1940s >> 1940 >> no-432-august-1940

<< Continued from the July 1940 issue.

In preceding issues of the Socialist Standard we have discussed at some length the writings of the most outstanding economists and Socialists prior to Marx, and have, in addition to this, touched upon the scheme of Marxian Political Economy. Let us now consider the Marxian analysis more closely.

The Nature of Wealth Under Capitalism

Bourgeois economists have expressed divergent views concerning the true nature of wealth. The Mercantilists, for example, identified wealth with money, whereas the Physiocrats thought that only the products of agriculture could be regarded as real wealth.

Marx’s view on the subject is expressed clearly in the opening chapter of his famous work, “Capital,” where he says:—

  The wealth of those societies in which the capitalist mode of production prevails, presents itself as an immense accumulation of commodities, its unit being a single commodity.— (Vol. I, p. 41, Modern Library Edition.)

Commodities are articles produced for exchange or sale. In the May Socialist Standard we pointed out that every commodity is a combination of use-value and value, and that it is the latter quality which determines the commodity’s average price on the market, and not the former. The vendor of commodities is, as we know, primarily interested in the exchange value of his articles, and not in the fact that they will satisfy human needs of some kind. That the prime motive of Capitalist production is not the satisfaction of human wants, but rather “sale at a profit,” has been demonstrated only recently by the tremendous destruction of coffee and cocoa, that has taken place in the colonies.

The Function of Money

Quite a number of people have misunderstood the rôle played by money. Britain has been literally overrun by miscellaneous currency cranks— from Major Douglas to the Imperial Fascist League—who either regarded money as the be-all and end-all of human existence, or else thought it an absolutely worthless object, perpetuated as a trick on society by unscrupulous financiers. In reality, however, money is the all-important medium of exchange—the resultant of the evolution of commodity exchanges. According to Marx the germ of money is to be found in the earliest accidental exchange of articles between one tribe and another—in barter. This elementary exchange Marx refers to as—

This money form is the price form of commodities. Between forms 3 and 4 there are no differences, except that in the one case it is cattle and in the other gold which serves as the general equivalent. Fundamental differences exist, however, between forms 1, 2 and 3. The illustrations I have presented show that gold became money because it had previously served as an ordinary commodity. The value of gold, like the value of any other commodity, is determined by the labour time socially necessary for its production. Gold is portable, divisible, endurable and non-corrosive; moreover, a small quantity of it incorporates comparatively a great deal of labour time—hence these qualities eventually forced it to the top as the money commodity, as the universal medium of exchange par excellence. As far as paper currency is concerned, Marx has this to say on the subject:—

  The State puts in circulation bits of paper on which various denominations, say £1, £5, etc., are printed . . .  A law peculiar to the circulation of paper money can spring up only from the proportion in which that paper money represents gold. Such a law exists; stated simply, it is as follows: the issue of paper money must not exceed in amount the gold (or silver, as the case may be) which would actually circulate if not replaced by symbols.—(Vol. I, page 143.)

In recent years gold has ceased to function legally as money. The consequence of the abandonment of the gold standard has been precisely that which Marx pointed out would be the case, viz.:—

If the quantity of paper currency issued be double what it ought to be, then, as a matter of fact, £1 would be the money name not of ¼ of an ounce, but of  ⅛ of an ounce of gold.—(P. 144.)

To-day gold sovereigns are bought and sold like any other commodity. This abandonment of gold as legal money in no way alters the basic economic laws of Bourgeois society. It can, however, be regarded as a disturbing feature—one symptom out of many of the underlying chaotic instability of recent international Capitalism.

For the sake of simplicity in the points that follow, we shall express prices in terms of gold coin—thus assuming gold as still the money commodity. The reader can easily reduce our illustrations to terms of present paper currency.

Capital and the Problem of Surplus Value

It has already been pointed out that the circulation of commodities presupposes in its pure form an exchange of equivalent values. This exchange of equivalents can be designated with the Marxian formula—

C—M—C or Commodity—Money—Commodity.

Let us illustrate this formula with two examples: (1) A handicraftsman has, shall we say, taken eight hours to produce a chair. He exchanges his chair (commodity) with, say, a gold sovereign (money) embodying an equal amount of labour, and with the money obtained he purchases a clock (commodity) in which eight hours of labour are also incorporated. (2) A worker sells his labouring-power (commodity) for wages, and with the latter buys articles of consumption (some commodities).

The formula for capital is, however:—

£100—Commodities—£ 110
M — C — M

and in this case it is no longer a question of recovering a mere equivalent, but of throwing into circulation a given amount of value for the purpose of recovering a greater amount. This increment obtained, or surplus of value over the original amount invested is what Marx calls surplus-value. Thus, capital is money invested with a view to gain or surplus-value. The problem Marx set out to solve was: on the assumption that in exchange only value-equivalents are given, where does the surplus-value come from?

That capital is not merely wealth, as such, but wealth invested for the specific purpose of profit, has been either completely ignored or hotly disputed by the Bourgeois economists. Karl Kautsky, in his work, “The Economic Doctrines of Karl Marx,” has the following interesting observations to make in this connection:—

    It is value that breeds surplus value. Those who ignore this movement and try to conceive of capital as an inert thing will instantly involve themselves in contradictions. Hence the confusion in the orthodox text-books concerning the idea of capital, and the question as to which things should be regarded as capital. Some define it as tools, which implies that there were capitalists in the Stone Age. Even the ape, which cracks nuts with a stone, is a capitalist; likewise, the tramp’s stick, with which he knocks fruit off a tree, becomes capital, and the tramp himself a capitalist. Others define capital as stored-up labour, according to which marmots and ants would enjoy the honour of figuring as colleagues of Rothschild. Bleichroeder and Krupp. Some economists have even reckoned as capital everything which promotes labour and renders it productive, the State, man’s knowledge and his soul.—(Pp. 53-54, A. & C. Black Edition.)

The prevailing form of capital is industrial capital. Commercial and financial capital are historically much older, but, to-day, play but a subordinate part alongside the capital of the industrialist.

It is in industry that surplus value is produced. Precisely how this is done we shall discuss in next month’s Socialist Standard.

Solomon Goldstein