Chapter 2: The Process of Exchange

Submitted by libcom on August 10, 2005

Outline of Marx's Discussion
Analysis of fetishism means we must move from study of commodities to that of their owners.
- possession
- embodied will
- consenting alienation
- private property and contract

Contradiction: commodities must be:
values before use-values
use-values before values

: resolution = exchange

Money - "crystallizes" out of exchange

History of Exchange
- reciprocity instead of exchange
- exchange of excess
- production for exchange
- emergence of money

It is in chapter two that Marx begins to respond to his own critique of chapter one as being "fetishistic." That is to say, after having analysed the commodity form purely in terms of commodities themselves, and money as a commodity, it will be recalled that in section 4 of chapter one, Marx turns upon himself and attacks this presentation saying that because it deals with the relationships between things and does not get to the social relations of which the things are a part, it is guilty of commodity fetishism. In this chapter he begins to remedy that situation.

From Things to Social Processes
He begins by recognizing that despite his discussion of commodities "doing this," and "doing that" (e.g., expressing value here, reflecting an essense there) it is indeed true that "Commodities cannot themselves go to market . . . we must, therefore have recourse to their guardians." We pass from the abstract world of chapter one, to the more realistic world of actual exchange - to that space within which the form of value is actually realized: the market where the owners or guardians of commodities meet.

Marx begins with an analysis of the relation between commodities and their owners and then passes to a summary of the logic of money as a requirement of exchange, and finally to a sketch of the historical emergence of exchange and money. His analysis of the relations between commodities and their owners, and among owners is very close to Hegel's in the Philosophy of Right.

1. Owners have possession of commodities
2. Owners are in relation to each other as having their "will" in the objects
3. Alienation of commodities only occurs in consenting acts
4. Juridical expression of this is private property and the contract of exchange

The primary and basic example of this in capitalism, of course, is the exchange of labor power for the means of subsistence. And the particular meaning of the above clauses we have already seen in Part VIII. The laborer must have possession of his labor power (not be a slave or serf). The capitalist must have possession of the means of production (having taken them from the workers). Given this pattern of possession the two parties are "free" to act. This "freedom" appears as an act of free "will" as well as an act between two freely consenting property owners. That Marx goes beyond Hegel on this is already apparent in Part VIII in his ironical attack on the meaning of such "freedom." This will recur in Chapter 6 on the "Sale and Purchase of labor power". Finally, the exchange of labor power for the means of subsistence takes the form of a legal contract, verbal or written. The union contract of collective bargaining being a recent formal example.

It is the introduction of the owner which adds concreteness to the analysis of the exchange process, partly because the owner, unlike the commodity, is not interested in just any exchange but in some specific exchange. "[The commodity] is always ready to exchange not only soul, but body, with each and every other commodity . . . the owner makes up for this lack [of specificity] in the commodity of a sense of the concrete, physical body of the other commodity by his own five and more senses." In other words the owner goes into the market with a will, and an object of acquiring some other particular commodity.

At this point Marx points out a contradiction -a discussion carried over from his earlier work Contribution To The Critique of Political Economy -- and, in a sense, from chapter one's discussion of the two sides of the commodity: use-value and exchange-value. He notes that for the seller the commodity exists only as exchange-value, "for himself its only direct use-value is as a bearer of exchange-value . . . all commodities are non-use-values for their owners . . . consequently [and this is the first point] commodities must be realized as values [which is to say exchanged] before they can be realized as use-values." Then he makes the second point: in order to be exchanged someone must see them as potential use-values: "they must stand the test as use-values before they can be realized as values." There is the contradiction. Before they can be use-values they must be exchange-values but before they can be exchange-values they must be use-values. And, in order to be complete as commodities they must be both.

Money in Exchange
It is in this dilemma that Marx sees the origin of the need for money in exchange. In so far as each owner of commodities looks at other commodities "as the particular equivalent of his own commodities [and] . . . his own commodity is the universal equivalent for all others . . . there is in fact no commodity acting as universal equivalent." This problem Marx notes was already discussed in chapter one somewhat more abstractly (the problem of the expanded form) and the solution perceived: the money form, but this he notes cannot be solved in the abstract, at the formal level of chapter one:

Only the action of society can turn a particular commodity into the universal equivalent . . . through the agency of the social process it becomes the specific social function of the commodity which has been set apart to be the universal equivalent. It thus becomes - money. Money necessarily crystalizes out of the process of exchange.

In other words the rise of the universal equivalent, i.e., money, is a real social phenomenon, not an abstract one, it emerges within the historical development of exchange. It comes with the "broadening and deepening of the phenomenon of exchange" and the "need to give an external expression to this opposition [between use-value and exchange-value] for the purposes of commercial intercourse produces the drive towards an independent form of value." So money within exchange is the outgrowth in real history of the exchanging of commodities by their owners, by real persons, and not an abstract process. Here again Marx fights the fetishism which would deal with these matters purely in terms of the relations between things.

The rest of this chapter is devoted to a sketch of the process by which money as universal equivalent emerged from widening exchange. However accurate Marx's treatment, the major methodological point is that we must locate this phenomenon in the real world of exchange, understand what is being designated by the term universal equivalent, money, and not be bemused by commodity fetishism into an equally mistaken money fetishism. As he terminates the chapter: "The riddle of the money fetish is therefore the riddle of the commodity fetish, now become visible and dazzling to our eyes."

Then and Now

1. There is no reciprocal isolation or foreigness in the "primitive" community - whether of patriarchal family, Indian commune, or Inca state
2. Exchange begins at the boundaries of communities, not produced for exchange
3. Commodities come to be produced for exchange
4. Repetition makes normal, fixes values at definite magnitudes
5. Articles come to only momentary equivalence with universal equivalent, comes and goes
6. Crystallizes out as money form - attached to most important articles of exchange from outside, or to local mobile wealth, i.e., cattle
7. Natural selection leads to money commodity being chosen among those that can be divisible at will, uniform in quality, i.e., precious metals
8. Value of money is determined by labor time of its production, expressed in other commodities.

All of this is a synopsis of his discussion in the Contribution To The Critique of Political Economy and in the Grundrisse's chapter on money - both of which can be consulted for a more developed analysis.

This discussion of the historical origins of money has contributed to an interpretation by some of this chapter, as well as of chapters one and three, as being about money in exchange in all kinds of society where money and exchange exist. And not just about money and exchange in capitalism. To such interpretations I would say this: the primary and central discussion in each chapter in Part I is about the determinations of exchange within a fully developed system of exchange. The only fully developed system of exchange is capitalism, for reasons that are presented in Part VIII and elsewhere (Part I, Vol. II). Marx just takes a few of these determinations at a time, adding them one to another as he goes, building up the full fleshed analysis of capital. Certainly he does give examples, such as those above, which draw on pre-capitalist societies, while making the point that money as universal equivalent is not an abstraction but designates real phenomenon, within the real world of exchange. And at times he points to the historical roots of various aspects of capital. Here it is money, in Vol. III it is rent, etc. But I would recall his discussion in the Introduction to the Contribution about bourgeois economy providing the key to the past, but not equating the past with the present. (See my book Reading Capital Politically.)

Commodification of Life
One aspect of Marx's analysis of the centrality of exchange in capitalism which has struck a sympathetic cord in many, even those who would never call themselves Marxists, is idea that in the pursuit of profit and social control capitalism tends to convert almost every thing and every relation into a commodity. This tendency toward the "commodification of life" has been recognized and deplored by a great many novelists, poets, social commentators and song writers. From Balzac's caustic condemnations of an infinitely invasive commerical logic to popular music, the tendency has long been denounced, made fun of and rejected in prose and lyrics. In reggae musician Jimmy Cliff's song "Commercialization" this aspect of capitalist Babylon is attacked vigorously. He decries the commercialization of women, people in general, food, drugs, war and time. Although written long before the Gulf War, its arcade video packaging and selling gives the lyrics about war an unfortunately all too contemporary relevance.

observation of this civilization
Advertise her
Sterilize her
Utilize her
Commercialize her
Cause commercialization is the
notion of the civilization

What kind of people?
What kind of people?
Civilize them
Brutalize them
Formalize them
Commercialize them
Cause commercialization is the
notion of the civilization

Commercialize it
Advertise it
Fertilize it
Commercialize it
Cause Commercialization is the
notion of the civilization

Investigate it
Instigate it
Motivate it
Commercialize it
Cause commercialization is the
notion of the civilization

Time is running out
Right here
Yes, time is running out
Right here
There isn't much left
Yes, time for people is
Running out right here
There isn't much left
No, there isn't
because they have
Utilized it
Mobilized it
Brutalized it
Commercialized it
Cause commercialization is
the notion of civilization

Jimmy Cliff

Tom Waits' song "Step Right Up" from the mid-1970s, is more light-hearted as he makes carnivalesque fun of advertising and the pretence that any and all problems can be solved by the purchase of some commodity -from the drudgery of housework to fears about personal appearance and relationships. Interlaced with a myriad sound bites of advertising hype and sexual inuendo is the real message of the song: all the junk is being sold for profit at the expense of the buyer ("how do we do it? Volume, volume turn up the volume", "we'll give you the business", "the large print giveth and the small print taketh away.") In this case the very length of the song is both a reproduction and a critique of the endlessness of the advertising noise that constantly bombards us all.

Step Right Up
Step right up
Step right up
Everyone's a winner
Bargains galore
That's right you too can be
The proud owner of the
Quality goes in before
the name goes on
One tenth of a dollar
One tenth of a dollar
We've got service after sales
How bout perfume we got perfume
How bout an engagement ring
Somethin for the little lady
Somethin for the little lady
Somethin for the little lady

Three for a dollar
We got a year end clearance
We got a white sale
and smoke damaged furniture
You can drive it away today
Act now
Act now
And receive as our gift to you
They come in all colors
One size fits all
No muss
No fuss
No spill
You tire of Kitchen drudgery
Everything must go
Goin' out of business
Goin' out of business
Goin' out of business sale
50% off original retail price
Skip the middle man
Don't settle for less
How do we do it?
How do we do it?

Volume, volume, turn up the volume
Don't hesitate
Don't be caught with your drawers down
Don't be caught with your drawers down
Step right up
Step right up
That's right
For ladies it chops, doesn't stop
Never stops, lots of luck!

It'll mow your lawn
And it picks up the kids from school
And it gets rid of unwanted facial hair
It gets rid of embarassing age spots
It delivers the pizza
And it lengthens
And it strengthens
And it finds that slipper that's been
at large under the chaise-lounge
for several weeks
And it plays a mean rythmn master
And it makes excuses
for unwanted lipstick on your collar
And it's only a dollar

Step right up
And it's only a dollar
Step right up
It forges your signature
If not completely satisfied
mail back unused portion
for complete refund of price of purchase

Step right up
Please allow thirty days for delivery
Don't be fooled by cheap imitations
Livin it
Livin it, laughtin it, lovin it, swim in it,
sleep in it, live in it, swim in it,
laugh in it, love in it

Removes embarassing stains from contour
sheets. That's right
And it entertains visiting relatives
It turns a sandwitch into a banquet
Tired of being the life of the party
Change your shorts
Change your life
Change your life
Change into a 9 year old kinda boy
Get rid of your wife
It walks your dog
It doubles on Sax
Jump back Jack

See you later alligator
See you later alligator
It steals your car
It gets rid of your gambling debts
It quits smoking
It's a friend
It's a companion
It's the only product you'll ever need
Follow these easy assembly instructions
It never needs ironing
It takes weight off hops
busts, thighs, chin, middrif
Gives you dandruff
It finds you a job
It is a job
And it stops the phone company prepaid
syndrome five exchange
It gives you denture breath
And you know it's a friend
It's a companion
And it gets rid of your travellers checks
It's new
It's improved
It's old fashioned
It takes care of business
Never needs winding
Never needs winding
Never needs winding
It gets rid of blackheads
Heart break of psoriasis
Christ you don't know the meaning of
heartbreak buddy
Come on, come on, come on
It's effective
It's defective
It creates household odors
It disinfects
It sanitizes
For your protection
It gives you an erection
That wins the election
Why put up with painful corns
any longer

It's a redeemable coupon
No obligation
No salesman will visit your home
We got a jackpot
Jackpot, jackpot

Prizes! Prizes! Prizes!
All work guaranteed
How do we do it?
How do we do it?
How do we do it?

We need your business
We're going out of business
We'll give you the business
Get on the business
Going out of business sale
Receive all
Free brochure
Free brochure

Read the easy to follow
assembly instructions
Batteries not included
Send before midnite tomorrow
Terms available
Step right up
Step right up
Step right up
You got it buddy
The large print giveth
And the small print taketh away

Step right up
Step right up
Step right up

Com'on step right up
Get away from me kid
Step right up
Step right up
right up
right up

Come on, come on


Tom Waits, Small Change, 1976
Elecktra/Asylum/Nonesuch Records
Asylum 7E-1078

Finally, as a third and final example, in the late 1970s the British group The Clash took up this theme more directly, attacking the idea that one can buy a "personality" through the purchase of commodities. Instead of being a "happy shopper" constructing his life through his purchases, the singer wanders confused amidst the mountains of commodities. He has done as the ads say, clipped his coupons, listened to the "hit" music and drunk his bottle of social brew; but low and behold, the alienation doesn't go away no matter how much he participates in "exchange".

Lost in the Supermarket (song)
I'm all lost in the supermarket
I can no longer shop happily
I came in here for the special offer
of guaranteed personality

I wasn't born so much as I fell out
Nobody seemed to notice me
We had a hedge back at home in the suburb
Over which I never could see

I heard the people who live on the ceiling
Scream and fight scarily
Hearing that noise was my first ever feeling
That's how its been all around me.


I'm all tuned in. I see your programs
I save coupons packets of tea
I've got my giant hit discoteque album
I empty a bottle I feel a bit free

The kids in the halls and the pipes in the walls,
Make me noises for company.
Long distance callers
Make long distance calls
And the silence makes me lonely


It's not here
It disappear


I'm all lost...
I'm all lost in the supermarket
I'm all lost...
I can no longer shop happily
I'm all lost...
I came in here for the special offer
of guaranteed personality
I'm all lost...

The Clash, London Calling,
CBS, 1979 (E2 36328)

Recommended Further Reading
For Hegel's discussion, on which Marx draws, see T. M. Knox (ed) Hegel's Philosophy of Right, Oxford: Clarendon Press, 1952, First Part: "Abstract Right", Section i: "Property" and Section ii: "Contract". You might also want to read the 1820 preface which contains Hegel's famous remark about the limits of philosophy: "The owl of Minerva spreads its wings only with the falling of the dusk." (p. 13) as well as the Third Part: section ii on "Civil Society"; Subsection a on the "System of Needs" contains his discussion of needs, work, capital and class divisions.

Marx's work The Contribution to the Critique of Political Economy (1859), which deals primarily with value and money, was the first published fruit of his work in the late 1850s that produced the long unpublished manuscript the Grundrisse (1857-58). The Contribution to the Critique was intended as the opening salvo of a series of works critiquing political economy but instead of following it up with the next parts, Marx wound up writing Capital instead, whose first volume was published in 1867. Despite the fact that some of the Contribution is included in Capital (and some in Marx's three volume Theories of Surplus Value), there is much material in it which provides useful alternative formulations to the first part of Capital on value and money. The same, of course, is true of the first chapter of Grundrisse manuscripts which also deals with value and money. Both the Contribution and the Grundrisse are available on-line and in Karl Marx and Frederick Engels, Collected Works, New York: International Publishers; the former can be found in Volume 29 and the latter in Volumes 28-29. The Grundrisse is also available in a Penguin paperback edition.

Along with Marx's own review of the history of the development of money and exchange, you might also want to look at Ernest Mandel's discussion in Chapter 2 of Volume I of his Marxist Economic Theory, New York: Monthly Review Press, 1962. At the same time you might also want to keep in mind that Mandel is a Trotskyist theorist whose understanding of these matters is quite different than the one I have been presenting to you. (Remember he is also the author of the introduction to the edition of Capital which you are using.) Another Marxist treatment, more thorough, is Pierre Vilar, A History of Gold and Money, 1450-1920, New York: Verso, 1991 (originally published in Spain in 1960).

There are many works by historians on the history of money and exchange and it has been a central area of contention in anthropology where "formalist" anthropologists have sought to find bourgeois rationality (homo economicus) in every society and "structuralist" anthropologists have sought to understand non-capitalist systems of exchange in their own right as alternative forms of social interaction. Among the latter, some of the most interesting work is by ex-Marxist Karl Polanyi whose book The Great Transformation, Boston: Beacon Press, 1944 is a classic and well worth the read. Polanyi abandons Marx's framework of understanding the modern world in terms of "capitalism" in favor of "the market economy" but the subject is the same and and a great deal can be learned from studying his work. The Fall 1987 issue of Telos magazine has a special section on Polanyi with an interesting overview of his life and work by his daughter Kari Polanyi-Levitt and Marguerite Mendell.

On the commodification of war (as in Jimmy Cliff's song "Commercialization", see Doug Kellner, The Persian Gulf TV War (1992) on how the pentagon and the news networks packaged and sold the Gulf War to the American people -against one of the most rapidly mobilized and nationwide anti-war movements in U.S. history. For further background see his earlier book: Television and the Crisis of Democracy, Boulder: Westview Press, 1990.

Concepts For Review
alienation of commodities
private property
free will
a contract
the money fetish
reciprocal isolation

Questions For Review
*1. Explain the role of Chapter Two in Capital. That is to say, explain its relation to Chapter One and to what comes after -- at least as far as you have studied to date.

2. Discuss the relationship between commodities and their owners as Marx analyses it here in Chapter Two. What is an "owner?" What is the distinction between "ownership" and "possession?"

3. Discuss the meaning of "freedom" with respect to commodity exchange.

4. What is the attitude of the owners of commodities toward those commodities when they want to exchange them. How do they look at those commodities? What is it about their commodities which concerns them first of all? What else must concern them if they are to actually realize an exchange?

*5. Explain the contradiction and the resolution of the contradiction that Marx says confronts commodities and their owners in exchange.

6. What does it mean to say that "money necessarily crystalizes out of the process of exchange?"

*7. Discuss the issue as to whether the analysis of Chapter Two is applicable to all forms of exchange or only to that within capitalism.

8. What new things do we learn about money in this chapter that we had not already learned in Chapter One?

*9. Apply the analysis of this chapter to the exchange of labor power for the wage.

10. Sketch the history that Marx cites of the development of exchange and money. What do you think is the relationship between this history and the presentation of the chapter?

11. Explain the solution to the "riddle" Marx refers to in his statement: "The riddle of the money fetish is therefore the riddle of the commodity fetish, now become visible and dazzling to our eyes."

12. If, in so-called "primitive" societies, people produced and shared collectively, or communally, with a division of labor, such that "exchange" relations were those of reciprocity and had no sense of "equality," what does this suggest about the possibilities of post-capitalist society?