Marx begins his discussion of the general formula for capital with an apparently strange distinction, between “money that is money only, and money that is capital”. In Marx’s account, money that “is money only”, is money in its role as a medium of exchange in a circuit in which commodity producers sell their commodities in order to buy other commodities: Marx’s C-M-C – a circuit oriented to the acquisition of a use value that is then consumed, and therefore oriented to a substantive endpoint that lies outside the circuit itself. Money that is capital, by contrast, inhabits a circuit in which possessors of money purchase commodities in order to resell them to obtain more money: Marx’s M-C-M – quickly redefined as M-C-M’ – a circuit oriented to its own endless quantitative expansion. Marx distinguishes the two circuits:
The repetition or renewal of the act of selling in order to buy, is kept within bounds by the very object it aims at, namely, consumption or the satisfaction of definite wants, an aim that lies altogether outside the sphere of circulation. But when we buy in order to sell, we, on the contrary, begin and end with the same thing, money, exchange-value; and thereby the movement becomes interminable… The simple circulation of commodities – selling in order to buy – is a means of carrying out a purpose unconnected with circulation, namely, the appropriation of use-values, the satisfaction of wants. The circulation of money as capital is, on the contrary, an end in itself, for the expansion of value takes place only within this constantly renewed movement. The circulation of capital has therefore no limits.
In social practice, these two circuits don’t describe two separate institutions or physically distinct processes of circulation, but rather practically distinguishable moments within the same overarching process – a point that allows Marx to open a strategically crucial discussion of how social actors who are engaging with the very same process, might still plausibly emerge from this engagement with radically different practical orientations and subjective perceptions of what the process entails. Marx is using this discussion, in other words, to open up an analysis of a social process that intrinsically entails a proliferation of conflicting perceptions, subjective orientations, and engagements with a core social institution. This is an analytical strategy Marx uses throughout Capital – not something he regards as unique to the analysis of the sphere of circulation: Capital relies heavily on the notion that the same context can be generative of forms of perception, thought, and practice that conflict with one another, but that nevertheless share the common quality of expressing determinate potentials of that context.
Analysing some of the forms of subjectivity that express the potentials of the sphere of circulation, Marx notes the subject position that the capitalist personifies:
As the conscious representative of this movement, the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which the money starts and to which it returns. The expansion of value, which is the objective basis or main-spring of the circulation M-C-M, becomes his subjective aim, and it is only in so far as the appropriation of ever more and more wealth in the abstract becomes the sole motive of his operations, that he functions as a capitalist, that is, as capital personified and endowed with consciousness and a will. Use-values must therefore never be looked upon as the real aim of the capitalist; neither must the profit on any single transaction. The restless never-ending process of profit-making alone is what he aims at. This boundless greed after riches, this passionate chase after exchange-value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never-ending augmentation of exchange-value, which the miser strives after, by seeking to save his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh into circulation.
The phrasing is important here. Marx does not say that we can predict how groups of empirical people will perceive or engage with the process of circulation by, for example, examining how much money they possess, determining whether they own the means of production, or monitoring how they engage with the process of circulation. His point is instead a definitional one: he says that a possessor of money becomes a capitalist, to the extent that they consciously represent and adopt as their subjective aim, a movement that is described in the text as an objective process – a process that confronts individuals as something beyond their personal control – to which the capitalist then orients subjectively in terms of their ongoing search for profit.
At the beginning of the following chapter, Marx further proliferates the perspectives from which this same social process can be viewed, by pointing out that most participants in the exchange process don’t adopt the perspective of the capitalist, but instead engage with the process as if it were a matter of simple commodity exchange – as if the process of circulation were a process of obtaining determinate use values for consumption. Marx argues:
The form which circulation takes when money becomes capital, is opposed to all the laws we have hitherto investigated bearing on the nature of commodities, value and money, and even of circulation itself. What distinguishes this form from that of the simple circulation of commodities, is the inverted order of succession of the two antithetical processes, sale and purchase. How can this purely formal distinction between these processes change their character as it were by magic?
But that is not all. This inversion has no existence for two out of the three persons who transact business together. As capitalist, I buy commodities from A and sell them again to B, but as a simple owner of commodities, I sell them to B and then purchase fresh ones from A. A and B see no difference between the two sets of transactions. They are merely buyers or sellers. And I on each occasion meet them as a mere owner of either money or commodities, as a buyer or a seller, and, what is more, in both sets of transactions, I am opposed to A only as a buyer and to B only as a seller, to the one only as money, to the other only as commodities, and to neither of them as capital or a capitalist, or as representative of anything that is more than money or commodities, or that can produce any effect beyond what money and commodities can. For me the purchase from A and the sale to B are part of a series. But the connexion between the two acts exists for me alone. A does not trouble himself about my transaction with B, nor does B about my business with A. And if I offered to explain to them the meritorious nature of my action in inverting the order of succession, they would probably point out to me that I was mistaken as to that order of succession, and that the whole transaction, instead of beginning with a purchase and ending with a sale, began, on the contrary, with a sale and was concluded with a purchase. In truth, my first act, the purchase, was from the standpoint of A, a sale, and my second act, the sale, was from the standpoint of B, a purchase. Not content with that, A and B would declare that the whole series was superfluous and nothing but Hokus Pokus; that for the future A would buy direct from B, and B sell direct to A. Thus the whole transaction would be reduced to a single act forming an isolated, non-complemented phase in the ordinary circulation of commodities, a mere sale from A’s point of view, and from B’s, a mere purchase. The inversion, therefore, of the order of succession, does not take us outside the sphere of the simple circulation of commodities, and we must rather look, whether there is in this simple circulation anything permitting an expansion of the value that enters into circulation, and, consequently, a creation of surplus-value. (italics mine)
Marx breaks down further potential perspectives in each chapter, each predicated on a socially plausible form of engagement with this very same process of circulation. He customarily links these perspectives, either in the text or in his notes, with specific figures or intellectual movements that express each perspective. These often rapid fire and gestural links are intended as immanent critiques – as demonstrations that Marx will not dismiss alternative forms of theory as “mere” errors or illusions (a form of abstract negation these competing forms of theory often practice on one another), but will instead grasp them as expressions of determinate dimensions of a shared context Marx is also seeking to theorise. By doing this, Marx begins to set up what he intends as a determinate negation – in the form of a theory of capitalism in which circulation itself is positioned as but a moment in an overarching process.
In these two chapters, he only hints at the perspective his own critique expresses, setting up for the analysis of wage labour to follow:
We have shown that surplus-value cannot be created by circulation, and, therefore, that in its formation, something must take place in the background, which is not apparent in the circulation itself. But can surplus-value possibly originate anywhere else than in circulation, which is the sum total of all the mutual relations of commodity-owners, as far as they are determined by their commodities? Apart from circulation, the commodity-owner is in relation only with his own commodity. So far as regards value, that relation is limited to this, that the commodity contains a quantity of his own labour, that quantity being measured by a definite social standard. This quantity is expressed by the value of the commodity, and since the value is reckoned in money of account, this quantity is also expressed by the price, which we will suppose to be £10. But his labour is not represented both by the value of the commodity, and by a surplus over that value, not by a price of 10 that is also a price of 11, not by a value that is greater than itself. The commodity owner can, by his labour, create value, but not self-expanding value. He can increase the value of his commodity, by adding fresh labour, and therefore more value to the value in hand, by making, for instance, leather into boots. The same material has now more value, because it contains a greater quantity of labour. The boots have therefore more value than the leather, but the value of the leather remains what it was; it has not expanded itself, has not, during the making of the boots, annexed surplus-value. It is therefore impossible that outside the sphere of circulation, a producer of commodities can, without coming into contact with other commodity-owners, expand value, and consequently convert money or commodities into capital.
It is therefore impossible for capital to be produced by circulation, and it is equally impossible for it to originate apart from circulation. It must have its origin both in circulation and yet not in circulation.
We have, therefore, got a double result.
The conversion of money into capital has to be explained on the basis of the laws that regulate the exchange of commodities, in such a way that the starting-point is the exchange of equivalents. Our friend, Moneybags, who as yet is only an embryo capitalist, must buy his commodities at their value, must sell them at their value, and yet at the end of the process must withdraw more value from circulation than he threw into it at starting. His development into a full-grown capitalist must take place, both within the sphere of circulation and without it. These are the conditions of the problem. Hic Rhodus, hic salta!