A Capital Saturday


With today being a relatively free day, I took some time and finished reading the third chapter of Karl Marx’s Capital entitled Money, or the Circulation of Commodities.  This chapter is definitely the longest so far, and by far, one of the more difficult I have read in quite some time from any book.  It was full of all kinds of great information about the money form.  Here’s a quick rundown of what I learned from this chapter:

  1. Marx designates gold as the money commodity for simplicity.
  2. Money is the measure of value.  It puts a value on labour-time.
  3. Money performs two functions:
    In its ideal representation, it is the measure of value as the social incarnation of human labour.
    It is the standard of price as a quantity of metal with a fixed weight.
  4. States organize and regulate the monetary system.
  5. Average realized prices will fluctuate based on supply and demand.  This price will become set as a result of the state of equilibrium of supply and demand.
  6. Commodities evolve as they enter the exchange process.
  7. The process of exchange is depicted as:  Commodity-Money-Commodity (C-M-C).
  8. It’s assumed the owner of a commodity has expended only the average socially amount of labour time to produce it.
  9. If prices remain stagnant, the quantity of the circulating medium may increase because of an increase of commodities on the market.
  10. Money takes on the form of a coin because it serves as a means of circulation.
  11. The state is responsible for all coining.
  12. Paper money serves as a substitute for coins.  This paper is relatively valueless and is divorced from its value in bouillon.
  13. To hoard money, the hoarder must prevent its circulation.
  14. Money is a means of payment.  Once payment is due and rendered, money then enters into circulation.

Questions:

Of course, the reading generated some questions that I hope will be answered as I continue my reading of Capital:

  1. Is a money hoarder the same as a money saver?  Will the act of saving money eventually cause the collapse of an economic system?
  2. I still wonder how you value labour-time.  There could be a number of factors that need to be taken into consideration.

Favorite Quotes:

I also wish to take a moment to share a few of my favorite quotes from this chapter:

Quote 1:  Talking about gold and its function:

The first main function of gold is to supply commodities with the material for the expression of their values, or to represent their values as magnitudes of the same denomination, qualitatively equal and quantitatively comparable.  it thus acts as a universal measure of value, and only through performing this function does gold, the specific equivalent commodity, become money.

Quote 2:  Regarding money as a measure of value:

Money as a measure of value is the necessary form of appearance of the measure of value which is immanent in commodities, namely labour-time.

Quote 3:  Regarding the state’s role in regulation of the monetary system:

Since the standard of money is on the one hand, purely conventional, while on the other hand, it must possess universal validity, it is in the end regulated by the state.

All-in-all, a very complex chapter that left me with a pretty decent knowledge of money going forward, but it also generated some questions as I indicated above.

Chapter Three also concluded the first part of Capital, Commodities and Money.  In Part 2, Marx begins to discuss The Transformation of Money into Capital.  I’m looking forward to learning more from Marx in the chapters ahead.

Please feel free to leave your thoughts below!

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About Jeremy

Husband, book lover, Civil War Buff. If I could read for a living I would, but unfortunately, it doesn't pay the bills!

Trackbacks/Pingbacks

  1. Capital – A Midweek Review « Beltwayliterature - February 16, 2011

    […] to begin?  Since I posted on Saturday my thoughts on Capital, Volume I, Chapter 3, I’ve only managed to complete the fourth chapter and I’m beginning to make my way […]

  2. Capital Progress | Beltwayliterature - February 23, 2011

    […] Those are just brief points, and a short selection of many things I picked up in these chapters.  What I’m most impressed with, is the fact that I was able to, for the most part, completely understand the arguments/concepts that Marx was presenting in these chapters.  They were definitely much easier to understand than especially the third chapter on money, which I spoke about here. […]

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