[ Money as Measure of Values]
From the determination of money as measure, as well as, secondly, from the fundamental law that the quantity of the circulating medium, assuming a certain velocity of circulation, is determined by the prices of the commodities and by the quantity of the commodities, which circulate at certain prices, or by the total price, the aggregate volume of commodities — which is itself, in turn, determined by 2 factors: (1) the level of commodity prices, and (2) the quantity of commodities circulating at certain prices — and, thirdly, from the law that money as means of circulation becomes coin, a merely evanescent moment, a mere token of the values which it exchanges, there follow more detailed determinations, which we shall only develop where and in so far as they coincide with more complicated economic relations, credit circulation, rate of exchange, etc. It is necessary to avoid all detail and, when it must be introduced, to do so only where it loses its elementary character.
D'abord," money circulation, as the most superficial (in the sense that it is driven out onto the surface) and most abstract form of the whole production process, is, in itself, utterly devoid of content, except in so far as its own formal distinctions, notably the simple determinations discussed in Section II,b constitute its content. It is clear that simple money circulation, considered in itself, does not lead back into itself, but consists of a multitude of indifferent and fortuitously juxtaposed movements. E.g. the mint may be regarded as the point from which money circulation sets out, but there is no law of REFLUX to the mint, except for depreciation by WEAR and TEAR, which makes necessary the melting-down and NEW ISSUE OF COINS. This only concerns the physical aspect, and by no means constitutes a moment of circulation itself.
Within circulation itself, the point of return may be different from the point of departure; to the extent that they do coincide, money circulation appears merely as a manifestation of a circulation which lies behind it and determines it, e.g. if we examine the money circulation between the factory-owner, the worker, the SHOPKEEPER and the banker. Furthermore, all of the factors which concern the quantity of commodities thrown into circulation, the rise and fall of prices, the velocity of circulation, the volume of simultaneous payments, etc., lie outside simple money circulation. They are relationships which are expressed in it; it gives, so to speak, the names to them; but they cannot be explained by its own differentiation. Different metals serve as money, which have different, varying value relations to one another. Thus the problem of the DOUBLE STANDARD, etc., comes in, a problem that assumes world-historical forms. But it assumes these forms, and the DOUBLE STANDARD itself comes in, only owing to foreign trade. Hence, if its analysis is to yield any useful results, far more highly developed relations must be examined than the simple monetary relation.
Money as the measure of value is not expressed in quantities of bullion but in coins of account, arbitrary names for fractional parts of a definite quantity of the money substance. These names can be changed, relation of the coin to its metallic substance can be changed, while the name remains the same. Hence debasement, which plays a great role in the history of states. Further, the currencies of different countries. But this question is only of interest in connection with the rate of exchange.
[VII-30] Money is measure only because it materialises labour time in a definite substance, hence is itself value, and, specifically, because this definite material is regarded as the generally objective material of value, as the material of labour time as such in distinction from its merely particular incarnations. Hence, because it is an equivalent. Yet, since in its function as measure, money is a merely notional point of comparison, and only needs to exist ideally — for the commodities are translated into their general mode of existence as value only notionally; since, further, in this quality as measure, it figures only as coin of account, and I say that a commodity is worth so many shillings, francs, etc., when I translate it into money; this has given rise to the confusing notion of an ideal measure, a notion developed by Steuart(1) and freshed up in England at different periods, quite recently too, as a discovery of deep significance. That notion implies that the names pound, shilling, guinea, dollar, etc., which are current as units of account, are not definite denominations of definite quantities of gold, silver, etc., but merely arbitrary points of comparison which themselves express no value, no definite quantity of objectified labour time.
Hence the whole claptrap about fixing the price of gold and silver — understanding by price the name given to [their] fractional parts. An ounce of gold is at present divided into £3 17s. lOd. This is called fixing the price; it is, as Locke correctly remarks,[3]
merely a fixing of the names of fractional parts of gold, silver, etc. Expressed in terms of itself, gold or silver is, of course, equal to itself. An ounce is an ounce, whether I call it £3 or £20.
In short, this ideal measure, in Steuart's sense, means this: If I say that commodity a is worth £12, commodity b £6 and commodity c £3, their proportion to one another=12 : 6 : 3. Their prices merely express the ratios in which they are exchanged for one another. 2b exchanges for la, and V/^b for 3c. But instead of expressing the relation of a, b and c in real money, which itself possesses value, is value, could I not just as well replace the £, which expresses a definite quantity of gold, with any arbitrarily chosen name devoid of content (this is called ideal here), e.g. mackerel. A = 12 mackerels, 6=6M, c=3M. The word M is here merely a name, without any relation at all to its specific content.
Steuart's example of the degree, the minute and the second proves nothing; for although the degree, the minute and the second have a varying magnitude, they are not mere names, but always express the fractional part of a definite spatial magnitude or period of time. So they do have a specific substance. The fact that money in its determination as measure functions merely as notional money, is here converted into the proposition that money is any arbitrary notion, a mere name, the name for the numerical value relation, the name for a mere relation of numbers. Yet then the correct thing to do would be to use no names at all and only express the relation of numbers. For it all boils down to this: I get 6a for 126, and 3b for 6c; these relations may also be expressed thus: a = 12x, b=6x, c = 3x, where x itself is merely a name for the relation of a to b and of b to c. But the simple, undenominated relation of numbers WOULD NOT DO. For a:b= 12:6=2:1, and b:c=6:3=2:l. Therefore, c=1/[2]. Therefore, b='/2> therefore b=c. Therefore, a=2 and b=2; therefore, a=b.
Suppose I take any list of prices current, e.g. potash, per cwt., 35s.; COCOA, per lb., 60s.; IRON BARS, per ton, 145s.; etc.(2) To have the relation of these commodities to one another, I may not merely forget the silver in the shilling: the mere numbers 35, 60, 145, etc., are sufficient to determine the mutual value relations of potash, iron bars. Numbers without any name at all are now sufficient; and not merely may I give their unit, the 1, any name I like, without reference to any value; I need not give it any name whatsoever. Steuart insists that I must give it some name, but that this name, as a merely arbitrary one, as itself merely a MARKING OF
PROPORTION, CANNOT BE FIXED TO ANY PARTICULAR QUANTITY OF GOLD, SILVER OR ANY
OTHER COMMODITY.
Whatever the measure in question, as soon as it serves as the point of comparison, i.e. as soon as the different things to be compared are posited in a numerical relation to the measure as unit, and are now related to one another, the nature of the measure becomes irrelevant and disappears in the act of comparison itself. The measuring unit has become merely a numerical unit; the quality of that unit, e.g. that it itself represents a definite length, or a definite period of time, or an angle of a certain degree, etc., has disappeared. But it is only when the different things are presupposed as already measured that the measuring unit MARKS ONLY [THE] PROPORTION BETWEEN THEM, e.g., in our case, the proportion of their values. The unit of account not merely has different names in different countries; it is the nomen for different fractional parts of, e.g., an ounce of gold. Yet they are all reduced to the same weight unit of gold or silver by means of the rate of exchange.
Hence, if I assume the different commodity magnitudes to equal, e.g., as above, 35s., 60s., and 145s., then, since the unit in which all of them are represented is now assumed to be the same, i.e. since they have been made commensurable, it is quite irrelevant to their comparison that the shilling is a definite quantity of silver, the name for a definite amount of silver. But they only become comparable with one another as mere numerical magnitudes, as numbers of any unit with the same name, and only begin to express proportions in relation to one another, when each individual commodity is measured in terms of that which serves as unit, as measure. And I can measure them in terms of each other, can make them commensurable, only in so far as they have a common element. This element is the labour time contained in both.
Consequently, the measuring unit must be a certain quantity of a commodity in which a quantity of labour is objectified. Since the same quantity of labour is not always expressed in e.g., the same quantity of gold, the value of this measuring unit itself is variable. But to the extent that money is considered only as a measure, this variability is no hindrance. Even in barter, as soon as it has reached a certain stage of development as barter, hence is a normal operation which is repeated, and not merely an isolated act of exchange, some other commodity appears as the measuring unit, e.g. cattle in Homer." In the case of the savage Papuan of the coast,
who "to have a FOREIGN ARTICLE BARTERS 1 or 2 of his children, and if they are not at hand, borrows those of his neighbour, promising TO GIVE HIS OWN IN EXCHANGE. WHEN THEY COME TO HAND, HIS REQUEST BEING RARELY REFUSED," 3 5
no measure of exchange exists. T h e sole aspect of exchange that exists for him is that he can appropriate a thing belonging to another only by alienating a thing belonging to himself. This alienation itself is regulated for him only by his FANCY, ON THE ONE SIDE, and the extent of his MOVABLE property, on the other.
In The Economist, 13 March 1858 [p. 290], we read the following in a letter to the Editor:
"As THE SUBSTITUTION IN FRANCE OF GOLD FOR SILVER IN THE COINAGE (WHICH
HAS BEEN T H E PRINCIPAL MEANS HITHERTO OF ABSORBING THE NEW DISCOVERIES OF GOLD) MUST BE APPROACHING ITS COMPLETION, PARTICULARLY AS LESS COINAGE WILL BE WANTED FOR A STAGNANT TRADE AND REDUCED PRICES, WE MAY EXPECT ERE LONG THAT
OUR FIXED PRICE OF £ 3 17s. 10!/ 2D. AN OUNCE WILL ATTRACT THE GOLD H E R E . " b
Now, what does this OUR FIXED PRICE OF AN OUNCE" OF GOLD mean? NOTHING ELSE BUT THAT A CERTAIN ALIQUOT PART OF AN OUNCE IS CALLED A PENNY, A CERTAIN MULTIPLE OF THIS PENNY-WEIGHT OF BOLD A SHILLING, AND A CERTAIN MULTIPLE OF THIS SHILLING-WEIGHT OF GOLD A POUND? Does the gendeman imagine that [VII-31] in other countries a gold gulden, louis d'or, etc., do not, likewise, denote a certain quantity of gold, i.e. that a certain quantity [of gold] does not have a fixed name? and that this is a privilege of England? or a special feature of it? Does he believe that in England an ounce of gold expressed in money is more than an ounce of gold and that in other countries it is less? We would be curious to know what this worthy fellow imagines the rate of exchange to be.
What misleads Steuart is this: T h e prices of commodities express nothing but the ratios in which they are exchangeable for one another, the proportions in which they exchange for one another. Given these proportions, I can give the unit any name I like, because the undenominated abstract number would suffice for the purpose, and instead of saying that this commodity=6 stivers and t h a t = 3 , etc., I could say that this=6 units and t h a t = 3 . I would not need to give the unit any name at all. Since now it is only a matter
a See present edition, Vol. 28, pp. 110 and 127.— Ed. b H. Stansfeld, "Will the Low Rate of Interest Last? To the editor of The Economist".— Ed.
of the numerical relation, [I] can give the unit any name I like.
But here it is already presupposed that these proportions have been given, that the commodities have prior to this become commensurable magnitudes. Once magnitudes have been posited as commensurable, the relations between them become simple numerical relations. Money appears precisely as measure, and a definite quantity of the commodity in which it is represented [appears] as the measuring unit employed to determine the proportions, to express the commodities as commensurable AND TO HANDLE them accordingly. The real common element is labour time, which is relatively objectified in them. But labour time itself is posited as general. The process by which values within the money system are determined by labour time does not come within the consideration of money itself and falls outside circulation; it stands behind circulation as its motivating basis and presupposition.
The question could only be this: Instead of saying this commodity is=to an ounce of gold, why do we not say directly that it is=to x labour time objectified in the ounce of gold? Why is labour time, the substance and measure of value, not also the measure of prices; or, in other words, why are price and value different things in general? The Proudhonist school believe to be doing something great in demanding that this identity should be posited and that the price of commodities should be expressed in labour time. The coincidence of price and value implies the equality of demand and supply, the simple exchange of equivalents (hence not of capital for labour), etc. In short, formulated in economic terms, it is immediately obvious that this demand is the negation of the entire groundwork of production relations based on exchange value. Yet, if we assume this basis to have been abolished, the problem itself is eliminated, for it only exists on and with this basis. To say that the commodity, in its immediate existence as use value, is not value, not the adequate form of value, is the same as saying that it is value if transposed into a different objective form or if equated to another object; or that value possesses its adequate form in a specific object as distinct from other objects. As values commodities are objectified labour; hence adequate value must itself appear in the form of a definite object, as a definite form of objectified labour.
Steuart supports his drivel about the ideal standard with 2 historical examples. The first of these, the bank money of Amsterdam, shows precisely the opposite, since it means nothing but the reduction of the circulating coinage to its bullion content (metallic content). The second example has been echoed by all of the more recent writers belonging to the same trend. E.g., Urquhart adduces the example of the Berbers, among whom an ideal BAR, an iron bar, a purely imaginary iron bar, serves as a standard which neither rises nor falls." If, e.g., the real iron bar falls [in value] by, say, 50%,b the [ideal] bar is worth 2 iron bars; if the real bar rises again by 100% [of its value after the fall], [the ideal bar is worth] only one [real bar]. Mr. Urquhart also claims to have observed that neither commercial nor industrial crises, nor still less monetary crises, occur among the Berbers, and attributes this to the magical effects of this IDEAL STANDARD OF VALUE. This "ideal" imaginary standard is merely an imaginary real value, a fancy, which does not attain any objective reality because the monetary system has not developed its further determinations — a development which is dependent upon quite different conditions. It is the same as if one wished, in the mythology, to assign a superior position to those religions whose deities have not been worked out as visual images, but remain confined to the sphere of concepts, i.e. attain at most a verbal but not an artistic existence.
The BAR is based upon a real iron bar, which was later converted into an object of fantasy and fixed as such. An ounce of gold expressed in English coin of account=£3 17s. 10 l/[2]d. WELL. WELL. Suppose that the price of a pound of silk had been exactly the same, but had later fallen, as e.g. Milanese raw silk stood at £1 8s. per lb. in London on 12 March [18]58.c
The ideal bar is the mental image of a quantity of iron, an iron bar, whose value is invariable with respect to (1) all other commodities; (2) the labour time contained in it. Of course, this iron bar is purely imaginary, only not quite as fixed and "STANDING LIKE A ROCK IN THE SEA", as Steuartd and, nearly 100 years later, Urquhart believe. The only thing about the iron bar which is fixed is its name; in one case, the real iron bar comprises 2 ideal ones, in the other, only 1. This is expressed in such a way that the same, invariable, ideal bar at one time=2, and at another=l real [bar]. If this is granted, only the relation of the real iron bar has changed, the ideal one has not. BUT IN FACT, in one case the ideal iron bar is double its length compared with the other case, and only its name is unchanged. On the one occasion, e.g. 100 lbs of iron is called A BAR, on the other occasion 200 [lbs].
Suppose that money was issued which represented labour time, F.i. hour tickets; some baptismal name could be arbitrarily bestowed upon them in turn, e.g. one pound; V20 of an hour would be Is., V240 of an hour Id. Gold and silver, like all other commodities, depending on the production time they cost, would express different MULTIPLES or fractional parts of pounds, shillings, pence; and an ounce of gold might just as well=£8 6s. 3d. as £3 17s. 10'^d. These numbers would always express the proportion in which a certain quantity of labour is contained in the ounce. Instead of saying that £3 17s. 10 1/sd., equal to one ounce of gold, now costs only 72lt>. of silk, we can imagine that the ounce now=£7 15s. 9d., or that £3 17s. 10 i/[2]d. is now only equal to half an ounce, because that money is now only half its value.
Comparing prices in England in, e.g., the 15th century with those in the 18th, we might find that two commodities had precisely the same nominal money value, e.g., £\ stg. Here the pound sterling is the standard, but in the first case it expresses 4 or 5 times as much value as in the second, and we could say that if the value of this commodity in the 15th century was='/4 ounce, in the 18th century it was=l ounce of gold, because in the 18th century 1 ounce of gold expresses the same labour time as [1]/[4] ounce did in the 15th century. It might therefore be said that the measure, the pound, had remained the same, but in one case it was equal to four times as much gold as in the other. This is the ideal standard. People of the 15th century, if they had lived until the 18th, could have made the same comparison as we have done, and could have said that 1 ounce of gold, now worth £1 stg., was previously worth only [1]/[4]. Now 4 pounds of gold is worth no more than 1 was, e.g., in the 15th century. If this pound was previously called the livre, I can imagine that a livre then was=4 pounds of gold, while now it is only=l; that the value of gold has changed, but the measure of value, the livre, has remained unchanged. IN FACT, a livre originally signified in France and England 1 pound of silver, and now only [1]/x. Hence it can be said that the name livre, the standard, has always remained nominally the same, but silver has, by contrast, changed its [VII-32] value. A Frenchman who had lived from the time of Charlemagne up to the present day could say that the livre of silver had always remained the standard of value, unchanged, but that, while it was once worth 1 pound of silver, it had, because of a diversity of circumstances, eventually come to be worth only [1]/x of half an ounce. The yard, although the same, is of different length in different countries. It is, IN FACT, the same as if, e.g., the product of a day's labour, the gold that can be mined in one working day, were given the name livre, and this livre always remained the same, although expressing very different quantities of gold at different periods.[3]
When we compare the pound sterling of the 15th century with that of the 18th century, how in fact do we do it? The two are the same quantity of metal (each=20s.), but of different value; for then the metal was worth 4 times as much as it is now. Hence, we say that then the livre=4 times the amount of metal it contains today. And one could imagine that the livre had remained unchanged, but was=4 real gold livres then as compared with only 1 now. That would be only relatively correct, not in terms of the quantity of metal contained in the livre, but in terms of its value; and this value itself is, in turn, expressed quantitatively in the form that [1]/(3) livre of gold then=l livre of gold now. WELL; the livre is identical, but then it was=4 REAL librae of gold (by relation to the current value), and is only=l now. If gold falls in value, and its fall or rise relative to other articles is expressed in their price, instead of saying that an object which previously cost £1 of gold now costs 2, it could be said that it still costs a pound but a pound is now worth 2 real gold livres, etc.; hence £1 comprises 2 real gold livres, etc.
Instead of saying: I sold this commodity yesterday for £1, I am selling it today for £4, I can say that I sell it for £1, but yesterday for a £ of 1 real £, and today for £1 of 4 real pounds.
All other prices are determined automatically, as soon as the relation of the real BAR to the imaginary one has been established; and this is simply the comparison between the past value of the BAR and its present value. It is the same as if we were to do all our calculations in the £ sterling of the 15th century, FOR INSTANCE. What the historian must do who traces the same kind of coinage, the same name of account for a coin of the same metallic content through the centuries, when he reckons it in present-day money, having to equate it with a greater or smaller quantity of gold depending on the coin's changing value in different centuries— this precisely is done by the Berber or Negro. It is the striving of the semi-civilised to maintain as value, too, the monetary unit, the quantity of metal which serves as measure; to uphold this value as a fixed measure as well. At the same time, however, the shrewdness of knowing that the real value of the BAR has changed.
Since this Berber has few commodities to measure, and tradition is still fresh among the uncivilised, this complicated method of calculation is not so difficult as it appears to be.
1 ounce is=£3 17s. 10'^d., i.e. not quite=£4. For the sake of convenience let us assume it is exactly=£4. Then l/[4] of an ounce of gold is given the name of pound, and serves under this name as coin of account. But this pound changes its value; partly it does so relatively, in relation to the value of other commodities whose value alters, and partly in so far as it is itself the product of more or less labour time. The one thing constant about it is its name, and the quantity, the fractional part of the ounce, the weight-part of gold whose baptismal name it is; i.e. the weight-part of gold contained in a PIECE OF MONEY CALLED ONE POUND.
The savage seeks to uphold it as unchanging value, and so it is the quantity of metal it contains that changes for him. If the value of gold falls by 50%,a in his view the pound is still the measure of value, but a £ of [2]/[4] ounce of gold, etc. He sees the pound as always equal to an amount of gold (iron) which has the same value. But since this value changes, the pound is equal now to a greater and now to a smaller quantity of real gold or iron, according as more or less of them must be given in exchange for other commodities. He compares the present value with the previous which functions for him as the STANDARD and lives on only in his imagination. Consequently, rather than reckoning in terms of V4 ounce of gold whose value varies, he reckons in terms of the value V4 ounce of gold possessed previously, i.e. by reference to an imaginary, unchanging value of V4 ounce, which, however, is expressed in varying quantities. On the one hand, he seeks to uphold the measure of value as constant in value; on the other, he is shrewd enough not to come to any harm in applying this roundabout method of calculation. In assimilating the measuring of values with money, a procedure imposed on them from without, the semi-savages first displace it and then, out of this displacement, find their bearings again. But it is utterly absurd to regard that fortuitous displacement as an organic historical form or, still worse, to set it up as something superior in opposition to more developed relations. These savages, too, proceed from a quantity, the iron bar; but they uphold as a unit of account the value it traditionally possessed, etc.
The whole problem acquired its significance in modern political economy chiefly because of 2 circumstances:
(1) It has happened at different times — in England, e.g. during the Revolutionary War — that the price of gold bullion rose above that of coined gold. This historical phenomenon appeared to be irrefutable proof that the names possessed by definite fractional weight-parts of gold (of the precious metal)—pound, shilling, pence, etc.—by some inexplicable process conduct themselves independendy towards the substance whose names they are. Otherwise, how could an ounce of gold be worth more than the same ounce coined into £3 17s. lO'^d.? Or how could an ounce of gold be worth more than 4 livres of gold, if livre is merely the name for [1]/i ounce?
Closer investigation, however, revealed that this was due to one of two causes. Either, the coins which circulated under the name of pound were IN FACT no longer of the normal metallic content; F,L, 5 circulating pounds IN FACT weighed only one ounce of gold (of the same fineness). Since a coin that ostensibly represented [1]U ounce of gold (or thereabouts) in fact only represented Vs, it was quite understandable that the ounce=5 such circulating £'s; hence that the value of the BULLION PRICE rose above the MINT PRICE, as £ 1 IN FACT no longer represented, no longer denominated, [1]/i but only Vs ounce of gold; was now only the name for l/s ounce.
Or the same happened when, even though the metallic content of the gold coins in circulation had not fallen below the normal measure, they circulated simultaneously with depreciated paper money, and it was prohibited to melt them down and export them. In this case, the U ounce of gold circulating in the form of a £ shared in the depreciation of the notes, a fate from which gold in bullion was exempt.* It was the same FACT again: fVII-33] the name of account "pound" had ceased to be the name for lU ounce, was the name for a smaller quantity. The ounce was therefore equal to, e.g., 5 such pounds. This meant, then, that the BULLION PRICE had risen above the MINT PRICE.
So it was these or analogous historical phenomena, all just as simple to explain and all belonging to the same series, that first gave rise to the discussion of the ideal measure, or the view that money as measure should be merely a point of comparison and not a definite quantity. Hundreds of volumes have been written on this CASE in England over the last 150 years.
In itself, there is nothing strange about a rise in the value of a definite kind of coin above that of its bullion content, since the
* Within a given country, seignorage may raise the mint price above the bullion price.
making (shaping) of coin involves the addition of new labour. But the value of a particular kind of coin may rise above its bullion content for other reasons too. Yet this is without any economic interest whatsoever, and has not given rise to any economic investigations. All it means is that for definite purposes gold or silver WAS REQUISITE precisely in this form, SAY OF BRITISH POUNDS OR OF SPANISH DOLLARS. The Bank directors naturally had a particular interest in proving that it was not a fall in the value of the notes, but a rise in that of gold. The latter problem can only be dealt with later.
(2) But the theory of the IDEAL MEASURE OF VALUE was first put forward at the beginning of the 18th century, and was raised again in the second decade of the 19th century, in connection with matters in which money figured not as measure, or as means of exchange, but as an invariable equivalent, as value-for-itself (money in its third determination) and hence as the universal material of contracts. On both occasions, the point at issue was whether or not State and other debts contracted in a depreciated money should be paid back and honoured in money of full value. The question was merely one between the creditors of the State and the mass of the nation. This question as such does not concern us here. Those who demanded a readjustment of claims, on the one hand, and of obligations, on the other, strayed into the wrong field by asking whether the STANDARIPOF MONEY should be altered or not. In this connection, such CRUDE theories were advanced about the STANDARD OF MONEY, the fixing of the price of gold, etc.
("ALTERING THE STANDARD [is] LIKE ALTERING THE NATIONAL MEASURES OR WEIGHTS." Steuart [An Inquiry into the Principles of Political Oeconomy, Vol. II, Dublin, 1770, p. 110].
It is immediately obvious that a nation's stock of grain is not altered by the volume of the bushel being, e.g., doubled or reduced by half. But such a change would be of great importance to, e.g., tenant farmers who had to discharge corn rents in a definite number of bushels, i.e. if the size of the measure had been doubled, and they had to supply the same number of bushels as before.)
In this case, it was the creditors of the State who clung to the name pound, in abstraction from the fractional weight-part of gold which it expressed, and hence to the "ideal STANDARD"—for IN FACT this is merely the name of account of the weight-part of the metal which serves as measure. Singularly enough, however, it was precisely their opponents that put forward this theory of the "ideal STANDARD", and the creditors themselves that opposed it. Instead of simply demanding a READJUSTMENT, or that the creditors of the State should only be paid back the quantity of gold which they had in fact advanced, they demanded that the STANDARD should be lowered in proportion to the depreciation; that is, e.g., if the £ sterling had fallen to 7s ounce of gold, the name pound should in future be borne by this [1]/b ounce, or the pound should perhaps be coined into 21 shillings instead of into 20. This lowering of the STANDARD was called raising the value of money, since the ounce would now be equal to £5 instead of, as previously, to £4. So they did not argue that those who had advanced, e.g., one ounce of gold in 5 depreciated pounds should now get back only 4 pounds of full value. They said, rather, that the creditors should get back £5, but that in future the pound should express V20 ounce less than it did before.
When they put forward this demand in England after the RESUMPTION OF CASH PAYMENTS, the coin of account had regained its previous metallic value. In this connection other CRUDE theories about money as the measure of value were also advanced, and on the pretext that those theories were false, which was easy to demonstrate, the interests of the creditors of the State were smuggled through.
The first conflict of this kind was that between Locke and Lowndes. From 1688 to 1695, the loans of the State were contracted in depreciated money — depreciated because all the full-weight money had been melted down, leaving only light money in circulation. The guinea had risen to 30 shillings. Lowndes (Master of the Mint?) wanted to have the £ sterling reduced by 20%; Locke insisted on maintaining the OLD STANDARD of Elizabeth. In 1695,a the remelting, the GENERAL RECOINAGE. Locke carried the day: debts contracted when the guinea passed current for 10 or 14 shillings were discharged at the RATE OF 20 shillings. This was equally advantageous to the State and the landed proprietors.
"Lowndes put the question upon the wrong footing. First he maintained that his SCHEME implied no DEBASEMENT of the former STANDARD. Then he ascribed the rise of the price of BULLION to the intrinsic value of silver, and not to the LIGHTNESS OF [the] COIN with which it was bought. He always supposed that the STAMP, and not the substance, made the CURRENCY. Locke, for his part, only wondered whether or not Lowndes' scheme implied a DEBASEMENT but he did not analyse the interests of those who are engaged in PERMANENT CONTRACTS. MR.
LOWNDES'S GREAT ARGUMENT FOR REDUCING THE STANDARD WAS, THAT SILVER BULLION WAS RISEN TO 6S. 5D. PER OUNCE (I.E. THAT IT MIGHT HAVE BEEN BOUGHT WITH 77 PENCE OF SHILLINGS OF V77 PART O F A POUND TROY), and therefore h e was of the opinion that the POUND TROY SHOULD BE COINED I N T O 77 shillings, which was a DIMINUTION of the value of the £ sterling by 2 0 % or l/[5]. Locke answered h i m that the 77d. WERE PAID IN CLIPPED MONEY, a n d that they were not in weight above 62 PENCE STANDARD COIN. B u t ought a m a n w h o h a d borrowed £1,000 sterling in THIS CLIPPED MONEY to be obliged to pay back £1,000 IN STANDARD WEIGHT? Both Lowndes a n d Locke examined only very slighdy the influence of changes in the STANDARD u p o n the relationship between debtors and creditors... In those days, the credit system was still little developed in England... T H E LANDED INTEREST and T H E
INTEREST O F T H E CROWN, WERE ONLY ATTENDED TO. T R A D E A T T H A T TIME WAS ALMOST
AT A STOP, AND HAD BEEN RUINED BY A PIRATICAL WAR... RESTORING T H E STANDARD WAS
T H E MOST FAVOURABLE, B O T H FOR T H E LANDED INTEREST AND T H E EXCHEQUER; AND SO
I T WAS GONE I N T O " (Steuart, I.e., Vol. II, p p . 178, 179).
Steuart remarks about the whole TRANSACTION ironically:
"By this RAISING O F T H E STANDARD, the government gained considerably upon the score of taxes, a n d the creditors upon their capital a n d interest; a n d the nation, which was the PRINCIPAL LOSER, was quite PLEASED, because its standard" (i.e. the measure of its own value) "was not DEBASED; thus ALL T H E THREE PARTIES WERE SATISFIED" (I.e., Vol. II, p. 156).
Cf., in John Locke, Works, 4 vols, 7th edition, London, 1768, the essay Some Considerations of the [Consequences of the] Lowering of Interest, and Raising the Value of Money (1691) and also Further Considerations concerning raising the value of Money, wherein Mr. Lowndes's arguments for it, in his late Report concerning "An Essay for the amendment of the silver coins" are particularly examined, both in Vol. II. The first treatise says, among other things:
[VII-34] " T H E RAISING OF MONEY, about which so much nonsense is talked now, is EITHER RAISING [the] VALUE OF OUR MONEY, a n d you cannot d o that; or RAISING THE DENOMINATION OF OUR COIN" (p. 53). "Call, e.g., a crown what formerly was called V2 a crown. T h e value remains determined by the metallic content. I F THE ABATING V20 OF THE QUANTITY OF THE SILVER OF ANY COIN DOES NOT LESSEN ITS VALUE, THE ABATING 19/2o OF THE QUANTITY OF THE SILVER OF ANY COIN WILL NOT ABATE ITS
VALUE. So according to this theory, A SINGLE THREEPENCE, O R A SINGLE FARTHING, BEING CALLED A CROWN, WILL BUY AS MUCH SPICE OR SILK, OR ANY OTHER COMMODITY, AS A CROWNPIECE WHICH CONTAINS 20 OR 60 TIMES AS MUCH SILVER" (p. 54). " T h e
RAISING O F MONEY is therefore nothing but GIVING A LESS Q U A N T I T Y O F SILVER T H E
STAMP AND DENOMINATION OF A GREATER" (I.e.). " The STAMP of the mint was a guarantee to the PUBLIC that under SUCH A DENOMINATION SO much silver was c o n t a i n e d " ( p . 57). " I T IS SILVER, AND N O T NAMES, T H A T PAYS DEBTS AND PURCHASES COMMODITIES" (p. 58). " The mint stamp suffices as a guarantee of the weight a n d fineness of the piece of money, but lets the GOLD MONEY SO COINED FIND ITS OWN RATE, like other commodities" (p. 66). In general, by the RAISING OF MONEY you can only make "MORE MONEY IN TALE", but not more "MONEY IN W E I G H T AND W O R T H " (p. 73).
[In the second essay:] is a all or measure by, may rest in the buyer's or seller's, or a third person's hands, IT MATTERS NOT WHOSE IT IS. But silver is not only the measure of BARGAINS, IT IS THE THING BARGAINED FOR, and in commerce passes from the buyer to the seller, AS BEING
IN SUCH A QUANTITY EQUIVALENT TO THE THING SOLD; AND SO IT NOT ONLY MEASURES THE VALUE OF T H E COMMODITY I T IS APPLIED TO, BUT IS GIVEN IN EXCHANGE FOR IT, AS OF EQUAL VALUE. B U T THIS IT DOES ONLY BY ITS QUANTITY, AND NOTHING ELSE" ( p . 9 2 ) .
" T H E RAISING BEING BUT GIVING OF NAMES AT PLEASURE T O ALIQUOT PARTS OF ANY PIECE, VIZ. T H A T NOW T H E SIXTIETH PART OF AN OUNCE SHALL BE CALLED A PENNY, MAY
BE DONE WITH WHAT INCREASE YOU PLEASE" ( 1 1 8 ) . " T H E PRIVILEGE THAT BULLION HAS,
TO BE EXPORTED FREELY, WILL GIVE IT A LITTLE ADVANCE IN PRICE ABOVE OUR COIN, LET
THE DENOMINATION OF T H A T BE RAISED, OR FALLEN AS YOU PLEASE, WHILST THERE IS NEED OF ITS EXPORTATION, AND THE EXPORTATION OF OUR COIN IS PROHIBITED BY LAW" (pp. 119, 120).
In his conflict with Locke, Lowndes had argued that the rise in the price of BULLION was due to the fact that there had been a rise in its value and hence a fall in the value of the coin of account (i.e. because the value of BULLION had risen, the value of a fractional part of it, that called £, had fallen). The same position was adopted by the LITTLE-SHILLING MEN — Attwood and the other members of the Birmingham SCHOOL, from 1819 onwards.[36] (Cobbetta
had put the question on the right basis: NON-ADJUSTMENT OF NATIONAL DEBTS, RENTS, etc.; but spoiled everything by his incorrect theory altogether rejecting paper money. Oddly enough, he arrived at this conclusion proceeding from the same incorrect premiss — that price was determined by the quantity of the means of circulation — as led Ricardo to draw the opposite conclusion.) Their whole wisdom is comprised in the following phrases:
"In his quarrel with the Birmingham CHAMBER OF COMMERCE Sir R. Peel asks: " W H A T WILL YOUR POUND NOTE REPRESENT?" (The Currency Question. The Gemini Letters, London, 1844, pp. 266) (i.e. the pound note if not redeemable in gold). "What is to be understood by the PRESENT STANDARD OF VALUE?... £3 17s. 10'^d., does it denote one ounce of gold or its value} If the ounce itself, why not call things by their names, and say OUNCES, PENNYWEIGHTS, AND GRAINS instead of POUNDS, SHILLINGS and PENCE? This would bring us back TO A DIRECT SYSTEM OF BARTER" (p. 269).
(Not QUITE. But what would Mr. Attwood have gained if people said "ounce" instead of £3 17s. lO'^cl., and "so many PENNYWEIGHT" instead of "shilling"? That for the sake of convenience in calculation names are given to the fractional parts — which shows, besides, that the metal is here given a social determination alien to it — in what sense is this evidence either for or against Attwood's theory?)
"Or does it denote the value} If an ounce=£3 17s. 10 '^d., why is gold at different periods £5 4s. and then again £3 17s. 9d.? ... the EXPRESSION POUND HAS
a W. Cobbett, Paper against Gold.—Ed.
8-785 REFERENCE T O VALUE, BUT NOT A FIXED STANDARD VALUE... LABOUR IS THE PARENT OF COST, AND GIVES THE RELATIVE VALUE TO GOLD OR IRON."
(And this is IN FACT why the value of one ounce and of £ 3 17s. lO'/äd. are both variable.)
" WHATEVER DENOMINATION OF WORDS ARE USED TO EXPRESS THE DAILY OR WEEKLY LABOUR OF A MAN. SUCH WORDS EXPRESS THE COST OF THE COMMODITY PRODUCED" (P. 270). "The word ONE POUND IS THE IDEAL UNIT" (p. 272).
This last proposition is significant because it shows how the theory of the "IDEAL UNIT" boils down to the demand for a money which should represent labour directly. "POUND" would then be the expression for, e.g., 12 days' labour. It is demanded that the determination of value should not give rise to that of money as a distinct determination, or that labour's being the measure of values should not lead to the labour objectified in a particular commodity being made the measure of other values. T h e important thing is that this demand is here made from the standpoint of the bourgeois economy (thus, among others, by Gray, who really carries the matter to the extreme, and of whom we shall speak presently) and not from that of the negation of the bourgeois economy, as was the case with, e. g., Bray. T h e Proudhonists (see, e. g., Mr. Darimon [3]) have in fact managed to postulate the demand, both as one corresponding to the present-day relations of production, and as a great innovation, a demand totally revolutionising these relations. They can afford to do so because, like the crapaudsh they are, they of course need know nothing whatsoever of what has been written or thought on the other side of the Channel. A T ALL EVENTS, the simple fact that the demand was first put forward more than 50 years ago by a group of bourgeois economists in England, shows in itself how far the socialists who pretend thereby to be advancing something new and anti-bourgeois have strayed onto the wrong track. On the demand itself, see above.0 (Here we can only bring in a few points from Gray. As for the rest, we can only go into the details of this matter when we come to discuss banking.)
Endnotes
[5] The reference is to the 1845 Brussels Excerpt Notebook. Other quotations from Storch are on pages 26, 34-35 of this notebook.— 24, 118
[36] Here Marx criticises the views of the so-called "little shilling men", the Birmingham school of bourgeois political economy initiated by the banker Thomas Attwood. These views were set out in The Currency Question. The Gemini Letters, a book published anonymously by Thomas Wright and John Harlow, who called themselves Gemini. On this school, see also Volumes I and III of Capital (present edition, vols 35 and 37).—185, 319
[3] In his manuscript, to denote these categories Marx uses mostly the French terms "capital circulant" and "capital fixe", but sometimes he also uses the German ones "zirkulierendes Kapital" and "fixiertes Kapital", or the English "circulating capital", "floating capital", and "fixed capital".— 9, 201, 515, 526
[2] Marx dealt with the circuit and turnover of capital in the preceding part of Section Two of the "Chapter on Capital" (see present edition, Vol. 28, pp. 439-72), but then he interrupted his exposition of these problems and wrote a section about bourgeois theories of surplus value and profit (see Vol. 28, pp. 473-537). He did, however, return to the topic.— 7
[1] This is the concluding part of Marx's economic manuscript of 1857-1858. Consisting of seven large notebooks, which Marx numbered I-VII, the manuscript is the first rough draft of Capital. On the cover of the last, seventh, notebook, Marx wrote Political Economy, Criticism of in English and "Fortsetzung [Continuation]" in German. This implies that Notebook VII is a continuation of the preceding six notebooks and that Marx did not consider it to be the concluding one. The words Political Economy, Criticism of can be regarded as the author's title for the whole manuscript. The words "rough draft" are taken from Marx's letter to Engels of November 29, 1858 in which Marx calls his economic manuscript of 1857-1858 a Rohentwurf (Rough Draft). The manuscript is, indeed, a rough draft, for it is unfinished and breaks off in mid-sentence. A major part of the manuscript is included in Volume 28 of the present edition and begins with Chapter II—"Chapter on Money", followed by a long third chapter, "Chapter on Capital". Notebook VII contains the conclusion ot this chapter, followed by fragments intended as additions to the two chapters — on money and on capital. The Economic Manuscript of 1857-1858 is being published in the sequence given by Marx. The numbers of the notebooks are indicated in Roman numerals and the pages in Arabic ones, in square brackets. The square brackets in the manuscript are, therefore, replaced by oblique lines. Some passages have been transposed — as indicated by Marx in the manuscript or where there are obvious additions relevant to the preceding text. All such cases are mentioned in the footnotes, which also indicate passages crossed out by Marx and sometimes reproduce them. Where Marx, in quoting, gives references to pages of his excerpt notebooks, these have been supplemented, in brackets, with references to the pages of the editions Marx used. Where he merely gives the authors' names, the titles of the quoted works have been supplied. Foreign words and expressions, including Greek and Latin, are preserved when the author used them for stylistic or terminological purposes. English phrases, expressions and separate words are given in small caps. Quotations from English sources are given according to the editions used by the author. In all cases the form in which Marx quoted is respected. The language in which Marx quotes is indicated, unless it is German. The manuscript was first published in full in the language of the original (German) in Karl Marx, Grundrisse der Kritik der politischen Oekonomie (Rohentwurf). 1857-1858, Moscow, 1939-41 and reproduced by Dietz Verlag, Berlin, in 1953. In English, the manuscript was published in full in Karl Marx, Grundrisse. Foundations of the Critique of Political Economy (Rough Draft). Translated with a foreword by Martin Nicolaus. Penguin Books in association with New Left Review, London, 1973. Separate extracts had been published previously in Marx's Grundrisse, ed. David McLellan, Macmillan Press Ltd., London, 1971.—Title-page
[4] This refers to the discovery of rich deposits of gold in Australia in 1851. The development of these deposits, alongside the extraction of gold discovered in California in 1848, spurred industrial and stock-exchange activity in capitalist countries.—11, 265