money functioning as capital-value, which begets surplus value and which is used to exploit hired labor. In precapitalist formations capital existed in the form of interest-bearing capital: usurious capital and monetary-commercial capital (“money-changers”).
The accumulation of monetary capital, a necessary prerequisite of the beginning of the capitalist method of production, was one of the basic factors of the so-called primitive accumulation of capital. Under capitalist conditions monetary capital is an essential form of capital circulation, in both its initial (purchase) and final (sale) stages. Monetary capital is used in the marketplace for buying labor power (LP) and the means of production (MP) necessary for production, which in the money (M) and commodity (C) cycle gives rise to the following metamorphosis:
The movement of monetary capital occurs in the sphere of circulation and is a condition necessary to the process of reproduction of social capital. In connection with this process, the money functions also become capital functions, since the capitalist advances money in order to receive profit. At the end of the process of circulation, the magnitude of monetary capital increases by the amount of surplus value.
Monetary capital exists both as a direct form of money and as a form of fictitious capital, that is, money accumulation in banks and various titles of ownership giving the right of appropriation of surplus value in the form of money. Accumulation of monetary capital and real capital (capital functioning in the production process) do not coincide, expressing the contradiction between commodities and money, between the social nature of production and the private-capitalist character of appropriation. This contradiction breaks out in an acute form during periodic economic crises of commodity overproduction, when the surplus of real capital (commodity and production) is opposed to the shortage of monetary capital in the form of lending capital, while the phase following a crisis—depression—is marked by the decreased volume of real capital and the accumulation of great masses of monetary capital unable to find productive use.
Z. V. ATLAS