Commercial Capital

Functioning capital that plays a part in the sphere of commodity circulation. In the circuit of industrial capital, there is always a part of capital, which assumes the form of commodity capital. With the growing scale of production and the continuous development of the social division of labor, the function of commodity capital has gradually been separated from industrial capital and has become the function of commercial capital, which specializes in the purchase and sale of commodities and independently performs the function of commodity capital for the purpose of obtaining commercial profit. Commercial profit reflects the relation between commercial capitalists and industrial capitalists in their joint division of the surplus-value created by wage-laborers.

The formula of the movement of commercial capital is M–C–M’, with M being the money advanced, C the commodity, and M’ is the money valorized. This formula indicates that commercial capital achieves a valorization in the process of purchase and sale of commodities operated. However, this increment does not originate from the circulation process, but from the production process of industrial capital.

Capitalist commercial capital is subordinate to industrial capital and serves the circulation of industrial capital. Commercial capitalists are specialized in the purchase and sale of commodities and are familiar with the market, so they can increase the turnover rate of capital and save circulation time, which is conducive to the development of industrial capital production and the increase of profits. However, the independence of commercial capital also creates a disconnection between capitalist production and consumption, resulting in a false prosperity in the market which increases the possibility of economic crises.