Industrial Capital

capital advanced to produce surplus value and functioning in the sphere of material production, including industry, agriculture, construction, and transportation. Industrial capital “comprises every branch of industry run on a capitalist basis” (K. Marx, in K. Marx and F. Engels, Soch., 2nd ed., vol. 24, p. 60). It reflects the specific character of capitalist production and circulation, which are subordinate to the process of self-expansion of capital value. Because the production of surplus value is not a one-time act but a continually reproduced process, industrial capital is in movement, continually following a cycle, and exists simultaneously in three functional forms—monetary, productive, and commodity—each of which in turn follows its own cycle. This ensures the continuity of capitalist production. “Industrial capital is the only mode of existence of capital in which not only the appropriation of surplus value, or surplus product, but simultaneously its creation is a function of capital. Therefore with it the capitalist character of production is a necessity. Its existence implies the class antagonism between capitalists and wage-laborers” (ibid., p. 65).

The initial and terminal point in the movement of industrial capital is money. Therefore the formula for the cycle of monetary capital

where M is money, C is commodity, L is labor, MP is means of production, and P is production, is also the general formula for the movement of industrial capital.

In the first stage M—C, industrial capital assumes the form of monetary capital, whose function is to prepare conditions for the direct process of creating surplus value. In the second stage P…C′ hired labor is exploited to bring about a real increase in the advanced value—its self-expansion—and industrial capital assumes the form of productive capital. The concluding stage is C′—M′, where industrial capital operates in the form of commodity capital, whose function is to realize the increased capital value. As capitalism develops, commercial capital and loan capital become separated from industrial capital; the basic form of capital still remains industrial capital, which directly expresses the essence of class relations between workers and capitalists.

The concentration and centralization of industrial capital and production in the late 19th and early 20th centuries led to the dominance of monopolies and the merging of industrial and bank capital—the formation of finance capital.