II. Chapter on Money

Notebook I (October 1857)[edit source]

Alfred Darimon, De la réforme des banques, Paris, 1856.^[1]

‘The root of the evil is the predominance which opinion obstinately assigns to the role of the precious metals in circulation and exchange.’ (pp. 1, 2.)^[2]

Begins with the measures which the Banque de France adopted in October 1855 to ‘stem the progressive diminution of its reserves.’ (p. 2.) Wants to give us a statistical tableau of the condition of this bank during the six months preceding its October measures. To this end, compares its bullion assets during these three months and the ‘fluctuations du portefeuille’, i.e. the quantity of discounts extended by the bank (commercial papers, bills of exchange in its portfolio). The figure which expresses the value of the securities held by the bank, ‘represents’, according to Darimon, ‘the greater or lesser need felt by the public for its services, or, which amounts to the same thing, the requirements of circulation’. (p. 2.) Amounts to the same thing? Not at all. If the mass of bills presented for discount were identical with the ‘requirements of circulation’, of monetary turnover in the proper sense, then the turnover of banknotes would have to be determined by the quantity of discounted bills of exchange. But this movement is on the average not only not parallel, but often an inverse one. The quantity of discounted bills and the fluctuations in this quantity express the requirements of credit, whereas the quantity of money in circulation is determined by quite different influences. In order to reach any conclusions about circulation at all, Darimon would above all have had to present a column showing the amount of notes in circulation next to the column on bullion assets and the column on discounted bills. In order to discuss the requirements of circulation, it did not require a very great mental leap to look first of all at the fluctuations in circulation proper. The omission of this necessary link in the equation immediately betrays the bungling of the dilettante, and the intentional muddling together of the requirements of credit with those of monetary circulation – a confusion on which rests in fact the whole secret of Proudhonist wisdom. (A mortality chart listing illnesses on one side and deaths on the other, but forgetting births.) The two columns (see p. 3) given by Darimon, i.e. the bank’s metallic assets from April to September on the one side, the movement of its portfolio on the other, express nothing but the tautological fact, which requires no display of statistical illustration, that the bank’s portfolio filled up with bills of exchange and its vaults emptied of metal in proportion as bills of exchange were presented to it for the purpose of withdrawing metal. And the table which Darimon offers to prove this tautology does not even demonstrate it in a pure form. It shows, rather, that the metallic assets of the bank declined by about 144 million between 12 April and 13 September 1855, while its portfolio holdings increased by about 101 million. The decline in bullion thus exceeded the rise in discounted commercial papers by 43 million. The identity of both movements is wrecked against this net imbalance at the end of six months. A more detailed comparison of the figures shows us additional incongruities.

Metal in bank	Paper discounted by bank
12 April – 432,614,799 fr.	12 April – 322,904,313
10 May – 420,914,028	10 May – 310,744,925

In other words: between 12 April and 10 May, the metal assets decline by 11,700,769, while the amount of securities increases by 12,159,388; i.e. the increase of securities exceeds the decline of metal by about half a million (458,619 fr.).^[3] The opposite finding, but on a far more surprising scale, appears when we compare the months of May and June:

Metal in bank	Paper discounted by bank
10 May – 420,914,028	10 May – 310,744,925
14 June – 407,769,813	14 June – 310,369,439

That is, between 10 May and 14 June the metal assets of the bank declined by 13,144,225 fr. Did its securities increase to the same degree? On the contrary, they fell during the same period by 375,486 fr. Here, in other words, we no longer have a merely quantitative disproportion between the decline on one side and the rise on the other. Even the inverse relation of both movements has disappeared. An enormous decline on one side is accompanied by a relatively weak decline on the other.

Metal in bank	Paper discounted by bank
14 June – 407,769,813	14 June – 310,369,439
12 July – 314,629,614	12 July – 381,699,256

Comparison of the months June and July shows a decline of metal assets by 93,140,199 and an increase of securities by 71,329,817; i.e. the decline in metal assets is 21,810,382 greater than the increase of the portfolio.

Metal in bank	Paper discounted by bank
12 July – 314,629,614	12 July – 381,699,256
9 August – 338,784,444	9 August – 458,689,605

Here we see an increase on both sides; metal assets by 24,154,830, and on the portfolio side the much more significant 76,990,349.

Metal in bank	[Paper discounted by bank]
9 August – 338,784,444	9 August – 458,689,605
13 Sept. – 288,645,333	[13 Sept.] – 431,390,562

The decline in metal assets of 50,139,111 fr. is here accompanied by a decline in securities of 27,299,043 fr. (Despite the restrictive measures adopted by the Banque de France, its reserves again declined by 24 million in December 1855.)

What’s sauce for the gander is sauce for the goose. The conclusions that emerge from a sequential comparison of the six-month period have the same claim to validity as those which emerge from Mr Darimon’s comparison of the beginning of the series with its end. And what does the comparison show? Conclusions which reciprocally devour each other. Twice, the portfolio increases more rapidly than the metal assets decrease (April-May, June-July). Twice the metal assets and the portfolio both decline, but the former more rapidly than the latter (May – June, August-September). Finally, during one period both metal assets and the portfolio increase, but the latter more rapidly than the former. Decrease on one side, increase on the other; decrease on both sides; increase on both sides; in short, everything except a lawful regularity, above all no inverse correlation, not even an interaction, since a decline in portfolio cannot be the cause of a decline in metal assets, and an increase in portfolio cannot be the cause of an increase in metal assets. An inverse relation and an interaction are not even demonstrated by the isolated comparison which Darimon sets up between the first and last months. Since the increase in portfolio by 101 million does not cover the decrease in metal assets, 144 million, then the possibility remains open that there is no causal link whatever between the increase on one side and the decrease on the other. Instead of providing a solution, the statistical illustration threw up a quantity of intersecting questions; instead of one puzzle, a bushelful. These puzzles, it is true, would disappear the moment Mr Darimon presented columns on circulation of banknotes and on deposits next to his columns on metal assets and portfolio (discounted paper). An increase in portfolio more rapid than a decrease in metal would then be explained by a simultaneous increase in metallic deposits or by the fact that a portion of the banknotes issued in exchange for discounted paper was not converted into metal but remained instead in circulation, or, finally, that the issued banknotes immediately returned in the form of deposits or in repayment of due bills, without entering into circulation. A decrease in metal assets accompanied by a lesser decrease in portfolio could be explained by the withdrawal of deposits from the bank or the presentation of banknotes for conversion into metal, thus adversely affecting the bank’s discounts through the agency of the owners of the withdrawn deposits or of the metallized notes. Finally, a lesser decline in metal assets accompanied by a lesser decline in portfolio could be explained on the same grounds (we entirely leave out of consideration the possibility of an outflow of metal to replace silver currency inside the country, since Darimon does not bring it into the field of his observations). But a table whose columns would have explained one another reciprocally in this manner would have proved what was not supposed to be proved, namely that the fulfillment by the bank of increasing commercial needs does not necessarily entail an increase in the turnover of its notes, that the increase or decrease of this turnover does not correspond to the increase or decrease of its metallic assets, that the bank does not control the quantity of the means of circulation, etc. – a lot of conclusions which did not fit in with Mr Darimon’s intent. In his hasty effort to present in the most lurid colours his preconceived opinion that the metal basis of the bank, represented by its metallic assets, stands in contradiction to the requirements of circulation, which, in his view, are represented by the bank’s portfolio, he tears two columns of figures out of their necessary context with the result that this isolation deprives the figures of all meaning or, at the most, leads them to testify against him. We have dwelt on this fact in some detail in order to make clear with one example what the entire worth of the statistical and positive illustrations of the Proudhonists amounts to. Economic facts do not furnish them with the test of their theories; rather, they furnish the proof of their lack of mastery of the facts, in order to be able to play with them. Their manner of playing with the facts shows, rather, the genesis of their theoretical abstractions.

Let us pursue Darimon further.

When the Bank of France saw its metal assets diminished by 144 million and its portfolio increased by 101 million, it adopted, on 4 and 18 October 1855, a set of measures to defend its vaults against its portfolio. It raised its discount rate successively from 4 to 5 and from 5 to 6% and reduced the time of payment of bills presented for discount from 90 to 75 days. In other words: it raised the terms on which it made its metal available to commerce. What does this demonstrate? ‘That a bank’, says Darimon, ‘organized on present principles, i.e. on the rule of gold and silver, withdraws its services from the public precisely at the moment when the public most needs them.’ Did Mr Darimon require his figures to prove that supply increases the cost of its services to the same degree as demand makes claims upon them (and exceeds them)? And do not the gentlemen who represent the ‘public’ vis-à-vis the bank follow the same ‘agreeable customs of life’? The philanthropic grain merchants who present their bills to the bank in order to receive notes, in order to exchange the notes for the bank’s gold, in order to exchange the bank’s gold for another country’s grain, in order to exchange the grain of another country for the money of the French public – were they perhaps motivated by the idea that, since the public then had the greatest need of grain, it was therefore their duty to let them have grain on easier terms, or did they not rather rush to the bank in order to exploit the increase of grain prices, the misery of the public and the disproportion between its supply and its demand? And the bank should be made an exception to these general economic laws? Quelle idée! But perhaps the present organization of the banks has as its consequence that gold must be piled up in great quantity so that the means of purchase, which, in case of insufficient grain, could have the greatest utility for the nation, should be condemned to lie fallow; in short, so that capital, instead of passing through the necessary transformation of production, becomes the unproductive and lazy basis of circulation. In this case the problem would be, then, that the unproductive stock of metal still stands above its necessary minimum within the present system of bank organization, because hoarding of the gold and silver in circulation has not yet been restricted to its economic limits. It is a question of something more or something less, but on the same foundation. But then the question would have been deflated from the socialist heights down to the practical bourgeois plains where we find it promenading among the majority of the English bourgeois opponents of the Bank of England. What a come-down! Or is the issue not a greater or lesser saving of metal by means of banknotes and other bank arrangements, but a departure from the metal basis altogether? But then the statistical fable is worthless again, as is its moral. If, for any reason whatever, the bank must send precious metals to other countries in case of need, then it must first accumulate them, and if the other country is to accept these metals in exchange for its commodities, then the predominance of the metals must first have been secured.

The causes of the precious metals’ flight from the bank, according to Darimon, were crop failures and the consequent need to import grain from abroad. He forgets the failure of the silk harvest and the need to purchase it in vast quantities from China. Darimon further cites the numerous great undertakings coinciding with the last months of the industrial exhibition in Paris. Again he forgets the great speculations and ventures abroad launched by the Crédit Mobilier and its rivals for the purpose of showing, as Isaac Péreire^[4] says, that French capital is as distinguished among capitals by its cosmopolitan nature as is the French language among languages. Plus the unproductive expenditures entailed by the Crimean War: borrowings of 750 million. That is, on one side, a great and unexpected collapse in two of the most important branches of French production! On the other, an unusual employment of French capital in foreign markets for undertakings which by no means immediately paid their way and which in part will perhaps never cover their costs of production! In order to balance the decrease of domestic production by means of imports, on the one side, and the increase of industrial undertakings abroad on the other side, what would have been required were not symbols of circulation which facilitate the exchange of equivalents, but these equivalents themselves; not money but capital. The losses in French domestic production, in any case, were not an equivalent for the employment of French capital abroad. Now suppose that the Bank of France did not rest on a metallic base, and that other countries were willing to accept the French currency or its capital in any form, not only in the specific form of the precious metals. Would the bank not have been equally forced to raise the terms of its discounting precisely at the moment when its ‘public’ clamoured most eagerly for its services? The notes with which it discounts the bills of exchange of this public are at present nothing more than drafts on gold and silver. In our hypothetical case, they would be drafts on the nation’s stock of products and on its directly employable labour force: the former is limited, the latter can be increased only within very positive limits and in certain amounts of time. The printing press, on the other hand, is inexhaustible and works like a stroke of magic. At the same time, while the crop failures in grain and silk enormously diminish the directly exchangeable wealth of the nation, the foreign railway and mining enterprises freeze the same exchangeable wealth in a form which creates no direct equivalent and therefore devours it, for the moment, without replacement! Thus, the directly exchangeable wealth of the nation (i.e. the wealth which can be circulated and is acceptable abroad) absolutely diminished! On the other side, an unlimited increase in bank drafts. Direct consequence: increase in the price of products, raw materials and labour. On the other side, decrease in price of bank drafts. The bank would not have increased the wealth of the nation through a stroke of magic, but would merely have undertaken a very ordinary operation to devalue its own paper. With this devaluation, a sudden paralysis of production! But no, says the Proudhonist. Our new organization of the banks would not be satisfied with the negative accomplishment of abolishing the metal basis and leaving everything else the way it was. It would also create entirely new conditions of production and circulation, and hence its intervention would take place under entirely new preconditions. Did not the introduction of our present banks, in its day, revolutionize the conditions of production? Would large-scale modern industry have become possible without this new financial institution, without the concentration of credit which it created, without the state revenues which it created in antithesis to ground rent, without finance in antithesis to landed property, without the moneyed interest in antithesis to the landed interest; without these things could there have been stock companies etc., and the thousand forms of circulating paper which are as much the preconditions as the product of modern commerce and modern industry?

We have here reached the fundamental question, which is no longer related to the point of departure. The general question would be this: Can the existing relations of production and the relations of distribution which correspond to them be revolutionized by a change in the instrument of circulation, in the organization of circulation? Further question: Can such a transformation of circulation be undertaken without touching the existing relations of production and the social relations which rest on them? If every such transformation of circulation presupposes changes in other conditions of production and social upheavals, there would naturally follow from this the collapse of the doctrine which proposes tricks of circulation as a way of, on the one hand, avoiding the violent character of these social changes, and, on the other, of making these changes appear to be not a presupposition but a gradual result of the transformations in circulation. An error in this fundamental premise would suffice to prove that a similar misunderstanding has occurred in relation to the inner connections between the relations of production, of distribution and of circulation. The above-mentioned historical case cannot of course decide the matter, because modern credit institutions were as much an effect as a cause of the concentration of capital, since they only form a moment of the latter, and since concentration of wealth is accelerated by a scarcity of circulation (as in ancient Rome) as much as by an increase in the facility of circulation. It should further be examined, or rather it would be part of the general question, whether the different civilized forms of money – metallic, paper, credit money, labour money (the last-named as the socialist form) – can accomplish what is demanded of them without suspending the very relation of production which is expressed in the category money, and whether it is not a self-contradictory demand to wish to get around essential determinants of a relation by means of formal modifications? Various forms of money may correspond better to social production in various stages; one form may remedy evils against which another is powerless; but none of them, as long as they remain forms of money, and as long as money remains an essential relation of production, is capable of overcoming the contradictions inherent in the money relation, and can instead only hope to reproduce these contradictions in one or another form. One form of wage labour may correct the abuses of another, but no form of wage labour can correct the abuse of wage labour itself. One lever may overcome the inertia of an immobile object better than another. All of them require inertia to act at all as levers. This general question about the relation of circulation to the other relations of production can naturally be raised only at the end. But, from the outset, it is suspect that Proudhon and his associates never even raise the question in its pure form, but merely engage in occasional declamations about it. Whenever it is touched on, we shall pay close attention.

This much is evident right at the beginning of Darimon, namely that he completely identifies monetary turnover with credit, which is economically wrong. (The notion of crédit gratuit, incidentally, is only a hypocritical, philistine and anxiety-ridden form of the saying: property is theft. Instead of the workers taking the capitalists’ capital, the capitalists are supposed to be compelled to give it to them.) This too we shall have to return to.

In the question under discussion now, Darimon got no further than the point that banks, which deal in credit, like merchants who deal in commodities or workers who deal in labour, sell at a higher price when demand rises in relation to supply, i.e. they make their services more difficult for the public to obtain at the very moment the public has the greatest need for them. We saw that the bank has to act in this way whether the notes it issues are convertible or inconvertible.

The behaviour of the Bank of France in October 1855 gave rise to an ‘immense clamour’ (p. 4) and to a ‘great debate’ between it and the spokesmen of the public. Darimon summarizes, or pretends to summarize, this debate. We will follow him here only occasionally, since his synopsis displays the weak sides of both opponents, revealed in their constant desultory irrelevances. Groping about in extrinsic arguments. Each of the antagonists is at every moment dropping his weapon in order to search for another. Neither gets to the point of striking any actual blows, not only because they are constantly changing the weapons with which they are supposed to hit each other, but also because they hardly meet on one terrain before they take rapid flight to another.

(The discount rate in France had not been raised to 6% since 1806: for 50 years the time of payment for commercial bills of exchange had stood firm at 90 days.)

The weakness of the bank’s defending arguments, as presented by Darimon, and his own misconceptions, emerge for example from the following passage in his fictitious dialogue:

Says the bank’s opponent: ‘By virtue of your monopoly you are the dispenser and regulator of credit. When you take up an attitude of severity, the discounters not only imitate you but they further exaggerate your rigour … Your measures have brought business to a standstill.’ (p. 5.)

The bank replies, and indeed ‘humbly’: ‘“What would you have me do?” the bank humbly said … “To defend myself against the foreigner, I have to defend myself against our citizens … Above all I must prevent the outflow of the currency, without which I am nothing and can do nothing.”’ (p. 5.)

The bank’s script is ridiculous. It is made to sidetrack the question, to turn it into a rhetorical generality, in order to be able to answer it with a rhetorical generality. In this dialogue the bank is made to share Darimon’s illusion that its monopoly really allows it to regulate credit. In fact the power of the bank begins only where the private ‘discounters’ stop, hence at a moment when its power is already extraordinarily limited. Suppose that during easy conditions on the money market, when everybody else is discounting at 2 1/2%, the bank holds at 5%; instead of imitating it, the discounters will discount all its business away before its very eyes. Nowhere is this more vividly demonstrated than in the history of the Bank of England since the law of 1844, which made it into a real rival of the private bankers in the business of discounting, etc. In order to secure for itself a share, and a growing share, of the discount business during the periods of easiness on the money market, the Bank of England was constantly forced to reduce its rates not only to the level adopted by the private bankers but often below it. Its ‘regulation of credit’ is thus to be taken with a grain of salt; Darimon, however, makes his superstitious faith in its absolute control of the money market and of credit into his point of departure.

Instead of analysing critically the determinants of the bank’s real power over the money market, he immediately grabs on to the phrase that cash is everything for the bank and that it has to prevent its outflow from the country. A professor of the Collège de France (Chevalier)^[5] replies: ‘Gold and silver are commodities like any other … The only purpose of the bank’s metallic reserves is to make purchases abroad in moments of emergency.’ The bank rejoins: ‘Metallic money is not a commodity like any other; it is an instrument of exchange, and by virtue of this title it holds the privilege of prescribing laws for all the other commodities.’ Now Darimon leaps between the combatants: ‘Thus the privilege held by gold and silver, that of being the only authentic instrument of circulation and exchange, is responsible not only for the present crisis, but for the periodic commercial crises as well.’ In order to control all the undesirable features of crises ‘it would be enough that gold and silver were made commodities like any other, or, precisely expressed, that all commodities were made instruments of exchange on an equal footing (au même titre) with gold and silver; that products were truly exchanged for products’. (pp. 5–7.)

Shallowness with which the disputed question is presented here. If the bank issues drafts on money (notes) and promissory notes on capital repayable in gold (or silver) (deposits), then it is self-evident that it can watch and endure the decrease of its metal reserves only up to a certain point without reacting. That has nothing to do with the theory of metallic money. We will return to Darimon’s theory of crises later.

In the chapter “Short History of the Crises of Circulation”, Mr Darimon omits the English crisis of 1809–11 and confines himself to noting the appointment of the Bullion Committee in 1810; and for 1811 he again leaves out the crisis itself (which began in 1809), and merely mentions the adoption by the House of Commons of the resolution that ‘the depreciation of notes relative to bullion stems not from a depreciation of paper money but from an increase in the price of bullion’, together with Ricardo’s pamphlet which maintains the opposite thesis, the conclusion of which is supposed to read: ‘A currency is in its most perfect state when it consists wholly of paper money.’ (pp. 22, 23.)^[6] The crises of 1809 and 1811 were important here because the bank at that time issued inconvertible notes, meaning that the crises did not stem from the convertibility of notes into gold (metal) and hence could not be restrained by the abolition of convertibility. Like a nimble tailor, Darimon skips over these facts which contradict his theory of crises. He clutches on to Ricardo’s aphorism, which had nothing to do with the real subject of discussion in the pamphlet, namely the depreciation of banknotes. He is unaware that Ricardo’s theory of money is as completely refuted as its false assumptions that the bank controls the quantity of notes in circulation, and that the quantity of means of circulation determines prices, whereas on the contrary prices determine the quantity of means of circulation etc. In Ricardo’s time all detailed studies of the phenomena of monetary circulation were still lacking. This by the way.

Gold and silver are commodities like the others. Gold and silver are not commodities like the others: as general instruments of exchange they are the privileged commodities and degrade the other commodities by virtue of this privilege. This is the last analysis to which Darimon reduces the antagonism. His final judgement is: abolish the privilege of gold and silver, degrade them to the rank of all other commodities. Then you no longer have the specific evils of gold and silver money, or of notes convertible into gold and silver. You abolish all evils. Or, better, elevate all commodities to the monopoly position now held by gold and silver. Let the pope remain, but make everybody pope. Abolish money by making every commodity money and by equipping it with the specific attributes of money. The question here arises whether this problem does not already pronounce its own nonsensicality, and whether the impossibility of the solution is not already contained in the premises of the question. Frequently the only possible answer is a critique of the question and the only solution is to negate the question. The real question is: does not the bourgeois system of exchange itself necessitate a specific instrument of exchange? Does it not necessarily create a specific equivalent for all values? One form of this instrument of exchange or of this equivalent may be handier, more fitting, may entail fewer inconveniences than another. But the inconveniences which arise from the existence of every specific instrument of exchange, of any specific but general equivalent, must necessarily reproduce themselves in every form, however differently. Darimon naturally skips over this question with enthusiasm. Abolish money and don’t abolish money! Abolish the exclusive privilege possessed by gold and silver in virtue of their exclusive monetary role, but turn all commodities to money, i.e. give them all together equally a quality which no longer exists once its exclusiveness is gone.

The bullion drains do in fact bring to the surface a contradiction which Darimon formulates superficially and distorts as well. It is evident that gold and silver are not commodities like the others, and that modern economics is horrified to see itself suddenly and temporarily thrown back again and again to the prejudices of the Mercantile System. The English economists attempt to overcome the difficulty by means of a distinction. What is demanded in moments of such monetary crises, they say, is not gold and silver as money, not gold and silver as coin, but gold and silver as capital. They forget to add: yes, capital, but capital in the specific form of gold and silver. Why else is there an outflow of precisely these commodities, while most of the others depreciate owing to lack of outflow, if capital were exportable in every form?

Let us take specific examples: drain as a result of domestic harvest failures in a chief food crop (e.g. grain), crop failure abroad and hence increased prices in one of the main imported consumer goods (e.g. tea); drain because of a crop failure in decisive industrial raw materials (cotton, wool, silk, flax etc.); drain because of excessive imports (caused by speculation, war etc.). The replacement of a sudden or chronic shortage (grain, tea, cotton, flax, etc.) in the case of a domestic crop failure deprives the nation doubly. A part of its invested capital or labour is not reproduced – real loss of production. A part of that capital which has been reproduced has to be shifted to fill this gap; and this part, moreover, does not stand in a simple arithmetical relation to the loss, because the deficient product rises and must rise on the world market as a result of the decreased supply and the increased demand. It is necessary to analyse precisely how such crises would look if money were disregarded, and what determinants money introduces into the given relations. (Grain crop failures and excess imports the most important cases. The impact of war is self-evident, since economically it is exactly the same as if the nation were to drop a part of its capital into the ocean.)

Case of a grain crop failure: Seen in comparison to other nations, it is clear that the nation’s capital (not only its real wealth) has diminished, just as clear as that a peasant who burns his loaves and has to buy bread at the baker’s is impoverished to the extent of the price of his purchase. In reference to the domestic situation, the rise in grain prices, as far as value enters into the question, seems to leave everything as it was. Except for the fact that the lesser quantity of grain multiplied by the increased price, in real crop failures, never = the normal quantity multiplied by the lesser price. Suppose that the entire English wheat crop were 1 quarter, and that this 1 quarter fetched the same price as 30 million quarters previously. Then, leaving aside the fact that it lacks the means to reproduce either life or wheat, and if we postulate that the working day necessary to produce 1 quarter = A, then the nation would exchange A × 30 million working days (cost of production) for 1 × A working days (product); the productive force of its capital would have diminished by millions and the sum of all values in the land would have diminished, since every working day would have depreciated by a factor of 30 million. Every unit of capital would then represent only 1/30,000,000 of its earlier value, of its equivalent in production costs, even though in this given case the nominal value of the nation’s capital would not have diminished (apart from the depreciation of land and soil), since the decrease in value of all other products would have been exactly compensated by the increase in value of the 1 quarter of wheat. The increase in the wheat price by a factor of A × 30 million would be the expression of an equivalent depreciation of all other products. This distinction between domestic and foreign, incidentally, is altogether illusory. The relation between the nation which suffers a crop failure and another nation where the former makes purchases is like that between every individual of the nation and the farmer or grain merchant. The surplus sum which it must expend in purchasing grain is a direct subtraction from its capital, from its disposable means.

So as not to obscure the question with unessential influences, it must be postulated that the nation has free trade in grain. Even if the imported grain were as cheap as the domestically produced grain, the nation would still be poorer to the amount of capital not reproduced by the farmers. However, on the above assumption of free trade, the nation always imports as much foreign grain as is possible at the normal price. The increase of imports thus presupposes a rise in the price.

The rise in the grain price is = to the fall in the price of all other commodities. The increased cost of production (represented by the price) at which the quarter of wheat is obtained is = to the decreased productivity of capital in all other forms. The surplus used to purchase grain must correspond to a deficit in the purchase of all other products and hence already a decline in their prices. With or without metallic money, or money of any other kind, the nation would find itself in a crisis not confined to grain, but extending to all other branches of production, not only because their productivity would have positively diminished and the price of their production depreciated as compared to their value, which is determined by the normal cost of production, but also because all contracts, obligations etc. rest on the average prices of products. For example, x bushels of grain have to be supplied to service the state’s indebtedness, but the cost of producing these x bushels has increased by a given factor. Quite apart from the role of money the nation would thus find itself in a general crisis. If we abstract not only from money but from exchange value as well, then products would have depreciated and the nation’s productivity diminished while all its economic relations are based on the average productivity of its labour.

A crisis caused by a failure in the grain crop is therefore not at all created by the drain of bullion, although it can be aggravated by obstacles set up to impede this drain.

In any case, we cannot agree with Proudhon either when he says that the crisis stems from the fact that the precious metals alone possess an authentic value in contrast to the other commodities; for the rise in the grain price first of all means only that more gold and silver have to be given in exchange for a certain quantity of grain, i.e. that the price of gold and silver has declined relative to the price of grain. Thus gold and silver participate with all other commodities in the depreciation relative to grain, and no privilege protects them from this. The depreciation of gold and silver relative to grain is identical with the rise of the grain price (not quite correct. The quarter of grain rises from 50s. to 100s., i.e. by 100%, but cotton goods fall by 80. Silver has declined by 50 relative to grain; cotton goods (owing to declining demand etc.) have declined by 80% relative to it. That is to say, the prices of other commodities fall to a greater extent than those of grain rise. But the opposite also occurs. For example in recent years, when grain temporarily rose by 100%, it never entered the heads of the industrial products to decline in the same proportion in which gold had declined relative to grain. This circumstance does not immediately affect the general thesis). Neither can it be said that gold possesses a privilege because its quantity is precisely and authentically defined in the coin form. One thaler (silver) remains under all circumstances one thaler. But a bushel of wheat is also always a bushel, and a yard of linen a yard.

The depreciation of most commodities (labour included) and the resultant crisis, in the case of an important crop mishap, cannot therefore be crudely ascribed to the export of gold, because depreciation and crisis would equally take place if no gold whatever were exported and no grain imported. The crisis reduces itself simply to the law of supply and demand, which, as is known, acts far more sharply and energetically within the sphere of primary needs – seen on a national scale – than in all other spheres. Exports of gold are not the cause of the grain crisis, but the grain crisis is the cause of gold exports.

Gold and silver in themselves can be said to intervene in the crisis and to aggravate its symptoms in only two ways: (1) When the export of gold is made more difficult by the metal reserve requirements to which the banks are bound; when the measures which the banks therefore undertake against the export of gold react disadvantageously on domestic circulation; (2) When the export of gold becomes necessary because foreign nations will accept capital only in the form of gold and not otherwise.

Difficulty No. 2 can remain even if difficulty No. 1 is removed. The Bank of England experienced this precisely during the period when it was legally empowered to issue inconvertible notes.^[7] These notes declined in relation to gold bullion, but the mint price of gold likewise declined in relation to its bullion price. In relation to the note, gold had become a special kind of commodity. It can be said that the note still remained dependent on gold only to the extent that it nominally represented a certain quantity of gold for which it could not in fact be exchanged. Gold remained its denomination, although it was no longer legally exchangeable for this quantity of gold at the bank.

There can be hardly a doubt (?) (this is to be examined later and does not directly belong with the subject under discussion) that as long as paper money retains its denomination in gold (i.e. so long as a £5 note for example is the paper representative of 5 sovereigns), the convertibility of the note into gold remains its economic law, whether this law also exists politically or not. The Bank of England’s notes continued during the years 1799–1819 to state that they represented the value of a given quantity of gold. How can this assertion be put to the test other than by the fact that the note indeed commands so-and-so-much bullion? From the moment when bullion to the value of 5 sovereigns could no longer be had for a £5 note, the note was depreciated even though it was inconvertible. The equivalence of the note with an amount of gold equal to its face-value immediately entered into contradiction with the factual non-equivalence between banknotes and gold. The point in dispute among the English who want to keep gold as the denomination of notes is not in fact the convertibility of the note into gold – which is only the practical equivalence of what the face of the note expresses theoretically – but rather the question how this convertibility is to be secured, whether through limits imposed by law on the bank or whether the bank is to be left to its own devices. The advocates of the latter course assert that this convertibility is achieved on the average by a bank of issue which lends against bills of exchange and whose notes thus have an assured reflux, and charge that their opponents despite everything never achieved better than this average measure of security. The latter is a fact. The average, by the way, is not to be despised, and calculations on the basis of averages have to form the basis for banks just as well as for all insurance companies etc. In this regard the Scottish banks are above all, and rightly, held up as a model. The strict bullionists say for their part that they take convertibility as a serious matter, that the bank’s obligation to convert notes keeps the notes convertible, that the necessity of this convertibility is given by the denomination of the notes themselves, that this forms a barrier against over-issue, and that their opponents are pseudo-defenders of inconvertibility. Between these two sides, various shadings, a mass of little ‘species’.^[8] The defenders of inconvertibility, finally, the determined anti-bullionists, are, without knowing it, just as much pseudo-defenders of convertibility as their opponents are of inconvertibility, because they retain the denomination of the note and hence make the practical equation between a note of a given denomination and a given quantity of gold the measure of their notes’ full value. Prussia has paper money of forced currency. (A reflux is secured by the obligation to pay a portion of taxes in paper.) These paper thalers are not drafts on silver; no bank will legally convert them. They are not issued by a commercial bank against bills of exchange but by the government to meet its expenses. But their denomination is that of silver. A paper thaler proclaims that it represents the same value as a silver thaler. If confidence in the government were to be thoroughly shaken, or if this paper money were issued in greater proportions than required by circulation, then the paper thaler would in practice cease to be equal to the silver thaler and would be depreciated because it had fallen beneath the value proclaimed on its face. It would even depreciate if neither of the above conditions obtained but if a special need for silver, e.g. for exports, gave silver a privileged position vis-à-vis the paper thaler. Convertibility into gold and silver is therefore the practical measure of the value of every paper currency denominated in gold or silver, whether this paper is legally convertible or not. Nominal value runs alongside its body as a mere shadow; whether the two balance can be shown only by actual convertibility (exchangeability). A fall of real value beneath nominal value is depreciation. Convertibility is when the two really run alongside each other and change places with each other. The convertibility of inconvertible notes shows itself not in the bank’s stock of bullion but in the everyday exchange between paper and the metal whose denomination the paper carries. In practice, the convertibility of convertible notes is already endangered when this is no longer confirmed by everyday routine exchange in all parts of the country, but has to be established specifically by large-scale operations on the part of the bank. In the Scottish countryside paper money is even preferred to metal money. Before 1845, when the English law of 1844^[9] was forced upon it, Scotland naturally took part in all English social crises, and experienced some crises to a higher degree because the clearing of the land proceeded more ruthlessly there. Nevertheless, Scotland never experienced a real monetary crisis (the fact that a few banks, exceptions, collapsed because they had made careless loans is irrelevant here); no depreciation of notes, no complaints and no inquiries into the sufficiency or insufficiency of the currency in circulation etc. Scotland is important here because it shows on the one hand how the monetary system can be completely regulated on the present basis – all the evils Darimon bewails can be abolished – without departing from the present social basis; while at the same time its contradictions, its antagonisms, the class contradiction etc. have reached an even higher degree than in any other country in the world. It is characteristic that both Darimon and the patron who introduces his book – Émile Girardin,^[10] who complements his practical swindles with theoretical utopianism – do not find the antithesis of the monopoly banks of France and England in Scotland, but rather look for it in the United States, where the banking system, owing to the need to obtain a charter from the individual State, is only nominally free, where the prevailing system is not free competition among banks but a federation of monopoly banks. The Scottish banking and monetary system was indeed the most perilous reef for the illusions of the circulation artists. Gold or silver money (except where coins of both kinds are legal tender) are not said to depreciate no matter how often their value changes relative to other commodities. Why not? Because they form their own denomination; because their title is not a title to a value, i.e. they are not measured in a third commodity, but merely express fractional parts of their own substance, 1 sovereign = so much gold of a given weight. Gold is therefore nominally undepreciable, not because it alone expresses an authentic value, but because as money it does not express value at all, but merely expresses a given quantity of its own substance, merely carries its own quantitative definition on its forehead. (To be examined more closely later: whether this characteristic mark of gold and silver money is in the last analysis an intrinsic property of all money.) Deceived by this nominal undepreciability of metallic money, Darimon and consorts see only the one aspect which surfaces during crises: the appreciation of gold and silver in relation to nearly all other commodities; they do not see the other side, the depreciation of gold and silver or of money in relation to all other commodities (labour perhaps, not always, excluded) in periods of so-called prosperity, periods of a temporary general rise of prices. Since this depreciation of metallic money (and of all kinds of money which rest on it) always precedes its appreciation, they ought to have formulated the problem the other way round: how to prevent the periodic depreciation of money (in their language, to abolish the privileges of commodities in relation to money). In this last formulation the problem would have reduced itself to: how to overcome the rise and fall of prices. The way to do this: abolish prices. And how? By doing away with exchange value. But this problem arises: exchange corresponds to the bourgeois organization of society. Hence one last problem: to revolutionize bourgeois society economically. It would then have been self-evident from the outset that the evil of bourgeois society is not to be remedied by ‘transforming’ the banks or by founding a rational ‘money system’.

Convertibility, therefore – legal or not – remains a requirement of every kind of money whose title makes it a value-symbol, i.e. which equates it as a quantity with a third commodity. The equation already includes the antithesis, the possibility of nonequivalence; convertibility includes its opposite, inconvertibility; appreciation includes depreciation, δυνάμει,^[11] as Aristotle would say. Suppose for example that the sovereign were not only called a sovereign, which is a mere honorific for the xth fraction of an ounce of gold (accounting name), in the same way that a metre is the name for a certain length, but were called, say, x hours of labour time. 1/x ounce of gold is in fact nothing more than 1/x hours of labour time materialized, objectified. But gold is labour time accumulated in the past, labour time defined. Its title would make a given quantity of labour as such into its standard. The pound of gold would have to be convertible into x hours of labour time, would have to be able to purchase it at any given moment: as soon as it could buy a greater or a lesser amount, it would be appreciated or depreciated; in the latter case its convertibility would have ceased. What determines value is not the amount of labour time incorporated in products, but rather the amount of labour time necessary at a given moment. Take the pound of gold itself: let it be the product of 20 hours’ labour time. Suppose that for some reason it later requires only 10 hours to produce a pound of gold. The pound of gold whose title advises that it = 20 hours’ labour time would now merely = 10 hours’ labour time, since 20 hours’ labour time = 2 pounds of gold. 10 hours of labour are in practice exchanged for 1 pound of gold; hence 1 pound of gold cannot any longer be exchanged for 20 hours of labour time. Gold money with the plebeian title x hours of labour would be exposed to greater fluctuations than any other sort of money and particularly more than the present gold money, because gold cannot rise or fall in relation to gold (it is equal to itself), while the labour time accumulated in a given quantity of gold, in contrast, must constantly rise or fall in relation to present, living labour time. In order to maintain its convertibility, the productivity of labour time would have to be kept stationary. Moreover, in view of the general economic law that the costs of production constantly decline, that living labour becomes constantly more productive, hence that the labour time objectified in products constantly depreciates, the inevitable fate of this golden labour money would be constant depreciation. In order to control this evil, it might be said that the title of labour time should go not to gold but, as Weitling proposed, with Englishmen ahead of him and French after, Proudhon & Co. among them, to paper money, to a mere symbol of value. The labour time incorporated in the paper itself would then have as little relevance as the paper value of banknotes. The former would be merely the representation of hours of labour, as the latter is of gold or silver. If the hour of labour became more productive, then the chit of paper which represents it would rise in buying power, and vice versa, exactly as a £5 note at present buys more or less depending on whether the relative value of gold in comparison to other commodities rises or falls. According to the same law which would subject golden labour money to a constant depreciation, paper labour money would enjoy a constant appreciation. And that is precisely what we are after; the worker would reap the joys of the rising productivity of his labour, instead of creating proportionately more alien wealth and devaluing himself as at present. Thus the socialists. But, unfortunately, there arise some small scruples. First of all: if we once presuppose money, even if it is only time-chits, then we must also presuppose the accumulation of this money, as well as contracts, obligations, fixed burdens etc., which are entered into in the form of this money. The accumulated chits would constantly appreciate together with the newly issued ones, and thus on the one hand the rising productivity of labour would go to the benefit of non-workers, and on the other hand the previously contracted burdens would keep step with the rising yield of labour. The rise and fall in the value of gold or silver would be quite irrelevant if the world could be started afresh at each new moment and if, hence, previous obligations to pay a certain quantity of gold did not survive the fluctuations in the value of gold. The same holds, here, with the time-chit and hourly productivity.

The point to be examined here is the convertibility of the time-chit. We reach the same goal if we make a detour. Although it is still too early, a few observations can be made about the delusions on which the time-chit rests, which allow us an insight into the depths of the secret which links Proudhon’s theory of circulation with his general theory – his theory of the determination of value. We find the same link e.g. in Bray^[12] and Gray.^[13] Whatever basis in truth it may happen to have will be examined later^[14] (but first, incidentally: seen only as drafts on gold, banknotes should not be issued in amounts exceeding the quantity of gold which they pretend to replace, or they depreciate. Three drafts of £15 which I issue to three different creditors on the same £15 in gold are in fact only drafts on £15 / 3 = £5 each. Each of these notes would have depreciated to 33 1/3 per cent from the outset.)

The value (the real exchange value) of all commodities (labour included) is determined by their cost of production, in other words by the labour time required to produce them. Their price is this exchange value of theirs, expressed in money. The replacement of metal money (and of paper or fiat money denominated in metal money) by labour money denominated in labour time would therefore equate the real value (exchange value) of commodities with their nominal value, price, money value. Equation of real value and nominal value, of value and price. But such is by no means the case. The value of commodities as determined by labour time is only their average value. This average appears as an external abstraction if it is calculated out as the average figure of an epoch, e.g. 1 lb. of coffee = 1s. if the average price of coffee is taken over 25 years; but it is very real if it is at the same time recognized as the driving force and the moving principle of the oscillations which commodity prices run through during a given epoch. This reality is not merely of theoretical importance: it forms the basis of mercantile speculation, whose calculus of probabilities depends both on the median price averages which figure as the centre of oscillation, and on the average peaks and average troughs of oscillation above or below this centre. The market value is always different, is always below or above this average value of a commodity. Market value equates itself with real value by means of its constant oscillations, never by means of an equation with real value as if the latter were a third party, but rather by means of constant non-equation of itself (as Hegel would say, not by way of abstract identity, but by constant negation of the negation, i.e. of itself as negation of real value).^[15] In my pamphlet against Proudhon I showed that real value itself – independently of its rule over the oscillations of the market price (seen apart from its role as the law of these oscillations) – in turn negates itself and constantly posits the real value of commodities in contradiction with its own character, that it constantly depreciates or appreciates the real value of already produced commodities; this is not the place to discuss it in greater detail.^[16] Price therefore is distinguished from value not only as the nominal from the real; not only by way of the denomination in gold and silver, but because the latter appears as the law of the motions which the former runs through. But the two are constantly different and never balance out, or balance only coincidentally and exceptionally. The price of a commodity constantly stands above or below the value of the commodity, and the value of the commodity itself exists only in this up-and-down movement of commodity prices. Supply and demand constantly determine the prices of commodities; never balance, or only coincidentally; but the cost of production, for its part, determines the oscillations of supply and demand. The gold or silver in which the price of a commodity, its market value, is expressed is itself a certain quantity of accumulated labour, a certain measure of materialized labour time. On the assumption that the production costs of a commodity and the production costs of gold and silver remain constant, the rise or fall of its market price means nothing more than that a commodity, = x labour time, constantly commands > or < x labour time on the market, that it stands above or beneath its average value as determined by labour time. The first basic illusion of the time-chitters consists in this, that by annulling the nominal difference between real value and market value, between exchange value and price – that is, by expressing value in units of labour time itself instead of in a given objectification of labour time, say gold and silver – that in so doing they also remove the real difference and contradiction between price and value. Given this illusory assumption it is self-evident that the mere introduction of the time-chit does away with all crises, all faults of bourgeois production. The money price of commodities = their real value; demand = supply; production = consumption; money is simultaneously abolished and preserved; the labour time of which the commodity is the product, which is materialized in the commodity, would need only to be measured in order to create a corresponding mirror-image in the form of a value-symbol, money, time-chits. In this way every commodity would be directly transformed into money; and gold and silver, for their part, would be demoted to the rank of all other commodities.

It is not necessary to elaborate that the contradiction between exchange value and price – the average price and the prices of which it is the average – that the difference between magnitudes and average magnitudes is not overcome merely by suppressing the difference in name, e.g. by saying, instead of: 1 lb. bread costs 8d., 1 lb. bread = 1/x hours of labour. Inversely, if 8d. = 1/x hours of labour, and if the labour time which is materialized in one pound of bread is greater or less than 1/x hours of labour, then, because the measure of value would be at the same time the element in which the price is expressed, the difference between price and value, which is hidden in the gold price or silver price, would never be glaringly visible. An infinite equation would result. 1/x hours of labour (as contained in 8d. or represented by a chit) > < than 1/x hours of labour (as contained in the pound of bread).

The time-chit, representing average labour time, would never correspond to or be convertible into actual labour time; i.e. the amount of labour time objectified in a commodity would never command a quantity of labour time equal to itself, and vice versa, but would command, rather, either more or less, just as at present every oscillation of market values expresses itself in a rise or fall of the gold or silver prices of commodities.

The constant depreciation of commodities – over longer periods – in relation to time-chits, which we mentioned earlier, arises out of the law of the rising productivity of labour time, out of the disturbances within relative value itself which are created by its own inherent principle, namely labour time. This inconvertibility of the time-chits which we are now discussing is nothing more than another expression for the inconvertibility between real value and market value, between exchange value and price. In contrast to all other commodities, the time-chit would represent an ideal labour time which would be exchanged sometimes against more and sometimes against less of the actual variety, and which would achieve a separate existence of its own in the time-chit, an existence corresponding to this non-equivalence. The general equivalent, medium of circulation and measure of commodities would again confront the commodities in an individual form, following its own laws, alienated, i.e. equipped with all the properties of money as it exists at present but unable to perform the same services. The medium with which commodities – these objectified quantities of labour time – are compared would not be a third commodity but would be rather their own measure of value, labour time itself; as a result, the confusion would reach a new height altogether. Commodity A, the objectification of 3 hours’ labour time, is = 2 labour-hour-chits; commodity B, the objectification, similarly, of 3 hours’ labour, is = 4 labour-hour-chits. This contradiction is in practice expressed in money prices, but in a veiled form. The difference between price and value, between the commodity measured by the labour time whose product it is, and the product of the labour time against which it is exchanged, this difference calls for a third commodity to act as a measure in which the real exchange value of commodities is expressed. Because price is not equal to value, therefore the value-determining element – labour time – cannot be the element in which prices are expressed, because labour time would then have to express itself simultaneously as the determining and the non-determining element, as the equivalent and non-equivalent of itself. Because labour time as the measure of value exists only as an ideal, it cannot serve as the matter of price-comparisons. (Here at the same time it becomes clear how and why the value relation obtains a separate material existence in the form of money. This to be developed further.) The difference between price and value calls for values to be measured as prices on a different standard from their own. Price as distinct from value is necessarily money price. It can here be seen that the nominal difference between price and value is conditioned by their real difference.

Commodity A = 1s. (i.e. = 1/x silver); commodity B = 2s. (i.e. 2/x silver). Hence commodity B = double the value of commodity A. The value relation between A and B is expressed by means of the proportion in which they are exchanged for a quantity of a third commodity, namely silver; they are not exchanged for a value-relation.

Every commodity (product or instrument of production) is = the objectification of a given amount of labour time. Their value, the relation in which they are exchanged against other commodities, or other commodities against them, is = to the quantity of labour time realized in them. If a commodity e.g. = 1 hour of labour time, then it exchanges with all other commodities which are the product of 1 hour of labour time. (This whole reasoning on the presupposition that exchange value = market value; real value = price.) The value of the commodity is different from the commodity itself. The commodity is a value (exchange value) only within exchange (real or imagined); value is not only the exchangeability of the commodity in general, but its specific exchangeability. Value is at the same time the exponent of the relation in which the commodity is exchanged with other commodities, as well as the exponent of the relation in which it has already been exchanged with other commodities (materialized labour time) in production; it is their quantitatively determined exchangeability. Two commodities, e.g. a yard of cotton and a measure of oil, considered as cotton and as oil, are different by nature, have different properties, are measured by different measures, are incommensurable. Considered as values, all commodities are qualitatively equal and differ only quantitatively, hence can be measured against each other and substituted for one another (are mutually exchangeable, mutually convertible) in certain quantitative relations. Value is their social relation, their economic quality. A book which possesses a certain value and a loaf of bread possessing the same value are exchanged for one another, are the same value but in a different material. As a value, a commodity is an equivalent for all other commodities in a given relation. As a value, the commodity is an equivalent; as an equivalent, all its natural properties are extinguished; it no longer takes up a special, qualitative relationship towards the other commodities; but is rather the general measure as well as the general representative, the general medium of exchange of all other commodities. As value, it is money. But because the commodity, or rather the product or the instrument of production, is different from its value, its existence as value is different from its existence as product. Its property of being a value not only can but must achieve an existence different from its natural one. Why? Because commodities as values are different from one another only quantitatively; therefore each commodity must be qualitatively different from its own value. Its value must therefore have an existence which is qualitatively distinguishable from it, and in actual exchange this separability must become a real separation, because the natural distinctness of commodities must come into contradiction with their economic equivalence, and because both can exist together only if the commodity achieves a double existence, not only a natural but also a purely economic existence, in which latter it is a mere symbol, a cipher for a relation of production, a mere symbol for its own value. As a value, every commodity is equally divisible; in its natural existence this is not the case. As a value it remains the same no matter how many metamorphoses and forms of existence it goes through; in reality, commodities are exchanged only because they are not the same and correspond to different systems of needs. As a value, the commodity is general; as a real commodity it is particular. As a value it is always exchangeable; in real exchange it is exchangeable only if it fulfills particular conditions. As a value, the measure of its exchangeability is determined by itself; exchange value expresses precisely the relation in which it replaces other commodities; in real exchange it is exchangeable only in quantities which are linked with its natural properties and which correspond to the needs of the participants in exchange. (In short, 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 as distinct from the value as product.) (The exchange value of a commodity, as a separate form of existence accompanying the commodity itself, is money; the form in which all commodities equate, compare, measure themselves; into which all commodities dissolve themselves; that which dissolves itself into all commodities; the universal equivalent.) Every moment, in calculating, accounting etc., that we transform commodities into value symbols, we fix them as mere exchange values, making abstraction from the matter they are composed of and all their natural qualities. On paper, in the head, this metamorphosis proceeds by means of mere abstraction; but in the real exchange process a real mediation is required, a means to accomplish this abstraction. In its natural existence, with its natural properties, in natural identity with itself, the commodity is neither constantly exchangeable nor exchangeable against every other commodity; this it is only as something different from itself, something distinct from itself, as exchange value. We must first transpose the commodity into itself as exchange value in order then to be able to compare this exchange value with other exchange values and to exchange it. In the crudest barter, when two commodities are exchanged for one another, each is first equated with a symbol which expresses their exchange value, e.g. among certain Negroes on the West African coast, = x bars. One commodity is = 1 bar; the other = 2 bars. They are exchanged in this relation. The commodities are first transformed into bars in the head and in speech before they are exchanged for one another. They are appraised before being exchanged, and in order to appraise them they must be brought into a given numerical relation to one another. In order to bring them into such a numerical relation, in order to make them commensurable, they must obtain the same denomination (unit). (The bar has a merely imaginary existence, just as, in general, a relation can obtain a particular embodiment and become individualized only by means of abstraction.) In order to cover the excess of one value over another in exchange, in order to liquidate the balance, the crudest barter, just as with international trade today, requires payment in money.

Products (or activities) are exchanged only as commodities; commodities in exchange exist only as values; only as values are they comparable. In order to determine what amount of bread I need in order to exchange it for a yard of linen, I first equate the yard of linen with its exchange value, i.e. = 1/x hours of labour time. Similarly, I equate the pound of bread with its exchange value, = 1/x or 2/x hours of labour time. I equate each of the commodities with a third; i.e. not with themselves. This third, which differs from them both, exists initially only in the head, as a conception, since it expresses a relation; just as, in general, relations can be established as existing only by being thought, as distinct from the subjects which are in these relations with each other. In becoming an exchange value, a product (or activity) is not only transformed into a definite quantitative relation, a relative number – that is, a number which expresses the quantity of other commodities which equal it, which are its equivalent, or the relation in which it is their equivalent – but it must also at the same time be transformed qualitatively, be transposed into another element, so that both commodities become magnitudes of the same kind, of the same unit, i.e. commensurable. The commodity first has to be transposed into labour time, into something qualitatively different from itself (qualitatively different (1) because it is not labour time as labour time, but materialized labour time; labour time not in the form of motion, but at rest; not in the form of the process, but of the result; (2) because it is not the objectification of labour time in general, which exists only as a conception (it is only a conception of labour separated from its quality, subject merely to quantitative variations), but rather the specific result of a specific, of a naturally specified, kind of labour which differs qualitatively from other kinds), in order then to be compared as a specific amount of labour time, as a certain magnitude of labour, with other amounts of labour time, other magnitudes of labour. For the purpose of merely making a comparison – an appraisal of products – of determining their value ideally, it suffices to make this transformation in the head (a transformation in which the product exists merely as the expression of quantitative relations of production). This abstraction will do for comparing commodities; but in actual exchange this abstraction in turn must be objectified, must be symbolized, realized in a symbol. This necessity enters into force for the following reasons: (1) As we have already said, both the commodities to be exchanged are transformed in the head into common relations of magnitude, into exchange values, and are thus reciprocally compared. But if they are then to be exchanged in reality, their natural properties enter into contradiction with their character as exchange values and as mere denominated numbers. They are not divisible at will etc. (2) In the real exchange process, particular commodities are always exchanged against particular commodities, and the exchangeability of commodities, as well as the relation in which they are exchangeable, depends on conditions of place and time, etc. But the transformation of the commodity into exchange value does not equate it to any other particular commodity, but expresses it as equivalent, expresses its exchangeability relation, vis-à-vis all other commodities. This comparison, which the head accomplishes in one stroke, can be achieved in reality only in a delimited sphere determined by needs, and only in successive steps. (For example, I exchange an income of 100 thalers as my needs would have it one after another against a whole range of commodities whose sum = the exchange value of 100 thalers.) Thus, in order to realize the commodity as exchange value in one stroke, and in order to give it the general influence of an exchange value, it is not enough to exchange it for one particular commodity. It must be exchanged against a third thing which is not in turn 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.) This symbol represents the fractional parts of labour time; it represents exchange value in such fractional parts as are capable of expressing all relations between exchange values by means of simple arithmetical combination; this symbol, this material sign of exchange value, is a product of exchange itself, and not the execution of an idea conceived a priori. (In fact the 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.)

The process, then, is simply this: The product becomes a commodity, i.e. a mere moment of exchange. The commodity is transformed into exchange value. In order to equate it with itself as an exchange value, it is exchanged for a symbol which represents it as exchange value as such. As such a symbolized exchange value, it can then in turn be exchanged in definite relations for every other commodity. Because the product becomes a commodity, and the commodity becomes an exchange value, it obtains, at first only in the head, a double existence. This doubling in the idea proceeds (and must proceed) to the point where the commodity appears double in real exchange: as a natural product on one side, as exchange value on the other. I.e. the commodity’s exchange value obtains a material existence separate from the commodity.

The definition of a product as exchange value thus necessarily implies that exchange value obtains a separate existence, in isolation from the product. The exchange value which is separated from commodities and exists alongside them as itself a commodity, this is – money. In the form of money all properties of the commodity as exchange value appear as an object distinct from it, as a form of social existence separated from the natural existence of the commodity. (This to be further shown by enumerating the usual properties of money.) (The material in which this symbol is expressed is by no means a matter of indifference, even though it manifests itself in many different historical forms. In the development of society, not only the symbol but likewise the material corresponding to the symbol are worked out – a material from which society later tries to disentangle itself; if a symbol is not to be arbitrary, certain conditions are demanded of the material in which it is represented. The symbols for words, for example the alphabet etc., have an analogous history.) Thus, the exchange value of a product creates money alongside the product. Now, just as it is impossible to suspend the complications and contradictions which arise from the existence of money alongside the particular commodities merely by altering the form of money (although difficulties characteristic of a lower form of money may be avoided by moving to a higher form), so also is it impossible to abolish money itself as long as exchange value remains the social form of products. It is necessary to see this clearly in order to avoid setting impossible tasks, and in order to know the limits within which monetary reforms and transformations of circulation are able to give a new shape to the relations of production and to the social relations which rest on the latter.

The properties of money as (1) measure of commodity exchange; (2) medium of exchange; (3) representative of commodities (hence object of contracts); (4) general commodity alongside the particular commodities, all simply follow from its character as exchange value separated from commodities themselves and objectified. (By virtue of its property as the general commodity in relation to all others, as the embodiment of the exchange value of the other commodities, money at the same time becomes the realized and always realizable form of capital; the form of capital’s appearance which is always valid – a property which emerges in bullion drains; hence capital appears in history initially only in the money form; this explains, finally, the link between money and the rate of interest, and its influence on the latter.)

To the degree that production is shaped in such a way that every producer becomes dependent on the exchange value of his commodity, i.e. as the product increasingly becomes an exchange value in reality, and exchange value becomes the immediate object of production – to the same degree must money relations develop, together with the contradictions immanent in the money relation, in the relation of the product to itself as money. The need for exchange and for the transformation of the product into a pure exchange value progresses in step with the division of labour, i.e. with the increasingly social character of production. But as the latter grows, so grows the power of money, i.e. the exchange relation establishes itself as a power external to and independent of the producers. What originally appeared as a means to promote production becomes a relation alien to the producers. As the producers become more dependent on exchange, exchange appears to become more independent of them, and the gap between the product as product and the product as exchange value appears to widen. Money does not create these antitheses and contradictions; it is, rather, the development of these contradictions and antitheses which creates the seemingly transcendental power of money. (To be further developed, the influence of the transformation of all relations into money relations: taxes in kind into money taxes, rent in kind into money rent, military service into mercenary troops, all personal services in general into money services, of patriarchal, slave, serf and guild labour into pure wage labour.)

The product becomes a commodity; the commodity becomes exchange value; the exchange value of the commodity is its immanent money-property; this, its money-property, separates itself from it in the form of money, and achieves a general social existence separated from all particular commodities and their natural mode of existence; the relation of the product to itself as exchange value becomes its relation to money, existing alongside it; or, becomes the relation of all products to money, external to them all. Just as the real exchange of products creates their exchange value, so does their exchange value create money.

The next question to confront us is this: are there not contradictions, inherent in this relation itself, which are wrapped up in the existence of money alongside commodities?

Firstly: The simple fact that the commodity exists doubly, in one aspect as a specific product whose natural form of existence ideally contains (latently contains) its exchange value, and in the other aspect as manifest exchange value (money), in which all connection with the natural form of the product is stripped away again – this double, differentiated existence must develop into a difference, and the difference into antithesis and contradiction. The same contradiction between the particular nature of the commodity as product and its general nature as exchange value, which created the necessity of positing it doubly, as this particular commodity on one side and as money on the other – this contradiction between the commodity’s particular natural qualities and its general social qualities contains from the beginning the possibility that these two separated forms in which the commodity exists are not convertible into one another. The exchangeability of the commodity exists as a thing beside it, as money, as something different from the commodity, something no longer directly identical with it. As soon as money has become an external thing alongside the commodity, the exchangeability of the commodity for money becomes bound up with external conditions which may or may not be present; it is abandoned to the mercy of external conditions. The commodity is demanded in exchange because of its natural properties, because of the needs for which it is the desired object. Money, by contrast, is demanded only because of its exchange value, as exchange value. Hence, whether or not the commodity is transposable into money, whether or not it can be exchanged for money, whether its exchange value can be posited for it – this depends on circumstances which initially have nothing to do with it as exchange value and are independent of that. The transposability of the commodity depends on the natural properties of the product; that of money coincides with its existence as symbolized exchange value. There thus arises the possibility that the commodity, in its specific form as product, can no longer be exchanged for, equated with, its general form as money.

By existing outside the commodity as money, the exchangeability of the commodity has become something different from and alien to the commodity, with which it first has to be brought into equation, to which it is therefore at the beginning unequal; while the equation itself becomes dependent on external conditions, hence a matter of chance.

Secondly: Just as the exchange value of the commodity leads a double existence, as the particular commodity and as money, so does the act of exchange split into two mutually independent acts: exchange of commodities for money, exchange of money for commodities; purchase and sale. Since these have now achieved a spatially and temporally separate and mutually indifferent form of existence, their immediate identity ceases. They may correspond or not; they may balance or not; they may enter into disproportion with one another. They will of course always attempt to equalize one another; but in the place of the earlier immediate equality there now stands the constant movement of equalization, which evidently presupposes constant non-equivalence. It is now entirely possible that consonance may be reached only by passing through the most extreme dissonance.

Thirdly: With the separation of purchase and sale, with the splitting of exchange into two spatially and temporally independent acts, there further emerges another, new relation.

Just as exchange itself splits apart into two mutually independent acts, so does the overall movement of exchange itself become separate from the exchangers, the producers of commodities. Exchange for the sake of exchange separates off from exchange for the sake of commodities. A mercantile estate^[17] steps between the producers; an estate which only buys in order to sell and only sells so as to buy again, and whose aim in this operation is not the possession of commodities as products but merely the obtaining of exchange values as such, of money. (A mercantile estate can take shape even with mere barter. But since only the overflow of production on both sides is at its disposal, its influence on production, and its importance as a whole, remain completely secondary.) The rise of exchange (commerce) as an independent function torn away from the exchangers corresponds to the rise of exchange value as an independent entity, as money, torn away from products. Exchange value was the measure of commodity exchange; but its aim was the direct possession of the exchanged commodity, its consumption (regardless of whether this consumption consists of serving to satisfy needs directly, i.e. serving as product, or of serving in turn as a tool of production). The purpose of commerce is not consumption, directly, but the gaining of money, of exchange values. This doubling of exchange – exchange for the sake of consumption and exchange for exchange – gives rise to a new disproportion. In his exchange, the merchant is guided merely by the difference between the purchase and sale of commodities; but the consumer who buys a commodity must replace its exchange value once and for all. Circulation, i.e. exchange within the mercantile estate, and the point at which circulation ends, i.e. exchange between the mercantile estate and the consumers – as much as they must ultimately condition one another – are determined by quite different laws and motives, and can enter into the most acute contradiction with one another. The possibility of commercial crises is already contained in this separation. But since production works directly for commerce and only indirectly for consumption, it must not only create but also and equally be seized by this incongruency between commerce and exchange for consumption. (The relations of demand and supply become entirely inverted.) (The money business then in turn separates from commerce proper.)

Fourthly: Just as exchange value, in the form of money, takes its place as the general commodity alongside all particular commodities, so does exchange value as money therefore at the same time take its place as a particular commodity (since it has a particular existence) alongside all other commodities. An incongruency arises not only because money, which exists only in exchange, confronts the particular exchangeability of commodities as their general exchangeability, and directly extinguishes it, while, nevertheless, the two are supposed to be always convertible into one another; but also because money comes into contradiction with itself and with its characteristic by virtue of being itself a particular commodity (even if only a symbol) and of being subject, therefore, to particular conditions of exchange in its exchange with other commodities, conditions which contradict its general unconditional exchangeability. (Not to speak of money as fixed in the substance of a particular product, etc.) Besides its existence in the commodity, exchange value achieved an existence of its own in money, was separated from its substance exactly because the natural characteristic of this substance contradicted its general characteristic as exchange value. Every commodity is equal (and comparable) to every other as exchange value (qualitatively: each now merely represents a quantitative plus or minus of exchange value). For that reason, this equality, this unity of the commodity is distinct from its natural differentiation; and appears in money therefore as their common element as well as a third thing which confronts them both. But on one side, exchange value naturally remains at the same time an inherent quality of commodities while it simultaneously exists outside them; on the other side, when money no longer exists as a property of commodities, as a common element within them, but as an individual entity apart from them, then money itself becomes a particular commodity alongside the other commodities. (Determinable by demand and supply; splits into different kinds of money, etc.) It becomes a commodity like other commodities, and at the same time it is not a commodity like other commodities. Despite its general character it is one exchangeable entity among other exchangeable entities. It is not only the general exchange value, but at the same time a particular exchange value alongside other particular exchange values. Here a new source of contradictions which make themselves felt in practice. (The particular nature of money emerges again in the separation of the money business from commerce proper.)

We see, then, how it is an inherent property of money to fulfil its purposes by simultaneously negating them; to achieve independence from commodities; to be a means which becomes an end; to realize the exchange value of commodities by separating them from it; to facilitate exchange by splitting it; to overcome the difficulties of the direct exchange of commodities by generalizing them; to make exchange independent of the producers in the same measure as the producers become dependent on exchange.

(It will be necessary later, before this question is dropped, to correct the idealist manner of the presentation, which makes it seem as if it were merely a matter of conceptual determinations and of the dialectic of these concepts. Above all in the case of the phrase: product (or activity) becomes commodity; commodity, exchange value; exchange value, money.)

(Economist. 24 January 1857. The following passage to be borne in mind on the subject of banks:

‘So far as the mercantile classes share, which they now do very generally, in the profits of banks – and may to a still greater extent by the wider diffusion of joint-stock banks, the abolition of all corporate privileges, and the extension of perfect freedom to the business of banking – they have been enriched by the increased rates of money. In truth, the mercantile classes by the extent of their deposits, are virtually their own bankers; and so far as that is the case, the rate of discount must be to them of little importance. All banking and other reserves must of course be the results of continual industry, and of savings laid by out of profits; and consequently, taking the mercantile and industrious classes as a whole, they must be their own bankers, and it requires only that the principles of free trade should be extended to all businesses, to equalize or naturalize for them the advantages and disadvantages of all the fluctuations in the money market.’)

All contradictions of the monetary system and of the exchange of products under the monetary system are the development of the relation of products as exchange values, of their definition as exchange value or as value pure and simple.

(Morning Star. 12 February 1857. ‘The pressure of money during last year, and the high rate of discount which was adopted in consequence, has been very beneficial to the profit account of the Bank of France. Its dividend has gone on increasing: 118 fr. in 1852, 154 fr. in 1853, 194 fr. in 1854, 200 fr. in 1855, 272 fr. in 1856.’)

Also to be noted, the following passage: The English silver coins issued at a price higher than the value of the silver they contain. A pound silver of an intrinsic value of 60–62s. (£3 on an average in gold) was coined into 66s. The Mint pays the ‘market price of the day, from 5s. to 5s. 2d. the ounce, and issues at the rate of 5s. 6d. the ounce. There are two reasons which prevent any practical inconvenience resulting from this arrangement:’ (of silver tokens, not of intrinsic value) ‘first, the coin can only be procured at the Mint, and at that price; as home circulation, then, it cannot be depreciated, and it cannot be sent abroad because it circulates here for more than its intrinsic value; and secondly, as it is a legal tender only up to 40s., it never interferes with the gold coins, nor affects their value.’ Gives France the advice to do the same: to issue subordinate coins of silver tokens, not of intrinsic value, and limit[ing] the amount to which they should be a legal tender. But at the same time: in fixing the quality of the coin, to take a larger margin between the intrinsic and the nominal value than we have in England, because the increasing value of silver in relation to gold may very probably, before long, rise up to our present Mint price, when we may be obliged again to alter it. Our silver coin is now little more than 5% below the intrinsic value: a short time since it was 10%. (Economist. 24 January 1857.)

Now, it might be thought that the issue of time-chits overcomes all these difficulties. (The existence of the time-chit naturally already presupposes conditions which are not directly given in the examination of the relations of exchange value and money, and which can and do exist without the time-chit: public credit, bank etc.; but all this not to be touched on further here, since the time-chit men of course regard it as the ultimate product of the ‘series’, which, even if it corresponds most to the ‘pure’ concept of money, ‘appears’ last in reality.) To begin with: If the preconditions under which the price of commodities = their exchange value are fulfilled and given; balance of demand and supply; balance of production and consumption; and what this amounts to in the last analysis, proportionate production (the so-called relations of distribution are themselves relations of production), then the money question becomes entirely secondary, in particular the question whether the tickets should be blue or green, paper or tin, or whatever other form social accounting should take. In that case it is totally meaningless to keep up the pretence that an investigation is being made of the real relations of money.

The bank (any bank) issues the time-chits.^[18] A commodity, A = the exchange value x, i.e. = x hours of labour time, is exchanged for a quantity of money representing x labour time. The bank would at the same time have to purchase the commodity, i.e. exchange it for its representative in monetary form, just as e.g. the Bank of England today has to give notes for gold. The commodity, the substantial and therefore accidental existence of exchange value, is exchanged for the symbolic existence of exchange value as exchange value. There is then no difficulty in transposing it from the form of the commodity into the form of money. The labour time contained in it only needs to be authentically verified (which, by the way, is not as easy as assaying the purity and weight of gold and silver) and thereby immediately creates its counter-value, its monetary existence. No matter how we may turn and twist the matter, in the last instance it amounts to this: the bank which issues the time-chits buys commodities at their costs of production, buys all commodities, and moreover this purchase costs the bank nothing more than the production of snippets of paper, and the bank gives the seller, in place of the exchange value which he possesses in a definite and substantial form, the symbolic exchange value of the commodity, in other words a draft on all other commodities to the amount of the same exchange value. Exchange value as such can of course exist only symbolically, although in order for it to be employed as a thing and not merely as a formal notion, this symbol must possess an objective existence; it is not merely an ideal notion, but is actually presented to the mind in an objective mode. (A measure can be held in the hand; exchange value measures, but it exchanges only when the measure passes from one hand to the other.) So the bank gives money for the commodity; money which is an exact draft on the exchange value of the commodity, i.e. of all commodities of the same value; the bank buys. The bank is the general buyer, the buyer of not only this or that commodity, but all commodities. For its purpose is to bring about the transposition of every commodity into its symbolic existence as exchange value. But if it is the general buyer, then it also has to be the general seller; not only the dock where all wares are deposited, not only the general warehouse, but also the owner of the commodities, in the same sense as every merchant. I have exchanged my commodity A for the time-chit B, which represents the commodity’s exchange value; but I have done this only so that I can then further metamorphose this B into any real commodity C, D, E etc., as it suits me. Now, can this money circulate outside the bank? Can it take any other route than that between the owner of the chit and the bank? How is the convertibility of this chit secured? Only two cases are possible. Either all owners of commodities (be these products or labour) desire to sell their commodities at their exchange value, or some want to and some do not. If they all want to sell at their exchange value, then they will not await the chance arrival or non-arrival of a buyer, but go immediately to the bank, unload their commodities on to it, and obtain their exchange value symbol, money, for them: they redeem them for its money. In this case the bank is simultaneously the general buyer and the general seller in one person. Or the opposite takes place. In this case, the bank chit is mere paper which claims to be the generally recognized symbol of exchange value, but has in fact no value. For this symbol has to have the property of not merely representing, but being, exchange value in actual exchange. In the latter case the bank chit would not be money, or it would be money only by convention between the bank and its clients, but not on the open market. It would be the same as a meal ticket good for a dozen meals which I obtain from a restaurant, or a theatre pass good for a dozen evenings, both of which represent money, but only in this particular restaurant or this particular theatre. The bank chit would have ceased to meet the qualifications of money, since it would not circulate among the general public, but only between the bank and its clients. We thus have to drop the latter supposition.

The bank would thus be the general buyer and seller. Instead of notes it could also issue cheques, and instead of that it could also keep simple bank accounts. Depending on the sum of commodity values which X had deposited with the bank, X would have that sum in the form of other commodities to his credit. A second attribute of the bank would be necessary: it would need the power to establish the exchange value of all commodities, i.e. the labour time materialized in them, in an authentic manner. But its functions could not end there. It would have to determine the labour time in which commodities could be produced, with the average means of production available in a given industry, i.e. the time in which they would have to be produced. But that also would not be sufficient. It would not only have to determine the time in which a certain quantity of products had to be produced, and place the producers in conditions which made their labour equally productive (i.e. it would have to balance and to arrange the distribution of the means of labour), but it would also have to determine the amounts of labour time to be employed in the different branches of production. The latter would be necessary because, in order to realize exchange value and make the bank’s currency really convertible, social production in general would have to be stabilized and arranged so that the needs of the partners in exchange were always satisfied. Nor is this all. The biggest exchange process is not that between commodities, but that between commodities and labour. (More on this presently.) The workers would not be selling their labour to the bank, but they would receive the exchange value for the entire product of their labour, etc. Precisely seen, then, the bank would be not only the general buyer and seller, but also the general producer. In fact either it would be a despotic ruler of production and trustee of distribution, or it would indeed be nothing more than a board which keeps the books and accounts for a society producing in common. The common ownership of the means of production is presupposed, etc., etc. The Saint-Simonians made their bank into the papacy of production.

The dissolution of all products and activities into exchange values presupposes the dissolution of all fixed personal (historic) relations of dependence in production, as well as the all-sided dependence of the producers on one another. Each individual’s production is dependent on the production of all others; and the transformation of his product into the necessaries of his own life is [similarly] dependent on the consumption of all others. Prices are old; exchange also; but the increasing determination of the former by costs of production, as well as the increasing dominance of the latter over all relations of production, only develop fully, and continue to develop ever more completely, in bourgeois society, the society of free competition. What Adam Smith, in the true eighteenth-century manner, puts in the prehistoric period, the period preceding history, is rather a product of history.

This reciprocal dependence is expressed in the constant necessity for exchange, and in exchange value as the all-sided mediation. The economists express this as follows: Each pursues his private interest and only his private interest; and thereby serves the private interests of all, the general interest, without willing or knowing it. The real point is not that each individual’s pursuit of his private interest promotes the totality of private interests, the general interest. One could just as well deduce from this abstract phrase that each individual reciprocally blocks the assertion of the others’ interests, so that, instead of a general affirmation, this war of all against all produces a general negation. The point is rather that private interest is itself already a socially determined interest, which can be achieved only within the conditions laid down by society and with the means provided by society; hence it is bound to the reproduction of these conditions and means. It is the interest of private persons; but its content, as well as the form and means of its realization, is given by social conditions independent of all.

The reciprocal and all-sided dependence of individuals who are indifferent to one another forms their social connection. This social bond is expressed in exchange value, by means of which alone each individual’s own activity or his product becomes an activity and a product for him; he must produce a general product – exchange value, or, the latter isolated for itself and individualized, money. On the other side, the power which each individual exercises over the activity of others or over social wealth exists in him as the owner of exchange values, of money. The individual carries his social power, as well as his bond with society, in his pocket. Activity, regardless of its individual manifestation, and the product of activity, regardless of its particular make-up, are always exchange value, and exchange value is a generality, in which all individuality and peculiarity are negated and extinguished. This indeed is a condition very different from that in which the individual or the individual member of a family or clan (later, community) directly and naturally reproduces himself, or in which his productive activity and his share in production are bound to a specific form of labour and of product, which determine his relation to others in just that specific way.

The social character of activity, as well as the social form of the product, and the share of individuals in production here appear as something alien and objective, confronting the individuals, not as their relation to one another, but as their subordination to relations which subsist independently of them and which arise out of collisions between mutually indifferent individuals. The general exchange of activities and products, which has become a vital condition for each individual – their mutual interconnection – here appears as something alien to them, autonomous, as a thing. In exchange value, the social connection between persons is transformed into a social relation between things; personal capacity into objective wealth. The less social power the medium of exchange possesses (and at this stage it is still closely bound to the nature of the direct product of labour and the direct needs of the partners in exchange) the greater must be the power of the community which binds the individuals together, the patriarchal relation, the community of antiquity, feudalism and the guild system. (See my Notebook XII, 34 B.)^[19] Each individual possesses social power in the form of a thing. Rob the thing of this social power and you must give it to persons to exercise over persons. Relations of personal dependence (entirely spontaneous at the outset) are the first social forms, in which human productive capacity develops only to a slight extent and at isolated points. Personal independence founded on objective [sachlicher] dependence is the second great form, in which a system of general social metabolism, of universal relations, of all-round needs and universal capacities is formed for the first time. Free individuality, based on the universal development of individuals and on their subordination of their communal, social productivity as their social wealth, is the third stage. The second stage creates the conditions for the third. Patriarchal as well as ancient conditions (feudal, also) thus disintegrate with the development of commerce, of luxury, of money, of exchange value, while modern society arises and grows in the same measure.

Exchange and division of labour reciprocally condition one another. Since everyone works for himself but his product is nothing for him, each must of course exchange, not only in order to take part in the general productive capacity but also in order to transform his own product into his own subsistence. (See my ‘Remarks on Economics’, p. V (13,20).)^[20] Exchange, when mediated by exchange value and money, presupposes the all-round dependence of the producers on one another, together with the total isolation of their private interests from one another, as well as a division of social labour whose unity and mutual complementarity exist in the form of a natural relation, as it were, external to the individuals and independent of them. The pressure of general demand and supply on one another mediates the connection of mutually indifferent persons.

The very necessity of first transforming individual products or activities into exchange value, into money, so that they obtain and demonstrate their social power in this objective [sachlichen] form, proves two things: (1) That individuals now produce only for society and in society; (2) that production is not directly social, is not ‘the offspring of association’, which distributes labour internally. Individuals are subsumed under social production; social production exists outside them as their fate; but social production is not subsumed under individuals, manageable by them as their common wealth. There can therefore be nothing more erroneous and absurd than to postulate the control by the united individuals of their total production, on the basis of exchange value, of money, as was done above in the case of the time-chit bank. The private exchange of all products of labour, all activities and all wealth stands in antithesis not only to a distribution based on a natural or political super- and subordination of individuals to one another (to which exchange proper only runs parallel or, by and large, does not so much take a grip on the life of entire communities as, rather, insert itself between different communities; it by no means exercises general domination over all relations of production and distribution) (regardless of the character of this super- and subordination: patriarchal, ancient or feudal) but also to free exchange among individuals who are associated on the basis of common appropriation and control of the means of production. (The latter form of association is not arbitrary; it presupposes the development of material and cultural conditions which are not to be examined any further at this point.) Just as the division of labour creates agglomeration, combination, cooperation, the antithesis of private interests, class interests, competition, concentration of capital, monopoly, stock companies – so many antithetical forms of the unity which itself brings the antithesis to the fore – so does private exchange create world trade, private independence creates complete dependence on the so-called world market, and the fragmented acts of exchange create a banking and credit system whose books, at least keep a record of the balance between debit and credit in private exchange. Although the private interests within each nation divide it into as many nations as it has ‘full-grown individuals’, and although the interests of exporters and of importers are antithetical here, etc, etc., national trade does obtain the semblance of existence in the form of the rate of exchange. Nobody will take this as a ground for believing that a reform of the money market can abolish the foundations of internal or external private trade. But within bourgeois society, the society that rests on exchange value, there arise relations of circulation as well as of production which are so many mines to explode it. (A mass of antithetical forms of the social unity, whose antithetical character can never be abolished through quiet metamorphosis. On the other hand, if we did not find concealed in society as it is the material conditions of production and the corresponding relations of exchange prerequisite for a classless society, then all attempts to explode it would be quixotic.)

We have seen that, although exchange value is = to the relative labour time materialized in products, money, for its part, is = to the exchange value of commodities, separated from their substance; and that in this exchange value or money relation are contained the contradictions between commodities and their exchange value, between commodities as exchange values and money. We saw that a bank which directly creates the mirror image of the commodity in the form of labour-money is a utopia. Thus, although money owes its existence only to the tendency of exchange value to separate itself from the substance of commodities and to take on a pure form, nevertheless commodities cannot be directly transformed into money; i.e. the authentic certificate of the amount of labour time realized in the commodity cannot serve the commodity as its price in the world of exchange values. How is this?

(In one of the forms of money – in so far as it is medium of exchange (not measure of exchange value) – it is clear to the economists that the existence of money presupposes the objectification [Versachlichung] of the social bond; in so far, that is, as money appears in the form of collateral which one individual must leave with another in order to obtain a commodity from him. Here the economists themselves say that people place in a thing (money) the faith which they do not place in each other. But why do they have faith in the thing? Obviously only because that thing is an objectified relation between persons; because it is objectified exchange value, and exchange value is nothing more than a mutual relation between people’s productive activities. Every other collateral may serve the holder directly in that function: money serves him only as the ‘dead pledge of society’,^[21] but it serves as such only because of its social (symbolic) property; and it can have a social property only because individuals have alienated their own social relationship from themselves so that it takes the form of a thing.)

In the lists of current prices, where all values are measured in money, it seems as though this independence from persons of the social character of things is, by the activity of commerce, on this basis of alienation where the relations of production and distribution stand opposed to the individual, to all individuals, at the same time subordinated to the individual again. Since, ‘if you please’, the autonomization of the world market (in which the activity of each individual is included), increases with the development of monetary relations (exchange value) and vice versa, since the general bond and all-round interdependence in production and consumption increase together with the independence and indifference of the consumers and producers to one another; since this contradiction leads to crises, etc., hence, together with the development of this alienation, and on the same basis, efforts are made to overcome it: institutions emerge whereby each individual can acquire information about the activity of all others and attempt to adjust his own accordingly, e.g. lists of current prices, rates of exchange, interconnections between those active in commerce through the mails, telegraphs etc. (the means of communication of course grow at the same time). (This means that, although the total supply and demand are independent of the actions of each individual, everyone attempts to inform himself about them, and this knowledge then reacts back in practice on the total supply and demand. Although on the given standpoint, alienation is not overcome by these means, nevertheless relations and connections are introduced thereby which include the possibility of suspending the old standpoint.) (The possibility of general statistics, etc.) (This is to be developed, incidentally, under the categories ‘Prices, Demand and Supply’. To be further noted here only that a comprehensive view over the whole of commerce and production in so far as lists of current prices in fact provide it, furnishes indeed the best proof of the way in which their own exchange and their own production confront individuals as an objective relation which is independent of them. In the case of the world market, the connection of the individual with all, but at the same time also the independence of this connection from the individual, have developed to such a high level that the formation of the world market already at the same time contains the conditions for going beyond it.) Comparison in place of real communality and generality.

(It has been said and may be said that this is precisely the beauty and the greatness of it: this spontaneous interconnection, this material and mental metabolism which is independent of the knowing and willing of individuals, and which presupposes their reciprocal independence and indifference. And, certainly, this objective connection is preferable to the lack of any connection, or to a merely local connection resting on blood ties, or on primeval, natural or master-servant relations. Equally certain is it that individuals cannot gain mastery over their own social interconnections before they have created them. But it is an insipid notion to conceive of this merely objective bond as a spontaneous, natural attribute inherent in individuals and inseparable from their nature (in antithesis to their conscious knowing and willing). This bond is their product. It is a historic product. It belongs to a specific phase of their development. The alien and independent character in which it presently exists vis-à-vis individuals proves only that the latter are still engaged in the creation of the conditions of their social life, and that they have not yet begun, on the basis of these conditions, to live it. It is the bond natural to individuals within specific and limited relations of production. Universally developed individuals, whose social relations, as their own communal [gemeinschaftlich] relations, are hence also subordinated to their own communal control, are no product of nature, but of history. The degree and the universality of the development of wealth where this individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities. In earlier stages of development the single individual seems to be developed more fully, because he has not yet worked out his relationships in their fullness, or erected them as independent social powers and relations opposite himself. It is as ridiculous to yearn for a return to that original fullness^[22] as it is to believe that with this complete emptiness history has come to a standstill. The bourgeois viewpoint has never advanced beyond this antithesis between itself and this romantic viewpoint, and therefore the latter will accompany it as legitimate antithesis up to its blessed end.)

(The relation of the individual to science may be taken as an example here.)

(To compare money with blood – the term circulation gave occasion for this – is about as correct as Menenius Agrippa’s comparison between the patricians and the stomach.)^[23] (To compare money with language is not less erroneous. Language does not transform ideas, so that the peculiarity of ideas is dissolved and their social character runs alongside them as a separate entity, like prices alongside commodities. Ideas do not exist separately from language. Ideas which have first to be translated out of their mother tongue into a foreign language in order to circulate, in order to become exchangeable, offer a somewhat better analogy; but the analogy then lies not in language, but in the foreignness of language.)

(The exchangeability of all products, activities and relations with a third, objective entity which can be re-exchanged for everything without distinction – that is, the development of exchange values (and of money relations) is identical with universal venality, corruption. Universal prostitution appears as a necessary phase in the development of the social character of personal talents, capacities, abilities, activities. More politely expressed: the universal relation of utility and use. The equation of the incompatible, as Shakespeare nicely defined money. Greed as such impossible without money; all other kinds of accumulation and of mania for accumulation appear as primitive, restricted by needs on the one hand and by the restricted nature of products on the other (sacra auri fames ).)

(The development of the money system obviously presupposes other, prior developments.)

When we look at social relations which create an undeveloped system of exchange, of exchange values and of money, or which correspond to an undeveloped degree of these, then it is clear from the outset that the individuals in such a society, although their relations appear to be more personal, enter into connection with one another only as individuals imprisoned within a certain definition, as feudal lord and vassal, landlord and serf, etc., or as members of a caste etc. or as members of an estate etc. In the money relation, in the developed system of exchange (and this semblance seduces the democrats), the ties of personal dependence, of distinctions of blood, education, etc, are in fact exploded, ripped up (at least, personal ties all appear as personal relations); and individuals seem independent (this is an independence which is at bottom merely an illusion and it is more correctly called indifference), free to collide with one another and to engage in exchange within this freedom; but they appear thus only for someone who abstracts from the conditions, the conditions of existence within which these individuals enter into contact (and these conditions, in turn, are independent of the individuals and, although created by society, appear as if they were natural conditions, not controllable by individuals). The definedness of individuals, which in the former case appears as a personal restriction of the individual by another, appears in the latter case as developed into an objective restriction of the individual by relations independent of him and sufficient unto themselves. (Since the single individual cannot strip away his personal definition, but may very well overcome and master external relations, his freedom seems to be greater in case 2. A closer examination of these external relations, these conditions, shows, however, that it is impossible for the individuals of a class etc. to overcome them en masse without destroying them. A particular individual may by chance get on top of these relations, but the mass of those under their rule cannot, since their mere existence expresses subordination, the necessary subordination of the mass of individuals.) These external relations are very far from being an abolition of ‘relations of dependence’; they are rather the dissolution of these relations into a general form; they are merely the elaboration and emergence of the general foundation of the relations of personal dependence. Here also individuals come into connection with one another only in determined ways. These objective dependency relations also appear, in antithesis to those of personal dependence (the objective dependency relation is nothing more than social relations which have become independent and now enter into opposition to the seemingly independent individuals; i.e. the reciprocal relations of production separated from and autonomous of individuals) in such a way that individuals are now ruled by abstractions, whereas earlier they depended on one another. The abstraction, or idea, however, is nothing more than the theoretical expression of those material relations which are their lord and master. Relations can be expressed, of course, only in ideas, and thus philosophers have determined the reign of ideas to be the peculiarity of the new age, and have identified the creation of free individuality with the overthrow of this reign. This error was all the more easily committed, from the ideological stand-point, as this reign exercised by the relations (this objective dependency, which, incidentally, turns into certain definite relations of personal dependency, but stripped of all illusions) appears within the consciousness of individuals as the reign of ideas, and because the belief in the permanence of these ideas, i.e. of these objective relations of dependency, is of course consolidated, nourished and inculcated by the ruling classes by all means available.

(As regards the illusion of the ‘purely personal relations’ in feudal times, etc., it is of course not to be forgotten for a moment (1) that these relations, in a certain phase, also took on an objective character within their own sphere, as for example the development of landed proprietorship out of purely military relations of subordination; but (2) the objective relation on which they founder has still a limited, primitive character and therefore seems personal, while, in the modern world, personal relations flow purely out of relations of production and exchange.)

The product becomes a commodity. The commodity becomes exchange value. The exchange value of the commodity acquires an existence of its own alongside the commodity; i.e. the commodity in the form in which (1) it is exchangeable with all other commodities, (2) it has hence become a commodity in general, and its natural specificity is extinguished, and (3) the measure of its exchangeability (i.e. the given relation within which it is equivalent to other commodities) has been determined – this commodity is the commodity as money, and, to be precise, not as money in general, but as a certain definite sum of money, for, in order to represent exchange value in all its variety, money has to be countable, quantitatively divisible.

Money – the common form into which all commodities as exchange values are transformed, i.e. the universal commodity – must itself exist as a particular commodity alongside the others, since what is required is not only that they can be measured against it in the head, but that they can be changed and exchanged for it in the actual exchange process. The contradiction which thereby enters, to be developed elsewhere. Money does not arise by convention, any more than the state does. It arises out of exchange, and arises naturally out of exchange; it is a product of the same. At the beginning, that commodity will serve as money – i.e. it will be exchanged not for the purpose of satisfying a need, not for consumption, but in order to be re-exchanged for other commodities – which is most frequently exchanged and circulated as an object of consumption, and which is therefore most certain to be exchangeable again for other commodities, i.e. which represents within the given social organization wealth ϰατ᾽ ἐξοχήν,^[24] which is the object of the most general demand and supply, and which possesses a particular use value. Thus salt, hides, cattle, slaves. In practice such a commodity corresponds more closely to itself as exchange value than do other commodities (a pity that the difference between denrée and marchandise cannot be neatly reproduced in German). It is the particular usefulness of the commodity whether as a particular object of consumption (hides), or as a direct instrument of production (slaves), which stamps it as money in these cases. In the course of further development precisely the opposite will occur, i.e. that commodity which has the least utility as an object of consumption or instrument of production will best serve the needs of exchange as such. In the former case, the commodity becomes money because of its particular use value; in the latter case it acquires its particular use value from its serviceability as money. The precious metals last, they do not alter, they can be divided and then combined together again, they can be transported relatively easily owing to the compression of great exchange value in little space – for all these reasons they are especially suitable in the latter stage. At the same time, they form the natural transition from the first form of money. At somewhat higher levels of production and exchange, the instrument of production takes precedence over products; and the metals (prior to that, stones) are the first and most indispensable instruments of production. Both are still combined in the case of copper, which played so large a role as money in antiquity; here is the particular use value as an instrument of production together with other attributes which do not flow out of the use value of the commodity but correspond to its function as exchange value (including medium of exchange). The precious metals then split off from the remainder by virtue of being inoxidizable, of standard quality etc., and they correspond better, then, to the higher stage, in that their direct utility for consumption and production recedes while, because of their rarity, they better represent value purely based on exchange. From the outset they represent superfluity, the form in which wealth originates. Also, metals preferably exchanged for metals rather than for other commodities.

The first form of money corresponds to a low stage of exchange and of barter, in which money still appears more in its quality of measure rather than as a real instrument of exchange. At this stage, the measure can still be purely imaginary (although the bar in use among Negroes includes iron) (sea shells etc., however, correspond more to the series of which gold and silver form the culmination).

From the fact that the commodity develops into general exchange value, it follows that exchange value becomes a specific commodity: it can do so only because a specific commodity obtains the privilege of representing, symbolizing, the exchange value of all other commodities, i.e. of becoming money. It arises from the essence of exchange value itself that a specific commodity appears as the money-subject, despite the monetary properties possessed by every commodity. In the course of development, the exchange value of money can again exist separately from its matter, its substance, as in the case of paper money, without therefore giving up the privilege of this specific commodity, because the separated form of existence of exchange value must necessarily continue to take its denomination from the specific commodity.

It is because the commodity is exchange value that it is exchangeable for money, is posited = to money. The proportion of its equivalence with money, i.e. the specificity of its exchange value, is presupposed before its transposition into money. The proportion in which a particular commodity is exchanged for money, i.e. the quantity of money into which a given quantity of a commodity is transposable, is determined by the amount of labour time objectified in the commodity. The commodity is an exchange value because it is the realization of a specific amount of labour time; money not only measures the amount of labour time which the commodity represents, but also contains its general, conceptually adequate, exchangeable form. Money is the physical medium into which exchange values are dipped, and in which they obtain the form corresponding to their general character. Adam Smith says that labour (labour time) is the original money with which all commodities are purchased.^[25] As regards the act of production, this always remains true (as well as in the determination of relative values). In production, every commodity is continuously exchanged for labour time. The necessity of a money other than labour time arises precisely because the quantity of labour time must not be expressed in its immediate, particular product, but in a mediated, general product; in its particular product, as a product equal to and convertible into all other products of an equal labour time; of the labour time not in a particular commodity, but in all commodities at once, and hence in a particular commodity which represents all the others. Labour time cannot directly be money (a demand which is the same, in other words, as demanding that every commodity should simply be its own money), precisely because in fact labour time always exists only in the form of particular commodities (as an object): being a general object, it can exist only symbolically, and hence only as a particular commodity which plays the role of money. Labour time does not exist in the form of a general object of exchange which is independent of and separate (in isolation) from the particular natural characteristics of commodities. But it would have to exist in that form if it were directly to fulfil the demands placed on money. The objectification of the general, social character of labour (and hence of the labour time contained in exchange value) is precisely what makes the product of labour time into exchange value; this is what gives the commodity the attributes of money, which however, in turn imply the existence of an independent and external money-subject.

A particular expenditure of labour time becomes objectified in a definite particular commodity with particular properties and a particular relationship to needs; but, in the form of exchange value, labour time is required to become objectified in a commodity which expresses no more than its quota or quantity, which is indifferent to its own natural properties, and which can therefore be metamorphosed into – i.e. exchanged for – every other commodity which objectifies the same labour time. The object should have this character of generality, which contradicts its natural particularity. This contradiction can be overcome only by objectifying it: i.e. by positing the commodity in a double form, first in its natural, immediate form, then in its mediated form, as money. The latter is possible only because a particular commodity becomes, as it were, the general substance of exchange values, or because the exchange values of commodities become identified with a particular commodity different from all others. That is, because the commodity first has to be exchanged for this general commodity, this symbolic general product or general objectification of labour time, before it can function as exchange value and be exchanged for, metamorphosed into, any other commodities at will and regardless of their material properties. Money is labour time in the form of a general object, or the objectification of general labour time, labour time as a general commodity. Thus, it may seem a very simple matter that labour time should be able to serve directly as money (i.e. be able to furnish the element in which exchange values are realized as such), because it regulates exchange values and indeed is not only the inherent measure of exchange values but their substance as well (for, as exchange values, commodities have no other substance, no natural attributes). However, this appearance of simplicity is deceptive. The truth is that the exchange-value relation – of commodities as mutually equal and equivalent objectifications of labour time – comprises contradictions which find their objective expression in a money which is distinct from labour time.

In Adam Smith this contradiction still appears as a set of parallels. Along with the particular product of labour (labour time as a particular object), the worker also has to produce a quantity of the general commodity (of labour time as general object). The two determinants of exchange value appear to Smith as existing externally, alongside one another. The interior of the commodity as a whole does not yet appear as having been seized and penetrated by contradiction. This corresponds to the stage of production which Smith found in existence at that time, in which the worker still directly owned a portion of his subsistence in the form of the product; where neither his entire activity nor his entire product had become dependent on exchange; i.e. where subsistence agriculture (or something similar, as Steuart calls it)^[26] still predominated to a great extent, together with patriarchal industry (hand weaving, domestic spinning, linked closely with agriculture). Still it was only the excess which was exchanged within a large area of the nation. Exchange value and determination by labour time not yet fully developed on a national scale.

(Incidental remark: It is less true of gold and silver than of any other commodities that their consumption can grow only in inverse proportion to their costs of production. Their consumption grows, rather, in proportion with the growth of general wealth, since their use specifically represents wealth, excess, luxury, because they themselves represent wealth in general. Apart from their use as money, silver and gold are consumed more in proportion as wealth in general increases. When, therefore, their supply suddenly increases, even if their costs of production or their value does not proportionately decrease, they find a rapidly expanding market which retards their depreciation. A number of problems which appear inexplicable to the economists – who generally make consumption of gold and silver dependent solely on the decrease in their costs of production – in regard to the California-Australia case,^[27] where they go around in circles, are thereby clarified. This is precisely linked with their property as money, as representation of wealth.)

(The contrast between gold and silver, as eternal commodities, and the others, which are not, is to be found in Petty,^[28] but is already present in Xenophon, On Revenues, in reference to marble and silver. ‘οὐ μόνον δὲ ϰρατεῖ τοῖς ἐπ᾽ ἐνιαυτὸν ϑάλλουσί τε ϰαὶ γηράσϰουσιν, ἀλλὰ ϰαὶ ἀίδια ἀγαϑὰ ἔχει ἡ χώρα. πέφυϰε μὲν γὰρ λίϑος ἐν αὐτῆ ᾄφθονος, etc. (namely marble) ἔστι δὲ ϰαὶ γῆ, ἣ σπειρομὲνη μὲν οὐ φέρει ϰαρπόν, ὀρυττομένη δὲ πολλαπλασίους τρέφει ἢ ἐι σῖτον ἒφεφε.’) (Important to note that exchange between different tribes or peoples – and this, not private exchange, is its first form – begins when an uncivilized tribe sells (or is cheated out of) an excess product which is not the product of its labour, but the natural product of the ground and of the area which it occupies.)

(Develop the ordinary economic contradictions arising from the fact that money has to be symbolized in a particular commodity, and then develop those that arise from this commodity itself (gold, etc.) This No. II.^[29] Then determine the relation between the quantity of gold and silver and commodity prices, and whether the exchange takes place in reality or only in the mind, since all commodities have to be exchanged for money in order to be determined as prices. This No. III.^[30] It is clear that, merely measured in gold or silver, the quantity of these metals has no influence on the prices of commodities; the difficulty enters with actual exchange, where the metals actually serve as instruments of exchange; the relations of demand and supply etc. But it is obviously as a measure that its value as an instrument of circulation is affected.)

Labour time itself exists as such only subjectively, only in the form of activity. In so far as it is exchangeable (itself a commodity) as such, it is defined and differentiated not only quantitatively but also qualitatively, and is by no means general, self-equivalent labour time; rather, labour time as subject corresponds as little to the general labour time which determines exchange values as the particular commodities and products correspond to it as object.

A. Smith’s thesis, that the worker has to produce a general commodity alongside his particular commodity, in other words that he has to give a part of his products the form of money, more generally that he has to convert into money all that part of his commodity which is to serve not as use value for himself but as exchange value – this statement means, subjectively expressed, nothing more than that the worker’s particular labour time cannot be directly exchanged for every other particular labour time, but rather that this, its general exchangeability, has first to be mediated, that it has first to take on an objective form, a form different from itself, in order to attain this general exchangeability.

The labour of the individual looked at in the act of production itself, is the money with which he directly buys the product, the object of his particular activity; but it is a particular money, which buys precisely only this specific product. In order to be general money directly, it would have to be not a particular, but general labour from the outset; i.e. it would have to be posited from the outset as a link in general production. But on this presupposition it would not be exchange which gave labour its general character; but rather its presupposed communal character would determine the distribution of products. The communal character of production would make the product into a communal, general product from the outset. The exchange which originally takes place in production – which would not be an exchange of exchange values but of activities, determined by communal needs and communal purposes – would from the outset include the participation of the individual in the communal world of products. On the basis of exchange values, labour is posited as general only through exchange. But on this foundation it would be posited as such before exchange; i.e. the exchange of products would in no way be the medium by which the participation of the individual in general production is mediated. Mediation must, of course, take place. In the first case, which proceeds from the independent production of individuals – no matter how much these independent productions determine and modify each other post festum through their interrelations – mediation takes place through the exchange of commodities, through exchange value and through money; all these are expressions of one and the same relation. In the second case, the presupposition is itself mediated; i.e. a communal production, communality, is presupposed as the basis of production. The labour of the individual is posited from the outset as social labour. Thus, whatever the particular material form of the product he creates or helps to create, what he has bought with his labour is not a specific and particular product, but rather a specific share of the communal production. He therefore has no particular product to exchange. His product is not an exchange value. The product does not first have to be transposed into a particular form in order to attain a general character for the individual. Instead of a division of labour, such as is necessarily created with the exchange of exchange values, there would take place an organization of labour whose consequence would be the participation of the individual in communal consumption. In the first case the social character of production is posited only post festum with the elevation of products to exchange values and the exchange of these exchange values. In the second case the social character of production is presupposed, and participation in the world of products, in consumption, is not mediated by the exchange of mutually independent labours or products of labour. It is mediated, rather, by the social conditions of production within which the individual is active. Those who want to make the labour of the individual directly into money (i.e. his product as well), into realized exchange value, want therefore to determine that labour directly as general labour, i.e. to negate precisely the conditions under which it must be made into money and exchange values, and under which it depends on private exchange. This demand can be satisfied only under conditions where it can no longer be raised. Labour on the basis of exchange values presupposes, precisely, that neither the labour of the individual nor his product are directly general; that the product attains this form only by passing through an objective mediation by means of a form of money distinct from itself.

On the basis of communal production, the determination of time remains, of course, essential. The less time the society requires to produce wheat, cattle etc., the more time it wins for other production, material or mental. Just as in the case of an individual, the multiplicity of its development, its enjoyment and its activity depends on economization of time. Economy of time, to this all economy ultimately reduces itself. Society likewise has to distribute its time in a purposeful way, in order to achieve a production adequate to its overall needs; just as the individual has to distribute his time correctly in order to achieve knowledge in proper proportions or in order to satisfy the various demands on his activity. Thus, economy of time, along with the planned distribution of labour time among the various branches of production, remains the first economic law on the basis of communal production. It becomes law, there, to an even higher degree. However, this is essentially different from a measurement of exchange values (labour or products) by labour time. The labour of individuals in the same branch of work, and the various kinds of work, are different from one another not only quantitatively but also qualitatively. What does a solely quantitative difference between things presuppose? The identity of their qualities. Hence, the quantitative measure of labours presupposes the equivalence, the identity of their quality.

(Strabo, Book XI. On the Albanians of the Caucasus: ‘ϰαὶ οἱ ἄνθρωνοι ϰάλλει ϰαὶ μεγέθει διαφέροντες, άπλοῖ δὲ ϰαὶ οὐ ϰαπηλιϰοί · οὐδἐ γὰρ νομίσματι τὰ πολλὰ ϰρῶνται, οὐδὲ ἀριθμὸν ἴσασι μείζω τῶν ἑϰατόν, ἀλλὰ φορτίοις τὰς ἀμοιβὰς ποιοῦνται.’ It says there further: ‘ἄπειροι δ ̓εἰσὶ ϰαὶ μέτρων τῶν ἐπ ̓ ἀϰριβὲς ϰαὶ σταθμῶν.’)

Money appears as measure (in Homer, e.g. oxen) earlier than as medium of exchange, because in barter each commodity is still its own medium of exchange. But it cannot be its own measure or its own standard of comparison.

(2)^[31] This much proceeds from what has been developed so far: A particular product (commodity) (material) must become the subject of money, which exists as the attribute of every exchange value. The subject in which this symbol is represented is not a matter of indifference, since the demands placed on the representing subject are contained in the conditions – conceptual determinations, characteristic relations – of that which is to be represented. The study of the precious metals as subjects of the money relations, as incarnations of the latter, is therefore by no means a matter lying outside the realm of political economy, as Proudhon believes, any more than the physical composition of paint, and of marble, lie outside the realm of painting and sculpture. The attributes possessed by the commodity as exchange value, attributes for which its natural qualities are not adequate, express the demands made upon those commodities which ϰατ᾽ ἐξοχήν^[32] are the material of money. These demands, at the level to which we have up to now confined ourselves, are most completely satisfied by the precious metals. Metals as such [enjoy] preference over other commodities as instruments of production, and among the metals the one which is first found in its physical fullness and purity – gold; then copper, then silver and iron. The precious metals take preference over others in realizing metal, as Hegel would say.^[33]

The precious metals uniform in their physical qualities, so that equal quantities of them should be so far identical as to present no ground for preferring this one to the others. Not the case, for example, with equal numbers of cattle and equal quantities of grain.

(a) Gold and silver in relation to the other metals[edit source]

The other metals oxidize when exposed to air; the precious metals (mercury, silver, gold, platinum) are unaffected by the air.

Aurum (Au). Specific gravity = 19.5; melting point: 1,200° C, ‘Glittering gold is the most magnificent of all metals, and was therefore referred to in antiquity as the sun or the king of metals. Widely distributed, never in great quantities, and is hence also more precious than the other metals. Found generally in pure metallic state, partly in larger pieces, partly in the form of smaller granules fused with other minerals. As the latter decompose, there arises gold-bearing sand, carried by many rivers, from which gold, owing to its greater specific gravity, can be washed out. Enormous malleability of gold; one grain can be drawn to make a 500-foot long wire, and can be hammered into leaves barely 1/200,000 of an inch thick. Gold resists all acids, only chlorine in a free state dissolves it (aqua regia, a mixture of nitric and hydrochloric acids). To gild.’

Argentum (Ag). Specific gravity = 10. Melting point = 1,000° C. Bright appearance; the friendliest of metals, very white and malleable; can be beautifully worked up and drawn in very thin wires. Silver found as unalloyed solid; frequently also combined with lead in silvery lead ores.

So much for chemical properties of gold and silver. (Divisibility and fusibility, uniformity of pure gold and silver etc. well known.)

Mineralogical:

Gold. It is surely noteworthy that the more precious the metals are, the more isolated is their occurrence; they are found separately from the more commonly prevalent bodies, they are higher natures far from the common herd. Thus we find gold, as a rule, in unalloyed metallic state, as a crystal in various die-shaped forms, or in the greatest variety of shapes; irregular pieces and nuggets, sand and dust, in which form it is found fused into many kinds of stone, e.g. granite: and it finds its way into the sand of rivers and the gravel of floodlands as a result of the disintegration of this stone. Since the specific gravity of gold in this state goes up to 19.4, even the tiniest pieces can be extracted by stirring gold-bearing sand in water. The heavier, metallic elements settle first and can thus, as the saying goes, be washed out. Most frequently found in the company of gold is silver, and one encounters natural combinations of both metals, containing from 0.16 to 38.7 per cent silver; which naturally entails differences in colour and weight.

Silver. With the great variety of its minerals, appears as one of the more prevalent metals, both as unalloyed metal and combined with other metals or with arsenic and sulphur. (Silver chloride, silver bromide, carbonic silver oxide, bismuth-silver ore, Sternbergite, polybasite, etc.)

The chief chemical properties are: all precious metals: do not oxidize on contact with air; of gold (and platinum): are not dissolved by acids, except in chlorine. Do not oxidize, thus remain pure, free of rust; they present themselves as that which they are. Resistance to oxygen – imperishability (so highly lauded by the gold and silver fanatics of antiquity).

Physical properties: Specific gravity, i.e. a great deal of weight in a small space, especially important for means of circulation. Gold 19.5, silver 10. Brilliance. Gleam of gold, whiteness of silver, magnificence, malleability; hence so serviceable for jewellery, ornamentation, and for the addition of splendour to other objects. The white shade of silver (which reflects all light rays in their original composition); red-yellow of gold (which absorbs all colours of a mixed beam and reflects back only the red). Difficult to melt.

Geological properties: Found (gold especially) as an unalloyed solid, separate from other bodies; isolated, individualized. Individual presentation, independent of the elemental.

About the two other precious metals: (1) Platinum lacks the colour: grey on grey (soot of metals); too rare; unknown in antiquity; discovered only after the discovery of America; also discovered in the Urals in the nineteenth century; soluble only in chlorine; always solid; specific gravity = 21; the strongest fire does not melt it; more of scientific value. (2) Mercury: found in liquid form; evaporates; vapours poisonous; can be combined with other liquids (amalgams). (Specific gravity = 13.5, boiling point = 360° C.) Thus neither platinum, nor much less mercury, are suitable as money.

One of the geological properties is common to all the precious metals: rarity. Rarity (apart from supply and demand) is an element of value only in so far as its opposite, the non-rare as such, the negation of rarity, the elemental, has no value because it does not appear as the result of production. In the original definition of value, that which is most independent of conscious, voluntary production is the most valuable, assuming the existence of demand. Common pebbles have no value, relatively speaking, because they are to be had without production (even if the latter consists only of searching). For something to become an object of exchange, to have exchange value, it must not be available to everyone without the mediation of exchange; it must not appear in such an elemental form as to be common property. To this extent, rarity is an element of exchange value and hence this property of the precious metal is of importance, even apart from its further relation to supply and demand.

When we look at the advantages of the metals as such as instruments of production, then gold has to its credit that it is at bottom the first metal to be discovered as metal. For a double reason. First, because more than the others, it presents itself in nature as the most metallic, the most distinct and distinguishable metal; second, because in its preparation nature has done the work otherwise left to artifice, and for its first discovery only rough labour is necessary, but neither science nor developed instruments of production.

‘Certain it is that gold must take its place as the earliest metal known, and in the first record of man’s progress it is indicated as a standard of man’s position’ (because in the form of excess, the first form in which wealth appears. The first form of value is use value, the everyday quality that expresses the relation of the individual to nature; the second, exchange value ALONGSIDE use value, its command over other people’s use values, its social connectedness: exchange value is itself originally a value for use on Sundays only, going beyond immediate physical necessity.)

Very early discovery of gold by man: ’Gold differs remarkably from the other metals, with a very few exceptions, in the fact that it is found in nature in its metallic state. Iron and copper, tin, lead and silver are ordinarily discovered in chemical combinations with oxygen, sulphur, arsenic, or carbon; and the few exceptional occurrences of these metals in an uncombined, or, as it was formerly called, virgin state, are to be cited rather as mineralogical curiosities than as common productions. Gold is, however, always found native or metallic … Therefore, as a metallic mass, curious by its yellow colour, it would attract the eye of the most uneducated man, whereas the other substances likely to lie in his path would offer no features of attraction to his scarcely awakened powers of observation. Again gold, from the circumstance of its having been formed in those rocks which are most exposed to atmospheric action, is found in the débris of the mountains. By the disintegrating influences of the atmosphere, of changes of temperature, of the action of water, and particularly by the effects of ice, fragments of rock are continually broken off. These are borne by floods into the valleys and rolled into pebbles by the constant action of flowing water. Amongst these, pebbles, or particles, of gold are discovered. The summer heats, by drying up the waters, rendered those beds which had formed river channels and the courses of winter torrents paths for the journeys of migratory man; and here we can imagine the early discovery of gold.’

‘Gold most frequently occurs pure, or, at all events, so nearly so that its metallic nature can be at once recognized, in rivers as well as in quartz veins.’

‘The specific gravity of quartz, and of most other heavy compact rocks is about 2 1/2, whilst the specific gravity of gold is 18 or 19. Gold, therefore, is somewhere about seven times as heavy as any rock or stone with which it is likely to be associated. A current of water accordingly having sufficient strength to bear along sand or pebbles of quartz or any other rock, might not be able to move the fragments of gold associated with them. Moving water, therefore, has done for the auriferous rocks formerly, just what the miner would do now, break it, namely, up, into fragments, sweep away the lighter particles, and leave the gold behind it. Rivers are, indeed, great natural cradles, sweeping off all the lighter and finer particles at once, the heavier ones either sticking against natural impediments, or being left whenever the current slackens its force or velocity.’ (See Gold (Lectures on). London, 1852.) (pp. 12 and 13.)^[34]

‘In all probability, from tradition and early history, the discovery of gold in the sand and gravel of streams would appear to have been the first step in the recognition of metals, and in almost all, perhaps in all, the countries of Europe, Africa and Asia, greater or smaller quantities of gold have from very early times been washed by simple contrivances from auriferous deposits. Occasionally, the success of gold-streams has been great enough to produce a pulse of excitement which has vibrated for a while through a district, but has been hushed down again. In 760 the poor people turned out in numbers to wash gold from the river sands south of Prague, and three men were able in the day to extract a mark (1/2 lb.) of gold; and so great was the consequent rush to the “diggings” that in the next year the country was visited by famine. We read of a recurrence of similar events several times within the next few centuries, although here, as elsewhere, the general attraction to surface-spread riches has subsided into regular and systematic mining.’

‘Two classes of deposits in which gold is found, the lodes or veins, which intersect the solid rock in a direction more or less perpendicular to the horizon; and the drift beds or ‘streams’, in which the gold mingled with gravel, sand, or clay, has been deposited by the mechanical action of water, upon the surface of those rocks, which are penetrated to unknown depths by the lodes. To the former class belongs more specially the art of mining; to the latter the simple operations of digging. Gold mining, properly so called, is, like other mining, an art requiring the employment of capital, and of a skill only to be acquired by years of experience. There is no art practised by civilized men which requires for its full development the application of so many sciences and collateral arts. But although so essential to the miner, scarcely any of these are necessary to the gold-washer or streamer, who must trust chiefly to the strength of his arm, or the buoyancy of his health. The apparatus which he employs must necessarily be simple, so as to be conveyed from place to place, to be easily repaired if injured, and not to require any of those niceties of manipulation which would cause him to lose time in the acquiring of small quantities.’

Difference between the drift-deposits of gold, best exemplified at the present day in Siberia, California and Australia; and the fine sands annually brought down by rivers, some of which are also found to contain gold in workable quantities. The latter are of course found literally at the surface, the former may be met with under a cover of from 1 to 70 feet in thickness, consisting of soil, peat, sand, gravel, etc. The modes of working the two must be identical in principle. For the stream-worker nature has pulled down the highest, proudest and richest parts of the lodes, and so triturated and washed up the materials, that the streamer has the heaviest part of the work already done for him: whilst the miner, who attacks the poorer, but more lasting, deep-going lodes, must aid himself with all the resources of the nicest art.

Gold has justly been considered the noblest of metals from various physical and chemical properties. It is unchangeable in air and does not rust. (Its unchangeability consists precisely in its resistance against the oxygen in the atmosphere.) Of a bright reddish yellow colour when in a coherent state, and very dense. Highly malleable. Requires a strong heat to melt it. Specific gravity.

Thus three modes of its production: (1) In the river sand. Simple finding on the surface. Washing. (2) In river beds and floodlands. Digging. (3) Mining. Its production requires, hence, no development of the productive forces. Nature does most of the work in that regard.

(The roots of the words for gold, silver etc. (see Grimm);^[35] here we find a number of general concepts of brilliance, soon to be transferred to the words, proximate to colour. Silver white; gold yellow; brass and gold, brass and iron exchange names. Among the Germans bronze in use before iron. Direct affinity between aes (bronze) and aurum (gold).)

Copper (brass, bronze: tin and copper) and gold in use before silver and iron.

‘Gold in use long before silver, because it is found pure or only lightly admixed with silver; obtained by simple washing. Silver is found in general in veins threaded through the hardest rocks in primitive terrain: its extraction requires complicated labour and machines. In southern America, veins of gold are not exploited, only gold in the form of dust and nuggets in alluvial terrain. In Herodotus’s time, similarly. The most ancient monuments of Greece, Asia, Northern Europe and the New World prove that the use of gold for utensils and for ornamentation is possible in a semi-barbarian condition; while the use of silver for the same purposes by itself already denotes a fairly advanced state of society. See Dureau de la Malle, Notebook. (2.)^[36]

Copper as main instrument of war and peace (ibid. 2) (as money in Italy ibid.).

(b) Fluctuations in the value-relation between the different metals[edit source]

If the use of metals as the substance of money, as well as their comparative uses, their earlier or later appearance, are to be examined at all, then it is necessary to look also at the fluctuations in their relative value. (Letronne, Böckh, Jacob.)^[37] (That part of the question which is linked to the question of the mass of circulating metals as such, and its relation to prices, is to be looked at later, as a historical appendix to the chapter on the relation between money and prices.)

The successive fluctuations between gold, silver and copper in various epochs had to depend first of all on the nature of the sites where they are found, and on their greater or lesser purity. Then, on political changes, such as the invasion of Asia and of a part of Africa by the Persians and the Macedonians; later the conquest of parts of three continents by the Romans (orbis Romanus, etc.). Dependent, therefore, on their relative purity and their location.

The value relation between the different metals can be determined without recourse to prices – by means of the simple quantitative ratio in which one exchanges for the other. We can employ this form, in general, when we are comparing only a few commodities which have the same measure; e.g. so many quarters of rye, barley, oats for so many quarters of wheat. This method employed in barter, where little of anything is exchanged and where even fewer commodities enter the traffic, and where, hence, no money is required.

Among an Arab people neighbouring on Sabaea, according to Strabo, pure gold was so abundant that 10 lb. of it were given for 1 lb. of iron, and 2 lb. were given for 1 lb. silver. A wealth of gold in the Bactrian region (Bactara, etc., in short, Turkestan) and in the part of Asia situated between the Paropamisus (Hindu-kush) and the Imaus (Mustagh Mountains), i.e. in the Desertum arenosum auro abondans (Desert of Cobi): according to Dureau de la Malle it is probable, therefore, that from the fifteenth to the sixth century BC the ratio of gold to silver was 6:1 or 8:1, the same which existed in China and Japan until the beginning of the nineteenth century; Herodotus puts it at 13:1 for Persia under Darius Hystaspes. According to the code of Manou, written between 1300 and 600 BC, gold to silver = 2 1/2:1. Silver mines must nearly always be established in primitive terrain; that is where the deposits lie, and only lesser veins are found in easier ground. Instead of in alluvial sand and gravel, silver is ordinarily embedded in the most compact and hard rocks, such as quartz, etc. This metal is more common in regions which are cold, either from latitude or from elevation, while gold generally frequents warm countries. In contrast to gold, silver is only very rarely found in a pure state (usually combined with arsenic or sulphur) (muriatic acid, nitric saltpetre). As far as the quantity of deposits is concerned (prior to the discovery of Australia and California), Humboldt in 1811 estimates the proportion of gold to silver in America at 1:46, and in Europe (including Asiatic Russia) at 1:40. The mineralogists of the Académie des Sciences estimate in our time (1842) that the ratio is 1:52; despite that, the lb. of gold is only worth 15 lb. of silver; thus their value relation = 15:1.

Copper. Specific gravity = 8.9. Beautiful dawn-red colour; fairly hard; requires very high temperatures to melt. Not infrequently encountered pure; frequently combined with oxygen or sulphur. Deposits found in primordial, ancient terrain. However, found more frequently close to the surface, at no great depth, agglomerated in masses of pure metal, sometimes of a considerable weight. Used in peace and war before iron. (Gold relates to silver as the substance of money in the same way as copper to iron as instrument of labour in historical development.) Circulates in great quantity in Italy under the Romans during the first to the fifth centuries. One can determine a priori a people’s degree of civilization if one knows no more than the metal, gold, copper, silver or iron, which it uses for weapons, tools or ornamentation. Hesiod, in his poem on agriculture: ‘χαλϰῷ δ ̓ειργάζοντο μέλας δ ̓οὐϰ ἔσϰε σίδηρος’.

Lucretius: ‘Et prior aeris erat quam ferri cognitus usus.’ Jacob cites ancient copper mines in Nubia and Siberia (see Dureau I, 58); Herodotus says that the Massagetians had only bronze, but no iron. To judge by the collection known as the Oxford Marbles, iron unknown before 1431 BC. In Homer, iron rare; however, very common use of bronze (an alloy of copper, zinc and tin) which Greek and Roman society used for a very long period, even for the fabrication of axes and razors. Italy fairly wealthy in native copper; thus copper money formed, if not the only currency, at least the normal currency, the monetary unit of central Italy, up to 247 BC. The Greek colonies in southern Italy received silver directly from Greece and Asia, or via Tyre and Carthage; and used it for money starting in the fifth and sixth centuries. The Romans, it seems, possessed silver money prior to the expulsion of the Kings, but, Pliny says, ‘interdictum id vetere consulto patrum, Italiae parci ‘ (i.e. the silver mines) ‘jubentium’, They feared the consequences of a convenient means of circulation – opulence, increase of slaves, accumulation, concentration of land ownership. Among the Etruscans, too, copper money before gold.

Garnier is wrong when he says (see Notebook III, p. 28), ‘The material destined for accumulation was naturally sought for and selected from the realm of the minerals.’^[38] On the contrary, accumulation began after metal money was found (whether as money proper or only as preferred medium of exchange by weight). This point to be discussed especially in regard to gold. Reitemeier is right (see Notebook III, p. 34): ‘Gold, silver and copper were used by the ancients as implements for hacking and breaking, despite their relative softness, before the advent of iron and before they were used as money.”^[39] (Improvement of implements when men learned to temper copper and thus make it hard enough to defy solid rock. A very much hardened copper was used to make the chisels and hammers used for mastering rock. Finally, iron was discovered.) Jacob says: ‘In patriarchal times’ (see Notebook IV, p. 3), ‘when the metals used for making weapons, such as (1) brass and (2) iron, were rare and enormously expensive compared with the common food and clothing then used, then, although coined money made of the precious metals was still unknown, yet gold and silver had acquired the faculty of being more easily and conveniently exchanged for the other metals than corn and cattle.’^[40]

‘Besides, in order to obtain the pure or nearly pure gold found in the immense alluvial lands situated between the Hindu-kush chains and the Himalaya, only a simple washing operation was required. In those times the population in these countries of Asia was abundant, and hence labour was cheap. Silver was relatively more expensive owing to the (technical) difficulties of obtaining it. The opposite tendency set in in Asia and in Greece after the death of Alexander. The gold-bearing sands became exhausted; the price of slaves and of manpower rose; and, since mechanics and geometry had made immense progress from Euclid to Archimedes, it was possible to exploit with profit the rich veins of silver mined in Asia, in Thrace and in Spain; and, silver being 52 times more abundant than gold, the value ratio between them necessarily changed, so that the livre of gold, which at the time of Xenophon, 350 BC, was exchanged for 10 livres of silver, came to be worth 18 livres of the latter metal in the year A.D. 422.^[41] Thus, it rose from 10:1 to 18:1.

At the end of the fifth century A.D. an extraordinary diminution in the quantity of precious metals; a halt in mining. In the Middle Ages up to the end of the fifteenth century a relatively significant portion of money in gold coins. (The diminution affected, most of all, silver, which had previously circulated most widely.) Ratio in the fifteenth century = 10:1, in the eighteenth century 14:1 on the continent, in England = 15:1. In most of Asia, silver more as a commodity in trade; especially in China, where copper money (Tehen, a composition of copper, zinc and lead) coin of the realm; in China, gold (and silver) by weight as a commodity to balance foreign trade.

Large fluctuations in Rome between the value of copper and silver (in coins). Up to Servius, metal in bullion form, aes rude, for trade. The monetary unit, the copper as = 1 pound of copper. In the time of Servius, silver to copper = 279:1; until the beginning of the Punic war = 400:1 ; during the First Punic War = 140:1; Second Punic War = 112:1.

Gold very expensive in Rome at first, whereas silver from Carthage (and Spain); gold used only in ingots until 547. Gold to silver in trade = 13.71:1, in coins = 17.4:1, under Caesar = 12:1 (at the outbreak of the civil war, after the plunder of the aerarium^[42] by Caesar, only 8:1); under Honorius and Arcadius (397) fixed at = 14.4:1; under Honorius and Theodosius the Younger (422)= 18:1. First silver coin in Rome minted 485; first gold coin: 547. As soon as, after the Second Punic War, the as was reduced to 1 ounce, it became small change; the sesterce (silver) the monetary unit, and all large payments made in silver. (In everyday commerce copper (later iron) remained the chief metal. Under the Emperors of the Orient and Occident, the solidus (aureus), i.e. gold, was the monetary standard.)

Thus, in antiquity, taking the average:

First: Relative increase in value of silver as compared with gold. Apart from special phenomena (Arabs) where gold cheaper than silver and still cheaper than iron, in Asia from the fifteenth to the sixth centuries BC, gold to silver = 6:1 or 8:1 (the latter ratio in China and Japan until the beginning of the nineteenth century). In the Manou Code itself = 2 1/2:1. This lower ratio arises from the same causes which promote the discovery of gold as the first metal. Gold in those days chiefly from Asia and Egypt. This period corresponds to that of copper money in Italian history. In general, copper as main instrument of peace and war corresponds to the pre-eminence of gold among the precious metals. Even in Xenophon’s time, gold to silver = 10:1.

Secondly: after the death of Alexander, relative rise in the value of gold compared to silver, with the exhaustion of the gold-bearing sand, progress in technology and civilization; and hence establishment of silver mines; now the influence of the quantitatively greater prevalence of silver over gold in the earth’s crust. But especially the Carthaginians, the exploitation of Spain, which necessarily had to revolutionize the relation of silver to gold in somewhat the same way as the discovery of American silver at the end of the fifteenth century. Ratio in Caesar’s time = 17:1; later 14: 1; finally, after A.D. 422 = 18: l. (The decline of gold under Caesar for accidental reasons.) The decline of silver relative to gold corresponds to iron being the chief instrument of production in war and peace. While in the first period, influx of gold from the East, in the second, influx of silver from the cooler West.

Thirdly in the Middle Ages: Again the ratio as in the time of Xenophon, 10:1. (In some places = 12:1?)

Fourthly, after the discovery of America: Again about the ratio as in the time of Honorius and Arcadius (397); 14 to 15:1. Although since about 1815–44 an increase in the production of gold, gold was at a premium (e.g. in France). It is probable that the discovery of California and Australia

fifthly, will reintroduce the ratio of the Roman Imperium, 18: 1, if not greater. The relative depreciation of silver due to progress in the production of precious metals, in antiquity as well as after, [proceeds] from East to West, until California and Australia reverse this. In the short run, great fluctuations; but when one looks at the main differences, these repeat themselves in a remarkable fashion.

In antiquity, copper three or four times as expensive as today. (Garnier.)

(c) Now to be examined, the sources of gold and silver and their connection with historical development.[edit source]

(d) Money as coin. Briefly the historical aspect of coins. Depreciation and appreciation, etc.[edit source]

Circulation, or the turnover of money, corresponds to an opposite circulation, or turnover, of commodities. A commodity possessed by A passes into the hands of B, while B’s money passes into the hands of A, etc. The circulation of money, like that of commodities, begins at an infinity of different points, and to an infinity of different points it returns. Departures from a single centre to the different points on the periphery and the return from all points of the periphery to a single centre do not take place in the circulatory process at the stage here being examined, i.e. its direct stage; they belong, rather, in a circulatory system mediated by a banking system. This first, spontaneous and natural circulation does consist, however, of a mass of turnovers. Circulation proper, nevertheless, begins only where gold and silver cease to be commodities; between countries which export precious metals and those which import them, no circulation in this sense takes place, but mere simple exchange, since gold and silver function here not as money but as commodities. Where money plays the role of mediating the exchange of commodities (that means here their circulation) and is hence a means of exchange, it is an instrument of circulation, a vehicle of circulation; but wherever, in this process, it is itself circulated, where it changes hands along its own lines of motion, there it itself has a circulation, monetary circulation, monetary turnover. The aim is to find out to what extent this circulation is determined by particular laws. This much is clear from the outset: if money is a vehicle of circulation for the commodity, then the commodity is likewise a vehicle for the circulation of money. If money circulates commodities, then commodities circulate money. The circulation of commodities and the circulation of money thus determine one another. As regards monetary turnover, three things merit attention: (1) the form of the movement itself; the line which it describes (its concept); (2) the quantity of money circulating; (3) the rate at which it completes its motion, its velocity of circulation. This can happen only in connection with the circulation of commodities. This much is clear from the outset, that there are moments in the circulation of commodities which are entirely independent of the circulation of money, and which either directly determine the latter, or which are determined along with monetary circulation by a third factor, as in the case of, e.g., the velocity. The overall character of the mode of production will determine them both, and will determine the circulation of commodities more directly. The mass of persons engaged in exchange (population): their distribution between the town and the country; the absolute quantity of commodities, of products and agencies of production; the relative mass of commodities which enter into circulation; the development of the means of communication and transport, in the double sense of determining not only the sphere of those who are in exchange, in contact, but also the speed with which the raw material reaches the producer and the product the consumer; finally the development of industry, which concentrates different branches of production, e.g. spinning, weaving, dyeing, etc., and hence makes superfluous a series of intermediate exchanges. The circulation of commodities is the original precondition of the circulation of money. To what extent the latter then reacts back on the circulation of commodities remains to be seen.

The first task is firmly to establish the general concept of circulation or of turnover.

But first let us note that what is circulated by money is exchange value, hence prices. Hence, as regards the circulation of commodities, it is not only their mass but, equally, their prices which must be considered. A large quantity of commodities at a low exchange value (price) obviously requires less money for its circulation than a smaller quantity at double the price. Thus, actually, the concept of price has to be developed before that of circulation. Circulation is the positing of prices, it is the process in which commodities are transformed into prices: their realization as prices. Money has a dual character: it is (1) measure, or element in which the commodity is realized as exchange value, and (2) means of exchange, instrument of circulation, and in each of these aspects it acts in quite opposite directions. Money only circulates commodities which have already been ideally transformed into money, not only in the head of the individual but in the conception held by society (directly, the conception held by the participants in the process of buying and selling). This ideal transformation into money is by no means determined by the same laws as the real transformation. Their interrelation is to be examined.

(a) An essential characteristic of circulation is that it circulates exchange values (products or labour), and, in particular, exchange values in the form of prices. Thus, not every form of commodity exchange, e.g. barter, payment in kind, feudal services, etc., constitutes circulation. To get circulation, two things are required above all: Firstly: the precondition that commodities are prices; Secondly: not isolated acts of exchange, but a circle of exchange, a totality of the same, in constant flux, proceeding more or less over the entire surface of society; a system of acts of exchange. The commodity is specified as an exchange value. As an exchange value, it functions in a given proportion (relative to the labour time contained in it) as equivalent for all other values (commodities); but it does not directly correspond to this, its function. As an exchange value it differs from itself as a natural, material thing. A mediation is required to posit it as an exchange value. Money presents the exchange value of the commodity to the commodity as something different from itself. The commodity which is posited as money is, at the outset, the commodity as pure exchange value, or, the commodity as pure exchange value is money. But at the same time, money now exists outside and alongside the commodity; its exchange value, the exchange value of all commodities, has achieved an existence independent of the commodity, an existence based in an autonomous material of its own, in a particular commodity. The exchange value of the commodity expresses the totality of the quantitative relations in which all other commodities can be exchanged for it, determined by the unequal quantities of the same which can be produced in the same labour time. Money then exists as the exchange value of all commodities alongside and outside them. It is the universal material into which they must be dipped, in which they become gilded and silver-plated, in order to win their independent existence as exchange values. They must be translated into money, expressed in money. Money becomes the general denomination of exchange values, of commodities as exchange values. Exchange value expressed as money, i.e. equated with money, is price. After money has been posited as independent in relation to exchange values, then the exchange values are posited in their particularity in relation to their subject, money. But every exchange value is a particular quantity; a quantitatively specific exchange value. As such, it is = a particular quantity of money. This particularity is given, in the general law, by the amount of labour time contained in a given exchange value. Thus an exchange value which is the product of, say, one day is expressed in a quantity of gold or silver which = one day of labour time, which is the product of one day of labour. The general measure of exchange values now becomes the measure which exists between each exchange value and the money to which it is equated. (Gold and silver are determined, in the first place, by their cost of production in the country of production. ‘In the mining countries all prices ultimately depend on the costs of production of the precious metals; … the remuneration paid to the miner, … affords the scale, on which the remuneration of all other producers is calculated. The gold value and silver value of all commodities exempt from monopoly depends in a country without mines on the gold and silver which can be obtained by exporting the result of a given quantity of labour, the current rate of profit, and, in each individual case, the amount of wages, which have been paid, and the time for which they have been advanced.’ (Senior.)^[43] In other words: on the quantity of gold and silver which is directly or indirectly obtained from the mining countries in exchange for a given quantity of labour (exportable products). Money is in the first instance that which expresses the relation of equality between all exchange values: in money, they all have the same name.)

Exchange value, posited in the character of money, is price. Exchange value is expressed in price as a specific quantity of money. Money as price shows first of all the identity of all exchange values; secondly, it shows the unit of which they all contain a given number, so that the equation with money expresses the quantitative specificity of exchange values, their quantitative relation to one another. Money is here posited, thus, as the measure of exchange values; and prices as exchange values measured in money. The fact that money is the measure of prices, and hence that exchange values are compared with one another on this standard, is an aspect of the situation which is self-evident. But what is more important for the analysis is that in price, exchange value is compared with money. After money has been posited as independent exchange value, separated from commodities, then the individual commodity, the particular exchange value, is again equated to money, i.e. it is posited as equal to a given quantity of money, expressed as money, translated into money. By being equated to money, they again become related to one another as they were, conceptually, as exchange values: they balance and equate themselves with one another in given proportions. The particular exchange value, the commodity, becomes expressed as, subsumed under, posited in the character of the independent exchange value, of money. How this happens (i.e. how the quantitative relation between the quantitatively defined exchange value and a given quantity of money is found), above. But, since money has an independent existence apart from commodities, the price of the commodity appears as an external relation of exchange values or commodities to money; the commodity is not price, in the way in which its social substance stamped it as exchange value; this quality is not immediately coextensive with it; but is mediated by the commodity’s comparison with money; the commodity is exchange value, but it has a price. Exchange value was in immediate identity with it, it was its immediate quality, from which it just as immediately split, so that on one side we found the commodity, on the other (as money) its exchange value; but now, as price, the commodity relates to money on one side as something existing outside itself, and secondly, it is ideally posited as money itself, since money has a reality different from it. The price is a property of the commodity, a quality in which it is presented as money. It is no longer an immediate but a reflected quality of it. Alongside real money, there now exists the commodity as ideally posited money.

This next characteristic, a characteristic of money as measure as well as of the commodity as price, is most easily shown by means of the distinction between real money and accounting money. As measure, money always serves as accounting money, and, as price, the commodity is always transformed only ideally into money.

‘The appraisal of the commodity by the seller, the offer made by the buyer, the calculations, obligations, rents, inventories, etc., in short, everything which leads up to and precedes the material act of payment, must be expressed in accounting money. Real money intervenes only in order to realize payments and to balance (liquidate) the accounts. If I must pay 24 livres 12 sous, then accounting money presents 24 units of one sort and 12 of another, while in reality I shall pay in the form of two material pieces: a gold coin worth 24 livres and a silver coin worth 12 sous. The total mass of real money has necessary limits in the requirements of circulation. Accounting money is an ideal measure, which has no limits other than those of the imagination. Employed to express every sort of wealth if considered from the aspect of its exchange value alone; thus, national wealth, the income of the state and of individuals; the accounting values, regardless of the form in which these values may exist, regulated in one and the same form; so that there is not a single article in the mass of consumable objects which is not several times transformed into money by the mind, while, compared to this mass, the total sum of effective money is, at the most = 1:10.’ (Garnier.)^[44] (This last ratio is poor. 1: many millions is more correct. But this entirely unmeasurable.)

Thus, just as originally money expressed exchange value, so does the commodity as price, as ideally posited, mentally realized exchange value, now express a sum of money: money in a definite proportion. As prices, all commodities in their different forms are representatives of money, whereas earlier it was money, as the independent form of exchange value, which was the representative of all commodities. After money is posited as a commodity in reality, the commodity is posited as money in the mind.

It is clear so far, then, that in this ideal transformation of commodities into money, or in the positing of commodities as prices, the quantity of really available money is altogether a matter of indifference, for two reasons: Firstly: the ideal transformation of commodities into money is prima facie independent of and unrestricted by the mass of real money. Not a single piece of money is required in this process, just as little as a measuring rod (say, a yardstick) really needs to be employed before, for example, the ideal quantity of yards can be expressed. If, for example, the entire national wealth of England is appraised in terms of money, i.e. expressed as a price, everyone knows that there is not enough money in the world to realize this price. Money is needed here only as a category, as a mental relation. Secondly: because money functions as a unit, that is, the commodity is expressed in such a way that it contains a definite sum of equal parts of money, is measured by it, it follows that the measure between both [is] the general measure of exchange values – costs of production or labour time. Thus if 1/3 of an ounce of gold is the product of 1 working day, and the commodity x is the product of 3 working days, then the commodity x = 1 oz. or £3 17s. 4d. With the measurement of money and of the commodity, the original measure of exchange values enters again. Instead of being expressed in 3 working days, the commodity is expressed in the quantity of gold or silver which is the product of 3 working days. The quantity of really available money obviously has no bearing on this proportion.

(Error by James Mill: overlooks that their cost of production and not their quantity determines the value of the precious metals, as well as the prices of commodities measured in metallic value.)^[45]

(‘Commodities in exchange are their own reciprocal measure … But this process would require as many reference points as there are commodities in circulation. If a commodity were exchanged only for one, and not for two commodities, then it would not serve as term of comparison … Hence the necessity of a common term of comparison … This term can be purely ideal … The determination of measure is fundamental, more important than that of wages … In the trade between Russia and China silver is used to evaluate all commodities, but nevertheless this commerce is done by means of barter.’ (Storch.)^[46] ‘The operation of measuring with money is similar to the employment of weights in the comparison of material quantities. The same name for the two units whose function is to count the weight as well as the value of each thing. Measures of weight and measures of value the same names. An étalon of invariable weight was easily found. In the case of money, the question was again the value of a pound of silver, which = its cost of production.’ (Sismondi.)^[47] Not only the same names. Gold and silver were originally measured by weight. Thus, the as = 1 pound of copper among the Romans.)

‘Sheep and oxen, not gold and silver, money in Homer and Hesiod, as measure of value. Barter on the Trojan battlefield.’ (Jacob.) (Similarly, slaves in the Middle Ages. ibid.)^[48]

Money can be posited in the character of measure and in that of the general element of exchange values, without being realized in its further qualities; hence also before it has taken on the form of metal money. In simple barter. However, presupposed in that case that little exchange of any kind takes place; that commodities are not developed as exchange values and hence not as prices. (‘A common standard in the price of anything presupposes its frequent and familiar alienation. This not the case in simple states of society. In non-industrial countries many things without definite price … Sale alone can determine prices, and frequent sale alone can fix a standard. The frequent sale of articles of first necessity depends on the relation between town and country’ etc.)^[49]

A developed determination of prices presupposes that the individual does not directly produce his means of subsistence, but that his direct product is an exchange value, and hence must first be mediated by a social process, in order to become the means of life for the individual. Between the full development of this foundation of industrial society and the patriarchal condition, many intermediate stages, endless nuances. This much appears from (a). If the cost of production of the precious metals rises, then all commodity prices fall; if the cost of production of the precious metals falls, then all commodity prices rise. This is the general law, which, as we shall see, is modified in particular cases.

(b) If exchange values are ideally transformed into money by means of prices, then, in the act of exchange, in purchase and sale, they are really transformed into money, exchanged for money, in order then to be again exchanged as money for a commodity. A particular exchange value must first be exchanged for exchange value in general before it can then be in turn exchanged for particulars. The commodity is realized as an exchange value only through this mediating movement, in which money plays the part of middleman. Money thus circulates in the opposite direction from commodities. It appears as the middleman in commodity exchange, as the medium of exchange. It is the wheel of circulation, the instrument of circulation for the turnover of commodities; but, as such, it also has a circulation of its own – monetary turnover, monetary circulation. The price of the commodity is realized only when it is exchanged for real money, or in its real exchange for money.

This is what emerges from the foregoing. Commodities are really exchanged for money, transformed into real money, after they have been ideally transformed into money beforehand – i.e. have obtained the attribute of price as prices. Prices, therefore, are the precondition of monetary circulation, regardless of how much their realization appears to be a result of the latter. The circumstances which make the prices of commodities rise above or fall below their average value because their exchange value does so are to be developed in the section on exchange value, and precede the process of the actual realization of the prices of commodities through money; they thus appear, at first, as completely independent of it. The relations of numbers to one another obviously remain the same when I change them into decimal fractions. This is only giving them another name. In order really to circulate commodities, what is required is instruments of transport, and transport cannot be performed by money. If I have bought 1,000 lb. of iron for the amount of £x, then the ownership of the iron has passed into my hand. My £x have done their duty as means of exchange and have circulated, along with the title of ownership. The seller, inversely, has realized the price of iron, iron as exchange value. But in order then to bring the iron from him to me, money itself is useless; that requires wagons, horses, roads, etc. The real circulation of commodities through time and space is not accomplished by money. Money only realizes their price and thereby transfers the title to the commodity into the hands of the buyer, to him who has proffered means of exchange. What money circulates is not commodities but their titles of ownership; and what is realized in the opposite direction in this circulation, whether by purchase or sale, is again not the commodities, but their prices. The quantity of money which is, then, required for circulation is determined initially by the level of the prices of the commodities thrown into circulation. The sum total of these prices, however, is determined firstly: by the prices of the individual commodities; secondly: by the quantity of commodities at given prices which enter into circulation. For example, in order to circulate a quarter of wheat at 60s., twice as many s. are required as would be to circulate it at 30s. And if 5,000 of these quarters at 60s. are to be circulated, then 300,000 s. are required, while in order to circulate 200 such quarters only 12,000s. are needed. Thus, the amount of money required is dependent on the level of commodity prices and on the quantity of commodities at specified prices.

Thirdly, however, the quantity of money required for circulation depends not only on the sum total of prices to be realized, but on the rapidity with which money circulates, completes the task of this realization. If 1 thaler in one hour makes 10 purchases at 1 thaler each, if it is exchanged 10 times, then it performs quite the same task that 10 thalers would do if they made only 1 purchase per hour. Velocity is the negative moment; it substitutes for quantity; by its means, a single coin is multiplied.

The circumstances which determine the mass of commodity prices to be realized, on the one hand, and the velocity of circulation of money, on the other hand, are to be examined later. This much is clear, that prices are not high or low because much or little money circulates, but that much or little money circulates because prices are high or low; and, further, that the velocity of the circulating money does not depend on its quantity, but that the quantity of the circulating medium depends on its velocity (heavy payments are not counted but weighed; through this the time necessary is shortened).

Still, as already mentioned, the circulation of money does not begin from a single centre, nor does it return to a single centre from all points of the periphery (as with the banks of issue and partly with state issues); but from an infinite number of points, and returns to an infinite number (this return itself, and the time required to achieve it, a matter of chance). The velocity of the circulating medium can therefore substitute for the quantity of the circulating medium only up to a certain point. (Manufacturers and farmers pay, for example, the worker; he pays the grocer, etc.; from there the money returns to the manufacturers and farmers.) The same quantity of money can effectuate a series of payments only successively, regardless of the speed. But a certain mass of payments must be made simultaneously. Circulation takes its point of departure at one and the same time from many points. A definite quantity of money is therefore necessary for circulation, a sum which will always be engaged in circulation, and which is determined by the sum total which starts from the simultaneous points of departure in circulation, and by the velocity with which it runs its course (returns). No matter how many ebbs and floods this quantity of the circulating medium is exposed to, an average level nevertheless comes into existence; since the permanent changes are always very gradual, take place only over longer periods, and are constantly paralysed by a mass of secondary circumstances, as we shall see.

(To (a). ‘Measure, used as attribute of money, means indicator of value’ … Ridiculous, that ‘prices must fall, because commodities are judged as being worth so many ounces of gold, and the amount of gold is diminished in this country … The efficiency of gold as an indicator of value is unaffected by its quantity being greater or smaller in any particular country. If the employment of banking expedients were to succeed in reducing the paper and metal circulation in this country by half, the relative value of money and commodities would remain the same.’ Example of Peru in the sixteenth century and transmission from France to England. Hubbard, VIII, 45.)^[50] (‘On the African coast neither gold nor silver the measure of value; instead of them, an ideal standard, an imaginary bar.’) (Jacob, V, 15.)^[51]

In its quality of being a measure, money is indifferent to its quantity, or, the existing quantity of money makes no difference. Its quantity is measured in its quality as medium of exchange, as instrument of circulation. Whether these two qualities of money can enter into contradiction with one another – to be looked at later.

(The concept of forced, involuntary circulation (see Steuart)^[52] does not belong here yet.)

To have circulation, what is essential is that exchange appear as a process, a fluid whole of purchases and sales. Its first presupposition is the circulation of commodities themselves, as a natural, many-sided circulation of those commodities. The precondition of commodity circulation is that they be produced as exchange values, not as immediate use values, but as mediated through exchange value. Appropriation through and by means of divestiture [Entäusserung] and alienation [Veräusserung] is the fundamental condition. Circulation as the realization of exchange values implies: (1) that my product is a product only in so far as it is for others; hence suspended singularity, generality; (2) that it is a product for me only in so far as it has been alienated, become for others; (3) that it is for the other only in so far as he himself alienates his product; which already implies (4) that production is not an end in itself for me, but a means. Circulation is the movement in which the general alienation appears as general appropriation and general appropriation as general alienation. As much, then, as the whole of this movement appears as a social process, and as much as the individual moments of this movement arise from the conscious will and particular purposes of individuals, so much does the totality of the process appear as an objective interrelation, which arises spontaneously from nature; arising, it is true, from the mutual influence of conscious individuals on one another, but neither located in their consciousness, nor subsumed under them as a whole. Their own collisions with one another produce an alien social power standing above them, produce their mutual interaction as a process and power independent of them. Circulation, because a totality of the social process, is also the first form in which the social relation appears as something independent of the individuals, but not only as, say, in a coin or in exchange value, but extending to the whole of the social movement itself. The social relation of individuals to one another as a power over the individuals which has become autonomous, whether conceived as a natural force, as chance or in whatever other form, is a necessary result of the fact that the point of departure is not the free social individual. Circulation as the first totality among the economic categories is well suited to bring this to light.

At first sight, circulation appears as a simply infinite process.^[53] The commodity is exchanged for money, money is exchanged for the commodity, and this is repeated endlessly. This constant renewal of the same process does indeed form an important moment of circulation. But, viewed more precisely, it reveals other phenomena as well; the phenomena of completion, or, the return of the point of departure into itself. The commodity is exchanged for money; money is exchanged for the commodity. In this way, commodity is exchanged for commodity, except that this exchange is a mediated one. The purchaser becomes a seller again and the seller becomes purchaser again. In this way, each is posited in the double and the antithetical aspect, and hence in the living unity of both aspects. It is entirely wrong, therefore, to do as the economists do, namely, as soon as the contradictions in the monetary system emerge into view, to focus only on the end results without the process which mediates them; only on the unity without the distinction, the affirmation without the negation. The commodity is exchanged in circulation for a commodity: at the same time, and equally, it is not exchanged for a commodity, in as much as it is exchanged for money. The acts of purchase and sale, in other words, appear as two mutually indifferent acts, separated in time and place. When it is said that he who sells also buys in as much as he buys money, and that he who buys also sells in as much as he sells money, then it is precisely the distinction which is overlooked, the specific distinction between commodity and money. After the economists have most splendidly shown that barter, in which both acts coincide, does not suffice for a more developed form of society and mode of production, they then suddenly look at the kind of barter which is mediated by money as if it were not so mediated, and overlook the specific character of this transaction. After they have shown us that money is necessary in addition to and distinct from commodities, they assert all at once that there is no distinction between money and commodities. They take refuge in this abstraction because in the real development of money there are contradictions which are unpleasant for the apologetics of bourgeois common sense, and must hence be covered up. In so far as purchase and sale, the two essential moments of circulation, are indifferent to one another and separated in place and time, they by no means need to coincide. Their indifference can develop into the fortification and apparent independence of the one against the other. But in so far as they are both essential moments of a single whole, there must come a moment when the independent form is violently broken and when the inner unity is established externally through a violent explosion. Thus already in the quality of money as a medium, in the splitting of exchange into two acts, there lies the germ of crises, or at least their possibility, which cannot be realized, except where the fundamental preconditions of classically developed, conceptually adequate circulation are present.

It has further been seen that, in circulation, money only realizes prices. The price appears at first as an ideal aspect of the commodity; but the sum of money exchanged for a commodity is its realized price, its real price. The price appears therefore as external to and independent of the commodity, as well as existing in it ideally. If the commodity cannot be realized in money, it ceases to be capable of circulating, and its price becomes merely imaginary; just as originally the product which has become transformed into exchange value, if it is not really exchanged, ceases to be a product. (The rise and fall of prices not the question here.) From viewpoint (a) price appeared as an aspect of the commodity; but from (b) money appears as the price outside the commodity. The commodity requires not simply demand, but demand which can pay in money. Thus, if its price cannot be realized, if it cannot be transformed into money, the commodity appears as devalued, depriced. The exchange value expressed in its price must be sacrificed as soon as this specific transformation into money is necessary. Hence the complaints by Boisguillebert,^[54] e.g. that money is the hangman of all things, the moloch to whom everything must be sacrificed, the despot of commodities. In the period of the rising absolute monarchy with its transformation of all taxes into money taxes, money indeed appears as the moloch to whom real wealth is sacrificed. Thus it appears also in every monetary panic. From having been a servant of commerce, says Boisguillebert, money became its despot.^[55] But, in fact, already the determination of prices in themselves contains what is counterposed to money in exchange; that money no longer represents the commodity, but the commodity, money. Lamentations about commerce in money as illegitimate commerce are to be found among several writers, who form the transition from the feudal to the modern period; the same later among socialists.

(α) The further the division of labour develops, the more does the product cease to be a medium of exchange. The necessity of a general medium of exchange arises, a medium independent of the specific production of each and every one. When production is oriented towards immediate subsistence, not every article can be exchanged for every other one, and a specific activity can be exchanged only for specific products. The more specialized, manifold and interdependent the products become, the greater the necessity for a general medium of exchange. At the beginning, the product of labour, or labour itself, is the general medium of exchange. But this ceases more and more to be general medium of exchange as it becomes more specialized. A fairly developed division of labour presupposes that the needs of each person have become very many-sided and his product has become very one-sided. The need for exchange and the unmediated medium of exchange develop in inverse proportion. Hence the necessity for a general medium of exchange, where the specific product and the specific labour must be exchanged for exchangeability. The exchange value of a thing is nothing other than the quantitatively specific expression of its capacity for serving as medium of exchange. In money the medium of exchange becomes a thing, or, the exchange value of the thing achieves an independent existence apart from the thing. Since the commodity is a medium of exchange of limited potency compared with money, it can cease to be a medium of exchange as against money.

(β) The splitting of exchange into purchase and sale makes it possible for me to buy without selling (stockpiling of commodities) or to sell without buying (accumulation of money). It makes speculation possible. It turns exchange into a special business; i.e. it founds the merchant estate.^[17] This separation of the two elements has made possible a mass of transactions in between the definitive exchange of commodities, and it enables a mass of persons to exploit this divorce. It has made possible a mass of pseudo-transactions. Sometimes it becomes evident that what appeared to be an essentially divided act is in reality an essentially unified one; then again, sometimes, that what was thought to be an essentially unified act is in reality essentially divided. At moments when purchasing and selling assert themselves as essentially different acts, a general depreciation of all commodities takes place. At moments where it turns out that money is only a medium of exchange, a depreciation of money comes about. General fall or rise of prices.

Money provides the possibility of an absolute division of labour, because of independence of labour from its specific product, from the immediate use value of its product for it. The general rise of prices in times of speculation cannot be ascribed to a general rise in its exchange value or its cost of production; for if the exchange value or the cost of production of gold were to rise in step with that of all other commodities, then their exchange values expressed in money, i.e. their prices, would remain the same. Nor can it be ascribed to a decline in the production price of gold. (Credit is not yet on the agenda here.) But since money is not only a general commodity, but also a particular, and since, as a particular, it comes under the laws of supply and demand, it follows that the general demand for particular commodities as against money must bring it down.

We see that it is in the nature of money to solve the contradictions of direct barter as well as of exchange value only by positing them as general contradictions. Whether or not a particular medium of exchange was exchanged for another particular was a matter of coincidence; now, however, the commodity must be exchanged for the general medium of exchange, against which its particularity stands in a still greater contradiction. In order to secure the exchangeability of the commodity, exchangeability itself is set up in opposition to it as an independent commodity. (It was a means, becomes an end.) The question was, whether a particular commodity encounters another particular one. But money suspends the act of exchange itself in two mutually indifferent acts.

(Before the questions regarding circulation, its strength, weakness, etc., and notably the disputed point regarding the quantity of money in circulation and prices, are further developed, money should be looked at from the point of view of its third characteristic.^[56])

One moment of circulation is that the commodity exchanges itself through money for another commodity. But there is, equally, the other moment, not only that commodity exchanges for money and money for commodity, but equally that money exchanges for commodity and commodity for money; hence that money is mediated with itself by the commodity, and appears as the unity which joins itself with itself in its circular course. Then it appears no longer as the medium, but as the aim of circulation (as e.g. with the merchant estate) (in commerce generally). If circulation is looked at not as a constant alternation, but as a series of circular motions which it describes within itself, then this circular path appears as a double one: Commodity–Money–Money–Commodity; and in the other direction Money–Commodity–Commodity–Money; i.e. if I sell in order to buy, then I can also buy in order to sell. In the former case money only a means to obtain the commodity, and the commodity the aim; in the second case the commodity only a means to obtain money, and money the aim. This is the simple result when the moments of circulation are brought together. Looking at it as mere circulation, the point at which I intervene in order to declare it the point of departure has to be a matter of indifference.

Now, a specific distinction does enter between a commodity in circulation and money in circulation. The commodity is thrown out of circulation at a certain point and fulfils its definitive function only when it is definitively withdrawn from circulation, consumed, whether in the act of production or in consumption proper. The function of money, by contrast, is to remain in circulation as its vehicle, to resume its circular course always anew like a perpetuum mobile.

Nevertheless, this second function is also a part of circulation, equally with the first. Now one can say: to exchange commodity for commodity makes sense, since commodities, although they are equivalent as prices, are qualitatively different, and their exchange ultimately satisfies qualitatively different needs. By contrast, exchanging money for money makes no sense, unless, that is, a quantitative difference arises, less money is exchanged for more, sold at a higher price than purchased, and with the category of profit we have as yet nothing to do. The circle Money–Commodity–Commodity–Money, which we drew from the analysis of circulation, would then appear to be merely an arbitrary and senseless abstraction, roughly as if one wanted to describe the life cycle as Death–Life–Death; although even in the latter case it could not be denied that the constant decomposition of what has been individualized back into the elemental is just as much a moment of the process of nature as the constant individualization of the elemental. Similarly in the act of circulation, the constant monetarization of commodities, just as much as the constant transformation of money into commodities. In the real process of buying in order to sell, admittedly, the motive is the profit made thereby, and the ultimate aim is to exchange less money, by way of the commodity, for more money, since there is no qualitative difference (here we disregard special kinds of metal money as well as special kinds of coins) between money and money. All that given, it cannot be denied that the operation may come to grief and that hence the exchange of money for money without quantitative difference frequently takes place in reality and, hence, can take place. But before this process, on which commerce rests and which therefore, owing to its extension, forms a chief phenomenon of circulation, is possible at all, the circular path Money–Commodity–Commodity–Money must be recognized as a particular form of circulation. This form is specifically different from that in which money appears as a mere medium of exchange for commodities; as the middle term; as a minor premise of the syllogism. Along with its quantitative aspect, visible in commerce, it must be separated out in its purely qualitative form, in its specific movement. Secondly: it already implies that money functions neither only as measure, nor only as medium of exchange, nor only as both; but has yet a third quality. It appears here firstly as an end in itself, whose sole realization is served by commodity trade and exchange. Secondly, since the cycle concludes with it at that point, it steps outside it, just as the commodity, having been exchanged for its equivalent through money, is thrown out of circulation. It is very true that money, in so far as it serves only as an agent of circulation, constantly remains enclosed in its cycle. But it appears here, also, that it is still something more than this instrument of circulation, that it also has an independent existence outside circulation, and that in this new character it can be withdrawn from circulation just as the commodity must constantly be definitively withdrawn. We must then observe money in its third quality, in which both of the former are included, i.e. that of serving as measure as well as the general medium of exchange and hence the realization of commodity prices.

(c) Money as material representative of wealth (accumulation of money; before that, money as the general material of contracts, etc.)[edit source]

It is in the nature of circulation that every point appears simultaneously as a starting-point and as a conclusion, and, more precisely, that it appears to be the one in so far as it appears to be the other. The specific form M–C–C–M therefore just as correct as the other, which appears the more original, C–M–M–C. The difficulty is that the other commodity is qualitatively different; not so the other money. It can differ only quantitatively. – Regarded as measure the material substance of money is essential, although its availability and even more its quantity, the amount of the portion of gold or silver which serves as unit, are entirely irrelevant for it in this quality, and it is employed in general only as an imaginary, non-existent unit. In this quality it is needed as a unit and not as an amount. If I say a pound of cotton is worth 8d., then I am saying that 1 pound of cotton = 1/116 oz. of gold (the ounce at £3 17s. 7d.) (931d.). This expresses at the same time its particularity as exchange value as against all other commodities, as equivalent of all other commodities, which contain the ounce of gold this or that many times, since they are all in the same way compared to the ounce of gold. This original relation of the pound of cotton with gold, by means of which the quantity of gold contained in an ounce of cotton is determined, is fixed by the quantity of labour time realized in one and the other, the real common substance of exchange values. This is to be presupposed from the chapter dealing with exchange value as such. The difficulty of finding this equation is not as great as it may appear. For example, labour which directly produces gold directly reveals a certain quantity of gold to be the product of, say, one working day. Competition equates the other working days with that one, modificandis modificatis. Directly or indirectly. In a word, in the direct production of gold, a definite quantity of gold directly appears as product and hence as the value, the equivalent, of a definite amount of labour time. One has therefore only to determine the amount of labour time realized in the various commodities, and to equate them to the labour time which directly produces gold, in order to state how much gold is contained in a given commodity. The determination of all commodities as prices – as measured exchange values – is a process which takes place only gradually, which presupposes frequent exchange and hence frequent comparison of commodities as exchange values; but as soon as the existence of commodities as prices has become a precondition – a precondition which is itself a product of the social process, a result of the process of social production – then the determination of new prices appears simple, since the elements of production cost are themselves already present in the form of prices, and are hence simply to be added. (Frequent alienation, sale, frequent sale, Steuart.^[57] Rather, all this must have continuity so that prices achieve a certain regularity.) However, the point we wanted to get at here is this: in so far as gold is to be established as the unit of measurement, the relation of gold to commodities is determined by barter, direct, unmediated exchange; like the relation of all other commodities to one another. With barter, however, the product is exchange value only in itself; it is its first phenomenal form; but the product is not yet posited as exchange value. Firstly, this character does not yet dominate production as a whole, but concerns only its superfluity and is hence itself more or less superfluous (like exchange itself); an accidental enlargement of the sphere of satisfactions, enjoyments (relations to new objects). It therefore takes place at only a few points (originally at the borders of the natural communities, in their contact with strangers), is restricted to a narrow sphere, and forms something which passes production by, is auxiliary to it; dies out just as much by chance as it arises. The form of barter in which the overflow of one’s own production is exchanged by chance for that of others’ is only the first occurrence of the product as exchange value in general, and is determined by accidental needs, whims, etc. But if it should happen to continue, to become a continuing act which contains within itself the means of its renewal, then little by little, from the outside and likewise by chance, regulation of reciprocal exchange arises by means of regulation of reciprocal production, and the costs of production, which ultimately resolve into labour time, would thus become the measure of exchange. This shows how exchange comes about, and the exchange value of the commodity. But the circumstances under which a relation occurs for the first time by no means show us that relation either in its purity or in its totality. A product posited as exchange value is in its essence no longer a simple thing; it is posited in a quality differing from its natural quality; it is posited as a relation, more precisely as a relation in general, not to one commodity but to every commodity, to every possible product. It expresses, therefore, a general relation; the product which relates to itself as the realization of a specific quantity of labour in general, of social labour time, and is therefore the equivalent of every other product in the proportion expressed in its exchange value. Exchange value presupposes social labour as the substance of all products, quite apart from their natural make-up. Nothing can express a relation without relating to one particular thing, and there can be no general relation unless it relates to a general thing. Since labour is motion, time is its natural measure. Barter in its crudest form presupposes labour as substance and labour time as measure of commodities; this then emerges as soon as it becomes regularized, continuous, as soon as it contains within itself the reciprocal requirements for its renewal. – A commodity is exchange value only if it is expressed in another, i.e. as a relation. A bushel of wheat is worth so many bushels of rye; in this case wheat is exchange value in as much as it is expressed in rye, and rye is exchange value in as much as it is expressed in wheat. If each of the two is related only to itself, it is not exchange value. Now, in the relation in which money appears as measure, it itself is not expressed as a relation, not as exchange value, but as a natural quantity of a certain material, a natural weight- fraction of gold or silver. In general, the commodity in which the exchange value of another is expressed, is never expressed as exchange value, never as relation, but rather as a definite quantity of its natural make-up. If 1 bushel of wheat is worth 3 bushels of rye, then only the bushel of wheat is expressed as a value, not the bushel of rye. Of course, the other is also posited in itself; the 1 bushel of rye is then = 1/3 bushel of wheat; but this is not posited, but merely a second relation, which is admittedly directly present in the first. If one commodity is expressed in another, then it is posited as a relation, and the other as simple quantity of a certain material. 3 bushels of rye are in themselves no value; rather, rye filling up a certain volume, measured by a standard of volume. The same is true of money as measure, as the unit in which the exchange values of other commodities are measured. It is a specific weight of the natural substance by which it is represented, gold, silver, etc. If 1 bushel of wheat has the price of 77s. 7d., then it is expressed as something else, to which it is equal, as 1 ounce of gold; as relation, as exchange value. But 1 ounce of gold is in itself no exchange value; it is not expressed as exchange value; but as a specific quantity of itself, of its natural substance, gold. If 1 bushel of wheat has the price of 77s. 7d. or of 1 ounce of gold, then this can be a greater or lesser value, since 1 ounce of gold will rise or fall in relation to the quantity of labour required for its production. But for the determination of its price as such, this is irrelevant; for its price of 77s. 7d. exactly expresses the relation in which it is equivalent to all other commodities, in which it can buy them. The specificity of price determination, whether the bushel is 77 or 1,780s., is a different matter altogether from the determination of price as such, i.e. the positing of wheat as price. It has a price, regardless of whether it costs 100 or 1s. The price expresses its exchange value only in a unit common to all commodities; presupposes therefore that this exchange value is already regulated by other relations. To be sure, the fact that 1 bushel of wheat has the price of 1 ounce of gold – since gold and wheat as natural objects have no relation with one another, are as such not a measure for one another, are irrelevant to one another – this fact is found out by bringing the ounce of gold itself into relation with the amount of labour time necessary for its production, and thus bringing both wheat and gold in relation to a third entity, labour, and equating them through this relation; by comparing them both, therefore, as exchange values. But this shows us only how the price of wheat is found, the quantity of gold to which it is equal. In this relation itself, where gold appears as the price of wheat, it is itself not in turn posited as a relation, as exchange value, but as a certain quantity of a natural material. In exchange value, commodities (products) are posited as relations to their social substance, to labour; but as prices, they are expressed as quantities of other products of various natural make-ups. Now, it can admittedly be said that the price of money is also posited as 1 bushel of wheat, 3 bushels of rye and all the other quantities of different commodities, whose price is 1 ounce of gold. But then, in order to express the price of money, the whole sphere of commodities would have to be listed, each in the quantity which equals 1 ounce of gold. Money would then have as many prices as there are commodities whose price it itself expresses. The chief quality of price, unity, would disappear. No commodity expresses the price of money, because none expresses its relation to all other commodities, its general exchange value. But it is the specific characteristic of price that exchange value must be expressed in its generality and at the same time in a specific commodity. But even this is irrelevant. In so far as money appears as a material in which the price of all commodities is expressed and measured, to that extent is money itself posited as a particular amount of gold, silver, etc., in short, of its natural matter; a simple amount of a certain material, not itself as exchange value, as relation. In the same way, every commodity which expresses the price of another is itself not posited as exchange value, but as a simple amount of itself. In its quality as unit of exchange value, as their measure, their common point of comparison, money is essentially a natural material, gold, silver; since, as the price of the commodity, it is not an exchange value, not a relation, but a certain weight of gold, silver; e.g. a pound with its subdivisions, and thus money appears originally as pound, aes grave. This is precisely what distinguishes price from exchange value, and we have seen that exchange value necessarily drives towards price formation. Hence the nonsensicality of those who want to make labour time as such into money, i.e. who want to posit and then not posit the distinction between price and exchange value. Money as measure, as element of price determination, as measuring unit of exchange values thus presents the following phenomena: (1) it is required only as an imagined unit once the exchange value of an ounce of gold compared to any one commodity has been determined; its actual presence is superfluous, along with, even more so, its available quantity: as an indicator (an indicator of value) the amount in which it exists in a country is irrelevant; required only as accounting unit; (2) while it thus only needs to be posited ideally, and, indeed, in the form of the price of a commodity is only ideally posited in it; at the same time, as a simple amount of the natural substance in which it is represented, as a given weight of gold, silver, etc. which is accepted as unit, it also yields the point of comparison, the unit, the measure. Exchange values (commodities) are transformed by the mind into certain weights of gold or silver, and are ideally posited as being = to this imagined quantity of gold etc.; as expressing it.

But when we now go over to the second quality of money, money as medium of exchange and realizer of prices, then we have found that in this case it must be present in a certain quantity; that the given weight of gold and silver which has been posited as a unit is required in a given quantity in order to be adequate to this function. If the sum of prices to be realized, which depends on the price of a particular commodity multiplied by its quantity, is given on one side, and the velocity of monetary circulation on the other, then a certain quantity of the circulating medium is required. When we now examine the original form more closely, the direct form in which circulation presents itself, C–M–M–C, then we see that money appears here as a pure medium of exchange. The commodity is exchanged for a commodity, and money appears merely as the medium of this exchange. The price of the first commodity is realized with money, in order to realize the price of the second commodity with the money, and thus to obtain it in exchange for the first. After the price of the first commodity is realized, the aim of the person who now has its price in money is not to obtain the price of the second commodity, but rather to pay its price in order to obtain the commodity. At bottom, therefore, money served him to exchange the first commodity for the second. As mere medium of exchange, money has no other purpose. The man who has sold his commodity and got money wants to buy another commodity, and the man from whom he buys it needs the money in order to buy another commodity etc. Now, in this function, as pure medium of circulation, the specific role of money consists only of this circulation, which it brings about owing to the fact that its quantity, its amount, was fixed beforehand. The number of times in which it is itself contained in the commodities as a unit is determined beforehand by their prices, and as medium of circulation it appears merely as a multiple of this predetermined unit. In so far as it realizes the price of commodities, the commodity is exchanged for its real equivalent in gold and silver; its exchange value is really exchanged for another commodity, money; but in so far as this process takes place only in order to transform this money back into a commodity, i.e. in order to exchange the first commodity for the second, then money appears only fleetingly, or, its substance consists only in this constant appearance as disappearance, as this vehicle of mediation. Money as medium of circulation is only medium of circulation. The only attribute which is essential to it in order to serve in this capacity is the attribute of quantity, of amount, in which it circulates. (Since the amount is co-determined by the velocity, the latter does not require special mention here.) In so far as it realizes the price, its material existence as gold and silver is essential; but in so far as this realization is only fleeting and destined to suspend itself, this is irrelevant. It is only a semblance, as if the point were to exchange the commodity for gold or silver as particular commodities: a semblance which disappears as soon as the process is ended, as soon as gold and silver have again been exchanged for a commodity, and the commodity, hence, exchanged for another. The character of gold and silver as mere media of circulation, or the character of the medium of circulation as gold and silver is therefore irrelevant to their make-up as particular natural commodities. Suppose the total price of circulating commodities = 1,200 thalers. Their measure is then 1 thaler = x weight of silver. Now let 100 thalers be necessary to circulate these commodities in 6 hours; i.e. every thaler pays the price of 100 thalers in 6 hours. Now, what is essential is that 100 thalers be present, the amount of 100 of the metallic unit which measures the sum total of commodity prices; 100 of these units. That these units consist of silver is irrelevant to the process itself. This is already visible in the fact that a single thaler represents in the cycle of circulation a mass of silver 100 times greater than is contained in it in reality, even though in each particular transaction it only represents the silver weight of 1 thaler. In circulation as a whole, the 1 thaler thus represents 100 thalers, a weight of silver a hundred times greater than it really contains. It is in truth only a symbol for the weight of silver contained in 100 thalers. It realizes a price which is 100 times greater than it realizes in reality as a quantity of silver. Let the pound sterling be = 1/3 ounce of gold (it is not as much as that). In so far as the price of a commodity at £1 is paid, i.e. its price of £1 is realized, it is exchanged for £1, to that extent it is of decisive importance that the £1 really contain 1/3 ounce of gold. If it were a counterfeit £, alloyed with non-precious metals, a £ only in appearance, then indeed the price of the commodity would not be realized; in order to realize it, it would have to be paid for in as great a quantity of the non-precious metal as equals 1/3 of an ounce of gold. Looking at this moment of circulation in isolation, it is thus essential that the unit of money should really represent a given quantity of gold or silver. But when we take circulation as a totality, as a self-enclosed process, C–M–M–C, then the matter stands differently. In the first case the realization of price would be only apparent: in reality only a part of its price would be realized. The price posited in it ideally would not be posited in reality. The commodity which is ideally equated to a given weight of gold would in actual exchange not bring in as much gold as that. But if a fake £ were to circulate in the place of a real one, it would render absolutely the same service in circulation as a whole as if it were genuine. If a commodity, A, with the price of £1, is exchanged for 1 fake £, and if this fake pound is again exchanged for commodity B, price £1, then the fake pound has done absolutely the same service as if it had been genuine. The genuine pound is, therefore, in this process, nothing more than a symbol, in so far as the moment in which it realizes prices is left out, and we look only at the totality of the process, in which it serves only as medium of exchange and in which the realization of prices is only a semblance, a fleeting mediation. Here the gold pound serves only to allow commodity A to be exchanged for commodity B, both having the same price. The real realization of the price of commodity A is, here, the commodity B, and the real realization of the price of B is the commodity A or C or D, which amounts to the same as far as the form of the relation is concerned, for which the particular content of the commodity is entirely irrelevant. Commodities with identical prices are exchanged. Instead of exchanging commodity A directly for commodity B, the price of commodity A is exchanged for the price of commodity B and the price of commodity B for commodity A. Money thus represents to the commodity only the latter’s price. Commodities are exchanged for one another at their prices. The price of the commodity expresses about it, ideally, that it is an amount of a certain natural unit (weight units) of gold or silver, of the material in which money is embodied. In the form of money, or its realized price, the commodity now confronts a real amount of this unit. But in so far as the realization of the price is not the final act, and the point is not to possess the price of commodities as price, but as the price of another commodity, to that extent the material of money is irrelevant, e.g. gold and silver. Money becomes a subject as instrument of circulation, as medium of exchange, and the natural material in which it presents itself appears as an accident whose significance disappears in the act of exchange itself; because it is not in this material that the commodity exchanged for money is supposed to be realized, but rather in the material of another commodity. For now, apart from the moments that, in circulation, (1) money realizes prices, (2) money circulates titles of ownership; we have (3), additionally, that by means of it something takes place which could not happen otherwise, namely that the exchange value of the commodity is expressed in every other commodity. If 1 yard of linen costs 2s. and 1 lb. of sugar 1s., then the yard of linen is realized, by means of the 2s., in 2 lb. of sugar, while the sugar is converted into the material of its exchange value, into the material in which its exchange value is realized. As a mere medium of circulation, in its role in the constant flow of the circulatory process, money is neither the measure of prices, because it is already posited as such in the prices themselves; nor is it the means for the realization of prices, for it exists as such in one single moment of circulation, but disappears as such in the totality of its moments; but is, rather, the mere representative of the price in relation to all other commodities, and serves only as a means to the end that all commodities are to be exchanged at equivalent prices. It is exchanged for one commodity because it is the general representative of its exchange value; and, as such, as the representative of every other commodity of equal exchange value, it is the general representative; and that is, as such, what it is in circulation itself. It represents the price of the one commodity as against all other commodities, or the price of all commodities as against the one commodity. In this relation it is not only the representative of commodity prices, but the symbol of itself; i.e. in the act of circulation itself, its material, gold and silver, is irrelevant. It is the price; it is a given quantity of gold or silver; but in so far as this reality of the price is here only fleeting, a reality destined constantly to disappear, to be suspended, not to count as a definitive realization, but always only as an intermediate, mediating realization; in so far as the point here is not the realization of the price at all, but rather the realization of the exchange value of one particular commodity in the material of another commodity, to that extent its own material is irrelevant; it is ephemeral as a realization of the price, since this itself disappears; it exists, therefore, in so far as it remains in this constant movement, only as a representative of exchange value, which becomes real only if the real exchange value constantly steps into the place of its representative, constantly changes places with it, constantly exchanges itself for it. Hence, in this process, its reality is not that it is the price, but that it represents it, is its representative – the materially present representative of the price, thus of itself, and, as such, of the exchange value of commodities. As medium of exchange, it realizes the prices of commodities only in order to posit the exchange value of the one commodity in the other, as its unit; i.e. in order to realize its exchange value in the other commodity; i.e. to posit the other commodity as the material of its exchange value.

Only within circulation, then, is it such a material symbol; taken out of circulation, it again becomes a realized price; but within the process, as we have seen, the quantity, the amount of these material symbols of the monetary unit is the essential attribute. Hence, while the material substance of money, its material substratum of a given quantity of gold or silver, is irrelevant within circulation, where money appears as something existing in opposition to commodities, and where, by contrast, its amount is the essential aspect, since it is there only a symbol for a given amount of this unit; in its role as measure, however, where it was introduced only ideally, its material substratum was essential, but its quantity and even its existence as such were irrelevant. From this it follows that money as gold and silver, in so far as only its role as means of exchange and circulation is concerned, can be replaced by any other symbol which expresses a given quantity of its unit, and that in this way symbolic money can replace the real, because material money as mere medium of exchange is itself symbolic.

It is these contradictory functions of money, as measure, as realization of prices and as mere medium of exchange, which explain the otherwise inexplicable phenomenon that the debasement of metallic money, of gold, silver, through admixture of inferior metals, causes a depreciation of money and a rise in prices; because in this case the measure of prices [is] no longer the cost of production of the ounce of gold, say, but rather of an ounce consisting of 2/3 copper etc. (The debasement of the coinage, in so far as it consists merely of falsifying or changing the names of the fractional weight units of the precious metal, e.g. if the eighth part of an ounce were to be called a sovereign, makes absolutely no difference in the measure and changes only its name. If, earlier, 1/4 of the ounce was called 1 sovereign, and now it is 1/8, then the price of 1 sovereign now expresses merely 1/8 of an ounce of gold; thus (about) 2 sovereigns are necessary to express the same price which was earlier expressed by 1 sovereign); or in the case of a mere falsification of the name of the fractional parts of the precious metal, the measure remains the same, but the fractional part [is] expressed in twice as many francs etc. as before; on the other hand, if the substratum of money, gold, silver, is entirely suspended and replaced by paper bearing the symbol of given quantities of real money, in the quantity required by circulation, then the paper circulates at the full gold and silver value. In the first case, because the medium of circulation is at the same time the material of money as measure, and the material in which prices are definitively realized; in the second case, because money only in its role as medium of circulation.

Example of the clumsy confusion between the contradictory functions of money: ‘Price is exactly determined by the quantity of money there is to buy it with. All the commodities in the world can fetch no more than all the money in the world.’ First, the determination of prices has nothing to do with actual sale; money, in sale, serves only as measure. Secondly, all commodities (in circulation) can fetch a thousand times more money as is in the world, if every piece of money were to circulate a thousand times. (The passage is quoted from the London Weekly Dispatch, 8 November 1857.)

Since the total sum of prices to be realized in circulation changes with the prices of the commodities and with the quantity of them thrown into circulation; and since, on the other side, the velocity of the medium of circulation is determined by circumstances independent of itself, it follows from this that the quantity of media of circulation must be capable of changing, or expanding and contracting – contraction and expansion of circulation.

In its role as mere medium of circulation, it can be said about money that it ceases to be a commodity (particular commodity), when its material is irrelevant and it meets only the needs of circulation itself, and no other direct need: gold and silver cease to be commodities as soon as they circulate as money. It can be said about it, on the other hand, that it is now merely a commodity (general commodity), the commodity in its pure form, indifferent to its natural particularity and hence indifferent to all direct needs, without natural relation to a particular need as such. The followers of the Monetary System, even partly of the protectionist system (see e.g. Ferrier, p. 2),^[58] have clung only to the first aspect, while the modern economists cling to the second; e.g. Say, who says that money should be treated like a ‘particular’ commodity, a commodity like any other.^[59] As medium of exchange, money appears in the role of necessary mediator between production and consumption. In the developed money system, one produces only in order to exchange, or, one produces only by exchanging. Strike out money, and one would thereby either be thrown back to a lower stage of production (corresponding to that of auxiliary barter), or one would proceed to a higher stage, in which exchange value would no longer be the principal aspect of the commodity, because social labour, whose representative it is, would no longer appear merely as socially mediated private labour.

The question whether money as medium of exchange is productive or not productive is solved just as easily. According to Adam Smith, money not productive.^[60] Of course, Ferrier says e.g.: ‘It creates values, because they would not exist without it.’ One has to look not only at ‘its value as metal, but equally its property as money’. A. Smith is correct, in so far as it is not the instrument of any particular branch of production; Ferrier is right too because it is an essential aspect of the mode of production resting on exchange value that product and agency of production should be posited in the character of money, and because this characteristic presupposes a money distinct from products; and because the money relation is itself a relation of production if production is looked at in its totality.

When C–M–M–C is dissected into its two moments, although the prices of the commodities are presupposed (and this makes the major difference), circulation splits into two acts of direct barter.

C–M: the exchange value of the commodity is expressed in another particular commodity, in the material of money, like that of money in the commodity; similarly with M–C. To this extent, A. Smith is right when he says that money as medium of exchange is only a more complicated kind of barter. But when we look at the whole of the process, and not at both as equivalent acts, realization of the commodity in money and of money in the commodity, then A. Smith’s opponents are correct when they say that he misunderstood the nature of money and that monetary circulation suppresses barter; that money serves only to balance the accounts of the ‘arithmetical division’ arising from the division of labour. These ‘arithmetical figures’ no more need to be of gold and silver than do the measures of length. (See Solly, p. 20.)^[61]

Commodities change from being marchandises to being denrées, they enter consumption; money as medium of circulation does not; at no point does it cease to be commodity, as long as it remains within the role of medium of circulation.

We now pass on to the third function of money; which initially results from the second form of circulation:

M–C–C–M; in which money appears not only as medium, nor as measure, but as end-in-itself, and hence steps outside circulation just like a particular commodity which ceases to circulate for the time being and changes from marchandise to denrée.

But first it must be noted that, once the quality of money as an intrinsic relation of production generally founded on exchange value is presupposed, it is possible to demonstrate that in some particular cases it does service as an instrument of production. ‘The utility of gold and silver rests on this, that they replace labour.’ (Lauderdale, p. 11.)^[62] Without money, a mass of swaps would be necessary before one obtained the desired article in exchange. Furthermore, in each particular exchange one would have to undertake an investigation into the relative value of commodities. Money spares us the first task in its role as instrument of exchange (instrument of commerce); the second task, as measure of value and representative of all commodities (idem, loc. cit.). The opposite assertion, that money is not productive, amounts only to saying that, apart from the functions in which it is productive, as measure, instrument of circulation and representative of value, it is unproductive; that its quantity is productive only in so far as it is necessary to fulfil these preconditions. That it becomes not only unproductive, but faux frais de production, the moment when more of it is employed than necessary for its productive aspect – this is a truth which holds for every other instrument of production or exchange; for the machine as well as the means of transportation. But if by this it is meant that money exchanges only real wealth which already exists, then this is false, since labour, as well, is exchanged for it and bought with it, i.e. productive activity itself, potential wealth.

The third attribute of money, in its complete development, presupposes the first two and constitutes their unity. Money, then, has an independent existence outside circulation; it has stepped outside it. As a particular commodity it can be transformed out of its form of money into that of luxury articles, gold and silver jewellery (as long as craftsmanship is still very simple, as e.g. in the old English period, a constant transformation of silver money into plate and vice versa. See Taylor)^[63] ; or, as money, it can be accumulated to form a treasure. When money in its independent existence is derived from circulation, it appears in itself as a result of circulation; by way of circulation, it closes the circle with itself. This aspect already latently contains its quality as capital. It is negated only as medium of exchange. Still, since it can be historically posited as measure before it appears as medium of exchange, and can appear as medium of exchange before it is posited as measure – in the latter case it would exist merely as preferred commodity – it can therefore also appear historically in the third function before it is posited in the two prior ones. But gold and silver can be accumulated as money only if they are already present in one of the other two roles, and it can appear in a developed form of the third role only if the two earlier ones are already developed. Otherwise, accumulating it is nothing more than the accumulation of gold and silver, not of money.

(As an especially interesting example, go into the accumulation of copper money in the earlier periods of the Roman republic.)

Since money as universal material representative of wealth emerges from circulation, and is as such itself a product of circulation, both of exchange at a higher potentiality, and a particular form of exchange, it stands therefore in the third function, as well, in connection with circulation; it stands independent of circulation, but this independence is only its own process. It derives from it just as it returns to it again. Cut off from all relation to it, it would not be money, but merely a simple natural object, gold or silver. In this character it is just as much its precondition as its result. Its independence is not the end of all relatedness to circulation, but rather a negative relation to it. This comes from its independence as a result of M–C–C–M. In the case of money as capital, money itself is posited (1) as precondition of circulation as well as its result; (2) as having independence only in the form of a negative relation, but always a relation to circulation; (3) as itself an instrument of production, since circulation no longer appears in its primitive simplicity, as quantitative exchange, but as a process of production, as a real metabolism. And thus money is itself stamped as a particular moment of this process of production. Production is not only concerned with simple determination of prices, i.e. with translation of the exchange values of commodities into a common unit, but with the creation of exchange values, hence also with the creation of the particularity of prices. Not merely with positing the form, but also the content. Therefore, while in simple circulation, money appears generally as productive, since circulation in general is itself a moment of the system of production, nevertheless this quality still only exists for us, and is not yet posited in money. (4) As capital, money thus also appears posited as a relation to itself mediated by circulation – in the relation of interest and capital. But here we are not as yet concerned with these aspects; rather, we have to look simply at money in the third role, in the form in which it emerged as something independent from circulation, more properly, from both its earlier aspects.

(‘An increase of money only an increase in the means of counting.’ Sismondi.^[64] This correct only in so far as defined as mere medium of exchange. In the other property it is also an increase in the means of paying.)

‘Commerce separated the shadow from the body, and introduced the possibility of owning them separately.’ (Sismondi.)^[65] Thus, money is now exchange value become independent (it never puts in more than a fleeting appearance as such, as medium of exchange) in its general form. It possesses, it is true, a particular body or substance, gold and silver, and precisely this gives it its independence; for what only exists as an aspect or relation of something else is not independent. On the other side, with this bodily independence, as gold and silver, it represents not only the exchange value of one commodity as against another, but rather exchange value as against all commodities; and although it possesses a substance of its own, it appears at the same time, in its particular existence as gold and silver, as the general exchange value of all commodities. On one side, it is possessed as their exchange value; they stand on the other side as only so many particular substances of exchange value, so that it can either transform itself into every one of these substances through exchange, or it can remain indifferent to them, aloof from their particularity and peculiarity. They are therefore merely accidental existences. It is the ‘précis de toutes les choses’, in which their particular character is erased; it is general wealth in the form of a concise compendium, as opposed to its diffusion and fragmentation in the world of commodities. While wealth in the form of the particular commodity appears as one of the moments of the same, or the commodity as one of the moments of wealth; in the form of gold and silver general wealth itself appears as concentrated in a particular substance. Every particular commodity, in so far as it is exchange value, has a price, expresses a certain quantity of money in a merely imperfect form, since it has to be thrown into circulation in order to be realized, and since it remains a matter of chance, due to its particularity, whether or not it is realized. However, in so far as it is realized not as price, but in its natural property, it is a moment of wealth by way of its relation to a particular need which it satisfies; and, in this relation, [it] expresses (1) only the wealth of uses [Gebrauchsreichtum], (2) only a quite particular facet of this wealth. Money, by contrast, apart from its particular usefulness as a valuable commodity, is (1) the realized price; (2) satisfies every need, in so far as it can be exchanged for the desired object of every need, regardless of any particularity. The commodity possesses this property only through the mediation of money. Money possesses it directly in relation to all commodities, hence in relation to the whole world of wealth, to wealth as such. With money, general wealth is not only a form, but at the same time the content itself. The concept of wealth, so to speak, is realized, individualized in a particular object.

Notebook II (November 1857)[edit source]

(Written in the upper right-hand corner : Superfluity, accumulation)

In the particular commodity, in so far as it is a price, wealth is posited only as an ideal form, not yet realized; and in so far as it has a particular use value, it represents merely a quite singular facet of wealth. In money, by contrast, the price is realized; and its substance is wealth itself considered in its totality in abstraction from its particular modes of existence. Exchange value forms the substance of money, and exchange value is wealth. Money is therefore, on another side, also the embodied form of wealth, in contrast to all the substances of which wealth consists. Thus, while on one side the form and the content of wealth are identical in money, considered for itself, on the other side, in contrast to all the other commodities, money is the general form of wealth, while the totality of these particularities form its substance. Thus, in the first role, money is wealth itself; in the other, it is the general material representative of wealth. This totality exists in money itself as the comprehensive representation of commodities. Thus, wealth (exchange value as totality as well as abstraction) exists, individualized as such, to the exclusion of all other commodities, as a singular, tangible object, in gold and silver. Money is therefore the god among commodities.

Since it is an individuated, tangible object, money may be randomly searched for, found, stolen, discovered; and thus general wealth may be tangibly brought into the possession of a particular individual. From its servile role, in which it appears as mere medium of circulation it suddenly changes into the lord and god of the world of commodities. It represents the divine existence of commodities, while they represent its earthly form. Before it is replaced by exchange value, every form of natural wealth presupposes an essential relation between the individual and the objects, in which the individual in one of his aspects objectifies [vergegenständlicht] himself in the thing, so that his possession of the thing appears at the same time as a certain development of his individuality: wealth in sheep, the development of the individual as shepherd, wealth in grain his development as agriculturist, etc. Money, however, as the individual of general wealth, as something emerging from circulation and representing a general quality, as a merely social result, does not at all presuppose an individual relation to its owner; possession of it is not the development of any particular essential aspect of his individuality; but rather possession of what lacks individuality, since this social [relation] exists at the same time as a sensuous, external object which can be mechanically seized, and lost in the same manner. Its relation to the individual thus appears as a purely accidental one; while this relation to a thing having no connection with his individuality gives him, at the same time, by virtue of the thing’s character, a general power over society, over the whole world of gratifications, labours, etc. It is exactly as if, for example, the chance discovery of a stone gave me mastery over all the sciences, regardless of my individuality. The possession of money places me in exactly the same relationship towards wealth (social) as the philosophers’ stone would towards the sciences.

Money is therefore not only an object, but is the object of greed [Bereicherungssucht]. It is essentially auri sacra fames. Greed as such, as a particular form of the drive, i.e. as distinct from the craving for a particular kind of wealth, e.g. for clothes, weapons, jewels, women, wine etc., is possible only when general wealth, wealth as such, has become individualized in a particular thing, i.e. as soon as money is posited in its third quality. Money is therefore not only the object but also the fountainhead of greed. The mania for possessions is possible without money; but greed itself is the product of a definite social development, not natural, as opposed to historical. Hence the wailing of the ancients about money as the source of all evil. Hedonism [Genusssucht] in its general form and miserliness [Geiz] are the two particular forms of monetary greed. Hedonism in the abstract presupposes an object which possesses all pleasures in potentiality. Abstract hedonism realizes that function of money in which it is the material representative of wealth; miserliness, in so far as it is only the general form of wealth as against its particular substances, the commodities. In order to maintain it as such, it must sacrifice all relationship to the objects of particular needs, must abstain, in order to satisfy the need of greed for money as such. Monetary greed, or mania for wealth, necessarily brings with it the decline and fall of the ancient communities [Gemeinwesen]. Hence it is the antithesis to them. It is itself the community [Gemeinwesen],^[66] and can tolerate none other standing above it. But this presupposes the full development of exchange values, hence a corresponding organization of society. In antiquity, exchange value was not the nexus rerum; it appears as such only among the mercantile peoples, who had, however, no more than a carrying trade and did not, themselves, produce. At least this was the case with the Phoenicians, Carthaginians, etc. But this is a peripheral matter. They could live just as well in the interstices of the ancient world, as the Jews in Poland or in the Middle Ages. Rather, this world itself was the precondition for such trading peoples. That is why they fall apart every time they come into serious conflict with the ancient communities. Only with the Romans, Greeks etc. does money appear unhampered in both of its first two functions, as measure and as medium of circulation, and not very far developed in either. But as soon as either their trade etc. develops, or, as in the case of the Romans, conquest brings them money in vast quantities – in short, suddenly, and at a certain stage of their economic development, money necessarily appears in its third role, and the further it develops in that role, the more the decay of their community advances. In order to function productively, money in its third role, as we have seen, must be not only the precondition but equally the result of circulation, and, as its precondition, also a moment of it, something posited by it. Among the Romans, who amassed money by stealing it from the whole world, this was not the case. It is inherent in the simple character of money itself that it can exist as a developed moment of production only where and when wage labour exists; that in this case, far from subverting the social formation, it is rather a condition for its development and a driving-wheel for the development of all forces of production, material and mental. A particular individual may even today come into money by chance, and the possession of this money can undermine him just as it undermined the communities of antiquity. But the dissolution of this individual within modern society is in itself only the enrichment of the productive section of society. The owner of money, in the ancient sense, is dissolved by the industrial process, which he serves whether he wants and knows it or not. It is a dissolution which affects only his person. As material representative of general wealth, as individualized exchange value, money must be the direct object, aim and product of general labour, the labour of all individuals. Labour must directly produce exchange value, i.e. money. It must therefore be wage labour. Greed, as the urge of all, in so far as everyone wants to make money, is only created by general wealth. Only in this way can the general mania for money become the wellspring of general, self-reproducing wealth. When labour is wage labour, and its direct aim is money, then general wealth is posited as its aim and object. (In this regard, talk about the context of the military system of antiquity when it became a mercenary system.) Money as aim here becomes the means of general industriousness. General wealth is produced in order to seize hold of its representative. In this way the real sources of wealth are opened up. When the aim of labour is not a particular product standing in a particular relation to the particular needs of the individual, but money, wealth in its general form, then, firstly the individual’s industriousness knows no bounds; it is indifferent to its particularity, and takes on every form which serves the purpose; it is ingenious in the creation of new objects for a social need, etc. It is clear, therefore, that when wage labour is the foundation, money does not have a dissolving effect, but acts productively; whereas the ancient community as such is already in contradiction with wage labour as the general foundation. General industriousness is possible only where every act of labour produces general wealth, not a particular form of it; where therefore the individual’s reward, too, is money. Otherwise, only particular forms of industry are possible. Exchange value as direct product of labour is money as direct product of labour. Direct labour which produces exchange value as such is therefore wage labour. Where money is not itself the community [Gemeinwesen], it must dissolve the community. In antiquity, one could buy labour, a slave, directly; but the slave could not buy money with his labour. The increase of money could make slaves more expensive, but could not make their labour more productive. Negro slavery – a purely industrial slavery – which is, besides, incompatible with the development of bourgeois society and disappears with it, presupposes wage labour, and if other, free states with wage labour did not exist alongside it, if, instead, the Negro states were isolated, then all social conditions there would immediately turn into pre-civilized forms.

Money as individualized exchange value and hence as wealth incarnate was what the alchemists sought; it figures in this role within the Monetary (Mercantilist) System. The period which precedes the development of modern industrial society opens with general greed for money on the part of individuals as well as of states. The real development of the sources of wealth takes place as it were behind their backs, as a means of gaining possession of the representatives of wealth. Wherever it does not arise out of circulation – as in Spain – but has to be discovered physically, the nation is impoverished, whereas the nations which have to work in order to get it from the Spaniards develop the sources of wealth and really become rich. This is why the search for and discovery of gold in new continents, countries, plays so great a role in the history of revaluation, because by its means colonization is improvised and made to flourish as if in a hothouse. The hunt for gold in all countries leads to its discovery; to the formation of new states; initially to the spread of commodities, which produce new needs, and draw distant continents into the metabolism of circulation, i.e. exchange. Thus, in this respect, as the general representative of wealth and as individualized exchange value, it was doubly a means for expanding the universality of wealth, and for drawing the dimensions of exchange over the whole world; for creating the true generality [Allgemeinheit] of exchange value in substance and in extension. But it is inherent in the attribute in which it here becomes developed that the illusion about its nature, i.e. the fixed insistence on one of its aspects, in the abstract, and the blindness towards the contradictions contained within it, gives it a really magical significance behind the backs of individuals. In fact, it is because of this self-contradictory and hence illusory aspect, because of this abstraction, that it becomes such an enormous instrument in the real development of the forces of social production.

It is the elementary precondition of bourgeois society that labour should directly produce exchange value, i.e. money; and, similarly, that money should directly purchase labour, and therefore the labourer, but only in so far as he alienates [veräussert] his activity in the exchange. Wage labour on one side, capital on the other, are therefore only other forms of developed exchange value and of money (as the incarnation of exchange value). Money thereby directly and simultaneously becomes the real community [Gemeinwesen], since it is the general substance of survival for all, and at the same time the social product of all. But as we have seen, in money the community [Gemeinwesen] is at the same time a mere abstraction, a mere external, accidental thing for the individual, and at the same time merely a means for his satisfaction as an isolated individual. The community of antiquity presupposes a quite different relation to, and on the part of, the individual. The development of money in its third role therefore smashes this community. All production is an objectification [Vergegenständlichung] of the individual. In money (exchange value), however, the individual is not objectified in his natural quality, but in a social quality (relation) which is, at the same time, external to him.

Money posited in the form of the medium of circulation is coin [Münze]. As coin, it has lost its use value as such; its use value is identical with its quality as medium of circulation. For example, it has to be melted down before it can serve as money as such. It has to be demonetized. That is why the coin is also only a symbol whose material is irrelevant. But, as coin, it also loses its universal character, and adopts a national, local one. It decomposes into coin of different kinds, according to the material of which it consists, gold, copper, silver, etc. It acquires a political title, and talks, as it were, a different language in different countries. Finally, within a single country it acquires different denominations, etc. Money in its third quality, as something which autonomously arises out of and stands against circulation, therefore still negates its character as coin. It reappears as gold and silver, whether it is melted down or whether it is valued only according to its gold and silver weight-content. It also loses its national character again, and serves as medium of exchange between the nations, as universal medium of exchange, no longer as a symbol, but rather as a definite amount of gold and silver. In the most developed international system of exchange, therefore, gold and silver reappear in exactly the same form in which they already played a role in primitive barter. Gold and silver, like exchange itself originally, appear, as already noted, not within the sphere of a social community, but where it ends, on its boundary; on the few points of its contact with alien communities. Gold (or silver) now appears posited as the commodity as such, the universal commodity, which obtains its character as commodity in all places. Only in this way is it the material representative of general wealth. In the Mercantilist System, therefore, gold and silver count as the measure of the power of the different communities. ‘As soon as the precious metals become objects of commerce, an universal equivalent for everything, they also become the measure of power between nations. Hence the Mercantilist System.’ (Steuart.)^[67] No matter how much the modern economists imagine themselves beyond Mercantilism, in periods of general crisis gold and silver still appear in precisely this role, in 1857 as much as in 1600. In this character, gold and silver play an important role in the creation of the world market. Thus the circulation of American silver from the West to the East; the metallic band between America and Europe on one side, with Asia on the other side, since the beginning of the modern epoch. With the original communities this trade in gold and silver was only a peripheral concern, connected with excess production, like exchange as a whole. But in developed trade it is posited as a moment essentially interconnected with production etc. as a whole. It no longer appears for the purpose of exchanging the excess production but to balance it out as part of the total process of international commodity exchange. It is coin, now, only as world coin. But, as such, its formal character as medium of circulation is essentially irrelevant, while its material is everything. As a form, in this function, gold and silver remain the universally acceptable commodity, the commodity as such.

(In this first section, where exchange values, money, prices are looked at, commodities always appear as already present. The determination of forms is simple. We know that they express aspects of social production, but the latter itself is the precondition. However, they are not posited in this character [of being aspects of social production]. And thus, in fact, the first exchange appears as exchange of the superfluous only, and it does not seize hold of and determine the whole of production. It is the available overflow of an overall production which lies outside the world of exchange values. This still presents itself even on the surface of developed society as the directly available world of commodities. But by itself, it points beyond itself towards the economic relations which are posited as relations of production. The internal structure of production therefore forms the second section; the concentration of the whole in the state the third; the international relation the fourth; the world market the conclusion, in which production is posited as a totality together with all its moments, but within which, at the same time, all contradictions come into play. The world market then, again, forms the presupposition of the whole as well as its substratum. Crises are then the general intimation which points beyond the presupposition, and the urge which drives towards the adoption of a new historic form.) ‘The quantity of goods and the quantity of money may remain the same, and price may rise or fall notwithstanding’ (namely through greater expenditure, e.g. by the moneyed capitalists, landowners, state officials etc. Malthus, X, 43).^[68]

Money, as we have seen, in the form in which it independently steps outside of and against circulation, is the negation (negative unity) of its character as medium of circulation and measure.^[69] We have developed, so far:

Firstly. Money is the negation of the medium of circulation as such, of the coin. But it also contains the latter at the same time as an aspect, negatively, since it can always be transformed into coin; positively, as world coin, but, as such, its formal character is irrelevant, and it is essentially a commodity as such, the omnipresent commodity, not determined by location. This indifference is expressed in a double way: Firstly because it is now money only as gold and as silver, not as symbol, not in the form of the coin. For that reason the face which the state impresses on money as coin has no value; only its metal content has value. Even in domestic commerce it has a merely temporary, local value, ‘because it is no more useful to him who owns it than to him who owns the commodity to be bought’. The more domestic commerce is conditioned on all sides by foreign commerce, the more, therefore, does the value of this face vanish: it does not exist in private exchange, but appears only as tax. Then: in their capacity as general commodity, as world coin, the return of gold and silver to their point of departure, and, more generally, circulation as such, are not necessary. Example: Asia and Europe. Hence the wailings of the upholders of the Monetary System, that money disappears among the heathen without flowing back again. (See Misselden about 1600.)^[70] The more external circulation is conditioned and enveloped by internal, the more does the world coin as such come into circulation (rotation). This higher stage is yet no concern of ours and is not contained in the simple relation which we are considering here.

Secondly: Money is the negation of itself as mere realization of the prices of commodities, where the particular commodity always remains what is essential. It becomes, rather, the price realized in itself and, as such, the material representative of wealth as well as the general form of wealth in relation to all commodities, as merely particular substances of it; but

Thirdly: Money is also negated in the aspect in which it is merely the measure of exchange values. As the general form of wealth and as its material representative, it is no longer the ideal measure of other things, of exchange values. For it is itself the adequate [adäquat] reality of exchange value, and this it is in its metallic being. Here the character of measure has to be posited in it. It is its own unit; and the measure of its value, the measure of itself as wealth, as exchange value, is the quantity of itself which it represents. The multiple of an amount of itself which serves as unit. As measure, its amount was irrelevant; as medium of circulation, its materiality, the matter of the unit, was irrelevant: as money in this third role, the amount of itself as of a definite quantity of material is essential. If its quality as general wealth is given, then there is no difference within it, other than the quantitative. It represents a greater or lesser amount of general wealth according to whether its given unit is possessed in a greater or lesser quantity. If it is general wealth, then one is the richer the more of it one possesses, and the only important process, for the individual as well as the nation, is to pile it up [Anhäufen]. In keeping with this role, it was seen as that which steps outside circulation. Now this withdrawing of money from circulation, and storing it up, appears as the essential object [Gegenstand] of the drive to wealth and as the essential process of becoming wealthy. In gold and silver, I possess general wealth in its tangible form, and the more of it I pile up, the more general wealth do I appropriate. If gold and silver represent general wealth, then, as specific quantities, they represent it only to a degree which is definite, but which is capable of indefinite expansion. This accumulation^[71] of gold and silver, which presents itself as their repeated withdrawal from circulation, is at the same time the act of bringing general wealth into safety and away from circulation, in which it is constantly lost in exchange for some particular wealth which ultimately disappears in consumption.

Among all the peoples of antiquity, the piling-up of gold and silver appears at first as a priestly and royal privilege, since the god and king of commodities pertains only to gods and kings. Only they deserve to possess wealth as such. This accumulation, then, occurs on one side merely to display overabundance, i.e. wealth as an extraordinary thing, for use on Sundays only; to provide gifts for temples and their gods; to finance public works of art; finally as security in case of extreme necessity, to buy arms etc. Later in antiquity, this accumulation becomes political. The state treasury, as reserve fund, and the temple are the original banks in which this holy of holies is preserved. Heaping-up and accumulating attain their ultimate development in the modern banks, but here with a further-developed character. On the other side, among private individuals, accumulation takes place for the purpose of bringing wealth into safety from the caprices of the external world in a tangible form in which it can be buried etc., in short, in which it enters into a wholly secret relation to the individual. This, still on a large historical scale, in Asia. Repeats itself in every panic, war etc. in bourgeois society, which then falls back into barbaric conditions. Like the accumulation of gold etc. as ornament and ostentation among semi-barbarians. But a very large and constantly growing part of it withdrawn from circulation as an object of luxury in the most developed bourgeois society. (See Jacob etc.)^[72] As representative of general wealth, it is precisely its retention without abandoning it to circulation and employing it for particular needs, which is proof of the wealth of individuals; and to the degree that money develops in its various roles, i.e. that wealth as such becomes the general measure of the worth of individuals, [there develops] the drive to display it, hence the display of gold and silver as representatives of wealth; in the same way, Herr v. Rothschild displays as his proper emblem, I think, two banknotes of £100,000 each, mounted in a frame. The barbarian display of gold etc. is only a more naïve form of this modern one, since it takes place with less regard to gold as money. Here still the simple glitter. There a premeditated point. The point being that it is not used as money; here the form antithetical to circulation is what is important.

The accumulation of all other commodities is less ancient than that of gold and silver: (1) because of their perishability. Metals as such represent the enduring, relative to the other commodities; they are also accumulated by preference because of their greater rarity and their exceptional character as the instruments of production par excellence. The precious metals, because not oxidized by the air, are again more durable than the other metals. What other commodities lose is their form; but this form is what gives them their exchange value, while their use value consists in overcoming this form, in consuming it. With money, on the other hand, its substance, its materiality, is itself its form, in which it represents wealth. If money appears as the general commodity in all places, so also does it in all times. It maintains itself as wealth at all times. Its specific durability. It is the treasure which neither rust nor moths eat up. All commodities are only transitory money; money is the permanent commodity. Money is the omnipresent commodity; the commodity is only local money. But accumulation is essentially a process which takes place in time. In this connection, Petty says:

‘The great and ultimate effect of trade is not wealth as such, but preferably an overabundance of silver, gold and jewels, which are not perishable, nor as fickle as other commodities, but are wealth in all times and all places. A superfluity of wine, grain, poultry, meat etc. is wealth, but hic et nunc … Therefore the production of those commodities and the effects of that trade which endow a land with gold and silver are advantageous above others.’ (p. 3.) ‘If taxes take money from one who eats or drinks it up, and give it to one who employs it in improving the land, in fisheries, in the working of mines, in manufactures or even in clothing, then for the community there is always an advantage; for even clothes are not as perishable as meals; if in the furnishing of houses, even more; in the building of houses yet more; in the improvement of land, working of mines, fisheries, more again; the most of all, when employed so as to bring gold and silver into the country, for these things alone do not pass away, but are prized at all times and in all places as wealth.’ (p. 5.)^[73] Thus a writer of the seventeenth century. One sees how the piling-up of gold and silver gained its true stimulus with the conception of it as the material representative and general form of wealth. The cult of money has its asceticism, its self-denial, its self-sacrifice – economy and frugality, contempt for mundane, temporal and fleeting pleasures; the chase after the eternal treasure. Hence the connection between English Puritanism, or also Dutch Protestantism, and money-making. A writer of the beginning of the seventeenth century (Misselden) expresses the matter quite unselfconsciously as follows:

‘The natural material of commerce is the commodity, the artificial is money. Although money by nature and in time comes after the commodity, it has become, in present custom, the most important thing.’ He compares this to the two sons of old Jacob: Jacob placed his right hand on the younger and his left on the older son. (p. 24.) ‘We consume among us too great an excess of wines from Spain, France, the Rhine, the Levant, the Islands: raisins from Spain, currants from the Levant, cambrics from Hainault and the Netherlands, the silkenware of Italy, the sugar and tobacco of the West Indies, the spices of East India; all this is not necessary for us, but is paid for in hard money … If less of the foreign and more of the domestic product were sold, then the difference would have to come to us in the form of gold and silver, as treasure.’ (loc. cit.)^[74] The modern economists naturally make merry at the expense of this sort of notion in the general section of books on economics. But when one considers the anxiety involved in the doctrine of money in particular, and the feverish fear with which, in practice, the inflow and outflow of gold and silver are watched in times of crisis, then it is evident that the aspect of money which the followers of the Monetary and Mercantilist System conceived in an artless one-sidedness is still to be taken seriously, not only in the mind, but as a real economic category.

The antithesis between the real needs of production and this supremacy of money is presented most forcibly in Boisguillebert. (See the striking passages in my Notebook.)^[75]

(2) The accumulation of other commodities, their perishability apart, essentially different in two ways from the accumulation of gold and silver, which are here identical with money. First, the accumulation of other commodities does not have the character of accumulating wealth in general, but of accumulating particular wealth, and it is therefore itself a particular act of production; here simple accumulation will not do. To accumulate grain requires special stores etc. Accumulating sheep does not make one into a shepherd; to accumulate slaves or land requires relations of domination and subordination etc. All this, then, requires acts and relations distinct from simple accumulation, from increase of wealth as such. On the other hand, in order then to realize the accumulated commodity in the form of general wealth, to appropriate wealth in all its particular forms, I have to engage in trade with the particular commodity I have accumulated, I have to be a grain merchant, cattle merchant, etc. Money as the general representative of wealth absolves me of this.

The accumulation of gold and silver, of money, is the first historic appearance of the gathering-together of capital and the first great means thereto; but, as such, it is not yet accumulation of capital. For that, the re-entry of what has been accumulated into circulation would itself have to be posited as the moment and the means of accumulation.

Money in its final, completed character now appears in all directions as a contradiction, a contradiction which dissolves itself, drives towards its own dissolution. As the general form of wealth, the whole world of real riches stands opposite it. It is their pure abstraction – hence, fixated as such, a mere conceit. Where wealth as such seems to appear in an entirely material, tangible form, its existence is only in my head, it is a pure fantasy. Midas. On the other side, as material representative of general wealth, it is realized only by being thrown back into circulation, to disappear in exchange for the singular, particular modes of wealth. It remains in circulation, as medium of circulation; but for the accumulating individual, it is lost, and this disappearance is the only possible way to secure it as wealth. To dissolve the things accumulated in individual gratifications is to realize them. The money may then be again stored up by other individuals, but then the same process begins anew. I can really posit its being for myself only by giving it up as mere being for others. If I want to cling to it, it evaporates in my hand to become a mere phantom of real wealth. Further: [the notion that] to accumulate it is to increase it, [since] its own quantity is the measure of its value, turns out again to be false. If the other riches do not [also] accumulate, then it loses its value in the measure in which it is accumulated. What appears as its increase is in fact its decrease. Its independence is a mere semblance; its independence of circulation exists only in view of circulation, exists as dependence on it. It pretends to be the general commodity, but because of its natural particularity it is again a particular commodity, whose value depends both on demand and supply, and on variations in its specific costs of production. And since it is incarnated in gold and silver, it becomes one-sided in every real form; so that when the one appears as money, the other appears as particular commodity, and vice versa, and in this way each appears in both aspects. As absolutely secure wealth, entirely independent of my individuality, it is at the same time, because it is something completely external to me, the absolutely insecure, which can be separated from me by any accident. Similarly, it has entirely contradictory qualities as measure, as medium of circulation, and as money as such. Finally, in the last-mentioned character, it also contradicts itself because it must represent value as such; but represents in fact only a constant amount of fluctuating value. It therefore suspends itself as completed exchange value.

As mere measure it already contains its own negation as medium of circulation; as medium of circulation and measure, as money. To negate it in the last quality is therefore at the same time to negate it in the two earlier ones. If negated as the mere general form of wealth, it must then realize itself in the particular substances of real wealth; but in the process of proving itself really to be the material representative of the totality of wealth, it must at the same time preserve itself as the general form. Its very entry into circulation must be a moment of its staying at home [Beisichbleiben], and its staying at home must be an entry into circulation. That is to say that as realized exchange value it must be simultaneously posited as the process in which exchange value is realized. This is at the same time the negation of itself as a purely objective form, as a form of wealth external and accidental to individuals. It must appear, rather, as the production of wealth; and wealth must appear as the result of the mutual relations among individuals in production. Exchange value is now characterized, therefore, no longer simply as a thing for which circulation is only an external movement, or which appears individually in a particular material: [but rather] as relation to itself through the process of circulation. On the other side, circulation itself is no longer [qualified] merely as the simple process of exchanging commodities for money and money for commodities, merely as the mediating movement by which the prices of the various commodities are realized, are equated as exchange values, with both [commodities and money] appearing as external to circulation: the presupposed exchange value, the ultimate withdrawal of the commodity into consumption, hence the destruction of exchange value, on one side, and the withdrawal of the money, its achievement of independence vis-à-vis its substance, which is again another form of its destruction [on the other]. [Rather,] exchange value itself, and now no longer exchange value in general, but measured exchange value, has to appear as a presupposition posited by circulation itself, and, as posited by it, its presupposition. The process of circulation must also and equally appear as the process of the production of exchange values. It is thus, on one side, the regression of exchange value into labour, on the other side, that of money into exchange value, which is now posited, however, in a more profound character. With circulation, the determined price is presupposed, and circulation as money posits it only formally. The determinateness of exchange value itself, or the measure of price, must now itself appear as an act of circulation. Posited in this way, exchange value is capital, and circulation is posited at the same time as an act of production.

To be brought forward: In circulation, as it appears as money circulation, the simultaneity of both poles of exchange is always presupposed. But a difference of time may appear between the existence of the commodities to be exchanged. It may lie in the nature of reciprocal services that a service is performed today, but the service required in return can be performed only after a year etc. ‘In the majority of contracts,’ says Senior, ‘only one of the contracting parties has the thing available and lends it; and if exchange is to take place, one party has to cede it immediately on the condition of receiving the equivalent only in a later period. Since, however, the value of all things changes in a given space of time, the means of payment employed is that thing whose value varies least, and which maintains a given average capacity to buy things for the longest time. Thus money becomes the expression or the representative of value.’^[76] According to this there would be no connection at all between the latter quality of money and the former. But this is wrong. Only when money is posited as the autonomous representative of value do contracts cease to be valued e.g. in quantities of grain or in services to be performed. (The latter was current e.g. in feudalism.) It is merely a notion held by Mr Senior that money has a ‘longer average capacity’ to maintain its value. The fact is that it is employed as the general material of contracts (general commodity of contracts, says Bailey)^[77] because it is the general commodity, the representative of general wealth (says Storch),^[78] because it is exchange value become independent. Money has to be already very developed in its two earlier functions before it can appear generally in this role. Now it turns out in fact that, although the quantity of money remains uniformly the same, its value changes: that, in general, as a specific amount, it is subject to the mutability of all values. Here its nature as a particular commodity comes to the fore against its general character. To money as measure, this change is irrelevant, for ‘in a changing medium, two different relations to the same thing can always be expressed, just as well as in a constant medium’.^[79] As medium of circulation it is also irrelevant, since its quantity as such is set by the measure. But as money in the form in which it appears in contracts, this is essential, just as, in general, its contradictions come to the fore in this role.

In separate sections, to be brought forward:

(1) Money as coin. This very summarily about coinage. (2) Historically the sources of gold and silver. Discoveries etc. The history of their production. (3) Causes of the variations in the value of the precious metals and hence of metallic money; effects of this variation on industry and the different classes. (4) Above all: quantity of circulation in relation to rise and fall of prices. (Sixteenth century. Nineteenth century.) Along the way, to be seen also how it is affected as measure by rising quantity etc. (5) About circulation: velocity, necessary amount, effect of circulation; more, less developed etc. (6) Solvent effect of money.

(This to be brought forward.) (Herein the specific economic investigations.)

(The specific gravity of gold and silver, to contain much weight in a relatively small volume, as compared with other metals, repeats itself in the world of values so that it contains much value (labour time) in relatively small volume. The labour time, exchange value realized in it, is the specific weight of the commodity. This makes the precious metals particularly suited for service in circulation (since one can carry a significant amount of value in the pocket) and for accumulation, since one can secure and stockpile a great amount of value in a small space. Gold does not turn into something else in the process, like iron, lead etc. Remains what it is.)

‘If Spain had never owned the mines of Mexico and Peru, it would never have had need of the grain of Poland.’ (Ravenstone.)^[80]

‘Illi unum consilium habent et virtutem et potestatem suam bestiae tradent … Et ne quis posset emere aut vendere, nisi qui habet characterem aut nomen bestiae, aut numerum nominis ejus.’ (Apocalypse. Vulgate.)^[81] ‘The correlative quantities of commodities which are given for one another, constitute the price of the commodity.’ (Storch.) ‘Price is the degree of exchangeable value.’ (loc cit.)^[82]

As we have seen, in simple circulation as such (exchange value in its movement), the action of the individuals on one another is, in its content, only a reciprocal, self-interested satisfaction of their needs; in its form, [it is] exchange among equals (equivalents). Property, too, is still posited here only as the appropriation of the product of labour by labour, and of the product of alien labour by one’s own labour, in so far as the product of one’s own labour is bought by alien labour. Property in alien labour is mediated by the equivalent of one’s own labour. This form of property – quite like freedom and equality – is posited in this simple relation. In the further development of exchange value this will be transformed, and it will ultimately be shown that private property in the product of one’s own labour is identical with the separation of labour and property, so that labour will create alien property and property will command alien labour.

↑ Alfred Darimon (1819–1902), a follower of Proudhon. He edited Proudhonist newspapers in 1848, wrote on financial questions in the 1850s and was a democratic opponent of Napoleon III until 1864 when he went over to the Bonapartists.
↑ In French in the original. Throughout this edition, passages in French, Italian and Spanish have been translated in the main body of the text; English has been left; Greek and Latin have been left in the text and translated in the notes.
↑ Should read: ‘ … while the amount of securities decreases by 12,159,388; i.e. the decline of securities exceeds the decline of metal … ’. The correction of these and similar errors would in no way touch the substance of Marx’s conclusions concerning Darimon’s statistical ideas.
↑ Isaac Péreire (1806–80), French banker and railway king who, together with his brother Émile, founded the Crédit Mobilier in 1852. A close associate of Napoleon III.
↑ Michel Chevalier (1806–79), follower of Saint-Simon up to 1833; later Bonapartist. From 1850 he was Professor of Political Economy at the Collège de France, and a supporter in the 1850s of Bonaparte’s move towards free trade.
↑ Ricardo’s pamphlet, Proposals for an Economical and Secure Currency, London, 1816.
↑ A reference to the period during which the Bank Restriction Act was in operation (1797–1819).
↑ A play on the two meanings of the French word ‘espèces’: (1) sorts; (2) specie.
↑ The Currency Act of 1844, which stringently limited the number of banknotes the country banks could issue, and also limited the fiduciary issue of the Bank of England to £14,000,000; any further issue had to be backed by coin or bullion.
↑ Émile de Girardin (1806–81), French journalist, who edited La Presse from 1830 to 1857 and wrote the introduction to Darimon’s book. A politician entirely lacking in scruples, he was a moderate republican in 1848, a Montagnard deputy to the Legislative Assembly in 1850 and a Bonapartist in 1852.
↑ Potentially. Cf. Aristotle, Metaphysics, Bk VIII, Ch. 6, 2.
↑ John Francis Bray (1809–95), economic pamphleteer and political activist in the England of the 1830s. In 1837 he became treasurer of the Leeds Working Men’s Association. He advocated utopian socialist ideas in the pamphlet Labour’s Wrongs and Labour’s Remedy, Leeds, 1839, and was described by Marx as an ‘English Communist’ (The Poverty of Philosophy, Moscow, 1966, p. 60).
↑ John Gray (1799–1850), economic pamphleteer and utopian socialist, author of The Social System, Edinburgh, 1831, and Lectures on the Nature and Use of Money, Edinburgh, 1848.
↑ See below, pp. 153–60.
↑ Hegel, Science of Logic, tr. A. V. Miller, London, 1969, p. 416.
↑ Cf. Marx, The Poverty of Philosophy, pp. 52–68.
↑ ^17.0 ^17.1 Kaufmannsstand: This refers above all to the merchants of the sixteenth and seventeenth centuries, who formed an ‘estate’ rather than a ‘class’.
↑ The following two paragraphs are directed specifically against the scheme outlined by John Gray in The Social System, pp. 62–86.
↑ This note refers to an unknown manuscript by Marx, which must be older than his work of 1851 on ‘The Completed Money System’. Possibly it refers to one of the missing parts of the manuscript of 1845–7 on the ‘Critique of Politics and Political Economy’, fragments of which are reprinted in Marx-Engels Gesamtausgabe (MEGA) 1/3, pp. 33–172, 437–583 and 592–6. The 1851 manuscript,’The Completed Money System’, is not extant in full, and remains unpublished. [MELI note.]
↑ This note refers to an unknown manuscript by Marx, which must be older than his work of 1851 on ‘The Completed Money System’. Possibly it refers to one of the missing parts of the manuscript of 1845–7 on the ‘Critique of Politics and Political Economy’, fragments of which are reprinted in Marx-Engels Gesamtausgabe (MEGA) 1/3, pp. 33–172, 437–583 and 592–6. The 1851 manuscript,’The Completed Money System’, is not extant in full, and remains unpublished. [MELI note.]
↑ Atistotle, Nicomachean Ethics, Bk V, Ch. 5, para. 14.
↑ This is directed against the doctrines of the Romantic reaction, as put forward by such people as Adam Müller (Die Elemente der Staatskunst, Berlin, 1809) and Thomas Carlyle (Chartism, London, 1840).
↑ Menenius Agrippa (c. 530–493 BC) was a Roman patrician who is said to have persuaded the plebeians to return to Rome by comparing the patricians to the stomach and the plebeians to the limbs without which the stomach could not survive.
↑ par excellence.
↑ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, new edition, London, 1843, Vol. I, pp. 100–101.
↑ Steuart, An Inquiry, Vol. I, p. 88.
↑ The discovery of gold in California and Australia in the 1850s.
↑ Sir William Petty (1623–87), the ‘founder of political economy’ (Marx, Theories of Surplus Value, p. 1) and an advocate of the labour theory of value. Author of A Treatise of Taxes, London, 1667, and Several Essays in Political Arithmetick, London, 1699.
↑ See pp. 171–87.
↑ See pp. 187–95.
↑ There is no heading (1) in the original text.
↑ par excellence.
↑ Hegel, Philosophy of Nature, Glockner edn, Vol. IX, pp. 413–24.
↑ See Government School of Mines and Science Applied to the Arts. Lectures on Gold for the Instruction of Emigrants about to Proceed to Australia. Delivered at the Museum of Practical Geology, London, 1852. Marx’s page reference is incorrect. The last sentence comes from p. 12, but the rest of the paragraph is from p. 10. The two preceding paragraphs come from pp. 171–2 and p. 8 of this work, and the two following ones from pp. 93–5 and 95–7 respectively.
↑ Jacob Grimm, Geschichte der deutschen Sprache, Vol. I, Leipzig, 1848, pp. 13–14.
↑ A reference to Marx’s own excerpt-book, No. XIV (1851), p. 2 of which contains the excerpt mentioned, from pp. 48–9 of Dureau de la Malle, Économie politique des Romains, Paris, 1840, Vol. I. In general pp. 180–84 are based on excerpts from Dureau de la Malle’s work.
↑ J.-A. Letronne, Considérations générales sur l’évaluation des monnaies grecques et romaines, et sur la valeur de l’or et de l’argent avant la découverte de l’Amérique, Paris, 1817; W. Jacob, An Historical Inquiry into the Production and Consumption of the Precious Metals, London, 1831; A. Böckh, The Public Economy of Athens, London, 1842.
↑ G. Garnier, Histoire de la monnaie depuis les temps de la plus haute antiquité jusqu’au règne de Charlemagne, Paris, 1819, Vol. I, p. 7.
↑ J. F. Reitemeier, Geschichte des Bergbaues und Hüttenwesens bey den alten Völkern, Göttingen, 1785, pp. 14, 15–16, 32.
↑ Jacob, An Historical Inquiry, Vol. I, p. 142.
↑ Dureau de la Malle, Économie politique des Romains, Vol. I, pp. 62–3.
↑ The treasury.
↑ Nassau Senior, Three Lectures on the Cost of Obtaining Money, London, 1830, p. 15.
↑ Garnier, Histoire de la monnaie, Vol. I, pp. 72, 73, 77, 78.
↑ Marx discusses James Mill’s theory more fully later on.
↑ Storch, Cours d’économie politique, Vol. I, pp. 81, 83, 84, 87, 88.
↑ J.C-L. Simonde de Sismondi (1773–1842), Swiss political economist and historian, who held that the value of a product was determined by the quantity of labour needed to produce it, not by its cost. He was the father of the romantic-reactionary opposition to capitalism. The reference here is to Études sur l’économie politique, Vol. II, Brussels, 1838, pp. 264–5.
↑ Jacob, An Historical Inquiry, Vol. I, pp. 109, 351.
↑ Steuart, An Inquiry, Vol. I, pp. 395–6.
↑ J. G. Hubbard (1805–89), English financier, a director of the Bank of England in 1838, later a Conservative M.P. The Currency and the Country, London, 1843, pp. 44–6. Marx’s reference (VIII, 45) is to his own excerpt-book.
↑ Jacob, An Historical Inquiry, Vol. II, p. 326.
↑ Steuart, An Inquiry, Vol. II, p. 389.
↑ Marx may also be alluding to Hegel’s concept of schlechte Unendlichkeit (‘bad’ or ‘spurious’ infinity), an infinity of connections merely piled on top of one another (Science of Logic, Glockner edn, Vol IV, pp. 165–83).
↑ Pierre le Pesant Boisguillebert (1646–1714). French judge and precursor of the Physiocrats who opposed Mercantilism, upheld free competition, and denounced the misery of the French agricultural population, which, under Louis XIV, earned him exile to the Auvergne.
↑ Boisguillebert, Dissertation sur la nature des richesses, de l’argent, et des tributs, printed in Éonomistes Financiers du XVIIIe siècle, ed. E. Daire, Paris, 1843, pp. 395 and 417.
↑ See above, p. 146; money is ‘(3) representative of commodities (hence object of contracts)’, and see below section c, ‘money as material representative of wealth’, p. 203.
↑ Steuart, An Inquiry, Vol. I, pp. 395–6.
↑ F.-L.-A. Ferrier, Du gouvernement considéré dans ses rapports avec le commerce, Paris, 1805, p. 35. Ferrier (1777–1861) was a high French customs official who both operated and wrote in favour of Napoleon I’s protective system.
↑ Louis Say (1774–1840), brother of Jean-Baptiste Say, issued a number of economic pamphlets criticizing the latter’s opinions. The reference here is to Principales Causes de la richesse ou de la misère des peuples et des particuliers, Paris, 1818, pp. 31–2.
↑ Adam Smith, Wealth of Nations, Vol. II, Bk 2, pp. 270–77.
↑ Edward Solly, The Present Distress in Relation to the Theory of Money, London, 1830, p. 5.
↑ James Maitland, Earl of Lauderdale (1759–1839), Whig, then Tory, politician, author of economic works attacking Smith’s distinction between productive and unproductive labour. Marx refers here to the French translation of one of his books, entitled Recherches sur la nature et l’origine de la richesse publique, et sur les moyens et les causes qui concourent à son accroissement, Paris, 1808, p. 140.
↑ James Taylor, A View to the Money System of England, from the Conquest; with Proposals for Establishing a Secure and Equitable Credit Currency, London, 1828, pp. 18–19.
↑ Sismondi, Études, Vol. II, p. 278.
↑ ibid., p. 300.
↑ The term Gemeinwesen also carries the nuances ‘common essence’, ‘common system’ and ‘common being’.
↑ Steuart, An Inquiry, Vol. I, p. 327.
↑ T. R. Malthus, Principles of Political Economy, London, 1836, p. 391.
↑ In so far as money is a medium of circulation, ‘the quantity of it which circulates can never be employed individually; it must always circulate’. (Storch.) The individual can employ money only by divesting himself of it, by positing it as being for others, in its social function. This, as Storch correctly remarks, is a reason why the material of money ‘should not be indispensable to human existence’, in the manner of such things as hides, salt, etc., which serve for money among some peoples. For the quantity that is in circulation is lost to consumption. Hence, firstly, metals [enjoy] preference over other commodities as money, and secondly, the precious metals preference over those which useful as instruments of production. It is characteristic of the economists that Storch expresses this thusly: the material of money should should ‘have direct value but on the basis of an artificial need‘. Artificial need is what the economist calls, firstly, the needs which arise out of the social existence of the individual; secondly, those which do not flow from its naked existence as a natural object. This shows the inner, desperate poverty which forms the basis of bourgeois wealth and of its science.
↑ Edward Misselden (seventeenth-century Mercantilist writer, active in the Merchant Adventurers’ Company, d. 1654), Free Trade, or the Meanes to Make Trade Flourish, London, 1622, pp. 19–24.
↑ German: Akkumulation. But Marx presumably intended this word to have the sense Anhäufung (piling-up), as on the previous page, rather than the more technical economic sense he usually gives to the word.
↑ Jacob, An Historical Inquiry, Vol. II, pp. 271–323.
↑ Petty, Political Arithmetick, pp. 178–9.
↑ Misselden, Free Trade, pp. 7, 12–13.
↑ The notes on Boisguillebert are in an unnumbered excerpt-book compiled in June and July 1845 and printed in MEGA, 1/3, pp. 568–79. Marx discussed Boisguillebert’s polemic against the power of money in A Contribution to the Critique of Political Economy, London, 1971, pp. 54–5 and 124–6.
↑ Nassau Senior, Principes fondamentaux de l’économie politique, tirés de leçons édites et inédites, Paris, 1836, pp. 116–17. (This is the translation by J. Arrivabene of Senior’s Outline of the Science of Political Economy, London, 1836). Senior himself (1790–1864) was an English political economist, a member of numerous mid-nineteenth-century government commissions, Professor of Political Economy in Oxford from 1847 to 1852, and noted for his two theories, that the profit of capital is the product of the last hour of the working day, and that the accumulation of capital results from the abstinence of the capitalist from consumption.
↑ Samuel Bailey (1791–1870, successful Sheffield businessman, ‘coarse practical bourgeois’ (Marx), and author of several economic pamphlets against Ricardo’s theory of value), Money and its Vicissitudes in Value; as They Affect National Industry and Pecuniary Contracts; with a Postscript on Joint-Stock Banks, published anonymously, London, 1837, p. 3.
↑ Storch, Cours d’économie politique, Vol. II, p. 135.
↑ Bailey, Money and its Vicissitudes, pp. 9–11.
↑ Piercy Ravenstone, Thoughts on the Funding System and its Effects London, 1824, p. 20.
↑ ‘These have one mind, and shall give their power and strength unto the beast’ (Revelation xvii, 13); ‘And that no man might buy or sell, save that he had the mark, or the name of the beast, or the number of his name’ (Revelation xiii, 17).
↑ Storch, Cours d’économie politique, Vol. I, pp. 72–3.

[1] Alfred Darimon (1819–1902), a follower of Proudhon. He edited Proudhonist newspapers in 1848, wrote on financial questions in the 1850s and was a democratic opponent of Napoleon III until 1864 when he went over to the Bonapartists.

[2] In French in the original. Throughout this edition, passages in French, Italian and Spanish have been translated in the main body of the text; English has been left; Greek and Latin have been left in the text and translated in the notes.

[3] Should read: ‘ … while the amount of securities decreases by 12,159,388; i.e. the decline of securities exceeds the decline of metal … ’. The correction of these and similar errors would in no way touch the substance of Marx’s conclusions concerning Darimon’s statistical ideas.

[4] Isaac Péreire (1806–80), French banker and railway king who, together with his brother Émile, founded the Crédit Mobilier in 1852. A close associate of Napoleon III.

[5] Michel Chevalier (1806–79), follower of Saint-Simon up to 1833; later Bonapartist. From 1850 he was Professor of Political Economy at the Collège de France, and a supporter in the 1850s of Bonaparte’s move towards free trade.

[6] Ricardo’s pamphlet, Proposals for an Economical and Secure Currency, London, 1816.

[7] A reference to the period during which the Bank Restriction Act was in operation (1797–1819).

[8] A play on the two meanings of the French word ‘espèces’: (1) sorts; (2) specie.

[9] The Currency Act of 1844, which stringently limited the number of banknotes the country banks could issue, and also limited the fiduciary issue of the Bank of England to £14,000,000; any further issue had to be backed by coin or bullion.

[10] Émile de Girardin (1806–81), French journalist, who edited La Presse from 1830 to 1857 and wrote the introduction to Darimon’s book. A politician entirely lacking in scruples, he was a moderate republican in 1848, a Montagnard deputy to the Legislative Assembly in 1850 and a Bonapartist in 1852.

[11] Potentially. Cf. Aristotle, Metaphysics, Bk VIII, Ch. 6, 2.

[12] John Francis Bray (1809–95), economic pamphleteer and political activist in the England of the 1830s. In 1837 he became treasurer of the Leeds Working Men’s Association. He advocated utopian socialist ideas in the pamphlet Labour’s Wrongs and Labour’s Remedy, Leeds, 1839, and was described by Marx as an ‘English Communist’ (The Poverty of Philosophy, Moscow, 1966, p. 60).

[13] John Gray (1799–1850), economic pamphleteer and utopian socialist, author of The Social System, Edinburgh, 1831, and Lectures on the Nature and Use of Money, Edinburgh, 1848.

[14] See below, pp. 153–60.

[15] Hegel, Science of Logic, tr. A. V. Miller, London, 1969, p. 416.

[16] Cf. Marx, The Poverty of Philosophy, pp. 52–68.

[:0-17] 17.0 ^17.1 Kaufmannsstand: This refers above all to the merchants of the sixteenth and seventeenth centuries, who formed an ‘estate’ rather than a ‘class’.

[18] The following two paragraphs are directed specifically against the scheme outlined by John Gray in The Social System, pp. 62–86.

[19] This note refers to an unknown manuscript by Marx, which must be older than his work of 1851 on ‘The Completed Money System’. Possibly it refers to one of the missing parts of the manuscript of 1845–7 on the ‘Critique of Politics and Political Economy’, fragments of which are reprinted in Marx-Engels Gesamtausgabe (MEGA) 1/3, pp. 33–172, 437–583 and 592–6. The 1851 manuscript,’The Completed Money System’, is not extant in full, and remains unpublished. [MELI note.]

[20] This note refers to an unknown manuscript by Marx, which must be older than his work of 1851 on ‘The Completed Money System’. Possibly it refers to one of the missing parts of the manuscript of 1845–7 on the ‘Critique of Politics and Political Economy’, fragments of which are reprinted in Marx-Engels Gesamtausgabe (MEGA) 1/3, pp. 33–172, 437–583 and 592–6. The 1851 manuscript,’The Completed Money System’, is not extant in full, and remains unpublished. [MELI note.]

[21] Atistotle, Nicomachean Ethics, Bk V, Ch. 5, para. 14.

[22] This is directed against the doctrines of the Romantic reaction, as put forward by such people as Adam Müller (Die Elemente der Staatskunst, Berlin, 1809) and Thomas Carlyle (Chartism, London, 1840).

[23] Menenius Agrippa (c. 530–493 BC) was a Roman patrician who is said to have persuaded the plebeians to return to Rome by comparing the patricians to the stomach and the plebeians to the limbs without which the stomach could not survive.

[24] par excellence.

[25] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, new edition, London, 1843, Vol. I, pp. 100–101.

[26] Steuart, An Inquiry, Vol. I, p. 88.

[27] The discovery of gold in California and Australia in the 1850s.

[28] Sir William Petty (1623–87), the ‘founder of political economy’ (Marx, Theories of Surplus Value, p. 1) and an advocate of the labour theory of value. Author of A Treatise of Taxes, London, 1667, and Several Essays in Political Arithmetick, London, 1699.

[29] See pp. 171–87.

[30] See pp. 187–95.

[31] There is no heading (1) in the original text.

[32] par excellence.

[33] Hegel, Philosophy of Nature, Glockner edn, Vol. IX, pp. 413–24.

[34] See Government School of Mines and Science Applied to the Arts. Lectures on Gold for the Instruction of Emigrants about to Proceed to Australia. Delivered at the Museum of Practical Geology, London, 1852. Marx’s page reference is incorrect. The last sentence comes from p. 12, but the rest of the paragraph is from p. 10. The two preceding paragraphs come from pp. 171–2 and p. 8 of this work, and the two following ones from pp. 93–5 and 95–7 respectively.

[35] Jacob Grimm, Geschichte der deutschen Sprache, Vol. I, Leipzig, 1848, pp. 13–14.

[36] A reference to Marx’s own excerpt-book, No. XIV (1851), p. 2 of which contains the excerpt mentioned, from pp. 48–9 of Dureau de la Malle, Économie politique des Romains, Paris, 1840, Vol. I. In general pp. 180–84 are based on excerpts from Dureau de la Malle’s work.

[37] J.-A. Letronne, Considérations générales sur l’évaluation des monnaies grecques et romaines, et sur la valeur de l’or et de l’argent avant la découverte de l’Amérique, Paris, 1817; W. Jacob, An Historical Inquiry into the Production and Consumption of the Precious Metals, London, 1831; A. Böckh, The Public Economy of Athens, London, 1842.

[38] G. Garnier, Histoire de la monnaie depuis les temps de la plus haute antiquité jusqu’au règne de Charlemagne, Paris, 1819, Vol. I, p. 7.

[39] J. F. Reitemeier, Geschichte des Bergbaues und Hüttenwesens bey den alten Völkern, Göttingen, 1785, pp. 14, 15–16, 32.

[40] Jacob, An Historical Inquiry, Vol. I, p. 142.

[41] Dureau de la Malle, Économie politique des Romains, Vol. I, pp. 62–3.

[42] The treasury.

[43] Nassau Senior, Three Lectures on the Cost of Obtaining Money, London, 1830, p. 15.

[44] Garnier, Histoire de la monnaie, Vol. I, pp. 72, 73, 77, 78.

[45] Marx discusses James Mill’s theory more fully later on.

[46] Storch, Cours d’économie politique, Vol. I, pp. 81, 83, 84, 87, 88.

[47] J.C-L. Simonde de Sismondi (1773–1842), Swiss political economist and historian, who held that the value of a product was determined by the quantity of labour needed to produce it, not by its cost. He was the father of the romantic-reactionary opposition to capitalism. The reference here is to Études sur l’économie politique, Vol. II, Brussels, 1838, pp. 264–5.

[48] Jacob, An Historical Inquiry, Vol. I, pp. 109, 351.

[49] Steuart, An Inquiry, Vol. I, pp. 395–6.

[50] J. G. Hubbard (1805–89), English financier, a director of the Bank of England in 1838, later a Conservative M.P. The Currency and the Country, London, 1843, pp. 44–6. Marx’s reference (VIII, 45) is to his own excerpt-book.

[51] Jacob, An Historical Inquiry, Vol. II, p. 326.

[52] Steuart, An Inquiry, Vol. II, p. 389.

[53] Marx may also be alluding to Hegel’s concept of schlechte Unendlichkeit (‘bad’ or ‘spurious’ infinity), an infinity of connections merely piled on top of one another (Science of Logic, Glockner edn, Vol IV, pp. 165–83).

[54] Pierre le Pesant Boisguillebert (1646–1714). French judge and precursor of the Physiocrats who opposed Mercantilism, upheld free competition, and denounced the misery of the French agricultural population, which, under Louis XIV, earned him exile to the Auvergne.

[55] Boisguillebert, Dissertation sur la nature des richesses, de l’argent, et des tributs, printed in Éonomistes Financiers du XVIIIe siècle, ed. E. Daire, Paris, 1843, pp. 395 and 417.

[56] See above, p. 146; money is ‘(3) representative of commodities (hence object of contracts)’, and see below section c, ‘money as material representative of wealth’, p. 203.

[57] Steuart, An Inquiry, Vol. I, pp. 395–6.

[58] F.-L.-A. Ferrier, Du gouvernement considéré dans ses rapports avec le commerce, Paris, 1805, p. 35. Ferrier (1777–1861) was a high French customs official who both operated and wrote in favour of Napoleon I’s protective system.

[59] Louis Say (1774–1840), brother of Jean-Baptiste Say, issued a number of economic pamphlets criticizing the latter’s opinions. The reference here is to Principales Causes de la richesse ou de la misère des peuples et des particuliers, Paris, 1818, pp. 31–2.

[60] Adam Smith, Wealth of Nations, Vol. II, Bk 2, pp. 270–77.

[61] Edward Solly, The Present Distress in Relation to the Theory of Money, London, 1830, p. 5.

[62] James Maitland, Earl of Lauderdale (1759–1839), Whig, then Tory, politician, author of economic works attacking Smith’s distinction between productive and unproductive labour. Marx refers here to the French translation of one of his books, entitled Recherches sur la nature et l’origine de la richesse publique, et sur les moyens et les causes qui concourent à son accroissement, Paris, 1808, p. 140.

[63] James Taylor, A View to the Money System of England, from the Conquest; with Proposals for Establishing a Secure and Equitable Credit Currency, London, 1828, pp. 18–19.

[64] Sismondi, Études, Vol. II, p. 278.

[65] ., p. 300.

[66] The term Gemeinwesen also carries the nuances ‘common essence’, ‘common system’ and ‘common being’.

[67] Steuart, An Inquiry, Vol. I, p. 327.

[68] T. R. Malthus, Principles of Political Economy, London, 1836, p. 391.

[69] In so far as money is a medium of circulation, ‘the quantity of it which circulates can never be employed individually; it must always circulate’. (Storch.) The individual can employ money only by divesting himself of it, by positing it as being for others, in its social function. This, as Storch correctly remarks, is a reason why the material of money ‘should not be indispensable to human existence’, in the manner of such things as hides, salt, etc., which serve for money among some peoples. For the quantity that is in circulation is lost to consumption. Hence, firstly, metals [enjoy] preference over other commodities as money, and secondly, the precious metals preference over those which useful as instruments of production. It is characteristic of the economists that Storch expresses this thusly: the material of money should should ‘have direct value but on the basis of an artificial need‘. Artificial need is what the economist calls, firstly, the needs which arise out of the social existence of the individual; secondly, those which do not flow from its naked existence as a natural object. This shows the inner, desperate poverty which forms the basis of bourgeois wealth and of its science.

[70] Edward Misselden (seventeenth-century Mercantilist writer, active in the Merchant Adventurers’ Company, d. 1654), Free Trade, or the Meanes to Make Trade Flourish, London, 1622, pp. 19–24.

[71] German: Akkumulation. But Marx presumably intended this word to have the sense Anhäufung (piling-up), as on the previous page, rather than the more technical economic sense he usually gives to the word.

[72] Jacob, An Historical Inquiry, Vol. II, pp. 271–323.

[73] Petty, Political Arithmetick, pp. 178–9.

[74] Misselden, Free Trade, pp. 7, 12–13.

[75] The notes on Boisguillebert are in an unnumbered excerpt-book compiled in June and July 1845 and printed in MEGA, 1/3, pp. 568–79. Marx discussed Boisguillebert’s polemic against the power of money in A Contribution to the Critique of Political Economy, London, 1971, pp. 54–5 and 124–6.

[76] Nassau Senior, Principes fondamentaux de l’économie politique, tirés de leçons édites et inédites, Paris, 1836, pp. 116–17. (This is the translation by J. Arrivabene of Senior’s Outline of the Science of Political Economy, London, 1836). Senior himself (1790–1864) was an English political economist, a member of numerous mid-nineteenth-century government commissions, Professor of Political Economy in Oxford from 1847 to 1852, and noted for his two theories, that the profit of capital is the product of the last hour of the working day, and that the accumulation of capital results from the abstinence of the capitalist from consumption.

[77] Samuel Bailey (1791–1870, successful Sheffield businessman, ‘coarse practical bourgeois’ (Marx), and author of several economic pamphlets against Ricardo’s theory of value), Money and its Vicissitudes in Value; as They Affect National Industry and Pecuniary Contracts; with a Postscript on Joint-Stock Banks, published anonymously, London, 1837, p. 3.

[78] Storch, Cours d’économie politique, Vol. II, p. 135.

[79] Bailey, Money and its Vicissitudes, pp. 9–11.

[80] Piercy Ravenstone, Thoughts on the Funding System and its Effects London, 1824, p. 20.

[81] ‘These have one mind, and shall give their power and strength unto the beast’ (Revelation xvii, 13); ‘And that no man might buy or sell, save that he had the mark, or the name of the beast, or the number of his name’ (Revelation xiii, 17).

[82] Storch, Cours d’économie politique, Vol. I, pp. 72–3.

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