Money. The root of all evil. It can’t buy you love, but it makes the world go round. Few people understood the vast complexities of currency better than Karl Marx. His book Capital, is seen by many as the authoritative theoretical text on economy, politics, and materialist philosophy. Its vast critiques have fostered new studies on capitalist practices relating to what exactly is ‘value’, many of which are still referenced today by countless economic experts. In this excerpt from Marx, Capital, and the Madness of Economic Reason, author David Harvey analyzes Marx’s thoughts on value as being more social than strictly finance based, and how it remains in motion while still not being able to completely sever its eternal tie with its old partner, money.
Most of Marx’s theoretical arguments throughout Capital are expressed in value terms. The economic data of the world and most of Marx’s actual examples are expressed in money terms. Are we to assume that money is an accurate and unproblematic representation of value? If not, why not: and with what consequences? Given the history of representational forms, is it possible that money is founded on systemic distortions of the value it is supposed to represent? Map projections are notorious for accurately representing some features of the earth’s surface while distorting others. Should we not worry about the possibility of similar distortions in the case of money in relation to value?
Value is a social relation. As such, it is ‘immaterial but objective.’ The ‘phantom-like objectivity’ of value arises because ‘not an atom of matter enters into the objectivity of commodities as values’. Their status as values contrasts with ‘the coarsely sensuous objectivity of commodities as physical objects. We may twist and turn a single commodity as we wish; it remains impossible to grasp it as a thing possessing value.’ The value of commodities is, like many other features of social life – such as power, reputation, status, influence or charisma – an immaterial but objective social relation that craves a material expression. In the case of value, this need is met through what Marx calls the ‘dazzling’ form of money.
Marx is very careful with his language. He refers to money almost exclusively as the ‘form of expression’ or as the ‘representation’ of value. He scrupulously avoids the idea that money is value incarnate, or that it is an arbitrary symbol imposed by convention on exchange relations (which was a widespread view in the political economy of his time). Value cannot exist without money as its mode of expression. Conversely, however autonomous it may seem, money cannot cut the umbilical cord that ties it to what it represents. We should think of money and value as autonomous and independent of each other but dialectically intertwined. This kind of relationship has a long history.
Here is how Marx thinks of it:
It has become apparent in the course of our presentation that value, which appeared as an abstraction, is possible only … as soon as money is posited; this circulation of money in turn leads to capital, hence can be fully developed only on the foundation of capital; just as, generally, only on this foundation can circulation seize hold of all moments of production. This development, therefore, not only makes visible the historic character of forms, such as capital, which belong to a specific epoch of history; but also (in its course), categories such as value, which appear as purely abstract, show the historic foundation from which they are abstracted, and on whose basis alone they can appear … and categories which belong to more or less all epochs, such as e.g. money, show the historic modifications which they undergo.
For Marx, all the major categories in Capital, taken together, are abstractions grounded in the historical experience and practices of capitalism. ‘The economic concept of value does not occur in antiquity … The concept of value is entirely peculiar to the most modern economy, since it is the most abstract expression of capital itself and the production resting on it.’ Categories that have a longer history, such as rent, interest and profit on merchant’s capital, become adapted over time to the requirements of a capitalist mode of production. This is the case with money. The problem is how to distinguish between those characteristics of money that are unique to capitalism and the various money forms (like cowrie shells or wampum beads) that pre-existed it. This question becomes doubly important when it comes to analyzing credit.
The constant continuity of the process (of circulation), the unobstructed and fluid transition of value from one form into the other, or from one phase of the process into the next, appears as a fundamental condition for production based on capital to a much greater degree than for all earlier forms of production… It thus appears as a matter of chance for production based on capital whether or not (this) essential condition … is actually brought about. The suspension of this chance element by capital itself is credit … Which is why credit in any developed form appears in no earlier mode of production. There was borrowing and lending in earlier situations as well, and usury is even the oldest of the antediluvian forms of capital. But borrowing and lending no more constitute credit than working constitutes industrial labor or free wage labor. And credit as an essential, developed relation of production appears historically only in circulation based on capital or on age labor. (Money itself is a form for suspending the unevenness of the times required in different branches of production, to the extent this obstructs exchange.)
The distinctive qualities of both money and credit within a capitalist mode of production are to ensure the continuity of movement of capital as value in motion. Conversely, the necessity to ensure continuity brings together the categories of money, credit and value into a specific historical configuration.
— source blog.oup.com by David Harvey 2017-09-12