2) Chapters 2-3: Money¶
Core Argument¶
In his dialectical materialist analysis, Marx traces money not as a timeless invention but as a special commodity that emerges logically from generalised commodity production under private ownership. Every commodity possesses a dual nature as both a use-value and an exchange-value, creating an inherent contradiction: for its owner, a commodity has no direct use-value but serves only as a bearer of exchange-value. As commodity production becomes universal, society requires a universal equivalent – a single commodity against which all others can be measured. Precious metals like gold assumed this role due to objective properties: homogeneity, divisibility, durability, and high labour content enabling small quantities to represent large values.
Money functions as a measure of value and a means of exchange, representing socially necessary labour-time. Over time, the nominal and real content of coins diverge, allowing paper notes and eventually digital information to replace physical tokens. The quantity of money in circulation must relate to the total value of commodities and the velocity of exchange. Fixed exchange rates, including the gold standard, become barriers to economic growth and are ultimately abandoned. Money also develops as a means of payment, enabling credit and debt, which introduces the contradiction of buying without having first sold.
This development refutes Say’s Law – the pre-Marxian notion that markets always clear because every sale is also a purchase. Hoarding demonstrates the possibility of market failure. Savings form the basis of credit, which artificially expands the market and allows productive forces temporarily to outstrip mass consumption. This expansion cannot continue indefinitely; a crisis, such as the 2008 Credit Crunch, occurs when debts default, creditors refuse further lending, and only cash suffices. The crisis causes the lack of credit, not vice versa. Money as a means of payment becomes a source of power: creditors dominate debtors, as seen historically with monarchs losing power to the bourgeoisie, and today with banks controlling society.
Money is not eternal but a necessary result of commodity production under private property. In a socialist society, socialising the commanding heights of the economy would end commodity production for most goods; money would wither away, beginning with necessities, replaced by tokens or digital entitlements. Cryptocurrencies like Bitcoin fail because they mistake central banks for the problem, whereas the real issue is private ownership of the means of production and production for profit. Only democratic social planning can eradicate crises.