Chapter 3 Week 1
Welcome to Chapter 3, where we start to pull together the threads drawn out in the first two chapters. As I am sure many of you have anticipated at this point, we will begin the discussion of money here. But, before we do so, let's rehash some of the relevant points, for this discussion, from weeks past.
The construct of money becomes relevant due to the centrality of abstract value in relation to the existence of the commodity. The commodity itself is an object that is produced for exchange, and has exchange value. This production for exchange displaces value from use and into exchange, and, as a result, displaces the conditions of possibility for the object or the act into the abstraction of quantifiable value.
This focus on exchange also generates this necessity of prediction, the prediction not only of the exchange, but also of the continued social operation of abstract value and exchange into the future. This is where we start to see capitalism colliding with policing, and where the concept of stable investment conditions emerges; more on that as we go along.
For this week, the critical point from these past discussions centers around the mechanism of exchange. For objects to be exchanged as commodities a third element must enter into the equation, the form of abstract value. This form operates as a universal equivalent, or a form that all things can be rendered in. So, clearly there is foreshadowing in play here, and clearly money comes to play that role.
In this week's reading, there are a number of concepts introduced, including the concept of the money commodity, the separation between the money commodity as money and money commodity as commodity, and the concept of social metabolism. Now, I will caution, this week's reading is largely a bridge. It lays out critical concepts to understand the second half of the chapter, which doubles back to discuss the commodity form in an interesting and impactful way (but I won't spoil that here).
Here we go!
-Money, and Marx is using gold here as the standard token, only becomes money to the degree that it fulfills a dual role. The first, most obvious, role is that money functions as this third item in the exchange, or the element that brings the other elements into equivalence with one another. In other words, for exchange value to function all items need to be rendered equivalent, they all need to be able to be abstracted into a quantity of value that can be exchanged for the item. Money is able to play this role to the degree that the exchange is broken apart. Rather than exchanging a thing for a thing, now one exchanges a thing for value and value for a thing (Marx articulates this in the M-C-M, C-M-C formulations in this chapter where M is money and C is commodity).
The second role money plays is that, by serving as the conduit for exchange, it allows the object to even be expressed as a commodity. The construction of the commodity involves the removal of the object from its material conditions, and the valuation of that object through a quantity of exchange value. Money is the form in which that quantity of value manifests, and without that functionality of abstract value the object cannot take on the commodity form.
- The quantity of value carried by the object is not an expression of some qualitative value of the object rendered as a quantity. Rather, due to the materiality of the object being negated in the construction of the object as commodity, the quantity of value is in relation to the abstraction of work as labor-power. This is an extension of the labor theory of value, where labor is said to construct all things, and take materials and render them into objects with use-value. As a result it is labor that gives things value, and it is that value that is abstracted as a quantity, not a value of the object itself, which is negated in the commodity form. One may say, and many economists have, that the labor theory of value cannot address supply and demand, questions of monetary valuation, etc, and we will get to why that reading is wrong in a second.
“Money as a measure of value is the necessary form of appearance of the measure of value which is immanent in commodities, namely labour-time” (188).
Here Marx introduces the concept of price, as opposed to value. Price refers to the value of the commodity rendered as a quantity and expressed in money-form. This creates the opening for Marx to be able to discuss economic dynamics in relation to the cost of items. Obviously, the cost of items fluctuates, which would not be possible if labor determined price. But, if we decouple price from value, and discuss price as the mechanism through which commodities interact with market conditions, then we can say that price and value diverge based on conditions.
This simplifies exchange by eliminating the complexity of the material world, the complexity of trading commodities for commodities, which do not have an equivalent value materially, and in which a structure of valuation must be constructed that is unique to that exchange, what Marx refers to as complex relative value. With the advent of money, the commodity no longer exists in relation to another commodity, all commodities are isolated expressions of value, but only exists in relation to money, which is a simple relative value that can be carried between exchanges.
Though money allows for price, and even though the physicality of money is a commodity, money itself cannot have a price. Namely, money cannot be used to purchase money, it is a tautology. Now, of course there are currency exchanges, and the language used in that industry is based on the concept of buying other currencies, but this is a misnomer. When a commodity is purchased it transforms back into a use-value for the buyer. Money cannot function in this way, it can only be an equivalent of things that have use value. When a currency is exchanged for another currency one is trading abstract value for an equivalent amount of abstract value. Money is extracted through that process in the form of fees, which are valued in relation to labor, and market manipulations, which just allow one to store abstract value in the form of money, and then exchange that at a future time for the equivalent value at that future time. But, nowhere is money bought in a formal sense; it is merely traded or transformed.
“The price or money-form of commodities is, like their form of value generally, quite distinct from their palpable and real bodily form; it is therefore a purely ideal or notional form” (189).
Due to the abstraction of value in the money-form, the valuation of the commodity is not OF the object, it is not a part of the object in its material form, but it defines the object from this exteriority. To the degree that this valuation exists in relation to labor, and labor exists as a production of commodities, then the ability to exchange value also comes to be the condition of possibility for labor as well. In other words, activity produces value, but when the activity itself is premised on the production of objects for exchange, then the predicted futurity of exchange comes to determine the possibility of the action, rather than utility, use or necessity. But, even though labor creates value, and this value is quantified in price, the concept of price is independent from that of value in the sense that price can be impacted by the dynamics of exchange (supply and demand for example), and can fluctuate even if the amount of labor in the object remains the same. Remember, and this is something capitalist economists get wrong all the time, it is the labor theory of VALUE, not the labor theory of price.
- This construction of the commodity around the dynamics of exchange at a future moment (we will return to temporal alienation in the next section) centers the commodity around a dual displacement. The very construct of the commodity is a removal of an object from itself, as well as from its present. To be able to engage with exchange, the commodity must become abstracted, with the dynamics of the production and circulation of that abstract value being determined by some speculation about the future.
“Though a commodity may, alongside its real shape (iron, for instance), possess an ideal value-shape or an imagined gold-shape in the form of its price, it cannot simultaneously be both real iron and real gold. To establish its price it is sufficient for it to be equated with gold in the imagination. But to enable it to render its owner the service of a universal equivalent, it must first be replaced by actual gold” (197).
- Social metabolism is a term Marx uses to discuss the production to consumption process of the commodity, as a series of social relations within a wider social structure of commodity circulation. The commodity is produced for exchange, but following that exchange it morphs back into the object, as a use-value for this purchaser. These inflection points in the metamorphosis of the object all occur in exchanges of commodity for money-commodity, through the abstraction of price. In this process a dual move occurs, the metamorphosis of value in the commodity and the morphing of a commodity into money.
“Commodities first enter into the process of exchange ungilded and unsweetened, retaining the original home-grown shape. Exchange, however, produces a differentiation of the commodity into two elements, commodity and money, an external opposition which expresses the opposition between use-value and value which is inherent in it. In this opposition, the commodities as use-values confront money as exchange-value. On the other hand, both sides of this opposition are commodities, hence themselves unities of use-value and value. But this unity of differences is expressed at two opposite poles, and at each pole in an opposite way. This is the alternating relation between the two poles: the commodity is in reality a use-value; its existence as a value appears only ideally, in its price, through which it is related to the real embodiment of its value, the gold which confronts it as its opposite. Inversely, the material of gold ranks only as the materialization of value, as money. It is therefore in reality exchange-value. Its use-value appears only ideally in a series of expressions of relative value within which it confronts all the other commodities as the totality of real embodiments of its utility. These antagonistic forms of the commodities are the real forms of motion of the process of exchange” (199).
It is in this process where commodities are produced to exchange that the predictability of the totality of future dynamics comes to be at issue, as it implies the exchange of commodity for money, and money for commodity, in the future. The purchasing of the commodity for sale, likewise implies this future; one purchases to sell to another later.
“We see here, on the one hand, how the exchange of commodities breaks through all the individual and local limitations of the direct exchange of products, and develops the metabolic process of human labour. On the other hand, there develops a whole network of social connections of natural origin, entirely beyond the control of human agents” (207).