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» NEIL SMITH: So. Money makes
the world go round they say.
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» DAVID HARVEY: Yes.
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It's so fascinating-
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money. We all use it,
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we all worry about it,
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we all spend an enormous
amount of our time getting it.
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But if you ask anybody the question: "What is money?",
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most people can't give you a clear answer at all.
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And I always remember this great line in
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Dickens' Dombey and Son, where little
Paul, his mother has died and he's very sickly,
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and he keeps on asking his father, "Papa, what
is money? What is money?" And Mister Dombey, who's
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the great entrepreneur, merchant,
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can't give an answer.
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At some point or other, he says: "Well,
it's something that allows you to do lots of things."
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So little Paul says:
"Well, why can't it bring Mama back then?"
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And Mister Dombey is so flummoxed,
he just leaves the room.
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I think this kind of question about what money is
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and its function in
society is really something of
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a mystery to everybody.
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Yet it's something that we're constantly
focused on. So here we are, focused on this thing money
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and we don't know what it is.
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What Marx tries to do
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is to tell us
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something about money
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which we hadn't really understood before.
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The theory of money in Marx even for Marx is very complicated.
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So the third chapter
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is probably the most difficult chapter
in the book for almost everybody to get through.
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And from experience when you ask people who
started reading Capital on their own when
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they gave up, well, they nearly always did so
in Chapter Three. So one of my tasks is to
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get people through Chapter Three,
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get them to the other side of it
and then it's like you've come out of purgatory.
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You're into heaven after that. »NEIL SMITH: You're on
to the good stuff. »DAVID HARVEY: Yes.
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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,
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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
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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,
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i.e. changed its value.
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So he breezes past that kind of
question by simply saying that
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this disappears in the wash.
But, on page 192
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Marx considers a more important issue,
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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.
0:14:42.910,0:14:53.630
Now, as a measure of value
the functions of money are:
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to be stable,
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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
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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,
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and is limited in supply since you
can't just go out and dig it up in your backyard.
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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.
0:15:48.210,0:15:51.360
Even though as we have seen
0:15:51.360,0:15:54.650
the value of gold itself can shift,
0:15:54.650,0:15:58.930
that doesn't materially affect its capacity
0:15:58.930,0:16:04.200
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
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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,
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because socially necessary labour time
is immaterial and immeasurable directly.
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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.
0:16:36.750,0:16:40.249
And that quantity of gold then tells you
0:16:40.249,0:16:42.650
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.
