Capital: Volume 1, Chapter 3 by Karl Marx

Chapter 3: Money or the Circulation of Commodities

- The measure of values

1. "It is not money that renders the commodities commensurable. Quite the contrary. Because all commodities, as values, are objectified human labour, and therefore in themselves commensurable" - 188
2. money-form or price: x commodity A = y money commodity
3. "the less the unit of measurement (here a quantity of gold) is subject to variation, the better the standard of price fulfils its office. But gold can serve as a measure of value only because it is itself a product of labour, and therefore potentially variable in value." - 192
4. causes of a "general rise in the prices of commodities", inflation: rise in commodity value, money value constant; fall in money value, commodity value constant - 193
5. "The possibility, therefore, of a quantitative incongruity between price and magnitude of value, i.e. the possibility that the price may diverge from the magnitude of value, is inherent in the price-form itself. This is not a defect, but, on the contrary, it makes this form the adequate one for a mode of production whose laws can only assert themselves as blindly operating averages between constant irregularities." - 197

- The means of circulation

A. The metamorphosis of commodities

1. biological economics: "In so far as the process of exchange transfers commodities from hands in which they are non-use-values to hands in which they are use-values, it is a process of social metabolism." - 198
2. exchange splits a commodity into use-value (the material commodity) and value (money), an inherent tension - 199
3. "The process of exchange is therefore accomplished through the following changes of forms: Commodity-Money-Commodity" - 200
4. "But the division of labour is an organization of production which has grown up naturally, a web which has been, and continues to be, woven behind the backs of the producers of commodities." - 201
5. price to use-value discrepancies: "all these pieces taken as a whole may contain superfluously expended labour-time." - 202
6. "a sale is a purchase, C-M is also M-C." - 203
7. "Money is the absolutely alienable commodity, because it is all other commodities divested of their shape, the product of their universal alienation." - 205
8. "Circulation sweats money from every pore." - 208

B. The circulation of money

1. "As means of circulation, money circulates commodities, which in and for themselves lack the power of movement, and transfers them from hands in which they are non-use-values into hands in which they are use-values...Money constantly removes commodities from the sphere of circulation, by constantly stepping into their place in circulation, and in this way continually moving away from its own starting-point" - 211
2. "If the mass of commodities remains constant, the quantity of money in circulation surges up or down according to the fluctuations in the prices of commodities....Whether the change in the price reflects an actual change in the value of the commodities, or merely fluctuations in their market prices, the effect on the quantity of the medium of circulation remains are the same." - 215
3. "The quantity of money thrown into the process of circulation at the beginning of each day is of course determined by the sum of the prices of all the commodities circulating simultaneously and side by side." - 216

C. Coin, the symbol of value

1. "The different national uniforms worn at home by gold and silver as coins, but taken off again when they appear on the world market, demonstrate the separation between the internal or national spheres of commodity circulation and its universal sphere, the world market." - 222
2. "The metallic content of silver and copper tokens is arbitrarily determined by law. In the course of circulation they wear down even more rapidly than gold coins. Their function as coins is therefore in practice entirely independent of their weight, i.e. it is independent of all value. In its form of existence as coin, gold becomes completely divorced from the substance of its value. Relatively valueless objects, therefore, such as paper notes, can serve as coins in place of gold." - 223-4

- Money

A. Hoarding

1. "as soon as the series of metamorphoses is interrupted, as soon as sales are not supplemented by subsequent purchases, money is immobilized" - 227
2. "His needs are ceaselessly renewed, and necessitate the continual purchase of other people's commodities, whereas the production and sale of his own commodity costs time and is subject to various accidents. In order then to be able to buy without selling, he must have sold previously without buying." - 228
3. "The hoarding drive is boundless in its nature. Qualitatively or formally considered, money is independent of all limits...This contradiction between the quantitative limitation and the qualitative lack of limitation of money keeps driving the hoarder back to his Sisyphean task: accumulation." - 230-1

B. Means of payment

1. "The seller sells an existing commodity, the buyer buys as the mere representative of money, or rather as the representative of future money. The seller becomes a creditor, the buyer becomes a debtor...money receives a new function as well. It becomes the means of payment." - 233
2. buyer: M --> C before C --> M; seller: C --> M before M --> C; hoarder: C --> M, stop
3. "Whenever there is a general disturbance of the mechanism [of an "ongoing chain of payments"], no matter what its cause, money suddenly and immediately changes from its merely nominal shape, money of account, into hard cash....The bourgeois, drunk with prosperity and arrogantly certain of himself, has just declared that money is a purely imaginary notion. 'Commodities alone are money,' he said. But now the opposite cry resounds over the markets of the world: only money is a commodity." - 236
4. "Credit-money springs directly out of the function of money as a means of payment, in that certificates of debts owing for already purchased commodities themselves circulate for the purpose of transferring these debts to others." - a circulation of debt - 238
5. "The development of money as a means of payment makes it necessary to accumulate it in preparation for the days when the sums which are owing fall due." - 240

C. World money

1. "World money serves as the universal means of payment, as the universal means of purchase, and as the absolute social materialization of wealth as such (universal wealth)." - 242
2. "The stream of gold and silver has a twofold motion. On the one hand, it spreads out from its sources all over the world, and is absorbed to various extents into the different national spheres of circulation...On the other hand, gold and silver continually flow backwards and forwards between the different national spheres of circulation, and this movement follows the unceasing fluctuations of the rate of exchange." - 243-4