Circuits of Capital

Developed by Karl Marx in the second volume of Capital, the “circuits of capital” approach represents a multifaceted way to understand the cyclical and self-expanding process of capitalist value circulation. Since each circuit is envisioned as a particular moment within a larger process, economic geographers have found it useful in situating local geographies in a wider context.

The circulation process is divided into three main circuits. The first circuit of money-capital (see Figure 1) represents succinctly the goal of any capitalist—starting with money and ending [Page 411]with more. Since most industrial production processes require substantial money-capital to purchase the commodities labor power and means of production (L + MP) before production takes place, the circuit money-capital can be envisioned as the various types of financial and credit institutions whose overarching goal is to invest money with the aim of gaining more (M - M').

Figure 1 The circuits of capital Source: Author.

The second circuit of productive-capital represents the periodic renewal of the concrete processes of commodity production (P). Each cycle of production must adapt to produce a specific volume of commodities at a particular speed in accordance with the industry's competitive dynamics. Focusing on this circuit allows a window into the context-specific struggles on the factory floor between capitalists, managers, and workers over the conditions and relations of production.

The third circuit of commodity-capital begins and ends its cycle with a produced commodity (C‘) that must be sold on the market. While the money obtained through the exchange ultimately will be reinvested in the production process, the process always ends with the renewal of the commodity-capital that must be exchanged. The circuit of commodity-capital can be conceptualized as the various types of distribution, marketing, and retail businesses whose overarching goal is to procure commodities and ensure their exchange.

Finally, the spatial and temporal interruptions of the circulation process—both in bringing commodities on site for production and in transporting them to the market for exchange—are also theorized as potential sources of crisis for the overall system of circulation as a whole.

Geographers have implicitly or explicitly applied the circuits-of-capital approach in a variety of ways. Within the circuit of money-capital, financial centers are studied as particular sites of power in the global market. Within the circuit of productive-capital, Doreen Massey's influential notion of “spatial divisions of labor” examines how localities and production facilities cohere within wider geographical networks of corporate organizational control. Within the circuit of commodity-capital, the commodity chain approach traces the geographical movement of commodities from raw materials to production, processing, retail, and consumption. Finally, following developments from cultural studies, cultural geographers have proposed a fourth “circuit of culture” that suggests that meanings and symbols themselves circulate between and among particular sites and places (e.g., households, advertising agencies, media outlets).