III. Third Stage. C'-M
Productive capital, in performing its functions, consumes its own component parts for the purpose of transforming them into a mass of products of a higher value. Since labour power acts merely as one of its organs, the excess of the product's value engendered by its surplus labour over and above the value of productive capital's constituent elements is also the fruit of capital. The surplus labour of labour power is the gratuitous labour performed for capital and thus forms surplus value for the capitalist, a value which costs him no equivalent return. The product is therefore not only a commodity, but a commodity pregnant with surplus value. Its value is equal to P + s, that is to say equal to the value of the productive capital P consumed in the production of the commodity plus the surplus value s created by it. Let us assume that this commodity consists of 10,000 lbs of yarn, and that means of production worth £372 and labour power worth £ 5 0 were consumed in the fabrication of this quantity of yarn. During the process of spinning, the spinners transmitted to the yarn the value of the means of production consumed by their labour, amounting to £372, and at the same time they created, in proportion with the labour expended by them, new value to the amount of, say, £ 128. The 10,000 lbs of yarn therefore represent a value of £500.
III. Third Stage. C'-M
Commodities become commodity capital as a functional form of existence — stemming directly from the process of production itself-— of the already expanded capital value. If the production of commodities were carried on capitalistically throughout society, all commodities would be elements of commodity capital from the outset, whether they were crude iron, Brussels lace, sulphuric acid or ci-gars. The problem of what kinds of commodities out of the vast host available are destined by their nature to rank as capital and what other kinds to serve as ordinary commodities, is one of the self-created lovely ills of scholastic political economy.
Capital in the form of commodities has to perform the function of commodities. The articles of which capital is composed are produced from the outset for the market and must be sold, transformed into money, hence go through the process C — M.
Suppose the commodity of the capitalist to consist of 10,000 lbs of cotton yarn. If £372 represent the value of the means of production consumed in the spinning process, and new value to the amount of £128 has been created, the yarn has a value of £500, which is expressed in its price of the same amount. Suppose further that this price is realised by the sale C — M. What is it that makes of this simple act of all commodity circulation at the same time a capital function? No change that takes place inside of it, neither in the use character of the commodity — for it passes into the hands of the buyer as an object of use — nor in its value, for this value has not experienced any change of magnitude, but only of form. It first existed in the form of yarn, while now it exists in the form of money. Thus a substantial distinction is evident between the first stage M — C and the last stage C — M. There the advanced money functions as money capital, because it is transformed by means of the circulation into commodities of a specific use value. Here the commodities can serve as capital only to the extent that they bring this character with them in ready shape from the process of production before their circulation begins. During the spinning process, the spinners create yarn value to the amount of £ 128. Of this sum, say £ 5 0 represent to the capitalist merely an equivalent for his outlay for labour power, while £ 78 — when the degree of exploitation of labour power is 156%—form surplus value. The value of the 10,000 lbs of yarn therefore embodies first the value of the consumed productive capital P, the constant part of which = £372, the variable = £50, their sum = £422 = 8,440 lbs of yarn. Now the value of the productive capital P = C, the value of its constituent elements, which in the stage M — C confronted the capitalist as commodities in the hands of their sellers.
In the second place, however, the value of the yarn contains a surplus value of £ 78 = 1,560 lbs of yarn. C as an expression of the value of the 10,000 lbs of yarn is therefore = to C + AC, or C plus an increment of C ( = £ 78), which we shall call c, since it exists in the same commodity form as now the original value C. The value of the 10,000 lbs of yarn, equal to £ 500, is therefore represented by C + c = C . What turns C, the expression of the value of the 10,000 lbs of yarn, into C is not the absolute magnitude of its value (£500), for that is determined, as in the case of any other C standing for the expression of the value of some other sum of commodities, by the quantity of labour objectified in it. It is its relative value magnitude, its value magnitude as compared with that of capital P consumed in its production. This value is contained in it plus the surplus value supplied by the productive capital. Its value is greater, exceeds that of the capital value by this surplus value c. The 10,000 lbs of yarn are the bearers of the capital value expanded, enriched by this surplus value, and they are so by virtue of being the product of the capitalist process of production. C expresses a value relation, the relation of the value of the commodities produced to that of the capital spent on their production, in other words, expresses the fact that its value is composed of capital value and surplus value. The 10,000 lbs of yarn represent commodity capital, C , only because they are a converted form of the productive capital P, hence in a connection which exists originally only in the circuit of this individual capital, or only for the capitalist who produced the yarn with the help of his capital. It is, so to say, only an internal, not an external relation that turns the 10,000 lbs of yarn in their capacity of vehicles of value into a commodity capital. They exhibit their capitalist birthmark not in the absolute magnitude of their value but in its relative magnitude, in the magnitude of their value as compared with that possessed by the productive capital embodied in them before it was transformed into commodities. If, then, these 10,000 lbs of yarn are sold at their value of £500, this act of circulation, considered by itself, = C — M, a mere transformation of an unchanging value from the form of a commodity into that of money. But as a special stage in the circuit of an individual capital, the same act is a realisation of the capital value embodied in the commodity to the amount of £422 + the surplus value, likewise embodied in it, of £ 78. That is to say it represents C — M', the transformation of the commodity capital from its commodity form into the money form.4)
The function of C is now that of all commodities, viz.: to transform itself into money, to be sold, to go through the circulation stage C — M. So long as the capital, now expanded, remains in the form of commodity capital, lies immovable in the market, the process of production is at rest. The capital acts neither as a creator of products nor as a creator of value. A given capital value will serve, in widely different degrees, as a creator of products and value, and the scale of reproduction will be extended or reduced commensurate with the particular speed with which that capital throws off its commodity form and assumes that of money, or with the rapidity of the sale. It was shown in Book I that the degree of efficiency of any given capital is conditional on the potentialities of the productive process, which to a certain extent are independent of the magnitude of its own value.(1) Here it appears that the process of circulation sets in motion new forces independent of the capital's magnitude of value and determining its degree of efficiency, its expansion and contraction.
The mass of commodities C , being the depository of the expanded capital, must furthermore pass in its entirety through the metamorphosis C — M'. The quantity sold is here a main determinant. The individual commodity figures only as an integral part of the total mass.
4) End of Manuscript VI. Beginning of Manuscript V.
The £500 worth of value exists in the 10,000 lbs of yarn. If the capitalist succeeds in selling only 7,440 lbs at their value of £ 372, he has replaced only the value of his constant capital, the value of the expended means of production. If he sells 8,440 lbs he recovers only the value of the total capital advanced. He must sell more in order to realise surplus value, and he must sell the entire 10,000 lbs in order to realise the entire surplus value of £ 78 ( = 1,560 lbs of yarn). In £ 500 in money he therefore receives merely an equivalent for the commodity sold. His transaction within the circulation is simply C — M. If he had paid his labourers £ 64 in wages instead of £ 50 his surplus value would be only £ 64 instead of 78, and the degree of exploitation would have been only 100% instead of 156. But the value of his yarn would not change; only the relation between its component parts would be different. The circulation act C — M would still represent the sale of 10,000 lbs of yarn for £500,, their value.
C = C + c ( = £422 + £ 78). C equals the value of P or the productive capital, and this equals the value of M, the money advanced in M — C, the purchase of the elements of production, amounting to £422 in our example. If the mass of commodities is sold at its value, then C = £ 422 and c = £ 78, the value of the surplus product of 1,560 lbs of yarn. If we call c, expressed in money, m, then C — M' = (C + c) — ( M + m), and the circuit M — C ... P ... C — M', in its expanded form, is therefore represented by M — C <^jP ... P ... (C + c) —(M + m).
In the first stage the capitalist takes articles of consumption out of the commodity market proper and the labour market. In the third stage he throws commodities back, but only into one market, the commodity market proper. However the fact that he extracts from the market, by means of his commodities, a greater value than he threw onto it originally is due only to the circumstance that he throws more commodity value back onto it than he first drew out of it. He threw in value M and drew out the equivalent C; he throws C + c back, and draws out the equivalent M + m.
In our example M was equal to the value of 8,440 lbs of yarn. But he throws 10,000 lbs of yarn onto the market, and therefore he returns a greater value than he took. On the other hand he threw this increased value onto the market only because through the exploitation of labour power in the process of production he had created surplus value (as an aliquot part of the product expressed in surplus product). It is only by virtue of being the product of this process that the mass of commodities becomes commodity capital, the bearer of the expanded capital value. By performing C — M' the advanced capital value as well as the surplus value are realised. The realisation of both takes place simultaneously in a series of sales or in a lump sale of the entire mass of commodities which is expressed by C — M'. But the same circulation act C — M' is different for capital value and for surplus value, as it expresses for each of them a different stage of their circulation, a different section of the series of metamorphoses through which they must pass in the sphere of circulation. The surplus value c came into the world only during the process of production. It appeared for the first time in the commodity market, and moreover in the form of commodities. This is its first form of circulation, hence the act c — m is its first circulation act, or its first metamorphosis, which remains to be supplemented by the antithetical act of circulation, or the reverse metamorphosis, m — c.5)
It is different with the circulation which the capital value C performs in the same circulation act C — M', and which constitutes for it the circulation act C — M, in which C is = to P, equal to the M originally advanced. Capital value has opened its first circulation act in the form of M, money capital, and returns through the act C — M to the same form. It has therefore passed through the two antithetical stages of the circulation, 1) M — C, 2) C — M, and finds itself once more in the form in which it can begin its circular movement anew. What for surplus value constitutes the first transformation of the commodity form into that of money, constitutes for capital value its return, or retransformation, into its original money form.
By means of M — C <^P money capital is transformed into an equivalent sum of commodities, L and MP. These commodities no longer perform the function of commodities, of articles for sale. Their value exists now in the hands of the capitalist who bought them as the value of his productive capital P. And in the function of P, productive consumption, they are transformed into a kind of commodity differ-ing materially from the means of production, into yarn, in which their value is not only preserved but increased, from £422 to £500. By means of this real metamorphosis, the commodities taken from the market in the first stage, M — C, are replaced by commodities of different substance and value, which now must perform the function of
5-1 This is true no matter how we separate capital value and surplus value. 10,000 lbs of yarn contain 1,560 lbs = £ 78 worth of surplus value; likewise one lb., or one shilling's worth of yarn, contains 2.496 ounces = 1.872 pence worth of surplus value.
commodities, must be transformed into money and sold. The process of production therefore appears to be only an interruption of the process of circulation of capital value, of which up to that point only the first phase, M — C, has been passed through. It passes through the second and concluding phase, C — M, after C has been altered in substance and value. But so far as capital value, considered by itself, is concerned, it has merely suffered an alteration of its use form in the process of production. It existed in the form of £422 worth of L and MP, while now it exists in the form of £422 worth, or 8,440 lbs of yarn. If we therefore consider merely the two circulation phases of capital value, apart from its surplus value, we find that it passes through 1) M — C and 2) C — M, in which the second C has a different use form but the same value as the first C. Hence it passes through M — C — M, a form of circulation which, because the commodity here changes place twice and in the opposite direction — transformation from money into commodities and from commodities into money — necessitates the return of the value advanced in the form of money to its money form — its reconversion into money.
The same circulation act C — M' that constitutes the second and concluding metamorphosis, a return to the money form, for the capital value advanced in money, represents for the surplus value — borne along by the commodity capital and simultaneously realised by its change into the money form — its first metamorphosis, its transformation from the commodity to the money form, C — M, its first circulation phase.
We have, then, two kinds of observations to make here. First, the ultimate reconversion of capital value into its original money form is a function of commodity capital. Secondly, this function includes the first transformation of surplus value from its original commodity form to its money form. The money form, then, plays a double role here. On the one hand it is the form to which a value originally advanced in money returns, hence a return to that form of value which opened the process. On the other hand it is the first converted form of a value which originally enters the circulation in commodity form. If the commodities composing the commodity capital are sold at their values, as we assume, then C + c is transformed into M + m, its equivalent. The realised commodity capital now exists in the hands of the capitalist in this form: M + m (£ 422 + £ 7 8 = £ 500) • Capital value and surplus value are now present in the form of money, the form of the universal equivalent.
At the conclusion of the process capital value has therefore resumed the form in which it entered it, and as money capital can now open and go through a new process. Just because the initial and final forms of this process are those of money capital (M), we call this form of the circuit process the circuit of money capital. It is not the form but merely the magnitude of the advanced value that is changed at the close.
M + m is nothing but a sum of money of a definite magnitude, in this case £500. But as a result of the circuit of capital, as realised commodity capital, this sum of money contains the capital value and the surplus value. And these values are now no longer inseparably united as they were in the yarn; they now lie side by side. Their realisation has given both of them an independent money form; [2] ' ' /250 of this money represent the capital value of £422 and [39]/250 constitute the surplus value of £ 78. This separation, effected by the realisation of the commodity capital, has not only the formal content to which we shall refer presently. It becomes important in the process of the reproduction of capital, depending on whether m is entirely or partially or not at all lumped together with M, hence depending on whether or not it continues to function as a component part of the advanced capital value. Both m and M may pass through quite different processes of circulation.
In M' capital has returned to its original form M, to its money form, a form however in which it is materialised as capital.
There is in the first place a difference of quantity. It was M, £422. It is now M', £500, and this difference is expressed by M ... M', the quantitatively different extremes of the circuit, whose movement is indicated only by the three dots. M' > M, and M ' — M = s, the surplus value.— But as a result of this circular movement M ... M' it is only M' which exists now; it is the product in which its process of formation has become extinct. M' now exists by itself, independently of the movement which brought it into existence. That movement is gone; M' is there in its place.
But M', being M + m, £500, composed of £422 advanced capital plus an increment of the same amounting to £ 78, represents at the same time a qualitative relation, although this qualitative relation itself exists only as a relation between the parts of one and the same sum, hence as a quantitative relation. M, the advanced capital, which is now once more present in its original form (£422), exists as realised capital. It has not only preserved itself but also realised itself as capital by being distinguished as such from m (£78), to which it stands in the same relation as to an increase of its own, to a fruit of its own, to an increment to which it has given birth itself. It has been realised as capital because it has been realised as a value which has created value. M' exists as a capital relation. M no longer appears as mere money, but is expressly posited as money capital, expressed as a self-expanded value, which therefore possesses the property of self-expansion, of hatching a higher value than it itself has. M became capital by virtue of its relation to the other part of M', which it has brought about, which has been effected by it as the cause, which is the consequence of it as the ground. Thus M' appears as a sum of values differentiated within itself, functionally (conceptually) distinguished within itself, expressing the capital relation.
But this is expressed only as a result, without the intervention of the process of which it is the result.
Parts of value as such are not qualitatively different from one another, except in so far as they appear as values of different articles, of concrete things, hence in various use forms and therefore as values of different commodities — a difference which does not originate from them themselves as mere parts of value. In money all differences between commodities are extinguished, because it is the equivalent form common to all of them. A sum of money in the amount of £500 consists solely of uniform elements of £ 1 each. Since the intermediate links of its origin are obliterated in the simple existence of this sum of money and every trace has been lost of the specific difference between the different component parts of capital in the process of production, there exists now only the distinction between the conceptual form of a PRINCIPAL[3] equal to £422, the capital advanced, and an excess value of £ 78. Let M' be equal to, say, £ 110, of which 100 may be equal to M, the principal, and 10 equal to s, the surplus value. There is an absolute homogeneity, hence an absence of conceptual distinctions, between the two constituent parts of the sum of £ 110. Any £ 10 of this sum always constitute '/,, of the total sum of£ 110, whether they are '/[10] of the advanced principal of £ 100 or the excess of £ 10 above it. Principal and excess sum, capital and surplus sum, may therefore be expressed as fractional parts of the total sum. In our illustration, ' °/ u form the principal, or the capital, and '/n the surplus sum. In its money expression realised capital appears therefore at the end of its process as an irrational expression of the capital relation.
" This English term in the original is given in parentheses after its German equivalent.
True, this applies also to C ( = C + c). But there is this difference: that C , of which C and c are only proportional value parts of the same homogeneous mass of commodities, indicates its origin in P, whose immediate product it is, while in M', a form derived directly from circulation, the direct relation to P is obliterated.
The irrational distinction between the principal and the incremen-tal sum, which is contained in M', so far as that expresses the result of the movement M ... M', disappears as soon as it once more functions actively as money capital and is therefore not fixed as a money expression of expanded industrial capital. The circuit of money capital can never begin with M' (although M' now performs the function of M). It can begin only with M, that is to say it can never begin as an expression of the capital relation, but only as a form of advance of capital value. As soon as the £ 500 are once more advanced as capital, in order again to produce s, they constitute a point of departure, not one of return. Instead of a capital of£422, a capital of £500 is now advanced. It is more money than before, more capital value, but the relation between its two constituent parts has disappeared. In fact a sum of £ 500 instead of the £ 422 might originally have served as capital.
It is not an active function of money capital to appear as M'; to appear as M' is rather a function of C Even in the simple circulation of commodities, 1) Ci — M, 2) M — C[2], money M does not figure actively until the second act, M — C[2]. Its appearance in the form of M is only the result of the first act, by virtue of which it only then appears as a converted form of C,. True, the capital relation contained in M', the relation of one of its parts as the capital value to the other as its value increment, acquires functional importance in so far as, with the constantly repeated circuit M ... M', M' splits into two circulations, one of them a circulation of capital, the other of surplus value. Consequently these two parts perform not only quantitatively but also qualitatively different functions, M others than m. But considered by itself, the form M ... M' does not include what the capitalist consumes, but explicitly only the self-expansion and accumulation, so far as the latter expresses itself above all as a periodical augmentation of ever renewed advances of money capital.
Endnotes
[39] Marx has, presumably, made a slip of the pen, since the quantity of the means of payment required for all periodical payments is not in inverse but in direct proportion to the length of their periods. Just such a proportion is established by William Petty, whom Marx quotes in Note 107 to Chapter 3 of Capital, Vol. I. The meaning of the concept "the period of payment" is also defined in this concrete example. In all German editions oiCapital, Vol. II, published in recent years, including Complete Works of K. Marx and F. Engels in the languages of the original (Marx-Engels, Gesamtausgabe (MEGA), Zweite Abteilung, Band 5, Dietz Verlag, Berlin, 1983, S. 97), this passage has been corrected and reads as follows. "From the law of the rapidity of circulation of the means of payment, it follows that the quantity of the means of payment required for all periodical payments, whatever their source, is in direct proportion to the length of their periods." See also present edition, Vol. 35.—189
[3] From the numerous notebooks compiled by Marx in the period indicated by Engels, the Institute of Marxism-Leninism of the CC CPSU published nearly all the passages from Russian sources (see Marx-Engels Archives, vols XI-XII, XVI, Moscow, 1948, 1952, 1955, 1982) as well as Mathematical Manuscripts (Moscow, 1968). Marx's notebooks are published in full in Section IV of Marx-Engels Gesamtausgabe.— 7
[10] phlet Some Illustrations of Mr. McCulloch's Principles of Political Economy (Edin-
[2] Engels did not have time to publish Marx's Theories of Surplus Value as the fourth volume of Capital. It was first published in 1905-10 by Karl Kautsky. In 1954-61 and 1962-64, the Institute of Marxism-Leninism of the CC CPSU in Moscow published in Russian a new edition of Theories... which differed from that of Kautsky. In 1956-62 this Russian edition was used by the Institute of Marxism-Leninism of the CC SUPG as the basis for the publication of Theories... in German. In the present edition Theories of Surplus Value is published, according to MEGA 2, Abt. II, Bd. 3, Berlin, 1976-82, as part of the Economic Manuscript of 1861-63 (see present edition, vols 30-34).— 6