Compare for instance a modern farmer of the Scotch lowlands with an old-fashioned small peasant on the Continent. The former sells his entire product and has therefore to replace all its elements, even his seed, in the market;the latter consumes the greater part of his product directly, buys and sells as little as possible, fashions tools, makes clothing, etc., so far as possible himself.
Natural economy, money-economy, and credit-economy have therefore been placed in opposition to one another as being the three characteristic economic forms of movement in social production.
In the first place these three forms do not represent equivalent phases of development. The so-called credit-economy is merely a form of the money-economy, since both terms express functions or modes of exchange among the producers themselves. In developed capitalist production, the money-economy appears only as the basis of the credit-economy. The money-economy and credit-economy thus correspond only to different stages in the development of capitalist production, but they are by no means independent forms of exchange vis-à-vis natural economy. With the same justification one might contrapose as equivalents the very different forms of natural economy to those two economies.
In the second place, since it is not the economy, i.e., the process of production itself that is emphasised as the distinguishing mark of the two categories, money-economy and credit-economy, but rather the mode of exchange -- corresponding to that economy -- between the various agents of production, or producers, the same should apply to the first category.
Hence exchange economy instead of natural economy. A completely isolated natural economy, such as the Inca state of Peru, would not come under any of these categories.
In the third place the money-economy is common to all commodity production and the product appears as a commodity in the most varied organisms of social production. Consequently what characterises capitalist production would then be only the extent to which the product is created as an article of commerce, as a commodity, and hence the extent also to which its own constituent elements must enter again as articles of commerce, as commodities, into the economy from which it emerges.
As a matter of fact capitalist production is commodity production as the general form of production. But it is so and becomes so more and more in the course of its development only because labour itself appears here as a commodity, because the labourer sells his labour, that is, the function of his labour-power, and our assumption is that he sells it at its value, determined by its cost of reproduction. To the extent that labour becomes wage-labour, the producer becomes an industrial capitalist. For this reason capitalist production (and hence also commodity production)does not reach its full scope until the direct agricultural producer becomes a wage-labourer. In the relation of capitalist and wage-labourer, the money-relation, the relation between the buyer and the seller, becomes a relation inherent in production. But this relation has its foundation in the social character of production, not in the mode of exchange. The latter conversely emanates from the former. It is, however, quite in keeping with the bourgeois horizon, everyone being engrossed in the transaction of shady business, not to see in the character of the mode of production the basis of the mode of exchange corresponding to it, but vice versa. [7]
_______________The capitalist throws less value in the form of money into the circulation than he draws out of it, because he throws into it more value in the form of commodities than he withdrew from it in the form of commodities. Since he functions simply as a personification of capital, as an industrial capitalist, his supply of commodity-value is always greater than his demand for it.
If his supply and demand in this respect covered each other it would mean that his capital had not produced any surplus-value, that it had not functioned as productive capital, that the productive capital had been converted into commodity-capital not big with surplus-value; that it had not drawn any surplus-value in commodity form out of labour-power during the process of production, had not functioned at all as capital. The capitalist must indeed "sell dearer than he has bought," but he succeeds in doing so only because the capitalist process of production enables him to transform the cheaper commodity he bought -- cheaper because it contains less value --into a commodity of greater value, hence a dearer one. He sells dearer, not because he sells above the value of his commodity, but because his commodity contains value in excess of that contained in the ingredients of its production.
The rate at which the capitalist makes the value of his capital expand is the greater, the greater the difference between his supply and his demand, i.e., the greater the excess of the commodity-value he supplies over the commodity-value he demands. His aim is not to equalize his supply and demand , but to make the inequality between them , the excess of his supply over his demand , as great as possible.
What is true of the individual capitalist applies to the capitalist class.
In so far as the capitalist merely personifies industrial capital, his own demand is confined to means of production and labour-power. In point of value, his demand for MP is smaller than his advanced capital;he buys means of production of a smaller value than that of his capital, and therefore of a still smaller value than that of the commodity-capital which he supplies.
