Matt.+153-201


 * Grundrisse. Chapter on Money. (p. 153-201)**

Because I didn’t complete reading the previous pages (115-153), I am uncertain of what this opening discussion on the “time-chit” means.

It is much more difficult to follow his train of thought in Grundrisse relative to Capital. Thoughts just end, or come in fragments and notes. This makes it both a pleasure, and pain, to read. After an analysis of the time-chit and necessities of the banking system, he then shifts into an exegesis on the general nature of social relations under capital:

“Each individual’s production is dependent on the production of all others; and the transformation of his product into the necessaries of his own life is [similarly] dependent on the consumption of all others” (156). He makes a very interesting point, highly relevant to today’s popular understanding of human behaviour:

“The reciprocal dependence is expressed in the constant necessity for exchange, and in exchange value as the all-sided mediation. The economists express this as follows: Each pursues his private interest and only his private interest; and thereby serves the private interests of all, the general interest, without willing or knowing it. The real point is not that each individual’s pursuit of his private interest promotes the totality of private interests, the general interest. One could just as well deduce from this abstract phrase that each individual reciprocally blocks the assertion of the others’ interest, so that, instead of general affirmation, this war of all against all produces a general negation” (156).

It is worth noting some of the discussion taking place around this very point. Kropotkin, who would later break with Marx and Engels over their view of the state, wrote a very important book titled Mutual Aid: A Factor of Evolution (1902). This was a response to social Darwinism. He looked at non-human animals to argue that cooperation was a necessity of evolutionary survival. Marx held Darwin in fairly high regard, you will note in reading Capital (Vol. 1). I also remember hearing during a radio panel that Darwin was by no means a “dog eat dog” thinker. It sounds as if he had highly developed views about cooperation and social systems.

From this critique of social Darwinism, which doesn’t quite address whether humans are innately self-interested, Marx makes a very compelling point about the historical specificity of this particular form of private interest: “The point is rather that private interest is itself already a socially determined interest, which can be achieved only within the conditions laid down by society and with the means provided by society; hence it is bound to the reproduction of these conditions and means. It is the interest of private persons; but its content, as well as the form and means of its realization, is given by social conditions independent of all” (156). **NOTE: I completely agree here, but it would be a mistake to have the notion that individual interest did not rule in some period prior to capital. “**the strong //do what they// can and the //weak suffer// what //they must//,” – Thucydides (460-395 BC).

This Thucydides quote is often used by Chomsky, which I find quite strange. Because Chomsky, an anarcho-syndicalist and strong adherent of Enlightenment principles, is all about certain universal principles innate within humanity. It seems contradictory that Chomsky could favourably quote Thucydides and then suggest that humans innately believe in justice and equality, etc.

The logical development of this particular chapter is becoming more apparent to me. Marx began with the general social conditions of capital (ie. “each individual’s production is dependent upon the production of all others....” see above). He then looks more closely at how this kind of universal equivalence can emerge, and it emerges through exchange value:

“The reciprocal and all-sided dependence of individuals who are indifferent to one another forms their social connection. This social bond is expressed in //exchange value//, by means of which alone each individual’s own activity or his product becomes an activity and a product for him; he must produce a general product – //exchange value//, or, the latter isolated for itself and individualized, //money.// On the other side, the power which each individual exercises over the activity of others or over social wealth exists in him as the owner of //exchange values//, of //money//. The individual carries his social power, as well as his bond with society, in his pocket. Activity, regardless of its individual manifestation, and the product of activity, regardless of its particular make-up, are always //exchange value//, and exchange value is a generality, in which all individuality and peculiarity are negated and extinguished. This indeed is a condition very different from that in which the individual or the individual member of a family or clan (later, community) directly and naturally reproduces himself, or in which his productive activity and his share in production are bound to a specific form of labour and of product, which determine his relation to others in just that specific way” (157).

This form of universal exchange value, however, necessarily entails alienation of individuals from each other and from their products:

“The social character of activity, as well as the social form of the product, and the share of individuals in production here appear as something alien and objective, confronting the individuals, not as their relation to one another, but as their subordination to relations which subsist independently of them and which arise out of collisions between mutually indifferent individuals. The general exchange of activities and products, which has become a vital condition for each individual – their mutual interconnection here appears as something alien to them, autonomous, as a thing. In exchange value, the social connection between persons is transformed into a social relation between things; personal capacity into objective wealth” (157).

His thought process thus far is summarized quite clearly:

“Relations of personal dependence (entirely spontaneous at the outset) are the first social forms, in which human productive capacity develops only to a slight extent and at isolated points. Personal independence founded on //objective [sachlicher]// dependence is the second great form, in which a system of general social metabolism, of universal relations, of all-round needs and universal capacities is formed for the first time. Free individuality, based on the universal development of individuals and on their subordination of their communal, social productivity as their social wealth, is the third stage. The second stage creates the conditions for the third. Patriarchal as well as ancient conditions (feudal, also) thus disintegrate with the development of commerce, of luxury, of //money//, of //exchange value,// while modern society arises and grows in the same measure” (158). There is a real emphasis on dependence upon this kind of system. He repeats the term “dependence” relentlessly in this chapter:

“Exchange and division of labour reciprocally condition one another. Since everyone works for himself but his product is nothing for him, each must of course exchange, not only in order to take part in the general productive capacity but also in order to transform his own product into his own subsistence” (158).

The following point here seems to cut off right at the point of being revolutionary. As I read it, he seems to be suggesting that even under full worker control, individuals are still subjugated/dependent upon this particular social system. He stops short of saying that in order for this form of dependence to end, capital must end:

“The very necessity of first transforming individual products or activities into //exchange value,// into //money,// so that they obtain and demonstrate their social //power// in this //objective [sachlichen]// form, proves two things: (1) That individuals now produce only for society and in society; (2) that production is not //directly// social, is not ‘the offspring of association,’ which distributes labour internally. Individuals are subsumed under social production; social production exists outside them as their fate; but social production is not subsumed under individuals, manageable by them as their common wealth. There can therefore be nothing more erroneous and absurd than to postulate the control by the united individuals of their total production, on the basis of //exchange value//, of //money,// as was done above in the case of the time-chit bank” (158-9).

This time-chit business is becoming a bit clearer to me now, though I need to read the opening of the chapter. Marx is getting back to his early critique of Proudhon and St-Simon. Proudhon wanted to create a bank that would provide low-interest loans, credit unions, worker control, and so on. Marx seems to be suggesting in the above extract that none of these would get rid of individual dependence upon capital as a social system. Marx’s critique of Proudhon was also remarkable, as he had torn Proudhon’s supposedly radical argument to shreds, only to see this supposed radical then join Napoleon, I believe. (Need to look into this again.) Yet I would not reject Proudhon simply because Marx wrote him off. I think it’s vital to read Marx’s critiques very carefully, and to weigh them against Marx’s work. There is also something to be said for Proudhon’s anarchist principles. Marx’s logical progression then continues. So he moved from general social relations necessary for capital, to the emergence of exchange value. He now shifts more explicitly to money as a universal measure of exchange value. So the logical progression of his argument is quite clear thus far:

“(In one of the forms of money - in so far as it is //medium// of exchange (not //measure// of exchange value) – it is clear to the economists that the existence of money presupposes the objectification [//Versachlichung//] of the social bond; in so far, that is, as money appears in the form of //collateral// which one individual must leave with another in order to obtain a commodity from him. Here the economists themselves say that people place in a thing (money) the faith which they do not place in each other. But why do they have faith in the thing? Obviously only because that thing is an //objectified relation// between persons; because it is objectified exchange value, and exchange value is nothing more than a mutual relation between people’s productive activities. Every other collateral may serve the holder directly in that function: money serves him only as the ‘dead pledge of society,’ //[citing Aristotle’s Nichomachean Ethics, Bk. V, Ch. 5, para. 14, which is a fascinating citation in itself]// but it serves as such only because of its social (symbolic) property; and it can have a social property only because individuals have alienated their own social relationship from themselves so that it takes the form of a thing)” (160).

This general statement on money is followed by a wonderful diatribe on what this form of exchange means for society. Again, it is worth reading this with an eye to our current stock market system:

“Since, ‘if you please,’ the autonomization of the world market (in which the activity of each individual is included), increases with the development of monetary relations (exchange value) and vice versa, since the general bond and all-round interdependence in production and consumption increase together with the independence and indifference of the consumers and producers to one another; since this contradiction leads to crises, etc., hence, together with the development of this alienation, and on the same basis, efforts are made to overcome it: institutions emerge whereby each individual can acquire information about the activity of all others and attempt to adjust his own accordingly, e.g. lists of current prices, rates of exchange, interconnections between those active in commerce through the mails, telegraphs etc. (the means of communication of course grow at the same time). (This means that, although the total supply and demand are independent of the actions of each individual, everyone attempts to inform himself about them, and this knowledge then reacts back in practice on the total supply and demand” (160-61).

And this wonderful analysis is followed by another hint of revolutionary intent:

“In the case of the //world market,// the connection of the //individual with all,// but at the same time also the //independence of this connection from the individual,// have developed to such a high level that the formation of the world market already at the same time contains the conditions for going beyond it.) //Comparison// in place of real communality and generality” (161).

He is clearly suggesting here that the conditions developed by capital (world market, connection of individual with all, etc.) also contain the “conditions for going beyond it.” Again, it’s a shame that he only hints at the revolutionary implications of his theory. I wish he would develop this argument further, but it is almost as if he regards the logic as so clear that it hardly merits elaboration. Nevertheless, it is at least clear that this necessary interdependence and global connectivity contains the seeds of revolution:

“(It has been said and may be said that this is precisely the beauty and the greatness of it: this spontaneous interconnection, this material and mental metabolism which is independent of the knowing and willing of individuals, and which presupposes their reciprocal independence and indifference. And, certainly, this objective connection is preferable to the lack of any connection, or to a merely local connection resting on blood ties, or on primeval, natural or master-servant relations. Equally certain is that individuals cannot gain mastery over their own social interconnections before they have created them. But it is an insipid notion to conceive of this merely //objective bond// as a spontaneous, natural attribute inherent in individuals and inseparable from their nature (in antithesis to their conscious knowing and willing). This bond is their product. It is a historic product. It belongs to a specific phase of their development. The alien and independent character in which It presently exists //vis-à-vis// individuals proves only that the latter are still engaged in the creation of the conditions of their social life, and that have not yet begun, on the basis of these conditions, to live it. It is the bond natural to individuals within specific and limited relations of production. Universally developed individuals, whose social relations, as their own communal [//gemeinschaftlich//] relations, are hence also subordinated to their own communal control, are no product of nature, but of history. The degree and the universality of the development of wealth where //this// individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities” (161-2).

He critiques “it as ridiculous to yearn for a return to that original fullness...” of the single individual prior to this historical development, and in particular the bourgeois “romantic viewpoint” (162). Again, I would cite Thucydides favourably when Marx then states the following:

“Greed as such impossible without money; all other kinds of accumulation and of mania for accumulation appear as primitive, restricted by needs on the one hand and by the restricted nature of products on the other” (163). – Where he then cites Virgil’s Aeneid, “that accursed hunger for gold.”

Based strictly on what Virgil and Thucydidies have said, and also looking at Aristotle and Sophocles’ Antigone, for example, I think it is impossible to attribute greed strictly to money, and to write off other forms of avarice to “primitive accumulation.” He would be better off suggesting that this particular form of greed is particular to this historical period.

Marx then touches upon typical liberal notions of liberty and equality. Certainly, you can have liberty and equality in exchange (money as universal leveller), but Marx says that it is impossible to have true liberty and equality without destroying the system:

“In the money relation, in the developed system of exchange (and this semblance seduces the democrats), the ties of personal dependence, of distinctions of blood, education, etc, are in fact exploded, ripped up (at least, personal ties all appear as //personal// relations); and individuals //seem// independent (this is an independence which is at bottom merely an illusion and it is more correctly called indifference), free to collide with one another and to engage in exchange within this freedom; but they appear thus only for someone who abstracts from the //conditions//, the //conditions of existence// within which these individuals enter into contact (and these conditions, in turn, are independent of the individuals and, although created by society, appear as if they were //natural conditions,// not controllable by individuals). [....] A closer examination of these external relations, these conditions, shows, however, that it is impossible for the individuals of a class etc. to overcome them //en masse// without destroying them. A particular individual may by chance get on top of these relations, but the mass of those under their rule cannot, since their mere existence expresses subordination, the necessary subordination of the mass of individuals.) These external relations are very far from being an abolition of ‘relations of dependence’; they are rather the dissolution of these relations into a general form; they are merely the elaboration and emergence of the general //foundation// of the relations of personal dependence. Here also individuals come into connection with one another only in determined ways” (164).

After this revolutionary statement, he then seems to suggest that the manner in which individuals come together to form reciprocal relations means they are now ruled by abstractions (by that, I think he means class abstractions). And these ideas, for ideological purposes, are made to become “the belief in the permanence of these ideas, i.e. of these objective relations of dependency, is of course consolidated, nourished and inculcated by the ruling classes by all means available” (165).

His argument then returns to its well-developed logic. He seems to be following a logical argument, but going off on all of these wonderful tangents. But the line of argument remains clear to me. After having introduced the general conditions for capital, followed by the nature of exchange value, and the money form as the universal measure of exchange value, he then looks at the money form more closely:

“Money – the common form, into which all commodities as exchange values are transformed, i.e. the universal commodity – must itself exist as a //particular// commodity alongside the others, since what is required is not only that they can be measured against it in the head, but that they can be changed and exchanged for it in the actual exchange process. //The contradiction which thereby enters, to be developed elsewhere.// Money does not arise by convention, any more than the state does. It arises out of exchange, and arises naturally out of exchange; it is a product of the same” (165, my italics).

He talks about how money started as an object of widespread consumption (salt, cattle, etc.), but that it gradually shifted. “In the course of further development precisely the opposite will occur, i.e. that commodity which has the least utility as an object of consumption or instrument of production will best serve the needs of //exchange as such////” (165)//. Interesting that he cites cattle, as the term ‘capital’ has origins in the Latin word, “cattle.” Cattle heads were easy to measure, and they could reproduce themselves!

With the universal equivalent established, Marx then looks at the manner in which value is determined:

“The proportion in which a particular commodity is exchanged for money, i.e. the quantity of money into which a given quantity of a commodity is transposable, is determined by the amount of labour time objectified in the commodity. The commodity is an exchange value because it is the realization of a //specific// amount of labour time; money not only measures the amount of **//labour time//** which the commodity represents, but also contains its general, conceptually adequate, exchangeable form. Money is the physical medium into which exchange values are dipped, and in which they obtain the form corresponding to their general character. Adam Smith says that labour (labour time) is the original money with which all commodities are purchased” (167, my bold).

“Labour time” is placed in bold here because there is a crucial element missing in this early development of the labour theory of value. That is, “socially necessary.” It is my understanding, based on Harvey’s reading, that the real contribution that Marx made to the labour theory of value was his emphasis on the “socially necessary labour time.” That is, the socially necessary amount of labour time necessary for the labourer to reproduce him/herself within a given epoch. Bourgeois sentiments vary over time –thus what is socially necessary and acceptable in one age may not be socially necessary and acceptable in the next (ex. sufficient income to own a television). We have yet to confront the “reduction problem,” however, where Marx tries to reduce this formulation to specific units of measurement. Note also that he is quoting Smith’s masterpiece, //The Wealth of Nations//. He then examines “labour time” as a concept on pg. 168, and the page is worth reading in full, but he closes in saying that: “Money is labour time in the form of a general object, or the objectification of general labour time, labour time as a //general commodity//” (168).

But then he necessarily complicates matters, and this is still following a very logical procession:

“However, this appearance of simplicity is deceptive. The truth is that the exchange-value relation – of commodities as mutually equal and equivalent objectification of labour time – comprises contradictions which find their objective expression in a //money which is distinct from// labour time” (169).

He critiques Adam Smith for portraying this contradiction between money and labour time as running in parallel, and attributes this shortcoming to the time with which Smith conducted his study. I don’t feel this is entirely necessary to the argument, but perhaps it is worth reading in full:

“In Adam Smith this contradiction still appears as a set of parallels. Along with the particular product of labour (labour time as a particular object), the worker also has to produce a quantity of the general commodity (of labour time as general object). The two determinants of exchange value appear to Smith as existing externally, //alongside// one another. The interior of the commodity as a whole does not yet appear as having been seized and penetrated by contradiction. This corresponds to the stage of production which Smith found in existence at that time, in which the worker still directly owned a portion of his subsistence in the form of the product; where neither his entire activity nor his entire product had become dependent on exchange; i.e. where subsistence agriculture (or something similar, as Steuart calls it) still predominated to a great extent, together with patriarchal industry (hand weaving, domestic spinning, linked closely with agriculture). Still it was only the excess which was exchanged within a large area of the nation. Exchange value and determination by labour time not yet fully developed on a national scale” (169).

He then makes some very interesting remarks on the role of time:

“Economy of time, to this all economy ultimately reduces itself. Society likewise has to distribute its time in a purposeful way, in order to achieve a production adequate to its overall needs;just as the individual has to distribute his time correctly in order to achieve knowledge in proper proportions or in order to satisfy the various demands on his activity. Thus, economy of time, along with the planned distribution of labour time among the various branches of production, remains the first economic law on the basis of communal production. It becomes law, there, to an even higher degree” (173).

He then notes it would be foolish to disregard the nature and quality of precious metals as subjects of money relations, and subsequently goes on a 13 page analysis of the scientific chemical properties of various metals, their composition, their history of exploitation, extraction, longevity, etc.!

"Where money plays the role of mediating the exchange of commodities (that means here their circulation) and is hence a means of exchange, it is an //instrument of circulation, a vehicle of circulation;// but wherever, in this process, it is itself circulated, where it changes hands along its own lines of motion, there it itself has a //circulation, monetary circulation, monetary turnover.// The aim is to find out to what extent this circulation is determined by particular laws. This much is clear from the outset: if money is a vehicle of circulation for the commodity, then the commodity is likewise a vehicle for the circulation of money. If money circulates commodities, then commodities circulate money. The circulation of commodities and the circulation of money thus determine one another. As regards monetary turnover, three things merit attention: (1) the form of the movement itself; the line which it describes (its concept); (2) the quantity of money circulating; (3) the rate at which it completes its motion, its velocity of circulation. This can happen only in connection with the circulation of commodities" (186)
 * Circulation of money and opposite circulation of commodities**

I regain his line of thought here. In a very logical fashion, he moved from the general conditions necessary for capital through to the money form and how value is established (labour time, which later becomes "socially necessary labour time"). In order to have a universal measurement, full circulation is required. In order to have full circulation, prices are necessary. Thus he examines the concept of price:
 * General concept of circulation**

"But first let us note that what is circulated by money is exchange value, hence //prices.// Hence, as regards the circulation of commodities, it is not only their mass but, equally, their prices which must be considered. A large quantity of commodities at a low exchange value (price) obviously requires less money for its circulation than a smaller quantity at double the price. Thus, actually, the concept of price has to be developed //before// that of circulation. Circulation is the positing of prices, it is the process in which commodities are transformed into prices: their realization as prices. Money has a dual character: it is (1) //measure//, or element in which the commodity is realized as exchange value, and (2) //means of exchange,// instrument of circulation, and in each of these aspects it acts in quite opposite directions. Money only circulates commodities which have already been //ideally// transformed into money, not only in the head of the individual but in the conception held by society (directly, the conception held by the participants in the process of buying and selling). This ideal transformation into money is by no means determined by the same laws as the real transformation. Their interrelation is to be examined" (187). (ie. money as measure vs. money as means of exchange.)

Interesting to note that concept of //circulation// itself is particular form of commodity exchange:
 * **(a) Circulation circulates exchange values in the form of prices**

"An essential characteristic of circulation is that it circulates exchange values (products or labour), and, in particular, exchange values in the form of //prices//. Thus, not every form of commodity exchange, e.g. barter, payment in kind, feudal services, etc., constitutes circulation. To get circulation, two things are required above all: Firstly, the precondition that commodities are prices; Secondly, not isolated acts of exchange, but a circle of exchange, a totality of the same, in constant flux, proceeding more or less over the entire surface of society..." (188).

Commodity is specified as exchange value, which requires an equivalent for all other values (relative to labour time contained in commodity). "A mediation is required to posit it as an exchange value" (188). Thus:

"Money then exists as the exchange values of all commodities alongside and outside them. It is the universal material into which they must be dipped, in which they become gilded and silver-plated, in order to win their independent existence as exchange values" (188).

Money expresses the relation of equality between all exchange values with the same name: price.

//"Exchange value, posited in the character of money, is price.// Exchange value is expressed in price as a specific quantity of money. Money as price shows first of all the //identity// of all exchange values; secondly, it shows the unit of which they all contain a given number, so that the equation with money expresses the quantitative specificity of exchange values, their quantitative relation to one another. Money is here posited, thus, as the //measure// of exchange values; and prices as exchange values measured in money [...] But what is more important for the analysis is that //in price, exchange value is compared with money.// After money has been posited as independent exchange value, separated from commodities, then the individual commodity, the particular exchange value, is again //equated// to money, i.e. it is posited as equal to a given quantity of money, expressed as money, translated into money" (189).

With the concept of price established, he can move to analysis of circulation. But first, he clearly sets up for a (Marxian, Hegelian, whatever) contradiction:

"But, since money has an independent existence apart from commodities, the price of the commodity appears as an //external// relation of exchange values or commodities to money; the commodity //is not price,// in the way in which its social substance stamped it as exchange value; this quality is not //immediately// coextensive with it; but is mediated by the commodity’s comparison with money; the commodity //is// exchange value, but it //has// a price." (190).
 * **(distinction between real money and accounting money)**

"Exchange value was in immediate identity with it, it was its immediate quality, from which it just as immediately split, so that on one side we found the commodity, on the other (as money) its exchange value; but now, as //price//, the commodity relates to money on one side as something existing outside itself, and secondly, it is //ideally// posited as money itself, since money has a reality different from it. The price is a property of the commodity, a quality in which it is //presented// as money. It is no longer an immediate but a reflected quality of it. Alongside real money, there now exists the commodity as ideally posited money.

"This next characteristic, a characteristic of money //as measure// as well as of the commodity as //price,// is most easily shown by means of the distinction between //real money// and //accounting money.// As measure, money always serves as accounting money, and, as price, the commodity is always transformed only ideally into money" (190).

Quoting Garnier, Histoire de la monnaie:

"‘The appraisal of the commodity by the seller, the other made by the buyer, the calculations, obligations, rents, inventories, etc., in short, everything which leads up to and precedes the material act of payment, must be expressed in accounting money. Real money intervenes only in order to realize payments and to balance liquidate) the accounts. If I must pay 24 //livres// 12 //sous//, then accounting money presents 24 units of one sort and 12 of another, while in reality I shall pay in the form of two material pieces: a gold coin worth 24 //livres// and a silver coin worth 12 //sous//. The total mass of real money has necessary limits in the requirements of circulation. Accounting money is an ideal measure, which has no limits other than those of the imagination. Employed to //express every sort of wealth if considered from the aspect of its exchange value alone;// thus, national wealth, the income of the state and of individuals; the accounting values, regardless of the form in which these values may exist, regulated in one and the same form; so that there is not a single article in the mass of consumable objects which is not several times transformed into money by the mind, while, compared to this mass, the total sum of effective money is, at the most = 1:10.’ (Garnier.)[|[52]] (This last ratio is poor. 1: many millions is more correct. But this entirely unmeasurable)" (190-91).

This contradiction opens up the potential for crises. Here, he is offering a sober reminder of how the 2007-10 recession emerged as money of account became principal means of growth. Entirely imagined. Over 100 banks went bankrupt in recession because of highly leveraged position:

"It is clear so far, then, that in this ideal transformation of commodities into money, or in the positing of commodities as //prices//, the quantity of really available money is altogether a matter of indifference, for two reasons: //Firstly//: the ideal transformation of commodities into money is //prima facie// independent of and unrestricted by the mass of real money. Not a single piece of money is required in this process, just as little as a measuring rod (say, a yardstick) really needs to be employed before, for example, the ideal quantity of yards can be expressed. If, for example, the entire national wealth of England is appraised in terms of money, i.e. expressed as a price, everyone knows that there is not enough money in the world to realize this price. Money is needed here only as a category, as a mental relation. //Secondly//: because money functions as a unit, that is, the commodity is expressed in such a way that it contains a definite sum of equal parts of money, is measured by it, it follows that the measure between both [is] the general measure of exchange values – costs of production or labour time. " (191).

The first condition is that circulation circulates exchange value in the form of prices (a). The second condition is that money serves as a medium of exchange. It mediates between sale and purchase. This mediation nevertheless bridges a division/distinction which bourgeois economists overlook (see 197).

"If exchange values are //ideally// transformed into money by means of prices, then, in the act of exchange, in purchase and sale, they are //really// transformed into money, exchanged for money, in order then to be again exchanged as money for a commodity. A particular exchange value must first be exchanged for exchange value in general before it can then be in turn exchanged for particulars. The commodity is realized as an exchange value only through this mediating movement, in which money plays the part of middleman. Money thus circulates in the opposite direction from commodities. It appears as the middleman in commodity exchange, as the medium of exchange. It is the wheel of circulation, the instrument of circulation for the turnover of commodities; but, as such, it also has a circulation of its own – //monetary turnover, monetary circulation.// The price of the commodity is realized only when it is exchanged for real money, or in its real exchange for money" (193).
 * **(b) Money as the medium of exchange**

"Money thus circulates in the opposite direction from commodities" (193).

"But in order then to bring the iron from him to me, money itself is useless; that requires wagons, horses, roads, etc. The real circulation of commodities through time and space is not accomplished by money. Money only realizes their //price// and thereby transfers the title to the commodity into the hands of the buyer, to him who has proffered means of exchange. What money circulates is not commodities but their titles of ownership; and what is realized in the opposite direction in this circulation, whether by purchase or sale, is again not the commodities, but their prices" (194).

"To have //circulation,// what is essential is that exchange appear as a process, a fluid whole of purchases and sales. Its first presupposition is the circulation of commodities themselves, as a natural, many-sided circulation of those commodities. The precondition of commodity circulation is that they be produced as //exchange values,// not as //immediate use values,// but as mediated through exchange value. Appropriation through and by means of divestiture [//Entäusserung//] and alienation [//Veräusserung//] is the fundamental condition" (196).

Thus perhaps you can have circulation, and alienation, without capital. Because surely you can have prices without growth?

"Circulation is the movement in which the general alienation appears as general appropriation and general appropriation as general alienation. As much, then, as the whole of this movement appears as a social process, and as much as the individual moments of this movement arise from the conscious will and particular purposes of individuals, so much does the totality of the process appear as an objective interrelation, which arises spontaneously from nature; arising, it is true, from the mutual influence of conscious individuals on one another, but neither located in their consciousness, nor subsumed under them as a whole. Their own collisions with one another produce an alien social power standing above them, produce their mutual interaction as a process and power independent of them. Circulation, because a totality of the social process, is also the first form in which the social relation appears as something independent of the individuals, but not only as, say, in a coin or in exchange value, but extending to the whole of the social movement itself. The social relation of individuals to one another as a power over the individuals which has become autonomous, whether conceived as a natural force, as chance or in whatever other form, is a necessary result of the fact that the point of departure is not the free social individual. Circulation as the first totality among the economic categories is well suited to bring this to light" (196-97).

We still don't have the conditions necessary for capital. We have exchange value, labour time, money, price, and circulation. It is only when we move into the next chapter, I would imagine, that surplus value emerges.

"At first sight, circulation appears as a //simply infinite// process. [|[61]] The commodity is exchanged for money, money is exchanged for the commodity, and this is repeated endlessly. This constant renewal of the same process does indeed form an important moment of circulation. But, viewed more precisely, it reveals other phenomena as well; the phenomena of completion, or, the return of the point of departure into itself. The commodity is exchanged for money; money is exchanged for the commodity. In this way, commodity is exchanged for commodity, except that this exchange is a mediated one. The purchaser becomes a seller again and the seller becomes purchaser again. In this way, each is posited in the double and the antithetical aspect, and hence in the living unity of both aspects. It is entirely wrong, therefore, to do as the economists do, namely, as soon as the contradictions in the monetary system emerge into view, to focus only on the end results without the process which mediates them; only on the unity without the distinction, the affirmation without the negation. The commodity is exchanged in circulation for a commodity: at the same time, and equally, it is not exchanged for a commodity, in as much as it is exchanged for money. The acts of purchase and sale, in other words, appear as two mutually indifferent acts, separated in time and place" (197).
 * Circulation as an endlessly repeated process**

In the following extract, I am not entirely sure how bourgeois economists fail to draw a distinction between money and commodities. Purchase and sale need not coincide in this form of circulation, evidently, and I suppose Marx is suggesting that bourgeois economists assume they do. For example, supply and demand (Say's Law). And this inability to draw the distinction opens up the potential for crises:

"After the economists have most splendidly shown that barter, in which both acts coincide, does not suffice for a more developed form of society and mode of production, they then suddenly look at the kind of barter which is mediated by money as if it were not so mediated, and overlook the specific character of this transaction. After they have shown us that money is necessary in addition to and distinct from commodities, they assert all at once that there is no distinction between money and commodities. They take refuge in this abstraction because in the real development of money there are contradictions which are unpleasant for the apologetics of bourgeois common sense, and must hence be covered up. In so far as purchase and sale, the two essential moments of circulation, are indifferent to one another and separated in place and time, they by no means need to coincide. Their indifference can develop into the fortification and apparent independence of the one against the other. But in so far as they are both essential moments of a single whole, there must come a moment when the independent form is violently broken and when the inner unity is established externally through a violent explosion. Thus already in the quality of money as a medium in the splitting of exchange into two acts, there lies germ of crises, or at least their possibility, which cannot be realized, except where the fundamental preconditions of classically developed, conceptually adequate circulation are present" (198).

"It has further been seen that, in circulation, money only realizes prices. The price appears at first as an ideal aspect of the commodity; but the sum of money exchanged for a commodity is its realized price, its real price. The price appears therefore as //external to// and //independent of// the commodity, as well as existing in it ideally. If the commodity cannot be realized in money, it ceases to be capable of circulating, and its price becomes merely imaginary; just as originally the product which has become transformed into exchange value, if it is not really exchanged, ceases to be a product. (The rise and fall of prices not the question here.) From viewpoint (a) //price// appeared as an //aspect of the commodity;// but from (b) //money// appears as //the price outside the commodity.// The commodity requires not simply demand, but demand which can pay in money. Thus, if its price cannot be realized, if it cannot be transformed into money, the commodity appears as //devalued, depriced" (198).//
 * The price as external to and independent of the commodity**

"( a ) The further the division of labour develops, the more does the product cease to be a medium of exchange. The necessity of a general medium of exchange arises, a medium independent of the specific production of each and every one. When production is oriented towards immediate subsistence, not //every// article can be exchanged for //every// other one, and a specific activity can be exchanged only for //specific// products. The more specialized, manifold and interdependent the products become, the greater the necessity for a general medium of exchange. At the beginning, the product of labour, or labour itself, is the general medium of exchange. But this ceases more and more to be general medium of exchange as it becomes more specialized. A fairly developed division of labour presupposes that the needs of each person have become very many-sided and his product has become very one-sided. The //need for exchange// and the //unmediated medium of exchange// develop in inverse proportion. Hence the necessity for a //general medium of exchange,// where the specific product and the specific labour must be exchanged for //exchangeability.// The exchange value of a thing is nothing other than the quantitatively specific expression of its capacity for serving as //medium of exchange.// In money the //medium of exchange// becomes a thing, or, the exchange value of the thing achieves an independent existence apart from the thing. Since the commodity is a medium of exchange of limited potency compared with money, it can cease to be a medium of exchange as against money" (199-200).
 * **Creation of general medium of exchange 199**


 * **Exchange as a special business 200**

Returning to his logical line of argument, after having established concept of price, he then looks at circulation. These past few pages have been an elaboration on circulation. Interesting here is his point on speculation. Very much like modern finance capital:

"( b ) The splitting of exchange into purchase and sale makes it possible for me to buy without selling (stockpiling of commodities) or to sell without buying (accumulation of money). It makes speculation possible. It turns exchange into a special business; i.e. it founds the //merchant estate.// This separation of the two elements has made possible a mass of transactions in between the definitive exchange of commodities, and it enables a mass of persons to exploit this divorce. It has made possible a mass of //pseudo-transactions" (200).//


 * Double motion of circulation: C-M; M-C, and M-C; C-M 201**