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Labor, Money, and "Labour-Money": A Review of Marx's Critique of John Gray's Monetary Analysis

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Labor, Money, and "Labour-Money": A Review of Marx's Critique of John Gray's Monetary Analysis

Abstract

L'A. cherche a comprendre la notion de «travail-argent» a travers la pensee economique de Gray, et a voir pourquoi Marx ne peut la considerer comme de l'argent reel. L'A. etudie a ce propos les rapports entre travail et valeur chez Marx, ainsi (chez Gray egalement) que les relations entre valeur, argent et la fixation d'un prix pour une valeur
Labor, Money, and “Labour=Money”:
A
Review
of
Marx’s Critique
of
John Gray’s Monetary Analysis
Alfredo Saad-Filho
A hundred guinea premium is offered
to
the man who may be able most
effectually to refute my arguments-John Gray
Lectures on the Nature
and
Use
of
Money
All the illusions of the monetary system arise from the failure to
perceive that money, though a physical object with distinct properties,
represents a social relation of production-Marx
A
Contribution to the
Critique
of
Political Economy
Throughout his mature work Marx often criticizes the “Ricardian
so-
cialist” economists whom he regarded as utopians. This text concen-
trates on Marx’s attack against one of their main proposals: a monetary
reform aiming at the institution of a “labour-money.” Although several
authors advanced some version
of
this idea,
I
will focus on John Gray’s
formulation, as his is probably the best-argued case for such a reform.
I.
The English economist John Gray (1799-1883) is not widely known. He was influ-
enced by Smith, Mill. Malthus, and McCulloch, and his ideas were close to Robert Owen’s.
Deeply impressed by the distress he witnessed
in
London during economic crises, he joined
the ranks of the social reformers of his time. Gray wrote his first book
in
1825,
Lecfure
on
Correspondence may be addressed to the author, Mr. Alfredo Saad-Filho, Department
of
Economics, School of Oriental and African Studies, University
of
London, Thornhaugh
Street, Russell Square, London WC1H
OXG,
England.
I
am deeply grateful to Ben Fine for
his help at every stage of this work, and
I
would also like to thank Richard Ketley, Rita
Bertholdi, and two anonymous referees of this journal; the responsibility for all remaining
errors and omissions
is,
of course, entirely my
own.
History
of
Political Economy 25:l
0
1993
by
Duke University Press.
CCC
0018-2702/93/$1.50
66
History of Political Economy
25:l (1993)
Despite this, neither the review of Gray’s plans nor the cogent pre-
sentation of Marx’s critiques are the main objectives of this article.
Marx’s polemic against the “labour-money” scheme is used here as a
means of scrutinizing his own theory of money and of shedding light
on its remarkably rich perspectives. In particular, I concentrate on the
analysis of the relations between labor and value and on the study of
the functions of money.
Limited to these aims, I do not attempt to give a comprehensive ac-
count of the various formulations that the “labour-money” idea re-
ceived, nor do I evaluate Gray’s influence on the evolution of Marx’s
own thought.2 In the first section, I present a summary of Gray’s pro-
posals and occasionally complement
it
by invoking the works of John
Bray, Pierre-Joseph Proudhon, and
A.
Darimon. In the second section,
I discuss the relation between labor and value
in
Marx, using the con-
cepts of normalization, synchronization, and homogenization of labor,
and
I
apply them to his critiques of the “labour-money” scheme,
In the third section, I concentrate on the relations between value,
money, and prices
in
both Marx and Gray and discuss how value is
measured and how prices are set
in
each. Then I proceed to the analysis
of other functions
of
money, verifying how Marx sees them and con-
trasting his analysis with Gray’s. I conclude by showing why for Marx
“labour-money
could not be money.
I
In the early and mid-nineteenth century, capitalist development was
seen by many as generating widespread misery among the working
class, manifest disproportionalities
in
production and frequent eco-
nomic crises. Besides that, unequal exchanges apparently took place
between capital and labor (the workers not receiving back the “full
fruit of their labour”) and between capitalists themselves (some of
whom did not command a “just price’’ for their commodities or were
exploited when accepting credit). Based on this framework, authors
Human Happiness,
which was soon followed by others. In 1826 he founded in Edinburgh,
with his brother James, the firm of
J.
and
J.
Gray and started publishing the
North
British
Advertiser.
Gray’s business success may have been influential in his increasing political
mod-
eration, which ultimately lead him
to
retire from the public scene after publishing
Lectures
on the Nature and the Use
of
Money,
in 1848 (see also Beer 1953,
A.
Gray 1947, Foxwell’s
introduction
to
Menger 1899, and especially Kimball 1948).
2.
The reader interested in this subject should refer
to
King 1983.
Saad-Filho
/
Marx’s Critique of Gray
67
such as Gray, Bray, Proudhon, and Darimon elaborated plans to
change the economic system.
They saw the monetary sphere as the main root of economic trou-
bles, since it was “wrongly” organized around the “privilege” of pre-
cious metals such as gold and silver that, because of their monopoly of
exchange equivalencies, were the sole form of money: “A defective
system of exchange is not one amongst many other evils of nearly equal
importance: it is the evil-the disease-the stumbling block of the
whole society”
(J.
Gray
183
1,
90).3
According to Gray, society creates
money as a scale to measure the relative values of commodities and to
enable them to be exchanged in correct proportions; as such, the quan-
tity of money
in
circulation should equal the sum of all prices, and
money should be promptly available wherever its services are needed
(see
J.
Gray
1831,
58-59).
However, since for Gray it was easier to
increase the production of commodities as a whole than to increase the
production of gold, the requirement that the aggregate value of gold
in
circulation should equal the value of commodities for sale implied that
commodities’ prices would tend to
fall
as their quantity increased
faster than the quantity of gold, bringing distress instead of rewards for
the producers:
money
. . .
must increase
just
exactly and precisely as fast as all
other marketable commodities put together; for if it [does] not do
this, every commodity multipliable by the exercise of human indus-
try faster than money itself.. .will
fall
in money-price; and from that
instant, the greatest and most important principle in Political Econ-
omy
.
. .
-Production the cause of Demand-is expelled from our
commercial system.
(J.
Gray
1848,
69)
As such, Gray considered the underproduction of money as the main evil
of
capitalism, while the overproduction
of
commodities was seen as im-
p~ssible.~ However, he believed that all difficulties could be overcome:
3.
Darimon, an author with similar views, would add that “The root of the evil is the
predominance which opinion obstinately assigns to the role
of
the precious metals in circu-
lation and exchange.
.
.
.
Thus the privilege held by gold and silver, that
of
being the only
authentic instrument of circulation and exchange,
is
responsible not only for the present cri-
sis, but for the periodic commercial crises as well” (quoted in Marx 1981, 115,
125).
4.
For
Proudhon, on the other hand, the main evil was the unjust exchanges between cap-
ital and labor, which prevented the workers from buying back the produce
of
their labor and
thus generated overproduction
(see
Allio 1978,
124-25).
68
History of Political Economy
25:l (1993)
It would be
by
no
means dijicult to place the commercial afairs of
society
upon
such a footing, that production would become the uni-
form and never failing cause
of
demand; or,
in
other words, that to
sell for money may be rendered, at all times, precisely as easy as it
now is to buy with money.
(J.
Gray
1831, 16)
Gray assumed that labor alone bestows value and that labor itself
should be the measure of values. The problems caused by the use of
gold (a valuable commodity) as a measure of values and by unequal
exchanges could be solved through the creation of a valueless (paper)
money, with average labor time as its unit. The privileges enjoyed by
gold would be abolished; all commodities would be directly exchange-
able for money and thus also for one another. As a result, society
would no longer have its progress hampered by a defective monetary
system, justice would prevail, and no exploitation would take place?
The possession of a given amount of “labour-money” would certify
a laborer’s true participation
in
social production and would enable
him or her to draw commodities of an equivalent value from the whole
of that produce. At the same time prices, determined by the costs of
material inputs, wages and profits,6 would at last find stability (of
course, if the conditions of production changed, they would be mod-
ified accordingly).
At the center of Gray’s system was the national
or
standard bank
that would print the “labour-money.” The producers would first sell all
their capital stock and properties to that bank, receiving for them a just
5.
John Bray would not agree. For him, “An exchange implies the giving of one thing for
another. But what is it that the capitalist
.
.
.
gives in exchange for the labour of the working
man? The capitalist gives no labour, for he does not work-he gives no capital, for his store
of wealth is being perpetually augmented.
.
.
.
The whole transaction, therefore, plainly
shews that the capitalists
. .
.
do no more than give the working man, for his labour of one
week, a part of the wealth which they obtained from him the week before!-which just
amounts to giving him norhing for,somerhing-and is a method of doing business which
.
. .
is by no means compatible with a working man’s ideas of justice”
(193
1,
49).
For a discus-
sion of Bray’s ideas, see Henderson
1985.
6.
The belief that value is created by labor and that prices are composed of wages, profits,
and rent makes Gray fall into a contradiction common to several Classical economists. Marx
says that this conception loses touch with the notion of value, and the only meaningful con-
cept here is price. But the notion of money-price is also blurred: as money is also a com-
modity, its “price” is also composed of those three factors; thus,
in
a sale, wages and profit
and rent (in the commodity) are equalized with wages and profit and rent (in money). There
is no way of determining, for example, the wage level, while profit and rent end up being an
extra charge added to prices, contradicting the premise that these are the remunerations paid
for the services of labor, capital, and land (see Marx
1984, 862-67).
Saad-Filho
/
Marx’s Critique of Gray
69
amount of “labour-money”; they would then be paid the usual rate of
profit to manage their old businesses. When they had produced com-
modities they would sell them to a network of national warehouses,
again receiving “labour-money”
in
return.
As
the value of all com-
modities for sale plus the value of the social stock of wealth would
be exactly matched by the amount of money
in
circulation, money
could always buy all goods at once: “Under the Social System, the
money in circulation and the goods
in
the national stores would al-
ways be exactly equivalent, increasing and decreasing together. The
money would be the demand, the property would be the supply, and
the one would ever be equal to the other”
(J.
Gray 1831, 251-52). As
demand would never fail, crises would be abolished forever:
by the adoption of the plan
of
exchange that is here described, goods
of every kind would be made to pay for each other. Selling would be
merely the act of lodging property
in
a particular place; buying
would be merely the act of taking of it back again; and money would
be merely the receipt which every man would require to keep
in
the
interim between the period of selling and that of buying.
(86)
If
the warehouses could not, for whatever reason, sell a commodity, its
producer would have to return the money previously received; if it
could only be sold at a reduced price, he
or
she would have to return
the difference and,
if
sold at a higher price, the producer would get the
extra profit (see
J.
Gray 1848,
1
17).
Thus,
in
the end, producers would
receive the sale price of commodities, and the role of the warehouse
would be that of a neutral intermediary.
The same group of authors also criticized credit and interest, al-
though once again there is no uniformity
in
their opinions. Gray him-
self did not have a firm point of view on these matters and changes his
(superficial) judgement between 1831 and 1848. At first he considered
interest as a source of injustice, since its addition to commodities’ val-
ues would both prevent workers from buying back the product of their
labor and prevent borrowers from having a fair reward for their efforts.
Later on, however, he saw it as a fair “remuneration for capital,” to be
preserved at least while his ideas were not
fully
implemented (see
Kimball 1948, 33).’
7. Proudhon (1923, 2:129, 134, 139-40; see also Allio 1978) wanted credit to
be
“free,”
because for him capital was unproductive and could not generate income. The elimination of
70
History of Political Economy
25:
1
(1993)
The discussion above could be summarized by saying that to estab-
lish “equivalent exchanges” we should, for Gray, Proudhon and oth-
ers, have
both
a form of money that allowed for a full reward of the
labor performed,
and
the absence of interest
in
the economy; this
would render harmonious and fair an otherwise anarchic and injust
economic system.
I1
A
discussion of Marx’s critique of the “labour-money” scheme re-
quires a brief exposition of his theory of money; thus, the analysis of
commodities must be my starting point. For Marx, a commodity has to
be first of all a use-value, thus requiring the application of concrete and
useful labor for its production. But commodities are not only that: the
abstraction of their use-value shows us that they share a common es-
sence amidst their apparent diversity-abstract human labor (see Marx
Every commodity-producing labor process is therefore an expendi-
ture of human labor-power with a double character: as concrete labor it
creates the useful properties of commodities, or their use-value; as ab-
stract labor it creates their value. Although producers are formally in-
dependent from each other, their underlying articulation prevails as
they are compelled to sell their commodities
in
order to buy. Private
activities are thus subordinated to the social division of labor and to
social needs.
The character of social utility that commodities must possess
in
or-
der to be sold implies a double condition: they must have use-value for
other producers, and the labor that has produced them must be equal-
ized with other kinds of labor, making the product of one’s labor ex-
changeable for the products of others’ labor:
1983,
45-46).
the labour of the individual producer acquires socially a two-fold
character. On the one hand, it must, as a definite useful kind of la-
bour, satisfy a definite social want, and thus hold its place as part
and parcel of the collective labour of all, as a branch of a social di-
vision of labour.
. . .
On the other hand, it can satisfy the manifold
interest would also help realize one of his dreams, that of enabling everyone to
be
a
capitalist.
Bray, on the other hand, deplores the injustices of the credit system but does not specify how
they should
be
dealt with.
Saad-Filho
/
Marx’s Critique
of
Gray
71
wants of the individual producer himself, only
in
so
far as
. .
.
[it]
ranks on an equality with that of all others. The equalization of the
most different kinds of labour can be the result only of an abstraction
from their inequalities, or of reducing them to their common denom-
inator, viz., expenditure
of
human labour-power or human labour
in
the abstract. (Marx
1983,
78)
When a commodity reaches the market, the private labor that produced
it loses its individuality
in
a real process composed of three distinct
logical stages: (a) it is normalized with all individual labors producing
the same kind of commodity, converting each good into a mere sample
of its kind; (b) it is synchronized with other labors that have produced
the same kind of commodity
in
the past but which are concurrently for
sale; and (c) it is homogenized
with
all other kinds of labor as the com-
modity is equalized with ideal money. Let us investigate these pro-
cesses more closely:
(a) The labors of the distinct individuals producing the same kind of
commodity, say silk, are normalized as every individual piece of silk
reaches the market, where they are identified as samples of a single
general piece
of
silk put up for sale. As such, all these labors become
links
in
a unique silk-producing process carried out throughout society.
Although all the silk will come from different labor processes, it will
all have the same value. The value of a specific piece of silk will thus
not be given by its individual production time; instead, its value will be
determined by the average or normal time it takes society as a whole
to produce it, or by its socially necessary labor time. The two hours it
takes society to produce each yard of silk are, then, a composition of
the one hour
it
takes A to produce one yard with the three hours it takes
B,
and
so
on. Hence, when silk-producing labors are normalized, their
diverse individual efficiencies are averaged out and all individual labor
times are put into correspondence with a socially determined one
(which is only taken here to be the numerical average by way
of
illus-
tration; see Marx
1983,
46-47).
(b) In the market, commodities produced in diverse moments of
time are also assimilated, and silk produced in the past will equal silk
produced now as they are parts of the same silk for sale. Without this
synchronization of inherently diachronous concrete labor processes,
production and exchanges could not be continuous
in
time, and the
necessary and inevitable non-simultaneity of human actions would
bring about a paralysis of the economy.
72
History
of
Political Economy
25:l
(1993)
We can conclude that, for Marx, the value of a commodity depends
not on the particular labor time necessary to produce it, nor on the
labor time socially necessary when
it
was made. Instead, the value of
a commodity depends
on
the social labor time presently necessary for
its production, or on the labor time socially necessary for its reproduc-
tion. Values
in
Marxist analysis are therefore not given to commodities
once and for all when they are produced, but are socially attributed to
them at every moment.
This does not contradict the fact that commodities themselves have
value, but only reveals the
social
nature of this concept: as commodity
production is a social division
of
labor, individual commodities only
exist as samples
of
their kind, and each kind of commodity only exists
as one among several others. It is the general, historical process
of
the
production
of
each commodity, alongside all other production pro-
cesses, that determines
the
values
they
have-and not the amount
of
physical labor one applies to produce a given good.
(c) When different kinds of commodities are related to money, the
heterogeneous qualities
of
the concrete labors applied
in
their produc-
tion are abstracted, and they are treated as materializations of equal
human labor. Those labors are then homogenized; only their essence
of
abstract labor becomes relevant and only their quantitative relations
matter. The value that commodities have may now be observed, through
their prices (see part
III).*
The processes of normalization, synchronization, and homogenization
are carried out simultaneously, and each
of
them depends on the others
for its fulfillment: the normalization of labors requires their synchro-
nization; the latter occurs among normalized labors; and only normal-
ized and synchronized labors can be homogenized. These demands are
not contradictory, since all these processes are unceasingly performed
in
a continuous flow of production that culminates
in
individual ex-
changes for money.
As
all private labors have this common need, they
are normalized, synchronized, and homogenized as they are performed
and even as they are conceived.
Let
us now see how Marx criticizes Gray’s value analysis, starting
with the “sale” of commodities to his warehouses.
A
preliminary point
is that if a warehouse would buy commodities and later on return to the
8.
See
Lee
1990.
The determination of prices
of
production and market prices and the
‘transformation problem’ are irrelevant here, and
will
be
ignored.
Saad-Filho
/
Marx’s Critique of Gray
73
same producer to give him or her the “true” price paid by the final
consumers, then the bank, the warehouses, and the “labour-money”
are all unnecessary-they change nothing
in
the capitalist reality of
uncertain sales, floating prices, and possible bankruptcies. Ignoring
the clumsy scheme above, three cases are worth discussing:
(a) If the just price that the warehouses would pay for a commodity
was solely determined by the time its producer had worked, the econ-
omy would be set into disarray: a chair produced
in
six hours would
“value” twice as much as a similar one that took a more efficient pro-
ducer only three hours
to
make. The first one could be exchanged for
ten pounds of potatoes, say, while the second one would only equal
five pounds. Total productivity would then quickly
fall,
because every-
one would try to make his or her commodities more valuable by
not
working intensively. This absurdity stems from the inconsistent as-
sumptions that commodity-producing labors do not need to be nor-
malized, and that their homogenization could be reduced to a direct
identity between individual labor time and money.
(b) Although metals would be, in Gray’s scheme, commodities unfit
to act as a measure
of
value, coins could be used as “auxiliary instru-
ments of exchange”
(183
1,
75-76)
bought and sold for money. In the
case of copper and silver,
if
their production times varied, their weights
would change to preserve their money prices, while gold coins, given
their importance and traditional use, would vary not
in
weight but
in
value (see
J.
Gray
1848, 180-84).
Let us analyze the second case, supposing that the bank charged for
gold coins the social labor time required for their reproduction and that
all labor productivities were kept constant, except
in
gold-mining. If
the latter constantly increased, the synchronization
of
gold-producing
processes would subject all coins to a constant
depreciation
and to the
idealization of their name, or to a specific form
of
inconvertibility-be-
tween an old “six-hour” coin and a new six-hour “worth” commodity.
This would happen because, as gold productivity rose, the labor
time necessary to produce a given coin would decrease, and
so
would
its value. Had labor productivity
in
gold-mining doubled, a coin of a
given size would be devalued, exchanging for only half as many com-
modities as it once did, and an old six-hour coin, say, would now equal
commodities that took only three hours to make:
Gold money with the plebeian title
x
hours of labour
would be
exposed to greater fluctuations than any other sort of money and
74
History
of
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1
(1993)
particularly more than the present gold money, because gold cannot
rise or fall in relation to gold (it is equal to itself), while the labour
time accumulated
in
a given quantity of gold, in contrast, must con-
stantly rise or fall
in
relation to present, living labour time. In order
to maintain its convertibility, the productivity of labour time would
have to be kept stationary. (Marx 1981, 135)
(c) Let us now consider paper “labour-money,” what Marx called
“labour-chits,” as proposed by “Weitling
.
.
.
with Englishmen ahead
of him and French after, Proudhon
&
Co.
among them” (198
1,
135). In
this case, other difficulties would arise.
As
labor productivity
in-
creased generally, a chair that yesterday could be exchanged for a six-
hour chit, say, would today command only a three-hour one, money
being constantly appreciated in relation to commodities-to the ben-
efit of the cursed creditors. Moreover,
The time-chit, representing
average labour time,
would never cor-
respond to or be convertible into
actual labour time;
i.e. the amount
of labour time objectified
in
a commodity would never command a
quantity of labour time equal to itself, and vice versa, but would
command, rather, either more or less, just as at present every oscil-
lation of market values expresses itself
in
a rise or fall of the gold or
silver prices of commodities. (Marx 1981, 139)
I11
For Marx, money is a special commodity, equivalent to all the others
and with the formal use value of representing values. Money is, there-
fore, a social relation that derives from the form of social articulation
and reflects the reciprocal dependence
of
commodity-producers.
As
the
money-commodity is for Marx a social value a priori, the concrete la-
bor of the individuals producing it (say, gold miners) is directly social
labor, or the medium for the material expression of abstract labor (see
Marx 1983,
64).
Commodities’ values are disclosed
in
a relation between each of
them and money; as such, money is their measure of value:
The first chief function
of
money is to supply commodities with the
material for the expression of their values, or to represent their val-
ues as magnitudes of the same denomination, qualitatively equal,
and quantitatively comparable. It thus serves as a
universal measure
of
value.
.
.
.
It is not money that renders commodities commensu-
Saad-Filho
/
Marx’s Critique of Gray 75
rable. Just the contrary. It is because all commodities, as values, are
realized human labour, and therefore commensurable, that their Val-
ues can be measured by one and the same special commodity, and
the latter be converted into the common measure of their values
Le.,
into money. Money as a measure of value, is the phenomenal form
that must of necessity be assumed by that measure of value which
is
immanent in commodities, labour-time. (Marx 1983, 97)
Marx stresses that, as a measure of value, money is merely ideal
Every trader knows, that he is far from having turned his goods into
money, when he has expressed their value in a price or
in
imaginary
money, and that it does not require the least bit of real gold, to es-
timate
in
that metal millions of pounds’ worth of goods. When,
therefore, money serves as a measure of value, it is employed only
as imaginary or ideal money. (Marx 1983, 98-99)
money:
The comparison of a commodity with money relates the values of them
both.
As
the value of money is already social, the value
of
the com-
modity is then expressed
in
a price, as soon as the measure of value is
divided into the conventional units of a standard of prices. Thus, as de
Brunhoff and Ewenczyk rightly put it,
As
measure
of
value and standard of prices, money gives a price
form to commodities; it expresses the value of commodities in quan-
tities of the money commodity (gold), and relates at the same time
these magnitudes to a fixed unitary quantity of weight of gold, that
functions as the standard of prices. The monetary name-the price
form-expresses at the same time these two functions. (De Brunhoff
and Ewenczyk 1979, 49-50)
It is this step that allows the heterogeneous labors that create each
commodity to be reduced
to
homogeneous labor: “the price relations
between commodities is the form in which an equivalence is estab-
lished between different concrete labours, the means by which these
are reduced to homogeneous labour that counts as value, what Marx
called abstract labour” (Fine 1980, 124).
For Gray,
on
the other hand, no commodity could be a good mea-
sure of value, since it would itself have a value; as such, changes in
the value of the money-commodity would modify the prices of all
commodities irrespective of the stability
of
their
own
production
times, thus disturbing the exchange process. Moreover, he believed that
76
History of Political Economy
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1
(1993)
increasing the production of metals was more difficult than increasing
the production of other commodities, prices would tend to
fall,
thus
reducing profits and ultimately generating a deflationary crisis.
However, this is neither a reasonable theory of value nor a good the-
ory of crisis. Gray’s valueless measure of value is simply not a measure
since, as we have seen, the bank-warehouses complex would be the
true measurers of value
in
his scheme. Furthermore, even if prices
tended to fall over time this would not by itself lead to the interruption
of sales. Gray’s conceptions show a defective understanding of the
synchronization and normalization of labors that are inherent in com-
modity production, which imply that increases in the value of money
reduce the price of the outputs at the same time that they reduce the
price of the inputs.
Another side of Marx’s critique of the “labour-money” scheme re-
gards its identification of prices with values. For Marx, at the same
time that prices express commodities’ values, they allow for the pos-
sibility of differences between values and prices, for him an intrinsic
characteristic of the price form (see Marx
1983, 104).
The distinction
between prices and values for him is a consequence of the private na-
ture of commodity-producing labors, and
it
has a role
in
the social reg-
ulation of the amounts of concrete labor applied
in
the production of
each use-value. For example, the relations between supply and de-
mand, although they do not affect the values of commodities, may
cause changes in their prices, which signal to all producers the wants
of
society and thus guide their expenditures of labor.
According to Marx, the identification of prices with values reveals
the unfamiliarity of Gray and others with the nature of commodity pro-
duction.
As
Gray considered labor time to be the measure of values
and proposed a “labour-money,” time would become the unit of both
values and prices. On the other hand, the warehouses’ automatic pur-
chases of any commodity would make private labor immediately
so-
cial, rendering prices equal to values. Values would then either directly
express commodities’ individual labor times (depriving society of the
relations between supply and demand as a signalling mechanism and
leading to the collapse of production that was noted
in
section
11),
or
they would result from determinations made by the bank
and
the ware-
houses (which would make
them
the signalers, instead of the market).
These ideas would, for Marx, imply the end
of
commodity produc-
tion and thus of capitalism itself. Commodities are products of private
Saad-Filho
/
Marx’s Critique
of
Gray
77
labor, and money is an immediately social value. The identity between
commodities and money-to which Gray aspires-makes private la-
bor social from the outset, or makes it produce money, and no longer
commodities.
As
such, the discussion of the conditions for the conver-
sion of commodities into money becomes meaningless:
The first basic illusion of the time-chitters consists
in
this, that by
annulling the
nominal
dzrerence
between real value and market
value, between exchange value and price-that is, by expressing
value
in
units of labour time itself instead of
in
a given objectifica-
tion of labour time, say gold and silver-
.
. .
they also remove the
real difference and contradiction between price and value. Given this
illusory assumption it is self-evident that the mere introduction of the
time-chit does away with all crises, all faults of bourgeois produc-
tion. The money price of commodities
=
their real value; demand
=
supply; production
=
consumption; money is simultaneously abol-
ished and preserved; the labour time of which the commodity is the
product, which is materialized
in
the commodity, would need only
to be measured
in
order to create a corresponding mirror-image
in
the form of a value-symbol, money, time-chits. In this way every
commodity would be directly transformed into money; and gold and
silver, for their part, would be demoted to the rank of all other com-
modities. (Marx 1981,
138;
see also 1987,
321-22).
In Gray’s economy, the bank would necessarily control every aspect
of production and enjoy absolute power.
As
the general buyer and
seller of commodities, we have seen that it would have to evaluate the
social labor time necessary to produce each commodity and thus to
oversee all production processes. It would also have to become the gen-
eral planner-both because the average productivity in all sectors of
the economy would have to be kept constant (or to grow at identical
rates) to avoid the development of disproportions and because supply
would have to balance demand, both in the aggregate and in each mar-
ket, to make the “labour-money” really convertible into comm~dities.~
In the end, the bank would order, control, receive, and pay for all
9.
In a way, Gray recognized this fact: “The specific object
of
the proposed commercial
association
.
.
.
is
to
make production the infallible cause
of
demand, and
to
give the greatest
possible effect
to
labour and capital
. .
.
by means of a thoroughly organized plan
of
pro-
duction, exchange, distribution, and accumulation” (1831
*
38).
78
History of Political Economy
25:
1
(1993)
products, and all individuals would be subordinated to it. But then we
are no longer
in
commodity production and thus no longer
in
a capi-
talist society-an inevitable result of Gray’s proposals to reform the
economic system.
IV
I
will now follow Marx’s analysis of the other functions of money,
in
order to understand more thoroughly his critique of the “labour-
money” scheme.
As
money personifies abstract labor, its concrete equivalence with
commodities, achieved
in
their sale, makes them “acquire the proper-
ties of a socially recognized universal equivalent” (Marx 1983, 108).
When commodities are exchanged for money and money occupies their
place,
it
acts as a means of circulation.
lo
Since for Marx exchanges occur between commodities of equal val-
ues, the role of money as a means of circulation requires the previous
normalization
,
synchronization, and homogenization of the labor pro-
cesses involved. However, the use of gold coins as a means of circu-
lation causes their wear and tear, and commodities are soon exchanged
for coins worth less then their face value. The continuity of exchanges
in
these circumstances shows that, although it is essential that in an
abstract exchange the value
of
the amount
of
money involved equals
the value of the commodity, in circulation as a whole, matters are dif-
ferent: what has to
be
preserved is no longer the value each participant
at all times has, but the value-equivalence of the commodities ex-
changed, money operating merely as a representative or as a symbol of
their values. Symbols of money may then perform exactly the same ser-
vice as pure gold:
The fact that the currency of coins itself effects a separation between
their nominal and their real weight, creating a distinction between
them as mere pieces of metal on the one hand, and as coins with a
definite function on the other-this fact implies the latent possibility
of replacing metallic coins by tokens of some other material.
. . .
Therefore things that are relatively without value, such as paper
notes, can serve as coins in its place. (Marx 1983, 126-27).
10.
As
there is no a priori guarantee that the value
of
any
specific commodity
will
be
sanctioned, the need to sell implies the possibility of non-sale, or the formal possibility
of crises.
Saad-Filho
/
Marx’s Critique of Gray 79
Many divergences between Marx and Gray stem from their different
views of money. For Marx, money is the unity of a measure of value
and a means of circulation: “The commodity that functions as a mea-
sure of value, and, either in its own person or by a representative, as
the medium of circulation, is money” (Marx 1983, 130).
Gray, on the contrary, sees money as a unique, static object that as
a measure of valuehtandard of prices (he cannot separate them) would
concretely,
in
a sale, certify the labor time necessary to the production
of each commodity. It should not be any valuable object,
so
that it
could be most easily reproduced and thus capable of preserving the
values of commodities. In its role as a means of circulation, Gray
wanted “labour-money” to be present
in
the same quantity as all goods
and wealth put together, enabling it to purchase all commodities at the
same time. Therefore, Gray’s misunderstanding of the synchronization
of labor processes leads him to
a
confusion between the fact that the
sum of prices of all commodities must equal the sum of money paid for
them, and the idea that that sum of prices would have to equal the total
of money in circulation, or that the velocity of circulation of money
should be unity.
For Marx (1981), Gray makes no more than a “clumsy confusion
between the contradictory functions of money’’ (213). To be a measure
of values, money must itself have value, since the determination of the
amount of social labor in a private product is made first through an
ideal comparison of the commodity with money. The result of this
comparison is a price, given in the units of the standard of prices, that
floats around the commodity’s value. This is necessarily followed by a
concrete equivalence between commodities and money, in a market
sale. Such sales may, however, be made against mere token represen-
tatives of money, such as paper notes.
The exchangeability of commodities does not for Marx result from
the intervention of money (as is the case for Gray) but is a character-
istic of commodity production. The units that compose the means of
circulation participate in several exchanges in their lifetime, simply by
circulating more than once. They may thus realize, in the aggregate,
values several times greater than their own, while in each exchange
they are present
in
amounts whose value equals that of the commodity
they are exchanged for. All in all, Marx’s money contrasts sharply
with Gray’s: it is the dialectical unity of a measure of value, that
works as an ideal body, with a means
of
circulation that may be sub-
stituted by symbols.
80
History of Political Economy
25:
1
(1993)
Let us now see how the functions of reserve value, means of pay-
ment, and world money derive
in
Marx from the unity of the measure
of values and the means of circulation.
The value of money, like the value of any other commodity, is given
at each moment by the social conditions of its reproduction;
it
is not
“preserved” through time inside the physical body
of
a
coin, and
changes in this value surface
in
the form of generalized variations
in
commodities’ prices. At the same time, money is always exchangeable
for any commodity, due to the unvarying nature of values and of value-
producing labor processes.
Only on this double basis may interruptions
in
the circulation of
money lead to its use as a reserve value and to the formation of hoards.
Hoarding plays a very important role
in
Marx, both because the vol-
ume of circulating money must respond to the needs of circulation it-
self and because money represents universal wealth, which may be
retained to symbolize a general power of purchase. This power is not,
however, absolute, since the value of the hoard depends on its size and
on
the present value of money.
If commodities are sold today to be paid for only later (or
if
they are
rented), their buyer becomes a debtor. To close that transaction, he or
she must either sell commodities and then transfer a given amount of
means of circulation to the creditor, or gradually hoard money as re-
serve value and use it later on as a means of circulation to pay the out-
standing debt. As such, money is used as a means of payment.
Attending the needs of trade and finance, all functions of money are
performed
in
the international sphere by world money, that is, value
in
pure form and an incarnation
of
abstract labor recognized
as
such
in
every single nation. Of course, all domestic currencies must be con-
vertible into world money to allow national commodities to be ex-
changed for foreign ones, or to insert nationally performed labors into
worldwide commodity production.
Gray makes no careful discussion of money either as reserve value,
means of payment, or world money. In his best case, presented above,
“labour-money
would lead to an appreciating currency and to distur-
bances
in
creditor-debtor relations, at the same time as hoards would
systematically gain value. Money hoards would not be, however, nor-
mal since for him production was directly aimed at consumption: “A
man
.
. .
having acquired property
in
the standard stock of the coun-
try,
as proved by his possession of standard bank-notes, is sure to re-
Saad-Filho
/
Marx’s Critique of Gray
81
quire
something
in exchange for them-the notes themselves being of
no value whatever”
(J.
Gray
1848,
118-19).
In the international sphere, gold would continue to perform the role
of world money:
gold, silver, and copper goods, (coins,) of two distinct kinds, or
classes, should be manufactured.
. .
.
The first class would be re-
quired to pay balances to foreign countries; to buy goods from for-
eign countries
. .
.
to enable persons, disposed to store up metallic
property, to do
so
[etc.]. (Gray
1831,
77-8)”
Gray’s valueless “labour-money,” since it would merely reflect the
in-
trinsic values of commodities, could at most be a means of circulation
(which is ironic, since
in
his economy commodities would
not
really
circulate). The functions of measure of value, means of payment, re-
serve value, and world money, intrinsically linked to gold’s cursed
“exclusivity,” would either not be performed by money but instead by
the bank-warehouses complex, or would be still carried out by gold.
V
The proposers of the “labour-money” scheme recognized labor as the
source of value and wished to eliminate economic crises and unjust ex-
changes. To do
so,
they imagined a bank that, in Marx’s analysis,
would take as its starting point the fact that, in simple commodity pro-
duction, if supply equals demand, prices
will
equal values. The bank
would then try to do the converse-identify prices with values as a
means of making supply match demand.
As
the bank guarantees an
equivalent exchange for anything produced, private labor would be-
come social a priori, and thereby every commodity would also be
money. Since prices would be identical with values, money would lose
its role, products would no longer be commodities-and the very basis
of
capitalism would be abolished, as a result of the effort to make Say’s
Law a reality.
We have seen that the “labour-money” could not fulfil all the func-
tions of money, and that it would
in
fact be a non-money, in Marx’s
sense. This is a consequence of the fact that “labour-money” is inca-
pable of socializing commodity-producing labors, a task that is carried
11.
The second class
of
coins would
be
used, as we have seen,
to
make small payments.
82
History of Political Economy
25:
1
(1993)
out by the bank and the warehouses, which occupy in Gray’s scheme
the role of money in Marx’s.
This does not happen by chance. When the authors who propose a
“labour-money” declare “labor” to be the essence of values but do not
admit a commodity to be the general equivalent, they make it trans-
parent that their labor is not what Marx calls “abstract labour.” In fact,
their notion of labor comes hand in hand with the belief that commod-
ity production and capitalism are eternal, ahistorical relations of pro-
duction. As such, the labor they see present in every commodity is
merely labor devoid of the concrete forms it acquires
in
use-values; it
is the expenditure of human energy required by any enterprise, all over
history-in this respect, it is equivalent to physiological labor. They
may thus consider all goods to be immediately exchangeable, since their
production always demands the expenditure of this kind of labor.I2
Physiological labor is totally distinct from Marx’s abstract labor,
since the former is incompatible with the historicity of Marx’s concept
and with the transitory nature of commodity production itself. As a re-
sult
of
his inconsistent views, Gray cannot arrive at the Marxian con-
cept of value, but only at the contradictions
I
have been discussing,
that lead his monetary system to the paradox of ultimately denying the
very kind of social division of labor that he sees as eternal.
According to Marx, Gray’s mistaken appreciation of commodity
production and money lead him to the utopian view that alterations
in
money would suffice to modify the form of socialization of private la-
bor and to change the capitalist economy as a whole. Similarly, for
Marx it is not through equivalent exchanges that we eliminate capital-
ism, exploitation, or crises-and we should remember that he studies
surplus value on the assumption of equivalent exchanges between cap-
italists and laborers.
Marx’s critique of the case for “free credit” was equally emphatic,
but
it
will not be detailed here. He considers that the elimination of
interest would neither prevent exploitation nor allow workers to buy
back the products of their labor, but would only do away with one of
the forms taken by surplus value. Marx would use this as an example
12.
Their concept of capital is also an ahistorical one: for them, capital is labor accumu-
lated and put in motion
to
create more wealth,
or
even mere monetary savings (see
J.
Gray
1831, 18,
40
and Bray 1931,
55).
There is an obvious parallel between these authors and
Ricardo, whose theory of value has been criticized by Marxists for failing
to
distinguish
be-
tween abstract and concrete labor (see Fine 1986).
Saad-Filho
/
Marx’s Critique of Gray 83
of what was to him utter ignorance of the nature of capitalist credit
shared by those who made such proposals.’3
Gray misapprehends the relations between money and commodities,
which leads him either to assume away the contradictions of commod-
ity production or to transfer their solution to a bank. When analyzing
money, he says that gold
is
a commodity like any other, being a mere
symbol of value. In this case any commodity, or all of them, could also
be money, since no objective basis gives gold its privileges.
At
the same
time, he shares the opposite (and also mistaken) view that money is
totally different from commodities, the former being added to the world
by convention, after the full development of commodity production.
Conclusion
In this article
I
have reviewed the case for the institution of a form of
money based on labor time as advanced by John Gray;
I
also com-
mented on similar ideas held by, among others, Bray, Proudhon, and
Darimon.
I
criticized such conceptions following Marx’s line of argu-
ment, showing that their theoretical weaknesses are symptoms of an
ahistorical approach to economics and
of
an undeveloped analysis
of
commodity production. I concluded that the “labour-money
cannot
be money, and that if it were to exist, money could no longer be what
it now is.
My main objective, however, concerned the study of Marx’s own
theory
of
money. The analysis of his critiques of the “labour-money”
scheme enabled me to show that in Marx’s view the attribution of
values and prices to commodities is neither direct nor straightforward,
but is composed of three distinct processes that relate individual
commodity-producing labors to the world of commodities: the normal-
ization, the synchronization, and the homogenization of labors. Fur-
thermore, the close relations between value and money theories in
Marx were stressed, and the various functions of money were analyzed
within this framework. The use of Marx’s critiques of the “labour-
money’’ scheme with these purposes is not fortuitous: by showing how
13.
Credit and interest in Marx are discussed by Fine (1985-86); for Marx,
‘‘as
long as
the capitalist mode of production continues
to
exist, interest-bearing capital, as one
of
its
forms, also continues
to
exist and constitutes in fact the basis of its credit system. Only that
sensational writer, Proudhon, who wanted
to
perpetuate commodity production and abolish
money, was capable of dreaming up the monstrous
crkdit
grutuit,
the ostensible realization
of the pious wish
of
the petty-bourgeois estate” (Marx 1984, 607-8).
84
History
of
Political Economy
25:l (1993)
Marx unveiled the contradictions
in
that proposal, some very impor-
tant aspects
of
his own theory
of
money could be brought to light.
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... 50 Marx was heavily critical of theories of exploitation that focused primarily upon the distribution of income; see Marx (1974, pp. 344-345) and Saad-Filho (1993a). 51 See Flaschel (1984) and Szumski (1991). ...
... 70-71), Gleicher (1983, p.100), Ilyenkov (1982, Messori (1984), Mollo (1999), Reuten and Williams (1989, pp. 65, 84-89), Rosdolsky (1977, part II), Rosenthal (1997, chs 11, 15), Saad-Filho (1993a) and Weeks (1981, ch. 4). 2 See Capital 1, p. 182. 3 Fine and Lapavitsas (2000, p. 370). ...
... 8 See Fine (1986a), Mandel and Freeman (1984) and Schwartz (1977). 9 For a detailed review, see Saad-Filho (1993a). For further details, see Bologna (1993a,b) and Cartelier (1987). ...
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This article analyses the transformation of values into prices of production from the point of view of differences in the organic composition of capital. Marx's transformation has two stages. In the first, the value of the means of production used up is irrelevant; in the second, the economy is analysed at the level of price. The transformation helps to explain the distribution of labour and surplus value across the economy, and substantiates the claim that value is produced by labour alone. However, it does not allow the vector of prices of production to be calculated.
Chapter
In this book, Yuki provides a comprehensive overview of historical and international debates on the theory of “labor money” or “labor note,” thereby joining numerous socialists, anarchists, and Marx and Engels. These debates exist in a triangular context of market socialism, communism (community-based socialism), and local currency. This book investigates the positions of the participants in the debate, such as Proudhon, Owen, Warren, Gray, Pare, Gesell, and Marx, as well as local currency theorists who are often forgotten or only dogmatically criticized by traditional Marxists.
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This chapter highlights some theoretical implications of the thought and practices of Robert Owen as well as the modern local currency, the “time dollar,” to avoid Marx’s criticism of the theory of labor money and utopian socialism. Owen’s communal socialism and time dollar are extremely close to the social vision that Marx had suggested in his Critique of the Gotha Programme. Communal socialism and time dollar activities exist in the periphery or outside of capitalism. Owen and time dollar advocates also accepted the equal exchange of labor time, which is unequally valued in the market economy.
Article
This article compares and contrasts Modern Monetary Theory and Marxist monetary theory focusing on the relationship of money to commodities, the role of state power in monetary processes, and the significance of global hierarchy for world money. Money is a social relation, as MMT claims, but for Marxist theory capitalist money is specifically a relation of class, both domestically and internationally. The room for state policy is correspondingly constrained, not least because the international monetary system is hierarchical. These issues are placed in historical context by analyzing a politically important plan for Eurozone exit during the Greek crisis of the 2010s. It is shown that regaining monetary sovereignty was a demanding technical problem but also, and more fundamentally, a class issue embedded in relations of international subordination.
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According to Marx, money capital, lent by its capitalist owner to an industrial capitalist, is ‘potential capital’. Interest payments made by borrowers to lenders are part of the global surplus value produced by labourers and appropriated by capitalists. There is no law of division of surplus value between profit and interest, no natural interest. Interest-bearing capital becomes a commodity sui generis. Its market price, the interest rate, is an irrational form of price. As a market price, the interest rate seems to arise from money capital as its own independent source.
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Full-text available
O presente artigo focaliza a caracterização, feita por Marx, da esfera internacional da circulação monetária ou sistema monetário internacional. Esta pesquisa é um subproduto de urna discussão sobre o caráter de mercadoria, atribuído por Marx ao dinheiro e contestado por diversos autores marxistas. O objetivo do artigo é deduzir, das indicações dispersas de Marx sobre o tema, uma estrutura conceitual consistente para a análise pretendida. Todavia, o artigo aborda apenas urna parte da estrutura conceituai básica, a relativa aos conceitos da teoria do dinheiro, omitindo a teoria do capital monetário na esfera internacional, remetida a análise posterior.
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