Capital I. Chapter 3: Commodities and Money. Sections 2 & 3

2. Money as means of circulation

a) metamorphosis of commodities

(again, excuse the brevity)

We saw in an earlier chapter that the exchange of commodities implies contradictory and mutually exclusive conditions. The further development of the commodity does not abolish these contradictions, but rather provides the form in which they have room to move.”

This refers back to the section of chapter one, concerning the appearance of the exchange of commodities… the relative and equivalent forms of value, pp148-151. The particularity of the money commodity, and its universal capacity to represent SNLT.

The process of exchange is one of ‘social metabolism’, the transfer of commodities from hands in which they are non-use-values to hands in which they are.

Dialectic… these pages contain a number of references such as the opposition between use-value and value… in this opposition commodities as use-values confront money as exchange-value. (whilst both sides of opposition are commodities, unities of use-value and value, this occurs in different ways at polar extremes)… and “these antagonistic forms of the commodities are the real forms of motion of the process of exchange.” (p199). This is the contradictory movement of commodities in the process of exchange, and the forms of appearance of value…


c-m-c, this circuit is composed of two moments, c-m (sale) & m-c (purchase)

there are two metamorphoses in this process.

The c-m represents the sale of the commodity c. The owner realises its exchange-value in the form of money – the value of c has a real, material existence in the form of money. The subsequent exchange of m-c, purchase of another commodity is the second metamorphosis this purchase sees the value of the first commodity transformed into a use-value to be consumed.

The contradiction articulated in chapter 1 (use-value and value) is resolved here… potential value and potential use-value become actual value and actual use-value.

Commodity circuit is incomplete if this full motion is not achieved.

The first movement c-m proves more difficult than the second movement m-c… exchanging the particular for the universal faces a number of problems, whereas controlling an amount of the universal, money, means you can purchase what you want… control of money is a mechanism of class power… One sells their labour, but it must be socially useful, must hold position in the social division of labour, “but this division of labour is an organisation of production which has grown up naturally, a web which has been, and continues to be, woven behind the backs of the producers of commodities.” (p201), and later on p203, “the division of labour converts the product of labour into a commodity, and thereby makes necessary its conversion into money. At the same time it makes it a matter of chance whether this transubstantiation succeeds or not.”

This is ultimately a pile of shit deal for the multitude, or proletariat, (whatever you prefer)…

The two metamorphoses which constitute the commodity’s circular path are at the same time two inverse partial metamorphoses of two other commodities…Hence the circuit made by one commodity in the course of its metamorphoses is inextricably entwined with the circuits of other commodities. This whole process constitutes the circulation of commodities” (p207).

The circuit does and doesn’t ‘finish’ in c-m-c, but continually opens up in different directions, for different buyers and sellers, in different places of the whole… this series of interconnections is unlimited, (good infinity), self-related and mediated by the universal mediator. We see a circuit of circuits, in which use-value and value are defined within the whole (Cleaver).

C-m-c is essentially different than c-c

the vanishing of use-values in c-c does not occur in c-m-c, where money continually leaves a trace of itself, leaving and the returning…

“Circulation sweats money from every pore” (p208).

The potential for crisis is embedded in the antithesis in the commodity between use-value and value, between private labour which must manifest a socially useful labour.

to say that these mutually independent and antithetical processes form form an internal unity, is also to say that their internal unity moves forward through external antitheses. These two processes lack internal independence because they complement each other. Hence, if the assertion of their external independence proceeds to a certain critical point, their unity violently makes itself felt by producing – a crisis (p209).

(b) the circulation of money.

This will be very short.

This section is based largely on the question of the quantity theory of money… how much money is necessary to circulate the given quantity and value of commodities…
velocity is measure how often a given piece of money is exchanged in a day…

increase in velocity means you need less actual money… various things can increase the velocity…

I will quote here from Cleaver’s notes, because I am being lazy and we are talking about this in a few hours…

The quantitative aspect of money as medium of circulation concerns how much money is necessary to circulate a given quantity and value of commodities (at a given rapidity). The relation between the required amount of money (M), the total value of the commodities (PQ), assuming value = price, and the rapidity of circulation or velocity of money = V is given by the formula:

M = PQ/V

For example, many quantity theorists interpreted the rise of prices which occurred in Europe in the 16th Century in the wake of the huge new gold flows from the the rape of the New World, as having been caused by the increase in the amount of precious metals, i.e., of money, in circulation. Marx says just the opposite about money gold. Since money exists in circulation only to circulate commodities its amount is determined by the amount and value of the commodities being bought and sold. The value of the commodities is determined by the SNLT, the value of gold by its SNLT. Therefore, the amount of money is determined by the value of gold and the value and quantity of other commodities, or M = f(V), not visa versa. So that he explains the inflation of the 16th Century by the fact that the discovery and rape of the Inca and Aztec civilizations and of the subsequent use of slave labor in the mines of the Western Hemisphere which produced the new flows of gold dramatically reduced the costs of producing gold and thus lowered its value. With a lower value for gold it took more of it to represent the values of a relatively unchanged quantity of commodities. Hence the price rise.(8)” (Cleaver)

(c) Coin. The symbol of value

The process of circulation requires the use of coins and symbols rather than actual gold…

State power is necessary for the enforcement and circulation of money…

“pieces of paper on which money names are printed…are thrown into the circulation process from outside by the state. In so far as they actually circulate in the place of the same amount of gold, their movement is simply a reflection of the laws of monetary circulation itself” (p224).

Money wears national uniform at home, which is removed on the world stage…

Symbols come to represent gold…

3 ‘Money’

The commodity which functions as measure of value and therefore also as the medium of circulation, either in its own body or through a representative, is money” (p227).

one money, different functions

The internalisation of contradictions by money… neither merely ideal, as it is with measure of value, nor capable of being represented as it is as medium of circulation. Yet, it also functions as money when it is fixed as sole form of value, the only adequate form of existence of exchange-value, where all other commodities play the role of use-values pure and simple… (p227).


With these in mind, Marx looks at specific elements of money


the sale of commodities in order to hold onto money…this becomes the end in itself, fetishising money…

m-c-m, money is what I want… the universal power of money…directly convertible into any other commodity…

a hoard of money can take different forms… bullion, or coin or paper money, or precious metals in different forms…

yet hoarding also plays necessary function in process of exchange… one needs to save over time in order to produce further etc, allows reserves to function as money channels in and out of circulation…

everything can become commodified – everything is saleable, convertible into money.

Money becoming private property… contradiction of point three of value in chapter 1, the private ownership of social wealth, basis of class power…social becoming private property… what isn’t money, mediated by it, subject to it?

No limits to money accumulation… accumulation of power…

money is still money when it is halted outside of circulation…

Means of payment

different to m-c as purchase, here we are talking of credit, we get c before we hand over m… credit money, an IOU of imaginary money… here money becomes means of payment…

there are a number of reasons as to why this is necessary… temporal, geographical etc…

In this case the seller becomes creditor, buyer a debtor, which embodies a power relation, clearly evident in ancient world… what about today?

two equivalents, commodity and money no longer appear simultaneously, at two poles of process of sale. So money is here measure of value in determination of price of commodity sold, and second serves as nominal means of purchase, although only a promise to pay, the commodity changes hands. Only when payment is made does money enter circulation…

m-c-m’, money is the object in itself, I lend it to you, you pay it back, with a bit more… this emerges from c-m-c, and this is necessary, to balance measure of value and means of circulation…

immanent contradiction in this form of money, potential for crisis… money as means of payment, its nominal form, functions until a disturbance occurs, in which case there is a rush for hard money, for money as universal value…

to take the example Cleaver uses:

The polarity and separation of actions (M – C) and (C – M) in credit, like the polarity of simple sale and purchase opens the possibility of the disruption of the circulation process –credit crises– like the 1974-1975 fiscal crisis in New York, where the city government piled up a huge number of IOU’s by borrowing to pay for growing services, etc., but then had trouble acquiring the means of payment by taxing business’ C – M, etc. –partly because the class struggle in New York was leading to business’ pulling out of the city or cutting down operations and thus reducing the number and size of their taxable C – M’s.

This crisis was subsequently repeated on a world scale in the 1980s after US President Jimmy Carter’s appointee to the Chairmanship of the Federal Reserve tightened up money supplies, dramatically raised interest rates and plunged the world into depression. The combination of high interest rates (dramatically raising the cost of debt service on international loans) and depression (shrinking business sales in both domestic and foreign markets and thus reduced possibilities for earning the foreign exchange necessary to repay the suddenly augmented debt service obligations) caused an international debt crisis from which the world has still not fully recovered.”

World money

on the world stage money returns to the precious metal, as bullion… (question of how this functions now?)

in the world market money first functions to full extent as commodity whose natural form is also the directly social form of realisation of human labour in the abstract. (p241)

world money serves as universal means of payment, universal means of purchase, and as absolute social materialisation of wealth as such.

International reserves necessary for circulation of money on world market…

stocks of gold…stocks of foreign currencies…

Questions from Cleaver’s reading

  1. Explain the role of Chapter Three in Capital. That is to say explain its relationship to Chapters One and Two and to what comes after.
  2. Explain the relationship between the general form of value and Marx’s formula C – M – C.
  3. What can you say about the price on a price tag in a store using Marx’s discussion in this chapter?
  4. What is the role of the state with respect to the role of money as a standard of price?
  5. Explain the relationships among gold, the weight name for the price of a good, and the money name for such a price. How can debasement result in a difference between the price and value of a commodity?
  6. Give an example and explain how a thing may have a price but no value.
  7. Explain why the general possibility of crisis exists within exchange relationships where money plays the role of mediator. What is the relation between this and a labor strike against a business?
  8. Locate c-m-c within the overall world of commodity exchange. Analyse it into its component parts and relate them to the rest of that world.
  9. Explain the logic of Marx’s comments that c-m-c can be usefully examined within the framework of Hegel’s syllogism P – U – I.
  10. Explain the difference between Marx’s quantity theory of money and that of classical political economy. How do they differ? Under what conditions do their interpretations converge?
  11. Discuss the relevance of post-WWII international monetary “liquidity problems” for interpreting the quantity theory.
  12. What is the role of hoard in the money system of capitalism?
  13. What is the miser’s mistake according to Marx?
  14. Explain “credit money” in Marx’s analysis. How does it not remove the possibility of crisis?
  15. “The class struggle in the ancient world,” Marx says “took the form mainly of a contest between debtors and creditors…” In what sense are struggles over debt today, especially in the international arena, part of the class struggle?
  16. What changes, if any, do we need to make to Marx’s discussion of money in order to analyse the role of money internationally?

6 Responses to “Capital I. Chapter 3: Commodities and Money. Sections 2 & 3”

  1. 1 jonathon 9 February 2010 at 4:46 am

    Over Chapters 2 and 3 Marx has repeatedly compared circulation to sex, or sexual desire, from the masculine standpoint: “If they are unwilling, he can use force” (178), “more repulsive than Maritornes herself” (179), “putting-off of the old Adam for Saint Jerome” (197), “the course of true love never did run smooth” (202), “those wooing glances cast at money by commodities” (205), “it goes the way of all flesh” (207), “Circulation sweats money from every pore” (208), passionate desire” (226), “the lust for gold awakens” (229), which is now perversion: “the hoarder sacrifices the lust of his flesh for the fetish of gold” (231). Comments?

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  4. 4 Liam 2 February 2018 at 2:10 am

    What a find- the social and economic construction of the ‘money myth’ explained so simply and so very smartly. Thank you! Liam

  1. 1 Partial notes to Volume 1, Chapters 2 and 3 | Chapter 25 Trackback on 8 November 2010 at 12:20 pm
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Reading Capital in Sydney records reading notes on Marx's Capital I, II and III, and other bits and pieces.

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