CHAPTERII
　　THECIRCUITOFPRODUCTIVECAPITALThecircuitofproductivecapitalhasthegeneralformulaP……C’——M’——C……P。Itsignifiestheperiodicalrenewalofthefunctioningofproductivecapital，henceitsreproduction，oritsprocessofproductionasaprocessofreproductionaimingattheself-expansionofvalue；notonlyproductionbutaperiodicalreproductionofsurplus-value；thefunctionofindustrialcapitalinitsproductiveform，andthisfunctionperformednotoncebutperiodicallyrepeated，sothattherenewalisdeterminedbythestarting-point。
　　AportionofC’mayincertaincases，invariousbranchesofindustrialcapitalre-enterdirectlyasmeansofproductionintothesamelabour-processoutofwhichitcameintheshapeofacommodity。Thismerelysavesthetransformationofthevalueofthisportionintorealmoneyortoken-moneyorelsethecommodityfindsanindependentexpressiononlyasmoneyofaccount。Thispartofvaluedoesnotenterintothecirculation。Thusvaluesenterintotheprocessofproductionwhichdonotenterintotheprocessofcirculation。ThesameistrueofthatpartofC’whichisconsumedbythecapitalistinkindaspartofthesurplus-product。Butthisisinsignificantforcapitalistproduction。Itdeservesconsideration，ifatall，onlyinagriculture。
　　Twothingsareatoncestrikinglyapparentinthisform。
　　Foronething，whileinthefirstform，M……M’，theprocessofproduction，thefunctionofP，interruptsthecirculationofmoney-capitalandactsonlyasamediatorbetweenitstwophasesM——CandC’——M’，heretheentirecirculationprocessofindustrialcapital，itsentiremovementwithinthephaseofcirculation，constitutesonlyaninterruptionandconsequentlyonlytheconnectinglinkbetweentheproductivecapital，whichasthefirstextremeopensthecircuit，andthatwhichclosesitastheotherextremeinthesameform，henceintheforminwhichitstartsagain。Circulationproperappearsbutasaninstrumentpromotingtheperiodicallyrenewedreproduction，renderedcontinuousbytherenewal。
　　Foranotherthing，theentirecirculationpresentsitselfinaformwhichistheoppositeofthatwhichithasinthecircuitofmoney-capital。
　　Thereitwas:M——C——MM——C。C——M，apartfromthedeterminationofvalue；hereitis，againapartfromthevaluedetermination:C——M——C
　　C——M。M——C，i。e。，theformofthesimplecirculationofcommodities。
　　I。SIMPLEREPRODUCTION
　　LetusfirstconsidertheprocessC’——M’——C，whichtakesplaceinthesphereofcirculationbetweenthetwoextremesP……P。
　　Thestarting-pointofthiscirculationiscommodity-capital；C’
　　=Cc=Pc。Thefunctionofcommodity-capitalC’——M’therealisationofthecapital-valuecontainedinitequalsP，whichnowexistsastheconstituentpartCofC’，aswellasofthesurplus-valuecontainedinit，whichexistsasaconstituentpartofthesamequantityofcommoditiesandhasthevaluecwasexaminedinthefirstformofthecircuit。Buttherethisfunctionformedthesecondphaseoftheinterruptedcirculationandtheconcludingphaseoftheentirecircuit。Hereitformsthesecondphaseofthecircuitbutthefirstphaseofthecirculation。ThefirstcircuitendswithM’，andsinceM’aswellastheoriginalMcanagainopenthesecondcircuitasmoney-capital，itwasnotnecessaryatfirsttoseewhetherMandmsurplus-valuecontainedinM’continueintheircoursetogetherorwhethereachofthempursuesitsowncourse。Thiswouldonlyhavebecomenecessaryifwehadfollowedupfurtherthefirstcircuitinitsrenewedcourse。Butthispointmustbedecidedinthecircuitoftheproductivecapital，becausethedeterminationofitsveryfirstcircuitdependsonitandbecauseC’——M’appearsinitasthefirstphaseofthecirculation，whichhastobecomplementedbyM——C。Itdependsonthisdecisionwhethertheformularepresentssimplereproductionorreproductiononanextendedscale。Thecharacterofthecircuitchangesaccordingtothedecisionmade。
　　Letus，then，considerfirstthesimplereproductionofproductivecapital，assumingthat，asinthefirstchapter，conditionsremainconstantandthatcommoditiesareboughtandsoldattheirvalues。
　　Onthisassumptiontheentiresurplus-valueentersintotheindividualconsumptionofthecapitalist。Assoonasthetransformationofthecommodity-capitalC’intomoneyhastakenplace，thatpartofthemoneywhichrepresentsthecapital-valuecontinuestocirculateinthecircuitofindustrialcapital；
　　theotherpart，whichissurplus-valuechangedintomoney，entersintothegeneralcirculationofcommodities，constitutesacirculationofmoneyemanatingfromthecapitalistbuttakingplaceoutsideofthecirculationofhisindividualcapital。
　　Inourillustrationwehadacommodity-capitalC’of10，000lbs。
　　ofyarn，valuedat£；500；£；422ofthisrepresentthevalueoftheproductivecapitalandcontinue，asthemoney-formof8，440lbs。ofyarn，thecapitalcirculationbegunbyC’，whilethesurplusvalueof£；78，themoney-formof1，560lbs。ofyarn，theexcessofthecommodity-product，leavesthiscirculationanddescribesaseparatecoursewithinthegeneralcirculationofcommodities。
　　C——
　　M——C