5. Conclusion
This paper has examined how credit relations develop from the
turnover of capital.
First,
we showed that under continuous production, shortening circulation time does
not reduce the total turnover time of capital. Instead, it reduces the amount
of capital required in advance, including the reserve funds. However, these
reserve funds always become idle in varying amounts and may occasionally run
short.
Second,
we argued that such reserve funds in circulation are difficult for individual
industrial capitals to manage on their own. Therefore, they rely on each other
by using commercial credit. Commercial credit arises spontaneously from the
uneven distribution of available reserve funds among different capitals. Thus,
under continuous production, credit contributes to reducing the advanced
capital.
Third,
this paper discussed how the credit giver in commercial credit can act as an
intermediary and evolve into banking capital. The credit giver can assess
buyers’ creditworthiness and its debt is trusted due to strong sales. It can
extend the role of credit intermediary and expand its profit beyond its own productive
capacities.
Fourth,
we examined how profit is transferred through the markup on credit sales and
through interest. Although the cash price is determined by the production price
system, both the markup rate and interest rate are shaped by the competition
for profit rates within the closed relationship between two or three capitals.
This
study has some limitations. By focusing on the relationships between only a few
capitals, it does not examine the formation of a general rate of interest. To
explore the general rate, Future research should explore competition among
multiple credit givers or intermediaries. Furthermore, this paper did not
examine the potential for capital saving by specialization in credit operation.
Nevertheless,
this paper has proposed a logical development of credit—from capital turnover,
to commercial credit, and finally to bank credit—based on the theory of
differentiation and emergence.
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