Literature Study GuidesCapital Das KapitalVol 1 Part 2 Chapter 4 Summary

Capital (Das Kapital) | Study Guide

Karl Marx

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Capital (Das Kapital) | Vol. 1, Part 2, Chapter 4 : The Transformation of Money into Capital (The General Formula for Capital) | Summary

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Summary

Marx defines trade as "the production of commodities and their circulation in its developed form." Money is a form of capital and is transformed into capital through various processes. The process of C-M-C is the "direct form of circulation" of commodities, and illustrates how money is used in its simple form. Marx calls this "selling in order to buy." When money is in the form of capital, it is circulated as money-commodity-money, or M-C-Mʹ. (The latter money is higher than the original money input, as indicated by the prime symbol following the acronym.) This he calls "buying in order to sell." This second process essentially results in exchanging money for money. Marx gives an illustration in which a person buys something for a certain amount and then resells that thing for more. Money has been essentially exchanged for more money.

One of the important differences between the C-M-C process and M-C-Mʹ is that in C-M-C, consumption (of the commodity) is the end goal. In contrast, M-C-M' is driven by exchange-value. The accumulation and valorization of capital (i.e., the process of assigning value to it) is the goal of capitalism. When money is made from this M-C-M' process, Marx calls this extra money "surplus-value." The capitalist is constantly questing after this surplus-value, and "his aim is ... the unceasing movement of profit-making."

Analysis

In this chapter Marx first introduces the term capital, sets about defining it, and then uses this definition to lead the reader to the concept of the capitalist: "the conscious bearer of this movement, the possessor of money." The chapter focuses primarily on setting up the concept of capital, and thus the concept of capitalism, using the formula M-C-Mʹ to illustrate the economic process. His presentation of the two processes—C-M-C and M-C-Mʹ—through simple and visual formulae helps the reader understand the core difference between the two types of economy.

Capital in motion is a process of self-valorization, wherein value increases its own value. Marx explains this in relation to the circulation of money, stating, "the valorization of value takes place only within this constantly renewed movement." Because of this, he shows "the movement of capital is therefore limitless."

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