Money
Money is the objective measure of value in commodity exchange.1 Don’t worry if that seems obscure to you right now. In this section, we’ll unpack the various parts that make up this definition. Money is one the most important notions in Marx’s system. So important, in fact, that the lifelong Marx scholar Michael Heinrich explains Marx’s project in Capital as “a monetary theory of value” [1, p.65]. Though Marx opens Capital with the commodity, it is arguably his conceptualization of money that constitutes his most innovative contribution to political economy; or rather, to what he sees as a damning critique of it, as we will explore in this section.2
Some of this is territory that we have already covered. Commodity exchange is the actual changing hands of commodities. It may seem obvious to point this out, but the knotted relationship between commodities and money stem from the logical implications of this simple act. As we saw in the previous section, the elementary idea of the commodity already has a notion of exchange implicitly embedded into it, as a commodity is any thing, process, or notion that can be exchanged for another commodity.
When commodities change hands in capital, there must be a way in which the exchange is made fair. This is because Marx is working with a very specific sense of the commodity, namely the way in which it holds up the edifice of thought that was known in the nineteenth century as political economy. Though commodities such as wheat and iron of course ‘exist’ in the colloquial sense in other modes of production such as feudalism, the idea that they are exchanged under the pretense of having equal (social) value is specific to capital. Therefore the commodity as we defined it in the previous section only exists in capital. It is not incorrect to say that it is the preponderance of this specific idea of the commodity—the fact of it generally taking hold over and above other ideas—that defines capital as a mode of production.
Famous political economists before Marx, such as Adam Smith and John Stuart Mill, argued that this notion of the commodity and the economy of fair exchange that it represents were the hallmarks of a social world in which humans were finally and truly free. In Capital, Marx sets out to show that the logical contradictions in this argument, which is why the subtitle to the book is: A Critique of Political Economy. The specific kind of fair exchange that the notion of the commodity as an exchange of equal value implies is not, as it appears to political economy, a form of social exchange that naturally leads to everyone’s betterment; or, at least, it doesn’t lead to betterment without qualification.
To develop this critique, as we know, Marx begins Capital by outlining the axiomatic notion of the commodity. He then progresses through the first few chapters by working through the consequences of this elementary axiom, much in the same way that formal proofs in mathematics derive statements from a set of formal premises. Marx’s critique of capital as a system of free and fair relations between people shows that the commodity’s elementary pretext of fair exchange cannot logically amount, when expanded through the sentences its axioms imply, to a system in which all become systematically better off.3
Let’s run with this mathematical metaphor to show how Marx derives the idea of money from the commodity. If two commodities A and B are exchanged fairly, there must be some way to recognize that they have equal value. In other words, both commodities must square up against some external measure of value that establishes the exchange of A and B as fair by commensurating the one with the other. Marx demonstrates how this commensurability works in practice through the famous example of an exchange of linen for a coat:
Let’s say that we have two commodities, a coat and 10 yards of linen. The former has twice the value of the latter, so if 10 yards of linen = v, the coat = 2v. [2, p.19]
It doesn’t take a genius to surmise, here, that a fair exchange of these commodities would be 20 yards of linen for 1 coat (or any such multiple). But what is it, logically speaking, that allows some quantity of the linen commodity to be equalized to the coat commodity in the first place? Marx calls this commesurating quality exchange-value. Exchange-value appears where the original thinkability of commodities as exchangeable hardens into a definitive balancing of two commodities. When exchange-value appears, so too does a ratio between commodity A and commodity B, a ratio that makes sense to express in numbers.
Exchange-value is the consistency through which commodities are measured against each other in capital when they are being exchanged. Marx makes a point of noting that exchange-value does not necessarily correspond to a commodity’s use-value, that is, its ability to actually satisfy a given human’s want, need, or desire. The absolute definitional gap between use-value and exchange-value is one of the most critical conceptual subtleties that Marx thinks much of political economy fails to recognize. What an object (or process, or idea) is worth can be measured in multiple ways, and exchange-value is just one of those ways. In capital, exchange-value too often gets unwittingly used as a proxy for use-value, leading to a distorted culture of valuation. Capitalist culture values some things enormously, giving them a weighty relative exchange-value, and then often fails to register that this exchange-valuation is not directly proportional to its use-valuation. A bad conviction—that capital is a mode of production that endlessly improves everyone’s lives—slips through the cracks of the fault-line of this conceptual subtlety.
With exchange-value in mind, however, we still haven’t quite reached the concept of money. Exchange-value is the measure of value in commodity exchange; but what distinguishes money as the objective measure of value in commodity exchange, as per this section’s opening? The bottom line is that exchange-value takes form as a ratio, and capital isn’t a mode of exchange that works with pure ratios of commodities. (This would be a barter economy, not capital.) Capital works by investing a particular commodity with a special status as the denotation measure of the exchange-value in all other commodities. When commodities change hands in capital, their exchange-value is equalized through a uniquely capable third commodity, the universal equivalent we know and love as money, moolah, lucre, ka-ching!
Money is a lubricant that makes any commodity exhangeable for any other commodity by embodying exchange-value. Instead of exchanging 20 yards of linen for 1 coat, we exchange it for X dollars. Commodity exchange is possible at a different scale than it was in a barter economy by the existence of this ethereal embodiment of exchange-value in money. Instead of exchanging a commodity A for another commodity B, we can exchange any commodity for the special commodity M, money. A commodity is exchanged for money, as money is a special commodity that can (more easily) be exchanged for any other commodity.
Money is thus the objective measure of value in commodity exchange, as it acts as exchange-value incarnate, value’s apparently ‘objective’ form in capital. If we take Heinrich’s suggestion seriously, that Marx’s theory of capitalism rests in its monetary theory of value, then it is hard to deny that there is at least some sense in which capital still haunts us in the world today. The globalized twenty-first century is awash with the idea that social value is exclusively measured in money, so much so that the late Marxist literary theorist Fredric Jameson once quipped that it is easier to imagine the end of the world than it is the end of capitalism.
Like the commodity, money is a very real abstraction at work in world. Even if you take issue with the way it works abstractly (and we would contend that you should!), it’s essentially impossible to extract yourself from its very real effects on your life and well-being. Money makes the world go around, as they say, as you can’t opt out of what it means at will. Money is a fiction, it’s true, but it is an objective fiction: its meaning cannot be wished away subjectively, because it takes root in a social process.
In this way, money is not unlike language. Though words are arguably arbitrary (why do we call this thing a ‘cat’ and that thing a ‘mat’?), they have obstinate meaning on account of their social gravity. If everyone else believes that this is a ‘cat’, I cannot opt out and use the word ‘fizzbuzz’ in its place. Private languages do not exist, as language is by definition a shared social meaning. The same is true of money. I pretend it doesn’t mean anything (or mean something different than what everyone else thinks it does) only at my own expense.