Mercantile Capital. Money-dealing Capital (Continuation of Notebook XV)
T h u s mercantile capital enters into the equalisation of surplus value to form an average profit (although it does not enter into the production of that surplus value), and therefore the AVERAGE RATE OF PROFIT already contains the deduction from surplus value which falls to MERCANTILE capital, hence the MERCANTILE DEDUCTION from the profit of productive capital.
Surplus value
,.g. EXTRACTIVE capital 200 30
AGRICULTURAL capital 300 45
MANUFACTURING capital 200 25
MERCANTILE capital 100
800 100
If the mercantile capital enters here into the distribution of the surplus value, the rate of profit= 12'/2%- If it does not, the rate=14 [2]/ [7]%. T h e mercantile capital of 100 must turn over 8 times in order to buy and sell 800 (for the value of the commodity=700 (cost price)+100 profit=800). A n d therefore, in order that it may also come to 14/7%, it must in every turnover give rise to an eighth of 14[2]/[7]; or H- [3]/ [4]+ [1]/ [2]8= l + "/i4%. T h e 800 would lose 14 z/ [7]. There would therefore remain 785 bln. And the real profit made by the capital of 700 would = 85 [5]/ [7]=12 [12]/49- Less than if the mercantile capital enters into the distribution. Because in fact the mercantile capital would make 14[2]/7%, whereas the others would be reduced to a quota which emerges if '/s of the capital makes l4[2]/[7]%. In fact, however, if a mercantile capital of 100 is necessary to turn over 781 V2 (at 12 i/?%), a larger MERCANTILE CAPITAL would be necessary to turn over 800. 102 ,74/i,r,63 would be necessary. More industrial capital would have to be converted into mercantile capital. T h e amount of surplus value would thereby be lessened, hence the rate of profit; but the mercantile rate of profit would always remain somewhat higher than the industrial rate.
If the CALICO man has realised in the £1,000 for which he sells the 12,000 yards the whole production process of the 12,000, it initially appears to be no concern of his if the MERCHANT adds e.g. 10% to the price. But, first, once he buys yarn, machine, coal, etc., he has for his part to pay for the addition to the price. If the calico enters into the worker's consumption, his wages rise. In both cases the calico man's rate of profit falls. If his product enters into the constant capital of another capital, this is the same thing for the equalisation of the rate of profit as if it entered into his own. Furthermore, the nominal increase in the rate of profit brings with it an uncompensated increase in the rate of interest. If the product enters into the consumption of the non-worker, his capacity for accumulation, etc., is reduced.
[XVII-1030] But this way of conceiving the matter is wholly incorrect.
Firstly, it contradicts the historical FACT that mercantile capital, so
FAR FROM BEING EXCLUDED OF PARTICIPATING IN THE REGULATION OF THE AVERAGE PROFIT, rather, as the first free form of capital, is the FIRST to ENTER INTO THAT CREATION. Mercantile profit originally determines the profit of PRODUCTIVE CAPITAL. Only when capitalist production has pene-trated fully, and the producer is A MERE MERCHANT, is the MERCANTILE PROFIT REDUCED TO THE ALIQUOT PART OF THE SURPLUS VALUE FALLING DUE TO IT IN REGARD TO THE ALIQUOT PART IT FORMS OF THE GENERAL CAPITAL.
Secondly, it altogether contradicts the concept of a GENERAL RATE OF PROFIT, which is entirely indifferent towards the particular function of the capital WHICH PARTICIPATES IN THE PARTITION OF THE GENERAL MASS OF SURPLUS VALUE, and is indifferent towards THE DEGREE IN WHICH IT CONCURRED IN ITS PRODUCTION.
It can therefore be seen that even MERCANTILE CAPITAL, once it appears as a mere element of capitalist production, is subsumed u n d e r it, does not contradict the law that the sum total of the AVERAGE PRICES of the commodities, i.e. the sum of their production prices,=the sum of their values, and the sum of the profits (INTEREST and RENT INCLUDED)=the sum of the surplus value or the unpaid SURPLUS labour. It is only that the mercantile capital shares the profit with the capital, while the latter directly winkles it out of the worker in the form of surplus value.
The magnitude of the deduction profit suffers through MERCANTILE profit — i.e. the magnitude of the difference between the BUYING PRICE of the MERCHANT (the SELLING PRICE of the PRODUCER) and the
SELLING PRICE o f t h e MERCHANT ( the BUYING PRICE o f t h e CONSUMER), h e n c e the apparent "extra charge" the merchant makes upon the price of the individual commodity — is determined, since the general rate of profit is already given, by the AVERAGE NUMBER OF turnovers, REVOLUTIONS of MERCANTILE CAPITAL, which is in turn expressed in the proportion in which the MERCANTILE CAPITAL stands to the total capital. For e.g. 100 to realise a profit of 20%, the merchant must add 5% to each sum of commodities of a price of £100 if his capital revolves 4 times, 4% if it revolves 5 times, 2% if it revolves 10 times. The difference between the BUYING PRICE and the SELLING PRICE of the MERCHANT is the smaller, the greater the proportion of the part of capital directly employed in production.
There now remains the question: Since the MERCHANT himself may employ labour, apart from his capital //to the extent that his own labour enters here, it forms a part of WAGES, as with industrial capital //, does he create surplus value through this labour? Does it originate directly as a part of the profit he CHARGES on account of the function of his own capital? What is his relation to his own wage labourers (commis,(1) etc.)?
Just as productive capital makes a profit by selling labour, contained in the commodity, which it has not paid for, so does mercantile capital do the same by paying productive capital not the whole of the unpaid labour contained in the commodity (in the commodity as product of that capital as an aliquot part of the total capital), but only a part of it, [and pocketing] the unpaid part which is still, for mercantile capital, contained within the commodity.[128] Just as [profit] appears to industrial capital as an extra, a supplement to the cost, the part of the value it has not laid out in production, not advanced, so for commercial capital does the purchase price of the commodity, and the supplement to the price, the difference between SELLING and BUYING PRICE, appear as something independent of the production process and the value of the commodity itself, although it is moderate in degree and is kept within bounds by the laws of competition.
If we therefore take the last price — the MERCANTILE PRICE — as distinct from the factory price, it is only in the former that the production price of the commodity is completely expressed.
The merchant [sells] — if we leave aside the intermediate transactions within the merchant estate itself, which are of no interest at all here — 1) to the industrial consumer, i.e. to productive capital. Here the mercantile profit enters as a cost into production. 2) He sells to the individual consumers; to the extent that he is himself one of these, this must be regarded as the direct appropriation of a part of his profit sub specie use value; [XVII-1031] what he himself consumes in this way is a deduction from the amount of the commodity in which the total surplus value is realised; when he sells to the industrial capitalist — profit and interest — this appears under both categories directly as a deduction from surplus value; what he sells to the workers is sale to variable capital. Finally he sells to the recipient of rent.
The merchant lessens the number of buyers for productive capital. The merchant lessens the number of sellers for the consumer. Towards the industrialist he concentrates the consumers into fewer persons, towards the consumer he concentrates the producers into fewer persons. Hence a great curtailment of this exchange process or of the loss of time on labour, etc., conditioned by mere circulation. The function of pure merchants' capital, separated from the previously mentioned continuation of productive operations in the circulation process, such as transportation, etc.,(2) can be reduced simply to buying and selling. With developed capitalist production and a developed division of labour we also find merchants' capital functioning in a certain sphere in its pure form, separated from its entanglement with other operations. E.g. forwarding and transport only concern the merchant in so far as they enter into the BUYING PRICE of the commodity, as ITEMS among the costs constituting its price. Similarly rent for WAREHOUSING, which falls to the share of another capital, that invested in DOCKS, etc. Finally, RETAILING does not fall within the province of merchants' capital, but of another section of merchants.
Merely buying and selling involves the MERCHANT in costs over and above the capital directly advanced, hence existing in the form of either money capital or commodity capital; namely the part of capital which really belongs to him. Firstly buying and selling themselves; the time this kind of labour costs (function); writing, calculating, accounting, travel costs, cost of correspondence, etc. And with bigger capital the clerks, the assistants who work for the merchant, finally HIS OFFICE. Whatever of his own labour goes into the shit can be deducted from profit, just as with every other kind of capital. The outlays this causes form a second part of the capital, which is not directly INVESTED IN WARES. They are costs incurred in buying and selling over and above the part of capital which is directly involved in this function. And the merchant adds to this part of capital the same profit as he adds to the other one, or the price of the commodity must not only replace the^e costs for him, but yield a profit on them. The whole thing therefore enters as an element into the surcharge the merchant adds to the price of the commodity, or into the excess of the SELLING PRICE over the BUYING PRICE. This excess therefore makes good a part of the costs which derive from the operation of BUYING and SELLING itself, and which are for the merchant as it were included in the BUYING PRICE of the commodity, although he does not have to pay them to the seller but must himself advance them.
These circulation costs — or costs of pure merchants' capital— can be divided up into an insignificant part, which has to do with the consumption of commodities themselves, namely e.g. travel costs, POSTAGE, paper, ink, OFFICE, etc.; and a more important part, which consists in the payment of alien labour, which is formally wage labour, SINCE it is exchanged directly for capital, and is only exchanged for it in the reproduction process of capital. Both sorts of circulation costs occur in part in productive capital itself (its mercantile or office costs); since circulation is after all its own process. With merchants' capital, in contrast, these costs occur as independent. In the former case the OFFICE stands alongside the factory, mine, FARM, etc. In the latter case the OFFICE is there as such with its outgoings.
These costs are not incurred in the production of the commodity itself, i.e. they are not necessary in the labour process in order to produce its use value. They are rather incurred in or for the circulation of commodities; they are necessary in order to realise them as value. They are necessary for their reproduction process. The commodity is a unity of exchange value and use value; but it is use value whose [XVII-1032] exchange value exists only ideally as price and must first be realised. In so far as this realisation gives rise to costs, those costs enter into the reproduction costs of the commodity, although not into its direct production cost. These reproduction costs also occur without capitalist production, as soon as production becomes commodity production in general. The circulation process is not only the realisation of surplus value, it is rather only the latter in so far as it is simultaneously and above all the realising of value.
Since merchants' capital is absolutely nothing but a form of productive capital functioning in the circulation process which has achieved an independent position, all questions relating to it must be solved by posing the problem first in the form in which those phenomena peculiar to MERCANTILE capital do not yet appear independently, but rather as directly linked, in direct connection, with productive capital. As OFFICE in contrast to factory, productive capital functions continuously in the circulation process. We therefore have first to consider the OFFICE and its costs, and their relation to the value and surplus value of commodities, where the office appears as the side of productive capital itself which is turned to circulation.
OFFICE costs can be reduced d'abord" to the rent of accommoda-tion, which is itself in turn composed of ground rent, interest for the capital fixed in the house, and finally the annual depreciation in replacement of that capital.
The rent is merely a part of the surplus value, as is the interest. The capitalist does not pocket them himself; he pays them to another capitalist. That does not change anything in the situation. They appear to him as costs. They are, nonetheless, deductions from the surplus value created by the worker. This part of the costs of circulation can therefore be reduced to the fact that productive capital has to pay a part of the surplus value, in the form of house rent, to another capitalist and to the LANDLORD.
Only a part of the OFFICE rent remains as a real advance, the depreciation of the house which is to be replaced annually. Now come the office costs, which can all be reduced to paper, ink, pens, STAMPS and the salaries of clerks, travelling salesmen, etc. The fixed capital needed by these fellows, apart from the raw material of the paper, etc., comes down to the depreciation of the house (this part of the rent of the accommodation) and the few miserable sticks of furniture they need to set up an office. These are costs which the productive capitalist must cover, pay cash for, to a greater or lesser extent, depending on the particular nature of his business; they form a real capital advance, and are not concealed surplus value which appears as a cost to the person who must pay it and as interest or rent, i.e. appears in the form of surplus value, to the other person, who pockets it.
In calculating the rate of profit the capitalist counts this part of the capital advanced just as much as he does the part advanced in raw material, machines, etc. These are values which are consumed, and must be consumed, not to produce the commodity itself, i.e. the use value of the commodity, but to make it circulate as a commodity, and it could not be reproduced without them; since it must be converted into money, must have realised its value, before its reproduction. They form part of the faux frais* of production, i.e. they are costs of reproduction which are not costs incurred in the manufacture of the use value of the commodities, but derive instead from their economic form as commodity. Relatively, these costs are always very insignificant as compared with the real outlays for production, and they are the more insignificant the larger they appear; because they are only noticeable where a big capital is set in motion, in proportion to which they are visible — on account of their concentration — but relatively weaker than in the case of a small capital. Yet we are not concerned here with the quantity, but with their qualitative determination.
In any case, these outlays have the peculiarity, which distinguishes them from the actual costs of production, that whereas the rate of profit (here=rate of surplus value, as we disregard the adjustment) depends in the best case on the costs of production, here inversely the costs stand in proportion to the amount of profit. If the business is small, the amount of profit is small, so the office costs are minimal, since the producer can take care of this almost alone. If the business is large, the amount of profit is large, so office costs increase and occasion a certain degree of division of labour. The great extent to which these costs are associated with the profit is shown e.g. in the fact that if they increase, a part of the salary is paid by giving a percentage share in that profit. In so far as the salary assumes this form, this part of the office costs is reduced to a deduction from the profit of the capitalists, a deduction which nevertheless leaves him the AVERAGE RATE, because he works under more favourable conditions than the AVERAGE
CONDITIONS OF PRODUCTION.
Hence this is also to be eliminated from the question. In any case, these office costs — in so far as they do not consist of the labour of the capitalist himself, in so far as they have to be paid and require advances — enter into those advances. They enter into the price of the commodity, and, [XVII-1033] for the commodity to be able to be reproduced, a part of its value must be set aside (hence a part of the commodity itself must be exchanged) for the OFFICE, pens, ink, paper, salaries of the clerks, etc. Since these expenses add nothing to the use value of the commodity, are expenses which do not enter into the direct production process, the capitalist seeks to restrict them as much as possible. In so far as that part of the value of the commodity is realised which constitutes wages, these expenses belong to the conditions of production of the commodity- producing labour itself (even if no capitalist were there), they belong therefore to the conditions of reproduction of the salary, [and] to the conditions of labour. A part of the annual labour of the country is therefore employed in the reproduction of these conditions. The worker must therefore reproduce them as capital, if not as profit as well. In so far as they are required to reproduce the part of the value of the commodities which represents surplus value, they have nothing to do with the worker as such. UNDER ALL CIRCUMSTANCES, as expenses which have always to be reproduced, they reduce the rate of profit and the amount of profit in so far as this part of capital cannot be laid out in, raw material, wages, etc.
The only question which opens up here is this: The clerks and other members of the office are formally wage labourers. They sell their labour capacity directly to capital. If the productive capitalist now makes a profit, does he extract surplus value directly from this sort of wage labourer or not? Does their labour enter into the value of the commodity, and how? Here, notabene, it is not a matter of OVERLOOKERS, MANAGERS, who are employed in the act of production in a directing role, but of purely mercantile workers, who are only concerned with the realisation of the value of the commodity, and the functional labours that are involved in the circulation process of the commodity.
There is, at the outset, an analogy between the clerks and the wage labourers: If e.g. a division of labour is introduced among them, the same number will perform more labour. But they receive their wages as individuals. The wage bears no relation to the productivity of their labour. The social character of their labour appears to them as rather a productive power of capital and a form belonging to capital itself.
Further: The more intensive or extensive their working day, the fewer of them does the capitalist need to retain. The higher his rate of profit on a given aliquot part of capital, e.g. 100, the lower is this ITEM of costs, and the more, pro rata, is the capital advanced lessened in proportion to the surplus value. The greater is then the amount of profit, since a proportionately greater part of the capital can be employed directly in production.
Just as labour is involved in direct production, so is the clerk in the direct reproduction of alien wealth. His labour, like that of the worker, is only a means for the reproduction of capital, as the power which commands him, and at the same time as the worker creates surplus value, the clerk is employed in helping its realisation, not for himself, but for capital.
But there always remains this difference between these mercantile workers and the wage labourers engaged in the production process: The more labour the capitalist extracts from the latter, the greater his surplus value. The more unpaid labour they perform, the more saleable, but unpaid, value they produce. And the greater the number of workers employed at a given stage of production, the greater the amount of surplus value. Surplus value can in general only be created by labour, whose realisation depends on its quantity, irrespective of whether this labour is, or is not, paid for. With the mercantile wage labourers, on the other hand, the value they add to the commodity is never greater than what they themselves cost; it depends not on their labour but on the value of their labour capacity. The capitalist can only extract surplus value from them in so far as he pays their labour capacity at less than its value, but reckons it among the ITEMS of cost at its value. This case does not belong here, where we always presuppose that full values are paid. The less the capitalist pays the MERCANTILE worker, i.e. the more he has him work for the same price, the smaller his costs. I.e. the less it costs him to realise the surplus value. But the latter is not itself affected by this (only indirectly, in so far as a large part of the capital can be invested in productive expenditure). The increase in the number of these workers as such therefore occurs only if there is more value and surplus value to be realised, hence more of this kind of labour is required. It is always a result, never a cause of the increase of surplus value.
The mercantile worker has something else in common with the wage labourer proper: What is paid to him is the value — the cost of reproduction — of his specific labour capacity, which stands higher than that of the wage labourer. (Incidentally, this depends very much on competition, and becomes ever cheaper WITH THE PROGRESS OF CIVILISATION.) With the development of capitalist production — and therefore of civilisation — this labour capacity depre-ciates. Its cost of reproduction becomes cheaper: 1) because of the emergence of the division of labour, which means that [XVII-1034] a more one-sided capacity needs to be produced, and part of the cost of this production is not borne by the capitalist since, like the aptitudes of the worker, this capacity develops by the exercise of the function itself, and develops the more rapidly the more one-sided the function becomes with the division of labour; 2) because the preliminary training, the acquisition of the knowledge of reading, writing, arithmetic and commercial matters in general, language skills, etc., becomes ever quicker with the progress of science, and can be reproduced more easily, more universally and more cheaply, the more the capitalist mode of production predominates, and therefore science and methods of teaching are directed to practical ends; 3) [because of] the introduction of universal public education, which permits the recruitment of this kind of worker from classes which were previously excluded, and are accustomed to an inferior living standard. The development of capitalist production therefore devalues the labour capacity of these people, their salaries, while their capacity for work increases; partly through better preliminary training, and superior skill resulting from the increase in the division of labour and the tradition handed down from the past. The auxiliary means of this labour, such as all the necessary books on commercial arithmetic, etc., and the art of book-keeping, etc., are also perfected.
But the labour time these people have to work stands in no connection with the labour time required for the reproduction of their labour capacity. All the labour they perform over and above this is unpaid labour time, which capital appropriates without an equivalent. Its costs would otherwise be very much increased, if it only received an equivalent in EXCHANGE for the value of this labour capacity which it pays. Its rate of profit would be very much reduced. But whatever the relation of the unpaid to the paid labour time which this kind of worker provides for capital, this unpaid labour never increases the value of the commodity, and it therefore does not add any surplus value to it. All it does is lessen the cost of realising the value, hence lessen the ratio of the capital advanced to the surplus value, hence increase the rate of profit in the same proportion as it is not paid and no equivalent for it enters into the costs of production. It never adds to the value of the commodity more than its own value, hence never more than its cost, however far that cost may sink below the labour time for which the labour is active. If the capitalist could reduce this labour to 0, the rate of profit and the amount of profit would be higher to a corresponding degree. But if, on the other hand, the (actual) wage labour were reduced to 0, profit would vanish and, with surplus value, capital itself.
The side of capital turned towards circulation therefore appears double to the money capital, which must always buy. This achieves an independent position in the shape of MERCANTILE capital, as capital which is always in the state of circulation, and which both alternately assumes the forms of commodity and of money and also, although in different proportions at different times, always exists simultaneously in both forms.
But productive capital not only alternately assumes the forms of commodity and money in the circulation process, its function thus appearing as that of selling and buying; not only must it always, for the sake of the continuity of the production process, be represented IN A CERTAIN AMOUNT OF CIRCULATING CAPITAL, CONSISTING IN MONEY. Buying and selling requires labour and this labour gives rise to costs, circulation costs. These are represented, alongside the productive workshop, in the OFFICE and its costs, which can be reduced partly to the consumption of the commodities needed to perform this labour of circulation, partly to the wages of the workers who are only employed in functions which arise from the circulation process of the commodity, partly in the realisation of its value, partly in the reconversion of the realised value into conditions of production, or, to look at this purely formally, in selling and buying. The commodities are sold to realise their value, they are bought (by the productive capitalist) for the purpose of reproduction, of starting industrial consumption or renewing it. This part of the capital advanced does not exist with the FARMER, e.g.; it is barely visible with the small industrialist, it attains a PALPABLE form in large-scale industry, but, like all the determinations which are appropriate to productive capital as circulating capital, it appears independently with MERCANTILE CAPITAL. Besides the part of mercantile capital which functions as commodity or money, another part is advanced in OFFICE costs, and in the wages of its IN and OUT OF DOOR FUNCTIONARIES. This is the only workshop of MERCANTILE capital. The part of capital employed in this way appears much larger with the big MERCHANT than with the industrialist, because apart from the MERCANTILE OFFICES proper which are associated with every productive workshop, the part of productive capital which would have to be employed in this manner by the whole class of productive capitalists is concentrated in the hands of individual MERCHANTS, who, just as they attend to the continuation of the function of circulation, attend also to the continuation of the costs of circulation which grows out of this continuation. What is true of the other part of MERCANTILE CAPITAL is true of this one. Every individual mercantile capital functions for A LOT OF PRODUCTIVE CAPITALS, and the whole of the mercantile capital laid out in this way replaces a capital which in this form was employed by the whole [XVII-1035] PRODUCTIVE CLASS, and it replaces it with a smaller amount, since the total amount of these circulation costs is lessened by division and concentration of labour. It is precisely in this way that it increases the capital employed in production itself and thereby indirectly the productive power and the quantity of the productive capital.
In so far as these costs enter into the function of MERCANTILE CAPITAL, they naturally do not form, as costs of this kind, a part of its profit. As we saw directly with productive capital, they enter into the price of the commodity as capital advanced, costs of production. In so far as these costs of realising the price (selling) or converting value into commodity (buying)—these costs of circulation — enter into the difference between the MERCANTILE SELLING PRICE and the BUYING PRICE, this part of the difference does not form a profit, and it is not a part of the surplus value, but rather a mere reproduction of capital advanced. So that if we are speaking of mercantile profit, this part of the merchant's EXPENSES, or this part of the SELLING PRICE, or RATHER the difference between SELLING PRICE and BUYING PRICE, must be deducted.
But there is a considerable difference between the relation of MERCANTILE capital to its MERCANTILE wage labourers — and the same relation between productive capital and its MERCANTILE clerks, etc.
It goes without saying, first of all, that just as the function of MERCANTILE CAPITAL creates absolutely no surplus value (the same is true of the MERCANTILE part of PRODUCTIVE capital), the workers employed by it create no surplus value either. The costs of circulation always increase the capital outlay, and always reduce the rate of profit. The commodities which are consumed in circulation are withdrawn as much from industrial as from individual consumption, and the labour which is performed there is always a deduction from productive labour.
The relation of MERCANTILE CAPITAL to surplus value is different from the relation of productive capital. The former appropriates a part of the surplus value, TRANSFERS PART OF IT TO ITSELF. The latter produces it by direct exploitation of labour, direct appropriation of alien labour. The costs of circulation appear to productive capital as expenses; they appear to mercantile capital as the source of its profit, which — presupposing the general rate of profit — is in proportion to the magnitude of the costs of circulation. For mercantile capital, therefore, INVESTMENT in these costs of circulation is productive INVESTMENT. Hence the MERCANTILE LABOUR it buys is also, for it, directly productive. It is only through its function of realising value that mercantile capital functions as capital in the
12-613 reproduction process. The amount of profit it makes depends on the amount of capital it can employ in this process, and the greater the unpaid labour of the clerks, the more of this capital can it employ (the more capital can it employ in buying and selling). For the most part, however, it has its workers perform the function itself, through which its capital acts as reproductive capital (not merely interest-bearing capital, for example), but it pays them as labour capacity. Although the unpaid labour of these clerks does not create surplus value, any more than mercantile capital does in general, it does create for it an appropriation of surplus value, which for the particular capital is the same thing. It is therefore a source of profit for it. Mercantile business could otherwise never be conducted on a large scale — in capitalist fashion. The relation of the MERCHANT to his "clerks, etc." is therefore much more analogous to the relation of productive capital to the productive wage labourer than the relation of the clerks in the MERCANTILE OFFICES attached to the factory, etc., although the exploitation of the MERCANTILE worker himself is the same in both cases.
Capital employed in money-dealing is a particular kind of commercial capital alongside capital employed in commodity-dealing. The one is a development of commodity capital, the other a development of money capital, or the one is a development of capital as commodity, the other of capital as money. Both are merely forms and modes of existence of productive capital present in the circulation process which have attained an independent role. Just as mercantile capital exists before productive capital, as the first free form of capital, so does money-dealing and capital employed therein (MONEYED CAPITAL, interest-bearing capital, also belongs here) presuppose only merchants' capital [XVII-1036]; it therefore equally exists as a form of capital which precedes productive capital.
Mercantile capital — within the capitalist reproduction process— is absolutely nothing but on the one hand productive capital in general in its circulation C—M—C (which however simultaneously assumes a shape of its own, because the commodity here is capital:
M—C'C"—M), in its function of buying and selling — or in the movement of the complete metamorphosis it passes through in its sphere of circulation, and on the other hand a part of productive capital which has been separated off from it, has become independent, and for which the sphere of circulation is the sphere of production peculiar to it. The situation is exactly the same with money-dealing capital.
Circulating capital (and all capital circulates, even fixed capital, to the extent that its depreciation enters into the commodity as a value component) is precipitated as money when it RETURNS from a circuit or appears as the starting point of a circuit. For a sum of value which must first be converted into capital, money appears as a starting point in isolation. This is only the case for newly invested capital But for capital already involved in the process, and therefore IN A CONTINUAL COURSE OF REPRODUCTION, both the concluding point and the starting point appear only as points of transit In so far as capital has to pass through C—M — C" between its stay in the sphere of production and its return to the latter, the M is in fact only the result of a phase of the metamorphosis, to become after that the starting-point for the opposite phase which complements it. Capital, however, simultaneously passes through the acts C—M and M—C. I.e. not only is there a capital in the stage M—C, while the other is in the stage C—M, but the same capital is simultaneously buying constantly and selling constantly, owing to the continuity of the production process. Capital is continuously to be found in both stages simultaneously. While a part of it is converted into money, to be reconverted into commodities, the other part is simultaneously converted into commodities, to be reconverted into money. Whether the money functions here as means of circulation or means of payment — in the second case so that the balances are paid, in the first case so that the value is always present in a dual form, at one pole as commodity, at the other as money — depends on the form of commodity exchange itself. But in both cases the capitalist has constantly to pay out money (and to many people; the productive capitalist has to pay many merchants, the merchant has to pay many capitalists, etc.) in order constantly to receive money in payment. This merely technical operation of paying money and collecting money in itself constitutes labour, which, in so far as money functions as means of payment, makes acts of account settling necessary, after the balance has been calculated. This labour is a cost of circulation. A definite part of the capital must constantly be available as hoard (as a coin reserve, i.e. a reserve of means of purchase and a fund for payment, a reserve for payments) and a part of the capital constantly returns in this form. This makes necessary, apart from payment and collection, the keeping in safe custody of this hoard, which is in turn a separate operation. It is therefore in fact the constant dissolution of the hoard into means of circulation and means of payment, and its rebuilding as money obtained through sale or payment fallen due — this constant movement of the part of capital which constantly exists as money — separated from the
12* function itself, this technical movement, which gives rise to particular labour and costs. Circulation costs. It is a result of the division of labour that these technical operations, which flow from the functions of capital, are allotted to definite functionaries on behalf of the whole capitalist class, and that these operations are concentrated in their hands. Here, as with merchants' capital, there is division of labour in a dual sense. It becomes a particular operation, a particular business, and because it becomes a particular business, performed for the whole class, it is concentrated, carried out on a large scale, and a division of labour takes place within it, both through its splitting into different branches which are independent of each other, and through the development of the workshop within these branches. A part of the productive capital involved in this movement is separated off from productive capital, and is employed only in these operations — first the storing of the money, then its payment, collection, settlement of balances, etc.—which are separate from the acts necessitating these technical operations. This is [XVII-1037] productive capital which has attained an independent role in money dealing.
If we now consider the reproduction process of a single capital, we see that the realised surplus value returns in the form of money. The profit is in part expended as income, and it must in part be reconverted into capital. The reproduction process is not only a simple reproduction process but a process of accumulation, reproduction on an increased scale. This manifests itself in part as accumulation of money. Whether the individual capitalist can immediately reconvert into capital his profit which exists in the form of money, i.e. utilise it within his reproduction process, depends 1) on the state of the market, which does not perhaps permit the extension of a particular business at that moment; 2) also on the organic composition of his productive capital; since not every sum can be converted immediately into productive capital, this conversion depending in part on the technological conditions (I may have enough money to extend a factory, not enough to add a new one), in part on the magnitude of the sum, which must be large enough to be divided into variable and constant capital in the appropriate proportions. As long as this is not possible, the money is a hoard lying idle — now capital lying idle. The job of storing it falls to the money dealer. This is an operation of the money dealer which arises from a moment of the capitalist process of accumulation, which initially presents itself as accumulation of money (in part at least). As long as the capitalist cannot invest the money in his own business, he endeavours to valorise this idle hoard as interest-bearing capital, to lend it out. The money dealer does this for the whole class; lending and borrowing, like paying and collecting money, become a particular function of capital employed in money dealing — a function which proceeds from the reproduction process of capital itself. What previously appeared as a concentration of the hoard reservoir, now appears as simultaneously a concentration of money loanable as capital.
The same is true of the capitalist who has brought his gains into safety but wants to consume them not as money but as capital, i.e. wants to live on interest.
Similarly for all productive capitalists themselves — for the part of the profit they expend as income, yet NOT AT ONCE, but au fur et à mesure.(3) This consumption fund (the actual coin reserve) can be lent out as capital in the interval, and it must under all circumstances be accumulated as money IN CERTAIN DIMENSIONS. The same holds for the recipient of rent who wants, apart from this, to consume a part of his income as interest-bearing capital. Ditto for all unproductive workers whose income is in part capitalised, in part consumed au fur et à mesure, but received in larger portions at certain intervals.
All this is concentrated as loan capital with the money dealer, who apart from this himself lends money and must keep READY definite funds, in order always to be able to pay. The function of his particular capital is only the independent form of the processes which emerge from the reproduction process of capital (conversion of profit into capital), in part from the form of circulation; the fact that newly arisen capital steps forth in the form of money. The money dealer lends and borrows for the whole class, or rather he performs the lending and borrowing of the whole class.
Exchange rate business and exchange business proceed from the function of money as world money; the difference between the national currencies. Finally the BULLION trade; in part the settlement of international payments, therefore the movement back and forth of money capital (here capital, because it is a form of capital); in part the procurement of fresh supplies of gold and silver from their sources of production. The latter is in fact brought about by foreign trade. But the technical aspect, the BULLION RETURN, is taken over by the money dealer. Hoard formation — usurers' capital— the exchange of international coins — the BULLION trade (the ENGLISH GOLDSMITHS) form the foundations of the independent development of money dealing. It is specially connected with dealing in commodities [XVII-1038], since only merchants' capital — before the development of capitalist production — constantly buys and sells on a mass scale, lends and borrows, pays and collects, in short constantly has its wealth chiefly in the form of money.[129]
Only with the credit system does MONIED CAPITAL and money dealing receive the form which emerges from the capitalist mode of production itself.
The profit of money dealing does not offer the same difficulty as that of mercantile capital. With the latter the difficulty arises from the fact that the profit originates through an addition to the prices of the commodities, and the commodity is sold dearer than it is bought; which appears to contradict the determination of the price of production and ultimately the value of the commodity by labour time. With the former, in contrast, the commodity as such remains entirely outside the picture, and by far the greater part of the money dealer's profit consists of the interest for which he lends capital, whereas he borrows it for nothing; or of the excess of the interest at which he lends it over the interest at which he borrows it. A part of the surplus value itself therefore directly appears as the source of his profit, and his profit merely appears as a share in that surplus value.
We shall be able to go into this in more detail in the section on capital as credit,[67] but this does not form part of our task at present.
Endnotes
[3] An analysis of vulgar political economy is to be found in Notebook XV, where revenue and its sources are examined (see present edition, Vol. 32, pp. 449-541). On p. XV — 935, Marx refers to the "section on the vulgarians" in which he will "return" to the polemic between Proudhon and Bastiat mentioned here chapter specifically devoted to vulgar political economy is provided by the plan for the third part of Capital, which he drew up in January 1863; the eleventh, and penultimate, chapter was to have the title "Vulgar Economy" (see this volume, p. 347).—7, 255
[4] By the "third chapter" or "third section" Marx means the entire third part of the investigation of "capital in general" (see Note 1). The title "Third Chapter. Capital and Profit", and also the draft plan of this chapter, are to be found on the inside front cover of Notebook XVI (originally Marx called this notebook, dated December 1861-January 1862, "Notebook Ultimum"). This title is also reproduced on p. XVI — 973. A slightly changed and extended version of the plan for this section of his study is given by Marx on p. XVIII — 1139 (see this volume, pp. 346-47). In mid-1863, when embarking on a new, third, version of the work which was later to become Capital, Marx concluded that the chapters, or sections,in his study of "capital in general" would actually represent separate books that would be comprised in Capital. From this time on, the third chapter began to figure as Book III (later Volume III) of Capital.—7, 346, 380, 478
[1] Having completed the economic manuscript of 1857-58 (see present edition, vols 28 and 29), Marx embarked on a substantial economic work which, as he planned, was to encompass all aspects of life in capitalist society. The first step was the publication, in 1859, of A Contribution to the Critique of Political Economy. Part One. In the preface to this work, Marx sets out the plan of his ambitious project: "I examine the system of bourgeois economy in the following order: capital, landed property, wage-labour; the State, foreign trade, world market... The first part of the first book, dealing with Capital, comprises the following chapters: 1. The commodity; 2. Money or simple circulation; 3. Capital in general. The present part consists of the first two chapters" (see present edition, Vol. 29, p. 261). The extant correspondence (see present edition, Vol. 40) shows that after the publication of Part One Marx intended to start immediately on the second part, dealing with capital in general. However, certain circumstances, his preoccupation with Herr Vogt among them, prevented him from immediately carrying out this intention. Preparatory work (drafting plans, reviewing the 1857-58 manuscript and excerpts dealing with capital — see present edition, Vol. 29 — as well as making new excerpts, etc.), continued up to the summer of 1861, and in August 1861 Marx began writing. Viewed as the second part of A Contribution to the Critique of Political Economy, the new manuscript originally bore the same title, and on the covers of the first two notebooks he wrote the subtitle "Third Chapter. Capital in General" (see present edition, Vol. 30, p. 6). But soon the size of the manuscript grew considerably and reached 23 notebooks, 1,472 large pages in all. In the present edition it is published in vols 30-34.—5
[5] Marx drew attention to the need for a special examination of the relation between surplus value and profit on p. Ill — 98 of the manuscript (see present edition, Vol. 30, p. 178).—7
[12] In the economic manuscript of 1857-58 (see present edition, Vol. 28), and also in notebooks I, II and XI of the present manuscript (see present edition, vols 30 and 31), Marx described mercantile and money-dealing capitals as being, on the one hand, the first historical forms of capital and, on the other hand, derivative forms of capital in bourgeois society. Marx drew attention to the need to go into greater detail on the role of trade in the development of capitalist production on p. II — 71 of the manuscript (see present edition, Vol. 30, p. 136).—9
[128] Cf. Capital, Volume III, Chapter XVII (present edition, Vol. 37).—156
[129] Cf. the paragraph below with Capital, Volume III, Chapter XIX (present edition, Vol. 37).—170
[67] When working on this manuscript, Marx was guided in his study of capital by the plan he had devised when writing the manuscript of 1857-58 and which he set out in a letter to Engels of April 2, 1858: "Capital falls into 4 sections, a) Capital en general... b) Competition, or the interaction of many capitals, c) Credit, where capital, as against individual capitals, is shown to be a universal element, d) Share capital as the most perfected form (turning into communism) together with all its contradictions" (see present edition, Vol. 40, p. 298).—75, 88, 94, 101, 111, 113, 170, 179, 184, 212, 280
[2] The section on Ravenstone begins on p. XIV — 861 of the manuscript (see present edition, Vol. 32, p. 392). Preceding it in Notebook XIV and numbered "1)" is a section devoted to the anonymous pamphlet The Source and Remedy of the National Difficulties.— 7
[7] From p. 1029 on, Notebook XVII continues the text begun in Notebook XV (see Note 53).—8