I read this quite some time ago, and so the notes might not be exactly the most well-organised. In any case, it is known to be hardest part of the book and it’s difficult not to see why, but most of it feels like it’s talking about concepts that’ll be used later on into the book. It becomes clearer as it goes on from what I’ve seen. Over to you.
Chapter I: The Commodity
Section I: The Two Factors of Commodity: Use-Value and Value
Marx begins his text by claiming that ‘the wealth of societies in which the capitalist mode of production prevails appears as an immense collection of commodities’ (p. 125). This sort of commodity-centred production is for him the character of capitalism. All useful things can be looked at from quantity and quality, or that it is composed of many properties and can be useful in various ways. The usefulness of a thing is called the use-value, conditioned by the physical properties the thing, this property ‘is independent of the amount of labour required to appropriate its useful qualities’ (p. 126).
In the form of society, however, commodities also carry exchange-value, which is a quantitive relation. This relation is always changing with time and place, and it appears to be accidental then, and not intrinsic. A value exchange occurs when the values of a particular commodity express something equal to another one—exchange-value is the mode of expression that we use for this, which ‘must be reduced to a common element, of which they represent a greater or lesser quantity’ (p. 127). Exchange-value is abstract from use-values, since exchange-value is quantitive and use-value is qualitative. However, there still exists a connection between the exchange-value and the use-value as exchange-value presupposes a commonality in commodities, which is that they are products of human labour, which is how value is defined as (socially necessary labour time). However, to quality for being a commodity someone must desire or need it, which runs again back to use-value.
All concrete forms of labour also are ‘reduced to the same kind of labour, human labour in the abstract’ (p. 128), since all things are made by human labour-power and this labour is accumulated within them. They are what may be called commodity-values. A use-value is only valuable because an abstract human labour is objectified in it. Labour-power is therefore measured by labour-time, and socially necessary labour time is the labour-time that is required to produce any use-value under a certain condition of production. Of course, this labour-time changes based on productivity. In essence, the ‘value of a commodity…varies directly as the quantity and inversely as the productivity of the labour which finds its realisation within the commodity’ (p. 131). A thing can easily have use-value without being a value (i.e air) or a thing can be useful and a product of human labour without being a commodity. In order to be a commodity, it needs to use use-value and use-value for others (social use-values) via exchange.
Section II: The Dual Character of the Labour Embodied in Commodities
Marx asks us to think of a coat, a coat is a use-value that satisfies our need for warmth and there needs to be labour to bring it about. This is useful labour, or ‘labour whose utility is represented by the use-value of its product, or by the fact that its product is a use-value’ (p. 132). There are different forms of useful labour (making a coat is not the same as making linen), and this social division of labour is necessary for commodity production, such as you, you cannot exchange a coat for a coat. Every use-value contains within it useful labour. Labour is, ‘an eternal natural necessity which mediates the metabolism between man and nature, and therefore human life itself’ (p. 133).
Let us then posit that a coat is worth 20 yards of linen, as values, they have the same substance, they are objective expressions of homogenous labour, even though they utilise different form of labour. Marx then defines simple average labour as being the ‘expenditure…of the labour-power possessed in his bodily organism by every by every ordinary man, on the average, without being developed in any special way’ (p. 135). In any society this is given. This is also precisely why for Marx, complex labour is simply simple labour as multiplied.
The coat and linen we mentioned earlier are equal in value when taken in certain proportions if we go with our labour-theory of value. Marx then makes quick comments on the idea of productivity, with productivity, it determines the effectiveness of productive activity. Change in productivity can increase the fruitfulness of labour, and therefore also the use-values that are produced by it, but it cuts down on the total labour-time necessary for the use-values as well. To sum up, I think the most important point to note is that use-values is produced by a definitive useful labour.
Section III: The Value-Form or Exchange-Value
This isn’t the most fun section to read but once you recognise his arguments then it becomes much simpler and more interesting to talk about. That being said, I’m just going to quick skim over what is in reality a hugely detailed and lengthy argument. Marx in essence wants to highlight the emergence of the money-form here.
For Marx, in a simple exchange relation (i.e one coat=20 yards of linen) then the linen in this instance, or the ‘relative form of the value of linen therefore presupposes that some other commodity confronts it in the equivalent form’ (p. 140). The value of 20 yards of linen is expressed in the body of the coat. The equivalent form, on the other hand, is the ‘commodity linen brings to view its own existence as a value through the fact that the coat can be equated with the linen, although it has not assumed a form of value distinct from its own physical form’ (p. 147), the characteristic of the equivalent side of the equation is that it is exchangeable with the relative side of it.
At this point, then, use-value, represented by the linen, becomes the form of its opposite, or value, that is to say, the natural form of the commodity becomes value-form when it enters into a relation with another commodity. But more simply speaking, money (which we will see is called the universal equivalent), is itself a specific use-value, but this becomes its opposite, a value in exchange relations. A great example Marx gives is that if we were to measure a sugar-loaf, and we took a giant lump of iron that was pre-measured, the iron here is merely the physical representation, a body, that represents weight. The only difference is that in the exchange relation the coat represents something social, a ‘supra-natural property’, value. This is why, for Marx, the ‘body of the commodity as equivalent, always figures as the embodiment of abstract human labour as some specific and useful concrete labour’ (p. 150). It’s easier to think of this in terms of money—money is an equivalent, and it represents a certain concrete labour (i.e someone had to make that bill that you are holding), but it becomes a representation of abstract human labour, or human labour, value, as a whole. Private labour then also becomes social labour, as, the production and accumulation of the money-form may be private to you, but it also affects society at large. These are the sorts of contradictions to keep in mind.
Even Aristotle knew that equality was crucial to commensurability, but he wasn’t quite sure what it was that two commodities had in common—human labour—Marx proclaims this was because Greek society was built on inequality, especially with slaves. This is all to represent that the most basic form of capitalist economy, the money-form, contains within it contradictions. There is this internal opposition within use-value and value (i.e relative or equivalent?), which is also external in an exchange-relation, where one commodity counts only as a use-value, and another commodity, only as an exchange-value. Or, the relationship between commodities (use-value) and money (exchange-value).
So far this has all been about a simple form of value (i.e 20 yards of linen=1 coat), but we could easily expand this relation, where ‘every other physical commodity now becomes a mirror of the linen’s value’ (p. 155). The linen’s value can be expressed through a multitude of equivalents, whether it be through a coat, corns, gold, whatever. Therefore each commodity also becomes an equivalent in terms of one relative value of a commodity. But for Marx, this ‘series of representations never comes to an end’ (p. 156), which is a defect of this expanded form of value.
So now we move onto the general form of value, where there must be one commodity that is set apart from the rest and represents the value of all commodities, or what can be called a universal equivalent. Therefore, a ‘single commodity…has the form of direct exchangeability with all other commodities, in other words, it has a direct social form because, and insofar as, no other commodity is in this situation’ (p. 161). This, of course, is the money-form. Eventually, Marx’s development spells out that value cannot exist without use-value.
Section IV: Fetishism of the Commodity
Chapter one sure is taking a long time, eh?
While a ‘commodity appears at first sight an extremely obvious, trivial thing…its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties’ (p. 163). For a use-value, there is nothing mysterious, but when it changes into a commodity, there are certain aspects we must consider. As soon as ‘men start to work for each other in any way then labour also assumes a social form’ (p. 164).
The commodity itself a representation of the social characteristics of the men’s own labour, the objective characteristics of the products of labour itself and the social relation of the producers to the total labour as a social relation. Products then take on a physical nature and at the same time a supra-sensible, or a social nature, which is value. This sort of ‘fetishism’ of the commodity, where we ignore the material conditions in which a commodity is made and care only for the value, is inseparable from the commodity-based economy of capitalism, as, when we exchange things, the products of labour acquire a social objectivity as values, that is different from them as articles of utility. The exchange-relations essentially disguise real social relations, which is fetishism. As he says, ‘value, therefore, does not have its description branded on its forehead; it rather transforms every product of labour into a social hieroglyphic’ (p. 167).
Marx goes onto criticise classical political economists who did not understand this fetishism, and felt that values were something of a universal truth. Value, or the socially necessary labour-time is sort of a law within a capitalist society. The bourgeois economists oftentimes bring up stories like Robinson Crusoe to represent how ‘natural’ the market economy arises, but this is ridiculously as if we recall the story then Robinson actually brought to the island with him materials from England. There are some examples of transparent social relations, like medieval Europe or a self-producing family. The family knows who does what and for whom.
Marx then gives an important comment about an ‘association of free men’ (socialist association, of course) where they Ould work with the means of production that is held in common and as a single social labour force, where the total product would be a social product, and where ‘labour-time…serves as a measure of the part taken by each individual in the common labour’ (p. 172). The social relations once again here become transparent. In a rare instance, Marx gives a quick comment about a socialist future—‘the veil [of fetishism] is not removed from the…process of material production until it becomes production by a freely associated men, and stands under their conscious and planned control’ (p. 173), which also implies that there must be a different value-form from capitalism if we are to rid of fetishism. Anyways, in conclusion, this is why it is ridiculous for any economist to claim value is something natural as ‘since exchange-value is a definite social manner of expressing the labour bestowed on a thing, it can have no…natural content’ (p. 176). Value is only realised in exchange, in a social process.
Chapter II: The Process of Exchange
Rather a short and simple chapter. Marx reminds us that commodities cannot act on their own and so ‘we must, have to recourse to their guardians’ (p. 178). We are responsible for exchange, and in an exchange we see each other as owners of private property. This relation is of course a personified version of an economic one. Marx states that for the owner, the commodity has no use-value and so ‘what chiefly distinguishes a commodity from its owner is the fact that every other commodity counts for it only as the form of appearance as its own value’ (p. 179).
Weirdly, commodities must be realised as values first before they can be realised as use-values. Only an act of exchange can therefore prove if the labour expended in that commodity is useful for owners. For the owner of one commodity, every other commodity becomes an equivalent, so that his commodity is the universal equivalent, but since this occurs with all commodities, then we have no universal equivalent—this is why ‘money necessarily crystallises out of the process of exchange’ (p. 181). This develops the opposition between use-value and value in the commodity, and this conflict is externalised via money.
In every exchange there is a reciprocal isolation, as people treat each other merely as independent owners of private property. The money-form, ‘by becoming the equivalent of various other commodities, directly acquires the form of a universal or social equivalent’ (p. 183). Money-forms therefore also need to be able to be divisive (i.e gold), so it has both a special use-value as a commodity and a formal use-value as social functions. Of course, we may say that ‘every commodity is a symbol [in the same sense of money], since, as value, it is only the material shell of the human labour expended on it’ (p. 185), but 18th century economists are wrong to claim this as money, despite its symbolic function, nonetheless cannot even realise its own value without exchange. All commodities universally express their value in a particular commodity, because it is money, not because all commodities express their value in it does a commodity become money. And therefore, ‘this physical object, gold or silver in its crude state, becomes, immediately on its emergence from the bowels of the earth, the direct incarnation of human labour. Hence the magic of money’ (p. 187), and it gathers a material shape independent of the control of men—almost like Adam Smith’s invisible hand of the market.
Chapter III: Money, or the Circulation of Commodities
Almost finished with the rough first three chapters of this book.
Section I: The Measure of Values
Surprisingly pretty easy to follow. Marx begins by assuming gold to be the money-commodity. The ‘first main function of gold 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 quantitively comparable’ (p. 188). Money is a merely a necessary form of appearance of the measure of value (objectified human labour). The general relative form then we find again (1 ton of iron=1 ounces of gold) and the expanded relative form has now also become a specific relative form of value of the money-commodity. While this money-form is invisible, guardians of commodities hang a ticket on their commodities to express their prices, that is, their signified equality with gold.
But here, ‘in its function as a measure of value, money therefore serves only in an imaginary or ideal capacity’ (p. 190). Hanging a price on a coat does not require actual money, the value is expressed via an imaginary quantity. Interestingly, Marx then goes on to talk about what would happen if there were two separate money-forms, like gold and silver. Then, any alteration in the ratio of gold to silver disturbs the price of commodities, and so it contradicts its function. Each commodity therefore is now a definite magnitude of gold and can be compared with one another with regard to some fixed quantity of gold as a unit of measurement, which becomes the standard of measurement. Like, a pound can be divided into ounces, etc.
At this point then money has two functions as the measure of value of human labour and also converting the values of commodities into prices. Therefore, there must be a certain weight of gold that is fixed as the unit of measurement. In terms of fluctuation, they ‘are subject to the laws of the relative expression of value’ (p. 193), which he talked about in Chapter I. From this we can gather though that just because the value of money rises does not mean the price of commodities needs to fall, or vice versa. From this also Marx claims the money-names of metal weights separated from their weight-names, i.e pound, and, ‘since the standard of money ….is in the end regulated by law’ (p. 194), into ponds, shillings, whatever. We then call price the money-name of the labour that is objectified in a commodity.
However, the price is not necessary the ‘exponent of the magnitude of the commodity’s value’. Point is difficult to understand, but basically it means that there can be a quantitive incongruity between price and the magnitude of value (price), but for Marx, ‘this is not a defect…it makes this form the adequate one for a mode of production whose laws can only assert themselves as blindly operating averages between constant irregularities’ (p. 196). All the prices that differ come into an average price. Another point to note for Marx is that there is another qualitative contradiction, where price ceases to express value, since, things like honour or uncultivated land can become commodities, so it can have a price but no value. In any case, in an exchange, imaginary price, quantity of gold is exchanged instead for real gold. The price-form implies therefore the exchangeability of commodities for money and an ideal measure of value, only because it already has established itself as money-commodity in the process of exchange itself.
Section II: The Means of Circulation
- Metamorphosis of Commodities
The exchange of commodities implies a contradictory and mutually exclusive condition. Commodity confronts money, not as a use-value, but rather as an exchange-value in this opposition, meaning that the commodity itself is a unity of use-value and value. The commodity really is only use-value, and its existence as value is manifest in gold (money), which makes it exchange-value. So, there is now the process of C-M-C (commodity-money-commodity), which takes on two forms.
The first metamorphosis is C-M, and is called sale. This is the leap of value of the body of the commodity into the body of gold. We need to have some more considerations, though, as ‘today, the product satisfies a social need. Tomorrow it may perhaps be expelled partly or completely from its place by a similar product’ (p. 201). There must be a societal need for the product otherwise it will be useless. This relation implies that ‘the price of the commodity…is merely the money-name of the quantity of social labour objectified in it’ (p. 202). When this exchange happens, the commodity is exchanged for a universal shape of its own value, whereas gold turns into a particular form of its own use-value.
The second metaphors is M-C, or a sale. There are certain contradictions in this overall circulation, as the commodity began as a non-use-value to its current owner and ends up as a use-value to the person who buys it, meaning it creates a circulation, a circuit, circulation ‘sweats money from every pore’ (p. 208). But we cannot say that since every purchase is also a sale, that there is some equilibrium between sales and purchases. This is the notion of Say’s Law, that states that there cannot be overproduction in capitalism, but this is not true, as nod boy can sell unless someone purchases, but nobody needs to purchase simply because they have sold. I can hold onto the money I have without spending it.
These two processes necessarily exist with one another, and when their external independence reaches a certain point, it ‘[implies] the possibility of crises, though no more than a possibility’ (p. 209). At least, for now.
(B) The Circulation of Money
The C-M-C form then results in a circuit, and this continuity of the movement depends entirely on money as a means of circulation between the hands of non-use-values into use-values. Money ‘functions as a means of circulation only because in it value possessed by commodities has taken on an independent shape’ (p. 212). Every commodity steps into circulation, changes form, then falls out of circulation, but then is replaced again by fresh commodities. Money constantly haunts this sphere of circulation.
It is important to note the velocity of circulation, measured by how many times the same piece of money turns over within a given period, which can give us the average velocity of the circulation of money. The quantity of money that is in circulation is determined both by the sum of the prices of commodities in circulation at the same time and the velocity of circulation as well. The three factors, of the quantity of circulating medium, the sum of the prices of commodities in circulation and velocity of the circulation all can vary in different directions. The most important rule is that I extracted:
If prices are constant, and a velocity of circulation decreases/number of commodities increases, then the quantity of circulating medium will increase and vice versa.
If prices rise and the number of commodities in circulation decrease proportionally to the increase in prices, or if the velocity of circulation increases in the same rate as the prices rise, the number of commodities remains constant.
If prices fall, and the number of commodities increase proportionally to their fall, or if the velocity of circulation decreases in the same proportion, the quantity of the circulating medium remains constant.
If the number of commodities increase more quickly or the velocity decreases more quickly than the fall of prices, then the quantity of the circulating medium increases.
(C) Coin. The Symbol of Value
Money takes the form of a coin because it functions as a circulating medium and needs to be able to move about quickly. The circulation of money, however, splits the nominal content of the coins from their real content, so their metallic existence does not matter, only their functional existence matters now. And so now, even valueless objects like paper can stand in the place of gold.
Credit-money is a different story, which we can say that comes out of the function of money as the means of payment. Paper money also still represents gold (the gold standard), and the issue of paper money therefore is restricted to the quantity of gold that would actually be in circulation. This paper money is where commodities find ‘imaginary expressions in certain quantities of gold…Only insofar as paper money represents gold…is it a symbol of value’ (p. 225). The symbol of money, any symbol of value, still requires an objective social validity, the enforcement of which is done by the state.
Section III: Money
Money can become immobilised when sales are not followed by a purchase. There is a desire to hold onto the product when circulation begins. Money then becomes petrified and people become hoarders. Every producer wants to secure a ‘social pledge’, eventually so that ‘with the possibility of keeping hold of the commodity as exchange-value, or exchange-value as a commodity, the lust for gold awakens’ (p. 229)
Since all things are convertible to money, it is the universal equivalent and the social incarnation of abstract human labour. However, every sum of money has its limits in quantity and quality, since it is always limited in amount and has a limited efficacy in purpose, you can’t buy much with $10 for example, and so the hoarder goes back to accumulating. Hoarding however does serve purpose where people can create reserves through which money can flow in and out of circulation, so that circulation never overflows the banks.
(B) Means of Payment
While at first, we considered money and commodity to appear at opposite poles in an exchange, with some commodities, like houses,, there is a lease. One can buy the house before they can pay it so that the seller becomes a creditor and the buyer becomes a debtor—meaning the relation C-M-C actually becomes M-C-M’, where money is used to get more money—characteristic of a capitalist state of production. Money acquires its new function as a means of payment. Commodity and money do not appear at two poles in the process of sale now.
At first money was merely a measure of value, but it is also a nominal means of purchase. The value-form of the commodity, money, has ‘now become the self-sufficient purpose of the sale, owing to a social necessity springing from the conditions of the process of circulation itself’ (p. 234). There is, however, a contradiction in considering money as a means of payment, since when payments must be made, money is no longer a circulating medium, but an individual incarnation of social labour or exchange-value, the universal commodity. This contradiction ‘bursts forth…[in] a monetary crisis’ (p. 236). And in such crises, money turns into hard-cash, commodities no longer suffice.
But nonetheless, the function of money as a means of payment begins to spread out, rent and taxes we begin to pay now in money and kind. Hoarding, also, no longer is an independent form of self-enrichment in bourgeois society, but rather it grows in the form of the accumulation of a reserve fund of the means of payment to pay taxes or rent.
(C) World Money
Whereas in domestic markets, there is only one commodity that serves as the measure of value, but on a world market there are two, gold and silver. World money serves as ‘the universal means of payment, the universal means of purchase and the absolute social materialisation of wealth as such’ (p. 242), meaning that world money serves as transferring wealth from one nation to another.