means of payment. Again, the basic problem addressed here arises out of the intersecting temporalities of different kinds of commodity production. A farmer produces a crop that can be put on the market in September. How do farmers live the rest of the year? They need money continuously but get their money all at one time, once a year. One solution, instead of hoarding, is to use money as a means of payment. This creates a time gap between the exchange of commodities and the money exchanges; a future date of settlement has to be set. (Michaelmas became a traditional date to settle up accounts in Britain, reflecting the agricultural cycle there.) The commodities circulate “on tick.” Money becomes money of account, written down in a ledger. Since no money is actually moving until settlement date, less aggregate money is needed to circulate commodities, and this helps resolve tensions between money as a measure of value and as a medium of circulation (232–3).
The result is a new kind of social relation—that between debtors and creditors—which gives rise to a different kind of economic transaction and a different social dynamic:
The seller becomes a creditor, the buyer becomes a debtor. Since the metamorphosis of commodities, or the development of their form of value, has undergone a change here, money receives a new function as well. It becomes the means of payment. (233)
But note well: “the role of creditor or of debtor results here from the simple circulation of commodities,” but it is also possible for it to shift from transient, occasional forms to “a more rigid crystallization,” by which he means a more definite class relation. (He compares this dynamic to the class struggle in the ancient world and the contest in the Middle Ages that “ended with the ruin of the feudal debtors, who lost their political power together with its economic basis” (233).) So there is a power relation within the debtor-creditor relation, though its nature has yet to be determined.
So what is the role of credit in the general circulation of commodities? Suppose I am a creditor. You are in need of money, and I lend it to you now with the idea I will get it back later. The form of circulation is M-C-M, which is very different from C-M-C. Why would I circulate money in order later to get back the same amount of money? There is no advantage to me in this form of circulation unless I get back more money at the end than I started with. (Perhaps it’s already clear where this analysis is leading.)
There follows a crucial passage, the significance of which is all too easy to miss, partly because of the way Marx buries it in complicated language. I cite it nearly in full:
Let us return to the sphere of circulation. The two equivalents, commodities and money, have ceased to appear simultaneously at the two poles of the process of sale. The money functions now, first as the measure of value in the determination of the price of the commodity sold … Secondly it serves as a nominal means of purchase. Although existing only in the promise of the buyer to pay, it causes the commodity to change hands. Not until payment falls due does the means of payment actually step into circulation, i.e. leave the hand of the buyer for that of the seller. The circulating medium was transformed into a hoard because the process stopped short after the first phase, because the converted shape of the commodity was withdrawn from circulation. The means of payment enters circulation, but only after the commodity has already left it. The money no longer mediates the process. It brings it to an end by emerging independently, as the absolute form of existence of exchange-value, in other words the universal commodity. The seller turned his commodity into money in order to satisfy some need; the hoarder in order to preserve the monetary form of his commodity, and the indebted purchaser in order to be able to pay. If he does not pay, his goods will be sold compulsorily. The value-form of the commodity, money, has now become the self-sufficient purpose of the sale, owing to a social necessity springing from the conditions of the process of circulation itself. (233–4, emphasis added)
Decoded, this means that there needs to be a form of circulation in which money is going to be exchanged in order to get money: M-C-M. This is a shift in perspective that makes a world of difference. If the objective is procuring other use-values through commodity production and commodity exchange, albeit mediated through money, we’re dealing with C-M-C. In contrast, M-C-M is a form of circulation in which money is the objective, not commodities. In order for that to have a rationale, it requires that I get back more money than I started with. This is the moment in Capital when we first see the circulation of capital crystallizing out of the circulation of commodities mediated by the contradictions of money-forms. There is a big difference between the circulation of money as a mediator of commodity exchange and money used as capital. Not all money is capital. A monetized society is not necessarily a capitalist society. If everything revolved around the C-M-C circulation process, then money would be merely a mediator, nothing more. Capital emerges when money is put into circulation in order to get more money.
I want to pause now to reflect a bit on the nature of Marx’s argument so far. At this point, we can say that the proliferation of commodity exchange necessarily leads to the rise of money-forms and that the internal contradiction within these money-forms necessarily leads, in turn, to the rise of the capitalist form of circulation, in which money is used to gain more money. This is, crudely summarized, the argument of Capital so far.
We first have to decide whether this is a historical or a logical argument. If it is the former, then there is a teleology to history in general, and capitalist history in particular; the rise of capitalism is an inevitable step in human history, emerging out of the gradual proliferations of commodity exchange. It is possible to find statements in Marx that would support such a teleological view, and his frequent deployment of the word “necessary” certainly supports such an interpretation. I myself am not convinced of it, and if Marx did indeed believe this then I think he was wrong.
This leaves us with the logical rationale, which I find much more persuasive. It focuses on the methodology at work as the argument unfolds: the dialectical and relational opposition between use-value and exchange-value as embodied in the commodity; the externalization of that opposition in the money-form as a way to represent value and facilitate commodity exchange; the internalization of this contradiction by the money-form as both a medium of circulation and a measure of value; and the resolution of that contradiction through the emergence of relations between debtors and creditors in the use of money as a means of payment. Now we are in a position to understand money as the beginning and end point of a distinctive circulation process, to be called capital. The logic of Marx’s argument reveals the internalized dialectical relations that characterize a fully developed capitalist mode of production (understood as a totality) of the sort that evolved (for contingent historical reasons) from the sixteenth century onward in Britain in particular.
There may, of course, be some compromise to be made with the historical rationale, simply by converting the language from “necessity” to “possibility” or even “probability” or “likelihood.” We would then say that the contradictions in the money-form created the possibility for the rise of a capitalist form of circulation, and perhaps even point to specific historical circumstances in which the pressures emanating from those contradictions might become so overwhelming as to directly cause capitalism to break through. Certainly much of what Marx attributes to “social necessity” would seem to indicate this. We could likewise point to the intense barriers that had to be developed in “traditional” societies to prevent the capitalist form of circulation from coming to dominate and the social instabilities those societies experienced as they were subjected to periodic feasts and famines of either commodity trading or gold or silver supply. Different social orders (such as China’s) have, at various times, ridden out these contradictions in their own fashion without falling under the domination of capital. Whether contemporary China has already fallen into the capitalist camp or can manage to continue to ride the capitalist tiger is, however, a matter of great import and a subject of much debate. I must, however, conclude now with a series of questions to contemplate.
In Capital, Marx passes on to more particular matters. There is, he notes “a contradiction immanent in the function of money as the means of payment”:
When
