p Circuit of Capital, movement of capital through the spheres of production and circulation, ensuring the production of surplus value and the reproduction of capital. The first stage of the circuit of capital takes place in the sphere of circulation. Money capital is spent to purchase the means of production (Mp) and labour power (Lp). This stage is expressed by the formula:

p M—C

p The purpose (the function) of the movement of capital at this stage is its transformation from its money form into its natural commodity form, which comprises the material (means of production) and personal (labour power) elements of production. The combination of the elements of production by the capitalist implies their productive consumption and yields the subsequent, the second stage of the movement of capital—the production of value and surplus value, indicated as ..f... (the dots show that the process of 39 circulation is broken). Having changed from its money form (M) to the form of productive capital, capital continues its movement in the sphere of production. Through production, capital acquires a commodity form (C”). Newly produced commodities qualitatively (by use value) and quantitatively (by the value embodied in them, containing the surplus value) differ from the commodities bought at the first stage of capital circuit. In the third stage of movement, capital once again enters the sphere of circulation: the capitalist sells manufactured commodities on the market, realising in money form the value and surplus value contained in these commodities. Capital changes from commodity form (C’) into money form (M’). The purpose (the function) of movement at this stage is the realisation of the value. Once the capitalist receives capital in money form, he can resume its turnover; in other words, that will be resumption of capitalist circulation and production. Thus, the circuit of capital is the movement in which capital is successively transformed from one form into another and then returns to its original form:

p M—C <   ... P ... C‘—M’ Mp

Money capital, productive capital and commodity capital are the forms of industrial capital, each performing certain economic functions. For this reason they are called functional forms. Each of the three forms of industrial capital has its own circuit (turnovers of money, productive, and commodity capital). The continuity of the process of capitalist production and circulation is ensured by the fact that in its circuit capital is not only successively transformed from one form to another, but at the same time exists in all three forms. To ensure this, every capitalist divides his capital into three parts: one represents capital engaged in production, another exists as a stock of commodities ready for realisation and being realised, while the third is in the form of money capital assigned for the ongoing purchase of the means of production and labour power.