5
built their own house, etc. They produced as much as they required, but no more. Gradually, however, owing to the progress of Agriculture, they reached a stage when they produced a surplus of things, which they did not want for their immediate use. They were thus placed in a position to exchange this surplus for products which they themselves did not produce or not in sufficient quantities, products which they welcomed, as, for example, a weapon, a tool, or jewels. By the means of exchange these products became commodities, that is, products intended not for use or consumption within the establishment, in which they were produced, but for the purpose of exchange for products of another establishment. The wheat produced by the peasant for his own use was not a commodity; the wheat he sold, however, was. To sell means nothing else than to exchange a certain commodity for such a one as is welcome to everybody and in this way becomes money, for instance, gold.
As we have seen, the peasant became, in the course of economic development, a producer of commodities. The handicraftsman in his independent petty enterprise was from the first a producer of commodities. And it was not only a surplus of products that he sold, but with him production for sale was the primary feature.
But the exchange of commodities presupposed two conditions, firstly, that every single concern produced a different class of goods and that division of labour had entered Society, and secondly, that those who exchanged were free to dispose of their products, that the latter were their private property.
The more that, in the course of economic development, division of labour in various trades progressed, and private property increased in extent and significance, the more generally was production for own consumption superseded by production of commodities.
Division of labour finally resulted in buying and selling becoming a separate business, which was pursued exclusively by one class, the merchants. These derived their incomes from buying cheaply and selling dearly. This does not mean, however, that they were able to fix the price of commodities at their own discretion, for the price depends ultimately upon the exchange value. The value of a commodity is determined by the average amount of labour expended in its production. Its price scarcely ever coincides exactly with its value. The former is determined not only by the conditions of its production, as is its value, but also by the conditions of the market, primarily, by its supply and demand, in what quantity the commodity is placed on the market, or is in demand. But the price is also subject to certain laws. It varies with different times and places. If, then, the merchant wishes to obtain a margin between the buying and the selling prices of the commodity, as profit, he must, as a rule, buy his commodities when and where they are cheap and sell them when and where they are dear.
When the peasant or handicraftsman bought commodities he did so because he required them for himself or his family as means of production or subsistence. The merchant bought commodities, not for his own use, but to utilise them so that they might yield him a profit. Commodities and sums of money for such a purpose are capital. It cannot always be said of a commodity or a sum of money that it is capital. Tobacco bought by a merchant for the purpose of being sold at a profit is to him capital. Tobacco bought for his own smoking is not capital.
The original form of capital was that of merchants' capital. Nearly as old is the usurers' capital, the profit of which consists of interest pocketed by the capitalist for commodities or sums of money lent.
