Class 3 German

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Class 3

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» NEIL SMITH: So. Money makes
the world go round they say.
Geld regiert die Welt, sagt der Volksmund.

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» DAVID HARVEY: Yes.
Ja.

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It's so fascinating-
Es ist so faszinierend.

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money. We all use it,
Geld. Wir alle nutzen es,

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we all worry about it,
wir alle machen uns deswegen Sorgen,

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we all spend an enormous
amount of our time getting it.
wir verbringen unglaublich viel
Zeit damit um an welches zu kommen.

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But if you ask anybody the question: "What is money?",
Aber, wenn sie jemanden fragen: "Was ist eigentlich Geld?"

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most people can't give you a clear answer at all.
können ihnen die meisten Menschen gar keine klare Antwort geben.

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And I always remember this great line in
Und ich erinnere mich immer an diese grossartige Zeile in

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Dickens' Dombey and Son, where little
Paul, his mother has died and he's very sickly,
'Dombey und Sohn' von Dickens, wo der kleine
Paul, dessen Mutter gestorben ist, und der sehr krank ist,

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and he keeps on asking his father, "Papa, what
is money? What is money?" And Mister Dombey, who's
immerzu seinen Vater fragt, "Papa, was ist Geld? Was ist Geld?"
Und Mister Dombey,

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the great entrepreneur, merchant,
ein erfolgreicher Unternehmer, ein Kaufmann,

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can't give an answer.
weiß keine Antwort.

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At some point or other, he says: "Well,
it's something that allows you to do lots of things."
Also erklärt er ihm an einem Punkt: "Nun,
es ist etwas, dass dir erlaubt eine Menge Dinge zu tun."

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So little Paul says:
"Well, why can't it bring Mama back then?"
Und der kleine Paul sagt:
"Also, warum kann es dann Mama nicht zurück bringen?"

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And Mister Dombey is so flummoxed,
he just leaves the room.
Und Mister Dombey ist so verblüft,
dass er einfach den Raum verlässt.

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I think this kind of question about what money is
Ich denke, die Frage danach, was Geld ist,

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and its function in
society is really something of
und nach dessen Funktion in
der Gesellschaft ist zu einem gewissen Grad

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a mystery to everybody.
für jeden ein Rätsel.

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Yet it's something that we're constantly
focused on. So here we are, focused on this thing money
Dennoch ist es etwas, was uns ständig beschäftigt.
Das sind wir, wir beschäftigen uns mit diesem seltsamen Geld

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and we don't know what it is.
und wir wissen nicht was es ist.

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What Marx tries to do
Was Marx nun versucht ist,

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is to tell us
das er uns etwas

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something about money
über Geld erzählt,

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which we hadn't really understood before.
was wir vorher nicht wirklich verstanden haben.

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The theory of money in Marx even for Marx is very complicated.
Die Geldtheory von Marx ist sogar für die marx'schen Verhältnisse sehr kompliziert

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So the third chapter
Das dritte Kapitel

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is probably the most difficult chapter
in the book for almost everybody to get through.
ist vielleicht das schwierigste Kapitel
im Buch für jeden der es liest

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And from experience when you ask people who
started reading Capital on their own when
Und ich weiß aus Erfahrung, dass wenn Du die Leute
fragst, die alleine versucht haben, 'Das Kapital' zu lesen,

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they gave up, well, they nearly always did so
in Chapter Three. So one of my tasks is to
wo sie abgebrochen haben, dann antworten sie immer
im dritten Kapitel. Es ist also eine meiner Aufgaben,

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get people through Chapter Three,
die Leute durch Kapitel Drei zu begleiten,

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get them to the other side of it
and then it's like you've come out of purgatory.
ans andere Ufer,
und dann haben sie das Schlimmste hinter sich.

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You're into heaven after that. »NEIL SMITH: You're on
to the good stuff. »DAVID HARVEY: Yes.
Danach geht es nur noch bergab.
Smith: Danach kommt das Vergnügen. Harvey: Ja.

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I have to say that New York City in these

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times provides a good

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occasion to reflect on

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all of this, but we have to
remember this chapter was written

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nearly 150…140 years ago,

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and so there is the question

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as to how much

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of the analysis stands, and this
is obviously something you have to think about.

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The chapter usually

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poses quite a bit of difficulty for people.

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I think I mentioned early on that many people
who start reading Capital kind of give up on

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this chapter because it just gets too dense and
too complicated, and it's very hard to figure

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out what's going on,

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but if you stick with

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the framework I've suggested, and you do think about it,

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then whenever you approach a chapter like this and
think about its structure you will remember

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where you are

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in the broader argument.

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For the argument here is once again,
fairly simple, and it has a very

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similar form to the arguments
encountered before, so

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you'll probably get sick of me

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putting this kind of formulation

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up on the board. But Marx starts with

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the idea of a commodity money,

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or, money as a commodity.

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As usual, he asks a number of questions.

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What work does this commodity do? What functions
does it perform, and then he,

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surprisingly finds a duality. Right?

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We've seen this before.

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And the duality is

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that it's a measure of values

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but also a means of circulation.

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And those two functions

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are going to be somewhat incompatible

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with each other so he will spend

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the first part of the chapter looking at

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the measure of values function and
the complications which attach to that.

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The second part is about the means of circulation

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and its complications.

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Then of course he finally comes back

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to the issue of universal money

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which not surprisingly
internalizes a contradiction.

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So what else is new

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about Marx's method of presentation?

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But this is basically what he does.

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Now, part of the difficulty here is that,

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although Marx inserted into the section about

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concrete and abstract labour, some

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extra elements to broaden the argument,

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here he actually sets up a mini
bifurcation when considering

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money as a measure of value
and as a standard of price.

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So, he kind of does a mini-diversion of this inside the proposition.

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He does the same

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mini kind of diversion when considering

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means of circulation.

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In particular when he looks at

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concrete money, gold coins and symbols,

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Marx asks the question:
what's the relationship between

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this real stuff and

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this which leads him to discuss things like

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money as money of account, credit money and
all those other kinds of forms of money.

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In effect he starts to elucidate

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the complicated world of money
activities via this strategy.

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But the basic structure of the chapter is

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an echo of what you saw in

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the section on commodities, the section on

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abstract and concrete labour, the relative
and equivalent forms, and here Marx is just

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doing the same thing again.

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So, if you have that in mind,
then you're less likely to get lost

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in the intensity or details of the argument in this chapter,

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important though they are.

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Now the reason I like to

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set up the argument in this way is because

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when you're wrestling with details
fascinating and important

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in their own right, you nevertheless need to remember that

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Marx has a
framework within which

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the argument is proceeding,
and that is

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the framework of the chapter.

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So, with that in mind,

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let's look at this piece of the story:

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money as a measure of value

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or the money commodity.

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Obviously there is going to be
a transition in this chapter from talking about

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money as a commodity or
the money commodity,

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to money as universal money

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which of course, nowadays would not be
represented by any particular commodity at all.

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It would be represented by something else.
But I think we can see shadows of that

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in Marx's interpretation.

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For purposes of simplification,

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Marx says I'm going to assume for the most part
in this chapter - occasionally he introduces

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silver and then sometimes talks about other things -

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but I'm going to assume that the
commodity money is gold.

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Therefore I will use the example of gold.

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and just assume

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that gold has become the money commodity

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which we are interested in looking at.

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Then he immediately says

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at the bottom of the first page
here: "Money as a measure of value

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is the necessary form of appearance…"

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Now, I have often

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insisted that you think a
lot about social necessity,

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what is socially necessary?

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And here he's saying that this

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form of appearance

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is a necessary form of
appearance; it is socially necessary,

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and it's necessary

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as a measure of value which
is imminent in commodities, namely

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labour time or more accurately:
socially necessary labour time.

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So there's an interrelation then between

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the world of commodities and the
socially necessary labour time which is embodied

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in all of those commodities,

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and the socially necessary labour time,

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which is embodied in the gold.

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But then he goes one step further

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at the bottom of page 189

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when he says: "The price
or money-form of commodities

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is like their form of
value generally, quite distinct

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from their palpable and real bodily
form; it is therefore

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a purely ideal or notional form."

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By ideal Marx means 'mental',

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i.e. constructed in our minds.

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"Although invisible",

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and I've mentioned several times

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the significance of
these invisibilities, these

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immaterialities which are
nevertheless objective and real.

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Marx then goes on to say:

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"The guardian of the commodities must therefore
lend them his tongue, or hang a ticket

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on them, in order to communicate
their prices to the outside world."

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Now what's happening here is the following:

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I have a commodity;

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I have no idea what its value is.

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How can I possibly know

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before I take it to market?

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But when I take it to market, I want to have
a notional value to put on it,

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so I hang a price tag on it

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to indicate its worth;

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It's a mental move on my part for I am guessing;

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only after the market has gone through
all of its ferment and done its work can

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I know what the value

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is as represented by its money form.

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But as a standard of price,
as Marx indicates

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two pages later, money

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is performing a different function
than as a measure of value.

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So, on page 190 Marx wants
to talk first about this imaginary side,

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the ideal side of the money form.

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I'm imagining what the
value is in my commodity.

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But then the price itself depends

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upon the substance that is money.

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And this then poses the first problem,

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which is signaled upon this page.

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The money commodity is gold.

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Since it is a distinctive commodity,

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it is produced under given
conditions of production.

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So, how much gold there is, what the gold is worth,
and what the socially necessary labour time

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embedded in gold is, will vary.

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So immediately there is a problem,

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not on the side of

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all of those commodities, which have been measured
in terms of the money commodity, but in terms

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of the money commodity itself.

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So Marx has to deal with the prospect
of inflation, or deflation,

0:13:29.859,0:13:35.070
because there's not much money
or there's a lot of money around,

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and in particular the presence of much
gold or little gold.

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So, there is a problem of the gold supply.

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His point about this is that

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yes, we have to take that
into account, but

0:13:47.540,0:13:53.350
actually the relative values of
commodities are not affected by the level of the gold supply.

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For example if shoes cost twice
as much as shirts,

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and the money commodity changes,

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then the ratio two-to-one will still hold.

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It's just that it will be

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articulated in a different way,
because the money commodity has changed,

0:14:11.020,0:14:12.900
i.e. changed its value.

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So he breezes past that kind of
question by simply saying that

0:14:18.890,0:14:25.570
this disappears in the wash.
But, on page 192

0:14:25.570,0:14:30.330
Marx considers a more important issue,

0:14:30.330,0:14:37.020
when he talks about the way
in which …"measure of value, and…standard of price.."

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wherein money performs two quite different functions.

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Now, as a measure of value
the functions of money are:

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to be stable,

0:14:56.370,0:15:01.660
to be tangible,

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to not change its qualities.

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And so you can see immediately why as
a measure of price gold

0:15:08.590,0:15:14.690
rather than strawberries would be the money commodity.

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Because money as gold commodity can store value.

0:15:19.160,0:15:23.920
Gold is fairly
constant in its form since it

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can be assayed, measured,

0:15:28.640,0:15:35.640
and is limited in supply since you
can't just go out and dig it up in your backyard.

0:15:35.770,0:15:39.700
So there are reasons why, money

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gravitates towards gold as the measure of value,

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because indeed it works very well.

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Even though as we have seen

0:15:51.360,0:15:54.650
the value of gold itself can shift,

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that doesn't materially affect its capacity

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to function in these ways.

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As…a standard of price however,

0:16:08.890,0:16:13.260
Marx points out that

0:16:13.260,0:16:17.160
we are no longer interested in the relationship
between the socially necessary labour time

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in gold and the socially necessary
labour time in commodities,

0:16:21.720,0:16:26.010
because socially necessary labour time
is immaterial and immeasurable directly.

0:16:26.010,0:16:27.690
What we're interested in

0:16:27.690,0:16:30.230
is the quantity of the gold

0:16:30.230,0:16:33.940
which is equivalent to whatever it is

0:16:33.940,0:16:36.750
you are selling as a commodity.

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And that quantity of gold then tells you

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how much your commodity is worth.

0:16:42.650,0:16:45.880
This is a quantitative relation.

0:16:45.880,0:16:54.720
For example why two ounces, why not one ounce,
why three ounces?

0:16:54.720,0:17:00.730
At some point or other this
leads us into, according to Marx,

0:17:00.730,0:17:03.960
the way in which the weight name

0:17:03.960,0:17:07.330
of the money becomes the weight name

0:17:07.330,0:17:09.590
of the value of the commodity.

0:17:09.590,0:17:11.570
In this weight name, quoting from the top of page 194

0:17:11.570,0:17:14.070
Marx shows this important transitional aspect in the naming of money

0:17:14.070,0:17:19.580
when he considers
the word 'pound'; for the

0:17:19.580,0:17:23.620
pound was originally a pound of silver,

0:17:23.620,0:17:28.260
but then it simply became called pound, and

0:17:28.260,0:17:34.220
so the British currency is in pounds.

0:17:34.220,0:17:35.840
Now, when you're in Britain and

0:17:35.840,0:17:39.350
you ask for pounds, you don't expect
somebody to give you a weight of something.

0:17:39.350,0:17:42.010
You expect them to give you notes.

0:17:42.010,0:17:47.350
So what he's doing here is to talk
about the transition that is going on from

0:17:47.350,0:17:51.790
the value form, which is
in the money commodity,

0:17:51.790,0:17:58.960
to this naming and counting

0:17:58.960,0:18:09.620
of elements of money, which are
then traded by the commodity traders in the market place.

0:18:09.620,0:18:15.809
And this transition therefore completes the
fetishism which he has talked about in an earlier chapter.

0:18:15.809,0:18:18.370
So on page195 Marx said,

0:18:18.370,0:18:22.600
"the name of a thing is entirely
external to its nature.

0:18:22.600,0:18:26.740
I know nothing of a man if
I merely know his name is Jacob.

0:18:26.740,0:18:32.620
In the same way, every trace of
the money-relation disappears in the money names,

0:18:32.620,0:18:37.940
pound, thaler, franc, ducat, etc."

0:18:37.940,0:18:44.160
Then he goes on to talk about "the confusion caused
by attributing a hidden meaning to these cabalistic signs

0:18:44.160,0:18:49.040
which is made even greater by the fact that these
money names express both the values of commodities

0:18:49.040,0:18:54.350
and simultaneously aliquot parts of a certain
weight of metal, namely the weight of the metal

0:18:54.350,0:18:58.720
serving as the standard of money.

0:18:58.720,0:19:01.499
On the other hand this is in fact "necessary",

0:19:01.499,0:19:05.720
again this word necessary,
"it is…necessary that value,

0:19:05.720,0:19:08.870
as opposed to the multifarious
objects of the world of commodities,

0:19:08.870,0:19:10.860
should develop into this form,

0:19:10.860,0:19:17.470
a material and non-mental one,
but also a simple social form…"

0:19:17.470,0:19:22.650
Which leads us to the conclusion that "price
is the money-name of the labour objectified

0:19:22.650,0:19:29.390
in a commodity."

0:19:29.390,0:19:33.440
Now, what Marx is saying here is that

0:19:33.440,0:19:36.100
yes indeed we have all these terms like

0:19:36.100,0:19:41.510
ducats, louis, dollars and pounds and so on,

0:19:41.510,0:19:47.250
and we measure the value of commodities
in quantities of those terms,

0:19:47.250,0:19:49.230
but at some point there

0:19:49.230,0:19:55.270
has to be some relationship between

0:19:55.270,0:20:02.270
the way these nominal forms of money are
articulated and a monetary base, a commodity base.

0:20:05.520,0:20:08.590
He is saying that this is essential.

0:20:08.590,0:20:10.780
Now of course since the 1970's

0:20:10.780,0:20:18.820
the global economy has not done that very effectively.

0:20:18.820,0:20:22.050
So the question which then arises

0:20:22.050,0:20:25.460
underscores this insistence about the monetary base,

0:20:25.460,0:20:33.720
the commodity base, the money commodity
value. Is his insistence on that realistic?

0:20:33.720,0:20:35.710
What happens when you decide

0:20:35.710,0:20:37.970
that you're going to dispense with it,

0:20:37.970,0:20:40.000
as has technically happened

0:20:40.000,0:20:43.390
since the de-materialization of money

0:20:43.390,0:20:49.330
from the 1970's onwards.

0:20:49.330,0:20:57.510
We'll come back to that later,
when we look at questions of money supply.

0:20:57.510,0:21:02.809
However the end of this section introduces

0:21:02.809,0:21:06.690
some rather astonishing
modifications of the argument.

0:21:06.690,0:21:12.360
On page 196 and 197

0:21:18.380,0:21:24.090
Marx says "the magnitude of the value of a commodity",

0:21:24.090,0:21:27.549
towards the bottom of 196,

0:21:27.549,0:21:31.700
"therefore expresses a necessary relation to
social labour time which is inherent in the

0:21:31.700,0:21:36.460
process by which its value is created." OK.

0:21:36.460,0:21:41.590
"With the transformation of the
magnitude of value into the price

0:21:41.590,0:21:47.060
this necessary relation appears
as the exchange ratio between a single commodity

0:21:47.060,0:21:51.500
and the money commodity which exists outside it.

0:21:51.500,0:21:56.230
This relation however may express
both the magnitude of the value of a commodity

0:21:56.230,0:22:02.550
and the greater or lesser quantity of money
for which it can be sold under given circumstances.

0:22:02.550,0:22:07.250
This condition therefore points to the possibility
of a quantitative incongruity".

0:22:07.250,0:22:14.260
Notice that the"quantitative incongruity
between price and magnitude of value,

0:22:14.260,0:22:18.860
i.e. the possibility that the price may
diverge from the magnitude of value,

0:22:18.860,0:22:21.929
is inherent in the price-form itself."

0:22:21.929,0:22:26.920
This is not a defect,

0:22:26.920,0:22:28.090
"on the contrary," this is

0:22:28.090,0:22:33.750
"what makes this form the adequate one for a mode
of production whose laws can only assert themselves

0:22:33.750,0:22:41.940
as blindly operating averages
between constant irregularities."

0:22:41.940,0:22:47.720
What's going on here?

0:22:47.720,0:22:50.660
If everything in the market

0:22:50.660,0:22:53.650
was presented at its value,

0:22:53.650,0:22:58.760
and sold at its value,

0:22:58.760,0:23:01.900
then there would be absolutely no way

0:23:01.900,0:23:04.390
in which you could adjust

0:23:04.390,0:23:09.670
for demand and supply fluctuations.

0:23:09.670,0:23:14.550
What's happening here is that, in effect,

0:23:14.550,0:23:19.080
on a given day if too many traders come into
the market and not enough 'demanders' come

0:23:19.080,0:23:24.860
the price will go down.

0:23:24.860,0:23:31.429
The next day perhaps fewer
traders come but more buyers are present,

0:23:31.429,0:23:35.760
so the price goes up.

0:23:35.760,0:23:39.740
So what's happening here is that Marx is
talking about the way in which once you go

0:23:39.740,0:23:45.930
to a price name and hang prices on commodities,

0:23:45.930,0:23:51.120
different prices can be realized
at different times in different places;

0:23:51.120,0:23:55.299
they fluctuate all over the place.

0:23:55.299,0:23:58.150
And that is what the anarchy

0:23:58.150,0:24:04.720
of a capitalist market system is all about.

0:24:04.720,0:24:11.130
Therefore a money system has
to be able to deal with that.

0:24:11.130,0:24:14.690
So these incongruities

0:24:14.690,0:24:19.150
are specifically able to deal with fluctuations

0:24:19.150,0:24:25.100
in demand and supply conditions.

0:24:25.100,0:24:27.059
Now Marx along with the

0:24:27.059,0:24:31.290
classical political economists assumed

0:24:31.290,0:24:33.230
that at the end of the day

0:24:33.230,0:24:37.380
despite all these fluctuations, there is
something called equilibrium price

0:24:37.380,0:24:42.750
or natural price. That is to say the price

0:24:42.750,0:24:49.750
achieved when
demand and supply are in equilibrium.

0:24:50.950,0:24:54.169
And at that point, Marx says,

0:24:54.169,0:24:59.430
demand and supply cease to explain anything.

0:24:59.430,0:25:02.490
It doesn't explain why shirts

0:25:02.490,0:25:07.130
exchange in a certain
ratio with shoes on average.

0:25:07.130,0:25:11.130
It's not that shirts are more in demand than
shoes or anything of that kind, on a given day for

0:25:11.130,0:25:15.840
they may fluctuate, but
the fact that shirts and shoes

0:25:15.840,0:25:19.080
have different prices has to do

0:25:19.080,0:25:23.400
with their socially necessary
labour time. The fact that on any given day,

0:25:23.400,0:25:29.410
the price of shoes fluctuates above or
below its socially necessary labour time equivalent,

0:25:29.410,0:25:36.090
is due to demand and supply fluctuations.

0:25:36.090,0:25:38.880
In order for demand and supply

0:25:38.880,0:25:44.610
fluctuations to be incorporated into a
capitalistic system, we need a money system

0:25:44.610,0:25:47.080
which can do that.

0:25:47.080,0:25:50.250
And this quantitative incongruity between

0:25:50.250,0:25:52.430
money as a measure of value and

0:25:52.430,0:25:57.110
the way in which prices get hung
on commodities and prices get realized,

0:25:57.110,0:26:06.430
on a given day in a given market at a
given time, all of that is allowed for

0:26:06.430,0:26:10.510
precisely because of this transition which has
occurred between money as a clean measure of

0:26:10.510,0:26:15.610
value to it's operating
function as a standard of price

0:26:15.610,0:26:20.120
that can allow for these fluctuations.

0:26:20.120,0:26:27.600
Even more astonishing is what Marx points out
on the next page, namely the fact

0:26:27.600,0:26:31.359
that this transition from
money as a measure of value into

0:26:31.359,0:26:34.900
a standard of price can also

0:26:34.900,0:26:40.419
harbor "a qualitative contradiction,
with the result that price ceases altogether

0:26:40.419,0:26:43.680
to express value,

0:26:43.680,0:26:49.190
despite the fact that money is
nothing but the value-form of commodities.

0:26:49.190,0:26:53.010
Things which in and for
themselves are not commodities,

0:26:53.010,0:26:58.080
things such as conscience, honor, etc.
can be offered for sale by their holders

0:26:58.080,0:27:03.550
and thus acquire the form of
commodities through their price."

0:27:03.550,0:27:06.680
K-street and all the rest of it.

0:27:06.680,0:27:12.980
"Hence a thing can, formally speaking,
have a price without having a value.

0:27:12.980,0:27:18.720
The expression of price is in this case
imaginary, like certain quantities in mathematics.

0:27:18.720,0:27:23.770
On the other hand, the imaginary price-form may also
conceal a real value relation or one derived

0:27:23.770,0:27:25.680
from it, as for instance

0:27:25.680,0:27:30.170
the price of uncultivated land, which is
without value because no human labour

0:27:30.170,0:27:36.000
is objectified in it."

0:27:36.000,0:27:42.470
The point about land which
has not yet been occupied, is that

0:27:42.470,0:27:47.560
there are ways in which land does incorporate
what you might call a shadow price of human labour.

0:27:47.560,0:27:54.870
That is land which has human labour

0:27:54.870,0:27:58.170
embodied in it over here

0:27:58.170,0:28:01.370
casts a shadow value, if you like,
on the land which

0:28:01.370,0:28:04.730
could be incorporated next year.

0:28:04.730,0:28:11.770
What Marx is saying here is that
the case of land is a complicated one.

0:28:11.770,0:28:14.070
Because, although you might not see any direct

0:28:14.070,0:28:18.540
human labour incorporated into that
piece of land, you would see its 'shadow', that is

0:28:18.540,0:28:22.679
what we call 'externality effects' arising
from the human labour which is incorporated

0:28:22.679,0:28:28.160
in all the land around it.

0:28:28.160,0:28:33.000
If you had a little piece of Manhattan,

0:28:33.000,0:28:35.990
and you had held onto it since Indian times

0:28:35.990,0:28:40.850
and had kept it pristine with no
human labour incorporated into the land lot,

0:28:40.850,0:28:43.070
it would therefore have zero value.

0:28:43.070,0:28:46.070
But if you went into the market
and sold it for zero value…

0:28:46.070,0:28:52.660
well this would be absurd from a financial point of view!

0:28:52.660,0:28:55.900
However what about conscience, honor etc….?
Once again what Marx is showing us that

0:28:55.900,0:29:02.650
this qualitative inconsistency
also has to take into account the background that

0:29:02.650,0:29:06.650
real value has to be produced somewhere.

0:29:06.650,0:29:13.650
I mean, imagine an economy

0:29:14.520,0:29:19.620
which only exists on trading conscience and honor.

0:29:19.620,0:29:23.190
How would we live?

0:29:23.190,0:29:27.610
Where would our shirts and shoes and all the
rest come from? And Marx is kind of saying:

0:29:27.610,0:29:32.590
well, these qualitative incongruities
also have to be examined in

0:29:32.590,0:29:36.140
the light of where the
real value comes from

0:29:36.140,0:29:37.870
and what this real value

0:29:37.870,0:29:41.420
is all about. It seems to me those are

0:29:41.420,0:29:44.030
the very pressing questions

0:29:44.030,0:29:50.460
which confront us when we think
about how the global economy works.

0:29:50.460,0:29:52.410
In the United States people like to say

0:29:52.410,0:29:56.910
well, the working class has disappeared, so value is no longer being

0:29:56.910,0:30:02.840
produced here anymore, but then
you've got to think about what's going on in China.

0:30:02.840,0:30:05.550
However when you think about the fact that

0:30:05.550,0:30:11.640
although everybody is now concentrating
on making megabucks out of financial operations,

0:30:11.640,0:30:17.730
the global proletariat has doubled since 1970,

0:30:17.730,0:30:19.350
and value is still being produced

0:30:19.350,0:30:22.180
in very traditional kinds
of ways even though it

0:30:22.180,0:30:31.900
is being distributed in quite other ways.

0:30:33.500,0:30:36.119
So this is the main point

0:30:36.119,0:30:40.870
Marx wants to make about

0:30:40.870,0:30:46.620
this measure of value / standard of price movement,

0:30:46.620,0:30:50.000
which then takes him into the second long section

0:30:50.000,0:30:57.000
on the means of circulation.

0:30:59.100,0:31:06.220
Now he starts off with the following observation:

0:31:06.220,0:31:08.530
"We saw in a former chapter

0:31:08.530,0:31:15.530
that the exchange of commodities implies
contradictory and mutually exclusive conditions."

0:31:17.410,0:31:20.140
Can anybody remember what those

0:31:20.140,0:31:27.140
contradictions and mutually exclusive conditions
were? »STUDENT: If you're buying you're not selling?

0:31:28.620,0:31:35.140
»HARVEY: No, he's referring back to the
section on the relative and equivalent forms of value.

0:31:35.140,0:31:39.060
And if you go back to page 148

0:31:39.060,0:31:41.289
you'll see he says:"…use-value

0:31:41.289,0:31:46.730
becomes the form of appearance
of its opposite namely value.

0:31:46.730,0:31:49.590
Concrete-labour becomes a form of manifestation

0:31:49.590,0:31:54.190
of its opposite namely abstract labour.

0:31:54.190,0:32:00.110
Private labour becomes a form of manifestation
of its opposite i.e. social labour,"

0:32:00.110,0:32:04.770
back on page 148 and 151.

0:32:04.770,0:32:09.250
So he's immediately referring back then to those

0:32:09.250,0:32:14.030
tensions between the particularity
of the money commodity and

0:32:14.030,0:32:21.120
its supposed universal capacity to represent

0:32:21.120,0:32:25.000
socially necessary labour time in
the global economy.

0:32:25.000,0:32:27.430
He then makes a very interesting observation, and

0:32:27.430,0:32:30.670
I highlight it because

0:32:30.670,0:32:36.180
it's important to grasp Marx's mode of thinking.

0:32:36.180,0:32:42.830
He says: "The further development of the
commodity does not abolish these contradictions,

0:32:42.830,0:32:46.680
but rather provides the form
within which they have room to move.

0:32:46.680,0:32:51.080
This is in general the way in
which real contradictions are resolved."

0:32:51.080,0:32:51.700

0:32:51.700,0:32:55.920
In a way Marx is here describing his dialectical method.

0:32:55.920,0:32:58.269
By expanding the argument

0:32:58.269,0:33:00.079
and the contradictions we see Marx

0:33:00.079,0:33:03.120
allows the contradictions greater

0:33:03.120,0:33:06.570
purchase, greater possibility of movement.

0:33:06.570,0:33:11.430
Then Marx uses an interesting metaphor:
"for instance, it is a contradiction to depict

0:33:11.430,0:33:17.600
one body as constantly falling towards another
and at the same time constantly flying away from it.

0:33:17.600,0:33:24.600
The ellipse is a form of motion within which
this contradiction is both realized and resolved."

0:33:26.390,0:33:31.250
Now I'm sure some of you feel Marx's argument is
indeed elliptical.

0:33:31.250,0:33:34.940
But, I think this metaphor is a very
important one, because we

0:33:34.940,0:33:38.850
notice that an ellipse is about motion;

0:33:38.850,0:33:40.690
it's not

0:33:40.690,0:33:43.909
about stasis; it's about movement,

0:33:43.909,0:33:46.240
and it's about perpetual movement,

0:33:46.240,0:33:49.860
perpetual motion.

0:33:49.860,0:33:53.330
So in a sense he is indeed

0:33:53.330,0:33:57.850
using this kind of method

0:33:57.850,0:34:04.850
to expand the general structure of
his argument.

0:34:10.589,0:34:12.549
So Marx's first

0:34:12.549,0:34:16.789
concern is to set up an argument

0:34:16.789,0:34:17.959
about

0:34:17.959,0:34:22.699
what he calls a metamorphosis of commodities

0:34:22.699,0:34:27.719
which is in fact a process of circulation.

0:34:27.719,0:34:29.679
Here also

0:34:29.679,0:34:33.809
we start to get a different idea of what the
dialectic is about; it's about

0:34:33.809,0:34:37.119
the study of motion. I've mentioned process
a lot,

0:34:37.119,0:34:39.799
but now we are looking at circulation,

0:34:39.799,0:34:42.589
we're looking at motion.

0:34:42.589,0:34:48.279
And that motion is what he calls on page 198 a social metabolism.

0:34:48.279,0:34:51.990
He has already talked about the metabolic relation
to nature but now he's talking about

0:34:51.990,0:34:58.990
the social metabolism.

0:35:01.229,0:35:02.809
He puts it this way on page 199:

0:35:02.809,0:35:06.129
"exchange (…)

0:35:06.129,0:35:09.009
produces a differentiation of the commodity

0:35:09.009,0:35:11.910
into two elements, commodity and money,

0:35:11.910,0:35:15.440
an external opposition…"

0:35:15.440,0:35:18.299
And further down the page he calls this

0:35:18.299,0:35:23.919
an antagonistic form.

0:35:23.919,0:35:28.249
So we start now to think about the world of
commodities on the one hand

0:35:28.249,0:35:33.099
and money on the other and then talk about
the relationship between them.

0:35:33.099,0:35:39.179
Then he immediately shifts his argument from

0:35:39.179,0:35:42.449
a commodity-commodity exchange relation,

0:35:42.449,0:35:45.279
a C-C relation such as in

0:35:45.279,0:35:47.339
a Robinson Crusoe economy,

0:35:47.339,0:35:49.949
to look at

0:35:49.949,0:35:55.139
a C-M-C relationship,

0:35:55.139,0:35:56.869
commodity to money to

0:35:56.869,0:36:00.170
commodity circulation.

0:36:00.170,0:36:04.239
And he sets up an argument

0:36:04.239,0:36:09.719
about this form of circulation.

0:36:09.719,0:36:12.259
One of Marx's big arguments is that

0:36:12.259,0:36:18.299
inferences you would draw from a commodity to
commodity relation, cannot be applied

0:36:18.299,0:36:21.700
to the commodity-money-commodity

0:36:21.700,0:36:28.700
metamorphosis.

0:36:29.239,0:36:33.789
The first metamorphosis involves the transformation of

0:36:37.539,0:36:41.639
commodities into money.

0:36:41.639,0:36:44.719
He points out that you are going from the particular

0:36:44.719,0:36:48.639
to the universal.

0:36:48.639,0:36:55.449
And going from the particular to the universal

0:36:55.449,0:36:59.880
faces a whole range of different problems.

0:36:59.880,0:37:01.810
You have to find somebody out there

0:37:01.810,0:37:03.939
who wants your commodity.

0:37:03.939,0:37:07.949
You've got to fulfill a social need.

0:37:07.949,0:37:11.549
In the midst of the tense complications of the

0:37:11.549,0:37:13.859
social division of labour,

0:37:13.859,0:37:14.929
somehow

0:37:14.929,0:37:17.629
I have to find somebody in the market

0:37:17.629,0:37:21.989
who wants my particular commodity and will give me

0:37:21.989,0:37:23.680
the money equivalent

0:37:23.680,0:37:29.269
of my commodity.

0:37:29.269,0:37:32.729
So this means that the labour expended
on the commodity,

0:37:32.729,0:37:34.769
as he says on page 201,

0:37:34.769,0:37:41.349
"…must therefore be of a socially useful kind…"

0:37:41.349,0:37:46.349
And then Marx goes on to say that "perhaps the
commodity is the product of a new kind of labour

0:37:46.349,0:37:51.880
and claims to satisfy a newly arisen need,
or is even trying to bring forth

0:37:51.880,0:37:57.349
a new need on its own account."

0:37:57.349,0:37:59.259
Here he's beginning to talk about

0:37:59.259,0:38:01.400
the problem of need creation

0:38:01.400,0:38:03.349
under capitalism.

0:38:03.349,0:38:05.649
What's going to happen?

0:38:05.649,0:38:08.880
How does an entrepreneur create a need

0:38:08.880,0:38:11.049
for a new product?

0:38:11.049,0:38:12.429
Perhaps

0:38:12.429,0:38:17.009
innovations have other effects, and he goes on to say
"today the product satisfies a social need,.

0:38:17.009,0:38:24.009
tomorrow it may perhaps be expelled partly or
completely from its place by a similar product."

0:38:28.680,0:38:31.349
What happens in the market therefore is

0:38:32.739,0:38:36.489
a whole set of difficulties which have to be overcome

0:38:36.489,0:38:38.539
before I can convert my commodity

0:38:38.539,0:38:43.039
into money.

0:38:43.039,0:38:46.579
I encounter, as he notes on page 202,

0:38:46.579,0:38:53.189
the fluctuating demand and supply conditions,
which is already mentioned.

0:38:53.189,0:38:56.869
So Marx then ends up saying

0:38:56.869,0:38:59.149
on page 202 towards the bottom,
"we see then

0:38:59.149,0:39:02.259
that commodities are in love with money,

0:39:02.259,0:39:06.449
but that the course of true love never did run smooth.

0:39:06.449,0:39:09.929
The quantitative articulation of society's
productive organism,

0:39:09.929,0:39:14.619
by which its scattered elements are integrated
into the system of the division of labour,

0:39:14.619,0:39:16.880
is as haphazard and spontaneous

0:39:16.880,0:39:19.669
as its qualitative articulation."

0:39:19.669,0:39:24.549
Here we are going back to the imagery
of the hidden hand and the atomistic

0:39:24.549,0:39:26.729
qualities of capitalist production,

0:39:26.729,0:39:32.079
which he is presuming and assuming.

0:39:32.079,0:39:35.419
Marx says "the owners of commodities
therefore find out

0:39:35.419,0:39:41.019
that the same division of labour which turns them
into independent private producers

0:39:41.019,0:39:44.999
also makes the social process of production and
the relations of the individual producers to

0:39:44.999,0:39:47.719
each other within that process

0:39:47.719,0:39:49.489
independent of the producers themselves."

0:39:49.489,0:39:53.719
Back again to the Adam Smithian argument.

0:39:53.719,0:39:57.569
"They also find out that the independence
of the individuals from each other has

0:39:57.569,0:39:59.009
its counterpart and supplement

0:39:59.009,0:40:03.680
in a system of all-round material dependence."

0:40:03.680,0:40:08.989
That means that although you are independent in the
market, you are dependent

0:40:08.989,0:40:10.479
on the market

0:40:10.479,0:40:17.479
in order to market your produce.

0:40:20.159,0:40:23.369
So he then pulls this all together around

0:40:23.369,0:40:25.789
this description which I've already used to clarify

0:40:25.789,0:40:29.649
the relationship of going from the particular
to the universal on page 203

0:40:35.249,0:40:36.930
He then goes to the second component

0:40:39.179,0:40:41.700
and says well let's look at

0:40:41.700,0:40:45.169
this M-C piece.

0:40:45.169,0:40:46.699
Here we're going

0:40:46.699,0:40:48.189
from the universal

0:40:48.189,0:40:55.189
to the particular.

0:40:55.380,0:41:00.949
Now clearly, what this means when he
starts out by saying that

0:41:00.949,0:41:03.179
all commodities are alienable is

0:41:03.179,0:41:09.529
that they can all be bought and sold,

0:41:09.529,0:41:14.529
and there is therefore a universal alienation,

0:41:14.529,0:41:17.139
in that technical sense of everyone willing

0:41:17.139,0:41:20.789
to give up their commodities,

0:41:21.939,0:41:28.939
in order to trade them away.

0:41:30.899,0:41:36.819
Clearly it is easier to go from the universal
to the particular for if I command money, and

0:41:36.819,0:41:43.309
I go into the marketplace, I can buy whatever
commodity I want.

0:41:43.309,0:41:46.349
So the difficulties and the traumas which
attach

0:41:46.349,0:41:50.549
to the C-M transition

0:41:50.549,0:41:51.890
are very different from the M-C transition .

0:41:51.890,0:41:55.940
There is, if you like, a different power relation
involved here,

0:41:55.940,0:42:00.929
and that has become crucial to the argument.

0:42:00.929,0:42:05.699
Those who command the universal equivalent,

0:42:05.699,0:42:08.219
namely money
are in a powerful position

0:42:08.219,0:42:11.179
vis-a-vis those

0:42:11.179,0:42:15.549
who command commodities.

0:42:15.549,0:42:18.079
It's a latent power, and

0:42:18.079,0:42:20.749
at the moment we can just see it is as

0:42:20.749,0:42:21.969
continuing power, but

0:42:21.969,0:42:25.640
you can see

0:42:25.640,0:42:29.609
how something can build there.

0:42:29.609,0:42:33.319
So then Marx goes on to say that he will call

0:42:33.319,0:42:35.979
this whole process

0:42:37.439,0:42:44.439
the circulation of commodities.

0:42:45.579,0:42:49.139
And on page 208, he goes into

0:42:50.869,0:42:53.969
a very significant diversion

0:42:54.879,0:43:01.879
to the main argument.

0:43:02.519,0:43:07.829
In the middle of page 208 Marx says "nothing
could be more foolish than the dogma

0:43:07.829,0:43:11.829
that because every sale is a purchase,

0:43:11.829,0:43:13.849
and every purchase a sale,

0:43:13.849,0:43:19.059
the circulation of commodities necessarily
implies an equilibrium between sales

0:43:19.059,0:43:23.929
and purchases."

0:43:23.929,0:43:27.099
He then goes through

0:43:27.099,0:43:29.180
an analysis

0:43:29.180,0:43:36.180
of this argument,

0:43:36.390,0:43:40.759
and quickly points out at the bottom of
the page that

0:43:40.759,0:43:47.759
"but no one directly needs to purchase because
he has just sold."

0:43:48.589,0:43:53.269
Then Marx comments, "circulation bursts
through all the temporal, spatial

0:43:54.069,0:43:58.929
and personal barriers imposed by the direct
exchange of products,

0:43:58.929,0:44:03.359
and it does this by splitting up the direct
identity present in this case

0:44:03.359,0:44:05.189
between the exchange

0:44:05.189,0:44:07.400
of one's own product and

0:44:07.400,0:44:10.339
the acquisition of someone
else's products

0:44:10.339,0:44:13.169
into the two antithetical processes of sale

0:44:13.169,0:44:16.109
and purchase."

0:44:16.109,0:44:21.859
To say that these mutually independent and
antithetical processes form an internal unity

0:44:21.859,0:44:25.380
is also to say that their internal unity
moves forward

0:44:25.380,0:44:28.469
through external antithesis.

0:44:28.469,0:44:30.189
These two processes

0:44:30.189,0:44:35.639
lack internal independence because they
complement each other.

0:44:35.639,0:44:40.710
Hence if the assertion of their external independence
proceeds to a certain critical point,

0:44:40.710,0:44:51.609
their unity makes itself felt violently by
producing a crisis.

0:44:56.579,0:44:58.910
Here Marx is arguing that

0:44:58.910,0:45:01.069
when I've sold a commodity

0:45:01.069,0:45:04.199
and I've got the money from my sale,

0:45:04.199,0:45:09.149
I may decide to hold onto that money.

0:45:09.149,0:45:15.919
And if I decide to hold onto the money there will be less
money to buy commodities.

0:45:15.919,0:45:21.079
Now why would I decide to hold onto the money?

0:45:21.079,0:45:26.699
I would hold onto the money in a situation
of insecurity,

0:45:26.699,0:45:28.669
I would keep the money

0:45:28.669,0:45:31.589
because I wanted the universal equivalent,

0:45:31.589,0:45:33.570
and as will be seen later some people

0:45:33.570,0:45:35.679
hold onto money because they love it

0:45:35.679,0:45:37.609
and fetishize it.

0:45:37.609,0:45:41.589
There are all kinds of reasons why people
might hold onto money.

0:45:41.589,0:45:44.549
The point here according to Marx is that

0:45:49.179,0:45:53.199
if a lot of people decide to hold onto money

0:45:53.199,0:45:56.849
then the circulation process stops;

0:45:56.849,0:46:02.049
when the circulation process stops the
demand for commodities drops off,

0:46:02.049,0:46:04.819
and when demand for commodities drops off

0:46:04.819,0:46:11.869
many people are left with unsold commodities.

0:46:12.809,0:46:19.289
Furthermore the fact that you have money allows you to get away

0:46:19.289,0:46:24.519
from the immediate temporality and
spatiality of barter.

0:46:24.519,0:46:27.959
For example you can hold onto the money for six months and

0:46:27.959,0:46:31.889
then take it to Japan,

0:46:31.889,0:46:36.519
Singapore or Brazil,

0:46:36.519,0:46:40.089
and then go purchase there six months later.

0:46:40.089,0:46:42.379
Once you've got your money

0:46:42.379,0:46:46.299
you can make all kinds of decisions about it.

0:46:46.299,0:46:50.469
Now what Marx is criticizing here

0:46:50.469,0:47:02.979
is a famous proposition called Say's law.

0:47:04.849,0:47:09.029
Say's law is commented on by Marx in the next
footnote on the next page as follows,

0:47:12.380,0:47:16.859
"the conception adopted by Ricardo from the
tedious Say, that over-production is not possible

0:47:16.859,0:47:20.039
or at least that no general glut of the market
is possible,

0:47:20.039,0:47:25.399
is based on the proposition that products
are exchanged against products."

0:47:25.399,0:47:27.519
Say's law

0:47:27.519,0:47:32.039
was also held by Ricardo

0:47:32.039,0:47:35.179
and it dominated thinking

0:47:35.179,0:47:37.849
in classical political economy.

0:47:37.849,0:47:41.899
And as a result the classical political economists

0:47:41.899,0:47:44.579
for the most part claimed

0:47:44.579,0:47:49.169
there could be no general crisis of capitalism.

0:47:49.169,0:47:53.409
Why not? Because every purchase is a sale and
every sale is a purchase, therefore you are always

0:47:53.409,0:47:54.839
in equilibrium.

0:47:54.839,0:47:59.559
There may be a problem with too many shoes,
or too many shirts, or too many apples,

0:47:59.559,0:48:06.559
but you cannot have a generalized crisis.

0:48:07.689,0:48:12.599
Because Say's law said you couldn't.

0:48:12.599,0:48:18.189
And Say's law actually carried over from the
classical period into the neoclassical period.

0:48:18.189,0:48:22.390
It was held by all economists at the end of
the nineteenth century up to the 1930's.

0:48:25.329,0:48:30.649
And in the 1930's there were still
economists saying that

0:48:30.649,0:48:34.039
a general crisis of capitalism is impossible.

0:48:35.739,0:48:38.069
And there you had one!

0:48:38.069,0:48:42.179
Marx has a very funny line about that elsewhere,
where he notes that faced with

0:48:42.179,0:48:45.659
a general crisis the only response made by

0:48:45.659,0:48:48.289
most economists is something to the effect that

0:48:48.289,0:48:50.709
it wouldn't happen this way if only

0:48:50.709,0:48:55.899
the economy worked according to my textbook.

0:48:55.899,0:49:02.160
But what Marx is saying is that
you can indeed have a general crisis.

0:49:02.160,0:49:07.489
And how a general crisis occurs
was also spotted by Keynes

0:49:13.349,0:49:19.659
Now what Keynes did in a series of very interesting
essays called Essays in Biography, back in the 1930's

0:49:19.659,0:49:34.809
was to point out the error of accepting Say's law

0:49:34.809,0:49:39.709
Keynes also pointed out that there were some
classical political economists

0:49:39.709,0:49:43.029
who did not accept Say's law and claimed

0:49:43.029,0:49:45.690
there could indeed be a general crisis.

0:49:45.690,0:49:50.460
At the time they went by the charming
name of the 'general glut theorists'.

0:49:52.319,0:49:56.339
And there were two in particular, Malthus and Sismondi.

0:49:58.799,0:50:03.169
Which is a bit of a problem for Marx because
Marx couldn't abide Malthus on other grounds,

0:50:04.069,0:50:06.779
but Malthus certainly believed there

0:50:06.779,0:50:14.300
could be a generalized crisis, and that such a generalized
crisis would be be the crisis of what he called effective demand;

0:50:16.139,0:50:19.119
Not enough money to buy all the commodities.

0:50:20.639,0:50:25.649
The other glut theorist was a Frenchman called Sismondi

0:50:29.359,0:50:32.719
who also disputed Say's law. However they were a minority.

0:50:33.439,0:50:40.349
What Keynes did was to point out the importance
of what he called the liquidity trap.

0:50:40.349,0:50:47.210
The liquidity trap develops in a time of difficulty

0:50:47.210,0:50:49.359
because people start to hold back money.

0:50:49.359,0:50:51.019
As they hold onto money

0:50:51.019,0:50:57.029
the difficulties get worse so
more people hold onto money.

0:50:57.029,0:50:59.929
The difficulty is therefore to get out of

0:50:59.929,0:51:04.400
this downward spiral

0:51:04.400,0:51:07.009
in the economy as more and more people

0:51:07.009,0:51:09.739
run for cover and hold back money

0:51:09.739,0:51:13.559
rather than investing it back into the market

0:51:13.559,0:51:18.289
by buying stuff.

0:51:18.649,0:51:24.669
So Keynes also talked about the significance of
effective demand, and of course

0:51:24.669,0:51:28.979
Keynesian policies in relationship to the
Great Depression were to

0:51:28.979,0:51:31.400
stimulate effective demand through

0:51:31.400,0:51:34.009
state expenditures, debt financing,

0:51:35.099,0:51:39.140
getting people back to work wherever possible
and getting consumerism back.

0:51:40.559,0:51:48.049
Of course a lot of those problems were solved by World
War II and the demand for armaments.

0:51:49.579,0:51:54.299
In so many ways World War II was a solution to the effective
demand problem.

0:51:54.299,0:51:58.279
You could mop it all up in terms of

0:52:00.729,0:52:05.499
armaments and production of armaments
and you would debt finance it,

0:52:05.499,0:52:08.289
even debt financing the British.

0:52:08.289,0:52:11.510
So you gave the British government something
called lend lease, meaning they took

0:52:11.510,0:52:15.019
the commodities and agreed to pay them back later

0:52:15.019,0:52:16.509
And when it came time for payment

0:52:16.509,0:52:19.119
Keynes was faced with negotiating the

0:52:19.119,0:52:23.819
repayment schedule, I think in 1944,

0:52:25.459,0:52:27.399
and the American state department said: well,

0:52:27.399,0:52:31.339
you give up the British Empire.

0:52:31.339,0:52:32.919
And so Keynes answered: you mean

0:52:32.919,0:52:38.149
we trade the British Empire for forgiving the
debt?, and the Americans basically said yes.

0:52:38.149,0:52:42.229
And that's where British decolonization policy

0:52:42.229,0:52:44.709
really came from. Opening the world market

0:52:44.709,0:52:47.419
was what the Americans wanted for American capital.

0:52:48.129,0:52:52.339
They wanted the closed system of the
British empire opened up.

0:52:52.339,0:52:56.079
And they reached their goal through this trade

0:52:56.079,0:52:57.809
agreement over lend-lease.

0:52:57.809,0:53:01.609
So this is the type of argument which is going on

0:53:01.609,0:53:03.509
here in Marx. Marx is saying that

0:53:03.509,0:53:07.900
you can indeed develop a general crisis thereby siding with
Malthus and Sismondi.

0:53:07.900,0:53:14.109
Later Keynes draws on these arguments refusing
however to cite Marx

0:53:14.109,0:53:20.149
Keynes claimed he had never read Marx,
but this is highly doubtful.

0:53:21.010,0:53:25.529
However even if he hadn't read Marx there were plenty
of people around him who had.

0:53:25.529,0:53:30.959
So Keynes was probably familiar with Marx's arguments
as to why Say's law must be wrong,

0:53:32.869,0:53:35.469
as well as the arguments describing the lopsidedness

0:53:35.469,0:53:38.989
in this relationship C-M-C where C to M is different
from M to C.

0:53:38.989,0:53:42.499
You cannot, as Say's law does, assume

0:53:42.499,0:53:47.360
that the laws relative to barter (C-C) also hold
in practice in the C-M-C circulation process

0:53:47.360,0:53:51.379
because the transition from C to M is not the same as M to C.

0:53:53.769,0:53:56.319
This is a sidebar but a terribly important one, obviously,

0:53:56.319,0:53:59.499
for understanding contemporary politics.

0:53:59.499,0:54:04.459
Now we get back to the circulation
of money.

0:54:04.459,0:54:08.559
What Marx does here is argue in

0:54:08.559,0:54:14.579
a set of rather boring maneuvers, if I dare say so.

0:54:16.229,0:54:18.559
What he shows us is

0:54:18.559,0:54:29.209
the interesting contrast between commodities
and money and how commodities enter into circulation.

0:54:29.209,0:54:37.629
Commodities- I buy them, I wear them or I eat them; they
disappear. Therefore commodities enter into and drop out of circulation

0:54:37.629,0:54:42.069
Money however stays in circulation,

0:54:42.069,0:54:43.559
unless people hoard it

0:54:43.559,0:54:47.019
or spirit it away or something like that,
but the general role of money

0:54:48.549,0:54:51.069
is to stay in the circulation process.
So you have myriad

0:54:52.059,0:54:55.919
commodity exchanges going on,
and you have a

0:54:55.919,0:55:03.849
money which is somehow acting as
a lubricant for all this exchange

0:55:03.849,0:55:06.529
And the question becomes

0:55:06.529,0:55:12.149
how is it a lubricant?

0:55:12.149,0:55:18.099
And furthermore: how much of that lubricant
do you need?

0:55:18.099,0:55:22.429
So what the next ten pages are taken up with is

0:55:22.429,0:55:27.269
the articulation of what we call the
'quantity theory of money',

0:55:27.269,0:55:34.649
which is actually fairly similar
to what Ricardo had to say.

0:55:34.649,0:55:41.649
So Marx defines the quantity theory first
at the bottom of page 217,

0:55:41.939,0:55:45.919
where he says "the total quantity of money
functioning during a given period is a circulating medium

0:55:45.919,0:55:56.639
which is determined on the one hand by the sum
of the prices of the commodities in circulation,"

0:55:56.639,0:56:00.559
namely the sum of the prices,

0:56:00.559,0:56:10.709
"and on the other hand by the rapidity of
alternation of the antithetical processes of circulation."

0:56:10.709,0:56:22.339
In other words he is looking at "…the movement of prices,
the quantity of commodities…, and the velocity of circulation."

0:56:22.339,0:56:31.459
The mass of money equals

0:56:31.459,0:56:35.479
the sum of all of the prices of the commodities
in circulation modified by

0:56:37.539,0:56:46.549
the velocity of circulation. The velocity of
circulation is a measure of how much work

0:56:47.139,0:56:52.769
a coin or a dollar bill does on a given day.

0:56:53.189,0:56:57.099
The velocity therefore tells us how many times
a mass of money exchanges on a given day.

0:56:59.209,0:57:01.440
The federal reserve still has

0:57:02.150,0:57:08.109
a key measure on the velocity
of money i.e. the velocity of circulation.

0:57:08.109,0:57:11.189
You can see how important this concept is because

0:57:11.189,0:57:17.539
once you have introduced credit cards as a means of exchange,
for example, you also increase the velocity of circulation.

0:57:17.539,0:57:22.229
And as you increase the velocity of circulation,
you need less actual money because

0:57:22.229,0:57:27.069
the amount of money you have is going to move much faster.

0:57:28.919,0:57:31.769
If a dollar bill exchanges hands only once a day,

0:57:31.769,0:57:34.009
that's a different kind of world economy

0:57:34.009,0:57:37.969
than an economy where a dollar bill changes
hands five times a day.

0:57:37.969,0:57:42.569
You need far more dollar bills if you only
exchange bills once a day than five times a

0:57:42.569,0:57:44.929
day, so the amount of money you need

0:57:44.929,0:57:49.979
is very sensitive to this measure of velocity circulation.

0:57:49.979,0:57:53.659
Now the federal reserve has all kinds of measures
for the velocity of money factor it sets up, and it's

0:57:53.659,0:57:56.199
a complicated issue how to measure it.

0:57:56.199,0:57:59.900
But what Marx is saying is that
we must take this measure into account.

0:57:59.900,0:58:04.539
Ricardo said the same thing so

0:58:04.539,0:58:07.429
Marx is not saying much here that has not already been said

0:58:07.429,0:58:17.260
in Ricardo, including the idea
of considering the sum of the prices.

0:58:17.429,0:58:22.579
So this section deals with setting up the quantity theory of money.

0:58:23.319,0:58:26.309
This then leads us into section C

0:58:26.309,0:58:28.349
where we move to another level

0:58:29.019,0:58:32.829
Here we talk about the way in which

0:58:32.829,0:58:38.829
coins and symbols of value start to take on
certain functions

0:58:41.170,0:58:44.669
And here we will find immediately:

0:58:44.669,0:58:48.789
"The weight of gold represented in
the imagination by the prices of money-names

0:58:48.789,0:58:52.719
of the commodities has to confront those commodities,
within circulation,

0:58:52.719,0:58:57.199
as coins or pieces of gold of the same denomination.

0:58:57.199,0:58:59.519
The business of coining,

0:58:59.519,0:59:03.159
like the establishing of a standard
measure of prices,

0:59:03.159,0:59:09.569
is an attribute proper to the state." State power becomes crucial.

0:59:11.469,0:59:16.259
"The different national uniforms worn at home
by gold and silver as coins, but taken off again

0:59:16.259,0:59:18.709
when they appear on the world market,

0:59:18.709,0:59:20.990
demonstrate the separation between the internal

0:59:20.990,0:59:23.640
or national spheres of commodity circulation

0:59:23.640,0:59:28.289
and its universal sphere, the world market."

0:59:28.289,0:59:31.439
This again is something which is going to
come back in the chapter about the world

0:59:31.439,0:59:34.259
market and the universal sphere.

0:59:34.259,0:59:39.539
Out of this arises, he says on page 223 ,
"…the latent possibility

0:59:39.539,0:59:44.239
of replacing metallic money with tokens made
of some…material, i.e. symbols.

0:59:46.729,0:59:50.969
And he observes further down: "Small change appears
alongside gold for the payment of fractional

0:59:50.969,0:59:53.499
parts of the smallest gold coin;

0:59:53.499,0:59:57.699
gold constantly enters into retail circulation,
although it is just as constantly being

0:59:57.699,1:00:02.529
thrown out again by being exchanged with small change."

1:00:02.529,1:00:03.969
And then on the next page,

1:00:03.969,1:00:05.180
he talks about

1:00:05.180,1:00:09.749
"…nonconvertible paper money issued by
the state and given forced currency."

1:00:09.749,1:00:11.769
Issues of paper money.

1:00:11.769,1:00:15.489
Here he begins to talk about the way

1:00:16.760,1:00:18.219
"…credit-money

1:00:18.219,1:00:24.149
(may) take root spontaneously in the function
of money as a means of payment."

1:00:24.149,1:00:25.299
So here we get

1:00:25.299,1:00:28.759
a replacement going on, a replacement of gold

1:00:28.759,1:00:33.359
by symbols, by paper, by coins.

1:00:33.359,1:00:35.989
Why would that occur?

1:00:35.989,1:00:38.489
Well, because gold is

1:00:38.489,1:00:40.369
very awkward

1:00:40.369,1:00:43.779
as a means of circulation.

1:00:43.779,1:00:47.059
If every time you engage in this transaction

1:00:47.059,1:00:49.880
you need a small grain of gold

1:00:49.880,1:00:53.749
it would be be horribly messy.

1:00:53.749,1:00:55.729
So indeed

1:00:55.729,1:00:57.989
the requirements of circulation,

1:00:57.989,1:01:00.829
meaning what is socially necessary in order

1:01:00.829,1:01:06.039
for this circulation to become general
and for commodities to be exchanged in a general way,

1:01:07.320,1:01:11.909
requires you to leave gold behind and instead use tokens,

1:01:11.909,1:01:16.630
symbols, paper and so forth.

1:01:18.819,1:01:20.299
"Paper money", he says on the bottom of

1:01:20.299,1:01:26.359
page 225 "is a symbol of gold,"
a symbol of money."

1:01:26.359,1:01:31.189
"Its relation to the values of commodities
consists only in this: they find imaginary expression

1:01:31.189,1:01:33.239
in certain quantities of gold,

1:01:33.239,1:01:40.239
and the same quantities are symbolically and
physically represented by the paper.

1:01:40.279,1:01:43.619
Only insofar as paper money
represents gold,

1:01:43.619,1:01:50.619
which like all other commodities has value,
is it a symbol of value."

1:01:58.569,1:02:00.849
Now, it's interesting here

1:02:00.849,1:02:07.849
to think about whether he is again working
with a logical argument or a historical argument.

1:02:07.989,1:02:20.539
Marx talks about how different forms of
money were pushed out through historical evolution,

1:02:20.539,1:02:31.249
and how important the state power was
in regulating what determines the value of money.

1:02:31.249,1:02:39.099
In this chapter the power of the state becomes critical.
In a way the state was already present in chapter two,

1:02:39.099,1:02:42.189
when he talked about the legal and juridical infrastructure
- ultimately a state function- being necessary

1:02:42.189,1:02:52.709
for market exchange to flourish. Here Marx is explicitly referring to

1:02:52.709,1:02:59.299
the way in which the state becomes critical in order to understand

1:02:59.299,1:03:06.360
how money becomes a symbol i.e. totem or tokens.

1:03:18.360,1:03:27.489
This transformation once again has an analogy
to the transformation of money as a measure into

1:03:27.489,1:03:35.659
a standard of price. So this new
transformation brings about a radical

1:03:35.659,1:03:44.239
redefinition of what money is about, and that
leads us into the final section 3 which is: Money.

1:03:44.239,1:03:50.979
Here again Marx argues that at the
end of the day there is only one money.

1:03:50.979,1:03:55.079
And it has to perform both of those functions.
How is it going to do that?

1:03:56.079,1:04:07.179
We observe that as a measure of value, gold
is fine, however as a means of circulation it is not.

1:04:07.179,1:04:11.919
As a standard of price
gold starts to fade into the background.

1:04:11.919,1:04:20.409
The connectivity between the socially necessary labour
time embodied in the money commodity which gets mediated

1:04:20.409,1:04:33.989
in all these different ways leads us to
lose contact with the monetary base.

1:04:35.989,1:04:44.639
This leads Marx to consider a number
of elements involved in the contradictions internalized within

1:04:44.639,1:04:49.249
the money form itself when considered as universal money.

1:04:49.249,1:04:56.249
And the first one is the issue of hoarding.

1:04:56.390,1:05:02.829
As Marx notes "when the circulation of commodities
first develops, there also develops the necessity

1:05:02.829,1:05:08.209
and passionate desire to hold fast to the
product of the first metamorphosis.

1:05:08.209,1:05:12.980
This product is the transformed shape of
the commodity or its gold chrysalis."

1:05:13.999,1:05:17.439
Commodities are thus sold not in
order to buy commodities,

1:05:17.439,1:05:23.310
but in order to replace their commodity form
by their money form.

1:05:23.310,1:05:27.529
Instead of being merely a way of
mediating the metabolic process,

1:05:27.529,1:05:33.429
this change of form then
becomes an endcin itself.

1:05:33.429,1:05:45.399
"The money," he says, "is petrified into a hoard,
and the seller of commodities also becomes a hoarder of money."

1:05:45.399,1:05:50.149
What he points to here, is
another transition.

1:05:50.149,1:05:53.189
Instead of thinking about the C-M-C transition,

1:05:55.209,1:06:02.209
we start to think about the M-C-M transition.

1:06:02.209,1:06:08.269
Money into commodities, commodities into money.

1:06:08.269,1:06:19.259
What the hoarders want is money,
they want the universal power money begets.

1:06:19.259,1:06:28.989
But it's interesting because Marx
talks about this in a sort of double language.

1:06:28.989,1:06:32.969
That it exerts a passionate desire.

1:06:32.969,1:06:37.799
Okay, so passionate desire is there, but then
he says it is also necessary. Why is it necessary?

1:06:37.799,1:06:48.229
Why is hoarding necessary to commodity exchange?

1:06:48.229,1:06:53.809
The first reason is given at the bottom of page 228:

1:06:57.069,1:07:00.739
because when you enter the market, you enter into it
at a certain time which implies

1:07:00.739,1:07:08.229
that when you need something in the market, you
would have saved up enough money beforehand to go into it.

1:07:08.229,1:07:17.869
If you are a farmer and say you produced and sold your crop
in September, you have to hoard the money

1:07:17.869,1:07:23.710
in order to buy the seeds and the energy
you will need in the spring to plant the crop,

1:07:23.710,1:07:26.789
hire the labour and so forth.

1:07:26.789,1:07:37.529
So hoarding is something which is implicit in
what we will call the time structure

1:07:37.529,1:07:43.899
of the production of commodities.If all commodities were
produced and sold in the same time frame

1:07:43.899,1:07:51.249
you wouldn't need hoarding. But the fact is, they are not.
Some take a long time to produce while

1:07:51.249,1:07:57.859
others are produced immediately
and consumed immediately.

1:07:57.859,1:08:07.839
As Marx notes on the top of page 229,"in this way, hoards
of gold and silver of the most various sizes are piled up at all

1:08:07.839,1:08:11.739
points of commercial intercourse."
And it is necessary that this happens.

1:08:11.739,1:08:20.429
"With the possibility of keeping hold of the commodity's exchange-value,
or the exchange-value of the commodity, the lust for gold awakens."

1:08:20.429,1:08:26.059
The passion and desire comes into play.

1:08:26.059,1:08:35.339
"Gold is a wonderful thing!, Its owner is master
of all he desires. Gold can even enable souls to enter Paradise."

1:08:35.339,1:08:42.210
The papacy in the medieval period, was in the habit of selling
indulgences which guaranteed your entry into heaven.

1:08:42.210,1:08:51.139
And there are some people who maintain that the Vatican
was one of the first great capitalistic institutions as a consequence of this.

1:08:51.139,1:08:57.419
We're selling entry into heaven.
I mean, talk about selling conscience and honor,

1:08:57.419,1:09:06.270
this is selling something really interesting!

1:09:06.270,1:09:10.799
"Since money." Marx says, "does not reveal what
has been transformed into it, everything whether a commodity

1:09:10.799,1:09:13.140
or not is convertible into money.

1:09:13.140,1:09:16.959
Everything becomes 'saleable and purchaseable.'"

1:09:16.959,1:09:22.279
Here he's talking about the potentiality for the
commodification of everything.

1:09:22.279,1:09:29.159
Once you use a money system, you could hang a
price on anything leading to the possible commodification of everything.

1:09:29.159,1:09:32.989
And he continues "nothing is immune from its alchemy,
the bones of the saints cannot withstand it,

1:09:32.989,1:09:34.989
let alone more delicate things.

1:09:34.989,1:09:39.229
Just as in money every qualitative difference
between commodities is extinguished,

1:09:39.229,1:09:40.909
so too for its part,

1:09:40.909,1:09:42.760
as a radical leveller".

1:09:42.760,1:09:45.900
Again here is an interesting theme recurrent in
Marx, something that acts as a radical leveller,

1:09:45.900,1:09:50.369
something capable of reducing everything to the same metric,

1:09:52.889,1:09:55.420
namely that everything should have a price

1:09:55.639,1:09:58.530
"It extinguishes," Marx says, "all distinctions".

1:09:58.530,1:10:02.779
"But money is itself a commodity,
an external object

1:10:02.779,1:10:07.839
capable of becoming the private property
of any individual."

1:10:07.839,1:10:10.150
Now this is a reversal of

1:10:10.150,1:10:13.300
item three in the contradictions

1:10:13.300,1:10:18.050
he noted on the relative and
equivalent forms of value.

1:10:18.050,1:10:21.790
Remember, private activity became

1:10:21.790,1:10:26.730
the means for the representation
of universal social labour.

1:10:26.730,1:10:29.239
Now he's saying that

1:10:29.239,1:10:36.239
in fact private individuals can appropriate social power.

1:10:40.999,1:10:45.479
Social power can become the property
of private persons.

1:10:45.479,1:10:46.610
This is indeed the

1:10:46.610,1:10:50.960
latent power relation of the money form and the
holding onto of the universal equivalent

1:10:50.960,1:10:53.449
which is beginning to crystallize out into the open,

1:10:53.449,1:11:00.449
and of course it will become
the basis of class power.

1:11:01.849,1:11:06.339
For this reason Marx notes, "ancient society
therefore denounced it [money] as tending to destroy

1:11:06.339,1:11:09.449
the economic and moral order.

1:11:09.449,1:11:13.369
Modern society, which already in its infancy
had pulled Pluto by the hair of his head from

1:11:13.369,1:11:14.780
the bowels of the earth,

1:11:14.780,1:11:17.790
greets gold as is its holy grail,
as the glittering incarnation of its

1:11:17.790,1:11:24.790
innermost principle of life."

1:11:26.900,1:11:28.559
It's very interesting.

1:11:28.559,1:11:30.870
We often talk about money as filthy,

1:11:30.870,1:11:37.590
filthy lucre.

1:11:37.590,1:11:43.860
Guess there's a TV show on right now about dirty
sexy money or something like that.

1:11:45.400,1:11:49.590
Freud had all kinds of wonderful things to
say about money, and in the end he called

1:11:49.590,1:11:55.070
it bourgeois sublimation of rituals of the anus.

1:11:55.070,1:11:59.489
So there's something unclean about
money, something

1:11:59.489,1:12:04.079
not nice about money, and ancient society
actually did not like the money economy.

1:12:04.079,1:12:07.530
In the Grundrisse, Marx talks about the
way in which one of the big transitions that

1:12:07.530,1:12:10.489
occurred in the social world

1:12:10.489,1:12:13.569
was what he called the destruction of community

1:12:13.569,1:12:17.380
by money power

1:12:17.380,1:12:21.769
whereby money became the community.

1:12:21.769,1:12:25.319
So that we now live in the community of money.

1:12:25.319,1:12:29.159
We may have all kinds of fantasies about living in
community somewhere else and all that kind of

1:12:29.159,1:12:31.239
stuff, but we live

1:12:31.239,1:12:34.000
in a community of money,

1:12:34.000,1:12:36.480
and Marx is also

1:12:36.480,1:12:42.179
making that point very clear.

1:12:42.179,1:12:43.409
Furthermore,

1:12:43.409,1:12:46.650
at the bottom of page 230 Marx piles on the agony of this

1:12:46.650,1:12:53.319
by simply pointing out that the
"hoarding drive is boundless in its nature.

1:12:53.319,1:12:58.550
Here Marx provides a description of the mechanism at work:
"the the metallic natural form of this object" and

1:12:58.550,1:13:02.159
the "universal equivalent form of all
other commodities"

1:13:02.159,1:13:07.610
and the "direct…social incarnation
of all human labour," all allow for

1:13:07.610,1:13:11.760
"the hoarding drive" to become
"boundless in its nature."

1:13:11.760,1:13:16.709
"Qualitatively or formally considered, money
is independent of all limits,

1:13:16.709,1:13:21.599
that is to say it is the universal representation of
material wealth because it is directly convertible

1:13:21.599,1:13:27.350
into any other commodity."

1:13:27.350,1:13:31.330
Marx then proceeds to talk about "this contradiction
between the quantitative limitation

1:13:31.330,1:13:33.990
and the qualitative lack of limitation of money

1:13:33.990,1:13:37.989
which keeps driving the hoarder
back to his Sisyphean task".

1:13:37.989,1:13:38.610
Here we are talking about accumulation

1:13:38.610,1:13:45.629
This is Marx's first mention of accumulation
in Capital.

1:13:45.629,1:13:47.790
The limitless qualities of it are

1:13:49.769,1:13:53.339
fascinating to reflect upon.

1:13:53.339,1:13:57.380
I mean, if we are accumulating use values,

1:13:57.380,1:14:00.639
how many Ferraris can you have?

1:14:00.639,1:14:04.859
Imelda Marcos had what? Six thousand
pairs of shoes?

1:14:04.859,1:14:08.269
But there is a limit.

1:14:08.269,1:14:11.280
But do billionaires feel they have a limit

1:14:11.280,1:14:13.510
about the next billion?

1:14:13.510,1:14:15.260
The answer is no.

1:14:15.260,1:14:18.600
The accumulation of money power is limitless,

1:14:18.600,1:14:20.389
and therefore

1:14:20.389,1:14:24.460
what we get into is a form of
accumulation that has in principle

1:14:24.460,1:14:29.000
no external limits.

1:14:29.000,1:14:33.940
This is a very important argument,

1:14:33.940,1:14:40.940
and to the degree that people are into
the accumulation of social power,

1:14:41.229,1:14:48.229
they are into the accumulation of
limitless social power.

1:14:48.959,1:14:53.960
I mean, most CEOs in this country
are getting perhaps

1:14:53.960,1:14:59.159
5 to 10 million dollars a year, nevertheless
they consider themselves underpaid.

1:14:59.159,1:15:01.270
They kind of say,

1:15:01.270,1:15:04.850
well hey, somebody in a hedge fund
got 1.7 billion dollars last year,

1:15:06.239,1:15:08.679
I deserve that.

1:15:08.679,1:15:13.389
How come they got 1.7 billion
and I didn't?

1:15:14.250,1:15:17.340
So this is the point about the
limitlessness of money accumulation.

1:15:17.340,1:15:21.360
Two years ago the top hedge fund
owner got 250

1:15:21.360,1:15:24.570
million dollars. This year it's 1.7 billion.

1:15:24.570,1:15:27.070
It's limitless.

1:15:27.070,1:15:33.300
And Marx is laying down a principle about
the limitlessness of money: as soon as you get into

1:15:33.300,1:15:35.989
money as a universal equivalent,

1:15:35.989,1:15:39.789
as a representation of socially necessary
labour time of value.

1:15:39.789,1:15:41.549
Money is in principle limitless

1:15:41.549,1:15:43.679
in terms of what you can accumulate,

1:15:43.679,1:15:46.649
and in terms of what private persons
can accumulate,

1:15:46.649,1:15:49.449
in terms of their own private power

1:15:49.449,1:15:52.159
over a social good,

1:15:52.159,1:15:57.039
which is the socially necessary labour time
in the world market.

1:15:57.039,1:15:58.480
This is what

1:15:58.480,1:16:00.140
Marx is pointing out here, namely

1:16:00.140,1:16:02.610
the limitless quality of accumulation,

1:16:02.610,1:16:08.380
and the fact that the accumulation of
capital knows no limit.

1:16:08.380,1:16:10.860
Of course if you look at every other society

1:16:10.860,1:16:15.559
that has ever existed
in history

1:16:15.559,1:16:20.719
you'll find almost invariably that they hit upon limits.

1:16:20.719,1:16:25.070
And when they hit limits and didn't know
where to go, they often collapsed.

1:16:25.070,1:16:30.920
The one society that seems to be
completely limitless is capital.

1:16:30.920,1:16:34.559
And so far it has been limitless

1:16:34.559,1:16:36.059
precisely because

1:16:36.059,1:16:40.519
its main measure of value has this particular
form which allows it to be accumulated

1:16:40.519,1:16:43.969
in this way.

1:16:43.969,1:16:45.639
The result is

1:16:45.639,1:16:50.320
all the growth curves in terms of the total
money in society, the total wealth of society,

1:16:50.320,1:16:53.570
the total amount of output in society,
the total global

1:16:53.570,1:16:56.260
gross domestic product in the world etc.

1:16:56.260,1:16:59.300
Look at the growth curves since capitalism

1:16:59.300,1:17:02.760
really kicked in around 1750

1:17:06.229,1:17:15.469
with all kinds of social, political and environmental
consequences to worry about of course

1:17:17.750,1:17:18.599
But that is

1:17:18.599,1:17:22.059
the nature of what capitalism

1:17:22.059,1:17:23.719
is about, and that is how Marx

1:17:23.719,1:17:29.909
is setting it up.

1:17:29.909,1:17:30.989
Which leads him

1:17:30.989,1:17:37.989
to point out the function of hoarding
towards the end of this section at the

1:17:39.179,1:17:43.639
bottom of page 231

1:17:43.639,1:17:46.260
where he makes a little aside about the aesthetic

1:17:46.260,1:17:51.319
form of hoarding, like wanting
to own gold or silver plated

1:17:51.319,1:17:54.040
urinals etc.

1:17:56.829,1:18:00.590
"Owing to the continual fluctuations in the extent
and rapidity of the circulation of commodities

1:18:00.590,1:18:01.989
as well as in their prices,

1:18:01.989,1:18:07.209
the quantity of money in circulation unceasingly
ebbs and flows. This quantity must

1:18:07.209,1:18:08.849
therefore be capable of

1:18:08.849,1:18:11.480
expansion and contraction."

1:18:11.480,1:18:14.699
And the hoard can fulfill that function.

1:18:14.699,1:18:15.789
In other words

1:18:15.789,1:18:19.159
Marx is going to modify his theory of money

1:18:19.159,1:18:21.409
in society by saying that

1:18:21.409,1:18:23.199
given the fluctuations

1:18:23.199,1:18:27.989
the total mass of money you need is the sum
of the prices modified by the velocity

1:18:27.989,1:18:35.889
plus a reserve fund.

1:18:36.009,1:18:42.319
This reserve fund can be brought into circulation
when there is a massive surge of commodity production,

1:18:42.319,1:18:45.059
and taken out of circulation

1:18:45.059,1:18:48.659
when it is not needed.

1:18:48.659,1:18:54.010
But the reserve fund is absolutely crucial
to the stabilization of this system.

1:18:54.010,1:19:00.929
That is to say that a form of hoarding is necessary.

1:19:00.929,1:19:04.179
For those two reasons, the temporality reason

1:19:04.179,1:19:07.070
and the following reason which pertains to the means of payment

1:19:07.070,1:19:13.010
These are to be found in Section B: means of payment.

1:19:13.010,1:19:15.149
So he returns to consider

1:19:15.149,1:19:17.289
means of payment

1:19:17.289,1:19:22.449
as being a way to approach

1:19:22.449,1:19:25.510
the need for a hoard

1:19:25.510,1:19:28.599
given the different temporalities in entering the market.

1:19:28.599,1:19:29.859
In other words

1:19:29.859,1:19:33.670
if we just exchange notes and say: I'll settle
up with you at the end of the year,

1:19:33.670,1:19:40.570
you don't actually need to hoard the money.

1:19:40.570,1:19:43.020
So this kind of exchange serves as a means of payment.

1:19:43.020,1:19:46.949
I just write a note and say:
okay, I owe you this. The farmer

1:19:46.949,1:19:51.189
writes a note and says: I owe you this and I'll
pay you back at harvest time or whatever.

1:19:51.189,1:19:56.110
And then certain dates are agreed upon for payment,

1:19:56.110,1:19:59.889
hence these exchanges tend to become formalized.

1:19:59.889,1:20:01.959
But the result of this type of exchange of notes is a transition.

1:20:01.959,1:20:03.429
So here we've got,

1:20:03.429,1:20:06.179
see pages 233 and 234,

1:20:06.179,1:20:10.300
an extremely important transition
which is very easy to miss

1:20:10.300,1:20:14.840
partly because of Marx's

1:20:14.840,1:20:16.439
complicated language.

1:20:16.439,1:20:19.549
The first element in this transition,
page 233 occurs when

1:20:19.549,1:20:24.309
"the seller becomes a creditor and the buyer
a debtor."

1:20:24.309,1:20:31.309
This amounts to a big transition in the relationships between buyer
and seller on the one hand and creditor and debtor on the other.

1:20:32.989,1:20:37.960
"Since the metamorphosis of commodities, or the
development of their form of value, has undergone a change here,

1:20:37.960,1:20:42.919
whereby money receives a new function as well. It
becomes a new means of payment.

1:20:42.919,1:20:48.800
Note that the role of creditor or of debtor results
here from the simple circulation of commodities."

1:20:48.800,1:20:53.060
It's amazing how much he squeezed
out of this concept of the commodity here.

1:20:53.060,1:21:00.060
The concept of commodities now give rise to
these new roles of creditor and debtor,

1:21:01.239,1:21:09.479
"and this is capable", he says,
"of a more rigid crystallization."

1:21:09.479,1:21:14.269
He then starts to talk about the forms of
class struggle in the ancient world

1:21:14.269,1:21:16.339
in which

1:21:16.339,1:21:19.059
the plebeian debtors

1:21:19.059,1:21:22.329
were destroyed by the creditors,

1:21:22.329,1:21:26.090
the struggle in the middle ages
where the feudal debtors

1:21:26.090,1:21:29.869
lost their political power.

1:21:29.869,1:21:33.899
So there's a power relation in this

1:21:33.899,1:21:39.940
debtor-creditor relationship.

1:21:39.940,1:21:42.880
He then takes us back

1:21:42.880,1:21:49.309
to the sphere of circulation.

1:21:49.309,1:21:50.590
And takes us back

1:21:50.590,1:21:54.090
to an earlier argument,

1:21:54.090,1:21:58.859
where he has talked about
the way in which money becomes the object

1:21:58.859,1:22:04.139
of the circulation process.

1:22:04.139,1:22:08.639
But money now enters the circulation process in
a peculiar way, as a means of payment, Marx says, money

1:22:08.639,1:22:13.150
"enters circulation, but only after
the commodity has already left it.

1:22:13.150,1:22:19.689
The money no longer mediates the process. It
brings it to an end by emerging independently,

1:22:19.689,1:22:23.680
as the absolute form of existence
of exchange value," in other words as

1:22:23.680,1:22:28.070
the universal commodity.

1:22:28.070,1:22:33.039
The seller turned his commodity
into money in order to satisfy some need;

1:22:33.039,1:22:37.190
the hoarder in order to preserve
the monetary form of his commodity,

1:22:37.190,1:22:41.179
and the indebted purchaser
in order to be able to pay.

1:22:41.179,1:22:46.249
If he does not pay, his goods
will be sold compulsorily.

1:22:46.249,1:22:48.750
The value form of the commodity, money,

1:22:48.750,1:22:51.820
has now become the
self-sufficient purpose of the sale

1:22:53.230,1:22:56.090
owing to a social necessity

1:22:56.090,1:23:03.090
springing from conditions of
the process of circulation itself."

1:23:04.029,1:23:06.189
Marx is now taking us to

1:23:06.189,1:23:08.099
this radical transition

1:23:08.099,1:23:11.780
from a C-M-C circuit

1:23:11.780,1:23:13.620
into a M-C-M circuit.

1:23:15.599,1:23:19.439
If I hold money,

1:23:19.439,1:23:22.639
I can just lend it to you

1:23:22.639,1:23:25.940
and then you pay me back.

1:23:25.940,1:23:31.070
I don't even have to produce commodities
anymore, I let you produce the commodities;

1:23:31.070,1:23:34.429
I just hold the money.

1:23:34.429,1:23:35.610
But note,

1:23:35.610,1:23:38.669
I want to get that money back.

1:23:38.669,1:23:46.229
But of course the underlying logical argument here is:
why would I get back the same amount I started with?

1:23:46.229,1:23:52.089
Why would I not insist upon

1:23:52.089,1:23:57.409
an extra amount of money?

1:23:57.409,1:23:58.469
That is to say an

1:23:58.469,1:24:02.140
exchange of equivalents makes sense

1:24:02.140,1:24:06.679
when I go from commodity to commodity mediated
by money, I end up with a commodity which in effect

1:24:06.679,1:24:08.900
has the same value as the one

1:24:08.900,1:24:11.199
I started out with in principle,

1:24:11.199,1:24:12.409
and I'm happy.

1:24:12.409,1:24:15.389
I started with shirts and I got my shoes,

1:24:15.389,1:24:19.899
equivalent exchanged for equivalent,
and everything's fine.

1:24:19.899,1:24:23.279
The equality principle has worked.

1:24:23.279,1:24:25.579
But why would I start with money

1:24:25.579,1:24:30.510
just in order to get money?

1:24:30.510,1:24:34.960
The only reason to do that
is to get more money.

1:24:34.960,1:24:39.069
And so what Marx is saying here is

1:24:39.069,1:24:44.150
that out of this relationship
between the commodity and money

1:24:44.150,1:24:51.020
there emerges a form of circulation
which is the M-C-M form of circulation.

1:24:51.020,1:24:56.509
And this form of circulation arises out of a social necessity,

1:24:56.509,1:25:00.439
not because somebody felt it was a good idea,
although we've seen here

1:25:00.439,1:25:05.359
that passionate interests are very much
engaged as well as lust for gold or lust for power.

1:25:06.940,1:25:09.379
But even if passion and lust were not involved,

1:25:09.379,1:25:13.219
you would still need this form of circulation

1:25:13.219,1:25:14.529
in order

1:25:14.529,1:25:19.119
to keep the measure of value
and the means of circulation in balance.

1:25:21.049,1:25:25.269
That is the only way you can
resolve the contradiction between

1:25:25.269,1:25:27.449
money as a measure of value

1:25:27.449,1:25:33.329
and money as a means of circulation,
that is by having this form of circulation

1:25:33.329,1:25:40.329
which brings money into exchange when
it is needed and takes it out when it is no longer needed.

1:25:40.959,1:25:43.259
So that, the money needed,

1:25:43.259,1:25:46.309
if it's in equilibrium with the

1:25:46.309,1:25:48.419
commodities being traded,

1:25:48.419,1:25:52.989
will keep the measure of value constant.

1:25:52.989,1:25:58.169
Otherwise the measure of value
will start shooting all over the place.

1:25:58.169,1:26:00.699
So if I want to maintain

1:26:00.699,1:26:03.749
a constant measure of value,

1:26:03.749,1:26:07.769
I have to be able to use
money as a means of payment,

1:26:07.769,1:26:09.380
and in doing so

1:26:09.380,1:26:11.179
I trigger

1:26:11.179,1:26:12.459
this form

1:26:12.459,1:26:14.550
of circulation

1:26:14.550,1:26:18.260
which is money

1:26:18.260,1:26:25.260
focusing on money.

1:26:26.320,1:26:27.300
This little passage,

1:26:27.300,1:26:30.889
in the middle and bottom of page 234

1:26:30.889,1:26:34.129
is a crucial transition point,

1:26:34.129,1:26:37.800
and you should mark it and recognize it as such,

1:26:37.800,1:26:43.409
in the whole of Marx's argument.

1:26:43.409,1:26:50.409
He doesn't actually signal this
transition as crucial but in fact it is.

1:26:51.799,1:26:55.519
And the idea that this transition
is indicative of a social necessity

1:26:55.519,1:26:59.859
is also important.

1:26:59.859,1:27:06.010
Capitalism does not actually depend

1:27:06.010,1:27:10.329
simply on individuals being greedy and so forth;

1:27:10.329,1:27:13.090
it depends upon

1:27:13.090,1:27:16.210
social necessity piled on top of social necessity,

1:27:16.210,1:27:18.119
which allows

1:27:18.119,1:27:19.949
for greed of a certain kind to flourish

1:27:19.949,1:27:26.949
in certain situations.

1:27:31.880,1:27:34.549
This brings him back,

1:27:34.549,1:27:37.400
on page 235 at the bottom,

1:27:37.400,1:27:44.359
to talk about "a contradiction imminent in
the function of money as the means of payment.

1:27:44.359,1:27:50.169
When the payments balance each other, money functions
only nominally, as money of account, as a measure of value.

1:27:50.169,1:27:55.499
But when actual payments have to be made, money
does not come onto the scene as a circulating medium,

1:27:55.499,1:28:00.009
in its merely transient form of
an intermediary in the social metabolism,

1:28:00.009,1:28:03.639
but as the "individual incarnation of social labour,

1:28:03.639,1:28:06.479
the independent presence of exchange value,

1:28:06.479,1:28:11.139
the universal commodity."

1:28:11.139,1:28:16.739
This leads him to remark on page 236,

1:28:16.739,1:28:19.200
"this contradiction bursts forth in

1:28:19.200,1:28:22.419
that aspect of industrial and commercial crisis

1:28:22.419,1:28:24.949
which is known as a monetary crisis.

1:28:24.949,1:28:31.169
Such a crisis occurs only where the ongoing
chain of payments has been fully developed."

1:28:31.169,1:28:32.190
That is when the full development of means of payment,

1:28:32.190,1:28:35.850
are just spread around all over the place and credit structures

1:28:35.850,1:28:39.619
are broadly engaged.

1:28:39.619,1:28:41.599
Marx remarks,

1:28:41.599,1:28:44.980
"whenever there is a general disturbance of
the mechanism, no matter what its cause,

1:28:44.980,1:28:49.540
money suddenly and immediately
changes over from its merely nominal shape,

1:28:49.540,1:28:53.650
money of account, into hard cash.

1:28:53.650,1:28:57.229
Profane commodities can no longer replace it.

1:28:57.229,1:29:01.179
The use-value of commodities becomes
valueless, and their value vanishes in the face of their

1:29:01.179,1:29:04.280
own form of value. The bourgeois,

1:29:04.280,1:29:06.630
drunk with prosperity and arrogantly

1:29:06.630,1:29:09.189
certain of himself, has just declared that money

1:29:09.189,1:29:12.560
is a purely imaginary creation.

1:29:12.560,1:29:14.749
'Commodities alone are money', he said.

1:29:14.749,1:29:19.539
But now the opposite cry resounds over the
markets of the world: only money is a commodity.

1:29:19.539,1:29:23.230
As the heart pants after fresh water,
so pants his soul after money,

1:29:23.230,1:29:24.989
the only wealth.

1:29:24.989,1:29:30.359
In a crisis, the antithesis between commodities
and their value-form, money, is raised to the level

1:29:30.359,1:29:35.159
of an absolute contradiction".

1:29:35.159,1:29:37.659
And he goes on to talk about monetary famine.

1:29:37.659,1:29:42.219
Six months ago, if you read the financial press,

1:29:42.219,1:29:45.599
everybody was talking about excess liquidity

1:29:45.599,1:29:47.489
in the markets.

1:29:47.489,1:29:51.070
A surplus of liquidity sloshing around,
not knowing where to go.

1:29:51.070,1:29:53.369
Surplus capital everywhere.

1:29:53.369,1:29:57.319
If you wanted to borrow you just went and
they gave you anything, you could get sub-prime

1:29:57.319,1:30:00.849
loans, you could get whatever you want.

1:30:00.849,1:30:03.219
And then what happened over the past few weeks, suddenly

1:30:03.219,1:30:06.269
the federal reserve has to inject liquidity

1:30:06.269,1:30:08.610
into the system.

1:30:08.610,1:30:11.059
They needed real money.

1:30:11.059,1:30:15.189
Those houses and all of that
didn't actually match up to that value.

1:30:15.189,1:30:22.189
In other words it was fictitious value
they were playing with out there.

1:30:22.380,1:30:26.309
Marx amusingly says somewhere else,

1:30:26.309,1:30:29.340
"at the moment of speculation,

1:30:29.340,1:30:31.800
everybody's a Protestant,

1:30:31.800,1:30:34.789
they act on faith.

1:30:34.789,1:30:41.609
When the crisis comes they want real money, they
go back to the Catholicism of the monetary base."

1:30:41.609,1:30:43.150
And this brings us to consider

1:30:43.150,1:30:44.929
the notion of value,

1:30:44.929,1:30:47.839
where is the value right now?

1:30:47.839,1:30:50.369
Where does it exist?

1:30:50.369,1:30:53.339
And what is all that money which
is being exchanged in all of these

1:30:53.339,1:30:56.699
debt bottling plants we find
around ourselves in New York City?

1:30:56.699,1:31:00.030
What does it mean?

1:31:00.030,1:31:04.819
What connectivity does it have to value,

1:31:04.819,1:31:07.980
to socially necessary labour time?

1:31:07.980,1:31:13.260
And what Marx is pointing to here
is the way in which

1:31:13.260,1:31:17.169
the monetary system, once it escapes

1:31:17.169,1:31:22.209
from those immediate constraints of socially
necessary labour time, can take off

1:31:22.209,1:31:25.570
and do all kinds of crazy things.

1:31:25.570,1:31:30.030
And those crazy things

1:31:30.030,1:31:36.579
create all sorts of problems in the global economy.

1:31:36.579,1:31:40.419
But credit money does more than that,
because in the next couple of pages

1:31:42.449,1:31:48.019
Marx is saying: "Credit money springs directly out
of the function of money as a means of payment,

1:31:48.019,1:31:52.789
furthermore, credit money becomes the
universal material of contracts. Rent, taxes and so on

1:31:52.789,1:31:55.599
are transformed from payments in kind

1:31:55.599,1:31:59.679
to payments in money."

1:31:59.679,1:32:03.309
The monetisation of everything.

1:32:03.309,1:32:05.489
In the past the church used to

1:32:05.489,1:32:10.579
tithe people's agricultural output,

1:32:10.579,1:32:15.079
then came the monetisation of tithes,

1:32:15.079,1:32:22.079
so finally you get the monetization
and commodification of everything.

1:32:27.959,1:32:31.689
This leads us into another duality:

1:32:31.689,1:32:34.760
firstly a reserve fund becomes necessary

1:32:34.760,1:32:36.959
and that reserve fund

1:32:36.959,1:32:40.540
is going to have to function
in relationship to this system,

1:32:40.540,1:32:41.999
via this form of

1:32:41.999,1:32:46.439
M-C-M circulation.

1:32:46.439,1:32:51.869
That's the way in which the argument works.

1:32:51.869,1:32:53.629
But Marx then says,

1:32:53.629,1:32:58.010
in the final and brief section on world money,

1:33:00.599,1:33:06.610
that individual states of course manage their own

1:33:06.610,1:33:10.489
money systems, money supplies, money tokens and so forth,

1:33:11.649,1:33:13.610
but they're

1:33:13.610,1:33:20.61
not outside of being disciplined
by the world market, meaning

1:33:20.829,1:33:24.849
that the exchange of commodities on the
world market at some point or other

1:33:24.849,1:33:28.110
becomes critical

1:33:28.110,1:33:31.009
to the way in which

1:33:31.009,1:33:35.460
this monetary system functions.

1:33:36.960,1:33:41.119
The state has had a very important role to play in

1:33:41.870,1:33:48.870
the stabilization of the monetary system within its borders.

1:33:50.969,1:33:53.540
And in doing so the state initially connected

1:33:53.540,1:33:56.139
its monetary system very clearly

1:33:56.139,1:34:03.139
to a metallic base, gold, silver.

1:34:03.360,1:34:05.599
And that metallic base

1:34:05.599,1:34:08.300
became crucial in the construction

1:34:08.300,1:34:12.249
of the initial financial monetary system.

1:34:12.249,1:34:16.530
Assuring the security of that metallic base

1:34:16.530,1:34:21.619
became critical.

1:34:21.619,1:34:24.229
It's kind of interesting to note that

1:34:24.229,1:34:27.699
John Locke wrote his essay on religious tolerance

1:34:27.699,1:34:31.779
in which he said, we should tolerate each other

1:34:31.779,1:34:37.659
in terms of our religious views and we shouldn't go
around burning heretics at the stake and all that kind of thing.

1:34:37.659,1:34:40.429
He said this at the same time

1:34:40.429,1:34:42.880
as Sir Isaac Newton

1:34:42.880,1:34:46.909
became master of the King's mint.

1:34:46.909,1:34:51.440
And Isaac's great role

1:34:52.419,1:34:56.019
was to assure the quality of the currency,

1:34:56.019,1:34:58.549
to assay the gold,

1:34:58.549,1:35:01.889
to assay the weight of the silver.

1:35:01.889,1:35:05.409
During those years there was great trade

1:35:05.409,1:35:08.569
which also lead to the debasement of the coinage,

1:35:08.569,1:35:11.719
a type of fraud called coin clipping.

1:35:11.719,1:35:16.369
What you did was to take a silver coin
and shave off a bit of it,

1:35:16.369,1:35:21.969
and then you took lots of silver coins and
shaved off lots of little bits.

1:35:21.969,1:35:24.879
So by the end of the day you had another silver coin,

1:35:24.879,1:35:27.799
good way to make money.

1:35:27.799,1:35:32.560
What did Isaac Newton do about this? He caught
a few of these people and he had them hung

1:35:32.560,1:35:36.079
on Tyburn in public.

1:35:36.079,1:35:44.150
So you no longer burned people at the stake for their
religious views, you now hung them in Tyburn for debasing coinage.

1:35:44.150,1:35:45.999
God is displaced by mammon

1:35:45.999,1:35:52.460
in terms of capital punishment.

1:35:52.460,1:35:56.420
So this business brings us back to the issue which
I'm sure is bothering many of you,

1:35:56.420,1:35:58.300
which is what happened to the metallic base?

1:35:58.300,1:36:02.540
There was a metallic base

1:36:02.540,1:36:04.630
to global capitalism up until

1:36:04.630,1:36:08.059
the late 1960's/1970's,

1:36:08.059,1:36:12.319
and it was put under great stress

1:36:12.319,1:36:17.209
in the late 60's early 1970's.

1:36:17.209,1:36:21.179
And ultimately it collapsed, so that

1:36:21.179,1:36:24.539
by 1973 you have a global monetary system

1:36:24.539,1:36:29.050
which is no longer based

1:36:29.050,1:36:33.759
on any metallic commodity

1:36:33.759,1:36:37.260
You will notice however that gold is still important,

1:36:37.260,1:36:40.429
the gold price is still quoted.

1:36:40.429,1:36:44.929
And if push comes to shove you might well
ask yourself whether you want to hold onto gold or

1:36:44.929,1:36:49.030
dollars, Euros, or Yen, or whatever.

1:36:49.030,1:36:50.630
You might want to

1:36:50.630,1:36:52.169
think about that.

1:36:52.169,1:36:56.750
So gold has not entirely disappeared from the monetary scene at all.

1:36:56.750,1:37:02.119
Many people still think, and there are even arguments,
that we should go back to the gold standard because

1:37:02.119,1:37:06.609
the current monetary system is just crazy.

1:37:06.609,1:37:10.880
But what in effect happened after 1973

1:37:10.880,1:37:17.260
was a tendency to associate currencies

1:37:17.260,1:37:21.250
with a particular basket of commodities.

1:37:21.250,1:37:27.260
For a while there we sat with the idea that
petro-dollars would work,

1:37:27.260,1:37:31.869
that actually the dollar value of petroleum

1:37:31.869,1:37:33.230
was the crucial basket determinant.

1:37:33.230,1:37:39.499
But then petroleum was yo-yoing too much, and in any case

1:37:39.499,1:37:44.610
its value was too much controlled by OPEC.

1:37:44.610,1:37:51.610
So in effect what now happens is that currency speculation

1:37:51.849,1:37:58.340
actually looks at the relationship
between the productivity of a whole economy,

1:37:58.340,1:38:03.260
i.e. its total bundle of goods and services produced,

1:38:03.260,1:38:06.509
and compares it to the value of its currency.

1:38:06.509,1:38:07.830
What is being compared is

1:38:07.830,1:38:11.250
the total commodity output of Japan, West

1:38:11.250,1:38:15.249
Germany as it was, and now Europe,

1:38:15.249,1:38:21.829
and the United States and China. And after
comparing all of these things the question is asked,

1:38:21.829,1:38:26.079
well, which economy

1:38:26.079,1:38:33.029
is producing a bundle of commodities
inside its borders that can really sustain that currency?

1:38:33.029,1:38:38.050
And if the Chinese economy is doing that,
then the Chinese currency should appreciate.

1:38:38.050,1:38:44.499
But the problem then starts when the state
steps in and does all kinds of strange things.

1:38:44.499,1:38:47.329
But at some point or other the question of the nature

1:38:47.329,1:38:51.019
of the commodity bundle

1:38:51.019,1:38:53.659
which underlies

1:38:53.659,1:38:59.199
the value is posed; in other words we no longer
attach the bundle to some single commodity like gold.

1:38:59.199,1:39:00.889
We attach it

1:39:00.889,1:39:03.929
to an imaginary

1:39:03.929,1:39:04.550
understanding

1:39:04.550,1:39:07.609
which is where statistics come in.

1:39:07.609,1:39:11.239
We wouldn't know how to work

1:39:11.239,1:39:13.480
in this world unless we had

1:39:13.480,1:39:15.789
masses of statistics.

1:39:15.789,1:39:18.599
And what are these statistics about?

1:39:18.599,1:39:20.479
GDP

1:39:20.479,1:39:24.649
Who produces all those statistics and who
collects them? The World Bank,

1:39:24.649,1:39:28.029
the International Bank of Settlements.

1:39:28.029,1:39:30.119
They produce all this data.

1:39:30.119,1:39:31.969
Vast amounts of it,

1:39:31.969,1:39:36.849
on the basis of what, sometimes you wonder,
but, nevertheless, it's there.

1:39:36.849,1:39:38.789
And this data serves to

1:39:38.789,1:39:44.309
construct the fiction that there
is a national economy.

1:39:44.309,1:39:47.479
Now this is a real problem because there is no
national economy, I mean everything is trading

1:39:47.479,1:39:49.680
with everything else on the global stage,

1:39:49.680,1:39:51.409
nevertheless there's this fiction which says

1:39:51.409,1:39:53.159
there is a national economy.

1:39:53.159,1:39:57.270
And when the national economy in the United States
is doing well, the dollar will rise, if it's

1:39:57.270,1:40:01.519
doing badly the dollar will collapse.

1:40:01.519,1:40:04.849
So the dollar has been under a lot of pressure lately
because the US economy is not doing

1:40:04.849,1:40:07.799
very well compared to the rest of the world

1:40:07.799,1:40:11.439
on the basis of certain measures.

1:40:11.439,1:40:14.499
But then speculators will intervene and claim
that wrong measure are being applied.

1:40:14.499,1:40:20.599
And if they can persuade you of this,
the values will change and they will make a bundle of money

1:40:20.599,1:40:24.439
on the currency movement.

1:40:24.439,1:40:25.800
George Soros made

1:40:25.800,1:40:30.249
two billion in about five days by speculating on

1:40:30.249,1:40:37.249
the value of the British pound against the
European exchange rate mechanism.

1:40:38.260,1:40:43.029
He was actually able to force those kinds of
things to happen.

1:40:43.029,1:40:50.849
So here you see that built into Marx's argument

1:40:50.849,1:40:52.339
is a very interesting way of understanding

1:40:52.339,1:40:57.529
the connectivity between the very secure
money commodity gold,

1:40:57.529,1:40:59.690
with which Marx began his

1:40:59.690,1:41:01.619
analysis of money, to this

1:41:03.320,1:41:07.429
real, problematical, universal money
emerging out of the M-C-M circuit in the end,

1:41:07.429,1:41:09.320
with all of these broader issues.

1:41:09.320,1:41:12.380
I think he did a pretty good job

1:41:12.380,1:41:16.159
and we can build on it. Of course much has changed since

1:41:16.159,1:41:23.959
Marx's time and we have to

1:41:23.959,1:41:27.510
take those transformations into account,

1:41:27.510,1:41:32.560
but it seems to me he set up a very useful argument

1:41:32.560,1:41:38.570
to contemplate our current situation.

1:41:38.570,1:41:42.650
Building on his arguments we can go quite far
towards understand many of the contradictions

1:41:42.650,1:41:44.549
which exist

1:41:44.549,1:41:47.510
within our contemporary

1:41:47.510,1:41:50.570
political economic system.

1:41:50.570,1:41:57.539
So it's interesting that something
like the sub-prime mortgage crisis, given my own background,

1:41:57.539,1:42:00.969
it has been obvious that there would be a crash

1:42:00.969,1:42:03.000
in property markets

1:42:03.000,1:42:04.570
sooner or later.

1:42:04.570,1:42:08.130
I thought it would occur about two or three
years ago, but they managed to stave it off.

1:42:08.130,1:42:12.290
But now it's with us and the question
is: how far will that go

1:42:12.290,1:42:15.590
before they can shift to something else,

1:42:15.590,1:42:19.109
some other fictitious form?

1:42:19.109,1:42:21.800
But behind this, of course, lies

1:42:21.800,1:42:23.729
the emergence of

1:42:23.729,1:42:26.369
imaginary forms.

1:42:26.369,1:42:30.519
Note how Marx emphasizes the imaginary qualities of all of this.

1:42:30.519,1:42:35.209
We imagine it to be this,
we imagine it to be that.

1:42:35.209,1:42:38.689
And we cannot do without that imaginary

1:42:38.689,1:42:40.809
stuff going on.

1:42:40.809,1:42:41.979
In fact

1:42:41.979,1:42:44.300
that is what allows the system to function.

1:42:44.300,1:42:45.649
It's built into it.

1:42:45.649,1:42:48.210
It's not as if we can say:

1:42:48.210,1:42:49.579
get rid of all the fetishism,

1:42:49.579,1:42:53.550
get rid of all of that imaginary stuff
and then we'll be ok.

1:42:53.550,1:42:56.789
No, we couldn't do that.

1:42:56.789,1:43:01.750
These things are socially necessary, they're
embedded within the capitalist system.

1:43:01.750,1:43:03.440
That raises the question: well

1:43:03.440,1:43:04.599
what we do about it?,

1:43:04.599,1:43:06.550
how do we confront them?,

1:43:06.550,1:43:12.859
and what do we do about their
obvious problematic consequences?

1:43:12.859,1:43:15.479
So these are the sorts of issues that this

1:43:15.479,1:43:19.419
chapter raises.

1:43:19.419,1:43:23.050
A final point this chapter raises is the

1:43:23.050,1:43:26.590
interesting question as to how much of it
do you really need to understand

1:43:26.590,1:43:30.249
the rest of volume one of Capital?

1:43:30.249,1:43:31.239
And the answer is:

1:43:31.239,1:43:34.650
not much. (laughter)

1:43:34.650,1:43:37.099
The rest of Capital

1:43:37.099,1:43:40.179
uses certain basic propositions out of here

1:43:40.179,1:43:42.260
which can be reduced to

1:43:42.260,1:43:44.419
four or five arguments

1:43:44.419,1:43:47.819
and then goes on with the analysis.

1:43:47.819,1:43:51.880
What Marx was trying to do here was to lay a basis,

1:43:51.880,1:43:55.579
as he was in the preceding chapters,

1:43:55.579,1:43:59.099
for a magnum opus i.e. the work
that was going to include

1:43:59.099,1:44:06.989
an understanding of credit systems, financial
institutions and structures, and state interventions.

1:44:06.989,1:44:10.690
He was really trying here to lay out

1:44:10.690,1:44:15.320
a systematic basis for a very much broader project.

1:44:15.320,1:44:17.659
But you'll be happy to know

1:44:17.659,1:44:21.620
that you don't have to thoroughly understand all
the nuances of this chapter, interesting and important though

1:44:21.620,1:44:26.710
they really are to our contemporary circumstances.

1:44:26.710,1:44:29.169
You don't have to understand every nuance

1:44:29.169,1:44:36.169
in order to move into the next chapters which
are much simpler and more direct.

1:44:38.369,1:44:42.090
So you're over the worst of it (laughter).

1:44:42.090,1:44:44.659
We can now start the easy part.

1:44:44.659,1:44:48.590
We have a few minutes for questions, I'm
sorry I have taken so long, but this is a difficult

1:44:48.590,1:44:51.669
and intricate chapter,

1:44:51.669,1:44:53.359
which needs a lot of

1:44:53.359,1:44:54.989
elabouration in order

1:44:54.989,1:44:57.849
to get it straight.

1:44:57.849,1:45:04.129
Any kind of comments, questions?

1:45:04.129,1:45:05.760
»STUDENT:When you're talking about the accumulation of

1:45:05.760,1:45:07.139
things and about upper limits, I went

1:45:07.139,1:45:10.879
to visit Yankee Candle just to see what that was

1:45:10.879,1:45:12.879
all about. And next to it they had opened a car museum,

1:45:12.879,1:45:14.329
a very large car museum, and I walked around it

1:45:14.329,1:45:18.280
and realized that all the cars seemed to have a personal
angle on the display cases and the descriptions.

1:45:18.280,1:45:22.599
It turned out the museum was the vast personal collection

1:45:22.599,1:45:26.730
of the owner and founder of the Yankee Candle.

1:45:26.730,1:45:27.999
It was just a garage, so large that it was now a museum,

1:45:27.999,1:45:31.790
and you payed to go in, but the owner drove them in and out

1:45:31.790,1:45:37.400
whenever he wanted. And there was no limit, it was huge.

1:45:37.400,1:45:39.770
»HARVEY:Not the same as what you could get with

1:45:39.770,1:45:42.560
twenty billion dollars.

1:45:42.560,1:45:48.349
And that's the point, that people do accumulate
large quantities of things like that, but

1:45:48.349,1:45:55.219
how many yachts can you have?,
how many residencies can you have?

1:45:55.219,1:45:58.689
On the use-value side there are these limitations,

1:45:58.689,1:46:02.440
so it's the limitless capacity of

1:46:02.440,1:46:05.580
the accumulation of money power

1:46:05.580,1:46:10.989
that will be very important to look at;
one of the major propositions, of course, in

1:46:10.989,1:46:16.380
the rest of Capital is the limitlessness of this.

1:46:16.380,1:46:19.619
»HARVEY: Yes.

1:46:19.619,1:46:26.619
»STUDENT:I'm just curious about paper money, when
paper money first starts showing up in…what are you saying
in terms of this as a historical or a logical development?

1:46:30.449,1:46:34.510
»HARVEY:Well scrip and things like that have
been around for very long time, in various

1:46:34.510,1:46:39.230
forms. So paper representations
as well as tokens have been

1:46:39.230,1:46:41.050
around for a long time.

1:46:41.050,1:46:44.959
Which goes back to my original argument
about the monetary form, that

1:46:44.959,1:46:48.820
monetary forms have been around a very long
time. The interesting question is how all of

1:46:48.820,1:46:50.949
those forms

1:46:50.949,1:46:56.709
actually became assembled around
the capitalist definition of what money is.

1:46:56.709,1:46:59.299
The same thing applies to temporality.

1:46:59.299,1:47:04.610
It's not as if
capitalism invented temporality.

1:47:04.610,1:47:09.269
Every society has its own
definitions of temporality and spatiality .

1:47:09.269,1:47:11.459
There's a long

1:47:11.459,1:47:15.070
history in the anthropological
and historical record of that.

1:47:15.070,1:47:18.480
But what happens is that
capitalism starts to insist upon

1:47:18.480,1:47:23.769
certain definitions of temporality.

1:47:23.769,1:47:27.290
For instance we're in one right now:
it's eight thirty and you all want to go home.

1:47:27.290,1:47:31.139
Now if you're really interested in learning
you would want to stay here until five in the

1:47:31.139,1:47:34.829
morning, right? (laughter)

1:47:34.829,1:47:40.540
You're being very nice…
But you see what I mean.

1:47:40.540,1:47:44.650
Here we have this kind of
definition of temporality which is in the

1:47:44.650,1:47:48.809
school calendar so for example we
we start in here and we finish off there.

1:47:48.809,1:47:50.849
It's all built in,

1:47:50.849,1:47:55.459
and we accept it as normal,
so it becomes normalized. Whereas

1:47:57.300,1:48:01.100
I can certainly remember intellectual
discussions in my youth, when all

1:48:01.100,1:48:03.820
things were wonderful,

1:48:03.820,1:48:08.199
which went on all day and all night,

1:48:08.199,1:48:12.329
and we were not limited by anything.
I mean, we skipped classes

1:48:14.260,1:48:19.469
and then had a discussion instead;
it was a different notion of temporality

1:48:19.469,1:48:30.080
The problem was there was nothing else to do,
and the classes were very boring.

1:48:30.080,1:48:31.770
So, I think these definitions are

1:48:33.040,1:48:37.250
contingent, and this is also what
Marx is arguing throughout the book,

1:48:38.349,1:48:42.459
namely that the categories of political economy
are contingent upon the rise of capitalism.

1:48:42.459,1:48:46.929
The notion of temporality is specific;
capitalism has a specific temporality,

1:48:46.929,1:48:49.799
which is what E.P. Thompson talks about, namely

1:48:49.799,1:48:52.229
the rise of industrial work discipline,

1:48:52.229,1:48:55.349
what that entailed and how that was enforced.

1:48:55.349,1:48:57.849
And we'll also see some of that coming up

1:48:57.849,1:49:00.939
in Marx's Capital.

1:49:00.939,1:49:06.530
OK, so we leave it there
and will continue this saga next week.

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