Aspect: Marx’s Critique of Political Economy
After the failure of the European democratic revolutions of 1848 Marx, in exile in England, decided to improve his knowledge of economics or “political economy” as it was called at that time. The first result of this research, mainly at the British Museum was the publication in 1859 of A Contribution to the Critique of Political Economy(*). Marx had intended, as he said in the Preface, to examine various aspects of the capitalist economic system and he listed capital, landed property, wage-labour, the State, foreign trade and the world market. In fact before he died in 1883 he had only got as far as capital with the publication of the first volume of his main book in 1867.
The Critique itself only covered the commodity and money, and is much the same as the first three chapters of Capital (though “exchange value” in the one becomes “value” in the other). In fact it too begins, “The wealth of bourgeois society, at first sight, presents itself as an immense accumulation of commodities . . .”, but is a good introduction to the labour-time theory of value, especially as applied to money.
Marx emphasises that money is not just a convenient device for facilitating the buying and selling of goods but is also, as he puts it, “an expression of a social relation of production”. Money, in other words, is a sign that the people who use it have a particular form of society; at the very least it tells us that the means for producing wealth are not owned in common and that production is not carried on according to some definite social plan. The regulation of production by money and the market disguises the domination of the means of production by a minority class.
Marx’s theory of money is that where wealth is exchanged one commodity (or, product of labour produced for sale) will eventually emerge as the one which can be exchanged for all other commodities. This commodity, which acts as a measure of the amount of socially necessary labour-time spent on producing all other commodities, is money. Being the measure of value is the money-commodity’s primary function, but it is a role which can only be played by something which itself has a labour-time value by virtue of being the product of socially-necessary labour. Say it takes the same amount of social labour-time to produce an overcoat as an ounce of gold, then we can say that the overcoat (or 4 chairs or 10 books, etc, etc) is worth 1 oz. of gold. This is its price, the expression of its exchange-value in units of the money-commodity. Being a standard of price and a unit of account like this is money’s second role. The units in which prices are expressed are purely conventional. In our example they are units of weight (which is what they originally were, a £ having once been a lb. of silver) but are now special money-units like cents and dollars or roubles and kopecks fixed by governments. These units can still be related, however indirectly, to weights of gold; the American dollar for instance was for a long time defined as l/35th oz. of gold. Finally, money serves as a means of settling debts, what Marx calls a means of payment.
Originally, the money-commodity itself, usually gold or silver, circulated as the currency in the form of coins. Where this is the case, said Marx, the amount of money that is needed depends on the total prices of all the goods and services to be bought and sold (and the total amount of debts to be settled) and, since coins can be used more than once, on how quickly the coins circulate. Marx rejected the Quantity Theory of Money, at least in the form put forward by Hume and Ricardo which made the price level depend on the quantity of the money-commodity rather than vice-versa.
But, Marx went on, “where paper notes are the sole medium of circulation”, i.e. where the currency is composed of paper notes circulating as tokens for the money-commodity, then the situation is reversed: the price level does depend on the quantity of (paper) money. This does not contradict the theory that the amount of real money is determined in the end by the price level. For the basis of the Quantity Theory of paper-money is that only a definite amount of real money is needed so that, if the amount of paper money issued exceeds this, then currency depreciation—and inflation—will result. This is because paper money is worthless in itself and only has value insofar as it represents gold or silver. If the amount of gold or silver to be represented is given, then obviously the more tokens are issued the less amount of gold or silver each will come to represent. Prices rise because in effect the whole standard of price has been altered.
As Marx put it:
“Let us assume that £14 million is the amount of gold required for the circulation of commodities and that the State throws 210 million notes each called £1 into circulation: these 210 million would then stand for a total gold worth £14 million. The effect would be the same as if the notes issued by the State were to represent a metal whose value was one-fifteenth that of gold or that each note was intended to represent one-fifteenth of the previous weight of gold. This would have changed nothing but the nomenclature of the standard of prices, which is of course purely conventional, quite irrespective of whether it was brought about directly by a change in the monetary standard or indirectly by an increase in the number of paper notes issued in accordance with a new lower standard. As the name pound-sterling would now indicate one-fifteenth of the previous quantity of gold, all commodity-prices would be fifteen times higher and 210 million pound notes would now be indeed just as necessary as 14 million had previously been. The decrease in the quantity of gold which each individual token of value represented would be proportional to the increased aggregate value of these tokens. The rise of prices would be merely a reaction of the process of circulation, which forcibly placed the tokens of value on a par with the quantity of gold which they are supposed to replace in the sphere of circulation”
That inflation will be the inevitable result of issuing more paper currency that the amount of the money- commodity which would have to circulate if there were no (inconvertible) paper currency was once recognised even by bourgeois economists. It was forgotten under the influence of Keynesian economics and is only now, after over thirty years of non-stop currency depreciation and rising prices, being rediscovered.
The Preface to the Critique contains Marx’s well-known account of his historical method—the materialist conception of history. The structure of a particular society, including the ideas predominant amongst its members, said Marx, was conditioned by how its members were organised with regard to the production of wealth. This, in its turn, was mainly dependent on technology and the level of productivity. As technology changed and productivity increased so social forces were set in motion which eventually led to a change of society. Marx mentioned four main stages through which human society has passed — later known as Asiatic society, chattel-slavery, feudalism and capitalism—and went on to say that the coming social revolution would end in the establishment of Socialism.
Also published with the Critique as with the original 1904 translation is a document called An Introduction to a Critique of Political Economy which is an unfinished and rough draft dealing mainly with the relationship between production, distribution (defined as a person’s share in what has been produced) and consumption. Though translated on its own into English in 1904 it is really the first part of a set of manuscripts known as “Marx’s Grundrisse,” which are only now being translated. The Introduction is interesting in that it shows that Marx would have rejected the orthodox Trotskyist description of Russia as a “contradictory combination of a non-capitalist mode of production and a still basically bourgeois mode of distribution” (Mandel).
Actually, “non-capitalist” is too weak a term to convey what the Trotskyists really have in mind. For they consider that as far as the production of wealth is concerned Russia is a classless society. They do not deny that there is a privileged group in Russia but claim that this group is privileged only with regard to the distribution of wealth. To make this point Trotsky called it a “caste” to distinguish it from a class.
True, classes are defined by how groups are related to the use of the means of production rather than by how they stand in relation to the distribution of the products, but the real question is: Could a class-type mode of distribution exist alongside a classless mode of production?
Marx’s answer can be clearly inferred from the following:
“The structure of distribution is entirely determined by the structure of production. Distribution itself is a product of production, not only with regard to the content, but also with regard to the form, since the particular mode of men’s participation in production determines the specific form of distribution, the form in which they share in distribution.”
And how in fact could a group be privileged with regard to the distribution of the products without being at the same time privileged with regard to their production? For having the power to distribute products to your advantage amounts to being able to decide what should be produced and so to deciding how the means of production should be used — which is precisely what being privileged in relation to production means. The orthodox Trotskyist analysis of Russia is an absurdity and, as the Introduction shows, quite at variance with Marx’s theory of society.
An introduction by Maurice Dobb and two reviews of the work by Engels complete this edition. Dobb, by the way, seems to imply that commodity-production and money were not central to Marx’s conception of capitalism, but this is what you would expect from someone who mistakenly believes that, although money and commodities still exist there, Russia has abolished capitalism and established Socialism. As Marx always made clear, capitalism is the highest form of commodity-production and money-economy while Socialism by establishing democratic social control over production necessarily means the abolition of production for sale and of money.
(*) Just republished by Lawrence and Wishart — £1.50.
A.L.B.