Chapter 4: The General Formula for Capital.
The purpose of this chapter is to provide a preliminary explanation of how capital is accumulated, Marx does this through introducing a new equation: M-C-M (another sequential motion of commodity exchange). The chapter opens with a series of basic claims about the nature of trade and commodity circulation. The focus is such because commodity circulation is the primary form in which capital appears. Capital, as Marx describes it, takes its appearance first and foremost from processes of commodity exchange. Marx specifies that the principle determining purpose of the M-C-M form of circulation is exchange-value. In this chapter, we see the introduction of the significant concepts of surplus value (251), valorization (252) and self-valorisation (255).
Marx states that the economic form that the exchange process takes in capitalism, leads ultimately to the money-form (247), so we will need to apply our analysis of money from previous chapters in this chapter.
On the nature of money
“Money is precisely the converted form of commodities” (251)
- For Marx, money becomes an automatic subject, as its movement becomes repeated endlessly (255).
- While value exists without money, “only in the shape of money does it possess form. Money therefore forms the starting-point and the conclusion of every valorization process” (255).
Two phases of the movement of money
The circulation of money as capital and the circulation of money as mere money is distinguished from each other.
- Selling in order to buy (C-M-C)
“The simple circulation of commodities – selling in order to buy – is a means to a final goal which lies outside circulation, namely the appropriation of use-values, the satisfaction of needs” (253).
- Buying in order to sell (M-C-M).
Here the buyer takes the commodity from a seller and “passes it into the hands of another buyer” (249).
This second form of money functions as capital, and in that sense, also becomes capital (248). For example, “only by the surplus value of $10 does the $100 originally advanced become capital”, and as soon as this has happened the amount of money goes to be re-advanced, its nature as capital disappears again.
Marx points out that this process M-C-M, would be a pointless exchange of money for money, in equal quantities, if it weren’t for other motives. M-C-M’ is the same equation expressing the original sum advanced plus surplus value.
Marx builds upon the classification of hoarding and credit flows from chapter 3.
We could discuss in this session the ways in which C-M-C represents the viewpoint of the working class and M-C-M represents the viewpoint of capital.
On Surplus Value
“the valorization of value takes place only within this constant renewed movement” (253).
“use values must never be treated as the immediate aim of the capitalist” (254).
- Surplus value is created by throwing money into circulation over and over again, this is the activity of capitalists.
- Capital is value in process, including money in process (256).
- Industrial capital. In this week’s session we could spend some time differentiating between mercantilist and industrial capital.
- Cleaver stresses that working class savings cannot be surplus value, as they mainly serve to redistribute income through time.
- Marx uses the term “self-valorization” to denote the expansion of capital. It’s important to note that this term has been redefined to describe the self-activity of the working class against and beyond capital (Negri, Cleaver).