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CAPITAL



A CRITIQUE OF POLITICAL ECONOMY



BY KARL MARX



VOLUME II

THE PROCESS OF CIRCULATION OF CAPITAL



EDITED BY

FREDERICK ENGELS



TRANSLATED FROM THE SECOND GERMAN EDITION
BY ERNEST UNTERMANN



CHIC AQ O

CHARLES H. KERR & COMPANY
1933



Copyright, 1909
BY CHARLES H. KERR & COMPANY



M



VTA

Cff.A

CONTENTS.



Page

PREFACE .............................................................. 7

TRANSLATOR'S 1 NOTE ............................................... 30

THE CIRCULATION OF CAPITAL.
PART I.

THE METAMORPHOSES OF CAPITAL AND THEIR CYCLES

CHAPTER I. The Circulation of Money-Capital ........................ 31

Section I. First Stage M C ....................................... 32

Section II. Second Stage, Functions of Productive Capital ............ 41

Section III. Third Stage, C' M' .................................... 46

Section IV. The Rotation as a Whole ................................ 58

CHAPTER II. The Rotation of Productive Capital ........................ 72

Section I. Simple Reproduction .................................... 73

Section II. Accumulation and Reproduction on an Enlarged Scale ...... 89

Section III. Accumulation of Money ................................. 93

Section IV. Reserve Funds ......................................... 96

CHAPTER III. The Circulation of Commodity-Capital ................... 98

CHAPTER IV. The Three Diagrams of the Process of Circulation ......... 114

CHAPTER V. The Time of Circulation .................................. 138

CHAPTER VI. The Expenses of Circulation ............................ 147

Section I. Genuine Expenses of Circulation ........................... 147

1. The Time of Purchase and Sale ........................ 147

2. Bookkeeping ........................................ 151

3. Money .............................................. 153

Section II. Expenses of Storage ..................................... 154

1. General Formation of Supply .......................... 155

2. The Commodity-Supply in Particular ................ 162

Section III. Expenses of Transportation .............................. 169

PART II.

THE TURN-OVER OF CAPITAL

CHAPTER VII. The Period and Number of Turn-Overs .................. 173

CHAPTER VIII. Fixed Capital and Circulating Capital .................. 178

Section I. Distinctions of Form ..................................... 178

Section II. Composition, Reproduction, Repair, and Accumulation of

Fixed Capital ........................................ 192

CHAPTER IX. The Total Turn-Over of Advanced Capital, Cycles of

Turn-Over ........................................... 208

CHAPTER X. Theories of Fixed and Circulating Capital, The Physiocrats

and Adam Smith ...................................... 215

CHAPTER XI. Theories of Fixed and Circulating Capital, Ricardo ........ 245

CHAPTER XII. The Working Period .................................... 260

CHAPTER XIII. The Time of Production ............................... 272

CHAPTER XIV. The Time of Circulation .............................. 284

CHAPTER XV. Influence of the Time of Circulation on the Magnitude

of an Advance of Capital .............................. 294

Section I. The Working Period Equal to the Period of Circulation - - 305

Section II. The Working Period Greater than the Period of Circulation 310

Section III. The Working Period Smaller than the Period of Circulation 315

5



6 Contents

Page

Section IV. Conclusions 319

Section V. The Effect of a Change of Prices 326

CHAPTER XVI. The Turn-Over of the Variable Capital 336

Section I. The Annual Rate of Surplus- Value 336

Section II. The Turn-Over of the Individual Variable Capital 354

Section III. The Turn-Over of the Variable Capital Considered from

the Point of View of Society 359

CHAPTER XVII. The Circulation of Surplus Value 367

Section I. Simple Reproduction 373

Section II. Accumulation and Reproduction on an Enlarged Scale 397

PART III.

THE REPRODUCTION AND CIRCULATION OF THE AGGREGATE SOCIAL CAPITAL

CHAPTER XVIII. Introduction 404

Section I. The Object of the Analysis 404

Section II. The Role of Money-Capital 407

CH AFTER XIX. Former Discussions of the Subject 414

Section I. The Physiocrats 414

Section II. Adam Smith 417

1. The General Point of View of Adam Smith 417

2. Smith Resolves Exchange- Value into V-|-S 427

3. The Constant Portion of Capital 430

4. Capital and Revenue in Adam Smith 436

5. Recapitulation 444

Section III. The Economists After Smith 450

CHAPTER XX. Simple Reproduction 453

Section I. -The Formulation of the Question 453

Section II. The Two Departments of Social Production 457

Section III. The Transactions Between the Two Departments 460

Section IV. Transactions Within Department II; Necessities of Life

and Articles of Luxury 465

Section V. The Promotion of the Transactions by the Circulation of

Money 477

Section VI. The Constant Capital of Department 1 489

Section VII. Variable Capital and Surplus- Value in Both Departments 493

Section VIII. The Constant Capital in Both Departments 498

Section IX. A Retrospect on Adam Smith, Storch and Ramsay 504

Section X. Capital and Revenue, Variable Capital and Wages 508

Section XI. Reproduction of the Fixed Capital 522

1. The Reproduction of the Value of the Worn-Out Part

in the Form of Money 526

2. The Reproduction of Fixed Capital in its Natural Form 532

Section XII. The Reproduction of the Money-Supply 547

Section XIII. Destutt De Tracy's Theory of Reproduction 560

CHAPTER XXI. Accumulation and Reproduction on an Enlarged Scale.. 571

Section I. Accumulation in Department 1 574

1. The Formation of a Hoard 574

2. The Additional Constant Capital 579

3. The Additional Variable Capital 585

Section II. Accumulation in Department II 586

Section III. Diagramatic Presentation of Accumulation 591

1. First Illustration 596

2. Second Illustration 600

3. Exchange of lie under Accumulation 607

Section IV. Concluding Remarks 610



PREFACE.

It was no easy task to prepare the second volume of "CAP-
ITAL" for the printer in such a way that it should make a
connected and complete work and represent exclusively the
ideas of its author, not of its publisher. The great number of
available manuscripts, and their fragmentary character, ad-
ded to the difficulties of this task. At best one single manu-
script (No. 4) had been revised throughout and made ready
for the printer. And while it treated its subject-matter fully,
the greater part had become obsolete through subsequent re-
vision. The bulk of the material ^\as not polished as to lan-
guage, even if the subject-matter was for the greater part
fully worked out. The language was that in which Marx used
to make his outlines, that is to say his style was careless, full
of colloquial, often rough and humorous, expressions and
phrases, interspersed with English and French technical
terms, or with whole sentences or pages of English. The
thoughts were jotted down as they developed in the brain of
f .he author. Some parts of the argument would be fully
treated, 'Others of equal importance only indicated. The
material to be used for the illustration of facts would be col-
lected, but barely arranged, much less worked out. At the
conclusion of the chapters there would be only a few inco-
herent sentences as mile-stones of the incomplete deductions,
showing the haste of the author in passing on to the next
chapter. And finally, there was the well-known handwriting
which Marx himself was sometimes unable to decipher.

I have been content to interpret these manuscripts as lit-
erally as possible, changing the style only in places where
Marx would have changed it himself and interpolating ex-
planatory sentences or connecting statements only where this
was indispensable, and where the meaning was so clear that
there could be no doubt of 'the correctness of my interpreta-

7



8 Preface.

tion. Sentences which seemed in the least ambiguous were
preferably reprinted literally. The passages which I have re-
modeled or interpolated cover barely ten pages in print, and
concern mainly matters of form.

The mere enumeration of the manuscripts left by Marx
as a basis for Volume II proves the unparalleled conscien-
tiousness and strict self-criticism which he practiced in his
endeavor to fully elaborate his great economic discoveries
before he published them. This self-criticism rarely permit-
ted him to adapt his presentation of the subject, in content
as well as in form, to his ever widening horizon, which he
enlarged by incessant study.

The material for this second volume consists of the fol-
lowing parts: First, a manuscript entitled "A Contribution
to the Critique of Political Economy," containing 1472
quarto pages in 23 divisions, written in the time from
August, 1861, to June, 1863. It is a continuation of the
work of the same title, the first volume of which appeared
in Berlin, in 1859. It treats on pages 1-220, and again
pages 1159-1472, of the subject analyzed in Volume I of
"CAPITAL," beginning with the transformation of money
into capital and continuing to the end of the volume, and
is the first draft for this subject. Pages 973-1158 deal with
capital and profit, rate of profit, merchant's capital and
money capital, that is to say with subjects which have been
farther developed in the manuscript for Volume III. The
questions belonging to Volume II and many of those which
are part of Volume III are not arranged by themselves in
this manuscript. They are merely treated in passing, espe-
cially in the section which makes up the main body of the
manuscript, viz.: pages 220-972, entitled "Theories of Sur-
plus Value." This section contains an exhaustive critical
history of the main point of political economy, the theory
of surplus value, and develops at the same time, in polemic
remarks against the position of the predecessors of Marx, most
of the points which he has later on discussed individually
and in their logical connection in Volume II and III. I re-



Preface. 9

serve for myself the privilege of publishing the critical part
of this manuscript, after the elimination of the numerous
parts covered by Volumes II and III, in the form of Volume
IV. This manuscript, valuable though it is, could not be
used in the present edition of Volume II.

The manuscript next following in the order of time is that
of Volume III. It was written for the greater part in 1864
and 1865. After this manuscript had been completed in its
essential parts, Marx undertook the elaboration of Volume
I, which was published in 1867. I am now preparing this
manuscript of Volume III for the printer.

The period after the publication of Volume I, which is
next in order, is represented by a collection of four manu-
scripts for Volume II, marked I-IV by Marx himself. Man-
uscript I (150 pages), presumably written in 1865 or 1867,
is the first independent, but more or less fragmentary, elab-
oration of the questions now contained in Volume II. This
manuscript is likewise unsuited for this edition. Manuscript
II is partly a compilation of quotations and references to the
manuscripts containing Marx's extracts and comments, most
of them relating to the first section of Volume II, partly an
elaboration of special points, particularly a critique of Adam
Smith's statements as to fixed and circulating capital and
the source of profits; furthermore, a discussion of the rela-
tion of the rate of surplus value to the rate of profit, which
belongs in Volume III. The references furnished little that
was new, while the elaborations for Volumes II and III
were rendered valueless through subsequent revisions and
had to be ruled out for the greater part. Manuscript IV is
an elaboration, ready for printing, of the first section and
the first chapters of the second section of Volume II, and
has been used in its proper place. Although it was found
that this manuscript had been written earlier than Manu-
script II, yet it was far more finished in form and could
be used with advantage for the corresponding part of this
volume. I had to add only a few supplementary parts
of Manuscript II. This last manuscript is the only fairly



10 Preface.

complete elaboration of Volume II and dates from the
year 1870. The notes for the final revision, which I shall
mention immediately, say explicitly: "The second elab-
oration must be used as a basis."

There is another interruption after 1870, due mainly to
ill health. Marx employed this time in his customary
way, that is to say he studied agronomics, agricultural
conditions in America and especially Russia, the money
market and banking institutions, and finally natural sci-
ences, such as geology and physiology. Independent
mathematical studies also form a large part of the numer-
ous manuscripts of this period. In the beginning of 1877,
Marx had recovered sufficiently to resume once more his
chosen life's work. The beginning of 1877 is marked by
references and notes from the above-named four manu-
scripts intended for a new elaboration of Volume II, the
beginning of which is represented by Manuscript V (56
pages in folio). It comprises the first four chapters and is
not very fully worked out. Essential points are treated in
foot notes. The material is rather collected than sifted, but
it is the last complete presentation of this most important
first section. A preliminary attempt to prepare this part
for the printer was made in Manuscript VI (after October,
1877, and before July, 1878), embracing 17 quarto pages,
the greater part of the first chapter. A second and last at-
tempt was made in Manuscript VII, dated July 2, 1878,
and consisting of 7 pages in folio.

About this time Marx seems to have realized that he would
never be able to complete the second and third volume in
a manner satisfactory to himself, unless a complete revolution
in his health took place. Manuscripts V-VIII show traces
of hard struggles against depressing physical conditions far
too frequently to be ignored. The most difficult part of the
first section had been worked over in Manuscript V. The
remainder of the first, and the entire second section, with the
exception of Chapter 17, presented no great theoretical diffi-
culties. But the 'third section, dealing with the reproduction



Preface. \ \

and circulation of social capital, seemed to be very much in
need of revision. Manuscript II, it must be pointed out, had
first treated of this reproduction without regard to the circu-
lation which is instrumental in effecting it, and then taken
up the same question with regard to circulation. It was the
intention of Marx to eliminate this section and to reconstruct
it in such a way that it would conform to his wider grasp
of the subject. This gave rise to Manuscript VIII, contain-
ing only 70 pages in quarto. A comparison with section
III, as printed after deducting the paragraphs inserted out
of Manuscript II, shows the amount of matter compressed
by Marx into this space.

Manuscript VIII is likewise merely a preliminary pre-
sentation 'of the subject, and its main object was to ascertain
and develop the new points of view not set forth in Manu-
script II, while those points were ignored about which there
was nothing new to say. An essential part of Chapter XVII,
Section II, which is more or less relevant to Section III, was
at the same time drawn into this discussion and expanded.
The logical sequence was frequently interrupted, the treat-
ment of the subject was incomplete in various places, and
especially the conclusion was very fragmentary. But Marx
expressed as nearly as possible what he intended to say on
the subject.

This is the material for Volume II, out of which I was
supposed "to make something," as Marx said to his daughter
Eleanor shortly before his death. I have interpreted this
request in its most literal meaning. So far as this was pos-
sible, I have confined my work to a mere selection of the
various revised parts. And I always based my work on the
last revised manuscript and compared this with the preced-
ing ones. Only the first and third section offered any real
difficulties, of more than a technical nature, and these were
indeed considerable. I have endeavored to solve them ex-
clusively in the spirit of the author of this work.

For Volume III, the following manuscripts were avail-
able, apart from the corresponding sections of the above-



12 Preface.

named manuscript, entitled "A Contribution to the Crit-
ique of Political Economy/' from the sections in Manu-
script III likewise mentioned above, and from a few occa-
sional notes scattered through various extracts: The folio
manuscript of 1864-65, referred to previously, which is about
as fully elaborated as Manuscript II of Volume II ; further-
more, a manuscript dated 1875 and entitled "The Relation
of the Rate of Surplus Value to the Rate of Profit," which
treats the subject in mathematical equations. The prepara-
tion of Volume III for the printer is proceeding rapidly.
So far as I am enabled to judge at present, it will present
mainly technical difficulties, with the exception of a few
very important sections.



I avail myself of this opportunity to refute a certain
charge which has been raised against Marx, first indistinctly
and at various intervals, but more recently, after the death
of Marx, as a statement of fact by the German state and
university socialists. It is claimed that Marx plagiarized
the work of Rodbertus. I have already expressed myself
on the main issue in my preface to the German edition of
Marx's "Poverty of Philosophy" (1885), but I will now
produce the most convincing testimony for the refutation
of this charge. 1

To my knowledge this charge is made for the first time in
R. Meyer's "Emancipationskampf des Vierten Standes"
(Struggles for the Emancipation of the Fourth Estate),
page 43: "It can be demonstrated that Marx has gathered
the greater part of his critique from these publications"
meaning the works of Rodbertus dating back to the last
half of the thirties of this century. I may well assume,
until such time as will produce further proof, that the
"demonstration" of this assertion rests on a statement made
by Rodbertus to Mr. Meyer. Furthermore, Rodbertus him-
self appears on the stage in 1879 and writes to J. Zeller

1 In the preface to " The Poverty of Philosophy." A Reply to Proudhon's " Philoso-
phy of Poverty," by Karl Marx. Translated Into German by E. Bernstein and K. Kautsky.
Stuttgart. 1885.



Preface. 13

(Zeitschrift fiir die Gesammte Staatswissenschaft, Tubin-
gen, 1879, page 219), with reference to his work "Zur Er-
kenntniss Unserer Staatswirthschaftlichen Zustande" (A
Contribution to the Understanding of our Political and
Economic Conditions), 1842, as follows: "You will find
that this line of thought has been very nicely used ... by
Marx, without, however, giving me credit for it." The pub-
lisher of Rodbertus posthumous works, Th. Kozak, repeats
his insinuation without further ceremony. (Das Kapital
von Rodbertus. Berlin, 1884. Introduction, page XV.)
Finally in the "Brief e und Sozialpolitische Aufsatze von Dr.
Rodbertus-Jagetzow," (Letters and Essays on Political Econ-
omy by Dr. Rodbertus-Jagetzow), published by R. Meyer in
1881, Rodbertus says directly: "To-day I find that I am
robbed by Schaffle and Marx without having my name men-
tioned" (Letter No. 60, page 134). And in another place,
the claim of Rodbertus assumes a more definite form: "In
my third letter on political economy, I have shown prac-
tically in the same way as Marx, only more briefly and
clearly, the source of the surplus value of the capitalists."
(Letter No. 48, page 111.)

Marx never heard anything definite about any of these
charges of plagiarism. In his copy of the "Emancipations-
kampf" only that part had been opened with a knife which
related to the International. The remaining pages were not
opened until I cut them myself after his death. The "Zeit-
schrift" of Tubingen was never read by him. The "Let-
ters," etc., to R. Meyer likewise remained unknown to him,
and I did not learn of the passage referring to the "robbery"
of which Rodbertus was supposed to be the victim until Mr.
Meyer himself called my attention to it. However, Marx
was familiar with letter No. 48. Mr. Meyer had 'been kind
enough to present the original to the youngest daughter of
Marx. Some of the mysterious whispering about the secret
source of his critique and his connection with Rodbertus
having reached the ear of Marx, he showed me this letter
with the remark that he had at last discovered authentic



14 'Preface.

information as to what Rodbertus claimed for himself; if
that was all Rodbertus wanted, he Marx, had no objection,
and he could well afford to let Rodbertus enjoy the pleasure
of considering his own version the briefer and clearer one.
In fact, Marx considered the matter settled by this letter of
Rodbertus.

He could so much the more afford this, as I know posi-
tively that he was not in the least acquainted with the liter-
ary activity of Rodbertus until about 1859, when his own
critique of political economy had been completed, not only
in its fundamental outlines, but also in its more important
details. Marx began his economic studies in Paris, in 1843,
starting with the prominent Englishmen and Frenchmen.
Of German economists he knew only Rau and List, and he
did not want any more of them. Neither Marx nor I heard
a word of Rodbertus' existence, until we had to criticise, in
the "Neue Rheinische Zeitung," 1848, the speeches he made
as the representative of Berlin and as Minister of Commerce.
We were both of us so ignorant that we had to ask the Rhen-
ish representatives who this Rodbertus was that had become
a Minister so suddenly. But these representatives could not
tell us anything about the economic writings of Rodbertus.
On the other hand, Marx showed that he knew even then,
without the help of Rodbertus, whence came "the surplus
value of the capitalists," and he showed furthermore how it
was produced, as may be seen in his "Poverty of Philoso-
phy," 1847, and in his lectures on wage labor and capital,
delivered in Brussels in 1847, and published in Nos. 264-69
of the "Neue Rheinische Zeitung," 1849. Marx did not
learn that an economist Rodbertus existed, until Lassalle
called his attention to the fact in 1859, and thereupon Marx
looked up the "Third Letter on Political Economy" in the
British Museum.

This is the actual condition of things. And now let us see
what there is to the content of Rodbertus which Marx is
charged with appropriating by "robbery." Says Rodbertus :
"In my third letter on political economy, I have shown prac-



Preface. 15

tically in the same way as Marx, only more briefly and
clearly, the source of the surplus-value of the capitalists."
This, then, is the disputed point: The theory of surplus
value. And indeed, it would be difficult to say what else
there is in Rodbertus which Marx might have found worth
appropriating. Rodbertus here claims to be the real origin-
ator of the theory of surplus-value of which Marx is sup-
posed to have robbed him.

And what has this third letter on political economy to say
in regard to the origin of surplus-value? Simply this: That
the "rent," as he terms the sum of ground rent and profit,
does not consist of an "addition to the value" of a commod-
ity, but is obtained "by means of a deduction of value from
the wages of labor, in other words, the wages represent only a
part of the value of a certain product," and provided that
labor is sufficiently productive, wages need not be "equal to
the natural exchange value of the product of labor in order
to leave enough of it for the replacing of capital and for
rent." We are not informed, however, what sort of a "nat-
ural exchange value" of a product it is that leaves nothing
for the "replacing" of capital, or in other words, I suppose,
for the replacing of raw material and the wear and tear of
tools.

I am happy to say that we are enabled to ascertain what
impression was produced on Marx by this stupendous dis-
covery of Rodbertus. In the manuscript entitled "A Contri-
bution to the Critique of Political Economy," Section X,
pages 445 and following, we find, "A deviation. Mr. Rod-
bertus. A new theory of ground rent." This is the only
point of view from which Marx there looks upon the third
letter on political economy. The Rodbertian theory of sur-
plus value is dismissed with the ironical remark : "Mr. Rod-
bertus first analyzes what happens in a country where prop-



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