- If you want a formula describing what capital is all about, you've come to the right place. This chapter looks at the exchanges happening in the market and hunts down what it is that capital does.
- First, though, Marx gives us some background. Commodities have to be produced and traded before capital can come into existence.
- The production and trade of commodities began in the sixteenth century, and if you want to read about that, check out the Communist Manifesto.
- The difference between plain ol' money and money as capital, Marx says, is the difference between how those two circulate in the market. There's the C-M-C pattern, where you start with C, a commodity, and sell it in order to gain money, M, which you then use to buy another commodity, C. That's just the ordinary, non-capital use of money.
- But then we find the M-C-M pattern happening in the market, too. That's starting with money, M, using it to buy a commodity, C, which you then sell in order to make more money, the second M—or as he later puts it, M'. That's M-prime, or a version of M that represents the original M plus more money.
- Marx digs into those two patterns in detail. But the gist is that capitalists undertake the M-C-M pattern—laying out money, getting a commodity with it, and then re-selling the commodity to profit—whereas ordinary folks like you and me just show up to work and receive a paycheck that we go home and buy commodities with. Then we consume the commodities; we don't profit.
- Capitalists doing the M-C-M dance are gaining more exchange-value, not consuming use-values like us.
- M-C-M starts with money and ends up with money, so there's no qualitative change. But there's a quantitative change; the capitalist ends up with more money. The amount of extra money obtained Marx defines as surplus-value.
- Capital is thus value in motion, this pattern of value moving to create more value, which Marx calls a valorization process. It's a limitless process: capital tries to expand to create more surplus-value forever. The purpose of any individual capitalist is to do this.
- In the course of the M-C-M pattern, capital is at times money, and at other times commodities. But the starting and ending points are money, so the nature of any particular commodity isn't important to a capitalist—except as it has to do with making more money.
- So, capital is money that begets more money. This is true of all types of capital, including that of merchants and industrialists.
- M-C-M', Marx concludes, is the general formula for capital in the sphere of circulation, that is, in the market where exchanges take place.