Capital[i]
Vol. I, Ch, 5
Contradictions
in the general formula of Capital
Summary
“The circulation of commodities is the
starting point of the capital. The production of commodities, their circulation
and the more developed form of their circulation called commerce form the
historical ground work from which it rises. The modern history of capital dates
from the creation in the 16th century of a world embracing commerce
and a world embracing market.” (CI, Ch4)[ii].
Chapter IV explains the General Formula for Capital -- the transformation
of money from money as, the means of payment in the simple circulation (C-M-C)
into capital in the capitalist circulation (M-C-M). In the former, the end
points are commodities, the use values C-C, involving exchange of 2 qualitatively
different commodities of the same value, i.e. the exchange of equivalents. “If the
commodities, or the commodities and the money of equal exchange value and
consequently equivalents are exchanged, it is clear that no one extracts more
value from than he throws into circulation. There is no creation of surplus
value.”[iii](Ch
5) In simple circulation the circuit begins and ends with C. One sells a
commodity to buy another. The values of the commodities do not expand,
“attained at the most a form independent of their use values, i.e. the form of
money…… (Ch 4)[iv]
In capitalist circulation circuit, M-C-M the process is inverted. The owner of
the money buys for sale, the end results are M-M.
Chapter
5, Contradictions in the General Formula
of the Capital explains the contradiction between use value and the
exchange value and generation of the surplus value, i.e. the expansion of the
value advanced in the form of money.. Two of the three actors involved in the
process of circulation -- the producer from whom the buys the commodity C for
money M and the consumer whom he sells it for money M’ remain unconcerned with
the inversion. The difference between M
and the M’, i.e. the value added to the capital advanced in the beginning of
the circulation, M’-M is the surplus extracted by the capitalist in the form of
profit. “The circuit M-C-M, buying in order to ell dearer is seen most clearly
in genuine merchants’ capital. The merchant “parasitically shoves in between”[v]
two producers, who in turn are consumers also. Same is true about money lenders
capital also.
“What we have said with reference to
merchants’ capital, applies still more to the money lenders capital. ……. In
moneylenders’ capital, the form M-C-M is reduced to 2 extremes without a mean,
M-M, money exchanged for more money.” This applies still more to contemporary
banking system that functions on the formula of peoples’ money controlled by
banks and used by the capitalist.
“The form, which circulation takes when
money becomes capital, is opposed to all the laws we have hitherto investigated
bearing on the nature of commodities, value and money, and even of circulation
itself. What distinguishes this form from that of the simple circulation of commodities
is, the inverted order of the two antithetical processes, the sale and purchase.”[vi]
To sum up, no surplus is created in
pre-capitalist, simple circulation, involving exchange of commodities of equal
values and the money does not take the form of capital but remains as means of
payment in the process of exchange. With the inversion of the “order of the two
antithetical processes, the sale and purchase”, money acquires the form of
capital – the mercantile or the merchant’s capital. This inversion of the
circulation circuit marks the beginning of the generation the surplus value and
its appropriation by the capitalist and laid the foundation of the subsequent
industrial capitalism. Creation of surplus cannot be entirely explained in
terms of the circulation that shall be dealt in subsequent chapters but also
cannot be explained without it.
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