e cannot bring labour-power under the head of circulating capital. Hence the variable capital here appears in the form of the commodities the labourer buys with his wages, viz., means of subsistence. In this form the capital-value invested in wages is supposed to belong to circulating capital. That which is incorporated in the process of production is labour-power, the labourer himself, not the means of subsistence wherewith the labourer maintains himself. True, we have seen (Buch I, Kap. XXI) [English edition: Volume I, Ch. XXIII. — Ed.] that from the point of view of society the reproduction of the labourer himself by means of his individual consumption is likewise part of the process of reproduction of social capital. But this does not apply to the individual, isolated process of production which we are studying here. The “acquired and useful abilities” (p. 187) which Smith mentions under the head of fixed capital are on the contrary component parts of circulating capital, since they are “abilities” of the wage-labourer and he has sold his labour together with its “abilities.”
It is a great mistake on the part of Adam Smith to divide the entire social wealth into 1) a fund for immediate consumption, 2) fixed capital, and 3) circulating capital. According to the above, wealth would have to be divided into 1) a consumption-fund which does not form any part of functioning social capital although parts of it can continually function as capital; and 2) capital. Accordingly one part of the wealth functions as capital, the other as non-capital, or consumption-fund. And here appears the absolute necessity that all capital be either fixed or circulating somewhat like the natural necessity that a mammal be male or female. But we have seen that the antithesis between fixed and circulating capital applies solely to the elements of productive capital, that consequently there is besides these a considerable amount of capital — commodity-capital and money-capital — exists in a form in which it can be neither fixed nor circulating.
Inasmuch as under capitalist production the entire mass of social products circulates in the market as commodity-capital, with the exception of that part of the products which is directly used up again by the individual capitalist producers in its bodily form as means of production without being sold or bought, it is evident that not only the fixed and circulating elements of productive capital, but likewise all the elements of the consumption-fund are derived from the commodity-capital. This is tantamount to saying that on the basis of capitalist production both means of production and articles of consumption first appear as commodity-capital, even though they are intended for later use as means of production or articles of consumption, just as labour-power itself is found in the market as a commodity, although not as commodity-capital.
This accounts for the following new confusion in Adam Smith. He says:
“Of these four parts”
(of the “circulating” capital, i.e., of capital in its forms of commodity-capital and money-capital belonging in the process of circulation, two parts which are turned into four by the material distinctions Adam Smith makes between the constituent parts of commodity-capital)
“three — provisions, materials, and finished work, are either annually or in a longer or shorter period, regularly withdrawn from it and placed either in the fixed capital, or in the stock reserved for immediate consumption. Every fixed capital is both originally derived from, and requires to be continually supported by, a circulating capital. All useful machines and instruments of trade are originally derived from a circulating capital which furnishes the materials of which they are made and the maintenance of the workmen who make them. They require, too, a capital of the same kind to keep them in constant repair.” (p. 188.)
With the exception of that part of the product which is constantly consumed again as means of production directly by its producers, the following general proposition applies to capitalist p