Question

On page 68, Marx states, “Capital cannot therefore arise from circulation, and it is equally impossible for it to arise apart from circulation. It must have its origin both in circulation and not in circulation… These are the conditions of the problems.”

Explain what Marx means.

Answer 1

Karl Marx in his book Capital examines the problem that arises from the process of exchange and circulation, in a capitalist producing economy. He explains how the capitalist acquire surplus through the general formula M-C-M'. According to Karl Marx, the extraction of surplus cannot arise simply from the process of exchange or circulation of commodities since commodities always exchange at value; based on the law of equivalent exchange. “Capital cannot therefore arise from circulation, and it is equally impossible for it to arise apart from circulation. It must have its origin both in circulation and not in circulation. The transformation of money into capital has to be developed on the basis of the immanent laws of the exchange of commodities, in such a way that the starting-point is the exchange of equivalents. The money-owner, who is as yet only a capitalist in larval form, must buy his commodities at their value, sell them at their value, and yet at the end of the process withdraw more value from circulation than he threw into it at the beginning. His emergence as a butterfly must, and yet must not, take place in the sphere of circulation. These are the conditions of the problem”. On the contrary, Karl Marx believed that surplus arises outside the circulation process. “Outside circulation, the commodity-owner stands in a relation to his own commodity… That the commodity contains a quantity of his own labour which is measured according to definite social laws”. Surplus value arises through the use of a commodity whose use creates value. More precisely, labour power.