Capital II, Chapter 4 - Part 8

Natural Money and Credit Economy

Marx then describes why it is the mode of production, not of exchange which is decisive.

A natural economy is one where the producers essentially produce only for their own consumption needs. But, an economy that also produces commodities will require money to facilitate their exchange. An economy that has gone beyond simple commodity production and exchange will develop credit-money as a means of exchange.

But, in reality, credit-money is only a development of money itself. Credit-money cannot exist without money itself. The division, therefore, is actually between natural economy on one side and money-economy and credit economy on the other. Yet, money can act as a means of exchange in a variety of economies from primitive tribes through slave production to capitalism. By the same token, natural economy can be used as a description of all sorts of different modes of production.

If the form of exchange can be the same across all these different types of society, it cannot act as a useful means of analysing these different modes of production.

“Consequently what characterises capitalist production would then be only the extent to which the product is created as an article of commerce, as a commodity, and hence the extent also to which its own constituent elements must enter again as articles of commerce, as commodities, into the economy from which it emerges.

As a matter of fact capitalist production is commodity production as the general form of production. But it is so and becomes so more and more in the course of its development only because labour itself appears here as a commodity, because the labourer sells his labour, that is, the function of his labour-power, and our assumption is that he sells it at its value, determined by its cost of reproduction. To the extent that labour becomes wage-labour, the producer becomes an industrial capitalist. For this reason capitalist production (and hence also commodity production) does not reach its full scope until the direct agricultural producer becomes a wage-labourer. In the relation of capitalist and wage-labourer, the money-relation, the relation between the buyer and the seller, becomes a relation inherent in production. But this relation has its foundation in the social character of production, not in the mode of exchange. The latter conversely emanates from the former. It is, however, quite in keeping with the bourgeois horizon, everyone being engrossed in the transaction of shady business, not to see in the character of the mode of production the basis of the mode of exchange corresponding to it, but vice versa.” (p 119-20)

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