Capital III, Chapter 30 - Part 1

Money-Capital and Real Capital. I

Marx then turns to a series of questions that are of interest today with the blowing up of repeated asset price bubbles.

First, to what extent is the accumulation of money-capital an indication of an accumulation of real capital, and to what extent is a plethora of money-capital a manifestation of overproduction.

“Does this plethora, or excessive supply of money-capital, coincide with the existence of stagnating masses of money (bullion, gold coin and bank-notes), so that this superabundance of actual money is the expression and external form of that plethora of loan capital?” (p 476)

Second,

“To what extent does a scarcity of money, i.e., a shortage of loan capital, express a shortage of real capital (commodity-capital and productive capital)? To what extent does it coincide, on the other hand, with a shortage of money as such, a shortage of the medium of circulation?” (p 476)

On the basis of the analysis so far, we know that money, as the universal equivalent form of value, represents a certain quantity of labour-time, and its owner, thereby, has a claim on an equal amount of labour-time. The owner of money-capital, i.e. money that has been loaned out, has a claim not just on an equivalent amount of labour, as represented by the loan, but also to an amount of labour equal in value to the interest on the loan.

Yet, there is nothing specific to the money used as money-capital as opposed to that which existed simply as money, which creates this larger quantity of labour-time over which it exerts a claim. If I have £10, and use it to buy food, I obtain food with a value of £10, which represents a given quantity of labour-time. There is no expansion of value. If I loan this £10 to B, who gives me an I.O.U., that promises to pay me back £11, at the end of the week, then, if B spends the £10 on food, there has likewise been no expansion of value. Absent any other factors, at the end of the week, B could give me the food, they bought, and nothing else, thereby defaulting on their promise to pay the £1 interest. I would simply have £10 of food, rather than £10 in money.

But, equally, B may have eaten the food. In that case, I am left with a rather worthless piece of paper that promised to pay me £11. Only if B has some form of employment can they repay me, so that they must expend £11 of labour-time, and with the proceeds repay the debt, so that, in effect, I had a claim on £11 worth of their labour-time.

However, in no way has this £10 loan created any additional value. Only if B had themselves used the loan as capital, i.e. to buy means of production and labour-power, so as to produce surplus value, would it have resulted in an expansion of value. But, then it is the real capital that self-expanded not the money-capital. The money-capital can only expand and obtain interest because the real capital expanded.

So, where money-capital is loaned for the national debt, for example, the interest paid on this loan does not arise because the money-capital somehow expands, or even because it is loaned to acquire real capital, which expands. It arises only because money-capital is able to command interest. In this case, the interest is paid, not out of any expansion of capital, but can only be paid continually out of the performance of new labour.

“By means of these facts, whereby even an accumulation of debts may appear as an accumulation of capital, the height of distortion taking place in the credit system becomes apparent. These promissory notes, which are issued for the originally loaned capital long since spent, these paper duplicates of consumed capital, serve for their owners as capital to the extent that they are saleable commodities and may, therefore, be reconverted into capital.” (p 476-7)

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