The following text was written in November 2018 as presentation for a series of self-education discussions on the 1st volume of Capital organised at our local Workers’ Club. Its the continuation of a previous presentation on the commodity-form. With this text, and the other presentations we’ll post in the future, we tried to keep a difficult balance: on the one hand, being a presentation of the subject-matter for people who are coming in contact with Capital for the first time and, on the other hand, having to offer some food for thought and discussion for people who are already familiar with Marx’s work.

If two commodities are equivalents -or bear a definite proportion to each other or, which is the same thing, if their magnitude differs according to the quantity of “labour” which they contain- then it is obvious that regarded as exchange values, their substance must be the same. Their substance is labour. That is why they are “values”. Their magnitude varies, according to whether they contain more or less of this substance. But Ricardo does not examine the form -the peculiar characteristic of labour that creates exchange value or manifests itself in exchange values- the nature of this labour. Hence he does not grasp the connection of this labour with money or that it must assume the form of money. Hence he completely fails to grasp the connection between the determination of the exchange value of the commodity by labour time and the fact that the development of commodities necessarily leads to the formation of money. Hence his erroneous theory of money. Right from the start he is only concerned with the magnitude of value, i.e., the fact that the magnitudes of the values of the commodities are proportionate to the quantities of labour which are required for their production. (MECW 31, p. 389-390)

Ricardo was only concerned with the magnitudes of value of the commodities, hence he failed to grasp the dual character of capitalist labour. We saw that concrete labour and “practically abstract” labour aren’t two different labours but contradictory determinations of the same labour. The same can be told about the dual character of the commodity: value and use-value are contradictory determinations of the same commodity. “[T]he value of a commodity is something by which it not only differs from or is related to other commodities, but is a quality by which it differs from its own existence as a thing, a value in use” (MECW 32, p. 315-316). Ricardo, concerned as he was with measuring magnitudes of value, never raised the queston of why an object acquires value. He considered it a fact of nature, an inherent quality of the products of human labour. However, “As values, commodities are social magnitudes, that is to say, something absolutely different from their ‘properties’ as ‘things’. As values, they constitute only relations of men in their productive activity. Value indeed ‘implies exchanges’, but exchanges are exchanges of things between men; exchanges which in no way affect the things as such. A thing retains the same ‘properties’ whether it be owned by A or by B. […] Exchange of products as commodities is a certain method of exchanging labour, and [the form] of the dependence of the labour of each upon the labour of the others, a certain mode of social labour or social production” (Ibid, p. 316 & 317). Thus, value always has to do with “social labour based on private exchange” (Ibid, p. 317).

“Practically abstract” labour, the labour which is dealt with in the social practices as abstract, is value-producing labour. “Practically abstract” labour “is not concerned with the individual production process but with the social interrelation of all the institutionally independent individual capitalist production processes that manifests in the market“[1]. We saw that the internal measure of value is the socially necessary labour-time for the production of a kind of commodity. However, value isn’t something that we come in contact with empirically. What we encounter when we buy or sell a commodity is the price, i.e., an amount of money. The substance of value, the socially necessary “practically abstract” labour-time for the production of a kind of commodity, being precisely a social abstraction, is something that we cannot measure in practice. The internal measure of value is time, but it’s a temporal duration of a process that cannot be measured because it’s not empirical. What we encounter empirically is the price, a certain amount of money. Price is a manifestation of value, but it’s different both qualitatively and quantitatively from value, but more about this has to do with the 3rd volume of Capital. Suffice it to say that “[t]he whole difficulty arises from the fact that commodities are not exchanged simply as commodities, but as the products of capitals, which claim shares in the total mass of surplus-value according to their size, equal shares for equal size. And the total price of the commodities that a given capital produces in a given period of time has to satisfy this demand” (Karl Marx, Capital, vol. 3, Penguin Books, 1981, p. 275-276).

The assumption we find in the 1st and 2nd volumes of Capital that commodities are sold at their values is something that doesn’t happen in reality. This assumption is made for two reasons: a) for the simplification of the analysis before we reach more complex issues, and thus before we reach more closely to a description of the real modus operandi of economy, and b) to prove that even if the commodities were sold at their values, exploitation still holds true because it’s not located in the market but in production. However, this assumption has as side-effect the identification of value and price of commodities in the 1st and 2nd volumes of Capital, and that can lead to erroneous rushed conclusion on part of the reader, leading him to overlook the significance of money, seeing it just like the classical economists as a mere organ for the facilitation of the commodity exchange. In reality, however, precisely because the internal measure of value, the labour-time, is something abstract that cannot be measured, money functions as the external measure of value because necessarily, due to the equation of the rates of profit, value is manifested distortedly as price. “For its part, the development of capital already presupposes the full development of the exchange value of commodities and consequently its independent existence as money” (MECW 32, p. 318). Therefore, Marx found the answer in Bailey: “His book has only one positive merit – that he was the first to give a more accurate definition of the measure of value, that is, in fact, of one of the functions of money, or money in a particular, determinate form” (Ibid, p. 320).

Before we continue, we should also note that the following gradual development leading us from the accidental exchange of two individual commodities to money, has nothing to do with historical stages. Adam Smith, in order to arrive at the emergence of money, fell into the trap of assuming that these stages were real existing historical stages of the human development, and talked about the barter system (simple exchange of commodities) in antiquity. Engels also fell in the same trap talking about the simple exchange of commodities, which is of no difference from Smith’s assumption. No historian and no ethnographer have found any clues about the existence of societies that operated with that system. Wherever there was systematic exchange of commodities, there was money. Historically, the role of money was played from cows to deer hide and from shells to giant stone rings (of course, the social function of capitalist money differs from that of the precapitalist one). Smith and Engels made the mistake to consider the logical stages of the theoretical development of a category, that of money, for real historical stages of the the development of human societies. However, we aren’t dealing with the historical emergence of money. On what follows below, Marx is describing moeny as a category of capital. The commodity-form, the value-form and the money-form are social forms in which the capital relation manifests. Marx doesn’t talk about commodity in general, for value in general, for money in general. He talks about them in the extent they are specifically capitalist forms.

The simple, isolated, or accidental form of value

During the exchange, value is expressed as exchange-value. Value acquires its own form through the relation between two different commodities. The simplest such relation is that between two commodities. This simplest form “embodies the whole secret of the money form and thereby, in nuce, of all bourgeois forms of the product of labour” (Karl Marx, “Marx to Engels, 22 June 1867” in MECW 42, p. 384).

Hence, we have x amount of the commodity A which is worth y amount of the commodity B. That is:

xA = yB

This might be, e.g., that 3 loafs of bread are worth 1 beer, or 3 lighters are worth 2 bags of crisps, etc. In this “equation”, the two terms play distinct roles[2]. The first commodity, commodity A, plays an active role and the second commodity, commodity B, plays a passive role. Through this exchange, the value of commodity A finds an independent expression and concrete manifestation in commidity B. That is, commodity B expresses the value of commodity A. Commodity A is the relative form of value, since its value is expressed in relation to commodity B. Commodity B is the equivalent form of value, because in the bodily use-value of commodity B is expressed the value of commodity A, i.e., commodity B provides the phenomenal form of appearance of the value of commodity A. “The relative form of value and the equivalent form are two inseparable moments, which belong to and mutually condition each other; but, at the same time, they are mutually exclusive or opposed extremes, i.e. poles of the expression of value” (Karl Marx, Capital, vol. 1, Penguin Books, 1976, p. 139-140). In this relation of exchange, commodity B “counts as the form of existence of value, as the material embodiment of value” (Ibid, p. 141) for only as such is it the same as commodity A.

If we say that, as values, commodities are simply congealed quantities of human labour, our analysis reduces them, it is true, to the level of abstract value, but does not give them a form of value distinct from their natural forms. It is otherwise in the value relation of one commodity to another. The first commodity’s value character emerges here through its own relation to the second commodity. By equating, for example, the coat as a thing of value to the linen, we equate the labour embedded in the coat with the labour embedded in the linen. Now it is true that the tailoring which makes the coat is concrete labour of a different sort from the weaving which makes the linen. But the act of equating tailoring with weaving reduces the former in fact to what is really equal in the two kinds of labour, to the characteristic they have in common of being human labour. This is a roundabout way of saying that weaving too, in so far as it weaves value, has nothing to distinguish it from tailoring, and, consequently, is abstract human labour. It is only the expression of equivalence between different sorts of commodities which brings to view the specific character of value-creating labour, by actually reducing the different kinds of labour embedded in the different kinds of commodity to their common quality of being human labour in general. […] The value of the linen […] can be expressed only as an “objectivity” [Gegenstandlichkeit], a thing which is materially different from the linen itself and yet common to the linen and all other commodities. The problem is already solved. […] Nevertheless, the coat cannot represent value towards the linen unless value, for the latter, simultaneously assumes the form of a coat. […] Hence, in the value relation, in which the coat is the equivalent of the linen, the form of the coat counts as the form of value. The value of the commodity linen is therefore expressed by the physical body of the commodity coat, the value of one by the use-value of the other. […] Thus the linen acquires a value-form different from its natural form. […] By means of the value relation, therefore, the natural form of commodity B becomes the value-form of commodity A, in other words the physical body of commodity B becomes a mirror for the value of commodity A. (Ibid, p. 142 & 143 & 144)

What we have here, therefore, is a mediation. It’s impossible for a commodity to express its value being in an immediate relation to itself. The commodity can express its value only coming into a relation with another commodity. Thus, commodity A expresses its value by coming into relation with commodity B. The relation of commodity A to itself is mediated by the commodity B. We encounter here what Hegel has called determinations of reflection [Reflexionsbestimmungen]. According to Hegel:

Reflection is determined reflection; accordingly, essence is determined essence, or it is essentiality. Reflection is the shining of essence within itself. Essence, as infinite immanent turning back is not immediate simplicity, but negative simplicity; it is a movement across moments that are distinct, is absolute mediation with itself. But in these moments it shines; the moments are, therefore, themselves determinations reflected into themselves. First, essence is simple self-reference, pure identity. This is its determination, one by which it is rather the absence of determination. Second, the specifying determination is difference – difference which is either external or indefinite, diversity in general, or opposed diversity or opposition. Third, as contradiction this opposition is reflected into itself and returns to its foundation. (Georg Wilhelm Friedrich Hegel, The Science of Logic, Cambridge University Press, 2010, p. 354)

Essence coming in an immediate relation to itself exhibits an absence of determinations. Its relation to itself must be mediated by something external to it, by something different from it, which will function as its mirror. Through this reflection we can now determine it, it acquires a determination of reflection. However, this relation of the essence with something external to it is neither optional nor temporally later: it’s a presupposition of essence itself. There cannot be an essence closed in itself, i.e., without a form of appearance. Appearance is presupposition and part of essence itself:

This identity, as it descended from Being, appears in the first place only charged with the characteristics of Being, and referred to Being as to something external. This external Being, if taken in separation from the true Being (of Essence), is called the Unessential. But that turns out to be a mistake. Because Essence is Being-in-self, it is essential only to the extent that it has in itself its negative, i.e. reference to another, or mediation. Consequently, it has the unessential as its own proper seeming (reflection) in itself. But in seeming or mediation there is distinction involved: and since what is distinguished (as distinguished from identity out of which it arises, and in which it is not, or lies as seeming) receives itself the form of identity, the semblance is still not in the mode of Being, or of self-related immediacy. The sphere of Essence thus turns out to be a still imperfect combination of immediacy and mediation. In it every term is expressly invested with the character of self-relatedness, while yet at the same time one is forced beyond it. It has Being – reflected being, a being in which another shows, and which shows in another. […] Essence is mere Identity and reflection in itself only as it is self-relating negativity, and in that way self-repulsion. It contains therefore essentially the characteristic of Difference. Other-being is here no longer qualitative, taking the shape of the character or limit. It is now in essence, in self-relating essence, and therefore the negation is at the same time a relation – is, in short, Distinction, Relativity, Mediation. (Georg Wilhelm Friedrich Hegel, Shorter Logic, §114 & §116)

Hence, the value of commodity A cannot be expressed by itself. It needs to be mediated by commodity B, to be reflected on the use-value of commodity B. This relation between the two commodities is the simple form of exchange-value as appearance of value. Exchange-value (here still in its simple form, further down in its developed, money-form) as form of appearance of value isn’t secondary or derivative. It’s a presupposition and moment of value. Exchange-value (and especially money, the autonomised form of exchange-value) is the form in which value manifests, appears. Exchange-value (money) is the form in which value sublates itself and becomes an immediacy.

The Essence must appear or shine forth. Its shining or reflection in it is the suspension and translation of it to immediacy, which, while as reflection-into-self it is matter or subsistence, is also form, reflection-on-something-else, a subsistence which sets itself aside. To show or shine is the characteristic by which essence is distinguished from Being – by which it is essence; and it is this show which, when it is developed, shows itself, and is Appearance. Essence accordingly is not something beyond or behind appearance, but -just because it is the essence which exists- the existence is Appearance (Forth-shining). (Ibid, §131)[3]

We are starting to unravel the mystery of money. Commodity A expresses its value in the body, the use-value, of commodity B. Thus, commodity B seems like having in its bodily, material properties the quality of expressing value, it seems like as having by its nature the quality of being exchangeable with this random commodity A. That way, use-value and value, the two contradictory determinations of every commodity, from a contradiction internal to every commodity is appearing as an external contradiction between the two commodities being exchanges, with one commodity being appearing only as use-value and the other only as exchange-value. While in reality there are two exchange-values, it appears as there is only one exchange-value, which seem to be autonomised only in one of the two poles of the exchange:

A close scrutiny of the expression of the value of commodity A contained in the value-relation of A to B has shown that within that relation the natural form of commodity A figures only as the aspect of use-value, while the natural form of B figures only as the form of value, or aspect of value. The internal opposition between use-value and value, hidden within the commodity, is therefore represented on the surface by an external opposition, i.e. by a relation between two commodities such that the one commodity, whose own value is supposed to be expressed, counts directly only as a use-value, whereas the other commodity, in which that value is to be expressed, counts directly only as exchange-value. (Marx, Capital, vol. 1, p. 153)

We drew as many conclusions could be drawn from the example of the exchange of two commodities. Obviously, however, the capitalist market doesn’t operate so simply. We don’t have accidental individual exchanges of products. All products are commodities, everything is exchangeable. “The expression of the value of commodity A in terms of any other commodity B merely distinguishes the value of A from its use-value, and therefore merely places A in an exchange-relation with any particular single different kind of commodity, instead of representing A’s qualitative equality with all other commodities and its quantitative proportionality to them” (Ibid, p. 154). We need now to add more determinations in the practice of exchange, to make it more concrete, to bring it closer to the capitalist reality.

The total or expanded form of value

Now, we have x amount of the commodity A which is worth y amount of the commodity B. In addition, x amount of the commodity A is worth z amount of the commodity C. Also, x amount of the commodity A is worth w amount of the commodity D, etc. That is:

xA = yB and xA = zC and xA = wD, etc.

Here, we have a relation of x amount of the commodity A with an infinite sequence of other commodities. The value of commodity A is now expressed in the infinite other commodities. The body of every other commodity expresses the value of commodity A. In the simple form of value, the value of commodity A was expressed only in one, random commodity, the commodity B. Now, the value of commodity A is expressed in all the other commodities. Commodity A now enters a relation with all the other commodities, and its value can be expressed in any different use-value.

In the first form [the simple form of value], 20 yards of linen = 1 coat, it might well be a purely accidental occurrence that these two commodities are exchangeable in a specific quantitative relation. In the second form [the total form of value], on the contrary, the background to this accidental appearance, essentially different from it, and determining it, immediately shines through. The value of the linen remains unaltered in magnitude, whether expressed in coats, coffee, or iron, or in innumerable different commodities, belonging to as many different owners. The accidental relation between two individual commodity-owners disappears. It becomes plain that it is not the exchange of commodities which regulates the magnitude of their values, but rather the reverse, the magnitude of the value of commodities which regulates the proportion in which they exchange. (Ibid, p. 156)

The value of commodity A is now able to appear in any other commodity. We have come a step closer to the autonomisation of the form of exchange-value, but we aren’t there yet. Now, the exchange-value of commodity A can be expressed in any other commodity, thus we have infinite equivalent forms an only one relative form. We are dealing with what Hegel called a bad infinity, an infinity which consinsts of a mosaic of individual determinations with no internal coherence which, ultimately, leads nowhere than to its perpetuation via its continuous expansion[4]. For the autonomisation of value we need the opposite of this, we need one equivalent form that expresses infinite relative forms, we need a good infinity. We don’t want the value of commodity A to be expressed in all other commodities; we want commodity A to be expressing the values of all other commodities.

The general form of value

Therefore, now we have y amount of the commodity B which is worth x amount of the commodity A. In addition, z amount of the commodity C is worth x amount of the commodity A. Also, w amount of the commodity D is worth x amount of the commodity A, etc. That is:

yB = xA and zC = xA and wD = xA, etc.

Now, all commodities express their values in the same commodity, the commodity A. Commodity A represents the value of all the other commodities. The exchange-value at last acquired a truly autonomous existence. Commodity A is now the universal equivalent, the universal equivalent form that against it all other commodities acquire the relative form of value. The value of all commodities is now mediated by commodity A. Commodity A is now capable to mediate any commodity exchange. The value of every commodity is now determined by being reflected on commodity A.

The new form [the general form of value] we have just obtained expresses the values of the world of commodities through one single kind of commodity set apart from the rest, through the linen for example, and thus represents the values of all commodities by means of their equality with linen. Through its equation with linen, the value of every commodity is now not only differentiated from its own use-value, but from all use-values, and is, by that very fact, expressed as that which is common to all commodities. By this form, commodities are, for the first time, really brought into relation with each other as values, or permitted to appear to each other as exchange-values. […] The general form of value […] can only arise as the joint contribution of the whole world of commodities. A commodity only acquires a general expression of its value if, at the same time, all other commodities express their values in the same equivalent; and every newly emergent commodity must follow suit. It thus becomes evident that because the objectivity of commodities as values is the purely “social existence” of these things, it can only be expressed through the whole range of their social relations; consequently the form of their value must possess social validity. In this form, when they are all counted as comparable with the linen, all commodities appear not only as qualitatively equal, as values in general, but also as values of quantitatively comparable magnitude. (Ibid, p. 158 & 159)

Commodity A, as the universal equivalent, now functions as the external measure of value. Now, all labours are equated with the labour that produced the commodity A. The labour have become social in universal degree. With the existence of a universal equivalent by which the values of all commodities are measured, labour have become “practically abstract” labour.

The innumerable equations of which the general form of value is composed equate the labour realized in the linen with the labour contained in every other commodity in turn, and they thus convert weaving into the general form of appearance of undifferentiated human labour. In this manner the labour objectified in the values of commodities is not just presented negatively, as labour in which abstraction is made from all the concrete forms and useful properties of actual work. Its own positive nature is explicitly brought out, namely the fact that it is the reduction of all kinds of actual labour to their common character of being human labour in general, of being the expenditure of human labour-power. (Ibid, p. 159-160)

The money form

With the general form of value we essentially arrived at the money-form. The only thing remaing to do is to find which commodity will be the commodity A that functions as the universal equivalent. For historical reasons, this role was given to gold. Gold, being a rare, shiny, precious metal which is resistable to erosion that comes with the passage of time, have conquered a high position among the other commodities. It was a commodity that everyone wanted to acquire, a symbol of power and wealth. Thus, gold became accepted through the social practice as the commodity able to play the role of the universal equivalent.

Someone can argue that nowadays money isn’t commodity money, that money have become a mere symbol of value. That’s a debate that exceeds the scope of our discussions. However, even if this claim is true, Marx’s presentation about the role of money still holds true. Money is the external measure of values. The only thing required for Marx’s theory is “that there be some objective measure of quantities of abstract labour that is socially accepted by all commodity owners as a universal equivalent” (Fred Moseley, Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the “Transformation Problem”, Brill, 2016, p. 215)[5].

1. From an introduction written by John Milios for the Greek translation of Rubin’s Essays on Marx’s Theory of Money. John Milios, “Πρόλογος: Η μαρξική χρηματική θεωρία της αξίας και ο Ισαάκ Ιλίτς Ρούμπιν (1886-1937)” in Isaak Illich Rubin, Μελέτες για τη Θεωρία του Χρήματος στον Μαρξ, Εκτός Γραμμής Press, 2015, p. 19.
2. We should note here that this “mathematical” articulation of the “equation” is used by Marx to save time. The equals sign “=” here doesn’t play the same role we know from mathematics: the relation xA = yB isn’t characterised by the symmetric property. That is, xA = yB doesn’t imply that yB = xA. Here, the equals sign “=” is used just in place of the phrase “is worth”. The “equation” xA = yB means that x amout of the commodity A is worth y amout of the commodity B, nothing more. If, like Ricardo, we were concerned only with the magnitudes of value of the commodities, then that “equation” would function in its normal mathematical way. However, because Marx here isn’t just combaring magnitudes of value, but he’s examining the form of expression of the value, we aren’t dealing only with magnitudes, but also with different qualitative characteristics. We aren’t dealing here just with the “equation” of magnitudes of value, but with the form that particular social relations take.
3. It would be useful here to quote an extract from a note of Giannis Tzavaras, translator of the Greek edition of Shorter Logic, regarding §131: “Hegel raises a view about the phenomenon that’s completely his own, in explicit opposition to the metaphysical tradition: essence isn’t an idea hiding behind the phenomena, like Plato and his followers argued positing the truth beyond the phenomena, in a heavenly place. For Hegel, phenomenon is neither that Kantian construction that’s revelead only subjectively, in our sensuous perception, while the thing itself remains supposedly elusive and unknown. For Hegel, phenomenon is the existence itself, and it’s neither more nor less from the essence, ‘just because it is the essence which exists'” (Georg Wilhelm Friedrich Hegel, Η Επιστήμη της Λογικής [Μικρή Λογική], Δωδώνη Press, 1991, p. 285).
4. “This infinity, which persists in the determination of the beyond of the finite, is to be characterized as the bad quantitative infinity. Like the qualitatively bad infinity, it is the perpetual movement back and forth from one side of the persistent contradiction to the other, from the limit to its non-being, and from the latter back again to the other, the limit. The bad infinity, especially in the form of the quantitative progress to infinity -this uninterrupted flitting over limits which it is powerless to sublate, and the perpetual falling back into them- is commonly held to be something sublime and a kind of divine service, just as in philosophy it has been regarded as ultimate. […] In fact, however, this modern sublimity does not enhance the object […] but bloats the subject who ingests such vast quantities. The poverty of such an irreducibly subjective step by step elevation on the ladder of the quantitative is betrayed by the admission that in that vain labor there is no getting closer to the infinite goal – for the attainment of which, to be sure, quite another line of attack is required” (Georg Wilhelm Friedrich Hegel, The Science of Logic, Cambridge University Press, 2010, p. 192-193).
5. See also, Riccardo Bellofiore, “The Adventures of Vergesellschaftung”, Consecutio Rerum, anno III, no. 5, October 2018.