Chapter 3

Discussion

- money has several functions: measure of value, standard of price, medium of circulation, means of payment, and money of the world. these are all seperate, independent, related but contradictory functions of the money commodity.

- as measure of value, money is the form assumed by the values of commodities, and so converts all values into quantities of the money commodity (which he assumes to be gold), but only ideally/mentally. as standard of price it measures those quantities of gold by a fixed unit quantity of gold (which is determined by the state).

- a change in value of gold does not affect the standard of price - an ounce of gold is always and ounce of gold - nor the function of measure of value, since the change will effect the relative value of all commoidities - assuming their values remain the same, their relative values between each other will remain the same, but be expressed in more or less gold. the laws governing fluctuations in value are those of the elementary form of value.

- the weight of gold represented by each name of a money quantity can be completely different from the weight name that it's money name originated, as long as it is a definite fixed quantity (generally fixed by the state) e.g. 1 pound doesn't have to mean a pound of silver in can be 0.392943kg of gold, as long as it is socially accepted that that is what 1 pound refers to.

- the following relates to issues raised in the discussion of the first chapter: though price is the expression of the magnitude of a commodity's value as the exchange ratio of that commodity with the money commodity, it does not follow that the expression of this ratio is necessarily that of the commodities value i.e. though one commodity may be twice the price of another, it does not necessarily mean it is twice the value. as soon as an article's magnitude of value is converted to the price form, the relationship between that article and the socially necessary labour time required to produce it takes the shape of a more or less accidental exchange ratio between a single commodity and another, money. this ratio may express the real magnitude of value or the quantity of gold deviating from that value for which in the circumstances it may be sold. the possibility of deviation of price from the magnitude of value is inherent in the price form itself, but this is not a defect, but adapts price to a mode of production whose laws impose themselves only as the mean of apparently lawless irregularities that compensate each other.

- furthermore, items such as honour, courage, etc. can through being given a price acquire the form of commodities though no human labour has gone into them so they have no value, or conceal other value relations in for instance the price of uncultivated land.

- a commodity cannot be both the original article and gold at the same time, even though it may be imagined so in the price form. in order for a commoidty to serve the purpose of universal equivalent to its owner, it must be replaced by real gold. so we have circulation: commodity a --sale--> becomes money --purchase--> commodity b. here the commodity enter as a commodity and metamorphoses into a new one, passing through a transient form of money, so forms a circuit. of course for the original owner of the money, the sale was in fact a purchase, the last metamophorsis of his commodity, and for the original owner of commodity b the purchase was a sale, the first metamorphosis of his commodity. so considering the sales and purchases of all commodities, we have them all entering circulation and then falling out as commodities, but money stays in as the medium of circulation. thus all the commodities are intricately linked together in a web of social relations outside the control of the actors, and breaking all barriers of time, place and individual relations imposed by barter.

- though buying and selling are antithetical to one another, they have a unity and if there is too great a time gap between them it can cause a crisis. all the antitheses immanent in commodities - use-value and value; private labour having to manifest itself as directly social labour; particular concrete labour forced to pass as abstract labour; personification of objects and representation of people by things - assert and develop modes of motion in the different phases of metamorphosis, and these modes imply the possibility of crisis.

- from point of view of money, once it is first sold directly at its source of production for another commodity, it constantly moves further and further away from its starting point, always in the hands of a buyer - the two antithetical process of sale and purchase are for money one and the same. as such money is the expression of the circulation of commodities changing form, it is not the case that money is the one moving commodities around.

- the amount of money required by circulation is determined by the sum of all the prices of commodities in circulation. of course, if the value of gold changes, prices will change, but this is caused by gold as a measure of value not as a medium of circulation. if this happens, it will first affect whatever commodity is exchanged directly for gold at its source, and so there will always be the required quantity of money in circulation - 1st prices vary inversely as value of money, then quantity of circulating medium varies as prices do.

- the velocity of the medium of circulation is how many times 1 particular coin changes hands in a given period i.e. how many metamorphoses of commodities have taken place. this affects the quantity of money required too - the greater the velocity the less money required to effect circulation and vice versa. a slow in velocity reflects a general separation in the acts of buying and selling, a stagnation in the social interchange of matter.

- if prices constant: increase of circulating commodities and/or decrease in velocity --> increase in quantity of circulating medium (and vice verse).

- if prices rise: proportional decrease of circulating commodities or proportional increase in velocity --> quantity of circulating medium constant.

- if prices fall: proportional increase of circulating commodities or proportional decrease in velocity --> quantity of circulating medium constant; quicker increase of circulating commodities or decrease in velocity --> increase in quantity of circulating medium constant (and vice versa)

- all the above changes tend to compensate each other so over time the quantity of circulating medium doesn't vary as much as might expect.

- since in the act of circulation coins quickly lose weight and so deviate from the weight their denomination represents - the name and the substance begin to seperate - with the result that the weight, that is standard of price, deviates from the circulating medium, the latter ceasing to be a real equivalent. this requires legislation fixing how much deviation is allowed before coins cease to be legal tender, and from this it is but a small step to replace coins with tokens.

- thus the function of gold as coin becomes independent of the value of gold and something relative worthless such as paper can take it's place. only nonconvertible paper money is being considered here not credit money (mentioned later). however the paper money cannot exceed the amount of gold which would circulate if it were not replaced be paper - if this happens as well as falling into disrepute the paper would only represent that quantity of gold which is actually required. eg if twice as much paper as would be gold then 1 pound would be the money name of 1/8 an ounce of gold rather than 1/4, and prices would be similarly affected.

- money can only be replaced by tokens when functioning as the circulating medium - each piece of gold is only a means of circulation whilst it circulates, but in the case of paper money, this is always the case. as the medium of circulation is the transient and objective reflex of prices of commodities, so serves only as a symbol of itself and can be replaced by socially valid tokens. this can only happen in the area controlled by the state imposing the social validity of the tokens, i.e. national territories, but this is the only sphere in which it responds as means of circulation completely, so it can be separated from its metallic form and replaced by paper.

- since money does not reveal what has been turned into it, all commodities are convertible to money. but since money is a commodity it is an external object capable of being the private property of anyone - social power becomes private power. since value measures degree that a commodity can attract all other commodities, money measure the social wealth of it's owner. money has no bounds qualitatively speaking - it can become anything - but has limits quantitatively, so the desire to hoard money is insatiable. these hoards then serve as reserves for the supply and withdrawal of money to or from circulation so that there is always the necessary amount of money.

- due to time differences in the production of different commodities - some take longer, are seasonal etc., a seller may be ready to sell before the buyer is ready to buy. other commodities are sold for use for a given period e.g. houses, in which case the buyer only receives the use value at the end of the term. in these cases the purchaser makes the purchase as the representative of future money and becomes a debtor, the vendor a creditor. from the point of view of the buyer, the 2nd metamorphosis of their commodity is taking place before the 1st. money functions first as measure of value and second as means of payment - as the circulating medium it goes into a hoard until the date fixed for payment - and is no longer the means by which circulation is brought about, but brings it to a close as the universal commodity.

- so we have:
seller: C --> M to satisfy want
hoarder: C --> M to keep commodity in money form
debtor: C --> M to pay
money, the value form of commodities, is now the end and aim of sale. as means of payment, money expresses an already existing social relation, rather than its role as medium of circulation of being the reflex of relations existing and originating only in circulation.

- as with currency of circulation, the amount of money required for payment depends on the sum of payments due in a given period and the length of debtor-creditor-debtor chains which cancel each other out leaving only a balance to pay.

- now the inevitable implied contradiction: as far as the payments balance, money functions only as money of account, measure of value; but if payments have to be actually made, money does not function as medium of circulation, a transient agent, but as individual incarnation of social labour, the universal commodity. the contradiction manifests itself in monetary crises which occur when a lengthening chain of payments and artificial institutions to settle them have been established and this mechanism is significantly disturbed. then money of account must become hard cash, use-values become valueless, "value vanishes in the presence of its own independent form" and the antithesis of commodities and value form heightened to absolute contradiction.

- so now we have: amount of money required in given period = sum of prices to be realised + sum of payments falling due - balancing payments - number of circuits of the same piece of coin serving as means of circulation and payment (given the velocities of currency of means of circulation and payment). quantity of means of payment required for all periodic payments is directly proportional to the lengths of those periods.

- as system of credit extends, so does money's function as means of payments outside the sphere of circulation - taxes, rent, etc. replacing payment in kind. hoarding vanishes with progress and reserves of means of payment build up against dates payments are due grow.

- when leaving the national spheres of circulation, money must take a socially recognised form, so returns to bullion. as money of the world it serves as universal means of payment and universally recognised embodiment of all wealth. it is used to settle international balances when normal exchanges of commodities not possible or for a general transfer of wealth. it then enters the different national spheres of circulation. where bourgeois production developed, hoards are limited to the minimum required for its functions - if it is too much above it generally reflects a stagnation in the circulation of commodities, the interrupted flow of commodity metamorphoses.