(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 c
Vol. I, Book I, Part I, Chapter III “Money, or the Circulation of Commodities”, Section 2 “The Medium of Circulation”, Subsection c “Coins and Symbols of Value”
--Marx points out that the only difference b/w coin and bullion is one of shape, but that once a coin leaves the mint it begins wearing away, some more, some less; “coins of the same denomination become different in value, because they are different in weight”;
--accordingly the circulating medium ceases to any longer be a real equivalent of the commodities whose prices it realizes; he apparently wishes to provide a historical explanation as to how mere tokens of money – paper money – can come to replace the actual universal equivalent commodity, which is gold; “the fact that the currency of coins itself effects a separation b/w their nominal and their real weight . . . implies the latent possibility of replacing metallic coins by tokens of some other material, by symbols serving the same purposes as coins.”
--for Marx, the amount of paper money that any nation might issue is and must be limited to the amount of gold coins that can actually be current
Paper-money is a token representing gold or money. The relation between it and the values of commodities is this, that the latter are ideally expressed in the same quantities of gold that are symbolically represented by the paper. Only insofar as paper-money represents gold, which like all other commodities has value, is it a symbol of value.
(NOTE: Wow! This I just do not agree with at all. As I understand Marx, he is suggesting that paper money has no actual value unless it represents gold (or some other commodity). But that just is not the case. The paper money we use now has value and it comes not from the fact that it is equivalent to gold but that it is equivalent to all commodities in ever shifting amounts, amounts determined by billions and billions of decisions being made in the marketplace (and by governments) that determines its fluctuating collective value. In a very real sense, the money we’ve been using for the past 40 years is just a collective agreement we all struck with each other; its value is real the way that Love, and Friendship, and Honor are real – non-material, but real nonetheless.
(I think Marx here is trapped by his own reductionist system of thought, because he desperately wants money to have some objective value – separate and apart from human fecklessness. I’d be willing to bet he started his consideration with gold as society’s money and then attempted to figure out how gold can be valued – given that it isn’t actually very useful in and of itself. He then figured that the only way to value gold is to measure the amount of labor that went into producing it, and decided that this was the proper determination of Value for all commodities.
(That very likely is why he started his discussion w/commodities to being with; he backdoors his way into explaining how gold comes to be the universal commodity, maybe because he is aware that his historical explanation is a “just so” story. But now he has to insist that paper money has no value unless it is backed up by gold . . . and we know that this just isn’t true.)
--Marx goes on to suggest that gold is replaceable by a token of no intrinsic Value (paper money) only to the extent that token is taking over the function of gold work as a circulating medium (although Marx implies that gold has other functions as well as serving as the means of circulatoin); each piece of money is a mere coin, or means of circulation only so long as it keeps circulating; thus the minimum amount of gold (money) necessary in the system is that amount of money necessary to be circulating at any one time . . . which Marx claimed in the last subsection is relatively stable (although he did not show his work in making that claim; such a blanket statement seems a bit dubious);
--So, the minimum amount of gold necessary to circulate is what may be replaced by paper money; these tokens must have an objective social validity of their own, which they acquire by the compulsory action of the State to require that they be accepted as money;
IMPORTANT TAKE-AWAY: The function of money is the circulation of commodities (the economy) and to serve as the means of circulation. A minimum amount of money is necessary to remain in the system at all times, circulating away.
Next Up: Vol. I, Book I, Part I, Chapter III “Money, or the Circulation of Commodities”, Section 3 “Money”, Subsection a “Hoarding” – Well, that was quick. And now the final section in Chapter 3 is coming up; it is divided into three relatively short subsections, and since today’s very short reading was a lot more fun than slogging through a bunch of this at once, I’ll probably break this down and do a separate entry on each of the short subsections in Section 3 “Money.”