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Marx seeks to explain how the circulation of commodities and money leads to capital. To explain the start of the process, he writes out the formula showing money buying commodities in order to sell for more money (M-C-M) (247-48). Even more simply, for Marx, this process represents an exchange of money for more money. Marx describes this process, of money returning to the seller of the commodity, as a “reflux of money” (250). An example of this is if someone buys cotton for 100 pounds and resells it for 110 pounds (248, 251). It is the person who engages in the M-C-M form of exchange that Marx describes as a “capitalist” (254). This treatment of money is described by Marx as “self-valorization” (255). It is because money becomes more valuable basically independently of its relationship to any other commodity. Marx summarizes this process as “[b]uying in order to sell, or, more accurately, buying in order to sell dearer” (256).
Marx opens this chapter by stating, “The form of circulation within which money is transformed into capital contradicts all the previously developed laws bearing on the nature of commodities, value, money and even circulation itself” (258). Marx gives the example of a farmer of corn and a vintner. In a C-M-C exchange, both the farmer and the vintner gain something from the exchange. With capital, there is “no increase of exchange-value” (249), just an increase in monetary value. Marx terms this “surplus-value” (263). He argues it results from when someone “parasitically inserts himself” between the producer and the buyer (267), allowing the capitalist to withdraw more value from the circulation of commodities than was originally put into it.
Next, Marx describes the purchasing of “labour-power” (270), the physical and mental work a human being is capable of, by buyers. People who give their labor power to an employer have to treat it like a commodity for sale. At the same time, people “must rather be compelled” to sell their labor power (272). People’s need for things like food compels them to do so. The alternative is to sell commodities themselves, but these people lack the “means of production” like tools and “raw materials” (272). As a result, the worker is forced to “alienate” themselves from their own labor (271).
Marx does not view this arrangement as natural. Instead, it is “the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older formations of social production” (273). Like material commodities, Marx suggests labor time determines the value of labor power. In addition, the value of labor power also includes what workers need to support and educate themselves and their children. It is, however, an uneven arrangement. Since the worker is usually only paid a wage after they have given up their labor power, “[e]verywhere the worker allows credit to the capitalist” (278).
Two core concepts in Marx’s analysis that are introduced here are the means of production and the alienation of the worker. Marx asserts that the relationship between a worker and their employer, or “capitalist” (254), is completely lopsided. This is because the capitalist controls the “means of production” (272). In Capital, Marx never offers a precise definition of the phrase “means of production.” However, throughout the text, it is used to refer to a variety of things that the worker uses during their work shift: mainly tools, machines, and raw materials but also the building, the workspace, and any food and drink that might be provided by the employer. The important point is that all of these things that the worker needs to perform their tasks are owned completely by the capitalist. For the most part (but not always), when Marx discusses the means of production, he is describing factory or workshop workers.
However, one could apply means of production more broadly to other professions as well. For example, a college professor does not own the lecture hall, their office computer, or the resources to advertise the courses they teach. In certain cases, the university may also have a claim to some of their intellectual property on the basis that the professor used their labs and other scientific and technological resources. This contradiction between what a worker produces or what services they provide and the actual value given to that work is part of Marx’s understanding of The Contradictions of Capitalism.
The second concept is the “alienation […] of labour-power” (277). The alienation takes several forms. First, it comes from the worker not being able to control the means of production to make their own commodities. For example, a worker at a deli may make sandwiches for sale to customers, but they may not be allowed to eat the food they produce themselves without paying a full or a discounted price for it; oftentimes, a worker may not be able to buy a single sandwich from one hour’s pay, while in that hour they may create dozens of sandwiches they are forbidden from eating. Another example of alienation would be that a worker who helps make cars may not be able to afford one of the cars they help produce themselves.
Second, because money can obscure the value of other commodities in relation to The Labor Theory of Value, money is “the absolutely alienable commodity, the other way is that the worker is not usually paid immediately for their labor, because it is all other commodities divested of their shape” (205). Finally, wages are instead paid at the end of a set period, such as a week or a month. As Marx describes the situation, “Everywhere the worker gives credit to the capitalist” (278). These factors all prevent workers from producing their own commodities to make enough of a profit to provide their own means of subsistence, forcing them to rely on the social arrangements created by capitalists. They also obscure the real value of the workers’ labor and set the situation of compensating workers to the advantage of the capitalist.
Marx also begins to define the role of a capitalist. Essentially, the capitalist is a middleman who places themselves between the exchange of commodities that takes place with the producer and the buyer. By playing the role of middleman, the capitalist is able to extract additional value from the C-M-Cexchange and create capital. This is the “contradiction” Marx refers to (231), where somehow “money […] is exchanged for more money” (267). Marx elaborates on this concept later as he discusses surplus value more at length. Here, Marx just notes that it is this process of generating additional value out of a C-M-C exchange that defines a capitalist (254-55).
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