Volume I dealt with the production of capital at the level of the individual capital, and in isolation from anything outside that production process. Volume II examined the circulation of capital outside the process of production, first at the level of the individual capital (many capitals) and then at the level of the circulation of the total social capital (capital in general). The conclusion of this was that capital could only be understood as a fusion both of the production and circulation processes.
The analysis, although referring to actual capitals, as examples, had been conducted at a level of abstraction, to focus on the actual laws that governed these processes, free from any disturbances to those laws that might have obscured them. Having analysed the underlying mechanism, Marx now turns to the way this is represented at the level of society, in the shape of concrete capitals, and the relations between them, and how these produce concrete social relations.
“The various forms of capital, as evolved in this book, thus approach step by step the form which they assume on the surface of society, in the action of different capitals upon one another, in competition, and in the ordinary consciousness of the agents of production themselves.” (p 25)
The value of commodities, C, is equal to c+v+s. This can be divided into two parts, and is done so by the capitalist. If we deduct s, the surplus value, we are left with c+v, which is the value of the capital laid out to produce the commodity, and so appears to the capitalist as its cost price. But, in reality, this is not the cost price. If we totalled up the labour-time required for production, it would be equal to c+v+s. It only appears to the capitalist that the cost price is c+v, because that is indeed what it has cost them, what they have paid for. But, their gain in that regard is the worker's loss. The worker has provided a certain number of hours labour, but only been paid for a part of them, even though that payment is equal to the value of the worker's labour power.
On the basis of this division, the cost price can be designated k, and so this value of the commodity resolves into k+s.
“The grouping of the various value portions of a commodity which only replace the value of the capital expended in its production under the head of cost-price expresses, on the one hand, the specific character of capitalist production. The capitalist cost of the commodity is measured by the expenditure of capital, while the actual cost of the commodity is measured by the expenditure of labour.” (p 26)
But, the cost price of the commodity is important, because it continually has to be reproduced in the sale of the commodity, so that the productive capital can be reproduced, so that production can continue on at least the same scale.
“The category of cost-price, on the other hand, has nothing to do with the formation of commodity-value, or with the process of self-expansion of capital.” (p 28)
The value of the commodity does not arise out of the cost price, but out of the labour-time required for its production, which in turn can be divided into that transferred from the constant capital, and that newly created by the variable capital. The self-expansion of the capital arises only from the latter as, in the process of production, it transforms what is an absolute quantity, the value of the labour-power, into a variable quantity, the value created by that labour-power.
But, the cost price, in combining the constant capital and the variable capital, into one amount, obscures this reality, so then it appears that the surplus value arises from the capital advanced as a whole.
“The investigation will show, however, that in capitalist economics the cost-price assumes the false appearance of a category of value production itself.” (p 28)