By confounding these two forms, which overlap each other, some people have been led to look upon the preservation and
increase
of money ad infinitum as the end and aim of Oeconomic.
Marx - Capital-Volume-I
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The value originally advanced, therefore, not only remains intact while in circulation, but adds to itself a surplus value or expands itself.
It is this movement that converts it into capital.
Of course, it is also possible, that in C-M-C, the two extremes C-C, say corn and clothes, may represent different quantities of value. The farmer may sell his corn above its value, or may buy the clothes at less than their value. He may, on the other hand, --be done? by the clothes merchant. Yet, in the form of circulation now under consideration, such differences in value are purely accidental. The fact that the corn and the clothes are equivalents, does not deprive the process of all meaning, as it does in M-C-M. The equivalence of their values is rather a necessary condition to its normal course.
The repetition or renewal of the act of selling in order to buy, is kept within bounds by the very object it aims at, namely, consumption or the satisfaction of definite wants, an aim that lies altogether outside the sphere of circulation. But when we buy in order to sell, we, on the contrary, begin and end with the same thing, money, exchange-value; and thereby the movement becomes interminable. No doubt, M becomes M + D M, ? 100 become ? 110. But when viewed in their qualitative aspect alone, ? 110 are the same as ? 100, namely money; and considered quantitatively, ? 110 is, like ? 100, a sum of definite and limited value. If now, the ? 110 be spent as money, they cease to play their part. They are no longer capital. Withdrawn from circulation, they become petrified into a hoard, and though they remained in that state till doomsday, not a single farthing would accrue to them. If, then, the expansion of value is once aimed at, there is just the same inducement to augment the value of the ? 110 as that of the ? 100; for both are but limited expressions for exchange-value, and therefore both have the same vocation to approach, by quantitative increase, as near as possible to absolute wealth. Momentarily, indeed, the value originally advanced, the ? 100 is distinguishable from the surplus value of ? 10 that is annexed to it during circulation; but the distinction vanishes immediately. At the end of the process, we do not
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receive with one hand the original ? 100, and with the other, the surplus value of ? 10. We simply get a value of ? 110, which is in exactly the same condition and fitness for commencing the expanding process, as the original ? 100 was. Money ends the movement only to begin it again. 5 Therefore, the final result of every separate circuit, in which a purchase and consequent sale are completed, forms of itself the starting-point of a new circuit. The simple circulation of commodities - selling in order to buy - is a means of carrying out a purpose unconnected with circulation, namely, the appropriation of use-values, the satisfaction of wants. The circulation of money as capital is, on the contrary, an end in itself, for the expansion of value takes place only within this constantly renewed movement. The circulation of capital has therefore no limits. 6
As the conscious representative of this movement, the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which the money starts and to which it returns. The expansion of value, which is the objective basis or main-spring of the circulation M-C-M, becomes his subjective aim, and it is only in so far as the appropriation of ever more and more wealth in the abstract becomes the sole motive of his operations, that he functions as a capitalist, that is, as capital personified and endowed with consciousness and a will. Use-values must therefore never be looked upon as the real aim of the capitalist; 7 neither must the profit on any single transaction. The restless never-ending process of profit-making alone is what he aims at. 8 This boundless greed after riches, this passionate chase after exchange-value9, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never-ending augmentation of exchange-value, which the miser strives after, by seeking to save10 his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh into circulation. 11
The independent form, i. e. , the money-form, which the value of commodities assumes in the case of simple circulation, serves only one purpose, namely, their exchange, and vanishes in the final result of the movement. On the other hand, in the circulation M-C-M, both the money and the commodity represent only different modes of existence of value itself, the money its general mode, and the commodity its particular, or, so to say, disguised mode. 12 It is constantly changing from one form to the other without thereby becoming lost, and thus assumes an automatically active character. If now we take in turn each of the two different forms which self-expanding value successively assumes in the course of its life, we then arrive at these two propositions: Capital is money: Capital is commodities. 13 In truth, however, value is here the active factor in a process, in which, while constantly assuming the form in turn of money and commodities, it at the same time changes in magnitude, differentiates itself by throwing off surplus value from itself; the original value, in other words, expands spontaneously. For the movement, in the course of which it adds surplus value, is its own movement, its expansion, therefore, is automatic expansion. Because it is value, it has acquired the occult quality of being able to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs.
Value, therefore, being the active factor in such a process, and assuming at one time the form of money, at another that of commodities, but through all these changes preserving itself and expanding, it requires some independent form, by means of which its identity may at any time be established. And this form it possesses only in the shape of money. It is under the form of money that value begins and ends, and begins again, every act of its own spontaneous generation. It began by being ? 100, it is now ? 110, and so on. But the money itself is only one of the two forms of value. Unless it takes the form of some commodity, it does not become capital. There is here no antagonism, as in the case of hoarding, between the money and commodities. The capitalist knows that all commodities, however scurvy they may look, or however badly they may smell,
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are in faith and in truth money, inwardly circumcised Jews, and what is more, a wonderful means whereby out of money to make more money.
In simple circulation, C-M-C, the value of commodities attained at the most a form independent of their use-values, i. e. , the form of money; but that same value now in the circulation M-C-M, or the circulation of capital, suddenly presents itself as an independent substance, endowed with a motion of its own, passing through a life-process of its own, in which money and commodities are mere forms which it assumes and casts off in turn. Nay, more: instead of simply representing the relations of commodities, it enters now, so to say, into private relations with itself. It differentiates itself as original value from itself as surplus value; as the father differentiates himself from himself qua the son, yet both are one and of one age: for only by the surplus value of ? 10 does the ? 100 originally advanced become capital, and so soon as this takes place, so soon as the son, and by the son, the father, is begotten, so soon does their difference vanish, and they again become one, ? 110.
Value therefore now becomes value in process, money in process, and, as such, capital. It comes out of circulation, enters into it again, preserves and multiplies itself within its circuit, comes back out of it with expanded bulk, and begins the same round ever afresh. 14 M-M', money which begets money, such is the description of Capital from the mouths of its first interpreters, the Mercantilists.
Buying in order to sell, or, more accurately, buying in order to sell dearer, M-C-M', appears certainly to be a form peculiar to one kind of capital alone, namely, merchants' capital. But industrial capital too is money, that is changed into commodities, and by the sale of these commodities, is re-converted into more money. The events that take place outside the sphere of circulation, in the interval between the buying and selling, do not affect the form of this movement. Lastly, in the case of interest-bearing capital, the circulation M-C-M' appears abridged. We have its result without the intermediate stage, in the form M-M', --en style lapidaire? so to say, money that is worth more money, value that is greater than itself.
M-C-M' is therefore in reality the general formula of capital as it appears prima facie within the sphere of circulation.
1 The contrast between the power, based on the personal relations of dominion and servitude, that is conferred by landed property, and the impersonal power that is given by money, is well expressed by the two French proverbs, --Nulle terre sans seigneur,? and --L'argent n'a pas de mai^tre,? - --No land without its lord,? and --Money has no master. ?
2 --Avec de l'argent on ache`te des marchandises et avec des marchandises on ache`te de l'argent. ? [--With money one buys commodities, and with commodities one buys money? ] (Mercier de la Rivie`re: --L'ordre naturel et essentiel des socie? te? s politiques,? p. 543. )
3 --When a thing is bought in order to be sold again, the sum employed is called money advanced; when it is bought not to be sold, it may be said to be expended. ? -- (James Steuart: --Works,? &c. Edited by Gen. Sir James Steuart, his son. Lond. , 1805, V. I. , p. 274. )
4 --On n'e? change pas de l'argent contre de l'argent,? [--One does not exchange money for money,? ] says Mercier de la Rivie`re to the Mercantilists (l. c. , p. 486. ) In a work, which, ex professo treats of --trade? and --speculation,? occurs the following: --All trade consists in the exchange of things of different kinds; and the advantage? (to the merchant? ) --arises out of this difference. To exchange a pound of bread against a pound of bread . . . would be attended with no advantage; . . . Hence trade is advantageously contrasted with gambling, which consists in a mere exchange of money for money. ? (Th. Corbet, --An Inquiry into the Causes and Modes of the Wealth of Individuals; or the Principles of
? ? 107 Chapter 4
Trade and Speculation Explained. ? London, 1841, p. 5. ) Although Corbet does not see that M-M, the exchange or money for money, is the characteristic form of circulation, not only of merchants' capital but of all capital, yet at least he acknowledges that this form is common to gambling and to one species of trade, viz. , speculation: but then comes MacCulloch and makes out, that to buy in order to sell, is to speculate, and thus the difference between Speculation and Trade vanishes. --Every transaction in which an individual buys produce in order to sell it again, is, in fact, a speculation. ? (MacCulloch: --A Dictionary Practical, &c. , of Commerce. ? Lond. , 1847, p. 1009. ) With much more naivete? , Pinto, the Pindar of the Amsterdam Stock Exchange, remarks, --Le commerce est un jeu: (taken from Locke) et ce n'est pas avec des gueux qu'on peut gagner. Si l'on gagnait longtemps en tout avec tous, il faudrait rendre de bon accord les plus grandes parties du profit pour recommencer le jeu. ? [--Trade is a game, and nothing can be won from beggars. If one won everything from everybody all the time, it would be necessary to give back the greater part of the profit voluntarily, in order to begin the game again? ] (Pinto: --Traite? de la Circulation et du Cre? dit. ? Amsterdam, 1771. p. 231,)
5 --Capital is divisible . . . into the original capital and the profit, the increment to the capital . . . although in practice this profit is immediately turned into capital, and set in motion with the original. ? (F. Engels, --Umrisse zu einer Kritik der Nationalo? konomie, in: Deutsch-Franzo? sische Jahrbu? cher, herausgegeben von Arnold Ruge und Karl Marx. ? Paris, 1844, p. 99. )
6 Aristotle opposes Oeconomic to Chrematistic. He starts from the former. So far as it is the art of gaining a livelihood, it is limited to procuring those articles that are necessary to existence, and useful either to a household or the state. --True wealth (o aleqinos ploutos) consists of such values in use; for the quantity of possessions of this kind, capable of making life pleasant, is not unlimited. There is, however, a second mode of acquiring things, to which we may by preference and with correctness give the name of Chrematistic, and in this case there appear to be no limits to riches and possessions. Trade (e kapelike is literally retail trade, and Aristotle takes this kind because in it values in use predominate) does not in its nature belong to Chrematistic, for here the exchange has reference only to what is necessary to themselves (the buyer or seller). ? Therefore, as he goes on to show, the original form of trade was barter, but with the extension of the latter, there arose the necessity for money. On the discovery of money, barter of necessity developed into kapelike, into trading in commodities, and this again, in opposition to its original tendency, grew into Chrematistic, into the art of making money. Now Chrematistic is distinguishable from Oeconomic in this way, that --in the case of Chrematistic circulation is the source of riches poietike crematon . . . dia chrematon diaboles. And it appears to revolve about money, for money is the beginning and end of this kind of exchange (to nomisma stoiceion tes allages estin). Therefore also riches, such as Chrematistic strives for, are unlimited. Just as every art that is not a means to an end, but an end in itself, has no limit to its aims, because it seeks constantly to approach nearer and nearer to that end, while those arts that pursue means to an end, are not boundless, since the goal itself imposes a limit upon them, so with Chrematistic, there are no bounds to its aims, these aims being absolute wealth. Oeconomic not Chrematistic has a limit . . . the object of the former is something different from money, of the latter the augmentation of money. . . .
By confounding these two forms, which overlap each other, some people have been led to look upon the preservation and increase of money ad infinitum as the end and aim of Oeconomic. ? (Aristoteles, De Rep. edit. Bekker, lib. l. c. 8, 9. passim. )
7 --Commodities (here used in the sense of use-values) are not the terminating object of the trading capitalist, money is his terminating object. ? (Th. Chalmers, On Pol. Econ. &c. , 2nd Ed. , Glasgow, 1832, pp. 165, 166. )
8 --Il mercante non conta quasi per niente il lucro fatto, ma mira sempre al futuro. ? [--The merchant counts the money he has made as almost nothing; he always looks to the future. ? ] (A. Genovesi,
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Lezioni di Economia Civile (1765), Custodi's edit. of Italian Economists. Parte Moderna t. viii, p. 139. )
9 --The inextinguishable passion for gain, the auri sacra fames, will always lead capitalists. ? (MacCulloch: --The Principles of Polit. Econ. ? London, 1830, p. 179. ) This view, of course, does not prevent the same MacCulloch and others of his kidney, when in theoretical difficulties, such, for example, as the question of over-production, from transforming the same capitalist into a moral citizen, whose sole concern is for use-values, and who even develops an insatiable hunger for boots, hats, eggs, calico, and other extremely familiar sorts of use-values.
10 Sozein is a characteristic Greek expression for hoarding. So in English to save has the same two meanings: sauver and e? pargner.
11 --Questo infinito che le cose non hanno in progresso, hanno in giro. ? [--That infinity which things do not possess, they possess in circulation. ? ] (Galiani. )
12 --Ce n'est pas la matie`re qui fait le capital, mais la valeur de ces matie`res. ? [--It is not matter which makes capital, but the value of that matter. ? ] (J. B. Say: --Traite? d'Econ. Polit. ? 3e`me e? d. Paris, 1817, t. II. , p. 429. )
13 --Currency (! ) employed in producing articles. . . is capital. ? (Macleod: --The Theory and Practice of Banking. ? London, 1855, v. 1, ch. i, p. 55. ) --Capital is commodities. ? (James Mill: --Elements of Pol. Econ. ? Lond. , 1821, p. 74. )
14 Capital: --portion fructifiante de la richesse accumule? e. . . valeur permanente, multipliante. ? (Sismondi: --Nouveaux Principes d'Econ. Polit. ,? t. i. , p. 88, 89. )
? ? Chapter 5: Contradictions in the General Formula of Capital
The form which circulation takes when money becomes capital, is opposed to all the laws we have hitherto investigated bearing on the nature of commodities, value and money, and even of circulation itself. What distinguishes this form from that of the simple circulation of commodities, is the inverted order of succession of the two antithetical processes, sale and purchase. How can this purely formal distinction between these processes change their character as it were by magic?
But that is not all. This inversion has no existence for two out of the three persons who transact business together. As capitalist, I buy commodities from A and sell them again to B, but as a simple owner of commodities, I sell them to B and then purchase fresh ones from A. A and B see no difference between the two sets of transactions. They are merely buyers or sellers. And I on each occasion meet them as a mere owner of either money or commodities, as a buyer or a seller, and, what is more, in both sets of transactions, I am opposed to A only as a buyer and to B only as a seller, to the one only as money, to the other only as commodities, and to neither of them as capital or a capitalist, or as representative of anything that is more than money or commodities, or that can produce any effect beyond what money and commodities can. For me the purchase from A and the sale to B are part of a series. But the connexion between the two acts exists for me alone. A does not trouble himself about my transaction with B, nor does B about my business with A. And if I offered to explain to them the meritorious nature of my action in inverting the order of succession, they would probably point out to me that I was mistaken as to that order of succession, and that the whole transaction, instead of beginning with a purchase and ending with a sale, began, on the contrary, with a sale and was concluded with a purchase. In truth, my first act, the purchase, was from the standpoint of A, a sale, and my second act, the sale, was from the standpoint of B, a purchase. Not content with that, A and B would declare that the whole series was superfluous and nothing but Hokus Pokus; that for the future A would buy direct from B, and B sell direct to A. Thus the whole transaction would be reduced to a single act forming an isolated, non-complemented phase in the ordinary circulation of commodities, a mere sale from A's point of view, and from B's, a mere purchase. The inversion, therefore, of the order of succession, does not take us outside the sphere of the simple circulation of commodities, and we must rather look, whether there is in this simple circulation anything permitting an expansion of the value that enters into circulation, and, consequently, a creation of surplus value.
Let us take the process of circulation in a form under which it presents itself as a simple and direct exchange of commodities. This is always the case when two owners of commodities buy from each other, and on the settling day the amounts mutually owing are equal and cancel each other. The money in this case is money of account and serves to express the value of the commodities by their prices, but is not, itself, in the shape of hard cash, confronted with them. So far as regards use-values, it is clear that both parties may gain some advantage. Both part with goods that, as use-values, are of no service to them, and receive others that they can make use of. And there may also be a further gain. A, who sells wine and buys corn, possibly produces more wine, with given labour-time, than farmer B could, and B on the other hand, more corn than wine-grower A could. A, therefore, may get, for the same exchange-value, more corn, and B more wine, than each would respectively get without any exchange by producing his own corn
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and wine. With reference, therefore, to use-value, there is good ground for saying that --exchange is a transaction by which both sides gain. ? 1 It is otherwise with exchange-value. --A man who has plenty of wine and no corn treats with a man who has plenty of corn and no wine; an exchange takes place between them of corn to the value of 50, for wine of the same value. This act produces no increase of exchange-value either for the one or the other; for each of them already possessed, before the exchange, a value equal to that which he acquired by means of that operation. ? 2 The result is not altered by introducing money, as a medium of circulation, between the commodities, and making the sale and the purchase two distinct acts. 3 The value of a commodity is expressed in its price before it goes into circulation, and is therefore a precedent condition of circulation, not its result. 4
Abstractedly considered, that is, apart from circumstances not immediately flowing from the laws of the simple circulation of commodities, there is in an exchange nothing (if we except the replacing of one use-value by another) but a metamorphosis, a mere change in the form of the commodity. The same exchange-value, i. e. , the same quantity of incorporated social labour, remains throughout in the hands of the owner of the commodity, first in the shape of his own commodity, then in the form of the money for which he exchanged it, and lastly, in the shape of the commodity he buys with that money. This change of form does not imply a change in the magnitude of the value. But the change, which the value of the commodity undergoes in this process, is limited to a change in its money-form. This form exists first as the price of the commodity offered for sale, then as an actual sum of money, which, however, was already expressed in the price, and lastly, as the price of an equivalent commodity. This change of form no more implies, taken alone, a change in the quantity of value, than does the change of a ? 5 note into sovereigns, half sovereigns and shillings. So far therefore as the circulation of commodities effects a change in the form alone of their values, and is free from disturbing influences, it must be the exchange of equivalents. Little as Vulgar-Economy knows about the nature of value, yet whenever it wishes to consider the phenomena of circulation in their purity, it assumes that supply and demand are equal, which amounts to this, that their effect is nil. If therefore, as regards the use-values exchanged, both buyer and seller may possibly gain something, this is not the case as regards the exchange-values. Here we must rather say, --Where equality exists there can be no gain. ? 5 It is true, commodities may be sold at prices deviating from their values, but these deviations are to be considered as infractions of the laws of the exchange of commodities6, which in its normal state is an exchange of equivalents, consequently, no method for increasing value. 7
Hence, we see that behind all attempts to represent the circulation of commodities as a source of surplus value, there lurks a quid pro quo, a mixing up of use-value and exchange-value. For instance, Condillac says: --It is not true that on an exchange of commodities we give value for value. On the contrary, each of the two contracting parties in every case, gives a less for a greater value. . . . If we really exchanged equal values, neither party could make a profit. And yet, they both gain, or ought to gain. Why? The value of a thing consists solely in its relation to our wants. What is more to the one is less to the other, and vice versa^. . . . It is not to be assumed that we offer for sale articles required for our own consumption. . . . We wish to part with a useless thing, in order to get one that we need; we want to give less for more. . . . It was natural to think that, in an exchange, value was given for value, whenever each of the articles exchanged was of equal value with the same quantity of gold. . . . But there is another point to be considered in our calculation. The question is, whether we both exchange something superfluous for something necessary. ? 8 We see in this passage, how Condillac not only confuses use-value with exchange-value, but in a really childish manner assumes, that in a society, in which the production of commodities is well
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developed, each producer produces his own means of subsistence, and throws into circulation only the excess over his own requirements9 Still, Condillac's argument is frequently used by modern economists, more especially when the point is to show, that the exchange of commodities in its developed form, commerce, is productive of surplus value. For instance, --Commerce . . . adds value to products, for the same products in the hands of consumers, are worth more than in the hands of producers, and it may strictly be considered an act of production. ? 10 But commodities are not paid for twice over, once on account of their use-value, and again on account of their value. And though the use-value of a commodity is more serviceable to the buyer than to the seller, its money-form is more serviceable to the seller. Would he otherwise sell it? We might therefore just as well say that the buyer performs --strictly an act of production,? by converting stockings, for example, into money.
If commodities, or commodities and money, of equal exchange-value, and consequently equivalents, are exchanged, it is plain that no one abstracts more value from, than he throws into, circulation. There is no creation of surplus value. And, in its normal form, the circulation of commodities demands the exchange of equivalents. But in actual practice, the process does not retain its normal form. Let us, therefore, assume an exchange of non-equivalents.
In any case the market for commodities is only frequented by owners of commodities, and the power which these persons exercise over each other, is no other than the power of their commodities. The material variety of these commodities is the material incentive to the act of exchange, and makes buyers and sellers mutually dependent, because none of them possesses the object of his own wants, and each holds in his hand the object of another's wants. Besides these material differences of their use-values, there is only one other difference between commodities, namely, that between their bodily form and the form into which they are converted by sale, the difference between commodities and money. And consequently the owners of commodities are distinguishable only as sellers, those who own commodities, and buyers, those who own money.
Suppose then, that by some inexplicable privilege, the seller is enabled to sell his commodities above their value, what is worth 100 for 110, in which case the price is nominally raised 10%. The seller therefore pockets a surplus value of 10. But after he has sold he becomes a buyer. A third owner of commodities comes to him now as seller, who in this capacity also enjoys the privilege of selling his commodities 10% too dear. Our friend gained 10 as a seller only to lose it again as a buyer.
Of course, it is also possible, that in C-M-C, the two extremes C-C, say corn and clothes, may represent different quantities of value. The farmer may sell his corn above its value, or may buy the clothes at less than their value. He may, on the other hand, --be done? by the clothes merchant. Yet, in the form of circulation now under consideration, such differences in value are purely accidental. The fact that the corn and the clothes are equivalents, does not deprive the process of all meaning, as it does in M-C-M. The equivalence of their values is rather a necessary condition to its normal course.
The repetition or renewal of the act of selling in order to buy, is kept within bounds by the very object it aims at, namely, consumption or the satisfaction of definite wants, an aim that lies altogether outside the sphere of circulation. But when we buy in order to sell, we, on the contrary, begin and end with the same thing, money, exchange-value; and thereby the movement becomes interminable. No doubt, M becomes M + D M, ? 100 become ? 110. But when viewed in their qualitative aspect alone, ? 110 are the same as ? 100, namely money; and considered quantitatively, ? 110 is, like ? 100, a sum of definite and limited value. If now, the ? 110 be spent as money, they cease to play their part. They are no longer capital. Withdrawn from circulation, they become petrified into a hoard, and though they remained in that state till doomsday, not a single farthing would accrue to them. If, then, the expansion of value is once aimed at, there is just the same inducement to augment the value of the ? 110 as that of the ? 100; for both are but limited expressions for exchange-value, and therefore both have the same vocation to approach, by quantitative increase, as near as possible to absolute wealth. Momentarily, indeed, the value originally advanced, the ? 100 is distinguishable from the surplus value of ? 10 that is annexed to it during circulation; but the distinction vanishes immediately. At the end of the process, we do not
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receive with one hand the original ? 100, and with the other, the surplus value of ? 10. We simply get a value of ? 110, which is in exactly the same condition and fitness for commencing the expanding process, as the original ? 100 was. Money ends the movement only to begin it again. 5 Therefore, the final result of every separate circuit, in which a purchase and consequent sale are completed, forms of itself the starting-point of a new circuit. The simple circulation of commodities - selling in order to buy - is a means of carrying out a purpose unconnected with circulation, namely, the appropriation of use-values, the satisfaction of wants. The circulation of money as capital is, on the contrary, an end in itself, for the expansion of value takes place only within this constantly renewed movement. The circulation of capital has therefore no limits. 6
As the conscious representative of this movement, the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which the money starts and to which it returns. The expansion of value, which is the objective basis or main-spring of the circulation M-C-M, becomes his subjective aim, and it is only in so far as the appropriation of ever more and more wealth in the abstract becomes the sole motive of his operations, that he functions as a capitalist, that is, as capital personified and endowed with consciousness and a will. Use-values must therefore never be looked upon as the real aim of the capitalist; 7 neither must the profit on any single transaction. The restless never-ending process of profit-making alone is what he aims at. 8 This boundless greed after riches, this passionate chase after exchange-value9, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never-ending augmentation of exchange-value, which the miser strives after, by seeking to save10 his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh into circulation. 11
The independent form, i. e. , the money-form, which the value of commodities assumes in the case of simple circulation, serves only one purpose, namely, their exchange, and vanishes in the final result of the movement. On the other hand, in the circulation M-C-M, both the money and the commodity represent only different modes of existence of value itself, the money its general mode, and the commodity its particular, or, so to say, disguised mode. 12 It is constantly changing from one form to the other without thereby becoming lost, and thus assumes an automatically active character. If now we take in turn each of the two different forms which self-expanding value successively assumes in the course of its life, we then arrive at these two propositions: Capital is money: Capital is commodities. 13 In truth, however, value is here the active factor in a process, in which, while constantly assuming the form in turn of money and commodities, it at the same time changes in magnitude, differentiates itself by throwing off surplus value from itself; the original value, in other words, expands spontaneously. For the movement, in the course of which it adds surplus value, is its own movement, its expansion, therefore, is automatic expansion. Because it is value, it has acquired the occult quality of being able to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs.
Value, therefore, being the active factor in such a process, and assuming at one time the form of money, at another that of commodities, but through all these changes preserving itself and expanding, it requires some independent form, by means of which its identity may at any time be established. And this form it possesses only in the shape of money. It is under the form of money that value begins and ends, and begins again, every act of its own spontaneous generation. It began by being ? 100, it is now ? 110, and so on. But the money itself is only one of the two forms of value. Unless it takes the form of some commodity, it does not become capital. There is here no antagonism, as in the case of hoarding, between the money and commodities. The capitalist knows that all commodities, however scurvy they may look, or however badly they may smell,
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are in faith and in truth money, inwardly circumcised Jews, and what is more, a wonderful means whereby out of money to make more money.
In simple circulation, C-M-C, the value of commodities attained at the most a form independent of their use-values, i. e. , the form of money; but that same value now in the circulation M-C-M, or the circulation of capital, suddenly presents itself as an independent substance, endowed with a motion of its own, passing through a life-process of its own, in which money and commodities are mere forms which it assumes and casts off in turn. Nay, more: instead of simply representing the relations of commodities, it enters now, so to say, into private relations with itself. It differentiates itself as original value from itself as surplus value; as the father differentiates himself from himself qua the son, yet both are one and of one age: for only by the surplus value of ? 10 does the ? 100 originally advanced become capital, and so soon as this takes place, so soon as the son, and by the son, the father, is begotten, so soon does their difference vanish, and they again become one, ? 110.
Value therefore now becomes value in process, money in process, and, as such, capital. It comes out of circulation, enters into it again, preserves and multiplies itself within its circuit, comes back out of it with expanded bulk, and begins the same round ever afresh. 14 M-M', money which begets money, such is the description of Capital from the mouths of its first interpreters, the Mercantilists.
Buying in order to sell, or, more accurately, buying in order to sell dearer, M-C-M', appears certainly to be a form peculiar to one kind of capital alone, namely, merchants' capital. But industrial capital too is money, that is changed into commodities, and by the sale of these commodities, is re-converted into more money. The events that take place outside the sphere of circulation, in the interval between the buying and selling, do not affect the form of this movement. Lastly, in the case of interest-bearing capital, the circulation M-C-M' appears abridged. We have its result without the intermediate stage, in the form M-M', --en style lapidaire? so to say, money that is worth more money, value that is greater than itself.
M-C-M' is therefore in reality the general formula of capital as it appears prima facie within the sphere of circulation.
1 The contrast between the power, based on the personal relations of dominion and servitude, that is conferred by landed property, and the impersonal power that is given by money, is well expressed by the two French proverbs, --Nulle terre sans seigneur,? and --L'argent n'a pas de mai^tre,? - --No land without its lord,? and --Money has no master. ?
2 --Avec de l'argent on ache`te des marchandises et avec des marchandises on ache`te de l'argent. ? [--With money one buys commodities, and with commodities one buys money? ] (Mercier de la Rivie`re: --L'ordre naturel et essentiel des socie? te? s politiques,? p. 543. )
3 --When a thing is bought in order to be sold again, the sum employed is called money advanced; when it is bought not to be sold, it may be said to be expended. ? -- (James Steuart: --Works,? &c. Edited by Gen. Sir James Steuart, his son. Lond. , 1805, V. I. , p. 274. )
4 --On n'e? change pas de l'argent contre de l'argent,? [--One does not exchange money for money,? ] says Mercier de la Rivie`re to the Mercantilists (l. c. , p. 486. ) In a work, which, ex professo treats of --trade? and --speculation,? occurs the following: --All trade consists in the exchange of things of different kinds; and the advantage? (to the merchant? ) --arises out of this difference. To exchange a pound of bread against a pound of bread . . . would be attended with no advantage; . . . Hence trade is advantageously contrasted with gambling, which consists in a mere exchange of money for money. ? (Th. Corbet, --An Inquiry into the Causes and Modes of the Wealth of Individuals; or the Principles of
? ? 107 Chapter 4
Trade and Speculation Explained. ? London, 1841, p. 5. ) Although Corbet does not see that M-M, the exchange or money for money, is the characteristic form of circulation, not only of merchants' capital but of all capital, yet at least he acknowledges that this form is common to gambling and to one species of trade, viz. , speculation: but then comes MacCulloch and makes out, that to buy in order to sell, is to speculate, and thus the difference between Speculation and Trade vanishes. --Every transaction in which an individual buys produce in order to sell it again, is, in fact, a speculation. ? (MacCulloch: --A Dictionary Practical, &c. , of Commerce. ? Lond. , 1847, p. 1009. ) With much more naivete? , Pinto, the Pindar of the Amsterdam Stock Exchange, remarks, --Le commerce est un jeu: (taken from Locke) et ce n'est pas avec des gueux qu'on peut gagner. Si l'on gagnait longtemps en tout avec tous, il faudrait rendre de bon accord les plus grandes parties du profit pour recommencer le jeu. ? [--Trade is a game, and nothing can be won from beggars. If one won everything from everybody all the time, it would be necessary to give back the greater part of the profit voluntarily, in order to begin the game again? ] (Pinto: --Traite? de la Circulation et du Cre? dit. ? Amsterdam, 1771. p. 231,)
5 --Capital is divisible . . . into the original capital and the profit, the increment to the capital . . . although in practice this profit is immediately turned into capital, and set in motion with the original. ? (F. Engels, --Umrisse zu einer Kritik der Nationalo? konomie, in: Deutsch-Franzo? sische Jahrbu? cher, herausgegeben von Arnold Ruge und Karl Marx. ? Paris, 1844, p. 99. )
6 Aristotle opposes Oeconomic to Chrematistic. He starts from the former. So far as it is the art of gaining a livelihood, it is limited to procuring those articles that are necessary to existence, and useful either to a household or the state. --True wealth (o aleqinos ploutos) consists of such values in use; for the quantity of possessions of this kind, capable of making life pleasant, is not unlimited. There is, however, a second mode of acquiring things, to which we may by preference and with correctness give the name of Chrematistic, and in this case there appear to be no limits to riches and possessions. Trade (e kapelike is literally retail trade, and Aristotle takes this kind because in it values in use predominate) does not in its nature belong to Chrematistic, for here the exchange has reference only to what is necessary to themselves (the buyer or seller). ? Therefore, as he goes on to show, the original form of trade was barter, but with the extension of the latter, there arose the necessity for money. On the discovery of money, barter of necessity developed into kapelike, into trading in commodities, and this again, in opposition to its original tendency, grew into Chrematistic, into the art of making money. Now Chrematistic is distinguishable from Oeconomic in this way, that --in the case of Chrematistic circulation is the source of riches poietike crematon . . . dia chrematon diaboles. And it appears to revolve about money, for money is the beginning and end of this kind of exchange (to nomisma stoiceion tes allages estin). Therefore also riches, such as Chrematistic strives for, are unlimited. Just as every art that is not a means to an end, but an end in itself, has no limit to its aims, because it seeks constantly to approach nearer and nearer to that end, while those arts that pursue means to an end, are not boundless, since the goal itself imposes a limit upon them, so with Chrematistic, there are no bounds to its aims, these aims being absolute wealth. Oeconomic not Chrematistic has a limit . . . the object of the former is something different from money, of the latter the augmentation of money. . . .
By confounding these two forms, which overlap each other, some people have been led to look upon the preservation and increase of money ad infinitum as the end and aim of Oeconomic. ? (Aristoteles, De Rep. edit. Bekker, lib. l. c. 8, 9. passim. )
7 --Commodities (here used in the sense of use-values) are not the terminating object of the trading capitalist, money is his terminating object. ? (Th. Chalmers, On Pol. Econ. &c. , 2nd Ed. , Glasgow, 1832, pp. 165, 166. )
8 --Il mercante non conta quasi per niente il lucro fatto, ma mira sempre al futuro. ? [--The merchant counts the money he has made as almost nothing; he always looks to the future. ? ] (A. Genovesi,
? ? 108 Chapter 4
Lezioni di Economia Civile (1765), Custodi's edit. of Italian Economists. Parte Moderna t. viii, p. 139. )
9 --The inextinguishable passion for gain, the auri sacra fames, will always lead capitalists. ? (MacCulloch: --The Principles of Polit. Econ. ? London, 1830, p. 179. ) This view, of course, does not prevent the same MacCulloch and others of his kidney, when in theoretical difficulties, such, for example, as the question of over-production, from transforming the same capitalist into a moral citizen, whose sole concern is for use-values, and who even develops an insatiable hunger for boots, hats, eggs, calico, and other extremely familiar sorts of use-values.
10 Sozein is a characteristic Greek expression for hoarding. So in English to save has the same two meanings: sauver and e? pargner.
11 --Questo infinito che le cose non hanno in progresso, hanno in giro. ? [--That infinity which things do not possess, they possess in circulation. ? ] (Galiani. )
12 --Ce n'est pas la matie`re qui fait le capital, mais la valeur de ces matie`res. ? [--It is not matter which makes capital, but the value of that matter. ? ] (J. B. Say: --Traite? d'Econ. Polit. ? 3e`me e? d. Paris, 1817, t. II. , p. 429. )
13 --Currency (! ) employed in producing articles. . . is capital. ? (Macleod: --The Theory and Practice of Banking. ? London, 1855, v. 1, ch. i, p. 55. ) --Capital is commodities. ? (James Mill: --Elements of Pol. Econ. ? Lond. , 1821, p. 74. )
14 Capital: --portion fructifiante de la richesse accumule? e. . . valeur permanente, multipliante. ? (Sismondi: --Nouveaux Principes d'Econ. Polit. ,? t. i. , p. 88, 89. )
? ? Chapter 5: Contradictions in the General Formula of Capital
The form which circulation takes when money becomes capital, is opposed to all the laws we have hitherto investigated bearing on the nature of commodities, value and money, and even of circulation itself. What distinguishes this form from that of the simple circulation of commodities, is the inverted order of succession of the two antithetical processes, sale and purchase. How can this purely formal distinction between these processes change their character as it were by magic?
But that is not all. This inversion has no existence for two out of the three persons who transact business together. As capitalist, I buy commodities from A and sell them again to B, but as a simple owner of commodities, I sell them to B and then purchase fresh ones from A. A and B see no difference between the two sets of transactions. They are merely buyers or sellers. And I on each occasion meet them as a mere owner of either money or commodities, as a buyer or a seller, and, what is more, in both sets of transactions, I am opposed to A only as a buyer and to B only as a seller, to the one only as money, to the other only as commodities, and to neither of them as capital or a capitalist, or as representative of anything that is more than money or commodities, or that can produce any effect beyond what money and commodities can. For me the purchase from A and the sale to B are part of a series. But the connexion between the two acts exists for me alone. A does not trouble himself about my transaction with B, nor does B about my business with A. And if I offered to explain to them the meritorious nature of my action in inverting the order of succession, they would probably point out to me that I was mistaken as to that order of succession, and that the whole transaction, instead of beginning with a purchase and ending with a sale, began, on the contrary, with a sale and was concluded with a purchase. In truth, my first act, the purchase, was from the standpoint of A, a sale, and my second act, the sale, was from the standpoint of B, a purchase. Not content with that, A and B would declare that the whole series was superfluous and nothing but Hokus Pokus; that for the future A would buy direct from B, and B sell direct to A. Thus the whole transaction would be reduced to a single act forming an isolated, non-complemented phase in the ordinary circulation of commodities, a mere sale from A's point of view, and from B's, a mere purchase. The inversion, therefore, of the order of succession, does not take us outside the sphere of the simple circulation of commodities, and we must rather look, whether there is in this simple circulation anything permitting an expansion of the value that enters into circulation, and, consequently, a creation of surplus value.
Let us take the process of circulation in a form under which it presents itself as a simple and direct exchange of commodities. This is always the case when two owners of commodities buy from each other, and on the settling day the amounts mutually owing are equal and cancel each other. The money in this case is money of account and serves to express the value of the commodities by their prices, but is not, itself, in the shape of hard cash, confronted with them. So far as regards use-values, it is clear that both parties may gain some advantage. Both part with goods that, as use-values, are of no service to them, and receive others that they can make use of. And there may also be a further gain. A, who sells wine and buys corn, possibly produces more wine, with given labour-time, than farmer B could, and B on the other hand, more corn than wine-grower A could. A, therefore, may get, for the same exchange-value, more corn, and B more wine, than each would respectively get without any exchange by producing his own corn
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and wine. With reference, therefore, to use-value, there is good ground for saying that --exchange is a transaction by which both sides gain. ? 1 It is otherwise with exchange-value. --A man who has plenty of wine and no corn treats with a man who has plenty of corn and no wine; an exchange takes place between them of corn to the value of 50, for wine of the same value. This act produces no increase of exchange-value either for the one or the other; for each of them already possessed, before the exchange, a value equal to that which he acquired by means of that operation. ? 2 The result is not altered by introducing money, as a medium of circulation, between the commodities, and making the sale and the purchase two distinct acts. 3 The value of a commodity is expressed in its price before it goes into circulation, and is therefore a precedent condition of circulation, not its result. 4
Abstractedly considered, that is, apart from circumstances not immediately flowing from the laws of the simple circulation of commodities, there is in an exchange nothing (if we except the replacing of one use-value by another) but a metamorphosis, a mere change in the form of the commodity. The same exchange-value, i. e. , the same quantity of incorporated social labour, remains throughout in the hands of the owner of the commodity, first in the shape of his own commodity, then in the form of the money for which he exchanged it, and lastly, in the shape of the commodity he buys with that money. This change of form does not imply a change in the magnitude of the value. But the change, which the value of the commodity undergoes in this process, is limited to a change in its money-form. This form exists first as the price of the commodity offered for sale, then as an actual sum of money, which, however, was already expressed in the price, and lastly, as the price of an equivalent commodity. This change of form no more implies, taken alone, a change in the quantity of value, than does the change of a ? 5 note into sovereigns, half sovereigns and shillings. So far therefore as the circulation of commodities effects a change in the form alone of their values, and is free from disturbing influences, it must be the exchange of equivalents. Little as Vulgar-Economy knows about the nature of value, yet whenever it wishes to consider the phenomena of circulation in their purity, it assumes that supply and demand are equal, which amounts to this, that their effect is nil. If therefore, as regards the use-values exchanged, both buyer and seller may possibly gain something, this is not the case as regards the exchange-values. Here we must rather say, --Where equality exists there can be no gain. ? 5 It is true, commodities may be sold at prices deviating from their values, but these deviations are to be considered as infractions of the laws of the exchange of commodities6, which in its normal state is an exchange of equivalents, consequently, no method for increasing value. 7
Hence, we see that behind all attempts to represent the circulation of commodities as a source of surplus value, there lurks a quid pro quo, a mixing up of use-value and exchange-value. For instance, Condillac says: --It is not true that on an exchange of commodities we give value for value. On the contrary, each of the two contracting parties in every case, gives a less for a greater value. . . . If we really exchanged equal values, neither party could make a profit. And yet, they both gain, or ought to gain. Why? The value of a thing consists solely in its relation to our wants. What is more to the one is less to the other, and vice versa^. . . . It is not to be assumed that we offer for sale articles required for our own consumption. . . . We wish to part with a useless thing, in order to get one that we need; we want to give less for more. . . . It was natural to think that, in an exchange, value was given for value, whenever each of the articles exchanged was of equal value with the same quantity of gold. . . . But there is another point to be considered in our calculation. The question is, whether we both exchange something superfluous for something necessary. ? 8 We see in this passage, how Condillac not only confuses use-value with exchange-value, but in a really childish manner assumes, that in a society, in which the production of commodities is well
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developed, each producer produces his own means of subsistence, and throws into circulation only the excess over his own requirements9 Still, Condillac's argument is frequently used by modern economists, more especially when the point is to show, that the exchange of commodities in its developed form, commerce, is productive of surplus value. For instance, --Commerce . . . adds value to products, for the same products in the hands of consumers, are worth more than in the hands of producers, and it may strictly be considered an act of production. ? 10 But commodities are not paid for twice over, once on account of their use-value, and again on account of their value. And though the use-value of a commodity is more serviceable to the buyer than to the seller, its money-form is more serviceable to the seller. Would he otherwise sell it? We might therefore just as well say that the buyer performs --strictly an act of production,? by converting stockings, for example, into money.
If commodities, or commodities and money, of equal exchange-value, and consequently equivalents, are exchanged, it is plain that no one abstracts more value from, than he throws into, circulation. There is no creation of surplus value. And, in its normal form, the circulation of commodities demands the exchange of equivalents. But in actual practice, the process does not retain its normal form. Let us, therefore, assume an exchange of non-equivalents.
In any case the market for commodities is only frequented by owners of commodities, and the power which these persons exercise over each other, is no other than the power of their commodities. The material variety of these commodities is the material incentive to the act of exchange, and makes buyers and sellers mutually dependent, because none of them possesses the object of his own wants, and each holds in his hand the object of another's wants. Besides these material differences of their use-values, there is only one other difference between commodities, namely, that between their bodily form and the form into which they are converted by sale, the difference between commodities and money. And consequently the owners of commodities are distinguishable only as sellers, those who own commodities, and buyers, those who own money.
Suppose then, that by some inexplicable privilege, the seller is enabled to sell his commodities above their value, what is worth 100 for 110, in which case the price is nominally raised 10%. The seller therefore pockets a surplus value of 10. But after he has sold he becomes a buyer. A third owner of commodities comes to him now as seller, who in this capacity also enjoys the privilege of selling his commodities 10% too dear. Our friend gained 10 as a seller only to lose it again as a buyer.
