The Process of Circulation of Capital (Capital Vol. II). Karl Marx

       II. Adam Smith

       III. Smith Resolves Exchange-Value into V Plus S

       IV. The Constant Portion of Capital.

       V. Capital and Revenue in Adam Smith

       VI. The Economists after Smith

       20. Simple Reproduction.

       I. The Formulation of the Question.

       II. The Two Departments of Social Production

       III. The Transactions between the Two Departments

       IV. Necessities of Life and Articles of Luxury

       V. The Promotion of the Transactions by the Circulation of Money

       VI. The Constant Capital of Department I

       VII. Variable Capital and Surplus-Value in Both Departments

       VIII. The Constant Capital in both Departments

       IX. A Retrospect on Adam Smith, Storch, and Ramsay

       X. Variable Capital and Wages

       XI. Reproduction of the Fixed Capital

       XII. The Reproduction of the Money Supply

       XIII. Destutt De Tracy's Theory of Reproduction

       21. Accumulation and Reproduction on an Enlarged Scale

       I. Accumulation in Department I

       II. Accumulation in Department II

       III. Diagrammatic Presentation of Accumulation

       IV. Concluding Remarks

       Endnotes

       Footnotes

      Part 1 -

       The Metamorphoses of Capital and Their Cycles

       Table of Contents

      1. The Circulation of Money-Capital

       Table of Contents

      The circulation process¹ of capital takes place in three stages, which, according to the presentation of the matter in Volume I, form the following series:

      First stage: The capitalist appears as a buyer on the commodity and labor market; his money is transformed into commodities, or it goes through the circulation process M-C.

      Second stage: Productive consumption of the purchased commodities by the capitalist. He acts in the capacity of a capitalist producer of commodities; his capital passes through the process of production. The result is a commodity of more value than that of the elements composing it.

      Third stage: The capitalist returns to the market as a seller; his commodities are exchanged for money, or they pass through the circulation process C-M.

      Hence the formula for the circulation process of money capital is: M-C...P...C'-M', the dots indicating the points where the process of circulation was interrupted, and C' and M' designating C and M increased by surplus value.

      The first and third stages were discussed in Volume I only in so far as it was required for an understanding of the second stage, the process of production of capital. For this reason, the various forms which capital assumes in its different stages, and which it either retains or discards in the repetition of the circulation process, were not considered. These forms are now the first objects of our study.

      In order to conceive of these forms in their purest state, we must first of all abstract from all factors which have nothing to do directly with the discarding or adopting of any of these forms. It is therefore taken for granted at this point that the commodities are sold at their value and that this takes place under the same conditions throughout. Abstraction is likewise made of any changes of value which might occur during the process of circulation.

I. First Stage. M-C.*1

       Table of Contents

      M-C represents the exchange of a sum of money for a sum of commodities; the purchaser exchanges his money for commodities, the sellers exchange their commodities for money. It is not so much the form of this act of exchange which renders it simultaneously a part of the general circulation of commodities and a definite organic section in the independent circulation of some individual capital, as its substance, that is to say the specific use-values of the commodities which are exchanged for money. These commodities represent on the one hand means of production, on the other labor-power, and these objective and personal factors in the production of commodities must naturally correspond in their peculiarities to the special kind of articles to be manufactured. If we call labor-power L, and the means of production Pm, the sum of commodities to be purchased is C=L+Pm, or more briefly C{^LPm. M-C, considered as to its substance, is therefore represented by M-C{^LPm, that is to say M-C is composed of M-L and M-Pm. The sum of money M is separated into two parts, one of which buys labor-power, the other means of production. These two series of purchases belong to entirely different markets, the one to the commodity-market proper, the other to the labor-market.

      Aside from this qualitative division of the sum of commodities into which M is transformed, the formula M-C{^LPm also represents a very characteristic quantitative relation.

      We know that the value, or price, of labor-power is paid to its owner, who offers it for sale as a commodity, in the form of wages, that is to say it is the price of a sum of labor containing surplus-value. For instance, if the daily value of labor-power is equal to the product