1. THE GENERAL FORMULA FOR CAPITAL 


Commodity circulation is the starting point of capital. Hence 
commodity production, commodity circulation and the latter’s 
developed form, commerce, are always the historical groundwork 
from which capital arises. The modern history .of capital dates 
from the creation of modern world trade and the world market in 
the sixteenth century. (P. 106.) 

If we consider only the economic forms produced by commodity 
circulation, we find that its final product is money, and the latter 
is the first form in which capital appears. Historically, capital 
invariably confronts landed property at first as moneyed wealth, 
merchant capital or usurer’s capital, and even today all new capital 
first comes on the stage in the shape of money that by definite 
processes has to be transformed into capital. 

Money as money and money as capital differ, to begin with, only 
‘in their form of circulation. Alongside C—M—C, the form 
M-—C—M, buying in order to sell, also occurs. Money that 
describes this form of circulation in its movement becomes capital, 
is already capital in itself (i.e., by its destination). 

The result of M—C—M is M—M, the indirect exchange of 
money for money. I buy cotton for £100 and sell it for £110; 
ultimately I have exchanged £100 for £110, money for money. 

If this process yielded at its outcome the same money-value that 
was originally put into it, £100 out of £100, it would be absurd. 
Yet whether the merchant realises £100, £110, or merely £50 for 


a This chapter corresponds to Part II of the 1887 English edition (Chap- 
ter [V.—The General Formula for Capital, Chapter V.—Contradictions in the 
General Formula of Capital, Chapter VI—The Buying and Selling of Labour- 
Power).— Ed. 


his £100, his money has described a specific movement quite 
different from that of commodity circulation, C—-M—C. From 
the examination of the differences in form between this movement 
and C—M—C the difference in content will also be found. 

The two phases of the process taken separately are the same as 
in C—M—C. But there is a great difference in the process as a 
whole. In C—M-—C money constitutes the intermediary, the 
commodity the starting point and the finish; in this case the 
commodity is the intermediary, with money the starting point and 
the finish. In C—M-—C the money is spent once for all; in 
M—C—M it is merely advanced, it is to be got back again. It flows 
back to its starting point. Here, therefore, is already a palpable 
difference between the circulation of money as money and money 
as capital. 

In C—M-—C money can return to its starting point only 
through the repetition of the whole process, through the sale of fresh 
commodities. Hence the reflux is independent of the process itself. 
In M—C—M, on the other hand, it is conditioned from the 
outset by the structure of the process itself, which is incomplete if 
the reflux fails. (P. 110.) 

The ultimate object of C—M—C is use-value, that of M—C—M 
exchange-value itself. 

In C—Mw—C both extremes possess the same definiteness of 
economic form. Both are commodities, and of equal value. But at the 
same time they are qualitatively different use-values, and the 
process has social interchange of matter as its content. In M— 
C—M the operation, at first glance, seems tautological, meaning- 
less. To exchange £100 for £100, and in a roundabout way to 
boot, seems absurd. One sum of money is distinguishable from 
another only by its size; M-—-C—M acquires its meaning, there- 
fore, only through the quantitative difference in the extremes. More 
money is withdrawn from circulation than has been thrown 
into it. The cotton bought for £100 is sold, say, for £100+£10; 
the process thus follows the formula M-—C—M"', where 
M’'=M+AM. This AM, this increment is surplus-value. The value 
originally advanced not only remains intact in circulation, but adds to 
itself a surplus-value, expands itself—and this movement converts 
money into capital. 

In C—M—C there may also be a difference in the value of the 
extremes, but it is purely accidental in this form of circulation, and 
C—M—C does not become absurd when the extremes are 
equivalent—on the contrary, this is rather the necessary condition 
for the normal process. 


Synopsis of Vol. I of Capital 2hY 


The repetition of C—M—C is regulated by an ultimate object 
outside itself: consumption, the satisfaction of definite needs. In 
M—C-—M, on the other hand, the beginning and the end are the 
same, money, and that already makes the movement endless. 
Granted, M+AM differs quantitatively from M, but it too is 
merely a limited sum of money; if it were spent, it would no 
longer be capital; if it were withdrawn from circulation, it would 
remain stationary as a hoard. Once the need for expansion of 
value is given, it exists for M’ as well as for M, and the movement 
of capital is boundless, because its goal is as much unattained at 
the end of the process as at the beginning. (Pp. 111-13.) As the 
representative of this process, the owner of money becomes a 
capitalist. 

If in commodity circulation the exchange-value attains at most a 
form independent of the use-value of a commodity, it suddenly 
manifests itself here as a substance in process, endowed with motion of its 
own, for which commodity and money are mere forms. More than that, as 
original value it is differentiated from itself as surplus-value. It becomes 
money in process, and as such, capital. (P. 116.) 

M—C—M' appears indeed to be a form peculiar to merchant 
capital alone. But industrial capital, too, is money which is 
converted into commodities, and by the latter’s sale reconverted 
into more money. Acts that take place between purchase and sale, 
outside the sphere of circulation, effect no change in this. Lastly, in 
interest-bearing capital, the process appears directly as M—M; 
value that is, as it were, greater than itself. (P. 117.)