II. ACCUMULATION AND REPRODUCTION ON AN EXTENDED SCALESince the proportions which the expansion of the productive process may assume are not arbitrary but prescribed by technology, the realised surplus-value, though intended for capitalisation, frequently can only by dint of several successive circuits attain such a size (and until then must therefore be accumulated) as will suffice for its effective functioning as additional capital or for entrance into the circuit of functioning capital-value.
Surplus-value thus congeals into a hoard and in this form constitutes latent money-capital -- latent because it cannot act as capital so long as it persists in the money-form. [6a] The formation of a hoard thus appears here as a factor included in the process of capitalist accumulation, accompanying it but nevertheless essentially differing from it; for the process of reproduction itself is not expanded by the formation of latent money-capital. On the contrary, latent money-capital is formed here because the capitalist producer cannot directly expand the scale of his production. If he sells his surplus-product to a producer of gold or silver, who puts new gold or silver into circulation or, what amounts to the same thing, to a merchant who imports additional gold or silver from foreign countries for a part of the national surplus-product, then his latent money-capital forms an increment of the national gold or silver hoard. In all other cases, the £78 for instance, which were a circulating medium in the hands of the purchaser, assume only the form of a hoard in the hands of the capitalist. Hence all that has taken place is a different distribution of the national gold or silver hoard.
If in the transaction of our capitalist the money serves as a means of payment (the commodities having to be paid for by the buyer on longer or shorter terms), then the surplus-product intended for capitalisation is not transformed into money but into creditor's claims, into titles of ownership of an equivalent which the buyer may already have in his possession or which he may expect to possess. It does not enter into the reproductive process of the circuit any more than does money in invested in interest-bearing securities, etc., although it may enter into the circuits of other individual industrial capitals.
The entire character of capitalist production is determined by the self-expansion of the advanced capital-value, that is to say, in the first instance by the production of as much surplus-value as possible;in the second place however (see Buch I, Kap. XXII) [English edition: Ch.
XXIV. -- Ed .] by the production of capital, hence by the transformation of surplus-value into capital. Accumulation, or production on an extended scale, which appears as a means for constantly more expanded production of surplus- value -- hence for the enrichment of the capitalist, as his personal aim -- and is comprised in the general tendency of capitalist production, becomes later, however, as was shown in Book I, by virtue of its development, a necessity for every individual capitalist. The constant augmentation of his capital becomes a condition of its preservation. But we need not revert more fully to what was previously expounded.
We considered first simple reproduction, assuming that the entire surplus-value is spent as revenue. In reality under normal conditions a part of the surplus-value must always be spent as revenue, and another part must be capitalised. And it is quite immaterial whether a certain surplus-value produced in any particular period is entirely consumed or entirely capitalised. On the average -- the general formula can represent only the average movement -- both cases occur. But in order not to complicate the formula, it is better to assume that the entire surplus-value is accumulated.
The formula: P ... C'---M'---C'< L MP ... P'stands for productive capital, which is reproduced on an enlarged scale and with greater value, and which as augmented productive capital begins its second circuit, or, what amounts to the same, renews its first circuit. As soon as this second circuit is begun, we once more have P as the starting-point;only this P is a larger productive capital than the first P was. Hence, if in the formula M ... M' the second circuit begins with M', M' functions as M, as an advanced money-capital of a definite magnitude. It is a larger money-capital than the one with which the first circular movement was opened , but all reference to its augmentation by the capitalization of surplus-value ceases as soon as it assumes the function of advanced money-capital. This origin is expunged in its form of money-capital, which begins its circuit.
This also applies to P' as soon as it functions as the starting-point of a new circuit.
If we compare P ... P' with M ... M', or with the first circuit, we find that they have not the same significance at all. M ... M' taken by itself as an isolated circuit, expresses only that M, the money-capital (or industrial capital in its circuit as money-capital), is money generating money, value generating value, in other words, produces surplus-value.
But in the P circuit the process of producing surplus-value is already completed upon the termination of the first stage, the process of production, and after going through the second stage (the first stage of the circulation), C'---M', the capital-value plus surplus-value already exist as realised money-capital, as M', which appeared as the last extreme in the first circuit.
That surplus-value has been produced is depicted in the first-considered formula P ... P (see expanded formula, p. 47) [See p. 75 of this book.