Capital cycle . Production and circulation are not autonomous and independent spheres, but a single interrelated whole, in which the determining role corresponds to production. The bourgeois political economy views the sphere of circulation as a completely autonomous sphere, independent of production, governed by its own laws. With such an approach, any possibility of understanding the specific peculiarities of capital circulation disappears. The vital way of capital; it is not limited to the sphere of production, but also encompasses the sphere of circulation.
Summary
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- 1 Reproduction and circulation of capital
- 2 Phases of capital movement
- 3 Functional forms of capital
- 1 Monetary capital
- 2 Productive capital
- 3 Mercantile capital
- 4 Sources
- 5 External links
Reproduction and circulation of capital
Every process of capital appreciation is inescapably linked to the sphere of circulation and is inconceivable without it. To discover the laws of the movement and growth of capital, it is necessary to complement the analysis of the production process with the analysis of the circulation process.
The circulation that constitutes the link between production and consumption, has a double character: first, the passage of use values is carried out ; second is the change of the forms of value . Its characteristic feature is that value is not created here, as it happens in the production process, but only changes its form: from the mercantile it passes to the monetary one and vice versa.
In the sphere of circulation there are two types of exchange of forms of different value on principle. The first type, which is characterized by the M-D-M formula, is inherent in simple mercantile production and is called simple mercantile circulation. The second type expressed by the formula D – M – D ‘is characteristic of capitalism and is called circulation of capital.
Phases of capital movement
In the process of valorization, every individual capital goes through three consecutive phases, which encompass the sphere of production and the sphere of circulation, and take three functional forms.
First phase: The capitalist buys in the market the goods necessary for productive consumption: the means of production and the labor force . Its capital, which was in monetary form, takes the form of productive capital. After that, the process of capital value circulation temporarily ceases. The second phase begins, the production process.
Monetary capital
Second phase: in the production process based on the exploitation of wage labor, the value of capital grows and undergoes a new metamorphosis simultaneously: from productive capital it is transformed into mercantile capital. The goods created in the production process contain surplus value .
Productive capital
Third phase: the capitalist returns to the market again, where he sells the produced goods. Its capital passes again from the mercantile form to the monetary form, performing the act M’- D ‘, where D’ means the monetary capital originally anticipated with the increase in surplus value . The Capital reacquires the way in which he began his movement, but now the capitalist has a larger sum.
Mercantile capital
By going through the three phases, capital makes a movement, specific circular. It reaches the end the same way the movement started. Marx called such a movement the cycle of capital, which can be represented as follows.
Capital cycle
The first and third phases refer to the sphere of circulation, and the second to the sphere of production. The process of creating surplus value is carried out in the second phase, in the production process. for this reason, the transformation of capital from a productive to a commercial form was called by Marx the real metamorphosis of capital, unlike the formal metamorphoses, which are carried out in the sphere of circulation and in which only the simple change of the forms of capital , but not its increase.
In the course of its movement, capital successively adopts and abandons all three forms: monetary, productive and mercantile capital. Being in each of the three forms, capital fulfills the corresponding function and therefore these forms are called functional forms of capital.
Functional forms of capital
Monetary capital
All new capital begins its movement in the form of a certain sum of money. Like all money, money capital is used in the market to buy merchandise, performing the current act of commercial circulation D – M, and its owner, the capitalist, appears as any buyer of merchandise. Despite the external similarity and certain common features, the movement of money capital differs from the movement of money . First, the buyer invests the money in act D – M, but no longer pays it back. Instead of moneythe buyer acquires the merchandise he consumes. Monetary capital is not invested in this act, it is only anticipated, since it returns to the capitalist again after a certain time. Second, and most importantly, money, which is the universal equivalent, can be used in the market to buy any kind of merchandise with any use value , while money capital is used to buy certain types of merchandise with a certain use value and, therefore, has a specifically determined purpose.
Act D – T is of primary and decisive importance, at which point he buys a special merchandise , in the process of whose consumption a greater value is created than the one he represents. The act D – T is a specific act of circulation of the equity , as under capitalism the labor force becomes merchandise . Precisely the purchase of labor power transforms current money into monetary capital.
To achieve a productive consumption of labor power , the capitalist must simultaneously buy the necessary means of production. Their quantity must be sufficient for the workforce to function for the necessary time and additional time.
Monetary capital does not carry out the current category D – M in the sphere of circulation. Its function is to unify the material and personal conditions of production and thereby prepare the production process of surplus value .
Monetary capital expresses the relations between two different classes, one of which appears as the owner of the means of production and the other is deprived of those means and only appears as the owner of its labor power . By form, the capitalist and the worker are face to face as current buyers and sellers. In reality, it is a new type of buyers and sellers that is formed on the basis of new relations of production, capitalist relations of production.
Productive capital
After having acquired the material elements of production, his capital abandons the monetary form and takes the form of productive capital.
It is called productive because first, it is occupied in the sphere of production, unlike monetary capital and mercantile capital, which move in the sphere of circulation and therefore represent circulating capital ; second, and this is the main thing, its function consists in the creation of surplus value , while monetary capital and mercantile capital fulfill the function of changing the forms of value and surplus value . The unification of the labor force with the means of production is characteristic of capitalism through the acts of purchase of the labor forceand the means of production that appear as commodities bought by the capitalist for productive consumption. These commodities become material carriers of the anticipated capital. The means of production appear as material carriers of constant capital , and the labor force , as material carriers of variable capital .
In the capitalist production process new commodities are created, the value of which is greater than the anticipated capital. Productive capital becomes mercantile capital.
Mercantile capital
Mercantile capital appears in the form of a certain sum of merchandise produced in capitalist companies and destined for sale. Its value not only includes the originally anticipated value, equal to c + v, but also the surplus value p. the commodity becomes mercantile capital because it is produced in the capitalist way and contains surplus value as a result of the exploitation of wage labor.
Mercantile capital appears, on the one hand, as one of the forms of existence of anticipated value, and on the other, as the first form in which the created surplus value arises . In merchant capital these two parts are inseparably fused.
The purpose of capitalist production is the appropriation of surplus value . This is created in the production process, but the way in which it leaves the production process generally discards its direct use by the given capitalist, both for personal consumption and for productive consumption. For the surplus value to be used by the capitalist, it must be separated from the anticipated capital and acquire a new form, that is, transform from the mercantile to the monetary form. This is accomplished through the realization of mercantile capital in the sphere of circulation.
The function of all merchandise is the realization of value. And the original capital has the function of realizing the surplus value . After the realization in the act M’-D ‘, these two parts that were previously fused, separate, acquire independent existence. M ‘which is equal to M + m, becomes D’, which is equal to D + d, where M and D are the magnitude of the anticipated capital, and m and d are the surplus value .
The initial capital D, when separated from the surplus value d, begins a new cycle as monetary capital. But surplus value d can be used in two different ways: either in the expansion of production or in the satisfaction of the capitalist’s personal needs, and in this case it appears as ordinary money, which makes its movement on the basis of simple commercial circulation laws. The function of all merchandise is the realization of value and mercantile capital fulfills the function of realization of surplus value . Apparently these functions can be believed to be the same, since it is not possible to realize the surplus value without realizing the value. Because mercantile capital appears as a commodity, it fulfills its functions also in the sphere of circulation. In turn, the realization of surplus value presupposes the overcoming of new difficulties, which do not arise when realizing the value of the merchandise .
In the simple mercantile circulation, each producer, once he realized the value of his merchandise, could demand merchandise whose value was equal to the value of those sold by him to satisfy personal and productive needs. In this case, the supply and demand of the merchandise correspond more or less. In the movement of capital , the correlation of supply and demand is formed differently .
In the first phase of the movement, all capital presents a demand on the market equivalent to the sum c + v. part of this demand (c) is presented to the merchandise market, and the other (v) to the labor market. In the third phase, all individual capital launches merchandise for the general sum of the value of c + v + p, with the particularity that all this mercantile mass does not go to two markets, but to one. The supply of all individual capital in the market in various stages exceeds its demand in the magnitude of the surplus value .
For p to be used in expanding production, it must be of sufficient magnitude, and this is accomplished in a few cycles rather than just one. While p does not reach the due magnitude; it is accumulating, but it still does not appear on the market. It turns out that after each cycle the individual capital launches merchandise for the sum c + v + p, but cannot in that period present the corresponding demand. If it is assumed that after each cycle the capitalist allocates surplus value to satisfy personal needs, and not as capital, this means that his company does not have the capacity to compete and cannot carry out extended reproduction, which contradicts internal laws. and the purpose of capitalist production.
The contradictions of the realization of mercantile capital cannot be solved within the framework of the cycle of individual capital. They are overcome in the course of the reproduction of all social capital.
