a) Hoarding
“The coin itself becomes money as soon as its movement is interrupted. In the hands of the seller who receives it in return for a commodity it is money, and not coin; but when it leaves his hands it becomes a coin once more.” (p 125)
But, this process of circulation of commodities and coin, itself, necessarily leads to the movement of coin being suspended, and so the creation of money reserves and hoards.
“This happens whenever a sale is not immediately turned into a purchase.” (p 125)
The whole nature of commodity production and exchange, as against that of direct production, is that production and consumption – supply and demand – is separated. Take an independent weaver. They produce cloth, and the frequency with which they take cloth to market is determined by the amount of time required by them to produce sufficient cloth to be sold. In Capital II, in examining the turnover of capital, Marx calls this time the production time. It comprises two elements. First is the working period, which is the actual amount of time in which labour is expended on production, but for some commodities, such as agricultural products, or wine, it involves a period where labour is not actively expended, but where natural chemical processes are required.
For a weaver, it may be, for example, that the optimum quantity of cloth for them to produce, to take to market is 10 metres. After all, it must be a sizeable amount, because taking it to market requires their time, which, otherwise, could have been used in production. Their labour in production is what creates value, whereas their labour in merely selling the cloth, whilst necessary, does not create value, but only realises the value already created. To produce this 10 metres of cloth may take a month. The weaver may also buy wool or cotton or flax, on a similar monthly basis, to replace the consumed material, but they may also not want to store that quantity of material, and so buy it, say, each week. So, already, even in relation to their production, it can be seen that sales and purchases, C – M, and M – C, do not coincide.
They sell 10 metres of cloth, and obtain £10, but may spend only £1 to buy materials, for the week ahead, with £3 forming a money reserve, only spent over the coming month to buy materials. As a full-time weaver, they no longer spend time producing their own food, as Lenin describes in relation to the development of commodity production in Russia, for example, in “On The So Called market Question”. But, they must still eat, drink and so on, and the frequency with which they must do so is in no way related to their production of cloth, or the frequency with which they obtain money from its sale. In times before refrigeration, canned goods and so on, the purchase of fresh food might be a daily requirement, so that, for this element of their spending, M – C, a totally different frequency, and series of circuits is established.
However, to be able to buy without selling requires, also, that, at some previous point, they have sold without buying. Initially, they must have bought material before they had sold cloth produced with such material. But, to buy the material, they had to have sold cloth, or something else, to obtain the money to buy the material. Consequently, these different frequencies with which they sell and obtain money, compared to those in which they buy, and so dispose of money, of itself requires that, as well as having always stocks of materials waiting to be processed, and stocks of finished cloth waiting to be taken to market, they must also hold stocks of money itself, money reserves and hoards.
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