Chapter 4 — The General Formula for Capital
The Paradox of Value
Chapter 4 opens the core argument of Capital. Marx introduces the general formula for capital and immediately poses the central problem: how does capital self-expand?
4.1 The Two Circuits Compared
The circuit of capital is not C — M — C (simple circulation) but:
C — M — C vs M — C — M'
| Simple Circulation (C—M—C) | Capital (M—C—M') | |
|---|---|---|
| Starting point | Commodity | Money |
| End point | Different commodity | More money |
| Aim | Use-value | Exchange-value / Self-expansion |
| Driving force | Satisfaction of want | Pure accumulation |
| Social relation | Between commodities | Between capital and labour |
The key difference: in C — M — C, the buyer gives up money to get ; in M — C — M', the buyer gives up money specifically to get it back with surplus.
"The商人 prepends buying cheap and selling dear to buying dear and selling cheap."
4.2 The Contradiction in the General Formula
Marx raises an immediate objection: where does the surplus come from?
If commodities exchange at their values, the money that comes out must equal the money put in:
M — C — M' where M' = M
If exchange is at value, ΔM = 0
But capital does grow. The formula M — C — M' presupposes that M' > M. Where does this increment come from?
The obvious candidates don't work
1. The price of the commodity changes: No — if prices rise and fall, the law of value is violated. Some capitals gain, others lose. But on average, over the whole system, no net new value is created.
2. The seller sells above value: No — this just redistributes existing value. A cannot create new value by selling to B at a premium unless B underpays their workers, which requires... capital.
3. The buydee gets goods below value: Same problem — redistribution, not creation.
Conclusion: Exchange at value cannot generate surplus value. But the capitalist does not buy and sell the same commodity. What they buy is labour-power.
4.3 Labour-Power as the Solution
Marx introduces the labour-market: a special market where a specific commodity is exchanged — labour-power.
is the capacity to labour — the physical and mental capability to work, possessed by human beings, which they sell on the market.
Crucially: the capitalist does not buy labour (the activity). They buy the capacity to labour, measured in time.
"On entering the labour-market, the worker already carries with him the idea of property separate from capital."
The value of , like any commodity, is determined by socially ">necessary labour time required to produce and reproduce it — i.e., the labour required to keep the worker alive and sustain their family.
4.4 The Capital Relation
Capital is not a thing but a social relation:
"Capital is not a thing; it is a definite social relation of production."
The relation is: the means of production are owned by capitalists, while workers own only their labour-power. This separation is the precondition for capitalist production.
Summary
| Concept | Definition |
|---|---|
| M — C — M' | General formula for capital |
| Surplus value (ΔM) | The increment over advanced capital |
| Labour-power | The commodity whose use-value creates value |
| Capital | A social relation between classes, not a thing |