The metal content of silver and copper coins, representing gold, was established by law, but, Marx explains why this is untenable, and unsustainable, meaning that these tokens can be replaced by base metal or paper. In circulation, silver and copper coins suffer wear and tear, the same as gold coins. Indeed, as their velocity of circulation is higher, they wear away faster. If they were taken out of circulation, when their metal content fell below a certain level, it would mean that, just as they replaced gold coins, other lower value metals would have to be used to replace them, “and in this way the representation of one type of symbolic money by other types of symbolic money would go on for ever. The needs of currency circulation itself accordingly compel all countries with a developed circulation to ensure that silver and copper tokens function as coin independently of the percentage of metal they lose. It thus becomes evident that they are, by their very nature, symbols of gold coin not because they are made of silver or copper, not because they have value, but they are symbols in so far as they have no value.” (p 113)
And, this demonstrates the nature of money tokens, as against the money commodity itself. The money commodity, say gold, has value because it is a commodity and represents a given quantity of universal labour/social labour-time, a ¼ ounce of gold, representing 100 labour hours, for example. It acts as money because it has value, and acts as the universal equivalent form of the value of all other commodities. It represents their values indirectly, on this basis, and circulates because it has value. But, a money token, by definition, is not money.
“But a thing cannot be its own symbol. Painted grapes are no symbol of real grapes, but are imaginary grapes. Even less is it possible for a light-weight sovereign to be the symbol of a standard-weight sovereign, just as an emaciated horse cannot be the symbol of a fat horse.” (p 111)
Even a gold coin acts as only a token, representing money, because its actual weight in gold may be only half that of the gold it represents, and so, also, only half the social labour-time it nominally represents. Yet, such coin continues to circulate as though it were full weight, and to act as the equivalent form of value it nominally represents. The money token has value, not because of its own material content, but, precisely, because it circulates, the opposite to the money commodity itself, which circulates because it has value.
But, then, we have to ask the question how this can be that even something as worthless as a scrap of paper can have value simply because it circulates, and so what are the laws relating to the circulation of these money tokens, as opposed to those relating to the circulation of money itself? The starting point has to be the laws relating to money itself, because the fact that money tokens are introduced to represent that money cannot change those laws.
So, as Marx says, if gold is the money commodity and a ¼ ounce of gold has a value of 100 labour hours, and the total value of commodities to be circulated is 1 million labour hours, the equivalent form of this value is 10,000 ¼ ounces of gold. If the gold is called £1, then the total price of all these commodities is £10,000, and if each £ performs 10 transactions, £1,000 is required as currency. This fundamental relation to money itself is not changed, if the money, 1,000 ¼ ounces of gold, is replaced by 1,000 worthless paper tokens, each proclaiming their value as being £1 (100 labour hours).
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