by precious metals such as gold and silver by virtue of their natural qualities. But, as he earlier pointed out, this means that the money commodity internalizes a duality, because it is both a commodity in the ordinary sense of being a product of labor and it also “acquires a formal use-value, arising out of its specific social function.” In this formal social function, “the money-form is merely the reflection thrown upon a single commodity by the relations between all other commodities” (183).
Furthermore, in this role it is perfectly possible to replace the money commodity “by mere symbols of itself.” This capacity for replacement is not surprising, however, given that “every commodity is a symbol, since, as value, it is only the material shell of the human labour expended on it” (185–6). Marx here opens up the possibility to incorporate many aspects of what is now often referred to as “the symbolic economy” directly into his analysis. He does not attempt to do so, and it would undoubtedly require modifications to the mode of presentation, but I think it important to note that the symbolic aspects of how capitalism works are not external to his argument. Those who argue that capitalism is different now because of the degree to which symbolic capital and the symbolic economy have come to the fore, and that capitalism has consequently changed its spots, should mark well that this is not necessarily so.
The danger lies in treating these symbolic qualities, which are very important, as purely imaginary or as “the arbitrary product of human reflection.” What Marx is driving at here is that even the money commodity cannot realize its specific value without exchanging with all other commodities as equivalents, even as it postures as the universal equivalent for all other commodities. “The difficulty,” he says, “lies not in comprehending that money is a commodity, but in discovering how, why and by what means a commodity becomes money” (186):
What appears to happen is not that a particular commodity becomes money because all other commodities universally express their values in it, but, on the contrary, that all other commodities universally express their values in a particular commodity because it is money. (187, emphasis added)
In other words, once money exists, then commodities find a means of measuring their value easily to hand as if the gold drawn “from the bowels of the earth” is “the direct incarnation of human labour.” This, he declares, is “the magic of money” that needs to be unpacked. “The riddle of the money fetish is therefore the riddle of the commodity fetish, now become visible and dazzling to our eyes” (187).
But there is one other vital point to this chapter. With the “magic” and “fetish” of money firmly in place,
men are henceforth related to each other in their social process of production in a purely atomistic way. Their own relations of production therefore assume a material shape which is independent of their control and their conscious individual action. (187)
This sounds suspiciously like a tacit invocation of Adam Smith’s vision of a perfectly functioning market whose hidden hand guides individual decisions. No individual is in command and everyone has to function according to what Marx later calls “the coercive laws of competition” (433).
In Smith’s ideal world, the state would create the institutional framework for perfectly functioning markets and private property and then watch the wealth of the state and the welfare of the citizenry rapidly improve as individual initiative and entrepreneurialism coordinated through the hidden hand of the market would produce a result that was beneficial to all. In such a world, Smith thought, the intentions and motivations of individuals (varying from greed to social mission) did not matter, because the hidden hand of the market would do the work.
This chapter poses a conundrum. On the one hand, Marx devotes a footnote to condemning Proudhon’s acceptance of bourgeois notions of rights and legality as providing absolutely no leverage in the construction of a revolutionary alternative. Yet in the main text of the chapter, Marx has seemingly accepted the liberal theory of property ownership, the reciprocity and equivalence of noncoercive market exchange between juridical individuals and even the hidden hand of the market as proposed by Adam Smith. How are we to reconcile this seeming contradiction? I think the answer is simple enough, but the answer does have important ramifications for how we read the rest of Capital.
Marx is engaged in a critique of classical liberal political economy. He therefore finds it necessary to accept the theses of liberalism (and, by extension to our own times, neoliberalism) in order to show that the classical political economists were profoundly wrong even in their own terms. So rather than saying that perfectly functioning markets and the hidden hand can never be constructed and that the marketplace is always distorted by political power, he accepts the liberal utopian vision of perfect markets and the hidden hand in order to show that these would not produce a result beneficial to all, but would instead make the capitalist class incredibly wealthy while relatively impoverishing the workers and everyone else.
This translates into a hypothesis about actually existing capitalism: that the more it is structured and organized according to this utopian liberal or neoliberal vision, the greater the class inequalities. And there is, it goes without saying, plenty of evidence to support the view that the rhetoric of free markets and free trade and their supposed universal benefits to which we have been subjected these past thirty years have produced exactly the result that Marx would expect: a massive concentration of wealth and power at one end of the social scale opposite the proliferating impoverishment of everyone else. But in order to prove that point, Marx has to accept the institutional foundations of liberal utopianism, and that is precisely what he does in this chapter.
This raises an important caveat into how we have to read Capital. We have to be careful to distinguish between when Marx is talking about and critiquing the liberal utopian vision in its perfected state, and when he is attempting to dissect actually existing capitalism with all of its market imperfections, power imbalances and institutional flaws. As we will see, these two missions sometimes confound each other. Some of the muddles of interpretation come from this confounding. So I will try in what follows to indicate when he is doing what and to pinpoint those moments of confusion that occasionally arise, including those in Marx’s own analysis, when his desire to accomplish one objective—the critique of classical political economy—gets in the way of the additional task of understanding the actual dynamics of a capitalist mode of production.
For the most part, though, Marx has an ingenious way of using the theoretical critique of liberal utopianism in its various political-economic guises to shed devastating critical light on the actually existing capitalism of his own day. And this is fortunate for us, living in a world where the theses of neoliberalism echo and, in some respects, deepen those of liberalism, because Marx’s critique of free markets and free trade can shed as much devastating light on our own actually existing capitalism as it did for the capitalism of Marx’s own time and place.
CHAPTER 3: MONEY, OR THE CIRCULATION OF COMMODITIES
By now it’s clear that a particular notion of money has been crystallizing out of Marx’s account of commodity exchange. It was implicit in the opposition between the relative and equivalent forms of value and this, with the proliferation of exchange into a general social act, led on to the emergence of a universal equivalent that took the form of a tangible money commodity that represented value even as it disguised the origins of value in socially necessary labor-time. We now inspect this money-form more closely.
Chapter 3 is long and quite intricate. It tells a simple story, though, in what by now should be a familiar fashion. Money is a unitary concept, but it internalizes dual functions that mirror the duality of use- and exchange-value within the commodity. On the one hand, money operates as a measure of value, as a golden representative, as it were, of socially necessary labor-time. In this role it must possess distinctive qualities so as to provide, as far as possible, an accurate and efficient standard measure of value. On the other hand, money also has to lubricate the proliferation of exchange and do