from the books: Capital, vol. 1, 1867, Ch. 3, Karl Marx and A Companion to Marx’s Capital, 2010, David Harvey

Key: (page numbers for Penguin Classics edition of Capital), [page numbers for David Harvey’s Companion to Capital]


Chapter 3


  • 1. The Measure of Values
    • Gold acts as a universal measure of value, and only through performing this function does gold, the specific equivalent commodity, become money
      • Money as the measure of value is the necessary form of appearance of the measure of value inherent to commodities: labor-time
  • (189) The expression of the value of a commodity in gold looks like this: x commodity a = y money commodity
    • This is its money-form, or price
    • This kind of equation (with gold as the equivalent form) is now socially valid
      • No longer a need for endless chain (e.g. commodity a = y commodity b = z commodity c…etc.) because the equivalent commodity–gold–already serves the role of money
  • What’s happened with the emergence of money:
    1. General relative form of value of commodities becomes once again a simple/individual relative value (1 ton of iron)
    2. But that endless series of equations–or expanded relative expression of value–has now become the specific relative form of value of the money commodity
      • Endless series of equations is now a socially given fact in the shape of the prices of the commodities
      • And money has no price; can’t serve as its own equivalent
  • (190) Since the expression of the value of commodities in gold is purely ideal act, we may use purely imaginary or ideal gold to perform this operation
    • E.g. Say you produce a table and intend on selling it in the market. Your placing a price in gold on it is entirely a made-up (but real) action–you’re not turning it into gold; you’re merely turning it into a price of imaginary gold
    • Still, despite this imaginary process, the price depends on the actual substance that is money
    • “The value (socially necessary labor-time), which is contained in a ton of iron is expressed by an imaginary quantity of the money commodity which contains the same amount of labor as the iron”
  • The coexistence of gold and silver as price-expressions (so long as ratio of value is ~15 to 1) is precarious — “every alteration of this ratio…proves that a duplication of the measure of value contradicts the function of that measure”
    • Footnote: “where 2 commodities perform by law the functions of a measure of value, in practice only one maintains that position”
    • “…the metal that rises in value is at a premium and measures its price in the overvalued metal, which alone serves in reality as the measure of value”
  • (191) The variegated commodities become magnitudes of the same denomination, gold-magnitudes
    • In this way, they can be compared with one another–course of development produces need to compare them with some fixed quantity of gold as unit of measurement
    • This unit, by subsequent division into smaller parts, becomes itself the standard measurement
    • Precious metals, before they’re money, possess such standards in their weights
  • (192) The two different functions that money performs:
    1. A measure of value
      • Social incarnation of human labor
      • Serves to convert values of commodities into prices (i.e. imaginary quantities of gold)
      • Measures commodities considered as values
    2. The standard of price
      • Quantity of metal with fixed weight
      • Measures those quantities in gold
      • Measures quantities of gold by a unit quantity of gold
  • [55-56] There’s a tension in the money commodity: it’s an effective measure of value, but an inefficient means of circulation
    • Quite literally, can you imagine having to carefully produce one tiny grain of gold fro a pouch to pay for a cup of coffee? What if you sneeze during the process?
    • Because of this tension, the notion of money on loan, debtors, creditors, and ultimately capital emerge
      • I.e. (3) credit moneys resolve the tension between (1) gold’s effective measure of value and (2) its inefficiency as a medium of circulation
        • Relation between creditors and debtors opens, by necessity, another from of circulation: capital
  • (193) Gold is a great measure of value because of its uniform properties
    • If its value falls 1,000%, there’s still a proportional relation between one ounce and 12 ounces of gold
    • And, the value relations between gold and all other commodities will remain uniform, too
  • (195) Price is the money-name of the labor objectified in a commodity
  • [56] There’s a distinction between “money” and “money commodity”
    • Marx seeks to consolidate previous argument: value is not materially measurable, but needs representation to regulate exchanges by
    • Assuming gold to be the singular money commodity
      • I.e. the necessary form of appearance of the measure of value that’s immanent in commodities: labor-time
    • Value resides in the relationship between the money commodity, “a form of appearance” of value and all the commodities that exchange with it
      • Value of commodities is unknowable without its form of appearance
  • [57] A relationship has emerged: between the imaginary, ideal prices and the prices actually received in the marketplace
  • [58] Money as measure of value AND as standard of price –> this sub-duality is not to be confused with measure of value vs. medium of circulation
    • Money commodity is (1) the measure of value as the social incarnation of human labor (the “ideal” representation) — But (2) it is also the standard of price as equality of metal with a fixed weight
      • It is #2 above that enables us to say this commodity is “worth” so many ounces gold
      • This quantity, weight, is what we have in mind before and what we have in hand after exchange of commodity
  • No explicit theory of the State in Das Kapital
    • But we can infer from its appearance that one of its functions has to do with organizing the monetary system, regulating money-names, and keeping monetary system effective/stable
    • Money-name is a fetish-construct; ie. the relationship to socially necessary labor itme is further concealed by money-names
    • [58] “Price” is “the money-name [fetish-construct] of the labor objectified in a commodity”
  • (197) Price-form is not only compatible with possibility of quantitative incongruity between magnitude of value and its own expression in money, but may also harbor a qualitative contradiction
    • Result of latter is that price ceases to express value, despite money being nothing but the value-form of commodities
    • Things which in and of themselves are not commodities–conscience, honor, etc.–can be offered for sale by their holders and thus acquire form of commodities through their price
    • I.e. a thing can have a price without having a value — expression of price here is imaginary
      • Other hand: imaginary price-form may also conceal a real value-relation or one derived from it, as for e.g. the price of uncultivated land, which is without value because no human labor is objectified in it
  • (198) Hard cash lurks within the ideal measure of value
  • [59] What Marx is saying on pp 196 in example:
    • I bring my commodity to market and hang a price on it
    • You do the same with similar commodity
    • Someone else does the same
    • We have a market full of different prices form same commodity
    • Average price realized on a particular day depends on how many people want the commodity and how many people come to market wanting to sell it
    • Average realized price will jump around depending on fluctuations in supply and demand conditions
  • Through the above mechanism, “equilibrium price” emerges, or the price achieved when supply and demand are in equilibrium
    • At this point, supply and demand will cease to explain anything
    • Supply/demand can’t explain why a shirt, on average, costs less than a pair of shoes and what the average differential price is between shirts and shoes 
      • Marx holds that this average differential price is reflective of value, of socially necessary labor-tie congealed in the different commodities
    • On a given day, though, price fluctuations will tell you the state of demand and supply for shoes on that day and why it has gone up or down from yesterday
    • So, putting money names on commodities and converting the measure of value into this ideal form-price-form allows price flux to equilibrate the market
    • Fluctuations in prices achieve: a convergence on the average social labor necessary to produce a commodity
      • Without this quantitative incongruity, there would be no way of smoothing out demand and supply variations in the marketplace and converging on social average price that represents value
  • [60] Second observation: about the discrepancy in price-form and magnitude of value and qualitative discrepancy of value and abstract ideas (honor); or: a thing can have a price and not a value
    • But if you can put a price tag on literally anything, and if it’s independent of value, then why is Marx so bent on the labor theory of value?
      • Aren’t conventional political economists right to say that all we can analyze are prices; to abandon the labor theory of value?
      • Well, Marx doesn’t defend his choice, but we must respond
  • David Harvey’s response: Marx would appeal to concept of material base:
    • If everyone tried to live off of spectacle of waterfall and honor, no one would survive
      • Real production, the transformation of natural resources into objects via labor, is crucial to existence
      • It is this material labor that forms basis for the production and reproduction of all human life
      • Waterfalls and conscience don’t clothe us; our breakfast comes from real labor–to pretend this stuff emerges out of market exchange and is facilitated by money in our pocket is to succumb to fetishism of commodity
        • We need concept of value as socially necessary labor-time to escape the fetishism
  • (198) 1. The Means of Circulation
  • [62] Metamorphosis of commodities
    • We’ve seen the exchange of commodities implies contradictory and mutually exclusive conditions
      • Relative and equivalent forms of value: 3 peculiarities of money commodity:
        1. Use-value becomes the form of appearance of its opposite, value
        2. Concrete labor becomes the form of manifestation of its opposite, abstract human labor
        3. Private labor takes form of its opposite, labor in its directly social form
    • [63] The “social metabolism” and “metamorphosis of commodities” through exchange fo commodities
      • Exchange produces 2 elements: commodity and money
        • Commodity and money move in opposite directions with each change of hands
        • While movement of one (exchange of money) is supposed to facilitate the other (movement of commodities), there’s an oppositional flow, which creates the possibility for the rise of antagonistic forms
    • (199) Will focus in on the change in form, or metamorphosis, of commodities through which the social metabolism is mediated
    • Exchange makes commodity into commodity and money, expressing the internal contradictions of use-value and value
      • In this opposition, commodities as use-values confront money as exchange-value
      • Other hand: both sides of this opposition are commodities, hence themselves unities of use-value and value
        • But this unity of differences is expressed at 2 opposite poles, and at each pole in an opposite way
      • Alternating relation between 2 poles:
        1. Commodity is really a use-value: its existence as a value appears only ideally in its price
          • Through price, the commodity is related to the real embodiment of its value: gold, which confronts it as its opposite
        2. Material of gold ranks only as the materialization of value, as money
          • It is therefore really exchange-value
          • Gold-as-money’s use-value appears only ideally in the series of expressions of relative value within which it confronts all the other commodities as the totality of real embodiments of its utility
      • “These antagonistic forms of the commodities are the real forms of the process of exchange”
    • (200) Into the market we go
      • Linen-producer takes his commodity to market, sells it and buys a bible
        • 2 metamorphoses of opposite yet mutually complementary character: C-M-C
          • Unity of these 2 acts: selling in order to buy
        • As far as concerns its material content, the movement is C-C, the exchange of one commodity for another–“the metabolic interaction of social labor”–in whose result the process itself becomes extinguished
  • C-M: first metamorphosis of the commodity, or sale
    • Value takes leap from commodity to money, may fall short
    • Social division of labor makes the nature of seller’s labor as one-sided as his/her needs are many-sided
      • This is why the product of her labor serves her as mere exchange-value
      • But it can’t acquire universal social validty as an equivalent-form except via conversion to money
      • (201) But that money is in another’s pocket
      • To draw money out, the commodity produced by its owner’s labor must above all be a use-value for owner of money
      • Labor expended on commodity must be of a socially useful kind; i.e. it must maintain its position as a branch of the social division of labor
      • But division of labor is an organization of production, a web which is woven behind the backs of the producers of commodity
      • (Weird interjection here about a potential commodity that may serve a new need — one that tears itself out of the social production framework and establishes an independent branch of labor — but for now, the product satisfies a social need)
      • If society’s need for linen is already satisfied, our producer will become irrelevant
  • [63] It would appear at first that C-M-C is a mirror image, but it’s composed of asymmetrical parts
    • C-M, sale, involves change in form of particular commodity into universal equivalent; money commodity; movement from particular to universal
      • So C-M exchange is complicated by supply-demand conditions that exist in the market at a particular time
  • (202) Commodities love money, but “the course of true love never did run smooth”
    • The qualitative articulation of society’s productive organism; by which its scattered elements are integrated into the division of labor, is as haphazard and spontaneous as its qualitative articulation
    • Commodity owners find that the social division of labor that makes them into independent private producers also makes social process of production and the relations between producers independent of the producers themselves
  • (203) If the commodity isn’t possible to sell, then a change in form must always occur; although there may be an abnormal loss of accretion of substance–i.e. of the magnitude of value
    • Seller: particular commodity is exchanged for its universal shape assumed by its own value
    • Buyer: gold is exchanged for a particular form of its own use-value
    • Gold confronts the linen as money because linen’s price of $2, it’s money-name, already brings it into relation with gold as money
      • Commodity is divested of its original form through sale
      • Sale: the moment its use-value actually attracts the gold [note the placement of agency], which previous had imaginary existence in its price
    • Realization of commodity’s price is simultaneously and inversely the realization of merely the ideal use-value of money
  • (204) Leaving aside its exchange for other commodities at the source of production, gold is, in the hands of every commodity-owner, her own commodity divested of its original shape by being alienated
  • (205) The metamorphosis of one commodity into money is also its diametric opposite, the change of another commodity into money — “the retransformation of latter from money into commodity”
  • M-C: 2nd, concluding change of commodity; or, purchase
    • Money “reads all prices backwards, and thus as it were mirrors itself in the bodies of all other commodities, which provide the material through which it can come into being as a commodity”
    • At the same time the prices, those wooing glances cast at money by commodities, define the limit of its convertibility, namely its own quantity
  • (206) The complete change of a commodity, in its simplest form, implies four dénouements and three dramatis personae
    • Commodity comes face-to-face with money
  • [64] C-M-C is an exchange process that can be viewed from any of its 2 poles
  • [65-66] Marx’s work here is to critique Say’s Law: that there can be no overproduction crisis within capitalism because every sale is a purchase and vice versa — therefore, it’s always reaching some equilibrium between purchases and sales in the market
    • Say: While there may be an over-production of shoes relative to shirts, a generalized over-production in society is impossible because of the overall equivalence of purchases and sales
    • Marx: no one directly needs to purchase just because she has sold
      • Mutually independent and antithetical processes of C-M and M-C form an internal unity, which is to say this internal unity moves forward through external antitheses
      • The 2 processes lack internal independence because they complement each other
      • Hence, if the assertion of their external independence proceeds to a critical threshold, their unity violently makes itself felt by producing a crisis
  • (208) “Circulation sweats money from every pore”
  • (210) (b) The Circulation of Money
    • C-M-C starts with commodity and ends with commodity; it’s a circuit
      • On other hand, the for of this movement excludes money from the circuit
      • Result of the movement is not a return of the money, but its continued removal further and further away from its starting point
  • (211) “The circulation of money is the constant and monotonous repetition of the same process”
    • Money serves as a means of purchase by realizing the price of the commodity
      • By doing this, it transfers the commodity from the seller to the buyer and removes the money from the hands of the buyer into those of the seller, where it goes through same process with new commodity
    • Hidden from view: that this one-sided form of motion of the money arises out of two-sided form of motion of the commodity
  • (212) Money’s movement, as the medium of circulation, is merely the movement undergone by commodities while changing their form
    • (213) “every commodity, when it first steps into circulation and undergoes its first change of form, does so to fall out of circulation once more and be replaced again and again by fresh commodities”
      • “Money, on the contrary, as the medium of circulation, haunts the sphere of circulation and constantly moves around within it”
      • Question: how much money does this sphere of circulation absorb?
  • (214) “the quantity of the medium of circulation is determined by the sum of the prices to be realized”
  • [67] Economists (including Ricardo) accepted Say’s Law up until the 1930s crisis (Great Depression)
    • 1936, John Maynard Keynes published General Theory of Employment, Interest, and Money, totally abandoning Say’s Law
    • In Essays in Biography (1933), Keynes takes Say to task, making much of the liquidity trap
    • Liquidity trap: a ruction occurs in the market, and those with money hold on to it nervously rather than invest/spend it, driving the demand for commodities down
      • Suddenly people can’t sell their commodities
      • Uncertainty increases, and folks hold on to the only security, their money
      • Subsequently, whole economy spirals downard
      • Keynes: Government had to step in and reverse this process by creating various fiscal stimuli — only then would privately hoarded money be enticed back into market
    • [68] Since Marx also critiques Say’s Law, there has been some dialogue since the ’30s between Marxian and Keynesian theories
    • Keynesian theory dominated until anti-Keynesian revolution of 1970s (i.e. neoliberalism); the monetarist and neoliberal theory predominant today harkens back to Say’s Law
  • Marx’s next step is to review the monetarist literature of the time
    • Question posed: how much money does there need to be in order to circulate a given quantity of commodities?
    • He accepts a (Ricardian) version of “quantity theory of money”
    • He soon arrives at a supposed law: the quantity of the circulating medium is “determined by sum of the prices and the commodities in circulation, and the average velocity of the circulation of money”
      • Velocity of circulation of money is simply a measure of the rate at which money circulates; e.g. how many times in a day does a dollar bill change hands?
    • He noted earlier: “these 3 factors”:
      1. the movement of prices
      2. the quantity of commodities in circulation
      3. the velocity of circulation of money — these can all vary in different directions under different conditions
    • Therefore, the quantity of money needed varies a great deal depending on how these 3 variables shift
    • If you can find a way to speed up the circulation, then the velocity of money accelerates as happens through credit-card use and electric banking
      • The greater the velocity of money, the less money you need
  • (221) (c) Coin. The Symbol of Value
    • Money takes the shape of coin because of its function as the circulating medium
      • The business of coining is an attribute proper to the state
      • Only difference between coin and bullion lies in physical configuration, and gold can at any time pass from one form to another
    • Whole argument laid out in David Harvey’s intro to the chapter: gold bullion is an ineffective form for the medium of exchange, so symbolic money comes to be
  • (226) One thing is necessary: the symbol of money must have its own objective social validity
  • [69] It is much more efficient to use tokens, coins, paper, or numbers on a screen
    • State plays vital role in replacing metallic money commodities with tokens, symbolic forms
    • Locally, the quest for efficient forms of money becomes paramount — small change appears alongside gold for payment of fractional parts of the smallest gold coin, which leads to “inconvertible paper money issued by the state and given forced currency”
    • (225) Marx: “Paper money is a symbol of gold, a symbol of money. Its relation to the values of commodities consists only in this: they find imaginary expression in certain quantities of gold, and the same quantities are symbolically and physically represented by paper”
    • Credit-money emerges because it becomes socially necessary to leave gold behind and to work with these other symbolic forms of money
  • [70] Pre-1970s, paper money was pegged to gold, giving it its stability, or its relationality to value
    • But converting money into gold was denied to private persons in many countries from 1920 onwards
    • Above was reserved for exchanges between countries to balance currency accounts
    • Whole thing broke down in late ’60s, early ’70s (fall of Bretton Woods system) and we now have purely symbolic system — a universal money commodity
  • (227) 3. Money: the commodity which functions as a measure of value and therefore also as the medium of circulation, either in its own body or through a representative
    • [70] ^ back to this unitary idea: but how do the contradictions of “money as a measure of value” vs “money as medium of circulation” operate dialectically within it
  • (a) Hoarding
    • (228) Commodities are sold not to buy other commodities, but to replace their commodity-form with their money-form
      • I.e. Not C-M-C, but M-C-M
      • The money is petrified into a hoard
  • Vanderlint believed that prices of commodities in a country correspond to quantity of gold and silver to be found in it
  • [71] Why would people hoard money (M-C-M)? Twofold answer:
    1. Passionate desire for money-power
    2. Social necessity
  • Why (2) is hoarding socially necessary for commodity exchange?
    • Temporal problem of coordinating sales/purchases of different commodities
      • E.g. Farmer sells once a year, but buys every day–therefore, he needs to hoard reserves from one harvest to the next
  • (1) Ability to hold means of exchange (contra Say’s Law) leads to “lust for gold” passion
  • [72] There is nothing that is not commensurable with money; in the circulation of commodities, it is ‘a radical leveler, it extinguishes all distinctions’
    • Democratizing power of money
  • But Money is also “itself a commodity, an external object capable of becoming the private property of any individual. Thus the social power becomes the private power of private persons
    • With this step, Marx reverses that initial formulation of the logical relation between money and labor (i.e. reverses the 3rd peculiarity of value-form that holds money’s tendency to render private labor a means of expression for social labor)
    • It was the problem that private activities were involved with the production of the universal equivalent
    • Now, he’s describing how private persons can appropriate the universal equivalent for their own private purposes
    • Soon, we’ll see the concentration of private and class power in monetary form
  • [73] Social power attached to money has no limit; yet, the amount of money the hoarder has at any given time does limit her
    • So, contradiction between quantitative limitation and qualitative lack of limitation of money keeps driving hoarder back to her Sisyphean task: accumulation
  • The accumulation of money as unlimited social power is an essential feature of a capitalist mode of production
    • Once the universal equivalent becomes a representation of all socially necessary labor-time, the potentiality for further accumulation is limitless
  • (230) The value of a commodity measures the degree of its attractiveness for all other elements of material wealth, and therefore measures the social wealth of its owner
  • (231) The more the hoarder produces, the more he can sell. Work, thrift, and greed are therefore the cardinal virtues, and to sell much and buy little is the sum of his political economy
    • (232) “The reserves created by hoarding serve as channels through which money may flow in and out of circulation, so that the circulation itself never overflows its banks”
  • (233) (b) Means of Payment
    • The seller sells an existing commodity, the buyer buys as the mere representative of money, or rather as the representative of future money
      • Seller becomes a creditor
      • Buyer becomes a debtor
    • Since the change of commodities, or the development of their form of value, has undergone a change here, money receives a new function as well — it becomes the means of payment
      • (e.g. lease must expire before buyer actually receives its use-value. He therefore buys it before he pays for it)
  • Roles of creditor and debtor emerge from circulation of commodities
  • [74] Back to pp 231: Marx takes p.o.v. of the hoarder and notices that it’s useful in relation to the contradiction between money as a measure of value and as a medium of circulation
    • Hoarded money is a reserve that can be put into circulation if there’s a surge in commodity production; it can be retracted when quantity of money needed for circulation shrinks
    • I.e. Formation of a hoard is crucial to moderating the ebbs and flows of the money in circulation
  • How can hoard of money be enticed back into circulation?
    • Raising relative price of gold/silver could tempt people to spend on commodities that have become relatively cheaper
  • Money as a means of payment: problem arises out of temporality of different kinds of commodity production
    • [75] Into the farmer example:
      • Farmer produces product that can be put on market in September
      • How do they live the rest of the year?–They need money continuously, but only get it once a year
      • One solution: instead of hoarding, use money as a form of payment
      • This creates a time gap between exchange of commodities and the money exchanged–future date of settlement has to be set
      • Money becomes money of account, written down in a ledger
      • Since no money is actually moving until settlement date, less aggregate money is needed to circulate commodities and this helps resolves tensions between money as measure of value and as medium of circulation
  • Rise of debtors and creditors
    • Seller –> creditor
    • Buyer –> debtor (both of these emerge from money as means of payment)
    • There’s a power relation here yet to be determined
    • This kind of commodity circulation is M-C-M
    • Why would a creditor lend money to get back the same amount of money? (M-C-M)
  • [76] On pp 233-234: Harvey decodes a long, but momentous passage as, “There needs to be a form of circulation in which money is going to be exchanged to get money: M-C-M”
    • This is a new form of circulation in which money is the objective, not commodities
    • In order for the above to make any sense, I need to get back more money than I started with
    • “This is the moment in Das Kapital when we first see the circulation of capital crystallizing out of the circulation of commodities mediated by the contradictions of money-forms”
  • [77] Marx’s argument so far:
    1. The proliferation of commodity exchange necessarily leads to rise of money-forms
    2. The internal contradictions within these money-forms necessarily leads to the rise of the capitalist form of circulation, in which money is used to gain more money
  • If this is an historical (and not a logical) argument, then Marx is wrong (according to Harvey)
  • But, if it’s a logical one, it evolves like:
    1. The dialectical and relational opposition between use-value and exchange-value as embodied in commodity
    2. Externalization of that opposition in the money-form as a way to represent value and facilitate commodity exchange
    3. Internalization of this contradiction by the money-form as both a medium of circulation and a measure of value
    4. The resolution of that contradiction through the emergence of relations between debtors and creditors in the use of money as a means of payment
  • [78] Contradiction immanent in money as a means of payment (pp 235)
    • “When actual payments have to be made, money doesn’t come to scene as circulating medium… but as the individual incarnation of social labor, the independent presence of exchange-value, the universal commodity”
      • I.e. the person who owns the universal equivalent puts it into market for a reason
      • and “independence” of universal commodity and its separation from day-to-day commodity circulation have profound consequences
  • This contradiction bursts forth in a monetary crisis: you can’t pay your bills with more IOUs, you’ve got to find hard cash, the universal equivalent, to pay them off — so where’s the hard cash going to come from?
  • [79] An example that helps explain pp 236-237
    • 2005: consensus there was surplus of liquidity chilling out in world’s market
    • Bankers had surplus funds and were lending to anyone, even those with no credit worthiness (i.e. subprime mortgages, NINJA loans, etc.)
      • You could buy a house with no income because a commodity, like a house, was seen as a safe bet
    • Prices of houses stopped rising –> debts fell due –> more and more people couldn’t pay
    • Liquidity suddenly dries up: where is the money?
    • Suddenly, the Federal Reserve has to inject massive funds into the banking system because now “money is the only commodity”
  • (237) (Sum of prices to be realized) + (Sum of payments falling due)
  • –(payments which balance each other out) – (number of circuits in which same piece of coin serves alternately as medium of circulation and means of payment)
  • (240) (c) World Money
    • It’s all about bullion <–Money of the world
  • [80] Crisis instigated by sudden withdraw of circulating money
    • E.g. 1997/1998 East and Southeast Asia; perfectly adequate companies, but highly indebted; bankers withdraw short term liquidity –> crash
      • Western capital and banks came in and bought the companies for dirt cheap
      • Liquidity restored; economy back; but now owned by Western capital/Wall Street
  • Marx then shows a modification of the quantity theory of money: Less money is needed the more payments balance each other out and the more money becomes a mere means of payment
    • “Commodities circulate, but their equivalent in money does not appear until some future date”
      • This is how “credit-money springs directly out of the function of money as a means of payment, in that certificates of debt owing for already purchased commodities (what on Wall Street is now institutionalized as collateralized debt obligations, or CDOs) themselves circulate for the purpose of transferring those debts to others”
  • [81] Bottom line: “the development of money as a means of payment makes it necessary to accumulate it in preparation for the days when the sums which are owing fall due”
    • Accumulation and hoarding are paired, but have different functions: “while hoarding, considered as an independent form of self-enrichment, vanishes with the advance of bourgeois society, it grows at the same time in the form of the accumulation of a reserve fund of the means of payment”
  • New equation:
    • Was: total quantity of money required in circulation is the sum of commodities, multiplied by their prices and modified by velocity and development of means of payment PLUS a reserve fund (hoard) that will permit flexibility in ties of flux
  • World money
    • Despite the state controlling domestic monetary system there’s still the world market, where gold and silver bullion function as lingua franca
  • [82] So, how relevant is Marx’s argument here since the world financial system works without a money commodity, or metallic base, as it has since 1971
    • But gold for Marx was only ever the representation of value, of socially necessary labor time
    • All that’s happening since 1971 is that the manner of representation has changed

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