Part Four — The Transformation of Commodity Capital and Money Capital into Commercial Capital and Money-Dealing Capital (Merchant's Capital) Chapters 16–20. Commercial capital, commercial profit, its turnover, money-dealing capital, and the history of merchant's capital.

Part Four analyses the first of the great functional differentiations of the total capital: the splitting-off of commercial (merchant's) capital, which takes over the buying and selling that the industrial capitalist would otherwise do himself. Two forms are distinguished — commercial capital proper, which deals in commodities (the commodity-capital phase C′–M′ made independent), and money-dealing capital, which handles the technical operations of money (payments, receipts, the management of the reserve). The central problem is a value-theoretic one, and it is the same problem the whole volume keeps posing in new forms: the merchant plainly makes a profit, yet buying and selling create no value. How, then, is commercial profit possible without breaking the law of value? Marx's answer is that commercial capital produces neither value nor surplus-value but shares in the surplus-value produced by industrial capital, drawing the average rate of profit on its own advance as a member of the total capital. Commercial profit is therefore a deduction from industrial surplus-value, a redistribution, not a new source. Chapters 16 and 17 establish this; Chapter 18 analyses the turnover of commercial capital and its effect on the merchant's mark-up; Chapter 19 treats money-dealing capital; Chapter 20 gives the long historical excursus on merchant's capital, which existed for millennia before the capitalist mode of production and whose autonomous power, Marx argues, stands in inverse proportion to the development of that mode.

Commercial capital is the commodity-capital phase of industrial capital given independent existence in a separate set of hands. The merchant advances money to buy commodities from the producer and sell them to the final buyer, performing the metamorphosis C′–M′ on the producer's behalf. Marx insists on the value-theoretic consequence: this activity, being pure circulation, adds nothing.

The definition is given at the outset: commercial capital is a portion of the total social capital, permanently resident in the sphere of circulation.

Commercial capital, then, is nothing but the transformed form of a portion of this circulation capital which is always to be found on the market, in the course of its metamorphosis, and perpetually confined to the circulation sphere. We refer here to a portion only, because another part of the buying and selling of commodities always takes place directly between the industrial capitalists themselves.

Marx, Capital III, page 380.

Commercial capital thus creates neither value nor surplus-value, at least not directly. In so far as it contributes towards shortening the circulation time, it can indirectly help the industrial capitalist to increase the surplus-value he produces.

Marx, Capital III, page 392.

By specializing circulation in one place, commercial capital reduces the total circulation costs and circulation time of the whole system, freeing more of industrial capital for production. It thus indirectly raises the mass of surplus-value produced, and it economizes the money and labour tied up in buying and selling. But none of this makes the merchant a producer of value; it makes him an agent who allows more value to be produced elsewhere, in exchange for a share of it.

The puzzle sharpens: if the merchant adds no value, how does he profit? Marx's solution folds commercial capital into the formation of the general rate of profit. The total surplus-value produced by industrial capital is divided over the total capital — industrial and commercial — so that the average rate of profit is calculated on the sum of the two. The industrial capitalist therefore sells to the merchant below the price of production, at a price that yields the industrialist the average profit on his own capital; the merchant then sells at the full price of production and pockets the difference, which is exactly the average profit on his capital. Commercial profit is thus a portion of the surplus-value produced in industry, ceded to commerce as its share.

The mechanism is stated exactly: once commercial capital enters the equalization, the average profit is calculated on the total productive and commercial capital together, and the industrial capitalist as such sells below the commodity's full production price.

The average rate of profit already takes into account the part of the total profit that accrues to commercial capital. The real value or production price of the total commodity capital is therefore k + p + m (where m is commercial profit). The price of production, i.e. the price at which the industrial capitalist sells as such, is therefore less than the real production price of the commodity; or, if we consider all commodities together, the price at which the industrial capitalist class sells them is less than their value.

Marx, Capital III, page 398.

The merchant's mark-up therefore realizes value that is already there — surplus-value the industrialist's sale price left unrealized — and the general rate of profit is formed with the merchant's deduction already reckoned in.

The merchant’s sale price is higher than his purchase price not because it is above the total value, but rather because his purchase price is below this total value.

Commercial capital is involved in the equalization of surplus-value that forms average profit, therefore, even though it is not involved in the production of this surplus-value. The general rate of profit thus already takes account of the deduction from the surplus-value which falls to commercial capital, i.e. a deduction from the profit of industrial capital.

Marx, Capital III, page 400.

commercial profit is reduced to the aliquot share of the total surplus-value that accrues to commercial capital as an aliquot part of the total capital concerned in the process of social reproduction.

Marx, Capital III, page 401.