Marx on Crises

“The division of exchange into purchase and sale not only destroys locally evolved primitive, traditionally pious and sentimentally absurd obstacles standing in the way of social metabolism. The division also represents the general fragmentation of the associated factors of this process and their constant confrontation. In short, the structure of the exchange process contains the general possibility of commercial crises. This is so because the contradiction of commodity and money is the abstract and general form of all contradictions inherent in the bourgeois mode of labour.”
[Karl Marx, A Contribution to the Critique of Political Economy, Progress Publishers, Moscow, 1970, p. 96.]

            [This passage has been edited to break up Marx’s single sentence into four. The danger is that the interconnections will be lost. Hence, once readers have grasped the idea, they should return to the original form of expression. However, there is a need for an edition of Capital which makes Marx’s style conform to contemporary expectations about the length of paragraphs and sentences. In the essay “The Unreadable Marx” on my website, I show that Marx is neither turgid nor more difficult than the reality he has to analyse.]

“When payments cancel one another as positive and negative quantities, no money need actually appear on the scene. Here money functions merely as measure of value with respect to both the price of the commodity and the size of mutual obligations. Apart from its nominal existence, exchange-value does not therefore acquire an independent existence in this case, even in the shape of a token of value, in other words, money becomes purely nominal money of account.

Money functioning as means of payment thus contains a contradiction: on the one hand, when payments balance, it acts merely as a nominal measure; on the other hand, when actual payments have to be made, money enters circulation not as a transient means of circulation, but as the static aspect of the universal equivalent, as the absolute commodity, in short, as money.

Where chains of payments and an artificial system for adjusting them have been developed, any upheaval that forcibly interrupts the flow of payments and upsets the mechanism for balancing them against one another suddenly turns money from the nebulous chimerical form it assumed as measure of value into hard cash or means of payment.

Under conditions of advanced bourgeois production, when the commodity-owner has long since become a capitalist, knows his Adam Smith and smiles superciliously at the superstition that only gold and silver constitute money or that money is after all the absolute commodity as distinct from other commodities – money then suddenly appears not as the medium of circulation but once more as the only adequate form of exchange-value, as a unique form of wealth just as it is regarded by the hoarder.

The fact that money is the sole incarnation of wealth manifests itself in the actual devaluation and worthlessness of all physical wealth, and not in purely imaginary devaluation as for instance in the Monetary System. This particular phase of world market crises is known as monetary crisis. The summum bonum, the sole form of wealth for which people clamour at such times, is money, hard cash, and compared with it all other commodities – just because they are use-values – appear to be useless, mere baubles and toys, or as our Doctor Martin Luther says, mere ornament and gluttony. This sudden transformation of the credit system into a monetary system adds theoretical dismay to the actually existing panic, and the agents of the circulation process are overawed by the impenetrable mystery surrounding their own relations.
[ Marx, A Contribution to the Critique of Political Economy, pp. 145-6.] [In the original, these four paragraphs were one.]

Submitted by Humphrey McQueen
November 2008