In so far as every one of these cycles is studied as a special form of movement through which various individual indus- trial capitals are passing, their differences have but an in- dividual nature. But in reality every individual industrial capital is contained simultaneously in all three cycles. These three cycles, the forms of reproduction assumed by the three modes of capital, rotate continuously side by side. For in- stance, one part of capital value which now performs the function of commodity-capital, is transformed into money- capital, but at the same time another part leaves the process of production and enters the circulation as a new commodi- ty-capital. The cycle C.-.C is thus continuously rotating, and so are the two other forms. The reproduction of capi- tal in each one of its forms and stages is just as continuous as the metamorphoses of these forms and their successive transition through the three stages. The entire circulation is thus actually a unit with these three forms.
We assumed in our analysis that the entire volume of capital-value acts either as money-capital, productive capital, or commodity-capital. For instance, we had those 422 pounds sterling first in the role of money-capital, then we transformed them entirely into productive capital, and final- ly into commodity-capital, into yarn valued at 500 pounds sterling and containing 78 pounds sterling of surplus-value. Here the various stages are so many interruptions. So long as, for instance, those 422 pounds sterling retain the form of money, that is to say until the purchases M — C (L plus Pm) have been made, the entire capital exists only in the form of money-capital and performs its functions. But as soon as it is transformed into productive capital, it performs neither the functions of money-capital nor of commodity-capital. Its entire process of circulation is interrupted, just as on the 116 Capital.
116 Capital.
other hand its entire process of production is interrupted, as soon as it performs any functions in one of its two cir- culation stages, either as M or as C. From this point of view, the cycle P...P would not only present a periodical renewal of the productive capital, but also the interruption of its function, the process of production, up to the time when the process of circulation is completed. Instead of proceeding continuously, production took place in jumps and was renewed only in periods of uncertain duration, according to whether the two stages of the process of circula- tion were completed fast or slowly. This would apply, for instance, to a Chinese artisan, who works only for private customers and whose process of production is interrupted, until he receives a new order.
This is true of every individual part of capital in process of circulation, and all parts of capital pass through this cir- culation in succession. For instance, the 10,000 lbs. of yarn are the weekly product of some spinner. These 10,000 lbs. of yarn leave the sphere of production in their entirety and enter the sphere of circulation. The capital-value contained in them must all be converted into money-capital, and so long as it retains the form of money-capital, it cannot return into the process of production. It must first go into circu- lation and be reconverted into the elements of productive capital, L plus Pm. The process of rotation of capital is a succession of interruptions, leaving one stage and entering the next, discarding one form and assuming another. Every one of these stages not only causes the next, but also excludes it.
But continuity is the characteristic mark of capitalist pro- duction, conditioned on its technical basis, although not absolutely attainable. Let us see, then, what passes in real- ity. While the 10,000 lbs. of yarn appear on the market as commodity-capital and are transformed into money (re- gardless of whether it is a paying, purchasing, or calculating medium), new cotton, coal, etc., take the place of the yarn in the process of production, having been reconverted from the form of money and commodities into that of productive capital and performing its functions. At the time when these 10,000 lbs. of yarn are converted into money, the pre- Diagrams of the Process of Circulation. IVi ceding 10,000 lbs. are going through the second stage of circulation and are reconverted from money into the ele- ments of productive capital. All parts of capital pass suc- cessively through the process of rotation and are simultane- ously in its different stages. The industrial capital thus exists simultaneously in all the successive stages of its rota- tion and in the various forms corresponding to its functions. That part of industrial capital, which is for the first time converted from commodity-capital into money, begins the cycle C\..C, while industrial capital as a rotating body of aggregates, has passed through it. One hand advances money, the other receives it. The inauguration of the cycle M...M' at one place coincides with its return to the starting point of another. The same is true of productive capital.
The actual rotation of industrial capital in its continuity is therefore not alone the unity of the processes of produc- tion and circulation, but also the unity of its three cycles. But it can be such a unity only, if every individual part of capital can go successively through the various stages of the rotation, pass from one phase and from one functional form to another, so that the industrial capital, being the aggregate of all these parts, is found simultaneously in its various phases and functions and describes all three cycles at the same time. The succession of these parts is conditioned on their simultaneous existence side by side, that is to say,, on the division of capital. In a systematized manufacture, the product is as much ubiquitous in the various stages of its process of formation, as it is in the transition from one phase of production to another. As the individual industrial capi- tal has a definite volume which does not merely depend on the means of the capitalist and which has a minimum mag- nitude for every branch of production, it follows that its division must proceed according to definite proportions. The magnitude of the available capital determines the volume of the process of production, and this, again, determines the size of the commodity-capital and money-capital which per- form their functions simultaneously with the process of pro- duction. The simultaneous functions, which enable the pro- duction to proceed continuously, are only due to the rota- 118 Capital.
tion of the various parts of capital which pass successively through their different stages. The simultaneousness is mere- ly the result of the succession. For if the rotation of one phase, for instance of C — M', is interrupted for one of the parts of capital, if the commodity cannot be sold, then the cycle of this part is broken and the reproduction of its ele- ments of production cannot take place; the succeeding parts, which come out of the process of production in the shape of C, find the conversion of their function blocked by their predecessors. If this is continued for some time, production is restricted and the entire process arrested. Every stop of the succession carries disorder into the simultaneousness of the cycles, every obstruction of one stage causes more or less obstruction in the entire rotation, not only of the obstructed part of capital, but of the total individual capital.
The next form, in which the process presents itself, is that of a succession of phases, so that the transition of capi- tal into a new phase is conditioned on its departure from another. Every special cycle has therefore one of the func- tional forms of capital for its point of departure or return. On the other hand, the aggregate process is indeed the unity of its three cycles, which are the different forms in which the continuity of the process expresses itself: The total rota- tion appears as its own specific cycle to every functional form of capital, and every one of these cycles contributes to the continuity of the process. The rotation of one functional form requires that of the others. This is the inevitable re- quirement for the aggregate process of production, especially for the social capital, that it is at the same time a process of reproduction, and thus a rotation of each one of its ele- ments. Different aliquot parts of capital pass successively through the various stages and functional forms. By this means, every functional form passes simultaneously with the others through its own cycles, although other parts of capi- tal are continuously presented by each form. One part of" capital, continually changing, continually reproduced, exists as a commodity-capital which is converted into money; an- other as money-capital converted into productive capital; and a third as productive capital converted into commodity- capital. The continuous existence of all three forms is Diagrams of the Process of Circulation. 119 bi ought about by the rotation of the aggregate cycle through these three phases.
Capital as a whole, then, exists simultaneously side by side in its different phases. But every part passes continu- ously and successively from one phase and functional form into the next one and performs a function in all of them. Its forms are fluid and their simultaneousness is brought about by their succession. Every form follows and precedes another, so that the return of one capital part to a certain form is conditioned on the return of another part to some other form. Every part describes continuously its own cycle, but it is always another part which assumes a certain form, and these special cycles are simultaneous and succes- sive parts of the aggregate rotation.
The continuity of the aggregate process is realized only by the unity of the three cycles, and would be impossible with the above-mentioned interruptions. The social capital always has this continuity and its process always rests on the unity of the three cycles.
The continuity of the reproduction is more or less inter- rupted so far as the individual capitals are concerned. In the first place, the masses of value are frequently distributed at various periods and in unequal portions over the various stages and functional forms. In the second place, these por- tions may be differently distributed, according to the charac- ter of the commodity, which is to be produced. In the third place, the continuity may be more or less interrupted in those branches of production, which are dependent on the seasons, either on account of natural causes, such as agricul- ture, fishing, etc., or on account of conventional circumstance such as the so-called season-work. The process proceeds most regularly and uniformly in the factories and in mining. But this difference of the various branches of production does not cause any difference in the general forms of the proc- ess of rotation.
Capital, as a value creating more value, is not merely con- ditioned on 'dass-relaitions, on a definite social system rest- ing on the existence of labor in the form of wage-labor. It is also a movement, a rotation through various stages, com- prising three different cycles. Therefore it can be understood 120 Capital.
only as a thing in motion, not as a thing at rest. Those who look upon the self-development of value as a mere abstraction forget that the movement of industrial capital is the realiza- tion of this abstraction. Value here passes through various forms in which it maintains itself and at the same time increases its value. As we are here concerned in the form of this movement, we shall not take into consideration the revolutions, which capital-value may undergo during its ro- tation. But it is clear that capitalist production can only exist and endure, in spite of the revolutions of capital-value, so long as this value creates more value, that is to say, so long as it goes through its cycles as a self-developing value, or so long as the revolutions in value can be overcome and balanced in some way. The movements of capital appear as the actions of some individual industrial capitalist who performs the functions of a buyer of labor-power, a seller of commodities, and an owner of productive capital, and who brings about the process of rotation by his activity. If social capital-value experiences a revolution in value, it may hap- pen, that the capital of the individual capitalist succumbs and fails, because it cannot adapt itself to the conditions of this conversion of values. To the extent that such revolutions in value become acute and frequent, the automatic nature of self-developing value makes itself felt with the force of elementary powers against the foresight and calculations of the individual capitalist, the course of normal production becomes subject to. abnormal speculation, and the existence of individual capitals is endangered. These periodical revo- lutions in value, therefore, prove that which they are alleged to refute, namely, the independent nature of value in the form of capital and its increasing independence in the course of its development.
This succession of the metamorphoses of rotating capital includes the continuous comparison of the changes of value brought about by rotation with the original magnitude of capital. When the growing independence of value as com- pared to the power of creating value, of labor-power, has been inaugurated by the act M — L (purchase of labor-power) and is realized during the process of production as an ex- ploitation of labor-power, this rise of independence on the Diagrams of the Process of Circulation. 121 part of value does not re-appear in that cycle, in which money, commodities, and elements of production are merely passing forms of rotating capital value, and in which the former magnitude of value compares itself to the present changed value of capital.
"Value," says Bailey, in opposition to the idea of the growing independence of value characteristic of capitalist production, which he regards as an illusion of certain economists, "value is a relation between contemporary com- modities, because such only admit of being exchanged with each other." This criticism is directed against the compari- son of commodity-values of different periods of time, which amounts to the comparison of the expenditure of productive labor required for the manufacture of equal commodities at different periods, once that 'the value of money for every period has been fixed. His opposition is due to his general misunderstanding, for he thinks that exchange-value is value itself, that the form of value is identical with the volume of value; so that values of commodities cannot be compared, so long as they do not perform active service as exchange values and are not actually exchanged for each other. He has not the least inkling of the fact that value performs only the functions of capital, in so far as it remains identical with itself and is compared with itself in those different phases of its rotation, which are not at all contemporary, but succeed one another.
In order to study the formula of this rotation in its puri- ty, it is not sufficient to assume that the commodities are sold at their value, but that this takes place under con- ditions which are otherwise equal. Take, for instance, the cycle P...P and make abstraction of all technical revolutions within the process of production, by which the productive capital of a certain individual capitalist might be depreci- ated; make abstraction furthermore of all reactions, which a change in the elements of value of productive capital might cause in the value of the existing commodity-capital, which might be increased or lowered, if a stock of it were kept on hand. Take it also, that C, or 10,000 lbs. of yarn, have been sold at their value of 500 pounds sterling; 8,440 lbs., equal to 422 pounds sterling, reproduce the capital-value contained 122 Capital 122 Capital in C\ But if the prices of cotton, coal, etc., have increased (we do not consider mere fluctuations in price), these 422 pounds sterling may not suffice for the full reproduction of the elements of productive capital; in that case, additional money-capital is required and money-value is tied up. The opposite takes place, if those prices fall, and money-capital is set free. The process takes a normal course only so long as the values remain constant; it proceeds practically normal, so long as the disturbances during the repetition of the proc- ess balance one another. But to the extent that these dis- turbances increase in volume, the industrial capitalist must have at his disposal a greater money-capital, in order to tide himself over the period of compensation; and as the scale of each individual process of production and thus the mini- mum size of the capital to be advanced increase in the proc- ess of capitalist production, we have here another circum- stance to add to those others which transform the functions of the industrial capitalist more and more into a monopoly of great money-capitalists, who may be individuals or asso- ciations.
We remark incidentally that a difference in the form of M...M' on one side, and of P...P and C...C' on the other ap- pears, if a change in the value of the elements of produc- tion occurs.
In the cycle M...M', the formula of newly invested capital, which for the first time appears in the role of money-capi- tal, a fall in the value of elements of production, such as raw materials, auxiliary materials, etc., will require a smaller investment of money-capital than would have been necessary before this fall for ■the purpose of starting a busi- ness of a definite size, because the scale of the process of pro- duction depends on the mass and volume of the means of production (provided the productivity remains unchanged), which a given quantity of labor-power can assimilate; but it does not depend on the value of these means of production nor on that of the labor-power (the latter has an influence only on the creation of more value). Take the opposite case. If the value of the elements of production of certain com- modities is increased, which are required as elements of a Diagrams of the Process of Circulation. 123 certain productive capital, then more money-capital is re- quired for 'the establishment of a business of definite pro- portions. In both cases it is only the quantity of the money- capital required for investment which is affected. In the former case, money-capital is set free, in the latter it is tied up, provided the advent of new industrial capitals proceeds normally in a given branch of production.
The cycles P...P and C\..C assume the character of M...M' only to the extent that the movement of P and C is at the same time accumulation, so that additional m, money, is converted into money-capital. Apart from this case, they are differently -affected than M...M' by a change of value of the elements of production; here, too, we do not take into consideration the reaction of such changes in value on those parts of capitals which are engaged in the process of pro- duction. It is not the original investment, which is here directly affected, not a capital engaged in its first rotation, but one in a process of reproduction; in other words, C'...C{pm> the reconversion of commodity-capital into its elements of production, so far as they are composed of commodities. In a reduction of value (or price), three cases are possible: The process of reproduction is continued on the same scale; in that case a part of the available money-capital is set free and money-capital is accumulated, although no actual ac- cumulation (production on an enlarged scale), or the trans- formation of m (surplus-value) into funds for accumulation initiating and accompanying it, has previously taken place. Or, the process of reproduction is renewed on a more enlarged scale than would have been ordinarily the case, provided the technical proportions admit it. Or, finally, a larger stock of raw materials, etc., is laid in.
The opposite takes place if the value of the elements of reproduction of a commodity-capital increases. In that case, reproduction does not take place on its normal scale (work is done in a shorter time, for instance); or additional money- capital must be employed in order to maintain the old scale (money-capital is tied up); or the money-fund of the ac- cumulation, if available, is entirely or partially employed for the enlargement of the process of reproduction to its old scale. This is also tying up money-capital, only the ad- 124 Capital.
ditional money-capital does not come from the outside, from the money-market, but out of the pockets of the industrial capitalist himself.
However, there may be modifying circumstances in P...P and C\..C\ If our cotton spinner has a large stock of cotton (a large proportion of his productive capital in the form of a stock of cotton), a part of his productive capital is de- preciated by a fall in the price of cotton; but if this price has risen, this part of his productive capital is enhanced in value. On the other hand, if he had tied up a large part of his capi- tal in the form of commodity-capital, for instance in cot- ton yarn, a part of his commodity capital, or for that matter of any of his rotating capital, is depreciated by a fall in the price of cotton, or enhanced by a rise in that price. Finally take the process C — M — C|pm. If C — M, the realization on the commodity-capital, has taken place before a change in the value of the elements of C, then capital is affected only in the way indicated in the first case, that is to say, in the second act of circulation, M — C|pm; but if such a change has occurred before the realization of C — M, then, other conditions remaining equal, a fall in the price of the cotton causes a corresponding fall in the price of yarn, and a rise in the price of cotton a rise in the price of yarn. The effect on the various individual capitals in the same branch of production may differ widely according to the circumstances in which they find themselves. Money-capital may also be set free or tied up by differences in the duration of the process of circulation, in other words, by the pace of the cir- culation. But this belongs in the discussion of the periods of turn-over. At this point, we are only interested in the real difference arising from changes of values in the elements of productive capital between M...M' and the other two cycles of the process of rotation.
In the section of circulation indicated by M — C{p-m, at a period of developed and prevailing capitalist modes of pro- duction, a large portion of the commodities composing Pm, means of production, will be rotating commodity-capital of some one else. From the standpoint of the seller, therefore, the transaction is C — M', the transformation of commodity- capital into money-capital. But this does not apply absolutely.
Diagrams of the Process of Circulation. 125 In the opposite case, in those sections of its process of rota- tion, where industrial capital performs either the functions of money or of commodities, the cycle of industrial capi- tal, whether as money-capital or as commodity-capital, crosses the circulation of commodities of the most varied social modes of production, so far as they produce commodities. No matter whether a commodity is the product of slavery, of peasants (Chinese, Indian ryots), of communes (Dutch East Indies), or of state enterprise (such as existed in former epochs of Russian history on the basis of serfdom), or of half- savage hunting tribes, etc., commodities and money of such modes of production, when coming in contact with commodi- ties and money representing industrial capital, enter as much into its rotation as into that of surplus-values embodied in the commodity-capital, provided the surplus-value is spent as revenue. They enter into both of the cycles of circula- tion of commodity-capital. The character of the process of production from which they emanate is immaterial. They perform the function of commodities on the market, and enter into the cycles of industrial capital as well as into those of the surplus-value carried by it. It is the universal character of the commodities, the world character of the market, which distinguishes the process of rotation of the industrial capital. What is true of foreign commodities, is also true of foreign money. Just as commodity-capital has only the character of commodities in contact with foreign money, so this money has only the character of money in contact with commodity-capital. Money here performs the functions of world-money.
However, two points must be noted here.
First. As soon as the transaction M — Pm is completed, the commodities (Pm) cease to be such and become one of the modes of existence of industrial capital in its function of productive capital. Henceforth their origin is obliterated. They exist only as forms of industrial capital and are em- bodied in it. But it still remains necessary to reproduce them, if their places are to be filled, and to this extent the capitalist mode of production is conditioned on other modes of production outside of its own stage of development. But it is the tendency of capitalist production to transform all 126 Capital.
production as much as possible into a production of com- modities. The mainspring, by which this is accomplished, is the implication of other modes of production into the cir- culation process of capitalist production. And developed commodity-production is capitalist production. The inter- vention of industrial capital promotes this transformation everywhere, and simultaneously with it also the transforma- tion of all direct producers into wage laborers.