What is Total Capitalization?

The general formula of capital, in economic terms, is the form of movement of money as capital in the field of circulation.

Capital formula

Right!

The general formula of capital, in economic terms, is the form of movement of money as capital in the field of circulation.

Chinese name

Capital formula

the term

Economic terms

Manifestations

Money as capital

Formula

G = G + G

The form of movement of money as capital in the field of circulation is G (money)-W (commodity)-G '(money'). Under the capitalist mode of production, each capitalist must first possess a certain amount of money when he begins his exploitation activities. This amount of money is converted into capital through the special form of movement of G-W-G '. Here, the currency of the terminal is larger in quantity than the currency of the starting point, so that value multiplication occurs. This multiplication amount is the surplus value. Therefore, the general formula of capital clearly shows that the motive of capitalist production is to make money, which concentratedly reflects the essential characteristic of capital as the value that brings surplus value. At first glance, GWG seems to be a unique form of movement for commercial capital. In fact, it is not true. It is also applicable to industrial capital and interest-bearing capital. So called the general formula of capital.
Conversion of money into capital Although capital initially appeared as a certain amount of money, money itself was not capital. The difference between money as a capital and money as a medium for the circulation of commodities lies in the fact that they have different forms of circulation.
As the currency of commodity circulation, its circulation form is the form of simple commodity circulation. The formula is:
W (commodity)-G (currency)-W (commodity)
As the currency of capital, its circulation formula is:
G (currency)-W (commodity)-G (currency)
There are common points between the simple commodity circulation formula and the capital circulation formula: they are divided into two opposite circulation stages of selling (WG) and buying (GW); The sellers oppose each other; They are the unification of the two opposing stages of selling and buying. This unification is achieved through the appearance of three parties, namely, the seller, the buyer, and both the buyer and the seller. These common points indicate that they all belong to the category of commodity economy, and there is a certain relationship between them, so simple commodity production can be transformed into capitalist production under certain conditions. However, in the formula for the circulation of money, unlike in the formula for the circulation of simple commodities, money must always undergo a unique movement before it can be converted into capital.
From the perspective of the form of circulation, the difference between the two circulation formulas is that the order of the two phases of selling and buying is opposite. WGW starts with selling and ends with buying. Commodities are the starting point and ending point of the movement. Currency is the medium of the process and is ultimately spent by the buyer. The GWG starts with buying and ends with selling; currency is the beginning and end of the movement; commodities are the medium of the process. Here, spending money is only to recover the money, money is only prepaid, and the return of money is determined by the nature of the money expenditure itself. This difference in form reflects the essential difference in content: The purpose and content of the movement are different. In WGW, the starting point is a commodity, and the ending point is another commodity, which is sold for buying. The purpose of the campaign is to obtain value in use and meet consumer needs. The exchange of different use values is the actual content of the movement and embodies the exchange of different materials of social labor. In GWG, the whole movement starts from currency and returns to currency. It is bought for sale. The motivation and fundamental purpose of the movement is to exchange value itself. Because the poles of the movement are money, they are not qualitatively different, but they are quantitatively different. The money recovered from circulation must be greater than the money put into circulation. Therefore, the complete form of this movement process should be G-WG , where G = G + G, G is a multiplication amount of the original prepaid monetary amount, that is, residual value. It can be seen that the content of sports lies in the proliferation of value. It was this unique movement that turned money into capital. Capital is value that brings surplus value. The boundaries of exercise are different. The simple purpose of simple commodity circulation is to obtain the use value it needs to meet the consumption as its ultimate purpose. Therefore, the satisfaction of the need is the ultimate limit of the movement. The purpose of capital circulation is to pursue the proliferation of value, and capital can only bring surplus value continuously in the continuous movement. If the movement ceases, it will lose its ability to multiply value and it will not be capitalized. Therefore, the movement of capital is endless. The capitalist is a conscious bearer of the capital movement and a personified capital. The objective content of the movement of value multiplication has become the subjective purpose of the capitalists; the infinity of the capital movement determines the infinite greed of capitalists for surplus value. The relationship between the subject and the embodiment of the movement is different. In the simple commodity circulation formula, the main body of the movement is the use value. Money, as an independent form of the existence of value, just acts as a medium for the process of commodity exchange, and it will disappear as soon as the movement is over. On the contrary, in the capital circulation formula, value is the subject of movement, and money and commodities are just different forms that capital value takes in the course of movement. In the process, value is constantly transformed from one form to another, but it will never disappear. Instead, it will constantly save itself, expand itself, change its quantity, and constantly multiply itself. Because the subjects of the movement are different, the economic relations reflected in the two circulation formulas are also different. In simple commodity circulation, value embodies the relationship between the producers of commodities exchanging their labor with each other; while capital circulation represents the relationship between original value and surplus value, that is, capitalist production relations.
The contradictory currency of the general formula, through the movement of GWG , brings surplus value, which is then converted into capital. Where does the surplus value come from? Formally, the general formula of capital contradicts the nature and laws of commodities, value, currency, and circulation itself. Commodity is the unity of use value and value; value is the materialized form of abstract labor, which is formed in the production process and does not multiply in circulation; metal money is the general equivalent of a commodity, and its value is determined in production , It will not multiply itself in circulation; circulation itself is only a change in the form of the commodity, not a source of value proliferation. All this shows that the circulation process does not produce surplus value. However, in the general formula of capital, the surplus value is the result of circulation, and the value is indeed multiplied. This is the contradiction of the total capital formula.
Some bourgeois economists think that surplus value is generated by circulation, which is wrong. No matter whether it is an equivalent exchange or an unequal exchange, the surplus value cannot be generated in the circulation process: The equivalent exchange. Since the exchange at each stage of buying and selling is carried out in accordance with the principle of equivalent exchange, buying goods with money or selling money to obtain money are only changes in the form of value, and do not include changes in the amount of value. In pure form, it is an equivalent exchange, which cannot produce surplus value. Unequal exchange. Whether it is expensive or cheap, it cannot produce surplus value. Because the clearing house gives each owner the same rights, the capitalist is both a buyer and a seller. It is assumed that the seller has certain privileges to sell the goods above the value, but when he becomes a buyer, other sellers also have the same right to sell the goods at a high price. In this way, the benefits obtained when he sells expensively are lost when buying. . In the same way, you can't get surplus value by buying cheaply. Even if some people buy both cheaply and expensively, this cannot tell the true source of surplus value. Because what he earns is what others lose. This kind of deceptive behavior in the purchase and sale of commodities can only change the distribution of the value of existing commodities in society among different people or groups, and the total value of the entire circulation will not increase in the slightest.
Residual value cannot be generated from circulation, and something that cannot be seen in circulation must occur outside the circulation process. However, surplus value cannot be generated without circulation, because circulation is the sum of all the interrelationships of the owners of the goods. Leaving the field of circulation, commodity owners can only have relations with their own commodities. They can only use their labor to create value, but cannot create value for proliferation. Therefore, outside the circulation, without contact with other commodity owners, the value cannot increase, and the currency cannot be converted into capital. Therefore, capital cannot be generated from circulation. The contradiction of the general capital formula must be resolved according to the inherent law of commodity exchange and the equivalent exchange as the starting point.
Since the change in the value of currency converted into capital cannot occur in the currency itself, it cannot occur in the second stage of circulation, that is, the sale of goods. This change can only happen to the goods purchased in the first stage of circulation. But it can't happen to the value of the purchased goods, because the goods are bought and sold by value. Therefore, this change can only occur in the use value of the purchased goods. To convert money into capital, the owner of the money must find such a commodity in the market. Its use value itself has the special attribute of becoming a source of value, so that its use itself can create value. This special commodity is labor, and labor to become a commodity is a prerequisite for currency to capital.
Labor is the sum of physical strength and intelligence that exists in a person's body. Under the conditions of capitalism, the labor force becomes a commodity, that is, an object of buying and selling, and has value and use value. The value of the labor force is determined by the value of the means of living necessary to produce, develop, maintain and continue the labor force. The capitalist first acts as a buyer in circulation, purchasing means of production and labor according to value. Then enter the production process and consume labor. The real realization of labor use value is labor itself, which can create greater value than the labor itself. What is decisive here is that the value of labor and the value created by labor in the production process are two different quantities. As long as the labor time of the hired worker is longer than the time required to compensate the value of the labor force, the value created in the production process will exceed the value of the labor force, thereby producing surplus value. Finally, as a seller, the capitalist sells the commodities he possesses, including the surplus value, according to the value, and realizes the surplus value. Throughout the process, commodity exchanges have followed the principle of equivalent exchanges. But as a result, value has multiplied, and capitalists have obtained surplus value. The process of converting money into capital is carried out both in circulation and not in circulation. To say that it is carried out in circulation means to use circulation as a medium and to purchase this special commodity on the market as a prerequisite. It is said that it does not take place in circulation because circulation is only to prepare for the process of value multiplication. Created in the field of production. In this way, the contradiction of the total capital formula was finally resolved.
The contradiction of the general formula of capital actually raises the source of surplus value. The problems to be solved are: the essence of capital and the conditions under which it arises, and the secret of capitalist exploitation. The bourgeois classical political economy did not solve this problem. Based on the scientific theory of labor value, Marx adhered to the principle of equivalent exchange to explain the conversion of money to capital, discovered the special commodity of labor (see labor commodity), and distinguished labor and labor, thereby solving the general formula of capital. The contradictions revealed the secret of capitalist exploitation. On this basis, can we fully reveal the inherent contradictions of the capitalist mode of production and its laws of movement.