From: glevy@PRATT.EDU
Date: Tue Nov 07 2006 - 07:33:42 EST
English translation of a 2002 essay by OPE-L member Michael H, published
on mrzine (url at end of piece). / In solidarity, Jerry
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Michael Heinrich, "A Thing with Transcendental Qualities: Money as a
Social Relationship in Capitalism"
A THING WITH TRANSCENDENTAL QUALITIES:
MONEY AS A SOCIAL RELATIONSHIP IN CAPITALISM
by Michael Heinrich
*An Introduction to Marx' Notion of Money*
What is money? This question hardly plays a role in everyday commerce.
What matters is that there is enough. Bourgeois economic theories reduce
money to its economic function. But the ubiquity of money is fateful and
presupposes certain conditions. Hence, the critique of financial markets
is incomplete when it suppresses certain fundamental social relationships
which are reified in money.
"Money makes the world go round." This statement is confirmed at all
levels of everyday life in capitalist society: whether the matter at hand
is the purchase of breakfast rolls, business investments, or pension
funds, the relevant question is always whether there is enough money, and
if not, where to get more. What's surprising, however, is that money
hardly plays any role in neoclassical economic theory, which enjoys
uninhibited dominance in universities and among economic advisers of
governments. For the neoclassical school that provides the theoretical
foundation for neo-liberal economic policies, money is merely a means of
circulation, a practical aid which simplifies exchange and is used as a
unit of measurement. But the neoclassical school denies money any
intrinsic economic relevance: only "real" quantities, the amount of goods
which are produced and exchanged, invested or consumed, are decisive from
the neoclassical perspective. The monetary sphere is viewed by the
neoclassical school as a veil which hangs over the "real" sphere of
physical products. This veil can inflict short-term damage as a result of
poor administration (such as when central banks issue too much currency,
thus fuelling inflation), but in the long term, the "real" underlying
relationships assert themselves. And when markets are allowed to operate
without hindrance -- so goes the lesson of the dominant neoclassical
school -- a societal "optimum" (maximum output at the lowest price) should
take effect.
For Keynesianism, consigned these days to a minor role in academic
Economics, money is of far greater importance than it is for the
neoclassical school. Money is not reduced to its function as a means of
circulation, rather, its capacity to function as a means of preserving
value is pushed to the fore and connected to the fundamental insecurity of
conditions in a market economy: money functions as a means of insurance
against a principally insecure future. If insecurity is on the rise,
according to the Keynesian argument, more money is held "liquid," that is,
households and businesses spend less or engage less in long-term
investment, in order not to lose their access to money in the short term.
This leads to increasing interest rates and a decrease in investment,
which in turn leads to declining income and increased unemployment.
Keynesianism does not recognize an automatic process capable of remedying
such a crisis, hence the necessity for state intervention.
The Keynesian consideration of money is more differentiated than that of
the neoclassical school; common to both, however, is a tendency to largely
reduce money to a single essential function. For both theories, money is
above all an aid, an unimportant one according to the neoclassical theory,
an important one in the case of Keynesianism. The question as to what
money actually is, and how it's connected to the specific mode of
socialisation inherent to a commodity producing society, isn't even posed.
*Money -- Merely an Overrated Instrument?*
This question, however, was central to Marx' examination of money.
Various currents in the English and French workers movements of the 19th
century intended to reform capitalism by changing the monetary system:
that is, private commodity production would be retained, but money would
be replaced by slips denoting hours worked or certificates of entitlement
to goods (similar to a theater ticket). In contrast to these reform
efforts, Marx attempted to show that the bourgeois mode of production
itself necessitated a particular means of exchange, money, which by its
very nature is not as innocuous as a theater ticket.
Individual private commodity producers are connected with one another
through the societal division of labor, but their products acquire social
character only in retrospect, namely, when they realize their value on the
market. In a society based upon exchange, the social character of goods
produced does not consist solely of their ability to satisfy the needs of
others; products must stand in a quantitative exchange-relationship to one
another, they must possess a Value in addition to their use-value. In
bourgeois society, wealth becomes an abstract quantity: it no longer
consists of a multiplicity of use-values and amenities, but rather of
abstract "Value." But Value cannot be grasped by considering a single
commodity, because it exists solely in its relationship to other
commodities. However, Value finds only a limited, coincidental expression
in an exchange relationship with another commodity. The value of a
commodity can only obtain a universally valid social expression when it
can relate to an independent embodiment of Value -- that is, when it can
refer to a thing that stands in relation to all other commodities not
simply as another commodity, but as a direct form of existence of Value.1
Only in such a relationship can a single commodity actually assert its
character as Value independent of its concrete character as a use value.
Abstract wealth necessitates a particular material form of existence --
and money is exactly that.
In a society based upon the exchange of commodities, money is not merely a
more or less important tool; it is a necessary means of economic
socialization. Individual commodity producers do not constitute their
social relationship to one another as people. Only their products stand
in relationship to each other, as Values. Precisely because isolated
individuals disappear behind their products, social cohesion must -- in a
very literal sense -- become reified (German: verdinglicht, thing-ified),
tied down by a thing, money. Money is not simply -- as the neoclassical
school maintains -- a simplification of the process of exchange, which
could in principle be dispensed with. Rather, money is the means by which
isolated individual commodity producers are first able to stand in
relationship to one another.
As money, a thing acquires social properties and social power. Marx
describes this "transcendental" quality of a thing as fetishism.2 Such
fetishism is not merely a delusion, or a sort of "false consciousness."
In bourgeois society, money actually does possess the greatest power.
However, it only possesses such power due to a specific social
relationship which underlies it: atomized commodity owners who can
constitute their social relationship to one another only by means of a
thing, money. Money only has power because all social actors relate to
money as money, that is, as an independent embodiment of Value. But
insofar as individuals act as commodity owners exchanging products, they
have no other choice but to stand in such a relationship to money. Having
said that, fetishism does contain a delusional aspect in that money seems
to possess an inherent social power. The fact that this power is the
result of an automatically executed social process evades the grasp of
everyday cognition. The process vanishes in its own result.
Commodity production is thus impossible without the correlation between
commodities and money. For that reason, there is a principal limit set
for all utopian projects; if one wishes to abolish money, the set of
societal relationships which necessitate the role of money must also be
abolished. One can't have the one without the other.
*From Money to Capital*
If the totality of the social process of reproduction is mediated by
commodity and money, that is, if commodity production is not merely
consigned to a niche existence within the framework of a different mode of
production (as was the case in the early feudal period in Western Europe),
then money acquires a new quality as capital. The autonomous
incorporation of Value, by means of which the economic socialization of
commodity production is consummated, itself becomes the main purpose of
economic activity. Precisely because money is the incarnation of abstract
wealth, which is not subject to any immanent limits, one can never have
"enough" money at one's disposal. Trade and production should not only
generate money, they should also generate continuously increasing sums of
money. The generalization of commodity production is only possible when
production itself is transformed into capitalist production, when the
multiplication and augmentation of abstract wealth becomes the direct goal
of production and all other social relationships are subsumed to this
goal. The "destructive power of money" which was the object of much
criticism in many pre-capitalist modes of production (by many authors in
ancient Greece, for example) is rooted precisely in this process of the
capitalization of society as a result of the generalization of the money
relationship. Market socialist conceptions that aim to abolish capitalist
production while still retaining the market, commodity production, and
money (because of their "efficiency" in the areas of production and
innovation) run up against the fundamental problem of how to prevent a
re-capitalization of society without inhibiting the "efficiency" of the
market.
*Capitalist Production and Financial Markets*
Because social cohesion in a society of commodity exchange is first
established through money, money also has the power to disrupt this
cohesion: the "possibility of crisis" -- which Marx already makes note of
in the third chapter of Capital -- is a given with money. Not only does
money mediate exchange within the commodity-money-commodity chain (one
sells one's own commodity in order to subsequently purchase other
commodities), it can also interrupt this mediation: sale without
accompanying purchase (that is, the money taken in upon sale is not used
for further purchases) leads to a rupture in the chain of reproduction.
Once this happens, produced goods can no longer be sold; production is
limited or partially stagnant. The consequence of this is unused capital
on the one hand, and unemployed forces of labor on the other. But a
series of further circumstances are necessary in order for the mere
possibility of crisis to go so far as to become an actual crisis.
In traditional Marxism, these circumstances are located primarily in the
conditions of capitalist production, such as in the "law of the tendency
of the rate of profit to fall." In contrast, money and credit play a
secondary role as mere "phenomena of circulation." As a result of a
one-sided approach focused on production, one loses sight of the fact
that, just as commodity production without money is impossible, capitalist
production cannot exist without credit (as well as advanced forms of the
same, such as credit-money, capital stock, etc). Precisely the flexible
character of capitalist production rests upon the fact that accumulation
does not encounter its limits with the realized profit of the previous
period of production, but rather can be expanded far beyond it by means of
credit, which implies the danger of crisis and overproduction. However,
credit is dealt out (or shares applied for, as the case may be) only in
those sectors where a high level of future profit can be expected. In
that respect, a strong speculative element is inherent to the entire
financial system. This speculative element is further strengthened
through specific financial instruments such as options (entitlements to
the purchase of specific shares at a previously determined price).
However, a speculative element is inherent in every specific instance of
capitalist production: an entrepreneur can never be completely certain
whether his products can be sold and at what price, or whether investments
that he makes will bring the expected level of profit in the future. So
credit and speculation are in no way external instances which are brought
to bear upon an otherwise non-speculative capitalist production. Without
a financial sector and speculation, capitalist production is impossible.
It is not only the case that this correlation should be more strongly
taken into consideration within the field of crisis theory than was done
within traditional Marxism. It is also a matter of importance for the
contemporary critique of globalization. It is commonly the case that
criticism is directed against an "unleashed" capitalism whose destructive
powers appear to be driven by a speculative financial system. That the
financial system sets standards of profitability and cost-effectiveness
which individual enterprises must comply with, should they wish to obtain
credit or issue stocks, is in no way a recent phenomenon. The financial
system has always had such a "control function." What is new is that in
the last few decades, a largely internationalized financial system has
emerged, which increasingly dictates international standards of capital
valorization. If the increase in speculation is seen as the main cause of
the ills of capitalism, which is therefore in need of regulation, the
necessary interrelationship between the financial system and capitalist
production is torn apart and -- at least tendentially -- a "good,"
productive capitalism is contrasted with a "bad," speculative financial
capitalism. In no way is the amount of regulation necessary in order to
"effectively" regulate capital flows predetermined, so in that sense the
demands of globalization critics for more regulation are not automatically
unrealistic or impossible to implement. However, one is entitled to doubt
whether such regulation would lead to the disappearance of capitalism's
more unpleasant aspects. Even in a highly-regulated capitalism, the
satisfaction of needs and wants, the elimination of social inequality, or
even a good life are not the aim of economic activity, but rather
valorization, the accumulation of abstract wealth -- an end for which
humans and nature are only means, and accordingly handled as such.
1 This is shown in the section "The value form, or exchange value" of
chapter one of Capital.
2 In Capital Marx wrote, that a product is a "sensuous thing," but as a
commodity a product becomes a "sensuous transcendental thing" ("sinnlich
uebersinnliches Ding"). The English translation of Capital here is not
quite correct: "a thing which transcends sensuousness" (Capital, vol. 1,
Penguin, p.163).
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Michael Heinrich is a political scientist and mathematician baGerman in
iz3w, no. 258, January/February 2002, <http://www.iz3w.org>. Translation
by Angelus Novus, who blogs at <http://negativepotential.blogsport.de/>.
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sed in Berlin. He is a member of the editorial board of Prokla, a journal
of critical social science, and author of the book, Die Wissenschaft vom
Wert: Die Marxsche Kritik der politischen Ökonomie zwischen
wissenschaftlicher Revolution und klassischer Tradition, now in its fourth
printing, and the introductory text, Kritik der politischen Ökonomie. Eine
Einführung, also in its fourth printing. Visit Heinrich's Web site:
<http://Oekonomiekritik.de> This essay was first published in URL:
<http://mrzine.monthlyreview.org/heinrich031106.html>
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