Episode. Reflux Movements of Money in Capitalist Reproduction

Let us take first the circulation between productive capitalist and SHOPKEEPER and worker. Let the SHOPKEEPER represent all the sellers of the means of subsistence which enter into the worker's consumption.

Money is paid as wages by the capitalist to the worker; the worker gives out this money as means of circulation, buys commodities from the SHOPKEEPER with it; with the money the SHOPKEEPER replaces his STOCK from the capitalist, who we shall assume produces means of subsistence.

In so far as the money is exchanged on the part of the capitalist for labour, it is money which is converted into productive capital. It is the first element (disregarding the part of the money which is converted into raw material, etc.) in M—C—M, as form of the reproduction process of capital.

Furthermore, as far as this capitalist is concerned, the money functions as means of purchase, means of circulation. C—M— C(L'⁽¹⁾). (He has converted the commodity into money and now converts this money into labour, another commodity.)

As far as the worker is concerned, the money is simply coin. L (his commodity)—M—C (the commodity he buys from the SHOPKEEPER); a mere money form, which his commodity assumes, to be subsequently converted into means of subsistence.

With the SHOPKEEPER, the money functions initially as means of circulation. C—M—C. He is constantly selling commodities and buying new commodities with the money. But CONSIDERING that he bought the commodity before he sold it, his process presents itself as M—C—M' M'—C, etc. And this REFLUX represents here the capitalist movement.

This money in the hands of the capitalist in the act M—L (labour^[130] as commodity), disregarding the fact that it is means of circulation (means of purchase), represents capital, but only a capital in the course of changing its form. It is converted from the form of money into the form of labour, from the form of money into that of the commodity. This is a change of form which capital undergoes in the reproduction process, but it does not express a valorisation of capital; for the money the capitalist pays=the value of the labour capacity he buys. No surplus value arises out of this process, considered in itself. Surplus value only arises from the industrial consumption of the commodity.

For the worker the money, as being merely coin, merely represents income. This is always the case where the money merely represents the simple metamorphosis C—M — C; the conversion of the commodity into money, so that it can be converted into means of subsistence. In fact exchange of the commodity for means of subsistence. Mr. Tooke calls money that is spent in this manner income, because it must in fact derive from an income, wages, profit — interest or rent.⁽²⁾

[XVII-1039] Lastly, if we consider the SHOPKEEPER, for him the money is not only the form of his capital but its REFLUX movement, it is the movement of his capital. M—C—M', money which returns increased from circulation, self-valorising value. We shall consider this point presently.

However, it is clear even now that nothing can be more incorrect than Tooke's direct identification of the different determinations of the form of money with the question whether they represent capital or income. Thus for example money as means of circulation=income, but when it is not expended as income it is capital

D'abord? money appears as means of circulation in all 3 processes. For the capitalist C—M — L'. For the worker L—M—C. For the SHOPKEEPER C—M—C". The same money functions here further as a mere change in the form of capital, as income, as capital+income; i.e. as capital which constitutes capital in relation to itself.

If we consider the whole process of the productive capitalist, money is merely a form of his capital, a form which he changes through his exchange with labour; considered from the point of view of the content, this is a reconversion into conditions of production. The same money in the worker's hands becomes income and circulates as income. The same money returning into the hands of the épicier⁽³⁾=capital + profit, and its departure from the shopkeeper in renewed purchases from the productive capitalist is a mere change in the form of his capital, which denotes a moment in the process of reproduction. It is therefore ridiculous to say that this money is income or capital or ANYTHING OF THE SORT.

Let us assume that the productive capitalist has bought labour capacity for £100; the workers buy with this money £100 of commodities (which the SHOPKEEPER has bought from the capitalist) and they thur return his money to him. This REFLUX expresses for him the conc'uding process of a part of his capital. M—C—M'. He has withdrawn more money from circulation than he threw in. If the profit= 10%, the commodities he sold for 100 cost him 90^[10]/n. (9'/ii profit on the 100.) He sells the commodities to the workers for 100 and buys them from the capitalist for 90^[10]/n. But in fact in his sale to the SHOPKEEPER the capitalist does not realise the whole value of these commodities — the production price of these commodities, but leaves the épicier to realise Vu of the value. The workers therefore obtain commodities the real production price of which =100. They obtain an equivalent for their 100. And when the épicier makes his profit on the commodities he is merely participating in the capitalist's profit.

In examining how the different parts of the total capital are exchanged for each other,^[132] how their values are realised one through the other, and how their use values replace each other, we saw that if we subsume the épicier under the productive capitalist, or entirely leave him aside, the transaction presents itself like this: The capitalist pays £100 for the labour of the workers: the latter buy back from him £100 worth of commodities. Thus the £100 flow back to him. But in this transaction the capitalist gains nothing. Instead of directly paying the workers commodities to the value of £100, he pays them a value of £100 in the form of exchange value (real money or tokens of value), and as soon as he receives this £100 back, he pays in commodities. Although every part of the commodity contains value, and every individual commodity consists in equal parts of C+P, cost and profit, paid labour and unpaid labour, the part of the total product (or of the value of the total product) which is paid in wages contains no SURPLUS VALUE, if it is considered in isolation, just as the part of the total product which replaces the constant capital contains no surplus value — because the whole of this part of the product (after the remplacements have been deducted) is then calculated as consisting merely of SURPLUS labour.

Hence for the épicier (who trades with the workers) to be able constantly to withdraw more money from circulation than he throws in, all that is needed is that enough money should circulate to pay the workers' wages. The épicier withdraws more money from circulation than he throws in because he in fact throws more value into circulation than he withdraws from it. Admittedly, the means of subsistence he bought from the capitalist had a value (we say here value for price of production, since we are dealing with capital as a whole and consider every particular sphere only as a part of the total capital) of [XVII-1040] 100, but a realised value of only 90^[10]/n. But he throws them into circulation with their adequate, full value expression of 100. And for the question we are considering here it is entirely the same thing whether the commodity is thrown into circulation with a higher value than that with which it was originally withdrawn therefrom, because its value has grown, or because a merely latent value has been made manifest, realised. We say: this is the same thing here, where we are considering the relation of circulating money to the reproduction process.

Let us assume that the épicier consumes his profit entirely, and in the same articles he buys from the capitalist. In this case, if he originally buys with £90^[10]/n, he sells these commodities to the workers for 100, and with this 100 he can buy back not only enough to replace the commodity capital which was to be sold to the workers (namely £100 worth of commodities for £90^[10]/n) but also Vu of the commodity value of 100 for his own consumption. Hence in this case he would buy back from the productive capitalist commodities to the value of £100. The sum of money (£100) the capitalist needs to pay the workers would therefore constantly flow back to him from the épicier. If the épicier buys for £90 ^[10]/n, he obtains a commodity value of £100, and he sells this to the workers for £100. If he buys for £100, he obtains a commodity value of £110. Therefore, after he has sold a value of 100 to the workers, he retains a commodity value of £10 for his own personal consumption.

Here, therefore, we see d'abord an example in which it is only required that the capitalist should pay the workers their wages weekly (or over some other period)—hence that money to the amount of their wages should circulate — for the épicier to be able constantly to withdraw from circulation more money than he threw in. In this case ^[10]/n ((9 ^[1]/ii)H=99+^[11]/ii=100) is constantly returned by the épicier to the capitalist from the circulation he requires in order to pay wages. But he would have to procure the remaining Vu in some other way, which we shall discuss later. Secondly, however, if the épicier realised his profit of £9 Vu in the commodities of the capitalist himself, the £100 of wages paid by the capitalist would be sufficient not only for the workers to obtain their wages and the épicier to replace his capital, but also for him simultaneously to realise his profit. To pay the wages of his workers periodically, therefore, the capitalist would need no other fund than this circulation between himself, his workers and the

épicier. As for the SHOPKEEPER, he would constantly withdraw from circulation more value than he threw into it (expressed as value), namely £110, while he only threw in £100. Nevertheless he would always throw into circulation as much money as he took out, namely £100. In this case, however, he constantly withdraws £110 worth of commodities from circulation and only throws back £100 worth. This version of the matter appears to contradict the previous one. First we said that he withdrew more money from circulation than he threw in, because he threw in commodities of greater value than he withdrew. Now we say that he throws exactly as much money in as he takes out, because he withdraws commodities of greater value from circulation than he throws back into it. The two are in fact identical expressions. In the one case he realises his surplus value in commodities, in the other in money. The épicier

constantly withdraws from circulation a commodity value of £110 for £100, while he only throws into circulation, sells to the workers, a commodity value of £100. This is the result of the fact that he constantly withdraws (realised) commodity value from circulation for £90^[10]/n. and throws back into it a value of 100 (realised in the same quantity of commodities).

At any rate, we have here an example in which the same circulation (£100) suffices for the capitalist to pay wages; suffices at the same time for the épicier to realise a SURPLUS value of £10, and finally the same amount suffices for the épicier to realise capital and income, and for the capitalist constantly to expend the same amount for the repeated purchase of the same amount of labour.^[43]

Let us assume that the capital of the épicier is £1,200. Let this sum turn over 4 times a year, so that every year he makes £4,800 worth of purchases from the capitalist, which is £400 a month and £100 a week. His own capital would be replaced in the first quarter. If the rate of profit were 10% per annum — hence the 4fold turnover were the AVERAGE REVOLUTION OF THE MERCANTILE CAPITAL— the épicier would add 2Va% on each 100, for 10% on 1,200=120, and 120 on 4,800=2'/2%- In this case, if the épicier paid 100 he would obtain a commodity value [XVII-1041] of IO2V2, and since he only gives the workers a commodity value of 100 for £100, these £100 worth of commodities would cost him £912iU\. Here, therefore, a weekly circulation of £100 (the £100 turn over 4 times a month and 48 times in the year) would 1) pay for labour^[43]

with an annual value of £4,800, and 2) realise a commodity value of £4,800. Taken together, a value of £9,600 would be realised. Apart from this, the capital of £100 would return to the capitalist at the end of the whole circuit, whether this was itself equal to a value of £100 (if gold money, etc.) or it was only represented by a token of value or credit paper, which is the same thing for this discussion. While it realised these commodity values, the £100 would at the same time have replaced the épicier's capital of 1,200 and realised a profit of 120.

(The calculation is in itself absurd on account of the hypotheses. For if the épicier only needs 100 in turnover, he cannot invest a capital of 1,200. We should then have to assume that, apart from the sum which he always has READY and which after all amounts at most to Vs of what is being turned over, hence £40 at most, the remainder is counted for his SHOP, wages, etc., circulation costs. We should then have to calculate a higher surcharge: 10% profit and so much, etc., for the replacement of the fixed capital. We should then have had to bring into the calculation as well the circulation between the épicier and his own workers.)

But what we are concerned with here, and what is the case independently of any hypotheses, is this: In one single cycle of the circulation of the capital, in which the capitalist lays out £100 in labour, the workers buy commodities with the £100 from the

épicier, and the épicier uses this £100 to buy back commodities from the capitalist, the £100 buy labour for £100 and commodities for £200, namely the £100 of commodities the workers buy from the épicier, and the £100 of commodities the épicier buys from the capitalist. This admittedly expresses, in so far as we are considering the circulation of money, merely its circuit, M—C— M — C, etc. But at the same time, if we look at the process which lies hidden behind this, [it expresses] a complete cycle of the reproduction process, which contains, entwined together, the moments of production, consumption, distribution, circulation and reproduction. In contrast to this, the 40 turnovers of the £100 in the year express the 40fold repetition of this complete cycle. A single cycle may proceed slowly or quickly, the amount circulating may be big or small, but the money must pass through these turnovers. ITS SUFFICIENCY for the 40 times greater amount, on the other hand, has as its condition a given number of repetitions of the cycle, hence that the reproductions of the whole cycle of reproduction over a year should be sufficiently rapid.

Assume that the capitalist pays the workers £100 out of his own pocket (before he has begun to trade with the épicier). The épicier

buys with £100 from his pocket a commodity value of £110 from the capitalist (namely £90^[10]/u of commodities for resale and 9'/n for his own consumption). £200 of money has now been laid out, therefore. £100 is in the pockets of the workers. The capitalist for his part has replaced the £100 through the sale of the commodities. As soon as the cycle has started, and the £100 has passed from the workers to the épicier, and flowed back from the latter to the capitalist in purchases, £200 is in the capitalist's pocket. But he pays his workers with the £100 he receives back from the épicier, not with the £100 he received from him before the cycle. £100 of money is now thrown out of this circulation. But the capitalist now may retain £100 less in the form of money. He can invest it elsewhere. The CURRENCY flows to him from the épicier. This is in general the service performed by capital engaged purely in trade. The capitalist does not gain any capital thereby. For he provided £100 of commodities for the first £100, and for the £100 of the épicier, with which he pays the workers from now on, he must always provide commodities afresh. But what he gains is that he can invest this value of £100 elsewhere. Whether the épicier was the original owner of the £100 or not is demonstrated at the end of the first cycle. If it was his, he now has £100, just as before, since he has consumed the surplus value of £10 in commodities. If it belonged to the capitalist, the épicier has to pay out the £100. If he buys anew, this happens in fact with fresh credit.

[XVII-1042] In the real reproduction process we must presume that one part of the profit is consumed as income, another part is accumulated. Let us assume that the épicier, who makes a profit of 10% on a capital of 100 (this 100 needs to be merely an aliquot part of his capital and stands for x here), consumes half of the 10% and accumulates the other half. On our assumption the workers buy from him £100 worth of commodities, which cost him £90^[10]/n. His profit=£9Vn- But in order to simplify the calculation we should • prefer to say, and the relation is the same here: the workers buy for £110 commodities which cost him £100. £110 is here what the capitalist has to pay the workers; he only receives the whole sum back from the épicier if the latter constantly consumes the £10 profit, and indeed consumes it in the capitalist's commodities. If he consumes £5, £105 comes back to the capitalist, and if this occurs regularly this amount is constantly in circulation. The capitalist, on the other hand, would constantly have to draw £5 from sources other than this cycle of circulation and, through wages, throw them into circulation as SURPLUS, except under certain circumstances which will appear shortly.

The £5 the épicier accumulates is initially accumulated by him in the form of money, and this is the sole, most direct, immediate form in which he can accumulate, unlike the productive capitalist. The productive capitalist can accumulate in natura, if his product itself enters as a condition of production into itself, as e.g. wheat does as wheat seed in agriculture, or he can accumulate through exchange, as do e.g. the machine manufacturer and iron producer. (What would correspond to this in the case of the SHOPKEEPER, perhaps, would be an increase in the part of his capital which enters into the circulation costs of his circulating capital, such as buildings, etc. But even so this too requires a prior conversion into money.)

//It is true that accumulation may appear with all capitalists as accumulation of unsold commodities (presupposing here that they have sold the part of the commodities which replaces their capital). But this is always involuntary accumulation and it hinders reproduction, with one sole exception. The capitalist may consider it necessary to produce an increasing reserve fund of commodities to cover increasing demand (this can naturally only happen with commodities which can be preserved FOR SOME TIME, such as clothing materials and the raw material for them, etc., cattle, machines, etc., metals, etc.), and so FAR (this may also be case for the SHOPKEEPER) all accumulation amounts to annual overproduction, an overproduction which is the law of expanding production, not stagnant production.//

Our SHOPKEEPER may now accumulate this £5 straight away in real terms as capital, i.e. convert it into capital, or only accumulate it as the material of capital, as money capital destined for reproduction, but temporarily at rest. This is in fact a mere hoard, but with the determination of capital lying fallow.

With £100 the SHOPKEEPER bought commodities of a value of 110; the capitalist paid the workers £110 of wages; the workers paid the SHOPKEEPER the £110 for commodities which are worth 110 but only cost the SHOP 100. On our first presupposition the SHOp[keeper] spends with the same capitalist, apart from the 100 needed for the replacement of his commodity capital (which has a value of 110), 10 more for his own personal consumption. For 110 he receives commodities of a value of 121, but he consumes this value of 21 or sells it to himself. The commodities cost him only 10, although they are worth £21; but cost him as his own customer the value of 21. (Just as he obtained 110 for 100 (in the case where his capital was 90'°/n) but consumed 10. The £110, however, circulates constantly; it provides the money for both the workers' wages and the épicier's commodities, as well as the commodities the épicier

buys back; equally the £110 replaces his capital and his profit.)

If the épicier always consumes £5 and accumulates £5 (as distinct from the HOARD, which is always involuntary with the capitalist, but which is, both for him and for the hoarder, money withdrawn from circulation, exchange value at rest as money) the situation remains the same in so far as he still buys commodities for £110; £100 to replace his capital, £5 as profit added to the capital, and £5 for his own consumption. But certain distinctions enter here. As far as concerns the £5 consumed by the épicier

himself, the old rule still prevails. He buys with it a commodity value of £1iU, which he himself consumes, however. [XVII-1043] It is different with the other £7s/^[4].

This is wrong. We assume that he always adds 5% to the capital, hence the capital is 100, 105, 110,^[133] etc. For him to accumulate this, to apply it as capital, the workers need to buy more from him, the capitalist must therefore buy more labour^[4] (whether by employing more workers, or by having to pay more because more work is done. Here we leave out of account any rise in the market price, although this amounts to the same thing for the circulation of money. Similarly, the production price of the commodity could have risen, hence either more labour is employed by the capitalist in order to produce the same amount of commodities, or the raw material, etc., has become dearer. We are not considering any of these CASES here. It is assumed that commodity values remain the same.) The mere accumulation of the SHOp[keeper], so FAR as it is not SPEND OF HIS PROFIT, is not of the slightest use to him in accumulating as capital the money saved, if the workers do not have any more to buy. And we are assuming that this is his LINE OF BUSINESS, and we leave out of account here the competition through which one SHOPKEEPER extends his sphere of action at the expense of another. (This is a very important consideration in dealing with the competition of capitals.^[67] Here one of the SHOpfkeepers] represents the class of SHOpfkeepers].) It is admittedly possible that he e.g.

expands his SHOP, etc., and maintains a larger service personnel. This already requires a considerable increase in the accumulation of his capital (or RATHER his LATENT CAPITAL). It therefore only comes about in consequence of a long (productive) accumulation or growth of latent capital.

But let us assume that the workers buy more and that the shopkeeper's accumulation corresponds exactly to the growth in wages (hence to the growth in the reproduction of the variable capital of the capitalist). (If the latter "were to proceed more rapidly, he would have to take credit from the capitalist. His profit would then grow more rapidly than his capital.)

Let us say that this process takes up e.g. 5 years.

Year I) Capital 100. SHOPfkeeper] buys from the capitalist for £100 commodities of the value of £110. Capital pays £110 in wages. The workers buy commodities from the SHOPfkeeper] to the value of £110.

//If the situation is normal, the worker, like anyone else, buys the commodities at their value. They are only dearer for him because he provides more labour for the money with which he buys them than the money represents; not because the commodity is worth less in money than it costs him. The money costs him more labour than it is worth.//

II) Capital 105. SHOPfkeeper] buys from capital for £110 (hence commodities to the value of .£121). But he only has in his shop commodities for £105, hence to the value of £115'/2- He consumes commodities to the value of £5^[1]/%, which cost him £5. (The ^[1]/s is 10% on 5.) The capitalist pays £115'/2 in wages, with which the workers buy from the sHOp[keeper] a commodity value of £115'/^[2].

III) Capital 110. SHOPfkeeper] buys commodities from capital for £11572. hence commodities of the value of £126^[1]/2+^[1]/2o, or £126n/2o- But he has in his shop only £110 of commodities, consumes therefore a commodity value of £5n/2o- The value of these commodities, for which he has laid out £110, is 121. The capitalist pays £121 in wages. The workers buy commodities from the SHOPfkeeper] for £121.

IV) Capital 115. SHOPfkeeper] buys from capital for £121 =a commodity value of £132'/io- But he only has in his SHOP commodities for 115, the value of which is 126'/2- He therefore consumes a commodity value of 6^[6]/io- The capitalist pays £126'/2 to the workers; they buy with this commodities which cost the SHop[keeper] 115.

[XVII-1044] V) Capital 120. SHOP[keeper] buys from the capitalist for £126'/2- But he only has enough in his SHOP for £120. He therefore consumes £6V2=a commodity value of 6+ k+ /10+ /20 = 6+ /20+ /20+ /20 = 6+ /20 = 6 /10.

He has in his SHOP commodities for £120, hence a value of £132. The capitalist pays £132 to the workers; they buy for this amount from the SHOpfkeeper], etc.

Two things are assumed here for the sHopfkeeper] to be able to add 5% to his capital every year. Firstly, that the individual CONSUMPTION OF the sHOp[keeper] himself grows somewhat every year. Otherwise the accumulation would have to proceed more rapidly. Secondly, that the capitalist (this is what we call the directly productive capitalist xaT'é£ox,nva) accumulates, since this is demonstrated in the growing magnitude of his variable capital, i.e. the annual growth in his outlay for the purchase of labour. But we see here at the same time that though the circulation of £100 was enough as long as the SHOpfkeeper] did not accumulate but consumed his £10 of profit in commodities, this is no longer the case once he begins to accumulate. Just as at the beginning of the process he bought for £90^[10]/n and sold for £100, the capitalist therefore having to add £9'/n to circulation, but the £100 being sufficient, so now at the beginning of each year the capitalist has to make an addition to circulation from his own capital in order to keep reproduction going.

Year I) SHOPKEEPER operates with £100. Capital pays wages of £110. Therefore throws £10 more money into circulation.

Year II) SHOPKEEPER operates with £105. Capital pays wages of 115 ^[1]/2- Throws £5 V2 more money into circulation.

Year III) SHOPKEEPER operates with £110. Capital pays wages of £121. Therefore throws £5 V2 more money into circulation. (115^[1]/2+5^[1]/2=120+^[2]/2=121.)

Year IV) SHOPKEEPER operates with £115.^[133] Capital pays wages of £126 lli. Therefore throws £5 V2 more into circulation.

Year V) SHOPKEEPER operates with £120. Capital pays £132. Throws £5 V2 more into action.^[134]

The total amount the capitalist has added to circulation over the five years=£10+4(5 + 72)=10+20+^[4]/^[2]=£32. This amount replaces the whole of the SHOPKEEPER'S profit, because he consumes part of it in the commodities of the capitalist, hence sells it to himself.

Incidentally, the eventual upshot of all this is the law we developed earlier. The wage of the worker pays the whole capital of the SHOP[keeper] as well as his profit. Therefore, if a SHOpfkeeper] who only provides the workers with the means of subsistence, i.e.

is only sustained by variable capital, accumulates, the money laid out for wages must increase. In fact the causal relation is reversed. The sHOp[keeper] can only accumulate as sHOp[keeper] (i.e. reconvert into CAPITAL his profit in his BUSINESS) if productive capital produces on an expanded scale, and only in so far as this expansion involves an expansion of variable capital, i.e. capital laid out in wages. The expansion of circulation — to the DEGREE of the SHOp[keeper]'s ACCUMULATION — must then be provided by capital.

Now take the second case. The sHOp[keeper] has no opportunity to expand his business, because the capital laid out in the purchase of labour does not increase, or does not increase in the proportion to which the sHOp[keeper] would like to accumulate.

If e.g. his capital is 100, the value of the commodities he buys is 110, and if he consumes half of the 10, he will accumulate £25 in the 5 years; if his capital= 1,000, he will accumulate £250. Thus the accumulation of capital appears here at first as accumulation of money, WHICH IS NOTHING ELSE than HOARDING, although here the hoard has the character of latent capital. All surplus value which is realised in money assumes this form initially, until it has been reconverted into productive capital. The latent capital may also have other forms, those of fixed capital, etc. But then — with the exception of unsold commodities destined for individual consumption (apart from the means of subsistence for the workers)—it already exists as a condition of production, realised (not in the money form) and available.

[XVII-1045] This accumulation of capital in the form of money is however the sole kind which can take place without the presupposition of simultaneous reproduction in other spheres of productive capital. This SHOPKEEPER can thus be compelled to HOARD the £250 as money, because there is no growth in variable capital. This lack of growth does not prevent him from setting aside annually £5 of money, or more, depending on his greed or mania for accumulation, which he cannot however directly apply as capital in his business. This is an incidental feature of the reproduction process which is important for the explanation of many phenomena.

Under the circumstances we have indicated, the SHOP[keeper] buys from capital:

1st year for £100. Capital has to throw £110 into circulation. Thus £10 more than it receives from the sHOP[keeper].

2nd year for £105. Namely £100 for SHOP and £5 for SHOPKEEPER. The SHOPKEEPER accumulates or RATHER HOARDS £5. Capital has as before to throw £110 into circulation. The sHOp[keeper] for the £5 receives £5 V2 of commodities in natura. But for the £100 he receives a value in commodities of £110, which the capitalist has to pay his workers as wages. But since he receives £105 from the SHOp[keeper] he has to add 5.

3rd year the same. 4th year the same. 5th year the same. The capitalist has therefore to add to circulation in the first year 10, in the 4 following years £20 (each year 5), in the 5 years £30. It was £32, while the sHop[keeper], instead of putting the £5 into the bank (in short laying it aside), invested it productively in the purchase of capital's commodities. It is therefore—prima facie—almost the same CASE, quoad circulationem," as if the SHop[keeper] had accumulated productively.

Given the capitalist mode of production, however, it is to be assumed that the SHOP[keeper] deposits this amount every year with a banker. Whether or not he draws interest from this is here irrelevant. Yet it would need to be considered for reproduction as a whole. This much is clear, however, that the amount the SHOP[keeper] puts aside in this case=the amount capital has to add every year over the 5 years—£5. The sHOp[keeper] first puts aside £5 at the end of the first year, hence £25 over the 5 years. In the first year capital throws £10 into circulation. But 5 out of this 10 remains in circulation or returns to it from the SHOpfkeeper]. With the exception of the £10 which the capitalist casts into circulation in the first year, he continues to throw in no more than 5 a year, since the other 5 remains in circulation. Since the 105 remains in circulation (the capitalist has thrown in the 5 once and for all) there remains to be added by the capitalist over the 5 years, after the deduction of this amount — and it is in circulation, flows back — only £25, exactly the same amount the sHop[keeper] has lying in the bank. This money — capital lying fallow, accumulating latent money capital for the sHOp[keeper] — forms the source of the supplement capital needs for the circulation. Thus the circulation can last year by year with the sum of £110. The profit of the épicier is verbalement PAID to him IN HIS OWN COIN. He himself puts back £105 a year, and £5 is paid to him in his money which he has deposited with the BANKER. (It is assumed here that he himself receives no interest; otherwise an increase of circulation from one direction or another would be necessary.) The capitalist pays him his annual balance of £5 with his £5 annually deposited with the BANKER. The business is now done in the following way:

First year. Capitalist receives £100 from épicier. Pays 110 to workers, who buy commodities from the épicier with this money. The épicier pays 105 and takes 5 to the banker.

Second year. Capitalist receives £105 from épicier (5 of which is thrown into circulation by capital). He takes from the BANKER the 5 which the épicier has deposited. He pays the workers £110. Back to the épicier. The latter brings to the banker the same £5, which have been returned to him in the £110.

Third year. Capitalist receives £105 from the épicier. He takes the £5 from the banker and pays it to the épicier for the second time, in the 4th year for the 3rd time, in the 5th year for the 4th time. The £25 deposited with the BANKER by the épicier therefore continues to exist only in the form of £5. And in fact the capitalist threw £10 into circulation only at the beginning of the transaction; this £10 passes through the same cycle just as before. Out of the £25, therefore, only £5 is to be found with the BANKER as money accumulated and constantly expended by the capitalist; this £5 constantly travels from the banker to the capitalist and from the [XVII-1046] épicier to the banker. Only by an indirect route does the épicier annually throw £110 into circulation. His capital of £25 deposited with the BANKER amounts to his having a balance of £25 in his favour with the BANKER, which is present (in so far as the BANKER deals at all with his own capital) in the form of SECURITIES, mere drafts on future income, government stocks, bills of exchange, share certificates, etc. What has accumulated here in fact is the épicier's draft on the BANKER, the BANKER'S draft on the future receipts of the state, share companies, productive capitals. The accumulation is IN FACT here an accumulation of mere drafts on receipts which derive from productive capital. (For the revenue of the state can also be reduced to receipts of this kind, which are paid to it annually by the productive capitalists.) This discussion belongs actually to the credit system.^[67] What is important here is that we should see how the £110 continues to suffice for the circulation, although £25 is accumulated as latent money capital One can see from this the difference between actual (apparent) accumulation of money and the inflow of CURRENCY. What must be accumulated here in CURRENCY is nothing but the identical original £110, although the SHOp[keeper] annually withdraws £5 of this from circulation.

//Even if the sHOP[keeper] accumulates productively, and annually buys £5 more of commodities from the capitalist, the latter receives the extra amount from the BANKER in the same way. Yet in this case circulation increases by the whole amount of money the sHOpfkeeper] does not consume in commodity value, as his purchasing money. The capitalist must obtain from other sources the increased wages over and above this purchasing money.// The capitalist indeed owes the banker capital (value) to the value of £5 each time, for the £5 he withdraws annually in this way. Hence at the end of the 5th year £25. But this is definitely not the same as saying that he has as a result of this changed the figures in his account with the BANKER. If, e.g., he has increased his constant, without increasing his variable, capital, he will have more to receive from the BANKER (who administers his account for him) for the sale of his commodities. We do not say, therefore, that he borrows the £25. To be sure, he must lay out £5 more of his capital every year in money. But for this it is not necessary that the amount of CURRENCY he himself provides via the SHOpfkeeper] be increased.

With regard to the MERCHANT (épicier, SHOPKEEPER) who sells the means of subsistence to the workers — with regard to a part of the capital (part of the MERCANTILE CAPITAL)—we have seen, thus, how he constantly "extracts from circulation more money than he throws in". He extracts a part of the "surplus value" in "commodity value", but this must be a GENERAL LAW, since all those who live off profit //interest and rent// must expend a PART for their individual consumption. It is enough for the operation that the amount of money necessary to pay the worker his weekly wage should circulate, hence the amount necessary to pay for the commodity values the worker consumes. The money necessary for this circulation is provided (and forms a part of the capital) from the capital of the SHOPKEEPER himself for the most part (unless he is trading on credit from the MANUFACTURER). The part originally provided by the productive capitalist himself=the profit of the SHOPKEEPER, i.e. it is not equal to the annual profit on his capital, but=the part of the profit which falls on the weekly turnover. (In fact the excess contains not only profit but at the same time the depreciation of the capital laid out for the circulation costs.) Let us assume that the SHOpfkeeper] circulates £1,000, which turn over 4 times in the year. And the profit (including costs, etc.)=16%. Thus 4% in three months and ^[4]/^[3]% in 1 month, and in one week ^[4]/i^[2]=7s%-(4% in 3 months on 1,000=£40. And in 12 months=£160. And 16% annually on £1,000=£160.) This would be a weekly addition of 7s % to 1,000. To £100 it is £'/s. To £300 it is 3 x £ 7 ^[3] = £ l - To £900 it is £3. And to £1,000 it is £3 7s or £3 6^[2]/sS. And this would be the amount the manufacturer had to add to the CURRENCY of £1,000. (Naturally all these amounts must in reality be set somewhat higher, because the REFLUX movement does not proceed without friction. A part of the wage, for example, may run into other channels, may be HOARDED by the worker, etc. On the other hand, we are leaving almost entirely out of account compensations for credit.) We have seen how [XVII-1047] this amount remains constant, if on the one hand wages (and the number of workers employed) remain the same, and on the other hand the épicier consumes the whole of his profit in the commodities of the capitalist. It is not greatly modified when the SHop[keeper] WITHDRAWS PART OF HIS PROFIT. If the épicier accumulates productively, i.e. expands his business, the prerequisite is that the variable capital employed by the capitalist should increase. In this case too, what the capitalist adds is only equal to the profit, or RATHER the weekly expression of the profit, of the tenant.⁽⁴⁾ A very small rate, therefore. Incidentally, see the following

11 Note to P. 1044} The calculation is wrong, because it is always only the part of the SHOPKEEPER'S money with which he operates as capital which is calculated, thus not the money he expends for his own consumption, the money he expends as income. Then matters proceed in this way:

Year I. SHOPKEEPER buys with £100 for his SHOP a commodity value of £110. Wages 110. The capitalist throws into circulation £10,=the profit of the SHOPKEEPER,=the 11th part of the circulation.

Year II. SHOPKEEPER expends £5 as income. Buys commodities for the SHOP for 105. He therefore expends the £110 he has received from the workers. For the £105 he receives commodities of 115 VÎ-The capitalist has to pay wages of £115V2- £110 of this has been thrown into circulation by the sHOp[keeper]. The capitalist now has to throw in 5'/2-

Year HI. SHop[keeper] throws in £115Vs. Capitalist 121. Hence 5 ⁽⁵⁾/2- Similarly in Years IV and V.

The calculation is thus correct after all. Besides this, the amount the capitalist throws in here as an increment is smaller than the amount he originally threw in by almost a half — 5 V2 instead of 10.//

*At first view, it seems a puzzling question, how the capitalist shall be able perpetually to withdraw more money from circulation than he throws into it, the more so since he, in fact, throws all the money into the circulation, or is the starting point as well as the returning point of the circulation?*

With the épicier the capitalist has only to throw once and for all into circulation — if the reproduction process remains the same and the épicier consumes the whole of his profit — the part=the weekly expression of the profit of the MERCANTILE capital of the

épicier. This addition to the capital thrown into circulation every week by the épicier himself //we can look later at the differences which enter through the fact that the épicier buys perhaps only once a month or once every 3 months, depending on the circumstances, and sells weekly//+the weekly monetary expression of this capital itself is then sufficient for the épicier to be able to withdraw every week from circulation e.g. £10 more than he threw into it, although the weekly CURRENCY remains £110, as before. And what the capitalist has thrown in, ONCE and FOR ALL, is only Vu of the weekly expression of his variable capital, hence, since the weekly variable capital=1/52 of the annual variable capital,

Vu of this, ='/s72 of the variable capital he has to lay out 52 x 11 annually. Whether I pay 1,200 thalers (value) all together at the end of the year, or 12 thalers a month or 3 thalers a week, changes nothing in the amount of value I have to pay for the whole year. In the first case, however, 1,200 thalers of money would be needed to realise the value. In the second, if the 3 thalers flow back, they may be sufficient to pay the 1,200 thalers. 3 thalers, turning over 400 times in the year, realise 1,200. But one sees at the same time that important as the above investigation is for the role played by mercantile capital in relation to the circulation of money proceeding during the reproduction process, the question is not thereby exhausted. This is so in two respects.

1) Since mercantile capital is itself PART and PARCEL OF THE CAPITAL, one should, to begin with, refer it to productive capital itself. The operation would then look like this: The capitalist pays out 110 in wages, the workers buy back from him commodities of 110, and the money thus flows back to him. This shows us indeed how a money capital of 110, laid out weekly (in money as CURRENCY, means of payment), is enough if he has to lay out a variable capital annually to the amount of £5,720. The workers receive from him in the course of the year a commodity value of £5,720. But the sum of £110 is sufficient to pay them this over the whole year. The simple circuit of the money is only that the same coin passes through different hands. In contrast to this, the REFLUX movement — continuity — implies [XVII-1048] that the same coin or ar least the same amount of money passes again and again through the same hands as means of purchase or payment. Hence the money capital the capitalist must have in order to pay his variable capital to the workers is in no way proportionate to the size of this variable capital itself. Although the weekly expression in money of the variable capital for the 2 variable capitals A and B is naturally proportionate to the magnitudes of A and B. If A is 50 times greater than B, its weekly expression in money is 50 times greater than that of B. In either case this is quite compatible with the MONETARY expression of A and B over the whole year never being, respectively, greater than A/^[5]2 and B/^[5]2. This is an important moment in the REFLUX movement, in order to grasp the mechanism of the circulation of money. But whether the capitalist pays out £110 at the end of the week or 5,720 at the end of the year, this movement does not explain how even a centime of profit flows back to him, hence also profit realised as money. For, reduced to a still simpler expression, the process comes down to this: He first pays out the amount in money; he then pays out the same amount of value in commodities and thus draws back the money. It is reduced to this, that every week he pays out a value of £110 to the workers. No advantage results from this process of payment. And not in the least from the fact that he first gives out the tokens (the money) and then draws them back and gives out the real commodity values.

2) But secondly, with regard to the MERCANTILE CAPITAL of the SHOPKEEPER, the matter can be reduced to this: His specific profit requires merely that the value of the commodity sold by him should be paid; and, since the workers are the buyers of his commodity, that the wage of labour should=the value of the commodities sold to them by him. But expressing this generally we find that the problem itself is only repeated (leaving aside the SPECIFIC NATURE OF MERCANTILE CAPITAL) IN ANOTHER FORM: Expressed generally this means nothing but: for the capitalist to draw from circulation more money than he has thrown into it nothing more is needed except that the value of his commodities should be paid for, or that enough money should be there to pay for the value of his commodities. Or that enough money should be available every week, i.e. that enough money should periodically circulate, to pay for the periodically circulating amount of commodities that he offers for sale. But since the value of his commodities includes surplus value (profit (interest, rent)), hence he has given out less money in order to buy the elements of the commodity, it means that so much money is (periodically) in circulation as to enable him periodically to withdraw from circulation more money than he has thrown in. This solution of the QUESTION, generalised, is therefore nothing more than a repetition of the QUESTION itself.

We must above all endeavour TO REDUCE THE PROBLEM ITSELF TO ITS

SIMPLEST EXPRESSION.

The fact that the capitalist receives back more value than he gives out is not what constitutes the question. For this would be the question of the origin of surplus value, which we have already solved. Therefore, what is at stake here is the question of how this surplus value is realised in circulation. In the first act of capital, M—C, it buys commodities to which, as shown above, surplus value is added in the production process, i.e. value the capitalist has not paid for but which he can sell. In the second process, C—M, in contrast, in the sale of the reproduced commodities, the capitalist in fact throws into circulation more value than he has withdrawn from it in M—C. The only requirement for the realisation of this higher value is that it should find an equivalent in circulation. We have discussed how this happens, in investigat-ing the way in which, in the total reproduction process, the use values and values of the different capitals replace, pay for, and realise each other.^[135] Hence this too is not the problem. In explaining that process we made abstraction from the circulation of money, or we considered money only as the expression of value, as money of account. The question was therefore then posed in this way: Assuming the product is sold, how is it replaced? Or, on the other hand, who buys it, who possesses the values needed to replace it? The question is now related to the money with which the purchase is conducted. Capital's extraction from the circulation process of a greater commodity value than it originally threw in is explained by the fact that it throws in the surplus in one form, before it extracts it in the other form. And the way it throws in the surplus in advance in the other form has been explained.

[XVII-1049] But the question here is: How is the surplus realised in money? How does the surplus value assume the form of a surplus of money? The money the capitalist lays out at the beginning of the process does not enter into the production process. The capitalist rather gives it away entirely. The fact that he has given it away is a condition for the initiation of the actual production process. Hence whatever increase of value occurs in the production process, the value which was originally represented by money increases, but this increase of value changes absolutely nothing in the quantity of money. It itself is present in circulation in the same quantity, before and after the production process. It has changed hands. If now through the circuit of reproduction it flows back into the hands of the capitalist, how should it flow back in increased quantity? Let us say the total productive capital= 1,000, and there were commodities of that amount in the hands of the MERCHANT. WELL. The commodities are now partly present in the productive process, and are partly being consumed by the workers. The £1,000, in contrast, is now in the hands of the MERCHANT. Once the production process has ended, commodities to the value of 1,100 ought to be found in the hands of the productive capitalist. How is the MERCHANT to buy commodities to the value of £1,100 with £1,000? It is of no assistance to shift the question from one foot to the other and to say: the MERCHANT sells the commodities to the consumers for £1,100. Who are the consumers? The industrial consumers and the individual consumers. Industrial consumers are the capitalist himself and the workers. But they only buy back when the £1,000 has been converted into 1,100. Individual consumers — profit (interest, rent) and RETAINERS. But this profit and its branches — interest, rent and the salaries of the unproductive workers — have first to be realised. They are contained precisely in the £100. One therefore says in fact that the capitalist pays the merchant the 100, so that the latter can pay him £1,100 for commodities of a value of 1,100, since the merchant only possesses £1,000 from the previous operation.

So BROADLY PUT, the question answers itself. In the form in which the problem is posed, money is only considered in circulation, excluded from the production process. //We disregard here credit money, in which circulation itself functions as the workshop for the production of money.// And it is excluded, as money. But not as commodity. As the latter, it emerges itself from the production process. And the money (gold, silver) is at first a commodity— before it runs its course in circulation as money. Let us transfer gold and silver production from the gold and silver lands to the home country itself, so that the entry of foreign trade does not bring in superfluous incidental details in advance. To WORK A GOLD OR SILVER MINE, the capitalist has to lay out constant and variable capital, as in every other branch of industry. But his constant capital consists only of fixed capital and matières instrumentales? Living labour forms a large proportion of the total outlay. Let us assume that when he lays out £100 in money, he gains £130. This £30 then forms the surplus value. ////(Profit and rent) The production of gold and silver is distinguished from all other branches of production by the fact that here, rather than comparing the value of the product with the value of the outlay, we must compare the money value of the outlay, the EXPENSES MONETARILY EXPRESSED, with the total amount of the product. The outlay, £100,=A CERTAIN MASS OF GOLD. Its price of £100 is merely the expression in the language of money of account of the fact that the outlay=a certain quantity of gold. Hence if the product is 130, i.e. if it contains ^[3]/i0 more gold than the outlay, the profit=30%. The rate of profit (which here includes rent) is determined purely by the excess of the use value obtained (gold) over the outlay (similarly in gold), expressed in the same use value, gold. And this is entirely independent of the value of the gold. An equalisation of the profit can here only take place to the extent that if the rate of profit=10% and the excess of gold=30, this 30 may be split up into rent and profit. On the other hand, the outlay itself depends, to be sure, on the value of the gold, hence on the productivity of the labour employed in the production of gold and silver — a productivity which is determined by the natural level of yield of the mine, if the mode of production is given, and which depends on the mode of production if the natural level of yield is given. If the value of gold and silver stands high, because the mines yield little //We want to leave aside the mode of production here, although it is important for SURPLUS value, as in every other TRADE; the capitalist [XVII-1050] can extract more surplus labour if he employs division of labour, machinery, etc.// and therefore a large quantity of labour provides a meagre result, £20 may perhaps buy as much labour (i.e. means of subsistence for the workers), instruments and

matières instrumentales as in another situation 100. If, therefore, £100 is invested and yields a SURPLUS PRODUCE of only £3, the rate of profit will admittedly only be 3%. But as much can be bought with this £3 as with £30 in the other case.////

Or the surplus labour is expressed in £30. Let us assume that the capital consists of 40 constant capital and 60 variable capital, i.e. £60 laid out in wages. In this case the £100 thrown into circulation comes out of the production process itself as gold and silver to the value of £130. The whole of the capital does not need first to be converted into gold or silver by the circulation process, but is converted into gold or silver in natura. The first metamorphosis here is not the conversion of the commodity into gold or silver (money) but inversely the conversion of gold and silver into commodity. Gold and silver are only realised as commodities and converted into money through their exchange with other commodities. Our gold producer would d'abord have had to pay out ^[6]/is of his product to the workers. The REFLUX of this ^[6]/is or £60 would not take place with him. The workers buy from the SHOPKEEPER with it, but the SHOPKEEPER does not have to buy from the gold producer with the £60, which is gold. He rather expends £60 in order to buy commodities from the capitalist who produces means of subsistence. The £60 therefore flows towards the latter. (The profit of the SHOPKEEPER continues to consist in his receiving from the capitalist for the £60 a commodity value of say £66 (10%). Whereas he himself naturally only gives out commodities to the value of £60 for the £60.) And the £30 is reconverted by the gold producer into machinery, matières instrumentales, etc.; they therefore flow to the machine manufacturer, coal producer, etc. Finally, profit and rent of £30 is in part consumed, whether in means of subsistence and luxuries or by being handed to unproductive workers (the state, servants, etc.); and a part of it is destined for accumulation, therefore thrown onto the loan market. As long as it is not loaned out, it lies idle as a hoard. Once it is loaned out, it is itself again laid out in constant capital and variable capital and thus thrown into circulation. The gold which the gold producer has thus thrown into circulation flows back to him from circulation only in the form of the commodity; it returns to him (with surplus) out of his own sphere of production as gold and silver. Thus the £130 of new gold flow as money into circulation, partly in exchange for means of subsistence, it may be for the workers, it may be for the other classes, partly in exchange for machinery and matières instrumentales. This commodity, unlike all others, does not have to be converted into money, but becomes money through its conversion into a commodity; it therefore performs the opposite movement to that performed by the other commodities. If on the one hand a SURPLUS of commodity values is thrown into circulation, on the other hand a surplus of gold is thrown in. This is on the assumption that there exists a circulation adequate to begin the new cycle of the reproduction process. On the same assumption, all that needs to be circulated anew, is surplus value. From the other angle, the angle of gold production, it is not only the surplus (the £30), which is thrown into circulation but the whole product (with the exception of the accumulated gold, as long as it lies idle). Thus on the above assumption,⁽⁶⁾ if e.g. the capital consists of 1,000 and the profit of 100 (the total SURPLUS VALUE), all that needs to be thrown into circulation is gold for £100. Thus a capital of 71^[5]/i3 would suffice for gold production. For the product equals 100. (Profit 28^[8]/^[13].) Relatively little capital suffices here because it is not the surplus of this capital but capital and profit — the total product in which it is reproduced — which is expended in paying for that surplus of commodity values.

The whole of the portion of annual production which is exchanged for gold or silver (this is how the matter presents itself when gold and silver are not produced within the country) or directly employed in the production of gold and silver, 1) represents more gold or silver than is expended to produce it; it represents SURPLUS value directly in gold or silver, as a surplus of gold and silver; 2) reproduces in gold or silver the whole of the capital laid out. This gold (let us leave out silver to simplify matters), in so far as it enters as a material into gold and silver manufacturing, is as we have seen⁽⁷⁾ also a form of hoard-formation, which we are not concerned with here. It replaces the constant capital of the jeweller, GOLDSMITH, watchmaker, etc. Another part enters the CURRENCY, whether to replace worn out, [XVI I-1051] abraded coins, or because the realisation of the commodity values requires a greater QUANTITY OF CURRENCY. A third part becomes a hoard, and in this form it is either a mere hoard (capital lying idle) or a reserve fund for means of payment and purchase, or, finally, for the settlement of international balances, or a means of purchase abroad. As BULLION, gold can only serve as means of payment on the world market; within the country it must be converted into actual coin or at least transferred into money of account.

According to our assumption, gold production takes place within the country.

The gold producer has to exchange his product 1) for variable capital by means of the wage paid to the workers; 2) for constant capital, for machinery and matières instrumentales; 3) for means of subsistence, etc., in which PROFIT (RENT INCLUDED) ISSPENDED [expended]; 4) a part of the profit is accumulated. If this accumulation is not to be mere HOARDING, it must in turn be laid out as variable and constant capital.

Let us start from 4); the part of the newly produced gold which is accumulated as profit. It must either BE HOARDED, if there is no direct employment for it, or, if there is employment for it, it replaces constant and variable capital. If the latter takes place, the gold producer may either invest it in his own business or loan it out as interest-bearing capital. As far as the first is concerned, the gold producer has it in common with all other producers whose SURPLUS is realised in money that it is initially a hoard which lies idle, latent money capital. As such it lies with the banker, and waits for its conversion into productive capital. The sole difference is that in the one case it can exist in the form of tokens of value (government stocks) or as banknotes or some other form of credit money, but here it exists itself as value, i.e. money. The second case is as follows: He accumulates, i.e. capitalises the profit existing as a SURPLUS of gold. This happens either through his investing it in his own business or loaning it out.

Let us assume that he invests it in his own business. Then, in this particular case, his accumulation will be different from that of the other capitalists. The other capitalists can only employ their own product again as a condition of production if it really enters as a condition of production into their own product. E.g. coal enters into coal production, machines enter into machine production, metal enters into metal production, corn enters into corn production. But they can never do more than reproduce it in

natura as constant capital. One might refer to the producers of means of subsistence which can be stored; e.g. living cattle, corn, clothes, etc., are variable capital which is accumulated in natura. But cattle-breeders, FARMERS, CLOTHIERS, etc., must all first sell cattle, corn, clothes before they can pay the workers with them. The wage must be paid in money. They indeed accumulate, TO A CERTAIN DEGREE (no one produces means of subsistence to pile them up; the capitalist produces at most the excess quantity he THINKS TO BE ABLE TO SELL WITHIN THE YEAR, basing his calculations on THE GENERAL OVERPRODUCTION AS COMPARED WITH THE YEAR PAST), variable capital FOR THE SOCIETY, but not directly for themselves. Apart from this, every particular branch of production produces ONLY ONE ITEM OF THE VARIABLE CAPITAL,

AND CAN ONLY BY ITS CONVERSION INTO MONEY BE RECONVERTED INTO ALL THE INGREDIENTS OF VARIABLE CAPITAL. The gold producer, in contrast, can never reproduce in natura any part of his constant capital. Gold is neither instrument, nor matière instrumentale for the production of gold. It does not enter into the production of gold in natura. But the gold producer, unlike the other producers, can directly reproduce his variable capital, i.e. the variable capital in its direct form, gold paid to the workers as wages. For the worker to be able to realise this gold there must admittedly be the commodities on the market into which, as means of subsistence, he sinks his wages. (For society it is variable capital which the producers of variable capital can accumulate, i.e. a commodity; but not this commodity in the form in which it serves them themselves directly as variable capital. Conditions of production and commodities which belong to the consumption fund of society can BE ACCUMULATED, the former TO A GREATER, THE LATTER TO A SMALLER DEGREE.) This gold paid to the workers would go directly into circulation. The more workers were employed, the more gold could circulate, and more gold would have to circulate, SINCE

THE WORKMEN ARE TO BE PAID CONTEMPORANEOUSLY AT A GIVEN PERIOD. But h e r e A DIFFERENCE comes in. What he has to advance for CIRCULATION is the weekly MONETARY EXPRESSION OF THE NEW VARIABLE CAPITAL HE IS TO DISPENSE DURING THE YEAR. What he must pay is THAT MONETARY EXPRESSION OF ONE WEEK x52. The matter proceeds in this way. He employs e.g. 10 more workers a year, SAY=£520. THIS IS £1 WEEKLY per worker or £10 for 10 workers. [XVII-1052] But he has to lay out this £10 every week, since the outlay flows back to him not as money but as commodity. The épicier receives the £10, buys a commodity from the manufacturer for it. If the circulation was previously 100 — I mean this circulation between the manufacturer, épicier and WORKMEN — it is now 110. The manufacturer continues to receive the £100 he EXPENDS FOR HIS OWN WORKMEN, REPLACED BY THE

épicier; he receives further, replaced by him, the £10 the gold producer SPENDS for his WORKMEN. The épicier makes his profit on the £10 as on the 100. He sells the workers for £10 commodities of the value of £10, but they only cost him £^[10]/n or 18^[2]/nS., if his profit on 100=10% (it is however much less on account of the turnover of the capital). The épicier therefore pays the manufacturer 110 the first week. But the manufacturer only pays his workers 100. Hence the £10 the gold producer threw into circulation does not flow back into this circulation between worker and épicier. But the épicier must now buy £110 worth a week from the manufacturer. Every week he receives from the workers who produce gold this addition of £10 for circulation. Nevertheless only £110 circulates every week. Therefore, out of the £520 the gold producer has laid out in additional labour during the year, no more than £10 enters into the circulation between the manufacturer and the SHOPKEEPER. The basic sum of 510 is money which has replaced the capital of the manufacturer, i.e. commodities to this amount, in which capital and profit are both included. Assume that the SHOPKEEPER, who has to buy Vu more from the manufacturer, bought in the 2nd week £110 worth, before he received the £10 from the gold producer's workers, that he therefore advanced the £10 from his own capital. Thus the manufacturer lays aside £10 (within this circulation), since he only has to pay 100 to his own workers. In the 2nd week, the épicier receives £110, 100 from the manufacturer's workers, 10 from the gold producer's workers. But he already possesses commodities for £110 (deducting what he keeps for himself). To the manufacturer's workers he gives £100 in commodities, and to the gold producer's workers he gives £10. He therefore once again has £110.

The only difference is this: If the épicier has advanced the £10, so when the cycle is broken off he retains the £10 which flow to him from the gold producer's workers. If he paid the money from his receipts from the gold producer's workers, he has to hand over the £10 to the manufacturer.

In any case, £520 worth of the manufacturer's commodities are converted into money. The manufacturer pays the wage IN FACT only for the first week in money. Later he always pays it in commodities. For the money form of his commodities flows back to him from the 2nd week onwards from the épicier. Every week the gold producer pays in gold. But this gold does not enter into this circulation, or only in his exchange with his workers. It only serves once as the workers' means of payment, and is then converted in the hands of the manufacturer into THE MONETARY EXPRESSION OF THAT PART OF HIS CAPITAL WHICH DOES NOT in natura ENTER INTO THE CONSUMPTION OF HIS WORKMEN. I.e. it is converted into the MONETARY

EXPRESSION (AS FAR AS IT GOES) OF THAT PART OF ITS PRODUCT WHICH REPRESENTS HIS CONSTANT CAPITAL AND HIS PROFIT. V52 of the variable capital of the gold producer enters into the circulating money capital of the SHOPKEEPER, and therefore functions as CURRENCY between the sHOp[keeper], the manufacturer and the WORKMEN, 51/S2. on the other hand, becomes the expression of the constant capital and profit of the manufacturer. (Here we disregard the PROFIT of the SHOPKEEPER, which receives its MONETARY EXPRESSION in the ^[51]/s2-)

Let us assume that the capital the manufacturer has laid out is £700. Then the gold manufacturer's 10 workers replace £520 for him. The £100 of "circulation" his workers cost him are to be found in the circuit between him and the SHOpfkeeper]. Therefore he only has to turn into money a commodity value of £170 [XVII-1053] in order to realise the whole of his capital, CAPITAL and profit. Since his constant capital=600, he replaces, with this 520, 600 — 520, the whole of his constant capital except £80. If the profit=10%, he therefore has to replace a further £80 for constant capital and £70 for profit,=£150.

His constant capital amounts to variable capital+profit for the producer of constant capital. If wages again form V7, the variable capital amounts to 74^[2]/7. And profit=445⁽⁸⁾/7- If the whole of this is given out, £520 flows back to him for commodities, since he provides the means of subsistence. And he only has to sell an additional £150 worth of commodities.

This much is clear d'abord,* that even the part of the gold producer's capital that he lays out in wages does not remain in circulation as COIN, but adds at most the MONETARY EXPRESSION OF ONE WEEK'S WAGES to this circulation. He pays this part as wages. This is the way in which he throws this part into circulation. But it does not remain in circulation for the payment of the wage. It is converted instead into the money capital of the productive capitalist. If, as a result of an increase in the production of gold (we do not mean a rise in the productivity of the mines, etc., but a growth in the labour and capital invested in gold production), the manufacturer increased his own production, hence e.g. in the above case⁽⁹⁾ employed 10 more workers (an incorrect proportion: if the gold producer employs 10 more workers the manufacturer will employ at most one more) the process would be as follows: he had to pay £100 in wages to 100 workers, and now he has to pay 110 for 110 workers. But on our assumption the SHOPKEEPER receives £10 a week from the workers of the gold producer. This would be the calculation, assuming that the production of the manufacturer provided enough commodities for 10 workers in addition to his own.

1st week. SHOPKEEPER receives £10 from gold producer's workers. 100 from manufacturer's workers. Buys for £110 from the manufacturer. Buys with this from the manufacturer commodities to the value of £110. Manufacturer pays £100 of this to his workers, uses the £10 in some other way. Only £100 flows to the

épicier from the manufacturer's workers, but 10 flows from the gold producer's workers. The first £100 circulates constantly within this sphere. The last £10 is constantly thrown afresh into this circulation every week, but does not return to it.

2nd week. Assume that the manufacturer increases his production by 10 workers as a result of new demand from the gold producer. He therefore pays a wage of £110. The SHOPKEEPER now sells for £110 to the manufacturer's workers, for 10 to the gold producer's workers. He buys for £120 from the manufacturer. But the manufacturer only needs £110 for wages. £10 therefore flows back. Therefore if he increases his own variable capital as a result of an increase in gold production, he only increases—quoad circulation — the weekly expression of his addition to variable capital. The gold of the gold producer which flows to him afresh every week — BEYOND THIS POINT — does not flow back to this section of circulation.

Let us now take the part of the profit which the gold producer expends as INCOME. Apart from particular expenditures, he will sometimes buy commodities of greater value, sometimes of smaller. For example, some furniture, jewels, etc., horses, carriages, etc., may have a high price, so that much gold must be expended at one time in the sale. But we can take an average. For 10 weeks he throws into circulation perhaps £10, while for 2 weeks 100 each time. If that is right, he would have thrown into circulation in the 12 weeks gold to the value of £1,200. That makes £100 a week. Over the year he throws £1,200 in gold into circulation. But we can calculate the quantity, which remains constant in this circulation between him, his SHOPKEEPER and the MANUFACTURER and FARMER, as ABOUT £100. The remainder, £1,100, goes into the pockets of the manufacturer and FARMER (in part into the SHOPKEEPER'S pockets), in order to serve in another sector of circulation, or it lies there as latent capital. If production is increased in this way, the WEEKLY MONETARY EXPRESSION OF THE WAGES OF THE ADDITIONAL LABOURERS must be added to this. The greater part of this gold is however withdrawn both from the circulation between SHOPKEEPER, WORKMEN and MANUFACTURER, and from the circulation between SHOPKEEPER, MANUFACTURER AND GOLD-PRODUCING [XVII-1054] capitalist.

The 3rd part of his product, finally, is exchanged for constant capital, where it again pays for wages (variable capital) and constant capital. Speaking of the former, what we said previously applies. Most of it is withdrawn from the sphere of circulation, into which it is thrown, and does not return there. Let us assume it is £110, and £10 of this represents the profit of the producer of the constant capital. Let l/s of his outgoings of £100=labour,^[43]

hence £20. This £20 does not return to circulation (or only a small part of it for an increased outlay in labour). The £20 replaces lU of the constant capital in money, SINCE ^[8]%=20. 70 remains to be replaced profit included. But the circulation which occurs within the sphere of circulation of the exchange of the constant capital is sufficient to realise the £80. Of the 20 paid for the variable capital, a half — 10 — is sufficient for the realisation of the profit. Of the £100 the producer of the constant capital receives 90 is therefore superfluous for his circulation. (Or at least most of the 90, if he expands his business as a result of the demand from the gold producer.) What now happens to this £90? To the producer of the constant capital it represents not an equivalent for profit but an equivalent for capital. He receives back more of the equivalent for his capital in money, an excess quantity in money, which he needs in the natural form of his capital as RETURN.

Let the whole of the annual productive capital consist of 6 million, i.e. let this be the magnitude of the part of the capital which comes onto the market as a commodity and which therefore includes the annual depreciation of the constant capital. Assume that the variable part of this capital=1/6>=l million. Then all that

• • ' million needs to be circulated for this in money is ——— =19,230.

This 19,230 in fact circulates 52 times its own value in commodities. There therefore remain to be realised 5 million+19,230. Assume further that the profit (rent included)=30%, hence 1,800,000 on the 6 million. Assume that this profit is completely consumed. If the capitalists, like the workers, were to spend their income roughly immediately in equal weekly portions, this would require 34,615^[6]/i3 a week. However, on account of the larger occasional and periodic purchases let us say 100,000. Then we have ABOUT 119,230 for CURRENCY. For the CURRENCY which is expended as profit. This sum replaces not only the profit of the producers of the means of subsistence, but their variable capital; it replaces not only the profit of the producers of constant capital but at the same time their variable capital. Let us assume that the proportion of variable to constant capital is in general 1:5. This proportion is not displayed exactly in the division of the 6 million, because it is merely the depreciation of the fixed capital which enters into it, not the fixed capital itself. According to our previous calculation, 2,800,000 of this consists of means of subsistence (1 million for replacement of the total variable capital of the society, and 1,800,000 for the profit on the total capital) and this is circulated on our first calculation by £108,334. Since these commodities of 2,800,000 are the product of the capitalists who produce the means of subsistence, their total product=£2,800,000. This includes their capital advanced+a profit of 20%. Hence ^[1]/^[6] of this amount consists of their profit, and the remainder consists of capital advanced. Out of the £2,800,000, therefore, 466,666^[4]/^[6] is profit and 2,333,334 is capital

14* advanced. The profit these producers consume in their own reciprocal commodities, or rather this reciprocal consumption of their profit in their reciprocal commodities, may occur in three ways. They may buy simultaneously or on credit from each other. In both cases, there is at most a balance to be paid, now from one, now from another. Or one may buy today from the other in CASH, the other tomorrow in CASH from the former. In this CASE — the most unfavourable case for the reduction of the CASH present in CURRENCY — there takes place at all events a REFLUX movement of money and through this REFLUX movement a circulation of money. Here a definite sum of money circulates, and pays many times over in the same hands for different portions of commodity value. Let us say it passes through each pair of hands 10 times. Thus only Vio is needed of the amount that would otherwise be necessary to circulate the above profit. Assume that the profit of 466,333 referred to =74 of the 1,800,000, of which it forms an aliquot PART. (It is more than 74-) Then, if a circulation of £100,000 is required for £1,800,000, £25,000 is required for 7^[4] of that. But this 25,000 should be reduced to a tenth of that amount. There therefore remain 75,000+2,500, or £77,500, for the total circulation present in profit. Furthermore, if the proportion of variable to constant capital in [XVII-1055] this sphere of production =1:5, the capital of 2,333,334 will be divided into 7s variable capital and ^[4]/^[5] constant. The variable=466,666^[4]/5, say 466,667, and the constant= 1,866,667. £8,974 is required for the circulation of the variable capital, and this is already calculated in the circulation of the total variable capital. There remain £1,866,667, with which the producers of the means of subsistence pay for their constant capital, and with which the workers and capitalists employed in the manufacture of the constant capital replace their variable capital and realise their profit, in short expend wages and profit.

After deduction of the 2,333,334 which are employed in the production of the means of subsistence there remain 3,666,666 of the capital of 6 million. £533,333 of this is variable capital (since variable capital is 1 million altogether and 466,667 falls to the workers in sphere I, that of the production of the means of subsistence). There remains a constant capital of 3,133,333. This amount, with which the capitalists of sphere II realise their profits and their variable capital, is sufficient to allow class I to replace its constant capital. £2,500 for profit and £8,974 for wages is sufficient for class I (for the circulation within it). So there remains for circulation between class I and class II, etc.^[136] The calculation SOMEWHAT ELSE to TURN. //We had a capital of 6 million. 20% profit= 1,800,000. Hence the value of all the commodities in circulation=7,800,000. If 2,800,000 consist of means of subsistence, a constant capital of 5,000,000 remains over. (The proportion is greater here because only the part of the constant capital which enters as depreciation into the commodity enters into the value of the annually circulating commodity.)//

Hence I) £2,800,000. Sphere of the capital employed in the production of the means of subsistence.

Out of these commodities of the value of £2,800,000 20% represent profit — ABOUT 466,667 — and the remainder, capital= 2,333,333. 388,888 of this capital is variable capital. There remains a constant capital of 1,944,445.ls7

There circulates within this sphere for the variable capital

!—, of which the weekly MONETARY expression=ABOUT 7,477

(7,476 ^[36]/^[52] to be precise). And there circulates for the profit, which is on our assumption entirely consumed, say for all expenditure of income (which is not wages), Vio of the total amount, which would be ABOUT 46,667. But since the consumers of the profit are reciprocally dealers in the commodities they consume, a REFLUX takes place here. The butcher buys from the baker, and with the same money the baker buys from the butcher and the butcher again from the baker. Through the REFLUX movement, therefore, the same sum of money passes through the same hands. Say this turnover takes place 10 times on the average. Then only '/io of the previous amount is required to turn the profit into money. There therefore remains about £4,666, whereby we have not made any attempt to calculate how much of his own commodities the SHOPKEEPER, etc., gobbles up.

In this sphere, therefore, what is required for circulation within it is £7,477 for wages and £4,666 for profit. Taken together=£12,143 in money.

The remaining £1,944,445 worth of commodities of class I are sold to class II, the manufacturers of constant capital.

So now to class II. Its capital, with profit,=a commodity value of £50,000,000. Of this, profit=somewhat more than 833,333. Out of the 5 million, the 1,944,445 replace the part of the product which consists of wages and profit; wages thus=l,lll,112. In order to

pay these wages, ' — is needed, =£21,367. And to pay the

profit say Vio of the amount is needed, hence 83,333. Thus the total amount of money that has to circulate [XVII-1056] = 83,333+£21,367=£104,700. With this £104,700 the capitalists and workers of class II buy their means of subsistence from class I, and class I buys the replacement of its constant capital in natura from class II. A REFLUX takes place. Class II buys e.g. means of subsistence from class I for £100; class I uses the same £100 to buy constant capital from class II. It is like a wagon which travels backwards and forwards, first taking A's load to B and then on the return journey taking B's freight to A. With this money, therefore, a commodity value not of £1,944,445 is realised, but one of 2x£l,944,445=£3,888,890. The same amount of money realises the constant capital of I, and the variable capital and profit of class II. There therefore remains of the 5 million of class II:

III) £5 million-£l,944,445=£3,055,555. Let us assume that only Vio of this is replaced in natura, which as regards agriculture is much too little. This part does not enter into circulation at all, and does not need to be turned into gold. ABOUT 305,555 should be deducted from the amount to be realised. There remain: £2,750,000 worth of commodities. This 2nd circulation in class II is a mere reciprocal TRANSFER of capital, an exchange mediated through money. The iron producer buys coal from the coal producer, the latter in turn buys machines from the machine-builder, he in turn buys iron from the iron producer, etc. The money here will for the most part circulate as means of payment and only balances will be paid in money. But even if it circulates

. ., ,, . . , 2,750,000 itself, at most /20 is required. =137,500.

What is required altogether, therefore, to realise the capital of 6 million as well as a profit of 1,800,000 (wrong again, should be 1,200,000, for this is V5 of 6 million or 20%, BUT NEVER MIND), to realise commodities of the value of 6 million plus profit of 1,200,000, or £7,200,000 worth, is the following:

£12,143 circulating in class I; £104,700 between class I and class II; £137,500 in class II. Makes together: £254,343 in money.

Sum total: 254,343.

We have assumed in this connection that out of the capital of 6 million, variable capital=388,888+1,111,112= 1,500,000, hence the variable capital =^[1]/^[4] of the capital advanced. This is somewhat more than ^[1]/^[6] of the capital advanced in wages. The adjustment of balances and credit, etc., has not been brought into the calculation. Hence if the gold producer only provided enough gold to realise VÔ of the capital laid out in wages, or, what is the same thing, if enough of the commodity was exported to return gold from the mining countries, etc., this would be sufficient to provide the whole CURRENCY. And once this had been imported, it would be enough (deducting wear and tear on the money) as long as the mode of production remained the same.

What is in general needed to enable the capitalist to withdraw more money from circulation than he throws into it is nothing more than this: enough money must circulate in order to convert into money the commodity values which are circulating. It is not yet necessary for this purpose that ^[1]U of the capital should be available as money; this is the annual amount of money which has to be paid out in wages alone. The amount which is needed, however, is provided by the part of capital which is exchanged directly for gold, i.e. the commodities which are sold to the producers of gold and silver, and bring back BULLION in RETURN. But a part of the capital is accumulated as hoard, under its various aspects. Thus one part always lies idle. Assume that the capital which circulates annually in commodities=£110. And Vio is required to convert it into gold, hence £10. If then £10 worth of commodities are exported and exchanged for gold, this is divided up among the whole class which produces the £110 worth of commodities.

[XVII-1057] Just as the producers of the means of consumption replace the variable capital and the part of the production of all classes expended as income, so these gold importing elements (THE SAME AS GOLD PRODUCING PART) of the COMMUNITY replace the money needed for the circulation of the whole of the capital.

After what we have developed so far, the following two points should first be made:

Firstly: The turnovers of the same amount of money effected by the REFLUX are always accompanied by turnovers of the same monetary individuals, while the number of different turnovers performed by the same monetary individuals by no means includes the REFLUX. E.g. £100 from the SHOPKEEPER to the manufacturer, from the manufacturer to the worker, from the worker back to the SHOPKEEPER. Here the same money makes 3 turnovers. At any rate 2, from the manufacturer to the workers, from the workers to the SHOPKEEPER. In addition to this, the REFLUX includes the repetition of this cycle, for the same amount of money, whether this consists of the same identical pieces of money or not.

A piece of money, on the other hand, may turn over 10 times in one day without expressing a REFLUX. I buy a commodity for 5s., the SHOPKEEPER gives the 5s. to another buyer in the change for £1, who in turn pays a worker with it, the worker makes a purchase with it, etc. The mere rapidity of turnover of the same piece of money — mostly in inverse proportion to its magnitude — is different from the rapidity with which the cycle passes through its phases and is repeated.

Secondly. Where money as coin appears in C—M—C in the first conception, i.e. the conversion of the commodity into means of subsistence for its producer or owner, it only functions, first as paid out wages, W—M—C; second where profit, interest, rent, etc. (also the wages of the unproductive) are spent as income. For here the M that they expend represents the exchange value form of a sold commodity, to be subsequently resolved into means of subsistence. C—M—C. The fact that the money expended in this way simultaneously replaces a capital (capital+profit) does not alter the situation at all. On the other hand, all other functions in which money appears in circulation are always forms in which it constitutes a phase of capitalist reproduction, which either does not proceed as far as RETAIL at all (as the EXCHANGE OF CONSTANT CAPITAL for CONSTANT CAPITAL), or is, at least, a PREVIOUS PROCESS. As long as it circulates in this way it is money capital. For the RETAILER, the income taken from the other is admittedly also money capital. But this is not reciprocal. Here the money does not derive from the metamorphosis of capital as such, but from incomes which have arisen from it and become separated off.

We have examined the cycle performed by the same amount of money between SHOPKEEPER, manufacturer and worker; which is IN FACT — if we leave aside the mediating SHOPKEEPER — the circulation of the same amount of money between manufacturer and worker. The manufacturer buys with the same money labour^[43] which is always new, and the worker buys with the same money commodities that are always new. The manufacturer (if we leave aside the sHOpfkeeper]) originally throws this money into circulation. He must therefore have originally received it from circulation; but from the circulation with the gold producer. Or this process took place earlier and he possesses this money as a part of his capital accumulated in money form, just as he possesses another part in machinery. If the weekly value of his commodity=£600 (including £100 of profit, or 20% [of the capital advanced]) and the wage to be paid every week=£100, he must sell '/6 of his commodity to the gold producer. He then has once and for all the £100 he needs for the weekly payment of the wage. Suppose that the whole of his capital is 1,500, of which 1,000 is fixed capital, 398 a week matière

brute et instrumentale,' 100 a week wages. Suppose the fixed capital is used up over a cycle of 10 years. Then he needs £100 a year for depreciation. And £2 a week (we shall reckon 50 weeks of labour a year). He therefore has a depreciation of £2 a week. 398

matière brute and instrumentale and 100 wages=an advance of £500, on which there is 20[%] profit=100. He perhaps has to replace the depreciation of £100 only once in the year (probably less often). The first week he takes in £600, of which 100 are not exchanged for commodities but for money. He has therefore converted the whole of his profit into money. Or he brought £100 more, apart from the WORKING CAPITAL. (This is IN FACT advanced by the SHOPKEEPER ) Or he can consume none of his profit in the first week. For he possesses '/6 of the commodity in gold, his workers consume ^[1]/^[6], and ^[4]/e replace his constant capital. In the next week he does not need to buy gold from the gold producer with any part of his commodity in order to be able to pay the wages. But in the 1ST WEEK he needs a part of his capital twice over. Firstly in the form of the commodity, the '/Ô that the workers will consume, secondly in the form of gold, so as to enable the workers [XVII-1058] to buy their VÔ from him. During this week, therefore, he must have currency in reserve for his own consumption, money which does not flow to him from the business but which he has inherited, etc., or he must live by borrowing, which is likely if he starts his production with £500.

In the 2nd week he does not need to possess '/6 of his commodity in dual form as commodity and as money; for the £100 of wages flow back to him from the worker in payment for the commodity.

Hence in order to maintain this circulation between himself and the worker in existence he only needs to buy gold from the gold producer with lU of the product of a week.

There is always the question of who first throws into circulation the part of the money present therein. The answer is: it is always the capitalist, whether he be producer or MERCHANT; never the worker or the recipient of interest or rent. He who loans out at interest throws capital into circulation, i.e. TRANSFERS IT TO THE PRODUCTIVE CAPITALIST; but it is the latter who first throws it really into circulation.

The recipient of rent receives his money in part from the FARMING

^[3] Raw material and instrumental material.— Ed.

CAPITALIST, in part from the INDUSTRIAL CAPITALIST (who WORKS MINES, etc., and for buildings) (and the rent of houses); further, he receives it from the worker. (Part of the rent of land, and the rent of his house.) In so far as rent is provided in currency by the workers, this part of its MONETARY EXPRESSION (just as with the SHOPKEEPER who sells means of subsistence to the workers) is drawn from the circulation between capitalist and workers, hence contained in the CURRENCY which circulates for wages. Admittedly this part does not flow back as quickly (if the manufacturer is not himself the LANDLORD or the FARMER, which is very often the CASE) as the part of the wages given out for the means of subsistence. Yet this latter CASE is a peculiar one. The same money which the MANUFACTURER or FARMER here gives out as a wage realises for him the rent he takes as LANDLORD, or the rental he takes as a letter of houses, leaving aside the fact that it replaces for him the depreciation of his commodities. The worker receives the value, namely the house, which he rents by the week. But a part of this value can be reduced to house- and ground-rent. And what the manufacturer pays as manufacturer simultaneously turns into money for him his revenue as LANDLORD and house-letting capitalist. He himself has advanced the CURRENCY for this in the purchase of labour.^[43] But the worker pays back to him ground- and house-rent.

He makes 2 transactions with the worker. He buys his labour with money, and secondly he sells him housing and receives back for it a part of this money. But the value he sells here to the worker is not entirely paid by him; it contains unpaid labour. By paying this to him, the worker pays him ground- and house-rent. There is therefore no contradiction in the fact that in drawing back the money he himself has thrown into circulation he draws back more money than he threw into circulation, i.e. more money than the paid value he threw in. For all LANDLORDS and house-letters, in so far as their ground- and house-rent is paid by the workers (just as with the taxes), the same money circulates the wage and realises a part of the rent and the interest on capital, hence monetises a part of the surplus value. All that is needed to monetise the whole of this part of surplus value, which can be reduced to the rent and interest on houses" paid by the worker, is the CURRENCY necessary for the payment of wages. The same is true of the profit of the SHOPKEEPER who trades with the workers.

The ground-rent of buildings, etc., forms part of the costs of fixed capital. Therefore a part of the CURRENCY which the productive capitalists advance for the fixed capital simultaneously monetises a part of the SURPLUS VALUE, namely the rent of land.

Rent on private houses, etc., forms part of the expenditure through which the capitalist SPENDS HIS PROFITS; the actual rent paid by the FARMER, MINING CAPITALIST, etc., forms a part of the surplus value of their products.

With the money he receives for rent the LANDLORD buys commodities from the manufacturer and FARMER, or he buys them from the SHOPKEEPER, who pays the manufacturer and FARMER with it. Therefore once this part of the CURRENCY exists, it flows back continuously to the productive capitalists, just as the money for wages does, although they must again withdraw it from circulation by means of commodities. But it is enough to enable them to pay the rent in the form of money over and over again, in order to receive the money back for commodities. But more flows back to them, namely the part of the rent which the workers pay to the LANDLORD as rent of their houses or the part the MANUFACTURER has paid as rent for buildings. Therefore the CURRENCY which monetises the rent is sufficient not only to pay it over and over again, but to pay the part of the wage which is resolved into rent, and the part of the costs of fixed capital which is resolved into rent. But it is only the part of the rent which does not always flow [from] wages or fixed capital that necessitates its own circulation of money, A

SPECIFIC SUM OF CURRENCY OF ITS OWN.

[XVII-1059] What is true of rent (to the LANDLORD) and interest (to the money-lender) is true of profit itself (* whether interest be paid to another person or not, whether or not, consequently, it be included in the revenue of the producing capitalist), as far as the productive capitalist spends it, and spend it he must, in some part, since h e lives upon it.* The money given out in THE SPENDING OF PROFIT, money thrown into circulation, * contributes as well as the money spent in the realisation of rent and interest to provide the monetary means for paying the capitalist.

The monetary expression of rent, interest, profit, as far as they buy commodities for individual consumption,* must flow back to the PRODUCTIVE CAPITALIST as means of purchase or payment just as m u c h as does the MONETARY EXPRESSION OF WAGES. T h e profit, RENT, INTEREST HAVE BEEN SPENT DURING LAST YEAR; the money given out for them is n o longer in the hands of the LANDLORD, rentier, PRODUCER, but in those of the épicier, who pays the WHOLESALE DEALER with it, who in turn pays the PRODUCTIVE CAPITALIST. In the same measure as this money flows back to the SHOPKEEPER, HIS STORE HAS BECOME EMPTIED AND WANTS REFILLING. T h e money therefore performs in reverse the same course as it performed d'abord in a forward direction. Since it thereby realises the commodity values of the PRODUCTIVE CAPITALIST, the latter is able to pay RENT and interest with the same money and TO EXPEND FOR HIS OWN USE another part of the surplus value.

For the productive capitalist to withdraw from circulation more money than he threw into it nothing more is necessary than that enough money should circulate in order to pay the commodity values. If BARTER were to occur, one would find nothing mysterious in the fact that the capitalist withdraws more commodity value from circulation at the end of the cycle than he threw in in the form of money. For at the end of the cycle h e has a greater commodity value to exchange. T h e origin of the whole PERPLEXED QUESTION is therefore that one does not see where the CURRENCY is to come from, the REAL MONETARY EXPRESSION OF THAT ENHANCED VALUE. WHAT PUZZLES is that more is withdrawn from circulation by the capitalist than is thrown in, which is the more PUZZLING in that he himself — as a class — IN FACT possesses the whole of the monetary wealth (possesses it because he directly owns the whole of the surplus value, whatever h e may have to give u p of this). But il faut distinguer." As capitalist he throws his capital alone into circulation (i.e. THE MONETARY EXPRESSION OF IT), but as a fellow who has realised profit (or if he has not yet realised any he must possess OTHER MEANS), he throws PART OF THE MONETARY EXPRESSION OF HIS SURPLUS VALUE into circulation, just as THE MONETARY EXPRESSION OF THE OTHER PART OF THAT SURPLUS VALUE — OF RENT AND INTEREST — is CONTINUALLY THROWN INTO CIRCULATION by the LANDLORD and the rentier and lastly the MONETARY EXPRESSION OF WAGES is thrown in BY THE WORKMEN. If a capitalist has thrown into circulation £1,000, i.e. employed it reproductively, and at the same time consumed £ 2 0 0 (sub specie of profit), and if his profit=20%, he has thrown into circulation exactly as much money as is necessary in order to give monetary expression to his commodity,= 1,200, his capital+his surplus value. H e has not made a gift to circulation, either with the £1,000 or with the £200; he has withdrawn commodity values in return for this money, for the 200 he has withdrawn as much as he threw in, for the 1,000 he has withdrawn 20% more. Nevertheless, he has provided the MONETARY EXPRESSION with which the commodity value of £1,200 can be paid to him, and, if we view the capitalist as one person with the PARTNERS IN THE SURPLUS VALUE ABSORBED BY HIM 11 The Times for November 19, 1862 [p. 9] calls the Lancashire manufacturers

One must make distinctions.— Ed.

" WEALTH ABSORBERS " and their workers "WEALTH-WINNERS"*//, he has in fact himself provided the money with which he is paid; but he has provided it IN EXCHANGE FOR COMMODITIES and (AS FAR AS IT IS GOLD, etc.) himself ORIGINALLY RECEIVED it IN EXCHANGE FOR THE LABOUR OF HIS MEN.

The first class of productive capitalists consists of those who produce the means of subsistence in their final form, in the form in which they enter into individual consumption. The value of their annual product consists of two parts: [The first part is) constant capital, which contains the depreciation of the fixed capital, this depreciation entering annually into the product. The other part, which remains unconsumed, has nothing to do with the value of the product (although, in the AVERAGE RATE OF PROFIT, profit and interest on this part of the capital advanced are reckoned just as much as on any other part. But even in this case the fixed capital only enters here as an ANNUITY, depreciation + profit on top, as with the second class of capitalist. We leave out the profit here as we are separating the surplus value). It consists secondly of raw material and matière instrumentale, which in natura in part, and in value every time, entirely enter into the product, because they are entirely consumed in the production process. Secondly: variable capital In the hands of the capitalist this exists as money; once it is realised it exists as labour. For the worker who provides the commodity in which this part of the capital is realised, it exists as WAGES. Finally the 3rd part of the product. Surplus value, which can be resolved into profit (interest) and in part into rent.

The whole of the annual product of this class, in so far as it enters into annual consumption, enters into individual consumption. Here we are leaving accumulation entirely to one side, for the moment, and only examining simple reproduction. A part of this product [XVII-1060] is bought by the workers of this class I, hence paid back with the money which is given them in WAGES by the capitalists. Or the money in which the variable capital of this class is paid out buys back an appropriate part of the value of the product. This money thereby flows back to the productive capitalist. This is not a replacement of the part of the capital

* In a LEADER occasioned by the Manchester DISTRESS,138 where the Manchester] men went begging to the whole of England FOR "THEIR POOR WORKMEN", but nervously buttoned up their own purses, and, as Mr. Cobden says, QUITE JUST so. Of course. If alms are given by those who do not directly participate in the exploitation of these particular workers, that is philanthropic. But for the capitalists themselves to be compelled to pay tribute instead of WAGES [XVII-1060] to their own workers once they cease to be able to exploit them, would be "AGAINST THE SOUND PRINCIPLES OF POLITICAL ECONOMY" and "WOULD", AS The Morning Star INSINUATED, "SMACK OF SOCIALIST PERVERSION".139 consumed by the workers; it is however the REFLUX to the productive capitalist of the CURRENCY in which he has paid the workers and with which he buys them afresh. The more or less small part of the surplus value which is consumed in natura in this class does not need any monetary expression, since it is appropriated by the producer in its natural form and does not enter into circulation. As TO THE OTHER PART, the rent, interest, profit, which were paid the previous year (or, if the business is in progress, au fur et à mesure of the reproduction (AS TO THE PRODUCTIVE CAPITALIST)) (or, if the business is begun afresh, from the currency reserve of the productive capitalist), are used to buy back the appropriate part of the value of the total product of class I. In this way the CURRENCY in which the productive capitalist pays rent and interest flows back to him. Not as a replacement for what he has paid; but for the commodities he is selling afresh for the money he himself has provided. It is not a replacement for the interest, rent, etc., paid the previous year, but a REFLUX to productive capital of the CURRENCY in which he has paid the LANDLORD and the rentier and in which he will pay them afresh. He will give them back the same tokens as a claim on the aliquot part owing to them of the commodity SURPLUS, which represents their share in the surplus value of these commodities. Finally, if e.g. capitalist A, a member of this class, which can be divided into an immense number of particular spheres — as numerous as the means of subsistence themselves — buys means of subsistence from B, C, D, E, he thereby enables them to realise in money the aliquot PART, consumed by him, of the product A — the part consumed by the productive capitalist himself. They in turn enable him to realise his own product in money, until everyone has drawn from someone else's pocket the MONETARY EXPRESSION of the consumed part of his product. Thus the CURRENCY with which each of them has bought, and will buy again, the commodity of the other, flows back to each one. The part of the value of product I which consists of variable capital and surplus value (profit, interest, RENT) is thus entirely realised in money.

But as far the other part of capital I is concerned, constant capital, this must be replaced in natura, reconverted from the form of the FINAL commodity into its elements of production, raw material, machinery, matière instrumentale, etc. (We consider the part of these products which enters again into their own reproduction as a condition of production, such as corn, coal, etc., as belonging to 2 from this point of view. By the way, corn is not directly a means of subsistence, at most flour is. Fruit, eggs, etc., poultry, etc., are though.) Or this part of capital I must be bought by class II. We therefore come now to the circulation of money between these two classes.

Second class. Its product consists similarly of constant capital (raw material, matière instrumentale and depreciation of the fixed capital), variable capital and surplus value, which is in turn divided in the form of profit (interest) and rent. But the product of this class does not enter into individual consumption (one might deduct dwellings, which enter into both individual and productive consumption. But this division is necessary for clarity) (or in so far as it does enter, it is class I, the section of class I whose product is simultaneously an element of variable and of constant capital). Neither the money which represents the variable capital of this class, nor the surplus value which is realised in its product, can BE

SPENT IN THE PRODUCE OF THIS CLASS.

In order now to determine the circulation between these 2 classes, we start with the MOST EVIDENT POINT.

Class II pays its variable capital out in money, as does class I, but this money does not flow back directly to the productive capitalist, as was the case under I). The worker buys his means of subsistence from class I. The WHOLE MONETARY EXPRESSION OF THE VARIABLE CAPITAL OF CLASS II therefore flows to the productive capitalists of class I. With it they buy from the productive capitalists of II a product value — i.e. constant capital, raw material, etc.—which is equal to the value of the variable capital of II. By this detour the CURRENCY originally given out by the capitalists of II and needed by them for the payment of wages flows back to them. At the same time they have by this detour sold the part of their product which equals the value of the variable capital to class I, and the latter class has TO THAT AMOUNT RECONVERTED ITS PRODUCE INTO THE ELEMENTARY CONSTITUENTS OF THAT PRODUCE. //This mediation must occur with class I as well, in the case of those who produce means of subsistence which do not enter into the workers' consumption. Their workers buy from the other capitalists of I and thus provide them with the money with which they in part give monetary expression to interest, rent, profit and use this to buy (as SPENDING of income) from the capitalists of I who do not produce means of subsistence for the workers. They thereby replace for the latter the CURRENCY needed for their variable capital. At the same time this CURRENCY serves for them as the monetary expression of a part of the profit, etc.// //Once banks have developed, the money [XVII-1061] for wages IN FACT returns every week to the productive capitalist, and it is a matter of indifference whether it would otherwise only have returned to him by detour.// In any case we see here how the same sum of money circulates between a productive capitalist and his workers, is then paid out by these workers to another class of productive capitalists, and is laid out by these as capital in the purchase of the commodities of the first productive capitalist and thus returns to him. The purchase of constant capital on the part of class I occurs — since it is a conversion of capital into its elements, not a conversion of income into the means of subsistence — at longer intervals of time and in larger amounts, corresponding to the scale on which production takes place and to the conditions of reproduction of capital in each of the particular spheres of I. The money paid out in wages therefore does not flow back every week to class II, but at greater intervals and in greater quantities, so that one cannot tell at all by looking at this money where it comes from. In agriculture too, by the way, and in certain urban trades, even if wages are paid by the week, a great deal of labour is employed at certain times, hence a lot of wages is paid, while at other periods in the year little is employed and little paid. The reflux therefore does not take place as smoothly as CLOCKWORK. But all that is needed here is to grasp the essential movement. Its further course should first be developed under the credit system^[6] ; but to understand this, PREVIOUS KNOWLEDGE OF THIS ESSENTIAL MOVEMENT is necessary. The exchange of the part of the product of class II which represents its surplus value for the constant capital of class I, which exists in means of subsistence, is tangibly demonstrated on the world market, e.g. in the exchange of English CALICOES for cotton, or the exchange of English machinery and yarn for foreign wheat, etc.

Finally, as far as concerns the income which can be utilised in this sphere in the form of profit (interest, rent), its monetised existence of the previous year, etc., is consumed in the last remaining part of the product of class I. There thus flows to class I the money with which it buys back from class II the part of its constant capital which is still missing. The money for its surplus value thus flows back to this class.

In this way the productive capitalists of I and II, apart from the fact that their fund for income is established in the form of money, are [able] to pay interest and rent in money to the lenders of capital and the LANDLORDS, whereupon the whole process begins again. It must be noted here, once more, that a reproduction of capital for class I is a realisation of surplus value in money for class II; and, further, that the way in which the money flows from II to I, precisely because this is in the form of daily expenditure or occasionally (irregularly) more important expenditures — since it is the expenditure of income and therefore corresponds to the needs and whims of individual consumption — must differ from the way and form in which the same sum of money flows back from I to II, since this is a reconversion of capital existing as money into productive capital; and the quantities in which purchases are made here, ditto the intervals [of payment], must correspond to the conditions of production of both capitals.

It is clear that if the capitalist SPENDS £200 IN REVENUE and throws £1,000 into circulation as capital, but withdraws £1,200, he has withdrawn from circulation more money than he threw into it, for as capitalist he has only thrown £1,000 into circulation. He has spent the £200 on means of subsistence of equal value, which have passed into his consumption fund. In short, as mere money-owner, and spender, not as capitalist.

Class I has now replaced the whole of its constant capital in natura, its variable capital in money, and similarly its income fund in money (profit (interest, rent)) and it has nothing further to buy from class II, nothing further to pay to it (since we are for the moment not speaking of accumulation here). That part of agriculture, as for example the cultivation of corn, etc., the breeding of cattle, etc., belongs at the same time to class II, i.e. is at the same time a producer of constant capital, does not alter this situation. To the extent that agriculture does belong to class II, what we shall now develop further in relation to class II applies to it as well.

We showed previously — presupposing reproduction on the same scale — that the new labour added during the year, or the value produced during the year,=the variable capital reproduced + the surplus value, cannot buy any more or pay for any more than what has just been discussed, i.e. the annual product of the articles which enter into individual consumption (class I) and the part of the product of the producers df constant capital which represents the variable capital and the incomes of class II.

Adam Smith would have been entirely correct if he had said that this part of the annual product resolves itself into mere income, which is paid by wages, profit (interest), rent. He would nevertheless have had to add here too that this total income replaces the total constant capital of class I. But Smith is wrong in asserting this of the totality of the annual product, and in having the constant capital of class II replaced by its income and that of class I. It is therefore also incorrect when Smith says the following.

15-613 Beforehand [XVII-1062] one further remark: under "DEALER" Smith includes all capitalists who participate in the production process and the circulation process,^[140] u n d e r "CONSUMERS" he includes the workers and the capitalists, LANDLORDS, etc., and their

RETAINERS, AS FAR AS THEY SPEND REVENUE. H e says:

* "The circulation of every country may be considered as divided into two different branches — the circulation of the dealers with one another, and the circulation between the dealers and consumers. Though the same pieces of money, whether paper or metal, may be employed sometimes in the one circulation and sometimes in the other, yet as both are constantly going on at the same time, each requires a certain kind of money of one kind or another to carry it on. The value of the goods circulated between the different dealers with one another never can exceed the value of those circulated between the dealers and the consumers, whatever is bought by the dealers being ultimately destined to be sold to the consumers" (Wealth of Nations, McCulloch's edition* [Vol. II, pp. 79-80]).

This corresponds to Smith's incorrect analysis of the value of the commodity into WAGES, PROFIT and RENT. O n this see our earlier remarks. ^[3] A n d this incorrect view itself rests in turn on the fact that the accumulated capital — including the constant capital — in the capitalist mode of production originally flows from surplus labour, i.e. profit is converted into capital, from which it nevertheless by n o means follows that the profit once converted into capital consists of "profit".

T h e VALUE of the GOODS CIRCULATED BETWEEN THE DIFFERENT DEALERS is always greater than the VALUE of the GOODS CIRCULATED BETWEEN THE DEALERS AND CONSUMERS, because the first circulation includes an EXCHANGE of the natural components of constant capital, which replaces a part of the value of the capital which the CONSUMER never pays. T h e simultaneous parallel course of the movements — and every successive moment of metamorphosis and reproduction appears at the same time as occurring simultaneously and in parallel — prevented Smith from seeing the movement itself. H e would otherwise have found in the monetary circulation of capital a refutation rather than a confirmation of his proposition, which is derived from an incorrect analysis of the natural price.^[141] T h e phrase "DEALER" and "CONSUMER" is also disturbing, since the DEALERS — the productive capitalists — appear in that EXCHANGE simultaneously as the final "CONSUMERS", even if industrial CONSUMERS, not individual.

Tooke remarks as follows on the above passage from Adam Smith, which he makes into one of the basic foundations of his theory of money:

a See present edition, Vol. 30, pp. 398-408 and Vol. 31, p. 106.— Ed.

* "All the transactions between dealers and dealers, by which are to be understood all sales from the producer or importer, through all the stages of intermediate processes of manufacture or otherwise to the retail dealer or the exporting merchant, are resolvable into movements or transfers of capital. Now transfers of capital do not necessarily suppose, nor do actually as a matter of fact entail, in the great majority of transactions, a passing of money, that is, bank notes or coin — I mean bodily, and not by fiction — at the time of the transfer. All the movements of capital may be, and the great majority are, effected by the operations of banking and credit without the intervention of actual payment in coin or bank notes, that is, actual, visible, and tangible bank notes, not suppositions bank notes, issued with one hand and received back by the other, or, more properly speaking, entered on one side of the ledger with a counter-entry on the other. And there is the further important consideration, that the total amount of the transactions between dealers and dealers must, in the last resort, be determined and limited by the amount of those between dealers and consumers" (Th. Tooke, An Inquiry into the Currency Principle* London, 1844, [pp.] 35-36).

In the concluding sentence, Tooke repeats Adam Smith's proposition, with the crudeness peculiar to him as a practitioner, in the process depriving it of its theoretical teeth. That the "TOTAL AMOUNT" of the "TRANSACTIONS BETWEEN DEALERS AND DEALERS" must be determined "IN THE LAST RESORT" by the AMOUNT of the TRANSACTIONS BETWEEN DEALERS and CONSUMERS is not subject to any doubt and is a triviality. T h e capital of the whole class that is employed in production at all depends in the "LAST RESORT" upon, and is therefore determined by, the amount of the product which the producer can sell, for it is only from the product he sells that he derives his profit. But Adam Smith, whose proposition Tooke thinks he is repeating, was not talking about this. Smith says: * "the value of the goods circulated between dealers and dealers" = "the value of those circulated between dealers and consumers".* Tooke is exclusively concerned in the above-mentioned pamphlet with the struggle against the CURRENCY PRINCIPLE.142 T h e [XVII-1063] phrase that the CIRCULATION BETWEEN DEALERS and DEALERS can be resolved into "MOVEMENTS OR TRANSFERS OF CAPITAL" //he is only interested here, vis-à-vis his-opponents, in the question of how the reciprocal obligations arising out of the circulation of capitals in the reproduction process are settled, a question which is theoretically entirely subordinate// shows the crudeness of the whole conception. "MOVEMENTS OF CAPITAL." What was required was to determine and analyse precisely these MOVEMENTS. What underlies this is that he means the MOVEMENTS of capital in the sphere of circulation, for which reason he always understands under capital here money or commodity capital. "TRANSFERS OF CAPITAL" are very different from MOVEMENTS OF CAPITAL, although they are MOVEMENTS. They only apply in fact to mercantil-

15* ist capital, and they mean in fact nothing more than that the different phases, in which capital passes from the hands of one buyer to the next, are IN POINT OF FACT only the movement of its own circulation. The "MOVEMENTS" of capital, however, are qualitatively distinct phases of the reproduction process. "TRANSFER" OF CAPITAL also takes place when variable capital passes into the hands of the workers as wages, thus being converted into "CURRENCY". The long and short of the story is simply that in the movements of capital as such — before its definitive exchange as commodity with the consumers — the money only circulates as means of payment, hence functions in part exclusively as money of account, in part exclusively as balance, IF THERE BE ANY. Tooke concludes from this that the distinction between these two functions of money is a distinction between "CAPITAL" and "CURRENCY". In general he firstly confuses money and commodity with money and commodity as modes of existence of capital, with money and commodity capital, and secondly regards the particular money form in which the capital is circulated as a distinction between "capital" and "coin". The following point by Tooke is a good one:

* "The business of bankers, setting aside the issue of promissory notes on demand, may be divided into two branches, corresponding with the distinction pointed out by Dr. Smith of the transactions between dealers and dealers, and between dealers and consumers. One branch of the banker's business is to collect capital from those who have not immediate employment for it, and to distribute or transfer it to those who have. The other branch is to receive deposits of the incomes of their customers, and to pay out the amount, as it is wanted for expenditure, by the latter in the objects of their consumption. The former may be considered as the business behind the counter, and the latter before or over the counter: the former being a circulation of capital, the latter of currency" * [I.e., p. 36].

(I.e. the first circulation OF money capital. This is not actual circulation, but TRANSFER. Real circulation always includes an objective moment of the reproduction process of capital. TRANSFER, as with MERCANTILE CAPITAL, puts one person in place of another; but the capital continues to be in the same phase as before. There is each time a transfer of money — or titles to property — from one to the other (or also a transfer of commodity), without the money's having undergone any metamorphosis. This is even truer of the

TRANSFER o f MONETARY CAPITAL BY LOANS, e t C , BY THE MEDIUM OF THE BANKER. The same is true of the TRANSFER by which the capitalist distributes the monetary expression of his surplus value in part to the rentier, in part to the LANDLORD. In the latter case it is distribution of income; in the former, distribution of capital. Only the TRANSFER of MERCANTILE CAPITAL f r o m ONE SORT OF MERCHANT TO THE OTHER b r i n g s commodity capital itself closer to its conversion into money.)

* "The distinction or separation in reasoning of that branch of banking which relates to the concentration of capital on the one hand and the distribution of it on the other, from that branch which is employed in administering the circulation* for * local purposes of the district, is so important, etc."* (I.e., [pp.] 36-37). In class II as in class I the total product can be divided into 3 parts.

//Here it may be remarked incidentally: capital, as opposed to profit, is the name of the amount of value advanced. But it is not an amount of value. It is capital and therefore implies in this form a relation to profit. As long as the surplus value is not realised, hence the movement of capital as capital has not yet come to an end, the total product (surplus value included) is called capital; it is pregnant with surplus value, but the latter has not yet [XVII-1064] attained an independent position in relation to capital. It is still self-realising capital, HENCE capital absolutely.//

1) 2) 3) Constant capital—Variable capital. Surplus value. (Profit, rent, interest.)

We have seen how 2) and 3) have been realised and have circulated in the exchange with 1). We have now to consider the first part, constant capital.

It consists a) of the unconsumed part of the fixed capital, which does not enter into the value of the product, and therefore does not come into consideration.

b) Secondly, however, it is necessary to replace the part of the value which represents the depreciation of the fixed capital and

matière instrumentale and matière brute, s'il y en a."

Just as in class I the part of the product which consists of profit — or which is expended as income — is realised through the consumption of the product in natura on the part of production or by exchange within the different spheres of production of this same class, so in class II the same takes place for the constant capital, whether through replacement in natura in its own sphere of production, or through exchange with products between the different spheres of this same class. The products here re-enter as condition of production into their own production (as corn enters as seed, breeding cattle, etc.) or the product of sphere A e.g. enters into the product of sphere B as condition of production,

Instrumental material and raw material, if any.— Ed.

and the product of sphere B enters into the product of sphere A, as iron into machine production or machines into iron production. The product of sphere A may enter into sphere B, that of B into C, and that of C into A. This intertwining — the GENERAL BALANCE of these spheres, without any need for an exact balance between any two spheres — makes no difference to the situation. It lies in the nature of the situation that here money will develop as means of payment and therefore the movement without money will be compensated for by SETOFFS. Yet since the period in which product A enters B may differ from the period in which B enters A, etc., here too circulation of money can take place, and will do so plus ou moins,'⁽¹⁰⁾ particularly before capitalist production is completely developed. It is in any case important to consider it so here.

Since there in fact takes place here EXCHANGE of constant capital for constant capital, and the products merely change their place in the production process reciprocally, the money constantly flows back to the person who expends it. E.g. when the machine manufacturer buys iron in order to replace his machine-building machine, there enters into this: 1) the depreciation of the machine-building machine itself; he advances this himself; 2) iron, etc. He buys this from the iron manufacturer; the iron manufacturer buys machines from him in order to replace the depreciation of his own machinery and thus the money flows back to the machine-builder.

Even where the product enters directly into its own reproduction, there may take place, in consequence of the division of labour, a circulation of money; the reproduction of capital may be accompanied by a circulation of money. A FARMER may sell all his corn and buy the seed from another farmer. But then the latter must grow seed both for himself and for the other. To the one farmer a part of the value of the corn represents the purchase price for the replacement of the seed, to the other it represents his variable capital-l-surplus value. In this case the money does not flow back between the two of them directly. Yet the seed man must expend the money in order to buy means of subsistence, corn among other things. He pays his workers with the money and expends it as his own income. The money of the farmer's workers flows back to him in part. They belong to the public who enable him to sell his corn as a whole. And so it is with cattle-breeding. One farmer may only fatten up the cattle to sell them as means of subsistence; but the other may produce breeding cattle, to replace the constant capital of the farmer who fattens for slaughter.

This part — resolving into constant capital — of the product of the productive capitalists who produce constant capital for class I, is just as much the product of the year's labour as every other part of the product, i.e. it is only reproduced by passing through the labour process. But its value is the result of past labour, labour of the previous year, etc. And as such value it buys back the part of the product which is required for its reproduction. The more developed capitalist production is, the more, consequently, the result of past labour enters as agens into production, the greater is this part of the product, which falls to the share of production and never leaves that sphere. And the greater the value component of the product which goes to replace the constant part of the constant capital. But the labour is more productive to that degree. This value itself is dependent not on the labour it cost but the labour its reproduction costs. It is therefore on the one hand constantly piled up with the progress of capitalist production, and on the other hand constantly depreciated over shorter or longer periods. Its value only remains constant as long as the mode of production does not alter.

[XVII-1065] We have still to consider the following:

1) Accumulation, specially in respect of money. 2) The simultaneity of the movements. 3) The gold and silver producer. 4) The whole movement of mercantile capital. First of all, as far as concerns 4), MERCANTILE CAPITAL, we have already elucidated its movement with the example of the SHOPKEEPER who sells means of subsistence to the workers. Put in the place of this MERCHANT A^[143] the whole class of these SHOPKEEPERS. Their business is, as before, to sell the producer's commodity to the workers, and to take back from them MONEY WAGES in return. Their capital is replaced IN MONEY and their profit is realised by the same money as originally existed as variable capital and is then paid to the workers as MONEY REVENUE and in turn paid back by the workers as COIN to the SHOPKEEPER, in order to realise the share of the total product which belongs to the workers in aliquot parts of that product. The MONEY CAPITAL of the SHOPKEEPER himself, in so far as it is not INVESTED IN COSTS OF CIRCULATION, consists of his circulating money capital. If he buys for £200 AT EVERY PERIOD in which he makes a purchase, 100 for credit, 100 from his own pocket, he has advanced £100 of the money capital constantly present in circulation. If this £200 turns over 40 times he successively buys commodities of a value of £8,000 with it. It changes nothing in the situation that a SHOPKEEPER from this sphere A buys from 50 different producers, and 50 SHOPKEEPERS from this sphere in their turn buy from 1 producer. Just as little is anything changed by the fact that this SHOPKEEPER consumes his profit in part in his own commodities, and in part buys commodities with it from other SHOPKEEPERS, who in turn buy from him again in accordance with the division of labour, so that the money which realises the profit of this class passes in turn through an intermediate circulation (SPENDING OF REVENUE) among the different agents of this class. What he consumes through purchasing from others realises their profit, and what others consume from him realises his profit. But each of them must thereby buy back from the producer with this money (in which their profit is realised) a part of the commodities, in order to renew this consumption. E.g. if SHOPKEEPER A of this class buys for £100 from producers and receives commodities for £110, in return for which he receives £110 from the workers, he has a profit of 10%. But if he buys for £110 and consumes for £10, he continues to sell to the workers for 100 and receives 110. But the 10 return to the PRODUCER in payment for the commodities consumed by the shopkeeper. He therefore receives the full value of the commodities for 10. If the profit is 10% he receives commodities for £10Vio, but he consumes these. If in contrast he buys with £10 from another sHOp[keeper], B, the latter realises his profit in this transaction, but must return £9 ^[10]/n to his producer, in order to replace the commodity. And if B buys from A for £10, the same thing is true of him.

Assume that the whole of the product which producer class I (the section which produces means of subsistence, and indeed that part of them which is sold to the workers) sells to this SHOPKEEPER class A=£500,000.

Assume that there are 5 WHOLESALE DEALERS who buy this 500,000; but that their capital turns over 5 times. Every fifth of a year they buy 100,000 between them. Each of the 5 buys 20,000 worth. Therewith each buys 100,000 worth over the whole year, thus 500,000 taken together. Assume their profit is 10%. Then the profit on the 20,000 each year=£2,000, and in each Vs of a year=£400.

The capitalist therefore sells in appearance to each of the 5 £20,400 worth of commodities every fifth of the year for £20,000. These 5 WHOLESALE DEALERS sell to the SHOPKEEPERS, RETAILERS of class A, in the course of every fifth of a year. Let there be 100 of these retailers. They sell by the day and by the hour, but buy at smaller intervals from the WHOLESALE DEALERS, perhaps only every fifth of a year or every month. Let the price supplement of these SHOPKEEPERS be 20%, namely 10% profit and 10% to replace their circulation costs (which also have to be deducted for the 5 WHOLESALE dealers; to simplify matters we have not done this). The commodity value 1 WHOLESALE DEALER has in hand=£20,400. And the commodity value 5 have in hand is £102,000 (since this is for Vs of a year, over the whole year this=£510,000 worth of commodities). Of this £102,000 each SHOPKEEPER has to buy £1,020. 20 of these shopkeepers correspond to 1 WHOLESALE DEALER, but V20 of £20,400=£1,020. 10% on this £1,020 makes 102. But let us assume this SHOPKEEPER makes his purchases 10 times a year. He then needs only £510 to buy £1,020 over a fifth of a year.^[144]

[XVI I-1065a] Assume that the complete wage bill for classes I and II is £550,000. This is therefore the commodity value which the SHOPKEEPER class A sells to the workers. For the SHOPKEEPER to gain 10[%] he must have paid V11 less for £550,000 than is contained therein. This=£50,000. So that he would only have paid £500,000 for the commodity value of £550,000. Only assuming that the SHOPKEEPER turns over his capital 10 times in the year, or renews his purchases 10 times, twice every fifth of a year. Thus he only has to advance a capital of £55,000. And on this there is an annual profit of 10%=£5,500. And this makes £1,100 every Vs of a year. Assume there are 100 SHOPKEEPERS; then each of them advances a capital of only £550. And every 5th of a year each of them receives a profit of ll%. ⁽¹¹⁾ But each of them sells to the workers every 5th of a year for £1,100. Over the year this amounts to 5,500 for 1 SHOPKEEPER and 550,000 for the 100 SHOPKEEPERS. On this £1,100 he adds a profit of £11. The commodity therefore costs him only £1,089. And 5,445 annually. And 544,500 for the 100. So that the producer would have sold him commodities of the value of 550,000 for 544,500. But there is further to be deducted the profit the SHOPKEEPER makes on the capital invested in the costs of circulation, the shop, etc., the depreciation of this capital; finally the part of the price supplement which falls to the capital invested in the productive labour of RETAILING: costs and profit. Assume that all of this comes to as much as the profit on the capital constantly circulating in purchases. Hence another £11 every fifth of a year. Thus 11 must be deducted from the £1,089, which brings it to 1,078. But in order to simplify matters let us assume that this second £11 is a price supplement which includes the costs (of circulation and production) and profit on the productive part of the capital. £11 per year comes to £55 for each sHopfkeeper], and 5,500 for the 100. We therefore deduct this 5,500, as not contained in the value of the purchased commodity, but added to it by the SHOP[keeper]. There remain 544,500. This is the real commodity value which the sHOp[keepers] buy annually from the producers. There must further be deducted 5,500 for profit. There remain 539,000. The SHOP[keeper] therefore pays 539,000 a year to the producer, and for this he receives a commodity value of 544,500 from him, adding 5,500, partly in circulation costs, partly in production costs (which however include the profit he himself makes as a capitalist producer). So we now have:

The workers buying commodities for 550,000 every year. 100 SHOPKEEPERS selling to them every year for 550,000; costs them 539,000 (whereby a value of 5,500 is added by them themselves). And they obtain from the producers a commodity value of 544,500 for the 539,000.

Each of the 100 SHOPKEEPERS sells every year for £5,500, every 10th of a year for £550, and every 5th of a year for £1,100. A value of £11 is deducted from this £1,100, added by the sHop[keeper]. £1,089 remains (every 5th of a year). This £1,089 costs the shopkeeper 1,078 (every 5th of a year) and over the whole year 5,390, and it costs the 100 SHOPKEEPERS 107,800 every 5th of a year, over the whole year 539,000. 20 of these fellows therefore buy for 21,560 every 5th of a year, receiving in return a commodity value of l,089x20=£22,780.

[XVIII-1066]^[145] One more point on the question of interest on interest^[60]:

The notion of capital as a self-reproducing entity — BY VIRTUE OF ITS INNATE QUALITY AS A PERENNIAL ANNUALLY GROWING VALUE l e d tO the WOI1-drous ideas of Dr. Price, which left the fantasies of the alchemists far behind them. Pitt seriously believed in these ideas and made them pillars of his financial wisdom in his laws on the SINKING FUND ^[146]:

Observations on Reversionary Payments etc., London, 1772, he flies still higher:

* "A shilling put out to 6% compound interest at our Saviour's birth would ... have increased to a greater sum than the whole solar system could hold, supposing it a sphere equal in diameter to the diameter of Saturn's orbit" * (I.e., XIII, note). *"A state need never, therefore, be under any difficulties; for, with the smallest savings, it may, in as little time as its interest can require, pay off the largest debt"* (I.e., [XIII/]XIV, p. 136).

What fine principles emerged from this for the credulous Pitt! Price WAS SIMPLY DAZZLED BY THE ENORMOUS QUANTITIES RESULTING FROM THE GEOMETRICAL PROGRESSION OF NUMBERS. Since he regarded capital as A SELFACTING THING, WITHOUT ANY REGARD TO THE CONDITIONS OF REPRODUCTION OF LABOUR, merely as a self-increasing number (just as Malthus regarded MAN in his GEOMETRICAL progressiona), he could believe he had found the laws of its growth in that formula. The formula: S=c(l + i)". (In this formula, S=the sum of capital and interest to be calculated; c=the capital advanced; i=the rate of interest (ALIQUOT PART OF 100) and n=the number of years during which the process takes place.) In a speech of 1792, proposing to increase the sum of money devoted to the SINKING FUND,^[147] Pitt takes Dr. Price's mystification entirely seriously.

"The House of Commons resolved in 1786" (see Lauderdale ) "that the consentement unanime was that 1 million pounds sterling be raised for the public benefit" (Lauderdale, I.e., p. 175).

According to Price, who was believed by Pitt, nothing was better, of course, than to tax the people in order to "accumulate" the sum of money raised by the tax and thereby to spirit away the STATE DEBT through the mystery of COMPOUND INTEREST. Taxes for "SINKING FUND" or amortisation fund.

"That resolution was soon followed by a law — of which Pitt was the author — which ordained the accumulation of V4 million pounds sterling, until the time when the annuities fell due and the fund increased to £4 million per year" [p. 176] (CH. XXXI of the ACT of the 26th Year of the Reign of George III).b

In his speech of 1792, in which he proposed increasing the sum devoted to the SINKING FUND, Pitt included machinery, credit, etc., among the reasons for England's commercial pre-eminence. But

"the most extensive and long-lasting reason is accumulation. This principle is developed fully and explained adequately in Smith's work alone, that genius, etc. ... This accumulation of capitals operates by reserving at least a part of the annual profit in order to increase the principal sum, which must then be employed in the 79].»

Pitt considered Price's interest on interest — COMPOUND INTEREST— calculation, to be identical with Adam Smith's theory of accumulation. This is important.

[XVIII-1067] Child, the ancestor of the London banking system, was incidentally an enemy of the "monopoly" of the usurers, in exactly the same sense as Moses and Son in its bulletins declares its opposition to the "monopoly prices" of the small tailors.

We already find with Josiah Child (father of the London banking system) (Traités sur le commerce et sur les avantages qui résultent de la réduction de l'intérêt de l'argent, by Jos. Child (written in 1669), etc., translated from the English, Amsterdam and Berlin, 1754) that

"£100 at 10% would produce 102,400 pounds sterling in 70 years, if interest is added on the interest"^[3] ([p.] 115).

The first notion of ACCUMULATION is that OF HOARDING, just as the first notion of CAPITAL is as MERCANTILE capital. T h e second notion is that of COMPOUND INTEREST, just as interest-bearing capital, or money lent out at interest, is the second historical form of capital. Political economy SOMETIMES becomes perplexed when the antediluvian expressions of the relations peculiar to capitalist production again assert themselves as expressions of the latter, as with interest on interest for the accumulation OF CAPITAL.

How Price's notion is unthinkingly allowed to slip into the works of modern, and relatively critical, economists is shown e.g. by the following passage from The Economist

*"If there be any cases in England in which land, with all its rights and privileges, has not been bought and sold over and over again"* (and hence, as he very wisely concludes, "has become merely the representative of the money paid for it") *"—which we doubt — we do ... not doubt ... that every sixpence of rent is the representative of capital, saved by the landlord and reinvested by the land, in those cases where land has not been sold... Capital, with compound interest on every portion of capital saved, is so all engrossing, that all the wealth in the world from which income is derived has long ago become the interest on capital Although land be more valuable in some places than in others, all rent is now the payment of interest on capital previously invested in the land" (Economist, July 19, 1851).*b

The Economist could say, based on the same incredible notion, *that all the labour that may in myriads of ages be realised, will only represent interest d u e to capital till now accumulated. * I cite the passage merely on account of the incredible notion that accumulation=interest on interest. Otherwise, by the by, and en passant, The Economist remarks, I.e., *that the community as such

"as a corporate body ... claims the land (as common property), and never gives up that claim".*

He who expends capital in the purchase of land

* "does in fact forfeit and give up to the community some of the advantages which belong to property strictly and exclusively personal" (I.e.).

Finally there is the following rubbish from the "romantic" Müller:

"Dr. Price's colossal increase in compound interest, or the self-accelerating forces of the human being, presupposes an undivided, unbroken, and uniform order over many centuries, if it is to bring about these incalculable effects. As soon as the capital is divided, cut up, into a number of separate branches, growing on their own account, the whole process of the accumulation of forces begins again. Nature has divided the progression of force into a series of courses of roughly 20 to 25 years, which are allotted to each individual worker on an average. After this period of time has expired, the worker leaves his course and must now transfer the capital gained through the compound interest of labour to a new worker; for the most part he must divide it among several workers or children. They have first to animate and learn to employ the capital which falls to them, before they can draw from it actual compound interest. An immense amount of capital gained by civil society is, even in the most dynamic communities, piled up gradually, over long years, and is not employed in the direct extension of labour, being rather transferred to another individual, a worker, a bank, the state, under the name of a loan, as soon as a considerable sum has been brought together. The recipient then sets the capital really into motion, and accordingly draws from it compound interest, and [XVIII-1068] can easily pledge himself to pay the giver simple interest. Finally the law of consumption, greed, waste reacts against that immense progression in which the forces of man and their product would tend to increase, if the law of production or frugality alone were to hold sway" (A. Müller, Die Elemente der Staatskunst, Berlin, 1809, Part III, [pp.] 147-49).

It would be impossible within a few lines to jumble together more hair-raising and self-contradictory nonsense. We do not mention the ludicrous confusion of worker and capitalist, of value of labour capacity and interest on capital, etc.—let us just mention the assertion that the decline in compound interest is due, among other things, to the fact that capital is "lent out", whereupon it "then" brings "compound interest". The extraordinary shallowness of this "profundity" or RATHER "stupidity", this for example:

consists in holding fast to the semblance and reasoning forth on this basis. The same fellow tells us:

"Urban production is bound to the cycle of days; rural production in contrast to the cycle of years" (I.e., [p.] 178).

By "urban production" he means manufacture in contrast to agriculture. Agriculture which is not run in the capitalist fashion — and this is what he refers to — is of course bound to the annual cycle. Large-scale manufacturing on the other hand (IN

CONSEQUENCE OF THE FIXED CAPITAL EMPLOYED) is b o u n d tO the Cycle o f ^[1] 2 tO 15, in some branches of the transport industry (railways, etc.) 20 years. Our Müller's procedure is characteristic of Romanticism in all its manifestations. Its content consists of the most vulgar everyday prejudices, trivialities created from superficial appear-ances. This false and trivial content then has to be "heightened" and made poetical by a mystificatory mode of expression.

[XVIII-1068] Assume that there are 5 WHOLESALE DEALERS for the 100 SHOPKEEPERS. They have therefore to sell to the shopkeepers every year 544,500 worth of value, and in Vs of a year 108,900 worth of commodity value. For which they, however, only receive a payment of 107,800 from the SHOPKEEPERS.

Each of the 5 WHOLESALE DEALERS has in Vs of a year to sell to 20 RETAILERS. I.e. each has to sell a commodity value of £21,780, for which he receives 21,560 in money. But for this 21,560 each WHOLESALE dealer must d'abord receive from the PRODUCER a commodity value of £21,780. Indeed, he must receive more than this, since he also has to make his profit. Assume that his capital circulates 5 times in the year. All 5 buy over the year from the PRODUCER for 539,000. But they do this with a capital of 107,800. 10% on this makes £10,780 over the year. And over a fifth of a year this makes £2,156. The profit for each of the 5 WHOLESALE DEALERS every Vs of a year is therefore £431 Vs- Each of the WHOLESALE DEALERS therefore buys from the capitalist every Vs of a year commodities to the value of £21,780 for £21,560 money minus £431 Vs. He therefore pays £21,128^[4]/^[5] for the commodities, or 5 pay 105,644 every Vs of a year, and 528,220 over the whole year. The producer therefore has in fact to provide a commodity value of 544,500 for 528,220 — if we disregard the value addition made by the RETAILER — the difference thus does not come even to 3'/2% of the commodity value provided by the capitalist.

The only thing of importance here is that the interposition of the WHOLESALERS in no way alters the circuit, described above, between the épicier, the producer and the worker; except that here the workers are not only workers of class I, who produce means of subsistence for the WORKMEN. T h e RETAILER [XVIII-1069] does not put in his pocket the whole of the reduction in the price at which the PRODUCER sells him the commodity; instead this reduction is divided between WHOLESALER and RETAILER. In other words, what is divided is the part of the surplus value which amounts to

MERCANTILE PROFIT. Instead of the MONEY WAGES PAID BY ONE CAPITALIST TO HIS

OWN WORKMEN [being] RETURNED TO HIM BY THE SHOPKEEPER (but now for the re-purchase not only of wages in commodities, but of the profit of the SHOPKEEPER) the MONEY WAGES of all WORKMEN of classes I and II flow back to the producers of class I through the SHOPKEEPER and the WHOLESALERS (in the re-purchase of the commodities falling to the share of the workers+the realisation in commodities of the profit of the WHOLESALERS and RETAILERS). With part of this reflux the producers of class I replace in money their variable capital, and with the other part they buy constant capital from class II, who with this money again obtain the MONEY fund from which they pay wages.

T h e situation for shopkeepers a n d wholesalers B, who sell means of subsistence to the owners and consumers of the SURPLUS, is the same as for SHOPKEEPERS and WHOLESALERS A.

We saw that the product of the producers of class I, however many of them there might be, was collected in 5 WHOLESALE reservoirs, a n d then divided into 100 RETAIL reservoirs, then entered PIECEMEAL, by the day and by the hour, into the circulation between RETAILER a n d CONSUMER. With the REFLUX of the money, on the other hand, n o such constantly increasing subdivision takes place as with the circulation of the commodity. O n the contrary. The workers' money is concentrated in the 100 RETAILERS, then collected into 5 reservoirs at the WHOLESALERS, and is only re-divided once it returns to the individual producers.

In the case of the circulation of the commodity there is a mere TRANSFER from PRODUCER tO WHOLESALER, from WHOLESALER tO RETAILER, a n d it is the last who sells it definitively. Similarly in the reverse direction, with the REFLUX, TRANSFER, of the money which flows back to the capitalist (REFLUX of capital, when h e sells on credit, but REFLUX of MONEY and indeed as means of purchase or REFLUX of the MONEY FORM of his capital when he sells for CASH) from the RETAILER to the WHOLESALER, from the WHOLESALER to the producer.

T h e situation is entirely the same with the MERCHANTS who mediate the purchase a n d sale of constant capital, i.e. buy and sell for industrial consumption. Here too the profit derives from the fact that they buy the commodity below its value and sell it at its value, thus receiving their share in its surplus value. This circulation in itself has no particular significance. E.g. the WHOLESALER buys yarn from the spinner, sells it to the weaver, or buys flax from the FARMER and sells it to the linen yarn manufacturer. In fact it is the weaver who pays the spinner. The circulation of these particular mercantile capitals, through their constant sale of a particular commodity, conceals the real movement, the real connection. Everything e.g. which appears in the circulation between flax producer, MERCHANT and spinner is nothing but a constant buying by the spinner from the flax producer. Every individual act of the reproduction process thus appears divided and in an independent shape.

We now come to accumulation. //But first still one more point. It is very important in estimating the GENERAL SURPLUS VALUE to include mercantile profit, because a part of the SURPLUS VALUE is concealed here and appears to arise out of a specific sphere of production.//

But now back to p. 1065, Notebook XVII, 1) and 3) (accumulation and the gold producer).* We have in the reproduction process

1) the class of producers who produce means of subsistence, the elements into which the variable capital and the part of the product produced as surplus value and expended as income are resolved,

2) the class of producers who produce the constant capital for the first class. This consists in the final analysis of the classes which provide the latter with elements of constant capital, hence raw materials, seeds (whether corn or breeding cattle. In the animal kingdom the seed is the cattle itself, in the vegetable kingdom it is the actual seeds), and produce the machines, containers and tools (we see even in agriculture how seed production, whether in the animal or the plant kingdom, can split away from production for consumption as an independent sphere of production).

[XVIII-1070] A house can of course serve as constant capital or enter into individual consumption, or both at once. Coal, wood, a horse, a wagon, a mass of small instruments and containers enter as constant parts of consumption, as tools of consumption. This makes no difference. In so far as the producers sell to individual consumers they belong to class I, in so far as they sell to producers, to class II. In one category things apply to them which pertain to that category; in the other, things which pertain to the other.

Alongside these classes the producer of the commodities which function as money, the producer of the precious metals, forms a category sui generis.^[3] For the sake of simplification, we only speak of the gold producer as the producer of the material of money. For the sake of simplification (since the countries which produce the precious metals have peculiar characteristics which are irrelevant to this general investigation) we place the gold producers in the middle of the country of capitalist production itself.

Incidentally, we have excluded foreign trade for the same reason^[149]; exporter and importer are themselves merely categories of WHOLESALE DEALERS. The exporter exports means of subsistence which enter in finished form into consumption: in this case he belongs to the WHOLESALE DEALERS, who do nothing in the reproduction process but mediate the TRANSFER to the RETAILERS of the product, which then flows directly into the sphere of consumption. Or he exports raw materials, semi-manufactures, instrumental materials, machines, instruments of labour. In this case he mediates the exchange between the producers themselves. In the one case it is C—M, in the other case M—C, the conversion of commodity capital into money, or of money capital into commodities. There is therefore no essential difference between these and the two main categories of WHOLESALE DEALERS. But the importer is the same as the exporter. The exporter of one country is the importer for the other one, and the importer of one country is the exporter for another one. There are of course exporters and importers in one single country, e.g. England. But the exporter imports into other countries, and the importer exports out of other countries.

Gold enters as raw material and matière instrumentale into a series of luxury products. In so far as the gold producer sells his gold to the producers of these articles, he belongs to class II, which sells and produces the elements of constant capital.

Every part of the product equally contains a portion of surplus value. Every individual commodity or portion of a commodity considered in itself. (Nevertheless, our distinction also appears in practice. If 2 thirds of the product consist of costs, Vs of SURPLUS, and the capitalist only sold 7s, he would only have replaced his variable capital; if he sold ⁽¹²⁾/s he would have replaced his variable and constant capital, and would have realised no profit, although every part of the commodity, and every individual commodity, would have been equally sold at its production price, hence would have realised a part of the SURPLUS VALUE.) The gold producer realises just as much profit on this part as on every other part; because unpaid labour is contained in the gold and he realises this pro rata. But only formally. For he receives no other commodity. But instead converts the gold from the form of bars into the money form, which he could also do by sending it to the mint. (There is of course a difference for him between places where it is coined free of charge, as in England, and where seigneuriage is charged as in France.) It emerges clearly in his case that the surplus value arises not from circulation but from production, because in production it already possesses the form in which it is capable of circulation. But this circulation between the gold producer and the gold consuming producer is important on account of one point. In this TRADE the gold producer withdraws money from circulation instead of throwing it in; for the gold that he throws in does not enter into circulation as money but as an element of production.

Therefore in a country where gold mines, etc., are located, we find AVERAGE productive consumption of gold, just as of all other commodities which form the object or the matière instrumentale of other commodities. If in this case this consumption were so large as to cover the wages [of the workers] of the gold producer and his profit (hence the part he spends as income) two things could be said:

1) The whole of this part of the annual gold production does not enter circulation as money; it neither enters as CURRENCY into the circulation between RETAILER and INDIVIDUAL CONSUMER (COIN) nor does it enter as money capital into the TRANSACTIONS between the productive consumers. //The difference between coin and money exists here in so FAR as the money capital is paid out to the worker in coin, because it has to circulate in the circulation between RETAILER and DEFINITIVE CONSUMER; whereas in the spheres in which it moves between the productive consumers, i.e. the productive capitalists, it does not enter into this circulation, serves chiefly as means of payment and in their hands ceases to represent capital, which is what it does do in the HANDS of the DEFINITIVE CONSUMERS. The simultaneity and parallel course of the different successive phases of circulation, which at the same time represent opposite phases for different capitals, brings about the difference between the kinds of money, in which capital circulates on the one hand and income on the other. The transition from one kind of money to the other is mediated through exchange.// [XVIII-1071] 2) There takes place here a REFLUX of money (from circulation) to the gold producer, and this REFLUX repeats itself. If e.g. the gold CONSUMER (GOLDSMITH, etc.) pays him 4 times a year, or buys from him every quarter, here in the case we have supposed this is money flowing from circulation itself for the payment of wages. T h e gold producer would only need to have in reserve in coin the expression of wages for a quarter of a year, since the same amount flows back to him again from circulation every quarter. T h e GOLDSMITH, etc., in contrast, replaces his money capital, which he laid out in the purchase of gold, with the money which comes from the SPENDERS OF REVENUE, to whom the gold producer would himself in part belong. If this consumption of gold amounted to a sufficiently considerable part, it would provide for the gold producer not only the money for wages, but also for the income PART (what is SPENT as income) OF THE PRODUCERS PROFIT (RENT). Here it must be borne in mind that the gold producer, like every other capitalist, needs ONLY AN ALIQUOT PART, AND A RELATIVELY SMALL PART, of the YEARLY MONEY EXPRESSION of the WAGES, in order to pay them, and that in spending his own income he also only needs A MUCH SMALLER MONEY EXPRESSION OF ITS YEARLY VALUE, since the same money flows back and performs the service anew.

Assume that the GOLD PRODUCER has to pay his workers £12,000 annually. This makes £1,000 a month, a n d say £240 a week, if 50 weeks are worked in the year. Assume that this producer advances the money weekly at the beginning of the first quarter, and, since it does not flow back to him, for the whole of the quarter. At the end of the quarter he makes a sale for £3,000 (if the year=50 weeks, the quarter=12'/2 weeks and the week=£240). T o the goldsmith, etc. In the second quarter, therefore, he n o longer has to increase the CURRENCY by a further £3,000, but instead he retains this £3,000 in his own possession or with his BANKER, a n d allows £240 of it to flow back into circulation every week. There is no doubt that this would be the case in an industrial country. Only a small part of the product would be necessary, and this would be sold to the productive consumers of gold so that in this way there would be a constant reflux of the wage from circulation. For this part of the gold producer's capital, therefore, and, depending on the circumstances, also for the MONETARY EXPRESSION OF HIS REVENUE, he adds nothing to circulation, in so far as its movement is between INDIVIDUAL CONSUMERS and PRODUCERS. This circumstance is entirely overlooked by Ricardo in a hypothesis he bases on the assumption that the gold mine is to be found in the country of capitalist production itself, e.g. England.^[150]

16* A money REFLUX would take place for this part of the gold producer's product, because he sells the gold as a commodity, does not buy with it, does not spend it as money.

//Within capitalist production cost price]5] never=value. Production price can=value, if the coincidence occurs that 1) the capital which gives the commodity its final form, and 2) the capital which provides the machine and the raw material, both have the AVERAGE ORGANIC COMPOSITION. Just as the production prices of the commodities which form the variable capital may always vary in their value, the amount of these commodities, which forms the wage, always=the labour time (ON AN AVERAGE) the worker needs to reproduce this amount, = the value of the labour capacity for which the variable part of the capital is exchanged. This part, whatever its price,=its value. It is therefore sufficient for the other two parts — surplus value and constant capital — to possess the AVERAGE COMPOSITION, for the production price of the commodity to be equal to its value.//

In what follows, therefore, we entirely leave à part the part of the gold which enters as raw material into the production of other commodities, hence into the constant capital of other spheres of production.

As far as concerns the position of the gold producer for gold production (THUS CIRCUMSCRIBED), this is sui generis. The product, the commodity he has produced, cannot enter as an element either into the constant or into the variable capital of other spheres of production, and it therefore does not enter into the real reproduction process as considered above. Nor does it enter into his own constant or variable capital. Just as little does it enter into the category of commodities in which income is IMMEDIATELY SPENT. O n the other hand, however, this commodity directly possesses the form in which it can enter into the world market as money, just as it can be converted into national money through a merely technical transformation. It may function directly as money, i.e. buy. The converted form of the commodity is its primitive form. And it therefore also directly possesses the absolute form of circulating capital, the form of money capital.

The gold producer can therefore buy directly, without having to sell. His COMMODITY IS IMMEDIATELY CONVERTIBLE INTO EVERY OTHER COMMODITY, WITHOUT ANY REGARD to its relation to the productive conditions of existence of the commodities for which it [XVIII-1072] is exchanged; the commodities it buys.

We have transferred the gold producer to a country of capitalist production. What applies to every other sphere of capitalist production applies to this one: it can only absorb its proportional part of capital and labour, if the rate of profit is not to fall below the AVERAGE PROFIT. In other spheres of production, where surplus value can be resolved into profit and rent, a relative oversupply of the sphere with capital would initially affect rent alone; the turn of profit would come when the relative oversupply of the sphere with capital and labour persisted, even after profit had swallowed u p the rent. Assume that the capital invested in gold production yielded 30%, 10 PROFIT and 20 rent. If a given amount more of capital and labour were applied to this sphere, and correspondingly more withdrawn from the other spheres, the means of subsistence and the constant capital of the gold producer (i.e. the machines, etc., he must buy) would rise for instance from 100 to 120. This 120 would as before express numerically the same physical amount of means of production, i.e. the same amount of labour, and the same ratio as previously of machinery, etc., to this given amount of labour. The product would be as before 130, whether the capital laid out=100, 110, or 120. If we take the last figure, not only would the rent have disappeared, but also nearly 20% of the profit. For 120:10=100:8 7s- Thus the rent of 20 would have vanished and the profit would have fallen from 10 to 8'/s%- The capital and labour employed in gold production therefore stands in a certain proportion to the amount of capital employed in all other spheres of production, or is brought back to this through the equalisation of the rate of profit.

The producer of the gold can buy what he wants with it (i.e. what commodities he finds on the market); hence means of subsistence on the one hand; instruments of production on the other. H e can consume, in this form, the part of his gold product which represents surplus value (profit, rent), IN FACT HOARD WITH A VIEW

TO CONVERT IT AT A LATER PERIOD EITHER INTO REVENUE OR INTO CAPITAL. In so far as he does this, the gold producer accumulates a part of his product in natural form, just as the peasant or the machine manufacturer does.

As regards the part he exchanged for means of subsistence or instruments of production, the part of the product sold to him by the producers of those commodities now exists entirely in gold, i.e. in a form in which the reproduction process of their commodities cannot be renewed. If they are to reproduce at the same level, the same part of their product (assuming that NO CHANGE has occurred in the value of the ingredients of their production) must be converted back into raw materials, machinery, etc. For example, those who sell the means of subsistence, i.e. commodities in their final form, the form in which they enter into individual consumption, cannot use gold either as a raw material (semi-manufactured material), or as a matière instrumentale (for this has already been withdrawn for GOLDSMITHS, etc.), or to replace their means of production. It is implied, furthermore, that the circulation is already sufficiently FULL TO REPLACE BY ITS FLUX AND REFLUX ALL VARIABLE CAPITAL IN THE FORM OF MONEY, etc.; similarly the part of the circulating capital which must circulate as money capital. From the means of subsistence this class has sold to the gold producer, and IN RETURN for which it now possesses gold, it can accumulate in gold the surplus value contained in these commodities; it can hold onto the gold as the form of the surplus value; it can store up, preserve, retain this surplus value in the form of gold. But it must replace the raw material, machinery (it is assumed that the production of gold for luxury consumption replaces the CURRENCY for the gold PRODUCER, without his having to throw other money into circulation to achieve this; but the part of the commodity that he consumes — and, apart from this, the part of the labour that is contained in the commodity consumed by him — must be replaced by its producers through the purchase of new labour^[43]); for we assume that the previous circulation was sufficient to pay out the variable capital in money. The producer of the means of subsistence therefore buys with the part of the gold which he has obtained — the part he keeps as the direct form of his surplus value (profit)—semi-manufactured material, matières instrumentales, MACHINERY, etc. The producers of these commodities are all in the same position. Each one can only retain a portion of the gold=a part of his profit or surplus value in general. With the other part he replaces the raw material, etc. For this last part of the gold, which comes to the original producer, they sell their whole commodity, pro toto, with deduction of exchanges between the original producers, and they cannot again split up this part into a PART consisting OF SURPLUS VALUE and a PART consisting OF PRODUCTIVE CAPITAL. For them this gold therefore represents nothing but the part of their surplus value accumulated in gold. And the commodities they thus sell indirectly to the gold producer constitute a part of the part of their product in which surplus value is realised.

We have observed the course of events where the gold producer buys means of subsistence. THE SAME CASE AS FAR AS HE BUYS INSTRUMENTS OF PRODUCTION AND matières instrumentales. [XVIII-1073] Hence the whole annual product of the gold producer //we are deliberately leaving foreign trade out of the picture here// can be resolved into the expression of surplus value in gold; it is a part of the SURPLUS LABOUR of the WHOLE SOCIETY which is directly incarnated in gold, converted into gold. For the gold producer, as for any other capitalist, his total product consists of 1) a part which reproduces the constant capital; 2) a part which replaces the variable capital; and 3) a third part which represents the SURPLUS VALUE. But in relation to the whole society it is merely the incarnation of SURPLUS VALUE and SURPLUS LABOUR. To the extent that this SURPLUS VALUE comes into consideration, the gold producer is distinguished from the others only in that for him it is a form emerging directly from the process of production, whereas for the others it is mediated through exchange, through circulation. The other producers— whether of means of subsistence or of constant capital — exchange, out of the part of their product which represents surplus value, a part for the gold of the gold producer; they thus replace his capital for him and he gives them the commodity in which they realise a part of their surplus value. The relation of the gold producer to classes I and II is therefore exactly the same as the relation of classes I and II to each other. That is, the whole of his annual product can be resolved into income, i.e. it is exchanged for a part of the means of subsistence and means of production which represent income for their producers, i.e. realisation OF SURPLUS LABOUR. Just as class I realised a part of its SURPLUS VALUE in its own products, so also can the gold producer. But he can realise only a part. He must consume a part of his SURPLUS VALUE. The others, in contrast, must not consume a part of their SURPLUS VALUE, if they want to possess it in the form of gold. Therefore, in so far as this form of replacement comes into consideration, the exchange between the gold producer and the other classes does not represent a new phenomenon. But it is a new phenomenon in so far as a part of the SURPLUS VALUE is here directly converted into the material of money and thereby the simple reproduction process assumes the special feature that the valorisation of the commodity presents itself directly as accumulation of gold, hence as accumulation of latent money capital.

If we leave aside the form of capitalist production, it is clear that the producers must exchange a part of their products with each other, in part for individual consumption, in part for productive consumption. This part (and it forms BY FAR THE GREATEST PART OF THEIR PRODUCE) can ON AN AVERAGE be regarded as given, particularly in static conditions, such as were normal before the capitalist mode of production. They can only exchange the SURPLUS with the product of the gold or silver producer. And in fact their hoards are formed in this manner, and in general the basis is laid for the circulation of metallic money. The situation that only this surplus can be converted into gold remains the same in capitalist production.

In so far as the gold producer and the other producers now convert their [surplus] into capital anew as money (in addition to the money otherwise circulating amongst them), the question is not specific. The same conditions are needed as are required in general for the conversion of money into capital.

So far, therefore, we merely have this: The accumulation of money — as identical with new gold production — requires that a part of the surplus labour of the country should be invested in the production of gold.

But now let us pose the question in a different form, in which the production of new gold is entirely left on one side. It is known that during a considerable period of time, roughly from 1808 to 1830, the newly added gold and silver were exactly sufficient to replace the abrasion, etc., the WEAR AND TEAR, of the money capital of Europe. The capitalist accumulation process must also be considered in itself — precisely with regard to money — without bringing in the production of gold and silver at all.

The question that concerns us here is not the same as the one considered previously, in dealing with reproduction: how surplus value existing as money, or RATHER the part of the surplus value which is not consumed, can be converted back into productive capital. The question is rather how, and UNDER WHAT CONDITIONS, a part of the surplus value, INSTEAD OF BEING SPENT, MAY BE ACCUMULATED AS

MONEY, AND THIS WITHOUT ANY REGARD TO THE EXCHANGE WITH THE GOLD OR SILVER

PRODUCING CAPITALIST?

Let us consider the different classes: class I, which produces means of subsistence; class II, which produces the constant capital for those means of subsistence and the constant capital for this constant capital;

c l a S S I I I , THE MERCANTILE AND MONIED CAPITAL, WHO ONLY INTERMEDIATE THE

MOVEMENTS AMONGST THE TWO FIRST CLASSES.

[XVIII-1074] On class I. This class has to replace its constant and variable capital. It replaces the latter through its own products, it buys the former through exchange for its products.

As regards the surplus value, class I must itself consume a part of it; but its whole product, * surplus value as well as capital, exists in the form of commodities destined for immediate consumption, or destined, at least, to fall into the funds of consumption, and, thereby, to be got rid of in the sphere of circulation. It must be sold, before any part of it exists in the form of money; and the sale of it means its being bought for consumption.* This is what the part of the product which represents SURPLUS VALUE has in common with the part which represents capital. * If, therefore, that class need only consume part of its surplus produce itself, the whole surplus produce must be consumed — and, therefore, sold to consumers. If not, it will encumber their warehouses in the form of not consumed and unvendible commodities.*

According to our presupposition, class I exchanges with class II only the part of its product which represents its constant capital, hence NO PART OF REVENUE. When dealing with this question, therefore, the exchange with this class must *be left out of consideration altogether, as far as class I is concerned. We are thrown back upon [class I] itself.

Within clasj I itself, the exchange with the workmen must be also eliminated. The workmen of class II are already included in the exchange of class I with II, which exchange, we say, is to be eliminated. Their own workmen only pay them back in money the value of the capital paid out to them in commodities. This exchange has nothing at all to do with the realisation of the surplus value, but only with the variable capital advanced.

We are then forced to consider the parties of class I itself, which share in the surplus value produced in it, and who by their exchanges return to the producing capitalist the monetary value partly of his capital advanced, partly of his profit. Neither the exchange with class II, nor the payment of the variable capital within class I, has anything to do with the question thus put.*

We have seen how a part of the capital can accumulate as money capital, in so FAR as not only the part of income which the gold producer consumes in natura, but the part of his product (gold) which he must give in natura in exchange, in order to replace his capital (leaving aside the part of this product that he sells as raw material to other branches of production), both constitute a part of the income of the other producers, a part which is retained directly in the shape of gold, is initially HOARDED gold, and can then function as money capital in reality, i.e. enter directly into the accumulation process of capital.

The question we now pose is this: Leaving aside this part of the SURPLUS VALUE, which is accumulated through exchange with the gold producer in the shape of gold, how is it possible at all for productive capital initially to pocket as gold a part of its income, instead of spending it, and then to accumulate this part as money capital?

The capitalist has laid out £100. His commodity = 110. In our presentation so far, where the surplus value of 10 BEYOND THE CAPITAL BECOMES MONETISED, we assumed that the income was entirely eaten

U p ; SO THAT IN FACT THE MONEY SPENT IN THE CONSUMPTION OF THE REVENUE monetises the surplus value, PAYS IT BACK. But if the capitalist (and EACH CAPITALIST, for the matter must be conceived in a general way; as a process of capital, NOT OF ONE SINGLE CAPITALIST AT THE EXPENSE OF OTHERS, so that e.g. the sale by one capitalist of 110, of which he only SPENDS 105, is not explained by saying THAT ANOTHER IS UNABLE TO SELL PART OF HIS PRODUCE) replaces 100, SPENDS 5 AND ACCUMULATES 5, HOW is THIS TO BE MANAGED ON A GENERAL SCALE? THAT IS THE QUESTION TO BE PUT AND TO

BE ANSWERED.

Just as a part of the produce of particular spheres of production enters into them again as a condition [of production], this consideration would be important if we were to examine a specific sphere of production of class I. But here it is not important. Let 100 represent the total capital of this class and 10 its total profit. It must consume a part in natura (i.e. in the product of this class itself in natura). Say 5. The question is thus: under what conditions can this class keep back 5 as money, FIRST conditions for the reconversion of income into capital? T h e first condition is that it sells for 105. The 100 — replacement of the capital — is explained, and therefore does not come into consideration any further here. T h e question is, to whom are the commodities to the value of £5 sold? They consist of commodities which in part merely enter into the income of the higher classes, in part enter into the consumption of the workers, productive or unproductive.

THE FURTHER ELUCIDATION OF THIS POINT TO BE POSTPONED.

---

Endnotes

(1) Labour capacity.— Ed.

[130] Marx means labour capacity, labour power. See Note 36.—172

a Th. Tooke, An Inquiry into the Currency Principle..., London, 1844, pp. 34, 36.131— Ed.

(2) To begin with.— Ed.

[132] 7"he reference is to the section "Digression. Tableau économique, according to Quesnay" in Notebook X of the manuscript (see present edition, Vol. 31).—173

(3) Shopkeeper.— Ed.

[11] The notes given below were made on the inside front cover of Notebook XX of the manuscript of 1861-63. On the front cover of Notebook XX Marx wrote: "März. April, Mai. 1863", the last two months being inserted in retrospect.—8

[134] In the margins opposite this paragraph Marx wrote "NB" and below "This calculation is wrong". He made similar calculations on p. 1047 (see this volume, p. 186), following which he apparently crossed out the words "This calculation is wrong" and added "See p. 1047".—181

a Par excellence.— Ed. 13-613

a From the standpoint of circulation.— Ed. b Literally.— Ed. 13*

(4) This seems to be a slip of the pen. It should probably be "shopkeeper".— Ed.

(5) See this volume, p. 181.— Ed.

[135] See, in particular, pp. VI — 272, VII — 273-299, IX — 379-419 and XIII —698-703 of the manuscript of 1861-63 (present edition, Vol. 30, pp. 411-51; Vol. 31, pp. 130-200; Vol. 32, pp. 111-22).—189

a Instrumental materials.— Ed.

[13] The text on pp. 9-25 of this volume reproduces in part and with some alterations a number of passages from Marx's economic manuscript of 1857-58 (see present edition, Vol. 29, pp. 226-36).-—9

(6) See this volume, pp. 189-91.— Ed.

(7) K. Marx, A Contribution to the Critique of Political Economy. Part One (present edition, Vol. 29, pp. 359-70).— Ed.

[51] Cf. Capital, Volume III, Chapter XVI (present edition, Vol. 37).—64

(8) At the outset.— Ed.

(9) See this volume, pp. 194-96.— Ed. 14-613

[136] Sphere I in the present manuscript refers to the production of means of subsistence (objects of consumption), and sphere II to the production of means of production, or elements of constant capital. Accordingly, the capitalists in sphere I are denoted as class I and those in sphere II as class II. Later, in Volume II of Capital (see present edition, Vol. 36), Engels, basing himself on the final draft of Volume II, denoted the production of means of production as sphere I and the production of means of subsistence as sphere II.— 200

[36] Page XV — 956 is the direct continuation of page XV — 953, and page XV — 954 is the direct continuation of page XV — 956.—30, 33

[52] Marx dwelled on this question on pp. X — 450-454, 470-473, XI — 529-560, XIV — 788-789 of the manuscript of 1861-63 (see present edition, Vol. 31, pp. 261-71, 301-05, 401-57; Vol. 32, pp. 270-73).—67 34-613

a See present edition, Vol, 31, p. 572; Vol. 32, p. 18.— Ed.

[140] Marx reproduces the explanation of the term "dealer" as given by Germain Gamier, who translated Smith's work into French.—214

[141] A critique of Smith's views of natural price is given on pp. VI — 263-265 of the manuscript of 1861-63 (see present edition, Vol. 30, pp. 399-403).—214

(10) More or less.— Ed.

[143] What Marx means by sphere A or class A hereinafter is class I of social production, the production of means of subsistence.—219

[144] There follows an incomplete calculation which Marx crossed out with three vertical lines: "And this is the entire capital he needs in this LINE during the year. 10% of 510 makes £51 a year and £10'/5 for '/j year. For £510 the SHOP therefore receives goods to the tune of £520 V5. And for 1,020 it receives goods to the tune of 1,0402/5. With this sum it makes purchases from the WHOLESALER every fifth of a year. For the 20 SHOPKEEPERS which exist for every WHOLESALE DEALER this makes 20x£520'/ 5=£10,404, and for 100 SHOPKEEPERS per year >/5 year=52,020. This means that for 5/5, or 1 year, = ."—221

(11) Thus in the original. It should be "£11".— Ed.

[145] Page 1066 opens Notebook XVIII, which Marx filled in in January 1863.—222

[60] Marx criticised the erroneous arguments on interest and compound interest in Richard Price's works An Appeal to the Public..., London, 1772, and Observations on Reversionary Payments..., London, 1772, and also William Pitt's fantasy engendered by Price's ideas, back in the manuscript of 1857-58 (see present edition, Vol. 29, pp. 218-19). When examining the question of compound interest on p. XIV — 853 of the manuscript he noted: "We shall return to Price's fantasy in the section on revenue and its sources" (see present edition, Vol. 32, p. 376). However, in Notebook XV, which contains a summary of the views of vulgar bourgeois political economists on revenue and its sources (see ibid.) there is no mention of "Price's fantasy". Marx did not resume his criticism of Price on this question until p. XVIII — 1066 of the manuscript of 1861-63 (see this volume, pp. 222-24). Subsequently a critical analysis of Price's views was given in Capital, Vol. Ill, Chapter XXIV (see present edition, Vol. 37).—71, 222

[146] In order to prevent a growth in the national debt, William Pitt the Younger, then British Prime Minister, introduced in 1786 a sinking fund, i.e., a scheme whereby a certain proportion of public revenues was used every year to purchase state promissory notes. However, the war with France (1793-1802) was accompanied by a sharp increase in the national debt. The imbalance between revenues and expenditure led first to a limit on the issue of banknotes, and in 1797 to the enactment of a law relieving the Bank of England of the obligation to accept banknotes. Marx dealt in detail with the laws on the sinking fund enacted under Pitt in the article "Mr. Disraeli's Budget" published in the New-York Daily Tribune, No. 5318, May 7, 1858 (see present edition, Vol. 15, pp. 512-14).—222

* "Money bearing compound interest increases at first slowly. But, the rate of increase being continually accelerated, it becomes in some time so rapid, as to mock all the powers of imagination. One Penny, put out at our Saviour's birth to 5% compound interest would before this time have increased to a greater sum, than would be contained in a 150 millions of Earths, all solid gold. But if put out to simple interest, it would in the same time, have amounted to no more than 7 sh. 4Väd. Our government has hitherto chosen to improve money in the last rather than the first of those ways" (Richard Price, An Appeal to the Public, on the Subject of the National Debt, London, 1772, 2nd ed.* [pp. 18-19]). (His trick: the government should borrow at simple interest and put out the borrowed money at compound interest.) In his:

[147] The reference is to Pitt's speech of February 17, 1792. It was reproduced in part in James Maitland Lauderdale's book Recherches sur la nature et l'origine de la richesse publique..., Paris, 1808, pp. 176-79, which Marx quotes below.— 223

a [Th. R. Malthus,] An Essay on the Principle of Population..., London, 1798, pp. 25-26.— Ed. b Marx quotes partly in German and partly in French.— Ed.

a Marx quotes partly in German and partly in French.— Ed. b The Economist, No. 412, July 19, 1851, p. 796.— Ed.

"In determining the price of things time is not an issue; in determining interest it is time which chiefly comes into consideration" (I.e., [pp.] 137-38). Müller is speaking here of circulation time. Since he sees circulation time as determining in the case of interest, but does not see this in the case of the price of the commodity, the profundity

a See this volume, p. 219.— Ed.

[149] Marx planned to devote one of the books of his economic work specifically to foreign trade (see Note 1).—229

(12) In its own right.— Ed. 16-613

[150] Ricardo advanced this hypothesis in chapters XIII and XXVIII of his book On the Principles of Political Economy, and Taxation. Here Marx, too, adheres to this hypothesis (see, for example, this volume, p. 193), considering it to be correct (see its substantiation in Capital, Volume II, Chapter XX, point XII, "The Reproduction of the Money Material"—present edition, Vol. 36). At the same time, Marx noted Ricardo's extreme inconsistency on this issue back in his work A Contribution to the Critique of Political Economy. Part One (see present edition, Vol. 29, pp. 401-02).—231

[10] In March 1862 Marx interrupted his successive analysis of relative surplus value and embarked on a detailed examination of bourgeois theories of surplus value. As a result, part of Notebook V was not filled in. In late 1862-early 1863 Marx returned to his analysis of the use of machinery in capitalist production and made records in notebooks V, XIX and XX, as is testified by his letters to Engels of January 24 and 28, 1863 (see present edition, Vol. 41, pp. 446 and 449-51). Part of Notebook V has therefore been included in this volume in accordance with the time it was written. The text on pp. 372-501 of this volume thus represents the continuation of subsection "y) Machinery. Utilisation of the Forces of Nature and of Science" of section "3) Relative Surplus Value", the beginning of which is published in Volume 30 of the present edition. Marx did not write the table of contents for Notebook V on the inside front cover, which he did for other notebooks of the manuscript of 1861-63 beginning with Notebook VI.—8, 372, 489

[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

[43] In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).—39, 50, 175, 176, 179, 198, 204, 206, 234, 262

[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

[133] Marx gives the nearest whole. More exactly, at an annual rate of accumulation of 5 per cent, the retailer's capital will amount to 100, 105, llO'Ai, 11561/80, etc.—179, 181

[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

[6] Marx evidently meant the ratio between the rate of profit and the rate of surplus value, which is in inverse proportion to the ratio of variable to total capital. On the importance of distinguishing between the rate of surplus value and the rate of profit see p. Ill — 124e of the manuscript (see present edition, Vol. 30, p. 229).—7, 77

[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

[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

[8] The "Episode" is to be found on pp. XVII— 1038-1065aand XVIII —1068-1074 (see this volume, pp. 171-222 and 226-38). In the draft plan for the third section (the future Volume III) of Capital it has a somewhat different title, namely "Reflux Movements of Money in the Process of Capitalist Production as a Whole" (see this volume, pp. 346-47).—8