Karl Marx/Capital1/Part1

This is a resource about the first part of the first volume of Capital by Karl Marx, entitled "Commodities and Money".

It holds a summary of the first three chapters:

• Ch. 1: Commodites
• Ch. 2: Exchange
• Ch. 3: Money, or the Circulation of Commodities

This first part of Capital has a reputation for being extremely complicated. Marx himself spends 125 pages (of the total of about 800) on this first part. And for instance, Harvey, in his Companion needs nearly 70 pages (of the total of 350) to treat the first three chapters.

Chapter 1: Commodities

The opening sentences of the first chapter of the first volume of Capital read as follows:

The wealth of societies in which the capitalist mode of production prevails appears as an "immense collection of commodities"; the individual commodity appears as its elementary form. Our in­vestigation therefore begins with the analysis of the commodity.

— Marx, Capital, Vol 1, p. 125

In this short paragraph three "interlocking themes—analytical, socio-historical, and experiential" are contained:

• the rejection of the claims of the then current liberal political economy: Adam Smith's "wealth of nations" is replaced by "wealth of societies";
• the statement that Marx does not write about societies in general, but about capitalism;
• the focus is primarily on production, not on consumption.

So Marx begins his investigation with the "elementary form" of the "wealth of societies in which the capitalist mode of production prevails": the analysis of the commodity. Every commodity in capitalism has a use-value, but also an exchange-value. Exchange-value being the "form of appearance" of value. Concrete labour produces use-value; abstract labour produces value. Value is the socially necessary labour-time to produce a use-value. Where Ricardo said that labour-time constitutes value, Marx adds: socially necessary labour-time.

Values are not fixed. They depend on the development of society, especially grows of productivity, i.e. degree of skill, level of development of science and technological applications, the social organization of production, the conditions found in the natural environment.

So there is in the commodity a dialectical relation between use-value, exchange-value and value.

In the next section of the first chapter the two sides of labour embodied in a commodity are further researched. First of all the labour embodied in the commodity is a creator of use-values, "a condition of human existence which is independent of all forms of society," where this labour is "an eternal natural necessity which mediates the metabolism between man an nature, and therefore human life itself." (p. 133) In the value of the commodity, on the other hand, the expenditure of simple labour power is expressed. In a few lines Marx states, that more complex, skilled forms of labour, can be regarded as multiplication of simple labour. But anyhow, value can be regarded as formed by the expenditure of human labour-power in general.

The section on "the form of value, or exchange-value" holds a long explanation of the development of the value from a simple barter situation, to the most sophisticated money form. This development goes via the exchange in a more complex situation, like the marketplace, and then to the "expanded form" of value, next into the "general form" and finally into the "universal equivalent": the situation where one commodity has the exclusive role of "money commodity".

The last section of the first chapter of Capital 1 is the well-known text about "the fetishism of the commodity and its secret." In sharp contrast to the previous section, which is a kind of example of Marx as a book-keeper, this section has a completely different and rather literary style: "evocative and methaphoric, imaginative, playful and emotive, full of allusions and references to magic, mysteries and necroromancies."

The analysis follows in two steps:

• How does fetishism arise and forms a fundamental feature of capitalism;
• How is this fetishism represented in bourgeois thought in general and classical political economy in particular.

The commodity-form, and the value of the commodity, as the product of labour, has absolutely no connection with the physical properties of the commodity, and the material relations arising therefrom. On the contrary. What happens in the process of production and exchange of commodities is that social relations between men grow into "the fantastic form of relations between things." This is what Marx mentions the "fetishism which attaches itself to the products of labour as soon as they are produced as commodities. (The) producers of commodities do not come into social contact until they exchange the products of their labour. (…) To the producers, therefore, the social relations between their private labours appear as what they are, i.e. they do not appear as direct social relations between persons in their work, but rather as material relations between persons and social relations between things." (p. 165-166)

For Marx his analysis of fetishism in Capital is also the starting point for his attack on the liberal concept of freedom. "The freedom of the market is not freedom at all. It is a fetishistic illusion." Bourgeois economic theorists have taken a course opposite to the real development: the analysis of the prices of commodities led to the determination of the magnitude of value, and the common expression of all commodities in money led to the establishment of their character as values. But this finished form of the world of commodities - the money form - is exactly the form "which conceals the social character of private labour and the social relations between the individual workers, by making those relations appear as relations between material objects, instead of revealing them plainly." (p. 168-169) So here we see how worthwhile it might be to read again the previous section on the development of the value form.

The focus of "fetishism" allows Marx to look at different forms of production, starting with one of the favourite examples of bourgeois economics, the isolated Robinson Crusoe on his island, and continuing to the darkness of the Middle Ages, where personal dependence characterizes the social relations of production. Next he puts a short glance on labour in common, i.e. directly associated labour, for instance in a patriarchal rural industry of a peasant family. And finally, for a change, he imagines "an association of free men, working with the means of production held in common, and expending their many different forms of labour-power in full self-awareness as one single social labour force. All the characteristics of Robinson's labour are repeated here, but with the difference that they are social instead of individual." (p. 171) This is one of the few places in Capital where Marx talks about a future society of free individuals.

Chapter 2: Exchange

This chapter is easier to follow than the first one. The problem that Marx tries to tackle here is: what are the socially necessary conditions of capitalist commodity exchange? The exchange is a kind of contract between owners of commodities. But for the owner the commodity has no particular use-value, and for someone else this commodity must have a use-value. But in this process on a certain scale it is necessary to have a certain commodity, which can serve as universal equivalent. The commodity fetish in this chapter meets its successor: the money fetish.

It is important to see that Marx, at least in this chapter, accepts the (bourgeois) notions of rights and legality in the marketplace. It looks like he accepts the liberal theory of property ownership, "and even the hidden hand of the market as proposed by Adam Smith." In his critique of classical liberal political economy he finds it necessary to accept the theses of liberalism. His intend here is, of course, to show that the classical political economists were wrong, even in their own terms. But this attempt, to criticize political economy, might come at odds with his task of explaining the dynamics of the capitalist mode of production. in what lies before us, we must be careful in distinguishing this two separate objectives of analysis.

Chapter 3: Money, or the Circulation of Commodities

The third chapter is long, and quite intricate. In the first section Marx takes a look at money as a measure of value, while in the second section he treats money as means of circulation. Concerning the function of money as a measure of value, he makes a number of very important observations, for instance about the relation between price and value. In this we have to keep in mind that in Marx's days the (Ricardian) labour theory of value was widely accepted. So the relation between market prices and value (or natural prices) was not problematic: prices are the surface appearance of the underlying values; they can fluctuate above and below the long-term equilibrium price because of conditions of demand and supply. But value, as the socially necessary labour time that is needed to produce goods, is the essence.

As a means of circulation, money is the opposite of the commodity it is exchanged for, and creates a chain that differs from barter trading: if we describe barter as "C-C" (one commodity for another), the exchange mediated by money can be described as "C-M-C". This relation is not symmetrical. And here we find, as Harvey points out extensively, the first germ of Marx's rejection of what is often called "Say's law," the idea that there can be no general crisis of overproduction, because every sale is also a purchase, and every purchase is a sale.

In the third section of the third chapter, Marx dives deeper into the C-M-C relation. In the first place he notes the fact that, with the development of the circulation of commodities, there also develops the possibility of hoarding. Here he foreshadows the circulation M-C-M. "Commodities are thus sold not in order to buy commodities, but in order to replace their commodity-form by their money-form. Instead of being merely a way of mediating the metabolic process, this change of form becomes an end in itself." (p. 227-228) The first mentions of accumulation are made here: "the accumulation of money as unlimited social power is an essential feature of a capitalist mode of production. (…) The consequences of this are legion. A capitalist mode of production is essentially based on infinite accumulation and limitless growth." But for now, Marx takes a closer look at the hoarder, and describes the potentially useful function of hoarding in creating reserves in circulation, so that "circulation itself never overflows its banks" (p. 232).

Money as a means of payment, that can fill temporal gaps in production and distribution, opens the possibility of creating a new kind of social relation: between debtors and creditors. "The seller becomes a creditor, the buyer 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. (p. 233) Now the circulation in the form of M-C-M gets a new content, which is crucial, but "buried in complicated language" as Harvey calls it: "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." (p. 234) The shift of perspective of C-M-C to M-C-M makes a world of difference. In M-C-M money is the objective, no longer 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."

Harvey summarizes the argument of Capital so far very crudely: "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."

The next step

In the second part of Capital 1 The transformation of money into capital will be examined in detail. This will bring the central concept of surplus value and a first formulation of "the general formula for capital".

Sources

• Harvey, David (2010). A Companion to Marx's Capital. London / New York: Verso. ISBN 978 1 84467 359 9. 
• Shapiro, Stephen (2008). How to Read Marx's Capital. London: Pluto Press. ISBN 978 0 7453 2562 0.