The new sociological method which Marx introduced into political economy applies a consistent distinction between productive forces and production relations, between the material process of production and its social form, between the process of labor and the process of value formation. Political economy deals with human working activity, not from the standpoint of its technical methods and instruments of labor, but from the standpoint of its social form. It deals with production relations which are established among people in the process of production. But since in the commodity-capitalist society people are connected by production relations through the transfer of things, the production relations among people acquire a material character. This "materialization" takes place because the thing through which people enter definite relations with each other plays a particular social role, connecting people - the role of "intermediary" or "bearer" of the given production relation. In addition to existing materially or technically as a concrete consumer good or means of production, the thing seems to acquire a social or functional existence, i.e., a particular social character through which the given production relation is expressed, and which gives things a particular social form. Thus the basic notions or categories of political economy express the basic social-economic forms which characterize various types of production relations among people and which are held together by the things through which these relations among people are established.
In his approach to the study of the "economic structure of society" or "the sum total of the relations of production" among people, Marx  separated particular forms and types of production  Marx analyzed these relations among people in a capitalist society types of production relations in the following sequence. Some of these relations among people presuppose the existence of other types of production relations among the members of a given society, and the latter relations do not necessarily presuppose the existence of the former: thus the former assume the latter. For example, the relation between financial capitalist C and industrial capitalist B consists of B's receiving a loan from C; this relation already presupposes the existence of production relations between industrial capitalist B and laborer A, or more exactly, with many laborers. On the other hand, the relations between the industrial capitalist and the laborers do not necessarily presuppose that capitalist B had to borrow money from the financial capitalist. Thus it is clear that the economic categories "capital" and "surplus value" precede the categories "interest-bearing capital" and "interest." Furthermore, the relation between the industrial capitalist and the workers has the form of purchase and sale of labor-power, and in addition presupposes that the capitalist produces goods for sale, i.e., that he is connected with other members of society by the production relations of commodity owners with each other. On the other hand, relations among the commodity owners do not necessarily presuppose a production bond between the industrial capitalist and the workers. From this it is clear that the categories "commodity" and "value" precede the category "capital." The logical order of the economic categories follows from the character of the production relations which are expressed by the categories. Marx's economic system analyzes a series of production relations of increasingly complex types. These production relations are expressed in a series of social forms of increasing complexity - these being the social forms acquired by things. This connection between a given type of production relation among people and the corresponding social function, or form, of things, can be traced in all economic categories.
The basic social relation among people as commodity-producers who exchange the products of their labor gives to the products the special property of exchangeability, which then seems to be a natural property of the products: the special "form of value." Regular exchange relations among people, in the context of which the social activity of commodity owners has singled out a commodity (for example gold) to serve as a general equivalent which can be directly exchanged for any other commodity, give this commodity the particular function of money, or the "money form." This money form, in turn, carries out several functions, or forms, depending on the character of the production relation among buyers and sellers.
If the transfer of goods from the seller to the buyer and the inverse transfer of money are carried out simultaneously, then money assumes the function, or has the form of a "medium of circulation." If the transfer of goods precedes the transfer of money, and the relation between the seller and the buyer is transformed into a relation between debtor and creditor, then money has to assume the function of a "means of payment." If the seller keeps the money which he received from his sale, postponing the moment when he enters a new production relation of purchase, the money acquires the function or form of a "hoard." Every social function or form of money expresses a different character or type of production relation among the participants in exchange.
With the emergence of a new type of production relation - namely a capitalistic relation which connects a commodity owner (a capitalist) with a commodity owner (a worker), and which is established through the transfer of money - the money acquires a new social function or form: it becomes "capital." More exactly, the money which directly connects the capitalist with the workers plays the role, or has the form, of "variable capital." But to establish production relations with the workers, the capitalist must possess means of production or money with which to buy them. These means of production or money which serve indirectly to establish a production relation between the capitalist and the workers has the function or form of "constant capital." To the extent that we consider production relations between the class of capitalists and the class of laborers in the process of production, we are considering "productive capital" or "capital in the stage of production." But before the process of production began, the capitalist appeared on the market as a buyer of means of production and labor power. These production relations between the capitalist as buyer and other commodity owners correspond to the function, or form, of "money capital." At the end of the production process the capitalist appears as a seller of his goods, which acquires an expression in the function, or form of, "commodity capital." In this way the metamorphosis or "transformation of the form" of capital reflects different forms of production relations among people.
But this still does not exhaust the production relations which connect the industrial capitalist with other members of society. In first place, industrial capitalists of one branch are connected with the industrial capitalists of all other branches through the competition of capital and its transfer from one branch to another. This relation is expressed in the formation of "the general average rate of profit," and the sale of goods at "prices of production." In addition, the class of capitalists is itself subdivided into several social groups or subclasses: industrial, commercial and money (financial) capitalists. Besides these groups, there is still a class of landowners. Production relations among these different social groups create new social and economic "forms": commercial capital and commercial profit, interest-bearing capital and interest, and ground-rent. "Stepping beyond its inner organic life, so to say, it [capital] enters into relations with outer life, into relations in which it is not capital and labor which confront one another, but capital and capital in one case, and individuals, again simply as buyers and sellers, in the other" (C., III, p. 44).  The subject here is the different types of production relations, and particularly production relations: 1) between capitalists and workers; 2) between capitalists and the members of society who appear as buyers and sellers; 3) among particular groups of industrial capitalists and between industrial capitalists as a group and other groups of capitalists (commercial and financial capitalists). The first type of production relation, which is the basis of capitalist society, is examined by Marx in Volume I of Capital, the second type in Volume II, and the third in Volume III. The basic production relations of commodity society, the relations among people as commodity-producers, are examined by Marx in A Contribution to the Critique of Political Economy, and are reexamined in Part I of the first volume of Capital, which has the heading "Commodities and Money" and which can be treated as an introduction to Marx's system (in the first draft Marx intended to call this part: "Introduction. Commodities, Money." See Theorien uber den Mehrwert, 1910, Vol. III, p. VIII). Marx's system examines various types of production relations of increasing complexity as well as the increasingly complex corresponding economic forms of things.
The basic categories of political economy thus express various types of production relations which assume the form of things. "In reality, value, in itself, is only a material expression for a relation between the productive activities of people" (Theorien uber den Mehrwert, III, p. 218). "When, therefore, Galiani says: Value is a relation between persons - 'La Ricchezza e una ragione tra due persone' - he ought to have added: a relation between persons expressed as a relation between things" (C., I, p. 74). "To it [monetary system] gold and silver, when serving as money, did not represent a social relation between producers" (C., I, p. 82). "Capital is a social relation of production. It is a historical production relation."  Capital is "a social relation expressed (darstellt) in things and through things" (Theorien uber den Mehrwert, III, p. 325). "Capital is not a thing, but rather a definite social production relation, belonging to a definite historical formation of society, which is manifested in a thing and lends this thing a specific social character" (C., III, p. 814). 
Marx explained his conception of economic categories as the expression of production relations among people in greatest detail when he dealt with the categories value, money and capital. But he more than once pointed out that other notions of political economy express production relations among people. Surplus value represents "a definite historical form of social process of production" (C., III, p. 816). Rent is a social relation taken as a thing (C., III, p. 815). "Supply and demand are neither more nor less relations of a given production than are individual exchanges."  Division of labor, credit, are relations of bourgeois production (Ibid., pp. 126-145). Or as Marx stated in a general form, "economic categories are only the theoretical expressions, the abstractions of the social relations of production (Ibid., p. 109).
Thus the basic concepts of political economy express different production relations among people in capitalist society. But since these production relations connect people only through things, the things perform a particular social function and acquire a particular social form which corresponds to the given type of production relation. If we said earlier that economic categories express production relations among people, acquiring a "material" character, we can also say that they express social functions, or social forms, which are acquired by things as intermediaries in social relations among people. We will begin our analysis with the social function of things.
Marx often spoke of the functions of things, functions which correspond to the different production relations among people. In the expression of value one commodity "serves as an equivalent" (C., I, p. 48 and p. 70). "The function of money" represents a series of different functions: "Function as a measure of value" (Ibid., p. 117), "function as a medium of circulation" or "function as coin" (Ibid., p. 117 and p. 126), "function as means of payment" (Ibid., pp. 127, 136, 139), "function of hoards" (p. 144) and "the function of money of the world" (p.144). The different production relations between buyers and sellers correspond to different functions of money. Capital is also a specific social function: "...the property of being capital is not inherent in things as such and in any case, but is a function with which they may or may not be invested, according to circumstances" (C., II, p. 207). In money capital, Marx carefully differentiated the "money function" from the "capital function" (C., II, pp. 36, 79). The subject here, obviously, is the social function which capital performs, connecting different social classes and their representatives, capitalists and wage workers; the subject clearly is not the technical function which the means of production perform in the material production process. If capital is a social function then, as Marx says, "its subdivision is justified and relevant." Variable and constant capital differ in terms of the different functions which they perform in the "process of expanding" capital (C., I, pp. 208-209); variable capital directly connects the capitalist with the worker and transfers the labor-power of the worker to the capitalist; constant capital serves the same purpose indirectly. A "functional difference" exists between them (C., I, p. 210). The same is true of the division into fixed and circulating capital. "It is not a question here of definitions [of fixed and circulating capital - I.R.] which things must be made to fit. We are dealing here with definite functions which must be expressed in definite categories (C., II, p. 230; emphasis added). This distinction between the functions of fixed and circulating capital refers to different methods of transferring the value of capital to the product, i.e., to the fuller partial restoration of the value of capital during one turnover period (Ibid., pp. 167-168). This distinction between social functions in the process of transferring value (i.e., in the process of circulation) is often confused by economists with a distinction between technical functions in the process of material production, namely with a distinction between the gradual wear and tear of the instruments of labor and the total consumption of raw materials and accessories. In the second part of Volume II of Capital, Marx devoted a great deal of energy to showing that the categories of fixed and circulating capital express precisely the above-mentioned social functions of transferring value. These functions are, in fact, related to particular technical functions of means of production, but they do not coincide with them. Not only do different parts of productive capital (constant and variable, fixed and circulating) differ from each other by their functions, but the division of capital into productive, money and commodity capital, is also based on differences in function. The "functions of commodity and commercial capital" are distinguished from the "functions of productive capital" (C., II, pp. 127, 79; C, III, p. 269, and elsewhere).
Thus different categories of political economy describe different social functions of things, corresponding to different production relations among people. But the social function which is realized through a thing gives this thing a particular social character, a determined social form, a "determination of form" (Formbestimmtheit),  as Marx frequently wrote. A specific social function or "economic form" of things corresponds to each type of production relations among people. Marx more than once pointed out the close relationship between the function and the form. "The coat officiates as equivalent, or appears in equivalent form" (C., I, p. 48). "This specific function in the process of circulation gives money, as a medium of circulation, a new determination of form" (Kritik der Politischen Oekonomie, p. 92). If the social function of a thing gives the thing a specific social-economic form, then it is clear that the basic categories of political economy (which we considered above as expressions of different production relations and social functions of things) serve as expressions of social-economic forms which correspond to things. These forms give things their function as "bearers" of the production relations among people. Most often Marx called the economic phenomena which he analyzed, "economic forms," "definitions of forms." Marx's system examines a series of increasingly complex "economic forms" of things or "definitions of forms"(Formbestimmtheiten) which correspond to a series of increasingly complex production relations among people. In the Preface to the first edition of the first volume of Capital, Marx pointed out the difficulties of "analyzing economic forms," particularly "the form of value" and "the money form." The form of value, in turn, includes various forms: on one hand, every expression of value contains a "relative form" and an "equivalent form," and on the other hand, the historical development of value is expressed in the increasing complexity of its forms: from an "elementary form" through an "expanded form," value passes to a "general form" and a "money form." The formation of money is a "new definition of form" (Kritik der Politischen Oekonomie, p. 28). Different functions of money are at the same time different "definitions of form" (Ibid., p. 46). Thus, for example, money as a measure of value and as a standard of price are "different definitions of form," the confusion of which has led to erroneous theories (Ibid, p. 54).  "The particular functions of money which it performs, either as the mere equivalent of commodities, or as means of circulation, or means of payment, as hoard or as universal money, point, according to the extent and relative preponderance of the one function or the other, to very different stages in the process of social production" (C., I, p. 170; emphasis added). What is emphasized here is the close connection between the forms (functions) of money and the development of production relations among people.
The transition of money into capital indicates the emergence of a new economic form. "Capital is a social form which is acquired by means of reproduction when they are used by wage labor" (Theorien uber den Mehrwert, Vol III, p. 383), a particular "social determination" (Ibid., p. 547). Wage labor is also "a social determination of labor" (Ibid., p. 563), i.e., a determined social form of labor. The component parts of productive capital (constant and variable, fixed and circulating, examined in terms of the differences of their functions, also represent different forms of capital (C., II, pp. 167-168, and elsewhere). Fixed capital represents a "determination of form" (C., II, p. 169). In the same way, money, productive capital, and commodity capital are different forms of capital (C., II, p. 50). A particular social function corresponds to each of these forms. Money and commodity capital are "special, differentiated forms, modes of existence corresponding to special functions of industrial capital" (C., II, p. 83). Capital passes "from one functional form to another, so that the industrial capital. . . exists simultaneously in its various phases and functions" (Ibid., p. 106). If these functions become independent from each other and are carried out by the separate capitals, then these capitals take on independent forms of commodity-commercial capital and money commercial capital "through the fact that the definite forms and functions which capital assumes for the moment appear as independent forms and functions of a separate portion of the capital and are exclusively bound up with it" (C., III p. 323).
Thus economic categories express different production relations among people and the social functions which correspond to them, or the social-economic forms of things. These functions or forms have a social character because they are inherent, not in things as such, but in things which are parts of a definite social environment, namely things through which people enter into certain production relations with each other. These forms do not reflect the properties of things but the properties of the social environment. Sometimes Marx simply spoke of "form" or "determination of form," but what he meant was precisely "economic form," "social form," "historical-social form," "social determination of form," "economic determination of form," "historical-social determination" (See, for example, C., I, p. 146, 147, 149; C., III, p. 816, 830; Kapital, Vol. III, Book II, pp. 351, 358, 360, 366; Theorien uber den Mehrwert, Vol. III, pp. 484-485, 547, 563; Kritik der Politischen Oekonomie, p. 20, and elsewhere). Sometimes Marx also says that the thing acquires a "social existence," "formal existence" (Formdasein), "functional existence," "ideal existence." (Cf, C., I, pp. 125, 129; Theorien uber den Mehrwert, Vol. III, pp. 314, 349; Kritik der Politischen Oekonomie, p. 28, 101, 100, 94.) This social or functional existence of things is opposed to their "material existence," "actual existence," "direct existence," "objective existence" (C., I, p 129; Kritik der Politischen Oekonomie, p. 102; Kapital, Vol. III, Book II, pp. 359, 360, and Vol. III, Book I, p. 19; Theorien uber den Mehrwert, Vol. III, p. 193, 292, 320, 434). In the same way the social form or function is opposed to the "material content," "material substance," "content," "substance," "elements of production," material and objective elements and conditions of production (C., I, p. 36, 126, 146, 147, 149; C., III, pp 824-5; Kritik der Politischen Oekonomie, pp. 100-104, 121; Theorien uber den Mehrwert, Vol. III, p. 315, 316, 318, 326, 329, 424, and elsewhere).  All these expressions which distinguish between the technical and social functions of things, between the technical role of instruments and conditions of labor and their social form, can be reduced to the basic difference which we formulated earlier. We are dealing with the basic distinction between the material process of production and its social forms, with two different aspects (technical and social) of the unified process of human working activity. Political economy deals with the production relations among people, i.e., with the social forms of the process of production, as opposed to its material-technical aspects.
Does this not mean that Marx's economic theory isolated the production relations among people from the development of productive forces when he analyzed the social form of production in isolation from its material-technical side? No at all. Every social-economic form analyzed by Marx presupposes, as given, a determined stage of the material-technical process of production. The development of the forms of value and money presupposes, as we have seen, constant "exchange of matter" (Stoffwechsel), the passage of material things. Value presupposes use value. The process of the formation of value presupposes the process of producing use values. Abstract labor presupposes a totality of different kinds of concrete labor applied in different branches of production. Socially necessary labor presupposes a different productivity of labor in various enterprises of the same branch. Surplus value presupposes a given level of development of productive forces. Capital and wage labor presuppose a social form of technical factors of production: material and personal. After the capitalist's purchase of labor power, the same difference between material and personal factors of production acquires the form of constant and variable capital. The relation between constant and variable capital, i.e., the organic composition of capital, is based on a certain technical structure. Another division of capital, into fixed and circulating, also presupposes a technical difference between the gradual wear and tear of instruments of labor and the complete consumption of the objects of labor and of labor power. The metamorphoses, or changes, of form of capital are based on the fact that productive capital directly organizes the material process of production. Money or commodity capital are more indirectly related to the material process of production, because directly they represent the stage of exchange. Thus on the one hand there is a difference between enterprise profit, commercial profit and interest, and on the other hand between productive and unproductive labor (employed in trade). The reproduction of capital presupposes the reproduction of its material component parts. The formation of a general average profit rate presupposes different technical and organic compositions of capital in individual industrial branches. Absolute rent presupposes a difference between industry, on the one hand, and agriculture on the other. Different levels of productivity of labor in different agricultural enterprises and extractive industries, caused by differences in fertility and location of plots, is expressed in the form of differential rent.
Thus we see that production relations among people develop on the basis of a certain state of productive forces. Economic categories presuppose certain technical conditions. But in political economy, technical conditions do not appear as conditions for the process of production treated from its technical aspects, but only as presuppositions of the determined social-economic forms which the production process assumes. The productive process appears in a given social-economic form, namely in the form of commodity-capitalist economy. Political economy treats precisely this form of economy and the totality of production relations which are proper to it. Marx's renowned theory according to which use value is the presupposition and not the source of exchange value must be formulated in a generalized way: Political economy deals with "economic forms," types of production relations among people in capitalist society. This society presupposes given conditions of the material process of production and of the technical factors which are its components. But Marx always protested against the transformation of the conditions of the material process of production from presuppositions of political economy into its subject matter. He rejected theories which derived value from use value, money from the technical properties of gold, and capital from the technical productivity of means of production. Economic categories, (or social forms of things) are of course very closely related to the material process of production, but they cannot be derived from it directly, but only by means of an indirect link: the production relations among people. Even in categories where technical and economic aspects are closely related and almost cover each other, Marx very skillfully distinguished one from another by considering the former as the presupposition of the latter. For example, the technical development of personal and material factors of production is a presupposition or basis on which the "functional," "formal" or social-economic distinction between variable and constant capital develops. But Marx decidedly refused to draw a distinction between them on the basis of the fact that they serve "as payment for a materially different element of production" (C., III, p. 32). For him this difference lay in their functionally different roles in the process of "the expansion of capital" (Ibid). The difference between fixed and circulating capital lies in the different ways that their value is transferred to products, and not in how fast they wear out physically. The latter distinction gives a material basis, a presupposition, a "point of departure" for the former, but not the distinction we are looking for, which has an economic and not a technical character (C., II, p. 201, Theorien uber den Mehrwert, Vol. III, p. 558). To accept this technical presupposition as our subject matter would mean that the analysis would be similar to that of vulgar economists whom Marx charged with "crudity" of analytical method because they were interested in "distinctions of form" and considered them "only from their substantive side" (C., III, p. 323).
Marx's economic theory deals precisely with the "differences in form" (social-economic forms, production relations) which actually develop on the basis of certain material-technical conditions, but which must not be confused with them. It is precisely this that represents the completely new methodological formulation of economic problems which is Marx's great service and distinguishes his work from that of his predecessors, the Classical Economists. The attention of Classical Economists was directed to discovering the material-technical basis of social forms which they took as given and not subject to further analysis. It was Marx's goal to discover the laws of the origin and development of the social forms assumed by the material-technical production process at a given level of development of productive forces.
This extremely profound difference in analytical method between the Classical Economists and Marx reflects different and necessary stages of development of economic thought. Scientific analysis "begins with the results of the process of development ready to hand" (C., I, p. 75), with the numerous social-economic forms of things which the analyst finds already established and fixed in his surrounding reality (value, money, capital, wages, etc.). These forms "have already acquired the stability of natural, self - understood forms of social life, before man seeks to decipher, not their historical character, for in his eyes they are immutable, but their meaning." (Ibid., emphasis added.) In order to discover the content of these social forms, the Classical Economists reduced complex forms to simple (abstract) forms in their analyses, and in this way they finally arrived at the material-technical bases of the process of production. By means of such analysis they discovered labor in value, means of production in capital, means of workers' subsistence in wages, surplus product (which is brought about by increased productivity of labor) in profit. Starting with given social forms and taking them for eternal and natural forms of the process of production, they did not ask themselves how these forms had originated. For Classical Political Economy, "the genetic development of different forms is not a concern. It [Classical Political Economy] only wants to reduce them to their unity by means of analysis, since it starts with them as given assumptions" (Theorien uber den Mehrwert, Vol. III, p. 572). Afterwards, when the given social-economic forms are finally reduced to their material-technical content, the Classical Economists consider their task complete. But precisely where they stop their analysis is where Marx continues. Since he was not restricted by the horizon of the capitalist economy, and since he saw it as only one of past and possible social forms of economy, Marx asked: why does the material-technical content of the labor process at a given level of development of productive forces assume a particular, given social form? Marx's methodological formulation of the problem runs approximately as follows: why does labor assume the form of value, means of production the form of capital, means of workers' subsistence the form of wages, increased productivity of labor the form of increased surplus value? His attention was directed to the analysis of social forms of economy and the laws of their origin and development, and to "the process of development of forms (Gestaltungsprozess) in their various phases" (Ibid.). This genetic (or dialectical) method, which contains analysis and synthesis, was contrasted by Marx with the one-sided analytical method of the Classical Economists. The uniqueness of Marx's analytical method does not consist only of its historical, but also of its sociological character, of the intense attention which it paid to social forms of economy. Starting with the social forms as given, the Classical Economists tried to reduce complex forms to simpler forms by means of analysis in order finally to discover their material-technical basis or content. However, Marx, starting from a given condition of the material process of production, from a given level of productive forces, tried to explain the origin and character of social forms which are assumed by the material process of production. He started with simple forms and, by means of the genetic or dialectical method, he went on to increasingly complex forms. This is why, as we said earlier, Marx's dominant interest is in "economic forms," in "determinations of forms" (Formbestimmtheiten).
 Marx, "Preface" to A Contribution to the Critique of Political Economy, Chicago: Kerr and Co., 1904.
 We have in mind various forms or types of production relations among people in a capitalist society, and not various types of production relations which characterize different types of social formations.
 Emphasis added.
 K. Marx, Wage Labour and Capital, in Marx and Engels, Selected Works, Moscow: Foreign Languages Publishing House, 1962. In this edition, the passage cited above is translated: "Capital, also, is a social relation of production. It is a bourgeois production relation, a production relation of bourgeois society," p. 90.
 Marx most often said that a production relation "is represented" (sich darstellt) in a thing, and a thing "represents" (darstellt) a production relation.
 K. Marx, The Poverty of Philosophy, New York: International Publishers, 1963, p. 43.
 The concept of Formbestimmtheit or Formbestimmung plays a large role in Marx' system. The system is concerned above all with the analysis of social forms of economy, namely production relations among people. Instead of Formbestimmrheit, Marx often said Bestimmrheit. V. Bazarov and I. Stepanov sometimes very correctly translate the latter term with the word "form" (Cf. Kapital, Vol. III, Book II, pp. 365-366, and the Russian translation, p. 359). It is completely impermissible to translate "Bestimmtheit" with the word "nomination" ("naznachenie"), as is often done by P. Rumyantsev (Kritik der Politischen Oekonomie, p. 10, and the Russian translation, p. 40). The translation "formal determination" ("formal'noe opredelenie") also misses Marx's point. (Nakoplenie kapitali i krizisy, The Accumulation of Capital and Crises, by S. Bessonova.) We prefer a precise translation: "determination of form" or "definition of form."
 Translated as "distinct forms of expression" in the English edition of the Critique, 1904, p. 81. (tr.)
 It must be pointed out that sometimes Marx uses the terms "function" and "form" in a material-technical sense, the first term very often, the second more rarely. This creates a terminological inconvenience, but in essence this does not prevent Marx from making clear distinctions between the two senses of these terms, except for some passages which are unclear and contradictory (for example, in Volume II, part II of Capital). On the other hand, the terms "substance" and "content" are used by Marx not only to refer to the material process of production, but also to its social forms.