stage in M — M', and as the second stage of the cycle, appears as the first stage of the circulation P...P.
In P...P', the term F does not express the fact that sur- plus-value has been produced, but that the produced surplus- value has been capitalized, that capital has been accumulated, and that P as distinguished from P consists of the original capital-value plus the value of capital accumulated by its movements.
M[, as the closing link of M...M', and C, as it appears within all these cycles, do not express the movement, but its result, if taken by themselves: they represent the result, in the form of money or commodities of the utilization of capi- tal-value, and capital-value therefore appears as M plus m, or 92 Capital.
C plus c, as a relation of capital-value to its surplus-value, its offspring. But whether this result appears in the form of JVP or C, it is not a function of either money-capital or com- modity-capital. As special and different forms correspond- ing to special functions of industrial capital, money-capital can perform only money functions, and commodity-capital only commodity functions. Their difference is merely that of money and commodity. Industrial capital, in its capac- ity of productive capital, can likewise consist only of the same elements as those of any other process of labor which creates products: on one side objective means of production, on the other labor-power as the productive element. Just as industrial capital can exist within the process of produc- tion only in a composition which corresponds to the require- ments of all production, even if it is not capitalist production so it can exist in the sphere of circulation only in the two forms corresponding to it, viz., that of a commodity or of money. Now the sum of the elements of production reveals its character of productive capital at the outside by the fact that the labor-power belongs to another from whom the cap- italist purchases it, just as he purchases his means of production from others who own them, so that the process of production itself appears as a productive function of indus- trial capital. In the same way money and commodities appear as forms of circulation of the same industrial capital, hence their functions as those of the circulation of this capi- tal, which either introduce the function of productive capital or originate from it. The money function and the commod- ity function become at the same time functions of money-cap- ital and commodity-capital for no other reason than that they enter into relationship with the functional forms through which industrial capital passes in the different stages of its process of circulation. It is, therefore, a mistake to attempt to derive the specific characters of money and commodities, and their specific functions as such, from their capital-char- acter, and it is likewise a mistake to derive the qualities of productive capital from its existence in means of production. As soon as M' or C have become fixed in the relation of M plus m, or C plus c, in other words, as soon as they become parts of the relation between capital-value and its offspring The Rotation of Productive Capital. 93 surplus-value, they give expression to this relation either in the form of money or of commodities, without changing the nature of the relation itself. This relation is not due to any qualities or functions of either money or commodities as such. In both cases the characteristic quality of capital, that of being a value generating more value, is expressed only as a result. C is always the product of the function of P, and M' is always merely a form of C changed in the cycle of industrial capital. As soon as the realized money-capi- tal begins its special function as money-capital anew, it ceases to express the capital-relation conveyed by the formula M' equal to M plus m. After M...M' has been completed and M' begins the cycle anew, it no longer figures as M' but as M, even if the entire capital-value contained in M' is capitalized. The second cycle begins in our case with a money-capital of 500 pounds sterling, instead of 422 pounds in the first cycle. The money-capital, which opens the cycle, is larger by 78 pounds sterling than before; this difference exists in the com- parison of one cycle with another, but it does not exist within each cycle. The 500 pounds sterling advanced as money- capital, 78 pounds of which formerly existed as surplusvalue, do not play any different role than some other 500 pounds sterling by which another capitalist opens his first cycle. The increased P' opens a new cycle as P, just as P did in the simple reproduction P...P.
In the stage M' — C |pm> the increased magnitude is indi- cated only by C, but not by L' and Pm\ Since C is the sum of L and Pm, the term C indicates sufficiently that the sum of the L and Pm contained in it is greater than the orig- inal P. In the second place, the terms L' and Pm' would be incorrect, because we know that the growth of capital implies a change in the relative proportions of the values composing it, and that, with the progressive changing of this proportion, the value of Pm increases, while that of L always decreases relatively, if not absolutely.
III. Accumulation of Money Whether or not m, the surplus-value transformed into gold, is immediately combined with the circulating capital- value and is thus enabled to enter into the cycle together 94 Capital.
with the capital M in the magnitude of M', depends on cir- cumstances which are independent of the mere existence of m. If m is to serve as money-capital in a second independ- ent business, to be run by the side of the first, it is evident that it cannot be used for this purpose, unless it is of the mini- mum size required for it. And if it is intended to use it for the extension of the original business, the condition of the substances composing P and their relative values likewise demand a minimum magnitude for m. All the means of production employed in this business have not only a quali- tative, but also a definite quantitative relation toward one another. These proportions of the substances and of their values entering into the productive capital determine the minimum magnitude required for m, in order to be capable of transformation into additional means of production and labor-power, or only into means of production as an addi- tion to the productive capital. For instance, the owner of a spinning loom cannot increase the number of his spindles without at the same time purchasing a corresponding num- ber of carders and preparatory looms, apart from the increased expense for cotton and wages, which such an ex- tension of his business demands. In order to carry this out, the surplus-value must have reached a considerable figure (one pound sterling per spindle is generally assumed for new installations). So long as m does not reach this figure, the cycle of the original capital must be repeated several times, until the sum of the successively produced surplus-values m can take part in the functions of M, in the process M' — C pm. Even mere changes of detail, for instance, in the spin- ning machinery, made for the purpose of making it more productive, require greater expenditures for spinning mate- rial, preparatory looms, etc. In the meantime, m is accumu- lated, and its accumulation is not its own function, but the result of repeated cycles of P...P. Its own function consists in persisting in the form of money, until it has received suffi- cient additions from the outside by means of successive cycles of utilization of capital to have acquired the minimum mag- nitude necessary for its active function. Only when it has reached this magnitude, can it actually serve as money-capital and eventually take part in the functions of the active The Rotation of Productive Capital. 95 money-capital M as its accumulated part. But until that time it is accumulated and exists only in the form of a hoard in a process of gradual growth. The accumulation of money, the formation of a hoard, appears here as a process which accompanies temporarily the accumulation by which industrial capital expands the scale of its productive action. This is a temporary phenomenon, for so long as the hoard remains in this condition, it does not perform the function of capital, does not take part in the process of utilization, and remains a sum of money which grows only by virtue of the fact that other money, existing without the initiative of the hoard, is thrown into the same safe.
The form of a hoard is simply the form of money not in circulation. It is money interrupted in its circulation and stored up in the form of money. As for the process of forming a hoard, it is found in all systems of commodity- production, and it plays a role as an end in itself only in the undeveloped, precapitalist forms of this production. In the present case, the hoard assumes the form of money-capi- tal, and goes through the process of forming a hoard as a temporary corollary of the accumulation of capital, merely because the money here figures as latent money-capital, and because the formation of a hoard as well as the surplus-value hoarded in the form of money represent a functionally pre- scribed and preliminary stage required for the transforma- tion of surplus-value into capital actually performing its functions. It is this end which gives it the character of latent money-capital. Hence the volume, which it must have acquired before it can take part in the process of capi- tal, is determined in each case by the values of which the productive capital is composed. But so long as it remains in the condition of a hoard, it does not perform the func- tions of money-capital, but is merely sterile money-capital; its functions have not been interrupted, as in a previous case, but it is as yet incapable of performing them.
"We are here discussing the accumulation of money in its original and real form of an actual hoard of money. But it may also exist in the form of mere outstanding money, of credits granted by a capitalist who has sold C\ As concerns 96 Capital.
ite other forms, where this latent money-capital exists in the meantime in the shape of money breeding more money, such as interest-bearing deposits in a bank, in drafts, or in bonds of some sort, these do not fall within the discussion at this point. Surplus-value realized in the form of money then performs special capital-functions outside of that cycle of industrial capital which originated it. In the first place, these functions have nothing to do with that cycle of indus- trial capital as such, in the second place they represent capi- tal-functions which are to be distinguished from the func- tions of industrial capital and which are not yet developed at this stage.
IV. Reserve Funds.
IV. Reserve Funds.
In the case which we have just discussed, surplus-value in the form of a hoard represents accumulated funds, a money-form temporarily assumed by the accumulation of capital and to that extent a condition of this accumulation. However, such accumulated funds may also perform special services of a subordinate nature, that is to say they may enter into the circulation-process of capital, even if this process, has not assumed the form of P — P', in other words, with- out an expansion of capitalist reproduction.
If the process C — M' is prolonged beyond its normal size, so that commodity-capital meets with abnormal obstacles dur- ing its transformation into the money-form, or if, after the completion of this transformation, the price of the means of production into which the money-capital is to be transformed has risen above the level occupied by it in the beginning of the cycle, the hoard held as accumulated funds may be used in the place of money-capital, or of a part of such capital. In that case, the accumulated funds of money serve as reserve funds for the purpose of counterbalancing disturb- ances of the circulation.
When in use as such a reserve fund, accumulated money differs from the fund of purchase or paying media discussed in the cycle P — P\ These media are a part of money-capi- tal performing its functions, they are forms of existence of a part of capital-value in general going through the process of its circulation, and its different parts perform their func- tions successively at different times. In the continuous The Rotation of Productive Capital. 97 process of production, money-capital in reserve is always formed, obligations being incurred today which will not be paid until later, and large quantities of commodities being sold today, while other large quantities are not to be bought until some other day. In these intervals, a part of the cir- culating capital exists continuously in the form of money. A reserve fund, on the other hand, is not a part of money- capital in the performance of its functions. It is rather a part of capital in a preliminary stage of its accumulation, of surplus-value not yet transformed into active capital.
Of course, it requires no explanation, that the capitalist, when pressed for funds, does not concern himself about the definite functions of the money in his hands. He simply employs whatever money he has for the purpose of keeping the circulation-process of his capital in motion. For in- stance, in our illustration, M is equal to 422 pounds sterling, M' to 500 pounds sterling. If a part of the capital of 422 pounds sterling exists in the form of money as a fund for paying or buying, it is intended that all of it should enter into circulation, conditions remaining the same, and that it is sufficient for this purpose. The reserve fund, on the other hand, is a part of the 78 pounds sterling of surplus-value. It cannot enter the circulation process of the capital of 422 pounds sterling, unless this circulation takes place under changed conditions; for it is a part of the accumulated funds, and figures here under conditions, where the scale of the reproduction has not been enlarged.
Accumulated money-funds represent latent money-capi- tal, or the transformation of money into money-capital.
The following is the general formula for the cycle of pro- ductive capital, combining simple reproduction and repro- duction on an enlarged scale: If P equals P, then M in 2) is equal to M' — m; if P equals P', then M in 2) is greater than M' — m, that is to say, m has been completely or partially transformed into money- capital.
The cycle of productive capital is that form, under which classical political economy discusses the rotation process of industrial capital.
88 Capital.
CHAPTER III.
THE CIRCULATION OF COMMODITY-CAPITAL.
The general formula for the cycle of commodity-capital in C appears not alone as the product, but also as the premise of the two previous cycles, since M — C includes for one capi- tal that which C — M' includes for the other, at least in so far as a part of the means of production represents the com- modity-product of other individual capitals going through their circulation process. In our case, for instance, coal, machinery, etc., represent the commodity-capital of the mine- owner, of the capitalist machine-manufacturer, etc. Fur- thermore, we have shown in chapter I, IV, that not only the cycle P...P, but also the cycle C...C' is assumed even in the first repetition of M...M', before this second cycle of money-capital is completed.
If reproduction takes place on an enlarged scale, then the final C is greater than the initial C and we shall then call the final one C".
The difference between the third form and the first two is on the one hand, that in this case the total circulation opens the cycle with its two opposite phases, while in form I the circulation is interrupted by the process of production, and in form II the total circulation with its two complementary phases appears as a connecting link for the process of repro- duction, intervening as a mediating movement between P...P. In the case of M...M', the cycle has the form M — C...C— M'=M— C— M. In the case of P...P it has the op- posite form, namely, C — M'. M — C=C — M — C. In the case of C — C, it likewise has this last form.
On the other hand, when the cycles I and II are repeated, even if the final points M' and P' are at the same time the starting points of the renewed cycle, the form in which they The Circulation of Commodity-Capital. 99 were originally generated disappears. M'=M plus m, and P'=P plus p, begin the new cycle as M and P. But in form III, the starting point C must be designated as C, also in the case of the renewal of the cycle on the same scale, for the following reason. As soon as M' as such opens a new cycle in the form I, it performs the functions of money- capital M, as an advance in the form of money of the capi- tal value to be utilized. The size of the advanced money- capital, increased by the accumulation resulting from the first cycle, is greater. But whether the size of the advanced money-capital is 422 pounds sterling or 500 pounds sterling, it nevertheless appears merely as a capital-value. M' no longer exists as a utilized capital pregnant with surplus- value, for it is still to be utilized. The same is true of P...P', for P' must always perform the functions of P, of capital-value used for the generation of surplus-value, and must renew its cycle for this purpose.
Now the circulation of commodity-capital does not open with capital-value, but with augmented capital-value in the form of commodities. It includes from the start not only the cycle of capital-value represented by commodities, but also of surplus-value. Hence, if simple reproduction takes place in this form, C at the starting point is equal to C at the closing point. If a part of the surplus-value enters into the circulation of capital, C", an enlarged C, appears at the close, but the succeeding cycle is once more opened by C\ This is merely a larger C than that of the preceding cycle, and it begins its new cycle with a proportionately in- creased accumulation of capital-value, which includes a pro- portionate increase of newly produced surplus-value. In every case, C always opens the cycle as a commodity-capi- tal which is equal to capital-value plus surplus-value.
C as C does not appear in the circulation of some individu- al industrial capital as a form of this capital, but as a form of some other industrial capital, so far as the means of pro- duction are its products. What is M — C (or M — Pm) for the first capital, is C — M' for this second capital.
In the circulation act M — C{£m the factors L and Pm have identical relations, in so far as they are commodities 100 Capital.
in the hands of those who sell them; on the one hand the laborers who sell their labor-power, on the other hand the owners of the means of production, who sell these. For the purchaser, whose money here performs the functions of money-capital, L and Pm represent merely commodities, so long as he has not bought them, so long as they confront his money-capital in the form of commodities owned by others. Pm and L here differ only in this respect that Pm may be C, or capital, in the hands of its owner, if Pm is the commodity-form of his capital, while L is always nothing else but a commodity for the laborer, and does not become capital, until it is made a part of P in the hand of its purchaser.
For this reason, C can never open any cycle as a mere commodity-form of capital-value. As commodity-capital it is always the representative of two things. From the point of view of use-value it is the product of the function of P, in the present case yarn, whose elements L and Pm, coming from the circulation, have been active in creating this prod- uct. And from the point of view of exchange-value, com- modity-capital is the capital-value P plus the surplus:value m produced by the function of P.
It is only in the circulation of C itself that C equal to P, and equal to the capital-value, can and must separate from that part of C in which surplus-value is contained, from the surplus-product representing the surplus-value. It does not matter, whether these two parts can be actually separated, as in the case of yarn, or whether they cannot be separated, as in the case of a machine. They may always be sepa- rated, as soon as C is transformed into M\ If the entire commodity-product is separable into inde- pendent homogeneous parts, as is the case in. our 10,000 lbs. of yarn, so that the act C — M' is performed by means of a number of successive sales, then capital-value in the form of commodities can perform the functions of C and can be separated from C, before the surplus-value, or the entire value of C, has been realized.
In the 10,000 lbs. of yarn at 500 pounds sterling, the value of 8,440 lbs., equal to 422 pounds sterling, is sepa- rated from the surplus-value. If the capitalist sells first The Circulation of Commodity-Capital. 101 8,440 lbs. at 422 pounds sterling, then these 8,440 lbs. of yarn represent C, or the capital-value, in the form of commodi- ties. The surplus-product of 1,560 lbs. of yarn, likewise con- tained in C, and valued at 78 pounds sterling, does not cir- culate until later. The capitalist may accomplish C — M — C- £m before the surplus product c — m — c circulates.
Or, if he sells 7,440 lbs. of yarn at 372 pounds sterling, and then 1,000 lbs. of yarn at 50 pounds sterling, he might replace the means of production (the constant capital c) with the first part of C and the variable capital v, the labor-power, with the second part of C, and then proceed as before.
But if such successive sales take place, and the condi- tions of the cycle permit it, the capitalist, instead of separat- ing C into c plus v plus s, may make such a separation also in the case of aliquot parts of C\ For instance, 7,440 lbs. of yarn, valued at 372 pounds ster- ling, representing a constant capital as parts of C, namely of 10,000 lbs. of yarn valued at 500 pounds sterling, may be separated into 5,535 lbs. of yarn valued at 276.768 pounds sterling, which replace the constant part, the value of the means of production used up in producing 7,440 lbs. of yarn; 744 lbs. of yarn valued at 37.200 pounds sterling, which replace only the variable capital; and 1,160- .640 lbs. of yarn valued at 58.032 pounds sterling, which are the surplus-product and represent surplus-value. If he sells his 7,440 lbs. of yarn, he can replace the capital-value contained in them after the sale of 6,279.360 lbs. of yarn at 313.968 pounds sterling, and he can spend as his revenue the value of the surplus-product of 1,160.640 pounds, or 58.032 pounds sterling.
In the same way, he may separate 1,000 lbs. of yarn, valued at 50 pounds sterling, or equal to the variable capi- tal-value, into its aliquot parts and sell them successively, as follows: 744 lbs. of yarn at 37.200 pounds sterling, for the constant capital-value of 1,000 lbs. of yarn; 100 lbs. of yarn at 5 pounds sterling, for the variable capital-value; or to- gether 844 lbs. of yarn at 42.2 pounds sterling, for replac- ing the capital-value contained in 1,000 lbs. of yarn; finally, 156 lbs. of yarn at 7.8 pounds sterling, representing the 102 Capital.
surplus-product contained in 1,000 lbs. of yarn, which may be spent as such.
Finally, the capitalist may divide the remaining 1,560 lbs. of yarn, valued at 78 pounds sterling, provided he suc- ceeds in selling them, in such a way that the sale of 1,160 lbs. of yarn, valued at 58.032 pounds sterling, replaces the value of the means of production contained in those 1,560 lbs. of yarn, and 156 lbs. of yarn, valued at 7.8 pounds ster- ling, replaces the variable capital-value; or a total of 1,316- .640 lbs. of yarn, valued at 65.832 pounds sterling, for re- placing the total capital-value; finally, the surplus-product of 243.360 lbs., valued at 12.168 pounds sterling, remains, to be spent as revenue.
Just as all the elements of c, v, and s, contained in the yarn, are divisible into the same component parts, so may every individual pound of yarn, valued at 1 sh., or 12 d., be divided.
If we add the results of the three above partial sales, we obtain the same result as we should when selling the entire 10,000 lbs. at one time.
We have the following parts of constant capital: In the first lot 5,535.360 lbs. of yarn at £276.768. In the second lot 744.000 lbs. of yarn at £37.200. In the third lot 1,160.640 lbs. of yarn at £58.032.
Total 7,440.000 lbs. of yarn at £372.000.
Furthermore, the following parts of variable capital: In the first lot of 744.000 lbs. of yarn at £37.200. In the second lot 100.000 lbs. of yarn at £5.000. In the third lot 156,000 lbs. of yarn at £7.800.
Total 1,000.000 lbs. of yarn at £50.000.
The Circulation of Commodity-Capital. 103 Finally, the following parts of surplus-value: In the first lot 1,160.740 lbs. of yarn at £58.032. In the second lot 156.000 lbs. of yarn at £7.800. In the third lot 343.360 lbs. of yarn at £12.168.
Total 1,560.000 lbs. of yarn at £78.000.
Grand Total: