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Capital, Vol. 1: Ch. 3

Monday, July 14, 2008

Chapter three, titled “Money, or the Circulation of Commodities” is the last chapter in the Part 1 called “Commodities and Money.” David Harvey went over the entire chapter for his lecture as he said it was the most difficult chapter to comprehend and that most people who quite, or almost quite, reading Capital, Vol. 1 almost always do it at or around reading chapter three.

However, despite its reputation for being hard (which it is, let me tell you) one can actually easily work through it be going at it step by step and by keeping in mind Marx’s main argument for a particular section you are reading.  With that, one realizes Marx’s argument in chapter three is quite simple.  The make-up of the chapter essentially goes like this, in the first part Marx goes over the value of money, in the second part he goes over it as a means of circulation, and then he ends by describing it as a universal equivalent on the world market.

The main structure of chapter three is similar to the previous two chapters in Capital.

One of the interesting points from the lecture and from chapter three is Marx’s explanation of money on the world market and how money is essentially based on imaginary forms, not based on actual gold.  This is kinda complicated to explain out right but he leads up to it by first explaining the measure of value of money in the market (sec. 1), then by explaining the means of circulation of commodities and money in the market (sec. 2), them by explaining money (sec. 3) and how money (the universal equivalent of all commodities) went from physical gold to essentially paper money (partly due to the convenience of paper money in everyday transactions); which leads to one of the interesting things about Harvey’s lecture on section three part B in chapter three on world money.

The nation-state itself plays an important role in the management and regulation of the money system.  At first by regulating gold to regulate inflation and deflation, then by backing up paper money and metallic tokens (creation of the state) with gold, and then by removing the gold back up and allowing the speculation of money.  But, once on the world market the state essentially losses all control of the regulation of its own money.

In 1973 the world market de-metalized its money.  Because of this speculators and economists still wanted to associated currencies around the world with certain commodities (like it had done with gold).  At first, Harvey says, there was talk of the Petro-dollar being the new standard, money in relation to oil.  But soon the oil crisis of the 1970s destroyed this thought.

Now, to find out the worth of money (which is essentially worthless peices of paper and metal) currency speculators and economists look at the productivity of a whole national economy (i.e., unemployment rates, stock market, accumulation of capital, national debt, trade balances, etc., etc.) and compares this outlook with other national economies across the global market.  While there is some type of control the state can exert over its currency there is a fiction of a national economy.  There is no national economy as the national economy is also based on the performance of other national economies that are connected to that economy.  If China is in a slump trade to the U.S. will fall which in turn would cause a rise in prices and other adverse affects in the U.S., etc.  So while there is a “national” economy it is also dependent on the international market.

There is an imaginary understanding of money now.  States collect massive amounts of data on money through statistics.  In order to understand the value of money statistics comes up with all sorts of mathematical equations and comparisons in order to give money value.  For example, statistics on GDP, GNP, collected on certain countries by the IMF or the World Bank.  Speculators step in and debate on what measures are right and what measures are wrong in the measurement of value of certain currencies, hence why George Soros was able to make a billion or so dollars within only a few days be speculating the British Sterling against that of the Euro.

Marx would essentially argue all of this is due to the masking of the true value of money over the decades by the market.  Marx states many times in Capital “We imagine it to be like this…” and “We imagine it to be like that…”  The reason why Marx talks so much about the imagined world of the capitalist market is because the capitalist market depends on imagination, the imaginary things are socially necessary, we can’t get rid of them within capitalism.

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