Capital

There is a distinction between a wider and a narrower sense. The concept of capital in a narrower sense refers specifically to the capital in the capitalist economy. The wider concept of capital includes a wider range, for example commercial capital and loan capital prior to capitalism. The concept of capital is also applied in Chinese socialist economy. The capital referred to here specifically in the capitalist economy refers to the value of surplus-value that can be obtained by purchasing laborer’s labor-power, reflecting the capitalist relations of production.

In the actual life, the form of existence of capital is always manifested as money, factories, machinery, raw materials, commodities and other definite things. But money and the means of production themselves exist in multiple socio-economic systems and cannot be equated with capital. The essence of capital is not things, which themselves cannot reflect the essence of capital. Only under the capitalist system can these things bring surplus-value in motion and become capital, and the essence of capital is the relations of production embodied in things. As Marx said, “the means of production and subsistence, while they remain the property of the immediate producer, are not capital. They become capital, only under circumstances in which they serve at the same time as means of exploitation and subjection of the laborer.” Therefore, “capital is not a thing, but a social relation between persons, established by the instrumentality of things.”

In Capital, Marx analyzed in detail the question of the transformation of money into capital, and held that “the circulation of commodities is the point of departure of capital. Commodity production and developed commodity circulation, trade, are the historical presuppositions under which capital originates.” The process of commodity circulation has given rise to money. Money is the initial form of appearance of capital, and in the process of capitalist production, any capitalist must first pay a certain amount of money in order to carry out production and business activity. The capitalist first releases money to buy commodities, but unlike the commodity exchange in general, the purpose of buying commodities is to sell them to regain the money and obtain surplus-value.

In the process of capitalist production, the capital in the form of value can be resolved into constant and variable capital. These two different forms of capital play different roles in the production of surplus-value and have different natures. Engels said that this distinction furnishes the key for the solution of the most complicated economic problems.