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.

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 379.

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.

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 396.

The merchant's mark-up is therefore not an addition to value made in circulation but a slice of the surplus-value already produced in the workshop, redistributed by the same competitive equalization that formed the general rate of profit in Part Two. The value theory is preserved: no value is created by buying and selling; the commercial profit is subtracted from the industrial surplus-value. What looks, on the surface, like the merchant "buying cheap and selling dear" is, at the level of the total capital, the merchant drawing the average rate of profit on his advance out of the common pool of surplus labour.

Chapter 18 examines the turnover of commercial capital and its curious effects. Because a single commercial capital can serve many industrial capitals and turn over many times a year, the number of its turnovers governs the mass of commodities it can handle with a given advance, and thereby the commercial mark-up. But Marx warns that the merchant's own experience inverts the real relation: the merchant sees the rate of profit as determined by his turnover and mark-up, not by the surplus-value produced in industry, and so commercial turnover becomes one more surface phenomenon that hides the origin of profit in production. Chapter 19 treats money-dealing capital — the specialized handling of the money side of circulation: receipts and payments, the holding of reserves, the bookkeeping of money, later the business of banking's technical operations. Like commercial capital, money-dealing capital produces no value; it economizes the costs and labour that the circulation of money would otherwise impose on each individual capital, and draws its profit as a share of the general surplus-value for performing this technical service. Both forms are, in Marx's phrase, differentiations within the circulation of the total capital, not new springs of value.

The Part closes with a historical excursus that reverses the temporal order of the analysis. Merchant's capital is the oldest free form of capital — it existed in antiquity, in the ancient world and the Middle Ages, long before capital had seized hold of production. In those pre-capitalist settings it profited precisely by buying cheap and selling dear between communities and modes of production that did not produce for exchange, living in the "pores" of society and battening on the difference between distant price levels. Marx draws the dialectical conclusion that has attracted much later comment: the autonomous power of merchant's capital stands in inverse proportion to the development of the capitalist mode of production. Where production itself is capitalist, commerce is subordinated to industry, reduced to an agent of industrial capital's circulation, and its profit is regulated down to the average rate; where production is not yet capitalist, merchant's capital rules the exchange but cannot transform production, and its independent supremacy is a mark of the immaturity, not the maturity, of capital. Merchant's capital can help dissolve the old modes of production, but it cannot by itself create the capitalist mode; that requires the revolution in production analysed in Volume I. The excursus thus places the whole Part in historical perspective and guards against the error — common to bourgeois economics and to some socialist accounts alike — of treating profit-upon-alienation, the merchant's ancient trick, as the model of capitalist profit in general.