8. The enactment of closure within Capital: Volume I

8. The enactment of closure within Capital: Volume I

Introduction
In the previous two chapters we saw how, in the historical context and intellectual climate of the mid to late nineteenth century, Marx, in adopting the problematic of political economy, came to impose a provisional closure within his broad thematic. We traced out how this closure became reflected in the theoretical movement between the Grundrisse and the three volumes of Capital, both in terms of the 'problem of the beginning', and in the change in outline of Marx's proposed plan of work. We shall now, in the following three chapters, examine in detail how this closure comes to be consolidated within the text of Capital itself, through a critical analysis of each of its three volumes. In this analysis we shall seek to tease out those points within the text that are tangential to Marx's principal line of theoretical development, and which thereby point beyond its closure. In doing so we shall find that this closure within Capital is not merely provisional but two-fold. We shall begin our analysis in this chapter with the examination of Volume I.

Since Volume I is by far the most important of all the three volumes of Capital, we propose to examine it in particular detail. As a consequence this rather lengthy chapter will be divided into two parts. The first part will deal with Marx's theory of value, which is developed in Parts I and II of Volume I of Capital; while the second part will deal with Marx's theory of the production of surplus-value and the accumulation of capital, which is set out in the remaining six parts of Volume I.

We have already seen how, by starting with the commodity, Marx comes to close off the question of the subjective, and with this the counter-dialectic of class struggle. We shall not repeat this line of argument here. Instead we shall seek to go a step further. We shall seek to show how, through the dialectical derivation of the category capital from that of the commodity, Marx, from the very beginning of his analysis, poses capital as a unity in opposition whose very possibility contains the inherent possibility of its rupture and crisis. Yet in order to develop his analysis, in order to demonstrate the persistence of capitalism, Marx, we shall find, is obliged to provisionally resolve the contradictions of his categories into an overall unity. Thus although at each step Marx comes to pose, at least implicitly, the question of rupture and crisis, he is also logically obliged to defer it. It is with this repeated deferral of the question of crisis that we shall come to identify as the second part of the two-fold closure that we find imposed by Marx's critique of political economy.

In the second part of this chapter, where we move onto Marx's theory of the production of surplus-value and the accumulation of capital, we shall return once more to the first phase of closure -- the closing off of the subjective -- to see how it is sustained in this, the most fundamental part of Capital. We shall see how this closure is consolidated in Capital through what we shall term the attenuation of Marx's analysis of capitalist production from that of an ontological process of human alienation to that of a quantifiable and objectified process of exploitation. An attenuation that becomes readily apparent once we compare Marx's theory of surplus-value as it is presented in the final version of Capital with its corresponding investigation in the earlier drafts such as the Grundrisse.

* * * I: The theory of value: from the commodity-form to the form of capital

A) The commodity-form and the abstract social labour theory of value

The wealth of those societies in which the capitalist mode of production prevails, presents itself as "an immense accumulation of commodities" its unit being a single commodity. Our investigation must therefore begin with the analysis of a single commodity. (Capital I, p. 35) Here, in the opening sentences of Volume I, Marx unequivocally takes the analysis of the commodity as the starting point for his critique of political economy. We have already examined in detail how Marx came to take up this point of departure and the implications this had for the development of his theoretical project. We shall now begin our examination of Volume I by briefly considering how Marx came to formulate this analysis.

At first sight, what distinguishes the material basis of capitalist society from that of all preceding forms of society is not so much the sheer volume and variety of its tangible wealth, although this is particularly conspicuous, but the specific social form that this wealth takes. Whereas in previous societies particular types of wealth have often taken the form of commodities, it is only in capitalist society that the commodity is the general and all pervasive form of wealth.

If the wealth of a society is to generally take the form of commodities, then it is necessary that this wealth is divided up into distinct and separate objects that may be appropriated as the exclusive private property of individuals. Thus, just as bourgeois society, at first sight, appears as little more than a simple aggregation of independent and atomized individuals, the total wealth of this society appears as a simple aggregation of disconnected commodities.

Yet all this is only the semblance of the capitalist economy. If we follow Marx, and indeed to some extent the classical political economists, below this surface appearance we find that, like any other society, the wealth of capitalist society is produced by a social division of human labour. In fact, as Adam Smith had shown, the increasing volume and variety of wealth produced within the capitalist economy is a direct result of the ever developing complexity of its underlying social division of labour.

On the one side then we find an immense increase in the social complexity and interconnectedness of the production of wealth that accompanies the capitalist development of forces of production; on the other side we find that this wealth is appropriated by the mass of private and atomized individuals. Thus we find that the social character of capitalist production stands in stark opposition to the private appropriation of the wealth that it produces in the form of commodities. The question which arises is: how is this opposition reconciled? What makes the capitalist economy possible?

If wealth is to appear in the form of commodities it must be produced as commodities. Thus the capitalist economy emerges as an economy based on generalized commodity production. In such an economy the wealth of society is produced by disassociated producers, each playing a particular part in the total social division of labour by producing a particular aspect of the total wealth of society. Yet the wealth that each of these producers produce is not produced for its own sake, still less for the sake of society as a whole, but for what it can command for its producer in exchange . Each of these disassociated producers, having produced a particular kind of wealth in the form of a specific commodity, seeks to exchange the wealth they have produced for other kinds of wealth that they require for future production, or for their own personal needs or wants.

As a consequence the social division of wealth is not constructed according to some social plan or custom but is rather constituted through the mutual acts of exchange that occur between these disassociated commodity producers. It is only through the exchange of commodities that each producer comes to be validated and recognized as a part of the total social division of labour; and it is only through such exchange that what each of these producers have produced becomes recognized and validated as part of the total wealth of society. Yet this exchange of commodities, which is necessary for both the reproduction and persistence of the capitalist economy as a generalized commodity economy, cannot be a simple random or accidental exchange. It must be, to some degree, regular and determinate. It is only when the general exchange of commodities possess such regularity and determinancy that each of the disassociated commodity producers can have a reasonable degree of certainty that the commodities which they are about to produce will be exchangeable for the right kind and quantity of commodities which they require. Without this degree of certainty the generalized production of commodities becomes untenable.

So we find that the opposition between the social nature of production, which stems from the social division of labour and which becomes ever more developed under capitalist production, and the disassociated commodity form that the wealth that it creates assumes, can only be resolved and reconciled by the regular and determinate exchange of commodities. But this only serves to raise further question: given that a generalized commodity economy is not static -- and it is quite evident that capitalist economies are far from being static -- how is such determinate and regular exchange possible? As Marx recognized, the answer to this question lies within the commodity-form itself; and it was in answer to this question that Marx opens Volume I with his analysis of the commodity.

i) The commodity-form For Marx, the commodity first appears as the unity of two opposed aspects: exchange-value and use-value. As a simple product of labour the commodity immediately appears in its tangible form as a set of physical attributes that, having been fashioned from nature by a set of concrete labours, constitute it as a socially recognized use-value. Yet for the producer/seller of this commodity these attributes are of no immediate concern except for the fact that they may serve to command other commodities with other use-values in exchange. For the producer/seller of the commodity what is of interest is not so much the use-value of the commodity -- in fact for her the commodity is not a use-value but a non-use-value -- but the commodity as an exchange-value: that is its potential to be exchanged for what it is not.

The exchange-value of a commodity stands in mutual opposition to its use-value and this opposition can only be overcome through the act of exchange. With exchange the use- value of the commodity becomes realized in the hands of its recipient owner who consumes it; while the exchange-value of the commodity becomes realized when its producer/seller obtains her desired other use-values.

Yet the question remains: what is it that allows the regular and determinate exchange of this commodity with other commodities? Marx argues that if a commodity is to exchange with other commodities then, to the degree that such an exchange is not random or accidental, the commodity must have something that is in common with all other commodities with which it may exchange. It must have something that makes it commensurate with other commodities. So what is this common something?

For Marx this common something cannot be any of the 'natural' or physical properties that serve to constitute the commodity's use-value since it is these very properties that act to differentiate one particular kind of commodity from another. While the different use-values that arise from the varying physical and 'natural' attributes of different kinds of commodities make commodity exchange necessary they do not serve to make systematic commodity exchange possible. As Marx points out: This common "something" cannot be either a geometrical, a chemical, or any other natural property of commodities. Such properties claim only our attention only insofar as they affect the utility of those commodities, make them use-values. But the exchange of commodities is evidently an act characterised by a total abstraction from use-value. (Capital I, p. 45) Having dismissed use-value as this common something we come to exchange-value. But exchange-value as such immediately appears only in terms of the multiplicity of other use-values that the commodity can command in exchange, and, as such, appears as being both external and accidental to the commodity itself. As Marx explains: Exchange-value, at first sight, presents itself as a quantitative relation, as the proportion in which values in use of one sort are exchanged for those of another sort, a relation constantly changing with time and place. Hence exchange-value appears to be something accidental and purely relative, and consequently an intrinsic value, i.e. an exchange-value that is inseparably connected with, inherent in commodities seems a contradiction in terms. (Capital I, p. 45) However, on closer inspection we find that: A given commodity, e.g. a quarter of wheat is exchanged for x blacking, y silk, or z gold, &c -- in short, for other commodities in the most different proportions.

Instead of one exchange-value, the wheat has, therefore, a great many. But since x blacking, y silk, or z gold &c., must, as exchange-values, be replaceable by each other, or equal to each other. Therefore, first: the valid exchange-values of a given commodity express something equal; secondly, exchange-value, generally, is only the mode of expression, the phenomenal form, of something contained in it, yet distinguishable from it. (Capital I, p. 45) So what is it that is given 'phenomenal form' or 'mode of expression' by the various exchange-values of a commodity? The answer is the value of the commodity. It is value which each particular commodity has in common with all other commodities, and hence it is value that makes it commensurable with them. Thus in Marx's example; a quarter of wheat is able to systematically exchange with x blacking, y silk or z gold etc. (and these with each other) because a quarter of wheat has the same value as x blacking, y silk, and z gold etc. These different exchange-values of a quarter of wheat serve to express the same value.

But if the exchange-values of a commodity are only the 'phenomenal forms', the 'modes of expression' of the value of that commodity, what is it that determines the substance of value?

ii) The substance of value With this question we reach the very basis from which Marx seeks to launch his critique of political economy. So before we proceed to see how Marx comes to answer this question we must pause to consider the development of his analysis of the commodity-form, and that of the form and substance of value, in the context of bourgeois political economy.

Modern economics, which is largely what Marx would have called vulgar economy, has never been much concerned with the question of the possibility of capitalism nor with the question of what value is. For the modern economist, the existence of capitalism is taken as being self-evident, something that requires either justification or reform rather than explanation. With regards to the question of what value is the modern economist is a little uneasy; it is a question that is perhaps a little too 'metaphysical' and one that is usually confined, if dealt with at all, to the preliminary remarks before the analysis proper.

This embarrassment and uneasiness over the question of value on the part of the modern economist is not, however, surprising. The positivist and empiricist methodology which pervades modern economic thought, as Zeleny has shown, strictly precludes a 'substantialist logic'.(1) All that is admitted with such an underlying methodology is the 'relativist logic' that operates with the relations between positively ascertained phenomena. Thus, to the mind of the modern economist, all reference to notions of the form and substance of value are entirely alien; such notions are regarded as either incomprehensible or at best metaphysical. It is for this reason that the opening chapters of Capital prove so difficult for those trained within the strictures of modern economics and associated disciplines, and why for such a long time, particularly in the English-speaking world where the influence of such positivist and empiricist methodologies has been strongest, the opening of Capital has tended to be overlooked or treated rather summarily.(2)

However, while modern economics precludes all reference to the form and substance of value, this was not true of classical political economy. Classical political economy followed, for the most part, the philosophical tradition of British pragmatic empiricism of the eighteenth century, particularly that school of thought which had been established by Locke. While, as an empiricist, Locke was suspicious of the notion that things had a real essence or substance that made them what they were, and was doubtful as to whether such real essences could be ever truly known, he did not dismiss such notions out of hand; instead he maintained a rather equivocal attitude to the question of real essences. As a result classical political economy was not precluded from a 'substantialist logic' and hence was not prohibited from going behind the surface phenomena of the bourgeois economy to ask what the substance, or at least, the origin of value is.

Yet, although classical political economy was not precluded from a 'substantialist logic', it still shared the perception of modern economics of the existence of capitalism as being self-evident. Furthermore, the conception of substance or real essence inherited from Locke was that of a fixed and unalterable essence which was indifferent to the particular forms that it may assume. As a consequence, insofar as classical political economists came to address the question of what value is, they did so rather obliquely; they stressed the quantitative side of the substance of value and took the form of value as given and therefore without interest. Yet nevertheless the classical political economists located the substance of value as being labour-in-general; and it was this that was, for Marx, perhaps their most important achievement.

Of all the classical political economists it was Ricardo who most consistently defended a labour theory of value and hence it was with Ricardo that classical political economy came closest to identifying labour as the substance of value. Despite the seemingly insurmountable problems that he faced in attempting to reconcile the labour-values of commodities with their prices once he had admitted profit on capital of varying duration, Ricardo persistently defended the view that the labour employed in the production of a commodity determined the value of that commodity, even though this value may be subsequently modified by other factors. This view was sustained against the increasingly vehement criticisms of many of his contemporaries by Ricardo's more or less implicit commitment to labour as not only the principal determinant, or origin, of relative values and prices of commodities, but also as the sole source of, what he terms, their 'true' or 'absolute' value. Ricardo could never bring himself to abandon his labour theory of value, despite all its problems and contradictions, because ultimately for him labour was value; that is labour, which was productive of material use- values, was the very substance of value.(3)

Yet Ricardo was never primarily concerned with the question of the substance of value as such. For him the principal problem was to find an invariable and practical standard with which to measure the distribution of wealth between the three great classes of bourgeois society under varying conditions. He only came to address the question of value insofar as, in line with the Newtonian thinking prevalent in the natural sciences of his time, he sought a standard measure that was itself co-substantial with what it was intended to measure. As Ricardo makes clear in the draft copy of his last and unpublished manuscript, Absolute Value and Exchange-Value: The only qualities necessary to make a measure of value a perfect one are, that it should itself have value, and that value should be itself invariable, in the same manner as a perfect measure of length should be neither liable to be increased or diminished; or in a measure of weight that it should have weight and that such weight should be constant. (Ricardo 1951 Vol. IV, p. 361) Thus it was primarily in terms of a measure of wealth that Ricardo came to address the question of the substance of value and as a consequence he could only go as far as to consider its quantitative aspect. Yet, as Marx recognized, any consideration of the quantitative aspect of the substance of value presupposes an understanding of its qualitative aspect; an understanding that remains for the most part implicit within Ricardo's labour theory of value.

Against any labour theory of value that suggests that labour is the substance of value it may be objected that labour is not homogeneous -- that there exists a vast array of different types of labour -- and that therefore labour cannot serve as the single substance of the value of all commodities. To overcome such an objection it is necessary to demonstrate how the multiplicity of different labours that enter the production of commodities can be reduced to particular expressions of some universal labour-in-general which may then itself serve as the homogeneous substance of value.

For Ricardo, who as we have seen was not much concerned with the qualitative aspect of labour as the substance of value, this reduction of the heterogeneity of labours to labour-in- general was, for the most part, taken as self-evident. Where he is obliged to address such objections Ricardo does so rather summarily. Firstly he argues that, through the operation of the market over a long period of time, the different types of labour can be quantitatively related to one another in accordance to a more or less fixed scale; and then he rules out any further investigation of the matter as being beyond the scope of his analysis. Thus in his Principles of Political Economy and Taxation Ricardo states, firstly: In speaking, however, of labour, as being the foundation of all value, and the relative quantity of labour as almost exclusively determining the relative value of commodities, I must not be supposed to be inattentive to the different qualities of labour, and the difficulty of comparing an hour's or a day's labour in one employment with the same duration in another. The estimation in which different qualities of labour are held comes soon to be adjusted in the market with sufficient precision for all practical purposes, and depends much on the comparative skill of the labourer and intensity of the labour performed. The scale, when once formed, is liable to little variation. If a day's labour of a working jeweller be more valuable than a day's labour of a common labourer, it has long ago been adjusted and placed in its proper position in the scale of value. (Ricardo, 1951, Vol. I, p. 20) And then he goes on to state: As the inquiry to which I wish to draw the reader's attention relates to the effect of variations in the relative value of commodities, and not to their absolute value, it will be of little importance to examine into the comparative degree of estimation in which different kinds of human labour are held. (Ricardo, 1951, p. 12) Hence Ricardo makes his orderly retreat from the problem of the heterogeneity of labour and, with it, the question of the qualitative aspect of labour as the substance of value. But for Marx the solution of this problem was vital; it could not be so easily dismissed. For Marx it was necessary to ask what it was that made this reduction of heterogeneous labours into the homogenous substance of labour-in-general possible and what implications this has for an understanding of labour as the substance of value.

Let us consider this a little more closely. Human labour is not biologically determined; hence in any form of society the division of human labour is first and foremost a social division of labour. This implies that any human individual has the potential, at least in principle, to perform any type of human labour. Human beings are not like animals such as bees or ants where the tasks of each individual is genetically predetermined. The limits imposed on the realization of the human individuals potential to perform any form of human labour are, for the most part, social.

Now, if all human individuals have the potential to perform any type of human labour then there must be something common to all these different types of human labour that allows them to be performed by any human being. So what is this common something? If we strip away all the particularities of all the various types of human labour we find that they are forms of the expenditure of both mental and physical human energy in the pursuit of a particular purpose. It is this ability to expend this physiological energy for a conscious end that is common to all human individuals and which is the common something of all human labour. As Marx himself states: Productive activity, if we leave out of sight its special form, viz, the useful character of the labour, is nothing but the expenditure of human labour-power.

Tailoring and weaving, though qualitatively different productive activities, are each a productive expenditure of human brains, nerves, and muscles, and in this sense are human labour. (Capital I, p. 51) Hence we can say that any particular type of human labour is simply a particular mode of expression of human labour-in- general.

Within a commodity-capitalist economy the social obstacles to the free movement of labour between different lines of employment -- such as caste, gender, serfdom etc. -- tend to be dissolved and the worker becomes more and more indifferent to her own particular form of labour. As a result human labour- in-general takes on an explicit social reality. Furthermore, through the repeated exchange of commodities this labour-in- general becomes abstracted from all the particularities of concrete labour and equalized. As a result the labour embodied in the commodity comes to take on a two-fold character; as Marx points out: On the one hand all labour is, speaking physiologically, an expenditure of human labour-power, and in its character of identical abstract human labour, it creates and forms the value of commodities. On the other hand, all labour is the expenditure of human labour-power in a special form and with a definite aim, and in this, its character of concrete useful labour, it produces use- values. (Capital I, p. 53) In identifying the two-fold character of labour which is embodied in the commodity Marx is able make explicit the qualitative aspect of labour as the substance of value and in doing so he can be seen to fully realize Ricardo's embodied labour theory of value at this point. Yet, as Rubin has shown in his seminal work Essays on Marx's Theory of Value, it would be a grave mistake to interpret Marx, as many commentators have done, as having simply developed the embodied labour theory of value bequeathed to him from Ricardo. Although there is plenty of evidence to suggest such an interpretation in the rather short section two of chapter 1 which deals with the two-fold character of labour embodied in the commodity, if Marx's value theory is considered in the wider context of chapter 1 (particularly in relation to the subsequent section on the value-form), or compared with the more extensive treatment of this subject in his earlier Contribution to the Critique of Political Economy, it becomes clear that, in identifying the two-fold quality of labour, Marx not only realizes Ricardo's embodied labour theory of value, but goes beyond it to develop his own abstract social labour theory of value.

In any society in which the social division of labour is at all developed there must be some form of social process through which labour can be socially evaluated and then allocated to various tasks, and through which the products of such labours can be distributed to the various members of society. In most forms of society this social process will involve either a conscious and deliberative social plan or else be the result of the slow evolution of social traditions or customs. In either case such social processes will require the direct personal or social interaction of the various members of society which will logically precede the actual labour process. In all such societies, therefore, labour is directly and immediately social.

In a generalized commodity economy, however, the social division of labour is only constituted through the exchange of commodities. There is no other social connection between the disassociated commodity producers other than the relations established between their commodities. Hence, the labour of these commodity producers is immediately private and disassociated; it is only through the act of exchange that such labour can become social and recognized as a part of the social division of labour of society as a whole. Thus in abstracting labour-in-general from the diversity of concrete labour, exchange must also involve the abstraction of social from private labour. Thus the substance of value is not simply human labour-in-general, but abstract social labour. As such the substance of value is emptied of all material and physiological content; it is a purely social substance. As Marx himself points out: The value of commodities is the very opposite of the coarse materiality of their substance, not an atom of matter enters into its composition. Turn and examine a single commodity, by itself, as we will, yet insofar as it remains an object of value, it seems impossible to grasp it. If, however, we bear in mind that the value of commodities has a purely social reality, and that they acquire this reality only insofar as they are expressions or embodiments of one identical social substance, viz human labour, it follows as a matter of course, that value can only manifest itself in the social relation of commodity to commodity. (Capital I, P. 54) For a purely embodied labour theory of value, such as that of Ricardo, the value of a commodity is simply the materialization of the expenditure of physiological human energy for a definite end. As such, value is determined as a technical relation of production; as a relation between the human mind and body and its interaction with the natural world. Consequently, the value of a commodity will simply depend on the technically determinant amount of labour time necessary for its production. So the actual labour embodied in the process of production is seen as the very substance of value.

For Marx's abstract social labour theory of value, however, the physiological expenditure of human labour is merely a necessary prerequisite for the substance of value. The substance of value, abstract social labour, is above all a social substance that emerges out of the relation between human beings with their collective appropriation of nature. It is therefore determined as a social relation that emerges through the articulation of production and exchange in an economy of disassociated commodity producers. Because of this it is insufficient to merely see how the substance of value is produced in the sphere of production; it is also necessary to see how this substance of value takes form in the sphere of exchange.

We shall have cause to return to this important distinction between an embodied labour theory of value and Marx's abstract social labour theory of value in due course. But before we can present this comparison we must first proceed to consider Marx's analysis of the form of value -- which is contained in the third section of chapter 1 -- since it is only after this analysis that we can fully grasp the significance of Marx's abstract social labour theory of value.

iii) The form of value So, for Marx, the substance of value is abstract social labour. Hence we may say that the regular and determinate exchange of commodities is possible insofar as the disassociated labour contained within each commodity can be validated as being part of the total social division of labour through the mediation of exchange. The problem now is to uncover the conditions within exchange which allow this validation of disassociated labour as social labour and this requires us to retrace our steps to consider the form of value. As Rubin points out: Leaving aside here the quantitative aspect, or the magnitude of value, and limiting ourselves to the qualitative aspect, we can say that value has to be considered in terms of 'substance' (content) and 'form of value'. The obligation to analyse value in terms of both of the factors included within it means an obligation to keep to a genetic (dialectic) method in the analysis. This method contains analysis as well as synthesis. On the one hand, Marx takes as his starting point the analysis of value as the finished form of the product of labour, and by means of analysis he uncovers the content (substance) which is contained in the given form, i.e. labour. Here Marx follows the road paved by the Classical Economists, particularly Ricardo [and which leads towards an embodied labour theory of value]...But on the other hand, because Ricardo had confined himself to the reduction of form (value) to content (labour) in his analysis, Marx wants to show why this content acquires a given social form. Marx does not only move from form to content, but also from content to form. He makes the 'form of value' the subject of his examination, namely value as the social form of the product of labour -- the form which the Classical Economists took for granted and thus did not have to explain. (Rubin, 1972, P. 113) So how does Marx come to consider the form of value now that he has identified its substance?

As we have already seen, value becomes manifest in the phenomenal form of exchange-value, that is in the relation of exchange that arises between commodities. The simplest value- form is that which arises through the single exchange-value of one commodity for another commodity. This Marx terms the accidental or elementary value-form.

The accidental or elementary value-form may be expressed as follows:

x of commodity A = y of commodity B or, for example: 20 yards of linen is worth one coat This expression may then be further broken down into two polarized (sub)-forms: the relative form, which in this case is taken up by commodity A (the 20 yards of linen), and the equivalent form, which is taken up in this case by commodity B (the coat). Let us first consider the relative form.

Commodity A cannot express its own value in terms of itself. The expression commodity A = commodity A would be a meaningless tautology. Commodity A must therefore find another commodity with which to express its own value and in this case it is commodity B. In relating its own value in terms of commodity B, commodity A finds that its value takes the material and bodily form of the use-values of commodity B. So, in Marx's example, the value of the 20 yards of linen is expressed in terms of the usefulness of one coat that it may obtain in exchange. As a result the intrinsic value of commodity A gains an independent and external expression from its own material and bodily form. The internal opposition within commodity A, between its use-value and its value, now becomes externalized with its relation with commodity B. The use-value of the linen now becomes opposed to its own value externalized in the bodily form of the use-value of the coat.

What is more, in taking up the relative form, commodity A comes to equate the labour embodied within it to the labour embodied in commodity B. That is, in Marx's example, weaving comes to be equated with tailoring. As a result both weaving and tailoring come to express the same quality of being abstract labour-in-general, as Marx himself explains: By making the coat equivalent of the linen, we equate the labour embodied in the former to that in the latter.

Now it is true that the tailoring, which makes the coat, is concrete labour of a different sort from the weaving which makes the linen. But the act of equating it to the weaving, reduces tailoring to that which is really equal in the two kinds of labour, to their common character of human labour. In this roundabout way, then, the fact is expressed, that weaving also, insofar as it weaves value, has nothing to distinguish it from tailoring, and, consequently, is abstract human labour.

It is the expression of equivalence between different sorts of commodities that alone brings into relief the specific character of value-creating labour, and this it does by actually reducing the different varieties of labour embodied in the different kinds of commodities to their common quality of human labour in the abstract. (Capital I, P. 57) So both weaving and tailoring appear within this relation of equivalence as abstract human labour stripped of all their different peculiarities. But this is not all. They do not merely express the common quality of being the products of abstract human labour but also, in this expression, appear as having the same quantity of such abstract labour. The amount of labour embodied in 20 yards of linen is the same amount as that required to produce one coat. So in equating itself to one coat the 20 yards of linen equates the amount of its own labour, and hence its value, to that of one coat.

But this is only a relative expression of the linen's value. As Marx points out, although the amount of labour time necessary to produce the 20 yards of linen, and hence its absolute value, may remain the same, changes in the production of the coat may alter the labour time, and thus the value, of the coat to which the 20 yards of linen is related. Thus for example, the productivity of tailoring may double, thereby cutting the labour time, and with it the value, of the coat by half. Hence the value of 20 yards of linen will be expressed not by one coat but by two. The relative value of 20 yards of linen will appear to have doubled, since it is now worth two coats rather than one, even though it absolute value remains the same. Here we find the limitations of the relative form.

We must now turn to Marx's analysis of the equivalent form. As Marx himself remarks, the equivalent form has a far more enigmatic character than that of the relative form and it is with this form that many of the errors of bourgeois political economy are rooted. Hence it was important for Marx to deal with this form in some detail. The difficulties involved in understanding the equivalent form arise according to Marx from the three interrelated peculiarities of this form. Let us consider each of these in turn.

The first peculiarity is that, in taking up the equivalent form, commodity B (the coat) comes to express the value of commodity A (Linen) in its own use-value. Hence its use-value becomes the phenomenal form of its own opposite -- value. It therefore appears that commodity B's use-value is the very material form of value itself. The utility of the coat is the bodily form of value. Of course this only holds in the elementary form while the coat takes up the equivalent form for linen. As soon as it discards this role, or as soon as linen finds another commodity to act as an equivalent, then the coat ceases to be the incarnation of value for linen.

The second peculiarity, which arises from the first, is that the concrete labour embodied in the equivalent, the coat, comes to express nothing other than abstract human labour. That is tailoring, despite all its concrete particularities, comes to represent no more than abstract human labour-in- general. Hence, as Marx observes, the concrete labour of tailoring becomes the very form through which its opposite, abstract labour, manifests itself. As Marx explains: The body of the commodity that serves as the equivalent, figures as the materialisation of human labour in the abstract, and is at the same time the product of some specifically useful concrete labour. This concrete labour becomes, therefore, the medium for expressing abstract human labour. If on the one hand the coat ranks as nothing but the embodiment of abstract human labour, so, on the other hand, the tailoring which is actually embodied in it, counts as nothing but the form under which that abstract labour is realised. In the expression of value of the linen, the utility of the tailoring consists, not in making clothes, but in making an object, which we at once recognise to be Value, and therefore to be a congealation of labour, but of labour indistinguishable from that realised in the value of the linen. In order to act as such a mirror of value, the labour of tailoring must reflect nothing besides its own distinct quality of being human labour generally.

(Capital I, P. 64) This brings us to the third peculiarity. As the equivalent to the 20 yards of linen the coat stands as readily exchangeable with that linen. As such it stands as the means through which the private, disassociated labour that is embodied in the linen is validated as being social labour. As the equivalent of the labour embodied in the 20 yards of linen the private, disassociated labour embodied in the coat therefore stands at once as socially validated labour. Hence, the private, disassociated labour of the coat becomes the form in which its own opposite, social labour, presents itself.

So, for the third time, the material properties of the equivalent come to serve as the bodily form through which their opposites make their appearance. The failure to distinguish between the intrinsic social properties of the commodity and the material forms in which they must necessarily appear becomes most acute with the understanding of the equivalent form, but the consequent confusion only really becomes apparent once we move beyond the simple elementary form of value to consider its more developed forms, as we shall see.

The elementary form is itself an inadequate form of value. The commodity does not simply relate to one other commodity but to any number of commodities that it may exchange with. We therefore come to the more developed value form which Marx terms the expanded form of value.

The expanded form of value may be expressed as follows:

y of commodity B x of commodity A = z of commodity C w of commodity D etc.

With the expanded form of value commodity A comes to relate its value to all other commodities in turn, each of which then stands equally opposed to commodity A as its equivalent form. Thus, continuing Marx's example, the 20 yards of linen may come to express its value not only in terms of one coat but also in terms of 10lbs of tea, 40lbs of coffee, one quarter of corn, two ounces of gold and so forth. In relating itself to the interminable list of all other commodities it becomes clear that the particular value contained in the 20 yards of linen is indifferent to the particular use-values within which it may be expressed. Hence, with the expanded form, the value of the commodity appears not only as distinct and separate from its own use-value, with its external expression in the particular use-value of another commodity, but as distinct and separate from all use-values -- that is as distinct and separate from use-value in general.

Furthermore, with value standing as distinct and separate from all particular use-values it becomes clear that the abstract social labour that serves to create this value must also stand as distinct and separate from all the particular disassociated and concrete labours that serve to create the wide diversity of use-values of all the different commodities. As Marx himself explains: Every other commodity now becomes the a mirror of the linen's value. It is thus, for the first time, this value shows itself in its true light as a congealation of undifferentiated human labour. For the labour that creates it, now stands expressly revealed, as labour that ranks equally with every other sort of human labour, no matter what its form, whether tailoring, ploughing, mining, &c, and no matter whether it is realised in coats, corn, iron, or gold. The linen, by virtue of the form of its value, now stands in a social relation, no longer with only one other kind of commodity, but with the whole world of commodities...At the same time, the interminable series of value equations implies, that as regards the value of a commodity, it is a matter of indifference under what particular form, or kind, of use-value it appears. (Capital I, P. 68) The expanded form of value is, however, inadequate. Value is only expressed in terms of an indefinite number of particular use-values. Thus while we can see with the expanded form of value how a particular value stands opposed to use-value in general we cannot determine how value in general stands in relation to use-value. For this we must pass on to what Marx terms the general form of value.

The general form of value is expressed as follows:

y of commodity B = z of commodity C = x of commodity A w of commodity D = etc.

In the general value-form the expanded form becomes reversed so that now commodity A stands as the equivalent form for all the other commodities. As a result the material form of commodity A now comes to be the general expression of value, since all commodities can now express and measure their own values in the material form of commodity A. Hence, if we return once more to Marx's example, one coat, 10 lbs of tea, 40 lbs of coffee, one quarter of corn, half a ton of iron, two ounces of gold and so on, can all express their own value in the material and tangible form of 20 yards of linen. As a result every commodity can be equated and exchanged with any other commodity with reference to the 20 yards of linen which stands as their common expression of value . Thus, for example, 80 lbs of coffee, being worth 40 yards of linen can now be directly exchanged with one ton of iron since this is also worth 40 yards of linen.

The material form of commodity A therefore comes to stand as the incarnation of value itself and thus of abstract social labour, as Marx goes on to point out: The bodily form of linen is now the form assumed in common by the values of all commodities; it therefore becomes directly exchangeable with all and every one of them. The substance linen becomes the visible incarnation, the social chrysalis state of every kind of human labour. Weaving, which is the labour of certain private individuals producing a particular article, linen, acquires in consequence a social character, the character of equality with all other kinds of labour.

The innumerable equations of which the general form of value is composed, equate in turn labour embodied in the linen to that embodied in every other commodity, and they thus convert weaving into the general form of manifestation of undifferentiated human labour. In this manner the labour realised in the values of commodities is presented not only under its negative aspect, under which abstraction is made from every concrete form and useful property of actual work, but its own positive nature is made to reveal itself expressly. The general value-form is the reduction of all kinds of actual labour to their common character of being human labour generally, of being the expenditure of human labour- power. (Capital I, P. 72) However, with the general value-form as such, any commodity may stand as the general equivalent. There may therefore be any number of material expressions of the value as they are commodities. Yet for regular and determinate exchange there must be a fixed point of reference for exchange, and thus a standard expression of value. As a result, with the emergence of generalized commodity exchange, a single commodity emerges that, by social convention, comes to exclude all other commodities from the position of the general equivalent. This commodity then becomes the money-commodity, which leads us to the money-form.

The money form may be expressed as follows:

x of commodity A y of commodity B = l amount of gold z of commodity C etc.

Where gold is the money-commodity.

Once the money-commodity has excluded all other commodities as the sole expression of value and direct exchangeability, all other commodities need only express their value in the form of their single exchange-value with a given measure of the money-commodity. That is each commodity need only express its value in terms of its money equivalent -- that is its price. Hence, if for example 2 ounces of gold is designated as being £2 then we may say that: 20 yards of linen is worth £2 one coat is worth £2 ½ a ton of iron is worth £2 and so forth.

However, as Marx observes, unless the money-form is grasped as a whole, money can easily lead to difficulties and confusion. As the sole and general equivalent money comes to express the peculiarities of the equivalent form in their most glaring and 'dazzling' form. Since the money-commodity exclusively reflects the value of all other commodities in its own material form it may appear that value is some natural property of the material substance of money itself; as if it was a natural property like weight, colour or chemical make up. This confusion was perhaps most keenly portrayed in the mercantilist theories of the seventeenth and eighteenth centuries which, in seeing gold as being value itself, advocated the accumulation of gold for its own sake regardless of its relation to the value of other commodities. As a result gold, as the money-commodity, became elevated as the sublime and mystical embodiment of wealth itself.

On the other hand, from the perspective of the relative form of this expression, a perspective taken up by the classical political economists in reaction to the mercantilist theories of their antecedents, money appears as just another commodity. In relating its value to a general equivalent a commodity is indifferent as to which other commodity may be acting as the general equivalent. What is important is that this commodity is able to find an external expression for its own internal value. Thus money is reduced to being an ordinary commodity -- a simple numeraire -- its special status as being the exclusive general equivalent through which all other commodities must express their value in order to become exchangeable becomes denied. As a result money is simply viewed as a mere medium of exchange; a mere oil in the wheels of commerce with no independent movement of its own.

Yet if we grasp the money-form as a whole such confusions fall away. Money emerges as a commodity from amongst the ranks of all other commodities and as such is simply a commodity like any other. But it stands above all other commodities because of its exclusive role as the universal equivalent -- as the external measure of the value of all other commodities. However, in taking this role the money-commodity does not become, in its own material substance, value itself but merely reflects, in this bodily form, the value of all the other commodities. It comes to stand as the externalized expression of the value of all these commodities -- which, as we shall see, may obtain its own relative autonomy of movement. Or as Marx remarks: ...one man is king only because other men stand in the relation of subjects to him. They, on the contrary, imagine they are subjects because he is king. (Capital I, p. 63) B) The money-form i)The money-form and the abstract social labour theory of value As we have seen, through his analysis of the value-form Marx comes to derive the logical necessity of money. Regular and determinate exchange of commodities is only possible in sofaras the labour required to produce them comes to be recognized as abstract social labour in the form of value. But the value of a commodity is only realized and confirmed as such with the sale of that commodity and the transformation of its value into the form of money. It is only in the money- form that the labour required to produce a commodity can stand confirmed as an integral part of the totality of homogeneous abstract social labour of society. Thus a generalized commodity economy must at the same time be a fully monetarized economy.

Furthermore, with the analysis of the value-form we come to the point where we can clearly delineate the distinction that we have made between Marx's abstract social labour theory of value and his realization of the Ricardian embodied labour theory of value. Let us consider this distinction a little more closely.(4)

As we have already noted, an embodied labour theory of value, such as that implicit within Ricardo, identifies the value of a commodity with the technically determined labour necessary for its production. Even if we, along with Marx, distinguish the two-fold quality of the actual labour embodied in a commodity it could be argued that we can still take the actual labour embodied in a commodity as a measure of its value since, being a mere aspect of actual labour, the quality of being labour-in-general will be coextensive with the quantity of actual labour. That is, if the actual and concrete labour necessary to produce a particular commodity doubles then we may reasonably assume that amount of labour-in- general -- the general capacity to expend human energy for a given purpose -- will also have to be doubled.

This proposition has important implications. If the value of a commodity is taken as simply the labour embodied in it during the process of its production, or just an exponent of such labour, then this implies that either all the disassociated labours that may be embodied in commodities are realized as values or that any labour that is not realized as value in exchange is precluded right from the beginning of such an analysis. Therefore, the process through which the labour embodied in commodities becomes realized as the value of those commodities becomes taken as a result. The exchange of commodities is thereby collapsed into a simply extension of the process of production. Production and exchange become identified.

This identification of production and exchange then denies the specific character of capitalism as a generalized commodity economy; that is as an economy in which production is undertaken exclusively for the purpose of exchange rather than for need. Thus the specific social form in which wealth takes in such an economy -- the commodity-form -- also becomes occluded. If the labour embodied in a commodity is automatically realized as value then the opposition between abstract social labour and concrete private labour -- and therefore between value and use-value -- is inevitably resolved and has little if any significance. The circulation of values thereby becomes merely the means with which to circulate use- values. The opposition between use-value and (exchange-) value of the commodity is collapsed into a simple identity.

For Marx's abstract social labour theory of value, value is a social substance that is formed from the social process of production for exchange. As such value cannot be taken simply as a result, but must be considered in terms of its becoming -- that is in terms of its formation. So, while for Marx there can be no value without the expenditure of human labour power, the expenditure of labour power in producing a set of use- values embodied in a commodity does not necessarily produce value. It only does so if this labour is able to count as part of the total abstract social labour of society, and it can only be confirmed as such if the commodity within which it is embodied is sold for money. What is more there is no guarantee that the labour embodied in a commodity will be realized as abstract social labour. This process of the formation of value may become ruptured. The commodity may fail to find a buyer.

If, for whatever reason, a commodity does not find a buyer then not only is its value is not realized but its use-value remains a non-use-value. The opposition between the use-value and value of the commodity opens out into a blatant contradiction. Value no longer stands as a means through which use-values circulate but stands as a barrier to the circulation and realization of use-values. Here we find, in embryonic form, the basic contradiction of the capitalist mode of production; a system in which huge quantities food may be stockpiled or destroyed while millions starve.

With Marx's abstract social labour theory of value the opposition between the value and use-value of the commodity- form is not automatically resolved; instead it becomes conditionally resolved by taking the form of the external opposition between money and the commodity. As Marx himself remarks: We saw in a former chapter that the exchange of commodities implies contradictory and mutually exclusive conditions [i.e. the opposition of value and use-value].

The differentiation of commodities into commodities and money does not sweep away these inconsistencies, but develops a modus vivendi, a form in which they can exist side by side. This is generally the way in which real contradictions are reconciled. (Capital I, p. 106) So, within Marx's abstract social labour theory of value, the opposition of value and use-value is not collapsed into a simple identity but is preserved as a unity in opposition that emerges between the commodity and money. A unity that is at most only provisional and one that must be repeatedly re- established with each repeated cycle of production for exchange. The significance of all this becomes clearer once we come to examine Marx's exposition of the three functions of money in chapter 3 of Volume I.

ii) The three functions of money With his presentation [Darstellung] of the three functions of money we find Marx coming full circle. It had been this very question of money's function which in the Grundrisse had served as the point of departure for Marx's investigation [Forschung] into the theory of value. Now as he draws to the close of his presentation of the theory of value as such we find him once more returning to this erstwhile starting point.

In the Grundrisse Marx's immediate concern had been to refute the contention put forward by Darimon and other socialist theorists that money was the root cause of the periodic crises that beset capitalism, and thereby to show how the various proposals for replacing money by labour chits that arose from such a contention were merely utopian schemes that could never be realized. In refuting Darimon's theory Marx had been obliged to show how money's function as an independent expression of value did not arise as merely a matter of convenience, as the political economists would have it, nor as an arbitrary and unscrupulous invention as the socialists maintained, but was a necessary part of the social regulation of any society made up of disassociated commodity producers.

For Darimon, commodities should, as a matter of justice, exchange in accordance with the labour embodied in their production. However, this basis for exchange had been usurped by money, which, being independent of labour, allowed for a divergence between the real labour-values of commodities and the money-prices at which they came to be exchanged. Not only was this unjust, since it meant the unequal exchange of labour, but it also resulted in crisis when money prices diverged so far from underlying labour-values that the relations of exchange lost all connection to production. Thus both justice and economic rationality demanded that money should be deposed and commodities exchanged directly in accordance with the labour that had been used for their production.

But for Marx, as we have seen, it was necessary for the labour-values of commodities to find an external and material expression in money. It is only with such an independent expression that the various disassociated production processes can be regulated and brought into relation to each other as particular expressions of the total labour of society. Because there is no social plan that precedes production and exchange within a generalized commodity economy the various branches of industry are undertaken without any immediate reference to each other. It is only after production, when the products of various industries enter into exchange, that the labour employed by the different industries become reconciled as parts of the total division of labour. Yet such a reconciliation can only be the result of a process of trial and error in which the 'exception continually proves the rule'. A process that demands that money-prices should be able to deviate from relative labour-values.

In the Grundrisse, Marx goes on to argue against Darimon and his supporters that any attempt to establish a rigid link between the medium of exchange and the actual labour times embodied in commodities could only end in failure. With regards to the proposals to replace money by the issue of labour chits denoting the labour time embodied in particular commodities, Marx argues that either these labour-chits would become just like paper money with the nominal labour-times they claim to represent diverging markedly from the actual labour-time embodied in commodities or else the bank entrusted to issue such chits would increasingly have to regulate production and exchange and thereby abolish the essential relations of a generalized commodity economy.

So for Marx, money, as an independent material expression of value, that exists in opposition to all other commodities, was a necessary function of a generalized commodity economy. As a consequence, money, for Marx, was not itself the cause of crisis but merely acted as a mode of expression of such crises which were an inherent possibility within an economy of disassociated commodity producers.

But now, in Capital, with the presentation of his theory of value, Marx is not so much concerned with money as crisis -- although as we shall see this is still very much present -- since crisis can only be fully understood with the more complex and concrete categories that had yet to be derived; but with the further development of the value-form which arises with the transition of money into capital. Yet, as we shall now see, in order to follow this development of the value-form Marx had to unfold in detail the three functions of money and this led Marx to return repeatedly to the underlying question of crisis.

1) Money as the Measure of Value As the universal equivalent money stands before all other commodities as the universal measure of their values. As such money appears with two distinct and opposed aspects. As Marx indicates in his rather longer exposition of this point in his Contribution to the Critique of Political Economy, it was the one-sided appropriation of these two opposed aspects that split the emergent bourgeois political economy into two opposed camps with regards to the recurrent monetary controversies of the seventeenth and eighteenth century and which still persisted in Marx's own day. And it is against these two camps that Marx began the development of his theory of the functions of money.

So what are these two aspects of money as the measure of value and how did they give rise to the monetary controversies that bedevilled early political economy? Firstly, money stands as the equivalent form for the value of all other commodities; it therefore appears as the universal material expression of value. It was this aspect of money as the measure of value that was taken up by the mercantilists, and also by such philosophical precursors of classical political economy as John Locke. As we have already noted, the mercantilists, beguiled by the peculiarities of the equivalent form in its most dazzling manifestation as money, confused the social substance of value with the material substance of the money-commodity. For them money was the material expression of value because precious metals such as gold and silver were naturally of value. It followed from this that the natural measure of the quantity of the money-commodity was at one and the same time the measure of value. Hence, it was observed, the unit of currencies referred to a specific weight of precious metals, usually either gold or silver.

Against this materialist view of money as the measure of value there arose an opposed idealist camp that was originally championed by early political economists such as James Steuart, and idealist philosophers such as Berkeley. This view had emerged from considering the perspective of the relative form which each commodity must take up in relation to money. In relating their own value to the value of the money- commodity each commodity does not demand the actual presence of the money-commodity. As Marx points out with regard to this point: ...the expression of the value of commodities in gold is a merely ideal act, we may use for this purpose imaginary or ideal money. Every trader knows, that he is far from having turned his goods into money, when he has expressed their value in a price or in imaginary money, and that it does not require the least bit of real gold, to estimate in that metal millions of pounds worth of goods. When, therefore, money serves as a measure of value, it is employed only as imaginary or ideal money. This circumstance has given rise to the wildest of theories. (Capital I, p. 98) Such wild theories that Marx mentions were those that emerged from the idealist camp in the early monetary controversies. Because it is recognized that the real presence of the money- commodity is not required for money to act as a measure of value the idealist camp came to view value as something that could somehow exist apart from the bodily form of money, or even commodities for that matter. Value, in diametric opposition to the mercantilist perspective, came to be seen as purely an ideal or imaginary substance that had nothing to do with matter. This came to be expressed with the theory of nominal standard of value. As Marx comments in his more extensive exposition of this point in the Contribution to a Critique of Political Economy: The fact that commodities are only nominally converted in the form of prices into gold and hence gold is only nominally transformed into money led to the doctrine of the nominal standard of money. Because only imaginary gold or silver, i.e. gold and silver merely as money of account, is used in the determination of prices, it was asserted that the terms pound, shilling, pence, thaler, franc, etc., denote ideal particles of value but not weights of gold or silver or any form of materialised labour. If, for example, the value of an ounce of silver were to rise, it would contain more of these particles and would therefore have to be divided or coined into a greater number of shillings.

(Contribution, p. 76) As Marx goes onto show in his Contribution to the Critique of Political Economy, the confrontation between these idealist and materialist views of money as the measure came to a head around the practical issue of the recoinage of the currency following its debasement due to wear and tear and the consequent practice of clipping coins; and it was still echoed in Marx's own day in the issue of the convertibility of paper money into gold coin. To dispel the confusions that arose from such controversies Marx, both in the Contribution and in Capital, takes up Ricardo's distinction between money as a measure of value and money as the standard of price.

Like Ricardo, Marx sees that money can only act as a measure of value because, like all other commodities, it is a product of human labour. Money does not, as the mercantilists thought, have value due to the innate and natural properties of its own material substance but because this substance is a materialization of human labour. Furthermore, a given amount of this material substance of the money-commodity, like any other commodity, may from one time to the next come to be the materialization of very different quantities of human labour and therefore stand for very different amounts of value. Thus money acts as a measure in two distinct ways.

Money, as the measure of value, can act as the material expression of value in which all other commodities can evaluate themselves because it is itself the product of labour and therefore has value. But the human labour embodied in commodities is not directly reflected and evaluated in terms of the labour embodied in the money-commodity, but rather in terms of the exchange-ratios between the material quantities of these commodities and the money-commodity. The value of a commodity is expressed in its exchange-value in terms of the money-commodity. That is as: x amount of commodity A = y amount of the money-commodity or one coat is worth two ounces of gold Furthermore, with the regular sale of commodities there emerges, as a matter of convenience, a need for a common standard of measurement of the money-commodity. This standard then takes the form of a unit of currency which is established within certain national boundaries by the state authorities, and which represents a given amount of the money-commodity. Thus we have pounds, dollars, yen, francs and so forth. As such money acts as a measure of its own material substance; it acts as the standard of price.

Consequently, the values of commodities are not expressed simply in terms of the physical quantity of the money- commodity -- in terms of ounces and grains of gold -- but as a price. That is we have: one coat is worth £20 Where this £20 is equal to two ounces of gold which is in turn the product of x hours of abstract social labour.

So, as Marx himself points out: As measure of value, and as standard of price, money has two entirely distinct functions to perform. It is the measure of value in as much as it is the socially recognised incarnation of human labour; it is the standard of price in as much as it is a fixed weight metal. As the measure of value it serves to convert the values of all the manifold commodities into prices, into imaginary quantities of gold; as the standard of price it measures those quantities of gold. The measure of values measures commodities considered as values; the standard of price measures, on the contrary, quantities of gold by a unit quantity of gold, not the value of one quantity of gold by the weight of another. (Capital I, p. 100) In making this distinction between money as the measure of value and money as a standard of price Marx is not only able to dispel the confusions that had arisen within various monetary controversies of the early political economists but is also able make clear the series of mediations that lie between the intrinsic value of a commodity and its external expression in money in the form of the commodity's price. Due to such mediations the value of a commodity may find itself expressed in a whole range of prices; and this may arise for two quite distinct reasons.

Firstly there may be a change in the relative value of the commodity with regard to that of the money-commodity. For example, while the abstract social labour time required to produce a particular commodity may remain the same the amount of such labour time needed in the mining of gold may rise or fall. Hence the value of the commodity, although remaining the same, may become expressed in a smaller or greater amount of gold-money.

Secondly, even if the relative value of the commodity with respect to the money-commodity remains the same, the debasement of the currency may lead to the real value of the unit of currency falling below that of its nominal value. Thus in order to express its value in a certain amount of gold the commodity will have to have a higher price.

But this brings us to an important point, which Marx then goes on to consider; because there is no necessary one to one correspondence between value and price, because they are mediated, in taking the price-form value appears as quite accidental and arbitrary: Magnitude of value expresses a relation of social production, it expresses the connexion that necessarily exists between a certain article and the portion of the total labour-time of society required to produce it. As soon as magnitude of value is converted into price, the above necessary relation takes the shape of a more or less accidental exchange-ratio between a single commodity and another, the money-commodity. But this exchange-ratio may express either the real magnitude of that commodity's value, or the quantity of gold deviating from that value, for which, according to circumstances, it may be parted with. The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself. (Capital I, p. 105) Yet this is not all. As Marx observes there is not only the possibility of a quantitative incongruity between value and its price-form but also the possibility of qualitative incongruence: The price-form, however, is not only compatible with the possibility of a quantitative incongruity between magnitude of value and price, i.e. between the former and its expression in money, but it may also conceal a qualitative inconsistency, so much so, that, although money is nothing but the value-form of commodities, price ceases altogether to express value. Objects that in themselves are not commodities, such as conscience, honour &c, are capable of being offered for sale by their holders, and of thus acquiring, through their price, the form of commodities. Hence an object may have a price without having value. (Capital I, p. 105) But as Marx remarks, this incongruity is...

...no defect, but on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another. (Capital I, p. 104) Here, in positing the necessity of the relative autonomy of the price-form from value, Marx steps beyond Ricardo and returns to the his point of departure in the Grundrisse: his critique of Darimon. As we have seen, by adopting Ricardo's distinction between money as the measure of value and money as the standard of price -- by making common cause with Ricardo in asserting labour as the source of value -- Marx was able to dispel the confusions that had arisen concerning money. Value was not a natural and innate property of precious metals but rather precious metals possessed value because they were products of human labour. Thus value was distinct from the material and physical substance of the money-commodity. But, on the other hand, value had to find a material form, it had to become objectified, it could not exist simply in the imagination as a pure notion or idea. But having sided with Ricardo to show how money is an expression of labour-values, Marx now comes to the point of showing how money, as the price- form, is not an expression of value.

For Ricardo, labour-values, that is the labour time embodied in commodities, determined prices. Of course Ricardo recognized that prices would from time to time deviate from their underlying labour-values but once labour-values had been modified for minor complications such as the duration and composition of capitals then any such deviations of prices from values would be purely due to extraneous and accidental causes and were therefore of little concern to establishing the principles of political economy. Yet for Darimon and the socialist it was evident that the deviation of prices from labour-values was far from being an accident but was the norm that had to be explained. For Marx both perspectives were true in that labour-values determined prices only through the continual deviation of prices from labour-values. For the disassociated commodity producers to reconcile themselves as part of the total social division of labour, prices had to have a relative autonomy from labour-values. The deviation of prices from labour-values was therefore no external accident, as Ricardo took it, but an internal necessity.

In stepping beyond Ricardo, the distinctive character of Marx's abstract social labour theory of value now re-emerges with respect to money's function as the measure of value. In standing before exchange the labour embodied in a commodity still remains concrete disassociated labour. The commodity only has value insofar as it can anticipate, on the basis of previous cycles of production and exchange, the realization of this labour as abstract social labour in the form of money. The commodity at this point does not have a value as such, but a potential or latent value. This potential value is then expressed in an ideal or imaginary quantity of money by its ideal price. It is here that we find the kernel of truth of the idealist camp of monetary theorists.

Of course Ricardo (who very much originates from the materialist camp particularly that part represented by John Locke) passes over this point. From his embodied labour theory of value, as we have already noted, the realization of labour as value is taken as a given result. But from the perspective of an abstract social labour theory of value it is very much a real problem. As Marx comments at the end of his section on money as the measure of value: In order...that a commodity may in practice act effectively as exchange-value, it must quit its bodily shape, must transform itself from mere imaginary into real gold, although to the commodity such transubstantiation may be more difficult than to the Hegelian 'concept', the transition from 'necessity' to 'freedom', or to a lobster the casting of his shell, or to Saint Jerome the putting off of old Adam. (Capital I, p. 105) The opposition between the commodity and money cannot be simply collapsed into a formal identity like that of Ricardo, or for that matter into an Hegelian identity, but is a real process that can only ever be held within a provisional unity. The possibility of rupture is inherent and this becomes a little more evident, as we shall now see, once Marx moves on to consider the second function of money.

2) Money as the medium of exchange As we have seen, before exchange money stands before commodities as the external and ideal measure of their value. Now the commodity must enter into the process of exchange and with this money must take on the function of the medium for the circulation of commodities. This function becomes expressed in the formula for the simple circulation of commodities as follows: C1 -- M -- C2 That is: the producer of a commodity (C1) sells her commodities for money (M) which is then used to purchase another set of commodities (C2). Here money appears as the means through which the commodities which are a non-use-value for their producer become transformed into a set of commodities that do have a use-value for that producer. As such money can be seen to unite and resolve the opposition between use-value and non-use-value inherent within each commodity.

But this is not only true for the particular commodity but also for all commodities. The sale of a commodity for one commodity producer is at one and the same time a concluding purchase for another commodity producer. The twin movements C - M and M -- C for a given commodity producer are the movements M -- C and C -- M for two other producers and are consequently merely two links in the chain through which all commodities become circulated by money. Money therefore serves to circulate all commodities, moving them from the hands of their producers into the hands of their consumers and in doing so unites production with consumption.

Simply as a means of circulation money is merely the servant of the movement of commodities. In fact, expressed as a result, the simple circulation of commodities becomes merely: C -- C the formula for the simple exchange of commodities as if in barter. Money consequently vanishes from view, other than as a fleeting symbol of the value of exchanging commodities. As Marx himself goes onto explain: Insofar as the circuit C -- M -- C is the dynamic unity of the two aspects C -- M and M -- C, which directly change into each other, or insofar as the commodity undergoes the entire metamorphosis, it evolves its exchange-value [value] into price and into money, but immediately abandons these forms again to become once more a commodity, or rather a use-value. The exchange-value [value] of the commodity thus acquires only a seemingly independent existence....of gold, when it functions only as specie, that is when it is perpetually in circulation, does indeed represent merely the interlinking of the metamorphoses of commodities and their ephemeral existence as money. Gold [in this function] realises the price of one commodity only in order to realise another, but it never appears in a state of rest or even as a commodity in a state of rest.

The reality which in this process the exchange-value [value] of commodities assumes, and which is expressed by gold in circulation, is merely the reality of an electric spark. Although it is real gold, it functions merely as apparent gold, and in this function therefore a token of itself can be substituted for it. (Contribution, p. 114) So, as Marx goes on to point out in particular detail in the Contribution, in its function as the medium for the circulation of commodities, the money-commodity need only appear as a token of its own value. Indeed it may become represented by something that in itself is as worthless as a scrap of paper. This becomes clear if we briefly consider historical development of coinage and the consequent emergence of paper money.

Once metallic money becomes minted into coins of a standard weight there emerges the problem of the wear and tear of these coins. With the constant circulation of these coins their real weight begins to fall significantly below that of their nominal weight of issue. Yet, within limits these coins still serve to circulate commodities as if they were freshly minted coins with their full weight in gold or silver. Insofar as they are below weight such coins then can be seen to act as simply tokens of value.

But this is not all. With the development of commodity exchange into even minor exchanges of value, less precious metals become pressed into service as small change. Being made of less precious metals the intrinsic value of the metal content of these coins is far below their face value, yet again they are still able to function as a means with which to circulate commodities as if they were in fact made of gold or silver of the requisite weight and value. Money as a token of value becomes even more pronounced with the development of paper money. Since paper money has, for all intents and purposes, little or no intrinsic value it must act as a token for all of its face value. With paper money it then becomes clear that money is present only as a token of value; and it is thus with paper money that we find the medium of circulation par excellence.

As a mere token or symbol, the character of money in its function as a medium of circulation is diametrically opposed to that which we saw it assume with its function as the universal measure of value. In its first function money was only present as ideal or imaginary money. There was no need for the money-commodity to be present in its full material reality for a commodity to express its own intrinsic value in the form of its price. But while their was no necessity for the real presence of money, the pricing of the commodity still presupposed the real existence of money as a real materialization of human labour. If gold did not have a real existence then commodities could not express their value in a nominal amount of its weight.

Yet now, with its function as the medium of circulation, money must have a real presence in order that the commodity's price may be realized; but it need only be present as a symbol or token of itself. Thus the vital characteristic of money is now its presence rather than its real existence as a materialization of abstract social labour. Thus, as Marx himself points out: ...the two functions of money -- as a standard [measure] of value and a medium of circulation -- are governed not only by conflicting laws, but by laws which appear to be at variance with the antithetical features of the two functions. As regards its function as a standard of value, when money serves solely as money of account and gold merely as nominal gold, it is the physical material used which is the crucial factor...On the other hand, when it functions as a medium of circulation, when money is not just imaginary but must be present as a real thing side by side with other commodities, its material is irrelevant and its quantity becomes the crucial factor. Although whether it is a pound of gold, silver or of copper is decisive for the standard measure, mere number makes the coin an adequate embodiment of any of these standard measures, quite irrespective of its own material. But it is at variance with common-sense that in the case of purely imaginary money everything should depend on the physical substance, whereas in the case of the corporeal coin everything should depend on a numerical relation that is nominal. (Contribution, p. 121) It was a failure to grasp and resolve this paradox, which arises from the antithetical characteristics of these two functions of money, that, for Marx, had proved the crucial stumbling block for much of bourgeois political economy. None the more so than for Ricardo.

As we have seen, in the consideration of money in its first function as the measure of value, Marx was able, for the most part, to adopt Ricardo's line of analysis. This was because Ricardo, with his commitment to a labour theory of value, was able to grasp money in its real existence as the materialisation of human labour which is presupposed in the ideal price of a commodity. Again, in his consideration of money in its second function as the medium of circulation, Ricardo correctly identifies money in its real presence as a mere symbol or token of value. But Ricardo, for Marx, was unable to go beyond the analysis of these two functions to consider them in synthesis. Instead, once Ricardo passes from his analysis of money in its first function to an analysis of money in its second function he is obliged to abandon the results of his previous analysis; he has to forget the material existence of money that is presupposed in the ideal price of each commodity. As a result Ricardo, in his analysis of money as a medium of circulation, not only sees money as nothing other than a pure symbol, but comes to adopt uncritically Hume's quantity theory of money.

Hume had been one of the first of the 'practical philosophers' to propose a quantity theory of money. He had argued that the movements in the general price level in the sixteenth and seventeenth centuries were closely connected to import of gold from the Americas. Following every discovery and exploitation of gold seams in the New World there would be a general rise in prices with the importation of this new gold into Europe. The reason Hume put forward for such an increase in the price level following the import of new gold can perhaps be best explained with reference to the identity put forward by a more modern defender of the quantity theory of money who gives his name to the so-called Fischer equations: M.V = P.T This identity states that the total money in circulation (M) multiplied by the average velocity with which this money circulates (V) must equal the sum of all prices (P) multiplied by the number of transactions (T) in a certain period. Now given that the velocity of money was more or less constant and the number of transaction was given, then an increase in the amount of gold, due for instance to the discovery of new gold mines, could only lead to an increase in the general level of prices. Since the value of money was nothing other than the inverse of the general price level, then the value of money was inversely dependent on its quantity. So, for example, if there was an increase in the amount of money then the general price level would rise in order to absorb this increase and hence the value of money would fall, and vice versa.

From the analysis of money as the measure of value, however, it is clear that the value of money is not determined by its relative quantity, but, as with any other commodity, by the socially necessary labour time required for its production. From this analysis it is clear that the value of both commodities and money is determined in production and is therefore prior to circulation and exchange. Consequently, with the total value of commodities already determined, it is the amount of value that needs to be circulated which determines the quantity of money of a given value in circulation rather than the quantity of money which determines the value of commodities and thus the value of money. Hence, insofar as Ricardo adopted Hume's quantity theory of money he was obliged to abandon the results of his analysis of money as the measure of value, and along with it this his important distinction between money as a measure of value and as a standard of price.

This becomes most evident with Ricardo's intervention in the controversy surrounding the convertibility of paper money which required that he examine the relation between paper money and gold.(5) Hume had developed his quantity theory of money exclusively in terms of gold money. The task that Ricardo set himself was therefore to extend this theory so that it could be applied to paper money. For Ricardo, the difference between gold and paper money was that the quantity of gold was ultimately limited by the labour required for its production, whereas the amount of paper money that could be printed was unlimited. If the authorities allowed too much money to be printed then, as with the discovery of new gold mines in the case of gold money, the general level of prices would rise and the value of money would fall.

However, the printing of more paper money was far easier than the discovery of new gold mines. In order to hold in check the great temptation for both banks and governments to print more money, which could only lead to excessive price inflation, Ricardo came to advocate the close connection between the issue of paper money and the amount of gold held and circulating in the country.

For Marx, however, Ricardo had not succeeded in extending the laws of metallic money to paper money but quite the reverse. In showing how the quantity of gold-money in circulation altered the general price level, Ricardo had in fact shown how gold could become a token of itself as if it was purely symbol of value like that of paper money. How was this?

As we have seen, for Marx, the amount of money in circulation was determined, given its velocity of circulation, by its own already determined value and the value of the commodities that required circulation. Now if gold-money is replaced by paper money then this paper money will act as a medium of circulation insofar as it is able to symbolize the value of gold-money. The total value of this paper money will therefore be equal to the value of the gold-money that it now symbolizes i.e. the gold-value required to circulate the total value of commodities. This is regardless of its nominal value. Thus, for example, if the nominal value of this paper money was doubled by doubling the number of notes in circulation, then the total real value of this money would remain the same; it would be just that the real value of each note would be halved. Thus for Marx the quantity theory of money applies to paper money because it is purely symbolic money.

Now, if the amount of gold coins in circulation doubles, although both the total value of commodities that require circulation and the value of gold itself remain the constant, then, if the velocity of these coins in circulation remains the same, then indeed the general level of prices may well double as Ricardo and Hume would argue. But, for Marx, this would not be due to a fall in the value of gold-money, since as we have seen this is constant and determined in the gold mines not in the market, but because these gold coins are forced to act as a token of their own value (even if they are freshly minted coins of the requisite weight and quality). In this case: Gold as a token of value will fall below its real value... (Contribution, p. 172) The gold coins will therefore be acting as if they were paper money, which, as we have seen, is, for Marx, the form of money as the medium for the circulation of commodities par excellence.

So, for Marx, Ricardo had in effect extended the laws of paper money (namely the quantity theory of money) to metallic money. But he could only do so insofar as he considered metallic money purely in its function as a medium of circulation and hence insofar as he could reduce its character to that of a pure symbol or token of value. That is: If gold is money only because it circulates as a medium of circulation... it is forced to stay in the sphere of circulation, like paper money with forced currency issued by the State (and Ricardo implies this)... (Contribution, p. 172) If gold is not forced to stay within the sphere of circulation then any excess over and above that warranted by the value of commodities that require circulation may be withdrawn from circulation. It was Ricardo's failure to recognize this that led to the vehement controversies between his successors and their critics that surrounded the financial crises of the mid-nineteenth century and the 1844 Bank Act which Marx considers in Volume III and which we shall consider in chapter ten.

* The question that we must now ask is: why was Ricardo unable to resolve the paradox that arises with the first two functions of money? Why was he unable to synthesise his analyses of these two functions? Why could he only consider them in isolation? To answer this we must return once more to consider Ricardo's embodied labour theory of value.

As we have already noted, in adhering to his embodied labour theory of value Ricardo only considered the labour embodied in a commodity insofar as it was realized as the value of that commodity. Consequently, for Ricardo, the potential value of a commodity became collapsed into an identity with the actual value of that commodity. As a result the ideal price of the commodity, which is none other than the monetary expression of potential value, was taken to be fully realized in real money with the sale of the commodity. Ricardo therefore saw the movement C -- M, the sale of the commodity as a simple identity; an inevitable exchange of equivalents. He therefore only considered the sale of the commodity -- the movement C -- M - from the perspective of its result.

But the sale of the commodity is at one and the same time a purchase for another commodity owner. Hence just as the movement C -- M could be seen as a simple identity, an inevitable exchange of equivalents, then so could the concluding movement of the simple circulation of commodities, M -- C, be seen as such. Hence Ricardo came to see the entire movement C -- M -- C in its result. He came to see it, in what Marx terms, its dynamic unity; as little more than barter in which money only has a fleeting presence that simply oils the wheels of the circulation of commodities.

By considering the circulation of commodities in its result, by reducing it to little more than barter of the form C1 -- C2, Ricardo came to adopt the propositions of Say's Law which stated that since every sale is at the same time a purchase then total demand must always equal total supply. In adopting Say's Law, as we shall see later, Ricardo came to deny the inherent possibility of capitalist crises.

For Marx's abstract social labour theory of value, the labour embodied in a commodity can only become validated as abstract social labour, and thereby as value, by entering into the exchange and assuming the form of money. Hence Marx has to maintain the distinction between the potential value of a commodity and its realization as an actual value. He has to see the sale of a commodity not as a result but as part of a process. Hence he also comes to see the overall circulation of commodities as a process; a process that may well become interrupted and whose completion is only ever provisional. The simple circulation of the commodity, C -- M -- C, cannot be seen by Marx as a simple identity -- an inevitable exchange of equivalents -- but as a unity of opposition that may well become ruptured.

Thus in the exposition of his analysis of the simple circulation of commodities Marx is obliged to pinpoint the possible interruptions of its overall movement that may emerge in both its phases.

a) C -- M So let us first consider the interruptions that may emerge in the phase of the sale of the commodity; C -- M. Before exchange, a commodity has a notional price that reflects its potential value. But there is no guarantee that this notional price will become real money and thus there is no guarantee that the potential value of a commodity will be realized as actual value. As Marx puts it, the commodity- owner must entice the money with which to realize the value of her commodity out of someone else's pocket; but to do this the commodity must be a use-value for this owner of money: For this, it is necessary that the labour expended upon it [the commodity], be of a kind that is socially useful, of a kind that constitutes a branch of the social division of labour. But division of labour is a system of production which has grown up spontaneously and continues to grow behind the backs of the producers.

The commodity to be exchanged may possibly be the product of some new kind of labour, that pretends to satisfy newly arisen requirements, or even to given rise itself to new requirements. A particular operation, though yesterday, perhaps, forming one out of many operations conducted by one producer in creating a given commodity, may today separate itself from this connexion, may establish itself as an independent branch of labour and send its incomplete product to market as an independent commodity. The circumstances may or may not be ripe for such a separation. Today the product satisfies a social want. Tomorrow the article may, either altogether or partially, be superseded by some other appropriate product. (Capital I, p. 108) Thus the continual change in the social division of labour repeatedly threatens to thwart the realization of potential value. As Marx goes onto to illustrate with his favourite example of the weaver and his 20 yards of linen: ...our weaver's labour may be a recognised branch of the social division of labour, yet that fact is by no means sufficient to guarantee the utility of his 20 yards of linen. If the community's want of linen, and such a want has a limit like every other want, should already be saturated by the products of rival weavers, our friend's product is superfluous, redundant, and consequently useless. Although people do not look a gift-horse in the mouth, our friend does not frequent the market for the purpose of making presents. But suppose his product turns out a real use-value, and thereby attracts money? The question arises, how much will it attract? No doubt the answer is already anticipated in the price of the article, in the exponent of the magnitude of its value.

We leave out of consideration here any accidental miscalculation of value by our friend, a mistake soon rectified in the market. We suppose him to have spent on his product only that amount of labour-time that is on an average socially necessary. The price then, is merely the money-name of the quantity of social labour realised in his commodity. But without leave, and behind the back, of our weaver, the old fashioned mode of weaving undergoes a change. The labour-time that yesterday was without doubt socially necessary to the production of a yard of linen, ceases to be so today, a fact which the owner of money is only too eager to prove from the prices quoted by our friend's competitors. (Capital I, p. 108) Yet it is not only changes in the mode of producing linen that may interrupt the sale of linen and the realization of its potential value; there may be also be a change in the relation between the total supply of linen and the total social demand for it. As Marx goes on to point out: Lastly, suppose that every piece of linen in the market contains no more labour-time than is socially necessary.

In spite of this, all these pieces taken as a whole, may have had superfluous labour-time spent upon them. If the market cannot stomach the whole quantity at the normal price of 2 shillings a yard, this proves that too great a portion of the total labour of the community has been expended in the form of weaving. The effect is the same as if each individual weaver had expended more labour-time upon his particular product than is socially necessary. (Capital I, p. 109) Here then, we can see how, at the very outset of Marx's analysis of the simple circulation of commodities, the very real obstacles that must be vaulted if the potential value of a commodity is to be realized as actual value in the form of money. We can see the possible interruptions that may disrupt the movement of the first phase of the circulation of commodities. But what of the second phase of this circulation? b) M -- C The underlying problem facing the realization of the movement C -- M was that the commodity was not itself immediately exchangeable with other commodities. It had to find an external expression for its exchange-value by placing itself in a relation to money. Money, however, being the universal equivalent, the external expression of exchange- value for all other commodities, is in itself immediately exchangeable with all these other commodities. It would therefore appear that once the commodity had made the bold leap into money then it would be more or less home and dry.

This is indeed true in terms of the transformation of the single commodity taken in its result. But in taking the form of the universal equivalent, what appeared as the solitary act C -- M now emerges as a single link in the innumerable exchanges that make up the general circulation of commodities. The act of sale, C1 -- M, does not immediately or necessarily imply the subsequent act M -- C2. With the mediation of money the exchange of one particular commodity, C1, for another particular commodity, C2, is not, as it is in the case of barter, a single unified act that binds the two commodities together at that instant. Instead two commodities exchange by means of two distinct and independent acts; C -- M and M -- C.

Having made the leap from the particular commodity into money by sucessfully completing the act C1 -- M, the commodity owner is now in possession of money which may be used to purchase any other commodity. Hence the subsequent act M -- C2 may be replaced by the purchase of any other kind of commodity; ie by M -- C3, M -- C4, M -- C5 etc. Or alternatively the subsequent act of purchase may be delayed and the movement of value within the simple circulation of commodities interrupted as money. As Marx points out: No one can sell unless some else purchases. But no one is forthwith bound to purchase, because he has just sold.

With this observation Marx then rounds on those who adhere to Say's Law: Nothing can be more childish than the dogma, that because every sale is a purchase, and every purchase a sale, therefore the circulation of commodities necessarily implies an equilibrium of sales and purchases. If this means that the number of actual sales is equal to the number of purchases, it is a mere tautology. But its real purport is to prove that every seller brings his buyer to market with him. Nothing of the kind. (Capital I, p. 114) And as he adds in the corresponding passage in the Contribution with reference to the commercial crisis of 1857/58: The metaphysical equilibrium of purchases and sales is confined to the fact that every purchase is a sale and every sale is a purchase, but this gives cold comfort to the possessors of commodities who unable to make a sale cannot accordingly make a purchase either. (Contribution, p. 97) Here then Marx comes back to the point of crisis. Say's Law, with its reduction of the simple circulation of commodities to the immediate identity of barter, precludes the possibility of crisis. But systematic and regular exchange of commodities cannot persist within the narrow confines of barter; it requires the mediation of money and with this inevitably comes the possibility of crisis: Circulation bursts through all restrictions as to time, place, and individuals, imposed by direct barter, and this it effects by splitting up, into antithesis of a sale and a purchase, the direct identity that in barter does exist between the alienation of one's own and the acquisition of some other man's product. To say that these two independent and antithetical acts have an intrinsic unity, are essentially one, is the same as to say that this intrinsic oneness expresses itself in an external antithesis. If the interval in time between the two complementary phases of the complete metamorphosis of a commodity become too great, if the split between the sale and the purchase become too pronounced, the intimate connexion between them, their oneness, asserts itself by producing crisis. (Capital I, p. 115) So, considered in the dynamic unity of the simple circulation of commodities money has only a fleeting existence that serves to mediate and thus unite the process C -- M -- C. But at the same time as mediating and unifying this process money also splits it up into two independent and antithetical acts C -- M and M -- C. As such the movement of value through this circuit must become interrupted, for a greater or lesser time, as money. With this money begins to appear with its own independent existence. An appearance that comes to fruition with the third function of money; money as money.

3) Money as money The third function of money -- money as money -- serves as the ground for both money as a measure of value and money as the medium of circulation. It is from the perspective of money as money that the one-sided perceptions of money that arose with its first two functions can be finally resolved. For Marx it is an important failing of bourgeois political economy, including that of Ricardo, that it has failed to fully grasp the nature of money in its third function.

As we have seen, with money as the measure of value, money was present as ideal or imaginary money. Although money as the measure of value presupposed the real material existence of the money as a commodity it did not require its real and material presence. With money as the medium of circulation, money had a real material presence but only as a symbol or token of the real material existence of the money-commodity. Now, however, with money as money, money has to have a real material presence, it must be 'present in its own golden person'. As such it asserts its own independent existence as: ...the sole form of value, the only adequate form of existence of exchange-value, in opposition to use-value, represented by all other commodities. (Capital I, p. 130) Marx identifies three forms through which money comes to exhibit its own independent existence over and against all other commodities: as a hoard, as a means of payment and as world money. Let us briefly consider each of these in turn.

a) money as a hoard: Money first asserts its own independence from all other commodities by withdrawing itself from the very process of commodity circulation and becoming a hoard. As we have seen, the process of commodity circulation must become interrupted, at least momentarily, as money. Now if this interruption is indefinitely prolonged then value becomes petrified as a hoard of money. With the miser this petrifaction is no mere accident, but an end in itself. The miser sells not in order to buy but in order to accumulate the universal expression of social wealth and power; an accumulation that has no limits: The desire after hoarding is in its very nature unsatiable. In its qualitative aspect, or formally considered, money has no bounds to its efficacy, i.e. it is the universal representative of material wealth, because it is directly convertible into any other commodity. But, at the same time, every actual sum of money is limited in amount, and therefore, as a means of purchasing has only limited efficacy. This antagonism between the quantitative limits of money and its qualitative boundlessness, continually acts as a spur to the hoarder in his Sisyphus-like labour of accumulating.

It is with him as it is with a conqueror who sees in every new country annexed, only a new boundary. (Capital I, p. 133) While the role of the miser is of historical importance as a precursor to the capitalist, logically she still stands as a mere possibility. But the act of hoarding does not just arise with the miser; although with her it gains its fullest expression. While money as a hoard stands opposed to the circulation of commodities it still presupposes it and is in constant tension with it. Money can only become a hoard by being withdrawn from circulation and it can only preserve itself as the universal and most adequate form of value insofar as it has the potential to convert itself back into any particular form of wealth by re-entering the circulation of commodities.

But while money as a hoard depends on the circulation of commodities, the continued circulation of commodities comes to depend on a process of hoarding and dishoarding to bring the amount of money into accordance with the value of commodities requiring circulation. As Marx explains in the Contribution: The total quantity of gold in circulation must...perpetually increase or decrease in accordance with the varying aggregate price of the commodities in circulation...This is only possible provided that the proportion of money in circulation to the total amount of money in a given country varies continuously. Thanks to the formation of hoards this condition is fulfilled.

If prices fall or the velocity of circulation increases, then money ejected from the sphere of circulation is absorbed by the reservoirs of hoarders; if prices rise or the velocity of circulation decreases, then these hoards open and a part of them streams back into circulation. (Contribution, p. 136) This process of hoarding and dishoarding as a means to ensure the continuity of circulation becomes even more important with the more developed circulation of capital; which we shall see when we turn in the following chapter to consider Volume II of Capital. But for now we must proceed to the second form of money as money.

b) Money as the means of payment: As a hoard money came to assert its independent existence by withdrawing from circulation; now, as a means of payment, money asserts its independence by re-entering circulation and gaining its own independent movement.

Commodities may be bought and sold without any immediate exchange of money from the buyer to the seller. The buyer may instead agree to pay the seller at some more convenient date in the future. The relation between buyer and seller then becomes one of debtor and creditor. In this way the circulation of commodities is able to overcome, at least temporarily, the limits imposed by the need for the immediate presence of money -- of 'hard cash'. But sooner or later these debts must be settled by money. The real presence of money is only defered, and money must eventually become hoarded to meet these debts.

However, by overcoming the need for the immediate presence of money by defering it, not only is the movement of commodities freed from the disciplines of ready cash but also the movement of money becomes independent, or at least relatively autonomous, from the movement of commodities. Thus the independent existence of money becomes also gains its own independent movement.

With money as a hoard, and money as a means of payment, we can see then how money emerges with its own distinct and independent existence and movement over and against that of all other commodities. However, before we proceed to consider the implications of this we must briefly, for the sake of comprehensiveness, consider the third form of money as money -- world money -- which in a certain sense is a something of a digression for Marx's exposition as far as we are concerned.

g) World money: As world money, money obtains its most adequate form as the universal form of value. It is the ultimate form of money as simply money. But any full consideration of this form presupposes an analysis that points beyond Marx's Capital to his proposed but never written books on the state, foreign trade and the world market. So why did Marx retain this section on world money that appears both in the Contribution and Capital?

Firstly, it would seem a matter of theoretical tidiness. With money as world money, where money becomes the citizen of the world, money comes to 'fulfil its concept'. With world money, Marx's analysis of money as simply money comes to a point of closure.

Secondly, Marx has to include world money in order consolidate his critique of Ricardo's quantity theory of money whose essential arguments had been, for Marx, obscured by its reference to foreign trade and the international movements of gold bullion. He therefore has to at least indicate how the laws that govern money as world money may differ, and in some case are the reverse, of those that govern domestic money.

Whatever other reasons that may be produced to explain the inclusion of world money they do not concern us here. We must return to the implications that arise with the emergence of the independent existence and movement of money as money which was established with its first two forms.

* With money coming to assert its own independent existence and movement we reach the closest point to the full expression of the possibility of crisis. In the independent and external form of money, which now can assert its own movement over against the use-values represented by all other commodities, value can move independently of use-value. Yet there must still be a unity of value and use-value. If these two poles move too far apart then they must be forcibly re-united; and this occurs through crisis. As Marx elucidates in his Theories of Surplus-Value in terms of the rupture between purchase and sale in the simple circulation of commodities: If, for example, purchase and sale...represent the unity of two processes, or rather the movement of one process through two opposite phases, and thus essentially the unity of the two phases the movement is essentially just as much the separation of these two phases and their becoming independent of each other. Since, however, they belong together, the independence of the two correlated aspects can only show itself forcibly, as a destructive process. It is just the crisis in which they assert their unity, the unity of the different aspects. The independence which these two linked and complimentary phases assume in relation to each other is forcibly destroyed. Thus the crisis manifests the unity of the two phases that have become independent of each other. (TSV II, p. 500) And we should add that this independence between two phases of the simple circulation of commodities only emerges because money is able to gain its own independent existence and movement over and against that of all other commodities.

But, while Marx's investigation in his Theories of Surplus- Value at this point is made against bourgeois political economy on the basis of the question of crisis; and while also, as we have seen, Marx's presentation [Darstellung] in Capital repeatedly returns to, and is propelled forward by, the question of crisis; Marx, in Capital, is not primarily concerned with this question. At this level of abstraction, capitalism is simply an economy of generalized commodity exchange; there can be only the possibility of crisis, and as Marx himself comments: The conversion of this mere possibility into a reality is the result of a series of relations, that, from our present standpoint of simple circulation, have as yet no existence. (Capital I, p. 115) Hence, in concluding the passage where he examines the possibility that a commodity may not be sold -- the rupture in the movement C -- M -- Marx remarks: Here, however, we are only concerned with the phenomenon in its integrity, and we therefore assume its progress to be normal. (Capital I, p. 110) Here we see Marx coming to reassert the analysis of the integrity or unity of the commodity and money over that of their opposition and separation, and the consequent question of crisis.

So while the question of crisis repeatedly serves to drive Marx's exposition forward it is not its end. In establishing the independent existence and movement of money, and thus of value, Marx is not primarily concerned with the question of the possibility of crisis -- he is not concerned with showing the necessary independence of money in order to refute reformist and utopian solutions to the problem of capitalist crisis as he was in the Grundrisse -- but rather with establishing the ontological basis for capital. Consequently the question of crisis has to be closed off and placed at the margins of Marx's presentation here in Capital. In fact, as we shall show, crisis remains marginal throughout Capital. It belongs to a new presentation [Neue Darstellung] beyond Capital. Here then, we come to a crucial point of closure within Capital.

C) The capital-form With the analysis of the value-form we saw how Marx derived the necessity for the value of the commodity to take an external expression in the form of money. We then saw how money itself comes to gain its own independent existence and movement over and against all other commodities. An independence that becomes most evident in the midst of rupture and crisis.

With the appearance of money's own independent existence and movement, money can no longer be seen as a mere fleeting servant for the exchange and circulation of commodities; a mere means with which use-values are transferred from the hands of their producers to those of their consumers. The possibility now arises of money becoming the master of commodities; of money subordinating the circulation of commodities and use-values to its own independent movement -- the independent and external movement of value.

Having established the opposition and externalization of value into the material form of the commodity that arises with its money form, and with this the possibility of its own independent existence and movement, Marx is now in a position to derive capital; he is now able to present the transition of value from its money-form into the form of capital. The form within which value finally becomes the self-determining and self-mediating process of its own self-expansion.

How then does Marx make this transition from the money-form to the capital-form? Let us return to the simple circulation of commodities, but this time let us take up the perspective of money.

Unlike the commodity, which enters circulation only then to fall out of it again once it reaches the hands of its consumer, money, on entering the sphere of circulation is constantly being displaced from one hand to another. From the perspective of money's own movement circulation therefore appears as an extended chain of exchanges as follows: ...M -- C -- M -- C -- M -- C -- M ...

A movement that cannot only be reduced to the common phase of simple commodity circulation (i.e. C-M-C) but also to its inverted form, M -- C -- M. With this expression money is seen as the beginning and end of the process, (which is now buying in order to sell rather than selling in order to buy) while the commodity appears as merely its means.

Yet as such this process does not have its own motivation; it is merely an inverted reflection of the simple circulation of commodities. With the simple circulation of commodities, the commodity is sold because it possesses the quality of a non-use-value for its producer but at the same time has a use- value for the owner of money. Having transformed her commodity into money the commodity producer can then buy another commodity that does have the quality of being a use- value for her. Thus the motive force for simple circulation of commodities arises from the qualitative difference in commodities with respect to their use-values. In its inverted form -- M -- C -- M -- there can be no such qualitative difference since money is the same homogeneous commodity.

Yet as we saw with the miser, money may become coveted and accumulated for its own sake. The motive for the inverted form of the simple circulation of commodities may therefore become the quantitative difference between M1 and M2. This inverted form of the simple circulation of commodities then becomes expressed in what Marx terms the general formula of capital, or, alternatively, the formula of merchant capital: M -- C -- M' Where M < M' Here the miser, who accumulated money by selling but not buying, now develops into the merchant who accumulates money not by withdrawing money from the process of circulation but by buying commodities cheap and selling them dear.

Whereas the motive force for the simple circulation of commodities lay outside the sphere of commodity exchange itself in the needs and desires of the commodity producers themselves, the motive force for the circulation of the merchant becomes internal to it. It emerges as the insatiable accumulation of the universal and abstract wealth represented by money. With this formula we find the formal expression of capital -- the process of the self-expansion of value.

In developing into the form of capital, value comes to subordinate the movement of use-values to its own ends -- to its own self-expansion. As capital, therefore, value becomes an independent and objective force whose movement appears autonomous from the will and desires of human beings. But for value to take up the form of capital it has to overcome an important contradiction between its own general expression and the circulation of commodities.

Taken in its 'integrity', in its 'normal' course, the circulation of commodities appears as being based on the free and equal exchange of commodities. Commodities have, for the most part, been assumed to exchange according to their values. But the circuit of merchant capital implies unequal exchange. Either the merchant buys commodities below their value and then sells at their value, or else she buys them at their value but then sells them above their value. In either case the merchant must be able to impose an unequal exchange in either the first phase of buying, or else in the second phase of selling. While for each individual merchant there may be a possibility of taking advantage of the divergence of the prices of commodities from their values in order to buy cheap and to sell dear, over all it is a zero sum game since the total value in circulation is predetermined by the values created in production. One dealer's gain must be another's loss. Hence there can be no general basis for merchant capitalist's profit, and thus for the self-expansion of value, within the circulation of commodities. With the generalization of commodity exchange, merchant profit, by itself, become impossible.

How then is it possible for value to become self-expanding within a world of equal exchange? How is the transition from money to capital to be made? The answer is that the capitalist must find a commodity which can be used to create a value greater than that embodied within itself; and the only such commodity is labour-power. As Marx argues: The change of value that occurs in the case of money intended to be converted into capital, cannot take place in the money itself, since in its function of means of purchase and of payment, it does no more than realise the price of the commodity it buys or pays for; and, as hard cash, it is value petrified, never varying. Just as little can it originate in the act of circulation, the re-sale of the commodity, which does no more than transform the article from its bodily form back again into its money-form. The change must, therefore, take place in the commodity bought by the first act, M -- C, but not in its value, for equivalents are exchanged, and the commodity is paid its full value. We are, therefore, forced to the conclusion that the change originates in the use-value, as such, of the commodity, i.e. in its consumption. In order to be able to extract v