Reason For The Concept
Marx showed in Das Kapital how "money is changed into capital" and "how capital generates surplus-value" forming more capital. But in doing so, he had already assumed that there exists a mass of Capital available for investment, and there already exists exploitable Labor power. He had shown how capitalist production could itself reproduce the conditions of its own existence on an ever broader scale. But, as he says, "the whole movement seems to turn into a vicious circle."
Capital is money that makes more money: value in search of Surplus value. In other words, it is money that gets reinvested. It originates in the activity of buying goods in order to resell them at a profit, and first emerges in commercial trade connecting different economic communities, whose production is not yet capitalist. The existence of usury capital, bank capital, rentier capital and merchant capital historically precedes capitalist industry.
To explain how the capitalist mode of production comes into being in the first place, Marx had to study history to locate an original accumulation that facilitated capitalist relations. Adam Smith had called this "previous accumulation" – an accumulation which did not result from capitalist production, but formed an external starting point to it.
Read more about this topic: Primitive Accumulation Of Capital
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