iEiKtieV LIBRARY CAUfOIWlA Of •V""^ 1^ A CONTRIBUTION TO THE CRITIQUE OF POLITICAL ECONOMY BY KARL MARX Translated from the Second German EditioB by N. I. Stone Wtap KT^/Htarof ivrrri i^ \piietween two persons") Galiani, "Delia MIoneta," p. 220 in vol. II. of Custodi's collection of "Scrittori classici Italiani di Eeonomia Politioa. Parte Moderna," Milano, 1803. — 31 — lation between things, and between things and persons. In commodities this mystification is as yet very sim- ple. It is more or less plain to everybody that a rela- tion of commodities as exchange values is nothing but a mutual relation between persons in their productive activity. This semblance of simplicity disappears in higher productive relations. All the illusions in regard to the monetary system are due to the fact that money is not regarded as something representing a social re- lation of production, but as a product of nature en- dowed with certain properties. The modern economists who sneer at the illusions of the monetary system, be- tray the same illusion as soon as they have to deal with higher economic forms, as, e. g., capital. It breaks forth in their confession of naive surprise, when what they have just thought to have defined with great diffi- culty as a thing suddenly appears as a social relation and then reappears to tease them again as a thing, be- fore they have barely managed to define it as a social relation. Since the exchange value of commodities is, in fact, nothing but a mutual relation of the labors of individ- uals — labors which are similar and universal — nothing but a material expression of a specific social form of labor, it is a tautology to say that labor is the only source of exchange value and consequently of wealth, *"In its natural state, matter ... is always destitute of value." McCulloch, "A Discourse on the Rise, Progress, Peculiar Objects, and Importance of Political Economy/* 2nd edition, Eddnburgh, 1825, p. 48. It is evident how high even a J^lfCulloch stands above the fetichism of German "thinkers," — 32 — in so far as the latter consists of exchange values. Similarly, it is a tautology to say that matter in its natural state has no exchange value, because it does not contain any labor, and that exchange value as such does not contain matter. But when William Petty calls "labor the father and earth the mother of wealth,'* or when Bishop Berkeley asks "whether the four ele- ments and man*s labour therein, be not the true source of wealth,"' or when the American, Thomas Cooper puts it popularly : "Take away from a piece of bread the labour bestowed by the baker on the flour, by the miller on the grain brought to him, by the farmer in ploughing, sowing, tending, gathering, threshing, cleaning and transporting the seed, and what will re- main? A few grains of grass, growing wild in the woods, and unfit for any human purpose*" — ^then all these views do not refer to abstract labor as the source of exchange value, but to concrete labor as the source of material wealth; in short, to labor in so far as it produces use-values. In assuming that a commodity has use-value we assume the special usefulness and distinct fitness of the labor absorbed by it, but that is all there is to the view of labor as useful labor from the standpoint of commodity. Considering bread as a use-value, we are interested in its properties as an article of food and not at all in the different kinds of labor of the farmer, miller, baker, etc. If by some who declare "matter** and half a dozen other foreign things to be elements of value. Cf. e. g. L. Stein, 1. c. v. I., p. 110. ^Berkeley, The Querist, (London, 1750. 'Thomas Ck)oper, Lectures on the Elements of Political Economy, London, 18-31, p. 99. — 33 — invention nineteen-twentieths of this labor could be saved, the loaf of bread would still render the same service as before. If it fell ready-made from the sky it would not lose a single atom of its use-value. While labor which creates exchange value is realized in the equality of commodities as universal equivalents, labor as a productive activity with a useful purpose is real- ized in the endless variety of use-values created by it. While labor which creates exchange values is abstract, universal and homogeneous, labor which produces use- values is concrete and special and is made up of an endless variety of kinds of labor according to the way in which and the material to w^hich it is applied. It is wrong to speak of labor in so far as it is ap- plied to the production of use-values as of the only source of wealth, namely, the material wealth produced by it. Being an activity intended to adapt materials to this OT that purpose, it requires matter as a pre-requi- site. In different use-values the proportion between labor and raw material varies greatly, but use-value always has a natural substratum. Labor, as an activity, directed to the adaptation of raw material in one form or another, is a natural condition of human existence, a condition of exchange of matter between man and nature, independent of all social forms. On the con- trary, labor producing exchange value is a specifically social form of labor. Tailoring, e. g., in its material manifestation as a distinct productive activity, pro- duces a coat, btit not the exchange value of the coat. The latter is produced not by the labor of the tailor as such, but by abstract universal labor, and that belongs -« 34 — to a certain organization of society which has not been brought about by the tailor. Thus, the women under the ancient system of house industry made coats with- out producing the exchange value of the coats. Labor as a source of material wealth was known to Moses, the legislator, as well as to Adam Smith, the customs official/ Let us consider now some propositions which fol- low from the determination of exchange value by labor-time. As a use-value, every commodity owes its usefulness to itself. Wheat, e. g., serves as an article of food. A machine saves labor to a certain extent. This function of a commodity by virtue of which it serves only as use-value, as an article of consumption, may be called its service, the service which it renders as use-value. But as an exchange value, a commodity is always re- garded as a result ; the question in this case is not as to the service which it renders, but as to the service* which it has been rendered in its production. Thus, the exchange value of a machine is determined not by *F. List could never grasp the difference between, labor as a source of use-value and labor as the creator of certain social form of wealth or exchange value, because comprehension was altogether foreign to his practical mind; he, therefore, saw in the modern English economists mere plagiarists of Moses, the Egyptian. 'It can be readily understood what kind of "service" is ren- dered by the category "service" to economists of the type of J. B. Say and F. Bastiat, whose pondering sagacity, as Mai- thus has justly remarked, always abstracts from the spe- cifically definite forms of economic relations. — 35 — the quantity of labor-time which it saves, but by the quantity of labor-time which has been expended on its own production and which is, therefore, required to produce a new machine of the same kind. If, therefore, the quantity of labor-time required for the production of commodities remained constant, their exchange value would remain the same. But the ease and the difficulty of production are constantly changing-. If the productivity of labor increases, the same use-value will be produced in less time. If the productivity of labor declines, more time will be re- quired for the production of the same use-value. Thus, the labor-time contained in a commodity or its ex- change-\'-alue is a variable quantity, increasing or di- minishing in an inverse ratio to the rise and fall of the productivity of labor. The productive power of labor which is applied in the manufacturing industry on a predetermined scale dep>ends in the agricultural and extractive industries also on natural conditions which are beyond human control. The same labor will yield a greater or less output of various metals, according to their more or less close occurrence in the earth's crust. The same labor may be embodied in two bushels of wheat in a favorable season, and only in one in an un- favorable season. In this case, scarcity or abundance, as natural conditions, seem to determine the exchange value of commodities, because they determine the pro- ductivity of certain kinds of labor which depend upon natural conditions. Unequal volumes of different use-value contain the same quantity of labor-time or the same exchange value. — 36 — . The smaller the volume of a use-value containing a certain quantity of labor-time as compared with other use-values, the greater its specific exchange-value. If we find that certain use-values, such as, e. g., gold, silver, copper and iron, or wheat, rye, barley and oats, form a series of specific exchange values which, though not retaining exactly the same numerical ratio, still retain through widely remote epochs of civilization the same rough proportion of relatively larger and smaller quan- tities, we may draw the conclusion that the progressive development of the productive powers of society has equally, or approximately so, affected the labor-time necessary for the production of the various commod- ities. The exchange value of a commodity is not revealed in its own use-value. But, as the embodiment of uni- versal social labor-time, the use-value of one commod- ity bears a certain ratio to the use-values of other com- modities. Thus, the exchange value of one commodity is manifested in the use-values of other commodities. An equivalent is, in fact, the exchange value of one commodity expressed in the use-value of another com- modity. If I say, e. g., that one yard of linen is worth /two pounds of coffee, then the exchange value of linen is expressed in terms of the use-value of coffee, viz., in a certain quantity of that use-value. This ratio being given, I can express the value of any quantity of linen in coffee. It is clear that the exchange value of one commodity, say linen, is not confined to the ratio of any one commodity, e. g. coffee, as its equivalent. The quantity of universal labor-time which is represented — 37 — in one yard of linen is at the same time embodied in an endless variety of volumes of use-values of all other commodities. The use-value of any other commodity forms the equivalent of one yard of linen, in the pro- portion in which it represents the same quantity of labor-time as that yard of linen. The exchange value of this single commodity is, therefore, fully expressed in the endless number of equations in which the use- values of all other commodities form its equivalents. Not until the exchange value of a commodity is ex- pressed in the sum total of these equations or of the different proportions in which one commodity is ex- changed for every other commodity, does it find an exhaustive expression as a universal equivalent; e. g., the series of equations : 1 yard of linen = 5^ lb. of tea, 1 yard of linen = 2 lbs. of coffee, 1 yard of linen = 8 lbs. of bread, 1 yard of linen := 6 yards of calico, may be represented as follows: 1 yard of linen = ^ lb. of tea + /^ lb. of coffee -{- 2 lbs. of bread + 1>2 yards of calico. Therefore, if we had before us the sum total of the equations, in which the value of a yard of linen is ex- haustively expressed, we could represent its exchange value in the form of a series. As a matter of fact, the series is an endless one, since the circle of commodities, constantly expanding, can never be closed up. But while the exchange value of one commodity is thus measured by the use-values of all other commodities, the exchange values of all the other commodities are, 38 in their turn, measured by the use-value of this one commodity/ If the exchange value of one yard of linen is expressed in Yq. lb. of tea, or 2 lbs. of coffee, or 6 yards of calico, or 8 lbs. of bread, etc., it follows that coffee, tea, calico, bread, etc., are equal to each other if taken in the same proportion in which they are equal to the third article, linen ; consequently, linen serves as the common measure of their exchange values. Every commodity, as the embodiment of universal labor-time, i. e., as a certain quantity of universal labor-time, expresses in turn its exchange value in definite quantities of the use-values of all other commodities, and the exchange values of all the other commodities are, on the other hand, measured by the use-value of this one exclusive commodity. But as an exchange value, every commodity is at the same time the one exclusive commodity that serves as a com- mon measure of the exchange values of all other com- modities; and, on the other hand, it is but one of the many commodities in the entire series of which every commodity expresses directly its exchange value. The value of a commodity is not affected by the number of commodities of other kinds. But the length * "Egli 6 proprio ancora delle misure d'aver si fatta relatione colle cose misurate, che in certo modo la misurata divien misura della misurante." Montanari, Delia Moneta, p. 48 in V. Ill, of Custodies "Scrittori classici Italiani di Economia Politica. Parte Antica." ("It is the property of measure to be in such a relation to the things measured, that in a certain way the thing measured becomes the measure of the measuring thing.") — 39 — of the series of equations in which its exchange value h realized does depend upon the greater or less varietv of other commodities. The series of equations in which the value of coffee, e. g., is represented, indicates the extent to which it is exchangeable, the limits within which it performs the function of an exchange value* The exchange value of a commodity as an embodiment of universal social labor-time is expressed in its equiv- alence to an endless variety of use-values. We have seen that the exchange value of a commodity varies with the quantity of labor-time directly con- tained in it. Its realized exchange value, i. e., its ex- change value expressed in the use-values of other com- modities, must also depend on the proportion in which the labor-time spent on the production of all other com- modities is changing. If, e. g., the labor-time required for the production of a bushel of wheat remained con- stant, while that required for the production of all other commodities doubled, the exchange value of a bushel of wheat expressed in its equivalents would be- come half as large as before. The result would be prac- tically the same as if the amount of time necessary for the production of one bushel of wheat had been re- duced by one-half, and that required for all other com- modities had remained unchanged. The value of com- modities is determined by the proportion in which they can be produced in the same labor-time. In order to see what possible changes this proportion may undergo, let us take two commodities, A and B. First case. Let the labor-time required for the pro- duction of commodity B remain unchanofed. In thai — 40 — case the exchange value of A, expressed in terms of B^ rises and falls with the rise and fall of the labor-time required for the production of A. Second case. Let the labor-time required for the pro- duction of commodity A remain constant. Then the exchange value of A, expressed in terms of B, falls and rises in an inverse ratio with the rise and fall of the labor-time required for the production of B. Third case. Let the labor-time required for the pro- duction of commodities A and B rise and fall in equal proportion. Then the expression of equivalence of A and B remains unchanged. If through some cause the productivity of all kinds of labor were to decline uni- formly, so that the production of all commodities would require an equally increased quantity of labor-time, then the value of all commodities would rise, though the ex- pression of their exchange values would remain un- changed, and the actual wealth of society would de- crease, because it would have to expend more labor- time on the production of the same stock of use-values. Fourth case. Let the labor-time required for the pro- duction of A and B rise and fall, but not uniformly ; that is to say, the labor-time required for the production of A may rise, while that required for B may fall, or vice versa. All of which can be reduced to the simple case where the labor-time required for the production of one commodity remains unchanged, while that required for the other rises or falls. The exchange value of any commodity is expressed in the use-value of any other commodity, be it in in- tegral units or in fractions thereof. As exchange value. — 41 — every commodity is capable of subdivision, like the labor-time embodied in it. The equivalence of commod- ities is independent of their physical divisibility as use- values, just as the sum of the exchange values of com- modities is indifferent to the change of form which use- values have to undergo when converted into a single new commodity. So far we have considered commodities from a two- fold point of view, as use-values and exchange values alternately. But a commodity as such is a direct com- bination of use-value and exchange value; and it is a commodity only in relation to other commodities. The actual relation between commodities constitutes the process of their exchange. It is a social process par- ticipated in by individuals independent of each other but the part they take in it is that of owners of com- modities only. Their mutual relations are those- of their commodities, and thus they really appear as conscious factors of the process of exchange. A commodity is a use-value, wheat, linen, a diamond, a machine, etc., but as a commodity it is, at the same time, not a use-value. If it were a use-value for its owner, i. e., a direct means for the satisfaction of his own wants, then it would not be a commodity. To him it is rather a non-use-value ; it is merely the material depository of exchange-value, or simply a means of ex- change; as an active bearer of exchange value, use-value becomes a means of exchange. To the owner it is a use-value only in so far as it constitutes exchange value.* ^ It is in that sense that Aristotle ( see the passage quoted at the b^inning of this chapter) conceives exchange value. — 42 —• It has yet io hscome a use-value, viz., to others. Not being a use-value to its owner, it is a use-value to the owners of other commodities. If it is not, then the labor expended on it was useless labor, and the result of that labor is not a commodit3^ On the other hand, the commodity must become a use-value to the owner him- self, because his means of existence lie outside of it in the use-values of commodities not belonging to him. In order to become a use-value, the commodity must meet the particular want of which it is the means of satisfaction. Use-values of commodities are thus realized use-values through a universal change of hands by passing from the hands in which they were held as means of exchange into those where they become use values. Only through this universal transfer of com- modities does the labor contained in them become use- ful labor. In this process of their mutual interchange as use-values, commodities do not acquire any new eco- nomic forms. On the contrary, even the form which marked them as commodities disappears. Bread, e. g., by changing hands from the baker to the consumer does not change its identity as bread. On the contrary, it is only the consumer that begins to regard it as a use- value, as a certain article of food, while in the hands of the baker it was only the bearer of an economic rela- tion, a palpable yet transcendental object. Thus, the only change of form that commodities undergo while becoming use-values, consists in the fact that they cease to be, as a matter of form, non-use-values to their own- ers, and use-values to those who do not own them. To become use-values commodities must be universally — 43 — alienated; they must enter the sphere of exchange; but they are subject to exchange in their capacity of ex- change values. Hence, in order to be realized as use- values, they must be realized as exchange values. While the single commodity appeared from the stand- point of use-value as something independent, as ex- change value it was regarded first of all in its relation to all other commodities. This relation was, however, merely theoretical, imaginary. It becomes real only in the process of exchange. On the other hand, a com- modity is an exchange value in so far as a certain quan- tity of labor-time has been expended on it, and it con- sequently represents materialized labor-time. But of itself it is only materialized individual labor-time of a particular kind, and not universal labor-time. There- fore, it is not directly an exchange value, but must first become such. First of all, it is an embodiment of uni- versal labor-time only in so far as it represents labor- time applied to a definite useful purpose, i. e., when it represents a use-value. This was the material condi- tion under which alone labor-time contained in com- modities was regarded as universal social labor. Thus, while a commodity can become a use-value only after it has been realized as an exchange value, it can, on the other hand, be realized as an exchange value only if it proves to be a use-value in the process of alienation. A commodity can be alienated as a use-value only to one whom it serves as a use-value, i. e., as a means of sat- isfying a certain want. On the other hand, it is ex- changed for another commodity, or, if we put ourselves on the side of the owner of the other commodity, it, too, — 44 — can be alienated, i. e., be realized, only if brought in contact with that particular want of which it is the ob- ject. In the universal exchange of commodities as use-values the basis for their mutual relations is in their material difference as distinct objects which satisfy different wants by their specific properties. But as mere use-values, they are indifferent to each other, and are incommensurable. As use-values they can be ex- changed only with reference to certain wants. They are exchangeable only as equivalents, and they are equiv- alents only as equal quantities of materialized labor- time, so that all regard to their natural properties as use-values and therefore to the relation of the com- modities to particular wants is eliminated. On the contrary, a commodity is realized as an exchange value by replacing as an equivalent any definite quantity of any other commodity, regardless of whether it is a use- value for the owner of the other commodity or not. But to the owner of the other commodity it is a commodity only in so far as it is a use-value to him, and it becomes an exchange value to its owner only in so far as it is a commodity to that other person. Thus, the same rela- tion appears as a proportion between commodities as magnitudes of the same denomination, but differing qualitatively; or, as an expression of their equivalence as embodiments of universal labor-time, and, at the same time, as a relation of qualitatively different ob- jects, of use-values intended for the satisfaction of par- ticular wants, in short, a relation in which they are dis- tinguished as actual use-values. But this equivalence and non-equivalence mutually exclude each other. Thus — 45 — we have before us not only a vicious circle of problems in which the solution of one implies that of the other, but a combination of contradicting claims, since the fulfillment of one is directly connected with that of its opposite. The process of exchange of commodities must result both in the unfolding and in the solution of these con- tradictions, neither of which, however, can appear in that process in this simple way. We have only observed how commodities are mutually related to each other as use-values, i. e., how they appear as use-values within the process of exchange. The exchange-value, on the contrary, as we have considered it so far, appeared as an abstraction formed in our own minds, or — if we may so put it — in the mind of the individual owner of com- modities, which lie stored in his warehouse as use-values, and weigh upon his conscience as exchange values. In the process of exchange, however, commodities must be not only use-values, but also exchange values to one another, and that should appear as their own mutual relation. The difficulty which we first encountered was that a commodity must be first alienated and delivered to its purchasers as a use-value, in order to appear as an exchange value, as materialized labor, while on the other hand its alienation as use-value implies its being an exchange value. But let us assume that this difficulty has been overcome. Suppose the commodity has di- vested itself of its use-value, and has thereby fulfilled the material condition of being socially useful labor, instead of a particular labor of an individual. In that case, the commodity must become an exchange value, — - 46 — ■ a universal equivalent, an embodiment of universal labor-time for all other commodities in the process of exchange, and thus, leaving behind its limited role of a particular use-value, acquire the ability to be directly represented in all use-values as its equivalents. But every commodity is jiist such a commodity, appearing as a direct incarnation of universal labor-time by divesting itself of its particular use-value. On the other hand, however, commodities confront each other in the pro- cess of exchange as particular commodities, as the labor of private individuals embodied in particular use- values. Universal labor-time is itself an abstraction, which, as such, does not exist for commodities. Let us examine the series of equations in which the exchange value of a commodity finds its concrete ex- pression, e. g. : 1 yard of linen = 2 lbs. of coffee. 1 yard of linen r= ^ lb. of tea. 1 yard of linen = 8 lbs. of bread, etc. These equations simply signify that equal quantities of universal social labor-time are embodied in one yard of linen, two pounds of coffee, half a pound of tea, etc. But as a matter of fact the individud labors which are represented in these particular use-values, become uni- versal, and, in that form, also social labor, only when they are actually exchanged for one another in pro- portion to the labor-time contained in them. Social labor-time exists in these commodities in a latent state, »o to say, and is first revealed in the process of exchange. We do not proceed from the labor of individuals as social labor, but, on the contrary, from special labor — 47 — of private individuals which appears as universal social labor only b}^ divesting itself of its original character in the process of exchange. Universal social labor is, therefore, no ready-made assumption, but a growing re- sult. And thus we are confronted with a new difficulty, that on the one hand commodities must enter the pro- cess of exchange as embodiments of universal labor- time, while, on the other hand, this embodiment of the labor-time of individuals as social labor-time is itself a result of the process of exchange. Every commodity becomes an exchange value by di- vesting itself of its use-value, or of its original nature. The commodity must therefore assume a double ca- pacity in the process of exchange. But that second capacity of exchange value can appear only in the shape of another commodity, because only commodities con- front each other in the process of exchange. How is a particular commodity to represent directly materialized universal labor-time, or — ^to put it differently — ^how is individual labor-time, which is embodied in a particular commodity to be made directly universal in character? The concrete expression of the exchange value of a commodity, i. e., of every commodity as a universal equivalent, is represented in an endless series of equa- tions, such as: 1 yard of linen = 2 lbs. of coffee. 1 yard of linen t= y^ \h. of tea. 1 yard of linen = 8 lbs. of bread. 1 yard of linen t= 6 yards of ealico. 1 yard of linen = etc. The above form is theoretical in so far af commod- — 48 — ities are only thought of as definite quantities of mate- rialized universal labor-time. But the capacity of a particular commodity to serve as a universal equivalent from a mere abstraction becomes a social result of the process of exchange by a simple inversion of the above series of equations, viz. : 2 lbs. of coffee = 1 yard of linen. ^2 lb. of tea = 1 yard of linen. 8 lbs. of bread = 1 yard of linen. 6 yards of calico = 1 yard of linen. While coffee, tea, bread, calico, in short, all commod- ities express in linen the labor-time contained in them, the exchange value of linen, on the other hand, unfolds itself in all other commodities as its equivalents, and the labor-time embodied in it becomes direct universal labor-time, which is equally expressed in different vol- umes of all other commodities. Linen thus becomes the universal equivalent through the universal action of all other commodities upon it. As exchange value, every commodity served as a measure of value of all other commodities. Now, on the contrary, since all com- modities measure their exchange values by means of a particular commodity, this excluded commodity be- comes the special expression of exchange value, as a universal equivalent. At the same time, the endless series of equations in which the exchange value of every commodity was expressed, is reduced to one single equation consisting of two members. The equation 2 lbs. of coffee = 1 yard of linen now fully expresses the exchange value of coffee, for in this expression a yard of linen appears as the direct equivalent of a defi- — 49 — nite quantity of every other commodity. Thus, within the sphere of exchange all commodities are or appear to each other as exchange values in the form of linen. The proposition that commodities, as exchange values, are to each other as different quantities of materialized universal labor-time, may now be worded to the effect that commodities, as exchange values, represent nothing but different quantities of the same article, linen. Uni- versal labor-time thus assumes the aspect of a distinct thing, as a commodity existing along with and outside of all other commodities. At the same time the equa- tion 2 lbs. of coffee = 1 yard of lineji, in which one commodity appears as the exchange value of another, is yet to be realized. Only by being alienated as use value — which depends upon whether it proves to be in the process of exchange the object of a certain want — does the commodity actually transform its existence as coffee into the existence as linen and thus takes on the form of a universal equivalent and becomes, indeed, an exchange value for all other commodities. Conversely, since all commodities are turned into linen by being alienated as use-values, linen becomes the converted form of all other commodities, and only as a result of this transformation of all other commodities into it, it becomes the direct embodiment of universal labor- time, i. e., the product of universal exchange and of the elimination of individual labor. If commodities thus assume a twofold character in order to appear as ex- change values to each other, the commodity which has been singled out as the universal equivalent becomes, on the other hand, a use-value in two ways. Besides — 50 — its special use-value as a particular commodity, it as- sumes a universal use-value. This latter kind of use- value constitutes its special feature, emanating as it does, from the specific part which the commodity plays as a result of the universal relation which all other commodities bear toward it in the process of exchange. The use-value of every commodity as an object of a particular want, has a different value in different hands, e. g., it has a different value in the hands of the one who disposes of it, than in those of the one who acquires it. But the commodity singled out as the universal equiv- alent, is now an object of a universal want arising from the very process of exchange, and it has the same use- value to everybody, viz., that of serving as the depos- itory of exchange value, of being a universal means of exchange. Thus we find in one commodity the solution of the contradiction which is inherent in commodity as such, namely, of being at one and the same time a par- ticular use-value and a universal equivalent, and, there- fore, a use-value for everybody or universal use-value. Thus, while all other commodities express their ex- change value in the form of an ideal equation with the excluded commodity — an equation yet to be realized — the use-value of the special commodity, although real, appears in the process itself as a mere form which is yet to be realized through transformation into actual use-values. Originally the commodity appeared simply fts commodity, as universal labor-time embodied in a particular use-value. In the process of exchange, all commodities are related to the one excluded commodi ity as to a simple commodity, one which appears as the — 51 — embodiment of universal labor-time in a particular use- value. Thus, particular commodities become related to one particular commodity as a universal commodity/ In that manner the mutual relations of possessors of commodities based on the fact that they regard their labor as imiversal social labor, takes on the aspect of their relations to commodities as exchange values; and the mutual relation of commodities as exchange values appears in the process of exchange as the relation of all of them to one particular commodity as to a specially adopted means of expression of their exchange value; again, from the point of view of that particular com- modity the above relation appears as its specific relation to. all other commodities, and, therefore, as its own definite, spontaneous, social character. The particular commodity which thus appears as the specially adopted expression of the exchange value of all other commod- ities, or the exchange value of commodities as a particu- lar exclusive commodity, is money. Money is a crystal- lization of the exchange value of commodities which they themselves form in the process of exchange. Thus, while commodities become use-values to each other in the process of exchange by casting off all definite forms and entering into mutual relations in their direct material shape, they must assume a new form, viz., proceed to the formation of money in order to appear as exchange values to each other. Money is not a sjrmbol, no more than the commodity aspect of a use-value is a symbol. That a social relation of production takes the form of an object existing outside of individuals, and that the defi- * This expression is used by Grenovesi. — se- nile relations into which individuals enter in the pro- cess of production carried on in society, assume the form of specific properties of a thing, is a perversion and by no means imaginary, but prosaically real, mys- tification marking all social forms of labor which creates exchange value. In money this mystification appears only more strikingly than in commodities. The necessary physical properties of the particular commodity in which the money form of all other com- modities is to be crystallized — ^as far as they are di- rectly determined by the nature of exchange value — are: divisibility to any desired extent, homogeneity of its parts, and uniformity of all the specimens of the commodity. As an embodiment of universal labor-time it must be homogeneous in its structure and capable of representing only quantitative differences. Another necessary property is durability of its use-value, as it must last through the process of exchange. The precious metals excel in these qualities. Money not being a result of a scheme or agreement, but having been produced instinctively in the process of exchange, a great variety of more or less unsuited commodities had successively performed its functions. At a certain stage of development of the process of exchange, the necessity arises for a polar distribution of the func- tions of exchange value and use-value among commo- dities, so that one commodity e. g. should act as a medium of exchange, while another is being alienated as a use-value. This necessity brings it about that one or even several commodities possessing the most generally accepted use-value, begin, incidentally at first, to play — 53 — the part of money. Even if not direct means of satis- fying existing wants, their being the most considerable material constituent part of wealth, insures to them a more general character than to the other use-values. Direct barter, the original natural form of exchange, represents rather the beginning of the transformation of use-values into commodities, than that of commo- dities into money. Exchange value has as yet no form of its own, but is still directly bound up with use- value. This is manifested in two ways. Production, in its entire organization, aims at the creation of use- values and not of exchange values, and it is only when their supply exceeds the measure of consumption that use-values cease to be use-values, and become means of exchange, i. e., commodities. At the same time, they be- come commodities only within the limits of being direct use-values distributed at opposite poles, so that the com- modities to be exchanged by their possessors must be use- values to both, — each commodity to its non-possessor. As a matter of fact, the exchange of commodities origin- ates not within the primitive communities,* but where they end, on their borders at the few points, where they come in contact with other communities. That is where barter begins, and from here it strikes back into the in- terior of the community, decomposing it. The various * Aristotle makes the same remark with reference to the private family as the primitive commimity. But the prim- itive form of family is the tribal family, from the historical dissolution of which the private family develops, "ip ^x**- oivrji 9fMTf jcotvwi'tqi (toOto B' e 1, c, p. 403. But while Petty was a frivolous, rapacious and unprincipled adventurer, Boisguillebert, though an intendant under Louis XIV, championed the interests of the oppressed classes with a daring that was equal to his keenness of mind. ■The French Socialism of the Proudhon type suffers from the same national hereditary disease. — en- treat labor-time as the measure of value of commo- dities, and at the same time confound labor embodied in the exchange value of commodities and measured by time, with the direct natural activity of individuals. The first sensible analysis of exchange value as labor- time, made so clear as to seem almost commonplace, is to be found in the work of a man of the New World where the bourgeois relations of production imported together with their representatives sprouted rapidly in a soil which made up its lack of historical traditions with a surplus of humus. That man was Benjamin Franklin, who formulated the fundamental law of mod- ern political economy* in his first work which he wrote when a mere youth and published in 1721. He declares it necessary to look for another measure of value than precious metals. That measure is labor. "By labor may the value of silver be measured as well as other things. As, suppose one man employed to raise com, while another is digging and refining silver ; at the year's end, or at any other period of time, the complete produce of com, and that of silver, are the natural price of each other; and if one be twenty bushels, and the other twenty ounces, then an ounce of that silver is worth the labor of raising a bushel of that com. Now if by the discovery of some nearer, more easy or plentiful mines, a man may get forty ounces of silver as easily as formerly he did twenty, and the same labor is still re- * "Benjamin Franklin, The Works of, etc.," ed. by I. Sparks, vol. II., Boston, 1836. "A Modest Inquiry into the Nature and Necessity of a Paper Currency." — es- quired to raise twenty bushels of corn, then two ounces of silver will be worth no more than the same labor of raising one bushel of corn, and that bushel of com will be as cheap at two ounces, as it was before at one, ceteris paribus. Thus the riches of a country are to be valued by the quantity of labor its inhabitants are able to pur- chase."^ Thus Franklin regards labor-time from the one- sided economic point of view, as the measure of value. The transformation of actual products into exchange values is self-evident with him and the only question is as to finding a quantitative measure of value. "Trade,'' says he, "in general being nothing else but the exchange of labour for labour, the value of all things is, as I have said before, most justly measured by labour."^ Substi- tute the word "work" for "labor" in the above statement, and the confusion of labor in one form and labor in an- other form becomes at once apparent. Since trade con- sists e. g. in the exchange of the respective labors of the shoemaker, miner, spinner, painter, etc., does it follow that the value of shoes is most justly measured by the work of a painter? On the contrary, Franklin meant that the value of shoes, mining products, yarn, paintings, etc., is determined by abstract labor which possesses no particular qualities and can, therefore, be measured only quantitatively.^ But since he does not develop the idea that labor contained in exchange value is abstract uni- » L. c, p. 265. » L. c, p. 267. " L. c, "Remarks and Facts relative to the American Paper Money," 1764. — 64 — versal labor which assumes the form ai social laDor as a result of the universal alienation of the products of in- dividual labor, he necessarily fails to recognize in money the direct embodiment of this alienated labor. For that reason he sees no inner connection between money and labor which creates exchange value, and considers money merely as an instrument introduced from outside into the sphere of exchange for purposes of technical con- venience.^ Franklin's analysis of exchange value did not exert any direct influence on the general trend of science, because he discussed only special questions of political economy whenever there was a definite practical occasion for it. The contrast between useful work and labor which creates exchange value agitated all Europe during the eighteenth century in the form of this question: what particular kind of labor constitutes the source of bour- geois wealth ? It was thus assumed that not every kind of labor which is realized in use-values or yields certain products does thereby directly create wealth. With the physiocrats, however, as well as with their opponents, the burning question was not, what kind of labor creates value, but which is it that creates surplus value. They approached the problem in its complicated form before they had solved it in its elementary form; such is the historical course of all sciences leading them by a labyrinth of intersecting paths to the real starting points. Unlike other builders, science not only erects castles in *See "Papers on American Politics; Remarks and Facta relative to the American Paper Money," 1764, I. c. — 65 — the air, but constructs separate stories of the building, before it has laid the foundation. Without dwelling any longer on the physiocrats and omitting quite a num- ber of Italian economists who in some more or less in- genious ideas came close to a correct analysis of the na- ture of commodity/ we pass at once to the first Briton who elaborated the general system of bourgeois econ- omics. Sir James Steuart/ His idea of exchange value as' well as all the abstract categories of political economy still seem to be with him in the process of differentiation from the material elements they represent and therefore appear quite vague and unsettled. In one place he de- termines real value hy lahor-time ("what a workman can perform in a day^'), but immediately creates confusion by introducing the elements of wages and raw material.'* In another place his struggle with the material sub- stance of the subject he treats of is revealed even more *See e. g. Galiani, "Delia Moneta," in vol. 3 of Scrittori Classici italiani di Economia politica (Published by Custodi). Parte Modema, Milano, 1803. "La fatica, he says, fe Tunica ehe da valore alia cosa" ("only effort can give value to any thing**). The designation of labor as "fatica," strain, eflFort, is characteristic of the southerner. * Steuart's work, "An Inquiry into the Principles of Political Economy, being an Essay on the Science of Domestic Policy in Free Nations," appeared first in London in two quarto vol- umes in the year 1767, ten years before Adam Smith's "Wealth of Nations." I quote from the Dublin edition of 1770. (The references to pages are the same for the standard Ix)ndon edi- tion of 1767, except where otherwise stated. Translator.) •Steuart, I. c, vol. I., p. 181-183. — 66 — strikingly. He cans the material of nature contained in a commodity, such as the silver in a silver plate, its "intrinsic worth," while the labor-time contained in it he calls *'useful value,'' The former, he says "is . . . something real in itself," while "the value of the second must be estimated according to the labour it has cost to produce it. . . . The labour employed in the modi- fication [of the substance] represents a portion of a man's time."* What distinguishes Steuart from his predecessors and followers is his keen differentiation between specifically social labor which is represented in exchange value, and concrete labor which produces use-values. Labor, he says, which through its alienation creates a universal equival- ent, I call industry. Labor as industry he distinguishes not only from concrete labor, but from all other social forms of labor.* It is to him the capitalistic form of labor in contrast to its antique and mediaeval forms. He is especially interested in the difference between cap- italistic and feudal labor, of which he had observed the latter in its decaying forms both in Scotland and on his extensive travels over the continent. Steuart knew, of course, very well that products took on the form of com- modities and commodities, the form of money in pre- capitalistic epochs as well; but he proves conclusively that it is only in the capitalistic period of production that the commodity becomes the elementary and funda- » Steuart, 1. c, vol. L, p. 361-362. 'Sec chapter I., book II., vol. I. "of the reciprocal conne*» tions between Trade and Industry" (Translator}. 67 mental form of wealth, and alienation [of commodities] , the ruling form of acquisition and that consequently labor creating exchange value is specifically capitalistic in its character/ After different forms of concrete labor, such as agri- culture, manufacture, navigation, trade, etc., had each in turn been declared the true source of wealth, Adam Smith proclaimed labor in general, and namely in its general social form of division of labor, to be the only source of material wealth or use-values. While ignoring in connection with the latter the part played by nature, he is troubled by it when he comes to deal with purely social wealth i. e. exchange value. To be sure, Adam de- termines the value of a commodity by the labor-time contained in it, but relegates the actual application of the principle to pre-Adamic times. In other words, what seems to him true from the standpoint of simple commodity, ceases to be clear as soon as the higher and more complex forms of capital, wage-labor, rent, etc. take its place. This he expresses by saying, that the value of commodities used to be measured by labor-time in the paradise lost of bourgeois society, in which men *He declares, therefore, the patriarchal form of agriculture which is devoted to the direct production of use-values for the owner of the land, to be an "abuse," not in Sparta, or Rome, or even in Athens, but in the industrial countries of the eigh- teenth century. This "abusive agriculture" is not "trade," but a "direct means of subsisting." Just as capitalistic agriculture clears the country of superfluous mouths, so does the capital- istic mode of manufacture clear the factory of superflu-^us hands. — 68 — dealt with each other not as capitalists, wage-workers, landlords, tenants, usurers, etc., but merely as plain pro- ducers of commodities which they exchanged. He con- stantly confuses the determination of the value of com- modities by the labor-time contained in them with the determination of their value by the value of labor. He becomes confused in working out the details and fails to see the objective equalization of different kinds of labor which the social process forcibly carries out, mistaking it for the subjective equality of the labors of individuals. The transition from concrete labor to labor creating ex- change value, i. e. to labor in its fundamental capitalistic form he tries to derive from the division of labor. Yet, while it is true that private exchange implies the divis- ion of labor, it is false to maintain that division of labor implies private exchange. Among the Peruvians, e. g., labor was divided to an extraordinary extent, although there was no private exchange, no exchange of products, as commodities. * Thus e. g., Adam Smith says : "Equal quantities of labour, at all times and places, may be said to be of equal value to the labourer. In his ordinary state of health, strength and spirits, in the ordinary degree of his skill and dexterity, he must al- ways lay down the same portion of his ease, his liberty, and his happiness. The price which he pays must always be the same, whatever may be the quantity of goods which he receives in return for it. Of these, indeed, it may sometimes purchase a greater and sometimes a smaller quantity; but it is their value which varies, not that of the labour which purchases them. . . . Labour alone, therefore, never varying in its own value ... is their [commodities'] real price, etc. Adam Smith (Book I., ch. V.. p. 34, Oxford, 1809. Translator.) — - 69 — Contrary to Adam Smith, David Ricardo elaborated with great clearness the determination of the value of a commodity by labor-time and showed that this law gov- erns also such relations of capitalistic production which seem to contradict it most. Ricardo confines his inves- tigations exclusively to the quantitative determination of value and as regards the latter he is at least conscious of the fact that the realization of the law depends upon cer- tain historical conditions. He says, namely, that the de- termination of value by labor-time holds good for com- modities "only as can be increased in quantity by the exertion of human industry, and on the production of which competition operates without restraint.^'^ What he really means is that the law of value presupposes for its full development an industrial society in which pro- duction is carried on a large scale and free competition prevails, i. e. the modern capitalist society. In all other respects, Ricardo considers the capitalist form of labor as the eternal natural form of social labor. He makes the primitive fisherman and the primitive hunter straightway exchange their fish and game as owners of commodities, in proportion to the labor-time embodied in these exchange values. On this occasion he commits the anachronism of making the primitive fisherman and primitive hunter consult the annuity tables in current use on the London Exchange in the year 1817 in the cal- culation relating to their instruments. The "parallelo- grams of Mr. Owen'* seem to be the only form of society * David Ricardo, "On the Principles of Political Economy and Taxation," 3rd edijiion, London, 1821, p. 3. — 70 — outside of the bourgeois form with which he was ac- quainted. Although confined within this bourgeois horizon, Eicardo analyzes the bourgeois economy — which looks quite different to deeper insight than it does on the surface — with such keen power of theoretical pene- tration that Lord Brougham could say of him: *'Mr. Ricardo seemed as if he had dropped from another planet/' In a direct controversy with Ricardo, Sismondi lays stress upon the specifically social character of labor which creates exchange value,^ and says it is "characteristic of our economic progress" to reduce the magnitude of value to the necessary labor- time, to the relation between the demand of society as a whole and the quantity of labor which is suf- ficient to satisfy this demand.^ Sismondi is no more laboring under Boisguillebert's idea, that labor which creates exchange value is adulterated by money ; but just as Boisguillebert denounced money, so does Sismondi de- nounce large industrial capital. In Ricardo political economy reached its climax, after recklessly drawing its ultimate conclusions, while Sismondi supplemented it by impersonating its doubts. Since Ricardo gave to classical political economy its * Sismondi, "Etudes sur rEconomic Politique," t. II., Brux- elles, 1837. "C'est Topposition entre la valeur usuelle . . . et la valeur ^changeable k laquelle le commerce a reduit toute chose," p. 161. [Paris edition, p. 229, TransL] 'Sismondi 1. c, p. 163-166 seq. [Paris edition, 230 etf. TransL] — 71 — final shape, having formulated and elaborated with the greatest clearness the law of the determination of ex- chaQge value by labor-time, it is natural that all the polemics among economists should center about him. Stripped of its puerile^ form this controversy comes down to the following points : First : Labor itself has exchange value, and different kinds of labor have different exchange values. We get into a vicious circle by making exchange value the meas- ure of exchange value, because the measuring exchange value needs a measure itself. This objection may be reduced to the following problem : Given labor-time as the intrinsic measure of exchange value, develop from that the determination of wages. The theory of wages gives the answer to that Second : If the exchange value of a product is equal to the labor-time contained in it, then the exchange value of one day of labor is equal to the product of that labor. In other words, wages must be equal to the product of labor.2 But the very opposite is actually the case. Ergo. * Perhaps the silliest to be found are the annotations of J. B. Say to the French translation of Ricardo, made by Constancio, and the most pedantically arrogant are the remarks of Mr. MacLeod in his newly published "Theory of Exchange," Lon- don, 1858. 'This objection raised against Ricardo by bourgeois econ- omists was taken up later by the socialists. Having assumed the correctness of the formula, they charged the practice with contradiction to the theory and appealed to bourgeois society to realize in practice the conclusions which were supposed to follow from its theoretical principles. That was at least the — 72 — this objection comes down to the following problem: How does production, based on the determination of exchange value by labor-time only, lead to the result that the exchange value of labor is less than the exchange value of its product? This problem is solved by us in the discussion of capital. Third : The market price of commodities either falls below or rises above its exchange value with the changing relations of supply and demand. Therefore, the ex- change value of commodities is determined by the rela- tion of supply and demand and not by the labor-time contained in them. As a matter of fact, this queer con- clusion merely amounts to the question, how a market price based on exchange value can deviate from that ex- change value; or, better still, how does the law of ex- change value assert itself only in its antithesis? This problem is solved in the theory of competition. Fourth : The last and apparently the most striking objection, if not raised in the usual form of queer ex- amples : If exchange value is nothing but mere labor- way in which the English socialists turned Ricardo's formula of exchange value against political economy. It remained for Mr. Proudhon not only to proclaim the fundamental principle of old society as the principle of the new, but also to declare liimself the discoverer of the formula in which Ricardo summed up the combined results of classical English political economy. It has been proven that the Utopian interpretation of the Ri- cardian formula was about forgotten in England when Mr. Proudhon "discovered** it on the other side of the Canal. (Cf. my work: **Mi8fere de la Philosophie." etc., Paris, 1847, para- graph on la valeur constitu^.) — 73 — time contained in commodities, how can commodities which contain no labor possess exchange- value, or in other words, whence the exchange value of mere forces of nature ? This problem is solved in the theory of rent. CHAPTER II. MONEY OR SIMPLE CIRCULATION. In a parliamentary debate on Sir Robert PeeFs Bank Act of 1844 and 1845, Gladstone remarked that not even love has made so many fools of men as the pondering over the nature of money. He spoke of Britons to Britons. The Dutch, on the contrary, who, from times of yore, have had, Petty's doubts notwithstanding, ''angelical wits" for money speculation have never lost their wits in speculations about money. The main difficulty in the analysis of money is over- come as soon as the evolution of money from commodity is understood. This point once granted, it only remains to comprehend clearly the particular forms of money, which is to some extent made difficult by the fact that all bourgeois relations, being gilt or silver plated, have the appearance of money relations, and money, therefore, seems to possess an endless variety of forms, which have nothing in common with it. Tn the following investigation only those forms of — 74 — money are treated of which directly grow out of the ex- change of commodities; the forms which belong to a higher stage of production, as e. g., credit money will not be discussed here. For the sake of simplicity gold is assumed throughout as the money commodity. 1. THE MEASURE OF VALUE. The first process of circulation constitutes, so to say, the theoritical preparatory process to actual circulation. To begin with, commodities which are use-values by nature, acquire a form in which they appear in idea to each other as exchange values, as definite quantities of incorporated universal labor-time. The first necessary step in this process is, as we have seen, the setting apart by the commodities of a specific commodity, say gold, as the direct incarnation of universal labor-time, or the uni- versal equivalent. Let us go back for a moment to the form in which commodities turn gold into money. 1 ton of iron = 2 ounces of gold 1 quarter of wheat = 1 ounce of gold 1 hundred weight of Mocca coffee = 1-4 ounce of gold 1 hundred weight of potash = ^ ounce of gold 1 ton of Brazil timber =13^ ounces of gold Y commodities = X ounces of gold In the above series of equations iron, wheat, coffee, potash, etc. appear to each other as embodiments of homogeneous labor, namely, as labor materialized in money, from which all the peculiarities of the different kinds of concrete labor represented in the different use- values are completely eliminated. As value they are all — 75 — identical, they are the incarnation of the same labor, or the same incarnation of labor, viz., gold. As uniform em- bodiments of the same labor they display only one differ- ence, a quantitative one, by appearing as different quan- tities of value, because unequal quantities of labor-time are contained in their use-values. The mutual relation of these separate commodities is that of embodiments of universal labor-time, since they are related to universal labor-time as to an excluded commodity, viz., gold. The same relation the development of which causes commodi- ties to appear to each other as exchange values, causes the labor time contained in gold to appear as universal labor-time, a given quantity of which is expressed in different quantities of iron, wheat, coffee, etc, — in short, in the use-values of all commodities, or is directly unfolded in the endless series of commodity- equivalents. While all commodities express their ex- change values in gold, gold expresses its exchange value directly in all commodities. While commodities assume the form of exchange value in relation to each other, they lend to gold the form of the universal equivalent, or of money. Grold becomes the measure of value,, because all com- modities measure their exchange values in gold, in proportion as a certain quantity of gold and a certain quantity of the commodity contain the same amount of labor-time; and it is only by virtue of this function of being a measure of value, in which capacity its own value is measured directly in the entire series of commodity equivalents, that gold becomes a universal equivalent or money. On the other hand, the exchange 76 value of all commodities is expressed in gold. In this expression, the qualitative aspect is to be distinguished from the quantitative : there is the exchange value of the commodity as the embodiment of the same uniform labor-time ; while the magnitude of value is exhaustively expressed, since in the same proportion in which com- modities are equated to gold they are equated to one an- other. On the one hand the universal character of the labor-time contained in them is revealed; on the other, its quantity is expressed in its golden equivalent. The exchange value of commodities thus expressed in the form of a universal equivalent and, moreover, as a numerical proportion of this equivalent, in terms of one specific commodity, or represented in the form of a series of commodities equated to one specific commodity, is PRICE. Price is the form into which the exchange value of commodities is converted when it appears within the sphere of circulation. By the same process b}"^ which commodities express their values in gold prices, they turn gold into a measure of value i. e. into money. If all of them were to measure their values in silver, wheat, or copper, and therefore express them in the form of silver, wheat or copper prices, then silver, wheat or copper would be measures of value and consequently universal equivalents. In order to appear as prices in circulation, commodities must be exchange values before they enter circulation. Gold be- comes the measure of value only because all commodities estimate their exchange value in it. The universality of this relation which is the result of evolution and from which alone springs the function of — 77 — gold 08 the measure of value, implies however, that every single commodity is measured in gold, in proportion to the labor-time contained in both; that the actual com- mon measure of the commodity and of gold is labor ; or that commodity and gold are passed for each other in direct barter as equal exchange values. How this equalization actually takes place, can not be discussed here when treating of simple circulation. So much, however, is clear, that in countries producing gold and silver, certain quantities of labor-time are directly em- bodied in definite quantities of gold and silver, while in countries which do not produce gold and silver the same result is reached in a round-about way, by direct or in- direct exchange of the commodities of those countries; i. e. a definite portion of average national labor is given for a definite quantity of labor-time, embodied in the gold and silver of the mine-owning countries. In order to be able to serve as a measure of value, gold must be as far as possible a variable value, because it can become the equivalent of other commodities only as an incarnation of labor-time, and the same labor-time is realized in unequal volumes of use-values with the change in the pro- ductive power of concrete labor. In estimating all com- modities in gold it is only assumed that gold represents a given quantity of labor at a given moment, as was done when the exchange value of any commodity was ex- pressed in terms of the use-value of any other com- modity. As for the variations of the value of gold, the law of exchange value formulated above holds good in its case as well. If the exchange value of commodities remains unchanged, then a general rise in their gold 78 prices is possible only in the case of a fall in the ex- change value of gold. If the exchange value of gold re- mains unchanged, a general rise of gold prices is pos- sible only when the exchange value of all commodities rises. The reverse is true in case of a general fall in the prices of commodities. If the value of an ounce of gold falls or rises in consequence of a change in the labor-time required for its production, then the values of all other commodities fall or rise to an equal extent. Thus, the ounce of gold represents after the change, as it did be- fore, a given quantity of labor-time with regard to all commodities. The same exchange values are now esti- mated in greater or smaller quantities of gold than be- fore, but they are estimated in proportion to the mag- nitude of their values, and consequently retain the same proportion to each other. The ratio 2 -r- 4 -f- 8 re- mains the same when expressed as 1 -r- 2 -f-4 or as 4 -V- 8 -f- 16. The change in the quantity of gold in which exchange values are estimated with a variation in the value of gold, interferes as little with the function of gold as a measure of value, as the fifteen times smaller value of silver as compared with that of gold interferes with the performance of that function by the latter. Since labor-time is the common measure of gold and commodities, and since gold figures as the measure of value only in so far as all commodities are measured by it, the idea that money makes commodities commen- surable, is therefore a mere fiction of the process of circulation.* It is rather the commensurability of com- * True, Aristotle sees that the exchange value of commodities underlies their prices : " 'iri ^ iAAayh ^v vpW rh yifiur^a «Tr«», Sfikw — 79 — modities as incorporated labor-time, that turns gold into money. Commodities enter the process of exchange in the con- crete form of use-values. They are yet to be turned into the real universal equivalent through their aliena- tion. The determination of their prices merely amounts to their ideal transformation into the universal equiv- alent, a process of equation to gold which is yet to be realized. But since commodities are, in their prices, transformed into gold only in imagination, or are con- verted only into imaginary gold, and since their money form is not differentiated as yet from their concrete selves, it follows that gold has also been turned into money only in imagination; it appears so far but as a measure of value, and in fact definite quantities of gold serve merely as names for certain quantities of labor- time. The form in which gold is crystallized in money Jto^c'pci yap ovifv ^ ci xAZvai irevrt avri oticta(, ^ ocrov ai irivrt ^Aivai.*" It IS clear that exchange existed before coin. For it does not make any difference whether you give five beds for a house, or as much money as five beds are worth"). On the other hand. since commodities acquire only in price the form of exchange value with respect to one another, he makes them commensur- able through money. ** Aib 8cr wivra. rtrt.tL^vim.. To jr; vopLUTfia ucnrtp fiirpov ^d. be an ounce of gold, why not call things by their proper names, and, dropping the terms pounds, shillings and pence, say ounces, penny- weights and grains? . . . If we adopt the terms ounces, pennyweights and grains of gold, as our mone- tary system, we should pursue a direct system of bar- ter. . . . But if gold be estimated as of the value of £3 17s. lO^d. per ounce . . . how is this . . . that much difficulty has been experienced at different periods to check gold from rising to £5 48. per ounce, and we now notice that gold is quoted at £3 17s. 9d. per ounce? . . . The expression 'pound has reference to value, but not a fixed standard value. . . . The term pound is the ideal unit, , , . Labour is the parent of cost and gives the relative value to gold or iron. Whatever denomination of words are used to express the daily or weekly labour of a man, such words express the cost of the commodity pro- duced.^^^ In the last words the hazy conception of the ideal money measure melts away and its real meaning breaks through. The reckoning names of gold, pound sterling, shilling, etc., should be names for definite quantities ^The Currency Question, The Gemini Letters, London, 1844, p. 260-272, passim. — 102 — of labor-time. Since labor-time constitutes the sub- stance and the intrinsic measure of values, these names would then actually represent definite proportions of value. In other words, labor-time is maintained to be the true unit of measure of money. With this we leave the Birmingham school, but should add in passing that the doctrine of the ideal measure of money acquired new importance in the controversy over the question of the convertibility or non-convertibility of bank notes. If paper receives its name from gold or silver, then the convertibility of a note or its exchangeability for gold or silver remains an economic law, no matter what the civil law may be. Thus a Prussian paper thaler, al- though legally inconvertible, would immediately depre- ciate if it were worth less than a silver thaler in ordi- nary trade, i. e., if it were not practically convertible. The consistent advocates of inconvertible paper money in England, therefore, sought refuge in the ideal meas- ure of money. If the reckoning names of money, £, s., etc., are names of certain quantities of atoms of value, of which a commodity absorbs or loses now more, now less in exchange for other commodities, then an English £5 note, e. g., is just as independent of its relation to gold as of that to iron and cotton. Since its title would no more imply its theoretical equality with a certain quantity of gold or any other commodity, the demand for its convertibility, i. e., for its practical equality with a definite quantity of a specified thing would be excluded by the very conception of the note. The theory of labor-time as the direct measure of money was first systematically developed by JOHN 103 GRAY.^ He makes a National Central Bank ascertain through its branches the labor-time consumed in the pro- duction of various conmiodities. The producer receives an official certificate of value in exchange for his commodity, i. e., he gets a receipt for as much labor-time as his com- modity contains,^ and these bank notes of one week*s labor, one day^s labor, one hour's labor, etc., serve at the same time as a check for an equivalent in all other commodities stored in the bank warehouses.^ This is the fundamental principle carefully worked out in de- tail and based throughout on existing English institu- * John Gray : "The Social System. A Treatise on the Principle of Exchange, Edinburgh, 1831." Compare with "Lectures on the Nature and Use of Money, Edinburgh, 1848,** by the same author. After the February revolution Gray sent a memorial to the provisional French government, in which he instructs the latter that France is not in need of an "organization of labour,** but of an "organization of exchange** of which the plan is fully worked out in his money system. Honest John did not suspect that sixteen years after the appearance of his "Social System*' a patent for the same discovery would be taken out by the ingenious Proudhon. 'Gray, "The Social System,'*^ etc., p. 63: "Money should be merely a receipt, an evidence that the holder of it has either contributed certain value to the national stock of wealth or that he has acquired a right to the same value from some one who has contributed to it.** 'An estimated value being previously put upon produce, let* it be lodged in a bank, and drawn out again, whenever it is required, merely stipulating, by common consent, that ha who lodges any kind of property in the proposed National Bank, may take out of it an equal value of whatever it may contain, instead of being obliged to draw out the self -same thing that he put in.** L. c, p. 68. — 104 — tions. Under this system, says Gray, **to sell for money may be rendered, at all times, precisely as easy as it now is to buy with money; . . . production would be- come the uniform and never-failing cause of demand."* The precious metals would lose their "privilege" as against other commodities and "take their proper place in the market beside butter and eggs, and cloth and calico, and then the value of the precious metals will concern us just as little ... as the value of the diamond."* "Shall we retain our fictitious standard of value, gold, and thus keep the productive resources of the country in bondage? or, shall we resort to the nat- ural standard of value, labour, and thereby set our pro- ductive resources free?"* Labor-time being the intrinsic measure of value, why should there be another external measure side by side with it? Why does exchange value develop into price? Why do all commodities estimate their value in one ex- clusive commodity, which is thus converted into a spe- cial embodiment of exchange value into money? That was the problem which Gray had to solve. Instead of solving it, he imagined that commodities could be re- lated directly to each other as products of social labor. But they can relate to each other only in their capacity of commodities. Commodities are the direct products of isolated independent private labors, which have to be realized as universal social labor through their alien- ation in the process of private exchange, that is to say, »L. c, p. 16. ■Gray: "Lectures on Money, etc.," p. 182. • L. c, p. 169. — 1U5 — labor basud on the production of commodities becomes social labor only through universal alienation of indi- vidual labors. But by assuming that the labor-time con- tained in commodities is directly social labor-time. Gray assumes it to be common labor-time or labor-time of di- rectly associated individuals. Under such conditions a Fpecific commodity like gold or silver could not con- front other commodities as the incarnation of universal labor, and exchange value would not be turned into r>rice; but, on the other hand, use-value would not be- come exchange value, products would not become com- modities and thus the very foundation of the capital- istic system of production would be removed. But that is not what Gray has in mind. Products are to be pro- duced as commodities, hut are not to be exchanged as commodities. He entrusts a national bank with the carrying out of this pious wish. On the one hand, society, through the bank, makes individuals indepen- dent of the conditions of private exchange, and on the other, it allows them to go on producing on the basis of private exchange. The logic of things, however, compels Gray to do away with one condition of capi- talistic production after another, although he wishes to "reform" only the money system which results from the exchange of commodities. Thus he transforms cap- ital into national capital," land into national property,' ^ "The business of every country ought to be conducted on a national capital.'* John Gray, "The Social System," etc., p. 171. * "The land to be transformed into national property." L. c. p. 298. — 106 — and if his bank is to be watched closely, it will be found that it not only receives commodities with one hand and issues certificates for work delivered with the other, but that it regulates production as well. In his last work, "Lectures on Money,'* in which Gray is anxious to dem- onstrate that his labor-money is a purely bourgeois re- form, he gets tangled up in even more glaring contra- dictions. Every commodity is directly money. That was Gray's theory deducted from his incomplete and, therefore, false analysis of commodities. The "organic" structure of "labor money," the "national bank" and the "ware- docks" are mere fantastic visions in which the dogma is made by a legerdemain to appear to us as a universal law. The dogma that a commodity is money or that the isolated labor of the individual contained in it is direct social labor, will of course not become true through the mere fact that a bank believes in it and carries on operations accordingly. It is more likely that bankruptcy would play in that case the part of the prac- tical critic. What remains concealed in Gray's writings and hidden from himself as well, namely, that labor- money is a well-sounding economic phrase for the pious wish to get rid of money, and with money, of exchange value, and with exchange value, of commodities, and with commodities, of the capitalistic mode of produc- tion, was clearly expressed by some English socialists of whom a few preceded and others followed Gray.^ * See e. g. W. Thompson : "An Inquiry into the Distribution of Wealth, etc.," London, 1827. Bray, "Labour's Wrongs and Labour's Remedy," Leeds, 1839. - 107 — But it remained for Mr. Proudhon and his school to preach in all earnest the degradation of money and the exaltation of the commodity as the gist of socialism and thus to reduce socialism to an elementary misconcep- tion of the necessary connection between commodity and money.* 2. THE MEDIUM OF CIKCULATION. After the commodity has received in the process of price determination the form in which it becomes capa- ble of circulation, and after gold has acquired the charac- ter of money in the same process, circulation will both present and solve the contradictions which are inherent in the process of exchange of commodities. The actual exchange of commodities, i. e., the social interchange of matter consists of a change of form in which is unfolded the double character of the commodity as use-value and exchange value, and at the same time its own change of form is crystallized in distinct forms of money. To de- scribe this change of form is to describe circulation. As we have seen, given a world of commodities and with it a system of division of labor, commodity is but a devel- oped form of exchange value ; in the same manner, cir- culation implies a steady stream of exchange transac- tions which are being continually renewed on all sides. The second assumption we make is that commodities * Alfred Darimont's "De la Reforme des banques," Paris, 1856, may be considered as a compendium of this melodramatic theory of money. — 108 — enter the process of exchange with a definite price or that they appear to each other in that process in a double capacity, really as use-values, ideally — in price — as exchange values. The liveliest streets of London are crowded with stores who?e show windows are filled with the riches of the world, Indian shawls, American revolvers, Chi- nese porcelain, Parisian corsets, Russian furs and trop- ical spices, but all of these things of Joy bear fatal white labels marked with Arabian figures with the la- conic characters £, s., d. Such is the picture of the commodity appearing in circulation. a. THE METAMORPHOSIS OF COMMODITIES. On close examination the process of circulation is seen to consist of two distinct cycles. If we denote commodity by the letter C and money by the letter M we can express these two forms as follows : C— M— C M--C— M. In this chapter we are interested exclusively in the first form, i, e., in the form which serves as the direct expression of the circulation of commodities. The process C — M — C consists of the movement C — M, the exchange of the commodity for money, or selling; the opposite movement M — C, exchange of money for a commodity, or buying; and of the unity of the two movements C— M — C, exchange of the com- modity for money in order to exchange the money for a commodity, or selling in order to buy. But the result which marks the end of the process is C — C, exchange — 109 — of commodity for commodity, real interchange of mat- ter. If we look at it from the extreme end of the first commodity, C — M — C represents its transformation into gold and its retransformation from gold into a com- modity; a movement in which the commodity exists first as a particular use-value, then divests itself of that character, acquires the character of exchange value or universal equivalent, in which capacity it has nothing in common with its natural form, then throws off the last form as well to remain finally an actual use-value for the satisfaction of particular wants. In this last form it falls out of the sphere of circulation into that of consimiption. The entire process of circulation C — M — C thus includes the combined series of meta- morphoses, which every single commodity undergoes in order to become a direct use-value to its possessor. The first metamorphosis is accomplished in the first phase of the circulation process, C — M; the second in the last phase, M — C; and the entire process consti- tutes the curriculum vitae of the commodity. But the process C — ^M — C represents the combined metamor- phosis of a single commodity and constitutes at the same time the sum of certain one-sided metamorphoses of other commodities, since every metamorphosis of the first commodity constitutes its transformation into another commodity and therefore the transformation of the other commodity into it ; hence it constitutes a two- fold transformation which takes place at the same stage of circulation. We must then consider separately — 110 — each of the two processes of exchange into which cir* culation C — ^M — C breaks up. C — M or sale : commodity C enters the process of cir- culation not only as a particular use-value, e. g., a ton of iron, but as a use-value of a certain price, say, £3 178. 10^ d., or an ounce of gold. While this price is on the one hand the exponent of the quantity of labor-time contained in a ton of iron, i. e., of the magnitude of its value, it at the same time expresses the pious wish of the iron to become gold, i. e., to give to the labor-time it contains the aspect of universal social labor-time. Unless this trans-substantiation takes place, the ton of iron not only ceases to be a commodity, but even a prod- uct, for it is a commodity only because it is a non-use- value to its owner; that is to say, his labor counts as actual labor only in so far as it is labor useful to others, and the thing is useful to him only as abstract universal labor. It is, therefore, the business of iron, or of its owner, to find that point in the world of commodities where iron attracts gold. But this difficulty, the salto mortale of the commodity, is overcome when the sale actually takes place, as is assumed here on the analysis of simple circulation. When the ton of iron is realized as a use-value through its alienation, i. e., by passing from the hands in which it is a non-use-value to hands in which it is a use-value, it at the same time realizes its price and from mere imaginary gold it becomes real gold. In place of the name one ounce of gold or £3 17s. lOJ^d., an ounce of real gold has appeared, but the ton of iron has cleared that place. Not only does the com- modity — which in its price had been ideally converted — Ill — into gold — actually turn into gold through the sale C — M, but gold, which as a measure of value had been only ideal money and in fact figured merely as a money name of commodities — is now turned into actual money* by the same process. Just as gold be- came the ideal universal equivalent, because all com- modities measured their values by it, so does it now become the absolutely alienable commodity, real money, because it is the product of the universal alienation of commodities for it — and the sale C — M is the process by means of which that universal aliena- tion takes place. But gold becomes real money only through sale, because the exchange values of commod- ities were already ideal gold in their prices. In the sale C — M, as well as in the purchase M — C, two commodities, entities of exchange value and use- value, confront each other, but the exchange value of the commodity exists only ideally as price ; while as re- gards gold, although it is really a use-value, its use- * "Di due sorte fe la moneta, ideale e reale ; e a dui diversi usi fe adoperata, a valutare le cose e a comperarle. Per valutare h buona la moneta ideale, cosi come la reale e forse anche piu. L'altro use della moneta fe di comperare quelle cose istesse, ch'ella apprezza . . . i prezzi e i contratti si valutano in moneta ideale e si eseguiscono in moneta reale." Galiani, 1. c, p. 112 sq. ("Money is of two kinds, ideal and real; and is adapted to two different uses: to determine the value of things and to buy them. For the purpose of valuation ideal money is as good as real and perhaps even better. The other use of money is to buy the same things which it appraises . . . prices and contracts are determined in ideal money and are executed in real money.'*) value is confined only to its being the bearer of ex- change value and is, therefore, merely a formal use- value, having no relation to a real individual want. The antithesis of use-value and exchange value is thus dis- tributed at the two extreme poles of C — M, so that the commodity confronts gold as a use-value which has yet to realize in gold its exchange value or its price, while gold confronts the commodity as an exchange value, whose formal use-value is yet to be realized in the com- modity. Only through this duplication of the com- modity as commodity and gold, and, further, through the twofold and polar relation by virtue of which each extreme represents but ideally what its opposite is in reality and is in reality what its opposite is only ideal- ly — in short, only through the appearance of commod- ities as two-sided polar opposites are the contradictions solved that are inherent in the process of exchange. So far we have considered C — M as sale, as the con- version of commodity into money. But if we look at it from the other end, the same process will assume the form M — C, or purchase, i. e., the conversion of money into commodity. Sale is necessarily its opposite at the same time; it is the former if we look at the process from one end, and the latter if we regard the process from the other end. In practice this process differs only in that the initiative in C — M originates at the commodity end or with the seller, while in M — C it comes from the money end or the bu5^er. In describing the first metamorphosis of the commodity, its conver- sion into money as a result of the completion of the first phase of circulation C — M, we assume at the same — 113 — time that another commodity has been converted into money and is now in its second phase of circulation, M — C. Thus we get into a vicious circle of assumptions. Circulation itself constitutes such a vicious circle. If we did not consider M in M — C as the result of a meta- morphosis of another commodity, we would thereby take exchange out of the process of circulation. But outside of the latter the form C — M disappears and only two different Cs confront each other, say iron and gold, the exchange of which does not constitute a part of the process of circulation, being direct barter. Gold, at the source of its production, is a commodity like any other commodity. Its relative value and that of iron or of any other commodity is expressed here in quantities in which they are mutually exchanged. But in the process of circulation this operation is implied, the value of gold being already given in the prices of com- modities. Nothing can, therefore, be more erroneous than the idea that gold and commodity enter into the relation of direct barter within the process of circula- tion and that their relative values are ascertained through their exchange as simple commodities. The illusion that gold is bartered as a simple commodity for other commodities in the process of circulation is due to the fact that prices represent equations in which certain quantities of commodities are made equal to certain quantities of gold, i. e., that the commodities are made to relate to gold in its capacity of money, as a universal equivalent, and, therefore, appear to be di- rectly exchangeable for it. In so far as the price of a commodity is realized in gold, it is exchanged for — 114 — gold as a commodity, as a particular embodiment of labor-time; but in so far as it is the price that is re- alized in gold, the commodity is exchanged for gold in its capacity of money and not of a commodity, i. e., it is exchanged for gold as a universal embodiment of labor- time. But in either case the quantity of gold for which the conmiodity is exchanged in the process of circula- tion is not determined by exchange, but the exchange is determined by the price of the commodity, i. e., by its exchange value estimated in gold/ Within the process of circulation gold appears in everybody's hands as the result of sale C — M. But since C — M, sale, is at the same time M — C, purchase, it is apparent that while C, the commodity from which the process starts, is pasing through its first metamorphosis, another commodity, which confronts it as the opposite pole M, is completing its second metamorphosis and is, therefore, passing through the second phase of circula- tion, while the first commodity is still in the first phase of its course. As a result of the first phase of circulation, the sale, we get money which is the starting point of the second phase. In place of the commodity in its first form ap- pears its golden equivalent. This result may now form a resting point, since the commodity in this second form *This, of course, does not prevent the market price of com- modities to be above or below their value. However, this con- sideration is foreign to simple circulation and belongs to quite another sphere to be considered later, when we shall investi- gate the relation between value and market price. — 115 — possesses a lasting existence of its own. The commod- ity, a non-use-value in the hands of its possessor, is now on hand in an always useful, since always exchangeable, form, and it depends upon circumstances when and at what point of the surface of the commodity world it will again enter circulation. Its formation into a gold chrysalis constitutes an independent period in its life which may last a greater or less length of time. While in the case of barter the exchange of one particular use- value is directly bound up with the exchange of another particular use-value, the universal character of labor which creates exchange value is manifested in the sep- aration and lack of coincidence of acts of purchase and sale. M — C, purchase, is the inverted movement of C — M and at the same time the second or final metamorphosis of the commodity. As gold, i. e., in the form of the uni- versal equivalent, the commodity can be directly repre- sented in the use-values of all other commodities; the latter aspire to gold as their hereafter, but at the same time indicate in their prices the key in which it must sound in order that their bodies, their use-values, may take the place of money, while their souls, their ex- change-values, may enter gold. The universal product of the alienation of commodities is the absolutely alien- able commodity. There is no qualitative and only a quantitative limit to the transformation of gold into commodity, namely, the limit of its own quantity or magnitude of its value. "Everjrthing is to be had for cash." While in the movement C — M, the commodity, through its alienation as a use-value, realizes its own — 116 — price and the use-value of somebody else's money; it realizes in the movement M — C, through its alienation as an exchange value, its own use-value and the price of the other commodity. While through the realization of its price the commodity transforms gold into actual money, it turns gold into its merely fleeting money- form, through its own retransformation. Since the circulation of commodities implies an extensive division of labor and consequently a diversity of wants on the part of individuals, a diversity which bears an inverse ratio to the specialization of their own products, the purchase M — C may appear as an equation with one com- modity equivalent or split up into a series of commodity- equivalents limited by the variety of the demands of the purchaser and by the amount of money in his possession. Just as a sale is a purchase, so is a purchase a sale. M — C is at the same time C — M, but the initiative belongs in this case to gold or the purchaser. Coming back now to C — M — C, or to circulation as a whole, it is apparent that it contains the combined series of metamorphoses through which a commodity passes. But at the same time as one commodity enters the first phase of its circulation and completes its first metamorphosis, another commodity enters the second phase of circulation, completes its second metamorphosis and falls out of circulation; the first commodity enters at the same time the second phase of circulation com- pletes its second metamorphosis and falls out of circu- lation, while a third commodity enters circulation, passes through the first phase of its course completing the first metamorphosis. — 117 — Thus, the combined circulation C — M — C, as a com- plete metamorphosis of a commodity always constitutes at the same time the end of the complete metamor- phosis of another commodity and the beginning of a complete metamorphosis of a third commodity, i. e., a series without beginning or end. To illustrate this let us call C in either extreme C and C respectively, in order to distinguish the commodities, the series reading thus: C — M — C. The first member, C — M, presup- poses in fact that M is the result of another transac- tion C — M, and is thus itself merely the last member of a series C — M — C, while the second part M — C is merely a result of C" — M, or appears as the first part of C — M — C'", and so on. Furthermore, although M is the result of only one sale, it appears that the last part M — C, may be represented as M — C' + M — C" -|- M — C, etc., i. e., it may be split up into a number of purchases, and consequently a number of sales, or into a number of first members of new complete metamor- phoses of commodities. Since the complete metamor- phosis of a single commodity thus appears as a link not only of one endless chain of metamorphoses, but of many such chains, the process of circulation in the world of commodities presents a hopeless confusion of inter- twined movements constantly ending and starting anew at a countless number of points. But every single sale or purchase stands as an independent isolated act, whose supplemental act may be separated from it in time and place, and therefore does not need to follow it directly as its continuation. Every separate process of circula- tion, C — ^M or M — C, as a transformation of one com- — 118 — modity into use-value and of another into money, i. e., as the first and second phases of circulation respective- ly forms an independent halting point from either di- rection; but, on the other hand, all commodities com- mence their second metamorphosis in the common form of the universal equivalent, gold, and stop at the start- ing point of the second phase of circulation; for that reason any M — C dovetails in actual circulation with any C — M; the second chapter in the life-course of one commodity with the first chapter of that of another commodity. A, e. g., sells £2 worth of iron. He thus completes the transaction C — M or the first metamor- phosis of commodity iron, but postpones his purchase until some other time. At the same time B, who sold 2 quarters of wheat for £6 a fortnight since, buys with the same £6 a coat and trousers of Moses & Son, thus completing M — C or the second metamorphosis of the commodity, wheat. The two transactions M — C and C — M appear here merely as links of one chain, because a commodity ex- pressed in gold looks like any other commodity, and one cannot tell by the looks of the gold whether it is transformed iron or transformed wheat. C — M — C ap- pears, therefore, in the actual process of circulation as a jumble of countless accidentally coinciding or suc- cessively following members of different complete meta- morphoses. The actual process of circulation thus ap- pears not as a complete metamorphosis of a commodity, not as its movement through opposite phases, but as a mere agglomeration of many accidentally coinciding or successive purchases and sales. The process thus loses — 119 — all clearness of outline which is so much more the case since every single act of circulation, e. g., sale, is at the same time its opposite, purchase, and vice versa. On the other hand, the process of circulation is nothing but the movement of metamorphoses in the world of com- modities and, therefore, must reflect them also in its movement as a whole. How that reflection takes place we shall consider in the following chapter. It may be added here that in C — M — C the two extreme Cs con- stitute two forms of commodities which do not bear the same relation to M. The first C relates to money as a commodity of a special class to a universal commodity, while money relates to the second C as a universal com- modity to an individual commodity. C — ^M — C can, therefore, be reduced by abstract logic to the final form S — ^U — ^I in which S, standing for species, forms the first extreme; U, signifying universality, forms the connecting medium, and I, individuality, constitutes the last extreme. The owners of commodities entered the sphere of circulation simply as guardians of commodities. Within that sphere they confront each other in the opposite roles of buyer and seller, one as a personified sugar-loaf, the other as personified gold. As soon as the sugar- loaf is turned into gold, the seller becomes a buyer. These definite social functions are no outgrowths of human nature, but are the products of relations of ex- change between men who produce their goods in the form of commodities. They are so far from being pure- ly individual relations between buyer and seller that both enter this relation only to the extent that their 120 individual labor is disregarded and is turned into money as labor of no individual. Just as it is, therefore, child- ish to consider these economic bourgeois roles of buyer and seller as eternal social forms of human individu- ality, so it is on the other hand, preposterous to lament in them the extinction of individuality/ They are the necessary manifestations of individuality at a certain stage of the social system of production. Moreover, in the opposition of buyer and seller the antagonistic nature * How deeply some beautiful souls are wounded by the merely superficial aspect of the antagonism which asserts itself in buy- ing and selling, may be seen from the following abstract from M. Isaac Pereire's: "Legons sur I'industrie et les finances," Paris, 1832. The fact that the same Isaac in his capacity of inventor and dictator of the "Credit mobilier" has acquired the reputation of the wolf of the Paris Bourse shows what lurks behind the sentimental criticism of economics. Says Mr. Pereire. at the time an apostle of St. Simons: "C'est parceque tous les individus sont isolfej, s6par6s les uns des autres, soit dans leur travaux, soit pour la consommation, qu'il y a echange entre eux des produits de leur industrie respective. De la necessity de r^change est deriv6e la necessity de determiner la valeur relative des objets. Les id6es de la valeur et de I'fichange sont done intimement li^es, et toutes deux dans leur forme actuelle exprime Tindividualisme et I'antagonismc . ^ . II n'y a lieu a fixer la valeur des produits que parcequ'il y a vente at achat, en d'autres termes, antagonisme entre les divers membres de la society. II n'y a lieu a s'occuper du prix, de valeur que 19. oH il y avait vente et echat, c'est h dire, ofi chaque individu 6tait oblige de 1 utter, pour se procurer les object n^essaires a Pentretien de son existence" (1. c, p. 2, 3 pas- sim). ("Since individuals are isolated and separated from one another both in their labors and in consumption, exchange takes place between them in the products of their respective — 121 — of capitalistic production is expressed as yet so super- ficially and as mere matter of form, that this opposition belongs also to precapitalistic forms of society, since it merely requires that the mutual relations of individuals should be those of owners of commodities. Now, if we consider the result of C — M — C, it comes down to mere interchange of matter, C — C. A com- modity has been exchanged for a commodity, a use- value for a use-value, and the transformation of the commodity into money, or the commodity in its form of money, serves merely as a means of effecting this inter- change of matter. Money thus appears merely as a medium of exchange of commodities; not as a medium of exchange in general, but as a means of exchange in the sphere of circulation, i. e., a medium of circulation.^ industries. From the necessity of exchange arises the necessity of determining the relative value of things. The ideas of value and exchange are thus intimately connected and both express in their actual form individualism and antagonism. . . . The determination of values of products takes place only because there are sales and purchases, or, to put it differ- ently, because there is an antagonism between different mem- bers of society. One has to occupy himself with price and value only where there is sale and purchase, that is to say, where every individual is obliged to struggle to procure for himself the objects necessary for the maintenance of his ex- istence." ) ' "L'argent n*est que le moyen et I'acheminement, au lieu que les denr^es utiles H la vie sont la fin et le but." (**Moncy is but the ways and means, while the things useful in life are the end and object.") Boisguillebert : "Le Detail de la France," 1697, in Eugene Daires* "Economistes financiers du XVIII ieme siecle, vol. I., Paris, 1843. p. 210. — 122 — We have seen that the process of circulation of com- modities comes to a completion in C — C, appearing as mere barter carried on by means of money; further, that C — M — C represents in general not only two iso- lated processes, but their dynamic union as well; but to draw from that the conclusion that purchase and sale form an indivisible unit, is a mode of thinking the crit- icism of which belongs to the domain of logic, and not to that of economics. The separation of purchase and sale in the process of exchange destroys all local, prim- itive, patriarchal and naively genial barriers to inter- change of matter in society. It is, moreover, the gen- eral form of the separation of the points of coincidence and opposition in this interchange, carrying within it the possibility of commercial crises, because the antag- onism of commodity and money is the abstract and general form of all antagonisms with which the capi- talistic system of labor is pregnant. Hence, circulation of money is possible without crises, but crises can not occur without money circulation. In other words, where labor based on the system of private exchange has not reached the stage marked by the existence of money, it is less capable of producing those phenomena which presuppose the full development of the capitalistic mode of production. Bearing this in mind we can appreciate the depth of the criticism which proposes to do away with the ^'shortcomings" of capitalistic pro- duction by abolishing the "privilege" enjoyed by the precious metals and introducing a so-called "rational monetary system.^' As a sample of economic defence of an opposite character may serve the following piece — 123 — of reasoning which has been proclaimed exceedingly keen, JAMES MILL, the father of the well-known English economist, John Stuart Mill, says: "Whatever . . . be the amount of the annual produce, it never can exceed the amount of the annual demand . . . Of two men who perform an exchange, the one does not come with only a supply, the other with only a de- mand; each of them comes with both a demand and a supply. . . . The supply which he brings is the instrument of his demand; and his demand and supply are of course exactly equal to one another. It is there- fore, impossible that there should ever be in any coun- try a commodity or commodities in quantity greater than the demand, without there being, to an equal amount, some other commodity or commodities in quan- tity less than the demand."* *In November, 1807, William Spence published a pamphlet in England under the title: "Britain Independent of Com- merce." The principle set forth in this pamphlet was further elaborated by William C!obbet in his "Political Register" under the virulent title, "Perish Commerce." To this James Mill re- plied in 1808 in his "Defence of Commerce" which contains the passage quoted above from his "Elements of Political Econ- omy** (p. 190-193, Transl.). In his controversy with Sismondi and Malthus on commercial crises, J. B. Say appropriated this clever device, and as it would be diflScult to point out with what new idea this comical "prince de la science" had enriched political economy, his continental admirers have trumpeted him as the man who had unearthed the treasure of the metaphysical balance of purchases and sales; as a matter of fact, his merits consisted rather of the impartiality with which he equally mis- understood his contemporaries, Malthus, Sismondi and Ricardo. — 124 — Mill restores the balance by turning the process of circulation into direct barter and then smuggling into direct barter the character of buyer and seller borrowed by him from the process of circulation. To put it in his own confused language, during certain periods when all commodities are unsaleable there are really more buyers than sellers of one commodity, money, and more sellers than buyers of all other money, commodities; such was, e. g., the case at certain moments during the commercial crisis of 1857-58 in London and Hamburg. Xhe metaphysical balance of purchases and sales amounts to this, that every purchase is a sale and every sale is a purchase, which is a poor consolation to the guardian of the commodity who can not bring about its sale and therefore can not buy.* The separation of sale and purchase makes possible ^ The maimer in which economists explain the different aspects of the commodity may be seen from the following examples: "With money in possession, we have but one exchange to make in order to secure the object of desire, while with other surplus products we have two, the first of which ( procuring the money) is infinitely more difficult than the second." (G. Opdyke, "A Treatise on Political Economy," New York, 1851, p. 277-278.) "The superior saleableness of money is the exact eflTect or natural consequence of the less saleableness of commodities." (Th. Oorbet, "An Inquiry into the Causes and Modes of the Wealth of Individuals," etc., London, 1841, p. 117.) **Money has the quality of being always exchangeable for what it measures." (Bosanquet, "Metallic, Paper and Credit Currency," etc., London, 1842, p. 100.) "Money can always buy other commodities, whereaa other commodities can not always buy money." (Th. Tooke, "An In- quiry into the Currency Principle," 2d ed., London, 1844, p. 10.) — 125 — a large number of fictitious transactions side by side with genuine trade before the final exchange between the producer and the consumer of commodities takes place. It enables a host of parasites to penetrate the process of production and exploit the separation. But this, again, means that with money as the universal form of labor under the capitalist system, there is the possibility of the development of its contradictions. b. THE CIKCULATIOX OF MONEY. Actual circulation appears at first sight as a mass of purchases and sales accidentally taking place side by side. In buying as in selling, commodities and money always stand in the same mutual relation : the seller, on the side of the commodity ; the buyer, on that of money. Money as a medium of circulation always appears there- fore as a means of purchase; and in that way the difference in its destinations in the opposite phases of the metamorphosis of the commodity becomes indis- tinguishable. Money passes into the hands of the seller in the same transaction in which the commodity passes into the hands of the buyer. Commodities and money thus flow in opposite directions and this change of place in which the commodity passes over to one side and money to the other side, occurs simultaneously at an indefinitely large number of points on the entire surface of bourgeois society. But the first step which the commodity makes in the sphere of — 126 — circulation is also its last step.* Wliether it leaves its place on account of its attraction for gold (C — M), or on account of its attraction by gold (M — C), with one move, with one change of place it falls out of the sphere of circulation into that of consumption. Circulation is a continuous flow of commodities, but different com- modities all the time, since each commodity makes but one move. Every commodity enters upon the second phase of its circulation not as the same commodity, but as another commodity, gold. Hence the movement of a metamorphosed commodity is the movement of gold. The same piece of gold or the identical gold coin which changed places with one commodity in the act C — M, reappears from the opposite end as the starting point for M — C and thus changes places for the second time with another commodity. Just as it passed from the hands of buyer B into those of seller A, it now leaves A's hands who has become a buyer and passes into C's hands. The path described by a commodity in its trans- formation into money and its retransformation from money, i. e., the movement of a complete metamor- phosis of a commodity assumes the aspect of an apparent movement of the same coin that changes places twice with two different commodities. No matter in how scattered and haphazard fashion purchases and sales may take place near each other, there is always in actual * The same commodity can be bought and resold many times. It circulates, then, not merely as a commodity, but in a capacity which does not exist from the point of view of simple circula- tion, of the simple contrast of commodity and money. — 127 — circulation a seller for each buyer and the money which moves into the place of the commodity sold, before it came into the hands of the buyer, must have already changed places with another commodity. Sooner or later it again leaves the hands of the seller, who turns buyer, to pass into the hands of a new seller and this frequently repeated change of place forms the interlac- ing of the metamorphoses of commodities- The same coins are moving, some more, others less frequently, from one place in the sphere of circulation to another, always in the direction opposite to that of the commodities moved, thus describing a longer or shorter circulation- curve. The different movements of the same coin can fol- low each other in point of time only, and on the contrary, the many scattered purchases and sales which appear as so many separate changes of place between commod- ities and money, occur simultaneously separated only in point of space. The circulation of commodities C — M — C in its ele- mentary form is completely described in the transition of money from the hands of the buyer into those of the seller and from the hands of the latter, as soon as he has turned buyer, into those of a new seller. This com- pletes the metamorphosis of the commodity and with it the movement of money in so far as that movement is the expression of the metamorphosis. But since new use-values are continually produced in the shape of new commodities and must thus be constantly thrown anew into circulation, the process C — M — C is repeatedly re- newed by the same commodity owners. The money which they have spent as buyers gets back into their hands — 128 — as soon as they appear again as vendors of commodities. The constant renewal of the circulation of commodities finds its reflection in the continual circulation over the entire surface of bourgeois society of a quantity of money which, passing from hand to hand, describes at the same time a nimiber of different small cycles starting from numberless points and returning each to its own start- ing point, to repeat the same movement over again. The change of form on the part of commodities ap- pears as a mere change of place on the part of money and the continuity of the circulation movement is all on the side of money, since the commodity always makes but one step in the direction opposite to money, while the latter makes in each case the second step for the commodity; the entire movement seems, therefore, to proceed from money, although in the case of a sale the commodity draws money out of its place, i. e., it circu- lates money as much as it is circulated by the latter in the case of a purchase. Furthermore, owing to the fact that money always confronts commodities in its capac- ity of a means of purchase, and in that capacity moves commodities only by realizing their price, the entire movement ot circulation appears as a change of place between money and commodities, the former realiz- ing the prices of the latter either by separate acts of circulation taking place simultaneously and side by side, or by successive transactions when the same coin realizes the prices of different commodities one after another. If we consider, e. g., the series C — ^M — C — M — C — M — C", etc., without regard to the qualitative aspects which become indistinguishable in the process — 129 — of circulation, we witness the same monotonous opera- tion. After realizing the price of C, M successively re- alizes those of C, C", etc., and commodities C, C, C", etc., constantly take the place which money has left. Money thus appears to keep commodities in circulation by realizing their prices. In discharging this function of realization of prices, money is itself constantly cir- culating, now changing its place, now describing a curve of circulation, now completing a small circuit where the starting and returning points coincide. As a medium of circulation, money is subject to a circulation of its own. The change of form of the circulating commodities ap- pears, therefore, as a movement of money which furthers the exchange of commodities, motionless in themselves. The movement of the circulation process of commodities thus takes on the form of the movement of gold as a medium of circulation, i. e. of the circulation of money. Since owners of commodities give the products of their individual labor the appearance of products of social labor by turning one object, viz. gold, into the direct expression of universal labor-time and therefore into money, their own movement by which all of them effect the interchange of the material products of their labor now appears to them as the direct movement of that one object, as the circulation of gold. The social move- ment itself appears to the owners of commodities partly as an outward necessity and partly as a mere formal in- termediary process which enables every individual who puts any use-value into circulation to get other use- values out of it of an equal value. The use-value of commodities comes into play with their disappearance ^ 130 — from the sphere or circulation, while the nse-value of money as a medium of circulation is in its Tery circula- tion. The movement of a commodity in the sphere or circulation is of a transitory kind, while ceaseless mo- tion in that sphere constitutes the function of money. •Through this special function which it performs within the sphere of circulation money acquires a new capacity, which we have to consider now more closely. In the first place, we see that the circulation of money forms an endlessly split up movement, since it reflects the splitting up of the process of circulation into an in- finitely large number of purchases and sales and the in- dependent separation of the mutually supplementary phases of metamorphoses of commodities. In the small cycles described by money, where the starting and re- turning points coincide, we do find a return movement, i. e., an actual circular movement, but the fact that there are as many starting points as there are commodities and that the number of these cycles is infinitely large puts them beyond all control, measurement, or computation. The time between the start and the return of a com- modity is just as indefinite. Moreover, it is immaterial whether or not such a circuit has been actually described in a given case. No economic fact is more generally known than that one can spend money with one hand without getting it back with the other. Money proceeds from an endless number of points and returns to as many different points, but the coincidence of the starting and returning points is a matter of chance, because in the movement C — M — C the turning of the buyer again into & seller is not a necessary condition. Still less does the — 131 — circulation of money resemble a movement radiating from a common centre to all points of the periphery and back from the peripheral points to the centre. The so- called cycle described by money, as it is pictured, amounts simply to this, that at all points we observe its appearance and disappearance, its never ceasing transi- tion from place to place. In a higher, more involved form of money circulation, e. g. bank-note circulation, we shall find that the conditions of emission of money include those for its return. But in the simple money circulation it is a matter of chance for the same buyer to become again a seller. Where we really see constant cycle motions taking place, they are only reflections of deeper forces in the sphere of production, e. g., the man- ufacturer draws money from his banker on Friday, pays it out to his workingmen on Saturday, the men im- mediately pay out the greater part of it to the store- keepers, etc, and the latter turn it in on Monday back to the banker. We have seen that money realizes simultaneously a certain number of prices in the variegated purchases and sales which take place side by side at the same time. On the other hand, in so far as its movement represents the movement of the combined metamorphoses of commodi- ties and the interlacing of these metamorphoses, the same coin realizes the prices of different com- modities and thus makes a larger or smaller number of moves. If we take the circulation of a country for a given length of time, say a day, the quantity of gold required for the realization of prices and, consequently, for the circulation of commodities, will be determined — . 132 — by two conditions: first, the sum total of the prices; sec- ond, the average number of moves made by one coin. This number of moves or the rapidity of circulation of money is in its turn determined by or expresses the average rapidity with which commodities go through the different phases of their metamorphoses, the rapidity with which these metamorphoses succeed one another, and with which those commodities that have gone through their metamorphoses are replaced by new com- modities in the process of circulation. We have seen that in the process of the determination of prices the exchange value of all commodities is ideally converted into a certain quantity of gold of the same value and that the same amount of value is present in a double form in either of the isolated acts of circulation M — C and C — M, first embodied in the commodity, and second, in gold ; yet gold enjoys the capacity of a medium of cir- culation not by virtue of its isolated relation to separate commodities in a state of rest, but owing to its active presence in the dynamic world of commodities, viz., its function of expressing the change of form of commodi- ties by its change of place and expressing the rapidity of their change of form by the rapidity of its change of place. The extent to which it is present in the sphere of circulation, i. e., the actual quantity of gold in cir- culation, is thus determined by the extent to which it is discharging its function throughout the entire process. The circulation of money implies the circulation of commodities; money circulates commodities which have prices, i. e., which are beforehand ideally equated to cer- tain quantities of gold. In the determination of the — 133 — prices of commodities, the value of the quantity of gold which serves as a unit of measure, or the value of gold, is assumed to be given. Under that assumption the quantity of gold necessary for circulation is determined first of all by the sum total of the prices of commodities that are to be realized. But this sum is itself determined : 1. By the level of prices, the relatively high or low ex- change value of commodities estimated in gold; and 2. By the mass of commodities circulating at fixed prices, i. e. by the number of purchases and sales at given prices.* If one quarter of wheat is worth 60 shillings, then twice as much gold is required to circu- late it or to realize its price as would be the case if it were worth only 30 shillings. To circulate 500 quar- ters of wheat at 60 shillings, twice as much gold is neces- sary as for the circulation of 250 quarters at the same price. Finally, to circulate 10 quarters at 100 shillings only half as much money is necessary as when circu- ^ The quantity of money is immaterial "pourvu qu'il y en ait assez pour maintenir les prix contractus par les denr§es" (as long as it is sufficient to maintain the existing prices of com- modities). Boisguillebert, 1. c. p. 210. "If the circulation of commodities of four hundred millions required a currency of forty millions, and . . . this pro- portion of one-tenth was the due level, estimating both cur- rency and commodities in gold ; then, if the value of commodi- ties to be circulated increased to four hundred and fifty millions, from natural causes ... I should say the currency, in order to continue at its level, must be increased to forty-five millions." (William Blake, "Observations on the Effects Pro- duced by the Expenditure of Government, etc.,*' London, 1823, p. 80.) — 134 — lating 40 quarters at 50 shillings. It follows that the quantity of gold required for circulation may fall in spite of a rise in price, if the mass of commodities in cir- culation declines in a greater ratio than the rise of the combined sum of prices ; and, inversely, the quantity of the circulating medium may rise in spite of a decline of the mass of commodities in circulation, if the sum total of prices rises in a greater ratio. Thorough and minute English investigations have demonstrated e. g. that in the early stages of a dearth of grain in England the quantity of money in circulation increases, because the total price of the diminished supply of grain is greater than the former total price of a larger supply of grain, while the circulation of the other commodities continues undisturbed for some time at their old prices. At a later stage of the dearth of grain, there is a decline in the quantity of circulating money, either because less goods are sold at old prices besides grain, or the same quantity of those goods is sold at lower prices. But, as we have seen, the quantity of money in cir- culation is determined not only by the sum total of prices of commodities that are to be realized, but also by the rapidity with which money circulates or with which it completes this work of realization. If the same sovereign makes ten purchases a day, each of a com- modity having a price of one sovereign, and thus changes hands ten times, it does as much work as would be ac- complished by ten sovereigns each performing but a single act of circulation a day.* Consequently, rapidity * **E la velocity del giro del danaro, non la quantity dei metal li cbe fa apparir molto a poco il danaro." (Galiani, 1. c. p. 99.) — 135 — of gold circulatioa can make up for its quantity, or the presence of gold in the sphere of circulation is de- termined not only by its presence as an equivalent of a commodity side by side with it, but also by its partici- pation in the movement of metamorphoses of commodi- ties. The rapidity of the circulation of money, how- ever, can ser^e as a substitute for its quantity only to a limited extent, since at any given moment an endless number of isolated purchases and sales takes places in different localities. If the total price of the commodities in circulation rises, but in a smaller ratio than the increase in the rapidity of circulation of money, the volume of the circu- lating medium will diminish. If on the contrary the rapidity of circulation decreases in a greater ratio than the total price of the commodities in circulation, the vol- imie of currency will increase. An increasing volume of currency combined with a general fall of prices or a di- minishing volume of currency in connection with a gen- eral rise of prices is one of the best known phenomena in the history of prices. But the consideration of the causes which bring about a simultaneous rise in the level of prices and a still greater rise in the rate of velocity of circulation of money, or the opposite phenomenon, falls outside of the sphere of simple circulation. By way of illustration, it may be mentioned that in periods of pre- vailing credit, the rapidity of circulation of money grows ("It is the rapidity of the circulation of money and not the quantity of metals that causes a jjreater or smaller amount of money to appear.**) — 136 - faster than the prices of commodities, while in times of declining credit the prices of commodities fall slower than the rapidity of circulation. The shallow and arti- ficial character of the simple circulation of money is manifested in the fact that all the elements which have a determining influence on the volume of currency, such as the volume of commodities in circulation, prices, the rise or fall of prices, the number of simultaneous pur- chases and sales, the rapidity of the circulation of money, — depend on the metamorphic process which takes place in the world of commodities, and that again depends on the general character of the methods of production, the size of population, the relation between city and country, the development of the means of transportation, the greater or less division of labor, credit, etc.; in short, on circumstances all of which lie outside of the sphere of simple circulation of money and are only reflected in it. The rapidity of circulation being given, the volume of currency is simply determined by the prices of com- modities. Hence, prices are not high or low, because there is more or less money in circulation, but on the contrary, there is more or less money in circulation, be- cause prices are high or low. This is one of the most important laws, whose demonstration in detail by means of the history of prices constitutes perhaps the only merit of the post-Eicardian English Political Economy. If experience shows, that the level of metallic circula- tion or the mass of gold and silver in circulation in a given country is subject to temporary ebbs and tides — 137 — and very violent ones at times/ but on the whole re- mains stationary for long periods, the deviations form- ing but small oscillations about the average level, this is explained by the antagonistic nature of the circum- stances which determine the quantity of money in circu- lation. Their simultaneous modifications neutralize their effects and leave everything where it was before. The law, that with a given rapidity of circulation of money and a given total sum of prices of commodities the quantity of the circulating medium is determined, may also be expressed as follows. If the exchange values of commodities and the average rapidity of their meta- morphoses are given, the quantity of gold in circulation depends on its own value. If, therefore, the value of gold, i. e. the labor-time necessary for its production, should rise or fall, the prices of commodities will rise * An example of an extraordinary decline of metallic circula- tion from its average level was furnished by England in 1858, as may be seen from the following extract from the London Economist: "From the nature of the case (namely, the iso- lated nature of simple circulation) very exact data cannot be procured as to the amount of cash that is fluctuating in the market, and in the hands of the not banking classes. But, perhaps, the activity or the inactivity of the mints of the great commercial nations is one of the most likely indications in the variations of that amount. Much will be manufactured when it is wanted; and little when little is wanted. . . . At the English mint the coinage was in 1855 £9,245,000; 1856, £6,476,000; 1857, £5,293,855. During 1858 the mint had scarcely anything to do." (Economist, July 10, 1858.) But at the same time about eighteen million pounds sterling were lying in the bank vaults. — 1S8 — or fall in inverse ratio, and corresponding to that rise or fall of prices, the rapidity of circulation remaining the same, a larger or smaller quantity of gold would be re- quired to keep the same volume of commodities in cir- culation. The same change would occur, if the old standard of value were superseded by a more or less valuable metal. Thus, Holland required from fourteen to fifteen times as much silver as it had previously re- quired gold, in order to circulate the same volume of com- modities, when out of tender regard for the government creditors and out of fear of the effects of the discoveries in California and Australia it substituted silver for gold money. From the fact that the quantity of gold in circulation depends on the variable sum total of prices of commodi- ties and the varying rapidity of circulation, it follows that the volume of the circulating medium must be capable of contraction and expansion; in short, that according to the requirements of circulation, gold must now enter, now leave the sphere of circulation in its capacity of a medium of circulation. How the circula- tion process itself realizes these conditions, we shall see later on. C. COIN AND SYMBOLS OF VALUE. In its capacity of a medium of circulation, gold ac- quires a shape of its own, it becomes coin. In order to prevent any technical difficulties in the way of its circu- lation, it is coined according to the standard of the money of account. Gold pieces whose imprints and legends show that they contain certain weights of gold — 139 — corresponding to the reckoning names of money, £, 8., etc., are coins. The establishment of a mint-price, as well as the technical work of coining, are the business of the state. Both as money of account and as coin, money acquires a local and political character; it speaks different languages and wears different national uni- forms. The sphere in which money circulates as coin, is distinguished as an internal sphere of circulation which is separated from the universal sphere of circula- tion in the commodity world by national boundaries. Yet, the only difference between gold bullion and gold coin is that between coin denomination and weight de- nomination. What seems to be a difference in name in the latter case appears as a difference in shape in the former. Qold coin can be thrown into the melting-pot. and thus be converted again into gold sans phrase, just as, on the contrary, gold bars only have to be sent to the mint to receive the shape of coins. The conversion and reconversion from one form into another appears to be a purely technical matter. For 100 pounds or 1200 ounces troy of 22 carat gold one can get £4,672^ or gold sovereigns at the English mint ; if these sovereigns be put on one side of the weigh- ing scale and one hundred pounds of gold bullion on the other, the two will balance each other, which proves that the sovereign is nothing but a piece of gold of certain weight bearing this name in English coinage and hav- ing a shape and stamp of its own. The 4,672 >^ sovereigns are put into circulation at different points, and once iu its grasp they make a certain number of moves per day, some sovereigns more, others less. If the — 140 — average number of moves per day of each ounce be ten, the 1200 ounces of gold would realize 12,000 ounces or 46,725 sovereigns as the total price of commodities. You may turn and toss an ounce of gold in any way you like, and it will never weigh ten ounces. But here in the process of circulation one ounce practically does weigh ten ounces. The work performed by a coin in the sphere of circulation is equivalent to the quantity of gold it contains multiplied by the number of its moves. Be- sides the actual importance which a coin possesses by virtue of its being an individual piece of gold of a def- inite weight, it acquires an ideal significance due to its function. But whether the sovereign circulates once or ten times, in each particular purchase or sale it acts only as one sovereign. It is like a general who by timely appearance at ten different points on the battle field does the work of ten generals, but still remains the same identical general at each point. The idealization of the means of circulation which is due to the supplanting of quantity by rapidity in money circulation, affects only the function of the coin within the sphere of circulation, but not the nature of the individual coin. The circulation of money is a movement through the outside world, and the sovereign, though it non oUt, keeps rather mixed company. In the course of its friction against all kinds of hands, pouches, pockets, purses, money-belts, bags, chests and strong- boxes, the coin rubs off, loses one gold atom here and another one there and thus, as it wears off in its wanderings over the world, it loses more and more of its intrinsic substance. By being used — 141 — it gets used up. Let us take up a sovereign at the moment when its natural, inborn character has been slightly affected. A baker, says Dodd,^ who receives from the bank to-day a brand new sovereign and pays it to-morrow to the miller, does not pay the same veritable sovereign; the latter has become lighter than it was at the time he received it. It is clear, says an anonymous writer/ that in the very nature of things, coins must de- preciate one by one as a result of ordinary and unavoid- able friction. It is a physical impossibility to entirely exclude light coins from circulation at any time, even for one day. Jacob estimates that of the 380 million pounds sterling which were in existence in Europe in 1809, nineteen million pounds sterling entirely disap- peared by 1829, i. e., within a period of twenty years.^ Thus, while a commodity at its first step into the sphere of circulation, falls out of it, a coin, after a couple of steps within that sphere represents more * Dodd, "Curiosities of Industry," etc., London, 1854. '"The Currency Question Reviewed, etc., by a Banker.'* (Edinburgh, 1845, p. 69.) "Si UB 6cu un peu us6 etait repute valoir quelque chose de moins qu'un ^u tout neuf, la circulation se trouverait contin- uellement arret€e, et il n'y aurait pas un seul payement qui ne fut matiSre i contestation." (G. Gamier, 1. c. t. I., p. 24.) ("If an ecu slightly used would pass for a little less than an entirely new ecu, circulation would be continually interfered with, and not a payment would take place that would not give rise to controversy.") •W. Jacob, "An Inquiry Into the Production and Consump- tion of the Precious Metals." (London, 1831, vol. II., ch. XXVL) — 142 — metal than it actually contains. The longer a coin remains in circulation, the rapidity of circu- lation remaining the same, or the greater its rapid- ity of circulation within the same period of time, the greater the discrepancy between its form as coin and its actual gold or silver substance. What remains is magni nominis umbra. The body of the coin becomes but a shadow. If at first it became heavier through the process of circulation, it now becomes lighter on account of it, but continues to represent the original quantity of gold in each single purchase or sale. The sovereign, as a fictitious sovereign, as fictitious gold, continues to perform the function of a legitimate coin. While other beings lose their idealism in contact with the outer world, the coin is idealized by practice, being gradually trans- formed into a mere phantom of its golden or silver body. This second idealization of metal money springing from the very process of circulation, or from the discrepancy between its nominal weight and its real weight is ex- ploited in all kinds of coin counterfeiting practiced partly by governments, partly by private adventurers. The entire history of coinage from the beginning of the middle ages until late in the eighteenth century is noth- ing but a history of these two-fold and antagonistic adul- terations, and Custodies voluminous collection of writ- ings of Italian economists turns mostly about this point. But the fictitious importance of gold due to its func- tion, comes in conflict with its real substance. One gold coin has lost more, another, less of its metal substance in the course of circulation, and one of them is, as a matter of fact, worth more now than the other. But — 143 — since in the discharge of their function of coins they are taken at the same value, the sovereign weighing a quarter of an ounce passing for no more than the sov- ereign which only stands for a quarter of an ounce, the full-weight sovereigns are subjected in the hands of un- scrupulous owners to surgical operations which produce artificially what the circulation process has caused in a natural way to their more light-weighted brothers. They are clipped and reduced and the superfluous gold fat lands in the melting pot. If 4,672^^ gold sovereigns when put on one side of the weighing scale weigh on an average only 800 ounces instead of 1200, they will buy when brought to the gold market only 800 ounces of gold ; that is, the market price of gold would rise above its mint price. Every coin, even if of full weight would pass in its mint form for less than in bullion form. The full weight sovereigns would be reconverted into bullion, a form in which a greater quantity of gold is always worth more than a smaller quantity. As soon as this decline of metallic weight would affect a sufficiently large number of sovereigns to bring about a permanent rise of the market price of gold above its mint price, the reckoning names of the coins, though remaining the same, would begin to denote a smaller quantity of gold. That is to say, the standard of money would change and gold would be coined in the future according to this new standard. By virtue of its idealization as a medium of circulation, gold would react upon and change the legally determined ratios under which it acted as the standard of price. The same revolution would be repeated after a certain length of time and thus gold — 144 — would be subject to constant change both as a standard of price and as a medium of circulation, a change under one of these forms leading to a change under the other and vice versa. This explains the phenomenon men- tioned above, namely that in the history of all modem nations the same money-name stands for a constantly diminishing quantity of metal. The contradiction be- tween gold as coin and gold as standard of price be- comes also one between gold as coin and gold as the imiversal equivalent; in the latter capacity it circulates not only within the limits of national boundaries, but in the world market. As a measure of value gold was always of full weight, because it served only as ideal gold. In its capacity of equivalent in the isolated transaction C — M it passes at once from a state of motion to a state of rest ; but in its capacity of coin its natural substance comes in constant conflict with its function. The trans- formation of the gold sovereign into fictitious gold can not be wholly avoided, but legislation seeks to prevent its unlimited circulation as coin by prescribing its with- drawal from circulation as soon as its shortage of metallic substance reaches a certain degree. According to the English law, e. g., a sovereign which lacks more than 0.747 grains of its weight ceases to be legal tender. The Bank of England which weighed forty-eight million gold sovereigns in the short period between 1844 and 1848, possesses in Mr. Cotton's gold weighing scale a machine which not only detects a difference of 1-100 part of a grain between two sovereigns, but like a sensible being, immediately throws out the light-weight coin on a board — 145 — where it lands under another machine which cuts it up with oriental cruelty. That being the case, gold coins could not circulate at all were not their circulation confined to definite spheres in which they do not wear off so rapidly. In so far as a gold coin weighing only one-fifth of an ounce passes in circulation for a quarter of an ounce of gold, it is practically merely a sign or a symbol for one- twentieth of an ounce of gold, and in that way all gold coins are transformed by the very process of circula- tion into more or less of a mere sign or symbol of their substance. But no thing can be its own symbol. Painted grapes are no symbol of real grapes, they are imaginary grapes. Still less can a light-weight sovereign be a sym- bol of a full-weighted one, just as a lean horse can not serve as a s3mibol of a fat one. Since gold thus be- comes a symbol of its own self, but at the same time can not serve in that capacity, it receives a symbolical, silver or copper substitute in those spheres of circulation in which it is most subject to wear and tear, namely where purchases and sales are constantly taking place on the smallest scale. In these spheres, even if not the same identical coins, still a certain part of the entire supply of gold money would constantly circulate as coin. To that extent gold is substituted by silver or copper tokens. Thus, while only a specific commodity can perform in a given country the function of a measure of value and therefore of money, different commodities can serve as coin side by side with gold. These subsidiary mediums of circulation, such as silver or copper coins, represent definite fractions of a gold coin within the sphere of cir- — 146 — eulation. Their own silver or copper weight is, there- fore, not determined by the proportions of the respective values of silver and copper to that of gold, but is ar- bitrarily fixed by law. They may be issued only in such quantities in which the diminutive fractions of gold coin which they represent would constantly circulate either for purposes of change for gold coins of higher denomina- tions, or for realizing equally small prices of commodi- ties. In retail trade silver and copper tokens belong to distinct spheres of circulation. In the nature of things, the rapidity of their circulation is in inverse ratio to the price which they realize in each separate purchase or sale, or to the size of the fraction of gold coin which they represent. If we consider how immense the volume of the daily retail trade in a country like England is, we will understand from the comparatively insignificant proportions of its combined volume how rapid and steady the circulation of the subsidiary coin must be. From a parliamentary report of recent date we see, e. g., that in 1857 the English mint coined £4,859,000 worth of gold, £733,000 of silver nominal value which contained metal actually worth £363,000. The total amount of gold coined in the ten years ending December 31, 1857, was £65,239,000, and of silver only £2,434,000. The sup- ply of copper coin in 1857 amounted only to £6,720 nominal value containing £3,492 worth of copper; of this £3,136 was in pennies, £2,464 in half-pennies, and £1,120 in farthings. The total value of copper coined in the ten years was £141,477 nominal, the metallic value being £73,503. Just as gold coin is prevented from permanently retaining its function of coin by the — 147 — legal provision of the loes of weight which demonetizes it, so are the silver and copper tokens prevented from passing from their spheres of circulation into that of gold coin and acquiring the character of money by the provision of the maximum amount for which they are legal tender. In England e. g. copper is legal tender only to the amount of six pence and silver up to forty shillings. If silver and copper tokens were to be issued in greater quantities than the requirements of their spheres of circulation call for, prices of commodities would not rise as a result, but the accumulation of these tokens in the hands of retail dealers would reach such an extent that they would be finally compelled to sell them as metal. Thus in 1798 English copper coins, issued by private individuals, accumulated in the hands of small traders to the amount of £20,350 which they tried in vain to put again in circulation, being finally compelled to throw them as metal on the copper market* The silver and copper tokens which represent gold coin in certain spheres of circulation in the interior of the country, contain a definite quantity of silver and copper prescribed by law, but after they get into circula- tion, they wear off like gold coins and become even more rapidly mere phantoms, according to the rapidity and steadiness of their circulation. To draw again a line of demonetization beyond which silver and copper tokens would lose their character of coins, they would have to b^ * David Buchanan, "Observations on the Subjects Treated of in Dr. Smith's Inquiry on the Wealth of Nations," etc (Edin- burgh, 1841, p. 3.) — 148 — replaced in turn within certain spheres of their own circulation by some other symbolic money, say iron and lead, and such representation of one kind of sym- bolic money by another kind would form an endless process. In all countries with a well developed cir- culation the very requirements of money circulation make it necessary that the character of silver and copper tokens as money be made independent of any loss of weight in those coins. Thus, as it was in the nature of things, it appears that they serve as sym- bols of gold coin not because they are symbols made of silver or copper, not because they have certain value, but only in so far as they have no value. Relatively worthless things, such as paper, can con- sequently perform the function of symbols of gold money. That subsidiary currency consists of metal tokens, such as silver, copper, etc., is mainly due to the fact that in most countries the less valuable metals such as silver in England, copper in ancient Rome, Sweden, Scotland, etc., had circulated as money be- fore they were degraded by the process of circulation to the rank of small change and replaced by a more precious metal. Besides, it is natural that the money symbol which grows directly out of metallic circula- tion, should itself be a metal. Just as that portion of gold which would always have to circulate as small change, is replaced by metal tokens ; so can the other portion of gold which is constantly absorbed as coin by circulation in the interior of the country and, therefore, must continually circulate, be replaced with worthless tokens. The level below which the mass of circulating coin never sinks is determined in each — 149 — country by experience. Thus, the originally imper- ceptible difference between the nominal weight and the metallic weight of a metal coin can grow apace until it reaches the point of absolute separation. The mint name of money parts company with its substance and exists outside of it in worthless slips of paper. Just as the exchange value of commodities is crystal- lized by their process of exchange into gold money, so is gold money sublimated in its currency into its own symbol first in the form of worn coin, then in the form of subsidiary metal currency, and finally in the form of a worthless token, paper, mere sign of value. Gold coin has produced its substitutes, first metallic and then paper, only because in spite of its loss of metallic weight it continued to perform the function of coin. It did not circulate because of its wear and tear ; on the contrary, it wore out to a symbol because it continued to circulate. Only in so far as gold money becomes simply a token of its own value in the process of circulation, can mere tokens of value take its place. In so far as the movement C — M — C represents a dynamic unity of two processes C — M and M — C which pass directly one into the other, or in so far as a commodity passes through the complete process of its metamorphosis, it express its exchange value in price and in money only to discard that form at once and to become again a commodity or, rather, a use- value. That is to say, it develops only an apparent assertion of the independence of its exchange value- On the other hand, we have seen that gold, in so far as it performs the function of coin or in so far as it — 150 — continually circulates, actually forms only a connect- ing link between the metamorphoses of commodities and constitutes but tlteir transitory money form; furthermore, that it realizes the price of one set of commodities only in order to realize that of another, but in no case does it constitute a stable form of ex- change value or appear itself as a commodity in a state of rest. The reality which the exchange value of commodities acquires in the process and which is represented by gold in its circulation, is the reality of an electric spark. Although real gold, it plays the part of fictitious gold, and can, therefore, be replaced in this function by a token of itself. The token of value, say paper, which plays the part of coin, is the token of a quantity of gold expressed in its currency name, i. e., it is a gold token. Just as a certain quantity of gold does not in itself express a value ratio, so is that true of the token which takes its place. In so far as a certain quantity of gold, as embodied labor-time, has a value of a certain magni- tude, the gold token represents value. But the mag- nitude of the value which it represents depends all the time on the value of the quantity of gold for which it stands. As regards commodities the token of value expresses the reality of their price, it is sig- num pretii and sign of their value only because their value is expressed in their price. In the process C — M — C, in so far as it represents the dynamic/ unity or direct alternation of the two metamorphoses — and that is the aspect it assumes in the sphere of circula- tion in which the token of value discharges its func- tion — the exchange value of commodities acquires in — 161 — price only an ideal expression and in money only an ima^nary symbolic existence. Exchange value thus acquires only an imaginary though material expres- sion, but it has no real existence except in the com- modities themselves, in so far as a certain quantity of labor-time is embodied in them. It appears, there- fore, that the token of value represents directly the value of commodities, by figuring not as a token of gold but as a token of the value which exists in the commodity alone and is only expressed in price. But it is a false appearance. The token of value is di- rectly only a token of price, i. e., a token of gold, and only indirectly a token of value of a commodity. Unlike Peter Shlemihl, gold has not sold its shadow, but buys with its shadow. The token of value oi>er- ates only in so far as it represents the price of one commodity as against that of another within the sphere of circulation, or in so far as it represents gold to every owner of commodities. A certain compara- tively worthless object such as a piece of leather, a slip of paper, etc., becomes by force of custom a token of money material, but maintains its existence in that capacity only so long as its character as a sym- bol of money is guaranteed by the general acquies- cence of the owners of commodities, i. e., so long as Tt enjoys a legally established conventional existence and compulsory circulation. Paper money issued by the state and circulating as legal tender is the per- fected form of the token of value, and the only form of paper money, which has its immediate origin in metallic circulation or even in the simple circulation of commodities. Credit money belongs to a higher sphere of the social process of production and is gov- — 152 — erned by entirely different laws. Symbolic paper money does not in fact, differ in the least from sub- sidiary metal coin, except that it reaches wider spheres of circulation. We have seen that the mere technical development of the standard of price or of the mint price and later the shaping of gold bullion into coin have called forth the interference of the state; this circumstance brought about a visible sep- aration of national circulation from the world circula- tion of commodities; this separation is completed by the evolution of coin into a token of value. As a mere medium of circulation money can assume an in- dependent existence only within the sphere of na- tional circulation. Our presentation has shown that the coin form of gold as a token of value differentiated from the gold substance itself, has its direct origin in the process of circulation and not in any agreement or state inter- ference. Russia offers a striking example of the natural origin of the token of value. At the time when hides and furs played there the part of money, the conflict between the perishable and bulky nature of the material and its function as a medium of cir- culation resulted in the custom of replacing it by small pieces of stamped leather which thus became a kind of draft payable in hides and furs. Later on they became under the name of copecs mere tokens for fractions of the silver rouble and remained in use in some parts until 1700, when Peter the Great ordered their withdrawal in exchange for small copper coins * Henry Storch, *'Cours d^Eoonomic Politique,*' etc., avec des notes par J. B Say. Paris, 1823, torn. IV., p. 179. Storch pub- — 153 — issued by the state. Ancient writers who could observe the phenomena of exclusively metallic circu- lation, already took the view of coin as a symbol or token of value. That is true both of Plato^ and Aris- totle* In countries where credit is not developed, lished his work in French at St. Petersburg. J. B. Say imme- diately issued a Parisian reprint, supplemented with alleged **notes," which as a matter of fact contain nothing but com- monplaces. Storch (see his "Considerations sur la Nature du Revenue National," Paris, 1824) took by no means kindly to this annexation of his work by the "prince de la science.'* ^Plato de Rep. L. H "vdiitoiAa ^uiaCoXov t^s iXkafnq.'T^onej symbol of exchange.") Opera omnia, etc., ed. G. Stallbumius, London, 1850, p. 304. Plato develops money only in two ca- pacities — as a measure of value and a token of value, but de- mands, in addition to the token of value serving for home cir- culation, another one for trade between Greece and foreign countries. (See also Book V of his Laws.) 'Aristotle, Ethic. Nicom, 1. 5., ch. 8, 1. c: olov 8* 6xAXXcrr{A« xriq %pe{a<; xb v6txt jpia yiyoy^ xccrd ffuv6TQXT}v* xoA 8t ), and ti is in our power to change it and make it void.") Aristotle had a far more comprehensive and deep view of money than Plato. In the following passage he beautifully shows how barter be- tween different communities creates the necessity of as- signing the character of money to a specific commodity, i. e.. one which has itself an intrinsic value.* 'Sgytxtdtipa? ydp Yevo{xiv»}<; Tij? PoTjOeta^ t^ tla&yey otOxb 6v tlx8 TT^v xpefav e6[i£xocxe(giaxov... olov cf8T}po? xod 5pYo- po? x5v ei Tt TotouTov iTepov". (Arist. De Republioa, L 4? *. 9, [sees. 7, 8] 1. c.) — 154 — as e. g". in China, legal tender paper money is found at an early date.*. Early advocates of paper money expressely point out the fact that metallic coin is transformed into a token of value in the very process ("When the inhabitants of one country became more de- pendent on those of another, and they imported what they needed and exported the sui-plns, money necessarily came into use . . . and hence men agreed to employ in their deal- ings with each other something which was intrinsically useful and easily applicable to the purposes of life, for example, iron, silver and the like." Trans, by B. Jowett, "The Politics of Ar- istotle, Oxford, 1885, p. 16). This passage is quoted by Mdchel Chevalier, who either has not read Aristotle or did not under- stand him, to prove that in Aristotle's opinion currency must consist of a substance having intrinsic value. On the contrary, Aristotle says expressly that money as a mere medium of cir- culation seems to owe its existence to agreement or law, as is shown by its name v6iJLioi&a) and that in reality it owes its utility as coin to its function and not to any intrinsic use- value of its own. X^po^ elvat Soxet xh v6(i.to|i,a xal v6pL0C xorvrdrwaot, fOffet h' o6Siv Zxi (AETaOe tvuv t« tuv xp(0(jlsvo>v oOScvb^ df^tov o5SI 2jp^at\u»'» Tpbc o68lv x&v dvaYxafwv *ct(* ("Others maintain that coined money is a mere sham, a thing not natural, but conven- tional only, which would have no value or use for any of the purposes of daily life if another commodity were substituted by the users." (1. c. sec. 11.) 'Mandeville, Sir John, "Voyages and Travels," London, 1705, p. 105: "This Emperor (of Cattay or China) may dis- pende ols muche as he wile withouten estymacion. For he despendethe not, nor makethe no money, but of lether em- predeth, or of papyre. And when that money hathe ronne so longe that it begynethe to waste, than men beren it to the Emperoure Tresorye, and then they taken newe Money for the old. And that money gothe thorghe out all the contree, and thorge out all his Provynces. . They make no money nouther of Gold nor of Sylver," and "therefore," thinks Handeville, "be may despende ynew and outrageously." — 155 — of circulation. So Benjamin Franklin* and Bishop Berkeley.' How many reams of paper cut up into bills can cir- culate as money ? Put in that way, the question would be absurd. The worthless tokens are signs of value only in so far as they represent gold within the sphere of circulation and they represent it only to the ex- tent to which it would itself be absorbed as coin by the process of circulation ; this quantity is determined by Its own value, the exchange values of the com- modities and the rapidity of their metamorphoses being given. Bills of a denomination of £5 could circulate in a quantity five times less than those of £ 1 denomination, and if all payments were made in shill- ing bills, then twenty times as many shilling bills would have to be in circulation as are one pound bills. If the gold currency were represented by bills of ^Benjamin Franklin, "Remarks and Facts Relative to the American Paper Money/* 1764, p. 348, 1. c "At this very time, even the silver money in England is obliged to the legal tender for part of its value; that part which h the difference between its real weight and its denomination. Great part of the shillings and sixpences now current are by wearing be- come 5, 10, 20, and some of the sixpences even 50 per cent., too light. For this difference between the real and the nominal you have no intrinsic value. You have not so much as paper, you have nothing. It is the legal tender, with the knowledge that it can easily be repassed for the same value, that makes three- pennyworth of silver pass for a sixpence." 'Berkeley, 1. c, p. 5-6. "Whether the denominations being retained, although the bullion were gone . . . might not nevertheless ... a circulation of commerce (be) main* tained?" — 156 — different denominations, e. g. five pound, one pound and ten shilling bills, then the quantity of these dif- ferent tokens of value would be determined not only by the quantity of gold necessary for circulation as a whole, but also by that required in the sphere of circulation of each kind of bills. If fourteen million pounds sterling (this is the provision of the English Bank Law, not for the entire currency but only for credit money) were the level below which the circu- lation of a country never sank, then fourteen million paper bills, each a token of value of one pound, could circulate. If the value of gold fell or rose because the labor-time necessary for its production had fallen or risen, then, the exchange value of the same volume of commodities remaining the same, the number of one pound bills in circulation would rise or fall in inverse ratio to the change in the value of gold. If gold were replaced by silver as a measure of value, the ratio of the respective values of silver and gold being 1 :15, and if each bill were to represent now ithe same quantity of silver as it represented gold before, then there would be 210 million one pound bills in cir- culation instead of the previous fourteen million. The number of paper bills is thus determined by the quantity of gold money which they represent in cir- culation, and since they are tokens of value only in so far as they represent it, their value is simply deter- mined by their quantity. Thus, while the quantity of gold in circulation is determined (by the prices of com- modities, the value of the paper bills in circulation, on the contrary, depends exclusively on their own quantity. The interference of the state which issues paper — 157 — money as legal tender — and we are treating of paper money of that kind only — seems to do away with the economic law. The state which in its mint price gave a certain name to a piece of gold of certain weight, and in the act of coinage only impressed its stamp on gold, seems now to turn paper into gold by the magic of its stamp. Since paper bills are legal tender, no one can prevent the state from forcing as large a quantity of them as it desires into circulation and from impressing upon it any coin denomination, such as il, £5, £20. The bills which have once gotten into circulation can not be removed, since on the one hand their course is hemmed in by the frontier posts of the country and on the other they lose all value, use- value as well as exchange-value, outside of circula- tion. Take away from them their function and they become worthless rags of paper. Yet this power of the state is a mere fiction. It may throw into circu- lation any desired quantity of paper bills of whatever denomination, but with this mechanical act its control ceases. Once in the grip of circulation and the token of value or paper money becomes subject to its in- trinsic laws. If fourteen million pounds sterling were the quan- tity of gold required for the circulation of commod- ities and if the state were to put into circulation two hundred and ten million bills each of the denomina- tion of £1, then these two hundred and ten millions would become the representatives of gold to the amount of fourteen million pounds sterling. It would be the same as if the state were to make the one pound bills represent a fifteen times less valuable metal or a fifteen times smaller weight — 158 — of gold. Nothing would be changed but the nomencla- ture of the standard of price, which by its very nature is conventional, no matter whether such change takes place as a direct result of a change of the mint stand- ard or indirectly owing to an increase of paper bills to an extent required by a new lower standard. Since the name £ would stand now for a fifteen times smaller quantity of gold, the prices of all commodities would increase fifteen times and two hundred and ten million one pound bills would now be actually as necessary as fourteen million had been before. To the same extent to which the combined quantity of tokens of value would increase now, the quantity of gold which each of them represents would decrease. The rise of prices would constitute but a reaction on the part of the process of circulation which forcibly equates the tokens of value to the quantity of gold which they are supposed to replace. In the history of the debasement of money in England and France by their governments, we find repeatedly that prices had not risen in the same proportion in which the silver coinage had been debased. That was simply due to the fact that the proportion in which the currency was increased did not correspond to the proportion in which it had been debased; that is to say, because an inadequate quantity of coins of the poorer metallic com- position was issued, if the exchange values of commodi- ties were to be estimated in the future in the new coin as a measure of value and be realized in coins correspond- ing to this smaller unit of measure. This solves the dif- ficulty left unsettled in the controversy between Locke and Lowndes. The ratio which a token of value, whether — 151) — made of paper or of debased gold or silver, bears to cer- tain weights of gold or silver estimated according to the mint price, depends not on its own composition but on the quantity in which it is found in circulation. The difficulty in understanding this is due to the fact that money in its two functions of a measure of value and a medium of circulation is subject to two not only op- posite but apparently contradictory laws corresponding to the difference in the two functions. In the discharge of its function of a measure of value where money serves merely as money of account and gold only as ideal gold, everything depends on the natural substance of money. Estimated in silver or expressed in silver prices exchange values are naturally estimated quite differently than when measured in gold or as gold prices. On the contrary, in its function of a medium of circulation, where gold is not only imagined but is actually present side by side with other commodities, its substance is immaterial and everything depends on its quantity. For the unit of measure the determining factor is whether it consists of a pound of gold, silver or copper ; while in the case of coin, no matter what its own composition is, it will become the embodiment of each of these units of measure in accordance with its quantity. But it goes against common sense that in the case of mere imaginary money everything should depend on its material sub- stance, while in that of the palpably present coin all should be determined by an ideal ratio of numbers. The rise or fall of prices of commodities following a rise or fall of the quantity of paper notes — ^the latter only where paper currency constitutes the exclusive — 160 — medium of circulation — is thus nothing but an asser- tion through the process of circulation of a law me- chanically violated from without; namely, that the quantity of gold in circulation is determined by the prices of commodities, and the quantity of tokens of value in circulation is determined by the quantity of gold coin which it represents. For that reason any desired number of paper notes will be absorbed and equally digested by the process of circulation, because the token of value, no matter with what gold title it may enter circulation, will be compressed within the latter to a token of that quantity of gold which could actually circulate in its place. In the case of the circulation of tokens of value all laws pertaining to the circulation of real money ap- pear to be reversed and standing on their heads. While gold circulates because it has value, paper has value because it circulates. While with a given ex- change value of commodities, the quantity of gold in circulation depends on its own value, the value of paper depends on its own quantity in circulation. While the quantity of gold in circulation rises or falls with the rise or fall of prices of commodities, the prices of commodities seem to rise or fall with the change in the quantity of paper in circulation. While the circulation of commodities can absorb only a definite quantity of gold coin and as a result of that the alternating contraction and expansion of the cur- rency appears as a necessary law, paper money seems to enter circulation in any desired amount. While the sfeite is guilty of debasing gold and silver coin and of disturtwng their function of a medium of circula- — 161 -- don, if it turns out a coin, only 1-100 of a grain be- low its nominal weight; it performs a perfectly proper operation by issuing absolutely worthless paper notes which contain nothing of the metal ex- cept its mint denomination. While gold coin ap- parently represents the value of commodities only in so far as that value is itself estimated in gold or is expressed in price, the token of value seems to repre- sent directly the value of commodities. It is, there- fore, clear why students who examined one-sidedly the phenomena of circulation of money by confining their observations to the circulation of legal tender paper money, should have failed to grasp the in- trinsic laws governing the circulation of money. As a matter of fact, these laws appear not only reversed but extinct in the circulation of tokens of value, since paper currency, if issued in the right quantity, goes through certain movements which are not in its nature as a token of value, while its proper move- ment instead of growing directly out of the meta- morphosis of commodities, springs from the violation of its proper proportion to gold. — 162 — 3. MONEY. Money as distinguished from coin, the result of the circulation process C — M — C, forms the starting point of the circulation process M — C — M, i. e. the exchange of money for commodity in order to exchange com- modity for money. In the form C — M — C, commodity forms the starting and final points of the movement ; in the form M — C — M, money plays that part In the former case money is the medium of exchange of com- modities, in the latter the commodity helps money to become money. Money which appears merely as a means of circulation in the first form becomes an end in the second form; while commodity which appeared first as the end, now becomes but a means. Since money is itself the result of circulation C — M — C, the result of circulation appears at the same time as its starting point in the form M — C — M. While in the case of C — M — C the interchange of matter constituted the real import of the process, the form of the commodity re- sulting from this first process constitutes the import of the second process M — C — M. In the form C — M — C the two extreme members are commodities of the same value, but qualitatively different use-values. Their mutual exchange C — C constitutes — 163 — actual interchange of matter. In the form M — C — M the two extremes are gold and at the same tune gold of equal value. To exchange gold for a commodity in order to exchange the commodity for gold, or if we con- sider the final result M — M, to exchange gold for gold, geems absurd. But if we translate the formula M — C — M into the expression: to buy in order to sell, which means nothing but to exchange gold for gold through an intervening movement, we recognize at once the pre- vailing fonn of capitalist production. In actual prac- tice, however, people do not buy in order to sell, but they buy cheap in order to sell dear. Money is exchanged for a commodity in order to exchange the same commodity for a larger amount of money, so that the extremes M, M are, if not qualitatively, then quantitatively different. Such a quantitative difference presupposes the exchange of non-equivalents, yet commodity and money as such are only opposite forms of the same commodity, i. e. they are different forms of the same magnitude of value. The circuit M — C — M thus conceals under the forms of money and commodity more highly developed relations of production, and is but a reflection within the sphere of simple circulation of a movement of a more advanced character. Money, as distinguished from the medium of circulation, must therefore be developed from the direct form of circulation of commodities, C — M — C. Grold, i. e., the specific commodity which serves as a measure of value and a medium of circulation, becomes money without any further assistance on the part of so- ciety. In England, where silver is neither the measure of value nor the prevailing medium of circulation, it — 164 — does not become money, just as gold in Holland, as soon as it had been dethroned as a measure of value, ceased to be money. A commodity thus becomes money only in its combined capacity of a measure of value and medium of circulation ; or, the unity of the measure of value and medium of circulation is money. As such a unity, how- ever, gold has a separate existence independent of its existence in the two functions. As a measure of value it is only ideal money and ideal gold ; as a mere medium of circulation it is symbolic money and symbolic gold; but in its plain metallic bodily form gold is money or money is real gold. Let us now consider for a moment the commodity gold when it is in a state of rest, and plays the part of money in its relation to other commodities. All com- modities represent in their prices a certain quantity of gold, that is to say, they are merely imaginary gold of imaginary money, representatives of gold, just as, on the other hand, money in the form of a token of value appeared as a mere representative of prices of commod- ities.* Since all commodities are thus but imaginary money, money is the only real commodity. Contrary to commodities, which only represent the independently ex- isting exchange value, i. e., universal social labor, or ab- stract wealth, gold is the material form of abstract . ^ , % * "Non solo i metalli ricchi son segni delle cose . . . ; m» viccndevolmente le cose . . . sono segni delForo e dell'ar- gento." (A. Genovesi, "Lezioni di Economia Civile," 1765, p. 281 in Custodi, Parte Mod. 1. VIII.) ("Not only are precious metals tokens of things, but vice versa, things are tokens oi gold and silver.") — 165 — wealth. Through its use-value, every commodity, by its relation to some particular want, expresses only one aspect of material wealth, but one side of wealth. Money, however, satisfies every want since it can be directly converted into the object of any want. Its own use- value is realized in the endless series of use-values which form its equivalents. In its virgin metallic state it holds locked up all the material wealth which lies un- folded in the world of commodities. Thus, while com- modities represent in their prices the universal equiva- lent or abstract wealth, viz., gold, the latter represents in its use-value the use-values of all commodities. Gold is, therefore, the bodily representative of material wealth. It is the ^^precis de toutes les choses" (Bois- guillebert), the compendium of the wealth of society. At one and the same time, it is the direct incarnation of universal labor in its form, and the aggregate of all concrete labor in its substance. It is universal wealth individualized.* As a medium of circulation it under- went aU kinds of injury, was clipped, and even reduced to the condition of a mere symbolic paper rag. As money it is restored to its golden glory.* From a serve * Petty. "Gold and silver are universal wealth,'* (Political Arithmetic, 1. c, p. 242.) 'E. Misselden. 'Tree Trade, or the Means to Make Trade Flourish," etc., London, 1622. "The natural matter of Com- merce is Merchandise, which Merchants from the end of Trade have stiled Commodities. The Artificiall matter of Commerce is Money, which hath obtained the title of sinewes of warre and of State. . . . Money, though it be in nature and time after Merchandise, yet forasmuch as it is now in use become — 166 — - it becomes a lord. From a mere understrapper it rises to the position of Lord of commodities.^ a. HOARDING. Gold separates itself as money from the process of circulation whenever a commodity interrupts the pro- cess of its metamorphosis and remains in its form of a gold chrysalis. This occurs every time a sale is not im- mediately followed by purchase. The independent is- olation of gold as money is, thus, a material expression of the disintegration of the process of circulation, or of the metamorphosis of commodities, into two separate acts independent of each other. The coin itself be- comes money as soon as its course is interrupted. Tn the hands of the seller who takes it in exchange for the chief e." (p. 7.) He compares his own treatment of mer- chandise and money with the manner of "Old Jacob, who, blessing his Grandchildren, crost his hands, and laide his right hand on the yonger, and his left hand on the elder." (1. c.) Boisguillebert, "Dissert, sur la Nature Des Richesses," etc. "Viola done Tesclave du commerce devenu son maltre . . . La mi84^re des peuples ne vient que de ce qu' 6n a fait un maltre, ou plutOt un tyran de ce qui 4tait un esclave." ( p. 395, 399, ) ^ Boisguillebert, 1. c. "On a fait une idole de ces metaux (Tor et I'argent) et laissant li, Tobjet et I'intention pour lesquels ils avaient 6t6 app6l^ dans le commerce, savoir, pour y servir de gages dans I'echange et la tradition reciproque, on les a presque quitt^s de ce service pour en former des divinit^s, aux quelles on a sacrifi^ et sacriSe toujours plus de biens et de besoins pr^ieux et m6me d'hommes, que jamais I'aveugle an- tiquity? n'en immola & ces fausses divinit^s," etc. (1. c, p. 395.) — 167 — his commodity, it is money and not coin; as soon aa it passes out of his hands it is again coin. Ef^eryfoody is a seller of the one commodity which he produces, but a buyer of all other commodities which he needs for his existence in society. While his selling is determined by the labor-time required for the production of his com- modity, his buying is determined by the continual re- newal of the wants of life. In order to be able to buy without having sold anything, he must sell without buy- ing. In fact, the circulation process C — M — C is a d3^namic unity of sale and purchase only in so far as it constitutes at the same time the constant process of its separation. In order that money should flow continu- ously as coin, coin must constantly coagulate as money. The continuous flow of coin depends on its constant accumulations in the form of reserve-funds of coin which spring up throughout the sphere of circulation and form sources of supply ; the formation, distribution, disappearance, and reformation of these reserve funds is constantly changing, their existence constantly dis- appears, their disappearance constantly exists. Adam Smith expressed this never-ceasing transformation of coin into money and of money into coin by saying that every owner of commodities must always keep in supply besides the particular commodity which he sells, a cer- tain quantity of the universal commodity with which he buys. We saw, that in the process C — M — C the second member M — C splits up into a series of purchases which do not take place at once, but at intervals of time, so that one part of M circulates as money while the other rests as money. Money is in that case only suspended — 168 — coin and the separate parts of the circulating mass of coins appear now in one form, now in another, constant- ly changing. This first transformation of the medium of circulation into money represents, therefore, but a technical aspect of money circulation/ The primitive form of wealth is that of a surplus or superabundance, i. e., that part of the products which are not immediately required as use-values, or the pos- session of such products whose use-value falls outside the sphere of mere necessaries. When considering the transition of commodity into money we saw that this surplus or superabundance of products constitutes the proper sphere of exchange at a low stage of development of production. Superfluous products become exchange- able products or commodities. The adequate form of this surplus is gold and silver, the first form in which wealth as abstract social wealth is preserved. Commod- ities can not only be stored up in the form of gold and silver, i. e., in the substance of money, but gold and . — . , . . i — I ^In the first halt of the perpetuum mobile, i. e., in the suspension of the function of money as a medium of circulation, Boisguillebert at once suspects its independent existence from commodities. Money, he says, must he "in constant motion, it can he money only by being mobile, but as soon as it be- comes motionless all is lost." ("Dans un mouvement con- tinuel, ce qui ne pent §tre que tant qu'il est meuble, mais Bitot qu'il devient immeuble tout est perdu." ('TLe Detail de la France," p. 231.) What he overlooks is that this halt constitutes the condition of its movement. What he really wants is that the value form of commodities should appear merely in the transitory form of their change of matter, but should never become an end in itself. — 169 — silver are wealth in preBerved form. While every use- value performs its service as such by being consumedj i. e., destroyed, the use-value of gold as money con- sists in its being the bearer of exchange value, in em- bodying universal labor-time as a shapeless raw material. As shapeless metal, exchange value posseses an inde- structible form. Gold or silver thus brought to rest as money, forms a hoard. Among nations with an exclu- sively metallic circulation, such as the ancients were, hoarding is practiced universally from the individual to the state which guards its state hoard. In more ancient times, in Asia and Egypt, these hoards under the protection of kings and priests appear rather as a mark of their power. In Greece and Eome it was part of public policy to accumulate state hoards as the safest and most available form of surplus. The quick transfer of such hoards by conquerors from one country to an- other and the sudden outpour of a part of these hoards into the general circulation constitute a peculiar feature of ancient economy. As the incarnation of labor-time gold is a pledge for its own value, and since it is the embodiment of univer- sal labor-time, the process of circulation pledges gold its constant role of exchange value. Owing to the mere fact that the owner of commodities can retain his com- modity in the form of exchange value or retain the ex- change-value as a commodity, the exchange of commod- ities for the purpose of retaining them in the trans- formed shape of gold becomes circulation's ovm motive. The metamorphosis C — M takes place for the sake of the metamorphosis, i. e., in order to transform it from — 170 — particular natural wealth into universal social wealth. Instead of change of matter, change of form becomes its own purpose. From a mere form of the movement ex- change value becomes its substance. Commodity is pre- served as wealth, as commodity, only in so far as it keeps witliin the sphere of circulation, and it keeps in that fluent state only in so far as it solidifies in the form of silver and gold. It remains in the stream of circu- lation as its crystal. At the same time gold and silver themselves become money only in so far as they do not play the part of mediums of circulation. As non- mediums of circulation they become money. The with- drawal of a commodity from circulation in the form of gold is therefore the only means oi keeping it con- stantly within the sphere of circulation. The owner of commodities can receive money from cir- culation only in return for a commodity which he gives to it. Constant selling, continual throwing of com- modities into circulation is, therefore, the first condition of hoarding from the standpoint of the circulation of commodities. On the other hand, money as a medium of circulation constantly disappears in the very process of circulation by being realized all the time in use-values and becoming dissolved in fleeting pleasures. It must, therefore, be taken out of the all-consuming stream of circulation or the commodity must be kept up in its first metamorphosis, so that money is prevented from performing its function of a means of purchase. The commodity owner who has now become a hoarder, must sell as much as possible and buy as little as possible, as old Cato had taught: "patrem familias vendacem, non — 171 — emacem esee/' While industry constitutes the positive condition of hoarding, saving forms the negative one. The less the equivalent of a commodity is withdrawn from circulation in the form of particular commodities or use-values, the more it is withdrawn in the shape of money or exchange value.' The acquisition of wealth in its universal form thus requires abstinence from wealth in its material reality. Thus the stimulating impulse for hoarding is greed, the objects of which are not commodities as use-values, but exchange value as commodity. In order to get possession of the surplus in its universal form, the particular wants must be treated as so much luxury and excess. Thus the Cortes presented a report to Philipp II., in 1593, in which, among other things, was said: "The Cortes of Valla- dolid in the year 1586 petitioned Your Majesty not to allow the further importation into the Kingdom of can- illes, glassware, jewelry, knives and similar articles; these things useless to human life come from abroad to be exchanged for gold, as though the Spaniards were Indians.** The hoarder despises the worldly, tempo- rary and transitory enjoyments ia his hunt after the eternal treasure, which neither moth nor rust can eat, which is perfectly celestial and earthly at the same time. "The general remote cause of our want of money is the great excess of this Kingdom in consuming the Com- modities of Forreine Countries, which prove to us discom- ^" . . . The more the stock ... is ... en- creased in wares., the more it decreaseth in treasure." (E. Misselden, 1. c, p. 23.) — 172 — modities, in hindering us of so much treasure, which otherwise would bee brought in, in lieu of those toyes . . . Wee . . . consume amongst us, that great abundance of the Wines of Spaine, of France, of the Khene, of the Levant . . . the Raisins of Spaine, the Corints of the Levant, the Lawnes and Cambricks of Hannaults . . . the Silkes of Italic, the Sugers and Tobaco of the West Indies, the Spices of the East Indies : All which are of no necessetie unto us and yet are bought with ready mony."* In the form of gold and silver, wealth is indestructi- ble, both because exchange value is preserved in the shape of indestructible metal, and, especially, because gold and silver are prevented from becoming, as me- diums of circulation, mere vanishing money forms of the commodity. The destructible substance is thus sa,c- rificed for the indestructible form. "If money be taken (by means of taxation) from him, who spendeth the same . . . upon eating and drinking, or any other perishing Commodity; and the same transferred to one that bestoweth it on Cloaths; I say that even in this case the Commonwealth hath some little advantage ; be- cause Cloaths do not altogether perish so soon as Meats and Drinks. But if the same be spent in Furniture of Houses, the advantage is yet a little more ; if in Building of Houses, yet more ; if in improving of Lands, working of Mines, Fishing, etc., yet more; but most of all, in bringing Gold and Silver into the Country ; because those things are not only not perishable, but are esteemed for *1. c, p. 11-13 passim. — 173 — Wealth at all times and everywhere ; whereas other Com- modities which are perishable, or whose value depends upon the Fashion ; or which are contingently scarce and plentiful, are Wealth, but pro hie et nunc."^ The with- drawal of money from the stream of circulation and the saving of it from the social interchange of matter reaches its extreme form in the burying of money, so that social wealth is brought as an underground indestructible treasure into a perfectly secret private relation with the owner of commodities. Dr. Bernier, who stayed for some time at the court of Aurenzeb at Delhi, tells U3 how the merchants, especially the Mohammedan heath- ens, who control nearly all the trade and all money, se<;retly bury their money deep in the ground, *^eing imbued with the faith that the gold and silver which they put away during their lives will serve them after death in the next world."^ However, in so far as the as- ceticism of the hoarder is combined with active in- dustry, he is rather a Protestant by religion and still more a Puritan. "It can not be denied that buying and selling are necessary, that one can not get along without them, and that one can buy like a Christian especially things that serve in need and in honor; for the patri- archs had also bought and sold cattle, wool, grain, but- ter, milk and other goods. They are gifts of God which He gives out of the earth and divides among men. But ^ Petty, "Political Arith./' 1. c, p. 196 { 1899 edition, v. I, p. 269. Transl.) 'Francois Bemier, "Voyage contenant la description dea etats du Grand Mogul." (Paris edition, 1830, t. 1., conf., p. 312314. — 174 — foreign trade which brings over from Calcutta, India and other such places commodities consisting of costly silks, and gold ware, and spices which only serve for luxury and are of no use, draining the land and the people of their money, should not be tolerated if we but had a government of princes. Yet I do not wish to write of that now, for I believe it will have to stop of itself, when we have no money any longer; and so will luxury and gluttony; for no writing or teaching will help until want and poverty will force us."* In times of disturbance in the process of the social interchange of matter, the burying of money takes place even in bourgeois societies which are at a high stage of development. The social bond in its compact form is ^ Dr. Martin Luther, "BUcher vom Kaufhandel und Wucher/' 1524. In the same passage Luther says: "Gott hat uns Deutsche dahin geschleidert, dass wir unser gold und silber mtissen in fremde Lander stossen, alle Welt reich machen und selbst Bettler Bleiben. England sollte wohl weniger Qoldes haben, wenn Deutschland ihm sein Tuch liesse, und der Konig von Portugal sollte auch weniger haben, wenn wir ihm die WUrze liessen. Eechne Du, wie viel eine Messe zu Frank- furt au8 Deutschen Landen gef iirt wird, ohne Not und Ursache : so wirst Du Dich wimdern, wie es zugehe, dass noch ein heller in Deutschen Landen sei. Frankfurt ist das Silber-und Gold- loch, dadurch aus Deutschem Lande fleisst, was nur guillet und w&chst, gemUnzt oder geschlagen wird bei uns; w&re das Loch zuegeetopft, so dUrft man itzt der Klage nicht horen, die allethalben eitel Schuld und kein Geld, alle Land und Stadte ausgewuchert sind. Aber lass gehen, es will doch also gehen; wir Deutsche mtissen Deutsche bleiben ! wir lassen nicht ab, wir mttssen denn." In the work quoted above Misselden wishes to retain the gold 175 being saved from the social movement (with the owner of commodities this bond is the commodity and the ade- quate form of the commodity is money). The social nervus rerum is buried next to the body whose nerve it is. The hoard would now become mere useless metal, its money soul would depart from it and it would re- main as the burnt ashes of circulation, as its caput mortuura, if it did not constantly tend to get back into circulation. Money, or crystallized exchange value, is, according to its nature, the form of abstract wealth; but, on the other hand, any given sum of money is a quantitatively limited magnitude of value. The quan- titative limitation of exchange value is in contradiction with its qualitative universality and the hoarder con- and silver at least within the confines of Christendom: "The other forreine remote causes of the want of money, are the Trades maintained out of Christendome to Turky, Persia and the East Indies, which trades are maintained for the most part with ready money, yet in a different manner from the trades of Christendome within itselfe. For although the trades within Christendome are driven with ready monies, yet those monies are still contained and continued within the bounds of Christen- dome. There is indeede a fluxus and refluxus, a flood and ebbe of the monies of Christendome traded within it selfe ; for some- times there is more in one part of Christendome, sometimes there is lesse in another, as one Country wanteth and an- other aboundeth: It cometh and goeth, and whirleth about the Circle of Christendome, but is still contained within the compasse thereof. But the money that is traded out of Chris- tendome into the parts aforesaid is continually issued out and never retiimeth againe." (p. 19-20.) 176 ceives in it a barrier which turns, in fact, into a quali- tative barrier as well and makes of the hoard merely a limited representative of material wealth. Money, in its capacity of a universal equivalent, appears, as we have seen, as a member of an equation, the other member of which consists of an endless series of commodities. It depends on the magnitude of the exchange value to what extent money will be realized in such an endless series, i. e., to what degree it corresponds to the con- ception of it as an exchange value. The automatic movement of exchange value as exchange value can only tend to its passing beyond its quantitative limits. But by exceeding the quantitative limits of the hoard a new limit is created which must be removed in its turn. There is no definite limit which appears as a barrier to further hoarding, every limit plays that part. Hoard accumulation has, therefore, no inherent limits, no in- herent measure; it is an endless process which finds in each successive result an impulse for a new beginning. While the hoard is increased only by being preserved, it is preserved only by being increased. Money is not only an object of the passion for riches ; it is the object of that passion. The latter is essentially auri sacra fames. The passion for riches, contrary to that for special kinds of natural wealth or use-values, such as clothing, ornaments, herds, etc., is possible only when universal wealth has been individualized as such in a particular object and can, therefore, be retained in the form of a single commodity. Money appears then no less as an object than as a source of the passion for — 177 — riches/ The underlying fact of the matter is that ex- change value as such and with it its increase become the final aim. Greed holds the hoard fast by not allow- ing the money to become a medium of circulation, but the thirst for gold saves the money soul of the hoard by keeping up the lasting affinity of gold for circulation. To sum up, the activity by which hoards are built up resolves itself into withdrawal of money from circula- tion by continually repeated sales, and simple hoarding or accumulation. In fact, it is only in the sphere of simple circulation and, especially, in the form of hoard- ing, that accumulation of wealth as such takes place, -while, as we shall see later, in the case of other so-called forms of accumulation it is only a misnomer to call them by that name in mere recollection of the simple accu- mulation of money. All other commodities are hoarded either as use-values, in which case the manner of storing them up is determined by the peculiarities of their use- value : the storing of grain, e. g., requires special equip- ment ; the accumulation of sheep makes one a shepherd ; the accumulation of slaves and land creates relations of master and servant, etc.; the accumulation of par- ticular kinds of wealth requires special processes differ- ent from the simple act of hoarding, and dev elops spe- •^ cial individual traits. Or, wealth in the form of com- *"A nmnmo prima origo avaritiae . . . haec paulatim exarsit rabie quadam, non jam avaritia, sed fames auris." (Plin., Hist. Nat., 1. XXXIII., c. XIV.) ("From money first springs avarice . . . the latter gradually grows into a kind of madness, which is no more avarice, but a thirst for gold.'*) — 178 — modities is hoarded as exchange-value and in that ease hoarding appears as a commercial or a specific economic operation. The one who carries on such operations be- comes a dealer in corn, in cattle, etc. Gold and silver are money not through some activity of the individual who accumulates it, but as crystals of the process of circulation which goes on without any aid on his part. He has nothing to do but to put them aside, adding new weights of metal to his hoard, a perfectly sense- less operation which, if applied to all other commodities, would deprive them of all value.^ Our hoarder appears as a martyr of exchange value, a holy ascetic crowning the metal pillar. He cares for wealth only in its social form and therefore he buries ^Horace thus understands nothing of the philosophy of boarding when he says (Satir. 1. II., Satir. Ill) : "Siquis emat citharas, emptas comportat in unum, Nee studio citharae nee musae deditus ulli ; Si scalpra et formas non sutor ; nautica vela Aversus mercaturis; delirus et amens, Undique dicatur merito. Qui discrepat istis, Qui nummos aurunque recondit nescius uti Compositis metuensque velut contingere sacrum V* "If one buys fiddles, hoards them up when bought, Though music's study ne'er engaged his thought, One lasts and awls, unrersed in cobbler's craft. One sails for ships, not knowing fore from aft. You'd call them mad : but tell me, if you please. How that man's case is different from these. Who as he gets it, stows away his gain, And thinks to touch a farthing were profane?" (Transl. by John Covington, London, 1874, p. 60.) Kr. Senior understands the question much better: '*L*:argeiit paratt etre la seule chose dont le d£sir est universel, et il en — 179 — it away from society. He wants to have the commodity in the form in which it is aJways capable of entering circulation and therefore he withdraws it from circula- tion. He dreams of exchange value and therefore does not exchange. The fluid form of wealth and its petri- fication, the elixir of life and the stone of wisdom madly haunt each other in alchemic fashion. In his imagi- nary unlimited passion for enjoyment he denies himself all enjoyment Because he wishes to satisfy all social wants, he barely satisfies his elementary natural wants. While holding fast to his wealth in its metallic bodily form, the latter escapes him as a phantom. As a matter of fact, however, the hoarding of money for the sake of money is the barbaric form of production for produc- tion's sake, i. e., the development of the productive forces of social labor beyond the limits of ordinary wants. The lees the production of commodities is developed, the more important is the first crystallization of ex- change value into money, or hoarding, which plays, therefore, an important part among the ancient nations, est ainsi parcequc I'argent est une richesse abatraiie et paroquc les bommes, en la poss^dant peuvent satisfaire 2L toua leur be- soine de quelque nature quMls soient.** ("Principca Fondamen- taux de TEconomie Politique, tir^ de legons edites et inedites dc N. W. Senior, par Comte Jean Arrivabene," Paris, 1836, p. 221. ( The corresponding passage in the English edition of his Politi- cal Economy, London, 1863, is to be found on p. 27. Trans- lator.) So does Storch: "Since money represents all other forms of Tvealth, it is only necessary to accumulate it to pro- vide for oneself all kinds of wealth existing in the world." (1. c, V. 2, p. 134.) — 180 — in Asia until the present day, and among modern agri- cultural nations where exchange value has not as yet taken hold of all the relations of production. Before taking up the consideration of the specific economic function of hoarding within the sphere of metallic cir- culation, let us mention another form of hoarding. Quite apart from their aesthetic properties, silver and gold commodities are convertible into money, since the material of which they are made is a money material ; and, inversely, gold money and gold bullion can be con- verted into commodities. Because gold and silver con- stitute the material of abstract wealth, the greatest dis- play of wealth consists of the utilization of these metals as concrete use-values, and if the owner of commodities hides his treasure at certain stages of production, he is very anxious to appear before other owners of commod- ities as rico homhre whenever he can do so with safety. He gilds himself and his house.^ In Asia, especially in India, where, unlike under the capitalist system, the hoarding of wealth appears not as a subordinate func- tion of the system of production, but as an end in itself, gold and silver commodities are practically but aesthetic forms of hoards. In mediaeval England gold and silver commodities were considered before the law as mere forms of treasure, since their value was but slightly in- ^To what extent th§ inner man of the commodity owner re- mains unchanged, even when he has become civilized and has developed into a capitalist, is shown by the example of a Lon- don representative of a cosmopolitan banking house who adopted as a fitting coat of arms for his family a £100,000 bank note, which he had hung up in a glass frame. The point here is in the mocking contempt of the note for circulation. — 181 — creased by the crude labor spent upon them. They were destined to re-enter circulation and their fineness was therefore prescribed in the same manner as that of coin. The increasing use of gold and silver as objects of luxury with the growth of wealth is such a simple matter that it was perfectly clear to the ancients/ while modem economists have advanced the erroneous prop- osition that the use of silver and gold articles increases not in proportion to the growth of wealth, but in pro- portion to the fall in value of the precious metals. Their otherwise accurate references to the use of Californian and Australian gold are inconclusive, since the increased consumption of gold as a raw material does not find justification, according to their theory, in any corre- sponding decline in its value. From 1810 to 1830, in consequence of the struggle of the American colonies against Spain and the interruption of mining caused by revolutions, the annual average production of precious metals declined by more than one-half. The decline of coin in circulation in Europe amounted to nearly one- sixth, comparing the years 1829 and 1809. Although the quantity produced had thus declined and the cost of production, if it had changed at all, had increased, yet the consumption of precious metals as objects of luxury increased to an extraordinary extent in England during the very war and on the continent after the Peace of Paris. The consumption increased with the general growth of wealth.^ It may be stated as a gen- eral law that the conversion of gold and silver money * See the passage from Xenophon, quoted below. ' Jacob, 1. c, v. 2, ch, 25 and 26. laz into articles of luxury prevails in times of peace, while their reconversion into bullion or even coin takes place in stormy periods.* How considerable the proportion is of the gold and silver treasure in the form of articles of luxury to the quantity of precious metals serving as money may be seen from the fact that in 1829 the pro- portion in England, according to Jacob, was two to one, and in entire Europe and America the precious metals in the form of articles of luxury exceeded those in the form of money by one-fourth. We have seen that the circulation of money is but the manifestation of the metamorphoses of commodities, or of the form under which the social interchange of matter takes place. With the change in the total price of commodities in circulation or in the volume of their simultaneous metamorphoses, the rapidity of their change of form in each case being given, the total quantity of gold in circulation must always expand or contract. That is possible only under the condition that the total quantity of money in the country continually bear a vary- ing ratio to the quantity of money in circulation- This condition is met by the process of hoarding. With a fall in prices or rise in the rapidity of circulation, the hoard-reservoirs absorb that part of money which is thrown out of circulation ; with a rise in price or a de- * "In times of great agitation and insecurity, especially dur- ing internal commotions or invasions, gold and silver articles are rapidly converted into money; whilst during periods of tranquility and prosperity, money is converted into plate and jewelry." (1. c, v. 2, p. 367.) — 183 — cline in the rapidity of circulation, the hoards open np and return a part of their contents to the stream of circulation. The solidification of circulating money into hoards and the outpouring of hoards into circula- tion is a constantly oscillating movement in which the prevalence of the one or the other tendency is deter- mined exclusively by fluctuations in the circulation of commodities. Hoards thus serve as conduits for the supply and withdrawal of money to or from circulation, so that every time only that quantity of money circu- lates as coin which is required by the immediate needs of circulation. If the volume of the entire circula- tion suddenly expands and the fluent unity of sale and purchase assumes such dimensions that the total sum of prices to be realized increases more rapidly than the rapidity of the circulation of money, the hoards decrease perceptibly; but when the combined movement slackens to an unusual extent, or the movement of buying and selling steadies itself, the medium of circulation solidi- fies into money in large measure, and the treasure reser- voirs fill up far above their average level. In countries with an exclusively metallic circulation or where pro- duction is at a low stage of development, the hoards are endlessly split up and scattered all over the land, while in countries where the capitalist system is developed they are concentrated in bank reservoirs. Hoards are not to be confounded with coin reservoirs, which form a constituent part of the total supply of money in circulation, while the interaction between hoards and currency implies the decline or rise of its total supply. Gold and silver commodities form, as we ~ 184 — have seen, both conduits for the withdrawal of precious metals, as well as sources of their supply. In ordinary times only their former function is of importance to the economy of metallic circulation/ ^ In the following passage Xenophon develops money in its specific forms of money and hoard : "iv novt^ tovt« &v iyi» olSa Iff fiav ov5e ^dofetovSet? tois ejritrKevafo/Aei'Ots...apyvprTi? 5e o av vXtiittv f^otvif- Tai, Ktti afyyvpiov irkelov yiyvijrai, toctovtw irAeioves eiri to epyov towto cpxofTat.... Kox yap Srf iirivka fiev eirei&ap txava tc? KT^arjrai rrj oi#cia, ov fA.d\a In wpo nokv eKrijo-aro uxrrt ftr) en vpoaQvlvOai^ a\k' 1JV rial yevTjTot TraftTrAijOes, to veptrrevov »caTopvTTOfTe9 ovBeif ^ttoi' rfSovrai ^ XP^f^evoi avTv ^ TToKepiM in Koi ttoAv ftaXAoi' ti}; y^? apyov yiyvofAeiai? KOt ci$ evir^eta ical eif eiriKovpovc vop.i