Part Five — The Division of Profit into Interest and Profit of Enterprise. Interest-Bearing Capital Chapters 21–36. Interest-bearing capital and the M–M′ fetish, the division of profit into interest and profit of enterprise, credit, fictitious capital, and pre-capitalist usury.

This is the longest and most difficult Part of Volume III — the one Engels assembled, with acknowledged struggle, from Marx's most disordered and unfinished manuscripts. Its subject is the second great differentiation of capital: the splitting of profit into interest and profit of enterprise, and the emergence of interest-bearing capital as a form of its own. Here the descent into the fetishized surface reaches its lowest point. Money is lent as capital and returns as money plus interest, M–M′, and in this form capital appears to breed money out of itself as a pear tree bears pears, with no visible trace of production, labour, or surplus-value. Interest-bearing capital is, for Marx, the most externalized and fetish-like form of the capital relation, the form in which the social relation of exploitation is most completely obliterated and capital appears as a self-moving thing. Chapters 21 to 23 develop interest-bearing capital and the merely quantitative, competition-fixed division of the average profit into interest (which appears to accrue to capital as property) and profit of enterprise (which appears as the wage of the active capitalist's labour). Chapter 24 draws out the fetish in its purest expression. Chapters 25 through 35 — the credit chapters, the most fragmentary in all of Marx — analyse credit, banking, fictitious capital, the money market, and the confrontation of money capital with real capital, material that would become the starting point for all later Marxist work on finance and crisis. Chapter 36 returns historically to usurer's capital, the antediluvian form of interest-bearing capital. The brief holds the load-bearing formulations of the fetish and of fictitious capital, reconstructs the credit material at the level of its essential concepts given its unfinished state, and keeps the finance-and-crisis reception in view.

Interest-bearing capital arises when money itself becomes a commodity of a special kind: the owner of money lends it to a functioning capitalist, who uses it as capital to produce the average profit, and returns it with a portion of that profit as interest. Money thus acquires, on top of its ordinary use-value, the "additional use-value" of functioning as capital — of producing a profit. The lender parts with the money and receives it back augmented; the circuit M–M′ is complete, apparently without any intervening production. Marx stresses that capital here becomes a commodity that is sold, uniquely, without changing owners in the way ordinary commodities do — it is alienated as a loan and returns to its owner.

On the basis of capitalist production, money – taken here as the independent expression of a sum of value, whether this actually exists in money or in commodities – can be transformed into capital, and through this transformation it is turned from a given, fixed value into a self-valorizing value capable of increasing itself. It produces profit, i.e. it enables the capitalist to extract and appropriate for himself a certain quantity of unpaid labour, surplus product and surplus-value. In this way the money receives, besides the use-value which it possesses as money, an additional use-value, namely the ability to function as capital. Its use-value here consists precisely in the profit that it produces when transformed into capital. In this capacity of potential capital, as a means to the production of profit, it becomes a commodity, but a commodity of a special kind. Or what comes to the same thing, capital becomes a commodity.

Marx, Capital III, page 459.

The profit the borrowing capitalist produces then splits in two. The part he pays to the lender is interest; the part he keeps is profit of enterprise. Marx's decisive point is that this division is purely quantitative and has no basis in the production of value: interest and profit of enterprise are not two different sources of income but two shares of the one surplus-value, and where the line between them falls is settled only by the competition between lenders and borrowers — by supply and demand for loanable money capital, with no "natural" rate to anchor it. Yet the division, once made, generates a powerful mystification. Interest comes to appear as the yield of capital-as-property, of mere ownership, accruing to the sleeping owner; profit of enterprise comes to appear as the reward of the active capitalist's own labour of superintendence, a kind of wage. The single relation of exploitation is thus refracted into two apparently independent and even opposed incomes — the passive owner's interest and the active manager's "wages" — and the surplus labour that is the source of both drops entirely out of view.

That no law of value fixes where the line falls is stated without qualification.

The prevailing average rate of interest in a country, as distinct from the constantly fluctuating market rate, cannot be determined by any law. There is no natural rate of interest, therefore, in the sense that economists speak of a natural rate of profit and a natural rate of wages.

Marx, Capital III, page 484.

And the mystification bred by the quantitative division is spelled out: confronted with the antithesis of owner and functionary, everyone forgets what is being divided.

That his function as a capitalist consists in producing surplus-value, i.e. unpaid labour, and in the most economical conditions at that, is completely forgotten in the face of the antithesis that interest accrues to the capitalist even if he does not perform any function as capitalist, but is simply the owner of capital; while profit of enterprise, on the other hand, accrues to the functioning capitalist even if he is not the owner of the capital with which he functions. In the face of the antithetical form of the two parts into which profit and thus surplus-value divides, it is forgotten that both are simply parts of surplus-value and that such a division can in no way change its nature, its origin and its conditions of existence.

Marx, Capital III, page 504.