[XV-891] The form of REVENUE and the sources of REVENUE are the most fetishistic expression of the relations of capitalist production. It is their form of existence as it appears on the surface, divorced from the hidden connections and the intermediate connecting links. Thus the land becomes the source of rent, capital the source of profit, and labour the source of wages. The distorted form in which the real inversion is expressed is naturally reproduced in the views of the agents of this mode of production. It is a kind of fiction without fantasy, a religion of the vulgar. In fact, the vulgar economists — by no means to be confused with the economic investigators we have been criticising — translate the concepts, motives, etc., of the representatives of capitalist production who are held in thrall to this system of production and in whose consciousness only its superficial appearance is reflected. They translate them into a doctrinaire language, but they do so from the standpoint of the ruling section, i.e. the capitalists, and their treatment is therefore not naïve and objective, but apologetic. The narrow and pedantic expression of vulgar conceptions which are bound to arise among the representatives of this mode of production is very different from the urge of political economists like the Physiocrats, Adam Smith and Ricardo to grasp the inner connection of the phenomena.
However, of all these forms, the most complete fetish is interest-bearing capital? This is the original starting-point of capital — money — and the formula M—C—M is reduced to its two extremes—M—M — money which creates more money. It is the original and general formula of capital reduced to a meaningless résumé.
The land or nature as the source of rent, i.e. of landed property, is fetishistic enough. But as a result of a convenient confusion of use value with exchange value, the common imagination is still able to have recourse to the productive power of nature itself, which, by some kind of hocus-pocus, is personified in the
LANDLORD.
Labour as the source of wages, that is, of the worker's share in his product, which is determined by the specific social form of labour; labour as the cause of the fact that the worker by means of his labour buys the permission to produce from the product (i.e. from capital considered in its material aspect) and has in labour the source by which a part of his product is returned to him in the form of payment made by this product as his employer — this is pretty enough. But the common conception is in so far in accord with the facts that, even though labour is confused with wage labour and, consequently, wages, the product of wage labour, with the product of labour, it is nevertheless obvious to anybody who has common sense that labour itself produces its own wages.
Capital, in so far as it is considered in the production process, still continues to a certain extent to be regarded as an instrument for
a See also this volume, pp. 456-58, 488-90 and 494-95.— Ed.
acquiring the labour of others. This may be treated as "right" or "wrong", as justified or not justified, but here the relation of the capitalist to the worker is always presupposed and assumed.
Capital, in so far as it appears in the circulation process, confronts the ordinary observer mainly in the form of merchant capital, that is, a kind of capital which is engaged only in this operation, hence profit in this field is in part linked with a vague notion of general swindling, or more specifically, with the idea that the merchant swindles the industrial capitalist or the consumer in the same way as the industrial capitalist swindles the worker, or as the producers swindle one another. In any case, profit here is explained as a result of EXCHANGE, that is, as arising from a social relation and not from a thing.
On the other hand, interest-bearing capital is the perfect fetish. It is capital in its finished form — as such representing the unity of the production process and the circulation process — and therefore yields a definite profit in a definite period of time. In the form of interest-bearing capital only this function remains, without the mediation of either production process or circulation process. Memories of the past still remain in capital and profit, although because of the divergence of profit from surplus value and the uniform profit yielded by all capitals — that is, the general rate of profit — capital becomes [XV-892] very much obscured, something dark arid mysterious.
Interest-bearing capital is the consummate automatic fetish, the self-valorising value the money-making money, and in this form it no longer bears any trace of its origin. The social relation is consummated as a relation of things (money, commodities) to themselves.
This is not the place for a more detailed examination of interest and its relation to profit; nor is it the place for an examination of the ratio in which profit is divided into industrial profit and interest. It is clear that capital, as the mysterious and self-generating source of interest, that is, source of its [own] increase, finds its consummation in capital and interest. It is therefore especially in this form that capital is imagined. It is capital par excellence.
Since, on the basis of capitalist production, a certain sum of values represented in money or commodities — actually in money, the converted form of the commodity — makes it possible to extract a certain amount of labour gratis from the workers and to appropriate a certain amount of SURPLUS VALUE, SURPLUS LABOUR, SURPLUS PRODUCE, it is obvious that money itself can be sold as capital, that is, as a commodity sui generis, or that capital can be bought in the form of commodities or of money.
It can be sold as the source of profit. I enable someone else by means of money, etc., to appropriate SURPLUS VALUE. Thus it is quite in order for me to receive part of this SURPLUS VALUE. Just as land has value because it enables me to intercept a portion of SURPLUS VALUE, and I therefore pay for this land only the SURPLUS VALUE which can be intercepted thanks to it, so I pay for capital the SURPLUS VALUE which is created by means of it. Since, in the capitalist production process, the value of capital is perpetuated and reproduced in addition to its surplus value, it is therefore quite in order that, when money or commodities are sold as capital, they return to the seller after a period of time and he does not alienate it [money] in the same way as he would a commodity but retains ownership of it. In this way, money or commodities are not sold as money or commodities, but in their second power, as capital, as self-increasing money, or commodity value. Money is not only increased, but is preserved in the total process of production. It therefore remains capital for the seller, and comes back to him. The sale consists in the fact that another person, who uses it as productive capital, has to pay its owner a certain part of his profit, which he only makes through this capital. Like land, it is rented out as a value-creating thing which in this process of generating value is preserved and continually returned, and therefore can also be returned to the original seller. It is only capital in virtue of its RETURN to him. Otherwise he would sell it as a commodity or buy with it as money.
In any case, the form considered in itself (in fact, it [money] is alienated periodically as a means for exploiting labour, for making surplus value) is this, that the thing now appears as capital and capital appears as a mere thing; the whole result of the capitalist production and circulation process appears as a property inherent in a thing, and it depends on the owner of money, i.e. of the commodity in its constantly exchangeable form, whether he expends it as money or rents it out as capital.
We have here the relation of capital as PRINCIPAL to itself as fructus," and the profit which it yields is measured against its own value, which (in accordance with the nature of capital) is not diminished in this process. It is thus clear why superficial criticism — in exactly the same way as it wants [to maintain] commodities and combats money — now turns its wisdom and reforming zeal against interest-bearing capital without touching upon real capitalist production, but merely attacking one of its consequences. This polemic against interest-bearing capital, undertaken from the standpoint of capitalist production, a polemic which today parades as "socialism", occurs, incidentally, as a phase in the development of capital itself, for example, in the 17th century, when the industrial capitalist had to assert himself against the old-fashioned usurer who, at that time, still [confronted] him as a superior power.(1)
[XV-893] The complete objectification, inversion and derangement of capital as interest-bearing capital — in which, however, the inner nature of capitalist production, [its] derangement, merely appears in its most palpable form — is capital which yields "COMPOUND INTEREST". It appears as a Moloch demanding the whole world as a sacrifice belonging to it of right, whose legitimate demands, arising from its very nature, are however never met and are always frustrated by a mysterious fate.
The characteristic movement of capital, both in the production and in the circulation processes, is the return of the money or commodity to its starting-point — to the capitalist. This expresses, on the one hand, the real metamorphosis, the conversion of the commodity into its conditions of production, and the conversion of the conditions of production back into the form of the commodity — i.e. reproduction, and, on the other hand, the formal metamorphosis, the conversion of the commodity into money and of the money back into the commodity. Finally, the multiplication of value: M—C—M'. The original value, which is however increased during the process, always remains in the possession of the same capitalist. Only the forms change in which he possesses it: money, commodity, or the form of the production process itself. In the case of interest-bearing capital, this return of capital to its starting-point acquires a quite external aspect, divorced from the real movement whose form it is. A spends his money not as money but as capital. No CHANGE takes place here in the money. It only changes hands. Its real conversion into capital takes place only while it is in the hands of B. But it has become capital for A as a result of the transfer of the money from A's hands into those of B. The real RETURN of capital from the production and circulation process takes place for B. But for A, the return takes place in the same way as the alienation did. The money passes from B back again to A. He lends the money instead of spending it.
In the real production process of capital, each particular movement of money expresses an aspect of reproduction, whether it be the conversion of money into labour, the conversion of the finished commodity into money (the end of the act of production) or the reconversion of the money into commodities (renewal of the production process, recommencement of reproduction). The movement of money when it is lent as capital, that is, when it is not converted into capital but enters into circulation as capital, expresses nothing more than the TRANSFER of the same money from one person to another. The property rights remain with the lender, but the possession is transferred to the industrial capitalist. For the lender, however, the conversion of the money into capital begins at the moment when he spends it as capital instead of spending it as money, i.e. when he hands it over to the industrial capitalist. (It remains capital for him even if he does not lend it to the industrial capitalist but to a spendthrift, or to a worker who cannot pay his rent. The whole pawnshop business [is based on this].(2)) True, the other person converts it into capital, but this is an operation beyond that in which the lender and the borrower are involved. This mediation is effaced, is not visible, is not directly included in it. Instead of the real conversion of money into capital, there appears only the empty form of this process. Just as in the case of labour capacity, the use value of money here becomes that of creating exchange value, more exchange value than it itself contains. It is lent as se If-valorising value, as a commodity, but a commodity which, precisely because of this quality, differs from commodities as such and therefore also possesses a specific form of alienation.
The starting-point of capital is the commodity owner, the owner of money, in short, the capitalist. Since in the case of capital both starting-point and point of return coincide, it returns to the capitalist. But the capitalist exists here in a dual form, as the owner of capital and as the industrial capitalist who really converts money into capital. The capital actually issues [XV-894] from him [the industrial capitalist] and returns again to him. But only as possessor. The capitalist exists in a dual form — juridically and economically. The capital as property consequently returns to the juridical capitalist, the LEFT-HANDED SAM. But the return of the capital, which includes the maintenance of its value and posits it as a self-maintaining and self-perpetuating value, is indeed brought about by intermediate steps for capitalist II but not for capitalist I. In this case therefore, the return is not the consequence and result of a series of economic processes but is effected by a particular juridical transaction between buyer and seller, by the fact that it is lent instead of being sold, and therefore it is posited only temporarily. What is sold is, in fact, its use value, whose function in this case is to produce exchange value, to yield profit, to produce more value than it itself contains. As money it does not change through being used. It is however expended as money and it flows back as money.
The form in which it returns depends on the mode of reproduction of the capital. If it is loaned as money, then it comes back in the form of circulating capital, that is, its whole value is returned+surplus value, in this case, that part of surplus value or of profit which consists of interest; the sum of money loaned+the additional amount which has arisen from it.
If it is loaned out in the form of machinery, buildings, etc., in short, in a material form in which it functions as fixed capital in the process of production, then it returns in the form of fixed capital, as an annuity, that is, for example, as an annual amount=to the replacement of the wear and tear=to that part of the value which has entered the circulation process+that part of the SURPLUS VALUE which is calculated as profit (in this case a part of the profit), interest on the fixed capital (not in so far as it is fixed capital, but in so far as in general it is capital of a definite amount).
In profit as such, SURPLUS VALUE, and consequently its real source, is already obscured and mystified:
1) Because, considered from the formal standpoint, profit is SURPLUS VALUE calculated on the whole of the capital advanced, so that each part of capital — fixed and circulating — laid out on raw materials, machinery or labour, yields an equal amount of profit.
2) Because, just as in the case of a single given capital of 500, for example, every fifth part yields 10%, if the SURPLUS VALUE=50, 50 now, as a result of the establishment of the general rate of profit, every capital of 500 or 100, no matter which sphere it operates in, irrespective of the relative proportions of variable and constant capital, no matter how varied the periods of turnover, etc., will yield the same average profit — say 10%—in the same period of time as any other capital under quite different organic conditions. Because, therefore, the profit of individual capitals regarded in isolation and the surplus value which is produced by them in their own sphere of production become in fact different magnitudes.
It is true that point 2 merely develops further what has already been implied in point 1.
The basis of interest however is this already externalised form of surplus value, i.e. its existence as profit This form differs from its first simple appearance, in which it still reveals the umbilical cord of its birth, and is, at first sight, by no means recognisable as a form of surplus value. Interest directly presupposes not surplus value, but profit, of which it is merely a part placed in a special category or division. It is therefore much more difficult to recognise surplus value in interest than in profit, since interest is directly connected with surplus value only in the form of profit.
The time needed for the RETURN [of capital] depends on the real production process; in the case of interest-bearing capital, its return as capital appears to depend merely on the agreement between lender and borrower. So that the RETURN of the capital in this transaction no longer appears to be a result determined by the production process, but it seems that the capital never loses the form of money for a single instant. These transactions are nevertheless determined by the REAL RETURNS. But this is not evident in the transaction itself.
[XV-895] Interest, as distinct from profit, represents the value of mere ownership of capital—i.e. it transforms the ownership of money (of a sum of values, commodities, whatever the form may be) in itself, into ownership of capital, and consequendy commodities or money as such into self-valorising value. The conditions of labour are of course capital only in so far as they confront the worker as his non-property and consequently function as someone else's property. But they can function in this way only in contradiction to labour. The antagonistic existence of these conditions in relation to labour makes their owners capitalists, and turns these conditions owned by them into capital. But capital in the hands of MONEYED capitalist A does not have this contradictory character which turns it into capital and which therefore makes ownership of money appear as ownership of capital. The actual formal determinant by means of which money or a commodity is converted into capital is obliterated. MONEYED capitalist A does not confront the worker at all, but only another capitalist — capitalist B. What he sells him is actually the "use" of the money, the results it will produce WHEN CONVERTED INTO PRODUCTIVE CAPITAL. But in fact it is not the use which he sells directly. If I sell a commodity, then I sell a specific use value. If I buy money with commodities, then I buy the functional use value which money, as the converted form of commodities, possesses. I do not sell the use value of the commodity along with its exchange value, nor do I buy the particular use value of the money along with the money itself. But money as money — before its conversion into and its function as capital, a function which it does not perform while it is in the hands of the MONEY-LENDER — has no other use value than that which it possesses as a commodity (gold, silver, its material substance) or as money which is the converted form of a commodity. What the MONEYLENDER sells in actual fact to the industrial capitalist, what really happens in the transaction, is simply this: he transfers the ownership of the money to the industrial capitalist for a certain period of time. He disposes of his ownership title for A CERTAIN TERM, and as a result the industrial capitalist has bought the ownership for A CERTAIN TERM. Thus his money appears to be capital before it is alienated and the mere ownership of money or a commodity— separated from the capitalist production process—[is regarded] as capital.
The fact that it becomes capital only after it has been alienated makes no difference, any more than the use value of cotton is altered by the fact that its use value only emerges after it has been alienated to the spinner or that the use value of meat only becomes apparent after it has been transferred from the butcher's shop to the consumer's table. Hence money, once it is not spent on consumption, and commodities, once they are not used as means of consumption by their owners, transform those who possess them into capitalists and are in themselves — separated from the capitalist production process and even before their conversion into "productive" capital — capital, that is, they are self-valorising, self-preserving and self-increasing value. It is their immanent attribute to create value, to yield interest, just as the attribute of the pear tree is to produce pears. And it is as such an interest-bearing thing that the MONEY-LENDER sells his money to the industrial capitalist. Because money preserves itself, i.e. is value which preserves itself, the industrial capitalist can return it at any time fixed by contract. Since it produces a definite amount of surplus value, interest, annually, or rather since value accrues to it over any period of time, he can also pay back this surplus value to the lender annually or in any other conventionally established period of time. Money as capital yields surplus value daily in exactly the same way as wage labour. While interest is simply a part of the profit established under a special name, it appears here as [the surplus value specifically created by] capital as such, separated
30* from the production process, and consequently deriving only from the mere ownership of capital, the ownership of money and commodities, separated from the relations which give rise to the contradiction between this property and labour, thus turning it into capitalist property. [Interest seems to be] a specific kind of surplus value the generation of which is due to the mere ownership of capital and therefore to an intrinsic characteristic of capital; whereas on the contrary, industrial profit appears to be a mere addition which the borrower obtains by employing capital productively, that is, by exploiting the workers with the help of the capital borrowed (or, as people also say, by his work as a capitalist, the function of the capitalist being equated here with labour, and even identified with wage labour, since the [XV-896] industrial capitalist, by really taking part in the production process, appears in fact as an active agent in production, as a worker, in contrast to the idle, inactive money-lender whose function of property owner is separate from and outside the production process).
Thus it is interest, not profit, which appears to be the creation of value arising from capital as such and therefore from the mere ownership of capital; consequently it is regarded as the specific REVENUE created by capital. This is also the form in which it is conceived by the vulgar economists. In this form all intermediate links are obliterated, and the fetishistic face of capital, as also the concept of the capital-fetish, is complete. This form arises necessarily, because the juridical aspect of property is separated from its economic aspect and one part of the profit under the name of interest accrues to capital in itself122 which is completely separated from the production process, or to the owner of this capital
To the vulgar economist who desires to represent capital as an independent source of value, a source which creates value, this form is of course a godsend, a form in which the source of profit is no longer recognisable and the result of the capitalist process — separated from the process itself — acquires an independent existence. In M—C—M' an intermediate link is still retained. In M — M' we have the incomprehensible form of capital, the most extreme inversion and materialisation of production relations.
A general rate of interest corresponds naturally to the general rate of profit It is not our intention to discuss this further here, since the analysis of interest-bearing capital does not belong to this general section but to that dealing with credit121. However, the observation that the general rate of profit appears much less as a palpable, solid fact than does the rate of interest is important to fully work out these manifestations of capital. True, the rate of interest fluctuates continuously. [It may be] 2% today (on the money market for the industrial capitalist — an J this is all we are discussing), 3% tomorrow, and 5% the day after. But n is 2 p~r cent, 3 per cent, 5 per cent for all borrowers. It is a general condition that every sum of money of £100 yields 2%, 3% or 5%, while the same value in its real function as capital yields very different amounts of real profit in the different spheres of production. The real profit deviates from the ideal average level, which is established only by a continuous process, a reaction, and this only takes place during long periods of circulation of capital. The rate of profit is in certain spheres higher for some years, while it is lower in succeeding years. Taking the years together, or taking a SERIES of such EVOLUTIONS, one will in general obtain the AVERAGE PROFIT. Thus it never appears as something directly given, but only as the average result of contradictory oscillations. It is different with the rate of interest. In its generality, it is a fact which is established daily, a fact which the industrial capitalist even regards as a precondition and an ITEM of calculation in his operations. The general rate of profit exists indeed only as an ideal average figure, in so far as it serves to estimate the real profit; it exists only as an average figure, as an abstraction, in so far as it is established as something which is in itself complete, definite, given. In reality, however, it exists only as the determining tendency in the movement of equalisation of the real different rates of profit, whether of individual capitals in the same sphere or of different capitals in the different spheres of production/
[XV-897] What the lender demands of the capitalist is calculated on the general (AVERAGE) rate of profit, not on individual deviations from it. Here the AVERAGE becomes the precondition. The rate of interest itself varies, but does so for all borrowers.
A definite, equal rate of interest, on the other hand, exists not only on the average but in actual fact (even though it is accompanied by variations between minimum and maximum rates according to whether or not the borrower is FIRST-RATE) and the deviations appear rather as exceptions brought about by special circumstances. The meteorological bulletins do not indicate the state of the barometer more exactly than stock-exchange bulletins do the state of interest rates, not for this or that capital, but for the capital available on the money market, that is, capital available for lending.
This is not the place to go into the reasons for this greater stability and equality of the rate of interest on loan capital in contradistinction to the less tangible form of the general rate of profit. Such a discussion belongs to the section on credit.[30] But this much is obvious: the fluctuations in the rate of profit in every sphere — quite apart from the special advantages which individual capitalists in the same sphere of production may enjoy — depend on the existing level of market prices and their fluctuations around cost prices. The difference in the rates of profit in the various spheres can only be discerned by comparison of the market prices in the different spheres, that is, the market prices of the. different commodities, with the cost prices of these different commodities. A decline in the rate of profit below the ideal average in any particular sphere, if prolonged, suffices to bring about a withdrawal of capital from this sphere, or to prevent the entry of the AVERAGE amount of new capital into it. For it is the inflow of new, ADDITIONAL capital, even more than the redistribution of capital already invested, that equalises the distribution of capital in the different spheres. The SURPLUS PROFIT in the different spheres, on the other hand, is discernible only by comparison of the market prices with cost prices. As soon as any difference becomes apparent in one way or another, then an outflow or inflow of capital from or to the particular spheres [begins]. Apart from the fact that this act of equalisation requires time, the average profit in each sphere becomes evident only in the average profit rates obtained, for example, over a cycle of 7 years, etc., according to the nature of the capital. Mere fluctuations—below and above—if they do not exceed the average extent and do not assume extraordinary forms, are therefore not sufficient to bring about a TRANSFER OF CAPITAL, and in addition the TRANSFER of fixed capital presents certain difficulties. Momentary booms can only have a limited effect, and are more likely to attract or repel ADDITIONAL CAPITAL than to bring about a REDISTRIBUTION of the capital invested in the different spheres. One can see that all this involves a very complex movement in which, on the one hand, the market prices in each particular sphere, the relative cost prices of the different commodities, the position with regard to demand and supply within each individual sphere, and, on the other hand, competition among the capitalists in the different spheres, play a part, and, in addition, the speed of the equalisation process, whether it is quicker or slower, depends on the particular organic composition of the different capitals (more fixed or circulating capital, for example) and on the particular nature of their commodities, that is, whether their nature as use values facilitates rapid withdrawal from the market and the diminution or increase of supply, in accordance with the level of the market prices.
In the case of money capital on the other hand, only two sorts of buyers and sellers, only two types of demand and supply, confront each other on the money market. On the one side, the borrowing class of capitalists — on the other, the money-lenders. The commodity has only one form — money. All the different forms assumed by capital according to the different spheres of production or circulation in which it is invested, are obliterated here. It exists here in the undifferentiated, always identical form, that of independent exchange value, i.e. of money. Here competition between the different spheres ceases; they are all lumped together as borrowers of money, and capital too confronts them all in a form in which it is still indifferent to the way it is utilised. Whereas productive capital [XV-898] emerges only in movement and competition between the different spheres as the joint capital of the whole class, capital here actually—as regards the pressure exerted—acts as such in the demand for capital On the other hand, money capital (the capital on the money market) really possesses the form which enables it as a common element, irrespective of its particular employment, to be distributed amongst the different spheres, amongst the capitalist class, according to the production needs of each separate sphere. With the development of large-scale industry, moreover, money capital, in so far as it appears on the market, is represented less and less by the individual capitalist, the owner of this or that PARCEL of capital available on the market, but is concentrated, organised and is [subject] in quite a different way from real production to the control of the bankers who represent the capital. So that in so far as the form of the demand is concerned, the weight of a class confronts it [this capital]; and as far as supply is concerned, it appears as loan capital en masse, the loan capital of society, concentrated in a few reservoirs.
These are some of the reasons why the general rate of profit appears as a hazy mirage in contrast to the fixed rate of interest which, although it fluctuates in magnitude, nevertheless fluctuates in the same measure for all borrowers and therefore always confronts them as something fixed, given; just as money despite the changes in its value has the same value for all commodities. Just as the market prices of commodities fluctuate daily, which does not prevent them from being quoted daily, so it is with the rate of interest, which is likewise quoted regularly as the price of money. This is the established price of capital, for capital is here offered as a special kind of commodity—money—and consequently its market price is established in the same way as that of all other commodities. The rate of interest is therefore always expressed as the general rate of interest, as a fixed amount [to be paid] for a certain amount of money; whereas the rate of profit within a particular sphere may vary although the market prices of commodities are the same (depending on the conditions under which individual capitals produce the same commodities; since the individual rate of profit does not depend on the market price of the commodity but on the difference between the market price and the cost price[6]) and it is equalised in the different spheres in the course of operations only as a result of constant fluctuations. In short, only in MONEYED CAPITAL, the money capital which can be lent, does capital become a commodity, whose quality of self-valorisation has a fixed price, which is quoted as the prevailing rate of interest.
Thus capital acquires its pure fetish form in interest-bearing capital, and indeed in its direct form of interest-bearing money capital (the other forms of interest-bearing capital, which do not concern us here, are in turn derived from this form and presuppose it). Firstly, as a result of its continuous existence as money, a form in which all its determining features are obliterated and its real elements invisible; in this form it represents merely independent exchange value, value which has become independent. The money form is a transient form in the real process of capital. On the money market capital always exists in this form. Secondly, the surplus value it produces, which again assumes the form of money, seems to accrue to capital as such, consequently to the mere owner of money capital, i.e. of capital separated from its process. Here M—C—M becomes M — M, and just as its form here is the undifferentiated money form (for money is precisely the form in which the differences between commodities as use values are obliterated, consequently also the differences between productive capitals, which are made up of the conditions of existence of these commodities, the particular forms of the productive capitals themselves are obliterated) so the surplus value it produces, the surplus money which it is or which it becomes, appears as a definite rate measured by the amount of the money. If the rate of interest is 5%, then 100 used as capital becomes 105. This is the quite tangible form of self-valorising value or of money-making money, and at the same time the quite irrational form, the incomprehensible, mystified form. In the discussion of capital we started from M—C—M, of which M—M' was only the result.(3) We now find M—M' as the subject Just as growth is characteristic of trees, so money-bearing (Toxo<;(4)) is characteristic of capital in this, its pure form as money. The incomprehensible superficial form we encounter and which has therefore constituted the starting-point of our analysis, is found again as the result of the process in which the form of capital is gradually more and more alienated and rendered independent of its inner substance.
[XV-899] We started with money as the converted form of the commodity. What we arrive at is money as the converted form of capital, just as we have perceived that the commodity is the precondition and the result of the production process of capital.
This aspect of capital, which is the most fantastic and at the same time comes nearest to the popular notion of it, is both regarded as the "basic form" by the vulgar economists and made the first point of attack by superficial critics; the former, partly because the inner connections are least apparent here and capital emerges in a form in which it appears to be an independent source of value, partly because its contradictory character is totally concealed and effaced in this form and no contradiction to labour [is evident]. On the other hand, [capital is subjected to] attack because it is the form in which it is at its most irrational and provides the easiest point of attack for the vulgar socialists.[124]
The polemic waged by the bourgeois economists of the 17th century (Child, Culpeperc125 and others) against interest as an independent form of surplus value merely reflects the struggle of the rising industrial bourgeoisie against the old-fashioned usurers, who monopolised the pecuniary resources at that time. Interest-bearing capital in this case is still AN ANTEDILUVIAN FORM OF capital which has yet to be subordinated to industrial capital and to acquire the dependent position which it must assume— theoretically and practically — on the basis of capitalist production. The bourgeoisie did not hesitate to accept State aid in this as in other cases, where it was a question of making the traditional production relations which it found, adequate to its own.
It is clear that any other kind of division of profit between various kinds of capitalists, that is, increasing the industrial profit by reducing the rate of interest and vice versa, does not affect the essence of capitalist production in any way. The kind of socialism which attacks interest-bearing capital as the "basic form" of capital not only remains completely within the bounds of the bourgeois horizon. In so far as its polemic is not a misconceived attack and criticism prompted by a vague notion and directed against capital itself, though identifying it with one of its derived forms, it is nothing but a drive, disguised as socialism, for the development of bourgeois credit and consequendy only expresses the low level of development of the existing conditions in a country where such a polemic can masquerade as socialist, and is itself only a theoretical symptom of capitalist development although this bourgeois striving can assume quite startling forms such as that of "crédit gratuit"" for example. The same applies to Saint-Simonism with its glorification of banking[126] (Crédit mobilier[127] later).
The commercial and interest-bearing forms of capital are older than industrial capital,b which, in capitalist production, is the basic form of the capital relation, as it dominates bourgeois society— and all other forms are only derived from it or secondary: derived as is the case with interest-bearing capital; secondary means that the capital fulfils a special function (which belongs to the circulation process) as for instance commercial capital. In the course of its evolution, industrial capital must therefore subjugate these forms and transform them into derived or special functions of itself. It encounters these older forms in the epoch of its formation and development. It encounters them as antecedents, but not as antecedents established by itself, not as forms of its own life-process. In the same way as it originally finds the commodity already in existence, but not as its own product, and likewise finds money circulation, but not as an element in its own reproduction. Where capitalist production has developed all its manifold forms and has become the dominant mode of production, interest-bearing capital is dominated by industrial capital, and commercial capital becomes merely a form of industrial capital, derived from the circulation process. But both of them must first be destroyed as independent forms [XV-900] and subordinated to industrial capital. Violence (the State) is used against interest-bearing capital by means of compulsory reduction of interest rates, so that it is no longer able to dictate TERMS to industrial capital. But this is a method characteristic of the least developed stages of capitalist production. The real way in which industrial capital subjugates interest-bearing capital is the creation of a procedure specific to itself — the credit system. The compulsory reduction of interest rates is a measure which industrial capital itself borrows from the methods of an earlier mode of production and which it rejects as useless and inexpedient as soon as it becomes strong and conquers its territory. The credit system is its own creation, and is itself a form of industrial capital which begins with manufacture and develops further with large-scale industry. The credit system originally is a polemical form directed against the old-fashioned usurers (GOLDSMITHS in England, Jews, Lombards, and others). The 17th-century writings in which its first mysteries are discussed are all produced in this polemical form.(5)
Commercial capital is subordinated to industrial capital in various ways or, what amounts to the same thing, it becomes a function of the latter, it is industrial capital engaged in a special function.(6)
The merchant, instead of buying commodities, buys wage labour with which he produces the commodities which he intends to sell on the market. But commercial capital thereby loses the fixed form which it previously possessed in contrast to production. This was the way the medieval guilds were undermined by manufacture and the handicrafts confined to a narrower sphere. The merchant in the Middle Ages was simply a dealer in commodities produced either by the town guilds or by the peasants (apart from sporadic areas where manufacture developed, for instance in Italy and Spain).(7)
This transformation of the merchant into an industrial capitalist is at the same time the transformation of commercial capital into a mere form of industrial capital. The producer, conversely, becomes a merchant. For example, the CLOTHIER himself buys material in accordance with the size of his capital, etc., instead of gradually obtaining his material in small amounts from the merchant and working for him. The conditions of production enter into the process [of production] as commodities which he himself has bought. And instead of producing for individual merchants or for particular customers, he now produces for the world of commerce. In the first form, the merchant dominates production and commercial capital dominates the handicrafts or rural domestic industry which it sets in motion. The crafts are subordinated to him. In the second form, production becomes capitalist production. The producer is himself a merchant, merchant capital now acts as an intermediary only in the circulation process, thus fulfilling a definite function in the reproduction process of capital. These are the 2 forms. The merchant as such becomes a producer, an industrialist. The industrialist, the producer, becomes a merchant. Industrial capital only emerges with commodity circulation as its precondition, and moreover the commodity circulation that has developed into trade.(8) Originally, trade is the precondition for the transformation of guild, rural domestic and feudal agricultural production into capitalist production. It develops the product into a commodity, partly by creating a market for it, partly by giving rise to new commodity equivalents and partly by supplying production with new materials and thereby initiating new kinds of production which are based on trade from the very beginning because they depend both on production for the market and on elements of production derived from the world market. In the 16th century, it was the discoveries and MERCANTILE ADVENTURERS that called forth manufacture.(9) As soon as it gains strength (and this applies to an even greater extent to large-scale industry), it in turn creates the market, conquers it, opens up, partly by force, markets which it conquers, however, by means of its commodities. From now on, trade is merely a servant of industrial production for which a constantly expanding market has become a very condition of existence, since constantly expanding mass production, circumscribed not by the existing limits of trade (in so far as trade is only an expression of the existing level of demand), but solely by the amount of capital available and the level of productive power of labour, always floods the existing market and consequently seeks constantly to expand and remove its boundaries. Trade is now the servant of industrial capital, and carries out one of the functions emanating from the conditions of production of industrial capital.
During its first stages of development, industrial capital seeks to secure a market and markets by force, by the colonial system (together with the prohibition system). The industrial capitalist faces the world market; [he] therefore compares [XV-901] and must constantly compare his own cost prices with market prices not only AT HOME, but also ON THE WHOLE MARKET OF THE WORLD. He always produces taking this into account. In the earlier period this comparison is carried out only by the merchant estate, thus enabling merchant capital to dominate over productive capital.
Endnotes
[121] On p. XV — 890 of the manuscript, Marx interrupts his analysis of Hodgskin's views and embarks on a survey of revenue and its sources and of vulgar political economy. A considerable part of notebook XV of the manuscript is devoted to these two subjects which are analysed in close interconnection. Judging by the plan for notebooks XIV and XV, he originally intended to write two separate sections, "Episode: Revenue and Its Sources" and "Vulgar Political Economy", respectively (see this volume, p. 8). Subsequently, Marx intended to incorporate this survey into the third part of Capital, as can be seen from the plan for this part which he drew up in January 1863 and according to which Chapter IX was to be headed "Revenue and Its Sources" (see p. XVIII —1139 of the manuscript, present edition, Vol. 33). Later some of the material contained in this section was used almost word for word by Marx when preparing the manuscript of Volume Three of Capital. Marx returned to his interrupted section on Hodgskin on p. XVIII — 1084 of the manuscript (see present edition, Vol. 33).—449
[30] Working on his manuscript of 1861-63 devoted to the study of capital, Marx based himself on the plan he had drawn up when preparing to compile the manuscript of 1857-58. He had intended to include in the book on capital special sections devoted to competition and credit (see Marx's letter to Engels of April 2, 1858, present edition, Vol. 40, p. 298). When subsequendy preparing the manuscript of Volume Three of Capital, Marx considered it expedient to deal here with a number of questions related to competition and credit (see present edition, Vol. 37).—116, 162, 444, 460
[6] The term "cost price" (Kostpreis, Kostenpreis) was used by Marx in three different senses: 1) in the sense of the costs of production for the capitalist (c + v), 2) in the sense of the "immanent costs of production" of a commodity (c + v + s) which coincide with the value of the commodity, and 3) in the sense of the price of production (c + v+average profit). Here the term is used in the third sense. In notebooks X-XIII of the manuscript Marx used the term "cost price" to mean the price of production, or the average price. He thus treats the two terms as identical (see present edition, Vol. 31, pp. 402-03, 559). In notebooks XIV-XV of the manuscript this term is used now in the sense of the price of production, and now in that of the costs of production for the capitalist (see this volume, pp. 261, 271, 462). The use of the term "Kostenpreis" in three different senses is due to the fact that "Kosten" has three different meanings in political economy, as specifically pointed out by Marx (see this volume, pp. 269-73, 513): 1) in the sense of what is advanced by the capitalist, 2) in the sense of the price of the capital advanced plus average profit, 3) in the sense of the actual (or immanent) production costs of the commodity itself. Apart from these three meanings which we encounter in the classics of bourgeois political economy, there exists a fourth, vulgar meaning of the term "costs of production" as used by J. B. Say. He defined the "costs of production" as something paid for the "productive services" performed by labour, capital or land (J. B. Say, Traité d'économie politique. Seconde édition, Tome II, Paris, 1814, p. 453). Marx resolutely rejects this vulgar interpretation of "costs of production" (see, for example, present edition, Vol. 31, pp. 361, 439 and this volume, p. 102).—9, 102, 210
[124] Marx is referring here to Proudhon and his supporters.—463
[126] Marx is referring to such followers of Saint-Simon as S. A. Bazard and B. P. Enfantin who accorded a special role to the banking system in the future organisation of the economy, the so-called industrial system.—464
[127] The reference is to the Société générale du Crédit mobilier, a big French joint-stock bank founded by the Péreire brothers in 1852. The bank was closely associated with the government of Napoleon III and under its protection engaged in large-scale speculation. It went bankrupt in 1867 and was liquidated in 1871. In 1856-57 Marx wrote five articles on the speculative activities of this bank for The People's Paper and the New-York Daily Tribune (see present edition, Vol. 15, pp. 8-24, 270-77, 357-60).—464