Episode 20

Gladstone,speaking in a parliamentary debate on Sir Robert Peel's Bank Act of 1844and 1845,observed that even love has not turned more men into fools than has meditation upon the nature of money.He spoke of Britons to Britons.The Dutch,on the other hand,who in spite of Petty's doubts possessed a divine sense for money speculation from time immemorial,have never lost their senses in speculation about money.

The principal difficulty in the analysis of money is surmounted as soon as it is understood that the commodity is the origin of money.After that it is only a question of clearly comprehending the specific form peculiar to it.This is not so easy because all bourgeois relations appear to be gilded,i.e.,they appear to be money relations,and the money form,therefore,seems to possess an infinitely varied content,which is quite alien to this form.

During the following analysis it is important to keep in mind that we are only concerned with those forms of money which arise directly from the exchange of commodities,but not with forms of money,such as credit money,which belong to a higher stage of production.For the sake of simplicity gold is assumed throughout to be the money commodity.1.MEASURE OF VALUEThe first phase of circulation is,as it were,a theoretical phase preparatory to real circulation.Commodities,which exist as use-values,must first of all assume a form in which they appear to one another nominally as exchange-values,as definite quantities of materialised universal labour-time.The first necessary move in this process is,as we have seen,that the commodities set apart a specific commodity,say,gold ,which becomes the direct reification of universal labour-time or the universal equivalent.Let us return for a moment to the form in which gold is converted into money by commodities.

1ton of iron =2ounces of gold 1quarter of wheat =1ounce of gold 1hundredweight of Mocha coffee =1/4ounce of gold 1hundredweight of potash =1/2ounce of gold 1ton of Brazil-timber =11/2ounces of gold Y commodities =X ounces of gold In this series of equations iron,wheat,coffee,potash,etc.,appear to one another as materialisation of uniform labour,that is labour materialised in gold,in which all distinctive features of the concrete labour represented in the different use-values are entirely obliterated.They are as values identical,i.e.,materialisations of the same labour or the same materialisation of labour --gold.Since they are uniform materialisations of the same labour,they differ only in one way ,quantitatively:

in other words they represent different magnitudes of value,because their use-values contain unequal amounts of labour-time.These individual commodities can be compared with one another as embodiments of universal labour-time,since they have been compared with universal labour-time in the shape of the excluded commodity,i.e.,gold.The same dynamic relation,as a result of which commodities become exchange-values for one another,causes the labour-time contained in gold to represent universal labour-time,a given amount of which is expressed in different quantities of iron,wheat,coffee,etc.,in short in the use-values of all commodities,or it may be displayed directly in the infinite series of commodity equivalents.

Since the exchange-value of all commodities is expressed in gold,the exchange-value of gold is directly expressed in all commodities.Because the commodities themselves assume the form of exchange-value for one another,they turn gold into the universal equivalent or into money.

Gold becomes the measure of value because the exchange-value of all commodities is measured in gold,is expressed in the relation of a definite quantity of gold and a definite quantity of commodity containing equal amounts of labour-time.To begin with,gold becomes the universal equivalent,or money,only because it thus functions as the measure of value and as such its own value is measured directly in all commodity equivalents.The exchange-value of all commodities,on the other hand,is now expressed in gold.One has to distinguish a qualitative and a quantitative aspect in this expression.The exchange-value of the commodity exists as the embodiment of equal uniform labour-time,the value of the commodity is thus fully expressed,for to the extent that commodities are equated with gold they are equated with one another.Their golden equivalent reflects the universal character of the labour-time contained in them on the one hand,and its quantity on the other hand.The exchange-value of commodities thus expressed in the form of universal equivalence and simultaneously as the degree of this equivalence in terms of a specific commodity,that is a single equation in which commodities are compared with a specific commodity,constitutes price .Price is the converted form in which the exchange-value of commodities appears within the circulation process.

Thus as a result of the same process through which the values of commodities are expressed in gold prices,gold is transformed into the measure of value and thence into money.If the values of all commodities were measured in silver or wheat or copper,and accordingly expressed in terms of silver,wheat or copper prices,then silver,wheat or copper would become the measure of value and consequently universal equivalents.Commodities as exchange-values must be antecedent to circulation in order to appear as prices in circulation.