Circulation of Capital
Description
Nick Dyer-Whiteford:
"What the young Marx discusses as “universal intercourse” is in his later works, such as Grundrisse and Capital, developed in more abstract terms through the concept of “circulation”. This is a term that has a double meaning, in a way that is both confusing and felicitous (Kjøsen 2019).
The first of these meanings — call it “circulation 1” — designates a specific moment or segment of the process by which capital incessantly transforms from money to commodities to more money, and more commodities. It is, Marx says, only in the process of production, where human labour transforms raw materials into commodities, that “surplus value” is created. However, for this surplus value to be realized as profit, commodities must exit production and go to market, where they can be exchanged for money. “Circulation 1” refers to this phase in the overall circuit of capital. As surplus value is only generated in production, circulation1 cannot add to the value of a commodity. But it can increase the speed and efficiency with which commodities are exchanged for money, realizing their value. Increasing the velocity of circulation decreases the time in which a given quantity of capital “turns over” from commodities to money and back again, thereby increasing its profitability. In this sense, then, circulation1 defines a crucial, but delimited part of the cycle of capital, one which gives rise to its own vast, historically evolving apparatus of transportation, warehousing, logistics, shops, marketing, advertising, financing and all the communicative flows these entail (see Kjøsen 2019).
There is, however, a second meaning of “circulation” in some passages of Marx’s work. In this usage, the term “circulation 2” refers to movement through the entire circuit of capital. It encompasses all the transformations of value through money, the purchase of labour and machinery for production, the making and marketing of commodities, back to more money. “Circulation 2” therefore includes and subsumes production and circulation1 — from which, in recent Marxist scholarship, monetary operations of credit, debt and speculation are sometimes split off as a distinct third category of “financialization”. “Circulation 2” thus comprises all of capital’s continuous motion between production, circulation1 and financialization."