Capital II, Chapter 21 - Part 3

Marx then gives an explanation that even he describes as based on “absurd” assumptions, but whose purpose is to “do nothing more than explain the possibility of a universal simultaneous formation of a hoard” (p 495). He assumes that instead of exchanges taking place in the way they do, A-B, C-D, E-F, F-B, D-A, and so on, in other words numerous bilateral simultaneous exchanges, instead exchanges take place only in a linear fashion, with all other capitals exchanging only with a gold producer.

As a gold producer, i.e. producer of money, the gold producer always here only buys without selling. This is the converse of the situation above where the surplus value is hoarded in money because, in respect of the surplus value, the capitalist sells without buying. They sell the surplus product, and then hoard its money equivalent rather than buying anything with it.

Here, the gold producer produces money-gold and simply buys commodities with it.

“In that case the entire yearly social surplus-product (the bearer of the entire surplus-value) would pass into his hands, and all the other capitalists would distribute among themselves pro rata his surplus-product, which naturally exists in the form of money, the natural embodiment in gold of his surplus-value. For that portion of the product of the gold producer which has to make good his active capital is already tied up and disposed of. The surplus-value of the gold producer, created in the form of gold, would then be the sole fund from which all other capitalists would draw the material for the conversion of their annual surplus-product into money. The magnitude of its value would then have to be equal to the entire annual surplus-value of society, which must first assume the guise of a hoard.” (p 495)

To put this another way, we can think about the process we have analysed several times before. Under simple reproduction, the capitalists advance money-capital to buy labour-power. The workers so employed use the wages paid to them to buy commodities, and thereby the capitalists who have paid their wages, by advancing variable capital, see that capital return to them. By the same token, the capitalists advance capital to buy means of production, and that money goes into circulation, and finds its way back to them via the sale of the corresponding proportion of their output. Finally, the capitalists spend a part of their money hoard, to buy the commodities required for their own consumption, equal to their surplus value, and thereby they put into circulation themselves the money required to realise their own surplus value.

In this process, it was assumed that the commodities the capitalists bought – equal to their surplus value – with the money equivalent they threw into circulation, were the things they required for their own reproduction – food, shelter, clothing etc. But, we can just as easily assume that what they buy with this money-capital, equal to surplus value, is instead gold. In that case, as Marx describes, the whole of the societies surplus product would be held in the form of gold. But here, gold is also money, and so we have arrived at the position that demonstrates the logical possibility of such a universal money hoard, of capital selling its surplus product, and realising its value without the need also to buy an equivalent of that surplus product. The whole surplus product now exists solely as a money hoard, as gold, waiting to be mobilised.

Back To Part 2

Forward To Part 4