Capital Volume II: Class 2

Readings: Capital II, ch. 1-3

At the start of Volume II, Marx introduces the process of circulation of industrial capital, which he divides into three forms: money capital, productive capital and commodity capital. Since this is the first time I am reading this text, I do not know exactly where he is going with this, but I can outline the basics of what he argues each of these forms shows about capital circulation, and what the implications are.

Money capital and commodity capital constitute the actual circulation stages of the process, where capital is being transferred between different people, while productive capital is that stage where the true metamorphosis occurs, i.e. labor is done to transform means of production into commodities that can be sold for a value.

There are two aspects of Marx’s description of this circuit: subjective and objective. This can be seen in the way that the circuit continues ad infinitum in a capitalist economy as commodities are produced, sold for money, the money is reinvested in production, more commodities are produced, sold for money, etc. He highlights the three forms as portions of this circuit that may be more important for an individual capitalist or worker at different points in the exchange and production process. Each purchase of a commodity to be used for production is simultaneously a sale of that commodity that just emerged from production. While the subjective goal of capitalists is to increase their capital in order to out-compete their rivals, that of most workers is to facilitate consumption of commodities to reproduce their labor power.

If we lay out the process as follows M–C–P–C’–M’–C–P–C’–M’–C–P–C’–M’… we can see that, depending on where you start following the circulation chain, different elements will be prioritized and others subordinated. If we start with M, commodity capital and productive capital are subordinated to money capital. If we start with C, money capital and productive capital are subordinated to commodity capital. And likewise for P.

He makes the point, perhaps prefiguring later development in the text, that mishaps or delays can happen at any step along the way and that this effects the outcome and stability of the economy. One example of this is money hoarding, which he argues is somewhat necessary for capitalists to build up enough capital to invest in expanded reproduction. He writes, “Thus the accumulation of money, the formation of a hoard, appears here as a process that temporarily accompanies an extension of the scale on which industrial capital operates. Temporarily, because as long as the hoard persists in its state as a hoard, it does not function as capital, does not participate in the valorization process but remains a sum of money that grows only because money available to it without any effort on its part is cast into the same coffer.” (163)

The occurrence of widespread money hoarding is consistent with a state of deflation, or at least one with high deflationary pressure, as exists today in the United States. The Federal Reserve has been fighting this hoarding tendency by attempting to force this money capital into circulation to produce commodities. We can see strong resistance to this, for example, in the sustained rise in the gold price especially since the financial crisis of 2008-09 and the rise of Bitcoin as a store of value. Ray Dalio recently argued that the federal government could seek to ban Bitcoin, presumably for the purpose of attempting to force this hoard into circulation.

But Marx focuses particular attention on the commodity form of circulation as one that is illustrative of the entire circulation process as opposed to just the individual. He writes, “But precisely because the circuit C’. . . C’ presupposes in its description the existence of another industrial capital in the form C(=L+mp)… it itself demands to be considered not only as the general form of the circuit, i.e. as a social form in which every individual industrial capital can be considered… hence not only as a form of motion common to all individual industrial capitals, but at the same time as the form of motion of the sum of individual capitals, i.e. of the total social capital of the capitalist class, a movement in which the movement of any individual industrial capital simply appears as a partial one, intertwined with the others and conditioned by them.” (176-7)

There is a lot to unpack here and I hope that he goes into more depth as to what he means. In my reading, he seems to be saying that commodity capital is unique in that it is two-sided: it embodies both the productive consumption that took place to produce it and the individual consumption that will take place to consume it. In this way, it captures all elements of the capitalist totality.