2. Marx, Magic and the Search for the Secret of Money

Money is the chemical power of the modern world; yet its existence as a supreme social being remains largely unrecognised. This invisibility demands an investigation into its secret life: an alchemy. The secret of money has transfixed science, metallurgy, astrology, astronomy, mythology, theology, philosophy, art and magic for thousands of years. Alchemy was the science of the search for the secret of money: the way in which base (iron and copper) and noble (silver) metals could be used to create gold, or the process by which an original quantity of gold could be expanded or multiplied — to use an alchemic expression. But alchemy is more than a preoccupation with the transmutation of base metals into noble ones, it was also

[a] grandiose philosophical system that aimed at penetrating and harmonising the mysteries of creation and of life. It sought to bring the microcosm of man into relation with the macrocosm of the universe. The transmutation of one form of inanimate matter into another, placed in this larger context, was merely an incidental aim of alchemy, designed to afford proof on the material plane of its wider tenets, in particular that of the essential unity of all things.
(Read, 1961: 14)

The purpose of this chapter is to reclaim that alchemic tradition for the modern world.

The history of alchemy is controversial and complex, containing the earliest examples of a fundamental theory of physical science. Thought to have originated in the ancient civilisations that made up the Egyptian, Arabic, Indian, Greek and Oriental worlds, it percolated into Western Europe in the twelfth century through Latin translations of Arabic texts, one of its earlier translations being Robert of Chester, The Book of the Composition of Alchemy (1144).

Although it has a disparate history, alchemy is unified by its principal assumption of the unitary nature of matter (remote); that is, transmutable into other substantial forms (proximate) through a potent transmuting agent: the philosopher's stone — a motive power. Originally a substance for turning base metal into gold, the 'stone' later acquired additional properties: the curing of disease or the granting of immortality through 'the elixir of life'. For alchemy, all matter shares the same origin, appearing in various abstracted and separate forms as a manifestation of its essential derived nature. This natural condition is striving in the Aristotelian sense to express perfection and in the Platonic sense to achieve the ambition of its inherent 'goodness'.

The theoretical framework of alchemy is organised within various adaptations: for example, Five Elements (Wu-hsing) and Two Contraries (yin and yang) or four principles or qualities (earth, wind, fire and water). Alchemy maintains that all matter is comprised of these elements in various proportions depending on the tradition. Perfect matter is that within which its elemental form is not apparent: thus gold is the most perfect substance. According to the Aristotelian version these four elements were imbued with a prima materia: a quality that had no material existence until it became allied with its form, which allowed one element to transmute into another. Behind these four elements was an other indistinct quality; for Aristotle it was 'ether', the element of the stars; for the neo-Platonists it was 'Logos', or the Word, or God, or Reason. Among medieval philosophy it was known as the 'quinta essencia': the quintessence (Read, 1961: 3). Alchemy, then, is concerned with the synthetic or induced perfection of matter: the elaboration of a process that occurs naturally in the natural world (Crosland, 1962).

Although it has gained something of a tarnished history, as a confidence trick, or delusion (e.g. Ben Jonson's The Alchemist, 1610), it has continued to hold an enduring fascination in philosophy and literature (Goethe, Shakespeare, Chaucer); and an inspiration for esoteric and exotic academic enquiry. It is also gratified by the quality (notoriety) of its various exponents, including all the major intellectual figures of the ancient world: Aristotle, Plato, Copernicus . . . and those who might be attached more comfortably to the modern (e.g. Isaac Newton). Newton's interest in money extended to the practical administration of the Royal Mint between 1696 and 1726 (Craig, 1946); but he was also profoundly interested in alchemy. Newton's 'genius' was completely expressed in his integration of mathematics, physics and astrology; but he also attempted to integrate alchemic ideas with the contemporary mechanical philosophies (Dobb, 1975: xi). In so far as alchemy is concerned, Newton is the last important alchemic adept. (Keynes was very interested in this aspect of Newton's work and collected his alchemic writings and referred to him as the last magician.) Newton is the culmination of the process for the search for the secret of money. After Newton alchemy disappears; or rather, it becomes a much more limited endeavour: chemistry.

But this chapter is not an investigation into the history of alchemy in all its esoteric exoticness, or even the history of money. Rather, I take up the quest from the moment that alchemy disappears, when the search for the secret of money is to all intents and purposes abandoned. I shall suggest that this was no arbitrary moment or historical aberration, but that something changes in the nature of money itself which causes it to cease to be a subject for intellectual investigation. Alchemy is abandoned because the inheritors of the modern world (the bourgeoisie), find a way to create money out of money itself. Thus, it is not that alchemy failed to find the secret of money and was, therefore, discredited, but that the search for the secret of money was solved, and in the nature of this practical success the explanation for this solution is obscured. Thus, the discovery of the mystery and its mysterious disappearance as a subject for enquiry are connected.

Money is not ignored from this moment. Theories appear to explain this new phenomenon and the social upheaval the creation of money out of money causes. In the seventeenth century John Locke, a close friend of Isaac Newton, argued against the new world of money (laissez-faire). He argued that a just Godly society is possible only when money is absent. Money is unnatural and against the law of nature, leading to desire beyond need, ambition, beyond morality, corruption and miserliness: 'for as to Money, and such Riches and Treasure . . . these are none of Nature's goods, they have but a Phantastical imaginary value: Nature has put no such upon them' (quoted in Tully, 1982: 150). However, the theories of money that came to dominate were invested with the naturalness (the rationality) that money seemed to contain, and were concerned, not so much with money itself, but with the system of exchange that money appeared to facilitate: the market and its (dys)functionality. The new theories of money concentrated on monetary policy: the debasement of coin, the prohibition of export in an attempt to determine the real value of money and the control of the problem of price — including, in particular, a debate about the various quantity theories of money (e.g. the debate between David Hume and Sir James Steuart; see Clarke, 1991a and Rubin, 1979).

The most developed modern theory of money appeared in the work of Adam Smith (The Wealth of Nations, 1776). The significance of this theory is that it has formed the enduring basis for subsequent economic analyses of money. Smith claimed that 'it is not for its own sake that men desire money, but for the sake of what they can purchase with it' (quoted in Clarke, 1988: 29). His work was opposed to mercantilism, which suggested that the accumulation of money was the dynamic of economic activity, which involved a conceptualisation of money which sought to justify trading and merchant practice. In contrast, Smith sought to assert the instrumental rationality of money, and the system it supports, as a means of enhancing individual and collective material prosperity through a freely developing process of exchange. For Smith, consumption, not accumulation, was the dynamic of economic activity: 'consumption is the sole end and purpose of all production' a proposition 'so perfectly self-evident that it would be absurd to attempt to prove it' (quoted in Clarke, 1988: 29).

Adam Smith naturalised production and consumption within an ideal model of reasonable exchange based on a claimed propensity in human nature 'to truck, barter and exchange one thing for another'. Money — the means through which one thing is exchanged for another thing — becomes a rational device facilitating a rational system, an instrument of exchange and account that enables a barter system to operate effectively and equitably. This system contains its own regulations through its own system of rewards for the thrifty and hard-working, and punishments for the indolent and greedy, with freedom of choice and equality of opportunity for all:

If money is not an end in itself, but is merely a means of exchanging one thing for another, the powers attributed to money are not inherent in money, but derive from its functions as a means of exchange. The rationality of money is the rationality of the system of exchange whose development it facilitates. Money is the means by which the hidden hand of the market achieves its ends.
(Clarke, 1988: 29)

But in Smith there is no adequate account for the accumulation (expansion) of money as profit, the process by which money makes itself into more money. Following his theory of value, where commodities are exchanged for the quantity of labour they embody, the cost of production or 'constant capital' (machinery, raw materials) resolves into revenue (wages, profit and rent). In this way, the entire product of society goes to the personal consumption of its members. Although Rubin called this is an 'absurd conclusion' (1979: 212–13), this became the dominant explanation of the Classical School: accepted by Ricardo, dogmatised by Say and repeated into the nineteenth century by J.S. Mill. However, the Classical School was unable to account for the expansion of money, for in order to explain the expansion of money it had to abandon the naturalistic premises on which its assumptions were based. That is, it had to acknowledge that the natural equivalence of petty commodity production within which exchange is precipitated by the products of labour is undermined by a society taking on increasing regulatory and administrative forms in response to increasing injustice and disproportionality. David Ricardo came close to making the point that profit equalled unpaid labour, but he failed to develop it. Thus, the Classical School could not account for the continuing expansion of money as wealth and the creation of an employed and unemployed population (Kay and Mott, 1982).

The shortcomings of this theory had been revealed by the end of the nineteenth century when it became obvious that market rationalities (the hidden hand) did not benefit all sections of society. Poverty and its antagonistic forms — socialism — demanded a more convincing account. The new economic theory (marginalism) replaced the rationality of an economic system with the rationality of rational individuals as consumers making informed choices about their own needs as defined by their self-interest. The creation of the rational individual actor is derived from the denial of the independent interest of the working class. This denial took the form of a political economy organised around subjectivist and individualist foundations. In economics this appeared as the marginalist revolution associated with Karl Menger in the Austrian School and Stanley Jevons in the UK. The accounts developed by these economists replaced the 'classic cost' of production theory of value with a subjective theory of value, whereby distribution took place, not in terms of the laws of classical economics, but rather, according to moral and political judgment (Clarke, 1991).

J.M. Keynes: The Magician Of Numbers

A revolution in the theory of money appeared in response to the world crisis of money following the world's greatest economic disaster in the 1920s and 1930s. In this period Keynes was formulating an approach to money that was to have decisive importance for the modern world. This 'new' approach owed as much to alchemy as it did to classical economics.

Keynes had been preoccupied with gold as a device for regulating economies, both as a supporter in the case of India in 1913, and as a strident critic against a return to the gold standard for the British economy following the first world war (Clarke, 1988: 204–5). As Robert Skiddelsky has noticed, Keynes was profoundly interested in Isaac Newton and his alchemic experiments. It was only an interest, but one on which he was prepared to spend an inordinate amount of time: 'Newton still absorbs more time than it should; but that is a hobby' (16 August 1936 in a letter to his mother; quoted in Skiddelsky, 1986: 626). Keynes described Newton as 'the last magician'; for Skiddelsky, Keynes was the last magician of number:

He was not the first of the modern statisticians, but the last of the magicians of number. For him the numbers were akin to those mystic 'signs' or 'clues' by which the necromancers had tried to uncover the secrets of the universe.
(Skiddelsky, 1986: 414)

This is the aspect of Newton that most attracted Keynes:

He regarded the universe as a cryptogram set by the Almighty. By pure thought, by concentration of mind, the riddle he believed, would be revealed to the initiate. . . . For some purposes at least, Keynes thought that the distinctions between magic, science and art were less interesting than the similarities.
(ibid.: 414)

Whilst Keynes accepted the conventions of economics, especially the convention of rationality, scattered through his writings are clues to the fact that he regarded the intellectual technique he practised as a surface technique only. He recognised that public life was simply a world of appearance, and that beneath the knowledge in which he dealt there lay an esoteric knowledge open only to a few initiates — the pursuit of which fascinated him as it did Newton (ibid.: 423). Arguing against the laissez-faire principles of classical economics, Keynes maintained that the market system was not self-regulating, it was not clockwork as it had been for Newton. The significance of that discovery is that the market ceases to be the motive power because of difficulties within the nature of money itself. Following Aristotle and Locke, Keynes recognised money as a means of exchange and as a store of value; but whereas they problematised these qualities as leading to an unnatural desire for conspicuous consumption or accumulation of more than one needs, Keynes recognised incipient problems within the relationship between these two functions of money which could be resolved only by extraneous interventions.

The significance of this understanding of the contradictory nature of money as a means of exchange and as a store of value was that, because of the ignorance and uncertainty that characterised economic activity, it was rational for money to be withdrawn from circulation at times when the store could not be increased. Keynes shared this observation with many earlier writers including proudhon and Silvio Gessel (see Mattick, 1971: 5). Keynes argued that if the hoarding of money could be prevented, production and profitability would ensue. This suggested, not only that economic irregularities might not be resolved by market mechanisms and required intervention by the state, but more fundamentally, it pointed to the deeply problematic nature of money itself. In order to preserve itself as a store of value, money would evacuate the exchange process and thereby precipitate economic crises: the declining propensity to consume.

Keynes thus pointed to the influential nature of money itself: money as a means of social subjectivity, whose withdrawals or interventions had the capacity of a powerful social force to determine human life and the way in which was lived. Keynes' alchemic importance, however, is that he discovered the motive power, the multiplicatory principle (the notion of the multiplier was an important one for alchemy) through which money could be produced. Through his theory of money, he established the link between the microcosm of man in relation to the macrocosm of the universe; although for Keynes man was still the self-interested actor and his vision of a united universe was restricted to preserving the modern world of the bourgeoisie.

The basis of Keynes magic formula for the expansion of money was labour. Keynes recognised the dangers inherent in attempting to reconcile the demands of the working class within the restrictions of the gold standard. Following the First World War and the Bolshevik Revolution he recognised that:

The labouring classes may no longer be willing to forgo so largely, and the capitalist classes, no longer confident of the future, may seek to enjoy more fully their liberties of consumption so long as they last, and thus precipitate the hour of their confiscation.
(The Economic Consequences of Peace [1929] quoted in Mattick, 1971)

Keynes also realised the motive power of this antagonistic subjectivity. Since 1871 state intervention had been on the basis of the working class as the object of the process; but now to accommodate this revealed subjectivity the working class would have to be accommodated on its own terms (Negri, 1988: 12). In an attempt to prevent communism, and to reconcile the demands of the working class within the imperatives of profitable capitalist accumulation, Keynes developed a theory of macroeconomics. This entailed a concentration on money and its aggregate forms (savings, investment, balance of payments and, in particular, wages) as opposed to markets and prices. Orthodox economics argued that lower wages reduce unemployment and unemployment reduces wages, but Keynes maintained that wages were not flexible, workers had learned to defend them. Wages could be reduced more effectively than by trying to cut them. An increase in the quantity of money, linked to extra market policies to ensure 'effective demand', would raise prices and reduce real wages. This could be brought about through the management of mutually independent economic variables. For Keynes, these variables were the propensity to consume and the incentive to invest:

the wisest course is to advance on both fronts at once . . . to promote investments and at the same time, to promote consumption, not merely to the level which, with the existing propensity to consume, would correspond to the increased investment, but to a higher level still.
(J.M. Keynes, The General Theory of Employment, Interest and Money quoted in Mattick, 1971: 13–14)

Keynes' solution was profoundly alchemic. It involved the creation of money through a multiplication effect: loan-financed government investment and increased government spending, which would be self-perpetuating and generate resources through taxation and savings to justify the initial deficit. Thus, in order to promote multiplication, it involved the accumulation of induced effects through a manipulation (elaboration) of savings and investments. In this way, Keynes de-naturalised money and explained it as the means of articulating a particular system of social relationships (Clarke, 1991a: 235). But Keynes did not take this analysis of money any further, nor did he challenge the fundamental nature of capitalism. Thus, the nature of the regulation remains incidental, with the purpose of regulation to restore the essential unity of the bourgeois world.

While Keynes created the context within which the motive power of labour could be utilised as a potent catalyst in the expansion of money, his experiment could not control the reaction. The system went into melt-down: inflation. This appeared in the 1970s in the form of an economic crisis and the collapse of the post-war boom (Clarke, 1988). Despite his importance Keynes had not fundamentally challenged the basic assumptions of bourgeois economics. The consequence of this was that Keynes was re-assimilated into neoclassical economics as a particular approach to economics rather than as a revolution in economic thought. His alchemic approach was reversed, to emerge as bad alchemy, to become not an expansion in the supply of money, but an attempt to control the money supply and to discipline, rather than enhance, the motive power of labour. Alchemy dissolves into a preoccupation with mysticism and metallurgy — monetarism. This reassimilation was associated with a denial of the idea that the state could regulate the harmonious development of capitalism. It was replaced by the notion that only the market had that capacity, and that barriers to the smooth operation of the market must be removed. This included the state itself, trade unions, popular democracy, a concentration on supply-side measures, deregulation and privatisation. The effectiveness of this model relies on the stability of money as an accurate means for the communication of information — as prices — and, therefore, demands a predictable and stable monetary policy. In the pursuit of 'sound money' all else must be sacrificed.

Sociology And The Avoidance Of Money

The space created by the demise of alchemy as a search for the secret of money was filled by theories of money concentrating on the market and prices: the formal and symbolic appearance of economic relationships. Whilst this was sufficient to explain rational activity within the limits of the distribution of scarce resources based on individual subjectivity in conjunction with supply and demand, a gap was left that needed to be filled in order to explain behaviour that lay outside this economic relation. This explanation was based on the same, limited assumptions concerning the formal rationality of exchange as had been developed by marginalist economics, and it took the form of modern sociology: the attempt to rationalise the rationality of money as the basis for social action based on non-rational activity. This is evident in classical sociology in Weber's Protestant Ethic, in Simmel's phenomenology of money, and endures through to the structural functionalism of Talcott Parsons and Jürgen Habermas.

In the work of Parsons we find the rationality of a fusion of value (object) and values (subject) in a sociological Keynesian Utopia. Parsons articulates the Keynesian-inspired sociological notion of the subjectivity of money. According to Parsons, money is the rational symbol through which the goals and functions of the constituent sub-systems of society can be both represented and realised. Money ensures that the goods which an economy produces are those that consumers require and allows the state to reward productivity through the allocation of capital funds. Money also encourages entrepreneurial activity through the allocation of profit to innovative firms and individuals (cf. Schumpeter). In this way money constitutes a rational mechanism of communication between the economic and political, ideological and cultural institutions of society.

Habermas attempts to deny this subjectivity. In Habermas we find the rupture of the unity between value (object) and values (subject) and an attempt to ground rationality on an inter-subjective denial of the object (value). This corresponds to the crisis of Keynesian money and money forms. In Habermas's system, power and money are divorced. Habermas rejects the labour theory of value and accepts Weber's theory of the state and political power (see Habermas, 1972). It is this which allows the functional separation of economy, polity and sociocultural spheres in Habermas's analysis of late capitalist society (Habermas, 1988). Money becomes merely an alienated form of 'steering mechanism' which prevents the development of 'communicative rationality'. Money, therefore, is reified as something outside the social relations which constitute the 'lifeworld' and which prevents rational communication. Habermas puts money in a box and allows it to escape only when it interferes with free and equal linguistic exchanges in the mythological sphere of civil society.

This was not a mistake of the classical sociology from which Habermas drew so much of his inspiration — particularly Georg Simmel. Simmel articulated the irrationality of money — although this was articulated alongside the formal rationality of capitalism. Simmel captured the phenomenological spirit of money in his seminal The Philosophy of Money (1906), in which he argued that money constituted the essence of modernity, for it was through money that the modern spirit finds its true expression (1979: 429–512). Simmel was concerned with the irrationality of a society dominated by money. This irrationality is attributed to a universal metaphysic or psychological process, premised on the inversion of means and ends and evoked only because money is wrongly designated as the supreme instrument of reason. Money facilitates the objectification of culture through the way in which the division of labour and the development of the money economy creates a specific form of mutual impersonal dependence. The development of the money economy increased individual liberty and individualism, but in such a way that the subjective and objective aspects of life were torn apart. That is, money creates a relationship between individuals whilst leaving individuality outside monetary relationships.

Whilst sociology has recognised the irrationality of money it has simultaneously avoided any confrontation with the content of this irrationality. This has been achieved through the invention of the 'life-world': a sphere in which social subjects are able to escape the objective impositions of money and the state. Sociology has thus tended to avoid the contradictions of money. However, as the crises and contradictions of Keynesianism intensified sociological conceptions of money have become increasingly abstract. In the historical context of bad alchemy, sociology has retreated into hyper-abstraction — and to present money as merely a simulacrum. Money as simulacrum is the most developed from of the avoidance of the search of money. There is no real money, therefore, there is no real secret. In postmodern social theory, as in all sociology, money is conjured out intelligent speculation. Derrida, quoting Mallarmé, remarks on this process as constituting the death of alchemy, what he refers to as the victory of 'sheer intelligence':

A certain deference, towards the extinct laboratory of the philosophers' elixir, would consist of taking up again, without the furnace, the manipulations, the poisons cooled down into something other than precious stones, so as to continue through sheer intelligence. . . . The null stone, dreaming of gold, once called the philosophical: but it foreshadows, in finance, the future credit, preceding capital or reducing it to the humility of money.
(Derrida, 1992: 116–17; emphasis in original)

Money becomes a sign amongst other signs, but is more than a sign, it is a ghost. Its ghostly appearance is conjured out of the inability of sociology in its structural and poststructural forms to go beyond reciprocity in its analysis of money. Money is only true money when it emerges as the simulacrum of discourse: a sign or symbol. That is to say, there is no way of knowing what is or is not counterfeit, other than the discursive meaning that is imposed on money: 'a true corpus is still perhaps counterfeit money; it may be a ghost or a spirit and of capital' (Derrida, 1992: 97). And Derrida adds that Marx, whom he regards as the chief wizard of money, also fails to penetrate the ghostly apparition of money:

Marx always described money, and more precisely the monetary sign, in the figure of appearance or simulacrum, more exactly of a ghost. The figural presentation of the concept seemed to describe some spectral thing. . . . Gold or silver produces a remainder. This remainder is — it remains, precisely — but the shadow of a great name. 'The body of money is but a shadow'. The whole movement of idealization that Marx then describes, whether it is a question of money or of ideologemes, is a production of ghosts, illusions, simulacra, appearances.
(Derrida, 1994: 37; emphasis added)

According to Derrida, Marx was afraid of ghosts. Marx was not a magician content to drive away or exorcise the magic of ghosts with a counter-magic. Instead he attempted to exorcise the ghost through a methodology which counterposed the simulacrum with effective reality — life against death. Despite this Derrida holds that Marx did not actually transcend magic and counter-magic. In other words, Marx was just a magician:

[Marx] tried to conjure away the ghosts, and everything that was neither life nor death, namely, the re-apparition of the apparition that will never be either the appearing or the disappeared, the phenomenon or its contrary.
(ibid.)

That is, Marx both invented and subsequently denied the simulacrum and the symbolic and ghostly existence of money.

The work of Jean Baudrillard has been central in articulating the apparent pre-eminence of the sign and sign-value in the postmodern order. His work is instructive as is his theoretical starting point in Althusserian structuralism. In his earlier works Baudrillard developed an essentially Althusserian Marxism in order to supplement orthodox Marxism's critique of capitalism with an assessment of the increasing domination of the objects of consumption on individual subjectivity (Baudrillard, 1968, 1970). According to this view, consumption had replaced production as the central mode of homogenisation, alienation and exploitation. Consumption constitutes a higher level of reification through which the 'signs' and 'symbols' attached to commodities result in the total death of the subject by the world of objects (the death of the individual and the social world). The most important form of labour becomes the labour of consuming commodities which allow one to differentiate oneself from others through the meaning, prestige and identity attached to commodities.

The ranking of commodities is achieved through a 'code of political economy' which links sign-value to exchange-value (money):

[I]t is the code that is determinant: the rules of the interplay between signifiers and exchange-value. Generalized in the system of political economy, it is the code which, in both cases reduces all symbolic ambivalence in order to ground the 'rational' circulation of values and their play of exchange in the regulated equivalence of values.
(Baudrillard, 1978: 146–7)

Money is the derivative of the code. The domination of capitalist society is symbolic. Money has no content other than symbolic content: it is determined from the abstract as an abstract form. Money is alienating only in respect of the role it plays in the symbolic system of meaning represented by the economic logic of political economy.

The abstraction of money is mirrored in the abstraction of intellect: money and sheer intellect both serving the highest and most base needs and desires. The money economy creates an abstract structure or system which reflects back on the objects from which it has been abstracted — the ghostly apparitions and spectral forms of money. This abstract structure is constituted by a metaphysical manifestation of objectified culture which, through the increasing rapidity of 'time—space compression' (Harvey, 1990) associated with the money economy, creates an irresolvable tension between the totality of society and the totality of the individual. As I demonstrate in the next section, it is through the 'real magic' of Marx's methodology that the reified apparitions and ghosts of the world of money can be revealed and exorcised.

Marx, Real Magic And The Critique Of Money

Marx was a magician, but his sorcery was of a different order from that outlined by Derrida. The reified and fetishised nature of money is both abstract and real; between life and death — indeed, a real abstract mediator between life and death. In denying the possibility of life out of death, post structuralism articulates the death of money, the crisis of money — the death of the social — as the subject is objectified and the object becomes self-referential. The reassimilation of Keynes into classical economics denies money a subjectivity and so it becomes an object of itself — a ghostly apparition, a simulacrum. The possession of money becomes the most abstract and total expression of individualism, freedom and self-expression and, indeed, a differentiation within the individual: a fragmentation of the self along the myriad of fragmented monetary relations in a generalised money economy. These peculiar characteristics of money make money both a means and an end in (post)modern society, linking all contents of life into a limitless teleological relationship and all relationships expressed in terms of objective exchange.

The problem with this sociology of money in both its modern and postmodern forms is that it conceptualises money as a medium of communication (interaction) and reduces money to a harmless social device with no recognition of its 'orientation to pecuniary acquisition for its own sake' (Weber, 1968: 159). What Weber and Simmel are alluding to but do not develop is the differentiation between money-as-money and money-as-capital. This distinction highlights the problem with poststructuralist conceptualisations of money which fail to recognise the existence of money as anything other than exchange (the spectre) and that 'it is only in the form of money as capital that the limitless drive for the enlargement of exchange-value can turn from a mere chimera into a living, actual reality (Rosdolsky, 1977: 187). For Marx money is a symbol; but it is more than a symbol, i.e. it is a symbol of itself and, in that way, denies its symbolic life. Money is constantly becoming more than itself through its own self-expansion. It is a ghost of something that is not yet dead. Money is living death. Money constitutes a loss of humanity as not-life. Money becomes the ultimate, supreme being:

Through this alien mediator man gazes at his will, his activity, his relation to others as a power independent of them and of himself — instead of man himself being the mediator for man. His slavery thus reaches a climax. It is obvious that this mediator must be a veritable God since the mediator is the real power over that which mediates me. His cult becomes an end in itself. Separated from this mediator, objects lose their worth. Thus they only have value in so far as they represent him.
(Marx, 1975a: 260–1; emphasis in original)

Human activity (labour) is estranged and becomes the property of a material thing external to man — e.g. money. The cult of money becomes an end in itself. Man has a value only to the extent that he is represented by money (the anticipation of Simmel is startling! But now the important difference). Man becomes money or becomes that which money can buy. Money has magical qualities. Money can conjure intelligence out of stupidity, beauty out of ugliness:

The properties of money are my . . . properties and essential powers. Therefore what I am and what I can do is by no means determined by my individuality. I am ugly, but I can buy the most beautiful woman. Which means to say that I am not ugly, for the effect of my ugliness, its repelling power, is destroyed by money . . . I am a wicked, dishonest, unscrupulous and stupid individual, but money is respected and so is its owner . . . Through money I can have anything the human heart desires.
(Marx, 1975b: 377; emphasis in original)

Money, therefore, is a truly creative power. It transforms the contents of the imagination into sensual reality. Without money the demands, passions and desires latent in the imagination remain in the realm of ideas. Needs exist only if there is money to actualise them in reality. As Marx noted:

money turns the imagination into reality and reality into mere imagination . . . real, human natural powers into purely abstract representations and tormenting phantoms, just as it turns real imperfections and phantoms . . . into real essential powers and abilities. Thus characterized money is the universal inversion of individualities.
(ibid.: 387; emphasis added)

Man (the subject) becomes poorer as the mediator (the thing/object) becomes richer. Money is omnipotent and the ultimate mediator and objectification of human needs:

Money, in as much as it possesses the property of being able to buy everything and appropriate all objects, is the object most worth possessing . . . money is the pimp between need and object, between life and man's means of life. But that which mediates my life also mediates the existence of other men for me. It is for me the other person.
(ibid: 375; emphasis in original)

Money is the universal confusion of an inverted world. Money is not only contradictory, but makes the contradictions embrace one another. Money is therefore the primordial locus of alienation and reification in bourgeois society. It is, however, the particular form that money takes that allows us to see the distinctiveness of Marx's approach. The ultimate achievement of Marx the magician was to expose the mystical appearence of the simulacrum and unveil the subjectivity of labour beneath it. There is a difference between Marx's notion of the abstract nature of money and the concept of simulacrum. A simulacrum is the identical copy of an original that never existed — an abstract abstraction — whereas Marx reveals the material content of the abstraction. He did this through an analysis of labour.

Keynes, as we have seen, recognised the importance of labour as his motive power. But this motivation and its possibilities were limited by his vision of the united universe: the preservation of the bourgeois world. In this sense Keynes was not a magician, but an illusionist, preserving rather than challenging the mystification of capitalistic social relations. Marx, on the other hand, was the real magician; understanding the motive power (subjectivity) of labour and the possibilities for social transformation. His alchemic importance was to recognise that the motive power for the expansion of money lay in the potential that is inherent in the contradiction between labour (as rationality: the unity of need and capacity, i.e. a world without money-capital) and labour-power (as the inability to exist other than through money-capital as the wage, the separation of need and capacity). But not simply labour, the expansion of money lay in the transmutation by labour of one form of matter (nature) into another form (value):

When man engages in production, he can only proceed as nature does herself, i.e. he can only change the form of the materials. Furthermore, even in this work of modification he is constantly helped by natural forces. Labour then is not the only source of material wealth.
(Marx, 1954: 134)

And in a profoundly alchemic moment Marx adds in a footnote:

All the phenomena of the universe whether produced by the hand or indeed by the universal laws of physics, are not to be conceived of as an act of creation but solely as a reordering of matter. Composition and separation are the only elements found by the human mind whenever it analyses the notion of reproduction of value . . . and wealth whether earth, air and water are turned into corn in the fields, the secretion of an insect are turned into silk by the hand of man, or some small pieces of metal are arranged to form a repeating watch.
(from Pietro Verri, Meditazioni sulla economia politica [1771] in Custodi's edition of the Italian economists, Parte moderna, vol. 15: 21–2; emphasis added)

What this suggests is that the immanent energy of matter lay within matter itself. Hence, whilst the social power of money appears outside the process of commodity production, and is represented thus by the economists, the motivating energy of this power lies imminently within the money form itself: not as money-as-money, but money-as-capital. Marx formulated the difference between money-as-money and money-as-capital in the equations C—M—C and M—C—M', where C=commodity and M=money. Capitalist production involves the reproduction of capital or self-expanding value. The basis of this self-expansion is labour-power. In this process money (the general form) and the commodity (the particular form) function only as different modes of existence of capital. Value is, therefore, the subject of this process, changing from one form to another without becoming lost in the movement; but in the process it changes its own magnitude, throwing off surplus-value from itself, and therefore valorising itself independently:

For the movement in the course of which it adds surplus-value is its own movement, its valorisation is therefore self-valorisation. By virtue of its being value, it has acquired the occult ability to add value to itself.
(Marx, 1956: 255)

In this process money is the independent form through which value preserves itself and expands. Money provides value with an identity with which to assert its dominant subjectivity through its process of self-expansion (capital).

Marx discovered the occult nature of money's ability to expand through itself. Whilst money provides value in process (capital) with an identifiable form through which it can expand, it does not imply any change in the magnitude of the value. In the process of exchange (circulation) money functions as the universal equivalent and, therefore, a change of value cannot take place in the money form itself. The change, therefore, can occur only in the use-value of the commodity, in its consumption. It was Marx's major theoretical break-through that he identified the commodity whose use-value possesses the peculiar quality of being a source and creation of value. The commodity is the capacity to labour: labour-power (Marx, 1954: 270).

It was with the discovery of labour-power (the social form of labour) that Marx was able to postulate the source of surplus-value (the social content, i.e. the alchemic principle). The separation theorised in Marx's early work (alienated labour) is now given a concrete material and socially specific reality and takes the form of the working class as a mass of people separated from themselves (labour and labour-power) and the means of their own survival (the means of production). The perpetuation of this separation is the absolutely necessary precondition for capitalist production (Marx, 1954: 716). It is this relationship of contradiction, antagonism and struggle over production, generalised through reproduction to the whole of human experience, and apparent in the struggle of everyday life, that forms the social basis for the social relations of capitalist society and by which their contradictory nature can be understood (Marx, 1954: 724).

In this chapter I have shown how in the world of money and self-expanding money (capital) it does appear that money changes everything. But as Marx showed, the power of money is conjured out of the alienation of labour. The fifth element, the quintessence of money, is labour. Marx discovered what alchemy did not know: the secret of money. But Marx's discovery was not an esoteric achievement. Marx's magic was real magic. Ernst Fischer in The Necessity of Art (1978) defines magic as the domination of nature and the avoidance of work. Through his analysis of capitalist society, Marx explained how the imposition of work through the commodity form (the separation of need and capacity of the working class) could be transformed into a state of abundance (i.e. the unity of need and capacity) and capitalist work abandoned. Thus, the real importance of Marx's magic was to realise that money-as-money changes nothing, it is a ghost, and that the real 'spirit' of money is labour. But in the world of money labour is forced to exist as labour-power: as negative human capacity. The logic of this negative capacity is the domination of nature through risk (e.g. nuclear energy and nuclear weapons), the positive capacity is the domination of nature as a state of superabundance (the spectre of communism). In the next chapter I explore the concept of risk in more detail through an analysis of the relationship between risk, chance and the social forms of capital.