I From the circulation of commodities to capital
Marx begins by making two observations about ‘capital’ (a term he has yet to define). First, he notes that commodity circulation is the starting point and historical presupposition of capital (Marx will say that capital is money – hence the necessity of commodity production, which leads to money – which differentiates itself first from money by the manner of its circulation). Marx clarifies ‘commodity circulation’ as ‘the production of commodities and their circulation in its developed form, namely trade.’ Second, he notes that the modern history of capital starts to unfold from the emergence of world trade and the world market, from the sixteenth century.
Marx now makes an historical observation: ‘Historically speaking, capital invariably first confronts landed property in the form of money; in the form of monetary wealth, merchants’ capital and usurers’ capital.’
Money as capital only distinguishes itself from money in general by virtue of its different form of circulation (with the significant consequence that if you look at, say, a €5 note you cannot tell if it is capital or not, it is simply money).
II The cycle of commodities and the cycle of capital
The movement of commodity circulation – C–M–C – arose because of the conflict between the two distinct tasks of realising value and obtaining use-value – a conflict which itself arises from the conflict between individual private labour and the social division of labour – that direct exchange (barter) broke into two steps, whose overall rubric could be ‘selling in order to buy’.
But alongside C–M–C we find another circulatory movement: M–C–M, buying in order to sell. This is the cycle of capital.
Clearly, M–C–M would be absurd if the second quantity M was not greater than the first. Nevertheless, independently of this fact, it is necessary to establish the similarities, and the differences, between the two cycles of C–M–C and M–C–M.
III Similarities between the cycle of commodities and the cycle of capital
- Both are composed of the same elements.
- Each cycle is formed by a unity of two opposite phases, a sale and a purchase.
- Each circuit is mediated through the participation of three agents, one who buys, one who sells, and one who both buys and sells (and it is this third agent that gives the process its unity; for the other two the circuit is incomplete.
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