Class 03 Reading Marx's Capital Vol I with David Harvey


Uploaded by readingcapital on 16.01.2011

Transcript:
» NEIL SMITH: So. Money makes the world go round they say.
» DAVID HARVEY: Yes.
It's so fascinating-
money. We all use it,
we all worry about it,
we all spend an enormous amount of our time getting it.
But if you ask anybody the question: "What is money?",
most people can't give you a clear answer at all.
And I always remember this great line in
Dickens' Dombey and Son, where little Paul, his mother has died and he's very sickly,
and he keeps on asking his father, "Papa, what is money? What is money?" And Mister Dombey, who's
the great entrepreneur, merchant,
can't give an answer.
At some point or other, he says: "Well, it's something that allows you to do lots of things."
So little Paul says: "Well, why can't it bring Mama back then?"
And Mister Dombey is so flummoxed, he just leaves the room.
I think this kind of question about what money is
and its function in society is really something of
a mystery to everybody.
Yet it's something that we're constantly focused on. So here we are, focused on this thing money
and we don't know what it is.
What Marx tries to do
is to tell us
something about money
which we hadn't really understood before.
The theory of money in Marx even for Marx is very complicated.
So the third chapter
is probably the most difficult chapter in the book for almost everybody to get through.
And from experience when you ask people who started reading Capital on their own when
they gave up, well, they nearly always did so in Chapter Three. So one of my tasks is to
get people through Chapter Three,
get them to the other side of it and then it's like you've come out of purgatory.
You're into heaven after that. »NEIL SMITH: You're on to the good stuff. »DAVID HARVEY: Yes.

I have to say that New York City in these
times provides a good
occasion to reflect on
all of this, but we have to remember this chapter was written
nearly 150…140 years ago,
and so there is the question
as to how much
of the analysis stands, and this is obviously something you have to think about.
The chapter usually
poses quite a bit of difficulty for people.
I think I mentioned early on that many people who start reading Capital kind of give up on
this chapter because it just gets too dense and too complicated, and it's very hard to figure
out what's going on,
but if you stick with
the framework I've suggested, and you do think about it,
then whenever you approach a chapter like this and think about its structure you will remember
where you are
in the broader argument.
For the argument here is once again, fairly simple, and it has a very
similar form to the arguments encountered before, so
you'll probably get sick of me
putting this kind of formulation
up on the board. But Marx starts with
the idea of a commodity money,
or, money as a commodity.
As usual, he asks a number of questions.
What work does this commodity do? What functions does it perform, and then he,
surprisingly finds a duality. Right?
We've seen this before.
And the duality is
that it's a measure of values
but also a means of circulation.
And those two functions
are going to be somewhat incompatible
with each other so he will spend
the first part of the chapter looking at
the measure of values function and the complications which attach to that.
The second part is about the means of circulation
and its complications.
Then of course he finally comes back
to the issue of universal money
which not surprisingly internalizes a contradiction.
So what else is new
about Marx's method of presentation?
But this is basically what he does.
Now, part of the difficulty here is that,
although Marx inserted into the section about
concrete and abstract labour, some
extra elements to broaden the argument,
here he actually sets up a mini bifurcation when considering
money as a measure of value and as a standard of price.
So, he kind of does a mini-diversion of this inside the proposition.
He does the same
mini kind of diversion when considering
means of circulation.
In particular when he looks at
concrete money, gold coins and symbols,
Marx asks the question: what's the relationship between
this real stuff and
this which leads him to discuss things like

money as money of account, credit money and all those other kinds of forms of money.
In effect he starts to elucidate
the complicated world of money activities via this strategy.
But the basic structure of the chapter is
an echo of what you saw in
the section on commodities, the section on
abstract and concrete labour, the relative and equivalent forms, and here Marx is just
doing the same thing again.
So, if you have that in mind, then you're less likely to get lost
in the intensity or details of the argument in this chapter,
important though they are.
Now the reason I like to
set up the argument in this way is because
when you're wrestling with details fascinating and important
in their own right, you nevertheless need to remember that
Marx has a framework within which
the argument is proceeding, and that is
the framework of the chapter.
So, with that in mind,
let's look at this piece of the story:
money as a measure of value
or the money commodity.
Obviously there is going to be a transition in this chapter from talking about
money as a commodity or the money commodity,
to money as universal money
which of course, nowadays would not be represented by any particular commodity at all.
It would be represented by something else. But I think we can see shadows of that
in Marx's interpretation.
For purposes of simplification,
Marx says I'm going to assume for the most part in this chapter - occasionally he introduces
silver and then sometimes talks about other things -
but I'm going to assume that the commodity money is gold.
Therefore I will use the example of gold.
and just assume
that gold has become the money commodity
which we are interested in looking at.
Then he immediately says
at the bottom of the first page here: "Money as a measure of value
is the necessary form of appearance…"
Now, I have often
insisted that you think a lot about social necessity,
what is socially necessary?
And here he's saying that this
form of appearance
is a necessary form of appearance; it is socially necessary,
and it's necessary
as a measure of value which is imminent in commodities, namely
labour time or more accurately: socially necessary labour time.
So there's an interrelation then between
the world of commodities and the socially necessary labour time which is embodied
in all of those commodities,
and the socially necessary labour time,
which is embodied in the gold.
But then he goes one step further
at the bottom of page 189
when he says: "The price or money-form of commodities
is like their form of value generally, quite distinct
from their palpable and real bodily form; it is therefore
a purely ideal or notional form."
By ideal Marx means 'mental',
i.e. constructed in our minds.
"Although invisible",
and I've mentioned several times
the significance of these invisibilities, these
immaterialities which are nevertheless objective and real.
Marx then goes on to say:
"The guardian of the commodities must therefore lend them his tongue, or hang a ticket
on them, in order to communicate their prices to the outside world."
Now what's happening here is the following:
I have a commodity;
I have no idea what its value is.
How can I possibly know
before I take it to market?
But when I take it to market, I want to have a notional value to put on it,
so I hang a price tag on it
to indicate its worth;
It's a mental move on my part for I am guessing;
only after the market has gone through all of its ferment and done its work can
I know what the value
is as represented by its money form.
But as a standard of price, as Marx indicates
two pages later, money
is performing a different function than as a measure of value.
So, on page 190 Marx wants to talk first about this imaginary side,
the ideal side of the money form.
I'm imagining what the value is in my commodity.
But then the price itself depends
upon the substance that is money.
And this then poses the first problem,
which is signaled upon this page.
The money commodity is gold.
Since it is a distinctive commodity,
it is produced under given conditions of production.
So, how much gold there is, what the gold is worth, and what the socially necessary labour time
embedded in gold is, will vary.
So immediately there is a problem,
not on the side of
all of those commodities, which have been measured in terms of the money commodity, but in terms
of the money commodity itself.
So Marx has to deal with the prospect of inflation, or deflation,
because there's not much money or there's a lot of money around,
and in particular the presence of much gold or little gold.
So, there is a problem of the gold supply.
His point about this is that
yes, we have to take that into account, but
actually the relative values of commodities are not affected by the level of the gold supply.
For example if shoes cost twice as much as shirts,
and the money commodity changes,
then the ratio two-to-one will still hold.
It's just that it will be
articulated in a different way, because the money commodity has changed,
i.e. changed its value.
So he breezes past that kind of question by simply saying that
this disappears in the wash. But, on page 192
Marx considers a more important issue,
when he talks about the way in which …"measure of value, and…standard of price.."
wherein money performs two quite different functions.
Now, as a measure of value the functions of money are:
to be stable,
to be tangible,
to not change its qualities.
And so you can see immediately why as a measure of price gold
rather than strawberries would be the money commodity.
Because money as gold commodity can store value.
Gold is fairly constant in its form since it
can be assayed, measured,
and is limited in supply since you can't just go out and dig it up in your backyard.
So there are reasons why, money
gravitates towards gold as the measure of value,
because indeed it works very well.
Even though as we have seen
the value of gold itself can shift,
that doesn't materially affect its capacity
to function in these ways.
As…a standard of price however,
Marx points out that
we are no longer interested in the relationship between the socially necessary labour time
in gold and the socially necessary labour time in commodities,
because socially necessary labour time is immaterial and immeasurable directly.
What we're interested in
is the quantity of the gold
which is equivalent to whatever it is
you are selling as a commodity.
And that quantity of gold then tells you
how much your commodity is worth.
This is a quantitative relation.
For example why two ounces, why not one ounce, why three ounces?
At some point or other this leads us into, according to Marx,
the way in which the weight name
of the money becomes the weight name
of the value of the commodity.
In this weight name, quoting from the top of page 194
Marx shows this important transitional aspect in the naming of money
when he considers the word 'pound'; for the
pound was originally a pound of silver,
but then it simply became called pound, and
so the British currency is in pounds.
Now, when you're in Britain and
you ask for pounds, you don't expect somebody to give you a weight of something.
You expect them to give you notes.
So what he's doing here is to talk about the transition that is going on from
the value form, which is in the money commodity,
to this naming and counting
of elements of money, which are then traded by the commodity traders in the market place.
And this transition therefore completes the fetishism which he has talked about in an earlier chapter.
So on page195 Marx said,
"the name of a thing is entirely external to its nature.
I know nothing of a man if I merely know his name is Jacob.
In the same way, every trace of the money-relation disappears in the money names,
pound, thaler, franc, ducat, etc."
Then he goes on to talk about "the confusion caused by attributing a hidden meaning to these cabalistic signs
which is made even greater by the fact that these money names express both the values of commodities
and simultaneously aliquot parts of a certain weight of metal, namely the weight of the metal
serving as the standard of money.
On the other hand this is in fact "necessary",
again this word necessary, "it is…necessary that value,
as opposed to the multifarious objects of the world of commodities,
should develop into this form,
a material and non-mental one, but also a simple social form…"
Which leads us to the conclusion that "price is the money-name of the labour objectified
in a commodity."
Now, what Marx is saying here is that
yes indeed we have all these terms like
ducats, louis, dollars and pounds and so on,
and we measure the value of commodities in quantities of those terms,
but at some point there
has to be some relationship between
the way these nominal forms of money are articulated and a monetary base, a commodity base.
He is saying that this is essential.
Now of course since the 1970's
the global economy has not done that very effectively.
So the question which then arises
underscores this insistence about the monetary base,
the commodity base, the money commodity value. Is his insistence on that realistic?
What happens when you decide
that you're going to dispense with it,
as has technically happened
since the de-materialization of money
from the 1970's onwards.
We'll come back to that later, when we look at questions of money supply.
However the end of this section introduces
some rather astonishing modifications of the argument.
On page 196 and 197
Marx says "the magnitude of the value of a commodity",
towards the bottom of 196,
"therefore expresses a necessary relation to social labour time which is inherent in the
process by which its value is created." OK.
"With the transformation of the magnitude of value into the price
this necessary relation appears as the exchange ratio between a single commodity
and the money commodity which exists outside it.
This relation however may express both the magnitude of the value of a commodity
and the greater or lesser quantity of money for which it can be sold under given circumstances.
This condition therefore points to the possibility of a quantitative incongruity".
Notice that the"quantitative incongruity between price and magnitude of value,
i.e. the possibility that the price may diverge from the magnitude of value,
is inherent in the price-form itself."
This is not a defect,
"on the contrary," this is
"what makes this form the adequate one for a mode of production whose laws can only assert themselves
as blindly operating averages between constant irregularities."
What's going on here?
If everything in the market
was presented at its value,
and sold at its value,
then there would be absolutely no way
in which you could adjust
for demand and supply fluctuations.
What's happening here is that, in effect,
on a given day if too many traders come into the market and not enough 'demanders' come
the price will go down.
The next day perhaps fewer traders come but more buyers are present,
so the price goes up.
So what's happening here is that Marx is talking about the way in which once you go
to a price name and hang prices on commodities,
different prices can be realized at different times in different places;
they fluctuate all over the place.
And that is what the anarchy
of a capitalist market system is all about.
Therefore a money system has to be able to deal with that.
So these incongruities
are specifically able to deal with fluctuations
in demand and supply conditions.
Now Marx along with the
classical political economists assumed
that at the end of the day
despite all these fluctuations, there is something called equilibrium price
or natural price. That is to say the price
achieved when demand and supply are in equilibrium.
And at that point, Marx says,
demand and supply cease to explain anything.
It doesn't explain why shirts
exchange in a certain ratio with shoes on average.
It's not that shirts are more in demand than shoes or anything of that kind, on a given day for
they may fluctuate, but the fact that shirts and shoes
have different prices has to do
with their socially necessary labour time. The fact that on any given day,
the price of shoes fluctuates above or below its socially necessary labour time equivalent,
is due to demand and supply fluctuations.
In order for demand and supply
fluctuations to be incorporated into a capitalistic system, we need a money system
which can do that.
And this quantitative incongruity between
money as a measure of value and
the way in which prices get hung on commodities and prices get realized,
on a given day in a given market at a given time, all of that is allowed for
precisely because of this transition which has occurred between money as a clean measure of
value to it's operating function as a standard of price
that can allow for these fluctuations.
Even more astonishing is what Marx points out on the next page, namely the fact
that this transition from money as a measure of value into
a standard of price can also
harbor "a qualitative contradiction, with the result that price ceases altogether
to express value,
despite the fact that money is nothing but the value-form of commodities.
Things which in and for themselves are not commodities,
things such as conscience, honor, etc. can be offered for sale by their holders
and thus acquire the form of commodities through their price."
K-street and all the rest of it.
"Hence a thing can, formally speaking, have a price without having a value.
The expression of price is in this case imaginary, like certain quantities in mathematics.
On the other hand, the imaginary price-form may also conceal a real value relation or one derived
from it, as for instance
the price of uncultivated land, which is without value because no human labour
is objectified in it."
The point about land which has not yet been occupied, is that
there are ways in which land does incorporate what you might call a shadow price of human labour.
That is land which has human labour
embodied in it over here
casts a shadow value, if you like, on the land which
could be incorporated next year.
What Marx is saying here is that the case of land is a complicated one.
Because, although you might not see any direct
human labour incorporated into that piece of land, you would see its 'shadow', that is
what we call 'externality effects' arising from the human labour which is incorporated
in all the land around it.
If you had a little piece of Manhattan,
and you had held onto it since Indian times
and had kept it pristine with no human labour incorporated into the land lot,
it would therefore have zero value.
But if you went into the market and sold it for zero value…
well this would be absurd from a financial point of view!
However what about conscience, honor etc….? Once again what Marx is showing us that
this qualitative inconsistency also has to take into account the background that
real value has to be produced somewhere.
I mean, imagine an economy
which only exists on trading conscience and honor.
How would we live?
Where would our shirts and shoes and all the rest come from? And Marx is kind of saying:
well, these qualitative incongruities also have to be examined in
the light of where the real value comes from
and what this real value
is all about. It seems to me those are
the very pressing questions
which confront us when we think about how the global economy works.
In the United States people like to say
well, the working class has disappeared, so value is no longer being
produced here anymore, but then you've got to think about what's going on in China.
However when you think about the fact that
although everybody is now concentrating on making megabucks out of financial operations,
the global proletariat has doubled since 1970,
and value is still being produced
in very traditional kinds of ways even though it
is being distributed in quite other ways.
So this is the main point
Marx wants to make about
this measure of value / standard of price movement,
which then takes him into the second long section
on the means of circulation.
Now he starts off with the following observation:
"We saw in a former chapter
that the exchange of commodities implies contradictory and mutually exclusive conditions."
Can anybody remember what those
contradictions and mutually exclusive conditions were? »STUDENT: If you're buying you're not selling?
»HARVEY: No, he's referring back to the section on the relative and equivalent forms of value.
And if you go back to page 148
you'll see he says:"…use-value
becomes the form of appearance of its opposite namely value.
Concrete-labour becomes a form of manifestation
of its opposite namely abstract labour.
Private labour becomes a form of manifestation of its opposite i.e. social labour,"
back on page 148 and 151.
So he's immediately referring back then to those
tensions between the particularity of the money commodity and
its supposed universal capacity to represent
socially necessary labour time in the global economy.
He then makes a very interesting observation, and
I highlight it because
it's important to grasp Marx's mode of thinking.
He says: "The further development of the commodity does not abolish these contradictions,
but rather provides the form within which they have room to move.
This is in general the way in which real contradictions are resolved."

In a way Marx is here describing his dialectical method.
By expanding the argument
and the contradictions we see Marx
allows the contradictions greater
purchase, greater possibility of movement.
Then Marx uses an interesting metaphor: "for instance, it is a contradiction to depict
one body as constantly falling towards another and at the same time constantly flying away from it.
The ellipse is a form of motion within which this contradiction is both realized and resolved."
Now I'm sure some of you feel Marx's argument is indeed elliptical.
But, I think this metaphor is a very important one, because we
notice that an ellipse is about motion;
it's not
about stasis; it's about movement,
and it's about perpetual movement,
perpetual motion.
So in a sense he is indeed
using this kind of method
to expand the general structure of his argument.
So Marx's first
concern is to set up an argument
about
what he calls a metamorphosis of commodities
which is in fact a process of circulation.
Here also
we start to get a different idea of what the dialectic is about; it's about
the study of motion. I've mentioned process a lot,
but now we are looking at circulation,
we're looking at motion.
And that motion is what he calls on page 198 a social metabolism.
He has already talked about the metabolic relation to nature but now he's talking about
the social metabolism.
He puts it this way on page 199:
"exchange (…)
produces a differentiation of the commodity
into two elements, commodity and money,
an external opposition…"
And further down the page he calls this
an antagonistic form.
So we start now to think about the world of commodities on the one hand
and money on the other and then talk about the relationship between them.
Then he immediately shifts his argument from
a commodity-commodity exchange relation,
a C-C relation such as in
a Robinson Crusoe economy,
to look at
a C-M-C relationship,
commodity to money to
commodity circulation.
And he sets up an argument
about this form of circulation.
One of Marx's big arguments is that
inferences you would draw from a commodity to commodity relation, cannot be applied
to the commodity-money-commodity
metamorphosis.
The first metamorphosis involves the transformation of
commodities into money.
He points out that you are going from the particular
to the universal.
And going from the particular to the universal
faces a whole range of different problems.
You have to find somebody out there
who wants your commodity.
You've got to fulfill a social need.
In the midst of the tense complications of the
social division of labour,
somehow
I have to find somebody in the market
who wants my particular commodity and will give me
the money equivalent
of my commodity.
So this means that the labour expended on the commodity,
as he says on page 201,
"…must therefore be of a socially useful kind…"
And then Marx goes on to say that "perhaps the commodity is the product of a new kind of labour
and claims to satisfy a newly arisen need, or is even trying to bring forth
a new need on its own account."
Here he's beginning to talk about
the problem of need creation
under capitalism.
What's going to happen?
How does an entrepreneur create a need
for a new product?
Perhaps
innovations have other effects, and he goes on to say "today the product satisfies a social need,.
tomorrow it may perhaps be expelled partly or completely from its place by a similar product."
What happens in the market therefore is
a whole set of difficulties which have to be overcome
before I can convert my commodity
into money.
I encounter, as he notes on page 202,
the fluctuating demand and supply conditions, which is already mentioned.
So Marx then ends up saying
on page 202 towards the bottom, "we see then
that commodities are in love with money,
but that the course of true love never did run smooth.
The quantitative articulation of society's productive organism,
by which its scattered elements are integrated into the system of the division of labour,
is as haphazard and spontaneous
as its qualitative articulation."
Here we are going back to the imagery of the hidden hand and the atomistic
qualities of capitalist production,
which he is presuming and assuming.
Marx says "the owners of commodities therefore find out
that the same division of labour which turns them into independent private producers
also makes the social process of production and the relations of the individual producers to
each other within that process
independent of the producers themselves."
Back again to the Adam Smithian argument.
"They also find out that the independence of the individuals from each other has
its counterpart and supplement
in a system of all-round material dependence."
That means that although you are independent in the market, you are dependent
on the market
in order to market your produce.
So he then pulls this all together around
this description which I've already used to clarify
the relationship of going from the particular to the universal on page 203
He then goes to the second component
and says well let's look at
this M-C piece.
Here we're going
from the universal
to the particular.
Now clearly, what this means when he starts out by saying that
all commodities are alienable is
that they can all be bought and sold,
and there is therefore a universal alienation,
in that technical sense of everyone willing
to give up their commodities,
in order to trade them away.
Clearly it is easier to go from the universal to the particular for if I command money, and
I go into the marketplace, I can buy whatever commodity I want.
So the difficulties and the traumas which attach
to the C-M transition
are very different from the M-C transition .
There is, if you like, a different power relation involved here,
and that has become crucial to the argument.
Those who command the universal equivalent,
namely money are in a powerful position
vis-a-vis those
who command commodities.
It's a latent power, and
at the moment we can just see it is as
continuing power, but
you can see
how something can build there.
So then Marx goes on to say that he will call
this whole process
the circulation of commodities.
And on page 208, he goes into
a very significant diversion
to the main argument.
In the middle of page 208 Marx says "nothing could be more foolish than the dogma
that because every sale is a purchase,
and every purchase a sale,
the circulation of commodities necessarily implies an equilibrium between sales
and purchases."
He then goes through
an analysis
of this argument,
and quickly points out at the bottom of the page that
"but no one directly needs to purchase because he has just sold."
Then Marx comments, "circulation bursts through all the temporal, spatial
and personal barriers imposed by the direct exchange of products,
and it does this by splitting up the direct identity present in this case
between the exchange
of one's own product and
the acquisition of someone else's products
into the two antithetical processes of sale
and purchase."
To say that these mutually independent and antithetical processes form an internal unity
is also to say that their internal unity moves forward
through external antithesis.
These two processes
lack internal independence because they complement each other.
Hence if the assertion of their external independence proceeds to a certain critical point,
their unity makes itself felt violently by producing a crisis.
Here Marx is arguing that
when I've sold a commodity
and I've got the money from my sale,
I may decide to hold onto that money.
And if I decide to hold onto the money there will be less money to buy commodities.
Now why would I decide to hold onto the money?
I would hold onto the money in a situation of insecurity,
I would keep the money
because I wanted the universal equivalent,
and as will be seen later some people
hold onto money because they love it
and fetishize it.
There are all kinds of reasons why people might hold onto money.
The point here according to Marx is that
if a lot of people decide to hold onto money
then the circulation process stops;
when the circulation process stops the demand for commodities drops off,
and when demand for commodities drops off
many people are left with unsold commodities.
Furthermore the fact that you have money allows you to get away
from the immediate temporality and spatiality of barter.
For example you can hold onto the money for six months and
then take it to Japan,
Singapore or Brazil,
and then go purchase there six months later.
Once you've got your money
you can make all kinds of decisions about it.
Now what Marx is criticizing here
is a famous proposition called Say's law.
Say's law is commented on by Marx in the next footnote on the next page as follows,
"the conception adopted by Ricardo from the tedious Say, that over-production is not possible
or at least that no general glut of the market is possible,
is based on the proposition that products are exchanged against products."
Say's law
was also held by Ricardo
and it dominated thinking
in classical political economy.
And as a result the classical political economists
for the most part claimed
there could be no general crisis of capitalism.
Why not? Because every purchase is a sale and every sale is a purchase, therefore you are always
in equilibrium.
There may be a problem with too many shoes, or too many shirts, or too many apples,
but you cannot have a generalized crisis.
Because Say's law said you couldn't.
And Say's law actually carried over from the classical period into the neoclassical period.
It was held by all economists at the end of the nineteenth century up to the 1930's.
And in the 1930's there were still economists saying that
a general crisis of capitalism is impossible.
And there you had one!
Marx has a very funny line about that elsewhere, where he notes that faced with
a general crisis the only response made by
most economists is something to the effect that
it wouldn't happen this way if only
the economy worked according to my textbook.
But what Marx is saying is that you can indeed have a general crisis.
And how a general crisis occurs was also spotted by Keynes
Now what Keynes did in a series of very interesting essays called Essays in Biography, back in the 1930's
was to point out the error of accepting Say's law
Keynes also pointed out that there were some classical political economists
who did not accept Say's law and claimed
there could indeed be a general crisis.
At the time they went by the charming name of the 'general glut theorists'.
And there were two in particular, Malthus and Sismondi.
Which is a bit of a problem for Marx because Marx couldn't abide Malthus on other grounds,
but Malthus certainly believed there
could be a generalized crisis, and that such a generalized crisis would be be the crisis of what he called effective demand;
Not enough money to buy all the commodities.
The other glut theorist was a Frenchman called Sismondi
who also disputed Say's law. However they were a minority.
What Keynes did was to point out the importance of what he called the liquidity trap.
The liquidity trap develops in a time of difficulty
because people start to hold back money.
As they hold onto money
the difficulties get worse so more people hold onto money.
The difficulty is therefore to get out of
this downward spiral
in the economy as more and more people
run for cover and hold back money
rather than investing it back into the market
by buying stuff.
So Keynes also talked about the significance of effective demand, and of course
Keynesian policies in relationship to the Great Depression were to
stimulate effective demand through
state expenditures, debt financing,
getting people back to work wherever possible and getting consumerism back.
Of course a lot of those problems were solved by World War II and the demand for armaments.
In so many ways World War II was a solution to the effective demand problem.
You could mop it all up in terms of
armaments and production of armaments and you would debt finance it,
even debt financing the British.
So you gave the British government something called lend lease, meaning they took
the commodities and agreed to pay them back later
And when it came time for payment
Keynes was faced with negotiating the
repayment schedule, I think in 1944,
and the American state department said: well,
you give up the British Empire.
And so Keynes answered: you mean
we trade the British Empire for forgiving the debt?, and the Americans basically said yes.
And that's where British decolonization policy
really came from. Opening the world market
was what the Americans wanted for American capital.
They wanted the closed system of the British empire opened up.
And they reached their goal through this trade
agreement over lend-lease.
So this is the type of argument which is going on
here in Marx. Marx is saying that
you can indeed develop a general crisis thereby siding with Malthus and Sismondi.
Later Keynes draws on these arguments refusing however to cite Marx
Keynes claimed he had never read Marx, but this is highly doubtful.
However even if he hadn't read Marx there were plenty of people around him who had.
So Keynes was probably familiar with Marx's arguments as to why Say's law must be wrong,
as well as the arguments describing the lopsidedness
in this relationship C-M-C where C to M is different from M to C.
You cannot, as Say's law does, assume
that the laws relative to barter (C-C) also hold in practice in the C-M-C circulation process
because the transition from C to M is not the same as M to C.
This is a sidebar but a terribly important one, obviously,
for understanding contemporary politics.
Now we get back to the circulation of money.
What Marx does here is argue in
a set of rather boring maneuvers, if I dare say so.
What he shows us is
the interesting contrast between commodities and money and how commodities enter into circulation.
Commodities- I buy them, I wear them or I eat them; they disappear. Therefore commodities enter into and drop out of circulation
Money however stays in circulation,
unless people hoard it
or spirit it away or something like that, but the general role of money
is to stay in the circulation process. So you have myriad
commodity exchanges going on, and you have a
money which is somehow acting as a lubricant for all this exchange
And the question becomes
how is it a lubricant?
And furthermore: how much of that lubricant do you need?
So what the next ten pages are taken up with is
the articulation of what we call the 'quantity theory of money',
which is actually fairly similar to what Ricardo had to say.
So Marx defines the quantity theory first at the bottom of page 217,
where he says "the total quantity of money functioning during a given period is a circulating medium
which is determined on the one hand by the sum of the prices of the commodities in circulation,"
namely the sum of the prices,
"and on the other hand by the rapidity of alternation of the antithetical processes of circulation."
In other words he is looking at "…the movement of prices, the quantity of commodities…, and the velocity of circulation."
The mass of money equals
the sum of all of the prices of the commodities in circulation modified by
the velocity of circulation. The velocity of circulation is a measure of how much work
a coin or a dollar bill does on a given day.
The velocity therefore tells us how many times a mass of money exchanges on a given day.
The federal reserve still has
a key measure on the velocity of money i.e. the velocity of circulation.
You can see how important this concept is because
once you have introduced credit cards as a means of exchange, for example, you also increase the velocity of circulation.
And as you increase the velocity of circulation, you need less actual money because
the amount of money you have is going to move much faster.
If a dollar bill exchanges hands only once a day,
that's a different kind of world economy
than an economy where a dollar bill changes hands five times a day.
You need far more dollar bills if you only exchange bills once a day than five times a
day, so the amount of money you need
is very sensitive to this measure of velocity circulation.
Now the federal reserve has all kinds of measures for the velocity of money factor it sets up, and it's
a complicated issue how to measure it.
But what Marx is saying is that we must take this measure into account.
Ricardo said the same thing so
Marx is not saying much here that has not already been said
in Ricardo, including the idea of considering the sum of the prices.
So this section deals with setting up the quantity theory of money.
This then leads us into section C
where we move to another level
Here we talk about the way in which
coins and symbols of value start to take on certain functions
And here we will find immediately:
"The weight of gold represented in the imagination by the prices of money-names
of the commodities has to confront those commodities, within circulation,
as coins or pieces of gold of the same denomination.
The business of coining,
like the establishing of a standard measure of prices,
is an attribute proper to the state." State power becomes crucial.
"The different national uniforms worn at home by gold and silver as coins, but taken off again
when they appear on the world market,
demonstrate the separation between the internal
or national spheres of commodity circulation
and its universal sphere, the world market."
This again is something which is going to come back in the chapter about the world
market and the universal sphere.
Out of this arises, he says on page 223 , "…the latent possibility
of replacing metallic money with tokens made of some…material, i.e. symbols.
And he observes further down: "Small change appears alongside gold for the payment of fractional
parts of the smallest gold coin;
gold constantly enters into retail circulation, although it is just as constantly being
thrown out again by being exchanged with small change."
And then on the next page,
he talks about
"…nonconvertible paper money issued by the state and given forced currency."
Issues of paper money.
Here he begins to talk about the way
"…credit-money
(may) take root spontaneously in the function of money as a means of payment."
So here we get
a replacement going on, a replacement of gold
by symbols, by paper, by coins.
Why would that occur?
Well, because gold is
very awkward
as a means of circulation.
If every time you engage in this transaction
you need a small grain of gold
it would be be horribly messy.
So indeed
the requirements of circulation,
meaning what is socially necessary in order
for this circulation to become general and for commodities to be exchanged in a general way,
requires you to leave gold behind and instead use tokens,
symbols, paper and so forth.
"Paper money", he says on the bottom of
page 225 "is a symbol of gold," a symbol of money."
"Its relation to the values of commodities consists only in this: they find imaginary expression
in certain quantities of gold,
and the same quantities are symbolically and physically represented by the paper.
Only insofar as paper money represents gold,
which like all other commodities has value, is it a symbol of value."
Now, it's interesting here
to think about whether he is again working with a logical argument or a historical argument.
Marx talks about how different forms of money were pushed out through historical evolution,
and how important the state power was in regulating what determines the value of money.
In this chapter the power of the state becomes critical. In a way the state was already present in chapter two,
when he talked about the legal and juridical infrastructure - ultimately a state function- being necessary
for market exchange to flourish. Here Marx is explicitly referring to
the way in which the state becomes critical in order to understand
how money becomes a symbol i.e. totem or tokens.
This transformation once again has an analogy to the transformation of money as a measure into
a standard of price. So this new transformation brings about a radical
redefinition of what money is about, and that leads us into the final section 3 which is: Money.
Here again Marx argues that at the end of the day there is only one money.
And it has to perform both of those functions. How is it going to do that?
We observe that as a measure of value, gold is fine, however as a means of circulation it is not.
As a standard of price gold starts to fade into the background.
The connectivity between the socially necessary labour time embodied in the money commodity which gets mediated
in all these different ways leads us to lose contact with the monetary base.
This leads Marx to consider a number of elements involved in the contradictions internalized within
the money form itself when considered as universal money.
And the first one is the issue of hoarding.
As Marx notes "when the circulation of commodities first develops, there also develops the necessity
and passionate desire to hold fast to the product of the first metamorphosis.
This product is the transformed shape of the commodity or its gold chrysalis."
Commodities are thus sold not in order to buy commodities,
but in order to replace their commodity form by their money form.
Instead of being merely a way of mediating the metabolic process,
this change of form then becomes an end in itself.
"The money," he says, "is petrified into a hoard, and the seller of commodities also becomes a hoarder of money."
What he points to here, is another transition.
Instead of thinking about the C-M-C transition,
we start to think about the M-C-M transition.
Money into commodities, commodities into money.
What the hoarders want is money, they want the universal power money begets.
But it's interesting because Marx talks about this in a sort of double language.
That it exerts a passionate desire.
Okay, so passionate desire is there, but then he says it is also necessary. Why is it necessary?
Why is hoarding necessary to commodity exchange?
The first reason is given at the bottom of page 228:
because when you enter the market, you enter into it at a certain time which implies
that when you need something in the market, you would have saved up enough money beforehand to go into it.
If you are a farmer and say you produced and sold your crop in September, you have to hoard the money
in order to buy the seeds and the energy you will need in the spring to plant the crop,
hire the labour and so forth.
So hoarding is something which is implicit in what we will call the time structure
of the production of commodities.If all commodities were produced and sold in the same time frame
you wouldn't need hoarding. But the fact is, they are not. Some take a long time to produce while
others are produced immediately and consumed immediately.
As Marx notes on the top of page 229,"in this way, hoards of gold and silver of the most various sizes are piled up at all
points of commercial intercourse." And it is necessary that this happens.
"With the possibility of keeping hold of the commodity's exchange-value, or the exchange-value of the commodity, the lust for gold awakens."
The passion and desire comes into play.
"Gold is a wonderful thing!, Its owner is master of all he desires. Gold can even enable souls to enter Paradise."
The papacy in the medieval period, was in the habit of selling indulgences which guaranteed your entry into heaven.
And there are some people who maintain that the Vatican was one of the first great capitalistic institutions as a consequence of this.
We're selling entry into heaven. I mean, talk about selling conscience and honor,
this is selling something really interesting!
"Since money." Marx says, "does not reveal what has been transformed into it, everything whether a commodity
or not is convertible into money.
Everything becomes 'saleable and purchaseable.'"
Here he's talking about the potentiality for the commodification of everything.
Once you use a money system, you could hang a price on anything leading to the possible commodification of everything.
And he continues "nothing is immune from its alchemy, the bones of the saints cannot withstand it,
let alone more delicate things.
Just as in money every qualitative difference between commodities is extinguished,
so too for its part,
as a radical leveller".
Again here is an interesting theme recurrent in Marx, something that acts as a radical leveller,
something capable of reducing everything to the same metric,
namely that everything should have a price
"It extinguishes," Marx says, "all distinctions".
"But money is itself a commodity, an external object
capable of becoming the private property of any individual."
Now this is a reversal of
item three in the contradictions
he noted on the relative and equivalent forms of value.
Remember, private activity became
the means for the representation of universal social labour.
Now he's saying that
in fact private individuals can appropriate social power.
Social power can become the property of private persons.
This is indeed the
latent power relation of the money form and the holding onto of the universal equivalent
which is beginning to crystallize out into the open,
and of course it will become the basis of class power.
For this reason Marx notes, "ancient society therefore denounced it [money] as tending to destroy
the economic and moral order.
Modern society, which already in its infancy had pulled Pluto by the hair of his head from
the bowels of the earth,
greets gold as is its holy grail, as the glittering incarnation of its
innermost principle of life."
It's very interesting.
We often talk about money as filthy,
filthy lucre.
Guess there's a TV show on right now about dirty sexy money or something like that.
Freud had all kinds of wonderful things to say about money, and in the end he called
it bourgeois sublimation of rituals of the anus.
So there's something unclean about money, something
not nice about money, and ancient society actually did not like the money economy.
In the Grundrisse, Marx talks about the way in which one of the big transitions that
occurred in the social world
was what he called the destruction of community
by money power
whereby money became the community.
So that we now live in the community of money.
We may have all kinds of fantasies about living in community somewhere else and all that kind of
stuff, but we live
in a community of money,
and Marx is also
making that point very clear.
Furthermore,
at the bottom of page 230 Marx piles on the agony of this
by simply pointing out that the "hoarding drive is boundless in its nature.
Here Marx provides a description of the mechanism at work: "the the metallic natural form of this object" and
the "universal equivalent form of all other commodities"
and the "direct…social incarnation of all human labour," all allow for
"the hoarding drive" to become "boundless in its nature."
"Qualitatively or formally considered, money is independent of all limits,
that is to say it is the universal representation of material wealth because it is directly convertible
into any other commodity."
Marx then proceeds to talk about "this contradiction between the quantitative limitation
and the qualitative lack of limitation of money
which keeps driving the hoarder back to his Sisyphean task".
Here we are talking about accumulation
This is Marx's first mention of accumulation in Capital.
The limitless qualities of it are
fascinating to reflect upon.
I mean, if we are accumulating use values,
how many Ferraris can you have?
Imelda Marcos had what? Six thousand pairs of shoes?
But there is a limit.
But do billionaires feel they have a limit
about the next billion?
The answer is no.
The accumulation of money power is limitless,
and therefore
what we get into is a form of accumulation that has in principle
no external limits.
This is a very important argument,
and to the degree that people are into the accumulation of social power,
they are into the accumulation of limitless social power.
I mean, most CEOs in this country are getting perhaps
5 to 10 million dollars a year, nevertheless they consider themselves underpaid.
They kind of say,
well hey, somebody in a hedge fund got 1.7 billion dollars last year,
I deserve that.
How come they got 1.7 billion and I didn't?
So this is the point about the limitlessness of money accumulation.
Two years ago the top hedge fund owner got 250
million dollars. This year it's 1.7 billion.
It's limitless.
And Marx is laying down a principle about the limitlessness of money: as soon as you get into
money as a universal equivalent,
as a representation of socially necessary labour time of value.
Money is in principle limitless
in terms of what you can accumulate,
and in terms of what private persons can accumulate,
in terms of their own private power
over a social good,
which is the socially necessary labour time in the world market.
This is what
Marx is pointing out here, namely
the limitless quality of accumulation,
and the fact that the accumulation of capital knows no limit.
Of course if you look at every other society
that has ever existed in history
you'll find almost invariably that they hit upon limits.
And when they hit limits and didn't know where to go, they often collapsed.
The one society that seems to be completely limitless is capital.
And so far it has been limitless
precisely because
its main measure of value has this particular form which allows it to be accumulated
in this way.
The result is
all the growth curves in terms of the total money in society, the total wealth of society,
the total amount of output in society, the total global
gross domestic product in the world etc.
Look at the growth curves since capitalism
really kicked in around 1750
with all kinds of social, political and environmental consequences to worry about of course
But that is
the nature of what capitalism
is about, and that is how Marx
is setting it up.
Which leads him
to point out the function of hoarding towards the end of this section at the
bottom of page 231
where he makes a little aside about the aesthetic
form of hoarding, like wanting to own gold or silver plated
urinals etc.
"Owing to the continual fluctuations in the extent and rapidity of the circulation of commodities
as well as in their prices,
the quantity of money in circulation unceasingly ebbs and flows. This quantity must
therefore be capable of
expansion and contraction."
And the hoard can fulfill that function.
In other words
Marx is going to modify his theory of money
in society by saying that
given the fluctuations
the total mass of money you need is the sum of the prices modified by the velocity
plus a reserve fund.
This reserve fund can be brought into circulation when there is a massive surge of commodity production,
and taken out of circulation
when it is not needed.
But the reserve fund is absolutely crucial to the stabilization of this system.
That is to say that a form of hoarding is necessary.
For those two reasons, the temporality reason
and the following reason which pertains to the means of payment
These are to be found in Section B: means of payment.
So he returns to consider
means of payment
as being a way to approach
the need for a hoard
given the different temporalities in entering the market.
In other words
if we just exchange notes and say: I'll settle up with you at the end of the year,
you don't actually need to hoard the money.
So this kind of exchange serves as a means of payment.
I just write a note and say: okay, I owe you this. The farmer
writes a note and says: I owe you this and I'll pay you back at harvest time or whatever.
And then certain dates are agreed upon for payment,
hence these exchanges tend to become formalized.
But the result of this type of exchange of notes is a transition.
So here we've got,
see pages 233 and 234,
an extremely important transition which is very easy to miss
partly because of Marx's
complicated language.
The first element in this transition, page 233 occurs when
"the seller becomes a creditor and the buyer a debtor."
This amounts to a big transition in the relationships between buyer and seller on the one hand and creditor and debtor on the other.
"Since the metamorphosis of commodities, or the development of their form of value, has undergone a change here,
whereby money receives a new function as well. It becomes a new means of payment.
Note that the role of creditor or of debtor results here from the simple circulation of commodities."
It's amazing how much he squeezed out of this concept of the commodity here.
The concept of commodities now give rise to these new roles of creditor and debtor,
"and this is capable", he says, "of a more rigid crystallization."
He then starts to talk about the forms of class struggle in the ancient world
in which
the plebeian debtors
were destroyed by the creditors,
the struggle in the middle ages where the feudal debtors
lost their political power.
So there's a power relation in this
debtor-creditor relationship.
He then takes us back
to the sphere of circulation.
And takes us back
to an earlier argument,
where he has talked about the way in which money becomes the object
of the circulation process.
But money now enters the circulation process in a peculiar way, as a means of payment, Marx says, money
"enters circulation, but only after the commodity has already left it.
The money no longer mediates the process. It brings it to an end by emerging independently,
as the absolute form of existence of exchange value," in other words as
the universal commodity.
The seller turned his commodity into money in order to satisfy some need;
the hoarder in order to preserve the monetary form of his commodity,
and the indebted purchaser in order to be able to pay.
If he does not pay, his goods will be sold compulsorily.
The value form of the commodity, money,
has now become the self-sufficient purpose of the sale
owing to a social necessity
springing from conditions of the process of circulation itself."
Marx is now taking us to
this radical transition
from a C-M-C circuit
into a M-C-M circuit.
If I hold money,
I can just lend it to you
and then you pay me back.
I don't even have to produce commodities anymore, I let you produce the commodities;
I just hold the money.
But note,
I want to get that money back.
But of course the underlying logical argument here is: why would I get back the same amount I started with?
Why would I not insist upon
an extra amount of money?
That is to say an
exchange of equivalents makes sense
when I go from commodity to commodity mediated by money, I end up with a commodity which in effect
has the same value as the one
I started out with in principle,
and I'm happy.
I started with shirts and I got my shoes,
equivalent exchanged for equivalent, and everything's fine.
The equality principle has worked.
But why would I start with money
just in order to get money?
The only reason to do that is to get more money.
And so what Marx is saying here is
that out of this relationship between the commodity and money
there emerges a form of circulation which is the M-C-M form of circulation.
And this form of circulation arises out of a social necessity,
not because somebody felt it was a good idea, although we've seen here
that passionate interests are very much engaged as well as lust for gold or lust for power.
But even if passion and lust were not involved,
you would still need this form of circulation
in order
to keep the measure of value and the means of circulation in balance.
That is the only way you can resolve the contradiction between
money as a measure of value
and money as a means of circulation, that is by having this form of circulation
which brings money into exchange when it is needed and takes it out when it is no longer needed.
So that, the money needed,
if it's in equilibrium with the
commodities being traded,
will keep the measure of value constant.
Otherwise the measure of value will start shooting all over the place.
So if I want to maintain
a constant measure of value,
I have to be able to use money as a means of payment,
and in doing so
I trigger
this form
of circulation
which is money
focusing on money.
This little passage,
in the middle and bottom of page 234
is a crucial transition point,
and you should mark it and recognize it as such,
in the whole of Marx's argument.
He doesn't actually signal this transition as crucial but in fact it is.
And the idea that this transition is indicative of a social necessity
is also important.
Capitalism does not actually depend
simply on individuals being greedy and so forth;
it depends upon
social necessity piled on top of social necessity,
which allows
for greed of a certain kind to flourish
in certain situations.
This brings him back,
on page 235 at the bottom,
to talk about "a contradiction imminent in the function of money as the means of payment.
When the payments balance each other, money functions only nominally, as money of account, as a measure of value.
But when actual payments have to be made, money does not come onto the scene as a circulating medium,
in its merely transient form of an intermediary in the social metabolism,
but as the "individual incarnation of social labour,
the independent presence of exchange value,
the universal commodity."
This leads him to remark on page 236,
"this contradiction bursts forth in
that aspect of industrial and commercial crisis
which is known as a monetary crisis.
Such a crisis occurs only where the ongoing chain of payments has been fully developed."
That is when the full development of means of payment,
are just spread around all over the place and credit structures
are broadly engaged.
Marx remarks,
"whenever there is a general disturbance of the mechanism, no matter what its cause,
money suddenly and immediately changes over from its merely nominal shape,
money of account, into hard cash.
Profane commodities can no longer replace it.
The use-value of commodities becomes valueless, and their value vanishes in the face of their
own form of value. The bourgeois,
drunk with prosperity and arrogantly
certain of himself, has just declared that money
is a purely imaginary creation.
'Commodities alone are money', he said.
But now the opposite cry resounds over the markets of the world: only money is a commodity.
As the heart pants after fresh water, so pants his soul after money,
the only wealth.
In a crisis, the antithesis between commodities and their value-form, money, is raised to the level
of an absolute contradiction".
And he goes on to talk about monetary famine.
Six months ago, if you read the financial press,
everybody was talking about excess liquidity
in the markets.
A surplus of liquidity sloshing around, not knowing where to go.
Surplus capital everywhere.
If you wanted to borrow you just went and they gave you anything, you could get sub-prime
loans, you could get whatever you want.
And then what happened over the past few weeks, suddenly
the federal reserve has to inject liquidity
into the system.
They needed real money.
Those houses and all of that didn't actually match up to that value.
In other words it was fictitious value they were playing with out there.
Marx amusingly says somewhere else,
"at the moment of speculation,
everybody's a Protestant,
they act on faith.
When the crisis comes they want real money, they go back to the Catholicism of the monetary base."
And this brings us to consider
the notion of value,
where is the value right now?
Where does it exist?
And what is all that money which is being exchanged in all of these
debt bottling plants we find around ourselves in New York City?
What does it mean?
What connectivity does it have to value,
to socially necessary labour time?
And what Marx is pointing to here is the way in which
the monetary system, once it escapes
from those immediate constraints of socially necessary labour time, can take off
and do all kinds of crazy things.
And those crazy things
create all sorts of problems in the global economy.
But credit money does more than that, because in the next couple of pages
Marx is saying: "Credit money springs directly out of the function of money as a means of payment,
furthermore, credit money becomes the universal material of contracts. Rent, taxes and so on
are transformed from payments in kind
to payments in money."
The monetisation of everything.
In the past the church used to
tithe people's agricultural output,
then came the monetisation of tithes,
so finally you get the monetization and commodification of everything.
This leads us into another duality:
firstly a reserve fund becomes necessary
and that reserve fund
is going to have to function in relationship to this system,
via this form of
M-C-M circulation.
That's the way in which the argument works.
But Marx then says,
in the final and brief section on world money,
that individual states of course manage their own
money systems, money supplies, money tokens and so forth,
but they're
not outside of being disciplined by the world market, meaning
that the exchange of commodities on the world market at some point or other
becomes critical
to the way in which
this monetary system functions.
The state has had a very important role to play in
the stabilization of the monetary system within its borders.
And in doing so the state initially connected
its monetary system very clearly
to a metallic base, gold, silver.
And that metallic base
became crucial in the construction
of the initial financial monetary system.
Assuring the security of that metallic base
became critical.
It's kind of interesting to note that
John Locke wrote his essay on religious tolerance
in which he said, we should tolerate each other
in terms of our religious views and we shouldn't go around burning heretics at the stake and all that kind of thing.
He said this at the same time
as Sir Isaac Newton
became master of the King's mint.
And Isaac's great role
was to assure the quality of the currency,
to assay the gold,
to assay the weight of the silver.
During those years there was great trade
which also lead to the debasement of the coinage,
a type of fraud called coin clipping.
What you did was to take a silver coin and shave off a bit of it,
and then you took lots of silver coins and shaved off lots of little bits.
So by the end of the day you had another silver coin,
good way to make money.
What did Isaac Newton do about this? He caught a few of these people and he had them hung
on Tyburn in public.
So you no longer burned people at the stake for their religious views, you now hung them in Tyburn for debasing coinage.
God is displaced by mammon
in terms of capital punishment.
So this business brings us back to the issue which I'm sure is bothering many of you,
which is what happened to the metallic base?
There was a metallic base
to global capitalism up until
the late 1960's/1970's,
and it was put under great stress
in the late 60's early 1970's.
And ultimately it collapsed, so that
by 1973 you have a global monetary system
which is no longer based
on any metallic commodity
You will notice however that gold is still important,
the gold price is still quoted.
And if push comes to shove you might well ask yourself whether you want to hold onto gold or
dollars, Euros, or Yen, or whatever.
You might want to
think about that.
So gold has not entirely disappeared from the monetary scene at all.
Many people still think, and there are even arguments, that we should go back to the gold standard because
the current monetary system is just crazy.
But what in effect happened after 1973
was a tendency to associate currencies
with a particular basket of commodities.
For a while there we sat with the idea that petro-dollars would work,
that actually the dollar value of petroleum
was the crucial basket determinant.
But then petroleum was yo-yoing too much, and in any case
its value was too much controlled by OPEC.
So in effect what now happens is that currency speculation
actually looks at the relationship between the productivity of a whole economy,
i.e. its total bundle of goods and services produced,
and compares it to the value of its currency.
What is being compared is
the total commodity output of Japan, West
Germany as it was, and now Europe,
and the United States and China. And after comparing all of these things the question is asked,
well, which economy
is producing a bundle of commodities inside its borders that can really sustain that currency?
And if the Chinese economy is doing that, then the Chinese currency should appreciate.
But the problem then starts when the state steps in and does all kinds of strange things.
But at some point or other the question of the nature
of the commodity bundle
which underlies
the value is posed; in other words we no longer attach the bundle to some single commodity like gold.
We attach it
to an imaginary
understanding
which is where statistics come in.
We wouldn't know how to work
in this world unless we had
masses of statistics.
And what are these statistics about?
GDP
Who produces all those statistics and who collects them? The World Bank,
the International Bank of Settlements.
They produce all this data.
Vast amounts of it,
on the basis of what, sometimes you wonder, but, nevertheless, it's there.
And this data serves to
construct the fiction that there is a national economy.
Now this is a real problem because there is no national economy, I mean everything is trading
with everything else on the global stage,
nevertheless there's this fiction which says
there is a national economy.
And when the national economy in the United States is doing well, the dollar will rise, if it's
doing badly the dollar will collapse.
So the dollar has been under a lot of pressure lately because the US economy is not doing
very well compared to the rest of the world
on the basis of certain measures.
But then speculators will intervene and claim that wrong measure are being applied.
And if they can persuade you of this, the values will change and they will make a bundle of money
on the currency movement.
George Soros made
two billion in about five days by speculating on
the value of the British pound against the European exchange rate mechanism.
He was actually able to force those kinds of things to happen.
So here you see that built into Marx's argument
is a very interesting way of understanding
the connectivity between the very secure money commodity gold,
with which Marx began his
analysis of money, to this
real, problematical, universal money emerging out of the M-C-M circuit in the end,
with all of these broader issues.
I think he did a pretty good job
and we can build on it. Of course much has changed since
Marx's time and we have to
take those transformations into account,
but it seems to me he set up a very useful argument
to contemplate our current situation.
Building on his arguments we can go quite far towards understand many of the contradictions
which exist
within our contemporary
political economic system.
So it's interesting that something like the sub-prime mortgage crisis, given my own background,
it has been obvious that there would be a crash
in property markets
sooner or later.
I thought it would occur about two or three years ago, but they managed to stave it off.
But now it's with us and the question is: how far will that go
before they can shift to something else,
some other fictitious form?
But behind this, of course, lies
the emergence of
imaginary forms.
Note how Marx emphasizes the imaginary qualities of all of this.
We imagine it to be this, we imagine it to be that.
And we cannot do without that imaginary
stuff going on.
In fact
that is what allows the system to function.
It's built into it.
It's not as if we can say:
get rid of all the fetishism,
get rid of all of that imaginary stuff and then we'll be ok.
No, we couldn't do that.
These things are socially necessary, they're embedded within the capitalist system.
That raises the question: well
what we do about it?,
how do we confront them?,
and what do we do about their obvious problematic consequences?
So these are the sorts of issues that this
chapter raises.
A final point this chapter raises is the
interesting question as to how much of it do you really need to understand
the rest of volume one of Capital?
And the answer is:
not much. (laughter)
The rest of Capital
uses certain basic propositions out of here
which can be reduced to
four or five arguments
and then goes on with the analysis.
What Marx was trying to do here was to lay a basis,
as he was in the preceding chapters,
for a magnum opus i.e. the work that was going to include
an understanding of credit systems, financial institutions and structures, and state interventions.
He was really trying here to lay out
a systematic basis for a very much broader project.
But you'll be happy to know
that you don't have to thoroughly understand all the nuances of this chapter, interesting and important though
they really are to our contemporary circumstances.
You don't have to understand every nuance
in order to move into the next chapters which are much simpler and more direct.
So you're over the worst of it (laughter).
We can now start the easy part.
We have a few minutes for questions, I'm sorry I have taken so long, but this is a difficult
and intricate chapter,
which needs a lot of
elabouration in order
to get it straight.
Any kind of comments, questions?
»STUDENT:When you're talking about the accumulation of
things and about upper limits, I went
to visit Yankee Candle just to see what that was
all about. And next to it they had opened a car museum,
a very large car museum, and I walked around it
and realized that all the cars seemed to have a personal angle on the display cases and the descriptions.
It turned out the museum was the vast personal collection
of the owner and founder of the Yankee Candle.
It was just a garage, so large that it was now a museum,
and you payed to go in, but the owner drove them in and out
whenever he wanted. And there was no limit, it was huge.
»HARVEY:Not the same as what you could get with
twenty billion dollars.
And that's the point, that people do accumulate large quantities of things like that, but
how many yachts can you have?, how many residencies can you have?
On the use-value side there are these limitations,
so it's the limitless capacity of
the accumulation of money power
that will be very important to look at; one of the major propositions, of course, in
the rest of Capital is the limitlessness of this.
»HARVEY: Yes.
»STUDENT:I'm just curious about paper money, when paper money first starts showing up in…what are you saying in terms of this as a historical or a logical development?
»HARVEY:Well scrip and things like that have been around for very long time, in various
forms. So paper representations as well as tokens have been
around for a long time.
Which goes back to my original argument about the monetary form, that
monetary forms have been around a very long time. The interesting question is how all of
those forms
actually became assembled around the capitalist definition of what money is.
The same thing applies to temporality.
It's not as if capitalism invented temporality.
Every society has its own definitions of temporality and spatiality .
There's a long
history in the anthropological and historical record of that.
But what happens is that capitalism starts to insist upon
certain definitions of temporality.
For instance we're in one right now: it's eight thirty and you all want to go home.
Now if you're really interested in learning you would want to stay here until five in the
morning, right? (laughter)
You're being very nice… But you see what I mean.
Here we have this kind of definition of temporality which is in the
school calendar so for example we we start in here and we finish off there.
It's all built in,
and we accept it as normal, so it becomes normalized. Whereas
I can certainly remember intellectual discussions in my youth, when all
things were wonderful,
which went on all day and all night,
and we were not limited by anything. I mean, we skipped classes
and then had a discussion instead; it was a different notion of temporality
The problem was there was nothing else to do, and the classes were very boring.
So, I think these definitions are
contingent, and this is also what Marx is arguing throughout the book,
namely that the categories of political economy are contingent upon the rise of capitalism.
The notion of temporality is specific; capitalism has a specific temporality,
which is what E.P. Thompson talks about, namely
the rise of industrial work discipline,
what that entailed and how that was enforced.
And we'll also see some of that coming up
in Marx's Capital.
OK, so we leave it there and will continue this saga next week.