( a) [ Money as Measure of Value]
Also to be noted that it is exchange values and hence prices which are circulated by money. In commodity circulation, therefore, we must take into account the prices of commodities just as much as their volume. Obviously, less money is needed to circulate a large quantity of commodities of low exchange value (price) than to circulate a small quantity at double the price. The concept of price must therefore be developed before that of circulation. Circulation is the positing of prices, the movement in which commodities are transformed into prices, their realisation as prices. Money has a dual determination: (1) as the measure or element in which the commodity is realised as exchange value, and (2) as means of exchange, instrument of circulation; and these two determinations have effects in quite different directions. Money only circulates commodities which have already been notionally transformed into money, not only in the mind of the individual but in the imagination of society (directly, of the parties involved in the process of purchase and sale). The notional transformation into money and the real one are not governed by the same laws at all. The relationship between them must be investigated.
( a) [ Money as Measure of Value]
An essential characteristic of circulation is that it circulates exchange values, exchange values, that is, in the form of prices. Hence, not every type of commodity exchange, e.g. BARTER, payments in kind, feudal services, etc., constitutes circulation. For circulation, two things above all are necessary: firstly, the premiss of commodities as prices; secondly, a circuit of exchanges, rather than isolated acts of exchange; a totality of exchanges in constant flow and taking place more or less over the whole surface of society; a system of acts of exchange.
[1-35] The commodity is cast in the role of exchange value. As such it is equivalent in a definite proportion (in proportion to the labour time contained in it) to all other values (commodities). But it does not correspond directly to itself in this role. As an exchange value it differs from itself in its natural form of existence. A mediation is required to posit the commodity as exchange value. Hence, in the form of money, exchange value confronts the commodity as something different from it. Only when posited as money is the commodity pure exchange value; or the commodity as pure exchange value is money. But at the same time, money now exists outside and alongside the commodity; its exchange value, the exchange value of all commodities, has acquired an existence independent of it, embodied in a material of its own, in a specific commodity. The exchange value of the commodity expresses the totality of the quantitative proportions in which all other commodities can be exchanged for it, as determined by the unequal quantities of the various commodities which can be produced in the same labour time. Money now exists as the exchange value of all commodities alongside and outside of them.
It is above all the general material into which they must be dipped to be gold- and silver-plated so as to acquire their free existence as exchange values. They must be translated into money, expressed in its terms. Money becomes the general denominator of exchange values, of commodities as exchange values. Exchange value expressed in money, i.e. equated to money, is price. Since money has been posited as something independent as against exchange values, exchange values are cast in the role of the money confronting them as subject.[33] But every exchange value is a definite quantity, is a quantitatively determined exchange value. As such it is = to a particular quantity of money. The particular quantity is determined according to the general law by the labour time realised in the exchange value. Thus, an exchange value that is the product of, SAY, a day's labour, is expressed in a quantity of gold or silver that is equal to a day's labour time, the product of a day's labour. The general measure of exchange values now becomes the measure between every exchange value and the money to which it is equated.
(Gold and silver are determined in the first instance by their production costs in the countries in which they are produced.
"In the MINING COUNTRIES all prices depend ultimately upon the production costs of the precious METALS; THE REMUNERATION PAID TO THE MINER AFFORDS THE SCALE upon which the REMUNERATION of all other PRODUCERS is calculated... The gold and silver value of all commodities not subject to any monopoly in a country not possessing mines depends upon the gold and silver WHICH CAN BE OBTAINED BY EXPORTING THE RESULT OF A GIVEN QUANTITY OF LABOUR, THE CURRENT RATE OF PROFIT, AND, IN EACH INDIVIDUAL CASE, THE AMOUNT OF WAGES WHICH HAVE BEEN PAID, AND THE TIME FOR WHICH THEY HAVE BEEN ADVANCED" (Senior [Three Lectures on the Cost of Obtaining Money, London, 1830, pp. 14-15 and 13-14]).
In other words, this value depends on the QUANTITY OF GOLD AND SILVER WHICH is DIRECTLY OR INDIRECTLY obtained from the mining countries for a certain quantity of labour (i.e. of exportable products). Money is first of all that which expresses the relation of equality of all exchange values: in money they all have the same denominator.
Exchange value posited in terms of money is price. In price it is expressed as a definite quantity of money. In price, money appears, firstly, as the unity of all exchange values; and secondly, as the unit of which they contain a particular number, so that their quantitative character, their quantitative ratio to one another, is expressed by comparison with that unit. Hence money here plays the role of the measure of exchange values, and prices that of exchange values measured by money. That money is the measure of prices, and hence the basis for the comparison of exchange values, is a definition that follows automatically. But more important for the purpose of this argument is that in price exchange value is compared with money. Once money has been cast in the role of exchange value independent of and separate from commodities, the particular commodity, the specific exchange value, is again equated to money, i.e. taken as equal to a certain sum of money, expressed in money, translated into it. By being equated to money, the commodities are again related to each other as they were, conceptually, as exchange values: as corresponding and comparable to each other in definite proportions.
The particular exchange value, the commodity, is expressed, subsumed, posited in the character of exchange value made independent, in money. How that happens (i.e. how the quantitative proportion between the quantitatively determined exchange value and a definite quantity of money is found), cf. above.[3] But since money has an independent existence outside commodities, the price of the commodity appears as an external relation of exchange values or commodities to money. The commodity is not price, not in the way it was exchange value in its social substance; it does not immediately coincide with its character as price; it acquires this character only through being compared with money. The commodity is exchange value, but it has a price. Exchange value was there in direct unity with the commodity, as its immediate character, from which it separated just as immediately so that on the one side there was the commodity, on the other its exchange value (as measured in money). But now, in its price, the commodity is on the one hand related to money as to something existing outside it, and on the other it is itself seen as money notionally, since money has a reality distinct from it. Price is an attribute of the commodity, a determination in which it is introduced as money. It is no longer an immediate but a reflected determinateness of the commodity. [1-36] Alongside real money there now exists the commodity as something notionally cast in the role of money.
This next determination both of money as measure and of the commodity as price is most simply illustrated by the distinction between real money and money of account. As measure, money always serves as money of account; and as price, the commodity is always transformed into money only notionally.
"The valuation of the commodity by the seller, the offer made by the buyer, the calculations, obligations, rents, inventories, etc., in short everything leading up to
•' See this volume, pp. 77-84.— Ed.
and preceding the material act of payment, must be expressed in money of account. Real money intervenes only in order to realise the payments and to balance" (liquidate) "the accounts. If I have 24 livres 12 sous to pay, the money of account presents 24 units of one kind and 12 of another, while I will actually pay with two pieces of material: one piece of gold worth 24 livres and one of silver worth 12 sous. The total volume of real money has necessary limits in the needs of the circulation. The money of account is an ideal measure, which has no limits other than those of the imagination. Employed to express every kind of wealth, if only it is considered from the viewpoint of its exchange value: the national wealth, the national income, the income of individuals; accounting values, in whatever form these values may exist, regulated according to that same form; so there is not a single article in the mass of choses consommables(1) that is not repeatedly transformed into money in thought, while compared with this mass, the total sum of real money is at most=l:10" (Gamier [Histoire de la monnaie, Vol. I, pp. 72, 73, 77, 78]).
(This ratio is wrong. l:many millions would be more correct. But this cannot be measured at all.)
Thus, if money originally expresses exchange value, the commodity as price, as notionally posited and conceptually realised exchange value, now expresses a sum of money: money in a particular proportion. As prices, all commodities are in various forms representatives of money, while previously money as exchange value made independent was the representative of all commodities. To money really posited as a commodity succeeds the commodity notionally posited as money.
It is now clear, to start with, that in this notional transformation of commodities into money, or in the positing of commodities as prices, the quantity of money actually available is completely irrelevant in two respects: Firstly, the notional transformation of commodities into money is prima facie(2) independent of and unrestricted by the quantity of real money. Not a single coin is necessary for this process, just as little as a measuring rod (say, a yardstick) need actually be employed in order to express, say, the length of the Earth's Equator in yards. If e.g. the whole national wealth of England is estimated in money, i.e. expressed as price, everyone knows that there is not enough money in the whole world to realise this price. Money is necessary here only as a category, as an imagined ratio. Secondly, since money is taken as a unit, and the commodity is thus expressed as containing a certain sum of equal parts of money, is measured by it, it follows that the measure between the two is the general measure of exchange values — the production costs or labour time. If V3 oz. of gold is the product of 1 working day, and the commodity x the product of 3 working days, that commodity =1 ounce of gold or £3 17 s. 7 d. sterling. In measuring money and commodity, the original measure of exchange values comes in again. Instead of being expressed in 3 working days, the commodity is expressed in the quantity of gold or silver which is the product of 3 working days. Obviously, the actual supply of money has no bearing on this proportion.
(Error of James Mill: overlooks the fact that the production costs, not their quantity, determine the value of the precious metals, and the prices of commodities MEASURED IN METALLIC VALUE.[53]
"Commodities in exchange act as each other's measure... But this procedure would require as many points of comparison as there are commodities in circulation. If one commodity were exchanged only for one, not for two commodities, it could not serve as the term of comparison... Hence the need for a
terme commun de comparaison... This term can be a purely notional one... The determination of measure is the original one, more important than that of gage(3)... In the trade between Russia and China, silver is used to evaluate all commodities, yet this commerce is carried on by trocs(4)" (Storch [Cours d'économie politique, Vol. I, Paris, 1823, pp. 81-84, 87, 88]).
"Measuring with money is like the use of weights to compare material quantities. The same name for the two units whose function was to count the weight as well as the value of each object. Measures of weight and measures of value have the same names. An étalon(5) that is always of the same weight was easily found. With money, it was a question of the value of a pound of silver=its costs of production" (Sismondi [Etudes sur l'économie politique, Vol. II, Brussels, 1838, pp. 264-68]).
Not only the same names. Gold and silver originally weighed. Thus, the Roman as = l lb. of copper. Wirth.(6))
[1-37] "Sheep and oxen, not gold and silver, figure as money, as the measure of value, in Homer and Hesiod. On the battle field of Troy, barter" (Jacob [An Historical Inquiry into the Production and Consumption of the Precious Metals, Vol. I, p. 109]). (Similarly slaves in the Middle Ages, ibid. [p. 351].)
Money can function as the measure and general element of exchange values without assuming its further determinations— hence even before it has assumed the form of metallic money, e.g. in the case of simple barter. But this presupposes that little exchange of any kind takes place, that commodities have not been developed as exchange values and consequently not as prices either.
("A COMMON STANDARD in the price of ANYTHING presumes ITS FREQUENT and FAMILIAR ALIENATION. This is not the case in simple states of society. In non-industrialised countries many things are without a definite price... SALE ALONE
CAN DETERMINE PRICES, AND FREQUENT SALE ALONE CAN FIX A STANDARD. T h e FREQUENT SALE of articles of first NECESSITY depends on the relation of town and country", etc.a)
Developed pricing presupposes that the individual does not directly produce his subsistence but that his immediate product is exchange value, and hence must first be mediated by a social process to become the means of subsist'ence for him. Between the full development of this basis of industrial society and patriarchal conditions many intermediate stages, endless nuances.
This much can be concluded from (a): if the costs of production of the precious metals rise, the prices of all commodities fall; if the costs of production of the precious metals fall, the prices of all commodities rise. This is the general principle which is, as we shall see, modified in particular cases. [1-37]
[1-38] (Note to a)(7) ("The term 'measure', used as an attribute of MONEY, means an INDICATOR OF VALUE"... Ridiculous assertion that "PRICES MUST FALL, because COMMODITIES are valued at so MANY OUNCES OF GOLD and the AMOUNT OF GOLD IS DIMINISHED IN THIS COUNTRY."... THE EFFICIENCY OF GOLD AS AN INDICATOR OF VALUE IS UNAFFECTED BY ITS QUANTITY BEING GREATER OR SMALLER IN ANY PARTICULAR COUNTRY. If the whole paper and metallic circulation in this country were reduced by half by means of BANKING EXPÉDIENTS, the relative value of gold and commodities would remain the same.' Examples of this: Peru in the 16th century and the transmission from France to England. Hubbard [The Currency and the Country, London, 1843, pp. 44-46,] VIII, 45.)
("On the African Coast, the measure of value is neither gold nor silver but a notional STANDARD, an imaginary bar", Jacob, [An Historical Inquiry into the Production and Consumption of the Precious Metals, Vol. II, London, 1831, pp. 326-27,] V, 15.) [1-38]
Endnotes
[33] Here as in a number of other places Marx uses the term "subject" in its pre-Kantian sense, as the bearer of predicates, properties, determinations, characteristic features, relations.— 81, 124
[3] According to Bastiat, "the workers' pension fund" was to be made up of contributions by the workers themselves, for thus alone the necessary degree of "stability" could be ensured (Fr. Bastiat, Harmonies économiques, 2nd edition, Paris, 1851, p. 395).—11
[53] A reference to the quantitative theory of money set forth in James Mill's Elements of Political Economy (London, 1821),Chapter III, sections VII and VIII. Marx quoted at length from these sections and gave a critical analysis of Mill's views in A Contribution to the Critique of Political Economy, Part One (see present edition, Vol. 29). He took the passage showing up Mill's error from Thomas Tooke's An Inquiry into the Currency Principle, 2nd ed., London, 1844, p. 136.—127