Reading Marx – Part XI

(Routine Introduction:  For reasons explained here, I’m in the process of slogging through Marx’s Capital.  The plan is to read it in conjunction with watching David Harvey’s free on-line lectures about the book.  I’ll be posting notes and initial impressions as I read.  This will be an extremely long-term project.)

Today:  Vol. I, Book I, Part I, Chapter III, Section 2, Subsection a

Vol. I, Book I, Part I, Chapter III “Money, or the Circulation of Commodities”, Section 2 “The Medium of Circulation”, Subsection a “The Metamorphosis of Commodities”

--commodities go from being owned by people who have no use for them to being owned by people who want to make use of them; at that point they fall out of the sphere of exchange and into that of consumption; we are concerned only w/the sphere of exchange here, and specifically the change of the form of commodities “which effectuates the social circulation of matter”;

--in the initial metamorphosis, a commodity is exchanged for money, which is then exchanged for another commodity; the weaver, say, brings 20 yards of linen to market (the linen has Value, but is not a use-value to the weaver); he then exchanges the linen for $2 of gold, which is the linen’s Value form; he then uses this $2 to purchase a Bible, which he will then take home and use (use-value);

--the whole process is no more than the exchange of the instantiation of his labor (the linen) for the instantiation of others’ labor (the Bible); there is no gain or loss, only a change in the fixed form in the same amount of socially necessary labor time;

--this exchange can be thought of as:  commodity --> money --> commodity and, so far as affects the objects themselves, from the weaver’s point of view, as commodity --> commodity, the exchange of one commodity for another, or the circulation of materialized social labor;

--this seems pretty simple, so naturally Marx wants to break it down even further and examine first the commodity to money transaction, and then the money to commodity transaction;

Commodity --> Money; The First Metamorphosis, or Sale;

--before a commodity can be exchanged for money (sold), it must have a use-value – that is, it must be of some utility to the purchaser; presumably, commodities’ prices will reflect the socially necessary labor time required to produce those commodities;

--however, a “commodity” offered on the market must be considered as the totality of those commodities offered on the market; and the amount of socially necessary labor time is only the amount of socially necessary labor time to produce the use-value necessary to satisfy the market’s appetite;

--thus, if a weaver produces 20 yds of linen, but something has occurred that results in a surfeit of linen, i.e., more linen than the market can consume, then prices will fall; presumably this is because the original prices reflected the necessary labor time required to produce all the linen on the market at the time, which is more than the market as a whole wishes to purchase;

--Say the market as a whole only wishes to purchase 2,000 yds of linen, which sells for $2 every 20 yds; the total the market is going to spend is $200.  But suppose there was – I dunno – a linen bonanza for some reason and 4,000 yds of linen flood the market; the market still only has a need for 2,000 yds of linen – or $200 worth of socially necessary labor time (Value); it is still willing to spend that much and no more (because the remaining linen has no use-value on the market – it is superfluous, unnecessary); so if weavers, competing against each other, wish to sell their linen, they must cut their price in half:  $1 for every 20 yds; this still results in $200 being spent on the market; the effect is as if every individual weaver had expended more labor time on his own product than was socially necessary

            LESSON:  in the hypothetical, all the linen in the market counts collectively as only one article, of which each piece sold by a particular weaver is only a sub-part of the whole;

--once the sale has occurred, the commodity has been exchanged for its Value, instantiated by money, the universal equivalent; the money has been exchanged for a particular form of the money’s own potential use-value (i.e., the specific commodity purchased); this single transaction is at once, two:  a sale (by the weaver) and a purchase (by the customer);

Money --> Commodity, or purchase; The Second and Concluding Metamorphosis of Commodity

--money is the metamorphosed shape of all commodities, a result of their general alienation; as a result, money itself is alienable w/out restriction; very often a single producer only has one commodity to sell (e.g., linen), but sells a great bulk of it and then splits up the resulting money to purchase many different other commodities in order to satisfy his very diverse wants; so one commodity may be transformed into many different types of commodities by the universal equivalent, money;

--in this cycle, the owner of a commodity has something of exchange value, but not use-value (to him); he exchanges it for  money, by which he realizes that commodity’s exchange value (i.e., Value); armed now w/money – which potentially represents all commodities and instantiates no commodities – he can now purchase a different commodity that has use-value to him; at that point, we begin consumption of the newly purchased commodity;

--the total of all these exchanges, in the world, Marx terms “the circulation of commodities”

--Marx points out that while the weaver has exchanged his linen for a Bible, the seller of the Bible does not recognize that the Bible was exchanged for linen; he knows only that he has exchanged his Bible for whatever he wants (brandy); this is how the circulation of commodities (money-based markets) differ from mere barter;

--specifically, circulation does not stop, as it does in a direct barter system, once a particular transaction has been concluded; the linen drops out of circulation but is replaced by money, then the Bible drops out of circulation, and is replaced with money; the money remains in circulation;

--Marx now assails the idea that because every purchase is also a sale, the circulation of commodities implies an equilibrium of sales and purchases; not so, says Marx, because the seller of a commodity is by no means required to purchase some other commodity;

--such an equilibrium would exist in a direct barter system; however, “if the interval in time between the two complementary phases of the complete metamorphosis of a commodity becomes too great, if the split between the sale and the purchase becomes too pronounced” then a crisis can be produced; but now we are getting ahead of ourselves; we are not yet at the point to discuss how the possibility of crisis converts to the reality of one;

NOTE:  I don’t care what anybody says, for me this subsection ends like a cliffhanger; what I understand Marx to be saying is that if money ceases to circulate, then a systemic crisis can develop – presumably even though the supply of and demand for commodities remains the same;  Of course, the first thing I think of when I consider the possibility that money may cease to circulate is the idea that a huge concentration of money in the hands of the few means that that few have little incentive to spend their money.  There are only so many shirts, houses, boats, etc. that any one person can buy; when money is taken out of circulation (when it ceased to be recycled into either consumption or investment in further capital projects) but is instead hoarded, then Marx intimates we are looking at a breakdown in the system.  That certainly hints at what we may be seeing these days, which is . . . intriguing.

Next Up:  Vol. I, Book I, Part I, Chapter III “Money, or the Circulation of Commodities”, Section 2 “The Medium of Circulation”, Subsection b “The Currency of Money” – another subsection coming up!  No idea what “the currency of money” means, or how useful it may be in a fractional reserve system in which the money supply is only slightly related to the actual currency in circulation; of course, Marx might mean something entirely different by “currency”; we’ll find out!