The relation between a circuit of capital forming part of a general circulation and a circuit forming links in an independent circuit is shown further on when we examine the circulation of M, which is equal to M plus m. M as money-capital continues capital's circuit; m, being spent as revenue (m---c), enters into the general circulation, but comes flying out of the circuit of capital. Only that part enters the latter circuit which performs the function of additional money-capital. In c---m---c money serves only as coin; the object of this circulation is the individual consumption of the capitalist. It is typical of the idiocy of vulgar economy that it gives out this circulation, which does not enter into the circuit of capital -- the circulation of that part of the value produced which is consumed as revenue -- as the characteristic circuit of capital.
In the second phase M---C, the capital-value M, which is equal to P (the value of the productive capital that at this point opens the circuit of industrial capital), is again present, delivered of its surplus-value, therefore having the same magnitude of value as it had in the first stage of the circuit of money-capital M---C. In spite of the difference in place the function of the money-capital into which the commodity-capital has now been transformed is the same: its transformation into MP and L, into means of production and labour-power.
In the functioning of commodity-capital C'---M', the capital-value, simultaneously with c---m, has consequently gone through the phase C---Mand enters now into the complementary phase M---C < L MP . Its complete circulation is therefore C---M---C< L MP .
First: Money-capital M appeared in Form I (circuit M ... M') as the original form in which capital-value is advanced; it appears here from the outset as a part of that sum of money into which commodity-capital transformed itself in the first circulation phase C'---M', therefore from the outset as the transformation of P, the productive capital, through the medium of the sale of commodities, into the money-form. Money-capital exists here from the outset as that form of capital- value which is neither its original nor its final one, since the phase M---C, which concludes the phase C---M, can only be performed by again discarding the money-form.
Therefore that part of M---C which is at the same time M---L appears now no longer as a mere advance of money by the purchase of labour-power, but as an advance by means of which the same 1,000 lbs. of yarn, valued at £50, which form a part of the commodity-value created by labour-power, are advanced to labour- power in the form of money. The money advanced here to the labourer is only a converted equivalent form of a part of the commodity-value produced by himself. And for that reason if no other the act M---C, so far as it means M---L, is by no means simply a replacement of a commodity in the form of money by a commodity in the use-form, but it includes other elements which are independent of the general commodity circulation as such.
M' appears as a converted form of C', which is itself a product of a previous function of P, the process of production. The entire sum of money M' is therefore a money-expression of past labour. In our illustration, 10,000 lbs. of yarn worth £500 are the product of the spinning process.
Of this quantity, 7,440 lbs. of yarn are equal to the advanced constant capital c worth £372; 1,000 lbs. of yarn are equal to the advanced variable capital v worth £50; and 1,560 lbs. of yarn represent the surplus-value s worth £78. If of M' only the original capital of £422 is again advanced, other conditions remaining the same, then the labourer is advanced the following week, in M---L, only a part of the 10,000 lbs. of yarn produced in the given week (the money-value of 1,000lbs. of yarn). As a result of C---M, money is always the expression of past labour. If the complementary act M---C takes place at once in the commodity-market, i.e., M is given in return for commodities existing in the market, this is again a transformation of past labour, from one form (money) into another form (commodities). But M---C differs in the matter of time from C---M. They may exceptionally take place at the same time, for instance when the capitalist who performs M---C and the capitalist to whom this act means C---M ship their commodities to each other at the same time and M is used only to square the balance. The difference in time between the performance of M---C and C---M may be more or less considerable.