II. Accumulation and Reproduction on an Extended Scale
Since the proportions which the expansion of the productive process may assume are not arbitrary but prescribed by technology, the realised surplus value, though intended for capitalisation, frequently can only by dint of several successive circuits attain such a size (and until then must therefore be accumulated) as will suffice for its effective functioning as additional capital or for entrance into the circuit of functioning capital value. Surplus value thus congeals into a hoard and in this form constitutes latent money capital — latent because it cannot act as capital so long as it persists in the money form. 6a) The formation of a hoard thus appears here as a factor included in the process of capitalist accumulation, accompanying it but nevertheless essentially differing from it; for the process of reproduction itself is not expanded by the formation of latent money capital. On the contrary, latent money capital is formed here because the capitalist producer cannot directly expand the scale of his production. If he sells his sur-
6a' The term "latent" is borrowed from the idea of latent heat in physics, which has now been almost replaced by the theory of the transformation of energy. Marx therefore uses in the third part (a later version) another term, borrowed from the idea of potential energy, viz: "potential", or analogous to the virtual velocities of D'Alembert, "virtual capital".— F.E.
plus product to a producer of gold or silver, who puts new gold or silver into circulation or, what amounts to the same thing, to a merchant who imports additional gold or silver from foreign countries for a part of the national surplus product, then his latent money capital forms an increment of the national gold or silver hoard. In all other cases, the £78 for instance, which were a circulating medium in the hands of the purchaser, assume only the form of a hoard in the hands of the capitalist. Hence all that has taken place is a different distribution of the national gold or silver hoard.
If in the transactions of our capitalist the money serves as a means of payment (the commodities having to be paid for by the buyer on longer or shorter terms), then the surplus product intended for capitalisation is not transformed into money but into creditor's claims, into titles of ownership of an equivalent which the buyer may already have in his possession or which he may expect to possess. It does not enter into the reproductive process of the circuit any more than does money invested in interest-bearing securities, etc., although it may enter into the circuits of other individual industrial capitals.
The entire character of capitalist production is determined by the self-expansion of the advanced capital value, that is to say, in the first instance by the production of as much surplus value as possible; in the second place however (see Buch I, Kap. XXII) a by the production of capital, hence by the transformation of surplus value into capital. Accumulation, or production on an extended scale, which appears as a means for constantly more expanded production of surplus value — hence for the enrichment of the capitalist, as his personal aim — and is comprised in the general tendency of capitalist production, becomes later, however, as was shown in the first book, by virtue of its development, a necessity for every individual capitalist. The constant augmentation of his capital becomes a condition of its preservation. But we need not revert more fully to what was previously expounded.
We considered first simple reproduction, assuming that the entire surplus value is spent as revenue. In reality under normal conditions a part of the surplus value must always be spent as revenue, and another part must be capitalised. And it is quite immaterial whether a certain surplus value produced in any particular period is entirely consumed or entirely capitalised. On the average — and the general formula can represent only the average movement — both cases occur. But in order not to complicate the formula, it is better to assume that the entire surplus value is accumulated. The formula P ... C — M'—C'<pjjp ... P' stands for productive capital, which is reproduced on an enlarged scale and with greater value, and which as augmented productive capital begins its second circuit, or, what amounts to the same, renews its first circuit. As soon as this second circuit is begun, we once more have P as the starting-point; only this P is a larger productive capital than the first P was. Hence, if in the formula M ... M' the second circuit begins with M', M' functions as M, as an advanced money capital of a definite magnitude. It is a larger money capital than the one with which the first circular movement was opened, but all reference to its augmentation by the capitalisation of surplus value ceases as soon as it assumes the function of advanced money capital. This origin is expunged in its form of money capital, which begins its circuit. This also applies to P' as soon as it functions as the starting-point of a new circuit.
If we compare P ... P' with M ... M', or with the first circuit, we find that they have not the same significance at all. M ... M', taken by itself as an isolated circuit, expresses only that M, the money capital (or industrial capital in its circuit as money capital), is money generating money, value generating value, in other words, produces surplus value. But in the P circuit the process of producing surplus value is already completed upon the termination of the first stage, the process of production, and after going through the second stage (the first stage of the circulation), C — M', the capital value + surplus value already exist as realised money capital, as M', which appeared as the last extreme in the first circuit. That surplus value has been produced is depicted in the first-considered formula P ... P (see expanded formula, p. 47)a by c — m — c, which, in its second stage, falls outside of the circulation of capital and represents the circulation of surplus value as revenue. In this form, where the entire movement is represented by P ... P, where consequently there is no difference in value between the two extremes, the self-expansion of the advanced value, the production of surplus value, is therefore represented in the same way as in M ... M', except that the act C — M', which appears as the last stage in M ... M' and as the second stage of the circuit, serves as the first stage of the circulation in P ... P.
In P ... P', P' does not indicate that surplus value has been produced but that the produced surplus value has been capitalised, hence that capital has been accumulated and that therefore P', in contrast to P, consists of the original capital value plus the value of the capital accumulated because of the capital value's movement.
M', as the simple close of M ... M', and also C , as it appears within all these circuits, do not if taken by themselves express the movement but its result: the self-expansion of capital value realised in the form of commodities or money, and hence capital value as M + m, or C + c, as a relation of capital value to its surplus value, as its offspring. They express this result as various circulation forms of the self-expanded capital value. But neither in the form of C nor of M' is the self-expansion which has taken place itself a function of money capital or of commodity capital. As special, differentiated forms, modes of existence corresponding to special functions of industrial capital, money capital can perform only money functions and commodity capital only commodity functions, the difference between them being merely that between money and commodity. Similarly industrial capital in its form of productive capital can consist only of the same elements as those of any other labour process which creates products: on the one hand objective conditions of labour (means of production), on the other productively (purposively) functioning labour power. Just as industrial capital can exist in the sphere of production only in a composition which corresponds to the production process in general, hence also to the non-capitalist production process, so it can exist in the sphere of circulation only in the two forms corresponding to it, viz., that of a commodity and of money. But just as the totality of the elements of production announces itself at the outset as productive capital by the . fact that the labour power is labour power that belongs to others and that the capitalist purchased it from its proprietor, just as he purchased his means of production from other commodity owners; just as therefore thé process of production itself appears as a productive function of industrial capital, so money and commodities appear as forms of circulation of the same industrial capital, hence their functions appear as the functions of its circulation, which either introduce the functions of productive capital or emanate from them. Here the money function and the commodity function are at the same time functions of money capital and commodity capital, but solely because they are interconnected as forms of functions which industrial capital has to perform at the different stages of its circuit. It is therefore wrong to attempt to derive the specific properties and functions which characterise money as money and commodities as commodities from their quality as capital, and it is equally wrong to derive on the contrary the properties of productive capital from its mode of existence in means of production.
As soon as M' or C have become fixed as M + m or C + c, i. e., as the relation between the capital value and surplus value, its offspring, this relation is expressed in both of them, in the first case in the money form, in the second case in the commodity form, which does not change matters in the least. Consequently this relation does not have its origin in any properties or functions inherent in money as such or commodities as such. In both cases the characteristic property of capital, that of being a value generating value, is expressed only as a result. C is always the product of the function of P, and M' is always merely the form of C changed in the circuit of industrial capital. As soon therefore as the realised money capital resumes its special function of money capital, it ceases to express the capital relation contained in M' = M + m. After M ... M' has been passed through and M' begins the circuit anew, it does not figure as M' but as M even if the entire surplus value contained in M' is capitalised. The second circuit begins in our case with a money capital of £500, instead of £422, as in the first circuit. The money capital, which opens the circuit, is -£ 78 larger than before. This difference exists on comparing the one circuit with the other, but no such comparison is made within each particular circuit. The £ 500 advanced as money capital, £ 78 of which formerly existed as surplus value, do not play any other role than would some other £ 500 with which another capitalist inaugurates his first circuit. The same happens in the circuit of the productive capital. The increased P' acts as P on recommencing, just as P did in the simple reproduction P ... P.
In the stage M'—C'<^IP, the augmented magnitude is indicated only by C , but not by 1/ or MP'. Since C is the sum of L and MP, C indicates sufficiently that the sum of L and MP contained in it is greater than the original P. In the second place, the terms 1/ and MP' would be incorrect, because we know that the growth of capital involves a change in the constitution of its value and that as this change progresses the value of MP increases, that of L always decreasing relatively and often absolutely.