This section is quite short, containing only three chapters with zero sub-chapters and is also relatively simple to follow. Really a lot of it is setting up the whole idea of labour-power as a commodity that’ll be applied more extensively through the rest of the book. Anyways, it’s quite a simple section for a change.
Part II: The Transformation of Money into Capital
Chapter IV: The General Formula for Capital
‘This ultimate product of the commodity circulation [money], is the first form of appearance of capital’ (p. 247). Capital first confronts us in the form pf money, or monetary wealth. The M-C-M form, being in order to sell, is what makes money into capital. The M-C-M form is different from C-M-C, in one the money is displaced twice, in other, the commodity is. In M-C-M, the ‘reflux of the money is conditioned by the very manner in which ti is expended’ (p. 250).
More money therefore is drawn out from circulation than thrown into it at the beginning, which Marx calls ‘surplus-value. Since this buying in order to sell is an end in itself, it has no limits, then, ‘the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which money starts, and to which it returns’ (p. 254). The valorisation of value is his concern. Value now appears to be a self-moving substance that passes through. Processor on its own. It enters into a relationship with itself, and creates the ‘general formula for capital, in the form in which it appears directly in the sphere of circulation’ (p. 257)
Chapter V: Contradictions in the General Formula
Just because the order of the transaction is inverted does not mean we are now outside the sphere of simple circulation. We must see how this simple circulation allows us to valorise the values that enter into it and forms surplus-value. But ‘all that happens in exchange…is a metamorphosis, a mere change in the form of the commodity’ (p. 260), which does not imply any change in the magnitude of value itself. Of course, you can sell higher than the actual value of the product, but this goes against the laws that govern the exchange of commodities.
Condillac talks about how in capitalism, each producer produces their own means of subsistence then throws into circulation what is excessive for his own requirements. But again, you don’t pay for both the use-value and then the exchange-value of the commodities. So what if there must be a class of buyers who do not sell, who keeps the economy stable? But this still makes little sense, since they are still making purchases with the money, and they must get their value from somewhere before providing surplus-value.
So what if everyone just sold their products at 10% above their value? Then, ‘the money-names or prices of the commodities would rise, but the relations between their values would remain unchanged’ (p. 253). If you sell a product at 10% higher and buy at 10% higher, then you have gained nothing. This all shows that circulation creates no value. But that being said, a capitalist cannot valorise his value without coming into contact with other commodity owners, meaning surplus-value must come out from circulation and also not out of circulation. How can this happen?
Chapter VI: The Sale and Purchase of Labour-Power
The change in the value can therefore come only from the actual use-value of the commodity, in its consumption. So where can there be a commodity whose use-value can be a source of value? This is labour-power, the ‘capabilities which [a human] sets in motion whenever he produces a use-value of any kind’ (p. 270). This implies that the seller of labour-power must be free, and that they must sell it for a limited time only as to not become a slave. The seller must also be compelled to sell his labour-power instead of being able to sell any commodities. This relation, ‘has no basis in natural history…It is clearly the result of a past historical developments, the product of many economic revolutions…’ (p. 273).
How can then the commodity of labour-power’s value be determined? By the labour-time necessary for the reproduction of this specific article, or necessary to maintain the worker. The amount of products that he needs to sustain himself are also affected by climate and the physical features or the level of civilisation of his country as well. The value of labour-power then ‘can be resolved into the value of a definite quantity of the means of subsistence’ (p. 276). The price of labour-power is, therefore, fixed by the contract, and the money-owner then buys all the raw material necessary for the labourer. One now becomes a capitalist, the other his worker.