A “world without money” describes one essential aspect of socialism. But to get a clearer idea of how society can function without money we need a better understanding of money and why it must exist under capitalism.
It might seem odd to suggest that people don’t really understand money all that well, for it is hard to get through a single day without thinking about money in some way or another. Yet for all the thought given to money, or how to get more of that magical substance, most people pretty much take its existence for granted, which is why the idea of a world without money seems ludicrous.
Most economics textbooks more or less try to define money by listing up a number of its functions, as reflected also on the Wikipedia page for money: “Money is anything that is generally accepted as payment for goods and services and repayment of debts. The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value, and occasionally, a standard of deferred payment.”
This is certainly true enough, and Marx also discusses the various functions of money in Chapter 3 of Capital, but listing the functions or attributes of something is not equivalent to arriving at an essential or conceptual definition of something.
Before considering the specific functions of money, we need to understand the fundamental role of money and its reason for existing. That fundamental role comes down to what might be called the expression of a commodity’s value. That is, money gives tangible shape to the worth of a commodity.
We have learned from the first two sections of Chapter 1 of Capital that the value of a commodity is in fact determined by the amount of (socially-necessary abstract) labor expended on its production. Yet there is no way to hold a commodity up to the light to see exactly how much labor it contains. Instead of that “substance” of value being directly expressed, it is expressed in a more roundabout way, with money serving as the material for expressing value.
We all know that money is used in this way to express the worth of any commodity. But Marx, in order to unravel the mystery of money, traces his way from the money-form (where a commodity expresses its value in money) to the simplest form of value, where one commodity expresses its value using another commodity’s use-value. In explaining that simple form, Marx takes the example of the equation: “20 yards of linen = 1 coat.”
In this equation, just as in the case of 20 yards of linen = x quantity of gold, for example, the value of the linen is expressed in something else. This is necessary because the linen is quite incapable of expressing its value on its own; for the equation “20 yards of linen = 20 yards of linen” clarifies nothing. There is a clear need, therefore, for some other thing—of equivalent value—to give concrete, visible expression to the linen’s value.
Marx points out that this relation of value-expression is similar to the expression of an object’s physical weight. That is, the “weight” of something—just like a commodity’s “value”—cannot be directly seen or touched; it needs instead to be expressed using something else that is placed in relation to it. In the relation of weight-expression, pieces of iron whose weight is already determined are used to express the weight of the object being measured. In that relation, those pieces of iron are the embodiment of weight. Similarly, in the relation of value-expression, the commodity placed in relation to the linen (or whatever commodity is expressing its value) becomes the embodiment of value.
The reasons that the commodity gold eventually monopoles that role as the embodiment of value is related to its physical properties, such as its durability and easy divisibility. This creates the illusion, however, that gold has some sort of magical power by nature, whereas in fact its power as money stems from—or only exists within—the relation of the value expression of commodities. Marx unravels that mystery surrounding money and gold by revealing that any commodity can be the embodiment of the value vis-à-vis another commodity.
And he closely examines the mechanism of value expression; which is to say, how the linen equates that other commodity (e.g. a coat) to itself and then uses the use-value of that equivalent commodity as the material for expressing its own value. Whatever commodity is in that position as the “equivalent commodity,” which serves as the material for value-expression, comes to possess a peculiar power as the direct embodiment of value within its relation to the commodity expressing its value.
Here, in other words, we have the source of the strange power of money, which gives visible shape to the intangible quality of “value” and has the power of direct exchangeability with regard to the commodity expressing its value. As Marx puts it: “within its value-relation to the linen, the coat signifies more than it does outside it, just as some men count for more when inside a gold-braided uniform than they do otherwise” (p. 143).
In Section 3, Marx thus uncovers the very essence of money. We learn that the power of money and the great mystery surrounding it stems from its role as the material used to express or give concrete shape to value.
Marx goes on, in the following section, to consider why money needs to exist in the first place, but already in Section 3 we can see that the strange power of money is not the result of a human weakness for shiny metal objects but rather emerges from the specific relations of commodity production. It is only within the relation of value-expression that the use-value of a commodity can become the very embodiment of value itself—outside of that relationship its use-value is simply whatever specific proprieties it has to satisfy some human need.
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