Capital, Chapter Three:

1. Capital, Chapter Three: Money, or the Circulation of Commodities

2. Money as Power • Defetishize reading • Class context • Money as power • for capital • for workers

3. Structure of Chapter • Money as Measure of Value • Money as Standard of Price • Money as Means of Circulation • Money as Store of Value (or Hoard) • Money as Means of Payment • World Money

4. Money as Measure of Value • Pre-sale: C - M(?) - C(?) • “Price” is hypothetical, asked for but not paid • Use value C has been produced, but has not found an expression of value • After-sale: C - M - C • Money paid; Price has been realized • Amount of Money measures value of C

5. Money as Standard of Price • Money Form: (zB, yC, ... nN) = xAu • Price form, e.g., zB = xAu • Value is measured by quantity of gold, ounces • Price is measured by money name of weight of gold, e.g., $35/oz, $1.00 = 1/35oz of Au • Money names attached to coins

6. Contradictions • As Measure of Value & Standard of Price • The distinction means possible rupture • Price and value can differ • e.g., debasement of currency • e.g., clipped coins’ value less than nominal value • e.g., Locke & recoinage during war

7. Money as Means of Circulation - 1 • As facilitator of exchange • C - M - C represents circulation of commodities • C - M = 1st metamorphosis (of form) • realization of exchange value • M - C = 2nd metamorphosis (of form) • realization of use value

8. Money as Means of Circulation -2 • Syllogistic mediation • C - M - C = P - U - I • C is produced for its particularity exchange value • M is the universal equivalent & mediator • C is acquired for its individual use value in consumption

9. Money as Means of Circulation -3 • Prime example: LP - M - C • LP = ability to work (for capital) • M = wage • C = C(MS) = means of subsistence • All this working class view of working for money as a means to an end: consumption/life

10. Possibility of Crisis - 1 • Separation of sale & purchase = possibility of rupture in circuit • C - M can be accomplished, but • M - C might not be • Money can be hoarded • Say’s Law doesn’t hold in money economy • Refusal to spend = inadequate aggregate D

11. Possibility of Crisis - 2 • In the case of LP - M - C • Workers can refuse to sell LP for M • e.g., refuse to leave land, strike • Workers can refuse to spend (today) • e.g., increase savings, reduce consumption demand

12. Quantity Theory - 1 • Classical Quantity Theory of Money M = ∑pq/V • M = money, p = price, q = goods, V = velocity of money (e.g., turnover/yr) • With q & V fixed, change in M produces a change in p, i.e., p = f(M) • e.g. influx of gold from new world in 16th C meant inflation in Europe

13. Quantity Theory - 2 • Marx’s Interpretation M = ∑vq/V • Behind price (p) lies value (v) • So instead of p = f(M), we have M = f(v) • e.g., 16th C gold had lower value per unit • so, M had to increase to express ∑vq/V

14. Quantity Theory - 3 • Marx’s interpretation with paper money • M = ∑vq/V • Paper money only represents value • Amount of value depends on ∑vq/V • Value per unit of money depends on quantity of money • So, Marx’s interpretation rejoins Classics’

15. Money as Store of Value • Money “stores” value when hoarded • Hoard functions in circulation • Money stored, released • Like foreign exchange reserves today • So misers are misguided obstacles to circulation

16. Money as Means of Payment • With “credit money” purchase preceeds payment • Payment follows later • e.g., commerical credit, credit cards • Separation = new potential for crisis • e.g., debt crisis of 80s & 90s

17. World Money • In 19th C, int’l money was bullion/metal • In late 20th C int’l money is credit • gold has been demonitized • although gold bugs still want it back • Marx’s discussion of credit provides basis for analysis of International Monetary System & IMF

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