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Chapter 1 covers the commodity form over the course of 4 sections: the two factors of the commodity: use-value and value, the dual character of the labor embodied in commodities, the value form or exchange value, and finally, the fetishism of the commodity and its secret.
I. the two factors of the commodity: use-value and value: Marx delineates the difference between use-value and exchange-value. Use-value is the usefulness of a thing conditioned by the physical properties of the object. Use-value is independent of the labor required to produce the product. This value is realized in use and consumption of the object. Exchange value, on the other hand, is the proportion in which use-values of one kind may be exchanged for use-values of another. Exchange-value changes constantly with time and place, conditioned by the state of industry, division of labor in a society, and the average skill at a trade in a society (ie socially necessary labor time). Socially necessary labor time is the labor time necessary to produce any use value under the conditions of production normal for a given society and with the average degree of skill and intensity of labor prevalent in that society. The intrinsic value of commodities, expressed in exchange value, is the definite quantity of congealed labor time. The productivity of labor is inversely proportional to labor time and thus the value of the commodity being produced.
II. the dual character of the labor embodied in commodities: The dual nature of labor is that labor can alternatively be the creator of use-values or expressed in exchange values. The totality of labor in a given societal division can be looked at as a heterogenous whole, the sum total of which attempts to satisfy the various needs of society. Alternatively the totality of labor in a given society can be looked at as a homogenous whole, the sum total of which expresses itself as the wealth of society in the form of commodities. Use-value considers labor qualitatively insofar as a particular form of labor is required to create a particular commodity which meets a particular need. Exchange-value considers labor quantitatively insofar as some amount of labor is needed to produce an exchange-value of some magnitude; considerations of type and sort of labor have no bearing on questions of exchange-value. The same labor performed for the same length of time always yields the same amount of exchange-value independent of any variation of productivity, but as productivity varies so does the quantity of use-values.
III. the value form or exchange value: Exchange-value is not intrinsic to the commodity. Commodities acquire their exchange value depending on the state of the productive forces in a society. “Commodities possess an objective character as values only insofar as they are all expressions of an identical social substance, namely human labor, and their objective character as values is therefore purely social”. Marx traces the development of the money over 4 expressions of value for commodities:
IV. the fetishism of the commodity and its secret: Commodities appear to humanity as fetishes with animating forces, and in this way seem to enter into relationships with one another that in reality are relationships between producers. Under the fetishism of the commodity, relationships between producers are represented by figurative relationships between congealed forms of labor (commodities).
Chapter 2 lays out a basic framework for the exchange relationship between agents in a market and the necessity of the money form to conduct these relationships between the aforesaid atomic agents. According to Marx, the characters who appear upon the economic stage are merely personifications of economic relations. Marx explains that the force behind these economic relations lies in the fact that for the owner who brings their commodity to market, the commodity has no use-value other than the use-value it has as a bearer of exchange value. For this reason they come to the market in order to exchange it for something that will have use value for them. This process of exchange becomes generalized throughout the society ("broadens and deepens").
The wide variety of commodities exchanged in a developed market economy creates a need for a single commodity to exclusively serve the role of the money commodity. The money commodity can then be used as a measure of universal value across market relationships. The money commodity then comes to have a dual use-value. It has a special use-value (in the case of gold it can be used to wire electronics) and a formal use-value (arising out of its specific social function as a means of exchange).
The people who bring commodities to market in this generalized exchange process thereby become the bearers of the relationships between the commodities they own (similarly to how the commodities are the bearers of the value of the labor that produced them). Marx says, “Men are henceforth related to each other in their social process of production in a purely atomistic way. Their own relations of production therefore assume a material shape which is independent of their control and their conscious individual action.”
I. The Measure of Values:
Marx demarcates the gulf between a commodity’s measure of value in gold and its ability to be exchanged for gold. This gulf would explain the imaginary nature of the gold used in accounting where huge sums of gold are moved from one side of the ledger to another with no actual metal being moved at all. As a consequence of the imaginary property of gold as a means of reckoning value money serves “only in an imaginary or ideal capacity” as a measure of value. Price is the money name of the labor objectified in a commodity. Price is an abstraction of the socially necessary labor time. Price is a representation of both the ratio of the commodity’s value to money and a representation of the commodity’s value but the price is not necessarily one because it is the other. There can be incongruities between the ratio of a commodity’s value to money (price) and the commodity’s value itself (socially necessary labor time) due to a number of factors that are briefly mentioned in this chapter. Marx states that this incongruity between the price and magnitude of value of a particular commodity is in fact inherent in the price form itself, and that furthermore, this incongruity makes the price form the appropriate one for a mode of production “whose laws can only assert themselves as blindly operating averages between constant irregularities.” 21st century Marxists have investigated and found support for the claim that, despite irregularities in the short term, over the long run the values of commodities sold in the market on average are determined by the socially necessary labor time expended to create said commodities. The price form allows for fluctuations that have nothing to do with the change in the actual value (determined by labor expended) of a commodity, and it also allows things which have no actual value to be exchanged through money. “The price form implies the exchangeability of commodities for money and the necessity of exchange.”
II. The Means of Circulation
a.) the metamorphosis of commodities: The metamorphosis of commodities is their transformation into the money commodity. The exchange of commodities renders the commodity into two elements, commodity and money, expressing use value and value respectively. At the same time, both sides of this opposition are commodities but each side of this opposition, commodity and money, expresses this in different ways. The commodity is really a use value and its existence as a value appears only ideally through its price. Gold, on the other hand, is a materialization of value (in other words it is money) and is thus an exchange value. Its use value appears only ideally in the series of expressions of relative value which were covered in chapter one. Marx describes how the rise of a division of labor under capitalism came to be (read for more detail). Capitalism produces a division of labor which renders individuals unable to fulfill their many-sided needs except by participating in commodity exchange. When the division of labor becomes generalized throughout society, all commodities are presumed to have been produced with the average socially-necessary labor time, so that the price of the commodity is “merely the money name of the quantity of social labor objectified in it.” When advances in an industry are made, all producers of the commodity, whether or not they have acquired the technological advancement, are affected. Therefore the value of the commodity will go down. Marx says that even when each individual commodity is produced using only the socially necessary labor time, labor time expended in producing the commodity as a whole can still go beyond what is socially necessary— this is overproduction. The division of labour in a capitalist industrial society is haphazard and random, often leading to issues of overproduction. Because each commodity of the same sort in society is looked upon as one division of a a whole these issues of overproduction will bring prices down for all producers of the overabundant commodity. The sensitivity that the fortune of each individual producer has towards overproduction, which is a result of the actions of the collective of producers, demonstrates that despite conducting their affairs as individuals, the fate of each producer is dependent on the actions taken by the collective.
b.) The circulation of money: The metamorphosis (or as Marx alternatively refers to it, the metabolism) of commodities assumes the circulation of money to take place in a particular circuit. Commodities are exchanged for money, which is then exchanged for another commodity, and this process is repeated indefinitely. Money here is “excluded from the circuit” (p. 210) insofar as it is never returned (as commodities in some form are to those who exchange one for another) but is instead moved farther and farther from its starting point. This form of circulation can be referred to as selling in order to buy (which Marx will place in contrast with buying in order to sell in the following chapter.) In an economy of buying in order to sell, money serves to grease the wheels of this series of exchanges as commodities “in and for themselves lack the power of movement” (p. 211). According to the rules of simple commodity exchange commodities are always falling out of circulation as they are employed for their various uses but money continues to circle though the economy fulfilling its role as a bearer of exchange value.
The amount of money needed in total to bear the sum of these values is equal to the sum of the prices of the goods which are intended to be exchanged. The prices of commodities vary indirectly with the value of money and the quantity of the medium of circulation varies directly with the price of commodities. As the exchanges of commodities for their prices measured in money occurs over time, the duration of the process of circulation, or the velocity of the circulation of money, can be measured as the number of times the same piece of money turns over within a given period. Together with the number of commodities in the market and the prices of those commodities, the velocity of the circulation of money determines the amount of medium of circulation in circulation.
Marx lays out three scenarios under which these factors vary:
On average, the quantity of money in circulation in a particular country remains stable over long periods of time except in crises of production or of the value of money.
c.) Coin: the symbol of value: Since C-M-C is a continuous circuit, money continually passes from person to person and only needs to lead a symbolic existence. It is only a “transiently objectified reflection of the prices of commodities,” and so “serves only as a symbol of itself,” and can therefore be replaced by another symbol. The symbol of money must, however, have its own “social objective validity” which it acquires by its forced currency, i.e. the state.
a.) Hoarding: As commodity circulation broadens and deepens, money increases in power— it is always ready to be used and everything (“commodity or not”) can be converted into money — everything is sellable and purchasable. Since money itself is a commodity, it can become the private property of any person, and this money’s social power can become the private power of anyone. Qualitatively, money has no limits in that it is directly convertible into any other commodity. At the same time, a certain quantity of money only holds a limited value, and can thus only purchase a limited amount of things. The contradiction between money’s quantitative limitation and qualitative lack of limitation drives accumulation (the hoarding of money).
Finally, Marx explains the role that hoarding plays in commodity circulation. Fluctuations in the velocity of circulation create ebbs and flows in the quantity of money in circulation; therefore this quantity must be capable of expansion and contraction. The quantity of gold and silver in a country must be greater than the quantity needed in circulation for the money in circulation to correspond to the sum of prices to be realized. Hoards thus serve the purpose of creating a reserve in and out of which money can enter and exit circulation so that the sum of the prices never exceeds the amount of money in the system.
b.) Money as means of payment: Under commodity circulation, a commodity can be alienated from the realization of its price across time (for example, a seller can become a creditor and the buyer a debtor when the buyer receives the commodity before it is fully paid for). M-C occurs before C-M in this case. this phenomenon reveals something deeper about the circulation of money than merely the connection between buyers and sellers. Payments eventually become concentrated in one place which causes “special institutions and methods of liquidation” to develop (i.e. paying debts through credit, banking).
c.) World money: Money loses its symbolic value when it exits a national economy and enters onto the world market. It is presented as bullion on the world market. World money serves as the universal means of payment, the universal means of purchase, and the absolute social materialization of wealth. Countries with developed bourgeois production try to encourage liquidity (as little hoarding as possible) in order to ensure the flow of commodity exchange.
These summaries were co-written with BA.
Move on to Part II ⇛
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