What is the first role of money as it comes into being?
It is to be a measure of labour time spent in the production of products, and provide a standard for this!
Since it comes to be as a result of development of divisions of labour and thus the amount and different kinds of products, and thus their exchange in the market, it is also not only a product of transformation of products into commodities but itself is also a commodity!
Under the conditions of commodity production just as products become commodities so does the labour time needed (socially necessary labour time) for the production of products become value. Thus value of a commodity is the deposited amount of labour time needed to produce the product in question. Exchange value is the form in which it shows itself.
Thus every commodity has a value and thus money also has a value. When a product is taken to the market and exchanged for money, the value of money and the value of the product must be equal. Thus the labour time needed to produce the amount of money used in exchange for the product and the labour time needed to produce the product that is to be exchanged for that amount of money must be known and must be equal.
It is thus that money is fist and most of all a rare metal, and first and most of all gold! The labour time needed to produce it is determined by the labour time needed to produce gold, its value is thus determined. It then can be used for exchange of products representing equal value, equal labour time needed to produce both the amount of gold used to exchange with the product in question and the said product.
This of course is already complicated for instead of comparing the labour time needed for the production of one product that one produce to the labour time needed for another product that one does not produce but need, and thus exchanging them directly, we are using a mediator, money, and achieving our aim of obtaining the product that we need through the medium of money.
Thus not only do we need to know the labour time our own product contain, and the product we need contain, we also need to know the amount of labour time the money contain.
We can complicate the matter more. For example one kind of labour used to produce a kind of product represent more labour time than another kind of labour that is used to produce another kind of product. That must be accounted too!
Such complications were relatively easy to resolve right at the start, when all new each other and thus the labour they performed and the products they produced, and exchanged them locally. Especially before money came into operation. Through barter of commodities. But money becomes necessary to progress commodity production and is produced and is used to exchange products. And that creates problems even when the commodity production is not well developed, for after all money may belong to another community, say the Roman empire, and who knows how much labour time it contains. And who is going to stop the Roman empire pillaging gold of others and who is going to stop the merchant from cheating the peasant and artisan….These are in the nature of commodity production. Just have a little look at what happens with it these days. America put paper to the printing press and declare it to be dollar, money that is worth certain amount of value and all goes “oh yeah, I want some of that…” and give away all that they produce in exchange for that piece of paper! That is by the by. And we will come to that.
But there are very funny examples regarding the value of money (that is gold) in history. One of the Chinese emperors is short of money. Thus demands a solution to his problem. Find a solution to the problem or have your head chopped off! Thus one of the clever consultants come up with a solution. He says: now we are calling 5 gram of gold one dollar (whatever) what we do is we melt them all and produce one dollar that actually has 4 grams of gold in it. Thus when we go to the market to buy all that grain etc., we give them one dollar for one tone of grain as before, but we will have much more dollars at hand. Wow says the Chinese emperor that is clever. And it is done. But the merchants in the market place are absolute utter whatever you want to call them. They realise the amount of gold has decreased, so the price (exchange value’s price form) goes up! And the Chinese emperor is back to square one. And of course the clever chap who proposed the solution ends up having his head chopped of. You may think that is funny, but ask the chap who lost his head. And we will come to that.
COOPS, COMMUNES, COUPONS OR MAGICAL WAY OF GETTING RID OF COMMODITY AND MONEY THAT DO NOT WORK
There are of course, and also, many an examples of attempts at getting rid of money and using say coupons that says the owner have spent so much labour time to obtain it. Robert Owen is one. But it does not work, for in the society where all the products turn into commodities, to exchange products you need money, a commodity agreed by all to be an equalant value to a certain standard. It did not work. The same problems are faced by many an anarchist co-operatives. They start say organising a market where producers come and exchange their products directly, thus going back to barter times. So long as things remain within that barter level, different producers can exchange their products, never of course achieving absolute equality, but nevertheless agreed by the producers of different products and exchange is completed. But than a producer want to exchange his product in that market but has nothing he wants in that market. How is he going to get rid of his product within that market? Thus a coupon for that market is produced. Producer sells his product and receives a coupon to prove that he sold such and such product worth so many coupons, which he can use when there is a product he wants and is produced by the members of the co-op. But what if there is nothing the producers of the coop produce that he wants, say he wants a spare part for his tractor, or some other things which are only produced outside the co-op and can only be obtained at the wider market (of commodity producers; some of them are huge companies, not coops at all, and of course they could be members of another independent coop-commune). These people will not accept these coupons. But they will accept say euros (these sort of coops are mainly in Europe.) Thus coop moves to creation of a mechanism whereby every coupon is worth certain amount of euros and provides these euros to the coop members in exchange for the coupons! The same problem arise for the people who are not members of the coop, do not produce nothing, but want to shop in the market set up by the coop members. They work outside, earn euros and have euros and want to shop in the coop’s market that only use those coupons. What to do? Certainly the coop wants to grow and make life better for its members. Help them sell more. Thus and again, these buyers are provided with coupons in exchange for their euros.
Here it is clear that someone has to decide what is the value of each product, thus equality can be achieved when they are exchanged, thus no inequality is committed against any of the producers, and more, somebody has to decide what the exchange rate of those coupons to euros is. Now the latter step takes the coop into the wider world of value of labour time for all the members of the wider society who are not the members of the coop at all. Who decides on the value of the labour time for all those people? Sorry to say so, but not the coop but the big capitalists who control the euros!
Thus these coops come up with all sorts of democratic structures to decide on the value of each product (thus the value of each producer’s labour time) so that an equal exchange can be achieved, and the democratic structure to decide on the exchange rate of the coupon with euro. And there is more.
Some of these coops grow so much that they produce things in Chine! And sell these products in the coop! And of course why not sell it outside the coop, so long as the funds are used to better the coop members. But then who decides the wages of the Chinese workers. Coop’s democratic structures of course-Chinese works are not part of those. And why go all the way to China if you are not producing things cheaper there. For the benefit of the coop, and thus coop members of course. Clearly the attempts to provide equality and democracy is breaking down in the jungle of capitalist commodity production.
Does that mean coop movement is bad in and by itself under capitalist conditions? Of course not, for even under such conditions coops can produce better conditions for producers and consumers. They produce not only better conditions for producers and consumers but also many an honest coop personnel who want to do the right thing for its members and the wider community. Yet and since they are stuck within this ocean of commodity production they may and usually they do end up growing, since they must, and do become capitalist companies not really serving the members and the community but those who run the coops. In any case, they are a reactionary movement if they claim that they are able to resolve the problems of capitalism within the system of capitalism.
There is more to this coop-commune movements. People lose their jobs. Are forced into small production to survive. And even than cannot sell their products and are forced into forming exchanges amongst people like themselves. Desperate to survive. Even if they do not form a producers’ coop, they form a local exchange coop and come up with their own coupons. There are many examples of these. Nay more people lose their job, have no product to sell but the labour that they can perform. Thus local labour exchanges are formed. One goes and perform certain labour for certain length of time, get a local coupon for that and then can call another person to perform another kind of labour at his place or exchange that coupon for food, goods etc. that others are willing to provide in exchange for the labour they can perform-or another member can perform for the coupon.
All these reflect the fact that capitalism at its most developed, as monopoly capitalism is not able to take care of its people, and people are forced into all sorts of barter situation-this is going back to commodity production at its most backward, at its start. This used to occur after big wars, such as IWW and IIWW, yet it is occurring now when there is no such wars.
Does that mean such movements are bad in and by themselves? Of course not. These are the results of forced conditions on the members of the working classes and so long as they are used to expose the fact that financial capitalism is in its general crises and is unable to function for such members of the society (as well as the out and out unemployed) they are not only a means of survival but also a means of exposer of financial capitalism. But if they are used to cover up the short comings of the financial oligarchs and the society they create and run (or rather not run) they become a reactionary movement.
There is a particularly good example of such a cooperative work going on in Turkey; it is the Municipality of Ovacik. The municipality is run by the elected municipal leader who is a clearly honest and well-wishing person who also claim to be a revolutionary. Municipality is run using as much democracy as is possible and one of its activities is to produce and sell products to finance the education of children of the municipality. They are also supported by many a well-wishing people in Turkey who buy its products and contribute to the municipality in many ways financially and through other means. It is certainly producing very good democratic and financial benefits for the municipality. Yet it invariably uses backward means of production and backward means of democracy (we are after all in the era of micro-chips) and since it has to act within the jungle of commodity production it can survive and prosper thanks to all those people who buy its product all over Turkey.
We can call all these coops, communes etc., Robert Owen effect that is kept alive after all these years and after Marx, as well as the failure of the capitalist system in its most “developed” stage! They are not reactionary in and by themselves but extremely reactionary as and when they claim to be a way, a means of salvation of humanity-and when they claim to be democratic as such, for these structures are invariably bound with beaurocracy. Dissolution of beaurocracy require a society that produce plenty and no commodity, and they are not the way forward to achieve that. Clearly not so in the age of micro-chips!
Marx notes that Robert Owen’s attempt to replace money with coupons in the process of exchange of commodities is an attempt to replace money with something that directly represent labour time spend by each individual, but that does not work since within the commodity production money is not a direct representative of labour time spent, but is itself a commodity. It cannot represent labour time directly bur only as value, that is as value, since labour time (socially necessary) becomes value under commodity production, and that value present itself to us only as exchange value. No coupon can change this fact under commodity conditions. The only way to represent labour time directly is to put an end to the commodity production. And that requires communal ownership all products (and thus means of production) and the developed, modern means of production that makes it possible to count the labour time needed for each production.
“the Communist principle of distribution which will be realised in the form of a direct accounting of the expenditure of labour in terms of labour time, when there will be no place for commodity circulation.”( Questions of Economics’, Moscow, No. 1, 1953; Communist Review, London, September and October 1953; Transcribed by George Gruenthal)
We shall have to come back to money, but let us have a look at the commodity in general. For there seems to be a lack of understanding in relation to it. And that is problematic for those who want to put an end to it. As Hegel says, fighting an enemy where he is not is a total waste of time-and in this case leads to defeat, which no one wants.
PRODUCT, DISTRIBUTION OF PRODUCTS, COMMODITY AND COMMODITY EXCHANGE (TRADE)
To live we have to produce many different kinds of products. Since this requires a division of labour in the wider society, what is produced by one (or rather by one group of people) has to reach those who need it. Thus it needs to be distributed.
When the products become commodities as they do in the capitalist societies, this distribution is done through exchange of products, through trade. Of course those who are engaged in trade do not produce nothing. They only pass on products to those who need it through exchange (through the medium of money. The same goes for those who work in say banks. They do not produce nothing but keep collecting and passing on money. Thus those who work in trade (of goods or money) may feel bad. Oh dear me, I am producing nothing, but I collect my wages and consume all those products produced by others they may think. Well they should not feel bad about it really. For the work they perform is socially necessary in a commodity producing society. Without their labour the whole society could not function. Those producers may produce all they can but who is going to pass it on to others and who is going to provide the money for that purpose. Clearly all the surplus labour that is needed to pay the people who work in trade (of goods and money) is produced when products (commodities) are produced, and it is this that provide the wages of the people who work in trade (of goods and money), but then this kind of work is necessary in this society. The profit, the rent, the interest is also produced during the process of production of goods-did you hear a capitalist, a land owner, a banker feeling bad about collecting and pocketing all that? No. so if you are a worker working in trade (of goods or money) do not feel bad. At least you are working and performing a socially necessary labour. It is capitalism that is causing all that.
Here it is clear that what turns products into commodity is the change of ownership that is occurring. Means of production used in producing the product (as well as the labour power of the worker using these means of products to produce things) are owned by someone (or some group of people). Thus the end product also belong to him (them). When that product belonging to him (them) are exchanged, the ownership of product is changed. What turns products into commodities is the fact that they belong to a person (to a group of people) and that they are exchanged for the products (so is money a product) owned by another (others). For products to turn into commodities they must be owned by a person (or group of people) and they must be produced so that they can be exchanged by other products owned by another person (or another group of people).
If and when all means of production is owned communally, and thus and if and when all the products are owned communally, the fact that these products need to be distributed amongst people who own these communally, does not make them a commodity. They remain as nothing more than products produced communally and distributed amongst the members of the society to meet their needs. In those conditions products do change hands, but products do not change ownership.
That is the difference between a commodity producing society, such as the present capitalist system, and a society that produce things to satisfy all its members needs and distribute it amongst its members.
Things can be communally owned and distributed amongst the members of society when production of things is extremely backward, when things produced are very little. Under those conditions, the very need of keeping society, and thus members of society alive necessitates communal ownership of means of production and the end products. Otherwise neither the society nor thus each member of the society could not survive. This is the primitive form of communism, and all nations has passed through this stage of communism. Present day rulers, financial oligarchs, bourgeois, and feudals are very eager to hide this fact. Thus the fact that Native Americans that they met were communists is hidden well and never talked of!
We are now at a stage where the products are not few but plenty, and society can provide abundance of products for all its members. This time it is-not a shortage of products but the abundance of products that makes it necessary that we own the means of production and the products in commune. We have started with primitive communism, we now have to pass into the modern communism. We were all communists (primitive) due to shortage and to survive, we shall all become communists (modern) due to abundance and again to survive (for ability to produce abundance under capitalism is not realised and lead to wars for the ownership of all that means of production and products amongst the finantial oligarchs that is clearly threatening the society with total annihilation).
To Be Continued.