Class 03 Reading Marx’s Capital Vol I with David Harvey

Class 03 Reading Marx’s Capital Vol I with David Harvey


» NEIL SMITH: So. Money makes
the world go round they say. » DAVID HARVEY: Yes. It’s so fascinating- money. We all use it, we all worry about it, we all spend an enormous
amount of our time getting it. But if you ask anybody the question: “What is money?”, most people can’t give you a clear answer at all. And I always remember this great line in Dickens’ Dombey and Son, where little
Paul, his mother has died and he’s very sickly, and he keeps on asking his father, “Papa, what
is money? What is money?” And Mister Dombey, who’s the great entrepreneur, merchant, can’t give an answer. At some point or other, he says: “Well,
it’s something that allows you to do lots of things.” So little Paul says:
“Well, why can’t it bring Mama back then?” And Mister Dombey is so flummoxed,
he just leaves the room. I think this kind of question about what money is and its function in
society is really something of a mystery to everybody. Yet it’s something that we’re constantly
focused on. So here we are, focused on this thing money and we don’t know what it is. What Marx tries to do is to tell us something about money which we hadn’t really understood before. The theory of money in Marx even for Marx is very complicated. So the third chapter is probably the most difficult chapter
in the book for almost everybody to get through. And from experience when you ask people who
started reading Capital on their own when they gave up, well, they nearly always did so
in Chapter Three. So one of my tasks is to get people through Chapter Three, get them to the other side of it
and then it’s like you’ve come out of purgatory. You’re into heaven after that. »NEIL SMITH: You’re on
to the good stuff. »DAVID HARVEY: Yes. I have to say that New York City in these times provides a good occasion to reflect on all of this, but we have to
remember this chapter was written nearly 150…140 years ago, and so there is the question as to how much of the analysis stands, and this
is obviously something you have to think about. The chapter usually poses quite a bit of difficulty for people. I think I mentioned early on that many people
who start reading Capital kind of give up on this chapter because it just gets too dense and
too complicated, and it’s very hard to figure out what’s going on, but if you stick with the framework I’ve suggested, and you do think about it, then whenever you approach a chapter like this and
think about its structure you will remember where you are in the broader argument. For the argument here is once again,
fairly simple, and it has a very similar form to the arguments
encountered before, so you’ll probably get sick of me putting this kind of formulation up on the board. But Marx starts with the idea of a commodity money, or, money as a commodity. As usual, he asks a number of questions. What work does this commodity do? What functions
does it perform, and then he, surprisingly finds a duality. Right? We’ve seen this before. And the duality is that it’s a measure of values but also a means of circulation. And those two functions are going to be somewhat incompatible with each other so he will spend the first part of the chapter looking at the measure of values function and
the complications which attach to that. The second part is about the means of circulation and its complications. Then of course he finally comes back to the issue of universal money which not surprisingly
internalizes a contradiction. So what else is new about Marx’s method of presentation? But this is basically what he does. Now, part of the difficulty here is that, although Marx inserted into the section about concrete and abstract labour, some extra elements to broaden the argument, here he actually sets up a mini
bifurcation when considering money as a measure of value
and as a standard of price. So, he kind of does a mini-diversion of this inside the proposition. He does the same mini kind of diversion when considering means of circulation. In particular when he looks at concrete money, gold coins and symbols, Marx asks the question:
what’s the relationship between this real stuff and this which leads him to discuss things like money as money of account, credit money and
all those other kinds of forms of money. In effect he starts to elucidate the complicated world of money
activities via this strategy. But the basic structure of the chapter is an echo of what you saw in the section on commodities, the section on abstract and concrete labour, the relative
and equivalent forms, and here Marx is just doing the same thing again. So, if you have that in mind,
then you’re less likely to get lost in the intensity or details of the argument in this chapter, important though they are. Now the reason I like to set up the argument in this way is because when you’re wrestling with details
fascinating and important in their own right, you nevertheless need to remember that Marx has a
framework within which the argument is proceeding,
and that is the framework of the chapter. So, with that in mind, let’s look at this piece of the story: money as a measure of value or the money commodity. Obviously there is going to be
a transition in this chapter from talking about money as a commodity or
the money commodity, to money as universal money which of course, nowadays would not be
represented by any particular commodity at all. It would be represented by something else.
But I think we can see shadows of that in Marx’s interpretation. For purposes of simplification, Marx says I’m going to assume for the most part
in this chapter – occasionally he introduces silver and then sometimes talks about other things – but I’m going to assume that the
commodity money is gold. Therefore I will use the example of gold. and just assume that gold has become the money commodity which we are interested in looking at. Then he immediately says at the bottom of the first page
here: “Money as a measure of value is the necessary form of appearance…” Now, I have often insisted that you think a
lot about social necessity, what is socially necessary? And here he’s saying that this form of appearance is a necessary form of
appearance; it is socially necessary, and it’s necessary as a measure of value which
is imminent in commodities, namely labour time or more accurately:
socially necessary labour time. So there’s an interrelation then between the world of commodities and the
socially necessary labour time which is embodied in all of those commodities, and the socially necessary labour time, which is embodied in the gold. But then he goes one step further at the bottom of page 189 when he says: “The price
or money-form of commodities is like their form of
value generally, quite distinct from their palpable and real bodily
form; it is therefore a purely ideal or notional form.” By ideal Marx means ‘mental’, i.e. constructed in our minds. “Although invisible”, and I’ve mentioned several times the significance of
these invisibilities, these immaterialities which are
nevertheless objective and real. Marx then goes on to say: “The guardian of the commodities must therefore
lend them his tongue, or hang a ticket on them, in order to communicate
their prices to the outside world.” Now what’s happening here is the following: I have a commodity; I have no idea what its value is. How can I possibly know before I take it to market? But when I take it to market, I want to have
a notional value to put on it, so I hang a price tag on it to indicate its worth; It’s a mental move on my part for I am guessing; only after the market has gone through
all of its ferment and done its work can I know what the value is as represented by its money form. But as a standard of price,
as Marx indicates two pages later, money is performing a different function
than as a measure of value. So, on page 190 Marx wants
to talk first about this imaginary side, the ideal side of the money form. I’m imagining what the
value is in my commodity. But then the price itself depends upon the substance that is money. And this then poses the first problem, which is signaled upon this page. The money commodity is gold. Since it is a distinctive commodity, it is produced under given
conditions of production. So, how much gold there is, what the gold is worth,
and what the socially necessary labour time embedded in gold is, will vary. So immediately there is a problem, not on the side of all of those commodities, which have been measured
in terms of the money commodity, but in terms of the money commodity itself. So Marx has to deal with the prospect
of inflation, or deflation, because there’s not much money
or there’s a lot of money around, and in particular the presence of much
gold or little gold. So, there is a problem of the gold supply. His point about this is that yes, we have to take that
into account, but actually the relative values of
commodities are not affected by the level of the gold supply. For example if shoes cost twice
as much as shirts, and the money commodity changes, then the ratio two-to-one will still hold. It’s just that it will be articulated in a different way,
because the money commodity has changed, i.e. changed its value. So he breezes past that kind of
question by simply saying that this disappears in the wash.
But, on page 192 Marx considers a more important issue, when he talks about the way
in which …”measure of value, and…standard of price..” wherein money performs two quite different functions. Now, as a measure of value
the functions of money are: to be stable, to be tangible, to not change its qualities. And so you can see immediately why as
a measure of price gold rather than strawberries would be the money commodity. Because money as gold commodity can store value. Gold is fairly
constant in its form since it can be assayed, measured, and is limited in supply since you
can’t just go out and dig it up in your backyard. So there are reasons why, money gravitates towards gold as the measure of value, because indeed it works very well. Even though as we have seen the value of gold itself can shift, that doesn’t materially affect its capacity to function in these ways. As…a standard of price however, Marx points out that we are no longer interested in the relationship
between the socially necessary labour time in gold and the socially necessary
labour time in commodities, because socially necessary labour time
is immaterial and immeasurable directly. What we’re interested in is the quantity of the gold which is equivalent to whatever it is you are selling as a commodity. And that quantity of gold then tells you how much your commodity is worth. This is a quantitative relation. For example why two ounces, why not one ounce,
why three ounces? At some point or other this
leads us into, according to Marx, the way in which the weight name of the money becomes the weight name of the value of the commodity. In this weight name, quoting from the top of page 194 Marx shows this important transitional aspect in the naming of money when he considers
the word ‘pound’; for the pound was originally a pound of silver, but then it simply became called pound, and so the British currency is in pounds. Now, when you’re in Britain and you ask for pounds, you don’t expect
somebody to give you a weight of something. You expect them to give you notes. So what he’s doing here is to talk
about the transition that is going on from the value form, which is
in the money commodity, to this naming and counting of elements of money, which are
then traded by the commodity traders in the market place. And this transition therefore completes the
fetishism which he has talked about in an earlier chapter. So on page195 Marx said, “the name of a thing is entirely
external to its nature. I know nothing of a man if
I merely know his name is Jacob. In the same way, every trace of
the money-relation disappears in the money names, pound, thaler, franc, ducat, etc.” Then he goes on to talk about “the confusion caused
by attributing a hidden meaning to these cabalistic signs which is made even greater by the fact that these
money names express both the values of commodities and simultaneously aliquot parts of a certain
weight of metal, namely the weight of the metal serving as the standard of money. On the other hand this is in fact “necessary”, again this word necessary,
“it is…necessary that value, as opposed to the multifarious
objects of the world of commodities, should develop into this form, a material and non-mental one,
but also a simple social form…” Which leads us to the conclusion that “price
is the money-name of the labour objectified in a commodity.” Now, what Marx is saying here is that yes indeed we have all these terms like ducats, louis, dollars and pounds and so on, and we measure the value of commodities
in quantities of those terms, but at some point there has to be some relationship between the way these nominal forms of money are
articulated and a monetary base, a commodity base. He is saying that this is essential. Now of course since the 1970’s the global economy has not done that very effectively. So the question which then arises underscores this insistence about the monetary base, the commodity base, the money commodity
value. Is his insistence on that realistic? What happens when you decide that you’re going to dispense with it, as has technically happened since the de-materialization of money from the 1970’s onwards. We’ll come back to that later,
when we look at questions of money supply. However the end of this section introduces some rather astonishing
modifications of the argument. On page 196 and 197 Marx says “the magnitude of the value of a commodity”, towards the bottom of 196, “therefore expresses a necessary relation to
social labour time which is inherent in the process by which its value is created.” OK. “With the transformation of the
magnitude of value into the price this necessary relation appears
as the exchange ratio between a single commodity and the money commodity which exists outside it. This relation however may express
both the magnitude of the value of a commodity and the greater or lesser quantity of money
for which it can be sold under given circumstances. This condition therefore points to the possibility
of a quantitative incongruity”. Notice that the”quantitative incongruity
between price and magnitude of value, i.e. the possibility that the price may
diverge from the magnitude of value, is inherent in the price-form itself.” This is not a defect, “on the contrary,” this is “what makes this form the adequate one for a mode
of production whose laws can only assert themselves as blindly operating averages
between constant irregularities.” What’s going on here? If everything in the market was presented at its value, and sold at its value, then there would be absolutely no way in which you could adjust for demand and supply fluctuations. What’s happening here is that, in effect, on a given day if too many traders come into
the market and not enough ‘demanders’ come the price will go down. The next day perhaps fewer
traders come but more buyers are present, so the price goes up. So what’s happening here is that Marx is
talking about the way in which once you go to a price name and hang prices on commodities, different prices can be realized
at different times in different places; they fluctuate all over the place. And that is what the anarchy of a capitalist market system is all about. Therefore a money system has
to be able to deal with that. So these incongruities are specifically able to deal with fluctuations in demand and supply conditions. Now Marx along with the classical political economists assumed that at the end of the day despite all these fluctuations, there is
something called equilibrium price or natural price. That is to say the price achieved when
demand and supply are in equilibrium. And at that point, Marx says, demand and supply cease to explain anything. It doesn’t explain why shirts exchange in a certain
ratio with shoes on average. It’s not that shirts are more in demand than
shoes or anything of that kind, on a given day for they may fluctuate, but
the fact that shirts and shoes have different prices has to do with their socially necessary
labour time. The fact that on any given day, the price of shoes fluctuates above or
below its socially necessary labour time equivalent, is due to demand and supply fluctuations. In order for demand and supply fluctuations to be incorporated into a
capitalistic system, we need a money system which can do that. And this quantitative incongruity between money as a measure of value and the way in which prices get hung
on commodities and prices get realized, on a given day in a given market at a
given time, all of that is allowed for precisely because of this transition which has
occurred between money as a clean measure of value to it’s operating
function as a standard of price that can allow for these fluctuations. Even more astonishing is what Marx points out
on the next page, namely the fact that this transition from
money as a measure of value into a standard of price can also harbor “a qualitative contradiction,
with the result that price ceases altogether to express value, despite the fact that money is
nothing but the value-form of commodities. Things which in and for
themselves are not commodities, things such as conscience, honor, etc.
can be offered for sale by their holders and thus acquire the form of
commodities through their price.” K-street and all the rest of it. “Hence a thing can, formally speaking,
have a price without having a value. The expression of price is in this case
imaginary, like certain quantities in mathematics. On the other hand, the imaginary price-form may also
conceal a real value relation or one derived from it, as for instance the price of uncultivated land, which is
without value because no human labour is objectified in it.” The point about land which
has not yet been occupied, is that there are ways in which land does incorporate
what you might call a shadow price of human labour. That is land which has human labour embodied in it over here casts a shadow value, if you like,
on the land which could be incorporated next year. What Marx is saying here is that
the case of land is a complicated one. Because, although you might not see any direct human labour incorporated into that
piece of land, you would see its ‘shadow’, that is what we call ‘externality effects’ arising
from the human labour which is incorporated in all the land around it. If you had a little piece of Manhattan, and you had held onto it since Indian times and had kept it pristine with no
human labour incorporated into the land lot, it would therefore have zero value. But if you went into the market
and sold it for zero value… well this would be absurd from a financial point of view! However what about conscience, honor etc….?
Once again what Marx is showing us that this qualitative inconsistency
also has to take into account the background that real value has to be produced somewhere. I mean, imagine an economy which only exists on trading conscience and honor. How would we live? Where would our shirts and shoes and all the
rest come from? And Marx is kind of saying: well, these qualitative incongruities
also have to be examined in the light of where the
real value comes from and what this real value is all about. It seems to me those are the very pressing questions which confront us when we think
about how the global economy works. In the United States people like to say well, the working class has disappeared, so value is no longer being produced here anymore, but then
you’ve got to think about what’s going on in China. However when you think about the fact that although everybody is now concentrating
on making megabucks out of financial operations, the global proletariat has doubled since 1970, and value is still being produced in very traditional kinds
of ways even though it is being distributed in quite other ways. So this is the main point Marx wants to make about this measure of value / standard of price movement, which then takes him into the second long section on the means of circulation. Now he starts off with the following observation: “We saw in a former chapter that the exchange of commodities implies
contradictory and mutually exclusive conditions.” Can anybody remember what those contradictions and mutually exclusive conditions
were? »STUDENT: If you’re buying you’re not selling? »HARVEY: No, he’s referring back to the
section on the relative and equivalent forms of value. And if you go back to page 148 you’ll see he says:”…use-value becomes the form of appearance
of its opposite namely value. Concrete-labour becomes a form of manifestation of its opposite namely abstract labour. Private labour becomes a form of manifestation
of its opposite i.e. social labour,” back on page 148 and 151. So he’s immediately referring back then to those tensions between the particularity
of the money commodity and its supposed universal capacity to represent socially necessary labour time in
the global economy. He then makes a very interesting observation, and I highlight it because it’s important to grasp Marx’s mode of thinking. He says: “The further development of the
commodity does not abolish these contradictions, but rather provides the form
within which they have room to move. This is in general the way in
which real contradictions are resolved.” In a way Marx is here describing his dialectical method. By expanding the argument and the contradictions we see Marx allows the contradictions greater purchase, greater possibility of movement. Then Marx uses an interesting metaphor:
“for instance, it is a contradiction to depict one body as constantly falling towards another
and at the same time constantly flying away from it. The ellipse is a form of motion within which
this contradiction is both realized and resolved.” Now I’m sure some of you feel Marx’s argument is
indeed elliptical. But, I think this metaphor is a very
important one, because we notice that an ellipse is about motion; it’s not about stasis; it’s about movement, and it’s about perpetual movement, perpetual motion. So in a sense he is indeed using this kind of method to expand the general structure of
his argument. So Marx’s first concern is to set up an argument about what he calls a metamorphosis of commodities which is in fact a process of circulation. Here also we start to get a different idea of what the
dialectic is about; it’s about the study of motion. I’ve mentioned process
a lot, but now we are looking at circulation, we’re looking at motion. And that motion is what he calls on page 198 a social metabolism. He has already talked about the metabolic relation
to nature but now he’s talking about the social metabolism. He puts it this way on page 199: “exchange (…) produces a differentiation of the commodity into two elements, commodity and money, an external opposition…” And further down the page he calls this an antagonistic form. So we start now to think about the world of
commodities on the one hand and money on the other and then talk about
the relationship between them. Then he immediately shifts his argument from a commodity-commodity exchange relation, a C-C relation such as in a Robinson Crusoe economy, to look at a C-M-C relationship, commodity to money to commodity circulation. And he sets up an argument about this form of circulation. One of Marx’s big arguments is that inferences you would draw from a commodity to
commodity relation, cannot be applied to the commodity-money-commodity metamorphosis. The first metamorphosis involves the transformation of commodities into money. He points out that you are going from the particular to the universal. And going from the particular to the universal faces a whole range of different problems. You have to find somebody out there who wants your commodity. You’ve got to fulfill a social need. In the midst of the tense complications of the social division of labour, somehow I have to find somebody in the market who wants my particular commodity and will give me the money equivalent of my commodity. So this means that the labour expended
on the commodity, as he says on page 201, “…must therefore be of a socially useful kind…” And then Marx goes on to say that “perhaps the
commodity is the product of a new kind of labour and claims to satisfy a newly arisen need,
or is even trying to bring forth a new need on its own account.” Here he’s beginning to talk about the problem of need creation under capitalism. What’s going to happen? How does an entrepreneur create a need for a new product? Perhaps innovations have other effects, and he goes on to say
“today the product satisfies a social need,. tomorrow it may perhaps be expelled partly or
completely from its place by a similar product.” What happens in the market therefore is a whole set of difficulties which have to be overcome before I can convert my commodity into money. I encounter, as he notes on page 202, the fluctuating demand and supply conditions,
which is already mentioned. So Marx then ends up saying on page 202 towards the bottom,
“we see then that commodities are in love with money, but that the course of true love never did run smooth. The quantitative articulation of society’s
productive organism, by which its scattered elements are integrated
into the system of the division of labour, is as haphazard and spontaneous as its qualitative articulation.” Here we are going back to the imagery
of the hidden hand and the atomistic qualities of capitalist production, which he is presuming and assuming. Marx says “the owners of commodities
therefore find out that the same division of labour which turns them
into independent private producers also makes the social process of production and
the relations of the individual producers to each other within that process independent of the producers themselves.” Back again to the Adam Smithian argument. “They also find out that the independence
of the individuals from each other has its counterpart and supplement in a system of all-round material dependence.” That means that although you are independent in the
market, you are dependent on the market in order to market your produce. So he then pulls this all together around this description which I’ve already used to clarify the relationship of going from the particular
to the universal on page 203 He then goes to the second component and says well let’s look at this M-C piece. Here we’re going from the universal to the particular. Now clearly, what this means when he
starts out by saying that all commodities are alienable is that they can all be bought and sold, and there is therefore a universal alienation, in that technical sense of everyone willing to give up their commodities, in order to trade them away. Clearly it is easier to go from the universal
to the particular for if I command money, and I go into the marketplace, I can buy whatever
commodity I want. So the difficulties and the traumas which
attach to the C-M transition are very different from the M-C transition . There is, if you like, a different power relation
involved here, and that has become crucial to the argument. Those who command the universal equivalent, namely money
are in a powerful position vis-a-vis those who command commodities. It’s a latent power, and at the moment we can just see it is as continuing power, but you can see how something can build there. So then Marx goes on to say that he will call this whole process the circulation of commodities. And on page 208, he goes into a very significant diversion to the main argument. In the middle of page 208 Marx says “nothing
could be more foolish than the dogma that because every sale is a purchase, and every purchase a sale, the circulation of commodities necessarily
implies an equilibrium between sales and purchases.” He then goes through an analysis of this argument, and quickly points out at the bottom of
the page that “but no one directly needs to purchase because
he has just sold.” Then Marx comments, “circulation bursts
through all the temporal, spatial and personal barriers imposed by the direct
exchange of products, and it does this by splitting up the direct
identity present in this case between the exchange of one’s own product and the acquisition of someone
else’s products into the two antithetical processes of sale and purchase.” To say that these mutually independent and
antithetical processes form an internal unity is also to say that their internal unity
moves forward through external antithesis. 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 makes itself felt violently by
producing a crisis. Here Marx is arguing that when I’ve sold a commodity and I’ve got the money from my sale, I may decide to hold onto that money. And if I decide to hold onto the money there will be less
money to buy commodities. Now why would I decide to hold onto the money? I would hold onto the money in a situation
of insecurity, I would keep the money because I wanted the universal equivalent, and as will be seen later some people hold onto money because they love it and fetishize it. There are all kinds of reasons why people
might hold onto money. The point here according to Marx is that if a lot of people decide to hold onto money then the circulation process stops; when the circulation process stops the
demand for commodities drops off, and when demand for commodities drops off many people are left with unsold commodities. Furthermore the fact that you have money allows you to get away from the immediate temporality and
spatiality of barter. For example you can hold onto the money for six months and then take it to Japan, Singapore or Brazil, and then go purchase there six months later. Once you’ve got your money you can make all kinds of decisions about it. Now what Marx is criticizing here is a famous proposition called Say’s law. Say’s law is commented on by Marx in the next
footnote on the next page as follows, “the conception adopted by Ricardo from the
tedious Say, that over-production is not possible or at least that no general glut of the market
is possible, is based on the proposition that products
are exchanged against products.” Say’s law was also held by Ricardo and it dominated thinking in classical political economy. And as a result the classical political economists for the most part claimed there could be no general crisis of capitalism. Why not? Because every purchase is a sale and
every sale is a purchase, therefore you are always in equilibrium. There may be a problem with too many shoes,
or too many shirts, or too many apples, but you cannot have a generalized crisis. Because Say’s law said you couldn’t. And Say’s law actually carried over from the
classical period into the neoclassical period. It was held by all economists at the end of
the nineteenth century up to the 1930’s. And in the 1930’s there were still
economists saying that a general crisis of capitalism is impossible. And there you had one! Marx has a very funny line about that elsewhere,
where he notes that faced with a general crisis the only response made by most economists is something to the effect that it wouldn’t happen this way if only the economy worked according to my textbook. But what Marx is saying is that
you can indeed have a general crisis. And how a general crisis occurs
was also spotted by Keynes Now what Keynes did in a series of very interesting
essays called Essays in Biography, back in the 1930’s was to point out the error of accepting Say’s law Keynes also pointed out that there were some
classical political economists who did not accept Say’s law and claimed there could indeed be a general crisis. At the time they went by the charming
name of the ‘general glut theorists’. And there were two in particular, Malthus and Sismondi. Which is a bit of a problem for Marx because
Marx couldn’t abide Malthus on other grounds, but Malthus certainly believed there could be a generalized crisis, and that such a generalized
crisis would be be the crisis of what he called effective demand; Not enough money to buy all the commodities. The other glut theorist was a Frenchman called Sismondi who also disputed Say’s law. However they were a minority. What Keynes did was to point out the importance
of what he called the liquidity trap. The liquidity trap develops in a time of difficulty because people start to hold back money. As they hold onto money the difficulties get worse so
more people hold onto money. The difficulty is therefore to get out of this downward spiral in the economy as more and more people run for cover and hold back money rather than investing it back into the market by buying stuff. So Keynes also talked about the significance of
effective demand, and of course Keynesian policies in relationship to the
Great Depression were to stimulate effective demand through state expenditures, debt financing, getting people back to work wherever possible
and getting consumerism back. Of course a lot of those problems were solved by World
War II and the demand for armaments. In so many ways World War II was a solution to the effective
demand problem. You could mop it all up in terms of armaments and production of armaments
and you would debt finance it, even debt financing the British. So you gave the British government something
called lend lease, meaning they took the commodities and agreed to pay them back later And when it came time for payment Keynes was faced with negotiating the repayment schedule, I think in 1944, and the American state department said: well, you give up the British Empire. And so Keynes answered: you mean we trade the British Empire for forgiving the
debt?, and the Americans basically said yes. And that’s where British decolonization policy really came from. Opening the world market was what the Americans wanted for American capital. They wanted the closed system of the
British empire opened up. And they reached their goal through this trade agreement over lend-lease. So this is the type of argument which is going on here in Marx. Marx is saying that you can indeed develop a general crisis thereby siding with
Malthus and Sismondi. Later Keynes draws on these arguments refusing
however to cite Marx Keynes claimed he had never read Marx,
but this is highly doubtful. However even if he hadn’t read Marx there were plenty
of people around him who had. So Keynes was probably familiar with Marx’s arguments
as to why Say’s law must be wrong, as well as the arguments describing the lopsidedness in this relationship C-M-C where C to M is different
from M to C. You cannot, as Say’s law does, assume that the laws relative to barter (C-C) also hold
in practice in the C-M-C circulation process because the transition from C to M is not the same as M to C. This is a sidebar but a terribly important one, obviously, for understanding contemporary politics. Now we get back to the circulation
of money. What Marx does here is argue in a set of rather boring maneuvers, if I dare say so. What he shows us is the interesting contrast between commodities
and money and how commodities enter into circulation. Commodities- I buy them, I wear them or I eat them; they
disappear. Therefore commodities enter into and drop out of circulation Money however stays in circulation, unless people hoard it or spirit it away or something like that,
but the general role of money is to stay in the circulation process.
So you have myriad commodity exchanges going on,
and you have a money which is somehow acting as
a lubricant for all this exchange And the question becomes how is it a lubricant? And furthermore: how much of that lubricant
do you need? So what the next ten pages are taken up with is the articulation of what we call the
‘quantity theory of money’, which is actually fairly similar
to what Ricardo had to say. So Marx defines the quantity theory first
at the bottom of page 217, where he says “the total quantity of money
functioning during a given period is a circulating medium which is determined on the one hand by the sum
of the prices of the commodities in circulation,” namely the sum of the prices, “and on the other hand by the rapidity of
alternation of the antithetical processes of circulation.” In other words he is looking at “…the movement of prices,
the quantity of commodities…, and the velocity of circulation.” The mass of money equals the sum of all of the prices of the commodities
in circulation modified by the velocity of circulation. The velocity of
circulation is a measure of how much work a coin or a dollar bill does on a given day. The velocity therefore tells us how many times
a mass of money exchanges on a given day. The federal reserve still has a key measure on the velocity
of money i.e. the velocity of circulation. You can see how important this concept is because once you have introduced credit cards as a means of exchange,
for example, you also increase the velocity of circulation. And as you increase the velocity of circulation,
you need less actual money because the amount of money you have is going to move much faster. If a dollar bill exchanges hands only once a day, that’s a different kind of world economy than an economy where a dollar bill changes
hands five times a day. You need far more dollar bills if you only
exchange bills once a day than five times a day, so the amount of money you need is very sensitive to this measure of velocity circulation. Now the federal reserve has all kinds of measures
for the velocity of money factor it sets up, and it’s a complicated issue how to measure it. But what Marx is saying is that
we must take this measure into account. Ricardo said the same thing so Marx is not saying much here that has not already been said in Ricardo, including the idea
of considering the sum of the prices. So this section deals with setting up the quantity theory of money. This then leads us into section C where we move to another level Here we talk about the way in which coins and symbols of value start to take on
certain functions And here we will find immediately: “The weight of gold represented in
the imagination by the prices of money-names of the commodities has to confront those commodities,
within circulation, as coins or pieces of gold of the same denomination. The business of coining, like the establishing of a standard
measure of prices, is an attribute proper to the state.” State power becomes crucial. “The different national uniforms worn at home
by gold and silver as coins, but taken off again when they appear on the world market, demonstrate the separation between the internal or national spheres of commodity circulation and its universal sphere, the world market.” This again is something which is going to
come back in the chapter about the world market and the universal sphere. Out of this arises, he says on page 223 ,
“…the latent possibility of replacing metallic money with tokens made
of some…material, i.e. symbols. And he observes further down: “Small change appears
alongside gold for the payment of fractional parts of the smallest gold coin; gold constantly enters into retail circulation,
although it is just as constantly being thrown out again by being exchanged with small change.” And then on the next page, he talks about “…nonconvertible paper money issued by
the state and given forced currency.” Issues of paper money. Here he begins to talk about the way “…credit-money (may) take root spontaneously in the function
of money as a means of payment.” So here we get a replacement going on, a replacement of gold by symbols, by paper, by coins. Why would that occur? Well, because gold is very awkward as a means of circulation. If every time you engage in this transaction you need a small grain of gold it would be be horribly messy. So indeed the requirements of circulation, meaning what is socially necessary in order for this circulation to become general
and for commodities to be exchanged in a general way, requires you to leave gold behind and instead use tokens, symbols, paper and so forth. “Paper money”, he says on the bottom of page 225 “is a symbol of gold,”
a symbol of money.” “Its relation to the values of commodities
consists only in this: they find imaginary expression in certain quantities of gold, and the same quantities are symbolically and
physically represented by the paper. Only insofar as paper money
represents gold, which like all other commodities has value,
is it a symbol of value.” Now, it’s interesting here to think about whether he is again working
with a logical argument or a historical argument. Marx talks about how different forms of
money were pushed out through historical evolution, and how important the state power was
in regulating what determines the value of money. In this chapter the power of the state becomes critical.
In a way the state was already present in chapter two, when he talked about the legal and juridical infrastructure
– ultimately a state function- being necessary for market exchange to flourish. Here Marx is explicitly referring to the way in which the state becomes critical in order to understand how money becomes a symbol i.e. totem or tokens. This transformation once again has an analogy
to the transformation of money as a measure into a standard of price. So this new
transformation brings about a radical redefinition of what money is about, and that
leads us into the final section 3 which is: Money. Here again Marx argues that at the
end of the day there is only one money. And it has to perform both of those functions.
How is it going to do that? We observe that as a measure of value, gold
is fine, however as a means of circulation it is not. As a standard of price
gold starts to fade into the background. The connectivity between the socially necessary labour
time embodied in the money commodity which gets mediated in all these different ways leads us to
lose contact with the monetary base. This leads Marx to consider a number
of elements involved in the contradictions internalized within the money form itself when considered as universal money. And the first one is the issue of hoarding. As Marx notes “when the circulation of commodities
first develops, there also develops the necessity and passionate desire to hold fast to the
product of the first metamorphosis. This product is the transformed shape of
the commodity or its gold chrysalis.” Commodities are thus sold not in
order to buy commodities, but in order to replace their commodity form
by their money form. Instead of being merely a way of
mediating the metabolic process, this change of form then
becomes an end in itself. “The money,” he says, “is petrified into a hoard,
and the seller of commodities also becomes a hoarder of money.” What he points to here, is
another transition. Instead of thinking about the C-M-C transition, we start to think about the M-C-M transition. Money into commodities, commodities into money. What the hoarders want is money,
they want the universal power money begets. But it’s interesting because Marx
talks about this in a sort of double language. That it exerts a passionate desire. Okay, so passionate desire is there, but then
he says it is also necessary. Why is it necessary? Why is hoarding necessary to commodity exchange? The first reason is given at the bottom of page 228: because when you enter the market, you enter into it
at a certain time which implies that when you need something in the market, you
would have saved up enough money beforehand to go into it. If you are a farmer and say you produced and sold your crop
in September, you have to hoard the money in order to buy the seeds and the energy
you will need in the spring to plant the crop, hire the labour and so forth. So hoarding is something which is implicit in
what we will call the time structure of the production of commodities.If all commodities were
produced and sold in the same time frame you wouldn’t need hoarding. But the fact is, they are not.
Some take a long time to produce while others are produced immediately
and consumed immediately. As Marx notes on the top of page 229,”in this way, hoards
of gold and silver of the most various sizes are piled up at all points of commercial intercourse.”
And it is necessary that this happens. “With the possibility of keeping hold of the commodity’s exchange-value,
or the exchange-value of the commodity, the lust for gold awakens.” The passion and desire comes into play. “Gold is a wonderful thing!, Its owner is master
of all he desires. Gold can even enable souls to enter Paradise.” The papacy in the medieval period, was in the habit of selling
indulgences which guaranteed your entry into heaven. And there are some people who maintain that the Vatican
was one of the first great capitalistic institutions as a consequence of this. We’re selling entry into heaven.
I mean, talk about selling conscience and honor, this is selling something really interesting! “Since money.” Marx says, “does not reveal what
has been transformed into it, everything whether a commodity or not is convertible into money. Everything becomes ‘saleable and purchaseable.'” Here he’s talking about the potentiality for the
commodification of everything. Once you use a money system, you could hang a
price on anything leading to the possible commodification of everything. And he continues “nothing is immune from its alchemy,
the bones of the saints cannot withstand it, let alone more delicate things. Just as in money every qualitative difference
between commodities is extinguished, so too for its part, as a radical leveller”. Again here is an interesting theme recurrent in
Marx, something that acts as a radical leveller, something capable of reducing everything to the same metric, namely that everything should have a price “It extinguishes,” Marx says, “all distinctions”. “But money is itself a commodity,
an external object capable of becoming the private property
of any individual.” Now this is a reversal of item three in the contradictions he noted on the relative and
equivalent forms of value. Remember, private activity became the means for the representation
of universal social labour. Now he’s saying that in fact private individuals can appropriate social power. Social power can become the property
of private persons. This is indeed the latent power relation of the money form and the
holding onto of the universal equivalent which is beginning to crystallize out into the open, and of course it will become
the basis of class power. For this reason Marx notes, “ancient society
therefore denounced it [money] as tending to destroy the economic and moral order. Modern society, which already in its infancy
had pulled Pluto by the hair of his head from the bowels of the earth, greets gold as is its holy grail,
as the glittering incarnation of its innermost principle of life.” It’s very interesting. We often talk about money as filthy, filthy lucre. Guess there’s a TV show on right now about dirty
sexy money or something like that. Freud had all kinds of wonderful things to
say about money, and in the end he called it bourgeois sublimation of rituals of the anus. So there’s something unclean about
money, something not nice about money, and ancient society
actually did not like the money economy. In the Grundrisse, Marx talks about the
way in which one of the big transitions that occurred in the social world was what he called the destruction of community by money power whereby money became the community. So that we now live in the community of money. We may have all kinds of fantasies about living in
community somewhere else and all that kind of stuff, but we live in a community of money, and Marx is also making that point very clear. Furthermore, at the bottom of page 230 Marx piles on the agony of this by simply pointing out that the
“hoarding drive is boundless in its nature. Here Marx provides a description of the mechanism at work:
“the the metallic natural form of this object” and the “universal equivalent form of all
other commodities” and the “direct…social incarnation
of all human labour,” all allow for “the hoarding drive” to become
“boundless in its nature.” “Qualitatively or formally considered, money
is independent of all limits, that is to say it is the universal representation of
material wealth because it is directly convertible into any other commodity.” Marx then proceeds to talk about “this contradiction
between the quantitative limitation and the qualitative lack of limitation of money which keeps driving the hoarder
back to his Sisyphean task”. Here we are talking about accumulation This is Marx’s first mention of accumulation
in Capital. The limitless qualities of it are fascinating to reflect upon. I mean, if we are accumulating use values, how many Ferraris can you have? Imelda Marcos had what? Six thousand
pairs of shoes? But there is a limit. But do billionaires feel they have a limit about the next billion? The answer is no. The accumulation of money power is limitless, and therefore what we get into is a form of
accumulation that has in principle no external limits. This is a very important argument, and to the degree that people are into
the accumulation of social power, they are into the accumulation of
limitless social power. I mean, most CEOs in this country
are getting perhaps 5 to 10 million dollars a year, nevertheless
they consider themselves underpaid. They kind of say, well hey, somebody in a hedge fund
got 1.7 billion dollars last year, I deserve that. How come they got 1.7 billion
and I didn’t? So this is the point about the
limitlessness of money accumulation. Two years ago the top hedge fund
owner got 250 million dollars. This year it’s 1.7 billion. It’s limitless. And Marx is laying down a principle about
the limitlessness of money: as soon as you get into money as a universal equivalent, as a representation of socially necessary
labour time of value. Money is in principle limitless in terms of what you can accumulate, and in terms of what private persons
can accumulate, in terms of their own private power over a social good, which is the socially necessary labour time
in the world market. This is what Marx is pointing out here, namely the limitless quality of accumulation, and the fact that the accumulation of
capital knows no limit. Of course if you look at every other society that has ever existed
in history you’ll find almost invariably that they hit upon limits. And when they hit limits and didn’t know
where to go, they often collapsed. The one society that seems to be
completely limitless is capital. And so far it has been limitless precisely because its main measure of value has this particular
form which allows it to be accumulated in this way. The result is all the growth curves in terms of the total
money in society, the total wealth of society, the total amount of output in society,
the total global gross domestic product in the world etc. Look at the growth curves since capitalism really kicked in around 1750 with all kinds of social, political and environmental
consequences to worry about of course But that is the nature of what capitalism is about, and that is how Marx is setting it up. Which leads him to point out the function of hoarding
towards the end of this section at the bottom of page 231 where he makes a little aside about the aesthetic form of hoarding, like wanting
to own gold or silver plated urinals etc. “Owing to the continual fluctuations in the extent
and rapidity of the circulation of commodities as well as in their prices, the quantity of money in circulation unceasingly
ebbs and flows. This quantity must therefore be capable of expansion and contraction.” And the hoard can fulfill that function. In other words Marx is going to modify his theory of money in society by saying that given the fluctuations the total mass of money you need is the sum
of the prices modified by the velocity plus a reserve fund. This reserve fund can be brought into circulation
when there is a massive surge of commodity production, and taken out of circulation when it is not needed. But the reserve fund is absolutely crucial
to the stabilization of this system. That is to say that a form of hoarding is necessary. For those two reasons, the temporality reason and the following reason which pertains to the means of payment These are to be found in Section B: means of payment. So he returns to consider means of payment as being a way to approach the need for a hoard given the different temporalities in entering the market. In other words if we just exchange notes and say: I’ll settle
up with you at the end of the year, you don’t actually need to hoard the money. So this kind of exchange serves as a means of payment. I just write a note and say:
okay, I owe you this. The farmer writes a note and says: I owe you this and I’ll
pay you back at harvest time or whatever. And then certain dates are agreed upon for payment, hence these exchanges tend to become formalized. But the result of this type of exchange of notes is a transition. So here we’ve got, see pages 233 and 234, an extremely important transition
which is very easy to miss partly because of Marx’s complicated language. The first element in this transition,
page 233 occurs when “the seller becomes a creditor and the buyer
a debtor.” This amounts to a big transition in the relationships between buyer
and seller on the one hand and creditor and debtor on the other. “Since the metamorphosis of commodities, or the
development of their form of value, has undergone a change here, whereby money receives a new function as well. It
becomes a new means of payment. Note that the role of creditor or of debtor results
here from the simple circulation of commodities.” It’s amazing how much he squeezed
out of this concept of the commodity here. The concept of commodities now give rise to
these new roles of creditor and debtor, “and this is capable”, he says,
“of a more rigid crystallization.” He then starts to talk about the forms of
class struggle in the ancient world in which the plebeian debtors were destroyed by the creditors, the struggle in the middle ages
where the feudal debtors lost their political power. So there’s a power relation in this debtor-creditor relationship. He then takes us back to the sphere of circulation. And takes us back to an earlier argument, where he has talked about
the way in which money becomes the object of the circulation process. But money now enters the circulation process in
a peculiar way, as a means of payment, Marx says, money “enters circulation, but only after
the commodity has already left it. The money no longer mediates the process. It
brings it to an end by emerging independently, as the absolute form of existence
of exchange value,” in other words as the universal commodity. The seller turned his commodity
into money in order to satisfy some need; the hoarder in order to preserve
the monetary form of his commodity, and the indebted purchaser
in order to be able to pay. If he does not pay, his goods
will be sold compulsorily. The value form of the commodity, money, has now become the
self-sufficient purpose of the sale owing to a social necessity springing from conditions of
the process of circulation itself.” Marx is now taking us to this radical transition from a C-M-C circuit into a M-C-M circuit. If I hold money, I can just lend it to you and then you pay me back. I don’t even have to produce commodities
anymore, I let you produce the commodities; I just hold the money. But note, I want to get that money back. But of course the underlying logical argument here is:
why would I get back the same amount I started with? Why would I not insist upon an extra amount of money? That is to say an exchange of equivalents makes sense when I go from commodity to commodity mediated
by money, I end up with a commodity which in effect has the same value as the one I started out with in principle, and I’m happy. I started with shirts and I got my shoes, equivalent exchanged for equivalent,
and everything’s fine. The equality principle has worked. But why would I start with money just in order to get money? The only reason to do that
is to get more money. And so what Marx is saying here is that out of this relationship
between the commodity and money there emerges a form of circulation
which is the M-C-M form of circulation. And this form of circulation arises out of a social necessity, not because somebody felt it was a good idea,
although we’ve seen here that passionate interests are very much
engaged as well as lust for gold or lust for power. But even if passion and lust were not involved, you would still need this form of circulation in order to keep the measure of value
and the means of circulation in balance. That is the only way you can
resolve the contradiction between money as a measure of value and money as a means of circulation,
that is by having this form of circulation which brings money into exchange when
it is needed and takes it out when it is no longer needed. So that, the money needed, if it’s in equilibrium with the commodities being traded, will keep the measure of value constant. Otherwise the measure of value
will start shooting all over the place. So if I want to maintain a constant measure of value, I have to be able to use
money as a means of payment, and in doing so I trigger this form of circulation which is money focusing on money. This little passage, in the middle and bottom of page 234 is a crucial transition point, and you should mark it and recognize it as such, in the whole of Marx’s argument. He doesn’t actually signal this
transition as crucial but in fact it is. And the idea that this transition
is indicative of a social necessity is also important. Capitalism does not actually depend simply on individuals being greedy and so forth; it depends upon social necessity piled on top of social necessity, which allows for greed of a certain kind to flourish in certain situations. This brings him back, on page 235 at the bottom, to talk about “a contradiction imminent in
the function of money as the means of payment. When the payments balance each other, money functions
only nominally, as money of account, as a measure of value. But when actual payments have to be made, money
does not come onto the scene as a circulating medium, in its merely transient form of
an intermediary in the social metabolism, but as the “individual incarnation of social labour, the independent presence of exchange value, the universal commodity.” This leads him to remark on page 236, “this contradiction bursts forth in that aspect of industrial and commercial crisis which is known as a monetary crisis. Such a crisis occurs only where the ongoing
chain of payments has been fully developed.” That is when the full development of means of payment, are just spread around all over the place and credit structures are broadly engaged. Marx remarks, “whenever there is a general disturbance of
the mechanism, no matter what its cause, money suddenly and immediately
changes over from its merely nominal shape, money of account, into hard cash. Profane commodities can no longer replace it. The use-value of commodities becomes
valueless, and their value vanishes in the face of their own form of value. The bourgeois, drunk with prosperity and arrogantly certain of himself, has just declared that money is a purely imaginary creation. ‘Commodities alone are money’, he said. But now the opposite cry resounds over the
markets of the world: only money is a commodity. As the heart pants after fresh water,
so pants his soul after money, the only wealth. In a crisis, the antithesis between commodities
and their value-form, money, is raised to the level of an absolute contradiction”. And he goes on to talk about monetary famine. Six months ago, if you read the financial press, everybody was talking about excess liquidity in the markets. A surplus of liquidity sloshing around,
not knowing where to go. Surplus capital everywhere. If you wanted to borrow you just went and
they gave you anything, you could get sub-prime loans, you could get whatever you want. And then what happened over the past few weeks, suddenly the federal reserve has to inject liquidity into the system. They needed real money. Those houses and all of that
didn’t actually match up to that value. In other words it was fictitious value
they were playing with out there. Marx amusingly says somewhere else, “at the moment of speculation, everybody’s a Protestant, they act on faith. When the crisis comes they want real money, they
go back to the Catholicism of the monetary base.” And this brings us to consider the notion of value, where is the value right now? Where does it exist? And what is all that money which
is being exchanged in all of these debt bottling plants we find
around ourselves in New York City? What does it mean? What connectivity does it have to value, to socially necessary labour time? And what Marx is pointing to here
is the way in which the monetary system, once it escapes from those immediate constraints of socially
necessary labour time, can take off and do all kinds of crazy things. And those crazy things create all sorts of problems in the global economy. But credit money does more than that,
because in the next couple of pages Marx is saying: “Credit money springs directly out
of the function of money as a means of payment, furthermore, credit money becomes the
universal material of contracts. Rent, taxes and so on are transformed from payments in kind to payments in money.” The monetisation of everything. In the past the church used to tithe people’s agricultural output, then came the monetisation of tithes, so finally you get the monetization
and commodification of everything. This leads us into another duality: firstly a reserve fund becomes necessary and that reserve fund is going to have to function
in relationship to this system, via this form of M-C-M circulation. That’s the way in which the argument works. But Marx then says, in the final and brief section on world money, that individual states of course manage their own money systems, money supplies, money tokens and so forth, but they’re not outside of being disciplined
by the world market, meaning that the exchange of commodities on the
world market at some point or other becomes critical to the way in which this monetary system functions. The state has had a very important role to play in the stabilization of the monetary system within its borders. And in doing so the state initially connected its monetary system very clearly to a metallic base, gold, silver. And that metallic base became crucial in the construction of the initial financial monetary system. Assuring the security of that metallic base became critical. It’s kind of interesting to note that John Locke wrote his essay on religious tolerance in which he said, we should tolerate each other in terms of our religious views and we shouldn’t go
around burning heretics at the stake and all that kind of thing. He said this at the same time as Sir Isaac Newton became master of the King’s mint. And Isaac’s great role was to assure the quality of the currency, to assay the gold, to assay the weight of the silver. During those years there was great trade which also lead to the debasement of the coinage, a type of fraud called coin clipping. What you did was to take a silver coin
and shave off a bit of it, and then you took lots of silver coins and
shaved off lots of little bits. So by the end of the day you had another silver coin, good way to make money. What did Isaac Newton do about this? He caught
a few of these people and he had them hung on Tyburn in public. So you no longer burned people at the stake for their
religious views, you now hung them in Tyburn for debasing coinage. God is displaced by mammon in terms of capital punishment. So this business brings us back to the issue which
I’m sure is bothering many of you, which is what happened to the metallic base? There was a metallic base to global capitalism up until the late 1960’s/1970’s, and it was put under great stress in the late 60’s early 1970’s. And ultimately it collapsed, so that by 1973 you have a global monetary system which is no longer based on any metallic commodity You will notice however that gold is still important, the gold price is still quoted. And if push comes to shove you might well
ask yourself whether you want to hold onto gold or dollars, Euros, or Yen, or whatever. You might want to think about that. So gold has not entirely disappeared from the monetary scene at all. Many people still think, and there are even arguments,
that we should go back to the gold standard because the current monetary system is just crazy. But what in effect happened after 1973 was a tendency to associate currencies with a particular basket of commodities. For a while there we sat with the idea that
petro-dollars would work, that actually the dollar value of petroleum was the crucial basket determinant. But then petroleum was yo-yoing too much, and in any case its value was too much controlled by OPEC. So in effect what now happens is that currency speculation actually looks at the relationship
between the productivity of a whole economy, i.e. its total bundle of goods and services produced, and compares it to the value of its currency. What is being compared is the total commodity output of Japan, West Germany as it was, and now Europe, and the United States and China. And after
comparing all of these things the question is asked, well, which economy is producing a bundle of commodities
inside its borders that can really sustain that currency? And if the Chinese economy is doing that,
then the Chinese currency should appreciate. But the problem then starts when the state
steps in and does all kinds of strange things. But at some point or other the question of the nature of the commodity bundle which underlies the value is posed; in other words we no longer
attach the bundle to some single commodity like gold. We attach it to an imaginary understanding which is where statistics come in. We wouldn’t know how to work in this world unless we had masses of statistics. And what are these statistics about? GDP Who produces all those statistics and who
collects them? The World Bank, the International Bank of Settlements. They produce all this data. Vast amounts of it, on the basis of what, sometimes you wonder,
but, nevertheless, it’s there. And this data serves to construct the fiction that there
is a national economy. Now this is a real problem because there is no
national economy, I mean everything is trading with everything else on the global stage, nevertheless there’s this fiction which says there is a national economy. And when the national economy in the United States
is doing well, the dollar will rise, if it’s doing badly the dollar will collapse. So the dollar has been under a lot of pressure lately
because the US economy is not doing very well compared to the rest of the world on the basis of certain measures. But then speculators will intervene and claim
that wrong measure are being applied. And if they can persuade you of this,
the values will change and they will make a bundle of money on the currency movement. George Soros made two billion in about five days by speculating on the value of the British pound against the
European exchange rate mechanism. He was actually able to force those kinds of
things to happen. So here you see that built into Marx’s argument is a very interesting way of understanding the connectivity between the very secure
money commodity gold, with which Marx began his analysis of money, to this real, problematical, universal money
emerging out of the M-C-M circuit in the end, with all of these broader issues. I think he did a pretty good job and we can build on it. Of course much has changed since Marx’s time and we have to take those transformations into account, but it seems to me he set up a very useful argument to contemplate our current situation. Building on his arguments we can go quite far
towards understand many of the contradictions which exist within our contemporary political economic system. So it’s interesting that something
like the sub-prime mortgage crisis, given my own background, it has been obvious that there would be a crash in property markets sooner or later. I thought it would occur about two or three
years ago, but they managed to stave it off. But now it’s with us and the question
is: how far will that go before they can shift to something else, some other fictitious form? But behind this, of course, lies the emergence of imaginary forms. Note how Marx emphasizes the imaginary qualities of all of this. We imagine it to be this,
we imagine it to be that. And we cannot do without that imaginary stuff going on. In fact that is what allows the system to function. It’s built into it. It’s not as if we can say: get rid of all the fetishism, get rid of all of that imaginary stuff
and then we’ll be ok. No, we couldn’t do that. These things are socially necessary, they’re
embedded within the capitalist system. That raises the question: well what we do about it?, how do we confront them?, and what do we do about their
obvious problematic consequences? So these are the sorts of issues that this chapter raises. A final point this chapter raises is the interesting question as to how much of it
do you really need to understand the rest of volume one of Capital? And the answer is: not much. (laughter) The rest of Capital uses certain basic propositions out of here which can be reduced to four or five arguments and then goes on with the analysis. What Marx was trying to do here was to lay a basis, as he was in the preceding chapters, for a magnum opus i.e. the work
that was going to include an understanding of credit systems, financial
institutions and structures, and state interventions. He was really trying here to lay out a systematic basis for a very much broader project. But you’ll be happy to know that you don’t have to thoroughly understand all
the nuances of this chapter, interesting and important though they really are to our contemporary circumstances. You don’t have to understand every nuance in order to move into the next chapters which
are much simpler and more direct. So you’re over the worst of it (laughter). We can now start the easy part. We have a few minutes for questions, I’m
sorry I have taken so long, but this is a difficult and intricate chapter, which needs a lot of elabouration in order to get it straight. Any kind of comments, questions? »STUDENT:When you’re talking about the accumulation of things and about upper limits, I went to visit Yankee Candle just to see what that was all about. And next to it they had opened a car museum, a very large car museum, and I walked around it and realized that all the cars seemed to have a personal
angle on the display cases and the descriptions. It turned out the museum was the vast personal collection of the owner and founder of the Yankee Candle. It was just a garage, so large that it was now a museum, and you payed to go in, but the owner drove them in and out whenever he wanted. And there was no limit, it was huge. »HARVEY:Not the same as what you could get with twenty billion dollars. And that’s the point, that people do accumulate
large quantities of things like that, but how many yachts can you have?,
how many residencies can you have? On the use-value side there are these limitations, so it’s the limitless capacity of the accumulation of money power that will be very important to look at;
one of the major propositions, of course, in the rest of Capital is the limitlessness of this. »HARVEY: Yes. »STUDENT:I’m just curious about paper money, when
paper money first starts showing up in…what are you saying
in terms of this as a historical or a logical development? »HARVEY:Well scrip and things like that have
been around for very long time, in various forms. So paper representations
as well as tokens have been around for a long time. Which goes back to my original argument
about the monetary form, that monetary forms have been around a very long
time. The interesting question is how all of those forms actually became assembled around
the capitalist definition of what money is. The same thing applies to temporality. It’s not as if
capitalism invented temporality. Every society has its own
definitions of temporality and spatiality . There’s a long history in the anthropological
and historical record of that. But what happens is that
capitalism starts to insist upon certain definitions of temporality. For instance we’re in one right now:
it’s eight thirty and you all want to go home. Now if you’re really interested in learning
you would want to stay here until five in the morning, right? (laughter) You’re being very nice…
But you see what I mean. Here we have this kind of
definition of temporality which is in the school calendar so for example we
we start in here and we finish off there. It’s all built in, and we accept it as normal,
so it becomes normalized. Whereas I can certainly remember intellectual
discussions in my youth, when all things were wonderful, which went on all day and all night, and we were not limited by anything.
I mean, we skipped classes and then had a discussion instead;
it was a different notion of temporality The problem was there was nothing else to do,
and the classes were very boring. So, I think these definitions are contingent, and this is also what
Marx is arguing throughout the book, namely that the categories of political economy
are contingent upon the rise of capitalism. The notion of temporality is specific;
capitalism has a specific temporality, which is what E.P. Thompson talks about, namely the rise of industrial work discipline, what that entailed and how that was enforced. And we’ll also see some of that coming up in Marx’s Capital. OK, so we leave it there
and will continue this saga next week.

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