between ‘productive capital’ and ‘unproductive capital’). The latter category involves essentially commercial capital, banking and insurance capital, and capital invested in the ‘unproductive’ branches of service industries. We have seen before that, while wage-labour hired by these capitalists enables them to appropriate a fraction of the sum total of surplus-value accruing to the entire capitalist class, it does not itself add to that total. The question may, therefore, be posed: why do the industrial capitalists, or more precisely all those who invest in the ‘productive’ sectors, accept that a portion of the surplus-value produced by ‘their’ workers should be appropriated by capitalists whose capital does not contribute to the production of surplus-value?

This problem is dealt with at length in Capital Volume 3; but since a section of Volume 2 is devoted to it, we should briefly touch on it here. The answer becomes clear once we realize that, although capital invested outside the sphere of material production does not directly augment the mass of surplus-value, it does contribute indirectly to its increase. In other words, industrial and farming capitalists abandon a share of ‘their’ surplus-value to traders and bankers not out of the goodness of their hearts, but because these gentlemen help them to raise the mass of that surplus-value.

In order to demonstrate that this is so, Marx again introduces into his analysis that ‘time dimension’ which plays such a key role throughout Volume 2, and which in a certain sense structures the whole process of circulation and turnover of capital. Whereas the total turnover time of fixed capital stretches over many years, and is not basically affected by small shifts in the length of the period during which capital takes the form of commodity capital (i.e. during which commodities remain unsold in the sphere of circulation), the situation is entirely different in the case of circulating capital. If it takes three months to produce a given mass of commodities, and three months to sell them, circulating productive capital will turn over only twice a year unless it receives assistance. That part of it which is exchanged for labour-power, and thus makes possible the creation of surplus-value, would then remain sterile for six months of the year. If, however, commercial capital buys up a large proportion of the commodities as soon as they leave the factory, or if banking capital advances the money to pay the raw materials bill immediately after the commodities are produced and before they are sold, then, owing to the assistance of these sectors of the capitalist class, productive circulating capital can be reinvested as soon as a production cycle is completed. Consequently, variable capital will never remain idle. It will set workers to produce surplus-value twelve months, and not six months a year – as a result of which, all other things being equal, the total annual mass of surplus-value will be twice as great as it would otherwise have been. It naturally pays industrial capital to give a discount to wholesale traders, or to pay interest to bankers, if these rescue operations allow an overall increase in the production of surplus-value.

What this implies, however, is that only a fraction of total social capital is continuously engaged in production. An important segment remains constantly outside the realm of production. We have already noted why part of social capital necessarily takes the form of money capital. We now see that another portion has to take the form of transportation and banking capital, in order to shorten the circulation time of commodities. From the point of view of the capitalist class as a whole (and this is the one adopted by Marx in Volume 2; only in Volume 3 does he consider these different sectors as competing with one another for fractions of social surplus-value), this may be regarded as a functional division of labour within that class. Instead of each industrialist and capitalist farmer acting as his own treasurer, his own money changer, his own transporter, his own seller of commodities on the home and world markets, and his own advancer of additional money capital, all these various functions are socially centralized by sectors of the bourgeoisie specializing in different fields. This division of labour carries with it a considerable rationalization: the costs of overall social circulation, transportation and banking are lower than they would have been if each capitalist firm had had to accomplish these tasks itself. The overhead costs of production are thereby reduced, and the total mass of surplus-value is increased through continuous production. It is thus profitable for the bourgeoisie as a whole to maintain (and even expand, as the record of the ‘service industries’ demonstrates!) this functional division of labour.

What is the source of capital invested outside the realm of material production? Since all capital derives in the last analysis from surplus-value, and since, under the capitalist mode of production, all surplus-value is created by ‘productive capital’ (that is, by wage-labour engaged in material production), it may appear that all commercial and banking capital ultimately derives from industrial and agricultural ‘productive’ capital. This is partially true. In Capital Volume 2, Marx points out how money capital is periodically ‘expelled’ from the process of value production, thereby becoming temporarily available for other purposes. The best example of this is the depreciation fund of fixed capital. Reinvested only at certain intervals, rather than piecemeal after each production cycle, it serves for a time as an important source of money capital employed in credit and other operations.

However, such a view should not be generalized. Capital, after all, is older than the capitalist mode of production. Before surplus-value was produced in the process of production, vast wealth was accumulated through the plunder of peasants, the fleecing of feudal lords (for example, by over-pricing exotic merchandise), robbery of merchants (through piracy) and tribal communities (through the capture of slaves). Merchant, commercial and banking capital existed long before ‘productive’ capital was born in manufactures, not to speak of the industrial revolution. Thus, industrial capital not only reproduces commercial and banking capital by paying over fragments of the surplus-value created by ‘its own’ workers; it also finds these other forms of capital present at the moment of its own birth, and indeed as a condition of this.