Capital is not a thing but a process in which money is perpetually sent in search more money. Capitalists — those who set this process in motion — take on many different personae. Finance capitalists look to make more money by lending to others in return for interest. Merchant capitalists buy cheap and sell dear. Landlords collect rent because the land and properties then own are scarce resource, Rentiers make money from royalties and intellectual property rights. Asset traders swap titles (to stocks and share for example), debts and contracts (including insurance) for a profit. Even the state can at like a capitalist, as, for example, when it uses tax revenues to invest in infrastructures that stimulate growth and generate even more tax revenue.
But the form of capital circulation that has come to dominate from the mid-eighteenth century onwards is that of industrial or production capital. In this case the capitalist starts the day with a certain amount of money, and, having selected a technology and organisational form, goes into the market place and buys the requisite amounts of labour power and means of production (raw materials, physical plant, intermediate products, machinery, energy and the liked The labour power is combined with the means of production through an active labour process conducted under the supervision of the capitalist. The result is a commodity that is sold by its owner, the capitalist, in the market place for a profit. The next day, the capitalist, for reasons that will shortly become apparent, takes a portion of yesterday’s profit, converts it into fresh capital and begins the process anew on an expanded scale. If the technology and organisational forms do not change, then this entails buying more labour power and more means of production to create even more profit during the second day And so it continues, ad infinitum.
In the service and entertainment industries this process looks a little different because the labour process (cutting the hair or entertaining the crowd) is in itself the commodity being sold, so there is no time lag between producing and selling the commodity (though there may be a lot of preparatory time involved). The necessity to reinvest in expansion, given the personal nature of the services often on offer, is not as strong, though there are plenty of examples of expanding service store and cinema chains, coffee shops and even private higher education centres.
Continuity of flow in the circulation of capital is very important. The process cannot be interrupted without incurring losses. There are also strong incentives te accelerate the speed of circulation. There are also strong incentives te accelerate the speed of circulation. Those who can move faster through the various phases of capital circulation accrue higher profits than their competitors. Speed-up nearly always pays off in higher profits. Innovations which help speed things up are much sought after. /…/
The circulation of capital also entails spatial movement. /…/ The means of production (including raw materials) have to he brought from yet another place to produce a commodity that has to be taken to market somewhere else. Frictions within or barriers to this spatial movement lake time to
negotiate and slow down circulation, throughout the history of capitalism much effort has therefore been put into reducing the friction of distance and barriers to movement. Innovations in transport and communications have been crucial. /…/
Throughout the history of capitalism there has been a trend towards the general reduction of spatial barriers and speed-up. /…/ But this trend is neither smooth nor irreversible. Protectionism can return, barriers can he refortified, civil wars can disrupt flows.
Excerpt from David Harvey, The Enigma of Capital (2010), chapter 2. Emphasis added.