Capital
Detailed Notes on Marx's "The General Formula for Capital"
I. The Historical and Logical Starting Point of Capital
Origin: The circulation of commodities is the starting point of capital.
Historical Groundwork:
Production of commodities.
The more developed form of circulation: commerce.
The modern history of capital dates from the 16th century with the creation of a world-embracing commerce and market.
First Form of Capital:
When abstracting from the material substance (use-values) of circulation, the final result is money.
Historically, capital first appears as moneyed wealth (e.g., merchant's capital, usurer's capital).
In the modern day, all new capital initially appears on the market in the shape of money, which must then be transformed into capital.
II. The Two Distinct Forms of Circulation
The first distinction between mere money and money as capital is a difference in their form of circulation.
A. Simple Circulation of Commodities: C—M—C
Formula: Commodity — Money — Commodity.
Purpose: Selling in order to buy.
Description:
The process begins with a commodity and ends with a different commodity.
The goal is the acquisition of a use-value (e.g., corn is sold to buy clothes).
The end result is consumption, the satisfaction of wants, which lies outside the sphere of circulation.
The same piece of money changes hands twice.
The expenditure of money is final; it is spent once for all.
A reflux of money to the original spender is accidental and only happens through a renewal of the entire process (e.g., selling another commodity).
B. Circulation of Money as Capital: M—C—M
Formula: Money — Commodity — Money.
Purpose: Buying in order to sell.
Description:
The process begins with money and ends with money.
The goal is exchange-value itself.
The money is not spent, but advanced with the intention of getting it back.
Here, it is the commodity that changes hands twice, not the money.
The reflux of money to its starting point is essential and conditioned by the very mode of its expenditure. Without the sale (C—M), the process is incomplete and fails.
III. The Key Difference: Surplus-Value and the "Why" of M—C—M
At first glance, M—C—M appears "absurd," "purposeless," and "tautological" because both extremes are money, with no qualitative difference.
The only possible difference is quantitative.
The complete form is therefore M—C—M', where M' = M + ΔM (the original sum plus an increment).
This increment is called "surplus-value".
The original value (M) not only remains intact but expands itself; it valorizesitself. It is this movement that converts money into capital.
IV. Contrasting the Motives and Limits of the Two Circuits
V. The Endless Movement of Capital
At the end of the process M—C—M', the distinction between the original capital (M) and the surplus-value (ΔM) vanishes. The result is a single sum of money (M') ready to begin the process again.
"Money ends the movement only to begin it again."
Therefore, every completed circuit automatically forms the starting point for a new one.
Conclusion: The circulation of capital is an end in itself, for the expansion of value takes place only within this constantly renewed movement. "The circulation of capital has therefore no limits."
VI. Historical and Philosophical Context (From Footnote)
Marx references Aristotle's distinction:
Oeconomic: The art of household management (acquiring use-values for life). It is limited and natural.
Chrematistic: The art of money-making. It is unlimited because its aim (money) is boundless.
Marx aligns the simple circulation C—M—C with Oeconomic and the capitalist circulation M—C—M with Chrematistic.
This highlights the historical shift where circulation itself (aimed at endless money accumulation) becomes the source of wealth.
(Continued)
I. The Nature of Capital as Self-Expanding Value
Value becomes the active factor in the process M—C—M'.
It changes forms (money → commodities → money) but preserves and expands itself.
It requires an independent form to establish its identity, which it finds in money (e.g., starting as £100, ending as £110).
However, money alone isn't capital; it must take the form of a commodity to transform and expand.
Key Metaphor: Value is like a father differentiating himself from his son (surplus-value). Initially distinct, their difference vanishes as they become one larger sum (£110), ready to begin the process again.
A. Capital as "Value in Process"
Value becomes value in process, money in process, and as such, capital.
It cycles through circulation, expanding each time: "comes back out of it with expanded bulk, and begins the same round ever afresh."
M—M' ("money which begets money") is the description given by the Mercantilists, capitalism's first interpreters.
While M—C—M' appears specific to merchants' capital, it is the general formula for all capital, including industrial capital.
B. The Abridged Form and the General Formula
For interest-bearing capital, the formula appears abridged as M—M' ("in lapidary style"), showing the result without the intermediate stage.
Therefore, M—C—M' is the general formula of capital as it appears within the sphere of circulation.
II. The Capitalist as Personified Capital
The owner of money becomes a capitalist, the conscious representative of the movement of capital.
His sole subjective aim is the expansion of value (the appropriation of abstract wealth).
He is capital personified, endowed with consciousness and a will.
Comparison with the Miser:
Commonality: Both have a boundless greed for wealth (exchange-value).
Difference: The miser is a "capitalist gone mad" who hoards money, saving it from circulation. The capitalist is a "rational miser" who constantly throws money back into circulation to augment it.
III. The Transformation of Money into Capital: The Problem
The change in value (ΔM) cannot occur in the money (M) itself, as it only realizes the price of a commodity.
It cannot originate in the second act (C—M), the sale, which merely transforms the commodity back into money.
Conclusion: The change must originate in the first act (M—C), specifically in the consumption (use-value) of the commodity bought.
The capitalist must find a commodity whose consumption is itself an embodiment of labour, and consequently, a creation of value.
This special commodity is labour-power (or capacity for labour).
IV. The Commodity: Labour-Power
Definition: Labour-power is the "aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of any description."
V. Conditions for Labour-Power to be a Commodity
For labour-power to be offered for sale on the market, two essential conditions must be met:
A. First Condition: The Labourer must be a "Free" Agent
The labourer must be the "untrammelled owner of his capacity for labour,"able to dispose of it as his own commodity.
He must sell it only for a definite period, not "rump and stump, once for all."
Selling it permanently would be selling himself, converting him from a free man into a slave.
By selling it temporarily, he retains ownership over his person.
B. Second Condition: The Labourer must be "Free" from the Means of Production
The labourer must have no other commodities to sell (i.e., no products of his own labour).
He is "free" in the negative sense: he is "short of everything necessary for the realisation of his labour-power" (raw materials, implements, means of subsistence).
He is therefore obliged to sell his labour-power itself as a commodity.
VI. The Historical Nature of the "Free Labourer"
The existence of a class of "free labourers" is not natural; it is the result of a specific historical development.
"Nature does not produce on the one side owners of money or commodities, and on the other men possessing nothing but their own labour-power."
This relation is the product of many economic revolutions and the extinction of older forms of social production (e.g., slavery, feudalism).
The widespread production of commodities (and the transformation of labour-power into a commodity) is itself a hallmark of capitalist production.
While commodity production can exist in other societies, the capitalist system is defined by its dominance and by the existence of this specific social relation between the owner of money and the "free" owner of labour-power.
(The Value of Labour-Power)
I. The Historical Specificity of Capital
The existence of capital signifies a new epoch in social production.
Its birth requires a specific historical condition beyond simple commodity circulation: the meeting of the money-owner with the "free labourer" selling his labour-power.
This single condition "comprises a world's history."
II. Determining the Value of Labour-Power
The value of labour-power is determined, like any other commodity, by the labour-time necessary for its production and reproduction.
Since labour-power exists only in a living individual, its production is the maintenance and reproduction of that individual.
A. The Components of Value
The value of labour-power resolves itself into the value of the means of subsistence necessary for the labourer, which includes:
Individual Maintenance: The means of subsistence (food, clothing, fuel, housing) sufficient to maintain the labourer in their normal state, allowing them to repeat the work process daily.
The Worker's Children: The means necessary to raise substitutes, ensuring this class of commodity-owners "may perpetuate its appearance in the market."
Education/Training Costs: The cost of education or training required to develop the skill for a specific kind of labour. This cost is pro-rated into the total value.
B. The "Historical and Moral Element"
Unlike other commodities, the determination of labour-power's value incorporates a historical and moral element.
The "necessary wants" of the labourer are not purely biological; they depend on:
The climate and physical conditions of the country.
The historical level of civilization.
The habits and degree of comfort in which the class of free labourers was formed.
Nevertheless, for a given country and period, the average quantity of necessary means of subsistence is practically known.
III. Quantitative Calculation and Minimum Limit
The value of labour-power can be calculated as a daily average of all the means of subsistence required over different time periods (daily, weekly, quarterly).
Formula: Daily average = (365A + 52B + 4C + etc.) / 365
If this mass of commodities embodies, for example, 6 hours of social labour, then half a day's labour is requisite to produce one day's labour-power. This quantity of labour forms its value.
Minimum Limit: The value has a lower limit: the value of the commodities physically indispensable for survival. If the price falls to this minimum, it is below its value, as the labourer can only be maintained in a "crippled state."
IV. Labour-Power vs. Labour: A Critique of Sentimentality
Marx criticizes economists like Rossi who argue that abstracting from the means of subsistence when discussing "capacity for labour" is to comprehend a "phantom."
Marx's Rebuttal:
Analogy: Speaking of a "capacity for digestion" is not the same as speaking of "digestion" itself.
When we speak of "capacity for labour" (labour-power), we do notabstract from the means of subsistence; their value is expressly included in its value.
The labourer feels the cruel necessity that this capacity costs a definite amount to produce and reproduce, whether sold or not. If unsold, it is a loss to the worker, leading to the agreement with Sismondi: "capacity for labour... is nothing unless it is sold."
V. The Peculiarities of Labour-Power as a Commodity
Separation of Alienation and Appropriation: Its value is fixed before circulation, but its use-value (the actual work) is only realized after the contract, in the hands of the buyer. There is a time gap between sale and actual delivery of the use-value.
The Worker Gives Credit: Due to this time gap, the capitalist almost always gets the use-value of labour-power (the worker's labour for a day, week, etc.) before paying for it. The worker, therefore, extends credit to the capitalist.
This is not a "mere fiction," as workers lose wages if a capitalist goes bankrupt.
VI. Leaving the Sphere of Circulation for the "Hidden Abode" of Production
The consumption of labour-power (i.e., the labour process) is the production of both commodities and surplus-value.
This consumption happens outside the market, in the sphere of production.
Marx symbolically leaves the "noisy sphere" of circulation, where everything is visible, to enter the "hidden abode of production."
Purpose: To discover "not only how capital produces, but how capital is produced" and to "force the secret of profit making."
VII. The Ideology of the Sphere of Circulation
Marx sarcastically describes the sphere of circulation as a "very Eden of the innate rights of man," where the following illusions rule:
Freedom: Buyer and seller contract as free agents based on their own will.
Equality: They meet as equal commodity-owners and exchange equivalents.
Property: Each disposes only of what is their own.
Bentham (Utilitarianism): Each looks only to their own self-interest, which supposedly harmoniously works for the common good.
This is the perspective of the "Free-trader Vulgaris."
VIII. The Change in Physiognomy upon Entering Production
Upon leaving circulation and entering production, the characters' demeanors change dramatically.
The money-owner now strides ahead as the capitalist, "with an air of importance, smirking, intent on business."
The possessor of labour-power follows as the labourer, "timid and holding back, like one who is bringing his own hide to market and has nothing to expect but—a hiding."
This powerful imagery signals the end of the formal equality of the market and the beginning of the exploitative and coercive relations of the workplace.