulate, TO A CERTAIN DEGREE (no one produces means of subsistence to pile them up; the capitalist produces at most the excess quantity he THINKS TO BE ABLE TO SELL WITHIN THE YEAR, basing his calculations on THE GENERAL OVERPRODUCTION AS COMPARED WITH THE YEAR PAST), variable capital FOR THE SOCIETY, but not directly for themselves. Apart from this, every particular branch of production produces ONLY ONE ITEM OF THE VARIABLE CAPITAL, AND CAN ONLY BY ITS CONVERSION INTO MONEY BE RECONVERTED INTO ALL THE INGREDIENTS OF VARIABLE CAPITAL. The gold producer, in contrast, can never reproduce in natura any part of his constant capital. Gold is neither instrument, nor matière instrumentale for the production of gold. It does not enter into the production of gold in natura. But the gold producer, unlike the other producers, can directly reproduce his variable capital, i.e. the variable capital in its direct form, gold paid to the workers as wages. For the worker to be able to realise this gold there must admittedly be the commodities on the market into which, as means of subsistence, he sinks his wages. (For society it is variable capital which the producers of variable capital can accumulate, i.e. a commodity; but not this commodity in the form in which it serves them themselves directly as variable capital. Conditions of production and commodities which belong to the consumption fund of society can BE ACCUMULATED, the former TO A GREATER, THE LATTER TO A SMALLER DEGREE.) This gold paid to the workers would go directly into circulation. The more workers were employed, the more gold could circulate, and more gold would have to circulate, SINCE THE WORKMEN ARE TO BE PAID CONTEMPORANEOUSLY AT A GIVEN PERIOD. Bu there A DIFFERENCE comes in. What he has to advance for CIRCULATION is the weekly MONETARY EXPRESSION OF THE NEW VARIABLE CAPITAL HE IS TO DISPENSE DURING THE YEAR. What he must pay is THAT MONETARY EXPRESSION OF ONE WEEK x52. The matter proceeds in this way. He employs e.g. 10 more workers a year, SAY=£520. THIS IS £1 WEEKLY per worker or £10 for 10 workers. [XVII-1052] But he has to lay out this £10 every week, since the outlay flows back to him not as money but as commodity. The épicier receives the £10, buys a commodity from the manufacturer for it. If the circulation was previously 100—I mean this circulation between the manufacturer, épicier and WORKMEN—it is now 110. The manufacturer continues to receive the £100 he EXPENDS FOR HIS OWN WORKMEN, REPLACED BY THE épicier; he receives further, replaced by him, the £10 the gold producer SPENDS for his WORKMEN. The épicier makes his profit on the £10 as on the 100. He sells the workers for £10 commodities of the value of £10, but they only cost him £10/11 or 18 2/11S., if his profit on 100=10% (it is however much less on account of the turnover of the capital). The épicier therefore pays the manufacturer 110 the first week. But the manufacturer only pays his workers 100. Hence the £10 the gold producer threw into circulation does not flow back into this circulation between worker and épicier. But the épicier must now buy £110 worth a week from the manufacturer. Every week he receives from the workers who produce gold this addition of £10 for circulation. Nevertheless only £110 circulates every week. Therefore, out of the £520 the gold producer has laid out in additional labour during the year, no more than £10 enters into the circulation between the manufacturer and the SHOPKEEPER. The basic sum of 510 is money which has replaced the capital of the manufacturer, i.e. commodities to this amount, in which capital and profit are both included. Assume that the SHOPKEEPER, who has to buy 1/11 more from the manufacturer, bought in the 2nd week £110 worth, before he received the £10 from the gold producer’s workers, that he therefore advanced the £10 from his own capital. Thus the manufacturer lays aside £10 (within this circulation), since he only has to pay 100 to his own workers. In the 2nd week, the épicier receives £110, 100 from the manufacturer’s workers, 10 from the gold producer’s workers. But he already possesses commodities for £110 (deducting what he keeps for himself). To the manufacturer’s workers he gives £100 in commodities, and to the gold producer’s workers he gives £10. He therefore once again has £110.

The only difference is this: If the épicier has advanced the £10, so when the cycle is broken off he retains the £10 which flow to him from the gold producer’s workers. If he paid the money from his receipts from the gold producer’s workers, he has to hand over the £10 to the manufacturer.

In any case, £520 worth of the manufacturer’s commodities are converted into money. The manufacturer pays the wage IN FACT only for the first week in money. Later he always pays it in commodities. For the money form of his commodities flows back to him from the 2nd week onwards from the épicier. Every week the gold producer pays in gold. But this gold does not enter into this circulation, or only in his exchange with his workers. It only serves once as the workers’ means of payment, and is then converted in the hands of the manufacturer into THE MONETARY EXPRESSION OF THAT PART OF HIS CAPITAL WHICH DOES NOT in natura ENTER INTO THE CONSUMPTION OF HIS WORKMEN. I.e. it is converted into the MONETARY EXPRESSION (AS FAR AS IT GOES) OF THAT PART OF ITS PRODUCT WHICH REPRESENTS HIS CONSTANT CAPITAL AND HIS PROFIT. 1/52 of the variable capital of the gold producer enters into the circulating money capital of the SHOPKEEPER, and therefore functions as CURRENCY between the sHOp[keeper], the manufacturer and the WORKMEN, 51/52. on the other hand, becomes the expression of the constant capital and profit of the manufacturer. (Here we disregard the PROFIT of the SHOPKEEPER, which receives its MONETARY EXPRESSION in the 51/52.)

Let us assume that the capital the manufacturer has laid out is £700. Then the gold manufacturer’s 10 workers replace £520 for him. The £100 of “circulation” his workers cost him are to be found in the circuit between him and the SHOpfkeeper]. Therefore he only has to turn into money a commodity value of £170 [XVII-1053] in order to realise the whole of his capital, CAPITAL and profit. Since his constant capital=600, he replaces, with this 520, 600—520, the whole of his constant capital except £80. If the profit=10%, he therefore has to replace a further £80 for constant capital and £70 for profit,=£150. His constant capital amounts to variable capital+profit for the producer of constant capital. If wages again form 1/7, the variable capital amounts to 74 2/7. And profit=445 5/7- If the whole of this is given out, £520 flows back to him for commodities, since he provides the means of subsistence. And he only has to sell an additional £150 worth of commodities.

This much is clear d’abord,[26] that even the part of the gold producer’s capital that he lays out in wages does not remain in circulation as COIN, but adds at most the MONETARY EXPRESSION OF ONE WEEK’S WAGES to this circulation. He pays this part as wages. This is the way in which he throws this part into circulation. But it does not remain in circulation for the payment of the wage. It is converted instead into the money capital of the productive capitalist. If, as a result of an increase in the production of gold (we do not mean a rise in the productivity of the mines, etc., but a growth in the labour and capital invested in gold production), the manufacturer increased his own production, hence e.g. in the above case[27] employed 10 more workers (an incorrect proportion: if the gold producer employs 10 more workers the manufacturer will employ at most one more) the process would be as follows: he had to pay £100 in wages to 100 workers, and now he has to pay 110 for 110 workers. But on our assumption the SHOPKEEPER receives £10 a week from the workers of the gold producer. This would be the calculation, assuming that the production of the manufacturer provided enough commodities for 10 workers in addition to his own.

1st week. SHOPKEEPER receives £10 from gold producer’s workers. 100 from manufacturer’s workers. Buys for £110 from the manufacturer. Buys with this from the manufacturer commodities to the value of £110. Manufacturer pays £100 of this to his workers, uses the £10 in some other way. Only £100 flows to the épicier from the manufacturer’s workers, but 10 flows from the gold producer’s workers. The first £100 circulates constantly within this sphere. The last £10 is constantly thrown afresh into this circulation every week, but does not return to it.

2nd week. Assume that the manufacturer increases his production by 10 workers as a result of new demand from the gold producer. He therefore pays a wage of £110. The SHOPKEEPER now sells for £110 to the manufacturer’s workers, for 10 to the gold producer’s workers. He buys for £120 from the manufacturer. But the manufacturer only needs £110 for wages. £10 therefore flows back. Therefore if he increases his own variable capital as a result of an increase in gold production, he only increases—quoad circulation—the weekly expression of his addition to variable capital. The gold of the gold producer which flows to him afresh every week—BEYOND THIS POINT—does not flow back to this section of circulation.

Let us now take the part of the profit which the gold producer expends as INCOME. Apart from particular expenditures, he will sometimes buy commodities of greater value, sometimes of smaller. For example, some furniture, jewels, etc., horses, carriages, etc., may have a high price, so that much gold must be expended at one time in the sale. But we can take an average. For 10 weeks he throws into circulation perhaps £10, while for 2 weeks 100 each time. If that is right, he would have thrown into circulation in the 12 weeks gold to the value of £1,200. That makes £100 a week. Over the year he throws £1,200 in gold into circulation. But we can calculate the quantity, which remains constant in this circulation between him, his SHOPKEEPER and the MANUFACTURER and FARMER, as ABOUT £100. The remainder, £1,100, goes into the pockets of the manufacturer and FARMER (in part into the SHOPKEEPER’S pockets), in order to serve in another sector of circulation, or it lies there as latent capital. If production is increased in this way, the WEEKLY MONETARY EXPRESSION OF THE WAGES OF THE ADDITIONAL LABOURERS must be added to this. The greater part of this gold is however withdrawn both from the circulation between SHOPKEEPER, WORKMEN and MANUFACTURER, and from the circulation between SHOPKEEPER, MANUFACTURER AND GOLD-PRODUCING [XVII-1054] capitalist.

The 3rd part of his product, finally, is exchanged for constant capital, where it again pays for wages (variable capital) and constant capital. Speaking of the former, what we said previously applies. Most of it is withdrawn from the sphere of circulation, into which it is thrown, and does not return there. Let us assume it is £110, and £10 of this represents the profit of the producer of the constant capital. Let 1/5 of his outgoings of £100=labour,[28] hence £20. This £20 does not return to circulation (or only a small part of it for an increased outlay in labour). The £20 replaces 1/4 of the constant capital in money, SINCE 80/4=20. 70 remains to be replaced profit included. But the circulation which occurs within the sphere of circulation of the exchange of the constant capital is sufficient to realise the £80. Of the 20 paid for the variable capital, a half—10—is sufficient for the realisation of the profit. Of the £100 the producer of the constant capital receives 90 is therefore superfluous for his circulation. (Or at least most of the 90, if he expands his business as a result of the demand from the gold producer.) What now happens to this £90? To the producer of the constant capital it represents not an equivalent for profit but an equivalent for capital. He receives back more of the equivalent for his capital in money, an excess quantity in money, which he needs in the natural form of his capital as RETURN.

Let the whole of the annual productive capital consist of 6 million, i.e. let this be the magnitude of the part of the capital which comes onto the market as a commodity and which therefore includes the annual depreciation of the constant capital. Assume that the variable part of this capital=1/6=1 million. Then all that needs to be circulated for this in money is 1million/52 =19,230. This 19,230 in fact circulates 52 times its own value in commodities. There therefore remain to be realised 5 million+19,230. Assume further that the profit (rent included)=30%, hence 1,800,000 on the 6 million. Assume that this profit is completely consumed. If the capitalists, like the workers, were to spend their income roughly immediately in equal weekly portions, this would require 34,615 5/13 a week. However, on account of the larger occasional and periodic purchases let us say 100,000. Then we have ABOUT 119,230 for CURRENCY. For the CURRENCY which is expended as profit. This sum replaces not only the profit of the producers of the means of subsistence, but their variable capital; it replaces not only the profit of the producers of constant capital but at the same time their variable capital. Let us assume that the proportion of variable to constant capital is in general 1:5. This proportion is not displayed exactly in the division of the 6 million, because it is merely the depreciation of the fixed capital which enters into it, not the fixed capital itself. According to our previous calculation, 2,800,000 of this consists of means of subsistence (1 million for replacement of the total variable capital of the society, and 1,800,000 for the profit on the total capital) and this is circulated on our first calculation by £108,334. Since these commodities of 2,800,000 are the product of the capitalists who produce the means of subsistence, their total product=£2,800,000. This includes their capital advanced+a profit of 20%. Hence 1/6 of this amount consists of their profit, and the remainder consists of capital advanced. Out of the £2,800,000, therefore, 466,666 4/6 is profit and 2,333,334 is capital advanced. The profit these producers consume in their own reciprocal commodities, or rather this reciprocal consumption of their profit in their reciprocal commodities, may occur in three ways. They may buy simultaneously or on credit from each other. In both cases, there is at most a balance to be paid, now from one, now from another. Or one may buy today from the other in CASH, the other tomorrow in CASH from the former. In this CASE—the most unfavourable case for the reduction of the CASH present in CURRENCY—there takes place at all events a REFLUX movement of money and through this REFLUX movement a circulation of money. Here a definite sum of money circulates, and pays many times over in the same hands for different portions of commodity value. Let us say it passes through each pair of hands 10 times. Thus only 1/10 is needed of the amount that would otherwise be necessary to circulate the above profit. Assume that the profit of 466,333 referred to =1/4 of the 1,800,000, of which it forms an aliquot PART. (It is more than 1/4.) Then, if a circulation of £100,000 is required for £1,800,000, £25,000 is required for 1/4 of that. But this 25,000 should be reduced to a tenth of that amount. There therefore remain 75,000+2,500, or £77,500, for the total circulation present in profit. Furthermore, if the proportion of variable to constant capital in [XVII-1055] this sphere of production =1:5, the capital of 2,333,334 will be divided into 1/5 variable capital and 4/5 constant. The variable=466,666 4/5, say 466,667, and the constant= 1,866,667. £8,974 is required for the circulation of the variable capital, and this is already calculated in the circulation of the total variable capital. There remain £1,866,667, with which the producers of the means of subsistence pay for their constant capital, and with which the workers and capitalists employed in the manufacture of the constant capital replace their variable capital and realise their profit, in short expend wages and profit.

After deduction of the 2,333,334 which are employed in the production of the means of subsistence there remain 3,666,666 of the capital of 6 million. £533,333 of this is variable capital (since variable capital is 1 million altogether and 466,667 falls to the workers in sphere I, that of the production of the means of subsistence). There remains a constant capital of 3,133,333. This amount, with which the capitalists of sphere II realise their profits and their variable capital, is sufficient to allow class I to replace its constant capital. £2,500 for profit and £8,974 for wages is sufficient for class I (for the circulation within it). So there remains for circulation between class I and class II, etc.[29]

The calculation SOMEWHAT ELSE to TURN.

//We had a capital of 6 million. 20% profit= 1,800,000. Hence the value of all the commodities in circulation=7,800,000. If 2,800,000 consist of means of subsistence, a constant capital of 5,000,000 remains over. (The proportion is greater here because only the part of the constant capital which enters as depreciation into the commodity enters into the value of the annually circulating commodity.)//

Hence I) £2,800,000. Sphere of the capital employed in the production of the means of subsistence.

Out of these commodities of the value of £2,800,000 20% represent profit—ABOUT 466,667—and the remainder, capital= 2,333,333. 388,888 of this capital is variable capital. There remains a constant capital of 1,944,445.[30]

There circulates within this sphere for the variable capital 388,888/52 of which the weekly MONETARY expression=ABOUT 7,477 (7,476 36/52 to be precise). And there circulates for the profit, which is on our assumption entirely consumed, say for all expenditure of income (which is not wages), 1/10 of the total amount, which would be ABOUT 46,667. But since the consumers of the profit are reciprocally dealers in the commodities they consume, a REFLUX takes place here. The butcher buys from the baker, and with the same money the baker buys from the butcher and the butcher again from the baker. Through the REFLUX movement, therefore, the same sum of money passes through the same hands. Say this turnover takes place 10 times on the average. Then only 1/10 of the previous amount is required to turn the profit into money. There therefore remains about £4,666, whereby we have not made any attempt to calculate how much of his own commodities the SHOPKEEPER, etc., gobbles up.

In this sphere, therefore, what is required for circulation within it is £7,477 for wages and £4,666 for profit. Taken together=£12,143 in money.

The remaining £1,944,445 worth of commodities of class I are sold to class II, the manufacturers of constant capital.

So now to class II. Its capital, with profit,=a commodity value of £50,000,000. Of this, profit=somewhat more than 833,333. Out of the 5 million, the 1,944,445 replace the part of the product which consists of wages and profit; wages thus=1,111,112 . In order to pay these wages 1,111,112/52 is needed, =£21,367. And to pay the profit say 1/10 of the amount is needed, hence 83,333. Thus the total amount of money that has to circulate [XVII1056] = 83,333+£21,367=£104,700. With this £104,700 the capitalists and workers of class II buy their means of subsistence from class I, and class I buys the replacement of its constant capital in natura from class II. A REFLUX takes place. Class II buys e.g. means of subsistence from class I for £100; class I uses the same £100 to buy constant capital from class II. It is like a wagon which travels backwards and forwards, first taking A’s load to B and then on the return journey taking B’s freight to A. With this money, therefore, a commodity value not of £1,944,445 is realised, but one of 2x£1,944,445=£3,888,890. The same amount of money realises the constant capital of I, and the variable capital and profit of class II. There therefore remains of the 5 million of class II:

III) £5 million-£1,944,445=£3,055,555. Let us assume that only 1/10 of this is replaced in natura, which as regards agriculture is much too little. This part does not enter into circulation at all, and does not need to be turned into gold. ABOUT 305,555 should be deducted from the amount to be realised. There remain: £2,750,000 worth of commodities. This 2nd circulation in class II is a mere reciprocal TRANSFER of capital, an exchange mediated through money. The iron producer buys coal from the coal producer, the latter in turn buys machines from the machinebuilder, he in turn buys iron from the iron producer, etc. The money here will for the most part circulate as means of payment and only balances will be paid in money. But even if it circulates itself, at most 1/20 is required. 2,750,000/20=137,500.

What is required altogether, therefore, to realise the capital of 6 million as well as a profit of 1,800,000 (wrong again, should be 1,200,000, for this is 1/5 of 6 million or 20%, BUT NEVER MIND), to realise commodities of the value of 6 million plus profit of 1,200,000, or £7,200,000 worth, is the following:

£12,143 circulating in class I;

£104,700 between class I and class II;

£137,500 in class II. Makes together: £254,343 in money.

Sum total: 254,343.

We have assumed in this connection that out of the capital of 6 million, variable capital=388,888+1,111,112= 1,500,000, hence the variable capital = 1/4 of the capital advanced. This is somewhat more than 1/6 of the capital advanced in wages. The adjustment of balances and credit, etc., has not been brought into the calculation. Hence if the gold producer only provided enough gold to realise 1/6 of the capital laid out in wages, or, what is the same thing, if enough of the commodity was exported to return gold from the mining countries, etc., this would be sufficient to provide the whole CURRENCY. And once this had been imported, it would be enough (deducting wear and tear on the money) as long as the mode of production remained the same.

What is in general needed to enable the capitalist to withdraw more money from circulation than he throws into it is nothing more than this: enough money must circulate in order to convert into money the commodity values which are circulating. It is not yet necessary for this purpose that 1/6 of the capital should be available as money; this is the annual amount of money which has to be paid out in wages alone. The amount which is needed, however, is provided by the part of capital which is exchanged directly for gold, i.e. the commodities which are sold to the producers of gold and silver, and bring back BULLION in RETURN. But a part of the capital is accumulated as hoard, under its various aspects. Thus one part always lies idle. Assume that the capital which circulates annually in commodities=£110. And 1/10 is required to convert it into gold, hence £10. If then £10 worth of commodities are exported and exchanged for gold, this is divided up among the whole class which produces the £110 worth of commodities.

[XVII-1057] Just as the producers of the means of consumption replace the variable capital and the part of the production of all classes expended as income, so these gold importing elements (THE SAME AS GOLD PRODUCING PART) of the COMMUNITY replace the money needed for the circulation of the whole of the capital.

After what we have developed so far, the following two points should first be made:

Firstly: The turnovers of the same amount of money effected by the REFLUX are always accompanied by turnovers of the same monetary individuals, while the number of different turnovers performed by the same monetary individuals by no means includes the REFLUX. E.g. £100 from the SHOPKEEPER to the manufacturer, from the manufacturer to the worker, from the worker back to the SHOPKEEPER. Here the same money makes 3 turnovers. At any rate 2, from the manufacturer to the workers, from the workers to the SHOPKEEPER. In addition to this, the REFLUX includes the repetition of this cycle, for the same amount of money, whether this consists of the same identical pieces of money or not. A piece of money, on the other hand, may turn over 10 times in one day without expressing a REFLUX. I buy a commodity for 5s., the SHOPKEEPER gives the 5s. to another buyer in the change for £1 , who in turn pays a worker with it, the worker makes a purchase with it, etc. The mere rapidity of turnover of the same piece of money—mostly in inverse proportion to its magnitude—is different from the rapidity with which the cycle passes through its phases and is repeated.

Secondly. Where money as coin appears in C—M—C in the first conception, i.e. the conversion of the commodity into means of subsistence for its producer or owner, it only functions, first as paid out wages, W—M—C; second where profit, interest, rent, etc. (also the wages of the unproductive) are spent as income. For here the M that they expend represents the exchange value form of a sold commodity, to be subsequently resolved into means of subsistence. C—M—C. The fact that the money expended in this way simultaneously replaces a capital (capital+profit) does not alter the situation at all. On the other hand, all other functions in which money appears in circulation are always forms in which it constitutes a phase of capitalist reproduction, which either does not proceed as far as RETAIL at all (as the EXCHANGE OF CONSTANT CAPITAL for CONSTANT CAPITAL), or is, at least, a PREVIOUS PROCESS. As long as it circulates in this way it is money capital. For the RETAILER, the income taken from the other is admittedly also money capital. But this is not reciprocal. Here the money does not derive from the metamorphosis of capital as such, but from incomes which have arisen from it and become separated off.

We have examined the cycle performed by the same amount of money between SHOPKEEPER, manufacturer and worker; which is IN FACT—if we leave aside the mediating SHOPKEEPER—the circulation of the same amount of money between manufacturer and worker. The manufacturer buys with the same money labour[31] which is always new, and the worker buys with the same money commodities that are always new. The manufacturer (if we leave aside the sHOpfkeeper]) originally throws this money into circulation. He must therefore have originally received it from circulation; but from the circulation with the gold producer. Or this process took place earlier and he possesses this money as a part of his capital accumulated in money form, just as he possesses another part in machinery. If the weekly value of his commodity=£600 (including £100 of profit, or 20% [of the capital advanced]) and the wage to be paid every week=£100, he must sell 1/6 of his commodity to the gold producer. He then has once and for all the £100 he needs for the weekly payment of the wage. Suppose that the whole of his capital is 1,500, of which 1,000 is fixed capital, 398 a week matière brute et instrumentale,[32] 100 a week wages. Suppose the fixed capital is used up over a cycle of 10 years. Then he needs £100 a year for depreciation. And £2 a week (we shall reckon 50 weeks of labour a year). He therefore has a depreciation of £2 a week. 398 matière brute and instrumentale and 100 wages=an advance of £500, on which there is 20[%] profit=100. He perhaps has to replace the depreciation of £100 only once in the year (probably less often). The first week he takes in £600, of which 100 are not exchanged for commodities but for money. He has therefore converted the whole of his profit into money. Or he brought £100 more, apart from the WORKING CAPITAL. (This is IN FACT advanced by the SHOPKEEPER ) Or he can consume none of his profit in the first week. For he possesses 1/6 of the commodity in gold, his workers consume 1/6, and 4/6 replace his constant capital. In the next week he does not need to buy gold from the gold producer with any part of his commodity in order to be able to pay the wages. But in the 1ST WEEK he needs a part of his capital twice over. Firstly in the form of the commodity, the 1/6 that the workers will consume, secondly in the form of gold, so as to enable the workers [XVII-1058] to buy their 1/6 from him. During this week, therefore, he must have currency in reserve for his own consumption, money which does not flow to him from the business but which he has inherited, etc., or he must live by borrowing, which is likely if he starts his production with £500.

In the 2nd week he does not need to possess 1/6 of his commodity in dual form as commodity and as money; for the £100 of wages flow back to him from the worker in payment for the commodity.

Hence in order to maintain this circulation between himself and the worker in existence he only needs to buy gold from the gold producer with 1/6 of the product of a week.

There is always the question of who first throws into circulation the part of the money present therein. The answer is: it is always the capitalist, whether he be producer or MERCHANT; never the worker or the recipient of interest or rent. He who loans out at interest throws capital into circulation, i.e. TRANSFERS IT TO THE PRODUCTIVE CAPITALIST; but it is the latter who first throws it really into circulation.

The recipient of rent receives his money in part from the FARMING CAPITALIST, in part from the INDUSTRIAL CAPITALIST (who WORKS MINES, etc., and for buildings) (and the rent of houses); further, he receives it from the worker. (Part of the rent of land, and the rent of his house.) In so far as rent is provided in currency by the workers, this part of its MONETARY EXPRESSION (just as with the SHOPKEEPER who sells means of subsistence to the workers) is drawn from the circulation between capitalist and workers, hence contained in the CURRENCY which circulates for wages. Admittedly this part does not flow back as quickly (if the manufacturer is not himself the LANDLORD or the FARMER, which is very often the CASE) as the part of the wages given out for the means of subsistence. Yet this latter CASE is a peculiar one. The same money which the MANUFACTURER or FARMER here gives out as a wage realises for him the rent he takes as LANDLORD, or the rental he takes as a letter of houses, leaving aside the fact that it replaces for him the depreciation of his commodities. The worker receives the value, namely the house, which he rents by the week. But a part of this value can be reduced to house- and ground-rent. And what the manufacturer pays as manufacturer simultaneously turns into money for him his revenue as LANDLORD and house-letting capitalist. He himself has advanced the CURRENCY for this in the purchase of labour.[33] But the worker pays back to him ground- and house-rent.

He makes 2 transactions with the worker. He buys his labour with money, and secondly he sells him housing and receives back for it a part of this money. But the value he sells here to the worker is not entirely paid by him; it contains unpaid labour. By paying this to him, the worker pays him ground- and house-rent. There is therefore no contradiction in the fact that in drawing back the money he himself has thrown into circulation he draws back more money than he threw into circulation, i.e. more money than the paid value he threw in. For all LANDLORDS and houseletters, in so far as their ground- and house-rent is paid by the workers (just as with the taxes), the same money circulates the wage and realises a part of the rent and the interest on capital, hence monetises a part of the surplus value. All that is needed to monetise the whole of this part of surplus value, which can be reduced to the rent and interest on houses[34] paid by the worker, is the CURRENCY necessary for the payment of wages. The same is true of the profit of the SHOPKEEPER who trades with the workers.

The ground-rent of buildings, etc., forms part of the costs of fixed capital. Therefore a part of the CURRENCY which the productive capitalists advance for the fixed capital simultaneously monetises a part of the SURPLUS VALUE, namely the rent of land.

Rent on private houses, etc., forms part of the expenditure through which the capitalist SPENDS HIS PROFITS; the actual rent paid by the FARMER, MINING CAPITALIST, etc., forms a part of the surplus value of their products.

With the money he receives for rent the LANDLORD buys commodities from the manufacturer and FARMER, or he buys them from the SHOPKEEPER, who pays the manufacturer and FARMER with it. Therefore once this part of the CURRENCY exists, it flows back continuously to the productive capitalists, just as the money for wages does, although they must again withdraw it from circulation by means of commodities. But it is enough to enable them to pay the rent in the form of money over and over again, in order to receive the money back for commodities. But more flows back to them, namely the part of the rent which the workers pay to the LANDLORD as rent of their houses or the part the MANUFACTURER has paid as rent for buildings. Therefore the CURRENCY which monetises the rent is sufficient not only to pay it over and over again, but to pay the part of the wage which is resolved into rent, and the part of the costs of fixed capital which is resolved into rent. But it is only the part of the rent which does not always flow [from] wages or fixed capital that necessitates its own circulation of money, A SPECIFIC SUM OF CURRENCY OF ITS OWN.

[XVII-1059] What is true of rent (to the LANDLORD) and interest (to the money-lender) is true of profit itself (* whether interest be paid to another person or not, whether or not, consequently, it be included in the revenue of the producing capitalist), as far as the productive capitalist spends it, and spend it he must, in some part, since he lives upon it.* The money given out in THE SPENDING OF PROFIT, money thrown into circulation, * contributes as well as the money spent in the realisation of rent and interest to provide the monetary means for paying the capitalist.

The monetary expression of rent, interest, profit, as far as they buy commodities for individual consumption,* must flow back to the PRODUCTIVE CAPITALIST as means of purchase or payment just as much as does the MONETARY EXPRESSION OF WAGES. The profit, RENT, INTEREST HAVE BEEN SPENT DURING LAST YEAR; the money given out for them is no longer in the hands of the LANDLORD, rentier, PRODUCER, but in those of the épicier, who pays the WHOLESALE DEALER with it, who in turn pays the PRODUCTIVE CAPITALIST. In the same measure as this money flows back to the SHOPKEEPER, HIS STORE HAS BECOME EMPTIED AND WANTS REFILLING. The money therefore performs in reverse the same course as it performed d’abord in a forward direction. Since it thereby realises the commodity values of the PRODUCTIVE CAPITALIST, the latter is able to pay RENT and interest with the same money and TO EXPEND FOR HIS OWN USE another part of the surplus value.

For the productive capitalist to withdraw from circulation more money than he threw into it nothing more is necessary than that enough money should circulate in order to pay the commodity values. If BARTER were to occur, one would find nothing mysterious in the fact that the capitalist withdraws more commodity value from circulation at the end of the cycle than he threw in in the form of money. For at the end of the cycle he has a greater commodity value to exchange . The origin of the whole PERPLEXED QUESTION is therefore that one does not see where the CURRENCY is to come from, the REAL MONETARY EXPRESSION OF THAT ENHANCED VALUE. WHAT PUZZLES is that more is withdrawn from circulation by the capitalist than is thrown in, which is the more PUZZLING in that he himself—as a class—IN FACT possesses the whole of the monetary wealth (possesses it because he directly owns the whole of the surplus value, whatever he may have to give up of this). But il faut distinguer.[35] As capitalist he throws his capital alone into circulation (i.e. THE MONETARY EXPRESSION OF IT), but as a fellow who has realised profit (or if he has not yet realised any he must possess OTHER MEANS), he throws PART OF THE MONETARY EXPRESSION OF HIS SURPLUS VALUE into circulation, just as THE MONETARY EXPRESSION OF THE OTHER PART OF THAT SURPLUS VALUE—OF RENT AND INTEREST—is CONTINUALLY THROWN INTO CIRCULATION by the LANDLORD and the rentier and lastly the MONETARY EXPRESSION OF WAGES is thrown in BY THE WORKMEN. If a capitalist has thrown into circulation £1,000, i.e. employed it reproductively, and at the same time consumed £200 (sub specie of profit), and if his profit=20%, he has thrown into circulation exactly as much money as is necessary in order to give monetary expression to his commodity,= 1,200, his capital+his surplus value. He has not made a gift to circulation, either with the £1,000 or with the £200 ; he has withdrawn commodity values in return for this money, for the 200 he has withdrawn as much as he threw in, for the 1,000 he has withdrawn 20% more . Nevertheless, he has provided the MONETARY EXPRESSION with which the commodity value of £1,200 can be paid to him, and, if we view the capitalist as one person with the PARTNERS IN THE SURPLUS VALUE ABSORBED BY HIM 11 The Times for November 19, 1862 [p. 9] calls the Lancashire manufacturers “ WEALTH ABSORBERS “ and their workers “WEALTH-WINNERS”*//, he has in fact himself provided the money with which he is paid; but he has provided it IN EXCHANGE FOR COMMODITIES and (AS FAR AS IT IS GOLD, etc.) himself ORIGINALLY RECEIVED it IN EXCHANGE FOR THE LABOUR OF HIS MEN.

The first class of productive capitalists consists of those who produce the means of subsistence in their final form, in the form in which they enter into individual consumption. The value of their annual product consists of two parts: [The first part is) constant capital, which contains the depreciation of the fixed capital, this depreciation entering annually into the product. The other part, which remains unconsumed, has nothing to do with the value of the product (although, in the AVERAGE RATE OF PROFIT, profit and interest on this part of the capital advanced are reckoned just as much as on any other part. But even in this case the fixed capital only enters here as an ANNUITY, depreciation + profit on top, as with the second class of capitalist. We leave out the profit here as we are separating the surplus value). It consists secondly of raw material and matière instrumentale, which in natura in part, and in value every time, entirely enter into the product, because they are entirely consumed in the production process. Secondly: variable capital In the hands of the capitalist this exists as money; once it is realised it exists as labour. For the worker who provides the commodity in which this part of the capital is realised, it exists as WAGES. Finally the 3rd part of the product. Surplus value, which can be resolved into profit (interest) and in part into rent.

The whole of the annual product of this class, in so far as it enters into annual consumption, enters into individual consumption. Here we are leaving accumulation entirely to one side, for the moment, and only examining simple reproduction. A part of this product [XVII-1060] is bought by the workers of this class I, hence paid back with the money which is given them in WAGES by the capitalists. Or the money in which the variable capital of this class is paid out buys back an appropriate part of the value of the product. This money thereby flows back to the productive capitalist. This is not a replacement of the part of the capital

* In a LEADER occasioned by the Manchester DISTRESS,[36] where the Manchester] men went begging to the whole of England FOR “THEIR POOR WORKMEN”, but nervously buttoned up their own purses, and, as Mr. Cobden says, QUITE JUST so. Of course. If alms are given by those who do not directly participate in the exploitation of these particular workers, that is philanthropic. But for the capitalists themselves to be compelled to pay tribute instead of WAGES [XVII-1060] to their own workers once they cease to be able to exploit them, would be “AGAINST THE SOUND PRINCIPLES OF POLITICAL ECONOMY” and “WOULD”, AS The Morning Star INSINUATED, “SMACK OF SOCIALIST PERVERSION”.[37] consumed by the workers; it is however the REFLUX to the productive capitalist of the CURRENCY in which he has paid the workers and with which he buys them afresh. The more or less small part of the surplus value which is consumed in natura in this class does not need any monetary expression, since it is appropriated by the producer in its natural form and does not enter into circulation. As TO THE OTHER PART, the rent, interest, profit, which were paid the previous year (or, if the business is in progress, au fur et à mesure of the reproduction (AS TO THE PRODUCTIVE CAPITALIST)) (or, if the business is begun afresh, from the currency reserve of the productive capitalist), are used to buy back the appropriate part of the value of the total product of class I. In this way the CURRENCY in which the productive capitalist pays rent and interest flows back to him. Not as a replacement for what he has paid; but for the commodities he is selling afresh for the money he himself has provided. It is not a replacement for the interest, rent, etc., paid the previous year, but a REFLUX to productive capital of the CURRENCY in which he has paid the LANDLORD and the rentier and in which he will pay them afresh. He will give them back the same tokens as a claim on the aliquot part owing to them of the commodity SURPLUS, which represents their share in the surplus value of these commodities. Finally, if e.g. capitalist A, a member of this class, which can be divided into an immense number of particular spheres—as numerous as the means of subsistence themselves—buys means of subsistence from B, C, D, E, he thereby enables them to realise in money the aliquot PART, consumed by him, of the product A—the part consumed by the productive capitalist himself. They in turn enable him to realise his own product in money, until everyone has drawn from someone else’s pocket the MONETARY EXPRESSION of the consumed part of his product. Thus the CURRENCY with which each of them has bought, and will buy again, the commodity of the other, flows back to each one. The part of the value of product I which consists of variable capital and surplus value (profit, interest, RENT) is thus entirely realised in money.

But as far the other part of capital I is concerned, constant capital, this must be replaced in natura, reconverted from the form of the FINAL commodity into its elements of production, raw material, machinery, matière instrumentale, etc. (We consider the part of these products which enters again into their own reproduction as a condition of production, such as corn, coal, etc., as belonging to 2 from this point of view. By the way, corn is not directly a means of subsistence, at most flour is. Fruit, eggs, etc., poultry, etc., are though.) Or this part of capital I must be bought by class II. We therefore come now to the circulation of money between these two classes.

Second class. Its product consists similarly of constant capital (raw material, matière instrumentale and depreciation of the fixed capital), variable capital and surplus value, which is in turn divided in the form of profit (interest) and rent. But the product of this class does not enter into individual consumption (one might deduct dwellings, which enter into both individual and productive consumption. But this division is necessary for clarity) (or in so far as it does enter, it is class I, the section of class I whose product is simultaneously an element of variable and of constant capital). Neither the money which represents the variable capital of this class, nor the surplus value which is realised in its product, can BE SPENT IN THE PRODUCE OF THIS CLASS.

In order now to determine the circulation between these 2 classes, we start with the MOST EVIDENT POINT.

Class II pays its variable capital out in money, as does class I, but this money does not flow back directly to the productive capitalist, as was the case under I). The worker buys his means of subsistence from class I. The WHOLE MONETARY EXPRESSION OF THE VARIABLE CAPITAL OF CLASS II therefore flows to the productive capitalists of class I. With it they buy from the productive capitalists of II a product value—i.e. constant capital, raw material, etc.—which is equal to the value of the variable capital of II. By this detour the CURRENCY originally given out by the capitalists of II and needed by them for the payment of wages flows back to them. At the same time they have by this detour sold the part of their product which equals the value of the variable capital to class I, and the latter class has TO THAT AMOUNT RECONVERTED ITS PRODUCE INTO THE ELEMENTARY CONSTITUENTS OF THAT PRODUCE. //This mediation must occur with class I as well, in the case of those who produce means of subsistence which do not enter into the workers’ consumption. Their workers buy from the other capitalists of I and thus provide them with the money with which they in part give monetary expression to interest, rent, profit and use this to buy (as SPENDING of income) from the capitalists of I who do not produce means of subsistence for the workers. They thereby replace for the latter the CURRENCY needed for their variable capital. At the same time this CURRENCY serves for them as the monetary expression of a part of the profit, etc.// //Once banks have developed, the money [XVII-1061] for wages IN FACT returns every week to the productive capitalist, and it is a matter of indifference whether it would otherwise only have returned to him by detour.// In any case we see here how the same sum of money circulates between a productive capitalist and his workers, is then paid out by these workers to another class of productive capitalists, and is laid out by these as capital in the purchase of the commodities of the first productive capitalist and thus returns to him. The purchase of constant capital on the part of class I occurs—since it is a conversion of capital into its elements, not a conversion of income into the means of subsistence—at longer intervals of time and in larger amounts, corresponding to the scale on which production takes place and to the conditions of reproduction of capital in each of the particular spheres of I. The money paid out in wages therefore does not flow back every week to class II, but at greater intervals and in greater quantities, so that one cannot tell at all by looking at this money where it comes from. In agriculture too, by the way, and in certain urban trades, even if wages are paid by the week, a great deal of labour is employed at certain times, hence a lot of wages is paid, while at other periods in the year little is employed and little paid. The reflux therefore does not take place as smoothly as CLOCKWORK. But all that is needed here is to grasp the essential movement. Its further course should first be developed under the credit system[38] ; but to understand this, PREVIOUS KNOWLEDGE OF THIS ESSENTIAL MOVEMENT is necessary. The exchange of the part of the product of class II which represents its surplus value for the constant capital of class I, which exists in means of subsistence, is tangibly demonstrated on the world market, e.g. in the exchange of English CALICOES for cotton, or the exchange of English machinery and yarn for foreign wheat, etc.

Finally, as far as concerns the income which can be utilised in this sphere in the form of profit (interest, rent), its monetised existence of the previous year, etc., is consumed in the last remaining part of the product of class I. There thus flows to class I the money with which it buys back from class II the part of its constant capital which is still missing. The money for its surplus value thus flows back to this class.

In this way the productive capitalists of I and II, apart from the fact that their fund for income is established in the form of money, are [able] to pay interest and rent in money to the lenders of capital and the LANDLORDS, whereupon the whole process begins again. It must be noted here, once more, that a reproduction of capital for class I is a realisation of surplus value in money for class II; and, further, that the way in which the money flows from II to I, precisely because this is in the form of daily expenditure or occasionally (irregularly) more important expenditures—since it is the expenditure of income and therefore corresponds to the needs and whims of individual consumption—must differ from the way and form in which the same sum of money flows back from I to II, since this is a reconversion of capital existing as money into productive capital; and the quantities in which purchases are made here, ditto the intervals [of payment], must correspond to the conditions of production of both capitals.

It is clear that if the capitalist SPENDS £200 IN REVENUE and throws £1,000 into circulation as capital, but withdraws £1,200, he has withdrawn from circulation more money than he threw into it, for as capitalist he has only thrown £1,000 into circulation. He has spent the £200 on means of subsistence of equal value, which have passed into his consumption fund. In short, as mere moneyowner, and spender, not as capitalist.

Class I has now replaced the whole of its constant capital in natura, its variable capital in money, and similarly its income fund in money (profit (interest, rent)) and it has nothing further to buy from class II, nothing further to pay to it (since we are for the moment not speaking of accumulation here). That part of agriculture, as for example the cultivation of corn, etc., the breeding of cattle, etc., belongs at the same time to class II, i.e. is at the same time a producer of constant capital, does not alter this situation. To the extent that agriculture does belong to class II, what we shall now develop further in relation to class II applies to it as well.

We showed previously—presupposing reproduction on the same scale—that the new labour added during the year, or the value produced during the year,=the variable capital reproduced + the surplus value, cannot buy any more or pay for any more than what has just been discussed, i.e. the annual product of the articles which enter into individual consumption (class I) and the part of the product of the producers df constant capital which represents the variable capital and the incomes of class II.

Adam Smith would have been entirely correct if he had said that this part of the annual product resolves itself into mere income, which is paid by wages, profit (interest), rent. He would nevertheless have had to add here too that this total income replaces the total constant capital of class I. But Smith is wrong in asserting this of the totality of the annual product, and in having the constant capital of class II replaced by its income and that of class I. It is therefore also incorrect when Smith says the following. Beforehand [XVII-1062] one further remark : under “DEALER” Smith includes all capitalists who participate in the production process and the circulation process,[39] under “CONSUMERS” he includes the workers and the capitalists, LANDLORDS, etc., and their RETAINERS, AS FAR AS THEY SPEND REVENUE.

He says:

* “The circulation of every country may be considered as divided into two different branches—the circulation of the dealers with one another, and the circulation between the dealers and consumers. Though the same pieces of money, whether paper or metal, may be employed sometimes in the one circulation and sometimes in the other, yet as both are constantly going on at the same time, each requires a certain kind of money of one kind or another to carry it on. The value of the goods circulated between the different dealers with one another never can exceed the value of those circulated between the dealers and the consumers, whatever is bought by the dealers being ultimately destined to be sold to the consumers” (Wealth of Nations, McCulloch’s edition* [Vol. II, pp. 79-80]).

This corresponds to Smith’s incorrect analysis of the value of the commodity into WAGES, PROFIT and RENT. On this see our earlier remarks. [40] And this incorrect view itself rests in turn on the fact that the accumulated capital—including the constant capital—in the capitalist mode of production originally flows from surplus labour, i.e. profit is converted into capital, from which it nevertheless by no means follows that the profit once converted into capital consists of “profit” .

The VALUE of the GOODS CIRCULATED BETWEEN THE DIFFERENT DEALERS is always greater than the VALUE of the GOODS CIRCULATED BETWEEN THE DEALERS AND CONSUMERS, because the first circulation includes an EXCHANGE of the natural components of constant capital, which replaces a part of the value of the capital which the CONSUMER never pays. The simultaneous parallel course of the movements—and every successive moment of metamorphosis and reproduction appears at the same time as occurring simultaneously and in parallel—prevented Smith from seeing the movement itself. He would otherwise have found in the monetary circulation of capital a refutation rather than a confirmation of his proposition, which is derived from an incorrect analysis of the natura l price.[41] The phrase “DEALER” and “CONSUMER” is also disturbing, since the DEALERS—the productive capitalists—appear in that EXCHANGE simultaneously as the final “CONSUMERS”, even if industrial CONSUMERS, not individual.

Tooke remarks as follows on the above passage from Adam Smith, which he makes into one of the basic foundations of his theory of money:

* “All the transactions between dealers and dealers, by which are to be understood all sales from the producer or importer, through all the stages of intermediate processes of manufacture or otherwise to the retail dealer or the exporting merchant, are resolvable into movements or transfers of capital. Now transfers of capital do not necessarily suppose, nor do actually as a matter of fact entail, in the great majority of transactions, a passing of money, that is, bank notes or coin—I mean bodily, and not by fiction—at the time of the transfer. All the movements of capital may be, and the great majority are, effected by the operations of banking and credit without the intervention of actual payment in coin or bank notes, that is, actual, visible, and tangible bank notes, not suppositions bank notes, issued with one hand and received back by the other, or, more properly speaking, entered on one side of the ledger with a counter-entry on the other. And there is the further important consideration, that the total amount of the transactions between dealers and dealers must, in the last resort, be determined and limited by the amount of those between dealers and consumers” (Th. Tooke, An Inquiry into the Currency Principle* London, 1844, [pp.] 35-36).

In the concluding sentence, Tooke repeats Adam Smith’s proposition, with the crudeness peculiar to him as a practitioner, in the process depriving it of its theoretical teeth. That the “TOTAL AMOUNT” of the “TRANSACTIONS BETWEEN DEALERS AND DEALERS” must be determined “IN THE LAST RESORT” by the AMOUNT of the TRANSACTIONS BETWEEN DEALERS and CONSUMERS is not subject to any doubt and is a triviality. The capital of the whole class that is employed in production at all depends in the “LAST RESORT” upon , and is therefore determined by, the amount of the product which the producer can sell, for it is only from the product he sells that he derives his profit. But Adam Smith, whose proposition Tooke thinks he is repeating, was not talking about this. Smith says: * “the value of the goods circulated between dealers and dealers “ = “the value of those circulated between dealers and consumers”.* Tooke is exclusively concerned in the abovementioned pamphlet with the struggle against the CURRENCY PRINCIPLE.[42] The [XVII-1063] phrase that the CIRCULATION BETWEEN DEALERS and DEALERS can be resolved into “MOVEMENTS OR TRANSFERS OF CAPITAL” //he is only interested here , vis-à-vis his-opponents, in the question of how the reciprocal obligations arising out of the circulation of capitals in the reproduction process are settled, a question which is theoretically entirely subordinate// shows the crudeness of the whole conception. “MOVEMENTS OF CAPITAL.” What was required was to determine and analyse precisely these MOVEMENTS. What underlies this is that he means the MOVEMENTS of capital in the sphere of circulation, for which reason he always understands under capital here money or commodity capital. “TRANSFERS OF CAPITAL” are very different from MOVEMENTS OF CAPITAL, although they are MOVEMENTS. They only apply in fact to mercantilist capital, and they mean in fact nothing more than that the different phases, in which capital passes from the hands of one buyer to the next, are IN POINT OF FACT only the movement of its own circulation. The “MOVEMENTS” of capital, however, are qualitatively distinct phases of the reproduction process. “TRANSFER” OF CAPITAL also takes place when variable capital passes into the hands of the workers as wages, thus being converted into “CURRENCY”. The long and short of the story is simply that in the movements of capital as such—before its definitive exchange as commodity with the consumers—the money only circulates as means of payment, hence functions in part exclusively as money of account, in part exclusively as balance, IF THERE BE ANY. Tooke concludes from this that the distinction between these two functions of money is a distinction between “CAPITAL” and “CURRENCY”. In general he firstly confuses money and commodity with money and commodity as modes of existence of capital, with money and commodity capital, and secondly regards the particular money form in which the capital is circulated as a distinction between “capital” and “coin”.

The following point by Tooke is a good one:

* “The business of bankers, setting aside the issue of promissory notes on demand, may be divided into two branches, corresponding with the distinction pointed out by Dr. Smith of the transactions between dealers and dealers, and between dealers and consumers. One branch of the banker’s business is to collect capital from those who have not immediate employment for it, and to distribute or transfer it to those who have. The other branch is to receive deposits of the incomes of their customers, and to pay out the amount, as it is wanted for expenditure, by the latter in the objects of their consumption. The former may be considered as the business behind the counter, and the latter before or over the counter: the former being a circulation of capital, the latter of currency” * [I.e., p. 36].

(I.e. the first circulation OF money capital. This is not actual circulation, but TRANSFER. Real circulation always includes an objective moment of the reproduction process of capital. TRANSFER, as with MERCANTILE CAPITAL, puts one person in place of another; but the capital continues to be in the same phase as before. There is each time a transfer of money—or titles to property—from one to the other (or also a transfer of commodity), without the money’s having undergone any metamorphosis. This is even truer of the TRANSFER of MONETARY CAPITAL BY LOANS, etC , BY THE MEDIUM OF THE BANKER. The same is true of the TRANSFER by which the capitalist distributes the monetary expression of his surplus value in part to the rentier, in part to the LANDLORD. In the latter case it is distribution of income; in the former, distribution of capital. Only the TRANSFER of

MERCANTILE CAPITAL from ONE SORT OF MERCHANT TO THE OTHER brings commodity capital itself closer to its conversion into money.)

* “The distinction or separation in reasoning of that branch of banking which relates to the concentration of capital on the one hand and the distribution of it on the other, from that branch which is employed in administering the circulation* for * local purposes of the district, is so important, etc.”* (I.e., [pp.] 36-37).

In class II as in class I the total product can be divided into 3 parts.

//Here it may be remarked incidentally: capital, as opposed to profit, is the name of the amount of value advanced. But it is not an amount of value. It is capital and therefore implies in this form a relation to profit. As long as the surplus value is not realised, hence the movement of capital as capital has not yet come to an end, the total product (surplus value included) is called capital; it is pregnant with surplus value, but the latter has not yet [XVII-1064] attained an independent position in relation to capital. It is still self-realising capital, HENCE capital absolutely.//

1) 2) 3)

Constant capitalVariable capital. Surplus value. (Profit, rent, interest.)

We have seen how 2) and 3) have been realised and have circulated in the exchange with 1). We have now to consider the first part, constant capital.

It consists a) of the unconsumed part of the fixed capital, which does not enter into the value of the product, and therefore does not come into consideration.

b) Secondly, however, it is necessary to replace the part of the value which represents the depreciation of the fixed capital and matière instrumentale and matière brute, s’il y en a.[43]

Just as in class I the part of the product which consists of profit—or which is expended as income—is realised through the consumption of the product in natura on the part of production or by exchange within the different spheres of production of this same class, so in class II the same takes place for the constant capital, whether through replacement in natura in its own sphere of production, or through exchange with products between the different spheres of this same class. The products here re-enter as condition of production into their own production (as corn enters as seed, breeding cattle, etc.) or the product of sphere A e.g. enters into the product of sphere B as condition of production, and the product of sphere B enters into the product of sphere A, as iron into machine production or machines into iron production. The product of sphere A may enter into sphere B, that of B into C, and that of C into A. This intertwining—the GENERAL BALANCE of these spheres, without any need for an exact balance between any two spheres—makes no difference to the situation. It lies in the nature of the situation that here money will develop as means of payment and therefore the movement without money will be compensated for by SETOFFS. Yet since the period in which product A enters B may differ from the period in which B enters A, etc., here too circulation of money can take place, and will do so plus ou moins,[44] particularly before capitalist production is completely developed. It is in any case important to consider it so here.

Since there in fact takes place here EXCHANGE of constant capital for constant capital, and the products merely change their place in the production process reciprocally, the money constantly flows back to the person who expends it. E.g. when the machine manufacturer buys iron in order to replace his machine-building machine, there enters into this: 1) the depreciation of the machine-building machine itself; he advances this himself; 2) iron, etc. He buys this from the iron manufacturer; the iron manufacturer buys machines from him in order to replace the depreciation of his own machinery and thus the money flows back to the machine-builder.

Even where the product enters directly into its own reproduction, there may take place, in consequence of the division of labour, a circulation of money; the reproduction of capital may be accompanied by a circulation of money. A FARMER may sell all his corn and buy the seed from another farmer. But then the latter must grow seed both for himself and for the other. To the one farmer a part of the value of the corn represents the purchase price for the replacement of the seed, to the other it represents his variable capital-l-surplus value. In this case the money does not flow back between the two of them directly. Yet the seed man must expend the money in order to buy means of subsistence, corn among other things. He pays his workers with the money and expends it as his own income. The money of the farmer’s workers flows back to him in part. They belong to the public who enable him to sell his corn as a whole. And so it is with cattle-breeding. One farmer may only fatten up the cattle to sell them as means of

subsistence; but the other may produce breeding cattle, to replace the constant capital of the farmer who fattens for slaughter.

This part—resolving into constant capital—of the product of the productive capitalists who produce constant capital for class I, is just as much the product of the year’s labour as every other part of the product, i.e. it is only reproduced by passing through the labour process. But its value is the result of past labour, labour of the previous year, etc. And as such value it buys back the part of the product which is required for its reproduction. The more developed capitalist production is, the more, consequently, the result of past labour enters as agens into production, the greater is this part of the product, which falls to the share of production and never leaves that sphere. And the greater the value component of the product which goes to replace the constant part of the constant capital. But the labour is more productive to that degree. This value itself is dependent not on the labour it cost but the labour its reproduction costs. It is therefore on the one hand constantly piled up with the progress of capitalist production, and on the other hand constantly depreciated over shorter or longer periods. Its value only remains constant as long as the mode of production does not alter.

[XVII-1065] We have still to consider the following:

1) Accumulation, specially in respect of money.

2) The simultaneity of the movements.

3) The gold and silver producer.

4) The whole movement of mercantile capital.

First of all, as far as concerns 4), MERCANTILE CAPITAL, we have already elucidated its movement with the example of the SHOPKEEPER who sells means of subsistence to the workers. Put in the place of this MERCHANT A[45] the whole class of these SHOPKEEPERS. Their business is, as before, to sell the producer’s commodity to the workers, and to take back from them MONEY WAGES in return. Their capital is replaced IN MONEY and their profit is realised by the same money as originally existed as variable capital and is then paid to the workers as MONEY REVENUE and in turn paid back by the workers as COIN to the SHOPKEEPER, in order to realise the share of the total product which belongs to the workers in aliquot parts of that product. The MONEY CAPITAL of the SHOPKEEPER himself, in so far as it is not INVESTED IN COSTS OF CIRCULATION, consists of his circulating money capital. If he buys for £200 AT EVERY PERIOD in which he makes a purchase, 100 for credit, 100 from his own pocket, he has advanced £100 of the money capital constantly present in circulation. If this £200 turns over 40 times he successively buys commodities of a value of £8,000 with it. It changes nothing in the situation that a SHOPKEEPER from this sphere A buys from 50 different producers, and 50 SHOPKEEPERS from this sphere in their turn buy from 1 producer. Just as little is anything changed by the fact that this SHOPKEEPER consumes his profit in part in his own commodities, and in part buys commodities with it from other SHOPKEEPERS, who in turn buy from him again in accordance with the division of labour, so that the money which realises the profit of this class passes in turn through an intermediate circulation (SPENDING OF REVENUE) among the different agents of this class. What he consumes through purchasing from others realises their profit, and what others consume from him realises his profit. But each of them must thereby buy back from the producer with this money (in which their profit is realised) a part of the commodities, in order to renew this consumption. E.g. if SHOPKEEPER A of this class buys for £100 from producers and receives commodities for £110, in return for which he receives £110 from the workers, he has a profit of 10%. But if he buys for £110 and consumes for £10, he continues to sell to the workers for 100 and receives 110. But the 10 return to the PRODUCER in payment for the commodities consumed by the shopkeeper. He therefore receives the full value of the commodities for 10. If the profit is 10% he receives commodities for £10 1/10, but he consumes these. If in contrast he buys with £10 from another sHOp[keeper], B, the latter realises his profit in this transaction, but must return £9 10/11 to his producer, in order to replace the commodity. And if B buys from A for £10, the same thing is true of him.

Assume that the whole of the product which producer class I (the section which produces means of subsistence, and indeed that part of them which is sold to the workers) sells to this SHOPKEEPER class A=£500,000.

Assume that there are 5 WHOLESALE DEALERS who buy this 500,000; but that their capital turns over 5 times. Every fifth of a year they buy 100,000 between them. Each of the 5 buys 20,000 worth. Therewith each buys 100,000 worth over the whole year, thus 500,000 taken together. Assume their profit is 10%. Then the profit on the 20,000 each year=£2,000, and in each 1/5 of a year=£400.

The capitalist therefore sells in appearance to each of the 5 £20,400 worth of commodities every fifth of the year for £20,000. These 5 WHOLESALE DEALERS sell to the SHOPKEEPERS, RETAILERS of class A, in the course of every fifth of a year. Let there be 100 of these retailers. They sell by the day and by the hour, but buy at smaller intervals from the WHOLESALE DEALERS, perhaps only every fifth of a year or every month. Let the price supplement of these SHOPKEEPERS be 20%, namely 10% profit and 10% to replace their circulation costs (which also have to be deducted for the 5 WHOLESALE dealers; to simplify matters we have not done this). The commodity value 1 WHOLESALE DEALER has in hand=£20,400. And the commodity value 5 have in hand is £102,000 (since this is for 1/5 of a year, over the whole year this=£510,000 worth of commodities). Of this £102,000 each SHOPKEEPER has to buy £1,020. 20 of these shopkeepers correspond to 1 WHOLESALE DEALER, but 1/20 of £20,400=£1,020. 10% on this £1,020 makes 102. But let us assume this SHOPKEEPER makes his purchases 10 times a year. He then needs only £510 to buy £1,020 over a fifth of a year.[46]

[XVI I-1065a] Assume that the complete wage bill for classes I and II is £550,000. This is therefore the commodity value which the SHOPKEEPER class A sells to the workers. For the SHOPKEEPER to gain 10[%] he must have paid 1/11 less for £550,000 than is contained therein. This=£50,000. So that he would only have paid £500,000 for the commodity value of £550,000. Only assuming that the SHOPKEEPER turns over his capital 10 times in the year, or renews his purchases 10 times, twice every fifth of a year. Thus he only has to advance a capital of £55,000. And on this there is an annual profit of 10%=£5,500. And this makes £1,100 every 1/5 of a year. Assume there are 100 SHOPKEEPERS; then each of them advances a capital of only £550. And every 5th of a year each of them receives a profit of 11%. [47] But each of them sells to the workers every 5th of a year for £1,100. Over the year this amounts to 5,500 for 1 SHOPKEEPER and 550,000 for the 100 SHOPKEEPERS. On this £1,100 he adds a profit of £11 . The commodity therefore costs him only £1,089. And 5,445 annually. And 544,500 for the 100. So that the producer would have sold him commodities of the value of 550,000 for 544,500. But there is further to be deducted the profit the SHOPKEEPER makes on the capital invested in the costs of circulation, the shop, etc., the depreciation of this capital; finally the part of the price supplement which falls to the capital invested in the productive labour of RETAILING: costs and profit. Assume that all of this comes to as much as the profit on the capital constantly circulating in purchases. Hence another £11 every fifth of a year. Thus 11 must be deducted from the £1,089, which brings it to 1,078. But in order to simplify matters let us assume that this second £11 is a price supplement which includes the costs (of circulation and production) and profit on the productive part of the capital. £11 per year comes to £55 for each sHopfkeeper], and 5,500 for the 100. We therefore deduct this 5,500, as not contained in the value of the purchased commodity, but added to it by the SHOP[keeper]. There remain 544,500. This is the real commodity value which the sHOp[keepers] buy annually from the producers. There must further be deducted 5,500 for profit. There remain 539,000. The SHOP[keeper] therefore pays 539,000 a year to the producer, and for this he receives a commodity value of 544,500 from him, adding 5,500, partly in circulation costs, partly in production costs (which however include the profit he himself makes as a capitalist producer). So we now have:

The workers buying commodities for 550,000 every year.

100 SHOPKEEPERS selling to them every year for 550,000; costs them 539,000 (whereby a value of 5,500 is added by them themselves). And they obtain from the producers a commodity value of 544,500 for the 539,000.

Each of the 100 SHOPKEEPERS sells every year for £5,500, every 10th of a year for £550, and every 5th of a year for £1,100. A value of £11 is deducted from this £1,100, added by the sHop[keeper]. £1,089 remains (every 5th of a year). This £1,089 costs the shopkeeper 1,078 (every 5th of a year) and over the whole year 5,390, and it costs the 100 SHOPKEEPERS 107,800 every 5th of a year, over the whole year 539,000. 20 of these fellows therefore buy for 21,560 every 5th of a year, receiving in return a commodity value of l,089x20=£21,780.

[XVIII-1066][48] One more point on the question of interest on interest[49]:

The notion of capital as a self-reproducing entity—BY VIRTUE OF ITS INNATE QUALITY AS A PERENNIAL ANNUALLY GROWING VALUE led to the Wondrous ideas of Dr. Price, which left the fantasies of the alchemists far behind them. Pitt seriously believed in these ideas and made them pillars of his financial wisdom in his laws on the SINKING FUND [50]:

* “Money bearing compound interest increases at first slowly. But, the rate of increase being continually accelerated, it becomes in some time so rapid, as to mock all the powers of imagination. One Penny, put out at our Saviour’s birth to 5% compound interest would before this time have increased to a greater sum, than would be contained in a 150 millions of Earths, all solid gold. But if put out to simple interest, it would in the same time, have amounted to no more than 7 sh. 4 1/2d. Our government has hitherto chosen to improve money in the last rather than the first of those ways” (Richard Price, An Appeal to the Public, on the Subject of the National Debt, London, 1772, 2nd ed.* [pp. 18-19]).

(His trick: the government should borrow at simple interest and put out the borrowed money at compound interest.) In his:

Observations on Reversionary Payments etc., London, 1772, he flies still higher:

* “A shilling put out to 6% compound interest at our Saviour’s birth would ... have increased to a greater sum than the whole solar system could hold, supposing it a sphere equal in diameter to the diameter of Saturn’s orbit” * (I.e., XIII, note). *”A state need never, therefore, be under any difficulties; for, with the smallest savings, it may, in as little time as its interest can require, pay off the largest debt”* (I.e., [XIII/]XIV, p. 136).

What fine principles emerged from this for the credulous Pitt!

Price WAS SIMPLY DAZZLED BY THE ENORMOUS QUANTITIES RESULTING FROM THE GEOMETRICAL PROGRESSION OF NUMBERS. Since he regarded capital as A SELFACTING THING, WITHOUT ANY REGARD TO THE CONDITIONS OF REPRODUCTION OF LABOUR, merely as a self-increasing number (just as Malthus regarded MAN in his GEOMETRICAL progression[51] ), he could believe he had found the laws of its growth in that formula. The formula: S=c(1 + i)n. (In this formula, S=the sum of capital and interest to be calculated; c=the capital advanced; i=the rate of interest (ALIQUOT PART OF 100) and n=the number of years during which the process takes place.) In a speech of 1792, proposing to increase the sum of money devoted to the SINKING FUND,[52] Pitt takes Dr. Price’s mystification entirely seriously.

“The House of Commons resolved in 1786” (see Lauderdale[53] ) “that the consentement unanime was that 1 million pounds sterling be raised for the public benefit” (Lauderdale, I.e., p. 175).

According to Price, who was believed by Pitt, nothing was better, of course, than to tax the people in order to “accumulate” the sum of money raised by the tax and thereby to spirit away the STATE DEBT through the mystery of COMPOUND INTEREST. Taxes for “SINKING FUND” or amortisation fund.

“That resolution was soon followed by a law—of which Pitt was the author—which ordained the accumulation of 1/4 million pounds sterling, until the time when the annuities fell due and the fund increased to £4 million per year” [p. 176] (CH. XXXI of the ACT of the 26th Year of the Reign of George III).[54]

In his speech of 1792, in which he proposed increasing the sum devoted to the SINKING FUND, Pitt included machinery, credit, etc., among the reasons for England’s commercial pre-eminence. But

“the most extensive and long-lasting reason is accumulation. This principle is developed fully and explained adequately in Smith’s work alone, that genius, etc. ... This accumulation of capitals operates by reserving at least a part of the annual profit in order to increase the principal sum, which must then be employed in the same manner in the next year, thereby providing a continuous profit” [pp. 178-79].[55]

Pitt considered Price’s interest on interest—COMPOUND INTEREST— calculation, to be identical with Adam Smith’s theory of accumulation. This is important.

[XVIII-1067] Child, the ancestor of the London banking system, was incidentally an enemy of the “monopoly“ of the usurers, in exactly the same sense as Moses an d Son in its bulletins declares its opposition to the “monopoly prices“ of the small tailors.

We already find with Josiah Child (father of the London banking system) (Traités sur le commerce et sur les avantages qui résultent de la réduction de l’intérêt de l’argent, by Jos. Child (written in 1669), etc., translated from the English, Amsterdam and Berlin, 1754) that

“£100 at 10% would produce 102,400 pounds sterling in 70 years, if interest is added on the interest”[56] ([p.] 115).

The first notion of ACCUMULATION is that OF HOARDING, just as the first notion of CAPITAL is as MERCANTILE capital. Th e second notion is tha t of COMPOUND INTEREST, just as interest-bearing capital, or money lent out at interest, is the second historical form of capital. Political economy SOMETIMES becomes perplexed when the antediluvian expressions of the relations peculiar to capitalist production again assert themselves as expressions of the latter, as with interest on interest for the accumulation OF CAPITAL.

How Price’s notion is unthinkingly allowed to slip into the works of modern, and relatively critical, economists is shown e.g. by the following passage from The Economist

*”If there be any cases in England in which land, with all its rights and privileges, has not been bought and sold over and over again”* (and hence, as he very wisely concludes, “has become merely the representative of the money paid for it”)*”—which we doubt—we do ... not doubt ... that every sixpence of rent is the representative of capital, saved by the landlord and reinvested by the land, in those cases where land has not been sold... Capital, with compound interest on every portion of capital saved, is so all engrossing, that all the wealth in the world from which income is derived has long ago become the interest on capital Although land be more valuable in some places than in others, all rent is now the payment of interest on capital previously invested in the land” (Economist, July 19, 1851).*[57]

The Economist could say, based on the same incredible notion, *that all the labour that may in myriads of ages be realised, will only represent interest due to capital till now accumulated.* I cite the passage merely on account of the incredible notion that accumulation=interest on interest. Otherwise, by the by, and en passant, The Economist remarks, I.e., *that the community as such

“as a corporate body ... claims the land (as common property), and never gives up that claim”.*

He who expends capital in the purchase of land

*“does in fact forfeit and give up to the community some of the advantages which belong to property strictly and exclusively personal” (I.e.).

Finally there is the following rubbish from the “romantic” Müller:

“Dr. Price’s colossal increase in compound interest, or the self-accelerating forces of the human being, presupposes an undivided, unbroken, and uniform order over many centuries, if it is to bring about these incalculable effects. As soon as the capital is divided, cut up, into a number of separate branches, growing on their own account, the whole process of the accumulation of forces begins again. Nature has divided the progression of force into a series of courses of roughly 20 to 25 years, which are allotted to each individual worker on an average. After this period of time has expired, the worker leaves his course and must now transfer the capital gained through the compound interest of labour to a new worker; for the most part he must divide it among several workers or children. They have first to animate and learn to employ the capital which falls to them, before they can draw from it actual compound interest. An immense amount of capital gained by civil society is, even in the most dynamic communities, piled up gradually, over long years, and is not employed in the direct extension of labour, being rather transferred to another individual, a worker, a bank, the state, under the name of a loan, as soon as a considerable sum has been brought together. The recipient then sets the capital really into motion, and accordingly draws from it compound interest, and [XVIII-1068] can easily pledge himself to pay the giver simple interest. Finally the law of consumption, greed, waste reacts against that immense progression in which the forces of man and their product would tend to increase, if the law of production or frugality alone were to hold sway” (A. Müller, Die Elemente der Staatskunst, Berlin, 1809, Part III, [pp.] 147-49).

It would be impossible within a few lines to jumble together more hair-raising and self-contradictory nonsense. We do not mention the ludicrous confusion of worker and capitalist, of value of labour capacity and interest on capital, etc.—let us just mention the assertion that the decline in compound interest is due, among other things, to the fact that capital is “lent out”, whereupon it “then” brings “compound interest”. The extraordinary shallowness of this “profundity” or RATHER “stupidity”, this for example:

“In determining the price of things time is not an issue; in determining interest it is time which chiefly comes into consideration” (I.e., [pp.] 137-38).

Müller is speaking here of circulation time. Since he sees circulation time as determining in the case of interest, but does not see this in the case of the price of the commodity, the profundity consists in holding fast to the semblance and reasoning forth on this basis. The same fellow tells us:

“Urban production is bound to the cycle of days; rural production in contrast to the cycle of years” (I.e., [p.] 178).

By “urban production” he means manufacture in contrast to agriculture. Agriculture which is not run in the capitalist fashion—and this is what he refers to—is of course bound to the annual cycle. Large-scale manufacturing on the other hand (IN CONSEQUENCE OF THE FIXED CAPITAL EMPLOYED) is boun d tO th e Cycl e o f 1 2 tO 15, in some branches of the transport industry (railways, etc.) 20 years. Our Müller’s procedure is characteristic of Romanticism in all its manifestations. Its content consists of the most vulgar everyday prejudices, trivialities created from superficial appearances. This false and trivial content then has to be “heightened” and made poetical by a mystificatory mode of expression.

[XVIII-1068] Assume that there are 5 WHOLESALE DEALERS for the 100 SHOPKEEPERS. They have therefore to sell to the shopkeepers every year 544,500 worth of value, and in 1/5 of a year 108,900 worth of commodity value. For which they, however, only receive a payment of 107,800 from the SHOPKEEPERS.

Each of the 5 WHOLESALE DEALERS has in 1/5 of a year to sell to 20 RETAILERS. I.e. each has to sell a commodity value of £21,780, for which he receives 21,560 in money. But for this 21,560 each WHOLESALE dealer must d’abord receive from the PRODUCER a commodity value of £21,780. Indeed, he must receive more than this, since he also has to make his profit. Assume that his capital circulates 5 times in the year. All 5 buy over the year from the PRODUCER for 539,000. But they do this with a capital of 107,800. 10% on this makes £10,780 over the year. And over a fifth of a year this makes £2,156. The profit for each of the 5 WHOLESALE DEALERS every 1/5 of a year is therefore £431 Vs- Each of the WHOLESALE DEALERS therefore buys from the capitalist every 1/5 of a year commodities to the value of £21,780 for £21,560 money minus £431 Vs. He therefore pays £21,1284/5 for the commodities, or 5 pay 105,644 every 1/5 of a year, and 528,220 over the whole year. The producer therefore has in fact to provide a commodity value of 544,500 for 528,220—if we disregard the value addition made by the RETAILER—the difference thus does not come even to 31/2% of the commodity value provided by the capitalist.

The only thing of importance here is that the interposition of the WHOLESALERS in no way alters the circuit, described above, between the épicier, the produce r an d the worker; except that her e the workers ar e not only workers of class I, who produce means of subsistence for the WORKMEN. The RETAILER [XVIII-1069] does not put in his pocket the whole of the reduction in the price at which the PRODUCER sells him the commodity; instead this reduction is divided between WHOLESALER and RETAILER. In other words, what is divided is the part of the surplus value which amounts to MERCANTILE PROFIT. Instead of the MONEY WAGES PAID BY ONE CAPITALIST TO HIS OWN WORKMEN [being] RETURNED TO HIM BY THE SHOPKEEPER (but now for the re-purchase not only of wages in commodities, but of the profit of the SHOPKEEPER) the MONEY WAGES of all WORKMEN of classes I and II flow back to the producers of class I through the SHOPKEEPER and the WHOLESALERS (in the re-purchase of the commodities falling to the share of the workers+the realisation in commodities of the profit of the WHOLESALERS and RETAILERS). With part of this reflux the producers of class I replace in money their variable capital, and with the other part they buy constant capital from class II, who with this money again obtain the MONEY fund from which they pay wages.

The situation for shopkeepers and wholesalers B, who sell means of subsistence to the owners and consumers of the SURPLUS, is the same as for SHOPKEEPERS and WHOLESALERS A.

We saw that the product of the producers of class I, however many of them there might be, was collected in 5 WHOLESALE reservoirs, and then divided into 100 RETAIL reservoirs, then entered PIECEMEAL, by the day and by the hour, into the circulation between RETAILER and CONSUMER. With the REFLUX of the money, on the other hand, no such constantly increasing subdivision takes place as with the circulation of the commodity. On the contrary. The workers’ money is concentrated in the 100 RETAILERS, then collected into 5 reservoirs at the WHOLESALERS, and is only re-divided once it returns to the individual producers.

In the case of the circulation of the commodity there is a mere TRANSFER from PRODUCER to WHOLESALER, from WHOLESALER to RETAILER, and it is the last who sells it definitively. Similarly in the reverse direction, with the REFLUX, TRANSFER, of the money which flows back to the capitalist (REFLUX of capital, when he sells on credit, but REFLUX of MONEY and indeed as means of purchase or REFLUX of the MONEY FORM of his capital when he sells for CASH) from the RETAILER to the WHOLESALER, from the WHOLESALER to the producer.

The situation is entirely the same with the MERCHANTS who mediate the purchase and sale of constant capital, i.e. buy and sell for industrial consumption. Here too the profit derives from the fact that they buy the commodity below its value and sell it at its value, thus receiving their share in its surplus value. This circulation in itself has no particular significance. E.g. the WHOLESALER buys yarn from the spinner, sells it to the weaver, or buys flax from the FARMER and sells it to the linen yarn manufacturer. In fact it is the weaver who pays the spinner. The circulation of these particular mercantile capitals, through their constant sale of a particular commodity, conceals the real movement, the real connection. Everything e.g. which appears in the circulation between flax producer, MERCHANT and spinner is nothing but a constant buying by the spinner from the flax producer. Every individual act of the reproduction process thus appears divided and in an independent shape.

We now come to accumulation.

//But first still one more point. It is very important in estimating the GENERAL SURPLUS VALUE to include mercantile profit, because a part of the SURPLUS VALUE is concealed here and appears to arise out of a specific sphere of production.//

But now back to p. 1065, Notebook XVII, 1) and 3) (accumulation and the gold producer).[58] We have in the reproduction process

1) the class of producers who produce means of subsistence, the elements into which the variable capital and the part of the product produced as surplus value and expended as income are resolved,

2) the class of producers who produce the constant capital for the first class. This consists in the final analysis of the classes which provide the latter with elements of constant capital, hence raw materials, seeds (whether corn or breeding cattle. In the animal kingdom the seed is the cattle itself, in the vegetable kingdom it is the actual seeds), and produce the machines, containers and tools (we see even in agriculture how seed production, whether in the animal or the plant kingdom, can split away from production for consumption as an independent sphere of production).

[XVIII-1070] A house can of course serve as constant capital or enter into individual consumption, or both at once. Coal, wood, a horse, a wagon, a mass of small instruments and containers enter as constant parts of consumption, as tools of consumption. This makes no difference. In so far as the producers sell to individual consumers they belong to class I, in so far as they sell to producers, to class II. In one category things apply to them which pertain to that category; in the other, things which pertain to the other.

Alongside these classes the producer of the commodities which function as money, the producer of the precious metals, forms a category sui generis.[59] For the sake of simplification, we only speak of the gold producer as the producer of the material of money. For the sake of simplification (since the countries which produce the precious metals have peculiar characteristics which are irrelevant to this general investigation) we place the gold producers in the middle of the country of capitalist production itself.

Incidentally, we have excluded foreign trade for the same reason[60]; exporter and importer are themselves merely categories of WHOLESALE DEALERS. The exporter exports means of subsistence which enter in finished form into consumption: in this case he belongs to the WHOLESALE DEALERS, who do nothing in the reproduction process but mediate the TRANSFER to the RETAILERS of the product, which then flows directly into the sphere of consumption. Or he exports raw materials, semi-manufactures, instrumental materials, machines, instruments of labour. In this case he mediates the exchange between the producers themselves. In the one case it is C—M, in the other case M—C, the conversion of commodity capital into money, or of money capital into commodities. There is therefore no essential difference between these and the two main categories of WHOLESALE DEALERS. But the importer is the same as the exporter. The exporter of one country is the importer for the other one, and the importer of one country is the exporter for another one. There are of course exporters and importers in one single country, e.g. England. But the exporter imports into other countries, and the importer exports out of other countries.

Gold enters as raw material and matière instrumentale into a series of luxury products. In so far as the gold producer sells his gold to the producers of these articles, he belongs to class II, which sells and produces the elements of constant capital.

Every part of the product equally contains a portion of surplus value. Every individual commodity or portion of a commodity considered in itself. (Nevertheless, our distinction also appears in practice. If 2 thirds of the product consist of costs, 1/3 of SURPLUS, and the capitalist only sold 1/3, he would only have replaced his variable capital; if he sold 2/3 he would have replaced his variable and constant capital, and would have realised no profit, although every part of the commodity, and every individual commodity, would have been equally sold at its production price, hence would have realised a part of the SURPLUS VALUE.) The gold producer realises just as much profit on this part as on every other part; because unpaid labour is contained in the gold and he realises this pro rata. But only formally. For he receives no other commodity. But instead converts the gold from the form of bars into the money form, which he could also do by sending it to the mint. (There is of course a difference for him between places where it is coined free of charge, as in England, and where seigneuriage is charged as in France.) It emerges clearly in his case that the surplus value arises not from circulation but from production, because in production it already possesses the form in which it is capable of circulation. But this circulation between the gold producer and the gold consuming producer is important on account of one point. In this TRADE the gold producer withdraws money from circulation instead of throwing it in; for the gold that he throws in does not enter into circulation as money but as an element of production.

Therefore in a country where gold mines, etc., are located, we find AVERAGE productive consumption of gold, just as of all other commodities which form the object or the matière instrumentale of other commodities. If in this case this consumption were so large as to cover the wages [of the workers] of the gold producer and his profit (hence the part he spends as income) two things could be said:

1) The whole of this part of the annual gold production does not enter circulation as money; it neither enters as CURRENCY into the circulation between RETAILER and INDIVIDUAL CONSUMER (COIN) nor does it enter as money capital into the TRANSACTIONS between the productive consumers. //The difference between coin and money exists here in so FAR as the money capital is paid out to the worker in coin, because it has to circulate in the circulation between RETAILER and DEFINITIVE CONSUMER; whereas in the spheres in which it moves between the productive consumers, i.e. the productive capitalists, it does not enter into this circulation, serves chiefly as means of payment and in their hands ceases to represent capital, which is what it does do in the HANDS of the DEFINITIVE CONSUMERS. The simultaneity and parallel course of the different successive phases of circulation, which at the same time represent opposite phases for different capitals, brings about the difference between the kinds of money, in which capital circulates on the one hand and income on the other. The transition from one kind of money to the other is mediated through exchange.//

[XVIII-1071] 2) There takes place here a REFLUX of money (from circulation) to the gold producer, and this REFLUX repeats itself. If e.g. the gold CONSUMER (GOLDSMITH, etc.) pays him 4 times a year, or buys from him every quarter, here in the case we have supposed this is money flowing from circulation itself for the payment of wages. The gold producer would only need to have in reserve in coin the expression of wages for a quarter of a year, since the same amount flows back to him again from circulation every quarter. The GOLDSMITH, etc., in contrast, replaces his money capital, which he laid out in the purchase of gold, with the money which comes from the SPENDERS OF REVENUE, to whom the gold producer would himself in part belong. If this consumption of gold amounted to a sufficiently considerable part, it would provide for the gold producer not only the money for wages, but also for the income PART (what is SPENT as income) OF THE PRODUCERS PROFIT (RENT). Here it must be borne in mind that the gold producer, like every other capitalist, needs ONLY AN ALIQUOT PART, AND A RELATIVELY SMALL PART, of the YEARLY MONEY EXPRESSION of the WAGES, in order to pay them, and that in spending his own income he also only needs A MUCH SMALLER MONEY EXPRESSION OF ITS YEARLY VALUE, since the same money flows back a n d performs the service anew.

Assume that the GOLD PRODUCER has to pay his workers £12,000 annually. This makes £1,000 a month , and say £240 a week, if 50 weeks are worked in the year. Assume that this producer advances the money weekly at the beginning of the first quarter, and, since it does not flow back to him, for the whole of the quarter. At the end of the quarter he makes a sale for £3,000 (if the year=50 weeks, the quarter=121/2 weeks and the week=£240). To the goldsmith, etc. In the second quarter, therefore, he no longer has to increase the CURRENCY by a further £3,000, but instead he retains this £3,000 in his own possession or with his BANKER, and allows £240 of it to flow back into circulation every week. There is no doubt that this would be the case in an industrial country. Only a small part of the product would be necessary, and this would be sold to the productive consumers of gold so that in this way there would be a constant reflux of the wage from circulation. For this part of the gold producer’s capital, therefore, and, depending on the circumstances, also for the MONETARY EXPRESSION OF HIS REVENUE, he adds nothing to circulation, in so far as its movement is between INDIVIDUAL CONSUMERS and PRODUCERS. This circumstance is entirely overlooked by Ricardo in a hypothesis he bases on the assumption that the gold mine is to be found in the country of capitalist production itself, e.g. England.[61]A money REFLUX would take place for this part of the gold producer’s product, because he sells the gold as a commodity, does not buy with it, does not spend it as money.

//Within capitalist production cost price[62] never=value. Production price can=value, if the coincidence occurs that 1) the capital which gives the commodity its final form, and 2) the capital which provides the machine and the raw material, both have the AVERAGE ORGANIC COMPOSITION. Just as the production prices of the commodities which form the variable capital may always vary in their value, the amount of these commodities, which forms the wage, always=the labour time (ON AN AVERAGE) the worker needs to reproduce this amount, = the value of the labour capacity for which the variable part of the capital is exchanged. This part, whatever its price,=its value. It is therefore sufficient for the other two parts—surplus value and constant capital—to possess the AVERAGE COMPOSITION, for the production price of the commodity to be equal to its value.//

In what follows, therefore, we entirely leave à part the part of the gold which enters as raw material into the production of other commodities, hence into the constant capital of other spheres of production.

As far as concerns the position of the gold producer for gold production (THUS CIRCUMSCRIBED), this is sui generis. The product, the commodity he has produced, cannot enter as an element either into the constant or into the variable capital of other spheres of production, and it therefore does not enter into the real reproduction process as considered above. Nor does it enter into his own constant or variable capital. Just as little does it enter into the category of commodities in which income is IMMEDIATELY SPENT. On the other hand, however, this commodity directly possesses the form in which it can enter into the world market as money, just as it can be converted into national money through a merely technical transformation. It may function directly as money, i.e. buy. The converted form of the commodity is its primitive form. And it therefor e also directly possesses the absolute form of circulating capital, the form of money capital.

The gold producer can therefore buy directly, without having to sell. His COMMODITY IS IMMEDIATELY CONVERTIBLE INTO EVERY OTHER COMMODITY, WITHOUT ANY REGARD to its relation to the productive conditions of existence of the commodities for which it [XVIII-1072] is exchanged; the commodities it buys.

We have transferred the gold produce r to a country of capitalist production. What applies to every other sphere of capitalist production applies to this one : it can only absorb its proportional part of capital and labour, if the rate of profit is not to fall below the AVERAGE PROFIT. In other spheres of production, where surplus value can be resolved into profit and rent, a relative oversupply of the sphere with capital would initially affect rent alone; the turn of profit would come when the relative oversupply of the sphere with capital and labour persisted, even after profit had swallowed up the rent. Assume that the capital invested in gold production yielded 30%, 10 PROFIT and 20 rent. If a given amount more of capital and labour were applied to this sphere, and correspondingly more withdrawn from the other spheres, the means of subsistence and the constant capital of the gold producer (i.e. the machines, etc., he must buy) would rise for instance from 100 to 120. This 120 would as before express numerically the same physical amount of means of production, i.e. the same amount of labour, and the same ratio as previously of machinery, etc., to this given amount of labour. The product would be as before 130, whether the capital laid out=100, 110, or 120. If we take the last figure, not only would the rent have disappeared, but also nearly 20% of the profit. For 120:10=100:81/3. Thus the rent of 20 would have vanished and the profit would have fallen from 10 to 81/3%- The capital and labour employed in gold production therefore stands in a certain proportion to the amount of capital employed in all other spheres of production, or is brought back to this through the equalisation of the rate of profit.

The producer of the gold can buy what he wants with it (i.e. what commodities he finds on the market); hence means of subsistence on the one hand; instruments of production on the other. H e can consume , in this form, the part of his gold product which represents surplus value (profit, rent), IN FACT HOARD WITH A VIEW TO CONVERT IT AT A LATER PERIOD EITHER INTO REVENUE OR INTO CAPITAL. In so far as he does this, the gold producer accumulates a part of his product in natural form, just as the peasant or the machine manufacturer does.

As regards the part he exchanged for means of subsistence or instruments of production, the part of the product sold to him by the producers of those commodities now exists entirely in gold, i.e. in a form in which the reproduction process of their commodities cannot be renewed. If they are to reproduce at the same level, the same part of their product (assuming that NO CHANGE has occurred in the value of the ingredients of their production) must be converted back into raw materials, machinery, etc. For example, those who sell the means of subsistence, i.e. commodities in their final form, the form in which they enter into individual consumption, cannot use gold either as a raw material (semimanufactured material), or as a matière instrumentale (for this has already been withdrawn for GOLDSMITHS, etc.), or to replace their means of production. It is implied, furthermore, that the circulation is already sufficiently FULL TO REPLACE BY ITS FLUX AND REFLUX ALL VARIABLE CAPITAL IN THE FORM OF MONEY, etc.; similarly the part of the circulating capital which must circulate as money capital. From the means of subsistence this class has sold to the gold producer, and IN RETURN for which it now possesses gold, it can accumulate in gold the surplus value contained in these commodities; it can hold onto the gold as the form of the surplus value; it can store up, preserve, retain this surplus value in the form of gold. But it must replace the raw material, machinery (it is assumed that the production of gold for luxury consumption replaces the CURRENCY for the gold PRODUCER, without his having to throw other money into circulation to achieve this; but the part of the commodity that he consumes—and, apart from this, the part of the labour that is contained in the commodity consumed by him—must be replaced by its producers through the purchase of new labour[63]); for we assume that the previous circulation was sufficient to pay out the variable capital in money. The producer of the means of subsistence therefore buys with the part of the gold which he has obtained—the part he keeps as the direct form of his surplus value (profit)—semi-manufactured material, matières instrumentales, MACHINERY, etc. The producers of these commodities are all in the same position. Each one can only retain a portion of the gold=a part of his profit or surplus value in general. With the other part he replaces the raw material, etc. For this last part of the gold, which comes to the original producer, they sell their whole commodity, pro toto, with deduction of exchanges between the original producers, and they cannot again split up this part into a PART consisting OF SURPLUS VALUE and a PART consisting OF PRODUCTIVE CAPITAL. For them this gold therefore represents nothing but the part of their surplus value accumulated in gold. And the commodities they thus sell indirectly to the gold producer constitute a part of the part of their product in which surplus value is realised.

We have observed the course of events where the gold producer buys means of subsistence. THE SAME CASE AS FAR AS HE BUYS INSTRUMENTS OF PRODUCTION AND matières instrumentales. [XVIII-1073] Hence the whole annual product of the gold producer //we are deliberately leaving foreign trade out of the picture here// can be resolved into the expression of surplus value in gold; it is a part of the SURPLUS LABOUR of the WHOLE SOCIETY which is directly incarnated in gold, converted into gold. For the gold producer, as for any other capitalist, his total product consists of 1) a part which reproduces the constant capital; 2) a part which replaces the variable capital; and 3) a third part which represents the SURPLUS VALUE. But in relation to the whole society it is merely the incarnation of SURPLUS VALUE and SURPLUS LABOUR. To the extent that this SURPLUS VALUE comes into consideration, the gold producer is distinguished from the others only in that for him it is a form emerging directly from the process of production, whereas for the others it is mediated through exchange, through circulation. The other producers— whether of means of subsistence or of constant capital—exchange, out of the part of their product which represents surplus value, a part for the gold of the gold producer; they thus replace his capital for him and he gives them the commodity in which they realise a part of their surplus value. The relation of the gold producer to classes I and II is therefore exactly the same as the relation of classes I and II to each other. That is, the whole of his annual product can be resolved into income, i.e. it is exchanged for a part of the means of subsistence and means of production which represent income for their producers, i.e. realisation OF SURPLUS LABOUR. Just as class I realised a part of its SURPLUS VALUE in its own products, so also can the gold producer. But he can realise only a part. He must consume a part of his SURPLUS VALUE. The others, in contrast, must not consume a part of their SURPLUS VALUE, if they want to possess it in the form of gold. Therefore, in so far as this form of replacement comes into consideration, the exchange between the gold producer and the other classes does not represent a new phenomenon. But it is a new phenomenon in so far as a part of the SURPLUS VALUE is here directly converted into the material of money and thereby the simple reproduction process assumes the special feature that the valorisation of the commodity presents itself directly as accumulation of gold, hence as accumulation of latent money capital.

If we leave aside the form of capitalist production, it is clear that the producers must exchange a part of their products with each other, in part for individual consumption, in part for productive consumption. This part (and it forms BY FAR THE GREATEST PART OF THEIR PRODUCE) can ON AN AVERAGE be regarded as given, particularly in static conditions, such as were normal before the capitalist mode of production. They can only exchange the SURPLUS with the product of the gold or silver producer. And in fact their hoards are formed in this manner, and in general the basis is laid for the circulation of metallic money. The situation that only this surplus can be converted into gold remains the same in capitalist production.

In so far as the gold producer and the other producers now convert their [surplus] into capital anew as money (in addition to the money otherwise circulating amongst them), the question is not specific. The same conditions are needed as are required in general for the conversion of money into capital.

So far, therefore, we merely have this: The accumulation of money—as identical with new gold production—requires that a part of the surplus labour of the country should be invested in the production of gold.

But now let us pose the question in a different form, in which the production of new gold is entirely left on one side. It is known that during a considerable period of time, roughly from 1808 to 1830, the newly added gold and silver were exactly sufficient to replace the abrasion, etc., the WEAR AND TEAR, of the money capital of Europe. The capitalist accumulation process must also be considered in itself—precisely with regard to money—without bringing in the production of gold and silver at all.

The question that concerns us here is not the same as the one considered previously, in dealing with reproduction: how surplus value existing as money, or RATHER the part of the surplus value which is not consumed, can be converted back into productive capital. The question is rather how, and UNDER WHAT CONDITIONS, a part of the surplus value, INSTEAD OF BEING SPENT, MAY BE ACCUMULATED AS MONEY, AND THIS WITHOUT ANY REGARD TO THE EXCHANGE WITH THE GOLD OR SILVER PRODUCING CAPITALIST?

Let us consider the different classes:

class I, which produces means of subsistence;

class II, which produces the constant capital for those means of subsistence and the constant capital for this constant capital;


[XVIII-1074] On class I. This class has to replace its constant and variable capital. It replaces the latter through its own products, it buys the former through exchange for its products.

As regards the surplus value, class I must itself consume a part of it; but its whole product, * surplus value as well as capital, exists in the form of commodities destined for immediate consumption, or destined, at least, to fall into the funds of consumption, and, thereby, to be got rid of in the sphere of circulation. It must be sold, before any part of it exists in the form of money; and the sale of it means its being bought for consumption.* This is what the part of the product which represents SURPLUS VALUE has in common with the part which represents capital. * If, therefore, that class need only consume part of its surplus produce itself, the whole surplus produce must be consumed—and, therefore, sold to consumers. If not, it will encumber their warehouses in the form of not consumed and unvendible commodities.*

According to our presupposition, class I exchanges with class II only the part of its product which represents its constant capital, hence NO PART OF REVENUE. When dealing with this question, therefore, the exchange with this class must *be left out of consideration altogether, as far as class I is concerned. We are thrown back upon [class I] itself.

Within class I itself, the exchange with the workmen must be also eliminated. The workmen of class II are already included in the exchange of class I with II, which exchange, we say, is to be eliminated. Their own workmen only pay them back in money the value of the capital paid out to them in commodities. This exchange has nothing at all to do with the realisation of the surplus value, but only with the variable capital advanced.

We are then forced to consider the parties of class I itself, which share in the surplus value produced in it, and who by their exchanges return to the producing capitalist the monetary value partly of his capital advanced, partly of his profit. Neither the exchange with class II, nor the payment of the variable capital within class I, has anything to do with the question thus put.*

We have seen how a part of the capital can accumulate as money capital, in so FAR as not only the part of income which the gold producer consumes in natura, but the part of his product (gold) which he must give in natura in exchange, in order to replace his capital (leaving aside the part of this product that he sells as raw material to other branches of production), both constitute a part of the income of the other producers, a part which is retained directly in the shape of gold, is initially HOARDED gold, and can then function as money capital in reality, i.e. enter directly into the accumulation process of capital.

The question we now pose is this: Leaving aside this part of the SURPLUS VALUE, which is accumulated through exchange with the gold producer in the shape of gold, how is it possible at all for productive capital initially to pocket as gold a part of its income, instead of spending it, and then to accumulate this part as money capital?

The capitalist has laid out £100. His commodity = 110. In our presentation so far, where the surplus value of 10 BEYOND THE CAPITAL BECOMES MONETISED, we assumed that the income was entirely eaten Up; SO THAT IN FACT THE MONEY SPENT IN THE CONSUMPTION OF THE REVENUE monetises the surplus value, PAYS IT BACK. But if the capitalist (and EACH CAPITALIST, for the matter must be conceived in a general way; as a process of capital, NOT OF ONE SINGLE CAPITALIST AT THE EXPENSE OF OTHERS, so that e.g. the sale by one capitalist of 110, of which he only SPENDS 105, is not explained by saying THAT ANOTHER IS UNABLE TO SELL PART OF HIS PRODUCE) replaces 100, SPENDS 5 AND ACCUMULATES 5, HOW is THIS TO BE MANAGED ON A GENERAL SCALE? THAT IS THE QUESTION TO BE PUT AND TO BE ANSWERED.

Just as a part of the produce of particular spheres of production enters into them again as a condition [of production], this consideration would be important if we were to examine a specific sphere of production of class I. But here it is not important. Let 100 represent the total capital of this class and 10 its total profit. It must consume a part in natura (i.e. in the product of this class itself in natura). Say 5. The question is thus: under what conditions can this class keep back 5 as money, FIRST conditions for the reconversion of income into capital? The first condition is that it sells for 105. The 100—replacement of the capital—is explained, and therefore does not come into consideration any further here. The question is, to whom are the commodities to the value of £5 sold? They consist of commodities which in part merely enter into the income of the higher classes, in part enter into the consumption of the workers, productive or unproductive .




“CAPITAL IS DIRECTED TO DIFFERENT EMPLOYMENTS BY THE RATE OF PROFITS. This GENERAL PRINCIPLE is modified by: * 1) the difficulties connected with a change of investment; 2) the risk which attends different investments. Risk of losses* determined by the INSURANCE SOCIETIES. But there is also *the risk of success. Should we take into account the many losses sustained by the community of merchants, the number of failures, as well as the instances of uncommon success, it would be found, that the average rate of profit in commerce, does not differ from that of capital, when vested in other branches of production” (S. P. Newman, Elements of Political Economy, Andover and New York, 1835, [pp.] 83-85).

“In the existing economical arrangements of society, the very act, which is performed by the merchant, of standing between the producer and consumer, advancing to the former capital and receiving products in return, and then handing over these products to the latter, receiving back capital in return, is a transaction, which both facilitates the economical processes of the community, and adds value to the products in relation to which it is performed”* (I.e., [p.] 174).

“Time is saved for the MANUFACTURER and the CONSUMER by his intervention and money. This *service requires an outlay of capital and labour* and must, * since it adds value to products, for the same products in the hands of consumers are worth more than in the hands of producers*” [p. 175],

//this is absolutely wrong. The use value of a commodity is greater IN THE HAND OF THE CONSUMER THAN IN THAT OF THE PRODUCER, because it is only then that it is REALISED at all. * The value in use of the commodity only becomes realised by passing into the sphere of consumption. In the hand of the producer it exists in a latent form only. But I do not pay a commodity twice over, first its value in exchange, and secondly its value in use. By paying its value in exchange, I appropriate its value in use. Its value in exchange is not augmented by passing from the producer to the consumer*//,

“STRICTLY BE CONSIDERED AN ACT OF PRODUCTION." //This is wrong.// (I.e., [p.] 175.)

“Let us say that trade is useful, but let us not say: trade is productive” (F. Vidal, De la répartition des richesses etc., Paris, 1846, [p.] 198).[65]

A very good work on mercantile capital is: Corbet (Thomas), An Inquiry into the Causes and Modes of the Wealth of Individuals; or the Principles of Trade and Speculation Explained, London , 1841.

Corbet does not pretend to give the GENERAL PRINCIPLES OF POLITICAL ECONOMY here. He conceives mercantile capital as something specific, and he describes its specific mode of operation. The connection between mercantile capital and the GENERAL PRINCIPLES IS RATHER LOOSELY more hinted at than developed. Yet, this is not the task Corbet sets himself. He leaves it to the GENERAL ECONOMIST. We shall now go through some of Corbet’s main points.

* “All trade consists in the exchange of things of different kinds; and the advantage arises out of this difference. To exchange a pound of bread against a pound of bread ... would be attended with no advantage ... hence trade is advantageously contrasted with gambling, which consists in the mere exchange of money for money”* (I.e., [p.] 5).

With C—M—C the ADVANTAGE arises from the difference between C and C”, i.e. the use values exchanged. The commodities are only realised as use values through this exchange, by passing out of the hand in which they are merely repositories of exchange value into the hand in which they are really use values. Exchange value appears as a mere form for the mediation of this process, and no alteration in the exchange value is IMPLIED IN IT. The whole movement of [XVIII-1076] capital M—C—AT, on the other hand, IMPLIES THE QUALITATIVE IDENTITY OF THE EXTREMES M and M’. * If no alteration were implied in the quantity of the extremes, the operation would be tautological, silly and useless. And in fact, suppose a merchant has bought commodities for £100 and the state of the market forces him to again sell them for £100. It is the same as if he had kept the original £100 in his hands, as far as he is concerned or his £100 are concerned. If he were forced to sell them for less, [which] may happen, the operation implies a positive loss, which can never be its purpose or its aim.* This is the general formula for capital, whether INDUSTRIAL OR MERCANTILE. And whether the trade is in commodities or money. It is always buying in order to sell; hence, if we leave aside the CHANGE IN THE QUANTITY of M’, AS COMPARED WITH M, * it is the exchange of money for money, of value in exchange for value in exchange. There is no difference in the kinds of the commodities exchanged. Hence no advantage arising out of that difference.* Thus according to Corbet every MOVEMENT of capital would be * gambling, and the difference between gambling properly so called and other kinds of capitalistic gambling would amount to this: In the one case //but this is also the case with all the operations of the monied capital properly so called// the exchange of money for money is concealed by intermediate movements; in the other case it is not. The gambler directly (and he shares this with the capital-lending capitalist, the banker, etc.) puts out money to gain more money or to lose the money put out. The productive capitalist, whether industrial or commercial, first exchanges his money for the commodity, to afterwards exchange the commodity for money. In the one instance the exchange of money for money is undisguised, direct, sans phrase. In the other instances it is concealed by intermediate movements, but does always appear as the result of the complex movements.* If Corbet therefore calls GAMBLING GAMBLING because it is EXCHANGE OF MONEY FOR MONEY, EVERY MOVEMENT OF CAPITAL RESOLVES INTO GAMBLING. This is why e.g. Pinto regards trade as “un jeu”.[66] But since this jeu would soon have to come to an end if this operation were to continue, if only one side gained, an alternation would have to take place: now one side, now the other, would have to be THE LOSING OR THE WINNING PARTY. This only expresses the contradiction that profit UPON ALIENATION[67] implies loss on one side, and therefore cannot be a continuous, general relation of production. Pinto says:

“Trade is a game; and nothing can be won from beggars. If one won everything from everybody for a long time, it would be necessary to give back the greater part of the profit voluntarily, in order to begin the game again. This devouring trade would destroy itself” ( Traité de la circulation et du crédit, edit. Pinto, Amsterdam, 1771, p. 231).[68]

And our friend M’Culloch in fact finds himself unable to distinguish in any way at all the principle of speculation, i.e. OF GAMBLING, from that of trade and the movement of capitalism — buying in order to sell. He says:

* “Every transaction in which an individual buys produce in order to sell it again, is, in fact, a speculation” * (A Dictionary, Practical etc., of Commerce etc., London, 1847, [p.] 1056 sqq.).

Note which is to be made on the division of labour.

Corbet establishes a very important new principle of the division of labour WITHIN THE SAME SPHERE OF PRODUCTION. However, this principle of the division of labour cannot be developed here, where we are speaking OF ITS GENERAL NATURE, because it already presupposes the real movement of capital.[69] The principle is the equalisation of the prices of commodities, WITHIN A LONGER PERIOD OF YEARS, TO THEIR PRICE OF PRODUCTION. In industry proper it is already the peculiar circulation of fixed capital WHICH FASTENS THE PRODUCER NOT ONLY TO A PECULIAR SPHERE OF PRODUCTION, BUT TO A GIVEN SUBDIVISION OF THAT SPHERE. In trade (WHOLESALE) the same SUBSUMPTION TO A SPECIAL KIND OF TRADE, AND TO A PARTICULAR SUBDIVISION OF THAT KIND, is PRODUCED by the cycle of equalisation of commodity prices [XVIII-1077], i.e. market prices, which stretches out over a number of years. In general Corbet emphasises very well how the AVERAGE PRICE, which appears AT FIRST VIEW as an abstraction,

1) appears as a principle regulating the division of labour;

2) how in turn particular TRADES—SPHERES OF EMPLOYMENT OF CAPITAL— are formed, which are only founded on AVERAGES.[70]

* “The third principle of trade is, to deal always in the same commodity, or set of commodities” (p. 12).* “This is in part founded on and * aided by the necessity of equalising the fluctuation of trade” (I.e.). “Hence when trade has made its greatest advances, and comes the next to perfection, such divisions of the professions, as the Russian merchant, the American, the Dutch merchant, the timber merchant, the fruit merchant, etc.” ([p.] 14).

“Profit, on the general principle, is always the same, whatever be [the] price; keeping its place like an incumbent body on the swelling or sinking tide. As, therefore, prices rise, a tradesman raises prices; as prices fall, a tradesman lowers price, i.e. as they are raised or lowered to him, he raises or lowers them to his customers”* (I.e., [p.] 20).


The equalisation of profits (along with the AVERAGE story we have just noted) is well presented in the following:

* “Every necessary trade must or does yield profit, and when trade ceases to do so it ceases to be necessary” (I.e., [p.] 22). “One business not more profitable than another” (I.e.). “One business not more hazardous than another”* ([p.] 24). “E.g. shipping: With regard to the trade in general, * the freight must compensate or pay for all hazards, and so far as the individual is concerned, they are covered or reduced to nothing by insurance; a device by which the loss is spread over all,” *

//it would be just as foolish to say *that this loss ceases to exist, because it is sprea d over all, as it would be to say that the diminution of profits resulting from the diminishing proportion of variable to constant capital, or from the longer revolutions of fixed capital or the later returns of some sorts of circulating capital, or of any of the circumstances, regulating the equalisation of profits between different spheres of production—and the hazard, the risk of loss, greater or smaller in different spheres, fully enters into those regulating circumstances—does take away the diminution of the general profit of capital caused by those circumstances//,

“or the whole trade is made to contribute to the loss of each individual member, with a fair remuneration for those who take the charge and run the risk of equalising the business, i.e. the underwriters” * (I.e.). “It can be assumed THAT ALL THE SHIPS BELONGING TO GREAT BRITAIN are lost (by force or through DECAY) in 17 years” ([p.] 26). “INSURANCE against loss by fire would seem a very hazardous TRADE, if one compares the SMALLNESS of the PREMIUM RECEIVED with the GREAT SUMS the INSURERS are called upon to pay.... But owing to THE GREAT EXTENT OF THE BUSINESS and to the AVERAGE which that * extent establishes, it is reduced to a business of very equal tenor, yielding always a fair profit or percentage on capital, and no more; wonderfully exact and uniform indeed considering the extremes to which it is subjected” * ([p.] 27). “When we say that one business is not more profitable than another, *this is to be understood of business in general; and taken along with the fact that eac h individual business is at one time more or less profitable, or pays better or worse than at another. That, indeed, a variation of profit as well as of price, to a certain extent, perpetually takes place or is in constant operation in each and all businesses, is beyond question.* It arises out of * adjusting the supply to the demand” ([p.] 33). “Fluctuations compensate each other” ([p.] 35). “Fluctuations, ebbs and flows, or oscillations continually happen or are constantly taking place, to a greater or [XVIII-1078] less extent, in each and all businesses”* ([p.] 36).

With regard to competition:

“FOR COMPETITION the following general principles apply: THE MINIMUM OF PRICE OF ANY COMMODITY REGULATES THE MARKET PRICE OF THAT COMMODITY. Secondly: IT IS NOT THE MAJORITY, BUT THE MINORITY OF PERSONS, who regulate competition. Thirdly: * it is capitalists, i.e. the greater or chief capitalists, who fix price. In this manner there is only one company in England for the manufacture of plate glass of any size, viz. the British Plate Glass Company at Ravenhead in Lancashire, all others having been found unable to compete with it; and the great thread manufacturers at Shrewsbury, oblige all other thread manufacturers in the kingdom to do as they do, as all the Ironfounders in Scotland are regulated by and follow steadily in the rear of the great Carron company*” (I.e., pp. 42-44). “LETTING e.g. of LANDS AND HOUSES is A CONDITIONAL SALE, OR SALE OF THE USE OF A THING FOR A LIMITED TIME’ (I.e., p . 81).

Businesses ON AVERAGE:

* “The great principle on which all insurance proceeds, whether sea, life, or fire, is average , the spreading of the general loss over the whole insured; or the uncertainty of individual events, and the certainty of general or cumulative.* E.g. * the duration of the life of any one person is very uncertain, but the average duration or term of human life is very certain or well established. So also in sea or fire insurance, the destruction of any individual or particular property is a matter of uncertainty, but the average amount or value of the property destroyed, or that will be destroyed, within a given time, is a thing pretty well ascertained or settled. It follows, therefore, that the less the risks (i.e. each individual risk) in amount, and the greater the number of them undertaken, the more nearly is the business reduced to a perfect average, and the better conducted” (I.e., [pp.] 100-01).

“Business is at all times overdone” (p. 115 sqq.). “However great the appetite or desire of the public for any thing, the food administered, the supply furnished, goes always beyond the demand. Like the Malthusian principle of propagation, the talent in society is always in advance, redundant, superabundant * (e.g. in the writing of newspapers). ...Nowhere is this more conspicuous than in towns. A town is always OVERBUILT, THERE BEING ALWAYS MORE HOUSES THAN ARE WANTED, particularly in the OUTSKIRTS OR SUBURBS, where they * never pay, but seem as if built for the public good or the dignity or honsur of the place—with but a far distant or prospective view to profit*” ([pp.] 115-17).

An important circumstance in the circulation and reproduction of capital is this: Time passes between the outlay and the RETURN of the capital, EVEN IF IT RETURNS. This interval, in proportion to its size, has a dual impact. Firstly on the use value. Time destroys use value absolutely; i.e. * every thing, in a certain period, deteriorates, and is at last corrupted, spoilt and bereft of the qualities which constitute its value in use; some articles sooner, some later. Some must be sold very quickly, not to deteriorate or to be altogether spoiled; some may stand a longer time. All are ruined, more or less, if, beyond a certain time, they do not enter into consumption, or, what is the same, prolong their existence as vendible commodities, instead of being used as values in use. This, then, is the first risk a commodity runs, in fact capital runs, by being converted from money into the shape of commodities, whether destined for individual or industrial consumption. Besides, the conservation of [XVIII-1079] commodities, so far as they are values in use or articles, requests spending upon them of capital and labour, in some instances less, in others more. Into their mercantile price, there can only enter the average cost which the conservation of a given article, during the interval that it finds itself upon the market, necessitates. That average cost, for a given article, is determined by the average time it is fixed in this interval between production and consumption, or its average stay as a commodity upon the market. For different article s this cost of conservation is evidently determined, not only by the average time they stay upon the market, but also by the average deterioration or cost of preventing that deterioration, according to the nature of different articles, during the same time. If the average time is given, the cost of conservation depends for different articles upon their specific qualities as values in use. If the cost, resulting from the different nature of the articles, is given, it exclusively depends upon their different averages of return, or the different averages during which they encumber the market, find themselves upon the market in the state of commodities (vendible commodities is only a tautology). This then constitutes one item of the costs of circulation. But it is evident, that this item, instead of adding to the value of the general production, can in no case be anything but a deduction from it. Suppose, that the average time, during which all articles stay upon the market, be the same; suppose in the second instance, that their deterioration and the costs to counteract it be the same; that, therefore, the unavoidable déchet[71] during the identical time of circulation and, moreover, the cost to prevent extra-déchet or deterioration, be the same for every sort of produce; then it is clear, that this unavoidable déchet on the one part, and the cost of limiting it to its minimum, is a deduction from the value of exchange of the article (at least its surplus value), firstly because in a given time so much percentage of the whole production is simply lost, and, secondly, because so much faux frais de production[72] are incurred, incurred not in creating surplus value, but in the task of realising it. It would never do to say that the consumer must pay this. But, from what source is he to pay it? His source for paying is his product, or the co-property in the product of another person. It is then clear, that his produce has been diminished, and that his costs of production have been augmented. Out of a diminished fund of production and of increased costs of production, he is positively unable to compensate another producer for the same loss incurred by that other producer. It is, therefore, clear, that as far as this item enters into price, it does not change the relation of prices of commodities, so far as the ratio of those costs of circulation is identical for them, and that, so far as it changes the relation of prices, and even of profits, this can only constitute a compensation for the greater loss incurred by particular branches of business, which exceptional loss, inherent to the nature of the business, is spread, by the equalisation of profits, over the whole sphere of employment of capital.*

[XVIII-1080] The second effect of time (disregarding the general effect of the RETURN, TO ENABLE THE PRODUCER TO ENTER UPON REPRODUCTION) within the circulation process * affects not the value in use (and the value in exchange only secondarily, so far as it exists only in the value of use), but the value of exchange directly, without any regard to the changes the article itself, or the value in use of a commodity, may incur during its intermediate stay between production and consumption, or during its sojourn on the market. We shall not speak here of the changes in the market price of commodities, since we always are reasoning here upon the supposition that commodities are selling at a price corresponding to their real values.

But the real value of commodities changes during a certain interval of time, and the greater the time, the larger the field, the opportunity for such changes of value. We do not take into consideration the mercantile capital. Although it has bought the article beneath its value, the value of the article may fall before it sells it, and in this case the difference between buying and selling price may either diminish, altogether vanish, or even the selling price may fall beneath the buying price according to an intermediate change having taken place in the value of the article.

But, as said, it is not worth while to consider here the mercantile capital in particular.

The process of circulation of the capital dissolves into two parts, epochs or phases—first, the conversion of commodity into money, and, secondly, the reconversion of money into commodities, viz. those commodities which constitute the ingredients entering into the production or formation of the first commodity; productive ingredients, as we shall call them for abbreviation’s sake. Now we shall inquire how far any variation or change in value may affect price and profit; any variation taking place in one or the other of these two phases. We shall commence with the latter, the reconversion of money into the productive ingredience.

Be the commodity produced cotton twist. The twist has been sold, converted into money, the surplus value contained in its price has been realised, and it is now about being reconverted into its productive ingredients.

It must be converted into cotton, and matières instrumentales, such as coal, soap, tallow, etc. It must, furthermore, be converted into labour, by paying anew wages out of the funds realised. The value of cotton, like all other raw produce, depends, independently of the will of man, or the capital expended, on the seasons. The same quantity of labour may, according to the favour of the season, as far as the old cotton fields are concerned, or to the fertility of the soil, as far as new fields for the production of cotton have been broken up, yield very different quantities of cotton. Consequently, the same quantity of cotton, say a cwt or a lb, may represent very different values. Suppose now that the value of cotton had risen, either because of bad weather, or because the additional demand for cotton was supplied from less fertile soils. In this case, to replace that part of his capital, which must replace cotton, the spinner has to make a greater outlay of the money realised. [XVIII-1081] This enhancement in the value of cotton may absorb or surpass the whole profit made in the first revolution of his capital. Then the price of labour may rise, because the value of necessary. He must again pay [the] greater part of his return, to replace that part of his capital which resolves into wages. If both these circumstances occur at the same time, it is probable that, even if he employs the whole money return— capital and profit—he will be unable //without recurrence to loan, not falling under our consideration now// to recommence his operations on the same scale of production. At all events, he will be unable to do so with the same amount of capital originally advanced. His operation may be a losing one, if we contemplate not one, but both consecutive revolutions of his capital. Suppose that, during the first turn, he advanced £100 and had returned to him 120. Suppose that in the second turn, the outlay for a less quantity of constant capital having augmented, and ditto the variable capital having risen in value, but diminished in quantity (the quantity of labour employed), so that his profits were only 5 p.c. He has won 5 p.c. or 515/21 in the second revolution. But he has advanced £120, not only the capital but the profit of the first revolution. Thus he has lost £146/21; because this part of his profit realised in the first turn has vanished. In both cases he has realised surplus value; but part of the surplus value realised in the first turn has been lost in the second. In the second turn, considered for itself, he has lost, because he had £100 capital and 20 profit, and has now 120 capital and only 515/21 profit. It is evident that his average profit must be determined by the equalisation of these fluctuations during the different turns. Hence he must stay to the same business, to get the average rate of profit.

There may also take place a change of value in the ingredients of his fixed capital. If coal, or iron, would have risen in value, the déchet may be impossible to be replaced at the same price, at which it originally entered into the process of production. The cost of its replacement may be higher than its original cost value amounted to. Besides, apart from this part of the fixed capital—the déchet of the last year to be replaced—the value of the whole machinery, instruments, etc., may have sunk by a fall in its cost of reproduction, or by a fall in its new value. In fact, if the déchet costs more to replace, the unconsumed part of the machinery will also rise in value; if the value of the whole machinery sinks, the cost of replacing its déchet will also sink.

We come now to* C—M, *the phasis during which the produce circulates, waiting to be changed into money. We do not speak of any fall or rise of market price originating from changes in the relative forces of demand and supply. Because we suppose prices=values. If in the preceding example the price of x lbs twist=£120 (including cost=£100, of which say £80 for raw material, i.e. cotton +£20 surplus value), and if the value of cotton fell suddenly, from an extraordinary harvest, by 60 p.c., then the cotton worked up in the twist floating upon the market would sink as well as the cotton in its raw state. Hence the price of the x lbs would be reduced from £120 to £88 (the cotton contained in it sinking from £80 to 48). The spinner would have incurred a positive loss of £12 , although he had realised a profit of £20, or a profit of [XVIII-1082] 20 p.c. which, in fact, may be a surplus value of 50 p.c. and more. But it would for him be the same as if he had bought x lbs [of] cotton for £80 in order to sell them for 48. If there was not the surplus value sold in his twist, his return would be only=48+20=£68. Consequently of £20 more than it is now in consequence of the surplus value realised. In fact, if cotton continued on the same low scale of price, the manufacturer, in the new turn of reproduction, might lay out only £48 in cotton, £20 for the other expenses, and continue on the same scale of production. And he might act with the £20 profit as before. (In regard to the capital laid out, the rate of profit would even have risen.) But on a full or an approximate return of the former cotton prices, he would not possess sufficient capital for a reproduction on the old scale. If he had debts to pay (interest for instance for £100 borrowed or bills of exchange on the suppliers of the old cotton, coal, etc.) he might be bankrupt. And, at all events, the monetary value of his capital would have depreciated, although no depreciation would have taken place in the value of money—£88 would at all events represent a smaller capital than would 100 (120 with the profit) before. The effect would be, of course, the reverse, if the price of cotton, etc., had risen instead of having fallen.*


But since the capital is always in both phases simultaneously—(newly invested capital, OR ADDITIONAL CAPITAL, IS, OF COURSE, ONLY AFFECTED BY THE CHANGES OF VALUE WORKING ON M--C), A CHANGE OF VALUE will thus WORK IN A CONTRARY DIRECTION UPON THE PART OF THE CAPITAL CIRCULATING AS CAPITAL (in C—M) and * the part of the capital reconverted from the form of money into that of the productive ingredients. For instance, if the value of cotton falls, the twists and cottons upon the market will be depreciated, but the capital of the spinner, etc., reconverted into cotton will yield higher profits than before and may enable him to enlarge his scale of production. (It will of course damage him, if he possesses great provisions of raw cotton, before the change of value took place. This will be depreciated like the cotton already worked up in twist, etc., and still more immediately.) On the other hand, if the value of cotton rises, the price (hence the profit, since the cost remains the same) of the circulating twist, etc., in short of all goods into which cotton has entered, will rise, and so the capital returned far exceed the capital advanced (the same will be the case with productive capital already invested in cotton=provisions) while the capital to be reconverted into cotton* (M—C) *will yield lower profit and may necessitate either a contraction of production (should wages not have fallen simultaneously) or the employment of additional capital, to yield the same quantity of produce and to absorb the same quantity, as before, of surplus labour. It is only with overstocked markets (be it that the markets are overstocked with yarns, goods, etc., be it that large accumulations of cotton of the former harvest still encumber the warehouses of the merchant or fill those of the manufacturer) that a fall in the price of cotton (or any other productive ingredient) can harm the productive capitalist to any degree. But an enhancement in the value of cotton, etc., will always check reproduction to a high degree, while only with markets overstocked can it bring him any profit.*

AT ALL EVENTS, these RISKS, arising out of the * change of value in the productive ingredients of commodities, and, therefore, affecting commodities in the interval between production and sale, or between their monetary form and their reconversion into the productive elements,* can never enter into the costs of circulation [XVIII-1083] , THAT IS TO SAY, SUCH COSTS OF CIRCULATION AS ARE COMPENSATED FOR IN THE PRICE OF THE PRODUCE. It is clear so far that the AVERAGE RISKS FROM SUCH CHANGES OF VALUE as are common to all spheres of production CAN GIVE NO TITLE OF COMPENSATION FOR ANY PECULIAR SPHERE OF PRODUCTION. SECONDLY, the commodities which ARE EXCEPTIONALLY EXPOSED TO SUCH SUDDEN FLUCTUATIONS OF VALUE (e.g. all those into which the annual produce of the earth enters, as opposed to those into which a specific mining product enters) *if they incur the risk of extraordinary losses, run the chance of extraordinary gains. And thus this becomes equalised.*

The contemporary COTTON crisis resulting from the American Civil War[73] has demonstrated both of these things. On the one hand, the greatest misery in the MANUFACTURING DISTRICTS and a standstill OF THE MILLS ON THE LARGEST SCALE. On the other hand, since the markets have since 1860 been oversupplied, an increase in the prices of the YARNS and GOODS available on the market, and therefore a rise in profits for the manufacturers to whom these GOODS belong. But particularly for those who possessed a STOCK OF COTTON, an d are speculating with it in Liverpool.

Now back to Corbet.

* “Time produces a difference of price. Now the principles of trade suppose a constant selling with one hand as a buying takes place with the other, so as that a person shall never have any stock on hand on which time can operate or produce an effect * This is never literally the case, even with a GROCER, much less with a CLOTHIER. THE EFFECT OF A RISE OR FALL OF PRICE HERE APPLIES especially TO THE MANUFACTURER, with whom, in many cases, a considerable time often elapses between the time when he buys the raw material and that at which he is * able to bring it to market worked up and finished ... while all must be affected to the extent of their stock on hand when they come out of business, according to the difference of price at that period as compared with what it was when they went in” ([p.] 121). “With regard to the profit of the shopkeeper, or the value of the labour laid out on a raw material by a manufacturer, if in either case a person can replace his stock at a price by as much less as the amount of that profit or the value of such labour, he is secure and safe whatever other difference may exist between the price of the commodity when purchased and when sold. * E.g. * shall he produce £100 worth of goods, if he sell them for £85 and replace his stock or raw material at £80, or sell them only for £80 and replace his stock or raw materials at £75, in either case he comes out of the transaction with a clear gain, profit or return on capital or stock of 5%; and he can never be placed in any better situation by an advance of price, because if in that case he has much to receive, he has as much to pay when he returns to the market. It will thus be seen that the profit on stock has nothing to do with, and is altogether distinct from the rise or fall of price”* ([p.] 121).

But in any case his capital is depreciated. Incidentally, it is only correct to say that he then always makes a profit of £5 , but it is wrong to say that he always makes a profit of 5%. 5 on 100=5%; 5 on 80=61/4% and 5 on 75=62/3%. If in consequence of the VARIATION OF VALUE there is a fall in THE VALUE OF CAPITAL, the rate of profit will rise, provided that the AMOUNT OF PROFIT remains the same; if the VALUE OF CAPITAL rises in the given manner, the rate of profit will fall, provided that THE AMOUNT OF PROFIT REMAINS THE SAME. This point is purely formal with the MERCHANT, who always adds e.g. 5%, * whatever the price of the commodity. The same does not hold true with the producing capitalist. The rate of profit must rise with him in the one case, and fall in the other, in as much as he sells the same surplus labour as before. *

It is clear from the above that it is necessary to * distinguish between one revolution of capital, and the set of revolutions or repeated number of revolutions which a capital describes in an economic cycle of reproduction. * If we consider ONE SINGLE REVOLUTION, the profit=the * ratio of the surplus to the capital advanced. And if he sells his commodity under cost price, it is a clear loss. Here we have in fact only the difference between the buying price (or what is the same to the producing capitalist, the cost price) and the selling price (or production price): the difference between the value of the capital originally advanced, and the value to which the capital worked up into the commodity is sold. However, the thing is different, if we consider not only one productive [XVIII-1084] revolution, but the process of continual reproduction during an economic cycle encompassing several years. * Just as important here, * not only for the profit realised, but for the value of the original capital to be [re]placed, [is] the concatenation of, or the ratio between, the different single revolutions; in one word the difference between the original value of the capital at the beginning of a turn and its replacing value at the second turn and so forth. For instance, if the capital=100, and profit=10 at the end of the first turn, and the replacing value at the beginning of the second turn=110, profit=0. And the reproduction would be commenced under worse circumstances; since only the same mass of surplus labour would be absorbed, although the capital advanced would have been augmented. The cost price would have increased, and the rate of profit decreased. These fluctuations are equalised in the whole cycle (even if the capital be depreciated finally, it will be made up by profit) which comprises a set of turns. *

* “The fall of prices, however, acts as a great discouragement to trade; because although the capitalist does not in effect, at least considered as a merchant, lose by it, he seems to do so, and the noncapitalist is ruined. Thus, supposing a person without capital to have purchased £100 worth of goods, and to have given his bill for that amount, if he is obliged to sell them for £80, or can sell them for no more, he is minus £20, and so cannot meet the demands on him, and is obliged to stop. As is commonly the case, the first bill of a person in such circumstances will be paid by selling below prime cost, and so may the second; but it is obvious that such an expedient must soon tell, and bring matters to a crisis. * The NON-CAPITALIST is always EXPOSED to this * fatality, and his situation very much resembles a time bargain between gamblers in the stocks; with this distinction that he wants the funds necessary to pay his differences when the day of settlement arrives, if the same shall be against him” ([p.] 122).

“Should we admit that the value of manufactured goods is affected by an alteration in the value of the raw material, some, particularly woollen goods, vary considerably, and consequently a person may gain or lose by having a stock of such on hand* ... for the essence of speculation lies after all in the * raw material, without seeming to do so, and would be properly carried into effect only in the coarser or plainer sorts, standing clear of fashion and the expense of manufacture as much as possible” ([p.] 128 sqq).

“Accumulation of stocks or non-exchange ... overproduction” ([p.] 104).

“A bushel of grain or a yard of cloth has, properly considered, no progressive value; is fixed and unalterable in its nature; and can be affected only by an alteration in other things, which may be either for or against according to circumstances” ([p.] 204).

“... time bargains in the funds ... this is branded with the name of gambling; because the one seems to lose exactly what the other gains... And gambling it certainly is” ([pp.] 207-08).

“With regard to the latter” * (the morality of this gambling with FUNDS) * “indeed, we can see nothing in them different from what takes place in all speculation, which, so far as it goes upon the difference of price between one time and another, futurity and contingency, may equally come under the denomination of gambling; and in point of fact, there are bargains for commodities which proceed upon the stipulation of delivery at a future period or the payment of a difference in lieu of it” * ([p.] 209).

  1. Cf. the paragraph below with Capital, Volume III, Chapter XIX (present edition, Vol. 37).
  2. When working on this manuscript, Marx was guided in his study of capital by the plan he had devised when writing the manuscript of 1857-58 and which he set out in a letter to Engels of April 2, 1858: "Capital falls into 4 sections, a) Capital en general... b) Competition, or the interaction of many capitals, c) Credit, where capital, as against individual capitals, is shown to be a universal element, d) Share capital as the most perfected form (turning into communism) together with all its contradictions" (see present edition, Vol. 40, p. 298)
  3. Labour capacity.— Ed.
  4. labour capacity, labour power. See Note 36.
  5. Th. Tooke, An Inquiry into the Currency Principle..., London, 1844, pp. 34, 36.131— Ed.
  6. To begin with.— Ed.
  7. Shopkeeper.— Ed.
  8. The reference is to the section "Digression. Tableau économique, according to Quesnay" in Notebook X of the manuscript (see present edition, Vol. 31).
  9. In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).
  10. In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).
  11. Marx gives the nearest whole. More exactly, at an annual rate of accumulation of 5 per cent, the retailer's capital will amount to 100, 105, llO'Ai, 11561/80, etc.
  12. In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).
  13. When working on this manuscript, Marx was guided in his study of capital by the plan he had devised when writing the manuscript of 1857-58 and which he set out in a letter to Engels of April 2, 1858: "Capital falls into 4 sections, a) Capital en general... b) Competition, or the interaction of many capitals, c) Credit, where capital, as against individual capitals, is shown to be a universal element, d) Share capital as the most perfected form (turning into communism) together with all its contradictions" (see present edition, Vol. 40, p. 298).
  14. Par excellence.— Ed.
  15. Marx gives the nearest whole. More exactly, at an annual rate of accumulation of 5 per cent, the retailer's capital will amount to 100, 105, llO'Ai, 11561/80, etc.
  16. In the margins opposite this paragraph Marx wrote "NB" and below "This calculation is wrong". He made similar calculations on p. 1047 (see this volume, p. 186), following which he apparently crossed out the words "This calculation is wrong" and added "See p. 1047
  17. From the standpoint of circulation.— Ed.
  18. Literally.— Ed.
  19. When working on this manuscript, Marx was guided in his study of capital by the plan he had devised when writing the manuscript of 1857-58 and which he set out in a letter to Engels of April 2, 1858: "Capital falls into 4 sections, a) Capital en general... b) Competition, or the interaction of many capitals, c) Credit, where capital, as against individual capitals, is shown to be a universal element, d) Share capital as the most perfected form (turning into communism) together with all its contradictions" (see present edition, Vol. 40, p. 298).
  20. This seems to be a slip of the pen. It should probably be "shopkeeper".— Ed
  21. See this volume, p. 181.— Ed.
  22. See, in particular, pp. VI—272, VII—273-299, IX—379-419 and XIII —698- 703 of the manuscript of 1861-63 (present edition, Vol. 30, pp. 411-51; Vol. 31, pp. 130-200; Vol. 32, pp. 111-22)
  23. Instrumental materials.— Ed.
  24. See this volume, pp. 189-91.— Ed.
  25. K. Marx, A Contribution to the Critique of Political Economy. Part One (present edition, Vol. 29, pp. 359-70).— Ed.
  26. At the outset.— Ed
  27. See this volume, pp. 194-96.— Ed.
  28. In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).
  29. Sphere I in the present manuscript refers to the production of means of subsistence (objects of consumption), and sphere II to the production of means of production, or elements of constant capital. Accordingly, the capitalists in sphere I are denoted as class I and those in sphere II as class II. Later, in Volume II of Capital (see present edition, Vol. 36), Engels, basing himself on the final draft of Volume II, denoted the production of means of production as sphere I and the production of means of subsistence as sphere II.
  30. In his previous calculations, Marx assumed that the ratio of variable to constant capital in this sphere was 1:5, and not 1:6, as he now assumes.
  31. In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).
  32. Raw material and instrumental material.— Ed.
  33. In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).
  34. See present edition, Vol, 31, p. 572; Vol. 32, p. 18.— Ed
  35. One must make distinctions.— Ed.
  36. On the events which Marx describes here as "Manchester distress", see also his articles "Workers' Distress in England" and "Garibaldi Meetings.—The Distressed Condition of Cotton Workers", written around September 20 and 30, 1862, respectively (present edition, Vol. 19, pp. 239-42, 245-47); they are also mentioned in his letter to Engels of November 17, 1862 (ibid., Vol. 41, p. 430).
  37. Marx quotes the pertinent excerpt from The Morning Star on pp. XII—611, 612 of the manuscript of 1861-63 (see present edition, Vol. 31, p. 538).
  38. When working on this manuscript, Marx was guided in his study of capital by the plan he had devised when writing the manuscript of 1857-58 and which he set out in a letter to Engels of April 2, 1858: "Capital falls into 4 sections, a) Capital en general... b) Competition, or the interaction of many capitals, c) Credit, where capital, as against individual capitals, is shown to be a universal element, d) Share capital as the most perfected form (turning into communism) together with all its contradictions" (see present edition, Vol. 40, p. 298).
  39. Marx reproduces the explanation of the term "dealer" as given by Germain Gamier, who translated Smith's work into French.
  40. See present edition, Vol. 30, pp. 398-408 and Vol. 31, p. 106.— Ed.
  41. A critique of Smith's views of natural price is given on pp. VI—263-265 of the manuscript of 1861-63 (see present edition, Vol. 30, pp. 399-403).
  42. The currency principle—one of the varieties of the quantitative theory of money , which emerged in England in the 1840s. Marx deals with the theoretical views of the Currency School in Capital, Vol. Ill , Chapter XXXI V (see presen t edition, Vol. 37)
  43. Instrumental material and raw material, if any.— Ed
  44. More or less.— Ed.
  45. what Marx means by sphere A or class A hereinafter is class I of social production , the production of means of subsistence
  46. There follows an incomplete calculation which Marx crossed out with three vertical lines: "And this is the entire capital he needs in this LINE during the year. 10% of 510 makes £51 a year and £10'/5 for '/j year. For £510 the SHOP therefore receives goods to the tune of £520 V5. And for 1,020 it receives goods to the tune of 1,0402 /5. With this sum it makes purchases from the WHOLESALER every fifth of a year. For the 20 SHOPKEEPERS which exist for every WHOLESALE DEALER this makes 20x£520'/ 5=£10,404, and for 100 SHOPKEEPERS per year >/5 year=52,020. This means that for 5 /5, or 1 year, = ."
  47. Thus in the original. It should be "£11".— Ed.
  48. page 1066 opens Notebook XVIII, which Marx filled in in January 1863
  49. Marx criticised the erroneous arguments on interest and compound interest in Richard Price’s works An Appeal to the Public..., London, 1772, and Observations on Reversionary Payments..., London, 1772, and also William Pitt’s fantasy engendered by Price’s ideas, back in the manuscript of 1857-58 (see present edition, Vol. 29, pp. 218-19). When examining the question of compound interest on p. XIV—853 of the manuscript he noted: “We shall return to Price’s fantasy in the section on revenue and its sources” (see present edition, Vol. 32, p. 376). However, in Notebook XV, which contains a summary of the views of vulgar bourgeois political economists on revenue and its sources (see ibid.) there is no mention of “Price’s fantasy”. Marx did not resume his criticism of Price on this question until p. XVIII—1066 of the manuscript of 1861-63 (see this volume, pp. 222-24). Subsequently a critical analysis of Price’s views was given in Capital, Vol. Ill, Chapter XXIV (see present edition, Vol. 37).
  50. In order to prevent a growth in the national debt, William Pitt the Younger, then British Prime Minister, introduced in 1786 a sinking fund, i.e., a scheme whereby a certain proportion of public revenues was used every year to purchase state promissory notes. However, the war with France (1793-1802) was accompanied by a sharp increase in the national debt. The imbalance between revenues and expenditure led first to a limit on the issue of banknotes, and in 1797 to the enactment of a law relieving the Bank of England of the obligation to accept banknotes. Marx dealt in detail with the laws on the sinking fund enacted under Pitt in the article "Mr. Disraeli's Budget" published in the New-York Daily Tribune, No. 5318, May 7, 1858 (see present edition, Vol. 15, pp. 512-14).
  51. [Th. R. Malthus,] An Essay on the Principle of Population..., London, 1798, pp. 25-26.— Ed
  52. The reference is to Pitt's speech of February 17, 1792. It was reproduced in part in James Maitland Lauderdale's book Recherches sur la nature et l'origine de la richesse publique..., Paris, 1808, pp. 176-79, which Marx quotes below.
  53. The reference is to Lauderdale's book from which Marx familiarised himself with Pitt's speech of Februar y 17, 1792 (see Not e 147)
  54. Marx quotes partly in German and partly in French.— Ed
  55. Marx quotes partly in German and partly in French.— Ed.
  56. Marx quotes partly in German and partly in French.— Ed.
  57. The Economist, No. 412, July 19, 1851, p. 796.— Ed.
  58. See this volume, p. 219.— Ed.
  59. In its own right.— Ed.
  60. Marx planned to devote one of the books of his economic work specifically to foreign trade (see Note 1).—229
  61. Ricardo advanced this hypothesis in chapters XIII and XXVIII of his book On the Principles of Political Economy, and Taxation. Here Marx, too, adheres to this hypothesis (see, for example, this volume, p. 193), considering it to be correct (see its substantiation in Capital, Volume II, Chapter XX, point XII, "The Reproduction of the Money Material"—present edition, Vol. 36). At the same time, Marx noted Ricardo's extreme inconsistency on this issue back in his work A Contribution to the Critique of Political Economy. Part One (see present edition, Vol. 29, pp. 401-02).—231
  62. In the manuscript of 1861-63 Marx uses the term "cost price" ("Kostenpreis" or "Kostpreis") in three different meanings: 1) in the sense of the price of production, as here; 2) in the sense of the "immanent cost of production" of the commodity, which is identical to the value of the commodity (see present edition, Vol. 30, p. 401); and 3) in the sense of the cost of production.—232
  63. In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).—39, 50, 175, 176, 179, 198, 204, 206, 234, 262
  64. The excerpts from Newman which Marx gives below contain minor digressions from the original. Marx quotes Newman according to notebooks XVI and XVII of excerpts compiled in London in 1851-52.—239
  65. Marx quotes from Vidal in French.— Ed.
  66. A game.— Ed.
  67. "Profit upon expropriation" (or "profit upon alienation") is a term which was used in writings on political economy before Marx. On p. VI—221 he writes that "profit upon alienation ... arises ... from the goods being sold above their value" (see present edition, Vol. 30, p. 351).—11, 35, 67, 241, 351
  68. Marx quotes in French.— Ed.
  69. In this manuscript Marx holds that the "real movement of capital" (it can be observed in competition, credit, share capital and other more concrete forms of interaction between numerous capitals) should be examined following a clarification of what is meant by the general nature of capital as expressed by the concept "capital in general" (see also notes 1 and 44).—242
  70. Below Marx reproduces some of Corbet's propositions, partly verbatim and partly in his own summarised rendering, according to Notebook XVI of excerpts compiled in London in 1851.—242
  71. Wear and tear.— Ed.
  72. Overhead costs of production.— Ed.
  73. The American Civil War (1861-65) led, among other things, to a blockade of US cotton exports to Britain, bringing about a crisis in the country's textile industry. Many factories were closed down and their workers sacked. The price of cotton rose, bringing with it unbridled speculation on the Liverpool cotton market. Marx later returned to this in Capital, Volume III, Chapter VI, point III (see present edition, Vol. 37).—249