The Necessity of Commodity Production and Money

(From “From the Gold Standard to Managed Currency”, 1988-89)

Written by Hayashi Hiroyoshi
Translated by Roy West

This is the first in a series of nine articles written by Hayashi Hiroyoshi from 1988 to 1989, entitled “From the Gold Standard to Managed Currency”. Page numbers listed for the passages from Capital refer to the Penguin editions, and MECW refers to the Collected Works of Marx/Engels published by International Publishers.

CONTENTS

1. Modern “Money”

2. Money [kahei] and the Concept of “Value”

3. The Particular Historical Character of Labor that Takes the Form of Value

4. Money and the Necessity of Human Relations Appearing as Relations of “Things”

5. Money Teaches Us that Human Labor has become Thoroughly Social

1 Modern “Money”

To understand international currency, it is necessary to first understand the meaning of money. [It is important to note that “money” here is a translation of kahei, which is similar to the German geld and can signify metallic money (gold), and is different from shihei (paper money).] Exactly what is money, and what are the production relations that make money necessary?

It is becoming increasingly difficulty to answer this question. In the past money had actually circulated and was something concrete in the eyes of the people who used it. Today, however, it only appears as paper money [kahei] in its function within the circulation process. In the past, metal money itself had value and was not simply a functional existence, whereas money now lacks any internal value of its own and is only paper. It thus appears as if today’s money has a purely functional existence.

With the breaking away from the so-called “gold standard” in the 1930s, and then with Nixon ending the convertibility of the dollar to gold in 1971, capitalism seemed to “free” itself from the restrictions of gold, and gold money appeared to have been banished from the world of capitalism. However, was this truly the case, and if so in what sense?

Capitalism cannot exist without money. Capitalist society (commodity production) necessarily gives birth to money, and this money plays a central role as the lever of capitalistic production. This is the real existence of capitalistic wealth and appears, glitteringly, as its materialistic symbol. Money [kahei] is fundamental to capitalist society, but in modern capitalism it does not appear within actual circulation, and this is an enormous, new contradiction that represents a significant theoretical problem. To “solve” this problem is to elucidate one of the fundamental characteristics of modern capitalism.

2 Money [kahei] and the Concept of “Value”

Without the role of money, capitalism could not even exist for one day. The contradictions of capitalism make money necessary -- Marx emphasized this fundamental point in Capital.

However, we must pay particular attention to the fact that here capitalism is used in the sense of commodity production, not to the class struggle between capital and labor. Capitalism is the highest development of commodity production society, and for this very reason the “value relationship” is also highly developed to the point where money is transformed into capital.

In other words, it is commodity production society and its contradictions that make money necessary. This ultimately comes down to the question of what is the commodity and its “value.” To discuss money presupposes, therefore, an understanding of value.

The commodity immediately exists as a use value and at the same time as value (exchange value). The fact that the commodity has a use value is an evident fact that requires little explanation. Without being useful to human beings, no product could ever become a commodity in the first place.

On the other hand, however, the commodity also has an exchange value -- i.e., it is a product that can be exchanged at a fixed ratio with other products. This raises the question of why a commodity can be exchanged at a fixed ratio with other commodities and what this reveals.

It should first be pointed out here that this problem concerns the commodity as the product of human labor (what we will call here the “primary commodity”). We will not consider other so-called derivative commodities (such as land, credit, or stock certificates). Of course, un-conceptual bourgeois scholars remain dissatisfied with this “methodology.” They would argue that, when considering the commodity, we must include all commodities and not limit ourselves to one type (i.e., only products of labor). They have “forgotten” that to understand complex capitalist society, it is necessary to start form the most essential (most abstract) relations, and then proceed, step by step, towards a deeper understanding. It is simply not possible to understand everything immediately and at the same time.

Bourgeois scholars would no doubt be greatly surprised by the idea that for the commodity the most essential thing is the quality of being a “product of labor.” But for workers this is perfectly clear. The problem centers on the “production” and “reproduction” of the material livelihood of human beings and the historical form this takes. This is a question of what is the primary in terms of the commodity. Thus, it is natural that products of labor make up the greater part of commodities. Moreover, by understanding the meaning of the “primary commodity,” it becomes possible for the first time to understand other “commodities” that only exist in the derivative form.

Conversely, if one attempts to elucidate all types of commodities at once, nothing will be clarified, and we would only end up with something that lacks a concept.

In the first place, a world of commodities without the “primary commodities” is unthinkable, whereas one can easily imagine a world without land commodities or stock certificates (capital commodity)! Even from this simple observation, or from daily experience, one can easily see the nature of the “primary commodity,” but for bourgeois scholars understanding this is seen as a virtually impossible task.

How then can the exchange value of a commodity be defined, or in simple terms: why can one commodity be exchanged with another commodity at a fixed ratio? Why at a certain rate, and not another?

People often say that the exchange of commodities is random and that no fixed rate of exchange can be assumed. The prices of the commodity markets fluctuate daily, and this is also the exchange value of the commodities (the exchange value as expressed in money). But we are already getting ahead of ourselves. Here we will have to be satisfied with just pointing out this fact. Of course, to those who view the exchange value of commodities as being random, the idea that this in fact has a certain necessary “objective” content must appear to be an outrageous statement.

Despite what the advocates of the “theory of utility value” (i.e. subjectivistic theory of value) may believe, exchange value has objective content and is certainly not simply something “subjective.”

This is witnessed, for example, by the fact that a car (1 million yen) cannot be exchanged for a single teacup (500 yen). Normally, a car might be exchanged for 2,000 teacups. The exchange ratio of cars to teacups would likely fluctuate on the market. For example, one car might be exchanged for 1,000 or 3,000 teacups instead of 2,000. These prices fluctuate constantly in the markets. But the question here is why exchange value does not fluctuate to the point that one car can be exchanged for one teacup -- in other words, why the price of the car does not drop that low (or the price of the tea cup rise that high). Since exchange is repeated and becomes more general and universal, the exchange ratio between cars and teacups would become increasingly stable and tend to gravitate around a certain point. Of course, essentially speaking this would not mean that the exchange rate could become perfectly “free” of fluctuation.

The attempt to explain from “utility value” why one car could not be exchanged for one teacup will certainly not succeed. This is because on the basis of “utility value” there is nothing strange at all about a car being exchanged for one teacup. Instead, this could be seen as a necessity since people often recognize a greater “utility value” for a teacup than a car. (If a person were to say that this was the case in their own household, proponents of the “theory of utility” would they indignantly say that that person has introduced an argument outside the realm of science into a scientific debate?)

According to their logic, one hundred cars might be exchanged for a single teacup, and there would be nothing wrong about such a concept. At the very least, they say that such a thing could occur, or that this possibility cannot be denied.

However, workers know that such a thing could never occur in reality. They would know immediately that what the “theory of utility value” is arguing could never occur even if the sky was turned upside down.

Here a new question emerges: why does one car exchange for 2,000 teacups, instead of for one teacup? Exactly what does this “exchange value” teach us?

Marx gave a clear response to this question. He said that the reason two commodities can be exchanged at a fixed ratio is that they both contain an equal amount of human labor abstracted in them. Of course, here “human labor” refers to human labor expended in a certain social form, i.e. abstract human labor.

Marx says that the “substance” of the value of the commodity is human labor. However, unlike members of the Uno school (or bourgeois critics of Marx in general), we do not think that this is the “essence” or most important content of Marxist economics.

In fact, this is not the most important element of Marx’s concept of value. If this were the extent of his concept of value, it would fundamentally be the same as the concept provided by the classical school of economics, particularly Ricardo. In this aspect, Marx’s task, as he himself recognized, was not simply to scientifically examine Ricardo and make his theory more consistent.

The crucial thing for Marx’s concept of value was not that the “value” of a commodity was labor (this was already recognized as a fact prior to Marx), but rather the question why labor takes the form of “value” (and the form of money). Marx’s real task was to explore the historical nature of labor that takes the “fetishistic” form of value, and therefore the form of money.

3 The Particular Historical Character of Labor that Takes the Form of Value

Concentrated within money is one particular historical type of production relation. Money is the decisive reflection, or “fetischistic” expression, of the historical character of the labor that produces commodities.

What is the historical particularity of the labor that produces commodities?

In a word, this is labor that is private but at the same time social. Labor that begins as private labor (because this is the labor of private commodity producers), but ultimately is proven to be (or realized as) social labor -- acquiring the significance of being one part of the aggregate social labor.

We must recognize that in a commodity-economy society, labor is thoroughly social labor. In other words, production is carried out not for the needs of the producers themselves, but for others. Production satisfies the wants of society and is carried out for the “market.” The appearance and development of a commodity-economy society forever relegates to the past the old “self-sufficient” society in which people produced to satisfy their own personal needs.

Of course, saying “production for others” does not signify a simple volunteer activity. This refers to social labor as one part of the aggregate social labor within the division of labor of society. In terms of the individual producer, the labor that he or she provides in one form is received back in a different form.

However, the labor of the producers is “mutually independently carried out private labor” (Capital), not social labor in the direct sense. The producers are not consciously working for the aim of satisfying the consumption needs of society. Rather, they undertake labor entirely in accordance with their own judgment and for the sake of their own interests (larger profits!) Their labor is social but at the same time private.

The labor “objectified” in the commodity is privately expended but thoroughly social labor. It is important to recognize that labor under capitalism that appears in the value of commodities is also social labor.

However, this social character does not exist directly. The social character of labor “objectified” in commodities only appears through commodity exchange. The starting point is private labor. Thus, people exchange the products they produce and thereby verify that their own private labor is at the same time social labor (one part of the aggregate social labor). This is the reason that labor takes, and must take, the form of value. If labor were expended consciously from the beginning as social labor, such labor would certainly have no need to take the form of value. Under capitalism, money is the expression, or outcome, of the contradictions of the social labor of human beings.

If labor were consciously expended directly as social labor (from the outset as one part of the aggregate labor of society), this would in fact be socialism.

However, the problem is not limited to this. In addition to the issue of the private and social nature of commodity-producing labor, this labor is also social labor as abstract general human labor. This is the precise reason that commodity-producing labor appears in the form of value or money.

Let’s turn to Marx for the definition of this concept ofabstract human labor. At the beginning of Capital, he provides the following concept of the substance of value being abstract human labor. That is, Marx says that “abstract human labor,” which is the substance of value, refers to different kinds of labor that “can no longer be distinguished, but are all together reduced to the same kind of labour, human labour in the abstract.” These kinds of labor are thus “merely congealed quantities of homogeneous human labour, i.e. of human labour-power expended without regard to the form of its expenditure.” Thus, “as crystals of this social substance, which is common to them all, they are values.” (Capital Vol. 1, p. 128)

Marx goes on to discuss the “dual character of the labor embodied in commodities,” and this discussion provides a more precise definition of abstract labor in general:

“Just as, in viewing the coat and the linen as values, we abstract from their different use-values, so, in the case of the labour represented by those values, do we disregard the difference between its useful forms, tailoring and weaving. The use-values coat and linen are combinations of, on the one hand, productive activity with a definite purpose, and, on the other, cloth and yarn; the values coat and linen, however, are merely congealed quantities of homogeneous labour. In the same way, the labour contained in these values does not count by virtue of its productive relation to cloth and yarn, but only as being an expenditure of human labour-power. Tailoring and weaving are the formative elements in the use-values coat and linen, precisely because these two kinds of labour are of different qualities; but only in so far as abstraction is made from their particular qualities, only in so far as both possess the same quality of being human labour, do tailoring and weaving form the substance of the values of these two articles mentioned.” (Ibid.135-6)

Marx adds that abstract human labor is nothing but concrete useful labor “understood in an abstract form.” And this is also an important perspective.

What needs to be noted here is that abstract human labor cannot be thought of as an supra-historical category; i.e., the idea that compared to the historical category of “value,” abstract labor is a supra-historical category common to human society in general. In fact, however, abstract human labor is also a historical category. This is clear, for example, from the fact that, in general, prior to capitalism labor in communities did not take the form of value, and therefore did not appear as abstract human labor.

When Marx spoke of abstract human labor, he was using it as a term with human historical significance. In other words, even human labor takes the form of commodity value, it becomes something that is truly social, and social in a global sense.

This is labor that is not the possession of anyone in particular, nor does it produce anything in particular. Rather, it is simply labor as the expenditure of labor power. This is thus the personal independence and equality of individuals, on the one hand, and the fundamental mutual interdependence of these individuals on the other hand. The labor of each person, as long as it satisfies some social need, is abstract labor, completely equal without discrimination or distinction. Indeed, by discovering this relationship within the reality of capitalism (commodity production society), modern socialism gained its own truly conscious foundation, thereby becoming scientific socialism. The discovery of abstract human labor as the “substance” of value represents a decisive stage in human history, which clarifies that socialism has become a realistic task. This is certainly not a supra-historical category, and to consider it as such would result in stripping modern socialism, i.e. scientific socialism, of its realistic basis.

Marx explains in detail how “simple labor” is a historical category in his Introduction to the Grundrisse, but there is also an interesting discussion of this in A Contribution to the Critique of Political Economy. First let’s look at the Introduction. In this work, there is a clear definition of “simple labor” (the substance of value) as a “modern category.” Incidentally, this essay of Marx is a treasure-trove for understanding the “methodology” of Marxism.

“Labour seems to be a very simple category. The notion of labour in this universal form, as labour in general, is also as old as the hills. Nevertheless, considered economically in this simplicity, “labour” is just as modern a category as the relations which give rise to this simple abstraction.” (MECW, Vol. 28 p. 40)

“The fact that the specific kind of labour is irrelevant presupposes a highly developed totality of actually existing kinds of labour, none of which is any more the dominating one. On the other hand, this abstraction of labour in general is not simply the conceptual result of a concrete totality of labours. The fact that the particular kind of labour is irrelevant corresponds to a form of society in which individuals easily pass from one kind of labour to another, the particular kind of labour being accidental to them and therefore indifferent. Labour, not only as a category but in reality, has become a means to create wealth in general, and has ceased a determination to be tied with the individuals in any particularity. This state of affairs is most pronounced in the most modern form of bourgeois society, the United States. It is only there that the abstract category “labour”, “labour as such”, labour sans phrase, the point of departure of modern [political] economy, is first seen to be true in practice.

“The simplest abstraction which plays the key role in modern [political] economy, and which expresses an ancient relation existing in all forms of society, appears to be true in practice in this abstract form only as a category of the most modern society…

“The example of labor strikingly demonstrates that even the most abstract categories, despite their being valid -- precisely because they are abstractions -- for all epochs, are, in the determinateness of their abstraction, just as much a product of historical conditions and retain their full validity only for and within these conditions.” (Ibid. pp. 41-2)

Here Marx is saying that, simple labor and abstract general labor are historical categories that emerge and develop with capitalistic production, and even though they have significance in socialist society, they are not supra-historical categories. Of course, with the highest level of communist society, these categories would likely lose their significance within society, but at the stage of socialism, where what the individual receives back from society is in accordance to the labor contributed, these categories remain real ones. But we must be aware of the following.

We have already seen that the “substance” of the commodity is abstract human labor, and in this sense social labor, but this does not mean that all social labor appears as abstract human labor (the reverse is not also true!). For example, in primitive communist society labor could be called social labor, but this certainly was not abstract human labor. This was directly concrete labor, which could not be reduced to abstract human labor.

In the A Contribution to the Critique of Political Economy, Marx says the following about the “particular social quality” of labor as exchange value, and therefore labor that appears as money.

“From the analysis of exchange value it follows that the conditions of labour which creates exchange value are social categories of labour or categories of social labour, social however not in the general sense but in the particular sense, denoting a specific type of society. Uniform simple labour implies first of all that the labour of different individuals is equal and that their labour is treated as equal by being in fact reduced to homogeneous labour. The labour of every individual in so far as it manifests itself in exchange values possesses this social character of equality, and it manifests itself in exchange value only in so far as it is equated with the labour of other individuals.” (MECW, Vol. 29, p. 273)

“Or finally let us take communal labour in its naturally evolved form as we find it among all civilized nations at the dawn of their history. In this case the social character of labour is evidently not mediated by the labour of the individual assuming the abstract form of universal labour or his product assuming the form of a universal equivalent. The communal system on which [this mode of] production is based prevents the labour of an individual from becoming private labour and his product the private product of a separate individual; it causes individual labour to appear rather as the direct function of a member of the social organization. Labour which manifests itself in exchange value appears to be the labour of an isolated individual. It becomes social labour by assuming the form of its direct opposite, of abstract universal labour.” (Ibid. p. 275)

“But since [Franklin] does not explain that the labour contained in exchange value is abstract universal social labour, which is brought about by the universal alienation of individual labour, he is bound to mistake money for the direct embodiment of this alienated labour. He therefore fails to see the intrinsic connection between money and labour which posits exchange value, but on the contrary regards money as a convenient technical device which has been introduced into the sphere of exchange from outside.” (Ibid. pp. 296-7)

“The commodity as such is an exchange value, the commodity has a price. This difference between exchange value and price is a reflection of the fact that the particular individual labour contained in the commodity can only through alienation be represented as its opposite, impersonal, abstract, general -- and only in this form social -- labour, i.e. money.” (Ibid. p. 308)

The final passage is particularly important. Labor in bourgeois society is social labor, but this does not directly exist as social labor, as expended social labor, but rather (1) appears as social labor through the exchange of products of private labor.

Moreover (2), this takes the form of “value,” i.e. as general abstract labor common to all people, and is only social labor in this form (this has a social character different from “social” labor in primitive or pre-capitalist communities.)

These two points must be clearly recognized as the historical character of labor taking the form of value or money!

Here the problem is quite simple and essential. We have been able to recognize the “particular social character” of the labor that produces commodities. Finally, let’s look at a quote from Capital.

“Something which is only valid for this particular form of production, the production of commodities, namely the fact that the specific social character of private labours carried on independently of each other consists in their equality as human labor, and, in the product, assumes the form of existence of value.” (Ibid. p. 167)

Here Marx says that “the specific social character of private labours carried on independently of each other consists in their equality as human labour.” In other words, since they are equal as human labor, they are social. The labor is social because it is abstract and indiscriminate. The labor is separated from its concrete content, and first evaluated in terms of its abstract definition. This completely general labor, labor as simple labor, which does not belong to any one person and is not applied for the production of a particular use value. Labor is abstracted from the concrete content of labor, but this is because this is in fact the case for labor that produces “value.”

In this sense, the notion that abstract labor is an alienated form of labor is not that far off. However, this certainly does not negate the great historical significance of the determination of labor as abstract labor (in this sense the New Left “view of labor,” derived by relying on Marx’s early works, as solely “alienated labor” is one-dimensional and incorrect). In appearing as abstract, general labor, human labor for the first time has truly social significance. It acquires a broad (indeed global) social quality. The labor of workers who produce cars in Japan is exchanged for the labor of workers in the United States who cultivate grapefruit, thereby obtaining an international social quality (of course, under capitalism this is mediated by the exchange of “things,” i.e. commodities).

The appearance of human labor as value, and as money, represents great progress for human history. Marx points out that Aristotle was able to see the value relationship, but lacking an awareness of labor in this “modern” sense, could not grasp the true significance of this relationship.

“Aristotle therefore himself tells us what prevented any further analysis: the lack of a concept of value. What is the homogenous element, i.e. the common substance, which the house represents from the point of view of the bed, in the value expression for the bed? Such a thing, in truth, cannot exist, says Aristotle. But why not? Towards the bed, the house represents something equal, in so far as it represents what is really equal, both in the bed and the house. And that is -- human labour.

“However, Aristotle himself was unable to abstract this fact, that, in the form of commodity-values, all labour is expressed as equal human labour and therefore as labour of equal quality, by inspection from the form of value, because Greek society was founded on the labour of slaves, hence had its natural basis the inequality of men and of their labour-powers. The secret of the expression of value, namely the equality and equivalence of all kinds of labour because and in so far as they are human labour in general, could not be deciphered until the concept of human equality had already acquired the permanence of a fixed opinion. This however becomes possible only in a society where the commodity-form is the universal form of the product of labour, hence the dominant social relation is the relation between men as possessors of commodities. Aristotle’s genius is displayed precisely by his discovery of a relation of equality in the value-expression of commodities. Only the historical limitation inherent in the society in which he lived prevented him from finding out what ‘in reality’ this relation of equality consisted of.” (Capital Vol. 1, pp. 151-2)

“Men are all equal,” since all labor, as abstract human labor, is qualitatively the same and “equal.” As long as labor is undertaken in this particular form, all men are equal. Whether labor is expended in agriculture or industry, as long as it is abstract human labor there is no distinction! (But today, more than a hundred years after Marx wrote this, there is no shortage of dim-witted “Marxists” and “communists” who argue that agricultural labor is somehow special, or, even worse, that a particular profession -- such as education -- is somehow sacred because it is not productive labor.

The special character of labor (producing commodities) in capitalist society should now be clear, but the question naturally arises about the nature of labor in socialist society.

This is indeed the question! In a socialist society, would the determination of human labor as abstract labor be shed?

Certainly not! Of course, in a socialist society all human labor is directly social labor and therefore does not take the form of money or value. However, not only is this aspect of human labor within commodity production not abandoned, in a sense it gains important meaning.

Labor that takes the form of value is abstract human labor, and in a socialist society as well, labor is also social as abstract human labor. This is why Marx said that the “content of the law of value would remain under socialism.” However, unlike capitalism, in a socialist society, this does not take the oppositional form seen in the division between concrete useful labor and abstract labor. Therefore, labor does not take the “material” [bushouteki] form of value.

Abstract human labor expresses the fact in terms of producing social objects of consumption, human labor is indiscriminate and equal. Therefore, this forms the basis for the equality and freedom of everyone within this society. Even though the bourgeois value form is shed in socialist society, its content is preserved in the new society, and in fact the awareness of people’s (workers’) “particular social labor” is the great premise of socialism, its starting point. This is what Marx calls the “content of the value determination,” and this category plays an essential and decisive role in both the planning of social production and distribution to individuals.

We need to recognize the enormous significance of labor taking the historical form of value (and money) under capitalist society. This expresses the fact, stated strongly, that the labor of people throughout the world, as general and abstract human labor, emerges with a social quality that has global significance, and people throughout the world come to be connected (and this connection is developing steadily).

Certainly, under socialism people’s labor directly appears as social labor, and in this sense “abstract general labor” slips into the background or loses its direct meaning. But this does not mean that the opposition or contradiction between concrete useful labor and abstract general labor is abolished. This is in fact impossible. Rather, the determination of human labor gains real meaning under socialism (this is because the limitations of the bourgeois determinations are broken through).

From chapter two, we will discuss the modern “money system,” but in preparation for this we need to first discuss the particular, historical character of the labor that produces commodities.

4 Money and the Necessity of Human Relations Appearing as Relations of “Things”

In capitalist society, people think that it is natural that things, i.e. products of labor, are exchanged. However, for Marx this was a completely strange reality. In such a society, people exchange “things,” that is, they exchange the fruit of their labor as “commodities,” and this forms one type of human society. Those who glorify this system brazenly say that equilibrium can only be achieved through free competition and that this is an ideal society that is always self-renovating and developing, or at least that it is superior to any alternative society. These apologists cannot imagine any society except one in which “things” are produced based on the responsibility of private individuals and then exchanged, a system in which products of labor are exchanged as commodities.

However, we need to consider the following: What is the exchange of “things,” exactly? What is the content of this exchange of “things”? In other words, what exactly is it that is being “exchanged”?

These “things” are exchanged as equal value. However, they are not exchanged blindly or at random. That is, only things that are equal in terms of value are exchanged. Moreover, the commonality of the commodities (= “substance of value”), which becomes the standard of exchange, is not their use value. It is precisely because their use values are different that they can be exchanged as things.

But we have already dealt with this and there is no need to repeat it again here. What governs this exchange of things is the human labor “objectified” in the things. The substance of “value” is human labor.

For Marx, the peculiar thing is why the relations between people take the form of a relationship between things, and indeed must take this form. That is, to explain the strange occurrence in which “things” themselves come to have a “social-natural quality” and assume a social relationship. If one says that the exchange of “things” is mere appearance, and that it is labor that is in fact being exchanged, there still remains the question of why this would this be necessary and what makes it necessary.

Marx says, first of all, that the mysterious quality of the commodity does not arise from its use value or the content of the value determination. The use value of a commodity is clearly the natural character of the thing. And for Marx, the “content of the value determination” is that human beings create a product through labor: that is, in the case of “modern” society, social labor is carried out in the form of abstract human labor. The issue here is how much labor is expended for the necessary products for society, and the fact that the labor of individuals in this form of labor is one part of the total social aggregate labor, so there is no great “mystery” (of course the bourgeoisie would probably disagree).

What, then, is the source of the “mystery.” “Clearly, it arises from [the] form itself,” Marx responds, and his explanation is presented in the following passage:

“Whence, then, arises the enigmatic character of the product of labour, as soon as it assumes the form of a commodity? Clearly, it arises from this form itself. The equality of the kinds of human labour takes on a physical form in the equal objectivity of the products of labour as values; the measure of the expenditure of human labour-power by its duration takes on the form of the magnitude of the value of the products of labour; and finally the relationships between the producers, within which the social characteristics of their labours are manifested, take on the form of a social relation between the products of labour.

“The mysterious character of the commodity-form consists therefore simply in the fact that the commodity reflects the social characteristics of men’s own labour as objective characteristics of the products of labour themselves, as the socio-natural properties of these things. Hence it also reflects the social relation of the producers to the sum total of labour as a social relation between objects, a relation which exists apart from and outside the producers. Through this substitution, the products of labour become commodities, sensuous things which are at the same time supra-sensible or social.” (Capital Vol. 1, pp. 164-5)

“The fact that commodity owners treat one another’s labour as universal social labour appears in the form of their treating their own commodities as exchange values; and the interrelation of commodities as exchange values in the exchange process appears as their universal relation to a particular commodity as the adequate expression of their exchange value; this in turn appears as the specific relation of this particular commodity to all other commodities and hence as the distinctive, as it were naturally evolved, social character of a thing. The particular commodity which thus represents the exchange value of all commodities, that is to say, the exchange value of commodities regarded as a particular, exclusive commodity, constitutes money. It is a crystallization of the exchange value of commodities and is formed in the exchange process.” (MECW, Vol. 29, p. 289)

The simplest relation of “things” is the exchange relationship of individual commodities. A commodity exchanging with another commodity at a certain ratio (at a certain quantity of use value) is nothing but a relationship of “things.” With further development, money is formed and a commodity is exchanged for money, and the money then exchanged for a different commodity -- this is indeed the relationship between “things” and its development, not a relationship of human beings (the Uno school scholars say that this is not simply a “relationship of things” because humans are the bearers of commodities or purchase commodities with money).

Marx emphasizes the strange inversion in which a product of labor comes to have value itself, the value has magnitude, and then the product enters into a relation with another “thing.”

The value of a commodity is value as the “objectification” of human labor. But, as Marx pointed out, value is a “supra-sensual” thing, and even if one holds a commodity (such as a fabric) up to the light to look at it the value within the commodity body will not be visible. However, as one social “substance,” value is manifested as a realistic force, and even while being the outcome of people’s labor, it turns the relations of people into relations of things. As the value of the commodity, value is a distant “thing” to the worker (and appears as an attribute of the thing). When one thinks about it, it is strange that as a thing, a commodity has a social attribute (value) and comes to rule over human beings. Still, in terms of the necessity of commodity production, this contradiction itself is thoroughly revealed within money.

The following passage provides the most appropriate explanation by Marx of the significance of money:

“In the first part of my book [A Contribution to the Critique of Political Economy], I mentioned that it is a characteristic of labour based on private exchange that the social character of labour “manifests itself” in a perverted form?as the “property” of things; that a social relation appears as a relation between things (between products, values in use, commodities)…

“But to say that ‘value’ is not an absolute, is not conceived as an entity, is quite different from saying that commodities must impart to their value of exchange a separate expression which is different to their use value and of their existence as real products, in other words, that commodity circulation is bound to evolve money. Commodities express their exchange value in money, first of all in the price, in which they all present themselves as materialised forms of the same labour, as only quantitatively different expressions of the same substance. The fact that the exchange value of the commodity assumes an independent existence in money is itself the result of the process of exchange, the development of the contradiction of use value and exchange value embodied in the commodity, and of another no loess important contradiction embodied in it, namely, that the definite, particular labour of the private individual must manifest itself as its opposite, as equal, necessary, general labour and, in this form, social labour. The representation of the commodity as money implies not only that the different magnitudes of commodity values are measured by expressing the values in the use value of one exclusive commodity, but at the same time that they are all expressed in a form in which they exist as the embodiment of social labour and are therefore exchangeable for every other commodity, that they are translatable at will into any use value desired. Their representation as money -- in the price -- therefore appears first only as something nominal, a representation which is realised only through actual sale.

“Ricardo’s mistake is that he is concerned only with the magnitude of value. Consequently his attention is concentrated on the relative quantities of labour which the different commodities represent, or which the commodities as values embody. But the labour embodied in them must be represented as social labour, as alienated individual labour. In the price this representation is nominal; it becomes reality only in the sale. The transformation of the labour of private individuals contained in the commodities into uniform social labour, consequently into labour which can be expressed in all use values and can be exchanged for them, this representation of exchange value as money, is not elaborated by Ricardo. This circumstance -- the necessity of presenting labour contained in commodities as uniform social labour, i.e. as money -- is overlooked by Ricardo.” (MECW, Vol. 32, pp. 317-8)

Some might say that a thing is a thing and that it is strange for it to have a social relation. Social relations are human relation, and in particular a relation formed in human labor = production. Human society necessitates social labor, and to carry this out, and for society’s members to assume a part of this labor, is not a relationship between “things,” and there is no necessity for this to be expressed as a relationship between things. But in capitalist society it does appear as such, and this is a necessity.

Marx says that what appears as a relationship between “things” is in fact a relationship between human beings. This appears as a relationship between things because the true reciprocal human relations are hidden, generating the illusion particular to this society, i.e. the illusion that takes relations between things at face value (as a natural social attribute of the things). Marx called this the “fetishism” of the world of commodities, and used the expression “consciousness of the fetish-worshipper” to this manner of understanding. This, simply put, is the illusion that fails to see the nature of human social labor and its relations in the nature of the things (commodities) and the relations in which they appear, seeing this instead as the natural trait or natural relation of the things themselves.

For example, people find it strange that a thing could have a social trait and be connected to social relations. But aren’t commodities, money, and capital all “things” and at the same time social relations?

Clearly they are social relations! -- But the question is whether things such as commodities have natural relations as “things.” Bourgeois scholars concur that commodities, money, and capital have a quality as “things,” or reduce them to this (this is the basis of all bourgeois economics, and its “mystery”). But the social quality seen in these things is in fact the social quality of human labor, and there is no way for commodities as things to take on such a quality -- and this is precisely the sort of fundamental consideration that is necessary!

Where, then, does this mystification come from? The answer to this can be seen in the answer to the question why commodity production is necessary:

“[T]his fetishism of the world of commodities arises from the peculiar social character of the labour which produces them.

“Objects of utility become commodities only because they are the products of the labour of private individuals who work independently of each other. The sum total of the labour of all these private individuals forms the aggregate labour of society. Since the producers do not come into social contact until they exchange the products of their labour, the specific social characteristics of their private labours appear only within this exchange. In other words, the labour of the private individual manifests itself as an element of the total labour of society only through the relations which the act of exchange establishes between the products, and, through their mediation, between the producers. To the producers, therefore, the social relations between their private labours appear as what they are, i.e. they do not appear as direct social relations between persons in their work, but rather as material [dinglich] relations between persons and social relations between things.”  (Capital Vol. 1, p. 165-6)

Since individual, separated private producers cannot directly exchange their own labor (since it is not expended consciously as one part of the aggregate social labor), it is through the exchange of their own products, through this process, that their own private labor becomes social labor. In this way, the product becomes a commodity. It is the social relationship of private products that makes commodity production necessary. To avoid misunderstanding here, commodity production is historically necessary and progressive (compared to feudal society and subsistence farming, as well as the “socialism” of Mao and Stalin) and moralistic criticism is nonsensical and powerless. What is necessary for workers is a historical criticism of commodity production. Today, this consideration is extremely important, considering the “great trend” of capitalism in which commodity production is developing in such countries as China, where a rapid transformation to capitalistic production is taking place.

Finally, we must consider the significance of money in connection to “fetishism.” Let’s start by listening to Marx:

“Money is not a symbol, just as the existence of a use value in the form of a commodity no symbol. A social relation of production appears as something existing apart from individual human beings, and the distinctive relations into which they enter in the course of production in society appear as the specific properties of a thing -- it is this perverted appearance, this prosaically real, and by no means imaginary, mystification that is characteristic of all social forms of labour positing exchange value. This perverted appearance manifests itself merely in a more striking manner in money than it does in commodities.” (MECW, Vol. 28, p. 289)

“We have already seen, from the simplest expression value, x commodity = y commodity B, that the thing in which the magnitude of the value of another thing is represented appears to have the equivalent form independently of this relation, as a social property inherent in its nature. We followed the process by which this false semblance became firmly established, a process which was completed when the universal equivalent form became identified with the natural form of a particular commodity, and thus crystallized into the money-form. What appears to happen is not that a particular commodity becomes money because all other commodities express their values in it, but, on the contrary, that all other commodities universally express their values in a particular commodity because it is money. The movement through which the process has been mediated vanishes in its own result, leaving no trace behind. Without any initiative on their part, the commodities find their own value-configuration ready to hand, in the form of a physical commodity existing outside but also alongside them. This physical object, gold or silver in its crude state, becomes, immediately on its emergence from the bowels of the earth, the direct incarnation of all human labour. Hence the magic of money. Men are henceforth related to each other in their social process of production in a purely atomistic way. Their own relations of production therefore assume a material shape which is independent of their control and their conscious individual action. This situation is manifested first by the fact that the products of men’s labour universally take on the form of commodities. The riddle of the money fetish is therefore the riddle of the commodity fetish, now become visible and dazzling to our eyes.” (Capital Vol. 1, p. 187)

“We have already shown in connection with the most simple categories of the capitalist mode of production and commodity production in general, in connection with commodities and money, the mystifying character that transforms the social relations for which the material elements of wealth serve as bearers in the course of production into properties of these things themselves (commodities), still more explicitly transforming the relation of production itself into a thing (money). All forms of society are subject to this distortion, in so far as they involve commodity production and monetary circulation. In the capitalist mode of production, however, where capital is the dominant category and forms the specific relation of production, this bewitched and distorted word develops much further.” (Capital Vol. 3, pp. 965-6)

The social quality that is seen in the commodity, and in money, according to Marx, is in fact a reflection of the social quality of the human labor that produces the commodity. Money itself as a “thing” does not have a social character, rather this quality is in the human labor that produces commodities. Money’s trait of “being exchangeable for any commodity,” means that the human labor contained within commodities is qualitatively identical as abstract labor, and that there is thus only a difference in quantity. The quality of the labor that produces commodities is reflected in the quality of money.

Even though, to begin with, money is only money within social relations, the quality and functions of money appear to be the natural attribute that gold or silver are endowed with. For example, we can buy anything with gold (money) -- it can be exchanged for any commodity. But this is certainly not because of the quality of gold as a natural thing. Outside of commodity society (outside of the value relationship of commodities) gold would not be money. But within bourgeois society, gold seems to be money for the simple reason that it is gold. Certainly money is gold, but gold is not intrinsically money.

Money is born through the exchange relationship of commodities, and is money in terms of being the “crystallization of the exchange-value of commodities and [being] formed in the exchange process,” (Capital Vol. 1) so that “the relation of production itself is [transformed] into a thing (money)” (Capital Vol. 3).   In other words, value as the social “substance” of the commodity appears here as a thing (money), and the true abstract social nature of human labor, its power, appears in the form of money as a “thing,” which is directly exchangeable for all other commodities and all-powerful! The mystification of the commodity extends to money, and people worship at the alter of this supreme power! In bourgeois society, mammonism (the idea that money is almighty and everything!) is nothing but the extreme form of fetish-worship consciousness.

Marx, in a very instructive fashion, offers the following:

“The belated scientific discovery that the products of labour, in so far as they are values, are merely the material expressions of the human labour expended to produce them, marks an epoch in the history of mankind’s development, but by no means banishes the semblance of objectivity possessed by the social characteristics of labour. Something which is only valid for this particular form of production, the production of commodities, namely the fact that the specific social character of private labours carried on independently of each other consists in their equality as human labour, and, in the product, assumes the form of the existence of value, appears to those caught up in the relations of commodity production (and this is true both before and after the above-mentioned scientific discovery) to be just as ultimately valid as the fact that the scientific dissection of the air into its component parts left the atmosphere itself unaltered in its physical configuration.” (Capital Vol. 1, p. 167)

In short, this illusion is rooted in the relations of production, and without overcoming these production relations it cannot be eliminated. Here Marx is criticizing the position of Ricardo and others. Ricardo “discovered” that the “substance” of the value of the commodity is human labor, and thought this was the end of the matter. In other words, he didn’t see this as a historical relation with limitations for people, and thought it natural and normal that human labor would take the objectified form of value. For Marx this is a bourgeois illusion, and he warns that this will inexorably lead to fetishized consciousness. This can also be taken as a criticism of the Uno school, since they recognize the “substance” of the commodity to be labor, but are unable to defend a position that reaches truly revolutionary conclusions and practice, falling instead into nonsensical arguments and becoming bedazzled by the fetishism of commodity-production society (recall how they followed in the path of the marginal utility school with their upside-down idea that the value of the commodity cannot be defined without considering use value!). In this way they have become bourgeois philistines (in their thought and way of living!).

5  Money Teaches Us that Human Labor has become Thoroughly Social

People tend to view commodity-capitalist production as simply “villainous,” but seen historically it represents great progress for the history of humankind. For human labor to take the form of value, and therefore the form of money, means that human labor has become a thoroughly social thing in an abstract general form.

Of course, in this form “social nature” is in contradiction. It is not directly social, but rather is a social quality that is formed, a social quality that appears “after the fact,” and a social quality that is brought about spontaneously and within people’s unconscious activity.

For this reason, this takes the form of the “fetishism” of the value of the commodity. This has to proceed to the formation of money. Furthermore, this contradiction in the form of labor under capitalism is an important moment in the necessity of socialism -- (important, but only one moment, since more significant is the actual moment of workers’ class struggles).

Under capitalism, despite this contradictory form, this is still a step forward for human history in terms of people’s labor becoming truly social, and their relations becoming thoroughly social, thereby establishing humanity as humanity (for its historical and real conditions).

The appearance of commodities, and therefore money, has such significance. Money is the “phenomenal” expression that people’s labor has become truly social as abstract human labor (indeed, this is a social quality that has a human-historical significance and spreads to the global level). Money reflects and expresses the character of the labor which produces commodities. This is abstract human labor in a form that is visible to the eye (money). Money becomes world money, but this is the outcome of this. As capital comes to be produced throughout the entire world, commodity production unites all of humanity, and for this very reason money becomes or emerges as world money. World money shows that human labor achieves a social nature on a global scale, and at the same time the labor of workers throughout the world (the direct producers), as long as they produce commodities, turns into abstract human labor that has “the same quality and is only different in quantity.” This means that it becomes possible to speak of relations of equality and a socialist union between the workers of the world. Marx refers to “general commodity distribution,” and distinguishes this from the “domestic commodity distribution” that is formed, elucidating the opposition between the international and domestic markets, and we will discuss this later.

Despite what the petty bourgeois Japanese Communist Party might think, this global trade has very revolutionary significance. Already more than one hundred years ago Marx wrote the following:

“The need for a constantly expanding outlet for their products pursues the bourgeoisie over the whole world. It must get a foothold everywhere, settle everywhere, establish connections everywhere.

“Through the exploitation of the world market the bourgeoisie has made the production and consumption of all countries cosmopolitan. It has pulled the national basis of industry right out from under the reactionaries, to their consternation. Long-established national industries have been destroyed and are still being destroyed daily. They are being displaced by new industries -- the introduction of which becomes a life-and-death question for all civilized nations -- industries that no longer work up indigenous raw materials but use raw materials from the ends of the earth, industries whose products are consumed not only in the country of origin but in every part of the world. In place of the old needs satisfied by home production we have new ones which demand the products of the most distant lands and climes for their satisfaction. In place of the old local and national self-sufficiency and isolation we have a universal commerce, a universal dependence of nations on one another. As in the production of material things, so with intellectual production. The intellectual creations of individual nations become common currency. National partiality and narrowness becomes more and more impossible, and from the many national and local literatures a world literature arises.

“Through rapid improvement in the instruments of production, through limitless ease of communication, the bourgeoisie drags all nations, even the most primitive ones, into civilization. Cut-price commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces undeveloped societies to abandon even the most intense xenophobia. It forces all nations to adopt the bourgeois mode of production or go under; it forces them to introduce so-called civilization amongst themselves, i.e. to become bourgeois. In a phrase, it creates a world in its image.” (Communist Manifesto, from Cambridge University Press Marx:Later Political Writings, pp. 4-5)

“Workers have no nation of their own…National divisions and conflicts between peoples increasingly disappear with the development of the bourgeoisie, with free trade and the world market, with the uniform character of industrial production and the corresponding circumstances of modern life.

The Rule of the proletariat will make the disappear even faster. United action, at least in the civilized countries, is one of the first conditions for freeing the proletariat.” (Ibid, pp. 17-8)

There is little that we can add to these beautiful sentences. The JCP has thrown aside the core of Marxism and fallen into a vulgar and narrow-minded petty bourgeois nationalism. Shouldn’t reactionaries like [JCP leaders] Miyamoto, Fuwa, and Kawakami, who are absorbed with one-sided and narrow-minded nationalism and peddle an “intense xenophobia” more inflexible than ideas held by “undeveloped societies,” listen to these words of Marx a hundred or even a thousand times. It’s hard to imagine anyone being more ignorant of Marxism (and therefore ignorant of capitalism and socialism!) and distorting its fundamental spirit to the extent that this group has!

Our starting point is not the anachronistic “independent national economy” or “protection and development of national industries,” which seeks a self-sufficient and increasingly closed economy, but rather a “global economy” where the international connections of people (workers) are increasingly developed. When we take up the topic of the modern international monetary system, it is precisely from this standpoint, not the craven petty bourgeois perspective that fears the global economy and seeks refuge in the “national economy.”