10 Jul 2011

Money Circles (C-M-C and M-C-M): Marx, Ch.4 "The General Formula for Capital" of Das Kapital, Vol.1, Part.2

Corry Shores
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Money Circles:
Marx, Ch.4 "The General Formula for Capital" of Das Kapital, Vol.1, Part.2

What does commodity and money exchange got to do with you?

In order to obtain the things we want and need, we must spend money for them. But to get that money in the first place, we might for example sell our labor for money, or we may sell our things for money. But in the end, we have some sort of goods that we make some actual use of. But another mode of money-making would be when we for example would put our money in the bank and let it gain interest. The interest we gain in one year adds to the pile, and then that total gains interest, and so on.

Brief Summary

Value circulates. Our aim might be to obtain some commodity to consume. To get it, we would sell one commodity for money, then use that money to buy the other desired commodity (C-M-C, commodity-money-commodity). Or, our aim might purely be the continual increase of wealth. In that case, we would invest our money into some commodity, which we would then resell at a higher value. With the now greater sum of money, we would invest that for an even greater profit. Or, we might loan our money on interest. (M-C-M', money-commodity-money plus profit, and for loan interest, just M-M'.)

Points Relative to Deleuze


Summary of
Karl Marx.
Capital / Das Kapital
Volume One
Part II: The Transformation of Money into Capital
Chapter Four: The General Formula for Capital

Capital begins with the circulation of commodities. It originates historically in the 16th century. (163 / 106)

We might consider commodities in terms of their use-values or instead in terms of their monetary-values [see
Aristotle's distinction between the shoe valued for protecting the foot and otherwise for making a profit through its sale]. So when we just examine the economic forms involved in the circulation of commodities, we see that the final result of this circulation is money. (163 / 107)

We will first look at capital rather than landed property. We find that capital begins as the moneyed wealth of merchants and money-lenders. We see money as capital also in our daily lives. We even come to give monetary value even to our labor. (163-164 / 107)

Marx distinguishes between two sorts of money: money itself and money as capital. Their difference lies in their form of circulation. (164 / 167)

Marx will now distinguish two types of circulation: C-M-C (commodity-money-commodity) and M-C-M (money-commodity-money). Both involve two antithetical phases. (164 / 107)

C-M-C is the simplest form of commodity-circulation. Here we sell commodities in order to buy more commodities. We transform commodities into money, then money back into commodities. (164 / 107)

In M-C-M's first antithetical phase M-C ('the purchase'), money is changed into commodity. In the C-M phase ('the sale'), the commodity is then transformed back into money. There is a single movement in the combination of these phases. [In C-M-C, our concern was getting a different commodity than what we began with, and money was the means. But in M-C-M, our concern is getting a different amount of money, and commodity is our means. So in M-C-M, there is motion of money increase, with the commodity part just an arbitrary means to it.] The thing bought is both the object of purchase and sale, and purchase-sale can be considered one movement, because there is the movement of money increase mediated by the commodity purchase-sale process. Thus the phases vanish, and our exchange becomes a matter of M-M. "If I purchase 2,000 lbs. of cotton for £100, and resell the 2,000 lbs. of cotton for £110, I have, in fact, exchanged £100 for £110, money for money. " (164 / 107-108)

There would be no point to M-C-M if in the end we exchange £100 for £100. And yet sometimes a merchant will for certain reasons sell goods for no profit or even at a loss. Yet the process of M-M remains the same nonetheless. This is different from the peasant who sells corn so to have money to buy clothes [perhaps C-C]. Marx will now further differentiate M-C-M and C-M-C. (165 / 108)

But first he will show what the two forms of circulation have in common.

Similarities: Components, Phases, and Agents

Both have the same two antithetical phases: M-C and C-M. In both circulations, there is the exchange of commodities and money, and there are two figures, buyers and sellers. And both circuits are unified by three parties: one who only sells, one who only buys, and one who both buys and sells. (165 / 108-109)
[To offer a possible interpretation for these three parties, let's consider for C-M-C someone who has corn, sells it for money, then buys clothes. In this case, this person both buys and sells. There is also the buyer he sells the corn to. And there is the seller who sells the clothes. In M-C-M, let's consider someone who exchanges shoes for a profit. There is the person who both buys the shoes with money then sells them for money. There is also the seller who sold the shoes to the merchant. And there is the buyer who buys the shoes from the merchant.]

Dissimilarity 1: Order of Conversion

C-M-C begins with a sale (peasant sells corn) and ends with a purchase (peasant buys clothes). M-C-M begins with a purchase (merchant buys shoes) and ends with a sale (merchant sells shoes). In C-M-C, both the starting-point and the goal are commodities. In M-C-M, origin and aim are both money. C-M-C's movement is mediated by money; M-C-M's is mediated by a commodity. (165 / 109)

Dissimilarity 2: Purpose of Money

In C-M-C, the money buys a commodity that will be used by the buyer. In M-C-M, the person buys a commodity so that he may recover more money by means of the sale of that same commodity. His intention for putting his money into circulation is not to obtain the use-value of the commodity, but rather to obtain more money. (165-166 / 109) "He lets the money go, but only with the sly intention of getting it back again. The money, therefore, is not spent, it is merely advanced." (166 / 109)

Dissimilarity 3: The Thing Changing Place

In C-M-C, the buyer sells his commodity to someone for money (the money's first change of place, from hands of seller to buyer), and with this very same money, he buys another commodity from a third person (the money's second change of place, to the hands of the new buyer). So here money changes its place twice. In M-C-M, the buyer/seller buys a commodity from one person (the commodity's first change of place) and sells it to someone else
(the commodity's second change of place). In this way, there is a reflux of money back to its source of departure. (166 / 109-110)

Dissimilarity 3: Reflux

The reflux of money back to money in M-C-M does not require that more money is attained in the end, but only that the purchased commodity is also then sold. In this way, money is circulated as capital rather than it just being money [as would be the case in C-M-C]. (166 / 110)

The C-M-C circuit closes to an end as soon as the second commodity is purchased.

But for a reflux back to the source to happen, there needs to be a renewal or repetition of the operation. If we sell corn for
£3, and with that money buy £3 of clothes, then the circuit is complete [so long as we wear the clothes rather than immediately resell them]. Then, if we sell some more corn, while it is true that the money comes back to us, it does not do so as a continuation of the first transaction. Thus in C-M-C circuits, spending money has nothing to do with its reflux. However, in M-C-M circuits, spending money is part of an operation whose intended outcome is acquiring more money in the end. Thus the reflux of money is built into the mode of money's expenditure. (166-167 / 110)

Dissimilarity 4: Final End of Process

In C-M-C, the commodity is the end. It will satisfy some want, and for that reason it has 'use-value' as the aim of the operation. M-C-M begins with money and ends with money. Money is "the goal that attracts it" and for this reason its aim is exchange value. (167 / 110)

Dissimilarity 5: Qualitative vs. Quantitative value

In C-M-C, the beginning and end have the same economic form. They are both commodities of equal value. Yet their use-value differs qualitatively, as corn is useful for nourishing and clothes for keeping warm. Here the exchange of products produced by labor is what fuels the movement. In M-C-M, the beginning and end also have the same economic form, in this case, money. Hence they do not have qualitatively different use values. When commodities are converted to money, their use-value vanishes. (167 / 110-111) "To exchange £100 for cotton, and then this same cotton again for £100, is merely a roundabout way of exchanging money for money, the same for the same, and appears to be an operation just as purposeless as it is absurd." (167 / 111) Yet although the two monies are qualitatively indistinguishable, they nonetheless can be quantitatively different. (167 / 111)
More money is withdrawn from circulation at the finish than was thrown into it at the start. The cotton that was bought for £100 is perhaps resold for £100 + £10 or £110. The exact form of this process is therefore M-C-M', where M' = M + ΔM = the original sum advanced, plus an increment. (168 /112)
So there is ΔM, the increase or surplus over the original value M. Marx calls this additional value the 'surplus value.' The process of turning invested money into more money is what bestows upon the original invested money the status of being capital. (168 /112)
The value originally advanced, therefore, not only remains intact while in circulation, but adds to itself a surplus-value or expands itself. It is this movement that converts it into capital. (168 /112)

Dissimilarity 6: Meaning of Breaking Even

It is possible that in C-M-C that the seller/buyer either obtains a commodity worth more than the original, or perhaps it is worth less. But one important difference between the two circuits is that in C-M-C, the basic idea is that there be an exchange of commodities of equal value. That gives the transaction its purpose or meaning. But in M-C-M, if someone ends up with the same amount of money as when she started, then the transaction would have been for nothing. It would be meaningless. (168 /112)

Dissimilarity 7: Closeability of the Circuit

In C-M-C, one sells and buys for the purpose of consumption and the satisfaction of definite wants, and this aim lies outside the sphere of circulation. However, in M-C-M, we buy in order to sell again. We begin with money whose purpose is to increase through investment, and we end up with money whose purpose is investment. For this reason, the movement is interminable. Now consider if we buy corn for
£100 and sell it for £110. If we then use that £110 to buy a commodity for its use value, then the money earned does not become capital but rather just serves as money. (168-169 / 112) However, if we reinvest the money along with its profit,
Money ends the movement only to begin it again. Therefore, the final result of every separate circuit, in which a purchase and consequent sale are completed, forms of itself the starting-point of a new circuit. 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. (169-170 / 112-113)
The conscious person conducting this double movement then becomes a capitalist. His aim is the expansion of value. For this reason, capitalists are never interested with the use-values of commodities. (170-171 / 113-115)

Dissimilarity 8: Perdurance of Money

In C-M-C, money serves the circulation of commodities, and the money vanishes at the result of the operation. However, in M-C-M, money and commodity are both different modalities of exchange-value.

On the other hand, in the circulation M-C-M, both the money and the commodity represent only different modes of existence of value itself, the money its general mode, and the commodity its particular, or, so to say, disguised mode. It is constantly changing from one form to the other without thereby becoming lost, and thus assumes an automatically active character. (171 / 115)

So self-expanding value takes-on in succession two different modalities. Hence, capital is money, and capital is commodity. But really it is an exchange value that is the active factor, because it is responsible for the continual production of greater value.

In truth, however, value is here the active factor in a process, in which, while constantly assuming the form in turn of money and commodities, it at the same time changes in magnitude, differentiates itself by throwing off surplus-value from itself; the original value, in other words, expands spontaneously. For the movement, in the course of which it adds surplus-value, is its own movement, its expansion, therefore, is automatic expansion. Because it is value, it has acquired the occult quality of being able to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs. (171-172 / 115-116)

Because value maintains itself throughout its modulations between commodity and money, it must have some independent form that maintains its identity. This form is money, because it is with money that the circulation begins, ends, then begins again with "every act of of its own spontaneous generation." (172 / 116) For a capitalist, commodities, no matter how low their quality, are in essence money [because their purpose is to be exchanged for money]. (172 / 116)

Dissimilarity 9: Independence of Money

In C-M-C, the exchange-value for a commodity takes the form of money. [So money mediates the given value of the commodities. It is secondary to them.] However, in M-C-M, money circulates as increasing capital. It is like an independent entity [that uses commodities to mediate its growth, and thus the commodities are secondary to the money.]

that same value now in the circulation M-C-M, or the circulation of capital, suddenly presents itself as an independent substance, endowed with a motion of its own, passing through a life-process of its own, in which money and commodities are mere forms which it assumes and casts off in turn. (172 / 116)

So in C-M-C, money exists primarily in relation to commodities. But in M-C-M, "it enters now, so to say, into private relations with itself." (172 / 116) Even though the profit can be distinguished from the initial investment, they both come together as another new investment. (172-173 / 116-117)

In M-C-M, money is a value in process (of quantitative variation), and for this reason, it is capital. M-M': in capitalism, money begets money. (173 / 117) (capital begets capital)

Industrial vs. Merchant vs. Interest-Bearing Capital

Buying in order to sell at a higher price, M-C-M', is merchants' capital. Industrial capital is money that is changed into commodities (through investments in industrial production), which are then changed back to money at a profit, and it is likewise M-C-M'. Yet there is also interest-bearing capital. Here money is not first converted to commodity, and so it is without the intermediate stage. Thus it takes the form M-M'. (173 / 117)


"M-C-M' is therefore in reality the general formula of capital as it appears prima facie within the sphere of circulation." (173 / 117)

Marx, Karl. Das Kapital: Kritik der politischen Oekonomie. Erster Band. Buch 1: Der Produktionsprocess des Kapitals. Hamburg: Verlag von Otto Meissner, 1867.
PDF available online at:

Marx, Karl.
Capital: A Critique of Political Economy. Ed. Frederick Engels. Transl. Samuel Moore & Edward Aveling. New York: The Modern Library, 1906.
PDF available online at:

Online text available at:


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