The Secret of Money and the Rise in Prices

The subject of gold has a fascination for all owing, among other things, to the part the metal has played in the history of the world. Yet signs are not wanting that the long supre­macy of the yellow metal is drawing to a close. Even now the hard coin is driven into the retail trade, serving otherwise to adjust balances which are infinitesimal in themselves compared with the enormous total of the whole tran­sactions.

Although under present-day conditions there slowly develops that social production whose maturity and organisation must ultimately sweep away the use of money, the actual role of the precious metal ia still as important as ever, if not more so. The real, if unseen, metal is still the standard of price and measure of value, and any disturbance of these functions has a cumulative effect owing to the huge superstructure of credit that is reared on a relatively diminishing base. So long as capitalist pro­duction continues, indeed, the use of money is indispensable. The existence of money is, in iact, a concomitant of anarchy in society. It is ithe product of the economic necessities of indi­vidualistic production. Apart from its quality of being the incarnation of labour and universally available substitute for personal effort, gold is above all the social regulator, adjusting production to effective demand, imposing, willy-nilly, social laws upon a society that is blind to them. It is the leveller of all labours, the per­sonification of all value, and the despotic arbiter of all supply. And from this marvellous but little understood position of adjuster of the total labours of society to social necessities, gold is not yet ready to be dethroned.

It can’t, indeed, only be actually superseded when production and distribution are socially and consciously ordered according to society’s known needs and powers, and not till then. Only when the relation between every man’s labour and society is made clear by social cognisance and organisation, will it cease to be necessary for money to bring some semblance of order out of chaos in determining social needs by the brutal, empirical test of the higgling of the market.

The unique and mysterious nature of money has been the starting point of more insane theories than any other subject with the excep­tion of religion. Because gold, as money, is immediately exchangeable for any other commo­dity, it has been imagined that all other products could simultaneously be made money—that is, directly and universally exchangeable on demand. This ignores the obvious fact that the universal exchangeability of gold is solely the reflex of the lack of direct exchangeability of all other products. The development of money is, indeed, at once the product of and remedy for the difficulties of exchange in all commodities that are not money. Capitalist society without money is, as Marx suggested, much less thinkable than Roman Catholicism without the Pope. And to think it possible to make every commodity as directly exchangeable as money is an even greater absurdity than it would be to imagine every Catholic simultaneously Pope.

Others, again, have childishly proclaimed that money is a mere fiction, and that its value can be fixed by the simple fiat of authority, an absurdity meriting the keen irony of William Petty, who said that “if the wealth of a nation could be decupled by a proclamation, it were strange that such proclamations were not made long since by our governors.”

It is at the price of bitter experience that the chief laws concerning the issue of money have been learnt, and history is strewn with the records of disasters due to disregard of these laws. In every solvent currency the legal ten­der of tokens is restricted, and the issue of inconvertible notes is maintained at par by restricting the face value of the notes in circula­tion to the amount of gold that would circulate in their place. The most financially sound nations, indeed, have practically abandoned the inconvertible paper, issuing only such notes (beyond the irreducible minimum) as are considered equal in amount to actual gold held in reserve for that purpose.

To even enumerate the many curious theories widely held concerning money would be a weari­some and fruitless task. Money has been reviled just as heartily as it has been worshipped. It has been the spur to greed, cruelty, and crime. It has been the scourge of the million. And truly, from the early days of capitalist enterprise in the Spanish “colonisation” of America down to the very latest horrors detailed in the latest edition of the papers, what crimes have been committed in the lust for gold !

Nevertheless, it is not the existence of gold, or of money of any kind, that is the prime cause. Social man had to develop through a painful stage, and gold was the means at hand. Gold, as money, is the product of exchange, not vice-versa. And exchange in its turn is the child of the division of labour. Exchange, based at first on the geographical or physical advantages possessed for those in distinct localities, and then increasingly on the specialised aptitudes of producers, gradually outgrew the clumsy me­thod of barter. One product in fairly constant demand began to assume the function of inter­mediary between producers. Many strange things have thus played the part of money. Gold, however, by its many qualities and its peculiar fitness, has triumphed over all, mea­suring all things, equalising all things, and commanding all things.

But starting as a simple commodity, gold only retains its potency because it is still in essence a commodity. As the labour involved in pro­ducing it lessens or grows according to the difficulties of mining or the advance of technology, so the amount of other things which a piece of gold will buy alters correspondingly. Equal labour products ever form the basis of the normal exchange. Gold, then, is the baro­meter of value only because it has value which varies as the labour socially required to produce it varies.

An increase or decrease in the value of gold will consequently disturb all prices. And hence, as indicated by H. A. Young in these columns in April, a fall in the value of gold will send up all prices except those of commodities whose value has fallen at the same, or a greater, rate than has that of the gold. That is why with the present fall in the value of gold, some highly manufactured goods have fallen in price notwithstanding, while raw materials and food stuffs have increased in price. In the case of manufactured goods labour-saving devices have been applicable to a greater extent than in agriculture, and in many cases the former have decreased in value more than has gold.

With a knowledge of the law of value the solution is not at all difficult, but it is interesting to note how very few of the ortho­dox apologists are willing to go outside the barren field of exchange for an explanation of the present rise in prices. Without for one moment wishing to trace all the changes in price to the fluctuations in the value of gold, it is demonstrably the case that by means of the cyanide process of treating the slime which results from crushing the quartz, and by means of improved machinery and methods generally, the cost of production of the ounce of gold has been considerably reduced. The result has been an enormous and continued increase |in gold production, over-supplying the markets of the world and forcing prices generally up about 23 per cent. Other factors have been at work in various ways, but the reduced labour cost of producing gold—our measure of value—is the prime cause.

Yet apologists for capital are falling over each other in an endeavour to find the chief cause of the rise in prices within the sphere of exchange instead of within that of production !

To the worker, naturally, production is fundamental. To the capitalist—not so naturally—exchange and consumption come first. His political economy begins—and ends—with the consumer. Even a child, however, unsophisti­cated by capitalist interests, can tell which is really fundamental. Production must obviously take place before products can be exchanged, while no multiplication of the things made can possibly take place in the mere act of exchange.

But the capitalist is not a child, by any means. Exchange, not production, is his work. He is quite willing to magnify his own importance, but not that of his enemy, the worker. His whole existence is a gamble in other people’s produce—products that he has appropriated. He starts with money, exchanges this into com­modities (including labour-power), and then turns these again into mare money, ignoring purposely in the productive commodity that intervened during the process—the real source of his profit—the unpaid or surplus labour of his hireling.

Hence profitable exchange is his heaven, and gold his god. His hell is to be reduced to labouring for his livelihood. It is his gold that stands between him and hell, and with the worker it is lack of gold that stands between him and heaven.

So it has been for centuries, but not for all ages. Time was when gold gave no social advantage to its possessor, and the time will be when gold will count no more than manure as a determinant of social position. But so potent is gold to-day, and so powerful has it been dur­ing historical times, that its worship surprises none. It was otherwise with the ancients. Thus Horace says (Trans. J. Covington ; quoted Marx) :

“If one buys fiddles, hoards them up when, bought,
Though music’s study ne’er engaged his thought,,
One lasts and awls, unversed in cobbler’s craft,
One sails for ships, not knowing fore from aft,
You’d call them mad : but tell me, if you please,
How that man’s case is different from these,
Who, as he gets it, stows away his gain,
And thinks to touch a farthing were profane.”

Take from gold its unique position and power and is it not possible that mankind’s attitude toward it may be exactly the reverse of the wor­ship and yearning that now prevail ? Might not Horace’s satire become literally true ? At present, however, men repeat the sentiment of Columbus : “Gold is a wonderful thing! Who­ever possesses it is master of all that he desires. By means of gold even admission to Heaven may be gained for souls.”

So profoundly, indeed, has the idea of gold being synonymous with all that is brightest and most glorious sunk into the minds of all, that an epoch of health, happiness, and beauty can scarcely be thought of otherwise than as the “Golden Age.” Yet gold in its supreme use as money is, as we have seen, an expression of hu­man ignorance, disunion, mistrust, and weak­ness. It adjusts private labour to society’s demands by inflicting unemployment and want, or feverish and excessive toil, on the producers. It was in much the same brutal way that cholera epidemics brought about the adjustment of urban sanitation to the needs of town life—ex­cept that gold daily recommences its Sisy­phean work. Gold stands, moreover, for the alienation of the worker from the produce of his labour, and enables the capitalist to pocket and spend the result of the labour of others. How true it is that:

“Plate sin with gold, and the strong lance of justice hurtless breaks ;
Arm it in rags, a pigmy’s straw doth pierce it.”

Can gold, then, retain its fetishism and plea­sant associations for all time ? Obviously no. Apart from its use as a medium of exchange its utility is less than that of many other metals. A certain utility is guaranteed to it by its non-corroding property, but its worship as the greatest of gods will surely end. Nay, more. Is it not probable that future society, co-operatively and sensibly supplying its own wants by the consciously directed organisation of its efforts, will more truly and profoundly appraise the salient characteristic of to-day ? It will note that the chief present use of gold is to lubricate the wasteful working of anarchic private pro­duction. It will see that to-day the position and function of gold stimulates greed and selfishness, robbery and cruelty ; augments the power of the tyrant, undermines virtue and integrity, enslaves and corrupts all. And noting these things and all that they imply, will not huma­nity of the future recoil with horror, and describe the capitalist epoch, fittingly, (but with what a depth of altered meaning !) as the “Golden Age”?

F. C. W.

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