It is a second transaction, which does not take place between the labourer and the capitalist, but between the labourer as a buyer of commodities and the capitalist as a seller of commodities, while in the first transaction the labourer is a seller of a commodity (his labour-power) and the capitalist its buyer. It is exactly the same as if a capitalist, on selling his commodity, say, a machine, to an iron works, has it replaced by some other commodity, say, iron. It is therefore not the labourer's means of subsistence which acquire the definite character of circulating capital as opposed to fixed capital. Nor is it his labour-power. It is rather that part of the value of productive capital which is invested in labour-power and which, by virtue of the form of its turnover, receives this character in common with some, and in contrast with other, component parts of the constant capital.
The value of the circulating capital -- in labour-power and means of production -- is advanced only for the time during which the product is in process of production, in accordance with the scale of production determined by the volume of the fixed capital. This value enters entirely into the product, is therefore fully returned by its sale from the sphere of circulation, and can be advanced anew. The labour-power and means of production, in which the circulating component of capital exists, are withdrawn from circulation to the extent required for the creation and sale of the finished product, but they must be continually replaced and renewed by purchasing them back, by reconverting them from the money-form into the elements of production. They are withdrawn from the market in smaller quantities at a time than the elements of fixed capital, but they must be withdrawn again from it so much the more frequently and the advance of capital invested in them must be renewed at shorter intervals. This constant renewal is effected by the continuous conversion of the product which circulates their entire value. And finally, they pass through the entire circuit of metamorphoses, not only so far as their value is concerned but also their material form.
They are perpetually reconverted from commodities into the elements of production of the same commodities.
Together with its own value, labour-power always adds to the product surplus-value, the embodiment of unpaid labour. This is continuously circulated by the finished product and converted into money just as are other elements of its value. But here, where we are primarily concerned with the turnover of capital-value, and not with that of the surplus-value occurring at the same time, we dismiss the latter for the present.
>From the foregoing one may conclude the following:
1. The definiteness of form of fixed and circulating capital arises merely from the different turnovers of the capital-value, functioning in the process of production, or of the productive capital . This difference in turnover arises in its turn from the different manner in which the various components of productive capital transfer their value to the product; it is not due to the different parts played by these components in the generation of product value, nor to their characteristic behaviour in the process of self-expansion. Finally the difference in the delivery of value to the product -- and therefore the different manner in which this value is circulated by the product and is renewed in its original bodily form through the metamorphoses of the product -- arises from the difference of the material shapes in which the productive capital exists, one portion of it being entirely consumed during the creation of an individual product and the other being used up only gradually. Hence it is only the productive capital which can be divided into fixed and circulating capital. But this antithesis does not apply to the other two modes of existence of industrial capital, that is to say, commodity-capital and money-capital, nor does it exist as an antithesis of these two modes to productive capital. It exists only for productive capital and within its sphere . No matter how much money-capital and commodity-capital may function as capital and no matter how fluently they may circulate, they cannot become circulating capital as distinct from fixed capital until they are transformed into circulating components of productive capital. But because these two forms of capital dwell in the sphere of circulation, Political Economy as we shall see has been misled since the time of Adam Smith into lumping them together with the circulating part of productive capital and assigning them to the category of circulating capital. They are indeed circulation capital in contrast to productive capital, but they are not circulating capital in contrast to fixed capital.
2. The turnover of the fixed component part of capital, and therefore also the time of turnover necessary for it, comprises several turnovers of the circulating constituents of capital. In the time during which the fixed capital turns over once, the circulating capital turns over several times. One of the component parts of the value of the productive capital acquires the definiteness of form of fixed capital only in case the means of production in which it exists is not wholly worn out in the time required for the fabrication of the product and its expulsion from the process of production as a commodity. One part of its value must remain tied up in the form of the still preserved old use-form, while the other part is circulated by the finished product, and this circulation on the contrary simultaneously circulates the entire value of the fluent component parts of the capital.