Das Kapital

The creation of commodities involves materials taken from nature being transformed through labor. This process is “the creator of use-values” (133). Marx uses the example of coats and linen. Linen is necessary for making the coat, but it is the labor that turns the linen into a coat that gives the coat its use value. Different types of labor may have gone into producing a coat, either what Marx calls “simple average labor” or “intensified labor.” However, Marx concludes that the “labour contained in a commodity counts only qualitatively” (136). In other words, no matter how complex the labor involved, the use value of a commodity is measured in the quantity, or the hours of labor put into it.

Commodities have a “homely, natural form” (138), which is the material they are made from. Examples include corn, linen, and iron. However, Marx still asserts that the value of any commodity still comes from the labor put into transforming it. Returning to the example of a coat, Marx writes, “The linen expresses its value in the coat; the coat serves as the material in which that value is expressed” (139). In other words, the value of any linen lies in the coat that could be made through labor. However, Marx also suggests that value does not exist in a coat in and of itself. Instead, it is the “human labour-power” that is “accumulated in the coat” (143).

Even the quantity of a material does not change the value of a commodity as much as the labor. Twenty yards of linen might be needed to make a coat. However, the value of a coat may double if it takes twice as much labor to produce, even if the coat is still made with 20 yards of linen. If more labor or less labor is required to produce a coat, then the price of the linen will increase or go down the same as the labor (145). Such value is not determined by any natural characteristic of the linen. By comparison, Marx gives the example of how the weight of a sugar loaf is determined compared to the weight of a piece of iron (148-49). While weight is a natural quality, the value of a coat is “something purely social,” as much as its value comes from “its property of being heavy or its ability to keep us warm” (149). Also, instead of the linen itself, the coat’s value comes from it being a “congealed quantity of labour” (150).

Marx also asserts that the labor that determines the value of a commodity is not concrete labor, meaning the actual work that goes into producing it. Instead, the value is shaped by the abstract labor, the value of which is determined by society. As Marx explains, “the usefulness of tailoring consists, not in making clothes […] but in making a physical object which we at once recognize as value” (150).

Marx addresses the first writer to discuss the value of commodities, the ancient Greek philosopher Aristotle. The money value, which Marx calls the “money-form” of a commodity (151), is just another way of saying a commodity is worth as much as another type of commodity. Marx cites Aristotle’s example of a house costing a specific amount of money being the same as saying a house is worth as much as five beds (151). However, according to Marx, Aristotle ends his discussion of value there since he could not figure out that there is a single thing that determines the value of both beds and houses. For Marx, this missing thing is “human labour” (151). Marx suggests Aristotle could not come to this conclusion because he lived in a society where much of the labor was done by enslaved people. Only in a contemporary society like Marx’s, where society is based around the fact that people can buy and own commodities, is it clear that labor is the main force that gives value to commodities.

At the same time, Marx agrees with Aristotle that the actual value of a commodity is seen in its relationship to other commodities. This remains true even in a society where the value of an item is expressed in terms of money. Marx contrasts this view against two schools of economic thought in his time: the Mercantilists, who think the value of commodities lie in the characteristics of the commodities themselves, and the supporters of free trade, who argue the value is in the amount of commodities. Instead, like Aristotle, Marx concludes that the value of a commodity is in its relationship with other commodities.

Further, the driving force determining the value of all commodities is labor. This is because the one thing all commodities have in common is that they are created through human work. The labor that creates a coat is “the equal of every other sort of human labour, whatever natural form it may possess, hence whether it is objectified in a coat, in corn, in iron, or in gold” (155). This relationship in value between different commodities is entirely determined by society or, in Marx’s words, “through the whole range of their social relations” (159). Labor is just the one factor that creates the value behind all commodities, but it is society that determines how much value that commodity has compared to other commodities.

Marx then discusses the “money form” of commodities, which is the pure financial value of an item. Money is based on gold, but, as Marx points out, gold is also a commodity (162). 

Marx suggests that commodities have a “mystical character” (164). By this, he means that wood is fundamentally transformed when it is made into a table, even though it is still actually wood. This is because once they are made through labor, commodities are given social significance: “Objects of utility become commodities only because they are the products of the labour of private individuals who work independently of each other” (165). It is when individuals try to exchange the products of their labor that society steps in and determines the value of their work. For Marx, commodities are the “material expressions of human labour” that are made “into a social hieroglyphic” (167). For Marx, this understanding only became possible within the social, economic, and intellectual circumstances of his era.

The money form of each commodity “conceals” the impact of society on the value of commodities (168), instead making them look like the value is innate to the objects themselves. An example of this is how silver and gold are seen as a means of equivalent exchange with coats and boots, which Marx describes as “absurd” (169). Marx gives the example of Robinson Crusoe, a novel about a man stranded on an island that was popular in Marx’s time. When Crusoe has to craft items to aid his own survival, he labels these objects in terms of the labor time that went into making them.

Next, Marx discusses feudalism in medieval Europe. Specifically, he mentions the corvée, a practice in which serfs owed a time of labor directly to the local lord or the king (169-70). For Marx, both are examples of how central raw labor is. In these contexts, stripped of money and complex modern social relations, the value of objects and services comes down to work and the amount of time it takes to do that work.

Marx then wonders why the importance of labor has become disguised under complex social concepts by modern times. In other words, he explores the question of the “fetishism” of labor production (176). He suggests this is the “natural and spontaneous product of a long and tormented historical development” (173). Specifically, the rise of the bourgeoisie led to a view of society where “the process of production has mastery over man, instead of the opposite” (175). Whatever its origins, the important point for Marx is that there is nothing natural about exchange rates and the value of commodities. Instead, these are socially determined.

Marx characterizes exchange as the process of an owner trading commodities that have no use value for themselves for other commodities that would have use value for them. This is what Marx labels the “exchange-value” (179). Money is simply the “external expression” of the exchange of commodities (181).

Marx argues that money arose among nomadic societies because the nomadic way of life required making wealth easily moveable and to make it possible to easily exchange goods with foreign societies (183). Among ancient societies, Marx suggests, money stood in for the enslaved person. Since the end of the 17th century, however, with the rise of the bourgeoisie, money now stands in for land. Money itself, especially in the form of silver and gold, becomes a commodity in and of itself and “acquires a formal use-value” (184). Due to this, Marx disagrees that money is purely a symbol; however, its value does only exist in how it can be traded with other commodities.

While money, especially in the form of gold, is a commodity, it still is the “necessary form of appearance of the measure of value which is imminent in commodities, namely labour-time” (188). Money stands for what really gives value to commodities: human labor. However, Marx argues it is arbitrary how a commodity used for money like gold is actually used to measure the value of any other commodity. Marx writes, “The guardian of the commodities must therefore lend them his tongue, or hang a ticket on them, in order to communicate their prices to the outside world” (189). Money’s role as a “measure of value” is thus “only imaginary” (190). Marx suggests this is seen when the value of money rises or falls while the value of commodities stays the same or the reverse happens. Marx points out that, over time, gold coins have become so debased that they are practically gold in name only. Marx gives the example of the British pound: The name used to refer to a pound of gold, but now the pound simply refers to the unit of currency (193-95).

Marx defines price as representing the “labour objected in a commodity” (195). Even so, prices may be applied to things that do not have a value derived from labor, like uncultivated land or honor. The money spent on a commodity represents another type of value, exchange value, which does not necessarily reflect the commodity’s use value. Marx gives the example of a weaver selling 20 yards of linen for two pounds. Then he spends the two pounds on a Bible. For Marx, this represents “the conversion of the commodity into money, and the re-conversion of the money into a commodity” (200), which Marx writes out as a formula: Commodity – Money – Commodity (C-M-C).

The commodity that is bought is “divested of its original form through its sale” (203), a process that Marx also describes as the commodity becoming “alienated” (204). This means money is the “absolutely alienable commodity, because it is all other commodities divested of their shape, the product of their universal alienation” (205). Eventually, commodities stop being exchanged and are replaced by new commodities. When the value of gold or silver changes, this also affects the price of commodities “through their common value-relation” (214). Across society, the circulation of money in exchanges reflects the circulation of commodities, including the replacement of old commodities with new ones. Marx believes that it is this circulation of commodities that influences the value of money and not the quantity of gold or silver (219-20).

Marx then discusses how money takes the form of the coin. However, the amount of actual precious metal in coins varies according to the law, and paper bills can completely take the place of coins. Paper bills carry value as “a symbol of gold, a symbol of money” (225). Such forms of currency need to have an “objective social validity” that is forced by the government (226). Marx points out that some people do not acquire money to buy commodities, but to hoard it. Marx sees this as a historical process where money gains more power and becomes a goal in and of itself: “Everything becomes saleable and purchaseable” (229). While ancient societies denounced hoarding wealth, modern society embraces it.

Besides the relationship between seller and buyer, money also defines the relationship between debtor and creditor. For Marx, this represents a time when money is no longer mediating an exchange of commodities but instead becomes the actual reason of the transaction. In Marx’s own words, money becomes the “universal commodity” (235).

Marx argues this is why financial crashes occur: The money supply is disrupted in such a way that it can no longer be replaced by other commodities. Marx notes that money in the form of credit and debt plays more of a role in “large-scale commercial transactions” and in the “world economy” than in regular, local small business transactions (238-39). Furthermore, gold and silver are the backbones of international trade. For this reason, banks hoard gold and silver, although this is regulated by governments. When the banks’ own hoards of silver and gold reach a certain point, it represents an economic crisis with the disruption of the circulation of commodities.