More and more local, regional, even national and continental communities depend upon one another for the supply and combination of raw materials, instruments of labour and human producers themselves. The labour process has thereby become to an increasing extent objectively socialized. At the same time, however, private ownership of the means of production and circulation combines with the appearance and growth of (money) capital to make private appropriation both the starting-point and the goal of all productive endeavour. Thus, while labour is objectively more and more socialized, it remains to a greater degree than ever before organized on the basis of private production.

Commodity production, value production, the ‘value form’, as Marx calls it at the beginning of Volume 1, are rooted in this basic contradiction.7 Production is impossible without social labour – without the co-operation of thousands (in some cases, hundreds of thousands) for the production of a given commodity, under optimum conditions of productivity of labour. But since production is based upon and tuned to private appropriation, social labour is not immediately organized as such – its input into the production process is not decided by society as a whole, and it is expended as private labour. Its social nature can only be recognized a posteriori, through the sale of the commodity, the realization of its value and, under capitalism, the appropriation in the form of profit by its capitalist owner of a given portion of the total surplus-value created by productive workers in their entirety. Value production or commodity production thus expresses the contradictory fact that goods are at one and the same time the product of social labour and private labour; that the social character of the private labour spent in their production cannot be immediately and directly established; and that commodities must circulate, their value must be realized, before we can know the proportion of private labour expended in their production that is recognized as social labour.

There is thus an indissoluble unity between the production of value and surplus-value on the one hand, and the circulation (sale) of commodities, the realization of value, on the other. Under commodity production, and even more so under its capitalist form, the one cannot take place without the other. That is why the study of ‘capital in general’ – provisionally abstracted from competition and ‘many capitals’ – encompasses both the process of production and the process of circulation of commodities.8

However, once we begin to examine the circulation of commodities under capitalism (in the first place, their sale with the purpose of realizing their value) we are considering much more than simple commodity circulation. We are in fact dealing with the circulation of commodities as capital, that is to say, with the circulation of capital. In the course of his progressive analysis of the circulation process, Marx introduces a new and passionately interesting object of study: the reproduction and circulation (‘turnover’) of the total social capital. While formally this is the title of only the third Part of Volume 2, it could well be argued that it expresses the underlying subject-matter of the whole volume.

Marx himself explains9 that the circulation and reproduction of each individual capital, analysis of which is begun in the first sections of Volume 2, must be seen as part of a more general movement of circulation and reproduction – that of the sum total of social capital. This is so not only because such a study must methodologically precede examination of the effects of competition on the division of surplus-value among various capitalist firms, but also because a broader question still has to be answered. How can an anarchic social system, based upon private determination of investment, ‘factor-combination’ and output, assure the presence of the objective, material elements necessary for further production and growth? What are the absolute preconditions of such growth? It was in order to answer these eminently ‘modern’ questions that Marx developed his famous reproduction schemas and showed that growth could be accommodated within his theory of capitalism.

Since capitalist production is production for profit (value production oriented towards an accretion of value), growth always has the meaning of accumulation of capital. While this is already made clear in Volume 1 of Capital (Chapters 22 and 23), the argument is only fully elaborated in Volume 2. The key concepts are those of capitalization of (part of) surplus-value and expanded reproduction. For economic growth to occur, part of the surplus-value produced by the working class and appropriated by the capitalists must be spent productively and not wasted unproductively on consumer goods (and luxury goods) by the ruling class and its retainers and hangers-on. In other words, it must be transformed into additional constant capital (buildings, equipment, energy, raw materials, auxiliary products, etc.) and additional variable capital (money capital available to hire an increased labour force). The accumulation of capital is nothing other than this (partial) capitalization of surplus-value, i.e. the (partial) transformation of profit into additional capital.10

Expanded reproduction denotes a process whereby the turnover of capital (both individual capitals and total social capital, although not necessarily all individual capitals; given competition, we may even say: in the long run, never all capitals) leads, after a certain number of intermediary stages minutely studied in Volume 2, to a larger and larger scale of productive operation. More raw materials are transformed by more workers using more machinery into more finished products, with greater overall value than in the previous turnover cycle. This results in higher total sales and final profits, which in turn allow a higher absolute sum (if not in all cases a higher percentage) of profit to be added to capital. Thus does the spiral of growth continue…

The study of the circulation of commodities, the reproduction (and accumulation) of capital and the rotation of capital in its totality constantly encompasses the dialectical unity-and-contradiction of opposites contained in the commodity form of production, namely, the contradictory unity of use-value and exchange-value, doubled in that of commodities and money. One of the outstanding features of Capital Volume 2, to which insufficient attention has been paid by academic and Marxist commentators alike,11 is precisely the masterly way in which Marx develops this initial theme of Capital Volume 1 throughout his analysis of the process of circulation. We shall have occasion to come back to this.

2. THE THREE FORMS OF CAPITAL

From the outset, Marx makes it clear that capital, in the capitalist mode of production,12 appears in three forms: money capital, productive capital and commodity capital. Money capital is the original form and final purpose of the whole devilish undertaking. Productive capital is the basic precondition of the constantly enlarging spiral. Without the penetration of capital into the sphere of production, the social product and surplus product can only be re-apportioned and re-appropriated, not increased by capitalist enterprise. Under such conditions, capitalists would act essentially as parasites upon and plunderers of pre-capitalist (or post-capitalist) forms of production, rather than as masters of the production and appropriation of surplus-value (of the social surplus-product).