The following three principal facts of capitalist produc- tion must be kept in mind: 1) Concentration of means of production in a few hands, whereby they cease to appear as the property of the immediate laborers and transform themselves into social powers of pro- duction. It is true, they first become the private property of capitalists. These are the trustees of bourgeois society, but they pocket the proceeds of their trusteeship.
2) Organisation of labor itself into social labor, by social co-operation, division of labor, and combination of labor witli natural sciences.
In both directions, the capitalist mode of production abolishes private property and private labor, even though it does so in contradictory forms.
3) Creation of the world market.
The stupendous productive power developing under the cap- Internal Contradictions. 313 italist mode of production relatively to population, and the increase, though not in the same proportion, of capital values (not their material substance), which grow much more rapidly than the population, contradict the basis, which, compared to the expanding wealth, is ever narrowing and for which this immense productive power works, and the conditions, under which capital augments its value. This is the cause of crises.
PART IV.
PART IV.
TEAXSFORMATIOlNr OF COMMODITY-CAPITAL AXD MONEY-CAPITAL INTO COMMEECIAL CAPITAL AND FINANCIAL CAPITAL (MER- CHANT'S CAPITAL).
CHAPTER XVL COMMERCIAL CAPITAL.
Merchant's capital, or trading capital, consists of two sub- divisions, namely commercial capital and financial capital, which we shall now proceed to define more in detail, so far as is necessary for the analysis of capital in its innermost struc- ture. This is so much the more needed, as modern political economy, even in its best representatives, indiscriminately mixes trading capital with industrial capital and wholly over- looks the characteristic peculiarities of the former.
The movements of commodity-capital have been analysed in volume II. The total capital of society exists always in part in commodities on the market about to be converted into money, and this part is naturally made up of ever changing elements and is continually changing in quantity. Another part exists as money on the market, ready to be converted into commodities. These portions of the total capital are per- petually passing through these metamorphoses. To the ex- tent that this function of capital in the process of circulation becomes a special function of independent capital and becomes an established service assigned by division of labor to some particular species of capitalists, the commodity-capital becomes commercial or financial cajiital.
Commercial Capital. 315 In volume II, chapter VI, under the head of cost of cir- culation, 2 and 3, we have explained to what extent the trans- portation industry, the storage and distribution of commodi- ties in a distributable form, may be regarded as processes of production continuing within the process of circulation. These incidents in the cifculation of commodity-capital are sometimes confounded with the peculiar functions of commer- cial or financial capital. It is true that the peculiar functions of these last-named forms of capital are sometimes practically combined with those incidental ones, but with the advancing development of social division of labor the functions of mer- chant's capital evolve into a distinct type and are separated from those real functions connected with those incidents in circulation. For our present purpose, which is to define the specific difference of this special form of capital, we must leave aside those other functions as irrelevant. So far as capital employed only in the process of circulation, such as commercial capital, combines at times those other functions with its specific ones, it does not appear in its typical form. We do not get its pure type, until we strip it of all incidental functions.
We have seen that the existence of capital in the shape of commodity-capital and tlie metamorphoses through which it passes within the sphere of circulation in its capacity as com- modity-capital on the market — a series of metamorphoses ex- pressed by buying and selling, conversion of commodity-capi- tal into money-capital and money-capital into commodity- capital — form a phase in the process of reproduction of in- dustrial capital, that is, a phase in its process of production as a whole. But we have also seen at the same time that it is distinguished in its function as capital of circulation from its function as productive capital. These are two different and separate forms of existence of the same capital. One portion of the total social capital is continually on the market in the form of capital of circulation, passing through those meta- morphoses. For each individual capital, however, its exist- ence as commodity-capital, and its metamorphoses in this form, represent merely ever vanishing and ever renewed points 3i6 Capitalist Production.
of transition, stages of transition in the continuity of its proc- ess of production. And the elements of commodity-capital on the market vary continually, being perpetually withdrawn from the market and just as perpetually returned to it as new products of tlie process of production.
Commercial capital is nothing else but a changed form of a portion of this capital of circulation, which exists contin- ually on the market in the process of its metamorphoses within the sphere of circulation. We say explicitly, a portion, be- cause a portion of the selling and buying of commodities takes place between the industrial capitalists themselves. We leave this portion entirely out of consideration in this analysis, be- cause it contributes nothing to the definition of the concept, or to the understanding of the specific nature, of merchant's capital. Moreover, it has been exhaustively treated in vol- ume II.
The dealer in commodities, as a capitalist, appears first on the market as the representative of a certain sum of money, which he advances in his capacity as a capitalist. lie de- sires to transform this sum of money from its original value X into X -j- &x, that is, the original sum plus his profit. But it is evident that his capital must first enter the market in the shape of money, not only on account of his capacity as a cajn- talist in general, but also as a trader in commodities in par- ticular. For he does not produce any commodities. He merely trades in them, he acts as middleman in their move- ments, and in order to be able to trade in them, he must first buy them, must be the owner of money-capital.
Take it that a trader in commodities owns 3,000 p.st., which he invests as a trading capital. He bu}S with these 3,000 p.st., say, 30,000 yards of linen from some linen manufac- turer, at 2 sh. per yard. Then he sells his 30,000 yards. If the annual average rate of profit is 10%, and if he makes a profit of 10% after deducting all incidental expenses, then he has converted his 3,000 p.st. into 3,300 p.st. at the end of one year. How he makes this profit is a question which we shall discuss later. At this place we merely intend to observe the form, which the movements of his capital take. He con- Commercial Capital. 317 tinually buys with his 3,000 p.st. linen and sells this linen; he continually repeats this operation of buying for the purpose of selling, M — C — M', the simple form of capital confined entirely to the sphere of circulation and not interrupted by the intervention of the process of production, which lies out- side of its own movement and function.
What, then, is the relation of this commercial capital to the commodity-capital representing a mere passing phase of in- dustrial capital? So far as the linen manufacturer is con- cerned, he has realised the value of his linen with the money of the merchant. He has thereby completed the first phase in the metamorphosis of commodity-capital, its conversion into money, and lie can now, provided that circumstances remain the same, proceed to reconvert this money into yarn, coal, wages, etc., or into means of existence, etc., for the consump- tion of his revenue. Leaving aside the spending of his rev- enue, he can continue his process of production.
But while the sale of the linen, its metamorphosis into money, has taken place so far as its direct producer is con- cerned, it has not yet taken place so far as the linen itself is concerned. It is still on the market as a commodity-capital and awaits the completion of its first metamorphosis, awaits its sale. Nothing has happened to this linen but a change in the person of its owner. From the point of view of its own destination, of its position in the process, it is still a com- modity-capital, a saleable commodity; only, it is now in the hands of the merchant instead of those of the manufacturer. The function of selling it, of serving as an agent in the first phase of its metamorphosis, has been transferred from the manufacturer to the merchant, has been converted into the particular business of the merchant, while it used to be a func- tion, which the producer had to perform after completing the process of its production.
'Now let us assume that tlie merchant would not succeed in disposing of those 30,000 yards of linen during the interval, which the linen manufacturer requires for the production of another lot of 30,000 yards and its marketing at 3,000 p.st. In that case, the merchant cannot buy this new lot, because 3i8 Capitalist Production.
he still has the old stock of 30,000 yards on hand, which he has not yet reconverted into money-capital. A stagnation then ensues, an interruption of reproduction. Of course, the linen manufacturer might have some additional money-capital in reserve, which he might convert into productive capital in- dependently of the sale of those 30,000 yards of linen, in order to continue his process of production. But this assumption would not alter the matter. So far as the capital tied up in the 30,000 yards of linen is concerned, its process of repro- duction is and remains interrupted. Here we see indeed very clearly, that the operations of the merchant are really nothing but operations which must be performed under all circum- stances in order to convert the commodity-capital of the pro- ducer into money-capital, operations, which promote the func- tions of the commodity-capital in the process of circulation and reproduction. If a clerk of the producer were to attend exclusively to the sale, and also with the purchase, instead of an independent merchant, this connection would not be ob- scured for a moment.
Commercial capital, then, is nothing but the commodity- capital of the producer, which has to pass through its trans- formation into money and to perform its function of commod- ity-capital on the market. The difference is only that this in- cidental function of the producer is now established as the ex- clusive business of a special kind of capitalists, of merchants, and becomes the independent business of a special investment of capital.
This is furthermore shown in the specific fonn of the circu- lation of commercial capital. The merchant buys a commod- ity and then sells it: M — C — M'. In the simple circula- tion of commodities, or even in tlie circulation of commodities as it appears when a process of circulation of industrial cap- ital, C — M — C, circulation is promoted by the circum- stance that every piece of money changes hands twice. The linen manufacturer sells his commodity, the linen, converts it into money; the money of the buyer passes into his hands. With this money he buys yarn, coal, labor, etc., he spends the same money for the purpose of reconverting the value of linen Commercial Capital. 319 into those commodities which form the elements of production of linen. The commodity which he buys is not the same kind of commodity which he sells. He has sold products and bought means of production. But it is different with the movements of commercial capital. With his 3,000 p.st., the linen mer- chant buys 30,000 yards of li*nen. He sells the same linen for the purpose of recovering his money-capital (increased by profits) from the circulation. It is not the same pieces of money which here change places twice, but the same commodi- ties; the linen passes from the seller into the hands of the buyer, and from the hands of the buyer, who becomes a seller, into those of another buyer. It is sold twice, and it may be sold still oftener, if a series of other merchants intervenes. And it is precisely through this repeated sale, this twofold change of place of the same commodity^ that the money ad- vanced by its first buyer for its purchase is recovered, its re- tiax to him promoted. In the case of C^ — M — C the twofold change of place of the same money assists in the sale of one form of commodities and the purchase of another form. In the other case, M — C — M', the twofold change of place of the same commodity assists in the recovery of the advanced money from the circulation. This shows that the commodity has not been definitely sold, when it has passed from the hands of the producer into those of the merchant, and that the latter merely continues the operation of selling — or promotes the functions of commodity-capital. But it shows at the same time that the operation C — M, which represents for the pro- ductive capitalist a mere function of his capital in its tran- sient form of commodity-capital, constitutes for the merchant the movement M — C — M', that is, a specific utilisation of his advanced money-capital. A phase in the metamorphosis of commodities here shows itself, with reference to the mer- chant, in the form of M — C — M', that is, as the evolution of a separate kind of capital.
The merchant sells his commodity, in this case the linen, definitely to the consumer, whether it be a productive con- sumer (for instance, a bleacher), or an individual consumer who uses the linen for his private needs. By this means the 320 Capitalist Production.
merchant recovers his advanced capital (with a profit), and he can then repeat his operation. If the money had served merely as a means of payment, when the merchant bought the linen from the manufacturer, for instance, if the merchant would not have had to make payment until after six weeks, he might be able to pay the manufacturer without even ad- vancing any money-capital of his own. But if he should not have sold the goods at the end of six weeks, he would have to advance his 3,000 p.st. on the date of the expiration, instead of advancing them on delivery of the linen. And if a fall in the market-price should have compelled him to sell below his purchase price, he would have to make good the loss out of his own capital.
N^ow, what is it that lends to commercial capital the char- acter of an independently operating capital, while in the hands of the producer who does his own selling, it is obviously merelv a special forai of his capital in some particular phase of his process of reproduction, during its sojourn in the sphere of circulation?
1) It is, in the first place, the fact that the commodity- capital completes its definite conversion into money, its first metamorphosis, its function on the market in its capacity as commodity-capital, in the hands of another agent than the producer, and that this function of commedity-capital is pro- moted by the operations of the merchant, by his buying and selling, so that these transactions constitute themselves into a separate and independent business distinct from the other functions of industrial capital. Through it a portion of a function, which used to be performed in circulation as a spe- cial phase of the process of reproduction, is molded into the exclusive function of an independent agent of the circulation distinct from the producer. But this alone ^vould not be enough to give to this special business the aspect of a function of an independent capital distinct from the industrial capital in process of self-expansion. In fact, it does not assume this aspect in cases Avhere the trade in commodities is carried on by traveling agents, or by other direct agents of the industrial cap- Commercial Capital. 321 italist. Another element is necessary to complete its special character.
2) This second element is introduced by the fact that the independent agent of circulation, the merchant, advances money-capital (his own or borrowed) in this position. The transaction which amounts for the industrial capital in process of reproduction merely to C — M, to a conversion of commod- ity-capital into money-capital, to a mere sale, assumes for the merchant the form M — C — M', purchase and sale of the same commodity, and thus to a reflux, by means of a sale, of the money-capital expended in a purchase.
It is always C — M, the conversion of commodity-capital into money, which assumes for the merchant the form of M — C — M, whenever he advances money for the purchase of commodities from their producers; it is always the first metamorphosis of commodity-capital, although the same trans- action may amount for a producer, or for industrial capital in process of reproduction, to M — C, a reconversion of money into commodities (means of production), the second phase of this metamorphosis. For the linen producer, the first meta- morphosis was C — M, the conversion of commodity-capital into money-capital. This transaction amounts for the mer- chant to M — C, the conversion of his money-capital into commodity-capital.!N^ow^, if he sells this linen to a bleacher, it means M — C, conversion of money-capital into productive capital, for the bleacher, which represents the second meta- morphosis of his commodity-capital; while it means C — M, the sale of the linen, for the merchant. Actually the com- modity-capital manufactured by the producer has now been definitely sold. This transaction, M — C — M, on the part of the merchant represents but the action of a middleman for the transaction C — M between two producers. Or let us as- sume, that the linen manufacturer buys wdth a portion of the value of the sold linen some yarn from a yarn dealer. This is M — C for him. For the merchant selling the yarn it is C — M, resale of the yarn. So far as the yarn itself is con- cerned, in its capacity of commodity-capital, it amounts to 2^22 Capitalist Production.
its definite sale, its transition from the sphere of circulation into the sphere of production by means of C — M, the definite conclusion of its first metamorphosis. Whether the merchant buys from the industrial capitalist, or sells to him, the cir- culation of his merchant's capital, M — C — M, always ex- presses but the same thing, which constitutes, from the point of view of the commodity-capital itself, a form of transition of the industrial capital in process of reproduction, C — M, the mere completion of its first metamorphosis. The M — C of the merchant's capital amounts only for the industrial cap- italist to C — M, but not for the commodity-capital produced by him. It is but the transfer of the commodity-capital from the hands of the industrial capitalist to those of the agent of circulation; Kot until the merchant's capital closes the trans- action C — M does commodity-capital as such perform its final C — M. M — C — M amounts merely to two times C — M on the part of the same commodity-capital, two suc- cessive sales of it, which promote its last and final sale.
It is evident, then, that commodity-capital assumes in com- mercial capital the form of an independent class of capital through the fact that the merchant advances money-capital. This money-capital serves its purpose as capital only by at- tending exclusively to the conversion of commodity-capital into money-capital, and it accomplishes tliis by the continual purchase and sale of commodities. This is its exclusive work. This promotion of the process of circulation of industrial cap- ital is the exclusive function of the money-capital with which the merchant operates. By means of this function he con- verts his money into money-capital, molds his M into M — C — M', and by the same process he converts commodity-cap- ital into commercial capital.
So long and so far as commercial capital exists in the form of commodity-capital, from the point of view of the process of reproduction of the total social capital, it is obviously nothing else but that portion of the industrial capital in process of metamorphosis, which is still on the market and serves as commodity-capital. It is therefore only the money-capital advanced by the merchant, which is exclusively destined for Couimercial Capital. 323 purchase and sale and for this reason never assumes any other form but that of commodity-capital and money-capital, always remaining confined to the sphere of circulation. It is only this money-capital which is now to be analysed wath reference to the entire process of reproduction of capital.
As soon as the producer, the linen manufacturer has sold his 30,000 yards of linen to the merchant for 3,000 p.st., he buys with the money so obtained the necessary means of production, and his capital re-enters the process of production; his process of production continues without interruption. So far as he is concerned, the conversion of his commodity into money has been accomplished. But we have already seen that the linen itself has not yet closed its metamorphosis. It has not yet been definitely reconverted into money, it has not yet passed as a use-value into productive or individual con- sumption. The linen merchant now represents on the market the same commodity-capital, which the linen manufacturer rep- resented originally. So far as the manufacturer is concerned, the process of transformation has been abbreviated, but only to be continued through the hand of the merchant.
If the linen producer had to wait, imtil his linen had really ceased being a commodity, until it had actually passed into the hands of its final purchaser for productive or indi- vidual consumption, his process of reproduction would be in- terrupted. Or, if he did not wish to interrupt it, he would have had to restrict his operations, to transform a smaller por- tion of the value of his linen into yarn, coal, labor, etc., in short, into the elements of productive capital, and to hold back a larger portion of it as a money-reserve. While one portion of his capital would then be on the market in the shape of commodities, another would be enabled to continue in the process of production. In this way, one portion would return in the shape of money, while another would be going to market in the form of commodities. This division of capital of the individual producer is not abolished by the intervention of the merchant. But without it that portion of the capi- tal of circulation which is held as a money reserve would have to be always greater in proportion than the portion em- 324 Capitalist Production.
ployed as productive capital, and the scale of production would have to be restricted accordingly. Instead of that, the pro- ducer is now enabled to employ a larger portion of his capital continually in the process of production itself, and a smaller portion as a money reserve.
This is offset on the other hand by the fact that another portion of the social capital, in the shape of merchant's cap- ital, is held continually within the sphere of circulation. It is employed for no other purpose but that of buying and sell- ing. There seems then to have been no other change but that of the persons who hold this capital in their hands.
If the merchant, instead of buying 3,000 p.st.'s worth of linen with the intention of selling it again, were to employ these 3,000 p.st. productively himself, then the productive capital of society would be increased. It is true, that the linen producer would then have to hold back a larger portion of his capital as a money reserve, and likewise the merchant who has now been transformed into an industrial capitalist. On the other hand, if the merchant were to remain a mer- chant the producer would save time in selling which he could employ for the supervision of the process of production, while the merchant would have to devote his whole time to selling.
If the merchant's capital does not exceed its necessary pro- portions, it may be assumed 1) that as a result of division of labor, the capital devoted exclusively to buying and selling (and this includes not only the money required for the purchase of commodities, but also the money which must be invested in the labor required for running the business of the merchant, in the constant capital of the merchant, store rooms, transportation, etc.) is smaller than it would be, if the industrial capitalist had to carry on the entire commercial part of his business himself; 2) that the exclusive occupation of the merchant with this business enables the producer to convert his commodities more rapidly into money, and permits the commodity-capital itself to pass more quickly through its metamorphosis, than it would in the hands of the producer; 3) that looking upon the entire merchant's capital in pro- Commercial Capital. 325 portion to the industrial capital, one turn-over o-f the mer- chant's capital may represent not only the turn-overs of many capitals in one sphere of production, but the turn-overs of a number of capitals in different spheres of production. The first is the case when the linen merchant, after buying with his 3,000 p. St. the product of some linen producer, sells it before the same producer can bring another lot of the same quantity to market, so that the linen merchant has to buy the product of another, or several other, linen manufacturers. When he sells this, he promotes the turn-overs of different capitals in the same sphere of production. The second is the case, if the merchant, after selling his linen, buys, for in- stance, some silk. In this way he promotes the turn-overs of capitals in different spheres.
In general it may be noted that the turn-over of the indus- trial capital is not limited merely by the time of circulation, but also by the time of production. The turn-over of mer- chant's capital, so far as it deals in one sort of commodities, is limited, not merely by the turn-over of one industrial cap- ital, but by the turn-overs of all industrial capitals in the same line of production. After the merchant has bought and sold the linen of one producer, he can buy and sell that of another, before the first can bring another lot of his product on tlie market. The same merchant's capital may, therefore, promote successively the different turn-overs of the industrial capitals invested in a certain line of production. Its turn- over is therefore not identified with the turn-overs of one sole industrial capital, but with the turn-overs of many, and it does not take the place of but one money reserve, which one single industrial capitalist would have to hold back. The turn-over of the merchant's capital in one sphere of produc- tion is naturally determined by the total production of that sphere. But it is not determined by the limits of production or the time of turn-over of any single capital of the same sphere, so far as its time of turn-over is determined by its time of production. For instance, let us assume that A supplies a commodity, which requires three months for its production. After the merchant has bought and sold it, say, in one month, 326 Capitalist Production.
he can buy and sell the same product of some other producer. Or, after he has sold, say, the corn of some farmer, he can buy with the same money that of another and another, etc. The turn-over of his capital is limited- by the mass of corn, which he can buy successively in a certain time, for instance, in one year, while the capital of the farmer is limited in its turn-over, aside from the time of circulation, by the time of production, which lasts one year.
However, the turn-over of the same merchant's capital may promote equally well the turn-overs of capitals in different lines of production.
To the extent that the same merchant's capital serves in different turn-overs to transform different commodity-capitals successively into money, buying and selling them one after another, it performs in its capacity as money-capital the same function with regard to the commodity-capital, which money in general performs by means of its turn-overs within a cer- tain period with regard to commodities.