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A Contribution to the Critique of Political Economy

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Title: A Contribution to the Critique of Political Economy

Author: Karl Marx

Translator: N. I. Stone


        
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  A CONTRIBUTION TO
  THE CRITIQUE OF
  POLITICAL ECONOMY

  BY
  KARL MARX

  Translated from the Second German Edition by N. I. Stone

  With an Appendix Containing Marx’s Introduction to the Critique
  Recently Published among His Posthumous Papers

  CHICAGO
  CHARLES H. KERR & COMPANY

  Copyright, 1904
  By the International Library Publishing Co.




TRANSLATOR’S PREFACE.


The present translation has been made from the second edition of the
“Zur Kritik der Politischen Oekonomie,” published by Karl Kautsky in
1897 with slight changes from the original edition of 1859; changes
that had been indicated by Marx on the margins of his own copy of the
book.

As will be seen from the author’s preface, the work was originally
issued as the first instalment of a complete treatise of political
economy. As he went on with his work, however, Marx modified his plans
and eight years after the appearance of the “Zur Kritik” he published
the first volume of his Capital, whose scope was intended to cover the
entire field of political economy.

The plan to which Marx alludes in the preface to the present work
was thus abandoned in its formal aspects, but not in substance. The
subject matter treated here was reproduced or rather “summarized,” as
Marx himself puts it, in Capital. But that was done in so far as was
necessary to secure continuity of treatment. On the other hand, many
important matters are treated here more thoroughly than in Capital,
especially the part devoted to the discussion of money. This, as well
as the chapters on the history of the theories of value and of money,
which do not appear in Capital, make “Zur Kritik” a work practically
complete in itself.

The recent silver agitation in this country shows how timely and useful
this work still is, though written nearly half a century ago. That a
great part of the working-men employed in the cities were not carried
away by the Democratic-Populist agitation in 1896 and 1900 is probably
due in a greater measure than is commonly realized to the direct
and indirect influence of Marx, whose economic teachings guided the
socialists in their counter agitation. And since the conditions which
once gave rise to a demand for an inflated currency have by no means
disappeared beyond a possibility of return, this book has a wide field
before it, outside of the library of the college and of the student of
economics, which the author’s name and prestige with the working class
insures for it.

There is another reason, if any need be given why this book should
have been translated into English. Marx’s preface to the present work
contains the classic formulation of his historico-philosophic theory
known as the Materialistic Interpretation of History. This theory,
which until recently was entertained almost exclusively by socialist
writers and was hardly heard of outside of socialist circles in English
speaking countries, is at last receiving not only due recognition but
sympathetic appreciation at the hands of men of science.[1] It is
rather a significant coincidence that the work which for the first
time clearly formulated the law governing social evolution should have
seen the light of day in the same year in which Darwin gave to the
world his theory of organic evolution. And as the latter had to fight
its way to recognition in the teeth of religious prejudices, so has the
recognition of the former been retarded by even more powerful social
and political prejudices.

The Introduction to the Critique of Political Economy which is added
as a supplement to this book is for the first time published in book
form in any language. It was written by Marx in 1857, but for reasons
explained by him in the preface was not published and in fact was never
finished by him, since according to his changed plans it would have
fitted more into the last volume of Capital which was to contain a
history of political economy. The introduction has been published but
lately in the form of a magazine article by Karl Kautsky, editor of the
Neue Zeit and literary executor of Karl Marx.

A few explanations are here in order with reference to the work of
translation. No one is more keenly alive to the shortcomings of the
English rendering of the original than the translator himself. While
fully conscious that the translation might be greatly improved, he
has at times deliberately sacrificed literary finish to closeness to
the original. It will be found that many passages have been rendered
more clear and concise in Capital in which, according to Marx’s own
statement in the preface to that work, they were much simplified and
popularized. The Hegelian phraseology is more in evidence in the
present work rendering translation a more difficult task. Yet for
that very reason it seemed particularly desirable to give to English
speaking readers as close a version of the original as was possible. In
the few cases where certain passages from this work were reproduced by
Marx in Capital, the translation of the latter by Moore and Aveling was
freely drawn upon with slight modifications here and there.

About the only liberty taken with Marx’s terminology has been in
the case of the word “bürgerlich.” Marx speaks here of “bürgerliche
Produktion” and “bürgerlicher Reichthum” and “bürgerliche Arbeit” where
eight years later he used in corresponding passages in Capital the word
“kapitalistische.” As the English speaking reader is more accustomed to
hear of the “capitalist” system of production than of the “bourgeois”
system of production, etc., the translator considered Marx’s own change
of this term within a few years from the publication of “Zur Kritik”
a sufficient justification for rendering the word “bürgerlich” into
“capitalistic” wherever it seemed more likely to carry the meaning home
to the reader.

In view of the fact that the work is likely to be read in wide circles
it was thought desirable to translate the numerous quotations from
Italian, Greek, Latin and French writers, the translation being given
side by side with the original quotation. All English citations given
by Marx in German have been restored from the original sources, which
necessitated the use of four libraries, the Astor and the Columbia
University libraries in New York, the Congressional Library in
Washington, and the private library of Professor Seligman to whose
kindness the translator is indebted for the permission to use rare
works of the seventeenth century quoted by Marx. Several of Marx’s
references to the pages of the books quoted by him have been found to
be wrong and therefore differ here from those given in the original.
In two or three cases where the original English citations could not
be found they were retranslated from German with the quotation marks
omitted.

This statement would be incomplete if the translator failed to mention
the helpful participation in this work by his wife whose share in the
translation is equal to his own.

New York, October, 1903.




AUTHOR’S PREFACE.


I consider the system of bourgeois economy in the following order:
_Capital_, _landed property_, _wage labor_; _state_, _foreign trade_,
_world market_. Under the first three heads I examine the conditions
of the economic existence of the three great classes, which make up
modern bourgeois society; the connection of the three remaining heads
is self evident. The first part of the first book, treating of capital,
consists of the following chapters: 1. Commodity; 2. Money, or simple
circulation; 3. Capital in general. The first two chapters form the
contents of the present work. The entire material lies before me in the
form of monographs, written at long intervals not for publication, but
for the purpose of clearing up those questions to myself, and their
systematic elaboration on the plan outlined above will depend upon
circumstances.

I omit a general introduction which I had prepared, as on second
thought any anticipation of results that are still to be proven, seemed
to me objectionable, and the reader who wishes to follow me at all,
must make up his mind to pass from the special to the general. On the
other hand, some remarks as to the course of my own politico-economic
studies may be in place here.

The subject of my professional studies was jurisprudence, which I
pursued, however, in connection with and as secondary to the studies
of philosophy and history. In 1842-43, as editor of the “Rheinische
Zeitung,” I found myself embarrassed at first when I had to take part
in discussions concerning so-called material interests. The proceedings
of the Rhine Diet in connection with forest thefts and the extreme
subdivision of landed property; the official controversy about the
condition of the Mosel peasants into which Herr von Schaper, at that
time president of the Rhine Province, entered with the “Rheinische
Zeitung;” finally, the debates on free trade and protection, gave
me the first impulse to take up the study of economic questions. At
the same time a weak, quasi-philosophic echo of French socialism and
communism made itself heard in the “Rheinische Zeitung” in those days
when the good intentions “to go ahead” greatly outweighed knowledge of
facts. I declared myself against such botching, but had to admit at
once in a controversy with the “Allgemeine Augsburger Zeitung” that my
previous studies did not allow me to hazard an independent judgment as
to the merits of the French schools. When, therefore, the publishers
of the “Rheinische Zeitung” conceived the illusion that by a less
aggressive policy the paper could be saved from the death sentence
pronounced upon it, I was glad to grasp that opportunity to retire to
my study room from public life.

The first work undertaken for the solution of the question that
troubled me, was a critical revision of Hegel’s “Philosophy of Law”;
the introduction to that work appeared in the “Deutsch-Französische
Jahrbücher,” published in Paris in 1844. I was led by my studies to
the conclusion that legal relations as well as forms of state could
neither be understood by themselves, nor explained by the so-called
general progress of the human mind, but that they are rooted in the
material conditions of life, which are summed up by Hegel after the
fashion of the English and French of the eighteenth century under
the name “civic society;” the anatomy of that civic society is to
be sought in political economy. The study of the latter which I had
taken up in Paris, I continued at Brussels whither I emigrated on
account of an order of expulsion issued by Mr. Guizot. The general
conclusion at which I arrived and which, once reached, continued to
serve as the leading thread in my studies, may be briefly summed up as
follows: In the social production which men carry on they enter into
definite relations that are indispensable and independent of their
will; these relations of production correspond to a definite stage
of development of their material powers of production. The sum total
of these relations of production constitutes the economic structure
of society―the real foundation, on which rise legal and political
superstructures and to which correspond definite forms of social
consciousness. The mode of production in material life determines the
general character of the social, political and spiritual processes
of life. It is not the consciousness of men that determines their
existence, but, on the contrary, their social existence determines
their consciousness. At a certain stage of their development, the
material forces of production in society come in conflict with the
existing relations of production, or―what is but a legal expression
for the same thing―with the property relations within which they
had been at work before. From forms of development of the forces
of production these relations turn into their fetters. Then comes
the period of social revolution. With the change of the economic
foundation the entire immense superstructure is more or less rapidly
transformed. In considering such transformations the distinction should
always be made between the material transformation of the economic
conditions of production which can be determined with the precision
of natural science, and the legal, political, religious, aesthetic or
philosophic―in short ideological forms in which men become conscious of
this conflict and fight it out. Just as our opinion of an individual
is not based on what he thinks of himself, so can we not judge of such
a period of transformation by its own consciousness; on the contrary,
this consciousness must rather be explained from the contradictions of
material life, from the existing conflict between the social forces
of production and the relations of production. No social order ever
disappears before all the productive forces, for which there is room
in it, have been developed; and new higher relations of production
never appear before the material conditions of their existence have
matured in the womb of the old society. Therefore, mankind always
takes up only such problems as it can solve; since, looking at the
matter more closely, we will always find that the problem itself
arises only when the material conditions necessary for its solution
already exist or are at least in the process of formation. In broad
outlines we can designate the Asiatic, the ancient, the feudal, and
the modern bourgeois methods of production as so many epochs in the
progress of the economic formation of society. The bourgeois relations
of production are the last antagonistic form of the social process of
production―antagonistic not in the sense of individual antagonism, but
of one arising from conditions surrounding the life of individuals in
society; at the same time the productive forces developing in the womb
of bourgeois society create the material conditions for the solution
of that antagonism. This social formation constitutes, therefore, the
closing chapter of the prehistoric stage of human society.

Frederick Engels, with whom I was continually corresponding and
exchanging ideas since the appearance of his ingenious critical essay
on economic categories (in the “Deutsch-Französische Jahrbücher”),
came by a different road to the same conclusions as myself (see his
“Condition of the Working Classes in England”). When he, too, settled
in Brussels in the spring of 1845, we decided to work out together the
contrast between our view and the idealism of the German philosophy, in
fact to settle our accounts with our former philosophic conscience. The
plan was carried out in the form of a criticism of the post-Hegelian
philosophy. The manuscript in two solid octavo volumes had long
reached the publisher in Westphalia, when we received information
that conditions had so changed as not to allow of its publication. We
abandoned the manuscript to the stinging criticism of the mice the
more readily since we had accomplished our main purpose―the clearing
up of the question to ourselves. Of the scattered writings on various
subjects in which we presented our views to the public at that time, I
recall only the “Manifesto of the Communist Party” written by Engels
and myself, and the “Discourse on Free Trade” written by myself. The
leading points of our theory were first presented scientifically,
though in a polemic form, in my “Misère de la Philosophie, etc.”
directed against Proudhon and published in 1847. An essay on “Wage
Labor,” written by me in German, and in which I put together my
lectures on the subject delivered before the German Workmen’s Club at
Brussels, was prevented from leaving the hands of the printer by the
February revolution and my expulsion from Belgium which followed it as
a consequence.

The publication of the “Neue Rheinische Zeitung” in 1848 and 1849, and
the events which took place later on, interrupted my economic studies
which I could not resume before 1850 in London. The enormous material
on the history of political economy which is accumulated in the British
Museum; the favorable view which London offers for the observation of
bourgeois society; finally, the new stage of development upon which the
latter seemed to have entered with the discovery of gold in California
and Australia, led me to the decision to resume my studies from the
very beginning and work up critically the new material. These studies
partly led to what might seem side questions, over which I nevertheless
had to stop for longer or shorter periods of time. Especially was the
time at my disposal cut down by the imperative necessity of working
for a living. My work as contributor on the leading Anglo-American
newspaper, the “New York Tribune,” at which I have now been engaged for
eight years, has caused very great interruption in my studies, since
I engage in newspaper work proper only occasionally. Yet articles on
important economic events in England and on the continent have formed
so large a part of my contributions that I have been obliged to make
myself familiar with practical details which lie outside the proper
sphere of political economy.

This account of the course of my studies in political economy is simply
to prove that my views, whatever one may think of them, and no matter
how little they agree with the interested prejudices of the ruling
classes, are the result of many years of conscientious research. At the
entrance to science, however, the same requirement must be put as at
the entrance to hell:

  Qui si convien lasciare ogni sospetto
  Ogni viltà convien che qui sia morta.


  Karl Marx.

  London, January, 1859.




CONTENTS.



                                                                  PAGE.

  Translator’s Preface                                                3

  Author’s Preface                                                    9


  BOOK I. CAPITAL IN GENERAL.

  Chapter I. Commodities                                             19

    A. Notes on the History of the Theory of Value                   56

  Chapter II. Money or Simple Circulation                            73

      1. The Measure of Value                                        74

    B. Theories of the Unit of Measure of Money                      91

      2. The Medium of Circulation                                  107

        a. The Metamorphosis of Commodities                         108

        b. The Circulation of Money                                 125

        c. Coin and Symbols of Value                                138

      3. Money                                                      162

        a. Hoarding                                                 166

        b. Means of Payment                                         185

        c. World Money                                              201

      4. The Precious Metals                                        208

    C. Theories of the Medium of Circulation and of
         Money                                                      215

  Appendix. Introduction to the Critique of Political
    Economy                                                         264

      1. Production in General                                      265

      2. The General Relation of Production to Distribution,
           Exchange, and Consumption                                274

      3. The Method of Political Economy                            292

      4. Production, Means of Production, and Conditions
           of Production                                            306

  Index                                                             313




CAPITAL IN GENERAL.




BOOK I.




CHAPTER I.

COMMODITIES.


At first sight the wealth of society under the capitalist system
presents itself as an immense accumulation of commodities, its unit
being a single commodity. But every commodity has a twofold aspect,
that of _use value_ and _exchange value_.[2]

A commodity is first of all, in the language of English economists,
“any thing necessary, useful or pleasant in life,” an object of human
wants, a means of existence in the broadest sense of the word. This
property of commodities to serve as use-values coincides with their
natural palpable existence. Wheat e. g. is a distinct use-value
differing from the use-values cotton, glass, paper, etc. Use-value has
a value only in use and is realized only in the process of consumption.
The same use-value may be utilized in various ways. But the extent of
its possible applications is circumscribed by its distinct properties.
Furthermore, it is thus limited not only qualitatively but also
quantitatively. According to their natural properties the various
use-values have different measures, such as a bushel of wheat, a quire
of paper, a yard of linen, etc.

Whatever the social form of wealth may be, use-values always have a
substance of their own, independent of that form. One can not tell by
the taste of wheat whether it has been raised by a Russian serf, a
French peasant, or an English capitalist. Although the object of social
wants and, therefore, mutually connected in society, use-values do
not bear any marks of the relations of social production. Suppose, we
have a commodity whose use-value is that of a diamond. We can not tell
by looking at the diamond that it is a commodity. When it serves as a
use-value, aesthetic or mechanical, on the breast of a harlot, or in
the hand of a glasscutter, it is a diamond and not a commodity. It is
the necessary prerequisite of a commodity to be a use-value, but it is
immaterial to the use-value whether it is a commodity or not. Use-value
in this indifference to the nature of its economic destination, i. e.
use-value as such lies outside the sphere of investigation of political
economy.[3] It falls within the sphere of the latter only in so far
as it forms its own economic destination. It forms the material basis
which directly underlies a definite economic relation called _exchange
value_.

Exchange-value appears at first sight as a _quantitative relation_,
as a proportion in which use-values are exchanged for one another. In
such a relation they constitute equal exchangeable quantities. Thus,
a volume of Propercius and eight ounces of snuff may represent the
same exchange value, in spite of the dissimilar use-values of tobacco
and elegy. As exchange-value, one kind of use-value is worth as much
as another kind, if only taken in right proportion. The exchange
value of a palace can be expressed in a certain number of boxes of
shoe-blacking. On the contrary, London manufacturers of shoe-blacking
have expressed the exchange value of their many boxes of blacking,
in palaces. Thus, entirely apart from their natural forms and
without regard to the specific kind of wants for which they serve as
use-values, commodities in certain quantities equal each other, take
each other’s place in exchange, pass as equivalents, and in spite of
their variegated appearance, represent the same entity.

Use-values are primarily means of existence. These means of existence,
however, are themselves products of social life, the result of expended
human vital power, _materialized labor_. As the embodiment of social
labor, all commodities are the crystallization of the same substance.
Let us now consider the nature of this substance, i. e., of labor,
which is expressed in exchange value.

Let one ounce of gold, one ton of iron, one quarter of wheat and
twenty yards of silk represent equal exchange values. As equivalents,
in which the qualitative difference between their use-values has been
eliminated, they represent equal volumes of the same kind of labor.
The labor which is equally embodied in all of them must be uniform,
homogeneous, simple labor. It matters as little in the case of labor
whether it be embodied in gold, iron, wheat, or silk, as it does in
the case of oxygen, whether it appears in the rust of iron, in the
atmosphere, in the juice of a grape, or in the blood of a human being.
But the digging of gold, the extraction of iron from a mine, the
raising of wheat and the weaving of silk are so many kinds of labor,
differing in quality. As a matter of fact, what in reality appears as a
difference in use-values, is in the process of production, a difference
in the work creating those use-values. Just as labor, which creates
exchange value, is indifferent to the material of use-values, so it
is to the special form of labor itself. Furthermore, the different
use-values are the products of the work of different individuals,
consequently the result of various kinds of labor differing
individually from one another. But as exchange values, they represent
the same homogeneous labor, i. e., labor from which the individuality
of the workers is eliminated. Labor creating exchange value is,
therefore, _abstract general labor_.

If one ounce of gold, one ton of iron, one quarter of wheat, and twenty
yards of silk are exchange values of equal magnitude or equivalents;
then one ounce of gold, half a ton of iron, three bushels of wheat
and five yards of silk are exchange values of different magnitudes,
and this quantitative difference is the only difference of which
they are capable as exchange values. As exchange values of different
magnitudes, they represent greater or smaller quantities of that
simple, homogeneous, abstract, general labor, which forms the substance
of exchange value. The question arises, how are these quantities to be
measured? Or, rather what constitutes the substance of labor, which
makes it capable of quantitative measurement, since the quantitative
differences of commodities in their capacity of exchange values are
but quantitative differences of labor embodied in them. Just as motion
is measured by time, so is labor measured by _labor-time_. Given
the quality of labor, the difference in its duration is the only
property by which it can be distinguished. As labor-time, labor has
the same standard of measurement as the natural time measures, viz.,
hours, days, weeks, etc. Labor-time is the vital substance of labor,
independent of its form, composition, individuality; it is its vital
substance quantitatively, having at the same time its own inherent
measure. Labor-time embodied in the use-values of commodities is the
substance which makes exchange values and, therefore, commodities of
them and at the same time serves to measure definite quantities of
their value. Corresponding quantities of different use-values, in which
the same quantity of labor-time is embodied, are equivalents; or, to
put it in another form, all use-values are equivalents when taken in
proportions containing the same quantity of expended, materialized
labor-time. As exchange values, all commodities are but definite
measures of _congealed labor-time_.

To understand how exchange value is determined by labor-time, the
following main points must be kept in mind: The reduction of labor to
simple labor, devoid of any quality, so to speak; the specific ways
and means by which exchange―value-creating, i. e., commodity producing
labor becomes _social labor_; finally, the difference between labor as
the producer of use-values, and labor as the creator of exchange values.

In order to measure commodities by the labor-time contained in them,
the different kinds of labor must be reduced to uniform, homogeneous,
simple labor, in short, to labor which is qualitatively the same, and,
therefore, differs only in quantity.

This reduction appears to be an abstraction; but it is an abstraction
which takes place daily in the social process of production. The
conversion of all commodities into labor-time is no greater abstraction
nor a less real process than the chemical reduction of all organic
bodies to air. Labor, thus measured by time, does not appear in reality
as the labor of different individuals. but on the contrary, the
various working individuals rather appear as mere organs of labor; or,
in so far as labor is represented by exchange values, it may be defined
as human labor in general. This abstraction of human labor in general
virtually exists in the average labor which the average individual
of a given society can perform―a certain productive expenditure of
human muscles, nerves, brain, etc. It is unskilled labor to which the
average individual can be put and which he has to perform in one way
or another. The character of this average labor varies in different
countries and at different stages of civilization, but appears fixed in
a particular society. Unskilled labor constitutes the bulk of all labor
performed in capitalist society, as may be seen from all statistics.

It is obvious that if A spends six hours in the production of iron
and six hours on linen, and B also produces iron during six hours and
linen during another six hours, it is but a different application
of _the same_ labor time that would be expended, if A produced iron
during twelve hours, while B worked twelve hours on linen. But how
about skilled labor which rises above the level of average labor by its
higher intensity, by its greater specific gravity? This kind of labor
resolves itself into unskilled labor composing it; it is simple labor
of a higher intensity, so that one day of skilled labor, e. g., may
equal three days of unskilled labor. This is not the place to consider
the laws regulating this reduction. It is clear, however, that such
reduction does take place, for, as exchange value, the product of the
most skilled labor is, when taken in a certain proportion, equivalent
to the product of unskilled average labor, or equal to a definite
quantity of that unskilled labor.

The determination of exchange-value by means of labor-time implies,
further, the fact that an equal quantity of labor is embodied in any
given commodity, e. g., a ton of iron, no matter whether it is the work
of A or B, that is to say, various individuals expend an equal amount
of labor-time for the production of the same use-value of a given
quality and quantity. It is thus assumed that the labor-time contained
in a commodity is the labor-time _necessary_ for its production, i. e.,
it is the labor-time which is required for the production of another
specimen of the same commodity under the same general conditions of
production.

The conditions of labor, which creates exchange value, as shown by the
analysis of the latter, are _social conditions_ of labor or conditions
of _social labor_. Social, not in the ordinary, but in a special
sense. It is a specific form of the social process. The homogeneous
simplicity of labor means first of all _equality_ of the labors of
various individuals, a reciprocal relation of equality of their labors
determined by the actual reduction of all kinds of labor to uniform
labor. The labor of every individual, as far as it is expressed in
exchange value possesses this social character of equality and finds
expression in exchange value only in so far as it is a relation of
equality with the labor of all other individuals.

Furthermore, the labor-time of a single individual is directly
expressed in exchange value as _universal labor-time_, and this
_universal character_ of individual labor is the manifestation of its
_social character_. The labor-time represented by exchange value is the
labor-time of an individual, but of an individual undistinguished from
other individuals in so far as they perform the same labor; therefore,
the time required by one individual for the production of a certain
commodity is the _necessary_ labor-time which any other individual
would have to spend on the production of the same commodity. It is the
labor-time of an individual, _his_ labor-time, but only as labor-time
common to all, regardless as to which particular individual’s
labor-time it is. As universal labor-time it is represented in a
universal product, in a _universal equivalent_, in a definite quantity
of materialized labor-time: the latter is indifferent as to the
particular form of use-value in which it appears directly as the
product of an individual, and may be turned at will into any other
form of use-value to represent the product of any other individual.
Only as such a _universal_ quantity, is it a _social_ quantity. In
order to result in exchange value, the labor of an individual must
be turned into a _universal equivalent_, i. e., the labor-time of an
individual must be expressed as universal labor-time, or universal
labor-time as that of an individual. It is the same as though different
individuals had put together their labor-time and contributed the
different quantities of labor-time at their common disposal in the form
of different use-values. The labor-time of the individual is thus,
in fact, the labor time which society requires for the production of
a certain use-value, i. e., for the satisfaction of a certain want.
But the question that interests us here is as to the specific form in
which labor acquires a social character. Let us suppose that a certain
quantity of labor-time of a spinner is realized in 100 lbs. of yarn.
Suppose 100 yards of linen, the product of the weaver, represent the
same quantity of labor-time. Inasmuch as these two products represent
equal quantities of universal labor-time and, hence, are equivalents of
_every_ use-value which contains the same amount of labor-time, they
are also equivalent to each other. Only because the labor-time of the
spinner and that of the weaver take the form of universal labor-time
and their products appear as universal equivalents, is the labor of
the weaver realized for the spinner, and that of the spinner, for the
weaver, the labor of one takes the place of the labor of the other, i.
e., the social character of their labors is realized for both. Quite
different it was under the patriarchal system of production, when
spinner and weaver lived under the same roof, when the female members
of the family did the spinning, and the male members did the weaving to
supply the wants of their own family; then yarn and linen were _social_
products, spinning and weaving were _social_ labor within the limits of
the family. But their social character did not manifest itself in the
fact that yarn, as a universal equivalent, could be exchanged for linen
as a universal equivalent, or that one was exchanged for another, as
identical and equivalent expressions of the same universal labor-time.
It was rather the family organization with its natural division of
labor that impressed its peculiar social stamp on the product of
labor. Or, let us take the services and payments in kind of the Middle
Ages. It was the specific kind of labor performed by each individual in
its natural form, the particular and not the universal aspect of labor,
that constituted then the social tie. Or, let us finally take labor
carried on in common in its primitive natural form, as we find it at
the dawn of history of all civilized races.[4] It is clear that in this
case labor does not acquire its social character from the fact that the
labor of the individual takes on the abstract form of universal labor
or that his product assumes the form of a universal equivalent. The
very nature of production under a communal system makes it impossible
for the labor of the individual to be private labor and his product
to be a private product; on the contrary, it makes individual labor
appear as the direct function of a member of a social organism. On the
contrary, labor, which is expressed in exchange value, at once appears
as the labor of a separate individual. It becomes social labor only
by taking on the form of its direct opposite, the form of abstract
universal labor.

Labor, which creates exchange value, is, finally, characterized by the
fact that even the social relations of men appear in the reversed form
of a social relation of things. Only in so far as two use-values are
in a mutual relation of exchange values does the labor of different
persons possess the common property of being identical universal labor.
Hence, if it be correct to say that exchange value is a relation
between persons,[5] it must be added that it is a relation disguised
under a material cover. Just as a pound of iron and a pound of gold
represent the _same_ weight in spite of their different physical and
chemical properties, so do two use-values, as commodities containing
the same quantity of labor-time, represent the _same exchange value_.
Exchange value thus appears as the natural social destination of
use-values, a property which they possess by virtue of being things and
in consequence of which they are exchanged for one another in definite
proportions, or form equivalents, just as chemical elements combine in
certain proportions, forming chemical equivalents. It is only through
the habit of everyday life that we come to think it perfectly plain and
commonplace, that a social relation of production should take on the
form of a thing, so that the relation of persons in their work appears
in the form of a mutual relation between things, and between things
and persons.

In commodities this mystification is as yet very simple. It is more
or less plain to everybody that a relation of commodities as exchange
values is nothing but a mutual relation between persons in their
productive activity. This semblance of simplicity disappears in higher
productive relations. All the illusions in regard to the monetary
system are due to the fact that money is not regarded as something
representing a social relation of production, but as a product of
nature endowed with certain properties. The modern economists who sneer
at the illusions of the monetary system, betray the same illusion
as soon as they have to deal with higher economic forms, as, e. g.,
capital.[6] It breaks forth in their confession of naive surprise, when
what they have just thought to have defined with great difficulty as a
thing suddenly appears as a social relation and then reappears to tease
them again as a thing, before they have barely managed to define it as
a social relation.

Since the exchange value of commodities is, in fact, nothing but a
mutual relation of the labors of individuals―labors which are similar
and universal―nothing but a material expression of a specific social
form of labor, it is a tautology to say that labor is the _only_
source of exchange value and consequently of wealth, in so far as the
latter consists of exchange values. Similarly, it is a tautology to
say that matter in its natural state has no exchange value, because
it does not contain any labor, and that exchange value as such does
not contain matter. But when William Petty calls “labor the father and
earth the mother of wealth,” or when Bishop Berkeley asks “whether
the four elements and man’s labour therein, be not the true source of
wealth,”[7] or when the American, Thomas Cooper puts it popularly:
“Take away from a piece of bread the labour bestowed by the baker on
the flour, by the miller on the grain brought to him, by the farmer
in ploughing, sowing, tending, gathering, threshing, cleaning and
transporting the seed, and what will remain? A few grains of grass,
growing wild in the woods, and unfit for any human purpose”[8]―then all
these views do not refer to abstract labor as the source of exchange
value, but to concrete labor as the source of material wealth; in
short, to labor in so far as it produces use-values. In assuming
that a commodity has use-value we assume the special usefulness
and distinct fitness of the labor absorbed by it, but that is all
there is to the view of labor as useful labor from the standpoint of
commodity. Considering bread as a use-value, we are interested in its
properties as an article of food and not at all in the different kinds
of labor of the farmer, miller, baker, etc. If by some invention
nineteen-twentieths of this labor could be saved, the loaf of bread
would still render the same service as before. If it fell ready-made
from the sky it would not lose a single atom of its use-value. While
labor which creates exchange value is realized in the equality of
commodities as universal equivalents, labor as a productive activity
with a useful purpose is realized in the endless variety of use-values
created by it. While labor which creates exchange values is _abstract_,
_universal_ and _homogeneous_, labor which produces use-values is
concrete and special and is made up of an endless variety of kinds of
labor according to the way in which and the material to which it is
applied.

It is wrong to speak of labor in so far as it is applied to the
production of use-values as of _the only_ source of wealth, namely,
the material wealth produced by it. Being an activity intended to
adapt materials to this or that purpose, it requires matter as a
prerequisite. In different use-values the proportion between labor
and raw material varies greatly, but use-value always has a natural
substratum. Labor, as an activity, directed to the adaptation of raw
material in one form or another, is a natural condition of human
existence, a condition of exchange of matter between man and nature,
independent of all social forms. On the contrary, labor producing
exchange value is a specifically social form of labor. Tailoring, e.
g., in its material manifestation as a distinct productive activity,
produces a coat, but not the exchange value of the coat. The latter
is produced not by the labor of the tailor as such, but by abstract
universal labor, and that belongs to a certain organization of society
which has not been brought about by the tailor. Thus, the women under
the ancient system of house industry made coats without producing the
exchange value of the coats. Labor as a source of material wealth was
known to Moses, the legislator, as well as to Adam Smith, the customs
official.[9]

Let us consider now some propositions which follow from the
determination of exchange value by labor-time.

As a use-value, every commodity owes its usefulness to itself. Wheat,
e. g., serves as an article of food. A machine saves labor to a certain
extent. This function of a commodity by virtue of which it serves only
as use-value, as an article of consumption, may be called its service,
the service which it renders as use-value. But as an exchange value,
a commodity is always regarded as a result; the question in this case
is not as to the service which it renders, but as to the service[10]
which it has been rendered in its production. Thus, the exchange value
of a machine is determined not by the quantity of labor-time which it
saves, but by the quantity of labor-time which has been expended on
its own production and which is, therefore, required to produce a new
machine of the same kind.

If, therefore, the quantity of labor-time required for the production
of commodities remained constant, their exchange value would remain
the same. But the ease and the difficulty of production are constantly
changing. If the productivity of labor increases, the same use-value
will be produced in less time. If the productivity of labor declines,
more time will be required for the production of the same use-value.
Thus, the labor-time contained in a commodity or its exchange-value is
a variable quantity, increasing or diminishing in an inverse ratio to
the rise and fall of the productivity of labor. The productive power of
labor which is applied in the manufacturing industry on a predetermined
scale depends in the agricultural and extractive industries also on
natural conditions which are beyond human control. _The same labor_
will yield a greater or less output of various metals, according to
their more or less close occurrence in the earth’s crust. _The same
labor_ may be embodied in two bushels of wheat in a favorable season,
and only in one in an unfavorable season. In this case, scarcity or
abundance, as natural conditions, seem to determine the exchange value
of commodities, because they determine the productivity of certain
kinds of labor which depend upon natural conditions.

Unequal volumes of different use-value contain the same quantity of
labor-time or the same exchange value. The smaller the volume of a
use-value containing a certain quantity of labor-time as compared with
other use-values, the greater its _specific exchange-value_. If we find
that certain use-values, such as, e. g., gold, silver, copper and iron,
or wheat, rye, barley and oats, form a series of specific exchange
values which, though not retaining exactly the same numerical ratio,
still retain through widely remote epochs of civilization the same
rough proportion of relatively larger and smaller quantities, we may
draw the conclusion that the progressive development of the productive
powers of society has equally, or approximately so, affected the
labor-time necessary for the production of the various commodities.

The exchange value of a commodity is not revealed in its own use-value.
But, as the embodiment universal social labor-time, the use-value
of one commodity bears a certain ratio to the use-values of other
commodities. Thus, the exchange value of one commodity is manifested
in the use-values of other commodities. An equivalent is, in fact, the
exchange value of one commodity expressed in the use-value of another
commodity. If I say, e. g., that one yard of linen is worth two pounds
of coffee, then the exchange value of linen is expressed in terms of
the use-value of coffee, viz., in a certain quantity of that use-value.
This ratio being given, I can express the value of any quantity of
linen in coffee. It is clear that the exchange value of one commodity,
say linen, is not confined to the ratio of any one commodity, e. g.
coffee, as its equivalent. The quantity of universal labor-time which
is represented in one yard of linen is at the same time embodied in
an endless variety of volumes of use-values of all other commodities.
The use-value of any other commodity forms the equivalent of one yard
of linen, in the proportion in which it represents the same quantity of
labor-time as that yard of linen. The exchange value of _this single
commodity_ is, therefore, fully expressed in the endless number of
equations in which the use-values of all other commodities form its
equivalents. Not until the exchange value of a commodity is expressed
in the sum total of these equations or of the different proportions in
which one commodity is exchanged for every other commodity, does it
find an exhaustive expression as a _universal equivalent_; e. g., the
series of equations:

  1 yard of linen = 1/2 lb. of tea,
  1 yard of linen = 2 lbs. of coffee,
  1 yard of linen = 8 lbs. of bread,
  1 yard of linen = 6 yards of calico,

may be represented as follows:

1 yard of linen = 1/8 lb. of tea + 1/2 lb. of coffee + 2 lbs. of bread
+ 1-1/2 yards of calico.

Therefore, if we had before us the sum total of the equations, in
which the value of a yard of linen is exhaustively expressed, we could
represent its exchange value in the form of a series. As a matter of
fact, the series is an endless one, since the circle of commodities,
constantly expanding, can never be closed up. But while the exchange
value of one commodity is thus measured by the use-values of all other
commodities, the exchange values of all the other commodities are, in
their turn, measured by the use-value of this one commodity.[11]

If the exchange value of one yard of linen is expressed in 1/2 lb. of
tea, or 2 lbs. of coffee, or 6 yards of calico, or 8 lbs. of bread,
etc., it follows that coffee, tea, calico, bread, etc., are equal to
each other if taken in the same proportion in which they are equal to
the third article, linen; consequently, linen serves as the common
measure of their exchange values. Every commodity, as the embodiment
of universal labor-time, i. e., as a certain quantity of universal
labor-time, expresses in turn its exchange value in definite quantities
of the use-values of all other commodities, and the exchange values
of all the other commodities are, on the other hand, measured by the
use-value of this one exclusive commodity. But as an exchange value,
every commodity is at the same time the one exclusive commodity
that serves as a common measure of the exchange values of all other
commodities; and, on the other hand, it is but one of the many
commodities in the entire series of which every commodity expresses
directly its exchange value.

The value of a commodity is not affected by the number of commodities
of other kinds. But the length of the series of equations in which
its exchange value is realized does depend upon the greater or less
variety of other commodities. The series of equations in which the
value of coffee, e. g., is represented, indicates the extent to which
it is exchangeable, the limits within which it performs the function of
an exchange value. The exchange value of a commodity as an embodiment
of universal social labor-time is expressed in its equivalence to an
endless variety of use-values.

We have seen that the exchange value of a commodity varies with the
quantity of labor-time directly contained in it. Its realized exchange
value, i. e., its exchange value expressed in the use-values of other
commodities, must also depend on the proportion in which the labor-time
spent on the production of all other commodities is changing. If, e.
g., the labor-time required for the production of a bushel of wheat
remained constant, while that required for the production of all other
commodities doubled, the exchange value of a bushel of wheat expressed
in its equivalents would become half as large as before. The result
would be practically the same as if the amount of time necessary for
the production of one bushel of wheat had been reduced by one-half,
and that required for all other commodities had remained unchanged.
The value of commodities is determined by the proportion in which they
can be produced in the same labor-time. In order to see what possible
changes this proportion may undergo, let us take two commodities, A and
B.

_First case._ Let the labor-time required for the production of
commodity B remain unchanged. In that case the exchange value of A,
expressed in terms of B, rises and falls with the rise and fall of the
labor-time required for the production of A.

_Second case._ Let the labor-time required for the production of
commodity A remain constant. Then the exchange value of A, expressed in
terms of B, falls and rises in an inverse ratio with the rise and fall
of the labor-time required for the production of B.

_Third case._ Let the labor-time required for the production of
commodities A and B rise and fall in equal proportion. Then the
expression of equivalence of A and B remains unchanged. If through some
cause the productivity of all kinds of labor were to decline uniformly,
so that the production of all commodities would require an equally
increased quantity of labor-time, then the value of all commodities
would rise, though the expression of their exchange values would remain
unchanged, and the actual wealth of society would decrease, because
it would have to expend more labor-time on the production of the same
stock of use-values.

_Fourth case._ Let the labor-time required for the production of A and
B rise and fall, but not uniformly; that is to say, the labor-time
required for the production of A may rise, while that required for B
may fall, or vice versa. All of which can be reduced to the simple
case where the labor-time required for the production of one commodity
remains unchanged, while that required for the other rises or falls.

The exchange value of any commodity is expressed in the use-value of
any other commodity, be it in integral units or in fractions thereof.
As exchange value, every commodity is capable of subdivision, like
the labor-time embodied in it. The equivalence of commodities is
independent of their physical divisibility as use-values, just as the
sum of the exchange values of commodities is indifferent to the change
of form which use-values have to undergo when converted into a _single_
new commodity.

So far we have considered commodities from a twofold point of view,
as use-values and exchange values alternately. But a commodity as such
is a direct combination of use-value and exchange value; and it is a
commodity only in relation to other commodities. The _actual_ relation
between commodities constitutes the _process of their exchange_. It is
a social process participated in by individuals independent of each
other but the part they take in it is that of owners of commodities
only. Their mutual relations are those of their commodities, and thus
they really appear as conscious factors of the process of exchange.

A commodity _is_ a use-value, wheat, linen, a diamond, a machine,
etc., but as a commodity it is, at the same time, _not_ a use-value.
If it were a use-value for its owner, i. e., a direct means for the
satisfaction of his own wants, then it would not be a commodity. To him
it is rather _a non-use-value_; it is merely the material depository of
exchange-value, or simply a _means of exchange_; as an active bearer of
exchange value, use-value becomes a means of exchange. To the owner it
is a use-value only in so far as it constitutes exchange value.[12]

It has yet _to become_ a use-value, viz., to others. Not being a
use-value to its owner, it is a use-value to the owners of other
commodities. If it is not, then the labor expended on it was useless
labor, and the result of that labor is not a commodity. On the other
hand, the commodity must become a use-value _to the owner himself_,
because his means of existence lie outside of it in the use-values of
commodities not belonging to him. In order to become a use-value, the
commodity must meet the particular want of which it is the means of
satisfaction. Use-values of commodities are thus _realized_ use-values
through a universal change of hands by passing from the hands in which
they were held as means of exchange into those where they become use
values. Only through this universal transfer of commodities does the
labor contained in them become useful labor. In this process of their
mutual interchange as use-values, commodities do not acquire any new
economic forms. On the contrary, even the form which marked them as
commodities disappears. Bread, e. g., by changing hands from the baker
to the consumer does not change its identity as bread. On the contrary,
it is only the consumer that begins to regard it as a use-value, as a
certain article of food, while in the hands of the baker it was only
the bearer of an economic relation, a palpable yet transcendental
object. Thus, the only change of form that commodities undergo while
becoming use-values, consists in the fact that they cease to be, as
a matter of form, non-use-values to their owners, and use-values to
those who do not own them. To become use-values commodities must be
universally alienated; they must enter the sphere of exchange; but
they are subject to exchange in their capacity of exchange values.
Hence, in order to be realized as use-values, they must be realized as
exchange values.

While the single commodity appeared from the standpoint of use-value as
something independent, as exchange value it was regarded first of all
in its relation to all other commodities. This relation was, however,
merely theoretical, imaginary. It becomes real only in the process of
exchange. On the other hand, a commodity _is_ an exchange value in so
far as a certain quantity of labor-time has been expended on it, and
it consequently represents _materialized labor-time_. But of itself it
is only materialized individual labor-time of a particular kind, and
not _universal_ labor-time. Therefore, it _is not_ directly an exchange
value, but must first _become_ such. First of all, it is an embodiment
of universal labor-time only in so far as it represents labor-time
applied to a definite useful purpose, i. e., when it represents a
use-value. This was the material condition under which alone labor-time
contained in commodities was regarded as universal social labor.
Thus, while a commodity can become a use-value only after it has been
realized as an exchange value, it can, on the other hand, be realized
as an exchange value only if it proves to be a use-value in the process
of alienation.

A commodity can be alienated as a use-value only to one whom it
serves as a use-value, i. e., as a means of satisfying a certain
want. On the other hand, it is exchanged for another commodity, or,
if we put ourselves on the side of the owner of the other commodity,
it, too, can be alienated, i. e., be realized, only if brought in
contact with that particular want of which it is the object. In the
universal exchange of commodities as _use-values_ the basis for
their mutual relations is in their material difference as distinct
objects which satisfy different wants by their specific properties.
But as mere use-values, they are indifferent to each other, and
are incommensurable. As use-values they can be exchanged only with
reference to certain wants. They are exchangeable only as equivalents,
and they are equivalents only as equal quantities of materialized
labor-time, so that all regard to their natural properties as
use-values and therefore to the relation of the commodities to
particular wants is eliminated. On the contrary, a commodity is
realized as an exchange value by replacing as an equivalent any
definite quantity of any other commodity, regardless of whether it
is a use-value for the owner of the other commodity or not. But to
the owner of the other commodity it is a commodity only in so far
as it is a use-value to him, and it becomes an exchange value to
its owner only in so far as it is a commodity to that other person.
Thus, the same relation appears as a proportion between commodities
as magnitudes of the same denomination, but differing qualitatively;
or, as an expression of their equivalence as embodiments of universal
labor-time, and, at the same time, as a relation of qualitatively
different objects, of use-values intended for the satisfaction of
particular wants, in short, a relation in which they are distinguished
as actual use-values. But this equivalence and non-equivalence mutually
exclude each other. Thus we have before us not only a vicious circle
of problems in which the solution of one implies that of the other, but
a combination of contradicting claims, since the fulfillment of one is
directly connected with that of its opposite.

The process of exchange of commodities must result both in the
unfolding and in the solution of these contradictions, neither of
which, however, can appear in that process in this simple way. We
have only observed how commodities are mutually related to each other
as use-values, i. e., how they appear as use-values _within_ the
process of exchange. The exchange-value, on the contrary, as we have
considered it so far, appeared as an abstraction formed in our own
minds, or―if we may so put it―in the mind of the individual owner
of commodities, which lie stored in his warehouse as use-values,
and weigh upon his conscience as exchange values. In the process of
exchange, however, commodities must be not only use-values, but also
exchange values to one another, and that should appear as their own
mutual relation. The difficulty which we first encountered was that a
commodity must be first alienated and delivered to its purchasers as
a use-value, in order to appear as an exchange value, as materialized
labor, while on the other hand its alienation as use-value implies
its being an exchange value. But let us assume that this difficulty
has been overcome. Suppose the commodity has divested itself of its
use-value, and has thereby fulfilled the material condition of being
socially useful labor, instead of a particular labor of an individual.
In that case, the commodity must become an exchange value, a universal
equivalent, an embodiment of universal labor-time for all other
commodities in the process of exchange, and thus, leaving behind its
limited role of a particular use-value, acquire the ability to be
directly represented in all use-values as its equivalents. But every
commodity is _just such_ a commodity, appearing as a direct incarnation
of universal labor-time by divesting itself of its particular
use-value. On the other hand, however, commodities confront each other
in the process of exchange as particular commodities, as the labor
of private individuals embodied in particular use-values. Universal
labor-time is itself an abstraction, which, as such, does not exist for
commodities.

Let us examine the series of equations in which the exchange value of a
commodity finds its concrete expression, e. g.:

  1 yard of linen = 2 lbs. of coffee.
  1 yard of linen = 1/2 lb. of tea.
  1 yard of linen = 8 lbs. of bread, etc.

These equations simply signify that equal quantities of universal
social labor-time are embodied in one yard of linen, two pounds
of coffee, half a pound of tea, etc. But as a matter of fact the
individual labors which are represented in these particular use-values,
become universal, and, in that form, also social labor, only when they
are actually exchanged for one another in proportion to the labor-time
contained in them. Social labor-time exists in these commodities in
a latent state, so to say, and is first revealed in the process of
exchange. We do not proceed from the labor of individuals as social
labor, but, on the contrary, from special labor of private individuals
which appears as universal social labor only by divesting itself of
its original character in the process of exchange. Universal social
labor is, therefore, no ready-made assumption, but a growing result.
And thus we are confronted with a new difficulty, that on the one
hand commodities must enter the process of exchange as embodiments of
universal labor-time, while, on the other hand, this embodiment of the
labor-time of individuals as social labor-time is itself a result of
the process of exchange.

Every commodity becomes an exchange value by divesting itself of its
use-value, or of its original nature. The commodity must therefore
assume a double capacity in the process of exchange. But that second
capacity of exchange value can appear only in the shape of another
commodity, because only commodities confront each other in the process
of exchange. How is a particular commodity to represent directly
_materialized universal_ labor-time, or―to put it differently―how is
individual labor-time, which is embodied in a particular commodity to
be made directly universal in character? The concrete expression of the
exchange value of a commodity, i. e., of every commodity as a universal
equivalent, is represented in an endless series of equations, such as:

  1 yard of linen = 2 lbs. of coffee.
  1 yard of linen = 1/2 lb. of tea.
  1 yard of linen = 8 lbs. of bread.
  1 yard of linen = 6 yards of calico.
  1 yard of linen = etc.

The above form is theoretical in so far as commodities are only
_thought of_ as definite quantities of materialized universal
labor-time. But the capacity of a particular commodity to serve as a
universal equivalent from a mere abstraction becomes a _social_ result
of the process of exchange by a simple inversion of the above series of
equations, viz.:

  2 lbs. of coffee  = 1 yard of linen.
  1/2 lb. of tea    = 1 yard of linen.
  8 lbs. of bread   = 1 yard of linen.
  6 yards of calico = 1 yard of linen.

While coffee, tea, bread, calico, in short, all commodities express
in linen the labor-time contained in them, the exchange value of
linen, on the other hand, unfolds itself in all other commodities as
its equivalents, and the labor-time embodied in it becomes direct
universal labor-time, which is equally expressed in different volumes
of all other commodities. Linen thus becomes the _universal equivalent_
through the _universal action_ of all other commodities upon it.
As exchange value, every commodity served as a measure of value of
all other commodities. Now, on the contrary, since all commodities
measure their exchange values by means of a particular commodity,
this excluded commodity becomes the special expression of exchange
value, as a universal equivalent. At the same time, the endless
series of equations in which the exchange value of every commodity
was expressed, is reduced to one single equation consisting of two
members. The equation 2 lbs. of coffee = 1 yard of linen now fully
expresses the exchange value of coffee, for in this expression a yard
of linen appears as the direct equivalent of a definite quantity
of every other commodity. Thus, within the sphere of exchange all
commodities are or appear to each other as exchange values in the
form of linen. The proposition that commodities, as exchange values,
are to each other as different quantities of materialized universal
labor-time, may now be worded to the effect that commodities, as
exchange values, represent nothing but different quantities of _the
same_ article, linen. Universal labor-time thus assumes the aspect of
a distinct thing, as a commodity existing along with and outside of
all other commodities. At the same time the equation 2 lbs. of coffee
= 1 yard of linen, in which one commodity appears as the exchange
value of another, is yet to be realized. Only by being alienated as
use-value―which depends upon whether it proves to be in the process
of exchange the object of a certain want―does the commodity actually
transform its existence as coffee into the existence as linen and
thus takes on the form of a universal equivalent and becomes, indeed,
an exchange value for all other commodities. Conversely, since all
commodities are turned into linen by being alienated as use-values,
linen becomes the converted form of all other commodities, and only as
a result of this transformation of all other commodities into it, it
becomes the direct _embodiment of universal labor-time_, i. e., the
product of universal exchange and of the elimination of individual
labor. If commodities thus assume a twofold character in order to
appear as exchange values to each other, the commodity which has been
singled out as the universal equivalent becomes, on the other hand, a
use-value in two ways. Besides its special use-value as a particular
commodity, it assumes a universal use-value. This latter kind of
use-value constitutes its special feature, emanating as it does,
from the specific part which the commodity plays as a result of the
universal relation which all other commodities bear toward it in the
process of exchange. The use-value of every commodity as an object of
a particular want, has a different value in different hands, e. g., it
has a different value in the hands of the one who disposes of it, than
in those of the one who acquires it. But the commodity singled out as
the universal equivalent, is now an object of a universal want arising
from the very process of exchange, and it has the same use-value to
everybody, viz., that of serving as the depository of exchange value,
of being a universal means of exchange. Thus we find in one commodity
the solution of the contradiction which is inherent in commodity as
such, namely, of being at one and the same time a particular use-value
and a universal equivalent, and, therefore, a use-value for everybody
or universal use-value. Thus, while all other commodities express their
exchange value in the form of an ideal equation with the excluded
commodity―an equation yet to be realized―the use-value of the special
commodity, although real, appears in the process itself as a mere
form which is yet to be realized through transformation into actual
use-values. Originally the commodity appeared simply as commodity, as
universal labor-time embodied in a particular use-value. In the process
of exchange, all commodities are related to the one excluded commodity
as to a simple commodity, one which appears as the embodiment of
universal labor-time in a particular use-value. Thus, _particular_
commodities become related to one particular commodity as a universal
commodity.[13] In that manner the mutual relations of possessors of
commodities based on the fact that they regard their labor as universal
social labor, takes on the aspect of their relations to commodities as
exchange values; and the mutual relation of commodities as exchange
values appears in the process of exchange as the relation of all of
them to one particular commodity as to a specially adopted means of
expression of their exchange value; again, from the point of view of
that particular commodity the above relation appears as its specific
relation to all other commodities, and, therefore, as its own definite,
spontaneous, social character. The particular commodity which thus
appears as the specially adopted expression of the exchange value
of all other commodities, or the exchange value of commodities as a
particular exclusive commodity, is _money_. Money is a crystallization
of the exchange value of commodities which they themselves form in
the process of exchange. Thus, while commodities become _use-values_
to each other in the process of exchange by casting off all definite
forms and entering into mutual relations in their direct material
shape, they must assume a new form, viz., proceed to the formation of
money in order to appear as _exchange values_ to each other. Money
is not a symbol, no more than the commodity aspect of a use-value
is a symbol. That a social relation of production takes the form of
an object existing outside of individuals, and that the definite
relations into which individuals enter in the process of production
carried on in society, assume the form of specific properties of a
thing, is a perversion and by no means imaginary, but prosaically real,
mystification marking all social forms of labor which creates exchange
value. In money this mystification appears only more strikingly than in
commodities.

The necessary physical properties of the particular commodity in which
the money form of all other commodities is to be crystallized―as far
as they are directly determined by the nature of exchange value―are:
divisibility to any desired extent, homogeneity of its parts, and
uniformity of all the specimens of the commodity. As an embodiment
of universal labor-time it must be homogeneous in its structure
and capable of representing only quantitative differences. Another
necessary property is durability of its use-value, as it must last
through the process of exchange. The precious metals excel in these
qualities. Money not being a result of a scheme or agreement, but
having been produced instinctively in the process of exchange, a great
variety of more or less unsuited commodities had successively performed
its functions. At a certain stage of development of the process
of exchange, the necessity arises for a polar distribution of the
functions of exchange value and use-value among commodities, so that
one commodity e. g. should act as a medium of exchange, while another
is being alienated as a use-value. This necessity brings it about that
one or even several commodities possessing the most generally accepted
use-value, begin, incidentally at first, to play the part of money.
Even if not direct means of satisfying existing wants, their being the
most considerable material constituent part of wealth, insures to them
a more general character than to the other use-values.

Direct barter, the original natural form of exchange, represents rather
the beginning of the transformation of use-values into commodities,
than that of commodities into money. Exchange value has as yet no
form of its own, but is still directly bound up with use-value. This
is manifested in two ways. Production, in its entire organization,
aims at the creation of use-values and not of exchange values, and
it is only when their supply exceeds the measure of consumption that
use-values cease to be use-values, and become means of exchange,
i. e., commodities. At the same time, they become commodities only
within the limits of being direct use-values distributed at opposite
poles, so that the commodities to be exchanged by their possessors
must be use-values to both,―each commodity to its non-possessor. As a
matter of fact, the exchange of commodities originates not within the
primitive communities,[14] but where they end, on their borders at the
few points, where they come in contact with other communities. That is
where barter begins, and from here it strikes back into the interior
of the community, decomposing it. The various use-values which first
become commodities in the barter between different communities, such
as slaves, cattle, metals, constitute therefore in most cases the
first money within those communities themselves. We have seen how
the exchange value of a commodity is manifested the more perfectly
as exchange value, the longer the series of its equivalents or the
_greater_ the sphere of exchange of that commodity. With the gradual
expansion of barter, the increase in the number of exchanges, and
the growing diversification of the commodities drawn into exchange,
commodities develop into exchange values, which leads to the formation
of money and has a destructive effect on direct barter. The economists
are in the habit of ascribing the origin of money to the difficulties
which are encountered in the way of extensive barter, but they forget
that these difficulties arise from the development of exchange value
and from the fact that social labor becomes universal labor. E. g.,
commodities as use-values can not be subdivided at will, a property
which they should possess as exchange values. Or, a commodity belonging
to A may be a use-value to B, while the commodity belonging to B may
not have any use-value to A. Or the owners of the commodities may
need each other’s indivisible goods in unequal proportions. In other
words, under the pretence of analyzing simple barter, economists
bring out certain aspects of the contradiction which is inherent in
commodities as entities simultaneously embodying both use-value and
exchange value. On the other hand, they consistently cling to the
idea that barter is the natural form of exchange, which suffers only
from certain technical difficulties, for which money is a cunningly
devised expedient. Arguing from this perfectly superficial view, an
ingenious English economist has rightly maintained that money is
merely a material instrument like a ship or a steam-engine, but not
an expression of a social relation in the field of production and
consequently not an economic category; and that it is, therefore, wrong
to treat the subject in political economy, which really has nothing in
common with technology.[15]

The world of commodities implies the existence of a highly developed
division of labor; this division is manifested directly in the great
variety of use-values, which confront each other as particular
commodities and which embody as many different kinds of labor. The
division of labor embracing all the particular kinds of productive
occupations, is the complete expression of social labor in its material
aspect viewed as labor creating use-values. But from the standpoint of
commodities and within the process of exchange, it exists only in its
results, in the variety of the commodities themselves.

The exchange of commodities constitutes the social metabolic process,
i. e. the process in which the exchange of the special products of
private individuals is the result of certain social relations of
production into which the individuals enter in this interchange of
matter. As they develop, the mutual relations of commodities crystalize
into various aspects of the universal equivalent and thus the process
of exchange becomes at the same time the process of the formation of
money. The whole of this process which takes the form of a succession
of processes, constitutes circulation.


NOTES ON THE HISTORY OF THE THEORY OF COMMODITIES.

The analysis of commodities according to their twofold aspect of
use-value and exchange value by which the former is reduced to work
or deliberate productive activity; and the latter, to labor time or
homogeneous social labor, is the result of a century and a half of
critical study by the classical school of political economy which dates
from William Petty in England and Boisguillebert in France[16] and
closes with Ricardo in the former country and Sismondi in the latter.

Petty reduces use-value to labor, without deceiving himself as to the
natural limitation of its creative power. As regards concrete labor,
he sizes it up in the magnitude of its social aspect, as _the division
of labor_.[17] This view of the source of material wealth does not
remain more or less fruitless as in the case of his contemporary,
Hobbes, but leads up to his _Political Arithmetic_, the first form in
which Political Economy is differentiated as an independent science.

He defines exchange value, however, just as it _appears_ in the process
of exchange of commodities, viz. as money; and money he defines as
an existing commodity, gold and silver. Laboring under the ideas of
the monetary system, he declares the special branch of labor which
is devoted to the production of gold and silver as the labor which
determines exchange value. What he really means is that the labor of
members of society must produce not direct use-values, but commodities
or use-values which by means of exchange are capable of assuming the
form of gold and silver, i. e. of money, i. e. of exchange value, i.
e. of embodiments of universal labor. His example, however, shows
strikingly that the recognition of labor as the source of material
wealth by no means excludes the misconception of the particular social
form in which labor constitutes the source of exchange value.

In his turn, Boisguillebert, if not consciously, at any rate actually
reduces the exchange value of a commodity to labor-time, since he
determines “true value” (la juste valeur) by the right proportion in
which the labor-time of individuals is distributed among the several
branches of industry, and defines free competition as the social
process which determines these correct proportions. At the same time,
however, and in contrast with Petty he wages a fanatical war against
money which, by its interference, disturbs the natural equilibrium or
harmony of exchange of commodities and, like a wanton Moloch, demands
all natural wealth as sacrifice. It is true that this assault on money
was called forth by certain historic conditions. Since Boisguillebert
attacked[18] the blind destructive lust after gold which possessed
the court of Louis XIV, his tax collectors, and his nobility; on the
other hand, Petty extolled in the greed of gold the mighty impulse
which spurred on the nation in her industrial development and in her
conquest of the world-market; still, there asserts itself here a
deeper antagonism of principles which constantly recurs between true
English and true French[19] Political Economy. Boisguillebert sees,
in fact, only the material substance of wealth, its use-value, the
enjoyment[20] of it, and considers the capitalistic form of labor, i.
e. the production of use-values as commodities and the exchange of
those commodities, as the natural social form in which individual labor
attains its end. When he is, therefore, confronted with the specific
character of capitalistic wealth as in the case of money, he sees in it
the usurping interference of extraneous elements and gets into a rage
about the capitalist system of labor in one form while utopian-like
he praises it in another.[21] Boisguillebert furnishes us with proof
that one may treat labor-time as the measure of value of commodities,
and at the same time confound labor embodied in the exchange value of
commodities and measured by time, with the direct natural activity of
individuals.

The first sensible analysis of exchange value as labor-time, made so
clear as to seem almost commonplace, is to be found in the work of
a man of the New World where the bourgeois relations of production
imported together with their representatives sprouted rapidly in a
soil which made up its lack of historical traditions with a surplus of
humus. That man was Benjamin Franklin, who formulated the fundamental
law of modern political economy[22] in his first work which he wrote
when a mere youth and published in 1721.

He declares it necessary to look for another measure of value than
precious metals. That measure is labor. “By labor may the value of
silver be measured as well as other things. As, suppose one man
employed to raise corn, while another is digging and refining silver;
at the year’s end, or at any other period of time, the complete produce
of corn, and that of silver, are the natural price of each other; and
if one be twenty bushels, and the other twenty ounces, then an ounce
of that silver is worth the labor of raising a bushel of that corn.
Now if by the discovery of some nearer, more easy or plentiful mines,
a man may get forty ounces of silver as easily as formerly he did
twenty, and the same labor is still required to raise twenty bushels
of corn, then two ounces of silver will be worth no more than the same
labor of raising one bushel of corn, and that bushel of corn will be
as cheap at two ounces, as it was before at one, _ceteris paribus_.
Thus the riches of a country are to be valued by the quantity of labor
its inhabitants are able to purchase.”[23] Thus Franklin regards
labor-time from the one-sided economic point of view, as the measure
of value. The transformation of actual products into exchange values
is self-evident with him and the only question is as to finding a
quantitative measure of value. “Trade,” says he, “in general being
nothing else but the exchange of labour for labour, the value of all
things is, as I have said before, most justly measured by labour.”[24]
Substitute the word “work” for “labor” in the above statement, and
the confusion of labor in one form and labor in another form becomes
at once apparent. Since trade consists e. g. in the exchange of the
respective labors of the shoemaker, miner, spinner, painter, etc., does
it follow that the value of shoes is most justly measured by the work
of a painter? On the contrary, Franklin meant that the value of shoes,
mining products, yarn, paintings, etc., is determined by abstract labor
which possesses no particular qualities and can, therefore, be measured
only quantitatively.[25] But since he does not develop the idea
that labor contained in exchange value is abstract universal labor
which assumes the form of social labor as a result of the universal
alienation of the products of individual labor, he necessarily fails to
recognize in money the direct embodiment of this alienated labor. For
that reason he sees no inner connection between money and labor which
creates exchange value, and considers money merely as an instrument
introduced from outside into the sphere of exchange for purposes of
technical convenience.[26] Franklin’s analysis of exchange value did
not exert any direct influence on the general trend of science, because
he discussed only special questions of political economy whenever there
was a definite practical occasion for it.

The contrast between useful work and labor which creates exchange
value agitated all Europe during the eighteenth century in the form of
this question: what particular kind of labor constitutes the source
of bourgeois wealth? It was thus assumed that not every kind of labor
which is realized in use-values or yields certain products does
thereby directly create wealth. With the physiocrats, however, as well
as with their opponents, the burning question was not, what kind of
labor creates _value_, but which is it that creates _surplus value_.
They approached the problem in its complicated form before they had
solved it in its elementary form; such is the historical course of
all sciences leading them by a labyrinth of intersecting paths to the
real starting points. Unlike other builders, science not only erects
castles in the air, but constructs separate stories of the building,
before it has laid the foundation. Without dwelling any longer on the
physiocrats and omitting quite a number of Italian economists who in
some more or less ingenious ideas came close to a correct analysis
of the nature of commodity,[27] we pass at once to the first Briton
who elaborated the general system of bourgeois economics, Sir James
Steuart.[28] His idea of exchange value as well as all the abstract
categories of political economy still seem to be with him in the
process of differentiation from the material elements they represent
and therefore appear quite vague and unsettled. In one place he
determines _real value by labor-time_ (“what a workman can perform in
a day”), but immediately creates confusion by introducing the elements
of wages and raw material.[29] In another place his struggle with the
material substance of the subject he treats of is revealed even more
strikingly. He calls the material of nature contained in a commodity,
such as the silver in a silver plate, its “intrinsic worth,” while the
labor-time contained in it he calls “useful value.” The former, he says
“is ... something real in itself,” while “the value of the second must
be estimated according to the labour it has cost to produce it.... The
labour employed in the modification [of the substance] represents a
portion of a man’s time.”[30]

What distinguishes Steuart from his predecessors and followers is
his keen differentiation between specifically social labor which is
represented in exchange value, and concrete labor which produces
use-values. Labor, he says, which through its alienation creates
a universal equivalent, I call _industry_. Labor as industry he
distinguishes not only from concrete labor, but from all other social
forms of labor.[31] It is to him the capitalistic form of labor
in contrast to its antique and mediaeval forms. He is especially
interested in the difference between capitalistic and feudal labor, of
which he had observed the latter in its decaying forms both in Scotland
and on his extensive travels over the continent. Steuart knew, of
course, very well that products took on the form of commodities and
commodities, the form of money in precapitalistic epochs as well; but
he proves conclusively that it is only in the capitalistic period of
production that the commodity becomes the elementary and fundamental
form of wealth, and alienation [of commodities], the ruling form of
acquisition and that consequently labor creating exchange value is
specifically capitalistic in its character.[32]

After different forms of concrete labor, such as agriculture,
manufacture, navigation, trade, etc., had each in turn been declared
the true source of wealth, Adam Smith proclaimed labor in general,
and namely in its general social form of _division of labor_, to be
the only source of material wealth or use-values. While ignoring in
connection with the latter the part played by nature, he is troubled
by it when he comes to deal with purely social wealth i. e. exchange
value. To be sure, Adam determines the value of a commodity by the
labor-time contained in it, but relegates the actual application of
the principle to pre-Adamic times. In other words, what seems to him
true from the standpoint of simple commodity, ceases to be clear as
soon as the higher and more complex forms of capital, wage-labor,
rent, etc. take its place. This he expresses by saying, that the value
of commodities used to be measured by labor-time in the paradise
lost of bourgeois society, in which men dealt with each other not
as capitalists, wage-workers, landlords, tenants, usurers, etc., but
merely as plain producers of commodities which they exchanged. He
constantly confuses the determination of the value of commodities by
the labor-time contained in them with the determination of their value
by the value of labor. He becomes confused in working out the details
and fails to see the objective equalization of different kinds of labor
which the social process forcibly carries out, mistaking it for the
subjective equality of the labors of individuals.[33] The transition
from concrete labor to labor creating exchange value, i. e. to labor in
its fundamental capitalistic form he tries to derive from the _division
of labor_. Yet, while it is true that private exchange implies the
division of labor, it is false to maintain that division of labor
implies private exchange. Among the Peruvians, e. g., labor was divided
to an extraordinary extent, although there was no private exchange, no
exchange of products, as commodities.

Contrary to Adam Smith, David Ricardo elaborated with great clearness
the determination of the value of a commodity by labor-time and showed
that this law governs also such relations of capitalistic production
which seem to contradict it most. Ricardo confines his investigations
exclusively to the _quantitative determination of value_ and as regards
the latter he is at least conscious of the fact that the realization
of the law depends upon certain historical conditions. He says,
namely, that the determination of value by labor-time holds good for
commodities “only as can be increased in quantity by the exertion of
human industry, and on the production of which competition operates
without restraint.”[34] What he really means is that the law of value
presupposes for its full development an industrial society in which
production is carried on a large scale and free competition prevails,
i. e. the modern capitalist society. In all other respects, Ricardo
considers the capitalist form of labor as the eternal natural form of
social labor. He makes the primitive fisherman and the primitive hunter
straightway exchange their fish and game as owners of commodities, in
proportion to the labor-time embodied in these exchange values. On this
occasion he commits the anachronism of making the primitive fisherman
and primitive hunter consult the annuity tables in current use on the
London Exchange in the year 1817 in the calculation relating to their
instruments. The “parallelograms of Mr. Owen” seem to be the only form
of society outside of the bourgeois form with which he was acquainted.
Although confined within this bourgeois horizon, Ricardo analyzes the
bourgeois economy―which looks quite different to deeper insight than
it does on the surface―with such keen power of theoretical penetration
that Lord Brougham could say of him: “Mr. Ricardo seemed as if he had
dropped from another planet.”

In a direct controversy with Ricardo, Sismondi lays stress upon
the specifically social character of labor which creates exchange
value,[35] and says it is “characteristic of our economic progress” to
reduce the magnitude of value to the _necessary_ labor-time, to the
relation between the demand of society as a whole and the quantity of
labor which is sufficient to satisfy this demand.[36] Sismondi is no
more laboring under Boisguillebert’s idea, that labor which creates
exchange value is adulterated by money; but just as Boisguillebert
denounced money, so does Sismondi denounce large industrial capital.
In Ricardo political economy reached its climax, after recklessly
drawing its ultimate conclusions, while Sismondi supplemented it by
impersonating its doubts.

Since Ricardo gave to classical political economy its final shape,
having formulated and elaborated with the greatest clearness the law of
the determination of exchange value by labor-time, it is natural that
all the polemics among economists should center about him. Stripped
of its puerile[37] form this controversy comes down to the following
points:

_First_: Labor itself has exchange value, and different kinds of labor
have different exchange values. We get into a vicious circle by making
exchange value the measure of exchange value, because the measuring
exchange value needs a measure itself. This objection may be reduced
to the following problem: Given labor-time as the intrinsic measure
of exchange value, develop from that the determination of wages. The
theory of wages gives the answer to that.

_Second_: If the exchange value of a product is equal to the labor-time
contained in it, then the exchange value of one day of labor is equal
to the product of that labor. In other words, wages must be equal to
the product of labor.[38] But the very opposite is actually the case.
Ergo. this objection comes down to the following problem: How does
production, based on the determination of exchange value by labor-time
only, lead to the result that the exchange value of labor is less than
the exchange value of its product? This problem is solved by us in the
discussion of capital.

_Third_: The market price of commodities either falls below or rises
above its exchange value with the changing relations of supply and
demand. _Therefore_, the exchange value of commodities is determined by
the relation of supply and demand and not by the labor-time contained
in them. As a matter of fact, this queer conclusion merely amounts to
the question, how a market price based on exchange value can deviate
from that exchange value; or, better still, how does the law of
exchange value assert itself only in its antithesis? This problem is
solved in the theory of competition.

_Fourth_: The last and apparently the most striking objection, if
not raised in the usual form of queer examples: If exchange value
is nothing but mere labor-time contained in commodities, how can
commodities which contain no labor possess exchange-value, or in other
words, whence the exchange value of mere forces of nature? This problem
is solved in the theory of rent.




CHAPTER II.

MONEY OR SIMPLE CIRCULATION.


In a parliamentary debate on Sir Robert Peel’s Bank Act of 1844 and
1845, Gladstone remarked that not even love has made so many fools of
men as the pondering over the nature of money. He spoke of Britons to
Britons. The Dutch, on the contrary, who, from times of yore, have had,
Petty’s doubts notwithstanding, “angelical wits” for money speculation
have never lost their wits in speculations about money.

The main difficulty in the analysis of money is overcome as soon as
the evolution of money from commodity is understood. This point once
granted, it only remains to comprehend clearly the particular forms
of money, which is to some extent made difficult by the fact that all
bourgeois relations, being gilt or silver plated, have the appearance
of money relations, and money, therefore, seems to possess an endless
variety of forms, which have nothing in common with it.

In the following investigation only those forms of money are treated
of which directly grow out of the exchange of commodities; the forms
which belong to a higher stage of production, as e. g., credit money
will not be discussed here. For the sake of simplicity gold is assumed
throughout as the money commodity.


1. THE MEASURE OF VALUE.

The first process of circulation constitutes, so to say, the
theoretical preparatory process to actual circulation. To begin
with, commodities which are use-values by nature, acquire a form in
which they _appear_ in idea to each other as exchange values, as
definite quantities of incorporated _universal_ labor-time. The first
necessary step in this process is, as we have seen, the setting apart
by the commodities of a specific commodity, say _gold_, as the direct
incarnation of universal labor-time, or the universal equivalent. Let
us go back for a moment to the form in which commodities turn gold into
money.

  1 ton of iron = 2 ounces of gold

  1 quarter of wheat = 1 ounce of gold

  1 hundred weight of Mocca coffee = 1-1/4 ounce of gold

  1 hundred weight of potash = 1/2 ounce of gold

  1 ton of Brazil timber = 1-1/2 ounces of gold

  Y commodities = X ounces of gold

In the above series of equations iron, wheat, coffee, potash, etc.
appear to each other as embodiments, of homogeneous labor, namely,
as labor materialized in money, from which all the peculiarities of
the different kinds of concrete labor represented in the different
use-values are completely eliminated. As value they are all identical,
they are the incarnation of _the same_ labor, or _the same_ incarnation
of labor, viz., gold. As uniform embodiments of the same labor they
display only _one_ difference, a quantitative one, by appearing
as different quantities of value, because _unequal_ quantities of
labor-time are contained in their use-values. The mutual relation
of these separate commodities is that of embodiments of universal
labor-time, since they are related to universal labor-time as to an
excluded commodity, viz., gold. The same relation the development of
which causes commodities to appear to each other as exchange values,
causes the labor time contained in gold to appear as universal
labor-time, a given quantity of which is expressed in different
quantities of iron, wheat, coffee, etc,―in short, in the use-values
of all commodities, or is directly unfolded in the endless series of
commodity-equivalents. While all commodities express their exchange
values in gold, gold expresses its exchange value directly in all
commodities. While commodities assume the form of exchange value in
relation to each other, they lend to gold the form of the universal
equivalent, or of money.

Gold becomes the _measure of value_, because _all_ commodities measure
their exchange values in gold, in proportion as a certain quantity of
gold and a certain quantity of the commodity contain the same amount
of labor-time; and it is only by virtue of this function of being a
measure of value, in which capacity its own value is measured directly
in the entire series of commodity equivalents, that gold becomes
a universal equivalent or money. On the other hand, the exchange
value of all commodities is expressed in gold. In this expression,
the qualitative aspect is to be distinguished from the quantitative:
there is the exchange value of the commodity as the embodiment of the
same uniform labor-time; while the magnitude of value is exhaustively
expressed, since in the same proportion in which commodities are
equated to gold they are equated to one another. On the one hand the
_universal_ character of the labor-time contained in them is revealed;
on the other, its quantity is expressed in its golden equivalent. The
exchange value of commodities thus expressed in the form of a universal
equivalent and, moreover, as a numerical proportion of this equivalent,
in terms of one specific commodity, or represented in the form of a
series of commodities equated to one specific commodity, is PRICE.
Price is the form into which the exchange value of commodities is
converted when it _appears_ within the sphere of circulation.

By the same process by which commodities express their values in gold
prices, they turn gold into a measure of value i. e. into money. If
all of them were to measure their values in silver, wheat, or copper,
and therefore express them in the form of silver, wheat or copper
prices, then silver, wheat or copper would be measures of value and
consequently universal equivalents. In order to appear as prices in
circulation, commodities must be exchange values before they enter
circulation. Gold becomes the measure of value only because all
commodities estimate their exchange value in it.

The universality of this relation which is the result of evolution
and from which alone springs the function of gold as the measure of
value, implies however, that every single commodity is measured in
gold, in proportion to the labor-time contained in both; that the
actual common measure of the commodity and of gold is labor; or that
commodity and gold are passed for each other in direct barter as
equal exchange values. How this equalization actually takes place,
can not be discussed here when treating of simple circulation. So
much, however, is clear, that in countries producing gold and silver,
certain quantities of labor-time are directly embodied in definite
quantities of gold and silver, while in countries which do not produce
gold and silver the same result is reached in a round-about way, by
direct or indirect exchange of the commodities of those countries;
i. e. a definite portion of average national labor is given for a
definite quantity of labor-time, embodied in the gold and silver of the
mine-owning countries. In order to be able to serve as a measure of
value, gold must be as far as possible a _variable_ value, because it
can become the equivalent of other commodities only as an incarnation
of labor-time, and the same labor-time is realized in unequal volumes
of use-values with the change in the productive power of concrete
labor. In estimating all commodities in gold it is only assumed that
gold represents a given quantity of labor at a given moment, as was
done when the exchange value of any commodity was expressed in terms
of the use-value of any other commodity. As for the variations of the
value of gold, the law of exchange value formulated above holds good
in its case as well. If the exchange value of commodities remains
unchanged, then a general rise in their gold prices is possible only
in the case of a fall in the exchange value of gold. If the exchange
value of gold remains unchanged, a general rise of gold prices is
possible only when the exchange value of all commodities rises. The
reverse is true in case of a general fall in the prices of commodities.
If the value of an ounce of gold falls or rises in consequence of a
change in the labor-time required for its production, then the values
of all other commodities fall or rise to an equal extent. Thus, the
ounce of gold represents after the change, as it did before, a _given_
quantity of labor-time with regard to all commodities. The same
exchange values are now estimated in greater or smaller quantities
of gold than before, but they are estimated in proportion to the
magnitude of their values, and consequently retain the same proportion
to each other. The ratio 2 ÷ 4 ÷ 8 remains the same when expressed
as 1 ÷ 2 ÷ 4 or as 4 ÷ 8 ÷ 16. The change in the quantity of gold in
which exchange values are estimated with a variation in the value of
gold, interferes as little with the function of gold as a measure
of value, as the fifteen times smaller value of silver as compared
with that of gold interferes with the performance of that function
by the latter. Since labor-time is the common measure of gold and
commodities, and since gold figures as the measure of value only in so
far as all commodities are measured by it, the idea that money makes
commodities commensurable, is therefore a mere fiction of the process
of circulation.[39] It is rather the commensurability of commodities
as incorporated labor-time, that turns gold into money.

Commodities enter the process of exchange in the concrete form
of use-values. They are yet to be turned into the real universal
equivalent through their alienation. The determination of their prices
merely amounts to their ideal transformation into the universal
equivalent, a process of equation to gold which is yet to be realized.
But since commodities are, in their prices, transformed into gold only
in imagination, or are converted only into imaginary gold, and since
their money form is not differentiated as yet from their concrete
selves, it follows that gold has also been turned into money only
in imagination; it appears so far but as a measure of value, and in
fact definite quantities of gold serve merely as names for certain
quantities of labor-time. The form in which gold is crystallized in
money always depends upon the way in which commodities express their
own exchange value to each other.

Commodities now confront one another in a double capacity: actually as
use-values, ideally as exchange values. The twofold aspect of labor
contained in them is reflected in their mutual relations; the special
concrete labor being virtually present as their use-value, while
universal abstract labor-time is ideally represented in their price
in which commodities appear as commensurable embodiments of the same
value―substance differing merely in quantity.

The difference between exchange value and price appears to be merely
nominal or, as Adam Smith says, labor is the real price, and money
the nominal price of commodities. Instead of estimating the value of
one quarter of wheat in thirty days of labor, it is estimated in one
ounce of gold if one ounce of gold is the product of thirty days’
labor. However, far from this difference being merely nominal, all the
storms which threaten commodities in the actual process of circulation
center about it. Thirty days of labor are contained in a quarter of
wheat and it need not, therefore, be expressed in terms of labor-time.
But gold is a commodity distinct from wheat, and only in circulation
it can be ascertained, whether the quarter of wheat can be actually
turned into an ounce of gold as is anticipated in its price. That will
depend on whether or not it proves to be a use-value, whether or not
the quantity of labor-time contained in it is the quantity necessarily
required by society for the production of a quarter of wheat. The
commodity as such _is_ an exchange value, it _has_ a price. In this
difference between exchange value and price lies the demonstration of
the fact that the particular individual labor contained in a commodity
has first to be expressed through the process of alienation in terms
of its counterpart, i. e. as impersonal, abstract, universal and, only
in that form, social labor, viz. money. Whether it can be so expressed
seems to be a matter of chance. Thus, although the exchange value
of a commodity finds only ideally a distinct expression in price,
and the twofold character of labor contained in the commodity exists
as yet merely as two distinct forms of expression, and, although in
consequence thereof, the embodiment of universal labor-time, gold,
confronts actual commodities only as an imaginary measure of value, yet
the fact that exchange value exists as price, or that gold exists as a
measure of value implies the necessity of the alienation of commodities
for hard cash and the possibility of their non-alienation. In short,
here lies latent the entire contradiction which is inherent in the
fact that products are commodities or that the particular work of a
private individual can be of no account in society until it has taken
the very opposite form of abstract universal labor. For that reason,
the utopians, who want to have commodities but not money, who want a
system of production based on private exchange without the necessary
conditions underlying such a system, are consistent when they “destroy”
money not in its tangible form but in its nebulous illusory form of a
measure of value. Under the invisible measure of value there lurks the
hard cash.

The process by which gold has become the measure of value and exchange
value has been turned into price, being once assumed, all commodities
express in their prices but imagined quantities of gold of various
magnitudes. As such various quantities of the same thing, gold, they
are equated, compared and measured with each other, and thus arises the
technical necessity of referring them to a definite quantity of gold
as a unit of measure, a unit which develops into a standard measure by
virtue of its divisibility into aliquot parts, which in their turn can
be subdivided into aliquot parts.[40] But quantities of gold as such
are measured by weight.

The standard of measure is thus found ready in the general measures
of weight of metals and, therefore, where-ever metallic circulation
is in vogue, these measures serve originally as standards of price.
Since commodities no more relate to each other as exchange values to
be measured by labor-time, but as magnitudes of the same denomination
measured in gold, the latter is transformed from a _measure of value_
into a _standard of price_. The comparison of prices with each other
as different quantities of gold is thus crystallized in figures which
correspond to an assumed quantity of gold and represent it as a
standard of aliquot parts. Gold as measure of value and as standard of
price has entirely different forms of manifestation and the confusing
of the two has resulted in the wildest of theories. Gold is a measure
of value as incorporated labor-time; it is the standard of price as
certain weight of metal. Gold becomes the measure of value by virtue
of its relation as exchange value to commodities as exchange values;
as standard of price, a definite quantity of gold serves as a unit
for other quantities of gold. Gold is the measure of value, because
its value is variable; it is the standard of price, because it is
fixed as a constant unit of weight. In this case, as in all cases of
measuring quantities of the same denomination, the establishment of a
definite and unvarying unit of measure is all-important. The necessity
of settling upon a quantity of gold as a unit of measure and upon its
aliquot parts as subdivisions of that unit, has given rise to the
notion that a certain quantity of gold which has naturally a variable
value had been assigned a fixed ratio of value to the exchange values
of all commodities; the fact is overlooked that exchange values of
commodities are transformed into prices, i. e. into quantities of gold,
before gold develops as a standard of price. No matter how the value of
gold may vary, the ratios between the values of different quantities of
gold remain constant. Let the fall in the value of gold amount to 1000
per cent., still twelve ounces of gold will have a twelve times greater
value than one ounce of gold; and in prices the only thing considered
is the ratio between different quantities of gold. Since, on the other
hand, no rise or fall in the value of an ounce of gold can alter its
weight, no alteration can take place in the weight of its aliquot
parts. Thus gold always renders the same service as an invariable
standard of price, no matter how much its value may vary.[41]

An historical process which, as we shall explain later, was determined
by the nature of metallic circulation, led to the result that the
same denomination of weight was retained for a constantly changing
and decreasing weight of precious metals in their function of a
standard of price. Thus the English pound sterling denotes less than
one-third of its original weight; the pound Scot, before the Union,
only 1-36; the French livre, 1-74; the Spanish Maravedi, less than
1-1000; the Portuguese Rei, a still smaller fraction. Such was the
historical origin of the discrepancy between the current money names
of various weights of metals and their weight denominations.[42]
Since the determination of the unit of measure, of its aliquot parts,
and of their names is purely conventional, and since they should
possess within the sphere of circulation the character of universality
and compulsion, they had to be settled _by law_. The purely formal
operation thus devolved upon the government.[43] The metal which
was to serve as the money material, was found already adopted in
the community. In different countries the legal standard of price
is naturally different. In England e. g. the ounce as a weight of
metal is divided into pennyweights, grains and carats Troy, but the
ounce of gold as the unit of money is divided into 3 7-8 sovereigns,
the sovereign into 20 shillings, the shilling into 12 pence, so that
100 pounds of 22 carat gold (1200 ounces) = 4672 sovereigns and 10
shillings. In the world market, however, where national boundaries
disappear, these national characteristics of the measure of money also
disappear and give place to the general measures of weight of metals.

The price of a commodity or the quantity of gold into which it is
ideally transformed, is, therefore, now expressed in the names of
coins of the gold standard. Thus, instead of saying: a quarter of
wheat is worth an ounce of gold, it is said in England to be worth 3£
17s. 10-1/2d. All prices are thus expressed in the same denominations.
The peculiar form which commodities lend to their exchange values is
transformed into a _money-denomination_ by which commodities tell each
other how much they are worth. Money in its turn becomes _money of
account_.[44]

We transform commodities into money of account, in our mind, on paper,
in conversation, whenever it is a question of expressing any kind of
wealth in terms of exchange value.[45] For that transformation we need
the gold substance, but only in imagination. In order to estimate the
value of a thousand bales of cotton in a certain number of ounces of
gold and then to express this number of ounces in the denominations of
the ounce, £. s. d., not a single atom of gold is required. Thus, not
a single ounce of gold was in circulation in Scotland before Robert
Peel’s Bank Act of 1845, although the gold ounce, expressed in its
English standard of account, 3£ 17s. 10-1/2d., served as the legal
standard of price. In a similar manner silver serves as standard of
price in the trade between Siberia and China, although that trade
virtually amounts to barter. It is, therefore, immaterial to money,
as money of account, whether or not its entire unit of measure or the
fractions thereof are really coined. In England, at the time of William
the Conqueror, 1£, then a pound of pure silver, and the shilling, 1-20
of a pound, existed only as money of account, while the penny, 1-240
of a pound of silver, was the largest silver coin in existence. On
the other hand, there are no shillings and pence in England to-day,
although they are legal denominations for certain parts of an ounce of
gold. Money as money of account may exist exclusively in idea, while
the money in actual existence may be coined according to an entirely
different standard. Thus the money in circulation in many English
colonies of North America consisted until late in the eighteenth
century of Spanish and Portuguese coins, although the money of account
was throughout the same as in England.[46]

Owing to the fact that money, when serving as the standard of price,
appears under the same reckoning names as do the prices of commodities,
and that, therefore, the sum of 3£ 17s. 10-1/2d. may signify, on
the one hand, an ounce weight of gold, and on the other, the value
of a ton of iron, this reckoning name of money has been called its
_mint-price_. Hence, there sprang up the extraordinary notion that
the value of gold is estimated in its own material, and that, in
contradistinction to all other commodities, its price is _fixed_ by
the State. It was erroneously thought that the giving of reckoning
names to definite weights of gold is the same thing as fixing the
value of those weights.[47] In so far as gold serves as one of the
elements in determining price, i. e., where it performs the function
of money of account, it not only has no _fixed_ price, but has _no_
price whatever. In order to have a price, i. e., in order to express
itself in a _specific_ commodity as a _universal_ equivalent that
other commodity would have to play the same exclusive role in the
process of circulation as gold. But two commodities excluding all other
commodities mutually exclude each other. Therefore, wherever gold and
silver have by law been made to perform side by side the function of
money or of a measure of value it has always been tried, but in vain,
to treat them as one and the same material. To assume that there is an
invariable ratio between the quantities of gold and silver in which a
given quantity of labor-time is incorporated, is to assume, in fact,
that gold and silver are of one and the same material, and that a given
mass of the less valuable metal, silver, is a constant fraction of a
given mass of gold. From the reign of Edward III to the time of George
II, the history of money in England consists of one long series of
perturbations caused by the clashing of the legally fixed ratio between
the values of gold and silver, with the fluctuations in their real
values. At one time gold was too high; at another, silver. The metal
that for the time being was estimated below its value was withdrawn
from circulation, melted and exported. The ratio between the two metals
was then again altered by law, but the new nominal ratio soon came into
conflict again with the real one. In our own times, the slight and
transient fall in the value of gold compared with silver, which was a
consequence of the Indo-Chinese demand for silver, produced on a far
more extended scale in France the same phenomena, export of silver,
and its expulsion from circulation by gold. During the years 1855,
1856 and 1857, the excess in France of gold imports over gold exports
amounted to £41,580,000, while the excess of silver exports over silver
imports was £14,704,000. In fact, in those countries in which both
metals are legally measures of value, and therefore both legal tender,
so that every one has the option of paying in either metal, the metal
that rises in value is at a premium, and, like every other commodity,
measures its price in the over-estimated metal which alone serves
in reality as the standard of value. The result of all experience
and history with regard to this question is simply that, where two
commodities perform by law the functions of a measure of value, in
practice one alone maintains that position.[48]


B. THEORIES OF THE UNIT OF MEASURE OF MONEY.

The circumstance that commodities are converted into gold only in ideas
as prices and that gold is therefore turned into money only in idea,
gave rise to the theory of the _ideal unit of measure of money_. Since,
in the determination of prices, gold and silver serve only ideally
as money of account, it was asserted that the names pound, shilling,
pence, thaler, franc, etc., instead of denoting certain weights of
gold and silver or labor incorporated in some way, stood rather for
ideal atoms of value. Thus, if, e. g., the value of an ounce of silver
should rise it would contain more such atoms and would therefore have
to be estimated and coined in a greater number of shillings. This
doctrine, revived again during the last commercial crisis in England
and even voiced in Parliament in two separate reports attached to the
report of the select Committee on the Bank Acts sitting in July, 1858,
dates from the end of the seventeenth century.

At the time of the accession of William III., the English mint-price
of an ounce of silver was 5s. 2d., or 1-62 of an ounce of silver was
equal to a penny; 12 of these pence were called a shilling. According
to that standard, a piece of silver weighing, say, 6 ounces, would be
coined into thirty-one coins, each called a shilling. But the _market
price_ of an ounce of silver rose above its _mint price_, from 5s. 2d.
to 6s. 3d., or, in order to buy an ounce of silver bullion 6s. 3d. had
to be paid. How could the market price of an ounce of silver rise above
its mint price, when the mint price is merely a reckoning name for
aliquot parts of an ounce of silver? The riddle was easily solved. Out
of £5,600,000 of silver money which was in circulation at that time,
four millions were worn out, clipped and debased. A trial disclosed
that £57,000 of silver which were supposed to weigh 220,000 ounces,
weighed only 141,000 ounces. The mint went on coining according to
the same standard, but light-weighted shillings in actual circulation
represented smaller parts of an ounce than their name implied. Hence,
a greater quantity of these light-weighted shillings had to be paid in
the market for an ounce of silver bullion. When a general recoinage
was decided upon in consequence of the derangement that had been
produced, LOWNDES, the Secretary of the Treasury, declared that the
value of an ounce of silver had risen and therefore it must henceforth
be coined into 6s. 3d. instead of into 5s. 2d. as heretofore. His
argument practically amounted to the assertion that the rise in the
value of the ounce caused a fall in the value of its aliquot parts.
His false theory, however, served merely as an embellishment for a
just, practical purpose. The government debts were contracted in light
shillings, were they to be paid in heavy ones? Instead of saying pay
back four ounces of silver, when you had received nominally five ounces
but virtually only four, he said pay back nominally five ounces but
reduce the metallic contents to four ounces and call a shilling what
you had called four-fifths of a shilling heretofore. Thus Lowndes
practically adhered to the metallic weight while theoretically he clung
to the reckoning name. His adversaries who clung only to the name
and therefore declared the 25 to 50 per cent. lighter shilling to be
identical with the full-weight shilling maintained on the contrary that
they adhered to the metallic weight.

JOHN LOCKE, who was an advocate of the new bourgeoisie in all forms,
the manufacturers against the working classes and paupers, the
commercial class against the old fashioned usurers, the financial
aristocracy against the state debtors, and who went so far as to prove
in his own work that the bourgeois reason is the normal human reason,
also took up the challenge against Lowndes. John Locke carried the day
and money borrowed at ten or fourteen shillings to a guinea was repaid
in guineas of twenty shillings.[49] SIR JAMES STEUART sums up the
entire transaction as follows: “ ... the state gained considerably upon
the score of taxes, as well as the creditors upon their capitals and
interest; and the nation, which was the principal loser, was pleased;
because their _standard_ (The standard of their own value) was not
debased.”[50] Steuart thought that the nation would prove more alert
with the further development of commerce. He was mistaken. About 120
years later the same _quid pro quo_ was repeated.

It was just in the order of things that Bishop BERKELEY, the
representative of a mystical idealism in English philosophy, should
have given a theoretical turn to the doctrine of the ideal unit
of measure of money, something which the practical “Secretary to
the Treasury” had failed to do. He asks: “Whether the terms Crown,
Livre, Pound Sterling, etc., are not to be considered as Exponents
or Denominations of such Proportion? [namely proportions of abstract
value as such.] And whether Gold, Silver, and Paper are not Tickets
or Counters for Reckoning, Recording and Transferring thereof? (of
the proportion of value). Whether _Power_ to command the Industry of
others be not real Wealth? And whether Money be not in Truth, Tickets
or Tokens for conveying and recording such Power, and whether it be of
great consequence what Materials the Tickets are made of?”[51] Here
we find a confusion, first of the measure of value and the standard
of price, and secondly of gold and silver as measures on the one hand
and mediums of circulation on the other. Because precious metals can
be replaced by tokens in the process of circulation Berkeley comes to
the conclusion that these tokens represent nothing, i. e., only the
abstract idea of value.

SIR JAMES STEUART had so fully developed the theory of the ideal
unit of measure of money, that his successors―unconscious successors
since they do not know him―have added to it neither a new version
nor even a new example. “Money, which I call of account, is no more
than an arbitrary scale of equal parts, invented for measuring the
respective value of things vendible. Money of account, therefore, is
quite a different thing from money coin, which is price[52] and might
exist, although there was no such thing in the world as any substance
which could become an adequate and proportional equivalent, for every
commodity.... Money of account ... performs the same office with
regard to the value of things, that degrees, minutes, seconds, etc.,
do with regard to angles, or as scales do to geographical maps, or to
plans of any kind. In all these inventions, there is constantly some
denomination taken for the unit. ... The usefulness of all those
inventions being solely confined to the marking of proportion. Just so
the unit in money can have no invariable determinate proportion to any
part of value, that is to say, it cannot be fixed to any particular
quantity of gold, silver, or any other commodity whatsoever. The
unit once fixed, we can, by multiplying it, ascend to the greatest
value.... The value of commodities, therefore, depending upon a
general combination of circumstances relative to themselves and to the
fancies of men, their value ought to be considered as changing only
with respect to one another; consequently, anything which troubles or
perplexes the ascertaining those changes of proportion by the means
of a general, determinate and invariable scale, must be hurtful to
trade.... Money ... is an ideal scale of equal parts. If it be demanded
what ought to be the standard value of one part? I answer by putting
another question: What is the standard length of a degree, a minute, a
second? It has none ... but so soon as one part becomes determined by
the nature of a scale, all the rest must follow in proportion. Of this
kind of money ... we have two examples. The bank of Amsterdam presents
us with the one, the coast of Angola with the other.”[53]

Steuart speaks here simply of the part money plays in circulation
as the _standard of price_ and _money of account_. If different
commodities are marked in the price-list at 15s., 20s., 36s.,
respectively, then I care, in fact, neither for the silver substance,
nor for the name of the shilling when comparing the magnitudes of their
values. The ratios between the numbers 15, 20, 36, tell everything, and
the number 1 has become the only unit of measure. Only the abstract
proportion of numbers can at all serve as a purely abstract expression
of proportion. In order to be consistent, Steuart should have dropped
not only gold and silver, but their legal baptismal names as well.
Since he does not understand the nature of the transformation of the
measure of value into a standard of price, he naturally believes that
the definite quantity of gold which serves as a unit of measure relates
as a measure not to other quantities of gold, but to values as such.
Since commodities appear as quantities of the same denomination through
the conversion of their exchange values into prices, he denies that
property of the measure which reduces them to one denomination; and
since in this comparison of different quantities of gold the quantity
of gold which serves as a unit of measure is conventional, he does not
see the necessity of fixing it at all. Instead of calling 1-360 part
of a circle degree, he might give that name to 1-180th part; the right
angle would then be measured by 45 degrees instead of 90, and acute and
obtuse angles would be measured accordingly. Nevertheless, the measure
of the angle would remain, then, as before, first a qualitatively
definite mathematical figure, the circle, and second a quantitatively
definite part of the circle. As for Steuart’s economic illustrations,
he refutes his own argument with one and does not prove anything with
the other. The bank money of Amsterdam was, in fact, merely the
reckoning name for Spanish doubloons, which retained their full weight
by lying idly in the bank vaults, while the circulating coins became
thinner from hard rubbing against the outer world. And as for the
African idealists we have to abandon them to their fate until critical
travelers will tell us more about them.[54] The French assignat
could be called an almost ideal money in Steuart’s sense: “_National
property. Assignation of 100 francs._” To be sure, the use-value which
the assignation was supposed to represent, namely, the confiscated
land, was indicated here, but the quantitative definition of the unit
of measure was forgotten and “the franc” became a meaningless word.
How much or how little land the assignation franc represented depended
on the results of the public auctions. In practice, however, the
assignation franc circulated as a token of value of silver money and
its depreciation was, therefore, measured by this silver standard.

The period of the suspension of cash payments by the Bank of England
was hardly more fruitful of war-bulletins than of money theories. The
depreciation of bank notes and the rise of the market price of gold
above its mint price called forth again the doctrine of the ideal
unit of money on the part of some of the advocates of the Bank. Lord
Castlereagh found the classical confused expression for the confused
idea by speaking of the unit of measure of money as “a sense of value
in reference to currency as compared with commodities.” When a few
years after the peace of Paris conditions permitted the resumption of
cash payments, the same question which had been stirred up by Lowndes
under William III., came up, hardly changed in form. An enormous
government debt, as well as a mass of private debts, accumulated in
twenty years, fixed obligations, etc., had been contracted on the
basis of depreciated bank notes. Were they to be paid back in bank
notes of which £4672, 10s. nominal, actually represented 100 pounds
of 22 carat gold? THOMAS ATTWOOD, a banker of Birmingham, came forth
as _Lowndes redivivus_. The creditors were to receive nominally as
many shillings as had been nominally borrowed, but if about 1-78 of
an ounce of gold constituted a shilling according to the old standard
of coinage, then say 1-90 of an ounce should now be christened a
shilling. Attwood’s adherents are known as the Birmingham school of
“little shillingmen.” The controversy over the ideal money unit, which
had started in 1819, still went on in 1845 between Sir Robert Peel and
Attwood, whose own wisdom, as far as the function of money as a measure
is concerned, is exhaustively summed up in the following passage, in
which, referring to Sir Robert Peel’s controversy with the Birmingham
Chamber of Commerce, he says: “The substance of your queries is ...
in what sense is the word pound to be used?... To what will the sum
one pound be equivalent?... Before I venture a reply I must enquire
what constitutes a standard of value?... Is £3 17s. 10-1/2d. an _ounce_
of gold, or is it only of the _value_ of an ounce of gold? If £3 17s.
10-1/2d. be an ounce of gold, why not call things by their proper
names, and, dropping the terms pounds, shillings and pence, say ounces,
pennyweights and grains?... If we adopt the terms ounces, pennyweights
and grains of gold, as our monetary system, we should pursue a direct
system of barter.... But if gold be estimated as of the _value_ of
£3 17s. 10-1/2d. per ounce ... how is this ... that much difficulty
has been experienced at different periods to check gold from rising
to £5 4s. per ounce, and we now notice that gold is quoted at £3 17s.
9d. per ounce?... The expression _pound_ has reference to value, but
not a fixed standard value.... The term pound is the _ideal unit_....
Labour is the parent of cost and gives the relative value to gold or
iron. _Whatever denomination of words are used to express the daily or
weekly labour of a man_, such words express the cost of the commodity
produced.”[55]

In the last words the hazy conception of the ideal money measure melts
away and its real meaning breaks through. The reckoning names of gold,
pound sterling, shilling, etc., should be names for definite quantities
of labor-time. Since labor-time constitutes the substance and the
intrinsic measure of values, these names would then actually represent
definite proportions of value. In other words, labor-time is maintained
to be the true unit of measure of money. With this we leave the
Birmingham school, but should add in passing that the doctrine of the
ideal measure of money acquired new importance in the controversy over
the question of the convertibility or non-convertibility of bank notes.
If paper receives its name from gold or silver, then the convertibility
of a note or its exchangeability for gold or silver remains an economic
law, no matter what the civil law may be. Thus a Prussian paper thaler,
although legally inconvertible, would immediately depreciate if it were
worth less than a silver thaler in ordinary trade, i. e., if it were
not practically convertible. The consistent advocates of inconvertible
paper money in England, therefore, sought refuge in the ideal measure
of money. If the reckoning names of money, £, s., etc., are names of
certain quantities of atoms of value, of which a commodity absorbs or
loses now more, now less in exchange for other commodities, then an
English £5 note, e. g., is just as independent of its relation to gold
as of that to iron and cotton. Since its title would no more imply
its theoretical equality with a certain quantity of gold or any other
commodity, the demand for its convertibility, i. e., for its practical
equality with a definite quantity of a specified thing would be
excluded by the very conception of the note.

The theory of labor-time as the direct measure of money was first
systematically developed by JOHN GRAY.[56] He makes a National Central
Bank ascertain through its branches the labor-time consumed in the
production of various commodities. The producer receives an official
certificate of value in exchange for his commodity. i. e., he gets a
receipt for as much labor-time as his commodity contains,[57] and these
bank notes of one week’s labor, one day’s labor, one hour’s labor,
etc., serve at the same time as a check for an equivalent in all other
commodities stored in the bank warehouses.[58] This is the fundamental
principle carefully worked out in detail and based throughout on
existing English institutions. Under this system, says Gray, “to
sell for money may be rendered, at all times, precisely as easy as it
now is to buy with money; ... production would become the uniform and
never-failing cause of demand.”[59] The precious metals would lose
their “privilege” as against other commodities and “take their proper
place in the market beside butter and eggs, and cloth and calico, and
then the value of the precious metals will concern us just as little
... as the value of the diamond.”[60] “Shall we retain our fictitious
standard of value, gold, and thus keep the productive resources of the
country in bondage? or, shall we resort to the natural standard of
value, labour, and thereby set our productive resources free?”[61]

Labor-time being the intrinsic measure of value, why should there be
another external measure side by side with it? Why does exchange value
develop into price? Why do all commodities estimate their value in one
exclusive commodity, which is thus converted into a special embodiment
of exchange value into money? That was the problem which Gray had
to solve. Instead of solving it, he imagined that commodities could
be related directly to each other as products of social labor. But
they can relate to each other only in their capacity of commodities.
Commodities are the direct products of isolated independent private
labors, which have to be realized as universal social labor through
their alienation in the process of private exchange, that is to say,
labor based on the production of commodities becomes social labor only
through universal alienation of individual labors. But by assuming
that the labor-time contained in commodities is _directly social_
labor-time, Gray assumes it to be common labor-time or labor-time of
directly associated individuals. Under such conditions a specific
commodity like gold or silver could not confront other commodities as
the incarnation of universal labor, and exchange value would not be
turned into price; but, on the other hand, use-value would not become
exchange value, products would not become commodities and thus the
very foundation of the capitalistic system of production would be
removed. But that is not what Gray has in mind. _Products are to be
produced as commodities, but are not to be exchanged as commodities._
He entrusts a national bank with the carrying out of this pious
wish. On the one hand, society, through the bank, makes individuals
independent of the conditions of private exchange, and on the other,
it allows them to go on producing on the basis of private exchange.
The logic of things, however, compels Gray to do away with one
condition of capitalistic production after another, although he wishes
to “reform” only the money system which results from the exchange of
commodities. Thus he transforms capital into national capital,[62]
land into national property,[63] and if his bank is to be watched
closely, it will be found that it not only receives commodities with
one hand and issues certificates for work delivered with the other, but
that it regulates production as well. In his last work, “Lectures on
Money,” in which Gray is anxious to demonstrate that his labor-money
is a purely bourgeois reform, he gets tangled up in even more glaring
contradictions.

Every commodity is directly money. That was Gray’s theory deducted
from his incomplete and, therefore, false analysis of commodities.
The “organic” structure of “labor money,” the “national bank” and the
“ware-docks” are mere fantastic visions in which the dogma is made
by a legerdemain to appear to us as a universal law. The dogma that
a commodity is money or that the isolated labor of the individual
contained in it is direct social labor, will of course not become
true through the mere fact that a bank believes in it and carries on
operations accordingly. It is more likely that bankruptcy would play
in that case the part of the practical critic. What remains concealed
in Gray’s writings and hidden from himself as well, namely, that
labor-money is a well-sounding economic phrase for the pious wish to
get rid of money, and with money, of exchange value, and with exchange
value, of commodities, and with commodities, of the capitalistic mode
of production, was clearly expressed by some English socialists of whom
a few preceded and others followed Gray.[64]

But it remained for Mr. Proudhon and his school to preach in
all earnest the degradation of _money_ and the exaltation of the
_commodity_ as the gist of socialism and thus to reduce socialism to an
elementary misconception of the necessary connection between commodity
and money.[65]


2. THE MEDIUM OF CIRCULATION.

After the commodity has received in the process of price determination
the form in which it becomes capable of circulation, and after gold has
acquired the character of money in the same process, circulation will
both present and solve the contradictions which are inherent in the
process of exchange of commodities. The actual exchange of commodities,
i. e., the social interchange of matter consists of a change of form in
which is unfolded the double character of the commodity as use-value
and exchange value, and at the same time its own change of form is
crystallized in distinct forms of money. To describe this change of
form is to describe circulation. As we have seen, given a world of
commodities and with it a system of division of labor, commodity is but
a developed form of exchange value; in the same manner, circulation
implies a steady stream of exchange transactions which are being
continually renewed on all sides. The second assumption we make is that
commodities enter the process of exchange with a _definite price_ or
that they appear to each other in that process in a double capacity,
really as use-values, ideally―in price―as exchange values.

The liveliest streets of London are crowded with stores whose show
windows are filled with the riches of the world, Indian shawls,
American revolvers, Chinese porcelain, Parisian corsets, Russian furs
and tropical spices, but all of these things of joy bear fatal white
labels marked with Arabian figures with the laconic characters £, s.,
d. Such is the picture of the commodity appearing in circulation.


a. THE METAMORPHOSIS OF COMMODITIES.

On close examination the process of circulation is seen to consist of
two distinct cycles. If we denote commodity by the letter C and money
by the letter M we can express these two forms as follows:

  C―M―C
  M―C―M.

In this chapter we are interested exclusively in the first form, i. e.,
in the form which serves as the direct expression of the circulation of
commodities.

The process C―M―C consists of the movement C―M, the exchange of the
commodity for money, or _selling_; the opposite movement M―C, exchange
of money for a commodity, or _buying_; and of the unity of the two
movements C―M―C, exchange of the commodity for money in order to
exchange the money for a commodity, or _selling_ in order to _buy_.
But the result which marks the end of the process is C―C, exchange of
commodity for commodity, real interchange of matter.

If we look at it from the extreme end of the first commodity, C―M―C
represents its transformation into gold and its retransformation from
gold into a commodity; a movement in which the commodity exists first
as a particular use-value, then divests itself of that character,
acquires the character of exchange value or universal equivalent,
in which capacity it has nothing in common with its natural form,
then throws off the last form as well to remain finally an actual
use-value for the satisfaction of particular wants. In this last form
it falls out of the sphere of circulation into that of consumption.
The entire process of circulation C―M―C thus includes the combined
series of metamorphoses, which every single commodity undergoes
in order to become a direct use-value to its possessor. The first
metamorphosis is accomplished in the first phase of the circulation
process, C―M; the second in the last phase, M―C; and the entire
process constitutes the _curriculum vitae_ of the commodity. But
the process C―M―C represents the combined metamorphosis of a single
commodity and constitutes at the same time the sum of certain one-sided
metamorphoses of other commodities, since every metamorphosis of the
first commodity constitutes its transformation into another commodity
and therefore the transformation of the other commodity into it; hence
it constitutes a twofold transformation which takes place at the same
stage of circulation. We must then consider separately each of the two
processes of exchange into which circulation C―M―C breaks up.

C―M or _sale_: commodity C enters the process of circulation not only
as a particular use-value, e. g., a ton of iron, but as a use-value
of a certain price, say, £3 17s. 10-1/2d., or an ounce of gold.
While this price is on the one hand the exponent of the quantity of
labor-time contained in a ton of iron, i. e., of the magnitude of its
value, it at the same time expresses the pious wish of the iron to
become gold, i. e., to give to the labor-time it contains the aspect
of universal social labor-time. Unless this trans-substantiation takes
place, the ton of iron not only ceases to be a commodity, but even a
product, for it is a commodity only because it is a non-use-value to
its owner; that is to say, his labor counts as actual labor only in so
far as it is labor useful to others, and the thing is useful to him
only as abstract universal labor. It is, therefore, the business of
iron, or of its owner, to find that point in the world of commodities
where iron attracts gold. But this difficulty, the _salto mortale_
of the commodity, is overcome when the sale actually takes place, as
is assumed here on the analysis of simple circulation. When the ton
of iron is realized as a use-value through its alienation, i. e., by
passing from the hands in which it is a non-use-value to hands in which
it is a use-value, it at the same time realizes its price and from mere
imaginary gold it becomes real gold. In place of the name one ounce of
gold or £3 17s. 10-1/2d., an ounce of real gold has appeared, but the
ton of iron has cleared that place. Not only does the commodity―which
in its price had been ideally converted into gold―actually turn into
gold through the sale C―M, but gold, which as a measure of value had
been only ideal money and in fact figured merely as a money name of
commodities―is now turned into actual money[66] by the same process.
Just as gold became the ideal universal equivalent, because all
commodities measured their values by it, so does it now become the
absolutely alienable commodity, real money, because it is the product
of the universal alienation of commodities for it―and the sale C―M is
the process by means of which that universal alienation takes place.
But gold becomes real money only through sale, because the exchange
values of commodities were already ideal gold in their prices.

In the sale C―M, as well as in the purchase M―C, two commodities,
entities of exchange value and use-value, confront each other, but the
exchange value of the commodity exists only ideally as price; while
as regards gold, although it is really a use-value, its use-value
is confined only to its being the bearer of exchange value and is,
therefore, merely a formal use-value, having no relation to a real
individual want. The antithesis of use-value and exchange value is thus
distributed at the two extreme poles of C―M, so that the commodity
confronts gold as a use-value which has yet to realize in gold its
exchange value or its price, while gold confronts the commodity as an
exchange value, whose formal use-value is yet to be realized in the
commodity. Only through this duplication of the commodity as commodity
and gold, and, further, through the twofold and polar relation by
virtue of which each extreme represents but ideally what its opposite
is in reality and is in reality what its opposite is only ideally―in
short, only through the appearance of commodities as two-sided polar
opposites are the contradictions solved that are inherent in the
process of exchange.

So far we have considered C―M as sale, as the conversion of commodity
into money. But if we look at it from the other end, the same process
will assume the form M―C, or purchase, i. e., the conversion of
money into commodity. Sale is necessarily its opposite at the same
time; it is the former if we look at the process from one end, and
the latter if we regard the process from the other end. In practice
this process differs only in that the initiative in C―M originates
at the commodity end or with the seller, while in M―C it comes from
the money end or the buyer. In describing the first metamorphosis
of the commodity, its conversion into money as a result of the
completion of the first phase of circulation C―M, we assume at the
same time that another commodity has been converted into money and
is now in its second phase of circulation, M―C. Thus we get into a
vicious circle of assumptions. Circulation itself constitutes such a
vicious circle. If we did not consider M in M―C as the result of a
metamorphosis of another commodity, we would thereby take exchange out
of the process of circulation. But outside of the latter the form C―M
disappears and only two different Cs confront each other, say iron
and gold, the exchange of which does not constitute a part of the
process of circulation, being direct barter. Gold, at the source of
its production, is a commodity like any other commodity. Its relative
value and that of iron or of any other commodity is expressed here in
quantities in which they are mutually exchanged. But in the process
of circulation this operation is implied, the value of gold being
already given in the prices of commodities. Nothing can, therefore,
be more erroneous than the idea that gold and commodity enter into
the relation of direct barter _within the process of circulation_ and
that their relative values are ascertained through their exchange as
simple commodities. The illusion that gold is bartered as a simple
commodity for other commodities in the process of circulation is due to
the fact that prices represent equations in which certain quantities
of commodities are made equal to certain quantities of gold, i. e.,
that the commodities are made to relate to gold in its capacity
of money, as a universal equivalent, and, therefore, appear to be
directly exchangeable for it. In so far as the price of a commodity
is _realized_ in gold, it is exchanged for gold as a commodity, as a
particular embodiment of labor-time; but in so far as it is the _price_
that is realized in gold, the commodity is exchanged for gold in its
capacity of money and not of a commodity, i. e., it is exchanged for
gold as a universal embodiment of labor-time. But in either case the
quantity of gold for which the commodity is exchanged in the process
of circulation is not determined by exchange, but the exchange is
determined by the price of the commodity, i. e., by its exchange value
estimated in gold.[67]

Within the process of circulation gold appears in everybody’s hands as
the result of sale C―M. But since C―M, sale, is at the same time M―C,
purchase, it is apparent that while C, the commodity from which the
process starts, is passing through its first metamorphosis, another
commodity, which confronts it as the opposite pole M, is completing
its second metamorphosis and is, therefore, passing through the second
phase of circulation, while the first commodity is still in the first
phase of its course.

As a result of the first phase of circulation, the sale, we get
money which is the starting point of the second phase. In place of
the commodity in its first form appears its golden equivalent. This
result may now form a resting point, since the commodity in this
second form possesses a lasting existence of its own. The commodity,
a non-use-value in the hands of its possessor, is now on hand in an
always useful, since always exchangeable, form, and it depends upon
circumstances when and at what point of the surface of the commodity
world it will again enter circulation. Its formation into a gold
chrysalis constitutes an independent period in its life which may last
a greater or less length of time. While in the case of barter the
exchange of one particular use-value is directly bound up with the
exchange of another particular use-value, the universal character of
labor which creates exchange value is manifested in the separation and
lack of coincidence of acts of purchase and sale.

_M―C, purchase_, is the inverted movement of C―M and at the same time
the second or final metamorphosis of the commodity. As gold, i. e., in
the form of the universal equivalent, the commodity can be directly
represented in the use-values of all other commodities; the latter
aspire to gold as their hereafter, but at the same time indicate in
their prices the key in which it must sound in order that their bodies,
their use-values, may take the place of money, while their souls,
their exchange-values, may enter gold. The universal product of the
alienation of commodities is the absolutely alienable commodity. There
is no qualitative and only a quantitative limit to the transformation
of gold into commodity, namely, the limit of its own quantity or
magnitude of its value. “Everything is to be had for cash.” While in
the movement C―M, the commodity, through its alienation as a use-value,
realizes its own price and the use-value of somebody else’s money; it
realizes in the movement M―C, through its alienation as an exchange
value, its own use-value and the price of the other commodity. While
through the realization of its price the commodity transforms gold
into actual money, it turns gold into its merely fleeting money-form,
through its own retransformation. Since the circulation of commodities
implies an extensive division of labor and consequently a diversity of
wants on the part of individuals, a diversity which bears an inverse
ratio to the specialization of their own products, the purchase M―C may
appear as an equation with one commodity equivalent or split up into a
series of commodity-equivalents limited by the variety of the demands
of the purchaser and by the amount of money in his possession. Just as
a sale is a purchase, so is a purchase a sale. M―C is at the same time
C―M, but the initiative belongs in this case to gold or the purchaser.

Coming back now to C―M―C, or to circulation as a whole, it is apparent
that it contains the combined series of metamorphoses through which
a commodity passes. But at the same time as one commodity enters the
first phase of its circulation and completes its first metamorphosis,
another commodity enters the second phase of circulation, completes its
second metamorphosis and falls out of circulation; the first commodity
enters at the same time the second phase of circulation completes
its second metamorphosis and falls out of circulation, while a third
commodity enters circulation, passes through the first phase of its
course completing the first metamorphosis.

Thus, the combined circulation C―M―C, as a complete metamorphosis of a
commodity always constitutes at the same time the end of the complete
metamorphosis of another commodity and the beginning of a complete
metamorphosis of a third commodity, i. e., a series without beginning
or end. To illustrate this let us call C in either extreme C’ and C”
respectively, in order to distinguish the commodities, the series
reading thus: C’―M―C”. The first member, C’―M, presupposes in fact
that M is the result of another transaction C―M, and is thus itself
merely the last member of a series C―M―C’, while the second part M―C”
is merely a result of C”―M, or appears as the first part of C”―M―C’”,
and so on. Furthermore, although M is the result of only _one_ sale,
it appears that the last part M―C, may be represented as M―C’ + M―C”
+ M―C’”, etc., i. e., it may be split up into a number of purchases,
and consequently a number of sales, or into a number of first members
of new complete metamorphoses of commodities. Since the complete
metamorphosis of a single commodity thus appears as a link not only
of one endless chain of metamorphoses, but of many such chains, the
process of circulation in the world of commodities presents a hopeless
confusion of intertwined movements constantly ending and starting anew
at a countless number of points. But every single sale or purchase
stands as an independent isolated act, whose supplemental act may be
separated from it in time and place, and therefore does not need to
follow it directly as its continuation. Every separate process of
circulation, C―M or M―C, as a transformation of one commodity into
use-value and of another into money, i. e., as the first and second
phases of circulation respectively forms an independent halting
point from either direction; but, on the other hand, all commodities
commence their second metamorphosis in the common form of the universal
equivalent, gold, and stop at the starting point of the second phase of
circulation; for that, reason any M―C dovetails in actual circulation
with any C―M; the second chapter in the life-course of one commodity
with the first chapter of that of another commodity. A, e. g., sells
£2 worth of iron. He thus completes the transaction C―M or the first
metamorphosis of commodity iron, but postpones his purchase until some
other time. At the same time B, who sold 2 quarters of wheat for £6 a
fortnight since, buys with the same £6 a coat and trousers of Moses &
Son, thus completing M―C or the second metamorphosis of the commodity,
wheat.

The two transactions M―C and C―M appear here merely as links of one
chain, because a commodity expressed in gold looks like any other
commodity, and one cannot tell by the looks of the gold whether it is
transformed iron or transformed wheat. C―M―C appears, therefore, in the
actual process of circulation as a jumble of countless accidentally
coinciding or successively following members of different complete
metamorphoses. The actual process of circulation thus appears not as
a complete metamorphosis of a commodity, not as its movement through
opposite phases, but as a mere agglomeration of many accidentally
coinciding or successive purchases and sales. The process thus loses
all clearness of outline which is so much more the case since every
single act of circulation, e. g., sale, is at the same time its
opposite, purchase, and vice versa. On the other hand, the process
of circulation is nothing but the movement of metamorphoses in the
world of commodities and, therefore, must reflect them also in its
movement as a whole. How that reflection takes place we shall consider
in the following chapter. It may be added here that in C―M―C the two
extreme Cs constitute two forms of commodities which do not bear the
same relation to M. The first C relates to money as a commodity of a
special class to a universal commodity, while money relates to the
second C as a universal commodity to an individual commodity. C―M―C
can, therefore, be reduced by abstract logic to the final form S―U―I in
which S, standing for species, forms the first extreme; U, signifying
universality, forms the connecting medium, and I, individuality,
constitutes the last extreme.

The owners of commodities entered the sphere of circulation simply
as guardians of commodities. Within that sphere they confront each
other in the opposite roles of buyer and seller, one as a personified
sugar-loaf, the other as personified gold. As soon as the sugar-loaf
is turned into gold, the seller becomes a buyer. These definite social
functions are no outgrowths of human nature, but are the products
of relations of exchange between men who produce their goods in the
form of commodities. They are so far from being purely individual
relations between buyer and seller that both enter this relation
only to the extent that their individual labor is disregarded and
is turned into money as labor of _no_ individual. Just as it is,
therefore, childish to consider these economic bourgeois roles of
buyer and seller as eternal social forms of human individuality, so it
is on the other hand, preposterous to lament in them the extinction
of individuality.[68] They are the necessary manifestations of
individuality at a certain stage of the social system of production.
Moreover, in the opposition of buyer and seller the antagonistic nature
of capitalistic production is expressed as yet so superficially
and as mere matter of form, that this opposition belongs also to
precapitalistic forms of society, since it merely requires that
the mutual relations of individuals should be those of owners of
commodities.

Now, if we consider the result of C―M―C, it comes down to mere
interchange of matter, C―C. A commodity has been exchanged for a
commodity, a use-value for a use-value, and the transformation of the
commodity into money, or the commodity in its form of money, serves
merely as a means of effecting this interchange of matter. Money thus
appears merely as a _medium of exchange_ of commodities; not as a
medium of exchange in general, but as a means of exchange in the sphere
of circulation, i. e., a _medium of circulation_.[69]

We have seen that the process of circulation of commodities comes to
a completion in C―C, appearing as mere barter carried on by means of
money; further, that C―M―C represents in general not only two isolated
processes, but their dynamic union as well; but to draw from that the
conclusion that purchase and sale form an indivisible unit, is a mode
of thinking the criticism of which belongs to the domain of logic,
and not to that of economics. The separation of purchase and sale in
the process of exchange destroys all local, primitive, patriarchal
and naively genial barriers to interchange of matter in society. It
is, moreover, the general form of the separation of the points of
coincidence and opposition in this interchange, carrying within it the
possibility of commercial crises, because the antagonism of commodity
and money is the abstract and general form of all antagonisms with
which the capitalistic system of labor is pregnant. Hence, circulation
of money is possible without crises, but crises can not occur without
money circulation. In other words, where labor based on the system of
private exchange has not reached the stage marked by the existence
of money, it is less capable of producing those phenomena which
presuppose the full development of the capitalistic mode of production.
Bearing this in mind we can appreciate the depth of the criticism
which proposes to do away with the “shortcomings” of capitalistic
production by abolishing the “privilege” enjoyed by the precious metals
and introducing a so-called “rational monetary system.” As a sample
of economic defence of an opposite character may serve the following
piece of reasoning which has been proclaimed exceedingly keen. JAMES
MILL, the father of the well-known English economist, John Stuart Mill,
says: “Whatever ... be the amount of the annual produce, it never can
exceed the amount of the annual demand.... Of two men who perform an
exchange, the one does not come with only a supply, the other with only
a demand; each of them comes with both a demand and a supply.... The
supply which he brings is the instrument of his demand; and his demand
and supply are of course exactly equal to one another. It is therefore,
impossible that there should ever be in any country a commodity or
commodities in quantity greater than the demand, without there being,
to an equal amount, some other commodity or commodities in quantity
less than the demand.”[70]

Mill restores the balance by turning the process of circulation into
direct barter and then smuggling into direct barter the character of
buyer and seller borrowed by him from the process of circulation. To
put it in his own confused language, during certain periods when all
commodities are unsaleable there are really more buyers than sellers
of one commodity, _money_, and more sellers than buyers of _all other
money_, commodities; such was, e. g., the case at certain moments
during the commercial crisis of 1857-58 in London and Hamburg. The
metaphysical balance of purchases and sales amounts to this, that
every purchase is a sale and every sale is a purchase, which is a poor
consolation to the guardian of the commodity who can not bring about
its sale and therefore can not buy.[71]

The separation of sale and purchase makes possible a large number of
fictitious transactions side by side with genuine trade before the
final exchange between the producer and the consumer of commodities
takes place. It enables a host of parasites to penetrate the process of
production and exploit the separation. But this, again, means that with
money as the universal form of labor under the capitalist system, there
is _the possibility_ of the development of its contradictions.


b. THE CIRCULATION OF MONEY.

Actual circulation appears at first sight as a mass of purchases and
sales accidentally taking place side by side. In buying as in selling,
commodities and money always stand in the same mutual relation: the
seller, on the side of the commodity; the buyer, on that of money.
Money as a medium of circulation always appears therefore as _a means
of purchase_; and in that way the difference in its destinations in
the opposite phases of the metamorphosis of the commodity becomes
indistinguishable.

Money passes into the hands of the seller in the same transaction in
which the commodity passes into the hands of the buyer. Commodities
and money thus flow in opposite directions and this change of place
in which the commodity passes over to one side and money to the other
side, occurs simultaneously at an indefinitely large number of points
on the entire surface of bourgeois society. But the first step which
the commodity makes in the sphere of circulation is also its last
step.[72] Whether it leaves its place on account of its attraction
for gold (C―M), or on account of its attraction by gold (M―C), with
one move, with one change of place it falls out of the sphere of
circulation into that of consumption. Circulation is a continuous flow
of commodities, but different commodities all the time, since each
commodity makes but one move. Every commodity enters upon the second
phase of its circulation not as the same commodity, but as another
commodity, gold. Hence the movement of a metamorphosed commodity is the
movement of gold. The same piece of gold or the identical gold coin
which changed places with one commodity in the act C―M, reappears from
the opposite end as the starting point for M―C and thus changes places
for the second time with another commodity. Just as it passed from the
hands of buyer B into those of seller A, it now leaves A’s hands who
has become a buyer and passes into C’s hands. The path described by a
commodity in its transformation into money and its retransformation
from money, i. e., the movement of a complete metamorphosis of a
commodity assumes the aspect of an apparent movement of the same coin
that changes places twice with two different commodities. No matter in
how scattered and haphazard fashion purchases and sales may take place
near each other, there is always in actual circulation a seller for
each buyer and the money which moves into the place of the commodity
sold, before it came into the hands of the buyer, must have already
changed places with another commodity. Sooner or later it again leaves
the hands of the seller, who turns buyer, to pass into the hands of
a new seller and this frequently repeated change of place forms the
interlacing of the metamorphoses of commodities. The same coins are
moving, some more, others less frequently, from one place in the
sphere of circulation to another, always in the direction opposite to
that of the commodities moved, thus describing a longer or shorter
circulation-curve. The different movements of the same coin can follow
each other in point of time only, and on the contrary, the many
scattered purchases and sales which appear as so many separate changes
of place between commodities and money, occur simultaneously separated
only in point of space.

The circulation of commodities C―M―C in its elementary form is
completely described in the transition of money from the hands of the
buyer into those of the seller and from the hands of the latter, as
soon as he has turned buyer, into those of a new seller. This completes
the metamorphosis of the commodity and with it the movement of money
in so far as that movement is the expression of the metamorphosis.
But since new use-values are continually produced in the shape of new
commodities and must thus be constantly thrown anew into circulation,
the process C―M―C is repeatedly renewed by the same commodity owners.
The money which they have spent as buyers gets back into their hands
as soon as they appear again as vendors of commodities. The constant
renewal of the circulation of commodities finds its reflection in the
continual circulation over the entire surface of bourgeois society of
a quantity of money which, passing from hand to hand, describes at the
same time a number of different small cycles starting from numberless
points and returning each to its own starting point, to repeat the same
movement over again.

The change of form on the part of commodities appears as a mere change
of place on the part of money and the continuity of the circulation
movement is all on the side of money, since the commodity always makes
but one step in the direction opposite to money, while the latter makes
in each case the second step for the commodity; the entire movement
seems, therefore, to proceed from money, although in the case of a sale
the commodity draws money out of its place, i. e., it circulates money
as much as it is circulated by the latter in the case of a purchase.
Furthermore, owing to the fact that money always confronts commodities
in its capacity of a means of purchase, and in that capacity moves
commodities only by realizing their price, the entire movement of
circulation appears as a change of place between money and commodities,
the former realizing the prices of the latter either by separate acts
of circulation taking place simultaneously and side by side, or by
successive transactions when the same coin realizes the prices of
different commodities one after another. If we consider, e. g., the
series C―M―C’―M―C”―M―C’”, etc., without regard to the qualitative
aspects which become indistinguishable in the process of circulation,
we witness the same monotonous operation. After realizing the price
of C, M successively realizes those of C’, C”, etc., and commodities
C’, C”, C’”, etc., constantly take the place which money has left.
Money thus appears to keep commodities in circulation by realizing
their prices. In discharging this function of realization of prices,
money is itself constantly circulating, now changing its place, now
describing a curve of circulation, now completing a small circuit where
the starting and returning points coincide. As a medium of circulation,
money is subject to a circulation of its own. The change of form of
the circulating commodities appears, therefore, as a movement of money
which furthers the exchange of commodities, motionless in themselves.
The movement of the circulation process of commodities thus takes on
the form of the movement of gold as a medium of circulation, i. e. of
the _circulation of money_.

Since owners of commodities give the products of their individual labor
the appearance of products of social labor by turning one object,
viz. gold, into the direct expression of universal labor-time and
therefore into money, their own movement by which all of them effect
the interchange of the material products of their labor now appears to
them as the direct movement of that one object, as the circulation of
gold. The social movement itself appears to the owners of commodities
partly as an outward necessity and partly as a mere formal intermediary
process which enables every individual who puts any use-value into
circulation to get other use-values out of it of an equal value. The
use-value of commodities comes into play with their disappearance from
the sphere or circulation, while the use-value of money as a medium of
circulation is in its very circulation. The movement of a commodity
in the sphere of circulation is of a transitory kind, while ceaseless
motion in that sphere constitutes the function of money. Through this
special function which it performs within the sphere of circulation
money acquires a new capacity, which we have to consider now more
closely.

In the first place, we see that the circulation of money forms an
endlessly split up movement, since it reflects the splitting up of the
process of circulation into an infinitely large number of purchases
and sales and the independent separation of the mutually supplementary
phases of metamorphoses of commodities. In the small cycles described
by money, where the starting and returning points coincide, we do find
a return movement, i. e., an actual circular movement, but the fact
that there are as many starting points as there are commodities and
that the number of these cycles is infinitely large puts them beyond
all control, measurement, or computation. The time between the start
and the return of a commodity is just as indefinite. Moreover, it is
immaterial whether or not such a circuit has been actually described in
a given case. No economic fact is more generally known than that one
can spend money with one hand without getting it back with the other.
Money proceeds from an endless number of points and returns to as many
different points, but the coincidence of the starting and returning
points is a matter of chance, because in the movement C―M―C the turning
of the buyer again into a seller is not a necessary condition. Still
less does the circulation of money resemble a movement radiating
from a common centre to all points of the periphery and back from
the peripheral points to the centre. The so-called cycle described
by money, as it is pictured, amounts simply to this, that at all
points we observe its appearance and disappearance, its never ceasing
transition from place to place. In a higher, more involved form of
money circulation, e. g. bank-note circulation, we shall find that
the conditions of emission of money include those for its return. But
in the simple money circulation it is a matter of chance for the same
buyer to become again a seller. Where we really see constant cycle
motions taking place, they are only reflections of deeper forces in
the sphere of production, e. g., the manufacturer draws money from his
banker on Friday, pays it out to his working-men on Saturday, the men
immediately pay out the greater part of it to the storekeepers, etc.,
and the latter turn it in on Monday back to the banker.

We have seen that money realizes simultaneously a certain number of
prices in the variegated purchases and sales which take place side by
side at the same time. On the other hand, in so far as its movement
represents the movement of the combined metamorphoses of commodities
and the interlacing of these metamorphoses, the same coin realizes
the prices of different commodities and thus makes a larger or
smaller number of moves. If we take the circulation of a country for
a given length of time, say a day, the quantity of gold required for
the realization of prices and, consequently, for the circulation of
commodities, will be determined by two conditions: first, the sum
total of the prices; second, the average number of moves made by one
coin. This number of moves or the rapidity of circulation of money is
in its turn determined by or expresses the average rapidity with which
commodities go through the different phases of their metamorphoses, the
rapidity with which these metamorphoses succeed one another, and with
which those commodities that have gone through their metamorphoses are
replaced by new commodities in the process of circulation. We have seen
that in the process of the determination of prices the exchange value
of all commodities is ideally converted into a certain quantity of gold
of the same value and that the same amount of value is present in a
double form in either of the isolated acts of circulation M―C and C―M,
first embodied in the commodity, and second, in gold; yet gold enjoys
the capacity of a medium of circulation not by virtue of its isolated
relation to separate commodities in a state of rest, but owing to its
active presence in the dynamic world of commodities, viz., its function
of expressing the change of form of commodities by its change of place
and expressing the rapidity of their change of form by the rapidity of
its change of place. The extent to which it is present in the sphere
of circulation, i. e., the actual quantity of gold in circulation, is
thus determined by the extent to which it is discharging its function
throughout the entire process.

The circulation of money implies the circulation of commodities; money
circulates commodities which have prices, i. e., which are beforehand
ideally equated to certain quantities of gold. In the determination
of the prices of commodities, the value of the quantity of gold
which serves as a unit of measure, or the value of gold, is assumed
to be given. Under that assumption the quantity of gold necessary
for circulation is determined first of all by the sum total of the
prices of commodities that are to be realized. But this sum is itself
determined: 1. By the level of prices, the relatively high or low
exchange value of commodities estimated in gold; and 2. By the mass
of commodities circulating at fixed prices, i. e. by the number of
purchases and sales at given prices.[73] If one quarter of wheat is
worth 60 shillings, then twice as much gold is required to circulate it
or to realize its price as would be the case if it were worth only 30
shillings. To circulate 500 quarters of wheat at 60 shillings, twice
as much gold is necessary as for the circulation of 250 quarters at
the same price. Finally, to circulate 10 quarters at 100 shillings
only half as much money is necessary as when circulating 40 quarters
at 50 shillings. It follows that the quantity of gold required for
circulation may fall in spite of a rise in price, if the mass of
commodities in circulation declines in a greater ratio than the
rise of the combined sum of prices; and, inversely, the quantity of
the circulating medium may rise in spite of a decline of the mass
of commodities in circulation, if the sum total of prices rises in
a greater ratio. Thorough and minute English investigations have
demonstrated e. g. that in the early stages of a dearth of grain in
England the quantity of money in circulation increases, because the
total price of the diminished supply of grain is greater than the
former total price of a larger supply of grain, while the circulation
of the other commodities continues undisturbed for some time at their
old prices. At a later stage of the dearth of grain, there is a decline
in the quantity of circulating money, either because less goods are
sold at old prices besides grain, or the same quantity of those goods
is sold at lower prices.

But, as we have seen, the quantity of money in circulation is
determined not only by the sum total of prices of commodities that are
to be realized, but also by the rapidity with which money circulates
or with which it completes this work of realization. If the same
sovereign makes ten purchases a day, each of a commodity having a
price of one sovereign, and thus changes hands ten times, it does as
much work as would be accomplished by ten sovereigns each performing
but a single act of circulation a day.[74] Consequently, rapidity of
gold circulation can make up for its quantity, or the presence of gold
in the sphere of circulation is determined not only by its presence
as an equivalent of a commodity side by side with it, but also by
its participation in the movement of metamorphoses of commodities.
The rapidity of the circulation of money, however, can serve as a
substitute for its quantity only to a limited extent, since at any
given moment an endless number of isolated purchases and sales takes
places in different localities.

If the total price of the commodities in circulation rises, but in
a smaller ratio than the increase in the rapidity of circulation of
money, the volume of the circulating medium will diminish. If on the
contrary the rapidity of circulation decreases in a greater ratio
than the total price of the commodities in circulation, the volume
of currency will increase. An increasing volume of currency combined
with a general fall of prices or a diminishing volume of currency in
connection with a general rise of prices is one of the best known
phenomena in the history of prices. But the consideration of the
causes which bring about a simultaneous rise in the level of prices
and a still greater rise in the rate of velocity of circulation of
money, or the opposite phenomenon, falls outside of the sphere of
simple circulation. By way of illustration, it may be mentioned that
in periods of prevailing credit, the rapidity of circulation of
money grows faster than the prices of commodities, while in times
of declining credit the prices of commodities fall slower than the
rapidity of circulation. The shallow and artificial character of the
simple circulation of money is manifested in the fact that all the
elements which have a determining influence on the volume of currency,
such as the volume of commodities in circulation, prices, the rise or
fall of prices, the number of simultaneous purchases and sales, the
rapidity of the circulation of money,―depend on the metamorphic process
which takes place in the world of commodities, and that again depends
on the general character of the methods of production, the size of
population, the relation between city and country, the development of
the means of transportation, the greater or less division of labor,
credit, etc.; in short, on circumstances all of which lie _outside_ of
the sphere of simple circulation of money and are only reflected in it.

The rapidity of circulation being given, the volume of currency is
simply determined by the prices of commodities. Hence, prices are not
high or low, because there is more or less money in circulation, but
on the contrary, there is more or less money in circulation, because
prices are high or low. This is one of the most important laws, whose
demonstration in detail by means of the history of prices constitutes
perhaps the only merit of the post-Ricardian English Political Economy.
If experience shows, that the level of metallic circulation or the mass
of gold and silver in circulation in a given country is subject to
temporary ebbs and tides and very violent ones at times,[75] but on
the whole remains stationary for long periods, the deviations forming
but small oscillations about the average level, this is explained
by the antagonistic nature of the circumstances which determine the
quantity of money in circulation. Their simultaneous modifications
neutralize their effects and leave everything where it was before.

The law, that with a given rapidity of circulation of money and a given
total sum of prices of commodities the quantity of the circulating
medium is determined, may also be expressed as follows. If the exchange
values of commodities and the average rapidity of their metamorphoses
are given, the quantity of gold in circulation depends on its own
value. If, therefore, the value of gold, i. e. the labor-time necessary
for its production, should rise or fall, the prices of commodities will
rise or fall in inverse ratio, and corresponding to that rise or fall
of prices, the rapidity of circulation remaining the same, a larger or
smaller quantity of gold would be required to keep the same volume of
commodities in circulation. The same change would occur, if the old
standard of value were superseded by a more or less valuable metal.
Thus, Holland required from fourteen to fifteen times as much silver as
it had previously required gold, in order to circulate the same volume
of commodities, when out of tender regard for the government creditors
and out of fear of the effects of the discoveries in California and
Australia it substituted silver for gold money.

From the fact that the quantity of gold in circulation depends on the
variable sum total of prices of commodities and the varying rapidity
of circulation, it follows that the volume of the circulating medium
must be capable of contraction and expansion; in short, that according
to the requirements of circulation, gold must now enter, now leave the
sphere of circulation in its capacity of a medium of circulation. How
the circulation process itself realizes these conditions, we shall see
later on.


C. COIN AND SYMBOLS OF VALUE.

In its capacity of a medium of circulation, gold acquires a shape
of its own, it becomes _coin_. In order to prevent any technical
difficulties in the way of its circulation, it is coined according to
the standard of the money of account. Gold pieces whose imprints and
legends show that they contain certain weights of gold corresponding
to the reckoning names of money, £, s., etc., are coins. The
establishment of a mint-price, as well as the technical work of
coining, are the business of the state. Both as money of account and
as coin, money acquires a _local and political character_; it speaks
different languages and wears different national uniforms. The sphere
in which money circulates as coin, is distinguished as an _internal_
sphere of circulation which is separated from the _universal_ sphere of
circulation in the commodity world by national boundaries.

Yet, the only difference between gold bullion and gold coin is that
between coin denomination and weight denomination. What seems to be a
difference in name in the latter case appears as a difference in shape
in the former. Gold coin can be thrown into the melting-pot and thus be
converted again into gold _sans phrase_, just as, on the contrary, gold
bars only have to be sent to the mint to receive the shape of coins.
The conversion and reconversion from one form into another appears to
be a purely technical matter.

For 100 pounds or 1200 ounces troy of 22 carat gold one can get
£4,672-1/2 or gold sovereigns at the English mint; if these sovereigns
be put on one side of the weighing scale and one hundred pounds of
gold bullion on the other, the two will balance each other, which
proves that the sovereign is nothing but a piece of gold of certain
weight bearing this name in English coinage and having a shape and
stamp of its own. The 4,672-1/2 sovereigns are put into circulation
at different points, and once in its grasp they make a certain number
of moves per day, some sovereigns more, others less. If the average
number of moves per day of each ounce be ten, the 1200 ounces of gold
would realize 12,000 ounces or 46,725 sovereigns as the total price
of commodities. You may turn and toss an ounce of gold in any way you
like, and it will never weigh ten ounces. But here in the process of
circulation one ounce practically does weigh ten ounces. The work
performed by a coin in the sphere of circulation is equivalent to the
quantity of gold it contains multiplied by the number of its moves.
Besides the actual importance which a coin possesses by virtue of its
being an individual piece of gold of a definite weight, it acquires
an ideal significance due to its function. But whether the sovereign
circulates once or ten times, in each particular purchase or sale
it acts only as one sovereign. It is like a general who by timely
appearance at ten different points on the battle field does the work
of ten generals, but still remains the same identical general at each
point. The idealization of the means of circulation which is due to the
supplanting of quantity by rapidity in money circulation, affects only
the function of the coin within the sphere of circulation, but not the
nature of the individual coin.

The circulation of money is a movement through the outside world, and
the sovereign, though it _non olet_, keeps rather mixed company. In the
course of its friction against all kinds of hands, pouches, pockets,
purses, money-belts, bags, chests and strong-boxes, the coin rubs off,
loses one gold atom here and another one there and thus, as it wears
off in its wanderings over the world, it loses more and more of its
intrinsic substance. By being used it gets used up. Let us take up a
sovereign at the moment when its natural, inborn character has been
slightly affected. A baker, says Dodd,[76] who receives from the bank
to-day a brand new sovereign and pays it tomorrow to the miller,
does not pay the same veritable sovereign; the latter has become
lighter than it was at the time he received it. It is clear, says an
anonymous writer,[77] that in the very nature of things, coins must
depreciate one by one as a result of ordinary and unavoidable friction.
It is a physical impossibility to entirely exclude light coins from
circulation at any time, even for one day. Jacob estimates that of
the 380 million pounds sterling which were in existence in Europe in
1809, nineteen million pounds sterling entirely disappeared by 1829,
i. e., within a period of twenty years.[78] Thus, while a commodity
at its first step into the sphere of circulation, falls out of it, a
coin, after a couple of steps within that sphere represents more metal
than it actually contains. The longer a coin remains in circulation,
the rapidity of circulation remaining the same, or the greater its
rapidity of circulation within the same period of time, the greater
the discrepancy between its form as coin and its actual gold or silver
substance. What remains is _magni nominis umbra_. The body of the coin
becomes but a shadow. If at first it became heavier through the process
of circulation, it now becomes lighter on account of it, but continues
to represent the original quantity of gold in each single purchase or
sale. The sovereign, as a fictitious sovereign, as fictitious gold,
continues to perform the function of a legitimate coin. While other
beings lose their idealism in contact with the outer world, the coin is
idealized by practice, being gradually transformed into a mere phantom
of its golden or silver body. This second idealization of metal money
springing from the very process of circulation, or from the discrepancy
between its nominal weight and its real weight is exploited in all
kinds of coin counterfeiting practiced partly by governments, partly by
private adventurers. The entire history of coinage from the beginning
of the middle ages until late in the eighteenth century is nothing
but a history of these twofold and antagonistic adulterations, and
Custodi’s voluminous collection of writings of Italian economists turns
mostly about this point.

But the fictitious importance of gold due to its function, comes
in conflict with its real substance. One gold coin has lost more,
another, less of its metal substance in the course of circulation,
and one of them is, as a matter of fact, worth more now than the
other. But since in the discharge of their function of coins they
are taken at the same value, the sovereign weighing a quarter of an
ounce passing for no more than the sovereign which only stands for a
quarter of an ounce, the full-weight sovereigns are subjected in the
hands of unscrupulous owners to surgical operations which produce
artificially what the circulation process has caused in a natural way
to their more light-weighted brothers. They are clipped and reduced
and the superfluous gold fat lands in the melting pot. If 4,672-1/2
gold sovereigns when put on one side of the weighing scale weigh on an
average only 800 ounces instead of 1200, they will buy when brought
to the gold market only 800 ounces of gold; that is, the market price
of gold would rise above its mint price. Every coin, even if of full
weight would pass in its mint form for less than in bullion form. The
full weight sovereigns would be reconverted into bullion, a form in
which a greater quantity of gold is always worth more than a smaller
quantity. As soon as this decline of metallic weight would affect a
sufficiently large number of sovereigns to bring about a permanent
rise of the market price of gold above its mint price, the reckoning
names of the coins, though remaining the same, would begin to denote a
smaller quantity of gold. That is to say, the standard of money would
change and gold would be coined in the future according to this new
standard. By virtue of its idealization as a medium of circulation,
gold would react upon and change the legally determined ratios under
which it acted as the standard of price. The same revolution would
be repeated after a certain length of time and thus gold would be
subject to constant change both as a standard of price and as a
medium of circulation, a change under one of these forms leading to a
change under the other and vice versa. This explains the phenomenon
mentioned above, namely that in the history of all modern nations
the same money-name stands for a constantly diminishing quantity of
metal. The contradiction between gold as coin and gold as standard of
price becomes also one between gold as coin and gold as the universal
equivalent; in the latter capacity it circulates not only within the
limits of national boundaries, but in the world market. As a measure of
value gold was always of full weight, because it served only as ideal
gold. In its capacity of equivalent in the isolated transaction C―M it
passes at once from a state of motion to a state of rest; but in its
capacity of coin its natural substance comes in constant conflict with
its function. The transformation of the gold sovereign into fictitious
gold can not be wholly avoided, but legislation seeks to prevent its
unlimited circulation as coin by prescribing its withdrawal from
circulation as soon as its shortage of metallic substance reaches a
certain degree. According to the English law, e. g., a sovereign which
lacks more than 0.747 grains of its weight ceases to be legal tender.
The Bank of England which weighed forty-eight million gold sovereigns
in the short period between 1844 and 1848, possesses in Mr. Cotton’s
gold weighing scale a machine which not only detects a difference of
1-100 part of a grain between two sovereigns, but like a sensible
being, immediately throws out the light-weight coin on a board where
it lands under another machine which cuts it up with oriental cruelty.

That being the case, gold coins could not circulate at all were not
their circulation confined to definite spheres in which they do not
wear off so rapidly. In so far as a gold coin weighing only one-fifth
of an ounce passes in circulation for a quarter of an ounce of gold,
it is practically merely a sign or a symbol for one-twentieth of an
ounce of gold, and in that way all gold coins are transformed by the
very process of circulation into more or less of a mere sign or symbol
of their substance. But no thing can be its own symbol. Painted grapes
are no symbol of real grapes, they are imaginary grapes. Still less can
a light-weight sovereign be a symbol of a full-weighted one, just as
a lean horse can not serve as a symbol of a fat one. Since gold thus
becomes a symbol of its own self, but at the same time can not serve in
that capacity, it receives a symbolical, silver or copper substitute in
those spheres of circulation in which it is most subject to wear and
tear, namely where purchases and sales are constantly taking place on
the smallest scale. In these spheres, even if not the same identical
coins, still a certain part of the entire supply of gold money would
constantly circulate as coin. To that extent gold is substituted by
silver or copper tokens. Thus, while only a specific commodity can
perform in a given country the function of a measure of value and
therefore of money, different commodities can serve as coin side by
side with gold. These subsidiary mediums of circulation, such as silver
or copper coins, represent definite fractions of a gold coin within
the sphere of circulation. Their own silver or copper weight is,
therefore, not determined by the proportions of the respective values
of silver and copper to that of gold, but is arbitrarily fixed by law.
They may be issued only in such quantities in which the diminutive
fractions of gold coin which they represent would constantly circulate
either for purposes of change for gold coins of higher denominations,
or for realizing equally small prices of commodities. In retail trade
silver and copper tokens belong to distinct spheres of circulation. In
the nature of things, the rapidity of their circulation is in inverse
ratio to the price which they realize in each separate purchase or
sale, or to the size of the fraction of gold coin which they represent.
If we consider how immense the volume of the daily retail trade in a
country like England is, we will understand from the comparatively
insignificant proportions of its combined volume how rapid and steady
the circulation of the subsidiary coin must be. From a parliamentary
report of recent date we see, e. g., that in 1857 the English mint
coined £4,859,000 worth of gold, £733,000 of silver nominal value which
contained metal actually worth £363,000. The total amount of gold
coined in the ten years ending December 31, 1857, was £55,239,000, and
of silver only £2,434,000. The supply of copper coin in 1857 amounted
only to £6,720 nominal value containing £3,492 worth of copper; of this
£3,136 was in pennies, £2,464 in half-pennies, and £1,120 in farthings.
The total value of copper coined in the ten years was £141,477 nominal,
the metallic value being £73,503. Just as gold coin is prevented from
permanently retaining its function of coin by the legal provision of
the loss of weight which demonetizes it, so are the silver and copper
tokens prevented from passing from their spheres of circulation into
that of gold coin and acquiring the character of money by the provision
of the maximum amount for which they are legal tender. In England e.
g. copper is legal tender only to the amount of six pence and silver
up to forty shillings. If silver and copper tokens were to be issued
in greater quantities than the requirements of their spheres of
circulation call for, prices of commodities would not rise as a result,
but the accumulation of these tokens in the hands of retail dealers
would reach such an extent that they would be finally compelled to sell
them as metal. Thus in 1798 English copper coins, issued by private
individuals, accumulated in the hands of small traders to the amount
of £20,350 which they tried in vain to put again in circulation, being
finally compelled to throw them as metal on the copper market.[79]

The silver and copper tokens which represent gold coin in certain
spheres of circulation in the interior of the country, contain a
definite quantity of silver and copper prescribed by law, but after
they get into circulation, they wear off like gold coins and become
even more rapidly mere phantoms, according to the rapidity and
steadiness of their circulation. To draw again a line of demonetization
beyond which silver and copper tokens would lose their character of
coins, they would have to be replaced in turn within certain spheres
of their own circulation by some other symbolic money, say iron and
lead, and such representation of one kind of symbolic money by another
kind would form an endless process. In all countries with a well
developed circulation the very requirements of money circulation make
it necessary that the character of silver and copper tokens as money be
made independent of any loss of weight in those coins. Thus, as it was
in the nature of things, it appears that they serve as symbols of gold
coin not because they are symbols made of silver or copper, not because
they have certain value, but only in so far as they have no

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