Grundrisse: Notebook VII – The Chapter on Capital
While, up to now, fixed capital and circulating capital appeared merely as different passing aspects of capital, they have now hardened into two particular modes of its existence, and fixed capital appears separately alongside circulating capital. They are now two particular kinds of capital. In so far as a capital is examined in a particular branch of production, it appears as divided into these two portions, or splits into these two kinds of capital in certain p[rop]ortions.
The division within the production process, originally between means of labour and material of labour, and finally product of labour, now appears as circulating capital (the last two) and fixed capital [the first].  The split within capital as regards its merely physical aspect has now entered into its form itself, and appears as differentiating it.
From a viewpoint such as Lauderdale’s etc., who would like to have capital as such, separately from labour, create value and hence also surplus value (or profit), fixed capital – namely that whose physical presence or use value is machinery – is the form which gives their superficial fallacies still the greatest semblance of validity. The answer to them, e.g. in Labour Defended, [is] that the road-builder may share [profits] with the road-user, but the ‘road’ itself cannot do so. 
Circulating capital – presupposing that it really passes through its different phases – brings about the decrease or increase, the brevity or length of circulation time, the easier or more troublesome completion of the different stages of circulation, a decrease of the surplus value which could be created in a given period of time without these interruptions – either because the number of reproductions grows smaller, or because the quantity of capital continuously engaged in the production process is reduced. In both cases this is not a reduction of the initial value, but rather a reduction of the rate of its growth. From the moment, however, when fixed capital has developed to a certain extent – and this extent, as we indicated, is the measure of the development of large industry generally – hence fixed capital increases in proportion to the development of large industry’s productive forces – it is itself the objectification of these productive forces, as presupposed product – from this instant on, every interruption of the production process acts as a direct reduction of capital itself, of its initial value. The value of fixed capital is reproduced only in so far as it is used up in the production process. Through disuse it loses its use value without its value passing on to the product. Hence, the greater the scale on which fixed capital develops, in the sense in which we regard it here, the more does the continuity of the production process or the constant flow of reproduction become an externally compelling condition for the mode of production founded on capital.
In machinery, the appropriation of living labour by capital achieves a direct reality in this respect as well: It is, firstly, the analysis and application of mechanical and chemical laws, arising directly out of science, which enables the machine to perform the same labour as that previously performed by the worker. However, the development of machinery along this path occurs only when large industry has already reached a higher stage, and all the sciences have been pressed into the service of capital; and when, secondly, the available machinery itself already provides great capabilities. Invention then becomes a business, and the application of science to direct production itself becomes a prospect which determines and solicits it. But this is not the road along which machinery, by and large, arose, and even less the road on which it progresses in detail. This road is, rather, dissection [Analyse] – through the division of labour, which gradually transforms the workers’ operations into more and more mechanical ones, so that at a certain point a mechanism can step into their places. (See under economy of power.) Thus, the specific mode of working here appears directly as becoming transferred from the worker to capital in the form of the machine, and his own labour capacity devalued thereby. Hence the workers’ struggle against machinery. What was the living worker’s activity becomes the activity of the machine. Thus the appropriation of labour by capital confronts the worker in a coarsely sensuous form; capital absorbs labour into itself – ‘as though its body were by love possessed’. 
The exchange of living labour for objectified labour – i.e. the positing of social labour in the form of the contradiction of capital and wage labour – is the ultimate development of the value-relation and of production resting on value. Its presupposition is – and remains – the mass of direct labour time, the quantity of labour employed, as the determinant factor in the production of wealth. But to the degree that large industry develops, the creation of real wealth comes to depend less on labour time and on the amount of labour employed than on the power of the agencies set in motion during labour time, whose ‘powerful effectiveness’ is itself in turn out of all proportion to the direct labour time spent on their production, but depends rather on the general state of science and on the progress of technology, or the application of this science to production. (The development of this science, especially natural science, and all others with the latter, is itself in turn related to the development of material production.) Agriculture, e.g., becomes merely the application of the science of material metabolism, its regulation for the greatest advantage of the entire body of society. Real wealth manifests itself, rather – and large industry reveals this – in the monstrous disproportion between the labour time applied, and its product, as well as in the qualitative imbalance between labour, reduced to a pure abstraction, and the power of the production process it superintends. Labour no longer appears so much to be included within the production process; rather, the human being comes to relate more as watchman and regulator to the production process itself. (What holds for machinery holds likewise for the combination of human activities and the development of human intercourse.) No longer does the worker insert a modified natural thing [Naturgegenstand] as middle link between the object [Objekt] and himself; rather, he inserts the process of nature, transformed into an industrial process, as a means between himself and inorganic nature, mastering it. He steps to the side of the production process instead of being its chief actor. In this transformation, it is neither the direct human labour he himself performs, nor the time during which he works, but rather the appropriation of his own general productive power, his understanding of nature and his mastery over it by virtue of his presence as a social body – it is, in a word, the development of the social individual which appears as the great foundation-stone of production and of wealth. The theft of alien labour time, on which the present wealth is based, appears a miserable foundation in face of this new one, created by large-scale industry itself. As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis. The free development of individualities, and hence not the reduction of necessary labour time so as to posit surplus labour, but rather the general reduction of the necessary labour of society to a minimum, which then corresponds to the artistic, scientific etc. development of the individuals in the time set free, and with the means created, for all of them. Capital itself is the moving contradiction, [in] that it presses to reduce labour time to a minimum, while it posits labour time, on the other side, as sole measure and source of wealth. Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary. On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high. ‘Truly wealthy a nation, when the working day is 6 rather than 12 hours. Wealth is not command over surplus labour time’ (real wealth), ‘but rather, disposable time outside that needed in direct production, for every individual and the whole society.’ (The Source and Remedy etc. 1821, p. 6.)
Nature builds no machines, no locomotives, railways, electric telegraphs, self-acting mules etc. These are products of human industry; natural material transformed into organs of the human will over nature, or of human participation in nature. They are organs of the human brain, created by the human hand; the power of knowledge, objectified. The development of fixed capital indicates to what degree general social knowledge has become a direct force of production, and to what degree, hence, the conditions of the process of social life itself have come under the control of the general intellect and been transformed in accordance with it. To what degree the powers of social production have been produced, not only in the form of knowledge, but also as immediate organs of social practice, of the real life process.
The development of fixed capital indicates in still another respect the degree of development of wealth generally, or of capital. The aim of production oriented directly towards use value, as well as of that directly oriented towards exchange value, is the product itself, destined for consumption. The part of production which is oriented towards the production of fixed capital does not produce direct objects of individual gratification, nor direct exchange values; at least not directly realizable exchange values. Hence, only when a certain degree of productivity has already been reached – so that a part of production time is sufficient for immediate production – can an increasingly large part be applied to the production of the means of production. This requires that society be able to wait; that a large part of the wealth already created can be withdrawn both from immediate consumption and from production for immediate consumption, in order to employ this part for labour which is not immediately productive (within the material production process itself). This requires a certain level of productivity and of relative overabundance, and, more specifically, a level directly related to the transformation of circulating capital into fixed capital. As the magnitude of relative surplus labour depends on the productivity of necessary labour, so does the magnitude of labour time – living as well as objectified – employed on the production of fixed capital depend on the productivity of the labour time spent in the direct production of products. Surplus population (from this standpoint), as well as surplus production, is a condition for this. That is, the output of the time employed in direct production must be larger, relatively, than is directly required for the reproduction of the capital employed in these branches of industry. The smaller the direct fruits borne by fixed capital, the less it intervenes in the direct production process, the greater must be this relative surplus population and surplus production; thus, more to build railways, canals, aqueducts, telegraphs etc. than to build the machinery directly active in the direct production process. Hence – a subject to which we will return later – in the constant under- and over-production of modern industry – constant fluctuations and convulsions arise from the disproportion, when sometimes too little, then again too much circulating capital is transformed into fixed capital.
<The creation of a large quantity of disposable time apart from necessary labour time for society generally and each of its members (i.e. room for the development of the individuals’ full productive forces, hence those of society also), this creation of not-labour time appears in the stage of capital, as of all earlier ones, as not-labour time, free time, for a few. What capital adds is that it increases the surplus labour time of the mass by all the means of art and science, because its wealth consists directly in the appropriation of surplus labour time; since value directly its purpose, not use value. It is thus, despite itself, instrumental in creating the means of social disposable time, in order to reduce labour time for the whole society to a diminishing minimum, and thus to free everyone’s time for their own development. But its tendency always, on the one side, to create disposable time, on the other, to convert it into surplus labour. If it succeeds too well at the first, then it suffers from surplus production, and then necessary labour is interrupted, because no surplus labour can be realized by capital. The more this contradiction develops, the more does it become evident that the growth of the forces of production can no longer be bound up with the appropriation of alien labour, but that the mass of workers must themselves appropriate their own surplus labour. Once they have done so – and disposable time thereby ceases to have an antithetical existence – then, on one side, necessary labour time will be measured by the needs of the social individual, and, on the other, the development of the power of social production will grow so rapidly that, even though production is now calculated for the wealth of all, disposable time will grow for all. For real wealth is the developed productive power of all individuals. The measure of wealth is then not any longer, in any way, labour time, but rather disposable time. Labour time as the measure of value posits wealth itself as founded on poverty, and disposable time as existing in and because of the antithesis to surplus labour time; or, the positing of an individual’s entire time as labour time, and his degradation therefore to mere worker, subsumption under labour. The most developed machinery thus forces the worker to work longer than the savage does, or than he himself did with the simplest, crudest tools.>
‘If the entire labour of a country were sufficient only to raise the support of the whole population, there would be no surplus labour, consequently nothing that could be allowed to accumulate as capital. If in one year the people raises enough for the support of two years, one year’s consumption must perish, or for one year men must cease from productive labour. But the possessors of [the] surplus produce or capital … employ people upon something not directly and immediately productive, e.g. in the erection of machinery. So it goes on.’ (The Source and Remedy of the National Difficulties, p. 4.)
<As the basis on which large industry rests, the appropriation of alien labour time, ceases, with its development, to make up or to create wealth, so does direct labour as such cease to be the basis of production, since, in one respect, it is transformed more into a supervisory and regulatory activity; but then also because the product ceases to be the product of isolated direct labour, and the combination of social activity appears, rather, as the producer. ‘As soon as the division of labour is developed, almost every piece of work done by a single individual is a part of a whole, having no value or utility of itself. There is nothing on which the labourer can seize: this is my produce, this I will keep to myself.’ (Labour Defended, p. 25, 1, 2, XI.) In direct exchange, individual direct labour appears as realized in a particular product or part of the product, and its communal, social character – its character as objectification of general labour and satisfaction of the general need – as posited through exchange alone. In the production process of large-scale industry, by contrast, just as the conquest of the forces of nature by the social intellect is the precondition of the productive power of the means of labour as developed into the automatic process, on one side, so, on the other, is the labour of the individual in its direct presence posited as suspended individual, i.e. as social, labour. Thus the other basis of this mode of production falls away.>
The labour time employed in the production of fixed capital relates to that employed in the production of circulating capital, within the production process of capital itself, as does surplus labour time to necessary labour time. To the degree that production aimed at the satisfaction of immediate need becomes more productive, a greater part of production can be directed towards the need of production itself, or the production of means of production. In so far as the production of fixed capital, even in its physical aspect, is directed immediately not towards the production of direct use values, or towards the production of values required for the direct reproduction of capital – i.e. those which themselves in turn represent use value in the value-creation process – but rather towards the production of the means of value creation, that is, not towards value as an immediate object, but rather towards value creation, towards the means of realization, as an immediate object of production – the production of value posited physically in the object of production itself, as the aim of production, the objectification of productive force, the value-producing power of capital – to that extent, it is in the production of fixed capital that capital posits itself as end-in-itself and appears active as capital, to a higher power than it does in the production of circulating capital. Hence, in this respect as well, the dimension already possessed by fixed capital, which its production occupies within total production, is the measuring rod of the development of wealth founded on the mode of production of capital.
‘The number of workers depends as much on circulating capital as it depends on the quantity of products of co-existing labour, which labourers are allowed to consume.’ (Labour Defended, p. 20.)
In all the excerpts cited above from various economists fixed capital is regarded as the part of capital which is locked into the production process. ‘Floating capital is consumed; fixed capital is merely used in the great process of production.’ (Economist, VI, 1.)  This wrong, and holds only for the part of circulating capital which is itself consumed by the fixed capital, the matières instrumentales. The only thing consumed ‘in the great process of production’, if this means the immediate production process, is fixed capital. Consumption within the production process is, however, in fact use, wearing-out. Furthermore, the greater durability of fixed capital must not be conceived as a purely physical quality. The iron and the wood which make up the bed I sleep in, or the stones making up the house I live in, or the marble statue which decorates a palace, are just as durable as iron and wood etc. used for machinery. But durability is a condition for the instrument, the means of production, not only on the technical ground that metals etc. are the chief material of all machinery, but rather because the instrument is destined to play the same role constantly in repeated processes of production. Its durability as means of production is a required quality of its use value. The more often it must be replaced, the costlier it is; the larger the part of capital which would have to be spent on it uselessly. Its durability is its existence as means of production. Its duration is an increase of its productive force. With circulating capital, by contrast, in so far as it is not transformed into fixed capital, durability is in no way connected with the act of production itself and is therefore not a conceptually posited moment. The fact that among the articles thrown into the consumption fund there are some which are in turn characterized as fixed capital because they are consumed slowly, and can be consumed by many individuals in series, is connected with further determinations (renting rather than buying, interest etc.) with which we are not yet here concerned.
‘Since the general introduction of soulless mechanism in British manufactures, people have with rare exceptions been treated as a secondary and subordinate machine, and far more attention has been given to the perfection of the raw materials of wood and metals than to those of body and spirit.’ (p. 31. Robert Owen: Essays on the Formation of the Human Character, 1840, London.)
<Real economy – saving – consists of the saving of labour time (minimum (and minimization) of production costs); but this saving identical with development of the productive force. Hence in no way abstinence from consumption, but rather the development of power, of capabilities of production, and hence both of the capabilities as well as the means of consumption. The capability to consume is a condition of consumption, hence its primary means, and this capability is the development of an individual potential, a force of production. The saving of labour time [is] equal to an increase of free time, i.e. time for the full development of the individual, which in turn reacts back upon the productive power of labour as itself the greatest productive power. From the standpoint of the direct production process it can be regarded as the production of fixed capital, this fixed capital being man himself. It goes without saying, by the way, that direct labour time itself cannot remain in the abstract antithesis to free time in which it appears from the perspective of bourgeois economy. Labour cannot become play, as Fourier would like,  although it remains his great contribution to have expressed the suspension not of distribution, but of the mode of production itself, in a higher form, as the ultimate object. Free time – which is both idle time and time for higher activity – has naturally transformed its possessor into a different subject, and he then enters into the direct production process as this different subject. This process is then both discipline, as regards the human being in the process of becoming; and, at the same time, practice [Ausübung], experimental science, materially creative and objectifying science, as regards the human being who has become, in whose head exists the accumulated knowledge of society. For both, in so far as labour requires practical use of the hands and free bodily movement, as in agriculture, at the same time exercise.
As the system of bourgeois economy has developed for us only by degrees, so too its negation, which is its ultimate result. We are still concerned now with the direct production process. When we consider bourgeois society in the long view and as a whole, then the final result of the process of social production always appears as the society itself, i.e. the human being itself in its social relations. Everything that has a fixed form, such as the product etc., appears as merely a moment, a vanishing moment, in this movement. The direct production process itself here appears only as a moment. The conditions and objectifications of the process are themselves equally moments of it, and its only subjects are the individuals, but individuals in mutual relationships, which they equally reproduce and produce anew. The constant process of their own movement, in which they renew themselves even as they renew the world of wealth they create.>
(In his Six Lectures Delivered at Manchester, 1837, Owen speaks about the difference which capital, by its very growth (and widespread appearance, and it obtains the latter only with large-scale industry, which is connected with the development of fixed capital), creates between workers and capitalists; but formulates the development of capital as a necessary condition for the recreation of society, and recounts about himself: ‘It was by being gradually trained to create and conduct some of these large’ (manufacturing) ‘establishments, that your lecturer’ (Owen himself) ‘was taught to understand the great errors and disadvantages of the past and present attempts to ameliorate the character and situation of his fellow beings.’ (p. 58.) We here put down the entire excerpt, to be used on another occasion.
‘The producers of developed wealth can be divided into workers in soft and workers in hard materials, under the immediate direction generally of masters whose object it is to make money through the labour of those they employ. Before the introduction of the chemical and mechanical manufacturing system, operations were carried out on a limited scale; there were many small masters, each with a few day-labourers, who expected in due time to become small masters themselves. They usually ate at the same table and lived together; a spirit and feeling of equality reigned among them. Since the period when scientific power began by and large to be employed in the business of manufacturing, a gradual change has taken place in this regard. Almost all manufactures, to be successful, must now be carried out extensively and with a great capital; small masters with small capitals have only little chance of success, particularly in the manufactures of soft materials, such as cotton, wool, flax etc.; and it is indeed evident now, that so long as the present classification of society and the mode of directing business life should endure, the small masters will be increasingly displaced by those who possess great capitals, and that the former relatively happier equality among the producers must give way to the greatest inequality between master and worker, such as has never before occurred in the history of mankind. The large capitalist is now elevated to the position of a commanding lord, treating the health, the life and death, indirectly, of his slaves, as he likes. He obtains this power through combination with other great capitalists, engaged in the same interest with himself, and thus effectively bends to his purpose those he employs. The large capitalist now swims in wealth, whose proper use he has not been taught and does not know. Through his wealth, he has gained power. His wealth and his power blind his reason; and when he oppresses altogether grievously, he believes he is bestowing favours … His servants, as they are called, his slaves in fact, are reduced to the most hopeless degradation; the majority robbed of health, of domestic comfort, of the leisure and healthy open-air pleasures of earlier days. Through excessive exhaustion of their powers, brought about by lengthy, drawn-out monotonous occupations, they are seduced into habits of intemperance, and made unfit for thinking or reflection. They can have no physical, intellectual or moral amusements other than of the worst sort; all real pleasures of life are far distant from them. The life which a very large part of the workers lead under the present system is, in a word, not worth having. But the individuals are not to blame for the changes of which these are the result; they proceed in the regular order of nature and are preparatory and necessary stages towards the great and important social revolution now in progress. Without great capitals no great establishments can be founded; men cannot be brought to understand the practicability of effecting new combinations, in order to ensure a superior character to all and the production of more annual wealth than can be consumed by all; and that wealth, too, should be of a higher kind than that hitherto generally produced.’ (loc. cit. 56, 57.) ‘It is this new chemical and mechanical manufacturing system which now expands human abilities, and prepares men to understand and to adopt other principles and practices, and thus to effect the most beneficial change in affairs which the world has yet known. And it is this new manufacturing system which now creates the necessity for another and higher classification of society.’ (loc. cit. 58.))
We remarked earlier that the force of production (fixed capital) only has value, hence only imparts value, in so far as it is itself produced, itself a given quantity of objectified labour time. But now natural agencies enter in, such as water, land (this notably), mines etc., which are appropriated, hence possess exchange value, and hence come as values into the calculation of production costs. This is, in a word, the entry of landed property (which includes earth, mines, water). The value of means of production which are not the product of labour does not belong here yet, since it does not arise out of the examination of capital itself. They appear for capital, initially, as given, historic presupposition. And we leave them as such, here. Only the form of landed property – or of natural agencies as value-determining magnitudes – modified to correspond to capital belongs within the examination of the system of bourgeois economy. It does not affect the examination of capital at the point we have so far reached, to regard land etc. as a form of fixed capital.
Since fixed capital, in the sense of a produced production force, as agency of production, increases the mass of use values created in a given time, it cannot grow without the raw material it works on also growing (in manufacturing industry. In the extractive industries, such as fishery, mining, labour merely consists in overpowering the obstacles in the way of the seizure and appropriation of the raw products or primary products. There is no raw material to be worked up for production; rather, the existing raw product is appropriated. By contrast, in agriculture the raw material is the earth itself; seed the circulating capital etc.). Its employment on a larger scale thus presupposes expansion of the part of circulating capital consisting of raw materials; hence growth of capital generally. It likewise presupposes (relative) decrease of the portion of capital exchanged for living labour.
In fixed capital, capital exists materially, too, not only as objectified labour, destined to serve as the means of new labour, but rather as value, whose use value is to create new values. The existence of fixed capital is therefore ϰατ᾽ ἐξοχήν its existence as productive capital. Hence the stage of development reached by the mode of production based on capital – or the extent to which capital itself is already presupposed as the condition of its own production, has presupposed itself – is measured by the existing scope of fixed capital; not only by its quantity, but just as much by its quality.
Finally: in fixed capital, the social productivity of labour [is] posited as a property inherent in capital; including the scientific power as well as the combination of social powers within the production process, and finally, the skill transposed from direct labour into the machine, into the dead productive force. In circulating capital, by contrast, it is the exchange of labours, of the different branches of labour, their interlacing and system-forming quality, the co-existence of productive labour, which appear as property of capital. *
* The determinations of raw material, product, instrument of production, change according to the role which the use values play in the production process itself. What may be regarded as a mere raw material (certainly not agricultural products, which are all reproduced, and not only reproduced in their original form, but also modified in their natural being itself to correspond to human needs. Quote from Hodges etc.  The products of purely extractive industry such as e.g. coal, metals, are themselves the result of labour, not only to bring them to light, but also in order to give them the form, as with metals, in which they can serve as raw materials for industry. But they are not reproduced, since we do not yet know how to create metals) is itself the product of labour. The product of one industry is the raw material for another and vice versa. The instrument of production itself is the product of one industry, and serves as instrument of production only in the other. One industry’s waste is the raw material of the other. In agriculture, a part of the product (seed, cattle etc.) itself appears as raw material for the same industry; hence, like fixed capital, it never leaves the production process; the portion of the agricultural products destined for animal feed can be regarded as matière instrumentale; but seed is reproduced in the production process, while the instrument as such is consumed in it. Could not seed, considering that it always remains within the production process, like draught animals, be regarded as fixed capital, like draught animals? No; otherwise all raw materials would have to be so regarded. As raw material it is always comprised within the production process. Finally, products entering into direct consumption in turn come out of consumption as raw materials for production, fertilizer in the process of nature etc., paper out of rags etc.; but secondly, their consumption reproduces the individual himself in a specific mode of being, not only in his immediate quality of being alive, and in specific social relations. So that the ultimate appropriation by individuals taking place in the consumption process reproduces them in the original relations in which they move within the production process and towards each other; reproduces them in their social being, and hence reproduces their social being – society – which appears as much the subject as the result of this great total process.
We have now to examine the other relations of fixed capital and circulating capital.
We said above that the social relation between different labours is posited as a property of capital in circulating capital, as the social productive power of labour in fixed capital.
‘The circulating capital of a nation is: money, necessaries of life, raw materials, and finished products.’ (Adam Smith, tome II, p. 218.) Smith is in a quandary whether he should call money circulating or fixed capital. In so far as it always serves merely as instrument of circulation, which is itself a moment of the total reproduction process, it is fixed capital – as instrument of circulation. But its use value itself is only to circulate and never to be absorbed either into the production process proper nor into individual consumption. It is the part of capital constantly fixed in the circulation phase, and in this respect it is the most perfect form of circulating capital; in the other respect, because it is fixed as an instrument, it is fixed capital.
In so far as a distinction between fixed capital and circulating capital enters in from the perspective of individual consumption, this is already given in the fact that fixed capital does not enter into circulation as use value. (A part of the seed in agriculture does enter into circulation as use value, because it multiplies itself.) This non-entry-into-circulation supposes that it does not become the object of individual consumption.
‘Fixed capital’ serves over and over again for the same operation, ‘and by how much larger has been the range of these iterations, by so much [the] more intensely is the tool, engine, or machinery, entitled to the denomination of fixed’. (De Quincey, X, 4.)  If a capital consists of £10,000, of which 5,000 is fixed and 5,000 circulating; the latter turns over 1 time in 1 year, the former 1 time in 5 years; then 5,000 turn over, or 1/2 of the total capital, 1 time in one year. During the same year, 1/5 of the fixed capital or £1,000 turn over; hence in 1 year £6,000 or 3/5 of the total capital turn over. Hence 1/5 of the total capital turns over in 12/3 months and the total capital, in (12 × 5)/3 months, in 60/3 = 20 months = 1 year and 8 months. In 20 months the total capital of £10,000 is turned over, although the fixed capital is replaced only in 5 years. This turnover time holds, however, only for the repetition of the production process and thus for the creation of surplus value; not for the reproduction of the capital itself. If the capital begins the process anew less frequently – returns from circulation into the form of fixed capital – then it returns all the more often into the form of circulating capital. But the capital itself is not replaced thereby. So with the circulating capital itself. If a capital of 100 returns 4 times a year and hence brings in 20%, like a capital of 400 which circulates only once, then the capital remains 100 at the end of the year as at the beginning, and the other capital remains 400, although it has effected a production of use values and a positing of surplus value equal to a 4 times larger capital. The fact that the velocity of turnover here substitutes for the magnitude of the capital shows strikingly that it is only the amount of surplus labour set into motion, and of labour generally, which determines the creation of value as well as the creation of surplus value, and not the magnitude of the capital for itself. The capital of 100 has, during the year, set in motion successively as much labour as one of 400, and hence created the same surplus value.
But the issue here is this. In the above example, the circulating capital of 5,000 first returns in the middle of the first year; then at the end of the second half; in the middle of the second; in the second half of the second (in the first 4 months) £3,333 2/6 of it have returned and the rest will have come back at the end of this half year.
But, of the fixed capital, only 1/5 was returned in the first year, 1/5 in the second. At the end of the first year, the owner has on hand £6,000; at the end of the second, 7,000; the third, 8,000; the fourth, 9,000; the fifth, 10,000. Only at the end of the fifth is he again in possession of his total capital, with which he began the production process; although in the creation of surplus value his capital acted as if it had wholly turned over in 20 months; thus the total capital itself is only reproduced in 5 years. The former aspect of turnover important for the relation of its realization; the latter, however, brings in a new relation which does not take place with circulating capital at all. Since circulating capital is completely absorbed into circulation and returns from it as a whole, it follows that it is reproduced as capital as many times as it is realized as surplus value or as surplus capital. But since fixed capital never enters circulation as a use value, and enters it as value only to the extent that it is consumed as a use value, it follows that it is by no means reproduced as soon as the surplus value determined by the average turnover time of the total capital is posited. The turnover of the circulating capital must take place 10 times in the 5 years before the fixed capital is reproduced; i.e. the period of the revulsions of circulating capital must be repeated 10 times while that of fixed capital is repeated once, and the total average turnover of the capital – 20 months – has to be repeated 2 times before the fixed capital is reproduced. Hence, the larger is the part of the capital consisting of fixed capital – i.e. the more capital acts in the mode of production corresponding to it, with great employment of produced productive force – and the more durable the fixed capital is, i.e. the longer its reproduction time, the more its use value corresponds to its specific economic role – the more often must the part of capital which is determined as circulating repeat the period of its turnover, and the longer is the total time the capital requires for the achievement of its total circulation. Hence the continuity of production becomes an external necessity for capital with the development of that portion of it which is determined as fixed capital. For circulating capital, an interruption, if it does not last so long as to ruin its use value, is only an interruption in the creation of surplus value. But with fixed capital, the interruption, in so far as in the meantime its use value is necessarily destroyed relatively unproductively, i.e. without replacing itself as value, is the destruction of its original value itself. Hence the continuity of the production process which corresponds to the concept of capital is posited as conditio sine qua [non] for its maintenance only with the development of fixed capital; hence likewise the continuity and the constant growth of consumption.
This is No. I. But No. II, the formal side, even more important. The total time in which we measured the return of capital was the year, while the time unit in which we measure labour is the day. We did [so] firstly because the year is more or less the natural reproduction time, or duration of the production phase, for the reproduction of the largest part of the vegetable raw materials used in industry. The turnover of circulating capital was determined, therefore, by the number of turnovers in the total time of a year. In fact, the circulating capital begins its reproduction at the end of each turnover, and while the number of turnovers during the year affects the total value, and the fate it encounters during each turnover appears as a determinant of the conditions under which it begins reproduction anew, yet each of them for itself is a complete lifespan for the circulating capital. As soon as capital is transformed back into money, it can transform itself e.g. into conditions of production other than the original ones, throw itself from one branch of production into another one, so that reproduction, regarded materially, is not repeated in the same form.
The introduction of fixed capital changes this; and neither the turnover time of capital, nor the unit in which their number is measured, the year, henceforth appear as the measure of time for the motion of capital. This unit is now determined, rather, by the reproduction time required for fixed capital, and hence the total circulation time it needs to enter into circulation as value, and to come back from it in the totality of its value. The reproduction of the circulating capital must also proceed in the same material form during this whole time, and the number of its necessary turnovers, i.e. the turnovers necessary for the reproduction of the original capital, is distributed over a longer or shorter series of years. Hence a longer total period is posited as the unit in which its turnovers are measured, and their repetition is now not merely externally, but rather necessarily connected with this unit. According to Babbage, the average reproduction of machinery in England 5 years;  the real one hence perhaps 10 years. There can be no doubt whatever that the cycle which industry has passed through since the development of fixed capital on a large scale, at more or less 10-yearly intervals, is connected with this total reproduction phase of capital. We shall find other determinant causes as well. But this is one of them. There were good and bad times for industry before, too, as well as for harvests (agriculture). But the industrial cycle of a number of years, divided into characteristic periods, epochs, is peculiar to large-scale industry.
Now the new distinction, No. III, appears.
Circulating capital was ejected from the production process in the form of the product, of the newly created use value, and thrown wholly into circulation; when transformed back into money, the entire value of the product (the entire labour time objectified in it, necessary and surplus labour time) was realized, and thereby the surplus value realized and all conditions of reproduction fulfilled. With the realization of the price of the commodity, all these conditions were fulfilled, and the process could begin anew. This holds, however, only for that part of the circulating capital which entered into large-scale circulation. As to the other portion of it, which continuously accompanies the process of production itself, the circulation of that part of it which is transformed into wages, it naturally depends on whether the labour is used for the production of fixed capital or of circulating capital whether these wages themselves are replaced by a use value entering into circulation or not.
Fixed capital, by contrast, does not itself circulate as a use value, but rather enters as value into the manufactured raw material (in manufactures and agriculture) or into the directly extracted raw material (mining industry etc.) only to the extent that it is used up as use value in the production process. Fixed capital in its developed form hence only returns in a cycle of years which embraces a series of turnovers of circulating capital. It is not at once exchanged as product for money, in such a way that its reproduction process might coincide with the turnovers of circulating capital. It enters into the price of the product only in successive bits, and hence returns as value only successively. It returns fragmentarily over longer periods, while circulating capital circulates wholly in shorter periods. To the extent that fixed capital remains as such, [it] does not return, because it does not enter into circulation; to the extent that it enters into circulation, it no longer remains as fixed capital, but rather forms an ideal value-component of the circulating capital. It returns in principle only to the extent that it transposes itself directly or indirectly into the product, hence into circulating capital. Because it is not a direct use value for consumption, it does not enter into circulation as use value.
This different kind of return of fixed and circulating capital will appear significant later as the difference between selling and renting, annuity, interest and profit, rent in its different forms, and profit; and the incomprehension of this merely formal distinction has led Proudhon and his gang to the most confused conclusions; as we shall see.  In its observations on the last crisis, the Economist reduces the whole difference between fixed capital and circulating capital to the ‘resale of articles within a short period and at a profit’ (Economist No. 754, 6 Feb. 1858) and ‘production of a revenue large enough to provide for expenses, risk, wear and tear, and the market rate of interest’. * The shorter return through the sale of the whole article, and the merely annual return of a part of the fixed capital, analysed above. As to profit – merchant’s profit does not concern us here – each part of the circulating capital which leaves and returns to the production process, i.e. contains objectified labour (the value of the advances), necessary labour (the value of wages) and surplus labour – brings profit as soon as it passes fully through circulation, because the surplus labour which the product contains is realized with it. But it is neither the circulating capital nor the fixed capital which create the profit, but rather the appropriation of alien labour which both of them mediate, hence at bottom only the part of circulating capital which enters into small-scale circulation. This profit is realized in practice, however, only through the entry of capital into circulation, hence only in its form as circulating capital, never in its form as fixed capital. But what the economist here understands by fixed capital is – as far as revenues from it are concerned – the form of fixed capital in which it does not directly enter into the production process as machinery, but rather in railways, buildings, agricultural improvements, drainings etc., † where, hence, the realization of the value and surplus value contained in it appears in the form of an annuity, where interest represents the surplus value and the annuity the successive return of the value advanced. This is therefore not in fact a case (although it is the case with agricultural improvements) of fixed capital entering into circulation as value by forming a part of the product, but rather of the sale of fixed capital in the form of its use value. It is here sold not all at once, but as an annuity. Now, it is clear, firstly, that some forms of fixed capital figure initially as circulating capital, and become fixed capital only when they become fixed in the production process; e.g. the circulating products of a machine-maker are machines just as those of a cotton-weaver are calico, and they enter into circulation in just the same way, for him. For him they are circulating capital; for the manufacturer who uses them in the production process, fixed capital; because product for the former, and instrument of production only for the latter. Likewise even houses, despite their immovability, are circulating capital for the building-trade; for him who buys them to rent them out again, or to use them as buildings for production, they are fixed capital. Now in so far as fixed capital itself circulates as use value, i.e. is sold, changes hands, we shall speak of it further, below.
* Risk, which plays a role for the economists in the determination of profit – it can obviously play none in the surplus gain, because the creation of surplus value is not increased thereby, and possible that capital incurs risk in the realization of this surplus value – is the danger that the capital does not pass through the different phases of circulation, or remains fixated in one of them. We have seen that the surplus gain is part of the production costs, not of the capital, but of the product. The necessity for capital to realize this surplus gain or a part of it confronts it as a double external compulsion. As soon as profit and interest become separated, so that the industrial capitalist must pay interest, a portion of the surplus gain is cost of production from capital’s viewpoint, i.e. belongs itself among his outlays. In another respect, it is the average assecurance which it gives itself in order to cover the risk of devaluation which it runs in the metamorphoses of the total process. A part of the surplus gain appears to the capitalist only as a compensation for the risk he runs so as to make more money; a risk which can lead to the loss of the presupposed value itself. In this form, the necessity of realizing the surplus gain appears to him as means to ensure its reproduction. Both relations, of course, do not determine the surplus value, but rather make its positing appear as an external necessity for capital, and not only as the satisfaction of its tendency to seek riches.
† We are not concerned here with the illusion that all parts of capital equally bring a profit, an illusion arising out of the division of the surplus value into average portions, independently of the relations of the component parts of capital as circulating and fixed, and the part of it transformed into living labour. Because Ricardo half shares this illusion, he considers the influence of the proportions of fixed and circulating capital from the start of his determination of value as such, and the reverend parson Malthus stupidly and simple-mindedly speaks of the profits accruing to fixed capital, as if capital grew organically by some power of nature.
But the viewpoint that capital is sold as capital – whether as money or in the form of fixed capital – is obviously not relevant here, where we are considering circulation as the movement of capital in which it posits itself in its various conceptually specific moments. Productive capital becomes product, commodity, money, and is transformed back into the conditions of production. It remains capital in each of these forms, and it becomes capital only by realizing itself as such. So long as it remains in one of these phases, it is fixed as commodity capital, money capital, or industrial capital. But each of these phases forms only one moment of its movement, and in the form from which it must propel itself to pass over into another phase it ceases to be capital. If it rejects itself as commodity and becomes money, or vice versa, then it does not exist as capital in the rejected form, but rather in the newly reached one. Of course, the rejected form can in turn become the form of another capital, or it can be the direct form of the consumable product. But this does not concern us and does not concern capital as far as the course it traces out in its internal circulation is concerned. Rather, it rejects each of the forms as its not-capital-being, so as to assume them again later. But if capital is lent out as money, as land and soil, house etc., then it becomes a commodity as capital, or, the commodity put into circulation is capital as capital. This to be further pursued in the next section.
What is paid for in the transposition of the commodity into money, as far as the part of the price which is the value of part of the fixed capital is concerned, is the part required for its partial reproduction, the part worn out and used up in the production process. What the buyer pays, then, is the use or wear of the fixed capital, in so far as it is itself value, objectified labour. Since this wear takes place successively, he pays it in portions in the product, whereas in the price he pays for the product he replaces the whole value of the fractional part of the raw material contained in the product. The worn-out, used-up fractional part of fixed capital is paid for not only successively, but also by a mass of buyers simultaneously, in relation as they buy products. Since capital appears in the first half of its circulation as C and the buyer as M, since its aim is value while the buyer’s is use (whether in turn productive, no matter here, where we are examining only the formal aspect such as it appears towards capital in its circulation), it follows that the relation of the buyer to the product is that of the consumer generally. Indirectly, then, in all commodities the buyer successively and bit by bit pays for the wear and use of fixed capital, even though the latter does not enter into circulation as use value. But there are forms of fixed capital where he pays directly for its use value – as with means of communication, transport etc. In all these cases the fixed capital in fact never leaves the production process, as with railways etc. But while it serves for some as means of communication within the production process itself, to bring the product to market, and for the producers themselves [as] means of circulation, it can serve others as means of consumption, as use value, for holiday travel, etc. Regarded as a means of production, it distinguishes itself from machinery etc. here in that it is used up by various capitals at the same time, as a common condition for their production and circulation. (We are not yet concerned with consumption as such here.) It does not appear as locked within a particular production process, but rather as the connecting artery of a mass of such production processes of particular capitals, who use it up only in portions. In contrast to all these particular capitals and their particular production processes, then, fixed capital is here cast as the product of a particular branch of production separate from them, in which, however, it is not sold by one producer as circulating capital and bought by another as fixed capital, as with machinery, but, rather, in which it can be sold only in the form of fixed capital itself. Then its successive return, hidden in the commodity, becomes apparent. But this fixed capital then also includes the surplus value, since it is itself a sold product (for the industrialist, the machine he uses is not a product), hence the return of interest and profit, if any. Since it can be consumed in the same common and successive form, can be use value for direct consumption, it follows that its sale – not as an instrument of production but as a commodity generally – also appears in the same form. But in so far as it is sold as an instrument of production – a machine is sold as a mere commodity and only becomes an instrument of production in the industrial process – i.e. as its sale directly coincides with its use in the general social production process, this is a determination which has no place within the examination of the simple circulation of capital. In the latter, fixed capital, in so far as it enters as an agency of production, appears as a presupposition of the production process, not as its result. It can therefore only be a matter of the replacement of its value, in which no surplus value for the user is included. What is rather the case is that he has paid this surplus value to the machine-maker. Railways, however, or buildings rented for production, are simultaneously instruments of production, and are simultaneously realized by their seller as product, as capital.
Since each moment which appears as presupposition of production is at the same time its result – in that it reproduces its own conditions – the original division of the capital within the production process now appears in such a way that the production process divides into three production processes, in which different portions of the capital – which now also appear as particular capitals – are at work. (Here we can still assume a form in which one capital is at work, because we are examining capital as such, and this way of looking at it simplifies what needs to be said about the proportion of these different kinds.) The capital is annually reproduced in different and changing portions as raw material, as product, and as means of production; in a word, as fixed capital and as circulating capital. The minimum presupposition which appears in all of these production processes is the part of circulating capital destined for exchange with labouring capacity and for the maintenance and consumption of the machinery or the instrument, and the means of production. In purely extractive industries, e.g. mining, the mine itself exists as the material of labour, but not as raw material passing over into product, which latter must, in the manufacturing industry, by contrast, have a particular existence in all forms. In agriculture, seed, fertilizer, cattle etc., may be regarded as raw material as well as matières instrumentales. Agriculture forms a mode of production sui generis, because the organic process is involved, in addition to the mechanical and chemical process, and the natural reproduction process is merely controlled and guided; extractive industry (mining the most important) is likewise an industry sui generis, because no reproduction process whatever takes place in it, at least not one under our control or known to us. (Fishery, hunting etc. can involve a reproduction process; likewise forestry; this is therefore not necessarily purely extractive industry.) Now, in so far as the means of production, fixed capital as the product of capital and hence containing objectified surplus time, is itself constituted in such a way that it can be ejected by its producer as circulating capital, e.g. like machinery by the machine builder, before it becomes fixed capital, i.e. first enters into circulation as use value, [to that extent] its circulation contains no new aspect whatever. But in so far as it can never be sold while it serves at the same time as instrument of production, as e.g. railways, or in proportion as it is used up as such, it shares with fixed capital generally the quality that its value returns only successively; but there is also the addition that this return of its value includes the return of its surplus value, of the surplus labour objectified in it. It then has a special form of return.
The important thing now is that the production of capital thus appears as the production in definite portions of circulating capital and fixed capital, so that capital itself produces its double way of circulating as fixed capital and circulating capital.
Before we settle the last point, first a few secondary matters. ‘Floating capital is consumed, fixed capital merely used, in the great work of production.’ (Economist, VI, p. 1.) The distinction between consume and use dissolves into gradual or rapid destruction. We need dwell on this point no further.
‘Floating capital assumes an infinite variety of forms, fixed capital has only one.’ (Economist, VI, p. 1.)  This ‘infinite variety of forms’, as regards the production process of capital itself, is much more correctly reduced by Adam Smith to a mere change of form. Fixed capital is of use to its master ‘so long as it continues to remain in the same form’. That means it remains within the production process as use value, in a specific material presence. Circulating capital, by contrast (A. Smith, tome II, p. 197, 198) ‘constantly passes out of his hands in a specific form’ (as product) ‘to return in another’ (as condition of production) ‘and brings profit only by means of this circulation and successive changes’. Smith does not speak here of the ‘infinite variety of forms’ in which circulating capital appears. Regarded materially, ‘fixed capital’ also assumes ‘an infinite variety of forms’; but this proceeds from the metamorphoses which circulating capital passes through as itself a use value, and the ‘infinite variety of forms’ reduces itself, therefore, to the qualitative differences of the various phases of circulation. Regarded within a specific production process, circulating capital always returns in the same form of raw materials and money for wages., The material presence is the same at the end of the process as at the beginning. Incidentally, elsewhere the Economist itself reduces the ‘infinite variety of forms’ to the conceptually determined change of forms in circulation. ‘The commodity is wholly consumed in the shape in which it is produced’ (i.e. enters into circulation as use value and is ejected from it) ‘and replaced in his hands in a new shape’ (as raw material and wages), ‘ready to repeat a similar operation’ (rather, the same operation). (loc. cit. VI, p. 1.)  Smith also says explicitly that fixed capital ‘requires no circulation’. (tome II, 197, 198.) With fixed capital, the value is imprisoned within a specific use value; with circulating capital, value takes the form of various different use values, likewise assumes as well as rejects the independent form distinct from every particular use value (as money); hence constant change of matter and form goes on.
‘Circulating capital supplies him’ (the entrepreneur) ‘with the materials and wages of the workers, and sets industry into activity.’ (A. Smith, tome II, p. 226.) ‘Every fixed capital comes originally from a circulating capital, and needs to be continually maintained by means of a circulating capital.’ (loc. cit. p. 207.) ‘Since so great a part of the circulating capital is being withdrawn continuously to be spent in the other two branches of the general social fund, this capital needs in turn to be renewed by continual replenishment, otherwise it would soon be reduced to nothing. These replenishments are drawn from three principal sources: the produce of the soil, of mines, and of fisheries.’ (loc. cit. p. 208.)
<We have already developed one distinction emphasized by the Economist: ‘Every production the whole cost of which is returned to the producer out of the current income of the country is floating capital; but every production, in respect of which only an annual sum is paid for the use, is – fixed capital.’ (Notebook VI, p. 1.)  ‘In the first case, the producer is entirely dependent on the country’s current income.’ (loc. cit.) We have seen that only part of the fixed capital returns in the time determined by circulating capital, which serves as the unit of its turnovers because it is the natural unit for the reproduction of the greatest part of food products and raw materials, just as, and because, it appears as the natural epoch in the life process (cosmic process) of the earth. This unit is the year, whose bourgeois calculation deviates more or less, but insignificantly, from its natural magnitude. The more the material presence of fixed capital corresponds to its concept, the more adequate its material mode of existence is, the more does its turnover time span a cycle of years. Since circulating capital is wholly exchanged first for money, secondly for its elements, it presupposes that a countervalue has been produced equal to its whole value (including the surplus value). It cannot be said that it enters or can enter into consumption entirely; since it must also in part serve in turn as raw material, or as an element for fixed capital; in short itself, in turn, as an element of production – a counter-production. A part of the use value ejected by capital as the product, as the result of the production process, becomes an object of consumption and thus drops out of the circulation of capital altogether; another part enters into another capital as a condition of production. This is itself posited in the circulation of capital as such, since it ejects itself from itself in the first half of circulation, as commodity, i.e. as use value; i.e. dismisses itself with respect to itself in this form from its own circulation as use value, article of consumption; but exchanges itself as money for commodity as condition of production, in the second half of its circulation. Thus, as circulating use value itself, it posits its material presence both as an article of consumption and as a new element of production, or rather an element of reproduction. But in both cases the whole of its countervalue must be on hand; i.e. it must have been wholly produced during the year. For example, the sum of manufactured products which can be exchanged during a year for agricultural products is determined by the mass of the raw products produced in a year, counted from harvest to harvest. Since we speak here of capital as such, capital in the process of becoming, we are not yet concerned with anything else in addition – in that the many capitals are not yet present for us – nothing but it itself and simple circulation, out of which it absorbs value in the double form of money and commodity and into which it throws it in the double form of money and commodity. When an industrial people producing on the foundation of capital, such as the English, e.g., exchange with the Chinese, and absorb value in the form of money and commodity from out of their production process, or rather absorb value by drawing the latter within the sphere of the circulation of their capital, then one sees right away that the Chinese do not therefore need to produce as capitalists. Within a single society, such as the English, the mode of production of capital develops in one branch of industry, while in another, e.g. agriculture, modes of production predominate which more or less antedate capital. Nevertheless, it is (1) its necessary tendency to conquer the mode of production in all respects, to bring them under the rule of capital. Within a given national society this already necessarily arises from the transformation, by this means, of all labour into wage labour; (2) as to external markets, capital imposes this propagation of its mode of production through international competition. Competition is the mode generally in which capital secures the victory of its mode of production. Still, this much is clear: quite regardless of whether it is another capital or whether it is capital itself as another which stands on both sides of the successive exchanges, each time in the opposite aspect, both aspects are already posited before we proceed to examine this double movement from the circulation of capital as such itself. In the first phase it ejects itself out of the movement of capital as use value, as commodity, and exchanges itself for money. The commodity expelled from the circulation of capital is no longer the commodity as a moment of self-perpetuating value, as the presence of value. It is, thus, its presence as use value, its being for consumption. Capital is transposed out of the form of commodity into the form of money only because an exchanger appears opposite it in ordinary circulation as consumer, who transposes M into C; [completes] this transposition in its material aspect, so that he relates to the use value as use value, as consumer, and only in this way is the use value replaced for capital as value. Thus, capital creates articles of consumption, but ejects them from itself in this form, ejects them from its circulation. On the basis of the aspect developed so far, no other relations exist. The commodity which is ejected as such from the circulation of capital loses its character as value and fulfills the role of use value for consumption, as distinct from fulfilling it for production. But in the second phase of circulation, capital exchanges money for commodity, and its transformation into commodity now itself appears as a moment of value-positing, because the commodity is accepted as such into the circulation process of capital. While it presupposes consumption in the first phase, in the second it presupposes production, production for production; for value in the form of the commodity is here taken into the circulation of capital from the outside, or, the inverse process is undertaken in the first phase. The commodity, as use value for capital itself, can only be the commodity as an element, use value, for its production process. In its double form, the process presents itself in this way: capital a exchanges its product as C for capital b’s M in the first phase; in the second, capital b as C exchanges for capital a’s M. Or, in the first phase, capital b as M exchanges for capital a’s C, in the second, a as M for capital b’s C. That is, capital is simultaneously posited in each of the two circulation phases as M and C; but in two different capitals, which are always in the opposite phase of their circulation process. In the simple circulation process, the acts of exchange, C–M or M–C appear either as directly coinciding or as directly divided. Circulation is not only the succession of both forms of exchange, but it is at the same time each of them distributed to two different sides. But we are not yet concerned here with exchange among many capitals. This belongs to the theory of competition or to that of the circulation of capitals (of credit). What concerns us here is the presupposition of consumption on one side – of the commodity ejected from the movement of value as use value – and the presupposition of production for production – of value, posited as use value, as a condition of its reproduction posited externally to the circulation of capital on the other side – so that these two sides arise out of the examination of the simple form of the circulation of capital. This much is clear: Since the entire circulating capital exchanges as C for M in the first phase, and as M for C in the second, then, if we regard the year as the unit of time of its evolutions, its transformations are limited both by the annual reproduction of raw materials etc. (the commodity for which it exchanges as money must have been produced, a simultaneous production must correspond to it), and by the constant creation of an annual revenue (the part of M which exchanges for commodity as use value) to consume the product of capital which is ejected as use value. Since further-developed relations are not present yet, such revenues are only those of the capitalists themselves and those of the workers. The examination of the exchange of capital and revenue, by the way, another form of the relation of production and consumption, does not belong here yet. In another respect, since fixed capital is exchanged only to the extent it enters as value into circulating capital, since it is, thus, realized only in part during the year, it presupposes only a partial counter-value, i.e. only the partial production of this counter-value during the course of the year. It is paid for only in proportion to its wear. This much clear, then, which already follows from the difference introduced by fixed capital into the industrial cycle, namely that it engages the production of subsequent years, and, just as it contributes to the creation of a large revenue, it anticipates further labour as a counter-value. The anticipation of future fruits of labour is therefore in no way a consequence of the state debt etc., in short, not an invention of the credit system. It has its roots in the specific mode of realization, mode of turnover, mode of reproduction of fixed capital.>
Since we are essentially concerned here with grasping the pure, specific economic forms, hence with not joining together things that do not belong, it has thus become clear from the above that the different forms in which circulating capital and fixed capital bring revenue – as well as the examination of revenue generally – do not yet belong here at all; but only the different ways in which they return and affect the total turnover of capital, the movement of its reproduction generally. Nevertheless, the incidental points made here are important – in that they reject the economists’ motley compilations, which have no place yet in the examination of the simple distinction between fixed capital and circulating capital – and because they showed us that the differences in revenue etc. have their basis in the difference of form between the reproduction of fixed and circulating capital. The issue here is still only the simple return of the value. Only later will it be found how the latter becomes the return of revenue, and that in turn becomes the difference in the determination of revenue.
We have said nothing so far about the maintenance costs, the frais d’entretien of fixed capital. These are partly the matières instrumentales it consumes in its action. They make up fixed capital in the first sense, as we have regarded it within the production process. These are circulating capital and may just as well serve for consumption. They become fixed capital only in so far as they are consumed in the production process, but do not have, like fixed capital proper, a material substance determined purely by their formal presence. The second part of these maintenance costs consists of the labour necessary for repairs.
A. Smith’s determination that every fixed capital comes originally from a circulating capital and must be constantly maintained by a circulating capital: ‘Every fixed capital originally comes from a circulating capital and must be continually kept up at the latter’s expense. No fixed capital can yield revenue except at the expense of a circulating capital.’ (Storch, 26a.)  As to Storch’s remark about revenue – an aspect which does not belong here – it is clear: fixed capital returns as value only in proportion as it becomes extinguished as use value, as fixed capital, and enters into circulating capital as value. Hence it can return in the form of a circulating capital only in so far as its value is concerned. But it does not circulate at all as use value. Further, since it has a use value only for production, it can return for individual use, for consumption, also only in the form of circulating capital. Improvements of the soil can directly enter chemically into the reproduction process and in this way be directly transformed into use values. But then they are consumed in their form as fixed capital. A capital can bring revenue at all only in the form in which it enters into and returns from circulation, because the production of revenue in direct use values, use values not mediated through circulation, contradicts the nature of capital. Hence, since fixed capital returns as value only in the form of circulating capital, it can bring revenue only in this form. Revenue is nothing whatsoever other than the part of the surplus value destined for immediate consumption. Its returns thus depend on the mode of return of value itself. Hence the different forms in which fixed capital and circulating capital bring revenue. Likewise, since fixed capital as such never enters circulation as use value, hence is never thrown out of the realization process as use value, it never serves for immediate consumption.
Now as to Smith, his view becomes clearer for us when he says that circulating capital must be annually replaced and constantly renewed by constantly drawing it from the sea, the soil, and from mines. Here, then, circulating capital becomes purely material for him; it is fished out by the hairs, chipped out, harvested; they are the movable primary products which are released from their connection with the earth, isolated, made movable thereby, or separated from their element in their ready-made individuality, like fish etc. Still regarded as pure material, it is further certain that, if Smith presupposes the production of capital and does not suppose himself at the beginning of the world, then every circulating capital likewise comes originally from a fixed capital. Without nets he can catch no fish; without a plough, till no fields; and without a hammer, etc., drive no mines. If he uses even so little as a stone for a hammer etc., then this stone is certainly no circulating capital, no capital of any sort, but rather a means of labour. As soon as he has to produce, man possesses the resolve to use a part of the available natural objects directly as means of labour, and, as Hegel correctly said it, subsumes them under his activity without further process of mediation.  The place where all capital, circulating as well as fixed, not only originally but continually comes from is the appropriation of alien labour. But this process presupposes, as we have seen, a continuous small-scale circulation, the exchange of wages for labour capacity, or approvisionnement. Assuming the production process of capital: All capital returns only in the form of a circulating capital; hence fixed capital can be renewed only by a process in which a part of circulating capital becomes fixed; hence, by the employment of part of the raw materials produced, and a part of labour consumed (hence also a part of the approvisionnement exchanged for living labour) for the production of fixed capital. In agriculture, e.g., part of the product is consumed by labour to build irrigation systems or a part of the grain is exchanged for guano, chemical substances etc., which are incorporated into the earth, but also in fact have no use value except in so far as they are surrendered to the chemical process of the soil. A part of the circulating capital has a use value only for the reproduction of the fixed capital, and is produced (even if its production consisted only of the labour time spent in changing its location) only for fixed capital. But fixed capital itself can be renewed as capital only by becoming a value-component of circulating capital, and its elements are thus reproduced through the transformation of circulating capital into fixed capital. Fixed capital is as much a presupposition for the production of circulating capital as circulating capital is for the production of fixed capital. Or, the reproduction of fixed capital requires: (1) the return of its value in the form of a circulating capital, for only in this way can it in turn be exchanged for the conditions of its production; (2) that a part of living labour and of the raw material be used to produce instruments of production, direct or indirect ones, instead of producing exchangeable products. Circulating capital enters as use value into fixed capital, just as does labour, while fixed capital enters as value into circulating capital; and, as movement (where it is direct machinery), as static motion, as form, into the use value.
<In connection with our statements developed above, that pauperism latent in free labour, the following statements by Sir Fr. Morton Eden, Bt: The State of the Poor, or an History of the Labouring Classes in England from the Conquest etc., 3 vols., 4º, London, 1797. (The quotations from Vol. I, bk I.) (In book I, chapter I, it says: ‘Our zone requires labour for the satisfaction of needs, and therefore at least one part of society must always tirelessly labour; others labour in the arts etc., and some, who do not work, still have the products of diligence at their disposal. For this, these proprietors have only civilization and order to thank; they are purely the creatures of civilized institutions. For these have recognized that one can also obtain the fruits of labour through ways other than labour; the men of independent fortune owe their wealth almost entirely to the labour of others, not to their own ability, which is not at all better. What divides the rich from the poorer is not the ownership of land or of money, but rather the command of labour.’ Poverty as such begins with the tiller’s freedom – the feudal fetters to the soil, or at least the locality, had until then spared the legislature the task of occupying itself with the vagrants, poor etc. Eden believes that the various commercial guilds etc. also fed their own poor. He said: ‘Without the most distant idea, then, of disparaging the numberless benefits derived for the country from manufactures and commerce, the result of this investigation seems to lead to this inevitable conclusion that manufactures and commerce’ (i.e. the first sphere of production in which capital became predominant) ‘are the true parents of our national poor.’ In the same place: Beginning with Henry VII (where at the same time there began the clearing of the land of superfluous mouths through transformation of the tilled fields into pasture, continuing for more than 150 years, at least the litigation and legislative interference; hence the number of hands made available for industry grew), wages in industry were no longer fixed, only in agriculture. 11, Henry VII. (With free labour, wage labour is not yet completely posited. The labourers still have support in the feudal relations; their supply is still too small; capital hence still unable to reduce them to the minimum. Hence statutory determination of wages. So long as wages are still regulated by statute, it cannot yet be said either that capital has subsumed production under itself as capital, or that wage labour has attained the mode of existence adequate to it.) The act cited also mentions linen weavers, building craftsmen, shipwrights. The same act also fixes the hours of labour: ‘Because many day labourers waste half the day, arrive late, leave early, take a long afternoon nap, spend a long time at breakfast, lunch and dinner, etc. etc.,’ it ordains the following hours: ‘from 15 March to 15 September, from 5 a.m., 1/2 hour breakfast, 1 1/2 dinner and siesta, 1/2 hour for noon meal, and work until between 7 and 8 p.m. In winter, however, no siesta during daylight; this permitted only from 15 May to 15 August.’>
<Wages again regulated in 1514, almost like the previous time. Hours of work again fixed. Whoever will not work upon application, arrested. Hence still compulsory labour by free workers at the given wages. They must first be forced to work within the conditions posited by capital. The propertyless are more inclined to become vagabonds and robbers and beggars than workers. The last becomes normal only in the developed mode of capital’s production. In the prehistory of capital, state coercion to transform the propertyless into workers at conditions advantageous for capital, which are not yet here forced upon the workers by competition among one another.> (Very bloody means of coercion of this sort employed under Henry VIII et. al.) (Suppression of the monasteries under Henry VIII likewise frees many hands.) (Under Edward VI still sharper laws against able-bodied labourers who do not want to work. ‘1 Edw. VI, 3: Who is able to work, refuses to labour, and lives idle for 3 days, shall be branded with redhot iron on the breast with the letter V – and shall be adjudged the slave for two years of the person who should inform against such idler etc.’ ‘If he runs away from his master for 14 days he shall become his slave for life and be branded on forehead or cheek with letter S, and if he runs away a second time and shall be convicted thereof by two sufficient witnesses, he shall be taken as a felon and suffer pains of death.’ (1376 first mention of the vagrants, sturdy rogues, 1388 the paupers.) (Similar cruel statute 1572 under Elizabeth.) 
Circulating capital and fixed capital, which appeared earlier as changing forms of the same capital in the different phases of its turnover, are now, when fixed capital is developed to its highest form, posited at the same time as two different modes of the existence of capital. They become such through the difference in kind of their return. Circulating capital which returns slowly has a quality in common with fixed capital. But it distinguishes itself from it because its use value itself – its material presence – enters into circulation and is at the same time shed by it, thrown beyond the bounds of the turnover process; while fixed capital – to the extent that it has been developed at this point – enters into circulation only as value, and, as long as it is still in circulation as a use value, such as e.g. the machine in circulation, it is fixed capital only δυνάμει. However, this distinction between fixed capital and circulating capital, resting initially on the relation of the material presence of the capital, or of its presence as use value, towards circulation, must, with reproduction, be posited at the same time as the reproduction of the capital in the double form of fixed capital and circulating capital. In so far as the reproduction of capital in every form is the positing not only of objectified labour time, but rather of surplus labour time, not only reproduction of its value but of a surplus value, the production of fixed capital cannot therefore be different in this regard from the production of circulating capital. Hence, in the manufacture of instruments or machines – in all the forms where fixed capital appears first as circulating capital in its material presence, in its presence as use value before becoming fixed as fixed capital, i.e. before it is consumed, for it is precisely its consumption which binds it to the production phase and distinguishes it as fixed capital – there is no difference at all, as to the realization of capital, whether it reproduces itself in the form of fixed or of circulating capital. Hence no new economic determination enters here, either. But where fixed capital as such is thrown into circulation by its producer – and not as circulating capital – hence where its proportionate use is sold, either for production or for consumption – for in the transformation of C into M, which takes place in the first section of the circulation of capital, it is irrelevant to the latter whether the commodity in turn enters into the circulation sphere of another productive capital, or whether it serves the purpose of direct consumption; for the first capital, it is rather always determined as a use value whenever it ejects it from itself, exchanges it for M – there the mode of return must be different for the producer of fixed capital from that for the producer of circulating capital. The surplus value created by him can return only proportionately and successively with the value itself. This to be looked at in the next section. Finally, although circulating capital and fixed capital now appear as two different kinds, circulating capital is still posited through the consumption, the wear of fixed capital; while fixed capital, for its part, exists only as a circulating capital transformed into this specific form. All capital transformed into objectified productive power – all fixed capital – is a use value fixated in this form, and hence a use value snatched away from consumption as well as from circulation. The transformation of wood, iron, coal and living labour (hence also indirectly that of the products consumed by the worker) into the specific use values of a machine or a railway would not by itself turn them into fixed capital if the other determinants developed above were absent. When circulating capital is transformed into fixed capital, then a part of the use values in whose form capital circulated, as well as indirectly the part of the capital which exchanges for living labour, are transformed into capital whose counter-value is created only over a longer cycle; which enters into circulation as value only proportionately and successively; and which can be realized as value only through being used up in production. The transformation of circulating capital into fixed capital presupposes relative surplus capital, since it is capital employed not for direct production but rather for new means of production. Fixed capital itself can in turn serve as a direct instrument of production – as a means within the immediate production process. In this case its value enters into the product and is replaced by the successive return of the products. Or it does not enter into the immediate production process – appears rather as a general condition for production processes, such as buildings, railways etc., and its value can be replaced only through circulating capital, to whose creation it indirectly contributed. Questions of greater detail about the proportion in the production of fixed capital and circulating capital belong to the following section. If valuable machinery were employed to supply a small quantity of products, then it would not act as a force of production, but rather make the product infinitely more expensive than if the work had been done without machinery. It creates value not in so far as it has value – for the latter is simply replaced – but rather only in so far as it increases relative surplus time, or decreases necessary labour time. In the same proportion, then, as that in which its scope grows, the mass of products must increase, and the living labour employed relatively decrease. The less the value of the fixed capital in relation to its effectiveness, the more does it correspond to its purpose. All unnecessary fixed capital appears as faux frais de production, like all unnecessary circulation costs. If capital could possess the machinery without employing labour for the purpose, then it would raise the productive power of labour and diminish necessary labour without having to buy labour. The value of the fixed capital is therefore never an end in itself in the production of capital.
Circulating capital, then, is transformed into fixed capital, and fixed capital reproduces itself in circulating capital; both, only in so far as capital appropriates living labour.
‘Every saving in fixed capital is an increase in the net revenue of society.’ (A. Smith.) 
The final and last distinction cited by economists is that between movable and immovable; not in the sense that the former enters into the movement of circulation, the latter does not; rather in the sense that the former is physically fixed, immovable, in the same way as movable and immovable property is distinguished. For example, improvements sunk in the soil, aqueducts, buildings; and machinery itself in great part, since it must be physically fixed, to act; railways; in short, every form in which the product of industry is welded fast to the surface of the earth. This basically adds nothing to the determination of fixed capital; but it is indeed part of this character that it becomes fixed capital in a more eminent sense the more its use value, its material presence, corresponds to its specific economic form. The immovable use value, such as house, railway etc., is therefore the most tangible form of fixed capital. Of course, it can then still circulate in the same sense as immovable property generally – as title; but not as use value; it cannot circulate in the physical sense. Originally, the growth of movable property, its increase as against immovable, indicates the ascendant movement of capital as against landed property. But once the mode of production of capital is presupposed, the level to which it has conquered the conditions of production is indicated in the transformation of capital into immovable property. It thereby establishes its residence on the land itself, and the seemingly solid presuppositions given by nature, themselves [appear], in landed property, as merely posited by industry.
(Originally, life in the community and, through its mediation, the relationship to the earth as property, are basic presuppositions of the reproduction both of the individual and of the community. Among pastoral peoples, land and soil appear merely as precondition of the migratory life, hence appropriation does not take place. Fixed settlements with soil cultivation follow – thus landed property is initially held in common, and even where it advances to private property the individuals’ connection to it appears as posited by his relation to the community. It appears as a mere fief of the community; etc. etc. The transformation of the latter into mere exchangeable value – its mobilization – is the product of capital and of the complete subordination of the state organism to it. Land and soil, even where they have become private property, are therefore exchange value only in a restricted sense. Exchange value begins in the isolated natural product, separated from the earth and individualized through industry (or mere appropriation). Individual labour first arises here too. Exchange as such does not begin within the original communes, but on their boundaries, where they cease to be. Of course, to exchange the land, their residence, to pawn it to alien communes, would be treason. Exchange can expand only little by little from its original realm, movable property, to immovable property. Only through expansion of the former does it little by little gain control over the latter. Money is the chief agent in this process.)
A. Smith at first distinguishes circulating capital and fixed capital by their role in the production process. Only later does he adopt the expression: ‘One can gainfully lay out a capital in different ways, (1) as circulating capital, (2) as fixed capital.’  This second expression obviously does not belong to the examination of this distinction as such, since fixed capital and circulating capital first have to be presupposed as two kinds of capital before we can speak about how to lay out capital gainfully in both forms.
‘The total capital of each entrepreneur is necessarily divided into his fixed capital and his circulating capital. If the sum is equal, then the one becomes larger as the other diminishes.’ (A. Smith, tome II, p. 226.)
Since capitals are (1) divided into fixed and circulating capital in unequal portions; (2) [have] an interrupted or uninterrupted production phase and return from more distant or nearer markets, hence, unequal circulation time; it follows that the determination of the surplus value created in a given time, e.g. annually, must be unequal because the number of reproduction processes in the given period is unequal. The amount of value created appears determined not simply by the labour employed during the immediate production process, but by the degree to which this exploitation of labour can be repeated within a given period of time.
Finally, then: While, in the examination of the simple production process, capital appeared to realize itself as value only in connection with wage labour, and circulation lay alongside, without connection to it, here, in its reproduction process, circulation is included in it in both the moments of circulation, C–M–M–C (as a system of exchanges through which it must pass, and to which the same number of qualitative changes within it correspond). In so far as its form as money is the point of departure and hence of return, circulation appears included in it as M–C–C–M. It contains both circular courses, and not merely as either change of form or change of substance, but rather as both of them included within the determination of value itself. The production process, as containing within itself the conditions of its renewal, is a reproduction process whose speed is determined by various relations developed above, which all arise from differences of circulation. The reproduction of capital also contains the reproduction of the use values in which it is realized – or the constant renewal and reproduction by human labour of the use values which enter human consumption and are themselves perishable. The change of substance and of form subordinated to human need through human labour appears from the viewpoint of capital as its own reproduction. It is at bottom the constant reproduction of labour itself. ‘Capital values perpetuate themselves by reproduction: the products which compose a capital are consumed just like any others; but their value, at the same time as it is destroyed by consumption, is reproduced in other materials or in the same one.’ (Say, 14.)  Exchange and a system of exchanges, and, included in that, the transformation into money as independent value, appears as condition and barrier for the reproduction of capital. With capital, production itself is on all sides subordinate to exchange. These exchange operations, circulation as such, produce no surplus value, but are conditions for its realization. They are conditions of the production of capital itself, in so far as its form as capital is posited only to the extent that it passes through them. The reproduction of capital is at the same time the production of specific formal conditions; of specific modes of relationship in which personified objectified labour is posited. Circulation is thus not merely the exchange of the product for the conditions of production – i.e. of produced wheat, e.g., for seed, new labour etc. The worker must exchange his product for the conditions of production, so as to begin anew, in every form of production. The peasant producing for immediate consumption also transforms part of the product into seed, instrument of labour, beasts of burden, fertilizer etc., and begins his labour anew. The transformation into money is necessary for the reproduction of capital as such, and its reproduction is necessarily the production of surplus value. * Although labour must merely maintain the value of what we earlier called constant capital in one production process, it must constantly reproduce it in another, since what appears as presupposition of material and instrument in one production process is product in the other, and this renewal, reproduction, must constantly proceed simultaneously.
* In regard to the reproduction phase (especially circulation time), note that use value itself places limits upon it. Wheat must be reproduced in a year. Perishable things like milk etc. must be reproduced more often. Meat on the hoof does not need to be reproduced quite so often, since the animal is alive and hence resists time; but slaughtered meat on the market has to be reproduced in the form of money in the very short term, or it rots. The reproduction of value and of use value partly coincide, partly not.