This provokes a whole series of questions about how need—and the production of needs through, for example, advertising—influences the exchange process:
Perhaps the commodity is the product of a new kind of labour, and claims to satisfy a newly arisen need, or is even trying to bring forth a new need on its own account … Today the product satisfies a social need. Tomorrow it may perhaps be expelled partly or completely from its place by a similar product. (201)
So the transformation from C into M is complicated in large part by supply and demand conditions that exist in the market at a particular time:
We see then that commodities are in love with money, but that ‘the course of true love never did run smooth’. The quantitative articulation … of society’s productive organism, by which its scattered elements are integrated into the system of the division of labour, is as haphazard and spontaneous as its qualitative articulation. (202)
That is, the hidden hand of the market—the chaos of market exchange, the chronic uncertainty of it all—places all kinds of barriers in the way of a direct conversion of the commodity into the universal equivalent.
C-M-C is a single process—an exchange—that can be viewed from either of its two “poles” (203). The M-C side of exchange, the purchase, is a transition from money to commodity; it entails a movement from the universal to the particular. This is not, however, simply C-M in reverse. Changing money into a commodity is in principle much easier: you enter the market with your money and buy anything you want. To be sure, potential buyers may on occasion be frustrated by not finding what they desire; but in that case, thanks to the universal equivalence of the money commodity, they can always buy something else.
So in the process of exchange, value in effect moves from one state (that of the commodity) into another (that of money) and back again. Viewed as a whole, this process
appears in the first place [to be] made up of two opposite and complementary movements, C-M and M-C. These two antithetical transmutations of the commodity are accomplished through two antithetical social processes in which the commodity-owner takes part, and are reflected in the antithetical economic characteristics of the two processes … While the same commodity is successively passing through the two inverted transmutations … the owner of the commodity successively changes his role from seller to buyer. (206)
Marx’s emphasis on antithesis signals a potential contradiction, but not one between buyers and sellers because these are “not fixed roles, but constantly attach themselves to different persons in the course of the circulation of commodities.” The contradiction has to lie in the metamorphosis of commodities taken as a whole, i.e., within the circulation of commodities in general, since “the commodity itself is here subject to contradictory determinations,” being at once a non-use-value from the standpoint of its owner and, as a purchase, a use-value to the buyer (206–7).
This process—the circulation of commodities—is increasingly mediated by money. Again, notice how important the proliferation of exchange relations is to Marx’s argument:
We see here, on the one hand, how the exchange of commodities breaks through all the individual and local limitations of the direct exchange of products, and develops the metabolic process of human labour. On the other hand, there develops a whole network of social connections of natural origin, entirely beyond the control of the human agents. (207)
So where in the process of the circulation of commodities is the contradiction? Whereas a purchased commodity, being a use-value to its consumer, might “fall out of circulation,” the money does not drop out and disappear. It keeps on moving such that “circulation sweats money from every pore” (208). With this, Marx launches a definitive and violent attack upon something called Say’s law, which was a powerful idea within classical political economy and continues to this day to be a strong tenet of belief among monetarist economists.1 The French economist J. B. Say held that there can be no such thing as a general crisis of overproduction within capitalism, because every sale is a purchase and every purchase is a sale. By this logic, there is always some sort of aggregate equilibrium between purchases and sales in the market: while there may be an overproduction of shoes relative to shirts, or oranges relative to apples, a generalized overproduction in society is impossible because of the overall equivalence of purchases and sales.
Marx objects as follows:
Nothing could be more foolish than the dogma that because every sale is a purchase, and every purchase a sale, the circulation of commodities necessarily implies an equilibrium between sales and purchases. If this means that the number of actual sales accomplished is equal to the number of purchases, it is a flat tautology … No one can sell unless someone else purchases. But no one directly needs to purchase just because he has sold … To say that these mutually independent and antithetical processes [i.e., C-M and M-C] form an internal unity is to say also that their internal unity moves forward through external antitheses. These two processes lack internal independence because they complement each other. Hence, if the assertion of their external independence … proceeds to a certain critical point, their unity violently makes itself felt by producing—a crisis. There is an antithesis, immanent in the commodity, between use-value and value, between private labour which must simultaneously manifest itself as directly social labour, and a particular concrete kind of labour which simultaneously counts as merely abstract universal labour, between the conversion of things into persons and the conversion of persons into things; the antithetical phases of the metamorphosis of the commodity are the developed forms of motion of this immanent contradiction. These forms therefore imply the possibility of crises, though no more than the possibility. (208–9)
For the full development of this possibility of crises, I am sorry to say, you are going to have to read Volumes II and III, along with the three volumes of Theories of Surplus Value, because, as Marx points out, we need to know a lot more before we can explain in detail where crises might come from. For our purposes here, though, it’s worth noticing how the “the conversion of things into persons and the conversion of persons into things” echoes the fetishism argument from the first chapter.
At the heart of Marx’s objection to Say’s law lies the following argument. I start with C, I go to M, but there is no force that compels me to spend the money immediately on another commodity. I can, if I want, simply hold on to the money. I might do that, for example, if I felt there was some insecurity in the economy, if I was worried about the future and wanted to save. (What would you rather have in your hand in difficult times: a particular commodity or the universal equivalent?) But what happens to the circulation of commodities in general if everybody suddenly decides to hold on to money? The buying of commodities would cease and circulation would stop, resulting in a generalized crisis. If everybody in the world suddenly decided not to use their credit cards for three days, the whole global economy would be in serious trouble. (Recall how we were all urged to get out our credit cards after 9/11 and get back to shopping.) Which is why so much effort is put toward getting money out of our pockets and keeping it circulating.
In Marx’s time, most economists, including Ricardo, accepted Say’s law (210, n. 42). And partly due to the influence of the Ricardians, the law dominated economic thinking throughout the nineteenth century and up until the 1930s, when there was a generalized crisis. Then followed the (typical, to this day) chorus of economists saying things like, “There would be no crisis if only the economy would perform according to my textbook!” The facts of the Great Depression made a dominant economic theory that denied the possibility of generalized crisis untenable.
Then, in 1936, John Maynard Keynes published his General Theory of Employment, Interest and Money, in which he totally abandons Say’s law. In his Essays in Biography (1933), Keynes reexamines the history of Say’s law and what he considered its lamentable consequences for economic theorizing. Keynes made much of something he called the liquidity trap, in which some ruction
