As soon as M---C< L MP is completed, the purchaser has at his disposal more than simply the means of production and labour-power required for the production of some useful article. He disposes of a greater capacity to render labour-power fluent, or a greater quantity of labour than is necessary for the replacement of the value of this labour-power, and he has at the same time the means of production requisite for the realisation or materialisation of this quantity of labour.
In other words, he has at his disposal the factors making for the production of articles of a greater value than that of the elements of production --the factors of production of a mass of commodities containing surplus-value.
The value advanced by him in money-form has now assumed a bodily form in which it can be incarnated as a value generating surplus-value (in the shape of commodities). In brief, value exists here in the condition or form of productive capital , which has the factor of creating value and surplus-value. Let us call capital in this form P.
Now the value of P is equal to that of L + MP, it is equal to M exchanged for L and MP. M is the same capital-value as P, only it has a different mode of existence, it is capital-value in the state or form of money -- money-capital .
M---C< L MP , or its general form M---C, a sum of purchases of commodities, an act of the general circulation of commodities, is therefore at the same time -- as a stage in the independent circuit of capital -- a transformation of capital-value from its money-form into its productive form. More briefly, it is the transformation of money-capital into productive capital . In the diagram of the circuit which we are here discussing, money appears as the first depository of capital-value, and money-capital therefore represents the form in which capital is advanced.
Capital in the form of money-capital is in a state in which it can perform the functions of money, in the present case the functions of a universal means of purchase and universal means of payment. (The last-named inasmuch as labour-power though first bought is not paid for until it has been put into operation. To the extent that the means of production are not found ready on the market but have to be ordered first, money in M---MPlikewise serves as a means of payment.) This capacity is not due to the fact that money-capital is capital but that it is money.
On the other hand capital-value in the form of money cannot perform any other functions but those of money. What turns the money-functions into functions of capital is the definite role they play in the movement of capital, and therefore also the interrelation of the stage in which these functions are performed with the other stages of the circuit of capital.
Take, for instance, the case with which we are here dealing. Money is here converted into commodities the combination of which represents the bodily form of productive capital, and this form already contains latently, potentially, the result of the process of capitalist production.
A part of the money performing the function of money-capital in M---C< L MP assumes, by consummating the act of circulation, a function in which it loses its capital character but preserves its money-character. The circulation of money-capital M is divided into M---MP and M---L, into the purchase of means of production and the purchase of labour-power. Let us consider the last-named process by itself. M---Lis the purchase of labour-power by the capitalist. It is also the sale of labour-power -- we may here say of labour, since the form of wages is assumed -- by the laborer who owns it. What is M---C (= M---L) for the buyer is here, as in every other purchase, L---M (= C---M) for the seller (the laborer). It is the sale of his labour-power. This is the first stage of circulation, or the first metamorphosis, of the commodity (Buch I, Kap.
III, 2a).[English edition: Ch. III, 2a- Ed .] It is for the seller of labour a transformation of his commodity into the money-form. The laborer spends the money so obtained gradually for a number of commodities required for the satisfaction of his needs, for articles of consumption. The complete circulation of his commodity therefore appears as L---M---C, that is to say first as L---M (= C---M) and secondly as M---C; hence in the general form of the simple circulation of commodities, C---M---C. Money is in this case merely a passing means of circulation, a mere medium in the exchange of one commodity for another.
M---L is the characteristic moment in the transformation of money-capital into productive capital, because it is the essential condition for the real transformation of value advanced in the form of money into capital, into a value producing surplus-value. M---MP is necessary only for the purpose of realising the quantity of labour bought in the process M---L, which was discussed from this point of view in Book I, Part II, under the head of "The Transformation of Money into Capital." We shall have to consider the matter at this point also from another angle, relating especially to money-capital the form in which capital manifests itself.
Generally M---L is regarded as characteristic of the capitalist mode of production. However not at all for the reason given above, that the purchase of labour-power represents a contract of purchase which stipulates for the delivery of a quantity of labour in excess of that needed to replace the price of the labour-power, the wages; hence delivery of surplus-labour, the fundamental condition for the capitalisation of the value advanced, or for the production of surplus-value, which is the same thing. On the contrary, it is so regarded because of its form, since money in the form of wages buys labour, and this is the characteristic mark of the money system.
Nor is it the irrationality of the form which is taken as characteristic.