CHAPTERII

THECIRCUITOFPRODUCTIVECAPITALThecircuitofproductivecapitalhasthegeneralformulaP……C’——M’——C……P。Itsignifiestheperiodicalrenewalofthefunctioningofproductivecapital，henceitsreproduction，oritsprocessofproductionasaprocessofreproductionaimingattheself-expansionofvalue；notonlyproductionbutaperiodicalreproductionofsurplus-value；thefunctionofindustrialcapitalinitsproductiveform，andthisfunctionperformednotoncebutperiodicallyrepeated，sothattherenewalisdeterminedbythestarting-point。

AportionofC’may(incertaincases，invariousbranchesofindustrialcapital)re-enterdirectlyasmeansofproductionintothesamelabour-processoutofwhichitcameintheshapeofacommodity。Thismerelysavesthetransformationofthevalueofthisportionintorealmoneyortoken-moneyorelsethecommodityfindsanindependentexpressiononlyasmoneyofaccount。Thispartofvaluedoesnotenterintothecirculation。Thusvaluesenterintotheprocessofproductionwhichdonotenterintotheprocessofcirculation。ThesameistrueofthatpartofC’whichisconsumedbythecapitalistinkindaspartofthesurplus-product。Butthisisinsignificantforcapitalistproduction。Itdeservesconsideration，ifatall，onlyinagriculture。

Twothingsareatoncestrikinglyapparentinthisform。

Foronething，whileinthefirstform，M……M’，theprocessofproduction，thefunctionofP，interruptsthecirculationofmoney-capitalandactsonlyasamediatorbetweenitstwophasesM——CandC’——M’，heretheentirecirculationprocessofindustrialcapital，itsentiremovementwithinthephaseofcirculation，constitutesonlyaninterruptionandconsequentlyonlytheconnectinglinkbetweentheproductivecapital，whichasthefirstextremeopensthecircuit，andthatwhichclosesitastheotherextremeinthesameform，henceintheforminwhichitstartsagain。Circulationproperappearsbutasaninstrumentpromotingtheperiodicallyrenewedreproduction，renderedcontinuousbytherenewal。

Foranotherthing，theentirecirculationpresentsitselfinaformwhichistheoppositeofthatwhichithasinthecircuitofmoney-capital。

Thereitwas:M——C——M(M——C。C——M)，apartfromthedeterminationofvalue；hereitis，againapartfromthevaluedetermination:C——M——C

(C——M。M——C)，i。e。，theformofthesimplecirculationofcommodities。

I。SIMPLEREPRODUCTION

LetusfirstconsidertheprocessC’——M’——C，whichtakesplaceinthesphereofcirculationbetweenthetwoextremesP……P。

Thestarting-pointofthiscirculationiscommodity-capital；C’

=C+c=P+c。Thefunctionofcommodity-capitalC’——M’(therealisationofthecapital-valuecontainedinitequalsP，whichnowexistsastheconstituentpartCofC’，aswellasofthesurplus-valuecontainedinit，whichexistsasaconstituentpartofthesamequantityofcommoditiesandhasthevaluec)wasexaminedinthefirstformofthecircuit。Buttherethisfunctionformedthesecondphaseoftheinterruptedcirculationandtheconcludingphaseoftheentirecircuit。Hereitformsthesecondphaseofthecircuitbutthefirstphaseofthecirculation。ThefirstcircuitendswithM’，andsinceM’aswellastheoriginalMcanagainopenthesecondcircuitasmoney-capital，itwasnotnecessaryatfirsttoseewhetherMandm(surplus-value)containedinM’continueintheircoursetogetherorwhethereachofthempursuesitsowncourse。Thiswouldonlyhavebecomenecessaryifwehadfollowedupfurtherthefirstcircuitinitsrenewedcourse。Butthispointmustbedecidedinthecircuitoftheproductivecapital，becausethedeterminationofitsveryfirstcircuitdependsonitandbecauseC’——M’appearsinitasthefirstphaseofthecirculation，whichhastobecomplementedbyM——C。Itdependsonthisdecisionwhethertheformularepresentssimplereproductionorreproductiononanextendedscale。Thecharacterofthecircuitchangesaccordingtothedecisionmade。

Letus，then，considerfirstthesimplereproductionofproductivecapital，assumingthat，asinthefirstchapter，conditionsremainconstantandthatcommoditiesareboughtandsoldattheirvalues。

Onthisassumptiontheentiresurplus-valueentersintotheindividualconsumptionofthecapitalist。Assoonasthetransformationofthecommodity-capitalC’intomoneyhastakenplace，thatpartofthemoneywhichrepresentsthecapital-valuecontinuestocirculateinthecircuitofindustrialcapital；

theotherpart，whichissurplus-valuechangedintomoney，entersintothegeneralcirculationofcommodities，constitutesacirculationofmoneyemanatingfromthecapitalistbuttakingplaceoutsideofthecirculationofhisindividualcapital。

Inourillustrationwehadacommodity-capitalC’of10，000lbs。

ofyarn，valuedat&pound；500；&pound；422ofthisrepresentthevalueoftheproductivecapitalandcontinue，asthemoney-formof8，440lbs。ofyarn，thecapitalcirculationbegunbyC’，whilethesurplusvalueof&pound；78，themoney-formof1，560lbs。ofyarn，theexcessofthecommodity-product，leavesthiscirculationanddescribesaseparatecoursewithinthegeneralcirculationofcommodities。

|C|——

|M|——C<LMP

C’|+|——M’|+|

|c|——

|m|——cm——crepresentsaseriesofpurchasesbymeansofmoneywhichthecapitalistspendseitherforcommoditiesproperorforpersonalservicestohischerishedselforfamily。Thesepurchasesaremadepiecemealatvarioustimes。Themoneythereforeexiststemporarilyintheformofasupply，orhoard，destinedforcurrentconsumption，sincemoneywhosecirculationbeeninterruptedassumestheformofahoard。Itsfunctionasamediumofcirculation，whichincludesitstransientformofahoard，doesnotenterthecirculationofcapitalinitsmoney-formM。Thismoneyisnotadvancedbutspent。

Wehaveassumedthatthetotaladvancedcapitalalwayspasseswhollyfromoneofitsphasestotheother；andsoheretooweassumethatthecommoditiesproducedbyPrepresentthetotalvalueoftheproductivecapitalP，or&pound；422plus&pound；78ofsurplus-valuecreatedintheprocessofproduction。Inourillustration，whichdealswithadiscretecommodity，thesurplus-valueexistsintheformof1，560lbs。ofyarn；

ifcomputedonthebasisofonepoundofyarn，itwouldexistintheformof2。496ouncesofyarn。ButifthecommoditywereforinstanceamachinevaluedatL500andhavingthesamevalue-composition，oneapartofthevalueofthismachine，&pound；78，wouldbesurplus-value，butthese&pound；78

wouldexistonlyinthemachineasawhole。Thismachinecannotbedividedintocapital-valueandsurplus-valuewithoutbreakingittopiecesandthusdestroyingitsvaluetogetherwithitsuse-value。Forthisreasonthetwovalue-componentscanberepresentedonlyideallyascomponentsofthecommodity，notasindependentelementsofthecommodityC’，likeanypoundofyarn，whichrepresentsaseparableindependentelementofthe10，000lbs。ofcommodity。Inthefirstcasetheaggregatecommodity，thecommodity-capital，themachine，mustbesoldinitsentiretybeforemcanenteruponitsseparatecirculation。Ontheotherhandwhenthecapitalisthassold8，440lbs。，thesaleoftheremaining1，560lbs。wouldrepresentawhollyseparatecirculationofthesurplus-valueintheformofc(1，560

lbs。ofyarn)——m(&pound；78)——c(articlesofconsumption)。Buttheelementsofvalueofeachindividualportionofthe10，000lbs。ofyarn，theproduct，canberepresentedbypartsoftheproductaswellasbythetotalproduct。

Justasthelatter，10，000lbs。ofyarn，theproduct，canberepresentedbypartsoftheproductaswellasbythetotalproduct。Justasthelatter，10，000lbs。ofyarn，canbedividedintothevalueoftheconstantcapital(c)，7，440lbs。ofyarnworth&pound；372，variablecapital-value(v)of1，000lbs。ofyarnworth&pound；50，andsurplus-value(s)of1，560lbs。

ofyarnworth&pound；78，soeverypoundofyarnmaybedividedintoc，equalto11。904ouncesworth8。928d。，vequalto1。600ouncesofyarnworth1。200d。，andsequalto2。496ouncesofyarnworth1。872d。Thecapitalistmightalsosellvariousportionsofthe10，000lbs。ofyarnsuccessivelyandsuccessivelyconsumesuccessiveportionsofthesurplus-valueelementscontainedinthem，thusrealising，alsosuccessively，thesumofcplusv。Butinthefinalanalysisthisoperationlikewisepremisesthesaleoftheentirelotof10，000lbs。，thatthereforethevalueofcandvwillbereplacedbythesaleof8，440lbs。(BuchI，Kap。VII，2。)

[Englishedition:Ch。IX，2——Ed。]

Howeverthatmaybe，bymeansofC’——M’boththecapital-valueandsurplus-valuecontainedinC’acquireaseparableexistence，theexistenceofdifferentsumsofmoney。InbothcasesMandmarereallyaconvertedformofthevaluewhichoriginallyinC’hadonlyapeculiar，anidealexpressionasthepriceofthecommodity。

C——m——crepresentsthesimplecirculationofcommodities，thefirstphaseofwhich，c——m，isincludedinthecirculationofcommodity-capital，C’——M’，i。e。，includedinthecircuitofcapital；itscomplementaryphasem——cfalls，onthecontrary，outsideofthiscircuit，beingaseparateactinthegeneralcirculationofcommodities。ThecirculationofCandc，ofcapital-valueandsurplus-value，splitsafterthetransformationofC’intoM’。Henceitfollows:

First，whilethecommodity-capitalisrealisedbyC’——M’=C’——(M

+m)，themovementofcapital-valueandsurplus-value，whichinC’——M’

isstillunitedandcarriedonbythesamequantityofcommodities，becomesseparable，bothofthemhenceforthpossessingindependentformsasseparatesumsofmoney。

Secondly，ifthisseparationtakesplace，mbeingspentastherevenueofthecapitalist，whileMasafunctionalformofcapital-valuecontinuesitscoursedeterminedbythecircuit，thefirstact，C’——M’，inconnectionwiththesubsequentacts，M——Candm——c，mayberepresentedastwodifferentcirculationsC——M——Candc——m——c；andbothoftheseseries，sofarastheirgeneralformisconcerned，belongintheusualcirculationofcommodities。

Bytheway，inthecaseofthecontinuous，indivisiblecommodities，itisamatterofpracticetoisolatethevalueconstituentsideally。ForinstanceintheLondonbuilding-business，whichiscarriedonmainlyoncredit，thebuildingcontractorreceivesadvancesinaccordancewiththestageofconstructionreached。Noneofthesestagesisahouse，butonlyareallyexistingconstituentpartofaninchoatefuturehouse；hence，inspiteofitsreality，itisbutanidealfractionoftheentirehouse，butrealenoughtoserveassecurityforanadditionaladvance。(SeeonthispointChapterXIIbelow。)[Seepp。237-38ofthisbook——Ed。]

Thirdly，ifthemovementofcapital-valueandsurplus-value，whichstillproceedsunitedlyinCandM，isseparatedonlyinpart(aportionofthesurplus-valuenotbeingspentasrevenue)ornotatall，achangetakesplaceinthecapital-valueitselfwithinitscircuit，beforeitiscompleted。Inourillustrationthevalueoftheproductivecapitalwasequalto&pound；422。IfthatcapitalcontinuesM——C，as，say，&pound；480

or&pound；500，thenitstridesthroughthelatterstagesofitscircuitwithanincreaseof&pound；58or&pound；78overitsinitialvalue。Thismayalsogohandinhandwithachangeinthecompositionofitsvalue。

C’——M’，thesecondstageofthecirculationandthefinalstageofcircuitI(M……M’)，isthesecondstageinourcircuitandthefirstinthecirculationofcommodities。Sofarasthecirculationisconcerned，itmustbecomplementedbyM’——C’。ButnotonlyhasC’——M’theprocessofself-expansionalreadybehindit(inthiscasethefunctionofP，thefirststage)，butitsresult，thecommodityC’；hasalreadybeenrealised。

Theprocessoftheself-expansionofcapitalandtherealisationofthecommoditiesrepresentingtheexpandedcapital-valuearethereforecompletedinC’——M’。

Andsowehavepremisedsimplereproduction，i。e。，thatm——cseparatesentirelyfromM——C。Sincebothcirculations，c——m——caswellasC——M——C，belonginthecirculationofcommodities，sofarastheirgeneralformisconcerned(andforthisreasondonotshowonlyvaluedifferencesintheirextremes)，itiseasytoconceivetheprocessofcapitalistproduction，afterthemannerofvulgareconomy，asamereproductionofcommodities，ofuse-valuesdesignedforconsumptionofsomesort，whichthecapitalistproducesfornootherpurposethanthatofgettingintheirplacecommoditieswithdifferentuse-values，orofexchangingthemforsuch，asvulgareconomyerroneouslystates。

C’actsfromtheveryoutsetascommodity-capital，andthepurposeoftheentireprocess，enrichment(theproductionofsurplus-value)，doesnotbyanymeansexcludeincreasingconsumptiononthepartofthecapitalistashissurplus-value(andhencehiscapital)increases；onthecontrary，itemphaticallyincludesit。

Indeed，inthecirculationoftherevenueofthecapitalist，theproducedcommodityc(orthefractionoftheproducedcommodityC’ideallycorrespondingtoit)servesonlytotransformit，firstintomoney，andfrommoneyintoanumberofothercommoditiesservingprivateconsumption。

Butwemustnot，atthispoint，overlookthetriflingcircumstancethatciscommodity-valuewhichdidnotcostthecapitalistanything，anincarnationofsurplus-labour，forwhichreasonitoriginallysteppedonthestageasacomponentpartofcommodity-capitalC’。Thiscis，bytheverynatureofitsexistence，boundtothecircuitofcapital-valueinprocessandifthiscircuitbeginstostagnateorisotherwisedisturbed，notonlytheconsumptionofcrestrictedorentirelyarrested，butalsothedisposalofthatseriesofcommoditieswhichservetoreplacec。ThesameistruewhenC’——M’endsinfailure，oronlyapartofC’canbesold。

Wehaveseenthatc——m——c，representingthecirculationoftherevenueofthecapitalist，entersintothecirculationofcapitalonlysolongascisapartofthevalueofC’，ofcapitalinitsfunctionalformofcommodity-capital；but，assoonasitacquiresindependencefromm——c，hencethroughouttheformc——m——c，thecirculationofthatrevenuedoesnotenterintothemovementofthecapitaladvancedbythecapitalist，althoughitstemsfromit。Thiscirculationisconnectedwiththemovementofadvancedcapitalinasmuchastheexistenceofcapitalpresupposestheexistenceofthecapitalist，andhisexistenceisconditionedonhisconsumingsurplus-value。

WithinthegeneralcirculationC’，forexampleyarn，functionsonlyasacommodity；butasanelementinthecirculationofcapitalitperformsthefunctionofcommodity-capital，aformwhichcapital-valuealternatelyassumesanddiscards。Afterthesaleoftheyarntoamerchant，itisextrudedoutofthecircularmovementofcapitalwhoseproductitis，butnevertheless，asacommodity，itmovesalwaysinthesphereofthegeneralcirculation。Thecirculationofoneandthesamemassofcommoditiescontinues，inspiteofthefactthatithasceasedtobeaphaseintheindependentcircuitofthespinner’scapital。Hencetherealdefinitivemetamorphosisofthemassofcommoditiesthrownintocirculationbythecapitalist，C——M，theirfinalexitintoconsumptionmaybecompletelyseparatedintimeandspacefromthatmetamorphosisinwhichthismassofcommoditiesfunctionsashiscommodity-capital。Thesamemetamorphosiswhichhasbeenaccomplishedinthecirculationofcapitalstillremainstobeaccomplishedinthesphereofthegeneralcirculation。

Thisstateofthingsisnotchangedabitifthisyarnentersthecircuitofsomeotherindustrialcapital。Thegeneralcirculationcomprisesasmuchtheintertwiningofthecircuitsofthevariousindependentfractionsofsocialcapital，i。e。，thetotalityoftheindividualcapitals，asthecirculationofthosevalueswhicharenotthrownonthemarketascapitalbutenterintoindividualconsumption。

TherelationbetweenacircuitofcapitalformingpartofageneralcirculationandacircuitforminglinksinanindependentcircuitisshownfurtheronwhenweexaminethecirculationofM，whichisequaltoMplusm。Masmoney-capitalcontinuescapital’scircuit；m，beingspentasrevenue(m——c)，entersintothegeneralcirculation，butcomesflyingoutofthecircuitofcapital。Onlythatpartentersthelattercircuitwhichperformsthefunctionofadditionalmoney-capital。Inc——m——cmoneyservesonlyascoin；theobjectofthiscirculationistheindividualconsumptionofthecapitalist。Itistypicaloftheidiocyofvulgareconomythatitgivesoutthiscirculation，whichdoesnotenterintothecircuitofcapital——thecirculationofthatpartofthevalueproducedwhichisconsumedasrevenue——asthecharacteristiccircuitofcapital。

InthesecondphaseM——C，thecapital-valueM，whichisequaltoP(thevalueoftheproductivecapitalthatatthispointopensthecircuitofindustrialcapital)，isagainpresent，deliveredofitssurplus-value，thereforehavingthesamemagnitudeofvalueasithadinthefirststageofthecircuitofmoney-capitalM——C。Inspiteofthedifferenceinplacethefunctionofthemoney-capitalintowhichthecommodity-capitalhasnowbeentransformedisthesame:itstransformationintoMPandL，intomeansofproductionandlabour-power。

Inthefunctioningofcommodity-capitalC’——M’，thecapital-value，simultaneouslywithc——m，hasconsequentlygonethroughthephaseC——M

andentersnowintothecomplementaryphaseM——C<LMP。ItscompletecirculationisthereforeC——M——C<LMP。

First:Money-capitalMappearedinFormI(circuitM……M’)astheoriginalforminwhichcapital-valueisadvanced；itappearsherefromtheoutsetasapartofthatsumofmoneyintowhichcommodity-capitaltransformeditselfinthefirstcirculationphaseC’——M’，thereforefromtheoutsetasthetransformationofP，theproductivecapital，throughthemediumofthesaleofcommodities，intothemoney-form。Money-capitalexistsherefromtheoutsetasthatformofcapital-valuewhichisneitheritsoriginalnoritsfinalone，sincethephaseM——C，whichconcludesthephaseC——M，canonlybeperformedbyagaindiscardingthemoney-form。

ThereforethatpartofM——CwhichisatthesametimeM——Lappearsnownolongerasamereadvanceofmoneybythepurchaseoflabour-power，butasanadvancebymeansofwhichthesame1，000lbs。ofyarn，valuedat&pound；50，whichformapartofthecommodity-valuecreatedbylabour-power，areadvancedtolabour-powerintheformofmoney。Themoneyadvancedheretothelabourerisonlyaconvertedequivalentformofapartofthecommodity-valueproducedbyhimself。AndforthatreasonifnoothertheactM——C，sofarasitmeansM——L，isbynomeanssimplyareplacementofacommodityintheformofmoneybyacommodityintheuse-form，butitincludesotherelementswhichareindependentofthegeneralcommoditycirculationassuch。

M’appearsasaconvertedformofC’，whichisitselfaproductofapreviousfunctionofP，theprocessofproduction。TheentiresumofmoneyM’isthereforeamoney-expressionofpastlabour。Inourillustration，10，000lbs。ofyarnworth&pound；500aretheproductofthespinningprocess。

Ofthisquantity，7，440lbs。ofyarnareequaltotheadvancedconstantcapitalcworth&pound；372；1，000lbs。ofyarnareequaltotheadvancedvariablecapitalvworth&pound；50；and1，560lbs。ofyarnrepresentthesurplus-valuesworth&pound；78。IfofM’onlytheoriginalcapitalof&pound；422isagainadvanced，otherconditionsremainingthesame，thenthelabourerisadvancedthefollowingweek，inM——L，onlyapartofthe10，000lbs。ofyarnproducedinthegivenweek(themoney-valueof1，000

lbs。ofyarn)。AsaresultofC——M，moneyisalwaystheexpressionofpastlabour。IfthecomplementaryactM——Ctakesplaceatonceinthecommodity-market，i。e。，Misgiveninreturnforcommoditiesexistinginthemarket，thisisagainatransformationofpastlabour，fromoneform(money)intoanotherform(commodities)。ButM——CdiffersinthematteroftimefromC——M。Theymayexceptionallytakeplaceatthesametime，forinstancewhenthecapitalistwhoperformsM——CandthecapitalisttowhomthisactmeansC——MshiptheircommoditiestoeachotheratthesametimeandMisusedonlytosquarethebalance。ThedifferenceintimebetweentheperformanceofM——CandC——Mmaybemoreorlessconsiderable。

AlthoughM，astheresultofC——M，representspastlabour，itmay，intheactM——C，representtheconvertedformofcommoditieswhicharenotasyetinthemarket，butwillbethrownuponitinthefuture，sinceM——C

neednottakeplaceuntilChasbeenproducedanew。MmaylikewisestandforcommoditieswhichareproducedsimultaneouslywiththeCwhosemoney-expressionitis。ForinstanceintheexchangeM——C(purchaseofmeansofproduction)

coalmaybeboughtbeforeithasbeenmined。Insofarasmfiguresasanaccumulationofmoney，isnotspentasrevenue，itmaystandforcottonwhichwillnotbeproduceduntilthefollowingyear。Thesameholdsgoodonspendingtherevenueofthecapitalist，m——c。Italsoappliestowages，toLequalto&pound；50。Thismoneyisnotonlythemoney-formofpastlabourofthelabourersbutatthesametimeadraftonsimultaneousandfuturelabourwhichisjustbeingrealisedorshouldberealisedinthefuture。Thelabourermaybuywithhiswagesacoatwhichwillnotbemadeuntilthefollowingweek。Thisappliesespeciallytothevastnumberofnecessarymeansofsubsistencewhichmustbeconsumedalmostassoonastheyhavebeenproducedtopreventspoilage。Thusthelabourerreceives，inthemoneywhichispaidtohiminwages，theconvertedformofhisownfuturelabourorthatofotherlabourers。Bygivingthelabourerapartofhispastlabour，thecapitalistgiveshimadraftonhisownfuturelabour。Itisthelabourer’sownsimultaneousorfuturelabourthatconstitutesthenotyetexistingsupplyoutofwhichhewillbepaidforhispastlabour。

Inthiscasetheideaofhoardingdisappearsaltogether。[HereMarxmadethefollowingnoteinthemanuscript:”Allthis，however，belongstothelastpartofBookTwo。”——Ed。]

SecondlyinthecirculationC——M——C<LMPthesamemoneychangesplacetwice；thecapitalistfirstreceivesitasasellerandpassesitonasabuyer；thetransformationofcommoditiesintothemoney-formservesonlyforthepurposeofretransformingitfromthemoney-formintothecommodity-form；themoney-formofcapital，itsexistenceasmoney-capital，isonlyatransientphasenthismovement；

or，sofarasthemovementisfluent，money-capitalappearsonlyasamediumofcirculationwhenitservesasameansofpurchase；itactsasapayingmediumproperwhencapitalistsbuyfromoneanotherandthereforeonlyhavetosquareaccounts。

Thirdly，thefunctionofmoney-capital，whetheritisamerecirculatingmediumorapayingmedium，effectsonlythereplacementofCbyLandMP，i。e。，thereplacementoftheyarn，thecommoditywhichrepresentstheresultoftheproductivecapital(afterdeductingthesurplus-valuetobeusedasrevenue)，byitselementsofproduction，inotherwords，theretransformationofcapital-valuefromitsformasacommodityintotheelementsthatbuildthiscommodity。Inthelastanalysis，thefunctionofmoney-capitalpromotesonlytheretransformationofcommodity-capitalintoproductivecapital。

Inorderthatthecircuitmaybecompletednormally，C’mustbesoldatitsvalueandinitsentirety。FurthermoreC——M——Cincludesnotmerelyreplacementofonecommoditybyanother，butreplacementwithvalue-relationsremainingthesame。Weassumethatthistakesplacehere。Asamatteroffact，however，thevalueofthemeansofproductionvary。Itispreciselycapitalistproductiontowhichcontinuouschangeofvalue-relationsispeculiar，ifonlybecauseoftheeverchangingproductivityoflabourthatcharacterisesthismodeofproduction。Thischangeinthevalueoftheelementsofproductionwillbediscussedlateron，[SeeSectionVofChapterXVofthisvolume——Ed。]andwemerelymentionithere。Thetransformationoftheelementsofproductionintocommodity-products，ofPintoC’，takesplaceinthesphereofproduction，whilethetransformationfromC’intoPoccursinthesphereofcirculation。Itisbroughtaboutbyasimplemetamorphosisofcommodities，butitscontentisaphaseintheprocessofreproduction，regardedasawhole。C——M——C，beingaformofcirculationofcapital，involvesafunctionallydeterminedexchangeofmatter。ThetransformationC——M——CrequiresfurtherthatCshouldbeequaltotheelementsofproductionofthecommodity-quantumC’，andthattheseelementsshouldretaintheiroriginalvalue-relationstooneanother。Itisthereforeassumedthatthecommoditiesarenotonlyboughtattheirrespectivevalues，butalsodonotundergoanychangeofvalueduringthecircularmovement。

Otherwisethisprocesscannotrunnormally。

InM……M’，Mrepresentstheoriginalformofthecapital-value，whichisdiscardedonlytoberesumed。InP……C’——M’——C……P，Mrepresentsaformwhichisonlyassumedintheprocessandwhichisdiscardedbeforethisprocessisover。Themoney-formappearshereonlyasatransientindependentformofcapital-value。CapitalintheformofC’isjustasanxioustoassumethemoney-formasitistodiscarditinM’，afterbarelyassumingthatgarbinorderagaintotransformitselfintoproductivecapital。Solongasitremainsinthegarbofmoney，itdoesnotfunctionascapitalanditsvaluedoesnotthereforeexpand。Thecapitalliesfallow。Mserveshereasacirculatingmedium，butasacirculatingmediumofcapital。[HereMarxmadethefollowingnoteinthemanuscript:”AgainstTooke。”——Ed。]

Thesemblanceofindependencewhichthemoney-formofcapital-valuepossessesinthefirstformofitscircuit(theformofmoney-capital)disappearsinthissecondform，whichthusisacriticismofFormIandreducesittomerelyaspecialform。Ifthesecondmetamorphosis，M——C，meetswithanyobstacles——forinstanceiftherearenomeansofproductioninthemarket——thecircuit，theflowoftheprocessofreproduction，isinterruptedquiteasmuchaswhencapitalisheldfastintheformofcommodity-capital。

Butthereisthisdifference:Itcanremainlongerinthemoney-formthaninthetransitoryformofcommodities。Itdoesnotceasetobemoney，ifitdoesnotperformthefunctionsofmoney-capital；butitdoesceasetobeacommodity，orause-valueingeneral，ifitisdelayedtoolongintheexerciseofitsfunctionofcommodity-capital。Furthermore，initsmoney-formitiscapableofassuminganotherformintheplaceofitsoriginaloneofproductivecapitalwhileitcannotbudgeatallifheldintheformofC’。

C’——M’——CincludesactsofcirculationonlyforC’inaccordancewithitsform，actswhicharephrasesofitsreproduction；buttherealreproductionofC，intowhichC’transformsitself，isnecessaryfortheperformanceofC’——M’——C。ThishoweverisconditionedonprocessesofreproductionwhichlieoutsideoftheprocessofreproductionoftheindividualcapitalrepresentedbyC’。

InFormItheactM——C<LMPpreparesonthefirsttransformationofmoney-capitalintoproductivecapital；inFormIIitpreparestheretransformationfromcommodity-capitalintoproductivecapital；thatistosay，sofarastheinvestmentofindustrialcapitalremainsthesame，retransformationofthecommodity-capitalintothesameelementsofproductionasthosefromwhichitoriginated。ConsequentlyhereaswellasinFormI，theactappearsasapreparatoryphaseoftheprocessofproduction，butasareturntoit，asarenewalofit，henceasaprecursoroftheprocessofreproduction，hencealsoofarepetitionoftheprocessofself-expansionofvalue。

ItmustbenotedoncemorethatM——Lisnotasimpleexchangeofcommoditiesbutthepurchaseofacommodity，L，whichistoservefortheproductionofsurplus-value，justasM——MPisonlyaprocedurewhichismateriallyindispensablefortheattainmentofthisend。

WiththecompletionofM——C<LMPMisreconvertedintoproductivecapital，intoP，andthecircuitbeginsanew。

TheexpandedformofP……C’——M’——C……Pistherefore:

|C|——|M|——C<LMP……P

P……C’|+|

|+|

|c|——|m|——cThetransformationofmoney-capitalintoproductivecapitalisthepurchaseofcommoditiesfortheproductionofcommodities。Consumptionfallswithinthecircuitofcapitalitselfonlyinsofarasitisproductiveconsumption；

itspremiseisthatsurplus-valueisproducedbymeansofthecommoditiessoconsumed。Andthisissomethingverydifferentfromproductionandevencommodityproduction，whichhasforitsendtheexistenceoftheproducer。

Areplacement——commoditybycommodity——thuscontingentontheproductionofsurplus-valueisquiteadifferentmatterfromthebareexchangeofproductsbroughtaboutmerelybymeansofmoney。Buttheeconomiststakethismatterasproofthatnooverproductionispossible。

ApartfromtheproductiveconsumptionofM，whichistransformedintoLandMP，thecircuitcontainsthefirstmemberM——L，whichsignifies，fromthestandpointofthelabourer，L——M，whichequalsC——M。Inthelabourer’scirculation，L——M——C，whichincludeshisconsumption，onlythefirstmemberfallswithinthecircuitofthecapitalasaresultofM——L。Thesecondact，M——C，doesnotfallwithinthecirculationofindividualcapital，althoughitspringsfromit。Butthecontinuousexistenceoftheworkingclassisnecessaryforthecapitalistclass，andsoisthereforetheconsumptionofthelabourermadepossiblebyM——C。

TheonlyconditionwhichtheactC’——M’stipulatesforcapital-valuetocontinueitscircuitandforsurplus-valuetobeconsumedbythecapitalististhatC’shallhavebeenconvertedintomoney，shallhavebeensold。

Ofcourse，C’isboughtonlybecausethearticleisause-value，henceserviceableforconsumptionofanykind，productiveorindividual。ButifC’continuestocirculateforinstanceinthehandsofthemerchantwhoboughttheyarn，thisatfirstdoesnotintheleastaffectthecontinuationofthecircuitoftheindividualcapitalwhichproducedtheyarnandsoldittothemerchant。Theentireprocesscontinuesandwithittheindividualconsumptionofthecapitalistandthelabourermadenecessarybyit。Thispointisimportantinadiscussionofcrises。

ForassoonasC’hasbeensold，beenconvertedintomoney，itcanbereconvertedintotherealfactorsofthelabourprocess，andthusofthereproductiveprocess。WhetherC’isboughtbytheultimateconsumerorbyamerchantforresaledoesnotaffectthecase。Thequantityofcommoditiescreatedinmassesbycapitalistproductiondependsonthescaleofproductionandontheneedforconstantlyexpandingthisproduction，andnotonapredestinedcircleofsupplyanddemand，onwantsthathavetobesatisfied。

Massproductioncanhavenootherdirectbuyer，apartfromotherindustrialcapitalists，thanthewholesaler。Withincertainlimits，theprocessofreproductionmaytakeplaceonthesameoronanincreasedscaleevenwhenthecommoditiesexpelledfromitdidnotreallyenterindividualorproductiveconsumption。Theconsumptionofcommoditiesisnotincludedinthecircuitofthecapitalfromwhichtheyoriginated。Forinstance，assoonastheyarnissoldthecircuitofthecapitalvaluerepresentedbytheyarnmaybeginanew，regardlessofwhatmaynextbecomeofthesoldyarn。Solongastheproductissold，everythingistakingitsregularcoursefromthestandpointofthecapitalistproducer。Thecircuitofcapital-valueheisidentifiedwithisnotinterrupted。Andifthisprocessisexpanded——whichincludesincreasedproductiveconsumptionofthemeansofproduction——thisreproductionofcapitalmaybeaccompaniedbyincreasedindividualconsumption(hencedemand)onthepartofthelabourers，sincethisprocessisinitiatedandeffectedbyproductiveconsumption。Thustheproductionofsurplus-value，andwithittheindividualconsumptionofthecapitalist，mayincrease，theentireprocessofreproductionmaybeinaflourishingcondition，andyetalargepartofthecommoditiesmayhaveenteredintoconsumptiononlyapparently，whileinrealitytheymaystillremainunsoldinthehandsofdealers，mayinfactstillbelyinginthemarket。Nowonestreamofcommoditiesfollowsanother，andfinallyitisdiscoveredthatthepreviousstreamshadbeenabsorbedonlyapparentlybyconsumption。

Thecommodity-capitalscompetewithoneanotherforaplaceinthemarket。

Late-comers，tosellatall，sellatlowerprices。Theformerstreamshavenotyetbeendisposedofwhenpaymentforthemfallsdue。Theirownersmustdeclaretheirinsolvencyorsellatanypricetomeettomeettheirobligations。Thissalehasnothingwhatevertodowiththeactualstateofthedemand。Itonlyconcernsthedemandforpayment，thepressingnecessityoftransformingcommoditiesintomoney。Thenacrisisbreaksout。Itbecomesvisiblenotinthedirectdecreaseofconsumerdemand，thedemandforindividualconsumption，butinthedecreaseofexchangesofcapitalforcapital，ofthereproductiveprocessofcapital。

IfthecommoditiesMPandLintowhichMistransformedtoperformitsfunctionofmoney-capital，ofcapital-valuedestinedtoberetransformedintoproductivecapital——ifthosecommoditiesaretobeboughtorpaidforondifferentterms，sothatM——Crepresentsaseriesofpurchasesandpayments，thenapartofMperformstheactM——C，whileanotherpartpersistsintheformofmoneyanddoesnotservetoperformsimultaneousorsuccessiveactsofM——Cuntilsuchtimeastheconditionsofthisprocessitselfmaydetermine。Thispartisonlytemporarilywithheldfromcirculation，inordertogointoaction，performitsfunction，induetime。Thisstoringofitistheninitsturnafunctiondeterminedbyitscirculationandintendedforcirculation。Itsexistenceasafundforpurchaseandpayment，thesuspensionofitsmovement，theinterruptedstateofitscirculation，willthenconstituteastateinwhichmoneyexercisesoneofitsfunctionsasmoney-capital。Asmoney-capital；forinthiscasethemoneytemporarilyremainingatrestisitselfapartofmoney-capitalM(ofM’minusm，equaltoM)，ofthatportionofthevalueofcommodity-capitalwhichisequaltoP，tothatvalueofproductivecapitalfromwhichthecircuitstarts。

Ontheotherhandallmoneywithdrawnfromcirculationhastheformofahoard。Moneyintheformofahoardthereforebecomeshereafunctionofmoney-capital，justasinM——Cthefunctionofmoneyasameansofpurchaseorpaymentbecomesafunctionofmoney-capital。Thisissobecausecapital-valueexistshereintheformofmoney，becausethemoneystatehereisastateinwhichindustrialcapitalfindsitselfatoneofitsstagesandwhichisprescribedbytheinterconnectionswithinthecircuit。

Atthesametimeitishereprovedtrueoncemorethatmoney-capitalwithinthecircuitofindustrialcapitalperformsnootherfunctionsthanthoseofmoneyandthatthesemoney-functionsassumethesignificanceofcapital-functionsonlybyvirtueoftheirinterconnectionswiththeotherstagesofthiscircuit。

TherepresentationofM’asarelationofmtoM，asacapital-relation，isnotdirectlyafunctionofmoney-capitalbutofcommodity-capitalC’，whichinitsturn，asarelationofcandC，expressesbuttheresultoftheprocessofproduction，oftheself-expansionofcapital-valuewhichtookplaceinit。

Ifthecontinuationoftheprocessofcirculationmeetswithobstacles，sothatMmustsuspenditsfunctionM——Conaccountofexternalcircumstances，suchastheconditionsofthemarket，etc。，andifitthereforeremainsforashorterorlongertimeinitsmoney-form，thenwehaveoncemoremoneyintheformofahoard，whichhappensalsoinsimplecommoditycirculationwheneverthetransitionfromC——MtoM——Cisinterruptedbyexternalcircumstances。Itisaninvoluntaryformationofahoard。Inthecaseathandmoneyhastheformoffallow，latentmoney-capital。Butwewillnotdiscussthispointanyfurtherforthepresent。

Ineithercasehoweverpersistenceofcapitalinitsmoneystateappearsastheresultofinterruptedmovement，nomatterwhetherthisisexpedientorinexpedient，voluntaryorinvoluntary，inaccordancewithitsfunctionsorcontrarytothem。

II。ACCUMULATIONANDREPRODUCTIONONANEXTENDEDSCALE

Sincetheproportionswhichtheexpansionoftheproductiveprocessmayassumearenotarbitrarybutprescribedbytechnology，therealisedsurplus-value，thoughintendedforcapitalisation，frequentlycanonlybydintofseveralsuccessivecircuitsattainsuchasize(anduntilthenmustthereforebeaccumulated)aswillsufficeforitseffectivefunctioningasadditionalcapitalorforentranceintothecircuitoffunctioningcapital-value。

Surplus-valuethuscongealsintoahoardandinthisformconstituteslatentmoney-capital——latentbecauseitcannotactascapitalsolongasitpersistsinthemoney-form。[6a]Theformationofahoardthusappearshereasafactorincludedintheprocessofcapitalistaccumulation，accompanyingitbutneverthelessessentiallydifferingfromit；fortheprocessofreproductionitselfisnotexpandedbytheformationoflatentmoney-capital。Onthecontrary，latentmoney-capitalisformedherebecausethecapitalistproducercannotdirectlyexpandthescaleofhisproduction。Ifhesellshissurplus-producttoaproducerofgoldorsilver，whoputsnewgoldorsilverintocirculationor，whatamountstothesamething，toamerchantwhoimportsadditionalgoldorsilverfromforeigncountriesforapartofthenationalsurplus-product，thenhislatentmoney-capitalformsanincrementofthenationalgoldorsilverhoard。Inallothercases，the&pound；78forinstance，whichwereacirculatingmediuminthehandsofthepurchaser，assumeonlytheformofahoardinthehandsofthecapitalist。Henceallthathastakenplaceisadifferentdistributionofthenationalgoldorsilverhoard。

Ifinthetransactionofourcapitalistthemoneyservesasameansofpayment(thecommoditieshavingtobepaidforbythebuyeronlongerorshorterterms)，thenthesurplus-productintendedforcapitalisationisnottransformedintomoneybutintocreditor’sclaims，intotitlesofownershipofanequivalentwhichthebuyermayalreadyhaveinhispossessionorwhichhemayexpecttopossess。Itdoesnotenterintothereproductiveprocessofthecircuitanymorethandoesmoneyininvestedininterest-bearingsecurities，etc。，althoughitmayenterintothecircuitsofotherindividualindustrialcapitals。

Theentirecharacterofcapitalistproductionisdeterminedbytheself-expansionoftheadvancedcapital-value，thatistosay，inthefirstinstancebytheproductionofasmuchsurplus-valueaspossible；

inthesecondplacehowever(seeBuchI，Kap。XXII)[Englishedition:Ch。

XXIV——Ed。]bytheproductionofcapital，hencebythetransformationofsurplus-valueintocapital。Accumulation，orproductiononanextendedscale，whichappearsasameansforconstantlymoreexpandedproductionofsurplus-value——hencefortheenrichmentofthecapitalist，ashispersonalaim——andiscomprisedinthegeneraltendencyofcapitalistproduction，becomeslater，however，aswasshowninBookI，byvirtueofitsdevelopment，anecessityforeveryindividualcapitalist。Theconstantaugmentationofhiscapitalbecomesaconditionofitspreservation。Butweneednotrevertmorefullytowhatwaspreviouslyexpounded。

Weconsideredfirstsimplereproduction，assumingthattheentiresurplus-valueisspentasrevenue。Inrealityundernormalconditionsapartofthesurplus-valuemustalwaysbespentasrevenue，andanotherpartmustbecapitalised。Anditisquiteimmaterialwhetheracertainsurplus-valueproducedinanyparticularperiodisentirelyconsumedorentirelycapitalised。Ontheaverage——thegeneralformulacanrepresentonlytheaveragemovement——bothcasesoccur。Butinordernottocomplicatetheformula，itisbettertoassumethattheentiresurplus-valueisaccumulated。

Theformula:P……C’——M’——C’<LMP……P’standsforproductivecapital，whichisreproducedonanenlargedscaleandwithgreatervalue，andwhichasaugmentedproductivecapitalbeginsitssecondcircuit，or，whatamountstothesame，renewsitsfirstcircuit。Assoonasthissecondcircuitisbegun，weoncemorehavePasthestarting-point；

onlythisPisalargerproductivecapitalthanthefirstPwas。Hence，ifintheformulaM……M’thesecondcircuitbeginswithM’，M’functionsasM，asanadvancedmoney-capitalofadefinitemagnitude。Itisalargermoney-capitalthantheonewithwhichthefirstcircularmovementwasopened，butallreferencetoitsaugmentationbythecapitalizationofsurplus-valueceasesassoonasitassumesthefunctionofadvancedmoney-capital。Thisoriginisexpungedinitsformofmoney-capital，whichbeginsitscircuit。

ThisalsoappliestoP’assoonasitfunctionsasthestarting-pointofanewcircuit。

IfwecompareP……P’withM……M’，orwiththefirstcircuit，wefindthattheyhavenotthesamesignificanceatall。M……M’takenbyitselfasanisolatedcircuit，expressesonlythatM，themoney-capital(orindustrialcapitalinitscircuitasmoney-capital)，ismoneygeneratingmoney，valuegeneratingvalue，inotherwords，producessurplus-value。

ButinthePcircuittheprocessofproducingsurplus-valueisalreadycompletedupontheterminationofthefirststage，theprocessofproduction，andaftergoingthroughthesecondstage(thefirststageofthecirculation)，C’——M’，thecapital-valueplussurplus-valuealreadyexistasrealisedmoney-capital，asM’，whichappearedasthelastextremeinthefirstcircuit。

Thatsurplus-valuehasbeenproducedisdepictedinthefirst-consideredformulaP……P(seeexpandedformula，p。47)[Seep。75ofthisbook——

Ed。]byc——m——c，which，initssecondstage，fallsoutsideofthecirculationofcapitalandrepresentsthecirculationofsurplus-valueasrevenue。Inthisform，wheretheentiremovementisrepresentedbyP……P，whereconsequentlythereisnodifferenceinvaluebetweenthetwoextremes，theself-expansionoftheadvancedvaluetheproductionofsurplus-value，isthereforerepresentedinthesamewayasinM……M’，exceptthattheactC’——M’，whichappearsasthelaststageinM……M’，andasthesecondstageofthecircuit，servesasthefirststageofthecirculationinP……P。

InP……P’，P’doesnotindicatethatthesurplus-valuehasbeenproducedbutthattheproducedsurplus-valuehasbeencapitalised，hencethatcapitalhasbeenaccumulatedandthatthereforeP’，incontrasttoP，consistsoftheoriginalcapital-valueplusthevalueofthecapitalaccumulatedbecauseofthecapital-value’smovement。

M’，asthesimplecloseofM……M’，andalsoC’，asitappearswithinallthesecircuits，donotiftakenbythemselvesexpressthemovementbutitsresult:theself-expansionofcapital-valuerealisedintheformofcommoditiesormoney，andhence，capital-valueasMplusm，orCplusc，asarelationofcapital-valuetoitssurplus-value，asitsoffspring。

Theyexpressthisresultasvariouscirculationformsoftheself-expandedcapital-value。ButneitherintheformofC’norofM’istheself-expansionwhichhastakenplaceitselfafunctionofmoney-capitalorofcommodity-capital。

Asspecial，differentiatedforms，modesofexistencecorrespondingtospecialfunctionsofindustrialcapital，money-capitalcanperformonlymoney-functionsandcommodity-capitalonlycommodity-functions，thedifferencebetweenthembeingmerelythatbetweenmoneyandcommodity。Similarlyindustrialcapitalinitsformofproductivecapitalcanconsistonlyofthesameelementsasthoseofanyotherlabour-processwhichcreatesproducts:ontheonehandobjectiveconditionsoflabour(meansofproduction)，ontheotherproductively(purposively)functioninglabour-power。Justasindustrialcapitalcanexistinthesphereofproductiononlyinacompositionwhichmeetstherequirementsoftheproductionprocessingeneral，hencealsoofthenon-capitalistproductionprocess，soitcanexistinthesphereofcirculationonlyinthetwoformscorrespondingcorrespondingtoit，viz。，thatofacommodityandofmoney。Butjustasthetotalityoftheelementsofproductionannouncesitselfattheoutsetasproductivecapitalbythefactthatthelabour-powerislabour-powerthatbelongstoothersandthatthecapitalistpurchaseditfromitsproprietor，justashepurchasedhismeansofproductionfromothercommodity-owners；justasthereforetheprocessofproductionitselfappearsasaproductivefunctionofindustrialcapital，somoneyandcommoditiesappearasformsofcirculationofthesameindustrialcapital，hencetheirfunctionsappearasthefunctionsofcirculation，whicheitherintroducethefunctionsofproductivecapitaloremanatefromthem。Herethemoney-functionandthecommodity-functionareatthesametimefunctionsofcommodity-capital，butsolelybecausetheyareinterconnectedasformsoffunctionswhichindustrialcapitalhastoperformatthedifferentstagesofitscircuit。Itisthereforewrongtoattempttoderivethespecificpropertiesandfunctionswhichcharacterisemoneyasmoneyandcommoditiesascommoditiesfromtheirqualityascapital，anditisequallywrongtoderiveonthecontrarythepropertiesofproductivecapitalfromitsmodeofexistenceinmeansofproduction。

AssoonasM’orC’havebecomefixedasMplusmorCplusc，i。e。，astherelationbetweenthecapital-valueandsurplus-value，itsoffspring，thisrelationisexpressedinbothofthem，inthefirstcaseinthemoney-form，inthesecondcaseinthecommodity-form，whichdoesnotchangemattersintheleast。Consequentlythisrelationdoesnothaveitsorigininanypropertiesorfunctionsinherentinmoneyassuchorcommoditiesassuch。Inbothcasesthecharacteristicpropertyofcapital，thatofbeingavalue，isexpressedonlyasaresult。C’isalwaystheproductofthefunctionofP，andM’isalwaysmerelytheformofC’changedinthecircuitofindustrialcapital。Assoonthereforeastherealisedmoney-capitalresumesitsspecialfunctionofmoneycapital，itceasestoexpressthecapital-relationcontainedinM’=Mplusm。AfterM……

M’hasbeenpassedthroughandM’beginsthecircuitanew，itdoesnotfigureasMeveniftheentiresurplus-valuecontainedinM’iscapitalised。

Thesecondcircuitbeginsinourcasewithamoney-capitalof&pound；500，insteadof&pound；422，asinthefirstcircuit。Themoney-capital，whichopensthecircuit，is&pound；78largerthanbefore。Thisdifferenceexistsoncomparingtheonecircuitwiththeother，butnosuchcomparisonismadewithineachparticularcircuit。The&pound；500advancedasmoney-capital，&pound；78whichformerlyexistedassurplus-value，donotplayanyotherrolethanwouldsomeother&pound；500withwhichanothercapitalistinaugurateshisfirstcircuit。Thesamehappensinthecircuitoftheproductivecapital。

TheincreasedP’actsasPonrecommencing，justasPdidinthesimplereproductionP……P。InthestageM’——C’——<LMP，theaugmentedmagnitudeisindicatedonlybyC’，butnotbyL’orMP’。

SinceCisthesumofLandMP，C’indicatessufficientlythatthesumofLandMPcontainedinitisgreaterthantheoriginalP。Inthesecondplace，thetermsL’andMP’wouldbeincorrect，becauseweknowthatthegrowthofcapitalinvolvesachangeintheconstitutionofitsvalueandthatasthischangeprogressesthevalueofMPincreases，thatofLalwaysdecreasingrelativelyandoftenabsolutely。

III。ACCUMULATIONOFMONEY

Whetherornotm，thesurplus-valueturnedintomoney，isimmediatelyaddedtothecapital-valueinprocessandisthusenabledtoenterthecircuittogetherwithcapitalMnowhavingthemagnitudeM’，dependsoncircumstanceswhichareindependentofthemereexistenceofm。Ifmistoserveasmoney-capitalinasecondindependentbusiness，toberunsidebysidewiththefirst，itisevidentthatitcannotbeusedforthispurposeunlessitisoftheminimumsizerequiredforit。Andifitisintendedtobeusedfortheexpansionoftheoriginalbusiness，therelationsbetweenthematerialfactorsofPandtheirvalue-relationslikewisedemandaminimummagnitudeform。Allthemeansofproductionemployedinthisbusinesshavenotonlyaqualitativebutalsoadefinitequantitativerelationtooneanother，areproportionateinquantity。Thesematerialrelationsaswellasthepertinentvalue-relationsofthefactorsenteringintotheproductivecapitaldeterminetheminimummagnitudemmustpossesstobecapableoftransformationintoadditionalmeansofproductionandlabour-power，oronlyintotheformer，asanaccretiontotheproductivecapital。Thustheownerofaspinning-millcannotincreasethenumberofhisspindleswithoutatthesametimepurchasingacorrespondingnumberofcardersandrovingframes，apartfromtheincreasedexpenditureforcottonandwageswhichsuchanexpansionofhisbusinessdemands。Tocarrythisoutthesurplus-valuemustthereforehavereachedaconsiderablefigure(generallycalculatedtobe&pound；1pernewlyinstalledspindle)。IfmdoesnotreachthisminimumsizethecircuitofcapitalmustberepeateduntilthesumofmsuccessivelyproducedbyitcanfunctiontogetherwithM，henceM’——C’<LMP。

Evenmerechangesofdetail，forinstanceinthespinningmachinery，introducedtomakeitmoreproductive，requiregreaterexpendituresforspinningmaterial，morerovingmachinery，etc。Inthemeantimemisaccumulated，anditsaccumulationisnotitsownfunctionbuttheresultofrepeatedP……P。Itsownfunctionconsistsinpersistinginthemoneystateuntilitreceivessufficientincrementfromtherepeatedsurplus-value-creatingcircuits，i。e。，fromoutside，topossesstheminimummagnitudenecessaryforitsactivefunction，themagnitudeinwhichaloneitcanreallyenterasmoney-capital——inthecaseathandastheaccumulatedpartofthefunctioningofmoney-capitalM——intothefunctioningofM。Butintheinterimitisaccumulatedandexistsonlyintheshapeofahoardinprocessofformation，ofgrowth。

Hencetheaccumulationofmoney，hoarding，appearshereasaprocessbywhichrealaccumulation，theextensionofthescaleonwhichindustrialcapitaloperates，istemporarilyaccompanied。Temporarily，forsolongasthehoardremainsintheconditionofahoard，itdoesnotfunctionascapital，doesnottakepartintheprocessofcreatingsurplus-value，remainsasumofmoneywhichgrowsonlybecausemoney，comebywithoutitsdoinganything，isthrowninthesamecoffer。

Theformofahoardissimplytheformofmoneynotincirculation，ofmoneywhosecirculationhasbeeninterruptedandwhichisthereforefixedinitsmoney-form。Asfortheprocessofhoarding，itiscommontoallcommodityproductionandfiguresasanendinitselfonlyintheundeveloped，pre-capitalistformsofthisproduction。Inthepresentcase，however，thehoardappearsasaformofmoney-capitalandtheformationofahoardasaprocesswhichtemporarilyaccompaniestheaccumulationofcapitalbecauseandsofarasthemoneyherefiguresaslatentmoney-capital；

becausetheformationofahoard，thestateofbeingahoard，inwhichthesurplus-valueexistinginmoney-formfindsitself，isafunctionallydeterminedpreparatorystagegonethroughoutsideofthecircuitdescribedbythecapitalandrequiredforthetransformationofthesurplus-valueintoreallyfunctioningcapital。Byitsdefinitionitisthereforelatentmoney-capital。Hencethesizeitmustacquirebeforeitcantakepartintheprocessisdeterminedineachcasebythevalueconstitutionoftheproductivecapital。Butsolongasitremainsintheconditionofahoarditdoesnotyetperformthefunctionsofmoney-capitalbutisstillidlemoney-capital；notmoney-capitalwhosefunctionhasbeeninterrupted，aswasthecasebefore，butmoney-capitalnotyetcapableofperformingit。

Weareherediscussingtheaccumulationofmoneyinitsoriginalrealformofanactualhoardofmoney。Itmayalsoexistintheformofamereoutstandingmoney，ofclaimsondebtorsbycapitalistswhohavesoldC’。Asforotherformsinwhichthislatentmoney-capitalmayexistinthemeantimeevenintheshapeofmoney-breedingmoney，suchasinterest-bearingbankdeposits，billsofexchangeorsecuritiesofanydescription，thesedonotbelonghere。Surplus-valuerealisedintheformofmoneyinsuchcasesperformsspecialcapital-functionsoutsidethecircuitdescribedbytheindustrialcapitalwhichoriginatedit——functionswhichinthefirstplacehavenothingtodowiththatcircuitassuchbutwhichinthesecondplacepresupposecapital-functionswhichdifferfromthefunctionsofindustrialcapitalandwhichhavenotyetbeendevelopedhere。

IV。RESERVEFUND

Intheforminwhichwehavejustdiscussed，thehoard，aswhichthesurplus-valueexists，isafundfortheaccumulationofmoney，themoney-formtemporarilyassumedbycapitalaccumulationandtothatextentaconditionofthisaccumulation。Howeverthisaccumulation-fundcanalsoperformspecialservicesofasubordinatenature，thatistosaycanenterintocapital’smovementincircuitswithoutthisprocessassumingtheformofP……P’，hencewithoutanexpansionofcapitalistreproduction。

IftheprocessC’——M’isprolongedbeyonditsnormalduration，ifthereforethecommoditycapitalisabnormallydelayedinitstransformationintothemoney-formorif，forinstance，afterthecompletionofthistransformationthepriceofthemeansofproductionintowhichthemoney-capitalmustbetransformedhasrisenabovethelevelprevailingatthebeginningofthecircuit，thehoardfunctioningasaccumulation-fundcanbeusedintheplaceofmoney-capitalorofpartofit。Thusthemoney-accumulationfundservesasareservefundforcounter-balancingdisturbancesinthecircuit。

AssuchareservefunditdiffersfromthefundofpurchasingorpayingmediadiscussedinthecircuitP……P。Thesemediaareapartoffunctioningmoney-capital(henceformsofexistenceofapartofcapital-valueingeneralgoingthroughtheprocess)whosepartsenterupontheirfunctionsonlyatdifferenttimes，successively。Inthecontinuousprocessofproduction，reserve-moneycapitalisalwaysformed，sinceonedaymoneyisreceivedandnopaymentshavetobemadeuntillater，andanotherdaylargequantitiesofgoodsaresoldwhileotherlargequantitiesarenotduetobeboughtuntilasubsequentdate。Intheseintervalsapartofthecirculatingcapitalexistscontinuouslyintheformofmoney。Areservefundontheotherhandisnotapartofconstituentcapitalalreadyperformingitsfunctions，or，tobemoreexact，ofmoney-capital。Itisratherapartofcapitalinapreliminarystageofitsaccumulation，ofsurplus-valuenotyettransformedintoactivecapital。Asfortherest，itneedsnoexplainingthatacapitalistinfinancialstraitsdoesnotconcernhimselfaboutwhattheparticularfunctionsofthemoneyhehasonhandare。Hesimplyemployswhatevermoneyhehasforthepurposeofkeepinghiscapitalcirculating。ForinstanceinourillustrationMisequalto&pound；422，M’to&pound；500。Ifapartofthecapitalof&pound；422existsasafundofmeansofpaymentandpurchase，asamoneyreserve，itisintended，otherconditionsremainingthesame，thatitshouldenterwhollyintothecircuit，andbesidesshouldsufficeforthispurpose。Thereservefundhoweverisapartofthe&pound；78ofsurplus-value。Itcanenterthecircularcourseofthecapitalworth&pound；422

onlytotheextentthatthiscircuittakesplaceunderconditionsnotremainingthesame；foritisapartoftheaccumulation-fund，andfiguresherewithoutanyextensionofthescaleofreproduction。

Money-accumulationfundimpliestheexistenceoflatentmoney-capital，hencethetransformationofmoneyintomoney-capital。

Thefollowingisthegeneralformulaforthecircuitofproductivecapital。Itcombinessimplereproductionandreproductiononaprogressivelyincreasingscale:

12

^^

P……C’——M’。M——C<LMP……P(P’)。

IfPequalsP，thenMin2)equalsM’minusm；ifPequalsP’，thenMin2)isgreaterthanM’minusm；thatistosaymhasbeencompletelyorpartiallytransformedintomoney-capital。

ThecircuitofproductivecapitalistheforminwhichclassicalPoliticalEconomyexaminesthecircularmovementofindustrialcapital。

NOTES

[6a]Theterm”latent”isborrowedfromtheideaoflatentheatinphysics，whichhasnowbeenalmostreplacedbythetheoryofthetransformationofenergy。Marxthereforeusesinthethirdpart(alaterversion)，anotherterm，borrowedfromtheideaofpotentialenergy，viz。:”potential”oranalogoustothevirtualvelocitiesofD’Alembert，”virtualcapital。”——Ed。

1885:CapitalII——Chapter3

partI

THEMETAMORPHOSESOFCAPITALANDTHEIRCIRCUITS

CHAPTERIII

THECIRCUITOFCOMMODITY-CAPITALThegeneralformulaforthecircuitofcommodity-capitalis:

C’——M’——C……P……C’。C’appearsnotaloneastheproductbutalsoasthepremiseofthetwopreviouscircuits，sincethatwhichM——CmeansfortheonecapitalC’——M’

meansfortheother，inasmuchasatleastapartofthemeansofproductionisitselfthecommodity-productofotherindividualcapitalsdescribingtheircircuits。Inourcaseforinstancecoal，machinery，etc。，representthecommodity-capitalofthemine-owner，ofthecapitalistmachine-manufacturer，etc。FurthermorewehaveshowninChapterI，4，thatnotonlythecircuitP……PbutalsothecircuitC’……C’isassumedeveninthefirstrepetitionofM……M’，beforethissecondcircuitofmoney-capitaliscompleted。

Ifreproductiontakesplaceonanextendedscale，thenthefinalC’isgreaterthantheinitialC’andshouldthereforebedesignatedhereasC’’。

Thedifferencebetweenthethirdformandthefirsttwoisasfollows:First，inthiscasethetotalcirculationwithitstwoantitheticalphasesopensthecircuit，whileintheFormIthecirculationisinterruptedbytheprocessofproductionandinFormIIthetotalcirculationwithitstwocomplementaryphasesappearsmerelyasameansofeffectingtheprocessofreproductionandthereforeconstitutesthemovementmediatingbetweenP……P。InthecaseofM……M’，theformofcirculationisM——C……C’——M’=M——C——M。InthecaseofP……PithastheinvertedformC’——M’。M——C=C——M——C。InthecaseofC’——C’itlikewisehasthisform。

Secondly，whencircuitsIandIIarerepeated，evenifthefinalpointsM’andP’formthestarting-pointsoftherenewedcircuit，theforminwhichM’andP’wereproduceddisappears。M’=MplusmandP’=PpluspbeginthenewprocessasMandP。ButintheformIIIthestarting-pointCmustbedesignatedasC’，evenifthecircuitisrenewedonthesamescale，forthefollowingreason。InFormI，assoonasM’assuchopensanewcircuititfunctionsasmoney-capitalM，asanadvanceinmoney-formofthecapital-valuethatistoproducesurplus-value。Thesizeoftheadvancedmoney-capital，augmentedbytheaccumulationachievedduringthefirstcircuit，hasincreased。Butwhetherthesizeoftheadvancedmoney-capitalis&pound；422or&pound；500doesnotalterthefactthatitappearsassimplecapital-value。M’nolongerexistsasself-expandedcapitaloracapitalpregnantwithsurplus-value，asacapital-relation。Indeed，itistoexpanditselfonlyduringitsprocess。ThesameistrueofP……

P’；PmuststeadilycontinuetofunctionasP，ascapital-valuewhichistoproducesurplus-value，andmustrenewitscircuit。

Thecommodity-capitalcircuit，onthecontrary，doesnotopenwithjustcapital-valuebutwithcapital-valueaugmentedinthecommodity-form。

Henceitincludesfromthestartthecircuitofnotonlycapital-valueexistingintheformofcommodities，butalsoofsurplus-value。Consequentlyifsimplereproductiontakesplaceinthisform，theC’attheterminalpointisequalinsizetotheC’atthestarting-point。Ifapartofthesurplus-valueentersintothecapitalcircuit，C’’，anenlargedC’，appearsatthecloseinsteadofC’。ThisismerelyalargerC’thanthatoftheproceedingcircuit，withalargeraccumulatedcapital-value。Henceitbeginsitsnewcircuitwitharelativelylarger，newlycreatedsurplus-value。

InanyeventC’alwaysinauguratesthecircuitasacommodity-capitalwhichisequaltocapital-valueplussurplus-value。

C’asCdoesnotappearinthecircuitofanindividualindustrialcapitalasaformofthiscapitalbutasaformofsomeotherindustrialcapital，sofarasthemeansofproductionaretheproductofthelatter。

TheactM——C(i。e。，M——MP)ofthefirstcapitalisC’——M’forthissecondcapital。

InthecirculationactM——C<LMPLandMPbearidenticalrelations，astheyarecommoditiesinthehandsoftheirsellers——ontheonehandthelabourerswhoselltheirlabour-power，ontheothertheownerofthemeansofproduction，whosellsthese。Forthepurchaser，whosemoneyherefunctionsasmoney-capital，LandMPfunctionmerelyascommoditiesuntilhehasboughtthem，hencesolongastheyconfronthiscapital，existingintheformofmoney，ascommoditiesofothers。MP

andLdifferhereonlyinthisrespect，thatMPmaybeC’，hencecapital，inthehandsofitsseller，ifMPisthecommodity-formofhiscapital，whileLisalwaysnothingelsebutacommodityforthelabourerandbecomescapitalonlyinthehandsofitspurchaserasaconstituentpartofP。

ForthisreasonC’canneveropenanycircuitasamereC，asamerecommodity-formofcapital-value。Ascommodity-capitalitisalwaystwo-fold。Fromthepointofviewofuse-valueitistheproduct，inthepresentcaseyarn，ofthefunctioningofPwhoseelementsLandMP，comingascommoditiesfromthesphereofcirculation，havefunctionedonlyasfactorsinthecreationofthisproduct。Secondly，fromthepointofviewofvalue，itisthecapital-valuePplusthesurplus-valuesproducedbythefunctioningofP。

ItisonlyinthecircuitdescribedbyC’itselfthatCequaltoPandequaltothecapital-valuecanandmustseparatefromthatpartofC’inwhichthesurplus-valueislodged。Itdoesnotmatterwhetherthetwothingscanbeactuallyseparated，asinthecaseofyarn，orwhethertheycannot，asinthecaseofamachine。TheyalwaysbecomeseparableassoonasC’istransformedintoM’。

Iftheentirecommodity-productcanbeseparatedintoindependenthomogeneouspartialproducts，asinthecaseofour10，000lbs。ofyarn，andifthereforetheactC’——M’canberepresentedbyanumberofsuccessivesales，thenthecapital-valueintheformofcommoditiescanfunctionasC，canbeseparatedfromC’，beforethesurplus-value，hencebeforeC’

initsentirety，hasbeenrealised。

Ofthe10，000lbs。ofyarnworth&pound；500，thevalueof8，440

lbs。，equalto&pound；422，isequaltothecapital-valuelessthesurplus-value。

Ifthecapitalistsellsfirst8，440lbs。ofyarnatL422，thenthese8，440

lbs。ofyarnrepresentC，thecapital-valueincommodity-form。Thesurplus-productof1，560lbs。ofyarn，containedbesidesinC’andequaltoasurplusvalueof&pound；78，doesnotcirculateuntillater。ThecapitalistcouldgetthroughC——M——C<LMPbeforethecirculationofthesurplus-productC——m——cisaccomplished。

Orifhesells7，440lbs。ofyarnworth&pound；372，andthen1，000

lbs。ofyarnworth&pound；50，hemightreplacethemeansofproduction(theconstantcapitalc)withthefirstpartofC，andthevariablecapitalv，thelabour-power，withthesecondpartofC，andthenproceedasbefore。

Butifsuchsuccessivesalestakeplaceandtheconditionsofthecircuitpermitit，thecapitalist，insteadofseparatingC’intoc+v+s，maymakesuchapreparationalsointhecaseofaliquotpartsofC’。

Forexamplethe7，440lbs。ofyarnequalat&pound；372，whichaspartsofC’(10，000lbs。ofyarnworth&pound；500)representtheconstantpartofcapital，maythemselvesbeseparatedinto5，535。360lbs。ofyarnworth&pound；276。768，whichreplaceonlytheconstantpart，thevalueofthemeansofproductionusedupinproducing7，440lbs。ofyarn；744lbs。

ofyarnworth&pound；37。200，whichreplaceonlythevariablecapital；and1，160，640lbs。ofyarnworth&pound；58。032，which，beingsurplus-product，arethedepositoriesofsurplus-value。Consequentlyonsellingthe7，440

lbs。ofyarn，hecanreplacethecapitalvaluecontainedinthemoutofthesaleof6，279。360lbs。ofyarnatthepriceof&pound；313。968，andhecanspendashisrevenuethevalueofthesurplus-productamountingto1，160。640lbs。，or&pound；58。032。

Inthesameway，hemaydivideupanother1，000lbs。ofyarnequalto&pound；50，equaltothevariablecapital-value，andsellthemaccordingly；

744lbs。ofyarnworth&pound；37。200，constantcapital-valuecontainedin1，000lbs。ofyarn；finally，100lbs。ofyarnworth&pound；5。000，variablecapital-valueditto；hence844lbs。ofyarnworth&pound；42。200，replacementofthecapital-valuecontainedinthe1，000lbs。ofyarn；finally156lbs。

ofyarnworth&pound；7。800，representingthesurplus-productcontainedinit，whichmaybeconsumedassuch。

Finally，hemaydividetheremaining1，560lbs。ofyarnworth&pound；78，insuchaway，providedhesucceedsinsellingthem，thatthesaleof1，160。640lbs。ofyarn，worth&pound；58。032，replacesthevalueofthemeansofproductioncontainedinthose1，560lbs。ofyarn，andthat156lbs。ofyarnworth&pound；7。800，replacesthevariablecapital-value；

altogether1，316。640lbs。ofyarnequalto&pound；65。832，replacementofthetotalcapital-value；finallythesurplus-productof243。360lbs。，equalto&pound；12。168，remainstobespentasrevenue。

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