Section 2
The Medium of Circulation
The Metamorphosis of Commodities
In Chapter 1 Marx identified a contradiction within the Value Form of
Commodities. The Relative Form and the Equivalent Form of Value are
mutually dependent but exclusive. The separation of commodities into
commodities and money does not end this contradiction, but provides a
'modus vivendi' as Marx puts it. It allows the process to continue.
The process of exchange is one in which commodities enter
circulation. The sellers of commodities do not view them as Use Values. The only Use Value they have for them is as an embodiment of
Exchange Value. As such, rather like a game of pass the parcel, they
want to get them out of their hands as soon as possible. Of course,
the buyers of these commodities may see them in a similar light.
That is they may not wish to consume them, personally either. A
merchant might want to buy a commodity to sell themselves in some
other market at a higher price (arbitrage). Another producer may
want the commodity to use in the production of some other commodity.
Though in this case, the producer still wants it for its Use Value in
the productive process.
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| All sorts of commodities have acted as the money commodity in the past. Then things like gold are priced in it rather than vice versa. |
A commodity only ceases being an Exchange Value, and becomes just a
Use Value, when it stops circulating and is consumed. What confuses
many economists, Marx says, is the fact that commodities are
exchanged for money i.e. gold. But, he points out, gold, as gold, as
a commodity, is not money. It is merely a commodity like any other.
A society could have goats as its money commodity, and then gold as a
commodity would be priced in goats, rather than goats priced in gold!
“When commodities express their prices in gold, this gold is but
the money form of those commodities themselves.” (p 106)
The relation of a commodity (Use Value) to money (Exchange Value
incarnate) is merely an external reflection of that same
contradictory unity of Use Value and Value. This situation of this
opposition of money and commodity has developed logically and
historically through the stages that Marx has previously described of
how commodities come into existence, exchange first against each
other, then against some single most traded commodity, and finally
against a money commodity – usually gold. But, beneath it all,
both sides of this exchange remain commodities, and the only reason
the gold can act as money is not because of any inherent property it
has, but only because like every other commodity it possesses Value,
because it is the product of human labour.
But, in this relation between the commodity and gold (money) there
has arisen a transformation. The gold money is Exchange Value, as
such it expresses the Value of the commodity against which it is
being exchanged. But, its own Use Value has disappeared. As money,
the Exchange Value of the gold as Use Value (for example to be used
as jewellery) can now not be expressed in money terms. It makes no
sense to say that the price of 1 oz. of gold is 1 oz. of gold. Its
own price can now only be expressed in terms of that infinite series
of Exchange Values in which gold exchanges for all other commodities!
Marx then explores the way in which this exchange takes place. He
starts with the weaver who has produced an amount of linen. The
weaver takes it to market and obtains the equivalent of its Value in
money. He then exchanges the money for a bible. For the weaver the
linen have no Use Value, but it contained Exchange Value to the amount of £2.
The weaver was, therefore, glad to sell the linen, which was no use
to him, and to obtain the £2 instead. But, the £2 itself has no
Use Value in and of itself. Its only Use Value to him is in order at
some point to exchange it for an item of real utility. He does so by
exchanging the £2 for the bible.
So, the weaver has gone from a situation where he owned 20 yards of
linen, which had no utility for him, to one where he owns a Bible,
which does. Orthodox economics describes an exchange which brings
about such a situation a gain in welfare i.e. the weaver has
increased his level of utility through the exchange without any
equivalent loss of utility for anyone else.
Viewed from the weaver's perspective, he has gone through two
separate processes. He has sold his linen, and he has bought a
bible. In reality he has sold in order to buy.
“The
result of the whole transaction, as regards the weaver, is this, that
instead of being in possession of the linen, he now has the Bible;
instead of his original commodity, he now possesses another of the
same value but of different utility. In like manner he procures his
other means of subsistence and means of production. From his point of
view, the whole process effectuates nothing more than the exchange of
the product of his labour for the product of someone else’s,
nothing more than an exchange of products.” (p 107)
Marx summarises the process as follows C (Commodity) – M (Money) –
C (Commodity). What was once the original form of exchange – one
commodity for some other commodity of equal Value, remains the end
result, here linen with a Value of £2 exchanged for a Bible with a
Value of £2. But, now money has interceded in the process of
exchange.
Marx makes a point of separating the fate of the commodity from the
fate of the owner.
“The
leap taken by value from the body of the commodity, into the body of
the gold, is, as I have elsewhere called it, the salto mortale
of the commodity. If it falls short, then, although the commodity
itself is not harmed, its owner decidedly is.” (p 108)
In other
words, the value of the commodity is determined by objective laws.
Whether the individual owner of the commodity is able to realise that
Value is another matter. Marx says the commodity may only fulfil its
function of being able to provide for his many wants if its Exchange
Value can be realised i.e. if it can be sold. That depends on many
things. It must be something somebody wants i.e. it must represent
useful labour. Its worth pointing out that at this stage of his
analysis, Marx has not just been talking about the logical processes
by which money arises, and by which trade develops. He has been
describing a particular historical development and the examples he
refers to here are still at the stage where production is being
carried on by individual producers owning their own means of
production.
But, he
describes here the problems faced by such producers as the Division
of Labour itself develops.
“But
division of labour is a system of production which has grown up
spontaneously and continues to grow behind the backs of the
producers. The commodity to be exchanged may possibly be the product
of some new kind of labour, that pretends to satisfy newly arisen
requirements, or even to give rise itself to new requirements. A
particular operation, though yesterday, perhaps, forming one out of
the many operations conducted by one producer in creating a given
commodity, may to-day separate itself from this connexion, may
establish itself as an independent branch of labour and send its
incomplete product to market as an independent commodity. The
circumstances may or may not be ripe for such a separation. To-day
the product satisfies a social want. Tomorrow the article may, either
altogether or partially, be superseded by some other appropriate
product. Moreover, although our weaver’s labour may be a recognised
branch of the social division of labour, yet that fact is by no means
sufficient to guarantee the utility of his 20 yards of linen. If the
community’s want of linen, and such a want has a limit like every
other want, should already be saturated by the products of rival
weavers. our friend’s product is superfluous, redundant, and
consequently useless.” (pp 108-9)
 |
| Abraham Darby discovered how to use coal rather than charcoal to smelt iron, reducing the labour-time required. |
If he does produce a Use Value then its price will be equivalent to
its Value. However, if some new technique arises which changes the
method of weaving, reducing the time required to produce a given
quantity of linen, the weaver will soon be made aware of this by the
owners of money and potential buyers of his linen who will point out
that his competitors are undercutting him. He will be forced to cut
his prices no matter how much labour-time (either of his own or dead
labour) have been used in the production of his linen. In fact, he
will have an incentive to adopt the same technique himself.
 |
| At the height of the tech boom, many telecoms firms hugely expanded their networks beyond what was needed. But, also companies like Cisco massively overproduced fibre and switiching gear. The latter was wasted as it had a limited shelf life. See:http://en.wikipedia.org/wiki/Dark_fibre. |
But, suppose he and all other weavers then adopt this new technique,
each then produces with only the minimum labour-time required. It
may still be that with this new more efficient method, the increased
quantity of linen brought to market is in excess of the demand for
it. In other words, the proportion of society's total labour-time
devoted to the production of linen was too great. Some of the
labour-time was not required, it was not socially necessary,
and therefore, does not count as Value creating. If all the linen was
produced under the same conditions then, as Marx put it in a later
correction to his formulation in Capital,
“And,
as a matter of fact, the value of each single yard is but the
materialised form of a part of the social labour expended on the
whole number of yards.” (note * on p 109)
Again emphasising that what he is describing is an historical as well
as logical development, Marx describes the way in which the Division
of Labour first of all creates independent producers (breaking up
communal production), as families begin to develop private property,
which is inherited in the way Engels describes in The Origin Of The Family, Private Property and the State. But, then, having
created these individual producers, the further development of the
Division of Labour brings them once more into a condition of
dependence on each other through the products of their labour. The
Division of Labour creates the necessity, once more for co-operative
labour, in a number of ways. First of all, producers are dependent
upon all other producers to produce the range of commodities needed
to meet their wants now that they have themselves begun to specialise
in a particular line of production. Each meets their needs by
exchange/selling their own production/commodities for those of
others.
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