In these modes of production, there is no role for large-scale borrowing, which only arises with capitalist production and bank credit. But, the individual producer, who, for whatever reason, begins to fail, is forced to borrow, because the money they obtain from selling, C – M, does not cover the money required for buying, M – C. The merchants themselves may be immediately best placed to extend such finance, but, now, unlike with commercial credit, only at interest, and, now, when the payment of that interest falls due, they demand their “pound of flesh”, as Shakespeare describes in The Merchant of Venice.
As Marx describes in Capital and Theories of Surplus Value, because there is no large-scale requirement for borrowing, the number of lenders is also limited, and that limitation is exacerbated by the fact that money-lending is proscribed by the dominant Christian religion, in Europe, in these earlier periods. It becomes the preserve of Jews and Lombards, but this limitation, together with the fact that borrowers are only borrowers out of necessity and desperation, and obtain no protection in societies where the activity is itself taboo, means that the rates of interest themselves are usurious. But, this also means that, in addition to the creation of commercial capital, and commercial profit, this separation of currency into money hoards creates interest-bearing capital, and the category of interest. These form what Marx calls the antediluvian forms of capital.
“So that money as coin may flow continuously, coin must continuously congeal into money. The continual movement of coin implies its perpetual stagnation in larger or smaller amounts in reserve funds of coin which arise everywhere within the framework of circulation and which are at the same time a condition of circulation. The formation, distribution, dissolution and re-formation of these funds constantly changes; existing funds disappear continuously and their disappearance is a continuous fact. This unceasing transformation of coin into money and of money into coin was expressed by Adam Smith when he said that, in addition to the particular commodity he sells, every commodity-owner must always keep in stock a certain amount of the general commodity with which he buys.” (p 126)
The first forms of wealth – as opposed to affluence – Marx says, arises from an overproduction of products. Its this ability to overproduce that allows the Pharaohs to employ large numbers of skilled craftsmen to build the pyramids and produce other totems of wealth, as they are no longer required for agricultural production.
“Superfluous products become exchangeable products or commodities. The adequate form of this surplus is gold and silver, the first form in which wealth as abstract social wealth is kept. It is not only possible to store commodities in the form of gold and silver, i.e., in the material shape of money, but gold and silver constitute wealth in preserved form. Every use-value fulfils its function while it is being consumed, that is destroyed, but the use-value of gold as money is to represent exchange-value, to be the embodiment of universal labour-time as an amorphous raw material. As amorphous metal exchange-value possesses an imperishable form. Gold or silver as money thus immobilised constitutes a hoard. In the case of nations with purely metallic currency, such as the ancients, hoarding becomes a universal practice extending from the individual to the State, which guards its State hoard.” (p 127)
In barter, or simple commodity circulation, C – M – C, the point of exchange is change of matter, but now the point becomes change of form, of the exchange-value represented by the commodity, i.e. its conversion into money as the embodiment of social wealth. Commodities remain wealth only so long as they are in circulation, but the purpose of owning them is to consume them, and so destroy them as wealth. To coin a phrase, you can't have your cake and eat it. They are merely transitory. Gold and silver, as money, however, are permanent forms of wealth. As money, they are not even owned as commodities, jewellery etc., which may be worn away, but solely as a store of wealth, which is one reason why, in times of inflation, these stores of wealth are again turned to.
To develop such a store of wealth, it must cease circulating, meaning that, after C – M, M – C must not follow, or, at least, a portion of M is retained. This is also the basis of the ideas of the mercantilists and Monetary School, who saw these hoards of gold and silver as the manifestation of national wealth. It requires that a nation export goods in exchange for gold and silver, but then spends only a portion of this treasure on imports.
“The smaller the proportion that is withdrawn from circulation as an equivalent for the commodities [thrown into it] consisting of particular commodities or use-values, the larger the proportion that consists of money or exchange-value. The appropriation of wealth in its general form therefore implies renunciation of the material reality of wealth. Hence the motive power of hoarding is avarice, which desires not commodities as use-values, but exchange-value as a commodity. So as to take possession of superfluous wealth in its general form, particular needs must be treated as luxuries and superfluities.” (p 128-9)
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