{"collection":"philosophy-ethics","full_text_available":true,"graph_url":"https://unchartedknowledge.5gfusion.net/v2/api/page/gutenberg_46423/graph","html_url":"https://unchartedknowledge.5gfusion.net/v2/page/gutenberg_46423","id":"gutenberg_46423","license":"Public Domain (US)","rights_basis":"gutenberg_metadata_copyright_false","source":"gutenberg","source_url":"https://www.gutenberg.org/ebooks/46423","summary":null,"tags":["Category: Economics","Category: Philosophy & Ethics","Category: Politics","Economics","Marxian economics"],"text":"------------------------------------------------\n  Transcriber\u2019s Note:\n\n  +Bold text+ is enclosed within plus signs.\n\n  =Gesperrt text= is enclosed within equal signs.\n\n  \u2016Fraktur font\u2016 is enclosed between two upright\n  lines.\n  ------------------------------------------------\n\n\n\n\n  A CONTRIBUTION TO\n  THE CRITIQUE OF\n  POLITICAL ECONOMY\n\n  BY\n  KARL MARX\n\n  Translated from the Second German Edition by N. I. Stone\n\n  With an Appendix Containing Marx\u2019s Introduction to the Critique\n  Recently Published among His Posthumous Papers\n\n  CHICAGO\n  CHARLES H. KERR & COMPANY\n\n  Copyright, 1904\n  By the International Library Publishing Co.\n\n\n\n\nTRANSLATOR\u2019S PREFACE.\n\n\nThe present translation has been made from the second edition of the\n\u201cZur Kritik der Politischen Oekonomie,\u201d published by Karl Kautsky in\n1897 with slight changes from the original edition of 1859; changes\nthat had been indicated by Marx on the margins of his own copy of the\nbook.\n\nAs will be seen from the author\u2019s preface, the work was originally\nissued as the first instalment of a complete treatise of political\neconomy. As he went on with his work, however, Marx modified his plans\nand eight years after the appearance of the \u201cZur Kritik\u201d he published\nthe first volume of his Capital, whose scope was intended to cover the\nentire field of political economy.\n\nThe plan to which Marx alludes in the preface to the present work\nwas thus abandoned in its formal aspects, but not in substance. The\nsubject matter treated here was reproduced or rather \u201csummarized,\u201d as\nMarx himself puts it, in Capital. But that was done in so far as was\nnecessary to secure continuity of treatment. On the other hand, many\nimportant matters are treated here more thoroughly than in Capital,\nespecially the part devoted to the discussion of money. This, as well\nas the chapters on the history of the theories of value and of money,\nwhich do not appear in Capital, make \u201cZur Kritik\u201d a work practically\ncomplete in itself.\n\nThe recent silver agitation in this country shows how timely and useful\nthis work still is, though written nearly half a century ago. That a\ngreat part of the working-men employed in the cities were not carried\naway by the Democratic-Populist agitation in 1896 and 1900 is probably\ndue in a greater measure than is commonly realized to the direct\nand indirect influence of Marx, whose economic teachings guided the\nsocialists in their counter agitation. And since the conditions which\nonce gave rise to a demand for an inflated currency have by no means\ndisappeared beyond a possibility of return, this book has a wide field\nbefore it, outside of the library of the college and of the student of\neconomics, which the author\u2019s name and prestige with the working class\ninsures for it.\n\nThere is another reason, if any need be given why this book should\nhave been translated into English. Marx\u2019s preface to the present work\ncontains the classic formulation of his historico-philosophic theory\nknown as the Materialistic Interpretation of History. This theory,\nwhich until recently was entertained almost exclusively by socialist\nwriters and was hardly heard of outside of socialist circles in English\nspeaking countries, is at last receiving not only due recognition but\nsympathetic appreciation at the hands of men of science.[1] It is\nrather a significant coincidence that the work which for the first\ntime clearly formulated the law governing social evolution should have\nseen the light of day in the same year in which Darwin gave to the\nworld his theory of organic evolution. And as the latter had to fight\nits way to recognition in the teeth of religious prejudices, so has the\nrecognition of the former been retarded by even more powerful social\nand political prejudices.\n\nThe Introduction to the Critique of Political Economy which is added\nas a supplement to this book is for the first time published in book\nform in any language. It was written by Marx in 1857, but for reasons\nexplained by him in the preface was not published and in fact was never\nfinished by him, since according to his changed plans it would have\nfitted more into the last volume of Capital which was to contain a\nhistory of political economy. The introduction has been published but\nlately in the form of a magazine article by Karl Kautsky, editor of the\nNeue Zeit and literary executor of Karl Marx.\n\nA few explanations are here in order with reference to the work of\ntranslation. No one is more keenly alive to the shortcomings of the\nEnglish rendering of the original than the translator himself. While\nfully conscious that the translation might be greatly improved, he\nhas at times deliberately sacrificed literary finish to closeness to\nthe original. It will be found that many passages have been rendered\nmore clear and concise in Capital in which, according to Marx\u2019s own\nstatement in the preface to that work, they were much simplified and\npopularized. The Hegelian phraseology is more in evidence in the\npresent work rendering translation a more difficult task. Yet for\nthat very reason it seemed particularly desirable to give to English\nspeaking readers as close a version of the original as was possible. In\nthe few cases where certain passages from this work were reproduced by\nMarx in Capital, the translation of the latter by Moore and Aveling was\nfreely drawn upon with slight modifications here and there.\n\nAbout the only liberty taken with Marx\u2019s terminology has been in\nthe case of the word \u201cb\u00fcrgerlich.\u201d Marx speaks here of \u201cb\u00fcrgerliche\nProduktion\u201d and \u201cb\u00fcrgerlicher Reichthum\u201d and \u201cb\u00fcrgerliche Arbeit\u201d where\neight years later he used in corresponding passages in Capital the word\n\u201ckapitalistische.\u201d As the English speaking reader is more accustomed to\nhear of the \u201ccapitalist\u201d system of production than of the \u201cbourgeois\u201d\nsystem of production, etc., the translator considered Marx\u2019s own change\nof this term within a few years from the publication of \u201cZur Kritik\u201d\na sufficient justification for rendering the word \u201cb\u00fcrgerlich\u201d into\n\u201ccapitalistic\u201d wherever it seemed more likely to carry the meaning home\nto the reader.\n\nIn view of the fact that the work is likely to be read in wide circles\nit was thought desirable to translate the numerous quotations from\nItalian, Greek, Latin and French writers, the translation being given\nside by side with the original quotation. All English citations given\nby Marx in German have been restored from the original sources, which\nnecessitated the use of four libraries, the Astor and the Columbia\nUniversity libraries in New York, the Congressional Library in\nWashington, and the private library of Professor Seligman to whose\nkindness the translator is indebted for the permission to use rare\nworks of the seventeenth century quoted by Marx. Several of Marx\u2019s\nreferences to the pages of the books quoted by him have been found to\nbe wrong and therefore differ here from those given in the original.\nIn two or three cases where the original English citations could not\nbe found they were retranslated from German with the quotation marks\nomitted.\n\nThis statement would be incomplete if the translator failed to mention\nthe helpful participation in this work by his wife whose share in the\ntranslation is equal to his own.\n\nNew York, October, 1903.\n\n\n\n\nAUTHOR\u2019S PREFACE.\n\n\nI consider the system of bourgeois economy in the following order:\n_Capital_, _landed property_, _wage labor_; _state_, _foreign trade_,\n_world market_. Under the first three heads I examine the conditions\nof the economic existence of the three great classes, which make up\nmodern bourgeois society; the connection of the three remaining heads\nis self evident. The first part of the first book, treating of capital,\nconsists of the following chapters: 1. Commodity; 2. Money, or simple\ncirculation; 3. Capital in general. The first two chapters form the\ncontents of the present work. The entire material lies before me in the\nform of monographs, written at long intervals not for publication, but\nfor the purpose of clearing up those questions to myself, and their\nsystematic elaboration on the plan outlined above will depend upon\ncircumstances.\n\nI omit a general introduction which I had prepared, as on second\nthought any anticipation of results that are still to be proven, seemed\nto me objectionable, and the reader who wishes to follow me at all,\nmust make up his mind to pass from the special to the general. On the\nother hand, some remarks as to the course of my own politico-economic\nstudies may be in place here.\n\nThe subject of my professional studies was jurisprudence, which I\npursued, however, in connection with and as secondary to the studies\nof philosophy and history. In 1842-43, as editor of the \u201cRheinische\nZeitung,\u201d I found myself embarrassed at first when I had to take part\nin discussions concerning so-called material interests. The proceedings\nof the Rhine Diet in connection with forest thefts and the extreme\nsubdivision of landed property; the official controversy about the\ncondition of the Mosel peasants into which Herr von Schaper, at that\ntime president of the Rhine Province, entered with the \u201cRheinische\nZeitung;\u201d finally, the debates on free trade and protection, gave\nme the first impulse to take up the study of economic questions. At\nthe same time a weak, quasi-philosophic echo of French socialism and\ncommunism made itself heard in the \u201cRheinische Zeitung\u201d in those days\nwhen the good intentions \u201cto go ahead\u201d greatly outweighed knowledge of\nfacts. I declared myself against such botching, but had to admit at\nonce in a controversy with the \u201cAllgemeine Augsburger Zeitung\u201d that my\nprevious studies did not allow me to hazard an independent judgment as\nto the merits of the French schools. When, therefore, the publishers\nof the \u201cRheinische Zeitung\u201d conceived the illusion that by a less\naggressive policy the paper could be saved from the death sentence\npronounced upon it, I was glad to grasp that opportunity to retire to\nmy study room from public life.\n\nThe first work undertaken for the solution of the question that\ntroubled me, was a critical revision of Hegel\u2019s \u201cPhilosophy of Law\u201d;\nthe introduction to that work appeared in the \u201cDeutsch-Franz\u00f6sische\nJahrb\u00fccher,\u201d published in Paris in 1844. I was led by my studies to\nthe conclusion that legal relations as well as forms of state could\nneither be understood by themselves, nor explained by the so-called\ngeneral progress of the human mind, but that they are rooted in the\nmaterial conditions of life, which are summed up by Hegel after the\nfashion of the English and French of the eighteenth century under\nthe name \u201ccivic society;\u201d the anatomy of that civic society is to\nbe sought in political economy. The study of the latter which I had\ntaken up in Paris, I continued at Brussels whither I emigrated on\naccount of an order of expulsion issued by Mr. Guizot. The general\nconclusion at which I arrived and which, once reached, continued to\nserve as the leading thread in my studies, may be briefly summed up as\nfollows: In the social production which men carry on they enter into\ndefinite relations that are indispensable and independent of their\nwill; these relations of production correspond to a definite stage\nof development of their material powers of production. The sum total\nof these relations of production constitutes the economic structure\nof society\u2015the real foundation, on which rise legal and political\nsuperstructures and to which correspond definite forms of social\nconsciousness. The mode of production in material life determines the\ngeneral character of the social, political and spiritual processes\nof life. It is not the consciousness of men that determines their\nexistence, but, on the contrary, their social existence determines\ntheir consciousness. At a certain stage of their development, the\nmaterial forces of production in society come in conflict with the\nexisting relations of production, or\u2015what is but a legal expression\nfor the same thing\u2015with the property relations within which they\nhad been at work before. From forms of development of the forces\nof production these relations turn into their fetters. Then comes\nthe period of social revolution. With the change of the economic\nfoundation the entire immense superstructure is more or less rapidly\ntransformed. In considering such transformations the distinction should\nalways be made between the material transformation of the economic\nconditions of production which can be determined with the precision\nof natural science, and the legal, political, religious, aesthetic or\nphilosophic\u2015in short ideological forms in which men become conscious of\nthis conflict and fight it out. Just as our opinion of an individual\nis not based on what he thinks of himself, so can we not judge of such\na period of transformation by its own consciousness; on the contrary,\nthis consciousness must rather be explained from the contradictions of\nmaterial life, from the existing conflict between the social forces\nof production and the relations of production. No social order ever\ndisappears before all the productive forces, for which there is room\nin it, have been developed; and new higher relations of production\nnever appear before the material conditions of their existence have\nmatured in the womb of the old society. Therefore, mankind always\ntakes up only such problems as it can solve; since, looking at the\nmatter more closely, we will always find that the problem itself\narises only when the material conditions necessary for its solution\nalready exist or are at least in the process of formation. In broad\noutlines we can designate the Asiatic, the ancient, the feudal, and\nthe modern bourgeois methods of production as so many epochs in the\nprogress of the economic formation of society. The bourgeois relations\nof production are the last antagonistic form of the social process of\nproduction\u2015antagonistic not in the sense of individual antagonism, but\nof one arising from conditions surrounding the life of individuals in\nsociety; at the same time the productive forces developing in the womb\nof bourgeois society create the material conditions for the solution\nof that antagonism. This social formation constitutes, therefore, the\nclosing chapter of the prehistoric stage of human society.\n\nFrederick Engels, with whom I was continually corresponding and\nexchanging ideas since the appearance of his ingenious critical essay\non economic categories (in the \u201cDeutsch-Franz\u00f6sische Jahrb\u00fccher\u201d),\ncame by a different road to the same conclusions as myself (see his\n\u201cCondition of the Working Classes in England\u201d). When he, too, settled\nin Brussels in the spring of 1845, we decided to work out together the\ncontrast between our view and the idealism of the German philosophy, in\nfact to settle our accounts with our former philosophic conscience. The\nplan was carried out in the form of a criticism of the post-Hegelian\nphilosophy. The manuscript in two solid octavo volumes had long\nreached the publisher in Westphalia, when we received information\nthat conditions had so changed as not to allow of its publication. We\nabandoned the manuscript to the stinging criticism of the mice the\nmore readily since we had accomplished our main purpose\u2015the clearing\nup of the question to ourselves. Of the scattered writings on various\nsubjects in which we presented our views to the public at that time, I\nrecall only the \u201cManifesto of the Communist Party\u201d written by Engels\nand myself, and the \u201cDiscourse on Free Trade\u201d written by myself. The\nleading points of our theory were first presented scientifically,\nthough in a polemic form, in my \u201cMis\u00e8re de la Philosophie, etc.\u201d\ndirected against Proudhon and published in 1847. An essay on \u201cWage\nLabor,\u201d written by me in German, and in which I put together my\nlectures on the subject delivered before the German Workmen\u2019s Club at\nBrussels, was prevented from leaving the hands of the printer by the\nFebruary revolution and my expulsion from Belgium which followed it as\na consequence.\n\nThe publication of the \u201cNeue Rheinische Zeitung\u201d in 1848 and 1849, and\nthe events which took place later on, interrupted my economic studies\nwhich I could not resume before 1850 in London. The enormous material\non the history of political economy which is accumulated in the British\nMuseum; the favorable view which London offers for the observation of\nbourgeois society; finally, the new stage of development upon which the\nlatter seemed to have entered with the discovery of gold in California\nand Australia, led me to the decision to resume my studies from the\nvery beginning and work up critically the new material. These studies\npartly led to what might seem side questions, over which I nevertheless\nhad to stop for longer or shorter periods of time. Especially was the\ntime at my disposal cut down by the imperative necessity of working\nfor a living. My work as contributor on the leading Anglo-American\nnewspaper, the \u201cNew York Tribune,\u201d at which I have now been engaged for\neight years, has caused very great interruption in my studies, since\nI engage in newspaper work proper only occasionally. Yet articles on\nimportant economic events in England and on the continent have formed\nso large a part of my contributions that I have been obliged to make\nmyself familiar with practical details which lie outside the proper\nsphere of political economy.\n\nThis account of the course of my studies in political economy is simply\nto prove that my views, whatever one may think of them, and no matter\nhow little they agree with the interested prejudices of the ruling\nclasses, are the result of many years of conscientious research. At the\nentrance to science, however, the same requirement must be put as at\nthe entrance to hell:\n\n  Qui si convien lasciare ogni sospetto\n  Ogni vilt\u00e0 convien che qui sia morta.\n\n\n  Karl Marx.\n\n  London, January, 1859.\n\n\n\n\nCONTENTS.\n\n\n\n                                                                  PAGE.\n\n  Translator\u2019s Preface                                                3\n\n  Author\u2019s Preface                                                    9\n\n\n  BOOK I. CAPITAL IN GENERAL.\n\n  Chapter I. Commodities                                             19\n\n    A. Notes on the History of the Theory of Value                   56\n\n  Chapter II. Money or Simple Circulation                            73\n\n      1. The Measure of Value                                        74\n\n    B. Theories of the Unit of Measure of Money                      91\n\n      2. The Medium of Circulation                                  107\n\n        a. The Metamorphosis of Commodities                         108\n\n        b. The Circulation of Money                                 125\n\n        c. Coin and Symbols of Value                                138\n\n      3. Money                                                      162\n\n        a. Hoarding                                                 166\n\n        b. Means of Payment                                         185\n\n        c. World Money                                              201\n\n      4. The Precious Metals                                        208\n\n    C. Theories of the Medium of Circulation and of\n         Money                                                      215\n\n  Appendix. Introduction to the Critique of Political\n    Economy                                                         264\n\n      1. Production in General                                      265\n\n      2. The General Relation of Production to Distribution,\n           Exchange, and Consumption                                274\n\n      3. The Method of Political Economy                            292\n\n      4. Production, Means of Production, and Conditions\n           of Production                                            306\n\n  Index                                                             313\n\n\n\n\nCAPITAL IN GENERAL.\n\n\n\n\nBOOK I.\n\n\n\n\nCHAPTER I.\n\nCOMMODITIES.\n\n\nAt first sight the wealth of society under the capitalist system\npresents itself as an immense accumulation of commodities, its unit\nbeing a single commodity. But every commodity has a twofold aspect,\nthat of _use value_ and _exchange value_.[2]\n\nA commodity is first of all, in the language of English economists,\n\u201cany thing necessary, useful or pleasant in life,\u201d an object of human\nwants, a means of existence in the broadest sense of the word. This\nproperty of commodities to serve as use-values coincides with their\nnatural palpable existence. Wheat e. g. is a distinct use-value\ndiffering from the use-values cotton, glass, paper, etc. Use-value has\na value only in use and is realized only in the process of consumption.\nThe same use-value may be utilized in various ways. But the extent of\nits possible applications is circumscribed by its distinct properties.\nFurthermore, it is thus limited not only qualitatively but also\nquantitatively. According to their natural properties the various\nuse-values have different measures, such as a bushel of wheat, a quire\nof paper, a yard of linen, etc.\n\nWhatever the social form of wealth may be, use-values always have a\nsubstance of their own, independent of that form. One can not tell by\nthe taste of wheat whether it has been raised by a Russian serf, a\nFrench peasant, or an English capitalist. Although the object of social\nwants and, therefore, mutually connected in society, use-values do\nnot bear any marks of the relations of social production. Suppose, we\nhave a commodity whose use-value is that of a diamond. We can not tell\nby looking at the diamond that it is a commodity. When it serves as a\nuse-value, aesthetic or mechanical, on the breast of a harlot, or in\nthe hand of a glasscutter, it is a diamond and not a commodity. It is\nthe necessary prerequisite of a commodity to be a use-value, but it is\nimmaterial to the use-value whether it is a commodity or not. Use-value\nin this indifference to the nature of its economic destination, i. e.\nuse-value as such lies outside the sphere of investigation of political\neconomy.[3] It falls within the sphere of the latter only in so far\nas it forms its own economic destination. It forms the material basis\nwhich directly underlies a definite economic relation called _exchange\nvalue_.\n\nExchange-value appears at first sight as a _quantitative relation_,\nas a proportion in which use-values are exchanged for one another. In\nsuch a relation they constitute equal exchangeable quantities. Thus,\na volume of Propercius and eight ounces of snuff may represent the\nsame exchange value, in spite of the dissimilar use-values of tobacco\nand elegy. As exchange-value, one kind of use-value is worth as much\nas another kind, if only taken in right proportion. The exchange\nvalue of a palace can be expressed in a certain number of boxes of\nshoe-blacking. On the contrary, London manufacturers of shoe-blacking\nhave expressed the exchange value of their many boxes of blacking,\nin palaces. Thus, entirely apart from their natural forms and\nwithout regard to the specific kind of wants for which they serve as\nuse-values, commodities in certain quantities equal each other, take\neach other\u2019s place in exchange, pass as equivalents, and in spite of\ntheir variegated appearance, represent the same entity.\n\nUse-values are primarily means of existence. These means of existence,\nhowever, are themselves products of social life, the result of expended\nhuman vital power, _materialized labor_. As the embodiment of social\nlabor, all commodities are the crystallization of the same substance.\nLet us now consider the nature of this substance, i. e., of labor,\nwhich is expressed in exchange value.\n\nLet one ounce of gold, one ton of iron, one quarter of wheat and\ntwenty yards of silk represent equal exchange values. As equivalents,\nin which the qualitative difference between their use-values has been\neliminated, they represent equal volumes of the same kind of labor.\nThe labor which is equally embodied in all of them must be uniform,\nhomogeneous, simple labor. It matters as little in the case of labor\nwhether it be embodied in gold, iron, wheat, or silk, as it does in\nthe case of oxygen, whether it appears in the rust of iron, in the\natmosphere, in the juice of a grape, or in the blood of a human being.\nBut the digging of gold, the extraction of iron from a mine, the\nraising of wheat and the weaving of silk are so many kinds of labor,\ndiffering in quality. As a matter of fact, what in reality appears as a\ndifference in use-values, is in the process of production, a difference\nin the work creating those use-values. Just as labor, which creates\nexchange value, is indifferent to the material of use-values, so it\nis to the special form of labor itself. Furthermore, the different\nuse-values are the products of the work of different individuals,\nconsequently the result of various kinds of labor differing\nindividually from one another. But as exchange values, they represent\nthe same homogeneous labor, i. e., labor from which the individuality\nof the workers is eliminated. Labor creating exchange value is,\ntherefore, _abstract general labor_.\n\nIf one ounce of gold, one ton of iron, one quarter of wheat, and twenty\nyards of silk are exchange values of equal magnitude or equivalents;\nthen one ounce of gold, half a ton of iron, three bushels of wheat\nand five yards of silk are exchange values of different magnitudes,\nand this quantitative difference is the only difference of which\nthey are capable as exchange values. As exchange values of different\nmagnitudes, they represent greater or smaller quantities of that\nsimple, homogeneous, abstract, general labor, which forms the substance\nof exchange value. The question arises, how are these quantities to be\nmeasured? Or, rather what constitutes the substance of labor, which\nmakes it capable of quantitative measurement, since the quantitative\ndifferences of commodities in their capacity of exchange values are\nbut quantitative differences of labor embodied in them. Just as motion\nis measured by time, so is labor measured by _labor-time_. Given\nthe quality of labor, the difference in its duration is the only\nproperty by which it can be distinguished. As labor-time, labor has\nthe same standard of measurement as the natural time measures, viz.,\nhours, days, weeks, etc. Labor-time is the vital substance of labor,\nindependent of its form, composition, individuality; it is its vital\nsubstance quantitatively, having at the same time its own inherent\nmeasure. Labor-time embodied in the use-values of commodities is the\nsubstance which makes exchange values and, therefore, commodities of\nthem and at the same time serves to measure definite quantities of\ntheir value. Corresponding quantities of different use-values, in which\nthe same quantity of labor-time is embodied, are equivalents; or, to\nput it in another form, all use-values are equivalents when taken in\nproportions containing the same quantity of expended, materialized\nlabor-time. As exchange values, all commodities are but definite\nmeasures of _congealed labor-time_.\n\nTo understand how exchange value is determined by labor-time, the\nfollowing main points must be kept in mind: The reduction of labor to\nsimple labor, devoid of any quality, so to speak; the specific ways\nand means by which exchange\u2015value-creating, i. e., commodity producing\nlabor becomes _social labor_; finally, the difference between labor as\nthe producer of use-values, and labor as the creator of exchange values.\n\nIn order to measure commodities by the labor-time contained in them,\nthe different kinds of labor must be reduced to uniform, homogeneous,\nsimple labor, in short, to labor which is qualitatively the same, and,\ntherefore, differs only in quantity.\n\nThis reduction appears to be an abstraction; but it is an abstraction\nwhich takes place daily in the social process of production. The\nconversion of all commodities into labor-time is no greater abstraction\nnor a less real process than the chemical reduction of all organic\nbodies to air. Labor, thus measured by time, does not appear in reality\nas the labor of different individuals. but on the contrary, the\nvarious working individuals rather appear as mere organs of labor; or,\nin so far as labor is represented by exchange values, it may be defined\nas human labor in general. This abstraction of human labor in general\nvirtually exists in the average labor which the average individual\nof a given society can perform\u2015a certain productive expenditure of\nhuman muscles, nerves, brain, etc. It is unskilled labor to which the\naverage individual can be put and which he has to perform in one way\nor another. The character of this average labor varies in different\ncountries and at different stages of civilization, but appears fixed in\na particular society. Unskilled labor constitutes the bulk of all labor\nperformed in capitalist society, as may be seen from all statistics.\n\nIt is obvious that if A spends six hours in the production of iron\nand six hours on linen, and B also produces iron during six hours and\nlinen during another six hours, it is but a different application\nof _the same_ labor time that would be expended, if A produced iron\nduring twelve hours, while B worked twelve hours on linen. But how\nabout skilled labor which rises above the level of average labor by its\nhigher intensity, by its greater specific gravity? This kind of labor\nresolves itself into unskilled labor composing it; it is simple labor\nof a higher intensity, so that one day of skilled labor, e. g., may\nequal three days of unskilled labor. This is not the place to consider\nthe laws regulating this reduction. It is clear, however, that such\nreduction does take place, for, as exchange value, the product of the\nmost skilled labor is, when taken in a certain proportion, equivalent\nto the product of unskilled average labor, or equal to a definite\nquantity of that unskilled labor.\n\nThe determination of exchange-value by means of labor-time implies,\nfurther, the fact that an equal quantity of labor is embodied in any\ngiven commodity, e. g., a ton of iron, no matter whether it is the work\nof A or B, that is to say, various individuals expend an equal amount\nof labor-time for the production of the same use-value of a given\nquality and quantity. It is thus assumed that the labor-time contained\nin a commodity is the labor-time _necessary_ for its production, i. e.,\nit is the labor-time which is required for the production of another\nspecimen of the same commodity under the same general conditions of\nproduction.\n\nThe conditions of labor, which creates exchange value, as shown by the\nanalysis of the latter, are _social conditions_ of labor or conditions\nof _social labor_. Social, not in the ordinary, but in a special\nsense. It is a specific form of the social process. The homogeneous\nsimplicity of labor means first of all _equality_ of the labors of\nvarious individuals, a reciprocal relation of equality of their labors\ndetermined by the actual reduction of all kinds of labor to uniform\nlabor. The labor of every individual, as far as it is expressed in\nexchange value possesses this social character of equality and finds\nexpression in exchange value only in so far as it is a relation of\nequality with the labor of all other individuals.\n\nFurthermore, the labor-time of a single individual is directly\nexpressed in exchange value as _universal labor-time_, and this\n_universal character_ of individual labor is the manifestation of its\n_social character_. The labor-time represented by exchange value is the\nlabor-time of an individual, but of an individual undistinguished from\nother individuals in so far as they perform the same labor; therefore,\nthe time required by one individual for the production of a certain\ncommodity is the _necessary_ labor-time which any other individual\nwould have to spend on the production of the same commodity. It is the\nlabor-time of an individual, _his_ labor-time, but only as labor-time\ncommon to all, regardless as to which particular individual\u2019s\nlabor-time it is. As universal labor-time it is represented in a\nuniversal product, in a _universal equivalent_, in a definite quantity\nof materialized labor-time: the latter is indifferent as to the\nparticular form of use-value in which it appears directly as the\nproduct of an individual, and may be turned at will into any other\nform of use-value to represent the product of any other individual.\nOnly as such a _universal_ quantity, is it a _social_ quantity. In\norder to result in exchange value, the labor of an individual must\nbe turned into a _universal equivalent_, i. e., the labor-time of an\nindividual must be expressed as universal labor-time, or universal\nlabor-time as that of an individual. It is the same as though different\nindividuals had put together their labor-time and contributed the\ndifferent quantities of labor-time at their common disposal in the form\nof different use-values. The labor-time of the individual is thus,\nin fact, the labor time which society requires for the production of\na certain use-value, i. e., for the satisfaction of a certain want.\nBut the question that interests us here is as to the specific form in\nwhich labor acquires a social character. Let us suppose that a certain\nquantity of labor-time of a spinner is realized in 100 lbs. of yarn.\nSuppose 100 yards of linen, the product of the weaver, represent the\nsame quantity of labor-time. Inasmuch as these two products represent\nequal quantities of universal labor-time and, hence, are equivalents of\n_every_ use-value which contains the same amount of labor-time, they\nare also equivalent to each other. Only because the labor-time of the\nspinner and that of the weaver take the form of universal labor-time\nand their products appear as universal equivalents, is the labor of\nthe weaver realized for the spinner, and that of the spinner, for the\nweaver, the labor of one takes the place of the labor of the other, i.\ne., the social character of their labors is realized for both. Quite\ndifferent it was under the patriarchal system of production, when\nspinner and weaver lived under the same roof, when the female members\nof the family did the spinning, and the male members did the weaving to\nsupply the wants of their own family; then yarn and linen were _social_\nproducts, spinning and weaving were _social_ labor within the limits of\nthe family. But their social character did not manifest itself in the\nfact that yarn, as a universal equivalent, could be exchanged for linen\nas a universal equivalent, or that one was exchanged for another, as\nidentical and equivalent expressions of the same universal labor-time.\nIt was rather the family organization with its natural division of\nlabor that impressed its peculiar social stamp on the product of\nlabor. Or, let us take the services and payments in kind of the Middle\nAges. It was the specific kind of labor performed by each individual in\nits natural form, the particular and not the universal aspect of labor,\nthat constituted then the social tie. Or, let us finally take labor\ncarried on in common in its primitive natural form, as we find it at\nthe dawn of history of all civilized races.[4] It is clear that in this\ncase labor does not acquire its social character from the fact that the\nlabor of the individual takes on the abstract form of universal labor\nor that his product assumes the form of a universal equivalent. The\nvery nature of production under a communal system makes it impossible\nfor the labor of the individual to be private labor and his product\nto be a private product; on the contrary, it makes individual labor\nappear as the direct function of a member of a social organism. On the\ncontrary, labor, which is expressed in exchange value, at once appears\nas the labor of a separate individual. It becomes social labor only\nby taking on the form of its direct opposite, the form of abstract\nuniversal labor.\n\nLabor, which creates exchange value, is, finally, characterized by the\nfact that even the social relations of men appear in the reversed form\nof a social relation of things. Only in so far as two use-values are\nin a mutual relation of exchange values does the labor of different\npersons possess the common property of being identical universal labor.\nHence, if it be correct to say that exchange value is a relation\nbetween persons,[5] it must be added that it is a relation disguised\nunder a material cover. Just as a pound of iron and a pound of gold\nrepresent the _same_ weight in spite of their different physical and\nchemical properties, so do two use-values, as commodities containing\nthe same quantity of labor-time, represent the _same exchange value_.\nExchange value thus appears as the natural social destination of\nuse-values, a property which they possess by virtue of being things and\nin consequence of which they are exchanged for one another in definite\nproportions, or form equivalents, just as chemical elements combine in\ncertain proportions, forming chemical equivalents. It is only through\nthe habit of everyday life that we come to think it perfectly plain and\ncommonplace, that a social relation of production should take on the\nform of a thing, so that the relation of persons in their work appears\nin the form of a mutual relation between things, and between things\nand persons.\n\nIn commodities this mystification is as yet very simple. It is more\nor less plain to everybody that a relation of commodities as exchange\nvalues is nothing but a mutual relation between persons in their\nproductive activity. This semblance of simplicity disappears in higher\nproductive relations. All the illusions in regard to the monetary\nsystem are due to the fact that money is not regarded as something\nrepresenting a social relation of production, but as a product of\nnature endowed with certain properties. The modern economists who sneer\nat the illusions of the monetary system, betray the same illusion\nas soon as they have to deal with higher economic forms, as, e. g.,\ncapital.[6] It breaks forth in their confession of naive surprise, when\nwhat they have just thought to have defined with great difficulty as a\nthing suddenly appears as a social relation and then reappears to tease\nthem again as a thing, before they have barely managed to define it as\na social relation.\n\nSince the exchange value of commodities is, in fact, nothing but a\nmutual relation of the labors of individuals\u2015labors which are similar\nand universal\u2015nothing but a material expression of a specific social\nform of labor, it is a tautology to say that labor is the _only_\nsource of exchange value and consequently of wealth, in so far as the\nlatter consists of exchange values. Similarly, it is a tautology to\nsay that matter in its natural state has no exchange value, because\nit does not contain any labor, and that exchange value as such does\nnot contain matter. But when William Petty calls \u201clabor the father and\nearth the mother of wealth,\u201d or when Bishop Berkeley asks \u201cwhether\nthe four elements and man\u2019s labour therein, be not the true source of\nwealth,\u201d[7] or when the American, Thomas Cooper puts it popularly:\n\u201cTake away from a piece of bread the labour bestowed by the baker on\nthe flour, by the miller on the grain brought to him, by the farmer\nin ploughing, sowing, tending, gathering, threshing, cleaning and\ntransporting the seed, and what will remain? A few grains of grass,\ngrowing wild in the woods, and unfit for any human purpose\u201d[8]\u2015then all\nthese views do not refer to abstract labor as the source of exchange\nvalue, but to concrete labor as the source of material wealth; in\nshort, to labor in so far as it produces use-values. In assuming\nthat a commodity has use-value we assume the special usefulness\nand distinct fitness of the labor absorbed by it, but that is all\nthere is to the view of labor as useful labor from the standpoint of\ncommodity. Considering bread as a use-value, we are interested in its\nproperties as an article of food and not at all in the different kinds\nof labor of the farmer, miller, baker, etc. If by some invention\nnineteen-twentieths of this labor could be saved, the loaf of bread\nwould still render the same service as before. If it fell ready-made\nfrom the sky it would not lose a single atom of its use-value. While\nlabor which creates exchange value is realized in the equality of\ncommodities as universal equivalents, labor as a productive activity\nwith a useful purpose is realized in the endless variety of use-values\ncreated by it. While labor which creates exchange values is _abstract_,\n_universal_ and _homogeneous_, labor which produces use-values is\nconcrete and special and is made up of an endless variety of kinds of\nlabor according to the way in which and the material to which it is\napplied.\n\nIt is wrong to speak of labor in so far as it is applied to the\nproduction of use-values as of _the only_ source of wealth, namely,\nthe material wealth produced by it. Being an activity intended to\nadapt materials to this or that purpose, it requires matter as a\nprerequisite. In different use-values the proportion between labor\nand raw material varies greatly, but use-value always has a natural\nsubstratum. Labor, as an activity, directed to the adaptation of raw\nmaterial in one form or another, is a natural condition of human\nexistence, a condition of exchange of matter between man and nature,\nindependent of all social forms. On the contrary, labor producing\nexchange value is a specifically social form of labor. Tailoring, e.\ng., in its material manifestation as a distinct productive activity,\nproduces a coat, but not the exchange value of the coat. The latter\nis produced not by the labor of the tailor as such, but by abstract\nuniversal labor, and that belongs to a certain organization of society\nwhich has not been brought about by the tailor. Thus, the women under\nthe ancient system of house industry made coats without producing the\nexchange value of the coats. Labor as a source of material wealth was\nknown to Moses, the legislator, as well as to Adam Smith, the customs\nofficial.[9]\n\nLet us consider now some propositions which follow from the\ndetermination of exchange value by labor-time.\n\nAs a use-value, every commodity owes its usefulness to itself. Wheat,\ne. g., serves as an article of food. A machine saves labor to a certain\nextent. This function of a commodity by virtue of which it serves only\nas use-value, as an article of consumption, may be called its service,\nthe service which it renders as use-value. But as an exchange value,\na commodity is always regarded as a result; the question in this case\nis not as to the service which it renders, but as to the service[10]\nwhich it has been rendered in its production. Thus, the exchange value\nof a machine is determined not by the quantity of labor-time which it\nsaves, but by the quantity of labor-time which has been expended on\nits own production and which is, therefore, required to produce a new\nmachine of the same kind.\n\nIf, therefore, the quantity of labor-time required for the production\nof commodities remained constant, their exchange value would remain\nthe same. But the ease and the difficulty of production are constantly\nchanging. If the productivity of labor increases, the same use-value\nwill be produced in less time. If the productivity of labor declines,\nmore time will be required for the production of the same use-value.\nThus, the labor-time contained in a commodity or its exchange-value is\na variable quantity, increasing or diminishing in an inverse ratio to\nthe rise and fall of the productivity of labor. The productive power of\nlabor which is applied in the manufacturing industry on a predetermined\nscale depends in the agricultural and extractive industries also on\nnatural conditions which are beyond human control. _The same labor_\nwill yield a greater or less output of various metals, according to\ntheir more or less close occurrence in the earth\u2019s crust. _The same\nlabor_ may be embodied in two bushels of wheat in a favorable season,\nand only in one in an unfavorable season. In this case, scarcity or\nabundance, as natural conditions, seem to determine the exchange value\nof commodities, because they determine the productivity of certain\nkinds of labor which depend upon natural conditions.\n\nUnequal volumes of different use-value contain the same quantity of\nlabor-time or the same exchange value. The smaller the volume of a\nuse-value containing a certain quantity of labor-time as compared with\nother use-values, the greater its _specific exchange-value_. If we find\nthat certain use-values, such as, e. g., gold, silver, copper and iron,\nor wheat, rye, barley and oats, form a series of specific exchange\nvalues which, though not retaining exactly the same numerical ratio,\nstill retain through widely remote epochs of civilization the same\nrough proportion of relatively larger and smaller quantities, we may\ndraw the conclusion that the progressive development of the productive\npowers of society has equally, or approximately so, affected the\nlabor-time necessary for the production of the various commodities.\n\nThe exchange value of a commodity is not revealed in its own use-value.\nBut, as the embodiment universal social labor-time, the use-value\nof one commodity bears a certain ratio to the use-values of other\ncommodities. Thus, the exchange value of one commodity is manifested\nin the use-values of other commodities. An equivalent is, in fact, the\nexchange value of one commodity expressed in the use-value of another\ncommodity. If I say, e. g., that one yard of linen is worth two pounds\nof coffee, then the exchange value of linen is expressed in terms of\nthe use-value of coffee, viz., in a certain quantity of that use-value.\nThis ratio being given, I can express the value of any quantity of\nlinen in coffee. It is clear that the exchange value of one commodity,\nsay linen, is not confined to the ratio of any one commodity, e. g.\ncoffee, as its equivalent. The quantity of universal labor-time which\nis represented in one yard of linen is at the same time embodied in\nan endless variety of volumes of use-values of all other commodities.\nThe use-value of any other commodity forms the equivalent of one yard\nof linen, in the proportion in which it represents the same quantity of\nlabor-time as that yard of linen. The exchange value of _this single\ncommodity_ is, therefore, fully expressed in the endless number of\nequations in which the use-values of all other commodities form its\nequivalents. Not until the exchange value of a commodity is expressed\nin the sum total of these equations or of the different proportions in\nwhich one commodity is exchanged for every other commodity, does it\nfind an exhaustive expression as a _universal equivalent_; e. g., the\nseries of equations:\n\n  1 yard of linen = 1/2 lb. of tea,\n  1 yard of linen = 2 lbs. of coffee,\n  1 yard of linen = 8 lbs. of bread,\n  1 yard of linen = 6 yards of calico,\n\nmay be represented as follows:\n\n1 yard of linen = 1/8 lb. of tea + 1/2 lb. of coffee + 2 lbs. of bread\n+ 1-1/2 yards of calico.\n\nTherefore, if we had before us the sum total of the equations, in\nwhich the value of a yard of linen is exhaustively expressed, we could\nrepresent its exchange value in the form of a series. As a matter of\nfact, the series is an endless one, since the circle of commodities,\nconstantly expanding, can never be closed up. But while the exchange\nvalue of one commodity is thus measured by the use-values of all other\ncommodities, the exchange values of all the other commodities are, in\ntheir turn, measured by the use-value of this one commodity.[11]\n\nIf the exchange value of one yard of linen is expressed in 1/2 lb. of\ntea, or 2 lbs. of coffee, or 6 yards of calico, or 8 lbs. of bread,\netc., it follows that coffee, tea, calico, bread, etc., are equal to\neach other if taken in the same proportion in which they are equal to\nthe third article, linen; consequently, linen serves as the common\nmeasure of their exchange values. Every commodity, as the embodiment\nof universal labor-time, i. e., as a certain quantity of universal\nlabor-time, expresses in turn its exchange value in definite quantities\nof the use-values of all other commodities, and the exchange values\nof all the other commodities are, on the other hand, measured by the\nuse-value of this one exclusive commodity. But as an exchange value,\nevery commodity is at the same time the one exclusive commodity\nthat serves as a common measure of the exchange values of all other\ncommodities; and, on the other hand, it is but one of the many\ncommodities in the entire series of which every commodity expresses\ndirectly its exchange value.\n\nThe value of a commodity is not affected by the number of commodities\nof other kinds. But the length of the series of equations in which\nits exchange value is realized does depend upon the greater or less\nvariety of other commodities. The series of equations in which the\nvalue of coffee, e. g., is represented, indicates the extent to which\nit is exchangeable, the limits within which it performs the function of\nan exchange value. The exchange value of a commodity as an embodiment\nof universal social labor-time is expressed in its equivalence to an\nendless variety of use-values.\n\nWe have seen that the exchange value of a commodity varies with the\nquantity of labor-time directly contained in it. Its realized exchange\nvalue, i. e., its exchange value expressed in the use-values of other\ncommodities, must also depend on the proportion in which the labor-time\nspent on the production of all other commodities is changing. If, e.\ng., the labor-time required for the production of a bushel of wheat\nremained constant, while that required for the production of all other\ncommodities doubled, the exchange value of a bushel of wheat expressed\nin its equivalents would become half as large as before. The result\nwould be practically the same as if the amount of time necessary for\nthe production of one bushel of wheat had been reduced by one-half,\nand that required for all other commodities had remained unchanged.\nThe value of commodities is determined by the proportion in which they\ncan be produced in the same labor-time. In order to see what possible\nchanges this proportion may undergo, let us take two commodities, A and\nB.\n\n_First case._ Let the labor-time required for the production of\ncommodity B remain unchanged. In that case the exchange value of A,\nexpressed in terms of B, rises and falls with the rise and fall of the\nlabor-time required for the production of A.\n\n_Second case._ Let the labor-time required for the production of\ncommodity A remain constant. Then the exchange value of A, expressed in\nterms of B, falls and rises in an inverse ratio with the rise and fall\nof the labor-time required for the production of B.\n\n_Third case._ Let the labor-time required for the production of\ncommodities A and B rise and fall in equal proportion. Then the\nexpression of equivalence of A and B remains unchanged. If through some\ncause the productivity of all kinds of labor were to decline uniformly,\nso that the production of all commodities would require an equally\nincreased quantity of labor-time, then the value of all commodities\nwould rise, though the expression of their exchange values would remain\nunchanged, and the actual wealth of society would decrease, because\nit would have to expend more labor-time on the production of the same\nstock of use-values.\n\n_Fourth case._ Let the labor-time required for the production of A and\nB rise and fall, but not uniformly; that is to say, the labor-time\nrequired for the production of A may rise, while that required for B\nmay fall, or vice versa. All of which can be reduced to the simple\ncase where the labor-time required for the production of one commodity\nremains unchanged, while that required for the other rises or falls.\n\nThe exchange value of any commodity is expressed in the use-value of\nany other commodity, be it in integral units or in fractions thereof.\nAs exchange value, every commodity is capable of subdivision, like\nthe labor-time embodied in it. The equivalence of commodities is\nindependent of their physical divisibility as use-values, just as the\nsum of the exchange values of commodities is indifferent to the change\nof form which use-values have to undergo when converted into a _single_\nnew commodity.\n\nSo far we have considered commodities from a twofold point of view,\nas use-values and exchange values alternately. But a commodity as such\nis a direct combination of use-value and exchange value; and it is a\ncommodity only in relation to other commodities. The _actual_ relation\nbetween commodities constitutes the _process of their exchange_. It is\na social process participated in by individuals independent of each\nother but the part they take in it is that of owners of commodities\nonly. Their mutual relations are those of their commodities, and thus\nthey really appear as conscious factors of the process of exchange.\n\nA commodity _is_ a use-value, wheat, linen, a diamond, a machine,\netc., but as a commodity it is, at the same time, _not_ a use-value.\nIf it were a use-value for its owner, i. e., a direct means for the\nsatisfaction of his own wants, then it would not be a commodity. To him\nit is rather _a non-use-value_; it is merely the material depository of\nexchange-value, or simply a _means of exchange_; as an active bearer of\nexchange value, use-value becomes a means of exchange. To the owner it\nis a use-value only in so far as it constitutes exchange value.[12]\n\nIt has yet _to become_ a use-value, viz., to others. Not being a\nuse-value to its owner, it is a use-value to the owners of other\ncommodities. If it is not, then the labor expended on it was useless\nlabor, and the result of that labor is not a commodity. On the other\nhand, the commodity must become a use-value _to the owner himself_,\nbecause his means of existence lie outside of it in the use-values of\ncommodities not belonging to him. In order to become a use-value, the\ncommodity must meet the particular want of which it is the means of\nsatisfaction. Use-values of commodities are thus _realized_ use-values\nthrough a universal change of hands by passing from the hands in which\nthey were held as means of exchange into those where they become use\nvalues. Only through this universal transfer of commodities does the\nlabor contained in them become useful labor. In this process of their\nmutual interchange as use-values, commodities do not acquire any new\neconomic forms. On the contrary, even the form which marked them as\ncommodities disappears. Bread, e. g., by changing hands from the baker\nto the consumer does not change its identity as bread. On the contrary,\nit is only the consumer that begins to regard it as a use-value, as a\ncertain article of food, while in the hands of the baker it was only\nthe bearer of an economic relation, a palpable yet transcendental\nobject. Thus, the only change of form that commodities undergo while\nbecoming use-values, consists in the fact that they cease to be, as\na matter of form, non-use-values to their owners, and use-values to\nthose who do not own them. To become use-values commodities must be\nuniversally alienated; they must enter the sphere of exchange; but\nthey are subject to exchange in their capacity of exchange values.\nHence, in order to be realized as use-values, they must be realized as\nexchange values.\n\nWhile the single commodity appeared from the standpoint of use-value as\nsomething independent, as exchange value it was regarded first of all\nin its relation to all other commodities. This relation was, however,\nmerely theoretical, imaginary. It becomes real only in the process of\nexchange. On the other hand, a commodity _is_ an exchange value in so\nfar as a certain quantity of labor-time has been expended on it, and\nit consequently represents _materialized labor-time_. But of itself it\nis only materialized individual labor-time of a particular kind, and\nnot _universal_ labor-time. Therefore, it _is not_ directly an exchange\nvalue, but must first _become_ such. First of all, it is an embodiment\nof universal labor-time only in so far as it represents labor-time\napplied to a definite useful purpose, i. e., when it represents a\nuse-value. This was the material condition under which alone labor-time\ncontained in commodities was regarded as universal social labor.\nThus, while a commodity can become a use-value only after it has been\nrealized as an exchange value, it can, on the other hand, be realized\nas an exchange value only if it proves to be a use-value in the process\nof alienation.\n\nA commodity can be alienated as a use-value only to one whom it\nserves as a use-value, i. e., as a means of satisfying a certain\nwant. On the other hand, it is exchanged for another commodity, or,\nif we put ourselves on the side of the owner of the other commodity,\nit, too, can be alienated, i. e., be realized, only if brought in\ncontact with that particular want of which it is the object. In the\nuniversal exchange of commodities as _use-values_ the basis for\ntheir mutual relations is in their material difference as distinct\nobjects which satisfy different wants by their specific properties.\nBut as mere use-values, they are indifferent to each other, and\nare incommensurable. As use-values they can be exchanged only with\nreference to certain wants. They are exchangeable only as equivalents,\nand they are equivalents only as equal quantities of materialized\nlabor-time, so that all regard to their natural properties as\nuse-values and therefore to the relation of the commodities to\nparticular wants is eliminated. On the contrary, a commodity is\nrealized as an exchange value by replacing as an equivalent any\ndefinite quantity of any other commodity, regardless of whether it\nis a use-value for the owner of the other commodity or not. But to\nthe owner of the other commodity it is a commodity only in so far\nas it is a use-value to him, and it becomes an exchange value to\nits owner only in so far as it is a commodity to that other person.\nThus, the same relation appears as a proportion between commodities\nas magnitudes of the same denomination, but differing qualitatively;\nor, as an expression of their equivalence as embodiments of universal\nlabor-time, and, at the same time, as a relation of qualitatively\ndifferent objects, of use-values intended for the satisfaction of\nparticular wants, in short, a relation in which they are distinguished\nas actual use-values. But this equivalence and non-equivalence mutually\nexclude each other. Thus we have before us not only a vicious circle\nof problems in which the solution of one implies that of the other, but\na combination of contradicting claims, since the fulfillment of one is\ndirectly connected with that of its opposite.\n\nThe process of exchange of commodities must result both in the\nunfolding and in the solution of these contradictions, neither of\nwhich, however, can appear in that process in this simple way. We\nhave only observed how commodities are mutually related to each other\nas use-values, i. e., how they appear as use-values _within_ the\nprocess of exchange. The exchange-value, on the contrary, as we have\nconsidered it so far, appeared as an abstraction formed in our own\nminds, or\u2015if we may so put it\u2015in the mind of the individual owner\nof commodities, which lie stored in his warehouse as use-values,\nand weigh upon his conscience as exchange values. In the process of\nexchange, however, commodities must be not only use-values, but also\nexchange values to one another, and that should appear as their own\nmutual relation. The difficulty which we first encountered was that a\ncommodity must be first alienated and delivered to its purchasers as\na use-value, in order to appear as an exchange value, as materialized\nlabor, while on the other hand its alienation as use-value implies\nits being an exchange value. But let us assume that this difficulty\nhas been overcome. Suppose the commodity has divested itself of its\nuse-value, and has thereby fulfilled the material condition of being\nsocially useful labor, instead of a particular labor of an individual.\nIn that case, the commodity must become an exchange value, a universal\nequivalent, an embodiment of universal labor-time for all other\ncommodities in the process of exchange, and thus, leaving behind its\nlimited role of a particular use-value, acquire the ability to be\ndirectly represented in all use-values as its equivalents. But every\ncommodity is _just such_ a commodity, appearing as a direct incarnation\nof universal labor-time by divesting itself of its particular\nuse-value. On the other hand, however, commodities confront each other\nin the process of exchange as particular commodities, as the labor\nof private individuals embodied in particular use-values. Universal\nlabor-time is itself an abstraction, which, as such, does not exist for\ncommodities.\n\nLet us examine the series of equations in which the exchange value of a\ncommodity finds its concrete expression, e. g.:\n\n  1 yard of linen = 2 lbs. of coffee.\n  1 yard of linen = 1/2 lb. of tea.\n  1 yard of linen = 8 lbs. of bread, etc.\n\nThese equations simply signify that equal quantities of universal\nsocial labor-time are embodied in one yard of linen, two pounds\nof coffee, half a pound of tea, etc. But as a matter of fact the\nindividual labors which are represented in these particular use-values,\nbecome universal, and, in that form, also social labor, only when they\nare actually exchanged for one another in proportion to the labor-time\ncontained in them. Social labor-time exists in these commodities in\na latent state, so to say, and is first revealed in the process of\nexchange. We do not proceed from the labor of individuals as social\nlabor, but, on the contrary, from special labor of private individuals\nwhich appears as universal social labor only by divesting itself of\nits original character in the process of exchange. Universal social\nlabor is, therefore, no ready-made assumption, but a growing result.\nAnd thus we are confronted with a new difficulty, that on the one\nhand commodities must enter the process of exchange as embodiments of\nuniversal labor-time, while, on the other hand, this embodiment of the\nlabor-time of individuals as social labor-time is itself a result of\nthe process of exchange.\n\nEvery commodity becomes an exchange value by divesting itself of its\nuse-value, or of its original nature. The commodity must therefore\nassume a double capacity in the process of exchange. But that second\ncapacity of exchange value can appear only in the shape of another\ncommodity, because only commodities confront each other in the process\nof exchange. How is a particular commodity to represent directly\n_materialized universal_ labor-time, or\u2015to put it differently\u2015how is\nindividual labor-time, which is embodied in a particular commodity to\nbe made directly universal in character? The concrete expression of the\nexchange value of a commodity, i. e., of every commodity as a universal\nequivalent, is represented in an endless series of equations, such as:\n\n  1 yard of linen = 2 lbs. of coffee.\n  1 yard of linen = 1/2 lb. of tea.\n  1 yard of linen = 8 lbs. of bread.\n  1 yard of linen = 6 yards of calico.\n  1 yard of linen = etc.\n\nThe above form is theoretical in so far as commodities are only\n_thought of_ as definite quantities of materialized universal\nlabor-time. But the capacity of a particular commodity to serve as a\nuniversal equivalent from a mere abstraction becomes a _social_ result\nof the process of exchange by a simple inversion of the above series of\nequations, viz.:\n\n  2 lbs. of coffee  = 1 yard of linen.\n  1/2 lb. of tea    = 1 yard of linen.\n  8 lbs. of bread   = 1 yard of linen.\n  6 yards of calico = 1 yard of linen.\n\nWhile coffee, tea, bread, calico, in short, all commodities express\nin linen the labor-time contained in them, the exchange value of\nlinen, on the other hand, unfolds itself in all other commodities as\nits equivalents, and the labor-time embodied in it becomes direct\nuniversal labor-time, which is equally expressed in different volumes\nof all other commodities. Linen thus becomes the _universal equivalent_\nthrough the _universal action_ of all other commodities upon it.\nAs exchange value, every commodity served as a measure of value of\nall other commodities. Now, on the contrary, since all commodities\nmeasure their exchange values by means of a particular commodity,\nthis excluded commodity becomes the special expression of exchange\nvalue, as a universal equivalent. At the same time, the endless\nseries of equations in which the exchange value of every commodity\nwas expressed, is reduced to one single equation consisting of two\nmembers. The equation 2 lbs. of coffee = 1 yard of linen now fully\nexpresses the exchange value of coffee, for in this expression a yard\nof linen appears as the direct equivalent of a definite quantity\nof every other commodity. Thus, within the sphere of exchange all\ncommodities are or appear to each other as exchange values in the\nform of linen. The proposition that commodities, as exchange values,\nare to each other as different quantities of materialized universal\nlabor-time, may now be worded to the effect that commodities, as\nexchange values, represent nothing but different quantities of _the\nsame_ article, linen. Universal labor-time thus assumes the aspect of\na distinct thing, as a commodity existing along with and outside of\nall other commodities. At the same time the equation 2 lbs. of coffee\n= 1 yard of linen, in which one commodity appears as the exchange\nvalue of another, is yet to be realized. Only by being alienated as\nuse-value\u2015which depends upon whether it proves to be in the process\nof exchange the object of a certain want\u2015does the commodity actually\ntransform its existence as coffee into the existence as linen and\nthus takes on the form of a universal equivalent and becomes, indeed,\nan exchange value for all other commodities. Conversely, since all\ncommodities are turned into linen by being alienated as use-values,\nlinen becomes the converted form of all other commodities, and only as\na result of this transformation of all other commodities into it, it\nbecomes the direct _embodiment of universal labor-time_, i. e., the\nproduct of universal exchange and of the elimination of individual\nlabor. If commodities thus assume a twofold character in order to\nappear as exchange values to each other, the commodity which has been\nsingled out as the universal equivalent becomes, on the other hand, a\nuse-value in two ways. Besides its special use-value as a particular\ncommodity, it assumes a universal use-value. This latter kind of\nuse-value constitutes its special feature, emanating as it does,\nfrom the specific part which the commodity plays as a result of the\nuniversal relation which all other commodities bear toward it in the\nprocess of exchange. The use-value of every commodity as an object of\na particular want, has a different value in different hands, e. g., it\nhas a different value in the hands of the one who disposes of it, than\nin those of the one who acquires it. But the commodity singled out as\nthe universal equivalent, is now an object of a universal want arising\nfrom the very process of exchange, and it has the same use-value to\neverybody, viz., that of serving as the depository of exchange value,\nof being a universal means of exchange. Thus we find in one commodity\nthe solution of the contradiction which is inherent in commodity as\nsuch, namely, of being at one and the same time a particular use-value\nand a universal equivalent, and, therefore, a use-value for everybody\nor universal use-value. Thus, while all other commodities express their\nexchange value in the form of an ideal equation with the excluded\ncommodity\u2015an equation yet to be realized\u2015the use-value of the special\ncommodity, although real, appears in the process itself as a mere\nform which is yet to be realized through transformation into actual\nuse-values. Originally the commodity appeared simply as commodity, as\nuniversal labor-time embodied in a particular use-value. In the process\nof exchange, all commodities are related to the one excluded commodity\nas to a simple commodity, one which appears as the embodiment of\nuniversal labor-time in a particular use-value. Thus, _particular_\ncommodities become related to one particular commodity as a universal\ncommodity.[13] In that manner the mutual relations of possessors of\ncommodities based on the fact that they regard their labor as universal\nsocial labor, takes on the aspect of their relations to commodities as\nexchange values; and the mutual relation of commodities as exchange\nvalues appears in the process of exchange as the relation of all of\nthem to one particular commodity as to a specially adopted means of\nexpression of their exchange value; again, from the point of view of\nthat particular commodity the above relation appears as its specific\nrelation to all other commodities, and, therefore, as its own definite,\nspontaneous, social character. The particular commodity which thus\nappears as the specially adopted expression of the exchange value\nof all other commodities, or the exchange value of commodities as a\nparticular exclusive commodity, is _money_. Money is a crystallization\nof the exchange value of commodities which they themselves form in\nthe process of exchange. Thus, while commodities become _use-values_\nto each other in the process of exchange by casting off all definite\nforms and entering into mutual relations in their direct material\nshape, they must assume a new form, viz., proceed to the formation of\nmoney in order to appear as _exchange values_ to each other. Money\nis not a symbol, no more than the commodity aspect of a use-value\nis a symbol. That a social relation of production takes the form of\nan object existing outside of individuals, and that the definite\nrelations into which individuals enter in the process of production\ncarried on in society, assume the form of specific properties of a\nthing, is a perversion and by no means imaginary, but prosaically real,\nmystification marking all social forms of labor which creates exchange\nvalue. In money this mystification appears only more strikingly than in\ncommodities.\n\nThe necessary physical properties of the particular commodity in which\nthe money form of all other commodities is to be crystallized\u2015as far\nas they are directly determined by the nature of exchange value\u2015are:\ndivisibility to any desired extent, homogeneity of its parts, and\nuniformity of all the specimens of the commodity. As an embodiment\nof universal labor-time it must be homogeneous in its structure\nand capable of representing only quantitative differences. Another\nnecessary property is durability of its use-value, as it must last\nthrough the process of exchange. The precious metals excel in these\nqualities. Money not being a result of a scheme or agreement, but\nhaving been produced instinctively in the process of exchange, a great\nvariety of more or less unsuited commodities had successively performed\nits functions. At a certain stage of development of the process\nof exchange, the necessity arises for a polar distribution of the\nfunctions of exchange value and use-value among commodities, so that\none commodity e. g. should act as a medium of exchange, while another\nis being alienated as a use-value. This necessity brings it about that\none or even several commodities possessing the most generally accepted\nuse-value, begin, incidentally at first, to play the part of money.\nEven if not direct means of satisfying existing wants, their being the\nmost considerable material constituent part of wealth, insures to them\na more general character than to the other use-values.\n\nDirect barter, the original natural form of exchange, represents rather\nthe beginning of the transformation of use-values into commodities,\nthan that of commodities into money. Exchange value has as yet no\nform of its own, but is still directly bound up with use-value. This\nis manifested in two ways. Production, in its entire organization,\naims at the creation of use-values and not of exchange values, and\nit is only when their supply exceeds the measure of consumption that\nuse-values cease to be use-values, and become means of exchange,\ni. e., commodities. At the same time, they become commodities only\nwithin the limits of being direct use-values distributed at opposite\npoles, so that the commodities to be exchanged by their possessors\nmust be use-values to both,\u2015each commodity to its non-possessor. As a\nmatter of fact, the exchange of commodities originates not within the\nprimitive communities,[14] but where they end, on their borders at the\nfew points, where they come in contact with other communities. That is\nwhere barter begins, and from here it strikes back into the interior\nof the community, decomposing it. The various use-values which first\nbecome commodities in the barter between different communities, such\nas slaves, cattle, metals, constitute therefore in most cases the\nfirst money within those communities themselves. We have seen how\nthe exchange value of a commodity is manifested the more perfectly\nas exchange value, the longer the series of its equivalents or the\n_greater_ the sphere of exchange of that commodity. With the gradual\nexpansion of barter, the increase in the number of exchanges, and\nthe growing diversification of the commodities drawn into exchange,\ncommodities develop into exchange values, which leads to the formation\nof money and has a destructive effect on direct barter. The economists\nare in the habit of ascribing the origin of money to the difficulties\nwhich are encountered in the way of extensive barter, but they forget\nthat these difficulties arise from the development of exchange value\nand from the fact that social labor becomes universal labor. E. g.,\ncommodities as use-values can not be subdivided at will, a property\nwhich they should possess as exchange values. Or, a commodity belonging\nto A may be a use-value to B, while the commodity belonging to B may\nnot have any use-value to A. Or the owners of the commodities may\nneed each other\u2019s indivisible goods in unequal proportions. In other\nwords, under the pretence of analyzing simple barter, economists\nbring out certain aspects of the contradiction which is inherent in\ncommodities as entities simultaneously embodying both use-value and\nexchange value. On the other hand, they consistently cling to the\nidea that barter is the natural form of exchange, which suffers only\nfrom certain technical difficulties, for which money is a cunningly\ndevised expedient. Arguing from this perfectly superficial view, an\ningenious English economist has rightly maintained that money is\nmerely a material instrument like a ship or a steam-engine, but not\nan expression of a social relation in the field of production and\nconsequently not an economic category; and that it is, therefore, wrong\nto treat the subject in political economy, which really has nothing in\ncommon with technology.[15]\n\nThe world of commodities implies the existence of a highly developed\ndivision of labor; this division is manifested directly in the great\nvariety of use-values, which confront each other as particular\ncommodities and which embody as many different kinds of labor. The\ndivision of labor embracing all the particular kinds of productive\noccupations, is the complete expression of social labor in its material\naspect viewed as labor creating use-values. But from the standpoint of\ncommodities and within the process of exchange, it exists only in its\nresults, in the variety of the commodities themselves.\n\nThe exchange of commodities constitutes the social metabolic process,\ni. e. the process in which the exchange of the special products of\nprivate individuals is the result of certain social relations of\nproduction into which the individuals enter in this interchange of\nmatter. As they develop, the mutual relations of commodities crystalize\ninto various aspects of the universal equivalent and thus the process\nof exchange becomes at the same time the process of the formation of\nmoney. The whole of this process which takes the form of a succession\nof processes, constitutes circulation.\n\n\nNOTES ON THE HISTORY OF THE THEORY OF COMMODITIES.\n\nThe analysis of commodities according to their twofold aspect of\nuse-value and exchange value by which the former is reduced to work\nor deliberate productive activity; and the latter, to labor time or\nhomogeneous social labor, is the result of a century and a half of\ncritical study by the classical school of political economy which dates\nfrom William Petty in England and Boisguillebert in France[16] and\ncloses with Ricardo in the former country and Sismondi in the latter.\n\nPetty reduces use-value to labor, without deceiving himself as to the\nnatural limitation of its creative power. As regards concrete labor,\nhe sizes it up in the magnitude of its social aspect, as _the division\nof labor_.[17] This view of the source of material wealth does not\nremain more or less fruitless as in the case of his contemporary,\nHobbes, but leads up to his _Political Arithmetic_, the first form in\nwhich Political Economy is differentiated as an independent science.\n\nHe defines exchange value, however, just as it _appears_ in the process\nof exchange of commodities, viz. as money; and money he defines as\nan existing commodity, gold and silver. Laboring under the ideas of\nthe monetary system, he declares the special branch of labor which\nis devoted to the production of gold and silver as the labor which\ndetermines exchange value. What he really means is that the labor of\nmembers of society must produce not direct use-values, but commodities\nor use-values which by means of exchange are capable of assuming the\nform of gold and silver, i. e. of money, i. e. of exchange value, i.\ne. of embodiments of universal labor. His example, however, shows\nstrikingly that the recognition of labor as the source of material\nwealth by no means excludes the misconception of the particular social\nform in which labor constitutes the source of exchange value.\n\nIn his turn, Boisguillebert, if not consciously, at any rate actually\nreduces the exchange value of a commodity to labor-time, since he\ndetermines \u201ctrue value\u201d (la juste valeur) by the right proportion in\nwhich the labor-time of individuals is distributed among the several\nbranches of industry, and defines free competition as the social\nprocess which determines these correct proportions. At the same time,\nhowever, and in contrast with Petty he wages a fanatical war against\nmoney which, by its interference, disturbs the natural equilibrium or\nharmony of exchange of commodities and, like a wanton Moloch, demands\nall natural wealth as sacrifice. It is true that this assault on money\nwas called forth by certain historic conditions. Since Boisguillebert\nattacked[18] the blind destructive lust after gold which possessed\nthe court of Louis XIV, his tax collectors, and his nobility; on the\nother hand, Petty extolled in the greed of gold the mighty impulse\nwhich spurred on the nation in her industrial development and in her\nconquest of the world-market; still, there asserts itself here a\ndeeper antagonism of principles which constantly recurs between true\nEnglish and true French[19] Political Economy. Boisguillebert sees,\nin fact, only the material substance of wealth, its use-value, the\nenjoyment[20] of it, and considers the capitalistic form of labor, i.\ne. the production of use-values as commodities and the exchange of\nthose commodities, as the natural social form in which individual labor\nattains its end. When he is, therefore, confronted with the specific\ncharacter of capitalistic wealth as in the case of money, he sees in it\nthe usurping interference of extraneous elements and gets into a rage\nabout the capitalist system of labor in one form while utopian-like\nhe praises it in another.[21] Boisguillebert furnishes us with proof\nthat one may treat labor-time as the measure of value of commodities,\nand at the same time confound labor embodied in the exchange value of\ncommodities and measured by time, with the direct natural activity of\nindividuals.\n\nThe first sensible analysis of exchange value as labor-time, made so\nclear as to seem almost commonplace, is to be found in the work of\na man of the New World where the bourgeois relations of production\nimported together with their representatives sprouted rapidly in a\nsoil which made up its lack of historical traditions with a surplus of\nhumus. That man was Benjamin Franklin, who formulated the fundamental\nlaw of modern political economy[22] in his first work which he wrote\nwhen a mere youth and published in 1721.\n\nHe declares it necessary to look for another measure of value than\nprecious metals. That measure is labor. \u201cBy labor may the value of\nsilver be measured as well as other things. As, suppose one man\nemployed to raise corn, while another is digging and refining silver;\nat the year\u2019s end, or at any other period of time, the complete produce\nof corn, and that of silver, are the natural price of each other; and\nif one be twenty bushels, and the other twenty ounces, then an ounce\nof that silver is worth the labor of raising a bushel of that corn.\nNow if by the discovery of some nearer, more easy or plentiful mines,\na man may get forty ounces of silver as easily as formerly he did\ntwenty, and the same labor is still required to raise twenty bushels\nof corn, then two ounces of silver will be worth no more than the same\nlabor of raising one bushel of corn, and that bushel of corn will be\nas cheap at two ounces, as it was before at one, _ceteris paribus_.\nThus the riches of a country are to be valued by the quantity of labor\nits inhabitants are able to purchase.\u201d[23] Thus Franklin regards\nlabor-time from the one-sided economic point of view, as the measure\nof value. The transformation of actual products into exchange values\nis self-evident with him and the only question is as to finding a\nquantitative measure of value. \u201cTrade,\u201d says he, \u201cin general being\nnothing else but the exchange of labour for labour, the value of all\nthings is, as I have said before, most justly measured by labour.\u201d[24]\nSubstitute the word \u201cwork\u201d for \u201clabor\u201d in the above statement, and\nthe confusion of labor in one form and labor in another form becomes\nat once apparent. Since trade consists e. g. in the exchange of the\nrespective labors of the shoemaker, miner, spinner, painter, etc., does\nit follow that the value of shoes is most justly measured by the work\nof a painter? On the contrary, Franklin meant that the value of shoes,\nmining products, yarn, paintings, etc., is determined by abstract labor\nwhich possesses no particular qualities and can, therefore, be measured\nonly quantitatively.[25] But since he does not develop the idea\nthat labor contained in exchange value is abstract universal labor\nwhich assumes the form of social labor as a result of the universal\nalienation of the products of individual labor, he necessarily fails to\nrecognize in money the direct embodiment of this alienated labor. For\nthat reason he sees no inner connection between money and labor which\ncreates exchange value, and considers money merely as an instrument\nintroduced from outside into the sphere of exchange for purposes of\ntechnical convenience.[26] Franklin\u2019s analysis of exchange value did\nnot exert any direct influence on the general trend of science, because\nhe discussed only special questions of political economy whenever there\nwas a definite practical occasion for it.\n\nThe contrast between useful work and labor which creates exchange\nvalue agitated all Europe during the eighteenth century in the form of\nthis question: what particular kind of labor constitutes the source\nof bourgeois wealth? It was thus assumed that not every kind of labor\nwhich is realized in use-values or yields certain products does\nthereby directly create wealth. With the physiocrats, however, as well\nas with their opponents, the burning question was not, what kind of\nlabor creates _value_, but which is it that creates _surplus value_.\nThey approached the problem in its complicated form before they had\nsolved it in its elementary form; such is the historical course of\nall sciences leading them by a labyrinth of intersecting paths to the\nreal starting points. Unlike other builders, science not only erects\ncastles in the air, but constructs separate stories of the building,\nbefore it has laid the foundation. Without dwelling any longer on the\nphysiocrats and omitting quite a number of Italian economists who in\nsome more or less ingenious ideas came close to a correct analysis\nof the nature of commodity,[27] we pass at once to the first Briton\nwho elaborated the general system of bourgeois economics, Sir James\nSteuart.[28] His idea of exchange value as well as all the abstract\ncategories of political economy still seem to be with him in the\nprocess of differentiation from the material elements they represent\nand therefore appear quite vague and unsettled. In one place he\ndetermines _real value by labor-time_ (\u201cwhat a workman can perform in\na day\u201d), but immediately creates confusion by introducing the elements\nof wages and raw material.[29] In another place his struggle with the\nmaterial substance of the subject he treats of is revealed even more\nstrikingly. He calls the material of nature contained in a commodity,\nsuch as the silver in a silver plate, its \u201cintrinsic worth,\u201d while the\nlabor-time contained in it he calls \u201cuseful value.\u201d The former, he says\n\u201cis ... something real in itself,\u201d while \u201cthe value of the second must\nbe estimated according to the labour it has cost to produce it.... The\nlabour employed in the modification [of the substance] represents a\nportion of a man\u2019s time.\u201d[30]\n\nWhat distinguishes Steuart from his predecessors and followers is\nhis keen differentiation between specifically social labor which is\nrepresented in exchange value, and concrete labor which produces\nuse-values. Labor, he says, which through its alienation creates\na universal equivalent, I call _industry_. Labor as industry he\ndistinguishes not only from concrete labor, but from all other social\nforms of labor.[31] It is to him the capitalistic form of labor\nin contrast to its antique and mediaeval forms. He is especially\ninterested in the difference between capitalistic and feudal labor, of\nwhich he had observed the latter in its decaying forms both in Scotland\nand on his extensive travels over the continent. Steuart knew, of\ncourse, very well that products took on the form of commodities and\ncommodities, the form of money in precapitalistic epochs as well; but\nhe proves conclusively that it is only in the capitalistic period of\nproduction that the commodity becomes the elementary and fundamental\nform of wealth, and alienation [of commodities], the ruling form of\nacquisition and that consequently labor creating exchange value is\nspecifically capitalistic in its character.[32]\n\nAfter different forms of concrete labor, such as agriculture,\nmanufacture, navigation, trade, etc., had each in turn been declared\nthe true source of wealth, Adam Smith proclaimed labor in general,\nand namely in its general social form of _division of labor_, to be\nthe only source of material wealth or use-values. While ignoring in\nconnection with the latter the part played by nature, he is troubled\nby it when he comes to deal with purely social wealth i. e. exchange\nvalue. To be sure, Adam determines the value of a commodity by the\nlabor-time contained in it, but relegates the actual application of\nthe principle to pre-Adamic times. In other words, what seems to him\ntrue from the standpoint of simple commodity, ceases to be clear as\nsoon as the higher and more complex forms of capital, wage-labor,\nrent, etc. take its place. This he expresses by saying, that the value\nof commodities used to be measured by labor-time in the paradise\nlost of bourgeois society, in which men dealt with each other not\nas capitalists, wage-workers, landlords, tenants, usurers, etc., but\nmerely as plain producers of commodities which they exchanged. He\nconstantly confuses the determination of the value of commodities by\nthe labor-time contained in them with the determination of their value\nby the value of labor. He becomes confused in working out the details\nand fails to see the objective equalization of different kinds of labor\nwhich the social process forcibly carries out, mistaking it for the\nsubjective equality of the labors of individuals.[33] The transition\nfrom concrete labor to labor creating exchange value, i. e. to labor in\nits fundamental capitalistic form he tries to derive from the _division\nof labor_. Yet, while it is true that private exchange implies the\ndivision of labor, it is false to maintain that division of labor\nimplies private exchange. Among the Peruvians, e. g., labor was divided\nto an extraordinary extent, although there was no private exchange, no\nexchange of products, as commodities.\n\nContrary to Adam Smith, David Ricardo elaborated with great clearness\nthe determination of the value of a commodity by labor-time and showed\nthat this law governs also such relations of capitalistic production\nwhich seem to contradict it most. Ricardo confines his investigations\nexclusively to the _quantitative determination of value_ and as regards\nthe latter he is at least conscious of the fact that the realization\nof the law depends upon certain historical conditions. He says,\nnamely, that the determination of value by labor-time holds good for\ncommodities \u201conly as can be increased in quantity by the exertion of\nhuman industry, and on the production of which competition operates\nwithout restraint.\u201d[34] What he really means is that the law of value\npresupposes for its full development an industrial society in which\nproduction is carried on a large scale and free competition prevails,\ni. e. the modern capitalist society. In all other respects, Ricardo\nconsiders the capitalist form of labor as the eternal natural form of\nsocial labor. He makes the primitive fisherman and the primitive hunter\nstraightway exchange their fish and game as owners of commodities, in\nproportion to the labor-time embodied in these exchange values. On this\noccasion he commits the anachronism of making the primitive fisherman\nand primitive hunter consult the annuity tables in current use on the\nLondon Exchange in the year 1817 in the calculation relating to their\ninstruments. The \u201cparallelograms of Mr. Owen\u201d seem to be the only form\nof society outside of the bourgeois form with which he was acquainted.\nAlthough confined within this bourgeois horizon, Ricardo analyzes the\nbourgeois economy\u2015which looks quite different to deeper insight than\nit does on the surface\u2015with such keen power of theoretical penetration\nthat Lord Brougham could say of him: \u201cMr. Ricardo seemed as if he had\ndropped from another planet.\u201d\n\nIn a direct controversy with Ricardo, Sismondi lays stress upon\nthe specifically social character of labor which creates exchange\nvalue,[35] and says it is \u201ccharacteristic of our economic progress\u201d to\nreduce the magnitude of value to the _necessary_ labor-time, to the\nrelation between the demand of society as a whole and the quantity of\nlabor which is sufficient to satisfy this demand.[36] Sismondi is no\nmore laboring under Boisguillebert\u2019s idea, that labor which creates\nexchange value is adulterated by money; but just as Boisguillebert\ndenounced money, so does Sismondi denounce large industrial capital.\nIn Ricardo political economy reached its climax, after recklessly\ndrawing its ultimate conclusions, while Sismondi supplemented it by\nimpersonating its doubts.\n\nSince Ricardo gave to classical political economy its final shape,\nhaving formulated and elaborated with the greatest clearness the law of\nthe determination of exchange value by labor-time, it is natural that\nall the polemics among economists should center about him. Stripped\nof its puerile[37] form this controversy comes down to the following\npoints:\n\n_First_: Labor itself has exchange value, and different kinds of labor\nhave different exchange values. We get into a vicious circle by making\nexchange value the measure of exchange value, because the measuring\nexchange value needs a measure itself. This objection may be reduced\nto the following problem: Given labor-time as the intrinsic measure\nof exchange value, develop from that the determination of wages. The\ntheory of wages gives the answer to that.\n\n_Second_: If the exchange value of a product is equal to the labor-time\ncontained in it, then the exchange value of one day of labor is equal\nto the product of that labor. In other words, wages must be equal to\nthe product of labor.[38] But the very opposite is actually the case.\nErgo. this objection comes down to the following problem: How does\nproduction, based on the determination of exchange value by labor-time\nonly, lead to the result that the exchange value of labor is less than\nthe exchange value of its product? This problem is solved by us in the\ndiscussion of capital.\n\n_Third_: The market price of commodities either falls below or rises\nabove its exchange value with the changing relations of supply and\ndemand. _Therefore_, the exchange value of commodities is determined by\nthe relation of supply and demand and not by the labor-time contained\nin them. As a matter of fact, this queer conclusion merely amounts to\nthe question, how a market price based on exchange value can deviate\nfrom that exchange value; or, better still, how does the law of\nexchange value assert itself only in its antithesis? This problem is\nsolved in the theory of competition.\n\n_Fourth_: The last and apparently the most striking objection, if\nnot raised in the usual form of queer examples: If exchange value\nis nothing but mere labor-time contained in commodities, how can\ncommodities which contain no labor possess exchange-value, or in other\nwords, whence the exchange value of mere forces of nature? This problem\nis solved in the theory of rent.\n\n\n\n\nCHAPTER II.\n\nMONEY OR SIMPLE CIRCULATION.\n\n\nIn a parliamentary debate on Sir Robert Peel\u2019s Bank Act of 1844 and\n1845, Gladstone remarked that not even love has made so many fools of\nmen as the pondering over the nature of money. He spoke of Britons to\nBritons. The Dutch, on the contrary, who, from times of yore, have had,\nPetty\u2019s doubts notwithstanding, \u201cangelical wits\u201d for money speculation\nhave never lost their wits in speculations about money.\n\nThe main difficulty in the analysis of money is overcome as soon as\nthe evolution of money from commodity is understood. This point once\ngranted, it only remains to comprehend clearly the particular forms\nof money, which is to some extent made difficult by the fact that all\nbourgeois relations, being gilt or silver plated, have the appearance\nof money relations, and money, therefore, seems to possess an endless\nvariety of forms, which have nothing in common with it.\n\nIn the following investigation only those forms of money are treated\nof which directly grow out of the exchange of commodities; the forms\nwhich belong to a higher stage of production, as e. g., credit money\nwill not be discussed here. For the sake of simplicity gold is assumed\nthroughout as the money commodity.\n\n\n1. THE MEASURE OF VALUE.\n\nThe first process of circulation constitutes, so to say, the\ntheoretical preparatory process to actual circulation. To begin\nwith, commodities which are use-values by nature, acquire a form in\nwhich they _appear_ in idea to each other as exchange values, as\ndefinite quantities of incorporated _universal_ labor-time. The first\nnecessary step in this process is, as we have seen, the setting apart\nby the commodities of a specific commodity, say _gold_, as the direct\nincarnation of universal labor-time, or the universal equivalent. Let\nus go back for a moment to the form in which commodities turn gold into\nmoney.\n\n  1 ton of iron = 2 ounces of gold\n\n  1 quarter of wheat = 1 ounce of gold\n\n  1 hundred weight of Mocca coffee = 1-1/4 ounce of gold\n\n  1 hundred weight of potash = 1/2 ounce of gold\n\n  1 ton of Brazil timber = 1-1/2 ounces of gold\n\n  Y commodities = X ounces of gold\n\nIn the above series of equations iron, wheat, coffee, potash, etc.\nappear to each other as embodiments, of homogeneous labor, namely,\nas labor materialized in money, from which all the peculiarities of\nthe different kinds of concrete labor represented in the different\nuse-values are completely eliminated. As value they are all identical,\nthey are the incarnation of _the same_ labor, or _the same_ incarnation\nof labor, viz., gold. As uniform embodiments of the same labor they\ndisplay only _one_ difference, a quantitative one, by appearing\nas different quantities of value, because _unequal_ quantities of\nlabor-time are contained in their use-values. The mutual relation\nof these separate commodities is that of embodiments of universal\nlabor-time, since they are related to universal labor-time as to an\nexcluded commodity, viz., gold. The same relation the development of\nwhich causes commodities to appear to each other as exchange values,\ncauses the labor time contained in gold to appear as universal\nlabor-time, a given quantity of which is expressed in different\nquantities of iron, wheat, coffee, etc,\u2015in short, in the use-values\nof all commodities, or is directly unfolded in the endless series of\ncommodity-equivalents. While all commodities express their exchange\nvalues in gold, gold expresses its exchange value directly in all\ncommodities. While commodities assume the form of exchange value in\nrelation to each other, they lend to gold the form of the universal\nequivalent, or of money.\n\nGold becomes the _measure of value_, because _all_ commodities measure\ntheir exchange values in gold, in proportion as a certain quantity of\ngold and a certain quantity of the commodity contain the same amount\nof labor-time; and it is only by virtue of this function of being a\nmeasure of value, in which capacity its own value is measured directly\nin the entire series of commodity equivalents, that gold becomes\na universal equivalent or money. On the other hand, the exchange\nvalue of all commodities is expressed in gold. In this expression,\nthe qualitative aspect is to be distinguished from the quantitative:\nthere is the exchange value of the commodity as the embodiment of the\nsame uniform labor-time; while the magnitude of value is exhaustively\nexpressed, since in the same proportion in which commodities are\nequated to gold they are equated to one another. On the one hand the\n_universal_ character of the labor-time contained in them is revealed;\non the other, its quantity is expressed in its golden equivalent. The\nexchange value of commodities thus expressed in the form of a universal\nequivalent and, moreover, as a numerical proportion of this equivalent,\nin terms of one specific commodity, or represented in the form of a\nseries of commodities equated to one specific commodity, is PRICE.\nPrice is the form into which the exchange value of commodities is\nconverted when it _appears_ within the sphere of circulation.\n\nBy the same process by which commodities express their values in gold\nprices, they turn gold into a measure of value i. e. into money. If\nall of them were to measure their values in silver, wheat, or copper,\nand therefore express them in the form of silver, wheat or copper\nprices, then silver, wheat or copper would be measures of value and\nconsequently universal equivalents. In order to appear as prices in\ncirculation, commodities must be exchange values before they enter\ncirculation. Gold becomes the measure of value only because all\ncommodities estimate their exchange value in it.\n\nThe universality of this relation which is the result of evolution\nand from which alone springs the function of gold as the measure of\nvalue, implies however, that every single commodity is measured in\ngold, in proportion to the labor-time contained in both; that the\nactual common measure of the commodity and of gold is labor; or that\ncommodity and gold are passed for each other in direct barter as\nequal exchange values. How this equalization actually takes place,\ncan not be discussed here when treating of simple circulation. So\nmuch, however, is clear, that in countries producing gold and silver,\ncertain quantities of labor-time are directly embodied in definite\nquantities of gold and silver, while in countries which do not produce\ngold and silver the same result is reached in a round-about way, by\ndirect or indirect exchange of the commodities of those countries;\ni. e. a definite portion of average national labor is given for a\ndefinite quantity of labor-time, embodied in the gold and silver of the\nmine-owning countries. In order to be able to serve as a measure of\nvalue, gold must be as far as possible a _variable_ value, because it\ncan become the equivalent of other commodities only as an incarnation\nof labor-time, and the same labor-time is realized in unequal volumes\nof use-values with the change in the productive power of concrete\nlabor. In estimating all commodities in gold it is only assumed that\ngold represents a given quantity of labor at a given moment, as was\ndone when the exchange value of any commodity was expressed in terms\nof the use-value of any other commodity. As for the variations of the\nvalue of gold, the law of exchange value formulated above holds good\nin its case as well. If the exchange value of commodities remains\nunchanged, then a general rise in their gold prices is possible only\nin the case of a fall in the exchange value of gold. If the exchange\nvalue of gold remains unchanged, a general rise of gold prices is\npossible only when the exchange value of all commodities rises. The\nreverse is true in case of a general fall in the prices of commodities.\nIf the value of an ounce of gold falls or rises in consequence of a\nchange in the labor-time required for its production, then the values\nof all other commodities fall or rise to an equal extent. Thus, the\nounce of gold represents after the change, as it did before, a _given_\nquantity of labor-time with regard to all commodities. The same\nexchange values are now estimated in greater or smaller quantities\nof gold than before, but they are estimated in proportion to the\nmagnitude of their values, and consequently retain the same proportion\nto each other. The ratio 2 \u00f7 4 \u00f7 8 remains the same when expressed\nas 1 \u00f7 2 \u00f7 4 or as 4 \u00f7 8 \u00f7 16. The change in the quantity of gold in\nwhich exchange values are estimated with a variation in the value of\ngold, interferes as little with the function of gold as a measure\nof value, as the fifteen times smaller value of silver as compared\nwith that of gold interferes with the performance of that function\nby the latter. Since labor-time is the common measure of gold and\ncommodities, and since gold figures as the measure of value only in so\nfar as all commodities are measured by it, the idea that money makes\ncommodities commensurable, is therefore a mere fiction of the process\nof circulation.[39] It is rather the commensurability of commodities\nas incorporated labor-time, that turns gold into money.\n\nCommodities enter the process of exchange in the concrete form\nof use-values. They are yet to be turned into the real universal\nequivalent through their alienation. The determination of their prices\nmerely amounts to their ideal transformation into the universal\nequivalent, a process of equation to gold which is yet to be realized.\nBut since commodities are, in their prices, transformed into gold only\nin imagination, or are converted only into imaginary gold, and since\ntheir money form is not differentiated as yet from their concrete\nselves, it follows that gold has also been turned into money only\nin imagination; it appears so far but as a measure of value, and in\nfact definite quantities of gold serve merely as names for certain\nquantities of labor-time. The form in which gold is crystallized in\nmoney always depends upon the way in which commodities express their\nown exchange value to each other.\n\nCommodities now confront one another in a double capacity: actually as\nuse-values, ideally as exchange values. The twofold aspect of labor\ncontained in them is reflected in their mutual relations; the special\nconcrete labor being virtually present as their use-value, while\nuniversal abstract labor-time is ideally represented in their price\nin which commodities appear as commensurable embodiments of the same\nvalue\u2015substance differing merely in quantity.\n\nThe difference between exchange value and price appears to be merely\nnominal or, as Adam Smith says, labor is the real price, and money\nthe nominal price of commodities. Instead of estimating the value of\none quarter of wheat in thirty days of labor, it is estimated in one\nounce of gold if one ounce of gold is the product of thirty days\u2019\nlabor. However, far from this difference being merely nominal, all the\nstorms which threaten commodities in the actual process of circulation\ncenter about it. Thirty days of labor are contained in a quarter of\nwheat and it need not, therefore, be expressed in terms of labor-time.\nBut gold is a commodity distinct from wheat, and only in circulation\nit can be ascertained, whether the quarter of wheat can be actually\nturned into an ounce of gold as is anticipated in its price. That will\ndepend on whether or not it proves to be a use-value, whether or not\nthe quantity of labor-time contained in it is the quantity necessarily\nrequired by society for the production of a quarter of wheat. The\ncommodity as such _is_ an exchange value, it _has_ a price. In this\ndifference between exchange value and price lies the demonstration of\nthe fact that the particular individual labor contained in a commodity\nhas first to be expressed through the process of alienation in terms\nof its counterpart, i. e. as impersonal, abstract, universal and, only\nin that form, social labor, viz. money. Whether it can be so expressed\nseems to be a matter of chance. Thus, although the exchange value\nof a commodity finds only ideally a distinct expression in price,\nand the twofold character of labor contained in the commodity exists\nas yet merely as two distinct forms of expression, and, although in\nconsequence thereof, the embodiment of universal labor-time, gold,\nconfronts actual commodities only as an imaginary measure of value, yet\nthe fact that exchange value exists as price, or that gold exists as a\nmeasure of value implies the necessity of the alienation of commodities\nfor hard cash and the possibility of their non-alienation. In short,\nhere lies latent the entire contradiction which is inherent in the\nfact that products are commodities or that the particular work of a\nprivate individual can be of no account in society until it has taken\nthe very opposite form of abstract universal labor. For that reason,\nthe utopians, who want to have commodities but not money, who want a\nsystem of production based on private exchange without the necessary\nconditions underlying such a system, are consistent when they \u201cdestroy\u201d\nmoney not in its tangible form but in its nebulous illusory form of a\nmeasure of value. Under the invisible measure of value there lurks the\nhard cash.\n\nThe process by which gold has become the measure of value and exchange\nvalue has been turned into price, being once assumed, all commodities\nexpress in their prices but imagined quantities of gold of various\nmagnitudes. As such various quantities of the same thing, gold, they\nare equated, compared and measured with each other, and thus arises the\ntechnical necessity of referring them to a definite quantity of gold\nas a unit of measure, a unit which develops into a standard measure by\nvirtue of its divisibility into aliquot parts, which in their turn can\nbe subdivided into aliquot parts.[40] But quantities of gold as such\nare measured by weight.\n\nThe standard of measure is thus found ready in the general measures\nof weight of metals and, therefore, where-ever metallic circulation\nis in vogue, these measures serve originally as standards of price.\nSince commodities no more relate to each other as exchange values to\nbe measured by labor-time, but as magnitudes of the same denomination\nmeasured in gold, the latter is transformed from a _measure of value_\ninto a _standard of price_. The comparison of prices with each other\nas different quantities of gold is thus crystallized in figures which\ncorrespond to an assumed quantity of gold and represent it as a\nstandard of aliquot parts. Gold as measure of value and as standard of\nprice has entirely different forms of manifestation and the confusing\nof the two has resulted in the wildest of theories. Gold is a measure\nof value as incorporated labor-time; it is the standard of price as\ncertain weight of metal. Gold becomes the measure of value by virtue\nof its relation as exchange value to commodities as exchange values;\nas standard of price, a definite quantity of gold serves as a unit\nfor other quantities of gold. Gold is the measure of value, because\nits value is variable; it is the standard of price, because it is\nfixed as a constant unit of weight. In this case, as in all cases of\nmeasuring quantities of the same denomination, the establishment of a\ndefinite and unvarying unit of measure is all-important. The necessity\nof settling upon a quantity of gold as a unit of measure and upon its\naliquot parts as subdivisions of that unit, has given rise to the\nnotion that a certain quantity of gold which has naturally a variable\nvalue had been assigned a fixed ratio of value to the exchange values\nof all commodities; the fact is overlooked that exchange values of\ncommodities are transformed into prices, i. e. into quantities of gold,\nbefore gold develops as a standard of price. No matter how the value of\ngold may vary, the ratios between the values of different quantities of\ngold remain constant. Let the fall in the value of gold amount to 1000\nper cent., still twelve ounces of gold will have a twelve times greater\nvalue than one ounce of gold; and in prices the only thing considered\nis the ratio between different quantities of gold. Since, on the other\nhand, no rise or fall in the value of an ounce of gold can alter its\nweight, no alteration can take place in the weight of its aliquot\nparts. Thus gold always renders the same service as an invariable\nstandard of price, no matter how much its value may vary.[41]\n\nAn historical process which, as we shall explain later, was determined\nby the nature of metallic circulation, led to the result that the\nsame denomination of weight was retained for a constantly changing\nand decreasing weight of precious metals in their function of a\nstandard of price. Thus the English pound sterling denotes less than\none-third of its original weight; the pound Scot, before the Union,\nonly 1-36; the French livre, 1-74; the Spanish Maravedi, less than\n1-1000; the Portuguese Rei, a still smaller fraction. Such was the\nhistorical origin of the discrepancy between the current money names\nof various weights of metals and their weight denominations.[42]\nSince the determination of the unit of measure, of its aliquot parts,\nand of their names is purely conventional, and since they should\npossess within the sphere of circulation the character of universality\nand compulsion, they had to be settled _by law_. The purely formal\noperation thus devolved upon the government.[43] The metal which\nwas to serve as the money material, was found already adopted in\nthe community. In different countries the legal standard of price\nis naturally different. In England e. g. the ounce as a weight of\nmetal is divided into pennyweights, grains and carats Troy, but the\nounce of gold as the unit of money is divided into 3 7-8 sovereigns,\nthe sovereign into 20 shillings, the shilling into 12 pence, so that\n100 pounds of 22 carat gold (1200 ounces) = 4672 sovereigns and 10\nshillings. In the world market, however, where national boundaries\ndisappear, these national characteristics of the measure of money also\ndisappear and give place to the general measures of weight of metals.\n\nThe price of a commodity or the quantity of gold into which it is\nideally transformed, is, therefore, now expressed in the names of\ncoins of the gold standard. Thus, instead of saying: a quarter of\nwheat is worth an ounce of gold, it is said in England to be worth 3\u00a3\n17s. 10-1/2d. All prices are thus expressed in the same denominations.\nThe peculiar form which commodities lend to their exchange values is\ntransformed into a _money-denomination_ by which commodities tell each\nother how much they are worth. Money in its turn becomes _money of\naccount_.[44]\n\nWe transform commodities into money of account, in our mind, on paper,\nin conversation, whenever it is a question of expressing any kind of\nwealth in terms of exchange value.[45] For that transformation we need\nthe gold substance, but only in imagination. In order to estimate the\nvalue of a thousand bales of cotton in a certain number of ounces of\ngold and then to express this number of ounces in the denominations of\nthe ounce, \u00a3. s. d., not a single atom of gold is required. Thus, not\na single ounce of gold was in circulation in Scotland before Robert\nPeel\u2019s Bank Act of 1845, although the gold ounce, expressed in its\nEnglish standard of account, 3\u00a3 17s. 10-1/2d., served as the legal\nstandard of price. In a similar manner silver serves as standard of\nprice in the trade between Siberia and China, although that trade\nvirtually amounts to barter. It is, therefore, immaterial to money,\nas money of account, whether or not its entire unit of measure or the\nfractions thereof are really coined. In England, at the time of William\nthe Conqueror, 1\u00a3, then a pound of pure silver, and the shilling, 1-20\nof a pound, existed only as money of account, while the penny, 1-240\nof a pound of silver, was the largest silver coin in existence. On\nthe other hand, there are no shillings and pence in England to-day,\nalthough they are legal denominations for certain parts of an ounce of\ngold. Money as money of account may exist exclusively in idea, while\nthe money in actual existence may be coined according to an entirely\ndifferent standard. Thus the money in circulation in many English\ncolonies of North America consisted until late in the eighteenth\ncentury of Spanish and Portuguese coins, although the money of account\nwas throughout the same as in England.[46]\n\nOwing to the fact that money, when serving as the standard of price,\nappears under the same reckoning names as do the prices of commodities,\nand that, therefore, the sum of 3\u00a3 17s. 10-1/2d. may signify, on\nthe one hand, an ounce weight of gold, and on the other, the value\nof a ton of iron, this reckoning name of money has been called its\n_mint-price_. Hence, there sprang up the extraordinary notion that\nthe value of gold is estimated in its own material, and that, in\ncontradistinction to all other commodities, its price is _fixed_ by\nthe State. It was erroneously thought that the giving of reckoning\nnames to definite weights of gold is the same thing as fixing the\nvalue of those weights.[47] In so far as gold serves as one of the\nelements in determining price, i. e., where it performs the function\nof money of account, it not only has no _fixed_ price, but has _no_\nprice whatever. In order to have a price, i. e., in order to express\nitself in a _specific_ commodity as a _universal_ equivalent that\nother commodity would have to play the same exclusive role in the\nprocess of circulation as gold. But two commodities excluding all other\ncommodities mutually exclude each other. Therefore, wherever gold and\nsilver have by law been made to perform side by side the function of\nmoney or of a measure of value it has always been tried, but in vain,\nto treat them as one and the same material. To assume that there is an\ninvariable ratio between the quantities of gold and silver in which a\ngiven quantity of labor-time is incorporated, is to assume, in fact,\nthat gold and silver are of one and the same material, and that a given\nmass of the less valuable metal, silver, is a constant fraction of a\ngiven mass of gold. From the reign of Edward III to the time of George\nII, the history of money in England consists of one long series of\nperturbations caused by the clashing of the legally fixed ratio between\nthe values of gold and silver, with the fluctuations in their real\nvalues. At one time gold was too high; at another, silver. The metal\nthat for the time being was estimated below its value was withdrawn\nfrom circulation, melted and exported. The ratio between the two metals\nwas then again altered by law, but the new nominal ratio soon came into\nconflict again with the real one. In our own times, the slight and\ntransient fall in the value of gold compared with silver, which was a\nconsequence of the Indo-Chinese demand for silver, produced on a far\nmore extended scale in France the same phenomena, export of silver,\nand its expulsion from circulation by gold. During the years 1855,\n1856 and 1857, the excess in France of gold imports over gold exports\namounted to \u00a341,580,000, while the excess of silver exports over silver\nimports was \u00a314,704,000. In fact, in those countries in which both\nmetals are legally measures of value, and therefore both legal tender,\nso that every one has the option of paying in either metal, the metal\nthat rises in value is at a premium, and, like every other commodity,\nmeasures its price in the over-estimated metal which alone serves\nin reality as the standard of value. The result of all experience\nand history with regard to this question is simply that, where two\ncommodities perform by law the functions of a measure of value, in\npractice one alone maintains that position.[48]\n\n\nB. THEORIES OF THE UNIT OF MEASURE OF MONEY.\n\nThe circumstance that commodities are converted into gold only in ideas\nas prices and that gold is therefore turned into money only in idea,\ngave rise to the theory of the _ideal unit of measure of money_. Since,\nin the determination of prices, gold and silver serve only ideally\nas money of account, it was asserted that the names pound, shilling,\npence, thaler, franc, etc., instead of denoting certain weights of\ngold and silver or labor incorporated in some way, stood rather for\nideal atoms of value. Thus, if, e. g., the value of an ounce of silver\nshould rise it would contain more such atoms and would therefore have\nto be estimated and coined in a greater number of shillings. This\ndoctrine, revived again during the last commercial crisis in England\nand even voiced in Parliament in two separate reports attached to the\nreport of the select Committee on the Bank Acts sitting in July, 1858,\ndates from the end of the seventeenth century.\n\nAt the time of the accession of William III., the English mint-price\nof an ounce of silver was 5s. 2d., or 1-62 of an ounce of silver was\nequal to a penny; 12 of these pence were called a shilling. According\nto that standard, a piece of silver weighing, say, 6 ounces, would be\ncoined into thirty-one coins, each called a shilling. But the _market\nprice_ of an ounce of silver rose above its _mint price_, from 5s. 2d.\nto 6s. 3d., or, in order to buy an ounce of silver bullion 6s. 3d. had\nto be paid. How could the market price of an ounce of silver rise above\nits mint price, when the mint price is merely a reckoning name for\naliquot parts of an ounce of silver? The riddle was easily solved. Out\nof \u00a35,600,000 of silver money which was in circulation at that time,\nfour millions were worn out, clipped and debased. A trial disclosed\nthat \u00a357,000 of silver which were supposed to weigh 220,000 ounces,\nweighed only 141,000 ounces. The mint went on coining according to\nthe same standard, but light-weighted shillings in actual circulation\nrepresented smaller parts of an ounce than their name implied. Hence,\na greater quantity of these light-weighted shillings had to be paid in\nthe market for an ounce of silver bullion. When a general recoinage\nwas decided upon in consequence of the derangement that had been\nproduced, LOWNDES, the Secretary of the Treasury, declared that the\nvalue of an ounce of silver had risen and therefore it must henceforth\nbe coined into 6s. 3d. instead of into 5s. 2d. as heretofore. His\nargument practically amounted to the assertion that the rise in the\nvalue of the ounce caused a fall in the value of its aliquot parts.\nHis false theory, however, served merely as an embellishment for a\njust, practical purpose. The government debts were contracted in light\nshillings, were they to be paid in heavy ones? Instead of saying pay\nback four ounces of silver, when you had received nominally five ounces\nbut virtually only four, he said pay back nominally five ounces but\nreduce the metallic contents to four ounces and call a shilling what\nyou had called four-fifths of a shilling heretofore. Thus Lowndes\npractically adhered to the metallic weight while theoretically he clung\nto the reckoning name. His adversaries who clung only to the name\nand therefore declared the 25 to 50 per cent. lighter shilling to be\nidentical with the full-weight shilling maintained on the contrary that\nthey adhered to the metallic weight.\n\nJOHN LOCKE, who was an advocate of the new bourgeoisie in all forms,\nthe manufacturers against the working classes and paupers, the\ncommercial class against the old fashioned usurers, the financial\naristocracy against the state debtors, and who went so far as to prove\nin his own work that the bourgeois reason is the normal human reason,\nalso took up the challenge against Lowndes. John Locke carried the day\nand money borrowed at ten or fourteen shillings to a guinea was repaid\nin guineas of twenty shillings.[49] SIR JAMES STEUART sums up the\nentire transaction as follows: \u201c ... the state gained considerably upon\nthe score of taxes, as well as the creditors upon their capitals and\ninterest; and the nation, which was the principal loser, was pleased;\nbecause their _standard_ (The standard of their own value) was not\ndebased.\u201d[50] Steuart thought that the nation would prove more alert\nwith the further development of commerce. He was mistaken. About 120\nyears later the same _quid pro quo_ was repeated.\n\nIt was just in the order of things that Bishop BERKELEY, the\nrepresentative of a mystical idealism in English philosophy, should\nhave given a theoretical turn to the doctrine of the ideal unit\nof measure of money, something which the practical \u201cSecretary to\nthe Treasury\u201d had failed to do. He asks: \u201cWhether the terms Crown,\nLivre, Pound Sterling, etc., are not to be considered as Exponents\nor Denominations of such Proportion? [namely proportions of abstract\nvalue as such.] And whether Gold, Silver, and Paper are not Tickets\nor Counters for Reckoning, Recording and Transferring thereof? (of\nthe proportion of value). Whether _Power_ to command the Industry of\nothers be not real Wealth? And whether Money be not in Truth, Tickets\nor Tokens for conveying and recording such Power, and whether it be of\ngreat consequence what Materials the Tickets are made of?\u201d[51] Here\nwe find a confusion, first of the measure of value and the standard\nof price, and secondly of gold and silver as measures on the one hand\nand mediums of circulation on the other. Because precious metals can\nbe replaced by tokens in the process of circulation Berkeley comes to\nthe conclusion that these tokens represent nothing, i. e., only the\nabstract idea of value.\n\nSIR JAMES STEUART had so fully developed the theory of the ideal\nunit of measure of money, that his successors\u2015unconscious successors\nsince they do not know him\u2015have added to it neither a new version\nnor even a new example. \u201cMoney, which I call of account, is no more\nthan an arbitrary scale of equal parts, invented for measuring the\nrespective value of things vendible. Money of account, therefore, is\nquite a different thing from money coin, which is price[52] and might\nexist, although there was no such thing in the world as any substance\nwhich could become an adequate and proportional equivalent, for every\ncommodity.... Money of account ... performs the same office with\nregard to the value of things, that degrees, minutes, seconds, etc.,\ndo with regard to angles, or as scales do to geographical maps, or to\nplans of any kind. In all these inventions, there is constantly some\ndenomination taken for the unit. ... The usefulness of all those\ninventions being solely confined to the marking of proportion. Just so\nthe unit in money can have no invariable determinate proportion to any\npart of value, that is to say, it cannot be fixed to any particular\nquantity of gold, silver, or any other commodity whatsoever. The\nunit once fixed, we can, by multiplying it, ascend to the greatest\nvalue.... The value of commodities, therefore, depending upon a\ngeneral combination of circumstances relative to themselves and to the\nfancies of men, their value ought to be considered as changing only\nwith respect to one another; consequently, anything which troubles or\nperplexes the ascertaining those changes of proportion by the means\nof a general, determinate and invariable scale, must be hurtful to\ntrade.... Money ... is an ideal scale of equal parts. If it be demanded\nwhat ought to be the standard value of one part? I answer by putting\nanother question: What is the standard length of a degree, a minute, a\nsecond? It has none ... but so soon as one part becomes determined by\nthe nature of a scale, all the rest must follow in proportion. Of this\nkind of money ... we have two examples. The bank of Amsterdam presents\nus with the one, the coast of Angola with the other.\u201d[53]\n\nSteuart speaks here simply of the part money plays in circulation\nas the _standard of price_ and _money of account_. If different\ncommodities are marked in the price-list at 15s., 20s., 36s.,\nrespectively, then I care, in fact, neither for the silver substance,\nnor for the name of the shilling when comparing the magnitudes of their\nvalues. The ratios between the numbers 15, 20, 36, tell everything, and\nthe number 1 has become the only unit of measure. Only the abstract\nproportion of numbers can at all serve as a purely abstract expression\nof proportion. In order to be consistent, Steuart should have dropped\nnot only gold and silver, but their legal baptismal names as well.\nSince he does not understand the nature of the transformation of the\nmeasure of value into a standard of price, he naturally believes that\nthe definite quantity of gold which serves as a unit of measure relates\nas a measure not to other quantities of gold, but to values as such.\nSince commodities appear as quantities of the same denomination through\nthe conversion of their exchange values into prices, he denies that\nproperty of the measure which reduces them to one denomination; and\nsince in this comparison of different quantities of gold the quantity\nof gold which serves as a unit of measure is conventional, he does not\nsee the necessity of fixing it at all. Instead of calling 1-360 part\nof a circle degree, he might give that name to 1-180th part; the right\nangle would then be measured by 45 degrees instead of 90, and acute and\nobtuse angles would be measured accordingly. Nevertheless, the measure\nof the angle would remain, then, as before, first a qualitatively\ndefinite mathematical figure, the circle, and second a quantitatively\ndefinite part of the circle. As for Steuart\u2019s economic illustrations,\nhe refutes his own argument with one and does not prove anything with\nthe other. The bank money of Amsterdam was, in fact, merely the\nreckoning name for Spanish doubloons, which retained their full weight\nby lying idly in the bank vaults, while the circulating coins became\nthinner from hard rubbing against the outer world. And as for the\nAfrican idealists we have to abandon them to their fate until critical\ntravelers will tell us more about them.[54] The French assignat\ncould be called an almost ideal money in Steuart\u2019s sense: \u201c_National\nproperty. Assignation of 100 francs._\u201d To be sure, the use-value which\nthe assignation was supposed to represent, namely, the confiscated\nland, was indicated here, but the quantitative definition of the unit\nof measure was forgotten and \u201cthe franc\u201d became a meaningless word.\nHow much or how little land the assignation franc represented depended\non the results of the public auctions. In practice, however, the\nassignation franc circulated as a token of value of silver money and\nits depreciation was, therefore, measured by this silver standard.\n\nThe period of the suspension of cash payments by the Bank of England\nwas hardly more fruitful of war-bulletins than of money theories. The\ndepreciation of bank notes and the rise of the market price of gold\nabove its mint price called forth again the doctrine of the ideal\nunit of money on the part of some of the advocates of the Bank. Lord\nCastlereagh found the classical confused expression for the confused\nidea by speaking of the unit of measure of money as \u201ca sense of value\nin reference to currency as compared with commodities.\u201d When a few\nyears after the peace of Paris conditions permitted the resumption of\ncash payments, the same question which had been stirred up by Lowndes\nunder William III., came up, hardly changed in form. An enormous\ngovernment debt, as well as a mass of private debts, accumulated in\ntwenty years, fixed obligations, etc., had been contracted on the\nbasis of depreciated bank notes. Were they to be paid back in bank\nnotes of which \u00a34672, 10s. nominal, actually represented 100 pounds\nof 22 carat gold? THOMAS ATTWOOD, a banker of Birmingham, came forth\nas _Lowndes redivivus_. The creditors were to receive nominally as\nmany shillings as had been nominally borrowed, but if about 1-78 of\nan ounce of gold constituted a shilling according to the old standard\nof coinage, then say 1-90 of an ounce should now be christened a\nshilling. Attwood\u2019s adherents are known as the Birmingham school of\n\u201clittle shillingmen.\u201d The controversy over the ideal money unit, which\nhad started in 1819, still went on in 1845 between Sir Robert Peel and\nAttwood, whose own wisdom, as far as the function of money as a measure\nis concerned, is exhaustively summed up in the following passage, in\nwhich, referring to Sir Robert Peel\u2019s controversy with the Birmingham\nChamber of Commerce, he says: \u201cThe substance of your queries is ...\nin what sense is the word pound to be used?... To what will the sum\none pound be equivalent?... Before I venture a reply I must enquire\nwhat constitutes a standard of value?... Is \u00a33 17s. 10-1/2d. an _ounce_\nof gold, or is it only of the _value_ of an ounce of gold? If \u00a33 17s.\n10-1/2d. be an ounce of gold, why not call things by their proper\nnames, and, dropping the terms pounds, shillings and pence, say ounces,\npennyweights and grains?... If we adopt the terms ounces, pennyweights\nand grains of gold, as our monetary system, we should pursue a direct\nsystem of barter.... But if gold be estimated as of the _value_ of\n\u00a33 17s. 10-1/2d. per ounce ... how is this ... that much difficulty\nhas been experienced at different periods to check gold from rising\nto \u00a35 4s. per ounce, and we now notice that gold is quoted at \u00a33 17s.\n9d. per ounce?... The expression _pound_ has reference to value, but\nnot a fixed standard value.... The term pound is the _ideal unit_....\nLabour is the parent of cost and gives the relative value to gold or\niron. _Whatever denomination of words are used to express the daily or\nweekly labour of a man_, such words express the cost of the commodity\nproduced.\u201d[55]\n\nIn the last words the hazy conception of the ideal money measure melts\naway and its real meaning breaks through. The reckoning names of gold,\npound sterling, shilling, etc., should be names for definite quantities\nof labor-time. Since labor-time constitutes the substance and the\nintrinsic measure of values, these names would then actually represent\ndefinite proportions of value. In other words, labor-time is maintained\nto be the true unit of measure of money. With this we leave the\nBirmingham school, but should add in passing that the doctrine of the\nideal measure of money acquired new importance in the controversy over\nthe question of the convertibility or non-convertibility of bank notes.\nIf paper receives its name from gold or silver, then the convertibility\nof a note or its exchangeability for gold or silver remains an economic\nlaw, no matter what the civil law may be. Thus a Prussian paper thaler,\nalthough legally inconvertible, would immediately depreciate if it were\nworth less than a silver thaler in ordinary trade, i. e., if it were\nnot practically convertible. The consistent advocates of inconvertible\npaper money in England, therefore, sought refuge in the ideal measure\nof money. If the reckoning names of money, \u00a3, s., etc., are names of\ncertain quantities of atoms of value, of which a commodity absorbs or\nloses now more, now less in exchange for other commodities, then an\nEnglish \u00a35 note, e. g., is just as independent of its relation to gold\nas of that to iron and cotton. Since its title would no more imply\nits theoretical equality with a certain quantity of gold or any other\ncommodity, the demand for its convertibility, i. e., for its practical\nequality with a definite quantity of a specified thing would be\nexcluded by the very conception of the note.\n\nThe theory of labor-time as the direct measure of money was first\nsystematically developed by JOHN GRAY.[56] He makes a National Central\nBank ascertain through its branches the labor-time consumed in the\nproduction of various commodities. The producer receives an official\ncertificate of value in exchange for his commodity. i. e., he gets a\nreceipt for as much labor-time as his commodity contains,[57] and these\nbank notes of one week\u2019s labor, one day\u2019s labor, one hour\u2019s labor,\netc., serve at the same time as a check for an equivalent in all other\ncommodities stored in the bank warehouses.[58] This is the fundamental\nprinciple carefully worked out in detail and based throughout on\nexisting English institutions. Under this system, says Gray, \u201cto\nsell for money may be rendered, at all times, precisely as easy as it\nnow is to buy with money; ... production would become the uniform and\nnever-failing cause of demand.\u201d[59] The precious metals would lose\ntheir \u201cprivilege\u201d as against other commodities and \u201ctake their proper\nplace in the market beside butter and eggs, and cloth and calico, and\nthen the value of the precious metals will concern us just as little\n... as the value of the diamond.\u201d[60] \u201cShall we retain our fictitious\nstandard of value, gold, and thus keep the productive resources of the\ncountry in bondage? or, shall we resort to the natural standard of\nvalue, labour, and thereby set our productive resources free?\u201d[61]\n\nLabor-time being the intrinsic measure of value, why should there be\nanother external measure side by side with it? Why does exchange value\ndevelop into price? Why do all commodities estimate their value in one\nexclusive commodity, which is thus converted into a special embodiment\nof exchange value into money? That was the problem which Gray had\nto solve. Instead of solving it, he imagined that commodities could\nbe related directly to each other as products of social labor. But\nthey can relate to each other only in their capacity of commodities.\nCommodities are the direct products of isolated independent private\nlabors, which have to be realized as universal social labor through\ntheir alienation in the process of private exchange, that is to say,\nlabor based on the production of commodities becomes social labor only\nthrough universal alienation of individual labors. But by assuming\nthat the labor-time contained in commodities is _directly social_\nlabor-time, Gray assumes it to be common labor-time or labor-time of\ndirectly associated individuals. Under such conditions a specific\ncommodity like gold or silver could not confront other commodities as\nthe incarnation of universal labor, and exchange value would not be\nturned into price; but, on the other hand, use-value would not become\nexchange value, products would not become commodities and thus the\nvery foundation of the capitalistic system of production would be\nremoved. But that is not what Gray has in mind. _Products are to be\nproduced as commodities, but are not to be exchanged as commodities._\nHe entrusts a national bank with the carrying out of this pious\nwish. On the one hand, society, through the bank, makes individuals\nindependent of the conditions of private exchange, and on the other,\nit allows them to go on producing on the basis of private exchange.\nThe logic of things, however, compels Gray to do away with one\ncondition of capitalistic production after another, although he wishes\nto \u201creform\u201d only the money system which results from the exchange of\ncommodities. Thus he transforms capital into national capital,[62]\nland into national property,[63] and if his bank is to be watched\nclosely, it will be found that it not only receives commodities with\none hand and issues certificates for work delivered with the other, but\nthat it regulates production as well. In his last work, \u201cLectures on\nMoney,\u201d in which Gray is anxious to demonstrate that his labor-money\nis a purely bourgeois reform, he gets tangled up in even more glaring\ncontradictions.\n\nEvery commodity is directly money. That was Gray\u2019s theory deducted\nfrom his incomplete and, therefore, false analysis of commodities.\nThe \u201corganic\u201d structure of \u201clabor money,\u201d the \u201cnational bank\u201d and the\n\u201cware-docks\u201d are mere fantastic visions in which the dogma is made\nby a legerdemain to appear to us as a universal law. The dogma that\na commodity is money or that the isolated labor of the individual\ncontained in it is direct social labor, will of course not become\ntrue through the mere fact that a bank believes in it and carries on\noperations accordingly. It is more likely that bankruptcy would play\nin that case the part of the practical critic. What remains concealed\nin Gray\u2019s writings and hidden from himself as well, namely, that\nlabor-money is a well-sounding economic phrase for the pious wish to\nget rid of money, and with money, of exchange value, and with exchange\nvalue, of commodities, and with commodities, of the capitalistic mode\nof production, was clearly expressed by some English socialists of whom\na few preceded and others followed Gray.[64]\n\nBut it remained for Mr. Proudhon and his school to preach in\nall earnest the degradation of _money_ and the exaltation of the\n_commodity_ as the gist of socialism and thus to reduce socialism to an\nelementary misconception of the necessary connection between commodity\nand money.[65]\n\n\n2. THE MEDIUM OF CIRCULATION.\n\nAfter the commodity has received in the process of price determination\nthe form in which it becomes capable of circulation, and after gold has\nacquired the character of money in the same process, circulation will\nboth present and solve the contradictions which are inherent in the\nprocess of exchange of commodities. The actual exchange of commodities,\ni. e., the social interchange of matter consists of a change of form in\nwhich is unfolded the double character of the commodity as use-value\nand exchange value, and at the same time its own change of form is\ncrystallized in distinct forms of money. To describe this change of\nform is to describe circulation. As we have seen, given a world of\ncommodities and with it a system of division of labor, commodity is but\na developed form of exchange value; in the same manner, circulation\nimplies a steady stream of exchange transactions which are being\ncontinually renewed on all sides. The second assumption we make is that\ncommodities enter the process of exchange with a _definite price_ or\nthat they appear to each other in that process in a double capacity,\nreally as use-values, ideally\u2015in price\u2015as exchange values.\n\nThe liveliest streets of London are crowded with stores whose show\nwindows are filled with the riches of the world, Indian shawls,\nAmerican revolvers, Chinese porcelain, Parisian corsets, Russian furs\nand tropical spices, but all of these things of joy bear fatal white\nlabels marked with Arabian figures with the laconic characters \u00a3, s.,\nd. Such is the picture of the commodity appearing in circulation.\n\n\na. THE METAMORPHOSIS OF COMMODITIES.\n\nOn close examination the process of circulation is seen to consist of\ntwo distinct cycles. If we denote commodity by the letter C and money\nby the letter M we can express these two forms as follows:\n\n  C\u2015M\u2015C\n  M\u2015C\u2015M.\n\nIn this chapter we are interested exclusively in the first form, i. e.,\nin the form which serves as the direct expression of the circulation of\ncommodities.\n\nThe process C\u2015M\u2015C consists of the movement C\u2015M, the exchange of the\ncommodity for money, or _selling_; the opposite movement M\u2015C, exchange\nof money for a commodity, or _buying_; and of the unity of the two\nmovements C\u2015M\u2015C, exchange of the commodity for money in order to\nexchange the money for a commodity, or _selling_ in order to _buy_.\nBut the result which marks the end of the process is C\u2015C, exchange of\ncommodity for commodity, real interchange of matter.\n\nIf we look at it from the extreme end of the first commodity, C\u2015M\u2015C\nrepresents its transformation into gold and its retransformation from\ngold into a commodity; a movement in which the commodity exists first\nas a particular use-value, then divests itself of that character,\nacquires the character of exchange value or universal equivalent,\nin which capacity it has nothing in common with its natural form,\nthen throws off the last form as well to remain finally an actual\nuse-value for the satisfaction of particular wants. In this last form\nit falls out of the sphere of circulation into that of consumption.\nThe entire process of circulation C\u2015M\u2015C thus includes the combined\nseries of metamorphoses, which every single commodity undergoes\nin order to become a direct use-value to its possessor. The first\nmetamorphosis is accomplished in the first phase of the circulation\nprocess, C\u2015M; the second in the last phase, M\u2015C; and the entire\nprocess constitutes the _curriculum vitae_ of the commodity. But\nthe process C\u2015M\u2015C represents the combined metamorphosis of a single\ncommodity and constitutes at the same time the sum of certain one-sided\nmetamorphoses of other commodities, since every metamorphosis of the\nfirst commodity constitutes its transformation into another commodity\nand therefore the transformation of the other commodity into it; hence\nit constitutes a twofold transformation which takes place at the same\nstage of circulation. We must then consider separately each of the two\nprocesses of exchange into which circulation C\u2015M\u2015C breaks up.\n\nC\u2015M or _sale_: commodity C enters the process of circulation not only\nas a particular use-value, e. g., a ton of iron, but as a use-value\nof a certain price, say, \u00a33 17s. 10-1/2d., or an ounce of gold.\nWhile this price is on the one hand the exponent of the quantity of\nlabor-time contained in a ton of iron, i. e., of the magnitude of its\nvalue, it at the same time expresses the pious wish of the iron to\nbecome gold, i. e., to give to the labor-time it contains the aspect\nof universal social labor-time. Unless this trans-substantiation takes\nplace, the ton of iron not only ceases to be a commodity, but even a\nproduct, for it is a commodity only because it is a non-use-value to\nits owner; that is to say, his labor counts as actual labor only in so\nfar as it is labor useful to others, and the thing is useful to him\nonly as abstract universal labor. It is, therefore, the business of\niron, or of its owner, to find that point in the world of commodities\nwhere iron attracts gold. But this difficulty, the _salto mortale_\nof the commodity, is overcome when the sale actually takes place, as\nis assumed here on the analysis of simple circulation. When the ton\nof iron is realized as a use-value through its alienation, i. e., by\npassing from the hands in which it is a non-use-value to hands in which\nit is a use-value, it at the same time realizes its price and from mere\nimaginary gold it becomes real gold. In place of the name one ounce of\ngold or \u00a33 17s. 10-1/2d., an ounce of real gold has appeared, but the\nton of iron has cleared that place. Not only does the commodity\u2015which\nin its price had been ideally converted into gold\u2015actually turn into\ngold through the sale C\u2015M, but gold, which as a measure of value had\nbeen only ideal money and in fact figured merely as a money name of\ncommodities\u2015is now turned into actual money[66] by the same process.\nJust as gold became the ideal universal equivalent, because all\ncommodities measured their values by it, so does it now become the\nabsolutely alienable commodity, real money, because it is the product\nof the universal alienation of commodities for it\u2015and the sale C\u2015M is\nthe process by means of which that universal alienation takes place.\nBut gold becomes real money only through sale, because the exchange\nvalues of commodities were already ideal gold in their prices.\n\nIn the sale C\u2015M, as well as in the purchase M\u2015C, two commodities,\nentities of exchange value and use-value, confront each other, but the\nexchange value of the commodity exists only ideally as price; while\nas regards gold, although it is really a use-value, its use-value\nis confined only to its being the bearer of exchange value and is,\ntherefore, merely a formal use-value, having no relation to a real\nindividual want. The antithesis of use-value and exchange value is thus\ndistributed at the two extreme poles of C\u2015M, so that the commodity\nconfronts gold as a use-value which has yet to realize in gold its\nexchange value or its price, while gold confronts the commodity as an\nexchange value, whose formal use-value is yet to be realized in the\ncommodity. Only through this duplication of the commodity as commodity\nand gold, and, further, through the twofold and polar relation by\nvirtue of which each extreme represents but ideally what its opposite\nis in reality and is in reality what its opposite is only ideally\u2015in\nshort, only through the appearance of commodities as two-sided polar\nopposites are the contradictions solved that are inherent in the\nprocess of exchange.\n\nSo far we have considered C\u2015M as sale, as the conversion of commodity\ninto money. But if we look at it from the other end, the same process\nwill assume the form M\u2015C, or purchase, i. e., the conversion of\nmoney into commodity. Sale is necessarily its opposite at the same\ntime; it is the former if we look at the process from one end, and\nthe latter if we regard the process from the other end. In practice\nthis process differs only in that the initiative in C\u2015M originates\nat the commodity end or with the seller, while in M\u2015C it comes from\nthe money end or the buyer. In describing the first metamorphosis\nof the commodity, its conversion into money as a result of the\ncompletion of the first phase of circulation C\u2015M, we assume at the\nsame time that another commodity has been converted into money and\nis now in its second phase of circulation, M\u2015C. Thus we get into a\nvicious circle of assumptions. Circulation itself constitutes such a\nvicious circle. If we did not consider M in M\u2015C as the result of a\nmetamorphosis of another commodity, we would thereby take exchange out\nof the process of circulation. But outside of the latter the form C\u2015M\ndisappears and only two different Cs confront each other, say iron\nand gold, the exchange of which does not constitute a part of the\nprocess of circulation, being direct barter. Gold, at the source of\nits production, is a commodity like any other commodity. Its relative\nvalue and that of iron or of any other commodity is expressed here in\nquantities in which they are mutually exchanged. But in the process\nof circulation this operation is implied, the value of gold being\nalready given in the prices of commodities. Nothing can, therefore,\nbe more erroneous than the idea that gold and commodity enter into\nthe relation of direct barter _within the process of circulation_ and\nthat their relative values are ascertained through their exchange as\nsimple commodities. The illusion that gold is bartered as a simple\ncommodity for other commodities in the process of circulation is due to\nthe fact that prices represent equations in which certain quantities\nof commodities are made equal to certain quantities of gold, i. e.,\nthat the commodities are made to relate to gold in its capacity\nof money, as a universal equivalent, and, therefore, appear to be\ndirectly exchangeable for it. In so far as the price of a commodity\nis _realized_ in gold, it is exchanged for gold as a commodity, as a\nparticular embodiment of labor-time; but in so far as it is the _price_\nthat is realized in gold, the commodity is exchanged for gold in its\ncapacity of money and not of a commodity, i. e., it is exchanged for\ngold as a universal embodiment of labor-time. But in either case the\nquantity of gold for which the commodity is exchanged in the process\nof circulation is not determined by exchange, but the exchange is\ndetermined by the price of the commodity, i. e., by its exchange value\nestimated in gold.[67]\n\nWithin the process of circulation gold appears in everybody\u2019s hands as\nthe result of sale C\u2015M. But since C\u2015M, sale, is at the same time M\u2015C,\npurchase, it is apparent that while C, the commodity from which the\nprocess starts, is passing through its first metamorphosis, another\ncommodity, which confronts it as the opposite pole M, is completing\nits second metamorphosis and is, therefore, passing through the second\nphase of circulation, while the first commodity is still in the first\nphase of its course.\n\nAs a result of the first phase of circulation, the sale, we get\nmoney which is the starting point of the second phase. In place of\nthe commodity in its first form appears its golden equivalent. This\nresult may now form a resting point, since the commodity in this\nsecond form possesses a lasting existence of its own. The commodity,\na non-use-value in the hands of its possessor, is now on hand in an\nalways useful, since always exchangeable, form, and it depends upon\ncircumstances when and at what point of the surface of the commodity\nworld it will again enter circulation. Its formation into a gold\nchrysalis constitutes an independent period in its life which may last\na greater or less length of time. While in the case of barter the\nexchange of one particular use-value is directly bound up with the\nexchange of another particular use-value, the universal character of\nlabor which creates exchange value is manifested in the separation and\nlack of coincidence of acts of purchase and sale.\n\n_M\u2015C, purchase_, is the inverted movement of C\u2015M and at the same time\nthe second or final metamorphosis of the commodity. As gold, i. e., in\nthe form of the universal equivalent, the commodity can be directly\nrepresented in the use-values of all other commodities; the latter\naspire to gold as their hereafter, but at the same time indicate in\ntheir prices the key in which it must sound in order that their bodies,\ntheir use-values, may take the place of money, while their souls,\ntheir exchange-values, may enter gold. The universal product of the\nalienation of commodities is the absolutely alienable commodity. There\nis no qualitative and only a quantitative limit to the transformation\nof gold into commodity, namely, the limit of its own quantity or\nmagnitude of its value. \u201cEverything is to be had for cash.\u201d While in\nthe movement C\u2015M, the commodity, through its alienation as a use-value,\nrealizes its own price and the use-value of somebody else\u2019s money; it\nrealizes in the movement M\u2015C, through its alienation as an exchange\nvalue, its own use-value and the price of the other commodity. While\nthrough the realization of its price the commodity transforms gold\ninto actual money, it turns gold into its merely fleeting money-form,\nthrough its own retransformation. Since the circulation of commodities\nimplies an extensive division of labor and consequently a diversity of\nwants on the part of individuals, a diversity which bears an inverse\nratio to the specialization of their own products, the purchase M\u2015C may\nappear as an equation with one commodity equivalent or split up into a\nseries of commodity-equivalents limited by the variety of the demands\nof the purchaser and by the amount of money in his possession. Just as\na sale is a purchase, so is a purchase a sale. M\u2015C is at the same time\nC\u2015M, but the initiative belongs in this case to gold or the purchaser.\n\nComing back now to C\u2015M\u2015C, or to circulation as a whole, it is apparent\nthat it contains the combined series of metamorphoses through which\na commodity passes. But at the same time as one commodity enters the\nfirst phase of its circulation and completes its first metamorphosis,\nanother commodity enters the second phase of circulation, completes its\nsecond metamorphosis and falls out of circulation; the first commodity\nenters at the same time the second phase of circulation completes\nits second metamorphosis and falls out of circulation, while a third\ncommodity enters circulation, passes through the first phase of its\ncourse completing the first metamorphosis.\n\nThus, the combined circulation C\u2015M\u2015C, as a complete metamorphosis of a\ncommodity always constitutes at the same time the end of the complete\nmetamorphosis of another commodity and the beginning of a complete\nmetamorphosis of a third commodity, i. e., a series without beginning\nor end. To illustrate this let us call C in either extreme C\u2019 and C\u201d\nrespectively, in order to distinguish the commodities, the series\nreading thus: C\u2019\u2015M\u2015C\u201d. The first member, C\u2019\u2015M, presupposes in fact\nthat M is the result of another transaction C\u2015M, and is thus itself\nmerely the last member of a series C\u2015M\u2015C\u2019, while the second part M\u2015C\u201d\nis merely a result of C\u201d\u2015M, or appears as the first part of C\u201d\u2015M\u2015C\u2019\u201d,\nand so on. Furthermore, although M is the result of only _one_ sale,\nit appears that the last part M\u2015C, may be represented as M\u2015C\u2019 + M\u2015C\u201d\n+ M\u2015C\u2019\u201d, etc., i. e., it may be split up into a number of purchases,\nand consequently a number of sales, or into a number of first members\nof new complete metamorphoses of commodities. Since the complete\nmetamorphosis of a single commodity thus appears as a link not only\nof one endless chain of metamorphoses, but of many such chains, the\nprocess of circulation in the world of commodities presents a hopeless\nconfusion of intertwined movements constantly ending and starting anew\nat a countless number of points. But every single sale or purchase\nstands as an independent isolated act, whose supplemental act may be\nseparated from it in time and place, and therefore does not need to\nfollow it directly as its continuation. Every separate process of\ncirculation, C\u2015M or M\u2015C, as a transformation of one commodity into\nuse-value and of another into money, i. e., as the first and second\nphases of circulation respectively forms an independent halting\npoint from either direction; but, on the other hand, all commodities\ncommence their second metamorphosis in the common form of the universal\nequivalent, gold, and stop at the starting point of the second phase of\ncirculation; for that, reason any M\u2015C dovetails in actual circulation\nwith any C\u2015M; the second chapter in the life-course of one commodity\nwith the first chapter of that of another commodity. A, e. g., sells\n\u00a32 worth of iron. He thus completes the transaction C\u2015M or the first\nmetamorphosis of commodity iron, but postpones his purchase until some\nother time. At the same time B, who sold 2 quarters of wheat for \u00a36 a\nfortnight since, buys with the same \u00a36 a coat and trousers of Moses &\nSon, thus completing M\u2015C or the second metamorphosis of the commodity,\nwheat.\n\nThe two transactions M\u2015C and C\u2015M appear here merely as links of one\nchain, because a commodity expressed in gold looks like any other\ncommodity, and one cannot tell by the looks of the gold whether it is\ntransformed iron or transformed wheat. C\u2015M\u2015C appears, therefore, in the\nactual process of circulation as a jumble of countless accidentally\ncoinciding or successively following members of different complete\nmetamorphoses. The actual process of circulation thus appears not as\na complete metamorphosis of a commodity, not as its movement through\nopposite phases, but as a mere agglomeration of many accidentally\ncoinciding or successive purchases and sales. The process thus loses\nall clearness of outline which is so much more the case since every\nsingle act of circulation, e. g., sale, is at the same time its\nopposite, purchase, and vice versa. On the other hand, the process\nof circulation is nothing but the movement of metamorphoses in the\nworld of commodities and, therefore, must reflect them also in its\nmovement as a whole. How that reflection takes place we shall consider\nin the following chapter. It may be added here that in C\u2015M\u2015C the two\nextreme Cs constitute two forms of commodities which do not bear the\nsame relation to M. The first C relates to money as a commodity of a\nspecial class to a universal commodity, while money relates to the\nsecond C as a universal commodity to an individual commodity. C\u2015M\u2015C\ncan, therefore, be reduced by abstract logic to the final form S\u2015U\u2015I in\nwhich S, standing for species, forms the first extreme; U, signifying\nuniversality, forms the connecting medium, and I, individuality,\nconstitutes the last extreme.\n\nThe owners of commodities entered the sphere of circulation simply\nas guardians of commodities. Within that sphere they confront each\nother in the opposite roles of buyer and seller, one as a personified\nsugar-loaf, the other as personified gold. As soon as the sugar-loaf\nis turned into gold, the seller becomes a buyer. These definite social\nfunctions are no outgrowths of human nature, but are the products\nof relations of exchange between men who produce their goods in the\nform of commodities. They are so far from being purely individual\nrelations between buyer and seller that both enter this relation\nonly to the extent that their individual labor is disregarded and\nis turned into money as labor of _no_ individual. Just as it is,\ntherefore, childish to consider these economic bourgeois roles of\nbuyer and seller as eternal social forms of human individuality, so it\nis on the other hand, preposterous to lament in them the extinction\nof individuality.[68] They are the necessary manifestations of\nindividuality at a certain stage of the social system of production.\nMoreover, in the opposition of buyer and seller the antagonistic nature\nof capitalistic production is expressed as yet so superficially\nand as mere matter of form, that this opposition belongs also to\nprecapitalistic forms of society, since it merely requires that\nthe mutual relations of individuals should be those of owners of\ncommodities.\n\nNow, if we consider the result of C\u2015M\u2015C, it comes down to mere\ninterchange of matter, C\u2015C. A commodity has been exchanged for a\ncommodity, a use-value for a use-value, and the transformation of the\ncommodity into money, or the commodity in its form of money, serves\nmerely as a means of effecting this interchange of matter. Money thus\nappears merely as a _medium of exchange_ of commodities; not as a\nmedium of exchange in general, but as a means of exchange in the sphere\nof circulation, i. e., a _medium of circulation_.[69]\n\nWe have seen that the process of circulation of commodities comes to\na completion in C\u2015C, appearing as mere barter carried on by means of\nmoney; further, that C\u2015M\u2015C represents in general not only two isolated\nprocesses, but their dynamic union as well; but to draw from that the\nconclusion that purchase and sale form an indivisible unit, is a mode\nof thinking the criticism of which belongs to the domain of logic,\nand not to that of economics. The separation of purchase and sale in\nthe process of exchange destroys all local, primitive, patriarchal\nand naively genial barriers to interchange of matter in society. It\nis, moreover, the general form of the separation of the points of\ncoincidence and opposition in this interchange, carrying within it the\npossibility of commercial crises, because the antagonism of commodity\nand money is the abstract and general form of all antagonisms with\nwhich the capitalistic system of labor is pregnant. Hence, circulation\nof money is possible without crises, but crises can not occur without\nmoney circulation. In other words, where labor based on the system of\nprivate exchange has not reached the stage marked by the existence\nof money, it is less capable of producing those phenomena which\npresuppose the full development of the capitalistic mode of production.\nBearing this in mind we can appreciate the depth of the criticism\nwhich proposes to do away with the \u201cshortcomings\u201d of capitalistic\nproduction by abolishing the \u201cprivilege\u201d enjoyed by the precious metals\nand introducing a so-called \u201crational monetary system.\u201d As a sample\nof economic defence of an opposite character may serve the following\npiece of reasoning which has been proclaimed exceedingly keen. JAMES\nMILL, the father of the well-known English economist, John Stuart Mill,\nsays: \u201cWhatever ... be the amount of the annual produce, it never can\nexceed the amount of the annual demand.... Of two men who perform an\nexchange, the one does not come with only a supply, the other with only\na demand; each of them comes with both a demand and a supply.... The\nsupply which he brings is the instrument of his demand; and his demand\nand supply are of course exactly equal to one another. It is therefore,\nimpossible that there should ever be in any country a commodity or\ncommodities in quantity greater than the demand, without there being,\nto an equal amount, some other commodity or commodities in quantity\nless than the demand.\u201d[70]\n\nMill restores the balance by turning the process of circulation into\ndirect barter and then smuggling into direct barter the character of\nbuyer and seller borrowed by him from the process of circulation. To\nput it in his own confused language, during certain periods when all\ncommodities are unsaleable there are really more buyers than sellers\nof one commodity, _money_, and more sellers than buyers of _all other\nmoney_, commodities; such was, e. g., the case at certain moments\nduring the commercial crisis of 1857-58 in London and Hamburg. The\nmetaphysical balance of purchases and sales amounts to this, that\nevery purchase is a sale and every sale is a purchase, which is a poor\nconsolation to the guardian of the commodity who can not bring about\nits sale and therefore can not buy.[71]\n\nThe separation of sale and purchase makes possible a large number of\nfictitious transactions side by side with genuine trade before the\nfinal exchange between the producer and the consumer of commodities\ntakes place. It enables a host of parasites to penetrate the process of\nproduction and exploit the separation. But this, again, means that with\nmoney as the universal form of labor under the capitalist system, there\nis _the possibility_ of the development of its contradictions.\n\n\nb. THE CIRCULATION OF MONEY.\n\nActual circulation appears at first sight as a mass of purchases and\nsales accidentally taking place side by side. In buying as in selling,\ncommodities and money always stand in the same mutual relation: the\nseller, on the side of the commodity; the buyer, on that of money.\nMoney as a medium of circulation always appears therefore as _a means\nof purchase_; and in that way the difference in its destinations in\nthe opposite phases of the metamorphosis of the commodity becomes\nindistinguishable.\n\nMoney passes into the hands of the seller in the same transaction in\nwhich the commodity passes into the hands of the buyer. Commodities\nand money thus flow in opposite directions and this change of place\nin which the commodity passes over to one side and money to the other\nside, occurs simultaneously at an indefinitely large number of points\non the entire surface of bourgeois society. But the first step which\nthe commodity makes in the sphere of circulation is also its last\nstep.[72] Whether it leaves its place on account of its attraction\nfor gold (C\u2015M), or on account of its attraction by gold (M\u2015C), with\none move, with one change of place it falls out of the sphere of\ncirculation into that of consumption. Circulation is a continuous flow\nof commodities, but different commodities all the time, since each\ncommodity makes but one move. Every commodity enters upon the second\nphase of its circulation not as the same commodity, but as another\ncommodity, gold. Hence the movement of a metamorphosed commodity is the\nmovement of gold. The same piece of gold or the identical gold coin\nwhich changed places with one commodity in the act C\u2015M, reappears from\nthe opposite end as the starting point for M\u2015C and thus changes places\nfor the second time with another commodity. Just as it passed from the\nhands of buyer B into those of seller A, it now leaves A\u2019s hands who\nhas become a buyer and passes into C\u2019s hands. The path described by a\ncommodity in its transformation into money and its retransformation\nfrom money, i. e., the movement of a complete metamorphosis of a\ncommodity assumes the aspect of an apparent movement of the same coin\nthat changes places twice with two different commodities. No matter in\nhow scattered and haphazard fashion purchases and sales may take place\nnear each other, there is always in actual circulation a seller for\neach buyer and the money which moves into the place of the commodity\nsold, before it came into the hands of the buyer, must have already\nchanged places with another commodity. Sooner or later it again leaves\nthe hands of the seller, who turns buyer, to pass into the hands of\na new seller and this frequently repeated change of place forms the\ninterlacing of the metamorphoses of commodities. The same coins are\nmoving, some more, others less frequently, from one place in the\nsphere of circulation to another, always in the direction opposite to\nthat of the commodities moved, thus describing a longer or shorter\ncirculation-curve. The different movements of the same coin can follow\neach other in point of time only, and on the contrary, the many\nscattered purchases and sales which appear as so many separate changes\nof place between commodities and money, occur simultaneously separated\nonly in point of space.\n\nThe circulation of commodities C\u2015M\u2015C in its elementary form is\ncompletely described in the transition of money from the hands of the\nbuyer into those of the seller and from the hands of the latter, as\nsoon as he has turned buyer, into those of a new seller. This completes\nthe metamorphosis of the commodity and with it the movement of money\nin so far as that movement is the expression of the metamorphosis.\nBut since new use-values are continually produced in the shape of new\ncommodities and must thus be constantly thrown anew into circulation,\nthe process C\u2015M\u2015C is repeatedly renewed by the same commodity owners.\nThe money which they have spent as buyers gets back into their hands\nas soon as they appear again as vendors of commodities. The constant\nrenewal of the circulation of commodities finds its reflection in the\ncontinual circulation over the entire surface of bourgeois society of\na quantity of money which, passing from hand to hand, describes at the\nsame time a number of different small cycles starting from numberless\npoints and returning each to its own starting point, to repeat the same\nmovement over again.\n\nThe change of form on the part of commodities appears as a mere change\nof place on the part of money and the continuity of the circulation\nmovement is all on the side of money, since the commodity always makes\nbut one step in the direction opposite to money, while the latter makes\nin each case the second step for the commodity; the entire movement\nseems, therefore, to proceed from money, although in the case of a sale\nthe commodity draws money out of its place, i. e., it circulates money\nas much as it is circulated by the latter in the case of a purchase.\nFurthermore, owing to the fact that money always confronts commodities\nin its capacity of a means of purchase, and in that capacity moves\ncommodities only by realizing their price, the entire movement of\ncirculation appears as a change of place between money and commodities,\nthe former realizing the prices of the latter either by separate acts\nof circulation taking place simultaneously and side by side, or by\nsuccessive transactions when the same coin realizes the prices of\ndifferent commodities one after another. If we consider, e. g., the\nseries C\u2015M\u2015C\u2019\u2015M\u2015C\u201d\u2015M\u2015C\u2019\u201d, etc., without regard to the qualitative\naspects which become indistinguishable in the process of circulation,\nwe witness the same monotonous operation. After realizing the price\nof C, M successively realizes those of C\u2019, C\u201d, etc., and commodities\nC\u2019, C\u201d, C\u2019\u201d, etc., constantly take the place which money has left.\nMoney thus appears to keep commodities in circulation by realizing\ntheir prices. In discharging this function of realization of prices,\nmoney is itself constantly circulating, now changing its place, now\ndescribing a curve of circulation, now completing a small circuit where\nthe starting and returning points coincide. As a medium of circulation,\nmoney is subject to a circulation of its own. The change of form of\nthe circulating commodities appears, therefore, as a movement of money\nwhich furthers the exchange of commodities, motionless in themselves.\nThe movement of the circulation process of commodities thus takes on\nthe form of the movement of gold as a medium of circulation, i. e. of\nthe _circulation of money_.\n\nSince owners of commodities give the products of their individual labor\nthe appearance of products of social labor by turning one object,\nviz. gold, into the direct expression of universal labor-time and\ntherefore into money, their own movement by which all of them effect\nthe interchange of the material products of their labor now appears to\nthem as the direct movement of that one object, as the circulation of\ngold. The social movement itself appears to the owners of commodities\npartly as an outward necessity and partly as a mere formal intermediary\nprocess which enables every individual who puts any use-value into\ncirculation to get other use-values out of it of an equal value. The\nuse-value of commodities comes into play with their disappearance from\nthe sphere or circulation, while the use-value of money as a medium of\ncirculation is in its very circulation. The movement of a commodity\nin the sphere of circulation is of a transitory kind, while ceaseless\nmotion in that sphere constitutes the function of money. Through this\nspecial function which it performs within the sphere of circulation\nmoney acquires a new capacity, which we have to consider now more\nclosely.\n\nIn the first place, we see that the circulation of money forms an\nendlessly split up movement, since it reflects the splitting up of the\nprocess of circulation into an infinitely large number of purchases\nand sales and the independent separation of the mutually supplementary\nphases of metamorphoses of commodities. In the small cycles described\nby money, where the starting and returning points coincide, we do find\na return movement, i. e., an actual circular movement, but the fact\nthat there are as many starting points as there are commodities and\nthat the number of these cycles is infinitely large puts them beyond\nall control, measurement, or computation. The time between the start\nand the return of a commodity is just as indefinite. Moreover, it is\nimmaterial whether or not such a circuit has been actually described in\na given case. No economic fact is more generally known than that one\ncan spend money with one hand without getting it back with the other.\nMoney proceeds from an endless number of points and returns to as many\ndifferent points, but the coincidence of the starting and returning\npoints is a matter of chance, because in the movement C\u2015M\u2015C the turning\nof the buyer again into a seller is not a necessary condition. Still\nless does the circulation of money resemble a movement radiating\nfrom a common centre to all points of the periphery and back from\nthe peripheral points to the centre. The so-called cycle described\nby money, as it is pictured, amounts simply to this, that at all\npoints we observe its appearance and disappearance, its never ceasing\ntransition from place to place. In a higher, more involved form of\nmoney circulation, e. g. bank-note circulation, we shall find that\nthe conditions of emission of money include those for its return. But\nin the simple money circulation it is a matter of chance for the same\nbuyer to become again a seller. Where we really see constant cycle\nmotions taking place, they are only reflections of deeper forces in\nthe sphere of production, e. g., the manufacturer draws money from his\nbanker on Friday, pays it out to his working-men on Saturday, the men\nimmediately pay out the greater part of it to the storekeepers, etc.,\nand the latter turn it in on Monday back to the banker.\n\nWe have seen that money realizes simultaneously a certain number of\nprices in the variegated purchases and sales which take place side by\nside at the same time. On the other hand, in so far as its movement\nrepresents the movement of the combined metamorphoses of commodities\nand the interlacing of these metamorphoses, the same coin realizes\nthe prices of different commodities and thus makes a larger or\nsmaller number of moves. If we take the circulation of a country for\na given length of time, say a day, the quantity of gold required for\nthe realization of prices and, consequently, for the circulation of\ncommodities, will be determined by two conditions: first, the sum\ntotal of the prices; second, the average number of moves made by one\ncoin. This number of moves or the rapidity of circulation of money is\nin its turn determined by or expresses the average rapidity with which\ncommodities go through the different phases of their metamorphoses, the\nrapidity with which these metamorphoses succeed one another, and with\nwhich those commodities that have gone through their metamorphoses are\nreplaced by new commodities in the process of circulation. We have seen\nthat in the process of the determination of prices the exchange value\nof all commodities is ideally converted into a certain quantity of gold\nof the same value and that the same amount of value is present in a\ndouble form in either of the isolated acts of circulation M\u2015C and C\u2015M,\nfirst embodied in the commodity, and second, in gold; yet gold enjoys\nthe capacity of a medium of circulation not by virtue of its isolated\nrelation to separate commodities in a state of rest, but owing to its\nactive presence in the dynamic world of commodities, viz., its function\nof expressing the change of form of commodities by its change of place\nand expressing the rapidity of their change of form by the rapidity of\nits change of place. The extent to which it is present in the sphere\nof circulation, i. e., the actual quantity of gold in circulation, is\nthus determined by the extent to which it is discharging its function\nthroughout the entire process.\n\nThe circulation of money implies the circulation of commodities; money\ncirculates commodities which have prices, i. e., which are beforehand\nideally equated to certain quantities of gold. In the determination\nof the prices of commodities, the value of the quantity of gold\nwhich serves as a unit of measure, or the value of gold, is assumed\nto be given. Under that assumption the quantity of gold necessary\nfor circulation is determined first of all by the sum total of the\nprices of commodities that are to be realized. But this sum is itself\ndetermined: 1. By the level of prices, the relatively high or low\nexchange value of commodities estimated in gold; and 2. By the mass\nof commodities circulating at fixed prices, i. e. by the number of\npurchases and sales at given prices.[73] If one quarter of wheat is\nworth 60 shillings, then twice as much gold is required to circulate it\nor to realize its price as would be the case if it were worth only 30\nshillings. To circulate 500 quarters of wheat at 60 shillings, twice\nas much gold is necessary as for the circulation of 250 quarters at\nthe same price. Finally, to circulate 10 quarters at 100 shillings\nonly half as much money is necessary as when circulating 40 quarters\nat 50 shillings. It follows that the quantity of gold required for\ncirculation may fall in spite of a rise in price, if the mass of\ncommodities in circulation declines in a greater ratio than the\nrise of the combined sum of prices; and, inversely, the quantity of\nthe circulating medium may rise in spite of a decline of the mass\nof commodities in circulation, if the sum total of prices rises in\na greater ratio. Thorough and minute English investigations have\ndemonstrated e. g. that in the early stages of a dearth of grain in\nEngland the quantity of money in circulation increases, because the\ntotal price of the diminished supply of grain is greater than the\nformer total price of a larger supply of grain, while the circulation\nof the other commodities continues undisturbed for some time at their\nold prices. At a later stage of the dearth of grain, there is a decline\nin the quantity of circulating money, either because less goods are\nsold at old prices besides grain, or the same quantity of those goods\nis sold at lower prices.\n\nBut, as we have seen, the quantity of money in circulation is\ndetermined not only by the sum total of prices of commodities that are\nto be realized, but also by the rapidity with which money circulates\nor with which it completes this work of realization. If the same\nsovereign makes ten purchases a day, each of a commodity having a\nprice of one sovereign, and thus changes hands ten times, it does as\nmuch work as would be accomplished by ten sovereigns each performing\nbut a single act of circulation a day.[74] Consequently, rapidity of\ngold circulation can make up for its quantity, or the presence of gold\nin the sphere of circulation is determined not only by its presence\nas an equivalent of a commodity side by side with it, but also by\nits participation in the movement of metamorphoses of commodities.\nThe rapidity of the circulation of money, however, can serve as a\nsubstitute for its quantity only to a limited extent, since at any\ngiven moment an endless number of isolated purchases and sales takes\nplaces in different localities.\n\nIf the total price of the commodities in circulation rises, but in\na smaller ratio than the increase in the rapidity of circulation of\nmoney, the volume of the circulating medium will diminish. If on the\ncontrary the rapidity of circulation decreases in a greater ratio\nthan the total price of the commodities in circulation, the volume\nof currency will increase. An increasing volume of currency combined\nwith a general fall of prices or a diminishing volume of currency in\nconnection with a general rise of prices is one of the best known\nphenomena in the history of prices. But the consideration of the\ncauses which bring about a simultaneous rise in the level of prices\nand a still greater rise in the rate of velocity of circulation of\nmoney, or the opposite phenomenon, falls outside of the sphere of\nsimple circulation. By way of illustration, it may be mentioned that\nin periods of prevailing credit, the rapidity of circulation of\nmoney grows faster than the prices of commodities, while in times\nof declining credit the prices of commodities fall slower than the\nrapidity of circulation. The shallow and artificial character of the\nsimple circulation of money is manifested in the fact that all the\nelements which have a determining influence on the volume of currency,\nsuch as the volume of commodities in circulation, prices, the rise or\nfall of prices, the number of simultaneous purchases and sales, the\nrapidity of the circulation of money,\u2015depend on the metamorphic process\nwhich takes place in the world of commodities, and that again depends\non the general character of the methods of production, the size of\npopulation, the relation between city and country, the development of\nthe means of transportation, the greater or less division of labor,\ncredit, etc.; in short, on circumstances all of which lie _outside_ of\nthe sphere of simple circulation of money and are only reflected in it.\n\nThe rapidity of circulation being given, the volume of currency is\nsimply determined by the prices of commodities. Hence, prices are not\nhigh or low, because there is more or less money in circulation, but\non the contrary, there is more or less money in circulation, because\nprices are high or low. This is one of the most important laws, whose\ndemonstration in detail by means of the history of prices constitutes\nperhaps the only merit of the post-Ricardian English Political Economy.\nIf experience shows, that the level of metallic circulation or the mass\nof gold and silver in circulation in a given country is subject to\ntemporary ebbs and tides and very violent ones at times,[75] but on\nthe whole remains stationary for long periods, the deviations forming\nbut small oscillations about the average level, this is explained\nby the antagonistic nature of the circumstances which determine the\nquantity of money in circulation. Their simultaneous modifications\nneutralize their effects and leave everything where it was before.\n\nThe law, that with a given rapidity of circulation of money and a given\ntotal sum of prices of commodities the quantity of the circulating\nmedium is determined, may also be expressed as follows. If the exchange\nvalues of commodities and the average rapidity of their metamorphoses\nare given, the quantity of gold in circulation depends on its own\nvalue. If, therefore, the value of gold, i. e. the labor-time necessary\nfor its production, should rise or fall, the prices of commodities will\nrise or fall in inverse ratio, and corresponding to that rise or fall\nof prices, the rapidity of circulation remaining the same, a larger or\nsmaller quantity of gold would be required to keep the same volume of\ncommodities in circulation. The same change would occur, if the old\nstandard of value were superseded by a more or less valuable metal.\nThus, Holland required from fourteen to fifteen times as much silver as\nit had previously required gold, in order to circulate the same volume\nof commodities, when out of tender regard for the government creditors\nand out of fear of the effects of the discoveries in California and\nAustralia it substituted silver for gold money.\n\nFrom the fact that the quantity of gold in circulation depends on the\nvariable sum total of prices of commodities and the varying rapidity\nof circulation, it follows that the volume of the circulating medium\nmust be capable of contraction and expansion; in short, that according\nto the requirements of circulation, gold must now enter, now leave the\nsphere of circulation in its capacity of a medium of circulation. How\nthe circulation process itself realizes these conditions, we shall see\nlater on.\n\n\nC. COIN AND SYMBOLS OF VALUE.\n\nIn its capacity of a medium of circulation, gold acquires a shape\nof its own, it becomes _coin_. In order to prevent any technical\ndifficulties in the way of its circulation, it is coined according to\nthe standard of the money of account. Gold pieces whose imprints and\nlegends show that they contain certain weights of gold corresponding\nto the reckoning names of money, \u00a3, s., etc., are coins. The\nestablishment of a mint-price, as well as the technical work of\ncoining, are the business of the state. Both as money of account and\nas coin, money acquires a _local and political character_; it speaks\ndifferent languages and wears different national uniforms. The sphere\nin which money circulates as coin, is distinguished as an _internal_\nsphere of circulation which is separated from the _universal_ sphere of\ncirculation in the commodity world by national boundaries.\n\nYet, the only difference between gold bullion and gold coin is that\nbetween coin denomination and weight denomination. What seems to be a\ndifference in name in the latter case appears as a difference in shape\nin the former. Gold coin can be thrown into the melting-pot and thus be\nconverted again into gold _sans phrase_, just as, on the contrary, gold\nbars only have to be sent to the mint to receive the shape of coins.\nThe conversion and reconversion from one form into another appears to\nbe a purely technical matter.\n\nFor 100 pounds or 1200 ounces troy of 22 carat gold one can get\n\u00a34,672-1/2 or gold sovereigns at the English mint; if these sovereigns\nbe put on one side of the weighing scale and one hundred pounds of\ngold bullion on the other, the two will balance each other, which\nproves that the sovereign is nothing but a piece of gold of certain\nweight bearing this name in English coinage and having a shape and\nstamp of its own. The 4,672-1/2 sovereigns are put into circulation\nat different points, and once in its grasp they make a certain number\nof moves per day, some sovereigns more, others less. If the average\nnumber of moves per day of each ounce be ten, the 1200 ounces of gold\nwould realize 12,000 ounces or 46,725 sovereigns as the total price\nof commodities. You may turn and toss an ounce of gold in any way you\nlike, and it will never weigh ten ounces. But here in the process of\ncirculation one ounce practically does weigh ten ounces. The work\nperformed by a coin in the sphere of circulation is equivalent to the\nquantity of gold it contains multiplied by the number of its moves.\nBesides the actual importance which a coin possesses by virtue of its\nbeing an individual piece of gold of a definite weight, it acquires\nan ideal significance due to its function. But whether the sovereign\ncirculates once or ten times, in each particular purchase or sale\nit acts only as one sovereign. It is like a general who by timely\nappearance at ten different points on the battle field does the work\nof ten generals, but still remains the same identical general at each\npoint. The idealization of the means of circulation which is due to the\nsupplanting of quantity by rapidity in money circulation, affects only\nthe function of the coin within the sphere of circulation, but not the\nnature of the individual coin.\n\nThe circulation of money is a movement through the outside world, and\nthe sovereign, though it _non olet_, keeps rather mixed company. In the\ncourse of its friction against all kinds of hands, pouches, pockets,\npurses, money-belts, bags, chests and strong-boxes, the coin rubs off,\nloses one gold atom here and another one there and thus, as it wears\noff in its wanderings over the world, it loses more and more of its\nintrinsic substance. By being used it gets used up. Let us take up a\nsovereign at the moment when its natural, inborn character has been\nslightly affected. A baker, says Dodd,[76] who receives from the bank\nto-day a brand new sovereign and pays it tomorrow to the miller,\ndoes not pay the same veritable sovereign; the latter has become\nlighter than it was at the time he received it. It is clear, says an\nanonymous writer,[77] that in the very nature of things, coins must\ndepreciate one by one as a result of ordinary and unavoidable friction.\nIt is a physical impossibility to entirely exclude light coins from\ncirculation at any time, even for one day. Jacob estimates that of\nthe 380 million pounds sterling which were in existence in Europe in\n1809, nineteen million pounds sterling entirely disappeared by 1829,\ni. e., within a period of twenty years.[78] Thus, while a commodity\nat its first step into the sphere of circulation, falls out of it, a\ncoin, after a couple of steps within that sphere represents more metal\nthan it actually contains. The longer a coin remains in circulation,\nthe rapidity of circulation remaining the same, or the greater its\nrapidity of circulation within the same period of time, the greater\nthe discrepancy between its form as coin and its actual gold or silver\nsubstance. What remains is _magni nominis umbra_. The body of the coin\nbecomes but a shadow. If at first it became heavier through the process\nof circulation, it now becomes lighter on account of it, but continues\nto represent the original quantity of gold in each single purchase or\nsale. The sovereign, as a fictitious sovereign, as fictitious gold,\ncontinues to perform the function of a legitimate coin. While other\nbeings lose their idealism in contact with the outer world, the coin is\nidealized by practice, being gradually transformed into a mere phantom\nof its golden or silver body. This second idealization of metal money\nspringing from the very process of circulation, or from the discrepancy\nbetween its nominal weight and its real weight is exploited in all\nkinds of coin counterfeiting practiced partly by governments, partly by\nprivate adventurers. The entire history of coinage from the beginning\nof the middle ages until late in the eighteenth century is nothing\nbut a history of these twofold and antagonistic adulterations, and\nCustodi\u2019s voluminous collection of writings of Italian economists turns\nmostly about this point.\n\nBut the fictitious importance of gold due to its function, comes\nin conflict with its real substance. One gold coin has lost more,\nanother, less of its metal substance in the course of circulation,\nand one of them is, as a matter of fact, worth more now than the\nother. But since in the discharge of their function of coins they\nare taken at the same value, the sovereign weighing a quarter of an\nounce passing for no more than the sovereign which only stands for a\nquarter of an ounce, the full-weight sovereigns are subjected in the\nhands of unscrupulous owners to surgical operations which produce\nartificially what the circulation process has caused in a natural way\nto their more light-weighted brothers. They are clipped and reduced\nand the superfluous gold fat lands in the melting pot. If 4,672-1/2\ngold sovereigns when put on one side of the weighing scale weigh on an\naverage only 800 ounces instead of 1200, they will buy when brought\nto the gold market only 800 ounces of gold; that is, the market price\nof gold would rise above its mint price. Every coin, even if of full\nweight would pass in its mint form for less than in bullion form. The\nfull weight sovereigns would be reconverted into bullion, a form in\nwhich a greater quantity of gold is always worth more than a smaller\nquantity. As soon as this decline of metallic weight would affect a\nsufficiently large number of sovereigns to bring about a permanent\nrise of the market price of gold above its mint price, the reckoning\nnames of the coins, though remaining the same, would begin to denote a\nsmaller quantity of gold. That is to say, the standard of money would\nchange and gold would be coined in the future according to this new\nstandard. By virtue of its idealization as a medium of circulation,\ngold would react upon and change the legally determined ratios under\nwhich it acted as the standard of price. The same revolution would\nbe repeated after a certain length of time and thus gold would be\nsubject to constant change both as a standard of price and as a\nmedium of circulation, a change under one of these forms leading to a\nchange under the other and vice versa. This explains the phenomenon\nmentioned above, namely that in the history of all modern nations\nthe same money-name stands for a constantly diminishing quantity of\nmetal. The contradiction between gold as coin and gold as standard of\nprice becomes also one between gold as coin and gold as the universal\nequivalent; in the latter capacity it circulates not only within the\nlimits of national boundaries, but in the world market. As a measure of\nvalue gold was always of full weight, because it served only as ideal\ngold. In its capacity of equivalent in the isolated transaction C\u2015M it\npasses at once from a state of motion to a state of rest; but in its\ncapacity of coin its natural substance comes in constant conflict with\nits function. The transformation of the gold sovereign into fictitious\ngold can not be wholly avoided, but legislation seeks to prevent its\nunlimited circulation as coin by prescribing its withdrawal from\ncirculation as soon as its shortage of metallic substance reaches a\ncertain degree. According to the English law, e. g., a sovereign which\nlacks more than 0.747 grains of its weight ceases to be legal tender.\nThe Bank of England which weighed forty-eight million gold sovereigns\nin the short period between 1844 and 1848, possesses in Mr. Cotton\u2019s\ngold weighing scale a machine which not only detects a difference of\n1-100 part of a grain between two sovereigns, but like a sensible\nbeing, immediately throws out the light-weight coin on a board where\nit lands under another machine which cuts it up with oriental cruelty.\n\nThat being the case, gold coins could not circulate at all were not\ntheir circulation confined to definite spheres in which they do not\nwear off so rapidly. In so far as a gold coin weighing only one-fifth\nof an ounce passes in circulation for a quarter of an ounce of gold,\nit is practically merely a sign or a symbol for one-twentieth of an\nounce of gold, and in that way all gold coins are transformed by the\nvery process of circulation into more or less of a mere sign or symbol\nof their substance. But no thing can be its own symbol. Painted grapes\nare no symbol of real grapes, they are imaginary grapes. Still less can\na light-weight sovereign be a symbol of a full-weighted one, just as\na lean horse can not serve as a symbol of a fat one. Since gold thus\nbecomes a symbol of its own self, but at the same time can not serve in\nthat capacity, it receives a symbolical, silver or copper substitute in\nthose spheres of circulation in which it is most subject to wear and\ntear, namely where purchases and sales are constantly taking place on\nthe smallest scale. In these spheres, even if not the same identical\ncoins, still a certain part of the entire supply of gold money would\nconstantly circulate as coin. To that extent gold is substituted by\nsilver or copper tokens. Thus, while only a specific commodity can\nperform in a given country the function of a measure of value and\ntherefore of money, different commodities can serve as coin side by\nside with gold. These subsidiary mediums of circulation, such as silver\nor copper coins, represent definite fractions of a gold coin within\nthe sphere of circulation. Their own silver or copper weight is,\ntherefore, not determined by the proportions of the respective values\nof silver and copper to that of gold, but is arbitrarily fixed by law.\nThey may be issued only in such quantities in which the diminutive\nfractions of gold coin which they represent would constantly circulate\neither for purposes of change for gold coins of higher denominations,\nor for realizing equally small prices of commodities. In retail trade\nsilver and copper tokens belong to distinct spheres of circulation. In\nthe nature of things, the rapidity of their circulation is in inverse\nratio to the price which they realize in each separate purchase or\nsale, or to the size of the fraction of gold coin which they represent.\nIf we consider how immense the volume of the daily retail trade in a\ncountry like England is, we will understand from the comparatively\ninsignificant proportions of its combined volume how rapid and steady\nthe circulation of the subsidiary coin must be. From a parliamentary\nreport of recent date we see, e. g., that in 1857 the English mint\ncoined \u00a34,859,000 worth of gold, \u00a3733,000 of silver nominal value which\ncontained metal actually worth \u00a3363,000. The total amount of gold\ncoined in the ten years ending December 31, 1857, was \u00a355,239,000, and\nof silver only \u00a32,434,000. The supply of copper coin in 1857 amounted\nonly to \u00a36,720 nominal value containing \u00a33,492 worth of copper; of this\n\u00a33,136 was in pennies, \u00a32,464 in half-pennies, and \u00a31,120 in farthings.\nThe total value of copper coined in the ten years was \u00a3141,477 nominal,\nthe metallic value being \u00a373,503. Just as gold coin is prevented from\npermanently retaining its function of coin by the legal provision of\nthe loss of weight which demonetizes it, so are the silver and copper\ntokens prevented from passing from their spheres of circulation into\nthat of gold coin and acquiring the character of money by the provision\nof the maximum amount for which they are legal tender. In England e.\ng. copper is legal tender only to the amount of six pence and silver\nup to forty shillings. If silver and copper tokens were to be issued\nin greater quantities than the requirements of their spheres of\ncirculation call for, prices of commodities would not rise as a result,\nbut the accumulation of these tokens in the hands of retail dealers\nwould reach such an extent that they would be finally compelled to sell\nthem as metal. Thus in 1798 English copper coins, issued by private\nindividuals, accumulated in the hands of small traders to the amount\nof \u00a320,350 which they tried in vain to put again in circulation, being\nfinally compelled to throw them as metal on the copper market.[79]\n\nThe silver and copper tokens which represent gold coin in certain\nspheres of circulation in the interior of the country, contain a\ndefinite quantity of silver and copper prescribed by law, but after\nthey get into circulation, they wear off like gold coins and become\neven more rapidly mere phantoms, according to the rapidity and\nsteadiness of their circulation. To draw again a line of demonetization\nbeyond which silver and copper tokens would lose their character of\ncoins, they would have to be replaced in turn within certain spheres\nof their own circulation by some other symbolic money, say iron and\nlead, and such representation of one kind of symbolic money by another\nkind would form an endless process. In all countries with a well\ndeveloped circulation the very requirements of money circulation make\nit necessary that the character of silver and copper tokens as money be\nmade independent of any loss of weight in those coins. Thus, as it was\nin the nature of things, it appears that they serve as symbols of gold\ncoin not because they are symbols made of silver or copper, not because\nthey have certain value, but only in so far as they have no value.\n\nRelatively worthless things, such as _paper_, can consequently perform\nthe function of symbols of gold money. That subsidiary currency\nconsists of metal tokens, such as silver, copper, etc., is mainly due\nto the fact that in most countries the less valuable metals such as\nsilver in England, copper in ancient Rome, Sweden, Scotland, etc.,\nhad circulated as money before they were degraded by the process of\ncirculation to the rank of small change and replaced by a more precious\nmetal. Besides, it is natural that the money symbol which grows\ndirectly out of metallic circulation, should itself be a metal. Just\nas that portion of gold which would always have to circulate as small\nchange, is replaced by metal tokens; so can the other portion of gold\nwhich is constantly absorbed as coin by circulation in the interior of\nthe country and, therefore, must continually circulate, be replaced\nwith worthless tokens. The level below which the mass of circulating\ncoin never sinks is determined in each country by experience. Thus,\nthe originally imperceptible difference between the nominal weight and\nthe metallic weight of a metal coin can grow apace until it reaches the\npoint of absolute separation. The mint name of money parts company with\nits substance and exists outside of it in worthless slips of paper.\nJust as the exchange value of commodities is crystallized by their\nprocess of exchange into gold money, so is gold money sublimated in\nits currency into its own symbol first in the form of worn coin, then\nin the form of subsidiary metal currency, and finally in the form of a\nworthless token, paper, mere _sign of value_.\n\nGold coin has produced its substitutes, first metallic and then paper,\nonly because in spite of its loss of metallic weight it continued to\nperform the function of coin. It did not circulate because of its wear\nand tear; on the contrary, it wore out to a symbol because it continued\nto circulate. Only in so far as gold money becomes simply a token of\nits own value in the process of circulation, can mere tokens of value\ntake its place.\n\nIn so far as the movement C\u2015M\u2015C represents a dynamic unity of two\nprocesses C\u2015M and M\u2015C which pass directly one into the other, or in\nso far as a commodity passes through the complete process of its\nmetamorphosis, it express its exchange value in price and in money\nonly to discard that form at once and to become again a commodity or,\nrather, a use-value. That is to say, it develops _only an apparent\nassertion of the independence_ of its exchange value. On the other\nhand, we have seen that gold, in so far as it performs the function\nof coin or in so far as it continually circulates, actually forms\nonly a connecting link between the metamorphoses of commodities and\nconstitutes _but their transitory money form_; furthermore, that it\nrealizes the price of one set of commodities only in order to realize\nthat of another, but in no case does it constitute a stable form of\nexchange value or appear itself as a commodity in a state of rest. The\nreality which the exchange value of commodities acquires in the process\nand which is represented by gold in its circulation, is the reality of\nan electric spark. Although real gold, it plays the part of fictitious\ngold, and can, therefore, be replaced in this function by a token of\nitself.\n\nThe token of value, say paper, which plays the part of coin, is the\ntoken of a quantity of gold expressed in its currency name, i. e., it\nis a gold token. Just as a certain quantity of gold does not in itself\nexpress a value ratio, so is that true of the token which takes its\nplace. In so far as a certain quantity of gold, as embodied labor-time,\nhas a value of a certain magnitude, the gold token represents value.\nBut the magnitude of the value which it represents depends all the\ntime on the value of the quantity of gold for which it stands. As\nregards commodities the token of value expresses _the reality of their\nprice_, it is _signum pretii_ and sign of their value only because\ntheir value is expressed in their price. In the process C\u2015M\u2015C, in so\nfar as it represents the dynamic unity or direct alternation of the\ntwo metamorphoses\u2015and that is the aspect it assumes in the sphere of\ncirculation in which the token of value discharges its function\u2015the\nexchange value of commodities acquires in price only an ideal\nexpression and in money only an imaginary symbolic existence. Exchange\nvalue thus acquires _only_ an imaginary though material expression,\nbut it has no real existence except in the commodities themselves, in\nso far as a certain quantity of labor-time is embodied in them. It\n_appears_, therefore, that the token of value represents _directly_\nthe value of commodities, by figuring not as a token of gold but as\na token of the value which exists in the commodity alone and is only\nexpressed in price. But it is a false appearance. The token of value is\ndirectly only _a token of price_, i. e., a _token of gold_, and only\nindirectly a token of value of a commodity. Unlike Peter Shlemihl, gold\nhas not sold its shadow, but buys with its shadow. The token of value\noperates only in so far as it represents the price of one commodity\nas against that of another within the sphere of circulation, or in so\nfar as it _represents gold_ to every owner of commodities. A certain\ncomparatively worthless object such as a piece of leather, a slip of\npaper, etc., becomes by force of custom a token of money material, but\nmaintains its existence in that capacity only so long as its character\nas a symbol of money is guaranteed by the general acquiescence of\nthe owners of commodities, i. e., so long as it enjoys a legally\nestablished conventional existence and compulsory circulation. Paper\nmoney issued by the state and circulating as legal tender is the\nperfected form of the token of value, and the only form of paper money,\nwhich has its immediate origin in metallic circulation or even in the\nsimple circulation of commodities. _Credit money_ belongs to a higher\nsphere of the social process of production and is governed by entirely\ndifferent laws. Symbolic paper money does not in fact, differ in the\nleast from subsidiary metal coin, except that it reaches wider spheres\nof circulation. We have seen that the mere technical development of the\nstandard of price or of the mint price and later the shaping of gold\nbullion into coin have called forth the interference of the state; this\ncircumstance brought about a visible separation of national circulation\nfrom the world circulation of commodities: this separation is completed\nby the evolution of coin into a token of value. As a mere medium of\ncirculation money can assume an independent existence only within the\nsphere of national circulation.[80]\n\nOur presentation has shown that the coin form of gold as a token of\nvalue differentiated from the gold substance itself, has its direct\norigin in the process of circulation and not in any agreement or state\ninterference. Russia offers a striking example of the natural origin of\nthe token of value. At the time when hides and furs played there the\npart of money, the conflict between the perishable and bulky nature of\nthe material and its function as a medium of circulation resulted in\nthe custom of replacing it by small pieces of stamped leather which\nthus became a kind of draft payable in hides and furs. Later on they\nbecame under the name of copecs mere tokens for fractions of the silver\nrouble and remained in use in some parts until 1700, when Peter the\nGreat ordered their withdrawal in exchange for small copper coins\nissued by the state. Ancient writers who could observe the phenomena\nof exclusively metallic circulation, already took the view of coin\nas a symbol or token of value. That is true both of _Plato_[81] and\n_Aristotle_.[82] In countries where credit is not developed, as e. g.\nin China, legal tender paper money is found at an early date[83]. Early\nadvocates of paper money expressly point out the fact that metallic\ncoin is transformed into a token of value in the very process of\ncirculation. So Benjamin Franklin[84] and Bishop Berkeley.[85]\n\nHow many reams of paper cut up into bills can circulate as money? Put\nin that way, the question would be absurd. The worthless tokens are\nsigns of value only in so far as they represent gold within the sphere\nof circulation and they represent it only to the extent to which it\nwould itself be absorbed as coin by the process of circulation; this\nquantity is determined by its own value, the exchange values of the\ncommodities and the rapidity of their metamorphoses being given. Bills\nof a denomination of \u00a35 could circulate in a quantity five times\nless than those of \u00a31 denomination, and if all payments were made in\nshilling bills, then twenty times as many shilling bills would have to\nbe in circulation as are one pound bills. If the gold currency were\nrepresented by bills of different denominations, e. g. five pound,\none pound and ten shilling bills, then the quantity of these different\ntokens of value would be determined not only by the quantity of gold\nnecessary for circulation as a whole, but also by that required in the\nsphere of circulation of each kind of bills. If fourteen million pounds\nsterling (this is the provision of the English Bank Law, not for the\nentire currency but only for credit money) were the level below which\nthe circulation of a country never sank, then fourteen million paper\nbills, each a token of value of one pound, could circulate. If the\nvalue of gold fell or rose because the labor-time necessary for its\nproduction had fallen or risen, then, the exchange value of the same\nvolume of commodities remaining the same, the number of one pound bills\nin circulation would rise or fall in inverse ratio to the change in the\nvalue of gold. If gold were replaced by silver as a measure of value,\nthe ratio of the respective values of silver and gold being 1:15, and\nif each bill were to represent now the same quantity of silver as it\nrepresented gold before, then there would be 210 million one pound\nbills in circulation instead of the previous fourteen million. The\nnumber of paper bills is thus determined by the quantity of gold money\nwhich they represent in circulation, and since they are tokens of value\nonly in so far as they represent it, their value is simply determined\nby their _quantity_. Thus, while the quantity of gold in circulation\nis determined by the prices of commodities, the value of the paper\nbills in circulation, on the contrary, depends exclusively on their own\nquantity.\n\nThe interference of the state which issues paper money as legal\ntender\u2015and we are treating of paper money of that kind only\u2015seems to\ndo away with the economic law. The state which in its mint price gave\na certain name to a piece of gold of certain weight, and in the act of\ncoinage only impressed its stamp on gold, seems now to turn paper into\ngold by the magic of its stamp. Since paper bills are legal tender,\nno one can prevent the state from forcing as large a quantity of them\nas it desires into circulation and from impressing upon it any coin\ndenomination, such as \u00a31, \u00a35, \u00a320. The bills which have once gotten\ninto circulation can not be removed, since on the one hand their course\nis hemmed in by the frontier posts of the country and on the other\nthey lose all value, use-value, as well as exchange-value, outside\nof circulation. Take away from them their function and they become\nworthless rags of paper. Yet this power of the state is a mere fiction.\nIt may throw into circulation any desired quantity of paper bills of\nwhatever denomination, but with this mechanical act its control ceases.\nOnce in the grip of circulation and the token of value or paper money\nbecomes subject to its intrinsic laws.\n\nIf fourteen million pounds sterling were the quantity of gold\nrequired for the circulation of commodities and if the state were to\nput into circulation two hundred and ten million bills each of the\ndenomination of \u00a31, then these two hundred and ten millions would\nbecome the representatives of gold to the amount of fourteen million\npounds sterling. It would be the same as if the state were to make\nthe one pound bills represent a fifteen times less valuable metal or\na fifteen times smaller weight of gold. Nothing would be changed but\nthe nomenclature of the standard of price, which by its very nature is\nconventional, no matter whether such change takes place as a direct\nresult of a change of the mint standard or indirectly owing to an\nincrease of paper bills to an extent required by a new lower standard.\nSince the name \u00a3 would stand now for a fifteen times smaller quantity\nof gold, the prices of all commodities would increase fifteen times and\ntwo hundred and ten million one pound bills would now be actually as\nnecessary as fourteen million had been before. To the same extent to\nwhich the combined quantity of tokens of value would increase now, the\nquantity of gold which each of them represents would decrease. The rise\nof prices would constitute but a reaction on the part of the process of\ncirculation which forcibly equates the tokens of value to the quantity\nof gold which they are supposed to replace.\n\nIn the history of the debasement of money in England and France by\ntheir governments, we find repeatedly that prices had not risen in the\nsame proportion in which the silver coinage had been debased. That was\nsimply due to the fact that the proportion in which the currency was\nincreased did not correspond to the proportion in which it had been\ndebased; that is to say, because an inadequate quantity of coins of\nthe poorer metallic composition was issued, if the exchange values\nof commodities were to be estimated in the future in the new coin as\na measure of value and be realized in coins corresponding to this\nsmaller unit of measure. This solves the difficulty left unsettled in\nthe controversy between Locke and Lowndes. The ratio which a token\nof value, whether made of paper or of debased gold or silver, bears\nto certain weights of gold or silver estimated according to the mint\nprice, depends not on its own composition but on the quantity in which\nit is found in circulation. The difficulty in understanding this is\ndue to the fact that money in its two functions of a measure of value\nand a medium of circulation is subject to two not only opposite but\napparently contradictory laws corresponding to the difference in the\ntwo functions. In the discharge of its function of a measure of value\nwhere money serves merely as money of account and gold only as ideal\ngold, everything depends on the natural substance of money. Estimated\nin silver or expressed in silver prices exchange values are naturally\nestimated quite differently than when measured in gold or as gold\nprices. On the contrary, in its function of a medium of circulation,\nwhere gold is not only imagined but is actually present side by side\nwith other commodities, its substance is immaterial and everything\ndepends on its quantity. For the unit of measure the determining factor\nis whether it consists of a pound of gold, silver or copper; while in\nthe case of coin, no matter what its own composition is, it will become\nthe embodiment of each of these units of measure in accordance with its\nquantity. But it goes against common sense that in the case of mere\nimaginary money everything should depend on its material substance,\nwhile in that of the palpably present coin all should be determined by\nan ideal ratio of numbers.\n\nThe rise or fall of prices of commodities following a rise or fall\nof the quantity of paper notes\u2015the latter only where paper currency\nconstitutes the exclusive medium of circulation\u2015is thus nothing but\nan assertion through the process of circulation of a law mechanically\nviolated from without; namely, that the quantity of gold in circulation\nis determined by the prices of commodities, and the quantity of tokens\nof value in circulation is determined by the quantity of gold coin\nwhich it represents. For that reason any desired number of paper notes\nwill be absorbed and equally digested by the process of circulation,\nbecause the token of value, no matter with what gold title it may enter\ncirculation, will be compressed within the latter to a token of that\nquantity of gold which could actually circulate in its place.\n\nIn the case of the circulation of tokens of value all laws pertaining\nto the circulation of real money appear to be reversed and standing\non their heads. While gold circulates because it has value, paper has\nvalue because it circulates. While with a given exchange value of\ncommodities, the quantity of gold in circulation depends on its own\nvalue, the value of paper depends on its own quantity in circulation.\nWhile the quantity of gold in circulation rises or falls with the\nrise or fall of prices of commodities, the prices of commodities\nseem to rise or fall with the change in the quantity of paper in\ncirculation. While the circulation of commodities can absorb only a\ndefinite quantity of gold coin and as a result of that the alternating\ncontraction and expansion of the currency appears as a necessary law,\npaper money seems to enter circulation in any desired amount. While\nthe state is guilty of debasing gold and silver coin and of disturbing\ntheir function of a medium of circulation, if it turns out a coin,\nonly 1-100 of a grain below its nominal weight; it performs a perfectly\nproper operation by issuing absolutely worthless paper notes which\ncontain nothing of the metal except its mint denomination. While gold\ncoin apparently represents the value of commodities only in so far as\nthat value is itself estimated in gold or is expressed in price, the\ntoken of value seems to represent directly the value of commodities.\nIt is, therefore, clear why students who examined one-sidedly the\nphenomena of circulation of money by confining their observations to\nthe circulation of legal tender paper money, should have failed to\ngrasp the intrinsic laws governing the circulation of money. As a\nmatter of fact, these laws appear not only reversed but extinct in the\ncirculation of tokens of value, since paper currency, if issued in\nthe right quantity, goes through certain movements which are not in\nits nature as a token of value, while its proper movement instead of\ngrowing directly out of the metamorphosis of commodities, springs from\nthe violation of its proper proportion to gold.\n\n\n3. MONEY.\n\nMoney as distinguished from coin, the result of the circulation process\nC\u2015M\u2015C, forms the starting point of the circulation process M\u2015C\u2015M, i.\ne. the exchange of money for commodity in order to exchange commodity\nfor money. In the form C\u2015M\u2015C, commodity forms the starting and final\npoints of the movement; in the form M\u2015C\u2015M, money plays that part. In\nthe former case money is the medium of exchange of commodities, in\nthe latter the commodity helps money to become money. Money which\nappears merely as a means of circulation in the first form becomes\nan end in the second form; while commodity which appeared first as\nthe end, now becomes but a means. Since money is itself the result of\ncirculation C\u2015M\u2015C, the result of circulation appears at the same time\nas its starting point in the form M\u2015C\u2015M. While in the case of C\u2015M\u2015C the\ninterchange of matter constituted the real import of the process, the\nform of the commodity resulting from this first process constitutes the\nimport of the second process M\u2015C\u2015M.\n\nIn the form C\u2015M\u2015C the two extreme members are commodities of the same\nvalue, but qualitatively different use-values. Their mutual exchange\nC\u2015C constitutes actual interchange of matter. In the form M\u2015C\u2015M the\ntwo extremes are gold and at the same time gold of equal value. To\nexchange gold for a commodity in order to exchange the commodity for\ngold, or if we consider the final result M\u2015M, to exchange gold for\ngold, seems absurd. But if we translate the formula M\u2015C\u2015M into the\nexpression: _to buy_ in order _to sell_, which means nothing but to\nexchange gold for gold through an intervening movement, we recognize\nat once the prevailing form of capitalist production. In actual\npractice, however, people do not buy in order to sell, but they buy\ncheap in order to sell dear. Money is exchanged for a commodity in\norder to exchange the same commodity for a larger amount of money, so\nthat the extremes M, M are, if not qualitatively, then quantitatively\ndifferent. Such a quantitative difference presupposes the _exchange of\nnon-equivalents_, yet commodity and money as such are only opposite\nforms of the same commodity, i. e. they are different forms of the same\nmagnitude of value. The circuit M\u2015C\u2015M thus conceals under the forms\nof money and commodity more highly developed relations of production,\nand is but a reflection within the sphere of simple circulation of a\nmovement of a more advanced character. Money, as distinguished from the\nmedium of circulation, must therefore be developed from the direct form\nof circulation of commodities, C\u2015M\u2015C.\n\nGold, i. e., the specific commodity which serves as a measure of\nvalue and a medium of circulation, becomes money without any further\nassistance on the part of society. In England, where silver is neither\nthe measure of value nor the prevailing medium of circulation, it\ndoes not become money, just as gold in Holland, as soon as it had been\ndethroned as a measure of value, ceased to be money. A commodity thus\nbecomes money only in its combined capacity of a measure of value\nand medium of circulation; or, the unity of the measure of value and\nmedium of circulation is money. As such a unity, however, gold has a\nseparate existence independent of its existence in the two functions.\nAs a measure of value it is only ideal money and ideal gold; as a mere\nmedium of circulation it is symbolic money and symbolic gold; but in\nits plain metallic bodily form gold is money or money is real gold.\n\nLet us now consider for a moment the commodity gold when it is in a\nstate of rest, and plays the part of money in its relation to other\ncommodities. All commodities represent in their prices a certain\nquantity of gold, that is to say, they are merely imaginary gold or\nimaginary money, representatives of gold, just as, on the other hand,\nmoney in the form of a token of value appeared as a mere representative\nof prices of commodities.[86] Since all commodities are thus but\nimaginary money, money is the only real commodity. Contrary to\ncommodities, which only represent the independently existing exchange\nvalue, i. e., universal social labor, or abstract wealth, gold is the\n_material form of abstract wealth_. Through its use-value, every\ncommodity, by its relation to some particular want, expresses only one\naspect of material wealth, but one side of wealth. Money, however,\nsatisfies every want since it can be directly converted into the object\nof any want. Its own use-value is realized in the endless series of\nuse-values which form its equivalents. In its virgin metallic state\nit holds locked up all the material wealth which lies unfolded in the\nworld of commodities. Thus, while commodities represent in their prices\nthe universal equivalent or abstract wealth, viz., gold, the latter\nrepresents in its use-value the use-values of all commodities. Gold\nis, therefore, _the bodily representative of material wealth_. It is\nthe \u201cprecis de toutes les choses\u201d (Boisguillebert), the compendium\nof the wealth of society. At one and the same time, it is the direct\nincarnation of universal labor in its form, and the aggregate\nof all concrete labor in its substance. It is universal wealth\nindividualized.[87] As a medium of circulation it underwent all kinds\nof injury, was clipped, and even reduced to the condition of a mere\nsymbolic paper rag. As money it is restored to its golden glory.[88]\nFrom a serve it becomes a lord. From a mere understrapper it rises to\nthe position of Lord of commodities.[89]\n\n\na. HOARDING.\n\nGold separates itself as money from the process of circulation whenever\na commodity interrupts the process of its metamorphosis and remains\nin its form of a gold chrysalis. This occurs every time a sale is not\nimmediately followed by purchase. The independent isolation of gold\nas money is, thus, a material expression of the disintegration of the\nprocess of circulation, or of the metamorphosis of commodities, into\ntwo separate acts independent of each other. The coin itself becomes\nmoney as soon as its course is interrupted. In the hands of the seller\nwho takes it in exchange for his commodity, it is money and not coin;\nas soon as it passes out of his hands it is again coin. Everybody is\na seller of the one commodity which he produces, but a buyer of all\nother commodities which he needs for his existence in society. While\nhis selling is determined by the labor-time required for the production\nof his commodity, his buying is determined by the continual renewal\nof the wants of life. In order to be able to buy without having sold\nanything, he must sell without buying. In fact, the circulation process\nC\u2015M\u2015C is a dynamic unity of sale and purchase only in so far as it\nconstitutes at the same time the constant process of its separation.\nIn order that money should flow continuously as coin, coin must\nconstantly coagulate as money. The continuous flow of coin depends on\nits constant accumulations in the form of reserve-funds of coin which\nspring up throughout the sphere of circulation and form sources of\nsupply; the formation, distribution, disappearance, and reformation of\nthese reserve funds is constantly changing, their existence constantly\ndisappears, their disappearance constantly exists. Adam Smith expressed\nthis never-ceasing transformation of coin into money and of money\ninto coin by saying that every owner of commodities must always keep\nin supply besides the particular commodity which he sells, a certain\nquantity of the universal commodity with which he buys. We saw, that\nin the process C\u2015M\u2015C the second member M\u2015C splits up into a series of\npurchases which do not take place at once, but at intervals of time,\nso that one part of M circulates as money while the other rests as\nmoney. Money is in that case only _suspended coin_ and the separate\nparts of the circulating mass of coins appear now in one form, now in\nanother, constantly changing. This first transformation of the medium\nof circulation into money represents, therefore, but a technical aspect\nof money circulation.[90]\n\nThe primitive form of wealth is that of a surplus or superabundance,\ni. e., that part of the products which are not immediately required as\nuse-values, or the possession of such products whose use-value falls\noutside the sphere of mere necessaries. When considering the transition\nof commodity into money we saw that this surplus or superabundance of\nproducts constitutes the proper sphere of exchange at a low stage of\ndevelopment of production. Superfluous products become exchangeable\nproducts or commodities. The adequate form of this surplus is gold and\nsilver, the first form in which wealth as abstract social wealth is\npreserved. Commodities can not only be stored up in the form of gold\nand silver, i. e., in the substance of money, but gold and silver are\nwealth in preserved form. While every use-value performs its service\nas such by being consumed, i. e., destroyed, the use-value of gold as\nmoney consists in its being the bearer of exchange value, in embodying\nuniversal labor-time as a shapeless raw material. As shapeless metal,\nexchange value possesses an indestructible form. Gold or silver thus\nbrought to rest as money, forms a _hoard_. Among nations with an\nexclusively metallic circulation, such as the ancients were, hoarding\nis practiced universally from the individual to the state which guards\nits state hoard. In more ancient times, in Asia and Egypt, these\nhoards under the protection of kings and priests appear rather as a\nmark of their power. In Greece and Rome it was part of public policy\nto accumulate state hoards as the safest and most available form of\nsurplus. The quick transfer of such hoards by conquerors from one\ncountry to another and the sudden outpour of a part of these hoards\ninto the general circulation constitute a peculiar feature of ancient\neconomy.\n\nAs the incarnation of labor-time gold is a pledge for its own value,\nand since it is the embodiment of _universal_ labor-time, the process\nof circulation pledges gold its constant r\u00f4le of exchange value.\nOwing to the mere fact that the owner of commodities can retain his\ncommodity in the form of exchange value or retain the exchange-value as\na commodity, the exchange of commodities for the purpose of retaining\nthem in the transformed shape of gold becomes circulation\u2019s own motive.\nThe metamorphosis C\u2015M takes place for the sake of the metamorphosis,\ni. e., in order to transform it from particular natural wealth into\nuniversal social wealth. Instead of change of matter, change of form\nbecomes its own purpose. From a mere form of the movement exchange\nvalue becomes its substance. Commodity is preserved as wealth, as\ncommodity, only in so far as it keeps within the sphere of circulation,\nand it keeps in that fluent state only in so far as it solidifies in\nthe form of silver and gold. It remains in the stream of circulation as\nits crystal. At the same time gold and silver themselves become money\nonly in so far as they do not play the part of mediums of circulation.\n_As non-mediums of circulation they become money._ The withdrawal of a\ncommodity from circulation in the form of gold is therefore the only\nmeans of keeping it constantly within the sphere of circulation.\n\nThe owner of commodities can receive money from circulation only\nin return for a commodity which he gives to it. Constant selling,\ncontinual throwing of commodities into circulation is, therefore, the\nfirst condition of hoarding from the standpoint of the circulation\nof commodities. On the other hand, money as a medium of circulation\nconstantly disappears in the very process of circulation by being\nrealized all the time in use-values and becoming dissolved in fleeting\npleasures. It must, therefore, be taken out of the all-consuming\nstream of circulation or the commodity must be kept up in its first\nmetamorphosis, so that money is prevented from performing its function\nof a means of purchase. The commodity owner who has now become a\nhoarder, must sell as much as possible and buy as little as possible,\nas old Cato had taught: \u201cpatrem familias vendacem, non emacem esse.\u201d\nWhile industry constitutes the positive condition of hoarding, saving\nforms the negative one. The less the equivalent of a commodity is\nwithdrawn from circulation in the form of particular commodities\nor use-values, the more it is withdrawn in the shape of money or\nexchange value.[91] The acquisition of wealth in its universal form\nthus requires abstinence from wealth in its material reality. Thus\nthe stimulating impulse for hoarding is _greed_, the objects of which\nare not commodities as use-values, but exchange value as commodity.\nIn order to get possession of the surplus in its universal form, the\nparticular wants must be treated as so much luxury and excess. Thus\nthe Cortes presented a report to Philipp II., in 1593, in which, among\nother things, was said: \u201cThe Cortes of Valladolid in the year 1586\npetitioned Your Majesty not to allow the further importation into the\nKingdom of candles, glassware, jewelry, knives and similar articles;\nthese things useless to human life come from abroad to be exchanged\nfor gold, as though the Spaniards were Indians.\u201d The hoarder despises\nthe worldly, temporary and transitory enjoyments in his hunt after\nthe eternal treasure, which neither moth nor rust can eat, which is\nperfectly celestial and earthly at the same time. \u201cThe general remote\ncause of our want of money is the great excess of this Kingdom in\nconsuming the Commodities of Forreine Countries, which prove to us\ndiscommodities, in hindering us of so much treasure, which otherwise\nwould bee brought in, in lieu of those toyes.... Wee ... consume\namongst us, that great abundance of the Wines of Spaine, of France, of\nthe Rhene, of the Levant ... the Raisins of Spaine, the Corints of the\nLevant, the Lawnes and Cambricks of Hannaults ... the Silkes of Italie,\nthe Sugers and Tobaco of the West Indies, the Spices of the East\nIndies: All which are of no necessetie unto us and yet are bought with\nready mony.\u201d[92]\n\nIn the form of gold and silver, wealth is indestructible, both\nbecause exchange value is preserved in the shape of indestructible\nmetal, and, especially, because gold and silver are prevented from\nbecoming, as mediums of circulation, mere vanishing money forms of\nthe commodity. The destructible substance is thus sacrificed for the\nindestructible form. \u201cIf money be taken (by means of taxation) from\nhim, who spendeth the same ... upon eating and drinking, or any other\nperishing Commodity; and the same transferred to one that bestoweth it\non Cloaths; I say that even in this case the Commonwealth hath some\nlittle advantage; because Cloaths do not altogether perish so soon as\nMeats and Drinks. But if the same be spent in Furniture of Houses,\nthe advantage is yet a little more; if in Building of Houses, yet\nmore; if in improving of Lands, working of Mines, Fishing, etc., yet\nmore; but most of all, in bringing Gold and Silver into the Country;\nbecause those things are not only not perishable, but are esteemed\nfor Wealth at all times and everywhere; whereas other Commodities\nwhich are perishable, or whose value depends upon the Fashion; or\nwhich are contingently scarce and plentiful, are Wealth, but pro hic\net nunc.\u201d[93] The withdrawal of money from the stream of circulation\nand the saving of it from the social interchange of matter reaches\nits extreme form in the _burying_ of money, so that social wealth is\nbrought as an underground indestructible treasure into a perfectly\nsecret private relation with the owner of commodities. Dr. Bernier, who\nstayed for some time at the court of Aurenzeb at Delhi, tells us how\nthe merchants, especially the Mohammedan heathens, who control nearly\nall the trade and all money, secretly bury their money deep in the\nground, \u201cbeing imbued with the faith that the gold and silver which\nthey put away during their lives will serve them after death in the\nnext world.\u201d[94] However, in so far as the asceticism of the hoarder is\ncombined with active industry, he is rather a Protestant by religion\nand still more a Puritan. \u201cIt can not be denied that buying and selling\nare necessary, that one can not get along without them, and that one\ncan buy like a Christian especially things that serve in need and in\nhonor; for the patriarchs had also bought and sold cattle, wool, grain,\nbutter, milk and other goods. They are gifts of God which He gives out\nof the earth and divides among men. But foreign trade which brings\nover from Calcutta, India and other such places commodities consisting\nof costly silks, and gold ware, and spices which only serve for luxury\nand are of no use, draining the land and the people of their money,\nshould not be tolerated if we but had a government of princes. Yet I\ndo not wish to write of that now, for I believe it will have to stop\nof itself, when we have no money any longer; and so will luxury and\ngluttony; for no writing or teaching will help until want and poverty\nwill force us.\u201d[95]\n\nIn times of disturbance in the process of the social interchange of\nmatter, the burying of money takes place even in bourgeois societies\nwhich are at a high stage of development. The social bond in its\ncompact form is being saved from the social movement (with the owner\nof commodities this bond is the commodity and the adequate form of the\ncommodity is money). The social _nervus rerum_ is buried next to the\nbody whose nerve it is.\n\nThe hoard would now become mere useless metal, its money soul would\ndepart from it and it would remain as the burnt ashes of circulation,\nas its caput mortuum, if it did not constantly tend to get back into\ncirculation. Money, or crystallized exchange value, is, according to\nits nature, the form of abstract wealth; but, on the other hand, any\ngiven sum of money is a quantitatively limited magnitude of value.\nThe quantitative limitation of exchange value is in contradiction\nwith its qualitative universality and the hoarder conceives in it a\nbarrier which turns, in fact, into a qualitative barrier as well and\nmakes of the hoard merely a limited representative of material wealth.\nMoney, in its capacity of a universal equivalent, appears, as we have\nseen, as a member of an equation, the other member of which consists\nof an endless series of commodities. It depends on the magnitude of\nthe exchange value to what extent money will be realized in such an\nendless series, i. e., to what degree it corresponds to the conception\nof it as an exchange value. The automatic movement of exchange value\nas exchange value can only tend to its passing beyond its quantitative\nlimits. But by exceeding the quantitative limits of the hoard a new\nlimit is created which must be removed in its turn. There is no\ndefinite limit which appears as a barrier to further hoarding, every\nlimit plays that part. Hoard accumulation has, therefore, no inherent\nlimits, no inherent measure; it is an endless process which finds in\neach successive result an impulse for a new beginning. While the hoard\nis increased only by being preserved, it is preserved only by being\nincreased.\n\nMoney is not only _an_ object of the passion for riches; it is _the_\nobject of that passion. The latter is essentially _auri sacra fames_.\nThe passion for riches, contrary to that for special kinds of natural\nwealth or use-values, such as clothing, ornaments, herds, etc., is\npossible only when universal wealth has been individualized as such\nin a particular object and can, therefore, be retained in the form of\na single commodity. Money appears then no less as an object than as\na source of the passion for riches.[96] The underlying fact of the\nmatter is that exchange value as such and with it its increase become\nthe final aim. Greed holds the hoard fast by not allowing the money\nto become a medium of circulation, but the thirst for gold saves the\nmoney soul of the hoard by keeping up the lasting affinity of gold for\ncirculation.\n\nTo sum up, the activity by which hoards are built up resolves itself\ninto withdrawal of money from circulation by continually repeated\nsales, and simple hoarding or _accumulation_. In fact, it is only\nin the sphere of simple circulation and, especially, in the form of\nhoarding, that accumulation of wealth as such takes place, while, as we\nshall see later, in the case of other so-called forms of accumulation\nit is only a misnomer to call them by that name in mere recollection\nof the simple accumulation of money. All other commodities are hoarded\neither as use-values, in which case the manner of storing them up is\ndetermined by the peculiarities of their use-value: the storing of\ngrain, e. g., requires special equipment; the accumulation of sheep\nmakes one a shepherd; the accumulation of slaves and land creates\nrelations of master and servant, etc.; the accumulation of particular\nkinds of wealth requires special processes different from the simple\nact of hoarding, and develops special individual traits. Or, wealth\nin the form of commodities is hoarded as exchange-value and in that\ncase hoarding appears as a commercial or a specific economic operation.\nThe one who carries on such operations becomes a dealer in corn, in\ncattle, etc. Gold and silver are money not through some activity of\nthe individual who accumulates it, but as crystals of the process of\ncirculation which goes on without any aid on his part. He has nothing\nto do but to put them aside, adding new weights of metal to his\nhoard, a perfectly senseless operation which, if applied to all other\ncommodities, would deprive them of all value.[97]\n\nOur hoarder appears as a martyr of exchange value, a holy ascetic\ncrowning the metal pillar. He cares for wealth only in its social\nform and therefore he buries it away from society. He wants to have\nthe commodity in the form in which it is always capable of entering\ncirculation and therefore he withdraws it from circulation. He dreams\nof exchange value and therefore does not exchange. The fluid form of\nwealth and its petrification, the elixir of life and the stone of\nwisdom madly haunt each other in alchemic fashion. In his imaginary\nunlimited passion for enjoyment he denies himself all enjoyment.\nBecause he wishes to satisfy all social wants, he barely satisfies\nhis elementary natural wants. While holding fast to his wealth in\nits metallic bodily form, the latter escapes him as a phantom. As a\nmatter of fact, however, the hoarding of money for the sake of money\nis the barbaric form of production for production\u2019s sake, i. e., the\ndevelopment of the productive forces of social labor beyond the limits\nof ordinary wants. The less the production of commodities is developed,\nthe more important is the first crystallization of exchange value into\nmoney, or hoarding, which plays, therefore, an important part among\nthe ancient nations, in Asia until the present day, and among modern\nagricultural nations where exchange value has not as yet taken hold of\nall the relations of production. Before taking up the consideration\nof the specific economic function of hoarding within the sphere of\nmetallic circulation, let us mention another form of hoarding.\n\nQuite apart from their aesthetic properties, silver and gold\ncommodities are convertible into money, since the material of which\nthey are made is a money material; and, inversely, gold money and gold\nbullion can be converted into commodities. Because gold and silver\nconstitute the material of abstract wealth, the greatest display\nof wealth consists of the utilization of these metals as concrete\nuse-values, and if the owner of commodities hides his treasure at\ncertain stages of production, he is very anxious to appear before\nother owners of commodities as _rico hombre_ whenever he can do so\nwith safety. He gilds himself and his house.[98] In Asia, especially\nin India, where, unlike under the capitalist system, the hoarding\nof wealth appears not as a subordinate function of the system of\nproduction, but as an end in itself, gold and silver commodities are\npractically but aesthetic forms of hoards. In mediaeval England gold\nand silver commodities were considered before the law as mere forms of\ntreasure, since their value was but slightly increased by the crude\nlabor spent upon them. They were destined to re-enter circulation\nand their fineness was therefore prescribed in the same manner as\nthat of coin. The increasing use of gold and silver as objects of\nluxury with the growth of wealth is such a simple matter that it was\nperfectly clear to the ancients,[99] while modern economists have\nadvanced the erroneous proposition that the use of silver and gold\narticles increases not in proportion to the growth of wealth, but\nin proportion to the fall in value of the precious metals. Their\notherwise accurate references to the use of Californian and Australian\ngold are inconclusive, since the increased consumption of gold as a\nraw material does not find justification, according to their theory,\nin any corresponding decline in its value. From 1810 to 1830, in\nconsequence of the struggle of the American colonies against Spain and\nthe interruption of mining caused by revolutions, the annual average\nproduction of precious metals declined by more than one-half. The\ndecline of coin in circulation in Europe amounted to nearly one-sixth,\ncomparing the years 1829 and 1809. Although the quantity produced had\nthus declined and the cost of production, if it had changed at all,\nhad increased, yet the consumption of precious metals as objects of\nluxury increased to an extraordinary extent in England during the very\nwar and on the continent after the Peace of Paris. The consumption\nincreased with the general growth of wealth.[100] It may be stated\nas a general law that the conversion of gold and silver money into\narticles of luxury prevails in times of peace, while their reconversion\ninto bullion or even coin takes place in stormy periods.[101] How\nconsiderable the proportion is of the gold and silver treasure in the\nform of articles of luxury to the quantity of precious metals serving\nas money may be seen from the fact that in 1829 the proportion in\nEngland, according to Jacob, was two to one, and in entire Europe and\nAmerica the precious metals in the form of articles of luxury exceeded\nthose in the form of money by one-fourth.\n\nWe have seen that the circulation of money is but the manifestation of\nthe metamorphoses of commodities, or of the form under which the social\ninterchange of matter takes place. With the change in the total price\nof commodities in circulation or in the volume of their simultaneous\nmetamorphoses, the rapidity of their change of form in each case being\ngiven, the total quantity of gold in circulation must always expand\nor contract. That is possible only under the condition that the total\nquantity of money in the country continually bear a varying ratio to\nthe quantity of money in circulation. This condition is met by the\nprocess of hoarding. With a fall in prices or rise in the rapidity\nof circulation, the hoard-reservoirs absorb that part of money which\nis thrown out of circulation; with a rise in price or a decline in\nthe rapidity of circulation, the hoards open up and return a part\nof their contents to the stream of circulation. The solidification\nof circulating money into hoards and the outpouring of hoards into\ncirculation is a constantly oscillating movement in which the\nprevalence of the one or the other tendency is determined exclusively\nby fluctuations in the circulation of commodities. Hoards thus serve as\nconduits for the supply and withdrawal of money to or from circulation,\nso that every time only that quantity of money circulates as coin which\nis required by the immediate needs of circulation. If the volume of the\nentire circulation suddenly expands and the fluent unity of sale and\npurchase assumes such dimensions that the total sum of prices to be\nrealized increases more rapidly than the rapidity of the circulation of\nmoney, the hoards decrease perceptibly; but when the combined movement\nslackens to an unusual extent, or the movement of buying and selling\nsteadies itself, the medium of circulation solidifies into money in\nlarge measure, and the treasure reservoirs fill up far above their\naverage level. In countries with an exclusively metallic circulation\nor where production is at a low stage of development, the hoards are\nendlessly split up and scattered all over the land, while in countries\nwhere the capitalist system is developed they are concentrated in bank\nreservoirs. Hoards are not to be confounded with coin reservoirs, which\nform a constituent part of the total supply of money in circulation,\nwhile the interaction between hoards and currency implies the decline\nor rise of its total supply. Gold and silver commodities form, as we\nhave seen, both conduits for the withdrawal of precious metals, as\nwell as sources of their supply. In ordinary times only their former\nfunction is of importance to the economy of metallic circulation.[102]\n\n\nb. MEANS OF PAYMENT.\n\nThe two forms which have so far distinguished money from the\ncirculating medium are those of _suspended coin_ and of the _hoard_.\nThe temporary transformation of coin into money in the case of the\nformer means that the second phase of C\u2015M\u2015C, namely purchase M\u2015C,\nmust break up within a certain sphere of circulation into a series\nof successive purchases. As to hoarding, it is simply based on the\nisolation of the act C\u2015M when it does not immediately pass into M\u2015C,\nor is but an independent development of the first metamorphosis of\na commodity; it represents money as the result of the alienation of\nall commodities in contradistinction to the medium of circulation as\nthe embodiment of commodities in their always alienable form. Coin\nreserves and hoards are money only as non-circulating mediums and\nare non-circulating mediums only because they do not circulate. In\nthe capacity in which we consider money now, it circulates or enters\ncirculation, but does not perform the function of a circulating medium.\nAs a medium of circulation money is always a means of purchase, now it\ndoes not act in that capacity.\n\nAs soon as money develops through the process of hoarding into the\nembodiment of abstract social wealth and the tangible representative\nof material wealth, it assumes in that capacity special functions\nwithin the process of circulation. If money circulates merely as a\nmedium of circulation and therefore as a means of purchase, it is\nunderstood that commodity and money confront each other at the same\ntime, i. e., that the same value is present in a double form: at one\npole, as a commodity in the hands of the seller; at the other pole as\nmoney in the hands of the buyer. This simultaneous existence of the two\nequivalents at opposite poles and their simultaneous change of places\nor mutual alienation presupposes in its turn that seller and buyer\nenter into relations as owners of equivalents that are on hand. But in\nthe course of time, the process of the metamorphosis of commodities\nwhich produces the different forms of money, transforms also the owners\nof commodities or changes the character in which they appear before\neach other in the community. In the process of metamorphosis of the\ncommodity the guardian of the latter changes his skin as often as\nthe commodity changes place or as the money assumes new forms. Thus,\nthe owners of commodities originally confronted each other only as\ncommodity owners, but later on they became one a buyer, the other a\nseller; then each became alternately buyer and seller, then hoarders,\nand finally rich men. In that manner, the owners of commodities do not\ncome out of the process of circulation the same men that they entered.\nIn fact the different forms which money assumes in the process of\ncirculation are but crystallized changes of form of the commodities\nthemselves, which in their turn are but concrete expressions of the\nchanging social relations in which commodity owners carry on the\ninterchange of matter with one another. New trade relations spring up\nin the process of circulation, and, as representatives of these changed\nrelations, commodity owners assume new economic roles. Just as gold\nbecomes idealized within the process of circulation and plain paper,\nin its capacity of a representative of gold, performs the function\nof money, so does the same process of circulation lend the weight of\nactual seller and buyer to the buyer and seller who enter it merely as\nrepresentatives of future money and future commodities.\n\nAll the forms in which gold develops into money, are but the unfolding\nof potentialities which the metamorphosis of commodities bears within\nitself. These forms did not become distinctly differentiated in the\nprocess of simple money circulation where money appears as coin and\nthe movement C\u2015M\u2015C forms a dynamic unity; at most, they appeared\nas mere potentialities as, e. g., in the case of the break in the\nmetamorphosis of a commodity. We have seen that in the process C\u2015M\nthe relations between the commodity and money were those of an actual\nuse-value and ideal exchange-value to an actual exchange value and\nonly ideal use-value. By alienating his commodity as a use-value the\nseller realized its own exchange value and the use-value of money. On\nthe contrary, the buyer, by alienating his money as exchange value,\nrealized its own use-value and the price of the commodity. Commodity\nand money changed places accordingly. When it comes to a realization\nin actual life of this bi-polar contrast, a new break occurs. The\nseller actually alienates his commodity, but realizes its price only in\nidea: he has sold his commodity at its price, which is to be realized,\nhowever, only subsequently, at a time agreed upon. The purchaser buys\nas the representative of future money, while the vender sells as the\nowner of present goods. On the part of the vender, the commodity as\nuse-value is actually alienated, without the price being actually\nrealized; on the part of the purchaser, money is actually realized\nin the use-value of the commodity, without being actually alienated\nas exchange value. Instead of a token of value representing money\nsymbolically as was the case before, the purchaser himself performs\nthat part now. And just as in the former case the symbolic nature of\nthe token of value called forth the guarantee of the state which has\nmade it legal tender, so does the personal symbolism of the buyer bring\nabout legally enforcible private contracts among commodity owners.\n\nThe contrary may happen in the process M\u2015C, where the money can be\nalienated as a real means of purchase, and in that way the price of the\ncommodity can be realized before the use-value of the money is realized\nand the commodity actually delivered. This occurs constantly under\nthe everyday form of pre-payments. And it is under this form that the\nEnglish government purchases opium from the ryots of India, or, foreign\nmerchants residing in Russia mostly buy agricultural products. In these\ncases, however, the money always acts in its well known role of a means\nof purchase and therefore, does not assume any new forms.[103] We need\nnot dwell, therefore, on this case any longer; but with reference to\nthe changed form which the two processes M\u2015C and C\u2015M assume now, we\nmay note that the difference between purchase and sale which appeared\nbut imaginary in the direct process of circulation, now becomes a real\ndifference, since in the former case only the money is present and in\nthe latter only the commodity, and in either case only that extreme is\npresent from which the initiative comes. Besides, the two forms have\nthis in common: that in either, one of the equivalents is present only\nin the common will of the buyer and seller,\u2015a will that is binding on\nboth and assumes definite legal forms.\n\nSeller and buyer become creditor and debtor. While the commodity\nowner looked comical as the guardian of a treasure, he now becomes\nawe-inspiring, since he no longer identifies himself but his neighbor\nwith a certain sum of money and makes him and not himself a martyr of\nexchange value. From a believer he becomes a creditor, for religion he\nsubstitutes law.\n\n  \u201cI stay here on my bond!\u201d\n\nThus, in the modified form C\u2015M in which the commodity is present and\nmoney is only represented, money plays first of all the part of a\nmeasure of value. The exchange value of the commodity is estimated in\nmoney as its measure; but as exchange value, established by contract,\nprice exists not only in the mind of the seller, but also as a measure\nof obligation on the part of the buyer. Besides serving as a measure of\nvalue, money plays here the part of a means of purchase, although in\nthat capacity it only casts ahead the shadow of its future existence.\nIt attracts the commodity from its position in the hand of the seller\ninto that of the buyer. As soon as the term of the contract expires,\nmoney enters circulation, since it changes its position by passing\nfrom the hands of the former buyer into those of the former seller.\nBut it does not enter circulation as a circulating medium or as a\nmeans of purchase. It performed those functions before it was present\nand it appears after it has ceased to perform them. It now enters\ncirculation as the only adequate equivalent of the commodity, as the\nabsolute form of existence of exchange value, as the last word of the\nprocess of exchange, in short as money, and money in its distinct role\nof a _universal means of payment_. In this capacity of a means of\npayment money appears as the absolute commodity, but within the sphere\nof circulation and not without it as was the case with hoards. The\ndifference between the means of purchase and the means of payment makes\nitself unpleasantly felt in periods of commercial crises.[104]\n\nOriginally, the conversion of the product into money in the sphere of\ncirculation appears only as an individual necessity for the commodity\nowner in so far as his own product has no use-value to him, but has\nto acquire it first by being alienated. But in order to pay at the\nexpiration of the contract, he must have sold commodities before that.\nThus, entirely apart from his individual wants, the movement of the\ncirculation process makes selling a social necessity with every owner\nof commodities. As a former buyer of a commodity he is compelled to\nbecome a seller of another commodity in order to get money not as a\nmeans of purchase but as a means of payment, as the absolute form of\nexchange value. The conversion of commodity into money as a final act,\nor the first metamorphosis of a commodity as an end in itself which in\nthe case of hoarding seemed to be a matter of caprice on the part of\nthe commodity owner, becomes now an economic function. The motive and\nessence of sale for the sake of payment becomes from a mere form of the\nprocess of circulation its self emanating substance.\n\nIn this form of sale the commodity completes its change of position;\nit circulates while it postpones its first metamorphosis, viz. its\ntransformation into money. On the contrary, on the part of the buyer\nthe second metamorphosis is completed, i. e. money is reconverted\ninto a commodity before the first metamorphosis has taken place,\ni. e., before the commodity has been turned into money. The first\nmetamorphosis thus takes place after the second in point of time;\nand thereby, money i. e. the form of the commodity in its first\nmetamorphosis, acquires a new destination. Money or the spontaneous\ndevelopment of exchange value, is no longer a mere intermediary form of\nthe circulation of commodities, but its final result.\n\nThat such _time sales_ in which the two poles of the sale are separated\nin point of time, have their natural origin in the simple circulation\nof commodities, requires no elaborate proof. In the first place, the\ndevelopment of circulation leads to a continual repetition of the\nmutual transactions between the same commodity owners who confront\neach other as seller and buyer. The repetition is not accidental; on\nthe contrary, goods are ordered, let us say, for a certain date in the\nfuture when they are to be delivered and paid for. In that case the\nsale is ideal, i. e. it is legally accomplished without the actual\npresence of the goods and money. Both forms of money, those of a medium\nof circulation and of a means of payment still coincide here, since\nin the first place, commodity and money change places simultaneously,\nand secondly, the money does not buy the commodity, but realizes the\nprice of the commodity purchased before. In the second place, the\nnature of a great many use-values makes the simultaneous alienation\nand delivery of the goods impossible, and delivery has to be postponed\nfor a certain time; e. g., when the use of a house is sold for one\nmonth, the use-value of the house is delivered only at the expiration\nof the month, although it changes hands at the beginning of the month.\nSince the actual transfer of the use-value and its virtual alienation\nare separated here in point of time, the realization of its price\noccurs also after its change of place. Finally, the difference in\nthe seasons and in the length of time required for the production of\nvarious commodities brings about a situation where one tries to sell\nhis goods, while the other is not ready to buy; and with the repeated\npurchases and sales between the same commodity owners the two ends\nof sale fall apart according to the conditions of production of the\nrespective commodities. Thus arises a relation of creditor and debtor\nbetween the owners of commodities which, though constituting the\nnatural foundation of the credit system, may be fully developed before\nthe latter comes into existence. It is clear that with the extension\nof the credit system, and, consequently, with the development of the\ncapitalist system of production in general, the function of money as a\nmeans of payment will extend at the expense of its function as a means\nof purchase and, still more, as an element of hoarding. In England, e.\ng., money as coin has been almost completely banished into the sphere\nof retail and petty trade between producers and consumers, while it\ndominates the sphere of large commercial transactions as a means of\npayment.[105]\n\nAs the universal means of payment money becomes the _universal\ncommodity_ of all contracts, at first only in the sphere of\ncirculation of commodities.[106] But with the development of this\nfunction of money, all other forms of payment are gradually converted\ninto money payments. The extent to which money is developed as the\nexclusive means of payment indicates the degree to which exchange value\nhas taken hold of production in its depth and breadth.[107]\n\nThe volume of money in circulation, as a means of payment, is\ndetermined in the first place, by the amount of payments, i. e. by the\nsum total of the prices of the commodities alienated, but not about to\nbe alienated, as in the case of the simple circulation of money. The\nquantity thus determined is subject, however, to two modifications.\nThe first modification is due to the rapidity with which the same\npiece of money repeats the same function, i. e. with which the several\npayments succeed one another. A pays B, whereupon B pays C, and so\nforth. The rapidity with which the same coin repeats its function\nas a means of payment, depends first, upon the continuity of the\nrelation of creditor and debtor among the owners of commodities, the\nsame commodity owner being the creditor of one person and the debtor\nof another, etc., and secondly, upon the interval which separates the\ntimes of various payments. This chain of payments or of supplementary\nfirst metamorphoses of commodities is qualitatively different from the\nchain of metamorphoses which is formed by the circulation of money as a\ncirculating medium. The latter not only makes its appearance gradually,\nbut is even formed in that manner. A commodity is first converted\ninto money, then again into a commodity, thereby enabling another\ncommodity to become money, etc.; or, seller becomes buyer, whereby\nanother commodity owner turns seller. This successive connection is\naccidentally formed in the very process of the exchange of commodities.\nBut when the money which A has paid to B is passed on from B to C,\nfrom C to D, etc., and that, too, at intervals rapidly succeeding one\nanother, then this external connection reveals but an already existing\nsocial connection. The same money passes through different hands not\nbecause it appears as a means of payment; it passes as a means of\npayment because the different hands have already clasped each other.\nThe rapidity with which money circulates as a means of payment thus\nshows that individuals have been drawn into the process of circulation\nmuch deeper than would be indicated by the same rapidity of the\ncirculation of money as coin or as a means of purchase.\n\nThe sum total of prices made up by all the purchases and sales taking\nplace at the same time, and, therefore, side by side, constitutes the\nlimit for the substitution of the volume of coin by the rapidity of its\ncirculation. If the payments that are to be made simultaneously are\nconcentrated at one place\u2015which naturally arises at first at points\nwhere the circulation of commodities is largest\u2015the payments balance\neach other as negative and positive quantities: A is under obligations\nto pay B, while he has to be paid by C. etc. The quantity of money\nrequired as a means of payment will, therefore, be determined not by\nthe total amount of payments which have to be made simultaneously, but\nby the greater or less concentration of the same and by the magnitude\nof the balance remaining after their mutual neutralization as negative\nand positive quantities. Special arrangements are made for settlements\nof this kind even where the credit system is not developed at all,\nas was the case e. g. in ancient Rome. The consideration of these\narrangements, however, as well as that of the general time limits of\npayment, which are everywhere established among certain elements in the\ncommunity, does not belong here. We may add that the specific influence\nwhich these time settlements exert on the periodic fluctuations in the\nquantity of money in circulation, has been scientifically investigated\nbut lately.\n\nIn so far as the payments mutually balance as positive and negative\nquantities, no money actually appears on the scene. It figures here\nonly in its capacity of a measure of value: first, in the prices of\ncommodities, and second, in the magnitude of mutual obligations. Aside\nfrom its ideal form, exchange value does not exist here independently,\nnot even in the form of a token of value; that is to say, money plays\nhere only the part of ideal money of account. The function of money\nas a means of payment thus implies a contradiction. On the one hand,\nin so far as payments balance, it serves only ideally as a measure of\nvalue. On the other hand, in so far as a payment has actually to be\nmade, money enters circulation not as a transient circulating medium,\nbut as the final resting form of the universal equivalent, as the\nabsolute commodity, in a word, as money. Therefore, whenever such a\nthing as a chain of payments and an artificial system of settling them,\nis developed, money suddenly changes its visionary nebulous shape as a\nmeasure of value, turning into hard cash or means of payment, as soon\nas some shock causes a violent interruption of the flow of payments and\ndisturbs the mechanism of their settlement. Thus, under conditions of\nfully developed capitalist production, where the commodity owner has\nlong become a capitalist, knows his Adam Smith, and condescendingly\nlaughs at the superstition that gold and silver alone constitute money\nor that money differs at all from other commodities as the absolute\ncommodity, money suddenly reappears not as a medium of circulation,\nbut as the only adequate form of exchange value, as the only form of\nwealth, exactly as it is looked upon by the hoarder. In its capacity\nof such an exclusive form of wealth, it reveals itself, unlike under\nthe monetary system, not in mere imaginary, but in actual depreciation\nand worthlessness of all material wealth. That is what constitutes\nthe particular phase of crises of the world market which is known as\na money crisis. The _summum bonum_ for which everybody is crying at\nsuch times as for the only form of wealth, is cash, hard cash; and by\nthe side of it all other commodities just because they are use-values,\nappear useless like so many trifles and toys, or, as our Dr. Martin\nLuther says, as mere objects of ornament and gluttony. This sudden\nreversion from a system of credit to a system of hard cash heaps\ntheoretical fright on top of the practical panic; and the dealers by\nwhose agency circulation is affected shudder before the impenetrable\nmystery in which their own economical relations are involved.[108]\n\nPayments, in their turn, require the formation of reserve funds,\nthe accumulation of money as a means of payment. The building up of\nreserve funds appears no longer as a practice carried on outside of\nthe sphere of circulation, as in the case of hoarding; nor as a mere\ntechnical accumulation of coin, as in the case of coin reserves; on the\ncontrary, money must now be gradually accumulated to be available on\ncertain future dates when payments become due. While hoarding, in its\nabstract form as a means of enrichment, declines with the development\nof the capitalist system of production, that species of hoarding which\nis directly called for by the process of production, increases; or, to\nput it differently, a part of the treasure which is generally formed\nin the sphere of circulation of commodities, is absorbed as a reserve\nfund of means of payment. The more developed the capitalist system of\nproduction, the more these reserve funds are limited to the necessary\nminimum. Locke, in his work \u201cOn the Lowering of Interest\u201d[109]\nfurnishes interesting data with reference to the size of these reserve\nfunds in his time. They show what a considerable part of the total\nmoney in circulation the reservoirs for means of payment absorbed in\nEngland just at the time when banking began to develop.\n\nThe law as to quantity of money in circulation, as it has been\nformulated in the analysis of the simple circulation of money, receives\nan essential modification when the circulation of the means of payment\nis taken into account. The rapidity of the circulation of money whether\nas circulating medium or as means of payment\u2015being given, the total\namount of money in circulation at a given time will be determined by\nthe sum total of the prices of commodities to be realized, _plus_ the\ntotal amount of payments falling due at the same time, _minus_ the\namount of payments balancing each other. The general law that the\nvolume of money in circulation depends on the prices of commodities is\nnot affected by this in the least, since the extent of the payments\nis itself determined by the prices stipulated in contracts. What is,\nhowever, strikingly demonstrated, is that even if the rapidity of\ncirculation and the economy of payments be assumed to remain the same,\nthe sum total of the prices of the commodities circulating in a given\nperiod of time, say one day, and the volume of money in circulation on\nthe same day are by no means equal, because there is a large number\nof commodities in circulation whose prices have yet to be realized in\nmoney at a future date, and there is a quantity of money in circulation\nwhich constitutes the payment for commodities which have long gone out\nof circulation. The latter amount will depend on the sum of payments\nfalling due on the same day although contracted for at entirely\ndifferent periods.\n\nWe have seen that a change in the values of gold and silver does not\naffect their function as measures of value or money of account. But\nthis change is of decisive importance for money as a hoard, since\nwith the rise or fall of value of gold and silver, the total value\nof a gold or silver hoard will also rise or fall. Of still greater\nimportance is the effect of this change on money as a means of payment.\nThe payment takes place after the sale of the commodity, or the money\nserves in two different capacities at two different periods; first, as\na measure of value, then as a means of payment corresponding to the\nmeasurement. If, during this interval, the value of the precious metals\nor the labor-time necessary for their production undergoes a change,\nthe same quantity of gold or silver will be worth more or less when\nit appears as a means of payment than what it was when it served as a\nmeasure of value, i. e., when the contract was concluded. The function\nof a particular commodity, like gold or silver, to serve as money or\nindependent exchange value comes here in conflict with the nature of\nthe particular commodity whose magnitude of value depends on changes in\nthe cost of its production. The great social revolution which caused\nthe fall in value of the precious metals in Europe, is as well known as\nthe revolution of an opposite character which had been brought about\nat an early period in the history of the ancient Roman republic by the\nrise in value of copper in terms of which the debts of the plebeians\nhad been contracted. Without attempting here to follow any further\nthe fluctuations of value of the precious metals and their effect on\nthe system of bourgeois political economy, it is at once apparent\nthat a fall in the value of the precious metals favors the debtors at\nthe expense of the creditors, while a rise in their value favors the\ncreditors at the expense of the debtors.\n\n\nc. WORLD MONEY.\n\nGold becomes money as distinguished from coin only after it is\nwithdrawn from circulation in the shape of a hoard; it then enters\ncirculation as a non-medium of circulation, and finally breaks through\nthe barriers of home circulation to assume the part of a universal\nequivalent in the world of commodities. It becomes _world money_.\n\nWhile the general measures of weight of the precious metals served as\ntheir original measures of value, the reverse process takes place now\nin the world market, and the reckoning names of money are turned back\ninto corresponding weight names. In the same way, while shapeless crude\nmetal (aes rude) was the original form of the medium of circulation\nand the coin form constituted but the official stamp certifying that a\ngiven piece of metal was of a certain weight, now the precious metal\nin its capacity of a world coin throws off its stamp and shape and\nreassumes the indistinguishable bullion form; and even if national\ncoins, such as Russian imperials, Mexican dollars, and English\nsovereigns, do circulate abroad, their name is of no importance,\nand only their contents count. Finally, as international money, the\nprecious metals come again to perform their original function of\nmediums of exchange, which, like the exchange of commodities, arose\nfirst not within the various primitive communities, but at their points\nof contact with one another. As world money, money thus reassumes its\nprimitive form. On leaving the sphere of home circulation, it strips\noff the particular forms which it has acquired in the course of the\ndevelopment of the process of exchange within that particular national\nsphere, those local garbs of standard of price, of coin, of auxiliary\ncoin, and of token of value.\n\nWe have seen that in the home circulation of a country, only one\ncommodity serves as a measure of value. Since, however, that function\nis performed by gold in some countries and by silver in others, there\nis a double standard of value in the world market and money assumes\ntwo forms in all its other functions. The translation of the values\nof commodities from gold prices into silver prices and vice versa\ndepends in each case upon the relative value of the two metals, which\nis constantly changing and, therefore, appears to be constantly in the\nprocess of determination. Commodity owners in every national sphere\nof circulation have to use gold and silver alternately for foreign\ncirculation and thus to exchange the metal which is accepted as money\nat home for the metal which they happen to need as money abroad. Every\nnation is, therefore, utilizing both metals, gold and silver, as world\nmoney.\n\nIn the international circulation of commodities, gold and silver appear\nnot as mediums of circulation, but as universal mediums of exchange.\nThe universal medium of exchange performs its function only under its\ntwo developed forms of a means of purchase and of a means of payment,\nwhose mutual relation in the world market is the very reverse of what\nit is at home. In the sphere of home circulation, money in the form of\ncoin, played exclusively the part of a means of purchase, either as the\nintermediary in the dynamic unity C\u2015M\u2015C or as the representative of the\ntransient form of exchange value in the unceasing change of positions\nby commodities. In the world market it is just the contrary. Gold and\nsilver appear here as a means of purchase when the exchange of matter\nis but one-sided, and purchase and sale do not coincide. The frontier\ntrade at Kiachta e. g. is both actually and according to treaty, one\nof barter, in which silver plays only the part of a measure of value.\nThe war of 1857-58 compelled the Chinese to sell without buying. Silver\nsuddenly appeared now as a means of purchase. Out of regard to the\nletter of the treaty, the Russians made up the French five frank coins\ninto crude silver commodities, which were made to serve as a means\nof exchange. Silver has always served as a means of purchase between\nEurope and America on one side and Asia on the other, where it settles\ndown in the form of hoards. Furthermore, the precious metals serve\nas international means of purchase whenever the ordinary balance of\nexchange of matter between two nations is suddenly upset, as e. g. when\na failure of crops forces one of them to buy on an extraordinary scale.\nFinally, the precious metals are international means of purchase in\nthe hands of gold and silver producing countries, in which case they\ndirectly constitute a product and commodity and not merely a converted\nform of a commodity. The more the exchange of commodities between\ndifferent national spheres of circulation is developed, the more\nimportant becomes the function of world money to serve as a _means of\npayment_ for the settlement of international balances.\n\nLike home circulation, international circulation requires a constantly\nchanging quantity of gold and silver. A part of the accumulated hoards\nserves therefore, in each country as a reserve fund of world money,\nwhich now declines, now rises, according to the fluctuations of the\nexchange of commodities.[110] Besides the special movements which take\nplace between national spheres of circulation, world-money possesses\na universal movement, whose starting points are at the sources of\nproduction from which gold and silver streams spread out in different\ndirections all over the world market. Here gold and silver enter the\nworld circulation as commodities and are exchanged for commodity\nequivalents in proportion to the labor-time contained in them, before\nthey penetrate national spheres of circulation. In the latter, they\nappear now with a given magnitude of value. Every fall or rise in the\ncost of their production equally affects, therefore, their relative\nvalue throughout the world market; on the other hand, that value is\nentirely independent of the extent to which the different national\nspheres of circulation absorb gold or silver. The part of the metal\nstream which is caught up by every separate sphere in the world of\ncommodities, partly enters directly the home circulation of money\nto make up for worn out coin; partly is dammed up in the different\nreservoirs containing hoards of coin, means of payment and world-money;\npartly is turned into articles of luxury, while the rest simply forms\na treasure. At an advanced stage of development of the capitalist\nsystem of production the formation of hoards is reduced to the minimum\nrequired by the various processes of circulation for the free play\nof their mechanism. The hoard as such becomes idle wealth, unless it\nappears as a temporary form of a surplus resulting from a favorable\nbalance of payments or as the result of an interrupted exchange of\nmatter, i. e. as the solidification of a commodity in its first\nmetamorphosis.\n\nGold and silver, in their capacity of money, being by conception\nuniversal commodities, assume in their capacity of world money the\nform adapted to a universal commodity. To the extent to which all\ncommodities are exchanged for them, they become the transformed\nimpersonation of all commodities and, therefore, universally alienable\ncommodities. Their function of serving as the embodiment of universal\nlabor-time is realized more and more as the interchange of matter\nproduced by concrete labor embraces increasing parts of the world.\nThey become universal equivalents to the extent to which the series\nof particular equivalents which constitute their spheres of exchange,\nincreases. Since in the sphere of world circulation commodities unfold\ntheir own exchange value on a universal scale, they assume the form\nof world money when transformed into gold and silver. As commodity\nowning nations are thus turning gold into money by their diversified\nindustry and universal trade, industry and trade appear to them only as\na means of getting money out of the world market in the shape of gold\nand silver. Gold and silver, as world money, are, therefore, as much\nproducts of the universal circulation of commodities as they are means\nof widening its sphere. Like chemistry which grew up behind the backs\nof the alchemists who tried to find a way of making gold, so do the\nsources of world industry and world trade spring up behind the backs\nof the owners of commodities, while they are hunting for the commodity\nin its magic form. Gold and silver help to create the world market by\nanticipating its existence in their conception of money. That this\nmagic effect of the precious metals is by no means confined to the\nperiod of infancy of capitalist society but is a necessary outgrowth\nof the perverse conception which the representatives of the commodity\nworld have of their own work in society, is shown by the extraordinary\ninfluence exerted in the middle of the nineteenth century by the\ndiscovery of new gold fields.\n\nJust as money develops into world-money, so the commodity owner\ndevelops into a cosmopolitan. The cosmopolitan relation of men is\noriginally only a relation of commodity owners. The commodity as such\nrises above all religious, political, national, and language barriers.\nPrice is its universal language and money, its common form. But with\nthe development of world-money as distinguished from national coin,\nthere develops the cosmopolitanism of the commodity owner as the faith\nof practical reason opposed to traditional, religious, national and\nother prejudices which hinder the interchange of matter among mankind.\nAs the identical gold that lands in England in the form of American\neagles, turns there into sovereigns and three days later circulates in\nParis in the form of Napoleons, only to emerge in Venice in a few weeks\nas so many ducats, retaining all the while the same value, it becomes\nclear to the commodity owner that nationality \u201cis but the guinea\u2019s\nstamp.\u201d The lofty idea which he conceives of the entire world is that\nof a market, the _world market_.[111]\n\n\n4. THE PRECIOUS METALS.\n\nThe process of capitalist production first of all takes hold of the\nmetallic circulation as of a ready, transmitted organ which, though\nundergoing a gradual transformation, always retains its fundamental\nstructure. The question as to why gold and silver and not other\ncommodities serve as money material falls outside the limits of the\ncapitalist system. We shall, therefore, confine ourselves to summing\nup the most essential points.\n\nSince universal labor-time admits of quantitative differences only,\nthe object which is to serve as its specific incarnation must be\ncapable of representing purely quantitative differences, i. e., it\nmust be homogeneous and uniform in quality throughout. That is the\nfirst condition a commodity must satisfy to perform the function of\na measure of value. If commodities were estimated in oxen, hides,\ngrain, etc., they would really have to be estimated in an ideal average\nox, or average hide, since there are qualitative differences between\nan ox and an ox, grain and grain, hide and hide. On the contrary,\ngold and silver, as elementary substances, are always the same,\nand equal quantities of them represent, therefore, values of equal\nmagnitude.[112] The other condition which a commodity that is to serve\nas a universal equivalent must satisfy and which follows directly from\nits function of representing purely quantitative differences, is that\nit must be capable of being divided and re-united at will, so that\nmoney of account may be represented materially as well. Gold and\nsilver possess these properties to a superior degree.\n\nAs mediums of circulation, gold and silver have this advantage over\nother commodities, that their high specific gravity which condenses\nmuch weight in little space, corresponds to their economic specific\ngravity which condenses relatively much labor-time, i. e. a great\nquantity of exchange value in a small volume. This insures facility\nof transport, of transition from hand to hand and from one country to\nanother, the ability to appear as rapidly as to disappear, in short,\nthat material mobility which constitutes the _sine qua non_ of the\ncommodity that is to serve as the _perpetuum mobile_ of the process of\ncirculation.\n\nThe high specific value of the precious metals, their durability,\ncomparative indestructibility, insusceptibility of oxidation through\nthe action of the air, in the case of gold insolubility in acids\nexcept in aqua regia,\u2015all these natural properties make the precious\nmetals the natural material for hoarding. Peter Martyr who seems to\nhave been a great lover of chocolate, remarks, therefore, of the\ncacao-bags which formed a species of Mexican gold: \u201cO felicem monetam,\nquae suavem utilemque praebet humano generi potum, et a tartarea peste\navaritiae suos immunes servat possessores, quod suffodi aut diu servari\nnequeat.\u201d[113]\n\nThe great importance of metals in general in the direct process of\nproduction is due to the part they play as instruments of production.\nApart from their scarcity, the great softness of gold and silver as\ncompared with iron and even copper (in the hardened state in which it\nwas used by the ancients), makes them unfit for that application and\ndeprives them, therefore, to a great extent, of that property on which\nthe use-value of metals is generally based. Useless as they are in the\ndirect process of production, they are easily dispensed with as means\nof existence, as articles of consumption. For that reason any desired\nquantity of them may be absorbed by the social process of circulation\nwithout disturbing the processes of direct production and consumption.\nTheir individual use-value does not come in conflict with their\neconomic function. Furthermore, gold and silver are not only negatively\nsuperfluous, i. e. dispensable articles, but their aesthetic properties\nmake them the natural material of luxury, ornamentation, splendor,\nfestive occasions, in short, the positive form of abundance and wealth.\nThey appear, in a way, as spontaneous light brought out from the\nunderground world, since silver reflects all rays of light in their\noriginal combination, and gold only the color of highest intensity,\nviz. red light. The sensation of color is, generally speaking, the most\npopular form of aesthetic sense. The etymological connection between\nthe names of the precious metals, and the relations of colors, in the\ndifferent Indo-Germanic languages has been established by Jacob Grimm\n(see his History of the German Language).\n\nFinally, the susceptibility of gold and silver of being turned from\ncoin into bullion, from bullion into articles of luxury and vice versa,\ni. e. the advantage they possess as against other commodities in not\nbeing tied down to a definite, exclusive form in which they can be\nused, makes them the natural material of money, which must constantly\nchange from one form to another.\n\nNature no more produces money than it does bankers or discount\nrates. But since the capitalist system of production requires the\ncrystallization of wealth as a fetich in the form of a single article,\ngold and silver appear as its appropriate incarnation. Gold and silver\nare not money by nature, but money is by nature gold and silver. In the\nfirst place, the silver or gold money crystal is not only the product\nof the process of circulation, but in fact its only final product. In\nthe second place, gold and silver are ready and direct products of\nnature, not distinguished by any difference of form. The universal\nproduct of the social process or the social process itself as a product\nis a peculiar natural product, a metal hidden in the bowels of the\nearth and extracted therefrom.[114]\n\nWe have seen that gold and silver are unable to fulfill the\nrequirements which they are expected to meet in their capacity of\nmoney, viz. to remain values of unvarying magnitude. Still, as\nAristotle had already observed, they possess a more constant value than\nthe average of other commodities. Apart from the universal effect of an\nappreciation or depreciation of the precious metals, the fluctuations\nin the ratio between the values of gold and silver has a special\nimportance, since both serve side by side in the world market as money\nmaterial. The purely economic causes of this change of value must be\ntraced to the change in the labor-time required for the production of\nthese metals; conquests and other political upheavals which exercised\na great influence on the value of metals in the ancient world, have\nnowadays only a local and transitory effect. The labor-time required\nfor the production of the metals will depend on the degree of their\nnatural scarcity, as well as on the greater or less difficulty with\nwhich they can be obtained in a purely metallic state. As a matter of\nfact, gold is the first metal discovered by man. This is due to the\nfact that nature itself furnishes it partly in pure crystalline form,\nindividualized, free from chemical combination with other substances,\nor, as the alchemists used to say, in a virgin state; and so far as\nit does not appear in that state, nature does the technical work in\nthe great gold washeries of rivers. Only the crudest kind of labor is\nthus required of man in the extraction of gold, either from rivers or\nfrom alluvial deposits; while the extraction of silver presupposes the\ndevelopment of mining and a comparatively high degree of technical\nskill generally. For that reason the value of silver is originally\ngreater than that of gold in spite of the lesser absolute scarcity of\nthe former. Strabo\u2019s assertion that a certain Arabian tribe gave ten\npounds of gold for one pound of iron and two pounds of gold for one\npound of silver, seems by no means incredible. But as the productive\npowers of labor in society are developed and the product of unskilled\nlabor rises in value as compared with the product of skilled labor;\nas the earth\u2019s crust is more thoroughly broken up and the original\nsuperficial sources of gold supply give out, the value of silver begins\nto fall in proportion to that of gold. At a given stage of development\nof engineering and of the means of communication, the discovery of\nnew gold or silver fields become the decisive factor. In ancient Asia\nthe ratio of gold to silver was 6 to 1 or 8 to 1; the latter ratio\nprevailed in China and Japan as late as the beginning of the nineteenth\ncentury; 10 to 1, the ratio in Xenophon\u2019s time, may be considered as\nthe average ratio of the middle period of antiquity. The exploitation\nof the Spanish silver mines by Carthage and later by Rome had about the\nsame effect in antiquity, as the discovery of the American mines in\nmodern Europe. For the period of the Roman empire 15 or 16 to 1 may be\nassumed as a rough average, although we frequently find cases of still\ngreater depreciation of silver in Rome. The same movement beginning\nwith the relative depreciation of gold and concluding with the fall\nin the value of silver, is repeated in the following epoch which has\nlasted from the Middle Ages to the present time. As in Xenophon\u2019s times\nthe average ratio in the Middle Ages was 10 to 1, changing to 16 or\n15 to 1 in consequence of the discovery of the American mines. The\ndiscovery of the Australian, Californian and Columbian gold sources\nmakes a new fall in the value of gold probable.[115]\n\n\nC. THEORIES OF THE MEDIUM OF CIRCULATION AND OF MONEY.\n\nAs the universal thirst for gold prompted nations and princes in the\nsixteenth and seventeenth centuries, the period of infancy of modern\nbourgeois society, to crusades beyond the sea in search of the golden\ngrail,[116] the first interpreters of the modern world, the founders\nof the monetary system, of which the mercantile system is but a\nvariation, proclaimed gold and silver, i. e. money, as the only thing\nthat constitutes wealth. They were quite right when, from the point\nof view of the simple circulation of commodities, they declared that\nthe mission of bourgeois society was to make money, i. e. to build up\neverlasting treasures which neither moth nor rust could eat. It is\nno argument with the monetary system to say that a ton of iron whose\nprice is \u00a33 constitutes a value of the same magnitude as \u00a33 worth\nof gold. The point here is not the magnitude of the exchange value,\nbut as to what constitutes its adequate form. If the monetary and\nmercantile systems single out international trade and the particular\nbranches of national industry directly connected with that trade as\nthe only true sources of wealth or money, it must be borne in mind,\nthat in that period the greater part of national production was still\ncarried on under forms of feudalism and was the source from which\nproducers drew directly their means of subsistence. Products, as a\nrule, were not turned into commodities nor, therefore, into money;\nthey did not enter into the general social interchange of matter; did\nnot, therefore, appear as embodiments of universal abstract labor;\nand did not, in fact, constitute bourgeois wealth. Money as the end\nand object of circulation is exchange value or abstract wealth, but\nit is no material element of wealth and does not form the directing\ngoal and impelling motive of production. True to the conditions as\nthey prevailed in that primitive stage of bourgeois production, those\nunrecognized prophets held fast to the pure, tangible, and resplendent\nform of exchange value, to its form of a universal commodity as against\nall special commodities. The proper bourgeois economic sphere of that\nperiod was the sphere of the circulation of commodities. Hence, they\njudged the entire complex process of bourgeois production from the\npoint of view of that elementary sphere and confounded money with\ncapital. The unceasing war of modern economists against the monetary\nand mercantile system is mostly due to the fact that this system blabs\nout in brutally naive fashion, the secret of bourgeois production, viz.\nits subjection to the domination of exchange value. Ricardo, though\nwrong in the application he makes of it, remarks somewhere that even in\ntimes of famine, grain is imported not because the nation is starving,\nbut because the grain dealer is making money. In its criticism of the\nmonetary and mercantile system, political economy, by attacking that\nsystem as a mere illusion and as a false theory, fails to recognize in\nit the barbaric form of its own fundamental principles. Furthermore,\nthis system has not only an historic justification, but within\ncertain spheres of modern economy retains until now the full rights\nof citizenship. At all stages of the bourgeois system of production\nin which wealth assumes the elementary form of a commodity, exchange\nvalue assumes the elementary form of money and in all phases of the\nprocess of production wealth reassumes for a moment the universal\nelementary commodity form. Even at the most advanced stage of bourgeois\neconomy, the specific functions of gold and silver to serve as money,\nin contradistinction to their function of mediums of circulation\u2015a\nfunction which distinguishes them from all other commodities\u2015is not\ndone away with, but only limited, hence the monetary and mercantile\nsystem retains its right of citizenship. The Catholic fact that gold\nand silver are contrasted with other profane commodities as the direct\nincarnation of social labor, that is as the expression of abstract\nwealth, naturally offends the Protestant point d\u2019honneur of bourgeois\neconomy, and out of fear of the prejudices of the monetary system\nit had lost for a long time its grasp of the phenomena of money\ncirculation, as will be shown presently.\n\nIt was quite natural that, contrary to the monetary and mercantile\nsystem which knew money only in its form of a crystallized product\nof circulation, classical political economy should have conceived\nmoney first of all in its fluent form of exchange value arising and\ndisappearing within the process of the metamorphosis of commodities.\nAnd since the circulation of commodities is regarded exclusively in the\nform of C\u2015M\u2015C and the latter in its turn, exclusively in its aspect of\na dynamic unity of sale and purchase, money comes to be regarded in\nits capacity of a medium of circulation as opposed to its capacity of\nmoney. And when that medium of circulation is isolated in its function\nof coin, it turns, as we have seen, into a token of value. But since\nclassical political economy had to deal with metallic circulation as\nthe prevailing form of circulation, it defined metallic money as coin,\nand metallic coin as a mere token of value. In accordance with the\nlaw governing the circulation of tokens of value, the proposition was\nadvanced that the prices of commodities depend on the quantity of money\nin circulation instead of the opposite principle that the quantity of\nmoney in circulation depends on the prices of commodities. We find\nthis view more or less clearly expressed by the Italian economists of\nthe seventeenth century; LOCKE now asserts, now denies that principle;\nit is clearly elaborated in the \u201cSpectator\u201d (of October 19, 1711)\nby MONTESQUIEU AND HUME. Since Hume was by far the most important\nrepresentative of this theory in the eighteenth century, we shall\ncommence our review with him.\n\nUnder certain assumptions, an increase or decrease in the quantity\neither of the metallic money in circulation, or of the tokens of value\nin circulation seems to affect _uniformly_ the prices of commodities.\nWith each fall or rise of the _value_ of gold or silver in which the\nexchange values of commodities are estimated as prices, there is a rise\nor fall of prices, because of the change in their measure of value; as\na result of the rise or fall of prices, a greater or smaller quantity\nof gold and silver is circulating as coin. But the apparent phenomenon\nis the fall in prices\u2015the exchange value of commodities remaining the\nsame\u2015accompanied by an increased or diminished quantity of the medium\nof circulation. On the other hand, if the quantity of tokens of value\nrises above or falls below its required level, it is forcibly reduced\nto the latter by a fall or rise of prices. In either case the same\neffect seems to be brought about by the same cause, and Hume holds fast\nto this semblance.\n\nEvery scientific inquiry into the relation between the volume of the\ncirculating medium and the movement of prices must assume the value\nof the money material as given. Hume, on the contrary, considers\nexclusively periods of revolution in the value of the precious metals,\ni. e. revolutions in the measure of value. The rise of prices which\noccurred simultaneously with the increase of metallic money after the\ndiscovery of the American mines forms the historical background of his\ntheory, while his polemic against the monetary and mercantile system\nfurnishes its practical motive. The importation of precious metals can\nnaturally increase while their cost of production remains the same.\nOn the other hand, a decrease in their value, i. e. in the labor-time\nrequired for their production will reveal itself first of all in\ntheir increased imports. Hence, said the later followers of Hume, a\ndecrease in the value of the precious metals, reveals itself in an\nincreased volume of the circulating medium, and the increased volume\nof the latter is shown in the rise of prices. As a matter of fact,\nhowever, the rise in price affects only exported commodities, which\nare exchanged for gold and silver as commodities and not as mediums\nof circulation. Thus, the prices of these commodities, which are now\nestimated in gold and silver of lower value, rise as compared with\nthe prices of all other commodities whose exchange value continues\nto be estimated in gold or silver according to the standard of their\nold cost of production. This twofold appraisement of the exchange\nvalues of commodities in the same country can naturally be only\ntemporary, and the gold and silver prices must become equalized in\nthe proportions determined by the exchange values themselves, so that\nfinally the exchange values of all commodities come to be estimated\naccording to the new value of the money material. The development of\nthis process, as well as the ways and means in which the exchange value\nof commodities asserts itself within the limits of the fluctuations\nof market prices, do not fall within the scope of this work. But that\nthis equalization takes place but gradually in the early periods of\ndevelopment of bourgeois production and extends over long periods of\ntime, never keeping pace with the increase of cash in circulation,\nhas been strikingly demonstrated by new critical investigations of\nthe movement of prices of commodities in the sixteenth century.[117]\nThe favorite references of Hume\u2019s followers to the rise of prices\nin ancient Rome in consequence of the conquests of Macedonia, Egypt\nand Asia Minor, are quite irrelevant. The characteristic method of\nantiquity of suddenly transferring hoarded treasures from one country\nto another, which was accomplished by violence and thus brought about\na temporary reduction of the cost of production of precious metals\nin a certain country by the simple process of plunder, affects just\nas little the intrinsic laws of money circulation, as the gratuitous\ndistribution of Egyptian and Sicilian grain in Rome affected the\nuniversal law governing the price of grain. Hume, as well as all\nother writers of the eighteenth century, was not in possession of the\nmaterial necessary for the detailed observation of the circulation\nof money. This material, which first becomes available with the full\ndevelopment of banking, includes in the first place a critical history\nof prices of commodities, and in the second, official and current\nstatistics relating to the expansion and contraction of the circulating\nmedium, the imports and exports of the precious metals, etc. Hume\u2019s\ntheory of circulation may be summed up in the following propositions:\n1. The prices of commodities in a country are determined by the\nquantity of money existing there (real or symbolic money); 2. The\nmoney current in a country represents all the commodities to be found\nthere. In proportion \u201cas there is more or less of this representation,\u201d\ni. e. of money, \u201cthere goes a greater or less quantity of the thing\nrepresented to the same quantity of it\u201d; 3. If commodities increase\nin quantity, their price falls or the value of money rises. If money\nincreases in quantity, then, on the contrary, the price of commodities\nrises and the value of money declines.[118]\n\n\u201cThe dearness of everything,\u201d says Hume, \u201cfrom plenty of money, is a\ndisadvantage, which attends an established commerce, and sets bounds\nto it in every country, by enabling the poorer states to undersell\nthe richer in all foreign markets.\u201d[119] \u201cWhere coin is in greater\nplenty; as a greater quantity of it is required to represent the same\nquantity of goods; it can have no effect, either good or bad, taking\na nation within itself; any more than it would make an alteration on\na merchant\u2019s books, if, instead of the Arabian method of notation,\nwhich requires few characters, he should make use of the Roman, which\nrequires a great many. Nay, the greater quantity of money, like the\nRoman characters, is rather inconvenient, and requires greater trouble\nboth to keep and transport it.\u201d[120] In order to prove anything, Hume\nshould have shown that under a _given_ system of notation the quantity\nof characters used does not depend on the magnitude of the numbers,\nbut that on the contrary, the magnitude of the numbers depends on\nthe quantity of the characters used. It is perfectly true that there\nis no advantage in estimating or \u201ccounting\u201d values of commodities\nin depreciated gold and silver, and that is the reason why nations\nhave always found it more convenient with the growth of the value\nof the commodities in circulation to count in silver in preference\nto copper, and in gold rather than in silver. In proportion as the\nnations became richer, they converted the less valuable metals into\nsubsidiary coin and the more valuable ones into money. Furthermore,\nHume forgets that in order to count values in gold and silver, it is\nnot necessary that either gold or silver should be \u201con hand.\u201d Money of\naccount and the medium of circulation are identical with him and both\nare \u201ccoin.\u201d Hume concludes that a rise or fall of prices depends on\nthe quantity of money in circulation, because a change in the value\nof the measure of value, i. e. of the precious metals which serve as\nmoney of account, causes a rise or fall of prices and, consequently,\nalso a change in the amount of money in circulation, the rapidity of\nthe latter remaining the same. That not only the quantity of gold and\nsilver increased in the sixteenth and seventeenth centuries, but that\nthe cost of their production had declined at the same time, Hume could\nknow from the closing up of the European mines. In the sixteenth and\nseventeenth centuries the prices of commodities increased in Europe\nwith the influx of the mass of American gold and silver; hence the\nprices of commodities in every land are determined by the mass of\ngold and silver to be found there. This was Hume\u2019s first \u201cnecessary\nconsequence.\u201d[121] In the sixteenth and seventeenth centuries prices\nhad not risen uniformly with the increase of the quantity of precious\nmetals; more than half a century passed before _any_ change in\nprices became perceptible, and even then it took a long time before\nthe exchange values of commodities came to be generally estimated\naccording to the depreciated value of gold and silver, i. e. before the\nrevolution affected the general price level. Hence, concludes Hume,\nwho, quite contrary to the principles of his philosophy, generalizes\nindiscriminately from imperfectly observed facts, prices of commodities\nor the value of money depend not on the total amount of money to be\nfound in the country, but rather on the quantity of gold and silver\nwhich is actually in circulation; but in the long run all the gold\nand silver in the country must be absorbed by circulation in the\nform of coin.[122] It is clear that if gold and silver have a value\nof their own, then, apart from all other laws of circulation, only a\ndefinite quantity of gold and silver can circulate as the equivalent\nof commodities of a given value. If, therefore, every quantity of gold\nand silver which happens to be in a country must enter the sphere of\nexchange of commodities as a medium of circulation without regard\nto the total value of the commodities, then gold and silver have no\nintrinsic value and are in fact no real commodities. That is Hume\u2019s\nthird \u201cnecessary consequence.\u201d He makes commodities enter the process\nof circulation without price and gold and silver without value. That\nis the reason why he never speaks of the value of commodities and of\ngold, but only of their relative quantities. Locke had already said\nthat gold and silver had merely an imaginary or conventional value; the\nfirst brutal expression of opposition to the assertion of the monetary\n\u201csystem\u201d that gold and silver alone have true value. That gold and\nsilver owe their character of money to the function they perform in\nthe social process of exchange is interpreted to the effect that they\nowe their own value and therefore the magnitude of their value to a\nsocial function.[123] Gold and silver are thus worthless things, which,\nhowever, acquire a fictitious value within the sphere of circulation\n_as representatives of commodities_. They are converted by the process\nof circulation not into money, but into value. This value of theirs is\ndetermined by the proportion between their own volume and that of the\ncommodities, since the two must balance each other. Thus, Hume makes\ngold and silver enter the world of commodities as non-commodities;\nbut as soon as they appear in the form of coin, he turns them, on\nthe contrary, into mere commodities, which must be exchanged for\nother commodities by simple barter. In that manner, if the world of\ncommodities consisted of but one commodity, say one million quarters\nof grain, the idea would work itself out very simply; viz., one\nquarter of grain would be exchanged for two ounces of gold if there\nwere altogether two million ounces of gold, and for twenty ounces of\ngold, if there were a total of twenty million ounces, the price of the\ncommodity and the value of money rising or falling in inverse ratio to\nthe quantity of gold in existence.[124] But the world of commodities\nconsists of an endless variety of use-values, whose relative values are\nby no means determined by their relative quantities. How, then, does\nHume conceive this exchange of the volume of commodities for the volume\nof gold? He contents himself with the meaningless, hollow idea that\nevery commodity is exchanged as an aliquot part of the entire volume of\ncommodities for a corresponding aliquot part of the volume of gold. The\nprocess of the movement of commodities due to the antagonism between\nexchange value and use-value which commodities bear within themselves,\nand which manifests itself in the circulation of money, becoming\ncrystallized in different forms of the latter, is thus done away with,\ngiving place to the imaginary mechanical equalization process between\nthe quantity of precious metals to be found in a country and the volume\nof commodities existing there at the same time.\n\nSIR JAMES STEUART opens his inquiry into the nature of coin and\nmoney with an elaborate criticism of Hume and Montesquieu.[125] He\nis really the first to ask this question: is the quantity of current\nmoney determined by the prices of commodities, or are the prices of\ncommodities determined by the quantity of current money? Although his\nanalysis is obscured by his fantastic conception of the measure of\nvalue, his vacillating view of exchange value and by reminiscences\nof the mercantile system, he discovers the essential forms of money\nand the general laws of the circulation of money, because he makes\nno attempt at a mechanical separation of commodities from money, but\nproceeds to develop its different functions from the different aspects\nof the exchange of commodities. Money is used, he says, for two\nprincipal purposes: for the payment of debts and for the purchase of\nwhat one needs; the two together form \u201cready money demands.\u201d The state\nof trade and industry, the mode of living, the customary expenditures\nof the people, taken all together regulate and determine the volume\nof \u201cready money demands,\u201d i. e. the number of \u201calienations.\u201d In order\nto effect this multitude of payments, a certain proportion of money\nis required. This proportion may increase or decrease according to\ncircumstances, even while the number of alienations remains the same.\nAt any rate, the circulation of a country can absorb only a definite\nquantity of money.[126] \u201cIt is the complicated operations of demand\nand competition which determines the standard price of everything\u201d;\nthe latter \u201cdoes not in the least depend on the quantity of gold and\nsilver in the country.\u201d[127] What then will become of the gold and\nsilver that is not required as coin? They are hoarded or used in the\nmanufacture of articles of luxury. If the quantity of gold and silver\nfall below the level required for circulation, symbolic money or other\nsubstitutes take its place. If a favorable rate of exchange brings\nabout a surplus of money in the country and cuts off at the same time\nthe demand for its shipment abroad, it will accumulate in strong-boxes,\nwhere the \u201criches will remain without producing more effect than if\nthey had remained in the mine.\u201d\n\nThe second law discovered by Steuart is that of the reflux of credit\ncirculation to its starting point. Finally, he works out the effects\nwhich the disparity of the rates of interest in different countries\nproduces upon the international export and import of precious\nmetals. The last two points we mention here only for the sake of\ncompleteness, since they have but a remote bearing on the subject of\nour discussion.[128] Symbolic money or credit money\u2015Steuart does not\nas yet distinguish between the two forms of money\u2015may take the place\nof precious metals as a means of purchase or means of payment in the\nsphere of home circulation, but never in the world market. Paper notes\nare therefore \u201cmoney of the society,\u201d while gold and silver are \u201cmoney\nof the world.\u201d[129]\n\nIt is characteristic of nations with an \u201chistorical\u201d development, in\nthe sense in which the term is used by the historical school of law,\nto keep forgetting their own history. Although the controversy as to\nthe relation of prices of commodities to the volume of the circulating\nmedium has been continually agitating Parliament for the last half a\ncentury, and has precipitated in England thousands of pamphlets, large\nand small, Steuart has remained even more of a \u201cdead dog\u201d than Spinoza\nseemed to be to Moses Mendelson in Lessing\u2019s time. Even the latest\nwriter on the history of \u201ccurrency,\u201d Maclaren, makes Adam Smith the\noriginal author of Steuart\u2019s theory, and Ricardo of Hume\u2019s theory.[130]\nWhile Ricardo elaborated Hume\u2019s theory, Adam Smith registered the\nresults of Steuart\u2019s investigations as dead facts. Adam Smith applied\nthe Scotch saying that \u201cmony mickles mak a muckle\u201d even to his\nspiritual wealth, and therefore concealed with petty care the sources\nto which he owed the little out of which he tried to make so much.\nMore than once he prefers to break off the point of the discussion,\nwhenever he feels that an attempt on his part clearly to formulate the\nquestion would compel him to settle his accounts with his predecessors.\nSo in the case of the money theory. He tacitly adopts Steuart\u2019s theory\nwhen he says that the gold and silver existing in a country is partly\nutilized as coin; partly accumulated in the form of reserve funds for\nmerchants in countries without banks, or of bank reserves in countries\nwith a credit currency; partly serves as a hoard for the settling of\ninternational payments; partly is turned into articles of luxury. He\npasses over without remark the question as to the quantity of coin in\ncirculation, treating money quite wrongly as a mere commodity.[131]\nHis vulgarizer, the dull J. B. Say, whom the French have proclaimed\n_prince de la science_\u2015like Johann Christoph Gottsched, who proclaimed\nhis Sch\u00f6naich a Homer and himself a Pietro Aretino to the _terror\nprincipum and lux mundi_\u2015has with great pomp raised this not altogether\ninnocent oversight of Adam Smith to a dogma.[132] It must be said,\nhowever, that his hostile attitude to the illusions of the mercantile\nsystem prevented Adam Smith from taking an objective view of the\nphenomena of metallic circulation, while his views on credit money are\noriginal and deep. As in the eighteenth century petrification theories\nthere is always felt the presence of an undercurrent which springs from\neither a critical or apologetic attitude toward the biblical tradition\nof the flood, so there is concealed behind all the money theories of\nthe eighteenth century a secret struggle with the monetary system, the\nghost which had stood guard over the cradle of bourgeois economy and\ncontinued to throw its shadow over legislation.\n\nIn the nineteenth century, inquiries into the nature of money were not\nprompted directly by phenomena of metallic circulation, but rather by\nthose of bank-note circulation. The former was touched upon only in\norder to discover the laws governing the latter. The suspension of\nspecie payments by the Bank of England in 1797, the rise of prices of\nmany commodities which followed it, the fall of the mint price of gold\nbelow its market price, the depreciation of bank-notes, especially\nsince 1809, furnished the direct practical occasion for a party\nstruggle in parliament and a theoretical tournament outside of it,\nboth conducted with like passion. The historical background for the\ncontroversy was furnished by the history of paper money during the\neighteenth century: the fiasco of Law\u2019s bank; the depreciation of the\nprovincial bank-notes of the English Colonies in North America from the\nbeginning to the middle of the eighteenth century which went hand in\nhand with the increase in the number of tokens of value; further, the\nContinental bills issued as legal tender by the American government\nduring the War of Independence; and finally, the experiment with the\nFrench _assignats_ carried out on a still larger scale. Most of the\nEnglish writers of that period confound the circulation of bank-notes,\nwhich is governed by quite different laws, with the circulation of\ntokens of value or government legal tender paper money; and while they\nclaim to explain the phenomena of this legal tender circulation by the\nlaws of metallic circulation, they proceed, as a matter of fact, just\nthe opposite way, viz., deducting laws for the latter from phenomena\nobserved in connection with the former. We omit all the numerous\nwriters of the period of 1800-1809 and turn directly to RICARDO, both\nbecause he embodies the views of his predecessors, which he formulates\nwith greater precision, and because the shape he gave to the theory of\nmoney governs English bank legislation until this moment. Ricardo, like\nhis predecessors, confounds the circulation of bank-notes, or credit\nmoney, with the circulation of mere tokens of value. The fact which\nimpresses him most is the depreciation of paper currency accompanied by\nthe rise of prices of commodities. What the American mines had been to\nHume, the paper-bill presses in Threadneedle street were to Ricardo,\nand he himself expressly identifies the two factors at some place in\nhis works. His first writings, which dealt exclusively with the money\nquestion belong to the time of the most violent controversy between\nthe Bank of England, which had on its side the ministers and the war\nparty, and its opponents about whom were centered the parliamentary\nopposition, the Whigs and the Peace party. They appeared as immediate\nforerunners of the famous Report of the Bullion Committee of 1810, in\nwhich Ricardo\u2019s views were adopted.[133] The singular circumstance,\nthat Ricardo and his adherents, who held money to be merely a token\nof value, are called bullionists, is due not only to the name of that\ncommittee, but also to the nature of their theory. In his work on\npolitical economy, Ricardo repeated and developed further the same\nviews, but nowhere has he investigated the nature of money as such, as\nhe had done in the case of exchange value, profit, rent, etc.\n\nTo begin with, Ricardo determines the value of gold and silver, like\nthat of all other commodities, by the quantity of labor-time embodied\nin them.[134] By means of them, as commodities of a given value, the\nvalues of all other commodities are measured.[135] The volume of the\ncirculating medium in a country is determined by the value of the\nunit of measure of money on the one hand, and by the sum total of\nthe exchange values of commodities, on the other. This quantity is\nmodified by economy in the method of payment.[136] Since the quantity\nof money, of a given value, which can be absorbed by circulation,\nis thus determined and since the value of money within the sphere of\ncirculation manifests itself only in its quantity, it follows that\nmere tokens of value, if issued in proportions determined by the value\nof money, may replace it in circulation, and in fact, \u201ca currency is\nin its most perfect state when it consists wholly of paper money, but\nof paper money of an equal value with the gold which it professes\nto represent.\u201d[137] So far Ricardo determines the volume of the\ncirculating medium by the prices of commodities, assuming the value of\nmoney to be given; money as a token of value means with him a token of\na definite quantity of gold and not a mere worthless representative of\ncommodities as was the case with Hume.\n\nWhen Ricardo suddenly gets off the straight path of his presentation\nand takes the very opposite view, he does so to turn his attention\nto the international circulation of precious metals and thus brings\nconfusion into the problem by introducing considerations that are\nforeign to the subject. Let us follow his own course of reasoning, and,\nin order to remove everything that is artificial and incidental, let\nus assume that the gold and silver mines are located in the interior\nof the countries in which the precious metals circulate as money.\nThe only inference which follows from Ricardo\u2019s reasoning as so far\ndeveloped, is that, the value of gold being given, the quantity of\nmoney in circulation will be determined by the prices of commodities.\nThus, at a given moment, the quantity of gold in circulation in a\ncountry is simply determined by the exchange value of the commodities\nin circulation. Let us suppose now that the sum total of these exchange\nvalues has declined either because there are less commodities produced\nat the old exchange values, or because, in consequence of an increased\nproductivity of labor, the same quantity of commodities has a smaller\nvalue. Or, we may assume on the contrary that the sum total of exchange\nvalues has increased, either because the quantity of commodities\nhas increased while the cost of their production has remained the\nsame, or because the value of the same or of a smaller quantity of\ncommodities has risen in consequence of a diminished productivity of\nlabor. What becomes in either case of the _given_ quantity of metal\nin circulation? If gold is money merely because it is current as a\nmedium of circulation; if it is compelled to remain in circulation\nlike government legal tender paper money (and that is what Ricardo has\nin mind), then the quantity of money in circulation will rise above\nthe normal level, as determined by the exchange value of the metal,\nin the former case, and fall below that level in the latter. Although\npossessing a value of its own, gold will become in the former case\na token of a metal of lower exchange value than its own, and in the\nlatter, a token of a metal of higher value. In the former case it will\nremain as a token of value less than its own, in the latter greater\nthan its own (again an abstract deduction from legal tender paper\nmoney). In the former case it is the same as though commodities were\nestimated in a metal of lower value than gold, in the latter, as though\nthey were estimated in a metal of higher value. In the former case,\nprices of commodities would rise therefore, in the latter they would\nfall. In either case the movement of prices, their rise or fall, would\nappear as the effect of a relative expansion or contraction of the\nvolume of gold in circulation above or below the level corresponding\nto its own value, i. e. above or below the normal quantity which is\ndetermined by the proportion between its own value and that of the\ncommodities in circulation.\n\nThe same process would take place if the sum total of the prices of\nthe commodities in circulation remained unchanged, while the volume\nof gold in circulation came to be below or above the right level: the\nformer in case the gold coin worn out in the course of circulation\nwere not replaced by the production of a corresponding quantity of\ngold in the mines; the latter, if the output of the mines exceeded the\nrequirements of circulation. In either case it is assumed that the cost\nof production of gold or its value remain the same.\n\nTo sum up: the money in circulation is at its normal level, when its\nvolume is determined by its own bullion value, the exchange value of\ncommodities being given. It rises above that level, bringing about a\nfall in the value of gold below its own bullion value and a rise of\nprices of commodities, whenever the sum total of the exchange values of\ncommodities declines, or the output of gold from the mines increases.\nIt sinks below its right level, leading to a rise of gold above its\nown bullion value and to a fall of prices of commodities, whenever the\nsum total of the exchange values of the commodities or the gold output\nof the mines is not sufficient to replace the quantity of outworn\ngold. In either case the gold in circulation becomes a token of value\ngreater or smaller than that it really possesses. It may become an\nappreciated or depreciated token of itself. As soon as all commodities\nwould come to be estimated in gold of this new value and the general\nprice level would accordingly rise or fall, the quantity of current\ngold would again answer the requirements of circulation (a consequence\nwhich Ricardo emphasizes with great pleasure), but would be at variance\nwith the cost of production of the precious metals and, therefore,\nwith their relation as commodities to all other commodities. According\nto the general Ricardian theory of exchange value, the rise of gold\nabove its exchange value, i. e., above the value as determined by the\nlabor-time contained in it, would cause an increase in the production\nof gold until the increased output of it would reduce its value to\nthe proper magnitude. And in the same manner, a fall of gold below\nits value would cause a decline in its production until its value\nrose again to its proper magnitude. By these opposite movements the\ndiscrepancy between the bullion value of gold and its value as a medium\nof circulation would disappear, the normal level of the volume of gold\nin circulation would be restored, and the price level would again\ncorrespond to the measure of value. These fluctuations in the value of\ngold in circulation would to the same extent affect gold in the form\nof bullion, because by assumption, all gold that is not utilized as an\narticle of luxury, is supposed to be in circulation. Since gold itself\nmay become, both as coin and bullion, a token of value of greater\nor smaller magnitude than its bullion value, it is self understood\nthat convertible bank-notes in circulation have to share the same\nfate. Although bank-notes are convertible, i. e. their real value and\nnominal value agree, \u201cthe aggregate currency consisting of metal and of\nconvertible notes\u201d may appreciate or depreciate according as to whether\nit rises or falls, for reasons already stated, above or below the level\ndetermined by the exchange value of the commodities in circulation\nand the bullion value of gold. Inconvertible paper money, has, from\nthis point of view, only that advantage as against convertible paper\nmoney, that it may depreciate in a twofold manner. It may fall below\nthe value of the metal which it is supposed to represent, because it\nhas been issued in too great quantity, or it may depreciate because\nthe metal it represents has itself fallen in value. This depreciation,\nnot of paper as compared with gold, but of gold and paper together,\nor of the aggregate currency of a country, is one of the principal\ndiscoveries of Ricardo, which Lord Overstone and Co. pressed into their\nservice and made a fundamental principle of Sir Robert Peele\u2019s Bank\nlegislation of 1844 and 1845.\n\nWhat should have been proven was that the price of commodities or the\nvalue of gold depends on the quantity of gold in circulation. The\nproof consists in the assumption of what is to be proven, viz. that\nany quantity of the precious metal employed as money must become a\nmedium of circulation or coin, and thereby a token of value for the\ncommodities in circulation, no matter in what proportion to its own\nintrinsic value and no matter what the total value of those commodities\nmay be. To put it differently, the proof consists in overlooking all\nthe other functions which money performs besides its function of a\nmedium of circulation. When hard pressed, as in his controversy with\nBosanquet, Ricardo, completely under the influence of the phenomenon of\ndepreciated tokens of value caused by their quality, takes recourse to\ndogmatic assurances.[138]\n\nIf Ricardo had built up this theory by abstract reasoning, as we\nhave done it here, without introducing concrete facts and incidental\nmatters which only distract his attention from the main question, its\nhollowness would be striking. But he takes up the entire subject in its\n_international_ aspect. It will be easy to prove, however, that the\napparent magnitude of scale does not make his fundamental ideas less\ndiminutive.\n\nHis first proposition was as follows: the volume of metallic currency\nis normal when it is determined by the total value of the commodities\nin circulation estimated in its bullion value. Expressed so as to\napply to international conditions, it reads thus: in a normal state of\ncirculation every country possesses a quantity of money \u201caccording to\nthe state of its commerce and wealth.\u201d Money circulates at a value\ncorresponding to its real value or to its cost of production, i. e.\nit has the same value _in all countries_.[139] That being the case,\n\u201cthere could be no temptation offered to either for their importation\nor exportation.\u201d[140] There would thus be established a balance of\ncurrencies between the different countries. The normal level of a\nnational currency is now expressed in terms of an international\nbalance of currencies, which practically amounts to the statement that\nnationality does not change anything in a universal economic law. We\nhave reached again the same fatal point as before. How is the normal\nlevel disturbed? Or, speaking in terms of the new terminology, how is\nthe international balance of currencies disturbed? Or, how does money\ncease to have the same value in all countries? Or, finally, how does\nit cease to pass at its own value in every country? We have seen that\nthe normal level was disturbed by an increase or decrease of the volume\nof money in circulation while the total value of commodities remained\nthe same; or, because the quantity of money in circulation remained\nthe same while the exchange values of commodities rose or fell. In the\nsame manner, the international level, determined by the value of the\nmetal itself, is disturbed by an increase in the quantity of gold in a\ncountry brought about by the discovery of new gold mines,[141] or by\nan increase or decrease of the total exchange-value of the circulating\ncommodities in any particular country. Just as in the former case the\noutput of the precious metals decreased or increased according as\nto whether it was necessary to contract or expand the currency and\nthereby to lower or raise prices, so are the same effects produced\nnow by export and import from one country to another. In the country\nin which prices would rise or the value of gold would fall below the\nbullion value in consequence of a redundant currency, gold would be\ndepreciated, and the prices of commodities would rise as compared with\nother countries. Gold would, therefore, be exported, while commodities\nwould be imported, and vice versa. Just as in the former case the\noutput of gold, so now the import or export of gold and, with it, the\nrise or fall of prices of commodities would continue until, as we would\nhave said before, the right value relation would be restored between\nthe metal and commodities, or as we shall say now, the international\nbalance of currencies would be restored. Just as in the former case\nthe production of gold increased or decreased because gold stood\nabove or below its value, so now the international migration of gold\nwould take place for the same reason. Just as in the former case,\nevery change in the production of the circulating metal affected its\nquantity and, thereby, prices, so would the same effect be produced\nnow by international import and export. As soon as the relative values\nof gold and commodities or the normal quantity of currency would be\nrestored, no further production would take place in the former case,\nand no further export or import in the latter, except in so far as\nwould be necessary to replace outworn coin and to meet the demand of\nmanufacturers of articles of luxury. It follows \u201cthat the temptation to\nexport money in exchange for goods, or what is termed an unfavorable\nbalance of trade, never arises but from a redundant currency.\u201d[142]\n\u201cThe exportation of the coin is caused by its cheapness, and is not\nthe effect, but the cause of an unfavourable balance.\u201d[143] Since the\nincrease or decrease in the production of gold in the former case and\nthe importation or exportation of gold in the latter, take place only\nwhenever its volume rises above or sinks below its normal level, i.\ne. whenever gold appreciates or depreciates in comparison with its\nbullion value, or whenever prices of commodities are too high or too\nlow; it follows that every such movement works as a corrective,[144]\nsince, through the resultant expansion or contraction of the currency,\nprices are restored to their true level: in the former case this level\nrepresents the balance between the respective values of gold and of\ncommodities; in the latter, the international balance of currencies. To\nput it in other words: money circulates in different countries only in\nso far as it circulates as coin in every country. Money is but coin and\nall the gold existing in a country must therefore enter circulation,\ni. e. it can rise above or fall below its value as a token of value.\nThus we safely land again, by the round-about way of this international\ncomplication, at the simple dogma which constituted our starting point.\n\nWith what violence to actual facts Ricardo has to explain them in\nthe sense of his abstract theory, a few illustrations will suffice\nto show. He maintains, e. g. that in years of poor crops, which\nhappened frequently in England during 1800-1820, gold is exported not\nbecause corn is needed and gold as money is at all times an effectual\nmeans of purchase in the world market, but because gold is in such\ncases depreciated in its value as compared with other commodities\nand, therefore, the currency of the country in which there has been\na failure of crops is depreciated with respect to other national\ncurrencies. \u201cIn consequence of a bad harvest, a country having been\ndeprived of a part of its commodities ... the currency which was\nbefore at its just level ... become(s) redundant,\u201d and prices of all\ncommodities rise in consequence.[145] Contrary to this paradoxical\ninterpretation it has been proven statistically that from 1793 to\nthe present time, whenever England had a bad harvest the available\nsupply of currency not only did not become superabundant, but became\ninadequate and that, therefore, more money circulated and had to\ncirculate on such occasions.[146]\n\nIn the same manner, Ricardo maintained, with reference to Napoleon\u2019s\nContinental System and the English Blockade Decree, that the English\nexported gold instead of commodities to the Continent, because their\nmoney was depreciated with respect to the money on the Continent, that\ntheir commodities were, therefore, more high priced, which made it\na more profitable commercial speculation to export gold than goods.\nAccording to him England was a market in which commodities were dear\nand money was cheap, while on the Continent commodities were cheap\nand money was dear. The trouble, according to an English writer, was\n\u201cthe ruinously low prices of our manufactures and of our colonial\nproductions under the operation ... of the \u2018Continental System\u2019 during\nthe last six years of the war.... The prices of sugar and coffee,\nfor instance, on the Continent, computed in gold, were four or five\ntimes higher than their prices in England, computed in bank-notes. I\nam speaking ... of the times in which the French chemists discovered\nsugar in beet-root, and a substitute for coffee in chicory; and when\nthe English grazier tried experiments upon fattening oxen with treacle\nand molasses\u2015of the times when we took possession of the island of\nHeligoland, in order to form there a depot of goods to facilitate, if\npossible, the smuggling of them into the north of Europe; and when\nthe lighter descriptions of British manufactures found their way into\nGermany through Turkey.... Almost all the merchandise of the world\naccumulated in our warehouses, where they became impounded, except when\nsome small quantity was released by a French License, for which the\nmerchants at Hamburgh and Amsterdam had, perhaps, given Napoleon such\na sum as forty or fifty thousand pounds. They must have been strange\nmerchants ... to have paid so large a sum for liberty to carry a cargo\nof goods from a dear market to a cheap one. What was the ostensible\nalternative the merchant had?... Either to buy coffee at 6d. a pound\nin bank-notes, and send it to a place where it would instantly sell at\n3s. or 4s. a pound in gold, or to buy gold with bank-notes at \u00a35 an\nounce, and send it to a place where it would be received at \u00a33 17s.\n10-1/2d. an ounce.... It is too absurd, of course, to say ... that the\ngold was remitted instead of the coffee, as a preferable mercantile\noperation.... There was not a country in the world in which so large a\nquantity of desirable goods could be obtained, in return for an ounce\nof gold, as in England.... Bonaparte ... was constantly examining the\nEnglish Price Current.... So long as he saw that gold was dear and\ncoffee was cheap in England, he was satisfied that his \u2018Continental\nSystem\u2019 worked well.\u201d[147]\n\nAt the very time when Ricardo first formulated his theory of money,\nand the Bullion Committee embodied it in its parliamentary report,\nnamely in 1810, a ruinous fall of prices of all English commodities\nas compared with those of 1808 and 1809 took place, while gold rose\nin value accordingly. Only agricultural products formed an exception,\nbecause their importation from abroad met with obstacles and their\ndomestic supply was decimated by unfavorable crop conditions.[148]\nRicardo so utterly failed to comprehend the r\u00f4le of precious metals as\nan international means of payment, that in his testimony before the\nCommittee of the House of Lords in 1819 he could say \u201cthat drains for\nexportation would cease altogether so soon as cash payments should be\nresumed, and the currency be restored to its metallic level.\u201d He died\njust in time, on the very eve of the crisis of 1825, which belied his\nprophesies.\n\nThe time when Ricardo wrote was generally little adapted for the\nobservation of the function of precious metals as world money. Before\nthe introduction of the Continental System, the balance of trade\nhad almost always been in favor of England, and while that system\nlasted, the commercial intercourse with the European continent was\ntoo insignificant to affect the English rate of exchange. The money\ntransmissions were mostly of a political nature and Ricardo seems to\nhave utterly failed to grasp the part which subsidy payments played at\nthat time in English gold exports.[149]\n\nAmong the contemporaries of Ricardo who formed the school which\nadopted his economic principles, JAMES MILL was the most important\none. He attempted to work out Ricardo\u2019s theory of money on the basis\nof simple metallic circulation, without the irrelevant international\ncomplications which served Ricardo to hide the inadequacy of his\ntheory, and without any controversial regard for the operations of the\nBank of England. His main arguments are as follows:\n\n\u201cBy value of money, is here to be understood the proportion in which\nit exchanges for other commodities, or the quantity of it which\nexchanges for a certain quantity of other things.... It is the total\nquantity of the money in any country, which determines what portion of\nthat quantity shall exchange for a certain portion of the goods or\ncommodities of that country. If we suppose that all the goods of the\ncountry are on one side, all the money on the other, and that they are\nexchanged at once against one another, it is evident ... that the value\nof money would depend wholly upon the quantity of it. It will appear\nthat the case is precisely the same in the actual state of the facts.\nThe whole of the goods of a country are not exchanged at once against\nthe whole of the money; the goods are exchanged in portions, often\nin very small portions, and at different times, during the course of\nthe whole year. The same piece of money which is paid in one exchange\nto-day, may be paid in another exchange tomorrow. Some of the pieces\nwill be employed in a great many exchanges, some in very few, and\nsome, which happen to be hoarded, in none at all. There will, amid all\nthese varieties, be a certain average number of exchanges, the same\nwhich, if all the pieces had performed an equal number, would have been\nperformed by each; that average we may suppose to be any number we\nplease; say, for example, ten. If each of the pieces of the money in\nthe country perform ten purchases, that is exactly the same thing as if\nall the pieces were multiplied by ten, and performed only one purchase\neach. The value of all the goods in the country is equal to ten times\nthe value of all the money.... If the quantity of money instead of\nperforming ten exchanges in the year, were ten times as great, and\nperformed only one exchange in the year, it is evident that whatever\naddition were made to the whole quantity, would produce a proportional\ndiminution of value, in each of the minor quantities taken separately.\nAs the quantity of goods, against which the money is all exchanged at\nonce, is supposed to be the same, the value of all the money is no\nmore, after the quantity is augmented, than before it was augmented.\nIf it is supposed to be augmented one-tenth, the value of every part,\nthat of an ounce for example, must be diminished one-tenth.... In\nwhatever degree, therefore, the quantity of money is increased or\ndiminished, other things remaining the same, in that same proportion,\nthe value of the whole, and of every part, is reciprocally diminished\nor increased. This, it is evident, is a proposition universally true.\nWhenever the value of money has either risen or fallen (the quantity\nof goods against which it is exchanged and the rapidity of circulation\nremaining the same), the change must be owing to a corresponding\ndiminution or increase of the quantity; and can be owing to nothing\nelse. If the quantity of goods diminish, while the quantity of money\nremains the same, it is the same thing as if the quantity of money\nhad been increased;\u201d and vice versa.... \u201cSimilar changes are produced\nby any alteration in the rapidity of circulation.... An increase in\nthe number of these purchases has the same effect as an increase in\nthe quantity of money; a diminution the reverse.... If there is any\nportion of the annual produce which is not exchanged at all, as what\nis consumed by the producer; or which is not exchanged for money;\nthat is not taken into the account, because what is not exchanged for\nmoney is in the same state with respect to the money, as if it did not\nexist.... Whenever the coining of money ... is free, its quantity is\nregulated by the value of the metal.... Gold and silver are in reality\ncommodities.... It is cost of production ... which determines the value\nof these, as of other ordinary productions.\u201d[150]\n\nThe whole wisdom of Mill resolves itself into a series of arbitrary and\nabsurd assumptions. He wishes to prove that the price of commodities or\nthe value of money is determined by \u201cthe total quantity of the money\nin any country.\u201d _Assuming_ that the quantity and the exchange value\nof the commodities in circulation remain unchanged and that the same\nbe true of the rapidity of circulation and of the value of precious\nmetals as determined by the cost of production, and _assuming_ at\nthe same time that the quantity of the metallic currency increases\nor decreases in proportion to the quantity of money _existing_ in a\ncountry, it becomes really \u201cevident\u201d that what was to have been proven\nhas been assumed. Mill falls, moreover, into the same error as Hume\nby assuming that use-values and not commodities with a given exchange\nvalue are in circulation, and that vitiates his statement, even if we\ngrant all of his \u201cassumptions.\u201d The rapidity of circulation may remain\nthe same; this may also be true of the value of the precious metals\nand of the _quantity_ of commodities in circulation; and yet a change\nin the exchange value of the latter may require now a larger and now\na smaller quantity of money for their circulation. Mill sees that a\npart of the money in a country is in circulation, while another is\nidle. With the aid of a most absurd average calculation he _assumes_\nthat, although it really appears to be different, yet all the gold in\na country does circulate. Assuming that ten million silver thalers\ncirculate in a country twice a year, there could be twenty million such\ncoins in circulation, if each circulated but once. And if the entire\nquantity of silver to be found in a country in any form amounts to\none hundred million thalers, it may be supposed that the entire one\nhundred million can enter circulation, if each piece of money should\ncirculate once in five years. One could as well assume that all the\nmoney of the world circulate in Hempstead, but that each piece of\nmoney instead of being employed three times a year, is employed once\nin 3,000,000 years. The one assumption is as relevant as the other for\nthe purpose of determining the relation between the sum total of prices\nof commodities and the volume of currency. Mill feels that it is a\nmatter of decisive importance to him to bring the commodities in direct\ncontact not with the money in circulation, but with the entire supply\nof money existing in a country. He admits that \u201cthe whole of the goods\nof a country are not exchanged at once against the whole of the money,\u201d\nbut that the goods are exchanged in different portions and at different\ntimes of the year for different portions of money. To do away with this\ndifficulty he _assumes_ that it does not exist. Moreover, this entire\nidea of direct contact of commodities and money and direct exchange is\na mere abstraction from the movement of simple purchase and sale or\nthe function of money as a means of purchase. Already in the movement\nof money as a means of payment, commodity and money cease to appear\nsimultaneously.\n\nThe commercial crises of the nineteenth century, namely, the great\ncrises of 1825 and 1836, did not result in any new developments in\nthe Ricardian theory of money, but they did furnish new applications\nfor it. They were no longer isolated economic phenomena, such as the\ndepreciation of the precious metals in the sixteenth and seventeenth\ncenturies which interested Hume, or the depreciation of paper money\nin the eighteenth and early nineteenth centuries which confronted\nRicardo; they were the great storms of the world market in which the\nconflict of all the elements of the capitalist process of production\ndischarge themselves, and whose origin and remedy were sought in the\nmost superficial and abstract sphere of this process, the sphere of\nmoney circulation. The theoretical assumption from which the school\nof economic weather prophets proceeds, comes down in the end to the\nillusion that Ricardo discovered the laws governing the circulation of\npurely metallic currency. The only thing that remained for them to do\nwas to subject to the same laws the circulation of credit and bank-note\ncurrency.\n\nThe most general and most palpable phenomenon in commercial crises is\nthe sudden, general decline of prices following a prolonged general\nrise. The general decline of prices of commodities may be expressed as\na rise in the relative value of money with respect to all commodities,\nand the general rise of prices as a decline of the relative value\nof money. In either expression the phenomenon is described but not\nexplained. Whether I put the question thus: explain the general\nperiodic rise of prices followed by a general decline of the same, or\nformulate the same problem by saying: explain the periodic decline and\nrise of the relative value of money with respect to commodities; the\ndifferent wording leaves the problem as little changed as would its\ntranslation from German into English. Ricardo\u2019s theory of money was\nexceedingly convenient, because it lends a tautology the semblance of\na statement of causal connection. Whence comes the periodic general\nfall of prices? From the periodic rise of the relative value of\nmoney. Whence the general periodic rise of prices? From the periodic\ndecline of the relative value of money. It might have been stated\nwith equal truth that the periodic rise and fall of prices is due\nto their periodic rise and fall. The problem itself is stated under\nthe assumption that the intrinsic value of money, i. e., its value\nas determined by the cost of production of precious metals remains\n_unchanged_. If it is more than a tautology then it is based on a\nmisconception of the most elementary principles. If the exchange value\nof A measured in terms of B, declines, we know that this may be caused\nby a decline of the value of A as much as by a rise of the value of\nB; the same being true of the case of a rise of the exchange value of\nA measured in terms of B. The tautology once admitted as a statement\nof cause, the rest follows easily. A rise of prices of commodities is\ncaused by a decline of the value of money and a decline of the value\nof money is caused, as we know from Ricardo, by a redundant currency,\ni. e., by a rise of the volume of currency over the level determined\nby its own intrinsic value and the intrinsic value of the commodities.\nIn the same manner, the general decline of prices of commodities is\nexplained by the rise of the value of money above its intrinsic value\nin consequence of an inadequate currency. Thus, prices rise and fall\nperiodically, because there is periodically too much or too little\nmoney in circulation. Should a rise of prices happen to coincide\nwith a contracted currency, and a fall of prices with an expanded\none, it may be asserted in spite of those facts that in consequence\nof a contraction or expansion of the volume of commodities in the\nmarket, which can not be proven statistically, the quantity of money\nin circulation has, although not absolutely, yet relatively increased\nor declined. We have seen that according to Ricardo these universal\nfluctuations must take place even with a purely metallic currency, but\nthat they balance each other through their alternations; thus, e. g.,\nan inadequate currency causes a fall of prices, the fall of prices\nleads to the export of commodities abroad, this export causes again an\nimport of gold from abroad, which, in its turn, brings about a rise\nof prices; the opposite movement taking place in case of a redundant\ncurrency, when commodities are imported and money is exported. But,\nsince in spite of these universal fluctuations of prices which are in\nperfect accord with Ricardo\u2019s theory of metallic currency, their acute\nand violent form, their crisis-form, belongs to the period of advanced\ncredit, it is perfectly clear that the issue of bank-notes is not\nexactly regulated by the laws of metallic currency. Metallic currency\nhas its remedy in the import and export of precious metals which\nimmediately enter circulation and thus, by their influx or efflux,\ncause the prices of commodities to fall or rise. The same effect on\nprices must now be exerted by banks by the artificial imitation of the\nlaws of metallic currency. If gold is coming in from abroad it proves\nthat the currency is inadequate, that the value of money is too high\nand the prices of commodities too low, and, consequently, that bank\nnotes must be put in circulation in proportion to the newly imported\ngold. On the contrary, notes have to be withdrawn from circulation in\nproportion to the export of gold from the country. That is to say,\nthe issue of bank notes must be regulated by the import and export\nof the precious metals or by the rate of exchange. Ricardo\u2019s false\nassumption that gold is only coin, and that therefore all imported gold\nswells the currency, causing prices to rise, while all exported gold\nreduces the currency leading to a fall of prices, this theoretical\nassumption is turned into a practical experiment of putting in every\ncase an amount of currency in circulation equal to the amount of gold\nin existence. Lord Overstone (the banker Jones Loyd), Colonel Torrens,\nNorman, Clay, Arbuthnot and a host of other writers, known in England\nas the adherents of the \u201ccurrency principle,\u201d not only preached this\ndoctrine, but with the aid of Sir Robert Peel succeeded in 1844 and\n1845 in making it the basis of the present English and Scotch bank\nlegislation. Its ignominous failure, theoretical as well as practical,\nfollowing upon experiments on the largest national scale, can be\ntreated only after we take up the theory of credit.[151] So much can be\nseen, however, that the theory of Ricardo which isolates money in its\nfluent form of currency, ends by ascribing to the ebbs and tides in the\nsupply of precious metals an influence on bourgeois economy such as the\nbelievers in the superstitions of the monetary system had never dreamt\nof. Thus did Ricardo, who proclaimed paper currency as the most perfect\nform of money, become the prophet of the bullionists.\n\nAfter Hume\u2019s theory or the abstract opposition to the monetary system\nwas thus developed to its ultimate conclusions, Steuart\u2019s concrete\nconception of money was finally restored to its rights by THOMAS\nTOOKE.[152] Tooke arrives at his principles not from any theory, but\nby a conscientious analysis of the history of prices of commodities\nfrom 1793 to 1856. In the first edition of his History of Prices which\nappeared in 1823, Tooke is still under the complete influence of the\nRicardian theory, and vainly tries to reconcile it with actual facts.\nHis pamphlet \u201cOn the Currency,\u201d which appeared after the crisis of\n1825 might even be considered as the first consistent presentation\nof the views which were later given the force of law by Overstone.\nContinued studies in the history of prices forced him, however, to the\nconclusion that the direct connection between prices and the volume of\ncurrency, as it is pictured by the theory, is a mere illusion; that\nthe expansion and contraction of currency which takes place while the\nvalue of the precious metals remains unchanged, is always the effect\nbut never the cause of price fluctuations; that the circulation of\nmoney is in any event but a secondary movement; and that money assumes\nquite different forms in the actual process of production in addition\nto that of a circulating medium. His detailed investigations belong\nto a sphere outside of that of simple metallic circulation and can be\ndiscussed here as little as the investigations of WILSON and FULLARTON\nwhich belong to the same class.[153] None of these writers takes a\none-sided view of money, but treat it in its various aspects; the\ntreatment, however, is mechanical, without an attempt to establish an\norganic connection either between these various aspects themselves,\nor between them and the combined system of economic categories. They\nfall, therefore, into the error of confusing _money_ as distinguished\nfrom _medium of circulation_ with _capital_ or even with commodity,\nalthough they are forced elsewhere to differentiate it from both.[154]\nWhen gold, e. g., is shipped abroad, it practically means that capital\nis sent abroad, but the same thing takes place when iron, cotton,\ngrain, or any other commodity is exported. Both are capital and are\ndistinguished not as capital, but as money and commodity. The function\nof gold as the international medium of exchange springs, therefore,\nnot from its being capital, but from its specific character of money.\nSimilarly, when gold, or bank notes in its place, circulate in the home\ntrade as means of payment, they constitute capital at the same time.\nBut they could not be replaced by capital in the form of commodities,\nas has been demonstrated very palpably by crises, for instance. That\nis to say, it is the fact that gold is distinguished from commodities\nin its capacity of money and not in that of capital, that makes it the\nmeans of payment. Even when capital is exported directly as capital,\nas, e. g., when it is done for the purpose of lending abroad a certain\namount on interest, it depends on circumstances, whether it will be\nexported in the form of commodities or in that of gold, and if in the\nlatter form, it is due to the specific destination of the precious\nmetals as distinguished from commodities to serve as money. In general,\nthese writers do not consider money in its abstract form, as it is\ndeveloped within the sphere of simple circulation of commodities,\nand as it spontaneously grows out of the relation of the circulating\ncommodities. As a result, they constantly vacillate between the\nabstract forms of money which distinguish it from commodity and those\nforms of it beneath which are concealed concrete relations, such as\ncapital, revenue, etc.[155]\n\n\n\n\nIntroduction\n\nto the\n\nCritique of Political Economy.[156]\n\n\n  1. PRODUCTION IN GENERAL.\n\nThe subject of our discussion is first of all _material_ production\nby individuals as determined by society, naturally constitutes the\nstarting point. The individual and isolated hunter or fisher who forms\nthe starting point with Smith and Ricardo, belongs to the insipid\nillusions of the eighteenth century. They are Robinsonades which do\nnot by any means represent, as students of the history of civilization\nimagine, a reaction against over-refinement and a return to a\nmisunderstood natural life. They are no more based on such a naturalism\nthan is Rosseau\u2019s \u201ccontrat social,\u201d which makes naturally independent\nindividuals come in contact and have mutual intercourse by contract.\nThey are the fiction and only the aesthetic fiction of the small and\ngreat Robinsonades. They are, moreover, the anticipation of \u201cbourgeois\nsociety,\u201d which had been in course of development since the sixteenth\ncentury and made gigantic strides towards maturity in the eighteenth.\nIn this society of free competition the individual appears free from\nthe bonds of nature, etc., which in former epochs of history made him\na part of a definite, limited human conglomeration. To the prophets of\nthe eighteenth century, on whose shoulders Smith and Ricardo are still\nstanding, this eighteenth century individual, constituting the joint\nproduct of the dissolution of the feudal form of society and of the new\nforces of production which had developed since the sixteenth century,\nappears as an ideal whose existence belongs to the past; not as a\nresult of history, but as its starting point.\n\nSince that individual appeared to be in conformity with nature and\n[corresponded] to their conception of human nature, [he was regarded]\nnot as a product of history, but of nature. This illusion has been\ncharacteristic of every new epoch in the past. Steuart, who, as an\naristocrat, stood more firmly on historical ground, contrary to\nthe spirit of the eighteenth century, escaped this simplicity of\nview. The further back we go into history, the more the individual\nand, therefore, the producing individual seems to depend on and\nconstitute a part of a larger whole: at first it is, quite naturally,\nthe family and the clan, which is but an enlarged family; later on,\nit is the community growing up in its different forms out of the\nclash and the amalgamation of clans. It is but in the eighteenth\ncentury, in \u201cbourgeois society,\u201d that the different forms of social\nunion confront the individual as a mere means to his private ends,\nas an outward necessity. But the period in which this view of the\nisolated individual becomes prevalent, is the very one in which the\ninterrelations of society (general from this point of view) have\nreached the highest state of development. Man is in the most literal\nsense of the word a _zoon politikon_, not only a social animal, but\nan animal which can develop into an individual only in society.\nProduction by isolated individuals outside of society\u2015something which\nmight happen as an exception to a civilized man who by accident\ngot into the wilderness and already dynamically possessed within\nhimself the forces of society\u2015is as great an absurdity as the idea\nof the development of language without individuals living together\nand talking to one another. We need not dwell on this any longer.\nIt would not be necessary to touch upon this point at all, were not\nthe vagary which had its justification and sense with the people of\nthe eighteenth century transplanted in all earnest into the field of\npolitical economy by Bastiat, Carey, Proudhon and others. Proudhon\nand others naturally find it very pleasant, when they do not know the\nhistorical origin of a certain economic phenomenon, to give it a quasi\nhistorico-philosopohical explanation by going into mythology. Adam or\nPrometheus hit upon the scheme cut and dried, whereupon it was adopted,\netc. Nothing is more tediously dry than the dreaming _locus communis_.\n\nWhenever we speak, therefore, of production, we always have in mind\nproduction at a certain stage of social development, or production\nby social individuals. Hence, it might seem that in order to speak\nof production at all, we must either trace the historical process of\ndevelopment through its various phases, or declare at the outset that\nwe are dealing with a certain historical period, as, e. g., with modern\ncapitalistic production which, as a matter of fact, constitutes the\nsubject proper of this work. But all stages of production have certain\nlandmarks in common, common purposes. _Production in general_ is an\nabstraction, but it is a rational abstraction, in so far as it singles\nout and fixes the common features, thereby saving us repetition. Yet\nthese general or common features discovered by comparison constitute\nsomething very complex, whose constituent elements have different\ndestinations. Some of these elements belong to all epochs, others are\ncommon to a few. Some of them are common to the most modern as well\nas to the most ancient epochs. No production is conceivable without\nthem; but while even the most completely developed languages have\nlaws and conditions in common with the least developed ones, what\nis characteristic of their development are the points of departure\nfrom the general and common. The conditions which generally govern\nproduction must be differentiated in order that the essential points\nof difference be not lost sight of in view of the general uniformity\nwhich is due to the fact that the subject, mankind, and the object,\nnature, remain the same. The failure to remember this one fact is the\nsource of all the wisdom of modern economists who are trying to prove\nthe eternal nature and harmony of existing social conditions. Thus they\nsay, e. g., that no production is possible without some instrument of\nproduction, let that instrument be only the hand; that none is possible\nwithout past accumulated labor, even if that labor consist of mere\nskill which has been accumulated and concentrated in the hand of the\nsavage by repeated exercise. Capital is, among other things, also an\ninstrument of production, also past impersonal labor. Hence capital is\na universal, eternal natural phenomenon; which is true if we disregard\nthe specific properties which turn an \u201cinstrument of production\u201d and\n\u201cstored up labor\u201d into capital. The entire history of production\nappears to a man like Carey, e. g., as a malicious perversion on the\npart of governments.\n\nIf there is no production in general, there is also no general\nproduction. Production is always some special branch of production or\nan aggregate, as, e. g., agriculture, stock raising, manufactures,\netc. But political economy is not technology. The connection between\nthe general destinations of production at a given stage of social\ndevelopment and the particular forms of production, is to be developed\nelsewhere (later on).\n\nFinally, production is not only of a special kind. It is always a\ncertain body politic, a social personality that is engaged on a larger\nor smaller aggregate of branches of production. The connection between\nthe real process and its scientific presentation also falls outside\nof the scope of this treatise. [We must thus distinguish between]\nproduction in general, special branches of production and production as\na whole.\n\nIt is the fashion with economists to open their works with a general\nintroduction, which is entitled \u201cproduction\u201d (see, e. g., John Stuart\nMill) and deals with the general \u201crequisites of production.\u201d\n\nThis general introductory part treats or is supposed to treat:\n\n1. Of the conditions without which production is impossible, i. e.,\nof the most essential conditions of production. As a matter of fact,\nhowever, it dwindles down, as we shall see, to a few very simple\ndefinitions, which flatten out into shallow tautologies;\n\n2. Of conditions which further production more or less, as, e. g., Adam\nSmith\u2019s [discussion of] a progressive and stagnant state of society.\n\nIn order to give scientific value to what serves with him as a mere\nsummary, it would be necessary to study the _degree of productivity_ by\nperiods in the development of individual nations; such a study falls\noutside of the scope of the present subject, and in so far as it does\nbelong here is to be brought out in connection with the discussion\nof competition, accumulation, etc. The commonly accepted view of the\nmatter gives a general answer to the effect that an industrial nation\nis at the height of its production at the moment when it reaches its\nhistorical climax in all respects. Or, that certain races, climates,\nnatural conditions, such as distance from the sea, fertility of\nthe soil, etc., are more favorable to production than others. That\nagain comes down to the tautology that the facility of creating\nwealth depends on the extent to which its elements are present both\nsubjectively and objectively. As a matter of fact a nation is at its\nindustrial height so long as its main object is not gain, but the\nprocess of gaining. In that respect the Yankees stand above the English.\n\nBut all that is not what the economists are really after in the general\nintroductory part. Their object is rather to represent production\nin contradistinction to distribution\u2015see Mill, e. g.\u2015as subject to\neternal laws independent of history, and then to substitute bourgeois\nrelations, in an underhand way, as immutable natural laws of society\n_in abstracto_. This is the more or less conscious aim of the entire\nproceeding. On the contrary, when it comes to distribution, mankind\nis supposed to have indulged in all sorts of arbitrary action. Quite\napart from the fact that they violently break the ties which bind\nproduction and distribution together, so much must be clear from the\noutset: that, no matter how greatly the systems of distribution may\nvary at different stages of society, it should be possible here, as\nin the case of production, to discover the common features and to\nconfound and eliminate all historical differences in formulating\n_general human_ laws. E. g., the slave, the serf, the wage-worker\u2015all\nreceive a quantity of food, which enables them to exist as slave,\nserf, and wage-worker. The conqueror, the official, the landlord, the\nmonk, or the levite, who respectively live on tribute, taxes, rent,\nalms, and the tithe,\u2015all receive [a part] of the social product which\nis determined by laws different from those which determine the part\nreceived by the slave, etc. The two main points which all economists\nplace under this head, are: first, property; second, the protection\nof the latter by the administration of justice, police, etc. The\nobjections to these two points can be stated very briefly.\n\n1. All production is appropriation of nature by the individual within\nand through a definite form of society. In that sense it is a tautology\nto say that property (appropriation) is a condition of production. But\nit becomes ridiculous, when from that one jumps at once to a definite\nform of property, e. g. private property (which implies, besides, as\na prerequisite the existence of an opposite form, viz. absence of\nproperty). History points rather to common property (e. g. among the\nHindoos, Slavs, ancient Celts, etc.) as the primitive form, which still\nplays an important part at a much later period as communal property.\nThe question as to whether wealth grows more rapidly under this or that\nform of property, is not even raised here as yet. But that there can\nbe no such a thing as production, nor, consequently, society, where\nproperty does not exist in any form, is a tautology. Appropriation\nwhich does not appropriate is a _contradictio in subjecto_.\n\n2. Protection of property, etc. Reduced to their real meaning, these\ncommonplaces express more than what their preachers know, namely, that\nevery form of production creates its own legal relations, forms of\ngovernment, etc. The crudity and the shortcomings of the conception\nlie in the tendency to see but an accidental reflective connection in\nwhat constitutes an organic union. The bourgeois economists have a\nvague notion that it is better to carry on production under the modern\npolice, than it was, e. g. under club-law. They forget that club law\nis also law, and that the right of the stronger continues to exist in\nother forms even under their \u201cgovernment of law.\u201d\n\nWhen the social conditions corresponding to a certain stage of\nproduction are in a state of formation or disappearance, disturbances\nof production naturally arise, although differing in extent and effect.\n\nTo sum up: all the stages of production have certain destinations in\ncommon, which we generalize in thought; but the so-called general\nconditions of all production are nothing but abstract conceptions which\ndo not go to make up any real stage in the history of production.\n\n\n  2. THE GENERAL RELATION OF PRODUCTION TO DISTRIBUTION, EXCHANGE, AND\n       CONSUMPTION.\n\nBefore going into a further analysis of production, it is necessary\nto look at the various divisions which economists put side by side\nwith it. The most shallow conception is as follows: By production, the\nmembers of society appropriate (produce and shape) the products of\nnature to human wants; distribution determines the proportion in which\nthe individual participates in this production; exchange brings him the\nparticular products into which he wishes to turn the quantity secured\nby him through distribution; finally, through consumption the products\nbecome objects of use and enjoyment, of individual appropriation.\nProduction yields goods adopted to our needs; distribution distributes\nthem according to social laws; exchange distributes further what has\nalready been distributed, according to individual wants; finally, in\nconsumption the product drops out of the social movement, becoming the\ndirect object of the individual want which it serves and satisfies in\nuse. Production thus appears as the starting point; consumption as the\nfinal end; and distribution and exchange as the middle; the latter\nhas a double aspect, distribution being defined as a process carried\non by society, while exchange, as one proceeding from the individual.\nIn production the person is embodied in things, in [consumption[157]]\nthings are embodied in persons; in distribution, society assumes\nthe part of go-between of production and consumption in the form of\ngenerally prevailing rules; in exchange this is accomplished by the\naccidental make-up of the individual.\n\nDistribution determines what proportion (quantity) of the products the\nindividual is to receive; exchange determines the products in which the\nindividual desires to receive his share allotted to him by distribution.\n\nProduction, distribution, exchange, and consumption thus form a\nperfect connection, production standing for the general, distribution\nand exchange for the special, and consumption for the individual, in\nwhich all are joined together. To be sure this is a connection, but\nit does not go very deep. Production is determined [according to the\neconomists] by universal natural laws, while distribution depends\non social chance: distribution can, therefore, have a more or less\nstimulating effect on production: exchange lies between the two as a\nformal (?) social movement, and the final act of consumption which is\nconsidered not only as a final purpose, but also as a final aim, falls,\nproperly, outside of the scope of economics, except in so far as it\nreacts on the starting point and causes the entire process to begin all\nover again.\n\nThe opponents of the economists\u2015whether economists themselves or\nnot\u2015who reproach them with tearing apart, like barbarians, what is an\norganic whole, either stand on common ground with them or are _below_\nthem. Nothing is more common than the charge that the economists\nhave been considering production as an end in itself, too much to\nthe exclusion of everything else. The same has been said with regard\nto distribution. This accusation is itself based on the economic\nconception that distribution exists side by side with production as\na self-contained, independent sphere. Or [they are accused] that the\nvarious factors are not treated by them in their connection as a\nwhole. As though it were the text books that impress this separation\nupon life and not life upon the text books; and the subject at issue\nwere a dialectic balancing of conceptions and not an analysis of real\nconditions.\n\n_a. Production is at the same time also consumption._ Twofold\nconsumption, subjective and objective. The individual who develops his\nfaculties in production, is also expending them, consuming them in the\nact of production, just as procreation is in its way a consumption\nof vital powers. In the second place, production is consumption of\nmeans of production which are used and used up and partly (as e. g. in\nburning) reduced to their natural elements. The same is true of the\nconsumption of raw materials which do not remain in their natural form\nand state, being greatly absorbed in the process. The act of production\nis, therefore, in all its aspects an act of consumption as well. But\nthis is admitted by economists. Production as directly identical with\nconsumption, consumption as directly coincident with production,\nthey call productive consumption. This identity of production\nand consumption finds its expression in Spinoza\u2019s proposition,\n_Determinatio est negatio_. But this definition of productive\nconsumption is resorted to just for the purpose of distinguishing\nbetween consumption as identical with production and consumption\nproper, which is defined as its destructive counterpart. Let us then\nconsider consumption proper.\n\nConsumption is directly also production, just as in nature the\nconsumption of the elements and of chemical matter constitutes\nproduction of plants. It is clear, that in nutrition, e. g., which\nis but one form of consumption, man produces his own body; but it is\nequally true of every kind of consumption, which goes to produce the\nhuman being in one way or another. [It is] consumptive production.\nBut, say the economists, this production which is identical with\nconsumption, is a second production resulting from the destruction\nof the product of the first. In the first, the producer transforms\nhimself into things; in the second, things are transformed into human\nbeings. Consequently, this consumptive production\u2015although constituting\na direct unity of production and consumption\u2015differs essentially from\nproduction proper. The direct unity in which production coincides with\nconsumption and consumption with production, does not interfere with\ntheir direct duality.\n\nProduction is thus at the same time consumption, and consumption is at\nthe same time production. Each is directly its own counterpart. But\nat the same time an intermediary movement goes on between the two.\nProduction furthers consumption by creating material for the latter\nwhich otherwise would lack its object. But consumption in its turn\nfurthers production, by providing for the products the individual\nfor whom they are products. The product receives its last finishing\ntouches in consumption. A railroad on which no one rides, which is,\nconsequently not used up, not consumed, is but a potential railroad,\nand not a real one. Without production, no consumption; but, on the\nother hand, without consumption, no production; since production would\nthen be without a purpose. Consumption produces production in two ways.\n\nIn the first place, in that the product first becomes a real product\nin consumption; e. g., a garment becomes a real garment only through\nthe act of being worn; a dwelling which is not inhabited, is really no\ndwelling; consequently, a product as distinguished from a mere natural\nobject, proves to be such, first _becomes_ a product in consumption.\nConsumption gives the product the finishing touch by annihilating it,\nsince a product is the [result] of production not only as the material\nembodiment of activity, but also as a mere object for the active\nsubject.\n\nIn the second place, consumption produces production by creating the\nnecessity for new production, i. e. by providing the ideal, inward,\nimpelling cause which constitutes the prerequisite of production.\nConsumption furnishes the impulse for production as well as its object,\nwhich plays in production the part of its guiding aim. It is clear\nthat while production furnishes the material object of consumption,\nconsumption provides the ideal object of production, as its image,\nits want, its impulse and its purpose. It furnishes the object of\nproduction in its subjective form. No wants, no production. But\nconsumption reproduces the want.\n\nIn its turn, production:\n\nFirst, furnishes consumption[158] with its material, its object.\nConsumption without an object is no consumption, hence production works\nin this direction by producing consumption.\n\nSecond. But it is not only the object that production provides for\nconsumption. It gives consumption its definite outline, its character,\nits finish. Just as consumption gives the product its finishing touch\nas a product, production puts the finishing touch on consumption. For\nthe object is not simply an object in general, but a definite object,\nwhich is consumed in a certain definite manner prescribed in its turn\nby production. Hunger is hunger; but the hunger that is satisfied with\ncooked meat eaten with fork and knife is a different kind of hunger\nfrom the one that devours raw meat with the aid of hands, nails, and\nteeth. Not only the object of consumption, but also the manner of\nconsumption is produced by production; that is to say, consumption is\ncreated by production not only objectively, but also subjectively.\nProduction thus creates the consumers.\n\nThird. Production not only supplies the want with material, but\nsupplies the material with a want. When consumption emerges from its\nfirst stage of natural crudeness and directness\u2015and its continuation\nin that state would in itself be the result of a production still\nremaining in a state of natural crudeness\u2015it is itself furthered by its\nobject as a moving spring. The want of it which consumption experiences\nis created by its appreciation of the product. The object of art, as\nwell as any other product, creates an artistic and beauty-enjoying\npublic. Production thus produces not only an object for the individual,\nbut also an individual for the object.\n\nProduction thus produces consumption: first, by furnishing the latter\nwith material; second, by determining the manner of consumption;\nthird, by creating in consumers a want for its products as objects of\nconsumption. It thus produces the object, the manner, and the moving\nspring of consumption. In the same manner, consumption [creates] the\n_disposition_ of the producer by setting (?) him up as an aim and by\nstimulating wants. The identity of consumption and production thus\nappears to be a three fold one.\n\nFirst, direct identity: production is consumption; consumption is\nproduction. Consumptive production. Productive consumption. Economists\ncall both productive consumption, but make one distinction by calling\nthe former reproduction, and the latter productive consumption. All\ninquiries into the former deal with productive and unproductive labor;\nthose into the latter treat of productive and unproductive consumption.\n\nSecond. Each appears as the means of the other and as being brought\nabout by the other, which is expressed as their mutual interdependence;\na relation, by virtue of which they appear as mutually connected and\nindispensable, yet remaining outside of each other.\n\nProduction creates the material as the outward object of consumption;\nconsumption creates the want as the inward object, the purpose of\nproduction. Without production, no consumption; without consumption, no\nproduction; this maxim figures (?) in political economy in many forms.\n\nThird. Production is not only directly consumption and consumption\ndirectly production; nor is production merely a means of consumption\nand consumption the purpose of production. In other words, not only\ndoes each furnish the other with its object; production, the material\nobject of consumption; consumption, the ideal object of production. On\nthe contrary, either one is not only directly the other, not (?) only\na means of furthering the other, but while it is taking place, creates\nthe other as such for itself (?). Consumption completes the act of\nproduction by giving the finishing touch to the product as such, by\ndestroying the latter, by breaking up its independent material form; by\nbringing to a state of readiness, through the necessity of repetition,\nthe disposition to produce developed in the first act of production;\nthat is to say, it is not only the concluding act through which the\nproduct becomes a product, but also [the one] through which the\nproducer becomes a producer. On the other hand, production produces\nconsumption, by determining the manner of consumption, and further, by\ncreating the incentive for consumption, the very ability to consume, in\nthe form of want. This latter identity mentioned under point 3, is much\ndiscussed in political economy in connection with the treatment of the\nrelations of demand and supply, of objects and wants, of natural wants\nand those created by society.\n\nHence, it is the simplest matter with a Hegelian to treat production\nand consumption as identical. And this has been done not only by\nsocialist writers of fiction but even by economists, e. g. Say; the\nlatter maintained that if we consider a nation as a whole, or mankind\n_in abstracto_\u2015her production is at the same time her consumption.\nStorch pointed out Say\u2019s error by calling attention to the fact that\na nation does not entirely consume her product, but also creates\nmeans of production, fixed capital, etc. To consider society as a\nsingle individual is moreover a false mode of speculative reasoning.\nWith an individual, production and consumption appear as different\naspects of one act. The important point to be emphasized here is that\nif production and consumption be considered as activities of one\nindividual or of separate individuals, they appear at any rate as\naspects of one process in which production forms the actual starting\npoint and is, therefore, the predominating factor. Consumption,\nas a natural necessity, as a want, constitutes an internal factor\nof productive activity, but the latter is the starting point of\nrealization and, therefore, its predominating factor, the act into\nwhich the entire process resolves itself in the end. The individual\nproduces a certain article and turns again into himself by consuming\nit; but he returns as a productive and a self-reproducing individual.\nConsumption thus appears as a factor of production.\n\nIn society, however, the relation of the producer to his product,\nas soon as it is completed, is an outward one, and the return of\nthe product to the individual depends on his relations to other\nindividuals. He does not take immediate possession of it. Nor does the\ndirect appropriation of the product constitute his purpose, when he\nproduces in society. Between the producer and the product distribution\nsteps in, which determines by social laws his share in the world of\nproducts; that is to say, distribution steps in between production and\nconsumption.\n\nDoes distribution form an independent sphere standing side by side with\nand outside of production?\n\n_b. Production and Distribution._ In perusing the common treatises on\neconomics one can not help being struck with the fact that everything\nis treated there twice; e. g., under distribution, there figure rent,\nwages, interest, and profit; while under production we find land,\nlabor, and capital as agents of production. As regards capital, it\nis at once clear that it is counted twice: first, as an agent of\nproduction; second, as a source of income; as determining factors and\ndefinite forms of distribution, interest and profit figure as such also\nin production, since they are forms, in which capital increases and\ngrows, and are consequently factors of its own production. Interest and\nprofit, as forms of distribution, imply the existence of capital as\nan agent of production. They are forms of distribution which have for\ntheir prerequisite capital as an agent of production. They are also\nforms of reproduction of capital.\n\nIn the same manner, wages is wage-labor when considered under another\nhead; the definite character which labor has in one case as an agent\nof production, appears in the other as a form of distribution. If\nlabor were not fixed as wage-labor, its manner of participation in\ndistribution[159] would not appear as wages, as is the case e. g. under\nslavery. Finally, rent\u2015to take at once the most developed form of\ndistribution\u2015by means of which landed property receives its share of\nthe products, implies the existence of large landed property (properly\nspeaking, agriculture on a large scale) as an agent of production,\nand not simply land, no more than wages represents simply labor.\nThe relations and methods of distribution appear, therefore, merely\nas the reverse sides of the agents of production. An individual who\nparticipates in production as a wage laborer, receives his share of the\nproducts, i. e. of the results of production, in the form of wages. The\nsubdivisions and organization of distribution are determined by the\nsubdivisions and organization of production. Distribution is itself a\nproduct of production, not only in so far as the material goods are\nconcerned, since only the results of production can be distributed; but\nalso as regards its form, since the definite manner of participation\nin production determines the particular form of distribution, the form\nunder which participation in distribution takes place. It is quite an\nillusion to place land under production, rent under distribution, etc.\n\nEconomists, like Ricardo, who are accused above all of having paid\nexclusive attention to production, define distribution, therefore,\nas the exclusive subject of political economy, because they\ninstinctively[160] regard the forms of distribution as the clearest\nforms in which the agents of production find expression in a given\nsociety.\n\nTo the single individual distribution naturally appears as a law\nestablished by society determining his position in the sphere of\nproduction, within which he produces, and thus antedating production.\nAt the outset the individual has no capital, no landed property.\nFrom his birth he is assigned to wage-labor by the social process of\ndistribution. But this very condition of being assigned to wage-labor\nis the result of the existence of capital and landed property as\nindependent agents of production.\n\nFrom the point of view of society as a whole, distribution seems to\nantedate and to determine production in another way as well, as a\npre-economic fact, so to say. A conquering people divides the land\namong the conquerors establishing thereby a certain division and\nform of landed property and determining the character of production;\nor, it turns the conquered people into slaves and thus makes slave\nlabor the basis of production. Or, a nation, by revolution, breaks up\nlarge estates into small parcels of land and by this new distribution\nimparts to production a new character. Or, legislation perpetuates\nland ownership in large families or distributes labor as an hereditary\nprivilege and thus fixes it in castes.\n\nIn all of these cases, and they are all historic, it is not\ndistribution that seems to be organized and determined by production,\nbut on the contrary, production by distribution.\n\nIn the most shallow conception of distribution, the latter appears as\na distribution of products and to that extent as further removed from\nand quasi-independent of production. But before distribution means\ndistribution of products, it is first, a distribution of the means of\nproduction, and second, what is practically another wording of the\nsame fact, it is a distribution of the members of society among the\nvarious kinds of production (the subjection of individuals to certain\nconditions of production). The distribution of products is manifestly\na result of this distribution, which is bound up with the process of\nproduction and determines the very organization of the latter. To\ntreat of production apart from the distribution which is comprised in\nit, is plainly an idle abstraction. Conversely, we know the character\nof the distribution of products the moment we are given the nature of\nthat other distribution which forms originally a factor of production.\nRicardo, who was concerned with the analysis of production as it is\norganized in modern society and who was the economist of production\n_par excellence_, for that very reason declares _not_ production\nbut distribution as the subject proper of modern economics. We have\nhere another evidence of the insipidity of the economists who treat\nproduction as an eternal truth, and banish history to the domain of\ndistribution.\n\nWhat relation to production this distribution, which has a determining\ninfluence on production itself, assumes, is plainly a question which\nfalls within the province of production. Should it be maintained\nthat at least to the extent that production depends on a certain\ndistribution of the instruments of production, distribution in that\nsense precedes production and constitutes its prerequisite; it may\nbe replied that production has in fact its prerequisite conditions,\nwhich form factors of it. These may appear at first to have a natural\norigin. By the very process of production they are changed from natural\nto historical, and if they appear during one period as a natural\nprerequisite of production, they formed at other periods its historical\nresult. Within the sphere of production itself they are undergoing a\nconstant change. E. g., the application of machinery produces a change\nin the distribution of the instruments of production as well as in that\nof products, and modern land ownership on a large scale is as much the\nresult of modern trade and modern industry, as that of the application\nof the latter to agriculture.\n\nAll of these questions resolve themselves in the last instance to this:\nHow do general historical conditions affect production and what part\ndoes it play at all in the course of history? It is evident that this\nquestion can be taken up only in connection with the discussion and\nanalysis of production.\n\nYet in the trivial form in which these questions are raised above,\nthey can be answered just as briefly. In the case of all conquests\nthree ways lie open. The conquering people may impose its own methods\nof production upon the conquered (e. g. the English in Ireland in the\nnineteenth century, partly also in India); or, it may allow everything\nto remain as it was contenting itself with tribute (e. g. the Turks\nand the Romans); or, the two systems by mutually modifying each other\nmay result in something new, a synthesis (which partly resulted\nfrom the Germanic conquests). In all of these conquests the method\nof production, be it of the conquerors, the conquered, or the one\nresulting from a combination of both, determines the nature of the new\ndistribution which comes into play. Although the latter appears now\nas the prerequisite condition of the new period of production, it is\nin itself but a product of production, not of production belonging to\nhistory in general, but of production relating to a definite historical\nperiod. The Mongols with their devastations in Russia e. g. acted\nin accordance with their system of production, for which sufficient\npastures on large uninhabited stretches of country are the main\nprerequisite. The Germanic barbarians, with whom agriculture carried\non with the aid of serfs was the traditional system of production and\nwho were accustomed to lonely life in the country, could introduce\nthe same conditions in the Roman provinces so much easier since the\nconcentration of landed property which had taken place there, died away\ncompletely with the older systems of agriculture. There is a prevalent\ntradition that in certain periods robbery constituted the only source\nof living. But in order to be able to plunder, there must be something\nto plunder, i. e. there must be production.[161] And even the method\nof plunder is determined by the method of production. A stockjobbing\nnation[162] e. g. can not be robbed in the same manner as a nation of\nshepherds.\n\nIn the case of the slave the instrument of production is robbed\ndirectly. But then the production of the country in whose interest he\nis robbed, must be so organized as to admit of slave labor, or (as in\nSouth America, etc.) a system of production must be introduced adapted\nto slavery.\n\nLaws may perpetuate an instrument of production, e. g. land, in certain\nfamilies. These laws assume an economic importance if large landed\nproperty is in harmony with the system of production prevailing in\nsociety, as is the case e. g. in England. In France agriculture had\nbeen carried on on a small scale in spite of the large estates, and\nthe latter were, therefore, broken up by the Revolution. But how about\nthe legislative attempt to perpetuate the minute subdivision of the\nland? In spite of these laws land ownership is concentrating again. The\neffect of legislation on the maintenance of a system of distribution\nand its resultant influence on production are to be determined\nelsewhere.\n\n_c. Exchange and Circulation._ Circulation is but a certain aspect\nof exchange, or it may be defined as exchange considered as a whole.\nSince _exchange_ is an intermediary factor between production and its\ndependent, distribution, on the one hand, and consumption, on the\nother; and since the latter appears but as a constituent of production,\nexchange is manifestly also a constituent part of production.\n\nIn the first place, it is clear that the exchange of activities and\nabilities which takes place in the sphere of production falls directly\nwithin the latter and constitutes one of its essential elements. In\nthe second place, the same is true of the exchange of products, in\nso far as it is a means of completing a certain product, designed\nfor immediate consumption. To that extent exchange constitutes an\nact included in production. Thirdly, the so-called exchange between\ndealers and dealers[163] is by virtue of its organization determined by\nproduction, and is itself a species of productive activity. Exchange\nappears to be independent of and indifferent to production only in the\nlast stage when products are exchanged directly for consumption. But\nin the first place, there is no exchange without a division of labor,\nwhether natural or as a result of historical development; secondly,\nprivate exchange implies the existence of private production; thirdly,\nthe intensity of exchange, as well as its extent and character are\ndetermined by the degree of development and organization of production,\nas e. g. exchange between city and country, exchange in the country, in\nthe city, etc. Exchange thus appears in all its aspects to be directly\nincluded in or determined by production.\n\nThe result we arrive at is not that production, distribution, exchange,\nand consumption are identical, but that they are all members of one\nentity, different sides of one unit. Production predominates not only\nover production itself in the opposite sense of that term, but over\nthe other elements as well. With it the process constantly starts over\nagain. That exchange and consumption can not be the predominating\nelements is self evident. The same is true of distribution in the\nnarrow sense of distribution of products; as for distribution in the\nsense of distribution of the agents of production, it is itself but a\nfactor of production. A definite [form of] production thus determines\nthe [forms of] consumption, distribution, exchange, and _also the\nmutual relations between these various elements_. Of course, production\n_in its one-sided form_ is in its turn influenced by other elements; e.\ng. with the expansion of the market, i. e. of the sphere of exchange,\nproduction grows in volume and is subdivided to a greater extent.\n\nWith a change in distribution, production undergoes a change; as\ne. g. in the case of concentration of capital, of a change in the\ndistribution of population in city and country, etc. Finally, the\ndemands of consumption also influence production. A mutual interaction\ntakes place between the various elements. Such is the case with every\norganic body.\n\n\n  3. THE METHOD OF POLITICAL ECONOMY.\n\nWhen we consider a given country from a politico-economic standpoint,\nwe begin with its population, then analyze the latter according to\nits subdivision into classes, location in city, country, or by the\nsea, occupation in different branches of production; then we study\nits exports and imports, annual production and consumption, prices of\ncommodities, etc. It seems to be the correct procedure to commence\nwith the real and concrete aspect of conditions as they are; in the\ncase of political economy, to commence with population which is the\nbasis and the author of the entire productive activity of society.\nYet, on closer consideration it proves to be wrong. Population is an\nabstraction, if we leave out e. g. the classes of which it consists.\nThese classes, again, are but an empty word, unless we know what are\nthe elements on which they are based, such as wage-labor, capital,\netc. Those imply, in their turn, exchange, division of labor, prices,\netc. Capital, e. g. does not mean anything without wage-labor, value,\nmoney, price, etc. If we start out, therefore, with population, we do\nso with a chaotic conception of the whole, and by closer analysis we\nwill gradually arrive at simpler ideas; thus we shall proceed from the\nimaginary concrete to loss and less complex abstractions, until we\nget at the simplest conception. This once attained, we might start\non our return journey until we would finally come back to population,\nbut this time not as a chaotic notion of an integral whole, but as a\nrich aggregate of many conceptions and relations. The former method\nis the one which political economy had adopted in the past at its\ninception. The economists of the seventeenth century, e. g., always\nstarted out with the living aggregate: population, nation, state,\nseveral states, etc., but in the end they invariably arrived, by means\nof analysis, at certain leading, abstract general principles, such\nas division of labor, money, value, etc. As soon as these separate\nelements had been more or less established by abstract reasoning,\nthere arose the systems of political economy which start from simple\nconceptions, such as labor, division of labor, demand, exchange value,\nand conclude with state, international exchange and world market. The\nlatter is manifestly the scientifically correct method. The concrete is\nconcrete, because it is a combination of many objects with different\ndestinations, i. e. a unity of diverse elements. In our thought, it\ntherefore appears as a process of synthesis, as a result, and not as a\nstarting point, although it is the real starting point and, therefore,\nalso the starting point of observation and conception. By the former\nmethod the complete conception passes into an abstract definition; by\nthe latter, the abstract definitions lead to the reproduction of the\nconcrete subject in the course of reasoning. Hegel fell into the error,\ntherefore, of considering the real as the result of self-coordinating,\nself-absorbed, and spontaneously operating thought, while the method of\nadvancing from the abstract to the concrete is but a way of thinking\nby which the concrete is grasped and is reproduced in our mind as\na concrete. It is by no means, however, the process which itself\ngenerates the concrete. The simplest economic category, say, exchange\nvalue, implies the existence of population, population that is engaged\nin production under certain conditions; it also implies the existence\nof certain types of family, clan, or state, etc. It can have no other\nexistence except as an abstract one-sided relation of an already given\nconcrete and living aggregate.\n\nAs a category, however, exchange value leads an antediluvian existence.\nAnd since our philosophic consciousness is so arranged that only the\nimage of the man that it conceives appears to it as the real man\nand the world as it conceives it, as the real world; it mistakes\nthe movement of categories for the real act of production (which\nunfortunately (?) receives only its impetus from outside) whose\nresult is the world; that is true\u2015here we have, however, again a\ntautology\u2015in so far as the concrete aggregate is a thought aggregate,\nin so far as the concrete subject of our thought is in fact a product\nof thought, of comprehension; not, however, in the sense of a product\nof a self-emanating conception which works outside of and stands\nabove observation and imagination, but of a mental consummation of\nobservation and imagination. The whole, as it appears in our heads as\na thought-aggregate, is the product of a thinking mind which grasps\nthe world in the only way open to it, a way which differs from the one\nemployed by the artistic, religious, or practical mind. The concrete\nsubject continues to lead an independent existence after it has been\ngrasped, as it did before, outside of the head, so long as the head\ncontemplates it only speculatively, theoretically. So that in the\nemployment of the theoretical method [in political economy], the\nsubject, society, must constantly be kept in mind as the premise from\nwhich we start.\n\nBut have these simple categories no independent historical or natural\nexistence antedating the more concrete ones? _\u00c7a depend._ For instance,\nin his Philosophy of Law Hegel rightly starts out with possession,\nas the simplest legal relation of individuals. But there is no such\nthing as possession before the family or the relations of lord and\nserf, which are a great deal more concrete relations, have come into\nexistence. On the other hand, one would be right in saying that there\nare families and clans which only _possess_, but do not _own_ things.\nThe simpler category thus appears as a relation of simple family and\nclan communities with respect to property. In earlier society the\ncategory appears as a simple relation of a developed organism, but the\nconcrete substratum from which springs the relation of possession, is\nalways implied. One can imagine an isolated savage in possession of\nthings. But in that case possession is no legal relation. It is not\ntrue that the family came as the result of the historical evolution of\npossession. On the contrary, the latter always implies the existence\nof this \u201cmore concrete category of law.\u201d Yet so much may be said, that\nthe simple categories are the expression of relations in which the\nless developed concrete entity may have been realized without entering\ninto the manifold relations and bearings which are mentally expressed\nin the concrete category; but when the concrete entity attains fuller\ndevelopment it will retain the same category as a subordinate relation.\n\nMoney may exist and actually had existed in history before capital, or\nbanks, or wage-labor came into existence. With that in mind, it may be\nsaid that the more simple category can serve as an expression of the\npredominant relations of an undeveloped whole or of the subordinate\nrelations of a more developed whole, [relations] which had historically\nexisted before the whole developed in the direction expressed in the\nmore concrete category. In so far, the laws of abstract reasoning which\nascends from the most simple to the complex, correspond to the actual\nprocess of history.\n\nOn the other hand, it may be said that there are highly developed but\nhistorically unripe forms of society in which the highest economic\nforms are to be found, such as co-operation, advanced division of\nlabor, etc., and yet there is no money in existence, e. g. Peru.\n\nIn Slavic communities also, money, as well as exchange to which it\nowes its existence, does not appear at all or very little within the\nseparate communities, but it appears on their boundaries in their\ninter-communal traffic; in general, it is erroneous to consider\nexchange as a constituent element originating within the community.\nIt appears at first more in the mutual relations between different\ncommunities, than in those between the members of the same community.\nFurthermore, although money begins to play its part everywhere at an\nearly stage, it plays in antiquity the part of a predominant element\nonly in one-sidedly developed nations, viz. trading nations, and even\nin most cultured antiquity, in Greece and Rome, it attains its full\ndevelopment, which constitutes the prerequisite of modern bourgeois\nsociety, only in the period of their decay. Thus, this quite simple\ncategory attained its culmination in the past only at the most advanced\nstages of society. Even then it did not pervade (?) all economic\nrelations; in Rome e. g. at the time of its highest development taxes\nand payments in kind remained the basis. As a matter of fact, the money\nsystem was fully developed there only so far as the army was concerned;\nit never came to dominate the entire system of labor.\n\nThus, although the simple category may have existed historically before\nthe more concrete one, it can attain its complete internal and external\ndevelopment only in complex (?) forms of society, while the more\nconcrete category has reached its full development in a less advanced\nform of society.\n\nLabor is quite a simple category. The idea of labor in that sense, as\nlabor in general, is also very old. Yet, \u201clabor\u201d thus simply defined\nby political economy is as much a modern category, as the conditions\nwhich have given rise to this simple abstraction. The monetary system,\ne. g. defines wealth quite objectively, as a thing (?)[164] in money.\nCompared with this point of view, it was a great step forward, when\nthe industrial or commercial system came to see the source of wealth\nnot in the object but in the activity of persons, viz. in commercial\nand industrial labor. But even the latter was thus considered only\nin the limited sense of a money producing activity. The physiocratic\nsystem [marks still further progress] in that it considers a certain\nform of labor, viz. agriculture, as the source of wealth, and wealth\nitself not in the disguise of money, but as a product in general, as\nthe general result of labor. But corresponding to the limitations of\nthe activity, this product is still only a natural product. Agriculture\nis productive, land is the source of production _par excellence_. It\nwas a tremendous advance on the part of Adam Smith to throw aside all\nlimitations which mark wealth-producing activity and [to define it] as\nlabor in general, neither industrial, nor commercial, nor agricultural,\nor one as much as the other. Along with the universal character of\nwealth-creating activity we have now the universal character of the\nobject defined as wealth, viz. product in general, or labor in general,\nbut as past incorporated labor. How difficult and great was the\ntransition, is evident from the way Adam Smith himself falls back from\ntime to time into the physiocratic system. Now, it might seem as though\nthis amounted simply to finding an abstract expression for the simplest\nrelation into which men have been mutually entering as producers from\ntimes of yore, no matter under what form of society. In one sense this\nis true. In another it is not.\n\nThe indifference as to the particular kind of labor implies the\nexistence of a highly developed aggregate of different species of\nconcrete labor, none of which is any longer the predominant one. So\ndo the most general abstractions commonly arise only where there is\nthe highest concrete development, where one feature appears to be\njointly possessed by many, and to be common to all. Then it can not\nbe thought of any longer in one particular form. On the other hand,\nthis abstraction of labor is but the result of a concrete aggregate of\ndifferent kinds of labor. The indifference to the particular kind of\nlabor corresponds to a form of society in which individuals pass with\nease from one kind of work to another, which makes it immaterial to\nthem what particular kind of work may fall to their share. Labor has\nbecome here, not only categorically but really, a means of creating\nwealth in general and is no longer grown together with the individual\ninto one particular destination. This state of affairs has found its\nhighest development in the most modern of bourgeois societies, the\nUnited States. It is only here that the abstraction of the category\n\u201clabor,\u201d \u201clabor in general,\u201d labor _sans phrase_, the starting point\nof modern political economy, becomes realized in practice. Thus,\nthe simplest abstraction which modern political economy sets up as\nits starting point, and which expresses a relation dating back to\nantiquity and prevalent under all forms of society, appears in this\nabstraction truly realized only as a category of the most modern\nsociety. It might be said that what appears in the United States as an\nhistorical product,\u2015viz. the indifference as to the particular kind of\nlabor\u2015appears among the Russians e. g. as a natural disposition. But it\nmakes all the difference in the world whether barbarians have a natural\npredisposition which makes them applicable alike to everything, or\nwhether civilized people apply themselves to everything. And, besides,\nthis indifference of the Russians as to the kind of work they do,\ncorresponds to their traditional practice of remaining in the rut of a\nquite definite occupation until they are thrown out of it by external\ninfluences.\n\nThis example of labor strikingly shows how even the most abstract\ncategories, in spite of their applicability to all epochs\u2015just because\nof their abstract character\u2015are by the very definiteness of the\nabstraction a product of historical conditions as well, and are fully\napplicable only to and under those conditions.\n\nThe bourgeois society is the most highly developed and most highly\ndifferentiated historical organization of production. The categories\nwhich serve as the expression of its conditions and the comprehension\nof its own organization enable it at the same time to gain an insight\ninto the organization and the conditions of production which had\nprevailed under all the past forms of society, on the ruins and\nconstituent elements of which it has arisen, and of which it still\ndrags along some unsurmounted remnants, while what had formerly been\nmere intimation has now developed to complete significance. The anatomy\nof the human being is the key to the anatomy of the ape. But the\nintimations of a higher animal in lower ones can be understood only if\nthe animal of the higher order is already known. The bourgeois economy\nfurnishes a key to ancient economy, etc. This is, however, by no means\ntrue of the method of those economists who blot out all historical\ndifferences and see the bourgeois form in all forms of society. One can\nunderstand the nature of tribute, tithes, etc., after one has learned\nthe nature of rent. But they must not be considered identical.\n\nSince, furthermore, bourgeois society is but a form resulting from\nthe development of antagonistic elements, some relations belonging\nto earlier forms of society are frequently to be found in it but in\na crippled state or as a travesty of their former self, as e. g.\ncommunal property. While it may be said, therefore, that the categories\nof bourgeois economy contain what is true of all other forms of\nsociety, the statement is to be taken _cum grano salis_. They may\ncontain these in a developed, or crippled, or caricatured form, but\nalways essentially different. The so-called historical development\namounts in the last analysis to this, that the last form considers its\npredecessors as stages leading up to itself and perceives them always\none-sidedly, since it is very seldom and only under certain conditions\nthat it is capable of self-criticism; of course, we do not speak here\nof such historical periods which appear to their own contemporaries as\nperiods of decay. The Christian religion became capable to assist us\nto an objective view of past mythologies as soon as it was ready for\nself-criticism to a certain extent, _dynamei_ so-to-say. In the same\nway bourgeois political economy first came to understand the feudal,\nthe ancient, and the oriental societies as soon as the self-criticism\nof the bourgeois society had commenced. So far as bourgeois political\neconomy has not gone into the mythology of purely (?) identifying the\nbourgeois system with the past, its criticism of the feudal system\nagainst which it still had to wage war resembled Christian criticism\nof the heathen religions or Protestant criticism of Catholicism.\n\nIn the study of economic categories, as in the case of every historical\nand social science, it must be borne in mind that as in reality so\nin our mind the subject, in this case modern bourgeois society, is\ngiven and that the categories are therefore but forms of expression,\nmanifestations of existence, and frequently but one-sided aspects of\nthis subject, this definite society; and that, therefore, the origin of\n[political economy] _as a science_ does not by any means date from the\ntime to which it is referred _as such_. This is to be firmly held in\nmind because it has an immediate and important bearing on the matter of\nthe subdivisions of the science.\n\nFor instance, nothing seems more natural than to start with rent, with\nlanded property, since it is bound up with land, the source of all\nproduction and all existence, and with the first form of production in\nall more or less settled communities, viz. agriculture. But nothing\nwould be more erroneous. Under all forms of society there is a certain\nindustry which predominates over all the rest and whose condition\ntherefore determines the rank and influence of all the rest.\n\nIt is the universal light with which all the other colors are tinged\nand are modified through its peculiarity. It is a special ether which\ndetermines the specific gravity of everything that appears in it.\n\nLet us take for example pastoral nations (mere hunting and fishing\ntribes are not as yet at the point from which real development\ncommences). They engage in a certain form of agriculture, sporadically.\nThe nature of land-ownership is determined thereby. It is held in\ncommon and retains this form more or less according to the extent to\nwhich these nations hold on to traditions; such e. g. is land-ownership\namong the Slavs. Among nations whose agriculture is carried on by a\nsettled population\u2015the settled state constituting a great advance\u2015where\nagriculture is the predominant industry, such as in ancient and feudal\nsocieties, even the manufacturing industry and its organization, as\nwell as the forms of property which pertain to it, have more or less\nthe characteristic features of the prevailing system of land ownership;\n[society] is then either entirely dependent upon agriculture, as in the\ncase of ancient Rome, or, as in the middle ages, it imitates in its\ncity relations the forms of organization prevailing in the country.\nEven capital, with the exception of pure money capital, has, in the\nform of the traditional working tool, the characteristics of land\nownership in the Middle Ages.\n\nThe reverse is true of bourgeois society. Agriculture comes to be more\nand more merely a branch of industry and is completely dominated by\ncapital. The same is true of rent. In all the forms of society in which\nland ownership is the prevalent form, the influence of the natural\nelement is the predominant one. In those where capital predominates the\nprevailing element is the one historically created by society. Rent\ncan not be understood without capital, nor can capital, without rent.\nCapital is the all dominating economic power of bourgeois society. It\nmust form the starting point as well as the end and be developed before\nland-ownership is. After each has been considered separately, their\nmutual relation must be analyzed.\n\nIt would thus be impractical and wrong to arrange the economic\ncategories in the order in which they were the determining factors in\nthe course of history. Their order of sequence is rather determined\nby the relation which they bear to one another in modern bourgeois\nsociety, and which is the exact opposite of what seems to be their\nnatural order or the order of their historical development. What we are\ninterested in is not the place which economic relations occupy in the\nhistorical succession of different forms of society. Still less are we\ninterested in the order of their succession \u201cin idea\u201d (_Proudhon_),\nwhich is but a hazy (?) conception of the course of history. We are\ninterested in their organic connection within modern bourgeois society.\n\nThe sharp line of demarkation (abstract precision) which so clearly\ndistinguished the trading nations of antiquity, such as the\nPhenicians and the Carthagenians, was due to that very predominance\nof agriculture. Capital as trading or money capital appears in that\nabstraction, where capital does not constitute as yet the predominating\nelement of society. The Lombardians and the Jews occupied the same\nposition among the agricultural nations of the middle ages.\n\nAs a further illustration of the fact that the same category plays\ndifferent parts at different stages of society, we may mention the\nfollowing: one of the latest forms of bourgeois society, viz. stock\ncompanies, appear also at its beginning in the form of the great\nchartered monopolistic trading companies. The conception of national\nwealth which is imperceptibly formed in the minds of the economists of\nthe seventeenth century, and which partly continues to be entertained\nby those of the eighteenth century, is that wealth is produced solely\nfor the state, but that the power of the latter is proportional to that\nwealth. It was as yet an unconsciously hypocritical way in which wealth\nannounced itself and its own production as the aim of modern states\nconsidering the latter merely as a means to the production of wealth.\n\nThe order of treatment must manifestly be as follows: first, the\ngeneral abstract definitions which are more or less applicable to\nall forms of society, but in the sense indicated above. Second, the\ncategories which go to make up the inner organization of bourgeois\nsociety and constitute the foundations of the principal classes;\ncapital, wage-labor, landed property; their mutual relations; city and\ncountry; the three great social classes, the exchange between them;\ncirculation, credit (private). Third, the organization of bourgeois\nsociety in the form of a state, considered in relation to itself; the\n\u201cunproductive\u201d classes; taxes; public debts; public credit; population;\ncolonies; emigration. Fourth, the international organization of\nproduction; international division of labor; international exchange;\nimport and export; rate of exchange. Fifth, the world market and\ncrises.\n\n\n  4. PRODUCTION, MEANS OF PRODUCTION, AND CONDITIONS OF PRODUCTION,\n       THE RELATIONS OF PRODUCTION AND DISTRIBUTION.[165] THE CONNECTION\n       BETWEEN FORM OF STATE AND PROPERTY ON THE ONE HAND AND RELATIONS\n       OF PRODUCTION AND DISTRIBUTION(1) ON THE OTHER. LEGAL RELATIONS.\n       FAMILY RELATIONS.\n\n\nNotes on the points to be mentioned here and not to be omitted:[166]\n\n1. _War_ attains complete development before peace; how certain\neconomic phenomena, such as wage-labor, machinery, etc., are developed\nat an earlier date through war and in armies than within bourgeois\nsociety. The connection between productive force and the means of\ncommunication is made especially plain in the case of the army.\n\n2. The relation between the idealistic and realistic methods of writing\nhistory; namely, the so-called history of civilization which is all a\nhistory of religion and states.\n\nIn this connection something may be said of the different methods\nhitherto employed in writing history. The so-called objective [method].\nThe subjective. (The moral and others). The philosophic.\n\n3. _Secondary and tertiary._ Conditions of production which have been\ntaken over or transplanted; in general, those that are not original.\nHere [is to be treated] the effect of international relations.\n\n4. Objections to the materialistic character of this view. Its relation\nto naturalistic materialism.\n\n5. The dialectics of the conceptions productive force (means of\nproduction) and relation of production, dialectics whose limits are to\nbe determined and which does not do away with the concrete difference.\n\n6. The unequal relation between the development of material production\nand art, for instance. In general, the conception of progress is not\nto be taken in the sense of the usual abstraction. In the case of\nart, etc., it is not so important and difficult to understand this\ndisproportion as in that of practical social relations, e. g. the\nrelation between education in the United States and Europe. The really\ndifficult point, however, that is to be discussed here is that of the\nunequal (?) development of relations of production as legal relations.\nAs, e. g., the connection between Roman civil law (this is less true of\ncriminal and public law) and modern production.\n\n7. This conception of development appears to imply necessity. On the\nother hand, justification of accident. Varia. (Freedom and other\npoints). (The effect of means of communication). World history does not\nalways appear in history as the result of world history.\n\n8. The starting point [is to be found] in certain facts of nature\nembodied subjectively and objectively in clans, races, etc.\n\n+4. Produktion, Produktions-mittel und Produktionsverh\u00e4ltnisse.\nProduktionsverh\u00e4ltnis und Verkehrsverh\u00e4ltnisse. Staats- und\nEigenthumsformen im Verh\u00e4ltnis zu den Produktions- und\nVerkehrsverh\u00e4ltnissen. Rechtsverh\u00e4ltnisse. Familienverh\u00e4ltnisse.+\n\nNotabene in bezug auf Punkte, die hier zu erw\u00e4hnen und nicht vergessen\nwerden d\u00fcrfen:\n\n\u20161. Der =Krieg= ist fr\u00fcher ausgebildet, wie der Frieden:\n[Auszuf\u00fchren w\u00e4re] die Art, wie durch den Krieg und in den Armeen\netc. gewisse \u00f6konomische Verh\u00e4ltnisse wie Lohnarbeit, Maschinerie\netc. fr\u00fcher entwickelt [werden] als im Inneren der b\u00fcrgerlichen\nGesellschaft. Auch das Verh\u00e4ltnis von Produktivkraft und\nVerkehrsverh\u00e4ltnissen wird besonders anschaulich in der Armee.\n\n2. Verh\u00e4ltnis der bisherigen idealen Geschichtsschreibung zur realen.\nNamentlich die sogenannte Kulturgeschichte, die alle Religions-und\nStaatengeschichte.\n\nBei der Gelegenheit kann auch etwas gesagt werden \u00fcber die\nverschiedenen Arten der bisherigen Geschichtsschreibung. Sogenannte\nobjektive. Subjektive. (Moralische und andere.) Philosophische.\n\n3. =Sekund\u00e4res und Terti\u00e4res.= Ueberhaupt =abgeleitete,\n\u00fcbertragene,= nicht urspr\u00fcngliche Produktionsverh\u00e4ltnisse. Hier\n[ist das] Einspielen der internationalen Verh\u00e4ltnisse [zu behandeln].\n\n4. Vorw\u00fcrfe \u00fcber Materialismus dieser Auffassung. Verh\u00e4ltnis zum\nnaturalistischen Materialismus.\n\n5. Dialektik der Begriffe Produktivkraft (Produktions-mittel) und\nProduktionsverh\u00e4ltnis, eine Dialektik, deren Grenzen zu bestimmen sind\nund den realen Unterschied nicht aufhebt.\n\n6. Das unegale Verh\u00e4ltnis der Entwicklung der materiellen Produktion\nzum Beispiel zur k\u00fcnstlerischen. Ueberhaupt ist der Begriff des\nFortschritts nicht in der gew\u00f6hnlichen Abstraktion zu fassen. Bei der\nKunst etc. ist diese Disproportion noch nicht so wichtig und schwierig\nzu fassen als innerhalb praktisch-sozialer Verh\u00e4ltnisse selbst, zum\nBeispiel das Bildungsverh\u00e4ltnis der Vereinigten Staaten zu Europa. Der\neigentlich schwierige Punkt, der hier zu er\u00f6rtern ist aber der, wie\ndie Produktionsverh\u00e4ltnisse als Rechtsverh\u00e4ltnisse in ungleiche (?)\nEntwicklung treten. Also zum Beispiel das Verh\u00e4ltnis des r\u00f6mischen\nPrivatrechts (im Kriminalrecht und \u00f6ffentlichen ist das wenige der\nFall) zur modernen Produktion.\n\n7. Diese Auffassung erscheint als nothwendige Entwicklung. Aber\nBerechtigung des Zufalls. Varia.[167] (Die Freiheit und\nanderes noch.) (Einwirkung der Kommunikationsmittel.) Weltgeschichte\neigentlich[168] nicht immer in der Geschichte als weltgeschicht[liches]\nResultat.\n\n8. Der Ausgangspunkt [ist] nat\u00fcrlich von der Naturbestimmtheit [zu\nnehmen]; subjektiv und objektiv, St\u00e4mme, Rassen etc.\u2016\n\nIt is well known that certain periods of highest development of art\nstand in no direct connection with the general development of society,\nnor with the material basis and the skeleton structure of its\norganization. Witness the example of the Greeks as compared with the\nmodern nations or even Shakespeare. As regards certain forms of art, as\ne. g. the epos, it is admitted that they can never be produced in the\nworld-epoch making form as soon as art as such comes into existence; in\nother words, that in the domain of art certain important forms of it\nare possible only at a low stage of its development. If that be true of\nthe mutual relations of different forms of art within the domain of art\nitself, it is far less surprising that the same is true of the relation\nof art as a whole to the general development of society. The difficulty\nlies only in the general formulation of these contradictions. No sooner\nare they specified than they are explained. Let us take for instance\nthe relation of Greek art and of that of Shakespeare\u2019s time to our own.\nIt is a well known fact that Greek mythology was not only the arsenal\nof Greek art, but also the very ground from which it had sprung. Is the\nview of nature and of social relations which shaped Greek imagination\nand Greek [art] possible in the age of automatic machinery, and\nrailways, and locomotives, and electric telegraphs? Where does Vulcan\ncome in as against Roberts & Co.; Jupiter, as against the lightning\nrod; and Hermes, as against the Credit Mobilier? All mythology masters\nand dominates and shapes the forces of nature in and through the\nimagination; hence it disappears as soon as man gains mastery over\nthe forces of nature. What becomes of the Goddess Fame side by side\nwith Printing House Square?[169] Greek art presupposes the existence\nof Greek mythology, i. e. that nature and even the form of society are\nwrought up in popular fancy in an unconsciously artistic fashion. That\nis its material. Not, however, any mythology taken at random, nor any\naccidental unconsciously artistic elaboration of nature (including\nunder the latter all objects, hence [also] society). Egyptian mythology\ncould never be the soil or womb which would give birth to Greek art.\nBut in any event [there had to be] _a_ mythology. In no event [could\nGreek art originate] in a society which excludes any mythological\nexplanation of nature, any mythological attitude towards it and which\nrequires from the artist an imagination free from mythology.\n\nLooking at it from another side: is Achilles possible side by side with\npowder and lead? Or is the Iliad at all compatible with the printing\npress and steam press? Does not singing and reciting and the muses\nnecessarily go out of existence with the appearance of the printer\u2019s\nbar, and do not, therefore, disappear the prerequisites of epic poetry?\n\nBut the difficulty is not in grasping the idea that Greek art and\nepos are bound up with certain forms of social development. It rather\nlies in understanding why they still constitute with us a source of\naesthetic enjoyment and in certain respects prevail as the standard\nand model beyond attainment.\n\nA man can not become a child again unless he becomes childish. But does\nhe not enjoy the artless ways of the child and must he not strive to\nreproduce its truth on a higher plane? Is not the character of every\nepoch revived perfectly true to nature in child nature? Why should the\nsocial childhood of mankind, where it had obtained its most beautiful\ndevelopment, not exert an eternal charm as an age that will never\nreturn? There are ill-bred children and precocious children. Many of\nthe ancient nations belong to the latter class. The Greeks were normal\nchildren. The charm their art has for us does not conflict with the\nprimitive character of the social order from which it had sprung. It is\nrather the product of the latter, and is rather due to the fact that\nthe unripe social conditions under which the art arose and under which\nalone it could appear can never return.\n\n\n(End of Manuscript.)\n\n\nFOOTNOTES:\n\n\n[1] Cf. Seligman, \u201cThe Economic Interpretation of History.\u201d MacMillan.\n1902.\n\n[2] Aristotle, d. Rep. L. l, c. 9 (edit. I Bekkeri Oxonii, 1837)\n\n\u201c\u1f11\u03ba\u03ac\u03c3\u03c4\u03bf\u03c5 \u03b3\u1f70\u03c1 \u03ba\u03c4\u03ae\u03bc\u03b1\u03c4\u03bf\u03c2 \u03b4\u03b9\u03c4\u03c4\u1f74 \u1f21 \u03c7\u03c1\u1fc6\u03c3\u03af\u03c2 \u1f10\u03c3\u03c4\u03b9\u03bd ... \u1f21 \u03bc\u1f72\u03bd \u03bf\u1f30\u03ba\u03b5\u03af\u03b1, \u1f21 \u03b4\u2019 \u03bf\u1f50\u03ba\n\u03bf\u1f30\u03ba\u03b5\u03af\u03b1 \u03c4\u03bf\u1fe6 \u03c0\u03c1\u03ac\u03b3\u03bc\u03b1\u03c4\u03bf\u03c2, \u03bf\u1f37\u03bf\u03bd \u1f51\u03c0\u03bf\u03b4\u03ae\u03bc\u03b1\u03c4\u03bf\u03c2 \u1f25 \u03c4\u03b5 \u1f51\u03c0\u03cc\u03b4\u03b7\u03c3\u03b9\u03c2 \u03ba\u03b1\u1f76 \u1f21 \u03bc\u03b5\u03c4\u03b1\u03b2\u03bb\u03b7\u03c4\u03b9\u03ba\u03ae.\n\u1f08\u03bc\u03c6\u03cc\u03c4\u03b5\u03c1\u03b1\u03b9 \u03b3\u1f70\u03c1 \u1f51\u03c0\u03bf\u03b4\u03ae\u03bc\u03b1\u03c4\u03bf\u03c2 \u03c7\u03c1\u03ae\u03c3\u03b5\u03b9\u03c2\u00b7 \u03ba\u03b1\u1f76 \u03b3\u1f70\u03c1 \u1f41 \u1f00\u03bb\u03bb\u03b1\u03c4\u03c4\u03cc\u03bc\u03b5\u03bd\u03bf\u03c2 \u03c4\u1ff7 \u03b4\u03b5\u03bf\u03bc\u03ad\u03bd\u1ff3\n\u1f51\u03c0\u03bf\u03b4\u03ae\u03bc\u03b1\u03c4\u03bf\u03c2 \u1f00\u03bd\u03c4\u1f76 \u03bd\u03bf\u03bc\u03af\u03c3\u03bc\u03b1\u03c4\u03bf\u03c2 \u1f22 \u03c4\u03c1\u03bf\u03c6\u1fc6\u03c2 \u03c7\u03c1\u1fc6\u03c4\u03b1\u03b9 \u03c4\u1ff7 \u1f51\u03c0\u03bf\u03b4\u03ae\u03bc\u03b1\u03c4\u03b9 \u1f97 \u1f51\u03c0\u03cc\u03b4\u03b7\u03bc\u03b1,\n\u1f00\u03bb\u03bb\u2019 \u03bf\u1f50 \u03c4\u1f74\u03bd \u03bf\u1f30\u03ba\u03b5\u03af\u03b1\u03bd \u03c7\u03c1\u1fc6\u03c3\u03b9\u03bd\u00b7 \u03bf\u1f50 \u03b3\u1f70\u03c1 \u1f00\u03bb\u03bb\u03b1\u03b3\u1fc6\u03c2 \u1f15\u03bd\u03b5\u03ba\u03b5\u03bd \u03b3\u03ad\u03b3\u03bf\u03bd\u03b5\u03bd. \u03a4\u1f78\u03bd \u03b1\u1f50\u03c4\u1f78\u03bd \u03b4\u1f72\n\u03c4\u03c1\u03cc\u03c0\u03bf\u03bd \u1f14\u03c7\u03b5\u03b9 \u03ba\u03b1\u1f76 \u03c0\u03b5\u03c1\u1f76 \u03c4\u1ff6\u03bd \u1f04\u03bb\u03bb\u03c9\u03bd \u03ba\u03c4\u03b7\u03bc\u03ac\u03c4\u03c9\u03bd.\u201d\n\n(\u201cOf everything which we possess there are two uses:\u2015one is the proper,\nand the other the improper or secondary use of it. For example, a shoe\nis used for wear, and is used for exchange; both are uses of the shoe.\nHe who gives a shoe in exchange for money or food to him who wants\none, does indeed use the shoe as a shoe, but this is not its proper\nor primary purpose, for a shoe is not made to be an object of barter.\nThe same may be said of all possessions.\u201d The Politics of Aristotle,\ntranslated into English by B. Jowett, Oxford, 1885, v. I., p. 15.)\n\n[3] That is the reason why German compilers are so fond of dwelling\non use-value, calling it a \u201cgood.\u201d See e. g. L. Stein, \u201cSystem der\nStaatswissenschaften,\u201d v. I., chapter on \u201cgoods\u201d (G\u00fctter). For\nintelligent information on \u201cgoods\u201d one must turn to treatises on\ncommodities.\n\n[4] A ridiculous presumption has gained currency of late to the effect\nthat common property in its primitive form is specifically a Slavonian,\nor even exclusively Russian form. It is the primitive form which we\ncan prove to have existed among Romans, Teutons, and Celts; and of\nwhich numerous examples are still to be found in India, though in a\npartly ruined state. A closer study of the Asiatic, especially of\nIndian forms of communal ownership would show how from the different\nforms of primitive communism different forms of its dissolution have\nbeen developed. Thus e. g. the various original types of Roman and\nTeutonic private property can be traced back to various forms of Indian\ncommunism.\n\n[5] \u201cLa Ricchezza \u00e8 una ragione tra due persone.\u201d (\u201cValue is a relation\nbetween two persons\u201d) Galiani, \u201cDella Moneta,\u201d p. 220 in vol. II.\nof Custodi\u2019s collection of \u201cScrittori classici Italiani di Economia\nPolitica. Parte Moderna,\u201d Milano, 1803.\n\n[6] \u201cIn its natural state, matter ... is always destitute of value.\u201d\nMcCulloch, \u201cA Discourse on the Rise, Progress, Peculiar Objects, and\nImportance of Political Economy,\u201d 2nd edition, Edinburgh, 1825, pg. 48.\nIt is evident how even a McCulloch stands above the fetishism of German\n\u201cthinkers\u201d, who declare \u201cmatter\u201d and half a dozen other foreign things\nto be elements of value. Cf. e. g. L. Stein, l. c. v. I., p. 110.\n\n[7] Berkeley, _The Querist_, London, 1750.\n\n[8] Thomas Cooper, Lectures on the Elements of Political Economy,\nLondon, 1831, p. 99.\n\n[9] F. List could never grasp the difference between labor as a source\nof use-value and labor as the creator of certain social form of wealth\nor exchange value, because comprehension was altogether foreign to his\npractical mind; he therefore saw in the modern English economists mere\nplagiarists of Moses, the Egyptian.\n\n[10] It can be readily understood what kind of \u201cservice\u201d is rendered\nby the category \u201cservice\u201d to economists of the type of J. B. Say and\nF. Bastiat, whose pondering sagacity, as Malthus has justly remarked,\nalways abstracts from the specially definite forms of economic\nrelations.\n\n[11] \u201cEgli \u00e8 proprio ancora delle misure d\u2019aver si fatta relazione\ncolle cose misurate, che in certo modo la misurata divien misura della\nmisurante.\u201d Montanari, Della Moneta, p. 48 in v. III of Custodi\u2019s\n\u201cScrittori classici Italiani di Economia Politica. Parte Antica.\u201d (\u201cIt\nis the property of measure to be in such a relation to the things\nmeasured, that in a certain way the thing measured becomes the measure\nof the measuring thing.\u201d)\n\n[12] It is in that sense that Aristotle (see the passage quoted at the\nbeginning of this chapter) conceives exchange value.\n\n[13] This expression is used by Genovesi.\n\n[14] Aristotle makes the same remark with reference to the private\nfamily as the primitive community. But the primitive form of family is\nthe tribal family, from the historical dissolution of which the private\nfamily develops. \u1f10\u03bd \u03bc\u1f72\u03bd \u03bf\u1f54\u03bd \u03c4\u1fc3 \u03c0\u03c1\u03ce\u03c4\u03bf \u03ba\u03bf\u03b9\u03bd\u03c9\u03bd\u03af\u1fb3 (\u03c4\u03bf\u1fe6\u03c4\u03bf \u03b4\u2019 \u1f10\u03c3\u03c4\u1f76\u03bd \u03bf\u1f30\u03ba\u03af\u1f00)\n\u03c6\u03b1\u03bd\u03b5\u03c1\u1f78\u03bd \u1f45\u03c4\u03b9 \u03bf\u1f50\u03b4\u03ad\u03bd \u1f10\u03c3\u03c4\u03b9\u03bd \u1f14\u03c1\u03b3\u03bf\u03bd \u03b1\u1f50\u03c4\u1fc6\u03c2 (namely \u03c4\u03b7\u03c2 \u1f00\u03bb\u03bb\u03b1\u03b3\u1fc6\u03c2) \u201cAnd in the\nfirst community, which is the family, this art is obviously of no use.\u201d\nJowett\u2019s transl. l. c.\n\n[15] \u201cMoney is, in fact, only the instrument for carrying on buying\nand selling (but, if you please, what do you understand by buying and\nselling?) and the consideration of it no more forms a part of the\nscience of political economy, than the consideration of ships, or\nsteam engines, or of any other instrument employed to facilitate the\nproduction and distribution of wealth.\u201d Th. Hodgskin, Popular Political\nEconomy, etc. London, 1827, p. 178, 179.\n\n[16] A comparative study of the writings and characters of Petty and\nBoisguillebert, outside of the light which it would throw upon the\ndifference of French and English society at the end of the seventeenth\nand the beginning of the eighteenth centuries, would disclose the\norigin of the national contrast between English and French Political\nEconomy. The same contrast reasserts itself in Ricardo and Sismondi.\n\n[17] Petty had illustrated the productive power inherent in the\ndivision of labor on a much grander scale than that was done later by\nAdam Smith. See his \u201cEssay concerning the multiplication of mankind,\netc.,\u201d 3rd edition, 1686, p. 35-36. He not only brings out the\nadvantages of the division of labor on the example of the manufacture\nof a watch, as Adam Smith did later on that of a needle, but considers\nalso a city and an entire country from the point of view of a large\nmanufacturing establishment. The Spectator, of November 26, 1711,\nrefers to this \u201cillustration of the admirable Sir William Petty.\u201d\nMcCulloch is, therefore, mistaken when he supposes that the Spectator\nconfounded Petty with a writer forty years his junior. See McCulloch,\n\u201cThe Literature of Political Economy, a classified catalogue,\u201d London,\n1845, p. 105. Petty is conscious of being the founder of a new science.\nHis method, he says, \u201cis not yet very usual, for instead of using\nonly comparative and superlative Words, and intellectual Arguments,\u201d\nhe has undertaken to speak \u201cin Terms of Number, Weight or Measure;\nto use only Arguments of Sense, and to consider only such Causes, as\nhave visible Foundations in Nature; leaving those that depend upon\nthe mutable Minds, Opinions, Appetites, and Passions of particular\nMen, to the Consideration of others.\u201d (Political Arithmetick, etc.,\nLondon, 1699. Preface.) (A new edition of \u201cThe Economic Writings of Sir\nWilliam Petty,\u201d edited by Chas. Henry Hull, has been published by the\nUniversity Press at Cambridge, 1899. The above passage will be found\nin vol. I., p. 244. The further references are given to this new, more\naccessible edition. Translator.) His wonderful keenness shows itself\ne. g. in the proposal to transport \u201call the moveables and people of\nIreland, and of the Highlands of Scotland ... into the rest of Great\nBritain.\u201d Thereby much labor-time would be saved, the productivity of\nlabor increased, and \u201cthe King and his Subjects would thereby become\nmore Rich and Strong.\u201d (Political Arithmetick, ch. 4, p. 285.) Or\nin the chapter of his Political Arithmetic in which he proves that\nEngland\u2019s mission is the conquest of the world\u2019s market at a time when\nHolland still played the leading part as a trading nation and France\nseemed to be on the way of becoming the ruling trading Power: \u201cThat the\nKing of England\u2019s Subjects, have Stock competent and convenient, to\ndrive the Trade of the whole Commercial World\u201d (l. c., ch. 10, p. 311).\n\u201cThat the Impediments of England\u2019s greatness are but contingent and\nremovable\u201d (l. c., ch. 5, p. 298). A singular humor pervades all his\nwritings. Thus, he shows that it was by material means that Holland\u2015at\nthat time the model country with English economists, just as England\nis with continental economists to-day\u2015conquered the world market\n\u201cwithout such Angelical Wits and Judgments, as some attribute to the\nHollanders\u201d (l. c., p. 258). He advocates \u201cLiberty of Conscience\u201d as a\ncondition of trade, because \u201cDissenters ... are ... patient Men, and\nsuch as believe that Labour and Industry is their Duty towards God,\u201d\nand \u201cThey believe that ... for those who have less Wealth, to think\nthey have the more Wit and Understanding, especially of the things\nof God which they think chiefly belong to the Poor.\u201d \u201cFrom whence it\nfollows that Trade is not fixt to any species of Religion as such; but\nrather ... to the Heterodox part of the whole\u201d (l. c., p. 262-264). He\nadvocates an \u201callowance by Publick Tax\u201d for those \u201cwho live by begging,\ncheating, stealing, gaming, borrowing without intention of restoring,\u201d\nbecause \u201cit were more for the publick profit\u201d to tax the country for\nsuch persons \u201cthan to suffer them to spend extravagantly, at the only\ncharge of careless, credulous, and good natured People\u201d (p. 269-270).\nBut he is opposed to taxes which transfer the wealth from industrious\npeople \u201cto such as do nothing at all, but eat and drink, sing, play,\nand dance; nay such as study the Metaphysicks\u201d (ibid.). Petty\u2019s\nwritings are rarities of the bookseller\u2019s trade and are to be found\nonly in scattered poor old editions, which is the more surprising since\nWilliam Petty was not only the father of English Political Economy,\nbut also the ancestor of Henry Petty, alias Marquis of Lansdowne, the\nnestor of the English Whigs. However, the Lansdowne family could hardly\nbring out a complete edition of Petty\u2019s works without prefacing it\nwith his biography, and what can be said of most origins of the great\nWhig families holds good also in this case, viz., \u201cthe less said of\nthem the better.\u201d The keen-witted but cynical army surgeon who was as\nready to plunder in Ireland under the shield of Cromwell as to crawl\nbefore Charles II. to get the title of baron which he needed for his\nplunderings, is a model hardly fit for public exhibition. Besides that,\nPetty seeks to prove in most of his writings which he published in his\nlifetime, that England\u2019s prosperity reached its climax under Charles\nII., a heterodox view for the hereditary exploiters of the \u201cglorious\nrevolution.\u201d\n\n[18] In contrast with the \u201cblack art of finance\u201d of his time,\nBoisguillebert says: \u201cLa science financi\u00e8re n\u2019est que la connaissance\napprofondie des int\u00e9r\u00eats de l\u2019agriculture et du commerce.\u201d Le D\u00e9tail de\nla France, 1697. Eug\u00e8ne Daire\u2019s edition of Economistes financiers du\nXVIII. si\u00e8cle, Paris, 1843, vol. I., p. 241.\n\n[19] But not _Romance_ Political Economy, since the Italians reproduce\nthe contrast between the English and French economists in the two\nrespective schools of Naples and Milan, while the Spaniards of the\nearlier period are either pure Mercantilists; modified mercantilists\nlike Ustariz; or, like Jovellanos (see his Obras, Barcelona, 1839-40),\nhold to the \u201cgolden mean\u201d with Adam Smith.\n\n[20] \u201cLa v\u00e9ritable richesse ... jouissance enti\u00e8re, non seulement des\nbesoins de la vie, mais m\u00eame de tous les superflus et de tout, ce qui\npeut fair plaisir \u00e0 la sensualit\u00e9,\u201d Boisguillebert, \u201cDissertation sur\nla nature de la richesse,\u201d etc., l. c., p. 403. But while Petty was\na frivolous, rapacious and unprincipled adventurer, Boisguillebert,\nthough an intendant under Louis XIV, championed the interests of the\noppressed classes with a daring that was equal to his keenness of mind.\n\n[21] The French Socialism of the Proudhon type suffers from the same\nnational hereditary disease.\n\n[22] \u201cBenjamin Franklin, The Works of, etc.,\u201d ed. by I. Sparks, vol.\nII., Boston, 1836. \u201cA Modest Inquiry into the Nature and Necessity of a\nPaper Currency.\u201d\n\n[23] L. c., p. 265.\n\n[24] L. c., p. 267.\n\n[25] L. c., \u201cRemarks and Facts relative to the American Paper Money,\u201d\n1764.\n\n[26] See \u201cPapers on American Politics; Remarks and Facts relative to\nthe American Paper Money,\u201d 1764, l. c.\n\n[27] See e. g. Galiani, \u201cDella Moneta,\u201d in vol. 3 of Scrittori Classici\nitaliani di Economia politica (Published by Custodi). Parte Moderna,\nMilano, 1803. \u201cLa fatica, he says, \u00e8 l\u2019unica che d\u00e0 valore alla cosa\u201d\n(\u201conly effort can give value to any thing\u201d). The designation of labor\nas \u201cfatica,\u201d strain, effort, is characteristic of the southerner.\n\n[28] Steuart\u2019s work, \u201cAn Inquiry into the Principles of Political\nEconomy, being an Essay on the Science of Domestic Policy in Free\nNations,\u201d appeared first in London in two quarto volumes in the year\n1767, ten years before Adam Smith\u2019s \u201cWealth of Nations.\u201d I quote from\nthe Dublin edition of 1770. (The references to pages are the same for\nthe standard London edition of 1767, except where otherwise stated.\nTranslator.)\n\n[29] Steuart, l. c., vol. I., p. 181-183.\n\n[30] Steuart, l. c., vol. I., p. 361-362.\n\n[31] See chapter I., book II., vol. I. \u201cof the reciprocal connections\nbetween Trade and Industry\u201d (Translator).\n\n[32] He declares, therefore, the patriarchal form of agriculture which\nis devoted to the direct production of use-values for the owner of the\nland, to be an \u201cabuse,\u201d not in Sparta, or Rome, or even in Athens, but\nin the industrial countries of the eighteenth century. This \u201cabusive\nagriculture\u201d is not \u201ctrade,\u201d but a \u201cdirect means of subsisting.\u201d Just\nas capitalistic agriculture clears the country of superfluous mouths,\nso does the capitalistic mode of manufacture clear the factory of\nsuperfluous hands.\n\n[33] Thus e. g., Adam Smith says: \u201cEqual quantities of labour, at all\ntimes and places, may be said to be of equal value to the labourer. In\nhis ordinary state of health, strength and spirits, in the ordinary\ndegree of his skill and dexterity, he must always lay down the same\nportion of his ease, his liberty, and his happiness. The price which\nhe pays must always be the same, whatever may be the quantity of goods\nwhich he receives in return for it. Of these, indeed, it may sometimes\npurchase a greater and sometimes a smaller quantity; but it is their\nvalue which varies, not that of the labour which purchases them....\nLabour alone, therefore, never varying in its own value ... is their\n[commodities\u2019] real price, etc. Adam Smith (Book I., ch. V., p. 34,\nOxford, 1869. Translator.)\n\n[34] David Ricardo, \u201cOn the Principles of Political Economy and\nTaxation,\u201d 3rd edition, London, 1821, p. 3.\n\n[35] Sismondi, \u201cEtudes sur l\u2019Economie Politique,\u201d t. II., Bruxelles,\n1837. \u201cC\u2019est l\u2019opposition entre la valeur usuelle ... et la valeur\n\u00e9changeable \u00e0 laquelle le commerce a reduit toute chose,\u201d p. 161.\n[Paris edition, p. 229, Transl.]\n\n[36] Sismondi l. c., p. 163-166 seq. [Paris edition, 230 etf. Transl.]\n\n[37] Perhaps the silliest to be found are the annotations of J. B.\nSay to the French translation of Ricardo, made by Constancio, and the\nmost pedantically arrogant are the remarks of Mr. MacLeod in his newly\npublished \u201cTheory of Exchange,\u201d London, 1858.\n\n[38] This objection raised against Ricardo by bourgeois economists was\ntaken up later by the socialists. Having assumed the correctness of the\nformula, they charged the practice with contradiction to the theory and\nappealed to bourgeois society to realize in practice the conclusions\nwhich were supposed to follow from its theoretical principles. That\nwas at least the way in which the English socialists turned Ricardo\u2019s\nformula of exchange value against political economy. It remained for\nMr. Proudhon not only to proclaim the fundamental principle of old\nsociety as the principle of the new, but also to declare himself the\ndiscoverer of the formula in which Ricardo summed up the combined\nresults of classical English political economy. It has been proven that\nthe utopian interpretation of the Ricardian formula was about forgotten\nin England when Mr. Proudhon \u201cdiscovered\u201d it on the other side of the\nCanal. (Cf. my work: \u201cMis\u00e8re de la Philosophie,\u201d etc., Paris, 1847,\nparagraph on la valeur constitu\u00e9e.)\n\n[39] True, Aristotle sees that the exchange value of commodities\nunderlies their prices: \u201c\u1f45\u03c4\u03b9 \u1f74 \u1f00\u03bb\u03bb\u03b1\u03b3\u03b7 \u1f25\u03bd \u03c0\u03c1\u1f76\u03bd \u03c4\u1f78 \u03bd\u03cc\u03bc\u03b9\u03c3\u03bc\u03b1 \u1f14\u03b9\u03bd\u03b1\u03b9, \u1f41\u1fc6\u03bb\u03bf\u03bd\u00b7\n\u03b4\u03b9\u03b1\u03c6\u03ad\u03c1\u03b5\u03b9 \u03b3\u1f70\u03c1 \u03bf\u1f50\u03b4\u1f72\u03bd \u1f21 \u03b5\u03af \u03ba\u03bb\u03af\u03bd\u03b1\u03b9 \u03c0\u03ad\u03bd\u03c4\u03b5 \u1f00\u03bd\u03c4\u03b9 \u03bf\u1f30\u03ba\u03af\u03b1\u03c2, \u1f23 \u1f45\u03c3\u03bf\u03c5 \u03b1\u1f76 \u03c0\u03ad\u03bd\u03c4\u03b5\n\u03ba\u03bb\u1fd6\u03bd\u03b1\u03b9.\u201d (\u201cIt is clear that exchange existed before coin. For it does not\nmake any difference whether you give five beds for a house, or as much\nmoney as five beds are worth\u201d). On the other hand, since commodities\nacquire only in price the form of exchange value with respect to one\nanother, he makes them commensurable through money. \u201c\u0394\u03b9\u1f78 \u03b4\u03b5\u1fd6 \u03c0\u03ac\u03bd\u03c4\u03b1\n\u03c4\u03b5\u03c4\u03b9\u03bc\u1fc6\u03c3\u03b8\u03b1\u03b9\u00b7 \u03bf\u1f55\u03c4\u03c9 \u03b3\u1f70\u03c1 \u1f00\u03b5\u1f76 \u1f14\u03c3\u03c4\u03b1\u03b9 \u1f00\u03bb\u03bb\u03b1\u03b3\u1f74, \u03b5\u1f30 \u03b4\u1f72 \u03c4\u03bf\u1fe6\u03c4\u03bf, \u03ba\u03bf\u03b9\u03bd\u03c9\u03bd\u03af\u03b1. \u03a4\u1f78 \u03b4\u1f74\n\u03bd\u03cc\u03bc\u03b9\u03c3\u03bc\u03b1 \u1f65\u03c3\u03c0\u03b5\u03c1 \u03bc\u03ad\u03c4\u03c1\u03bf\u03bd \u03c3\u03cd\u03bc\u03bc\u03b5\u03c4\u03c1\u03b1 \u03c0\u03bf\u03b9\u1fc6\u03c3\u03b1\u03bd \u1f30\u03c3\u03ac\u03b6\u03b5\u03b9, \u03bf\u1f54\u03c4\u03b5 \u03b3\u1f70\u03c1 \u1f03\u03bd \u03bc\u1f74 \u03bf\u1f54\u03c3\u03b7\u03c2\n\u1f00\u03bb\u03bb\u03b1\u03b3\u1fc6\u03c2 \u03ba\u03bf\u03b9\u03bd\u03c9\u03bd\u03af\u03b1 \u1f21\u03bd, \u1f44\u03c5\u03c4\u2019 \u1f00\u03bb\u03bb\u03b1\u03b3\u1f74 \u1f30\u03c3\u03cc\u03c4\u03b7\u03c4\u03bf\u03c2 \u03bc\u1f74 \u03bf\u1f54\u03c4\u2019\u1f30\u03c3\u03cc\u03c4\u03b7\u03c2, \u03bc\u1f74 \u03bf\u1f54\u03c3\u03b7\u03c2\n\u03c3\u03c5\u03bc\u03bc\u03b5\u03c4\u03c1\u03af\u03b1\u03c2.\u201d (\u201cTherefore all has to be appraised. In that way exchange\nmay always take place, and, with it, society can exist. Coin, like\nmeasure, makes everything commensurable and equal, for without exchange\nthere would be no society, without equality there would be no exchange,\nand without commensurability, no equality.\u201d) He does not conceal from\nhimself that these different objects measured by money are entirely\nincommensurable quantities. What he is after is the common unit of\ncommodities as exchange values, which as an ancient Greek he was unable\nto find. He gets out of the difficulty by making commensurable through\nmoney what is in itself incommensurable, so far as it is necessary for\npractical purposes. \u201c\u03a4\u1fc7 \u03bc\u1f72\u03bd \u03bf\u1f54\u03bd \u1f00\u03bb\u03b7\u03b8\u03b5\u03af\u1fb3 \u1f00\u03b4\u03cd\u03bd\u03b1\u03c4\u03bf\u03bd \u03c4\u1f70 \u03c4\u03bf\u03c3\u03bf\u1fe6\u03c4\u03bf\u03bd \u03b4\u03b9\u03b1\u03c6\u03ad\u03c1\u03bf\u03bd\u03c4\u03b1\n\u03c3\u03cd\u03bc\u03bc\u03b5\u03c4\u03c1\u03b1 \u03b3\u03b5\u03bd\u03ad\u03c3\u03b8\u03b1\u03b9, \u03c0\u03c1\u1f78\u03c2 \u03b4\u1f72 \u03c4\u1f74\u03bd \u03c7\u03c1\u03b5\u03af\u03b1\u03bd \u1f10\u03bd\u03b4\u03ad\u03c7\u03b5\u03c4\u03b1\u03b9 \u1f30\u03ba\u03b1\u03bd\u1ff6\u03c2.\u201d (\u201cIn truth\nit is impossible to make things that are so different, commensurable,\nbut for practical purposes it is permissible.\u201d) Aristotle, Ethica\nNicomachea. l. 5, c. 8, edit. Bekkeri. Oxonii, 1837.\n\n[40] The peculiar circumstance that, while the ounce of gold serves\nin England as the unit of the standard of money, it is not divided\ninto aliquot parts has been explained as follows: \u201cOur coinage was\noriginally adapted to the employment of silver only\u2015hence an ounce of\nsilver can always be divided into a certain adequate number of pieces\nof coin; but as gold was introduced at a later period into a coinage\nadapted only to silver, an ounce of gold cannot be coined into an\nadequate number of pieces.\u201d Maclaren: \u201cA Sketch of the History of the\nCurrency,\u201d p. 16, London, 1858.\n\n[41] \u201cMoney may continually vary in value and yet be as good a\nmeasure of value as if it remained perfectly stationary. Suppose, for\ninstance, it is reduced in value.... Before the reduction, a guinea\nwould purchase three bushels of wheat or 6 days\u2019 labour; subsequently\nit would purchase only 2 bushels of wheat, or 4 days\u2019 labour. In both\ncases, the relations of wheat and labour to money being given, their\nmutual relations can be inferred; in other words, we can ascertain that\na bushel of wheat is worth 2 days\u2019 labour. This, which is all that\nmeasuring value implies, is as readily done after the reduction as\nbefore. The excellence of a thing as a measure of value is altogether\nindependent of its own variableness in value\u201d (p. 11, Bailey, \u201cMoney\nand its Vicissitudes.\u201d London, 1837).\n\n[42] \u201cLe monete lequali oggi sono ideali sono le piu antiche d\u2019ogni\nnazione, e tutte furono un tempo reali (the latter assertion is too\nsweeping), e perch\u00e8 erano reali con esse si contava.\u201d Galiani, \u201cDella\nMoneta,\u201d l. c., p. 153 (\u201cCoins which are ideal to-day [i. e., whose\nnames no longer correspond to their value] are among the more ancient\nwith every nation; at one time they were all real, and for that reason\nserved for the purpose of counting.\u201d)\n\n[43] The romantic A. M\u00fcller says: \u201cAccording to our idea every\nindependent sovereign has the right to name the metal money, and to\ngive it a nominal social value, rank, standing and title (p. 276, v.\nII., A. H. M\u00fcller, \u201cDie Elemente der Staatskunst,\u201d Berlin, 1809). As\nfar as title is concerned the Hon. Hofrath is right; but he forgets\nthe _substance_. How confused his \u201cideas\u201d were, may be seen, e. g.,\nfrom the following passage: \u201cEverybody understands how much depends\nupon the right determination of the mint-price, especially in a country\nlike England, where the government with _magnificent liberality_\ncoins money gratuitously (Herr M\u00fcller seems to think that the members\nof the English government defray the mint expenses out of their own\npockets), where it does not charge any mintage, etc., and thus if the\nmint-price of gold were set considerably above its market price, if\ninstead of paying as now \u00a33 17s. 10-1/2d. per 1 oz. of gold, it would\nset the price of an ounce of gold at \u00a33 19s., all money would flow\ninto the mint and exchanging for the silver contained there bring\nit into the market to be exchanged there for the cheaper gold; the\nlatter would in the same manner be brought again to the mint and the\nentire coinage system would be upset\u201d (l. c., p. 280-281). To preserve\norder in English coinage, M\u00fcller falls back on \u201cdisorder.\u201d While\nshilling and pence are mere names of certain parts of an ounce of gold\nrepresented by signs of silver and copper, he imagines that an ounce\nof gold is estimated in gold, silver and copper and thus confers upon\nthe Englishmen the blessing of a triple standard of value. Silver as a\nmeasure of money, next to gold, was formally abolished only in 1816 by\n56 George III., c. 68. As a matter of fact, it was legally abolished\nas early as 1734 by 14 George II., c. 42, and still earlier by actual\npractice. There were two circumstances that made A. M\u00fcller capable of\na so-called higher conception of political economy: first, his wide\nignorance of economic facts; second, his dilettanti-like visionary\nattitude toward philosophy.\n\n[44] \u201c\u1f08\u03bd\u03ac\u03c7\u03b1\u03c1\u03c3\u03b9\u03c2, \u03c0\u03c5\u03bd\u03b8\u03b1\u03bd\u03bf\u03bc\u03ad\u03bd\u03bf\u03c5 \u03c4\u03b9\u03bd\u1f78\u03c2, \u03c0\u03c1\u1f78\u03c2 \u03c4\u03af \u03bf\u03af \u1f1d\u03bb\u03bb\u03b7\u03bd\u03b5\u03c2 \u03c7\u03c1\u1ff6\u03bd\u03c4\u03b1\u03b9 \u03c4\u1ff7\n\u1f00\u03c1\u03b3\u03c5\u03c1\u03af\u1ff3 \u1f15\u03b9\u03c0\u03b5 \u03c0\u03c1\u1f78\u03c2 \u03c4\u1f78 \u1f00\u03c1\u03b9\u03b8\u03bc\u03b5\u1fd6\u03bd.\u201d (Athen. Deipn. l. IV. 49. v. 2, ed.\nSchweigh\u00e4user, 1802.) (When Anacharsis was asked for what purpose the\nGreeks used money, he replied, \u201cFor reckoning.\u2015\u2018\u2019\u201c\u201d)\n\n[45] G. Garnier, one of the early French translators of Adam Smith,\nconceived the queer notion of fixing a proportion between the use of\nmoney of account and that of actual money. His proportion is 10 to 1.\n(G. Garnier, \u201cHistoire de la Monnaie depuis les temps de la plus haute\nantiquit\u00e9,\u201d etc., t. 1, p. 78.)\n\n[46] The act of Maryland in 1723 by which tobacco was made the legal\nstandard, but its value reduced to terms of English gold money,\nnamely one penny equal to one pound of tobacco, reminds of the \u201cleges\nbarbarorum,\u201d in which, inversely, certain sums of money were expressed\nin terms of oxen, cows, etc. In that case neither gold nor silver, but\nthe ox and the cow were the actual material of the money of account.\n\n[47] Thus, we read, e. g., in the \u201cFamiliar Words\u201d of Mr. David\nUrquhart: \u201cThe value of gold is to be measured by itself; how can\nany substance be the measure of its own worth in other things? The\nworth of gold is to be established by its own weight, under a false\ndenomination of that weight\u2015and an ounce is to be worth so many pounds\nand fractions of pounds. This is falsifying a measure, not establishing\na standard.\u2015\u2018\u2019\u201c\u201d\n\n[48] \u201cMoney is the measure of Commerce, and of the rate of everything,\nand therefore ought to be kept (as all other measures) as steady and\ninvariable as may be. But this cannot be, if your money be made of\ntwo Metals, whose proportion ... constantly varies in respect of one\nanother.\u201d John Locke: Some Considerations on the Lowering of Interest,\netc., 1691 (p. 166, p. 65 in his Works 7 ed., London, 1768, vol. III.)\n\n[49] Locke says among other things: \u201c ... call that a Crown now, which\nbefore ... was but a part of a Crown.... An equal quantity of Silver is\nalways the same Value with an equal quantity of Silver.... For if the\nabating 1-20 of the quantity of Silver of any Coin does not lessen its\nValue, the abating 19-20 of the quantity of the Silver of any Coin will\nnot abate its Value. And so a single Penny, being called a Crown, will\nbuy as much Spice, or Silk, or any other Commodity, as a Crown-Piece,\nwhich contains 20 times as much Silver.... Now [all that may be done]\nis giving a less quantity of Silver the Stamp and Denomination of a\ngreater.... But \u2019tis Silver and not Names that pay Debts and purchase\nCommodities\u201d (l. c., p. 135-145 passim). If to raise the value of\nmoney means nothing but to give any desired name to an aliquot part\nof a silver coin, e. g., to call an eighth part of an ounce of silver\na penny, then money may really be rated as high as you please. At the\nsame time, Locke answered Lowndes that the rise of the market price\nabove the mint price was due not to the rise of the value of silver,\nbut to the lighter silver coins. Seventy-seven clipped shillings do not\nweigh a particle more than 62 full-weighted ones. Finally he pointed\nout with perfect right that, aside from the loss of weight in the\ncirculating coin, the market price of silver bullion in England could\nrise to some extent above its mint price, since the export of silver\nbullion was allowed while that of silver coin was prohibited (l. c.,\np. 54-116 passim). Locke was exceedingly careful not to touch upon the\nburning question of public debts, and no less carefully avoided the\ndiscussion of the delicate economic question, viz., the depreciation of\nthe currency out of proportion to its real loss of silver, as was shown\nby the rate of exchange and the ratio of silver bullion to silver coin.\nWe shall return to this question in its general form in the chapter on\nthe Medium of Circulation. Nicholas Barbon in \u201cA Discourse Concerning\nCoining the New Money Lighter, in Answer to Mr. Locke\u2019s Considerations,\netc.,\u201d London, 1696, tried in vain to entice Locke to difficult ground.\n\n[50] Steuart, l. c., v. II., p. 154.\n\n[51] The Querist, l. c., (p. 5-6-7.) The \u201cQueries on Money\u201d are\ngenerally clever. Among other things Berkeley is perfectly right in\nsaying that by their progress the North American colonies \u201cmake it\nplain as daylight, that gold and silver are not so necessary for the\nwealth of a nation, as the vulgar of all ranks imagine.\u2015\u2018\u2019\u201c\u201d\n\n[52] Price means here real equivalent in the sense commonly employed by\nEnglish economic writers in the seventeenth century.\n\n[53] Steuart, l. c., v. II., p. 154, 299 [1st London edition, of 1767,\nv. I., p. 526-531. Transl.].\n\n[54] On the occasion of the last commercial crisis the ideal African\nmoney received loud praise from certain English quarters, after its\nseat was this time moved from the coast to the heart of Barbary. The\nfreedom of the Berbers from commercial and industrial crises was\nascribed to the ideal unit of measure of their bars. Would it not have\nbeen simpler to say that trade and industry are the _conditio sine qua\nnon_ of commercial and industrial crises?\n\n[55] The Currency Question, The Gemini Letters, London, 1844, p.\n260-272, passim.\n\n[56] John Gray: \u201cThe Social System. A Treatise on the Principle of\nExchange, Edinburgh, 1831.\u201d Compare with \u201cLectures on the Nature and\nUse of Money, Edinburgh, 1848,\u201d by the same author. After the February\nrevolution Gray sent a memorial to the provisional French government,\nin which he instructs the latter that France is not in need of an\n\u201corganization of labour,\u201d but of an \u201corganization of exchange\u201d of which\nthe plan is fully worked out in his money system. Honest John did not\nsuspect that sixteen years after the appearance of his \u201cSocial System\u201d\na patent for the same discovery would be taken out by the ingenious\nProudhon.\n\n[57] Gray, \u201cThe Social System,\u201d etc., p. 63: \u201cMoney should be merely\na receipt, an evidence that the holder of it has either contributed\ncertain value to the national stock of wealth or that he has acquired a\nright to the same value from some one who has contributed to it.\u2015\u2018\u2019\u201c\u201d\n\n[58] An estimated value being previously put upon produce, let it be\nlodged in a bank, and drawn out again, whenever it is required, merely\nstipulating, by common consent, that he who lodges any kind of property\nin the proposed National Bank, may take out of it an equal value of\nwhatever it may contain, instead of being obliged to draw out the\nself-same thing that he put in.\u201d L. c., p. 68.\n\n[59] L. c., p. 16.\n\n[60] Gray: \u201cLectures on Money, etc.,\u201d p. 182.\n\n[61] L. c., p. 169.\n\n[62] \u201cThe business of every country ought to be conducted on a national\ncapital.\u201d John Gray, \u201cThe Social System,\u201d etc., p. 171.\n\n[63] \u201cThe land to be transformed into national property.\u201d L. c., p. 298.\n\n[64] See e. g. W. Thompson: \u201cAn Inquiry into the Distribution of\nWealth, etc.,\u201d London, 1827. Bray, \u201cLabour\u2019s Wrongs and Labour\u2019s\nRemedy,\u201d Leeds, 1839.\n\n[65] Alfred Darimont\u2019s \u201cDe la Reforme des banques,\u201d Paris, 1856, may be\nconsidered as a compendium of this melodramatic theory of money.\n\n[66] \u201cDi due sorte \u00e8 la moneta, ideale e reale; e a dui diversi usi\n\u00e8 adoperata, a valutare le cose e a comperarle. Per valutare \u00e8 buona\nla moneta ideale, cosi come la reale e forse anche pi\u00f9. L\u2019altro uso\ndella moneta \u00e8 di comperare quelle cose istesse, ch\u2019ella apprezza ...\ni prezzi e i contratti si valutano in moneta ideale e si eseguiscono\nin moneta reale.\u201d Galiani, l. c., p. 112 sq. (\u201cMoney is of two kinds,\nideal and real; and is adapted to two different uses: to determine\nthe value of things and to buy them. For the purpose of valuation\nideal money is as good as real and perhaps even better. The other\nuse of money is to buy the same things which it appraises ... prices\nand contracts are determined in ideal money and are executed in real\nmoney.\u201d)\n\n[67] This, of course, does not prevent the market price of commodities\nto be above or below their value. However, this consideration is\nforeign to simple circulation and belongs to quite another sphere to be\nconsidered later, when we shall investigate the relation between value\nand market price.\n\n[68] How deeply some beautiful souls are wounded by the merely\nsuperficial aspect of the antagonism which asserts itself in buying\nand selling, may be seen from the following abstract from M. Isaac\nPereire\u2019s: \u201cLe\u00e7ons sur l\u2019industrie et les finances,\u201d Paris, 1832. The\nfact that the same Isaac in his capacity of inventor and dictator\nof the \u201cCredit mobilier\u201d has acquired the reputation of the wolf of\nthe Paris Bourse shows what lurks behind the sentimental criticism\nof economics. Says Mr. Pereire at the time an apostle of St. Simons:\n\u201cC\u2019est parceque tous les individus sont isol\u00e9s, s\u00e9par\u00e9s les uns des\nautres, soit dans leur travaux, soit pour la consommation, qu\u2019il y a\nechange entre eux des produits de leur industrie respective. De la\nn\u00e9cessit\u00e9 de l\u2019\u00e9change est deriv\u00e9e la n\u00e9cessit\u00e9 de determiner la valeur\nrelative des objets. Les id\u00e9es de la valeur et de l\u2019\u00e9change sont donc\nintimement li\u00e9es, et toutes deux dans leur forme actuelle exprime\nl\u2019individualisme et l\u2019antagonisme.... Il n\u2019y a lieu a fixer la valeur\ndes produits que parcequ\u2019il y a vente at achat, en d\u2019autres termes,\nantagonisme entre les divers membres de la societ\u00e9. Il n\u2019y a lieu \u00e0\ns\u2019occuper du prix, de valeur que l\u00e0 o\u00f9 il y avait vente et echat, c\u2019est\n\u00e0 dire, o\u00f9 chaque individu \u00e9tait oblig\u00e9 de lutter, pour se procurer\nles object n\u00e9cessaires a l\u2019entretien de son existence\u201d (l. c., p. 2,\n3 passim). (\u201cSince individuals are isolated and separated from one\nanother both in their labors and in consumption, exchange takes place\nbetween them in the products of their respective industries. From the\nnecessity of exchange arises the necessity of determining the relative\nvalue of things. The ideas of value and exchange are thus intimately\nconnected and both express in their actual form individualism and\nantagonism.... The determination of values of products takes place\nonly because there are sales and purchases, or, to put it differently,\nbecause there is an antagonism between different members of society.\nOne has to occupy himself with price and value only where there is\nsale and purchase, that is to say, where every individual is obliged\nto struggle to procure for himself the objects necessary for the\nmaintenance of his existence.\u201d)\n\n[69] \u201cL\u2019argent n\u2019est que le moyen et l\u2019acheminement, au lieu que les\ndenr\u00e9es utiles \u00e0 la vie sont la fin et le but.\u201d (\u201cMoney is but the ways\nand means, while the things useful in life are the end and object.\u201d)\nBoisguillebert: \u201cLe D\u00e9tail de la France,\u201d 1697, in Eugene Daires\u2019\n\u201cEconomistes financiers du XVIIIieme si\u00e8cle, vol. I., Paris, 1843, p.\n210.\n\n[70] In November, 1807, William Spence published a pamphlet in England\nunder the title: \u201cBritain Independent of Commerce.\u201d The principle set\nforth in this pamphlet was further elaborated by William Cobbet in\nhis \u201cPolitical Register\u201d under the virulent title, \u201cPerish Commerce.\u201d\nTo this James Mill replied in 1808 in his \u201cDefence of Commerce\u201d which\ncontains the passage quoted above from his \u201cElements of Political\nEconomy\u201d (p. 190-193, Transl.). In his controversy with Sismondi and\nMalthus on commercial crises, J. B. Say appropriated this clever\ndevice, and as it would be difficult to point out with what new idea\nthis comical \u201cprince de la science\u201d had enriched political economy, his\ncontinental admirers have trumpeted him as the man who had unearthed\nthe treasure of the metaphysical balance of purchases and sales; as a\nmatter of fact, his merits consisted rather of the impartiality with\nwhich he equally misunderstood his contemporaries, Malthus, Sismondi\nand Ricardo.\n\n[71] The manner in which economists explain the different aspects of\nthe commodity may be seen from the following examples:\n\n\u201cWith money in possession, we have but one exchange to make in order\nto secure the object of desire, while with other surplus products\nwe have two, the first of which (procuring the money) is infinitely\nmore difficult than the second.\u201d (G. Opdyke, \u201cA Treatise on Political\nEconomy,\u201d New York, 1851, p. 277-278.)\n\n\u201cThe superior saleableness of money is the exact effect or natural\nconsequence of the less saleableness of commodities.\u201d (Th. Corbet, \u201cAn\nInquiry into the Causes and Modes of the Wealth of Individuals.\u201d etc.,\nLondon, 1841, p. 117.)\n\n\u201cMoney has the quality of being always exchangeable for what it\nmeasures.\u201d (Bosanquet, \u201cMetallic, Paper and Credit Currency,\u201d etc.,\nLondon, 1842, p. 100.)\n\n\u201cMoney can always buy other commodities, whereas other commodities\ncan not always buy money.\u201d (Th. Tooke, \u201cAn Inquiry into the Currency\nPrinciple,\u201d 2d ed., London, 1844, p. 10.)\n\n[72] The same commodity can be bought and resold many times. It\ncirculates, then, not merely as a commodity, but in a capacity which\ndoes not exist from the point of view of simple circulation, of the\nsimple contrast of commodity and money.\n\n[73] The quantity of money is immaterial \u201cpourvu qu\u2019il y en ait\nassez pour maintenir les prix contract\u00e9s par les denr\u00e9es\u201d (as long\nas it is sufficient to maintain the existing prices of commodities).\nBoisguillebert, l. c. p. 210.\n\n\u201cIf the circulation of commodities of four hundred millions required a\ncurrency of forty millions, and ... this proportion of one-tenth was\nthe due level, estimating both currency and commodities in gold; then,\nif the value of commodities to be circulated increased to four hundred\nand fifty millions, from natural causes ... I should say the currency,\nin order to continue at its level, must be increased to forty-five\nmillions.\u201d (William Blake, \u201cObservations on the Effects Produced by the\nExpenditure of Government, etc.,\u201d London, 1823, p. 80.)\n\n[74] \u201cE la velocit\u00e0 del giro del danaro, non la quantit\u00e0 dei metalli\nche fa apparir molto a poco il danaro.\u201d (Galiani, l. c. p. 99.) (\u201cIt is\nthe rapidity of the circulation of money and not the quantity of metals\nthat causes a greater or smaller amount of money to appear.\u201d)\n\n[75] An example of an extraordinary decline of metallic circulation\nfrom its average level was furnished by England in 1858, as may be\nseen from the following extract from the London Economist: \u201cFrom the\nnature of the case (namely, the isolated nature of simple circulation)\nvery exact data cannot be procured as to the amount of cash that is\nfluctuating in the market, and in the hands of the not banking classes.\nBut, perhaps, the activity or the inactivity of the mints of the\ngreat commercial nations is one of the most likely indications in the\nvariations of that amount. Much will be manufactured when it is wanted;\nand little when little is wanted.... At the English mint the coinage\nwas in 1855 \u00a39,245,000; 1856, \u00a36,476,000; 1857, \u00a35,293,855. During 1858\nthe mint had scarcely anything to do.\u201d (Economist, July 10, 1858.) But\nat the same time about eighteen million pounds sterling were lying in\nthe bank vaults.\n\n[76] Dodd, \u201cCuriosities of Industry,\u201d etc., London, 1854.\n\n[77] \u201cThe Currency Question Reviewed, etc., by a Banker.\u201d (Edinburgh,\n1845, p. 69.)\n\n\u201cSi un \u00e9cu un peu us\u00e9 \u00e9tait reput\u00e9 valoir quelque chose de moins qu\u2019un\n\u00e9cu tout neuf, la circulation se trouverait continuellement arr\u00eat\u00e9e, et\nil n\u2019y aurait pas un seul payement qui ne fut mati\u00e8re \u00e0 contestation.\u201d\n(G. Garnier, l. c. t. I., p. 24.) (\u201cIf an ecu slightly used would\npass for a little less than an entirely new ecu, circulation would be\ncontinually interfered with, and not a payment would take place that\nwould not give rise to controversy.\u201d)\n\n[78] W. Jacob, \u201cAn Inquiry Into the Production and Consumption of the\nPrecious Metals.\u201d (London, 1831, vol. II., ch. XXVI.)\n\n[79] David Buchanan, \u201cObservations on the Subjects Treated of in Dr.\nSmith\u2019s Inquiry on the Wealth of Nations,\u201d etc. (Edinburgh, 1841, p. 3.)\n\n[80] Henry Storch, \u201cCours d\u2019Economic Politique.\u201d etc., avec des notes\npar J. B Say. Paris, 1823, tom. IV., p. 179. Storch published his work\nin French at St. Petersburg. J. B. Say immediately issued a Parisian\nreprint, supplemented with alleged \u201cnotes,\u201d which as a matter of fact\ncontain nothing but commonplaces. Storch (see his \u201cConsiderations sur\nla Nature du Revenue National,\u201d Paris, 1824) took by no means kindly to\nthis annexation of his work by the \u201cprince de la science.\u201d\n\n[81] Plato de Rep. L. II \u201c\u03bd\u03cc\u03bc\u03b9\u03c3\u03bc\u03b1 \u03be\u03cd\u03bc\u03b2\u03bf\u03bb\u03bf\u03bd \u03c4\u1fc6\u03c2 \u1f00\u03bb\u03bb\u03b1\u03b3\u1fc6\u03c2.\u201d (\u201cMoney symbol\nof exchange.\u201d) Opera omnia, etc., ed. G. Stallbumius, London, 1850, p.\n304. Plato develops money only in two capacities\u2015as a measure of value\nand a token of value, but demands, in addition to the token of value\nserving for home circulation, another one for trade between Greece and\nforeign countries. (See also Book V of his Laws.)\n\n[82] Aristotle, Ethic. Nicom, l. 5., ch. 8, l. c.: \u03bf\u1f36\u03bf\u03bd \u03b4\u2019 \u1f51\u03c0\u03ac\u03bb\u03bb\u03b1\u03b3\u03bc\u03b1\n\u03c4\u1fc6\u03c2 \u03c7\u03c1\u03b5\u03af\u03b1\u03c2 \u03c4\u1f78 \u03bd\u03cc\u03bc\u03b9\u03c3\u03bc\u03b1 \u03b3\u03ad\u03b3\u03bf\u03bd\u03bf\u03c5 \u03ba\u03b1\u03c4\u1f70 \u03c3\u03c5\u03bd\u03b8\u03ae\u03ba\u03b7\u03bd \u03ba\u03b1\u1f76 \u03b4\u03b9\u1f70 \u03c4\u03bf\u1f54\u03c4\u03bf \u03c4\u03bf\u1f54\u03bd\u03bf\u03bc\u03b1 \u1f14\u03c7\u03b5\u03b9\n\u03bd\u03cc\u03bc\u03b9\u03c3\u03bc\u03b1. \u1f45\u03c4\u03b9 \u03bf\u1f50 \u03c6\u1f50\u03c3\u03b5\u03b9 \u1f00\u03bb\u03bb\u1f70 \u03bd\u03cc\u03bc\u1ff3, \u03ba\u03b1\u1f76 \u1f10\u03c6\u2019 \u1f21\u03bc\u1fd6\u03bd \u03bc\u03b5\u03c4\u03b1\u03b2\u03b1\u03bb\u03b5\u1fd6\u03bd \u03ba\u03b1\u1f76 \u03c0\u03bf\u03b9\u1fc6\u03c3\u03b1\u03b9\n\u1f04\u03c7\u03c1\u03b7\u03c3\u03c4\u03bf\u03bd.\u201d (\u201cIn the satisfaction of wants money became the medium of\nexchange by agreement. And for that reason it bears the name \u03bd\u03cc\u03bc\u03b9\u03c3\u03bc\u03b1,\nbecause it owes its existence, not to nature, but to law (\u03bd\u03cc\u03bc\u03c9), and it\nis in our power to change it and make it void.\u201d) Aristotle had a far\nmore comprehensive and deep view of money than Plato. In the following\npassage he beautifully shows how barter between different communities\ncreates the necessity of assigning the character of money to a specific\ncommodity, i. e., one which has itself an intrinsic value. \u201c\u039e\u03b5\u03bd\u03b9\u03ba\u03c9\u03c4\u03ad\u03c1\u03b1\u03c2\n\u03b3\u1f70\u03c1 \u03b3\u03b5\u03bd\u03bf\u03bc\u03ad\u03bd\u03b7\u03c2 \u03c4\u1fc6\u03c2 \u03b2\u03bf\u03b7\u03b8\u03b5\u03af\u03b1\u03c2 \u03c4\u1ff7 \u03b5\u1f30\u03c3\u03ac\u03b3\u03b5\u03c3\u03b8\u03b1\u03b9 h\u1f66\u03bd \u1f10\u03bd\u03b4\u03b5\u03b5\u1fd6\u03c2 \u03ba\u03b1\u1f76 \u1f14\u03ba\u03c0\u03b5\u03bc\u03c0\u03b5\u03b9\u03bd \u1f65\u03bd\n\u1f10\u03c0\u03bb\u03ad\u03bf\u03bd\u03b1\u03b6\u03bf\u03bd, \u1f10\u03be \u1f00\u03bd\u03ac\u03b3\u03ba\u03b7\u03c2 \u1f21 \u03c4\u03bf\u1fe6 \u03bd\u03bf\u03bc\u03af\u03c3\u03bc\u03b1\u03c4\u03bf\u03c2 \u1f10\u03c0\u03bf\u03c1\u03af\u03c3\u03b8\u03b7 \u03c7\u03c1\u1fc6\u03c3\u03b9\u03c2\u00b7 \u03b4\u03b9\u1f78 \u03c0\u03c1\u1f78\u03c2 \u03c4\u1f70\u03c2\n\u1f00\u03bb\u03bb\u03b1\u03b3\u03b1\u03c2 \u03c4\u03bf\u03b9\u03bf\u1fe6\u03c4\u03cc\u03bd \u03c4\u03b9 \u03c3\u03c5\u03bd\u03ad\u03b8\u03b5\u03bd\u03c4\u03bf \u03c0\u03c1\u1f78\u03c2 \u03c3\u03c6\u1fb6\u03c2 \u03b1\u1f50\u03c4\u03bf\u1f7a\u03c2 \u03b4\u03b9\u03b4\u03cc\u03bd\u03b1\u03b9 \u03ba\u03b1\u1f76 \u03bb\u03b1\u03bc\u03b2\u03ac\u03bd\u03b5\u03b9\u03bd,\n\u03b4\u2019 \u03c4\u1ff6\u03bd \u03c7\u03c1\u03b7\u03c3\u03af\u03bc\u03c9\u03bd \u03b1\u1f50\u03c4\u1f78 \u1f42\u03bd \u03b5\u1f36\u03c7\u03b5 \u03c4\u1f74\u03bd \u03c7\u03c1\u03b5\u03af\u03b1\u03bd \u03b5\u1f50\u03bc\u03b5\u03c4\u03b1\u03c7\u03b5\u03af\u03c1\u03b9\u03c3\u03c4\u03bf\u03bd ... \u03bf\u1f36\u03bf\u03bd\n\u03c3\u03af\u03b4\u03b7\u03c1\u03bf\u03c2 \u03ba\u03b1\u1f76 \u1f04\u03c1\u03b3\u03c5\u03c1\u03bf\u03c2 \u03ba\u1f02\u03bd \u03b5\u1f34 \u03c4\u03b9 \u03c4\u03bf\u03b9\u03bf\u1fe6\u03c4\u03bf\u03bd \u1f15\u03c4\u03b5\u03c1\u03bf\u03bd\u201d. (Arist. De Republica,\nl. i. p. 9, [secs. 7, 8] l. c.)\n\n(\u201cWhen the inhabitants of one country became more dependent on those of\nanother, and they imported what they needed and exported the surplus,\nmoney necessarily came into use ... and hence men agreed to employ in\ntheir dealings with each other something which was intrinsically useful\nand easily applicable to the purposes of life, for example, iron,\nsilver and the like.\u201d Trans, by B. Jowett, \u201cThe Politics of Aristotle,\nOxford, 1885, p. 16). This passage is quoted by Michel Chevalier, who\neither has not read Aristotle or did not understand him, to prove that\nin Aristotle\u2019s opinion currency must consist of a substance having\nintrinsic value. On the contrary, Aristotle says expressly that money\nas a mere medium of circulation seems to owe its existence to agreement\nor law, as is shown by its name \u03bd\u03cc\u03bc\u03b9\u03c3\u03bc\u03b1, and that in reality it owes\nits utility as coin to its function and not to any intrinsic use-value\nof its own. \u03bb\u1fc6\u03c1\u03bf\u03c2 \u03b5\u1f36\u03bd\u03b1\u03b9 \u03b4\u03bf\u03ba\u03b5\u1fd6 \u03c4\u1f78 \u03bd\u03cc\u03bc\u03b9\u03c3\u03bc\u03b1 \u03ba\u03b1\u1f76 \u03bd\u03cc\u03bc\u03bf\u03c2 \u03c0\u03b1\u03bd\u03c4\u03ac\u03c0\u03b1\u03c3\u03b9, \u03c6\u03cd\u03c3\u03b5\u03b9 \u03b4\u2019\n\u03bf\u1f50\u03b4\u1f72\u03bd \u1f45\u03c4\u03b9 \u03bc\u03b5\u03c4\u03b1\u03b8\u03b5 \u03b5\u03bd\u03c9\u03bd \u03c4\u03b5 \u03c4\u1ff6\u03bd \u03c7\u03c1\u03c9\u03bc\u03ad\u03bd\u03c9\u03bd \u03bf\u1f50\u03b4\u03b5\u03bd\u1f78\u03c2 \u1f04\u03be\u03b9\u03bf\u03bd \u03bf\u1f50\u03b4\u1f72 \u03c7\u03c1\u03ae\u03c3\u03b9\u03bc\u03bf\u03bd \u03c0\u03c1\u1f78\u03c2\n\u03bf\u1f50\u03b4\u1f72\u03bd \u03c4\u1ff6\u03bd \u1f00\u03bd\u03b1\u03b3\u03ba\u03b1\u03af\u03c9\u03bd \u1f11\u03bf\u03c4\u03af\u2019 (\u201cOthers maintain that coined money is a mere\nsham, a thing not natural, but conventional only, which would have no\nvalue or use for any of the purposes of daily life if another commodity\nwere substituted by the users.\u201d) (l. c. sec. 11.)\n\n[83] Mandeville, Sir John, \u201cVoyages and Travels,\u201d London, 1705, p. 105:\n\u201cThis Emperor (of Cattay or China) may dispende ols muche as he wile\nwithouten estymacion. For he despendethe not, nor makethe no money, but\nof lether empredeth, or of papyre. And when that money bathe ronne so\nlonge that it begynethe to waste, than men beren it to the Emperoure\nTresorye, and then they taken newe Money for the old. And that money\ngothe thorghe out all the contree, and thorge out all his Provynces....\nThey make no money neither of Gold nor of Sylver,\u201d and \u201ctherefore,\u201d\nthinks Mandeville, \u201che may despende ynew and outrageously.\u201d\n\n[84] Benjamin Franklin, \u201cRemarks and Facts Relative to the American\nPaper Money,\u201d 1764, p. 348, l. c. \u201cAt this very time, even the silver\nmoney in England is obliged to the legal tender for part of its value;\nthat part which is the difference between its real weight and its\ndenomination. Great part of the shillings and sixpences now current\nare by wearing become 5, 10, 20, and some of the sixpences even 50\nper cent., too light. For this difference between the _real_ and the\n_nominal_ you have no intrinsic value. You have not so much as paper,\nyou have nothing. It is the legal tender, with the knowledge that it\ncan easily be repassed for the same value, that makes three-pennyworth\nof silver pass for a sixpence.\u201d\n\n[85] Berkeley, l. c., p. 5-6. \u201cWhether the denominations being\nretained, although the bullion were gone ... might not nevertheless ...\na circulation of commerce (be) maintained?\u201d\n\n[86] \u201cNon solo i metalli ricchi son segni delle cose ...; ma\nvicendevolmente le cose ... sono segni dell\u2019oro e dell\u2019argento.\u201d (A.\nGenovesi, \u201cLezioni di Economia Civile,\u201d 1765. p. 281 in Custodi, Parte\nMod. 1. VIII.) (\u201cNot only are precious metals tokens of things, but\nvice versa, things are tokens of gold and silver.\u201d)\n\n[87] Petty. \u201cGold and silver are universal wealth.\u201d (Political\nArithmetic, l. c., p. 242.)\n\n[88] E. Misselden. \u201cFree Trade, or the Means to Make Trade Flourish,\u201d\netc., London, 1622. \u201cThe natural matter of Commerce is Merchandise,\nwhich Merchants from the end of Trade have stiled Commodities. The\nArtificiall matter of Commerce is Money, which hath obtained the title\nof sinewes of warre and of State.... Money, though it be in nature\nand time after Merchandise, yet forasmuch as it is now in use become\nthe chiefe.\u201d (p. 7.) He compares his own treatment of merchandise and\nmoney with the manner of \u201cOld Jacob, who, blessing his Grandchildren,\ncrost his hands, and laide his right hand on the yonger, and his left\nhand on the elder.\u201d (l. c.) Boisguillebert, \u201cDissert. sur la Nature\nDes Richesses,\u201d etc. \u201cVoil\u00e0 donc l\u2019esclave du commerce devenu son\nma\u00eetre.... La mis\u00e8re des peuples ne vient que de ce qu\u2019on a fait un\nma\u00eetre, ou plut\u00f4t un tyran de ce qui \u00e9tait un esclave.\u201d (p. 395, 399.)\n\n[89] Boisguillebert, l. c. \u201cOn a fait une idole de ces m\u00e9taux (l\u2019or\net l\u2019argent) et laissant l\u00e0, l\u2019objet et l\u2019intention pour lesquels ils\navaient \u00e9t\u00e9 appel\u00e9s dans le commerce, savoir, pour y servir de gages\ndans l\u2019\u00e9change et la tradition r\u00e9ciproque, on les a presque quitt\u00e9s\nde ce service pour en former des divinit\u00e9s, aux quelles on a sacrifi\u00e9\net sacrifie toujours plus de biens et de besoins pr\u00e9cieux et m\u00eame\nd\u2019hommes, que jamais l\u2019aveugle antiquit\u00e9 n\u2019en immola \u00e0 ces fausses\ndivinit\u00e9s,\u201d etc. (l. c., p. 395.)\n\n[90] In the first halt of the perpetuum mobile, _i. e._, in the\nsuspension of the function of money as a medium of circulation,\nBoisguillebert at once suspects its independent existence from\ncommodities. Money, he says, must be \u201cin constant motion, it can be\nmoney only by being mobile, but as soon as it becomes motionless all\nis lost.\u201d (\u201cDans un mouvement continuel, ce qui ne peut \u00eatre que tant\nqu\u2019il est meuble, mais sit\u00f4t qu\u2019il devient immeuble tout est perdu.\u201d\n\u201cLe D\u00e9tail de la France,\u201d p. 231.) What he overlooks is that this halt\nconstitutes the condition of its movement. What he really wants is that\nthe value form of commodities should appear merely in the transitory\nform of their change of matter, but should never become an end in\nitself.\n\n[91] \u201c ... The more the stock ... is ... encreased in wares, the more\nit decreaseth in treasure.\u201d (E. Misselden, l. c., p. 23.)\n\n[92] l. c., p. 11-13 passim.\n\n[93] Petty, \u201cPolitical Arith.,\u201d l. c., p. 196 (1899 edition, v. I, p.\n269. Transl.)\n\n[94] Francois Bernier, \u201cVoyage contenant la description des \u00e9tats du\nGrand Mogul.\u201d (Paris edition, 1830, t. l., conf., p. 312-314.)\n\n[95] Dr. Martin Luther, \u201cB\u00fccher vom Kaufhandel und Wucher,\u201d 1524.\nIn the same passage Luther says: \u201cGott hat uns Deutsche dahin\ngeschleidert, dass wir unser gold und silber m\u00fcssen in fremde L\u00e4nder\nstossen, alle Welt reich machen und selbst Bettler Bleiben. England\nsollte wohl weniger Goldes haben, wenn Deutschland ihm sein Tuch\nliesse, und der K\u00f6nig von Portugal sollte auch weniger haben, wenn wir\nihm die W\u00fcrze liessen. Rechne Du, wie viel eine Messe zu Frankfurt\naus Deutschen Landen gef\u00fcrt wird, ohne Not und Ursache: so wirst Du\nDich wundern, wie es zugehe, dass noch ein heller in Deutschen Landen\nsei. Frankfurt ist das Silber-und Goldloch, dadurch aus Deutschem\nLande fleisst, was nur guillet und w\u00e4chst, gem\u00fcnzt oder geschlagen\nwird bei uns; w\u00e4re das Loch zuegestopft, so d\u00fcrft man itzt der Klage\nnicht h\u00f6ren, die allethalben eitel Schuld und kein Geld, alle Land und\nSt\u00e4dte ausgewuchert sind. Aber lass gehen, es will doch also gehen; wir\nDeutsche m\u00fcssen Deutsche bleiben! wir lassen nicht ab, wir m\u00fcssen denn.\u201d\n\nIn the work quoted above Misselden wishes to retain the gold and silver\nat least within the confines of Christendom: \u201cThe other forreine\nremote causes of the want of money, are the Trades maintained out of\nChristendome to Turky, Persia and the East Indies, which trades are\nmaintained for the most part with ready money, yet in a different\nmanner from the trades of Christendome within itselfe. For although\nthe trades within Christendome are driven with ready monies, yet\nthose monies are still contained and continued within the bounds of\nChristendome. There is indeede a fluxus and refluxus, a flood and ebbe\nof the monies of Christendome traded within it selfe; for sometimes\nthere is more in one part of Christendome, sometimes there is lesse\nin another, as one Country wanteth and another aboundeth: It cometh\nand goeth, and whirleth about the Circle of Christendome, but is still\ncontained within the compasse thereof. But the money that is traded out\nof Christendome into the parts aforesaid is continually issued out and\nnever returneth againe.\u201d (p. 19-20.)\n\n[96] \u201cA nummo prima origo avaritiae ... haec paulatim exarsit rabie\nquadam, non jam avaritia, sed fames auris.\u201d (Plin., Hist. Nat., l.\nXXXIII., c. XIV.)\n\n(\u201cFrom money first springs avarice ... the latter gradually grows into\na kind of madness, which is no more avarice, but a thirst for gold.\u201d)\n\n[97] Horace thus understands nothing of the philosophy of hoarding when\nhe says (Satir. l. II., Satir. III): \u201cSiquis emat citharas, emptas\ncomportat in unum, Nec studio citharae nec musae deditus ulli; Si\nscalpra et formas non sutor; nautica vela Aversus mercaturis; delirus\net amens, Undique dicatur merito. Qui discrepat istis, Qui nummos\naurunque recondit nescius uti Compositis metuensque velut contingere\nsacrum?\u201d\n\n  \u201cIf one buys fiddles, hoards them up when bought,\n  Though music\u2019s study ne\u2019er engaged his thought,\n  One lasts and awls, unversed in cobbler\u2019s craft,\n  One sails for ships, not knowing fore from aft,\n  You\u2019d call them mad: but tell me, if you please,\n  How that man\u2019s case is different from these,\n  Who as he gets it, stows away his gain,\n  And thinks to touch a farthing were profane?\u201d\n\n  (Transl. by John Covington, London, 1874, p. 60.)\n\nMr. Senior understands the question much better: \u201cL\u2019argent para\u00eet \u00eatre\nla seule chose dont le d\u00e9sir est universel, et il en est ainsi parceque\nl\u2019argent est _une richesse abstraite_ et parceque les hommes, en la\nposs\u00e9dant peuvent satisfaire \u00e0 tous leur besoins de quelque nature\nqu\u2019ils soient.\u201d (\u201cPrincipes Fondamentaux de l\u2019Economie Politique,\ntir\u00e9s de le\u00e7ons edites et inedites de N. W. Senior, par Comte Jean\nArrivabene,\u201d Paris, 1836, p. 221. The corresponding passage in the\nEnglish edition of his Political Economy, London, 1863, is to be found\non p. 27. Translator.) So does Storch: \u201cSince money represents all\nother forms of wealth, it is only necessary to accumulate it to provide\nfor oneself all kinds of wealth existing in the world.\u201d (l. c., v. 2,\np. 134.)\n\n[98] To what extent the inner man of the commodity owner remains\nunchanged, even when he has become civilized and has developed into a\ncapitalist, is shown by the example of a London representative of a\ncosmopolitan banking house who adopted as a fitting coat of arms for\nhis family a \u00a3100,000 bank note, which he had hung up in a glass frame.\nThe point here is in the mocking contempt of the note for circulation.\n\n[99] See the passage from Xenophon, quoted below.\n\n[100] Jacob, l. c., v. 2, ch. 25 and 26.\n\n[101] \u201cIn times of great agitation and insecurity, especially during\ninternal commotions or invasions, gold and silver articles are rapidly\nconverted into money; whilst during periods of tranquility and\nprosperity, money is converted into plate and jewelry.\u201d (l. c., v. 2,\np. 357.)\n\n[102] In the following passage Xenophon develops money in its specific\nforms of money and hoard: \u201c\u1f10\u03bd \u03bc\u03cc\u03bd\u03c9 \u03c4\u03bf\u03cd\u03c4\u1ff3 \u1f66\u03bd \u1f10\u03b3\u03c9 \u03bf\u1f34\u03b4\u03b1 \u1f14\u03c1\u03b3\u03c9\u03bd \u03bf\u1f50\u03b4\u1f72 \u03c6\u03b8\u03bf\u03bd\u03b5\u1fd6\n\u03bf\u1f50\u03b4\u03b5\u03b9\u03c2 \u03c4\u03bf\u1fd6\u03c2 \u1f10\u03c0\u03b9\u03c3\u03ba\u03b5\u03c5\u03b1\u03b6\u03bf\u03bc\u03ad\u03bd\u03bf\u03b9\u03c2 ... \u1f00\u03c1\u03b3\u03c5\u03c1\u1fd6\u03c4\u03b9\u03c2 \u03b4\u1f72 \u1f45\u03c3\u03c9 \u1f04\u03bd \u03c0\u03bb\u03b5\u03af\u03c9\u03bd \u03c6\u03b1\u03af\u03bd\u03b7\u03c4\u03b1\u03b9,\n\u03ba\u03b1\u1f76 \u1f00\u03c1\u03b3\u03cd\u03c1\u03b9\u03bf\u03bd \u03c0\u03bb\u03b5\u1fd6\u03bf\u03bd \u03b3\u03af\u03b3\u03bd\u03b7\u03c4\u03b1\u03b9, \u03c4\u03bf\u03c3\u03bf\u03cd\u03c4\u1ff3 \u03c0\u03bb\u03b5\u03af\u03bf\u03bd\u03b5\u03c2 \u1f10\u03c0\u03af \u03c4\u1f78 \u1f14\u03c1\u03b3\u03bf\u03bd \u03c4\u03bf\u1fe6\u03c4\u03bf\n\u1f14\u03c1\u03c7\u03bf\u03bd\u03c4\u03b1\u03b9 ... \u03ba\u03b1\u1f76 \u03b3\u1f70\u03c1 \u03b4\u1f74 \u1f14\u03c0\u03b9\u03c0\u03bb\u03b1 \u03bc\u1f72\u03bd \u1f10\u03c0\u03b5\u03b9\u03b4\u1f70\u03bd \u1f30\u03ba\u03b1\u03bd\u03ac \u03c4\u03b9\u03c2 \u03ba\u03c4\u03ae\u03c3\u03b7\u03c4\u03b1\u03b9 \u03c4\u1fc7 \u03bf\u1f30\u03ba\u03af\u1fb3,\n\u03bf\u1f50 \u03bc\u03ac\u03bb\u03b1 \u1f14\u1f31\u03c4\u03b9 \u03c0\u03c1\u03bf\u03c3\u03c9\u03bd\u03bf\u1fe6\u03bd\u03c4\u03b1\u03b9\u00b7 \u1f00\u03c1\u03b3\u03cd\u03c1\u03b9\u03bf\u03bd \u03b4\u1f72 \u03bf\u1f50\u03b4\u03b5\u03af\u03c2 \u03c0\u03c9 \u03bf\u1f54\u03c4\u03c9 \u03c0\u03bf\u03bb\u1f7a \u1f10\u03ba\u03c4\u03ae\u03c3\u03b1\u03c4\u03bf\n\u1f65\u03c3\u03c4\u03b5 \u03bc\u1f74 \u1f14\u03c4\u03b9 \u03c0\u03c1\u03bf\u03c3\u03b8\u03b5\u1fd6\u03c3\u03b8\u03b1\u03b9, \u1f00\u03bb\u03bb\u2019 \u1f24\u03bd \u03c4\u03b9\u03c3\u03b9 \u03b3\u03ad\u03bd\u03b7\u03c4\u03b1\u03b9 \u03c0\u03b1\u03bc\u03c0\u03bb\u03b7\u03b8\u1f72\u03c2, \u03c4\u1f78 \u03c0\u03b5\u03c1\u03b9\u03c4\u03c4\u03b5\u1fe6\u03bf\u03bd\n\u03ba\u03b1\u03c4\u03bf\u03c1\u03cd\u03c4\u03c4\u03bf\u03bd\u03c4\u03b5\u03c2 \u03bf\u1f50\u03b4\u1f72\u03bd \u1f25\u03c4\u03c4\u03bf\u03bd \u1f25\u03b4\u03bf\u03bd\u03c4\u03b1\u03b9 \u1f25 \u03c7\u03c1\u03ce\u03bc\u03b5\u03bd\u03bf\u03b9 \u03b1\u1f50\u03c4\u1fa0\u00b7 \u03ba\u03b1\u1f76 \u03bc\u1f72\u03bd \u1f45\u03c4\u03b1\u03bd \u03b3\u03b5 \u03b5\u1f57\n\u03c0\u03c1\u03ac\u03c4\u03c4\u03c9\u03c3\u03b9\u03bd \u03b1\u1f30 \u03c0\u03cc\u03bb\u03b5\u03b9\u03c2 \u1f30\u03c3\u03c7\u03c5\u03c1\u1ff6\u03c2, \u03bf\u1f30 \u1f04\u03bd\u03b8\u03c1\u03c9\u03c0\u03bf\u03b9 \u1f00\u03c1\u03b3\u03c5\u03c1\u03af\u03bf\u03c5 \u03b4\u03ad\u03bf\u03bd\u03c4\u03b1\u03b9. \u039f\u1f30 \u03bc\u1f72\u03bd \u03b3\u1f70\u03c1\n\u1f04\u03bd\u03b4\u03c1\u03b5\u03c2 \u1f00\u03bc\u03c6\u03b9 \u1f45\u03c0\u03bb\u03b1 \u03c4\u03b5 \u03ba\u03b1\u03bb\u1f70 \u03ba\u03b1\u1f76 \u1f35\u03c0\u03c0\u03bf\u03c5\u03c2 \u1f00\u03b3\u03b1\u03c1\u03b8\u03bf\u1f7a\u03c2 \u03ba\u03b1\u1f76 \u03bf\u1f30\u03ba\u03af\u03b1\u03c2 \u03ba\u03b1\u1f76 \u03ba\u03b1\u03c4\u03b1\u03c3\u03ba\u03b5\u03c5\u1f70\u03c2\n\u03bc\u03b5\u03b3\u03b1\u03bb\u03bf\u03c0\u03c1\u03b5\u03c0\u03b5\u1fd6\u03c2 \u03b2\u03bf\u1f50\u03bb\u03bf\u03bd\u03c4\u03b1\u03b9 \u03b4\u03b1\u03c0\u03b1\u03bd\u1fb6\u03bd, \u03b1\u1f30\u03b4\u1f72 \u03b3\u03c5\u03bd\u03b1\u1fd6\u03ba\u03b5\u03c2 \u03b5\u1f30\u03c2 \u1f10\u03c3\u03b8\u1fc6\u03c4\u03b1 \u03c0\u03bf\u03bb\u03c5\u03c4\u03b5\u03bb\u1fc6 \u03ba\u03b1\u1f76\n\u03c7\u03c1\u03c5\u03c3\u03bf\u1fe6\u03bd \u03ba\u03cc\u03c3\u03bc\u03bf\u03bd \u03c4\u03c1\u03ad\u03c0\u03bf\u03bd\u03c4\u03b1\u03b9\u00b7 \u1f45\u03c4\u03b1\u03bd \u03b4\u03b5 \u03b1\u1f54 \u03bd\u03bf\u03c3\u03ae\u03c3\u03c9\u03c3\u03b9 \u03c0\u03cc\u03bb\u03b5\u03b9\u03c2 \u1f20 \u1f00\u03c6\u03bf\u03c1\u03af\u03b1\u03b9\u03c2 \u03ba\u03b1\u03c1\u03c0\u1ff6\u03bd \u1fc6\n\u03c0\u03bf\u03bb\u03ad\u03bc\u03c9 \u1f14\u03c4\u03b9 \u03ba\u03b1\u1f76 \u03c0\u03bf\u03bb\u1f7a \u03bc\u1f04\u03bb\u03bb\u03bf\u03bd \u03c4\u1fc6\u03c2 \u03b3\u1fc6\u03c2 \u1f00\u03c1\u03c5\u03bf\u1fe6 \u03b3\u03b9\u03b3\u03bd\u03bf\u03bc\u03b5\u03bd\u03b7\u03c2 \u03ba\u03b1\u1f76 \u03b5\u1f30\u03c2 \u1f10\u03c0\u03b9\u03c4\u03ae\u03b4\u03b5\u03b9\u03b1\n\u03ba\u03b1\u1f76 \u03b5\u1f30\u03c2 \u1f10\u03c0\u03b9\u03ba\u03bf\u03c5\u03c1\u03bf\u1f7a\u03c2 \u03bd\u03bf\u03bc\u03af\u03c3\u03bc\u03b1\u03c4\u03bf\u03c2 \u03b4\u03ad\u03bf\u03bd\u03c4\u03b1\u03b9.\u201d (Xen. de Vectigalibus, c. IV.)\n(\u201cOf all operations with which I am acquainted, this is the only one\nin which no sort of jealousy is felt at a further development of the\nindustry ... the larger the quantity of ore discovered and the greater\nthe amount of silver extracted, the greater the number of persons\nready to engage in the operation.... No one when he has got sufficient\nfurniture for his house dreams of making further purchases on this\nhead, but of silver no one ever yet possessed so much that he was\nforced to cry \u201cEnough.\u201d On the contrary, if ever anybody does become\npossessed of an immoderate amount he finds as much pleasure in digging\na hole in the ground and hoarding it as an actual employment of it....\nWhen a state is prosperous there is nothing which people so much desire\nas silver. The men want money to expend on beautiful armor and fine\nhorses, and houses and sumptuous paraphernalia of all sorts. The women\nbetake themselves to expensive apparel and ornaments of gold. Or when\nstates are sick, either through barrenness of corn and other fruits,\nor through war, the demand for current coin is even more imperative\n(whilst the ground lies unproductive), to pay for necessaries or\nmilitary aid.\u201d Transl. by H. G. Dakyns, London, 1892, v. 2, Revenues,\np. 335-336.) Aristotle develops in Book I., ch. 9 of his Politics\nthe two opposite movements of circulation. C-M-C and M-C-M, calling\nthem \u201ceconomics\u201d and \u201cchrematistics\u201d respectively. The two forms are\nrepresented by the Greek tragedian Euripides as Sikn (right) and Keodos\n(profit).\n\n[103] Of course, capital also is advanced in the shape of money, and\nthe money thus advanced may be advanced capital, but this point of view\ndoes not fall within the horizon of simple circulation.\n\n[104] \u201cThe difference between the means of purchase and the means of\npayment\u201d is emphasized by Luther.\n\n[105] Mr. MacLeod, in spite of his doctrinaire conceit about\ndefinitions, fails so utterly to grasp the most elementary economic\nrelations that he tries to deduce the very origin of money from its\ncrowning form, viz., that of a means of payment. He says among other\nthings that since people do not always need each other\u2019s services at\nthe same time, and not to the same extent, \u201cthere would remain over\na certain difference or amount of service due from the first to the\nsecond\u2015debt.\u201d The owner of this debt needs the services of a third\nperson, who does not directly need those of the second, and \u201ctransfers\nto the third the debt due to him from the first. Evidence of debts\nchanges so hands\u2015currency.... When a person received an obligation\nexpressed by metallic currency, he is able to command the services\nnot only of the original debtor, but of the whole of the industrious\ncommunity.\u201d (MacLeod, \u201cTheory and Practice of Banking,\u201d etc., London,\n1855, v. I., ch. I.)\n\n[106] Bailey, l. c., p. 3. \u201cMoney is the general commodity of\ncontracts, or that in which the majority of bargains about property, to\nbe completed at a future time, are made.\u201d\n\n[107] Says Senior (in his Lectures, published by Comte Arrivabene, l.\nc., p. 117): \u201cSince the value of everything changes within a certain\nperiod of time, people select as a means of payment an article whose\nvalue changes least and which retains longest a given average ability\nto buy things. Thus, money becomes the expression or representative of\nvalues.\u201d On the contrary: just because gold, silver, etc., have become\nmoney, i. e., the embodiment of independently existing exchange value,\nthey become the universal means of payment. When the consideration as\nto the stability of the value of money mentioned by Mr. Senior comes\ninto play, i. e., in periods when money asserts itself as the universal\nmeans of payment through the force of circumstances, then is just the\ntime when fluctuations in the value of money are discovered. Such was\nthe time of Elizabeth in England, when Lord Burleigh and Sir Thomas\nSmith, in view of the manifest depreciation of the precious metals, put\nthrough an act of parliament which obliged the universities of Oxford\nand Cambridge to stipulate the payment of one-third of their ground\nrents in wheat and malt.\n\n[108] Boisguillebert, who would stem the development of bourgeois\nrelations of production and violently attacks the bourgeois personally,\nhas a soft heart for those forms of money in which it appears only\nideally or transiently. Thus he speaks first of the medium of\ncirculation and next of the means of payment. What he does not see is\nthe direct transition of money from its ideal to the material form,\nsince the hard cash is latently present in the ideal measure of value.\nThat money is but another form of commodities, he says, is shown by\nwholesale trade, in which exchange takes place without the intervention\nof money, after \u201cles marchandises sont appreci\u00e9s.\u201d (\u201cLe Detail de la\nFrance,\u201d l. c. p. 210.)\n\n[109] Locke, l. c., p. 17, 18.\n\n[110] \u201cIl danaro ammassato supplisce a quella somma, che per essere\nattualmente in circolazione, per l\u2019eventuale promiscuit\u00e0 de\u2019 commerci\nsi allontana _e sorte della sfera della circolazione medesima_.\u201d\n(\u201cThe accumulated money supplements that amount which, in order to\nbe actually in circulation and to meet all possible perturbations of\ntrade, retires from that sphere of circulation.\u201d G. R. Carli, note\nto Berri\u2019s \u201cMeditazioni sulla Economia Politica,\u201d p. 196, t. XV. of\nCustodi\u2019s l. c.)\n\n[111] Montanari, \u201cDella Moneta,\u201d 1683, l. c., p. 40. \u201c\u00c8 cosi fattamente\ndiffusa per tutto il globo terrestre la communicazione de\u2019 populi\ninsieme, che puo quasi dirsi esser il mondo tutto divinuto una sola\ncitta in cui si fa perpetua fiera d\u2019ogni mercanzia, e dove ogni uomo\ndi tutto cio che la terra, gli animali e l\u2019umana industria altrove\nproducono, puo mediante il danaro stando in sua casa provedersi e\ngodere. Maravigliosa invenzione.\u201d (\u201cThe communication of nations\namong themselves is so widely extended all over the globe that it may\nbe almost said that the entire world has become one city in which a\nperpetual fair of merchandise is held and where every man may by means\nof money acquire and enjoy, while staying at home, all that the earth,\nthe animals and human industry produce elsewhere. Marvelous invention.\u201d)\n\n[112] I metalli han questo di proprio e singulare che in essi soli\ntutte le ragioni si riducono ad una che \u00e8 la loro quantit\u00e0, non\navendo ricevuto delle natura diversa qualit\u00e0 n\u00e8 nell\u2019interna loro\nconstituzione n\u00e8 nell\u2019externa forma e fattura.\u201d (Galiani, l. c., p.\n130.) (\u201cMetals have this singular property, that everything in them is\nreduced to one consideration, viz., that of quantity, since they are\nnot endowed by nature with any differences in quality either in their\ninternal structure or in their external form and shape.\u201d)\n\n[113] De Orbe Novo. \u201cO, happy coin, which furnishes mankind with a\npleasant and useful beverage and keeps its possessors immune from\nthe hell-born pest of avarice, since it can not be either buried or\npreserved long.\u201d\n\n[114] In 760 a multitude of poor people emigrated to the south of\nPrague to wash the gold sand found there, and three men were able to\nextract three marks of gold a day. As a result of that the run on\nthe \u201cdiggings\u201d and the number of hands taken away from agriculture\nbecame so great that the country was visited by a famine the following\nyear. See M. G. K\u00f6rner, \u201cAbhandlung von dem Alterthum des B\u00f6hmischen\nBergwerks,\u201d Schneeberg, 1758.\n\n[115] So far the Australian and other discoveries have not affected the\nratio of the values of gold and silver. The assertions to the contrary\nof Michel Chevalier are worth as much as the Socialism of this ex-St.\nSimonist. The quotations of silver on the London market prove, however,\nthat the average gold price of silver during 1850-1858 is not quite\n3 per cent. higher than the price during 1830-1850. But this rise in\nprice is accounted for simply by the Asiatic demand for silver. In\nthe course of the years 1852-1858 the price of silver was changing in\ncertain years and months only with a change in this demand, and in no\ncase with the importation of gold from the newly discovered sources.\nThe following is a summary of the gold prices of silver on the London\nmarket.\n\nPRICE OF SILVER PER OUNCE.\n\n _Year\u2015_      _March._       _July._       _November._\n  1852      60-1/8 pence   60-1/4 pence   61-7/8 pence\n  1853      61-3/8 pence   61-1/2 pence   61-7/8 pence\n  1854      61-7/8 pence   61-3/4 pence   61-1/2 pence\n  1855      60-7/8 pence   61-1/2 pence   60-7/8 pence\n  1856      60     pence   61-1/4 pence   62-1/8 pence\n  1857      61-3/4 pence   61-5/8 pence   61-1/2 pence\n  1858      61-5/8 pence\n\n[116] \u201cGold is a wonderful thing! Whoever possesses it, is master of\nall that he desires. By means of gold even admission to Heaven may be\ngained for souls.\u201d (Columbus in a letter from Jamaica in 1503).\n\n[117] The slowness of the process was admitted by Hume, although it but\nlittle agrees with his principle. See David Hume \u201cEssays and Treatises\non several subjects.\u201d London, 1777, v. I, p. 300.\n\n[118] Conf. Steuart, l. c. v. I, p. 394-400.\n\n[119] David Hume, l. c. p. 300.\n\n[120] David Hume, l. c. p. 303.\n\n[121] David Hume, l. c. p. 303.\n\n[122] David Hume, l. c. p. 307, 308, 303: \u201cIt is evident, that the\nprices do not so much depend on the absolute quantity of commodities,\nand that of money, which are in a nation, as on that of the\ncommodities, which can or may come to market, and of the money which\ncirculates. If the coin be locked up in chests, it is the same thing\nwith regard to prices, as if it were annihilated; if the commodities be\nhoarded in magazines and granaries, a like effect follows. As the money\nand commodities in these cases, never meet, they cannot affect each\nother. The whole (of prices) at last reaches _a just proportion with\nthe new quantity of specie which is in the kingdom_.\u201d\n\n[123] See _Law_ and _Franklin_ about surplus value which gold and\nsilver are supposed to acquire from their function of money. Also\n_Forbonnais_.\n\n[124] This fiction is literally advanced by Montesquieu. [The passage\nfrom Montesquieu is quoted by Marx in his Capital, v. I. Part 1, Ch.\nIII, section 2, b, foot-note. Note by K. Kautsky to 2nd German edition].\n\n[125] Steuart, l. c. v. I., p. 394 seq.\n\n[126] Steuart, l. c., v. 2. p. 377-379 passim (not found in the 1767\nLondon edition. Translator).\n\n[127] Steuart, l. c., p. 379-380 passim (London, 1767 edition, v. l. p.\n400. Transl.).\n\n[128] \u201cThe additional coin will be locked up, or converted into\nplate.... As for the paper money, so soon as it has served the first\npurpose of supplying the demand of him who borrowed it, it will\nreturn upon the debtor in it and become realized.... Let the specie\nof a country, therefore, be augmented or diminished in ever so great\na proportion, commodities will still rise and fall according to the\nprinciples of demand and competition, and these will constantly\ndepend upon the inclinations of those who have property or any kind\nof equivalent whatsoever to give, but never upon the quantity of coin\nthey are possessed of.... Let it (namely, the quantity of specie\nin a country) be ever so low, while there is real property of any\ndenomination in the country, a competition to consume in those who\npossess it, prices will be high, by the means of barter, symbolical\nmoney, mutual prestations and a thousand other inventions.... If\nthis country has a communication with other nations, there must\nbe a proportion between the prices of many kinds of merchandize\nthere and elsewhere, and a sudden augmentation or diminution of the\nspecie, supposing it could of itself operate the effects of raising\nor sinking prices, would be restrained in its operation by foreign\ncompetition.\u201d l. c. v. 1, p. 400-402. \u201cThe circulation of every country\nmust be in proportion to the industry of the inhabitants producing\nthe commodities which come to market.... If the coin of a country,\ntherefore, falls below the proportion of the price of industry offered\nto sale, inventions, like symbolical money, will be fallen upon, to\nprovide for an equivalent for it. But if the specie be found above the\nproportion of industry, it will have no effect in raising prices, nor\nwill it enter into circulation: it will be hoarded up in treasures....\nWhatsoever be the quantity of money in a nation, in correspondence with\nthe rest of the world, there never can remain in circulation, but the\nquantity nearly proportional to the consumption of the rich and to the\nlabour and industry of the poor inhabitants,\u201d and this proportion is\nnot determined \u201cby the quantity of money actually in the country\u201d (l.\nc. p. 403-408 passim.) \u201cAll nations will endeavor to throw their ready\nmoney, not necessary for their own circulation, into that country where\nthe interest of money is high with respect to their own.\u201d (l. c. v. 2.\np. 5). \u201cThe richest nation in Europe may be the poorest in circulating\nspecie.\u201d l. c., v. 2, p. 6. For the polemics against Steuart see Arthur\nYoung. [In his foot-note in Capital, v. 1, Part 1, ch. III., section\n2, b. p. 62, Humboldt ed., Marx says: The theory of Hume was defended\nagainst the attacks of J. Steuart and others, by A. Young, in his\n\u201cPolitical Arithmetic,\u201d London, 1774, in which work there is a special\nchapter entitled \u201cPrices depend on quantity of money.\u201d Note by K.\nKautsky to 2nd German edition].\n\n[129] Steuart, l. e., v. 2, p. 370. Louis Blanc translates the\nexpression \u201cmoney of the society\u201d which stands for home or national\nmoney, as socialist money, which is perfectly meaningless and makes\na Socialist of John Law. (See the first volume of his History of the\nFrench Revolution).\n\n[130] Maclaren, l. c. p. 43 seq. Patriotism led Gustav Julius, a\nGerman writer who met with very early death, to hold up old B\u00fcsch as\nan authority as against the Ricardian school. Honest B\u00fcsch rendered\nSteuart\u2019s elegant English into Hamburg Platt and by trying to improve\nupon the original spoiled it as often as he could.\n\n[131] Note to the 2nd edition: This is not an exact statement. Adam\nSmith expresses the law correctly on many occasions. [See Capital,\nHumboldt edition, p. 62, ft-note 1, where writing seven years later,\nMarx makes the following qualification: \u201cThis statement applies only\nin so far as Adam Smith, _ex officio_, treats of money. Now and then,\nhowever, as in his criticism of the earlier systems of political\neconomy, he takes the right view. \u2018The quantity of coin in every\ncountry is regulated by the value of the commodities which are to be\ncirculated by it.... The value of the goods annually bought and sold\nin any country requires a certain quantity of money to circulate and\ndistribute them to their proper consumers, and can give employment to\nno more. The channel of circulation necessarily draws to itself a sum\nsufficient to fill it, and never admits any more.\u2019 Wealth of Nations,\nBook iv., ch. I.\u201d]\n\n[132] The distinction between currency and money is therefore\nnot found in \u201cWealth of Nations.\u201d Deceived by the apparent impartiality\nof Adam Smith, who knew his Hume and Steuart very well, honest Maclaren\nremarks: \u201cThe theory of the dependence of prices on the extent of the\ncurrency had not as yet, attracted attention; and Doctor Smith, like\nMr. Locke (Locke undergoes a change in his view), considers metallic\nmoney nothing but a commodity.\u201d Maclaren, l. c. p. 44.\n\n[133] David Ricardo, \u201cThe High Price of Bullion, a Proof of\nthe Depreciation of Bank-notes.\u201d 4th edition, London, 1811. (The first\nedition appeared in 1809). Further, \u201cReply to Mr. Bosanquet\u2019s Practical\nObservations on the Report of the Bullion Committee.\u201d London, 1811.\n\n[134] David Ricardo: \u201cOn the Principles of Political Economy,\netc.\u201d p. 77. \u201cTheir value [of metals] [like that of all other\ncommodities], depends on the total quantity of labour necessary to\nobtain the metal, and to bring it to market.\u201d\n\n[135] 1 p. 77, 180, 181.\n\n[136] Ricardo, l. c. p. 421. \u201cThe quantity of money that can be\nemployed in a country must depend on its value: if gold alone were\nemployed for the circulation of commodities, a quantity would be\nrequired, one fifteenth only of what would be necessary, if silver were\nmade use of for the same purpose.\u201d See also Ricardo\u2019s: \u201cProposals for\nan Economical and Secure Currency,\u201d London, 1816, p. 89, where he says:\n\u201cThe amount of notes in circulation depends on the amount required for\nthe circulation of the country; which is regulated ... by the value\nof the standard [of money], the amount of payments, and the economy\npractised in effecting them.\u201d\n\n[137] Ricardo, \u201cPrinciples of Political Economy\u201d, p. 432.\n\n[138] David Ricardo, \u201cReply to Mr. Bosanquet\u2019s Practical Observations,\netc.\u201d p. 49. \u201cThat commodities would rise or fall in price, in\nproportion to the increase or diminution of money, _I assume as a fact\nwhich is incontrovertible_.\u201d\n\n[139] David Ricardo, \u201cThe High Price of Bullion,\u201d etc. \u201cMoney would\nhave the same value in all countries.\u201d p. 4. In his Political Economy\nRicardo modified this statement, but not in a way to affect what has\nbeen said here.\n\n[140] l. c. p. 3-4.\n\n[141] l. c., p. 4.\n\n[142] Ricardo, l. c., p. 11-12.\n\n[143] Ricardo, l. c., p. 14.\n\n[144] l. c., p. 17.\n\n[145] Ricardo, l. c., p. 74-75. \u201cEngland, in consequence of a bad\nharvest, would come under the case of a country having been deprived\nof a part of its commodities, and, therefore, requiring a diminished\namount of circulating medium. The currency which was before equal to\nher payments would now become superabundant and relatively cheap,\nin proportion ... of her diminished production; the exportation of\nthis sum, therefore, would restore the value of her currency to the\nvalue of the currencies of other countries.\u201d His confusion of money\nand commodity, and of money and coin borders on the ludicrous in\nthe following passage: \u201cIf we can suppose that after an unfavorable\nharvest, when England has occasion for an unusual importation of corn,\nanother nation is possessed of a superabundance of that article, but\nhas no wants for any commodity whatever, it would unquestionably follow\nthat such nation would not export its corn in exchange for commodities:\n_but neither would it export corn for money_, as that is a commodity\nwhich no nation ever wants absolutely, but relatively.\u201d l. c., p.\n75. Pushkin in his hero poem makes the father of his hero incapable\nof comprehending that commodities are money. But that money is a\ncommodity, the Russians have understood from times of yore as is proven\nnot only by the English corn imports in 1838-1842, but by the entire\nhistory of their commerce.\n\n[146] Conf. Thomas Tooke, \u201cHistory of Prices,\u201d and James Wilson,\n\u201cCapital, Currency and Banking.\u201d (The latter work is a reprint of a\nseries of articles which appeared in the London Economist in 1844, 1845\nand 1847.)\n\n[147] James Deacon Hume: \u201cLetters on the Corn Laws.\u201d London, 1834, p.\n29-31. [Letter by H. B. T. on the Corn Laws and on the Rights of the\nWorking Classes. Transl.]\n\n[148] Thomas Tooke, \u201cHistory of Prices,\u201d etc. London, 1848, p. 110.\n\n[149] Conf. W. Blake\u2019s above quoted \u201cObservations etc.\u201d\n\n[150] James Mill: \u201cElements of Political Economy.\u201d [London, 1821, p.\n95-101 passim. Transl.]\n\n[151] A few months before the outbreak of the commercial crisis of\n1857, a committee of the House of Commons was in session to inquire\ninto the effect of the bank-laws of 1844 and 1845. Lord Overstone, the\ntheoretical father of these laws, delivered himself of this boast in\nhis testimony before the committee: \u201cBy strict and prompt adherence\nto the principles of the act of 1844, everything has passed off with\nregularity and ease; the monetary system is safe and unshaken, the\nprosperity of the country is undisputed, the public confidence in\nthe wisdom of the act of 1844 is daily gaining strength; and if the\ncommittee wish for further practical illustration of the soundness of\nthe principles on which it rests, or of the beneficial results which it\nhas assured, the true and sufficient answer to the committee is, look\naround you; look at the present state of trade of the country, look\nat the contentment of the people; look at the wealth and prosperity\nwhich pervades every class of the community; and then, having done so,\nthe committee may be fairly called upon to decide whether they will\ninterfere with the continuance of an act under which these results have\nbeen developed.\u201d Thus did Overstone blow his own horn on the fourteenth\nof July, 1857; on the twelfth of November of the same year the Ministry\nhad to suspend on its own responsibility the wonderful law of 1844.\n\n[152] Tooke was entirely ignorant of Steuart\u2019s work, as may be seen\nfrom his \u201cHistory of Prices for 1839-1847,\u201d London, 1848. where he\nreviews the history of the theories of money.\n\n[153] Tooke\u2019s most important work besides the \u201cHistory of Prices\u201d which\nhis co-worker Newmarch published in six volumes, is \u201cAn Inquiry into\nthe Currency Principle, the Connection of the Currency with Prices\u201d\netc., 2nd edition, London, 1844. Wilson\u2019s book we have already quoted.\nFinally there is to be mentioned John Fullarton\u2019s \u201cOn the Regulation of\nCurrencies,\u201d 2d edition, London, 1845.\n\n[154] \u201cWe ought to ... distinguish ... between gold ... as merchandise,\n_i. e._ as capital, and gold ... as currency\u201d (Tooke, \u201cAn Inquiry into\nthe Currency Principle, etc.\u201d p. 10). \u201cGold and silver may be counted\nupon to realize on their arrival nearly the exact sum required to be\nprovided ... gold and silver possess an infinite advantage over all\nother description of merchandize ... from the circumstance of being\nuniversally in use as money.... It is not in tea, coffee, sugar or\nindigo that debts, whether foreign or domestic, are usually contracted\nto be paid, but in coin; and the remittance, therefore, either in the\nidentical coin designated, or in bullion which can be promptly turned\ninto that coin through the mint or market of the country to which\nit is sent, must always afford to the remitter, the most certain,\nimmediate, and accurate means of affecting this object, without risk\nof disappointment from the failure of demand or fluctuation of price.\u201d\n(Fullerton, l. c. p. 132-133.) \u201cAny other article (except gold or\nsilver) might in quantity or kind be beyond the usual demand of the\ncountry to which it is sent.\u201d (Tooke: \u201cAn Inquiry, etc.\u201d)\n\n[155] The transformation of money into capital we shall consider in the\nthird chapter which treats of capital and forms the end of the first\nbook.\n\n[156] This introduction was first published in the Neue Zeit (see\nTranslator\u2019s Preface, p. 5) of March 7, 14 and 21, 1903, by Karl\nKautsky, with the following explanation:\n\n\u201cThis article has been found among the posthumous papers of Karl Marx.\nIt is a fragmentary sketch of a treatise that was to have served as an\nintroduction to his main work, which he had been writing for many years\nand whose outline was clearly formed in his mind. The manuscript is\ndated August 23, 1857.... As the idea is very often indicated only in\nfragmentary sentences, I have taken the liberty of introducing here and\nthere changes in style, insertions of words, etc.... A mere reprint of\nthe original would have made it unintelligible.... Not all the words in\nthe manuscript are legible....\n\n\u201cWherever there could be no doubt as to the necessity of corrections,\nI did so without indicating them in the text; in other cases I put all\ninsertions in brackets. Wherever I am not certain as to whether I have\ndeciphered a word correctly, I have put an interrogation point after\nit; other changes are specially noted. In all other respects this is\nan exact reprint of the original, whose fragmentary and incomplete\npassages serve to remind us only too painfully of the many treasures\nof thought which went down to the grave with Marx, treasures which\nwould have sufficed for generations if Marx had not so anxiously\navoided giving to the world any of his ideas until he had tested them\nrepeatedly from every conceivable point of view and had given them a\nwording that would be incontrovertible. In spite of its fragmentary\ncharacter it opens before us a wealth of new points of view.\u201d\n\n[157] The original reads \u201cperson.\u201d\n\n[158] The manuscript reads \u201cproduction.\u201d\n\n[159] The manuscript reads \u201cproduction.\u201d\n\n[160] The German text reads \u201cinstruktiv,\u201d which I take to be a misprint\nof \u201cinstinktiv.\u201d Translator.\n\n[161] Compare this with foot-note 1, on p. 34 of Capital, Humboldt\nedition, New York:\n\n\u201cTruly comical is M. Bastiat, who imagines that the ancient Greeks and\nRomans lived by plunder alone. But when people plunder for centuries,\nthere must always be something at hand for them to seize; the objects\nof plunder must be continually reproduced.\u201d K. Kautsky.\n\n[162] The English expression is used by Marx in his German original.\nTransl.\n\n[163] Marx evidently has in mind here a passage in Adam Smith\u2019s Wealth\nof Nations (vol. 2, ch. 2) in which he speaks of the circulation of\na country as consisting of two distinct parts: circulation between\ndealers and dealers, and that between dealers and consumers. The word\ndealer signifies here not only a merchant or shopkeeper, but also a\nproducer. K. Kautsky.\n\n[164] Here two words in the manuscript can not be deciphered. They look\nlike \u201causser sich\u201d (\u201coutside of itself\u201d). K. Kautsky.\n\n[165] Distribution (Verkehr) is used here in the sense of physical\ndistribution of goods and not in sense of economic distribution of the\nshares of the products between the different factors of production.\nTranslator.\n\n[166] As the \u201cnotes\u201d written down by Marx in the following eight\nparagraphs are extremely fragmentary, making translation in some cases\nimpossible without a certain degree of interpretation, and as the\noriginal is not accessible in book-form, they are reproduced here in\nGerman for the benefit of the student who may feel interested in the\noriginal wording as it had been jotted down by Marx.\n\n[167] Im Original ist zu lesen Va\n\n[168] Im Original ist zu lesen egtl.\n\n[169] The site of the \u201cTimes\u201d building in London. K. K.\n\n\n\n\nAUTHORS QUOTED IN ZUR KRITIK\n\n\n  Arbuthnot, 258.\n\n  Aristotle, 19, 41, 53, 78-79, 153, 154, 184.\n\n  Athenaeus, 87.\n\n  Attwood, 100.\n\n\n  Bailey, 84.\n\n  Barbon, 95.\n\n  Bastiat, 34.\n\n  Berkeley, Bischop, 32, 95-96, 155.\n\n  Bernier, 173.\n\n  Blake, 133, 250.\n\n  Blanc, Louis, 231.\n\n  Boisguillebert, 56, 59, 121, 133, 166, 168, 198.\n\n  Bosanquet, 124, 235, 242.\n\n  Bray, 106.\n\n  Brougham, 70.\n\n  Buchanan, 147.\n\n  B\u00fcsch, 231.\n\n\n  Carli, 205.\n\n  Castlereagh, Lord, 100.\n\n  Cato, 170.\n\n  Chevalier, 154, 215.\n\n  Clay, 258.\n\n  Cobbet, 123.\n\n  Cooper, 32.\n\n  Corbet, 124.\n\n\n  Darimont, 107.\n\n  Dodd, 141.\n\n  Forbonnais, 226.\n\n  Franklin, 62-3, 155, 226.\n\n  Fullarton, 260.\n\n\n  Galiani, 30, 65, 85, 111, 134.\n\n  Garnier, 87, 141.\n\n  Genovesi, 51, 164.\n\n  Gladstone, 73.\n\n  Gray, 103 sq.\n\n  Grim, 211.\n\n\n  Hodgskin, 55.\n\n  Horace, 178.\n\n  Hume, D., 219, 221 sq, 231.\n\n  Hume, J. D., 249.\n\n\n  Jakob, 141, 181.\n\n  Jovellanos, 61.\n\n  Julius, 231.\n\n  K\u00f6rner, 212.\n\n  Law, 226, 231.\n\n  List, 34.\n\n  Locke, 91, 93 sq., 199, 219, 226, 233.\n\n  Lowndes, 94.\n\n  Luther, 174-5, 190.\n\n\n  McCulloch, 31, 57.\n\n  Maclaren, 82, 231, 233.\n\n  Macleod, 71, 193.\n\n  Malthus, 34.\n\n  Mandeville, Sir J., 154.\n\n  Mill, James, 123-4, 250 sqq.\n\n  Misselden, 165, 171, 174-5.\n\n  Montanari, 38.\n\n  Montesquieu, 219, 227.\n\n  M\u00fcller, 85.\n\n\n  Norman, 258.\n\n\n  Opdyke, 124.\n\n  Overstone, Lord, 241, 258.\n\n\n  Peel, Sir R., 73, 100, 241, 258.\n\n  Pereire, 120.\n\n  Peter Martyr, 210.\n\n  Petty, Sir W., 32, 56 sq., 165, 172-3.\n\n  Plato, 153.\n\n  Pliny, 177.\n\n  Proudhon, 61, 72, 103, 107.\n\n\n  Ricardo, 56, 69 sq., 71, 217, 231, 235, 250, 259.\n\n\n  Say, 34, 71, 123, 153, 233.\n\n  Senior, 178, 194.\n\n  Sismondi, 56, 77.\n\n  Smith, 34, 57, 61, 67-68, 80, 231 sq.\n\n  Spence, 123.\n\n  Stein, 21, 31-2.\n\n  Steuart, Sir James, 65 sq., 94 sq., 222, 227 sq., 260.\n\n  Storch, 152-3, 179.\n\n\n  Thompson, 106.\n\n  Tooke, 124, 247, 249, 260 sq.\n\n  Torrens, 58.\n\n\n  Urquhart, 89.\n\n  Ustariz, 61.\n\n\n  Wilson, 260.\n\n\n  Xenophon, 181, 184.\n\n\n  Young, 231.","title":"A Contribution to the Critique of Political Economy","tradition":"philosophy-ethics","translated_text":null,"word_count":84905}