Soren Mau - Transition To Capital

Historical Materialism 26.
1 (2018) 68–102
brill.com/hima
The Transition to Capital in Marx’s Critique of

Political Economy
Søren Mau
University of Southern Denmark, Odense
smau@sdu.dk
Abstract
The introduction of the concept of capital in Capital – with the words ‘we find’ – has
provoked a great deal of discussion about the precise relation between the categories of
simple circulation and the concept of capital. In this article, I argue that Marx derives
the concept of capital by way of an analysis of the immanent contradictions of money,
and that this dialectical derivation can be understood as a conceptual movement in
which the concepts of money and capital progressively change their modal status.
Furthermore, I examine the development of this transition to capital throughout
Marx’s writings from the period 1857 to 1872, arguing that the same arguments can be
found in all the relevant writings. Finally, the article provides a critical review of the
literature on the transition to capital.
Keywords
Marx – capital – dialectics – money – circulation
Introduction
In Capital, the concept and so-called general formula of capital is introduced

with these words: ‘alongside this form [C–M–C, i.e. simple circulation] we find
* The author would like to thank Anne-Marie Søndergaard Christensen, Esben Bøgh Sørensen,
Dominique Routhier, the editors and the two anonymous reviewers for their generous
comments and suggestions.
© koninklijke brill nv, leiden, ��8 | doi 10.1163/1569206X-00001542

The Transition to Capital in Marx ’ s Critique of Political Economy 69
another specifically different form: M–C–M’.1 This seems to be a somewhat

nonchalant way of introducing what is arguably the most fundamental concept
of the critique of political economy, especially in comparison to the meticulous
dialectical deduction of the concept in the Grundrisse and the Urtext.2
The different ways of introducing the concept of capital in the various
manuscripts written in the period from the Grundrisse (1857–8) to the
publication of Capital (1867) have provoked a great deal of discussion. Is
there a necessary relation between, on the one hand, the categories of simple
circulation (e.g. commodity, value, abstract labour and money) and, on
the other, the concept of capital? Are capitalist relations of production the
necessary presupposition of the concept of simple circulation – or can the
latter be seen as corresponding to a society with so-called ‘simple commodity
production’, as Engels argued? Do the words ‘we find’ in the quote above
indicate that Marx reached a theoretical impasse and replaced the attempt to
dialectically deduce the concept of capital with a methodologically superior
appeal to ‘ordinary experience’, as Jacques Bidet argues?3 Or is Capital rather
the culmination of a process of theoretical betrayal, in which Marx sacrificed
the superb dialectic of the Urtext in the name of ‘popularisation’, as Michael
Heinrich argues?4 These are some of the most important questions contained
in the problematic of the transition to capital, and some of the questions that
I will touch upon and clarify in the following. I will examine the transition to
capital in three sections:
The first section presents a reconstruction of what I take to be Marx’s
essential arguments with regard to the transition to capital, that is, the
dialectical deduction of the concept of capital. Drawing on all of the relevant
writings of Marx from the period 1857–72 – including the 1861–3 Manuscripts,
which are often completely neglected with regard to this theoretical problem5 –
I argue that Marx unfolds a coherent derivation of the concept of capital, and
that this derivation can be understood as a dialectical movement in which the
1 Marx and Engels 1996, p. 158.

2 The Urtext is a fragment of the draft for the Contribution to the Critique of Political Economy. It
was written in the autumn of 1858, published together with the Grundrisse in 1939–41 and
made available in English translation in 1987.
3 Bidet 2007, p. 163.
4 Heinrich 1999, pp. 253–5.
5 The 1861–3 Manuscripts began as the continuation of the Contribution to the Critique of
Political Economy (1859), but grew into a huge manuscript, comprising over 2000 pages.
Kautsky published parts of it in a modified form as Theories of Surplus Value in 1905–10, but
the original text was not published until 1976–82. It was published in English translation in
1988–94.
Historical Materialism 26.1 (2018) 68–102

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concepts of money and capital undergo successive changes with regard to their
modality, i.e. their status as necessary, possible and impossible. Furthermore,
I will also show that the derivation of the concept of capital is, in the conceptual
order of presentation, conducted before the transition from the sphere of
circulation to that of production – a distinction that is often overlooked in
the literature.
Based on this reconstruction of the transition to capital, in which capital
is revealed to be the necessary logical result and presupposition of the
categories of simple circulation, the second section traces the development
of the transition to capital throughout Marx’s writings from the Grundrisse to
Capital. In contrast to the widespread tendency to oppose these texts I argue
that the central arguments first developed in the Grundrisse can also be found
in the 1861–3 Manuscripts and Capital, albeit in a different and abbreviated –
but nevertheless coherent – form of presentation.
Finally, the third section provides an overview and evaluation of the
literature on the transition to capital. Distinguishing between three dominant
readings – a historical, an empirical and a logical – I separate the wheat from
the chaff in light of the first and second sections and highlight the widespread
confusion about the transition to capital.
The goal of this article is in the first place to provide a coherent reading of
Marx’s texts, but in the final instance the significance of such a reading stems
from its critical and political meaning. The transition to capital constitutes, as
will become clear in the following, the crucial argument in the critique of the
ideology of circulation, in which capitalism appears as a system of freedom and
equality. It furthermore has ‘direct political consequences’,6 as the dialectical
derivation of the concept of capital shows why the idea of ‘market socialism’,
i.e. a non-capitalist market economy, is inherently contradictory. In other
words, by informing us what capitalism is, the transition to capital also informs
us about what it would mean to abolish it.
The Transition to Capital
In the bourgeois conception of the economy, the market functions as the prism
through which society is understood. As Anwar Shaik has recently pointed out,
‘neoclassical economics presents the exchange of equivalents as the central
6 Heinrich 2012, p. 84. See also Heinrich 2013, p. 177; Elbe 2008, p. 308; and Callinicos 2014,
pp. 135ff.

organizing principle of capitalist society’.7 The market – or the sphere of

circulation – is understood as the place where free and equal producers go
in order to exchange their commodities, for the benefit of all; it is a way of
achieving ‘co-ordination without coercion’,8 as Milton Friedman once put it:
the great advantage of the market … is that it permits a wide diversity. It

is, in political terms, a system of proportional representation. Each man
can vote, as it were, for the color of the tie he wants and get it[.]9
Marx describes this paradigmatic imaginary of the free and pluralist sphere of
circulation in the following manner:
The busiest streets of London are crowded with shops whose show cases
display all the riches of the world, Indian shawls, American revolvers,
Chinese porcelain, Parisian corsets, furs from Russia and spices from
the tropics, but all of these worldly things bear odious, white paper
labels with Arabic numerals and then laconic symbols £ s. d. This is how
commodities are presented in circulation.10
As Friedman notes, ‘no one who buys bread knows whether the wheat from
which it is made was grown by a Communist or a Republican’.11 In the same way,
no-one knows how and under which conditions the bread was produced. In the
market, relations of production disappear.12 Countering this disappearance by
tracing the necessary logical presuppositions of the commodity form is precisely
what the transition to capital is about. Against the ‘confusion of thought which
is called forth by the mirage of circulation’,13 Marx wants to show that
The simple circulation is … an abstract sphere of the bourgeois process of

production as a whole, which through its own determinations shows itself
7 Shaik 2016, p. 9.
8 Friedman 2002, p. 13.
9 Friedman 2002, p. 15.
11 Friedman 2002, p. 21.
12 Marx and Engels 1986, pp. 182ff.
13 Marx and Engels 1997, p. 357. This is a quote from the second volume of Capital. The
corresponding passage in Marx’s original manuscript (1878) can be found in MEGA II/11,
p. 698.

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to be a moment, a mere form of appearance of some deeper process lying

behind it, even resulting from it and producing it – industrial capital.14
From passages like this, it is clear that Marx regarded simple circulation as a
‘surface’ under which capitalist relations of production necessarily prevail.
However, this and similar passages merely show Marx’s intention, not his
arguments.15
In his theory of value, Marx argues that value must necessarily obtain an
independent and adequate form of existence in a society in which exchange
of commodities is the basis of social reproduction. Proceeding from the
commodity, i.e. ‘the simplest social form in which the product of labour
presents itself in contemporary society’,16 Marx shows that it must necessarily
double itself into commodity and money, the latter functioning as the ‘the
visible incarnation, the social chrysalis state of every kind of human labour’.17
That value must gain an independent and adequate form of existence means
that it must be able to exist without being directly dependent upon the
particular commodities in which it is embodied.18 This peculiar situation,
in which the abstract universal exists directly on the same ontological level
as the particular – this ‘incarnation’, as Marx frequently calls it – is what the
introduction of money achieves. Or, as he put it in the first edition of Capital:
‘It is as if, alongside and external to lions, tigers, rabbits, and all other actual
animals … there existed in addition the animal, the individual incarnation of
the entire animal kingdom.’19
Money is objectified exchange value, and since exchange value expresses
the relations between commodities, one can say that with the introduction of
money, the relation gains an objective being independently of the relata. Marx’s
theory of value thus reveals not only that a social relation (value) must express
itself in a relation between commodities (exchange value), but also that this
relation between commodities must obtain an objective being independently
of the relata. This argument about the need for an independent and adequate
form of existence of value is spelled out in the analysis of the value form in the
14 Marx and Engels 1987, p. 482. See also Marx and Engels 1987, p. 466.
15 Campbell 2013, pp. 172ff.: ‘In the drafts [the Grundrisse and the Urtext], the superficial
character of simple circulation is often just asserted.’
16 Marx and Engels 1989a, p. 544.
19 Marx 1976, p. 27.

third part of Chapter One of Capital and constitutes the necessary background
for the transition to capital.20
A dialectical transition from simple circulation to capital essentially
requires two things: first, it must be shown that value is not able to obtain
an independent and adequate form of existence within simple circulation.
Secondly, it must be shown that this inability of simple circulation results in
another form of circulation (M–C–M) that overcomes the contradictions of
the form C–M–C.
The Possibility of Capital and the Impossibility of Money

Value circulating in the form of capital is already possible with the doubling
of the commodity into commodity and money. When money is introduced,
the act of buying and selling splits into two separate processes, C–M and
M–C, and with this separation, the process M–C–M also becomes – at
least formally – possible:
As exchange itself splits into two mutually independent acts, so the

general movement of exchange is severed from the exchangers, from
the producers of the commodities. Exchange for the sake of exchange
is separated from exchange for the sake of commodities. An estate of
merchants intervenes between the producers, an estate which buys
only in order to sell, and sells only in order to buy again, aiming in this
operation not at the possession of the commodities as products but
merely at the acquisition of exchange value as such, of money.21
The point here is simply that, ‘if I can sell in order to buy, I can just as well buy
in order to sell’.22 At this point, Marx does not show that the form M–C–M is
a necessary consequence of the doubling into commodities and money – he
merely shows that capital is a possible form of circulation.
As noted, Marx’s theory of value reveals that money ‘is a crystal formed of
necessity’.23 The result of the further analysis of money, however, is that money
20 Cf. Backhaus 1997; Brentel 1989; Reichelt 1970, Chapter 3; Elbe 2008, Chapter 1.3; Hoff
2009, Chapter 3.1; Murray 1988, Chapter 13; Heinrich 2012, Chapter 3; and Heinrich
1999, Chapter 6.
22 Marx and Engels 1986, p. 135; emphasis added.

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is in fact not capable of constituting an ‘adequate being of exchange value’24

when confined within the limits of simple circulation:
It cannot be said that in simple circulation exchange value as such is

realised. It is always realised only in the moment of its disappearance. If a
commodity is exchanged for another commodity by means of money, its
value-character [Wertbestimmung] disappears in the moment in which it
is realised, and it steps outside the relation, becomes indifferent to it and
is now only a direct object of need.… In the first case [money as hoard]
the form of exchange value is extinguished, in the second its substance;
in both, therefore, its realisation is its disappearance.25
Money thus ceases to be the ‘direct incarnation’26 of value, whether thrown

into circulation in the form of C–M–C or withdrawn as a hoard. As a means
of circulation, money is nothing but a ‘vanishing mediator [verschwindende
Vermittlung]’,27 because the form C–M–C is ultimately directed towards
consumption, in which the commodity loses its value-form and becomes a
mere product or use value. As Robert Kurz puts it, ‘every commodity goes from
production over sale to consumption, where it disappears. The intermediary
trade cannot count as a proof of a circulation of commodities, because it only
slightly prolongs the one-way street to consumption’.28 It is equally impossible,
however, for value to sustain itself as a hoard outside of circulation, because
in that case, money regresses to ‘its metallic being, with its economic being
annihilated’29 and is reduced to ‘the inorganic ashes of the whole process’.30
The conclusion to this analysis is clear: money cannot function as the
incarnation of value, neither in simple circulation, nor when it is withdrawn
from circulation.31 This contradicts the necessity of an independent form of
24 Marx and Engels 1987, p. 488. This is a quote from the Urtext, where Marx had not yet
precisely distinguished between exchange-value and value. In this quote, as in many of
the following quotes in this article, the correct term would be ‘value’. However, as Marx
later wrote: ‘once we know this, such a mode of expression does no harm’ (Marx and
Engels 1996, p. 71).
27 Marx and Engels 1986, p. 199; Marx and Engels 1987, p. 484.
28 Kurz 2012, p. 160.
31 Cf. Heinrich 1999, pp. 255ff.; Murray 1988, pp. 175ff.; Brentel 1989, pp. 254ff.; PEM 1973,
pp. 96ff.; and Wolf 2007, Section VI.

existence of value in a society in which products of labour primarily take on the

form of commodities. We are therefore left with the contradictory conclusion
that money – as the adequate form of existence of value – is both necessary
and impossible.
The Necessity of Capital, I

Marx stresses that we cannot import arbitrary and external facts or concepts
into the transition: ‘In developing capital it is important to insist that the sole
presupposition – the sole material we start out from – is commodity circulation
and money circulation, commodities and money’.32 On this basis, we can
specify the requirements for value in so far as it has to acquire an independent
form:
Its entry into circulation must itself be an element of its staying with
itself [Beisichbleiben], and its staying with itself must be an entry into
circulation. That is to say, as realised exchange value it must also be
posited as the process in which exchange value is realised … In other
words, exchange value is now determined no longer as a simple object,
for which circulation is only an external movement, or which exists
individually in a particular material, but as a process, as its self-relation
by means of the process of circulation.33
This process is what is formalised as M–C–M. What Marx says here is essentially
that value, which necessarily doubles itself into commodity and money, must
circulate in the form of M–C–M if it is to acquire an ‘adequate existence’34 – or,
in other words, that value must necessarily circulate in the form of capital, ‘in
which money in its perfected determination really first develops’.35 The form
M–C–M resolves the problems inherent in C–M–C by positing value as both
the beginning and the end of the process and giving value an ‘independent
form by means of which its identity with itself can be established’.36 Circulating
in the form M–C–M, value becomes ‘the essence which remains equal to itself
[das sich gleichbleibende Wesen]’.37
32 Marx and Engels 1988, p. 33; translation modified. See also Marx and Engels 1988, pp.
36ff.
36 Marx and Engels 1996, p. 165; translation modified.

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In this way, Marx deduces the concept and general formula of capital as
the necessary product of the contradictions inherent in simple circulation.
The crucial thing to note here is that, at this stage of the argument, capital
should be understood only as a form of circulation. In all of his manuscripts
Marx is careful to use the expression ‘form of circulation’ when introducing the
concept of capital, whereas otherwise he speaks of capital as either a mode of
production or a social relation.38 The transition to capital is therefore entirely
immanent to the sphere of circulation, which is why Marx writes that
When we speak of capital here, it is still only a name. The only

determinateness in which capital is posited in distinction from immediate
exchange value and from money, is that of exchange value maintaining
and perpetuating itself in and by circulation.39
The fact that capital is here understood only as a form of circulation, means
that it is not yet determined as industrial or productive capital – i.e. implying
specific relations of production – but can also refer to the ‘antediluvian’40 forms
of merchant’s and usury capital. This is why the general formula of capital is
general, in contrast to the specific formula of productive or industrial capital
as analysed in the second volume of Capital.41
The Impossibility of Capital

In the next step of the argument, Marx shows that capital as a form of
circulation, which has just been revealed as the necessary presupposition of
simple circulation, is in fact inherently contradictory and thus impossible.
Exchange is only undertaken in order to arrive at a point different from
the one where the process started: for the possessor of a commodity, the
‘commodity possesses for himself no immediate use value. Otherwise,
he would not bring it to the market’.42 This means that there is an implicit
difference between the first and last ‘C’ in C–M–C. This must also be the case
in M–C–M – otherwise, it would be ‘just as purposeless as it is absurd’.43 In
both C–M–C and M–C–M, there is then an implicit difference between the
38 Marx and Engels 1986, p. 137; Marx and Engels 1983, p. 301; Marx and Engels 1987,
p. 324; Marx and Engels 1988, p. 10; Marx and Engels 1996, p. 158.

beginning and the end of the process – but whereas in the first case we are
dealing with a qualitative difference, in the second case the difference can only
be quantitative.44 Therefore ‘increase coincides with self-preservation in the
case of value which holds on to itself as value’.45 This necessary surplus value is
inscribed in the formula with a mark: M–C–M′.
The problem with this is that it directly contradicts what Marx terms the
immanent law of circulation: the exchange of equivalents. This law must
generally apply in order for exchange to uphold itself as the basis of social
reproduction – otherwise, the sphere of circulation would be a sphere
of constant fraud, which cannot be the basis of stable relations of social
reproduction: ‘The capitalist class, as a whole, in any country, cannot overreach
themselves’.46 However, if the law of circulation is not systematically violated,
then M–C–M′ cannot possibly be the dominant form of circulation. Marx
sums up the contradiction in a clear manner:
It is therefore impossible for capital to be produced by circulation, and

it is equally impossible for it to originate apart from circulation. It must
have its origin both in circulation and yet not in circulation.
We have, therefore, got a double result.
The transformation of money into capital has to be explained on the
basis of the laws that regulate the exchange of commodities, in such a
way that the starting point is the exchange of equivalents. Our possessor
of money, who as yet is only an embryo capitalist, must buy his com-
modities at their value, must sell them at their value, and yet at the end
of the process must withdraw more value from circulation than he threw
into it at starting. His development into a full-grown capitalist must take
place, both within the sphere of circulation and without it. These are the
conditions of the problem. Hic Rhodus, hic salta!47
What we are dealing with here is a clear contradiction between, on the one
hand, the necessity of value acquiring an independent form of existence in
the form M–C–M′, and, on the other, the law of circulation. M–C–M′ is ‘utterly
incompatible with the nature of money, the commodity, value and circulation
itself’.48 In other words, capital is both necessary and impossible.

47 Marx and Engels 1996, pp. 176ff.; translation modified.

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It is important to note that capital is here still understood only as a form of

circulation. Otherwise, the argument would not make sense: the contradiction
between the law of circulation and M–C–M′ is only a contradiction because
M–C–M′ is understood as a process only occurring within the sphere of
circulation (i.e. consisting only of acts of buying and selling).
The Necessity of Capital, II

The contradiction between the necessity of exchange of equivalents and the
necessity of surplus value can only be sublated if the possessor of money is ‘so
lucky as to find, within the sphere of circulation, in the market, a commodity,
whose use value possesses the peculiar property of being a source of value’.49
As we know from the theory of value, this commodity can only be labour power.
With this argument, Marx has shown that if we proceed from the exchange
of commodities as a dominant social form, labour power must be accessible
in the sphere of circulation. Whether this is actually the case is of course not
something that can be deduced by dialectical analysis of concepts: ‘We cling to
the fact theoretically, as he [the capitalist] does practically’.50
Here we bump into the (in)famous ‘limits to the dialectical form of
presentation’.51 This limit is not a purely external one, but rather signifies the
point at which the dialectical form of presentation, by way of its own immanent
dynamic, points towards something outside of itself – or, as Marx puts it: ‘[O]ur
method indicates the points at which historical analysis must be introduced’.52
The important thing to note here is that the limit of the dialectics refers to the
existence of labour power as a commodity, and not to the transition to capital.
With the introduction of the commodity labour-power into the chain
of arguments, the contradiction between the exchange of equivalents and
M–C–M′ is sublated. We can thus again confirm the possibility and necessity
of capital, but now the concept of capital has acquired a new meaning: as the
consumption of the commodity labour-power is what is commonly termed
production, capital is now no longer to be understood as merely a form of
circulation, but rather as mode of production. We have thereby completed the
transition from the sphere of circulation to ‘the hidden abode of production’,53
and now see that capital can only be based upon the separation of the producers
from the means of production and subsistence, or in other words: that capital


is ultimately a social relation delineating a field of social antagonism and class

struggle. Retrospectively, it then becomes possible to see that class struggle
was present from the very beginning of the critical exposition of categories.
With the transitions (a) from simple circulation to capital as a form of
circulation, and (b) from capital as a form of circulation to capital as a mode of
production, we have thereby shown that simple circulation is nothing but ‘an
abstract sphere of the bourgeois process of production as a whole’ and that it is
only ‘a mere form of appearance of some deeper process lying behind it, even
resulting from it and producing it – industrial capital’.54
The Trajectory of the Transition to Capital, 1857–72
One of the areas of controversy in the literature on the transition to capital

is whether Marx made any important changes to his arguments in the period
from the Grundrisse to Capital. On the one hand we have a scholar like Bidet,
who maintains that the dialectical arguments in the Grundrisse and the
Urtext are ‘artificial, revealing themselves according to the “obligatory figures”
of Hegelian Logic, employed a priori in an almost experimental manner’.55
According to Bidet, Marx realised the inadequacy of these experiments and
instead opted for a non-dialectical appeal to ‘ordinary experience’ when
introducing the general formula of capital.56 On the other hand, we have
Heinrich, according to whom the Urtext is superior to the later texts, where
the transition to capital entirely disappears.57 Heinrich here concurs with
the ‘popularisation’-thesis put forward by Helmut Reichelt and Hans-Georg
Backhaus.58 All their important differences notwithstanding, Bidet and
Heinrich, like Alex Callinicos, Nadja Rakowitz, Projektgruppe Entwicklung
des Marxschen Systems and Reichelt, agree that Capital does not contain the
same arguments as the Grundrisse and the Urtext.59 This has been contested
54 Marx and Engels 1987, p. 482. The distinction between capital as a form of circulation
and capital as a mode of production, and thereby also between the transition from simple
circulation to capital and the transition from circulation to production – a distinction
that is, as we have seen, crucial for correctly understanding Marx’s line of thought – is
often overlooked or blurred, especially by Bidet 2007, pp. 153ff., and Callinicos 2014,
pp. 133ff.
55 Bidet 2007, p. 153; Bidet 2005, pp. 139ff.
56 Bidet 2005, and Bidet 2007, pp. 159, 163.
57 Heinrich 1999, p. 253.
58 Reichelt 1995; Backhaus 1998.
59 Callinicos 2014; Rakowitz 2000; Reichelt 1970; PEM 1973.

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by Martha Campbell who argues that the same arguments can be found in
both the Grundrisse and Capital, albeit presented in different ways. According
to her, the earlier drafts are merely ‘elaborations on and alternative statements
of the same points [that] clarify Marx’s meaning and lend additional support
for interpreting Capital’.60 In this section, I will trace the development of the
arguments presented above throughout Marx’s writings from the period 1857
to 1872, where the second edition of Capital was published.
Section ‘6) Transition to Capital’ in the Urtext is essentially a collection of
passages almost directly copied from the Grundrisse. Marx seems to have simply
copied all the relevant passages in the Grundrisse and put them all together
in one section. This means that the Urtext does not contain any important
arguments that cannot also be found in the Grundrisse.61 Nonetheless, the
Urtext makes it clear that the relevant passages scattered across the Grundrisse
actually constitute something like one coherent argument.
One obvious theoretical mistake of the Grundrisse should be mentioned
at this point: the application of the formula M–C–C–M to money as hoard.62
As Bidet rightly argues, ‘M–C–C–M cannot represent the third function of
money’.63 This is confirmed by the fact that from the Urtext onwards, the
formula M–C–C–M (abbreviated as M–C–M) is reserved for capital, while
hoarding is given the formula C–M.64 The mistake is, however, purely formal
and is not due to a conceptual conflation of money as hoard and capital, which
Marx clearly distinguishes.65 In other words, Marx here makes an erroneous
formalisation of a correct concept of money as hoard.66
60 Campbell 2013, p. 150.

61 This is apparently overlooked by the Projektgruppe Entwicklung des Marxschen Systems,
who oppose the two texts. See PEM 1973, p. 58.
62 Marx and Engels 1986, p. 150. The mistake also appears in Marx’s letter to Engels of
2 April 1858 (Marx and Engels 1996, p. 302).
63 Bidet 2007, p. 155.
64 Marx and Engels 1987, p. 489; Marx and Engels 1987, p. 371; Marx and Engels 1988, p. 18;
Marx and Engels 1996, p. 141.
66 Tony Smith surprisingly repeats this quite obvious mistake in his reading of the transition
to capital: ‘When exchange is undertaken in order to accumulate a hoard, or in order
to collect a reserve fund to make payments as bills become due, or in order to possess
a universal money that can be used throughout the world market, the C–M–C circuit
is replaced by a M–C–M circuit’ (Smith 1990, p. 89). The mistake also carries over to
Endnotes, who follow Smith (Endnotes 2010, p. 119).

The Impossibility of Money

The exposition of the immanent contradictions of simple circulation and the
inability of money to constitute an independent form of value within simple
circulation can be found in all of Marx’s writings from the Grundrisse to (and
including) Capital.67 One especially evident example of this continuity is the
following passage:
The imperishability money strove for when it posited itself negatively

against circulation and withdrew from it, is attained [erreicht] by capital
in that it preserves itself precisely by giving itself up to circulation.68
This quote from the Grundrisse, where Marx makes it clear that capital achieves
what money was unable to achieve within simple circulation – that is, giving
value an independent form of existence – is copied almost without changes
into the Urtext and the 1861–3 Manuscripts.69 It also appears in a reworked form
in Capital, where the economic categories are replaced with their ‘character
masks’:
The restless augmentation of value, which the miser [Schatzbildner]

strives after when seeking to save his money from circulation, is attained
by the more acute capitalist by constantly giving it up to circulation.70
The passages are not identical, but the operative opposition between ‘striving’
and ‘attaining’ remains the same, and the same essential idea is clearly present
in the texts: money cannot maintain itself as the independent form of existence
of value when it is hoarded. The goal of the miser is the augmentation of value,
but this is an impossible goal since money ceases to be the direct incarnation
of value if withdrawn from circulation. Hoarding is thus a ‘Sisyphus-like
labour’, as Marx puts it in Capital;71 like Sisyphus, the miser cannot but fail to
achieve his goal. We can also see the continuity of this analysis of hoarding in
67 Cf. the Grundrisse (Marx and Engels 1986, pp. 151, 166, 191, 193); the Urtext (Marx and
Engels 1987, pp. 479, 484, 497); the Contribution (Marx and Engels 1987, pp. 365–7); the
1861–3 Manuscripts (Marx and Engels 1988, pp. 18, 36).
69 The almost-identical wording is nearly impossible to tell from the English translations:
compare MEGA II/1.1, p. 185 with Marx and Engels 1986, p. 192 (Grundrisse); MEGA II/2,
p. 82 with Marx and Engels 1987, p. 497 (Urtext); and MEGA II/3.1, p. 29 with Marx and
Engels 1988, p. 20 (1861–3 Manuscripts).

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the words used to characterise money as hoard: inorganic or burnt-out ‘ashes’

and ‘a sheer figment of the imagination [ein reines Hirgespinst]’ are used in
the Grundrisse,72 the Urtext73 and the Contribution,74 ‘caput mortuum’ in the
Urtext75 and Contribution,76 and ‘petrified [versteinern]’ in the Urtext,77 the
Contribution,78 the 1861–3 Manuscripts79 and Capital.80
The same is true with regard to the analysis of the contradictions of money
as a means of circulation. In all of the various manuscripts, Marx repeatedly
writes that value ‘disappears [verschwinden]’ when money functions as a
means of circulation. Compare, for example, the following passages from the
Grundrisse, the 1861–3 Manuscripts and Capital:
It cannot be said that in simple circulation exchange value as such is

realised. It is always realised only in the moment of its disappearance.81
In simple circulation, in contrast, exchange value is not realised as such.

It is always realised only in the moment of its disappearance.82
The independent form, i.e. the money form, which the value of
commodities assumes in simple circulation only mediates the exchange
of commodities and disappears in the final result of the movement.83
72 Marx and Engels 1986, pp. 193, 166.

80 Marx and Engels 1996, p. 141. For the possible Hegelian source of these expressions, see
Murray 1988, p. 175.
83 Marx and Engels 1996, p. 164; translation modified. This passage was added to the
second edition of Capital (1872–3), replacing this: ‘In simple circulation the value of
the commodities develops different forms that stand opposite to their use-value, i.e.
their money-forms, which mediate exchange and disappear in the final result’ (MEGA
II/5, p. 108). The essential meaning of the two quotes is the same, but it is more clearly
expressed in the second edition, and one could thus speculate that Marx changed the
sentence precisely in order to emphasise the argument about the ‘disappearance’ of value
in simple circulation. The quote from the second edition also appears in the manuscript

Again, the same thought is clearly expressed all the way from the Grundrisse
to Capital: value disappears and is not able to maintain an independent and
adequate form in simple circulation.84
The Necessity of Capital

Marx’s way of presenting the argument revealing the necessity of M–C–M,
and not only the inadequacy of C–M–C, undergoes a change with the 1861–3
Manuscripts. In the Grundrisse, Urtext and Contribution, the arguments that
reveal the inadequacy of simple circulation are more separated from the
argument that shows the necessity of the form M–C–M than in the 1861–3
Manuscripts and Capital.85 In short, the former adopts a form of presentation
in which it is shown first that value cannot uphold itself within simple
circulation and then why value must circulate in the form M–C–M. In contrast
to this procedure, the 1861–3 Manuscripts and Capital merge these arguments
and adopt a form of presentation in which the two forms of circulation are
presented at the outset. A subsequent comparison then reveals the impossibility
of C–M–C and the necessity of M–C–M or, in other words, that capital logically
is the necessary outcome of the need for an independent form of existence of
value. It does so, as we have seen, by pointing out that value ‘disappears’ in
C–M–C and ‘petrifies’ in the unsuccessful attempt of the miser to hold onto
value. In contrast, value assumes an adequate form of existence and a higher
degree of independence in M–C–M, where it becomes the ‘overarching subject
[übergreifendes Subjekt]’86 of the process of circulation.87 The use of the
concept of ‘subject’ to point to the independent form of existence assumed by
value when it circulates as capital can be found in all of the relevant writings
of Marx, thereby once again pointing to continuity in Marx’s conception of the
transition to capital.88
Ergänzungen und Veränderungen zum ersten Band des ‘Kapitals’, which Marx wrote while
preparing the second edition of Capital (MEGA II/6, p. 52).
84 Cf. also the Urtext, Marx and Engels 1987, pp. 479, 488; and the Contribution, Marx and
Engels 1987, p. 362.
85 This shift is also noted by Martha Campbell, but since she does not take the 1861–3
Manuscripts into account, she mistakenly locates the appearance of this shift in Capital
(Campbell 2013, p. 174, n. 74).
86 Translated as ‘the active factor’ in MECW.
88 With the exception of the Contribution, which does not contain anything about capital.
See Marx and Engels 1986, pp. 196, 237, 399 (Grundrisse); Marx and Engels 1987, p. 493
(Urtext); Marx and Engels 1988, pp. 12ff. (1861–3 Manuscripts). See also Wolf 2007, p. 16.

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The comparison of C–M–C and M–C–M in the 1861–3 Manuscripts and

Capital thus reveals that ‘the autonomisation of value [Verselbständigung des
Werts] is raised to a much higher potency [in capital] than in money’.89
What happens in the course of the presentation at the beginning of the
1861–3 Manuscripts and in Chapter Four of Capital is therefore that the modality
of the two forms of circulation (C–M–C and M–C–M) changes. At this stage,
C–M–C is presented as a necessary form, whereas M–C–M is only a possible
form of circulation. The comparison then shows the former to be impossible
and the latter to be necessary. This means that M–C–M does not have to be
deduced as a necessary form of circulation in order to justify its introduction
into the logical progression – it is sufficient to have shown, without introducing
arbitrary assumptions, that the concepts already developed make it possible.
To put this in terms of the structure of Capital, one could say that at the
beginning of Chapter Four, C–M–C and M–C–M have the status of being
necessary and possible, respectively. The comparison shows that, in fact,
C–M–C is an impossible form and M–C–M is necessary. Hence, in order for
the introduction of M–C–M to be justified, Marx does not need to prove the
necessity of M–C–M, but only its possibility – and as we have seen, this has
already been accomplished with the argument concerning the necessary
doubling of the commodity into commodity and money. The existence of
M–C–M is thus not ‘simply presupposed’90 in the opening paragraphs of
Chapter Four of Capital: only the possibility of its existence is presupposed,
and this is not an arbitrary assumption, but a result of the analysis of the
commodity.
The much-debated and criticised introduction of M–C–M in Capital –
the (in)famous ‘we find’ – is therefore perfectly justified, inasmuch as the
deduction of its necessity is not to found at the outset, but in the subsequent
comparison with C–M–C.91
The Transition to Production

In the Grundrisse and the Urtext, the transition from circulation to production
is presented in quite a different manner than in the 1861–3 Manuscripts and
Capital. In the former, Marx argues that in order for value to sustain itself in
M–C–M′, it has to integrate the consumption of the commodity into its own
process without losing its value-form. Money, as objectified labour, can only do
this by exchanging with its opposite, i.e. living labour:
89 Marx and Engels 1989b, p. 318; translation modified.

90 Heinrich 2013, p. 186.
91 Cf. also Wolf 2007, pp. 115, 120ff.

For money, use value is now no longer an article of consumption in which

it loses itself, but only a use value through which it preserves and increases
itself. No other use value exists for money as capital. That is precisely the
relation of capital as exchange value to use value. Labour is the only use
value which can present an opposite and a complement to money as capital,
and it exists in labour capacity, which exists as a subject.92
Labour power – or ‘labour capacity’, as Marx calls it at this stage – is thus the
only commodity that can be consumed without resulting in the disappearance
of value, and capital can therefore only become a dominant form of circulation
on the condition that it consumes labour power, that is, in so far as it is not
merely a form of circulation, but also a mode of production. In other words,
the argument corresponds broadly to what is presented at the beginning of the
section ‘γ) Exchange with Labour. Labour Process. Valorisation Process’ in the
1861–3 Manuscripts93 and Chapter Six of Capital.94
What Marx does not explicate in the Grundrisse and the Urtext is the
contradiction between the exchange of equivalents and the necessity of
surplus value in M–C–M′. Presupposing this contradiction in an implicit
manner, he does not explicitly show why capital cannot be the dominant
form of circulation in the form of merchant’s capital or usury capital. In this
regard, the 1861–3 Manuscripts and especially Capital constitute a theoretical
improvement with the adding of the sections ‘b) Difficulties Arising from
the Nature of Value, etc.’ and Chapter Five with the unambiguous heading:
‘Contradictions in the General Formula of Capital’. Here, it is demonstrated
in an extremely clear way how M–C–M′, which has been revealed as the
necessary logical consequence of generalised commodity exchange, cannot
possibly be reconciled with the law of circulation, and that merchant’s capital
and usury capital cannot expand into the entirety of social reproduction – only
productive capital can do that.
In contrast to the dense and experimental reasoning of the Grundrisse and
the Urtext, which can at times be quite difficult to decipher, the arguments in
Capital are presented in a crystal-clear and accessible manner. Here we are
obviously dealing with both a popularisation and an improvement.95

95 Concerning the so-called ‘popularisation thesis’, see Backhaus 1997 and 1998; Reichelt
1995; Heinrich 1999.

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The metamorphosis of the ways of presenting the transition to capital

throughout the writings of Marx can be summarised in the following way. We
can already find the necessary arguments in the Grundrisse, albeit scattered
across the text and intertwined with other arguments – hence the need
for careful reconstruction in order for them to be presented as a coherent
argument. This is what the Urtext does by compiling the various passages
from the Grundrisse and adding a few clarifying comments under the heading
‘Transition to Capital’, placed within the chapter on money at the threshold
to the section on the transformation of money into capital. The Urtext still
has the character of a draft, and as Heinrich puts it, ‘[s]upreme presentation
and argumentative self-forgetting replace each other, which leads to a great
number of new beginnings and repetition’.96 When reading the Urtext, it is
clear that the argument did not need the 22 pages that it takes up in the MECW.
This might be the reason why it was abbreviated in the 1861–3 Manuscripts and
especially in Capital. The 1861–3 Manuscripts adopt the aforementioned new
form of presentation, and the transition to capital is moved into the section on
capital (though still at the beginning of it, and therefore at a kind of threshold,
as in the Urtext). The presentation in the 1861–3 Manuscripts clearly resembles
Capital, though as we have seen there are several passages and expressions
from the Grundrisse and Urtext that disappear in Capital, but which can still
be found in the 1861–3 Manuscripts. Finally, Capital maintains the new form
of presentation and abbreviates the transition to capital to the point of being
‘extremely compact’.97 Even so, the essential arguments can still be found in
Capital. The tendency to oppose the Grundrisse and the Urtext on the one hand
and Capital on the other – which is widespread in the literature – is therefore
misguided.98
Review of the Literature
In this section, an overview of the literature on the transition to capital will

be provided. This can be divided into three readings: (1) the historical reading,
which conceives the transition from simple circulation as a historical process;
(2) the empirical reading, according to which Marx introduces the concept of
96 Heinrich 2013, p. 177.

97 Campbell 2013, p. 155.
98 This view can be found in Heinrich 1999, pp. 253ff., and Heinrich 2013, p. 176; PEM
1973, pp. 101ff.; Reichelt 1970, pp. 219, 244; Bidet 2007, pp. 153ff., and Bidet 2005,
pp. 139ff.; Murray 2009, p. 176; Callinicos 2014, pp. 133ff.

capital as an empirical fact; and (3) the logical reading, which insists that there
is a necessary logical connection between the categories of simple circulation
and the concept of capital.
The Historical Reading

Engels famously wrote in his review of the Contribution that the succession
of categories is ‘the reflection, in abstract and theoretically consistent form,
of the course of history’.99 Simple circulation thus corresponds to a ‘simple
commodity production’, a pre-capitalist society of independent commodity
producers, not (yet) separated from the means of production.100 This idea
became common doxa in traditional Marxism, propagated by, for example,
Kautsky and Lenin.101
Not only does the Engelsian reading clearly contradict Marx’s intentions;
on the basis of the reading of the transition to capital presented in this article,
we can also see that it was, as Backhaus puts it, a ‘grave misunderstanding’.102
Consequently it is, as Callinicos notes, ‘rejected by virtually every contemporary
commentator on Capital’.103 However, what many critics of Engels fail to reflect
upon is how this misunderstanding could arise and appear as a plausible
interpretation.
There are plenty of passages in Marx’s writings which suggest that
commodities and money are the historical presuppositions of capital – i.e. that
money and commodities pre-date capital, and that capital could only come
into being on this basis. Consider, for example, the first sentence of Chapter
Four of Capital:
The circulation of commodities is the starting-point of capital. The

production of commodities, their circulation, and that more developed
form of their circulation called commerce, these form the historical
ground-work from which it rises.104
Passages like this can be found in many places in Marx’s writings, but they are
often glossed over in the effort to refute the logico-historical reading. There

100 As Chris Arthur notes, the phrase ‘simple commodity production’ was never used by Marx
(Arthur 2002, p. 19). Cf. also Rakowitz 2000, and Heinrich 1999, pp. 164ff.
101 Kautsky 1922, p. 52; Lenin 1977. See also Elbe 2008, pp. 18ff.
102 Backhaus 1997, p. 11.
103 Callinicos 2014, p. 42.

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is no need, however, to evade these passages in order to argue for the logical,
in contrast to the historical or empirical, account of the transition to capital.
When Marx speaks of pre-capitalist trade, money and commodities, he is
always careful to point out that we are dealing with marginal social processes.
He repeatedly underlines that in pre-capitalist societies only surplus products
(Überschuss) were traded as commodities. Capital in the form of merchant’s
capital thus also pre-dates capitalism:
This movement can take place within peoples and between peoples
for whose production exchange value has by no means yet become the
prerequisite. The movement only touches the surplus of their output,
which is still directed towards the satisfaction of their immediate needs,
and takes place only on the boundary of production.105
There is, then, a sense in which the production and circulation of commodities,
money and ‘antediluvian’ forms of capital pre-date the capitalist mode of
production – but only in the precise sense that the production and circulation
of commodities was a marginal social phenomenon, and not the dominant
form of social reproduction.106
On this basis, it is possible to clarify what Engels’s misreading consisted
in: possibly taking his cue from passages such as the ones quoted,107 Engels
seems to have read the theory of value as proceeding from the exchange of
commodities tout court, regardless of whether this is understood as a dominant
or merely a marginal social process. He did not see that in order for the theory
to work, the commodity must have the status of being the dominant form of
the products of labour.108
It is therefore not wrong to speak of a historical transition from simple
circulation to capital in the (rather banal) sense that simple circulation,
understood as a marginal social phenomenon, pre-dates capitalism. This is,
however, not what the transition to capital as outlined above depicts – here, we
are from the start dealing with simple circulation as a dominant social form,
105 Marx and Engels 1986, p. 184. Cf. also Marx and Engels 1986, p. 160.
106 Marx is very clear about this in Results of the Direct Production Process (Marx and Engels
1994, pp. 355–62).
107 See also Marx’s letter of 2 April 1858 to Engels: ‘Implicit in money – as the elaboration
of its definitions shows – is the postulate capital, i.e. value entering into and maintaining
itself in circulation, of which it is at the same time the prerequisite. This transition also
historical’ (Marx and Engels 1983, p. 303).
108 Cf. Heinrich 1999, Chapter 6.

which turns out to be inherently contradictory, leading dialectically to the

concept of capital.
The Empirical Reading

One of the earliest commentaries on the transition to capital can be found
in Evald Ilyenkov’s The Dialectics of the Abstract and the Concrete in Marx’s
Capital (1960). In this reading, which has exerted a lasting influence on later
commentators, Marx simply introduces the formula M–C–M′ as an empirical
fact: ‘the commodity-money circulation … does not contain in it any conditions
under which an obvious, unquestionable, and omnipresent economic fact is
possible, nay necessary: the spontaneous growth of value’.109 M–C–M′ is here
taken to be ‘a pervading fact not only under capitalism but in all the earlier
systems, too’.110
The view that Marx refers to an empirical phenomenon when introducing
M–C–M′ is also held by such otherwise diverse scholars as Bidet,111 Callinicos,112
Alfredo Saad-Filho,113 Duncan Foley114 and John Rosenthal.115 I will not go into
a discussion of whether it is possible to integrate M–C–M′ as an empirical fact
without violating the methodological framework of the critique of political
economy, as this would require an extensive discussion of Marx’s method.
Instead, I will simply point out that Marx, as we have seen, actually develops
the concept of capital on the basis of simple circulation without recourse to
direct empirical observations – and that the empirical introduction of M–C–
M′ therefore seems superfluous.
The Logical Reading

Another of the early commentaries on the transition is Roman Rosdolsky’s
classic study of the Grundrisse and the Urtext.116 Though it is not formulated
in the same terms and is flawed by a few ambiguities,117 Rosdolsky’s reading
is essentially compatible with the one developed in the first section of this
109 Ilyenkov 2008, p. 274.

110 Ilyenkov 2008, p. 273.
111 Bidet 2007, pp. 153ff.
112 Callinicos 2014, pp. 133ff.
113 Saad-Filho 2002, pp. 13ff.
114 Foley 1986, p. 33.
115 Rosenthal 1997, pp. 161ff.
116 Rosdolsky 1977, pp. 183–93.
117 For example: ‘However, which of the two forms of circulation which we already know
(C–M–C and M–C–M) is involved here? In which can value become capital?’ (Rosdolsky
1977, p. 185). Here one gets the impression that the concept of capital is introduced

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article – i.e., he argues that an analysis of the immanent contradictions of

simple circulation leads dialectically to the concept of capital, albeit without
commenting on the relation between Marx’s different texts.118 It should be
noted, however, that Rosdolsky is quite ambiguous about the relation between
history and logic in his comments on Marx’s method. On the one hand, he
quotes the famous passage from the Grundrisse where Marx argues that it
would be ‘wrong to present the economic categories successively in the order
in which they played the determining role in history’.119 On the other hand,
Rosdolsky directly contradicts this in his reading of the ‘transition from value
to money’, where he approvingly quotes the passages from Engels’s review of
the Contribution mentioned above.120 His reconstruction of the transition to
capital, however, makes no mention of the logico-historical reading of the
dialectical mode of presentation, and it is therefore possible to untangle this
reconstruction from his ambiguities concerning Marx’s method.
This ‘logical’ reading of the transition has been repeated and further
developed along the same lines by Helmut Reichelt, Projektgruppe zur
Kritik der politischen Ökonomie, Projektgruppe Entwicklung des Marxschen
Systems, Helmut Brentel, Patrick Murray, Michael Heinrich, Nadja Rakowitz,
Chris Arthur and Dieter Wolf.121 They all draw primarily on the Grundrisse
and the Urtext, and, in the case of the Projektgruppe zur Kritik der politischen
Ökonomie, Brentel, Arthur and Murray, without discussing the relations
between the various manuscripts. Reichelt notes that the transition to capital is
more ‘smooth’ in the Grundrisse than in Capital,122 and Rakowitz likewise holds
that ‘the necessity of the transition to capital is more clear [in the Grundrisse]
than in the presentation in Capital’.123 The Projektgruppe Entwicklung des
Marxschen Systems observe that the transition is ‘significantly abbreviated’
in Capital, and claim that in the latter, ‘it is no longer clear what the inner
before the formula M–C–M and then functions as the standard by which the two forms of
circulation can be measured.
118 When Rosdolsky writes that ‘this is the same solution to the problem which we have
already encountered in Volume I of Capital’ (Rosdolsky 1977, p. 189), he is referring to the
derivation of the necessity of the commodity labour-power, not the transition to capital,
as Elbe seems to think (Elbe 2008, p. 309).
119 Marx and Engels 1986, p. 44; Rosdolsky 1977, pp. 27–8.
120 Rosdolsky 1977, pp. 114–15. I would like to thank Janaína de Faria for pointing this out to
me.
121 Reichelt 1970, pp. 243–9; PKpÖ 1973; PEM 1973; Brentel 1989, pp. 254–61; Murray
1988; Heinrich 1999 and 2013; Rakowitz 2000; Arthur 2002; Wolf 2007.
122 Reichelt 1970, p. 244.
123 Rakowitz 2000, p. 148.

connection between the circulation of commodities and the circulation

of capital is’.124 Finally, as mentioned earlier, Heinrich argues that the
introduction of the general formula of capital in Capital (‘we find’) signifies
that the transition to capital has altogether disappeared, resulting in ‘a breach
in the dialectical presentation’.125 As we have seen, this is not a very convincing
reading of Capital. Although the above-mentioned scholars present their
arguments in a coherent and convincing manner, we do not find any serious
engagement with either (and especially) the 1861–3 Manuscripts or Capital.126
Martha Campbell
To my knowledge, the only thorough comparison of the Grundrisse and the
Urtext on the one hand, and Capital on the other, is found in Campbell’s article
on ‘The Transformation of Money into Capital’.127 Against the tendency to
dismiss Capital on the grounds of the ‘we find’-sentence, she rightly notes: ‘For
some scholars, the abruptness of this introduction is evidence that parts one
and two of Capital are logically discontinuous. Marx, however, neither just
drops simple circulation once he introduces M–C–M nor leaves M–C–M just
as we find it’.128
124 P EM 1973, p. 102.

125 Heinrich 1999, p. 257, and Heinrich 2013, pp. 177ff.
126 A partial exception here is Wolf, who rightly argues that the same arguments are present
in the Grundrisse, the Urtext and Capital, but does not consider the 1861–3 Manuscripts.
It is of course important to note that the 1861–3 Manuscripts were not available at the
time of the publication of Rosdolsky 1977, Reichelt 1970, PKpÖ 1973 and PEM 1973 (see
Footnote 5). Enrique Dussel, in his influential commentary on the 1861–3 Manuscripts,
notes that ‘ “behind” the superficial appearance of circulation, a new formula develops;
M–C–M’ (Dussel 2001, p. 4), but he does not explain how this new formula develops.
127 Repeating a common mistake, Campbell uses the expressions ‘the transformation of
money into capital’ and ‘the transition to capital’ as synonyms. Though not entirely
consistently, Marx actually designates two different things with these expressions, which
is indicated by the fact that they figure as the headlines of two successive sections in
the Urtext. Generally, the term ‘transition to capital’ refers to the dialectical, conceptual
operation by which the concept of capital is deduced as a form of circulation by way of
an analysis of the contradictions of money within simple circulation. By using the term
‘transition [Übergang]’, Marx implicitly refers to Hegel, who uses this term to designate
the dialectical movement from one concept to another. ‘The transformation of money
into capital’, on the other hand, refers to the real process by which the possessor of money
turns money into capital. See for example Marx and Engels 1988, p. 105; Marx and Engels
1994, p. 359; and Marx and Engels 1996, p. 176. Note that Verwandlung is often translated
as ‘conversion’ in MECW.
128 Campbell 2013, p. 154.

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In a detailed reading of Chapter Four of Capital, Campbell argues that

the same central arguments are present in the Grundrisse, the Urtext and
Capital. According to Campbell, Capital introduces both forms of circulation
at the outset and then compares them in three ‘rounds’, thereby disclosing
the necessity of M–C–M.129 The result of this comparison is that M–C–M′, in
contrast to C–M–C, is able to reproduce itself because it continually recreates
the conditions of its repetition.130 The crux of Campbell’s argument is that
‘[b]ecause circulation is a permanently existing process but is unable to
recreate itself, it presupposes capital’.131 This corresponds to a point frequently
repeated in the Grundrisse and the Urtext: with C–M–C, the ‘repetition of the
process … does not spring from the conditions of circulation itself.… [it] does
not, therefore, carry within itself the principle of self-renewal’.132 In contrast
to this, M–C–M′ is, in Campbell’s words, ‘all-encompassing, enclosing both
commodities and money in its circulation, it relates only to itself … and it has
the capacity to reproduce itself’.133
While admirably clear and illuminating, Campbell’s reading focuses on the
wrong argument and therefore ultimately fails to account for the transition
to capital in a satisfying manner. In order to see why, we have to take a closer
look at the function, within Marx’s text, of the argument about the inability
of C–M–C to reproduce itself. The first thing to note is that it is entirely
unnecessary to compare C–M–C and M–C–M in order to make the point that
the former is not able to reproduce itself; and this is in fact also how Marx
proceeds in the Urtext:
Considered in itself, circulation is the mediation of preposited extremes.

But it does not posit these extremes. It itself must be mediated as the
totality of mediation, as total process. That is why its immediate being is
pure appearance … The repetition of the process from both points, money
and commodity, does not spring from the conditions of circulation
itself. The act cannot again be rekindled of itself. Circulation does not,
therefore, carry within itself the principle of self-renewal. It proceeds from
preposited moments, and not from those created by itself. Commodities
129 Campbell 2013, p. 156.

130 Campbell 2013, pp. 161ff.
131 Campbell 2013, p. 151.
133 Campbell 2013, p. 171.

must be thrown into it again and again, and that from outside, as fuel into
the fire.134
The point Marx makes here is rather simple: something must be produced in
order for it to circulate. Circulation is a mediation of already-posited extremes,
that is, the circulation of commodities presupposes the prior production of
the commodities that are thrown into circulation. The ‘immediate being’ of
circulation – its apparent autonomy – is therefore ‘pure appearance’.
This insight flows directly from the concept of circulation, and it is
not necessary to appeal to M–C–M in order to make that point. But more
importantly, the exact same can be said of M–C–M as long as it is understood
as a form of circulation – and as we have seen, M–C–M is derived as a form
of circulation before the transition to production.135 As long as M–C–M is
taken as a form of circulation, the ‘C’ in the middle could in principle be any
commodity, as it is not yet determined as labour power. M–C–M is therefore
also a ‘mediation of preposited extremes’.
This is no longer the case when capital is understood as a mode of producing:
only by integrating production into its circuit does capital become able to
reproduce itself. Commodities are no longer thrown into circulation from the
outside, because now the movement of capital comprises both the production
and circulation of commodities. This transition from circulation to production
is, as we have seen, conducted by way of an analysis of the contradiction
between M–C–M′ and the immanent law of circulation, and not from the
simple argument that circulation qua circulation presupposes production.
The upshot of all this is that Marx’s scattered comments about the inability
of circulation to reproduce itself cannot constitute a dialectical transition
from C–M–C to M–C–M, because the argument applies equally to both forms.
It is of course true that in a formal sense, M–C–M is able to reproduce itself
because it ‘begin[s] and end[s] with the same thing’.136 However, it is not this
merely formal aspect that Marx aims at; it is rather, as can be seen in the above-
quoted passage from the Urtext, the fact that the content of circulation (the
commodities) does not originate in circulation itself.
This does not mean that the comments concerning the absence of ‘the
principle of self-renewal’ are entirely unimportant. In the larger thrust of
the argument they have the function of pointing toward the transition from
circulation to production, which is developed in the subsequent sections. The

135 The last point is also recognised by Campbell (Campbell 2013, p. 158, n. 29).
136 Marx and Engels 1996, p. 162. Campbell 2013, p. 162.

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function of the argument that Campbell focuses on is, in other words, not to
accomplish the transition to capital, but to prepare the subsequent transition
to production.
Campbell also shows that the comparison of C–M–C and M–C–M reveals
that value reaches a higher degree of independence in the latter.137 This
is, however, not sufficient in order get from C–M–C to M–C–M. In order
to do that, it must be shown not only that value reaches a higher degree of
‘autonomisation [Verselbständigung]’ in the latter than in the former, but also
that value cannot reach a high enough degree of autonomisation in the former.
That this is actually the case is revealed by the analysis of the immanent
contradictions of money, but unfortunately Campbell neglects this analysis
and only mentions it en passant.138
David Harvey
In another ‘logical reading’ of the transition to capital, David Harvey argues
that capital can be derived from money in its function as a means of payment.
This involves a serious misunderstanding of what the means of payment is,
which is clear from his comments on Marx’s introduction of the character-
masks creditor and debtor:
So what is the role of credit in the general circulation of commodities?

Suppose I am a creditor. You are in need of money, and I lend it to you
now with the idea that I will get it back later. The form of circulation is
M–C–M, which is very different from C–M–C.139
The problem with this reading is quite straightforward: the means of payment
is not credit. Even though Marx writes that credit has its ‘root’ in the means of
payment, he is very clear about the fact that credit money implies ‘conditions,
which, from our standpoint of the simple circulation of commodities, are as
yet totally unknown to us’.140 Furthermore, the situation Marx describes in the
passage Harvey refers to is not one where money is lent out, but rather one
137 Campbell 2013, p. 152.

138 Campbell 2013, p. 160, p. 163, n. 51, p. 169, n. 70. Jairus Banaji commits a similar error,
as he also tries to explain the transition to capital with reference to the absence of the
principle of self-renewal in the form C–M–C (Banaji 1979, pp. 37ff.). Patrick Murray also
invokes this argument, but without ascribing to it the same importance that Campbell
and Banaji do (Murray 1988, pp. 172ff.).
139 Harvey 2010, p. 75.

in which there is a temporal separation between the payment and the actual
acquisition of the commodity. We are therefore not dealing with the process
M–C–M. The seller turns into a creditor because the buyer owes the creditor
money for a commodity that has already been handed over, not because the
creditor lends out money. Harvey’s misunderstanding can also be seen from
his reading of a passage in Capital in which Marx writes that the debtor turns
commodity into money ‘in order to be able to pay’, which means that money
becomes an end in itself (Selbstzweck).141 To this, Harvey comments:
Decoded, this means that there needs to be a form of circulation in which

money is going to be exchanged in order to get money: M–C–M.… This
is the moment in Capital when we first see the circulation of capital
crystalizing out of the circulation of commodities mediated by the
contradictions of money-forms.142
Once again, Harvey misunderstands the situation Marx describes with the
words ‘the debtor [turned his commodity into money] in order to be able
to pay’: what this describes is that the debtor, who has been handed over a
commodity (and not money), must now raise money (by selling a commodity)
in order to pay the creditor. The sale undertaken by the debtor in order to raise
money therefore happens not in order to buy a new commodity, but in order
to pay – i.e., it has the form C–M, and not M–C–M. The form M–C–M can thus
not be derived from money as means of payment.
Moishe Postone
Yet another attempt at a dialectical transition to capital can be found in
Postone’s Time, Labor, and Social Domination. Relying exclusively on Capital,
Postone argues that Marx derives the concept of capital from money as hoard.
He notes that hoarding is necessary in a commodity economy, since ‘not every
purchase can be effected by a simultaneous sale’.143 This entails the separation
of purchase (M–C) and sale (C–M), which leads to money becoming a goal in
itself in the process C–M.
At this point Marx begins his transition to the category of capital … Marx
argues that hoarding money is not a mode of accumulation that is logically
adequate to value, to an abstract general form which is independent of all

142 Harvey 2010, p. 76.
143 Postone 1993, p. 266.

96 Mau
qualitative specificity. Marx elaborates a logical contradiction between

the boundlessness of money, when considered qualitatively as the
universal representation of wealth that is directly convertible into any
other commodity, and the quantitative limitation of every actual sum of
money.144
This contradiction in money as hoard constitutes the transition to capital,

because capital – according to Postone – is the solution to this contradiction.
Here is the passage in Capital that Postone refers to:
The desire after hoarding is in its very nature unsatiable [maßlos]. In its
qualitative aspect, or considered according to its form, money has no
bounds to its efficacy, i.e., it is the universal representative of material
wealth, because it is directly convertible into any other commodity. But,
at the same time, every actual sum of money is quantitatively limited,
and, therefore, as a means of purchasing, has only a limited efficacy.
This contradiction between the quantitative limits of money and its
qualitative boundlessness, continually drives the hoarder back to his
Sisyphus-like labour of accumulating.145
The last sentence in this quote is crucial: what Marx describes here is not why
money must necessarily circulate in the form M–C–M, but rather why there
is no natural measure or limit for the hoarder. The contradiction between
the quantitative and the qualitative aspects of money accounts for the
compulsory and never-ending character of hoarding, but it does not account
for the necessity of capital as a form of circulation. Furthermore, capital does
not offer a solution to or sublation of this contradiction. Rather than pointing
to a difference between money as hoard and capital, this contradiction is
actually something they have in common. This is what Marx points out when
he writes that the capitalist and the hoarder share ‘the absolute drive for
riches, the passionate chase after value’146 and is also indicated by his use
of the word Maßlos (‘without measure’) to characterise both hoarding and
capital.147 In short, the contradiction between quantity and quality accounts
144 Postone 1993, p. 267.

145 Marx and Engels 1996, pp. 143ff.; translation modified.
147 Marx and Engels 1996, p. 143; Marx and Engels 1996, p. 163. This terminological
convergence is obliterated in MECW, where Maßlos is translated first as ‘unsatiable’ (Marx
and Engels 1996, p. 143) and then as ‘no limits’ (Marx and Engels 1996, p. 163).

for the compulsory repetition characteristic of both hoarding and capital, but
it does not provide a dialectical transition from the former to the latter. There
is therefore no ‘dialectical reversal’ here, as Postone claims.148
Concluding Remarks
As we have seen, the movement from the commodity to capital can be

understood as a process in which money and capital undergo successive
changes in modality. In terms of the structure of Capital, we begin with the
exchange of commodities as the basis of social reproduction, i.e. ‘a society in
which the great mass of the produce of labour takes the form of commodities’.149
On this basis, the analysis of the value-form in Chapter One and the analysis
of the process of exchange in Chapter Two reveal the necessity of money. This
necessity – which is the same as the necessity of the doubling of the commodity
into commodity and money – also reveals the possibility of capital. The
further analysis of simple circulation shows that money is, within the sphere
of circulation, in fact impossible and that capital is on the contrary necessary
(Chapter Four). The analysis of capital as a form of circulation, however,
reveals that this form is also impossible (Chapter Five), and that the only way
to overcome this is for capital to be a mode of production (Chapter Six), which
is thereby shown to be the necessary result and presupposition of the starting
point: exchange of commodities. What we see here is a gradual change of the
modality of money, from possibility to necessity and impossibility – and in the
same way, capital is first posited as a mere possibility, which then shows itself
first to be necessary and then to be impossible, only to arrive at necessity again
(though now in a different sense: as a mode of production, and not only a form
of circulation).
As Robert Kurz puts it, the form C–M–C solely has a place in ‘the bourgeois
social-science ideology, which proceeds from independent commodity
148 Murray also invokes the contradiction between the quantitative and qualitative aspects
of money in his account of the transition to capital, and the argument is flawed for the
same reasons as in the case of Postone. Murray views this contradiction as a ‘further’
and ‘second’ contradiction (Murray 1988, pp. 171, 178), besides the primary or first
contradiction, which corresponds broadly to what was presented in the first section
of the present article. According to Murray, ‘capital mediates the two contradictions in
a single stroke’ (Murray 1988, p. 179), but it is not clear from Murray’s account why it
should be necessary to appeal to the ‘second’ contradiction when the first is sufficient in
order to accomplish the transition.

98 Mau
producers as the presupposition of the universal market, thereby making

the capital relation disappear’.150 At the kernel of the bourgeois fantasy of
capitalism as a system of freedom and equality is the idea of an autonomous
sphere of circulation in which producers freely exchange equivalents. The
market is ‘a sphere where the relations under which value is originally produced
are pushed completely into the background.’151 By revealing the necessity of
the transition to capital, Marx showed that this sphere, in which ‘Freedom,
Equality, Property and Bentham’ rule,152 is nothing but the surface of relations
of production based on exploitation, dispossession and coercion: ‘the system
of exchange values … reveals as its concealed background, the appropriation of
alien labour without exchange, the total separation of labour and property’.153
The transition to capital also reveals the utopian character of every form
of Proudhonianism, that is, the belief that a free and egalitarian society can
be created merely by changes in the sphere of circulation.154 As Marx put it in
quite a direct manner against the French socialists: ‘It is an aspiration as pious
as it is stupid to wish that exchange value would not develop into capital’.155
The conclusion of the analysis of the transition to capital in this article is
that capitalist relations of production are the necessary basis of a society based
on the commodity form. There are two important comments to be made with
regard to this conclusion.
First, the necessity of capital is, as Marx expresses it, a ‘transitory necessity’.156
Capitalist relations of productions are necessary within a framework that
150 Kurz 2012, p. 158. Kurz does not go into a discussion about the transition to capital,
which he would probably dismiss as an exercise in marxology and ‘pure logicism’. He
does, however, fiercely reject the conception of simple circulation and the ‘idiot formula
C–M–C’ (Kurz 2012, p. 156) as depicting an actual (contemporary or historical) social
phenomenon. This rejection is grounded partly in a critique of the concept of circulation,
and partly in references to the historical emergence of capitalism (Kurz 2012, Chapters
7, 8). According to Kurz, the concept of simple circulation is therefore ‘only a heuristic
tool in the Marxian theoretical reconstruction of the actual circumstances [wirklichen
Verhältnisses]’ (Kurz 2012, p. 158) – a conception in accordance with the reading of the
transition to capital presented in this article.
151 Marx and Engels 1998, p. 814. This is a quote from the third volume of Capital. The
corresponding passage in Marx’s original manuscripts can be found in MEGA II/4.2,
p. 849.
154 Cf. Rakowitz 2000, Chapters 2, 3.

is itself not necessary, and as Marx wrote in his dissertation, freely quoting
Epicurus: ‘to live in necessity is not a necessity.… It is permitted to subdue
necessity itself’.157
Second, it is important to stress that the transition to capital only marks the
beginning of Marx’s analysis of capitalism. The further analysis of the capitalist
mode of production reveals that capital is anything but a harmoniously self-
reproducing process. As the transition from circulation to production evinces,
capital is in the final instance a social relation based upon the separation
of the producers from immediate access to the means of production and
subsistence – in other words, it points towards the reality of class struggle.
Furthermore, the analysis of the dynamics of capital accumulation reveals
that it is a process that in and of itself undermines the conditions of its own
reproduction. Capital is the ‘processing contradiction’,158 a permanent state of
crisis that points towards the need for creating a society in which freedom is
not merely the name for the appearance of violence and coercion.
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Historical Materialism 26.

The Transition to Capital in Marx’s Critique of

Marx – capital – dialectics – money – circulation

In Capital, the concept and so-called general formula of capital is introduced

© koninklijke brill nv, leiden, ���8 | doi 10.1163/1569206X-00001542

another specifically different form: M–C–M’.1 This seems to be a somewhat

1 Marx and Engels 1996, p. 158.

Historical Materialism 26.1 (2018) 68–102

The Transition to Capital

Historical Materialism 26.1 (2018) 68–102

organizing principle of capitalist society’.7 The market – or the sphere of

the great advantage of the market … is that it permits a wide diversity. It

The simple circulation is … an abstract sphere of the bourgeois process of

Historical Materialism 26.1 (2018) 68–102

to be a moment, a mere form of appearance of some deeper process lying

Historical Materialism 26.1 (2018) 68–102

The Possibility of Capital and the Impossibility of Money

As exchange itself splits into two mutually independent acts, so the

Historical Materialism 26.1 (2018) 68–102

is in fact not capable of constituting an ‘adequate being of exchange value’24

It cannot be said that in simple circulation exchange value as such is

Money thus ceases to be the ‘direct incarnation’26 of value, whether thrown

Historical Materialism 26.1 (2018) 68–102

existence of value in a society in which products of labour primarily take on the

The Necessity of Capital, I

Historical Materialism 26.1 (2018) 68–102

When we speak of capital here, it is still only a name. The only

The Impossibility of Capital

Historical Materialism 26.1 (2018) 68–102

It is therefore impossible for capital to be produced by circulation, and

44 Marx and Engels 1996, pp. 161ff.

Historical Materialism 26.1 (2018) 68–102

It is important to note that capital is here still understood only as a form of

The Necessity of Capital, II

49 Marx and Engels 1996, p. 177.

Historical Materialism 26.1 (2018) 68–102

is ultimately a social relation delineating a field of social antagonism and class

The Trajectory of the Transition to Capital, 1857–72

One of the areas of controversy in the literature on the transition to capital

Historical Materialism 26.1 (2018) 68–102

60 Campbell 2013, p. 150.

Historical Materialism 26.1 (2018) 68–102

The Impossibility of Money

The imperishability money strove for when it posited itself negatively

The restless augmentation of value, which the miser [Schatzbildner]

Historical Materialism 26.1 (2018) 68–102

the words used to characterise money as hoard: inorganic or burnt-out ‘ashes’

It cannot be said that in simple circulation exchange value as such is

In simple circulation, in contrast, exchange value is not realised as such.

72 Marx and Engels 1986, pp. 193, 166.

Historical Materialism 26.1 (2018) 68–102

The Necessity of Capital

Historical Materialism 26.1 (2018) 68–102

The comparison of C–M–C and M–C–M in the 1861–3 Manuscripts and

The Transition to Production

89 Marx and Engels 1989b, p. 318; translation modified.

Historical Materialism 26.1 (2018) 68–102

For money, use value is now no longer an article of consumption in which

92 Marx and Engels 1987, p. 503.

Historical Materialism 26.1 (2018) 68–102

The metamorphosis of the ways of presenting the transition to capital

Review of the Literature

In this section, an overview of the literature on the transition to capital will

© koninklijke brill nv, leiden, ��8 | doi 10.1163/1569206X-00001542

1 Marx and Engels 1996, p. 158.

44 Marx and Engels 1996, pp. 161ff.

49 Marx and Engels 1996, p. 177.

60 Campbell 2013, p. 150.

72 Marx and Engels 1986, pp. 193, 166.

89 Marx and Engels 1989b, p. 318; translation modified.

92 Marx and Engels 1987, p. 503.

96 Heinrich 2013, p. 177.

99 Marx and Engels 1980, p. 475.

109 Ilyenkov 2008, p. 274.

124 P EM 1973, p. 102.

129 Campbell 2013, p. 156.

134 Marx and Engels 1987, p. 479.

137 Campbell 2013, p. 152.

141 Marx and Engels 1996, p. 147.

144 Postone 1993, p. 267.

157 Marx and Engels 1975, p. 43.