quantitatively fluctuate all over the place independently of value, then why is Marx so fixated on the labor theory of value? Aren’t the conventional political economists—even to this day—correct to say that all we can observe and all that can have real meaning is contained in the concept of price, and that the labor theory of value is therefore irrelevant?
Marx does not defend his choice here; he didn’t particularly have to, given that the labor theory of value was widely accepted by his Ricardian contemporaries. But today, with the labor theory widely questioned or abandoned, even by some Marxist economists, it behooves us to construct some sort of response. Marx would, I think, appeal to the concept of the material base: if everybody tried to live off the spectacle of waterfalls or through trading in conscience and honor, no one would survive. Real production, the real transformation of nature through labor processes, is crucial to our existence; and it is this material labor that forms the basis for the production and reproduction of all human life. We can’t dress in conscience and honor (remember the fable of the emperor’s new clothes), we can’t dress in the spectacle of a waterfall; clothes do not come to us that way, they come to us through human labor processes and commodity exchange. Even in a city like Washington, D.C., where a vast amount of trading in conscience and honor seems to occur, there is always the question of where everybody’s breakfast comes from, as well as the electronics, the paper, the automobiles, the houses and the highways that sustain daily life. To pretend this all arrives magically through the market, facilitated by the magic of the money that happens to be in our pocket, is to succumb totally to the fetishism of the commodity. We need the concept of value as socially necessary labor-time in order to break through the fetishism.
Whether or not you believe that Marx was right to take a position such as this is up to you to decide. To understand Capital on Marx’s own terms, though, you have to be prepared to accept an argument somewhat along these lines, at least until you get to the end of the book. It is also important to recognize that Marx is, nevertheless, conceding something here that is terribly important. That is, the price system is indeed a surface appearance that has its own objective reality (it really is “as it appears”) as well as a vital function—the regulation of demand and supply fluctuations so that they converge on an equilibrium price—and this system can easily get out of control on its own terms. As we will later see even in this chapter, the quantitative and qualitative incongruities have serious consequences for how market systems and money-forms work. (They can even yield not only the possibility, but also the inevitability, of financial and monetary crises!)
But Marx’s presumption—and if you are to understand him, you must bear with him on this point—is that value as socially necessary labor-time lies at the center of things. If we assume that values are fixed (though perpetual shifts in technology and social and natural relations constantly remind us that in fact it’s quite the contrary), then we’ll see prices fluctuating over time around “natural” prices, the state of equilibrium between demand and supply. This equilibrium price is merely an appearance, a representation of socially necessary labor-time that generates the value crystallized in money. And this value is what the market prices are actually fluctuating around (196). Market prices perpetually and necessarily deviate from values; if they didn’t, there would be no way of equilibrating the market. As for the qualitative incongruities, some of them (such as speculation in land values and land rents) have an important material role to play (not to be taken up until Volume III) in processes of urbanization and the production of space. But this is something that cannot be considered here.
Section 2: The Means of Circulation
It is useful to study Marx’s introductory paragraphs carefully since they often signal a general argument or theme that needs to be borne in mind. Here he reminds us that “we saw in a former chapter that the exchange of commodities implies contradictory and mutually exclusive conditions” (198). What is he referring to? Look back at the section on relative and equivalent forms of value. There, he identified three peculiarities of the money commodity. First, that “use-value becomes the form of appearance of its opposite, value”; second, that “concrete labour becomes the form of manifestation of its opposite, abstract human labour”; and third, that “private labour takes the form of its opposite, namely labour in its directly social form” (148, 150, 151).
Gold is a particular commodity produced and appropriable by private persons, with a particular use-value, and yet all those particularities are somehow buried within the universal equivalent of the money commodity. “The further development of the commodity does not abolish these contradictions,” Marx observes, “but rather provides the form within which they have room to move.” There are some clues here—pay particular attention to that phrase, “the form within which [contradictions] have room to move”—as to the nature of Marx’s dialectical method. There is, he says, a general “way in which real contradictions are resolved. 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” (198, emphasis added).
Earlier, I described the dialectic as a form of expansionary logic. Some people like to think about the dialectic as being strictly about thesis, antithesis and synthesis, but what Marx is saying here is that there is no synthesis. There is only the internalization of and greater accommodation of the contradiction. Contradictions are never finally resolved; they can only be replicated either within a perpetual system of movement (like the ellipse) or on a grander scale. Yet there are apparent moments of resolution, as when the money-form crystallizes out of exchange to resolve the problem of how to circulate all those commodities efficiently. So we might breathe a sigh of relief and say, thank God, we have money, that’s a nice synthesis, we don’t have to think anymore. No, no, says Marx, we now have to analyze the contradictions that money-forms internalize—contradictions that become problematic on a much grander scale. There is, as it were, a perpetual expansion of the contradictions.
For this reason I get impatient with people who depict Marx’s dialectic as a closed method of analysis. It is not finite; on the contrary, it is constantly expanding, and here he is explaining precisely how. We only have to review what we have already experienced in reading Capital; the movement of its argument is a perpetual reshaping, rephrasing and expansion of the field of contradictions. This explains why there is so much repetition. Each step forward requires Marx to return to an earlier contradiction in order to explain where the next one is coming from. Reflecting on introductory passages like this one helps to clarify Marx’s meaning; it gives us a better idea of what he is trying to do in each section as his argument unfolds.
We see this process at work in the second section of the chapter on money, where Marx examines what he calls the “social metabolism” and “metamorphosis of commodities” through exchange. Exchange, as we have seen, “produces a differentiation of the commodity into two elements, commodity and money.” When we put these into motion, we see that commodities and money move in opposite directions with each change of hands. While the movement of one (the exchange of money) is supposed to facilitate the other (the movement of commodities), there is an oppositional flow, which creates the possibility for the rise of “antagonistic forms” (198–9). This sets the stage for the analysis of the metamorphosis of commodities.
Exchange is a transaction in which value undergoes a change of form. Marx labels this chain of movements—commodity into money, money into commodity—the “C-M-C” relation. (This is different from the “C-C” or commodity-to-commodity movement of bartering; all exchanges are now mediated through money.) This process is a twofold metamorphosis of value from C into M and of M into C (199–200).
It would seem on the surface that these are mirror images and therefore in principle equivalent, but in fact they are asymmetrical. The C-M side of the exchange, the sale, involves the change in form of a particular commodity into the universal equivalent, the money commodity. It is a movement from the particular to the universal. In order to sell your particular commodity, you must find somebody
