HUMAN SOCIETY'S ENTRANCE into capitalism occurred because of a transformation in the understanding of exchange-value and of labor. In a barter society, goods are exchanged in a way that directly relates one item to another by consideration of the "specific useful and concrete labour" used to produce the object (Marx, Capital 150). The objects exchanged are tied closely both to the use-value of the objects (their immediate usefulness) and to the real, material labor expended to produce the object. In capitalism, that concrete labor tends to get translated into an abstract quantity that can then stand as an equivalent-form that one can use to determine the exchangeability of all sorts of products. In this way, "concrete labour... becomes the expression of abstract human labor" (150). The differences between different kinds of labor and different sorts of use-value no longer matter: one begins to think of labor as an abstract, undifferentiated quantity that one can exchange for analogous abstract quantities of labor "congealed" in other products: the labor that creates value "is now explicitly presented as labour which counts as the equal of every other sort of human labour, whatever natural form it may possess, hence whether it is objectified in a coat, in corn, in iron, or in gold" (155). As Marx goes on, "The linen, by virtue of the form of value, no longer stands in a social relation with merely one other kind of commodity, but with the whole world of commodities as well" (155). We thus begin to move towards a "universal equivalent": a single abstract measure by which one can facilitate the exchange of categorically different items on the market. A similar transformation occurs in the value of the given product. In the exchange of goods on the capitalist market, exchange-value rather than use-value dominates. As Marx explains, exchange-value must always be distinguished from use-value, because "the exchange relation of commodities is characterized precisely by its abstraction from their use-values" (127). By abstracting value into exchange-value, the stage is set for the eventual dominance of first gold and then paper money as the universal equivalent of capitalist society.

By accepting money as the universal equivalent, capitalism eventually manages to exploit the laborer upon whom all value ultimately inheres, according to Marx. That is, money tends to hide the real equivalent behind any monetary exchange: labor. The more labor it takes to produce a product, the greater its value. Marx therefore concludes that "As exchange-values, all commodities are merely definite quantities of congealed labour-time" (130). However, what happens in a capitalist society is that people tend to believe that power and value really inhere in the money-form rather in the labor that actually produces goods and services, leading to what Marx terms "commodity fetishism." (See the next module on fetishism.)

Money in turn allows for the accumulation of capital. In commodity exchange, one exchanges a commodity for money, which one then exchanges for some other commodity. One sells in order to buy something else of use to the consumer; Marx writes this formula as C-M-C (or Commodity-Money-Commodity). Money allows this formula to be transformed, however: now one can buy in order to sell (at a higher price) or M-C-M, which becomes for Marx the general formula for capital. In this second formula, "the circulation of money as capital is an end in itself, for the valorization of value takes place only within this constantly renewed movement. The movement of capital is therefore limitless" (253). The aim of the capitalist thus becomes "the unceasing movement of profit-making" (254). Indeed, the formula is reduced even further in the case of usury, when one loans money in return for the same money with interest, or M-M. A similar process occurs on the stock market: money making yet more money without the purchase of a tangible commodity.

Once again, what is forgotten in this process is the labor-power upon which the whole system of profit relies: the purchasing of a person's labor-power in exchange for full ownership of the product thus produced. The product is in turn sold on the market at a profit that is controlled exclusively by the capitalist (M-C-M).


Proper Citation of this Page:

Felluga, Dino. "Modules on Marx: On Capital." Introductory Guide to Critical Theory. Date of last update, which you can find on the home page. Purdue U. Date you accessed the site. <>.






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