Chapter 2.4 The Precious Metals
In this section, Marx sets out, in more detail, why precious metals are adopted as money. As already seen, they are not the first commodity to perform this role. Earlier, things like cattle, and furs, are used, and the reason for that is that the first requirement of a money commodity is to act as an indirect measure of value. To do that, its own value must be well known, and that arises with these most commonly produced and traded goods. But, everywhere, these earlier money commodities eventually give way to precious metals, and that is because, although the value of things like cattle are well known, as an average, they are not uniform in their use value. They suffer the same problem as measuring value directly in terms of concrete labour, or trying to measure distance by using actual human feet.
To measure distance uniformly, it is necessary to abstract from all of the actual human feet, into a standardised unit of measure. And, the same applies when other measures of distance are established, such as the Metre. In fact, that is not as scientifically precise as may be thought either. A standard metre varies minutely, in length, depending on temperature, expanding when temperature rises etc. The significance of that is shown over longer distances, as train track may buckle, unless scope for expansion is provided. And, when it comes to calculating over astronomical distances, in the literal sense, even the minutest divergence can turn into a serious error. In an effort to obtain a more accurate standard metre, it is now defined in terms of the distance travelled by light, in a given time, and it is done using the most precise atomic clocks.
To measure value directly, its not concrete labour that is used, but abstract average labour/universal labour. If science cannot measure distance, weight and time with absolute precision, there is no reason why it should be required to do so in relation to value. In order to measure value by a uniform, standard measure, which only becomes vital when commodities are produced and exchanged, the use of a third commodity arises naturally from this process of exchange itself, just as humans use the things at hand, as their other metrics. The foot, cubit and so on, are measurements derived from human body parts, the chain, furlong etc., distances based on agricultural activity, whilst stone and so on are weights based on physical elements in the environment.
Time units are derived from Nature, a day being the time taken for the Earth to rotate on its axis, which, again, varies slightly, from one day to another. A year is the time it takes to orbit the Sun, which again is subject to variation. But, the division of the day into 24 hours, 60 minutes to the hour, and 60 seconds to the minute is historically determined, as is the division of the year into 12 months of varying lengths. There is no reason not to have ten months in a year, or 20 hours in a day, and separated from Earth, these time periods become arbitrary, as witnessed by the use of decimalised “Star Dates” in Star Trek.
For a primitive commune, or peasant household, measuring value using some third term, in the form of a money commodity, is unnecessary, for the reasons Marx sets out in Capital I. Like Robinson Crusoe, it is only their collective labour involved, and there is no reason to compare it to another labour. The value it produces is individual value, and it is measured directly by the labour-time expended. Whether it is labour producing linen or wine is irrelevant, because it is their own labour, in either case. The only thing they have to consider, as they measure this time, is whether the use values obtained from the linen produced in a given time will provide them with more or less utility than were that time used to produce wine.
But, as described earlier, this is not the case as soon as products become commodities that are produced specifically to be exchanged, and so where what is actually being exchanged is different quantities of social labour. Now, all of the different concrete labours must be reduced to a uniform standard labour, and this is effected by competition. The uniform standard takes the form of the actual labour used to produce a given commodity, whose value is well known, and which is regularly traded, for example, cattle. But, now, as trade increases, the inadequacy of such measures of value becomes increasingly apparent, due to their own variation. In terms of currency, their limitations have already been discussed, with money tokens, in the form of printed strips of leather acting as their representatives, and so on.
The precious metals replace these earlier money commodities, because they do not suffer their deficiencies. They are uniform in terms of their use-value, for example. One gram of gold is the same as another, as with silver or copper. Unlike, say, cattle, they are divisible into uniform smaller weights, and their high value means that a lot of value can be contained in a small quantity of metal, making it also portable, and so facilitating its use as coin. So, precious metals arise as money, and as coin, long before bourgeois production itself becomes established, and when it does, it simply takes over these existing forms.
Another aspect of the precious metals, discussed by Marx, in relation to their suitability, was that they played little role in the production process itself, unlike, for example, iron. That meant that they were already subject to hoarding, and use as manifestations of wealth. They could be converted into money and coin readily, and without any impact of production. However, this is not entirely accurate. Copper, even in Marx's day, was used in production in boilers, piping and electrical circuits. As electrical supply and usage expanded massively, after Marx died, he could not have foreseen the massive expansion of the industrial use of copper, which has led to it being called Dr.Copper, the metal with a Ph.D in Economics, because of its ability to predict future economic conditions. But, then, of course, obviously, copper does not play the role as money, or currency, it once did either.
But, also, silver is used as the basis of solder in jointing electrical circuits, and gold itself is used in some electronics, where its high value can be justified, for the small amounts required.
“Nature no more produces money than it does bankers or a rate of exchange. But since in bourgeois production, wealth as a fetish must be crystallised in a particular substance, gold and silver are its appropriate embodiment. Gold and silver are not by nature money, but money consists by its nature of gold and silver. Gold or silver as crystallisation of money is, on the one hand, not only the product of the circulation process but actually its sole stable product; gold and silver are, on the other hand, finished primary products, and they directly represent both these aspects, which are not distinguished by specific forms. The universal product of the social process, or the social process itself considered as a product, is a particular natural product, a metal, which is contained in the earth's crust and can be dug up.” (p 155)
In fact, Marx points out that, initially, gold had a lower value than silver. That was because gold was fist discovered, occurring naturally, on the surface. It had been washed down in rivers, and so, its mining done by Nature, leaving it only for unskilled labour to come along and pick it up, much as with hunter-gatherers picking berries. That was not the case with silver which had to be mined, and which required, therefore, relatively skilled labour. For the quantities of gold and silver actually provided, therefore, the silver required more abstract labour than the gold, and its value was, therefore, that much higher.
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