The circuit of capital moves through three stages. As Volume I laid them out, they form this series:

First stage. The capitalist appears on the commodity market and the labour market as a buyer. His money is converted into commodities — it goes through the act of circulation M-C.

Second stage. The capitalist uses up the commodities he has bought in making new ones. He acts as a capitalist producer of commodities; his capital passes through the production process. The result: commodities worth more than the elements that went into producing them.

Third stage. The capitalist returns to the market as a seller. His commodities are converted into money — they go through the act of circulation C-M.

So the formula for the circuit of money capital is:

M-C . . . P . . . C'-M', where the dots mark a break in the circulation process, and C' and M' stand for C and M increased by surplus-value.

Volume I discussed the first and third stages only as far as was needed to understand the second stage, capital's production process. So the different forms capital puts on at its different stages — forms it takes up and sheds again each time the circuit repeats — were left unexamined. They are now the next thing to investigate.

To grasp these forms in their pure state, we first have to set aside everything that has nothing to do with how the forms themselves change and take shape. So here we assume not only that commodities sell at their values, but also that this happens under unchanging circumstances. We also set aside any changes in value that might occur during the circuit.

Note 2 (marked at the section heading; Fernbach [2]): from here on the text follows Manuscript VII, begun 2 July 1878.

M-C is the exchange of a sum of money for a sum of commodities: for the buyer, his money turns into commodities; for the sellers, their commodities turn into money. What makes this everyday act of buying a stage in one capital's own circuit is, first of all, not the form of the act but what actually changes hands — the particular useful things the money is exchanged for. On one side these are means of production, on the other labour-power: the material and personal factors of commodity production, whose particular kind must of course match the sort of article to be produced. If we call labour-power L and means of production mp, then the sum of commodities to be bought is C = L + mp, or C<L/mp> for short. Looked at by its content, then, M-C presents itself as M-C<L/mp>: that is, M-C splits into M-L and M-mp. The sum of money M divides into two parts, one of which buys labour-power, the other means of production. These two sets of purchases belong to two completely different markets — one to the commodity market proper, the other to the labour market.

But besides this split into two different kinds of commodities, M-C also shows a striking ratio between the amounts of money spent on each.

We know that the value, or price, of labour-power is paid to its owner — the person offering it for sale as a commodity — in the form of wages: that is, as the price of a sum of labour that contains surplus labour. So if, say, a day's value of labour-power is 3 shillings, the product of five hours' labour, this same sum figures in the contract between buyer and seller as the price or wage for, say, ten hours' labour. If such a contract is made with fifty workers, together they owe the buyer 500 hours of labour over the day, of which half — 250 hours, or twenty-five ten-hour working-days — consists purely of surplus labour. The quantity and scale of the means of production bought must be enough to put this mass of labour to work.

So M-C expresses two relations at once. First, a given sum of money — say £422 — is turned into means of production and labour-power that fit together. Second, the split between the money laid out on labour-power (L) and the money laid out on means of production (mp) is fixed from the start by the total surplus labour the workers will have to expend.

So if, say, the weekly wages of fifty workers in a spinning mill come to £50, then £372 must be laid out on means of production — assuming that is the value of the means of production that turns a week's work of 3,000 hours, 1,500 of them surplus labour, into yarn.

How far the use of extra labour requires an extra outlay on means of production varies from industry to industry, and that does not matter here. What matters is only this: whatever the circumstances, the part of the money spent on means of production — the means of production bought in M-mp — must be enough, and so must be calculated and provided in the right proportion from the start. Put another way, the mass of means of production must be enough to absorb the mass of labour — enough for that labour to turn them into product. If there were not enough means of production, the surplus labour the buyer has at his disposal could not be used; his right to dispose of it would come to nothing. If there were more means of production than available labour, they would stay unsaturated with labour — they would not be turned into product.

Once the purchase is complete, the buyer has more than just the means of production and labour-power needed to make something useful. He paid for the labour-power at its value — but what that purchase puts at his command is more labour than it takes to replace that value — and, alongside it, enough means of production to turn all that labour into actual goods. So he now controls everything needed to produce goods worth more than what went into making them: a batch of commodities carrying surplus-value inside it.

The value he laid out in money has taken on a new shape — one in which it can breed more value, surplus-value, in the form of goods. In other words, he now holds his capital in a new form.

Productive capital is the name for that new form: capital able to function as a creator of value and surplus-value. Capital in this form is called P.

The value of P equals the value of L plus mp — the same money, M, converted into labour-power and means of production. M is the very same capital-value as P, just existing differently: capital-value in the state of money. This is money capital.

M-C<L/mp> — or, in its general form, simply M-C, a set of commodity purchases — is an act of ordinary commodity circulation. But as a stage in capital's own circuit, it is at the same time something more: the transformation of capital-value out of its money form and into its productive form — money capital becoming productive capital, for short.

In this first shape of the circuit, then, money appears as the first bearer of the capital-value, and money capital appears as the form in which capital is advanced.

As money capital, it is in a state where it can perform money's own functions — here, the functions of a general means of purchase and a general means of payment. (It works as a means of payment because, although labour-power is bought first, it is only paid for after it has worked. And wherever the means of production are not ready-made on the market but have to be ordered, money functions as a means of payment there too, in M-mp.)

This power does not come from money capital being capital. It comes from its being money.

But the other side is just as true: capital-value in the state of money can perform only money's functions, and nothing more. What turns those functions into functions of capital is their specific role in the movement of capital, and so their connection to the other stages of its circuit.

Take the case before us: money is converted into commodities, and the combination of those commodities forms the natural shape of productive capital. Already, latently, as a possibility, that shape carries within it the result of the capitalist production process.

Part of the money that acts as money capital in M-C, simply by completing this circulation, passes into a different function — one where its character as capital disappears, though its character as money remains. The circulation of the money capital, M, splits into M-mp and M-L: buying means of production, and buying labour-power.

Take the second of these on its own. M-L is the capitalist buying labour-power. From the worker's side — the owner of labour-power's — it is a sale: a sale of labour-power, or, since the wage form is already assumed here, simply a sale of labour. What is M-C (that is, M-L) for the buyer is, as with any purchase, L-M (that is, C-M) for the seller: the worker sells his labour-power.

The sale of labour-power is the first stage of circulation, the first metamorphosis of the commodity, as already covered in Volume I. For the seller of labour, it is his commodity turning into its money form.

He then spends the money he gets this way, bit by bit, on a set of commodities that meet his needs — articles of consumption. So the whole circulation of his commodity works out as L-M-C: first L-M (that is, C-M), then M-C. In other words, it takes the general form of simple commodity circulation, C-M-C, where money is nothing but a vanishing means of circulation, a mere go-between in swapping one commodity for another.

M-L is the crucial moment in turning money capital into productive capital, because it is the essential condition for the value advanced in money-form to actually become capital — value that produces surplus-value. M-mp, by contrast, is necessary only in order to put to use the mass of labour that M-L has bought.

That's why M-L was presented, from this angle, in Volume I, Part Two, "The Transformation of Money into Capital." Here the same thing needs to be looked at from a different angle: with specific attention to money capital as a form of appearance of capital.

M-L is generally seen as the characteristic feature of the capitalist mode of production. But not for the reason you might expect: not because the contract secures the buyer more labour than is needed to cover the wage — surplus labour, the basic condition for turning the advanced value into capital, that is, for producing surplus-value.

Rather, it is seen this way because of its form: because labour is bought with money, in the shape of wages — and that is taken as the mark of a money economy.

Here too, it isn't the irrationality of this form that gets treated as characteristic — that irrationality is simply overlooked. And the irrationality is real: labour, as the very thing that creates value, cannot itself have a value — so a given quantity of labour cannot have a value expressed as a price — cannot be worth a given sum of money.

But we already know that the wage is just a disguised form: a form in which, say, the daily price of labour-power presents itself as the price of the labour that labour-power performs in a day. So the value produced in six hours' work by that labour-power gets expressed as the value of its whole twelve-hour stint.

M-L counts as the defining trait, the signature, of the so-called money economy — because here labour appears as its owner's commodity, and money appears as its buyer. In short, because of the money relation: the buying and selling of human activity.

But money has appeared as a buyer of so-called services far earlier than this, long before any of it turned money into money capital, or overturned the general character of the economy.

It makes no difference at all to money what kind of commodity it turns into. Money is the universal equivalent-form for every commodity — commodities already show, in their prices, that they already count as a given sum of money, that they expect to be turned into money, and that only by changing places with money do they take on the form in which they can become useful things for their owners.

So once labour-power turns up on the market as its owner's commodity — its sale taking the form of a payment for labour, the shape of wages — then buying and selling it is no more remarkable than buying and selling any other commodity. What's characteristic is not that the commodity labour-power can be bought. It's that labour-power appears as a commodity at all.

Through M-C<L/mp> — turning money capital into productive capital — the capitalist brings together the two sides of production: the things (means of production) and the people (labour-power), so far as both are bought as commodities.

Say money is being turned into productive capital for the very first time, or is acting as money capital for its owner for the very first time. Then the capitalist has to buy the means of production — buildings, machines, and so on — before he buys labour-power. Because the moment labour-power comes under his command, the means of production have to already be there, ready for that labour-power to work with.

This is how things look from the capitalist's side.

Now look from the worker's side. His labour-power can only actually be put to work once it has been sold and, through that sale, joined to the means of production. Before the sale, it exists apart from them — cut off from the objective conditions it needs to be exercised.

In that cut-off state, the worker cannot use his labour-power directly to make useful things for himself, and he cannot use it to make commodities he could live by selling either. But as soon as the sale joins it to the means of production, it becomes part of the buyer's productive capital — exactly as the means of production themselves are.

In the act M-L, the owner of money and the owner of labour-power deal with each other only as buyer and seller — money-owner facing commodity-owner — and in that respect the only relation between them is a plain money relation.

And yet the buyer, from the very start, is also the owner of the means of production — the objective conditions the owner of labour-power needs in order to spend it productively. In other words, those means of production face the owner of labour-power as someone else's property. The buyer, in turn, is confronted by the seller's labour-power as someone else's — labour-power that has to pass under his command and be built into his capital before that capital can actually act as productive capital.

So the class relation between capitalist and wage-labourer is already there — already presupposed — the moment the two face each other in the act M-L (L-M, seen from the worker's side). It is a purchase and sale, a money relation, yes — but one where the buyer is already assumed to be a capitalist and the seller a wage-labourer. And that assumption holds because the conditions needed to put labour-power to use — means of subsistence and means of production — are already separated from the owner of labour-power, held instead as someone else's property.

How that separation came about is not our question here. It is enough that it exists the moment M-L happens.

What matters here is this: when M-L shows up as a function of money capital — when money here appears as a form capital takes — that is not simply because money is acting as payment for a human activity with a useful effect, a service. It is not a matter of money's function as means of payment at all.

Money can be spent in this way only because labour-power is separated from its means of production (including the means of subsistence, which are themselves a means of production of labour-power). And that separation is undone only by selling labour-power to whoever owns the means of production — which means the buyer now controls how that labour-power gets used — and the amount of labour he can draw out of it is not limited to the labour needed just to cover the price he paid.

The capital-relation only comes out during the production process because it was already there, implicitly, in the act of circulation itself — in the basically different economic positions that buyer and seller occupy toward each other, in their class relation. It is not money's nature that gives rise to this relation. It is the other way round: it is the relation, once it exists, that can turn a mere money-function into a capital-function.

When people think about money capital — and for now we are only looking at the one specific function it performs here — two mistakes usually run together or get tangled up.

First: the functions capital-value performs as money capital, which it can perform only because it happens to be in money form, get wrongly credited to its character as capital. In fact they belong only to its being in the state of money — its form of appearing as money.

Second, the reverse mistake: the specific thing that makes a money-function also a capital-function gets derived from the nature of money itself, so that money and capital get confused with each other. In fact that function presupposes social conditions — as here, in carrying out M-L — which mere commodity circulation, and the money circulation that goes with it, never supply on their own.

Buying and selling slaves is, in form, also a purchase and sale of commodities. But without slavery already existing, money cannot perform this function. Where slavery exists, money can be spent buying slaves. But the reverse does not hold: money in a buyer's hand is by no means enough, on its own, to bring slavery into being.

Historical processes had to happen first. Only then could the sale of one's own labour-power — in the form of selling one's labour for wages — stop being an isolated, occasional thing and become the socially decisive precondition for producing commodities at all; and only then could money capital perform the function M-C on a social scale. Processes that dissolved the original union between the means of production and labour-power, so that the mass of the people, the workers, now stand facing the non-workers: the workers owning none of the means of production, the non-workers owning all of them.

It makes no difference here whether, before it was broken up, that original union took the form of the worker himself belonging among the means of production, as one more of them — or the form of the worker owning them himself.

What actually underlies the act M-C here is distribution — not distribution in the everyday sense of dividing up consumer goods, but the distribution of the elements of production themselves: the objective factors piled up on one side, and labour-power kept isolated from them on the other.

So the means of production — the objective part of productive capital — must already face the worker as capital, before the act M-L can become something that happens generally, throughout society.

We have already seen how capitalist production, once established, does not just reproduce this separation as it develops — it keeps widening it, until it becomes the generally dominant state of society.

But there is another side to this. For capital to form itself and take hold of production, trade has to have reached a certain level of development first — and with it, commodity circulation, and with that, commodity production. Articles cannot enter circulation as commodities unless they were produced for sale in the first place — that is, produced as commodities.

Yet commodity production appears as the normal, dominant character of production only once capitalist production is already its basis.

Russian landowners — who, since the so-called emancipation of the peasants, now run their farms with wage-labourers instead of unfree serfs — complain of two things.

First, they complain of a shortage of money capital. The complaint runs something like this: before the harvest can be sold, large sums have to be paid out to wage-labourers, and the first thing needed for that — ready cash — is missing. Capital in the form of money has to be constantly on hand, specifically to pay wages, if production is to be run on a capitalist footing.

But the landowners can take comfort. Given time, one gathers the roses: eventually the industrial capitalist has at his disposal not only his own money, but other people's money too.

The second complaint is more telling, though: that even when they do have the money, they cannot find enough labour-power to buy, at the time they need it. The reason is that the Russian farm-worker — because the village community still holds the land in common — is not yet fully cut off from his means of production, and so is not yet a "free wage-labourer" in the full sense of the word.

But it is exactly the presence of such free wage-labourers, on a social scale, that is the indispensable condition for M-C — the turning of money into commodities — to take the form of turning money capital into productive capital.

So it follows, as a matter of course, that the formula for the circuit of money capital, M-C . . . P . . . C'-M', is the self-evident form the circuit of capital takes only on the basis of already-developed capitalist production — because it presupposes that a class of wage-labourers is available on a social scale.

Capitalist production, as we have seen, does not just produce commodities and surplus-value. It reproduces the class of wage-labourers too, and on an ever-widening scale, turning the vast majority of direct producers into wage-labourers.

Since the very first precondition for M-C . . . P . . . C'-M' to run its course is the constant availability of the class of wage-labourers, the formula already presupposes capital in the form of productive capital — and so already presupposes the form of the circuit of productive capital.

This circuit starts with M-C, money changing into commodities — a purchase. For the circulation to be complete, it needs the opposite move too: C-M, commodities changing into money — a sale. But the immediate result of M-C is not more circulation, it is an interruption of it. The capital value that was advanced as money has taken on a physical form it cannot keep circulating in. It has to go into consumption instead — specifically, productive consumption.

The use of labour-power, labour itself, can only happen in the labour process. The capitalist cannot turn around and sell the worker again as a commodity: the worker is not his slave, and all the capitalist bought was the use of his labour-power for a fixed time. The only way the capitalist can use that labour-power at all is by having it use up the means of production, turning them into commodities.

So the result of the first stage is simply this: capital enters the second stage, the productive stage.

The movement now looks like M-C . . . P. The dots mark a break: capital's circulation has stopped, but its overall circuit keeps going — it has simply passed out of the sphere of commodity circulation and into the sphere of production. So this first stage, turning money capital into productive capital, shows up as no more than a lead-in, an introduction to the second stage, where productive capital does its work.

M-C requires more than having value in some usable form. It requires having that value in money form — being a possessor of money. But the act itself consists in giving that money away. So the buyer can go on being a possessor of money only if the money flows back to him, implicitly, through this very act of giving it away. And money can only flow back to him through selling commodities. So this act presupposes that he is a commodity producer.

M-L. The wage-worker lives only by selling his labour-power. Keeping that labour-power alive — which means keeping himself alive — requires eating and using things up every day.

So the wage-worker's payment has to be repeated constantly, at short intervals, so he can keep repeating the purchases he needs for his own upkeep — the act L-M-C, or C-M-C. That means the capitalist must constantly face him as a money capitalist, with his capital functioning as money capital.

But there is another side to this. For the mass of direct producers, the wage-workers, to carry out the act L-M-C, the necessities of life must constantly stand ready for them to buy — that is, in commodity form. This alone already calls for a high degree of circulation of products as commodities, and so for commodity production on a large scale. Once production by wage-labour becomes the general rule, commodity production has to become the general form of production. And once commodity production is general, it in turn forces a steadily growing division of social labour: products grow ever more specialized as commodities made by one particular capitalist, and complementary processes split apart into independent branches.

So M-mp develops to the same degree as M-L. That is, the production of means of production separates, to the same extent, from the production of the commodities those means of production serve — and these means of production now confront every commodity producer as commodities he does not make himself, but buys for his own particular production process. They come from branches of production entirely separate from his own, run independently, and enter his branch as commodities that must therefore be bought. The material conditions of commodity production confront him more and more as products of other commodity producers, as commodities. And to the same extent, the capitalist must appear as a money capitalist: the scale on which his capital has to function as money capital keeps expanding.

On the other hand, the very same conditions that create the basic requirement of capitalist production — the existence of a class of wage-workers — also push all commodity production toward becoming capitalist commodity production. As capitalist production develops, it eats away at and dissolves every older form of production, the kind aimed mainly at meeting the producers' own needs directly, which turns only its surplus into commodities. At first, it simply makes selling the product the main concern, without appearing to attack the older way of producing itself — this, for instance, was the first effect of capitalist world trade on peoples like the Chinese, the Indians, the Arabs, and others.

But once it has taken root, it goes further: it destroys every form of commodity production founded either on producers working for themselves, or merely on selling a leftover surplus as commodities. First it makes commodity production universal, then, step by step, it turns all commodity production into capitalist production.

Whatever the social form production takes, workers and means of production always remain its two factors. But as long as they are separated from each other, each is only a factor in potential, not yet actually one. For any production to happen at all, they have to be joined together. The particular way this joining happens is exactly what distinguishes one economic epoch of society's structure from another.

In the case before us, the starting point is given: the free worker separated from his means of production. And we have already seen how, and under what conditions, the two are brought back together in the capitalist's hands — namely, as the productive mode of existence of his capital. So the production process, in which these personal and material factors join together, itself becomes a function of capital: the capitalist production process, whose nature was worked out in detail in the first volume of this work.

Every pursuit of commodity production is at the same time a pursuit of exploiting labour-power. But only capitalist commodity production becomes an epoch-making way of exploiting — one that, as it develops historically through the organization of the labour process and the enormous growth of technology, overturns the whole economic structure of society and towers, incomparably, above every earlier epoch.

Means of production and labour-power play different roles during the production process in forming value — and so also in creating surplus-value. To the extent that both are forms of existence of the capital value advanced, this difference marks them off as constant capital and variable capital.

As different components of productive capital, they differ in another way too. The means of production, once in the capitalist's possession, remain his capital even outside the production process. Labour-power, by contrast, becomes the form of existence of an individual capital only inside that process. Labour-power is a commodity only in the hands of the person who sells it, the wage-worker; it becomes capital only in the hands of the person who buys it, the capitalist, to whom its temporary use falls.

The means of production themselves become mere physical shapes of productive capital, or productive capital as such.

The means of production reach that point only once labour-power — as the personal form in which productive capital exists — can be built into them. So human labour-power is no more capital by nature than the means of production are. Both take on this specific social character only under certain historically developed conditions — just as it is only under such conditions that precious metals get stamped with the character of money, or money, in turn, with the character of money capital.

In the course of functioning, productive capital uses up its own components in order to turn them into a mass of products worth more than they were. Labour-power operates only as one organ of that capital, so the extra value its surplus labour creates — the amount by which the product's value exceeds the value of the elements that went into making it — is also capital's fruit. The surplus labour of labour-power is labour performed for capital for free. That is exactly what forms surplus-value for the capitalist: a value that costs him no equivalent in return.

So the product is not just a commodity, it is a commodity impregnated with surplus-value. Its value is P + s: the value of the productive capital P used up in making it, plus the surplus-value s that capital has generated.

Say this commodity is 10,000 lb. of yarn, made using means of production worth £372 and labour-power worth £50. During the spinning process, the spinners transferred the value of the means of production they used up, £372, onto the yarn, while at the same time, through their own expenditure of labour, they created a new value of, say, £128. So the 10,000 lb. of yarn carries a value of £500.

A commodity becomes commodity capital as the form taken, straight out of the production process, by a capital value that has already been valorized. If commodity production were carried out on a capitalist basis across the whole of society, then every commodity would from the outset be an element of some commodity capital — whether it consisted of pig-iron or Brussels lace, sulphuric acid or cigars. The question of which kinds, out of the whole army of commodities, are marked out by their own properties for the rank of capital, and which others for ordinary commodity duty, is one of the charming torments that scholastic economics inflicts on itself.

In commodity form, capital has to perform a commodity's function. The articles that make it up were produced for the market from the start, so they have to be sold, turned into money. They have to pass through the movement C-M.

Say the capitalist's commodity is 10,000 lb. of cotton yarn. In the spinning process, means of production worth £372 were used up and a new value of £128 was created, so the yarn has a value of £500, expressed in its corresponding price. This price gets realized through the sale C-M.

What is it that turns this simple act, an act common to all commodity circulation, into a function of capital at the same time? It is not any change that happens within the act itself. Not with respect to its use character: the commodity passes to the buyer as an object of use, just as any commodity does. And not with respect to its value either: that value does not change in magnitude, only in form. First it existed as yarn; now it exists as money. So an essential difference emerges between the first stage, M-C, and the final stage, C-M.

In the first stage, the money advanced functions as money capital because, through circulation, it converts itself into commodities of a specific use-value. In the final stage, the commodity can function as capital only because it already carries that character with it, ready-made, out of the production process, before its circulation even begins.

During the spinning process the spinners created yarn-value amounting to £128. Of that, say £50 is simply an equivalent to the capitalist for his outlay on labour-power, and £78, at a rate of exploitation of labour-power of 156 per cent, is surplus-value.

So the value of the 10,000 lb. of yarn contains, first, the value of the productive capital P that was consumed: its constant part, £372, its variable part, £50, together £422, equal to 8,440 lb. of yarn. The value of the productive capital P is itself equal to C, the value of its formative elements, which in the stage M-C confronted the capitalist as commodities in the hands of their sellers.

Second, the value of the yarn also contains a surplus-value of £78, equal to 1,560 lb. of yarn. So C, as the value-expression of the 10,000 lb. of yarn, equals C plus an increment of C, £78, which we will call c, since it exists in the same commodity form as the original value C does. The value of the 10,000 lb. of yarn, £500, is therefore C + c = C'.

What turns C, the value-expression of the 10,000 lb. of yarn, into C', is not its absolute size, £500. That absolute size, like the value-expression of any other batch of commodities, is simply fixed by the amount of labour objectified in it. What makes it C' is its relative size, its value compared with the value of the capital P used up in producing it. That capital value is contained in it, plus the surplus-value the productive capital has supplied. Its value is bigger than that capital value, exceeds it, by exactly this surplus-value.

The 10,000 lb. of yarn carries a capital value that has been valorized, enriched with a surplus-value, and it carries this because it is the product of the capitalist production process. C' expresses a value-relation: the ratio between the value of the commodity product and the value of the capital spent producing it, that is, the composition of its value out of capital value plus surplus-value.

The 10,000 lb. of yarn are commodity capital, C', only as the transformed form of the productive capital P, so within a connection that, for now, exists only inside the circuit of this one individual capital, or for the capitalist who has produced yarn with his own capital. It is, so to speak, only an internal relation, not an external one, that turns the 10,000 lb. of yarn, as bearer of value, into commodity capital. The yarn carries its capitalist birthmark not in the absolute size of its value, but in its relative size, in its value compared to the value the productive capital contained in it had before it turned into a commodity.

So if the 10,000 lb. of yarn is sold at its value of £500, this act of circulation, considered on its own, is simply C-M, the plain conversion of an unchanged value out of commodity form into money form. But as a particular stage in the circuit of one individual capital, this same act is the realization of the capital value of £422 the commodity was carrying, plus the surplus-value of £78 it was carrying, that is, C'-M', the transformation of commodity capital out of its commodity form into money form.

C' now has the function every commodity product has: to be turned into money, to be sold, to pass through the phase of circulation C-M. As long as this now-valorized capital stays stuck in the form of commodity capital, tied up on the market, the production process stands still. It functions neither as a producer of products nor as a producer of value.

Depending on how fast the capital sheds its commodity form and takes on its money form, that is, depending on how quickly it sells, the very same capital value will produce products and value to very different degrees, and the scale of reproduction will expand or shrink accordingly. It was shown in the first volume that how effective a given capital is depends on forces within the production process that are, to some degree, independent of its own size.

It now becomes clear that circulation itself sets new forces in motion, forces independent of the capital's size, that affect how effective it is, how far it can expand or contract.

The mass of commodities C', as bearer of the valorized capital, also has to go through the whole metamorphosis C'-M' across its entire quantity. Here the amount sold becomes what matters essentially. The single commodity now figures only as one part making up the total mass. The value of £500 exists spread across the 10,000 lb. of yarn.

If the capitalist manages to sell only 7,440 lb., at its value of £372, he has only replaced the value of his constant capital, the value of the means of production he laid out. If he sells 8,440 lb., he has only replaced the size of the whole capital he advanced. He has to sell more than that to realize any surplus-value at all, and he has to sell the full 10,000 lb. of yarn to realize the entire surplus-value of £78, equal to 1,560 lb. of yarn. So in receiving £500 in money, he only gets an equal value for the commodity he sold — within circulation, his transaction is simple C-M.

If he had paid his workers £64 instead of £50, his surplus-value would only have been £64 instead of £78, and the rate of exploitation only 100 per cent instead of 156 per cent. But the value of his yarn would still be exactly the same — only the proportion between its different parts would differ. The act of circulation C-M would still be the sale of 10,000 lb. of yarn for £500, its value.

C' = C + c (£422 + £78). C is equal to the value of P, the productive capital, and that in turn is equal to the value of M advanced in M-C, the purchase of the elements of production, in our example £422. 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 lb. 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', written out in full, is M-C . . . P . . . (C+c)-(M+m).

In the first stage, the capitalist withdraws articles of use from the commodity market and from the labour market. In the third stage, he throws commodities back in, but only into one market, the commodity market. If, through his commodity, he draws more value back out of the market than he originally threw in, that is only because he throws in a greater commodity-value than he originally drew out. He threw in the value M and drew out the equal value C; now he throws in C + c and draws out the equal value M + m. In our example, M was equal to the value of 8,440 lb. of yarn; but he throws 10,000 lb. into the market, giving it more value than he took from it.

But the capitalist only threw in this increased value in the first place because, in the process of production, he produced surplus-value — as one part of the product, existing in the shape of a surplus product — by exploiting labour-power. It is only as the product of this process that the mass of commodities is commodity capital, bearer of a valorized capital value.

By carrying out C'-M', both the capital value advanced and the surplus-value get realized. Both are realized together, whether across a series of sales or in one sale of the whole mass of commodities at a stroke, either way it is what C'-M' expresses.

But this same circulation act, C'-M', is not the same thing for the capital value as it is for the surplus-value. For each of the two, it marks a different stage of their circulation, a different leg in the series of metamorphoses each of them has to pass through within circulation. The surplus-value, c, was only just born inside the production process. So it is stepping onto the commodity market for the first time, and in commodity form. That commodity form is its first form of circulation. So the act c-m is its first act of circulation, its first metamorphosis, one that still needs to be completed by the opposite act of circulation, the reverse metamorphosis m-c.

It's different for the circulation the capital value itself goes through in that same act C'-M'. For the capital value, that act is just C-M — because C here is P, the same value that was originally advanced as M. The capital value opened its first act of circulation as M, as money capital, and through the act C-M it comes back to that same form. So it has passed through the two opposite phases of circulation — first M-C, then C-M — and stands once again in the form it started in, ready to begin the same circuit all over. What is, for the surplus-value, its first change from commodity form to money form is, for the capital value, a return — a change back into the money form it began in.

Through M-C, the money capital was turned into an equal-value sum of commodities — labour-power and means of production. These commodities don't go on to function as commodities again, as things up for sale. Their value now sits in the hands of the person who bought them, the capitalist, as the value of his productive capital P. And in the function of P — productive consumption — they're transformed into a kind of commodity materially different from the means of production: yarn. In the yarn, their value isn't just kept, it's increased — from £422

to £500. Through this real transformation, the commodities withdrawn from the market in the first stage, M-C, are replaced by different commodities — different in kind and in value — which now have to function as commodities themselves: turned into money, sold. So the production process shows up simply as an interruption in the circulation of the capital value, which up to that point had only gone through its first phase, M-C. It now goes through the second and final phase, C-M, with C changed both in kind and in value.

But looked at just by itself, the capital value has only undergone a change in its use-form during production. It existed as £422 of value in labour-power and means of production; it now exists as £422 of value in 8,440 lb. of yarn.

So if we consider only the two phases of the capital value's circulation, thought of apart from its surplus-value, it goes through (1) M-C and (2) C-M — where the second C has a changed use-form but the same value as the first C. That gives M-C-M: a form of circulation which, through this double change of place of the commodity in opposite directions — money turned into commodity, commodity turned into money — necessarily requires the value advanced as money to come back to its money form: its transformation back into money.

That same act of circulation, C'-M', is two things at once. For the capital value advanced in money, it is the second and final change — the return to money form. For the surplus-value carried along in the same commodity capital and realized together with it when it turns into money, it is the first change: the change from commodity form into money form, C-M, the first phase of circulation.

Two things are worth noting here. First: the capital value's final change back into its original money form is a function of the commodity capital. Second: that same function includes the surplus-value's first change of form, out of its original commodity form into money form. So the money form plays a double role. On one side, it's the returning form of a value that was originally advanced in money — a return to the value-form that opened the process. On the other side, it's the first transformed form of a value that originally enters circulation in commodity form.

If the commodities making up the commodity capital are sold at their value, as we're assuming here, then C + c turns into the equal-value M + m. In this form, M + m (£422 + £78 = £500), the realized commodity capital now exists in the capitalist's hands. Capital value and surplus-value now both exist as money — in the universal equivalent form.

At the end of the process, then, the capital value is back in the same form it started in — so it can open and run through the process afresh, once again as money capital. It's exactly because the starting form and the closing form of the process are both the form of money capital, M, that we call this shape of the circuit the circuit of money capital. It isn't the form of the value advanced that has changed by the end — only its size.

M + m is nothing but a sum of money of a given size — in our case, £500. But as the result of the circuit of capital, as realized commodity capital, this sum of money contains both the capital value and the surplus-value. And now the two are no longer fused together the way they were in the yarn — they simply lie side by side. Turning them into money has given each of them its own independent money form. 211/250 of the £500 is the capital value, £422; 39/250 of it is the surplus-value, £78.

This split, produced by realizing the commodity capital, isn't only a matter of form — we'll come to that in a moment. It also matters for the reproduction process of capital, depending on whether m gets added back onto M in whole, in part, or not at all — that is, depending on whether it goes on functioning as part of the capital value advanced or not. m and M can even go through completely different circulations from each other.

In M', the capital has returned once more to its original form, M — its money form. But now in a form in which it stands realized as capital.

First, there's a quantitative difference. It was M, £422; now it's M', £500. That difference is expressed in M . . . M', the quantitatively different end-points of the circuit, whose actual movement is indicated only by the dots. M' is greater than M; M' minus M = s, the surplus-value. But as the result of this circuit, M . . . M', all that now exists is M' itself — it's the product, and the process that formed it has been extinguished in it. M' now exists on its own, independent of the movement that produced it. That movement is past; M' is there in its place.

But M' as M + m — £500 as £422 of capital advanced, plus an increment on it of £78 — represents, at the same time, a qualitative relation. Though this qualitative relation itself only exists as a relation between the parts of one sum of money, all counted in the same unit — that is, as a quantitative relation. M, the capital advanced, now present again in its original form (£422), exists now as realized capital. It hasn't just maintained itself — it has also realized itself as capital, by distinguishing itself, as such, from m (£78), which it relates to as its own increase, its fruit, an increment it has itself bred. It is realized as capital because it is value — and value that has bred value.

M' exists as a capital-relation. M no longer appears as mere money — it is now expressly posited as money capital, expressed as value that has valorized itself, and so it also carries the property of valorizing itself: of breeding more value than it itself amounts to. M is posited as capital through its relation to the other part of M' — to that part as something it has itself brought about, an effect of which it is the cause, a consequence of which it is the ground. So M' appears as a sum of value that is internally differentiated, that distinguishes itself from itself functionally — conceptually — and that expresses the capital-relation.

But the capital-relation appears here only as a result — without the mediation of the process whose result it is.

Portions of value aren't qualitatively distinct from one another as such — except so far as they show up as the values of different articles, different concrete things, in different use-forms, and so as the values of different bodies of commodities. That's a distinction that doesn't come from them as mere portions of value. In money, every difference between commodities is wiped out, because money is exactly the equivalent form they all share. A sum of money of £500 is made up of nothing but identical elements of £1 each.

Because the simple existence of this sum of money wipes out any trace of where it came from, and every trace of the specific difference the various components of capital had in the production process has vanished, the distinction now exists only in the conceptual form of a 'principal' — the capital advanced, £422 — and a surplus sum of value, £78. Say M' = £110, of which £100 is M, the principal, and £10 is s, the surplus-value. Between the two parts making up the sum of £110 there is complete sameness — a complete absence of conceptual distinction. Any given £10 is always one eleventh of the total sum of £110, whether it happens to be a tenth of the £100 principal advanced, or the £10 surplus over and above it.

Principal and increment, capital and surplus, can therefore both be expressed as fractions of the whole sum. In our example, 10/11 make up the principal, or the capital, and 1/11 makes up the surplus. This is why the realized capital, at the end of its process, appears in its money expression as a non-conceptual expression of the capital-relation — non-conceptual because the sum itself no longer shows the relation that produced it.

The same non-conceptual distinction holds for C' as well (= C + c). But with this difference: C', in which C and c are likewise only proportional portions of value within the same homogeneous mass of commodities, points back to its origin in P — of which it is the direct

product. In M', by contrast — a form arising directly out of circulation — that direct connection to P has disappeared.

The non-conceptual distinction between principal and increment contained in M' — so far as M' expresses the result of the movement M . . . M' — vanishes the moment M' goes back to functioning actively as money capital, rather than being fixed, the other way round, as the money expression of valorized industrial capital — the capital that runs the whole circuit. The circuit of money capital can never begin with M' (even though M' now functions as M) — only with M. That is: never as an expression of the capital-relation, only as the form in which the capital value is advanced.

As soon as the £500 is advanced afresh as capital, to be valorized once again, it is a starting point rather than a point of return. Instead of a capital of £422, one of £500 is now advanced — more money than before, more capital value — but the relation between the two parts has dropped away. It's exactly as if the original sum of £500, rather than £422, had simply functioned as capital from the start.

Presenting itself as M' is not an active function of money capital at all — its presentation as M' is, rather, a function of C'. Already in simple commodity circulation — (1) C1-M, (2) M-C2 — money only functions actively in the second act, M-C2; its presentation as M is only the result of the first act, by virtue of which it first shows up as the transformed form of C1.

Still, the capital-relation contained in M' — the relation of one of its parts, as the capital value, to the other, as the increment on that value — does take on functional significance once the circuit M . . . M' keeps repeating and M' splits into two separate circulations: the circulation of capital and the circulation of surplus-value. The two parts then carry out functions that differ not just in size but in kind, M doing one thing, m another. But taken by itself, the form M . . . M' does not include the capitalist's own consumption at all — it stands, expressly, only for self-valorization and accumulation, so far as accumulation shows up, to begin with, as the periodic growth of the money capital that keeps getting advanced afresh.

Even though it's a non-conceptual form of capital, M' = M + m is, at the same time, money capital in its first realized form — money that has bred money. But here we need to distinguish it from the function money capital performs in the first stage, M-C. In that first stage, M circulates simply as money. It functions as money capital only because it is only in its money state that it can perform a money function — converting itself into the elements of P that face it as commodities, L and mp. In that act of circulation it functions only as money; but because that act is the first stage of the capital value in process, it is at the same time a function of money capital, by virtue of the specific use-form of the commodities L and mp that get bought.

M', by contrast — made up of M, the capital value, and m, the surplus-value produced by it — expresses valorized capital value: the purpose and the result, the function of the whole circuit of capital. That it expresses this result in money form, as realized money capital, doesn't come from its being the money form of capital, money capital; it's the other way round — it comes from its being money capital, capital in the money form, from the fact that capital opened the process in this form, was advanced in its money form. The transformation back into money form is a function of the commodity capital, C', as we've seen — not of money capital.

As for the difference between M' and M: that difference, m, is only the money form of c, the increment on C. M' is only equal to M + m because C' was equal to C + c. So in C', this difference — and the relation of the capital value to the surplus-value it has bred — is already present and already expressed, before both get turned into M', into a sum of money in which the two portions of value stand facing each other independently, and so can also be put to independent, distinct functions.

M' is only the result of realizing C'. Both C' and M' are just different forms — commodity form and money form — of the valorized capital value; what they have in common is that both are valorized capital value. Both are capital made real, because here the capital value as such exists together with the surplus-value as a fruit distinct from it yet produced by it — even though this relation is only expressed in the non-conceptual form of a ratio between two parts of a sum of money, or of a commodity value. But as expressions of capital in its relation to, and its distinction from, the surplus-value it has produced — that is, as expressions of valorized value — M' and C' are the same thing, expressing the same thing, only in different form. They are not distinguished from one another as money capital and commodity capital, but as money and commodity.

So far as they represent valorized value, capital active as capital, they only express the result of the function of productive capital — the one function in which the capital value breeds value. What they have in common is that both, money capital and commodity capital, are ways capital exists. One is capital in money form, the other in commodity form. So the specific functions that tell them apart can only be differences between the money function and the commodity function.

Commodity capital, as the direct product of the capitalist production process, still recalls its own origin, and so its form is more rational — less non-conceptual — than money capital, in which every trace of that process has been wiped out, the way money in general wipes out every particular use-form a commodity has. So it's only where M' itself functions as commodity capital — where it is the direct product of a production process and not the transformed form of that product — that its strange, puzzling form disappears. That is: in the production of the money material itself. For gold production, for example, the formula would be M-C<L/mp> . . . P . . . M'(M+m), where M' figures as the commodity product itself, because P delivers more gold than was advanced for the elements of producing that gold in the original M, the money capital. Here, then, the irrational element of the expression M . . . M'(M+m) disappears — the appearance of one part of a sum of money appearing as the mother of another part of that same sum of money.

We have seen that the circulation process, once its first phase — money into commodities, M-C — is finished, gets interrupted by P. There, the commodities bought on the market, labour-power and means of production, are consumed as the material and the value that make up the productive capital. What that consumption produces is a new commodity, C', changed both materially and in value from what went in.

The interrupted process, M-C, still needs completing by commodities turning back into money, C-M. But it is C', not the original commodity C, that carries this second and final phase — a commodity different from C both materially and in value. So the circulation series presents itself as running in two steps: first, money buys commodity C1; second, a different commodity, C'2, of higher value and a different useful form, takes C1's place in the second phase. That substitution happens during the very interruption P causes — the production of C' out of the elements of C — the same elements that make up the productive capital P.

Compare this with the first shape in which capital appeared to us, M-C-M' (Volume I, Chapter 4). Broken into steps, that was: money buys commodity C1; that same commodity C1 is later sold for more money. There, one and the same commodity appears twice. Here, the commodity money buys and the commodity later sold for money are two different commodities.

Despite that real difference, both circuits share something: in each, money turns into commodities in the first phase and commodities turn into money in the second, so the money spent in the first phase flows back in the second. Both share this return of money to its starting point, and both share an excess — the money that flows back is more than the money advanced. In that sense, M-C . . . C'-M' too appears to be contained within the general formula M-C-M'.

It also turns out that in the two circulation moves belonging to this process, M-C and C'-M', equal amounts of value — both present at the same time — always face each other and replace each other.

The change in value belongs only to the other moment, P, the production process. That is why P appears as the real transformation of capital, as opposed to the merely formal transformations that happen in circulation.

Now consider the whole movement: M-C . . . P . . . C'-M', or written out in full, M-C<L/mp> . . . P . . . C'(C+c)-M'(M+m).

Here capital appears as a value passing through a sequence of connected transformations that condition one another — a series of metamorphoses, each one a phase, or stage, of one total process. Two of these stages belong to the sphere of circulation, one to the sphere of production. In each stage the capital value takes a different form, and each form corresponds to a different, specific function.

Within this movement, the value advanced does not just maintain itself — it grows, it increases in size. And finally, at the last stage, it returns to the very form it had at the start of the whole process.

That is why this whole process is a circuit.

The two forms the capital value takes on during its stages in circulation are money capital and commodity capital; the form it takes during the production stage is productive capital.

The capital that takes on these forms over the course of its whole circuit, sheds them again, and carries out the function proper to each one, is industrial capital — 'industrial' here meaning it covers every branch of production run on a capitalist basis.

So money capital, commodity capital, and productive capital do not name independent kinds of capital, whose functions would make up separate, independent lines of business.

They name only particular functional forms of industrial capital — forms that the same industrial capital takes on, one after another, all three of them.

The circuit of capital runs normally only as long as its different phases pass into one another without a hold-up.

If capital gets stuck in the first phase, M-C, the money capital freezes into a hoard. If it gets stuck in the production phase, the means of production sit idle on one side while labour-power stays unemployed on the other. If it gets stuck in the last phase, C'-M', commodities pile up unsold and block the flow of circulation.

On the other hand, it lies in the nature of the case that the circuit itself requires capital to stay fixed, for certain periods, in each individual section of the cycle.

Industrial capital, in each of its phases, is tied to one specific form — money capital, productive capital, or commodity capital. Only after it has carried out the function that belongs to whichever form it is currently in does it take on the form it needs for the next stage of transformation.

To make this clear, our example assumed that the capital value of the mass of commodities made in the production stage equals the whole sum originally advanced as money — in other words, that the entire capital value advanced as money moves all at once from one stage into the next. But we have already seen (Volume I, Chapter 6) that part of the constant capital — the actual instruments of labour, machines for example — keeps serving through a larger or smaller number of repetitions of the same production process, and so gives up its value to the product only bit by bit. How far this modifies the circuit of capital will be shown later. For now, this is enough:

In our example, the value of the productive capital, £422, contained only the average calculated wear on the factory buildings, machinery, and so on — that is, only the portion of their value carried over onto the product when 10,600 pounds of raw cotton are turned into 10,000 pounds of yarn, the output of one week's spinning, sixty hours long. So in the means of production that the advanced constant capital of £372 turned into, the instruments of labour — buildings, machinery, and so on — figured as if they had simply been rented on the market against a weekly payment. This changes nothing whatsoever about the substance of the matter: we only need to multiply the week's output of yarn, 10,000 pounds, by the number of weeks in some given run of years, and the whole value of the instruments of labour bought and used up over that time will have been carried over to it.

It follows that the advanced money capital must first be turned into these means of production — must have left the first stage, M-C — before it can function as productive capital, P. It is just as clear, in our example, that the £422 of capital value built into the yarn during the production process cannot enter the circulation phase C'-M', as part of the value of the 10,000 pounds of yarn, until the yarn is finished. The yarn cannot be sold before it has been spun.

In the general formula, the product of P is treated as a material thing, distinct from the elements of the productive capital — an object with an existence of its own, separate from the production process, with a useful form different from the elements that produced it.

Whenever the result of the production process shows up as a thing, this holds true — even when part of the product goes back in as an element of renewed production. Grain, for instance, serves as seed for growing more grain; but the product is still only grain, and so it has a different shape from the elements combined with it — labour-power, tools, fertilizer.

But there are independent branches of industry where the product of the production process is not a new, separate thing, not a commodity at all. Economically, the only one that matters here is the communication industry — whether that means the transport industry proper, moving goods and people, or simply the transmission of messages, letters, telegrams, and so on.

A. Chuprov says on this point:

"The manufacturer can produce articles first and look for customers afterwards."

The manufacturer's product, once it comes out finished from the production process, passes into circulation as a commodity separate from that process.

"Production and consumption thus appear as two acts, separated in space and time. In the transport industry, which creates no new products but only moves people and things, these two acts coincide; the services" — the change of place — "have to be consumed in the very moment they are produced. That is why the area from which railways can draw their custom reaches, at most, fifty versts" — about 53 kilometres — "on either side."

Whether it is people or commodities that get transported, the result each time is a change in where they are located. The yarn, say, now finds itself in India instead of in England, where it was made.

But what the transport industry sells is the change of place itself. The useful effect it produces cannot be separated from the transport process — that is, from the production process of the transport industry. People and goods travel together with the means of transport, and that traveling, that movement from place to place, is exactly the production process the transport industry carries out.

This useful effect can only be consumed while it is being produced. It does not exist as a separate, usable thing that, once produced, then goes on to function as an article of trade, circulating as a commodity. Even so, its exchange-value is fixed the same way any other commodity's is: by the value of the production elements used up in making it (labour-power and means of production), plus the surplus-value created by the surplus labour of the workers employed in transport. Its consumption, too, works just like any other commodity's: consumed individually, its value disappears with that consumption; consumed productively — as one production stage of the commodity being transported — its value is carried over onto that commodity as an added value.

So the formula for the transport industry would be M-C<L/mp> . . . P . . . M', since what gets paid for and consumed is the production process itself, not some product that could be separated from it. This is almost exactly the same form as the one for producing precious metals — except that here M' is the transformed shape of the useful effect produced during the production process, not the natural shape of gold or silver produced and ejected from that process.

Industrial capital is the only form capital takes in which not just the appropriation of surplus-value, or surplus product, but its very creation, is a function of capital. This is what makes production capitalist in character; wherever industrial capital exists, so does the class antagonism between capitalists and wage-workers. As it takes hold of social production, it revolutionizes the technique and the social organization of the labour process, and with that, the economic-historical type of society itself.

The other kinds of capital, the ones that appeared before it, amid past or dying forms of social production, are not just made subordinate to it and altered to fit how it functions — they now move only on its foundation, and so live and die, stand and fall, along with that foundation. Where money capital and commodity capital still appear alongside industrial capital, carrying out their own separate lines of business, they are now only independent, one-sided versions — created by the social division of labour — of the functional forms that industrial capital keeps taking on and shedding within the sphere of circulation.

The circuit M...M' is, on one hand, bound up with the general circulation of commodities — it comes out of that general circulation and flows back into it, forming one part of it. On the other hand, it is also an independent movement of the capital value, belonging to the individual capitalist — a movement that runs partly inside the general circulation of commodities and partly outside it, but that always keeps its independent character.

First, because its two phases that take place within circulation, M-C and C'-M', each have a functionally specific character as phases of the movement of capital: in M-C, the commodity C is materially fixed as labour-power and means of production; in C'-M', the capital value, together with the surplus-value, gets realized — turned back into money. Second, P, the production process, encloses productive consumption within it. Third, the return of the money to its starting point turns the movement M...M' into a circuit that closes in on itself.

So on one hand, every individual capital, across its two circulation halves M-C and C'-M', is an agent of the general circulation of commodities — functioning there either as money or as commodity, linked into it, and so forming one link in the general chain of metamorphoses that makes up the commodity world.

On the other hand, within that general circulation, it also traces out its own independent circuit, in which the sphere of production is just a stage it passes through, and in which it comes back to its starting point in the very same form it left in. Within its own circuit — which includes its real transformation in the production process — its value magnitude also changes at the same time. It comes back not merely as a money value, but as an enlarged, grown money value.

Let us finally consider M-C . . . P . . . C'-M' as one special form of the circuit process of capital, alongside the other forms still to be examined later. It stands out in the following ways.

1. This circuit appears as the circuit of money capital, because industrial capital, in its money form — as money capital — forms both the starting point and the return point of its whole process. The formula itself shows that the money here is not spent as money, only advanced — so it is simply the money-form of capital, money capital. It also shows that exchange-value, not use-value, is the movement's determining purpose — the movement is its own end.

Precisely because the money-shape of value is its independent, tangible form of appearance, the circulation form M...M' — starting and ending in actual money — expresses money-making, the driving motive of capitalist production, more plainly than anything else can. The production process appears only as an unavoidable middle link, a necessary evil for the sake of making money.

All nations under the capitalist mode of production are therefore periodically seized by a kind of delirium in which they want to make money without going through the production process at all.

Second: in this circuit, the production stage — the work P does — breaks up the two circulation phases, M-C and C'-M'. Those two phases, in turn, are only a way of carrying out the simple circulation M-C-M'. Within the circuit's own shape, production shows itself formally and openly for what it actually is under capitalism: a mere means for growing the value advanced. Enrichment as such appears as the very purpose of production.

Third: because this sequence of phases opens with M-C, the second link is C'-M'. So the starting point is M, the money capital still to grow, and the closing point is M', the grown money capital, M + m — where M appears as realized capital sitting alongside its offspring, m.

This is what sets the circuit of money capital apart from the other two circuits, P . . . P and C' . . . C', in two ways.

First, both endpoints are in money form. Money is value's own independent, tangible form of existence — the product's value in a shape all its own, one where every trace of the commodities' use-value has been wiped out.

Second, P . . . P does not have to become P . . . P' (P+p): production, taken through its own circuit, need not visibly grow. And in C' . . . C', no difference in value between the two ends is visible at all.

So the formula M . . . M' has two hallmarks: the capital value is the starting point and the grown capital value is the point of return, so that advancing the capital value looks like the means, and the grown capital value looks like the goal of the whole operation. And this relation is expressed in money form — value's independent form — so money capital appears as money that breeds money. The creation of surplus-value out of value is not only presented as the alpha and omega of the process, it is presented openly, in the glittering form of money.

Fourth: M', the money capital realized as the result of C'-M' — the phase that completes and closes M-C — comes out in exactly the same form in which the circuit first opened. So as soon as it emerges, it can open that same circuit again, now as grown, accumulated money capital: M' = M + m. And nothing in the formula M . . . M' itself says that, when the circuit repeats, the circulation of m splits off from the circulation of M.

Looked at just once, formally, the circuit of money capital therefore expresses only the process of growing value and accumulating it. Consumption appears in it only as productive consumption, carried by M-C — that is the only consumption this circuit of the individual capital includes. M-L, seen from the worker's side, is L-M or C-M: it is the first phase of a circulation that carries his own, personal consumption — L-M-C (means of subsistence).

The second phase, M-C, no longer belongs to the circuit of the individual capital. But that circuit sets it going and assumes it will happen — because the worker, to keep being material the capitalist can exploit on the market, must...

The worker, to keep being material the capitalist can exploit on the market, must above all stay alive — keep himself going through his own consumption. But this consumption itself is assumed here only as a condition for capital's productive consumption of labour-power; only, that is, so far as the worker maintains and reproduces himself as labour-power through his own consumption.

The means of production — the actual commodities that enter this circuit — are only feeding material for that productive consumption. The act L-M carries the worker's own consumption: turning his means of subsistence into his own flesh and blood.

The capitalist, too, of course has to exist — has to live and consume — in order to function as a capitalist. But strictly, all he needs is to consume as a worker does; the circuit in this form assumes nothing more than that. In fact it does not even express that much formally, since the formula closes with M', a result that can immediately function again as enlarged money capital.

C'-M' directly contains the sale of C'. But C'-M' — a sale on one side — is M-C, a purchase, on the other; and in the end a commodity is only ever bought for its use-value, to enter the process of consumption (leaving aside any resale along the way), whether that consumption is personal or productive, depending on what kind of thing was bought.

But this consumption does not enter the circuit of the individual capital whose product C' is — that product is precisely pushed out of the circuit as a commodity to be sold. C' is expressly meant for someone else's consumption.

That is why we find, among the spokesmen of the Mercantile System (whose foundation is the formula M-C . . . P . . . C'-M'), long-winded sermons insisting that the individual capitalist should consume only as a worker does — just as a capitalist nation should leave the consuming of its goods, and consumption in general, to other, more foolish nations, while making productive consumption its own life's task. These sermons often recall, in both form and content, similar ascetic exhortations by the Church Fathers.

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The circuit of capital, then, is a unity of circulation and production — it includes both. Insofar as the two phases M-C and C'-M' are circulation events, the circulation of capital forms part of the general circulation of commodities. But as functionally defined sections, stages within capital's own circuit — a circuit that belongs not only to the sphere of circulation but also to the sphere of production — capital carries out its own circuit inside the general circulation of commodities.

The general circulation of commodities serves capital, in the first stage, by letting it take on the shape in which it can function as productive capital; in the second stage, by letting it shed the commodity function, a shape in which it cannot renew its circuit; and at the same time it opens up the possibility of separating capital's own circuit from the circulation of the surplus-value that has grown onto it.

The circuit of money capital is therefore the most one-sided form of appearance of the circuit of industrial capital — and for that very reason the most striking and the most characteristic one. In it, industrial capital's aim and driving motive — growing value, making money, accumulating — is put right before our eyes (buying in order to sell dearer).

Because the first phase is M-C, this form also brings out where the elements of productive capital come from — the commodity market — and, more generally, how the capitalist production process depends on circulation, on trade. The circuit of money capital is not simply commodity production; it only comes about through circulation, and it presupposes circulation. This is already implied by the fact that M, the form belonging to circulation, appears as the first and pure form of the capital value advanced — which is not true of the other two forms of the circuit.

The circuit of money capital remains, in this sense, always the general expression of industrial capital, because it always includes the growth in value of the capital advanced. In P . . . P, by contrast, capital's money expression shows up only as the price of the elements of production — that is, only as value expressed in money of account — and it is kept in that form in the bookkeeping.

M . . . M' becomes a particular form of the circuit of industrial capital whenever newly appearing capital is first advanced as money and then withdrawn again in that same form — whether it is moving from one branch of business into another, or industrial capital is withdrawing from business altogether. This includes surplus-value starting to work as capital, first advanced in money form, and it stands out most strikingly when that surplus-value goes to work in a different business from the one it came from.

M . . . M' can be a capital's first circuit; it can be its last; it can count as the form of the total social capital. It is the form taken by capital that is newly invested — whether newly accumulated capital in money form, or old capital fully turned into money so it can move from one branch of production to another.

As a form included in every circuit, money capital carries out this circuit precisely for the part of capital that creates surplus-value — the variable capital. The normal form for advancing wages is payment in money; and this has to be renewed constantly, at short intervals, because the worker lives from hand to mouth. So the capitalist must constantly face the worker as a money-capitalist, and his capital as money capital.

Here there can be no direct or indirect balancing of accounts, the way there can be when means of production are bought and productive commodities are sold (where most of the money capital actually exists in the form of commodities; money itself serves only as money of account; and cash appears only at the end, to settle the balances). On the other hand, part of the surplus-value that springs from the variable capital is spent by the capitalist on his own private consumption — which belongs to retail trade and, however roundabout the route, is spent as cash, in the money form of surplus-value. Whether this part of the surplus-value is large or small changes nothing about the matter.

Over and over, the variable capital reappears as money capital laid out in wages (M-L), and m reappears as surplus-value spent to cover the capitalist's private needs. So M, as the variable capital value advanced, and m, as its increment, both necessarily stay in money form, in order to be spent that way.

The formula M-C . . . P . . . C'-M', with its result M' = M + m, carries a deception built into its form — an illusory character, springing from the fact that the value advanced and the value grown both exist in their equivalent form, money. The emphasis falls not on the growing of value, but on the money form of this process: on the fact that, in the end, more value in money form is drawn out of circulation than was originally put into it — that is, on the growth of the mass of gold and silver belonging to the capitalist.

The so-called Monetary System is simply the expression of this non-conceptual form, M-C-M' — a movement that runs entirely within circulation, and so can only explain its two acts, (1) M-C and (2) C-M', by saying that C is sold above its value in the second act, and therefore draws more money out of circulation than its purchase threw into it.

By contrast, M-C . . . P . . . C'-M', fixed as the exclusive form, underlies the more developed Mercantile System, where it is not only the circulation of commodities but also their production that appears as a necessary element.

This illusory character of M-C . . . P . . . C'-M', and the illusory reading that goes with it, only sets in once this form is fixed as a one-off, rather than seen as something fluid, constantly renewing itself — once it is taken, that is, not as one of the forms of the circuit but as its exclusive form. But the formula itself points beyond itself, to the other forms.

First: this whole circuit presupposes the capitalist character of the production process itself, and so presupposes, as its basis, this production process together with the specific state of society it depends on. M-C = M-C<L/mp>; but M-L assumes the wage-labourer — and therefore assumes the means of production as part of productive capital, and therefore assumes the labour process and the process of growing value, the production process, already as a function of capital.

Second: once M . . . M' repeats, the return to money form comes to look just as fleeting as the money form was at the first stage. M-C vanishes, to make room for P. The constantly renewed advance in money, and its constant return as money, both come to look like nothing more than passing moments within the circuit.

Third:

Already by the second time the circuit repeats, the circuit P . . . C'-M' . M-C . . . P shows up, before the second circuit of M is even finished — and every further circuit can be seen in this form, P . . . C'-M-C . . . P. So M-C, as the first phase of the very first circuit, turns out to be only a fleeting run-up to the constantly repeating circuit of productive capital — which is in fact what happens when industrial capital is invested for the first time in the form of money capital.

Likewise, before the second circuit of P is finished, the first circuit has already traced out C'-M' . M-C . . . P . . . C' (in short, C' . . . C'), the circuit of commodity capital. So the first form already contains the two others within it, and the money form falls away, at least so far as it is not merely an expression of value, but an expression of value in the equivalent form — in money.

Finally: take a newly appearing individual capital, tracing out the circuit M-C . . . P . . . C'-M for the first time. Here M-C is a preparatory phase, the forerunner of the first production process this individual capital goes through. So this phase M-C is not something already presupposed — rather, it is the production process that sets it up, that conditions it. But this holds only for this one individual capital.

The general form of the circuit of industrial capital is the circuit of money capital, so far as the capitalist mode of production is already presupposed — that is, within a state of society already shaped by capitalist production. The capitalist production process is therefore assumed as a prius — something that must already be in place — if not within this newly invested capital's first circuit of money capital, then outside it; the constant existence of this production process assumes the constantly renewed circuit of P . . . P.

Within the first stage, M-C, this presupposition already shows up: on one side, it assumes that a class of wage-labourers exists; on the other, what is the first stage, M-C, for the buyer of the means of production is C'-M' for their seller — so it assumes that C' is commodity capital, that the commodity itself is a result of capitalist production, and with that, the function of productive capital.