The great economists, such as Smith, Eicardo, etc., are em- barrassed over mercantile capital as a special kind, since they analyse the basic form of capital, industrial capital, and take liotice of capital of circulation (commodity-capital and money- japital) only to the extent that it is a phase in the process of ♦eproduction of all capital. The rules concerning the forma- tion of value, profit, etc., which are directly deduced from an analysis of industrial capital, do not fit merchants' capital di- rectly. Therefore these economists leave merchants' capital entirely out of consideration and mention it only as a kind of industrial capital. Whenever they treat of it particularly, as Eicardo does in dealing with foreign commerce, they seek to demonstrate that it does not create any value (and conse- quently no surplus-value). But Avhatever is true of foreign commerce, applies also to home commerce.
Hitherto we have considered merchants' capital merely from the point of view of the capitalist mode of production, and within its limits. However, not only commerce, but also mer- chants' capital, is older than the capitalist mode of produc- tion. In fact, it represents historically the oldest free exist- ence of capital.
As we have already seen that the money trade and the cap- ital advanced for it require nothing for their existence but the presence of commerce on a large scale, and further of com- mercial capital, it is only the latter, which we have to con- sider here.
Since commercial capital is tied up in the circulation, and since its function consists exclusively in promoting the ex- change of commodities, it follows that it requires no other condition for its existence — aside from undeveloped forms arising from direct barter — but those indispensable for the /simple circulation of money and commodities. Or rather, tlie circulation of money is the condition of its existence. iNc matter what may be the basis on which production is carried on, which throws its products into circulation as commodiproducers among themselves. They are but middle men in an exchange, which in a thousand cases takes place without them.
Historical Data. 383 ties • — ■'.vhetlier it be the basis of a primitive commune, or of slave production, or of small agricultural, small bourgeois, or capitalist — the character of the products as commodities is not altered, and as commodities they have to pass through the process of exchange and through the forms incidental to it. The extremes, between which merchants' capital acts as a mediator, exist for it as given propositions, just as they do for money and its movements. The only requisite is that these extremes should be present as commodities, regardless of whether production is wholly a production of commodities, or whether only the surplus of the independent producers over the immediate needs satisfied by their production is thrown on the market. The merchants' capital promotes only the move- ments of these extremes, these commodities, which are prem- ises of its own existence.
The extent to which j^roduction ministers to commerce and supplies the merchants, depends on the mode of production. It reaches its maximum under a fully developed capitalist production, in w^hich the product is primarily produced as a commodity, not for direct subsistence. On the other hand, on the basis of every mode of production, commerce promotes the production of surplus products destined for exchange, for the purpose of increasing the enjoyments of wealth of the producers (who are here understood to be the owners of the products). Commerce impregnates production more and more with the character of a production for exchange.
The metamorphosis of commodities, their movements, con- sist, 1) materially, of an exchange of different commodities for one another; 2) formally, of a conversion of commodities into money by sale, and a conversion of money into commodi- ties by purchase. And the functions of merchants' capital resolve themselves into these functions of buying and selling commodities. It promotes merely the exchange of commodi- ties, which must be conceived at the outset as being something more than a bare exchange of commodities between direct pro- ducers. Under slavery, feudalism, vassalage, so far as prim- itive organisations are concerned, it is the slave holder, the feudal lord, the tribute collecting state, who are the owners 384 Capitalist Production.
and sellers of the products. The merchant buys and sells for many. In his hands are concentrated purchases and sales, and purchase and sale cease consequently to be dependent on a direct necessity of the buyer (as a merchant).
But whatever may be the social organisation of the spheres of production, whose exchange of commodities the merchant promotes, his wealth exists always in the form of money and his money always serves as capital. Its form is always M — C — M'. Money, the independent form of exchange value, is his starting point, expansion of the exchange value his independent purpose. He occupies himself with the ex- change of commodities and the operations incidental to it, which are separated from production and performed by a non- producer, and this is merely a means to increase wealth and at that wealth in its most general social form, exchange value. His compelling motive and compelling end are the conversion of M into M + A M. The transactions M — C and C — M, which promote the act M — M', appear merely as stages of transition in this conversion of M into M -f" A M. This M — C — M' is the characteristic movement of merchants' capital which distinguishes it from C — M — C, the ex- change of commodities between the producers themselves, which has for its ultimate end the exchange of use-valueg.
To the extent that production is undeveloped, the money wealth Avill be concentrated in the hands of merchants, will appear in the specific form of merchants' wealth.
Within the capitalist mode of production — that is, as soon as capital has seized hold of production and given to it a wholly changed and specific form — merchants' capital a]> pears merely as a capital with a specific function. But in all previous modes of production, and so much the more pro- duction ministers to the direct wants of the producers them- selves, merchants' capital appears as the capital which per- forms the function of capital.
There is, then, no difficulty in understanding how it is that ' that merchants' capital is the historical form of capital long before capital has subjected production to its control. Its existence and development to a certain level are themselves I Historical Data. 385 historical premises for the development of capitalist produc- tion. For they are, 1), premises for the concentration of moneyed wealth, and 2), the capitalist mode of production is conditioned on production for exchange, commerce on a large scale instead of with a few individual customers, and this re- quires also a merchant, who does not buy for the satisfaction of his own individual wants, but concentrates the transactions of many buyers in one commercial transaction. On the other hand, all development of merchants' capital tends to give to production more and more the character of a production for exchange and to impregnate the products more and more with the character of commodities. But the development of mer- chants' capital by itself is incapable of bringing about and explaining the transition from one mode of production to an- other, as we shall presently see.
Within capitalist production, the merchants' capital is re- duced from its former independent existence to a special phase in the investment of capital in general, and the compensation of profits reduces its rate of profits to the general average.. Then it serves only as an agent of productive capital. The particular social conditions, which formed together with the development of merchants' capital, are then no longer para- mount. On the contrary, where merchants' capital still pre- dominates, we find backward conditions. TJiis is true even of one and the same country, in which, for instance, the pure merchants' towns form far better analogies with past condi- tions than the manufacturing towns.^''' An independent and prevailing development of capital in the shape of merchants' capital signifies that production is not subject to capital, in other words, it means that capital devel- "Mr. W. Kiesselbach (in his Dcr Gang (Jes Welthandels im Mittelalter, 1860) is indeed still living in the conceptions of a world, in which the merchants' capital is the general form of capital. He has not the least inkling of the modern meaning of capital, any more than Mommsen has, when he speaks in^^s history of Rome of "capital" and "the rule of capital." In modern Englisli history, the commercial estate proper and the merchant towns are also political reactionaries and in league with the landed and financial aristocracy against industrial capital. Compare, for instance, the political role of Liverpool as against Manchester and Birmingham. The complete rule of industrial capital was not acknowledged by English merchants' capital and moneyed interests until after the abolition of the duties on corn, etc.
y 386 Capitalist Production ops on the basis of a mode of jDroduction independent and out- side of it. The independent development of merchants' cap- ital stands therefore in an inverse ratio to the general econo- mic development of society.
The independent mercantile wealth, as a prevailing form of capital represents the independent establishment of the proc- ess of circulation as against its extremes, and these extremes are the exchanging producers themselves. These extremes remain independent of the process of circulation, just as this circula- tion remains independent of them. The product becomes a commodity in this case by way of commerce. It is commerce which, under such conditions, develops products into commodi- ties; it is not the produced commodity itself which, by its movements, gives rise to commerce. Capital in the capacity of capital appears here first in the process of circulation. In the process of circulation money first develops into capital. In the circulation, the products first assume the character of exchange values, of commodities and money. Capital can and must form in the process of circulation, before it learns to control the extremes, that is, the various spheres of produc- tion between which circulation intervenes as a mediator. The circulation of money and commodities may act as an inter- mediary between spheres of production of widely different organisation, whose internal structure is still, predominantely adjusted to the production of use-values. This independent status of the process of circulation, by which various spheres of production are connected by means of a third link, ex- presses two facts. On tlie one hand it shows that the cir- culation has not yet seized hold of production, but as yet regards it as an existing fact. On the other hand, it shows that the process of production has not yet absorbed circulation and made a phase of production of it. But in capitalist pro- duction, both of these things are accomplished. The process of production rests wholly upon the circulation, and the cir- culation is a mere phase of transition of production, in which the product, having been created as a commodity, is realised in money and its elements of production replaced by products, which have likewise been created in the shape of commodities.
I Historical Data. 387 That form of capital, which developed directly in circulation, the merchants' capital, appears here merely as one of the forms of capital in its process of reproduction.
The rule, that the independent development of merchantsN capital is inversely proportioned to the degree of development/ of capitalist production, becomes particularly manifest in the history of the carrying trade, for instance, among the Vene- tians, Genoese, Dutch, etc., where the principal gains were not made by the exportation of the products of the home in- dustries, but by the promotion of the exchange of products of commercially and otherwise economically undeveloped societies and by the exploitation of both spheres of production.^^ Here the merchants' capital is pure, separated from the ex- tremes, the spheres of production, between which it intervenes. This is one of the main sources of its formation. But this monopoly of the carrying trade disintegrates, and with it this trade itself, in proportion as the economic development of peo- ples advances, whom it exploits at each end of its course, and whose backward development formed the basis of this trade. In the carrying trade, this appears not only as the disintegra- tion of a special line of commerce, but also as the disintegration of the supremacy of jDurely commercial nations and of their commercial wealth in general, which rested upon this carrying trade. This is but one of the special forms, which expresses the subordination of the commercial capital to the industrial cap- ital with the advance of cajDitalist production. The manner in which merchants' capital behaves wherever it rules over production is drastically illustrated, not only by the colonial economy (the colonial system) in general, but particularly by the methods of the old Dutch East India Company.
Since the movement of merchants' capital is M — C — M', *' The inhabitants of merchant towns imported refined manufactured goods and expensive articles of luxury from rich countries, and thus offered incentives to the vanity of the large landowners, who eagerly bought these goods and paid large quantities of raw materials from their lands for them. Thus the commerce of a large part of Europe during this period consisted in an exchange of the raw materials of one country for the manufactured products of some industrially de- veloped country. As soon as this taste became general and created a considerable demand, the merchants, in order to save the expenses of freight, began to establish similar manufactures in their own countries. (Adam Smith, Book III, chapter III.)
388, Capitalist Production.
the profit of the merchant is made, in the first place, only within the jDrocess of circnlation, by the two transactions of buying and selling; and in the second place, it is realised in the last transactions, the sale. It is a profit upon alienation. At first sight, a pure and independent commercial profit seems impossible, so long as products are sold at their value. To buy. cheap in order to sell dear is the rule of trade. It is not supposed to be an exchange of equivalents. The conception of value is included in it only to the extent that the individual commodities all have a value and are to that extent money. In quality, they are all expressions of social labor. But they are not values of equal magnitude. The quantitative ratio, in which products are exchanged, is at first quite arbitrary. They assume the form of commodities inasmuch as they are exchangeable, that is, inasmuch as they may be expressed in terms of the same third thing. The continued exchange and the more regular reproduction for exchange reduces this arbi- trariness more and more. But this applies not at once to the producer and consumer, but only to the mediator between them, the merchant, wdio.comjiares the money-prices and pock- ets their difl^erence. By his own movements he establishes the equivalence of commodities.
The merchants' capital is at first merely the intervening movement betw^een extremes not controlled by it and between premises not created by it.
Just as from the mere form of the circulation of commodi- ties, C — M — C, money rises not only as a measure of value and medium of circulation, but also as the absolute form of the commodity and thus of wealth, in the form of a hoard, so that its conservation and accumulation as money become its life's purpose, so money, in the shape of a hoard, issues from the mere form of the circulation of merchants' capital, M — C — M', as something which is preserved and increased only by its alienation.
The trading nations of the ancients existed like the gods of Epicure in the intermediate worlds of the universe, or rather like the Jews in the pores of Polish society. The trade of the first independent and highly developed merchant towns and Historical Data. 389 trading nations rested as a pure carrying trade upon the bar- barism of the producing nations between whom they inter- vened.
In the precapitalist stages of society, commerce rules in- dustry. The^ reverse is true of modern society. Qf_course, commerce will have more or less of a reaction on the societies, between which it is carried on. It will subject production more and more to exchange value, by making enjoyments and subsistence more dependent on the sale than on the immediate / use of the products. Thereby it dissolves all old conditions. It increases the circulation of money. It seizes no longer merely upon the surplus of production, but corrodes produc- tion itself more and more, making entire lines of production dependent upon it. However, this dissolving effect depend^ to a large degree on the nature of the producing society.
So long as merchants' capital promotes the exchange of products between undeveloped societies, commercial profit does not only assume the shape of outbargaining and cheating, but also arises largely from these methods. Leaving aside the fact that it exploits the difference in the prices of production of the various countries (and in this respect it tends to level and fix the values of commodities), those modes of production bring it about that merchants' capital appropriates to itself the overwhelming portion of the surplus-product, either in its capacity as a mediator between societies, which are as yet largely engaged in the production of use-values and for whose economic organisation the sale of that portion of its product which is transferred to the circulation, or any sale of products at their value, is of minor importance; or, because under those former modes of production, the principal owners of the sur- plus-product, with whom the merchant has to deal, are the slave holder, the feudal landlord, the state (for instance,, the oriental despot), and they represent the wealth and luxury, which the merchant tries to trap, as Adam Smith correctly scented in that passage on feudal times, which I have quoted above. Merchants' capital in its supremacy everywhere stands \ for a system of robbery,^^ and its development, among the ■ *' " Now there is among merchants much complaint about the nobles or robbers, 390 Capitalist Production.
trading nations of old and new times, is always connected with plundering, piracy, snatching of slaves, conquest of colonies.
\ See Carthage, Eome, and later Venetians, Portuguese, Dutch, Vtc.
/ The development of commerce and merchants' capital brings / forth everywhere the tendency toward production of exchange / values, increases its volume, multiplies and monopolises it, de- i velops money into world money. Commerce therefore has everywhere more or less of a dissolving influence on the pr(j- ducing organisations, which it finds at hand and whose differ- ent forms are mainly carried on with a view to immediate ase. To what extent it brings about a dissolution of the old mode of production, depends on its solidity and internal artic- vilation. And to what this process of dissolution will lead, in other words, what new mode of production will take the place of the old, does not depend on commerce, but on the character of the old mode of production itself. In the antique world the efi^ect of commerce and the development of merchants' capital always result in slave economy; or, according to what the point of departure may be, the result may simply turn out to be the transformation of a patriarchal slave system devoted because they must trade under great danger and run the risk of being kidnapped, beaten, blackmailed, and robbed. If they suffered these things for the sake of justice, the merchants would be saintly people...But since such great wrong and unchristian thievery and robbery are committed all over the world by merchants, and even among themselves, is it any wonder that God should pro- cure that such great wealth, gained by wrong, should again be lost or stolen, and they themselves hit over their heads or made prisoners?...And the princes should punish such unjust bargains with due rigor and take care that their subjects shall not be so outrageously abused by merchants. Because they don't do so, God employs knights and robbers, and punishes through them the merchants for the wrongs committed, and uses them as his devils, just as he plagues Egypt and all the world with devils, or persecutes with enemies. In the same way he beats one boy through another, without thereby insinuating that knights are any the less robbers than merchants, although the merchants daily rob the whole world, while a knight may rob one or two once or twice in a year." "Go by the word of Esau: Thy princes have become the companions of robbers.
For they hang the thieves, who have stolen a gulden or a half gulden, but they associate with those, who rob all the world and steal with greater assurance than all others, that the proverb may remain true: Great thieves hang little thieves; and as the Roman senator Cato said: Mean thieves lie in prisons and stocks, but public thieves are clothed in gold and silks. But what will God say finally? He will do as he said to Ezekiel, he will amalgamate princes and merchants, one thief with another, like lead and iron, as when a city burns down, leaving neither princes nor merchants." (Martin Luther, Biicher vom Kauf- handel und Wucher. Vom Jahr, 1527.)
I Historical Data. 391 to the production of direct means of subsistence into a similar system devoted to the production of surplus-value. However, in the modern world, it results in the capitalist mode of pro-i duction. From these facts it follows, that these results were conditioned on quite other circumstances than the mere in- fluence of the development of merchants' capital.
It follows from the nature of the case that as soon as town industry as such separates from agricultural industry, its prod- ucts are from the outset commodities and require for their sale the intervention of commerce. The leaning of commerce upon the development of the towns, and, on the other hand, the de- pendence of the towns upon commerce, are to that extent in- telligible. However, in what measure industrial development will keep step with this development, depends upon quite other circumstances. Already ancient Rome, in its later re- publican days, developed merchants' capital more highly than it had ever existed in the antique world, without any progress in the development of crafts, while in Corinth and in other Grecian towns of Europe and Asia Minor the development of commerce was accompanied by highly developed crafts. On the other hand, in direct opposition to the development of towns and its conditions, the trading spirit and the development of commerce are frequently found among unsettled nomadic peoples.
There is no doubt — and it is precisely this fact which has led to many wrong conceptions — that in the 16th and 17th centuries the great revolutions, which took place in com-' nierce with the through geographical discoveries and rapidly \ increased the development of merchants' capital, form one of,1 the principal elements in the transition from feudal to capi-.' talist production. The sudden expansion of the world market,; the multiplication of the circulating commodities, the zeal? displayed among the European nations in the race after the products of Asia and the treasures of America, the colonial system, materially contributed toward the destruction of the feudal barriers of production. However, the modern mode of production, in its first period, the manufacturing period, developed only in j)laces, where the conditions for it had been 392 Capitalist Production.
previously developed during medieval times. Compare, for instance, Holland with Portugal. ^*^ And, on the other hand, when in the 16th, and partially still in the 17th, century the sudden expansion of commerce and the creation of a new world market exerted an overwhelming influence on the overthrow of the old mode of production and the rise of the capitalistic one, this was accomplished on the basis of the already created capitalist mode of production. The world market forms itself the basis of this mode of production. On the other hand, the immanent necessity of this production to produce on an ever enlarged scale tends to extend the world market continually, so that it is not commerce in this case which revolutionises in- dustry, but industry which continually revolutionises com- merce. The commercial supremacy itself is now conditioned on the greater or smaller prevalence of the conditions for a large industry. Compare for instance, England and Holland. The history of the decline of Holland as the ruling commercial nation is the history of the subordination of merchants' capital to industrial capital. The obstacles presented by the inter- nal solidity and articulation of precapitalistic, national, modes of production to the corrosive influence of commerce is strikingly shown in the intercourse of the English with India and China. The broad basis of the mode of production is here /formed by the unity of small agriculture and domestic indus- (try, to which is added in India the form of communes resting \pon common ownership of the land, which, by the way, was likewise the original form in China. In India, the English exerted simultaneously their direct political and economic power as rulers and landlords, for the purpose of disrupting these small economic organisations.^^ The English commerce