The Circuit of Capital

Authored by: Paulo L. dos Santos , Duncan K. Foley

Routledge Handbook of Marxian Economics

Print publication date:  March  2017
Online publication date:  March  2017

Print ISBN: 9781138774933
eBook ISBN: 9781315774206
Adobe ISBN:

10.4324/9781315774206.ch10

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Abstract

The Circuit of Capital is a conceptual tool first advanced by Marx (1893) to analyze the process of capitalist accumulation, its requirements, and potential contradictions. It is founded on consideration of the characteristic motion or metamorphoses experienced by capital value as it seeks self-expansion through the exploitation of wage-labor, which Marx schematized as, (1) M − C ( l p , m p ) … P … C ′ − M ′ The circuit is opened as capital value in monetary form M is advanced as capital outlays that purchase input commodities C, including labor power and means of production. Those inputs are combined in productive processes P that result in the completion of output commodities C′. The circuit is closed as output commodities are sold, typically generating revenues M′ that exceed the original capital outlay and realize capitalist profits. Those profits are grounded on the appropriation of surplus value, made possible by the fact that employed labor-power can typically contribute more value to output commodities than its own value. The capitalization of fractions of profits to support growth in the scale of the circuit is taken as the most general foundation for the accumulation of capital—i.e., economic growth.

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