Capital

Capital exists from economic production

Capital exists via the general formula of capital (C=Commodity, and M= Money) as M–C–M’, where M'-M= economic production. A “reflux” occurs here so that the process is inverted from C–M–C, with money now the driving and motivating force of commodity production, into M–C–M. There is a metamorphous in the commodity’s form in this process, where value presents itself as surplus-value, or the original sum advanced plus an increment, and is converted into the general formula of capital: M–C–M’. For the transformation of money into capital, then, there has to be annexed surplus-value, the valorisation of value.

Both circuits are resolvable into the same two antithetical phases, C-M, a sale, and M-C, a purchase. In each of these phases the same material elements - a commodity, and money, and the same economic dramatis personae, a buyer and a seller - confront one another. Each circuit is the unity of the same two antithetical phases, and in each case this unity is brought about by the intervention of three contracting parties, of whom one only sells, another only buys, while the third both buys and sells.

What, however, first and foremost distinguishes the circuit C-M-C from the circuit M-C-M, is the inverted order of succession of the two phases. The simple circulation of commodities begins with a sale and ends with a purchase, while the circulation of money as capital begins with a purchase and ends with a sale. In the one case both the starting-point and the goal are commodities, in the other they are money. In the first form the movement is brought about by the intervention of money, in the second by that of a commodity.

The reflux itself takes place, so soon as the purchased commodity is resold, in other words, so soon as the circuit M-C-M is completed. We have here, therefore, a palpable difference between the circulation of money as capital, and its circulation as mere money.

The general formula of capital as M–C–M’

Marx turns his attention to the pre-suppositions from which capital may arise. These pre-suppositions commence with the metamorphosis of the world of commodities (C) into money (M) that begins to define the dramatis personae of the general formula, marked by buyer and seller. However, at this stage we are still in the realm of commodities in the sphere of simple circulation, based on use-values and the satisfaction of human needs; we are, in this formula, treading the path from commodity, to money, to commodity (C–M–C). The pupation of commodities into exchange-value creates the possibility for a continuous movement of commodities as capital – of the perpetuum mobile of capital. Here the obvious and trivial “thing” of a fetishised commodity becomes defined by its social relations and the mass of socially necessary economic production needed to produce it, which is then exchanged through the universal equivalent of a deferred currency based payment.

A “reflux” occurs here so that the process is inverted from C–M–C, with money now the driving and motivating force of commodity production, into M–C–M. There is a metamorphous in the commodity’s form in this process, where value presents itself as surplus-value, or the original sum advanced plus an increment, and is converted into the general formula of capital: M–C–M’. For the transformation of money into capital, then, there has to be annexed surplus-value, the valorisation of value. Thus, for the larval form of the money-owner (M) to become the butterfly of the capitalist extracting surplus-value (M’), economic production becomes the pivotal commodity (C). Value, after all, is a congealed quantity of abstract labour and its crystallisation into surplus-value, which is soaked in the exploitation of labour-time. The general formula of capital as M–C–M’ is thus the purchase (M) of the commodity of labour-power (C) and its metamorphosis into surplus-value (M’) based on the exploitation of economic production (labour-time) as surplus-value.

Karl Marx. Capital Volume One. Part II: The Transformation of Money into Capital. Chapter Four: The General Formula for Capital

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