Chapter 2.2 – Medium of Exchange a) The Metamorphosis of Commodities - Part 7 of 8

This development of commodity production and exchange, as a form of social organisation, is different to the conditions that existed in the primitive commune, or under direct production, in the peasant household. It is commodity production and exchange that creates the categories of buyer and seller, unknown to these other forms of organisation. It is the antagonism between buyer and seller, which then determines the antagonistic and contradictory interests of the human beings caught up in these historically specific social conditions.

“It is therefore as absurd to regard buyer and seller, these bourgeois economic types, as eternal social forms of human individuality, as it is preposterous to weep over them as signifying the abolition of individuality. They are an essential expression of individuality arising at a particular stage of the social process of production. The antagonistic nature of bourgeois production is, moreover, expressed in the antithesis of buyer and seller in such a superficial and formal manner that this antithesis exists already in pre-bourgeois social formations, for it requires merely that the relations of individuals to one another should be those of commodity-owners.” (p 95)

In C – M – C, we have the condition of barter, C – C, with money acting as intermediary “not however as a medium of exchange in general, but a medium of exchange adapted to the process of circulation, i.e., a medium of circulation.” (p 96) However, as illustrated previously, this idealised circuit of money and commodity does not mean that it is realised, because, at every stage, every transaction, the contradiction, inherent in the commodity, between use value and exchange-value, and, in money, as measure of value and means of circulation, threatens to blow it apart.

“If, because the process of circulation of commodities ends in C—C and therefore appears as barter merely mediated by money, or because C—M—C in general does not only fall apart into two isolated cycles but is simultaneously their dynamic unity, the conclusion were to be drawn that only the unity and not the separation of purchase and sale exists, this would display a manner of thinking the criticism of which belongs to the sphere of logic and not of economics.” (p 96)

This was precisely the error of Mill, Say and Ricardo, who saw only the unity between production and consumption, supply and demand, value and use value, and so failed to see that, with commodity production, this is a contradictory unity. Commodity production and exchange itself explodes the limitations of direct production. In fact, we know that from early in Man's history, this commodity production and exchange existed, and expanded horizons. Thousands of years ago, trade existed between the Middle East and South America, making the existence of pyramids, in both societies, not such a coincidence. The Bible story of the journey of the Magi is simply testament of the existence of trade along the Silk Road.

But, all of these are relatively minor, compared to the explosion of trade and rapid adoption of commodity production that arises when the towns expanded in the Middle Ages, let alone when this development of commerce leads to the voyages of the merchant adventurers, such as Columbus, Magellan, and so on. Now, all of the restrictions on diet, fashion, and so on are swept away, as trade expands.

“The division of exchange into purchase and sale not only destroys locally evolved primitive, traditionally pious and sentimentally absurd obstacles standing in the way of social metabolism, but it also represents the general fragmentation of the associated factors of this process and their constant confrontation, in short it contains the general possibility of commercial crises, essentially because the contradiction of commodity and money is the abstract and general form of all contradictions inherent in the bourgeois mode of labour. Although circulation of money can occur therefore without crises, crises cannot occur without circulation of money.” (p 97)

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