Deville - The People's Marx (1893)

Chapter IV: The General Formula for Capital

The simple circulation of commodities, and the circulation of money as capital.—Surplus-value.

The Simple Circulation of Commodities, and the Circulation of Money as Capital.

The circulation of commodities is the starting-point of capital. It appears only when the production of commodities and commerce have already attained a certain degree of development. The modern history of capital dates from the creation, in the 16th century, of a worldwide commerce and a world-wide market.

We have seen that the simplest form of the circulation of commodities is (20 yards of linen—2 louis—1 coat) or (commodity-money-commodity), the transformation of the commodity into money, and the re-transformation of the money into a commodity, or selling in order to buy.

But, by the side of this form, we find another altogether distinct from it (money-commodity-money), the transformation of money into a commodity, and the re-transformation of the commodity into money, or buying in order to sell. Every sum of money that goes through this circuit becomes capital.

It is well to remark here that this movement, buying to sell, is distinct from the ordinary form of the circulation of commodities only from the point of view of the person who conducts this movement, beginning and ending in money, i.e., the capitalist. In fact it is composed of two phases of the ordinary circulation, a purchase and a sale, separated from the phases that, usually, precede and follow them, and considered as constituting a complete operation. The first act or phase, the purchase, is a sale from the point of view of the person from whom the capitalist buys; the second phase, the sale, is a purchase from the point of view of the person to whom the capitalist sells. There is there nothing but the ordinary concatenation of the usual phases of circulation. Buying to sell, considered as a finished operation, differentiated from ordinary circulation, exists only from the point of view of the capitalist.

In each of these two circuits—(commodity-money-commodity) and (money-commodity-money) the same two material elements, commodity and money, confront each other. But, while the first circuit, the simple circulation of commodities, begins with a sale and ends with a purchase, the second, the circulation of money as capital, begins with a purchase and ends with a sale.

In the first form the money is in the end transformed into a commodity destined to serve as a use-value, as a useful thing. From the time of the purchase it moves always away from its starting-Point. It is spent once and for all. In the second, the money that the buyer throws into circulation, he means in the end to withdraw by acting as a seller. This money returning, as it does, to its starting-point, is, when it is in the first place thrown into circulation, simply advanced.


A use-value capable of satisfying a need, that is the end and aim of the first circuit, which results in an exchange of products of the same magnitude as values, though of different character as use-values, for instance, linen and a coat. The linen may chance to be sold for more than it is worth, or the coat to be bought below its value. One of the parties is likely enough to be cheated, but this possible inequality of the values exchanged is here only an accident. The usual characteristic of this form of circulation is the equality in value of the two extremes, the two commodities.

The second circuit ends as it begins, in money. Its end and aim is, consequently, exchange-value. The two extremes, the two sums of money, identical in quality and utility, can be distinguished from each other only by their quantity. To exchange 100 dollars for 100 dollars would be an absurd enough operation. The circuit (money-commodity-money) can be justified then only by the quantitative difference between the two sums of money. To conclude, more money is drawn out of circulation at the end than was thrown into it in the beginning, so that the exact form of this circuit is, for example, (100 dollars—2,000 pounds of cotton—110 dollars). The result is that a sum of money, 100 dollars, is exchanged for a greater sum, 110 dollars. This increase or excess of 10 dollars, we call surplus-value. Not only, then, does the value advanced maintain itself intact in circulation, but it even grows larger, and it is this fact that transforms it into capital.

The movement of selling in order to buy, which aims at the appropriation of things suited to satisfy definite wants, has its natural limitations, outside the sphere of circulation, so that when the requirements of consumption are met, the movement ceases.

On the contrary, the movement of buying in order to sell, aiming at the augmentation of value, has no limits, or if it ceases, value, which is augmented only by its continuous repetition, will no longer grow.

The last term of the circuit (money-commodity-money) 110 dollars in our example, is the first term of a new circuit of the same kind, and the last term of this new circuit is again larger than it, and so on.

As the representative of this movement, the possessor of money becomes a capitalist. To constantly renew the profit breeding circuit by constantly putting back his money into circulation, to make value create surplus-value—that is his inciting motive. Use-value or utility does not concern him; for him, commodities and money function only as different forms of value, which, by incessantly changing their forms, also change their magnitude, and seem to have acquired the power of breeding their kind. It is under the form of money that value begins, ends and re-begins its own spontaneous generation. It is under the commodity-form, that it appears as the means of making money. Money-commodity-more money,—that is the general formula of capital as it appears in the realm of circulation.