or how could this
imaginary
value have maintained itself?
Marx - Capital-Volume-I
So soon, however, as products once become commodities in the external relations of a community, they also, by reaction, become so in its internal intercourse.
The proportions in which they are exchangeable are at first quite a matter of chance.
What makes them exchangeable is the mutual desire of their owners to alienate them.
Meantime the need for
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foreign objects of utility gradually establishes itself. The constant repetition of exchange makes it a normal social act. In the course of time, therefore, some portion at least of the products of labour must be produced with a special view to exchange. From that moment 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. On the other hand, the quantitative proportion in which the articles are exchangeable, becomes dependent on their production itself. Custom stamps them as values with definite magnitudes.
In the direct barter of products, each commodity is directly a means of exchange to its owner, and to all other persons an equivalent, but that only in so far as it has use-value for them. At this stage, therefore, the articles exchanged do not acquire a value-form independent of their own use- value, or of the individual needs of the exchangers. The necessity for a value-form grows with the increasing number and variety of the commodities exchanged. The problem and the means of solution arise simultaneously. Commodity-owners never equate their own commodities to those of others, and exchange them on a large scale, without different kinds of commodities belonging to different owners being exchangeable for, and equated as values to, one and the same special article. Such last-mentioned article, by becoming the equivalent of various other commodities, acquires at once, though within narrow limits, the character of a general social equivalent. This character comes and goes with the momentary social acts that called it into life. In turns and transiently it attaches itself first to this and then to that commodity. But with the development of exchange it fixes itself firmly and exclusively to particular sorts of commodities, and becomes crystallised by assuming the money-form. The particular kind of commodity to which it sticks is at first a matter of accident. Nevertheless there are two circumstances whose influence is decisive. The money-form attaches itself either to the most important articles of exchange from outside, and these in fact are primitive and natural forms in which the exchange-value of home products finds expression; or else it attaches itself to the object of utility that forms, like cattle, the chief portion of indigenous alienable wealth. Nomad races are the first to develop the money-form, because all their worldly goods consist of moveable objects and are therefore directly alienable; and because their mode of life, by continually bringing them into contact with foreign communities, solicits the exchange of products. Man has often made man himself, under the form of slaves, serve as the primitive material of money, but has never used land for that purpose. Such an idea could only spring up in a bourgeois society already well developed. It dates from the last third of the 17th century, and the first attempt to put it in practice on a national scale was made a century afterwards, during the French bourgeois revolution.
In proportion as exchange bursts its local bonds, and the value of commodities more and more expands into an embodiment of human labour in the abstract, in the same proportion the character of money attaches itself to commodities that are by Nature fitted to perform the social function of a universal equivalent. Those commodities are the precious metals.
The truth of the proposition that, --although gold and silver are not by Nature money, money is by Nature gold and silver,? 6 is shown by the fitness of the physical properties of these metals for the functions of money. 7 Up to this point, however, we are acquainted only with one function of money, namely, to serve as the form of manifestation of the value of commodities, or as the material in which the magnitudes of their values are socially expressed. An adequate form of manifestation of value, a fit embodiment of abstract, undifferentiated, and therefore equal human labour, that material alone can be whose every sample exhibits the same uniform qualities. On the other hand, since the difference between the magnitudes of value is purely quantitative, the money commodity must be susceptible of merely quantitative differences, must therefore be
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divisible at will, and equally capable of being reunited. Gold and silver possess these properties by Nature.
The use-value of the money-commodity becomes two-fold. In addition to its special use-value as a commodity (gold, for instance, serving to stop teeth, to form the raw material of articles of luxury, &c. ), it acquires a formal use-value, originating in its specific social function.
Since all commodities are merely particular equivalents of money, the latter being their universal equivalent, they, with regard to the latter as the universal commodity, play the parts of particular commodities. 8
We have seen that the money-form is but the reflex, thrown upon one single commodity, of the value relations between all the rest. That money is a commodity9 is therefore a new discovery only for those who, when they analyse it, start from its fully developed shape. The act of exchange gives to the commodity converted into money, not its value, but its specific value-form. By confounding these two distinct things some writers have been led to hold that the value of gold and silver is imaginary. 10 The fact that money can, in certain functions, be replaced by mere symbols of itself, gave rise to that other mistaken notion, that it is itself a mere symbol. Nevertheless under this error lurked a presentiment that the money-form of an object is not an inseparable part of that object, but is simply the form under which certain social relations manifest themselves. In this sense every commodity is a symbol, since, in so far as it is value, it is only the material envelope of the human labour spent upon it. 11 But if it be declared that the social characters assumed by objects, or the material forms assumed by the social qualities of labour under the re? gime of a definite mode of production, are mere symbols, it is in the same breath also declared that these characteristics are arbitrary fictions sanctioned by the so-called universal consent of mankind. This suited the mode of explanation in favour during the 18th century. Unable to account for the origin of the puzzling forms assumed by social relations between man and man, people sought to denude them of their strange appearance by ascribing to them a conventional origin.
It has already been remarked above that the equivalent form of a commodity does not imply the determination of the magnitude of its value. Therefore, although we may be aware that gold is money, and consequently directly exchangeable for all other commodities, yet that fact by no means tells how much 10 lbs. , for instance, of gold is worth. Money, like every other commodity, cannot express the magnitude of its value except relatively in other commodities. This value is determined by the labour-time required for its production, and is expressed by the quantity of any other commodity that costs the same amount of labour-time. 12 Such quantitative determination of its relative value takes place at the source of its production by means of barter. When it steps into circulation as money, its value is already given. In the last decades of the 17th century it had already been shown that money is a commodity, but this step marks only the infancy of the analysis. The difficulty lies, not in comprehending that money is a commodity, but in discovering how, why, and by what means a commodity becomes money. 13
We have already seen, from the most elementary expression of value, x commodity A = y commodity B, that the object in which the magnitude of the value of another object is represented, appears to have the equivalent form independently of this relation, as a social property given to it by Nature. We followed up this false appearance to its final establishment, which is complete so soon as the universal equivalent form becomes identified with the bodily form of a particular commodity, and thus crystallised into the money-form. What appears to happen is, not that gold becomes money, in consequence of all other commodities expressing their values in it, but, on the contrary, that all other commodities universally express their values in gold, because it is money. The intermediate steps of the process vanish in the result and leave
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no trace behind. Commodities find their own value already completely represented, without any initiative on their part, in another commodity existing in company with them. These objects, gold and silver, just as they come out of the bowels of the earth, are forthwith the direct incarnation of all human labour. Hence the magic of money. In the form of society now under consideration, the behaviour of men in the social process of production is purely atomic. Hence their relations to each other in production assume a material character independent of their control and conscious individual action. These facts manifest themselves at first by products as a general rule taking the form of commodities. We have seen how the progressive development of a society of commodity-producers stamps one privileged commodity with the character of money. Hence the riddle presented by money is but the riddle presented by commodities; only it now strikes us in its most glaring form.
1 In the 12th century, so renowned for its piety, they included amongst commodities some very delicate things. Thus a French poet of the period enumerates amongst the goods to be found in the market of Landit, not only clothing shoes, leather, agricultural implements, &c. , but also --femmes folles de leur corps. ?
2 Proudhon begins by taking his ideal of Justice, of --justice e? ternelle,? from the juridical relations that correspond to the production of commodities: thereby, it may be noted, he proves, to the consolation of all good citizens, that the production of commodities is a form of production as everlasting as justice. Then he turns round and seeks to reform the actual production of commodities, and the actual legal system corresponding thereto, in accordance with this ideal. What opinion should we have of a chemist, who, instead of studying the actual laws of the molecular changes in the composition and decomposition of matter, and on that foundation solving definite problems, claimed to regulate the composition and decomposition of matter by means of the --eternal ideas,? of --naturalite? ? and --affinite? ? ? Do we really know any more about --usury,? when we say it contradicts --justice e? ternelle,? e? quite? e? ternelle --mutualite? e? ternelle,? and other ve? rite? s e? ternelles than the fathers of the church did when they said it was incompatible with --gra^ce e? ternelle,? --foi e? ternelle,? and --la volonte? e? ternelle de Dieu? ?
3 For two-fold is the use of every object. . . . The one is peculiar to the object as such, the other is not, as a sandal which may be worn, and is also exchangeable. Both are uses of the sandal, for even he who exchanges the sandal for the money or food he is in want of, makes use of the sandal as a sandal. But not in its natural way. For it has not been made for the sake of being exchanged. ? (Aristoteles, --De Rep. ? l. i. c. 9. )
4 From this we may form an estimate of the shrewdness of the petit-bourgeois socialism. which, while perpetuating the production of commodities, aims at abolishing the --antagonism? between money and commodities, and consequently, since money exists only by virtue of this antagonism, at abolishing money itself. We might just as well try to retain Catholicism without the Pope. For more on this point see my work, --Zur Kritik der Pol. Oekon. ,? p. 61, sq.
5 So long as, instead of two distinct use-values being exchanged, a chaotic mass of articles are offered as the equivalent of a single article, which is often the case with savages, even the direct barter of products is in its first infancy.
6 Karl Marx, l. c. , p. 135. --I metalli . . . naturalmente moneta. ? [--The metals . . . are by their nature money. ? ] (Galiani, --Della moneta? in Custodi's Collection: Parte Moderna t. iii. )
7 For further details on this subject see in my work cited above, the chapter on --The precious metals. ?
8 --Il danaro e` la merce universale"(Verri, l. c. , p. 16).
9 --Silver and gold themselves (which we may call by the general name of bullion) are . . . commodities . . . rising and falling in . . . value . . . Bullion, then, may be reckoned to be of higher value where the
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smaller weight will purchase the greater quantity of the product or manufacture of the countrey,? &c. (--A Discourse of the General Notions of Money, Trade, and Exchanges, as They Stand in Relation each to other. ? By a Merchant. Lond. , 1695, p. 7. ) --Silver and gold, coined or uncoined, though they are used for a measure of all other things, are no less a commodity than wine, oil, tobacco, cloth, or stuffs. ? (--A Discourse concerning Trade, and that in particular of the East Indies,? &c. London, 1689, p. 2. ) --The stock and riches of the kingdom cannot properly be confined to money, nor ought gold and silver to be excluded from being merchandise. ? ("The East-India Trade a Most Profitable Trade. ? London, 1677, p. 4. )
10 L'oro e l'argento hanno valore come metalli anteriore all'esser moneta. ? [--Gold and silver have value as metals before they are money? ] (Galiani, l. c. ) Locke says, --The universal consent of mankind gave to silver, on account of its qualities which made it suitable for money, an imaginary value. ? Law, on the other hand. --How could different nations give an imaginary value to any single thing. . .
or how could this imaginary value have maintained itself? ? But the following shows how little he himself understood about the matter: --Silver was exchanged in proportion to the value in use it possessed, consequently in proportion to its real value. By its adoption as money it received an additional value (une valeur additionnelle). ? (Jean Law: --Conside? rations sur le nume? raire et le commerce? in E. Daire's Edit. of --Economistes Financiers du XVIII sie`cle,? p. 470. )
11 --L'Argent en (des denre? es) est le signe. ? [--Money is their (the commodities') symbol? ] (V. de Forbonnais: --Ele? ments du Commerce, Nouv. Edit. Leyde, 1766,? t. II. , p. 143. ) --Comme signe il est attire? par les denre? es. ? [--As a symbol it is attracted by the commodities? ] (l. c. , p. 155. ) --L'argent est un signe d'une chose et la repre? sente. ? [--Money is a symbol of a thing and represents it'] (Montesquieu: --Esprit des Lois,? (Oeuvres, Lond. 1767, t. II, p. 2. ) --L'argent n'est pas simple signe, car il est lui-me^me richesse, il ne repre? sente pas les valeurs, il les e? quivaut. ? [--Money is not a mere symbol, for it is itself wealth; it does not represent the values, it is their equivalents? ] (Le Trosne, l. c. , p. 910. ) --The notion of value contemplates the valuable article as a mere symbol - the article counts not for what it is, but for what it is worth. ? (Hegel, l. c. , p. 100. ) Lawyers started long before economists the idea that money is a mere symbol, and that the value of the precious metals is purely imaginary. This they did in the sycophantic service of the crowned heads, supporting the right of the latter to debase the coinage, during the whole of the middle ages, by the traditions of the Roman Empire and the conceptions of money to be found in the Pandects. --Qu'aucun puisse ni doive faire doute,? [--Let no one call into question,? ] says an apt scholar of theirs Philip of Valois, in a decree of 1346, --que a` nous et a` notre majeste? royale n'appartiennent seulement . . . le mestier, le fait, l'e? tat, la provision et toute l'ordonnance des monnaies, de donner tel cours, et pour tel prix comme il nous plait et bon nous semble. ? [--that the trade, the composition, the supply and the power of issuing ordinances on the currency . . . belongs exclusively to us and to our royal majesty, to fix such a rate and at such price as it shall please us and seem good to us? ] It was a maxim of the Roman Law that the value of money was fixed by decree of the emperor. It was expressly forbidden to treat money as a commodity. --Pecunias vero nulli emere fas erit, nam in usu publico constitutas oportet non esse mercem. ? [--However, it shall not be lawful to anyone to buy money, for, as it was created for public use, it is not permissible for it to be a commodity? ] Some good work on this question has been done by G. F. Pagnini: --Saggio sopra il giusto pregio delle cose, 1751"; Custodi --Parte Moderna,? t. II. In the second part of his work Pagnini directs his polemics especially against the lawyers.
12 --If a man can bring to London an ounce of Silver out of the Earth in Peru, in the same time that he can produce a bushel of Corn, then the one is the natural price of the other; now, if by reason of new or more easier mines a man can procure two ounces of silver as easily as he formerly did one, the corn will be as cheap at ten shillings the bushel as it was before at five shillings, caeteris paribus. ? William Petty. --A Treatise of Taxes and Contributions. ? Lond. , 1667, p. 32.
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13 The learned Professor Roscher, after first informing us that --the false definitions of money may be divided into two main groups: those which make it more, and those which make it less, than a commodity,? gives us a long and very mixed catalogue of works on the nature of money, from which it appears that he has not the remotest idea of the real history of the theory; and then he moralises thus: --For the rest, it is not to be denied that most of the later economists do not bear sufficiently in mind the peculiarities-that distinguish money from other commodities? (it is then, after all, either more or less than a commodity! ). . . --So far, the semi-mercantilist reaction of Ganilh is not altogether without foundation. ? (Wilhelm Roscher: --Die Grundlagen der Nationaloekonomie,? 3rd Edn. 1858, pp. 207- 210. ) More! less! not sufficiently! so far! not altogether! What clearness and precision of ideas and language! And such eclectic professorial twaddle is modestly baptised by Mr. Roscher, --the anatomico-physiological method? of Political Economy! One discovery however, he must have credit for, namely, that money is --a pleasant commodity. ?
? ? Chapter 3: Money, Or the Circulation of Commodities
Section 1: The Measure of Values
Throughout this work, I assume, for the sake of simplicity, gold as the money-commodity.
The first chief function of money is to supply commodities with the material for the expression of their values, or to represent their values as magnitudes of the same denomination, qualitatively equal, and quantitatively comparable. It thus serves as a universal measure of value. And only by virtue of this function does gold, the equivalent commodity par excellence, become money.
It is not money that renders commodities commensurable. Just the contrary. It is because all commodities, as values, are realised human labour, and therefore commensurable, that their values can be measured by one and the same special commodity, and the latter be converted into the common measure of their values, i. e. , into money. Money as a measure of value, is the phenomenal form that must of necessity be assumed by that measure of value which is immanent in commodities, labour-time. 1
The expression of the value of a commodity in gold - x commodity A = y money-commodity - is its money-form or price. A single equation, such as 1 ton of iron = 2 ounces of gold, now suffices to express the value of the iron in a socially valid manner. There is no longer any need for this equation to figure as a link in the chain of equations that express the values of all other commodities, because the equivalent commodity, gold, now has the character of money. The general form of relative value has resumed its original shape of simple or isolated relative value. On the other hand, the expanded expression of relative value, the endless series of equations, has now become the form peculiar to the relative value of the money-commodity. The series itself, too, is now given, and has social recognition in the prices of actual commodities. We have only to read the quotations of a price-list backwards, to find the magnitude of the value of money expressed in all sorts of commodities. But money itself has no price. In order to put it on an equal footing with all other commodities in this respect, we should be obliged to equate it to itself as its own equivalent.
The price or money-form of commodities is, like their form of value generally, a form quite distinct from their palpable bodily form; it is, therefore, a purely ideal or mental form. Although invisible, the value of iron, linen and corn has actual existence in these very articles: it is ideally made perceptible by their equality with gold, a relation that, so to say, exists only in their own heads. Their owner must, therefore, lend them his tongue, or hang a ticket on them, before their prices can be communicated to the outside world. 2 Since the expression of the value of commodities in gold is a merely ideal act, we may use for this purpose imaginary or ideal money. Every trader knows, that he is far from having turned his goods into money, when he has expressed their value in a price or in imaginary money, and that it does not require the least bit of real gold, to estimate in that metal millions of pounds' worth of goods. When, therefore, money serves as a measure of value; it is employed only as imaginary or ideal money. This circumstance has given rise to the wildest theories. 3 But, although the money that performs the functions of a measure of value is only ideal money, price depends entirely upon the actual substance that is money. The value, or in other words, the quantity of human labour contained in a ton of iron, is
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expressed in imagination by such a quantity of the money-commodity as contains the same amount of labour as the iron. According, therefore, as the measure of value is gold, silver, or copper, the value of the ton of iron will be expressed by very different prices, or will be represented by very different quantities of those metals respectively.
If, therefore, two different commodities, such as gold and silver, are simultaneously measures of value, all commodities have two prices - one a gold-price, the other a silver-price. These exist quietly side by side, so long as the ratio of The value of silver to that of gold remains unchanged, say, at 15:1. Every change in their ratio disturbs the ratio which exists between the gold-prices and the silver-prices of commodities, and thus proves, by facts, that a double standard of value is inconsistent with the functions of a standard. 4
Commodities with definite prices present themselves under the form; a commodity A = x gold; b commodity B = z gold; c commodity C = y gold, &c. , where a, b, c, represent definite quantities of the commodities A, B, C and x, z, y, definite quantities of gold. The values of these commodities are, therefore, changed in imagination into so many different quantities of gold. Hence, in spite of the confusing variety of the commodities themselves, their values become magnitudes of the same denomination, gold-magnitudes. They are now capable of being compared with each other and measured, and the want becomes technically felt of comparing them with some fixed quantity of gold as a unit measure. This unit, by subsequent division into aliquot parts, becomes itself the standard or scale. Before they become money, gold, silver, and copper already possess such standard measures in their standards of weight, so that, for example, a pound weight, while serving as the unit, is, on the one hand, divisible into ounces, and, on the other, may be combined to make up hundredweights. 5 It is owing to this that, in all metallic currencies, the names given to the standards of money or of price were originally taken from the pre-existing names of the standards of weight.
As measure of Value, and as standard of price, money has two entirely distinct functions to perform. It is the measure of value inasmuch as it is the socially recognised incarnation of human labour; it is the standard of price inasmuch as it is a fixed weight of metal. As the measure of value it serves to convert the values of all the manifold commodities into prices, into imaginary quantities of gold; as the standard of price it measures those quantities of gold. The measure of values measures commodities considered as values; the standard of price measures, on the contrary, quantities of gold by a unit quantity of gold, not the value of one quantity of gold by the weight of another. In order to make gold a standard of price, a certain weight must be fixed upon as the unit. In this case, as in all cases of measuring quantities of the same denomination, the establishment of an unvarying unit of measure is all-important. Hence, the less the unit is subject to variation, so much the better does the standard of price fulfil its office. But only in so far as it is itself a product of labour, and, therefore, potentially variable in value, can gold serve as a measure of value. 6
It is, in the first place, quite clear that a change in the value of gold does not, in any way, affect its function as a standard of price. No matter how this value varies, the proportions between the values of different quantities of the metal remain constant. However great the fall in its value, 12 ounces of gold still have 12 times the value of 1 ounce; and in prices, the only thing considered is the relation between different quantities of gold. Since, on the other hand, no rise or fall in the value of an ounce of gold can alter its weight, no alteration can take place in the weight of its aliquot parts. Thus gold always renders the same service as an invariable standard of price, however much its value may vary.
In the second place, a change in the value of gold does not interfere with its functions as a measure of value. The change affects all commodities simultaneously, and, therefore, caeteris
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paribus, leaves their relative values inter se, unaltered, although those values are now expressed in higher or lower gold-prices.
Just as when we estimate the value of any commodity by a definite quantity of the use-value of some other commodity, so in estimating the value of the former in gold, we assume nothing more than that the production of a given quantity of gold costs, at the given period, a given amount of labour. As regards the fluctuations of prices generally, they are subject to the laws of elementary relative value investigated in a former chapter.
A general rise in the prices of commodities can result only, either from a rise in their values - the value of money remaining constant - or from a fall in the value of money, the values of commodities remaining constant. On the other hand, a general fall in prices can result only, either from a fall in the values of commodities - the value of money remaining constant - or from a rise in the value of money, the values of commodities remaining constant. It therefore by no means follows, that a rise in the value of money necessarily implies a proportional fall in the prices of commodities; or that a fall in the value of money implies a proportional rise in prices. Such change of price holds good only in the case of commodities whose value remains constant. With those, for example, whose value rises, simultaneously with, and proportionally to, that of money, there is no alteration in price. And if their value rise either slower or faster than that of money, the fall or rise in their prices will be determined by the difference between the change in their value and that of money; and so on.
Let us now go back to the consideration of the price-form.
By degrees there arises a discrepancy between the current moneynames of the various weights of the precious metal figuring as money, and the actual weights which those names originally represented. This discrepancy is the result of historical causes, among which the chief are: - (1) The importation of foreign money into an imperfectly developed community. This happened in Rome in its early days, where gold and silver coins circulated at first as foreign commodities. The names of these foreign coins never coincide with those of the indigenous weights. (2) As wealth increases, the less precious metal is thrust out by the more precious from its place as a measure of value, copper by silver, silver by gold, however much this order of sequence may be in contradiction with poetical chronology. 7The word pound, for instance, was the money-name given to an actual pound weight of silver. When gold replaced silver as a measure of value, the same name was applied according to the ratio between the values of silver and gold, to perhaps 1- 15th of a pound of gold. The word pound, as a money-name, thus becomes differentiated from the same word as a weight-name. 8 (3) The debasing of money carried on for centuries by kings and princes to such an extent that, of the original weights of the coins, nothing in fact remained but the names. 9
These historical causes convert the separation of the money-name from the weight-name into an established habit with the community. Since the standard of money is on the one hand purely conventional, and must on the other hand find general acceptance, it is in the end regulated by law. A given weight of one of the precious metals, an ounce of gold, for instance, becomes officially divided into aliquot parts, with legally bestowed names, such as pound, dollar, &c. These aliquot parts, which thenceforth serve as units of money, are then subdivided into other aliquot parts with legal names, such as shilling, penny, &c. 10 But, both before and after these divisions are made, a definite weight of metal is the standard of metallic money. The sole alteration consists in the subdivision and denomination.
The prices, or quantities of gold, into which the values of commodities are ideally changed, are therefore now expressed in the names of coins, or in the legally valid names of the subdivisions of the gold standard.
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foreign objects of utility gradually establishes itself. The constant repetition of exchange makes it a normal social act. In the course of time, therefore, some portion at least of the products of labour must be produced with a special view to exchange. From that moment 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. On the other hand, the quantitative proportion in which the articles are exchangeable, becomes dependent on their production itself. Custom stamps them as values with definite magnitudes.
In the direct barter of products, each commodity is directly a means of exchange to its owner, and to all other persons an equivalent, but that only in so far as it has use-value for them. At this stage, therefore, the articles exchanged do not acquire a value-form independent of their own use- value, or of the individual needs of the exchangers. The necessity for a value-form grows with the increasing number and variety of the commodities exchanged. The problem and the means of solution arise simultaneously. Commodity-owners never equate their own commodities to those of others, and exchange them on a large scale, without different kinds of commodities belonging to different owners being exchangeable for, and equated as values to, one and the same special article. Such last-mentioned article, by becoming the equivalent of various other commodities, acquires at once, though within narrow limits, the character of a general social equivalent. This character comes and goes with the momentary social acts that called it into life. In turns and transiently it attaches itself first to this and then to that commodity. But with the development of exchange it fixes itself firmly and exclusively to particular sorts of commodities, and becomes crystallised by assuming the money-form. The particular kind of commodity to which it sticks is at first a matter of accident. Nevertheless there are two circumstances whose influence is decisive. The money-form attaches itself either to the most important articles of exchange from outside, and these in fact are primitive and natural forms in which the exchange-value of home products finds expression; or else it attaches itself to the object of utility that forms, like cattle, the chief portion of indigenous alienable wealth. Nomad races are the first to develop the money-form, because all their worldly goods consist of moveable objects and are therefore directly alienable; and because their mode of life, by continually bringing them into contact with foreign communities, solicits the exchange of products. Man has often made man himself, under the form of slaves, serve as the primitive material of money, but has never used land for that purpose. Such an idea could only spring up in a bourgeois society already well developed. It dates from the last third of the 17th century, and the first attempt to put it in practice on a national scale was made a century afterwards, during the French bourgeois revolution.
In proportion as exchange bursts its local bonds, and the value of commodities more and more expands into an embodiment of human labour in the abstract, in the same proportion the character of money attaches itself to commodities that are by Nature fitted to perform the social function of a universal equivalent. Those commodities are the precious metals.
The truth of the proposition that, --although gold and silver are not by Nature money, money is by Nature gold and silver,? 6 is shown by the fitness of the physical properties of these metals for the functions of money. 7 Up to this point, however, we are acquainted only with one function of money, namely, to serve as the form of manifestation of the value of commodities, or as the material in which the magnitudes of their values are socially expressed. An adequate form of manifestation of value, a fit embodiment of abstract, undifferentiated, and therefore equal human labour, that material alone can be whose every sample exhibits the same uniform qualities. On the other hand, since the difference between the magnitudes of value is purely quantitative, the money commodity must be susceptible of merely quantitative differences, must therefore be
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divisible at will, and equally capable of being reunited. Gold and silver possess these properties by Nature.
The use-value of the money-commodity becomes two-fold. In addition to its special use-value as a commodity (gold, for instance, serving to stop teeth, to form the raw material of articles of luxury, &c. ), it acquires a formal use-value, originating in its specific social function.
Since all commodities are merely particular equivalents of money, the latter being their universal equivalent, they, with regard to the latter as the universal commodity, play the parts of particular commodities. 8
We have seen that the money-form is but the reflex, thrown upon one single commodity, of the value relations between all the rest. That money is a commodity9 is therefore a new discovery only for those who, when they analyse it, start from its fully developed shape. The act of exchange gives to the commodity converted into money, not its value, but its specific value-form. By confounding these two distinct things some writers have been led to hold that the value of gold and silver is imaginary. 10 The fact that money can, in certain functions, be replaced by mere symbols of itself, gave rise to that other mistaken notion, that it is itself a mere symbol. Nevertheless under this error lurked a presentiment that the money-form of an object is not an inseparable part of that object, but is simply the form under which certain social relations manifest themselves. In this sense every commodity is a symbol, since, in so far as it is value, it is only the material envelope of the human labour spent upon it. 11 But if it be declared that the social characters assumed by objects, or the material forms assumed by the social qualities of labour under the re? gime of a definite mode of production, are mere symbols, it is in the same breath also declared that these characteristics are arbitrary fictions sanctioned by the so-called universal consent of mankind. This suited the mode of explanation in favour during the 18th century. Unable to account for the origin of the puzzling forms assumed by social relations between man and man, people sought to denude them of their strange appearance by ascribing to them a conventional origin.
It has already been remarked above that the equivalent form of a commodity does not imply the determination of the magnitude of its value. Therefore, although we may be aware that gold is money, and consequently directly exchangeable for all other commodities, yet that fact by no means tells how much 10 lbs. , for instance, of gold is worth. Money, like every other commodity, cannot express the magnitude of its value except relatively in other commodities. This value is determined by the labour-time required for its production, and is expressed by the quantity of any other commodity that costs the same amount of labour-time. 12 Such quantitative determination of its relative value takes place at the source of its production by means of barter. When it steps into circulation as money, its value is already given. In the last decades of the 17th century it had already been shown that money is a commodity, but this step marks only the infancy of the analysis. The difficulty lies, not in comprehending that money is a commodity, but in discovering how, why, and by what means a commodity becomes money. 13
We have already seen, from the most elementary expression of value, x commodity A = y commodity B, that the object in which the magnitude of the value of another object is represented, appears to have the equivalent form independently of this relation, as a social property given to it by Nature. We followed up this false appearance to its final establishment, which is complete so soon as the universal equivalent form becomes identified with the bodily form of a particular commodity, and thus crystallised into the money-form. What appears to happen is, not that gold becomes money, in consequence of all other commodities expressing their values in it, but, on the contrary, that all other commodities universally express their values in gold, because it is money. The intermediate steps of the process vanish in the result and leave
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no trace behind. Commodities find their own value already completely represented, without any initiative on their part, in another commodity existing in company with them. These objects, gold and silver, just as they come out of the bowels of the earth, are forthwith the direct incarnation of all human labour. Hence the magic of money. In the form of society now under consideration, the behaviour of men in the social process of production is purely atomic. Hence their relations to each other in production assume a material character independent of their control and conscious individual action. These facts manifest themselves at first by products as a general rule taking the form of commodities. We have seen how the progressive development of a society of commodity-producers stamps one privileged commodity with the character of money. Hence the riddle presented by money is but the riddle presented by commodities; only it now strikes us in its most glaring form.
1 In the 12th century, so renowned for its piety, they included amongst commodities some very delicate things. Thus a French poet of the period enumerates amongst the goods to be found in the market of Landit, not only clothing shoes, leather, agricultural implements, &c. , but also --femmes folles de leur corps. ?
2 Proudhon begins by taking his ideal of Justice, of --justice e? ternelle,? from the juridical relations that correspond to the production of commodities: thereby, it may be noted, he proves, to the consolation of all good citizens, that the production of commodities is a form of production as everlasting as justice. Then he turns round and seeks to reform the actual production of commodities, and the actual legal system corresponding thereto, in accordance with this ideal. What opinion should we have of a chemist, who, instead of studying the actual laws of the molecular changes in the composition and decomposition of matter, and on that foundation solving definite problems, claimed to regulate the composition and decomposition of matter by means of the --eternal ideas,? of --naturalite? ? and --affinite? ? ? Do we really know any more about --usury,? when we say it contradicts --justice e? ternelle,? e? quite? e? ternelle --mutualite? e? ternelle,? and other ve? rite? s e? ternelles than the fathers of the church did when they said it was incompatible with --gra^ce e? ternelle,? --foi e? ternelle,? and --la volonte? e? ternelle de Dieu? ?
3 For two-fold is the use of every object. . . . The one is peculiar to the object as such, the other is not, as a sandal which may be worn, and is also exchangeable. Both are uses of the sandal, for even he who exchanges the sandal for the money or food he is in want of, makes use of the sandal as a sandal. But not in its natural way. For it has not been made for the sake of being exchanged. ? (Aristoteles, --De Rep. ? l. i. c. 9. )
4 From this we may form an estimate of the shrewdness of the petit-bourgeois socialism. which, while perpetuating the production of commodities, aims at abolishing the --antagonism? between money and commodities, and consequently, since money exists only by virtue of this antagonism, at abolishing money itself. We might just as well try to retain Catholicism without the Pope. For more on this point see my work, --Zur Kritik der Pol. Oekon. ,? p. 61, sq.
5 So long as, instead of two distinct use-values being exchanged, a chaotic mass of articles are offered as the equivalent of a single article, which is often the case with savages, even the direct barter of products is in its first infancy.
6 Karl Marx, l. c. , p. 135. --I metalli . . . naturalmente moneta. ? [--The metals . . . are by their nature money. ? ] (Galiani, --Della moneta? in Custodi's Collection: Parte Moderna t. iii. )
7 For further details on this subject see in my work cited above, the chapter on --The precious metals. ?
8 --Il danaro e` la merce universale"(Verri, l. c. , p. 16).
9 --Silver and gold themselves (which we may call by the general name of bullion) are . . . commodities . . . rising and falling in . . . value . . . Bullion, then, may be reckoned to be of higher value where the
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smaller weight will purchase the greater quantity of the product or manufacture of the countrey,? &c. (--A Discourse of the General Notions of Money, Trade, and Exchanges, as They Stand in Relation each to other. ? By a Merchant. Lond. , 1695, p. 7. ) --Silver and gold, coined or uncoined, though they are used for a measure of all other things, are no less a commodity than wine, oil, tobacco, cloth, or stuffs. ? (--A Discourse concerning Trade, and that in particular of the East Indies,? &c. London, 1689, p. 2. ) --The stock and riches of the kingdom cannot properly be confined to money, nor ought gold and silver to be excluded from being merchandise. ? ("The East-India Trade a Most Profitable Trade. ? London, 1677, p. 4. )
10 L'oro e l'argento hanno valore come metalli anteriore all'esser moneta. ? [--Gold and silver have value as metals before they are money? ] (Galiani, l. c. ) Locke says, --The universal consent of mankind gave to silver, on account of its qualities which made it suitable for money, an imaginary value. ? Law, on the other hand. --How could different nations give an imaginary value to any single thing. . .
or how could this imaginary value have maintained itself? ? But the following shows how little he himself understood about the matter: --Silver was exchanged in proportion to the value in use it possessed, consequently in proportion to its real value. By its adoption as money it received an additional value (une valeur additionnelle). ? (Jean Law: --Conside? rations sur le nume? raire et le commerce? in E. Daire's Edit. of --Economistes Financiers du XVIII sie`cle,? p. 470. )
11 --L'Argent en (des denre? es) est le signe. ? [--Money is their (the commodities') symbol? ] (V. de Forbonnais: --Ele? ments du Commerce, Nouv. Edit. Leyde, 1766,? t. II. , p. 143. ) --Comme signe il est attire? par les denre? es. ? [--As a symbol it is attracted by the commodities? ] (l. c. , p. 155. ) --L'argent est un signe d'une chose et la repre? sente. ? [--Money is a symbol of a thing and represents it'] (Montesquieu: --Esprit des Lois,? (Oeuvres, Lond. 1767, t. II, p. 2. ) --L'argent n'est pas simple signe, car il est lui-me^me richesse, il ne repre? sente pas les valeurs, il les e? quivaut. ? [--Money is not a mere symbol, for it is itself wealth; it does not represent the values, it is their equivalents? ] (Le Trosne, l. c. , p. 910. ) --The notion of value contemplates the valuable article as a mere symbol - the article counts not for what it is, but for what it is worth. ? (Hegel, l. c. , p. 100. ) Lawyers started long before economists the idea that money is a mere symbol, and that the value of the precious metals is purely imaginary. This they did in the sycophantic service of the crowned heads, supporting the right of the latter to debase the coinage, during the whole of the middle ages, by the traditions of the Roman Empire and the conceptions of money to be found in the Pandects. --Qu'aucun puisse ni doive faire doute,? [--Let no one call into question,? ] says an apt scholar of theirs Philip of Valois, in a decree of 1346, --que a` nous et a` notre majeste? royale n'appartiennent seulement . . . le mestier, le fait, l'e? tat, la provision et toute l'ordonnance des monnaies, de donner tel cours, et pour tel prix comme il nous plait et bon nous semble. ? [--that the trade, the composition, the supply and the power of issuing ordinances on the currency . . . belongs exclusively to us and to our royal majesty, to fix such a rate and at such price as it shall please us and seem good to us? ] It was a maxim of the Roman Law that the value of money was fixed by decree of the emperor. It was expressly forbidden to treat money as a commodity. --Pecunias vero nulli emere fas erit, nam in usu publico constitutas oportet non esse mercem. ? [--However, it shall not be lawful to anyone to buy money, for, as it was created for public use, it is not permissible for it to be a commodity? ] Some good work on this question has been done by G. F. Pagnini: --Saggio sopra il giusto pregio delle cose, 1751"; Custodi --Parte Moderna,? t. II. In the second part of his work Pagnini directs his polemics especially against the lawyers.
12 --If a man can bring to London an ounce of Silver out of the Earth in Peru, in the same time that he can produce a bushel of Corn, then the one is the natural price of the other; now, if by reason of new or more easier mines a man can procure two ounces of silver as easily as he formerly did one, the corn will be as cheap at ten shillings the bushel as it was before at five shillings, caeteris paribus. ? William Petty. --A Treatise of Taxes and Contributions. ? Lond. , 1667, p. 32.
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13 The learned Professor Roscher, after first informing us that --the false definitions of money may be divided into two main groups: those which make it more, and those which make it less, than a commodity,? gives us a long and very mixed catalogue of works on the nature of money, from which it appears that he has not the remotest idea of the real history of the theory; and then he moralises thus: --For the rest, it is not to be denied that most of the later economists do not bear sufficiently in mind the peculiarities-that distinguish money from other commodities? (it is then, after all, either more or less than a commodity! ). . . --So far, the semi-mercantilist reaction of Ganilh is not altogether without foundation. ? (Wilhelm Roscher: --Die Grundlagen der Nationaloekonomie,? 3rd Edn. 1858, pp. 207- 210. ) More! less! not sufficiently! so far! not altogether! What clearness and precision of ideas and language! And such eclectic professorial twaddle is modestly baptised by Mr. Roscher, --the anatomico-physiological method? of Political Economy! One discovery however, he must have credit for, namely, that money is --a pleasant commodity. ?
? ? Chapter 3: Money, Or the Circulation of Commodities
Section 1: The Measure of Values
Throughout this work, I assume, for the sake of simplicity, gold as the money-commodity.
The first chief function of money is to supply commodities with the material for the expression of their values, or to represent their values as magnitudes of the same denomination, qualitatively equal, and quantitatively comparable. It thus serves as a universal measure of value. And only by virtue of this function does gold, the equivalent commodity par excellence, become money.
It is not money that renders commodities commensurable. Just the contrary. It is because all commodities, as values, are realised human labour, and therefore commensurable, that their values can be measured by one and the same special commodity, and the latter be converted into the common measure of their values, i. e. , into money. Money as a measure of value, is the phenomenal form that must of necessity be assumed by that measure of value which is immanent in commodities, labour-time. 1
The expression of the value of a commodity in gold - x commodity A = y money-commodity - is its money-form or price. A single equation, such as 1 ton of iron = 2 ounces of gold, now suffices to express the value of the iron in a socially valid manner. There is no longer any need for this equation to figure as a link in the chain of equations that express the values of all other commodities, because the equivalent commodity, gold, now has the character of money. The general form of relative value has resumed its original shape of simple or isolated relative value. On the other hand, the expanded expression of relative value, the endless series of equations, has now become the form peculiar to the relative value of the money-commodity. The series itself, too, is now given, and has social recognition in the prices of actual commodities. We have only to read the quotations of a price-list backwards, to find the magnitude of the value of money expressed in all sorts of commodities. But money itself has no price. In order to put it on an equal footing with all other commodities in this respect, we should be obliged to equate it to itself as its own equivalent.
The price or money-form of commodities is, like their form of value generally, a form quite distinct from their palpable bodily form; it is, therefore, a purely ideal or mental form. Although invisible, the value of iron, linen and corn has actual existence in these very articles: it is ideally made perceptible by their equality with gold, a relation that, so to say, exists only in their own heads. Their owner must, therefore, lend them his tongue, or hang a ticket on them, before their prices can be communicated to the outside world. 2 Since the expression of the value of commodities in gold is a merely ideal act, we may use for this purpose imaginary or ideal money. Every trader knows, that he is far from having turned his goods into money, when he has expressed their value in a price or in imaginary money, and that it does not require the least bit of real gold, to estimate in that metal millions of pounds' worth of goods. When, therefore, money serves as a measure of value; it is employed only as imaginary or ideal money. This circumstance has given rise to the wildest theories. 3 But, although the money that performs the functions of a measure of value is only ideal money, price depends entirely upon the actual substance that is money. The value, or in other words, the quantity of human labour contained in a ton of iron, is
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expressed in imagination by such a quantity of the money-commodity as contains the same amount of labour as the iron. According, therefore, as the measure of value is gold, silver, or copper, the value of the ton of iron will be expressed by very different prices, or will be represented by very different quantities of those metals respectively.
If, therefore, two different commodities, such as gold and silver, are simultaneously measures of value, all commodities have two prices - one a gold-price, the other a silver-price. These exist quietly side by side, so long as the ratio of The value of silver to that of gold remains unchanged, say, at 15:1. Every change in their ratio disturbs the ratio which exists between the gold-prices and the silver-prices of commodities, and thus proves, by facts, that a double standard of value is inconsistent with the functions of a standard. 4
Commodities with definite prices present themselves under the form; a commodity A = x gold; b commodity B = z gold; c commodity C = y gold, &c. , where a, b, c, represent definite quantities of the commodities A, B, C and x, z, y, definite quantities of gold. The values of these commodities are, therefore, changed in imagination into so many different quantities of gold. Hence, in spite of the confusing variety of the commodities themselves, their values become magnitudes of the same denomination, gold-magnitudes. They are now capable of being compared with each other and measured, and the want becomes technically felt of comparing them with some fixed quantity of gold as a unit measure. This unit, by subsequent division into aliquot parts, becomes itself the standard or scale. Before they become money, gold, silver, and copper already possess such standard measures in their standards of weight, so that, for example, a pound weight, while serving as the unit, is, on the one hand, divisible into ounces, and, on the other, may be combined to make up hundredweights. 5 It is owing to this that, in all metallic currencies, the names given to the standards of money or of price were originally taken from the pre-existing names of the standards of weight.
As measure of Value, and as standard of price, money has two entirely distinct functions to perform. It is the measure of value inasmuch as it is the socially recognised incarnation of human labour; it is the standard of price inasmuch as it is a fixed weight of metal. As the measure of value it serves to convert the values of all the manifold commodities into prices, into imaginary quantities of gold; as the standard of price it measures those quantities of gold. The measure of values measures commodities considered as values; the standard of price measures, on the contrary, quantities of gold by a unit quantity of gold, not the value of one quantity of gold by the weight of another. In order to make gold a standard of price, a certain weight must be fixed upon as the unit. In this case, as in all cases of measuring quantities of the same denomination, the establishment of an unvarying unit of measure is all-important. Hence, the less the unit is subject to variation, so much the better does the standard of price fulfil its office. But only in so far as it is itself a product of labour, and, therefore, potentially variable in value, can gold serve as a measure of value. 6
It is, in the first place, quite clear that a change in the value of gold does not, in any way, affect its function as a standard of price. No matter how this value varies, the proportions between the values of different quantities of the metal remain constant. However great the fall in its value, 12 ounces of gold still have 12 times the value of 1 ounce; and in prices, the only thing considered is the relation between different quantities of gold. Since, on the other hand, no rise or fall in the value of an ounce of gold can alter its weight, no alteration can take place in the weight of its aliquot parts. Thus gold always renders the same service as an invariable standard of price, however much its value may vary.
In the second place, a change in the value of gold does not interfere with its functions as a measure of value. The change affects all commodities simultaneously, and, therefore, caeteris
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paribus, leaves their relative values inter se, unaltered, although those values are now expressed in higher or lower gold-prices.
Just as when we estimate the value of any commodity by a definite quantity of the use-value of some other commodity, so in estimating the value of the former in gold, we assume nothing more than that the production of a given quantity of gold costs, at the given period, a given amount of labour. As regards the fluctuations of prices generally, they are subject to the laws of elementary relative value investigated in a former chapter.
A general rise in the prices of commodities can result only, either from a rise in their values - the value of money remaining constant - or from a fall in the value of money, the values of commodities remaining constant. On the other hand, a general fall in prices can result only, either from a fall in the values of commodities - the value of money remaining constant - or from a rise in the value of money, the values of commodities remaining constant. It therefore by no means follows, that a rise in the value of money necessarily implies a proportional fall in the prices of commodities; or that a fall in the value of money implies a proportional rise in prices. Such change of price holds good only in the case of commodities whose value remains constant. With those, for example, whose value rises, simultaneously with, and proportionally to, that of money, there is no alteration in price. And if their value rise either slower or faster than that of money, the fall or rise in their prices will be determined by the difference between the change in their value and that of money; and so on.
Let us now go back to the consideration of the price-form.
By degrees there arises a discrepancy between the current moneynames of the various weights of the precious metal figuring as money, and the actual weights which those names originally represented. This discrepancy is the result of historical causes, among which the chief are: - (1) The importation of foreign money into an imperfectly developed community. This happened in Rome in its early days, where gold and silver coins circulated at first as foreign commodities. The names of these foreign coins never coincide with those of the indigenous weights. (2) As wealth increases, the less precious metal is thrust out by the more precious from its place as a measure of value, copper by silver, silver by gold, however much this order of sequence may be in contradiction with poetical chronology. 7The word pound, for instance, was the money-name given to an actual pound weight of silver. When gold replaced silver as a measure of value, the same name was applied according to the ratio between the values of silver and gold, to perhaps 1- 15th of a pound of gold. The word pound, as a money-name, thus becomes differentiated from the same word as a weight-name. 8 (3) The debasing of money carried on for centuries by kings and princes to such an extent that, of the original weights of the coins, nothing in fact remained but the names. 9
These historical causes convert the separation of the money-name from the weight-name into an established habit with the community. Since the standard of money is on the one hand purely conventional, and must on the other hand find general acceptance, it is in the end regulated by law. A given weight of one of the precious metals, an ounce of gold, for instance, becomes officially divided into aliquot parts, with legally bestowed names, such as pound, dollar, &c. These aliquot parts, which thenceforth serve as units of money, are then subdivided into other aliquot parts with legal names, such as shilling, penny, &c. 10 But, both before and after these divisions are made, a definite weight of metal is the standard of metallic money. The sole alteration consists in the subdivision and denomination.
The prices, or quantities of gold, into which the values of commodities are ideally changed, are therefore now expressed in the names of coins, or in the legally valid names of the subdivisions of the gold standard.
