The following text was written in January 2019 as presentation for a series of self-education discussions on the 1st volume of Capital organised at our local Workers’ Club. With this text, and the other presentations we’ll post in the future, we tried to keep a difficult balance: on the one hand, being a presentation of the subject-matter for people who are coming in contact with Capital for the first time and, on the other hand, having to offer some food for thought and discussion for people who are already familiar with Marx’s work.

The production of commodities and their circulation in its developed form, namely trade, form the historic presuppositions under which capital arises. World trade and the world market date from the sixteenth century, and from then on the modern history of capital starts to unfold. (Karl Marx, Capital, vol. 1, Penguin Books, 1976, p. 247)

The general formula for capital

If we disregard the material aspect of the circulation of commodities, i.e., the use-values of the concrete commodities, and examine only the economic forms that arise in this process, then the form appearing at the end of this process is money. Money is the first form of appearance of capital. This is something we can verify empirically: whenever a new capital enters the game, it doesn’t appear as, e.g., means of production, but as money in the market. However, the fact that money enters the market doesn’t mean that money is capital. Money will become capital because it will follow a particular process.

We saw that in the exchange process we encounter the sequence:


That is, a commodity owner enters the market with a commodity (C), he sells it for money (M), and with this money he buys another commodity (C). When the possessor of money enters the market as a potential capitalist, then the sequence acquires the form:


That is, the possessor of money enters the market holding money (M), he buys a commodity (C), and he sells it for money (M).

In the sequence C-M-C, we have a commodity owner trying to acquire a different commodity from the one he already has. The exchange in which he engages has probably to do with consumption: he wants a commodity he doesn’t have, so he sells the commodity he has to get money with which he’ll buy the commodity he desires. However, in the sequence M-C-M, why someone holding money buys a commodity only to sell it? Here, in the sequence M-C-M, the aim of this sequence of exchanges isn’t consumption. Since he already has money, why does he try to acquire money again? The answer can only be that he seeks to have more money in the end of the exchanges than when he started. “Money which describes the latter course [M-C-M] in its movement is transformed into capital, becomes capital, and, from the point of view of its function, already is capital” (Ibid, p. 248).

He buys the commodity not because he desires it, but to resell it. Therefore, the possessor of money engaged in this sequence has in his mind to give money (M) in order to acquire more money (M’). For instance, if I pay 10€ (M) to buy a T-shirt (C) and resell it for 12€ (M’), then it’s like I exchanged 10€ for 12€ and I managed to pocket ΔM = M’M = 12 – 10 = 2€. I exchanged money for more money. It’s obvious that if I resell the T-shirt in the same price I bought it, then in the end I’ll have the same amount of money I had at the beginning, so it would be pointless to do all this. The only reason to enter such a process of reselling is to get more money – of course, my desire to acquire money from this process doesn’t mean that I’ll necessary achieve it.

When the sequence M-C-M’ is completed, then with the new money (M’) I acquired I’ll buy again a commodity (C) in order to once more sell it for more money (M”). The sequence M-C-M’ thus leads me to the sequence M’-C-M”, and this in its turn leads me to M”-C-M”’, and so on. It’s a process that potentially, if I’m a good entrepreneur and the conditions in the market are favourable, can go on forever.

In the sequence C-M-C, I began with a commodity and ended up with another commodity. I sold 5 lighters for 1€ each, and with the money I got I bought 1 packet of cigarettes that costs 5€. The value of the commodity I began with (5 lighters) and of the commodity I ended up with (1 packet of cigarettes) is the same: 5€. On the contrary, in the sequence M-C-M’, I began with 10€ and ended up with 12€, so I had a profit of 2€. This ΔM, the change between the value I began with and the value I ended up with, we call it surplus-value. I ended up with a value bigger than the one I began with, i.e., I valorised the initial amount of money paid, and it’s this valorisation process that transforms money into capital.

The simple circulation of commodities -selling in order to buy [C-M-C]- is a means to a final goal which lies outside circulation, the appropriation of use-values, the satisfaction of needs. On the contrary, the circulation of money as capital [M-C-M’] is an end in itself, for the valorization of value takes place only within this constantly renewed movement. The movement of capital is therefore limitless. As the conscious bearer [Träger] 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 objective content of the circulation we have been discussing -the valorization of value- is his subjective purpose, and it is only in so far as the appropriation of ever more wealth in the abstract is the sole driving force behind his operations that he functions as a capitalist, i.e. as capital personified and endowed with consciousness and a will. Use-values must therefore never be treated as the immediate aim of the capitalist; nor must the profit on any single transaction. His aim is rather the unceasing movement of profitmaking. (Ibid, p. 253-254)

In the sequence C-M-C, a commodity of a certain value enters the market and its value is transformed in its money-form, which in its turn is transformed again to another commodity of the same value which is now withdrawn from the circulation. The value that entered the market in the form of a commodity, in the end is withdrawn in the form of another commodity, which is now being dealt with only as use-value for consumption. On the contrary, in the ceaseless sequence M-C-M’, a certain value enters the market in its money-form, is transformed into a commodity and then is transformed back into money of greater value, and this circuit continues ad infinitum. The value is constantly changing from money-form to commodity-form, from commodity-form to money-form, and begins again from the beginning. Money is the general mode of existence of value and the commodity its particular, disguised mode of existence. With the continuous alternation from one mode to the other, from one form to the other, value becomes an automatic subject. “[V]alue is here the subject of a process in which, while constantly assuming the form in turn of money and commodities, it changes its own magnitude, throws off surplus-value from itself considered as original value, and thus valorizes itself independently. For the movement in the course of which it adds surplus-value is its own movement, its valorization is therefore self-valorization [Selbstverwertung]. By virtue of being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or at least lays golden eggs” (Ibid, p. 255).

Value, through its perpetual self-valorisation, enters in a relation with itself. It distinguishes between, on the one hand, itself as value and, on the other hand, as surplus-value, because it’s only thanks to surplus-value that the initial value counts as capital. Value gave birth to more value, money gave birth to more money: this is the process that transforms money into capital. Money, from a means of exchange, became an end in itself, and the only way to become an end in itself is its multiplication: if we ended up with the initial amount of money, then the whole sequence of exchanges was pointless. The sequence M-C-M’ is the general formula of capital.

Contradictions in the general formula of capital

In the exchanges M-C and C-M we have a transformation of value. In M-C value changes from money-form to commodity-form, while in C-M value changes from commodity-form to money-form. However, in both cases the magnitude of value remains the same: all the exchanges are exchanges of equal values. Here arises a contradiction: how can it be that while the individual exchanges are exchanges of equal values, in the sequence M-C-M’ we end up with a surplus-value, an amount of value, expressed in money, greater than the amount of value we had in the beginning?

Is there a fraud? I begin with a certain amount of money M and end up with an amount of money M’ greater than the initial one. A first assumption is that at least in one of the two individual exchanges comprising the sequence M-C-M’ I got more value than I gave. Either in M-C I bought a commodity of bigger value than the money I paid, or in C-M’ I was paid more money than what the commodity I sold is worth. Indeed, these are possible, either because I deceived the person I was exchanging with or because he was naive, or due to external factors: e.g., what appears to be an exchange is in fact a covert extortion I imposed by force or threat of force. However, two problems arise from this.

If it’s a fraud, then my profit-seeking is precarious. How many times could I deceive someone until he notices, and how many naive people can I find to deceive? Not to mention if someone calls my fraud I may end up paying fines or going to jail. And isn’t it possible also for me to be the victim of a fraud? The same precariousness goes with all extraeconomic factors. How many times will, e.g., a natural disaster occur in order to find people desperate at such a degree to sell their commodities under their values or buy my commodities over their values? Isn’t it possible that in some cases I’ll find myself in the same situtation? Over how many people would it be possible to impose myself by force? Aren’t there people more powerful than me that can impose themselves over me by force and take from me what I also took from others by force? As many times I would be able to exploit such extraeconomic factors at someone else’s expense, so many times others would be able to exploit such extraeconomic factors at my expense. Hence, ultimately, in some exchanges I’ll end up with profit, in others with loss, and over time I would have gained as much as I have lost. Therefore, in the long run, I’ll end up with the same amount of money as I began with.

Here we discover the second problem. If the surplus-value acquired is the result of extraeconomic factors, then we’re dealing with a zero-sum game: if the winners gained x amount of money, then the losers lost the same x amount of money. If in an exchange I had a surplus-value of 5€, then the person with which I exchanged had a loss of 5€. The overall magnitude of value that we possessed before the exchange remained the same after the exchange, with only difference that now a part of that value was transferred from one to the other. Therefore, if that was how the capitalist economy worked, the overall magnitude of value in a given society (imaging here societies as closed systems for the sake of argument; in reality, in the world market) would be constant and unchangeable, with the only thing changing being the way that this certain magnitude of value is distributed among the various members of that society. If there’s a constant and unchangeable overall magnitude of value in a given society, how is it determined? Is it determined arbitrarily by the central bank that issues money?

“However much we twist and turn, the final conclusion remains the same. If equivalents are exchanged, no surplus-value results, and if non-equivalents are exchanged, we still have no surplus-value. Circulation, or the exchange of commodities, creates no value” (Ibid, p. 266). As we saw, the value of a commodity represents the socially necessary labour-time for the production of this kind of commodity. Labour is value-producing, but values aren’t by definiton self-valorising. Labour can produce a brand new value or it can add an additional value to an already existing value, but, on the one hand, for this value to be realised and, on the other hand, for this value to self-valorise, the commodity must pass from production to circulation. Let’s say that a possessor of money buys T-shirts from another town and transports them here to sell them. During the transportation, he added value to his commodities: T-shirts aren’t gonna grow legs and transport themselves, labour is needed for their transport. Or, the possessor of money bought cloth and used it to make T-shirts, which then he sells. In both cases, human labour was expended, labour which created value: in the first case, labour added value to the already produced T-shirts, in the second case it created value by manufacturing T-shirts from the raw material. However, during the labour process there’s no self-valorisation of the initial values that were bought: that values remained the same, we just added more value to them by expending labour. The initial values didn’t self-valorise, they didn’t added themselves a surplus-value on themselves during the labour process:

It is therefore impossible that, outside the sphere of circulation, a producer of commodities can, without coming into contact with other commodity-owners, valorize value, and consequently transform money or commodities into capital. Capital cannot therefore arise from circulation, and it is equally impossible for it to arise apart from circulation. It must have its origin both in circulation and not in circulation. We therefore have a double result. The transformation of money into capital has to be developed on the basis of the immanent laws of the exchange of commodities, in such a way that the starting-point is the exchange of equivalents. The money-owner, who is as yet only a capitalist in larval form, must buy his commodities at their value, sell them at their value, and yet at the end of the process withdraw more value from circulation than he threw into it at the beginning. His emergence as a butterfly must, and yet must not, take place in the sphere of circulation. (Ibid, p. 268-269)

Production and circulation

In the sequence C-M-C, we begin with a commodity. This commodity was somehow produced. The sequence of exchanges took place presupposing this production of our initial commodity. We created something which in the end we didn’t need, and we threw it into the circulation in order to get another commodity that we desire. The circulation is here an accidental event. For some reason, some people made things that they didn’t need (e.g., they ultimately needed a smaller amount of that product than they had initially expected so they ended up with an excess, or in their region they find in the environment some raw material in abundance) and they went to exchange them for some other things they needed. The circulation starts from a condition that lies outside of circulation and ends in a way (the consumption of the final commodity) that doesn’t posit a new starting point for the restart of the whole process. The kickoff of the sequence depends on something lying outside of it, and if the conditions that kick it off doesn’t arise anew throwing new products into the circulation, then the circulation won’t repeat. However, in the sequence M-C-M’ things are different:

While, originally, the act of social production appeared as the positing of exchange values and this, in its later development, as circulation -as completely developed reciprocal movement of exchange values- now, circulation itself returns back into the activity which posits or produces exchange values. It returns into it as into its ground. It is commodities (whether in their particular form, or in the general form of money) which form the presupposition of circulation; they are the realization of a definite labour time and, as such, values; their presupposition, therefore, is both the production of commodities by labour and their production as exchange values. This is their point of departure, and through its own motion it goes back into exchange-value-creating production as its result. We have therefore reached the point of departure again, production which posits, creates exchange values; but this time, production which presupposes circulation as a developed moment and which appears as a constant process, which posits circulation and constantly returns from it into itself in order to posit it anew. […] Production itself is here no longer present in advance of its products, i.e. presupposed. (Karl Marx, Grundrisse, Penguin Books, 1973, p. 255 & 256)

Now, circulation isn’t an accidental result of production: it is circulation that imposes the restart of production, in order for circulation itself to continue. M is thrown into the production in order for a commodity C to be produced and then sold for M’, M’ in its turn will be invested back into production in order for a commodity C to be produced and then sold for M”, and so on. The riddle is solved. M-C-M’: in exchanges M-C and C-M’ we have exchanges of equivalents. However, between these two exchanges, C enters production and labour adds a value to it. While C was initially worth M, after the production it’s worth M’. But now another problem arises.

Suppose I’m a possessor of money M. I buy a commodity C, I throw it into production and hence value is added to the commodity, and I sell the now processed commodity C for money M’. If I was the one that processed the commodity in production, everything is fine. But what happens if I employ someone else to do this? If they were slaves, everything would be also fine. But since the labour is executed by wage-labourers it means that we have once again an exchange. In the first exchange M-C I didn’t only buy the initial unprocessed commodity, I also hired workers. I gave money to buy the commodity “labour”. If I paid labour at its value, i.e., if the money I gave to the workers was equivalent to the value added to the unprocessed commodity by their labour transforming it into the final processed commodity, then we arrive once again to the initial problem: how did surplus-value arise from exchanges between equivalents? M’ is equal to the initial amount of money M which is now distinguished in two parts: MM1 (value of unprocessed commodity) + M2 (value of labour). If I didn’t buy labour at its value and deceived the workers or if I exploited other extraeconomic factors in order to buy their labour under its value, then the same problems arise as we discussed above.

Let’s take a step back. The internal measure of value is labour-time. How much value do 8 hours of labour have? Eight hours of labour. What lenght do 8 centimetres have? Eight centimetres. That’s a tautology. In fact, “[a]s soon as his [the worker’s] labour actually begins, it has already ceased to belong to him; it can therefore no longer be sold by him. Labour is the substance, and the immanent measure of value, but it has no value itself” (Marx, Capital, vol. 1, p. 677). The expression “value of labour” is absurd.

The sale and purchase of labour-power

What the worker sells to capital isn’t his labour but his labour-power, i.e., his labour-capacity. “We mean by labour-power, or labour-capacity, the aggregate of those mental and physical capabilities existing in the physical form, the living personality, of a human being, capabilities which he sets in motion whenever he produces a use-value of any kind” (Ibid, p. 270).

For labour-power to be a commodity, its bearer must be free, doubly free. On the one hand, he must be the proprietor of his labour-power, thus he cannot be a slave or be under any form of dependence or coercion. He must enter voluntarily the market in order to sell his labour-power. In addition, he cannot be selling it for life, since if the labour-power gets disconnected from its bearer, then the worker would turn into a slave. The selling and buing of labour-power must be done for a certain temporal duration, with the price and the duration of this selling and buying being defined in a contract between the worker and the capitalist, who are negotiating as equals from a legal viewpoint. On the other hand, the worker must be free from means of production. If he owned means of production, he wouldn’t be selling his labour-power but the commodities which he would produce with his means of production. The creation of the free worker and his encounter with the possessor of money is the second historical condition for the arise of capital – with the other condition being the development of the world market. These two conditions were the result of concrete historical processes and events that exceed this presentation, and we’ll discuss them on the chapter on the primitive accumulation of capital.

The value of a commodity is the socially necessary labour-time for its production. The same goes for the commodity of labour-power. Only that in this case this temporal duration isn’t direct: there’s no enterprise producing workers. The labour-time here is indirect, it’s the labour-time, i.e., value, represented in the commodities needed by the worker. It’s obvious that there’s a minimum limit for the consumption of the worker, since below this limit he wouldn’t be able to work. However, this doesn’t mean that the value of labour-power is necessarily identified with this minimum limit. Value is the socially necessary labour-time, so its determination is influenced by various social norms. The value of labour-power, besides its minimum limit, is determined by various social factors like culture, ethics, the balance of forces between workers and capitalists, etc. These differ from social formation to social formation and change with the passage of time. Finally, the value of labour-power must subsist not only the individual worker selling it, but also the new generation of workers until they reach the age to work themselves – this age is also socially determined. Since family remains the main unit of reproduction and child-bearing, the value of labour-power must subsist not only the individual worker selling it, but the whole family. Therefore, in the determination of the magnitude of value of labour-power contributes the factor of what is considered as an “average family” in a given social formation: how many are the members of an “average family”, how many of its members, on average, work, etc.

The other aspect of a commodity is its use-value. Use-value manifests in the consumption/use of the commodity. The use-value of labour-power is labour. The capitalist buys a labour-power and consumes it in the production, i.e., he makes the labourer work. More on this when we’ll discuss the production process.

Now, the problem is solved. All exchanges in the sequence M-C-M’ are exchanges of equivalents, everything is paid at its value. Capitalist’s surplus-value results from him exploitating his workers, since what capitalist pays to them isn’t the value their labour produced but the value of their labour-power: these two values are of different magnitude. The moment that capitalist and worker have signed an employment contract, the factory nods to the worker. We go from the formal freedom of the market where capitalist and worker face one another as equals, being equals before the law, to the workplace where worker is posited under the power of the capitalist.

The fetishism of capital

For money to be transformed into capital, both money and commodity must prove to be temporary forms of value, with value, as we saw above, being constantly transformed from the one form to the other. It’s through this that value gets autonomised and transforms into an automatic subject, into self-valorising value, into capital. Value gets “autonomised” and becomes itself a “subject”. From what value is autonomised, in order to become from an object a subject? It cannot be autonomising from use-values, since it has already acquired an autonomous form from them in money. But money isn’t capital, it must get further autonomised in order to transform into capital. What value gets autonomised from in order to be transformed into capital is labour in the sphere of production. We saw that circulation doesn’t create value and that value is created from labour. In order for value to present itself as self-valorising, as valorising itself, it has to present itself as autonomous from the value-producing labour. In the sphere of production things are quite obvious and self-evident. But when looking from the standpoint of circulation, it seems as value itself is creating additional value, surplus-value, through its constant transformations from money to commodity to money and so on. Everything paid at its value, thus surplus-value results from the self-activity of capital. This is fetishism, a fetishism greater than that of commodity and of money. This is the fetishism of capital.

Commodities became a fetish and presented themselves as subjects entering into relations with one another. Money, as the universal equivalent, as the independent form of value, as the “god among commodities” (Marx, Grundrisse, p. 221), became a fetish since it’s the subject able to enter into a relation with every single commodity and thus can mediate the relation between any commodities[1]. Now it’s capital that becomes a fetish, as a subject entering into a relation with itself and self-multiplicating. It doesn’t need to enter into a relation with another subject external to it, it’s the one and only Subject. Everything else have been consumed by the Subject, i.e., capital have incorporated everyting into itself, making them elements and attributes of itself.

Since living labour is incorporated into capital -through the exchange between capital and the worker- since it appears as an activity belonging to capital, as soon as the labour process starts, all the productive powers of social labour present themselves as productive powers of capital […] Here once again we have the inversion of the relation, the expression of which we have already characterised as fetishism in considering the nature of money. […] The means of production, the objective conditions of labour -material of labour, means of labour (and means of subsistence)- do not appear as subsumed under the worker; rather, he appears as subsumed under them. He does not employ them, they employ him. And they are thereby capital. […] He [the worker] is rather a means for them, partly to preserve their value, partly to valorise it […] But the relation becomes still more complex -and apparently more mysterious- in that, with the development of the specifically capitalist mode of production, not only do these directly material things […] stand on their hind legs vis-à-vis the worker and confront him as “capital”, but also the forms of socially developed labour, cooperation, manufacture (as a form of the division of labour), the factory (as a form of social labour organised on the material basis of machinery) appear as forms of the development of capital, and therefore the productive powers of labour, developed out of these forms of social labour, hence also science and the forces of nature, appear as productive forces of capital. In fact, unity in cooperation, combination in the division of labour, the application of the forces of nature and science, as well as the products of labour in the shape of machinery, for the purpose of production, are all things which confront the individual workers themselves as alien and objective, as a mere form of existence of the means of labour […] just as the means of labour, in their simple visible shape as material, instrument, etc., confront the workers as functions of capital and therefore functions of the capitalist. […] This purchase [of labour-power by the capitalist] incorporates into capital the use of labour capacity for a certain period of time, or, in other words, it makes a definite quantity of living labour into one of the modes of existence of capital itself, its entelechy so to speak. In the real production process, living labour is converted into capital by on the one hand reproducing the wage […] and on the other hand positing a surplus value. (MECW 34, p. 122 & 123 & 130)

Circulation and production present themselves as autonomous spheres, but they’re separated in their unity, one cannot exist without the other. There’s no commodity circulation if commodities aren’t produced. However, since a thing is produced as a commodity, it’s produced in order to be thrown into circulation. In capitalism, production is a presupposition of circulation and circulation a presupposition of production. What happens in one of the two spheres wouldn’t happen if the other one didn’t exist. “Circulation itself must appear as a moment of the production of exchange values (as the process of production of exchange values). […] The process of exchange value becoming independent in money must itself appear only as a moment of the movement, as a result of circulation, but as one determined for starting it again, without congealing in this form [in money]” (MECW 29, p. 491).

Capital is in a relation with itself and has incorporated everything as its own elements. However, as we have seen in the transition from value-form to money-form, an essence cannot be in an immediate relation with itself since that would be a simple identity and wouldn’t involve any determination of the essence. This relation must be mediated. Since capital has incorporated everything, it doesn’t find something external to mediate it. Labour itself has become an internal element of capital.

For capital, this preservation [of the quality of previous labour in the simple production process] is the preservation of the amount of objectified labour by the production process; for living labour itself, it is merely the preservation of the already present use value. Living labour adds a new amount of labour; however, it is not this quantitative addition which preserves the amount of already objectified labour, but rather its quality as living labour, the fact that it relates as labour to the use values in which the previous labour exists. […] Within the production process, the separation of labour from its objective moments of existence -instruments and material- is suspended. The existence of capital and of wage labour rests on this separation. […] But as use value, labour belongs to the capitalist; it belongs to the worker merely as exchange value. Its living quality of preserving objectified labour time by using it as the objective condition of living labour in the production process is none of the worker’s business. This appropriation, by means of which living labour makes instrument and material in the production process into the body of its soul and thereby resurrects them from the dead, does indeed stand in antithesis to the fact that labour itself is objectless, is a reality only in the immediate vitality of the worker – and that the instrument and material, in capital, exist as beings-for-themselves [für sich selbst seiende]. […] But to the extent that labour steps into this relation, this relation exists not for itself, but for capital; labour itself has become already a moment of capital. (Marx, Grundrisse, p. 363 & 364)

Capital is mediated by labour, by one of its constituents. Capital contains in itself its own negation: this is a contradiction of the Hegelian fashion. “Money exists as capital only in connection with non-capital, the negation of capital, in relation to which alone it is capital. Labour itself is the real non-capital” (MECW 29, p. 503). “Capital as a Subject needs to include ‘labour’ as the internal other, so that more value is extracted from value. The workers as subjects embodied within Capital as the Automatic Fetish acting as an overgrasping/dominating Subject, are ‘free’ and ‘equal’: they must be forced to work” (Riccardo Bellofiore, “The Adventures of Vergesellschaftung“, Consecutio Rerum, anno III, numero 5, November 2018, p. 511). The formal freedom and equality of the bourgeois society is in reality a form of subjugation. In reality, bourgeois society was produced and is reproduced by force. Here the dialectics reaches its limits[2]. It’s also here that we are offered the possibility to rupture the dialectics. If the contradiction between capital and labour, the class struggle, was only the mode of movement of capital, the capital relation would be inescapable. But class struggle also defetishises the mystical forms of capital: as “class struggle [takes] on more and more explicit and threatening forms, both in practice and in theory” then it “[sounds] the [death] knell of scientific bourgeois economics” (Marx, Capital, vol. 1, p. 97). By looking past the fetishism, we see the possibility of rupture.

1. See Karl Marx, Capital, vol. 1, Penguin Books, 1976, p. 187.
2. See MECW 29, p. 505. Also, see Louis Althusser, Philosophy of the Encounter: Later Writings, 1978-1987, Verso, 2006, p. 196-203 and Riccardo Bellofiore, “The Adventures of Vergesellschaftung“, Consecutio Rerum, anno III, numero 5, November 2018, p. 511-512.