Grundrisse: Notebook VII – The Chapter on Capital / Bastiat and Carey
‘The remaining value or overplus will in each trade be in proportion to the value of the capital employed.’ (Ricardo.) 
In regard to interest, two things are to be examined: Firstly, the division of profit into interest and profit. (As the unity of both of these the English call it gross profit.) The difference becomes perceptible, tangible as soon as a class of monied capitalists comes to confront a class of industrial capitalists. Secondly: Capital itself becomes a commodity, or the commodity (money) is sold as capital. Thus it is said e.g. that capital, like any other commodity, varies in price according to demand and supply. These then determine the rate of interest. Thus here capital as such enters into circulation.
Monied capitalists and industrial capitalists can form two particular classes only because profit is capable of separating off into two branches of revenue. The two kinds of capitalists only express this fact; but the split has to be there, the separation of profit into two particular forms of revenue, for two particular classes of capitalists to be able to grow up on it.
The form of interest is older than that of profit. The level of interest in India for communal agriculturists in no way indicates the level of profit. But rather that profit as well as part of wages itself is appropriated in the form of interest by the usurer. It requires a sense of history like that of Mr Carey to compare this interest with that prevailing on the English money market, which the English capitalist pays, and to conclude therefrom how much higher the ‘labour share’ (the share of labour in the product) is in England than in India. He ought to have compared the interest which English handloom-weavers, e.g. in Derbyshire, pay, whose material and instrument is advanced (lent) by the capitalist. He would have found that the interest is here so high that, after settlement of all items, the worker ends up being the debtor, after not only having made restitution of the capitalist’s advance, but also having added his own labour to it free of charge. Historically, the form of industrial profit arises only after capital no longer appears alongside the independent worker. Profit thus appears originally determined by interest. But in the bourgeois economy, interest determined by profit, and only one of the latter’s parts. Hence profit must be large enough to allow of a part of it branching off as interest. Historically, the inverse. Interest must have become so depressed that a part of the surplus gain could achieve independence as profit. There is a natural relation between wages and profit – necessary labour and surplus labour; but is there any between profit and interest, same [as] that which is determined by the competition between these two classes arranged under these different forms of revenues? But in order that this competition exist, the [existence of the] two classes, the division of the surplus value into profits and interest, is already presupposed. To examine capital in general is not a mere abstraction. If I regard the total capital of e.g. a nation as distinct from total wage labour (or, as distinct from landed property), or if I regard capital as the general economic basis of a class as distinct from another class, then I regard it in general. Just as if I regard man e.g. as physiologically distinct from the animals. The real difference between profit and interest exists as the difference between a moneyed class of capitalists and an industrial class of capitalists. But in order that two such classes may come to confront one another, their double existence presupposes a divergence within the surplus value posited by capital.
(Political economy has to do with the specific social forms of wealth or rather of the production of wealth. The material of wealth, whether subjective, like labour, or objective, like objects for the satisfaction of natural or historical needs, initially appears as common to all epochs of production. This material therefore appears initially as mere presupposition, lying quite outside the scope of political economy, and falls within its purview only when it is modified by the formal relations, or appears as modifying them. What it is customary to say about this in general terms is restricted to abstractions which had a historic value in the first tentative steps of political economy, when the forms still had to be laboriously peeled out of the material, and were, at the cost of great effort, fixed upon as a proper object of study. Later, they become leathery commonplaces, the more nauseating, the more they parade their scientific pretensions. This holds for everything which the German economists are in the habit of rattling off under the category ‘goods’.)
The important thing is that both interest and profit express relations of capital. As a particular form, interest-bearing capital stands opposite, not labour, but rather opposite profit-bearing capital. The relation in which on one side the worker still appears as independent, i.e. not as wage labourer, but on the other side his objective conditions already possess an independent existence alongside him, forming the property of a particular class of usurers, this relation necessarily develops in all modes of production resting more or less on exchange – with the development of merchant wealth or money wealth in antithesis to the particular and restricted forms of agricultural or handicraft wealth. The development of this mercantile wealth may itself be regarded as the development of exchange value and hence of circulation and of money relations in the former spheres. Of course, this relation shows us, on one side, the growing independence, the unbinding of the conditions of labour – which more and more come out of circulation and depend on it – from the worker’s economic being. On the other side, the latter is not yet subsumed into the process of capital. The mode of production therefore does not yet undergo essential change. Where this relation repeats itself within the bourgeois economy, it does so in the backward branches of industry, or in such branches as still struggle against their extinction and absorption into the modern mode of production. The most odious exploitation of labour still takes place in them, without the relation of capital and labour here carrying within itself any basis whatever for the development of new forces of production, and the germ of newer historic forms. In the mode of production itself, capital still here appears materially subsumed under the individual workers or the family of workers – whether in a handicraft business or in small-scale agriculture. What takes place is exploitation by capital without the mode of production of capital. The rate of interest appears very high, because it includes profit and even a part of wages. This form of usury, in which capital does not seize possession of production, hence is capital only formally, presupposes the predominance of pre-bourgeois forms of production; but reproduces itself again in subordinate spheres within the bourgeois economy itself.
Second historic form of interest: Lending of capital to wealth which is engaged in consumption. Appears historically important here as itself a moment in the original rise of capital, in that the income (and often the land, too) of the landed proprietors accumulates and becomes capitalized in the pockets of the usurer. This is one of the processes by which circulating capital or capital in the form of money comes to be concentrated in a class independent of the landed proprietors.
The form of realized capital as well as of its realized surplus value is money. Profit (not only interest) thus expresses itself in money; because in that value is realized and measured.
The necessity of payments in money – not only of money for the purchase of commodities etc. – develops wherever exchange relations and money circulation take place. It is by no means necessary that exchange should be simultaneous. With money, the possibility is present that one party cedes his commodity and the other makes his payment only later. The need for money for this purpose (later developed in loans and discounts) a chief historic source of interest. This source does not concern us at all yet at this point; is to be looked at only along with credit relations.
Difference between buying (M–C) and selling (C–M): ‘when I sell, I have (1) added the profit to the commodity and obtained it; (2) an article universally representative or convertible, money, for which, money being always saleable, I can always command every other commodity; the superior saleableness of money being the exact effect or natural consequence of the less saleableness of commodities … With buying, different. If he buys to sell again or supply customers, whatever may be the probability, there is no absolute certainty of his selling at a remunerative price … But not all buy so as to sell again, but rather for their own use or consumption’ etc. (p. 117 seq. Corbet, Th. An Inquiry into the Causes and Modes of the Wealth of Individuals, London, 1841.)
Economist, 10 April : ‘A parliamentary return moved for by Mr James Wilson, shows that the mint coined in 1857 gold to the value of £4,859,000, of which £364,000 was in half sovereigns. The silver coinage of the year amounted to £373,000, the cost of the metal used being £363,000 … The total amount coined in the ten years ending the 31st of December, 1857, was £55,239,000 in gold, and 2,434,000 in silver … The copper coinage last year amounted in value to £6,720 – the value of the copper being £3,492; of this 3,163 was in pence, 2,464 in half-pence, and 1,120 in farthings … The total value of the copper coinage of the last ten years was £141,477, the copper of which it was composed being purchased for £73,503.’
‘According to Thomas Culpeper (1641), Josiah Child (1670), Paterson (1694), Locke (1700), wealth depends on the self-enforced reduction of the interest rate of gold and silver. Accepted in England during nearly two centuries.’ (Ganilh.)  When Hume, in antithesis to Locke, developed the determination of the interest rate by the rate of profit, he already had before his eyes a far greater development of capital; even more so Bentham when, towards the end of the eighteenth century, he wrote his defence of usury. (From Henry VIII to Anne, statutory reduction of interest.)
‘In every country: (1) a producing class and (2) a monied class, which lives from the interest on its capital.’ (p. 110.) (J. St. Mill, Some Unsettled Questions of Political Economy, London, 1844.)
‘It is by frequent fluctuation in a month, and by pawning one article to relieve another, where a small sum is obtained, that the premium for money becomes so excessive. 240 licensed pawn-brokers in London and about 1450 in the country … The capital employed is estimated at about 1 million. Turned over at least three times annually … Each time on the average for 33 1/3% profit; so that the inferior orders of England pay 1 million annually for a temporary loan of one million, exclusive of what they lose by goods being forfeited.’ (p. 114.) (Vol. I. J. D. Tuckett, A History of the Past and Present State of the Labouring Population etc., London, 1846.)
‘Some works cannot be operated on other than a large scale, e.g. porcelain making, glass making etc. Hence are never handicrafts. Already in the thirteenth and fourteenth centuries, some works, like weaving, were carried on on a large scale.’ (Poppe, p. 32.)
‘In earlier times all factories belonged to the crafts, and the merchant remained merely the distributor and promoter of the handicrafts. This was still most strictly observed in the manufacture of cloth and textiles. But, by and by, in many localities the merchants began to set themselves up as masters’ (of course without the old masters’ guild prejudices, traditions, relations to the journeymen), ‘and to take journeymen into their employ for day-wages.’ (Poppe. p. 92, Vol. 1. Geschichte der Technologie, Göttingen, 1807–11.) This was a chief reason why, in England, industry proper struck root and arose in non-incorporated cities.
Mercantile capital, or money as it presents itself as merchant wealth, is the first form of capital, i.e. of value which comes exclusively from circulation (from exchange), maintains, reproduces and increases itself within it, and thus the exclusive aim of this movement and activity is exchange value. There are two movements, to buy so as to sell, and to sell so as to buy; but the form M–C–C–M predominates. Money and its increase appear as the exclusive purpose of the operation. The merchant neither buys the commodity for his own needs, for the sake of its use value, nor does he sell it so as to e.g. pay off contracts written in money, or so as to obtain another commodity for his own needs. His direct aim is increase of value, and namely in its direct form as money. Mercantile wealth is, firstly, money as medium of exchange; money as the mediating movement of circulation; it exchanges commodity for money, money for commodity and vice versa. Money likewise appears here as an end-in-itself, but without therefore existing in its metallic existence. It is here the living transformation of value into the two forms of commodity and money: the indifference of value towards the particular form of use value which it assumes, and at the same time its metamorphosis into all of these forms, which appear, however, merely as disguises. Thus, while the action of commerce concentrates the movements of circulation, hence money as merchant wealth is in one respect the first existence of capital, still appears as such historically, this form appears on the other side as directly contradictory to the concept of value. To buy cheap and sell dear is the law of trade. Hence not the exchange of equivalents, with which trade, rather, would be impossible as a particular way of gaining wealth.
Nevertheless, money as trading wealth – as it appears in the most various forms of society and at the most various stages of the development of the forces of social production – is merely the mediating movement between two extremes, which it does not dominate, and presuppositions which it does not create.
A. Smith, Vol. II (ed. Garnier): ‘The great trade of every civilized society is that which is established between the inhabitants of the town and those of the countryside … it consists in the exchange of the raw product for the manufactured product … either directly, or by the intervention of money.’ (p. 403.) Trade always concentrates; production originally on a small scale. ‘The town is a continual fair or marketplace where the inhabitants of the countryside go to exchange their raw product for manufactured products. It is this trade which supplies the inhabitants of the town both with the material of their labour and with the means of their subsistence. The quantity of manufactured goods which they sell to the inhabitants of the countryside necessarily determines the quantity of materials and subsistence they buy.’ (p. 408 .)
So long as ‘means of subsistence and of pleasure’ the chief aim, use value predominates.
It is part of the concept of value that it maintains itself and increases only through exchange. But the existing value, initially, money.
‘This industry, whose aim was something beyond absolute necessity, established itself in the towns long before it could be commonly practised by the cultivators of the countryside.’ (p. 452.)
‘Although the inhabitants of a town ultimately draw their subsistence and all the means and materials of their industry from the countryside, yet those of a town lying near the shores of the sea or of a navigable river may draw them also from the farthest corners of the world, either in exchange for the manufactured product of their own industry, or by performing the service of carriers alternately between distant countries and exchanging the products of these countries among them. Thus a city may become very wealthy, while not only the land in its immediate environs, but also all lands where it trades, are poor. Each of these countries, taken separately, can offer it only a very small part of subsistence and for business; but all of these countries, taken collectively, can supply it with a great quantity of subsistence and a great variety of employment.’ (p. [452,] 453.) (Italian cities were the first in Europe to rise by trade; during the crusades – Venice, Genoa, Pisa – partly by the transport of people and always by that of the supplies which had to be delivered to them. These republics were, in a manner of speaking, the supply commissaries of these armies.) (loc. cit.)
Merchant wealth, as constantly engaged in exchange and exchanging for the sake of exchange value, is in fact living money.
‘The inhabitants of mercantile towns imported refined objects and luxury articles from wealthier countries at a high price, thus furnishing new food for the vanity of the great landed proprietors, who bought them with alacrity, by paying great quantities of the raw produce of their estates for them. Thus the commerce of a great part of Europe at this time consisted in exchange of the raw produce of one country for the manufactured produce of a country more advanced in industry.’ (p. [454,] 455.) ‘When this taste had become sufficiently general to create a considerable demand, the merchants sought, so as to save the costs of transport, to establish similar manufactures in their own country. This the origin of the first manufactures for distant markets.’ Luxury manufactures, arisen out of foreign commerce, established by merchants (p. [456–] 458) (worked up foreign materials). Ad. Smith speaks of a second sort, which ‘arose naturally and by itself through successive refinement of the crude and domestic employments’. Worked up home-grown materials. (p. 459.)
The trading peoples of antiquity like the gods of Epicurus in the spaces between the worlds, or rather like the Jews in the pores of Polish society. Most of the independent trading peoples or cities attained the magnificent development of their independence through the carrying trade, which rested on the barbarity of the producing peoples, between whom they played the role of money (the mediators).
In the preliminary stages of bourgeois society, trade dominates industry; in modern society, the opposite.
Trade will naturally react back to varying degrees upon the communities between which it is carried on. It will subjugate production more and more to exchange value; push direct use value more and more into the background; in that it makes subsistence more dependent on the sale than on the immediate use of the product. Dissolves the old relations. Thereby increases money circulation. First seizes hold of the overflow of production; little by little lays hands on the latter itself. However, the dissolving effect depends very much on the nature of the producing communities between which it operates. For example, hardly shook the old Indian communities and Asiatic relations generally. Fraud in exchange is the basis of trade such as it appears independently.
But capital arises only where trade has seized possession of production itself, and where the merchant becomes producer, or the producer mere merchant. Opposed to this, the medieval guild system, the caste system etc. But the rise of capital in its adequate form presupposes it as commercial capital, so that production is no longer for use, more or less mediated by money, but for wholesale trade.
Commercial wealth as an independent economic form and as the foundation of commercial cities and commercial peoples exists and has existed between peoples on the most diverse stages of economic development, and within the commercial city itself (e.g. the old Asian, the Greek, and the Italian etc. of the Middle Ages) production can continue on in the form of guilds etc.
Steuart. ‘Trade is an operation, by which the wealth, or work, either of individuals, or of societies, may be exchanged by a set of men called merchants, for an equivalent, proper for supplying every want, without any interruption to industry, or any check to consumption. Industry is the application to ingenious labour in a free man, in order to procure, by the means of trade, an equivalent, fit for supplying every want.’ (Vol. I, p. 166.)
‘While wants continue simple and few, a workman finds time enough to distribute all his work; when wants become more multiplied, men must work harder; time becomes precious; hence trade is introduced … The merchant as mediator between workmen and consumers.’ (p. 171.)
The collection (of products) into a few hands is the introduction of trade. (loc. cit.) The consumer does not buy so as to sell again. If the merchant buys and sells solely with a view to a gain (p. 174) (i.e. for value). ‘The simplest of all trades is that which is executed by bartering of the most necessary means of subsistence’ (between the surplus food of the farmers and the free hands). ‘Progress chiefly to be ascribed to the introduction of money.’ (p. 176.) As long as mutual needs are supplied by barter, there is not the least occasion for money. This the simplest combination. When needs have multiplied, bartering becomes more difficult: upon this, money is introduced. This is the common price of all things. A proper equivalent in the hands of those who want. This operation of buying and selling is somewhat more complex than the first. Thus (1) barter; (2) sale; (3) commerce. The merchant must intervene. What was earlier called wants is now represented by the consumer; industry by the manufacturer, money by the merchant. The merchant represents money by substituting credit in its place; and as money invented for the facilitation of barter, so the merchant, with credit, a new refinement upon the use of money. This operation of buying and selling is now trade; it relieves both parts of the whole trouble of transportation and adjusting wants to needs, or wants to money; the merchant represents by turns the consumer, the manufacturer, and money. Towards the consumer he represents the totality of manufacturers, to the latter the totality of consumers, and to both classes his credit supplies the use of money. (p. 177, 178.) Merchants are supposed to buy and sell not out of necessity, but rather with a view to profit. (p. 203.)
‘First the industrialist produces for others’ not for his own use; these goods begin to be of use to him only from the moment he exchanges them away. They thus make trade and the art of exchange necessary. They are only appraised by their exchangeable value.’ (p. 161.) (Sismondi, Études sur l’économie politique, Vol. II, Brussels, 1837.) Trade has robbed things, pieces of wealth, of their primitive character of usefulness: it is the antithesis between their use value and their exchangeable value to which commerce has reduced all things. (p. 162.) At the beginning, utility is the true measure of values; … trade exists then, in the patriarchal state of society; but it has not entirely absorbed the society; it is practised only upon the surplus of each one’s production, and not on what constitutes its existence. (p. 162, 163.) By contrast, the character of our economic progress is that trade has taken on the burden of the distribution of the totality of the annually produced wealth and it has consequently suppressed absolutely its character of use value, letting only that of exchangeable value remain. (163.) Before the introduction of trade … the increase in the quantity of the product was a direct increase of wealth. Less significant at that time was the quantity of labour by means of which this useful thing was obtained … And really, the thing demanded loses none of its usefulness even if no labour at all were needed to obtain it; grain and linen would not be less necessary to their owners … even if they fell to them from heaven. This is without a doubt the true estimate of wealth, enjoyment, and usefulness. But from the moment when men … made their subsistence dependent on the exchanges they could make, or on commerce, they were forced to adhere to a different estimation, to exchange value, to value which results not from usefulness but rather from the relation between the needs of the whole society and the quantity of labour which was sufficient to satisfy this need, or as well the quantity of labour which might satisfy it in the future. (p. 266, loc. cit.) In the estimation of values, which people endeavoured to measure with the introduction of currency, the concept of usefulness is quite displaced. It is labour, the exertion necessary to procure oneself the two things exchanged for one another, which has alone been regarded. (p. 267.)
Gilbart (J. W.): The History and Principles of Banking, London, 1834, has this to say about interest:
‘That a man who borrows money with the intention of making a profit on it, should give a portion of the profit to the lender, is a self-evident principle of natural justice. A man makes a profit usually by means of traffic. But in the Middle Ages the population purely agricultural. And there, like under the feudal government, there can be only little traffic and hence little profit … Hence the usury laws in the Middle Ages justified … Furthermore: in an agricultural country a person seldom wants to borrow money except he be reduced to poverty or distress by misery.’ (p. 163.) Henry VIII limited interest to 10%, James I to 8, Charles II to 6, Anne to 5. (164, 165.) In those days, the lenders were, if not legal, still actual monopolists, and thus it was necessary to place them under restraint like other monopolists. (p. 165.) In our time the rate of profit governs the rate of interest; in those days the rate of interest governed the rate of profit. If the money-lender burdened the merchant with a higher rate of interest, then the merchant had to put a higher rate of profit on his goods, hence a greater sum of money taken out of the pockets of the buyers so as to bring it into the pockets of the money-lenders. This additional price put on the goods made capital less able and less inclined to buy them. (p. 165.) (loc. cit.)
‘Under the rule of invariable equivalents commerce etc. would be impossible.’ (G. Opdyke, A Treatise on Political Economy, New York, 1851, p. 67.)
‘The positive limitation of quantity on this instrument’ (i.e. paper money) ‘would accomplish the only useful purpose that cost of production does in the other’ (metal money). (loc. cit. 300.)
Interest. ‘If a fixed sum of precious metal falls, then this no reason that a smaller quantity of money should be taken for its use, for if the principal worth less for the borrower, so the interest in the same measure less difficult for him to pay … In California 3% per month, 36% per annum because of the unsettled state … In Hindustan, where borrowing by Indian princes for unproductive expenses, in order to balance the losses of capital on the average, very high interest, 30%, having no relation to profit which might be gained in industrial operations.’ (Economist, 22 January 1853.) (The lender ‘here charges interest so high as to be sufficient to replace the principal in a short time, or at least as on the average of all his lending transactions, might serve to counterbalance his losses in particular instances, by the apparently exorbitant gains acquired in others.’ (loc. cit.))
The rate of interest depends: (1) on the rate of profit; (2) on the proportion in which the entire profit divided between lender and borrower. (loc. cit.)
Abundance or scarcity of the precious metals, the high or low scale of general prices prevailing, determines only whether a greater or less amount of money will be required in effecting the exchanges between borrowers and lenders, as well as every other species of exchange … Difference only, that a greater sum of money would be needed to represent and transfer capital lent … the relation between the sum paid for the use of capital and the capital expresses the rate of interest as measured in money. (loc. cit.)
Double Standard. Previously, in countries where gold and silver legal standard, silver circulated almost exclusively, because from 1800 to 1850 the tendency was for gold to become dearer than silver … The gold was somewhat risen against silver, bore a premium in France on its relation to silver as fixed in 1802 … so in the United States; … in India. (In the latter now silver standard, as in Holland etc.) … The circulation of the United States the first affected. Great import of gold from California, premium on silver in Europe … extensive shipment of silver coins and replacement by gold. The United States government struck silver coins as low as 1 dollar … Substitution of silver for gold in France. (Economist, 15 November 1851.) Let the ‘standard of value’ be what it will, ‘and let the current money represent any fixed portion of that standard, that may be determined upon, the two can only have a fixed and permanent value in relation to each other, by being convertible at the will of the holder.’ (Economist.) 
The only way in which any class of coins can command a premium is that no one is obliged to pay them, while every one is obliged to take them as a legal tender. (Economist.) 
No country may consequently have more than one standard (more than one standard of the measure of value); for this standard must be uniform and unchanging. No article has a uniform, unchanging value relative to another; it only has such with itself. A gold piece is always of the same value as another, of exactly the same fineness, the same weight, and the same value in the same place; but this cannot be said of gold and any other article, e.g. silver. (Economist, 1844.) 
The English £ somewhat less than 1/3 of its original value, the German florin = 1/6, Scotland before the union [reduced] its pound 1/36, to the French livre 1/74, the Spanish maravedi = less than 1/1,000, the Portuguese re still lower. (p. 13, Morrison.) 
Before the law of 1819, causes in existence in determinating the bullion price apart from the circulation of bank notes: (1) the more or less perfect condition of the coin. If the circulating metallic coin is debased below its standard weight, then the slightest turn of exchange causing a demand for exportation must raise the price of the uncoined bullion by at least the degradation of the coin. (2) penal laws which forbade the melting and exporting of coin, and permitted the traffic in bullion. With intensive demand for export, this gave latitude for variation of bullion price against coin even at times when paper completely convertible. In 1783, 1792, 1795, 1796 … 1816, the bullion price rose above the mint price, because the bank-creditors, in their anxiety to prepare for the resumption of cash payment, accepted gold considerably above the mint price. (Fullarton.) 
The standard may be for gold, without one ounce of gold circulating. (Economist.)
Under George III (1774) silver legal tender only for £25. And the bank, by statute, now paid only in gold. (Morrison.) Lord Liverpool (beginning of the nineteenth century) made silver and copper into purely representative coins. (loc. cit.) 
Urquhart’s nonsense about the standard of money: ‘The value of gold is to be measured by itself; how can any substance be the measure of its own worth in other things? The worth of gold is to be established by its own weight, under a false denomination of that weight – and an ounce is to be worth so many pounds and fractions of pounds. This is – falsifying a measure, not establishing a standard!’ (Familiar Words.) 
Ad. Smith calls labour the real and money the nominal measure of value; presents the former as the original. 
Value of money. J. St. Mill. ‘If the quantity of goods sold is given, and the number of sales and resales of these goods, then the value of money depends on its quantity, together with the number of times that each piece of money changes hands in this process.’ ‘The quantity of money in circulation = the money value of all commodities sold, divided by the number which expresses the velocity of circulation.’ ‘If the amount of commodities and transactions be given, then the value of money is the inverse of its quantity multiplied by its velocity of circulation.’ But all these statements to be understood only in the sense ‘that we speak only of the quantity of money which really circulates and is factually exchanged for commodities’. ‘The necessary quantity of money determined partly by its production costs, partly by the velocity of its circulation. If the velocity of circulation is given, then the costs of production are determinant; if the production costs are given, then the quantity of money depends on the velocity of circulation.’ 
Money has no equivalent other than itself or commodities. Hence degrades everything. At the beginning of the fifteenth century in France even the sacred vessels of the church (chalices) etc. pawned to the Jews. (Augier.) 
Money not a direct object of consumption: the currency never becomes an object of consumption, always remains a commodity, never becomes a good. Has a direct intrinsic value only for society; an exchangeable one for each individual. Its material must therefore have value, but founded on an artificial need, must not be indispensable for human existence; for the whole quantity of it which is used as currency can never be employed individually; it must always circulate. (Storch.) 
John Gray: The Social System. A Treatise on the Principle of Exchange, Edinburgh, 1831.
‘To sell for money ought at all times to be made as easy as to buy with money; production would then become the uniform and never failing cause of demand.’ (16.) It is the quantity that can be sold at a profit, not the quantity that can be made, that is the present limit to production. (59.)
Money should be merely a receipt, an evidence that the holder of it has either contributed a certain value to the national stock of wealth, or that he has acquired a right to the said value from some one who has contributed to it … Money should be nothing more or less than portable, transferable, divisible, and inimitable evidences of the existence of wealth in store. (63, 64.) An estimated value being previously put upon produce, let it be lodged in a bank, and drawn out again whenever it is required; merely stipulating, by common consent, that he who lodges any kind of property in the proposed National Bank may take out of it an equal value of whatever it may contain, instead of being obliged to draw out the selfsame thing that he put in … The proposed national banker should receive and take charge of every description of valuable, and give back any description of valuable again. (loc. cit. 68.)
‘If money,’ says Gray, ‘be of equal value with that which it represents, it ceases to be a representative at all. It is one of the chief desideratums in money, that the holder of it should be compelled at one time or other to present it for payment at the place ‘from whence he received it. But if money be of the same intrinsic value as that which is given for it, no such necessity exists.’ (74.)
‘Depreciation of stock … should form an item of national charge.’ (p. [115,] 116.) ‘The business of every country is to be conducted … on a national capital.’ (171.) ‘All land to be transformed into national property.’ (298.)
Gray (John), Lectures on the nature and use of Money (Edinburgh, 1848): ‘Man collectively should know no limit to his physical means of enjoyment, save those of the exhaustion either of his industry or [of] his productive powers: whilst we, by the adoption of a monetary system, false in principle, and destructive in practice, have consented to restrict the amount of our physical means of enjoyment to that precise quantity which can be profitably exchanged for a commodity, one of the least capable of multiplication by the exercise of human industry of any upon the face of the earth.’ (29.) What will be required for a good system, is (1) a bank system through whose operations the national relationship of supply and demand would be restored; (2) a true standard of value, instead of the existing fiction. (108.) (In this book the idea of the exchange-bank developed in still more detail and with preservation of the present mode of production.) ‘There must be a minimum price of labour payable in standard money.’ (p. 160.) Let us call e.g. the lowest rate of wages per week for 60–72 hours that may by law be given, 20s. or £1 standard. (161.) ‘Shall we retain our fictitious standard of value, gold, and thus keep the productive resources of the country in bondage, or shall we resort to the natural standard of value, labour, and thereby set our productive resources free?’ (p. 169.) The amount of this minimum wage being once fixed … it should remain the same for ever. (174.) ‘Merely let gold and silver take their proper place in the market beside butter and eggs and cloth and calico, and then the value of the precious metals will interest us no more than that of the diamond’ etc. (182 [, 183].) No objection to make to gold and silver used as instruments of exchange, … but only as measures of value … In a short time one would see how many ounces of gold or silver were obtainable in London, Edinburgh or Dublin in exchange for a hundred pound standard note. (p. 188.)
Interest. As the class of rentiers increases, so also does that of lenders of capital, for they are one and the same. From this cause alone, interest must have had a tendency to fall in old countries. (201, 202 Ramsay.) ‘It is probable that in all ages the precious metals cost more in their production than their value ever repaid.’ (101, II. Jacob, W. An Historical Enquiry into the Production and Consumption of Precious Metals, London, 1831.)
Value of money. The value of all things, divided by the number of transactions of which they were the object, from product[ion] to the produc[er], = the value of the écus used to buy them, divided by the number of times that these thalers have been transferred in the same space of time. (Sismondi, Nouveaux Principes d’Économie Politique, etc.)
The most formal development of the false theory of prices is by James Mill (quoted from the translation by J. T. Parisot, Paris, 1823. Éléments d’Économie Politique).
The chief passages in Mill are:
‘Value of money = the proportion in which one exchanges it for other articles, or the quantity of money which one gives in exchange for a specific quantity of other things.’ (p. 128.) This relation is determined by the total quantity of money existing in a country. If one supposes all the commodities of a country brought together on one side, and all the money on the other, then it is evident that in the exchange between both sides, the value of money, i.e. the quantity of the commodities for which it has been exchanged, entirely depends on its own quantity. (loc. cit.) The case is wholly the same in the actual state of things. The total mass of the commodities of a country is not exchanged at once for the total mass of the money, but rather the commodities are exchanged in portions, and often very small portions, at various periods in the course of the year. The same piece of money which has served today for one exchange may serve tomorrow for another. A part of the money is used for a very great number of exchanges, another part for a very small number, a third is stockpiled and serves for no exchange. Among these variations there will be a median rate, based on the number of exchanges for which each piece of money would be used if all had effected an equal number of exchanges. Let this rate be fixed at some convenient number, e.g. 10. If every piece of money in the country has served for 10 purchases, then it is the same as if the total number of pieces of money had increased tenfold, and each had served for only a single exchange. In this case the value of all commodities is equal to 10 times the value of the money etc. (p. 129, 130.) If, instead of each coin serving for 10 purchases a year, the total mass of money had increased tenfold, and the coin served for only one exchange, then it is evident that every increase of this mass would cause a relative diminution in the value of each of these coins taken separately. Since it is supposed that the mass of all commodities for which the money may exchange remains the same, therefore the value of the total mass of the money has become no greater after the increase of its quantity than before. If one supposes an increase of one-tenth, then the value of each of its parts, e.g. an ounce, must have diminished by one-tenth. (p. 130, 131.) ‘Thus, whatever may be the degree of the increase or decrease of the total mass of money, if the quantity of the other things remains the same, then this total mass and each of its parts experiences inversely a relative diminution or increase. It is clear that this thesis is of absolute truth. Whenever the value of money has experienced a rise or fall, and whenever the quantity of the commodities for which it could be exchanged, and the movement of circulation, remained the same, this change must have had as cause a relative increase or diminution of money, and can be ascribed to no other cause. If the mass of commodities decreases while the quantity of money remains the same, then it is as if the totality of money had increased, and vice versa. Similar changes are the result of every alteration in the movement of circulation. Every increase of the number of purchases produces the same effect as a total increase of money; a decrease of this number produces directly the opposite effect.’ (p. 131, 132.) If a portion of the annual product has not been exchanged at all, like that which the producers consume, or is not exchanged for money, then this portion must not be put on the account, because whatever does not exchange for money is in the same situation relative to money as if it did not exist. (p. 131, 132.) Whenever the increase or diminution of money can proceed freely, this quantity is governed by the value of the metal … Gold and silver, however, are commodities, products … The costs of production govern the value of gold and silver, like that of all other products. (p. 136.)
The insipidness of this reasoning is quite evident.
(1) If one supposes that the mass of commodities remains the same, and the velocity of circulation as well, but that nevertheless a great mass of gold or silver exchanges for this same mass of commodities (without the value, i.e. the amount of labour contained in gold and silver, having changed), then one supposes exactly what one wanted to prove, namely that the prices of commodities are determined by the quantity of the circulating medium and not vice versa.
(2) Mill concedes that the commodities not thrown into circulation do not exist for money. It is equally clear that the money not thrown into circulation does not exist for the commodities. Thereby there exists no fixed relation between the value of money generally and the mass of it which enters into circulation. That the mass actually in circulation, divided by the number of its turnovers, is equal to the value of money is merely a tautological circumlocution for saying that the value of the commodity expressed in money is its price; since the money in circulation expresses the value of the commodities it circulates – it follows that the value of these commodities is determined by the mass of the circulating money.
(3) The confusion of Mill’s view is clearly shown in his thesis that the value of money diminishes or increases with ‘every alteration in the movement of circulation’. Whether one pound sterling circulates 1 time or 10 times a day, in each exchange it expresses an equivalent for the commodity, exchanges for the same value in commodities. Its own value remains the same in every exchange, and is hence altered neither by slower nor by rapid circulation. The mass of the circulating money is altered; but neither the value of the commodity, nor the value of the money. ‘If it is said: a piece of cloth is worth £5, then it means: it possesses the value of 616,370 grains of standard gold. The reason assigned above may be paraphrased thus: “prices must fall because commodities are estimated as being worth so many ounces of gold; and the amount of gold in this country is diminished”.’ (Hubbard, J. G., The Currency and the Country, London, 1843, p. 44.)
(4) Mill at first supposes, in theory, that the whole mass of the money in a country is exchanged at once for the whole mass of the commodities which are to be found in it. Says, then, that this is so in reality, namely for the main reason that in practice just the opposite takes place, and only portions of money are exchanged for portions of commodities, the fewest payments arranged by payment on the spot – time bargains. Follows, therefore, that the total amount of transactions or purchases, made in a day, is entirely independent of the money circulating on this day, and that the mass of money circulating on any given day is not the cause but the effect of a mass of previous transactions, each of them wholly independent of the money supply at the time.
(5) Finally, Mill himself admits that with free circulation of money, and this is our only concern, the value of money is determined by its cost of production, i.e., according to his own admission, by the labour time contained in it.
Monetary affairs. In Ricardo’s pamphlet: Proposals for an Economical and Secure Currency with Observations on the Profits of the Bank of England, London, 1816, there is a passage where he makes a shambles of his whole viewpoint. It says, namely: ‘The amount of notes in circulation depends … on the amount required for the circulation of the country, and this is governed by the value of the standard, the amount of payments, and the economy applied to accomplish them’. (p. 8 loc. cit.)
Under Louis XIV, XV, XVI France still had, for its state taxes, taxes in kind levied on the rural people. (Augier.) 
Prices and mass of the circulating medium. Mere rise of prices not sufficient to create demand for additional currency. This only the case if production and consumption rise simultaneously. E.g. the price of grain rises, but its supply declines. Can thus be governed with the same quantity of currency … but if rise of prices due to rising demand, new markets, enlarged scale of production, in a word, rise of prices and of the general sum of transactions, then it is necessary for the intervention of money to be multiplied in number and enlarged in magnitude. (Fullarton.) 
Trade governs money, not money trade. The servant of trade must follow the variations (in the prices) of the other commodities. (D’Avenant.) 
(Under the feudal kings, the few articles bought in mass quantities by the people fell so much that no gold or silver coin small enough to correspond to the daily requirement of the labourer … current money thus like in ancient Rome only the inferior metals, copper, tin, iron.) (Jacob.) 
Jacob assumes that in this century, 2/3 of the gold and silver in Europe in other articles, utensils and ornament, not in coin. (In another passage he calculates the precious metal so used in Europe and America at £400 million.) 
Prices and mass of the circulating medium. Locke, Spectator (19 Oct. 1711), Hume, Montesquieu – their doctrine rests on three theses:
(1) Prices of commodities proportionate to the mass of money in the country; (2) the coin and current money of a country representative of all its labour and commodities, so that the more or less representation, the more or less quantity of the thing represented goes to the same quantity of it; (3) increase commodities, they become cheaper; increase money, they rise in their value. (Steuart.)
Markers (small copper money or silver money, counters) in antithesis to money of intrinsic worth. (loc. cit.)
Dissolving effect of money. Money a means of cutting up property (houses, other capital) into countless fragments and consuming it piece by piece through exchange. (Bray.)  (Without money, a mass of inexchangeable, inalienable objects.) ‘As immobile and immutable things came into human commerce just as well as movable things made for exchange, money came into use as rule and measure (square), by which these things obtained appraisal and value.’ (Free Trade, London, 1622.) 
Coin. The silver and copper markers are representatives of fractional parts of the pound sterling. (Thus in a recent answer of the Lord of the Treasury.)
Exchange value. F. Vidal says (likewise, Lauderdale) (and in certain respects Ricardo): ‘The true social value is use or consumption value; exchangeable value serves only to characterize the relative wealth of each of the members of a society in comparison to the others.’ (70. De la Répartition des Richesses etc., Paris, 1846.) On the other side, exchange value expresses the social form of value, while use value no economic form of it whatever, rather, merely the being of the product, etc. for mankind generally.
<From the possibility that profit may be less than surplus value, hence that capital [may] exchange profitably without realizing itself in the strict sense, it follows that not only individual capitalists, but also nations may continually exchange with one another, may even continually repeat the exchange on an ever-expanding scale, without for that reason necessarily gaining in equal degrees. One of the nations may continually appropriate for itself a part of the surplus labour of the other, giving back nothing for it in the exchange, except that the measure here [is] not as in the exchange between capitalist and worker.>
Money in the third role, as money. (Value for-itself, equivalent etc.) How important a role money still plays in this role – even in its immediate form – is revealed in time of crises, harvest failures etc., in short, whenever one nation must suddenly liquidate its account with another. Money in its immediate, metallic form then appears as the sole absolute means of payment, i.e. as the sole counter-value, acceptable equivalent. And consequently it pursues a moving course which directly contradicts that of all other commodities. Commodities are transported as means of payment etc. from the country where they are cheapest to the country where they are most expensive. Money, the opposite; in all periods where it brings out its specific inner nature, where, hence, money is called for, in antithesis to all other commodities, as value for-itself, as absolute equivalent, as general form of wealth, in the specific form of gold and silver – and such moments are always more or less moments of crisis, whether a general one, or a grain crisis – then gold and silver are always transmitted from the country where they are most expensive – i.e. where all commodity prices have fallen by the relatively greatest amount – to the country where they are cheapest, i.e. where the prices of commodities are relatively higher. ‘It is a singular anomaly in the economy of the exchanges, and one particularly deserving of remark, that … the course of transit (of gold between two nations equally employing gold as a circulating medium) is always from the country where for the moment the metal is dearest, to the country where it is cheapest, a rise of the market price of the metal to its highest limit in the home market, and a fall of the premium in the foreign market, being the certain results of that tendency to an efflux of gold which follows a depression of the exchanges.’ (J. Fullarton, On the Regulation of Currencies etc. 2nd ed., London, 1845, p. 119.)
Just as exchange as such begins where the communities end, and as money, as the measure, medium of exchange and general equivalent created by exchange itself, arose not in internal traffic but rather in that between different communities, peoples, etc., and there obtains its specific importance, so it was also ϰατ᾽ ἐξοχήν as medium of international payments – for the liquidation of international debts – that money cast its spell, in the sixteenth century, the period of bourgeois society’s infancy, holding the exclusive interest of states and of incipient political economy. The important role which money (gold and silver) in this third form still plays in international traffic has only become fully clear and been again recognized by the economists since the regular succession of money crises in 1825, 1839, 1847 and 1857. The economists try to extricate themselves by pointing out that money is called for here not as medium of circulation, but as capital. This is correct. Only it should not be forgotten that capital is being called for in the specific form of gold and silver, and not in that of any other commodity. Gold and silver appear in the role of absolute medium of international payments, because they are money as value-for-itself, as independent equivalent. ‘This, in fact, is not a question of currency but of capital.’ (It is rather a question of money, not of currency, nor of capital, because it is not capital which is indifferent to the special form in which it exists, but value in the specific form of money which is requested) ‘… all those various causes which, in the existing condition of monetary affairs, are capable … of directing the stream of bullion from one country to another’ (i.e. giving origin to a drain of bullion), ‘resolve themselves under a single head, namely the state of the balance of foreign payments, and the continually recurring necessity of transferring capital’ (but notabene! capital in the form of money) ‘from one country to another to discharge it. For example failure of crops … Whether that capital is transmitted in merchandise or in specie is a point which in no way affects the nature of the transaction’ (affects it very materially!). Further, war-expenditure. (The case of transmission of capital in order to place it out to greater advantage at interest does not concern us here; nor does that of a surplus quantity of foreign goods imported, which Mr Fullarton cites, although this case certainly belongs here if this surplus importation coincides with crises.) (Fullarton, loc. cit. 130, 131.) ‘Gold is preferred for this transmission of capital’ (but in cases of violent drains of bullion it is absolutely not a question of preference) ‘only in those cases where it is likely to effect the payment more conveniently, promptly, or profitably, than any other description of stock or capital.’ (Mr Fullarton falsely treats the transmission of gold or another form of capital as a matter of preference, whereas the question is precisely those cases when gold must be transmitted in the international trade, just as at the same time bills in the domestic trade must be acquitted in the legal money, and not in any substitute.) ‘Gold and silver … can always be conveyed to the spot where it is wanted with precision and celerity, and may be counted upon to realize on its arrival nearly the exact sum required to be provided, rather than incur the hazard of sending it in tea, coffee, sugar, or indigo. Gold and silver possess an infinite advantage over all other descriptions of merchandise for such occasions, from the circumstance of their being universally in use as money. It is not in tea, coffee, sugar, or indigo that debts, whether foreign or domestic, are usually contracted to be paid, but in coin; and a remittance, therefore, either in the identical coin designated, or in bullion which can be promptly turned into that coin through the Mint or Market of the country to which it is sent, must always afford to the remitter the most certain, immediate, and accurate means of effecting this object, without risk of disappointment from the failure of demand or fluctuation of price.’ (132, 133.) Thus he cites precisely its property of being money, general commodity of contracts, standard of values, and with the possibility of being immediately converted at liberty in medium of circulation. The English have the apt expression currency for money as medium of circulation (Münze, coin, does not correspond to this, because it is itself the medium of circulation in a particular form again) and money for it in its third attribute. But since they have not particularly developed the latter, they declare this money to be capital, although they are then in practice forced to distinguish again between this particular form of capital, and capital generally.
‘Ricardo appears to have entertained very peculiar and extreme opinions as to the limited extent of the offices performed by gold and silver in the adjustment of foreign balances. Mr Ricardo had passed his life amid the controversies which grew out of the Restriction Act,’  and had accustomed himself so long to consider all the great fluctuations of exchange and of the price of gold as the result of the excessive issues of the Bank of England, that at one time he seemed scarcely willing to allow that such a thing could exist as an adverse balance of commercial payments … And so slight an account did he set on the functions performed by gold in such adjustments, as to have even anticipated that drains for exportation would cease altogether so soon as cash payments should be resumed, and the currency restored to the metallic level … (See Ricardo’s Evidence before the Lords’ Committee of 1819 on the Bank of England, p. 186.) … But since 1800, when paper quite displaced gold in England, our merchants did not really want it; for, owing to the unsettled state of continental Europe, and the increased consumption there of imported manufactures, in consequence of the interruption given to industry and to all domestic improvement by the incessant movement of invading armies, together with the complete monopoly of the colonial trade which England had obtained through her naval superiority, the export of commodities from Great Britain to the Continent continued greatly to exceed her imports from thence, so long as the intercourse remained open; and after that intercourse was interrupted by the Berlin and Milan decrees, the transactions of trade became much too insignificant to affect exchanges in one way or the other. It was the foreign military expenditures and the subsidies, and not the necessities of commerce, that contributed in so extraordinary a manner to derange the exchanges and enhance the price of bullion in the latter years of the war. The distinguished economists of that period, therefore, had few or no real opportunities of practically estimating the range of which foreign commercial balances are susceptible.’ (Believed that with war and over-issue, the international transmission of bullion would cease.) ‘Had Mr Ricardo lived to witness the drains of 1825 and 1839, he would no doubt have seen reason to alter his views.’ (loc. cit. 133–6.)
Price is the money value of commodities. (Hubbard.)  Money has the quality of being always exchangeable for what it measures, and the quantity required for the purposes of exchange must vary, of course, according to the quantity of property to be exchanged. (100. J. W. Bosanquet. Metallic, Paper, and Credit Currency etc., London, 1842.) ‘I am ready to admit that gold is a commodity in such general demand that it may always command a market, that it can always buy [all] other commodities; whereas, other commodities cannot always buy gold. The markets of the world are open to it as merchandise at less sacrifice upon an emergency than would attend an export of any other article, which might in quantity or kind be beyond the usual demand in the country to which it is sent.’ (Th. Tooke. An Enquiry into the Currency Principle etc., 2nd ed., London, 1844, p. 10.) ‘There must be a very considerable amount of the precious metals applicable and applied as the most convenient mode of adjustment of international balances, being a commodity more generally in demand, and less liable to fluctuations in market value than any other.’ (p. 12, 13.)
(Causes, according to Fullarton, of the rise of bullion price above the mint price: ‘Coin debased by wear to the extent of 3 or 4% below its standard weight; … penal laws which prohibited the melting and exportation of the coin, while the traffic in the metal of which that coin was composed remained perfectly free. These causes themselves, however, acted only during periods of unfavourable rate of exchange … [The market price of money] fell, however, from 1816 to 1821 always to the bank price of bullion, when the exchange in favour of England; never rose higher, when the exchange unfavourable, than to such a rate as would indemnify the melters of the coin for its degradation by wear and for the penal consequences of melting it, but rose no higher.’ (Fullarton, see his book, p. 8, 9.) ‘From 1819 to the present time, amid all the vicissitudes which the money has undergone during that eventful period, the market-price of gold has on no occasion risen above 78s. per oz., nor fallen below 77s. 6d., an extreme range of only 6 in the ounce. Nor would even that extent of fluctuation be now possible; for it was solely owing to the renewed deterioration of the coin that even so trivial a rise occurred as 1 1/2d. in the ounce, or about 1/6% above the Mint-price; and the fall to 77s. 6d. is entirely accounted for by the circumstance of the Bank having at one time thought proper to establish that rate as the limit for its purchases. Those circumstances, however, exist no longer. For many years the Bank has been in the practice of allowing 77s. 9d. for all the gold brought to it for coinage’ (i.e. the bank pockets 1 1/2d. mintage, which the coin gives it free of charge); ‘and as soon as the recoinage of sovereigns now in progress shall be completed, there will be an effectual bar, until the coin shall again become deteriorated, to any future fluctuation of the price of gold bullion in our market beyond the small fractional difference between 77s. 9d. allowed by the Bank, and the Mint-price of 77s. 10 1/2d.’ (loc. cit. p. 9, 10.)
Contradiction between money as measure and equivalent on one side and as medium of circulation. In the latter, abrasion, loss of metallic weight. Garnier already remarks that ‘if a somewhat worn écu were taken as being worth somewhat less than a quite new one, then circulation would be constantly hampered, and every payment would give rise to disputes.’ 
(The material designed for accumulation naturally sought for and chosen from the realm of minerals. Garnier.) 
‘It being obvious that the coinage, in the very nature of things, must be forever, unit by unit, falling under depreciation by the mere action of ordinary and unavoidable abrasion (to say nothing of the inducement which a very restoration of the coinage holds out to the whole legion of ‘players’ and ‘sweaters’), it is a physical impossibility at any time, even for a single day, utterly to exterminate light coins from circulation.’ (The Currency Theory reviewed etc. By a Banker in England. Edinburgh, 1845, p. 69.) This written December 1844 commenting upon the operation of the then recent proclamations respecting the light gold in circulation in a letter to The Times. (Hence difficulty: If the light money is refused, then all standards insecure. If it is accepted, then door is opened to fraud and the same result.) That is why he says, in regard to the above-cited proclamations: ‘The effect … has virtually been to denounce the whole of the current gold coin as an unsafe and illegal medium for monetary transactions.’ (p. 68, 69, loc. cit.) ‘In English law, when a gold sovereign is more than 0.774 grains deficient in weight, it may no longer pass as current. No such law for silver money.’ (54. Wm H. Morrison, Observations on the System of Metallic Currency Adopted in this Country, London, 1837.)
Assertion by the currency people that the value of a currency depends on its quantity. (Fullarton, p. 13.) If the value of the currency is given, and prices and the mass of transactions likewise (as well as the velocity of circulation), then of course only a specific quantity can circulate. Given prices and the mass of transactions as well as the velocity of circulation, then this quantity depends exclusively on the value of the currency. Given this value and the velocity of circulation, it depends exclusively on prices and on the mass of transactions. In this way is the quantity determined. If, however, the money in circulation is representative money – mere value-symbols – then it depends on the standard they represent what quantity of them can circulate. From this it has been wrongly concluded that quantity alone determines its value. For example, paper chits representing pounds cannot circulate in the same quantity as those which represent shillings.
Profit-bearing capital is the real capital, value posited as simultaneously self-reproducing and multiplying, and as constantly self-equivalent presupposition, distinguished from itself as surplus value posited by itself. Interest-bearing capital is in turn the purely abstract form of profit-bearing capital.
Since capital is posited as profit-bearing, in accordance with its value (presupposing a specific stage of the force of production), the commodity – or the commodity posited in its form as money (in its corresponding form as independent value, or, as we may now say, as realized capital) – may enter into circulation as capital; it may become a commodity, as capital. In this case, it is capital lent out at interest. The form of its circulation – or of the exchange it undergoes – then appears as specifically distinct from that examined hitherto. We have seen that capital posits itself both in the role of the commodity and in the role of money; but this happens only in so far as both appear as moments of the circulation of capital, in which it alternately realizes itself. These are only its vanishing and constantly re-created modes of existence, moments of its life’s process. But capital as capital, capital itself as commodity, has not itself become a moment of circulation. The commodity has not been sold as capital; nor money as capital. In a word, neither commodity nor money – and we need actually regard only the latter as the adequate form – have entered into circulation as profit-bearing values.
‘ “Mr Tooke, Mr Fullarton, and Mr Wilson consider money as possessing intrinsic value as a commodity, and exchanging with goods according to that value, and not merely in accordance with the supply of pieces at the time; and they suppose with Dr Smith that exports of bullion are made quite irrespective of the state of the currency, to discharge balances of international debt, and to pay for commodities such as corn, for which there is a sudden demand, and that they are taken from a fund which forms no part of the internal circulation, nor affects prices, but is set apart for these purposes … Difficulty in explaining in what manner the bullion they say is set apart for this purpose, and has no effect on prices, can escape the laws of supply and demand, and though existing in the shape of money lying unemployed and known for the making of purchases, is neither applied for that purpose nor affects prices by the possibility of its being so applied.” The reply to this is, that the stock of bullion in question represents surplus-capital, not surplus-income, and is not available, therefore, merely to increase the demand for commodities, except on condition of increasing also the supply. Capital in search of employment is not a pure addition to the demanding power of the community. It cannot be lost in the currency. If it tends to raise prices by a demand, it tends to lower them by a corresponding supply. Money, as the security for capital, is not a mere purchasing power – it purchases only in order to sell, and finally goes abroad in exchange for foreign commodities rather than disburse itself in merely adding to the currency at home. Money, as the security for capital, never comes into the market so as to be set off against commodities, because its purpose is to produce commodities; it is only the money which represents consumption that can finally affect prices.’ (Economist, 15 May ’58.) 
‘Mr Ricardo maintained that prices depend on the relative amount of the circulating medium and of commodities respectively, and that prices rise only through a depreciation of the currency, that is, from a too great abundance of it in proportion to commodities, that they fall either from a reduction in the amount of the currency, or from a relative increase in the stock of general commodities which it circulates. All the bullion and gold coin in the country is, according to Mr Ricardo, to be reckoned currency, and if this increases without a corresponding increase in commodities, the currency is depreciated, and it becomes profitable to export bullion rather than commodities. On the other hand, if a bad harvest or any other calamity cause a great destruction of commodities, without any corresponding change in the amount of the circulation, the currency, whose amount was proportioned to the estimated rather than to the suddenly reduced market of commodities, again becomes redundant or ‘depreciated’, and must be diminished by exportation before its value can be restored. According to this view of the circulation, which is at the root of Lord Overstone’s theory, the supply of circulating medium or currency is always capable of being indefinitely increased in amount, and diminishes in value according to that increase; and can be restored to its proper value only by exportation of the superabundant portion. Any issue, therefore, of paper money which might supply the gap caused by the exportation of the bullion, and so prevent the ‘natural’ fall of prices otherwise certain to ensue, is held by Mr Ricardo’s school to be an interference with the economical laws of price, and a departure from the principles which would necessarily regulate a purely metallic currency.’ (loc. cit.)
This section to be brought forward.
The first category in which bourgeois wealth presents itself is that of the commodity. The commodity itself appears as unity of two aspects. It is use value, i.e. object of the satisfaction of any system whatever of human needs. This is its material side, which the most disparate epochs of production may have in common, and whose examination therefore lies beyond political economy. Use value falls within the realm of political economy as soon as it becomes modified by the modern relations of production, or as it, in turn, intervenes to modify them. What it is customary to say about it in general terms, for the sake of good form, is confined to commonplaces which had a historic value in the first beginnings of the science, when the social forms of bourgeois production had still laboriously to be peeled out of the material, and, at great effort, to be established as independent objects of study. In fact, however, the use value of the commodity is a given presupposition – the material basis in which a specific economic relation presents itself. It is only this specific relation which stamps the use value as a commodity. Wheat, e.g., possesses the same use value, whether cultivated by slaves, serfs or free labourers. It would not lose its use value if it fell from the sky like snow. Now how does use value become transformed into commodity? Vehicle of exchange value. Although directly united in the commodity, use value and exchange value just as directly split apart. Not only does the exchange value not appear as determined by the use value, but rather, furthermore, the commodity only becomes a commodity, only realizes itself as exchange value, in so far as its owner does not relate to it as use value. He appropriates use values only through their sale [Entäusserung], their exchange for other commodities. Appropriation through sale is the fundamental form of the social system of production, of which exchange value appears as the simplest, most abstract expression. The use value of the commodity is presupposed, not for its owner, but rather for the society generally. (Just as a Manchester family of factory workers, where the children stand in the exchange relation towards their parents and pay them room and board, does not represent the traditional economic organization of the family, so is the system of modern private exchange not the spontaneous economy of societies. Exchange begins not between the individuals within a community, but rather at the point where the communities end – at their boundary, at the point of contact between different communities. Communal property has recently been rediscovered as a special Slavonic curiosity. But, in fact, India offers us a sample chart of the most diverse forms of such economic communities, more or less dissolved, but still completely recognizable; and a more thorough research into history uncovers it as the point of departure of all cultured peoples. The system of production founded on private exchange is, to begin with, the historic dissolution of this naturally arisen communism. However, a whole series of economic systems lies in turn between the modern world, where exchange value dominates production to its whole depth and extent, and the social formations whose foundation is already formed by the dissolution of communal property, without
[Here the manuscript breaks off.]
Bastiat. Harmonies économiques. 2 édition Paris, 1851
The history of modern political economy ends with Ricardo and Sismondi: antitheses, one speaking English, the other French – just as it begins at the end of the seventeenth century with Petty and Boisguillebert. Subsequent political-economic literature loses its way, moving either towards eclectic, syncretistic compendia, such as e.g. the work of J. St. Mill, or into deeper elaboration of individual branches, such as e.g. Tooke’s History of Prices and, in general, the newer English writings about circulation – the only branch in which real new discoveries have been made, since the works about colonization, landed property (in its various forms), population etc. actually differ from the older ones only in the greater completeness of their material – or the reproduction of old economic disputes for a wider public, and the practical solution of questions of the day, such as the writings on free trade and protection – or, finally, into tendentious exaggerations of the classical tendencies, a relation which e.g. Chalmers occupies toward Malthus and Gülich to Sismondi, as well as in certain respects the older writings of MacCulloch and Senior to Ricardo. It is altogether a literature of epigones; reproduction, greater elaboration of form, wider appropriation of material, exaggeration, popularization, synopsis, elaboration of details; lack of decisive leaps in the phases of development, incorporation of the inventory on one side, new growth at individual points on the other. The only exceptions seem to be the writings of Carey, the Yankee, and Bastiat, the Frenchman, the latter of whom confesses that he leans on the former.  Both grasp that the antithesis to political economy – namely socialism and communism – finds its theoretical presupposition in the works of classical political economy itself, especially in Ricardo, who must be regarded as its complete and final expression. Both of them therefore find it necessary to attack, as a misunderstanding, the theoretical expression which the bourgeois economy has achieved historically in modern economics, and to demonstrate the harmony of the relations of production at the points where the classical economists naïvely described this antagonism. Notwithstanding the altogether different, even contradictory national environment from within which each of them writes, they are driven to identical endeavours. Carey is the only original economist among the North Americans. Belongs to a country where bourgeois society did not develop on the foundation of the feudal system, but developed rather from itself; where this society appears not as the surviving result of a centuries-old movement, but rather as the starting-point of a new movement; where the state, in contrast to all earlier national formations, was from the beginning subordinate to bourgeois society, to its production, and never could make the pretence of being an end-in-itself; where, finally, bourgeois society itself, linking up the productive forces of an old world with the enormous natural terrain of a new one, has developed to hitherto unheard-of dimensions and with unheard-of freedom of movement, has far outstripped all previous work in the conquest of the forces of nature, and where, finally, even the antitheses of bourgeois society itself appear only as vanishing moments. That the relations of production within which this enormous new world has developed so quickly, so surprisingly and so happily should be regarded by Carey as the eternal, normal relations of social production and intercourse, that these should seem to him as hampered and damaged by the inherited barriers of the feudal period, in Europe, especially England, which actually represents Europe to him, and that the English economists should appear to him to give a distorted, falsified reflection, generalization of these relations, that they should seem to him to confuse accidental distortions of the latter with their intrinsic character – what could be more natural? American relations against English ones: to this his critique of the English theory of landed property, wages, population, class antitheses etc. may be reduced. In England, bourgeois society does not exist in pure form, not corresponding to its concept, not adequate to itself. How then could the English economists’ concepts of bourgeois society be the true, undimmed expression of a reality, since that reality was unknown to them? In the last analysis, the disturbing effect which traditional influences, influences not arising from the womb of bourgeois society itself, exercise upon its natural relations reduces itself for Carey to the influence, to the excesses and interferences of the state in bourgeois society. It is in the nature of wages, e.g., to rise with the productivity of labour. If we find that reality contradicts this law, then, whether in Hindustan or in England, we have only to abstract from the influence of the government, taxes, monopolies etc. If the bourgeois relations are regarded in themselves, i.e. after deduction of state influences, they will indeed always confirm the harmonic laws of the bourgeois economy. The question to what extent these state influences, public debt, taxes etc., grow out of the bourgeois relations themselves – and hence, e.g. in England, in no way appear as results of feudalism, but rather as results of its dissolution and defeat, and in North America itself the power of the central government grows with the centralization of capital – is one which Carey naturally does not raise. While Carey thus brings the higher power to which bourgeois society is developed in North America to bear against the English economists, Bastiat brings to bear the lower power of bourgeois society in France, against the French socialists. You believe yourselves to be rebelling against the laws of bourgeois society, in a land where these laws were never allowed to realize themselves! You only know them in the stunted French form, and regard as their inherent form what is merely its French national distortion. Look across, at England. Here, in our own country, the task is to free bourgeois society from the fetters which the state imposes on it. You want to multiply these fetters. First work out the bourgeois relations in their pure form, and then we may talk again. (Bastiat has a point, in so far as in France, owing to its peculiar social formation, many a thing is considered socialism that counts in England as political economy.)
Carey, however, whose point of departure is the American emancipation of bourgeois society from the state, ends with the call for state intervention, so that the pure development of bourgeois relations is not disturbed by external forces, as in fact happened in America. He is a protectionist, while Bastiat is a freetrader. All over the world, the harmony of economic laws appears as disharmony, and even Carey himself is struck by the beginnings of this disharmony in the United States. What is the source of this strange phenomenon? Carey explains it with the destructive influence of England, with its striving for industrial monopoly, upon the world market. Originally, the English relations were distorted by the false theories of her economists, internally. Now, externally, as the commanding power of the world market, England distorts the harmony of economic relations in all the countries of the world. This disharmony is a real one, not one merely based on the subjective conceptions of the economists. What Russia is, politically, for Urquhart, England is, economically, for Carey. The harmony of economic relations rests, according to Carey, on the harmonious cooperation of town and countryside, industry and agriculture. Having dissolved this fundamental harmony in its own interior, England, by its competition, proceeds to destroy it throughout the world market, and is thus the destructive element of the general harmony. The only defence lies in protective tariffs – the forcible, national barricade against the destructive power of large-scale English industry. Hence, the state, which was at first branded the sole disturber of these ‘harmonies économiques’, is now these harmonies’ last refuge. On the one side, Carey here again articulates the specific national development of the United States, their antithesis to and competition with England. This takes place in the naïve form of suggesting to the United States that they destroy the industrialism propagated by England, so as, by protective tariffs, to develop the same more rapidly themselves. This naïveté apart, with Carey the harmony of the bourgeois relations of production ends with the most complete disharmony of these relations on the grandest terrain where they appear, the world market, and in their grandest development, as the relations of producing nations. All the relations which appear harmonious to him within specific national boundaries or, in addition, in the abstract form of general relations of bourgeois society – e.g. concentration of capital, division of labour, wage labour etc. – appear as disharmonious to him where they appear in their most developed form – in their world market form – as the internal relations which produce English domination on the world market, and which, as destructive influences, are the consequence of this domination. If patriarchal gives way to industrial production within a country, this is harmonious, and the process of dissolution which accompanies this development is conceived in its positive aspect alone. But it becomes disharmonious when large-scale English industry dissolves the patriarchal or petty-bourgeois or other lower stages of production in a foreign country. The concentration of capital within a country and the dissolving effect of this concentration present nothing but positive sides to him. But the monopoly of concentrated English capital and its dissolving effect on the smaller national capitals of other countries is disharmonious. What Carey has not grasped is that these world-market disharmonies are merely the ultimate adequate expressions of the disharmonies which have become fixed as abstract relations within the economic categories or which have a local existence on the smallest scale. No wonder, then, that he in turn forgets the positive content of these processes of dissolution – the only side he recognizes in the economic categories in their abstract form, or in the real relations within the specific countries from which they are abstracted – when he comes to their full appearance, the world market. Hence, where the economic relations confront him in their truth, i.e. in their universal reality, his principled optimism turns into a denunciatory, irritated pessimism. This contradiction forms the originality of his writings and gives them their significance. He is equally an American in his assertion of the harmony within bourgeois society, as in his assertion of the disharmony of the same relations in their world-market form. In Bastiat, none of this. The harmony of these relations is a world beyond, which begins just at the point where the boundaries of France end; which exists in England and America. This is merely the imaginary, ideal form of the un-French, the Anglo-American relations, not the real form such as he confronts it on his own land and soil. Hence, as with him the harmony in no way arises out of the abundance of living observation, but is rather the flat, stilted product of a thin, drawn, antithetical reflection, hence the only moment of reality with him is the demand that the French state should give up its economic boundaries. Carey sees the contradictions in the economic relations as soon as they appear on the world market as English relations. Bastiat, who merely imagines the harmony, begins to see its realization only at the point where France ceases, and where all nationally separate component parts of bourgeois society compete among one another liberated from the supervision of the state. This ultimate among his harmonies – and the presupposition of all his earlier, imaginary ones – is however itself in turn merely a postulate, which is supposed to be realized through free-trade legislation. Thus, while Carey, quite apart from the scientific value of his researches, has at least the merit of articulating in abstract form the large-scale American relations, and, what is more, of doing so in antithesis to the old world, the only real background in Bastiat would be the small scale of the French relations, which everywhere poke their long ears through his harmonies. Still, this meritorious contribution is superfluous, because the relations of so old a country are sufficiently known and least of all require to become known by so negative a detour. Carey is rich, therefore, in, so to speak, bonafide research in economic science, such as about credit, rent, etc. Bastiat is preoccupied merely with pacifying paraphrases of researches ending in contrasts; hypocrisy of contentment. Carey’s generality is Yankee universality. France and China are equally close to him. Always the man who lives on the Pacific and the Atlantic. Bastiat’s generality is to ignore all countries. As a genuine Yankee, Carey absorbs from all directions the massive material furnished him by the old world, not so as to recognize the inherent soul of this material, and thus to concede to it the right to its peculiar life, but rather so as to work it up for his purposes, as indifferent raw material, as inanimate documentation for his theses, abstracted from his Yankee standpoint. Hence his strayings and wanderings through all countries, massive and uncritical use of statistics, a catalogue-like erudition. Bastiat, by contrast, presents fantasy history, his abstractions sometimes in the form of arguments, another time in the form of supposed events, which however have never and nowhere happened, just as a theologian treats sin sometimes as the law of human existence, then at other times as the story of the fall from grace. Hence both are equally unhistorical and anti-historical. But the unhistoric moment in Carey is the contemporary historic principle of North America, while the unhistoric element in Bastiat is a mere reminiscence of the French eighteenth-century manner of generalizing. Hence Carey is formless and diffuse, Bastiat affected and formally-logical. The most he achieves is commonplaces, expressed paradoxically, ground and polished into facets. With Carey, a couple of general theses, advanced in schoolmasterly form. Following them, a shapeless material, compendium, as documentation – the substance of his theses in no way digested. With Bastiat, the only material – abstracting from a few local examples, or whimsically refashioned English trivia – consists in the general theses of the economists. Carey’s chief antithesis, Ricardo, in short, the modern English economists; Bastiat’s, the French socialists.
The following are Bastiat’s main theses: All men strive for constancy of income, fixed revenue. <Truly French example: (1) All men want to be civil servants or make their sons civil servants. (p. 371.)> Wages are a fixed form of remuneration (p. 376) and hence a very perfect form of association, in whose original form ‘the aleatory’ predominates, in so far as ‘all the associated’ are subject to ‘all the risks of the enterprise’. <If capital takes the risk on its own account, the remuneration of labour becomes established under the name wages. If labour wants to take the consequences, good and bad, then the remuneration of capital splits off and establishes itself under the name interest (382).> (On this juxtaposition, see further p. 382, 383.) However, while the aleatory originally predominates in the worker’s condition, the stability of wage labour is not yet sufficiently secured. There is an ‘intermediate degree which separates the aleatory from stability’. This last stage is reached by ‘saving, during days of work, the means to provide for the needs of days of old age and illness’. (p. 388.) The final stage develops by means of ‘mutual aid societies’ (loc. cit.) and in the final instance by means of the ‘workers’ retirement fund’. (p. 393.) (As man began with the need to become a civil servant, so he ends with the satisfaction of drawing a pension.)
As to 1. Suppose everything Bastiat says about the fixity of wages to be correct. Then we would still not know the proper character of wages, its characteristic specificity, simply because wages are subsumed under the fixed revenues. One of its relations – which it has in common with other sources of income – would be emphasized. Nothing more. This would already be something, admittedly, for the advocate who wishes to plead the advantages of wage labour. It would still be nothing for the economist who wishes to understand the peculiarity of this relation in its entire scope. A one-sided characterization of a relation, of an economic form, so as to make it the object of panegyrics in contrast to the opposite form; this cheap practice of lawyers and apologists is what distinguishes the logician, Bastiat. Thus, in place of wages, put: fixed income. Is a fixed income not a good thing? Does not everyone love to count on a sure thing? Especially every petty-bourgeois, narrow-minded Frenchman? the ‘ever-needy’ man? Human bondage has been defended in the same way, perhaps on better grounds. The opposite could also be asserted, and has been asserted. Equate wages to non-fixedness, i.e. progression past a certain point. Who does not love to get ahead, instead of standing still? Can a relation be bad which makes possible an infinite bourgeois progress? Naturally, Bastiat himself in another passage asserts wages as non-fixedness. How else, apart from non-fixedness, would it be possible for the worker to stop working, to become a capitalist, as Bastiat wishes? Thus wage labour is good because it is fixedness; it is good because it is non-fixedness; it is good because it is neither one nor the other, but both at the same time. What relation is not good, if it is reduced to a one-sided characterization and the latter is regarded as position, not as negation? All opportunist chattering, all apologetics, all philistine sophistry rests on this sort of abstraction.
After this general preface, we come to Bastiat’s actual construction. Only, be it noted in passing that his rural sharecropper,  this type who combines in himself the misfortune of the wage labourer with the bad luck of the small capitalist, might indeed consider himself fortunate if he were put on fixed wages. Proudhon’s ‘descriptive and philosophical history’ hardly holds a candle to that of his opponent Bastiat. The original form of association, wherein all the associates share all the risks of chance, is followed, as a higher stage of association entered into voluntarily by both sides, by a form in which the worker’s remuneration is fixed. We will not call attention here to the genius of a procedure which begins by presupposing a capitalist on one side and a worker on the other, so as then, afterwards, to let the relation of capital and wage labour arise between them by their mutual agreement.
The form of association in which the worker is exposed to all the chance risks of the business – in which all producers are equally exposed to these risks – and which immediately precedes the form of wages, where the remuneration of labour gains fixity, becomes stable, as thesis precedes antithesis – is, as Bastiat tells us, the state in which fishing, hunting and herding form the dominant forms of production and society. First the wandering fisherman, hunter, herdsman – and then the wage labourer. Where and when has this historic transition from the semi-savage state into the modern taken place? If at all, then only in the burlesque. In real history, wage labour arises out of the dissolution of slavery and serfdom – or of the decay of communal property, as with oriental and Slavonic peoples – and, in its adequate, epoch-making form, the form which takes possession of the entire social being of labour, out of the decline and fall of the guild economy, of the system of Estates, of labour and income in kind, of industry carried on as rural subsidiary occupation, of small-scale feudal agriculture etc. In all these real historic transitions, wage labour appears as the dissolution, the annihilation of relations in which labour was fixed on all sides, in its income, its content, its location, its scope etc. Hence as negation of the stability of labour and of its remuneration. The direct transition from the African’s fetish to Voltaire’s supreme being, or from the hunting gear of a North American savage to the capital of the Bank of England, is not so absurdly contrary to history as is the transition from Bastiat’s fisherman to the wage labourer. (Furthermore, in all these developments there is no sign of voluntary changes arising from mutual agreement.) This construction – in which Bastiat dishonestly conjures up his flat abstraction in the form of a historic event – is quite of the same rank as the synthesis in which the English friendly societies and the savings banks appear as the last word of wage labour and as the suspension of all social antinomies.
Thus the historic character of wage labour is non-fixity: the opposite of Bastiat’s construction. But how did he come at all to construe fixity as the all-compensating aspect of wage labour? What led him to the wish to present wage labour in this form historically in other forms of society and of association, as a higher form of the remuneration of labour?
All economists, when they come to discuss the prevailing relation of capital and wage labour, of profit and wages, and when they demonstrate to the worker that he has no legitimate claim to share in the risks of gain, when they wish to pacify him generally about his subordinate role vis-à-vis the capitalist, lay stress on pointing out to him that, in contrast to the capitalist, he possesses a certain fixity of income more or less independent of the great adventures of capital. Just as Don Quixote consoles Sancho Panza with the thought that, although of course he takes all the beatings, at least he is not required to be brave. Thus an attribute which the economists attach to wage labour in antithesis to profit is transformed by Bastiat into an attribute of wage labour in antithesis to earlier forms of labour, and as progress relative to the remuneration of labour in these earlier relationships. A commonplace which takes up the standpoint of the prevailing relation, which consoles one of its sides towards the other, is taken out of this relation by Mr Bastiat and turned into the historic foundation of this relation’s origin. In the relation of wages to profit, wage labour to capital, say the economists, wages have the advantage of fixity. Mr Bastiat says this fixity, i.e. one of the aspects of the relation of wages to profit, is the historical foundation on which wage labour arose (or, is an attribute of wages in antithesis not to profit, but rather to the earlier forms of the remuneration of labour), hence on which profit, hence the whole relation arose likewise. Thus a truism about one facet of the relation of wages and profit is surreptitiously transformed for him into the historic basis of this whole relation. This happens because he is constantly preoccupied by reflections upon socialism, which latter is then dreamed to be everywhere the first form of association. This an example of the importance assumed in Bastiat’s hands by the apologetic commonplaces which accompany the course of development in the economists’ writings.
To return to the economists. Of what does this fixity of wages consist? Are wages immutably fixed? This would altogether contradict the law of demand and supply, the basis of the determination of wages. No economist denies the fluctuations, the rise and fall of wages. Or are wages independent of crises? Or of machines which make wage labour redundant? Or of divisions of labour, which displace it? To assert any of this would be heterodox, and it is not asserted. What is meant is that in a certain average, wages realize a fair average level, i.e. the minimum wage for the whole class, a concept so hateful to Bastiat, and that a certain average continuity of labour takes place, e.g. that wages may continue on even in cases where profit falls or momentarily disappears entirely. Now, what does this mean other than that, if wage labour is presupposed as the dominant form of labour, as the foundation of production, then the working class exists from wages, and that labour individually possesses, on the average, the fixity of working for wages? In other words, a tautology. Where capital and wage labour is the dominant relation of production, there exists an average continuity of wage labour, and, to that extent, a fixity of wages for the worker. Where wage labour exists, it exists. And this is regarded by Bastiat as its all-compensating attribute. Furthermore, that in the state of society where capital is developed, social production as a whole is more regular, continuous, all-sided – hence, also, the income of the elements employed in it ‘more fixed’ – than where capital, i.e. production, is not yet developed to this stage, is yet another tautology which is given with the concept of capital itself and of production resting on it. In other words: that the general presence of wage labour presupposes a higher development of the productive forces than in the stages preceding wage labour, who denies this? And what would lead the socialists to the idea of raising higher demands if they did not presuppose this higher development of the forces of social production, brought about by wage labour? The latter is rather the presupposition of their demands.
Note. The first form in which wages make their general appearance – military pay [Sold], which arises with the decline and fall of national armies and of citizens’ militias. First, the citizens themselves are paid as soldiers. Soon after that, their place is taken by mercenaries who have ceased to be citizens.
(2) (It is impossible to pursue this nonsense any further. We, therefore, drop Mr Bastiat.)