Commercial Capital

Commercial Capital


capital functioning in the sphere of commodity circulation; a distinctive part of industrial capital acting at the stage of realization of commodity capital. The movement of commercial capital is characterized by the formula M—CM’, where M represents money, C a commodity, and M’ the money with an increase. A fixed sum of money is advanced to obtain commodities, which are then sold to consumers. The difference between the purchase price and the selling price constitutes the commercial profit, the determining motive of commercial activity.

In precapitalist socioeconomic formations, commercial capital took the form of merchant’s capital. Along with usurer’s capital, it was characterized by K. Marx as “historically the oldest free state of existence of capital” (K. Marx and F. Engels, Soch., 2nd ed., vol. 25, part 1, p. 357). Merchant’s capital arose with the development of commodity and monetary circulation, and it acted as mediator in the process of simple commodity exchange. Its activity, which achieved enormous dimensions with regard to the number of transactions and the quantities of money, was exploitative and parasitic in nature. As a medium of nonequivalent exchange, merchant’s capital took on part of the value created by the labor of small-scale commodity producers; it figured in the redistribution of the surplus product, which was appropriated without compensation by the dominant classes in slaveholding and feudal societies. Merchant’s capital thus functioned in various types of social production and served as one of the important factors in the primitive accumulation of capital, even though its role was complex and contradictory.

In a certain sense, merchant’s capital facilitated the creation of favorable conditions for the development of capitalist production relations. It aided in the concentration and accumulation of monetary possessions in the hands of a few persons, the disintegration of the natural economy, the expansion of the sphere of commodity-money relations, the further differentiation among simple commodity producers, and the formation of a world market. In a number of instances, the merchant made the transition from middleman to organizer of production in order to obtain a profit. Also transitional was a form of organization wherein a producer operated on the basis of orders placed by a merchant; here, the merchant advanced money to the producer for raw materials and equipment and then enjoyed a monopoly on the goods produced. Despite the retention of traditional economic practices, this form contained elements of capitalist exploitation.

In another sense, however, merchant’s capital only helped to distribute the surplus product. In extracting a commercial profit through a nonequivalent exchange, it retarded the development of industry and hindered the penetration of capital into the sphere of production. Marx noted that the “independent and predominant development of capital as merchant’s capital is tantamount to the nonsubjection of production to capital, and hence to capital developing on the basis of an alien social mode of production that is also independent of it. The independent development of merchant’s capital, therefore, stands in inverse proportion to the general economic development of society” (ibid., p. 360).

The consolidation of the capitalist mode of production occurred within the context of a fierce struggle between industrial capital and merchant’s capital for a share of the surplus product. During the stage of simple capitalist cooperation, a considerable portion of the surplus product took the form of commercial profit, which determined the dimensions of the industrial profit. The consolidation of the technological base of the capitalist economy, the development of mass production, and the creation by big industry of its own market led to the subordination of merchant’s capital to the patterns governing the functioning of industrial capital and to the individuation of merchant’s capital as commercial capital.

The prerequisites for the individuation of commodity capital as commercial capital lie in the very mechanism for the circulation of industrial capital, the continuity of which is ensured through the circulation of the capital’s relatively independent functional forms. Part of social capital is constantly in the sphere of circulation, manifesting itself as the output produced in capitalist enterprises and destined for sale on the market. With a larger scale of production activity and a more pronounced social division of labor, the functions of realizing commodity capital are concentrated in the hands of a particular group of capitalists who specialize in the process of changing the forms of value. There is a metamorphosis of commodity capital into commercial capital. Commercial capital does not directly create surplus value because value increases on its own within the sphere of production; in an indirect manner, however, commercial capital does contribute to an increase. Commercial capitalists, with their specialized buildings and equipment and their knowledge of trading practices and market conditions, function as intermediaries in such a way that there is a relative saving of capital and time in converting the products of labor from the commodity form into the monetary form. This division of labor permits commercial capitalists to simultaneously market the output of several industrial capitalists. The acceleration of capital turnover and the reduction of the time and expenses necessary for circulation allow a corresponding increase in the share of productive capital and, at the same time, a growth in the amount of surplus value and the rate of profit. Taken as a whole, these factors broaden the possibilities for capital accumulation and favor the process of concentration of capitalist production. Commercial capital has developed flexible means of adjusting supply and demand; within certain limits, it can also affect the structure and volume of production and consumption.

At the same time, commercial capital aggravates the socioeconomic contradictions inherent in capitalism. It functions under the conditions of competition and anarchy in production. The individuation of commercial capital leads to a situation wherein the industrial capitalists, having sold their output to traders, are in a position to reproduce their capital without awaiting the final sale of the output. Commercial capitalists create a fictitious demand since they may not be able to sell the goods they have purchased. A contradiction arises between the dimensions of the supply and the effective demand. For a certain period, this contradiction is concealed because a significant number of transactions are carried out on a credit basis. This state of affairs increases both the hidden overproduction and the disproportionality of economic development. The severed link between production and consumption is restored by force through periodic crises of overproduction.

Commercial capital recovers its expenses and makes its profit in the course of capital competition by exploiting hired labor. Additional circulation costs are of a production nature, and their recovery coincides essentially with the recovery of production costs. Circulation costs as such, which are grouped with nonproductive capital expenses, are recovered from the aggregate surplus value obtained by the capitalist.

The imperialist stage brings the formation of commercial monopolies, which concentrate the marketing of enormous volumes of goods, create a differentiated system of marketing facilities (department stores, mail-order houses, supermarkets), and use their control over prices to extract monopoly profits. The intensified struggle for markets, the greater competition between monopolies, and the instability in the development of the capitalist economy have, under present conditions, hastened the trend toward commercial-industrial complexes. There has also been a greater reliance on long-term, negotiated agreements between industrial and commercial monopolistic associations.


Marx, K. Kapital, vol. 3. In K. Marx and F. Engels, Soch., 2nd ed., vol. 25, parti, chs. 16–20.
Lenin, V. I. Razvitie kapitalizma v Rossii. In Poln. sobr. soch., 5th ed., vol. 3, chs. 5,6, and 8.
Kochevrin, Iu. B. Malyi biznes v SShA. Moscow, 1965. Chapter 3.
Polianskii, F. Ia. Tovarnoe proizvodstvo v usloviiakh feodalizma. Moscow, 1969.
Sedov, V. I. Novye formy konkurentnoi bor’by v usloviiakh sovremennogo kapitalizma. Moscow, 1971. Chapter 1.
Kotov, V. N. Monopolisticheskie formy khoziaistvennykh otnoshenii. Moscow, 1971. Chapters 4 and 5.


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