[OPE-L:5884] Why Marx does not Need a Commodity Theory of Money - Two

Michael Williams (Michael@MWILLIAM.U-NET.COM)
Mon, 22 Dec 1997 16:50:29 +0000

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This is Part Two of a Two-Part message.
IV. Money and Commodity - a Value-Form interpretation
A. Money is not a commodity since it has neither Value nor use-value.
There is in Marx no Value separate from Money. In Part I of volume I
of Capital, entitled `Commodities and money', Value is introduced in
connection with exchange and then circulation of commodities. The role
of production and the integration of labour is introduced only later,
in Part III, and presupposes the prior development of Money. The prime
characterisation of capitalism for Marx concerns the determination of
production by exchange, and the concomitant emergence of Value only in
its circulation through commodity production and exchange:

"[C]ommodity production presupposes commodity circulation, and
commodity circulation presupposes the expression of commodities in
money, the circulation of money; the splitting of a commodity into a
commodity and money is a law of the expression of the product as a
commodity" [Marx, 1893: 358-9].

"all properties which may be cited as the special qualities of money
are properties of the commodity *as exchange value*[+], of the product
*as value*[+]" [Marx, 1973 {written 1857- 8}: 142].

1. Commodity has two necessary moments:
a. It is produced by the incorporation of labour with a view to
selling it for a price that is intended to cover its costs and the
going rate of profit. "From that moment [when `constant repetition of
exchange makes it a normal social act' so that `products of labour
must be *produced with a special view to exchange*' [+]] the
distinction becomes firmly established between the utility of an
object for the purposes of consumption, and its utility for the
purposes of exchange. Its use-value becomes distinguished from its
exchange-value." [Marx, 1887: 86] b. It is the contradictory unity of
Value and use-value. (i) Its Value - expressing its systemic social
evaluation - is systematically related to the Abstract Labour required
to reproduce it. (ii) Its use-value - expressing in an alienated form
its trans-historical private usefulness - is implemented outside the
sphere of circulation.

2. Money, as a putative commodity, fails on both these counts.

"[I]n order to realize the commodity as exchange value ... [i]t must
be exchanged against a third thing which is *not itself a particular
commodity*[+], but is the symbol of the commodity as commodity, of the
commodity's exchange value itself; *which thus represents, say, labour
time as such* [+], say a piece of paper or of leather, which
represents a fractional part of labour time. (Such a symbol
presupposes general recognition; *it can only be a social symbol; it
expresses, indeed, nothing more than a social relation* [+].)" [Marx,
1973 {written 1857-8}: 144]

"[T]he commodity which is required as medium of exchange becomes
transformed into money, into a symbol, only little by little; as soon
as this has happened, it can in turn be *replaced by a symbol of
itself* [+]. It then becomes the conscious sign of exchange value.)"
[Marx, 1973 {written 1857-8}: 144]

Commodities and money have in common the Value-form, not the Commodity
form. Money, as the general equivalent, is crucially

"the value-form independent of [exchanging commodities] own use-value,
or of the individual needs of the exchangers" [Marx, 1887: 92].

1. Money has no Value because
a. its systemic social usefulness is rather to be the quasi-autonomous
existence of Value, bearing the social functions of Money; b. its
systemic social usefulness is not systematically related to the
Abstract Labour required to reproduce the money-object. Rather it has
only an infinite number of exchange values, one against each

Money's social usefulness is thus not related to the Abstract Labour
incorporated in the production and exchange of the money-objects that
bear the functions of Money.

2, Money has no use-value

"[I]n general all special use-forms [sic] of commodities disappear in
money" [Marx, 1893: 48].

"the money-commodity acquires a formal [ie transcendent, MW]
use-value, originating in its specific social function." [Marx, 1887:

Money's private usefulness is not manifest, as is that of a commodity,
by it dropping out of circulation but rather by it being condemned to
circulate endlessly. Money, on the other hand, functions as "a
*perpetuum mobile* of circulation" [Marx, 1887: 130]. "[M]oney ...
exists only in exchange" [Marx, 1973 {written 1857-8}]: 150}.

"[M]oney does not vanish on dropping out of the circuit of the
metamorphosis of a given commodity. It is constantly being
precipitated into new places in the arena of circulation vacated by
other commodities." [Marx, 1887: 114]

3. Money cannot be reproduced by the incorporation of labour in a
capitalist labour process.

a. Money is not (though the money-object typically is) produced under
capitalist relations of production with a view to selling for a price
that covers its costs and the going rate of profit.

b. In the move from Commodity to Money, the necessary particularity of
the former is negated by the necessary generality of the latter.

c. The Commodity is in itself only a symbol of Value.

Thus Money and Commodity, although interconnected as Value, are
categorically different moments of the capitalist system.

V. Some concluding remarks:
A. Assuming gold no longer plays any necessary role, there are two
possibilities: 1. The world capitalist system is in the throes of a,
no matter how cyclically modulated, secular decline, because it has
lost a necessary condition of its reproduction. (e.g. the *Critique*
position? Shared with Milton Friedman ... .) 2. Commodity money is not
in fact a necessary condition of existence of capitalism. This is my
position. Indeed I go further: modern Money is in itself more adequate
to the concept of Money, in being a form of expression of Value
independent of the abstract labour value of the money-object.
Overcoming the Mercantilist fetishisation of commodity money is part
of the process of finally transcending the
Tugan-Baranowsky/Bortkiewicz/Böhm- Bawerk/Sweezy/Steedman
(mis)interpretation of Marx's Value theory, that neglects the central
systemic importance of the form of Value, commodity fetishism and
alienation as indicated by their location, integrated with the
development of Value, in Chapter I, sections 3 and 4, and Chapter III
of [Marx, 1867].

B. Money and the State
Historically, the sovereign has long been involved in determining the
price of bullion in the national currency, the extent of cutting of
gold when coined and the enforcement of legal tender [Marx, 1887:
95n]. "[c]oining, like the establishment of a standard of prices, is
the business of the state." [Marx, 1887: 125]

"The weight of metal in the silver and copper coins is arbitrarily
fixed by law. ... Hence their functions are totally independent of
their weight, ... . The function of gold as coin becomes completely
independent of the metallic value of that gold." [Marx, 1887: 127]

The decommodification of Money is prefigured at an early stage of its
development. During the historical course of debasement of coins, by
the Sovereign, "a distinction between them as mere pieces of metal on
the one hand, and as coins *with a definite function* on the other ...
implies the latent possibility of replacing metallic coins by tokens
of some other material, by symbols *serving the same purposes* as
coins" [Marx, 1887: 126].

And it is
"modern legislation[,] which fixes the loss of weight sufficient to
demonetise a gold coin, or to make it no longer legal tender" [Marx,
1887: 126].

The evolution of bank credit and a fractionally-backed banking system
[Marx, 1894: 401ff] involved the issue of bank token Money, the
emergence of central Banking in Europe (largely to deal with the
hundreds of different kinds, and differentially debased, coins -
mostly silver - then in existence), and the development of central
Bank as state's banker and bankers' Bank. What was to replace gold as
the grounding of Money post-convertibility was, of course, the
exercise of state power. It is clear that it is no longer even a
`stylised fact' that money supply is regulated at all as described by
[Marx, 1887: 134], by the coining of specie to meet excess demand and
the melting of coin in response to excess supply.

"He (Adam Smith) ... treats money quite wrongly as a mere commodity"
[Marx, 1887 : 124n1], quoting himself from [Marx, 1859: 149].

We should not.
Thank you for your patience.
"Books are Weapons"

Dr Michael Williams
Department of Economics Home:
School of Social Sciences 26 Glenwood Avenue
De Montfort University Southampton
Hammerwood Gate SO16 3QA
Kents Hill
Milton Keynes
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