Productive Capital, a form of functioning of industrial capital evolved as a result of the transition of capital from the money to the productive form. Productive capital is the second stage of the circuit of industrial capital. The means of production and labour power purchased by the capitalist form the material and personal components of the capital operating in the sphere of production. The means of production and labour power must be combined to ensure the process of labour. Under capitalism it is done through regular purchases of labour power and the means of production by the capitalist. Production stops when these two factors are not combined, as happens during economic crises. Unlike money and commodity capital, productive capital has two features: first, it operates only in the sphere of material production, and second and most important, it creates surplus value. This determines the decisive importance of the productive form of capital during its circuit. Of the two components the only source of surplus value is labour power, which is purchased by variable capital. To disguise the essence of capitalist exploitation, bourgeois economists have come up with the false theory of capital productivity. According to this “theory”, the capitalists’ income is created by capital rather than wage labour, and the concept of capital is reduced merely to the elements of constant capital, i. e., the means of production—past labour. However, Marx’s theory of surplus value has shown irrefutably that surplus value is created in the process of capitalist production through the labour that workers expend.