Part Two — The Transformation of Money into Capital Chapters 4–6. The general formula M–C–M′, the contradictions it raises, and the peculiar commodity that resolves them: labour-power.

Part One ended with money. Part Two asks how money becomes capital, and in three short chapters it poses the question the entire rest of the volume exists to answer: where does surplus-value come from? Chapter 4 isolates the form that distinguishes capital from money — not C–M–C, selling in order to buy, but M–C–M′, buying in order to sell dearer, money that returns as more money. Chapter 5 drives that formula into an apparent impossibility: the increment cannot arise in circulation, since exchange of equivalents adds nothing and exchange of non-equivalents only redistributes; yet it cannot arise outside circulation either. Chapter 6 resolves the contradiction with a single discovery — a commodity whose use-value is itself a source of value, labour-power — and then walks the reader to the threshold of production, where the rest of Capital begins.

The through-line is a strict dialectical sequence: a form (M–C–M′), the contradiction the form generates (surplus-value must and cannot arise in circulation), and the resolution that preserves both sides of the contradiction (the sale of labour-power, which happens in circulation and yet delivers a use-value consumed outside it). Part Two is the hinge of Volume I. Everything before it analyses the commodity and money as such; everything after it analyses the production of surplus-value. The labour-power material in Chapter 6 is where the two halves are joined, and this brief catches it in full.

Capital begins where commodity circulation is already developed into trade, and its first appearance is always money. But money as money and money as capital differ in their form of circulation. Simple circulation is C–M–C: sell in order to buy, ending in a use-value consumed outside circulation. Capital's circulation inverts this into M–C–M: buy in order to sell. Money that describes this second path is already, functionally, capital.

But alongside this form we find another form, which is quite distinct from the first: M–C–M, the transformation of money into commodities, and the re-conversion of commodities into money: buying in order to sell. Money which describes the latter course in its movement is transformed into capital, becomes capital, and, from the point of view of its function, already is capital.

Marx, Capital I, page 248.

The two circuits are built from the same phases in inverted order, but the inversion changes everything, because it changes the goal. C–M–C aims at a use-value, a purpose lying outside circulation; M–C–M has money at both ends, so its purpose can only be exchange-value itself.

The path C–M–C proceeds from the extreme constituted by one commodity, and ends with the extreme constituted by another, which falls out of circulation and into consumption. Consumption, the satisfaction of needs, in short use-value, is therefore its final goal. The path M–C–M, however, proceeds from the extreme of money and finally returns to that same extreme. Its driving and motivating force, its determining purpose, is therefore exchange-value.

Marx, Capital I, page 250.

M–C–M with equal sums at both ends would be pointless. What gives the circuit its content is that the money returns augmented. Marx writes the complete form and names the increment — the concept the whole volume is built to explain.

The complete form of this process is therefore M–C–M′, where M′ = M + ΔM, i.e. the original sum advanced plus an increment. This increment or excess over the original value I call ‘surplus-value’.

Marx, Capital I, page 251.

Because the end of the circuit is money, and money is qualitatively identical to the money at the start, the movement has no natural stopping point. Where C–M–C finds its measure in a need to be satisfied, M–C–M′ finds none, and so the valorization of value becomes an end in itself and the movement of capital becomes limitless.

The simple circulation of commodities – selling in order to buy – is a means to a final goal which lies outside circulation, namely the appropriation of use-values, the satisfaction of needs. As against this, the circulation of money as capital is an end in itself, for the valorization of value takes place only within this constantly renewed movement. The movement of capital is therefore limitless.

Marx, Capital I, page 253.

The person who consciously wills this endless movement is the capitalist — not a psychological type but a function, capital personified. Marx marks the kinship and the difference with the miser: both are driven by the boundless chase after value, but the miser hoards while the capitalist keeps the value in motion.

As the conscious bearer [Träger] of this movement, the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which the money starts, and to which it returns. The objective content of the circulation we have been discussing – the valorization of value – is his subjective purpose, and it is only in so far as the appropriation of ever more wealth in the abstract is the sole driving force behind his operations that he functions as a capitalist, i.e. as capital personified and endowed with consciousness and a will.

Marx, Capital I, page 254.

This boundless drive for enrichment, this passionate chase after value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser.

Marx, Capital I, page 254.

In the capital-circuit, value ceases to be a passive property of commodities and becomes the active subject of the whole process, passing through the forms of money and commodity while preserving and expanding itself. This is the passage where Marx grants value its uncanny autonomy — the "automatic subject" that valorizes itself and breeds.

It is constantly changing from one form into the other, without becoming lost in this movement; it thus becomes transformed into an automatic subject. … In truth, however, value is here the subject of a process in which, while constantly assuming the form in turn of money and commodities, it changes its own magnitude, throws off surplus-value from itself considered as original value, and thus valorizes itself independently. For the movement in the course of which it adds surplus-value is its own movement, its valorization is therefore self-valorization [Selbstverwertung]. By virtue of being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or at least lays golden eggs.

Marx, Capital I, page 255. The ellipsis drops the intervening sentence listing capital as money and capital as commodities.

The section closes by naming the formula and marking its scope: whatever the type of capital — merchant, industrial, interest-bearing — this is the shape it shows in the sphere of circulation. That "in the sphere of circulation" is the hook Chapter 5 will pull on, because the formula as stated looks impossible.

M–C–M′ is in fact therefore the general formula for capital, in the form in which it appears directly in the sphere of circulation.

Marx, Capital I, page 257.