English subtitles for clip: File:Class 03 Reading Marx's Capital Vol I with David Harvey.webm

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» NEIL SMITH: So. Money makes
the world go round they say.

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» DAVID HARVEY: Yes.

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It's so fascinating-

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money. We all use it,

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we all worry about it,

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we all spend an enormous
amount of our time getting it.

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But if you ask anybody the question: "What is money?",

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most people can't give you a clear answer at all.

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And I always remember this great line in

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Dickens' Dombey and Son, where little
Paul, his mother has died and he's very sickly,

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and he keeps on asking his father, "Papa, what
is money? What is money?" And Mister Dombey, who's

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the great entrepreneur, merchant,

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can't give an answer.

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At some point or other, he says: "Well,
it's something that allows you to do lots of things."

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So little Paul says:
"Well, why can't it bring Mama back then?"

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And Mister Dombey is so flummoxed,
he just leaves the room.

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I think this kind of question about what money is

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and its function in
society is really something of

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a mystery to everybody.

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Yet it's something that we're constantly
focused on. So here we are, focused on this thing money

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and we don't know what it is.

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What Marx tries to do

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is to tell us

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something about money

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which we hadn't really understood before.

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The theory of money in Marx even for Marx is very complicated.

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So the third chapter

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is probably the most difficult chapter
in the book for almost everybody to get through.

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And from experience when you ask people who
started reading Capital on their own when

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they gave up, well, they nearly always did so
in Chapter Three. So one of my tasks is to

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get people through Chapter Three,

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get them to the other side of it
and then it's like you've come out of purgatory.

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You're into heaven after that. »NEIL SMITH: You're on
to the good stuff. »DAVID HARVEY: Yes.

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I have to say that New York City in these

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times provides a good

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occasion to reflect on

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all of this, but we have to
remember this chapter was written

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nearly 150…140 years ago,

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and so there is the question

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as to how much

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of the analysis stands, and this
is obviously something you have to think about.

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The chapter usually

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poses quite a bit of difficulty for people.

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I think I mentioned early on that many people
who start reading Capital kind of give up on

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this chapter because it just gets too dense and
too complicated, and it's very hard to figure

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out what's going on,

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but if you stick with

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the framework I've suggested, and you do think about it,

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then whenever you approach a chapter like this and
think about its structure you will remember

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where you are

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in the broader argument.

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For the argument here is once again,
fairly simple, and it has a very

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similar form to the arguments
encountered before, so

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you'll probably get sick of me

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putting this kind of formulation

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up on the board. But Marx starts with

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the idea of a commodity money,

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or, money as a commodity.

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As usual, he asks a number of questions.

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What work does this commodity do? What functions
does it perform, and then he,

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surprisingly finds a duality. Right?

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We've seen this before.

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And the duality is

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that it's a measure of values

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but also a means of circulation.

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And those two functions

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are going to be somewhat incompatible

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with each other so he will spend

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the first part of the chapter looking at

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the measure of values function and
the complications which attach to that.

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The second part is about the means of circulation

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and its complications.

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Then of course he finally comes back

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to the issue of universal money

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which not surprisingly
internalizes a contradiction.

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So what else is new

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about Marx's method of presentation?

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But this is basically what he does.

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Now, part of the difficulty here is that,

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although Marx inserted into the section about

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concrete and abstract labour, some

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extra elements to broaden the argument,

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here he actually sets up a mini
bifurcation when considering

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money as a measure of value
and as a standard of price.

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So, he kind of does a mini-diversion of this inside the proposition.

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He does the same

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mini kind of diversion when considering

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means of circulation.

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In particular when he looks at

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concrete money, gold coins and symbols,

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Marx asks the question:
what's the relationship between

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this real stuff and

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this which leads him to discuss things like

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money as money of account, credit money and
all those other kinds of forms of money.

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In effect he starts to elucidate

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the complicated world of money
activities via this strategy.

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But the basic structure of the chapter is

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an echo of what you saw in

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the section on commodities, the section on

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abstract and concrete labour, the relative
and equivalent forms, and here Marx is just

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doing the same thing again.

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So, if you have that in mind,
then you're less likely to get lost

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in the intensity or details of the argument in this chapter,

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important though they are.

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Now the reason I like to

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set up the argument in this way is because

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when you're wrestling with details
fascinating and important

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in their own right, you nevertheless need to remember that

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Marx has a
framework within which

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the argument is proceeding,
and that is

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the framework of the chapter.

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So, with that in mind,

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let's look at this piece of the story:

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money as a measure of value

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or the money commodity.

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Obviously there is going to be
a transition in this chapter from talking about

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money as a commodity or
the money commodity,

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to money as universal money

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which of course, nowadays would not be
represented by any particular commodity at all.

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It would be represented by something else.
But I think we can see shadows of that

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in Marx's interpretation.

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For purposes of simplification,

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Marx says I'm going to assume for the most part
in this chapter - occasionally he introduces

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silver and then sometimes talks about other things -

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but I'm going to assume that the
commodity money is gold.

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Therefore I will use the example of gold.

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and just assume

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that gold has become the money commodity

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which we are interested in looking at.

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Then he immediately says

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at the bottom of the first page
here: "Money as a measure of value

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is the necessary form of appearance…"

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Now, I have often

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insisted that you think a
lot about social necessity,

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what is socially necessary?

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And here he's saying that this

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form of appearance

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is a necessary form of
appearance; it is socially necessary,

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and it's necessary

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as a measure of value which
is imminent in commodities, namely

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labour time or more accurately:
socially necessary labour time.

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So there's an interrelation then between

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the world of commodities and the
socially necessary labour time which is embodied

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in all of those commodities,

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and the socially necessary labour time,

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which is embodied in the gold.

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But then he goes one step further

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at the bottom of page 189

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when he says: "The price
or money-form of commodities

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is like their form of
value generally, quite distinct

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from their palpable and real bodily
form; it is therefore

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a purely ideal or notional form."

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By ideal Marx means 'mental',

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i.e. constructed in our minds.

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"Although invisible",

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and I've mentioned several times

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the significance of
these invisibilities, these

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immaterialities which are
nevertheless objective and real.

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Marx then goes on to say:

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"The guardian of the commodities must therefore
lend them his tongue, or hang a ticket

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on them, in order to communicate
their prices to the outside world."

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Now what's happening here is the following:

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I have a commodity;

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I have no idea what its value is.

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How can I possibly know

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before I take it to market?

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But when I take it to market, I want to have
a notional value to put on it,

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so I hang a price tag on it

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to indicate its worth;

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It's a mental move on my part for I am guessing;

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only after the market has gone through
all of its ferment and done its work can

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I know what the value

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is as represented by its money form.

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But as a standard of price,
as Marx indicates

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two pages later, money

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is performing a different function
than as a measure of value.

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So, on page 190 Marx wants
to talk first about this imaginary side,

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the ideal side of the money form.

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I'm imagining what the
value is in my commodity.

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But then the price itself depends

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upon the substance that is money.

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And this then poses the first problem,

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which is signaled upon this page.

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The money commodity is gold.

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Since it is a distinctive commodity,

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it is produced under given
conditions of production.

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So, how much gold there is, what the gold is worth,
and what the socially necessary labour time

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embedded in gold is, will vary.

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So immediately there is a problem,

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not on the side of

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all of those commodities, which have been measured
in terms of the money commodity, but in terms

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of the money commodity itself.

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So Marx has to deal with the prospect
of inflation, or deflation,

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because there's not much money
or there's a lot of money around,

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and in particular the presence of much
gold or little gold.

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So, there is a problem of the gold supply.

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His point about this is that

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yes, we have to take that
into account, but

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actually the relative values of
commodities are not affected by the level of the gold supply.

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For example if shoes cost twice
as much as shirts,

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and the money commodity changes,

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then the ratio two-to-one will still hold.

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It's just that it will be

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articulated in a different way,
because the money commodity has changed,

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i.e. changed its value.

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So he breezes past that kind of
question by simply saying that

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this disappears in the wash.
But, on page 192

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Marx considers a more important issue,

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when he talks about the way
in which …"measure of value, and…standard of price.."

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wherein money performs two quite different functions.

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Now, as a measure of value
the functions of money are:

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to be stable,

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to be tangible,

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to not change its qualities.

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And so you can see immediately why as
a measure of price gold

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rather than strawberries would be the money commodity.

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Because money as gold commodity can store value.

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Gold is fairly
constant in its form since it

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can be assayed, measured,

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and is limited in supply since you
can't just go out and dig it up in your backyard.

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So there are reasons why, money

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gravitates towards gold as the measure of value,

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because indeed it works very well.

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Even though as we have seen

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the value of gold itself can shift,

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that doesn't materially affect its capacity

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to function in these ways.

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As…a standard of price however,

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Marx points out that

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we are no longer interested in the relationship
between the socially necessary labour time

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in gold and the socially necessary
labour time in commodities,

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because socially necessary labour time
is immaterial and immeasurable directly.

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What we're interested in

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is the quantity of the gold

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which is equivalent to whatever it is

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you are selling as a commodity.

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And that quantity of gold then tells you

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how much your commodity is worth.

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This is a quantitative relation.

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For example why two ounces, why not one ounce,
why three ounces?

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At some point or other this
leads us into, according to Marx,

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the way in which the weight name

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of the money becomes the weight name

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of the value of the commodity.

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In this weight name, quoting from the top of page 194

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Marx shows this important transitional aspect in the naming of money

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when he considers
the word 'pound'; for the

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pound was originally a pound of silver,

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but then it simply became called pound, and

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so the British currency is in pounds.

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Now, when you're in Britain and

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you ask for pounds, you don't expect
somebody to give you a weight of something.

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00:17:39,035 --> 00:17:41,101
You expect them to give you notes.

254
00:17:42,001 --> 00:17:47,035
So what he's doing here is to talk
about the transition that is going on from

255
00:17:47,035 --> 00:17:51,079
the value form, which is
in the money commodity,

256
00:17:51,079 --> 00:17:58,096
to this naming and counting

257
00:17:58,096 --> 00:18:08,162
of elements of money, which are
then traded by the commodity traders in the market place.

258
00:18:09,062 --> 00:18:15,251
And this transition therefore completes the
fetishism which he has talked about in an earlier chapter.

259
00:18:15,809 --> 00:18:18,370
So on page195 Marx said,

260
00:18:18,037 --> 00:18:22,060
"the name of a thing is entirely
external to its nature.

261
00:18:22,006 --> 00:18:26,020
I know nothing of a man if
I merely know his name is Jacob.

262
00:18:26,074 --> 00:18:31,162
In the same way, every trace of
the money-relation disappears in the money names,

263
00:18:32,062 --> 00:18:37,094
pound, thaler, franc, ducat, etc."

264
00:18:37,094 --> 00:18:43,116
Then he goes on to talk about "the confusion caused
by attributing a hidden meaning to these cabalistic signs

265
00:18:44,016 --> 00:18:48,104
which is made even greater by the fact that these
money names express both the values of commodities

266
00:18:49,004 --> 00:18:54,035
and simultaneously aliquot parts of a certain
weight of metal, namely the weight of the metal

267
00:18:54,035 --> 00:18:58,072
serving as the standard of money.

268
00:18:58,072 --> 00:19:00,851
On the other hand this is in fact "necessary",

269
00:19:01,499 --> 00:19:05,720
again this word necessary,
"it is…necessary that value,

270
00:19:05,072 --> 00:19:08,087
as opposed to the multifarious
objects of the world of commodities,

271
00:19:08,087 --> 00:19:09,186
should develop into this form,

272
00:19:10,086 --> 00:19:16,147
a material and non-mental one,
but also a simple social form…"

273
00:19:17,047 --> 00:19:22,065
Which leads us to the conclusion that "price
is the money-name of the labour objectified

274
00:19:22,065 --> 00:19:28,139
in a commodity."

275
00:19:29,039 --> 00:19:33,044
Now, what Marx is saying here is that

276
00:19:33,044 --> 00:19:35,110
yes indeed we have all these terms like

277
00:19:36,001 --> 00:19:41,042
ducats, louis, dollars and pounds and so on,

278
00:19:41,051 --> 00:19:46,125
and we measure the value of commodities
in quantities of those terms,

279
00:19:47,025 --> 00:19:48,123
but at some point there

280
00:19:49,023 --> 00:19:55,027
has to be some relationship between

281
00:19:55,027 --> 00:20:02,027
the way these nominal forms of money are
articulated and a monetary base, a commodity base.

282
00:20:05,052 --> 00:20:08,059
He is saying that this is essential.

283
00:20:08,059 --> 00:20:10,078
Now of course since the 1970's

284
00:20:10,078 --> 00:20:18,082
the global economy has not done that very effectively.

285
00:20:18,082 --> 00:20:21,105
So the question which then arises

286
00:20:22,005 --> 00:20:25,046
underscores this insistence about the monetary base,

287
00:20:25,046 --> 00:20:33,072
the commodity base, the money commodity
value. Is his insistence on that realistic?

288
00:20:33,072 --> 00:20:34,171
What happens when you decide

289
00:20:35,071 --> 00:20:37,097
that you're going to dispense with it,

290
00:20:37,097 --> 00:20:39,100
as has technically happened

291
00:20:40,000 --> 00:20:43,039
since the de-materialization of money

292
00:20:43,039 --> 00:20:48,133
from the 1970's onwards.

293
00:20:49,033 --> 00:20:57,051
We'll come back to that later,
when we look at questions of money supply.

294
00:20:57,051 --> 00:21:02,350
However the end of this section introduces

295
00:21:02,809 --> 00:21:06,690
some rather astonishing
modifications of the argument.

296
00:21:06,069 --> 00:21:11,136
On page 196 and 197

297
00:21:18,038 --> 00:21:23,109
Marx says "the magnitude of the value of a commodity",

298
00:21:24,009 --> 00:21:27,468
towards the bottom of 196,

299
00:21:27,549 --> 00:21:31,700
"therefore expresses a necessary relation to
social labour time which is inherent in the

300
00:21:31,007 --> 00:21:35,083
process by which its value is created." OK.

301
00:21:36,046 --> 00:21:41,059
"With the transformation of the
magnitude of value into the price

302
00:21:41,059 --> 00:21:46,106
this necessary relation appears
as the exchange ratio between a single commodity

303
00:21:47,006 --> 00:21:51,050
and the money commodity which exists outside it.

304
00:21:51,005 --> 00:21:55,078
This relation however may express
both the magnitude of the value of a commodity

305
00:21:56,023 --> 00:22:02,055
and the greater or lesser quantity of money
for which it can be sold under given circumstances.

306
00:22:02,055 --> 00:22:06,062
This condition therefore points to the possibility
of a quantitative incongruity".

307
00:22:07,025 --> 00:22:14,026
Notice that the"quantitative incongruity
between price and magnitude of value,

308
00:22:14,026 --> 00:22:18,032
i.e. the possibility that the price may
diverge from the magnitude of value,

309
00:22:18,086 --> 00:22:21,155
is inherent in the price-form itself."

310
00:22:21,929 --> 00:22:26,920
This is not a defect,

311
00:22:26,092 --> 00:22:27,109
"on the contrary," this is

312
00:22:28,009 --> 00:22:33,075
"what makes this form the adequate one for a mode
of production whose laws can only assert themselves

313
00:22:33,075 --> 00:22:41,094
as blindly operating averages
between constant irregularities."

314
00:22:41,094 --> 00:22:46,172
What's going on here?

315
00:22:47,072 --> 00:22:49,166
If everything in the market

316
00:22:50,066 --> 00:22:52,165
was presented at its value,

317
00:22:53,065 --> 00:22:58,076
and sold at its value,

318
00:22:58,076 --> 00:23:01,090
then there would be absolutely no way

319
00:23:01,009 --> 00:23:03,058
in which you could adjust

320
00:23:04,039 --> 00:23:09,067
for demand and supply fluctuations.

321
00:23:09,067 --> 00:23:13,155
What's happening here is that, in effect,

322
00:23:14,055 --> 00:23:18,108
on a given day if too many traders come into
the market and not enough 'demanders' come

323
00:23:19,008 --> 00:23:24,086
the price will go down.

324
00:23:24,086 --> 00:23:30,655
The next day perhaps fewer
traders come but more buyers are present,

325
00:23:31,429 --> 00:23:35,760
so the price goes up.

326
00:23:35,076 --> 00:23:38,174
So what's happening here is that Marx is
talking about the way in which once you go

327
00:23:39,074 --> 00:23:45,093
to a price name and hang prices on commodities,

328
00:23:45,093 --> 00:23:50,112
different prices can be realized
at different times in different places;

329
00:23:51,012 --> 00:23:55,191
they fluctuate all over the place.

330
00:23:55,299 --> 00:23:58,150
And that is what the anarchy

331
00:23:58,015 --> 00:24:04,072
of a capitalist market system is all about.

332
00:24:04,072 --> 00:24:10,113
Therefore a money system has
to be able to deal with that.

333
00:24:11,013 --> 00:24:14,069
So these incongruities

334
00:24:14,069 --> 00:24:18,115
are specifically able to deal with fluctuations

335
00:24:19,015 --> 00:24:24,110
in demand and supply conditions.

336
00:24:25,001 --> 00:24:26,960
Now Marx along with the

337
00:24:27,059 --> 00:24:31,290
classical political economists assumed

338
00:24:31,029 --> 00:24:32,123
that at the end of the day

339
00:24:33,023 --> 00:24:37,038
despite all these fluctuations, there is
something called equilibrium price

340
00:24:37,038 --> 00:24:42,075
or natural price. That is to say the price

341
00:24:42,075 --> 00:24:49,075
achieved when
demand and supply are in equilibrium.

342
00:24:50,095 --> 00:24:53,314
And at that point, Marx says,

343
00:24:54,169 --> 00:24:59,430
demand and supply cease to explain anything.

344
00:24:59,043 --> 00:25:02,049
It doesn't explain why shirts

345
00:25:02,049 --> 00:25:06,113
exchange in a certain
ratio with shoes on average.

346
00:25:07,013 --> 00:25:11,013
It's not that shirts are more in demand than
shoes or anything of that kind, on a given day for

347
00:25:11,013 --> 00:25:15,084
they may fluctuate, but
the fact that shirts and shoes

348
00:25:15,084 --> 00:25:18,108
have different prices has to do

349
00:25:19,008 --> 00:25:23,040
with their socially necessary
labour time. The fact that on any given day,

350
00:25:23,004 --> 00:25:29,005
the price of shoes fluctuates above or
below its socially necessary labour time equivalent,

351
00:25:29,041 --> 00:25:35,109
is due to demand and supply fluctuations.

352
00:25:36,009 --> 00:25:38,088
In order for demand and supply

353
00:25:38,088 --> 00:25:43,161
fluctuations to be incorporated into a
capitalistic system, we need a money system

354
00:25:44,061 --> 00:25:46,108
which can do that.

355
00:25:47,008 --> 00:25:50,025
And this quantitative incongruity between

356
00:25:50,025 --> 00:25:52,043
money as a measure of value and

357
00:25:52,043 --> 00:25:56,111
the way in which prices get hung
on commodities and prices get realized,

358
00:25:57,011 --> 00:26:06,043
on a given day in a given market at a
given time, all of that is allowed for

359
00:26:06,043 --> 00:26:10,051
precisely because of this transition which has
occurred between money as a clean measure of

360
00:26:10,051 --> 00:26:15,052
value to it's operating
function as a standard of price

361
00:26:15,061 --> 00:26:19,112
that can allow for these fluctuations.

362
00:26:20,012 --> 00:26:27,060
Even more astonishing is what Marx points out
on the next page, namely the fact

363
00:26:27,006 --> 00:26:30,765
that this transition from
money as a measure of value into

364
00:26:31,359 --> 00:26:34,900
a standard of price can also

365
00:26:34,009 --> 00:26:39,528
harbor "a qualitative contradiction,
with the result that price ceases altogether

366
00:26:40,419 --> 00:26:43,680
to express value,

367
00:26:43,068 --> 00:26:48,119
despite the fact that money is
nothing but the value-form of commodities.

368
00:26:49,019 --> 00:26:52,101
Things which in and for
themselves are not commodities,

369
00:26:53,001 --> 00:26:58,008
things such as conscience, honor, etc.
can be offered for sale by their holders

370
00:26:58,008 --> 00:27:03,055
and thus acquire the form of
commodities through their price."

371
00:27:03,055 --> 00:27:06,068
K-street and all the rest of it.

372
00:27:06,068 --> 00:27:12,071
"Hence a thing can, formally speaking,
have a price without having a value.

373
00:27:12,098 --> 00:27:17,172
The expression of price is in this case
imaginary, like certain quantities in mathematics.

374
00:27:18,072 --> 00:27:23,077
On the other hand, the imaginary price-form may also
conceal a real value relation or one derived

375
00:27:23,077 --> 00:27:24,168
from it, as for instance

376
00:27:25,068 --> 00:27:29,117
the price of uncultivated land, which is
without value because no human labour

377
00:27:30,017 --> 00:27:35,100
is objectified in it."

378
00:27:36,000 --> 00:27:42,047
The point about land which
has not yet been occupied, is that

379
00:27:42,047 --> 00:27:47,056
there are ways in which land does incorporate
what you might call a shadow price of human labour.

380
00:27:47,056 --> 00:27:54,087
That is land which has human labour

381
00:27:54,087 --> 00:27:57,090
embodied in it over here

382
00:27:58,017 --> 00:28:01,019
casts a shadow value, if you like,
on the land which

383
00:28:01,037 --> 00:28:04,073
could be incorporated next year.

384
00:28:04,073 --> 00:28:11,077
What Marx is saying here is that
the case of land is a complicated one.

385
00:28:11,077 --> 00:28:13,080
Because, although you might not see any direct

386
00:28:14,007 --> 00:28:18,054
human labour incorporated into that
piece of land, you would see its 'shadow', that is

387
00:28:18,054 --> 00:28:22,193
what we call 'externality effects' arising
from the human labour which is incorporated

388
00:28:22,679 --> 00:28:28,160
in all the land around it.

389
00:28:28,016 --> 00:28:32,100
If you had a little piece of Manhattan,

390
00:28:33,000 --> 00:28:35,099
and you had held onto it since Indian times

391
00:28:35,099 --> 00:28:39,185
and had kept it pristine with no
human labour incorporated into the land lot,

392
00:28:40,085 --> 00:28:42,107
it would therefore have zero value.

393
00:28:43,007 --> 00:28:46,007
But if you went into the market
and sold it for zero value…

394
00:28:46,007 --> 00:28:52,066
well this would be absurd from a financial point of view!

395
00:28:52,066 --> 00:28:55,090
However what about conscience, honor etc….?
Once again what Marx is showing us that

396
00:28:55,009 --> 00:29:01,084
this qualitative inconsistency
also has to take into account the background that

397
00:29:02,065 --> 00:29:06,065
real value has to be produced somewhere.

398
00:29:06,065 --> 00:29:13,065
I mean, imagine an economy

399
00:29:14,052 --> 00:29:19,053
which only exists on trading conscience and honor.

400
00:29:19,062 --> 00:29:22,119
How would we live?

401
00:29:23,019 --> 00:29:27,061
Where would our shirts and shoes and all the
rest come from? And Marx is kind of saying:

402
00:29:27,061 --> 00:29:31,159
well, these qualitative incongruities
also have to be examined in

403
00:29:32,059 --> 00:29:35,114
the light of where the
real value comes from

404
00:29:36,014 --> 00:29:37,087
and what this real value

405
00:29:37,087 --> 00:29:40,142
is all about. It seems to me those are

406
00:29:41,042 --> 00:29:43,103
the very pressing questions

407
00:29:44,003 --> 00:29:50,046
which confront us when we think
about how the global economy works.

408
00:29:50,046 --> 00:29:51,141
In the United States people like to say

409
00:29:52,041 --> 00:29:56,046
well, the working class has disappeared, so value is no longer being

410
00:29:56,091 --> 00:30:01,184
produced here anymore, but then
you've got to think about what's going on in China.

411
00:30:02,084 --> 00:30:04,155
However when you think about the fact that

412
00:30:05,055 --> 00:30:11,064
although everybody is now concentrating
on making megabucks out of financial operations,

413
00:30:11,064 --> 00:30:17,073
the global proletariat has doubled since 1970,

414
00:30:17,073 --> 00:30:18,135
and value is still being produced

415
00:30:19,035 --> 00:30:21,118
in very traditional kinds
of ways even though it

416
00:30:22,018 --> 00:30:31,090
is being distributed in quite other ways.

417
00:30:33,005 --> 00:30:35,624
So this is the main point

418
00:30:36,119 --> 00:30:40,870
Marx wants to make about

419
00:30:40,087 --> 00:30:45,162
this measure of value / standard of price movement,

420
00:30:46,062 --> 00:30:49,100
which then takes him into the second long section

421
00:30:50,000 --> 00:30:57,000
on the means of circulation.

422
00:30:59,001 --> 00:31:06,013
Now he starts off with the following observation:

423
00:31:06,022 --> 00:31:08,053
"We saw in a former chapter

424
00:31:08,053 --> 00:31:15,053
that the exchange of commodities implies
contradictory and mutually exclusive conditions."

425
00:31:17,041 --> 00:31:19,114
Can anybody remember what those

426
00:31:20,014 --> 00:31:27,014
contradictions and mutually exclusive conditions
were? »STUDENT: If you're buying you're not selling?

427
00:31:28,062 --> 00:31:34,114
»HARVEY: No, he's referring back to the
section on the relative and equivalent forms of value.

428
00:31:35,014 --> 00:31:38,106
And if you go back to page 148

429
00:31:39,006 --> 00:31:41,235
you'll see he says:"…use-value

430
00:31:41,289 --> 00:31:46,730
becomes the form of appearance
of its opposite namely value.

431
00:31:46,073 --> 00:31:48,159
Concrete-labour becomes a form of manifestation

432
00:31:49,059 --> 00:31:53,065
of its opposite namely abstract labour.

433
00:31:54,019 --> 00:31:59,111
Private labour becomes a form of manifestation
of its opposite i.e. social labour,"

434
00:32:00,011 --> 00:32:04,077
back on page 148 and 151.

435
00:32:04,077 --> 00:32:08,125
So he's immediately referring back then to those

436
00:32:09,025 --> 00:32:13,103
tensions between the particularity
of the money commodity and

437
00:32:14,003 --> 00:32:21,012
its supposed universal capacity to represent

438
00:32:21,012 --> 00:32:24,100
socially necessary labour time in
the global economy.

439
00:32:25,000 --> 00:32:27,043
He then makes a very interesting observation, and

440
00:32:27,043 --> 00:32:30,067
I highlight it because

441
00:32:30,067 --> 00:32:35,118
it's important to grasp Marx's mode of thinking.

442
00:32:36,018 --> 00:32:42,083
He says: "The further development of the
commodity does not abolish these contradictions,

443
00:32:42,083 --> 00:32:45,168
but rather provides the form
within which they have room to move.

444
00:32:46,068 --> 00:32:50,072
This is in general the way in
which real contradictions are resolved."

445
00:32:51,007 --> 00:32:55,029
In a way Marx is here describing his dialectical method.

446
00:32:55,092 --> 00:32:57,441
By expanding the argument

447
00:32:58,269 --> 00:32:59,350
and the contradictions we see Marx

448
00:33:00,079 --> 00:33:03,120
allows the contradictions greater

449
00:33:03,012 --> 00:33:06,057
purchase, greater possibility of movement.

450
00:33:06,057 --> 00:33:10,143
Then Marx uses an interesting metaphor:
"for instance, it is a contradiction to depict

451
00:33:11,043 --> 00:33:17,060
one body as constantly falling towards another
and at the same time constantly flying away from it.

452
00:33:17,006 --> 00:33:24,006
The ellipse is a form of motion within which
this contradiction is both realized and resolved."

453
00:33:26,039 --> 00:33:30,125
Now I'm sure some of you feel Marx's argument is
indeed elliptical.

454
00:33:31,025 --> 00:33:34,094
But, I think this metaphor is a very
important one, because we

455
00:33:34,094 --> 00:33:37,185
notice that an ellipse is about motion;

456
00:33:38,085 --> 00:33:39,169
it's not

457
00:33:40,069 --> 00:33:43,288
about stasis; it's about movement,

458
00:33:43,909 --> 00:33:46,240
and it's about perpetual movement,

459
00:33:46,024 --> 00:33:49,086
perpetual motion.

460
00:33:49,086 --> 00:33:52,133
So in a sense he is indeed

461
00:33:53,033 --> 00:33:57,085
using this kind of method

462
00:33:57,085 --> 00:34:04,085
to expand the general structure of
his argument.

463
00:34:10,589 --> 00:34:11,685
So Marx's first

464
00:34:12,549 --> 00:34:16,573
concern is to set up an argument

465
00:34:16,789 --> 00:34:17,806
about

466
00:34:17,959 --> 00:34:22,033
what he calls a metamorphosis of commodities

467
00:34:22,699 --> 00:34:27,701
which is in fact a process of circulation.

468
00:34:27,719 --> 00:34:28,815
Here also

469
00:34:29,679 --> 00:34:33,692
we start to get a different idea of what the
dialectic is about; it's about

470
00:34:33,809 --> 00:34:36,840
the study of motion. I've mentioned process
a lot,

471
00:34:37,119 --> 00:34:39,187
but now we are looking at circulation,

472
00:34:39,799 --> 00:34:41,878
we're looking at motion.

473
00:34:42,589 --> 00:34:47,658
And that motion is what he calls on page 198 a social metabolism.

474
00:34:48,279 --> 00:34:51,990
He has already talked about the metabolic relation
to nature but now he's talking about

475
00:34:51,099 --> 00:34:58,099
the social metabolism.

476
00:35:01,229 --> 00:35:02,287
He puts it this way on page 199:

477
00:35:02,809 --> 00:35:05,841
"exchange (…)

478
00:35:06,129 --> 00:35:08,217
produces a differentiation of the commodity

479
00:35:09,009 --> 00:35:11,910
into two elements, commodity and money,

480
00:35:11,091 --> 00:35:14,144
an external opposition…"

481
00:35:15,044 --> 00:35:17,903
And further down the page he calls this

482
00:35:18,299 --> 00:35:23,361
an antagonistic form.

483
00:35:23,919 --> 00:35:27,952
So we start now to think about the world of
commodities on the one hand

484
00:35:28,249 --> 00:35:32,334
and money on the other and then talk about
the relationship between them.

485
00:35:33,099 --> 00:35:39,107
Then he immediately shifts his argument from

486
00:35:39,179 --> 00:35:42,206
a commodity-commodity exchange relation,

487
00:35:42,449 --> 00:35:44,532
a C-C relation such as in

488
00:35:45,279 --> 00:35:47,285
a Robinson Crusoe economy,

489
00:35:47,339 --> 00:35:49,400
to look at

490
00:35:49,949 --> 00:35:54,968
a C-M-C relationship,

491
00:35:55,139 --> 00:35:56,212
commodity to money to

492
00:35:56,869 --> 00:36:00,170
commodity circulation.

493
00:36:00,017 --> 00:36:04,086
And he sets up an argument

494
00:36:04,239 --> 00:36:09,287
about this form of circulation.

495
00:36:09,719 --> 00:36:11,773
One of Marx's big arguments is that

496
00:36:12,259 --> 00:36:18,263
inferences you would draw from a commodity to
commodity relation, cannot be applied

497
00:36:18,299 --> 00:36:21,700
to the commodity-money-commodity

498
00:36:21,007 --> 00:36:28,007
metamorphosis.

499
00:36:29,239 --> 00:36:33,294
The first metamorphosis involves the transformation of

500
00:36:37,539 --> 00:36:41,540
commodities into money.

501
00:36:41,639 --> 00:36:44,647
He points out that you are going from the particular

502
00:36:44,719 --> 00:36:47,811
to the universal.

503
00:36:48,639 --> 00:36:54,720
And going from the particular to the universal

504
00:36:55,449 --> 00:36:59,880
faces a whole range of different problems.

505
00:36:59,088 --> 00:37:00,181
You have to find somebody out there

506
00:37:01,081 --> 00:37:03,210
who wants your commodity.

507
00:37:03,939 --> 00:37:07,940
You've got to fulfill a social need.

508
00:37:07,949 --> 00:37:10,955
In the midst of the tense complications of the

509
00:37:11,549 --> 00:37:13,580
social division of labour,

510
00:37:13,859 --> 00:37:14,866
somehow

511
00:37:14,929 --> 00:37:16,936
I have to find somebody in the market

512
00:37:17,629 --> 00:37:21,665
who wants my particular commodity and will give me

513
00:37:21,989 --> 00:37:23,680
the money equivalent

514
00:37:23,068 --> 00:37:28,657
of my commodity.

515
00:37:29,269 --> 00:37:32,315
So this means that the labour expended
on the commodity,

516
00:37:32,729 --> 00:37:34,733
as he says on page 201,

517
00:37:34,769 --> 00:37:40,827
"…must therefore be of a socially useful kind…"

518
00:37:41,349 --> 00:37:46,349
And then Marx goes on to say that "perhaps the
commodity is the product of a new kind of labour

519
00:37:46,349 --> 00:37:51,880
and claims to satisfy a newly arisen need,
or is even trying to bring forth

520
00:37:51,088 --> 00:37:56,557
a new need on its own account."

521
00:37:57,349 --> 00:37:58,440
Here he's beginning to talk about

522
00:37:59,259 --> 00:38:01,400
the problem of need creation

523
00:38:01,004 --> 00:38:02,953
under capitalism.

524
00:38:03,349 --> 00:38:05,352
What's going to happen?

525
00:38:05,649 --> 00:38:08,880
How does an entrepreneur create a need

526
00:38:08,088 --> 00:38:10,257
for a new product?

527
00:38:11,049 --> 00:38:12,087
Perhaps

528
00:38:12,429 --> 00:38:16,487
innovations have other effects, and he goes on to say
"today the product satisfies a social need,.

529
00:38:17,009 --> 00:38:24,009
tomorrow it may perhaps be expelled partly or
completely from its place by a similar product."

530
00:38:28,068 --> 00:38:30,737
What happens in the market therefore is

531
00:38:32,739 --> 00:38:35,814
a whole set of difficulties which have to be overcome

532
00:38:36,489 --> 00:38:38,494
before I can convert my commodity

533
00:38:38,539 --> 00:38:42,544
into money.

534
00:38:43,039 --> 00:38:46,093
I encounter, as he notes on page 202,

535
00:38:46,579 --> 00:38:52,640
the fluctuating demand and supply conditions,
which is already mentioned.

536
00:38:53,189 --> 00:38:56,257
So Marx then ends up saying

537
00:38:56,869 --> 00:38:58,897
on page 202 towards the bottom,
"we see then

538
00:38:59,149 --> 00:39:02,160
that commodities are in love with money,

539
00:39:02,259 --> 00:39:06,278
but that the course of true love never did run smooth.

540
00:39:06,449 --> 00:39:09,497
The quantitative articulation of society's
productive organism,

541
00:39:09,929 --> 00:39:13,998
by which its scattered elements are integrated
into the system of the division of labour,

542
00:39:14,619 --> 00:39:16,880
is as haphazard and spontaneous

543
00:39:16,088 --> 00:39:18,877
as its qualitative articulation."

544
00:39:19,669 --> 00:39:23,757
Here we are going back to the imagery
of the hidden hand and the atomistic

545
00:39:24,549 --> 00:39:26,567
qualities of capitalist production,

546
00:39:26,729 --> 00:39:31,764
which he is presuming and assuming.

547
00:39:32,079 --> 00:39:35,113
Marx says "the owners of commodities
therefore find out

548
00:39:35,419 --> 00:39:40,425
that the same division of labour which turns them
into independent private producers

549
00:39:41,019 --> 00:39:44,117
also makes the social process of production and
the relations of the individual producers to

550
00:39:44,999 --> 00:39:47,071
each other within that process

551
00:39:47,719 --> 00:39:48,796
independent of the producers themselves."

552
00:39:49,489 --> 00:39:53,512
Back again to the Adam Smithian argument.

553
00:39:53,719 --> 00:39:56,804
"They also find out that the independence
of the individuals from each other has

554
00:39:57,569 --> 00:39:58,613
its counterpart and supplement

555
00:39:59,009 --> 00:40:03,680
in a system of all-round material dependence."

556
00:40:03,068 --> 00:40:08,377
That means that although you are independent in the
market, you are dependent

557
00:40:08,989 --> 00:40:10,038
on the market

558
00:40:10,479 --> 00:40:17,479
in order to market your produce.

559
00:40:20,159 --> 00:40:23,180
So he then pulls this all together around

560
00:40:23,369 --> 00:40:25,411
this description which I've already used to clarify

561
00:40:25,789 --> 00:40:28,875
the relationship of going from the particular
to the universal on page 203

562
00:40:35,249 --> 00:40:36,930
He then goes to the second component

563
00:40:39,179 --> 00:40:41,700
and says well let's look at

564
00:40:41,007 --> 00:40:44,476
this M-C piece.

565
00:40:45,169 --> 00:40:46,222
Here we're going

566
00:40:46,699 --> 00:40:47,748
from the universal

567
00:40:48,189 --> 00:40:55,189
to the particular.

568
00:40:55,038 --> 00:41:00,607
Now clearly, what this means when he
starts out by saying that

569
00:41:00,949 --> 00:41:02,972
all commodities are alienable is

570
00:41:03,179 --> 00:41:09,214
that they can all be bought and sold,

571
00:41:09,529 --> 00:41:14,529
and there is therefore a universal alienation,

572
00:41:14,529 --> 00:41:16,590
in that technical sense of everyone willing

573
00:41:17,139 --> 00:41:20,204
to give up their commodities,

574
00:41:21,939 --> 00:41:28,939
in order to trade them away.

575
00:41:30,899 --> 00:41:35,991
Clearly it is easier to go from the universal
to the particular for if I command money, and

576
00:41:36,819 --> 00:41:42,868
I go into the marketplace, I can buy whatever
commodity I want.

577
00:41:43,309 --> 00:41:46,313
So the difficulties and the traumas which
attach

578
00:41:46,349 --> 00:41:50,351
to the C-M transition

579
00:41:50,549 --> 00:41:51,890
are very different from the M-C transition .

580
00:41:51,089 --> 00:41:55,094
There is, if you like, a different power relation
involved here,

581
00:41:55,094 --> 00:42:00,083
and that has become crucial to the argument.

582
00:42:00,929 --> 00:42:05,006
Those who command the universal equivalent,

583
00:42:05,699 --> 00:42:07,751
namely money
are in a powerful position

584
00:42:08,219 --> 00:42:10,315
vis-a-vis those

585
00:42:11,179 --> 00:42:15,216
who command commodities.

586
00:42:15,549 --> 00:42:17,602
It's a latent power, and

587
00:42:18,079 --> 00:42:20,146
at the moment we can just see it is as

588
00:42:20,749 --> 00:42:21,771
continuing power, but

589
00:42:21,969 --> 00:42:25,640
you can see

590
00:42:25,064 --> 00:42:29,033
how something can build there.

591
00:42:29,609 --> 00:42:32,680
So then Marx goes on to say that he will call

592
00:42:33,319 --> 00:42:35,385
this whole process

593
00:42:37,439 --> 00:42:44,439
the circulation of commodities.

594
00:42:45,579 --> 00:42:48,635
And on page 208, he goes into

595
00:42:50,869 --> 00:42:53,870
a very significant diversion

596
00:42:54,879 --> 00:43:01,879
to the main argument.

597
00:43:02,519 --> 00:43:07,550
In the middle of page 208 Marx says "nothing
could be more foolish than the dogma

598
00:43:07,829 --> 00:43:11,829
that because every sale is a purchase,

599
00:43:11,829 --> 00:43:13,831
and every purchase a sale,

600
00:43:13,849 --> 00:43:18,870
the circulation of commodities necessarily
implies an equilibrium between sales

601
00:43:19,059 --> 00:43:23,146
and purchases."

602
00:43:23,929 --> 00:43:26,946
He then goes through

603
00:43:27,099 --> 00:43:29,180
an analysis

604
00:43:29,018 --> 00:43:36,018
of this argument,

605
00:43:36,039 --> 00:43:40,408
and quickly points out at the bottom of
the page that

606
00:43:40,759 --> 00:43:47,759
"but no one directly needs to purchase because
he has just sold."

607
00:43:48,589 --> 00:43:52,657
Then Marx comments, "circulation bursts
through all the temporal, spatial

608
00:43:54,069 --> 00:43:58,155
and personal barriers imposed by the direct
exchange of products,

609
00:43:58,929 --> 00:44:02,972
and it does this by splitting up the direct
identity present in this case

610
00:44:03,359 --> 00:44:04,442
between the exchange

611
00:44:05,189 --> 00:44:07,400
of one's own product and

612
00:44:07,004 --> 00:44:09,943
the acquisition of someone
else's products

613
00:44:10,339 --> 00:44:12,422
into the two antithetical processes of sale

614
00:44:13,169 --> 00:44:15,263
and purchase."

615
00:44:16,109 --> 00:44:21,184
To say that these mutually independent and
antithetical processes form an internal unity

616
00:44:21,859 --> 00:44:25,380
is also to say that their internal unity
moves forward

617
00:44:25,038 --> 00:44:28,127
through external antithesis.

618
00:44:28,469 --> 00:44:29,541
These two processes

619
00:44:30,189 --> 00:44:35,234
lack internal independence because they
complement each other.

620
00:44:35,639 --> 00:44:40,710
Hence if the assertion of their external independence
proceeds to a certain critical point,

621
00:44:40,071 --> 00:44:50,970
their unity makes itself felt violently by
producing a crisis.

622
00:44:56,579 --> 00:44:58,910
Here Marx is arguing that

623
00:44:58,091 --> 00:45:00,250
when I've sold a commodity

624
00:45:01,069 --> 00:45:04,082
and I've got the money from my sale,

625
00:45:04,199 --> 00:45:08,294
I may decide to hold onto that money.

626
00:45:09,149 --> 00:45:15,226
And if I decide to hold onto the money there will be less
money to buy commodities.

627
00:45:15,919 --> 00:45:20,935
Now why would I decide to hold onto the money?

628
00:45:21,079 --> 00:45:26,141
I would hold onto the money in a situation
of insecurity,

629
00:45:26,699 --> 00:45:27,796
I would keep the money

630
00:45:28,669 --> 00:45:30,761
because I wanted the universal equivalent,

631
00:45:31,589 --> 00:45:33,570
and as will be seen later some people

632
00:45:33,057 --> 00:45:35,166
hold onto money because they love it

633
00:45:35,679 --> 00:45:36,772
and fetishize it.

634
00:45:37,609 --> 00:45:40,707
There are all kinds of reasons why people
might hold onto money.

635
00:45:41,589 --> 00:45:43,685
The point here according to Marx is that

636
00:45:49,179 --> 00:45:53,181
if a lot of people decide to hold onto money

637
00:45:53,199 --> 00:45:56,264
then the circulation process stops;

638
00:45:56,849 --> 00:46:01,851
when the circulation process stops the
demand for commodities drops off,

639
00:46:02,049 --> 00:46:04,126
and when demand for commodities drops off

640
00:46:04,819 --> 00:46:11,824
many people are left with unsold commodities.

641
00:46:12,809 --> 00:46:18,857
Furthermore the fact that you have money allows you to get away

642
00:46:19,289 --> 00:46:24,312
from the immediate temporality and
spatiality of barter.

643
00:46:24,519 --> 00:46:27,563
For example you can hold onto the money for six months and

644
00:46:27,959 --> 00:46:31,052
then take it to Japan,

645
00:46:31,889 --> 00:46:35,952
Singapore or Brazil,

646
00:46:36,519 --> 00:46:39,576
and then go purchase there six months later.

647
00:46:40,089 --> 00:46:42,118
Once you've got your money

648
00:46:42,379 --> 00:46:45,471
you can make all kinds of decisions about it.

649
00:46:46,299 --> 00:46:50,316
Now what Marx is criticizing here

650
00:46:50,469 --> 00:47:02,520
is a famous proposition called Say's law.

651
00:47:04,849 --> 00:47:08,867
Say's law is commented on by Marx in the next
footnote on the next page as follows,

652
00:47:12,038 --> 00:47:16,517
"the conception adopted by Ricardo from the
tedious Say, that over-production is not possible

653
00:47:16,859 --> 00:47:19,877
or at least that no general glut of the market
is possible,

654
00:47:20,039 --> 00:47:25,075
is based on the proposition that products
are exchanged against products."

655
00:47:25,399 --> 00:47:27,411
Say's law

656
00:47:27,519 --> 00:47:31,571
was also held by Ricardo

657
00:47:32,039 --> 00:47:35,053
and it dominated thinking

658
00:47:35,179 --> 00:47:37,246
in classical political economy.

659
00:47:37,849 --> 00:47:41,854
And as a result the classical political economists

660
00:47:41,899 --> 00:47:43,967
for the most part claimed

661
00:47:44,579 --> 00:47:48,638
there could be no general crisis of capitalism.

662
00:47:49,169 --> 00:47:53,193
Why not? Because every purchase is a sale and
every sale is a purchase, therefore you are always

663
00:47:53,409 --> 00:47:54,452
in equilibrium.

664
00:47:54,839 --> 00:47:58,911
There may be a problem with too many shoes,
or too many shirts, or too many apples,

665
00:47:59,559 --> 00:48:06,559
but you cannot have a generalized crisis.

666
00:48:07,689 --> 00:48:11,780
Because Say's law said you couldn't.

667
00:48:12,599 --> 00:48:17,658
And Say's law actually carried over from the
classical period into the neoclassical period.

668
00:48:18,189 --> 00:48:22,390
It was held by all economists at the end of
the nineteenth century up to the 1930's.

669
00:48:25,329 --> 00:48:30,361
And in the 1930's there were still
economists saying that

670
00:48:30,649 --> 00:48:33,688
a general crisis of capitalism is impossible.

671
00:48:35,739 --> 00:48:37,772
And there you had one!

672
00:48:38,069 --> 00:48:42,080
Marx has a very funny line about that elsewhere,
where he notes that faced with

673
00:48:42,179 --> 00:48:45,227
a general crisis the only response made by

674
00:48:45,659 --> 00:48:47,722
most economists is something to the effect that

675
00:48:48,289 --> 00:48:50,331
it wouldn't happen this way if only

676
00:48:50,709 --> 00:48:55,728
the economy worked according to my textbook.

677
00:48:55,899 --> 00:49:02,160
But what Marx is saying is that
you can indeed have a general crisis.

678
00:49:02,016 --> 00:49:07,345
And how a general crisis occurs
was also spotted by Keynes

679
00:49:13,349 --> 00:49:19,380
Now what Keynes did in a series of very interesting
essays called Essays in Biography, back in the 1930's

680
00:49:19,659 --> 00:49:34,674
was to point out the error of accepting Say's law

681
00:49:34,809 --> 00:49:38,818
Keynes also pointed out that there were some
classical political economists

682
00:49:39,709 --> 00:49:42,741
who did not accept Say's law and claimed

683
00:49:43,029 --> 00:49:45,690
there could indeed be a general crisis.

684
00:49:45,069 --> 00:49:49,146
At the time they went by the charming
name of the 'general glut theorists'.

685
00:49:52,319 --> 00:49:56,321
And there were two in particular, Malthus and Sismondi.

686
00:49:58,799 --> 00:50:02,836
Which is a bit of a problem for Marx because
Marx couldn't abide Malthus on other grounds,

687
00:50:04,069 --> 00:50:06,140
but Malthus certainly believed there

688
00:50:06,779 --> 00:50:14,300
could be a generalized crisis, and that such a generalized
crisis would be be the crisis of what he called effective demand;

689
00:50:16,139 --> 00:50:18,237
Not enough money to buy all the commodities.

690
00:50:20,639 --> 00:50:25,640
The other glut theorist was a Frenchman called Sismondi

691
00:50:29,359 --> 00:50:32,395
who also disputed Say's law. However they were a minority.

692
00:50:33,439 --> 00:50:39,530
What Keynes did was to point out the importance
of what he called the liquidity trap.

693
00:50:40,349 --> 00:50:47,210
The liquidity trap develops in a time of difficulty

694
00:50:47,021 --> 00:50:49,170
because people start to hold back money.

695
00:50:49,359 --> 00:50:50,425
As they hold onto money

696
00:50:51,019 --> 00:50:57,020
the difficulties get worse so
more people hold onto money.

697
00:50:57,029 --> 00:50:59,038
The difficulty is therefore to get out of

698
00:50:59,929 --> 00:51:04,400
this downward spiral

699
00:51:04,004 --> 00:51:06,613
in the economy as more and more people

700
00:51:07,009 --> 00:51:09,082
run for cover and hold back money

701
00:51:09,739 --> 00:51:12,821
rather than investing it back into the market

702
00:51:13,559 --> 00:51:17,632
by buying stuff.

703
00:51:18,649 --> 00:51:24,651
So Keynes also talked about the significance of
effective demand, and of course

704
00:51:24,669 --> 00:51:28,700
Keynesian policies in relationship to the
Great Depression were to

705
00:51:28,979 --> 00:51:31,400
stimulate effective demand through

706
00:51:31,004 --> 00:51:33,613
state expenditures, debt financing,

707
00:51:35,099 --> 00:51:39,140
getting people back to work wherever possible
and getting consumerism back.

708
00:51:40,559 --> 00:51:47,608
Of course a lot of those problems were solved by World
War II and the demand for armaments.

709
00:51:49,579 --> 00:51:53,651
In so many ways World War II was a solution to the effective
demand problem.

710
00:51:54,299 --> 00:51:57,397
You could mop it all up in terms of

711
00:52:00,729 --> 00:52:04,806
armaments and production of armaments
and you would debt finance it,

712
00:52:05,499 --> 00:52:07,578
even debt financing the British.

713
00:52:08,289 --> 00:52:11,510
So you gave the British government something
called lend lease, meaning they took

714
00:52:11,051 --> 00:52:14,560
the commodities and agreed to pay them back later

715
00:52:15,019 --> 00:52:16,068
And when it came time for payment

716
00:52:16,509 --> 00:52:18,570
Keynes was faced with negotiating the

717
00:52:19,119 --> 00:52:23,126
repayment schedule, I think in 1944,

718
00:52:25,459 --> 00:52:26,553
and the American state department said: well,

719
00:52:27,399 --> 00:52:30,493
you give up the British Empire.

720
00:52:31,339 --> 00:52:32,397
And so Keynes answered: you mean

721
00:52:32,919 --> 00:52:37,942
we trade the British Empire for forgiving the
debt?, and the Americans basically said yes.

722
00:52:38,149 --> 00:52:42,157
And that's where British decolonization policy

723
00:52:42,229 --> 00:52:44,277
really came from. Opening the world market

724
00:52:44,709 --> 00:52:46,780
was what the Americans wanted for American capital.

725
00:52:48,129 --> 00:52:52,150
They wanted the closed system of the
British empire opened up.

726
00:52:52,339 --> 00:52:55,413
And they reached their goal through this trade

727
00:52:56,079 --> 00:52:57,152
agreement over lend-lease.

728
00:52:57,809 --> 00:53:00,817
So this is the type of argument which is going on

729
00:53:01,609 --> 00:53:02,618
here in Marx. Marx is saying that

730
00:53:03,509 --> 00:53:07,900
you can indeed develop a general crisis thereby siding with
Malthus and Sismondi.

731
00:53:07,009 --> 00:53:13,218
Later Keynes draws on these arguments refusing
however to cite Marx

732
00:53:14,109 --> 00:53:20,113
Keynes claimed he had never read Marx,
but this is highly doubtful.

733
00:53:21,001 --> 00:53:25,520
However even if he hadn't read Marx there were plenty
of people around him who had.

734
00:53:25,529 --> 00:53:30,572
So Keynes was probably familiar with Marx's arguments
as to why Say's law must be wrong,

735
00:53:32,869 --> 00:53:34,875
as well as the arguments describing the lopsidedness

736
00:53:35,469 --> 00:53:38,521
in this relationship C-M-C where C to M is different
from M to C.

737
00:53:38,989 --> 00:53:42,040
You cannot, as Say's law does, assume

738
00:53:42,499 --> 00:53:47,360
that the laws relative to barter (C-C) also hold
in practice in the C-M-C circulation process

739
00:53:47,036 --> 00:53:51,055
because the transition from C to M is not the same as M to C.

740
00:53:53,769 --> 00:53:55,824
This is a sidebar but a terribly important one, obviously,

741
00:53:56,319 --> 00:53:59,337
for understanding contemporary politics.

742
00:53:59,499 --> 00:54:03,595
Now we get back to the circulation
of money.

743
00:54:04,459 --> 00:54:08,460
What Marx does here is argue in

744
00:54:08,559 --> 00:54:14,561
a set of rather boring maneuvers, if I dare say so.

745
00:54:16,229 --> 00:54:18,262
What he shows us is

746
00:54:18,559 --> 00:54:28,624
the interesting contrast between commodities
and money and how commodities enter into circulation.

747
00:54:29,209 --> 00:54:37,251
Commodities- I buy them, I wear them or I eat them; they
disappear. Therefore commodities enter into and drop out of circulation

748
00:54:37,629 --> 00:54:41,673
Money however stays in circulation,

749
00:54:42,069 --> 00:54:43,118
unless people hoard it

750
00:54:43,559 --> 00:54:46,605
or spirit it away or something like that,
but the general role of money

751
00:54:48,549 --> 00:54:50,601
is to stay in the circulation process.
So you have myriad

752
00:54:52,059 --> 00:54:55,145
commodity exchanges going on,
and you have a

753
00:54:55,919 --> 00:55:03,012
money which is somehow acting as
a lubricant for all this exchange

754
00:55:03,849 --> 00:55:05,917
And the question becomes

755
00:55:06,529 --> 00:55:11,591
how is it a lubricant?

756
00:55:12,149 --> 00:55:17,244
And furthermore: how much of that lubricant
do you need?

757
00:55:18,099 --> 00:55:22,132
So what the next ten pages are taken up with is

758
00:55:22,429 --> 00:55:26,513
the articulation of what we call the
'quantity theory of money',

759
00:55:27,269 --> 00:55:34,307
which is actually fairly similar
to what Ricardo had to say.

760
00:55:34,649 --> 00:55:41,649
So Marx defines the quantity theory first
at the bottom of page 217,

761
00:55:41,939 --> 00:55:45,037
where he says "the total quantity of money
functioning during a given period is a circulating medium

762
00:55:45,919 --> 00:55:55,991
which is determined on the one hand by the sum
of the prices of the commodities in circulation,"

763
00:55:56,639 --> 00:55:59,731
namely the sum of the prices,

764
00:56:00,559 --> 00:56:10,574
"and on the other hand by the rapidity of
alternation of the antithetical processes of circulation."

765
00:56:10,709 --> 00:56:21,772
In other words he is looking at "…the movement of prices,
the quantity of commodities…, and the velocity of circulation."

766
00:56:22,339 --> 00:56:31,351
The mass of money equals

767
00:56:31,459 --> 00:56:35,461
the sum of all of the prices of the commodities
in circulation modified by

768
00:56:37,539 --> 00:56:46,540
the velocity of circulation. The velocity of
circulation is a measure of how much work

769
00:56:47,139 --> 00:56:52,202
a coin or a dollar bill does on a given day.

770
00:56:53,189 --> 00:56:56,280
The velocity therefore tells us how many times
a mass of money exchanges on a given day.

771
00:56:59,209 --> 00:57:01,440
The federal reserve still has

772
00:57:02,015 --> 00:57:07,974
a key measure on the velocity
of money i.e. the velocity of circulation.

773
00:57:08,109 --> 00:57:11,117
You can see how important this concept is because

774
00:57:11,189 --> 00:57:17,224
once you have introduced credit cards as a means of exchange,
for example, you also increase the velocity of circulation.

775
00:57:17,539 --> 00:57:21,608
And as you increase the velocity of circulation,
you need less actual money because

776
00:57:22,229 --> 00:57:26,313
the amount of money you have is going to move much faster.

777
00:57:28,919 --> 00:57:31,004
If a dollar bill exchanges hands only once a day,

778
00:57:31,769 --> 00:57:33,793
that's a different kind of world economy

779
00:57:34,009 --> 00:57:37,105
than an economy where a dollar bill changes
hands five times a day.

780
00:57:37,969 --> 00:57:41,975
You need far more dollar bills if you only
exchange bills once a day than five times a

781
00:57:42,569 --> 00:57:44,605
day, so the amount of money you need

782
00:57:44,929 --> 00:57:49,934
is very sensitive to this measure of velocity circulation.

783
00:57:49,979 --> 00:57:53,047
Now the federal reserve has all kinds of measures
for the velocity of money factor it sets up, and it's

784
00:57:53,659 --> 00:57:55,713
a complicated issue how to measure it.

785
00:57:56,199 --> 00:57:59,900
But what Marx is saying is that
we must take this measure into account.

786
00:57:59,009 --> 00:58:03,648
Ricardo said the same thing so

787
00:58:04,539 --> 00:58:06,628
Marx is not saying much here that has not already been said

788
00:58:07,429 --> 00:58:17,260
in Ricardo, including the idea
of considering the sum of the prices.

789
00:58:17,429 --> 00:58:22,444
So this section deals with setting up the quantity theory of money.

790
00:58:23,319 --> 00:58:25,418
This then leads us into section C

791
00:58:26,309 --> 00:58:28,313
where we move to another level

792
00:58:29,019 --> 00:58:32,100
Here we talk about the way in which

793
00:58:32,829 --> 00:58:38,829
coins and symbols of value start to take on
certain functions

794
00:58:41,017 --> 00:58:44,516
And here we will find immediately:

795
00:58:44,669 --> 00:58:48,681
"The weight of gold represented in
the imagination by the prices of money-names

796
00:58:48,789 --> 00:58:51,882
of the commodities has to confront those commodities,
within circulation,

797
00:58:52,719 --> 00:58:56,767
as coins or pieces of gold of the same denomination.

798
00:58:57,199 --> 00:58:59,231
The business of coining,

799
00:58:59,519 --> 00:59:02,583
like the establishing of a standard
measure of prices,

800
00:59:03,159 --> 00:59:09,200
is an attribute proper to the state." State power becomes crucial.

801
00:59:11,469 --> 00:59:15,548
"The different national uniforms worn at home
by gold and silver as coins, but taken off again

802
00:59:16,259 --> 00:59:18,304
when they appear on the world market,

803
00:59:18,709 --> 00:59:20,990
demonstrate the separation between the internal

804
00:59:20,099 --> 00:59:22,164
or national spheres of commodity circulation

805
00:59:23,064 --> 00:59:27,713
and its universal sphere, the world market."

806
00:59:28,289 --> 00:59:31,304
This again is something which is going to
come back in the chapter about the world

807
00:59:31,439 --> 00:59:33,521
market and the universal sphere.

808
00:59:34,259 --> 00:59:39,287
Out of this arises, he says on page 223 ,
"…the latent possibility

809
00:59:39,539 --> 00:59:43,546
of replacing metallic money with tokens made
of some…material, i.e. symbols.

810
00:59:46,729 --> 00:59:50,753
And he observes further down: "Small change appears
alongside gold for the payment of fractional

811
00:59:50,969 --> 00:59:53,022
parts of the smallest gold coin;

812
00:59:53,499 --> 00:59:57,501
gold constantly enters into retail circulation,
although it is just as constantly being

813
00:59:57,699 --> 01:00:01,782
thrown out again by being exchanged with small change."

814
01:00:02,529 --> 01:00:03,573
And then on the next page,

815
01:00:03,969 --> 01:00:05,180
he talks about

816
01:00:05,018 --> 01:00:09,587
"…nonconvertible paper money issued by
the state and given forced currency."

817
01:00:09,749 --> 01:00:11,751
Issues of paper money.

818
01:00:11,769 --> 01:00:14,841
Here he begins to talk about the way

819
01:00:16,076 --> 01:00:17,535
"…credit-money

820
01:00:18,219 --> 01:00:23,312
(may) take root spontaneously in the function
of money as a means of payment."

821
01:00:24,149 --> 01:00:25,164
So here we get

822
01:00:25,299 --> 01:00:28,345
a replacement going on, a replacement of gold

823
01:00:28,759 --> 01:00:32,765
by symbols, by paper, by coins.

824
01:00:33,359 --> 01:00:35,422
Why would that occur?

825
01:00:35,989 --> 01:00:37,994
Well, because gold is

826
01:00:38,489 --> 01:00:39,577
very awkward

827
01:00:40,369 --> 01:00:43,410
as a means of circulation.

828
01:00:43,779 --> 01:00:46,807
If every time you engage in this transaction

829
01:00:47,059 --> 01:00:49,880
you need a small grain of gold

830
01:00:49,088 --> 01:00:52,957
it would be be horribly messy.

831
01:00:53,749 --> 01:00:54,847
So indeed

832
01:00:55,729 --> 01:00:57,755
the requirements of circulation,

833
01:00:57,989 --> 01:01:00,073
meaning what is socially necessary in order

834
01:01:00,829 --> 01:01:05,850
for this circulation to become general
and for commodities to be exchanged in a general way,

835
01:01:07,032 --> 01:01:11,621
requires you to leave gold behind and instead use tokens,

836
01:01:11,909 --> 01:01:16,630
symbols, paper and so forth.

837
01:01:18,819 --> 01:01:19,867
"Paper money", he says on the bottom of

838
01:01:20,299 --> 01:01:26,305
page 225 "is a symbol of gold,"
a symbol of money."

839
01:01:26,359 --> 01:01:30,442
"Its relation to the values of commodities
consists only in this: they find imaginary expression

840
01:01:31,189 --> 01:01:33,194
in certain quantities of gold,

841
01:01:33,239 --> 01:01:40,239
and the same quantities are symbolically and
physically represented by the paper.

842
01:01:40,279 --> 01:01:43,313
Only insofar as paper money
represents gold,

843
01:01:43,619 --> 01:01:50,619
which like all other commodities has value,
is it a symbol of value."

844
01:01:58,569 --> 01:02:00,597
Now, it's interesting here

845
01:02:00,849 --> 01:02:07,849
to think about whether he is again working
with a logical argument or a historical argument.

846
01:02:07,989 --> 01:02:20,044
Marx talks about how different forms of
money were pushed out through historical evolution,

847
01:02:20,539 --> 01:02:30,610
and how important the state power was
in regulating what determines the value of money.

848
01:02:31,249 --> 01:02:38,334
In this chapter the power of the state becomes critical.
In a way the state was already present in chapter two,

849
01:02:39,099 --> 01:02:42,108
when he talked about the legal and juridical infrastructure
- ultimately a state function- being necessary

850
01:02:42,189 --> 01:02:52,241
for market exchange to flourish. Here Marx is explicitly referring to

851
01:02:52,709 --> 01:02:58,768
the way in which the state becomes critical in order to understand

852
01:02:59,299 --> 01:03:06,360
how money becomes a symbol i.e. totem or tokens.

853
01:03:18,036 --> 01:03:27,165
This transformation once again has an analogy
to the transformation of money as a measure into

854
01:03:27,489 --> 01:03:35,506
a standard of price. So this new
transformation brings about a radical

855
01:03:35,659 --> 01:03:43,717
redefinition of what money is about, and that
leads us into the final section 3 which is: Money.

856
01:03:44,239 --> 01:03:50,313
Here again Marx argues that at the
end of the day there is only one money.

857
01:03:50,979 --> 01:03:54,980
And it has to perform both of those functions.
How is it going to do that?

858
01:03:56,079 --> 01:04:07,080
We observe that as a measure of value, gold
is fine, however as a means of circulation it is not.

859
01:04:07,179 --> 01:04:11,253
As a standard of price
gold starts to fade into the background.

860
01:04:11,919 --> 01:04:19,968
The connectivity between the socially necessary labour
time embodied in the money commodity which gets mediated

861
01:04:20,409 --> 01:04:33,467
in all these different ways leads us to
lose contact with the monetary base.

862
01:04:35,989 --> 01:04:44,054
This leads Marx to consider a number
of elements involved in the contradictions internalized within

863
01:04:44,639 --> 01:04:48,700
the money form itself when considered as universal money.

864
01:04:49,249 --> 01:04:56,249
And the first one is the issue of hoarding.

865
01:04:56,039 --> 01:05:02,478
As Marx notes "when the circulation of commodities
first develops, there also develops the necessity

866
01:05:02,829 --> 01:05:07,867
and passionate desire to hold fast to the
product of the first metamorphosis.

867
01:05:08,209 --> 01:05:12,980
This product is the transformed shape of
the commodity or its gold chrysalis."

868
01:05:13,999 --> 01:05:17,043
Commodities are thus sold not in
order to buy commodities,

869
01:05:17,439 --> 01:05:23,310
but in order to replace their commodity form
by their money form.

870
01:05:23,031 --> 01:05:27,250
Instead of being merely a way of
mediating the metabolic process,

871
01:05:27,529 --> 01:05:32,538
this change of form then
becomes an end in itself.

872
01:05:33,429 --> 01:05:44,526
"The money," he says, "is petrified into a hoard,
and the seller of commodities also becomes a hoarder of money."

873
01:05:45,399 --> 01:05:49,474
What he points to here, is
another transition.

874
01:05:50,149 --> 01:05:53,153
Instead of thinking about the C-M-C transition,

875
01:05:55,209 --> 01:06:02,209
we start to think about the M-C-M transition.

876
01:06:02,209 --> 01:06:08,215
Money into commodities, commodities into money.

877
01:06:08,269 --> 01:06:18,368
What the hoarders want is money,
they want the universal power money begets.

878
01:06:19,259 --> 01:06:28,332
But it's interesting because Marx
talks about this in a sort of double language.

879
01:06:28,989 --> 01:06:32,087
That it exerts a passionate desire.

880
01:06:32,969 --> 01:06:37,052
Okay, so passionate desire is there, but then
he says it is also necessary. Why is it necessary?

881
01:06:37,799 --> 01:06:47,842
Why is hoarding necessary to commodity exchange?

882
01:06:48,229 --> 01:06:53,287
The first reason is given at the bottom of page 228:

883
01:06:57,069 --> 01:07:00,136
because when you enter the market, you enter into it
at a certain time which implies

884
01:07:00,739 --> 01:07:07,788
that when you need something in the market, you
would have saved up enough money beforehand to go into it.

885
01:07:08,229 --> 01:07:17,293
If you are a farmer and say you produced and sold your crop
in September, you have to hoard the money

886
01:07:17,869 --> 01:07:23,710
in order to buy the seeds and the energy
you will need in the spring to plant the crop,

887
01:07:23,071 --> 01:07:26,150
hire the labour and so forth.

888
01:07:26,789 --> 01:07:36,863
So hoarding is something which is implicit in
what we will call the time structure

889
01:07:37,529 --> 01:07:43,566
of the production of commodities.If all commodities were
produced and sold in the same time frame

890
01:07:43,899 --> 01:07:50,934
you wouldn't need hoarding. But the fact is, they are not.
Some take a long time to produce while

891
01:07:51,249 --> 01:07:57,310
others are produced immediately
and consumed immediately.

892
01:07:57,859 --> 01:08:06,957
As Marx notes on the top of page 229,"in this way, hoards
of gold and silver of the most various sizes are piled up at all

893
01:08:07,839 --> 01:08:10,848
points of commercial intercourse."
And it is necessary that this happens.

894
01:08:11,739 --> 01:08:19,808
"With the possibility of keeping hold of the commodity's exchange-value,
or the exchange-value of the commodity, the lust for gold awakens."

895
01:08:20,429 --> 01:08:25,492
The passion and desire comes into play.

896
01:08:26,059 --> 01:08:35,087
"Gold is a wonderful thing!, Its owner is master
of all he desires. Gold can even enable souls to enter Paradise."

897
01:08:35,339 --> 01:08:42,210
The papacy in the medieval period, was in the habit of selling
indulgences which guaranteed your entry into heaven.

898
01:08:42,021 --> 01:08:50,950
And there are some people who maintain that the Vatican
was one of the first great capitalistic institutions as a consequence of this.

899
01:08:51,139 --> 01:08:57,167
We're selling entry into heaven.
I mean, talk about selling conscience and honor,

900
01:08:57,419 --> 01:09:06,270
this is selling something really interesting!

901
01:09:06,027 --> 01:09:10,556
"Since money." Marx says, "does not reveal what
has been transformed into it, everything whether a commodity

902
01:09:10,799 --> 01:09:13,140
or not is convertible into money.

903
01:09:13,014 --> 01:09:16,833
Everything becomes 'saleable and purchaseable.'"

904
01:09:16,959 --> 01:09:21,991
Here he's talking about the potentiality for the
commodification of everything.

905
01:09:22,279 --> 01:09:28,367
Once you use a money system, you could hang a
price on anything leading to the possible commodification of everything.

906
01:09:29,159 --> 01:09:32,242
And he continues "nothing is immune from its alchemy,
the bones of the saints cannot withstand it,

907
01:09:32,989 --> 01:09:34,989
let alone more delicate things.

908
01:09:34,989 --> 01:09:39,013
Just as in money every qualitative difference
between commodities is extinguished,

909
01:09:39,229 --> 01:09:40,297
so too for its part,

910
01:09:40,909 --> 01:09:42,760
as a radical leveller".

911
01:09:42,076 --> 01:09:45,090
Again here is an interesting theme recurrent in
Marx, something that acts as a radical leveller,

912
01:09:45,009 --> 01:09:49,478
something capable of reducing everything to the same metric,

913
01:09:52,889 --> 01:09:55,420
namely that everything should have a price

914
01:09:55,639 --> 01:09:58,530
"It extinguishes," Marx says, "all distinctions".

915
01:09:58,053 --> 01:10:02,302
"But money is itself a commodity,
an external object

916
01:10:02,779 --> 01:10:07,785
capable of becoming the private property
of any individual."

917
01:10:07,839 --> 01:10:10,150
Now this is a reversal of

918
01:10:10,015 --> 01:10:13,030
item three in the contradictions

919
01:10:13,003 --> 01:10:17,078
he noted on the relative and
equivalent forms of value.

920
01:10:18,005 --> 01:10:21,079
Remember, private activity became

921
01:10:21,079 --> 01:10:25,173
the means for the representation
of universal social labour.

922
01:10:26,073 --> 01:10:28,582
Now he's saying that

923
01:10:29,239 --> 01:10:36,239
in fact private individuals can appropriate social power.

924
01:10:40,999 --> 01:10:45,047
Social power can become the property
of private persons.

925
01:10:45,479 --> 01:10:46,610
This is indeed the

926
01:10:46,061 --> 01:10:50,096
latent power relation of the money form and the
holding onto of the universal equivalent

927
01:10:50,096 --> 01:10:52,585
which is beginning to crystallize out into the open,

928
01:10:53,449 --> 01:11:00,449
and of course it will become
the basis of class power.

929
01:11:01,849 --> 01:11:05,898
For this reason Marx notes, "ancient society
therefore denounced it [money] as tending to destroy

930
01:11:06,339 --> 01:11:09,350
the economic and moral order.

931
01:11:09,449 --> 01:11:12,541
Modern society, which already in its infancy
had pulled Pluto by the hair of his head from

932
01:11:13,369 --> 01:11:14,780
the bowels of the earth,

933
01:11:14,078 --> 01:11:17,079
greets gold as is its holy grail,
as the glittering incarnation of its

934
01:11:17,079 --> 01:11:24,079
innermost principle of life."

935
01:11:26,009 --> 01:11:27,668
It's very interesting.

936
01:11:28,559 --> 01:11:30,870
We often talk about money as filthy,

937
01:11:30,087 --> 01:11:36,159
filthy lucre.

938
01:11:37,059 --> 01:11:43,086
Guess there's a TV show on right now about dirty
sexy money or something like that.

939
01:11:45,004 --> 01:11:49,023
Freud had all kinds of wonderful things to
say about money, and in the end he called

940
01:11:49,059 --> 01:11:54,107
it bourgeois sublimation of rituals of the anus.

941
01:11:55,007 --> 01:11:59,426
So there's something unclean about
money, something

942
01:11:59,489 --> 01:12:03,548
not nice about money, and ancient society
actually did not like the money economy.

943
01:12:04,079 --> 01:12:07,530
In the Grundrisse, Marx talks about the
way in which one of the big transitions that

944
01:12:07,053 --> 01:12:10,012
occurred in the social world

945
01:12:10,489 --> 01:12:13,497
was what he called the destruction of community

946
01:12:13,569 --> 01:12:17,380
by money power

947
01:12:17,038 --> 01:12:21,427
whereby money became the community.

948
01:12:21,769 --> 01:12:24,824
So that we now live in the community of money.

949
01:12:25,319 --> 01:12:28,403
We may have all kinds of fantasies about living in
community somewhere else and all that kind of

950
01:12:29,159 --> 01:12:31,167
stuff, but we live

951
01:12:31,239 --> 01:12:34,000
in a community of money,

952
01:12:34,000 --> 01:12:36,048
and Marx is also

953
01:12:36,048 --> 01:12:41,747
making that point very clear.

954
01:12:42,179 --> 01:12:43,202
Furthermore,

955
01:12:43,409 --> 01:12:46,650
at the bottom of page 230 Marx piles on the agony of this

956
01:12:46,065 --> 01:12:52,734
by simply pointing out that the
"hoarding drive is boundless in its nature.

957
01:12:53,319 --> 01:12:58,550
Here Marx provides a description of the mechanism at work:
"the the metallic natural form of this object" and

958
01:12:58,055 --> 01:13:01,664
the "universal equivalent form of all
other commodities"

959
01:13:02,159 --> 01:13:07,610
and the "direct…social incarnation
of all human labour," all allow for

960
01:13:07,061 --> 01:13:11,076
"the hoarding drive" to become
"boundless in its nature."

961
01:13:11,076 --> 01:13:16,025
"Qualitatively or formally considered, money
is independent of all limits,

962
01:13:16,709 --> 01:13:20,798
that is to say it is the universal representation of
material wealth because it is directly convertible

963
01:13:21,599 --> 01:13:27,350
into any other commodity."

964
01:13:27,035 --> 01:13:30,133
Marx then proceeds to talk about "this contradiction
between the quantitative limitation

965
01:13:31,033 --> 01:13:33,099
and the qualitative lack of limitation of money

966
01:13:33,099 --> 01:13:37,098
which keeps driving the hoarder
back to his Sisyphean task".

967
01:13:37,989 --> 01:13:38,610
Here we are talking about accumulation

968
01:13:38,061 --> 01:13:45,080
This is Marx's first mention of accumulation
in Capital.

969
01:13:45,629 --> 01:13:47,790
The limitless qualities of it are

970
01:13:49,769 --> 01:13:52,826
fascinating to reflect upon.

971
01:13:53,339 --> 01:13:57,380
I mean, if we are accumulating use values,

972
01:13:57,038 --> 01:14:00,297
how many Ferraris can you have?

973
01:14:00,639 --> 01:14:04,661
Imelda Marcos had what? Six thousand
pairs of shoes?

974
01:14:04,859 --> 01:14:07,900
But there is a limit.

975
01:14:08,269 --> 01:14:11,280
But do billionaires feel they have a limit

976
01:14:11,028 --> 01:14:13,051
about the next billion?

977
01:14:13,051 --> 01:14:14,126
The answer is no.

978
01:14:15,026 --> 01:14:18,060
The accumulation of money power is limitless,

979
01:14:18,006 --> 01:14:19,795
and therefore

980
01:14:20,389 --> 01:14:24,460
what we get into is a form of
accumulation that has in principle

981
01:14:24,046 --> 01:14:28,100
no external limits.

982
01:14:29,000 --> 01:14:33,094
This is a very important argument,

983
01:14:33,094 --> 01:14:40,094
and to the degree that people are into
the accumulation of social power,

984
01:14:41,229 --> 01:14:48,229
they are into the accumulation of
limitless social power.

985
01:14:48,959 --> 01:14:53,960
I mean, most CEOs in this country
are getting perhaps

986
01:14:53,096 --> 01:14:58,295
5 to 10 million dollars a year, nevertheless
they consider themselves underpaid.

987
01:14:59,159 --> 01:15:01,270
They kind of say,

988
01:15:01,027 --> 01:15:04,085
well hey, somebody in a hedge fund
got 1.7 billion dollars last year,

989
01:15:06,239 --> 01:15:08,283
I deserve that.

990
01:15:08,679 --> 01:15:12,750
How come they got 1.7 billion
and I didn't?

991
01:15:14,025 --> 01:15:17,034
So this is the point about the
limitlessness of money accumulation.

992
01:15:17,034 --> 01:15:21,036
Two years ago the top hedge fund
owner got 250

993
01:15:21,036 --> 01:15:24,057
million dollars. This year it's 1.7 billion.

994
01:15:24,057 --> 01:15:26,062
It's limitless.

995
01:15:27,007 --> 01:15:33,030
And Marx is laying down a principle about
the limitlessness of money: as soon as you get into

996
01:15:33,003 --> 01:15:35,692
money as a universal equivalent,

997
01:15:35,989 --> 01:15:38,997
as a representation of socially necessary
labour time of value.

998
01:15:39,789 --> 01:15:40,865
Money is in principle limitless

999
01:15:41,549 --> 01:15:43,562
in terms of what you can accumulate,

1000
01:15:43,679 --> 01:15:45,776
and in terms of what private persons
can accumulate,

1001
01:15:46,649 --> 01:15:48,657
in terms of their own private power

1002
01:15:49,449 --> 01:15:51,520
over a social good,

1003
01:15:52,159 --> 01:15:56,247
which is the socially necessary labour time
in the world market.

1004
01:15:57,039 --> 01:15:58,480
This is what

1005
01:15:58,048 --> 01:15:59,114
Marx is pointing out here, namely

1006
01:16:00,014 --> 01:16:02,061
the limitless quality of accumulation,

1007
01:16:02,061 --> 01:16:07,138
and the fact that the accumulation of
capital knows no limit.

1008
01:16:08,038 --> 01:16:10,086
Of course if you look at every other society

1009
01:16:10,086 --> 01:16:14,785
that has ever existed
in history

1010
01:16:15,559 --> 01:16:20,575
you'll find almost invariably that they hit upon limits.

1011
01:16:20,719 --> 01:16:25,070
And when they hit limits and didn't know
where to go, they often collapsed.

1012
01:16:25,007 --> 01:16:30,092
The one society that seems to be
completely limitless is capital.

1013
01:16:30,092 --> 01:16:33,731
And so far it has been limitless

1014
01:16:34,559 --> 01:16:35,564
precisely because

1015
01:16:36,059 --> 01:16:40,105
its main measure of value has this particular
form which allows it to be accumulated

1016
01:16:40,519 --> 01:16:43,564
in this way.

1017
01:16:43,969 --> 01:16:45,036
The result is

1018
01:16:45,639 --> 01:16:50,320
all the growth curves in terms of the total
money in society, the total wealth of society,

1019
01:16:50,032 --> 01:16:53,057
the total amount of output in society,
the total global

1020
01:16:53,057 --> 01:16:55,126
gross domestic product in the world etc.

1021
01:16:56,026 --> 01:16:59,030
Look at the growth curves since capitalism

1022
01:16:59,003 --> 01:17:02,049
really kicked in around 1750

1023
01:17:06,229 --> 01:17:15,253
with all kinds of social, political and environmental
consequences to worry about of course

1024
01:17:17,075 --> 01:17:17,924
But that is

1025
01:17:18,599 --> 01:17:21,645
the nature of what capitalism

1026
01:17:22,059 --> 01:17:23,125
is about, and that is how Marx

1027
01:17:23,719 --> 01:17:29,738
is setting it up.

1028
01:17:29,909 --> 01:17:30,917
Which leads him

1029
01:17:30,989 --> 01:17:37,989
to point out the function of hoarding
towards the end of this section at the

1030
01:17:39,179 --> 01:17:43,225
bottom of page 231

1031
01:17:43,639 --> 01:17:46,260
where he makes a little aside about the aesthetic

1032
01:17:46,026 --> 01:17:51,085
form of hoarding, like wanting
to own gold or silver plated

1033
01:17:51,319 --> 01:17:54,040
urinals etc.

1034
01:17:56,829 --> 01:18:00,590
"Owing to the continual fluctuations in the extent
and rapidity of the circulation of commodities

1035
01:18:00,059 --> 01:18:01,458
as well as in their prices,

1036
01:18:01,989 --> 01:18:07,011
the quantity of money in circulation unceasingly
ebbs and flows. This quantity must

1037
01:18:07,209 --> 01:18:08,273
therefore be capable of

1038
01:18:08,849 --> 01:18:11,480
expansion and contraction."

1039
01:18:11,048 --> 01:18:14,267
And the hoard can fulfill that function.

1040
01:18:14,699 --> 01:18:15,708
In other words

1041
01:18:15,789 --> 01:18:18,826
Marx is going to modify his theory of money

1042
01:18:19,159 --> 01:18:21,184
in society by saying that

1043
01:18:21,409 --> 01:18:22,488
given the fluctuations

1044
01:18:23,199 --> 01:18:27,278
the total mass of money you need is the sum
of the prices modified by the velocity

1045
01:18:27,989 --> 01:18:34,998
plus a reserve fund.

1046
01:18:36,009 --> 01:18:42,040
This reserve fund can be brought into circulation
when there is a massive surge of commodity production,

1047
01:18:42,319 --> 01:18:44,393
and taken out of circulation

1048
01:18:45,059 --> 01:18:48,065
when it is not needed.

1049
01:18:48,659 --> 01:18:54,010
But the reserve fund is absolutely crucial
to the stabilization of this system.

1050
01:18:54,001 --> 01:19:00,920
That is to say that a form of hoarding is necessary.

1051
01:19:00,929 --> 01:19:03,954
For those two reasons, the temporality reason

1052
01:19:04,179 --> 01:19:07,070
and the following reason which pertains to the means of payment

1053
01:19:07,007 --> 01:19:12,101
These are to be found in Section B: means of payment.

1054
01:19:13,001 --> 01:19:15,140
So he returns to consider

1055
01:19:15,149 --> 01:19:17,163
means of payment

1056
01:19:17,289 --> 01:19:22,305
as being a way to approach

1057
01:19:22,449 --> 01:19:25,510
the need for a hoard

1058
01:19:25,051 --> 01:19:28,140
given the different temporalities in entering the market.

1059
01:19:28,599 --> 01:19:29,625
In other words

1060
01:19:29,859 --> 01:19:33,670
if we just exchange notes and say: I'll settle
up with you at the end of the year,

1061
01:19:33,067 --> 01:19:39,076
you don't actually need to hoard the money.

1062
01:19:40,057 --> 01:19:42,102
So this kind of exchange serves as a means of payment.

1063
01:19:43,002 --> 01:19:46,931
I just write a note and say:
okay, I owe you this. The farmer

1064
01:19:46,949 --> 01:19:50,973
writes a note and says: I owe you this and I'll
pay you back at harvest time or whatever.

1065
01:19:51,189 --> 01:19:56,110
And then certain dates are agreed upon for payment,

1066
01:19:56,011 --> 01:19:59,790
hence these exchanges tend to become formalized.

1067
01:19:59,889 --> 01:20:01,896
But the result of this type of exchange of notes is a transition.

1068
01:20:01,959 --> 01:20:03,006
So here we've got,

1069
01:20:03,429 --> 01:20:05,504
see pages 233 and 234,

1070
01:20:06,179 --> 01:20:10,300
an extremely important transition
which is very easy to miss

1071
01:20:10,003 --> 01:20:14,057
partly because of Marx's

1072
01:20:14,084 --> 01:20:15,683
complicated language.

1073
01:20:16,439 --> 01:20:19,450
The first element in this transition,
page 233 occurs when

1074
01:20:19,549 --> 01:20:23,625
"the seller becomes a creditor and the buyer
a debtor."

1075
01:20:24,309 --> 01:20:31,309
This amounts to a big transition in the relationships between buyer
and seller on the one hand and creditor and debtor on the other.

1076
01:20:32,989 --> 01:20:37,960
"Since the metamorphosis of commodities, or the
development of their form of value, has undergone a change here,

1077
01:20:37,096 --> 01:20:42,055
whereby money receives a new function as well. It
becomes a new means of payment.

1078
01:20:42,919 --> 01:20:48,800
Note that the role of creditor or of debtor results
here from the simple circulation of commodities."

1079
01:20:48,008 --> 01:20:52,034
It's amazing how much he squeezed
out of this concept of the commodity here.

1080
01:20:53,006 --> 01:21:00,006
The concept of commodities now give rise to
these new roles of creditor and debtor,

1081
01:21:01,239 --> 01:21:09,263
"and this is capable", he says,
"of a more rigid crystallization."

1082
01:21:09,479 --> 01:21:13,558
He then starts to talk about the forms of
class struggle in the ancient world

1083
01:21:14,269 --> 01:21:16,276
in which

1084
01:21:16,339 --> 01:21:18,411
the plebeian debtors

1085
01:21:19,059 --> 01:21:22,086
were destroyed by the creditors,

1086
01:21:22,329 --> 01:21:26,090
the struggle in the middle ages
where the feudal debtors

1087
01:21:26,009 --> 01:21:29,788
lost their political power.

1088
01:21:29,869 --> 01:21:33,872
So there's a power relation in this

1089
01:21:33,899 --> 01:21:39,940
debtor-creditor relationship.

1090
01:21:39,094 --> 01:21:41,188
He then takes us back

1091
01:21:42,088 --> 01:21:48,517
to the sphere of circulation.

1092
01:21:49,309 --> 01:21:50,590
And takes us back

1093
01:21:50,059 --> 01:21:53,064
to an earlier argument,

1094
01:21:54,009 --> 01:21:58,778
where he has talked about
the way in which money becomes the object

1095
01:21:58,859 --> 01:22:03,887
of the circulation process.

1096
01:22:04,139 --> 01:22:08,144
But money now enters the circulation process in
a peculiar way, as a means of payment, Marx says, money

1097
01:22:08,639 --> 01:22:13,150
"enters circulation, but only after
the commodity has already left it.

1098
01:22:13,015 --> 01:22:19,554
The money no longer mediates the process. It
brings it to an end by emerging independently,

1099
01:22:19,689 --> 01:22:23,680
as the absolute form of existence
of exchange value," in other words as

1100
01:22:23,068 --> 01:22:27,107
the universal commodity.

1101
01:22:28,007 --> 01:22:32,976
The seller turned his commodity
into money in order to satisfy some need;

1102
01:22:33,039 --> 01:22:37,190
the hoarder in order to preserve
the monetary form of his commodity,

1103
01:22:37,019 --> 01:22:41,008
and the indebted purchaser
in order to be able to pay.

1104
01:22:41,179 --> 01:22:46,186
If he does not pay, his goods
will be sold compulsorily.

1105
01:22:46,249 --> 01:22:48,750
The value form of the commodity, money,

1106
01:22:48,075 --> 01:22:51,082
has now become the
self-sufficient purpose of the sale

1107
01:22:53,023 --> 01:22:55,109
owing to a social necessity

1108
01:22:56,009 --> 01:23:03,009
springing from conditions of
the process of circulation itself."

1109
01:23:04,029 --> 01:23:06,045
Marx is now taking us to

1110
01:23:06,189 --> 01:23:07,280
this radical transition

1111
01:23:08,099 --> 01:23:11,780
from a C-M-C circuit

1112
01:23:11,078 --> 01:23:12,162
into a M-C-M circuit.

1113
01:23:15,599 --> 01:23:18,683
If I hold money,

1114
01:23:19,439 --> 01:23:22,441
I can just lend it to you

1115
01:23:22,639 --> 01:23:25,940
and then you pay me back.

1116
01:23:25,094 --> 01:23:30,107
I don't even have to produce commodities
anymore, I let you produce the commodities;

1117
01:23:31,007 --> 01:23:34,366
I just hold the money.

1118
01:23:34,429 --> 01:23:35,610
But note,

1119
01:23:35,061 --> 01:23:38,120
I want to get that money back.

1120
01:23:38,669 --> 01:23:45,725
But of course the underlying logical argument here is:
why would I get back the same amount I started with?

1121
01:23:46,229 --> 01:23:51,315
Why would I not insist upon

1122
01:23:52,089 --> 01:23:57,121
an extra amount of money?

1123
01:23:57,409 --> 01:23:58,415
That is to say an

1124
01:23:58,469 --> 01:24:02,140
exchange of equivalents makes sense

1125
01:24:02,014 --> 01:24:06,553
when I go from commodity to commodity mediated
by money, I end up with a commodity which in effect

1126
01:24:06,679 --> 01:24:08,900
has the same value as the one

1127
01:24:08,009 --> 01:24:10,308
I started out with in principle,

1128
01:24:11,199 --> 01:24:12,220
and I'm happy.

1129
01:24:12,409 --> 01:24:14,507
I started with shirts and I got my shoes,

1130
01:24:15,389 --> 01:24:19,440
equivalent exchanged for equivalent,
and everything's fine.

1131
01:24:19,899 --> 01:24:22,937
The equality principle has worked.

1132
01:24:23,279 --> 01:24:25,282
But why would I start with money

1133
01:24:25,579 --> 01:24:30,510
just in order to get money?

1134
01:24:30,051 --> 01:24:34,096
The only reason to do that
is to get more money.

1135
01:24:34,096 --> 01:24:38,205
And so what Marx is saying here is

1136
01:24:39,069 --> 01:24:44,150
that out of this relationship
between the commodity and money

1137
01:24:44,015 --> 01:24:50,102
there emerges a form of circulation
which is the M-C-M form of circulation.

1138
01:24:51,002 --> 01:24:56,491
And this form of circulation arises out of a social necessity,

1139
01:24:56,509 --> 01:24:59,602
not because somebody felt it was a good idea,
although we've seen here

1140
01:25:00,439 --> 01:25:04,531
that passionate interests are very much
engaged as well as lust for gold or lust for power.

1141
01:25:06,094 --> 01:25:08,533
But even if passion and lust were not involved,

1142
01:25:09,379 --> 01:25:12,463
you would still need this form of circulation

1143
01:25:13,219 --> 01:25:14,250
in order

1144
01:25:14,529 --> 01:25:18,588
to keep the measure of value
and the means of circulation in balance.

1145
01:25:21,049 --> 01:25:25,071
That is the only way you can
resolve the contradiction between

1146
01:25:25,269 --> 01:25:27,287
money as a measure of value

1147
01:25:27,449 --> 01:25:32,537
and money as a means of circulation,
that is by having this form of circulation

1148
01:25:33,329 --> 01:25:40,329
which brings money into exchange when
it is needed and takes it out when it is no longer needed.

1149
01:25:40,959 --> 01:25:42,962
So that, the money needed,

1150
01:25:43,259 --> 01:25:46,264
if it's in equilibrium with the

1151
01:25:46,309 --> 01:25:48,320
commodities being traded,

1152
01:25:48,419 --> 01:25:52,476
will keep the measure of value constant.

1153
01:25:52,989 --> 01:25:58,007
Otherwise the measure of value
will start shooting all over the place.

1154
01:25:58,169 --> 01:26:00,222
So if I want to maintain

1155
01:26:00,699 --> 01:26:03,704
a constant measure of value,

1156
01:26:03,749 --> 01:26:07,751
I have to be able to use
money as a means of payment,

1157
01:26:07,769 --> 01:26:09,380
and in doing so

1158
01:26:09,038 --> 01:26:10,837
I trigger

1159
01:26:11,179 --> 01:26:12,207
this form

1160
01:26:12,459 --> 01:26:14,550
of circulation

1161
01:26:14,055 --> 01:26:17,126
which is money

1162
01:26:18,026 --> 01:26:25,026
focusing on money.

1163
01:26:26,032 --> 01:26:26,130
This little passage,

1164
01:26:27,003 --> 01:26:30,592
in the middle and bottom of page 234

1165
01:26:30,889 --> 01:26:33,913
is a crucial transition point,

1166
01:26:34,129 --> 01:26:37,800
and you should mark it and recognize it as such,

1167
01:26:37,008 --> 01:26:42,617
in the whole of Marx's argument.

1168
01:26:43,409 --> 01:26:50,409
He doesn't actually signal this
transition as crucial but in fact it is.

1169
01:26:51,799 --> 01:26:54,871
And the idea that this transition
is indicative of a social necessity

1170
01:26:55,519 --> 01:26:59,553
is also important.

1171
01:26:59,859 --> 01:27:06,010
Capitalism does not actually depend

1172
01:27:06,001 --> 01:27:10,320
simply on individuals being greedy and so forth;

1173
01:27:10,329 --> 01:27:13,090
it depends upon

1174
01:27:13,009 --> 01:27:16,021
social necessity piled on top of social necessity,

1175
01:27:16,021 --> 01:27:17,930
which allows

1176
01:27:18,119 --> 01:27:19,202
for greed of a certain kind to flourish

1177
01:27:19,949 --> 01:27:26,949
in certain situations.

1178
01:27:31,088 --> 01:27:33,757
This brings him back,

1179
01:27:34,549 --> 01:27:37,400
on page 235 at the bottom,

1180
01:27:37,004 --> 01:27:43,963
to talk about "a contradiction imminent in
the function of money as the means of payment.

1181
01:27:44,359 --> 01:27:49,440
When the payments balance each other, money functions
only nominally, as money of account, as a measure of value.

1182
01:27:50,169 --> 01:27:55,202
But when actual payments have to be made, money
does not come onto the scene as a circulating medium,

1183
01:27:55,499 --> 01:27:59,550
in its merely transient form of
an intermediary in the social metabolism,

1184
01:28:00,009 --> 01:28:03,072
but as the "individual incarnation of social labour,

1185
01:28:03,639 --> 01:28:05,723
the independent presence of exchange value,

1186
01:28:06,479 --> 01:28:10,545
the universal commodity."

1187
01:28:11,139 --> 01:28:16,145
This leads him to remark on page 236,

1188
01:28:16,739 --> 01:28:19,200
"this contradiction bursts forth in

1189
01:28:19,002 --> 01:28:22,221
that aspect of industrial and commercial crisis

1190
01:28:22,419 --> 01:28:24,472
which is known as a monetary crisis.

1191
01:28:24,949 --> 01:28:30,971
Such a crisis occurs only where the ongoing
chain of payments has been fully developed."

1192
01:28:31,169 --> 01:28:32,190
That is when the full development of means of payment,

1193
01:28:32,019 --> 01:28:35,085
are just spread around all over the place and credit structures

1194
01:28:35,085 --> 01:28:38,854
are broadly engaged.

1195
01:28:39,619 --> 01:28:40,717
Marx remarks,

1196
01:28:41,599 --> 01:28:44,980
"whenever there is a general disturbance of
the mechanism, no matter what its cause,

1197
01:28:44,098 --> 01:28:48,154
money suddenly and immediately
changes over from its merely nominal shape,

1198
01:28:49,054 --> 01:28:53,065
money of account, into hard cash.

1199
01:28:53,065 --> 01:28:56,644
Profane commodities can no longer replace it.

1200
01:28:57,229 --> 01:29:00,324
The use-value of commodities becomes
valueless, and their value vanishes in the face of their

1201
01:29:01,179 --> 01:29:04,280
own form of value. The bourgeois,

1202
01:29:04,028 --> 01:29:06,063
drunk with prosperity and arrogantly

1203
01:29:06,063 --> 01:29:08,622
certain of himself, has just declared that money

1204
01:29:09,189 --> 01:29:12,560
is a purely imaginary creation.

1205
01:29:12,056 --> 01:29:14,245
'Commodities alone are money', he said.

1206
01:29:14,749 --> 01:29:18,828
But now the opposite cry resounds over the
markets of the world: only money is a commodity.

1207
01:29:19,539 --> 01:29:23,230
As the heart pants after fresh water,
so pants his soul after money,

1208
01:29:23,023 --> 01:29:24,782
the only wealth.

1209
01:29:24,989 --> 01:29:30,026
In a crisis, the antithesis between commodities
and their value-form, money, is raised to the level

1210
01:29:30,359 --> 01:29:34,367
of an absolute contradiction".

1211
01:29:35,159 --> 01:29:37,164
And he goes on to talk about monetary famine.

1212
01:29:37,659 --> 01:29:41,715
Six months ago, if you read the financial press,

1213
01:29:42,219 --> 01:29:45,257
everybody was talking about excess liquidity

1214
01:29:45,599 --> 01:29:46,688
in the markets.

1215
01:29:47,489 --> 01:29:51,070
A surplus of liquidity sloshing around,
not knowing where to go.

1216
01:29:51,007 --> 01:29:53,306
Surplus capital everywhere.

1217
01:29:53,369 --> 01:29:56,464
If you wanted to borrow you just went and
they gave you anything, you could get sub-prime

1218
01:29:57,319 --> 01:30:00,372
loans, you could get whatever you want.

1219
01:30:00,849 --> 01:30:02,886
And then what happened over the past few weeks, suddenly

1220
01:30:03,219 --> 01:30:06,224
the federal reserve has to inject liquidity

1221
01:30:06,269 --> 01:30:08,610
into the system.

1222
01:30:08,061 --> 01:30:10,510
They needed real money.

1223
01:30:11,059 --> 01:30:15,072
Those houses and all of that
didn't actually match up to that value.

1224
01:30:15,189 --> 01:30:22,189
In other words it was fictitious value
they were playing with out there.

1225
01:30:22,038 --> 01:30:25,967
Marx amusingly says somewhere else,

1226
01:30:26,309 --> 01:30:29,340
"at the moment of speculation,

1227
01:30:29,034 --> 01:30:31,080
everybody's a Protestant,

1228
01:30:31,008 --> 01:30:33,997
they act on faith.

1229
01:30:34,789 --> 01:30:40,871
When the crisis comes they want real money, they
go back to the Catholicism of the monetary base."

1230
01:30:41,609 --> 01:30:43,150
And this brings us to consider

1231
01:30:43,015 --> 01:30:44,794
the notion of value,

1232
01:30:44,929 --> 01:30:47,020
where is the value right now?

1233
01:30:47,839 --> 01:30:49,892
Where does it exist?

1234
01:30:50,369 --> 01:30:52,466
And what is all that money which
is being exchanged in all of these

1235
01:30:53,339 --> 01:30:56,375
debt bottling plants we find
around ourselves in New York City?

1236
01:30:56,699 --> 01:31:00,030
What does it mean?

1237
01:31:00,003 --> 01:31:04,792
What connectivity does it have to value,

1238
01:31:04,819 --> 01:31:07,980
to socially necessary labour time?

1239
01:31:07,098 --> 01:31:12,126
And what Marx is pointing to here
is the way in which

1240
01:31:13,026 --> 01:31:16,935
the monetary system, once it escapes

1241
01:31:17,169 --> 01:31:22,173
from those immediate constraints of socially
necessary labour time, can take off

1242
01:31:22,209 --> 01:31:25,570
and do all kinds of crazy things.

1243
01:31:25,057 --> 01:31:29,103
And those crazy things

1244
01:31:30,003 --> 01:31:36,552
create all sorts of problems in the global economy.

1245
01:31:36,579 --> 01:31:39,663
But credit money does more than that,
because in the next couple of pages

1246
01:31:42,449 --> 01:31:47,506
Marx is saying: "Credit money springs directly out
of the function of money as a means of payment,

1247
01:31:48,019 --> 01:31:52,096
furthermore, credit money becomes the
universal material of contracts. Rent, taxes and so on

1248
01:31:52,789 --> 01:31:54,870
are transformed from payments in kind

1249
01:31:55,599 --> 01:31:59,607
to payments in money."

1250
01:31:59,679 --> 01:32:02,742
The monetisation of everything.

1251
01:32:03,309 --> 01:32:05,327
In the past the church used to

1252
01:32:05,489 --> 01:32:10,498
tithe people's agricultural output,

1253
01:32:10,579 --> 01:32:14,584
then came the monetisation of tithes,

1254
01:32:15,079 --> 01:32:22,079
so finally you get the monetization
and commodification of everything.

1255
01:32:27,959 --> 01:32:31,032
This leads us into another duality:

1256
01:32:31,689 --> 01:32:34,760
firstly a reserve fund becomes necessary

1257
01:32:34,076 --> 01:32:36,275
and that reserve fund

1258
01:32:36,959 --> 01:32:40,540
is going to have to function
in relationship to this system,

1259
01:32:40,054 --> 01:32:41,513
via this form of

1260
01:32:41,999 --> 01:32:46,043
M-C-M circulation.

1261
01:32:46,439 --> 01:32:51,482
That's the way in which the argument works.

1262
01:32:51,869 --> 01:32:52,945
But Marx then says,

1263
01:32:53,629 --> 01:32:58,010
in the final and brief section on world money,

1264
01:33:00,599 --> 01:33:06,610
that individual states of course manage their own

1265
01:33:06,061 --> 01:33:09,940
money systems, money supplies, money tokens and so forth,

1266
01:33:11,649 --> 01:33:13,610
but they're

1267
01:33:13,061 --> 01:33:20,061
not outside of being disciplined
by the world market, meaning

1268
01:33:20,829 --> 01:33:24,831
that the exchange of commodities on the
world market at some point or other

1269
01:33:24,849 --> 01:33:28,110
becomes critical

1270
01:33:28,011 --> 01:33:30,910
to the way in which

1271
01:33:31,009 --> 01:33:35,460
this monetary system functions.

1272
01:33:36,096 --> 01:33:40,255
The state has had a very important role to play in

1273
01:33:41,087 --> 01:33:48,087
the stabilization of the monetary system within its borders.

1274
01:33:50,969 --> 01:33:53,540
And in doing so the state initially connected

1275
01:33:53,054 --> 01:33:55,653
its monetary system very clearly

1276
01:33:56,139 --> 01:34:03,139
to a metallic base, gold, silver.

1277
01:34:03,036 --> 01:34:05,275
And that metallic base

1278
01:34:05,599 --> 01:34:08,300
became crucial in the construction

1279
01:34:08,003 --> 01:34:11,952
of the initial financial monetary system.

1280
01:34:12,249 --> 01:34:16,530
Assuring the security of that metallic base

1281
01:34:16,053 --> 01:34:21,142
became critical.

1282
01:34:21,619 --> 01:34:23,680
It's kind of interesting to note that

1283
01:34:24,229 --> 01:34:27,276
John Locke wrote his essay on religious tolerance

1284
01:34:27,699 --> 01:34:31,707
in which he said, we should tolerate each other

1285
01:34:31,779 --> 01:34:36,867
in terms of our religious views and we shouldn't go
around burning heretics at the stake and all that kind of thing.

1286
01:34:37,659 --> 01:34:39,736
He said this at the same time

1287
01:34:40,429 --> 01:34:42,880
as Sir Isaac Newton

1288
01:34:42,088 --> 01:34:46,117
became master of the King's mint.

1289
01:34:46,909 --> 01:34:51,440
And Isaac's great role

1290
01:34:52,419 --> 01:34:55,425
was to assure the quality of the currency,

1291
01:34:56,019 --> 01:34:58,072
to assay the gold,

1292
01:34:58,549 --> 01:35:01,583
to assay the weight of the silver.

1293
01:35:01,889 --> 01:35:04,941
During those years there was great trade

1294
01:35:05,409 --> 01:35:08,425
which also lead to the debasement of the coinage,

1295
01:35:08,569 --> 01:35:11,584
a type of fraud called coin clipping.

1296
01:35:11,719 --> 01:35:15,784
What you did was to take a silver coin
and shave off a bit of it,

1297
01:35:16,369 --> 01:35:21,375
and then you took lots of silver coins and
shaved off lots of little bits.

1298
01:35:21,969 --> 01:35:24,060
So by the end of the day you had another silver coin,

1299
01:35:24,879 --> 01:35:26,971
good way to make money.

1300
01:35:27,799 --> 01:35:32,560
What did Isaac Newton do about this? He caught
a few of these people and he had them hung

1301
01:35:32,056 --> 01:35:35,575
on Tyburn in public.

1302
01:35:36,079 --> 01:35:44,150
So you no longer burned people at the stake for their
religious views, you now hung them in Tyburn for debasing coinage.

1303
01:35:44,015 --> 01:35:45,864
God is displaced by mammon

1304
01:35:45,999 --> 01:35:52,460
in terms of capital punishment.

1305
01:35:52,046 --> 01:35:55,142
So this business brings us back to the issue which
I'm sure is bothering many of you,

1306
01:35:56,042 --> 01:35:57,130
which is what happened to the metallic base?

1307
01:35:58,003 --> 01:36:02,027
There was a metallic base

1308
01:36:02,054 --> 01:36:04,063
to global capitalism up until

1309
01:36:04,063 --> 01:36:07,492
the late 1960's/1970's,

1310
01:36:08,059 --> 01:36:12,085
and it was put under great stress

1311
01:36:12,319 --> 01:36:16,408
in the late 60's early 1970's.

1312
01:36:17,209 --> 01:36:20,306
And ultimately it collapsed, so that

1313
01:36:21,179 --> 01:36:24,215
by 1973 you have a global monetary system

1314
01:36:24,539 --> 01:36:29,050
which is no longer based

1315
01:36:29,005 --> 01:36:33,714
on any metallic commodity

1316
01:36:33,759 --> 01:36:37,260
You will notice however that gold is still important,

1317
01:36:37,026 --> 01:36:40,195
the gold price is still quoted.

1318
01:36:40,429 --> 01:36:44,434
And if push comes to shove you might well
ask yourself whether you want to hold onto gold or

1319
01:36:44,929 --> 01:36:49,030
dollars, Euros, or Yen, or whatever.

1320
01:36:49,003 --> 01:36:50,009
You might want to

1321
01:36:50,063 --> 01:36:51,602
think about that.

1322
01:36:52,169 --> 01:36:56,750
So gold has not entirely disappeared from the monetary scene at all.

1323
01:36:56,075 --> 01:37:01,444
Many people still think, and there are even arguments,
that we should go back to the gold standard because

1324
01:37:02,119 --> 01:37:06,168
the current monetary system is just crazy.

1325
01:37:06,609 --> 01:37:10,880
But what in effect happened after 1973

1326
01:37:10,088 --> 01:37:16,126
was a tendency to associate currencies

1327
01:37:17,026 --> 01:37:20,125
with a particular basket of commodities.

1328
01:37:21,025 --> 01:37:27,026
For a while there we sat with the idea that
petro-dollars would work,

1329
01:37:27,026 --> 01:37:31,635
that actually the dollar value of petroleum

1330
01:37:31,869 --> 01:37:33,230
was the crucial basket determinant.

1331
01:37:33,023 --> 01:37:39,292
But then petroleum was yo-yoing too much, and in any case

1332
01:37:39,499 --> 01:37:44,610
its value was too much controlled by OPEC.

1333
01:37:44,061 --> 01:37:51,061
So in effect what now happens is that currency speculation

1334
01:37:51,849 --> 01:37:58,340
actually looks at the relationship
between the productivity of a whole economy,

1335
01:37:58,034 --> 01:38:02,126
i.e. its total bundle of goods and services produced,

1336
01:38:03,026 --> 01:38:06,275
and compares it to the value of its currency.

1337
01:38:06,509 --> 01:38:07,830
What is being compared is

1338
01:38:07,083 --> 01:38:10,125
the total commodity output of Japan, West

1339
01:38:11,025 --> 01:38:15,024
Germany as it was, and now Europe,

1340
01:38:15,249 --> 01:38:21,307
and the United States and China. And after
comparing all of these things the question is asked,

1341
01:38:21,829 --> 01:38:25,854
well, which economy

1342
01:38:26,079 --> 01:38:32,174
is producing a bundle of commodities
inside its borders that can really sustain that currency?

1343
01:38:33,029 --> 01:38:38,050
And if the Chinese economy is doing that,
then the Chinese currency should appreciate.

1344
01:38:38,005 --> 01:38:44,454
But the problem then starts when the state
steps in and does all kinds of strange things.

1345
01:38:44,499 --> 01:38:46,582
But at some point or other the question of the nature

1346
01:38:47,329 --> 01:38:50,398
of the commodity bundle

1347
01:38:51,019 --> 01:38:53,083
which underlies

1348
01:38:53,659 --> 01:38:58,713
the value is posed; in other words we no longer
attach the bundle to some single commodity like gold.

1349
01:38:59,199 --> 01:39:00,268
We attach it

1350
01:39:00,889 --> 01:39:03,893
to an imaginary

1351
01:39:03,929 --> 01:39:04,550
understanding

1352
01:39:04,055 --> 01:39:07,114
which is where statistics come in.

1353
01:39:07,609 --> 01:39:10,672
We wouldn't know how to work

1354
01:39:11,239 --> 01:39:13,480
in this world unless we had

1355
01:39:13,048 --> 01:39:15,357
masses of statistics.

1356
01:39:15,789 --> 01:39:17,870
And what are these statistics about?

1357
01:39:18,599 --> 01:39:19,687
GDP

1358
01:39:20,479 --> 01:39:24,496
Who produces all those statistics and who
collects them? The World Bank,

1359
01:39:24,649 --> 01:39:27,687
the International Bank of Settlements.

1360
01:39:28,029 --> 01:39:30,038
They produce all this data.

1361
01:39:30,119 --> 01:39:31,204
Vast amounts of it,

1362
01:39:31,969 --> 01:39:36,057
on the basis of what, sometimes you wonder,
but, nevertheless, it's there.

1363
01:39:36,849 --> 01:39:37,943
And this data serves to

1364
01:39:38,789 --> 01:39:43,841
construct the fiction that there
is a national economy.

1365
01:39:44,309 --> 01:39:47,326
Now this is a real problem because there is no
national economy, I mean everything is trading

1366
01:39:47,479 --> 01:39:49,680
with everything else on the global stage,

1367
01:39:49,068 --> 01:39:50,797
nevertheless there's this fiction which says

1368
01:39:51,409 --> 01:39:52,484
there is a national economy.

1369
01:39:53,159 --> 01:39:57,270
And when the national economy in the United States
is doing well, the dollar will rise, if it's

1370
01:39:57,027 --> 01:40:01,276
doing badly the dollar will collapse.

1371
01:40:01,519 --> 01:40:04,552
So the dollar has been under a lot of pressure lately
because the US economy is not doing

1372
01:40:04,849 --> 01:40:06,944
very well compared to the rest of the world

1373
01:40:07,799 --> 01:40:10,863
on the basis of certain measures.

1374
01:40:11,439 --> 01:40:14,445
But then speculators will intervene and claim
that wrong measure are being applied.

1375
01:40:14,499 --> 01:40:20,500
And if they can persuade you of this,
the values will change and they will make a bundle of money

1376
01:40:20,599 --> 01:40:23,683
on the currency movement.

1377
01:40:24,439 --> 01:40:25,800
George Soros made

1378
01:40:25,008 --> 01:40:29,457
two billion in about five days by speculating on

1379
01:40:30,249 --> 01:40:37,249
the value of the British pound against the
European exchange rate mechanism.

1380
01:40:38,026 --> 01:40:42,795
He was actually able to force those kinds of
things to happen.

1381
01:40:43,029 --> 01:40:50,111
So here you see that built into Marx's argument

1382
01:40:50,849 --> 01:40:51,898
is a very interesting way of understanding

1383
01:40:52,339 --> 01:40:57,358
the connectivity between the very secure
money commodity gold,

1384
01:40:57,529 --> 01:40:59,690
with which Marx began his

1385
01:40:59,069 --> 01:41:00,998
analysis of money, to this

1386
01:41:03,032 --> 01:41:07,141
real, problematical, universal money
emerging out of the M-C-M circuit in the end,

1387
01:41:07,429 --> 01:41:09,320
with all of these broader issues.

1388
01:41:09,032 --> 01:41:12,038
I think he did a pretty good job

1389
01:41:12,038 --> 01:41:15,817
and we can build on it. Of course much has changed since

1390
01:41:16,159 --> 01:41:23,167
Marx's time and we have to

1391
01:41:23,959 --> 01:41:27,510
take those transformations into account,

1392
01:41:27,051 --> 01:41:32,056
but it seems to me he set up a very useful argument

1393
01:41:32,056 --> 01:41:38,057
to contemplate our current situation.

1394
01:41:38,057 --> 01:41:42,065
Building on his arguments we can go quite far
towards understand many of the contradictions

1395
01:41:42,065 --> 01:41:43,964
which exist

1396
01:41:44,549 --> 01:41:47,510
within our contemporary

1397
01:41:47,051 --> 01:41:50,057
political economic system.

1398
01:41:50,057 --> 01:41:57,026
So it's interesting that something
like the sub-prime mortgage crisis, given my own background,

1399
01:41:57,539 --> 01:42:00,582
it has been obvious that there would be a crash

1400
01:42:00,969 --> 01:42:03,000
in property markets

1401
01:42:03,000 --> 01:42:04,057
sooner or later.

1402
01:42:04,057 --> 01:42:07,113
I thought it would occur about two or three
years ago, but they managed to stave it off.

1403
01:42:08,013 --> 01:42:12,029
But now it's with us and the question
is: how far will that go

1404
01:42:12,029 --> 01:42:15,032
before they can shift to something else,

1405
01:42:15,059 --> 01:42:18,578
some other fictitious form?

1406
01:42:19,109 --> 01:42:21,800
But behind this, of course, lies

1407
01:42:21,008 --> 01:42:22,937
the emergence of

1408
01:42:23,729 --> 01:42:25,793
imaginary forms.

1409
01:42:26,369 --> 01:42:30,384
Note how Marx emphasizes the imaginary qualities of all of this.

1410
01:42:30,519 --> 01:42:34,588
We imagine it to be this,
we imagine it to be that.

1411
01:42:35,209 --> 01:42:38,257
And we cannot do without that imaginary

1412
01:42:38,689 --> 01:42:40,701
stuff going on.

1413
01:42:40,809 --> 01:42:41,826
In fact

1414
01:42:41,979 --> 01:42:44,300
that is what allows the system to function.

1415
01:42:44,003 --> 01:42:45,352
It's built into it.

1416
01:42:45,649 --> 01:42:48,210
It's not as if we can say:

1417
01:42:48,021 --> 01:42:49,390
get rid of all the fetishism,

1418
01:42:49,579 --> 01:42:53,550
get rid of all of that imaginary stuff
and then we'll be ok.

1419
01:42:53,055 --> 01:42:56,294
No, we couldn't do that.

1420
01:42:56,789 --> 01:43:01,750
These things are socially necessary, they're
embedded within the capitalist system.

1421
01:43:01,075 --> 01:43:02,144
That raises the question: well

1422
01:43:03,044 --> 01:43:04,203
what we do about it?,

1423
01:43:04,599 --> 01:43:06,550
how do we confront them?,

1424
01:43:06,055 --> 01:43:12,364
and what do we do about their
obvious problematic consequences?

1425
01:43:12,859 --> 01:43:14,921
So these are the sorts of issues that this

1426
01:43:15,479 --> 01:43:18,573
chapter raises.

1427
01:43:19,419 --> 01:43:23,050
A final point this chapter raises is the

1428
01:43:23,005 --> 01:43:26,059
interesting question as to how much of it
do you really need to understand

1429
01:43:26,059 --> 01:43:29,718
the rest of volume one of Capital?

1430
01:43:30,249 --> 01:43:30,348
And the answer is:

1431
01:43:31,239 --> 01:43:34,650
not much. (laughter)

1432
01:43:34,065 --> 01:43:36,514
The rest of Capital

1433
01:43:37,099 --> 01:43:40,107
uses certain basic propositions out of here

1434
01:43:40,179 --> 01:43:42,260
which can be reduced to

1435
01:43:42,026 --> 01:43:44,185
four or five arguments

1436
01:43:44,419 --> 01:43:47,423
and then goes on with the analysis.

1437
01:43:47,819 --> 01:43:51,880
What Marx was trying to do here was to lay a basis,

1438
01:43:51,088 --> 01:43:54,787
as he was in the preceding chapters,

1439
01:43:55,579 --> 01:43:58,631
for a magnum opus i.e. the work
that was going to include

1440
01:43:59,099 --> 01:44:06,188
an understanding of credit systems, financial
institutions and structures, and state interventions.

1441
01:44:06,989 --> 01:44:10,690
He was really trying here to lay out

1442
01:44:10,069 --> 01:44:14,132
a systematic basis for a very much broader project.

1443
01:44:15,032 --> 01:44:17,371
But you'll be happy to know

1444
01:44:17,659 --> 01:44:21,620
that you don't have to thoroughly understand all
the nuances of this chapter, interesting and important though

1445
01:44:21,062 --> 01:44:26,071
they really are to our contemporary circumstances.

1446
01:44:26,071 --> 01:44:28,530
You don't have to understand every nuance

1447
01:44:29,169 --> 01:44:36,169
in order to move into the next chapters which
are much simpler and more direct.

1448
01:44:38,369 --> 01:44:42,090
So you're over the worst of it (laughter).

1449
01:44:42,009 --> 01:44:44,578
We can now start the easy part.

1450
01:44:44,659 --> 01:44:48,590
We have a few minutes for questions, I'm
sorry I have taken so long, but this is a difficult

1451
01:44:48,059 --> 01:44:51,138
and intricate chapter,

1452
01:44:51,669 --> 01:44:52,738
which needs a lot of

1453
01:44:53,359 --> 01:44:54,422
elabouration in order

1454
01:44:54,989 --> 01:44:57,075
to get it straight.

1455
01:44:57,849 --> 01:45:03,877
Any kind of comments, questions?

1456
01:45:04,129 --> 01:45:05,760
»STUDENT:When you're talking about the accumulation of

1457
01:45:05,076 --> 01:45:06,455
things and about upper limits, I went

1458
01:45:07,139 --> 01:45:10,213
to visit Yankee Candle just to see what that was

1459
01:45:10,879 --> 01:45:12,879
all about. And next to it they had opened a car museum,

1460
01:45:12,879 --> 01:45:13,924
a very large car museum, and I walked around it

1461
01:45:14,329 --> 01:45:18,280
and realized that all the cars seemed to have a personal
angle on the display cases and the descriptions.

1462
01:45:18,028 --> 01:45:22,347
It turned out the museum was the vast personal collection

1463
01:45:22,599 --> 01:45:26,730
of the owner and founder of the Yankee Candle.

1464
01:45:26,073 --> 01:45:27,342
It was just a garage, so large that it was now a museum,

1465
01:45:27,999 --> 01:45:31,790
and you payed to go in, but the owner drove them in and out

1466
01:45:31,079 --> 01:45:36,140
whenever he wanted. And there was no limit, it was huge.

1467
01:45:37,004 --> 01:45:39,041
»HARVEY:Not the same as what you could get with

1468
01:45:39,077 --> 01:45:41,156
twenty billion dollars.

1469
01:45:42,056 --> 01:45:47,845
And that's the point, that people do accumulate
large quantities of things like that, but

1470
01:45:48,349 --> 01:45:54,436
how many yachts can you have?,
how many residencies can you have?

1471
01:45:55,219 --> 01:45:58,266
On the use-value side there are these limitations,

1472
01:45:58,689 --> 01:46:02,440
so it's the limitless capacity of

1473
01:46:02,044 --> 01:46:05,058
the accumulation of money power

1474
01:46:05,058 --> 01:46:10,467
that will be very important to look at;
one of the major propositions, of course, in

1475
01:46:10,989 --> 01:46:16,380
the rest of Capital is the limitlessness of this.

1476
01:46:16,038 --> 01:46:19,277
»HARVEY: Yes.

1477
01:46:19,619 --> 01:46:26,619
»STUDENT:I'm just curious about paper money, when
paper money first starts showing up in…what are you saying
in terms of this as a historical or a logical development?

1478
01:46:30,449 --> 01:46:34,510
»HARVEY:Well scrip and things like that have
been around for very long time, in various

1479
01:46:34,051 --> 01:46:38,123
forms. So paper representations
as well as tokens have been

1480
01:46:39,023 --> 01:46:40,105
around for a long time.

1481
01:46:41,005 --> 01:46:44,914
Which goes back to my original argument
about the monetary form, that

1482
01:46:44,959 --> 01:46:48,820
monetary forms have been around a very long
time. The interesting question is how all of

1483
01:46:48,082 --> 01:46:50,211
those forms

1484
01:46:50,949 --> 01:46:56,025
actually became assembled around
the capitalist definition of what money is.

1485
01:46:56,709 --> 01:46:58,768
The same thing applies to temporality.

1486
01:46:59,299 --> 01:47:04,610
It's not as if
capitalism invented temporality.

1487
01:47:04,061 --> 01:47:08,720
Every society has its own
definitions of temporality and spatiality .

1488
01:47:09,269 --> 01:47:11,288
There's a long

1489
01:47:11,459 --> 01:47:15,070
history in the anthropological
and historical record of that.

1490
01:47:15,007 --> 01:47:18,048
But what happens is that
capitalism starts to insist upon

1491
01:47:18,048 --> 01:47:23,337
certain definitions of temporality.

1492
01:47:23,769 --> 01:47:27,290
For instance we're in one right now:
it's eight thirty and you all want to go home.

1493
01:47:27,029 --> 01:47:30,878
Now if you're really interested in learning
you would want to stay here until five in the

1494
01:47:31,139 --> 01:47:34,208
morning, right? (laughter)

1495
01:47:34,829 --> 01:47:40,540
You're being very nice…
But you see what I mean.

1496
01:47:40,054 --> 01:47:44,065
Here we have this kind of
definition of temporality which is in the

1497
01:47:44,065 --> 01:47:48,224
school calendar so for example we
we start in here and we finish off there.

1498
01:47:48,809 --> 01:47:50,813
It's all built in,

1499
01:47:50,849 --> 01:47:54,910
and we accept it as normal,
so it becomes normalized. Whereas

1500
01:47:57,003 --> 01:48:00,011
I can certainly remember intellectual
discussions in my youth, when all

1501
01:48:01,001 --> 01:48:03,073
things were wonderful,

1502
01:48:03,082 --> 01:48:07,461
which went on all day and all night,

1503
01:48:08,199 --> 01:48:12,212
and we were not limited by anything.
I mean, we skipped classes

1504
01:48:14,026 --> 01:48:19,235
and then had a discussion instead;
it was a different notion of temporality

1505
01:48:19,469 --> 01:48:30,080
The problem was there was nothing else to do,
and the classes were very boring.

1506
01:48:30,008 --> 01:48:31,077
So, I think these definitions are

1507
01:48:33,004 --> 01:48:37,025
contingent, and this is also what
Marx is arguing throughout the book,

1508
01:48:38,349 --> 01:48:42,360
namely that the categories of political economy
are contingent upon the rise of capitalism.

1509
01:48:42,459 --> 01:48:46,506
The notion of temporality is specific;
capitalism has a specific temporality,

1510
01:48:46,929 --> 01:48:49,016
which is what E.P. Thompson talks about, namely

1511
01:48:49,799 --> 01:48:51,842
the rise of industrial work discipline,

1512
01:48:52,229 --> 01:48:55,241
what that entailed and how that was enforced.

1513
01:48:55,349 --> 01:48:57,354
And we'll also see some of that coming up

1514
01:48:57,849 --> 01:49:00,858
in Marx's Capital.

1515
01:49:00,939 --> 01:49:06,530
OK, so we leave it there
and will continue this saga next week.