There is a superb segment within Part 5 of Capital Volume 3 which provides provides an overview of how Marx conceived the different functioning parts of capital operating as a system. It also has tremendous relevance to our own form of capitalism where the realities of production seem to have been left behind, and we exist in a sort of dream state where money can seemingly generate a profit simply because of it’s inherent nature.
The passages are in chapters 30, 31, & 32 (from the Penguin Classics edition translated by David Fernbach) where Marx pulls together the various threads of production, circulation, and distribution to create something akin to an overall system view, drawing together threads from all three volumes of Capital.
Capitalist production rests on the creation of surplus value, which is generated during the production process by living labour power. This surplus value is appropriated by the capitalist and must then be sold in the market to realise both the capital invested at the start and the surplus value generated. True value is determined by the quantity of labour required to create the commodity. This is broadly the ground covered in Volume 1.
At this point capital moves into the circulation process which Marx divides into three fundamental and interlocking circuits, those of money capital, productive capital, and commodity capital. Set together these form what David Harvey compares to blood flowing around the body of capitalism.
In the money circuit, money capital is used to drive the production process and create commodities which are then converted back into money.
In the productive circuit the starting point is the pair of labour power and means of production. Used to create commodities which when converted into money can be used to buy more means of production and labour power to start the process again.
In the commodity circuit, stock converted into money and pushed through the productive process creates a larger stock of commodities.
These three interlock to create the whole circuit from money, to means of production and labour power, to commodities, and back into money again. At any given time any single business will have capital committed within each three of these circuits. Maintaining the flow around and between each circuit and through the whole system is vitally important. Capitalism is a fundamentally dynamic system, any pause in circulation is likely to precipitate a crisis.
Finance capitalism and credit lubricates this system. The complexity of the required flow, and the need for hoards of money to be available to bridge pauses, gaps, and disproportionality leads to the elaboration of a credit system to get around the need for money to be held in an unproductive hoard. This credit system also allows for money which does accumulate at rest to be recycled out elsewhere via the banks.
Credit therefore addresses one problem by keeping things moving, but does it by creating another. This is the financial system which allows those who have accumulated capital in the past to grab control over current production and for speculation and purely financial crises to appear which end up damaging accumulation. In other words as wealth accumulates and is distributed unevenly it creates significant imbalances.
It seems to me that in essence this is how modern western capitalism operates. The accumulated wealth of the past has allowed the west to act like a rentier maintaining a large financial system that appears to operate according to different rules disconnected from production. Marx’s analysis suggests that this cannot last forever. The fundamental importance of value production will reassert itself eventually and in the meantime this over-financialised system will be unstable.
To me this analysis of the circulation and distribution of capital from Volumes 2 and 3 bring Marx’s thinking on capitalism much closer to the modern world with rapid financial flows across an interconnected system.