Marx's ‘Capital’, Philosophy and Political Economy by Geoffrey Pilling 1980

5 Some aspects of Marx’s notion of commodity fetishism

When therefore Galiani says: Value is a relation between persons ... he ought to have added: a relation between persons expressed as a relation between things. (I, p. 74)

In his important book Essays on Marx’s Theory of Value, I. I. Rubin draws attention to the fact that ‘Marx’s theory of commodity fetishism has not occupied the place which is proper to it in the Marxist economic system’ (1972, p. 5).[1] As he observes, many writers have failed to grasp the relationship of this notion to Marx’s critique of political economy – it has, he says, often been regarded as a ‘brilliant sociological generalization, a theory and critique of all contemporary culture based on the reification of human relations’. Rubin was surely right to oppose such a view and also that which seeks to separate out Marx’s notion of fetishism as some independent entity, having hardly any connection to Capital as a whole. Rubin’s book was first published over fifty years ago, but in the light of the many distortions of this aspect of Marx’s work which have appeared in recent years, what he said then carries even more force today. In fact we shall seek to show that for Marx his notion of fetishism is no mere literary digression, something ancillary to the main text. On the contrary, as Rubin, I think, has adequately shown, it provides one of the key elements in the foundation of Marx’s entire theory and is in particular directly bound up with his conception of economic crisis. We know that a separate treatment of fetishism did not appear in the first edition of Capital, even though the concept is implicitly present. Only with the second and third editions (the basis for the English translations) did a separate section ‘The Fetishism of Commodities and the Secret Thereof’ appear at the end of Chapter One. We know that it was the first chapter which gave Marx the greatest difficulty. He wrote and re-wrote the sections dealing with the value-form, seeking to present in the clearest way possible the contradictory nature of the commodity-form and reveal the results of these contradictions. It is no accident that the section on fetishism appears after those dealing with the value-form and no accident that this section was added as part of Marx’s struggle to present the value-form in the most adequate manner. But although there is a separate section dealing with fetishism, it is not as though Marx deals with this matter and then drops it. It is a notion which is present throughout the entire three volumes, and one which he develops and concretizes in these volumes as well as in the Theories of Surplus Value. (See also Kemp, 1978, where Marx’s conception of fetishism is discussed.)

Fetishism and social being

Let us start by recalling that Marx took the political economists severely to task for having accepted the reified, alienated forms of bourgeois economy at face value, for having failed to inquire into the historical and social basis of these forms. In this critique of the work of his predecessors, Marx rejected all notions which sought to ‘derive’ value (a social relation) from use-value (a material phenomenon). (‘the mystical character of commodities does not originate in their use-value’, 1, p. 71). In similar fashion, Marx opposed all those views which explained the nature of money in terms of the material-technical properties of gold, just as he poured scorn on all those who sought to understand capital from the technical nature of the means of production. What all these ‘errors’ had in common for Marx was this: they failed to distinguish between the technical role of the instruments of labour on the one hand, and their social form on the other. For Marx the essence of fetishism was this: under commodity production relations between men take the form of relations between ‘things’. The social relations are indirect relations, relations mediated through these things, and men simply ‘represent’ or ‘personify’ these things in the market place. Now Marx chastised the political economists for taking these forms ‘as given’ (by Nature) and not as social forms arising under definite historical conditions, forms which would therefore disappear under new social conditions. Those who accept the social relations of capital ‘uncritically’ in effect attribute to things in their immediate manifestation properties which, in point of fact, have nothing in common with this immediate material manifestation as such. The attention of Ricardo was directed almost exclusively to discovering the material base of definite social forms. These forms of social being were taken as read and therefore lying outside the scope of further analysis. It was Marx’s aim to discover the origin and development of these social forms assumed by the material-technical production process at a definite stage in the development of the productive forces. Here, incidentally, is a further clue to the distinction between classical political economy and its later degenerate form in vulgar economy. In the latter case, vulgar political economy, certain properties materially inherent in things are assigned to the social form of these things. Hence the power inherent in the means of production to raise labour productivity – that is the power to increase the production of use-values for a given expenditure of labour-time – is ascribed falsely to capital, and by extension, to the owner of capital. From this notion comes the apologetic theory of the ‘productivity’ of capital. Classical economy, on the other hand, ascribed economic forms to the specific property of things. It attempted to derive social phenomena directly from material-technical phenomena. Hence capital was ‘stored-up labour’, rent arose from the soil, etc. Now whatever the inadequacies of the notion that ‘capital is stored-up labour’, it at least had the merit over vulgar economy that the connection between ‘labour’ and ‘capital’ was kept in sight, even if this connection was misunderstood. In the case of vulgar economy, its apologetic nature reaches its high point with the formula: land-rent, capital-interest, labour-wages. For as we have already noted, in this formula the categories of capitalist production do not face each other as alien, hostile forms, but rather as heterogeneous and different forms. The different revenues are derived from different sources, one from land, one from labour and the other from capital. All notions of any inner connections are obliterated. The three categories work together harmoniously in the cause of production as do the plough and the land. In so far as any contradiction is admitted by the vulgar school, it is one merely concerned with distribution – one about the distribution of the value jointly created by the three agents. As we have seen, it was John Stuart Mill, with his division between conditions of production (fixed by nature and therefore immutable) and conditions of distribution (fixed socially and therefore within limits amenable to modification) who elaborated this aspect of vulgar economy into a system which was taken over by Fabianism and various other brands of reformism. Before turning to look at Marx’s notion of fetishism in more detail, we should say a little about the origin of this idea and its connection with the development of Marx’s work. The notion of fetishism, sketched out in the Critique and more fully in Capital, is the product of a long line of development, going back to The Holy Family (in Marx and Engels, 1975b), with its contrast between ‘social’ relations and materialized forms. We find Marx, in this early work, saying that property, capital, money, wage labour and similar categories, do not, in themselves, represent phantoms of the imagination, but very practical, very concrete products of the self-alienation of the worker. The material element, dominating all economic relations, is contrasted with an ideal, with a view of the world as it should be. In The Poverty of Philosophy Marx says that ‘Economic categories are only the theoretical expressions, the abstractions, of the social relations of production’. Marx, in opposition to Proudhon, now grasped that social relations of production stand behind the material categories of the economy. But he did not yet ask why this relationship was a necessary one under commodity production. It was only with the Critique and Capital that this problem is thoroughly examined and made the basis of the criticism of political economy as a whole. Now it is explained – and this is the essential point in the notion of fetishism – that the:

absence of direct regulation of the social process of production necessarily leads to the indirect regulation of the production process through the market, through the products of labour, through things. Here the subject is the ‘materialization’ of productive relations and not only ‘mystification’, or illusion. (Rubin, 1972, p. 59)

It is especially important to stress this last point – that fetishism is not merely illusion, that ‘fetishism is not only a phenomenon of social consciousness, but of social being’ as Rubin (p. 59) correctly puts it. For fetishism is often wrongly equated with mystification, merely an ideological category. (We shall return to this point.) It would of course be quite wrong to see a fully worked-out theory of fetishism in Marx’s early writings, but it would be equally one-sided to draw a rigid distinction between Marx’s early formulation of this question and its rounded out version in Capital, a position in general adopted by the Althusserian school. For one element found in the Economic and Philosophical Manuscripts of 1844 (Paris Manuscripts, in Marx, 1975a) is returned to throughout all Marx’s later work – namely that under capitalist relations, the products of the workers’ labour confront him as something coercive and this is a real coercion, with a definite material base. This we find in this early work:

The worker puts his life into the object; but now his life no longer belongs to him but to the object. Hence, the greater this activity, the greater is the worker’s lack of objects, whatever the products of his labour is, he is not. Therefore the greater this product, the less is he himself. The alienation of the worker in his product does not only mean that his labour becomes an object, an external existence, but that it exists outside him, independently as something alien to him, and that it becomes a power of its own confronting him; it means that the life which he has conferred on the object confronts him as something hostile and alien. (Marx, 1975a; author’s italics)

We shall see how this theme, far from being dropped, is enriched and developed in Capital.

Rubin is absolutely right to say that fetishism is a phenomenon of social being and because of this alone it is present in consciousness. And this ‘social being’ is commodity production and commodity production alone. Marx is quite explicit on this point.

The relation of the producers to the sum total of their own labour is presented to them as a social relation of objects which exists outside them.... It is a particular social relation between men themselves which in their eyes assumes a phantasmagorical form of a relation between things. ... This is what I call fetishism; it attaches itself to the products of labour as soon as they are produced as commodities, and it is therefore inseparable from the production of commodities. (I, p. 72)

Here Marx indicates clearly that the fetishism of economic relations arises only with commodity production. Of course ideology is not a product of capitalism only; false consciousness is a product of all societies divided into classes. But it is only under condition of capitalism that men’s economic relations appear to them in the shape of things. So this form of false consciousness, the fetishization of the economic relations, is unique to commodity-capitalist production. This must be stressed against those who wish to see fetishism as for example a product of the division of labour. According to this view, the division of labour means that the individual interest diverges from the general interest, that the deployment of activity is not determined voluntarily, but by circumstances apparently independent of man. Man’s own activity thus becomes, by virtue of this division of labour, an alien force which confronts and enslaves him, something not controlled by him. Each member has an exclusive field of activity; the division of labour means that each individual can only take on a partial view of the social whole. What this view ‘misses’ is that while it is certainly the case that in all pre-capitalist modes the conditions of production dominate men, only under capitalism does this take the form of the dominance of things over men. And these things dominate men not by virtue of a growing division of labour, but because of the social role the products of men’s labour actually play. Under capitalism the social relations of production are established by means of the transfer of ‘things’ from individual to individual. This movement of things is a coercive power over men – for it is through the movement of these ‘things’ (commodities, money, etc.) that production is organized, and not according to any conscious plan on the part of the producers. Thus in the elementary value-form (20 yards of linen = 1 coat) we have a movement of ‘things’ but simultaneously a definite transfer of economic forms, of definite activities, activities which correspond to definite social relations of production. So it must be stressed that it is only with commodity production (and of course its developed form, capitalism) that definite economic forms attach themselves to things and develop through these things. Thus, says Marx of pre-capitalist society:

this economic mystification arose principally with respect to money and interest-bearing capital. In the nature of things it is excluded, in the first place, where production for use-value, for immediate personal requirements, predominates; and secondly, where slavery and serfdom form the broad foundation of social production, as in antiquity and during the Middle Ages. Here the dominance of the producers by the conditions of production is concealed by the relation of dominance and servitude, which appear and are evident as the direct motive power of the process of production. (III, P. 810)

Referring to the Middle Ages, Marx notes that:

The practical and natural form of labour, and not, as in a society based on the production of commodities, its general abstract form is the immediate social form of labour ... the social relations between individuals in the performance of their labour, appear at all events as their own mutual personal relations, and are not disguised under the shape of social relations between the products of labour. (I, p. 77)

And this same point is made about those early societies:

in which primitive communism prevailed, and even in the ancient communal towns, it was the communal society itself with its conditions which appeared as the basis of production, and its reproduction appeared as its ultimate purpose. Even in the medieval guild system neither capital nor labour appear untrammelled, but their relations are rather defined by their corporate rules, and by the same associated relations, and corresponding conception of professional duty, craftsmanship etc. (I, p. 77)

These passages (and many others could be cited) express the fact that the uniqueness of bourgeois society consists in the peculiar fact that the most basic relations established between human beings in the social production and reproduction of their lives can be known to them only after the event and even then solely in the ‘opposed’ ‘inverted’ form of the relations between things. Or rather not ‘even then’ but precisely because the relations are unplanned, knowable a posteriors they can become visible only through the results of man’s activities, through the things he has produced. Under capitalism, man’s reflections on the forms. of social life and therefore his scientific investigation of these forms take a path which is not merely different but is in fact the direct opposite to that of the actual emergence and development of these forms. He begins, as he must, with the result of these activities. That is why, for instance, the proportions in which the products of man’s labour exchange, appear, and can only appear, to result from the very nature of the products themselves. Thus: ‘The quantities vary continuously, independently of the will, foresight and action of the producers. To them, their own social action takes the form of the action of objects, which rule the producers, instead of being ruled by them’ (I, p. 75). It is necessary to keep in mind the fact that when we say that men’s social relations of production affix themselves to things, are moved by these things, this is no illusion, to be demystified by some pure thought. Matters appear necessarily this way. The inverted form taken by man’s consciousness is a necessary inversion. It is precisely because fetishism is inherent in commodity production that it cannot be ‘demystified’ in thought alone but only in practice, in the overthrow of those social relations which create the very conditions for this fetishism. This is how Marx expresses this point.

The life-process of society, which is based on the process of material production, does not strip off its mystical veil until it is treated as production by freely associated men and is consciously regulated by them in accordance with a settled plan. This however, demands for society a certain material ground-work or set of conditions of existence which in their form are the spontaneous product of a long and painful process of development. (I, p. 80)

Only under communism will fetishism disappear, for it is only under commodity production and above all under capitalism where production is unplanned, where economic and social crises strike the working class as a kind of natural catastrophe, as something having nothing to do with human activity – that the basis for fetishism exists. As Marx says, the formulae whereby labour is represented indirectly, in fetishistic form, in the value of its product and labour-time represented indirectly by the magnitude of its value, bear stamped upon them the fact ‘that they belong to a state of society in which the process of production has the mastery over man, instead of being controlled by him’ (I, p. 81).

Disappearance of fetishism

Involved here is the notion that if fetishism will only be finally overcome in a society of freely associated producers, then it is equally true that the transparency of the economic relations of pre-capitalist economy was a product of the backwardness of the productive forces. Marx makes this explicit in the following passage:

The ancient social organisms of production are extraordinarily much more simple and transparent than the bourgeois organism, but they are based either on the immaturity of the individual man who has not yet torn himself from the umbilicus of the natural species-connection with the other men or based upon an immediate master-slave relationship. They are conditioned by a lower level of the productive powers of labour, by correspondingly restricted relationships of men within their material process of the constitution of their life, and consequently to one another and to nature. (Marx, 1976, p. 38)

Therefore the loss of the transparent quality of the social relations marked by the advent of commodity production – a loss which becomes increasingly pronounced with the development of capitalism – must not be evaluated in purely negative terms. For the fact that men’s social relations in production become increasingly indirect, the fact that the internal vein connecting man to man becomes more and more embodied in the connection between things, testifies to a development of the productive forces. The point here is that while the conditions of production rule producers in ancient, Asiatic, feudal and capitalist economy alike, in the case of pre-capitalist modes, these conditions were more immediately natural – climatic changes, soil fertility etc. Under capitalism man gains increasing control over these immediately natural conditions (although of course it can never be complete) and this is reflected in the fact that men become increasingly dependent on social conditions to secure their means of life. Under capitalism, the more man gains control over nature the more he becomes dependent on capital. And this dependency takes the form of a growing domination of ‘things’ over man and his activities. Thus changes in the price of a metal (gold) can, under certain conditions, not only seem to create economic crises – unemployment, currency depreciation, stock collapses, etc. – but actually do result in these phenomena.

As anybody familiar with Capital knows, Marx continually draws an analogy between the commodity-form of production and the religious conceptions developed by man. And this is important for us here, because it underlines the fact that the reified character of the products of man’s labour just like religion has a definite objective basis in the social relations of production. Religion can never be fully understood if it is regarded merely as an ideological device, carrying a definite function – for instance, to reconcile the masses to the conditions of their exploitation and poverty. Undoubtedly this is one side of religion (’the opium of the people') but for Marx only one side. For the fact must not be lost sight of that religion has definite material roots – it expresses man’s inadequate knowledge and control over nature, a lack of development of the productive forces and the fact that in class society he confronts nature indirectly through a set of (antagonistic) social relations. Only the removal of these social relations and conditions can lay the basis for the final disappearance of religious conceptions. Thus ‘The religious reflections of the real world can only disappear as soon as the practical workaday life represents for men transparently resolvable relationships to one another and to nature’ (Marx, 1976, p. 38). Neither religion nor fetishism arise from a wrong way of viewing the world to be righted by the disembodied intellectual who has grasped the ‘real’ relationship between man and the products of his labour. just as ‘after the discovery by science of the component gases of the air the atmosphere itself remains unaltered’ (I, p. 74), in the same way,

The determination of the magnitude of value by labour-time is therefore a secret, hidden under the apparent fluctuations in the relative values of commodities. Its discovery, while removing all appearance of mere accidentality from the determination of the values of products, yet in no way alters the mode in which that determination takes place. (I, p. 75)

Because of many quite erroneous views on the nature and source of fetishism let us consider this last point further by looking at one criticism directed by Marx against Thomas Hodgskin, a member of the ‘proletarian opposition’ to political economy (Marx, 1972, p. 267), and a writer for whom Marx had much admiration. At one place Hodgskin attacked the notion, prevalent amongst the economists, that the level of employment together with the standard of living of the working class depended on the amount of circulating capital available. Marx quotes from Hodgskin’s ‘correct’ reply. Hodgskin says, ‘The number of labourers must at all times depend on the quantity of circulating capital; or, as I should say the quantity of coexisting labour, which labourers are allowed to consume’ (p. 295). And Marx comments:

What is attributable (in the economists’ conception) to circulating capital to a stock of commodities, is the effect of ‘coexisting labour’. In other words, Hodgskin says that the effects of a certain social form of labour are ascribed to objects, to the products of labour; the relationship itself is imagined to exist in material form. We have already seen that this is a characteristic of labour based on commodity production, or exchange-value and this quid pro quo is revealed in the commodity, in money ... to a still higher degree in capital, in their personification, their independence in respect of labour. They would cease to have these effects if they were to cease to confront labour in their alienated form. The capitalist, as capitalist, is simply the personification of capital, that creation of labour endowed with its own will and personality which stands in opposition to labour. (pp. 295-6)

So, for Marx, Hodgskin recognized that political economy made a fetish of the social conditions of capital. But for Hodgskin, Marx proceeds to point out, this fetish was a subjective illusion, an illusion advanced, thought Hodgskin, to cover up the class interest of the owners of capital.

Hodgskin regards this as a pure subjective illusion which conceals the deceit and the interests of the ruling classes. He does not see that the way of looking at things arises out of the actual relation itself; the latter is not an expression of the former, but vice versa. In the same way English socialists say ‘we need capital, but not the capitalists’. But if one eliminates the capitalists, the means of production cease to be capital. (p. 296; author’s italics)

This is a vital point made by Marx against Hodgskin. For it involves questions not so much in economics, as in the Marxist theory of knowledge. If social being determines social consciousness, then this consciousness cannot be reduced to a series of mere ‘illusions’ or ‘mystifications’, the product of a distorted way of looking at things. To see the matter this way would amount to sheer idealism. Marx’s consciousness is a product of his social being, of his social practice. Thus the manner in which man conceives his social relations, the form taken by his consciousness, cannot be divorced from these relations. ‘The way of looking at things arises out of the actual relation’. Man’s social relations are reflected in his mind and translated into thought-forms. But these social relations are always reflected in thought in an inverted form. And this inversion arises from the fact that man’s social relations under capitalism are formed without first passing through consciousness. This last point actually provides the criterion whereby Marxism distinguishes between social relations and ideological relations. Speaking of the ideas of that group of Enlightenment thinkers which found classical expression in Rousseau’s Social Contract, Lenin says:

So long as they confined themselves to ideological social relations (i.e. such as, before taking shape, pass through man’s consciousness) they could not observe recurrence and regularity in the social phenomena of the various countries. ... The analysis of material social relations (i.e. of those that take shape without passing through man’s consciousness: when exchanging products men enter into production relations without even realising that there is a social relation of production here) at once made it possible to observe recurrence and regularity. (LCW, Vol. 1)

Fetishism as illusion

Thus it is not at all true that the value-relations appearing in the exchange of the products of labour as commodities are not ‘really’ relations between things, but merely imaginary relations having a mystical quality. This view is directly refuted by Marx in many places, for instance when he says,

The labour of the individual asserts itself as part of the labour of society, only by means of the relations which the net of exchange establishes directly between the products, and indirectly through them, between the producers. To the latter, therefore, the relations connecting the labour of one individual with that of the rest appear not as direct social relations between individuals at work, but as what they really are material relations between persons and social relations between things. (1; author’s italics)

This point, that the attachment of the social relations of production to things is no mere illusion, not something to be explained from some self-contained ‘ideological sphere’, is brought out strikingly by Marx in the Critique.

A social relation of production appears as something existing apart from individual human beings, and the distinctive relations which they enter in the course of production in society appear as the specific properties of a thing – it is this perverted appearance, this prosaically real, and by no means imaginary mystification that is characteristic of all social forms of labour positing exchange-value. This perverted appearance manifests itself merely in a more striking manner in money than it does in commodities. (Marx, 1971a, p. 49; author’s italics)

It should be clear from the above that (a) Marx understood fetishism as an objective phenomenon, a product of definite social conditions and (b) the basis for overcoming fetishism is provided by the development of the productive forces. From this standpoint it is clearly impossible to treat Marx’s notion of fetishism as merely mystification. It is here that once again we must take issue with Althusser. For this is precisely how he treats the notion of fetishism. In his view ideology (false consciousness) is not a product of definite social conditions but something playing what is essentially a functional role in all societies. He tells us, ‘Ideology is not an aberration or a contingent excrescence of History: it is a structure essential to the historical life of societies’ (Althusser, 1969, p. 232). And it follows necessarily from this that ‘historical materialism cannot conceive that even a communist society could ever do without ideology be it ethics, art or “world outlook"’. (Althusser, 1969, p. 232). Ideology, for Marx a product of definite social conditions (and in particular the division between mental and manual labour which arises with class society), is made by Althusser into a product of all societies. Fetishism (which Marx sees arising specifically in connection with commodity-capitalist economic forms) can for Althusser have no specific material basis in definite production relations.

One task involved in refuting Althusser’s view – which involves amongst other things the attempt to draw a rigid distinction between ‘ideology’ and ‘science’ – is to demonstrate how Marx traces the fetishistic forms associated with capitalist economy from their simplest forms to the more complex, which are discussed in Capital, Volume III. Here again it is necessary to bring out the connection, the unity, between ‘logic’ and ‘history’, of being and social consciousness. If the commodity is the cell-form of all the social relations of capital, the embryo out of which all those higher forms historically emerge, then the commodity constitutes also the cell-form for all those ‘necessary illusions’ which dominate present society. We shall, in dealing with this problem, have to stress one point: Marx does much more than recognize that political economy deals uncritically with reified categories. Nor was he content merely to reveal that the inverted way in which the social relations appear in capitalist society arises from the essence of the social relations of production which form the basis of this society. He wanted to show that the more the capitalist mode of production develops, the more the social relations increasingly confront men as an external dominating power.

By means of its conversion into an automaton, the instrument of labour confronts the labourer, during the labour-process in the shape of capital, of dead labour, that dominates and pumps dry, living labour-power. The separation of the intellectual powers of production from the manual labour, and the conversion of those powers into the might of capital over labour, is, as we have already shown, finally completed by modern industry erected on the foundation of machinery. The special skill of each individual insignificant factory operative vanishes as an infinitesimal quantity before the science, the gigantic physical forces, and the mass of labour that are embodied in the factory mechanism and, together with that mechanism, constitute the power of the ‘master’. (I, p. 423)

And this power is a real, not ‘illusory’ power. And because it is a real power, it brings real powers, the working class, into conflict with it. Marx stresses this point in the course of his discussion ‘Machinery and Modern Industry’:

Hence the character of independence and estrangement which the capitalist mode of production gives to the instruments of labour and to the product, as against the workman, is developed by means of machinery into a thorough antagonism. Therefore it is with the advent of machinery, that the workman for the first time brutally revolts against the instruments of labour. (I, p. 432; author’s italics)

In other words, the very development of the fetishism of the products of man’s labour under capitalism – seen in naked form with the emergence of modern industry – brings with it, at the same time, the social force with the potential to bring about an end to this fetishism. History does not set only ‘problems’, it always, in setting these problems, also brings into being the necessary forces through which these problems can be overcome.

Mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation. (Marx, 1971a, p. 21)

So for Marx the growth of fetishism, far from being an indication of the growing ability of capital to suppress the revolutionary struggle of the working class, is on the contrary an expression of the ever-growing contradictions of capitalist society which bring the working class face-to-face with these contradictions.

The growing accumulation of capital implies its growing concentration. Thus grows the power of capital, the alienation of the conditions of social production personified in the capitalist, from the real producers. Capital comes more and more to the fore as a social power, whose agent is the capitalist. This social power no longer stands in any possible relation to that which the labour of a single individual can create. It becomes an alienated, independent social power which stands opposed to society as an object, and as an object that is the capitalist’s source of power. The contradiction between the general social power into which capital develops, on the one hand, and the private power of the individual capitalists over these social conditions on the other, becomes even more irreconcilable and yet contains the solution of the problem because it implies at the same time the transformation of the conditions of production into the general, common, social, conditions. This transformation stems from the development of the productive forces under capitalist production, and from the ways and means by which this development takes place. (III, p. 259; author’s italics)

As we have said, Marx’s task was to reveal the origin of this reification in its most simple form, commodity production. Let us begin with the simplest expression of this perversion which reaches its high point in capital – that is with the elementary value form itself, 20 yards of linen = 1 coat. This is the first expression of the ‘externalization’ or ‘alienation’ of the opposition between value and use-value which exists in every commodity. From this point all the higher forms of fetishism can be considered as a growth in the contradiction between the production of use-values and the social forms through which that production develops. When commodities come into the world as use-values this is merely their ‘plain, homely, bodily form’.

They are, however, commodities only because they are something two-fold, both objects of utility and at the same time depositories of value. They manifest themselves therefore as commodities, or have the form of commodities only in so far as they have two forms, a physical or natural form and a value-form. (I, p. 47)

It is this fetishism, inherent in commodities, which is more clearly and strikingly expressed in gold. In making this point, Marx refers to the value-form of the commodity as ‘ideal’.

The price or money-form of commodities is, like their form of value generally, a form quite distinct from their palpable bodily form, it is therefore, a purely ideal or mental form. Although invisible, the value of iron, linen and corn has actual existence in these very articles. (I, p. 95)

Now what does it mean to say that the value-form is ‘purely ideal’? Does this mean that, like value, money is purely a mental state, a figment of individual imagination? Clearly this is not what Marx means.

The ideality of value

For Marx, value is an expression of a definite social relation. And we know that for Marx social relations were objective – therefore value cannot be something present merely in consciousness. Similarly, Marx explicitly rejected the idea that money was a mere symbol, that is, he rejected the notion that money was something purely imaginary, thus ‘although gold and silver are not by Nature money, money is by Nature gold and silver’. What does Marx mean therefore, when he tells us that money is a purely ideal form? In his essay ‘The Concept of the Ideal’, the Soviet philosopher Ilyenkov, in examining this question of Marx’s use of the term ‘ideal’, has done much to throw light on the notion of fetishism (see Ilyenkov, 1977a, pp. 71-99). As he notes, the term ‘ideal’ is used today largely as a synonym for ‘conceivable’, phenomena that are represented, imagined and thought. (if we were to follow this definition, as he correctly points out, there would be no point in talking about any ‘ideality’ existing outside human consciousness.) When Marx uses the term ideal in connection with the value-form, he certainly does not mean something present only in consciousness. On the contrary – and this is Ilyenkov’s main point in connection with the value-form – Marx means that the value-form is ‘ideal’ because it is totally distinct from the palpable, corporeal form of the commodity in which it is presented. In other words, the value-form is ‘ideal’ but certainly exists outside human consciousness. As Ilyenkov states, in what is a clear reference to the degeneration of philosophical work under the impact of Stalinism,

This use of the term may perplex the reader who is accustomed to the terminology of popular essays on materialism and the relationship of the material to the ‘ideal’. The ideal that exists outside people’s heads and consciousness, as something completely objective, a reality of a special kind that is independent of their consciousness and will, invisible, impalpable and sensuously imperceptible, may seem to them something that is only ‘imagined’, something ‘supersensuous’. (1977a, p. 72)

As Ilyenkov argues, the term ‘ideal’ in this debased version of materialism, has more in common with Kantianism and the pre-Hegel tradition in philosophy than it has with Hegel (and, by extension, with Marx). For Hegel,

This relationship of representation is a relationship in which one sensuously perceived thing performs the role or function of representation of quite another thing, and, to be even more precise, the universal nature of that other thing, that is, something ‘other’ which in sensuous bodily terms is quite unlike it, and it was this relationship that in the Hegelian terminological tradition acquired the title of ‘ideality’. (1977a, p. 84)

It is clear that if we follow this line, Marx’s designation of the value-form as ‘ideal’ takes on a quite different meaning than it would for a ‘simplistic’ materialism, and a meaning which throws much light on Marx’s notion of fetishism. By ‘ideal’ Marx in no way means that the value-form exists only in the brain of the commodity owner, but in the fact that the corporeal form of a thing (the coat) is only a form of expression of a quite different ‘thing’ (linen as a value) with which it has nothing in common. The nature of this linen is represented, expressed, embodied, in the form of a coat and the coat is the ‘ideal’ or ‘represented’ form of the value of the linen. And far from being something expressed only in consciousness, this representation expresses a relationship entirely objective, which actually determines the behaviour of man without his being aware of it. The social relations under which the linen is produced find their embodiment, their representation, not directly, not immediately, but in the mediated form of the coat. These social conditions are alienated in the form of the coat. The transformation of nature by man which is involved in the production of linen, a definite form of human objective activity, is represented in an ‘object’, the coat. And this is what Marx means by ideality – the form of human social activity represented in a thing. Ilyenkov puts the point this way:

‘Ideality’ is a kind of stamp impressed on the substance of nature by social human life activity, a form of the functioning of the physical thing in the process of this activity. So all the things involved in the social process acquire a new ‘form of existence’ that is not included in their physical nature and differs from it completely – their ideal form. (1977a, p. 86)

The commodity form is ‘ideal’ precisely because it does not include a single atom of the substance of the body in which it is represented, because it is the form of quite another body. And this other body exists only ideally; the chemical analysis of gold will find within it not a single atom of boot polish. Nevertheless gold ‘represents’ a hundred tins of boot polish (say), and this representation is performed not in the consciousness of the seller of the polish – it takes lace through a market according to forces which in no sense depend on any consciousness of the money-form. Everybody spends money without necessarily being aware of what he is spending. (As Ilyenkov correctly notes, ‘In Capital Marx quite consciously uses the term “ideal” in this formal meaning that it was given by Hegel, and not in the sense in which it was used by the whole pre-Hegelian tradition.’ This example alone serves to show that Marx did far more than ‘coquette’ with Hegel’s terminology.)

It is in this sense that the simplest value-form (20 yards of linen 1 coat) contains the essence of the fetishism inherent in all bourgeois economic forms. The ‘peculiarities’ of this form (abstract labour in the linen taking a form directly opposed to it, the concrete labour in the coat, etc.) thus contain the key to grasping the riddle and source of the fetishism of all bourgeois economic forms.

The reification of production relations associated with simple commodity production develops further with money. The ‘riddle of the money fetish now becomes dazzling to our eyes’, says Marx. In one of his earliest economic writings he had written about the fetish quality of money as follows:

Why must private property develop into the money-system? Because man as a social being must proceed to exchange and because exchange – private property being presupposed must evolve value. The mediating process between men engaged in exchange is not a social or human relationship, it is the abstract relation of private property to private property and the expression of this abstract relationship is value whose real existence as value constitutes money. Since men engaged in exchange do not relate to each other as men, things lose the significance of human personal property. (Marx, 1975a, pp. 212-13)

This was written in 1844 as notes on James Mill’s Elements of Political Economy. It serves to indicate once more that Marx’s notion of fetishism found in Capital was a true development of all his previous economic writings right back to the 1840s. (It puts Althusser’s much vaunted ‘epistemological break’ into true perspective.) Marx continues:

The personal mode of existence of money as money – and not only as the inner, implicit, hidden social relationship or class relationship between commodities – this mode of existence corresponds more to the essence of money, the more abstract it is, the less it has a natural relationship to other commodities, the more it appears as the product and yet the non-product of man.

All the products in a situation of commodity production have first to be exchanged for a third material thing, in order that these commodities can receive their adequate social validation. This material medium has become independent of the world of commodities – this provides the basis for the emergence of money. And it is through this medium of money and through it alone that man’s social bond is established. Man carries his social power in his pocket. In this sense, as the power of money grows, it constitutes the ‘objective bond of society’ the ‘real community’ as Marx at one point characterizes it. Thus, far from money overcoming the reification inherent in the simplest exchange of two commodities, this fetishism is heightened and intensified. Thus Marx tells us,

The same contradiction between the particular nature of the commodity as product and its general nature as exchange-value, which created the necessity of positing it doubly, as this particular commodity on the one side and money on the other ... contains from the beginning the possibility that these two separated forms in which the commodity exists are not convertible into one another. (G, pp. 147-8)

That is, the contradiction between use-value and value is not definitely, finally, resolved in money, it is externalized, made more open, more antagonistic. Not merely does the value of one commodity have to realize its value in another commodity, now, in the money form, all commodities have to express their value in one single commodity. This reification of social relations is more extreme, but, by this very fact, so is the possibility of crisis. Hence:

As soon as money has become an external thing alongside the commodity, the exchangeability of the commodity for money becomes bound up with external conditions which may or may not be present, it is abandoned to the mercy of external conditions. (G, p. 147)

And this is not all. In the exchange of commodities further contradictions arise. For the act of exchange is split into two mutually independent acts, namely exchange of commodities for money and exchange of money for commodities – in short purchase and sale (C-M-C). The acts take place at different times and places and their immediate identity is destroyed. If purchase and sale balance, this balance can only be the result of accident, never of conscious will.

Circulation bursts through all restrictions as to time, place, and individuals, imposed by direct barter, and this it effects by splitting up, into the antithesis of a sale and a purchase, the direct identity that in barter does exist between the alienation of one’s own and the acquisition of some other man’s product. To say that these two independent and antithetical acts have an intrinsic unity, are essentially one, is the same as to say that this intrinsic oneness expresses itself in an external antithesis. If the interval in time between the two complementary phases of the complete metamorphosis of a commodity becomes too great, if the split between purchase and sale becomes too pronounced, the intimate connection between them, their oneness, asserts itself by producing a crisis. (I, pp. 113-14)

Fetishism and economic crisis

Marx immediately follows this with a passage which underlines the point we are here at pains to stress – that the growing reification of economic relations – the process whereby they are increasingly attached to things and their connection with human labour, man’s practice, appears to be less and less immediately obvious, involves the very same process which creates within capitalism the source of its breakdown. That is, the theory of fetishism and theory of capitalist crisis are in Capital completely united, inseparable.

The antithesis, use-value and value: the contradictions that private labour is bound to manifest itself as direct social labour, that a particular concrete kind of labour has to pass for abstract human labour; the contradiction between the personification of objects and the representation of persons by things; all these antitheses and contradictions, which are immanent [author’s emphasis] in commodities, assert themselves and develop their modes of action in the antithetical phases of the metamorphosis of a commodity. (G, p. 414)

Purchase and sale are equally essential but ‘there must come a moment when the independent form is broken and when their inner unity is established externally through a violent explosion ... there lies the germ of crisis’ (G, p. 198). Here is only a germ, a ‘possibility’ of a crisis and further development is required before this possibility is transformed into a reality. Hence ‘The conversion of this mere possibility into a reality is the result of a long series of relations, that, from our present standpoint of simple circulation, have as yet no existence’ (I, p. 114).

This path, from possibility to reality, is treated by Marx when he traces the growing independence of this money-form, separated from the products it ‘represents’. Exchange separates itself out as an independent aspect, cut off from the actual production of commodities. Now commodities are bought not only for consumption but for resale. The obtaining of exchange-value becomes the object of these latter transactions. ‘The rise of exchange (commerce) as an independent function torn away from the exchanges corresponds to the rise of exchange-value as an independent entity in money, torn away from products’ (G, p. 149). And here the possibility of crisis is now considerably enhanced:

This doubling of exchange – exchange for the sake of consumption and therefore exchange for exchange – gives rise to a new disproportion.... The possibility of commercial crisis is already contained in this separation. But since production works directly for commerce and only indirectly for consumption, it must not only create but also and equally be seized by this incongruity between commerce and exchange for consumption. (G, p. 149)

And finally, the emergence of money as the general equivalent in which all concrete labour is objectified cannot escape the contradiction that while money is a commodity unlike any other particular commodity, it nevertheless does remain a particular commodity. Gold still has to be brought out of the ground, refined, transported, etc. It still has to be produced as a commodity. The opposition of the money-commodity to the world of commodities can never be absolute. As Marx says of money: ‘It is not only the exchange-value, but at the same time a particular exchange-value. Hence a new source of contradictions which make themselves felt in practice’ (G, p. 151).

Now of course the analysis of the fetish character of money does not exhaust the fetishism of bourgeois economy. This fetishism grows and develops along with the emergence and development of capital. As we have seen, it is a growth in which (a) the social relations between men, based upon their labour, become increasingly obscured, hidden behind the things which this labour produces. The inner connection between these outward forms is increasingly lost and can only be grasped through strict scientific analysis but (b) this development is accompanied, and must be accompanied, by an equal growth in the coercive power of these alienated forms (money, capital, etc.) which increasingly stand as oppressive forces, opposed to the needs of the working class. So the increasing ‘reification’ of these forms goes hand-in-hand with the conditions for their overthrow. The growing social power of capital brings it increasingly into conflict with the needs of society as a whole. The growth of this fetishism inherent in commodity production reaches its consummate expression in interest-bearing capital (M-M'). This, says Marx, is the ‘mystification of capital in its most extreme form’ (Marx, 1972, p. 494). And elsewhere,

of all these forms, the most complete fetish is interest-bearing capital. This is the original starting point of capital-money and the formula M-C-M’ is reduced to its true extremes M-M’, money which creates more money. It is the general formula of capital reduced to a meaningless résumé. (1972, p. 453)

Interest-bearing capital is capital which ‘no longer bears any birth mark of its origin’; it represents ‘the perversion and objectification of productive relations to the highest degree’; it is ‘only form without content’ (1972, p. 384).

In a very interesting passage Marx deals with the various forms of capital in order to demonstrate that this interest-bearing capital is the automatic fetish, where money appears to breed money, where capital appears able to expand without reference to any natural-objective factors such as the length of the working day, size of the proletariat, etc. To illustrate his point, Marx takes the elements of the Trinity Formula in full:

The land or nature as the source of rent i.e. landed property is fetishistic enough. But as a result of a convenient confusion of use-value with exchange-value the common imagination is still able to have recourse to the productive power of nature itself, which, by some kind of hocus-pocus, is personified in the landlord. (1972, p. 454)

Marx turns next to the formula ‘Labour is the source of wages’, and demonstrates that here there is a confusion between labour as a material activity and labour in a definite social form. However, despite this,

the common conception is so far in accord with the facts that even though labour is confused with wage-labour and, consequently, wages, the product of wage-labour with the product of labour, it is nevertheless obvious to anybody who has commonsense that labour itself produces its own wages. (1972, p. 454)

Similarly, when capital is considered as part of the productive process, it still continues to be regarded as an instrument for acquiring the labour of others, and ‘here the relationship of the capitalist to the worker is always presupposed and assumed’. (1972, p. 454). And even though in the case of merchant capital, capital appearing in the process of circulation where ideas that profit arises from swindling, ‘buying cheap and selling dear’, etc. – even here profit is explained as a result of exchange, that is, arising from a social relation and not from a thing (1972 p. 454). Quite different is interest-bearing capital:

It is capital in its finished form – as such representing the unity of the productive process and the circulation process [here is the subject of Volume III] and therefore yields a definite profit in a definite period of time. In the form of interest-bearing capital only this function remains, without the mediation of either productive process or circulation process. ... Interest-bearing capital is the consummate automatic fetish, the self-expanding value, the money making money, and in this form no longer bears any trace of its origin. The social relation is consummated as a relation of things (money, commodities) to themselves. (1972, p. 454)

Marx deals with these forms in Volume III but the actual growth of the fetishism is traced throughout the entire work. Considering the road travelled by capital before it appears in interest-bearing capital’ (1972, p. 48 1), Marx examines the connection between the circulation process and the creation of surplus value. Whereas, in the immediate production process, the relationship is still very obvious or cannot be misunderstood, ‘The circulation process obliterates and obscures the connection. Since here the mass of surplus-value is also determined by the circulation time of capital, an element foreign to labour-time seems to have entered’ (1972, p. 482). And when we come to profit (as distinct from surplus value) the inner connection between labour-time and the economic forms is even more obscured and reified in things.

This profit is first received for a definite period of circulation of capital, and this period is distinct from the labour-time; it is secondly, surplus-value calculated and drawn not on the part of capital from which it originates directly, but quite indiscriminately on the total capital. In this way its source is completely concealed. Thirdly, although the mass of profit is still quantitatively identical in the first form of profit with the mass of surplus-value produced by the individual capital, the rate of profit is, from the very beginning, different from the rate of surplus-value; since the rate of surplus-value is s/v and the rate of profit is s/c+v. Fourthly, if the rate of profit is presumed given, it is possible for the rate of profit to rise or fall and even to move in the opposite direction to the rate of surplus-value. (1972, p. 482)

The price of production and fetishism

And the matter becomes even more obscured when we consider the average rate of profit and with it the conversion of values into cost prices. Here,

the profit of individual capital becomes different from the surplus-value produced by the individual capital in its particular sphere of production, and different, moreover, not only in the way it is expressed – i.e. rate of profit as distinct from rate of surplus-value – but it becomes substantially different, that is, in this context, quantitatively different. (1972, pp.482-3)

In this form of profit:

Capital more and more acquires a material form, is transformed more and more from a relationship into a thing, but a thing which embodies, which has absorbed, the social relationship, a thing which has acquired a fictitious life and independent existence in relationship to itself, a natural-supernatural entity; and in this form of capital and profit it appears superficially as a ready-made precondition. It is the form of its reality, or rather its real form of existence. And it is the form in which it exists in the consciousness and is reflected in the imagination of its representatives, the capitalists. (1972, p. 483)

The point here is this: the formation of ‘prices of production’ constitutes a more perverted and estranged form than ‘value’ for now, outwardly, the price of production depends not upon labour, but upon capital. This development of fetishism is a reflection not only of increasing mystification but of the contradictory development of the social relations of production. That the formation of an average rate of profit – and the contradiction this entails between value and price – is itself engendered by the development of the productive forces was many times stressed by Marx. Thus:

What competition, first in a single sphere achieves, is a single market value and market price derived from the various individual values of commodities. And it is competition of capitals in different spheres which first brings out the price of production equalising the rate of profit in the different spheres. The latter process requires a higher development of capitalist production than the previous one. (III, p. 177; author’s italics)

It is because of the growing disparity in the organic composition of capitals between and within industries, that values are transformed into production prices. The regulator of capital accumulation, the establishment of an average rate of profit, demands a deviation, a ‘contradiction’ between price and value; this is a contradiction made not in thought but in material reality. In this form, ‘price of production’, is reflected the growing social power of capital. For now the capitalists as a class take part in the exploitation of the working class as a class. Expressed in this ‘thing’ the price of production, is the growing antagonism between the two major classes, an antagonism raised to the level of society as a whole:

In each sphere [it transpires that] the individual capitalist, as well as the capitalists as a whole, take part in the exploitation of the total working class by the totality of capital and in the degrees of that exploitation not only out of general class sympathy, but also for direct economic reasons. For, assuming all other conditions ... to be given, the average rate of profit depends on the intensity of exploitation of the sum total of labour by the sum total of capital. (III, p. 193)

In this form (production prices) Marx notes ‘capital becomes conscious of itself as a social power in which every capitalist participates proportionally in his share of the total social capital’. (III, p. 191). The capitalists now become communists, as Marx wryly observes. But at the same time the material conditions are laid for the unity of the working class in its struggle against the entire capitalist class.

Enough has been said about these forms of surplus value to reveal the truth of Marx’s proposition that economics is not concerned with things, but with relations between people, and in the last resort between classes, but that these relations ‘are always bound to things and appear as things’ (Engels). In place of the fetishized categories which bourgeois social science uncritically adopted, Marx presented a quite different conception of the process of social production, that is, one which started not with a view of things ‘in themselves’ but a process in which men, in unity with nature and with other men, continually renew both themselves and the world of wealth which they create. As Rubin has rightly said, this revolutionary conception of the scope and nature of political economy involved drawing a consistent distinction between the material process of production on the one hand and its social form on the other. It is under capitalism (as it develops out of commodity production) that these social relations acquire a material form and because of this the ‘things’ to which the social relations are attached play a definite social role: as the ‘bearer’ of the given social relations. The basic notions of political economy express the essence of the various social-economic forms which in turn express the developing production relations between the classes in capitalist society. As Rubin has said, ‘some of these relations between and among people presuppose the existence of other types of production relations among the members of a given society and the latter do not necessarily presuppose the existence of the former’ (1972, Ch. 4). He gives, as an example, the relationship between finance and industrial capital (ibid. p. 32). This relationship involves industrial capital’s receiving loans from finance capital; but presupposed here, or more accurately, sublated here are the relations between industrial capital and wage labour. On the other hand this latter relationship – between industrial capital and wage labour – does not necessarily involve relations between industrial and finance capital. From this it is clear that the economic categories ‘capital’ and ‘surplus value’ precede the categories ‘interest-bearing’ capital and ‘interest’. To take this point further, the relations between industrial capital and the working class take the form of the sale and purchase of labour-power. Sublated here are the relations of simple commodity producers without which the buying and selling of labour-power would, of course, be impossible.

The functions of money

We have noted in several places that in Marx’s opinion classical economic theory had singularly failed to grasp the nature of money.[2] And the confusion which surrounded this problem amongst the leading bourgeois economists in the first decades of the nineteenth century found its reflection amongst the theoreticians of the working class. This is clear in Marx’s polemics against Proudhon and his analysis of the writings of the English socialists on the nature of money. The mistakes committed by these writers amounted, in essence, to a failure to understand the fetishism inherent in money; or where there was some inkling of this fetishism (Hodgskin has already been mentioned), its source was not appreciated. We can therefore conveniently draw together some of the points made about Marx’s notion of alienation by considering the functions performed by money in capitalist economy as well as the mistakes made by Marx’s opponents on this question. For Marx, money fulfils the following functions:

1 Measure of value
2 Medium of commodity circulation
3 Means of accumulation (hoarding)
4 Means of payment
5 World money

Right from the start we should be careful to realize that Marx is not ‘defining’ money in any abstract sense. ‘It is not a question here of definitions which things must be made to fit. We are dealing here with definite functions which must be expressed in definite categories’ (11, p. 230). This point, which has considerable importance for Marx’s method as a whole, applies entirely to his notion of money. Marx, in his treatment of the functions of money, is actually pointing to the role which money, appearing as a thing, plays in the organization of the social relations of capitalist production. As with all his categories, the functions of money express production relations and the various functions represent the changes taking place in the production relations which the development of capitalism brings. This is stressed by Marx when he says,

The particular functions of money which it performs, either as the mere equivalent of commodities, or as a means of circulation or means of payment, as hoard, or as universal money, point, according to the extent or relative preponderance of the one function or another, to very different stages in the process of social production. (I, p. 170; author’s italics)

Here once more is expressed the great gap separating Marx from vulgar political economy. Conventional economic thought contents itself with enumerating various types of money systems, some of which exist in reality, others merely in the imagination. Marx used to remark ironically how proud the economists were with the discovery that money was a commodity. But vulgar economy has forgotten even this discovery of its predecessors. For economic theory, especially since the collapse of the Gold Standard in the 1930s, the commodity is only one of a number of possible money-forms. On this view we seem to be offered a choice, as if we were able to select the most suitable money-type after considering all the advantages and disadvantages of the various possible alternatives. Needless to say, all such ‘theories’ are quite devoid of any historical sense. Neither money, nor any of the various functions it fills, are the result of ‘discoveries’; the various money systems did not arise because people consciously weighed their comparative advantages. They have all emerged out of definite social relations, or, more specifically, out of the contradictions of commodity production and circulation. For Marx, money reflects definite social relations, a point emphasized by Rubin when, in his discussion of the nature of fetishism, he deals with the various functions of money in the following way:

1 If the transfer of goods from sellers to buyers and the inverse transfer are carried out simultaneously, then money assumes the function, acts as, a ‘medium of circulation’.

2 if the transfer of goods precedes the transfer of money, and the relation between sellers and buyers is transformed into a relation between debtor and creditor, then money has now assumed the form of a ‘means of payment’.

3 If the seller keeps the money which he receives from his sale, postponing the moment when he enters a new relationship as a purchaser, then money has acquired the function-form of a ‘hoard’.

4 Once the emergence of capitalism takes place and a relationship between a commodity owner (capitalist) and a commodity owner (the worker selling his labour power) is established through the transfer of money, then money has become transformed into capital. The money which directly connects the capitalist with the worker plays the role, or takes the form of ‘variable capital’. But to establish the necessary relationship with the worker, the capitalist must of necessity possess means of production, or money with which to buy the means of production. In this form money plays the role of ‘constant capital’.

Here are expressed the various ‘sides’ or ‘aspects’ of money, as they have actually come into being. Marx’s task (as with all the reified forms of bourgeois economy) was to grasp the historical character of the various functional forms of money, or its ‘conceptually determined forms of existence’, as the Grundrisse puts it. So the various functions of money cannot be reduced to a series of formal definitions, akin to those encountered in conventional textbooks of economics. The functions dealt with in Capital were the ones which money has actually played (and continues to play) in the evolution of bourgeois economy. The properties of money were abstracted from history. Thus the first specific form of money lies in its function as a measure of value – the first because it emerges directly from commodity circulation ‘The principal difficulty in the analysis of money is surmounted as soon as it is understood that the commodity is the origin of money’ (I, p. 64). And all the functions, as evolved in Marx’s analysis, must be seen in the same way – as expressions, in the alienated form of this metal, of definite social relations. As commodity production develops so money assumes its various roles, revealing its essential quality in its highest form as world money, universal money.

It is only in the markets of the world money acquires to the full extent the character of the commodity whose bodily form is also the immediate social incarnation of human labour in the abstract. Its real mode of existence in this sphere adequately corresponds to its ideal concept. (I, p. 142)

All the mistakes of political economy in connection with money take the following basic form: one aspect of money, one of its several functions, is isolated from the rest and elevated to the rank of being the defining function of money, one from which all the rest can be derived. Rosdolsky quotes H. Black, a critic who none the less appears to have some insight into Marx’s work,

The strict division of these functions from the substance of money (social value) and likewise the separation of the functions from one another, is a striking feature of Marx’s theory of money. Other theoreticians define money as a means of commerce, a unit of account, a means of exchange or a means of payment, i.e. they elevate one particular function to the position of being the determining function on money and then somehow derive all the remaining functions from the main one. In contrast to this Marx strictly separates the essence of money from the services which it is able to perform, owing to its particular character. (Rosdolsky, 1977, p. 135)

But if political economy derived the functions of money from one basic function this derivation was necessarily devoid of any historical content. And for Marx this mistake – which led to a confusion of money’s various functions – is one concerned not with economic theory as such, but again involves philosophical questions. For political economy, as we have seen, the social relations of capital were fixed by Nature. It was the very nature of ‘things’ which determined the social relations of capital. The political economists did not grasp that these ‘things’ were the bearers of historically changing and developing social relations and therefore the changing social function of these ‘things’ (money, means of production, etc.) had to be examined. For Marx the various functions of money, as they had evolved, represented the development of the social relations of modern society. This is why all the various functions of money, in their transition and interconnection, had to be investigated. To abstract merely one function of money (as instrument of circulation, means of accumulation) was, in effect, to deny the historical character of bourgeois social relations. For this had the result of isolating this ‘thing’ (gold) from that totality of social relations which this metal, in its diverse functions, represented. To grasp the role of money in modern society (that is to grasp it concretely) it was necessary to combine its many abstract properties into a series of concepts. This is why the essence of money only emerges at its highest level when it fulfils the role of world money and hence ‘Its real mode of existence in this sphere adequately corresponds to its ideal concept.'

Mistakes of the type we have mentioned were clearly evident in the metalist theory of money, a theory which is associated with the early development of capitalism. The early representatives of this school, such as Thomas Mun (1571-1641), held that gold and silver were the only true forms of wealth, trade capital the only legitimate form of capital, and they confined the functions of money to the single one as a means of accumulation (money as a hoard). They attempted to explain this single function of gold by reference to its very nature. In replying to these ideas, Marx shows that objects of one kind or another only assume the various functional forms of money as the social relations demand. This the adherents of metalism failed to grasp. Contemporary metalists aim to show, but without success, that the instability of capitalist economy and its contradiction can be eliminated and capitalism rescued by means of the ‘miraculous’ power of gold.

Marx’s treatment of ‘money as hoard’ also brings out another important point connected with the question of fetishism. When we said that Marx ‘combined’ the abstract properties of money, this should not he taken to mean that he eclectically pulled together the various functions of money as they had existed historically. This ‘combination’ is always undertaken from the standpoint of developed capitalist relations. (The analogy of the relationship of ape to man holds fully here.) The hoard is, in one respect, the clearest form of money’s anatomy. But although the formation of hoards is a process common to all commodity production, it constitutes an end in itself only where this commodity production remains underdeveloped – that is, where it has not reached the level of capitalist commodity production. This is so because the less intensively and extensively has commodity production developed, the more does money appear as actual wealth, wealth as such, wealth in general. The accumulation of wealth in the form of the precious metals precedes the accumulation of wealth in the form of other commodities. This is due to the natural properties of the noble metals – their durability, etc. Under developed capitalist conditions hoarding continues and money, in one of its functions, plays the role of hoard, as one of the means of accumulation. But this role is now qualitatively different’ The same object (metal) now assumes a quite new role, expressing quite new, more developed, social relations. Needless to say, therefore, these social relations can in no way be deduced from the natural qualities of this metal. Now the function of money as hoard must be understood from the point of view of the circuit of capital in general (M-CM'). Hoarding is now a resting place in this process. Whereas in pre-capitalist economy the accumulation of hoards signified wealth, now their over-accumulation signifies stagnation, a withdrawal from the circuit of capital, an interruption in the process of their metamorphosis. Thus:

Countries in which the bourgeois form of production is developed to a certain extent, limit the hoards concentrated in the strong room of the banks to the minimum required for the proper performance of their peculiar functions. Whenever these hoards are strikingly above their average level, it is, with some exceptions, an indication of stagnation in the circulation of commodities, of an interruption in the even flow of their metamorphosis. (I, p. 145)

Ricardo’s notion of money

This same mistake – taking one particular function of money out of its real historical context and deriving the rest from it – was made by Ricardo and his school, although from a different angle than in the case of metalism. The error committed by Ricardo consisted of the fact that he raised to the level of dogma that money was merely a medium of circulation. According to Ricardo’s conception, money is only an instrument for the circulation of commodities. It was not, for him, a necessary form of the existence of the commodity in which the contradictory nature of the labour embodied in the commodity (abstract and concrete labour) must manifest itself in exchange-value, as general social labour. Money was, for the Ricardians, a means for effecting the union of purchase and sale, of the buyers and sellers of products. The exchange of commodities was transformed unwittingly into the mere barter of products, of simple use-values. This represented a return not only to pre-capitalist production relations, but even to conditions prior to simple commodity production. Circulation, like all economic relations, has two aspects, closely related. In so far as this circulation transfers commodities from those for which they constitute non-use-values to those for whom they are use-values, this process consists simply of the appropriation of objects for human needs. However, to the extent that this process takes place through private exchange, mediated by money, and the relations between these commodities (and indirectly the buyers and sellers of the commodities themselves) to one another are objectified in the different forms of money, then it gives rise to definite social relations. Marx is careful to distinguish these two aspects, making the latter the subject matter of political economy. But Ricardo reduces this latter relationship to the former. And implied here was the denial of any possibility of capitalist crisis. This was so precisely because the first, basic, condition of capitalist production, is that the product of labour must assume the commodity-form, and therefore this product must express itself in the alienated form of money.

Since the transformation of the commodity into mere use-value (product) obliterates the essence of exchange-value, it is just as easy to deny, or rather it is necessary to deny, that money is an essential aspect of the commodity and that in the process of metamorphosis it is independent of the original form of the commodity. (Marx, 1971b, pp. 501-2)

This same point is made against vulgar economy with even more force.

With regard to this subject, we may notice two methods characteristic of apologetic economy. The first is the identification of the circulation of commodities with the direct barter of the products, by simple abstraction from their points of difference; the second is, the attempt to explain away the contradictions of capitalist production, by reducing the relations between the persons engaged in that mode of production, to the simple relations arising out of the circulation of commodities. The production and circulation of commodities are, however, phenomena that occur to a greater or lesser extent in modes of production the most diverse. If we are acquainted with nothing but the abstract categories of circulation, which are common to all these modes of production, we cannot possibly know anything of the specific points of difference of these modes, nor pronounce any judgement upon them. In no science is such a big fuss made with commonplace truisms. For instance, J. B. Say sets himself up as a judge of crises, because, forsooth, he knows that a commodity is a product. (I, footnote, p. 114)

It was the ahistorical, formal view of money which Ricardo developed into the quantity theory of money. This theory, which affirms that the value of money (be it gold or paper) is determined exclusively by the quantity of it in circulation, took shape in the eighteenth century. Its principal exponent at that time was Hume, who held that money lacked any innate value, that its value arose solely as a result of its functioning as currency. With Ricardo’s view of the essence of money one can see yet another example of the inconsistency of his economic theory. From the standpoint of the law of value he held that gold and silver did indeed have an innate value, determined (as in the case of all commodities generally) by the quantity of labour involved in their production. At the same time he held that gold coins had more or less value according to the number in circulation and that, as the quantity of gold increased, its value would fall. Here was a clear deviation from Ricardo’s value theory. Reducing the essence of money to a simple function (instrument of circulation) the upholders of the quantity theory of money confused the laws of full-value gold money and token money (paper money) and wrongly assumed that any quantity of full-value gold money could be in circulation at any one moment. From this it followed that commodities entered circulation without a price and money without a value, and that prices of commodities altered according to the quantity of money on the market. In criticizing this theory, Marx shows that only the quantity of full-value money actually needed enters circulation and this quantity is fixed spontaneously, according to the law of value. Money (gold) has its own value, formed in production before the process of circulation. It fulfils its function as the measure of value of commodities before the direct act of purchase and sale. Marx says,

The first chief function of money is to supply commodities with the material for the expression of their values, or to represent their values as magnitudes of the same denomination, qualitatively equal, and quantitatively comparable. It thus serves as a universal measure of value. And only by virtue of this function does gold, the equivalent commodity par excellence become money. (I, p. 94)

Commodities therefore enter circulation with a price and money with a specific value and it is thus impossible for the quantity of gold money to be more or less than that needed. Hence the depreciation of monetary gold in the seventeenth century (to which those adhering to the quantity theory usually referred) was the result not of a surplus of gold in circulation, but of an increase in the productivity of labour in gold mining and a consequent fall in the value of gold.

This inability to see in money the universal measure of value led not only to a series of mistakes about the determination of the general price level. It was directly connected with Ricardo’s false search for an invariable measure of value. This is a problem we have already looked at, but can return to briefly in the light of the discussion of fetishism. To insist, as we have done, that fetishism is a phenomenon of the very being of capital amounts to exactly the same as insisting that the ‘measurement’ of all commodities in one alienated (money) commodity is an objective, necessary process and not the ‘invention’ of man. All those who think there can be some invariable measure of value in fact completely misunderstand the nature of capital. It is because man’s production relations are indirect, relations mediated through things, that there can never be any invariable measure of value, be it ‘labour’, ‘money’ or the currently fashionable Sraffian ‘standard commodity’. Values are measured spontaneously, becoming embodied in one commodity (money) because the production relations are not, and cannot be, planned in advance. To deny this is to deny one of the basic qualities of capitalism as a mode of production. The task of true science here is therefore not to invent fictitious ‘measures’ but to demonstrate how this spontaneous process of measurement actually takes place. The neo-Ricardian school does not even begin to understand this point. All those who wish to discover some standard of value in effect want to transform capitalism into a system capable of conscious planning. In short they want to retain capital while removing its contradictions. Stressing the need for money as a ‘thing’ in which the values of all commodities must be alienated, Marx says,

To the owner of a commodity, every other commodity is, in regard to his own, a particular equivalent, and consequently his own commodity is the universal equivalent for all others. But since this applies to every owner, there is, in fact, no commodity acting as universal equivalent, and the relative value of commodities possesses no general form under which they can be equated as values and have the magnitude of their values compared. So far, therefore, they do not confront each other as commodities, but only as products or use-values. (I, p. 86)

How is this contradiction resolved? Not through the ‘invention’ by men of some invariable measure of value of the sort after which Ricardo searched. The problem is solved in practice, spontaneously:

In their difficulties our commodity owners think like Faust: ‘Im Anfang war die That’. ['In the beginning was the deed'] They therefore acted and transacted before they thought. Instinctively they conform to the laws imposed by the nature of commodities. They cannot bring their commodities into relation as values, and therefore as commodities, except by comparing them with some other commodity as the universal equivalent. (I, p. 86)

And Marx stresses that this process whereby all commodities find their representation is one alienated commodity is a social act:

a particular commodity cannot become the universal equivalent except by a social act. The social action therefore of all other commodities, sets apart the particular commodity in which they all represent their values. Thereby the bodily form of this commodity becomes the form of the socially recognized universal equivalent. (I, p. 86)

There is here no question of gold being an invariable measure of value. Quite the contrary: precisely because gold is a commodity its value must fluctuate. Its fluctuation in no way impairs its function as a standard of prices. Nor does it interfere with its functions as a measure of value for ‘The change affects all commodities simultaneously, and, therefore caeteris paribus, leaves their relative values inter se, unaltered, although those values are expressed in a higher or lower gold price. (I, p. 98).

This futile search for a standard of value for the ‘economist’s stone’, should perhaps enable us to put into some perspective the work of those who believe that Marx’s work suffers from precisely the absence of such a standard. It is no accident that there is no trace of the notion of fetishism in the work of what might he called the ‘Sraffa School’ which has returned to Ricardo for some answers to the current crisis in economic theory. For it is precisely this school which has grappled with what we have tried to show is a quite mistaken problem – namely the search for some abstract standard of value – be it a ‘standard’ or ‘composite’ commodity. Nor is it any accident that this school has ‘discovered’ (one hundred years after Marx!) that capital is a social relation. No doubt this is a welcome advance over the orthodox conception that capital is a stock of goods used in the production of other goods. But in the light of what we have tried to show it must be said that it is quite inadequate merely to stress that capital is no mere thing but a social relation. This was not Marx’s position: he insisted always that capital was a social relation, but one affixed to ‘things’. Marx’s qualification to Galiani involved no small quibble. For in this caveat to Galiani is expressed the essential point of Marx’s notion of fetishism, a notion which is fundamental to his entire analysis of capitalist economy.


1 Rubin’s book is amongst the very few which since 1917 have done real justice to the method of Capital. It is important to note that, like Rosdolsky, Rubin was associated with theoretical and political trends hostile to Stalinism. He was born in 1886 and from 1905 was an active participant in the Russian revolutionary movement, after 1926 being employed at the Marx-Engels Institute. Between 1924 and 1930 he completed several works in the field of political economy, covering various aspects of the history of economic thought. In 1930 he was arrested, accused of belonging to an organization which never existed, forced to confess to deeds never committed and eventually murdered. He was amongst a generation of brilliant Soviet economists wiped out by Stalin. It is to be hoped that some of his other work will be translated into English.

2 Adam Smith was in this respect no exception. Starting with the division of labour and the processor commodity exchange, Smith then raises the question of money, without which regular exchange is impossible. In the brief fourth chapter Smith discusses the nature of money and the history of its emergence from all other commodities as a special commodity. Although Smith returns to the problems of money and credit throughout The Wealth of Nations these economic categories play only a minor role in his writing. He sees in money only a technical device making possible the course of economic progress – ‘the great wheel of circulation’.

Credit is similarly regarded as a technical device through which capital is activated.