[ Money as Means of Circulation and as Independent Value]
As regards money as an equivalent that remains equal to itself, i. e. as value as such, and hence as the material of all contracts, it
a See present edition, Vol. 28, pp. 51-72.— Ed. b Philistines (literally: toads).— Ed. c See present edition, Vol. 28, pp. 60-93.— Ed.
is obvious that changes in the value of the material in which it is represented (directly, as in gold or silver, or indirecdy, as a draft upon a specific quantity of gold, silver, etc., in the form of notes) must give rise to great revolutions between the different classes of a State. This is not to be examined here, since the relations in question can only be discussed given a knowledge of the different economic relations. [VII-35] Only so much by way of illustration.
In the 16th and 17th centuries, as is well known, the depreciation of gold and silver, resulting from the discovery of America, lowered the standing of the working class and of the landed proprietors, and raised that of the capitalists (especially the industrial capitalists). In the Roman Republic, the plebeians became the slaves of the patricians because of the APPRECIATION of copper."
"Since the largest sums had to be paid in copper, one had to accumulate this metal either IN MASSES or as shapeless fragments which could be given and accepted by weight. Copper in this state was called aes grave.b Metal MONEY was weighed." //Initially, the copper circulating among the Romans bore no stamp; later it bore the stamp of foreign mints. Servius rex ovium bourrique effigie primus aes signavitc
(Pliny, Historia Naturalis, Book 18, Ch. 3).//
"After the patricians had accumulated a mass of this dull and rough metal, they sought to get rid of it either by buying from the plebeians all the lands which the latter agreed to sell to them or by lending it out at long term. They were forced to sell cheap a value which was an inconvenience to them, and which they had acquired without cost. The competition between all those who wished to get rid of it was bound to result in a considerable decline in the price of copper in Rome in a short time. At the beginning of the 4th century after the foundation of Rome, the ratio of copper to silver= 1:960, as can be seen from the lex Menenia (302 A.U.C.d)....
"At the same time, this metal, so depreciated in Rome, was one of the most sought-after articles in trade (since the Greeks made works of art out of bronze, etc.).... The exchange of the precious metals for copper in Rome yielded enormous profits, and so lucrative a trade daily stimulated fresh imports....
"Gradually, the patricians replaced in their hoards the piles of old copper, so inconvenient to store and so unpleasant to see, with ingots of gold and silver, aurum infectum and argentum infectum. After the defeat of Pyrrhus and especially after the conquests in Asia ... the aes grave completely disappeared and the needs of circulation necessitated the introduction of the Greek drachma, under the name of victoriatus, weighing 1 l/% scruples of silver, like the Attic drachma; in the 7th century after the foundation of Rome the lex Clodia made it into Roman coin. Usually, it exchanged for one pound of copper or the as of 12 ounces "So, owing to export, the ratio of silver to copper was now 192:1, i. e. the advantage of silver had declined to V5 of what it was at the time of the greatest depreciation of copper. Nevertheless, copper was still cheaper in Rome than in Greece and Asia.
"This great revolution in the exchange value of the material of money, as it proceeded, brought about the cruellest deterioration in the lot of the unfortunate plebeians who, having borrowed the copper when it was depreciated, and spent or used it in accordance with the value it possessed at the time, were now indebted, according to the letter of their contracts, for 5xthe sum they had actually borrowed. They had no means of buying themselves free from servitude.... Who had borrowed 3,000 as when this sum was=300 oxen or 900 scruples of silver could now obtain that amount only for 4,500 scruples of silver, since by then the as was represented by 1 V2 scruples of this metal.... If the plebeian had returned V5 of the copper which he had obtained, he would in reality have discharged his debt, for '/[5] now [possessed] the same value as 1 at the time when the contract had been made. The value of copper relative to that of silver had risen five-fold....
"The plebeians demanded a revision of their debts, a new assessment of the sums due, and amendments in the title of their original obligations. True, the creditors did not demand restitution of the capital, but as a result of the excessive appreciation of the money, the very payment of interest originally stipulated at 12%, had become unbearable, as onerous as if it had been set at 60% of the principal. The debtors obtained a law subtracting the accumulated interest from the capital, but gained nothing by it....
"The senators would not relinquish the means by which they held the people in the most abject dependence. The owners of almost all the landed property, armed with legal titles authorising them to throw their debtors into irons and subject them to corporal punishment, they crushed the rebellions and raged against the most unruly ones. The house of every patrician was a prison. Finally, wars were provoked, which provided pay to the debtor, with a suspension of obligations, and opened up new sources of wealth and power to the creditor.
"This was the internal situation of Rome at the time of the defeat of Pyrrhus, the seizure of Taranto, and the important victories over the Samnites, Lucanians and other South Italic peoples, etc. The first Roman silver coin, the libella, was issued in 483 or 485 [after the foundation of Rome]; it was called the libella because, being of small weight, it was the libra of 12 ounces of copper" (Germain Gamier, Histoire de la monnaie etc., 2 vols, Paris, 1819, Vol. II, [21-24] pp. 15 et sqq.).
11 Assignats.*[1]
"NATIONAL PROPERTY. Assignat OF 100 FRANCS" LEGAL TENDER. They differed from all other NOTES IN NOT EVEN PROFESSING TO REPRESENT ANY SPECIFIED THING. The words "NATIONAL PROPERTY" signified that their value could be obtained by purchasing with them the CONFISCATED PROPERTY at the regular auctions of such property. But there was no reason why that value should have been called 100 francs. It depended on the COMPARATIVE QUANTITY of the PROPERTY SO PURCHASABLE, and the number of assignats issued (Nassau W. Senior, Three Lectures on the Cost of Obtaining Money etc., London, 1830, pp. 78, 79).
"Tlje livre of account, introduced by Charlemagne, and almost never represented by a real equivalent coin, retained its name, as well as its divisions into sous and deniers, up to the end of the 18th century. By contrast, there was infinite variation in the name, form, weight and value of real money, not only at every change of government, but under the same government. True, the value of the livre of account was also subjected to enormous reductions, but this was always done forcibly" (Gamier, I.e., Vol. I, p. 76 [77]).
All coins of the ancients were originally weights (ibid.).
"MONEY IS IN THE FIRST PLACE THE UNIVERSALLY MARKETABLE COMMODITY, OR THAT IN WHICH EVERY ONE DEALS FOR THE PURPOSE OF PROCURING OTHER COMMODITIES" (Bailey, Money and Its Vicissitudes etc., London, 1837, p. 1). " I T IS THE GREAT MEDIAL COMMODITY" (I.e., p . 2 ) . I t is the GENERAL COMMODITY OF CONTRACTS, OR THAT IN WHICH THE MAJORITY OF BARGAINS ABOUT PROPERTY, TO BE COMPLETED AT A FUTURE TIME, ARE MADE ( p . 3 ) . F i n a l l y , it is the "MEASURE OF VALUE.. NOW, AS ALL ARTICLES ARE EXCHANGED FOR MONEY, THE MUTUAL VALUES OF A AND B ARE AS NECESSARILY SHOWN BY THEIR VALUES IN MONEY OR THEIR PRICES... [ V I I - 3 6 ] AS THE COMPARATIVE WEIGHTS OF SUBSTANCES ARE SEEN BY THEIR WEIGHTS IN RELATION T O WATER, OR THEIR SPECIFIC GRAVITIES" ( p . 4 ) .
" T H E FIRST ESSENTIAL REQUISITE IS THAT MONEY SHOULD BE UNIFORM IN ITS PHYSICAL QUALITIES, SO THAT EQUAL QUANTITIES OF IT SHOULD BE SO FAR IDENTICAL AS T O PRESENT NO GROUND FOR PREFERRING ONE TO THE OTHER. F o r e x a m p l e , GRAIN a n d CATTLE a r e n o t suitable for this purpose, if only because EQUAL quantities O F GRAIN AND EQUAL NUMBERS OF CATTLE ARE NOT ALWAYS ALIKE IN THE QUALITIES FOR WHICH THEY ARE PREFERRED" (pp. 5-6).
" H e n c e STEADINESS OF VALUE IS DESIRABLE in money as the MEDIAL COMMODITY AND A COMMODITY OF CONTRACT; it is QUITE UNESSENTIAL TO IT IN ITS CAPACITY OF THE MEASURE OF VALUE" (p. 9). "MONEY MAY CONTINUALLY VARY IN VALUE, AND YET BE AS GOOD A MEASURE OF VALUE AS IF IT REMAINED PERFECTLY STATIONARY. SUPPOSE, for example, I T IS REDUCED IN VALUE a n d the reduction in value implies A REDUCTION OF VALUE IN RELATION TO SOME ONE OR MORE COMMODITIES; SUPPOSE IT IS REDUCED IN VALUE IN RELATION TO CORN AND LABOUR. BEFORE THE REDUCTION, A GUINEA WOULD PURCHASE THREE BUSHELS OF WHEAT, OR SIX DAYS' LABOUR; SUBSEQUENTLY, IT WOULD PURCHASE ONLY TWO BUSHELS OF WHEAT OR 4 DAYS' LABOUR. I n b o t h cases, THE RELATIONS OF WHEAT AND LABOUR TO MONEY BEING GIVEN, THEIR MUTUAL RELATIONS CAN BE INFERRED; IN OTHER WORDS, WE CAN ASCERTAIN THAT A BUSHEL OF WHEAT IS WORTH 2 DAYS' LABOUR. T H I S , WHICH IS ALL THAT MEASURING VALUE IMPLIES, IS AS READILY DONE AFTER THE REDUCTION AS BEFORE. T H E EXCELLENCE OF ANY THING AS A MEASURE OF VALUE IS ALTOGETHER INDEPENDENT OF ITS OWN VARIABLENESS IN VALUE.... One confuses INVARIABLENESS OF VALUE WITH INVARIABLENESS IN FINENESS AND WEIGHT.... T H E COMMAND OF QUANTITY BEING THAT WHICH CONSTITUTES VALUE, A DEFINITE QUANTITY OF A SUBSTANCE OF SOME UNIFORM COMMODITY MUST BE USED AS A UNIT TO MEASURE VALUE; AND IT IS THIS DEFINITE QUANTITY OF A SUBSTANCE OF UNIFORM QUALITY WHICH MUST BE INVARIABLE" (P[P. 9-] 11).
All pecuniary contracts are concerned with the quantity of gold and silver to be loaned, not with their value (p. [100-] 103). "If a person insists that it is a contract f o r a d e f i n i t e value, HE IS BOUND T O SHOW IN RELATION TO WHAT COMMODITY: THUS, HE WOULD BE MAINTAINING THAT A PECUNIARY CONTRACT DOES NOT RELATE TO A QUANTITY OF MONEY AS EXPRESSED ON THE FACE OF IT, BUT TO A QUANTITY OF SOME COMMODITY OF WHICH NO MENTION IS MADE" ( p . 1 0 4 ) .
"It is not necessary to confine this to contracts where actual money is lent. It is
t r u e FOR ALL STIPULATIONS FOR THE FUTURE PAYMENTS OF MONEY, WHETHER FOR ARTICLES OF ANY KIND SOLD ON CREDIT, OR FOR SERVICES, OR AS RENT OF LAND OR HOUSES; they a r e PRECISELY IN THE SAME CONDITION AS PURE LOANS OF THE MEDIAL COMMODITY. IF A SELLS A TON OF IRON TO B FOR [10] POUNDS, AT 12 MONTHS' CREDIT, IT IS JUST THE SAME IN EFFECT
AS LENDING THE TEN POUNDS FOR A YEAR, and the interests of both parties to the contract will BE AFFECTED in the same manner BY CHANGES IN THE CURRENCY" (pp. 110, 111).
The naming of specific and invariable fractional parts of the money substance which are to serve as the measuring unit is confused with fixing the price of money. This confusion is characteristic of, among others, Mr. Adam Müller, the highfalutin Romantic political economist. He says, among other things:
"Everybody realises how important it is to determine the price of coins correctly, especially in a country like England, where the government with generous liberality coins money gratuitously" (i. e. at the expense of the country and to the profit of the Bank of England BULLION DEALERS), "where no seigniorage is levied, etc., and consequently if the government were to fix the mint price considerably above the market price, if instead of paying £3 17s. 10 ' ^ d . f° r an ounce of gold as at present, it fixed the mint price of an ounce of gold at £3 19s., all gold would flow into the mint and the silver obtained there would be exchanged for the cheaper gold on the market and, as a result, again brought to the mint, thus throwing the monetary system into disorder" (Die Elemente der Staatskunst, Part II, Berlin, 1809, pp. 280, 281).
So Mr. Müller is unaware of the fact that pence and shilling here are merely names for fractional parts of a gold coin. Because pieces of silver and copper — which, notabene, are not stamped according to the ratio of silver and copper to gold, but are issued merely as tokens representing portions of gold of the same name, and hence have only to be taken in payments in very small amounts — circulate under the names "shillings" and "pence", he imagines that an ounce of gold is divided into pieces of gold, silver and copper (hence a triple STANDARD OF VALUE). But a few lines further, he recalls that in England there is not even a double standard, still less a triple one. Mr. Müller's hazy notions of "common" economic relations is the real foundation of his "higher" conception.
From the general law that the total price of the commodities in circulation determines the volume of the circulating medium, assuming a definite velocity of circulation, it follows that, at a definite stage in the growth of values thrown into circulation, the more precious metal — the metal of greater specific value, i. e., which contains more labour time in a smaller quantity of itself — supersedes the less precious metal as the dominant means of circulation. Hence, copper, silver, gold, one ousts the other as the dominant means of circulation. The same aggregate sum of prices can, e. g., be circulated with 14 times less gold coins than silver coins. The dominance of copper coins, and still more of iron coins, as the means of circulation implies a low level of circulation. In just the same way, the more powerful but more valuable means of transport and communication replace the less valuable, as the volume of commodities in circulation and of circulation in general increases.
On the other hand, the petty retail trade of everyday life, of course, requires acts of exchange which are on a diminutive scale — the smaller the poorer the country and the lower the level of circulation in general are. It is in this retail trade, in which very small quantities of commodities, and hence very small values, are circulated, that money appears in the strictest sense of the word only as an evanescent means of circulation and is not fixed as realised price. To serve the needs of this trade a subsidiary means of circulation is therefore introduced which is merely the token of the fractional parts of the dominant means of circulation. They are silver and copper chips which are, consequently, not coined according to the proportion of the value of their substance to the value of, e. g., gold. Here money appears merely as a token, even though itself still in a relatively valuable substance. Gold, e. g., would have to be divided into exceedingly small fractions to correspond as an equivalent to the division of commodities which is required by this retail trade.
Therefore, these subsidiary means of circulation need, under law, to be taken in payment only in small amounts; so they can never assert themselves as the realisation of price. [VII-37] E. g., in England, copper to the amount of 6d., and silver to the amount of 20s. The higher the degree of development of circulation in general, and the greater the sum of prices of the commodities entering into circulation, the more is the WHOLESALE exchange of commodities separated from their retail exchange, and the more do they require different kinds of coin for circulation. The velocity of circulation of the chips is inversely related to the magnitude of their value.
"In the EARLY STAGE OF SOCIETY, WHEN NATIONS ARE POOR, AND THEIR PAYMENTS TRIFLING, COPPER HAS FREQUENTLY BEEN KNOWN T O ANSWER ALL THE PURPOSES OF CURRENCY; and IT IS COINED INTO PIECES OF VERY LOW DENOMINATIONS IN ORDER TO FACILITATE THE INCONSIDERABLE EXCHANGES WHICH THEN TAKE PLACE. T h u s i n the EARLY AGE of the ROMAN REPUBLIC and Scotland" (David Buchanan, Observations on the Subjects Treated of in Dr. Smith's Inquiry etc., Edinburgh, 1814, p. 3).
" T H E GENERAL WEALTH OF A COUNTRY IS VERY ACCURATELY MEASURED BY THE NATURE OF ITS PAYMENTS AND THE STATE OF ITS COIN; AND THE DECIDED PREVALENCE OF
A COARSE METAL IN ITS CURRENCY, JOINED T O THE USE OF COINS OF VERY LOW DENOMINATIONS, MARKS A RUDE STATE OF SOCIETY" ( p . 4 ) . " L a t e r t h e BUSINESS o f t h e CURRENCY divides itself into 2 DISTINCT DEPARTMENTS: THE DUTY OF EFFECTING THE MAIN PAYMENTS being reserved for the MORE PRECIOUS METALS, while the INFERIOR METALS are RETAINED FOR MORE TRIVIAL EXCHANGES, and are thus merely SUBSER-VIENT TO THE MAIN CURRENCY. Between the first INTRODUCTION of a precious metal into the CURRENCY of a country, and its exclusive USE in the MAIN PAYMENTS, there is a wide interval; and the PAYMENTS of the RETAIL TRADE must, in the meantime, have become so CONSIDERABLE, in consequence of the INCREASE OF WEALTH, that they COULD, in part at least, BE CONVENIENTLY MANAGED BY THE NEW and MORE VALUABLE COIN; SINCE NO COIN CAN BE USED FOR THE MAIN PAYMENTS" (this is wrong, as is seen in the case of banknotes) "WHICH IS NOT SUITED, at the same time, TO THE TRANSACTIONS OF THE RETAIL TRADE, because every TRADE ultimately derives THE RETURN OF ITS CAPITAL from the CONSUMER....
On the Continent silver has held its ground everywhere in the MAIN PAYMENTS.... In Britain, the quantity of silver in circulation does not exceed what is necessary for the SMALLER PAYMENTS.... In point of fact, FEW PAYMENTS to the amount of 20s. are made in silver. Before the REIGN OF William III, SILVER WAS BROUGHT IN LARGE BAGS TO THE TREASURY IN PAYMENT OF THE NATIONAL REVENUE. At this period the great change took place.... The exclusive INTRODUCTION of gold into
the MAIN PAYMENTS OF ENGLAND WAS A CLEAR PROOF that the RETURNS of the RETAIL
TRADE were by this time chiefly made in gold; this possible without a SINGLE PAYMENT ever EXCEEDING or even EQUALLING ANY OF THE GOLD COINS; BECAUSE, IN THE GENERAL ABUNDANCE OF GOLD, AND SCARCITY OF SILVER, GOLD COINS would naturally be OFFERED FOR SMALL SUMS and A BALANCE OF SILVER DEMANDED IN RETURN; as a result of which gold, BY THUS ASSISTING in the RETAIL TRADE, and ECONOMISING THE USE OF SILVER, even for the SMALL PAYMENTS, WOULD PREVENT ITS ACCUMULATION BY THE RETAIL TRADER... The substitution of gold for silver in the MAIN PAYMENTS in England" (1695) "coincided with the substitution of silver for copper in Sweden....
"It is clear that the COIN USED FOR THE LARGER PAYMENTS CAN ONLY PASS CURRENT AT ITS INTRINSIC WORTH.... But intrinsic worth is not necessary to a SUBSIDIARY CURRENCY... In Rome, as long as COPPER was the PREVAILING COIN, it was CURRENT ONLY FOR ITS INTRINSIC VALUE... Silver was introduced 5 years before the commencement of the First Punic War, and superseded copper in the main payments only gradually.... Gold was introduced 62 years after silver; BUT IT NEVER SEEMS TO HAVE EXCLUDED SILVER FROM THE MAIN PAYMENTS... In India, copper is not a SUBSIDIARY CURRENCY; therefore, passes current for its INTRINSIC WORTH. The RUPEE, A SILVER COIN of 2s. 3d., is the MONEY OF ACCOUNT; IN RELATION to which, the MOHOUR, A GOLD COIN, and the PICE, A COPPER COIN, ARE ALLOWED TO FIND THEIR VALUE IN THE MARKET; the NUMBER OF PICE CURRENTLY EXCHANGED FOR A RUPEE constantly VARIES with the weight and value of the COIN; while here 24 HALFPENCE always=ls. without regard to their weight. In India, the RETAIL DEALER must still accept CONSIDERABLE QUANTITIES OF COPPER in return for his GOODS; and he CANNOT AFFORD TO TAKE IT, therefore, BUT for its intrinsic worth. In the CURRENCIES of Europe, copper PASSES for whatever value is fixed on it, without examination either of its weight or FINENESS" (pp. 4-18).
"In ENGLAND, an excess of copper coin was issued in 1798, BY PRIVATE TRADERS; and although COPPER is LEGAL PAYMENT for no more than 6d., the surplus found its way to the RETAIL TRADERS, who sought to put it back into circulation; but it ultimately returned to them. When this CURRENCY was stopped, COPPER had accumulated with the RETAIL TRADERS, in sums of £20, £30 and even £50, which they were finally obliged to dispose of for their INTRINSIC worth" (p. 31).
In the SUBSIDIARY CURRENCY the means of circulation as such, as a mere evanescent medium, assumes a special existence, alongside the means of circulation which simultaneously is an equivalent, realises prices, and is accumulated as independent value. Here, therefore, purely a token. Hence it can only be issued in the quantity that is absolutely necessary for the petty RETAIL TRADE, and consequently it can never be accumulated. That quantity must be determined by the aggregate of the prices it circulates divided by its velocity. Since the amount of the circulating medium, of a certain value, is determined by the prices, it follows that if a greater quantity were artificially thrown into circulation than that required by circulation itself, and could not flow off (which is not the case here, because as a means of circulation it is above its INTRINSIC WORTH), it would be depreciated — not because the quantity determines the prices, but because the prices determine the quantity, so that only a definite quantity of it, to a definite value, can remain in circulation.
Hence, if there are no openings through which circulation can throw out the excessive quantity, if the circulating medium cannot change from its form as means of circulation into that of value-for-itself, the value of the means of circulation must fall. But unless there are artificial hindrances, prohibition of the melting-down of coin, of its export, etc., this can only take place if the circulating medium is merely a token, does not itself possess a real value which corresponds to its nominal value, and hence cannot pass over from the form of circulating medium into that of commodity in general, divesting itself of the stamp it bears; if it is imprisoned in its existence as coin.
On the other hand, it follows that the token, the money chip, can circulate at the nominal value of the money which it represents — without in fact possessing any value of its own — only in so far as it represents the means of circulation in the quantity in which that means would have circulated itself. But the condition then is, simultaneously, that it itself either is available only in so small a quantity that it circulates only in the subsidiary form, i.e. never ceases for a moment to be means of circulation (in which situation it constantly serves partly to effect the exchange of small quantities of commodities, and partly merely for the exchange of the real means of circulation), and hence can never be accumulated; or else it must not possess any value at all, so that its nominal value can never be compared with its intrinsic value. In the latter case it is posited as a mere token, which indicates a value as existing outside it. In the former case, the occasion never arises for a comparison to be made between its intrinsic value and its nominal value.
[VII-38] That is why debasements of money become manifest immediately, while a total abolition of its value has no negative effect. Otherwise it would look paradoxical that money could be replaced with valueless paper, while the least diminution of its metallic content depreciates it.
In general, there is a contradiction in the dual determination of money in circulation, i.e. as mere means of circulation, in which role it is an evanescent mediator; and simultaneously as the realisation of prices, in which form it is accumulated and converted into its third determination as money. As means of circulation, it is worn out, and therefore does not comprise the metallic content which makes it a fixed quantity of objectified labour. Hence its correspondence to its value is always more or less illusory. Here an example should be given.
It is important, already at this point in the chapter on money, to introduce the determination of quantity, but deduced in a way that is the very opposite to that in the usual doctrine. Money can be replaced, because its quantity is determined by the prices which it circulates. T o the extent that it itself has value — as in the case of the subsidiary means of circulation — its quantity must be so determined that it can never be accumulated as an equivalent and in fact always figures only as an auxiliary wheel of the actual means of circulation. But if it is to replace the latter itself, it must have no value at all, i.e. its value must exist outside it. The VARIATIONS in circulation are determined by the AMOUNT and NUMBER OF TRANSACTIONS ([The] Econ[omistY)• T h e circulation may increase because of an increase in the AMOUNT of commodities, prices remaining the same; because of a rise in prices, the AMOUNT of commodities remaining the same; because of a combination of the two factors.
The proposition that the prices regulate the QUANTITY OF CURRENCY and not vice versa, or, in other words, THAT TRADE REGULATES CURRENCY (the quantity of the means of circulation), AND CURRENCY DOES NOT REGULATE TRADE, implies, OF COURSE, AS OUR DEDUCTION HAS SHOWN, THAT PRICE IS ONLY VALUE TRANSLATED INTO ANOTHER LANGUAGE. Value, more specifically value determined by labour time, is the presupposition. Hence it is clear that this law is not equally applicable to price FLUCTUATIONS at all epochs; e.g., to those in the ancient world, e.g. in Rome, where the circulating medium does not itself spring from circulation, from EXCHANGE, but originates from looting, plunder, etc.
"No country can consistently have more than one STANDARD; MORE THAN ONE STANDARD FOR THE MEASURE OF VALUE; for this STANDARD must be UNIFORM and UNCHANGING. No article has a uniform and unchanging value in relation to
a "On the Use and Functions of Bank Notes.—Circulation.—The Bank Act of 1844", The Economist, No. 226, 25 December 1847.— Ed.
another; IT ONLY HAS SUCH WITH ITSELF. One piece of gold is always of the same value as another of exactly the same fineness, the same weight and in the same place; BUT THIS CANNOT BE SAID OF GOLD AND ANY OTHER ARTICLE, e.g. silver" ([The] Economist], Vol. I, [No. 37, 11 May 1844,] p. 771). "The POUND is nothing but A DENOMINATION IN ACCOUNT, WHICH HAS REFERENCE TO A GIVEN and FIXED QUANTITY OF GOLD OF STANDARD QUALITY" (ibid.). "To speak OF MAKING an ounce of gold worth £5 instead of £3 17s. 10 *l?d. is merely to say that it ought henceforth to be minted into 5 SOVEREIGNS instead of into 3 4 2 9/ 4 8 0 SOVEREIGNS. We would not thereby alter the value of gold, but merely the weight and consequently the value of the pound or SOVEREIGN. An ounce of gold would continue to have the same value relative to wheat and all other commodities; but since a pound, though bearing the same name as before, would represent a smaller part of an ounce of gold, it would represent a CORRESPONDINGLY less quantity of wheat and other commodities. Just exactly as if we were to say that a quarter of wheat should no longer be divided into 8, but into 12 BUSHELS; we could not thereby alter the value of wheat but [only] diminish the QUANTITY contained in a BUSHEL and consequently diminish its value" (I.e., p. 772).
"Whatever temporary or permanent CHANGE may take place [in the value of gold], its price will always be expressed in the same AMOUNT OF MONEY: one ounce of gold will continue to be £3 17s. 10 ll^d. OF OUR MONEY. The change in its value is indicated by the greater or lesser quantity of other commodities which it can buy" (I.e., [The Economist, No. 42, 15 June 1844,] p. 890).
The ideal bar" may be compared, e.g., with the ideal milrea in Brazil (similarly with the POUND in England at the time of the depreciation of bank notes, etc.). What is fixed here is the name milrea; what fluctuates is the quantity of gold or silver which it expresses.
In Buenos Aires, the CURRENCY is an INCONVERTIBLE paper money (paper dollars); this dollar was originally=4s. 6d., now about 3 '^d., and HAS BEEN AS LOW AS 1 i/gd. A yard of CLOTH was previously worth 2 dollars, now nominally 28 dollars in consequence of the depreciation of the paper [The Economist, No. 57, 28 September 1844, p. 1253].
"In Scotland, THE MEDIUM OF EXCHANGE" , not to be confused with the STANDARD OF VALUE, "of the AMOUNT OF £1 and UPWARDS, MAY BE SAID TO BE EXCLUSIVELY PAPER, a n d GOLD DOES NOT CIRCULATE AT ALL; YET GOLD IS AS MUCH THE STANDARD OF VALUE AS IF NOTHING ELSE CIRCULATED, BECAUSE THE PAPER IS CONVERTIBLE INTO THE SAME FIXED QUANTITY OF THAT METAL; AND IT CIRCULATES ONLY ON THE FAITH OF BEING so CONVERTIBLE" ([The Economist, No. 58, 5 October 1844,] p. 1275).
"GUINEAS are HOARDED IN TIMES OF DISTRUST" (Thornton, [An Enquiry into the Nature and Effects of the Paper Credit of Great Britain, London, 1802,] p. 48).
The HOARDING PRINCIPLE, in which money functions as independent value, is necessary as a moment—leaving aside the striking forms in which it appears — of exchange based on money circulation. For, as A. Smith says,b besides one's own commodity everyone needs
a See present edition, Vol. 28, pp. 80 and 128.— Ed. b A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. I, London, 1835, p. 85.— Ed.
the MEDIAL QUANTITY, a definite proportion, of the "general commodity".
"THE MAN IN TRADE HAS PROPERTY IN TRADE" (I.e. [Thornton], p. 21).//
"EQUAL CAPITALS, or, in other words, EQUAL QUANTITIES OF ACCUMULATED LABOUR, WILL OFTEN PUT IN MOTION DIFFERENT QUANTITIES OF IMMEDIATE LABOUR; b u t this changes nothing in substance" (Torrens, An Essay on the Production of Wealth, London, 1821, pp. 29-30). "In the EARLY PERIOD OF SOCIETY, it is the TOTAL QUANTITY OF LABOUR, ACCUMULATED a n d IMMEDIATE, EXPENDED ON PRODUCTION, that determines the relative value of commodities. But as soon as STOCK has ACCUMULATED, and there emerges a class of capitalists distinct from that of labourers, WHEN THE PERSON WHO UNDERTAKES ANY BRANCH OF INDUSTRY DOES NOT PERFORM HIS OWN WORK,
BUT ADVANCES SUBSISTENCE a n d MATERIALS TO OTHERS, THEN IT IS THE AMOUNT OF CAPITAL, OR THE QUANTITY OF ACCUMULATED LABOUR EXPENDED IN PRODUCTION, that determines the EXCHANGEABLE POWER OF COMMODITIES" (pp. 33-34). "As long as 2 capitals are equal, their products are of equal value, HOWEVER WE MAY VARY THE QUANTITY OF IMMEDIATE LABOUR WHICH THEY PUT IN MOTION, OR WHICH THEIR PRODUCTS MAY REQUIRE. If they are unequal, their PRODUCTS are OF UNEQUAL VALUE, THOUGH THE TOTAL QUANTITY OF LABOUR EXPENDED UPON EACH SHOULD BE PRECISELY EQUAL" (p. 39). "Therefore after the separation of CAPITALISTS and LABOURERS, it is the AMOUNT OF CAPITAL, the QUANTITY OF ACCUMULATED LABOUR, and not, as before this separation, the SUM OF ACCUMULATED and IMMEDIATE LABOUR, EXPENDED ON PRODUCTION, that determines the exchange value" (I.e., [pp. 39-40]).
Mr. Torrens' confused approach is correct compared to the ABSTRACT WAY of the RICARDIANS. In itself, fundamentally wrong. Firstly, the determination of value by pure labour time takes place only on the basis of production [VII-39] of capital, hence on that of the separation of the 2 classes. T h e equalisation of prices IN CONSEQUENCE OF THE SAME AVERAGE RATE OF PROFIT—(and EVEN this is to be taken cum grano salis[3])—has nothing to do with the determination of value, but rather presupposes value. T h e passage is important for showing the confusion of the RICARDIANS.
T h e rate of surplus value as profit is determined (1) by the volume of surplus value itself; (2) by the ratio of living labour to ACCUMULATED labour (the ratio of the CAPITAL EXPENDED in wages TO THE CAPITAL EMPLOYED AS SUCH). T h e two factors which determine (1) and (2) must be examined specially. E.g., the law of rent pertains to (1). For the time being, necessary labour as such is assumed, i.e. that the worker always receives only the necessary minimum of wages. This assumption is, of course, necessary in order to establish the laws of profit, to the extent that they are not determined by the rise and fall of wages or by the influence of landed property. All the solid assumptions themselves become
a With a grain of salt.— Ed.
fluid in the course of the analysis. But it is only by fixing them at the outset that one can undertake the analysis WITHOUT CONFOUNDING
EVERYTHING. BESIDES, IT IS PRACTICALLY SURE, THAT, FOR INSTANCE, HOWEVER THE
STANDARD OF NECESSARY LABOUR MAY DIFFER AT VARIOUS EPOCHS AND IN VARIOUS
COUNTRIES, OR HOw [ e v e r ] MUCH, IN CONSEQUENCE OF THE CHANGING PRICES OF RAW
PRODUCE, ITS RATIO, OR IN CONSEQUENCE OF THE DEMAND AND SUPPLY OF LABOUR ITS
AMOUNT AND RATIO MAY CHANGE, AT ANY GIVEN EPOCH THE STANDARD IS TO BE
CONSIDERED AND ACTED UPON AS A FIXED ONE BY CAPITAL. T o CONSIDER THOSE
CHANGES THEMSELVES BELONGS ALTOGETHER TO THE CHAPTER TREATING OF WAGES-
LABOUR.
"EXCHANGEABLE VALUE IS DETERMINED, NOT BY THE ABSOLUTE, BUT BY THE
RELATIVE COST OF PRODUCTION. IF THE COST OF PRODUCING GOLD REMAINED THE SAME,
WHILE THE COST OF PRODUCING ALL OTHER THINGS SHOULD BE DOUBLED, THEN WOULD
GOLD HAVE A LESS POWER OF PURCHASING ALL OTHER THINGS THAN BEFORE; AND ITS
EXCHANGEABLE VALUE WOULD FALL 1/i: and this DIMINUTION in its exchange value
would be precisely the same, IN EFFECT, as if the COST OF PRODUCING ALL OTHER THINGS
REMAINED UNALTERED, WHILE THAT OF PRODUCING GOLD HAD BEEN REDUCED y 2" (Torrens, I.e., pp. 56-57).
This is important for prices, but not at all for the determination of value; a mere tautology. To say that the value of a commodity is determined by the quantity of labour which it contains is to say that it exchanges for the same quantity of labour embodied in any other form of use value. Hence it is clear that, if the labour time necessary for the production of object a DOUBLES, only 1/2 of it is now=to its former equivalent b. Since equivalence is determined by the equality of labour time or of the quantity of labour, difference in value is OF COURSE determined by inequality of these, or labour time is the measure of value.
"In 1826 the VARIOUS MACHINERY USED IN MANUFACTURING COTTON enabled 1 man TO PERFORM THE WORK OF 150. Now assuming that only 280,000 men are employed in it, half a century ago 42,000,000 men would have had to be in it" (Hodgskin, [Popular Political Economy, London, 1827,] p. 72).
" T H E RELATIVE VALUE O F T H E PRECIOUS METALS T O O T H E R COMMODITIES DETERMINES HOW MUCH OF THEM MUST BE GIVEN FOR OTHER THINGS; AND THE NUMBER OF SALES T O BE MADE, WITHIN A GIVEN PERIOD, DETERMINES, AS FAR AS MONEY IS THE INSTRUMENT FOR EFFECTING SALES, THE QUANTITY OF MONEY REQUIRED" (I.E., P . 188). "ABUNDANT REASON TO BELIEVE THAT THE PRACTICE OF COINING ORIGINATED WITH INDIVIDUALS AND WAS CARRIED ON BY THEM BEFORE IT WAS SEIZED ON AND MONOPOLISED BY GOVERNMENTS. Such was for a LONG time the practice in RUSSIA" (see Storch3) (I.e., p. 195, note).
a H. Storch, Coure d'économie politique, Vol. II, p. 128.— Ed.
Hodgskin takes a different view from that of the romantic Müller3:
" T H E MINT STAMPS ONLY WHAT INDIVIDUALS BRING, MOST INJUDICIOUSLY CHARGING THEM NOTHING FOR THE LABOUR OF COINING; AND TAXING THE NATION FOR THE BENEFIT OF THOSE WHO DEAL IN MONEY" (Popular Political Economy, etc., London, 1827, p. 194).
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
[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
[10] The reference is to Excerpt Notebook X (London, mid-June-July 1851).—30, 102
[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