It passes through the second and concluding phase, C---M, after C has been altered in substance and value. But so far as capital-value, considered by itself, is concerned, it has merely suffered an alteration of its use-form in the process of production. It existed in the form of £422 worth of L and MP, while now it exists in the form of £422 worth of, or 8,440 lbs. of yarn. If we therefore consider merely the two circulation phases of capital-value, apart from its surplus-value, we find that it passes through 1) M---C and 2) C---M, in which the second C has a different use-form but the same value as the first C. Hence it passes through M---C---M, a form of circulation which, because the commodity here changes place twice and in the opposite direction -- transformation from money into commodities and from commodities into money -- necessitates the return of the value advanced in the form of money to its money-form -- its reconversion into money.
The same circulation act C'---M' that constitutes the second and concluding metamorphosis, a return to the money-form, for the capital-value advanced in money, represents for the surplus-value -- borne along by the commodity-capital and simultaneously realised by its change into the money-form -- its first metamorphosis, its transformation from the commodity-to the money-form, C---M, its first circulation phase.
We have, then, two kinds of observations to make here. First, the ultimate reconversion of capital-value into its original money-form is a function of commodity-capital. Secondly, this function includes the first transformation of surplus-value from its original commodity-form to its money-form. The money-form, then, plays a double role here. On the one hand it is the form to which a value originally advanced in money returns, hence a return to the form of value which opened the process. On the other hand it is the first converted form of a value which originally enters the circulation in commodity-form. If the commodities composing the commodity-capital are sold at their values, as we assume, then C plus c is transformed into M plus m, its equivalent. The realised commodity-capital now exists in the hands of the capitalist in this form: M plus m (£422 plus £78=£500).
Capital-value and surplus-value are now present in the form of money, the form of the universal equivalent.
At the conclusion of the process capital-value has therefore resumed the form in which it entered it, and as money-capital can now open and go through a new process. Just because the initial and final forms of this process are those of money-capital, M, we call this form of the circulation process the circuit of money-capital. It is not the form but merely the magnitude of the advanced value that is changed at the close.
M plus m is nothing but a sum of money of a definite magnitude, in this case £500. But as a result of the circulation of capital, as realised commodity-capital, this sum of money contains the capital-value and the surplus-value. And these values are now no longer inseparably united as they were in the yarn; they now lie side by side. Their sale has given both of them an independent money-form; 211/250 of this money represent the capital-value of £422 and 39/250 constitute the surplus-value of £78. This separation, effected by the realisation of the commodity-capital, has not only the formal content to which we shall refer presently. It becomes important in the process of the reproduction of capital, depending on whether m is entirely or partially or not at all lumped together with M, i.e., depending on whether or not it continues to function as a component part of the advanced capital-value. Both m and M may pass through quite different processes of circulation.
In M' capital has returned to its original form M, to its money-form, a form however in which it is materialised as capital.
There is in the first place a difference of quantity. It was M, £422. It is now M', £500, and this difference is expressed by M ... M', the quantitatively different extremes of the circuit, whose movement is indicated only by the three dots. M'>M, and M'---M = s, the surplus-value. But as a result of this circular movement M ... M' it is only M' which exists now; it is the product in which its process of formation has become extinct. M' now exists by itself, independently of the movement which brought it into existence. That movement is gone; M' is there in its place.
But M', being M plus m, £500, composed of £422 advanced capital plus an increment of the same amounting to £78, represents at the same time a qualitative relation, although this qualitative relation itself exists only as a relation between the parts of one and the same sum, hence as a quantitative relation. M, the advanced capital, which is now once more present in its original form (£422), exists as realised capital. It has not only preserved itself but also realised itself as capital by being distinguished as such from m (£78), to which it stands in the same relation as to an increase of its own , to a fruit of its own , to an increment to which it has given birth itself. It has been realised as capital because it has been realised as a value which has created value. M' exists as a capital-relation. M no longer appears as mere money, but expressly plays the part of money-capital, expressed as a self-expanded value, hence possessing the property of self-expansion, of hatching a higher value than it itself has. M became capital by virtue of its relation to the other part of M', which it has brought about, which has been effected by it as the cause, which is the consequence of it as the ground. Thus M' appears as the sum of values differentiated within itself, functionally (conceptually) distinguished within itself, expressing the capital-relation.