Alan Freeman: Investing in Civilization


This is a lecture that Marxist economist Alana Freeman gave in China in 2012 on the topic of the Creative Industries. (It’s a practice talk Alan gave in his hotel the day before his actual presentation.) While the talk begins on a more narrow discussion of the creative industries it becomes a wide-ranging discussion of the role of creative labor in the changing nature of the modern capitalism, to crisis, to the role of the state in crisis, to a critique of stage-ist theories of history and mechanical marxism, and more. It’s a fascinating talk.

Alan Freeman now has his own Youtube channel where you can see more of his lectures. His papers can be read at:

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Read a book with me

I have moved to New York City. I am looking to either join or start a reading group. I want to read the Grundrisse (and perhaps some supplementary texts) with this group. I want to start as soon as possible.


Contact me at: call me cooney at g mail (no spaces.)

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Critique of Political Economy. Chapter 2 part 2- notes

2. Medium of Circulation

Interesting that Marx has discussed all of these properties of money as measure of value, unit of account and so on, without getting into circulation. Thus, in Marx’s system, money arises out of the nature of the commodity itself, out of the social relations of commodity production, not out of some abstracted notion of circulation. This roots Marx’s concept of money and circulation in a theory of production, firmly establishing the primacy of the social relations of production in our analysis.

Marx tells us that circulation will both present and solve the contradictions of exchange that are inherent in commodity production. Circulation is the change of form of commodities. Commodities enter exchange with an ideal price which their sellers hope to realize. If this price is realized they become use-values to the new owner and a sum of money to the seller. Thus the change of form corresponds to the two sides of the commodity: it’s use-value and exchange-value (or value, in Marx’s later formulations.)

Circulation implies a continual renewal of transactions and that commodities enter exchange with an ideal price.

a. Metamorphosis of commodities:

Marx is dealing here exclusively with C-M-C (the form of exchange where a commodity-C- is traded for money-M- and then this money is used to buy another commodity-C-.) He is setting aside M-C-M, the process whereby capitalist’s make profit. He is setting M-C-M aside because this entails more advanced relations of production, specifically capitalist relations of production (M-C-M implies M-C-M1, or production for profit which implies wage labor). Marx is here dealing merely with social relations of simple circulation. Later, in Capital, he will show that simple circulation masks capitalist social relations.

In C-M-C, the ideal price of a commodity becomes real social labor. Ideal money becomes actual money. Exchange values were ideal gold. Now they are actual gold.

Here gold’s value is a formal use-value, its ability to measure value, rather than an actual use-value (it’s ability to be jewelry or something). Thus the antithesis of exchange value (or value!) and use-value splits into the antithesis of commodities and money. The antagonisms within the commodity form is externalized to the antagonism between commodities and money. Each extreme (C and M) represents the other ideally. Commodities are ideally money and vice versa. And this solves the contradiction inherent in exchange.

…what was that contradiction again? It was that a commodity with an ideal price must exchange for money with an ideal use-value. By representing the commodity and gold as one-sided polar opposites we can finally see how this exchange becomes logically possible. We return to this point after noting…

When we discuss C-M-C we get into a viscous circle of assumptions where we assume purchases and sales at each end of the circuit. The presence of money implies the metamorphosis of other commodities elsewhere in the economy. It implies an infinity of interlinked circuits.

When we said that we can only solve the mystery of exchange if we consider commodities and money one-sidedly this means that though money is a commodity and the the commodity has an exchange-value, money must take the form of pure, one-sided exchange-value. Gold is not bartered as a simple commodity. It is money. And commodities are already estimated in ideal money prices. The exchange value of a commodity is determined by the price of the commodity and the value of gold, not vice versa. This is in contrast to the view that gold and commodities enter circulation as simple commodities to be bartered and that their values are determined in this process of bartering. For Marx, money and commodities have values before they enter circulation.

Parenthetically here Marx tells us that discussions of price-value divergence do not belong in the analysis at this point since we are only talking about simple circulation. Nonetheless it is still appropriate to discuss the separation of purchase and sale, though at this point it is merely a formal possibility. (The reason that price-value divergence do not belong in this analysis at this point is not because Marx has an equilibrium view of exchange as is sometimes argued. Rather, since he has abstracted from production relations and is merely treating relations of circulation his analysis at this level of abstraction lacks a discussion of the dynamism of capitalist productive relations and the way they manifest in price-value divergence.) Marx then discusses the isolated sides of each part of the metamorphosis.

When we look at C-M we see that there is no quantitative limit to the alienability of gold, but only a quantitative limit. In other words, anything can be sold for cash. Each isolated exchange is part of a vast intertwined web of exchanges.

Marx relates C-M-C to S-U-I or Species-Universality-Inidivuality. I can’t say the meaning of this is perfectly clear to me, but I assume me means that Money is the link that connects the individual laborer to the species. Money is the universal measure of value and hence the universal gateway which connects the two extremes.

The role of buyer and seller are not eternal to human nature but part of a specific organization of production. In C-M-C capitalist relations are expressed merely as formal relations of buying and selling. The origin of profit and the specific capitalist form of circulation (M-C-M) are obscured. The formal equality of markets and civil society is established.

In the antagonism of M-C we see the possible separation of purchase and sale. Just because one person turns C into M doesn’t mean that they will turn around and turn M back into C. The possibility for crisis is opened up. Say’s Law if refuted. Say’s Law is bullshit because it leaves out the role of money!

B. Circulation of M

As a means of circulation money always appears as a means of purchase. Commodities change form while money changes its place. The metamorphosis of commodities take the form of the circulation of money.Through its special function acquired in the sphere of circulation money acquires a new function which Marx must now examine.

The constant movement of money could appear chaotic unless we see the order imposed upon it by production (or by banks which we abstract from here.) The amount of gold required for circulation is determined by the sum of all prices and the velocity of money (and the value of gold.) The velocity of money refers the amount of transactions a unit of money can make in a day. The velocity of money can substitute for the amount of gold required for circulation only up to a limit. The volume of money required is set by the prices of commodities not vice versa, as in the quantity theory of money. The quantity of gold required depends on its own value. And Money must be capable of expanding and contracting is supply so that it can adjust its volume to the needed price level.

Since all of the determining factors here originate in production, the analysis of strict simple circulation is shallow and limited.

c. Coin and Symbol of Value

As medium of circulation gold becomes coin. It is coined according to money of account, or unit of account. In other words money takes the form of coins which are coined in specific unit names (shillings, pounds, pennies, whatever.) Coins are gold pieces stamped with weight names. This shows the obvious role of the state in money. The state gives money its local and political character. A new contradiction emerges, that between the national sphere of circulation of a coin and the universal sphere of commodity circulation (and gold circulation as world money…)The difference between coin and bullion is the difference between coin denomination and weight denomination. The technical conversion between the two forms consists of either stamping or melting.

When a coin is debased its ideal value is greater than its real value. It becomes fictitious gold. It is idealized in practice! (It is important that Marx always bases these theoretical moves in real practice, in historical development.This doesn’t mean that the logical succession of categories is the same as the history of concrete money relations. It just means that the logical ordering of these categories is not merely a matter of idealist philosophizing but rather that logical categories can and do take concrete form in specific historical examples.) This means that the mint value of money comes into conflict with the bullion value, or, in another way of putting it, the medium of circulation comes into conflict with the standard of price. Of course, both medium of circulation and standard of price are properties of money and so we are talking about a contradiction/antagonsim/conflict within the money form itself. We can expect that this contradiction will be too volatile to be contained in one form of money and that it will have to be resolved by splitting the various functions of money into different types of money in the same way that the contradiction in the commodity form between use-value and value is externalized into the separation of money and commodities.

As explained above, when the market price of gold rises above its mint price this means that the ‘reckoning name’ of coins begins to denote smaller and smaller quantities of gold. The standard of price changes. Future money must be coined to adjust to this change in the standard of price. Thus the same money name, the same standard of price, stands for a constantly diminishing quantity of gold. In other words we could have a coin that has “I am a pound of gold” written on it but it is not actually a pound of gold. The mint price/the reckoning name/unit of account has been devalued. If we are talking about gold coins then this devaluation is probably the result of clipping of coins. The ideal value of the coin (“I am a pound of gold”) has become less than the actual value of that coin (perhaps it is only .9 pounds of gold.) The gold coin is fictitious gold. It has become ‘idealized in practice’! This contradiction between mint value and bullion value is another name for the contradiction between medium of circulation and standard of price.

Thus the market value of gold rises above its mint price. The reckoning names of coins begin to represent a smaller and smaller quantity of gold. A ‘pound’ comes to mean less and less than an actual pound of gold. This means that the standard of money has changed. Future coins are minted to this new standard. Thus the same money name (one pound of franc or dollar, etc.) stands for a constantly diminishing quantity of gold! This is a contradiction between coind and standard of price. It is also a contradiction between coin and universal equivalent.

If it seems that we are drowning in a lot of different contradictions we could probably step back for a moment and realize that all of these contradictions in the money form seem to be variations on a theme. Money has a use-value and a value. It’s value is universal (the representation of abstract labor, universal wealth.) It’s use-value takes particular forms: coins, paper money, credit money, etc. Perhaps all of these contradictions are all variations of a universal-particular contradiction. (Alan Freemen makes this point in a paper called ‘GELD’).

This absurdity of measuring gold in gold coins of lesser value leads to the replacement of gold coins by symbols of value, tokens of value like copper coins or paper money. Thus coins become symbols of ideal money. While only gold can be the measure of value anything can be a means of circulation. Gold doesn’t actually have to be physically present in order to measure the value of a commodity or in order to realize this value in exchange. We already know that commodities have ideal prices. They don’t need gold to be present in order to form these prices. And we know that a symbol of value, like a copper coin, can serve the purpose of realizing the value of the commodity.

The state is important here because the state must guarantee the value of the symbolic money. Marx mentions that copper coins are legally kept within the sphere of circulation by not over minting (not producing too many of them). Over production of copper coins would lead to people hoarding them to melt down and sell for metal. In fact, because copper, silver, nickel, etc. coins still have values as metals this leads to the use of paper money. Thus the medium of circulation becomes purely symbolic. We have moved from a commodity with a use-value and value to money to coin to subsidiary metal to paper. The separation of commodities from the representation of their own value has become completely separated.

Still, despite this separation, the value of the symbol relies on the value of the gold it represents. Thus exchange value has an ideal expression in price and an imaginary, symbolic existence in money. The only real existence of value is in the commodity itself (the gold commodity and all other commodities.) The token appears to represent value directly but it does not. It only represents value indirectly through gold.

Credit money, Marx tells us here, operates under different laws which he does not take up in this volume, or elsewhere. This is because credit money assumes more advances relations of production, which we are abstracting away from at this level of analysis. Unfortunately, Marx did not get around to fleshing out a credit theory of money so it lies up to others to construct one based on his framework.

While Marx leaves a big role for the state in most of his value theory he likes to deduce the categories from each other without relying on some exogenous force like the state. While the state is often caught up in the regulation of token money Marx has shown us how token money evolves logically from the structure of simple circulation. Thus monetary politics which seek to change the role of token money in capitalism (say the movement to bring back the gold standard) will fail to change the fact that token money evolves ‘naturally’ in capitalism into purely symbolic money.

A change in the value of gold effects the value of paper money. The value of paper money depends on the quantity of paper money relative to the gold needed for circulation. In other words divide the quantity of paper by the value of all commodities to be circulated (measured in gold). This tells us the value of paper currency. This is an extremely important point and relevant to debates over the theory of paper money.

The state seems like it can escape the laws of money but it can’t. It seems like the state can just print more money to solve the problems of capitalism. But this just causes inflation. The state can only control the nomenclature of the standard of price. It can control how much money to print but the underlying values of commodities and gold determine the value of these tokens. Circulation forces these tokens to have a relation to gold.

For the measure of value the substance of money is important. Not so for medium of circulation. The measure of value depends on the quality of the money. The medium of circulation depends on the quantity of tokens. The quantity of gold present in the economy is determined by the total price level and the value of gold. The quantity of token money depends on the quantity of tokens and the value of the gold they represent. Thus all laws appear reversed in circulation. It appears that the quantity of money determines the value of money and that this determines the price level. This would be the Quantity Theory of Money. In actuality the process works the other way around.

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the UnMaking of Marx’s Capital

Back in April the Monthly Review posted a piece by Michael Heinrich about Marx’s theorization of the tendency of the rate of profit to fall. Here I have attached/linked a response co-authored by Andrew Kliman, Nick Potts, Alan Freeman, Alexy Gusev and myself.

Unmaking of Marx’s Capital, final, 7-22-13-2

Michael Heinrich’s recent Monthly Review article claims that the law of the tendential fall in the rate of profit (LTFRP) was not proved by Marx and cannot be proved. Heinrich also argues that Marx had doubts about the law and that, for this and other reasons, his theory of capitalist economic crisis was only provisional and more or less in continual flux.

This response shows that Heinrich’s elementary misunderstanding of the law – his belief that it is meant to predict what must inevitably happen rather than to explain what does happen – is the source of his charge that it is unproved. It then shows that a simple misreading of Marx’s text lies at the basis of Heinrich’s claim that the simplest version of the LTFRP, “the law as such,” is a failure. Marx’s argument that increases in the rate of surplus-value cannot “cancel” the fall in the rate of profit is then defended against Heinrich’s attempt to refute it. Finally, the paper presents evidence that Marx was indeed convinced that the LTFRP is correct and that he regarded the crisis theory of volume 3 of Capital as finished in a theoretical sense.

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The Critique of Political Economy- Chapter 2 part 1 notes

the second installment of my notes on the book:

Chapter 2: Money or Simple Circulation.

Marx tells us that the confusion about money will disappear once we look at the evolution of money. Does he mean the historical evolution or a logical evolution? Marx says that it is crucial to understand the particular forms of Money and their interrelations. This is difficult because all bourgeois relations are money relations. In order to get to the heart of money, and its relation to the mode of production, Marx will only deal, in this book, with the forms of money that arise directly from commodity production. He will not deal with credit money. This is also his approach in Capital.

1. Measure of Value.

Gold becomes the measure of value because all commodities measure their value in gold. These exchange values with gold are prices. Price is the form of appearance of exchange value in circulation.  There is an equalization between the labor in gold and the labor in all other commodities. Of course, like any other commodity, the labor that goes into gold can vary with changes in the productivity of gold producers.

Prices are commodities transformed into gold in imagination. Prices measure the abstract labor contained in commodities, while their use-values correspond to the specific concrete labors that formed them.

The difference between exchange value and price (notice he doesn’t say “value and exchange value”… though I assume this is what he means) is super-important. This is the kernel of the storms that rock capitalist production… the source of uncertainty and crisis. Whether or not exchange value equals price is a matter of chance. The flip side of the necessity for alienating the commodity from the worker is the possibility of the non-alienation of the commodity.

Standard of price: The standard of price is the particular unit of gold that is used to measure value. Measure of value and standard of price are not the same!!! The measure of value is a measure of the abstract labor time contained in a commodity. The standard of price is a unit of weight (pound, etc.). It is similar to the difference between distance and a foot. A foot is a unit of measurement. Distance is the thing to be measured in feet.

Historically there was a process by which the same unit of measurement (the pound for instance) came to represent a smaller and smaller amount of gold. This seems insane but it happened all the time. A piece of gold was stamped as a pound. In circulation it lost some of its weight (through people shaving off parts and through wear and tear.) Now we see the importance of the state in establishing the value of the money of account. Money of account is the specific legal unit of account (pound, franc, etc.)

In order for money of account to exist, gold only needs to exist in the mind. Tokens of the money of account can circulate.

Now’s the part that fucks up your brain: The mint price of gold is the price of gold measured in the unit of account. But money has no price!

B. Theories of the unit of measure of Money

The purpose of this section is to critique previous theories of the unit of measure. Marx makes important points about the logical and practical relation between the unit of measure and the measure of value. He also discusses the problem with utopian labor-money schemes.

Marx first begins with the theory of the ideal unit of measure of money. This theory holds that since the unit names of money (pound, dollar, franc, etc.) are what is used to measure value that these units don’t represent quantities of gold, but instead directly measure ideal “atoms” of value. Thus value seems to have an abstract, independent, ideal form. (But this is impossible since we only can see value through exchange value. Value does have some independent abstract essence to measure without reference to an exchange value.)

Marx’s critique might seem like a nitpicky one but he immediately moves to a real-world example. During the reign of England’s William III silver coins were becoming debased. This meant that the market price for silver rose above its mint price. Why? The mint price is the amount of silver a coin says it represents. The market price is the actual amount of coins one receives for selling an ounce of silver bullion. Since the coins were debased it took more coins to buy an ounce of silver. In Marx’s example an ounce of silver bullion was minted into 5s 2d (5 shillings 2 pennies) but after debasement an ounce of silver bullion could be sold for 6s 3d! Eventually there was a re-coining of silver coins so that each silver coin was worth less silver than originally.

Now comes the interesting part: Lowndes, Biritish secretary to the treasury, declared that the reason for the rise in market price above mint price was not the debasement of the currency. Rather the rise in market price was a sign that silver had become more valuable (because it was measured in more units of the unit of measure!) The unit of measure represented ideal atoms of value and hence the rise in market price could only mean a rise in value! The upshot os this bullshit theory was that the British state could argue that it should pay back its debts in devalued currency!

This sort of problematic thinking directly relates to questions of inconvertible paper money. Marx says that regardless of civil law, the economic law is that paper gets its value from gold. Or, perhaps to put it better, paper’s ability to measure value is derived from gold’s place as a measure of value. The theorists of inconvertible paper money, Marx says, take refuge in this notion of an ‘ideal unit of measure’, as if worthless scraps of paper can represent ideal atoms of value directly, without measuring value through commodity exchange.

The same problem applies to Gray’s utopian labor money schemes. Gray advocated a system whereby all inequalities in exchange could be eliminated through a system whereby each commodity was automatically stamped with a price directly corresponding to the labor that went into it. Gray thought that the labor in all commodities could be directly social, without having to move through the process of exchanging against a money commodity, and all of the divergences of price and value and corresponding adjustments that take place in capitalism. Marx critiques this idea at length in other places, but here he points out that labor will not become directly social just because a bank or state declares it. The indirectly social nature of capitalist labor comes from commodity production not from a problem with the measure of value. If labor were directly social then there would be no need for gold or commodity production. But this is not the society that Gray is imagining.

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Interview on Alpha2Omega

I recently had the privileged to appear on Tom O-Brien’s excellent podcast Alpha2Omega. We discuss, among other things,  the Occupy movement, Marx’s critique of labor-money. The interview can be heard below. Alpha2Omega is a really excellent podcast. Tom has really top-notch guests on each week, he asks excellent questions, and does a great job of editing the interviews. I don’t feel like I was able to be as spontaneously articulate as I’d have liked to have been during our interview but so it goes.

The interview:

The podcast

Photo 3Here’s the paper by Seth Weiss that Tom asks me about.

It’s a great paper. I’ve referenced it several times on this blog.

Also, listeners interested in thinking more about ‘socialist labor vouchers’ should know that there is currently a heated debate happening on the topic on Libcom. I have not had time to read through it all but it looks like a spirited and sophisticated discussion. Here is a recent summary and response to that discussion.

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The Critique of Political Economy; chapter 1 notes

Summary of Critique of Political Economy Chapter 1 by Karl Marx
(Chapter 2 to follow in a future post.)
Written before Das Capital, the Critique of Political Economy covers much of the theoretical ground of the opening chapters of Capital but in more detail. Sometimes readers have difficulty with the theoretically dense and stylistically strange nature of Capital’s opening chapters. For those interested in thinking more about these opening chapters, especially the stuff about money, it may be helpful to read the Critique.

The one caveat that is important to note however is that in the Critique Marx had not yet made the distinction between exchange value and value. The development of this important theoretical distinction is one of the most important aspects of the opening chapter of Capital.

What follows is a summary of the Critique. It is no substitute for reading the book itself. I write it mostly for self-clarification as I think about a future video on Money. The stuff on money is mostly in chapter 2, but I thought I might as well type up notes on chapter 1 while I’m at it. The origin of money in the commodity form is in chapter 1 though.

Chapter 1- Commodities

As we know a commodity has a use-value and an exchange value. The use-value of a commodity falls outside of the realm of political economy except in that it is a bearer of exchange value. Why? The use-value does not bear the mark of the social relations of production. We can’t tell that an object is a commodity by examining its use-value. The use-value is limited by the particular properties of the commodity, and is not a universal quality that can be quantified or compared with other use values in any meaningful economic sense.

[Of course, most of the uses that commodities serve are needs created by capitalism. So when Marx says that the use-value does not bear the mark of the social relations of production we should read this in the narrow, specific sense that the use-value has no relation to the division of labor or socially necessary labor time represented by a commodity rather than in the broad sense of the observation that uses and needs are created/conditioned by capital.]

Exchange value appears at first sight as a quantitative relation. Commodities are equivalent to other commodities despite having different, incomparable uses. Despite different uses Marx tells us they “represent the same entity.” (I take it this is a kernel of what later becomes the concept of ‘intrinsic value’) When two commodities have equivalent exchange values this means that they have equivalent volumes of the same time of labor. Though what Marx goes on to talk about is the quality of this labor (that it is abstract, simple labor, etc) it should be pointed out that he does seem to operate under the assumption at this point that equivalent exchange values represent equivalent labor content, on an individual basis. Of course, with his fully-fledged theory of price and value, as worked out in the 3 volumes of Capital (and in his comments in chapter 2 of this book), this identity of value and price, on the level of individual commodities, does not hold. He makes similar statements about quantitative equivalence in the beginning of Capital. My instinct is to take this as an opening assumption, abstracting from the complexities of the later stages of the analysis. But Marx does not state that this equivalence is merely a simplification.

What kind of labor forms the value of commodities? It is abstract, general labor. It is also simple labor. Labor time is the inherent measure of labor.

Simple labor is a real abstraction. There is a real process which reduces all labors to a common denominator. Labor does not appear as different, isolated labors. Instead, under capitalism, labors appear as different arms of the same social organ. As in Capital, Marx says that this is not the place to discuss the actual processes of the reduction of complex labor to simple labor. But tells us that it is a constant process. This makes it a real abstraction.

He covers the concept of socially necessary labor time.

In capitalism private labor produces exchange value. This is how it becomes universal labor, or social labor. This universal labor time is represented in the general equivalent. Hence, universal abstract labor is the specific type of labor of a capitalist society, not all human societies.

Marx enters into a brief discussion of the way the social relations between men appear inverted as social relations between things. This is obviously a precursor to the concept of the ‘fetishism of commodities’ introduced in the end of chapter one of Capital vol. 1.

Labor is both abstract and concrete at the same time. It is both social labor and natural labor. Concrete labor makes use-values. Abstract labor makes exchange values.

Use-values stay the same while the social relations around them change. Hence the labor time it takes to make a use-value can change and thus the exchange value changes. (It seems a simple enough point, yet we see the confusions that have been made in the 20th century by physicalist misreadings of value theory which seem to posit that exchange-value is the same as physical quantities!) Scarcity and abundance effect the productivity of labor and therefore APPEAR to effect exchange value directly.

The exchange value of a commodity is not revealed by examining one use-value in isolation (say, in the nature of a supply and demand graph), but by examining the relation of all commodities to each other. Exchange value manifests itself in the endless series of equations through which commodities demonstrate themselves as being the equivalent of another commodity in value. The universal equivalent is the one commodity that all other commodities measure their exchange value in.

The commodity is not a use-value for the seller, only for the buyer (if only this was understood by marginalists…). The commodity is only an exchange value for the seller and a potential use-value for the buyer. But it must be a use-value to a buyer in order for its labor to be social. (Though this is a condition for social labor it is not a determinate of the value of a commodity.) Private labor is not directly social. It must be socially useful to be social.

Here’s a puzzle: The commodity must enter exchange as social labor but this universality is only a result of exchange! How can this be? The puzzle is solved via the universal equivalent. The universal equivalent has two uses. It has its own use (if it is gold then it can make rings, microprocessors and stuff…) and it has a universal use in that it is used to measure the value of all other commodities. This resolves the contradiction of the commodity, that the commodity has a particular use value but a universal exchange-value. All commodities express their exchange-value not in an endless series of equations, but in one equation, their equivalence with the universal equivalent, money. This is expression of equivalence exists ideally before the purchase has been made. This is why we have price tags. We guess the exchange value of a commodity against money. But this price has to be realized in exchange in order for the process to be complete. Though exchange value has this ideal aspect this does not mean that money is a symbol. Money and value are quite real.

The fetish character of the commodity form is even more striking in money where money appears to have its own autonomous power.

Exchange value, of course, predates capitalist social relations. It originates at the borders of societies where trade begins between societies, not within societies. At first these exchange values are random. But as soon as a part of production begins to be production for exchange and not for use then exchange values begin take on predictable forms. This leads to the development of money.

Bourgeois economy treats barter as a natural form of exchange and sees money as a mere expedient. (This is true for contemporary bourgeois economy as well as the classical political economy.) Money is seen as a material instrument, a tool for simplifying barter, rather than as a social relation. But Marx knows that money doesn’t just solve the difficulties of barter in a technical sense. These difficulties arise from the development of exchange value and from the appearance of social labor as universal labor.

Notes on the History of the Theory of Commodites (a section at the end of Chapter 1) I didn’t take the best notes on this section…

Adam Smith thinks that the Labor Theory of Value applies to pre-capitalist societies. He sees it as a theory of subjective equalizations of labor time. Smith tries to derive exchange value from the social division of labor. Ricardo focuses on the quantitative determination of value rather than the qualitative side which would allow him to see the specifically capitalist nature of the value form. He sees capitalist labor as the eternal form of value. Sismondi focuses on the specific social character of labor, he develops an idea of necessary labor time and a critique of large industrial capital.

Ricardo represents the final shape of classical political economy. He leaves us with some controversies.
1. Labor itself has exchange value yet different types of labor produce different amounts of exchange value. We get into a viscous circle by making exchange value the measure of exchange value… Marx will later solve this by distinguishing between labor and labor power. The capitalist buys labor power but labor is what produces value. Marx says we need a theory of wages to explain this.
2. Point two seems to be a reiteration of point one. Marx says we need a theory of capital to explain this.
3. Supply and demand cause exchange-value to deviate from exchange-value. Marx says we need a theory of competition to explain this. Later, in Capital, when he develops the difference between value and exchange-value, this becomes a little clearer.
4. How do non-commodities have exchange value? For this, Marx says, we need a theory of rent.

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